Don't sell Technology to Indian Businesses
blog.architgupta.com
blog.architgupta.com
Another person also complained about the writing, so an opportunity to learn here. :)
[Edit: I see feedback below. I'll take another pass soon.]
> But now I am of the opinion. Figure out an unnatural advantage. Take it. Otherwise raise VC from day-one for Indian startups. Don't bootstrap because longer runways are needed.
It has sentence fragments like "But now I am of the opinion.", sentences that don't make sense at first reading like "Don't bootstrap because longer runways are needed." and grammatical errors. Sorry for the harsh response, but I feel that rewriting the article will make it easier for the readers to see your points better.
I'm aware that Skitt's law probably applies to my post. :)
"So here goes the question: [..]"
What is the question?
It was kind of difficult to get what your point was and what you where arguing. Please, just keep it simple.
I am Indian and I couldn't make head or tail of what exactly is being said here. I suspect it isn't so much "Indian English" as unclear writing.
I think you are trying to say something like (I had to pause reading and think for a while)
"After a market was created and validated by companies with long gestation periods, others set up very similar companies quickly to exploit it. Given this, if the business model is not dependent on network effects, it might be better to just focus on brand building"
At least that is what I think you were trying to say.
Coupled with somewhat odd sentence structure (But now I am of the opinion. Figure out...) , and random capitalization choices (why is the word "Restaurants" capitalized for example?) the article is a very difficult read, with very choppy idea arrangement. A rewrite might really help.
(my 2 cents. posted this only because you asked for feedback)
I am an Indian! Currently staying in Bangalore.
Indians don't buy Technology? This is BS, right?
Indians pay for technology all the time. From the poorest to richest. Just because they don't click on paypal and the money doesn't land in your start up's account it doesn't mean Indians don't pay up. The average levels of Piracy in India will more or less be the same as they are around the world.
Indians pay for things that bring them value. Not just because you built something. And it is you who built it.So first understand what value you bring common Indian masses.
I know of Auto drivers and cab drivers who get costly metering and taxi dispatch systems fitted to their vehicles. And they are really poor people. They are paying for technology, because it brings value to them. Do you know how many people use mobiles phones in India? Even the poorest people might be earning less than $1 a day(I know many beggars who carry mobile phones) use mobile phones in India, and they pay their bills.
I know Temples, Churches, Mosques use scrolling displays outside their compounds for various announcements. The displays survive in tough weather. And they sell. They bought it because it adds value to them.
I know ordinary middle class people, buy handy glucometers( for diabetes/blood sugar level testing) and Nebulizers and Sphygmomanometers(To check their blood pressure levels), Glucometers made by Accecheck. Why do they buy this technology? Because it brings value to them.
Millions of middle class Indians use solar technology and rain water harvesting systems. And they pay for it, you know why? Because it brings value to them.
I can go on and on... Citing examples.
India is like every other country and Indians are like people from any other nation.
People pay up when they see some value in the product. So any time you accuse Indians of not paying up. Ask your self a simple question.
What value does my service/product bring to the people
If you can't come up with a good answer to this question. Really the problem is with your product strategy.
Not Indians. Or India as a whole.
PS:
In this case 'Tax filing' software/means is worth dime for a dozen in this country.
EDIT : To all people who are downvoting this, Truth is bitter. An MVC site which has a thousand clones or which doesn't bring any value is not bound to succeed.
Seriously ask your self what value you bring to the world or why should people buy from you.
This forces people to spoil their thinking that there is easy money in such places. Most people don't know they are getting into Schlep blindness(http://paulgraham.com/schlep.html)
I know a lot of guys who think they can become millionaires the moment their MVC site goes live. This is the problem.
In general cases. Building anything awesome is difficult, not just in India but any where in the world.
Building things which bring value is even more difficult. Building things which bring value both in physical existence and software requires lot of work and patience.
Unless people understand this, things won't change.
India and other poor nations account for a larger share of piracy worldwide. Here's a somewhat old study but it still serves to prove my point. http://www.nationmaster.com/graph/cri_sof_pir_rat-crime-soft...
