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Sunday, Aug 25, 2019

Excerpt: Boom Country; The New Wave of Indian Enterprise by Alan Rosling

A new business book looks at the growing ecosystem of Indian start-ups. This excerpt that includes a section from the introduction that puts things in perspective, and portions of Chapter 7, that looks at The Opening Up of the Indian Mind, conveys all that’s exciting about the country’s start-up scene today

books Updated: Jul 01, 2017 08:28 IST
Alan Rosling
Alan Rosling
Hindustan Times
Early days: A panel discussion at E - summit 09 at IIT-B. From left to right - Alok Kejriwal, CEO and co-founder, Contests2Win; Rajeev Mantri, executive director, Navam Capital; Jay Gupta, MD, The Loot; Russell Stamets, director, JCSS Consultants
Early days: A panel discussion at E - summit 09 at IIT-B. From left to right - Alok Kejriwal, CEO and co-founder, Contests2Win; Rajeev Mantri, executive director, Navam Capital; Jay Gupta, MD, The Loot; Russell Stamets, director, JCSS Consultants(HT Photo)

Introduction: An Entrepreneurial Pivot

… Until his brief resumption of the group chairmanship on an interim basis during the transition in leadership, and instead of returning to design and architecture as he had earlier contemplated, Ratan spent much of the first years of his retirement becoming India’s most prominent angel investor… He has pivoted from the world of international big business to the growing ecosystem of Indian start-ups...

Boom Country; The New Wave of Indian Enterprise
Boom Country; The New Wave of Indian Enterprise

So far, he has made 34 investments in small or growing companies, including Snapdeal, Ola Cabs, Paytm, CarDekho, Zivame, Urban Ladder and BlueStone. …

Ratan’s pivot towards supporting young entrepreneurs encapsulates the theme of this book – that something new, different and exciting is happening in India in entrepreneurship. …

Ratan Tata
Ratan Tata ( Girish Srivastava/HT )

Ratan has invested in businesses whose technology and team appeal to him… ‘I have very little interest in those entrepreneurs who are running after valuation and are looking to flip quickly; I’ve stayed away from them. The guys who attract me are the smaller segment who are looking at where they can make a difference to the vast manpower base that India has, to the length and quality of life and dealing with ailments, illnesses and hardships.’

… As I listened to his words I realized I too had failed to appreciate early enough, while I was employed in large companies, the profound nature of the changes and development taking place in the entrepreneurial culture of India…

… My first encounters in the startup world coincided with the sudden realization that an increasing number of people I knew or had worked with had become entrepreneurs. Friends at Tata, McKinsey & Company, Bain and Goldman Sachs mentioned an exodus of young talent, not to competitors, but to start-ups…

Suddenly, it seemed that everyone was talking about entrepreneurship in India…

It became increasingly clear to me that the entrepreneurial boom was of deeper importance and potential than was being reflected by the sensational coverage in the business press of fundraising, valuations, personality clashes and exits in the e-commerce sector. The recent dramatic surge in entrepreneurialism in India bodes well for the future of the country in terms of economic growth, jobs and quality of life for the majority of India’s people. India seems set to become a genuine boom country for new enterprise...

Chapter 7

The Opening Up of the Indian Mind

Sachin Basal, CEO of
Sachin Basal, CEO of ( Hemant Mishra/Mint )

‘Actually, I didn’t want to start this, I did not want the lifestyle of a businessman. That is why I had gone to IIT – I wanted to study science. Even though my brother, my father, all my father’s brothers and sisters, my mothers’ sisters and brothers, all of my extended family, cousins and everyone, have some sort of business or the other.’ Sachin Bansal, Co-founder and Executive Chairman, Flipkart

‘What I find in India is, in spite of all the problems that we have, the current generation of Indians is very enthusiastic about the creation of new enterprises here. I get so many mails every week saying I have got this idea, I want to leave my job and do this.’ Narayana Murthy, Founder, Infosys and Catamaran Ventures…

