India’s vernacular opportunity and why it could be tough to beat the Chinese

There has been a lot that has been written about the Indian vernacular opportunity. While the intention of this post is not to state or elaborate on the same facts, I do would like to lay out a few numbers that are quite striking:

• More than 50% of online internet users are Non-English Users.

• Non-English users are expected to grow from ~234 mn to ~536 mn at a growth rate of ~18% in the next 3–4 years

• 9 out of 10 new internet users in India over the next 5 years are likely to be Non-English Users

• ~400 mn mobile internet users as of 2017 — >80% are accessing the internet through their mobile

• 32% of the internet users are rural

Mobile data cost reduced by 96% from since Dec 2016 driving rural internet growth

Source: Google KPMG Report

While the VC and the start-up community has been salivating at this opportunity for a while, this clearly has not escaped the attention of international investors or entrepreneurs, particularly the Chinese. As the non-english user base comes online and starts consuming various kinds of services, it is quite evident that social media and entertainment has been adopted readily by them. While Facebook, Whatsapp, Youtube continue to take up a lion’s share of time and mind-space, as the vernacular audience matures, they are now starting to demand more relevant services, products and content.

The Chinese have been steadily increasing their presence in key segments targeting the vernacular audience — UC Browser (browser), UC News and NewsDog (news), Xender and ShareIT (file transfer), Bigo Live (although strictly not Chinese) and Kwai (live videos), Beautyplus (photo editing) and the list goes on. While the point is not that Chinese competition should not be allowed, India is an open economy and competition is only good for the ecosystem. The bigger point is to understand what are the Chinese good at, I mean really good at —

- I have heard from multiple VC’s that Chinese are really “scrappy”, what that effectively means that they will use whatever growth hacks needed to scale — if that means using racy content to get users, using Whatsapp and other platforms to drive virality etc, then so be it! (More on this in another blog post).

- Excellent at building apps that work really well on low end smart or feature phones — low installation size, offline features, quick video streaming, ease of use with key hooks for repeat user actions.

- Strong focus on algorithms for better user experience, ML for tagging and classifications of articles, recommendation engines which are very highly tuned into user preferences.

- Target key user segments in entertainment, politics, cricket with a strong tech backend to view, render videos, images and other content.

- Use of gamification in creative and innovative ways to grow user base. For instance, NewsDog has an interesting referral program where people can not only make money on referrals but also make money based on your usage and usage of your referees (clearly NewsDog can do this considering their recent funding round!).

- Aggregating content across platforms, labelling, building distribution deals with publishers.

I was amazed that an app called Noticias Aguila, translated as News Eagle recently became the No 1 news app on Mexico’s Google Playstore, while the development team and the founder is based in Shenzen, China!

Backed by millions in venture dollars, a fertile breeding ground for technology talent and cut-throat competition back home is driving a lot of Chinese entrepreneurs outside China and India is definitely red hot on their radar.

So, the question begs to be asked, how do Indian entrepreneurs/start-up founders focused on the Indian vernacular opportunity compete? While the space continues to evolve and develop, here are some of my thoughts:

- Indian entrepreneurs need to build something uniquely Indian, what this means that a Tamilian best understands the Tamil audience, a Bihari best understands a Bihari…you get the drift…

- Communities — Build a social layer with a strong community connect which could be by language, region, city, town, interests, relevant topics etc, this could go a long way in keeping the community engaged and hooked

- Build at least one use case that passes the tooth brush test, that gets the user to come back to the platform daily

- While Hindi is the largest audience, India is so widely dispersed that the audience in Bihar is significantly different from that in UP although both these regions speak Hindi, perhaps would make sense to start as local/regional as possible and acquire that core group of highly engaged users which can then be used to scale

- Content — It would be tough to beat the Chinese or the larger players in pure aggregating content, especially in today’s day and age when content is ubiquitous, hence it would be critical to mix aggregated content with user generated content and own content. While this strategy could initially be expensive for start-ups, it is also equally important for users to identify with something unique about the platform.

- Indianized version of engaging users through interesting referral programs, gamification, user engagement, feedback loops, Indian characters etc.

There is a certain joy in backing David to beat Goliath, and at the outset while it might seem that taking on and beating well funded players is almost impossible, we believe that tough entrepreneurs are made of stuff that wants to do exactly that! We at WaterBridge Ventures are infinitely excited about the Indian vernacular opportunity. We are excited about spaces such as religion, astrology, local content (videos), topics relevant to regional communities (rural jobs, local politics, agriculture, govt. policies) etc. If there are any entrepreneurs out there working on some or any of any of these, please do reach out to us.

With inputs from Pulkit Mehrotra.