As an entrepreneur in India | Hacker News Reader

As an entrepreneur in India

nithyadayal.com

57 pointsprateekdayal24 comments

This is a great post - "moral suffering" exactly captures the feeling I have as an educated and affluent Indian. Yet, I keep going back, keep doing more in India.

I have thought about this quite a bit, and here is an interlocking set of problems that cause this "moral suffering". The phrase "private wealth and public squalor" captures the present situation in urban India very well. A city like Chennai or Bangalore is not that poor anymore on a per-capita basis, but they looks much poorer. The contrasts are just shocking. You can find apartment complexes where flats cost $150-200K and up (yes that is in USD) , sitting on potholed roads, surrounded by trash. Here is an explanation of how the system doesn't work in India:

* Taxation system is irrational - the $200K apartment would pay next to nothing in property taxes, probably as little as $100 a year (legally). Local governments require state or central assistance to run themselves. Consequence: there is no way for a local government to plan ahead, it has to rely on entities at a much higher level. Even the state government doesn't have much of a tax base, so it relies on grants from the center. This is a completely broken over-centralized public finance system, but there is absolutely no political will to tackle it.

* Relentless concentration of economic activity in major cities, because smaller cities and towns are even more starved of resources (on a per capita basis) and lack any local tax base at all, so both investment and people migrate to large cities like Chennai or Bangalore. This self-reinforcing dynamic has resulted in ridiculously overpopulated big cities. At Zoho, 70-80% of our employees come from smaller towns who have migrated to Chennai, so we are part of the problem of this over-concentration of economic activity.

* Increasing private wealth and non-existent urban infrastructure combine to produce some of the most extreme valuations in real estate in the world. Right next to Zoho office in formerly suburban Chennai, land goes for $10 million an acre (there are no acre-sized parcels, of course) simply because as a close-in suburb, this has a nominally functioning infrastructure, which far out places would lack.

Note that I don't mention a world about corruption because that exists in so many other countries without producing the same urban squalor and "moral suffering" that India produces.

The solution I have come up with, something we intend to adopt in Zoho, is to abandon major cities, and move to much, much smaller towns. At the level of about 50-100K population, there are many towns that offer a decent quality of life, particularly when you bring in the kind of jobs and economic activity a company like Zoho can bring. This is the plan we are working on.

Now I will mention some good news, because some posters here are so pessimistic. In my life time, I have seen massive improvements, massive reduction in human suffering in South India. I routinely saw sights as a kid that I don't see anymore: train stations full of emaciated, sick people begging, severe malnourishment everywhere, higher education serving 1-2% of the population (now in the Southern states, it is closer to 20-30%), and a general mood that life would never get better. Today a lot of smart young talent coming on stream that is a capitalist's dream in India. Yes, you have to invest in training and skill building, but if you do, the rewards are immense. The monetary rewards are very good, but the psychic rewards are immeasurable.

  The solution I have come up with, something we intend to adopt in Zoho, 
  is to abandon major cities, and move to much, much smaller towns.

This definitely is a good move especially for a company like Zoho that has an excellent training & skill building program.

I personally would like to do the same once my startup gets going and of course assuming other things fall in place. Probably, that's an advantage for a bootstrapped company rather than a funded one, where one might be forced to stick to such bigger cities with moral suffering.

I have a different suggestion. Leave India altogether. Take the programmers with you. Don't give those politicians any more wealth. Doesn't mean you still can't help build roads and clean up garbage in towns in India. You're still going to help the populace, just not at the mercy of politicians.

Although realistically, I doubt Zoho can even leave Chennai, let alone India.

I think bringing in your nationality into the debate makes it somewhat irrational.

You've said you are "an educated and affluent Indian". In reality, you are "an educated and affluent person". Whether you choose to live in India or choose to pursue a greencard in the US as a Princeton PhD in academia or industry, or maybe go to UK/Canada/Europe, or maybe even South America - Brazil, Costa Rica, all of these are/were valid choices. You've simply chosen to return to India, perhaps as some sort of default choice. But all those other choices still exist. Each of them will have some component of moral suffering and some component of psychic reward.

I think many of the "system does not work" points you've made are simply examples of a different system. When I'm back home in India and I see people pissing on the street corner, I don't think "Hey, system does not work. They should be pissing in restrooms". I think "This is a different system with some pluses & some minuses. Pluses : no infrastructure needed, organic waste in a tropic country decays rapidly, freedom to piss wherever since its accepted culturally. Minuses : the pervasive smell of ammonia."

