The Real Truth about Indian Startup Ecosystem

I am following Indian startup ecosystem since my college years, have attended all the startup meets and events possible around India, have seen hundreds of startups, met hundreds of founders, have started a startup (actually two), have been part of startup accelerator, have met many VCs and partners and have seen the Indian ecosystem as closely as anyone can see.

I was thinking of writing this post since 2012 but I always kept in draft as I wasn’t sure I have enough material or should I even publish it (too much negative and opinionated content) but I know there are lot of people who know a lot but “in trying to look good” don’t share their experience and knowledge. 9 out of 10 startups in India get shut down in first 3 years (the number is probably 19 out of 20, just look at nextbigwhat and yourstory coverage of startups in 2010 and see how many are still functioning). So I thought let me be “that” guy who will share without trying to look good.

I have kept the post as honest as I can keep as well as tried to keep it opinionated as I feels its not worth writing another generic post spending 3 hours.

Alright so here is the real truth about Indian startup ecosystem -

1. India has no startup ecosystem – Startups makes no sense in Indian context, people reading Mark Suster, PG and Andrew Chen are just wasting their time. As a startup founder, you are better of having that “marwadi/gujrati” mentaity while building a business, specially when we are bootstrapping.

2. There are trolls in Indian startups ecosystem, people are just there for Kicks, Greed, Ego or Entertainment. These people are doing lot of damage and I hope they just go away. These trolls are VC associates/analysts, some startup mentors or people offering startup services including “I will help you in raising funding or grow your startup”. Most of these people bring nothing on table, takes no risk and just there to use you. Be careful.

3. Startup Accelerators and Mentors are Scams – Barring 3-4 startup accelerators, all are scams. You don’t need them to build businesses and I hope they go away. Mentors are even bigger scams, to build a business you don’t need mentors but need some friends who are there with you. In Bangalore, every guy with failed startup has the potential to become a mentor. I of course don’t hate the player, just the game :)   I know there are good people too, it is just that there are too many people who are goofing around.

4. There is no such thing as a product based business in India – I had met a very nice guy who is running a funded startup with 5 lakh revenue with 50 people who proudly said they are a product company and they will soon double their headcount. I am sure they have a great product but if you have 80% people in sales, marketing, support, demo presentation, accounting and HR, you are really not a product company. If you are targeting Indian market, every business becomes an operations business. There is no such thing as product or service business from Indian POV. It is good if you stay grounded and don’t chase

I hope this post help few startups and founders, give them some clarity about where really they are, keep them focussed in just building business and stop them from making bad decisions. If you have any questions, feel free to ask in comments.

Stop Comparing your Startup with Other Startups

If you are running a startup, please stop comparing it with others. You will be doing great favour to yourself, will have less clutter in your head and certainly will make better decisions.

I have met way too many startup founders and I myself have been guilty of doing this. We compare the growth rate (which every one lies about anyway), how much money someone has raised (again people lies and you never know the terms anyway), how many people a startup has (judging growth of a startup by how many people they have is like judging the taste of cup of tea by just looking at it) and so on.

It is stupid to compare your startup, your product, your team and yourself with others since you will never know who others are. Building something because others are building, hiring someone because others are hiring, raising money because others are raising is extremely stupid. You build your startup the way you want it and let others build their startup the way they want it.

There will always be startups who is doing better than you, this is how business and life works. So stand aside, appreciate others but don’t judge your startup from others parameters.

When Should you Raise Money and When to Bootstrap your startup in India ?

I am following Startup ecosystem for 4-5 years now, both Indian one and Silicon valley one and most of the first time entrepreneur struggles to figure out if they should bootstrap or raise money. Raising money is very lucrative and sounds great for first timers, all the million dollars investments which we read on startup blogs often make entrepreneurs think that there is lot of easy money or the best way to build the business is to raise money. Unfortunately this is NOT the complete picture. VC money comes with lot of strings attached and often ends up founders losing control and in worst case (which often happens), founder making very less or no money.

This is what I can suggest

When to Bootstrap

1. If you have some of your own money to invest or the initial team can complete the whole sales cycle form development to sale. So if you can be profitable without any external funding, don’t raise money. If you wait, you will get much higher valuation.

2. If you love your freedom, keep bootstrapping. I am bootstrapping because i love freedom over money and some how will feel suffocated if I become an employee.

3. When you are unsure about your path – by going slow, it gives you more time to learn. It is well known fact that first you learn, then you earn. By building a strong base, you can build a much stronger company which eventually will have more value.

