How culture is the fevicol of a startup

I recently attended a Playbook Roundtable organised by iSPIRT on “Culture Design” discussing how to preserve culture of a company that it started with? Reading so much strife because of culture conflict globally or in India or how MNCs should imbibe the “Transparency Culture” & “Accountability Culture” has made me wonder Isn’t “Culture” a confusing word?

Each time we use the word culture we incline toward one or another of its aspects: toward the “culture” that’s imbibed through osmosis or the “culture” that’s learned at museums, toward the “culture” that makes you a better a person or the “culture” that just inducts you into a group.

As per Wikipedia, Culture is, in the words of E.B. Tylor, “that complex whole which includes knowledge, belief, art, morals, law, custom and any other capabilities and habits acquired by man as a member of society.”

Tirthankar Dash articulated culture that can be depicted in a pyramid. At the base is the Philosophy – what are the belief systems underlying the culture.

On that base is built the Mythology or folklore. This would mean Stories – what are the stories that make your philosophy real and personal. And at the top would be Rituals – what can you do that will bring it all alive.

One truth we have seen over the centuries – whether it’s a team of 3 or a country or a civilization, culture exists in every community. So the choice is between letting an unconscious culture crop up like weeds or consciously creating a culture we truly love.

A lot has been said about “Corporate Culture” of late especially about “Startup Culture”. One can have big vision and goals, smart people, super pay, great products and more, but the undercurrents of culture many a times determine whether the company crosses the chasm from good to great.

So, the key question is what kind of culture we want to propagate, as a company, community and the country? How do we provide an environment where one can respond (said and unsaid) to people and situations to bring out the best in each of us?

How does one ensure that we preserve and pass the culture of company from the 10th employee to the 100th to the 1000th?

While each startup or a big company should identify its own values, rituals, celebration and mythologies, there are three critical aspects that each culture should have for it to sustain, have its employees be “in the zone”, an experience when your concentration and focus peak and you are able to scale uncharted territory.

Trust: Every culture should command and demand trust among its community. If there is trust deficit, it leads to fear which creates processes and policies. Leaders of many organizations are afraid of the 2 per cent employees who may break their trust. The reality is, whether you create restrictive processes or not only 2 per cent of the people break your trust.

You end up penalizing the 98 per cent of the employees with restrictive policies (attendance tracking, detailed travel policies, time-tracking etc.) Any driven employee cannot ever be in the zone if they feel restricted, monitored and trapped.

Progress: Growth, movement , opportunities whatever you call it progress is like oxygen for any company or culture. Driven people constantly look for avenues where they can satiate their hunger for learning. Hence the culture should foster open communication and collaboration coupled with professional & personal growth.

The Indian culture, often labelled as an amalgamation of several sub-cultures is a prime example of this progress over several millennia.

Purpose: As a leader, if you had to choose to do only one thing to get your team to be in the zone, it should be to continuously, shamelessly and loudly remind them of the larger purpose of the team and the organisation they are a part of.

Remember, there are a bunch of operational tasks and distractions vying for your team’s time and attention. It is your job to take out time and remind them of the larger purpose of the organisation. It is your job to get them back on track when they are distracted and to give them the feedback and support they require.

At InMobi we believe in nurturing a culture that enables people to become more of who they truly are. YaWiO which is the foundation of our culture is like the wind – it’s the presence that can’t be directly seen, but it can be felt very strongly. It is our glue that holds the organization together and can guide how to behave & act!

Guest Post by Ankit Rawal, Proud Veteran InMobian

Digital India’s DigiLockers: Boon To Startups & SMBs

India’s Step Forward

India’s government is rewriting the rules on basic standards of living and business. It’s an ambitious goal, but there’s been a rise in foreign direct investments in those sectors that have been affected by the “Digital India” campaign. So, the world seems to agree with what they’re doing – let’s not forget the Rs. 4.5 trillion pledged to the initiative by some of the biggest corporate names in the nation.

We want to have one mission and target – Take the nation forward digitally and economically.” Prime Minister Narendra Modi

This increased approval from the world’s business community has also given India the push to jump forward 14 ranks to 55th place out of 140 economies in the Global Competitiveness Index of 2015-16 released by the World Economic Forum.

As we discussed in our previous article in this series, Indian smaller to medium-sized businesses (SMBs) that are digitally disconnected are slowly dying out with an 8% decrease in revenue year-on-year.

The appearance of “Digital India” as a market force now brings new hope for these SMBs.

In this post, we will address some ways in which the “Digital India” initiative cuts through bureaucratic sloth and speeds up business practices. In our next post, we will go through the technical elements of how the digilocker works.

In short, this post will discuss:

  • The purpose of the DigiLocker; and
  • Immediate benefits of digital lockers to business

India’s DigiLocker: The Corporate Clog-Cutter

The Sluggish Source of Redundant Red-Tape

Indian governance bodies are reasonably self-aware, and understand the immense burden of documentation that is placed on the average citizen or business – even if they seldom attempt to ease it.

An SMB is required to acquire, manage, and regularly update a dizzying host of documentation across several dozen government departments. What’s more, there are even more government-issued documents that are shared with banks, other private organizations, etc.

With a population of 1.26 billion, it’s understandable why we need verification of documentation.

However, the real damage happens in the time it takes for each agency to verify these documents on the request of every government-to-business (G2B) service.

The process is then made worse by the fact that Indian government departments have historically been notorious for their lack of cooperation with each other.

It’s just as Mr. Narendra Modi himself remarked on his initial experiences as Prime Minister – “Even in one government, there were different governments. It was as if each had their own jagirs (fiefdom),” to the point that different departments even wanted to take each other to court.

Is it surprising, then, that this hostile atmosphere would slow inter-department verification processes – that should only take a day or two at most – to the point of taking weeks? In the end, the real losers of this constant jurisdictional feud are the citizens and, by extension, their businesses.

Still not convinced about the depth of this problem? Maybe this comparison will shed more light on the situation.

29 Days Later

In India, document verification at every step is so redundant that reserving a company name with the Registrar of Companies, paying stamp duties, filing the incorporation requirements, and receiving a certificate of incorporation takes 7 to 12 days on average. Side note: for Hummingbill, this took us OVER 4 MONTHS before we received our certificate of incorporation!

In the United States, this entire process can be completed in less than one day. Not just that, businesses can expedite processing to 2 hours by paying an additional fee.

The entire process of starting a business takes 29 days in India as of 2016; the same process can be completed in US in a mere 5 and a half days, 4 days if done from New York.

The economic ramifications of these differences are mind-boggling.

It takes the same time to finish business registration processes in India as it does 5 to 8 businesses in the United States.

This makes a big difference in productivity. Although these metrics are definitely not immediately related, it’s important to note that the nominal GDP of the United States is roughly 8 times that of India.

Imagine the swiftness with which eGovernance services could be requested and delivered – or a new business could be set up – if documents were digitally shareable and pre-authenticated to reasonable extents.

As the late Dr. APJ Abdul Kalam said,

We can not stress this enough. The arrival of Digital Lockers as a commonplace tool for the India of tomorrow could speed up every aspect of life in the country, from professional to personal.”

Thanks for reading and stay tuned for the next post on how the DigiLockers work.

Guest Post by Adam Walker & Aniket Saksena, Hummingbill Inc.

Thinking PN: Tribute to the Spirit of ISPIRT

The Dream of a Product Nation, to give India its true Identity and enable Bharat to be the crown jewel of the World, took seed in Feb 2013. An idea to harness the energy of many volunteers inspired by the Open Source movement took the shape of iSPIRT and Product Nation.

The Spectrum of Volunteering spreads from Bad-to-Good-to-Great. Adam Grant in his book Give and Take highlights this mindset of Giving & Taking. There are some Volunteers who Commit to Doing Whatever it Takes, Giving completely Selfless, while some even Indulge in Malicious Free Riding. 
ThinkingPN

Celebrating iSPIRT’s 3rd Anniversary

Creating a Unique and Distinct Organization, unlike Trade Bodies, and keeping the Spirit of Volunteering in the mind at all times, makes it an even arduous journey. But iSPIRT just completed 3 years and celebrations of the 3rd Anniversary, has instilled a great sense of community building, while Thinking Product Nation (Thinking PN).

