Towards a glorious product nation!

The biggest success of the IT industry in the country has also been its biggest challenge. The phenomenal rise of the Software services industry led by global leaders like TCS Cognizant, Infosys and Wipro and smaller firms like HCL, Mindtree, Zensar and Hexaware in hot pursuit has put India in pole position in the global IT services industry. Driven by NASSCOM with visionary leadership and full support from industry stalwarts, the services industry really gathered momentum towards the end of the last century and has never looked back since.

However many other industry segments have struggled to emerge from the shadow of the spectacularly successful services sector. Business Process Outsourcing looked like a rising star for some time followed by Engineering Services, Media and Animation and other sub-sectors but could not match the rise or the stature of IT Services. The Products industry too has had many good starts, but in a manner similar to India’s cricket openers these days, have spluttered too fast and too frequently. Barring a few successes like i-Flex, Tally and some products that germinated within the comfort of a services company, the product story from India has just not done justice to the energy enthusiasm and incredible talent that lies in this country.

There are many green shoots emerging in the hitherto parched product landscape that give us all hope that the story is destined to change and move towards a happy ending with a more focused approach to developing a new eco-system for the product industry. In the last few years, outstanding leadership of the product forum in NASSCOM and the very successful product conferences in Bengaluru have demonstrated the high energy that flows through the veins of the product entrepreneurs today. The opportunities too abound with the ubiquitous spread of the internet and cloud computing enabling “made in India” products to quickly expand their availability globally and Software as a Service enabling new methods of consumption and commercial relationships.

However mere enthusiasm does not create a product nation and there needs to be concerted efforts to build a sustained focus on the products industry. There is a need to work with this fledgling sector from the early stages of creating programs in Universities to build a product mindset to developing incubation centres and a more vibrant angel network that will enable thousands of start-ups to bloom. Since significant Government and corporate support for Indian products will also be needed akin to the support given in China to the local industry, serious efforts will be needed to educate the bureaucracy in Delhi on the very specific needs of the product companies so that enabling policies and programs are created and funded by Government.

The opportunity for the products industry to be a hundred billion dollars strong by the time India turns seventy-five in 2022 is very real but we will need to bring all the players together and build a strong platform to propel the industry into the stratosphere of global success!

Let the world know about your software product

LaunchPad

You’ve spent months and days and hours conceptualizing your product and then taking it to market. You’ve won the first few customers who are now stable and you’re thinking about what next…if you’ve achieved this, it’s time to show your product to the world.

The NASSCOM Product Conclave LaunchPAD is the place you should be to demonstrate your product and recount your journey from CONCEPT to REALITY. We’re inviting a select community to hear about you and your product. Won’t you come?

A day before NASSCOM Product Conclave kicks-off in Bangalore (November 6, 2012), we are pleased to host an exclusive interactive session with the media, blogger and analyst community where you have the opportunity to launch your new product and enjoy your moment in the spotlight. Last year we had some of the crème-de-la-crème of press attending the event and reporting it in the print and online media.

Who is eligible?
If you are an Indian software product company that has a software product in the market for at least six months and has at least one revenue generating (not beta!) customer, then you are eligible to participate. Apply for the Product LaunchPAD here before October 25, 2012.

What happens next?
NASSCOM shortlists eligible companies and informs them by October 30, 2012 Present your software product to the media at an exclusive event.

Publish a booklet containing information about your company and software product which will be circulated to the media and available online on the NASSCOM Product Conclave website. Opportunity to interact with a focused group of professionals and hear their feedback on your product.

Some of the folks who will help us short-list some great Products are:

Amit Somani, Arun Katiyar, Suresh Sambandam

Need further help?
If you need advice on how to structure your launch pitch or presentation, then please do let us know. Also we have many curated sessions at product conclave to help you take your software product initiatives even further. If you haven’t registered, then do so NOW!

See you at the NASSCOM Product Conclave – the place to connect with Indian Products Ecosystem.

 

Software Products Industry: Transforming India at Large

In my mind transformation is something that takes place when there is a significant change that happens and a whole genre of populace move from one condition or state to another. It is palpable, widely felt and very tangible right down to the grassroot level. One such occurrence that comes to mind is the Indian Railways reservation portal which was launched a few years back where millions across the country suddenly had the facility of bypassing greasy touts and getting a seat on a train of their choice in an honest way.

I believe another such transformation is already being felt. The phenomenon is criss-crossing the country like never before. Suddenly from the bylanes of Indiranagar and Koramangala in Bangalore and the swank office blocks of the NCR region, not to mention localities like Aundh in Pune and other such places, a breed of software product entrepreneurs are willing to stand up and be counted. But again, mistake me not, these entrepreneurs do not necessarily come from the Tier 1 and 2 cities (as demographers like to classify) but indeed from cities like Belgaum, Udupi and Bhopal, Agra, Jalandhar and Coimbatore and so on.

These new breeds of entrepreneurs are not those who have a blueprint in mind but have actually launched a software product of their own because they have identified a need in the market. These needs are not necessarily easy opportunistic needs that some early generation product companies took but those which require a sound architecture and robust package (including pricing) to positively influence the market. So why am I excited?

The first undeniable fact (and Zinnov says so, not me) is that there are about 100 million lives being transformed across 10 million SMBs in the country. To put this in another perspective, this is virtually like CK Prahlad’s “Bottom of the Pyramid”. While the software industry has been renowned for its transformational activities among the Fortune Global 2000 list, this is a bottom up revolution.

Secondly, these recently started software product enterprises offer job opportunities not far from “home”. What I mean here is that no longer will engineering graduates have to uproot themselves from hearth and home to travel across the length and breadth of the country to the large cities in search of employment. There is already evidence of companies in towns which have a population of less than a million who have demand for such skills.

