52 stories: a roundup of tech in India in 2018

In many ways, 2018 is the year where the Indian tech ecosystem showed signs of fulfilling its promise. Here are 52 stories that highlight the major developments this year:

The verdict is in: Reliance Jio has reshaped the tech industry

1. Reliance has invested over $35bn in Jio, a telecom network that has brought hundreds of millions of users online and fundamentally altered the market. [Newley Purnell]

As expected, mobile data subscriber growth is healthy. But looking deeper into usage patterns shows why we’re in a different world today — the people who are online are much more meaningfully engaged now.

Since 2016:

2. Average price per GB has dropped from $2.14 to $0.14. [ET Bureau]

3. Data usage per subscriber has exploded from 0.42 GB to 4.7 GB per month. [KPMG]

4. Only 2% of data subscribers had 4G. Today, the number is 50%. [KPMG]

However, the potential for actualising this growth lies ahead:

5. Most internet users are early in the maturity cycle. Only ~20% have made ecommerce transactions online so far (c.f. 63% in China & 79% in the US). [BCG-Google Report]

6. We must wait until 2020 for a significant portion (~75%) of internet users to reach a digital age of 2 years. [BCG-Google Report]

7. While mobile internet speed has rapidly improved, it remains at half of the global average. Interactive use cases for digital will proliferate as speeds continue to improve. [KPMG]

8. Given this proliferation of data, companies are increasingly competing to build consumer platforms by creating content and monopolising distribution. [KPMG]

2018 is the year that Indian startups decided to go global

[Ananya Bhattacharya]

9. These have been 2 very different kinds: (a.) companies that target tier-1 Indian internet users are seeing local growth plateauing; or (b.) companies that see large growth opportunities and are not constrained by geography…

10. Zomato, a food-delivery company, was an early mover and has made inroads across the Middle East.

11. As ride-hailing growth plateaus in India, Ola — a ride-hailing company — launched in Australia and the UK. [Manu P Toms]

12. BYJU, an online education company, raised $540mn in December to start international expansion. [Jon Russell]

13. OYO, a low-budget accomodation company, is believed to have doubled their business this year by expanding to the Chinese market. Their valuation jumped to $5bn in September — a 6x hike in less than 12 months. [Suma Ramachandran]

Tier-2 India is the new battleground

As consumer exposure to options proliferates, the decision-makers for adoption will increasingly be consumers vis-a-vis investors.

14. Increasing, consumer internet companies are targeting a “Tier-2 user”, i.e. less affluent, non-English speaking audiences, typically in Tier 2 and 3 India cities, new to the internet [Sajith Pai]

15. Apps like Sharechat and Helo have struck a chord with Tier-2 users. Interestingly, they don’t offer English as an option. [Gopal Sathe]

16. One of the top searched queries for customers is “how to measure shoe size”. Clearly, our assumptions about tier-2 users need to be changed at the most fundamental level. [BCG-Google Report]

17. Fashion purchases are driven less by needs (e.g. having a complete wardrobe) and more by events (e.g. Diwali or a wedding). [BCG-Google Report]

18. Dunzo, an on-demand app for ordering anything, is one of the most widely-loved products by users. While competing in a crowded space, their difficulty in raising capital is partly indicative of investor appetite shifting away from Tier-1 markets. [Rohin Dharmakumar]

19. While India overtook the US in smartphone sales in 2017, Apple’s woes in India demonstrate how small the high-end smartphone market is [Newley Purnell & Tripp Mickle]

Transactions are evolving

20. Monthly digital transactions exploded — from $1.4bn in Nov-17 to $11.6bn in Nov-18 — as PayTM, Google, Flipkart et al. pushed adoption of payment apps. This is all possible because of UPI (an open technology platform for digital payments) [NPCI]

21. 40% of the world’s freelancers are in India — they earn $30,000 annually doing things like teaching students, software development tasks, online e-commerce.[Kanika Saxena & Sanchali Richi]

22. Cross-border transactions in India are huge. It was the world’s largest remittance market in 2017 with $69bn being sent back to India. [Mayur Shetty]

23. QR codes were popularised by PayTM. These offer retailers a viable alternative to expensive PoS systems. [Jayadevan PK & Sunny Sen].

Chinese players are getting increasingly involved

24. Now that their domestic market has matured, Chinese investors are turning to India for the upside that is missing back home. [Suma Ramachandran]

25. Chinese performance in India has been mixed: localising has been difficult for products that require deep user interaction, but lately consumer platforms have shown promise, and exposure via investing has been quite successful. [Shadma Shaikh]

26. In 2017, video users grew 64% y-o-y to 250mn users; short-form entertainment has resonated to Tier-2 internet users and Chinese firms have been the fastest movers. [Venkat Ananth & Samidha Sharma]

Even Google is changing tact for the local market

While most foreign players are competing via investment, Google also has a team on the ground developing products for the local market.

