iSPIRT works to transform India into a hub for new generation software products, by addressing crucial government policy, creating market catalysts and grow the maturity of product entrepreneurs. Welcome to the Official Insights!
iSPIRT does not fit into known mental model for many folks, they often ask what exactly is it? Few say it is hard to pin it inside a known category or even describe it in words.
The 2017 annual letter contains thoughts on what iSPIRT stands for. Some more explanation below on the why who and the how of iSPIRT.
Folks involved with iSPIRT are people with a passion for seeing “India as a Product Nation”. It is a grand vision of seeing the Indian product industry to be at least five times the size of the IT services industry.
The why and the what.
India’s answer to global product winner may get shaped through two siblings. The fist is in Saas (Software as Service), India will be for global Saas what Israel is for cyber security. The second is that “India 2″ also known Bharat market will be the envy of the world.
In either case winning the battle of platforms and ecosystems ie essential. Additionally, a new mindset to help win in the global rules of the game is critical. iSPIRT efforts affect both.
Difference between historically ace sprinters Jesse Owens and Usain Bolt of 14 strides is in the ecosystem where they ran.
Amiya Malik had the potential and the ecosystem support to be an Usain Bolt. But he declared victory too early in his mind by not having an underdog mindset.
Think tank, 30 year architect
Most apt technical description of iSPIRT is that it is a think tank. Which mean it is not an association, not a trade body, not a lobbyist group, or not academia.
A think tank is best understood as “university without students”. It takes the necessary long-term time scale view to solving hard problems.
iSPIRT works with all ecosystem stakeholders for the necessary influence of change. Yet it stands for the product founder who is the man in the arena.
Four pillars of public goods
All iSPIRT initiatives fall under one of the four pillars of public goods generated.
Public technology platform that can create local markets,
Policy work to educate and remove irritants of doing product business.
Market access program that brings buyers and sellers together who have not met before. Indian startups & Global Corporates for example.
Playbook for product business skill so that as an ecosystem we make newer mistakes.
Initiatives are levers that are stage dependent
Volunteer Engine, Belief, Credo keep us together
iSPIRT while is a think tank has a heavy bias for action. Several people volunteer and ‘pay it forward’ through time, donation and other contribution.
The operating model is inspired by Wikipedia. Two broad type of volunteers, the ones who lead an initiative called as Fellows. Other contributors have different names based intiatives Saarthi, Maven, Policy Sherpa etc.
Currently there are 24 Fellows and ~195 contributors. Volunteers sign a code of conduct to help address any conflict of interest while creating the public goods.
To put in a tweet-size “iSPIRT is like the Olympic Gold Quest for India’s Product Winners”
Customer feedback is gradually becoming the cornerstone of growth initiatives.
A new research published in the Harvard Business Review found that the act of just asking for customer feedback in itself is enough to help keep customers satisfied and coming back for more — even when they do not respond to your request.
Several theories of consumer psychology point to the fact that even a simple satisfaction survey appeals to your customers’ desire to be coddled, reinforcing the positive feelings they might already have about your product, and making them more likely to buy from you.
The very process of asking questions or seeking opinions induces people to form judgments that otherwise wouldn’t occur to them. They might not consciously realize that they love a feature unless you seek feedback about it.
Customer feedback has become one of the primary drivers for long term growth. Present day organizations jump at every opportunity to talk to the customer or learn about them. Businesses are spending millions of dollars on setting up feedback channels: emails, reviews, surveys, website analytics.
The pertinent question now is: how do you utilize these channels to actually learn from the feedback? Before you establish the viability of a channel, it is crucial to develop a clear picture of WHY you are collecting feedback.
Are you seeking first-hand advice on product improvement? Are you building a new feature for which you’re seeking the users’ inputs? Have you been receiving a lot of complaints? Once you have the end goal clear, proceed to the tactical part: how do you collect feedback?
There is no one-size-fits-all tactic to gain information from your users. Different situations require different methods of collecting customer feedback. For example, a survey form sent to an already disgruntled user will only make matters worse; a phone call works better here.
Let’s find out what are the best methods of collecting customer feedback:
THE BEST WAYS TO COLLECT CUSTOMER FEEDBACK
There are hundreds of ways to collect feedback from customers. The ones we’ll talk about here are the most popular — they are the most effective too.
1. Long form-based surveys
These most common way of collecting customer feedback are survey forms with a set of questions that are usually sent in an email.
The one thing you have to always keep in mind here is to not get carried away and ask too many questions.
QuickTapSurvey states that the connection between the number of questions and the time spent answering each question is not linear. The more questions your survey has, the less time your respondents spend, on an average, answering each.
In other words, the more questions you ask your respondents, the more likely they will “speed” through it, and the quality and reliability of your data will suffer:
It is clear from the above table that the longer the survey, the less time will the respondents spend on each question. The takeaway is to make the survey as short as possible.
There is, however, no ‘ideal’ length for a survey. A few experts do say that anything between 5 and 10 questions is a decent number.
To keep your surveys short, a good rule of thumb to keep in mind is: only ask questions that fulfill your end goal. Ensure that every question serves a clear purpose. If you do not intend to use the information, do not ask that question. The aim is to collect customer feedback and not to have them write an essay.
For example: If you are surveying a customer who has just exited your paid plan, there is no point asking them if the onboarding was easy! Your only aim should be to understand why they are leaving and what can you do to prevent that.
It is also important to start with open-ended questions. Let your customers surprise you. Multiple choice questions will give you answers based on your own assumptions. If you really want to know what the customer is thinking, give them an open-ended question.
A great open-ended question is: What do you love the most about the product. It is also a great hook to have your respondents start the survey on a positive note.
When to use form-based surveys to collect customer feedback
The best place to use this is when we want detailed inputs and have some open-ended questions to ask. This should only be sent to an engaged user, who you’re sure would like to take the time to provide feedback to you.
One way we used this in Hiver was to understand from our users which integrations we should build. We asked customers open-ended questions about how they use Hiver. Then asked them which integration they’d like to see, which was an MCQ, followed by another open-ended question about how they’d like to put the integration to use.
2. Short in-app surveys
Customers are constantly thinking of ways your product can work better for them. Maybe parts of your app do not have what they are looking for, or maybe the design could look a little better, or maybe they found something that is broken.
More often than not, they will not reach out to you on your support address. That happens only when the problem is big. But for the minor lapses, your users will just give up and walk away slightly frustrated.
A great idea is to offer a survey while your customer is using your app. The survey can be prompted the moment a user has finished interacting with a particular feature in the app. Since the user is already in the process of using that feature, it is very likely that their feedback will be very precise and to the point, and not ambiguous.
Remember: Your users are on the app for a certain purpose, it is not a great idea to throw a long survey at them. Keep it to two to three questions that are relevant to the page that it’s being displayed on.
Intercom.io is a fantastic tool to trigger in-app surveys in your app. For example, the moment a user finishes using a particular feature, a quick question like the one below is a great way to get their ideas about improving it.
When to use In-app surveys to collect customer feedback
When you want a quick feedback from someone who has performed a certain action. Timing is of the essence here — you have to trigger the survey at the very moment a transaction ends.
The questions should be specific to what the user is using or has just used, and NOT about the product in general.
3. Phone calls
It’s said that if you truly want to understand someone, you will have to talk to them.
The surveys and tests will give you tons of data but they can never tell you what a person truly feels about your product. This is when you need to reach out to your users through the phone. It is a personalized and proactive method that generates the best responses.
Hearing a person’s voice and tone is the best way to sense what they actually feel about your product.
A call will help you tell the features that get users excited, features that really make their lives easier.
The key here is that the person calling the user should genuinely want to understand their problem and offer solutions. Do not do it because you have to do it. Do it because you care. This is not a sales call.
The second factor to keep in mind is the time when you call. Studies have shown that customers are more likely to respond between 8 am and 9 am, and between 4 pm and 5 pm. Lunchtime, between 1 pm and 2 pm is the absolute worst time to reach out to anyone.
When to use phone calls to collect customer feedback
Scheduling calls with your users, talking to them, and making sense of feedback which is not as structured as entries in a form is a lot of hard work. The key here is to focus on the users who can give you the best feedback to improve your product or service.