When to Raise Money

1. If you don’t have any money – I personally feels if you don’t have any money, you are better of raising some money. There is no point in taking extreme risk. Living on Ramen noodles and working 18 hours ignoring family and health is extremely stupid. Just give up 20% of the company and raise some money. Ideally you want to raise minimum 50 lakh as even very small 5-6 companies can have burn rate of 5 lakh per month.

2. If you think you have figure out the business model, growing but need more money to speed growth – normally this phase after 2 years and more running operations.

3. Any India centric business will eventually become operations based business meaning you will be needing hundreds of employees and offices in various cities. Even if your offices are just based out of one metro, your expenses will be huge and you will be needing external funding. I don’t think it is possible to build a big business now without VC funding as the cost of running a business has become huge, it has become extremely easy to copy business models and there is lot of easy money available relatively.

 

My Learning while building a Bootstrap Startup in India

I had written a post How I built a 1100+ users SaaS business as a Single Founder with Zero Marketing Budget some time back which got covered at YourStory. Since then I have got lot of mails asking many questions, I did tried my best (and will always be) to answer to everyone but it is not possible to reply to everyone so I thought I should write down a post putting down all my learning.

I feels most of the failed startup owners quietly disappear instead of sharing their learning and unfortunately what all I learnt, learn through failures after paying big price so I thought to share my knowledge and learning to other startup founders and entrepreneur so they can learn from it. I am writing it the way as I feel it, take it with pinch of salt.

1. There is nothing great about building a startup – You will start a startup with lot of excitement, want to make lot of money, change the world etc but the kicks will be temporary. Starting a startup, running a startup and making money from a startup are three totally different and often separate things.  Fun is in the first part but that has shortest life. Lot of people get sucked into thinking that there is something great about startups, there really isn’t. If you want kicks or wants to make money, there are less risky options available. Startups have very poor success rate, so you better understand the risk/reward and have solid reason behind doing it

2. India doesn’t have a startup ecosystem – There is lot of noise in India specially in bangalore about startups but really there is very little signal. Way too many people get sucked into this “startup” way of building business losing time and money both. There are plenty of startup trolls, advisors, accelerators, investors, has been wannabes in Balgoare who know nothing about building business and are just there for kicks, greed, ego and entertainment. If you are a startup founder, be careful. you are the only one who is taking risk, never forget this.

3. It is very difficult to build a good team – Every seasoned entrepreneur can vouch for this, it is extremely difficult to hire and retain good talent, building a strong team is even more difficult. You will not find co-founders from startup events. Indians are also very emotional people, which often causes problem in building strong team and specially between co-founders who don’t know each other before partnering.

4. Exponential growth is a myth – Very few startups grow exponentially, don’t get fooled by those who are saying they are growing exponentially. Those who say numbers openly have a reason behind it. Most of the startup and startup founders also lies a lot.

5. Never compare your startup and yourself with anyone – I never read Indian startup blogs, techcrunch, HN etc, as it is waste of time. I am least interested in knowing who has got thousands of users or who got millions of funding, as you will never know the underneath reality. There is way too much going on with every startup and startup founders which you will never know. So don’t waste time following other startups unless you can learn something from them.

6. Bootstrapping is not easy – I have found bootstrapping to be difficult specially since I am doing it from Bangalore with no local support. I do know what I am doing and understand how to manage money and expenses and have a profitable startup but still, if you are first timer, expect lot of things to go wrong. Your expenses will be 2X-3X then what you think. I have learnt to manage expenses but only by failing and losing lot of money which hurts, or at least it used to.

7. Deadlines are meaningless – I have missed all my deadlines till now. Earlier it used to bother me, now I just don’t care. I have found it very difficult to set deadlines as there are way too many unknown variables so it makes sense to not set too many deadlines and sleep well in night.

8. You need help from all corners – This is something which I have seen with all successful startups. They always have some support system in terms of family, friends or some network. There is always brother, father, close friend, spouse etc as well as office space, logistics support system with successful startups. These things often happen at background and people never realizes this or acknowledge this but this local support system plays huge role in success of startups.

9. Single founders have limited bandwidth and fast burn rate – No one talks about founder burn rate but they have limited bandwidth. There is huge difference between single founder, two founders and three founder teams. A single guy can at max manage 2-3 people, any more and things will start falling apart. I had made a huge mistake earlier when I tried to manage 5 people which I couldn’t and it became ugly. Do not chew more than what you can swallow.

