Scaling Good Advice In India’s Startup Ecosystem – A Research Paper On PNGrowth Model

In January 2016 iSPIRT ran the largest software entrepreneur school in India, called PNgrowth (short for Product Nation Growth).  The central vision of PNgrowth was to create a model of peer learning where over 100 founders could give each other one-on-one advice about how to grow their startups. With peer learning as PNgrowth’s core model, this enterprise was supported by a volunteer team of venture capitalists, founders, academics, and engineers.  See iSPIRT’s volunteer handbook (https://pn.ispirt.in/presenting-the-ispirt-volunteer-handbook/)

However, unlike a regular “bootcamp” or “executive education” session, the volunteers were committed to rigorously measuring the value of the peer advice given at PNgrowth. We are excited to announce that the findings from this analysis have recently been published in the Strategic Management Journal, the top journal in the field of Strategy, as “When does advice impact startup performance?” by Aaron Chatterji, Solène Delecourt, Sharique HasanRembrand Koning (https://onlinelibrary.wiley.com/doi/10.1002/smj.2987).

TLDR: Here’s a summary of the findings:

1.
 There is a surprising amount of variability in how founders manage their startups.  To figure out how founders prioritized management, we asked them four questions:

“…develop shared goals in your team?”
“…measure employee performance using 360 reviews, interviews, or one-on-ones?”
“…provide your employees with direct feedback about their performance?”
“…set clear expectation around project outcomes and project scope?”

Founders could respond “never,” “yearly,” “monthly,” “weekly,” or “daily.”

Some founders never (that’s right, never!) set shared goals with their teams, only did yearly reviews, never provided targets, and infrequently gave feedback. Other, super-managers were more formal in their management practices and performed these activities on a weekly, sometimes daily, basis. Not surprisingly, the supermanagers led the faster-growing startups.  Most founders, however, were in the middle: doing most of these activities at a monthly frequency.

2. Since PNGrowth was a peer learning based program, we paired each founder (and to be fair, randomly) with another participant. For three intense days, the pairs worked through a rigorous process of evaluating their startup and that of their peer. Areas such as a startup’s strategy, leadership, vision, and management (especially of people) were interrogated. Peers were instructed to provide advice to help their partners.

3. We followed up on participating startups twice after the PNgrowth program. First ten months after the retreat, and then we rechecked progress two years afterwards.

We found something quite surprising: the “supermanager” founders not only managed their firms better but the advice they gave helped their partner too.  Founders who received advice from a peer who was a “formal”  manager grew their firms to be 28% larger over the next two years and increased their likelihood of survival by ten percentage points. What about the founders who received advice from a laissez-faire manager? Their startup saw no similar lift. Whether they succeeded or failed depended only on their own capabilities and resources.

4. Not all founders benefited from being paired up with an effective manager though. Surprisingly, founders with prior management training, whether from an MBA or accelerator program, did not seem to benefit from this advice.

5. The results were strongest among pairs whose startups were based in the same city and who followed up after the retreat. For many of the founders, the relationships formed at PNgrowth helped them well beyond those three days in Mysore.

So what’s the big take away: While India’s startup ecosystem is new and doesn’t yet have the deep bench of successful mentors, the results from this study are promising. Good advice can go a long way in helping startups scale.   iSPIRT has pioneered a peer-learning model in India through PlaybookRTs, Bootcamps, and PNgrowth (see: https://pn.ispirt.in/understanding-ispirts-entrepreneur-connect/).

This research shows that this model can be instrumental in improving the outcomes of India’s startups if done right. If peer-learning can be scaled up, it can have a significant impact on the Indian ecosystem.

India powers up its ‘Software Product’ potential, Introduces National Policy on Software Products (NPSP)

This is an exciting occasion for our indigenous software industry as India’s National Policy on Software Product gets rolled out. This policy offers the perfect framework to bring together the industry, academia and the government to help realise the vision of India as a dominant player in the global software product market.

For ease of reference, let us summarise some of the major things that the policy focuses on

  • Single Window Platform to facilitate issues of the software companies
  • specific tax regime for software products by distinguishing  them from software services via HS code
  • enabling Indian software product companies to set off tax against R&D  credits on the accrual basis
  • creation of a Software Product Development fund of INR 5000 crores to invest in Indian software product companies
  • grant in aid of  INR 500 Crores to support research and innovation on software products
  • encouragement to innovation via 20 Grant Challenges focusing on Education, Healthcare & Agriculture thus further enabling software products to solve societal challenges
  • enabling participation of Indian software companies in the govt. e-marketplace to improve access to opportunities in the domestic market
  • developing a framework for Indian software product companies in government procurement.
  • special focus  on Indian software product companies in international trade development programmes
  • encouraging software product development across a wide set of industries by developing software product clusters around existing industry concentrations such as in automobile, manufacturing, textiles etc.
  • nurturing the software product start-up ecosystem
  • building a sustainable talent pipeline through skilling and training programmes
  • encouraging entrepreneurship and employment generation in tier II cities
  • creating governing bodies and raising funds to enable scaling of native software product companies.

There is good cause for cheer here. The policy offers to address many of the needs of the Software Product Ecosystem. For the first time, HS codes or Harmonised Codes will be assigned to Indian software product companies that will facilitate a clear distinction from ‘Software Services’ facilitating availing of any benefits accruing under the ‘Make in India’ programme. In addition, this will enable Indian software product companies to participate in govt contracts through registration on GeM (Govt. eMarketplace).

Considering that we remain a net importer of software products at present, steps such as the inclusion of Indian software products in foreign aid programmes, setting up of specialised software product incubators in other geographies and promoting our software product capabilities through international exhibitions definitely show intent in the right direction. With a commitment to develop 10000 software product start-ups, with 1000 of them in tier II cities, technology entrepreneurs building IP driven product companies can now look forward to infrastructural and funding support. The policy also aims to go beyond metro-centric development with a commitment to develop tech clusters around existing industry concentrations, enable skilling and drive employment in non-metros and tier II cities while actively encouraging Indian software companies to solve native problems.  

This policy could not have been possible without the vision of the Honourable Minister Shri Ravi Shankar Prasad, and continuous engagement and discussions with Shri Ajay Prakash Sawhney, Rajeev Kumar and Ajai Kumar Garg from MEITY and their team.

We have seen software companies solving native problems do exceptionally well, just look at what Paytm has been able to achieve while driving digital payments in India. There is now an understanding ‘Make in India’ can help us bridge the digital divide given that Indian entrepreneurs have a greater understanding of local issues and the challenges that are unique to us.

Setting up bodies such as the National Software Products Mission in a tripartite arrangement with the industry, academia and govt. to enable creation and monitoring of schemes beneficial to native software product companies is another much-needed step that will create a forum distinct to our software product companies and help give them a strong voice.

We would like to thank Lalitesh Katragadda, Vishnu Dusad, Sharad Sharma, Rishikesha T Krishnan, Bharat Goenka, T.V. Mohandas Pai, Arvind Gupta for their diligent efforts on the continuous dialogue and inputs for the policy.

While launching the policy is a great start, its implementation is what we all will have our eyes on. Now is the moment of action. We all look forward to fast-tracking of the various proposed measures under this policy for the benefits to start showing!