I think that attitude makes it much easier to adapt to the different system than to try and westernize everything by saying "system doesn't work in India".

Interesting way of thinking. So, what is your thought process on each of these:

- Garbage everywhere, especially next to your local restaurants.

- Feces in the streets

- Slum across from your house

- Beggars attacking your neighbor

- Frequent blackouts for a whole day

Where do you live dude?

The author in the rush of justifying her feelings of moral suffering has put some factual lies and false notions.

First, she claims that the standard of living in India is plummeting and goes on mentioning slums, filth, corruption, bureaucracy etc. If one checks the recent national census and other survey results, the poverty has been steadily declining [1], the illiteracy has sharply declined [2], Indian consumers are the most optimistic in the world! [3], and ironically - Indian entrepreneurs are the most optimistic in the world! [4]. The rest of her complaints are just nitpicks.

Second, the notion that happy existence or perfect system is the prerequisite to creativity and success. This is false. If one studies Anthropology, creativity/art/culture/economic-activity/entrepreneurship exist everywhere, even in the most failed country. It is the nature of man to grab every little opportunity. The fact that Mercedes has opened R&D centre in India only shows their creativity, their ability to grab the opportunity and their entrepreneual spirit. More power to the potholed roads! There's nothing called perfection in this universe.

Third, not a criticism but, one doesn't need to be overly pessimistic. India and other emerging economies are yet to see several decades of growth. Especially India and China, because of their huge population, will continue to see high economic growth for very long (ask any economists) [5][6]. And no, the moral suffering due to inequality will not disappear anytime soon. China even after growing at a breakneck speed of 10% a year for last three decades and pulling millions of people out of poverty has more inequality than India (Gini coefficient) [7]. I think we'll just gradually evolve to live with it.

[1] - http://www.moneycontrol.com/news/current-affairs/indias-pove...

[2] - http://www.deccanherald.com/content/150267/indias-literacy-l...

[3] - http://www.afaqs.com/news/story.html?sid=30621_Indian+consum...

[4] - http://docs.google.com/viewer?a=v&q=cache:5wJKiOx4osAJ:w...

[5] - http://www.livemint.com/2011/05/25191535/India-could-be-worl...

[6] - http://www.deccanherald.com/content/140463/india-likely-worl...

[7] - http://en.wikipedia.org/wiki/File:Gini_Coefficient_World_CIA...

Standard of living is going up, but quality of life is definitely declining in major cities. There is a lot more money (even after adjusting for inflation) so the purchasing power has increased tremendously. There is a much richer variety of goods and services people have access to, housing is a lot nicer, people can afford vacations and so on. All that is on the positive side. On the negative side, people spend longer and longer time commuting in worse and worse traffic, suffer more water & electricity shortages. The general stress level of urban life has gone way up. Overcrowding would explain all of the negatives, and I have outlined why the overcrowding occurs. It is not just "too many people", because even the most densely populated regions of India have plenty of space when you leave major cities and India's population density is at the same general level as Western Europe. It is the inadequate infrastructure that causes massive overcrowding.

I agree with your overall point though - I am an optimist.

As an entrepreneur who moved to Bangalore recently, I completely agree to Sridhar's post here.

My 2 paise - do a India based / focused startup, just live outside India's cities (if you can't live outside India, that is).

Here is the counterpoint: India is awesome if you're not struggling.

A lot of people complain about traffic. You know the salary of a driver on a monthly basis? About $100-250 (depending on the car you drive).

Bureaucracy is killing. Takes 3 months to incorporate. But do you know how much accountants charge in India to take care of all your business details? A startup probably won't have to pay more than $150 a month on an accountants fees.

Things are so cheap in India that you can live an extremely shiny life on the same budget at which an entrepreneur struggles to feed his family in USA.

But yes - a lot of the things are broken in India if you don't have the little bit of money required to throw at it to fix it. On the bright side: the pace of improvement is staggering (I mean - Indian literacy rate went from 65% to 75% in 10 years. Thats 650 million literates in 2001 to 900 literates in 2011! Still not awesome. And college education is still lacking in many places. But the speed of improvement is staggering.)

Disclosure: I'm a glass-half-full kind of an Indian who studied in USA but is now living in Bombay working on a startup.

Cheap isn't everything. China is cheap. Thailand is cheap. Malaysia is cheap. They don't have the massive infrastructure problems that India has.