The 3rd year Celebration on its Agenda had a lot of things, but it mostly highlighted the Success of Volunteering and the Power of Selfless Contribution.

There were many Events and Sessions since Morning, Notably

  1. Highlights of Various iSPIRT programs like Playbook Round Tables, iKEN, InTech50, SaasX, etc.
  2. Health Tech, M&Connect are tracks which promise a lot for the Startup Entrepreneur
  3. Ecosystem Policy Nudging Programs
  4. India Stack and the FinTech Revolution brewing currently.

But the Most Notable one was Celebrating the Spirit of ISPIRT.

Spirit of ISPIRT

This video below tells the Celebration of the Spirit of ISPIRT, better than words can describe.

Conclusion

India will Innovate for the next 6 Billion. The dream of a Product Nation will be realized only by harnessing the Collective Energy of millions of Change Makers. People who create great poetry by being on the arduous journey of a Volunteer, of a Selfless Contributor. The Spirit of ISPIRT is best embraced by getting your hands dirty, focusing on small, mundane, and gritty details to do whatever it takes, to positively affect the outcome of initiatives. That is what Power Volunteers DO, & that is what gets Celebrated. Join the Movement & say Cheers to the Spirit of ISPIRT!

3 Years of Volunteering to enable hundreds of experiments to blossom

AnHRA0C0tF4mI0qO-9WAwf-AXl383SqEDMGC9He_wzNoOn Saturday, I was going to attend 3rd year anniversary event of iSPIRT On the way on my bus to meeting, my mind was filled with varied thoughts about 2010 or earlier, when I was outsourced product start-up employee. Looks like little time ago, 6 years has passed from 2010 when I met the volunteers of NPC. Sharing comments to volunteers (Avinash, Rajan, Vijay, Manju, Suresh) on lack of “Made in India” products, I learnt that their thoughts were similar and more advanced. In addition, while I was talking, they had larger dream to create ecosystem where tech geeks are proud of creating products and the first baby step to create pride to come with products was NPC event.

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For a regular visitor in technical meetups of BLR and volunteer for education and health activities in the weekends, their volunteering style spoke more about the volunteer’s real intent. More interaction made me realize that contribution mattered more than the person’s experience or position. This was firs time I heard people work selflessly as part of industry forum and became curious to understand their concept better, leading to a sense of respect for volunteers, motivating myself to volunteer for NPC 2013. In 2013, iSPIRT was formed as new initiative with focus to create a product nation and volunteers drive the vision of iSPIRT. Today, I continue to see the volunteering spirt even today to be similar or better than my experience in early 2010. Hence I have planned to spend whole day to attend 3 In 2013, iSPIRT was formed as new initiative with focus to create a product nation and volunteers drive the vision of iSPIRT. Today, I continue to see the volunteering spirt even today to be similar or better than my experience in early 2010. Hence I have planned to spend whole day to attend 3rd year anniversary function of iSpirit. This blog represents what I learnt about growth of iSPIRT in 3 years. When the first session on “PlayBooks” started, I started to recall that iSPIRT had started to offer Playbooks as first learning program. Playbooks used to represent all programs offered to start-up entrepreneurs. Targeted entrepreneurs on application were invited to participate in playbooks based on specific stage of their start-up. Being in the ecosystem, I am aware of

      • All programs and events are free for participants. Participants apply to attend program or event with details about their startup and applicant registration is approved based on their suitability to programs theme and approved participants attend event for free.

 

 

    • Programs and events focus to impart learning for a category of start-ups that are present in specific stage of their journey namely start-up enthusiasts, Discovery, Product Market Fit and finally Scale To Grow.

 

6The session shared that iSPIRT is offering 3 learning programs and 3 knowledge events. I did not realize that I myself have been attending some of these events. I still see absence of programs and events for the Discovery stage yet, difficult and tricky stage to cross.

iSPIRT has come with a matured structure around programs and events termed KASH Playbook Framework. Playbook are no more a program and had become umbrella representation for all programs. What does KASH represents?

  • K – Knowledge
  • A – Attitude (Mindset)
  • S – Skills
  • H – Habit

Been an entrepreneur, I can relate with KASH as learning theme for programs offered to entrepreneur’s because all programs aims to impart entrepreneur to gain knowledge, develop a mindset, learn skills, identify habits and practice the same to empowers entrepreneur in current stage to create/generate KASH leading to transition from current stage to next stage.

First pic - 3 years

My view of RoundTable is to help happy & confused startups with product market to scale business. I learnt RoundTable (K, S) continues to be an informal closed door interaction (~4 hour) among entrepreneurs and practitioners facilitated by saddle entrepreneur to learn tacit knowledge & skill. Roundtable started as first program of iSPIRT in 2013.

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My view of PNGrowth is to help scaled startups with product market fit to grow leaps and bounds. I learnt PNGrowth (A) is 3 day bootcamp to shake up and instill ‘Panga’ Mindset requisite for category leadership, followed by a 1 year community support. The first program was in 2016 at Mysore The 3 learning events Innofest, SaaSx, InTech50 are focused on large participants. My view of Innofest is to help creators to explore possibility to transform their creation/hobby in to business. I attended the first I attended the first Innofest (A) that happened in Aug 2015 in Bangalore and nice to hear the event travelled to Hyderabad. I wish that sure more cities are eager to conduct event to help innovators take pride in their products and show case them, get feedback of their application in reality. This is “No copy paste entrepreneurship”. My view of SaaSx is that new entrants gain insights in to the tribal knowledge of experienced SaaS folks which helps them to make their offering better more efficient. SaaSx(K) event is to create & nurture community of SaaS entrepreneurs in India at the SaaS capital of India – Chennai. The first event happened in Chennai in 2014, followed in 2015, which I attended and can vouch for the fact that SaaS entrepreneur’s shared their deep intimate learning with others. My view of InTech50 is as experiment with difference. Instead of startups working hard to engage and partner with large corporates with their product offerings, can we make corporates to come together and engage with startups and share feedback and evolve in to partnership. Reversing approach of startup Push model to build relationship and engagement to Corporate Pull model.  InTech50 showcases software products created by Indian entrepreneurs, with aim to help software product companies to enter global markets via our network of early adopters, partners, co-innovators and investors. Companies apply and Chosen companies receive advice, on-going mentoring, product marketing support, and funding to scale in the global markets. This program comes with a cost cover expenses for two attendees and event logistics. 13
Another session I focused was on “India Stack: Powering thousands of experiments”. Before jumping to understand India Stack and session contents, it is good to start with some history in India of how absence of legacy era in telecom and internet has become Indian advantage over time. With absence of telecom legacy, India skipped analog era and leapfrog to digital era of STDs, leading to leapfrog to mobile usage. With absence of internet legacy, India skipped PC based internet and had leapfrog to era where internet technology is available to every Indian via mobile (computing device of choice). Look at the money savings for India from not having to spend to build legacy infrastructure that becomes obsolete with advent of new technologies and money goes waste.

This enables every Indian to access and consume service offered by internet software and mobile apps over internet. It is time to dream and create experiments to leverage this leapfrog benefit to enable Indians to leapfrog to make use of digital applications and the Indian government has jumped in to same with Digital India campaign. One see two fundamental changes happening.

  1. Every Indian can access and use mobile apps, with mobile phones in hands of every Indian.
  2. Every Indian is getting used to electronic banking and payments fueled by e-commerce players.

iSPIRT wants to dreams along with Indian government with belief that this is right time that Indian entrepreneur’s need to leverage Digital explosion wave expected in India soon. One can dream in terms of how technology can be leveraged to create financial inclusion, how apps can create positive interventions in areas of education and health care. When you dream, you are motivated with the potential to leapfrog tech-starved Indians to tech- savvy Indian.
12Dreams are ideas to start with. Dreams need to follow with action to reality. For such a dream to happen, iSPIRT has seen itself a role to contribute to seamless working between entrepreneurs and with government agencies and regulators and has started to proactively engage with government. This joint engagement with stakeholders of Indian government enabled iSPIRT to propose 4 recommendation to serve as backbone for Indian government to realize the dream of Digital India.