References

J​ANUARY​ 15, 2019​ – ​https://tech.economictimes.indiatimes.com/news/internet/india-needs-to-win-the-software-products-race/67533374

DECEMBER 8, 2016​ – ​https://pn.ispirt.in/what-to-expect-from-draft-national-policy-on-software-products/

NOVEMBER 13, 2016​ – ​https://pn.ispirt.in/national-software-policy-2-0-needed/

MAY 10, 2016​ – ​https://pn.ispirt.in/taxation-and-digital-economy/

APRIL 29, 2016​ – ​https://pn.ispirt.in/saas-the-product-advantage-and-need/

JULY 16, 2014​ – ​https://pn.ispirt.in/government-recognizes-the-software-product-industry/

DECEMBER 11, 2013​ – ​https://pn.ispirt.in/three-waves-of-indian-software/

JULY 16, 2013​ – ​https://pn.ispirt.in/smbs-and-indian-software-product-industry-intertwined-fortunes/

JULY 4, 2013​ – ​https://pn.ispirt.in/8-truths-why-it-services-organizations-cannot-do-software-products/

Clipping The Wings Of Angel Tax

 

2000 startups. 100 meetings. 25 articles. 7 years. 3 WhatsApp groups. 2 whitepapers.

1 unwavering ask:

No More Angel Tax.

This evening, when we first got to see the circular from DPIIT/CBDT that formalized key recommendations suggested with respect to Angel Tax or section 56(2)(viib), we admit our minds went blank for a moment. After all, this one document represents the tireless, collaborative efforts of iSPIRT, the entrepreneurial community of India and ecosystem partners like IVCA, Local Circles, IAN, TiE, 3one4 Capital, Blume Ventures etc., and the proactive support from the government. It has been one relentless outreach initiative that has seen us become a permanent fixture at Udyog Bhavan and North Block (I even checked with the guards regarding the possibility of a season pass). My colleagues Sharad Sharma, TV Mohandas Pai, and partners such as Siddharth Pai, Nikunj Bubna, Sreejith Moolayil, Monika, Ashish Chaturvedi and Sachin Taporia deserve a big shout out for their diligent efforts at connecting with various ecosystem partners and initiating a regular cadence of dialogue with the government.

The key takeaways from the circular are as below

  • Blanket exemption for up to INR 25Cr of capital raised by DIPP registered startups from any sources
  • Amendment in the definition of startups in terms of tenure from 7 to 10 years
  • Increase in the revenue threshold for the definition of startups from INR 25Cr to INR 100 Cr
  • Breaking the barrier for listed company investments by excluding high-traded listed companies and their subsidiaries, with a net-worth above INR 100Cr or a Turnover of 250 cr, from section 56(2)(viib)’s ambit

Each of these points is a major win for the startup community. If one looks at the data from the LocalCircles startup survey in January 2019, nearly 96% of startups that had received notices regarding angel tax, had raised below the permissible limit of INR 10cr. Expansion of this limit to INR 25cr is a huge boost and instantaneously removes thousands of startups from the reach of angel tax. There is an effort here to critically analyse, define and differentiate genuine startups from shell corporations. It includes measures such as increase in the revenue and tenure threshold that will not only help startups with respect to the challenges posed by angel tax but also open up eligibility for benefits under Startup India schemes and policies. We have been talking about the need to encourage and protect domestic investments and the government has paid heed to our concerns by introducing accredited investor norms and by breaking the barrier for listed company investments.

Initiated in 2012 by the UPA government, Section 56(2)(viib) or the “angel tax” section has been a relentless shadow on the entrepreneurial ecosystem. It taxed as income any investment received at a premium by an Indian startup. This provision saw many entrepreneurs clash with the tax officials about the true value of their business and pitted unstoppable entrepreneurial zeal against the immovable tax department.

All of us from the policy team at iSPIRT have been at the forefront of this issue since 2015 when we began petitioning the government to exclude startups from section 56(2)(viib) as taxing investments from Indian sources would cripple the startup ecosystem. We laud the government for appreciating the urgency of the situation and prioritizing this issue.

We first had an inkling of things to come at the February 4th, 2019 meeting held by DPIIT. It was unprecedented as it saw a direct dialogue between government and entrepreneurs wherein both sides could better understand the issues facing each other – how section 56(2)(viib) was hampering founder confidence and how it is a needed tool in the government’s arsenal for combatting the circulation of unaccounted funds.

After this, a smaller working group was constituted on February 9th, to review the proposals made by DPIIT to address this issue, in consultation with the CBDT and the startup ecosystem. iSPIRT were part of both meetings and contributed actively to the discussion.

We can now heave a sigh of relief as we have finally achieved to a large extent what we had set out to do. We finally have a solution that ensures genuine startups will have no reason to fear this income tax provision and the CBDT can continue to use it against those attempting to subvert the law.

This could not have been possible without the help of well-wishers in government departments like Mr Nrpendra Misra, Mr Sanjeev Sanyal, Mr Suresh Prabhu, Mr Ramesh Abhishek, Mr Anil Chaturvedi, Mr Rajesh Kumar Bhoot, Mr Anil Agarwal, who patiently met the iSPIRT policy team and helped develop a feasible solution.

At long last, domestic pools of capital will no longer be disadvantaged as compared to foreign sources. At long last, Indian entrepreneurs will no longer have to fear the questioning of the valuations of their businesses and taxation of capital raised.

Who knows, someday we might have a movie on this. On a more serious note, it is a step that will go down in the chronicles of India’s startup story. This puts the startup engine back on track. More importantly, it shows what can be achieved when citizens and the government get together.

By Nakul Saxena and Siddharth Pai, Policy Experts – iSPIRT

White Paper On Section 56(2)(viib) And Section 68 And Its Impact on Startups In India

Angel Tax (Section 56(2)(viib)) has become a cause celebre in Indian startup circles due to its broad-reaching ramifications on all startups raising capital.

This paper traces the origin of this section, it’s analysis, impact, how it adversely affects startups. Special mention is also made of the seldom covered Section 68 and it’s used in conjunction with Section 56(2)(viib). The paper also proposes recommendations to ensure that genuine companies are not aggrieved by this while the original intent of the section is preserved.

For any support or query, please write to us at [email protected]

Why the SC ruling on ‘Private Players’ use of Aadhaar doesn’t say what you think it does

On behalf of iSPIRT, Sanjay Jain recently published an opinion piece regarding the recent supreme court judgement on the validity of Aadhaar. In there, we stated that section 57 had been struck down, but that should still allow some usage of Aadhaar by the private sector. iSPIRT received feedback that this reading may have been incorrect and that private sector usage would not be allowed, even on a voluntary basis. So, we dug deeper, and analyzed the judgement once again, this time trying to disprove Sanjay’s earlier statement. So, here is an update:

Section 57 of the Aadhaar act has NOT been struck down!

Given the length of the judgement, our first reading – much like everyone else’s was driven by the judge’s statement and confirmed by quickly parsing the lengthy judgement. But in this careful reanalysis, we reread the majority judgement at leisure and drilled down into the language of the operative parts around Section 57. Where ambiguities still remain, we relied on the discussions leading up to the operative conclusions. Further, to recheck our conclusions, we look at some of the other operative clauses not related to Section 57. We tested our inference against everything else that has been said and we looked for inconsistencies in our reasoning.

Having done this, we are confident in our assertion that the judges did not mean to completely blockade the use of Aadhaar by private parties, but merely enforce better guardrails for the protection of user privacy. Let’s begin!

Revisiting Section 57

Here is the original text of section 57 of the Aadhaar Act

Nothing contained in this Act shall prevent the use of Aadhaar number for establishing the identity of an individual for any purpose a purpose backed by law, whether by the State or any body corporate or person, pursuant to any law, for the time being in force, or any contract to this effect:

Provided that the use of Aadhaar number under this section shall be subject to the procedure and obligations under section 8 and Chapter VI.

Now, let us simply read through the operating part of the order with reference to Section 57, ie. on page 560. This is a part of paragraph 447 (4) (h). The judges broke this into 3 sections, and mandated changes:

  1. ‘for any purpose’ to be read down to a purpose backed by law.
  2. ‘any contract’ is not permissible.
  3. ‘any body corporate or person’ – this part is struck down.