Personally I (or any sane person) wouldn't want to just live in a nice house, then sit in a chauffered car, stuck in traffic for hours, while avoiding looking out to see bum/garbage/slum/dirt/smog/chaos, then arrive in a nice office, then eat lunch and hope it doesn't make me sick, then go back home again.

fk, you just described my life. I live in a fantastic bubble and work in a fantastic bubble. I travel in a car driven by my driver and I pretend the in between doesn't exist.

> A lot of people complain about traffic. You know the salary of a driver on a monthly basis? About $100-250 (depending on the car you drive).

This is precisely what the author seems to be complaining about. We throw money at the problem and insulate/isolate ourselves. Too much pollution => AC car. Power shortage => generators. Corruption => "agencies" that help in getting stuff done. These practical choices are the reasons for crushing the soul.

And it takes absolutely no time and no legal backing system to get screwed up in India as well. Driver who will be late to work on 9 out of 10 times is worse than driving through the traffic.

FWIW - Literacy rate in India should not be confused with education. I have been to government operated schools many times and you wont find more than 10% students who can do simple math or write there own names even in 4th standard.

Isn't this the exact moral qunadry that the author faces right now? India (and China) benefits from what I call as human subsidy. The living standard on average for general population are low which lead to reduction in cost for manpower, which makes stuff cheap. Sure if you are in top 10-20% of the earners, your life is amazing, you can have all the benefits of developed world at the price of developing world. I am not saying that people who live in other place are free of such guilt, consider Americans buying Apple products, made by Chinese workers who live in poverty. However for Indians the guilt is significantly higher. At least Americans can invoke Us vs Them argument, or point out the fact that actually buying the products might be the best thing that they can currently do considering their government.

Regarding India,there would be significant inflation in next decade, the main problem will start when our generation enters later thirties. There would be significant stress on India's healthcare system. (Indians might make fun of US healthcare, but Medicare/Medicaid is amazing and there is no equivalent in developing world). Worse India does not even has large army or pressure to grantee energy security. Unless there are groundbreaking inventions in energy/healthcare (which are quite possible) the next two decades are going to be challenging. India's best bet is that its demographic dividend and ageing population in US/Europe, pays out.

We're already in an necessity inflation period. Check how fast food prices went up in India.

As for the demographic dividends, I doubt it will last long. When a large, unemployed segment takes control over at US/Europe, the first thing they'll do? Make sure they have jobs. How do they compete against cheap labors in Asia? Simple. Tariffs.

Look at Greece, Ireland, Spain protesting...we're almost there.

In India to succeed as an entrepreneur you need either Caste or Cash.

Caste since banks give 84% of the loans to http://en.wikipedia.org/wiki/Forward_caste

Cash since you've to bribe govt officials and business executives http://business.rediff.com/report/2009/sep/24/indians-among-...

What the article says is very true.. Sometimes I feel like a time traveler trapped in dark ages, waiting for the things around me to catch up to what I know is already a reality else where.. like last weekend when there was a 9am-5pm power-cut in bangalore, wondering how life without such basic problems can be.. :(

Another link-bait. What's a diatribe about conditions of infrastructure, pollution, corruption et al, got to do anything with the title of the blog.

Yes. things suck in developing countries, either move to the US, its easy enough if you are good or stop complaining and deal with it.

I need a plan to get out of India.

Exactly. All the media hogwash about 'brain drain' flowing back to India....nobody smart enough is going to go live India to start a startup. It's like trying to fight your schizophrenia while living in a bomb shelter in a war zone. At best these entrepreneurs are going back briefly to setup offshore office in India before hightailing out of there. And from personal experience, offshore teams aren't that great...the smart ones left India already.

>the smart ones left India already

Actually thats the other problem :) There is so much focus on "brain drain" that people have almost come to believe that the rest of us in India have no brain. There is so much hoopla about getting people back to India and very little about people who just stay back and never move out.

I returned to India 3 years ago. I have other friends and people I know who have come back since. Many of them are doing startups. Others are working in academia. Not a single one is setting up offshore offices or looking to fly back (AFAIK). These are mostly young guys returning soon after their studies.

But media hype is perhaps not about these people. It is about people who are coming back after 10-15 years of career in US, have families and a reputation to carry. In this segment, I know many who have come and gone back, after establishing the Indian centers of their employers. :)

So depends on who and what you want to see.

800 million people are starving in India.

And the Govt/Politicians doesn't want people to prosper. They fear people might vote as per their conscience in elections.

http://www.deeshaa.org/2011/06/02/the-starving-800-million-i...

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