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The Nascent Transparency Movement Shifts Gears

Two recent blogposts, one simply titled Transparency by Amarpreet Kalkat of Frrole, and the other labeled Sharing by Sumanth Raghavendra of Deck, have given embrynonic radical transparency movement a boost.

This movement in India started many years back when NPC started published its internal metrics (see the example for 2009 & 2010). Initially this caused a stir. Luckily, appreciation, especially, from entrepreneurs quickly kicked in and this level of transparency became the norm until the handoff of NPC to a corporatized setup.

Transparency movementThe transparency and sharing tradition carried over to iSPIRT. Nowadays, iSPIRT routinely shares the good, bad and ugly, often in the form of a “journeyline”, so that everybody in the ecosystem can learn from its experiences (see PNCamp’s example here). It even publishes its volunteer model so that other community efforts can build on its lessons. In fact, now, the concept of radical transparency is baked into iSPIRT’s guiding principles itself (alongside polycentric governance and open-access to public goods).

Early last year entrepreneurs started embracing the radical transparency movement. This started with PlaybookRTs. In these PlaybookRTs, the facilitator, always an in-the-saddle entrepreneur gets “metaphorically naked” till all the other 10 participants are (metaphorically) naked too. This nakedness sets the stage for tremendous give-and-take of insights and learning. Today, there are almost two-dozen entrepreneurs who regularly “pass knowledge to others in a pay-forward model” in these PlaybookRTs. They go by the name of iSPIRT Mavens. You’ll be happy to see that this list includes some of the most prominent software product entrepreneurs.

The example of Mavens motivated Raj Sheth of RecruiterBox (an iSPIRT Product Circle donor) to embrace radical transparency by sharing their December marketing plan openly. The recent blogposts by Amarpreet of Frrole and Sumanth of Deck have given this trend more momentum. Kudos to them!

This is an important dynamic that is playing out in our ecosystem. This type of radical sharing increases the tacit knowledge in the ecosystem and it drives faster learning for everybody. It’s particularly helpful for novice entrepreneurs. It builds trust since the sharing is entrepreneur to entrepreneur with no middlemen involved. All these soft benefits power faster growth of our software product industry.

Come, take inspiration from Raj, Amarpreet and Sumanth. Join the transparency movement and help India become a Product Nation!

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Why entrepreneurs should watch MasterChef Australia

This article is not about cooking or opportunities in the F&B sector. Instead, it is about the importance of design, presentation quality, and visual appeal. And the impact it can have on your business, including your ability to attract employees, mentors/advisors, suppliers, and investors.

MasterChef Australia to me is an excellent reminder that producing a great product is not enough. Presenting it well enhances the appeal, and value, of the product manifold.

Likewise with startups, producing a great product or service is not enough. Even if the product or service addresses a strong consumer need, the adoption rates will be lower if the product is not designed well. In India recently, Indigo Airlines and Paper Boat (Aamras, Jal Jeera and juices) are great examples of how a brand can be built on design and aesthetics. It goes without saying that the product is very good. But the design, look & feel makes you pick it up from the shelf instantly.

But it is not just about making your product look beautiful. To really delight your customer, it is critically important that you design the overall experience around the product or service. Everything that you do can be presented well. Your company website, marketing material, signage in the office, power-point presentations (Oh God… how many times do we sit through ppts that are awfully designed), word documents, PDFs, etc. More often than not, we see excellent content get diluted in impact because of poor formatting of the word document or PDF.

Even excel sheets can be done beautifully. Yes, ‘beautifully’. With the startups that I advice/mentor, I insist that they spend some time, effort and energy to design their excel sheets. And it does make a huge difference. Just redoing the line spacing and alignments well makes documents much better than factory settings. Try formatting your excel sheets – indenting, making the rows slightly bigger than the content so that it looks well spaced out, coloring the different headers etc. – and see how pleasing it looks to read. It takes less than 30 seconds to move from a -10 to a +5 on an excel sheet look & feel by just doing indenting and spacing. Try it.

If you invest time in making your product and everything that you put out to the world – website, documents, excel sheets and presentations – look beautiful, the overall impact on your business can be surprisingly significant. Not only will your consumer/customer perceive higher value in your product, a company that has a culture of design aesthetics also finds it easier to attract employees, vendors, advisors/mentors, and investors.

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Women Entrepreneurs and Professional Networking

Few months ago a Nicole Jackisch German exchange student doing her Master Thesis at IIMB contacted me and requested to take part in a survey of women entrepreneurs. I filled up the online questionnaire that was mostly about who I reach out to when I run into problems in tech, business and other aspects of entrepreneurship. I forgot about it but few weeks later she called me and asked for one more session as she found my answers were an aberration in her data samples. Curious I spent some time with her.

Her research was about comparison and pattern analyses of networking traits between Germany and India’s high potential women entrepreneurs (On a side note a comparison on the same lines with American counterparts would be hugely valuable).  She chose two contrasting industries, Fashion and Technology and surveyed equal number of Entrepreneurs in both fields.

Apparently I was one of the very few who contacted generic expert folks as opposed to male relatives that majority reached out to. She wanted to analyze why that is so. I was very surprised as, for me it is just plain common sense to reach out to folks who have been on the same path. Fortunately I am also blessed with quite a few phenomenal men and women ex-colleagues, mentors, and folks in the eco system who I can trust to give me appropriate (and sometimes blunt) suggestions, information and further contacts.  It has taken time, but I am thankful for these folks.

It would be unscientific to interpret this any further and I would encourage you to read the report which also doesn’t interpret but notes data patterns. However it may be relevant to note my personal experience (and opinion) while networking (strangely this term does have lot of negative connotation in India). There are three types of folks you meet in professional settings.

    1. A small percentage of socially reserved people who aren’t comfortable in talking to women.   – This affects one’s confidence when you go with lot of enthusiasm to discuss some bright ideas and reciprocated with silence.
    2. Another small percentage is of offensive people who make off color jokes, politically incorrect discriminatory statements (sometimes unwittingly) and sometime just plain innuendos in the name of being friendly.  – These are downright dangerous as they can completely derail ones esteem and make one defensive and bring a sense of disgust and despair.
    3. Thankfully majority folks are very professional and can be professional allies once a common professional ground is established.

The task for Entrepreneurs is to deal with type 1 and 2 in a tactful manner and not to let those experiences stopping one from reaching out to the large, sensible professional majority.  Would this limit the possibilities, probably, but everyone will have to deal with their own unique limitations, so just keep the focus on the goal and march on

(With Thanks to Nicole Jackisch who graciously shared her report)

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Flipkart – Lessons for “Make in India”

Disclaimer : This article is entirely based on my reflection on what I read in the media

It was exciting and encouraging to experience the marketing campaigns of Flipkart’s billion dollar day and painful and demoralizing to witness pitfalls. I completely empathize with Sachin and Binny who had to write an unconditional apology letter to angry consumers while “celebrating” the victory in round #1 over Amazon, to keep their troops motivated.

Lessons for “Make in India"

The biggest question for me about the big billion day was : Is it a flop-show for Flipkart or is it a success ? Is complete acceptance of failure a sign off greatnes ? I felt apologizing and celebrating success at the same time is a concrete evidence of mediocrity

In any case, there are significant lessons to be learnt from this which is a classic case of gaps between intent and experience, plan and delivery.

We all know the investment and effort that goes into building such a market / consumer momentum for a day like this. We also know the lost image, lost investment, lost opportunity and above all the lost pride due to a result like flopkart. Why did this happen ? Here are my takeaways on the top reasons behind the gap between intent and experience, plan and delivery

  • Inadequate / incomplete anticipation / visualization of what is going to happen on the Big Billion Day. From the load on server to the demand for different products were mis-judged including the peak load at the time of start.
  • Poor coordination in the cross functional team in executing the project: Basically, the left hand was not aligned to what the right hand was doing. The eyes and feet were not coordinated with the brain etc.
  •  Poor workmanship / quality of delivery: from merchandiser to product manager, from project manager to developer, every person fell short in delivering what was expected. Every single gap in delivery contributed their share to the poor experience result.