Applying these changes to the section, we get:

Nothing contained in this Act shall prevent the use of Aadhaar number for establishing the identity of an individual for any purpose a purpose backed by law, whether by the State or any body corporate or person, pursuant to any law, for the time being in force, or any contract to this effect:

Provided that the use of Aadhaar number under this section shall be subject to the procedure and obligations under section 8 and Chapter VI.

Cleaning this up, we get:

Nothing contained in this Act shall prevent the use of Aadhaar number for establishing the identity of an individual pursuant to any law, for the time being in force:

Provided that the use of Aadhaar number under this section shall be subject to the procedure and obligations under section 8 and Chapter VI.

It is our opinion that this judgement does not completely invalidate the use of Aadhaar by private players, but rather, specifically strikes down the use for “any purpose [..] by any body corporate or person [..] (under force of) any contract”. That is, it requires the use of Aadhaar be purpose-limited, legally-backed (to give user rights & protections over their data) and privacy-protecting.

As an exercise, we took the most conservative interpretation – “all private use is struck down in any form whatsoever” – and reread the entire judgement to look for clues that support this conservative view.

Instead, we found that such an extreme view is inconsistent with multiple other statements made by the judges. As an example, earlier discussions of Section 57 in the order (paragraphs 355 to 367). The conclusion there – paragraph 367 states:

The respondents may be right in their explanation that it is only an enabling provision which entitles Aadhaar number holder to take the help of Aadhaar for the purpose of establishing his/her identity. If such a person voluntary wants to offer Aadhaar card as a proof of his/her identity, there may not be a problem.

Some pointed out that this is simply a discussion and not an operative clause of the judgement. But even in the operative clauses where the linking of Aadhaar numbers with bank accounts and telecom companies is discussed, no reference was made to Section 57 and the use of Aadhaar by private banks and telcos.

The court could have simply struck down the linking specifically because most banks and telcos are private companies. Instead, they applied their mind to the orders which directed the linking as mandatory. This further points to the idea that the court does not rule out the use of Aadhaar by private players, it simply provides stricter specifications on when and how to use it.

What private players should do today

In our previous post, we had advised private companies to relook at their use of Aadhaar, and ensure that they provide choice to all users, so that they can use an appropriate identity, and also build in better exception handling procedures for all kinds of failures (including biometric failures).

Now, in addition to our previous advice, we would like to expand the advice to ask that each company look at how their specific use case draws from the respective acts, rules, regulations and procedural guidelines to ensure that these meet the tests used by this judgement. That is, they contain adequate justification and sufficient protections for the privacy of their users.

For instance, banks have been using Aadhaar eKyc to open a bank account, Aadhaar authentication to allow operation of the bank accounts, and using the Aadhaar number as a payment address to receive DBT benefits. Each of these will have to be looked at how they derive from the RBI Act and the regulations that enable these use cases.

These reviews will benefit from the following paragraphs in the judgement.

The judgement confirmed that the data collected by Aadhaar is minimal and is required to establish one’s identity.

Paragraph 193 (and repeated in other paras):

Demographic information, both mandatory and optional, and photographs does not raise a reasonable expectation of privacy under Article 21 unless under special circumstances such as juveniles in conflict of law or a rape victim’s identity. Today, all global ID cards contain photographs for identification alongwith address, date of birth, gender etc. The demographic information is readily provided by individuals globally for disclosing identity while relating with others and while seeking benefits whether provided by government or by private entities, be it registration for citizenship, elections, passports, marriage or enrolment in educational institutions …

The judgement has a lot to say in terms of what the privacy tests should be, but we would like to highlight two of those paragraphs here.

Paragraph 260:

Before we proceed to analyse the respective submissions, it has also to be kept in mind that all matters pertaining to an individual do not qualify as being an inherent part of right to privacy. Only those matters over which there would be a reasonable expectation of privacy are protected by Article 21…

Paragraph 289:

‘Reasonable Expectation’ involves two aspects. First, the individual or individuals claiming a right to privacy must establish that their claim involves a concern about some harm likely to be inflicted upon them on account of the alleged act. This concern ‘should be real and not imaginary or speculative’. Secondly, ‘the concern should not be flimsy or trivial’. It should be a reasonable concern…

Hence, the privacy risk in these use cases must be evaluated in terms of the data in the use case itself, as well as in relation to biometrics, and the Aadhaar number in the context of the user’s expectations, and real risks. Businesses must evaluate their products, and services – particularly those which use Aadhaar for privacy risks. It is helpful that the UIDAI has provided multiple means of mitigating risks, in the form of Registered Devices, Virtual Ids, Tokenization, QR Codes on eAadhaar, etc. which must be used for this purpose.

What private players should do tomorrow

In the future, the data protection bill will require a data protection impact assessment before deploying large scale systems. It is useful for businesses to bring in privacy and data protection assessments early in their development processes since it will help them better protect their users, and reduce potential liability.

This is a useful model, and we would hope that, in light of the Supreme Court judgement, the Government will introduce a similar privacy impact review, and provide a mechanism to regulate the use of Aadhaar for those use cases, where there are adequate controls to protect the privacy of the users and to prevent privacy harms. Use cases, and an audit/enforcement mechanism matter more than whether the entity is the state, a public sector organization, or a private sector organization.

Note: This is in continuation of Sanjay Jain’s previous op-ed in the Economic Times which is available here and same version on the iSPIRT blog here.

The writer is currently Partner, Bharat Innovation Fund, and Chief Innovation Officer at the Centre for Innovation, Incubation and Entrepreneurship, IIM Ahmedabad. As a volunteer at iSPIRT, he helped define many of the APIs of the India Stack.  He was the Chief Product Manager of UIDAI till 2012

(Disclaimer: This is not legal advice)

AI/ML Shift for SaaS Companies: Insights from SaaSx Fifth Edition

Early stage SaaS startups typically struggle with one of two things. When you are just starting out, the first struggle is all about mere survival. Will we find customers willing to use and pay for our product ? Good teams typically manage to find ways to negotiate that first challenge. The playbook has been sufficiently commoditized that if you execute well enough, you can actually succeed in getting those early customers. Its a challenge for sure, but is getting easier and cheaper to overcome — which takes me to the second challenge. Once you survive that initial phase, how do you continue to stay relevant and grow? For if you don’t grow, you’ve only prolonged the inevitable and will likely get disrupted into irrelevance by the next upstart that comes along. When you play in a commodity market, that’s the sad reality.

If you find yourself gaining customer adoption, you can be fairly certain that competition isn’t far behind. Unless you find a way to establish sustainable differentiation while you have that head start, you will ultimately die. And that differentiation now increasingly comes down to the value of the data flowing through your platform and how you are able to leverage it better than your competition. In other words, if you are not thinking about constantly learning from the data that you are gathering and enabling implicit intelligence via your products, the odds of survival are going to be stacked against you. Given the significance this topic carries for us at Swym, I was really excited to have the chance to sit in on Ashwini Asokan and Anand Chandrasekaran’s session on AI/ML for SaaS at SaaSx5. And they most certainly didn’t disappoint. With a lucidly laid out argument, their talk served as a strong wake-up call for the SaaS founders in the room that weren’t sufficiently worrying about this topic.

SaaS growth is slowing

Ashwini started out by underscoring the fact that SaaS growth was slowing in general. There’s no denying that most solutions are rapidly becoming commoditized — building a good product has gotten fairly prescriptive, costs have come down and barriers to customer adoption are a lot lower than they used to be. That inevitably leads to markets getting very crowded, making survival increasingly difficult. If you don’t stand out in very defensible ways, you will perish. To make matters worse, AI is slowly but surely causing entire categories of work to disappear — Customer Support, SDRs, Financial/Market Analysts, to name just a few examples. If those workers were your market and you were helping them be more efficient, you are in trouble because your market is disappearing with them. You better be evolving from being software that’s serving those people that in turn serve a function, to actually serving the function itself. Of course you do this with human assistance, but in a progressively intelligent fashion that makes you indispensable.

