When Mario plays Soccer
by Thiyagarajan Maruthavanan (Rajan)
Can he become a Super Mario?
Everything about the future is so clearly visible when looked through the rearview mirror.
Wish I knew what influenced outcomes for a tech startup founder in India.
When you look back decade-long to sketch the picture from 2007 till now, leaving out the frenzy of funding peaks & disappointment three distinct picture emerge.
In all cases, the rules of the games for Indian founder are not apparent. The game itself is very different.
First in how consumer technology businesses are built, second how enterprise business evolves. And the third in how technology led acquisition happens.
Software is eating an unevenly distributed world of India
Wiliam Gibson, the famous science-fiction author has said, “The future is already here, it’s just not evenly distributed”
When you spread technology on the world, the thinnest layer gets cornered in emerging markets like India. Combine that with what Andy Rachleff, founding investor of Benchmark Capital has noted “Software is eating the world” it is easy to make sense of consumer tech in India.
It turns out that
Google for India is Google. Not Guruji as Sequoia had thought.
Facebook for India is Facebook, Not Minglebox, Sequoia’s second such bet.
WhatsApp for India is WhatsApp. Not Hike as Airtel had thought.
Jury is still out on whether Amazon for India will be Amazon. (Looking at the skeletons that are tumbling out of Walmart India’s closet, the last word on this may be by Amazon)
Also, the Jury is still out on whether Ola will be Uber of India. Only time can tell.
In a winner takes all market, only one rule exists. Become biggest & largest at any cost. Not just in that geography but globally.
If you are not #1 then you don’t exist.
You can exist for 2 years, maybe 5 years but after a decade only the last man standing residues in the mind.
Once a category is taken, it is better to go after a new one, AgriTech is the flavor of today. Or invent a new one like the mobile mediated ‘Handyman Services’
In all this as Bill Gross, founder of Idea Labs says, timing matters more than anything else.
TIming is the difference between IndiaPlaza & Flipkart.
Selling to Assisted Buying
There is a bigger story than cursory ones on Freshdesk & Zoho reveal.
In 2009 all SaaS revenue as a % of Enterprise Software globally was very small, less than 3%. In 2018 SaaS revenue is more than one-fourth of total Enterprise Software revenue. Given the rate at which SaaS is growing, it will not be a surprise if 90% of revenue of all global Enterprise revenue turns SaaS in the next decade.
This is happening because of an important shift, shift in how software purchase process happen. It has moved from selling to assisted buying.
This shift has provided a big edge that Zoho & Freshdesk leverage. If the product trial experience is good enough, price not too large you can close sales remotely sitting in any part of the world.
Sales acquires a new meaning here, it is not being the door to door roaming water filter salesman, but the sales assistant inside Levi’s jean showroom helping customers try out a fitting and gently nudging them to make a purchase.
In this type of sales, you don’t always be closing, you land quickly and always be upselling. Here the product has to take the lead on triggering emotions and do the initial sell by itself.
Enterprise software never had a winner takes all behavior. Many companies in a category can co-exist sustainably. Several Indian startups have therefore mushroomed in global SaaS
Fear meets greed on a treasure hunt journey
Only a handful of startups grow like a rocket ship to become some of the largest companies in the world.
Majority of them walk down the path of an acquisition. Whether planned or forced this entire process looks like dark art.
Walmart tried partnering with Airtel and Tata group independently to gain entry India and both failed, It felt the heat in the US with Amazon and China market was shut to outsiders. Getting into India was crucial in defining the new phase of the company their stake in the $100b+ market of global online retail.
Billions were at stake for Flipkart, smart late-stage investors pushed the right emotional buttons at Walmart to extract a huge strategic multiple.
In a much smaller case, AthenaHealth from Boston was heading for mobile-first world, their gap in mobile product offering led them to pay $60m in cash to Praxify in Pune. Or most recently Nutanix’s repositioning in the market from hardware box to SaaS company in the public market led them to make a spate of acquisition including the acquisition of Bangalore based Minjar.
In the startup land, a key thing that is missed is what happens in the terrain outside is more important than what happens inside in the making of the startup’s engine.
When a large technology company goes after the same future that a small startup is heading, a lot of emotions get triggered amongst all the players.
A heady concoction of fear and greed inside the large company trigger conditions for the acquisition of the startup to unfold.
This is mostly serendipity and sometimes engineered
A challenge for Indian founders is that even when aligned on the future direction conversations of merger and acquisition don’t happen.
This is because startups don’t come on the radar of the global corporations often enough.
Which explains the lackluster M&A ecosystem in India.
Therefore, it is important to know the play
As is the game, so is the play.
If playing in a winner takes all market, must find a way to be the biggest & largest not in just a geography but in the entire world. And Time it right.
In enterprise software, it is about nurturing a product led, inside sales DNA not the suitcase hogging salesman tribe of the yesteryears.
Finally, for technology-first business, with an acquisition as a likely outcome, it is creating the condition for coming in the radar of a strategic.
Not getting the game being played will see the Mario do a lot of activity.
Which may err into a foul and not becoming a SuperMario.