Thirdly and most importantly, these software product companies have mushroomed because of a demand that has arisen from manufacturers. Small entrepreneurs, retail enterprises, cooperative banks and a variety of other organizations have made it a point to adopt best practices that once seemed to be the preserve of only the larger conglomerates. Efficiency is the buzzword down the enterprise chain and the attraction to software products has only become greater given that it is often available on a “pay for use” model. Very often the software could come bundled with the hardware at an even more attractive price. What more could a customer ask for?

Just consider this. If a pickle manufacturer in Jaipur can streamline his inventory and manage his complex distribution and invoicing using a software product that is made locally and sold on a SaaS model and for every kilo of pickle he retails he saves 20% of the cost because of efficiency and is able to achieve lesser wastage in the process because of better inventory management, then why would he not consider using local software that is easily accessible and where service is only a call away.

The transformation has already begun and there’s no turning back.

This is part of a series and watch out for the next one.

Why aren’t more developers creating serious Mobile App Products?

Mobile Apps

These are the times, when every third person that you meet in Technology world has an idea for an App. It could be every alternate person if you’re hanging out in geeky groups or among heavy Smartphone users.

The Industry trends suggest a phenomenal surge as well. According to Gartner, Mobile Apps Store downloads worldwide for the year 2012 will surpass 45.6 billion. Out of these, nearly 90% are free Apps, while out of the rest of 5 billion downloads majority (90% again) cost less than $3 per download. This trend has a strong growth curve for the next five years. (See Table 1. Mobile App Store Downloads, courtesy: Gartner) 

Another report suggests that 78% of US mobile App Companies are small businesses (based on the Apple and Android App Stores based research). The typical apps that dominate this market are games, education, productivity, and business.

Mobile App Store Downloads - Gartner 2012

This comes as no surprise. There is a huge divide between the Enterprise Mobility (dominated by the Enterprise Architecture, existing platforms and mobility extensions to the platforms that ensure business continuity) and End-User (Consumer) Mobile Apps dominated by the App Stores supported Small and Mid-size App Development Companies. The barriers to entry in the Smart phone Apps Market seem pretty low with the supporting ecosystem from Apple, Amazon, Google, and Telecom carriers.

However, let’s get back to the fact that majority of these Apps “do not” generate direct revenue.

While the entry seems without barriers, there are multiple hurdles on the race track:

1. Developers need to focus on the User Experience. The smartphone apps pick-up is highly skewed toward Apps that offer a good user experience even for minimal functionality. After the initial success, the App makers end up adding functionality for sustained interest, but the User Experience tops. It’s difficult to focus on UX while still trying to do everything right at the underlying architecture level for long term.

2. Marketing is important. Getting the early eyeballs is key for the App developers. Any serious App needs an immediate initial take-off, and among the things that they need to do to make it happen is to market the App beforehand and to get the authoritative reviews in place.

3. Initial Take-off is just the first hurdle. App needs to be able to handle traffic bursts, it needs scale with increased traction, support virality & social connects inherently, and also build an effective User ecosystem. None of these may seem like the core functional features of the App, but are most critical for the broad-based success.

4. The Freemium model is very popular, but it can kill the business if the marginal costs are not sustainable. The paradox of the Free model is that unless the 10% paid users are able to pay for your 100% costs, every additional user takes you closer to the grave. With this come in two questions – how do you keep the infrastructural costs low, and how do you build additional revenue models around the app.

  • IaaS can solve some of the infrastructural headache, but doesn’t provide you with the other functional layers that every App needs. You need to still build them. PaaS providers provide the scalable platform for building Apps, but you still need to build some of the functional features such as Gaming Rooms support, Messaging, User Authentication & authorization models, and so on. Mobile developers are still doing a lot of repetitive work across the smartphone Apps that can be consolidated into a framework.
  • Supporting the additional revenue models require integration with external Ad-services, Payment systems and more importantly the bandwidth to deal with this even more fragmented set of agencies.

5. The End-point device platforms are fragmented and getting even more so. A typical model for App developers is to develop an Android App, iOS App or a Windows App and then support the other platforms as they go along. However, keeping up with these multiple platforms is only getting more and more difficult with the speed with which Apple, Microsoft, and Google keep rolling out the OS. There’s tremendous pressure to release the App within the 1-3 days window of the release of the underlying platform.

Hence, while there are millions of people developing smartphone Apps as we speak, there are only a fraction that get built at serious level, and even smaller fraction that gets built for sustainable business success.

And considering these hurdles, the arrival of the Backend-as-a-Service (BaaS) is a blessing for the App Developers. Forrster’s Michael Facemire refers to them as “The New Lightweight Middleware”. He goes ahead and lists out some of the basic tenets of what makes a Mobile Backend as a Service, but I see this list evolving as the vendors offer more and more functionality to the customers leading to en ecosystem.

And the term “ecosystem” is going to be the key. That’s because a successful mobile App doesn’t stop at the user starting the app, using the app, and leaving the app. A successful App creates an ecosystem for the viral growth, user engagement, social functionality, in-built broad-based connectivity for multi-user interactions, and more importantly the ability for cross-platform usage. In a Gaming scenario, the user interactions and the relevant immediate feedbacks are paramount. Most successful apps build an ecosystem. Instagram, 4Square, Pinterest are the common household examples today.

ShepHertz App42 Cloud API is complete backend as service to help app developers develop, buid and deploy their app on the cloud.While Michael lists out the usual suspects in his post, most of them in the Silicon Valley, there is a very interesting player in Shephertz’s App42 platform, right here in India. The ecosystem approach that they have taken seems pretty much what may be required for serious app developers that need a robust backend provided as a service, so that they can focus on the app functionality, user experience, and more importantly the marketing aspects of the App.

Now why, still, aren’t more and more developers building even more serious mobile App products? Why shouldn’t they be? I think, they will!

Product companies will constantly change business plans, product ideas, and offerings to meet the ever-changing market opportunities, Piyush Singh, CIO, Great American Insurance Co.