Basically, every single person who worked on the project would have felt they did their job perfectly well but the end result was a not a success.

The lessons we should learn are very simple : Each one of us must visualize, simulate and experience the customer engagement in our mind while we create a product or service. Each one in the team including suppliers and vendors must collaborate deeply and engage passionately to ensure  the customer engagement visualized can be delivered 100%. When so much is at stake, the load and stress test must be done to ensure systems can withstand the load. Finally, when it comes to each of our own deliverable, we must ensure we deliver 110% and leave nothing to chance

Few other questions I was asking myself repeatedly but could not get an answer. Some of them are, If such thing has happened in a well funded US company, would heads roll ? Are heads not rolling in India because we do not have depth in leadership in the ecosystem ? Is stringent accountability a necessity for Make in India to succeed ?

Only if each person in the team is 100% committed to deliver customer delight, experience vision for customer engagement, execute and deliver on the plans – greatness is guaranteed. Every slip between the cup and the lip gets exposed. I strongly feel, these all are essential for Make in India to become a reality.

Cheers
CEO & Founder
GoFrugal Technologies

 

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Make in India – A Social and Cultural Revolution starting at Home

Delighted and enthusiastic to hear and read about the “Make in India” initiative by PM Modi. I came back to India after a short stay in Qualcomm, USA in 1995 to start a software company, to ship software that is made in India to USA. Along with my brothers Sridhar and Sekar, we started our journey with Vembu Systems. The passion and drive then was to create a software product like the Honda brand, from India.

I spent my first month in 1995 trying to get a telephone connection on Tatkal. I succeeded in getting it by paying Rs. 30,000/- and spent about 10 full days in various BSNL offices including Chrompet and Tambaram telephone exchanges. We used dial-up modem to connect Internet few times a day to download mails and upload software.

We could not afford to invest more that time. We were hiring from our friend circle and from those who walked into our office to drop in their resume. Each one of us were working minimum 12 hours a day and almost for first 5 years most of us only knew work. There was no life outside office. I really enjoyed working with almost every single person we hired. Every person had the eagerness and desire to succeed, were totally committed, were willing to put in as much time as it takes to deliver and were all willing to follow me. I remember myself as a cocky and an impatient manager.

We succeeded in figuring our way out, finding our feet to establish a business and grow it.

Looking back at India then and now, a lot has changed.

Today, most of the things any entrepreneur wants or needs are available. There are lots of money, best infrastructure, lots of guidance by people who have been there and have already done that. The world’s best practices are also available at finger tips/search.

I honestly feel we have all the resources to deliver on “Make in India” dream and convert it into a reality. But, do we have the resourcefulness?

We have the demographic dividend. Everyone from farms to factories and from campuses to companies are struggling to recruit even semi-skilled people who are capable enough to be trained on the job. PM Modi’s 3S mantra of Skill, Speed, and Scale is very apt for making things in India but the fundamental need is the professional ethics and hard work. Do we have the ethics, passion, apptite, aspiration, commitment and the willingness to work hard work to make things in India or are we just consumers?

#MakeInIndiaI feel “Make in India” must start in every home and in every primary school. Only if parents instill values, ethics, responsibility, respect for efforts, invest in developing comprehensive skills, environment awareness, and problem solving at a young age – the “Make in India” dream can become a reality. Parents and grandparents should go back to tell the stories that teach ethics and values in addition to kids growing up only watching Barbie’s, Ninja Hattori, and Harry Potter.

The post-liberalization growth had a negative impact on Indian middle class and it is showing up in the youth joining the workforce now. The middle class then had American ethics and values and the middle class now wants to live a western life, as they see it on TV.

We have started believing that success is all about contacts, recommendations, pulling strings, money, and merit does not matter. Only when we believe ethics, talent, skill, merit, and hard work matters, we can make things in India that we will be all proud of.

Till then, succeeding in “Make in India” is an accident against all odds. To make things in India that are relevant to the world, we must first make things that we are proud of consuming. Only if we build products and offer services in India that can compete against the best products in the world, we can take them to the world. Without a vibrant local market, any success will be short-lived.

Let each one of us be a good parent, develop good primary school teachers, and create a vibrant, healthy, competitive local market, so that we can deliver world class products and services, locally from India. Only then, we can have a sustained and repeatable success globally.

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Internet’s Truth or Dare game of anonimisation

A while ago, I broke my self imposed “participate in only one social network policy” when I installed popular networking app Secret. It was out of sheer curiosity and an intention to experiment with its technology of anonymous social networking. The underlying premise is very interesting as the people participating are from your extended friend circles but are anonimised by a combination of encryption and oneway hashes, time lags. As expected both vigilantism and mud slinging are rampant and there are lot of scandalous topics and dirt being posted regarding obvious taboo subjects, about people and sometime very personal intimate information, which if traced back to a real person can cause huge legal trouble, embarrassment and pain in multiple spheres of life. But can one be really anonymous online even while assuming the technology and intent behind such apps to be secure and trusted ?

Let us look at the recent case of data share in NY city which released anonymized records of all the cab trips that included, types of cabs, number of passengers, routes, times, fare and other treasure trove of information which could be used for intelligent planning of traffic, roads, cab capacity, parking, public transport. However some of the information such as drivers license number, cab license plates could be sensitive information as they lend themselves to malicious uses apart from breach of privacy. So that information was masked by the use of oneway hash (for uninitiated, it is an encryption technology which can never be decoded back to original text even if the key and algorithm is known). However one intelligent researcher saw this data and realized that license numbers are fixed format and there is finite number of possible hash results. So he simply computed all possible hashes (173 million records) and matched that with the datasets that identify all the cab drivers, their incomes and whereabouts.

There is a considerable research happening in the space of re-identification with the fact that only 33 bits of unique information to be able to uniquely identify everyone on the internet. This along with slew of public data statistics such as census records, innocuous social network data could mean the task of re-identifying anonymized information is easier than ever. As in everything with the internet, many such technologies are becoming commoditized, due to cheap availability of processing power.

Now lets apply this concept back to secret; With the secrets utility that informs how far the person posting something is located, whether he/she is a friend and pandering to one’s inner sherlock Holmes aka deductive logic one can potentially figure out who the people participating in that discussion are. This is in spite of the integrity of the app and security technologies being intact. Obviously any malicious hack could lead more devastating circumstances.

While secret is somewhat frivolous albeit interesting use case, there are many valid, business and legal reasons for protecting people’s identity while sharing relevant data for both academic and business purposes. Strong anonymization is desired in many cases, but often leads to loss of intelligence. Next few years will see an interesting race between anonymization and re-identification both providing useful application in various contexts.

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Gandhigiri to the Software & Technology Entrepreneur – Part II

Gandhi and Customer Centricity

The progression of Economic activity as it stands in the Global Economy today has accelerated from commodities->products->services->experiences->transformations. (Pine and Gilmore)

Today we are already in the Experience Economy (Its Apple like experience, its not apple like products), but as professionals we are still grappling with how we build Products, let alone scaling the Economic activity to be staging experiences and guiding transformations!

While I am not an economist in any regard, and I do not understand the nuances of all industries and their current economic function in India (Are we building products? Are we providing services? or just plainly selling commodities?), its imperative that I comment on only Software and Services.