Embrace the platform mindset

In order to stay relevant, you really need to create a viable roadmap for yourself to graduate from being a simple feature that’s part of a larger platform (No one likes being told they are nothing but a feature, but this really is where most early stage SaaS products sit today) to becoming the platform itself over time. It can most certainly be done because the opportunity exists, and the access you have to your data and how you are able to leverage it is likely to be the most effective weapon to get you there. Think really hard about new use cases you can light up, automations you can now enable, important solutions that hitherto weren’t possible or practical — enabling those capabilities is what will give you stickiness. And you can in turn leverage that stickiness to allow others to build on the data platform you’ve created to expand your moat. Easier said than done of course, but it is the only path to staying relevant. Alexa, Salesforce, Adobe, Hubspot, and most recently Stripe with their just announced app store, all come to mind as stellar examples of execution on this strategy.

How should I be thinking about Data Science?

Anand followed that up with some really good advice on how to go about this, especially touching on what not to do, and it was clearly resonating with the audience. For instance, when he highlighted the fact that most AI initiatives that start with “Here’s the data I have…what can I do with it?” are doomed from the get go, a lot of heads in the room were nodding in agreement — seemed like a pretty common trap that folks had fallen into. Instead, his advice was to identify the end goal that mattered first, with the caution that this could be deceptively challenging. Once that goal is well understood, then focus on the data you have and the gaps that exist — and your challenge basically boils down to filling those gaps and cleansing/validating your data. Those are your most critical, time-consuming steps in the process for once you get the data quality you want, it becomes much simpler to build and iterate your model around that and figure out how to engineer this into a repeatable part of your workflow. The sub par data quality is one of the most common causes for AI projects “failing” and no amount of modeling proficiency will save you from bad data or a poorly understood problem statement.

Get on the train, but don’t lose sight of what got you here

I’m really glad to have had the benefit of listening to their talk in person, and now that I’ve let the arguments sink in over the past couple of weeks, a few truths have become indisputably clear in my head. The AI shift is not one you can ignore as a SaaS founder. If you don’t get on the train, you’ll likely end up under it. And no, getting on the train doesn’t mean simply attaching a “.ai” to your domain name and claiming success. It really comes down to internalizing your vision for why you exist, identifying in very clear terms how your roadmap to making that vision a reality will need to evolve given the AI shift. How do you see your problem space changing in the the next 2–5 years thanks to AI, and what does that mean for you? And given your existing strengths, what can you do to make the most of that shift?

Its important to remember that a lot of the fundamentals of a good SaaS story still don’t change. For instance, a sound distribution strategy is still very much necessary, for without sustainable access to customers, the rest of it is moot. Likewise, you want to be able to protect the access you have to your most valuable asset, your data) and lower the barriers enough for adjacent players to be able to work seamlessly with your offering. All those advantages you have still very much matter. Really, the biggest mental shift you need to make is thinking very deliberately about how the world around you is changing because of AI, and how you leverage those strengths so you continue to have proprietary access to the data you need and become an integral part of that change.

The article is authored by our volunteer Arvind Krishnan, CEO & Founder – Swym Technologies.

Build On IndiaStack – Venture Pitch Competition

Announcing ‘Venture Pitch Competition: #BuildOnIndiaStack’

Dalberg and iSPIRT invite applications from early-stage ventures that are tech-
based solutions leveraging the India Stack platform at the core of their business
model to bring financial or transactional services to the underserved in India.
Pitch to some of the leading investors and thinkers in the Indian start-up ecosystem,
including the Bharat Innovations Fund, Omidyar Network and Unitus Seed Fund.
Winners will spend an hour of 'Think Time' – a mentorship session with
technology evangelist Nandan Nilekani.

Who are we looking for?

We are open to all innovations that use the India Stack to unlock new business
models or reach previously underserved new customer segments across sectors
such as financial services, education, healthcare and others. Some core focus areas
for the competition may include digital lending and supporting activities, such as
alternative credit scoring; sector specific affordable digital finance services such as
health insurance or education loans; sector specific digital services such as skilling
and certification, property registration agreements, patient-centric healthcare
management; and SaaS platforms “as a service” that support the development of
other India Stack based innovations such as Digi-locker or e-sign providers.

 

Who is eligible?
All applicants should:
1. Meet the 3-point criteria: tech enabled, leveraging India Stack Platform and
serving the underservedBe

2. Be a part of two (minimum) to four (maximum) members team including the
founder of the companyBe early stage start-ups that have received only seed (or limited angel)

3. Be early stage start-ups that have received only seed (or limited angel)
funding, if at all

 
What is in it for you?
The investor group, comprising of Bharat Innovations Fund, Omidyar Network and
Unitus Seed Fund, is a network of investors and operators, entrepreneurs and
technologists, designers and engineers, academicians and policy makers, with the
singular mission to solve some of India’s toughest problems.

Through this event you have an opportunity to receive:

-Exclusive focus on tech innovations that leverage the India Stack platform
and have the potential to address the underservedFlexible

-Flexible, insight driven, funding of up to Rs. 8 lakhs for early stage, innovative
modelsStrategic

-Strategic business support, through their specialists to support investees in
their strategy and growthA chance to be a part of the India Stack ecosystem through partnerships,

-A chance to be a part of the India Stack ecosystem through partnerships,
pilots, workshops, conferences and network building exercises

Visit www.buildonindiastack.in and send your pitch now.

On Organizations and Lessons from the Industrial Revolution

The Industrial Revolution was possible because organizations could be built and managed effectively. Today too, problem #1 in business is creating the organization in the right way.

changing landscape, in the 19th century (photo credit: thomasgenweb.com)

The first time I saw this chart below, a light bulb went off in my head.

It shows the world’s average GDP per capita over the past thousand years. It is basically represents an average human’s economic productivity over time. Note: this is on a log scale.

source: http://www.j-bradford-delong.net/TCEH/1998_Draft/World_GDP/Estimating_World_GDP.html

I mainly want to talk about the last couple of hundred years in this chart, but let’s get a couple of things out of the way upfront. Firstly, the GDP estimates go back a million years, but most of human history is rather uneventful from an economic perspective. Secondly, the dip around 1300 AD is due to the “Black Death” plague that killed nearly a third of the world’s population, most devastatingly in Europe.

After the plague, productivity recovered with the population, and started improving as we kept getting a little better at what we did. But what made the line shoot up so drastically in the 19th century?

The Industrial Revolution happened.

Firstly, technology.

There were newer, more sophisticated machines that made large scale manufacturing possible, and there was power available to run these machines.

The textile industry is everyone’s favorite example. Historically, production of cloth used to be largely a domestic enterprise and sometimes a cottage industry. Farmers’ wives would spin the cotton at home, and the men would then weave it into cloth. It would take four to eight spinners to supply one handloom weaver. Enter the Industrial Revolution: at the time the textile industry was inventing the Flying Shuttle and the Power Loom, the steam engine was also being invented. And very quickly, the two came together to enable large factories where steam-powered machines would do the work of hundreds of people.

Secondly, people formed organizations.

The most important part (in my mind) of the Industrial Revolution was the rise of the business organization and of management as a function.

