Facebook, Instagram, Twitter etc. all originated in the Silicon Valley. It was an early lead. But what about TikTok and WeChat? China’s ByteDance developed a short video app TikTok, and in nine months from its launch in September 2018, it attracted more than 200 million users in India, with a monthly active user base of around 120 million. Why couldn’t India create an internet rage with an app that thrives on user generated content?
The closest an user-generated, content-based Indian app has come to is ShareChat, with a daily active user base of around 40 million as of January 2019. Ever since China’s aggression on the Indian border came to the fore and the series of actions taken thereafter (including the ban of 59 Chinese apps), this question becomes worth exploring. And there is a cliched and connected question — what will it take to create a global brand out of India? Here is my take from the business and behavioural standpoints.
The startup ecosystem realities
Setting seems just right. We have a globally recognized ecosystem of IT services, with right talent and infrastructure. We have a burgeoning startup ecosystem with nearly 60,000 startups by now, (we added over 1300 in 2019). VC money does not seem to be an issue as these startups now access Indian as well as global VCs. We also have a government that (politics apart) supported the rise of new ideas under Startup India and Make in India. We spoke English like none other, in the non-English speaking countries. We laughed when China became the World’s factory, that they won’t be edging up to the more intellectual stuff like ’innovation’. ‘Design in India’ or ‘R&D in India’ seemed a natural territory and positioning when China was busy minting money on the physical products and India on IT services and the Indian mobile phone companies like Micromax were giving a tough fight to the Koreans. Then came the Chinese onslaught of Oppo, Vivo and OnePlus that beat the Indian phone brands with the same stick, with which they beat Korean and Japanese companies earlier. Slowly, our Facebook and Whatsapp feeds started getting a lot of Tik Tok video feeds. And before we could realise Tik Tok was a rage. Why couldn’t India do it?
I tried probing for an answer in my networks. And the answers varied from Indian businesses and VCs being ‘risk averse’ and Indian startups being too focused on real life problems to Indians being too argumentative for the worse. And then I came across this article tin Economic Times (June 6, 2019) which lined up three three basic reasons why India didn’t create apps that lead to hyperscale mass adoption -
“First, mountains of cash have to be burnt to bet on an app that may go viral. ByteDance, valued at $72 billion, is well placed to do just that, just like Facebook does for WhatsApp”
“Entrepreneurs still rely on US/ foreign funding to scale ideas and the pitch deck is: what worked there will work here. For ideas that may see hyperscale mass adoption, capital is a problem. You need venture investors to take outsized calls,” said Ashok Kumar, CEO, ScripBox.
Second, India doesn’t offer scale advantages for pure play digital apps that focus on entertainment or user generated content. Digital ad revenues in India are close to $3bn while they stand at $130bn in the USA (2019). Half the Indian population is yet to go online.
The third reason is that most Indian internet business ideas developed to address the country’s many problems, and many of them were clones of ideas tested successfully outside India, and therefore considered less risky by investors.
“India has bigger pain points, looking for simple, affordable solutions. Cash burn for entertainment is not uppermost on mind,” says K Ganesh, co-founder of GrowthStory.”
Seems all logical. However, consider a few points:
First, the market for such universal apps cannot be thought of as just India. They can only be limited by language boundaries, not national. So Indian statistics (ad budgets etc. have little relevance).
Second, for the focus on the real life problems — yes, it is natural for a developing country to put focus on the essentials. That does not mean that India should not build rockets, should not have stadiums and shouldn’t even think of launching a luxury brand but first solve poverty, hunger, and healthcare infrastructure issues. The argument does not hold water unless one puts on a socialist lens and completely ignores the asymmetric and organic road to growth that countries tend to have.
It also raises some bigger behavioural questions . Are Indians usually risk averse? Is the argumentative Indian losing out when the big ideas are being put to test? Have the creative abilities of Indians debilitated due to living in a deficient economy for decades?
The ‘safe play’ question
It is true that Indian businesses and Indian VCs have been known for the ‘safe play’. If you ask the same question to VCs point to the quality of startup ideas and the lack of solid teams therein. I have personally gone through the pitches, toying with new startup business ideas, where investors became edgy when they saw brand new ideas. It is quite ironic that the country that exports ‘Jugaad’ as a concept to emulate (no, I am not a fan of it either) across the world to spark innovation, actually dithers when it comes to formulating new business models (and thereby differentiated consumer experience) . As I am writing this, there is a news that the newly launched JioMeet app appears to be a ditto copy of Zoom and it is likely to face a legal case from the Zoom. One wonders if the might of Jio, would even bother taking the first few steps of UX research or take the easy way of copying the UX? Businesses and the governments in developing countries, with meagre resources and tremendous consumer power, usually find it easy to take an existing idea but multiply the scale of manufacturing and distribution. Hence, a global brand out of India still remains a distant dream.
