Joydeep Sen Sarma and Ashish Thusoo started Qubole, a managed Hadoop-as-a-Service offering, in late 2011. Since then they have seen an impressive growth counting some of the well known names such as Pinterest, Quora and Nextdoor as their customers and raising a total of $7m of funding till date. They were recently mentioned as the one of the top 10 Hadoop startups to watch by CIO.com and Qubole Data Service was selected as InTech’s Top 50 Most Innovative Products from India. Qubole is headquartered in Mountain View, California and has an engineering office in Bangalore, India.
ProductNation had a brief chat with Joydeep to learn about his experiences of building a product company from India. This article touches upon some of the insights gathered from the discussion.
Joydeep Sen Sarma and Ashish Thusoo, batch mates from IIT-D moved to US soon after their graduation to pursue Masters. They worked with different companies in various technical roles and eventually came together again at Facebook where they worked with the Data Infrastructure team for close to 4 years. At Facebook, they created the social network’s big data infrastructure and Apache Hive. Those 4 years at Facebook not just exposed them to the big data market but also helped them form a strong network in Silicon Valley. When they found themselves questioning what they want to do next, it was clear that they are going to follow their passion for technology and build a product company. “We started brainstorming on what customers wanted to buy from us? What the market needs are? What to build? We got a small room and started writing code”, says Joydeep. Joydeep & Ashish built on their knowledge of the big data market and came up with the idea behind Qubole. They leveraged their network to find the initial customers and also managed to raise a seed capital of $1m to fund their product development.
Their starting up story highlights that two key things that strengthened their position as they were starting up – firstly the credibility and depth of knowledge they gained through their experience at Facebook and secondly the strong network they formed in Silicon Valley.
Tapping the Indian market
We have seen that many of the successful start-ups such as Zoho Corp, Druva, and Fusion Charts are growing by acquiring international customers. This poses a curious question – Is the Indian market very small or unattractive? Joydeep admits that it would have been difficult for them to achieve a similar growth if they had been just India focused. “We had Quora as one of our initial customers. Acquiring such a customer would have been very difficult in India. It is not impossible to build business from India but getting the initial customers is hard. For a business like ours having an international presence is required.” He also quickly pointed out that Indian market is quite big if you build a product for the masses. “To build a business completely focused on the Indian market, one needs to pick a problem that is big and not niche. Many people build something and then hunt for a big market. That is a wrong approach. One needs to build something that has high leverage. Leverage can be measured as Revenue per employee or Revenue per engineer. Given that equation, mass market products can grow exponentially focusing just on the Indian market”.
Coming back to enterprise product start-ups, targeting a broad international market remains the most attractive approach to fuel growth. Joydeep applauded the efforts of iSPIRT and NASSCOM for taking efforts to help start-ups with M&A and go-to market.
Every year close to 1.5 million students graduate with an engineering degree in India. But still many start-ups quote finding talent as one of the top challenges. As per Joydeep finding an engineering talent at the start-up phase is not a big challenge anymore. He mentioned “During my time the cream of the engineering talent from India used to either move out of the country or pursue non-tech careers. Most of my peers from my 1996 Computer Science batch didn’t stay in technology sector. But I see the situation changing now. The volume of engineers we produce nowadays is way higher. Even if we lose a few good developers to the developed economies, still we have a good supply of entry level engineers. Overall the quality of engineers has improved considerably. Even company’s incentive systems are changing to reward good engineers.” Qubole currently has 20 member engineering team in India working on backend, frontend & UX and a 10 member team in US.
Though this sounds promising, the situation is not the same once a company starts scaling up and is looking for highly experienced technical experts. “In India, we struggle to find talent with a strong depth of knowledge. If one were looking for hands-on systems engineers with 15 or more years of experience – it would be very hard, if not possible, to find such people in India. The US and Silicon Valley remains the go-to place to hire experts”. On the brighter side, India is seeing an interesting trend of reverse brain drain with many returning back to India after a long career in US. A study conducted by human resource and recruiting firm Kelly Services India in 2011 estimated that 300,000 Indian professionals working overseas will return between 2011 and 2015. As per a study done by Harvard Law School, 50% of the NRI’s returning to India plan to start new ventures. Joydeep observes that currently the top management of many successful start-ups in India is headed by US returned people.
Challenges in building a business in India
Qubole has been actively growing and managing teams both in US & India. However operating in India comes with its own set of challenges.
- Infrastructure has been a continuing pain point in India especially in Bangalore. “Because of complete lack of mass rapid transit and bad traffic conditions, many employees spend a significant amount of their commuting. Or they are forced to work from home. Aside from impacting us individually, the startup ecosystem suffers as a whole. It is hard to pull in professionals from across the city for networking events. Basic things like an easily accessible world class conference center are lacking. India needs to take some cues from countries like Singapore and build better infrastructure. It is ironical that Singapore which is small compared to Bangalore in the IT sector hosts significantly more and much larger events in this category” says Joydeep.
- Unnecessary government regulations cripple the start-ups. “Indian government has too many random rules and a lot of gatekeepers. For e.g the labor regulations for hiring blue collar workers are extremely stringent and scary.” Joydeep admits that he avoids taking up any activity that ties him into the web of government rules and regulations. “We do not hire blue collar workers and do not do sales from India as taxation levels here are very high”.
- Product start-ups also face a lack of financing. Joydeep observes “In India, the appetite to finance risky software is less. We would have struggled to raise seed finance in India”. It is unfortunate that India has startup tax law which makes it further difficult to raise seed capital. Instead the Indian government should follow the Israel model and introduce “Angel’s law” under which a substantial tax benefit is given to individuals who invest in qualified Israeli R&D companies.
Most of the above challenges require government intervention and we can just hope that the new government takes steps to make Indian ecosystem more conducive to starting up.
The discussion with Joydeep reiterated on the potential that Indian product companies have in international markets. This requires careful planning, strong network in international markets and ability to manage international sales along with managing R&D in India. Though setting up and operating a product company in India is not as smooth as other start-up ecosystems, still India offers a strong technical talent pool and other cost advantages which can be used to our advantage to compete in the global market.
As Qubole plans its next phase of scaling up, ProductNation wishes the team a lot of success in the coming future.