Sharad Sharma: “Indian Product Software is at the Cusp of an Exciting Change”
“India can emerge as the market leader”
In Parts I and Part II of the interview, the NASSCOM Product Chair Sharad Sharma talked about his career and entrepreneurship. In Parts III and IV of his interview with Venkatesh Krishnamoorthy, chief evangelist, YourStory, he talks about the Indian Product software and the ecosystem available at present. His expert view captures the software product industry that evolved from being a fringe player to the market leader.
Part III—Indian Product Software Scenario
Software products—this is the space in which Sharad Sharma’s contrarian view of persisting with the “not-so-successful” product industry despite services defining a global benchmark holds relevance. Many people possess contrarian wisdom. However, only a few are passionate about or get immersed in their views as Sharad Sharma, who possesses an unflinching belief that the product industry in India will gain global eminence. There is expectation in the air pregnant with innumerable possibilities that it has become pertinent to ask if the next Google is going to be out of India? To make it happen, Sharad Sharma is playing a significant part by providing an enabling environment in his sphere of influence—as Chair of NASSCOM Product Forum.
YourStory: As a professional in the software product space for 20+ years, what is your perception of the Indian product space as it exists today and what is its potential to expand in future?
Sharad Sharma: There is significant, but cautious, optimism among a group of us who are involved with the NASSCOM Product Forum. I think we are at the cusp of exciting change in this part of the industry.
YourStory: Do you think a Google or a Microsoft can emerge out of India?
Sharad Sharma: I think the next Microsoft will not look anything like the current Microsoft. It will look more like Google. I personally believe that it is possible for it to emerge out of India, much more so than was the case five years back. But our goal is not to look for it. Our goal is to create product businesses that are successful and in doing so, some may truly scale and become phenomenally valuable as companies. So we have to ask ourselves are we creating more viable products than before that are solving meaningful problems.
There are reasons for optimism. One reason is that there is a significant change in the product ecosystem which is producing not just good products but great products. Trying to build the world’s best product is an important mindset.. I think this mindset is certainly emerging. Earlier even if such a mindset existed, it was difficult to implement because we had significant gaps in talent around the product management area. However, all the MNCs, like Yahoo!, NetApp, HoneyWell, and Texas Instruments across various domains, have now created a fairly successful and useful product management talent base, which is now becoming available even to startups.
So earlier even when there was a desire to make a great product, it was difficult to do, not because we did not have the technology talent but we didn’t have the product management talent. That is getting addressed now and you are beginning to see more examples of products that are not just “good enough” but really great. Second, even if people were creating great products in the past, they were unable to turn them into a good business proposition, which means acquiring customers around that product, so that it generates revenue. That was really hard. If your customers were in the US, you had to invest in a sales effort to make that happen. This kind of effort was very expensive and therefore most companies short changed and underinvested in sales outreach, which resulted in a sub-optimal outcome. Though they had a good product, it did not have an impact because they could not invest in the sales outreach that was necessary to make it successful.
This scenario is changing now. For products that are on the Web, Indian companies are doing a great job of using the Internet for sales outreach. This trend has already resulted in Zoho, FusionCharts, and a host of other companies that are very promising. This could be just the tip of an iceberg and many more of such companies may emerge. This creates a truly flat world. If you have a good product, selling on the Internet does not matter if you are from Estonia, India, or the US. It creates a level playing field in a way that did not exist earlier for enterprise products.
The second point is even when it comes to enterprise products, the fact that a large proportion of SI [system integration] companies are based out of India like Infosys, Wipro, Accenture, has resulted in tremendous interest in these SIs to find product company partners out of India that are relevant in emerging markets. This is a great opportunity for Indian product companies to become partners. i-Flex opted for such an opportunity to get into Japan. i-Flex products were more appropriate for Japanese banks than the traditional, mainstream Western products. It is quite likely that an ERP solution from a small Indian company would be able to generate better services revenue in BRIC countries compared to the solutions offered by traditionally big ERP players. This is understood by both sides and the necessary effort is being made to build go-to-market linkages. Some promising companies might emerge out of this effort.
This dynamic go-to-market effort is definitely exciting. This is also fuelled by other developments like availability of venture capital, talent, and demand in domestic market. I am optimistic about seeing many more success stories.
YourStory: Do you think global companies setting up R&D centers in India would result in a deluge of product companies because of a change in mindset that would encourage people who work with them to start product businesses by identifying suitable opportunities?
Sharad Sharma: Absolutely. This is starting to happen. A number of companies in the product domain are formed by people who were part of an MNC . They have learnt how to release products several times in their professional life by working in India. There is also an influx of people coming back from the US. Both of these developments has resulted in people getting to understand how to conceive, develop, and sell a product.