While the initial spurts of technological advancement led to the creation of many businesses, they were still run by one or a few owners or partners trying to do everything, and that could not scale. You could draw an analogy with startups today, but it wouldn’t be accurate as we do have access to management tools. Back then, it just didn’t exist. The railroad companies spearheaded the science and practice of management, being one of the largest organizations and requiring large numbers of people across different aspects of the entire operation to act as one unit. They realized they could organize into departments and appoint managers who planned tasks and supervised the workers that carried out those tasks.

Organizations of an unprecedented size and scale could exist because of this, kicking off many self-fueling virtuous cycles, and not just enabling co-ordination across a large enterprise but also dramatically improving processes and workforce utilization. This is what made the right side of the chart possible.

While it seems like a blip in history, this took time: nearly two hundred years. It completely elevated what we as a species are capable of, but also came at a great societal cost (large scale unemployment and severe exploitation of those that were employed).

And it hasn’t ended: that line is only going up (and perhaps with different kinds of costs).


Now, based on all this, I’m going to posit:

Now, based on all this, I’m going to posit:

The key to all progress lies in creating scalable organizations.

Misallocating Entrepreneurship

There is an interesting example that elucidates this point. This article — India is a much more Entrepreneurial Society than the United States (and that’s a problem) — talks about the problems when a society cannot scale its organizations:

India is a much more entrepreneurial society than the United States. That may seem surprising since India is poor and we typically associate entrepreneurship with being rich but it’s clearly true. Only ~15% of Indians work for a firm compared to approximately 90% of US workers.

It digs into why it can be a problem.

Entrepreneurship in India isn’t a choice, it’s a requirement. Indian entrepreneurship is a consequence of India’s failed economy. The problem with developing countries is not that they lack entrepreneurs but that entrepreneurs cannot grow their firms large enough to become major employers.

Entrepreneurship, like other factors of production, can be misallocated. India has great entrepreneurs but their hard work, creativity, and risk taking is being wasted building tiny, stunted firms.

Entrepreneurship, like other factors of production, can be misallocated.

But our culture is becoming more individualistic, in all aspects of society. In business, everyone wants to be the entrepreneur, and is looking for “non-entrepreneurs” to recruit to their cause. And it has never been easier to start a company — limited liability and easy access to capital, distribution and technology have made sure of that.

Perhaps the optimal size of the firm will change in response to these forces, but I don’t see evidence of that yet — quite the opposite, if anything. Perhaps this chart above will sober up for a bit, or perhaps technology (general AI?) will render people irrelevant in the scheme of things. Until then, building high-functioning, scalable organizations that fit into the cultural mood will have to be the foremost problem company-builders need to solve.

(Huge thanks to Michael Dearing for showing me this chart for the first time, and opening up the first principles of management for me. I highly recommend his General Management course.)

Diversity with Collaboration Unlocks Innovation and Drives Business Growth

“Diversity is an intellect multiplier, especially when the diverse groups can collaborate well” – Mark Sareff

This year the International Women’s day was a different experience for me, no panels stating gender diversity facts most people are painfully aware of. Instead I had the proud privilege of being invited to do a fireside chat and explore new dimensions of diversity and its impact on innovation and business growth.

We are familiar with dimensions of diversity we are born with — gender, age, race etc. but less familiar with the dimensions we acquire in our lifetime — culture, life experiences, domains worked in, education background etc. These interesting dimensions set your thinking patterns, beliefs and problem-solving approaches.

Diversity is an intellect multiplier but, only when diverse groups can collaborate. We need a common language that helps diverse groups come together and collaborate. We need an inclusive environment that fosters diverse perspectives without judgment… here’s where design thinking comes in!

Design thinking in its application celebrates diversity, when done well allows you to go broad try many, diverse approaches before narrowing down to one solution. It can also change how people work together for the better, introducing a deeper level of collaboration, appreciation of diversity and creativity.

Sharing a few key tools to help you create an inclusive environment that fosters diverse perspectives and hence innovative solutions:

1.   Don’t brainstorm; think Independently, together While we are not against brainstorming, we believe brainstorming can lead to HiPPO decisions (Highest Paid Person’s Opinion) and can exclude out-of-the-box thinking because the facilitator or the group naturally judges all ideas being generated. Instead have everyone think independently and write down their ideas individually and review every single idea. Similar ideas get grouped together, no idea gets left behind or judged right away. Instead we build on existing ideas to make them more diverse and disruptive. It is a powerful process that celebrates diversity and creates an inclusive environment for disruptive ideas to form and persist.

2.   Narrow ideas using clear criteria – The 2×2 tool is a narrowing tool, allows you to choose ideas that the team will filter down to. The team identifies 2 key criteria to narrow ideas (ideally, customer benefits) that would make massive impact on the business. Ideas are then plotted against those dimensions relative to the benefits it brings to the organization versus making Caesar-like decisions. Again allowing diverse teams and ideas to collaborate well hence leading to innovation and business growth.

3.   Facilitating large group dialogues – The World Café is a structured tool intended to facilitate collaboration, initially in small groups and then linking ideas within a larger group to access the collaborative and collective wisdom in the group. Each person interprets the world differently, based on his/her perception. Sharing the viewpoints of others is essential for understanding alternatives and adapting strategies to deal with environments. Environments that recognize the contribution of all will foster a strong commitment to achieve common goals.

Diversity offers different experiences and novel perspectives, leading to better decision making and problem solving. It opens up new conversations pushing the boundaries on unrestrained thinking which enables breakthrough innovations.

At Pensaar, one of the things we celebrate is the differences we all bring to the table. Each of us comes with unique experiences having worked in varied industries and lived very different lives. It allows us to recognize each other’s strengths and learn from each other while also being sympathetic to each other’s weaknesses. Our different experiences and perspectives help us foster innovation to beat and not just meet the needs of our increasingly diverse customer base.

So much has already been written about this amazing topic, go here to read more:

·   To Make Diversity Work You Need Design Thinking

·   HBR’s How Diversity Can Drive Innovation

·   10 Companies Around the World That Are Embracing Diversity in a BIG Way

·   Why diversity matters

 

What the U.S. can learn from India’s move toward a cashless society

Looking from Silicon Valley upon the progress that India has made in building a digital infrastructure, I am in awe.  The U.S. tech industry fancies itself as the global leader in innovation, yet India has leapt far ahead of it.  Silicon Valley’s tech investors hype complex technologies such as Bitcoin and blockchain.  But India, with simple and practical innovations and massive grunt work, has built a digital infrastructure that will soon process billions more transactions than these do.

India is about to skip two generations of financial technologies and build something as monumental as China’s Great Wall and America’s interstate highways.

Though few people in the West know of Aadhar, it has been the largest and most successful I.T. project in the world.  There was widespread skepticism that a billion people could be provided with a verifiable digital identity, yet it has occurred, in a short six years.  Hundreds of millions of people who were doomed to live in the shadows of the informal economy can now participate as equals in the global economy.  Thanks to Jan Dhan Yojana, they also have bank accounts; these already haveRs. 69000 crores in deposits.

The reason investors are pouring billions of dollars into technologies such as Bitcoin is that they provide a secure way of linking a person to and recording a transaction.  But Bitcoin requires massive, wasteful, computing resources to do what is called mining: transactions’ mathematical verification.  And this complex computing infrastructure needs constantly improvement as it hits transaction limits.

The simple design of India’s digital payments infrastructure, Unified Payments Interface (UPI), allows banks to transfer money directly to each other based on an Aadhar number or mobile-phone number plus pin.  Yes, this doesn’t have the anonymity of Bitcoin, but I would argue that anonymity is mainly for money laundering and tax evasion—which need to be eliminated.  There is almost no overhead in UPI, and transactions happen within seconds rather than the 10 minutes that Bitcoin takes.