It makes sense to do phone calls only with the users who are avid users, have deep knowledge about the area you operate in and can give you actionable feedback.
This is not a good avenue when you want to reach out to a lot of people at the same time.
4. Transactional emails
Transactional emails are the ones that you receive right after signing up for a new service, or upgrading to a new plan, and so on. Basically, these are emails triggered by a certain interaction between the user and your app.
More often than not, transactional emails are treated like a necessary notice and companies would not put much effort in creating a dialogue with the customer. These emails often lack the aesthetic appeal of the website and the newsletters and deliver an inconsistent customer experience — that’s a shame.
Contrary to this popular practice, transactional emails can be used as a powerful weapon to foster a dialogue with customers. If we look at email open rates, these emails do better than all other emails, says an Experian report. The reason is that people actually want to receive these emails — for instance, they want to know if an upgrade went through or not. Asking the right feedback question in these emails will certainly get good responses.
Viking does a great job at it by asking users to rate their delivery right after they have delivered a product:
In situations when you do not have a question to ask, it’s a good idea to give your users a very easy way of getting in touch with you. Buffer does it neatly:
Interestingly, the peak-end rule states that ‘our memory of past experience does not correspond to an average level of positive or negative feelings but to the most extreme point and the end of the episode’.
Say a user receives a transactional email just after they’ve upgraded — asking a question at that juncture would evoke positive feelings about the product and set them on the path to loyalty.
When to use transactional emails to collect customer feedback
When a user does something significant: signs up, upgrades to or exits a plan, and so on. You can send them a quick one-liner question or a short multiple choice question. The key is to gain an insight at the right time without burdening them with too many questions.
5. Net Promoter Score Surveys
It’s the simplest question you can ask your customers: ‘’how likely are you to recommend us to a friend or colleague?’’ It is, basically, a method to measure your customers’ sentiment about your product.
People who rate you 0 through 6 are known as “Detractors”, those who rate you 7 or 8 are known as “Passives”, and those who give you a 9 or 10 are known as “Promoters”, as illustrated here:
Net Promoter Score (NPS) = Percent Promoters — Percent Detractors
Let’s take an example. Say there are 100 respondents.
10 responses were in the range 0 to 6 (Detractors)
40 responses were in the range 7 to 8 (Passives)
50 responses were in the range 9 to 10 (Promoters)
NPS: [(50/100)*100] minus [(10/100)*100] = 40
The worst score you can get is -100 and the best score you can get is +100.
Apple uses NPS surveys to find detractors and improve their retail store experience. Whether a customer made a purchase or scheduled an appointment to try on an Apple Watch, they e-mail a survey to rate the in-store experience.
Remember: Any score above zero is good, anything above +50 is excellent, and over +70 is considered world-class.
The greatest advantage of NPS is its simplicity and ease of use. It can be set up in minutes and is easily understood by everyone in the organization. It also makes it very easy to compare yourself with the industry standards.
When to use NPS to collect customer feedback
When you want to understand the general sentiment of your users about a transaction. You can use NPS for any of the touchpoints that the customer might have with a team: sales, customer support, etc. For example, it is a good practice to send an NPS survey after a support query is resolved.
6. Suggestion boards
Suggestion boards take collecting feedback a notch up: it allows users to collaborate on ideas with not just the company, but also with other users.
These boards allow users to create feedback posts which can be upvoted or commented by other users. Top posts that have been upvoted or highly commented can help you discover what the majority of your users need.
The best thing about suggestion boards is that ideas that had been suggested by some customers became popular ideas among others who hadn’t thought of the benefits those ideas could bring.
Aha.io is a wonderful tool for creating these boards.
It is important to make the board very easy to navigate. Users should be able to add new posts with ease. Creating categories, allowing your customers to view the most popular ideas, and making it searchable are key.
Results will take some time to develop. Feedback will not be accumulated immediately. Wait till your users leave enough feedback so that you can determine which ones are popular to your entire base as a whole.
When to use suggestion boards to collect customer feedback
When you are looking for new ideas from your users. You should start with inviting the extensive users first — they know your product well and will be in a better position to suggest improvements or new features.
After you have a few ideas on the board, you can start inviting more users — they can upvote or comment others’ ideas even if they do not have one.
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Once you’ve collected the feedback you want to pay attention to, the next step is to analyze the data and take actual steps to make things better for all stakeholders.
WHAT TO DO WITH THE FEEDBACK YOU’VE COLLECTED
“Every day, companies solicit feedback from customers, yet only a few translate that feedback into meaning. An even smaller fraction of companies actually take action or close the loop with the customer, to let them know their voice was heard,” says Whitney Wood, managing partner of the Phelon Group.
If you handle it right, the dialogue between you and your customers can become the biggest growth driver for your business.
The only way to reward your vocal and consultative customers is to roll with the punches and bring in actual changes.
Let’s talk about taking the feedback data to actual use:
1. Identify product improvement areas
More often than not, your loyal users would have developed an expertise of your product features; some of our users understand the product as much as our product managers do.
The standup product improvement meetings can only take you so far — the real insight comes from the ones who use your product regularly.
No matter how hard you try to empathize with them and put yourself in their shoes, your users will always have some exciting ideas that you did not think of.
So, stop brainstorming and start following the advice your customers give you. Not only will your customers appreciate your willingness to listen and implement their ideas, but you will set yourself apart from your competitors, as a business that genuinely cares.
LEGO Ideas is quite possibly one of the best examples of how customer insight can be used for product development. Enthusiasts can easily submit their own designs on this mini site. The projects gathering more than 10,000 votes from the community undergo LEGO review and are turned into new sets if the review is favorable.
Nobody understands the pain points of the product as well as the customers. If companies are able to incorporate customer feedback into the product roadmap successfully, they have certainly come very close to the ideal market-fit.
It is crucial to classify feedback into improvements and game changers. Let’s take a couple of examples from Hiver itself.
A few of our customers thought shared labels can have different colors as that would help them manage their inboxes better. Now, this is a product improvement — we added it to our ‘task manager’ and had implemented in almost no time!
After we built the shared mailbox, a few customers suggested we implement automation that will allow emails to be assigned based on a few pre-set conditions. Now, this is a game changer as it would significantly reduce the time people spend on task assignment. We added it to our ‘brainstorming session’ and discussed the pros and cons of doing it. It took us a few weeks to build it, but it’s been worth it.
The biggest challenge is to get your customers to suggest. Would they really bother to spend time suggesting a feature?
Fitbit implemented the suggestion boards and noticed that even the ones who did not have a suggestion were either upvoting and downvoting. Ideas suggested by other customers became popular among others who hadn’t thought of benefits those ideas could bring.
Most companies are not a hundred percent sure about the verticals they should focus on. It is never an exact science and companies end up spending huge amounts on trial and experimentation.
Customer feedback can be a good way to find out where you belong.
During the process of analyzing feedback from customers from a broad spectrum of verticals, you will begin to see patterns as to where do the majority of your happy customers come from.
Once you have discovered the verticals where the majority of your happy customers exist, start working on strengthening the relations you already have with them. Strive to make them your advocates and seek recommendations.
4. Prevent customer churn
Are you stuck with the principle that negative feedback should be swept under the rug and kept silent? It is a clear indication that you have set your customer success goal to a low ‘simply meeting customer expectations’. It is crucial to use feedback to improve customer service.
A customer who has taken the effort to call you is a lot more likely to tell their friend about the same problem — ignoring the negative feedback will have a compounding effect.
Contrary to what most businesses think, a negative feedback is an opportunity to prevent customer churn and foster a long-term relationship with the customer. These are the guys who’d need a little extra work: call them, understand their problem and ensure you do your best to make them happy. Ensure that you check on them regularly — make them feel ‘cared’. Showing that you care goes a long way in building a healthy business relationship.
By keeping the two-way conversation open and building trust gradually, you can turn these problem customers into raging evangelists.
Remember: they have taken the time out to give you a feedback when they could have just switched to another product. Any feedback is a display of interest in your product. Be wise and use feedback to improve customer service.
5. Discover potential advocates and nurture them
Customer satisfaction is the primary indicator of how happy they are with your product. Gathering feedback will help you quickly identify the happiest of your users.
