Indian Urban Mass — The Next Frontier?


In my previous blog, I wrote about what products/services are online in India. In it, I referred to the Indian Urban Mass as coined by Goldman Sachs in their detailed report on India. It is a very insightful report and I’m including a couple of images from that report in this blog.

At this moment in time, India has north of 300M smartphone users as per various publications (here’s one report by the Economic Times). With the launch of Reliance Jio, and subsequent mobile data price wars, the average price of data in India is one of the lowest in the world. What this means is there are 300M+ people in India capable of transacting online.

But, when you actually look at the transaction data across the various businesses described in the blog above, there are only about 60M+ people transacting online. One of the major reasons for this is the income levels across India. Majority of people transacting online belong to the top 4 categories of people in the Income Pyramid — Movers&Shakers, Govt/SOE Employees, Urban white collar/SME owners and the Educated Urban mass — which add up to about 60M.


Don’t get me wrong, these 60M people are transacting quite actively on the internet. If we look across startups in India, some of the best in class startups which started around 2015 are able to get to a scale (in terms of # of transactions/day or GMV) in half the time than a startup that started around 2011–12. This is mainly because of the increasing comfort of the higher end of the Indian consumer to transact online — thanks to the first generation of Indian startups such as Flipkart, Myntra, BookMyShow, Ola, etc. to name a few.

Having said that, the 60M transacting users is still a small fraction — 1/5th of the smartphone users. And that bring me to the reason for this blog — the importance of the Urban Mass in India. The Urban Mass, comprising of the Educated Urban Mass and the Urban blue collar/migrant workers account for about 130M people in 2015 and projected to grow to 165M by 2020. Their average income is projected to grow from $3200 (2015) to about $4800 (2020). This is projected to add about $400B in aggregate earning pool.


If you look at most of the online services in India, only a few of them currently cater to this Urban Mass population. As an example, very few services in India, like Flipkart, PayTM or Ola serve north of 50 cities in India. But if you look at many of the other online services in India that are listed in my previous blog, they are focused on probably 20 cities or lesser in India. In comparison, many of the online services in China serve 300 cities.

Over the next 5–10 years, the Urban Mass with their increasing income and widely prevalent internet connectivity are going to consume/demand more of these online services. There will be a class of products/services that will cater and scale to this Urban Mass. But, there are probably going to be a new set of companies created who are more focused on this Urban Mass.

Any predictions on which products/services will be unique to the Urban Mass — in the top 20 cities or the broader population in the next 100+ cities? This could be across categories such as communication, commerce, entertainment, health, education or any other sector.

Note: Blog also posted here

Pinging an Investor on LinkedIn — Do’s and Don’ts

I’m reposting this blog of mine from a few years back since its still relevant.


I personally think it is worth a shot for an entrepreneur to try reaching a potential venture capital (VC) or angel investor via LinkedIn. Particularly if you can find a mutual contact to provide an introduction. The main benefits of this approach, over just cold calling or dropping a note on the investing firms website, are the following:

  • The investor can quickly browse through your profile to get a good sense of your professional background and relevance to the startup you are working on
  • Check for mutual connections to do a quick reference check

But, here are a few suggestions while trying this approach:

  • Do some research on the VC firm you are trying to reach and figure out the most appropriate person to reach out to, based on their profile. Most investor profiles list areas of investment interest (e.g. internet, mobile, education, etc.) and so this should not be tough to do
  • Reach out only to one or at most two people at that firm who are appropriate for your particular startup. It does not help if your ping everyone in the VC firm. Yes, this does happen often and if anything it’s counterproductive. What happens is one of the investing team members who receives this, will forward it to the other team member who is more suitable to look at your company (based on interest areas) and if they realize you pinged all the members indiscriminately, it shows that you have not done any research on which of the investors would be better suited for your startup
  • If you have a mutual connection with the investor, see if you can get an introduction by the mutual connection (especially if this person knows the investor well and is willing to refer you)
  • Avoid requesting to “add as connections” directly. Try sending a message via InMail or through mutual connections. Many investors are particular who they add as connections and so, if you directly try adding them, they might “ignore” your request
  • See if the VC is part of any group that indicates a mutual interest area and use that group to reach out to him/her
  • Keep the LinkedIn message short giving a 3–4 sentence summary on your teams background and what you are trying to do. Ask the VC if you could get 15 mins over the phone to give more background and see if mutual interest. Avoid very long messages.

While on the topic of reaching out via a social network, I would highly recommend reading the following article by Ried Hoofman on “The real way to build a social network“, if you haven’t already read it.