          • OpenAPI Policy objectives recommended for Digital India programs

 

      • 7 key principles for to be adhered for implementing Digital India programs.

 

      • Technology Stack to serve as baseline for developing apps for Digital India

 

      • India Stack to serve as baseline for implementing Digital India.

 

              iSPIRT has recommended these OpenAPI policy objectives

          1. Software interoperability: APIs are recommended for all e-governance applications and systems, enabling quick and transparent integration across these applications and systems.

 

        • No Government Silos: Information and data shall be shared through a secure and reliable sharing mechanism across various e-Governance applications and systems.

 

        • Data available to public: Make people’s data public. Provide APIs to enable people to view data.

 

        • Baseline guidelines for Implementers Provide guidance to Government Organizations to develop, publish and use these Open APIs

 

  iSPIRT has recommended these 7 key principles to be followed in developing application by government and integration layer with government applications. 3
The 3 learning programs IKEN, RoundTable and PNGrowth are focused on limited participants.

My view of IKEN to help startup enthusiasts aware of challenges to enable self-assess of their strengths and to identify needed self-improvements. I learnt IKEN (S, H) is a 10 weekend boot-camp for early/Novice entrepreneurs and startup enthusiasts and focuses on life skills of an Entrepreneur along with business skills. The first program was created in 2015 in consultation with effectuation with Prof Saras and happened multiple times in Bangalore.

Picture 2 - three years

Based on OpenAPI Policy and guideline principles, here is robust technology stack recommended for creating innovative solutions to India’s hard problems.

Picture 3

With payments being accelerated by regulatory Innovation and a continuous rise of smart phones, here is robust solution stack recommended for developing Digital India applications.

Picture 4

What I liked about iSPIRT is

  • Supporting entrepreneur’s with learning that they need and that is not easily available.
  • Focus to get feedback for their initiatives and working to bring a structure to their work.
  • Contribute by promoting and facilitating the use of IndiaStack creating curiosity and real interest.

If APIs are made open, secure and available for developers (through sandbox), I am sure iSpirt would jump to volunteer to evangelize IndiaStack APIs and promote IndiaStack APIs through Hackathons and developer Events.

To end with, Saturday meeting made me realize that iSpirt has matured from an unstructured volunteer initiative for entrepreneurs and is on the path to become think tank to create product nation.
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Guest Post by G. Srinivasan

2016 iSPIRT Annual Letter

AnHRA0C0tF4mI0qO-9WAwf-AXl383SqEDMGC9He_wzNoSeven years ago a band of volunteers came together to move the Indian software product ecosystem into the next orbit. Three years ago this movement became a think tank, iSPIRT. We pioneered the idea of building public goods without public money in India. Today, India has many software product Unicorns and many more are in the making. We are doing one M&A a month. India Stack is reshaping many sectors especially the financial sector. And, the Government of India recognizes the power of startups and have started changing their systems to enable us. This has been a long and a fun journey for us all. This letter captures what we have been up to, our learnings and our dreams.

Bharat Goenka, Jay Pullur, Naveen Tewari, Sharad Sharma, Vishnu Dusad

Governing Council, iSPIRT Foundation, 4th Feb 2016

 

iSPIRT’s Stay-in-India Checklist gains further traction: RBI and MCA follow the Startup India Action Plan

Several notable announcements have been made by RBI and MCA pursuant to iSPIRT’s Stay-in-India Checklist (discussed in my earlier post here). In its bi-monthly monetary policy statement released earlier today, RBI has stated that it will take steps to contribute to an ecosystem that is conducive for growth of startups. It is noteworthy that each of the points in the policy framework released by RBI has attempted to address specific issues set out in iSPIRT’s Stay-in-India Checklist. As a member of iSPIRT’s Stay-and-List-in-India Policy Expert Team, it is a proud moment for me to see the result of months of interaction with various authorities on the Stay-in-India Checklist.

IMG_2447The policy changes announced by RBI are as follows:

  • Startups in all sectors will be permitted to receive investments from foreign venture capital investors (FVCI)
  • Transfer of shares from FVCIs to other residents or non-residents will be allowed
  • Permitting receipt of the consideration amount on a deferred basis as also enabling escrow or indemnity arrangements up to a period of 18 months, in case of transfer of ownership of a start-up
  • Enabling online submission of A2 forms for outward remittances on the basis of the form alone or with document(s) upload/submission, depending on the nature of remittance
  • Simplifying the process for dealing with delayed reporting of FDI related transaction by building a penalty structure into the regulations itself
  • Issue of shares without cash payment through sweat equity or against any legitimate payment owed by the company, remittance of which does not require any permission under FEMA
  • Collection of payments by start-ups on behalf of their subsidiaries abroad

In addition to the above, the following Stay-in-India Checklist points have been deferred for consideration with the Central Government.

  • Permitting start-ups to access rupee loans under ECB framework with relaxations in respect of eligible lenders, etc.
  • Issuance of innovative FDI instruments like convertible notes
  • Streamlining of overseas investment operations for start-ups
  • While the above announcements by RBI are encouraging (and extremely fulfilling, given the role iSPIRT’s Stay-in-India Checklist has played), it is important that these relaxations are not limited to the category of startups that are eligible to benefits under the Startup India Action Plan.

In addition to RBI, several key MCA points from iSPIRT’s Stay-in-India Checklist have been discussed in the report of the Companies Law Committee which was submitted to the Government yesterday. These issues are as follows:

  • Reducing private placement process for issuance of securities
  • Excluding convertible notes (convertible into equity or repayable within 5 years from the date of issue, if issued to a person with a minimum investment size of INR 25 lakhs brought in a single tranche) raised by startups from the definition of deposits
  • Allowing startups (which are incorporated as private companies) to raise deposits from members for the first 5 years without any upper limit
  • Simplifying the procedure to convert an LLP into a company
  • Deleting insider trading provisions
  • Allowing startups to issue ESOPs to promoters working as employees or directors
  • Excluding certain private companies under the purview of the definition of ‘listed company’
  • Simplifying the incorporation process

Again, while it is heartening to see this extent of action by the authorities on iSPIRT’s Stay-in-India Checklist, it must be ensured that not everything is linked to the definition of startups announced in the Startup India Action Plan.

photozzLastly, while the RBI has positively stated that it will notify certain changes soon, all of MCA issues and a majority of RBI issues are still at a ‘discussion/recommendation stage’ (and have been merely acknowledged by the authorities as issues that need to be resolved). Hopefully, the authorities will not stop here, and will implement all these changes soon. Needless to add, iSPIRT will keep interacting with, and assisting, the authorities in achieving a quick closure to these items, as well as the remaining issues which have not yet been touched by the authorities.

PNGrowth – An Experience that transformed…

Getting up at 4am in the  morning and discovering 200 founders lined up at Madiwala, to catch the bus before the scheduled departure, instantly reminded me of  the huge line of techies in front of the American Consulate at Annasalai for my H1B visa, two decades ago 🙂

What a transformation India has gone through!!  I have no doubt in my mind that India has started a new innings and is steadily transforming into a Product Nation.

Finding Your North Star

Day One was all about defining the Vision, Goals and the Scope of our respective companies. Aaron Chatterji, from Duke, started with this analogy “Finding Your North Star” – which is about identifying that one thing that will give you direction when you are lost in the middle of nowhere. He then, conversed with  Pallav, from FusionCharts, on his “North Star”; which was then extended to an elaborate discussion on why it is important to manifest a sustainable belief statement and focus hard to keep things open and adapt to environmental changes that may occur in the future. Pallav further elaborated this with a few examples. I will pick one of them –  Adobe believes that they will help people create digital assets and publish them in an easily and creatively. Twenty years back, it was consumed by DTP(Desktop publishing) centers, then web design, and now it’s digital marketing. But with all the changes that happened over the past twenty years, their belief statement  still aligns with what they do!