Almost all the auto drivers here use the meters that come with the auto. Newer 4-stroke autos have better mileage so auto drivers or auto lending firms buy them and they come with digital meters by default so more autos are starting to get them. I don't know about taxies because I don't use them.
Most temples, churches and mosques here don't.
Buying a glucometer saves a trip to the doctor just for that. It is a reduction of cost and there is no cheaper way to do it. In the case of software however, piracy or a cheaper option is almost always available.
Of course you can go on and on but you have proven nothing. You have chosen to speak of a minority who do understand the value of technology and pay for it. I can also show you people/businesses who use FOSS or legally purchased software in Bangalore. Would that mean piracy doesn't exist here or that it is not prevalent? There is always the outlier class in any society. You cannot depend on them for a viable business in most cases.
Do you know how much booking for taxis happens through emails/SMS and other online systems. The number is enormous. Those who sell, sell. Those who whine, whine.
Coming to your point about Glucometers, again, people buy them because they need them regularly. So they pay for value. Why shouldn't they? I know at least 3 homes around me, and I live deep in Bangalore, not in BTM and Jayanagar types where only rich people live. People in those 3 homes have Nebulizers. They are ordinary middle class people who earn less than me.
Your problem is simple, You refuse to learn from failures. And you believe the problem is with people around not with you. If you have the same attitude you will never succeed in business. Business requires learning a lot from feedback.
Piracy is a global problem, Not just in India.
Your assumption that Piracy is an Indian monopoly is ridiculous to say at the least.
You say viable business cannot be set up in India. From where do you think crores of Indians derive their livelihood from? Have you heard of Jamshedpur an entire city set up by Tata's?
Again as I said, those who know how to do buisiness in India do it by building value. Those who can't just whine.
Lastly code is not the answer to all the problems in world/India. And business success doesn't depend on code alone. It depends on understanding people's problems and solving them. People pay if there is value, not just because its built.
If a software engineer can hop jobs every year without adding even 6 months of value to a company and he submits false rent receipts to save taxes(Which is stealing or fleecing as your describe the national treasury by the way)or when he reads online forums in the day time instead of working(which is fleecing the company by the way) etc.
We should not point fingers at other occupations and pass sweeping generalizations on other people.
This is the classic Indian mentality. We expect the poor to remain poor. An Auto driver is not supposed to earn well. The son of a cab driver like me is not supposed to be an engineer and earning well. And if we work hard and succeed we are assumed to be crossing our bounds. And the traditional Indian crowd can't stand this.
But my point stands true right.
The digital meters sell because there is a demand, and there is a value to it.
Business demands value.
You ask him to refrain from making generalizations, but YOU are the one that is making a lot of them. Nobody said that they don't want you to succeed because you are the son of a taxi driver, there was no need to even mention it in an anonymous online forum. It is YOU who is trying to get sympathy from this fact. Please try to understand what you are doing.
I must say that I agree with asto; you have not countered his assertions, skirted but not tackled his points. It is an undeniable fact that piracy is rampant in India. Whether it is "good or bad for the country" is debatable, but the fact that it exists is not.
True,
By me asking to build business which add value I did a big mistake, but him by pointing the whole nation to be of people who are pirates has done a very great thing.
By the way bashing India to get moments of glory has become fashionable for many Indians these days.
They do it all the time, to get visas abroad or settle down abroad.
If there is so much problem here, why don't you guys leave this place and go and settle down in your promised land.
But I am not able to understand what problem young entrepreneurs actually have.
I know for sure that as a nation we are honest people. We pay for stuff as we always have been.
The problem is simple, India is a different nation and you need to build stuff that solves peoples problem and they will buy those solutions from you.
For a moment I can't imagine why anybody would blame the whole nation just because one start up failed. Or a certain part of the nation pirated something, which by the way happens around the globe. Most of such people are basically wannabe westerners and for whatever reason they just want to run from here. May be they think its honey and milk outside. Or may be they just want to go and settle down abroad.
All that is understandable and we Indians have no problems with that, but don't defame a whole nation to justify your actions. Writing books, blog posts and publicly ridiculing a whole nation just so that you can get your moments of glory outside.
My advice to any person starting a start up in India would be simple and straight. Understand what problems people have and solve them, give them a good pricing and people will buy it.
