When I'm talking of the startup scene in India, I am, somehow, doing a close comparison between the Silicon Valley startups with their Indian counterparts to get the message clear. So here is the good, bad and the ugly.
The "Startup" tag
For some reason, most of the Indian startups love to be a startup, and take pride in being one FOR YEARS. I recently met a guy who runs a medium-scale web development company in Rajastan, India. I was surprized when he introduced himself as the CEO of a 6 year old startup! Now that's like calling someone a 40 year old baby! I am yet to understand the reason behind it, but I dont see any logic. If that was a successful marketing trick, why would Google leave it's "startup" status after 4 months of it's inception?
Wikipedia says:
“A startup company or start-up is a company with a limited operating history. These companies, generally newly created, are in a phase of development and research for markets. They have an uncertain future, and may result in a spectacular success, or failure”
We, at Startup School, try our best to help startups turn into successful businesses, but the case if reverse in India. The startups are sort of emotionally attached to their startup status. Wierd.
Funding
Another surprising thing about Indian entrepreneurs is that they start thinking about getting VC funding and finding angel investors even before they register the company. Or even worse, the founder takes a personal loan to fund the business. One main reason behind this maybe the mindset of making quick money with their ventures.Most entrepreneurs visit startup events simply because it gives them easy access to the VCs.
What they need to learn is that they should try to sustain with their personal savings, at least for the first couple of months. Look for investments only if they are really under-equipped, and not because they think having a fancy office in a metro is cool.
Most of the startups I know, do not need funding. What they really need is mentorship. And if they disagree to it, it's because they don't believe in their product themselves.
Entrepreneurship
Merely registering a company (or just a $10 domain) doesn't make a good business. This is again something Indian startups need to learn. Some of the startups are started by people who are working in other companies! They work for their startup part time, and on weekends. That's definitely not going to work. I am not against trying, but am against calling those ‘casual’ ventures a startup. To me, it’s an insult to all those entrepreneurs who are taking the venture full time at the risk of personal/professional life (no matter how good/bad the venture is).
Honestly, except for a few startups, most of them don’t even seem to be a serious effort at all. Infact, it won’t be wrong to say that most of the startups (or lets call then dotcoms) are like “Look mom! I am a CEO now!” sites and lack the basic thought process that should go inside building a great product.
Thanks to ready made CMS tools, primarily Wordpress & Joomla, many of these startups don’t care to exercise their creativity and have a half-baked offering (which will eventually die out).
Will we ever see a global consumer product from India? Forget about global, lets get local – Will we ever see a successful “local” consumer product from India (or will it be the same old Google/Yahoo?)
Piracy
Now it gets interesting. Most of the startups I have worked with, were using pirated softwares illegally. And I'm sure it's rampant all over India. What's shocking is, in an interview for system administror, the first question he is asked is whether he knows how to "crack" Adobe CS or MS Visual Studio. This is indeed a cost cutting measure, but this makes a bad start. I wont write much about it.
Payscale
Another important aspect of Indian startups is their reluctance to pay well. They hide facts about the pay range and badly negotiate with the job applicants. In fact the major job of the HR executives is to hunt down candidates working currently on a low CTC and offer them a 10-15% hike. That's way lower than the industry standards. The average annual salary of startup employees hovers around $5000. That's ridiculously low and results in substandard performance of the employee, and in turn, the company.
Recently, the companies have started taking advantage of the recession. Lowering salaries and blaming it on the economy/market conditions. They know that their employees won't quit fearing the market situation, where getting a decent job can be difficult. And they stick to the company for job security.
Working Hours
Most startups work 6 days a week and force their employee to work for 10 hours a day, or even more. Being a startup, they keep their offices open 7 days a week and sometimes the employees have to work on weekends too. What the startups do NOT realise is that overworking breeds underperformance.
Did i miss something?
I am sure there is a lot more to Indian startups then what I have mentioned. If you have something in your mind, let me know via comments.
UPDATE: There is a second part of the story here, written exactly a year later.
Cheers!
Arun Pattnaik.
Supercool School