The same situation developed in Taiwan in the late 1980s and 1990s and in Israel in the late 1990s and early 2000s. At a point in time, both these countries experienced a significant outflow of seasoned talent from multinational companies to establish entrepreneurial ventures. Those ventures became relevant and meaningful to these countries. We are in the midst of this right now. We haven’t seen big success stories but migration of talent is happening.
YourStory: The Indian market could be offering much more than a Taiwanese or Israeli market.
Sharad Sharma: Yes. Another possibility is yet to kick in and that is very important. The multinationals have to see benefit from these ventures so that they acquire these small companies that are important to them and their mission. A majority of large companies grow by what is called acquired innovation. They buy companies they think are relevant. So the fact that Cisco has bought nine companies in Israel helps the Israeli ecosystem because it gives exit options for a venture-funded company that would otherwise not be possible. This loop has not started happening in India. So in the NASSCOM Product Conclave 2009 we had a session dedicated to discuss what it would take for such M&A activity to get started in India. This kind of M&A option is very powerful as it creates an exit route for venture investors and they become more confident about investing in such companies. Therefore venture fund availability increases and encourages more entrepreneurs to try their hand in setting up companies.
This creates a win-win situation for MNCs asthey acquire the successful companies and build their own business on the back of it. This activity has yet to kick in in India. We have seen the first wave, which is the entrepreneurial startups by people who are coming out of the MNCs. But the second wave is yet to kick in. I am confident that this will also happen over time.
YourStory: How do you view the entrepreneurial ecosystem for software product companies in India now as opposed to when you started your career?
Sharad Sharma: My startup [Teltier Technologies] ended up being a part of Cisco. I came back to India in 2004 to establish another product startup. I chickened out because I felt the ecosystem was not ready. That motivated me to engage in a set of activities to help strengthen the ecosystem. I am involved now with NASSCOM for the last few years. There is improvement taking place. To summarize, at the base level, you need insights.
Product companies, by definition, have to anticipate market needs rather than merely react to market needs. This requires a deep insight of what your customers need. There is improvement taking place for reasons I mentioned earlier because physical proximity or electronic proximity to some customers, especially the SMB [small and medium-sized business] type customers, is definitely improving. So you find more people who are insightful about the opportunities they want to chase. It becomes easier if you have these insights than if you don’t have them.
It has also become easier to turn the insight into a great product. A deeper understanding is necessary and for people who believe that it is necessary, it has become easier to translate their desire, as product management talent has fleshed out much better than before.
It has now become easier in some pockets to turn go-to-market into business. Not in every category but in some categories. This is a healthy development.
Lastly, in my opinion, our ecosystem DNA cannot be a faithful replica of the Silicon Valley ecosystem. If I go back three years the conversations that were taking place among people in the ecosystem were about what we should do to become a faithful replica of Silicon Valley. Today we are well past that. There is no desire to replicate Silicon Valley. A deeper level of understanding and maturity makes us now realize what can we pick up from Silicon Valley, and what will never be the same, yet is a source of strength and advantage for us.
We are now maturing to a point where we can understand our unique DNA and its advantages. This will help India adapt its own product ecosystem that will help us to be relevant in the world where many ecosystems coexist, each with its own DNA. The Taiwanese DNA is different from the Israeli DNA, which is in turn different from the East European DNA. There is confidence in the kind of DNA we can evolve into, which fits our way of thinking and acts as a source of strength. If we can do this well, we can be relevant in global markets.
YourStory: Do you see this in alignment with what Kishore Biyani has done in the retail space?
Sharad Sharma: I think so. What Kishore Biyani is saying is “Look! You cannot have a retail store in India that does not sound like a railway station!!” If a retail store is going to look like the one in Scandinavia, it not going to culturally click with Indian people. You can take this idea one step further. You can’t have an Indian MNC, which will be a replica of the Western multinational. Korean, Taiwanese, Japanese multinationals all have their own way. They don’t faithfully replicate Western management practices. There is a confidence that is emerging that an Indian multinational has to display a high degree of professionalism but does not have to ape the western way of thinking. From a product ecosystem point of view, the power that has emerged is related to this but is different.
In the Western market, the power is to be an early adopter, at the consumer or the enterprise level. This is embedded in the Geoffrey Moore model [on technology adoption lifecycle], which says build something; never mind if it is unfinished. Go and sell it to early adopters. Polish your product, and then once it is polished, sell it to a pragmatic buyer who is only going to buy because it makes sense for that buyer. You will have a chasm in the middle. That model worked for them because there were enough early adopters.
