[Sometimes back a journalist from a leading business publication had asked me if I can write a short essay with my thoughts on what differentiates Indian start-ups from US start-ups and also what were some good learnings which budding start-up industry in India can learn from their mature counter-parts in the West - so that he can file a story on the same. Unfortunately, it seems that the journalist had to move to another story and hence could not take this forward. So I am posting the same essay here for the wider audience.
While the article compares Indian start-ups with US (driven by the need of the Journalist); the comparison in here is valid with start-ups in general with the Western countries besides US too. Thoughts and comments are welcome!]
I recollect a quote from one of a renowned Management Speaker from United States wherein he had observed that he was amazed to see the entrepreneurial spirit in the current generation of India. “Strong Dollar! No problem!” An Indian entrepreneur seems to have told him. “I can now generate more for the same amount.” For the weaker dollar argument, the same entrepreneur was still bullish. “I can now go and think about buying out someone in US”.
I agree with the speaker. While the modern ways of counting number of self-started businesses a.k.a. start-ups may have a different approach to measure – entrepreneurial endeavors have been prevalent for generations in India. Be it a doctor starting his independent practice or a housewife at home deciding to start an embroidery business. However with technology start-ups (the focus of this article), the state of things in India seem to be slightly different from the other countries in the world. Assuming that in today’s world technology is a common denominator all across the world now, the number of successful technology start-ups in India are still handful.
Over the years having consulted and worked with more than a dozen start-ups – in India and outside India – I feel that I may have some thoughts on this low success numbers (as compared to countries like United States) followed by suggestions to improve those. Hopefully, this will also help to contrast Indian start-ups with their counter-parts in other parts of the world. The points listed below are from the perspective of what are some of the key differentiated learnings which Indian start-ups can take from their counterparts in US (besides some standard best practices for any start-ups).
- Technology just enables a business; Value Proposition drives the business:
In comparison with the US start-ups, a large majority of Indian start-ups are driven by technologists. I am not surprised by this considering that science and technology has always been close to the heart of the Indians. In their passion for the technology, I have seen that many such entrepreneurs have inherent weakness of not being able to properly formulate the end-user value proposition. As an example – cell phones did not become popular because of the technology; but because of the convenience and accessibility they offered to its users. However, the same cell phone user may not be ready to pay for a video stream on his/her cell just because technology enables video streaming to mobile phone too. I have started to cringe when yet another entrepreneur’s focus is on technology which allows you to find the nearest X, say plumber, using your mobile phone. My question to them remains – is this a technology solution or a value proposition?
- Focus on the early adopters:
Another difference between the Indian and US start-ups is their focus on who their potential customers would be. Compared to their US peers, Indian start-ups traditionally seem to have believed that their success is directly proportional to the wide range of customers they can attract at the start. One might think of this as a natural strategy; however in my experience it dilutes the value proposition and confuses the initial set of users. Start-ups are all about crisp and focused value proposition. Entrepreneurs should focus on the needs of early adopters of their value proposition. More users will naturally follow if these early adopters like what these start-ups have to offer.
As an example, we had worked with a start-up focusing on using social media streams for project management. It was a powerful concept and in their zeal they tried targeting all possible personas for the first release. Unfortunately, a late entry in this space with a small focus got all the attention when they could crisply explain their value proposition to a subset and people could make sense out of it. The first company sadly could never recover from that setback.
- Focus on execution; Ideas are just temporary:
Majority of start-ups today are based on a value offering as compared to a new or ground-breaking intellectual property. Contrary to the popular belief, it is not the ‘idea’ of the start-up which is critical for the success. An all-round focus on execution which includes building a strong advisory and organization team, partnerships, software engineering, messaging, launches, etc. is what matters. Indian start-ups need to be sensitive to this aspect of achieving success.
- Productization of the “offering”:
Whether the start-up has a product or a services offering – in today’s world the productization of what customers are buying from them is becoming increasingly important. By productization, I mean things like Messaging, User Experience, Packaging, Clear Pricing, Delivery, etc. US start-ups with their experience over the years typically have done a better job in this. Indian start-ups need to catch up on this in a faster way.
- “If we build it, they will come!”:
This principle may have worked for Kevin Costner in the movie ‘Field of Dreams‘; but unfortunately this may not apply in real-world start-up scenarios. In the initial stages of the start-ups, the entrepreneurs have to think about from the perspective of earning each and every of their customer. And let me tell you from my experience that it is not easy. Entrepreneurs may have invested a lot in building their product; however if they cannot invest in the Marketing & Sales effort their success may not be guaranteed. Start-ups in India need to increasingly focus on this aspect of their go-to-market plan.
I am of the view that Start-ups/Entrepreneurship in India is booming, however it is in its end success rate where India might be struggling. The above suggestions are more from the learning of what the US counter parts are doing better. Compared to them, Indian start-ups probably also do not have access to the best of environments, infrastructure, or an ecosystem. However, I have also heard from many US start-ups envying business opportunities and possibilities that India offers and to which Indian start-ups have easy access to.
[Image Src - "Start-ups That Work" by Joel Kurtzman]
[Update|Feb. 24, 2010 - New York Times carried the news today about Intel's initiative to pump in about $3.5 Billion into technology start-ups in US fearing that America might be losing its competitive edge to countries like China and India. Interesting article which covers some interesting points as to how each country view's start-ups in the 'other' countries.]