This is what big successes of India have been doing. This is what Tata's and Ambani's did, This is what NRN's and Premji's or the modern era did. They gave value to people at affordable prices. They built industries and sectors that has fueled India's growth for a decades now.
None of them wanted hit and run success with a tiny 3 web page MVC website and then expected the entire nation to make them millionaires regardless of whether the product they sold was useful to them. They faced numerous failure but they did go on and blame the whole nation for that. They looked internally and solved their problems.
Focus and build stuff that matters. Give a good pricing. The market here is huge. People will buy.
- SaaS is good as piracy is not a big problem.
Small/Medium Enterprise don't see a huge benefit of paying for Technology. Its both a mindset and a cost issue.
We do Tax Returns, so we see how margins are quite low for most Indian Businesses. Paying for software that can be pirated easily might tip them to a loss.
Software cost isn't factored in as a cost of doing business.
PS: I am saying "Indians" because I am quite familiar with the situation here. I am sure though, that things are quite similar in most "developing nations".
Inside businesses? Really? Don't think I have ever seen pirated software at the places I have worked, and I don't believe it's very common. I have seen people "borrowing" software to install on their personal computers, but that's something else.
Is this just in Scandinavia?
'Borrowing' is a neat little alternative to the word 'piracy' :)
1. Pricing. The cost of most software is comparable to its cost in U.S. A windows 7 professional edition costs around 8000 bucks, which I think is pretty high. I am sure most people would gladly pay if they thought it was reasonable. Same with books.
2. Convenience. Most people are wary of using their credit cards or debit cards online. For physical goods, there is Cash On Delivery which is working out pretty well for a lot of companies. Not sure what the alternative is for software thought.
For example, look at Flipkart. They are killing it.
Also could not make much out of the article.
My post is mostly about
- Indian Businesses and consumers don't pay for Technology Products.
- If they want to pay, they don't have mechanisms to pay you online.
- Most people aren't online. They are offline.
>>Cash on Delivery has a lot of issues. I won't elaborate but, customers refuse the sale later on (impulse buy regrets), delayed booking of revenue, costs around collecting and cash reconciliation.
So do other modes of payments. There will always be customers who will want to get a refund. As I said am not entirely sure what the best solution is for non-physical transactions.
>>Indian Businesses and consumers don't pay for Technology Products.
This a blanket statement. Maybe the types of businesses we interact with are very different. From my experience a lot of them are ready to pay well if they see the benefits.
>>If they want to pay, they don't have mechanisms to pay you online. Umm, this is false. There are lots of ways to pay online. IRCTC does this on a decent scale.
All that being said, I agree it can be hard doing business but I don't believe it is any harder than doing it anywhere else. Every market has its set of advantages and disadvantages, but one needs to focus on what can be done instead of obsessing over what cannot be done.
I looked at your site and like the idea. I am sure you must have tried this but have you tried making up deals with IT companies where you do the tax filings for all the people in the company for a bulk rate. A lot of companies do this since the guys collect the documents from the office saving the employees time and your pricing is very reasonable. Also, they are the ones who'd be more likely to understand and pay for this.
Cheers
- Many businesses will send you cheques, recurring payments are PITA, as you have to do "collection". Delayed payments are quite common.
>> but have you tried making up deals with IT companies where you do the tax filings for all the people in the company for a bulk rate.
- We do exactly that. Large employers buy ClearTax on a negotiated price for all their employees. Most people want to transact in cash.
- My point is the infrastructure is maturing very slowly. You can't bootstrap easily. Your startup may die by the time the market matures.
>> I looked at your site and like the idea.
Thanks! :-)
The concept of ecommerce is pretty old in itself. The fact that Indian consumers have woken up so late to it re-emphasizes that Indians resist technological intervention. It is not as if internet penetration, credit card penetration and logistics infrastructure has changed radically in the past year in India. It is the only the investment scenario that has changed. Archit's article in some sense calls for more such investments in other technology and technology enabled products.
>>The fact that Indian consumers have woken up so late to it re-emphasizes that Indians resist technological intervention
Maybe I see things wrong but I don't think Indians resist technology. Its that the technology got here late. Also, its just that it is a different market and different factors at play here.
