A New Kind of Incubation Model. Part III

Ever since the journey with Proto.in started, about two years ago, I can safely say that I’ve sifted through atleast 300+ company profiles. I’ll hit you with the bad news first: Most of them are hopeless. They are half-baked solutions. They probably are great hobby projects and shouldn’t even allowed to be classified as a “startup” or a Product. Most of them lack business sense – to the point that if you did get a chance to see some of them, you might totally lose hope on the startup scene in India altogether.

Of course, the good news, is that the evolution is happening extremely rapidly. I am seeing lesser and lesser of the type of companies that I described above, and more holistic companies starting to appear. So what’s the issue? Not all is happy and merry yet.

Lately, I am seeing quite a bit of companies that seem to be addressing some very valid problems, and coming up with solutions that do make sense and would work. The only issue is that since most of them have a problem hiring, and a much bigger issue validating the concept and running the pilot that they end up building one piece of the puzzle and it takes them far too long to roll out the “solution”. The funny thing is that, mentally I can clearly see that there are different pieces of the same puzzle being put together by different groups. I simply can’t understand why they can’t collaborate and work together to target the problem.

So, yes, there are issues with this. First of all, since all of them are startups, and all being run by founders, there would be some issues with personality clashes as to how things are done. But lets face it. There are atleast seven players for every single component that is being made for the same problem out there. I think there are plenty of options of teams to choose from.

Before I do get blamed for pulling this out of thin air, here’s an example of something that works somewhere else. There is a Firm that I am aware of that operates out of an emerging nation. The way they work is that they fund certain entities to create knowledge and IP. Their IP could be as simple as a new recipe for a cake (quite seriously!). The firm identifies entrepreneurs in a location, and helps this entrepreneur create a franchisee location, and is given the know-how as to how to create these recipes and sell them. He is given just about six months of time when he is hand-held and guided on the art of running a businesses.

Six months later, the firm goes and finds an entrepreneur, exactly in the opposite side of the country and does the same thing. Follows up in another three months with another entrepreneur in another location, etc etc and repeats all above steps till they have five or six stable entrepreneurs who are running local units in different parts across the country. Then their only focus is to pump all their energy, and resources into these five units and watch with whom the entrepreneurial leadership kicks in. Once that is identified, they create a new entity, merge all these five units under it, place this “leader” as the manager, and take a stake out of this new entity.

The positive note for the firm in all this is that, they take equity out of a firm which has a high chance of success since its run by not one but five entrepreneurs who are well versed in the same business, understand local diversity, and have crossed the issue of scalability, and probably are leaders and hence will ensure that their local unit grows and thrives.

If you take that model and see how to apply a version of it in the context of India, and the technology space, I’d say that for most problems, the solution is broken and built by various companies – mostly small teams, two or three people. It would be interesting for a firm, or an incubator to pick a aching problem, and bring together startups who are building pieces of the puzzle. Come up with a formula (perhaps on revenue, team size, and product readiness) as metrics and figure out the percentage each company will hold, on a new entity that will be created and promoted as the solution to this problem.

Simple case in point: Ordering Food over the net. It is going to require a hotel network front, a logistics front, and perhaps a LBS, technology front. Hungry Bangalore + OrderMonger + Yulop is a solution to go with. You at least need these three bare minimum teams to come together if the Seamless web is the kind of end-result that they are aiming for. I am sure there are other alternatives and maybe other elements as well, that other companies can bring in.

Firms, since they do enjoy the same bird’s eye view that Proto.in enjoys can definitely put together this high level working arrangement, and someone will have to “architect” and manage these teams, atleast initially till their co-existence structure gets ironed out and they find their roles. But its certainly do-able.a

I strongly believe that this kind of lego-work will probably increase a few more holistic startups in the indian scene. If it does come together and work, it will probably one of the most high energy teams, since all the founders will be the guys who will be driving this, and there is no comparison to that – ever.

Related Posts:

A New Kind of Incubation Model. Part I

A New Kind of Incubation Model. Part II

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