The next step is to nurture them into advocates. Get them sufficiently excited to rave about your product and recommend it to friends and colleagues. Monetary rewards do not motivate advocates. Do simple things — thank you notes is a great idea.
HEX is one cool company that attributes a lot of their success to the handwritten notes they send to their customers.
Here are some great ideas to turn your customers into advocates.
Imagine the world where most of your new customers came from business referrals. This can be achieved only when you know who your advocates are.
6. Motivate your team
Customer feedback can act as a secret driver to motivate employees.
Say you’ve been hearing praise about a feature — pass compliments directly to the person who built the feature, and ensure the team knows it too. It is a good way to encourage healthy competition among your team members.
Say you’ve been getting some brickbats about a certain feature — pass it to the person who built the feature and let them talk to the irate customer directly. It makes them feel in charge of that feature and they will be ready to take more ownership in the future.
Share conversations that are interesting and come up with new ideas about the product (improvements or game changers) with the whole team. It would help everyone understand the larger picture.
Wrapping Up: Feedback matters
A startling truth about most SaaS companies: your support team always understands more about what the customer needs than your product team.
It is time you start discussing your product roadmap with the support team as well — they are the ones who know about the ‘actual’ problems your customers face.
Building a good product and marketing it well is the job only half done. A lasting commitment to evangelizing a customer-centric culture, followed by a fierce commitment to gathering, analyzing, and sharing the feedback across the company plays a vital role in propelling your product and the business forward.
Always go back to your users and tell them you implemented something they suggested — this is a solid step in building a long term relation with them.
Originally published by Niraj Ranjan Rout at hiverhq.com on April 5, 2017.
Recently was having a conversation with a Private Equity friend and was trying to explain the challenge that has captured my imagination and full attention, ie exits for software product startups in India. He felt that the data about the exit structural deficit that I was trying to point out felt too bearish to be true. My counter argument was that my intent is not to sound bearish but instead be a realist, after all acknowledgement of a problem is first step to solving one. Post that conversation I thought should put this data out publicly so that through crowdsourcing can at the very least improve my understanding if it is off by wide margins.
Above data indicates that Israel was able to generate 1.8X of the money that went in while in India in the same period it was 0.2X. The right comparison is exits from 2012-2016 with VC investments from 2005-2009, iSPIRT report does that comparison but results are even less encouraging.
Exits follow a power law distribution, however in India it seems like a power law’s power law.
Not only is the volume of exit a challenge but also the structure, any ecosystem exits follow a typical power law. For every $1 bn exit, there are ten $100m deal, for every $100m there are hundred $10m deals.
Top 7 deals in India account for ~$2.5b of the $4b in exit. About 250 of 391 deals total a deal volume of $97m which means the size of an acqui hire i.e in long tail is about 0.5m, which is inadequate even for an angel investor (in other ecosystem long tail is >$10 m, hence being referred to as power’s law power law). Lack of many $10-100m deal means there is a missing middle of the long tail.
Anything in the data above that does not feel kosher ?
iSPIRT M&A Connect program takes a multiyear view to design interventions that can address the middle and long tail of the market coordination challenge.
TiE Nagpur and iSPIRT – two iconic initiatives, committed to building a great startup ecosystem for startups in India, came together to create magic at the Nagpur Innofest on the 5th of March 2017. Innofest is a platform where innovators can connect with enablers, experts, mentors to build, create, connect, improvise & explore. It’s a movement on ‘Innovation’ in India.
The first Innofest of 2017 was held at Nagpur, with over 150 slated to attend the event. However, the organisers were pleasantly surprised to cater to over 250 people that eventually attended the event. The keynote addresses were made by Sharad Sharma, Co-Founder iSPIRT and Nagaprakasham, who is an investor. There were multiple workshops during the entire day.
Over 10 interesting hardware products were showcased at the event. Right from a 3D printing machine, collision-detecting devices, IoT based tracking devices, ultrasonic sensors, drone technology to the very unique e-funnel.
Nagaprakasham talked about the trend of creating copycat technologies and emphasized how innovation must ensure that newer technologies are able to touch more and more Indian lives. India’s strength lies in its humongous manpower, ample farmers, cheap labour and last but not the least, its vast natural beauty. And they all must be leveraged for innovation.
Subinder Khurana, held a session on Product innovation, where he talked about the essential ingredients of innovation. He pointed out that every venture must have a story of its own that is inspiring enough for not only the customers, but also family, friends, investors and other collateral stakeholders.
On the concept of disruption, he clarified that breaking something is easy, but it must be done creatively. Has some new technology being leveraged? Is there a good story around it? Is some equilibrium being challenged, which will add value to the customers?
Sharad Sharma spoke about IndiaStack and why it will be a critical step in helping creating new innovations for Bharath, he also explained about the building blocks as part of IndiaStack which include Aadhaar. He also spoke about how SAAS will be for India as Cyber Security is for Israel. He spoke so passionately that later during an audience interaction, Shashikant Choudhary, TiE Nagpur President felt that the entire stage was shaking and the podium would fall off. We had Radhesh Kanumury, Country Lead, Global Entrepreneur Program, IBM India Ltd having a fire side chat with Prajakt Raut. Radhesh spoke on the various technology trends giving good insights about them along with examples of innovative Startups working on those areas.
Another session, led by Prajakt Raut was on creating Business Plans. According to him b-plans are critical indicators of the real status of the business as it gives us a framework for assessing the business. The plans give us early warning signals of something that is not going right. It is important for every Founder to know the answers to these questions: What problem or opportunity are we addressing? (The market/ target audience). How are we addressing it?
How are we planning to do it? (Organisations & operations planning) what skills are required? (What are the competencies that are required to handle the business). Why are you doing it?
We also held the iKen Workshop which was facilitated by Rakesh Debur and Kavita Arora of Bangalore Makerspaces joined us to mentor the innovators. This entire activity was possible because of the support of TiE Nagpur and the people of Nagpur who joined us on a Sunday.
Some of the innovations showcased…
Traxafe is an advanced, tiny IOT based tracking device for kids, elders and cars. It’s based on GPS, GSM and BEACON technology connected with a user-friendly app to keep track of your loved ones.
E-Funnel is an electronic fluid gauging device. It measures any quantum of fluid flowing through it. All the information information of every fluid filling can be accessed through a mobile app or through our website on your desktop. It will be available for different variants of diesel generators, trucks and buses.
ISCREAM is a device which can perform numerous operations from detecting vehicle
collision to analysing the vehicle analytics.i-Scream is assisted with our IoT-based crash sensor and emergency response software which helps us to both keep a track on you and make you feel safe at the same time.
It has been a nervous month for the professionals working for internet and e-commerce companies in India. Shutdowns and layoffs have been the flavour of the month, and business models have come under scrutiny. The effects of recent events at Stayzilla and Snapdeal have not been limited to job losses only. Weighed down by these developments in the sector, Rakuten, the Japanese e-tailer, has puts its India plans on the back-burner.
Stayzilla, an alternate and homestay aggregator, has shut operations. Investors including Nexus Venture Partners and Matrix Partners have invested USD 33 million across multiple rounds in the company. The founders have promised to bounce back ‘with a different business model’.
Snapdeal, announced that it will lay-off about 600 employees from the company including from its Vulcan (logistics) and Freecharge (payments) business divisions. The company has so far raised USD 1.75 billion from investors which include global heavyweights such as Softbank, Kalaari Capital, Temasek, Alibaba Group and eBay. However, Snapdeal reportedly is left with less than enough cash to survive the next 12 months. The merger talks with Paytm, facilitated by the common investor Alibaba, are not murmurs anymore and seem to be the logical next step in many ways. A very honest and important insight on the business model emerged from this episode, in which the founders admitted to ‘doing too many things’ and ‘diversifying and starting new projects while we still hadn’t perfected the first or made it profitable’.
The above incidents highlight the fact that Indian e-commerce in 2016 has been significantly different from its ‘glory days’ in 2015. GMV growth in 2016 was flat, even though long term prospects remain intact for now. The year-end sales were also impacted due to the demonetisation exercise carried out by the government. The cash on delivery (CoD) transactions, which account for approximately 50% of total GMV, were severely impacted due to the lack of availability of the new currency notes.