On this #TeachersDay

On this #TeachersDay

This is more a personal post. I grew up watching my mother put her heart and soul into teaching for more than 25 years of her working career. My childhood memories revolve around her always doing something around teaching — even at home — correcting papers, preparing for her class, etc.

And my wife, is a music teacher who went to the prestigious Berklee College of Music and loves teaching. And is one of the most sought after music teachers in Bangalore in her private music studio

And so it goes without saying, I have a real soft corner when it comes to teachers. I still remember with appreciation all that teachers have done for me, right from school to college to my post graduate degrees. I won’t be what I am today but for all those wonderful teachers. And I’m sure most of you resonate with what I’m saying.

On my encouragement, since both our kids go to school now, my wife decided to put her teaching skills to broader use and has been teaching for a couple of days a week for more than a year now. This is in one of the most reputed schools in Bangalore

Through this process, I realized, how little we value teachers in our society. My first shock was on finding out how little teachers get paid even in this day and age — irrespective of their backgrounds and what kind of schools they teach in (private, international — doesn’t matter). An entry level software engineer (from a decent college) probably​ makes more money than most teachers you know. And this is for the most important job of educating our next generation.

But, what’s even worse is that they are treated as dispensable commodities in the schools. From what I hear, most of the teachers in my wife’s school feel they are treated badly — and when I checked with other teachers in my ecosystem they reflect the same. And they are forced to work there since they don’t see an alternative.

An incident happened a few days back that was the hair that broke the camels’ back for my wife. She was called into the office along with another teacher by the HR person in school. When they went into the room, the HR person didn’t even offer them a seat (this was the first day of the new academic year) but handed them their contracts and shared the salary information verbally in front of each other. Imagine if that happened to you and a colleague, with your HR. A complete invasion of privacy!

My wife was so devastated and disappointed that she decided to resign the very next day after informing the school management. Funny thing is that the school management feels the HR person did nothing wrong! And this is one of the top schools in Bangalore.

Why aren’t more teachers voicing such concerns? Because most have no other income streams and are afraid they might lose their jobs if they speak up.

On this #TeachersDay, I write this with a heavy heart. I don’t have any solutions but wish this sad state of affairs changes and changes soon in India. For any teachers out there, please do share if you feel I have this whole thing wrong and things are much brighter out there. That would be very encouraging to hear.

Management Lessons from Movies

ManagementLessons

Had the pleasure of hanging out with my longtime friend Gokul last evening. We were chatting about his book “Management Lessons from Movies” and I was  excited to get a signed copy from him. It is a quick read and I really enjoyed it. I was surprised to find that I had seen 20 of the 33 movies he refers to in his book – not being as big a movie buff as Gokul – he sees on an average 230 movies in a year across most Indian and world languages!

I have created a IMDb List for those interested in checking out these movies. The average IMDb rating is 8.25 for the movies and so a good collection. Gokul has classified these movies into 25+ categories such as the few listed below and in each category he has listed at least 4 movies (in addition the movie he reviewed) and so in all there are more than 100 good movies to checkout from the book. Some of the more fascinating categories that I plan to check out (Can you guess which movie belongs to which category from the above IMDb list?):

  1. Reverse Chronology
  2. Parallel Universe
  3. Time-loop
  4. Docu-fiction
  5. Hyperlink Cinema

And a handful of takeaways from the book that I found particularly relevant to startups – listing a few of them here so that you can checkout the rest in the book directly.

  • Sky is the limit (Forrest Gump)In the book, Gokul quotes how Forrest keeps stretching his goals while running “That day, for no particular reason, I decided to go for a little run. So I ran to the end of the road. And when I got there, I thought maybe I’d run to the end of town. And when I got there, I thought maybe I’d just run across Greenbow County. And I figured, since I run this far, maybe I’d just run across the great state of Alabama”. The same applies to startups – first you focus on getting one customer, then ten, then a hundred and the good ones just keep scaling – and there are challenges all along the way, which you take it in your stride.
  • Managing with Limited Resources (Children of Heaven, Persian; Taxi, Persian; The Birds, English) – There are multiple examples of managing ones meager resources and this is a theme across three movies at least – its either the protagonists managing meager resources (Children of Heaven) or the director making the most of his limited resources (Taxi). It goes without saying, startup journey is all about making the most from very limited resources of time, money and talent.
  • Know your team’s strength (Lagaan) – One of the few Indian entrants in the book, it talks about how the protagonist builds a strong team with a handful of riff raffs just by identifying special skills that each of them possess. Goes without saying how applicable this is to startup leaders.
  • Small Joys Matter (Amelie, French; Lagaan, Hindi) – In this busy world, we don’t end up celebrating small successes as much as we should – this is well highlighted in these two movies and very relevant for most of us reading this blog and in particular startups that are always running at light speed with very little time to stop and celebrate the small victories.