Its just the beginning. I am sure that its going to increase. A lot.
This is almost like saying Amazon is useless.
Flipkart is doing absolutely amazing job by delivering things at people's door step. And that's not easy.
Code is not an answer to everything.
This is precisely what I said before.
Understand what value you bring to your customers
Don't assume your customers should buy from you just because your webpages loads 0.001ms faster than Flipkart. Understand the total business proposition. Technology is one aspect of it, there are many aspects to business.
Unless the customers feel some value in your product they are not going to buy no matter what hipster technology its built on.
Processing 100s of transactions and dealing with Indian payment gateways requires some kickass technology. They have scores of engineers working on the site's backend.
Why is this wrong. I don't see anything wrong in this.
Don't deals work around the world. Haven't you heard of sites like groupon?
Why are you pulling groupon into this? Businesses offer discounts through groupon. The business itself may be among the worst of its kind or among the best. So the quality of product/service received depends on the business offering discount. If you are hiring the cheapest web-developer in the market however, I can guarantee you that you will end up with somebody incompetent.
Lets take the example of Flipkart. It might not be the epitome of tech innovation. But Flipkart is sheer awesomeness.
Let me tell you why! They might have built their site with php, and they might use MySQL and they might use Java. None of that matters. It doesn't matter that they don't use Python, or NoSQL or Ruby on Rails. It doesn't matter if their webpages load 0.01 ms slower than others.
Let me tell you what matters.
What matters is, somebody with an email can go on their site and order stuff even without a credit card. And they are trustworthy to deliver the good at your doorstep. And they do this with several thousands of customers everyday.
This is what matters! They solved a problem, they do it efficiently and they do that several thousand times a day.
Code is not an answer to all solutions. In case of a business many things matters. Business is a proposition of a many things and tech is one of them.
Merely writing efficient code is not going to make you successful. Although writing efficient code will help you to be successful.
For me, it reads like a cathartic post from a stressed out entrepreneur. Needs to be 'understood' rather than being taken literally.
The gist of the post can be summarized so:
Is it a good idea to start a software products company in India? No, it isn't, because VCs will never fund it and you will never make it by bootstrapping. Even if you do, "fast-followers" will clone your business and get the benefit. Heads you loose, tails they win.
Then we have all the obstacles one has to grapple with. Not least are the unreasonable, uncouth, undiscerning customers who want to free-ride as much as possible.
The future will be better but now it's so bleak... :(
----
Being a Bangalore based entrepreneur focused on Indian enterprises and small businesses (co-founder, Greytip), I can relate to the frustrations but also strongly disagree on many counts.
Yes, there may not be a market for Online Tax Filing due to all the factors Archit lists out, but, it could also be because there are already many players in the domain. Moreover, it is a once a year business opportunity so it's a tougher nut to crack.
As for customers willingness to pay for software, it is all about value for money. A $5 per user pricing, although reasonable in the developed world, will not cut ice in India. A 50 cents per user pricing may yet work.
Which brings us to the key challenges to doing business in India: how do you keep costs low and still make profits, break-even before you break out of runway, and not compromise on quality and service.
Some days you put your head down and get going, some days you silently scream in the dark, and on some days you just rant... ;)
If your intention is hit and run success through easiest means. And then complaining that it isn't happening won't help.
Good things and 'value for money' is not easy to build.
Something like Flipkart is not easy to build(The whole thing with their supply chain, not just the site) and not easy to copy.
And for genuine stuff its not going to be as easy as heads you loose, tails they win.
A more important question to ask
Is your success that easy to replicate? And if it is, what is so great about your work?
It was a rant. $5 pricing once a year. If that's outside of the affordability range, my business will be in trouble. Most people pay though, so I am not too worried.
VC funded business is fine IMO, just be prepared if you create a market, fast followers are coming. True for most companies across the world I suppose(Expedia, Kayak, Orbitz). Hence, I wrote about brand building, while you create value.
I think the takeaway is:
"the key challenges to doing business in India: how do you keep costs low and still make profits, break-even before you break out of runway, and not compromise on quality and service."
I think this is true for across the world. I mean everyone loves a deal! So maybe create a business for the richer part of the world.
Mostly food for thought. I like what GreyTip is doing.