Piyush Singh is the Chief Information Office (CIO) and Senior Vice President at the Great American Insurance Company—a property and casualty insurance company, and Vice President of it’s parent company, American Financial Group [NYSE:AFG]. Under his direction and vision, Great American’s IT department has transitioned from supporting a legacy IT environment to become a trusted player in the company’s business success—offering agility and adaptability to align with the executive vision. In this interview, Mr. Singh shares his observations on innovation in Indian software companies, product development, and how large IT companies could accelerate the pace of product innovation. 

Piyush, you have been watching the Indian software industry over a period of time. What are some of the changes you see now especially in the context of the software product industry in India?

The Indian software Industry is the envy of many countries around the world, and numerous governments and business associations have been trying to emulate its model. It has made a significant difference in elevating the professional services job market and provided the necessary fillip to the country’s infrastructure—transforming sleepy suburbs into high-tech cities with world-class facilities. The Indian software Industry contributes $67B to the economy in direct revenue, but delivers a bigger economic impact (probably tenfold) when you think of all the tertiary employment it generates and the indirect revenues created.

Yet, this phenomenal growth has been a result of labor pricing arbitrage, and many of the large companies that lead the software services are today challenged by lack of innovation and intellectual property (IP). Yes, outsourcing and large services contracts are definitely attractive but unsustainable in the long-term. Sustainable growth and maintaining unique value propositions demand significant investment in IP—and this needs to be more than just systematizing processes. I do not see IT services companies investing in actual development of product portfolios that might address vertical markets or provide horizontal solutions. Typically, I see global services brands create deliberate pools of internal innovation that harnesses the knowledge of its workforce or buy IP-based companies to provide them the necessary scale for reach and investment. So far, I’ve seen neither processes here, but am hopeful that this will change.

Culturally, do you think Indians (and this is very broad considering our diversity) are risk takers and willing to start out businesses? Or are they averse to taking risks?

I don’t think so, and there are numerous examples of our appetite for risk—numerous Indians in the Silicon Valley have taken their start-ups all the way to public offerings. What I have noticed is, we tend to invest in real estate—really investing for the long haul.

Today, I find ourselves increasingly accepting entrepreneurship and its risks, even as senior executives leave large corporations to do something more meaningful, and different. But these new companies will need significant capital and gestation periods before they begin to show results. This is in contrast to the services industry growth that sets an average 20-30% growth every year—leaving start-ups struggling to showcase such growth. The risks and returns are completely different in a product company—Oracle, SAP, Microsoft, Apple are all shining examples of IP-led revenue-generators. Their valuation and market sizes are incredibly spectacular. But they didn’t grow into such successes overnight.

Product companies will constantly change business plans, product ideas, and offerings to meet the ever-changing market opportunities. These evolutions take time, effort, and capital—ask any Silicon Valley venture capitalist.

On the other hand, if you read the balance sheets of many of the services firms, they have idle cash, and great market reach. It will be a win-win for all if they use the cash to fund or accelerate the incubation of products that they can take back to their markets.

What is your take on emerging companies in the product space? We see, for example, many of them are developing apps and very few seem to be venturing into the enterprise or B2B space. Do you agree?

I agree completely. In the insurance space, for example, of all the companies out of India I’ve worked with, only a few have made any real IP investments—MajescoMastek, PlanetSoft (acquired by Ebix), L&T Infotech, and Mphasis. But if you see the revenue portfolio of the top 200 services firms out of India, the financial services industry is a leader in driving investments. And only a handful companies have made any IP-led investments. Strange, don’t you think?

What’s interesting is that it’s not that India doesn’t have the talent: every large US-based company (Microsoft, HP, Cisco, IBM) have a lot of product development out of India. The capabilities and talent definitely exists—we need the larger Indian companies to show the way.  They should make use of the talent that exists in their own setups, sponsor ideation, build incubators and make a directional investment in product development. They should stand up to explain their actions and the promise it holds. Analysts might not like the idea initially as it does not fit in their current forecasting models  but as they realize the potential and see results over time, they will warm up to the concept and probably push for higher investment. I would argue that Indian companies do bring in a lot of process expertise in any project that they manage, so  they can definitely build processes that would seek ideation and lead to valuable IP.

What’s your view on innovation in the Corporate environments?

Innovation has become a necessity for existence. As Robert Murdoch, Chairman and CEO of News Corp aptly said, “The world is changing very fast.  Big will not beat small anymore.  It will be the fast beating the slow.”  Innovation is being taken out of R&D labs and becoming the fabric of the entire company and an integral part of the culture at all levels. If it’s not happening, it can hurt them. Look at what’s happened to Kodak—they invented the digital camera concept but now the only value left is in the patents which they filed.    Blackberry (RIM) is facing a similar situation – in May of 2008, of the corporate companies surveyed 82% of them were looking at buying RIM based Blackberry’s.  Their lack of innovation in the world of user experience design has left them in a situation no one wants their company to be.

Do you think a major contributing factor in the last couple of years has been contributed by bandwidth availability, relatively easier capital and technology disruptions from areas like cloud computing? Have these leveled the playing field?

Well, these not only level the playing field but also give you an opportunity to differentiate your offering. For example, cloud computing levels the playing field, making it a lot easier for people to invest in or explore new products as long as you provide open integration points,a level of flexibility and a blueprint for future innovation. Commoditization brings prices down but forces you to decide on the USP that would help your company stand out.  You need to balance commodity with strong uniqueness so you can leverage both benefits. People who are going to be nimble and fast, and people who respond to these paradigm shifts are going to emerge the winner.  The key lies in how quickly you react to market forces and how adaptable you are. Any country that can produce a model of constant adaptability becomes a much more stronger player in the long haul.

Five years ago a typical software strategy didn’t take into account elements like user experience design, predictable analytics/big data, mobility and enterprise social networking. If you’re a ten-year old product company or a large services firm, it’s a little tougher to make a shift to embrace these elements. If you’re a smaller company though, and you’re nimble and watching these trends closely you can adapt to them quickly. It depends on how leading edge you are, because people are always talking in the context of ‘now.’ Mobility has been on the forefront since early 2008—but companies are still exploring mobile apps. Big data has been there for 3 plus years—but how many people are truly exploiting the value of this data? Enterprise social networking helps companies capitalize on people, collaboration and sharing better. It provides individuals more command and control—if the person at the lowest level comes up with a bright idea, everybody knows who to give credit to!