Before doing that, on the Gandhi Jayanti day, I would like to introspect what our Father-of-the-Nation tried to teach us, by emphasizing on making our own Salt, our own clothes with the Swadeshi Movement OR with his services at the Sabarmati Ashram. Essentially he articulated with his actions what our present day government is campaigning for “Make in India”. How did Gandhi understand the evolution of Economic activity more than a 130 years ago?

Because Gandhi was more customer centric a 100 years ago, than we are today. He empathized with every person, much better than we did. Let me quote the now cliched Gandhi’s quote on Customer Service “A customer is the most important visitor on our premises. He is not dependent on us. We are dependent on him. He is not an interruption in our work. He is the purpose of it. He is not an outsider in our business. He is part of it. We are not doing him a favor by serving him. He is doing us a favor by giving us an opportunity to do so.”

Customer is more important

Empathy By Design

Come to think of it, our entire Indian Cultural ethos is based on Empathy. “Karuna” is the foundation of almost every teaching in our country. Indian institutionalization and Orientation has Empathy by Design. Then how is it, that we have failed to reciprocate to the needs of People? Why is it, that we have not built products, services, experiences that cater to the needs/wants/aspirations of people, when there is Empathy by Design in our culture?

Tough questions to answer universally or generally. However focusing on Software and Services, I think we have become too focused on Systems, Processes and Technology, rather than addressing the concerns of people. We have gotten too-carried away with Western philosophy of Professionalism, which emphasizes a lot on Systems, but empathizes little with people.

Let me give you a more concrete example. High exploratory and high mortality nature of software projects is like an Industry Standard. 9 out of 10 software initiatives don’t go anywhere, seems to be an easily accepted norm. All the cash-rich service majors in IT/ITES industry have not re-deployed their capital to building an Indian Apple today, because they seem to have accepted that Software products have a 9 in 10 chance of mortality. However what they have failed to realize, is all Lean Methods today propose Customer Development first, rather than Product Development. Build it and they will come, is almost an era of the past. Every Agile and Lean technique today is about keeping the Customer-centric view first and rapidly building tools, products, services, etc which empathize with the needs of people.

Making in INDIA

India however has a renewed emphasis on the Swadeshi movement. Its now called Making In India. Every body is now encouraged to make their products in India. However, I would like to draw your attention to Gandhi’s philosophy again, which has found a new meaning, with the Lean and Agile world. Customer Development is more important than Product Development.

Let me go a little further, the first realization all product entrepreneurs need to have is this “Customer is the Product”. Your product is just a medium/abstraction through which, you continuously develop your Customer. Stop fiddling with the Features and Benefits. They are the HOW and WHAT for your Customer. WHY the customer does anything with you and your Product, is essentially what we need to understand.

Making In India, is all about making the Customer or Consumer in India happier, healthier and wealthier each day. Do you have a plan for this? Why should you think about Making in India, is it only for Export? Well, here is why. All new ideas, new software product ideas are imperfect ideas, and need to be tested locally, and refined continually, before we can think of exporting. India today lacks any credible domestic infrastructure or support, to even make little bets, so ideas never go past their imperfect states, and hence never attain Global Standards. So, lets make and try it here first.

Mahatma Gandhi

Conclusion

We are a country blessed with Empathy by Design. We are a nation which puts Emotions ahead of Professionalism. We are a nation that believes in Darshan (of all deities). Truth is, Customer is the first GOD. So, fellow Entrepreneurs, if there is one Gandhigiri that we need to learn, it is to do a full-darshan of every customer, their needs, their wants, their aspirations. We now realize Consumer Development is as important, if not more important than Product Development. Is’nt it then, not automatic, that building a Consumer-Centric Nation, is the first step to building a Product Nation. Lets go and create this change, and let initiatives like iSPIRT and ProductNation be the inspiration through which we can channel our aspirations and ideas. Happy Gandhi Jayanthi to all!

Be the Change

Read the Part 1 here Gandhigiri to the Software and Technology Entrepreneur!

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Looking for business leads? Want to be seen among the top level CXOs and decision maker? @CeBITINDIA

The premiere edition of CeBIT in Asia is all set to get off to a very strong start. From 12-14 November over 600 companies spread over 9 topic clusters will showcase global enterprise technology innovations. 200 of these 600 exhibitors are international companies who are completely new to the Indian market. iSPIRT is a key strategic partner to CeBIT India and together the goal is to showcase India as a Product Nation both in Bangalore this year and Hannover in 2015. With a clear focus on IT.BUSINESS.100% the event invites Enterprise Technology Buyers with a clear B2B focus. As per the latest forecasts received from the organisers, the event, will garner close to 25,000 visitors. CXOs, IT Resellers, MSMEs and Government Officials from State and Central Ministries form the majority of the visitor base. The focus end user sectors for the event are BFSI, Automotive and Manufacturing, Retail, Healthcare, Education, R&D and Hospitality.

Want to Win the CeBIT Challenge? Here’s your opportunity

“If you are a start-up, then +91 is your code to connect with seasoned entrepreneurs, venture capitalists, mentors and accelerators and win a chance to showcase your ideas to a global audience at CeBIT 2015, Hannover, Germany.”

Technology, as the industry of choice for many of today’s start-up businesses, attracts investors and venture capitalists, and has enormous payout potential. While the appeal of launching a tech start-up is easy to understand, some entrepreneurs fail to cope with the unique risks they face being in the competitive world of technology. This is where +91 comes in.

The genesis of +91 lies in the Start-up Village that was started at CeBIT Hannover as an international initiative for digital pioneers, innovators and ground breaking start-ups. Initiated over a decade ago, the Start-up Village has since been supporting outstanding business talents and their exceptional business ideas, providing them with a platform for dialog, and therefore stimulating and accelerating innovation in the field. 

CeBIT INDIA

Business Technology +91 Start-up Challenge is being organized alongside CeBIT INDIA – Asia’s leading Business Technology and ICT Procurement Event will be held from 12-14 November 2014 at BIEC, Bangalore. CeBIT India needs no introduction. With the aim of showcasing New Perspectives in IT Business, India’s first CeBIT will cover the key IT trends of Cloud Computing, Strategic Big Data, Enterprise Mobilily and Social Media.

Along with its large exhibits, CeBIT India will also feature a series of engaging conferences, workshops and seminars by global thought leaders like Vishal Sikka CEO, Infosys and Mark McDonald Global MD, Accenture at their CeBIT Global Conference. You can download the brochure for +91 Start-Up Challenge for CeBIT India here

PLUGGED IN:  

Along with CeBIT India, a Consumer Electronic Show for consumers called PLUGGED IN will be organized, parallel from 14 – 15 November, 2014 at BIEC, Bangalore. Consumer Technology +91 Start-Up Challenge will be held at PLUGGED IN

PLUGGED IN is the largest consumer gathering and showcase of consumer electronics & technology in India! It is is a comprehensive convergence of all stakeholders in the Consumer Electronics & Technology sphere to engage, educate and entertain consumers like never before. It is a platform for new product launches and showcase of game changing technologies in the consumer technology industry. For more information visit the PLUGGED IN website. You can download the brochure for +91 Start-Up Challenge for PLUGGED IN here

iSPIRT SaaS Pavilion @ CeBIT India

With a view to showcase India’s product strengths, CeBIT India has partnered with iSPIRT to create an exclusive SaaS display. The organisers have built a smart all-inclusive package, which includes fully built and functional display space, central meeting area facilities and prime space on the CeBIT India show floor. In recognition of our partnership with CeBIT, iSPIRT members on the SaaS pavilion are offered a preferential participation rate. In addition to the SaaS pavilion, CeBIT and iSPIRT will work closely together to showcase product innovation in the +91 zone. Please don’t miss the opportunity and contact the CEBIT India team(Mls(AT)HMF-India.com) at the earliest, who will provide you details information on the challenge. You can find more information about the SaaS pavilion here.

