Going Global | Chinese social companies starting in India come with considerable opportunities and challenges
“India is like an open game for every single social company in the world because its millennials have not been tapped”
— — Prakhar Khanduja
Interviewee: Prakhar Khanduja
- Indian 3x serial entrepreneur with multiple exits;
- His last two social and content startups, InstaLively (world’s first live streaming app for YouTube), and Pulse (Asia’s first university social network), were acquired by Tencent-backed Hike Messenger;
- Led the product and growth for over 150 million users;
- Now leads Indian investments at Legend Capital, which manages five USD funds and two RMB funds with AUM over RMB 45billion (about USD 640million)
The China Startup Pulse podcast host Oscar Ramos interviewed Prakhar and went through Prakhar’s M&A experience, observations about the Indian market, and the opportunities and challenges that Chinese founders are facing in India. In this article, we extracted part of the conversation and if you are interested in getting more details, please click here to listen to the full episode. The content has been edited for clarity.
● Why Prakhar moved to China after selling his company to Tencent’s Hike Messenger
● India is now looking East for inspiration
● Chinese investors put about $3 billion into India in 3 years
● The next billion users are in India
● How localization is a challenge in India due to languages and cultures
● How the Newsdog’s CEO is embracing the local culture to succeed
Oscar (OR): Why did you move to China after you sold your company to Tencent’s Hike Messenger?
Prakhar (PK): I used to work with Chinese people, helping them build the product, the strategy and so on. They were very passionate and hardworking when I talked to them. And I realized that China and India are exactly the same. Back when WeChat just started is where India is right now. India has about 400 million Internet users right now active on mobile phones. In China, now everything happens on WeChat and every single person is on the internet.
Culturally as well, our family values and principles are similar, apart from the fact that we have a religion in India but Chinese people don’t. In China, grandparents always raise the kids, which is the same in India. I got most of my values from my grandparents. Also, people live in small houses and most of the people in the country are middle-class.
India used to always look up to the West but from 2016 everyone started looking to the East. Since then I saw a lot of similarities and opportunities.
OR: Right now, what do you do in China?
PK: What I started in China was trying to connect a few people of the same interest on WeChat. Now it’s a healthy group of more than 200 people, who are either founders, VCs, or people who are interested in China or interested in building a partnership with India. Everyone shares information in the group. It’s probably one of the most active groups, at least on my WeChat. We share a lot of information and every other month we meet together on mixers where we have some drinks and food, and we just talk about ideas. Now that I sort of went through the process, I realized that the same thing could be replicated in India too.
OR: Chinese investors and corporates are active abroad. India is one of those markets.
PK: This is true. Chinese investors are actively getting involved in India. If you look at the past three years, there was about $3 billion that Chinese investors have put into India. And the one belt one road project initiated by the Chinese government is going to increase trade. Along with this, technology and the Internet should also be developed. More cross-border investments are happening, and a lot of Fintech startups are coming to India right now, most of which are backed by Chinese investors and counterparts.
OR: There are many Chinese entrepreneurs that are building companies in India. What are the competitive advantages that those “Chuhai” startups have?
PK: There are big and small companies. There is NewsDog, Bytedance, Kuaishou, etc. I also met another gentleman who was trying to create a social app called Spotlight, like Douyin (TikTok) for India. All of them are doing fairly well.
The reason why they should be successful is that the market is huge. Everyone is moving into content, for instance, Bytedance, Kuaishou, Alibaba, UCWeb, and more. NewsDog is content. Spotlight is content. They’re trying to bridge China and India through relevant news and information.
The Internet in India is cheap, literally super cheap. It is less than one RMB per day for one gigabyte. I used to pay less than 30 RMB per month for my unlimited internet in India. Now I have to pay 300 RMB in China.
The low Internet cost drives more people to use the Internet. People who are coming on the Internet right now see the internet for the first time through a smartphone. They come from lower social and economic background, like small towns and villages. They still don’t have online habits. What you might know is that the most famous app right now in India is called ShareChat. In one button, people can share information with their WhatsApp friends. It’s so simple but it has a lot of users and it’s one of the largest social networks in India. It is used by people in small towns and villages.
Also, people can access anything in the world in India. It’s an open market for anyone to come in.
OR: There are no restrictions for anybody to come to the country. But still, localization is very important. The winners are those who figured out localization.
PK: Exactly. Localization is a challenge that has nothing to do with intelligence. It’s very simple. In China, there are many different dialects but everyone speaks and reads Mandarin. India has about 29 provinces and states and every province has a different language. I’m not even talking about a dialect. It’s a different language. I’m from North India so I can’t read anything if I go to South India. I can’t talk to them like the locals. Now imagine if a company is trying to cover content in India, it’s hard to cover it all. Not everyone understands Hindi which is the national language. Not everyone understands English. And now since the new generation of internet users in India is coming from areas where people don’t speak Hindi or English, you need to build products for the local languages.
In fact, a lot of Chinese companies have a misconception that what works in China is going to work in India.
OR: Many Chinese founders build successful startups in China through a very data-driven approach. So when Chinese founders get into India, they also take that Chinese model as a starting point. They use data to decide what should be kept and moved. But when they start designing the changes and modifications, they really need to have a deep understanding of the local culture and users.
PK: Let me give you an example, NewsDog. I think Forrest (Founder of NewsDog) is one of the most amazing founders I’ve ever met. He spends most of his time in India. But he travels around India rather than just work in the office. He lives like a local and talks to local people. If he can’t speak the language, he will try to figure it out, just like how I figured it out in China through Baidu translation when I talked to a DiDi driver. He does the same thing. Most importantly, he is trying to understand the culture. His product is doing great but it’s still not as good as other players. The reason is very simple. For a Chinese person to understand the Indian culture, it’s just as hard as for an Indian guy to understand the Chinese culture. It really takes time.
OR: In your opinion, what are the differences between the Chinese market and Indian market?
PK: I see that the growth has definitely slowed down in China. Everyone wants to be in India, or in Indonesia. Because you have literally 500 million people who have never used the internet. They’re on the internet for the first time. So they will use whatever you give to them.
Let me give you an interesting insight. As I mentioned, people who come on the internet for the first time right now in India are from smaller cities and towns. Their first app to download is YouTube. Second is WhatsApp. If that’s me, when I have to download an app, I would probably first download Gmail or WeChat.
You see the differences here. We use it as a utility when they use it for entertainment. Those guys can’t even text. But they still use WhatsApp because they want to share stuff with their friends. I imagine that in the next two or three years when people figure out a utility, like payments, social commerce, security, or whatever, India could just become exactly like China. The next billion people on the internet will be coming from India.
The article is edited by Eva Shi, Communications Manager at Chinaccelerator & Producer of China Startup Pulse Podcast
The China Startup Pulse Podcast is an original weekly podcast to pave the way for entrepreneur enthusiasts about running a business in China where we present entrepreneurial stories, investors’ and mentors’ takeaways, and big tech giants’ visions.
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