“Innovations in India should be focused on defining standards for emerging markets,” says Vijay Anand

TechSparks Special

“Product tech is at a nascent stage in India”

Vijay Anand, founder, proto.in; Vice President (New Ventures), RTBI, IIT-Madras; and the Startup Guy, opens up for YourStory in a freewheeling chat with Venkatesh Krishnamoorthy, chief evangelist, YourStory. Vijay perhaps closely watches the entrepreneurial space, especially the startup space, like no other person. His passion to make a difference to the startup ecosystem first pushed him to found a platform that was first of its kind – proto.in. He then began to focus on viable rural ventures in his capacity as head of the incubation center at RTBI. It is just natural for Vijay, whose first startup happened when he was 16. His views are objective and his insights are thought-provoking. His constant search to meet startup entrepreneurs lands him every month on the first Sunday evening at the Open Coffee Club, Chennai. He is now conceiving a unique space that will give birth to out-of-the-world ideas through the collective wisdom of diverse group of people. His blog is a must-read if you are an entrepreneur. He is closely involved with NASSCOM in the EMERGE forum for the forum’s twice a year conclaves and the Product Conclave once a year. He headed the program committee for the Chennai 2010 Conclave and was a jury member to select EMERGE 50 companies.

This long conversation encompasses a comprehensive outlook on the startup scenario with a special emphasis on product technology companies, one of which Vijay founded himself while in Canada. Here rolls the chat...

Roles of Vijay Anand

YourStory: In the context of what you do, what best describes Vijay Anand, the Startup Guy?

Vijay Anand: I currently head the incubation centre of RTBI at IIT-Madras. It is a unique incubator and that is the reason why I am interested in it. They build businesses that are focused on rural areas. This incubation center started about three years ago, a little later than proto.in. Considering that 730 million people live in rural areas, how do we actually help them? One of the reasons why we are unable to bridge the gap between urban and rural areas is because the government is unable to figure out the needs of the rural people. The conviction of RTBI is that entrepreneurship is the best way to understand people’s needs.

YS: So you encourage social entrepreneurship?

Vijay: I don’t like the word “social entrepreneurship.” It’s just entrepreneurship. It’s just business. But it’s not all about money. At any given point in time, you have to conscious about your customer. If you do that, you more or less end up being a social entrepreneur. Technically, you could do a Google and be a social entrepreneur.

There are many companies that are in this space. Rural BPO is one that is coming up as a prominent one in this sector. We have about 14 such companies now and takes most of my time.

YS: Is there any product company in RTBI?

Vijay: We do have a couple of strong technology companies. We do realize that technology for the last-mile connectivity is very important. We have companies working on telemedicine kits, soil testing kits, weather monitoring stations.

YS: What are your other initiatives in the ecosystem for entrepreneurs?

Vijay: I stepped back from proto a year ago because proto is run by 120 volunteers now. It’s very active in about seven or eight cities in India. Proto is pretty much taking a life of its own. One of the things I realized was the journey that started four years ago in which we wanted to showcase interesting startups in India is not a problem point anymore. People do understand that companies are coming out of India. Lot of people are now interested in where do we go next from here. Are companies able to raise money? Are these companies able to attract talent? Are they able to find customers? Are they able to make revenues? Are they able to make the exit? There is a slew of next level of questions that have pretty much opened up after proto. I am now trying to figure out what is the best way to address these things. That’s what I am involved in right now.

YS: A bit about the meets for entrepreneurs that you are interested in...

Vijay: I am pretty involved with the Open Coffee Club in Chennai. We get about 40 new people showing up every month. It’s amazing. Every meet is about 50 to 80 people. So the Chennai group has been growing quite steadily. I think Siddarth and Vaithy have done an amazing job. Due credits to them for that. It’s a great place to meet some entrepreneurs. We meet some non-IT guys as well. People coming from retail and all kinds of stuff. It is interesting to see what is going on.

Yes. the Startup Saturday has been doing a great job all across different cities. But OCC is also doing its bit. Things are going well in terms of monthly meets for entrepreneurs.

Startup scenario and product technology companies

YS: Where do you see the entrepreneurial interest in today’s environment? Are they more technology-oriented or are they looking at other sectors like retail, health care, etc.

Vijay: I think lot of people are asking this question. It really depends upon which city you are in. I found that there are lot of consulting and services companies in Hyderabad.

In Mumbai, there is an Open Coffee Club. No matter what you discuss, eventually the conversation ends in retail. People discuss what is business and IT is not dominant here.

