A friend of mine and I, had this elaborate discussion on some of the advantages of actually being in the valley. Well, Thomas Fieldman is proving himself to be right with the globe turning more and more flat as the years pass by and I am quite positively sure that position holds not that much of a relevance and trumph card anymore.
As it is, I understand that most startup projects that are happening in the valley are being outsourced to companies here in India to be developed. The reason being cost and the availability of talent.
The fact that the dollar is dropping, added to the fact that the ruppee is appreciated is really not helping the case. In most cases, apart from the added headache of managing your team remotely, your cost also ends up being the same. What is even more empathetic is that most of these silicon valley companies end up handing their product developments to companies that probably aren’t the best of the breed when it comes to development – the biggest issue when it comes to outsourcing.
I am all for outsourcing service-related work. Management of networks, servers and mindless crunching of data and numbers seems to be a valid point, but would a startup want to outsource its most crucial asset – the product itself? Hmm… I am not sure if thats the right way to go.
So, what does a startup need anyways?
Access to the market, capital, human resources and the depth in a market to build a product that actually makes sense. An entrepreneur from the valley will always have his roots there, and does have the liberty to fly to and forth, along with taking advantage of the evolving business models of the east.
Being a global entrepreneur, might be the trend of the future to match up with the world becoming flat.
I question, Why don’t most of these silicon valley entrepreneurs move to India anyways? It might not be the way to go as the business scales up, but for being on bootstrapping mode and to get a product and team together, I strongly believe that India is the way to go. If you are the next Mark Zuckerburg trying to build the next big thing, India is very much the place to be.
An elaborate post on this, is soon to follow.
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Deepak, very good point.
But here’s a question. Lets say when we talk about bootstrapping (where the team size is no more than five), and we do have definite roles assigned and there is one guy who is responsible for listening to the customers and he is based in the US, and frequents to India with the team once in two months or so. And the product you are building is not a commodity one, but one of high value and probably a research product, which actually is a cutting edge technology.
Does the implications change in that case?
I mean, in a lot of ways, didn’t Mindtree manage to hold their offices and maximum strength here and yet aggressively grow in the US market?
Thanks for all the discussions guys, this is good mental stimulation. What I am looking for is that, I know that a company always need to be market and customer faced, but somewhere along the lines its always good to back and rethink he basics, since things around do evolve – flights and air travel become cheaper, immigration policies loosened and a lot of things happen. It’s good to start from the basics.
I’m on the absolute other side of the fence. I think it’s crazy to not be where most of your customers are likely to be; even if you are an internet startup. My last startup was about custom product development and an accounting product, both of which lost a lot of ground because we weren’t present where our customers were (We operated out of Bangalore, and accounting systems of our type were likely to be bought by HQs in Mumbai. Plus the outsourcing product dev business had its client base in the US and Europe)
This time I’m not making that mistake. My startup is about the Indian stock market, so I’m moving to Mumbai.
And I don’t mean a presence like a virtual or shell office. I mean either headquarters, or a huge team. Take Talisma for instance – they moved HQ to the US. Or the outsourcing giants who have a significant presence. We could talk examples all day, but it wouldn’t prove the point either ways – to me it sounds like NOT being in the place where your customers are is a battle best not fought at all.
I don’t want to discourage the next facebook from India (though perhaps facebook is a lousy example, I just don’t think it’s a sustainable business) but for those that want to plunge into selling to what is essentially the market outside, either get outside, or go get funding to get outside.
Hari, very valid point, but I probably was looking at something Like Netflicks/70mm which does seem to resonate quite well with the indian audience.
In a conversation with a VC/Entrepreneur yesterday, he mentioned that the beauty of the silicon valley is that you can build a product and also find clients in the same bay area. My thought was, why cant you build it here and still sell it there – opening an US office is just a matter of days actually.
I think its a logical move and will eventually happy, as most europeans are moving to and fro from and to the US with their ventures.
In order to build truly innovative companies, we need to be global and by that I mean, having links to the happening places, touching base with them – just as the trade routes served their purpose and coming back with enough roadmap and competitive info to pump into the team to get cracking. I do envision a future like that.
RYK: Lots of questions, you have. 🙂 I think the answer to all your doubts are simple. Register a shell corporation in the US and work out of India. You have the best of both worlds.
I too feel not every start-up is meant for India. Especially, the example you have taken of Mark Zuckerberg – the next Facebook will not become a Facebook if the product was developed and bootstrapped in India.
I do agree that it would work for true “product” companies – networks, protocols, and other such enterprise type plays. It will not work for a consumer Internet play like Facebook, where the most important aspect is to be close to your users.
Hari –
I’m glad you raised this issue. The question is not of whether entrepreneurs are ready to go global, because as you know entrepreneurs are always at the forefront of innovation and thought leadership, but are resources ready for global:
1. Will VCs involve in cross border ventures?
2. Will teams become globally mobile?
3. How is cost disparity to be managed especially in HR
4. Will stock markets support the cross border story
5. Is government policy ready to support cross border ventures
For example, if my company is registered in the US and for the US market, but the team is mostly in India and now I’m adding senior people in the US. So should I approach Indian investments bankers for fund raising, or US investment bankers?
However I don’t fully agree that you should base your bootsrapping team in India for the US market. Of the people, by the people and for the people is normally better.