Then, it was time for an “empathy interview” –  where two founders interviewed each other  in turns. Here, we tried to put ourselves into the other person’s shoes and see how we can help the other side to discover and/or realise things that he/she can’t see otherwise. If you care for someone, then you won’t be afraid to be brutal in your opinions, and that helps the person you care. So, the intent of this exercise was to get brutal, if required, and make the other person realise what they have not realised till date. On day one, everyone got tensed with all the harsh feedback from mentors like Sharad Sharma and Kunal Shah; as both of them did their best to convey the message to all the participants – that they are here to become the category leaders in their space. I guess the intent was to ignite that fire, and make participants realise they need to get their act together, if at all they want to become the category leaders in their respective spaces. You could see that people went to bed with long faces 🙂

Unfair Advantage

Day two was about discovering our unfair advantages and leveraging the ecosystem.

Aaron Chatterji from Duke started the day with beautiful remarks and helped people understand the semantics of “Unfair Advantage”. Sharad Sharma took the stage and in his usual style asked people who they are taking a “Panga” with, he then gave a case study of Sridhar Vembu from Zoho and quoted him (from the NASSCOM Emergeout event 2009), “watch out guys, I will be coming with products, which will take away your business!” Then Sharad was in the fact-taking “Panga” with all the service companies in the Indian software ecosystem. And now, Zoho is the  leader in it’s space. So the message was very clear –  if you want to become a category leader in your space, you have to take a “Panga” with someone, you have to disrupt somebody, it may be a company or a system, but you have to take a “Panga” and Sharad was aggressive while saying this.

Then Shankar Maruwada took the thread and asked the participants to travel to the future, and assume that Forbes India has just listed them as a part of the ‘Top 100 Richest Indians’ and asked everyone to list out the unfair advantage that helped them become successful. Participants were given 5 minutes… you could feel 200 entrepreneurs churning inside the cores of their body and mind and it was indeed a powerful realisation. The mentors were visibly happy that the participants were putting in real effort to discover themselves, with tools provided to them. Aaron then spoke about various resources and capabilities that could be potential advantages to the entrepreneurs, and then we all carried out the exercise of identifying the “dhobi list” of all possible resources and capability that work as an advantage to our businesses. Then, we slowly filtered the list using a few parameters like ‘valuable’ and ‘can’t be copied.’ We did a few more exercises to identify the top two or three unfair advantages, that help us be a category leader. Later in the day, we went through another critical aspect, where we went through a bunch of worksheets to identify our IPO (Information, People, Organization) that can potentially help us become category leaders. IP Framework is a very powerful tool which enables entrepreneurs to leverage the ecosystem, while building powerful companies and creating substantial value. The second day was very satisfying, and I saw many  gratifying faces during dinner time. The Infosys Campus was beautiful and green, but there was no place to hangout and have bonding sessions and fun with fellow entrepreneurs ; so, a bunch of us went out to a local pub, and to our surprise they arranged a campfire and we had loads of fun. We discovered two spontaneous and outstanding stand up comedians, who can make you laugh till you drop !!!

Action Plan

Day three was about creating an action plan and refining it via ‘SharkTank-style grilling’ interviews with mentors. Aneesh Reddy from Capillary was at his usual best in sharing how to grow, how to focus on things that matter today, and then derive an action plan accordingly. Everybody was asked to create a “laundry list” and then continue eliminating till they were left with the top two action items. The Sharks (Mentors) then picked a few entrepreneurs they wanted to grill. It was more like the “empathy interview” we did with fellow entrepreneurs. The intention here was to ensure that each one of us were made aware of the tools we had in hand to go fight it out, and increase our chances to become category leaders. Through all three days there were mentors and coaches all around us, who were helping entrepreneurs brainstorm and refine their gameplan to win, and win profoundly. It was a life changing event for many, including me, here are three essential things that I learned:

    • Have a sustainable belief statement with focus on function, so it will be easy to evolve and adapt to environmental changes  that may occur in the future
  • Having a strong disagreement is not enough, take a “Panga” with whoever (company or system) you are disrupting
  • To take a “Panga”, you need to have tools; so identify your ‘Unfair Advantage’ (read as Brahmastra)

It was a great experience for me and it was wonderful to see people like Phanindra Sama, Aneesh Reddy, Shankar Maruwada and other mentors going out of the way in helping the entrepreneurs.  

 

Folks at work @PNgrowth #pngrowth pic.twitter.com/0cgLRLYIBc

— Ankur Agarwal (@annkur) January 9, 2016

I have also attempted to capture some experiences from fellow entrepreneurs –

Harshit Agarwal  from Appknox: We are too busy in building our business and we don’t get enough time to come out of that loop and think from outside about where are we heading and what is our vision. PNGrowth helped us realise that we need to have a proper plan and we need to know our unfair advantages and make a growth plan accordingly. Mentors, who had gone through this journey and built successful companies shared their experience and worked one-on-one with us to make an impact. For sure, a majority of us came back with a proper executable plan to make sure we are category leaders in our space.

Suneil Chawla from Influencer.in: PNGrowth was a one-of-a-kind experience – having 200 fellow founders and some very successful founders like Kunal from FreeCharge, Anish from Capillary, Phani from Redbus –  all spending time together over a weekend with only one goal: creating category leaders who innovate and have an unfair advantage against other players in their chosen markets. Personally, it really helped us to get valuable inputs and feedback from 20+ founders and nearly 10 startups keen to launch ‘Influencer marketing’ campaigns. We also had a bunch of startup founders from Chennai and I’m sure we will continue our new friendships. Sharad and the entire Product Nation team drove this fabulous initiative as volunteers  – we definitely need more such initiatives to become a Product Nation.

Paul Mathews  from nethram.com: This was no ordinary conference or workshop. We got the taste at the end of the first day, when Kunal (Freecharge) and Sharad (iSPIRT) did not mince words, and told us that we have to call each off other’s ‘BullShit.’ The mood shifted from then on. Becoming a category leader is not easy; you need an unfair advantage; need to take a panga (fight) with a leader; and need to stay focused on an action plan for 10x growth. This was no ‘feel-good’ seminar. Calling this a BootCamp is an understatement.

Jaineel Aga from Planet Superheroes: 3 days of a turbo charged environment, where entrepreneurs from all walks of life had only one thing on their mind – Displace the incumbent, take the “panga” and not settle for mediocrity. With solid frameworks backed by academic research by professors of Entrepreneurship from Duke and Stanford, and corroborated by real life learnings from arguably the best in the business, this program and experience over three days would outshine most “entrepreneurship” programs in business schools.  After 3 days, I have been left with a razor sharp vision for our business, solid framework and metrics to track and lastly, the one that I value most – a  network of 200+ entrepreneurs and industry mentors whose support, feedback and bonhomie will be the necessary fresh air while traversing the circuitous and lonely journey to the top.

Osho Sidhant from craftemporio.com: We get so busy doing things that we forget to check if we are doing things which will bear fruits. In the life of an entrepreneur, it is critically important to do only the right things because resources are limited and every wrong step potentially takes you behind in terms of time. PNgrowth was an event which has trained our minds to run in the right direction. For the three days at the bootcamp, we were compelled to rethink our strategies and what it will take to be a category leader. The talks of seasoned entrepreneurs like Phani, Kunal, Aneesh, Pallav further let us know the highs and lows of entrepreneurship, and to keep our minds and hearts at peace.

Ravi Datanwala from AppICE.io: The best investment for any founder aspiring to be a category leader and taking a #panga with the incumbents. Knowledge sharing by those who have been there and done that and how they did it – was very insightful and helped me make the necessary corrections in our planning and execution. It helped train our mind on how we should be razor-focused on the short term goals to get to the next innings, whilst building the right long term goals for our success. Do #epicshit and learn to say NO. The best way to say thanks to all the organizers and program mentors would be to put the learnings into action and show them how you are on the path to becoming a category leader and being a part of the Product Nation.

Ajay Chanam from halfsteprock.com: PNgrowth will prove a game changer for not only the companies that participated and benefitted through its extensive learning program, but also for India as a whole in terms of our ability to produce the next wave of innovative companies. While PNgrowth evidently seeks to help the first 200 startups, it also lays precedent for ‘Paying it Forward’ and companies will do it happily having experienced its power – first hand. The conventional mindsets are at the cusp of being torn apart, paving way for a transparent entrepreneurial eco-system and while companies will continue competing with each other, the new ecosystem will empower the better company to win and make the playing field more equitable for the Davids of the world (against the Goliaths of the world). It was one such experience for me – an experience of a lifetime, absolutely. I will never be the same, Half Step Rock will never be the same, and the  world will never be the same going forward.  So, get your gear, set the stage, check the sound. There are Rock Stars from every part of India who are now only waiting to be found!