Figure 1: India e-tailing GMV (USD mn)
Source: Company data, IAMAI, Euromonitor, Credit Suisse
GMV, as the supreme emperor of metrics, has lost its sheen and the challengers which have come to the fore include revenue per customer (function of number of orders per year, value per order and commission), net promoter score (a measure of customer satisfaction) and overall user monetisation (including alternative sources such as advertising as well as new service offerings such as hyperlocal services).
The sustainability of business model is back in focus as a tool to evaluate potential winners and losers. Throwing money at the customers as discounts has not worked out very well for a lot of players. There has been a definite move towards trying to find other means of retaining customers. Going forward, winners are most likely to be companies that provide a differentiated customer experience. An obvious example is Amazon Prime which now brings more personalized experience to the company’s customers. Flipkart (Flipkart Assured) and Snapdeal (Snapdeal Gold) have similar offerings to enhance the stickiness of their customers. While ‘Flipkart Assured’ has seen limited success so far, Amazon Prime, launched at a very attractive price point of INR 499 per year, seems to be more suited for success going forward. Amazon has also clubbed its Netflix challenge – Prime Video offering with Amazon Prime subscription. With these offerings, the companies are trying to take focus away from discounts and towards customisation, quick delivery, consistency and reliability of shopping experience.
The control over supply side is a key element of constructing an enhanced and consistent experience for customers. Logistics is one of most prominent cost items for ecommerce firms, and depending on the category and value of the goods being delivered, could be 10% to 20% of GMV.
In India, the number of Amazon fulfilment centres has grown to 27 by the end of 2016. Shipping from stores is less efficient than from dedicated fulfilment centres. Amazon is looking to replicate their success in North America where they have invested billions in network of fulfilment centres. It has more than 75 such centres in North America, covering 25 US states. This gives Amazon an easy two-day reach over the entire US. Snapdeal has opened 6 logistics hub during 2016, with an estimated investment of USD 300 million. Paytm, flush with a USD 200 million funding from Alibaba, is reportedly firming up plans for a significant strategic investment in a logistics firm to improve its deliveries process.
The key growth drivers for e-commerce in India remain in place. There is a large aspirational population, faster and wider internet access, a never before push on digital payments and an opportunity to further penetrate the offline organised retail market. Nevertheless, the year 2016 has been a reality check. The Indian players have had to review their business models and take some tough calls to focus on sustainability. While the market may continue to be volatile in the short term, with more potential shutdowns and/or consolidation in the offing, we can now be more confident that the firms that do survive will turn profitable soon.
Finance minister had announced during budget 2016 that place of effective management (POEM) will determine if a company is resident in India or not. Accordingly, this was notified in Finance ACT 2016 as under.
The details of what will determine the place of business rules was not decided in the Finance Act 2016. The POEM provisions was supposed to become effective from April 2017. The detailed guidelines of what rules and conditions will determine the POEM has been issued by CBDT on 24 January 2017.
Ever since the announcement in 2016 there were many apprehensions on POEM, especially in SaaS companies.
In order to clear this apprehension a PolicyHacks session of iSPIRT was conducted.
The video discussion on POEM attended by Girish Rowjee, Founder CEO of Greytrip; Mrigank, Mrigank Tripathi, Founder CEO of Qustn Technologies; Sanjay Khan Nagra, of Khaitan and Co.; Avinash Raghava and Sudhir Singh, iSPIRT is given below.
What does the above POEM ruling incorporate in finance bill imply?
In simple terms the place of effective management in above act means a place where key management or commercial decisions that are necessary for the conduct of the business of an entity are made, in substance. This implies Indian resident status on a company will apply even when the entity is incorporated outside India, if the place of effective management is proven to be in India.
The guidelines issued on 24th January 2017 by CBDT will be used to determine if a business of non-Indian entity or a subsidiary of Indian entity will fall under the place of business rules or not. The Guide lines can be accessed here.
POEM is an internationally recognised test for determination of residence of a company incorporated in a foreign jurisdiction.
Why this regulation has been brought in?
POEM require Indian firms with overseas subsidiaries or foreign companies in India to pay local taxes based on where the business is effectively controlled.
The main intention of this regulation is to capture the income in shell companies incorporated outside India that are held by resident Indians with a basic intention of retaining the income outside India.
The regulation is not intended to discourage valid Indian businesses to setup an entity outside India or operate in global markets.
Does it impact Software sector?
It is very common for the India Software companies to open an office in foreign geography, many times as a subsidiary of Indian company and sometimes a new entity with mixed local and Indian management. Hence, the POEM has been worrying entrepreneurs in this sector. For SaaS segment, it is very normal to have a foreign entity, either for reasons of funding or market penetration.
As mentioned above, for a valid global business the POEM will not be a hurdle. Businesses, having global operation but not retaining income in foreign companies (i.e repatriating profits to Indian company) through authorised route and after complying with other regulations, POEM will not be a a worrying factor.
There may be a very few Software Companies, who may need to be concerned, to pass the test of POEM. Any determination of the POEM will depend upon the facts and circumstances of a given case. The POEM concept is one of substance over form. If POEM is established to be in India for businesses operating outside India, they will be taxed in India.
It is not possible to generalize the impact of POEM on Software sector or illustrate few used cases. Whether a business operating outside India will get classified as POEM can only be ascertained after detailed examination.
Exemption for turnover less than 50 Crore
There is good news for startups as per the Press release accessible here, it has been decided that the POEM guidelines shall not apply to companies having turnover or gross receipts of Rs. 50 crore or less in a financial year.
This was not clear before video discussion and doubts were expressed during discussion, as this rule has not been described in the guideline circular of CBDT but has been mentioned in the press release of same date from CBDT.
Hence, we can expect that the rule of less than 50 crore income shall be embedded in income tax rules to be notified later.
Other salient features
The provision would be effective from 1st April 2017 and will apply to Assessment Year 2017-18 and subsequent assessment years.
The Assessing Officer (AO) shall, before initiating any proceedings for holding a company incorporated outside India, on the basis of its POEM, as being resident in India, seek prior approval of the Principal Commissioner or the Commissioner, as the case may be.
Further, in case the AO proposes to hold a company incorporated outside India, on the basis of its POEM, as being resident in India then any such finding shall be given by the AO after seeking prior approval of the collegium of three members consisting of the Principal Commissioners or the Commissioners, as the case may be, to be constituted by the Principal Chief Commissioner of the region concerned, in this regard. The collegium so constituted shall provide an opportunity of being heard to the company before issuing any directions in the matter.
The point 2 and 3 mentioned above will ascertain that there is no arbitrary discretion exercised by Assessing officers on ground.
The Guidelines issued can be accessed here, also provides examples that explains when an active business outside India will be treated as Indian business based on POEM. These examples do not explain each and every case.
Also the exemption of 50 Crore is neither given in Finance Act or in the Guidelines but mentioned in press release.
CBDT may therefore issue further circulars to clarify these positions.
We spoke to couple of Indian product founders (who went through M&A or strategic investments) and friendly lawyers to extract advice on tips that they will keep in mind when making their next deal. Two key things emerged
Unlike a product sale where the value to different buyer is roughly the same, in case of companies dynamics are different. Here the value is completely based on what is perceived by the buyer much like art. Moreover price communication involves negotiation and it is a function of both the scarcity and perceived utility of the buyer.
Every transaction is unique and complex, complexity is one of the biggest deal killer so some forethought and operational hygiene readiness goes a long way in winning or losing a deal.
While it is hard to cover a generic playbook for point #1, some forethought on operational structure and preparedness goes a long way in increasing the odds of making deals happen. The deck captures many of these operational points.
As an eco-system builder, I’m always challenged with finding more Founders to contribute or help other early stage Founders. Normally, successful people have very little time to contribute and many a times, there is no formal platform which allows them to engage on an ongoing basis. Unfortunately, our eco-system has many fake mentors and founders who know it all 🙁
I have been fortunate to have access to a lot of Founders who are willing to help and share their learnings with early stage, growth stage companies..,but it has always been a challenge to expand this pool.
A couple of months back, Amarpreet Kalkat of Frrole had reached out to me on why most of the iSPIRT activities are focused only around Founders. How do we extend the same by involving some of the team members in a startup to leverage and also contribute back to the eco-system?