In Delhi, there is a different tone. In Bangalore, there are more chances of you bumping up against an IT company. Kolkata is a place where you can come across diverse companies. There is a small, but vibrant entrepreneurial community there.

Depending upon the city and the predominant sector in which companies are, the startups also revolve around that. Overall in India, there is a good mix of all kinds of companies.

YS: There is a lot of activity in the product software space now. How do you view the environment for product techs now and how do you see the entrepreneurial energy in product tech?

Vijay: There are two things here. Are companies building products today? Yes, there are lot of companies building products today. Slowly the understanding of what it is to build a product is coming in. Are we building software products? That is a different question altogether. Software as a product is an evolving industry in India. I don’t think India has ever sold software. Even Microsoft does about half a million dollars in India.

YS: There is a talk of a Microsoft or a Google emerging out of India.

Vijay: Microsoft is a software product company. Google is not a product company. It’s more or less a SaaS company in some sense. We haven’t seen any product company in India apart from Tally. People are still figuring out how to do it, the infrastructure around it. Because cloud is talked about, SaaS would be the way this will happen. This is also important because you have 32 million SMEs in the country. Most companies would buy a computing device or a computer to enhance their productivity. This is probably the best time to get into it. The jury is still out on whether it is a desktop model or a SaaS model.

YS: What are the other product companies that are coming out?

Vijay: I see a lot of lifestyle companies lately. We interact with a lot of people who are building designer brands. We saw a company in Pune edition of proto, Vardenchi, that makes remodeled bikes. The company Cashiodrive does stickers on cars for advertisements. That’s a fantastic idea. When billboards are not allowed, it is a good way of monetizing. You don’t know how many people will still allow stickers to be stuck on their cars. This might an interesting opportunity with lot of cabs in operation.

Apart from software, there is a whole array of different companies that are coming up as well.

YS: Building a product requires a different mindset -- knowing the customer and their needs. How do you think this can be nurtured at the university level for students?

Vijay: I think people should go and start something. Richard Branson says, “you cannot learn about business. You have to do it.” Unless you get into the grit of it and get your hands dirty, you’re never going to learn what cash flow really means. And lot of people expect their first company to be a Google. That’s a wrong mindset to get involved with it. The best way is to start something in college that is profitable. Say you invest Rs. 5000 and take Rs. 5200 from it. That is probably the first lesson you learn.

Build your next company that makes a bigger exit, say `50 lakhs or a crore. Your third company could make it really big. The earlier you start the earlier you will make your big break as well. Making a first big break is not going to happen in countries like India where we are still learning and still don’t know how business is done. Lot of them are first-time entrepreneurs unlike Silicon Valley where a million people have tried several things before. They kind of pick up from there.

So the chance of getting it right the first time is low in India. I would say if you want to do business, just go and do it. That’s the only way to start.

Vijay’s entrepreneurial journey

YS: Can you tell us about your entrepreneurial ventures?

Vijay: I was probably one of the crazy ones in school. During my tenth standard holidays, I used to hang around a computer centre of a bank. Lot of banks at the time were training their employees on FoxPro and dBase, and other applications. I came to know that the bank was trying to digitize all their records using these applications. I got into that and many employees vouched for me. So I ended up building software for some of the banks. We made some money and it was quite interesting.

At the time I was interested in software and wanted to build something that people can use. I then went to study in Canada. My parents were comfortable in saying that I can make money in software. They invested in a computer and did all that for me. It was easy to convince them afterwards.

When I went to study in Canada, they did not cover all the fees for me. They paid the first year fee and said I have to take care of the rest of it. Considering that I have done something on my own, I was confident of managing. I went to Canada and in summer, we started a services company. We built interesting stuff like VoIP software. This was in 2002. US was still catching up.

This experience taught me lot of things. I learnt how to work with a team. As a startup, emotions can run high, either for good things or bad things. So we learnt how to work with each other. We argued but we got the product delivered at the end of the day. Once we built a couple of products for others, we began to think why don’t we start our own product company. That’s how LeadStep Technologies, our third company, came together.

YS: What did you do as a product company?

Vijay: We discussed lot of things. We were thinking of a product that would help elderly people to send emails. After market research, we found that this product is more suitable for India. But we were sitting in Canada. One of the inspirations for that was my own family. When I came to India, people asked me in my family how to check emails, how to turn on computer. We wanted a simple application that can do these operations. We had advisers who told us that if you are not close enough to your customers, it is difficult to build the product.

