if there’s one lesson i’ve learned from my 3-year-and-counting entrepreneurial stint in india, it’s that market size matters. vcs love it more than their mistresses, businesses cannot even begin to contemplate revenues without it, and frankly, even shitty ideas have half a shot if the market is juicy enough. many of my vc buddies (i know, you’re surprised i have vc buddies) have told me personally that they come across some smart teams with good ideas…but in the wrong market, namely, india. many of them have even admitted to me that when they were fundraising, one of the things that was a slightly easier sell to the lps was that india was a country with a population of over 1 billion people. lps were sold the lip-smacking dream of over 1 billion potential customers for the right ideas. this is where india diverges a bit from many other countries that are currently cultivating some great startup ideas. why is india different? my theory is simply this: the delta (or difference) between what many consider to be india’s market size and its addressable market size is vast.
i see this fallacy most starkly when discussing mobile opportunities or mobile businesses in india. again, i go back to discussions with vc buds to establish some context. many have now retreated back to their shells and are not actively and excitingly deploying their funds; or they’ve taken their fund deployment strategy upstream, and have essentially become more private-equity’ish in investment philosophy (less risk). the addressable market size reality has been a rude awakening; but most do still have mandates to invest early stage in mobile. the mobile market in india is closing in on just below half a billion. that’s almost twice the entire population of the united states. how many of those mobile subscribers are on prepaid plans? how many of them are below the poverty line? how many of them are unemployed? qualitatively, how many of them are just struggling to get a 4th grade education, can’t afford medicine for their illnesses, and frankly, don’t give a shit about anything except making sure their mobile allows them to talk to their circle? the point i’m trying to make is that when we sit down and try to draft up our fancy business plans, our best estimates of the addressable market size are, in actuality, just some bullshit pipe dream. the fact is none of us really know. there are stark quantitative and more importantly (and less measurable) qualitative realities in india that choke our efforts to understand who might actually use the shit we’re trying to sell to them.
i often tell anand that our next thing must target a more predictable and larger addressable market. we’ve been lucky thus far. but sometimes, you just have to put yourself in a position to get lucky. sorry, my entrepreneurial peers; india is not that place.
Good point.
Vijay
Now, thats what I call letting off some steam. The engines halted at the station and the steams come off after travelling for three years.
Well, Deep, I am surprised to not see any comments here, but frankly I couldn’t agree more with you. The market is very difficult for online/mobile entrepreneurs and you need to have more talent than houdini to make money
hi deap,
nice to read your article on the indian startup scenario. well, there are 3 things here…
social media – ( facebook, orkut , all those that come under user participation )
search ( include mail ) – ( google, ask laila, guruji…._
e-commerce – ebay, amazon…..
i consider these 3 essential pillars of the internets.
now all these are interdependent!
what is the future of e-commerce in india. can you give me more insight on it. i intend to start an e-commerce site selling creative , communicative print products.
do lemme know cause your post gave me a little shiver!
Hi,
I am not sure how much this question of mine actually makes business sense but still I wanted to ask this to gain some knowledge from you. Why you didnot try to penetrate into some other countries market as well as in India.Even if you get a few people in US/UK/Australia etc it can very well surge your revenue margins.I know there are companies already there doing similar things, but there is no harm in launching there since you already have the product and you can just modify a little bit and launch a new version there.What is your opinion on this.
I completely agree with someone after along time! Being involved in almost 5 ventures in New Media, Mobile VAS, Web 2,0 space over a decade now. I think the time to draw up fancy business plan, looking at master card reports and static’s are over. Either you be there or you be here.
Most of our drivers and servants are now using more expensive Mobile and VAS services maybe regional, hindi, marathi, udiya rigntones, and much more. We are more or less using content thru our social connections, wif fi, bluetoth and friends f friends, I can’t even remember the last Time I bought anything from Vodafone ever?!!!
Deap Very well nice entry. I landed here thru my Aloo Techie newsletter!
i’ve guys in my ofis who earn abt 100$ a month but still somehow spend abt 8$ on mobile stuff (ringtones, mp3)…meaning they are sooooo attached 2 their fones, their cellfone is their only ticket to amusment, entertainment et al. if u knw whhat i mean.
Also i believe the payment (Credit card) systems in India are not very mature.
So revenue recognition is also a challenge.
There *is* a market, even an addressable one. Just that it does not look, feel, think, pay along the lines startups have assumed based on how-it-happened-’there’.
Lotsa “startups” succeed around here – just not yet the sexier web-tech kinds. But the models will emerge, especially as business sense necessitates getting out there and understanding the real markets, and the creation of models, price points and delivery channels that support these.