Time is priceless not because it passes away, it’s because it leaves behind priceless memories. I still vividly remember my last few days in Hyderabad before shifting to the so called silicon valley of India- Bangalore. It was during my last few days that I attended TheRodinhoods meet up in Hyderabad. It was a fantastic meet up where everyone spoke their heart out unlike in front of investors. Few had desires in their minds and few had confessions to make. It was an unusual gathering to be described in words.
It was during that discussion when we spoke of our start-up Bazaarfunda and our unique way of simplifying consumer decision making by aggregating online reviews and analysing it using our in-house text analysis tools. Few people were excited by the concept and gave valuable suggestions. In the midst of all the conversations, one was with the founder of Paratha Post who told me to check out an article written by Haresh Chawla where he expressed the same consumer pain point. I read it not once, but thrice and pondered over it for weeks.
It was a fantastic article portraying the Indian copycat and cash burn based start-up scenario. The facts were put together brilliantly in conversational tone. I honestly agree to the fact that businesses can’t be solely built on funding. Revenues need to roll out and take care of the expenses sooner or later. Consumer is the king and solving their problems in reality is the only way to stand out. But what was astonishing in the entire article was that it was generalised. There are many start-ups solving real consumer pain points.
There was a para stating, “For example, not a single e-commerce company has created a simple usage and buying guide. There is no content to help people choose their TV sets or smartphones. The strategy seems to be to just overwhelm them with 250 smartphone models and bribe them with a discount. In five years, most haven’t figured that their site can be a favourite place to shop if it actually helps consumers make a decision.” This is a highly generalised statement.
We at have developed text analysis tools to extract and analyse consumer reviews parametrically so that consumers don’t have to visit multiple websites and get confused by reading the reviews. What we realised that in the product purchase cycle, the most time-consuming phase is the product selection followed by price comparison. So we wanted to address both the issues and help the consumers to decide what they should buy and from where they should buy.
We would soon be expanding to 40 categories like beauty and personal care, home appliances, service based decisions to name a few. But you were oblivious of the fact, right? So similarly there are many like us solving or trying to solve real consumer pain points.
So couple of questions arise.
1. Why are most of the start-ups copycats with no product differentiation?
2. If such a start-up exists why is it unknown to many? I won’t put the entire blame on the founders as there is other side of the story too. Let me today state the plausible reasons.
Venture Capitalist mentality
Let’s do a cohort analysis of the funding done by VCs. There is a clear trend of all similar start-ups either in foodtech space or in hyperlocal delivery and services. The founders just rode the wave with VC/angel support. The investors equally promoted the ideas and almost all funds wanted to have a share of the pie of it. So why blame the founders alone? 31 food tech start-ups got funded and now when cash is burning they are questioning the fundamentals? Where were these queries buried earlier?
Most of the VCs either checked whether a similar start-up existed in US or invested on the basis of metrics like website traffic, app downloads number of deliveries per month etc. Nobody asked about the product.
Sometime back it seemed that everybody was interested in hyperlocal delivery. The media war was on the number of hours taken. Some claimed 5 hours whereas other’s 4 hours. But the underlying question is did it matter so much to the customer? Yes in few categories like food and liquor (not available in India yet though Amazon started it in US) it matters. But only two sectors can’t accommodate so many players.
In case of apparels, groceries it hardly matters whether you deliver it in 5 or 6 hours. After all nobody is lying naked on the bed and ironically those who are, for them what to eat the next morning is the main concern. So along with founders VCs too got it wrong!
Media hype
The hype created by paid media was also a reason for such a trend. What general people read on the news website daily was the glorification of funds raised by a start-up. Media hailed those who were funded and rejected bootstrapped companies who were profitable or those start-ups burning their midnight oil to create real solutions for real problems.
PR agencies followed and glorified even the tweets as breaking news through media channels. This was alarming and created a false picture of business model which revolved around the concept of making a prototype app or website, get initial traction, raise funds and the rest could be taken care in future. So apart from founders media also shared an equal hand in this phenomena.
Too much reliance on what succeeded in US
Most of the start-ups had a carbon copy in US. I don’t say it’s wrong to imitate but the culture, consumer mentality and the state of economy varies widely to blindly copy the same business model with a hope that it would succeed. Technology alone can’t solve a problem; it needs to be integrated with socio-economic factors which are often neglected. I guess the Bihar election results showed that India off the internet and on the internet is totally different and the apology of NDTV founder Prannoy Roy vindicated that.
So what’s the solution to the problem raised by Mr. Haresh? I am not an expert so I would just give my opinion which is equally debatable. Funds should try to invest in India-centric problems and solutions and diversify their portfolio to a wide extent and include the ideas in niche fields where website traffic and app downloads are not the only metrics to be judged upon.
Funds should try to help the founders how and in which places their product or technology could be used as this would help in developing additional revenue models which was exactly the case with us when we partnered with Vertebrand management consulting and to our dismay we discovered that there is a huge demand of text analytics in B2B space too.
These are just few suggestions and there might be plenty of others too. I would like to hear them from you.
I wish good luck to everyone and hope India can emerge as a global centre of attraction for start-ups.
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