There are 100 such takeaways in this small but very delightful book. Hope you get a chance to check it out and maybe the movie buff in you will spot a movie and a lesson that Gokul missed. If so, do highlight it here in the comments.

Note: Blog also posted here

Indian Urban Mass — The Next Frontier?

 

In my previous blog, I wrote about what products/services are online in India. In it, I referred to the Indian Urban Mass as coined by Goldman Sachs in their detailed report on India. It is a very insightful report and I’m including a couple of images from that report in this blog.

At this moment in time, India has north of 300M smartphone users as per various publications (here’s one report by the Economic Times). With the launch of Reliance Jio, and subsequent mobile data price wars, the average price of data in India is one of the lowest in the world. What this means is there are 300M+ people in India capable of transacting online.

But, when you actually look at the transaction data across the various businesses described in the blog above, there are only about 60M+ people transacting online. One of the major reasons for this is the income levels across India. Majority of people transacting online belong to the top 4 categories of people in the Income Pyramid – Movers&Shakers, Govt/SOE Employees, Urban white collar/SME owners and the Educated Urban mass – which add up to about 60M.

Don’t get me wrong, these 60M people are transacting quite actively on the internet. If we look across startups in India, some of the best in class startups which started around 2015 are able to get to a scale (in terms of # of transactions/day or GMV) in half the time than a startup that started around 2011-12. This is mainly because of the increasing comfort of the higher end of the Indian consumer to transact online – thanks to the first generation of Indian startups such as Flipkart, Myntra, BookMyShow, Ola, etc. to name a few.

Having said that, the 60M transacting users is still a small fraction – 1/5th of the smartphone users. And that bring me to the reason for this blog – the importance of the Urban Mass in India. The Urban Mass, comprising of the Educated Urban Mass and the Urban blue collar/migrant workers account for about 130M people in 2015 and projected to grow to 165M by 2020. Their average income is projected to grow from $3200 (2015) to about $4800 (2020). This is projected to add about $400B in aggregate earning pool.

GoldmanSach_Pyramid_UrbanMass_Projections.png

If you look at most of the online services in India, only a few of them currently cater to this Urban Mass population. As an example, very few services in India, like Flipkart, Amazon, Ola serve north of 50 cities in India. But if you look at many of the other online services in India that are listed in my previous blog, they are focused on probably 20 cities or lesser in India. In comparison, many of the online services in China serve 300 cities.

Over the next 5-10 years, the Urban Mass with their increasing income and widely prevalent internet connectivity are going to consume/demand more of these online services. There will be a class of products/services that will cater and scale to this Urban Mass. But, there are probably going to be a new set of companies created who are more focused on this Urban Mass.

Any predictions on which products/services will be unique to the Urban Mass –  in the top 20 cities or the broader population in the next 100+ cities? This could be across categories such as communication, commerce, entertainment, health, education or any other sector.

Note: Blog also posted here

What’s On(line) India — 2017?

This is an update on a blog from 2011 titled What’s On(line) India? I wrote that blog about a year after I moved back from US and compared the online services that were available in India to the ones in the US. I had identified a few areas where the services had just launched in India and a few more where we did not have an equivalent service in India.

I was curious to check how things have changed in India and so did a refresh of that table.



Some observations:

Most categories popular in the US are all available in India and with reasonably good options

There are a few categories (particularly in O2O) that were non-existent (or very early) in 2011 that have quickly evolved in both US and in India and have got to reasonable scale. These categories are highlighted in green.

The categories that are driven by subscriptions or purely digital revenue (e.g. Movie rentals) are still early in India — particularly since subscription businesses are yet to catch the Indian consumers favor.

Most of these products/services are still getting traction mostly from the top of the Indian consumption pyramid

With the growing smartphone penetration and growing income levels, we can expect some of these products/services to trickle down to the next layer of Indian consumption — what Goldman Sachs calls the Urban Mass


The above list is by no means exhaustive. Curious to hear what products/services you would love to order from your mobile or your computer that you are not able to yet in India.

Note: Blog also posted here

This is an update on a blog from 2011 titled What’s On(line) India? I wrote that blog about a year after I moved back from US and compared the services that were available in India online to the ones in the US. I had identified a few areas where the services had just launched in India and a few more where we did not have an equivalent service in India.