Sarang Lakare from InTouchApp.com: Someone rightly said, if you want to make a great dish, you need to mix the right contents in the right amounts. PNGrowth was one such great dish, a delicacy if I may call it that, perfected by some of the most experienced Chefs from Stanford, Duke, and the Indian product ecosystem. When you give such a dish to 200 startup founders, you are bound to get healthy product startups out of it! One day, we all hope to make these Chefs proud for what they created for us.

The Road to Startup Exits – Think Next Roundtable Recap

$8B of venture investment went into Indian startups in 2015 alone! Four firms–Ola Cabs, Flipkart, Snapdeal, Paytm–accounted for 32% of these investments.  However, on the M&A side, things have been slow. Since 2011, there have been approximately 190 transactions valued at a total of $2.3B (about $11M per deal), placing India way behind the U.S., Israel, and other startup ecosystems.

I recently hosted a roundtable on M&A at Microsoft Ventures’ Think Next in Delhi, called “The Road to Startup Exits.” Our star panel consisted of Ashish Gupta(Helion Ventures), Deepak Gaur (SAIF Partners), and Abhishek Kumar (Snapdeal). Among a marquee audience of VCs, entrepreneurs, and senior execs from the industry, we discussed the present M&A scenario, its gaps, and the future.

Here is a glimpse of the insights generated during the panel:

  1. There is a slowdown in private markets globally, including in the U.S. and India. Valuations are expected to come down in 2016 and will cause grief for some investors, but the long term promise of India is in tact. In other words, there is no issue with fundamentally strong companies being built in India, but there is an issue with them being overvalued.
  2. This is a normal cycle for the startup/venture space: there will be several startups who will not survive the slowdown and will get integrated into other startups or corporates. A slowdown is actually good for the startups that survive – they can finally focus on getting their unit economics right, hiring the right talent and focus on what needs to be done to get to the next level. This also contributes to the ecosystem’s evolution, shaping the next waves of entrepreneurs and their offerings.
  3. Some recent examples of companies who had a solid team and business model, but that were unable to scale (subscale), are Qikwell (acquired by Practo for ~$50M), Exclusively (acquired by Myntra for their private label offerings), and Letsbuy (acquired by Flipkart). TaxiforSure’s (TFS) acquisition by Ola was about the power of financing–Ola had raised significantly more money than TFS, and at that point, TFS’s volume was still interesting for Ola and Uber, which justified Ola’s decision to acquire TFS.
  4. Large startups are more open to leveraging other startups and their offerings. For instance, Snapdeal has been a prolific acquirer of Indian startups (15-16 to date), primarily to plug their own gaps in terms of technologies, products or customers. For example, the product from Martmobi became the basis of Shopo, the C2C platform for Snapdeal. Freecharge was one of the fastest growing mobile wallets in the country and post-acquisition now has become Snapdeal’s payments business.
  5. Companies stay private much longer in the U.S. This will play out in India, too, and fewer companies will go for IPOs in coming years–and the ones who do might not consider doing it in India. The capacity of the India market to absorb large IPOs is restricted–there is limited float. Although regulations are becoming favourable, the India market today still has very stringent guidelines on public listing with very high levels of scrutiny and liability. Hence, listing a company in the U.S. is a lot more attractive, even for an Indian company.

In summary, 2016 is expected to see a slowdown in the funding space both globally and in India, which in-turn will drive an uptick in the number of M&A transactions as companies who are unable to raise their next financing round will seek an exit option.

Want to see the entire Think Next Roundtable? Watch it here:

3 Days to remember : 200+ Entrepreneurs , Inspiring mentors and a life-changing workshop – @PNGrowth 2016.

It was an eventful Friday morning – 7 buses with more than 200 attendees made their way to Infosys campus, Mysore, the venue for a 3-day entrepreneurial retreat.  #PNGROWTH 2016, was handcrafted by iSPIRT foundation and  academia professionals of  Stanford and Duke school of businesses for Indian Start-ups. Each bus was assigned a bus facilitator and Pallav Nadhani, who set the ice-breaker game rolling in our bus.

 

Infosys Campus, Mysore is one of the best campuses one can experience. We were highly-charged with great energy and enthusiasm after a delicious lunch that was arranged at the venue by the organizers.

PN Growth Collage

Enter, Day-1 Session.  

The agenda was focussed on crafting visions statements, setting goals and identifying scopes.  We were assigned partners, asked to exchange information about our company, our vision, goals and scopes and also gave feedback to one another.  Thanks to ways we’re programmed, our feedback was sugar-coated, attempted to never offend anybody with our brutal expressions. Little did we know that this exercise had a greater purpose until Sharad Sharma insisted  “Sugar-coating was never the name of this game!” The session was an eye-opener for many of us, as he explained that it was important to learn the art of calling out on somebody’s bullshit on their face. This exercise put every one of us into deep-thinking, unlearning and reconciliation.

Relevant Tweets:

https://twitter.com/sharads/status/686200805024608256

https://twitter.com/manjulogic/status/685732899727884288

https://twitter.com/prasanna_says/status/686800624772485120

Day 2 , 9th Jan Saturday

PNgrowth 2016, was essentially designed to construct a mindset wherein entrepreneurs need to ascend from just being profitable to becoming a category leader.  As the first step, each of us had to get to the grass-root level of what “unfair advantage” our businesses offer.  Adding to it, we were asked to analyze many other aspects of our businesses. The PN Growth ecosystem is so solid, that this mentorship program not only helps new-generation and budding entrepreneurs of product companies to learn from peers, but also strengthen the startup ecosystem with the sound knowledge on how to run a business like a visionary.  This one-of-a-kind experience of business modelling was presented to us based on combined efforts of industry unicorns and academic professionals from Duke & Stanford.

Tweets:

https://twitter.com/amitsomani/status/685728303479574528

https://twitter.com/SarangLakare/status/686126760451244032

Day 3, Jan 10th  Sunday

The enriching conversations and the beam of positive vibes injected by mentors is what made this retreat a fun learning experience.  It was Sunday morning and it never felt like it . The third day was designed to focus on putting every learning that we had gained over day 1 and 2 into action.  During this implementation, we were not only able to define action items for the early-stage and growth-stage of the businesses, but also understand and prioritize each of these action items. “Shark Tank”, one of the most valuable sessions at the event happened. Every participating company was given a 15-minute slot to present their idea. The mentors questioned us,  gave feedback and also guidance. This collaborative mentoring was priceless.  Our special thanks to all the learning coaches who took their precious time off their busy schedules to contribute to the community and a big shout out to the iSPIRT team,  especially Avinash Raghava and Sharad Sharma to make this event happen. Everyone of them have been a wonderful source of inspiration and exuberating great passion and energy.

Tweets:

https://twitter.com/prasanna_says/status/686191914043887617

PN Growth program has helped shape many of us to build great companies and for that, a great deal of thanks! We are now driven by this one superordinate goal of becoming a category leader. India is already proud of many such companies and many more will get there soon. They say “all good things come to end”– but for PN Growth members this is just the beginning!

Guest Post by Arvind Parthiban , CEO – Zarget (A/B Testing & Heatmap Software)

#StartupIndia Action Plan — Reactions from a “normal startup”

Last weekend witnessed a glitzy startup event. In many ways, this event was like every other startup event in India — founders of “unicorn” startups dispensing gyaan to the rest of us mortals interspersed by some disinterested folks featuring in hackneyed panel discussions on done-to-death topics in front of an uninterested audience who had suddenly rediscovered the hidden joys buried deep in their smart phones.

There was one difference though — the final keynote of the day was delivered by none other than the Prime Minister of the country where he drew up what was purported to be an action plan for Indian startups.

Predictably, this was followed by universal approbation and politically-correct reactions from our startup luminaries who declared this as a momentous day only marginally less important than the Second Coming.