We had a great team. Through our industry contacts, we came to understand that Nokia was looking for a product similar to what we had brainstormed about. The entire idea was mobile phones have different screen sizes and colors. If you want to watch mobile TV, you have to encode all these different sizes and colors. We essentially built what is called a media server, which will encode it real time.

YS: What lessons did you learn from your product startup that you can share as advice to product startups?

Vijay: One of the things we did was we wasted a lot of time trying to raise money from venture capitalists. People said that there are angels and VCs. We did not know enough people. In hindsight, we were young and passion-driven to be invested in. People who were interested were not the right ones. They asked us 60 or 80 percent of the company. We eventually said we believe in it or don’t believe in it. If we believe in it, we should all live together in it. We were seven founders. We all pitched in. We did part-time jobs and took care of what was required for the company. We all split equity on the company. We did fairly well.

My first advice is not to get distracted about how to raise money and the second one is you need to manage your cash flow. People who are technology-focused seem to forget the other side. It’s very important to manage your cash flow. The third point is tech people don’t even understand management. People are happy saying I cannot do excel. As a startup, you cannot afford to do that. You should be willing to learn. The tech person should learn design and management. The management person should learn technology. These are important.

If you are doing a startup, you should ask yourself why am I the best person to do this? This is one of the first tests we use in the incubation center. A lot of people are thinking of startup as they do not get jobs. That’s the worse reason to startup. As a startup, you have a lot of constraints. You don’t have a brand to work with, you don’t have money or a team, but still you have to beat the bigger guys. This means you have to be 100% efficient or 100 times faster and better. And smarter. This means you should be the best in the industry on what you do. If you are starting a HR company, you should understand what is happening in the HR space and not I also do HR. You need to keep this in mind.

Innovation, disruptive technologies, and possibilities for product tech companies in India

YS: If you are a product startup, what kind of disruptive technologies can you bring in? What can be a game changer from India in today’s scenario?

Vijay: Innovation works slightly different in India. When people talk of India and innovation, they think innovation will start to happen in India when we catch up to the West. But if you really look at it, I don’t think it will happen that way. Whenever a developing country catches up to the developed country, it is always a leapfrog in technology. We never had landline phones to start with. It would take eight years to get a connection and suddenly everyone has a mobile phone. We skipped the landline altogether.

If you look at what is happening in the software industry, you will never have desktop software at all, might never have PCs at all. People are adopting laptops quickly and they never owned a PC. Like the software could adopt the SaaS model and a lot of SaaS companies would come up. This catching up is not a linear path. It takes a short cut.

What we did in mobile is a proof in point. We skipped 1G, 2G and went into 2.5G directly.

When we think of innovation, we are bottlenecked. People always focus upon what is happening in Silicon Valley. But actually what we hear from the Valley in the media is the hype generated there. We don’t know what’s happening underneath. What are people talking about and its pros and cons. The discussions never come out. That’s possibly the bad way to go about it.

If you look at disrupting in India, you should not look at West. You should probably be looking at something different. Say if one billion people want to get to Internet, and need to have productivity tools, if there were no PCs how would they go about it?

India has a billion population and so India can define the next set of standards. Unless we think in that direction, we would not innovate. These kinds of conversations would help us make the leapfrog in terms of products, standards, and others that need to come out of India. If it works in India, we have five-sixth of the world emerging. So if it works in India, we can go to China, Thailand, Indonesia. Because most of the products working in the US are not working there either.

YS: You had tweeted that India and China make up two-thirds of the world.

Vijay: Yes. We should probably start from the needs of population in India. China is too closed and we don’t understand what is going on there. Go find your customer and figure out where they are. Most of the products from the US never land in India because they are not able to understand what an Indian customer needs. What we are doing now is we are completely ignoring this population and concentrating on the other side. We should probably take advantage of this. That’s why I think Nano is such a great success. They have figured out what works in India. If it works in India, they would sell it in Thailand, Indonesia and every other country. They could end up being bigger than GM in terms of numbers and volumes of their sales.

YS: How is the product ecosystem in India?

Vijay: There are initiatives like proto, HeadStart and others. Honestly, we are very nascent in the product space in India. India is not mature as a marketplace for product companies. People are still in the first iteration. People are figuring out how to build a product. We haven’t seen amazing products come out yet.

