State of Innovation – Perspectives

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,

11 Responses to “State of Innovation – Perspectives”

  1. Rakesh Singh says:

    The currents are flowing in the opposite direction as well. HyperOffice, a well known online collaboration solution provider recently partnered with Tata Communications to offer its products in India – http://www.hyperoffice.com/saas-india/

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