WHAT DOES A START UP GET?

  • Showcase & Market:  An exclusive opportunity for start-ups to showcase and market products to their customers at +91 Start-up market
  • Workshops:  Exclusive access to workshops conducted in the +91 Zone by industry experts covering the core business aspects-Marketing, Finance, Operations and more.
  • Mentors: Interact with the best minds in the industry on one-one basis, receive valuable suggestions & feedback to enhance and add value to your business.
  • Network & Interact: An opportunity to network with fellow entrepreneurs, angel investor and venture capitalists, accelerators, experts & support programs, as well as interact with 25,000+ business visitors of CEBIT India & Plugged In
  • Attract investments:  With investors coming from all domains of thetechnology ecosphere, you get the best chance to attract investment.
  • Visibility: visibility through extensive media coverage and promotion across all mediums

AND WIN AN OPPORTUNITY TO SHOWCASE YOUR PRODUCT AT CEBIT IN HANNOVER, GERMANY.

WHAT NEXT? 

Participation for CeBIT India +91 Start-up Challenge is limited to only 50 Start Up companies and PLUGGED IN +91 Starts-up Challenge is limited to 25 Start Up companies. Please don’t miss the opportunity and contact the CEBIT India & PLUGGED IN team(Praveen.Nair(AT)HMF-India.com) at the earliest, who will provide you details information on the challenge.

 

 

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Understanding tech play in the B2B (business to business) Space

The last few years of my time I spent in IBM was in the space of B2B. Here are some of my observations during my consulting and interactions with the B2B companies over the years.

What is B2B?

B2B and B2C are often used terms in the Startup space. Let me begin by explaining these two.

B2C (Business to Consumer) are those companies who have products or Platforms that are used by end consumers like you and me. Most omnipresent examples of B2C companies in our lives are sites like Facebook, Twitter, Snapdeal, Flipkart.

B2B (Business to Business) Startups are those companies who have Products or Platforms that are used by Business or Enterprises. These Businesses or Enterprises could be a Bank or Insurance Company, Manufacturing Plant or a Retail Store, or a Hospital. The Startups in this space may not ring a bell. But if you see the iSPIRT’s InTech50 winners for 2014. They are classic examples of B2B Startups. I am putting up the link for anyone to refer to.

B2B few examples B2B product companies around 14-15 years back would focus on Automating things that were done over paper. I can take the classic example of Enterprise Resource Planning for Manufacturing Industry.

Before the advent of Information technology, all the processes in a Manufacturing company used to done over Documents. Right from generation of Master Product Schedule to Manufacturing Resource Plan, to generation of Purchase requisition and converting that to Purchase order.

The other ubiquitous change we all must have observed is when we walk into the Banks. There was a time when all the accounts were maintained in Registers. For our account statements, they used to give passbooks which would have all the transactions we did with the Bank. I haven’t taken a Passbook for the last 9 years. Thanks to the Core Banking Solutions, Loan Origination Systems, Internet Banking etc now it would be difficult to find Banks where the accounts and the transactions are maintained in registers. We can sit at our home take a view of the Transactions in the Bank we have done in the browsers. The Products for the Banks come from many providers like TCS, Infosys, Oracle, Infrasoft, Finacle to name a few.

As we passed through the years, we see the various Industries, be it Banking, Manufacturing, Retail, Logistics, Insurance, Hospital they have implemented Information technology in at least doing away from the Manual processes. In Banking as I mentioned earlier one has Core Banking Solutions, Payment Solutions, Channels Solutions, CRM applications, Basel II applications etc. Similarly in Insurance one has Underwriting, Policy Administration, Claims Administration, Product Configuration etc. Each of them are a subject in itself and I can probably write a book explaining each of these.

Startups Play in B2B

Now the questions comes is how Startups will play a role in the B2B space. The answer to this is there are always areas to achieve efficiencies in the existing landscape of any industry. Also there are new market to cater to. With advent of new technologies in the area of Enterprise Mobility, Cloud, Internet of Things, Big Data and Analytics, Startups have a great potential to provide solutions in these space in a fast and swift manner. I will take some examples in each of the above areas.

In Banks and Insurance there has been lot of data for them over the past 10 – 14 years. Many Banks and Insurance are looking at making more sense of the Data. For example what is the Product Profitability Analysis, Channel Profitability, Individual Customer Profile, Branch Profitability, Customer Lifetime Value etc.

This would be typically solved using Analytics solutions. How a Bank or the Insurance would typically generate this report is by pushing their Transactional data into a Data warehouse repository using Extraction, transformation and load (generally termed as ETL) tools. And on top of they would have an Analytics Engine. The Analytics engine would get the data from the Data warehouse repository and have it put in its Data Models. From the Data Models the Analytical reports are generated. What some of the B2B companies are doing is having pre build Data Models for a Bank or Insurance company and than having pre built Analytics reports.

These Prebuilt Data Models and Reports would cater to most of the Analytical report requirement for a Bank or an Insurance Company. But they can be also customized depending on the specifics of an organization by tweaking here and there. The advantage a Bank or an Insurance company gets is faster time to go live with the Analytics projects instead of defining the Data Models and the Reports from scratch and than the Technology Implementation partner developing those. Similarly Prebuilt Analytics Solutions can be developed for any other industry such as Manufacturing, Retail, Healthcare etc.

Another example can be extension of Customer Relationship Management (CRM) applications using Mobile Technologies, especially with Location based services of Mobile Technologies.

Imagine if one can create a Customer opportunity in the CRM using his Mobile on his way back to office after he or she has a successful Customer meeting. Or if a Manager is able to figure out how many of his employees have made customer visits location wise in a week or month in a single Dashboard (I know this gets little intrusive).

One more example using the Internet of Things (IOT). This example would be for Utility companies especially Water. Imagine if the Water Utility Provider wants to know how much of Water is flowing across various pipes in a single Dashboard. This is possible by having sensors called Flow meters which detect the flow of water in a pipe and which would be sending the information to a central server using Wire less technologies (could be combinations of ZigBee, GSM). Once it reaches the Central server, it goes into a database from Dashboards can be generated.

Once they have the infrastructure in place, Utilities would be able to detect leakages or theft of waters in their areas. Let me illustrate how this can be done using a simple example. If there is Pipe A supplying water to Pipe B and Pipe C, the sum total of water flowing through Pipe B and Pipe C should be approximately equal the water that has flown through Pipe A. If there is an inequality (Water flown through Pipe A in a day < Water flown through Pipe B in a day + Water flown through Pipe C in a day) one can suspect a Water leakage. This would come as an alert in the Dashboard, which would be actioned by the Utility.

Applying analytics now the Utility can also get historical reports how much of water has been flowing through the various Water networks in the cities. It would be also possible to predict the Water that is required for the coming day based on past historical data. This can lead to better planning of the Utility resources right from figuring how much water should be pumped from the Water reservoirs to the Overhead Tanks depending on the amount of Water present in the Overhead Tanks. There are level sensors (another usage of IOT) which communicate the level of water in a tank to the Central Server.

I would take one last example which illustrates an entirely new customer segment being catered with the advent of technology. I am taking the example of Cooperative Banks. There are still many Cooperative Banks who have not been catered by the Solution providers in the Banking space. There are B2B Startups who are focused in these space. Cloud technologies have helped these Startups in the Economies of Scale to cater to this segment.

The examples mentioned are just scratch in the surface. By identifying a problem statement and finding a solution which is scalable by applying the right set of technologies to it, the possibilities are galore.

As per my observations most of the B2B companies originate with their Founders

  • Have experience in the specific Business domains, and they see an opportunity to solve a problem in that domain.
  • Have experience as an IT Consultant or Tech Specialist in a specific domain.
  • Are in the System Integration space to start with and have graduated to Product or Platform Solutions in a Domain.