Out of these, one quip stood out for me.

Vijay Shekhar Sharma, the founder of Paytm had this to say:

“The announcements by the government were more than what a normal start-up would have expected”

I am not quite sure what this “normal startup” that Vijay alluded to exactly is but if I were to hazard a guess, it probably means an average joe workhorse startup — one that is far from being a unicorn (like the one that Vijay himself runs) and has no rockstar founders, hedge-fund investors or nose-bleed valuations to boast of.

As it turns out, I run a company that qualifies precisely for being called a “normal startup”.

And for what it’s worth, these are my expectations around the aspects addressed in the announcements:

I don’t expect to be subject to a new “permit raj”

Apparently, to decide who can avail of some of the envisaged benefits, an Inter-Ministerial Board will be set up that will get to decide if a particular company is a startup or not.

As those of us who grew up in the “licence raj” pre-liberalization era will readily testify, requiring to be gated by a government-sanctioned body to avail of any benefits or privileges is the first step down a slippery road that leads to abuses and rent-seeking behaviours of all kinds.

I have no desire or inclination to run down the “permit raj” gauntlet again.

If at all, a set of gating criteria is unavoidable, they should have been simple and empirically demonstrable rather than having to depend on the whims of a board of any kind.

I don’t expect the government to become a VC or LP that chooses winners

The government has announced a corpus of Rs. 10,000 crore structured as a “fund of funds” that will be disbursed over a period of four years.

I am not sure if this is a fresh initiative or the same Rs.10,000 crore fund that was announced two years back — and of which, I have heard precious little since.

In any case, I have no idea why the government feels that it needs to support the Indian startup ecosystem with direct funding. It is not as if there is a dearth of capital for startups currently — billions of dollars of VC money was invested last year and most people in the know will tell you that there is 10X more money that is waiting on the sidelines to enter the country. All of these funds are run by professional investors who have a well-informed hypothesis on why they should invest in India and specifically in chosen Indian startups.

But it is, admittedly, high-risk capital — a high-stakes game of startup roulette operating under an extreme power law (a small percentage of “winners” will end up delivering more than 90% of the returns).

This is a game that the government has no business playing. Not just because it doesn’t have the skills or risk appetite of professional investors but also because it shouldn’t be in the business of choosing winners in any form — something that yet again can leads to all kinds of rent-seeking behaviours and cronyism.

I don’t expect tax waivers or hand-outs for my startup or my investors

Two of the announcements made are around taxation — firstly, startups who are vetted by the Inter-Ministerial Board are exempt from paying income tax for three years and secondly, any long-term capital gains will be exempt from tax if you invest it into the government’s “fund of funds”.

I am really curious what made the government to offer tax exemption —does it feel that Indian startups are incapable of competing on their own without these kind of sops?

As far as I know, no self-respecting startup entrepreneur would expect this type of hand-out. I, for one, would have no problems with paying the stipulated taxes as mandated by the law of the land in which my startup operates.

If this is an attempt to recreate the IT-services boom which ostensibly benefited from zero tax on export income, then it is an ill-considered and retrograde move.

Tax incentives artificially mask the inadequacies of the companies who require such hand-outs and this move gives out a signal that startups are not capable of competing in a free market without this kind of government support to boost their margins and returns.

Also, as and when these incentives play out their life cycle, it leads to drastic pushbacks and over-compensatory normalizations that defeat the basic purpose of the original incentive.

Finally, tax incentives inevitably lead to distortions and abuse — while “good” startups require no such hand-out from the government, “bad” startups — those set up to explicitly exploit these types of schemes for nefarious purposes such as money-laundering — will prosper. A classic case of adverse selection.

As far as exemption on capital gains go, this is again an artificial inducement that is more likely to throw up bad results than good — if people invest in startups simply because they can save on their capital gain tax, it is a very bad reason to invest! Angel investing is not for all and certainly not for the faint-hearted.

I don’t expect the government to make it easier for folks to start up

Under the proposed action plan, it would apparently be possible for folks to start up in a single day through a mobile app.

I am a loss to understand why this is useful or valuable and see this primarily as showboating (why a mobile app for instance?).

Is this an attempt to improve our ranking in the “ease of doing business” index?

Singapore is currently ranked one of the top-ranked countries in this index and it takes two-three weeks for you to completely set up your startup there. This is not significantly different from the time taken in India — what’s more, most of this can easily be outsourced and doesn’t really take up much of the entrepreneur’s time.

In any case, this is an activity that a startup has to go through just once in it’s lifetime — contrast this with the recurring reporting overheads that a startup has to face thereafter with assorted tax and labor departments which are far more taxing and cumbersome.

Finally, on a somewhat philosophical note, I am not quite sure why starting up should be a trivially easy operation — having some “pain” in this aspect is actually a good thing as it could filter out some of the folks who are not really cut out to be entrepreneurs in the first place! The current system is therefore a positive aspect as it is self-selecting.

I do agree that it should be easier to shut down companies but from what I understand, a bill addressing this is already pending before Parliament and the action plan doesn’t offer anything new in this regard. Also, this step is more useful to investors than to entrepreneurs themselves, so it is somewhat orthogonal to a plan that is targeted towards startups.

The others…

Now I have been running startups for a while and so, some of the points mentioned don’t apply to me as they target newbies.

I am not convinced that the government operating startup hubs and supporting incubation centers is a step in the right direction — the bottleneck in enablers like this has never been around infrastructure but rather on having the right mentors and guides. Nothing in the announcement contours suggested that this key gap is the one that the government is cognizant of attempting to fill.

For other announcements — such as self-certified compliance and subsidized patent filings, the devil is in the details and it would be premature to judge these one way or the other today.

What I actually expect…

So, as a “normal startup”, what do I actually expect?

This is what I would expect:

Boost sentiment by having a predictable policy regime

A lot of startups in my peer group have re-domiciled to Singapore. Nothing that has been announced in this plan will make any of these companies to reconsider the move.

These startups have moved to Singapore primarily because global investors see India as an unpredictable place to do business. Unfortunately, these sentiments are well-founded .

Take the illustrative example of a global major that acqui-hired a small Indian startup for what was essentially a rounding error in their balance-sheet — the actual acquisition was dragged on for over a year and the amount stuck in a holding account as the acquirer was made to run from pillar to post to explain why the value of the IP acquired was fair. This global major has now sworn off acquiring any more Indian startups!

Or take the example of companies like Flipkart that have had to migrate to Singapore because the policies around FDI in e-commerce are murky and/or inimical.

Unless the government address these structural issues around business and taxation policies at a fundamental level not restricted merely to startups, the state of things is unlikely to change.

Be a proactive customer to Indian startups

Rather than being a defensive regulator, the government should consider morphing into a proactive enabler that supports Indian startups — for instance, by being a customer for the products and services offered by us. The action plan does mention a few steps in this direction but the patronage mentioned extend only to manufacturing firms who are already in line to leverage the 20% procurement mandate for PSUs and others.

Double down on building out internet connectivity infrastructure

While a large portion of the Indian populace have come online over the last few years, there are still large swathes who are not connected. If large companies like Flipkart could be created on the back of 100 million Indians online, imagine how many behemoths could emerge from 500 million Indians being online!

Epilogue

As someone who runs a normal startup in India, I already am all too aware of the myriad risks and challenges of trying to build a world-class company out of here.

But none of this fazes me.

As an Indian, this is something that I signed up for with my eyes fully open.

I see the government’s announcement as a signal that it recognizes Indian startups as an engine for innovation and non-linear growth and am grateful for this “intent”.

That said, I would love to see the policies and execution around this intent to be done on the back of substantive discussions with Indian startups and representative bodies like iSpirt.

Only then can this intent translate into something meaningful beyond a superficial fest of circle-jerking and premature declarations of victory.

