In 1999, K Vaitheeswaran, together with five friends in the IT industry, founded India's first e-commerce company, Fabmart.com. The venture also built a physical retail chain called Fabmall, which was later acquired by the Aditya Birla Group and was rebranded as More. Vaitheeswaran carried forward the online venture under a new name, Indiaplaza.com. But despite being the first mover, Indiaplaza could not deal with the aggression of the newer players, Flipkart and Snapdeal, and shut down in 2013. In his upcoming book `Failing to Succeed', Vaitheeswaran cautions entrepreneurs about the dark side of starting up.In the profits vs GMV (gross merchandise value) battle, GMV won. From 1999 to 2013, we raised only $9 million for our e-commerce company. Today, people lose that much in a month. I came after 10 years working for Wipro. I was trained to make profits. We carried that story to every investor and we realised that they were not listening to our story. The pitch deck said Indiaplaza - only profitable e-commerce company. Today, if I take the same story, I would have made a lot of money. It was a timing issue.Hardly anybody gives you good feedback. They just drop you a polite mail. Sometimes they'll say market is not big enough, even though they put a lot of money to build one. The pitch that could have worked then was the numbers - number of people expected to come online.Undoubtedly no one will make a profit. You are hoping to be the last man standing. You can never be the last man standing since there is always a person with more money than you. And 50% of all customers that shop online do it for discounts and delivery. So, it's a hard game to win. One thing you don't want to do is fight with a global giant who will do whatever it takes to take your market.First, you have to be clear that you are a retail company, not a technology company. Customers don't shop on a platform because it has got great artificial intelligence software. For a retail company, the key is merchandising - selection, pricing and availability. If we were around today, we would try to be better than Amazon in certain areas. You can have 3 or 4 areas where your selection is unique, which becomes the reason customers come to you. Whether that would be enough for us to succeed, it is hard to answer. It is tough to beat Amazon in technology. Some battles you don't fight.Yes, because it is the only hope they have. But the problem is it is one of the lowest margin category. If 60-70% of your sales is coming from a low margin category, it won't take such a large company to profitability. Fashion has a high margin of 30-40% and that is why every single Amazon advertisement is on fashion.We ran into a series of shocking incidents of fraud, duplicity and cheating. We had a term sheet signed with an investor, and they kept saying they had wire transferred the money, but the money never reached us. We were running out of cash and we were distracted by these series of events. And when you sign a term sheet, you don't talk to others about funding.For a long time, I had problems in coping with the failure. I did not have the strength to talk about it. Not many people in India are willing to discuss their failures. Social stigmas are too high. If I had failed in Silicon Valley, I might have seen investors queuing up. Here, people did not return my calls and nobody helped me. I had to go to a police station for three consecutive days after threats from vendors. The amount of money we owed was a paltry Rs 10 crore when we shut. And despite having just 2% share in the company, I was left alone to deal with the mess and that is my biggest grudge with the startup ecosystem. If investors own 80-90% of the company, they have to help with a full closure.India believes that there is a certain type of people that can start up - those from a premier institute, having worked for an MNC, gone to the US. If you don't fit this profile, VCs think you are unfit to start up. All those who invest big bucks also come from the same background. And suddenly the whole funding system is dependent on these connections. For me, who never went to such colleges, it's very hard to break in. You shouldn't do pedigree investing. There are smart Indians outside these colleges. Picking a winner when you are starting a race requires hard work. Investors take an easy way out. All it takes to go to a certain college is to do well in the entrance exam.I think it's global to some extent. VCs believe one success out of ten investments is a great success rate. That's not insight. The fact that success rates are low calls for more hard work and more analysis. I think it will happen now, when money from the LPs (limited partners who invest in VCs, PEs) comes down. Because the entire ecosystem pays for the failure rates. Hundreds of entrepreneurs are today paying for the fallacies of a few.An important goal for an entrepreneur is to make sure that his/her startup becomes self-sustaining. The entrepreneur's energy must go into that. If you go for a significantly large financial distraction, you might not even have the incentive to do anything. The moment you allow an entrepreneur to reach the stage of 'why should I care,' you are removing the strongest motivation for him to succeed. You can't encash in the middle of the journey when your company is struggling for survival.You must do all the thinking about your startup before you start. After you start, you must put in your everything. You can't work for six weeks and say I want to pivot. Then you are being frivolous about the whole thing. Entrepreneurs must treat startups like their own babies. They must treat it like the best in the world till it's no longer possible for them to move forward. Take six months to think about it, if necessary. Do your best and fail long.Failing fast is different from changing product strategy. When you are launching a product A, you can learn, and change features to A+ or A-. But you can't launch something and then do something completely different. Good startups can never launch with a great product. They will keep changing the product every day. What you start with and what you end up with six months later would be different.