Opportunities Are Big and Technology is the key - Mohandas Pai
The chairman of Aarin Capital believes many startups make the mistake of focusing on their own point of view rather than user's ease
Digitalization has taken the startup world by storm. Companies have witnessed a boom due to digital processes, enriching consumer experience. Especially, cloud architecture has gained significant impetus.
Digital companies that maintained pace with customers and new age stood rock solid during the lockdown. A harmonious integration of a well-sought front end and a powerful backend enabled companies to keep up their graphs. E-commerce witnessed major growth during the lockdown. Other industries that suffered due to lockdown stood up by interacting well within themselves.
Companies that enabled digital contact between their distribution and supply chains were able to catch up quickly compared with the ones which did not. The distribution chain should be an integral part of the digital transformation of any company. Support systems such as HR and finance could prosper due to the digital backend they had. Cybersecurity lets the process hold integrity and protection. Digital evolution provided access to medical consultation to customers and businesses.
Consumers chose to stick to digital modes of distribution of goods and services. Dealers provided doorstep and cashless deliveries to the consumers that enabled a smooth distribution chain. Back office functions shifted to work from home. Although not 100 per cent work from home can happen yet, it is poised to be the new normal. A better work environment at home is essential for work from home. Travel time and costs are no longer the hurdles for employees. The productive time has increased and for the same reason CEOs push for a much more digital company than before. "Each user has different sophistication and levels of ease of use," says Mohandas Pai, chairman, Aarin Capital.
Many startups make the mistake of focusing on their own point of view towards the company. But what should matter the most is the user's ease of using the business.
New age for social commerce
The distribution and supply chain has seen massive digitisation which provides for ample growth prospects. Today, startups have the power to build an intuitive business without needing big player's aid. Social commerce puts efficient businesses at the forefront of the market. As Pai points out, you don't require a data center in a cloud-based system. Such digital benefits help startups save money. Opportunities are big but it depends on the businesses as to how much they want to make out of that opportunity. One should make sure that ease of use and service are foremost priorities and pricing should come later. Nonetheless, domestic consumers are still not willing to pay more for technology. Henceforth, too much discount is also not a good strategy. Rather marketing and sales should receive more attention than subsidies. Investors look for business today than to put their money just anywhere. The last six months have clearly shown who are the winners and who are not. Many startups don't invest much in marketing and hope their product to speak for itself. This particular model cannot prosper, coming from startups.
It is important to remember that "not everyone can be Bill Gates". There are very few success stories because hard work may not necessarily be a prerequisite to flourish. The government has put out a mandate of "Digital India" but as businesses each company has to start their own digital journey. NITI Aayog has removed obstacles such as prior experience, revenue conditions and has also become open to startups. Government has been trying to remove barriers created by consultants. Qualification barriers, for instance, can be removed only when they are being reported actively by media and social media.
Relationships have become important more than ever before for businesses. Credible contacts are faces of marketing today. Even a good product can lag behind if it doesn't have a known enterprise seller with it. Paying monopolies like Facebook and Google for social media campaigns is not a reliable strategy, if a business is really looking out to sell itself. Targeted marketing using the channels of media is vital in today's world where there is a diverse platform called the Internet.
What is the role of digital media?
The traditional digital media is being ignored by newbies that proves to be a disastrous idea. Social media alone cannot carry the campaign of your products and services. Efficient contracting is the key to do right marketing. Pai tells us, "Selling is an art". Follow ups and selling cannot be taken lightly for business. India doesn't really have a selling culture which surely needs to change.
One shouldn't feel shy about spending money on getting the best of people who can get you sales. Experienced and efficient salespeople bring along the hope of getting the business done. Short term profit-based strategies will only put you in the "race to the bottom".
B2B Explosion is on the anvil
B2C obviously has grown almost 3X during the peak of the pandemic and take eyeball but the B2B explosion is not underwritten either. The key is to implement B2B software very fast, easily - Having API's to take people through, Backend to bring people quickly onboard, and where Businesses are able to see the result very quickly. Newer trends suggest markets for artificial intelligence and other related things are booming because the market is favorable. Nonetheless, the market is still competitive. The path to success is still narrow and requires constant strategization. B2B becomes sticky because it needs efficient workers to build a reliable company. Consumers need to trust the business. A company with average employees shouldn't aim to become extraordinary. Efficiency is significant for any business. Understanding your own inadequacies and inabilities only makes you able to bag the success. People you're hiring should be able to grow along with the pace of the company.
Three steps towards Digital Transformation
The Lockdown had brought things to a standstill in 2020 -what saved the day were the companies who had a front-end digital interface with customers and back end of delivery with an efficient supply chain. Now India's manufacturing base- cement, steel - large factories got shutdown. To avoid this - it needs to start with such businesses to get their distributors on board and have a digital strategy so the business can happen even if people don't come to the workplace, orders flow through and the distribution chain becomes digital to have an interface with Customers. Secondly, the support system - finance, HR - should be envisioned to WFH and should have the right products and tools available to allow them together with cybersecurity has to be taken care of. Thirdly, the actual production should be automated so physical interfaces can be reduced to a mid to large extent. Consumer behavior has changed and Dealers should be able to provide doorstep and cashless deliveries to the consumers to enable a smooth distribution chain. Back office functions shifted to work from home. Although it may not be possible to make a business 100 percent work from home, yet it can be done up to be 60-70%.
What do you have to say for the Online Gaming World?
Creating a code of conduct and socialising with the government is vital for online gaming as they serve at the borderline of law. Proper mechanisms need to check the regulations made for online gaming as they build their revenue system around betting and other illegalities often. Government is still doubtful about the entire online gaming business. Careful operations should be carried out to enable a profitable system.
Connections remain important.
Chinese Influence on the Digital Industry
Nations must be protective of their digital territory just as their physical one. Chinese digital intrusion can not be overlooked and requires planning that keeps integrity at the center. Chinese firewall built around their digital market is a major reason why Mr. Pai strongly supports the banning of Chinese digital apps by Indian Government. Work and compete with free markets like Europe and America. Chinese protectionism for its own digital markets prove to be an example of divisive policymaking.
What to bet on?
It is important to remember B2C has always been brutal yet it will still be an easy bet. Allocation of investment should depend case to case. Great capabilities and products can only be key elements. Mentorship can not be substituted and needs constant attention. Valuable experience is a price possession for any leadership and thus should be used cleverly to benefit the business. Passion and energy bring in impetus to grow. Funds can not be promised and thus try to become fund of funds yourself. Share your ideas and work with individuals willing to learn. This makes it easier for people to know your goals and invest in you. Always pick the best when it comes to fund managers. Best companies will follow if you're committed to the goals and company. Legacy players should work towards connecting with young people. Observe and pick the winners of respective fields to invest your money in.