2 B or not 2 B

Consumer Internet has been the engine for innovation in technology space for 20 years now and darling of investors. Google, YouTube, Facebook, Netflix, Twitter, Spotify, Amazon, Instagram, WhatsApp, SnapChat, LinkedIn all have become household names across the world with 500 mi users of more worldwide. There are 100s of others that have reached 100 mi users or more worldwide.

India has been a powerhouse of IT and software talent since early 1990s and one of the biggest mobile markets since 2010. However, very few consumer internet companies were created and achieved scale in India. Rather, Indian startups that scaled were those that took Indian marketplaces global — Naukri (jobs), MakeMyTrip (travel), Zomato (Food), PayTM (payments), Flipkart (eCommerce). Its not that Indian startups and founders did not go after pure play consumer internet portals / offerings — for many reasons (lack of internet penetration, lack of capital, lack of advertising dollars, lack of global reach) they just could not grow beyond 100k to 1 mi users.

The author himself has been part of multiple efforts to build consumer internet startup from India — BubbleIdeas (hand-writing based authoring); Shifu (intelligent personal attendant); Movico (long tail video portal); Movense (3D smart videos); Notesgen (peer2peer education notes exchange) have all struggled to scale. Even when there has been some scale, the funding required to sustain a pure consumer product and acquisition has not been forthcoming with nearly 90% investors (make that 95%) asking the dreaded question — show me the money even before the startup has had found a perfect product-market-fit. The 5% who encourage a pure play initiative have set impossible targets / metrics that a startup, struggling to survive can simply not afford to achieve.

Founders therefore have been forced to execute on “revenue-generation” as the critical path as opposed to tech leadership or wide customer acquisition and user delight as a core priority. However, revenue generation also involves customization for the enterprises that will adopt the core platform, integrating with their existing ecosystems and changing product road-map to meet their needs. Of course the challenge of selling a leading edge platform to a “slow adopter” target customer (Indian enterprises) makes it harder. In the meanwhile, global consumer internet startups with enough cash to invest, will innovate faster, better and suddenly the Indian startup would be a laggard with trailing edge technology / product and the only way to survive would be a decent EXIT (good for the investors and probably fair for the founder but value destroying for the nation).

No wonder then, that pure play consumer internet startups in India fail. Will this change in 2019? I don’t think so, though as a die hard optimist, this will be my prayer for the midnight gods — please, lets put an end to the question “2 B or not to B (read B2B or B2C)”. Send some big hearted, deep pocketed investors to consumer internet startups in India.

Happy New Year.

ps — Happy to share that Notesgen now has nearly 2 million users across 150+ countries actively trading student notes with each other. Desperately hoping it survives. The others are in the startup graveyard.