Sometime back, I got a call from Laxman Papineni of AppVirality, he came up with a brilliant suggestion on how he as a Founder would like to get more value from the heads of growth, marketing, product, tech from a well established company. I remember one of the Playbook done by Paras Chopra, Wingify in Delhi on Content marketing, he invited his head of Growth to share their learnings on what worked and what didn’t work for them. Girish Mathrubootham from Freshdesk at SaaSx3 had invited his team to share their learnings and few months back Ankit Oberoi of AdPushUp invited his colleagues to share their learnings on Content Marketing Playbook.
So, I believe there is a lot of knowledge sitting inside a company which is still untapped and the eco-system is yet to leverage that. Thanks to Laxman, who put a working document and has been kind enough to be an early customer for this beta program called #BeyondFounders.
So, What is that we are trying to solve?
If you’re a founder of SaaS company having trouble figuring/building outbound sales channel. It’s not necessary that you have to wait for Girish (Freshdesk) suggestion or mentorship, you can simply talk to the person who is incharge of Outbound sales at Freshdesk. But, how could you find them? That’s what we are gonna solve here.
Let’s just say that you have persistent problems with breaking that glass ceiling of the elusive 1K/10K MRR figure in Sales – and now you fear plateauing from here on. What if someone just showed you that small process refinement in your Sales cycle that could do the trick and turn the tide?
Apart from Sales, we would like to explore areas like Product Management, Operational Excellence, Growth Hacking.
How do we solve this?
BeyondFounders is an initiative to help startup Founders, equipped with a clear vision and a pinpoint challenge, find the right person (Founder or an executive from a fellow successful startup) to solve their burning problems.
For example: A startup founder with $10K MRR finding it hard to build the right sales process and team to scale further, is looking for an advice from Founder/Head of Sales at a successful startup who have reached $100K MRR.
The Mechanics of #BeyondFounders
How does this work? – Entrepreneurs-in-need fill a detailed form about themselves, their startup, stage they are at, challenges they face, who would they want to talk to (if any preference, so we can request them), etc.
Is this FREE? No, you would be paying back to the community by helping your fellow Entrepreneurs-in-need.
Mentors:
Why should I help? What’s in it for me? You would be really proud helping build a great company from India. Entrepreneurs would appreciate your time and valuable suggestions and may give credits wherever possible. As a Mentor, we expect you to spend at least 60-minutes per week, whenever possible.
You, as a mentor, can either give in-person slots or virtual (Phone/Skype/Hangouts).
If you would like to contribute as a mentor, do send out an email to me at avinash(at)ispirt.in on where you would like to help, the startups that you are currently with and what kind of startups would you be keen to help.
Entrepreneurs:
What type of questions can I ask? You should be really really straight with the challenge/problem you’re facing. You can’t come up with a broad problem like “How can I improve my revenue” or “How can I scale by tech infra”. Instead, you should come with questions like “I’m doing XYZ already, how can I generate more leads via outbound” or “How do I improve API response time handling data update asynchronously”.
If you are a startup who would like to be part of this program, do fill out this form, we are only looking at doing a beta program with 5 companies for the next 3-4 months. Please apply before 20th February 2017. We hope to start the first batch of 5 companies by 2nd March 2017
If you would like to volunteer and help in this program managing this, do write to me at avinash(at)ispirt.in
Thanks to Laxman Papineni of AppVirality whose brainchild this program is. Hoping that you can leverage and also contribute here.
I missed the 4th anniversary celebrations of iSPIRT in Bangalore today as my father has been unwell for the last couple of weeks and I have been avoiding travel. I thought it will be good to refresh my memory by reading up some of the old emails and also share the journey of the 9 months of preparation before we officially launched iSPIRT. In the early months we called ourselves as SPIRT — Software Product Industry Roundtable.
iSPIRT officially got launched on 4th Feb 2013 after missing the launch date on 26th January 2013. You should read up the annual letter issued today which talks about the journey, the good progress made and why India has the potential to innovate for the next six billion.
Why I started?
The idea of setting up a product body came about after I ended my ten-year stint with NASSCOM in February 2012, where I was lucky to have worked closely with a number of inspiring individuals in the software product space. While my next career milestone took me back to the corporate world at One97 and I remember Paytm was in the early day: I never knew VSS would make it so BIG one day.
The desire to contribute to the start-up and software product eco-system in the country never left me. This desire in me forced me to reach out to Vishnu Dusad, MD of Nucleus Software. I met him at his office and he encouraged me to stay focussed and he will put all efforts behind convincing and engaging with people like Bharat Goenka of Tally & Sharad Sharmawho chaired the NASSCOM Product Council.
While I was at One97, I had a candid conversation (of leaving One97. I was just 3 months in the system) with Vijay Shekhar Sharma about my passion as I didn’t want to be unfair to a friend who had offered me a job when I needed. I still remember the brief conversation that I had with Vijay where he said “You go ahead and follow your passion, I will support you in whatever you do, be it on the rolls of One97 or outside”. I think that was a big commitment, I know very few people who can do things like that. He said — don’t worry about sustaining yourself, I will take care of that, you go and follow your dream.
I still thank him as he was the first person who freed me and became the angel for the Product mission.
How the key people came together
Vishnu was able to convince Bharat & Sharad that it was time to focus on creating something unique for the Software Product companies in India. We also engaged with Pari Natarajan of Zinnov as he had a good understanding of the ecosystem and also knew some of the gaps that had to be filled. I remember, we did few calls and everything would stop for few weeks as people got busy. I had to again nudge people so that they start contributing back. Many a times, I thought it was difficult to pull something together, but something inside me didn’t allow me to stop.
We always were trying to identify more people, but early on someone had suggested that it is better to start with a small team and then keep adding more people. I remember in one of the calls, how Bharat had motivated me by giving some valuable advice. I remember I had written it down somewhere, but it was more on the lines of when you have a dream and when you discover your mission, it will fill you with enthusiasm and a burning desire to work on it. It was always good to hear Bharat on how much passionate he was for India and for Software Products from India.
Once everyone was aligned, we virtually laid the foundation for SPIRT on 15th August 2012 where Bharat & Sharad met at the Tally office and Vishnu and I joined on the call from Delhi. I came officially on board after that.
How we ideated on the mission and the core beliefs…
After lot of back and forth and around 8–10 calls, we arrived at the Draft 1 of what SPIRT should be focussing on. Once in a while, we would also get an outsider to share their perspective and we got advice on how to create another trade body on software products. I’m glad we did not go ahead with the trade-body concept and created a think tank thanks to Sharad.
Also, since most of the conversations were done on phone, i don’t have any photographs of the team in the early days. Normally, startups always show their photographs from the garages 🙂
Sharing what Pari of Zinnov had put together on. Since beginning, we had lot of confusion on the name, as you can see, SPIRT became SPIRIT 🙂
In one of the initial meetings, it was decided that we will be taking the 3 pillar approach — Policy, Market Catalyst & Playbooks. This was articulated beautifully by Sharad and what SPIRT would be focussing on..
Over the period of time, Bharat, Sharad and Vishnu crystallized the vision and we put together this document, although I remember lot of efforts went behind this.
Launch of ProductNation — the community for Product Founders
Once the core team had decided launch the mission, I was assigned the task to build the community for software products. I remember i had proposed few names to Sharad out of which ProductNation was picked up. The other two names which were close were ProductoNomy.com & ProductsFrom.In
The other list which got dropped was:
TheIndusValley.com & theindusvalley.in are available (this is inspired from The Silicon Valley).
The ProductNation Blog was launched in the first week of September 2012 and I was fortunate that many product folks came and supported this by writing blogs, doing interviews and few meetups.
One of the early versions of the ProductNation newsletters
This is a writeup that I had done at that time
Productnation aims to be a forum for these individuals to contribute their points of view and opinions and energize the software product industry with their passion for enhancing the product eco-system. The citizens of this great “nation” bring experience, diversity, information, knowledge and cut across caste, creed, race and color! In a nutshell, Productnation.in is by the product guys, for the product guys.
The initial name was SPIRT and why we changed to iSPIRT.
