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 isÂ not growing at a sufficient rate toÂ 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 theseÂ 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 ourÂ own ideas and start loving it so much that we are almost confident that this will turn into real business. I am talking aboutÂ mostÂ 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 startupÂ 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 donâ€™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
Good thoughts. The first thing that came to my mind was SaaS (since I am in that space here). We need more companies to design and develop functional as well as sleek-looking online business software to the global audience. They should charge for their product and not rely on advertising as the only means to generate revenue. This is where I see opportunity going forward.
Great Article. We are working on CyberCafe for Payment Solutions coz Credit cards is not used too aggressively in India.
We would be looking for various website providers to access our service in India.
Good thoughts, Its really good to hear that people are concentrating how can I make difference. As famous saying ” Great People Don’t do different things, but they do things differently” Understanding the Making Difference will make wonders
As we the IT became more Integral part of everyone’s life, we should think beyond Just Services, Products.
I suggest, Building an Eco System that solves the Identified problem(s) by embracing IT should make us different from other start ups & Creating that “X” Factor of Difference
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Good thots & adding few bits:
To take it forward, we need startups with deep technology. Here are some example categories. There may be a 1-2 in India but we need more orthogonal/vertical/horizontal ideas:
2. web analytics
3. business intelligence/transaction data analysis
4. online commerce engine
5. payment engine
6. security software, anti-virus (there are couple in this space)
7. CRM/sales & marketing automation
8. storage, archival, tagging, discovery
There are a few Indian examples in each of the categories above but that’s not enough, IMO. Also, it can be argued that there is google, amazon, symantec, etc. in those categories, but the idea is to innovate beyond what the googles of the world have and not really compete head-on.
I agree with your point about the current startups in the internet space.
I would like to add that the risk averse nature coupled with the current definition of ‘success’ in the society are primary drivers that often convert an internet venture into a mere ‘lifestyle’ business. Simply put, if a startup is making $500K a year with adsense and other things, would they be willing to risk it all to build a much larger company, or would they be content and be touted as another success story?
Culturally, a lot of the Indian entrepreneurs still reach out for the ‘low hanging fruit’. This scenario will likely change after the first set of real startup successes – companies that cross the $100 MM mark with an IPO/acquisition exit.
However, I do not agree that the Indian market is too small for all the players, quite the contrary. Startups should aim to be the walmart of the internet era – not the mom ‘n pop shop of their region.
i) There is fortune at the bottom of the pyramid and a lot of industries are highly fragmented and disorganized. If done right, the internet can be a very powerful tool to achieve efficiency and scale.
The Indian market is large enough, there is a lot of room for new innovative business models that is inclusive of the suburban and rural masses.
ii) Also, the one size fits all solution will just not work in the internet space. There are subtle cultural and other differences that make certain business models work in certain geographies.
Google and Microsoft are still largely a technology play. In fact, they are struggling hard to find new business models for India and China.
About the need to explore global opportunities, what could work is if a team builds something out of India targeting say the American markets. This would however require a good understanding of the business as well as the target market.
We live in interesting times and all of these should be viewed as opportunities by new players. This window of opportunity will close in the next couple of years.