How can a startup invest in R&D without spending the big bucks?

Startups are cash crunched and that is no secret. Be it bootstrapped companies or seed funded, the initial days (of a tech company) are bound to be from small one room offices which has space only for enthusiasm. I was visiting several offices last week and one practice caught my eye at Shopsense- a Mumbai based venture that uses digital interaction technology to make the process of buying better.

The company has been founded by three IIT Bombay alumni, Farooq Adam, Harsh Shah and Sreeraman MG. Shopsense also raised a funding round from Kae Capital and a few angels to fuel their growth. The company is about to deploy their solutions after a few successful pilots and while on a visit to their office, Harsh told me about an internship program they ran over the summer which helped them to develop an R&D wing from where things are coming into production now. They called it the Hackers and Painters Internship and the way the program was executed has some valuable takeaways.

HPI- The Hackers and Painters Internship

Hackers and Painters Internship (HPI) primarily allowed five young undergraduates from India’s premier technology institutes to spend the summer of 2013 with ShopSense. Yes, being IIT Bombay alumni, getting these interns wasn't a challenge but given an interesting problem, it is very much possible for anyone to hire a few good interns.

The name of the program was based on the idea of creation. What hackers and painters have in common is that they’re both makers. "To bring the best out of the young internees, we provided them with a chance to explore cutting edge tech problems in areas like Kinect based virtual dressing room, video analytics, internet enabled sensors and indoor positioning," says Jayesh Sidhwani, the lead engineer at Shopsense who played a pivotal role in the success of the program.

They were each given projects in specific areas knowledge about which would be a lot of value add for the company. The projects were in 'Indoor Navigation in the retail environment', 'customer analysis using video feed', etc and at the end of the three month stint, all the interns had come up with some really valuable developments.

All the projects were showcased on the Demo Day (yes, you heard that right) where some of the successful entrepreneurs were invited at the Shopsense office to have a look at the innovations and give their feedback. One of the projects is being implemented to augment the overall Shopsense product and the winner also took away an iPad mini as a reward.

So, is this the R&D wing?

Well, yes! This is a very smart way of utilizing talent which is at your disposal only for a certain time frame. When you're certain that you cannot get anyone full-time for purely doing research, this is a good way of setting the ball rolling. But is research even relevant for a startup?

It depends on the situation but if you're in it for the long haul, research and developing on it is something that can be a killer differentiator. Companies like redBus have had a full time (small) research team once they grew to a certain scale whose only job is to play with new technologies and come up with ideas to stay ahead of the game.

ShopSense managed to extract some good value in return for the small investment (around INR 10k per intern and the iPad mini) and in return they were also able to give something very meaningful to the young students who might go on to startup on their own or might as well join ShopSense to continue on their projects.

Read more about the experiences of the interns on their blog.