Now with these hundred or so venture-funded companies that were created everyone tried to simulate the same model. The problem is in India, there are no early adopters. We don’t have people who go and buy something and keep it in their garage and then have a garage sale after four years and sell all that stuff.
YourStory: That’s why Walmart model doesn’t work in India.
Sharad Sharma: That is not our buying behavior at the consumer level. Indian buyers have enormous value consciousness. So everybody is a pragmatic buyer from day one. Indian product companies are now learning not to moan or complain about this behaviour but to leverage this as an advantage. Because if you can start selling from day one to a pragmatic buyer, that is enormous power that you can create for yourself. This willingness to embrace what was considered to be a liability and convert it into an asset now makes it possible to go after a set of customers who have never “consumed” IT before. These customers are the SMBs of the world. By bringing this “world” view of thinking, I think India can emerge as a market leader in what you can call as “Nanofication” of the product industry. The Nano model [Tata Motors’ Nano, the Rs. 1 lakh car] was exactly this. It got to bring something that is low cost but high value. If it is cheap but not high value it is not going to succeed. Time will tell if the Nano will be successful, but it appears it will be. That mindset is a uniquely Indian mindset.
This is pervading a host of industries and certainly the IT product industry. You can see that in medical equipment, IT solutions, software as a service (SaaS) solutions are being promoted to small businesses. This will be the unique strength India will bring to the global market over a period of time. This DNA is maturing. I am very optimistic about that.
Part IV—Ecosystem Player
Finally, a deeply involved product space expert spells out wisdom in what lies ahead. His roles at present and how his thinking shapes companies of the future and his effort to see the making of a big product company out of India. Be it the NASSCOM Product Chair, Entrepreneur in Residence, Canaan Partners, or Partner of Indian Angel Network, you find a common thread in his thoughts—be daring and make the impossible possible. This mindset has pushed him to explore the emerging cloud computing space, and also given him the courage to invest in what he feels are promising companies. As the complete man in the Park Avenue ad, we find a complete professional in Sharad Sharma who is not afraid of being frank about his work–life balance fiascos and getting over them. Finally his thinking is drifting not towards the materialistic facilitation of life, but the very Indian philosophy of being happy in what you are doing. We have the right person for the right job—enabling the ecosystem in India. We hope to see a great happening emerging in the tech product space as we go by.
YourStory: Talking about the ecosystem, you are involved with various forms like NASSCOM and TiE. Can you briefly describe your role in NASSCOM and TiE Bangalore and other forums if you are involved with them?
Sharad Sharma: I am a charter member with TiE. As regards my product ecosystem activities, I focus my energies on NASSCOM. I am an Executive Council member of NASSCOM and I chair the NASSCOM Product Forum. My role is to provide strategy and operational oversight to the various activities NASSCOM is initiating to create a successful product ecosystem in India.
In another role, I am an Entrepreneur-in-Residence with a venture firm called Canaan Partners. In this role, I am personally involved in creating startups. Not merely investing in existing startups but essentially bringing to life what is called deal creation. This is bringing the right people around the right idea to create viable startups that are meaningful in the future.
In a purely personal capacity, I am also active as an angel investor. I am part of the Indian Angel Network. Here I invest in what I would regard as early stage and promising startups as a passive investor.
Cloud computing perspective
YourStory: When you became an EIR with Canaan Partners, you had said “My goal is to build a viable and successful company and my knowledge in cloud computing will help me do that.” Has Canaan Partners been successful in identifying an unfilled gap in this space and how far has this come through?
Sharad Sharma: We are not talking about specific companies here. Remember I am an EIR with Canaan’s global fund not just within India. My role as an EIR is to facilitate, enable, and drive what the startup may need. My degree of involvement may vary but the idea is to create meaningful companies going forward. We haven’t made announcements but that doesn’t mean nothing has happened. This has been a promising journey so far.
YourStory: Can you call yourself a cloud computing evangelist?
Sharad Sharma: My cloud computing background is from my Veritas experience. Veritas was in the storage virtualization space. When I was in Veritas, it morphed into data centre virtualization because the company felt storage virtualization is insufficient. During those years, Veritas’ slogan was we are driving utility computing, which was one of the earlier words that described cloud computing. I was very fortunate to participate in the infrastructure as a service part.
In Yahoo! it was been a rich experience again. Yahoo! was focused on bringing service as an application. Even today, you can build a presentation layer on search APIs and offer a service very very quickly. Yahoo! has done a fair amount of innovation around using Platform as a Service (PaaS), not only for third party developers but also for its internal use like opening an email application. I was able to watch very closely what has been happening in the cloud computing area over the last five years.