The Closing of the American Mind (Simon & Schuster, 1987) by philosopher Allan Bloom argued that, as the book’s subtitle unequivocally states, ‘higher education has failed democracy and impoverished the souls of today’s students.’ In my view, the experience in India has been quite the opposite. Manoj Nair is probably the most naturally entrepreneurial person with whom I have worked. He bubbles with enthusiasm for his business, talks incessantly about every new thought to build the company, and seems to spend all night shooting WhatsApp messages at his team., which offers a better property rental experience to landlords and tenants by the application of technology, is his third venture. Just as the demonetization, which was unexpectedly announced by the government in 2016, squeezed the cash-based economy, he launched RentPay, a patent-pending product based on blockchain technology, to allow tenants to pay rent on their leased properties electronically. His story captures much about the massive cultural change that has swept India in recent years, most particularly among the young.

Manoj started from a very ordinary background. His father was an army jawan who took hardship postings like on the Siachin glacier in order to keep his family in their government accommodation in Delhi… Growing up, he had no thought of becoming an entrepreneur and just wanted to get a secure job. After graduating in electrical engineering in 1996 from PUSA Polytechnic in Delhi, Manoj got a job as a salesman with Bharat Bijlee, an electrical engineering company that made transformers. After working for a little over a year he saw an opportunity in power-starved Delhi to sell large back-up diesel generators to housing compounds and industrial units. Barely 22, he left his job and set out on his own. His father was dead against this, fearing his son had made a major blunder… It took Manoj six months to convert his first order, but that deal alone brought `7.5 lakh of profit, a huge sum for his family. Soon Manoj had a roaring business… Manoj’s career then took an unusual turn as he decided to sit for the intensely competitive UPSC (Union Public Service Commission) exam to become a civil servant and achieved a ranking of 157 nationally…

From 2005 to 2012 he was an officer in the Income Tax Department, first as an assistant commissioner then as a deputy commissioner. …In 2012, he resigned from the IRS and moved to London to become the managing director of an asset management company.

Characteristically, Manoj simultaneously started studying for a Masters in Macroeconomics and International Strategy at the London School of Economics (LSE), juggling classes with travel and office work. By late 2014, as he graduated from LSE, he agreed to sell his stake in the asset management business and went to HBS for the one-year Program for Leadership Development (PLD). He graduated from HBS in 2015 with a clear business plan to create He had also persuaded four of his professors at HBS and one from LSE to join the founding team.

The idea for was sparked by his own challenges in letting out the properties he had invested in and, in particular, the experience of dealing with unscrupulous estate agents.

The platform presents a selection of screened properties to vetted tenants and has well-defined processes to manage the rental process from leads to property choices and through to the lease contract, the tenancy and renewal. The demonetization of large denomination notes in November 2016 provided a huge additional opportunity to digitalize the $60 billion annual property rental markets through the RentPay product, offered jointly with India’s largest banks…

Manoj has come a very long way... Now he believes that entrepreneurship is the force that can change India and the lives of millions of young Indians. He told me, ‘India is changing and is full of unbridled opportunity. In the next 10 years India is going to see enormous wealth creation. The world is going to gape at the unleashing of entrepreneurial energy as never witnessed before.’

New attitudes, new dreams

Manoj’s journey… captures much of the economic and social change that is reforging India. The most striking change in India in the past decade …is a profound cultural shift in attitudes across the country, especially among the young. This fresh world view, similar to the confidence, impatience and ambition I saw in America when I went there for business school, is at the core of the upsurge in entrepreneurialism that the country is witnessing…

Education is often key to the inception of opportunity. Experience of the West, especially the US, frequently acts as midwife to a sense of new possibilities. Role models in business who represent new ways of crafting a better life, endorse and spark new thinking. The media has also played a role by publicizing success. The outcome, especially among the young, has been a sea-change in attitude towards entrepreneurship as a life choice. A safe job, advocated by the family as the natural, responsible step after a good education, has lost its totemic appeal as the only route to security, a good marriage, fulfilment of familial obligations and self-esteem… Rajeev Mantri of Navam Capital remarked, ‘The degree of social transformation here is not fully appreciated.’ This new sense of confidence, aspiration and drive among young people in particular was described aptly by Sanjoy Roy of Teamwork Arts, provocative as usual, as ‘the Americanization of the Indian mind.’

