
Zen and the Art of Surviving India's Startup Crash - vatsal
https://www.bloomberg.com/news/articles/2016-10-25/zen-and-the-art-of-surviving-india-s-startup-crash
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blizkreeg
Compared to any other market for Internet startups in the world, India is the
least homogenous (type of consumer) and shallow of them all (when you measure
it against the size of the population).

Good-quality Internet/smartphone penetration is not as deep as you think. If
you think it's a market of 1B people, you're sorely off the mark.

Then there's the issue of language. 10% or less of the population speaks and
understands English.

Past that, there's the issue of credit cards/digital wallets and willingness
to pay for online services (not just goods).

Finally, while there's a massive middle class that does access the web on
their phones, most of their usage is limited to facebook, whatsapp, and the
like.

There are likely less than 50-75M english-speaking, smartphone-enabled,
credit-card/wallet-enabled consumers.

With time this will get better, but for now I feel like irrational exuberance
has gone a little too far in funding 4-5 similar startups in a single
category.

~~~
fractalb
>Then there's the issue of language. 10% or less of the population speaks and
understands English

Why restrict yourself to do business with only english-speaking people?

~~~
adventured
Not sure what the implication was meant to be by the parent. That English
speaking demographic would also tend to be a more highly educated, wealthier /
higher income segment of India, linking up with the rest of the parent's
reference about having a smart phone + credit card etc. I'm not sure what
Internet business could possibly generate significant profit from the bottom
750-900 million consumers in India today (median ~$500 annual income in that
group). They simply do not have enough disposable income and won't for a few
decades yet. Nor are they a homogeneous consumer group that you can network
capture (get the first N and the rest come in easier and easier) all or a huge
part of (spending wise). The top 200 million consumers in India however are
increasingly very enticing for a traditional tech company. The ideal would be
to start with the higher profit, higher margin customers in the top
demographic, and as India rises accumulate the customers that move upwards in
income. It's exactly what eg Amazon will ultimately do.

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cyberjunkie
The Indian customer is extremely price-centric. Price trumps everything. The
biggest startups today are the online retailers. The Indian customer switches
to whoever offers the best deal, not the best convenience. It was Flipkart,
PayTM, Snapdeal, then Amazon. People no matter how financially well off or
educated or technology-friendly, will still squeeze every penny's worth out of
a business and will go any distance for a good deal.

Startups we've seen use funding to attract customers. They offer attractive
deals, and when they're done, the same customers move on to the next startup.
Startups will be popular as long as the price is right, and as long as there
is funding.

There are going to be some successful startups in India that won't be in the
limelight. They'll be small and won't take over the country, or the world.

~~~
gnipgnip
How exactly is this different from the US ?

You think people will rush to Amazon, if overnight becomes just as expensive
as B&N ?

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adrianN
In Germany, book prices are fixed. Buying a book on Amazon costs exactly as
much as buying it from the small shop at the corner. People still prefer
Amazon and book shops are dying.

~~~
gnipgnip
I see. Are book-stores far and in-between (why is it inconvenient ?).

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pjc50
No density of bookstores is going to be able to match ordering from inside
your house.

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gnipgnip
> She was convinced that local startups would have a fundamental edge over
> foreign competitors.

No they do not. They had a head start from setting up a city-wide logistics
company, but other than that there isn't much else.

Localization ? None of them localize. All of them are meant to serve the
English-speaking classes. Flipkart said earlier that "churan" and "hing" don't
count for "real" sales [1].

Honestly, I basically see multiple foreign entities fight it out. Ironically,
American cos generally tend to localize far more than Indian cos (not AMA
though).

[1] [http://m.thehindu.com/business/Industry/rivals-find-it-
shame...](http://m.thehindu.com/business/Industry/rivals-find-it-shameful-
selling-products-unique-to-india-amit-agarwal/article9258713.ece)