I was curious to check how things have changed in India and so did a refresh of that table.

WhatsOnLineIndia

Some observations:

  • Most categories popular in the US are all available in India and with reasonably good options
  • There are a few categories (particularly in O2O) that were non-existent (or very early) in 2011 that have quickly evolved in both US and in India and have got to reasonable scale. These categories are highlighted in green.
  • The categories that are driven by subscriptions or purely digital revenue (e.g. Movie rentals) are still early in India – particularly since subscription businesses are yet to catch the Indian consumers favor.
  • Most of these products/services are still getting traction mostly from the top of the Indian consumption pyramid
  • With the growing smartphone penetration and growing income levels, we can expect some of these products/services to trickle down to the next layer of Indian consumption – what Goldman Sachs calls the Urban Mass

The above list is by no means exhaustive. Curious to hear what products/services you would love to order from your mobile or your computer that you are not able to yet in India.

Note: Blog also posted here

 

 

 

Accel @ Nasscom Product Conclave 2013

Wanted to briefly recap a couple of events in which Shekhar Kiran and I had the pleasure of participating at the recently concluded Nasscom Product Conclave 2013. Overall, we really enjoyed being at the event (this is my third year attending the event). Just like previous years, the 2013 event managed to get a great set of entrepreneurs to attend and really enjoyed interacting with them. Now to the recap.

Building fundable startups

Shekhar Kirani (my colleague at Accel) and Vijay Anand (from TheStartupCenter in Chennai) brought out the essence of how to build fundable startups in this 45 min panel. Topics where covered in a top-down fashion where they set the context that for Indian VC’s a good exit to shoot for is $200M+. And to achieve that the two essential components are – market and team. They went into great detail on how to pick the right markets and what are the essential components of building a team. If you are a first-time entrepreneur, would encourage you to spend 45 mins reviewing the following video.

Desi vs Pardesi Capital

I had the pleasure of moderating a short 30 min panel on raising capital from Indian investors vs. from investors outside India. More details about the context for the panel is here in this blog post. A quick summary of what we discussed:

  • If you are a startup going after the local Indian market, your best option might be to raise capital from India
  • On the other hand, if you are startup going after the global market, you might want to talk to investors from India as well as outside.
  • We also discussed nuances of fundraising outside India and then trying to raise capital in India (and vice versa).
  • And a shameless plug, there are funds such as our own (Accel.com) that has global presence and so you have flexibility to raise capital and get help from our team in India as well as across the globe (US, Europe and China).

We are sure there are many questions we did not manage to cover in our short sessions. Please feel free to share those via our Accel India Facebook page.

 

Is it a good idea to ping an investor via LinkedIn?

I personally think it is worth a shot for an entrepreneur to try reaching a potential venture capital (VC) or angel investor via LinkedIn. Particularly if you can find a mutual contact to provide an introduction. The main benefits of this approach, over just cold calling or dropping a note on the investing firms website, are the following:

  • The investor can quickly browse through your profile to get a good sense of your professional background and relevance to the startup you are working on
  • Check for mutual connections to do a quick reference check

But, here are a few suggestions while trying this approach:

  • Do some research on the VC firm you are trying to reach and figure out the most appropriate person to reach out to, based on their profile. Most investor profiles list areas of investment interest (e.g. internet, mobile, education, etc.) and so this should not be tough to do
  • Reach out only to one or at most two people at that firm who are appropriate for your particular startup. It does not help if your ping everyone in the VC firm. Yes, this does happen often and if anything it’s counterproductive. What happens is one of the investing team members who receives this, will forward it to the other team member who is more suitable to look at your company (based on interest areas) and if they realize you pinged all the members indiscriminately, it shows that you have not done any research on which of the investors would be better suited for your startup
  • If you have a mutual connection with the investor, see if you can get an introduction by the mutual connection (especially if this person knows the investor well and is willing to refer you)
  • Avoid requesting to “add as connections” directly. Try sending a message via InMail or through mutual connections. Many investors are particular who they add as connections and so, if you directly try adding them, they might “ignore” your request
  • See if the VC is part of any group that indicates a mutual interest area and use that group to reach out to him/her
  • Keep the LinkedIn message short giving a 3-4 sentence summary on your teams background and what you are trying to do. Ask the VC if you could get 15 mins over the phone to give more background and see if mutual interest. Avoid very long messages.

While on the topic of reaching out via a social network, I would highly recommend reading the following article by Ried Hoofman on “The real way to build a social network“, if you haven’t already read it.

Note: Pluggd.in published this blog here.

 

 

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