Profound cultural change, as we have seen in India in the past decade, is always complex in its causes and spotty in its manifestation… The causes of the changed attitude are multiple and intertwined. Economic growth and liberalization underpin growing opportunities. Technology has fragmented barriers to entry. Cable television, then the Internet, has seeped a different thinking about a world of opportunity into most homes across the country. Education plays a catalytic role, bringing young talent together, shaping it by formal teaching, but also allowing a million connections to be made on campus, in the new coffee shops and online chatrooms.

Shashank ND, founder and CEO of Practo.
Shashank ND, founder and CEO of Practo. ( Kashif Masood/HT )

…Repeatedly, I heard from the entrepreneurs I interviewed how going to college had changed their outlook on life and the choices open to them. All of the entrepreneurs I interviewed were college educated, most were engineers, and 27 per cent were from IITs… Shashank N.D. of Practo described how, for him, going to college, in his case NIT Surathkal, was like being ‘a bird released from a cage’. From a solid middle-class background in Bangalore, growing up, he had had no interest in a business career. ‘It was always about engineering and getting a job.’ College opened his eyes to so much, not only with the course content but also the clubs and travel away from home. Most of all, Shashank discovered the appeal of entrepreneurship. ‘This whole entrepreneurship thing really got into me. I recognized this when I was at an event where there were four speakers from big companies whom I respected a lot, but they literally put everyone to sleep. And then enters this entrepreneur. His company is one-tenth the size of these big companies, but the way he spoke, he just cut through the clutter.’ …

American connections

More significant than role models in the cultural shift in India has been the deepening influence of the US on evolving Indian attitudes. The American connection cropped up repeatedly and strikingly in the stories of the entrepreneurs I interviewed. They went to the US to study or work, their technical skills were developed there, their thinking was changed by exposure to the US and they raised investment for their Indian dreams there.

Among the 92 entrepreneurs I interviewed, the most important common factor, ahead of attendance at an IIT or coming from a trading community background, was time spent in the US. About 42 per cent of the interviewees had gone to study or work in the US. Others like Sachin Bansal or Bhavish Aggarwal had worked in India for a US company. The mindset of young people is therefore irradiated with American culture and business thinking, and many of them then become entrepreneurs. It is too early to speculate how this positive interaction between India and the US over decades may be changed by the advent of less generous, welcoming and outward-looking policies advocated by the new US administration of President Donald J. Trump…

Prashant Tandon (Right) founder and Joint MD with Sameer Maheshwari Founder and Joint MD of
Prashant Tandon (Right) founder and Joint MD with Sameer Maheshwari Founder and Joint MD of ( Pradeep Gaur/Mint )

Prashant Tandon, co-founder of Healthkart and then 1mg, an online pharmacy, was also profoundly influenced by his experience in the US. After IIT Delhi he joined Hindustan Unilever in 2002 and soon became a production manager. He then moved into brand development and innovation. While he enjoyed working at Hindustan Unilever, and the challenge of innovation in particular, he felt, ‘I was climbing very fast up the wrong hill as I knew that this was not what I wanted to do long-term.’ He went to Stanford Business School in 2005. ‘Stanford completely changed my perspective… For the first time I [was] exposed to start-ups. It made me think that this is really cool and exciting, the idea of entrepreneurship.’ On graduation, he spent some months in a start-up in India, MapMyIndia, but then joined McKinsey back in San Francisco. In California he increasingly ‘felt pretty stupid to be wasting time in the US when the action was in India.’ His choice of healthcare as a sector on which to focus was heavily influenced by what he had seen during his time in the US and he met his business partner, Sameer Maheshwari, in California. The two returned to India together in 2010, first trying a practice management software business, which did not work out, before identifying online health supplements as an opportunity with Healthkart...

Besides confidence and drive, two other key traits commonly associated with American business culture are fast developing in India. The first is a new attitude towards failure, and the fear of failure. The second is a level of ambition that is fresh and startling.