So you Piyush – if you had to give some advise to product companies or people who are venturing into the software product element India, what would you say?

  • Identify a domain where you see that there is market opportunity and don’t look at what is currently being offered as a solution.  Try to look 3 years ahead and try to build it around the emerging model of doing business—it’s about how you’re going to do business tomorrow, not how people work today.
  • You’ve got to balance domain expertise with people from outside so that you can think differently. You can’t have people who think the same way all the time. You need to understand how to incorporate User Experience Design—making people react and say “It is obvious.” Product companies have the advantage of disrupting the existing ways and changing the model—that’s what DELL did with PCs, Amazon with the book store, and Netflix changed movie watching at home.
  • You should be willing to find a charter partner who can help you to bring about change and  break the current paradigm.  Once you have this, you’re on the path to building a product that will succeed.
  • Don’t just be happy with what you have and what you build. You really have to be dissatisfied with the present and galvanize resources into action. This requires a fundamental shift in the group mindset, how we operate and how the company is structured. We need to learn from the old Chinese saying ‘let a thousand flowers bloom’ – not just the management ranks!
  • Don’t make random calls and hope that there will be sales. Learn the market, understand the potential buyer fully and then target with laser focus. Do not take a shot gun approach and hope that it succeeds.

Which 5 product companies or fields are you interested in meeting?

I would rather choose three fields that are of interest for me:

  • Companies that are working in the insurance sector – what are they doing and what’s innovative
  • Companies involved in infrastructure–what are you doing to improve the end user experience/reliability and availability in the modern complex world
  • Companies that are involved in new and novel concepts that challenges any business model. I want to be challenged to look outside my standard thinking model.

If you are keen to meet with Piyush at NPC. Do drop in a mail to us at [email protected] and we will get back to you.

Product/Market Fit and Why Startups Should Care

Most successful products go through two distinct phases 1) product/market fit 2) growth/scale. There are a large number of startups that fails before achieving product/market fit and therefore, it is important to understand what is it and why it matters.

What is product/market fit?

Product/market fit is a phase where you try to establish that you are in a good market and have the right product to satisfy the market. Generally it involves developing a deep understanding of customers, running several experiments and iterating product several times to create the right fit between customer needs and your product.

It’s amazing how imporatnt the concept of product/market fit for startups is and how often it is ignored. Focusing on growth before achieving product/market fit can be counter productive for startups. Therefore, it is critical to know when you have achieved it and when to start focusing on scale.

How do you determine product/market fit?

So how do you know that you have achieved product/market fit? Which metric or target you focus on?

Sean Ellis’s definition is perhaps most objective definition for determining product/market fit. Sean devised below survey:

How would you feel if you could no longer use [product]?

1.     Very disappointed

2.     Somewhat disappointed

3.     Not disappointed (it isn’t really that useful)

4.     N/A – I no longer use [product]

As per Sean if more than 40% of your customers respond that they will be “Very disappointed” without your product then you have product/market fit. You can find more about Sean’s definition in this post.

Famous VC Mark Andreessen describes a more subtle method. As per Andreessen, you can always feel when product/market fit is happening. Your product usage would be great, customers would be happy, key metrics would grow consistently so on and so forth. More about it here.

Product/market fit is essentially having an engaging product that users find valuable. This can be measured by metrics that are critical for consumer engagement. Take social networking products for example. Key indicator of engagement is what percent of registered users use the product every day and every month. A good standard for engaging social networking product is that at least 30% of registered users are MAUs and at least 10% registered users are DAUs. So it is safe to assume product/market fit when you hit those metrics. Exact metric differs based on nature of product but the essence remains same that how engaging and valuable product is for consumers.

How to achieve product market fit?

1) Focus on engagement features

Typically features fall into one of the below quadrants:

Prioritize features that improve engagement and retention and de-prioritize every thing else till you achieve product/market fit.

2) Experiment and iterate fast

Iterate quickly through features using build-measure-learn model that Eric Ries describes in The Lean Startup.

The core idea behind build-measure-learn feedback loop is to consider product development as an iterative process of learning while minimizing the time through the loop. Many startups fail because they build product on assumption that they know what customer wants. Build-measure-learn model requires you to constantly test your assumptions by quickly building features while constantly measuring to determine how those features are resulting in real progress.

Finding product/market fit is an iterative process but bottom line is to establish key metrics that define product engagement and focus on those metrics relentlessly. Anything that doesn’t contribute to moving those metrics upward is not important before product/market fit.

Original Post By Rajat Garg, BubbleMotion and can be accessed here.

Autodesk Acquires Qontext Social Collaboration Platform.

Acquisition to Expand Social Capabilities of Autodesk 360 Cloud Services.

SAN FRANCISCO, Oct. 4, 2012 — Autodesk Inc., (NASDAQ: ADSK) has completed the acquisition of Qontext,enterprise social collaboration software, from India-based Pramati Technologies. The acquisition of the Qontext technology and development team will accelerate Autodesk’s ongoing move to the cloud and expansion of social capabilities in the Autodesk 360 cloud-based service. Terms of the transaction were not disclosed.

“Autodesk’s acquisition of the Qontext technology is a testament to the Pramati strategy,” said Vijay Pullur, Pramati president. “This transaction is a significant milestone in our ongoing efforts to incubate and build companies that address the rapidly changing needs of business through highly innovative technologies.”

Autodesk intends to use the Qontext technology to add new social capabilities to Autodesk 360, a cloud-based platform that offers users the ability to store, search, and view critical design data improving the way they design, visualize, simulate and share work with others at anytime and from anywhere.

Read the complete story here

Should we aim for quantity or quality in Indian startups?