10. Don’t micromanage or use metrics – using KPIs, metrics, media mentions, traffic and even earnings are often deceptive in early stage startups. As startup founder, you are anyway will always be bias and will only look at things which you want to see so don’t waste too much time on these vanity metrics. They are not as important as you think they are.

11. People are not making as much money as you think they are – Earlier i used to think all these VC funded companies who have raised millions of dollars and people who are running the startups/companies makes lot of money. In reality, very few are making that kind of money. Founders become employees the moment you form a private limited company and raise funding and are not in full control irrespective of what they say publicly. Things never look what they are anyway, so if you think are thinking that there are tons of people making tons of money doing startups, you are wrong. Contrary, I have seen lot of people doing self owned services/development business or running small online businesses are doing fairly well. So if you can successfully build a small business, do it instead of building a big failed business.

12. There is nothing great about product companies nor anything bad about services companies – I had met someone in 2012 who proudly said they are a product based company focussing on Indian SaaS B2B market. They had 80 employees and with about 8 lakh rupees in revenue. I don’t think product companies need that many people, unfortunately in India, there is no such thing as product company, every product or services or B2C or B2B company eventually becomes an Operations company. Don’t get sucked into these definitions of product or service company, there is lot of overlapping between them when you are building India focussed business.

There is Nothing Great about taking your startup to USA from India, stop fooling yourself

I never understood the fascination of Indian startups and the founders to move to US to run their company. There is nothing wrong in taking your startup from India to USA if you see the value and it has worked really well for few but there is also nothing great about it either.

I have seen way too many Indian startups and founder getting excited with the prospect of moving to US or to get their company registered there (mostly Delaware) hoping for either easy funding or easy clients. I can’t say how easy it is to get funded (I am sure it is easier as compared to India) but there are certainly no easy clients or easy money. You have to work equally hard to get US clients while being in US as compared to India and for web based SaaS startups, it is suicidal to go to US as even a 10 people company can have a burn rate of one million dollars.

There is also one major problem in running your business from USA, you loses out on cost arbitrage. Some of the India’s biggest self funded software companies like Directi and Fusioncharts make so much money because of cost arbitrage, you earn in US dollars and pay expenses in Indian rupees.

There is also huge cultural difference, India will be India, USA will not be India :) There are no friends or family around you, just people, business and money. Once the excitement of doing business in USA while being in USA dies down, the hard reality hits which takes away lot of positive energy and steam from the startups. Building a business whether in India or USA is a long term game so make sure you know what you are doing. Success in business is all about making less mistakes than your competitors.

Entrepreneurship is test of Character and not test of skills

The title says it all, I don’t have to write much.

Whatever I have seen till now, from my experience of running 2 startups and after looking at hundreds of startups, entrepreneurship is test of character and not test of skills.

It is OK if you don’t know how to code, don’t know how to do marketing, don’t know how to build a team, don’t understand the market well or don’t have any money since these things can be learnt or achieved in some time. Startups don’t fails because of the above reason, startup fails because of lack of survival skills.

I have seen way too many people in India who are really smart, hard working, have awesome ideas and co-founders but they just quit and the moment you quit, it is all over. All the experience, learning, knowledge is lost.

Building a business or making money is not difficult, what you need is character and survival skills. Ability to go beyond your comfort zone and hang in there for some more time when it is tough to get going.

Landmark Forum Learning and Teaching – What I learnt in 3 Days

I did landmark forum at Sri Satya Sai Sadan in Bangalore on 4th, 5th, 6th April and evening of 9th April 2014. A really good friend got me enrolled/registered to it and I did Landmark Forum without any notion of what it is. Me not having any knowledge turned out to be a blessing in disguise as I listened to so many people, made lot of friends, found and learnt about new way of looking at life without having any preconceived notion and bias.

I was leaving at 8:30 in the morning and was coming back at 11:45 in night and somehow I never felt tired sitting for 14 hours every day which is nothing short of a miracle! During breaks and after coming back to my home every night I tried to write what I learnt so I don’t forget the teachings.

Through this post, I am sharing it with others as I know many have forgotten what they learnt and are probably searching for it on Internet :) Here are my learning of landmark forum (or should I say here are the teachings of Landmark Education).

I am putting it as word by word what I wrote on those 3 and a half day without adding or subtracting anything. 

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Stories vs Facts – we make stories from facts. Facts are true, stories are meaningless.

In life you want power, freedom, self expression and peace of mind.

