Why In-dian startups stop In-novating?


Yes, both these words share common initials, but in reality there is huge gap between India and Innovation. In past decade India has become a hub for outsourcing (specially in IT), and has shown some outstanding growth in fields like Telecom. But this post is specially for Internet Startups where all the action is happening today (both locally and Internationally)! I have recently started my startup journey and have experienced some fake expectations and harsh realities in past one year. My interaction with some young entrepreneurs and startup enthusiasts forced me to think about one issue- “Why we don’t hear Google/Twitter like stories from India?”


I have been to several B-Plan contests in India and have attended several other events as TIE-Con, OMCAR etc. These events do help us in creating an initial business network but the problem lies in the seriousness shown from both the startup side and Investors’ side. No, it’s not about the idea, in fact all the ideas are good and promising on paper.

The main issue is the expectations- we expect too much from Investors just by making a Business Plan and preparing some cool slides and in return they put some tough conditions on us (show me the real money!).

But real fighters do start their own thing. They apply their ideas and start creating an innovative product. The dream always start by seeing oneself as another Google on web, without giving a single thought on Indian Internet market :). But that’s fine, that’s how one should start and that’s how most of the web startups grow. Still, we don’t hear any big innovative success in Web from India (exceptions include naukri.com, cricinfo.com and few others).

When we read about startups like Google, Facebook, Twitter and likes there is only one quality which justify their success- their ‘vision’.

Indian internet startups don’t suffer from ‘can’t innovate’ syndrome, they rather lack a clear vision and strength to remain focused on a single goal.

This is mainly because the ground realities are much tougher in India than US/Israel/Germany which have fostered a very good entrepreneurial ecosystem in their country. My recent conversation with some of the Founders and even my own experience have given me a sense of the answer which I’m seeking throughout this post- “Why Indian startups stop Innovating?”.

It’s not much time since we launched the alpha version of our website, some people liked our design and concept and we have already started getting queries related to design and development of websites. Point to be noted here is that we haven’t posted anything that would suggest that we are a Web development firm.

When we start something new the joy of starting things on own and the challenge to show others that we can actually generate money overpowers the very basic idea of why we started.

This thought became much more prominent when I heard some other startups trying to do the same thing to generate cash. Since for a web startup the basic requirements are all there (coders, designers and infrastructure) the chances of getting lured into something which offers easy money are increased. But, in my opinion this should be the real phase when such startups should start looking for funding, as taking external projects increases the chance of loosing focus. The main reason why we see thousands of small IT firms doing web development may be this one only.

People may argue that when you are in the war-zone you have to fight for survival. I agree on this, but I just want to say that if you switch your path from an innovative product development startup to another web development firm, the fight will become more brutal and your strength to fight will also reduce drastically. With no focus and limited scope you’ll end up as just another company fighting for daily bread and the very premise on which you started will end (isn’t it better to get a job in such case?).

There are some very simple lessons we should learn from companies like Google and Twitter-

Twitter has grown from nothing to huge (3 Million unique page view per day) in just 3 years and still it doesn’t talk about making money. They are still very much focused on what they want to make:

We continue to follow user behavior and pay close attention to feature requests. We launched our mobile site, m.twitter.com after getting lots of requests for this feature. However, we are also very much guided by our philosophy of keeping things simple and intuitive so we like to restrain ourselves with regard to features.

Twitter has many appealing opportunities for generating revenue but we are holding off on implementation for now because we don’t want to distract ourselves from the more important work at hand which is to create a compelling service and great user experience for millions of people around the world. While our business model is in a research phase, we spend more money than we make.

These are the reason why Twitter allows 3rd party applications to foster without worrying about how they themselves will generate money.

Google always wanted to make a better search engine without even knowing how they’d generate any money. Today they generate more money than any other Internet company, still they want their search engine to throw even better search results.

If you know some Indian web companies which still hold on to the vision they started with, I would love to know about them.

I don’t know why I wrote this post, as I’m still not that experienced to talk about this. But this is from my very first observation of the real world. This is one issue I thought everyone should try to bring forward and we should talk about it more prominently. I’m writing this in hope that I, myself don’t loose focus from what I want to do with my product. We are yet to see major challenges but I hope that we would not look towards alternative ways of generating ‘main’ revenue stream. Side businesses are always good until it starts hurting the main business. What do you people think?

"Why In-dian startups stop In-novating?", 5 out of 5 based on 1 ratings.
  1. Mandar Shinde says

    Agree with your take on Vision. The reason behind not having proper vision can be found in the circumstances that gave birth to concerned startup. Most of the technocrats start on their own because of a failed job or disputes with management or similar negative reasons. Hence, the first attempt is to survive, obviously by catching the running train. This creates the picture – West innovates and East produces! It would be unrealistic to expect startups invest (time, energy, and money) in innovation, when their survival is at stake (and when there are lots of money-making tricks available in market). Recently, CDAC has come up with English-Hindi translation tool, after 20 years of research. Such an effort can be expected only when the team’s survival is guaranteed. However, this seems to be a vicious circle – startups do not guarantee innovation, investors do not guarantee finance…and startups have easier options to earn money, investors have faster ways to multiply wealth.

  2. Clipped.in - Latest and greatest Indian blogs says

    Agreed, the start ups are few and far between. That doesn’t mean Indian’s are not trying. There are many that are successful on a lesser scale. Many end up being taken over by a bigger shark from abroad.