I had a very good discussion with 2 folks over the last week about the current state of technology entrepreneurship in India. The rough estimates from multiple sources indicate a varied number from 250 (low estimate) to 1000 (high estimate) technology product startups each year in India. Compared to that, the US produces tens of thousands and even Israel beats India by having 3-4 times that number.

There are a few folks in the ecosystem that suggest that we should focus on fewer but better quality startups in the technology space. They have some strong points in their argument which include a) the total amount of funding available in the system will only support 50-100 companies annually b) if more companies were to be started, more will fail, which will deter more folks from becoming entrepreneurs and c) there are not too many experienced entrepreneurs & seasoned executives who can tackle issues of scale yet.

I fall on the other camp and my focus is to get more people to buy into the religion. I agree with the premise that most startups fail and that’s the nature of the beast. That has not changed much (or at all) with the number of accelerators or incubators in the last few years. Startups die for multiple reasons and many of them are not easy to fix.

The main reason I think we should focus on quantity first is so we can increase the pool of risk-takers in India. Entrepreneurs take the most amount of risk in the ecosystem. We need more of them, in fact more than the system can really handle. So how do we address the arguments from the “Quality first” side?

1. Most product entrepreneurs I meet in India (I meet a new batch of 5 EVERY week) dont really want to build a company to exit. They would prefer to build strong profitable companies and run time for a long time. They do need some funding initially when they are ready to test a few of their hypothesis. Many build products that take a few pivots to get right and most operate in markets that take long to mature. So what if the ecosystem can only support 50-100 currently? We should be able to find ways to get the not so successful ones to pick up, dust-off and get on the horse again. The other point I make that we really have a lot of money sitting on the sidelines in India, with a fairly immature angel investment ecosystem. Each week I meet one new person interested in investing in technology companies, usually a technology executive at a large software company like Microsoft, SAP or VMware. They are enough to get our entrepreneurs started and build good companies.

2. If the percentage of startups that succeed is fairly constant, then the argument for more startups is even stronger. If we increase the pool of startups and the failure rate is still a constant, we should get more successful startups. The failure rate has not dramatically increased or decreased over the last 5 years, so if we have 2000 startups and a 99% failure rate we will still have 20 successes vs. 250 startups and 95% failure rate.

3. The best way to have “serial” entrepreneurs is to have more people go through the experience once. Regardless of whether they failed at their first startup, the success rate of a repeat entrepreneur is dramatically higher. They are more experienced, seasoned and more willing to understand the importance of persistence.

I believe that we need more, not less technology startups overall to help our ecosystem grow dramatically

Demo Days: Obsolete. Over-Hyped. Disaster

If we were going to let the cat out of the bag, so to speak, comparing accelerators, here is my biggest gripe about “Accelerator Models” – Demo Day.

For the fortunate, who aren’t aware of the Process, this is how it goes. Applications open, Teams submit their applications, Interview processes later, teams are picked, brought onboard and after a 12 – 16 week Programme (depending on which accelerator you are part of), you are building off that first version of the product and then comes D-Day, Demo day when you launch your product, Introduce the Startup, and get funded so that you can move forward. Except that there is one glitch. The funding never happens. Nobody I know of has gotten customers at these D-Days, and nobody is wowed.

You could have glue stuck wings on the entrepreneurs and pushed them off the cliff instead.

Sadly, D-Day is a critical aspect that a lot of accelerators acclaim, is their USP, and that is going to come bite a few entrepreneurs in the ass sometime. Unfortunately. Its not just me saying this. Sameer and Nandini have been saying this for years.

India is Different

Demo Day works. It works in the Valley. A bunch of accelerators put up their startups, and there is someone to come look at these companies and see them for their potential rather than what they are a the moment. At the stage that these accelerators are putting up, all they have is a product that is ready to go for launch, and that is only going to get you one answer “Interesting. Keep us posted on how it goes”.

There is no one here in India who will take you at that stage and take you forward.

For those who understand this space better: You ideally want someone who can drop a 100-250K USD (with a valuation of roughly 1 – 1.5mn Valuation) on the startup to take the company from there. But thats precisely it, they want a “company” not a product built in a scurry. I havent met any teams in the Demo Days of most of these accelerators who can even justify (with data) why they think the product will work.

The Pivot is on you.

So If D-Day is the day when you launch, and I presume it will take the entrepreneur another 30-45 days before they realize that the product is not taking off – nobody is using it, let alone pay for it, what happens? Then comes the decision to Pivot vs Persevere and its the hardest decision on an entrepreneur. Except, guess what. You have already “graduated”. And whatever you pivot on, you’ve lost the opportunity of Demo-day to gain audience. You are as good as a team which was never part of the accelerator in the first place. I know how draining that is on an entrepreneur – we wouldn’t wish that he goes through it alone. Thats why we take our time and go through it in six months.

Direction vs Speed.

Something we’ve been saying for quite sometime. You might want to know where you are heading, before you start setting yourself on fire with Jet fuel. Do you even have a product that the market wants? Without it, Where-my-friend are you “accelerating” to? :) Find your Direction first, in terms of the industry, domain, and problem you are addressing and the solution to it. Thats direction. Then, figure out how fast you want to go and how an accelerator can help. (though most accelerator models seem to be Product accelerators than Startup Accelerators)

Product vs. Startup

There are essentially three steps. Picking an Idea that you want to work on and building a prototype. Its Okay to build multiple prototypes of multiple ideas and figure which one “sticks”. But once you see the data, let the numbers guide you, and make the decision to build it out as a product. Once a product, see if it makes sense to build a startup around it. There is a reason why we modelled ourselves in three stages.

Product acceleration is not equal to startup Acceleration. You shouldn’t be giving equity for inputs that you get towards a product (which might pivot dramatically) – atleast, not so much as what typical accelerators charge.

Is it important to give Young Startups a Platform? Absolutely. We ran Proto.in for years. The key however is to know what stage to unveil them at. Demo Day, as it stands in India today in India, is a disaster.

