“Dude, I’ve come up with an excellent startup idea.”, Kapil said to me excitedly.
“What is it, this time?” I replied with a little smile.
“Kritesh, I was doing this e-course on Coursera. It is an online platform which hosts courses offered by renowned universities in the world. I’m planning to build something similar for India, where people can enroll and attend different courses online. What do you think?”, Kapil asked me impatiently.
In the last three months, Kapil has come up to me with at least ten different startup ideas. He has been working as a full-time consultant in a fortune 500 company for past two years and now he is desperate to start something of his own.
“I think it’s a good model. But have you checked whether there are any existing startups in India which are working on the same concept and leading the industry.”, I asked Kapil.
“There are few startups which are working on the similar model. And there are a few international platforms like Udemy which provides a similar online course hosting platform. But none of them is too popular in India.”, Kapil answered while rolling his eyes.
“Hey, wait. I just remembered… Have you heard of Byju’s? They provide a similar eLearning platform for online courses like UPSC, CAT, GMAT, etc.… And yeah, there’s one more popular portal- Khan Academy”, I replied.
“Yes, I have heard of them. They are in the education sector for the past many years… But this model is really profitable, Kritesh. India is a growing nation with not so many quality education options available for the students. People are ready to spend a lot of money for their kid’s education. If we are able to build a better product, we will definitely be able to get a lot of users on our platform.”, Kapil said. By ‘we’, he meant himself and one of his colleague who is also looking for starting his own startup with Kapil.
I could also notice a thrill in his eyes. However, I had already seen the same thrill when he was explaining his last ten ideas.
“I’m not sure, Kapil. I mean, there are already many startups which are doing the same thing. And you are not even innovating enough. Just a little modification in the existing model will not be enough to get people’s attention.”, I replied empathetically.
“But this business model is very profitable.”, Kapil seemed to be stuck at this point.
“Maybe it is. And maybe you will even be able to get decent traction. However, I’m not sure about your vision. Here you have to decide whether you want to become a small fish in a big pound or you want to become a big fish in a small pound… Even if you are able to get 5–10% share of this industry, still you won’t be able to grow much as there are already many big fishes in this industry.”, I tried to explain my thoughts.
“What you want to say, Kritesh? Is the business model not good enough?”, finally, Kapil asked the question which I was trying to avoid.
Out of the past ten ideas that Kapil approached me, I only showed interest in three (which he anyhow dropped because they didn’t seem little unrealistic to him later). And that’s why I didn’t want to give any more disheartening answer.
“I don’t know, Kapil. I’m not an expert in this and I’m also learning like you. All I wanna say is that there are already many copycats in the Indian startup economy… If you wanna do it, go for it. I won’t discourage you. After all, it is your idea and you must have researched a lot about it before approaching me. However, I believe that if you want to build a successful startup, then you need to innovate more…”, I concluded my answer.
In a study by the IBM Institute for Business Value and Oxford Economics published at “Entrepreneurial India,”, it is highlighted that 90% of Indian startups may fail within the first five years. And the most common reason for the failure of the Indian startups is the lack of innovation.
Here is the exact context from the report:
“Seventy-seven percent of venture capitalists report that many Indian startups lack pioneering innovation based on new technologies or unique business models. Rather, they are prone to emulate already successful ideas from elsewhere.
While such mimicry can create value by fine-tuning already successful concepts to local markets, generally it precludes sustainable expansion beyond India’s borders and keeps barriers to competition — from home or abroad — low.
Consequently, despite the country’s large market size and robust startup activity, Indian startups comprise only 4 percent of globally recognized unicorns (startup businesses valued at USD 1 billion or more).” [Source: Entrepreneurial India]
The report reflects that 77% of venture capitalists surveyed believe that Indian startups lack new technologies or unique business models.
But we Indians are innovative, aren’t we? Let’s find it by studying the recipe for the past successful startups in India.
Recipe for Past Successful startups in India
The recipe to build a successful startup in India in the past was pretty simple. It’s a five-step process:
- Look for a big hyped market.
- Copy the model from the established companies in the United States.
- Raise funding and take angels & VCs on board.
- Scale the business in Indian territory.
- Keep in mind the exit strategy.
This recipe has been successfully used by multiple Indian startups. For example, we have Ola for Uber, Flipkart for Amazon, Gaana for Spotify, OYO Rooms for Airbnb etc.
Anyways, please note that this recipe is only viable for copying those startups which are not specifically targeting Indian audience. For the popular startups like Google, Facebook, Twitter or Youtube, there are no copycats in India. After all, how the founders can copy and scale the idea which is already dominating the Indian market?
Problem with the old recipe.
The biggest problem with the old recipe is that it was good only in the older time. In the past, there was a need for these products since we lived in a world of scarcity.
However, with the rise of the Internet and technology, now there are no boundaries for the global startups. Many of these startups like Uber & Amazon have already captured a big market in the Indian market and many more like Spotify or Airbnb are almost on the door.
Moreover, another problem is that- there are not many big models left to copy-cats now. Today we live in a world where we have too much of everything. From online payment to booking a flight, we have an option for everything at least 10x times.
Therefore, the only alternative available to build a successful startup now is by innovating. However, this is something where most Indian startup founders are lagging.
According to the Global Innovation Index list (GII) 2018, India ranks 57th in the world, which is 40 places behind China. (Source: Global Innovation Index). And this may be the reason why China (which is also famous for copycat startups) has built its own mega-startups for even the popular ones like Baidu for Google and Alibaba for Amazon.
What’s the solution?
The biggest reason why Indian startups fail and no one is waiting for their startup is that they are not innovating enough. Just making a little change or slightly improving features for the existing models is not enough to attract customers.
These days, everyone is building a fintech model with slightly improved payment system or a little easier peer-to-peer lending app. But we already have 10x apps solving the same concern.
When Steve Jobs was presenting his iTunes Music store to the people, they all had tons of suggestions on how to improve the store. The people kept raising their hand saying, “Does it do [x]?”, “Do you plan to add [y]?”
Finally, this is what he replied:
“Wait wait — put your hands down. Listen: I know you have a thousand ideas for all the cool features iTunes could have. So do we. But we don’t want a thousand features. That would be ugly. Innovation is not about saying yes to everything. It’s about saying NO to all but the most crucial features.” -Steve Jobs
And this is where most of the Indian Startups are missing out. All are busy building little features. But no one is innovating enough to build the crucial one.
If you want to start a successful startup, you need to innovate things. Simply ignore the little tweaks or improvements that are not a must-have. Until and unless you are innovating enough, and building a clear, noticeable and magical product, no one gives a f**k about your startup.
Instead of trying to build a startup, build a revolution. Apple was a revolution. Microsoft was a revolution. Amazon was a revolution. People already have too much of everything and too much of choice. Why should they care if you bring a ‘Just Another little-modified’ product?
Overall, stop modifying and start innovating!! Build a revolution!