Always be present and stop talking to yourself.

Look for context and learn to distinguish and look differently.

Acceptance and Acknowledgement of Parents.

Go to the source, what is causing the problem. Avoid blind beliefs.

Be fearless. I am the most dangerous guy. I am not scared of anything or person.

Do not put past in future, put your past where it belongs, in the past.

Learn self expression. complete things which are ended but not completed.

Do not have any rackets and complaints with anyone. Declare your rackets. They are just like monkey holding peanuts.

Nothing happens to you, you don’t get hurt, it is the meaning which we give to it. View become reality.

Opportunity and identity are conflicting.

Paradigm shift from I to nobody.

Not the talk but who spoke.

Honour the word if you can’t keep it.

Strong suit give you success. Strong suit comes from background.

What am I doing ? surviving

Constraints come from context and background.

You decide your future.

No conditions are needed to change yourself.

Life has no meaning. You are just a meaning making machine.

You never get what you want. This isn’t it. It goes on, stop chasing.

The meaning we give to life causes problem

You are unique expression on this planet.

Life is empty and meaningless and it is empty and meaningless that it is empty and meaningless.

Don’t give meaning to anything.

Declare declaration, not description

Nothing — Create – Action – Complete – Nothing

You chose your circumstances.

Keep this alive forever. More, Better and Different.

Knowing doesn’t make any difference.

Present is shaped by future we are living into, stop doing this.

Last 75 Days of my life – Journey of a lifetime

I posted this on facebook and thought to put it on my blog too.

Last 75 days have been hell of a ride! I decided to change the way I was living life and doing things. I have done more in last 75 days than what I did in last 3 years. I got a new car, upgraded life style and wardrobe and improving my fitness too, I am learning guitar and hip hop dance, danced with lot of cute girls as part of dance performance, got new dslr camera, got a new macbook too. I have talked to hundreds of people and tried to know more about their life. I have also worked heavily on my social and communication skills and trying to be more involved. I have also participated in various groups, acted as leader and listened and looked at life like I never did before.

I have also taken an office, finished building my product and have hit decent number of users and paying customers. Life is Going Great and I am just Staring to Rock … :)

I will be publishing a post about inBoundio and how I took it to 1000+ users and 80+ paying customers in next 48 hours. I will also be writing more about my startup journey and how I am bootstrapping a business as a single founder.

Animals Live, you want to be Alive

Animals Live, you want to be Alive – This was told me to be someone exactly one month back. I have read 50+ books in last 12 months on life and philosophy and for some reason, I couldn’t get it what this one line made me realize and felt.

One month back, I listened to few people who shared their problems and their struggle with life, people and their environment and it made me realize how great life I had till now.

I have got great upbringing even though I comes from middle class background, parents always gave me more that what I wanted and needed, had good education and I am doing really well professionally.

My problem was, I was just trying to over analyze life and trying to find meaning of something which was not there. It turns out, life is empty and meaningless and this is a good thing! Now it is your job to give meaning to it.

In last 30 days, I have 

  1. Joined guitar classes
  2. Joined dance classes
  3. Throw away most of the unused clothes and bought new once.
  4. been working heavily on my social and communication skills. I have made lot of friends through the network and group I am part of.
  5. been heavily working out to gain weight and be in shape
  6. Have spent heavily on personal care and hygiene.
  7. Got a new music system, new glasses and if needed, will get new DSLR and a new car too. Though I won’t buy anything, unless I am really going to use it.
  8. Become leader of Koramangala group and discuss and listen to others life
  9. Got more clarity about business and what I want to do. Most importantly, I don’t think much about work and money. I am running a one man company which is growing organically and I am already getting mails of partnership and acquisitions, I think I am doing OK.

I know this blog post won’t be read by many but if you think you need help or need someone to discuss your problems in life, feel free to mail me.

You want to live in Present

I was discussing this with a friend yesterday about why we think too much about past mistakes and why future makes us nervous and anxious. The conclusion of the discussion came as – We have to live in Present.

This is an excellent article on How to live in present which I will highly advice everyone to read. Here is the first paragraph

What does it mean to live fully in the present moment? It means that your awareness is completely centered on the here and now. You are not worrying about the future or thinking about the past. When you live in the present, you are living where life is happening. The past and future are illusions, they don’t exist. As the saying goes “tomorrow never comes”. Tomorrow is only a concept, tomorrow is always waiting to come around the corner, but around that corner are shadows, never to have light shed upon, because time is always now.