IBM has interesting tools and middleware, which can be used by the B2B startups. We are working with some innovative companies in this space. Putting a few names below

  • A3 RMT has a solution for remote wireless patient monitoring which would lead to life saving emergency medical response in difficult conditions such as uneven communication networks, unstable power, jerky ambulance journeys etc. These mobile solutions deliver high precision medical parameters e.g. full 12 lead ECG, to any internet connected devices like a low cost mobile phone through which the doctor can remotely monitor a patient in critical condition. Their solution has enabled saving of over 1000 lives. They have integrated with WebSphere Application Server and DB2.
  • Ideyeah has a Cloud based offering called opTEAMize for Delivery & Operational Heads of IT/ITeS companies who need to quickly find resources and accurately quote for a project. opTEAMize integrates with existing HR, CRM, ERP & Resource Management Systems of IT/ ITeS companies and aggregates skill, capability, and cost data. And this enables fast decision making through information models and interactive analytics. The product runs on IBM Softlayer and IBM Cloudant and are integrating using IBM CastIron.
  • GlobalSinc has a Product called Educube, which is a cloud based collaboration and ERP suite for K-12 Schools enabling collaboration between students, teachers and parents, streamlining the business processes for schools such as Fees Automation, Payroll, Admissions, HR, performance and assessment of Students, knowledge management for teachers, teacher effectiveness monitoring with advanced Business Intelligence and Analytics tools. They are integrating with IBM Cognos BI.

We also do some interesting stuff in the B2B space. We are launching a competition for B2B Startups, the first of its kind by a Corporate in India. If you are a B2B Startup, less than 5 years and privately held. You can apply to the competition by becoming a Global Entrepreneur Program member. There is a bouquet of prizes for the winners. The details are in the website ibmgepindia.com.

Guest Post by Radhesh Kanumury, Country Lead, Global Entrepreneur Program, IBM.

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M&A: Why small exits matter? The big value of small exits (#iSPIRT-OEQ)

iSPIRT Open Ecosystem Questions(OEQ) Series.  The conversation around this exciting session was lead by Sanat Rao (iSPIRT) and the speakers were Jay Pullur (Pramati Technologies), Sanjay Shah (Invensys Skelta), Pari Natarajan (Zinnov), Karthik Reddy (Blume Ventures) & Vijay Anand (The Startup Centre).

Sanat initiated the conversation with an observation that it was only the bigger exits that are picked up by the media. Smaller exits do not get any media attention at all. , We all hear about the big bang “home runs”:   WhatsApp sold for 19 billion USD to Facebook, Google acquires Nest for 3.2 billion USD, etc.     However, studies show that 65% of VC funded companies in the US return 0-1x to their investors.    Even among the remaining 35%, the exit valuations are relatively small:   since 2010, the average M&A deal size in the US/Israel is 100 million USD.  Only a small 0.1% of VC-funded companies are home runs (50X returns).  And not just in India. In Israel too, from 2010-14, out of the 88 exits, two deals on Viber and Waze accounted for a whopping 25% of the total M & A value.

Given these statistics, why do we promote the myth of a multi-billon $$ exit?  Why don’t we recognize the value of these smaller exits?   Should we not be promoting and helping product startups to find an exit at an earlier point in their lifecycle, rather than treating these exits as a worst case scenario?

Jay Pullur, Founder of Pramati Technologies added that startups must understand and provide an exit plan to investors. Given the risks involved in investing in startups, it is natural for investors to expect lucrative returns. There is no point in them investing in startups, which are riskier investments, if the returns are as much as they would get from a bank Fixed Deposit. Given the fact that only a handful of companies can go public, M&A is an alternative to providing liquidity and exit to investors. M&A also allows employees with ESOPs to monetize their stock.

Karthik Reddy, Managing Partner at Blume Ventures, pointed out that there is a consistency in all top-performing funds. However, the bizarre statistic is that only 4-5-6 companies deliver majority of the returns even in high-performing funds. “There is a classic conundrum that plays here – can you systematically look at reasonable sized exits or go for the homerun. The curse of the VC system is to play for the homerun”.

He added, “At Blume, we look at things differently. For the right deals, we do consider smaller mergers and acquisitions. Though they do not move the needle significantly, it brings much needed cash back into play which we can either invest in other ventures or use that to provide follow-on capital to better performing ventures. Also, the talent gets absorbed in a big company or some of your own portfolio companies.” Karthik’s view is that as an investor, helping under-performing or weak companies find exits and placing the founders and teams with other companies creates a bond and relationship. I.e. when a strong team whose current company doesn’t do well and starts up again, they should consider the fund to invest in their new venture too. In an environment where good teams are hard to find, relationships built even during challenging circumstances can be a big asset.

Karthik’s observation is that Indian buyers/acquirers are stingy and skeptical in buying assets.

The panel also mentioned Paul Graham’s (of Y-combinator) view that for every big exit there are a multiple smaller exits. The smaller exits feed the bigger one.

Smaller exits have a multiplying effect on the entrepreneurial ecosystem –

Sanjay Shah explained that he has had three exits – one was a small exit but it was a good exit since they have not raise external funds; the second one was a good exit but as they had raised a lot of money it was not very meaningful for the investors. However, the third one was very fulfilling. A rather small round of money was raised, and with very few members of the team they were able to create wealth for everyone, including the employees because of the value of the ESOP’s. Interestingly, three other companies were created with their old business, which revalidated the culture of entrepreneurship. Therefore, smaller exits are important as they have a multiplying effect. Sanjay mentioned that he himself is starting up again.

Jay was asked the tricky question – when do we know when to exit? His reply was very simple – the entrepreneur and the investor – who are involved deepest, know it. They know that they are not in an airplane but a rocket J. You know when you are zooming; the market is opening up and you need more fuel in terms of capital… Or you know that it’s time for an exit. It becomes obvious.

But, he also cautioned that sometimes this could go dangerously wrong. Just because you want to exit, doesn’t mean that you will get one! There may not be any current buyers, the market may have changed, there is competition etc  – any of these can make an exit difficult.

Pari Natarajan mentioned that acquirers want the key people to stay. All of the key people in a company, that gets acquired, are usually interviewed and then the decision of buying the company is taken. It is a wonderful thing for the ecosystem, as the team that gets acquired, gets the advantage of money and the experience of a larger organization. Therefore, they could scale faster than otherwise. Therefore, smaller exits are very important. When your basic needs are taken care of (like a house, car and education for your kids) you can aspire for bigger goals.

Vijay Anand, of The Startup Center – raised an interesting point – India, unusually focuses on US acquires. There seems to be a pedigree attached to being acquired by a US company, even though the valuation maybe lower.

He pointed out that the downside of being acquired by a US company is that we are shipping the IP and talent abroad. This was an area of concern not from a patriotic point of view, but for the long-term ecosystem-building perspective.

Sanjay suggested that one of the ways Indian companies can look at buying smaller startups is by having a business relationship with them. Networking within the ecosystem is important.

However, the panel unanimously agreed that companies should not be created for exits, but for value addition to the customer. However, exits are important – both for the entrepreneur and employees. 

Some key points

  • A good exit builds risk capital in the ecosystem.
  • A successful exit creates passion and drives entrepreneurship
  • The money generated goes back into the ecosystem – i.e. to fund new ventures or to provide follow-on capital to better-performing companies of the investor’s portfolio
  • A good value of ESOP’s and Bonuses help in employee drive and passion
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Take a Step Towards Denmark Presenting The Next Step Challenge

Denmark is located in Scandinavia in Northern Europe and of the easiest places to start and grow a business. The World Bank has rated it as amongst the easiest countries to do business in and as a fledging business, is that not ‘music to your ears’.