Junking the fear of failure

A repeated theme of my interviews was a changed attitude towards failure and the fear of failure. Globally, the majority of entrepreneurial ventures fail, and many successful entrepreneurs fail initially, sometimes repeatedly, before breaking through. The initial or previous failure rate I found among the 92 entrepreneurs I interviewed was 14 per cent, which seems low by most standards.

Infosys co-founder and executive chairman NR Narayana Murthy
Infosys co-founder and executive chairman NR Narayana Murthy ( HT photo )

Among the very successful entrepreneurs I interviewed who had failed early on in an initial venture were Narayana Murthy, Ajay Piramal, Niranjan Hiranandani, Vijay Shekhar Sharma and Sharad Sharma. Earlier, in India, there was a deeply ingrained fear of trying a business and failing, which, possibly based on personal experience, both Ajay Piramal and Narayana Murthy called the ‘stigma of failure’. In an inflexible, conservative and lowgrowth India still recovering from the Nehruvian ice age, the social attitude towards a failed business person was particularly negative. Moreover, very practically, if a young person did not take up a ‘good job’ early in his (normally his) career, he (normally he) would probably find it hard to get into decent employment, having tried and failed in business on his own account.

One of Ronnie Screwvala’s key themes in his book, Dream With Your Eyes Open, is the importance of India learning to accept failure and not to fear it. When we met, he elaborated on this evangelism, advocating the need for a new attitude to failure. ‘The fear of failure,’ Ronnie explained, ‘is there all the time. It’s huge and deep. I want people to feel that it’s actually cool to fail.’ Interview after interview touched on a similar point, usually contrasting the earlier ‘stigma’ of failure with a new willingness to risk failure and to deal with the consequences of failure if that were the outcome. …

The scale of ambition

A desire to change the country and the sheer scale of the ambition of many of those I interviewed was striking. Sachin Bansal wants Flipkart not just to lead the transformation of retailing in India by ramping up e-commerce to a $100 billion industry by 2020, but to go on to lead a revolution addressing the three billion underserved customers in comparable markets globally. Bhavish Aggarwal wants to change mobility in India, not just provide a taxi service in urban areas. Tarun Mehta and his colleagues at Ather Energy are building an electric bike with world-class looks and performance to alter commuting in urban India. Dhiraj Rajaram wants to change the way companies make decisions.

Shashank N.D. of Practo simply wants to ‘help mankind to live longer and healthier.’ He told me, ‘I keep joking that if two kids can really change the way in which healthcare in India is delivered, people can do anything. Practo is seven years old; I want us to be a $100 billion company for 100 years.’ …

With ambitions and capabilities like this, and now access to deep sources of funding, Minister of State Jayant Sinha’s desire to see a company comparable to Apple emerge from India, serving the next six billion people, does not seem so far-fetched. These young entrepreneurs have watched companies like Facebook, Uber, AirBnB and Tesla become global players in their brief adult lives. There is no reason why a similar business could not be created in Bangalore, possibly with an initial focus on a non-Western consumer…

Cultural miles yet to go

‘There is a lot of inappropriate conduct. I would get asked for meetings at inappropriate times – suggesting meetings at 9 p.m. on a Saturday, even asking for a date. I would say it happened with about 50 per cent of the investors I spoke to. You have to manage all of that.’

I was completely flabbergasted listening to Akanksha Hazari, founder of m.Paani, talking about what it can be like to be a female entrepreneur in India. Young and fashionable, with a slight American accent, she is very different from the intense tech entrepreneurs I had got used to interviewing. Pitching to investors is usually a difficult and frustrating process for founders, unless you have the luck, or the knock-out story, of Ashish Goel of Urban Ladder who secured a term sheet on his first pitch. But it had not occurred to me what additional issues a single female founder might face while trying to raise money. Akanksha was advised by a number of investors to get a co-founder, which is commonly a good practice, but it was stressed that the co-founder should be male. She also faced issues with recruitment as some techies did not want to work for a female boss. ‘I think on the gender side, India is going through a big transformation,’ Akanksha continued. ‘I think it’s one of the big transformations happening in parallel to this drive in entrepreneurship. It will take time to have it fixed in deeper parts of the country, but to me that’s a second transformation that is happening now.’