Sharad came up with the name of SPIRT which stands for Software Product Industry Roundtable. I guess after few weeks, Sharad came up with this beautiful analogy of why a think-tank positioning is better than the trade body approach. He had all his facts & data ready with him and others also agreed and we were all set.We tried the following domains early
SPIRuT.in (Software Products Industry RoUndTable )
But when we applied for the name at MCA, it got rejected twice and that’s when we thought about adding i for India. Luckily, the third attempt(i was told it is the last attempt) was successful and we got the name registered as Indian Software Product Industry Roundtable Foundation and called it as iSPIRT Foundation. I added the i in the name 🙂
the first version of the iSPIRT website
We again had a tough challenge in getting the domain as someone had registered ispirt.org and few other domains that we wanted. I also wanted to block ispirit.in as many people continued to call us iSPIRT(with the I) in the end.
Joy from WoodApple, a dear friend helped us with the design of the iSPIRT logo…and you can see the wonderful options that he created and I think we picked up the best.
Joy put his heart in designing the logo which is why it came out so well. We didn’t do any iteration, change of colour, style nothing. We just picked one of them.
How the funding happened…
It was clear that iSPIRT will not be a trade body and will not have members. Instead it will be funded by grants and contributions from products firms and individuals. So, we made a list of 30–35 product founders in the month of December 2013 and started to reach out to them.
VAS: One97, OnMobile, NetCore
SaaS/PaaS: OrangeScape, Zoho (has announced India launch)
Most of my meetings with Sharad would happen at KGA, that was the place where all discussions would be done on the donor funding.
In the first list, I remember we had not even put Freshdesk and today, you can’t do anything in the product eco-system without the Girish’s touch. So happy to see that Girish has built a powerful brand in the last 4 years.
This would be a 20–30 minute led by Sharad on why we are setting up iSPIRT, how it will be different from a trade body model and how they can be part of this movement and support it. To our surprise, most of the founders believed in the story and came forward and donated money to iSPIRT.
Some of the meetings in Bangalore were face to face whereas the meetings in other cities were on phone. The meeting with Naveen of InMobi was pretty good as he gave us lot of insights on what kind of companies/Founders we should be adding in the first 30. The meeting with Shashank of Practo was also insightful as he shared some pain areas of a growing startup and no help he was getting from the eco-system.
The meeting with Pallav happened at Mainland China and Pallav was on full fire, he asked so many tough questions on why we are starting? 🙂
The conversation with Suresh of Orangescape was the easiest as he was one of the early guys who always believed and supported the work been done by us.
I remember collecting 4 lakhs form companies which were in the early stages, but believed so much in the mission, that they did not even question us on the mission or on where the money would be used.
Before the launch, we had 30 founders who had signed up for the mission and came for the first meeting scheduled at Pramati’s office in Bangalore.
The Launch
We had most of the founders who attended the first meeting on 4th Feb, some of them flew from different places to be part of the meeting. You can see some photographs here. It was good to share the mission, what we had planned to do and also how we were planning to execute it.
The Founder Circle at iSPIRT launch on 4th Feb 2013 at Pramati office
Before the launch, Sujit John & Shlipa Phadnis of TOI did a breaking story of the launch by calling it as 30 software product firms break free from Nasscom. This created lot of issue for me & Sharad as both had played an active role in NPC and the EMERGE forum.
Luckily those days, I think @Sumanthr was not active or he did not notice us and hence we never got some mileage 🙂
When we launched iSPIRT, I remember after few weeks we had Manish Bahl of Forrester questioned that iSPIRT will not be able to make an impact as it is driven by volunteers and doesn’t have a proper secretariat, etc. Based on his blog post, i remember there were couple of stories written about iSPIRT as why we might not be able to do what we have set up as a mission.
Surviving and thriving against all odds!
Initially, some of the leaders also thought that iSPIRT will be an experiment for 1 year, if it worked, we will continue, if it failed, the spirit will just evaporate 🙂 I’m glad that we continued the spirit and good to see the movement has taken off. I can see that now we are a large number of volunteers with many initiatives and happy to be one of the volunteers part of this amazing journey, onwards to many more years of thought leadership as #iSPIRTturns4. It has been an awesome journey!
Special thanks to my friend Sairam who did take a look at the blog inspite of his offsite.
Know Your Customer (KYC) is essential for obtaining Financial, Healthcare, Insurance, and Telecom services around the world. In the Indian context, until Aadhaar opened up its APIs, KYC was a laborious process costing billions to services providers and inconveniencing customers with a mountain of paper identity documents. The thoughts here are confined to the Banking sector but applies to other sectors equally.
eKYC “assisted”
With the advent of electronic KYC or eKYC using the Aadhaar biometrics platform, things haven’t changed a lot. It certainly has reduced paper documents. However, eKYC is still done in “assisted” mode – meaning either the customer has to be present at the Bank or a Bank Executive has to reach the customer to collect the biometric data. Besides, in most Banks, a paper trail is still maintained despite the biometrics data – reasons best known to themselves. What was costing the Banks earlier is what is costing today – perhaps more with the new biometric devices and the cost to maintain them.
eKYC “unassisted”
The Reserve Bank of India (RBI) took a significant step in December 2016 to allow opening of deposits and borrower accounts using OTP based eKYC, albeit with some restrictions (RBI notification on 08 December 2016, Chapter VI – Customer Due Diligence (CDD) Procedure – Clause 17 and 38 amendments). This has opened up the opportunity to provide this service to customers at the comfort of their homes at a vastly reduced cost to Banks. This would satisfy the two-factor authentication needed by RBI and would suffice to open an Account. However, with increasing volumes (500 million eKYCs projected for 2020 by UIDAI), and the possibility for this service to be abused through third party fraud, this would need additional authentication to ensure that the person completing the transaction is who he really says he is (as close to a physical check).
eKYC “unassisted” with three factor authentication – Aadhaar, OTP and Face Biometrics
To solve this particular problem, FRS Labs rolled out the “Atlas eKYC” solution – fully integrated with Aadhaar – with face biometrics as the third factor of authentication (watch the 60 second video here). While the face is captured by UIDAI as the third biometric element (fingerprints and IRIS being the other two), RBI has not mandated the use of face for biometric authentications – for reasons that face is considered not as unique as fingerprints and certainly not IRIS – and the false acceptance rates (e.g. twins) could be high and that people’s faces change over time – but as always research contradicts this notion and there are plenty of evidence to prove that face is a reliable biometric feature. And it can only get better.
Notwithstanding, RBI has not specified that face could not be used if a commercial organisation wishes to do so as additional factor of authentication to protect their businesses and consumers, so long as the mandatory 2 factor authentication is in force. In a similar tone, RBI has not ruled out authenticating customers using their voice (another biometric element not in Aadhaar). ICICI Bank and Citibank have rolled out voice biometrics to authenticate customers to call centres is a case in point – It is still two factor authentication (the registered mobile phone as the first factor and the consumer’s voice as the second factor of authentication). Therefore, there is a great opportunity here for Banks to provide face biometrics as the third factor of authentication for secure “unassisted” OTP based eKYC without the need for biometric devices. I can only begin to image the convenience for consumers and cost savings for Banks.
Just about two months ago, the nation attempted the massive ‘demonetization’ initiative at an unprecedented scale to clean-up illicit money and move towards greater economic equity and justice. As a consequence, the realm of digital money management and transactions saw a burgeoning growth and needless to say, this accelerated the vision of ‘Digital India’, the India where technology and digitization makes every facet of life for a common man, easy and empowering. This is becoming a global phenomenon as a recent report from Accenture found that global investment in FinTech has skyrocketed from $930 million back in 2008 to over $12 billion by the beginning of 2015.
Alongside digital payments, the nation also takes pride in harboring FinTech initiatives working wonders on the ground, in the areas of banking for the unbanked, micro-loans, credit-free schemes, micro asset-management, and a portmanteau of other technology-powered solutions/models that are serving the unreached. Recognizing these FinTech entrepreneurs, the 6th edition of Action For India Forum, is on a mission to help Indian social innovators overcome barriers to scale and achieve greater impact.