As Malcolm Gladwell says in his book Outliers, it takes 10,000 hours of practice to be an expert in something. I would say I am halfway there. I don’t regard myself as an expert but definitely a very avid student and learner of what is possible in this space. Since this is a new space, the only way to learn is to dirty your hands. My entrepreneurial cap allows me to do this through the many companies I am associated with, and to try out a few ideas. Some may work and some may not but you end up being wiser.
YourStory: Future of cloud computing in India?
Sharad Sharma: I think cloud computing will have several favorable impacts. The one development we are already witnessing is creating of the “flat” world for application companies. ZOHO is a living example and there are a number of other small players. In Bangalore, a small but promising company called SourceBits is very successful as an iPhone store run by, believe-it-or-not, a radiologist who got interested in building software. Dr. Rohit Singhal, who is fanatic about this, has a platform that would otherwise be not possible had there not been something called an iPhone store. It is enormously liberating at that level.
We are beginning to see promising companies coming up in the development tools area. I often cite OrangeScape out of Chennai as an example. The reason I am doing this is because of what e-governance is doing in India. Most of our e-governance projects are custom projects. But those are at price points much higher than custom projects executed by Indian companies for CIOs in the United States. The government is very demanding. To execute these custom projects at aggressive price points and make it successful, you have to embrace the next generation of rapid application development, an equivalent of Platform as a Service. For the first time, you are beginning to see real traction among companies who can offer development tools and development frameworks as a PaaS offering. There is a huge domestic market that can be built on these PaaS offerings and create value. These companies will succeed in the local context first and have the potential to travel to other parts of the world.
The MNCs are doing significant work in India around infrastructure as a service. EMC and NetApp are some examples. You know that Yahoo!’s entire network is run 12 hours in the US and 12 hours out of Bangalore. One of the largest cloud computing networks is run by a team in India day after day for 12 hours. There is an enormous amount of capability, which is feeding into remote infrastructure management and so on. Infrastructure as a Service will see a lot of activity, PaaS is seeing activity but the quickest development we will see will be in the application layer space.
YourStory: In your blog “Orbit Change Conversations,” where you talk about transformational changes facing the IT industry, in one of your posts “Passion, Happiness, Play, and Life,” you mention Randy Komisar’s Monk and the Riddle, and you talk of work–life balance. It is a challenge. Can you provide more insight on that?
Sharad Sharma: First of all, that book is phenomenal. That post is a review of that book and in some sense how I was touched by it. I think I have become much better in work-life balance. Luckily, my wife and daughter are not around…
YourStory: You mention they asked you to switch off the computer for one whole day.
Sharad Sharma: Exactly. That has not happened yet. I just came back from Israel. I was there on a weekend. In Israel, many people switch off computers on Saturdays in the week. I must confess I have never been able to do that. I am much more diligent now about striking a good balance. I was a C earlier but maybe a B+ now. My family would not still give me an A. But I am working on that as we go forward.
YourStory: Inspiring books you read…
Sharad Sharma: I am a voracious reader.
YourStory: Can you suggest books for an entrepreneur?
Sharad Sharma: Of late, I have not been reading too many books on entrepreneurship. I am very fascinated by some of the changes taking place in the area of understanding the brain and closing the gap between the brain and the mind, which could have an impact on social policy. Lot of my reading is now in that realm of philosophy and neuroscience.
For entrepreneurs, Randy Komisar’s other book Getting to Plan B is out. An Indian edition is available. It is a very practical book and I would strongly recommend it. It’s very fresh.
YourStory: Any other book that was inspiring for you…
Sharad Sharma: The other book I will point you to is a book that is not inspiring but a good read in making complex concepts very viscerally understandable. This book is on a topic close to my heart – orbit change. How do you bring about change? This is a simple fable written by John Kotter, father of organizational change, and is called The Iceberg is Melting. This book may go on to become a classic. You can read it in just two hours but it is very very powerful. You should read this book many times. Every time you read it, there is a deeper understanding.
One more book I would recommend is about something different. We are getting to a point where we need to be successful as an entrepreneur and be happy despite challenges. It is important to have a worldview of what happiness is. It is therefore important for me to know what makes me happy and incorporate that into my work life and non-worklife as well. I think, as Indians, our worldview on happiness especially from Bhagavad Gita is becoming the dominant worldview. Instead of suggesting an Indian book I would ask people to read Dr. Martin Seligman’s book Authentic Happiness. Dr. Seligman was founder of the positive psychology movement, which has led to us to get to measure happiness, understand happiness, with Bhutan going on the path of maximizing happiness and the human development index associated with it. This is a book to have a simple framework to start with to say what makes you happy. This then brings the best out of people. You can maximize happiness through entrepreneurship. Or whatever path that leads to your happiness.
YourStory: On that happy note, thank you very much for your time.