In the U.S., we pay an indirect tax of 2–3% on consumer transactions because of the use of credit cards.  Companies such as Visa, Mastercard, and American Express don’t even manage the money or provide banking services; all they do is to act as an intermediary between banks.  The merchant has the responsibility of verifying the identity of a customer.  With UPI, India doesn’t need credit cards or middlemen, it can build the next generation of finance.

The instant and non-repudiable proof of identity that Aadhaar’s know your customer technology, e-KYC, provides, gives India a big advantage. Most people in the U.S. have drivers licenses and social security numbers. But these are not verifiable with biometrics or mobile numbers, so complex verification technologies need to be built into every financial system.  Indian entrepreneurs building applications don’t need to worry about all this.

Going beyond money, India Stack provides a digital locker through which to store and share personal data such as addresses, medical records, and employment records.  With this, the government is providing a public service that is the digital equivalent of roads and electricity.  I don’t know of any other country that has anything comparable; India will soon have the digital equivalent of super-highways.

There are all sorts of benefits.  For example, the opening of a mobile-phone account is a lengthy process everywhere, because telecom carriers must verify the user’s identity and credit history.  With India Stack, all it requires is a thumbprint or retina scan and permission to share digital documents.  The typical villager presently has no chance of getting a small-business loan, because he or she does not have a credit history or verifiable credentials.  With India Stack, he or she can share digital copies of bank statements and utility-bill payments, and life-insurance policies and loans can receive instantaneous approval.

Nandan Nilekeni is right when he says that these advances “represent the biggest advance globally in public digital infrastructure since the Internet and GPS”.  In an email to me, he predicted that they will “lead to a leapfrogging on many fronts, including a digital financial platform for a billion people which does not require cards, POS machines or ATMs but will be entirely driven by what is in your hand—your finger and your phone”.

Prime Minister Modi has taken a lot of fire for demonetization.  This is understandable, given the hardships and the disruption to the economy that it created.  But it was a bold move and one that will produce tremendous long-term benefit—because it will accelerate the push to digital currency.  India has the opportunity to enter an age of transparency and be at the forefront of digital technologies.

Nobel Prize–winning economist Joseph Stiglitz said in Davos that the U.S. should follow Modi’s lead in phasing out currency and moving toward a digital economy, because it would have “benefits that outweigh the cost”.  Speaking of the inequity and corruption that is becoming an issue in the U.S. and all over the world, he said “I believe very strongly that countries like the United States could and should move to a digital currency so that you would have the ability to trace this kind of corruption”.

Yes, India is ahead and America can learn from it.

Guest post by Prof. Vivek Wadhwa, Distinguished Fellow, Carnegie Mellon University Engineering at Silicon Valley. Former entrepreneur. Syndicated columnist for Washington Post.


The six key pillars of software that enables Innovation-led growth

Ever wondered if a Software could help business chart the next growth curve?.

The marketplace is changing and the competition is catching up. Organisations need a new concept to break out to create the next growth curve and they depend on functions like Strategy, NPD ( New product development ), R&D Teams internally. Some of these organizations also use external consulting firms, crowdsource, outsource, merge, acquire and do many things more.

In order to bring in rigor and predictability, organisations need sound processes, but the paradox in Innovation-led growth, unlike other variants, is the need to have the right balance between creative freedom and execution discipline. Most organisations are designed for execution discipline while some are designed to be creative. But, today’s organisations need both in the right mix to win in the long run.

We need to manage Innovation-led growth like any other process and to institutionalize this, a structured approach which would balance creative freedom and execution discipline would be more effective.

Well, can a Software help with this?

If yes, what should be the pillars of such an Innovation-led growth Software?

Business would need 6 Es to Innovate.

Empower:
Organisation needs to draw the creativity and drive to make things happen.Often the best source for innovation is the team within the business. A great leader turns them into entrepreneurs who are hungrily looking for new opportunities. The key is empowerment. An Innovation-led growth software should empower teams to achieve their goals through their own ideas and efforts.

The leader sets the destination, but the team chooses the route to get there.

Enabler:
Enable employees to adopt an “entrepreneurial mindset” to showcase their ideas and ideals. Allowing them to propel innovation and show initiative is the key to a successful workplace revival and an opportunity to re-energize individual and organic organisational growth.
Innovation and workplace transformation represent two-sides of the same coin.
An Innovation-led growth software should help business in tossing the coin instead of taking sides.

Effective:
Effectiveness isn’t just a property of the idea but, more importantly, a property of the execution, and that’s where an Innovation-led growth software comes in. It should help business with it right from the word go & ensure effectiveness on all sides by having an innate ability to look at your problem from multiple viewpoints thereby ensuring a holistic overview.

Engage:
The most important part of any business idea is to maintain traction, and that requires engagement: the kind which can grab the right audience. An Innovation-led growth software should help business create a meaningful engagement with and within the audience, be it internal or external. Software should help organizations get perspectives from people who matter and thereby helping it to improve its offerings.

Evaluate:
Evaluating Innovation-led growth initiatives is something that very few organizations have understood. Most of them use the traditional criterion which works against the constructive collaboration that is required. Software should have a new set of evaluation tools that supports such a collaboration and help business in making the decision.

Efficiency:
Efficiency is the result of all the other Es coherently and cohesively coming together to function in a synchronous manner. Software should have proven techniques that shall improve the efficiency of generating new business concepts at a faster rate and continuously.

Edge:
There are few companies, which have few of the above 6 Es.Not any single company possess all 6 Es at the right proportion for the right yield. Experts who are proficient in the field of innovation vouch that iEnabler Software has these 6 pillars at right proportion for companies embarking their Growth journey. For your reference (www.ienabler.co)

Guest Post by Sridhar D.P, iEnabler

Disruptive Blue Oceans and India to the world!

In this article, we brief on what the architect of disruptive innovation Clayton Christensen explained in his seminal work called disruptive theory. This contains the edited excerpts of ‘What is disruptive innovation’ article published in Harvard Business Review. We also considered the tools, frameworks and concepts from Blue Ocean Strategy developed by W. Chan Kim and Renee Mauborgne, as we feel that the Indian companies adopt the essence of both the Disruptive Innovation and Blue Ocean Strategy ideas.

Clayton clarifies Disruption is a process where by a smaller company with fewer resources is able to successfully challenge established incumbent businesses. Specifically, as incumbents focus on improving their product and services for the most demanding customers, new entrants prove disruptive by successfully targeting those overlooked segments and by delivering more suitable functionality frequently at lower price. And any product or service to be considered as disruptive innovation must actually fit into the two important criteria below.

  1. Low-end footholds
  2. New market footholds

Low-end footholds

Value-InnovationLow-end footholds exist; when an established or large organization focuses only on the prime customers or most profitable customers and overlook their needs and fail to fulfil the needs of the least profitable or low-end customers. New entrants seize the white space by servicing to these low-end segments with ‘good enough’ product. The performances of the new entrants are ever improving when compared to those established incumbents. However, the quality of their offerings increases over the period of time. New entrants create unprecedented value to the customers by adopting Value Innovation. Value Innovation is created in the region where a company’s actions favourably affect both its cost structure and its value proposition to buyers.

 

Cost savings are made by eliminating and reducing the factors industry competes on and buyer value is lifted by raising and creating the elements industry has never offered. Kim and Mauborgne call it ‘4 Action Framework’ in their book titled ‘Blue Ocean Strategy, 2005.’

3nethra capturing Low-end segments through Value Innovation in India.