Large companies are training grounds for startups. Just like people come out of big services companies to start their own services business, when big companies turn product companies, lot of people will quit and start a product business. Bigger companies are the best places to learn. So people coming of Microsoft or Google have a higher chance of building a product company because they understand how it works. And also what is the developer to tester ratio? Ideally, you should have more testers than developers in a product company. Technically, you go to any product company in India you will see the reverse. You see four developers and one tester. But in a company like Microsoft, they have four testers for every developer. You need to test your product. The general product development process is very different. All these developments will happen as we see big product companies go mainstream.

Lot of people starting out now are people returning from US to start a product company in India and they have exposure to product environments. Sharad Sharma, who is heading NASSCOM’s product forum, has a lot of exposure in this area. He is also putting together special interest groups and others. He is trying to help in this space.

YS: Reasons for failure of a product company?

Vijay: There are many things that could go wrong. Anything that is not managed deteriorates. As simple as that. You cannot say I am the leader and would not do anything more. This applies to most things in life too. Relationships you don’t manage, customers you don’t manage, cash flow that starts dipping, not understanding your customers -- all of these start adding up. One of the common issues that makes or breaks the company is the cofounder issue. You need to clearly define roles and sit with someone who has done companies before. The structure of a company will define how it functions. It is where the design philosophy of form follows function very much applies.

The founder and how he puts together the core team. That’s when the vision is set. If this is not done properly, it may either limit the growth of the company or lead to problems. As you grow you have different kinds of challenges. The way you bring in new people. As a startup, you need to be careful about cofounders and the starting team, your mentors, advisers, and board.

Marketing

YS: You have been involved with a lot of startups. Marketing seems to be the technology entrepreneur’s weak link. Are Indians poor in marketing or is it simply a myth and how has been your experience?

Vijay: I wouldn’t say we are great in marketing. But we do have billion dollar companies in India, which means someone has something right. Probably our strategy may not be right. We need to have long-term plans. We need to get into standards. I don’t think people understand that. Lot of foreign companies come here and create patents. Technically, we are in a knowledge economy. Whoever holds patents holds power for the next 20 years till the patent is alive. This is a way of colonization. Just like you pay taxes, you are paying royalties. It is important for us to do what NTT did with Docomo in Japan. This is how multimedia-rich mobile communication happens and they have a standard on how it happens. When Nokia goes to Japan, they have to adapt NTT Docomo’s standards. It is one of the highest standards in any telecom communications. We need to develop stuff like that. We need to figure out how to make this happen. There is a leapfrog happening in telecommunications. There are already groups working in 4G and patents here in India. People are realizing that and that has to happen in other sectors as well.

So we need to figure out what needs to happen in software, health care, etc. We need to find solutions in the education sector. We now just borrow it from the West. Ten years ago, we did not have the means to come up on our own. Today we do. As such, we need to develop our basics and develop our own.

India does not even have a weather model. We actually use Britain’s weather model. That’s why our weather predictions are not accurate. In order to develop a weather model, you need to collect data. If a weather model is developed, farmers will get huge benefits out of it. We need to understand what is going on in India and be the first ones to standardize that. Otherwise we will end up with US holding the patent for Basmathi rice.

YS: Any tips on marketing for startups.

Vijay: I think we need to know how to collaborate with others. If we have customers in other countries, we can target them using collaboration. If we figure out how others work, then it is how M&As work. Then it leads to one of us buying ten others. That’s how acquisitions happen. The problem with Indian companies is that they are scared to talk about their products. They do not codevelop anything. A startup says we are developing end-to-end solutions, which means it is scared of anybody in that vertical. We don’t talk about our products because our perception is someone will steal it. That’s probably bad. As a startup, you are constrained by what you can do. Focus on something small and work with partners to market your product.

It is also important to have a marketing budget. You should go and meet people in other ecosystems. We are always scared of the unknowns. Go to industry meets, conferences and share your opinions and you will get to know people who have a similar mindset. It then gives you confidence to work on lot of things. We don’t interact with too many people. We are happy to restrict it to our own circle. Marketing is an extension from there. The whole attitude starts from the idea that we need to collaborate.

Mentoring

YS: How crucial is mentoring for startups?

