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Product Uprising: India can only become a product nation when corporates work with startups

Vishal Krishna
24th Feb 2018
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India has several new age startups that are going to the globe, yet Indian corporate are still reluctant to work with startups.

India is witnessing a revolution of sorts. A lot of young companies have invested in taking software to the next level of corporate use, where they aspire to become a next-generation Microsoft or SAP. We saw the SaaS revolution give birth to companies like Freshworks and Helpshift. Although India isn't a big market for them yet, these companies, by adopting technologies like AI and Machine Learninghave global aspirations. .

Hindol Basu, CEO of Acitify Data Labs, and Naganand Doraswamy, founder of IdeaSpring Capital, spoke to YourStory about what India should do to become a product nation.

Here are edited excerpts from the interview.

Hindol Basu, CEO of Actify Data Labs

YS: Is India poised to become a product nation?

Hindol: IT services was a success and we have achieved great things in the industry in the past 25 years. But it became historical baggage and stifled innovation. To build a product there is higher risk because it has to be accepted and used by people. Also, people who provide capital should take higher risk and that is yet to take off in India. The third is that the B2B market for the product happens to be in the US. When no one is guiding you, what can one do but to chart your own map in India? Some of the big corporations in India need to start working with startups. In China, Tencent and Aliba are working with startups. Unfortunately Indian corporate entitites are not supporting local companies completely.

Naganand: We are very good at business innovation. Funding was easy for IT services and we were very good at that. There is no product ecosystem - other an InMobi, there aren't many success stories over the last decade.

Entire thesis of building products did not exist andthe journey has just started. I advise startups to build the company from scratch and focus on the market they want to operate in, as unfortunately money is going to B2C ideas.

You have to put in a lot of money in products before you go forward because you don't know where it's going to go. But B2C is gone way ahead when it comes to funding.

The one advantage s that B2Boduct companies do not require thousands as employees, it requires a few good people to build great solutions.

YS: When do you think we will reach Silicon Valley levels?

Naganand: First we need the risk-taking ability, both as an entrepreneur and as a venture capitalist. People have realised that Indian market does not exist for B2B startups and that's because the corporate organisations here do not work with technology companies. There is a lot of uncertainty for a VC and an entrepreneur. There are so many unknowns that hold you back. There is absolutely no market for B2B software products in India. The scale exists only in the USA and we can build international global products from India, but not for India. I have been asking the government to go beyond funding and provide a leeway for startups to work with the industry here and also help them get smaller exits.

I am like small companies and small deal sizes. I am not a big believer in the unicorn theory. There is a natural evolution that needs to happen where companies start small and make it to a reasonable size before they get acquired for the work that they have put it in. There has to be an ecosystem for M&As here and that is absent. Even Google, when they started, did not know what would happen but the support in their ecosystem made them get a hockey stick growth. If we are betting on startup India then we should support these small companies. There is a lot of seed funding happening in India and that is a good thing. Early stage needs patience and only then products work. But there are other problems too - product marketing and sales positioning are problems for Indian startups because they just don't know how to do it. This is a skill they have to learn.

We don't fund the company if their technical skills are not good. Also its team should feel proud to work on a neat idea. Founders need to work with a solid technical team. Having the right skilled people is always a challenge. Even the US does not have that kind of talent where every company would have great talent. Andrew Ng, the investor, has started courses for improvement in areas like AI. For aspiring engineers, I would say that, in the future, you have to put in your own effort to learn. For founders. retaining talent is key to their company's survival.

Hindol: Deep technical expertise remains a challenge. It is very difficult to find an AI engineer and India needs to prepare for these kind of skills. It is a big limitation for product development.

The type of curriculum from undergraduate levels needs to be spruced up. The talent buying into the idea is ideal, but we don't have that talent that believes they can contribute to the idea. I people who have taken salary cuts to be part of Actify Data Labs because of the product that we are building. So a founder, in his limitations, must realise that he must build in smaller iterations. Investors think the next Google will happen immediately, but that's not true at all. It takes time. So every ecosystem must understand that it’s best to have smaller M&As.

You need to have the ability to learn and adapt to the new world of Al and Machine Learning. Product companies need people who can be ambidextrous and flexible. On top of the talent, which some employees have, they need to learn on their own to be really successful in a product company.

YS: What can the government do?

Naganand: The centre and state have done a phenomenal job. The Karnataka government gives grants. The governments are doing their part in organising conferences and creating interest. Like I mentioned earlier, you need to have an ecosystem that works with startups. But that's not happening.

Hindol: Co-innovating with startups is key. Security is the best example, where organisations going digital can use startups to help build a state-of-the-art security system. Agri and security tech is the best example in Israel where the government co-innovates with startups. Can India do this? DRDO and ISRO should co-innovate with smaller companies. I spoke to officials in agriculture ministry and they are trying to get the department to study genomics through AI platforms. But will this take off? It must.

YS: How do we stand against other countries?

Naganand: India has the talent and the capability. We need to build deeper innovation and we cannot afford to be superficial. The government and research labs have the talent to build deep tech. They are only concentrating on business innovation and not building depeer technologies. Research should focus on going commercial and only then will you have a product nation.

Hindol: China has big companies that focus on spinning off innovations from within their company. Flipkart, for example could have spun off startups too. I am thinking whether other Indian companies can do this. I don't see it happening, but may hopefully happen soon.

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