3nethra, eye pre-screening device, a product of Forus Healthcare, has made a significant impact in the eye care industry, in private clinics as well as in large eye hospitals. A significant contribution of 3nethra to eye care is the fast screening made possible by this device. Quick, yet accurate, screening translates into shorter waiting periods for patients. In a domino effect, quick screening also means that the eye doctor can devote more time to patients that need immediate attention. The simplicity of usage of 3nethra results in minimal training to operate the device. While, most eye pre screening devices cost between Rs 18 and 20 lakh, 3nethra costs just about Rs 5 lakh. 3nethra is also being used in community healthcare services and CSR initiatives. Forus, has conducted over 100 eye check-up camps all over India and screened over 2,50,000 people so far. Additionally, 3nethra can be installed in kiosks in places with high footfalls like airports, railway stations and even malls, where one can walk in and get fast, affordable and accurate screening for common eye diseases for their entire family.

new value curve

New market footholds

In new-market footholds, disruptors get into the uncontested market place and make the competition irrelevant. They find ways to convert non-customers to customer. In Blue Ocean Strategy, Kim and Mauborgne delineate as ‘the three tiers of non customers’ who can be transformed into customers.

First Tier: ‘Soon to be’ noncustomers who are on the edge of your market. They minimally use current market offerings to get by as they search for something better. Upon finding better alternative they will jump ship.

Second Tier: ‘Refusing’ noncustomers who consciously choose against your market because they find the offerings unacceptable or beyond their means.

Third Tier: ‘Unexplored’ noncustomers who are in markets distant from yours. They are the ones who have not been targeted or thought as potential customers by any existing incumbents.

Harboring these noncustomers is an ocean of untapped demand waiting to be released.

Paytm transforming noncustomers to customers

marketDigital wallet and mobile commerce marketplace Paytm is creating huge market by enabling more than 80,000 merchants to do the transactions on its platform. Paytm is an Indian e-commerce shopping website launched in 2010, owned by One97 Communications which initially focused on Mobile and DTH Recharging. The company is headquartered in Noida, India. It gradually provided recharging and bill payment of various portals including electricity bills, gas bills, as well as telephone bills. Paytm entered India’s e-commerce market in 2014, providing facilities and products similar to businesses such as Flipkart, Amazon.com, Snapdeal. In 2015, it added booking bus travel. In July 2015, it included industrial supplies such as power tools, safety and security equipment, test & measurement apparatuses, machines, lab supplies, abrasives etc on its platform. Paytm states that the initiative will help SMEs get in touch with different suppliers for different needs. Currently, it claims to have crossed over 100 million users in the country in a very short span. It also declares that more than 75 million transactions are made through their platform. In 2014, the company launched Paytm Wallet, India’s largest mobile payment service platform with over 40 million wallets. The service became the preferred mode of payment across leading consumer internet companies such as Uber, BookMyShow, MakeMyTrip and many more.

Bibliography

  1. What is disruptive innovation by Clayton Christensen, http://hbr.org/2015/12/what-is-disruptive-innovation
  2. Book titled Blue Ocean Strategy, 2005, by W Chan Kim and Renee Mauborgne
  3. Forushealth.com, http://forushealth.com/forus/Implementation.html

Paytm, https://en.wikipedia.org/wiki/Paytm

This writeup is complied and created by R Ragavendra Prasath; volunteer for iSPIRT.

Disclaimer

Disruptive Innovation and Blue Ocean strategy are two distinctive thinking by itself and broad as it is deep. Adopted these thinking together for learning and understanding purposes only.

How “born globals” dance with gorillas to punch above their weight

For over a decade now I have been studying “born globals” i.e. new ventures that internationalize rapidly, and in particular how these firms leverage relationships with large multinationals to facilitate this process. My studies on this topic span China, India, UK and USA.

I recently published a book targeted at other academics, based on this research, titled Born Globals, Networks and the Large Multinational Enterprise, which was released during the Academy of International Business conference in Bangalore.


The insights for entrepreneurs from this research include the following:

Be proactive in recognizing the opportunity to harness globalization. More than at any point in history, multinationals are genuinely interested to engage with start-ups. It wasn’t always like this. When I started my research in 2002 I could barely find any multinational with a structured partnering program targeted at young companies at home or abroad. This changed over the next few years as multinationals recognized that they could not be self-sufficient in generating novel ideas, and that start-ups were great at doing this. Today many multinationals offer a range of start-up engagement mechanisms from mass partner programs to selective incubators.

Be discerning in order to leverage the right opportunity. Just because an opportunity exists does not mean that it is guaranteed to work out. Entrepreneurs have to be discerning in how they engage with multinationals. In one sense, discernment in this context entails figuring out which partner is most appropriate to its strategic intent. Another facet is ensuring that its interests are protected, which may call for clever cooptation of local allies (e.g. mentors from respected incubators or VC firms). Yet another aspect of this is learning as much about the partner as possible to have a realistic understanding of what is and isn’t likely to be feasible.

Be reflective to learn from, and become better at dancing with, gorillas. Gorillas i.e. large multinationals can be an effective source of new business opportunities and revenues – but typically there are limits to how helpful they can be in this way. In the long term, new ventures will accrue important benefits if they adopt a learning mindset and seek to learn new capabilities through observation of, and joint activity with, large multinationals. Also, partnering with multinationals is a skill, and ventures can become better at this over time – if they consciously make the effort to reflect on their partnering experiences and talk to mentors periodically.

Thus partnering with multinationals involves considerable skill and effort – but the payoff can be considerable for new ventures if they can pull it off. Such start-ups harness globalization to punch above their weight. It’s a worthy goal for ventures with high aspirations in terms of innovation and internationalization

“Dancing with gorillas” – what is it?

Dancing with gorillas refers to start-ups partnering with large companies, in particular multinational corporations. I have been studying how these very different types of companies engage with each other in both the West (especially the US and UK) and East (especially China and India) for about a decade now. At the early stages of my research, I once asked the late Professor C K Prahalad what he thought about the scope for start-ups to engage with large multinationals, and his immediate response was: “Many of these small companies have no choice but to learn to dance with big gorillas”. I immediately latched on to that phrase!

Source: An interview with Dr Shameen Prashantham available here

India Innovation Session with Jeff Immelt, CEO, GE

GE

Every sector has a long period of evolutionary change that is only occasionally interrupted by a short (5-10 year) period of intense non-linear change. Global corporates like GE are able to position themselves to successfully embrace the evolutionary change. However, to leverage the period of non-linear change, a new kind of partnering model is needed.

Keeping in mind this theme, iSPIRT, India’s software product think tank, spent an hour with Jeff Immelt, CEO of General Electric, and his team, to discuss the implications of such non-linear change to GE and the larger global ecosystem. To drive home the point, six inspiring startups showcased their respective cutting-edge innovations that are helping drive change in their individual sectors. Their stories are captured, in brief, below.

Team IndusTeamIndus

Infrastructure for NextGen Apps

Team Indus, a highly qualified group of ex-ISRO scientists and systems engineers, spoke to GE of two moonshots they are attempting. Literally. The first is landing a privately funded spacecraft on the moon by 2017. As part of this mission, they India’s only entry, and top 3 of 16 global teams, in the Google Lunar XPrize Competition.

The second is a derivative of the first, where they aim to put up a high-altitude long-endurance platform to deliver payload to stratospheric orbits. In laymen’s terms, they are enabling wide-area connectivity for terrestrial applications, essentially disrupting satellites as they’ve been known and used. And at the current pace of progress, they are on track to be the leader in Asia by 2021.

Nimble WirelessNimble

Cold Chain Monitoring

Nimble Wireless’ pioneering IoT solution is built on top of the future of pervasive connectivity that TeamIndus is working towards. Their platform helps enterprises connect, control and manage their business critical assets to enable greater efficiencies and savings. A great use case is in helping leading food/cold chain companies ensure food safety and reduce wastage, especially important in a country that has 33% malnourished children but wastes nearly a third of its dairy products. Here, Nimble deploys real time temperature monitoring and alert management systems to help ensure food safety, eliminate wastages and attain visible RoI for food and logistics companies.

