We have seen lots and lots of startup companies coming up in our country since last few years. Companies ranging from matrimonial websites, job portals to even companies helping people sell their used online stuff. Now and then we keep getting portals which fall into larger categories of a specific list of online portals, some of which could be:-
- Matrimonial website
- Job portals
- Startup directory
- Web design companies
- Management systems like Hospital management system, School management system, College Management system etc
- Social communities and networking
- Online education support systems like preparing for IIT JEE, Medical entrance etc etc
- Â Online T-Shirt selling portals
And the list goes to thousands of categories.
I ask a simple question to all our young entrepreneurs. With these kind of portal based companies ,who are your potential customers and what is your customer segmentation?
We could get following answers based on the business model of the company:-
- If they are directly selling the service to Indian customers then the money comes form the Indian masses
- If they are providing free information to the people through online portals then the money comes from advertising and that too only from those sources who are interested to put adds to a particular segment of visitors which would be mostly Indians
I do not want to discourage the attempts made by thousands of startups coming up from hundreds of universities from all over the country and even from people who are already well settled in a good job. My point is, you are doing so much to generate some money out of your business and that too comes from within your own country. Startups falling in similar categories are competing with each other for a segment of market which is not growing at a sufficient rate to support all of them for a sustainable and scalable business. The day is not far when you try to get an appointment with the IT head of a potential customer to show your product and you are waiting for your turn to come up may be next month. or later . The extreme example of these are those start-ups claiming to provide business consulting or corporate profiling and having team members having low or almost no experience in these areas.
But, we should definitely appreciate the confidence our youngsters have and the ecosystem in our country which make theme start thinking about having their own business.
So, what is the problem and how to resolve it?
The problem is, that, we get too much exited about our own ideas and start loving it so much that we are almost confident that this will turn into real business. I am talking about most of those ideas which strike us during the dinner last night and we just jump into making a venture out of it without doing sufficient survey about the market and the competition. And what happens when you jump into business with these kind of ideas?. Well, you start shifting your domain slowly and end up having a business with no goals or road map, but, to just to think about sustainance. In fact, i know about few companies which started with some great ideas and ended up providing web solutions to local market.
So, what we might agree upon till this stage is that:
- We need to start building products and solutions which have a larger market, the market itself should have possibility of getting bigger in future
- With bigger market segments there will be bigger competition (only if you are building an existing solution), but , the kind of competition you will face will be entirely different from the one you find in a limited market
- Building already existing solution in a small market will be a recipe for disaster in most of the cases with few exceptions
- You can beat competition in both markets (limited and global) with a unique product or value proposition, but the returns with a unique product will always be higher if you target global market.
In a nut shell, if you are planning to build a startup from India , where the cost of building software based technologies are low as compared to western countries, you should look into following issues:-
- Do not try to build yet another startup trying to sell something which hundreds of startups are already doing
- Try to leverage the advantage of online business and sell something which can be distributed globally and should be useful not only to Indians but to the other countries as well
- Try to have major stream of your revenue from foreign exchange. Making good amount of money from domestic market is something you will always be doing
Everything said and explained, where do we see this model working?
Why don’t you find it yourself. Search for technology startup companies from India and you will get lot of insight into the discussion we had with this article. I am not denying the fact the common portal based companies have also been successful in past. But, we should also look into the fact that thousands of them are lying there today without doing anything significant and generating revenue through Google ad sense and many more will come up. What we need the most is start having an understanding of building unique technology startups from India which can sell worldwide. After all, this is what large number of foreign companies like Google, Microsoft, Apple, you tube, Symantec etc have done. When do we get to see our own Googles and Microsofts?
- Why India needs more tech software companies? - December 17, 2009
Talk about innovation. I’m residing in north India(along himachal) and around my area there is hardly anyone who knows about blogging/entrepreneurship or atleast is serious about it.
I completely disagree with almost everything said in this article. The big idea is to build a self sustaining entity. This entity might be based on a totally innovative idea or something completely trivial. That is irrelevant. I would argue that almost all the examples you have mentioned: Google, Microsoft, Apple, you tube, Symantec started off as yet another company. What has distinguished them is that they had an outstanding execution. They continuously leveraged on the base they had built. The technical achievement was just a side effect of this whole endeavour.
hi Vikram,
You have hit the right question but what do you think is the answer to why aren’t indian startup doing something innovative? I am myself an entrepreneur and have started Social Media based company called InRev.
As you have put, we have been drifting through ideas and main reason is the lack of proper funding and place to appreciate the new technology.
I have been to few of the startup programs in Bangalore and what I found was that people were more concerned about creating community rather than a great product or services.
Though being an startup my company have come up with new services (We have unique products which i don’t thing you can find in indian market) but the moment we go for funding we get this huge virtual wall of rejection….
For great product focus is important and it can be only gained if a proper funding is made.. we have been struggling for years between building our own product and supporting ourselves from external projects. Doing external project and building your own product has become a double edge for us….
I think this is why there aren’t enough great startups not due to lack of ideas but due to the social norms that reject these ideas… something is doen only when proven by others…. IT surely have revolutionized India but for great innovation, we should still wait for cultural breakthrough…
A very good and comprehensive article. Really appreciate the amount of detail you have gone into.
In India, so far, we have seen entrepreneurs go for low-hanging fruit and that too the same kind of fruit available elsewhere. Very few of them have tried going to market with truly original ideas. The aversion of most VCs to look at path-breaking ideas is one of the reasons. Like the entrepreneurs, they also don’t want to fail and hence end up funding ideas which have succeeded elsewhere.
In India, we have this great herd mentality. If someone thinks he/she can make money with a travel site and gets funding, everyone starts thinking they can also make money with that idea. Then, it becomes a sales and marketing game than a true technology game.
One important move that the government is making which could potentially alter the startup ecosystem is the decision to allow university professors to start their own ventures while keeping their academic job. This is allowed in most developed countries. This is a great move. It will encourage a lot of useful research in our universities and some of which can result in great startup businesses.
In summary, though we have been seeing very little of path-breaking startup ventures in India, I firmly believe that in another decade or so, things would be a whole lot different, on the positive side.