FootNotes:

1. The Process of building a company in India is still very much bootstrappish – Unless you are an entrepreneur with a track record of execution. The Norm is that, you are rewarded for results you show. PS: There is nothing wrong with that. But its here to stay and its important to acknowledge that and work around that, rather than being in Denial land.

2. The Startup Cuve of a Startup In India is very different from that of a US Startup. “Demo Days” are to replicate the “Techcrunch Initiations”. Answer honestly, does it? It does create a blip, but is it really a launch?

A Rough Sketch, if I were to map out the Startup Process in India Mapped against Traction vs Time would look like this – against the US Counterpart:

Assumptions:

a) The Startup Didnt have to Pivot. Fact: Most Startups will Pivot 2.5 Times.

b) The Startup survived competition, were able to find their value kernel and pivot for scale.

c) Also assuming that this startup did Marketing from Day minus 150 before the product launched. Otherwise, traction would be 0 till demo day when there would be a just a few curious bites, and no solid engagement. Situation, in reality, would and is much worse.

Cross Post from the Startup Guy’s blog

Software Products: Funding and Opportunities, Shoaib Ahmed, Tally Solutions (Part 3 of 3)

Read the Part 1 and Part 2 of the series.

Shoaib Ahmed, President of Tally Solutions, began his career as a retail
software developer in the early 90s. Formerly the Founder-Director of Vedha
Automations Pvt.Ltd, Mr. Ahmed was responsible for developing Shoper, a
market-leading retail business solution — and the first of its kind in India to
bring in barcoding to the retail space. The company was acquired by Tally
Solutions in 2005, where Shoper merged with the Tally platform to offer a
complete enterprise retail software suite. In the last of a three-part series,
Mr. Ahmed gives entrepreneurs some advice from the product development
trenches.

In your opinion how important is the concept of funding? Do you think
people can bootstrap easily without funding?

Unfortunately, I come from a bootstrap background so I have to admit that I haven’t
watched the successfully funded companies very closely! Looking at the components,
you need money for development and marketing. I also feel one key component is
requiring enough money to bring on board people with enough leadership qualities and
understanding to pre-empt issues on all fronts. You have to have the working capital to
confidently bring on board people with these qualities. In this kind of context come the
questions: who should fund and at what period of time. There are the elements of the
seed and angel fund — in my mind the concept of angel fund hasn’t matured completely
because there is the expectation is that there isn’t complete clarity but there
is an element of being able to patch the company through so that they experiment through
the formative periods, and the VC comes in when the company is ready to scale, like for
marketing to get big numbers.

The sharpness, unfortunately, is not yet there because the maturity hasn’t been
established. For example, once a product company has been funded, there is an
expectation that the trend set by early adopters is what the remaining set of customers are
going to adopt as eagerly. However, this set may not have bought into the idea yet — but
there now is an expectation that based on the reaction of the first set, the next set will get
automatically attracted and it’s just a matter of reaching out to them. However, the method
and timing of reach out will be different. What it takes and what can kind of expectation
to set is dependent on the fund, but it also largely depends on getting the right kind of
mentoring and product mindset so that the entrepreneur is geared in a sensible manner.

What opportunities should entrepreneurs in the SMB space be
focussing on, other than in the accounting space?

Typically, the mid or large market gets most of the attention. For small businesses,
however, the pain-point is bringing hygiene into working systems like managing books,
inventories and people. At this point, there are options for the small business owner

to opt for enterprise integrated business solutions or specialised applications. The
opportunity lies in recognizing that different segments with different nuances exist —
and your focus is to design in such a way that their respective problems are solved. For
example, keeping in mind what a pharmacy needs both from a software and form factor,
I would say that billing is not the problem but replenishment is. Therefore, a large PC
may not be the solution — maybe an iPad or a mobile app makes more sense. So I would
say that you would need to wear the hat. To find a customer is the first element, and
giving a suggestion which works and bringing new technology in place are areas which
entrepreneurs in the SMB space should be focussing on.

What advice would you give to people who are getting into the product
development space?

First, they should understand the product mindset, which is to be able to identify if they
are building a value proposition. The whole process of product development shouldn’t
confuse them – there is the whole question of what the customer is asking for and what
the product will provide them. This is important, but product development shouldn’t just be
about reacting to market opportunities – arriving at a product design is also critical.

Secondly, there’s also a tendency to concentrate on providing too many features,
understanding customer requirements and being in a perpetual development mode. This is
why the development team has to have a strong business and marketing background.

Thirdly, having a face in the Indian market is a huge opportunity, but technology adoption
continues to be an issue so that needs to be kept in mind. This has a bearing on how you
design the product and experience. How much of that product you’re designing needs a
deep engagement, as well as elements like value and price. There’s a catch-22 situation
here because these elements of the product will still be in infancy – I don’t see a method
which a product company can use to address a market across the entire country. This is
where a lot of product companies fall into a gap because they might move to a partnership
model to sell to more people and this may not always be logical because a partner will
be interested in someone who has already created a market! A product company falls
into this gap where it sells to a few people, finds that it cannot reach out to more, gets
into a deeper engagement with the few customers it has and then loses the shape of the
product. Over the past 25 years, many product companies have morphed into service
companies because of this reason. Yes, environments have changed today: there’s
internet penetration, elements of communication have evolved and so product companies
should leverage this.

Read the Part 1 and Part 2 of the series.

The weight of expectation

How many times last month did you use Power Point? Most would have used it at least a couple of times. Power Point is one of those products that seem so natural and effortless to use. And when you think about it, Power Point acquires its muscle from its core ability to dumb down a variety of thinking processes. What were its creators — Dennis Austin and Thomas Rudkin – thinking when they were writing Power Point? Could they imagine that within 25 years their creation would be installed on over a billion computers worldwide?