  3. Nitin Sawant says

    yes, I agree,

    capitalism is the only reason

  4. Siddharth Menon says

    Rabi you are very correct.

    1. When we started we too had a vision, but reality strikes hard & we took lots of side business, which btw gave us lots of cool experience and money, above all we always maintained high standards at low cost. Thought we were choosy about the projects but at times we did pickup something that was not by choice.

    2. Two years down the line, we have very little regret of our past, but now we know to be innovative or stay focused we have to cut down on side business (something we developed in 2 1/5 yrs). We are now re-focusing on our goals, long terms … since last 6mo we are engaging our self into innovative thoughts, solutions, research etc for the web ( Directly targeting internet users world wide).

    3. Another point is that Self Funded model has more probability of loosing focus. Strong elements like maintaining quality developers / designers becomes a challenge, specially when the market is opening up and MNCs are preying on these cream guys with high package. Cat and mouse game begins, you take up project to fund your self, increase the salary, then again iterate it every 4-6mo, at the end your way away for your original goal / focus.

    4. VC here may be really difficult to convince without a revenue model (Very little experience cause, till date we are 100% self funded ). Giving examples of twitter, Google, Facebook doesn’t help much, even thought they are confident about user acceptance of the proposed idea. Importantly one should approach VC who has good understanding about web trends and user behavior (Need not be technical ), they can evaluate your ideas more accurately.

    5. A mind set about Startup in India has to change. ” Big is not always good ” something which all the passionate skilled developers or designers should realize. Guys opt for working on reputed big companies, where the scale of the project is huge, but the work is more or less mechanical when compared to innovation driven startups. For us recruiting has always been a challenge, we say no to many and yes to just one or may be none, only if we feel he/she can contribute to our goal & is innovator.

    6. Getting really passionate guys are difficult and one should not compromise by recruiting just anyone.


    Siddharth Menon

    1. rabi gupta says

      Thanks Siddharth for sharing your experience.. its really helpful :)

  5. Aditya says

    Quoting what a senior alumnus told me:

    US is an innovation driven society, people love adopting new things. On the other hand, Indians are “habit driven”, there’s no craze to adopt newer and newer things. Rather, the focus is on basics like education, energy, travel etc. Hence, startups who’re successfully seem to revolve around the basics.

  6. rabi gupta says

    Hi Madhav,
    Couldn’t agree more to both the points you made. There are some startups for which making a local version make sense. For e.g. burrp. But for websites similar to Orkut/FB there is no excuse, as the market is getting saturated already. There would be no one who will be on Bigadda and not on Orkut. But yes, I agree to your point on capitalism. Really a deep thought :).

  7. Madhav Shivpuri says

    Rabi – good question. Vishal – good observation.

    I just gave a thought to Rabi’s question about why Indian’s does not innovate and some thoughts come to my mind:

    Why small entrepreneurs don’t innovate? Is it because we expect to be paid (as a basic salary through sponsorship or funding) before we do some experimenting? Is it the fear of not being able to pay bills keeping our entrepreneurs from trying something new? Or Is it the case that there are plenty of opportunities which are not fully exhausted due to which entrepreneurs are not forced to find newer problems and hence newer solutions to them.

    Ex: AskLaila/ Burrp/ Mouthshut are similar to Yelp/Shopping.com (prev. epinions.com). Picsquare was similar to Zazzle/ Cafepress, Minglebox/ Bigadda are similar Facebook/ Myspace etc.

    I am guessing and could be hugely wrong that innovation could be lacking in many developing countries as they too might be creating products and services which are meeting basic needs in their countries/communities. In developed countries however, as the markets are near saturation they might be forced to innovate.

    Another guess for the reason for American companies being ahead on the innovation could simply be capitalism – where the rewards far outweigh the risks. There is less of a stigma on failure while the rewards if one succeeds can be extremely high.

    What do you think?

  8. Ankit says

    Ground realities in India are quite different…ppl in sillicon valley are crazy enough to fund a team of hackers with working prototype… whereas in India ; a startup might struggle to get funding even after showing real customers (have seen this personally)… no wonder many startups move from product to services model…

  9. Vishal Sanjay says

    Its all in our education system, you see indian schools teach you everything other than something that should be taught. We are told to memorize a long timing table in chemistry , but this timing will not be used by half of us and even if we do use, we can easily find in one Google search, there are many such things in our education system. The things that really need to be taught are creativity, innovation and characters. Schools in the US give importance to things like story writing, essay writing and other creative activities. If you take in my case I get less than 50 in subjects like maths, biology and chemistry, but i never got below 90 in subjects like economics, commerce, political science and history, but still my teachers and parents tell me that those subjects are of no use. Most of the parents want their kids to become doctors and engineers, no one wants to care about any other fields outside, this is the main reason for India’s lack of innovation.

    1. rabi gupta says

      Hi Vishal,
      Really a good point, we Indians are slow in fact very reluctant to change. That’s the reason we have a decade old Parliamentary system and 50 years old education system. Here no one cares for what you Innovate, parents are more concerned with their children’s jobs as they want them to get married well. Here social status is more important than personal status. Unless we move out of such dogmatic thinking we are bound to become a stale country.

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