27. Google launched a slew of products for local users: neighbourhood Q&A, payments, home services discovery, and wifi at train stations. [Ingrid Lunden]

28. Google competes with its own Play Store by allowing the installation of apps via “side-loading” (installing via memory cards). [Arundathi Ramanathan]

29. Google invested in an OS for feature phones: a move indicative of their strategy to bring new, Tier-2 internet users on to Google services early on. [Jon Russell & Ingrid Lunden]

30. Google’s investments in Fynd and Dunzo reflect an acknowledgement that offline is a core component of the customer journey

31. In fact, omni-channel distribution is the new best practice: buying decisions of Indian consumers follow a hybrid offline-online journey; startups are prioritising journey-over-channel. [Haresh Chawla]

Reliance’s reinvention could well make it a new-age technology conglomerate:

32. Reliance Jio was built leveraging foreign expertise. Today, of the 200,000 staff in their head office, 15% are expats. [Sunny Sen]

“Mukesh Ambani spends a couple of hours every Wednesday here. There is no hierarchy and it is totally flat organisation — very different from the refinery business.”

33. They have also been forward-thinking with partnerships. Reliance invested in Saavn to integrate their music streaming service. [Lata Jha]

34. Jio’s aggressive launch strategy was aided by several exemptions from regulators that placed it in a favourable position compared to incumbents. [Kiran Stacy & Simon Mundy]

35. Sidenote: in less than a year, Jio also captured 15% of the global feature phone market by launching a fully-refundable 4G-compatible phone priced at $23. [Ananya Bhattacharya]

Public policy

36. The Indian government is looking to the China model of managing the internet. Concerns on data, cross-border information flows, and content control are being seen as issues of political and economic security. [Vinay Kesari & Vindu Goel]

37. Yet concerns restricting free speech have not abated. This year, over 800 porn websites were blocked.[Rachel Chitra]

38. Privacy concerns about data misuse led to a recent ruling which casts doubt on whether private companies may use the Aadhaar platform for identity verification. Status unclear; stay tuned. [N S Ramnath]

39. Reliance is driving the agenda for protectionist policy which would hurt the inventory-led ecommerce business of Amazon & Flipkart. [Sunny Sen]

Whatsapp and fake news

40. Fake news is a particularly pronounced problem in India due to (a.) the popularity of closed social networks such as WhatsApp; and (b.) an inability of 1st-time internet users to distinguish fake news. [Manish Singh]

41. In fact, fake news on Whatsapp has led to numerous incidents of vigilante violence in rural villages. [Pranav Dixit & Ryan Mac]

42. Viral content in India is not typically URLs but, rather, visual with minimal text. [Laura Hazard Owen]

43. Whatsapp’s offline marketing efforts involve a troupe of travelling performers that act out a rowdy game of cricket, friends excitedly taking selfies and creating WhatsApp groups. [Saritha Rai]

44. Early reports of FB developing a digital currency for Whatsapp — primarily targeted at remittances in India.This story stood out to me as, unlike upstart cryptos, Whatsapp has the scale to make it work. [Sarah Frier & Julie Verhage]

More capital moved to companies at a growth stage

45. A year of inflection for the Indian startup ecosystem, where companies that demonstrated the ability to scale were rewarded by investors. [Shradha Sharma]

46. Indian startups raised $12.7bn in 2018. [Suma Ramachandran]

47. With (a.) addressable market, (b.) talent and (c.) capital lining up, India is a land-grab opportunity over the next 5 years. [Madhav Chanchani]

48. A growing theme that we have talked much about: enabling micro-entrepreneurship by building quality supply in trust-deficit markets. Urbanclap (a marketplace for home services) and Meesho (a distribution network of resellers) each raised $50mn investment rounds. [Sindhu Kashyap]

Established startups are coming of age

49. Berkshire Hathaway dipped their toes in India with a $350mn investment to buy a 4% stake in PayTM. [Sinduja Balaji]

50. In the largest e-commerce deal in history, Walmart acquired a controlling stake in Flipkart for $16 billion, paving the way to go head-to-head with Amazon in India. [Brad Stone & Saritha ]

51. A number of Flipkart employees turned dollar-millionaires overnight, and are expected to spawn off the next generation of startups. [Anirban Sen]

52. On-demand food startup, Swiggy, raised $1bn from Tencent & Naspers, with a 5x jump in valuation from earlier in the year to $3.3bn [Madhav Chanchani]