Decoding the failure of Indian startups – the scale problem

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India has been a great success story, especially in IT, post the liberalization of the economy. However, failure continues to plague a large percentage of new startups and enterprises launched in Indian IT. We can look at the Indian IT sector’s evolution in comparison to the way Indian cricket has also evolved. For example, the new T20 game format is akin to a startup.

A predominantly services-based company trying to produce products and build competencies is not a joke. The fundamental problem that needs to be addressed here is education. Are we getting the right skill set of people? The university-corporate relationship in India is an evolving entity. It’s like the Indian cricket team missing that one all-rounder who can solve that critical balance problem.

If you can, as a startup, decode this, you have the technology in place. However, technology alone will not solve the problem; you need to finish the game and you need a Dhoni. When we get lost in the passion of exploring technology, sometimes we forget we still have to do business, and evolving the right business model is critical.

Indian cricket and Indian IT have evolved together, and for that matter, so has the Indian economy. But Indian startups are struggling today, viz they are not able to solve the scale problem. If you are going to achieve scale, the question of “Is there a market for your technology?” is something you need to address at the very beginning, and timing is very critical.

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Take the case of the IPL format of cricket. India wins the T20 World Cup and BCCI starts the IPL. Similarly, with building scale in a startup too, you need to start at the right time. Google, Apple, Amazon, and Facebook are oft-quoted and admired US startups which succeeded. How many do we have?

The me-too syndrome is admittedly a big problem. We try to emulate US-based startups or are happy providing services rather than building products. If you don’t focus on providing hyperlocal solutions, building scale in a market like India is going to be difficult.

A strange pattern that is emerging is that non-local founder companies are succeeding in the same areas where their local counterparts are not able to crack the market.

This is an interesting phenomenon and needs introspection. One could even call this a mindset issue, like in Indian cricket, where the team needed a foreign coach – be it, a John Wright or Gary Kristen – to solve the problem.

Dattatri Salagame, Digital Head and Vice President at Bosch Engineering and Business Solutions Pvt Ltd, says, “For a consumer, be it when he is at his home or using mobility for leisure or work...where convenience is needed – and when – is at a retail outlet, where ‘needs’ are important. We are moving towards an ‘Internet of Living’. Making ‘choices at the right time’ is important, and this will enhance the quality of living going forward.”

As millennials of the post-liberalization and startup era, one hopes that the next generation of entrepreneurs will be able to find solutions to the problem of scale for Indian startups. When they do, we should start seeing true success stories, and probably see the next Apple or Google born in India.

Hemanth Sheelvant and Pavan Govindan are founders in an intrapreneurial venture in Bosch called IERO.

(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory.)

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