Ironically, Power Point was designed for the Macintosh and was the first venture capital investment that Apple ever made. Forethought, the company which created it, was bought by Microsoft in 1987. With such a rich history and possibly the only company to have the two software behemoths in its DNA, we may well ask, “What have Dennis Austin and Thomas Rudkin done after Power Point?” Austin created some average-to-middling clip art (Screen Beans) and Rudkin worked for Microsoft in Silicon Valley, turning Power Point into a product with $100 million in sales. Why could Austin and Rudkin not create another great product?

That’s because creating software products is not like building a home or a work desk. The problems that software solves are not the same as those which apartments and office cubicles solve. Software solves newer problems (hopefully!) each time. That’s why there are more failures in creating software products than in making homes and offices. Every time a software engineer sits down to write code, the end goal is different – and often the end goal doesn’t stay the same through the lifecycle of the product’s development (surely you are familiar with scope creep and change requirements?).

It doesn’t matter that the profession has its own set of guidelines and best practices to follow. There are languages and project management techniques. There are tools and quality processes. Yet, practically any software project you come across has seen time and cost over runs, has versions lying on shelves that have been discarded, and has bugs that cannot be eliminated before release (these are passed off as “known issues”).

Why is it that creating software products is such a random process? Why can’t success be replicated even though the team has experience and ability? In other words, if there is a lesson in the creators of Power Point, it is this: building software products is not like constructing a home or a table with raw material that is pretty much standard. Software products have to be built from the ground upwards. From the framework to the data types and structures, from how the data will be
managed and manipulated to the protocols and networks that will come into play and finally how human beings will view it, store it, share it and deploy it. Creating software products is an intensely unpredictable process. The industry may try to provide examples of how great products were created, the role of engineering and innovation, of time and funding, of requirements and usability, market studies and prototypes and a whole list of other imponderables. None of them hold fully true when you get down to solving a new problem with fresh code.

The point is this: if you are trying to create a software product, the top most problem you have is not your skills or resources, but the expectations that industry has about you getting it right first time. You can’t will that expectation away. The trick is to not let it weigh you down – or even dictate the course you are charting for yourself.

Is Software Innovation an Art or a Science? It’s Artful Science or Scientific Art!

When we think of Software Product Innovation, we imagine getting “Eureka!” moments 3 am in the morning, getting up and writing down inspired thoughts and coding them the next morning!

Reality is much more mundane and is more of evolution rather than sudden insprirations from the sky!

Yahoo started because Jerry Yang and Filo just wanted to create a searchable directory of information first at Stanford University and then San Francisco in general!

facebook started as a teenage testorone-fueled comparion site for Harvard students to post pictures of fellow girl students and rate who’s hot and who’s not! From there it evolved into directories of students in universities to find each other for dating more than anythingelse. For a long time, facebook signed up university by university and not the general public-oriented thing it is now!

This stands for enterprise software products also – Oracle Relational Databases were less expensive, clumsy knock-offs and replacements for Digital Equipment Corporation’s RDB/VMS relational database system.

Before Microsoft Word and Excel spreadsheets, there were Lotus Ami Pro and Lotus 123!

Before Google search, there were DEC Alta Vista search engine and Yahoo!

What made all the successful ones innovations in their own right were not just technical superiority but they took useful innovations and products before them and fixed annoying problems with their usages or expanded the concept of who can use them additionally or fixed usability problems with them.

Or they took an older concept and applied it to a new platform!

Or took an older concept and applied it to a newer market!

So if you want to innovate, you don’t necessarily to invent something new. You can innovate by doing one of these:

—- Is there something useful but not so easy to use? Can I fix it by making it easier to use? (Google’s single search box in the middle is a great example – Alta Vista got lost in boolean searches and requiring ANDs and ORs when specifying search. Google said – don’t worry about all of that stuff. We will take care of it. Just type in what you want into that box!)

— Can I take something useful and apply it to a new market? eBay India was another company before it became eBay bought it and made it eBay India. Flipkart is India’s Amazon. Cleartrip is India’s Expedia! Make no mistake. They are not just copies. Flipkart uses courier delivery. Cleartrip is useful for buying train tickets less painfully than when going to the IRCTC website. They all add some value and difference!

— Can I take something in one platform and make it suitable and applicable to another platform? Mobiile versions of applications may need to be differently designed and executed than an online, browser version of something.

— Can I build a family of products around one idea with more features? Personal, Professional, Enterprise versions of software is a fairly standardized way of adding additional features but orienting them towards different markets.

— Can I build a family of products that are related to each other but different from each other in functionality? Word, Powerpoint, Visio, Excel are all examples of slightly related products but providing different kinds of functionality.

Many times, we think that innovation is coming up with something completely new,. Successful innovations have all fixed or fine-tuned something useful but had some problems that were preventing widespread adoption.

Sometimes it is as simple as figuring out what these are and fixing them. And also thinking about related things so that you are thinking about a “family of products” rather than a single “one hit wonder”.

Wikipedia provides a clear definition of Innovation:

Innovation is the development of new customer value through solutions that meet new needs, unarticulated needs, or old customer and market needs in new ways. This is accomplished through different or more effective productsprocessesservices,technologies, or ideas that are readily available to marketsgovernments, and society. Innovation differs from invention in that innovation refers to the use of a better and, as a result, novel idea or method, whereas invention refers more directly to the creation of the idea or method itself. Innovation differs from improvement in that innovation refers to the notion of doing something different (Lat. innovare: “to change”) rather than doing the same thing better.