Startup Action Plan: Glass Half Full

Innovation and entrepreneurship are cornerstones of sustained economic growth. The Government has done well to recognise this by launching the Startup India Action Plan. The event was an unprecedented and resounding success. The energy in entrepreneurs, leaders of unicorns, seasoned investors, Government officials, etc was intense and, for most part, contagious. No doubt the Startup India Action Plan has provided various important exemptions and incentives to startups. However, the key question is this – Whether the Action Plan adequately addresses the irritants that make the Indian startup ecosystem unattractive? In our view, the answer is no.

iSPIRT has been closely associated with the Government in this endeavour, and had put together a list of thirty four key irritants that need to be resolved to arrest the exodus of Indian startups. The list is called the Stay-in-India Checklist. Of the thirty four issues, ten each came under the Revenue Department and the RBI, nine came under the MCA, and the remaining came under multiple departments such as the DEA, DIPP, RBI, MCA, and SEBI. Based on our analysis of the Action Plan and other announcements made, the present status looks like the following:

Startup Action plan

As noted above, only one RBI issue has been resolved so far (that too by way of a clarification during our discussion prior to the Startup India event). There was no announcement on any other RBI issues as part of the Action Plan. For creating a vibrant startup ecosystem, it is imperative that the investments from foreign sources are made easier. While the RBI, MCA, and other authorities had assured us that action will be taken on most of these issues (see the orange category above) once the definition of ‘startup’ is released, so far, there is no clarity as to when such action will be taken.

We will internally continue to interact on the outstanding (orange and red) items with the RBI, MCA, Revenue, and other departments. We hope that these issues will also be resolved by the relevant authorities soon.

#StartupIndia Little Action Plan

There was palpable excitement all around on June 16th as the much awaited Startup India policy was to be unveiled. Scores of intrepid, passionate, dedicated, knowledgeable volunteers from multiple groups had worked tirelessly for very many months advocating the need for the administration to recognise startups as legitimate 21st century vehicles for creating jobs and wealth in society. For this to happen, multiple sessions were held to educate, illustrate and showcase what startups had done for other economies and are beginning to do in India.


One of the great accomplishments has been to get the word “startup” accepted within the administration. Acknowledging that an educated highly talented set of individuals could come together to start an entity based on innovation and driven by technology and intellectual property was a major achievement. Because till then, the visual metaphor was of a safari suited micro and small business owner – much maligned in various soaps and movies – obsequiously dealing with multiple government agencies and not averse to bending the law and greasing the machinery!

It is said that the beginning of wisdom starts with definitions. Section A of the Action Plan details the definition of a startup which is quite acceptable. However, what is important is to see how language gets transferred into official government notifications and the law.

However, for a startup to get government tax benefits it has to receive a certification from an Inter-Ministerial Board that will be set up for such purposes! When such a Board will be set up, the composition of the Board, the frequency of their meetings, the discretion powers vested with this Board are all yet to be made known. Why not have An online self-certification mechanism for this with severe penalties for those misusing or misrepresenting their case?

A mobile app will be made available from April 1st of this year for the purposes of registering, filing, tracking, applying for schemes, by startups. Interestingly, though the hope is that it will be within a day, the Action Plan document doesn’t specify how long it will take for a startup company to be registered! And what the pre-requisites are eg does the Inter-Ministerial Board or the DIPP or any other approved 3rd party have to certify the startup?

Self-certification of compliance, via the mobile app, with 9 Labour and 3 Environment laws is a welcome move with a 3 year moratorium on labour inspection. But why not include simple self-certification compliance for all other laws too, eg secretarial and governance matters? And why not for say, 5 years? Especially when the definition of a startup talks of an entity that is less than 5years old?

The Action Plan aims to allow a startup to wind-down its operations in 90days after it appoints a liquidator/insolvency professional and pays off all creditors and sells the assets. This is a very welcome move as anyone who has attempted to shut a company down in India can attest that it is an almost impossible task. The Insolvency and Bankruptcy Bill 2015 (IBB) that’s pending in Parliament will detail the provisions of the fast-track and voluntary closure of a business. Till the IBB is passed and the details known, celebrations will have to wait. The PM even exhorted the audience to use social media to rally support for IBB!

Since April 2015, central and state governments and PSUs have to mandatorily procure 20% from micro, small and medium enterprises (MSMEs). This has been extended now to include startups. But only startups only in the manufacturing sector are eligible! Why not all startups? And in place of “prior experience/criterion” startups have to demonstrate “requisite capability to execute the project as per the requirements”. Whatever that means! With fears of the CAG audit, one can see how this will be implemented in practice.

Startups don’t have to pay Income Tax for 3 years. Well, am not sure if there are any startups that generate taxable income in the first 3years! Why not make startups exempt from all taxes for 5 years?

There is an exemption for investors with capital gains to invest in the government “Fund of Funds” and for investments in manufacturing MSMEs. This is just an extension of an existing provision. But is this exemption applicable to entrepreneurs (not just investors) who say, sell their house and invest in a startup? If not, why not?

Angel investors cannot claim the FMV certification exemption that now, thanks to this policy, includes incubators in addition to venture capital funds.

A clear liberal stock option policy, taxation policy, onerous compliance requirements for startups raising capital – either domestic or overseas – are other areas that will have to wait another day or the budget.

A Rs 10,000crore Fund of Funds, setting up a Rs 500cr annual venture debt scheme, encouraging the setting up of research parks, incubators and a country wide programme to spread the awareness of startups in schools and colleges showcase what the government does best, namely creating large national schemes with a grandiose hopeful vision. Clarity on how these will be implemented and more importantly managed and monitored and what kind of outcomes are planned will however have to await another day!

This Startup Action Policy flatters only to deceive. The reluctance of the state to disengage from the culture of command and control shines through. India jumped 12 places to 130 from 142 in the Ease of Doing Business Index 2015 thanks in large part to the improved power situation and not due to any radical change in procedures and laws!

The good news is that entrepreneurs are unstoppable and have, in spite of the best efforts of India’s crushing bureaucracy, demonstrated their abilities and established India as a global startup hotspot. The steps outlined in the Action Plan will only nudge them along faster. And that can’t be bad. India remains the country with enormous potential!

(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of iSPIRT.)

This article was first published on YourStory

Prof. Sharique’s(Stanford’s) email to internal iSPIRT community

Dear iSPIRT Family,

I wanted to follow up with an update from the PNgrowth team at iSPIRT. A little less than a year ago, a small group of iSPIRT volunteers proposed something unconventional:

We would run a bootcamp to jolt 200 growth stage entrepreneurs from India to aspire to category leadership. The bootcamp would combine learnings from strategy courses taught at Duke and Stanford with detailed case studies of Indian companies such as InMobi, Zoho, Paytm and more. More radically, we would eschew the Sage-on-Stage model for 3 days of active learning where founders worked with peer and mentor support to rethink their own startup’s raison d’etre. To provide as intensive an experience as possible we would have morning and evening breakout sessions and the bootcamp would be fully residential with accommodation, food and transport from Bangalore available to all participants. Finally, we would do this with only minimal cost to the participants. In early 2015, something of this complexity and scale seemed not just unconventional, but improbable.

As many of you know, last week a team of nearly 30 iSPIRT volunteers pulled off the PNgrowth bootcamp in Mysore for 200 growth stage startups. The response before and after has been tremendous, and we have learned much in the process. After the bootcamp, participants have taken to social media to share their experiences. A few examples on the iSPIRT blog:

https://pn.ispirt.in/top-10-observations-of-pngrowth-camp/

https://pn.ispirt.in/le-lo-panga-lets-make-india-a-product-nation/

https://pn.ispirt.in/whats-your-unfair-advantage-pngrowth/

And read the many tweets on #PNgrowth:

https://twitter.com/search?f=tweets&vertical=default&q=%23PNgrowth&src=typd

Now, with some experience under our belts, we hope to continue working with the PNgrowth participants over the course of the year, learning about their startups and providing help and resources when possible. But, if producing many category leaders from India is the ultimate goal, then even the best organized 3-day bootcamp will be insufficient. So, as 2016 begins, a small group of volunteers is beginning to reimagine even bolder ways to help India’s product entrepreneurs. The ideas are likely to be audacious and unconventional, but that might be what it takes.

