Why do Indian start ups fail more than ones abroad?

There was a time when flight tickets were a booklet and the only way to get them was through an agent or by travelling to the airport. Today, we do it from the comfort of our homes or offices, or even on the go, in fact I don’t even know too many people who use or know of an agent! So, how did we get here?

The short answer to that question is – technology. However, this is not something new, through the ages, technology has been defined and redefined several times, there was a point when the steam engine was considered cutting edge technology! Today it is more subtle and sits in the palm of our hands. Yes, we are talking the technologies that are being cultivated to make our lives easier and to address several problems we face.

All this is happening at a break-neck speed in the proverbial ‘garages’ across the world with the adoption of Valley or Valley-like culture. Uber, Airbnb, WhatsApp and Truecaller are some of the prime examples of what technology can achieve. While Truecaller with a handful of employees has created one of the largest global database of mobiles and telephones, WhatsApp with 55 employees got bought by Facebook for a whopping $19 billion. And on the other hand, Airbnb and Uber have become one of the world’s largest hospitality chains and transport operators respectively, without owning a single property or car!

The secret to their success (if we can call it that) is their laser-sharp focus on the problems they want to solve and their effective use of technology. And this is where the roads diverge for the global and Indian start-up ecosystems. There have been a fair share of Indian startups that have made a mark on the world, but they are few and far in between, and this despite having what is arguably the world’s largest English speaking population and the best technology talent pool. Or perhaps is that the issue?

The traditional Indian response to a business problem is to deploy more people, be it offshore call centres or deployment of largescale IT projects. And this mind-set seems to be creeping in the Indian startup ecosystem too. Instead of developing the technology to solve a problem, several startups just add more people in the hope that it would work. It does not. This is also where several startups in India are struggling.

It is a known fact that startups, particularly those in the consumer business have a long gestation period, and it takes several years for them to start making money. So the pressure to succeed, to make the first million dollar, or worse still, to become a ‘unicorn’ can be daunting. Given this, they need to scale-up and if the scaling-up is done Indian style by adding people, it is likely to fail nine out of ten times.

More people mean more salaries, larger office space and rentals, additional overheads (start-ups are known for their perks so that can’t go away!) and so on. Here is where the investors come in. Like anyone putting their money at stake, Venture Capitalists too want to make money and the physical scaling-up does not impress them, because they’ve invested in a technology company and not in a direct marketing company for a reason!

By definition, a product or a technology startup is expected to solve the problem using technology. The scaling-up has to happen using technology. It is expected to bring in the ten millionth user by playing smart and not by physically sending out a thousand people, it just defeats the purpose. So, if you are someone who has a brilliant idea and are just starting off, here are three things you should keep in mind:

Fall in love with the problem, not the solution – never lose sight of the problem, how you attack the solution can remain more flexible, iterative and ultimately, be more likely to succeed

Build the Business, not just the valuation – avoid focusing on funding and valuation from day zero instead focus on the problem you are trying to solve and on the users you are targeting.

Throw technology not people at problems – most Indian startups begin as technology or product companies; and given that there is no dearth of skilled population, start throwing people at problems rather than throwing technology and using it to address the issue.

Finally, it will only be fair to say, that to build the business be people-first, but to grow and scale be technology-first.

Credits ET Realty

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