Though this exclusive invite-only event (taking place on January 24th & 25th, 2017 in New Delhi) that brings together 100 leading social innovators (with FinTech as one of the six sectors of focus) along with 100 “influencers” (from the realms of impact investment, philanthropy, government, technology and public policy), it aims to bring together a stellar set of handpicked start-ups and provide them with a platform to further partnerships, investment and growth. The applications to be a part of the esteemed Forum, are still open for all the promising FinTech startups.
It is at this event that the most promising social entrepreneurs are selected to be a part of a two-week all-expense- paid trip to Silicon Valley through the Silicon Valley Challenge (SVC).
I have known Nikhil for 10 years and have the highest respect for him, after Om Malik he is my most favourite technology journalist for his deep and incisive views. I also admire his courage to deliberate topics which are normally deemed outside the ‘overton window’ (non discussable topics)
So despite the rant I had to sit down and had to think on this because this is Nikhil asking these questions. However after reflection I found that I can’t agree with him on several counts, well this is not our first time 🙂
I also feel more compelled to do so because while he talks technology & politics in the title of his post but it seems to be a complaint against iSPIRT. And I am on the side of iSPIRT, have been part of iSPIRT from the day it officially started and many years before that. Moreover now I am a full time ‘Fellow In Residence’ since last four months running the M&A Connect program.
His rant has many factual errors including about UPI that Nikhil Kumar already points out in his tweets.
If I understand it right the following seems to be major points he rants about
Unsettling adoption pace in Digital Identity & Payments
Muddled debate on digital colonization
Subversion of choice in technology diffusion
Close relationship of technology and politics
Technology is the yin, policy the yang of new markets
Technology as Kevin Kelly beautifully points out is a force of evolution, it is an unstoppable force of nature. Definition of politics or policies in this context is it is allocation of scarce resources in the face of change. Technology creates new possibilities while policies moderates those by setting up the new rules of game. Looking across time or geography this relation has been so empirical that technology and policy have been the yin and yang of new market creation.
Sometimes policies or regulation kills a market. Peer to peer music file sharing – Napster anyone ? DMCA killed it. Closer home about 5-7 years ago every mobile payment startup in India died because it was not clear who defined the policies when it came to mobile payments (RBI or TRAI)
Over time this is the reason why the ‘challengers’ just like the ‘incumbent’ have learnt to engage not only to understand the new game (technology) but to also influence the rules of the game (policies). More pronounced recent debate of defining the rules of the game for being challenger friendly is Net Neutrality of which Nikhil was the chief crusader himself.
Makes me wonder what makes one crusade(er) more noble than another.
Poor understanding of Digital colonization
Digitization is going to happen to everyone in the world, that is the force of technology. Digital or not is not the choice we have, how in the new digital world can we influence net positive societal impact is a more apt question.
I am not in favour of a state hand in speeding the process of digitization but in the digital world does one want to be in control of a private hand whom you can’t influence. I would rather prefer to yield in to the power of who I can vote out not a global private lord that dictates a feudal system.
In face of creative destruction it is indeed the responsibility of the state and the society to rehabilitate the farmer or the cobbler that loses a job because of change in technology. To shoot the messenger that warn about the creative destruction and is helping preparing everyone for the change is naive.
Dealing with Illusion of Choice
It is easy to score a debate by calling something as ‘attack on choice’. In world with natural monopolies (key digital infrastructure) options out there are merely illusion of choice. Many other countries are discovering now that Google, Facebook control identity than most countries would like to yield it. These countries have already yielded their choices and data to large corporation. Internet is fundamentally a aggregation of private data which is retailed to highest bidder. Due to India’s ability to leapfrog an architecture around data for the first time we can even enter into a dialogue about data and privacy. The debate and the policies on this has not been settled. Questions on these are great, rolling sleeves with an alternate solution even better. Standing by the side and only complaining the least useful.
Debating Issue Vs pointing fingers without facts is not cool
People in iSPIRT are rooting for positive change like Nikhil and everyone involved feels responsible for the consequence of change that takes place especially those that get influenced by them. They think deeply about the societal impact and have had major share of disagreement with the Government as well. To cherry pick links and blog post to say things iSPIRT is very close to just one stakeholder is totally unwarranted and uncool.
India stack – one of four building blocks for Product Nation
iSPIRT is a part of the ecosystem and works with everyone within it – entrepreneurs (entire spectrum of ‘new’ to ‘seasoned’ ones), policymakers, global corporates, academic researchers, developers, investors, banks, other industry bodies, global think tanks and more.
The vision for iSPIRT is building India as a Product Nation, our thoughts captured in the annual letter 2016 here. For realizing that vision building public goods is a declared motto. Four type of these building blocks of public goods is Technology (India Stack), Policy , Market Catalyst (InTech50, M&A Connect), Playbooks (Roundtable, PNGrowth, iKEN). Belief systems formalized to make this happen as credo has stood us for last four years.
As much impact as India Stack if not more is happening in other blocks as well – Innofest that is championing support of grass root innovators that will help build the ‘India 2’ (beyond metro) market. A fintech leapfrog council (FTLC) that is helping public sector banks navigate the nonlinear change, a huge step in helping banks arrest the negative impact of technology disruption. Startup Bridge India a roadshow for Indian startups in the valley declaring the arrival new global category leaders from India that silicon valley should take note of and partner. Helping grooming the next ring of category leaders in India through PNGrowth bootcamp led by practitioner entrepreneur who are few years ahead (senior doing group study for juniors). How do we know that this is creating an impact, NPS (Net Promoter Score) of each of the initiative hovers around +80.
Of course iSPIRT works with policy makers as well to ensure that when rules of game are drafted the challenger is not endowed with a structural disadvantage. When iSPIRT supported Nikhil on similar rules creating exercise with respect to Net Neutrality I do not understand why engaging other stakeholder should not be done.
Summary
I have gone through many red pill moment myself to later realize that it is also recursive, it feels smart to have the first red pill moment but is humbling when there is realization that there is a red pill’s red pill (Matrix Revolution gives a more detailed picture than just the first Matrix movie). In times of unprecedented change cognitive dissonance is bound to happen, wisdom is measured by how much cognitive dissonance one can handle.
“Nikhil, do continue to ask tough questions on important topics regardless of how discomforting they are, for we all will benefit by finding answers to it. However to attribute wrong intent to people and organization especially without facts is uncool even in a rant for you have been the gold standard of teaching India to form points of view supported with facts.
Also I would encourage you to define why should one crusade be called more noble than another one”
Robots, Drones, Electric Bikes, 3D printers, Modular Homes – It’s all Happening in India – #IndiaInnovates
The Indian Software Product Industry Roundtable (iSPIRT), a think tank dedicated to the cause of the Indian Product Industry, held its flagship event InnoFest 2016 in Bengaluru. This unique event was inaugurated byMr. Mohandas Pai, Chairman of the Board, Manipal Global Education. The one day long festival focused on hardware innovation encompassed inspirational talks by industry leaders, sessions by key innovators, a panel discussion, a product showcase, workshops, a DIY pavilion and makerspaces. Mr. Mohandas Pai and Vijay Shekhar Sharma, Co Founder Paytm, delivered the opening address.
InnoFest 2016 had over 1200 registered participants and showcased 150 products and innovations. The event featured 10 Workshops, 12 DIY Pavilion participants and 2 Community projects, wherein the audience could actively participate. Over 35 Speakers addressed the huge gathering of budding innovators, manufacturers, techies, entrepreneurs, students, professors, researchers and representatives from the financial sector. A significant number of participants were women entrepreneurs and innovators.
In his keynote and inaugural addressMr. Mohandas Pai, said, “More often than you think, innovations are stemmed from an idea that provides a solution to recurring and nagging problems that you may face personally. To translate that idea into a product and a business, requires an eco-system to support it and reach-out to the markets. InnoFest provides that platform and unlocks a plethora of opportunities. It is imperative that successful innovators need to foster other innovators and harvest benefits collectively. I’m elated to say that InnoFest is turning out to be a hub for innovation led entrepreneurs.”
InnoFest 2016 showcased exciting innovations such as a Sumo wrestling Robot, electric bikes, modular portable micro housing units, a 3D selfie maker, digital microscopy, 3D printers, pop up makerspace, farming tools, healthcare devices, education products, green energy equipment, environment related products were just the tip of the iceberg.
