Start-up story in India : Bubbles are not formed in the placid water.

An Economic Times headline screamed a few month ago, “Is the bubble bursting for India's online start-ups?” It listed several examples where the poster boys of the Startup bandwagon such as Zomato, TinyOwl, Food Panda, Housing.com seemed to tumble.  There is also growing debate whether the valuations of the stalwarts like Flipkart, Snapdeal and Oyo are unrealistically inflated.  But the purpose of this post is not to argue for or against the business models of the start ups or their valuations. Enough and more experts have been commenting on that already. I want to dig deeper and explore this phenomenon of Indian Start ups.   

  

Nehru in his classic treatise The Discovery of India says As the First millennium of the CE approached its end, all the rich heritage of India’s Culture, Arts, Science, Literature, Philosophy, Trade and even War craft appears to be  the afternoon of a civilization. Her heart seemed to petrify and gradually this petrification and decay spread to the limbs............... The sense of curiosity and the spirit of mental adventure gave place to a hard and formal logic and a sterile dialectic...................India was drying up and losing her creative genius and vitality. ........................

If a similar discovery is undertaken by another great thinker after a few centuries, he would certainly mark turning of the 21^st century as the Economic Renaissance in India. Especially the last decade or so has seen emergence of a new breed of entrepreneurs. They are not scions of rich business families but have come from urban, middle class families. They are young, well educated, highly ambitious and even brash. With almost 10,000 start ups, India is ranked almost 3^rd (after the USA and UK) in terms of the total number of active start ups.  And despite doomsday predictions the start ups are here to stay and grow.

Why I bet that this particular period than any other in the past for it to be marked as an epoch of the Indian Economic Renaissance? There are several reasons for that.  Something fundamentally is changing at the core of the Indian society. This is not just an incremental or a superficial change but a tectonic shift in the ethos of the peoples of this country. And it seems to me that in its wake this change has triggered an irreversible fission chain reaction.

So what is changing?

First and foremost it’s the attitude. In the 21^st century India people think it’s alright to fail but you tried. There is no social stigma attached, either to the failure or to the failed.  In fact we now willingly agree what is universally accepted that only the brave may fail because they try. While USA has over 85,000 start ups with population of barely 300 million, India with her population of 1.2 billion people, can easily provide enough business and growth opportunities for a few hundred thousand more start-ups.  

Second the employment seekers are becoming the employment creators. For almost two hundred years the ultimate middle class fantasy has been to ensure that their children get a degree and then get a job. And better still a job with the government. Because a job fed the whole family and the government job assured that for rest of your life.  Only those who failed at getting a coveted degree or a job would consider starting a business enterprise so long as they could not land a job. Any job.  With so many new start ups mushrooming practically every day, one hopes that very soon the government will not be the largest job provider.  Though start ups are estimated to have created 100,000 direct jobs so far and are expected to reach around 250,000 to 300,000 by 2020, what is more  exciting is the indirect employment they are creating.  For example, the Teamlease Employment Outlook Report says that the e-commerce sector has created a large  number of jobs in two categories: taxi drivers, and delivery personnel, hired in large numbers by online shopping websites and apps.

Third is the change in the consumer behaviour. IRCTC can safely take the credit for hooking on the train travelers early on to buy train tickets on line. We have come a long way now from buying train tickets online to even vegetables, grocery and medicine. This change is addictive and infectious. It is also spreading albeit slowly but surely to  the  tier 2 and 3 cities.  Consumers are warming up to the fact that buying stuff online is not only convenient but also safe and reliable.

Fourth, the start up economy is driving an economy of start ups within itself where such a symbiotic dependence is sustaining both. For example, we see spawning  of so many newer start ups to cater to the peripheral needs of earlier start ups. They are engaged in the areas of supply chain management, logistics, data analytics, artificial intelligence, digital marketing, payments so on an so forth.  This support system will ensure survival of both sets of the start-ups    

Aren’t bubbles still better than the sloth? They are result of the churn and turbulence in the environment which did not stir for a thousand years. Nehru lamented that the Indian society had lost its values about enterprise, the restlessness, the curiosity, the madness of explorers by end of the first millennium CE. These start ups are a sure sign that India is getting its mojo back.

Visit Digital Dimensions to know more about the author