“If you want to build a $100B Indian company, stop being proud of jugaad.” -Amit Singhal
“Unless you ask yourself troubling questions and stumble across troubling answers, you will not build a long-lasting company that will outlive you.” noted Amit Singhal, a renowned researcher, engineer, and philanthropist as he addressed the gathering at Kalaari’s Annual Summit 2019*.
Amit oversaw the development of Search at Google for over 15 years, during which Google’s search algorithms became what it is today. His family story is that of incremental success over generations empowered through education. Hence, it is only fitting that Amit founded the Sitare Foundation in 2015, where he empowers underprivileged children through education.
Apart from education, Amit’s other passion is building tech companies for India’s tomorrow. Amit noted that during his career, he has had the privilege of seeing companies being built in Silicon Valley and in India, where he served as an investor, mentor and guide to various companies. He noted,
“I love India and I am giving back everything I have ever made to the country. I invest heavily in India and am extremely bullish when it comes to India.”
India’s challenges
While the Indian startup ecosystem has grown in leaps and bounds in the last decade, Amit believes that there is room for improvement and some areas of concern. As a techie at heart, Amit believes that entrepreneurs should have the ‘engineering mindset’ of always trying to fix things. He cited the example of an engineer who responds to a ‘Great job done’ annual performance review with,
“Don’t tell me the good stuff, tell me what needs fixing”
Amit believes that irrespective of the stage of your startup- pre-seed, seed, Series A or beyond- the first question that every entrepreneur should ask themselves is, “What do I bring to the table?”
While such introspection can be troubling initially, Amit believes that this mindset will help founders maintain discipline and build long-lasting companies.
This is what founders in Silicon Valley do well. They introspect and build a company on their strengths. If they are first movers in a space, then they look to build companies with strong network effects or sticky sales channels to capitalize on their head start. If the company’s strength is in technology, then they look at the best ways to generate vast volumes of good data. Successful companies are able to generate deep insights or data from their unique strengths and are able to plough that back to improve their products and offerings. Amit half-seriously and half-jokingly said,
“Without data none of the big buzzwords of today, AI, ML, Blockchain would exist or work.”
The dangers of jugaad
Based on his vantage point of having seen companies across the globe, Amit believes that technology stacks are somewhat lacking in India. He believes that there is a big need for India to build better technology stacks or we will face problems five years down the road. Amit noted that one of the key barriers holding India back is our love for ‘jugaad’. He said,
“We are still living in an era of the 60s and 70s where resources were low, and we have not yet liberated our brains from that low resource economy. The intriguing thing about India of today is that culture eats strategy for breakfast, lunch, and dinner. We are(still) proud that we are a jugaad culture.”
While jugaad can get you a working model, a more structured approach is needed to build elegant solutions that can work at scale. India now has better access to resources- capital as well as talent. Amit believes that if we are going to become the third biggest economy in the world, we have to stop being proud of jugaad and instead focus on building for excellence.
The need to go global and the Israel-China chasm
While there is a big need for Indian startups to think global, Amit currently sees Indian companies stuck between what he like to call the ‘Israel-China chasm’. With an estimated population of under ten million people and the limited growth opportunity in their domestic market, startups in Israel have been forced to go global from day one. On the other hand, China has GDP of almost $9,000 per capita and a population the size of India allowing it to build several companies worth $50 to $100+ Billion valuation. Amit noted,
“We(India) behave like China but don’t realise that of the 2.6 trillion dollar GDP that we talk about, the bottom 95% is not yet available as disposable income to spend on luxuries. Most of the income currently goes on subsistence.”
So, Amit believes that many startups in India overestimate the addressable size of the Indian market and hence don’t have global ambitions. The conservative number of the Indian population that can spend on luxuries today is most likely between 50–100 million. But this is changing rapidly. A recent study by UNDP noted that over the last 10 years India has made monumental progress with the poverty rate reducing to half, with over 270 million people coming out of poverty.
To build a truly valuable company, a strong tech stack must be followed by great distribution channels. Amit cited the example of the capital and effort a startup will need to reach 10 million app installs. An app install through Google or FB can cost anywhere between $1- $5. On average, the retention after 30 days for most apps is 10%. Imagine how much funding a company will need to get to 10 million users inorganically. Amit said,
“Hence, distribution is King, and founders need to have strategies for scaling…. It will be hard to build $100B Indian companies without focusing on excellence and going global.”
Watch the entire video of the session here.
The Kalaari Annual Summit- “Every year, Kalaari hosts a Summit that highlights the India opportunity and the impact that start-ups have on the ecosystem. Over the years, the Summit has become a seminal platform for industry thought leaders to engage in dialogue on growing India’s digital economy. This year our theme was #HindustanHamara, where we discussed how startups are embracing India’s diversity and building“Uniquely Indian” business models to enable inclusive digital growth. Read more about the summit here.”
Acknowledging Harshith Mallya, a contributor to this article. Harshith is a Kstart fellow.