Observations on India

I’ve spent a decent amount of time in India over the past few months. Most recently, I spent a little over two weeks of August meeting with founders and investors in Mumbai, Delhi, Bangalore and Goa. A couple of observations in no particular order:

  • Indian founders don’t have clear role models… at least not within the Indian startup ecosystem. That being said, that will likely change over the next 3-5 years as the founders of companies such as SnapDeal, FlipKart, Naukri, MakeMyTrip, Inmobi, Directi (along with many other fantastic companies) continue to grow.
  • The communication style of Indian founders is quite different than other places. It seems like a cultural thing: founders (and perhaps most people) seem to think that they are establishing authority by giving longer answers to specific questions. I’d like to see founders improve their communication styles: be direct, be crisp and be passionate. By doing that, they’ll be able to better communicate with cofounders, potential team hires, press and investors (both foreign and domestic). More tips here: Your Solution Is Not My Problem. (On a side note: There’s huge opportunity for a speaking coach to make a metric shit-ton of money in India.)
  • Pound for pound, the Indian technical founder has far more raw horsepower than I’ve seen anywhere else. I suppose that’s why nearly every pitch I’ve heard from Indian founders has been heavy on the technology powering the solution. Unless you’re building a startup that *is* technology, your pitch shouldn’t contain any mention of the technology you’re using.
  • I’d like to see more Indian founders try to solve problems for the Indian market. Until now, it seems that most focused on building online products that could be sold to the West and that made sense: the Western internet user was way more likely to buy online. Internet penetration is rapidly increasing in India, that’s no surprise — Indian founders should start to focus on the Indian internet user because more of them are coming online daily, their comfort with purchasing on the web is growing and, frankly, becauseoutsiders are less likely to understand the cultural nuances of the Indian customer.
  • No surprise: most of the Indian investor community isn’t founder friendly. They can be very slow, deal terms can be onerous and the overall experience for founders is rough. For investors, there’s a lot of opportunity in this — just be more founder friendly and I suspect your dealflow will rise considerably.
  • Investors seem to inherently distrust founders. Investors should only take referrals from trusted sources and initial check sizes should be smaller while the relationship is still new. Founders should take it upon themselves to present themselves in the most truthful way. Regardless, I think you’ll begin to see investors prosecuting founders publicly in an effort to make a statement to the market.
  • As a first generation Indian-American, I find it interesting that many founders and investors born and raised in India seem to be more pessimistic about India’s prospects than I (and, by extension, other outsiders) am. As Sasha Mirchandani has said in the past, my hope for India is that it changes from a pessimistic society to an optimistic one.

I’m certainly not the first one to say this but, even with all the challenges that exist, India has no where to go but up — the question isn’t *if* but *when* it will happen. We’ve made a handful of investments in Indian startups over the past year and we’re planning to aggressively ramp that up immediately. Watch out India, the 500 train’s coming!

Startups and mentors: How to look for a great marketing mentor? & A list of top marketing mentors in India

After the first post on technology mentors in India, the next person who can help the most as a mentor to startups < 2 years old is someone that can help with product & customer knowledge (or understanding user / customer behavior if its a consumer startup).

There are 3 primary categories of “marketing” mentors I’d recommend you think about. You dont need them all, just be clear who you need for what kind of mentorship.

Product mentors are people who can distill what customers would need and say into what you need to build in your product. There’s a big difference between a product manager and a business analyst. The latter, typically found in many Indian services companies, tries to give the customer exactly what they want, and end up building largely a custom piece of work for that client. Product experts on the other hand, observe customers, ask them tough questions and direct the technology team to build what the customer really wants.

Sales mentors are people carrying a quota (target). They are pounding the street or directing teams that are selling every day. They understand targets, compensation, lead nurturing, managing deals and sales opportunities. There are many types of sales people but largely they are either “farmers” or “hunters”. Farmers end up expanding your current opportunity and Hunters get new business from new clients. They both have their place. Mostly, I have found sales people dont make very good mentors because they are largely unavailable, but there are a few good guys around. Ideally they would help you understand and grow your sales team from “CEO is the sales guy” to building a repeatable, growth-oriented team.

Marketing mentors would help you with positioning, building awareness, lead generation and digital marketing. They can typically help you at the stage when you need to launch (largely after product-market-fit). Most marketing people tend to talk lots and do little, so if you get someone that can give you practical tips on how to build your funnel and grow your customer base by spending as little money as possible, then you have the right person.

The question usually is why do you need so many mentors. The answer is you dont. It all depends on the team you have and if they need advice, help and mentorship. I have seen startups with 5 mentors and many with none. Most have 2-3 mentors to complement the team. You can get as much value from mentors as much time you put into the relationship. I typically recommend most entrepreneurs to setup 1 hour every other week during the initial days (<6 months) and then 1 hour every month and finally 1-2 hours every other month.

Some recommended Product mentors:

1. Amit Somani (Make my trip)

2.  Varun Shoor (Kayako)

3. Vijay Anand (The Startup Center)

4. Girish Mathrubootham (Fresh Desk)

5. Sridhar Ranganathan (InMobi)

6. Amit Gupta (InMobi)

8. Preetham VV (InMobi)

9. Dhimant Parekh (Hoopos)

Some recommended Sales mentors:

1. Madhu Lakshmanan (ex Photon)

2. Abhay Singhal (Inmobi)

Some recommended Marketing / Online customer acquisition mentors:

1. Pankaj Jain (Startup Weekend)

2. Ravi Vora (Flipkart)

3. Karthik Srinivasan (Flipkart)

Technology product startups, angel and venture market comparisons – US and India

There is a lot of activity and interest in technology product companies in India, as there is in the US. I spent some time reviewing numbers from NVCA, VCCircle and pulled some numbers specifically in the areas of Internet, software, technology products and eliminated services companies. Here is a simple table to keep things in perspective. All sources are at the bottom.

USA

India

Total number of technology (Product & services) companies formed annually (average)

24,169

412

# of companies that secured angel funding

15,233 (1)

65

# of companies that secured seed / early stage from VC

1,682

58

# of companies that secured late stage funding from VC

658

31

I am yet to do any “analysis”. Right now the data validation process is what I am going to embark upon.

What is your analysis.

Relevant Links:

1. Crash Dev – eye of the needle

2. UNH center for angel investment research.

3. NAV Fund John Backus

4. Product Startup Landscape in India from Zinnov . (Thanks Pari!)

5. NVCA National aggregate data for US investments (Excel spreadsheet)