ANIL ADVANI, INVENTUS LAW@ADVANI_ANIL MARCH 17, 2019 3:34 AM
While I spend a majority of my time in Palo Alto, I have also worked extensively with hundreds of Indian startups, helping them set up their companies in Silicon Valley and connecting them to partners in the US. Experience has taught me that tech leaders in these two tech regions approach business in very different ways. As India’s tech ecosystem continues to grow in importance, it’s important that Silicon Valley companies understand these differences and learn from them. After all, India is now Uber’s second largest market, and Amazon and other technology giants are investing billions of dollars in India to take advantage of the growing opportunities.
Here are a few characteristics of Indian entrepreneurship that anyone thinking of expanding to the Indian market — or beyond — should be familiar with.
In India, most entrepreneurs grow up with the concept of doing more with less. While founders everywhere are laser-focused on building their venture, Indian founders tend to depend more on their creative and hustling skills to get them to the next level. It’s called the “jugaad” (Wikipedia defines jugaad as a “do-it-yourself” or “hack”), and most Indian founders are used to deploying jugaad in order to get things done in typically competitive situations with comparatively fewer resources at their disposal. Most Indian founders are also frugal. When they raise their first $1 million in seed money, they are not going to spend it on real estate, foosball tables, higher salaries or upgraded offices; they are conservative with their spending, both on others and on themselves. Silicon Valley founders competing in emerging markets can learn from this approach.
2. The hardening power of bureaucracy
Within the Indian ecosystem, regulatory framework and investment cycles are not as mature as in Silicon Valley. Having to deal with Indian bureaucrats from early on hardens Indian founders’ negotiating and haggling skills much earlier than their Silicon Valley competitors, who work from the comforts of a very developed infrastructure with established legal, tax, and regulatory systems. It also sharpens their instincts as they are less likely to trust the system and more likely to do their own diligence given that the cost of not complying with arcane rules and illogical procedures can be prohibitive and sometimes lethal. The bureaucratic challenges founders face run the gamut of the startup ecosystem: having to rely on inexperienced legal and finance professionals, dealing with demanding and overreaching investors (who many times require personal guarantees and indemnities), and dealing with the overall lack of trust in the systems, processes, and ethics. Developing patience to conquer these challenges makes them battle-ready early on — if they can deal with Indian bureaucracy, they can take on any challenge in the world! US tech leaders should be prepared to be more patient and use local resources and experts in dealing with many of these local issues instead of trying to apply what works in the US.
3. No MVP
While many founders in Silicon Valley and India both start out as engineers, Indians usually have more engineering and less business expertise than their US counterparts. This translates in a few different ways, but it’s easiest to see when you look at how an MVP is released. In India products are developed with more engineering and less consumer focus; you’re less likely to see a product hit the market before every single bug and kink has been worked out — a very different model than in the US, where products are often required to be on the market by a certain date and then are updated as needed based on consumer feedback. This can be both good and bad, but leaders in both regions need to learn from each other on achieving the right balance between creating the perfect technology product while also adapting it to what consumers want and will pay for.
4. A track record in different markets
The way things are marketed, priced and consumed in India is very different than in the US. Indian CEOs are more plugged into pricing differences because most have already worked in Silicon Valley before going to India to start their own companies there. They have the perspectives of both markets, of building and selling technology products in US and European markets, as well as adapting the same technology for consumers in the emerging markets. This gives them a unique advantage over Silicon Valley founders who don’t understand or focus on developing their knowledge on how consumers want or consume tech products in emerging markets. For example, WhatsApp is a huge part of social commerce in India and other developing markets, particularly in the small-and-midsize sector, whereas very little business is transacted on WhatsAspp in the US and, therefore, very little innovation or development takes place along these opportunities for US consumers. US tech founders need to go deeper into learning how small to mid-sized businesses operate in India in order to build products to meet their unique requirements, challenges, and opportunities.
5. Agility in claiming secondary markets
Indian CEOs tend to be more international in their perspective and experience. They frequently attend conferences and talks in different parts of the world, as these become more viable markets for their products. Indian founders and early-stage technology companies are much more aggressive about expanding into smaller markets in Far-East Asia, Africa, the Middle East and Europe. Silicon Valley companies tend to wait much longer and get to a more mature stage before contemplating international expansion — in fact, most Silicon Valley companies don’t even venture out of the Bay Area until they have raised their Series C/D financing rounds. This is one of the best opportunities I see for partnership between companies in the two regions — growing a startup into a global enterprise is much more effective when you have multiple teams who deeply understand the different markets you are going after. The most successful ventures in the future will be built with a combination of Indian and US leaders working together.
Everyone has different perspectives on the place of social media in business, but Indian CEOs are very connected via social channels. That’s how they share information, and they’re not shy about it. Startups need publicity, and any publicity is good publicity when you’re a young company. You see a lot of seed-funded company founders in India talking at conferences and being very open about their current and future plans; everybody in the Indian tech ecosystem gets to know when a startup gets seed funded, releases its beta product, hires a key employee, or achieves any initial milestone. All you have to do is show up at a cocktail party in Bangalore and you will get to hear about the latest event in any young startup’s life that you care to learn about. In comparison, Silicon Valley companies tend to stay in stealth mode for much longer even after raising multiple rounds of seed funding, and the founders don’t “come out” until at a much later stage of development.
India founders are also very tight knit and tend to help each other out with advice, feedback, and many times initial investment; most times doing that on social media like Facebook so that they can share their knowledge and involvement with others. I see almost daily posts on my Facebook feed from founders soliciting ideas and feedback on their product and venture and getting very eager and deep participation from other founders, including many seasoned entrepreneurs. In Silicon Valley, at least the more successful founders tend to keep to themselves and only get involved in companies they are investing in or otherwise have equity stakes in. They are not as eager to share their knowledge and advice publicly and shy away from interacting as much on social media. Silicon Valley CEOs looking to do business in India should be ready for incessant publicity and profiling in Indian social media.
Tech is competitive and it’s rife with amazing ideas, innovators and talent — and it’s no longer confined to Silicon Valley. Founders everywhere are extremely driven. With the globalization of the industry, California’s best and brightest can learn from Indian CEOs who have a different and more global perspective on business and technology.
Anil Advani is founder and managing partner of Inventus Law, a global technology firm that represents high growth startup companies, founders, angel investors, incubators, accelerators, and venture capital and private equity investors. He has represented over 3,000 startups, angels, founders, and has been involved in approximately 500 financing and M&A transactions.