Let’s take the behavioural side of the argument now. The question of ‘risk aversion’ or ‘limited vision’ — is this a cultural trait of India? Nope, risk aversion is not a cultural trait of Indians, nor is an unclean street a part of our culture. Culture is a fabric determined by time. A trait defined by a narrow slice of time, can not be called culture. If you stretch the slice of time to decades, the outlook of India does look dark and timid, with the colonial regime and later toddling steps of a deficient economy, playing their part on people’s psyche. Stretching it farther into centuries till medieval times, Indians missed the entire renaissance period. According to a study, while Europe bubbled with the rise of the renaissance, India lost out in the global race for mechanisation largely due to the complacency of the Mughal kings ruling the country. They knew of the inventions of the printing press, improvised cannons, modern ship building and discovery of a heliocentric solar system taking place in Europe but they made no effort to take a jab at it themselves. In the words of reputed historian Tapan Raychaudhuri -
“Mughal India had little curiosity about the laws of Nature; neither the elite nor the mass of producers manifested any curiosity, utilitarian or otherwise, about things mechanical. The marvels of Mughal architecture were achieved without the aid of wheelbarrows…Both early modern Europe and medieval China were ahead of mid-eighteenth century India in such crucial fields of technology as the use of wind and water power, cast iron technology, paper and printing, nautical instruments, and basic tools and precision instruments. The pattern in India was not one of total stagnation, but rather of a general indifference to labour-saving devices”
India kept losing the race of modern inventions and mechanisation. The bane of the caste system relegated the arduous tasks to the lower castes of the society to further push mechanisation away from adoption. The final nail in the coffin was the British rule. The situation didn’t really improve till the IT revolution enabled an average Indian to travel to far shores and probably learn the forgotten facets of rational thinking and develop some nerve for experimentation. The glorious past of Indian discoveries in mathematics to medicine and philosophy to grammar don’t make it to our textbooks under the anxiety to quickly come at par with the developed world. In my opinion, India is in a period of recovery when the eyes are getting used to the light, after centuries of darkness. However, one cannot live with this excuse all the time. Welcoming the ‘uniqueness’ and celebrating the ‘diversity’ in business ideas does require a certain wealth level, where one can suspend the idea of ROI for some time. For certain sections of the society and the government, that time is now, if not for all Indians.
TikTok was just an anchor in the broader discussion I wanted to instigate. It is about trying to see the ability of the Indian business ecosystem to support the new, unexplored, unestablished, vulnerable to hard arguments at the inception, seemingly unscalable in immediate future but bright in the long term, requiring a lot of R&D effort, guzzling a lot of cash to survive first two years, the ones that bet on high intelligence of average consumer and does not take him/her for granted, exploring dimensions of Indian thought, elevating and humane ideas. Hope things will change for the better now that there is a God sent push due to the China situation and rising national-pride as a megatrend.
How do we do it?
So what can provide an escape velocity to some business ideas from India to cover a global landscape? Here are some pointers:
- Investors and the business community at large must set a global vision and break out of ‘India only’ syndrome. For this, they must embrace eclectic and out of the line ideas that show potential. Of course, this course would be fraught with several failures. But then that is the cost of building a visionary-idea-building culture.
- Concepts like Design Thinking help mitigating the risk of bright but untried ideas. Entrepreneurs must embrace the chemistry of these methods irrespective of the domain (physical or digital products/services).
- Indian startups must reach out to global incubators rather than staying happy with the local ecosystem. Today’s digitalized world post-Covid, makes it even more easier to be globally located.
- Perfection and Scale: Indian entrepreneurs’ can naturally think ‘frugal’ (without any formal training) but where it requires help is ‘perfection and scale’ thinking. India needs to learn the art of making everyday things ‘perfect’- no shortcuts, no rough edges, no ‘lost in translation’ stuff. Then we need to look at the global scale and consumers.
- Target second timers: Startup founders who exited the first startup successfully and are now looking at the second or a third innings are best suited to take the visionary leaps. Their basic life-needs are fulfilled and they can afford to take a rested view of issues like perfection v/s time to market. They can also withstand the stakeholder storm better, on the long term vision.
- The Golden Touch: Indian concepts from ancient knowledge systems, present a cognitive goldmine for the 21st century. We have not even touched the tip yet. There is an interpretation pending for the modern world, but once one can do that, the disorienting tech-disruption could have an Indian antidote with strong foundations.