Bernard has a great article on state of innovation in India. Some thoughts on the same.
The article speaks about the risk-reward equation being balanced – I beg to differ. Big still means safe. Its not a matter of reality but perception. Like capital, talent flights to safety in downturns – especially as the support systems (capital, mentors) around them shrink. India has a large percentage of “forced entrepreneurship” but when I talk to my friends who have recently lost jobs, few see that as a great opportunity to do the startup they’ve always wanted to do.
The second challenge I see for Indian startups, including Zoho for which all of us have great respect, is the challenge to grow over adolescence. It reminds me of sports where you see a bunch of potential world-beaters in junior olympics/tournaments, even cricket. Somehow, by the time they get to adulthood, most of them fade into mediocrity. The question today is whether the adolescents of indian startups will grow into globally competitive adults. I certainly believe that building institutional capability and resources is part of that play.
I agree on the “cheap” software advantage. However, I believe that the consumer proposition here will not be shaped by the software, but by the services wrapped around it. To an extent, that is part of our excitement with iYogi (which both Bernard and I are involved with). The second key opportunity is see is to “micro-verticalize” software – the cost advantage by itself might not be defining – to the extent you can use it to create highly differentiated customer relevance, the rewards can be multifold. I believe that platform based services will be a key reflection of this model.
Amongst things not covered in the article, one of the distinct transitions we have observed on young internet businesses is that they are finally beginning to get the “viral equation” right. Building consumer internet companies has so far been about being able to pump significant marketing dollars early in the life of the company – thats changiing and 2008 provided enough evidence of the same. I think this changes the financial risk-reward on internet businesses, and despite the low subscriber numbers, can define the financing model for startups in that area.
Comments welcome,
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Its always good o hear any VC talking ‘dil se’. I really loved this term ‘forced entrepreneurship’ It suitsso well to past and (and to some extent current) indian entrepreneurial ecosystem Poeple want to do business becoz:
a) they failed to get a enginereing or some other professional degree.
b)family already had a business and fami do not allow much outside adventures.
where puspoe of busines is not to create market or try new bussniess model but to make sure you maintain families’s standard of living. Everything above that is value addition.
Reason are amny and valid and I will not question them. But this was and is reality as far as indian innovation story goes. It will take time when people will consider doing startups as vaible way of living and as medium of self expression.that when we wil see true innovation coming out of india.
We will not see technology based startups in near future becoz we do not invest in higher education. we all know qulity and quantity of CS phds in india.
I believe right ecosystem starts with right education system. At present our education system support outsourcing based bottom of the pyramid kind of businesss. For enovation we need huge investment in higher education.
secondly sectorial growth will not help innovation. we need fresh ideas, views and adoption of techmology and all sector be it it,manufacturing,SME, government (egovernance )health,etc.
Satpal Parmar
IMO, it is too early to worry about these startups will burnout or not. There will be lots of burnouts, thats business. The pertinent question to ask are,
1. Are there enough startups to keep the India-advantage going for decades to come.
2. Do we have the ecosystem in place to foster the spirit startups?
The answer to the second question will also address the question of burnouts.
Regards,
Brijesh
Santosh – By forced entrepreneurship, I refer to perhaps what you called necessity based entrepreneurship – the fact that many people take up entrepreneurship because they do not have a choice of a better livelihood.
Micro-verticalize – when product development companies segment, the granularity of that segmentation is often driven by the scale at which product development becomes economically viable. Thus, you may have a single core banking system (surely, with “implementation” options). Lower cost development allows you to build functionality that is specific to smaller segments of this market (such as something built for cooperative banks given their unique requirements). In my view, this is a better route to get value out of lower cost product development, than to simply sell the same generic software for a lower price.
On Zoho:
(I deeply love Zoho as a company and this comment is not an attempt to undermine what they have done, I’m a happy and a paying customer of their several products — These are just thoughts crossing my mind.)
I reverberate your thoughts on Zoho and fear that it may go down as one of the successful Indian companies which had the potential to be a billion dollar enterprise.
From the outside it looks like a 2 (Sridhar and Raju) + 2000 (the rest of the employees) people company. Do they have a guy talking Channel? Do they have someone talking to CIOs? Do they have a seasoned Marketing team? Do they even have an engineering head? They may — I don’t know nor I hear any mutterings from them. Compare this to the high-note a SalesForce.com or Google Apps has and their employees have. Compare this to the pitch even a pre-revenue SaaS startup has. Though zoho is popular, I still don’t see it’s ubiquitous presence.
The humility of company’s founders is beyond comprehension — However, I don’t wanna see the company forgotten like an Ashton-Tate(dBase), MicroPro(Wordstar) or a Lotus.
I’m looking at them as an Indian product poster child and with a lot of high hopes.
@1ndus
hi Alok,
I’m not sure I follow these two terms, I beg you to shed more light on them. What do you mean by,
“micro-verticalize” &
“forced entrepreneurship” – I can’t grasp this one as the context is completely missing. I’ve heard of necessity-based entrepreneurship but I can’t guess forced would refer to -leave job-become a consultant scenarios.
– Santosh