SavariSavari

V2X: Connecting Vehicles to Everything

Moving beyond the world of cold chain to the world of automobiles is Savari’s technology that connects vehicles to everything – each other, smartphones and road infrastructure. There is a battle ensuing between Silicon Valley’s revolutionary approach in favor of self-driving cars and the auto industry’s evolutionary approach in favor of connected cars. Savari’s patented middleware software is enabling the auto industry to realize the gradual, incremental change they believe is the way forward in connecting vehicles. Their technology is pushing forward safety, fuel savings and automation and ensuring auto companies don’t become ‘the Foxconn of Apple’.

Julia ComputingJulia

An Open Platform for Brilliant Machines

The consistent theme emerging is that machines are all going to be connected in not too distant a future. All well and good, but there’s a small problem. Today the programming language for machines (iron) is different from that of the cloud (silicon), where software and analytics reside. That means large time and cost investments are needed in translating algorithms between the languages to connect the machines.

Which is where Julia, an open-source language being built out of MIT, fits in. Their solution, a language with a strong mathematical foundation, serves as a common language for machines and the cloud, so the same engineers can write analytics that run on sensors and scale to the cloud. The language has visible use cases across machines (air collision avoidance algorithms, 3D printing) and cloud applications (predictive analytics, pricing algorithms), enabling immense savings in time and complexity. The industrial world until now only had proprietary platforms to choose from but now Julia provides an alternative that is open and neutral, where firms can retain strategic control of their products.

LogistimoLogistimo

Open-source supply chain

Continuing with the theme of improved efficiency is Logistimo, an open-source supply chain software enabling manufacturers, distributors and after-sales partners to better reach and serve frontier markets.  There are unique challenges of implementing such systems in low-resource settings of rural India, where nearly 70% of Indians live. But Logistimo’s nuanced methodologies to manage this low-resource context is what has helped reduce infant mortality, electrify villages, and improve the overall quality of life for citizens of the hinterland.

India StackiSPIRT

Impact on Service Delivery

Tying this all together was the final session about a pioneering initiative, the first of its kind globally, being spearheaded in India towards a cashless, paperless and presence-less service delivery. The India Stack ties together the Identity Layer (Adhaar), a Paperless Layer (eSign, eKYC), a frictionless Payments Layer, a Transaction Layer (GSTn) and finally a privacy/data-sharing Consent Layer to revolutionize the Indian landscape in not too distant a future.

 

Lots going on, lots more to come. And this is just the beginning of the excitement for India and the non-linear change that the startup ecosystem is enabling.

InMobi’s Miip May Be More Important to India than Pichai

The emergence of an IP and technology-based leader from India will have a bigger long-term impact than a few Indians heading major global corporations

Isn’t it strange that we were obsessed with happenings at Google while the really momentous news of the coming of age of a serious desi challenger got lost in the noise?

Sundar Pichai and Google

News of Sundar Pichai’s ascension to the Google throne hogged media headlines for almost a week.

While I could understand the excitement instigated by the front page of Dainik Bhaskar in a young tier-2 and tier-3 city audience for whom a compensation of Rs 300+ crore would seem out of this world (however misleading that figure is since Pichai’s actual compensation in his new role is not known, and conversion from dollars to rupees doesn’t make sense anyway), the hoopla in the metro-based English language press was surely misplaced.

After all, what’s surprising? Indians including Ajay Banga (MasterCard), Victor Menezes (Citibank), Indra Nooyi (PepsiCo) and Anshu Jain (Deutsche Bank) have been CEOs of global corporations. And it’s now more than 20 years since Rajat Gupta became the CEO of the world’s bluest blue management consulting firm—McKinsey!

Indians are smart, ambitious and can communicate well. Once they have studied at a top US university and worked there for a while, they fit well into American corporate life, capable of discussing football and technology, and being politically correct. Most importantly, they can be quite conformist and refrain from rocking the boat. Clearly a good choice if you are a culturally diverse company like Google.

And, mind you, this may not really be the throne anyway as Larry Page and Sergey Brin are just one degree of separation away.

I have nothing against Pichai who appears to be a perfectly competent technical manager with the right credentials. But for me there were more interesting and promising events happening recently that didn’t get the attention they deserve.

What We Should Have Focused On…

For years now, we have bemoaned the absence of a Google-like company from India. Yes, we have had successful tech enterprises from India but these have been in the difficult-to-relate-to business-to-business (B2B) IT services space. The real big news of the last few weeks is that we now see some green shoots pointing to the emergence of an IP and technology-based leader from India.

On August 5, in a virtuoso performance that had a clear Steve Jobs touch to it, the CEO of InMobi, Naveen Tewari, introduced his company’s new advertising platform, Miip, to a gathering of who’s who in the technology world at Bangalore.

For the technological cognoscenti, InMobi is not a new company. It calls itself the “world’s largest independent mobile advertising platform”. Funded by Softbank, Kleiner Perkins Caufield and Byers and Sherpalo to the tune of $220 million, InMobi reportedly served 2.2 trillion advertisement requests in 2014. Its revenues are not in the public domain though some reports suggest that they could be as high as $500 million.

So, What Is Miip and Why Is It Significant?

Firstly, mobile advertising is huge and growing rapidly. With the shift of the internet to the mobile, most dramatically underlined by some Indian e-commerce giants’ decision to be “mobile-only”, the clear trend is for advertising on mobile.

Secondly, the whole promise of internet-based advertising (and now mobile-based advertising) is better targeting and customization. But this promise has to a large extent been belied. I am repeatedly amused by the fact that after I have purchased a ticket from, say, Indore to Delhi, I see online advertisements offering me low-priced Indore-Delhi tickets. These are completely wasted on me.

And, as InMobi keeps reminding us, many users see advertising as a distraction and an intrusion rather than something they find useful or enjoy.

Most extant internet or mobile-based advertising is intent-driven. You search for something you want to buy by entering it in a dialog box, and the search engine helps you by displaying related advertisements in addition to the search results. Once you have done such a search, related advertisements keep popping up even though the purchase may have been completed or you no longer have the requirement.

Such advertising makes limited use of analytics and doesn’t prompt you to check on other things you may be interested in. The range of products or services offered is also very narrow even though we know that there are hundreds if not thousands of companies that may be offering other products or services that may be of interest.

InMobi’s Miip is a mobile-based discovery platform that not only uses advanced analytics to overcome this problem, but also features a cute mascot that enters into a dialogue with the user to make suggestions and elicit user feedback. Along the way, the user can consult her friends before making a purchase choice using social media. All of this is done with high-quality visual content that exploits the superior graphics of today’s smartphone screens. Together, these enable an enjoyable and comprehensive shopping experience.

What’s significant in this case is that the company is already a strong player in the mobile advertising space, having entered at the right time about seven years ago. This gives it the muscle and the connections to capitalize on a big bet like Miip .

I particularly liked the launch of Miip in San Francisco, Bangalore and Beijing in quick succession, as these could very well represent loci of technological advancement and economic growth for the next decade. Unlike the earlier generation of Indian companies that shunned collaboration, it was good to see InMobi sharing space with important partners like Paytm and Walmart at the launch event itself.

I have only one regret about InMobi: I wish it wasn’t into push-based advertising that will promote even more consumerism.

India as a Product Nation

India’s success in services came from our ability to write high-quality software at low cost, without the need to make large irreversible upfront investments in technology or products. Companies like InMobi represent a new frontier where we are taking large bets and investing in platforms and new technologies.

This article is not only about InMobi, but about this new generation of companies that’s changing the way we do business. If sustained, this trend could help India become a Product Nation. In the long run, that would have much more impact than a few Indians heading major global corporations.

Reblogged from FoundingFuel