Should India Copy East or West? Or Should it Create its Own Growth Story?
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I got an invitation to attend the biggest startup conference in China-GMIC (Global Mobile International Conference) It was China this time after covering other eastern countries like Japan, South Korea, and Hongkong last year.
We keep hosting various delegates from China and various Chinese investors at the NASSCOM 10000 Startups warehouse, who keep visiting India looking for new partnership and deals, but the first-hand information you get when you actually visit a place and interact with local startups, and people is something unmatched.
It’s one thing to hear about China and one awesome thing to experience it!
First, the physical impact of the city itself was amazing. In the few days, I was in China, after meeting several VC’s, angel investors, business press and hundreds of entrepreneurs, I was blown away by what I saw in Beijing.
Though missed visiting the Great Wall of China, couldn't escape experiencing the Great firewall (It's nirvana experience with no Google, Facebook, and vegetarian food)!
Chinese startups are notorious for being called as innovation sponge, but China for sure is on its way to becoming global innovation leader! I was awed by all the VR & AR technologies which took the center stage at the Global Mobile Internet Conference world's largest tech conferences with over 60,000 participants. Olympic stadium was booked for the startup's award ceremony; it's that scale we are talking about.
Hover Camera was the biggest hit of the event, a Chinese startup launched by American students, it's the first in a line of personal robotics products (an AI-powered self-flying drone).
90% of Chinese software startups focus exclusively on the Chinese market. With a consumer ever ready to try new things, Chinese always get their 'go to market strategy' right, the problem then is only in retaining those customers.
Talent, Culture & Capital
1.Talent - One similarity seen between U.S. & China is that R&D centers and universities provide the technology and seed capital for new startups which is not the case in India. Both the countries have great line up of top class accelerators, incubators and hubs helping entrepreneurs. And yet still there is a stark difference in how these startups operate and the culture in which they are thriving.
U.S. protects its startups with its strong IP & patenting policies, while in China there are almost no mergers or acquisitions as its much easier to just steal startups ideas and hire their employees. 70% of exits in China are via IPO, compared to the 90% of exits in the U.S. via mergers or acquisitions.
2. Capital - When I was in Austin Texas, we visited Dell Spanning Facility and there Mr. John L. Howard, Jr. Dell, Senior Manager | Global Public Policy Shared how Dell’s once-rocketing stock price not only made Michael Dell one of the richest men in the country, it also changed the city of Austin, profoundly and forever.
From the day of its initial public offering in 1988 to its peak in March 2000, Dell’s stock rose a staggering—no, staggering is not quite the word—apocalyptic 87,000 percent. Thousands of Dell employees got rich. At one point Dell’s stock was said to have created 2,700 millionaires, so many that they got a name: Dellionaires. Many of them had a lot more than a million dollars.
It created a lot of millionaires and billionaires who turned into angel investing. These were the people who believed in magic and were ready to risk their money with innovative ideas. Today the city has more than 1,000 technology companies, a direct legacy of Dell and its rising stock. Dell was to Austin what Hewlett-Packard was to the Silicon Valley and Microsoft was to Seattle.
But in China, for a very long time, startups were funded either by Chinese banks or the government. Later came their ChiNext, China’s equivalent of NASDAQ stock exchange for startups, in 2009. The market was created to provide startups and their investor's liquidity.
In India, while companies like Infosys and Wipro were able to provide jobs for lakhs of people, we still don't have companies which have created millionaires and billionaires. Our universities have mastered the art of producing world-class employees and not the entrepreneurs. While the government is doing all it can to provide policy and infrastructure support to the budding entrepreneurs, big corporates are also in it too.
3. Culture - While U.S. startup ecosystem was built on 'Pay it forward' model by many of the dedicated volunteers, government folks and successful entrepreneurs sharing their knowledge and growing the community, Chinese ecosystem thrived with only government support. In the U.S. it’s easy to share and browse ideas and deals, but in China, there’s a long legacy of guarding knowledge as power, and a paranoia of someone copying your idea prevents sharing.
We are neither U.S. nor China, we may be like Chinese in nature but we are fascinated and adopting startup culture from the west. At least in Bangalore, Pay-it-forward model works but not that much in other cities. People discuss ideas openly and try to get whatever share they can of this huge market.
You may ask where do we stand. My answer is –exactly in the center.
Unlike both the countries which has a unanimous language, Indian companies need to design products that cater to the taste and preferences of various communities within India.
"India is a unique market. Because it is English-speaking, the Americans and the Chinese are fighting over it.
Strategic Chinese investors including Alibaba Group, Tencent, Foxconn, and MediaTek have taken front seats in some of the India’s biggest tech and consumer internet firms while New York-based hedge fund Tiger Global Management is on a rampage. Seven private equity (PE) funds — SoftBank, Temasek, Steadview Capital, Centrebridge Partners, Sequoia Capital and Falcon Edge Capital, together with Tiger Global — invested as much as $10.3 billion (Rs 68,300 crore) in 2015.
India is in a very strategic position its growth story will be completely different from that of the U.S. and that of China. Either foreign companies will hire Indian Ceo’s who understand Indian market and will be able to sell to Indian consumers or Foreign companies will invest in Indian startups who knows how to scale, or there will be companies like Patanjali & Reliance Jio, who takes over the entire market in no time. The country with the highest & youngest population can never be ignored by the world.
Will it become a consumeristic nation or an innovative nation is something we need to wait and watch.