Denmark is also a hub for cutting edge technologies widen a variety of clusters including ICT, Clean Technologies, Life Sciences & Design. Some of the exciting start ups that have grown out of Denmark over the past few decades include SKYPE, GIGA, LINKSYS, NAVISION, all of whom were subsequently acquired by global majors.

The Danish Government is committed to fostering a culture of business & entrepreneurship and positioning Denmark as a global hot spot for Innovation. It continues to attract foreign companies into Denmark in an attempt to further strengthen its clusters.

Next Step Challenge

Invest in Denmark, a part of the Danish Ministry of Foreign Affairs in partnership with Next Step Challenge & Accelerace  brings to you a unique Accelerator program that promises you are ‘ride of your life’..

Next Step Challenge offers ambitious startups the chance to become part of what is perhaps the most ambitious accelerator program you’ll ever encounter.

The main prize of EUR 250,000 for the winning startup makes Next Step Challenge the biggest entrepreneur prize in Europe and the US.

Next Step Challenge could open a whole new world of opportunities for startup companies within the fields of digital health, smart energy, smart home, and communication. But just being part of the accelerator program is guaranteed to benefit the participating startups and entrepreneurs. 

nextstepchallenge

What the Program Entails

All Next Step Challenge participants are enrolled in an extensive six-month business development program that guarantees:

  • Two months of preparation where your business is currently located and four months on site in Next Step City
  • EUR 30,000 in seed financing (based on a due diligence) when you relocate to Next Step City
  • Individual mentoring by external business experts from leading Danish and international companies
  • 200+ hours of personal business training from experienced Accelerace consultants
  • Learning labs and workshops where you will get intensive training designed to maximize your business potential
  • The opportunity to test technology on 261,000 households using one of the world’s most advanced digital infrastructures
  • Free office space in Next Step City with access to high-speed broadband
  • Free housing in the region during the four-month relocation period
  • Rich opportunity to qualify for further financing from Accelerace and other Danish seed funds
  • A Founders pack with resources and tools worth EUR 50,000+
  • The benefit of a collaborative business environment featuring ambitious companies like your own
  • And much more …

We believe that this is a unique opportunity for Indian startups to get a foothold into one of the most exciting technology environments in the world and use Denmark as a launch pad into Europe.

So hurry, visit http://www.nextstepchallenge.com/apply/. Applications close by 30th of September, 2014.

Guest Post by Shanker Subramaniam, Country Manager, Invest in Denmark

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Enterprise Agility in Public Sector Insurance

Indian insurance market today is primarily dependent on push, tax incentives and mandatory buying for sales. There is very little customer pull, which will come from with increasing savings and disposable income. With the recent increase of FDI limit to 49% from 26% has put more pressure on public insurance companies to maintain their market share.

Public Insurance Systems
Premiums from Life Insurance is decreasing since 2011 and there is no significant growth in Non-Life Insurance premium from 2012 (growing population, vehicles should increase premiums collected every year). India’s population is 1,22,88,88,667* and only 20% are insured i.e. 98,31,10,933 people are uninsured. Working population is 49,15,55,467** that can afford insurance. With these numbers, India’s insurance adoption rate and the premiums collections are decreasing every year.
*Accurate data was not available, forecasting was done
*Data based on censusindia.gov, 2001

Insurance1

Source – Data from IRDA

Digital Solution
Current projections show that, by 2030, the global middle class could constitute 50% of the world’s population. Today’s low income consumers become tomorrow’s middle class. Insurance companies need to effectively target emerging customers through awareness (marketing), affordability (products) and accessibility (ease of purchasing, servicing and claims handling). A digital solution will build enterprise agility helping public insurance move away from pull strategy and engage people with a push strategy.

Marketing
IRDA is trying to make people aware of the benefits of insurance. They are successful in getting 20% of the total population insured, but the other 80% of the population is not aware or they are not considering insurance important.
Alerts Management – Insurance companies should remind people constantly through SMS, e-mail and IVR, the important of insurance and the benefits they will reap from it.
Campaign management – Definitely public insurance companies are publicizing their schemes and products through media channels but a measurement of every campaign is needed. A digitalized campaign management solution would give public insurance company’s information on which campaign was effective and how many products they sold through that.

Products
Insurance products should be created based on the needs of the customer to attract more customers.
Analytics- Have an analytics solution in place to constantly monitor your customer’s behavior through available external databases to give them products they need the most.

Interactive e-mail- Have a push mechanism email strategy solution, where the solution should mail all relevant products to existing/prospect customers to give them more available options. Customer should be able to view all available products within their mailbox instead of getting redirected to the company web portal.

Purchasing, servicing and claims handling
Make your customer onboarding and other transaction simple to pass on their experience to their friends and family.
Self-care portal – An integrated self-care portal that can be used to browse through products, online purchase, submit claims and take feedback or requests. Centralized application that should integrate with existing processes to create a uniform platform.
Onboard- use digital onbording solution for faster onboarding clients. Research shows that many people change their mind half way through onboarding process. Do not lose a customer with snail onboarding.
Interactive e-mail – Integrate the web portal into a PDF and give greater control to the customer.

Insurance2

YOY Life Insurance Premium with and without Digital Solution

*Note
• The above calculations are based on historical data
• These approximate statistics are used to show the benefit of a digital solution

Insurance3

YOY Non Life Insurance Premium with and without Digital Solution

*Note
• The above calculations are based on historical data
• These approximate statistics are used to show the benefit of a digital solution

Benefits with Enterprise Agility

  • Increase insurance penetration in India (SMS alerts in rural areas).
  • Increase in premium with alerts about insurance to everyone.
  • Faster time to market new insurance products.
  • Relevant offers are sent to customers for generating revenue.
  • Centralized application can be accessed by clients and business users.
  • Enhance customer experience and reduce client acquisition.
  • Provide specific, focused and timely marketable messages
  • Revenue realization by upto 35-40% per customer segment
  • Ability to analyze transaction information and make payment though the interactive PDF provides useful insights and greater convenience to the customers
  • Targeted and personalized promotional offers and interactive hyperlinks that lead to more information about the offers enables customer to be better informed
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Who owns the Copyrights on a product?

The Company where the engineers are employed for product development OR the Company employing them OR the product development team ?

This is an oft arising question in the software industry and of great relevance in fighting a corporate battle for claiming Copyright /IP and patent control of a product developed by the employees of a company. Logically speaking, the employees work under the overall product development framework of a company, and the development / coding structure is a joint effort of the whole team. The product overall functionality is defined by the Company and details multiple aspects :

  • The target market
  • The input and output parameters
  • The Call flow and the functionality within the product
  • The marketing pitch
  • And more….

But it’s the individual employee or the team effort that goes into the development and its their skill set deployed here. It’s a bit of a grey area and has been debated in court many a time. Its experienced in filing of patents globally and the right way ahead is to get a patent assignment deed signed by the patent filing individual / team for the same in favour of the Company in perpetuity and without any claims in the past, present and future on the same.

Extending the same logic to the product development team and the individuals threin, it would be best to structure the following plans in the employee contracts in an organization :

  • A Disclaimer from the employees clearly stating that all development work / concepts / and ideas executed in the due course of their employment with the organization are the rightful property of the Organisation and that the employee has no legal right over the same even after the termination of his contract with the Company.
  • A No- Compete/ Non Disclosure Agreement : in case of highly confidential and tasks involving a high degree of IP creation, its most important to get this agreement in place. A lot of knowledge is shared between employees in an organization in the due course of product ideation / development and this is valuable knowledge for competition. Employee ethics warrant a Non Disclosure of virgin knowledge developed within an organization with any outside and its good to strictly implement this in an organization.
  • Ethical Code of Conduct Agreement : Inclusions in this could be :
    1. Use of Company assets and information
    2. Non Disclosure
    3. Accountability and Zero tolerance

Implementing the above basics in an organization, add to the security layer in ensuring adequate protection and safeguards in any legal framework and action if needed at any time against violations in Copyright / IP ownership on products owned / developed by an organization.