Vijay: I think a mentor is important. I basically need a person whose help I can take whenever I need it. When I was in Canada, I had a mentor who was 65 years old. He was a corporate lawyer. He put me through a lot of things. That guy put me through hell actually. For the first six months I was interacting with him, one after the other, he would find me books. He would ask me to read the book and come back next week for a discussion. We will then have coffee and discuss. All these books were about how great entrepreneurs came together with great product idea and the company went nowhere. His entire idea was that you should get it into your head that success is very hard. You find very very few people telling you this. That’s probably the reason why you need a mentor -- somebody you can trust and tell things as they are. I was reinforced by my mentor that I always had it at the back of my mind that success is hard. His common saying was birds fly, fishes swim, startups fail! So if a startup succeeds, you are creating a miracle. You need to do something against the norm to make it succeed. A mentor is there to make you work hard. When you are slacking, he could alert you and he can also relate to you in your personal choices.

Whoever says there is work-life balance in entrepreneurship is lying to you. Your personal life overlaps with what is going on in your business life. The average age of an entrepreneur is 23 years in India. One of the first questions I ask is when are you planning to settle down to these guys. What you want to do should match with what you want to do with your company. The pace has to be managed more or less accordingly. If someone says I need to be a crorepathi in two years to marry someone I am seeing, you need to take a different stance in life. You need to almost accelerate. You also need to know when do I call it quits. A mentor helps you decide these things.

There are two people -- mentor and adviser. A mentor looks at your life in an overall manner. An adviser looks at business, strategy and such stuff. I would bring an adviser to my board and I would have a thanksgiving dinner with my mentor. A mentor is someone whom you can trust beyond your startup. I think we don’t have the concept of life mentor and all such concepts in India. A lot of people have their fathers whether they know it or not. It is important to have people to grow with.

YS: How is the mentoring ecosystem?

Vijay: The whole mentoring process is misunderstood in India. I don’t think you can speed date and do mentorship. You can’t spend 30 minutes in a conference and mentor someone. You need to spend a lot more time at regular intervals. You need to understand the highs and lows of the person and help them through it. TiE is doing a great job with their EAP program. It is a six-month program and done in a regular manner. Mentor Square is more of an adviser than a mentor. If you have a business problem, they help you with that. They have some great networks. They are always a helpful bunch. It’s a great place to check out.

There are always informal people. I would say make the venture capitalist your friend before you ask them for money. It would be a good idea to associate yourself with people with whom you are going to do business with. Who you know matters and it is always better to connect to someone before you do business. Startup community is small and it’s nice to catch up with the community.

Books to read and perspectives

YS: Books for the startup entrepreneur...

Vijay: The Empires of Light is about what happened when Edison invented the light bulb. This sounds similar to what is happening in India. If you are an Internet company, you need to have infrastructure or you cannot go far. This book contains what happened during those days and the analogy seems very similar. Electricity and Internet almost being the same.

Built to Last by Jim Collins -- you should read this book over and over again.

Slide Rule -- I don’t know if this book is published still. My mentor gave me this book. It is about a guy who founded a company that made airplanes. The helium balloon airplanes. That company did not go anywhere. They were pioneers in their field though. This is a great book to read about what could potentially go wrong.

YS: In your blog on ten tips to get a startup right, for an entrepreneur, what is important?

Vijay: I think it is perseverance. Take your time to understand what you are getting into. Also understand where you are going and be at it. Every company goes through a cycle where it hits the bottom and comes back three or four times. The hockey stick curve reaches a real low before it reaches the high. It is important to understand the nose dive and the upsurge. Unless you plan ahead, you will not be able to come to grips with it.

When entrepreneurs say jump and find out, it sounds awesome on paper. But it is really bad to do that way. When you have a team and investor, and of course, family and friends watching you, it is too much of stress for people. You may be a person who can build feathers when you are falling down. If you can plan for it, why not?

YS: Final word...

Vijay: India is an amazing place. What is going to happen in India in the next 10 years. If you see starting from the Y2K, the whole boom started. It has been only ten years. The last 10 years has been amazing for India. The next 20 years will redefine how India will be positioned in the world. Entrepreneurs are going to be at the forefront driving all these changes -- be it employment, lifestyle. The consumption is driven by entrepreneurs. This is a great place to be in. Ten years ago, billion population is a burden. And today it is an asset. We are uniquely positioned to lead the way how the world acts -- be it culture, technology. When there is peace all around and food on the table, then philosophy starts to flow. At least urban Indian population has reached a level of comfort from where we are growing. Rural India is still catching up. So we can sit back and think what kind of health care system is needed. Today we are debating about education because we need to go to the next logical step. In the next 10 years, these things will happen. It’s a great time for entrepreneurs and take a lead and make things happen.