InnoFest also had a host of mentors who were available throughout the day to have a one-on-one discussion with participants. A workshop focused on providing a clear understanding of Entrepreneurship for early entrepreneurs and novice entrepreneurs was a runaway hit.
A key element that innovators grapple with is Funding, InnoFest featured a session on funding resources for early stage Hardware Entrepreneurs, Crowd Funding, Challenges in obtaining Grants and Equity Funding.
With the Make in India movement gaining momentum a session on Building Hardware Businesses in India/from India, enlighten the participants.
Mr. Sharad Sharma, Co-Founder of iSPIRT and Convenor of InnoFest, said, “India is on the cusp of a business revolution. We are going to see a spurt in the manufacturing sector addressing basic human needs air, water and food. Today’s innovators are going to be the leaders tomorrow. Events such as InnoFest will be pivotal in providing a jump-start to budding entrepreneurs.”
The Patrons of this event were Mr. Amitabh Kant CEO, NITI Aayog; Mr. Jayant Sinha, Minister of State for Civil Aviation, Government of India; Mr. Nandan Nilekani, Former Chairman of Infosys and Former Chairman of UIDAI; Mrs. Kiran Mazumdar Shaw, Chairman and Managing Director of Biocon and Mr. Mohandas Pai, Chairman of the Board, Manipal Global Education.
InnoFest was concieved as a day-long festival of ideas and inspiration that will exponentially multiply innovation across the country and make India into a Product Nation. Our research shows that there is a need for a strong support ecosystem for hardware innovators similar to that available to software innovators. InnoFest seeks to bring together the multitude of partners needed to build such platform that encourages and supports grassroots innovators from ideation to realization to growth. iSPIRT strongly believes that a robust product ecosystem is the key to rapid growth across the country.
In case you are a manufacturing company beginning to explore how investment into Artificial Intelligence and Internet of Things could help your top and bottom lines, you may already have fallen behind. The fourth industrial revolution or the ‘Industry 4.0’ is already upon us and the opportunities to completely transform the way we carry out production are limitless. Industry 4.0 may be broadly defined as a collective term for a number of contemporary automation, data exchange and manufacturing technologies. It is characterised by a diminishing boundary between the cyber and physical systems to enhance productivity and reduce costs. ‘Smart’ and ‘Connected’ are two of the most important keywords in the new industry universe. Smart takes us into the domain of Artificial Intelligence (AI) while ‘Connected’ is more a purview of ‘Internet of Things’ (IoT).
‘Smart’ – A detour into Artificial Intelligence
AI finds its roots way back in 1956 when the name ‘Artificial Intelligence’ was adopted or even further back with Alan Turing in 1950 or in 1943 when McCulloch & Pitts introduced the Boolean circuit model of brain. It’s still however, a little difficult to settle on one universal definition of AI. For our purpose we may define AI as the development of computer systems able to perform tasks normally requiring human intelligence. These may include (but are not limited to) visual perception, speech recognition, decision-making, and translation between languages. More passionate people define AI as the ability to ‘solve new problems’.
The lack of one single definition has not detracted investors from recognizing the potential of AI and they have been pouring in money like never before. As per Zinnov Consulting, in the last 5 years alone, investments in AI have grown ten-fold from USD 94 million in 2011 to USD 1billion in 2016. As per CB Insights, the equity investments in AI were North of USD 2 billion in both 2014 and 2015. We may attribute different ways of defining AI to different investment figures, however we can agree that investments have sky rocketed. While, Venture capital firms have obviously been at the forefront in backing early stage companies, the high corporate interest in acquiring AI start-ups has also led to a buzz in the M&A markets. Some of the biggest acquirers in AI include Google, Apple, Salesforce, Amazon, Microsoft, Intel and IBM.
India is holding its own in terms of AI related action. As per Zinnov, India has emerged as the 3rd largest AI ecosystem in the world with 170 start-ups. Niki.ai, SnapShopr, YANA, HealthNextGen, Aindra Systems, Hire Alchemy are some of the notable firms trying to disrupt the value chain across sectors. Global technology companies have acquired more than half-a-dozen India based AI start-ups in the last 18 months. It’s not all one way traffic. Indian IT services firms like Infosys (UNSILO, Cloudyn, TidalScale) and Wipro (Vicarious, Vectra Ventures) have been looking for targets abroad to augment their AI capabilities.
Table 1: AI use cases across sectors
‘Connected’ – the Industrial IoT
The Industrial Internet of Things refers to the network of equipment which includes a very large volume of sensors, devices and “things” that produce information and add value to the manufacturing processes. This information or data acts a feed to the AI systems. As per Cisco, 50 billion devices will be connected by 2020 and 500 billion by 2030. McKinsey projects that IoT will generate 11% of global GDP by 2025. This is driven by optimising industry performance and cost efficiencies.
IIoT on the Factory Floor
The global IIoT spending is estimated at USD 250 billion and is expected to reach USD 575 billion by 2020. The key components of the IIoT ecosystem include sensors/modules, connectivity, customisation, and platform/IoT cloud/applications.
As per NASSCOM, The Indian IoT market is expected to reach USD 15 billion with 2.7 billion units by 2020 from the current USD 5.6 billion and 200 million connected units. This is expected to be largely driven by applications in manufacturing, automotive and transportation and logistics.
In India, the IIoT segment has caught the attention of the largest manufacturers. In November 2016, Reliance and GE announced a partnership to work together to build applications for GE’s Predix platform. The partnership will provide industrial IoT solutions to customers in industries such as oil and gas, fertilizers, power, healthcare and telecom. Mahindra & Mahindra’s uses bots to build car body frames at its Nashik plant. Plants operated by Godrej and Welspun use the Intelligent Plant Framework provided by Covacis Technologies to run their factory floors.
Industry 4.0 is an exciting phase and the possibilities seem limitless. The Indian government is trying to play its part through the Digital India mission. It is positively driving various government projects such as smart cities, smart transportation, smart grids, etc. which are also expected to further propel the use of IoT technology. It is imperative for the promoters and companies in the manufacturing segment to find their place in the new digital world order through organic or inorganic investment.
Think about endgame, chess grandmasters do so to win.
Studies point out that chess grandmasters visualize the chess board state few steps away to a ‘winning game’ and make moves based on memory pattern that can lead to that board state and thus help them win the game.
Many startups however operate in a game where the rules are dynamic and change unexpectedly. An unanticipated flood of competition could sweep in, or the ground gets shaken underneath because of a regulation or policy change. Due to such unpredictability most of the founder’s move is extremely tactical, the focus is in on surviving and not getting killed as opposed to planning to grow like rabbits.
Data from 20 years of startups in US suggest mean time to exit is 4th and 6th year.
Mean exit time for startups
This is simply because If investors don’t do that then they can’t return the capital to their own investors (i.e limited partners) within the 10 year fund cycle.
Same data also reveals that after 1997 there has been more exit through M&A than IPO both in terms of count and value which means that it is more likely for a startup to have an exit via M&A rather than an IPO as the most likely route
VC vs M&A vs IPO
In India with no IPO route, M&A is the most likely endgame
On decade long VC scale, Indian ecosystem is quite young and thus historical data is not available to compare however similar forces broady apply.
Also while scale can become large but technology market growth rates in India are not as fast the US. Add to this the fact there is no IPO market in India for the technology companies. Some efforts are underway to open it such as the new ITP platform by SEBI but nothing has kicked in practice. That makes M&A option all the more important to consider for an Indian startup founder.
From limited data that is available about the Indian ecosystem we can that $14.5 billion of VC money has been invested in last 4 years and $2.5b of exits have happened in the same period spread over 300 deals. This ratio are still very skewed when compared to other ecosystem.
India M&A / VC Ratio – Low
All of this build the strong case for why an Indian startup founder should think about exits via M&A
A reason they don’t think about it is because they don’t know much about exits or the playbook involved in doing that. Second likely reason could be that advisors actively discourage founders from thinking about exits by labeling them opportunistic and not being a visionary founder.
Paradoxically the right time to think about exits is exactly when an exit is not needed.
Founders should think about exit before they are forced to think about it
PS: Exit has a broader significance, applies to open source and even countries. Here is a talk by Balaji Srinivasan that illustrates the importance of exit as key lever of an healthy ecosystem