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From manifesto to budget to delivery

The 2014 election manifesto of the Bharatiya Janata Party (BJP) outlined how innovation, research and technology can transform India into a superpower by empowering, connecting and binding all stakeholders.

The decisive mandate given to the BJP-led National Democratic Alliance, under the leadership of Narendra Modi, in the general election marked a paradigm shift in the Indian political landscape; the people of India reposed their complete faith in Prime Minister Modi and his team.

Finance minister Arun Jaitley and his team must be complimented for taking forward the visionary BJP manifesto and turning it into actionable budget proposals, and also for setting the direction towards building a “Digital India” where innovation, research and technology will play a major role.

Rural broadband and e-highways

A pan-India programme called “Digital India” has been proposed in the 2014 budget to bridge the divide between digital “haves” and “have-nots”. This would ensure broadband connectivity at the village level, improved access to services through information technology (IT)-enabled platforms, greater transparency in government processes, consumption of local content and a host of other services. The railway budget proposed providing Wi-Fi connectivity at train stations, on premium trains and “Office on Wheels”.

An ambitious plan to integrate all government departments through an e-platform will create a business- and investor-friendly ecosystem in India, by making all business- and investment-related clearances and compliances available on a single 24×7 portal, with an integrated payment gateway.

An ecosystem for innovation: from ‘Sell in India’ to ‘Made in India’

India, since the beginning of civilization, has been a leader in science and technology. Lack of a favourable ecosystem for spurring innovation, however, has dented its position post-independence.

Today, India produces only around 2% of IT products that it consumes. This is having an adverse impact on its economy. The need of the hour is to make India an innovation-driven manufacturing hub from a consumption market, by creating an enabling ecosystem for nurturing product start-ups. Entrepreneurship needs to become part of the national culture instead of being the success story of a few.

The new government has recognized the need to create an ecosystem for fundamental research and innovation for India to become a global manufacturing giant with specific programmes for small entrepreneurs, start-up villages and incubation centres. The nationwide district-level incubation and accelerator programme can promote frugal innovation ground-up.

Special focus on software product industry

IT services will remain important for economic growth, but India needs new growth drivers as well. Global Indians educated in Indian universities, in Indian Institutes of Technology and Indian Institutes of Management have used foreign soil to make inventions and innovations that have benefited the world.

With the right impetus, it is quite possible to create the next Google, Facebook, WhatsApp out of India. The budget makes a big start by launching a fund for promoting product-led start-ups, a much desired innovation in the thinking of the government.

E-Healthcare and e-Education

Much of real India, Bharat, still lives in villages. Unfortunately, the past government’s average spending on healthcare and education was just 1% and 3%, respectively, of gross domestic product. As a result, basic health and education infrastructure is in bad shape.

The budget does a great job in recognizing the enormous opportunity that lies in improving healthcare and basic education access by using IT. Use of telemedicine, virtual classrooms, open online courses and e-education can be the kick-starter to achieve size and scale to improve the primary healthcare network and basic education standards.

Content localization and digitization

India has more Internet users than English language speakers; as a result, regional language keyboards are vital for deeper Internet penetration. Local language content needs to get digitized. China has already successfully developed and standardized local language keyboards.

Government can help by providing the standard templates for every language that can then be commercialized by using the public-private partnership model.

Now it’s time to deliver.

Technology, needless to say, will play an important role in effective delivery of services, monitoring performance, managing projects and improving governance.

An Integrated Office of Innovation and Technology to achieve the same, and for problem solving, sharing applications and knowledge management will be the key to rapid results, given that most departments work in their own silos. Tracking and managing the projects assume significance because India has been busy spending money in buying technology that it has not used effectively or in some cases not even reached implementation stage. Sharing knowledge and best practices across departments need to be driven by this Office of Technology.

India needs interventions across sectors to become a global knowledge hub by 2022. The Prime Minister is a very technology-savvy leader and the country looks forward to his leadership to drive this next phase of revolution in innovation and technology with a renewed vision and vigour.

This article first appeared in LiveMint

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Building Billion dollar product companies from India

“Flipkart raises fresh round of $1b”, “Wipro sets up $100m VC fund to invest in start-ups”, “Ratan Tata considering a personal investment in Snapdeal”, “Druva raises $25 million in a fresh round of funding” Entrepreneurship ecosystem in India currently seems to be buzzing with multiple investment rounds, acquisitions and launch of new funds. A big driver of this activity is the eCommerce boom that India is seeing currently with Flipkart.com and Snapdeal.com leading the race. Though the increased activity is going to benefit the ecosystem as a whole, the service sector seems to be getting more attention.

This brings us back to the question that we have been asking many times – “Why India does not have many billion dollar technology product companies?” There have been multiple debates and discussions around this topic for years. So I set out to do an in depth research using primary and secondary sources to find out what people say and how much of that is validated. Over two months, I spoke with multiple founders and players in the Indian start-up ecosystem and also read through many articles, discussion forums and interviews to find out what issues product companies face in India.

As per the research findings, following key issues emerged:

  1. Difficult to penetrate Indian market especially the enterprise and government sectors.
  2. Small early adopter market in India.
  3. VC and angel investments are not directed to product companies due to reasons including risk averse investors, lack of fundable companies that can show traction immediately and no good way to discover good product companies.
  4. Difficulty attracting and retaining talent.

But how do we resolve these issues? What have some of the successful companies such as InMobi, Druva and FusionCharts done to circumvent some of the above problems? What can we learn from other start-up ecosystems around the world?

Research indicated that the above issues cannot be fixed by one entity. Instead the entrepreneurship ecosystem as a whole needs to take multiple steps to address the specific problems. Some of the recommendations to address the above issues and move towards building billion dollar product companies from India have been discussed below.

Difficult to penetrate Indian market

Ecosystem players can play a huge role by bridging the gap between product start-ups and enterprise and consumer buyers. One way to do that is by bringing Enterprises & start-ups closer. Many of the B2B product start-ups interviewed for the research mentioned difficultly in penetrating the enterprise market as one of their biggest pain points. iSPIRT has taken the lead here and had recently organized a meet-up – InTech50 of product startups with Chief Information Officers ( CIOs) of global companies such as Citigroup, Procter and Gamble Co. etc. These meet-ups called “Swayamvars” are curated events where a large company can meet 5-15 startups it can potentially partner with. We need more such initiatives to bridge the gap.

We also need to increase the trust between start-ups and enterprise customers. Enterprise buyers often are reluctant in trying products from start-ups as they have had few bad experiences in the past. To solve this issue, start-ups should be educated on how to approach enterprise customers, how to draw contracts and what level of service to offer. On the other hand Enterprise companies need to be educated on the pros & cons of buying from start-ups to set the expectations right. They also need to be trained on how to evaluate a start-up vendor.

It is also essential to open the doors to start-up firms to apply for government contracts. Start-ups are often left out of the government contracts due to bidding criteria that favor large firms. Government should work towards either relaxing the requirements for bidding for government contracts or initiate a separate program to award contracts to start-up firms. Another way to resolve this issue would be to allow companies to compete for contracts based on their innovation and not be stifled by impossible high qualifying hurdles.