In spite of the explosion of entrepreneurialism, India remains at an early stage in what will be a long process. One way in which the entrepreneurial ecosystem is still immature is the paucity of female founders. Only six of the 92 entrepreneurs, and seven of the 108 people in total, whom I interviewed, were women. I had expected that the acceptability of female entrepreneurs would have improved from the 1980s when Kiran Mazumdar-Shaw struggled with financing and hiring because she was ‘a slip of a girl’, as she put it…

Once Akanksha pointed it out I realized that with a few exceptions, like Vani Kola of Kalaari Capital and Renuka Ramnath of Multiples, I had not encountered many women in the VC and PE world, other than junior associates...

If women are under-represented among entrepreneurs, so are other sections of Indian society. Half of the entrepreneurs I interviewed were either from traditional trading communities (Marwaris, Gujaratis and Sindhis) or were Brahmins, only three were Muslim and none came from tribal or Dalit backgrounds. Stand-Up India, the parallel government initiative to Startup India, aims to spread entrepreneurship to less advantaged social groups like Dalits and Scheduled Tribes, with a target of encouraging 125,000 new Scheduled Caste/Scheduled Tribe businesses in three years. The Dalit India Chamber of Commerce (DICCI) estimates that there are already 8.7 million Scheduled Caste entrepreneurs in India, up from 1.5 million in 2001, representing about 15 per cent of all small businesses in the country. However, these groups remain under-represented among Indian entrepreneurs, tend to be entrepreneurs of necessity, not opportunity, running very small enterprises that struggle to scale, and are largely excluded from external equity financing and often even from bank finance.

Other than family background and membership of a community whose culture encourages a bias for business, education is very clearly the best gateway to entrepreneurship of opportunity. By the nature of their educational backgrounds, in India and abroad, the entrepreneurs in my interview set were drawn from a small educational elite in India, whatever their social origins. Expansion of truly world-class education is a fundamental, if long-term, building block for democratizing and scaling entrepreneurship in the country…

Alan Rosling
Alan Rosling

Geographic disparities

In addition to social and gender biases, it was also clear that the start-up upsurge is, so far at least, geographically concentrated. There are, of course, entrepreneurs throughout India, in metros, small towns and rural areas. However, entrepreneurship of ambition is clustered in just a few cities, especially in Bangalore, Gurgaon and Bombay. These clusters result from the benefits of better-developed entrepreneurial ecosystems in these hotspots, the choice by entrepreneurs of where they want to live and the variation in the degree of business-friendliness of cultures and policies across the country. …

…Yet, with the momentum towards entrepreneurship of ambition spreading, start-up activity is beginning to pick up in other large cities and smaller towns. I could have added to my interviews by meeting new entrepreneurs based in fast-growth Tier 2 cities like Jaipur, Hubli, Guwahati, Coimbatore, Chandigarh, Cochin and Vadodara. ..

Read more: Startups should be left to start up on their own

India’s sheer size means that a globally significant trend in absolute terms can develop in parts of new India, yet the scale of traditional Bharat can average it out in relation to the economy and population as a whole. Rama Bijapurkar’s concept of the great Indian rope trick, the impact of very large numbers, explains how India can have at the same time a globally significant start-up scene, a wave of entrepreneurship, and yet perform relatively badly when ranked on the Global Entrepreneurship Index, the GEI (98 out of 132 countries). As in the theory of quantum mechanics, in India there are often parallel realities, many versions of the truth co-existing at once, each equally valid.

India has become a boom country in terms of a new wave of entrepreneurship, in part if not in whole. But for India to become a global leader in entrepreneurship, and for business to lead the change possible for a large section of society, much more is required. The virus of the entrepreneurial dream needs to spread wider and deeper. The hotspots of start-up excitement, significant as they are even today in historical or international terms, are still swamped by the larger swathe of India, geographically and socially, that has not changed enough. Start-up Bangalore is not yet representative of Bharat…

First Published: Jun 30, 2017 22:14 IST

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