Thank you,

Sharique
An incomplete list of the volunteers who made PNgrowth possible:

Aaron Chatterji – Duke University; Amit Somani – Prime Ventures; Aneesh Reddy – Capillary Technologies; Avlesh Singh – WebEngage; Kunal Shah – FreeCharge; Manav Garg – Eka; Manjula Sridhar – ArgByte; Nags – [24]7 Inc; Pallav Nadhani – FusionCharts; Phanindra Sama – Former redBus; Prasanna Krishnamoorthy – Microsoft Ventures; Sanat Rao – iSPIRT; Sanjay Deshpande – Uniken; Sanjay Shah – Zapty; Shankar Maruwada – EkStep; Shekhar Kirani – Acces; Sumanth Raghavendra – Deck; Avinash Raghava – iSPIRT; M. Thiyagarajan(Rajan) – Intuit; Sandeep Todi – Remitr; Rohit Veerarajappa – Wow Labz; Praveen Hari – Thinkflow; Manu Jolly – Student; Tanish Thakker – Zone Startups; Rem Koning – Stanford GSB; Sharique Hasan – Stanford GSB; Solene Delecourt – Stanford GSB; Randy Lubin – FactoryX; Gokul K S – PNgrowth; Sairam Krishnan – iSPIRT; Hrishikesh Kulkarni – Freshdesk; Senthil Kanthaswamy – Freshdesk; Sharad Sharma – iSPIRT.

Sign Startup Bridge Petition and promote Stay-in-India Checklist

Today’s Economic Times carries an article about “The Dark Secret of India’s Start-up Boom”. This implores the Modi Government to make bold moves regarding the onerous regulations that startups face.

iSPIRT is also part of the new Startup Bridge India campaign, which urges the Indian government to adopt best practices from around the globe to help startups start, flourish and exit.  We’ve been working alongside a consortium of lawyers, think tanks, entrepreneurs and venture capital firms from TiE Silicon Valley to put together detailed legal language and fixes in the current policy. Startup Bridge India is hosting an online petition that demands simpler processes for investing in India’s future, a petition intended to show widespread public support for these important initiatives. Every signature matters and timing is critical to help bring about much needed policy change. You can sign the petition on startupbridgeindia.com.

iSPIRT has been involved in nitty-gritty work with the Government in the past 75 days around its Stay-in-India Checklist. Here is what’s been happening…

What is Stay-in-India Checklist?

More and more technology startups are being forced to redomicile to Singapore or US due to a host of policy irritants that disparage the Indian startup ecosystem. After careful consideration, iSPIRT’s Stay-and-List-in-India Policy Team identified 34 key issues that need to be resolved immediately to stop this exodus. The list includes issues covering incorporation, fund raising, operations, taxation, exits, closure, payments, and intellectual property.

How was it created?

We looked at submissions from TiE, NASSCOM, IVCA and FICCI and put them into a single spreadsheet. After de-duplication we had about 120 items. These were then classified into hygiene and incentives categories. Based on consultations with startups, the hygiene set was further refined to create the Stay-in-India Checklist.

What are some of the key items on Stay-in-India Checklist?

The Checklist includes requests for favourable IP tax regime, harmony in taxation of listed and unlisted securities, relaxed external commercial borrowing norms, faster incorporation and liquidation processes, and permitting convertible notes, indemnity escrows, and deferred consideration in foreign investment transactions.

Who manages the Checklist?

iSPIRT Stay-and-List-in-India Policy Expert team managed the Checklist. The team has 7 members – two startup CFOs, two VCs and three tax/legal experts. Mohandas Pai as the mentor to the team.

What’s been the progress on the Checklist?

The Checklist received mixed responses from the regulators. While certain items (like permitting share swap as a valid method of share transfer in FDI transactions) were allowed during the discussion process itself (hence removed from the Checklist), the regulators were hesitant in permitting other items (such as tax exemptions). Largely, the regulators were receptive to the suggestions. We had detailed discussions on each item of the Checklist with the relevant regulators. Wherever the regulators were unable to implement our suggestions, they conveyed to us the concerns that restrained them. We hope these concerns are alleviated in due course, and they are able to implement all suggestions.

What are some of the key meetings that have taken place?

We have a good partnership with Mr. Amitabh Kant, Secretary, DIPP on this. His office has setup about two dozen meetings with the relevant regulators. In these meeting, iSPIRT plays the role of being the subject matter expert on items in the Stay-in-India Checklist.

The whole process kicked into high gear after an intense and productive meeting with Mr. Amitabh Kant on Oct 23rd and with Dr. Raghuram Rajan on Oct 24th. This was followed by a meeting with Principal Secretary, Mr. Nripendra Mishra at PMO on Nov 9th. Subsequently, meetings with Revenue Secretary and MCA Secretary took place. These led to numerous follow-up meetings and calls with relevant officers. Nakul Saxena has coordinated all these meetings.

What are some of the learning’s from this effort?

There is very little awareness about the world of technology startups. So education on the realities faced by the startups is critical. Sometimes one runs into situations where the issue can be closed without much effort. At other times, the dichotomy between regulatory agencies is most frustrating. Also, because of the way liberalisation of regulatory framework has been widely misused in India, the authorities exercise great caution before liberalising any regulation. The approach, therefore, is to not permit any ‘risky’ regulation, rather than punishing those who misuse it. Overall, we find the receptivity of the government agencies is good. Our positioning of being a think tank, focussed on the national agenda, rather than being a tradebody is helping a lot as well.

Guest post by Sanjay Khan, Khaitan & Co

The Dark Secret of India’s Start-up Boom

The Modi Government has made bold moves on the world stage. Its now time to make one at home!

By Mohandas Pai & Sharad Sharma

New-age startups are making waves. Flipkart has redefined retail. Ola is changing how we travel by taxis. PayTm is at the threshold of disrupting banks. Forus Health is attacking blindness with gusto. Eko is bringing financial inclusion to millions. Team Indus is on its way to land a rover on the moon. Nowfloats is bringing lakhs of businesses online. Pick any sector, even agriculture, and you’ll find a new-age startup gamely trying to bring about change.

These new-age startups are not like our traditional small businesses. They are peculiar in many respects. For one, they don’t play safe. They take on incumbents that are many times their size. They seek out David versus Goliath battles. They have a ‘panga’ mindset where our traditional small businessman was all about ‘dhanda’. This craziness in their DNA makes them wonderful change agents. No wonder, these new startups are transforming India from within.

We are blessed to have these new-age startups. It turns out that this new species of small businesses thrives only in a few places in the world. The most famous locale is, of course, Silicon Valley. Europe, unfortunately, is a veritable desert. South America has only Chile as a small oasis. Asia, however, looks really promising. Israel became a startup hub first, then China and now India. We are now the third largest startup ecosystem in the world.

But there is something dark about India’s startup boom. Six of the eight Unicorns have domiciled themselves outside India-in Singapore or US. In 2014, 54% of all new-age startups raising money chose to domicile outside India. Last year this number grew. It is estimated to have crossed 75%! This points to a big problem.

You might wonder why it matters where Flipkart is domiciled. For starters, when Flipkart has its IPO, Indian citizens won’t get a chance to participate in it. Worse, the intellectual property of these redomiciled companies moves to their new home. But the worst is that the money that the founders and investors make at the time of an IPO or an M&A goes to their foreign bank accounts and tends to stay there. It stymies the creation of Rupee risk-capital system in India. It makes are startups almost fully dependent on foreign capital leaving most of them starved and under-capitalized in their early years.

Startup India is an opportunity to stop the exodus. It turns out that only 34 issues, across Ministry of Finance, RBI, Ministry of Corporate Affairs and Ministry of Commerce, need to be tackled. Work has been underway on them since 23rd Oct and 60% of the issues seem to be on their way to a resolution. But this 60% fix is a recipe for failure. Unless all the 34 items are resolved, exodus will not abate. Just one friction point is enough to send the startup to Singapore, where, a welcome band awaits.

Anything that we do in Startup India without addressing the issues on the Stay-in-India Checklist is a gift to Singapore. The Modi Government has made bold moves on the world stage. Its now time to make one at home!

Mohandas Pai was the CFO and then the head of HR at Infosys. He is now Chairman, Aarin Capital Partners.

Sharad Sharma was the CEO of Yahoo India R&D. He is a co-founder of iSPIRT, a non-profit think tank that wants India to be a product nation.