Wednesday, October 15, 2008

Crisis or Opportunity?

The Wall Street as we know it doesn’t exist. This could be the onset of worst financial crisis in the last fifty years. The alarms are being sounded. It’s going to be gloomy ahead. ‘Brace yourself for the worst storm ever’. ‘It’s going to be another Great Depression’, and so on. Indians would love to believe it is going to affect them exactly the way it is affecting Americans. Flat world, isn’t it? We have believed in that myth far too long not to believe it now. 

The news pours in from every quarter. It’s impossible to get away from it – every newspaper, every magazine, and every news report suggests the same. There will an economic slowdown. There will be layoffs. Startups need to conserve cash. Already cautious VCs of India become more cautious now.

I am supposed to be gloomy too. I am supposed to make negative statements too. I am supposed to say that, ‘Yeah! It’s going to be hard; it’s going to be tough; it’s going to be bleak!’
Yet, I don’t say that. I am a startup, remember. I am already in the deepest shit-hole possible. I am used to surviving in a very hostile environment. I conserve cash like nobody else’s business. I starve and yet put on a smile. I am used to it. (It’s been four years like that. I better be used to it.)
Unlike the pundits out there, I am not pessimistic.


Yes, it is a crisis. But I think it is also an opportunity in the long run; especially, if you are a technology startup aiming big sitting right here in India. Most of my competitors are based in US and Europe. The current crisis is going to hit those companies really hard who usually take lot of funds to bring a product to the market. Many of them will be cautious and conservative and therefore will shelve some of the plans on hand. The more ambitious and riskier they are, greater the likelihood of shelving them. Being a garage startup in India, we have a DNA to work on extremely low budget, spending cash very conservatively. I believe that it is an opportunity for many Indian companies who have started on this model to take on the challenge and launch products onto the world market. 

Those high-spending startups may have to be cautious, because most probably they have been spending too much money unnecessarily. Whereas, we will continue to be aggressive and bold! At any day, we know that we will take only about 1/20 to 1/50 of funds what a typical heavily-invested company would take to launch new products. With some of the competitors folding and some being cautious, it’s definitely an opportunity. 

Startups in India- think real. Go back to basics. Think of the real stuff for which people will pay real money. There are few basic things for which people actually pay money, like shoes, medicine, energy, TV, mobile phone, computer, broadband, communications, travel, marriage, etc. Make sure your company can make revenues, instead of creating just a perceived value. I would be cautious working on a service or a product that has a perceived value but no tangible value to the customer.

Ask yourself, will you pay for this service? And if you consider yourself a geek and an early adopter, ask your friend, mom and another fellow engineer if he would pay for this service? Get real, as real as you can be. For a moment, forget you can create value based on perception and hype. Don’t assume too many things to happen in the ecosystem. If your business model suggests that you will reap lots of money when there are lots of WiFi phones around in India to create ad hoc networks, you are assuming too many things.

If you are an investor, it’s actually the right time for you take that big bet. If you were afraid of those gorillas eating your startup’s market, this is time for you to take that bet. If you were afraid, how can this small startup in India make it big on the world market, here’s the time. While the gorillas are being cautious, you should run like a gazelle and get to that post. 

Get your head out of those power point presentations and excel sheets. Take a tour of the companies that you want to invest in. Meet the team members; see the passion in their eyes. How long will you evaluate a startup based on titles and degrees of the team members? I would like to see my potential investors showing interest by coming to my office and see what we are doing instead of evaluating us just by the market projections based on a Gartner report. For all that matters, throw that market report into the nearest trashcan.

Tejas Networks, based in Bangalore, a technology product company focusing on optical networking equipment, got started in 2000, right in the middle of dot com burst. When they got started, there were nearly 200 startups in North America and Europe in the same space. While nearly 95% of them eventually folded, Tejas stood ground and eventually became a market leader in India, and is now poised to take on world markets.

The crisis in the global market was an opportunity for an Indian company. Here’s another opportunity for all of us. It knocks only once in a while.

It’s time for Indians companies to think big. Let’s make Ciscos, Apples and Nokias out of this place. Let us be brave and let us not be daunted. Let’s not chicken out. Let’s use this as the biggest opportunity that has landed at our feet. Let’s embark on this challenge. Let’s not shy away from taking the bets. Use the startup DNA to your advantage, use this time to launch the technology and products onto the world market. Let’s do it!

5 comments:

Vijay Anand said...

Well said. But I think quite a few people have already started this tune as well. Its going to be a good time for startups, if they know what they are doing. This is when Great companies will survive.

A said...

Sujai, switch to the newer blogger templates, will make it easier for you to blog.

A

Dash said...

Excellent post - very encouraging and clearly lays out what can be achieved sitting here and on what to look out in this downtime!

Dash

Harinath Pudipeddi said...

Well put Sujai. You are absolutely correct and startup's should be more positive and optimistic of the future ahead.

Barack Obama said...

Great stuff! A fresh air of optimism compared to the gloom and doom of E=mc^2.