Although most tech startups still focus on services, a new trend puts products and innovation center stage.May 19, 2014
A Friday afternoon crowd of young men and women packs a microbrewery. The Wi-Fi is free and the music is loud. Jeans and t-shirts abound. So do cell phones and conversations about technology, startup funding and business strategy. Outside, a black Porsche speeds by.
It could be a scene in any high-tech enclave in the United States—were it not for the torrent of motorbikes and auto-rickshaws that also careens past, along with stray dogs and a blue-horned cow foraging roadside. In fact, we’re at Toit—one of several brewpubs in the trendy Bangalore neighborhood of Indiranagar.
Dubbed the “Silicon Valley of India,” the southern Indian city of Bangalore is a high-tech hotbed where multinational Titans from Google and Samsung to Microsoft and IBM maintain large outposts. And while outsourced tech support services are still a major turbine in India’s economic engine, innovation is increasingly the name of the tech game.
“Yes, we were predominantly a services and support country, but that’s changing,” says Raghu Mohan, 25, a product manager at HackerEarth, a startup that helps companies recruit programmers. “The age of the product companies has arrived in India and we will slowly see more of them.”
Rise of the Product Startup
Today, India is home to more than 10,000 technology-based startups, with up to 8,000 new ones sprouting every year, according to YourStory.com, a startup in Indiranagar that promotes the country’s entrepreneurial ecosystem. Factoring in survival rates, that’s an effective growth rate of 25 percent to 30 percent, the company says. Most are based in Bangalore.
“The startup climate in Bangalore is extremely hot right now,” says Tushar Vashisht, 29, co-founder and CEO of Indiranagar-based startup HealthifyMe, which helps people track their nutrition and lifestyle. “Ten years ago, starting up meant large capital and major infrastructure plays, whereas today it’s a very democratized process.”
If Bangalore is the heart of India’s vibrant startup scene, then Indiranagar is its pulsing ventricle. Here, many residential houses double as bare-bones offices for scrappy startups run by entrepreneurs working long hours and riding a tide of creativity. A growing number of startups are bringing new products to market—most recently in mobile, healthcare and education.
“We’re at a point where there is actually great innovation, great ideas being seeded and built by Indians in India with Indian money,” says India watcher Louis Selincourt, a managing partner at Better Faster Further, an executive coaching company in the San Francisco Bay Area.
Opportunity From Chaos
Bangalore’s fertile ground for startups owes much to Silicon Valley. The outsourcing movement has not only forged close ties between both places, it has also contributed to a flattening of the technology playing field.
“Entrepreneurs here are completely up to speed with the latest technologies in the States,” says Shripati Acharya, co-founder and managing partner at AngelPrime, a seed fund and one of several tech incubators in Bangalore.
Little wonder that product companies stateside are turning to Bangalore to hire skilled development teams. Case in point, Los Angeles-based dotstudioPRO, a social video platform that democratizes the distribution and monetization of video. CEO and Co-founder Joe Pascual says he had much greater success finding good developers in Bangalore than in other Indian cities.
“Just evaluating résumés, it’s completely night and day,” Pascual says. “We’re looking at people who have minimum four years’-plus experience and have already been exposed to technologies that are even brand new to the U.S.”
Further enriching the startup soil—perhaps counter intuitively—is the lack of organization that pervades Bangalore and India in general. Exhibit A is redBus—one of the biggest startup success stories in India. In 2005, the Bangalore-based company took on the overwhelming chaos of the country’s bus ticketing system. Today, it is India’s top bus ticketing platform, allowing the country’s 1.2 billion inhabitants to choose from over 1,500 bus operators and 80,000 routes.
“Where there is chaos, there is opportunity,” Acharya says. “And India is highly chaotic.”
Risking It All vs. Playing It Safe
With a failure rate of about 75 percent, versus about 50 percent in the United States, according to YourStory.com, the startup route is not for the faint-hearted. Some say it’s a bit of a fad.
“It’s quite romantic for young adults when they see only the success stories,” says Jivtesh Singh Chhatwal, a 25-year-old software engineer who flirted with a startup in college before landing a full-time job at Cisco’s huge Bangalore campus, and who hints he’s not done with the startup scene yet.
Indeed, there’s no denying the lure of the male-dominated startup world, even for some Indian women.
“Sometimes you just get tired of a monotonous way of living,” says Nidhi Tyagi, 26, a female software engineer at Cisco in Bangalore. “You have those three or four years before you turn 30 and settle down where you can take that risk. And if it doesn’t work out, it’s OK.”
For Aishwarya Jain, a 23-year-old in charge of business development at HackerEarth, the startup option was a no brainer. “I wanted to break and make things, and that is only possible in a startup,” he says.
And what of security? “That doesn't really matter,” Jain says. “I’m still very young.”
For Mohan, working at a big company pales beside the opportunity to do what he calls “big work.”
“There’s so much at stake in what you do at a startup,” he says. “You mess up, the whole company messes up. You do well, the whole company does well. That sort of thing keeps you burning all the time.”
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