Small early adopter market in India

India currently has an urban population of 27.8% with an internet penetration that stands at 20%. The country is still evolving especially from technology perspective. Increase in early adopter market would take its natural course of time as more people start adopting technology in their daily lives and are open to try new products as seen in US and other markets. Though the issue of small early adopter market cannot be solved directly, in the meantime, more opportunities can be created for Indian product companies to sell to the global world. If we look at Israel startup ecosystem which has a small local market, we notice that they focus on US markets solely. India also can gain advantage of the large markets in US & Europe by creating avenues for start-ups to sell to global markets. These avenues could be either in the form of international treks taking selected Indian companies to US & Europe to meet potential buyers or bringing international companies to India and showcasing India product companies. In May 2014, Ravi Gururaj, Chairman of NASSCOM Product Council led NASSCOM InnoTrek 2014, a first of its kind event that took a delegation of India’s top product and entrepreneurial founders/CEOs to Silicon Valley. This is great initiative and first step towards putting Indian product companies on the global map. More such opportunities would open the international markets for Indian product companies.

Not every start-up can afford to make international visits or have international sales offices. To resolve this issue, a common international sales and marketing body should be established in locations such as US and UK. This common sales office could help all India based product companies to reach out to International customers by acting as their own sales and marketing office.

As per iSPIRT’s estimation, at least five Indian product companies have crossed or are on track for a $1 billion valuation. Among those are InMobi, Zoho, QuickHeal and Pubmatic. Each of these companies has grown targeting international markets and they are now rapidly expanding their global footprint.   

VC and angel investments are not directed to product companies

Before we get to the recommendations, it is important to understand why Indian investors are risk averse especially when evaluating product companies. A deeper analysis reveals multiple issues – Limited growth opportunities for product companies due to market issues addressed in previous section and lack of enough M&A exits. We already addressed the market challenges above. To solve the issue with M&A exits, investors should focus more on smaller sub $40m exits. As Sharad Sharma described it, for every Billion dollar startup (e.g InMobi) there should be 10-12 $100m startups (which is the case right now). For every $100m startup there should be 10-12 $50m startups; and for every $50m startup there should be 10-12 $10m startups. A healthy power law distribution is a sign of a healthy ecosystem. In India, many believe that this power law distribution is broken. Looking deeper one can see that it is not broken at the top as we can see many $100m companies rising up slowly. It is broken at the bottom! There are too few small-value (sub $40m) exits. Fixing this situation by catalyzing more small value exits will improve the entire distribution.

One way to resolve this issue is by enabling more M&A opportunities for startups. iSPIRT has taken up this cause and had drafted an elaborate M&A connect action plan in 2013. As part of iSPIRT’s M&A Connect Programme, they have been organizing multiple roundtables to showcase Indian product companies to potential acquirers in Silicon Valley. This is a step in the right direction and we need more such initiatives to increase the volume of M&A in the Indian start-up ecosystem.

There is also a need to increase seed stage money through government innovation funding programs. Government currently provides funds through bodies such as Department of Science and Technology (DST) to fund technology research. Karnataka government recently announced that it is drafting a new “Startup Act” to boost the state’s entrepreneurial activity. Budget 2014 announced Rs 10,000 crore fund of funds for startups. Issue is not availability of funds but dispersion of funds through transparent processes and having single window clearances. Many of these schemes are not marketed enough and often the process to acquire these funds is extremely complex and outweighs the benefits. Israel’s technological incubator program which was started by the government in 1991, provides funding and know-how to people to become successful entrepreneurs. Since the first companies emerged from the incubator program in 1993, 61% have secured follow-on funding and 40% are active to this day. These are some great examples to follow to lay out a better process to access government funds. Some of the ways include building and funding incubators, and closer collaboration with academia through research programmes as in the US.

Government intervention is also required in resolving taxation issues by providing tax holidays to startups and removing the start-up tax. A great suggestion given by YourStory was to give startups in India tax exemptions on the line of Singapore tax exemption scheme for new startup companies. As per this scheme, a newly incorporated company that meets certain qualifying conditions can claim for full tax exemption on the first $100,000 of the normal chargeable income for each of its first 3 consecutive assessment years. A further 50% exemption is given on the next $200,000 of the normal chargeable income for each of the first three consecutive assessment years. Schemes like these would indirectly address the issue of lack of funding by allowing the start-ups to reinvest more of their earnings.

The Finance Act 2012 of India brought in an amendment to tax the share premium which is above the fair value of investment by the resident angel investors and not proven satisfactorily to the tax assessing officer. This “Start-up tax” law makes it much more difficult to raise early stage funding for start-ups. Instead the new Indian government should follow the Israel model and introduce “Angel’s law” under which a substantial tax benefit is given to individuals who invest in qualified Israeli R&D companies. Under that law the investors can deduct their investment from any other income source such as salary, capital gains etc. In 2009, the Israeli government also removed the capital gain tax for foreign investors.

Though many of the above suggestions apply to all kind of start-ups and not specifically product startups, but product startups have a longer gestation period before they can start generating revenue and therefore have higher funding needs.

Difficulty attracting and retaining talent

India is a risk averse country and people always look for stability and security when looking for employment opportunities. Finding a good employment is not just a concern of the individual but of his whole family. If a person opts to join a no-name brand start-up, he has to handle the questions, concerns and taunting of the whole family. Hopefully all this is changing slowly with the current increased activity and main stream coverage of start-up successes. But still attracting and retaining talent stays as one of the big concerns of start-ups.

In my discussions with different founders, various suggestions were made. “Start-up” hiring events are a great way to enable start-ups and potential employees to get to know each other. Recently held “Headstart Higher”, a start-up hiring program run by Headstart Network Foundation was a huge success and led to many employment offers being made. Apart from enabling recruitment, these events should also be a medium to educate both fresh graduates and experienced professionals on topics such as “benefits of working with start-ups”, “How to evaluate a start-up for employment”, “Value of stock options” etc.

It is also important to effectively sell the value proposition of working with start-ups. Many of the entrepreneurs interviewed indicated that the only way they have been able to acquire talent is by matching the salaries of larger tech firms. While it is good that they are addressing the salary concern but this is not solving the underlying issue as every potential hire would expect to get that much salary and not all start-ups can afford to pay that much. Instead entrepreneurs need to do a much better job of communicating the value proposition of working in a start-up (faster career growth, technical leadership and growth, quality of work, long-term pay-offs, flexibility of timings etc) rather than trying to compete with big companies on the strengths of big companies (salary, facilities, etc.).

Government should also work in skill development making young population employable. Close to 1.5million people graduate with an engineering degree every year in India but only 3 out of 10 are actually employable based on the skill sets. There are more than 5000 Industrial Training Institutes (ITI) in India. However, the quality of training is not up to the mark. They have poor infrastructure, outdated curriculum, less qualified instructors and limited interaction with the industry. The entrepreneurs who hire them spend considerable amount of time to first train them and then use them. YourStory.com suggests a creative idea – businesses and Government can work together on this, wherein businesses can train young force on the job and government can motivate businesses by providing wage subsidy for a defined period.

Indian start-ups are slowly getting noticed by the global world. Start-ups like Fusion Charts and the more recent acquisition of Little Eye Labs by Facebook are giving a new wave of hope and inspiration to the younger lot of product start-ups. SaaS companies such as iCreate, Manthan, Druva and Eka have potential market sizes of thousands of clients. As per iSPIRT, close to 26 product companies have the potential for a $100 million valuation this financial year. All these signs indicate that India is moving in the right direction. However to ensure we see more and more product companies hitting the billion dollar mark, we need to resolve the core issues such as difficult to penetrate local market, slow adoption of new technology, lack of risk capital and difficulty attracting and retaining talent. Resolving these issues require equal effort from government, ecosystem players, investors and entrepreneurs themselves and could take easily 6-8 years.

What are some of your recommendations to create billion dollar product companies from India?

The detailed research paper can be accessed here: