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April - 2007 - issue > In My Opinion
The-startup-called-India
Ashish Gupta
Saturday, March 31, 2007
Growth, chaos; huge returns, uncertainty; inadequate leadership, opportunity to make a difference; big bets, lots of investment—these are some of the words that come to mind when thinking of India, as they do in the context of a startup. That way, India is a startup. While one cannot get too literal in applying any analogy, especially to a country like India, the startup analogy yields an interesting model for thinking and making decisions. Let’s look at some aspects of a startup—the ability to have impact, people related matters, organizational, and financial issues.

Impact: Most startups want to change the world and so does India. Our country has the potential, but she has to create her own path. Much as a startup seldom succeeds at beating incumbents at their own game, so will Indial have trouble if we merely emulate. We should avoid the mistakes made by other nations – in terms of learning from their varied approaches to urban development, energy, and healthcare.

While we do have legacy on many fronts, there are also many green-field fronts where we have relatively a clean sheet to write on. For individuals too, the room to make an impact is overwhelming – as is in a startup. Success in such a situation requires a lot of conviction to keep plugging away despite the odds being poor. Fortunately, there are legions of newly initiated people who have this conviction and the steel to take on the challenge. The adrenaline levels are running high, driven by growth, opportunity, value of stock market, the most recent “customer” win, or pure faith. We need to ensure that a bump on the way does not deter the ‘stalwarts’.

People front: Often, one joins a startup to take on disproportionate responsibility—for example, a manager from IBM dons the role of a VP in a startup. India has many “open positions” that provide ample opportunity for people to rise quickly and assume a lot of responsibility. However, there are a couple of things about India that need to change for it to feel like a great startup. One is attitude. It is vital to have people who posses the desire to do well and take responsibility for a problem. In general, the India team has a lot of pride in all kinds of things but not enough in the quality of work and the value of commitment; unless someone else is holding us to it. We constantly see examples of the ‘India slip’, that is, something left unfinished.

Be they misaligned tiles in airport corridors, user interfaces with spelling errors, or missing clasps in household plumbing. One can argue that indeed this is like a startup - sure - but it is a startup that needs fixing. The gap will be fatal when worthy competitors arrive. If we do not make a systemic correction in the attitudes of more members of our team, we could be in trouble. Clearly the country cannot ‘fire’ its citizens, but as consumers, managers, and professionals, we need to demand and deliver higher standards; and not be content with chalta hai quality.

Financially, India is definitely ‘high risk high reward’, especially depending on one’s time frame. For returning NRIs, there is the risk of not having a position back in the U.S. For people with homes, it is real estate prices; and for those without homes, it’s the rent. Most people take a better standard of living for granted and assume that their salary will continue to rise. However, the Indian startup has not been going for long enough to substantiate that assumption.

Ironically this issue is exacerbated by a malaise from the startup world—too much available investment. While historically it was normal to take a salary cut in a startup, today because of (too much) capital, salary cuts are no longer needed. Unfortunately, high salaries endanger the companies’ staying power. Similarly in the case of India, salaries are rising so quickly that we are endangering our own competitiveness and staying power.

So while the upside potential of the Indian Startup is very high, we need to preserve fiscal prudence. In the short run it may mean that we behave like a startup that is maximizing adoption, investing for the future, and not indiscriminately increasing its expenses.

Organizationally too there are many parallels. Captains of the Indian industry and Indian government officials are all much more easily accessible than in a developed country; much like the senior management in a startup is, as compared to bigger companies. Taking advantage of this is the imperative of anyone who wants to make a difference. On another front, immature processes and infrastructure, coupled with constant change are as much a part of India as of any startup. Just as the finance department of a startup keeps revising reimbursement policy, so does the Indian tax department.

This flux is not alarming as it marks growth and progress towards identifying issues that need addressing—as long as its not the same things that keep changing. Lack of sufficient leadership is another common trait which we are hopefully addressing fast – both by recruiting from the outside (people from overseas) and growing leaders internally.

A lot of us are betting that the India-startup is a once-in-a-lifetime opportunity. The job of the management (government) is harder because this startup is a democracy — discontinuing free coffee results in protests and burning of the office furniture. The management confuses its financing with its personal bank accounts. There is not sufficient urgency in fixing the infrastructure, especially when compared with other up-and-comers.

Yet there are many good things—in terms of strong momentum, lots of promising talent, compelling market opportunity, virtues of a democracy, and a lot of belief. Like any other opportunity with huge upside this also has a downside that is worth thinking through before taking the plunge. Don’t join the startup because it’s cool and a sure bet—but rather because you will enjoy it.

Ashish Gupta is a partner at Helion Ventures, an India-focused venture fund, investing in high growth technology powered businesses. He can be reached at ashish@helionvc.com

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