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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I would seriously question the hypothesis that there is a lot of innovation happening in India.
Across industries, high tech to mundane, there is a lot of repetition of models that have worked elsewhere. There is also a lot of engineering and services happening – bringing western innovation to life.
Yes, it is better than before and hopefully will only increase over time.
However, as a comparison, across the spectrum of industries, I find innovation in China to be way higher than what we see here. Maybe the massive local market, combined with a talent base that is many times larger than India’s, is driving innovation in products, services and business models.
I return to my pet theme of what I call India’s biggest disadvantage, which restricts its talent pool to a very small percentage of its population. The disadvantage is called “English”.
Chinese innovators have the advantage of thinking and working in the local language. In addition, almost all the research and knowledge resources they need are available in the local language (in the local language WEB for example).
Indian innovators (most of them) are starved of this. Because what they need is available only in English and they do not know English.
@ Shailendra
I am agree with your view on viral marketing.When we want to build business we understand ( price-cost=profit) we use guerrilla marketing. But unfortunetly internet busniess do not work on same principals as our generation old brick-mortal business. Here you start building business hoping some day you find out how to make money and focus on creating buzz and getting eyeballs and hope-wish-pray that one fortuen day cash rich 800 pund gorrila will buy you.This make viral marketing an importnat and necessary.
Alok,
I fairly agree with your observations, but with few reservation.
I would like to add on Bernard’s remark on Risk and Reward. It is not only that the job loses from big outsourcing firms are making Indians think about taking a dip into startup world, but also Indians losing jobs here in US are seriously considering going back to India. The opportunity cost of going back to India and pursuing dreams has reduced significantly as six figures salaries are not as prevalent as they used to be. Though it can definitely be argued that with the revival of US economy, temptation with startups may go back to the back burner. But as of now exodus to India is a reality.
Talking about viral marketing, I am not really convinced of the effectiveness of the mechanism. As we have seen the fate of companies like digg, viral is more of a transient phenomena and I will skeptical before advising viral route to anyone. I am not advocating conventional marketing here, but I think grass root or guerrilla marketing can be better ways for emerging ventures.
Bernard – totally agree with you on Zoho – have a lot of regard for what they have accomplished!
Alok, yes I probably extrapolated my US experience too much to India. Here there is now a “big is unsafe” thought emerging after decades (well, centuries maybe) when the reverse was true. When mega big financial institutions and car companies go smash or look like unmanageable zombies, then SmallCo looks kinda safe in comparison.
But that is not so true in India. Apart from Satyam, BigCo still means safe. And changes in perception do take a LONG time to change. This perception change has been brewing for a while in America and the Great Credit Crisis just brought it to boiling point.
On the challenge to grow over adolescence, I think you need to give Zoho more credit. Yes adoloscence is tough for all companies (er, Yahoo?). But just getting to that stage is a great and unprecedented achievement for a product company in India. What they do from here remains to be seen. I do think that the commenter who said they are a 2 man show may have a point. If that is not true, they need to showcase their management bench strength a bit more. I also think they now need to work on real UI innovation to integrate features to really drive productivity. Thats tough, but they have to do it.