World is not flat

by Thiyagarajan Maruthavanan (Rajan)

At least for enterprise software startups.

Fact, one of two enterprise startups in the valley has an Indian founder or a co-founder

Fact, earlier they had back office in India now they have front office as well. Largely due to how SaaS is changing how buying & deploying is done inside an enterprise.

Still pause before you quit your job at NetApp, Cisco or Microsoft or any other MNC R&D India office. Starting up a B2B startup from India you must think of few things before jumping in.

Thomas Friedman won awards and accolades for writing that the World is Flat in non-fiction category. In your reality, you have to cross at least four big chasms.

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Capital Chasm

There is more money in India than there are good ideas.  However this money is on a blood-thirsty hunt for unicorns. Flipkart turned real, was not a mythical unicorn. It means more unicorn chasing.  This money therefore stays blind to outcomes that can happen via relatively smaller yet meaningful exits. An outcome any typical enterprise software company is more prone to. Moreover as an ‘Aam Aadmi Founder’ (Average Joe Founder) capital for you will still need the collar tags of IIT, IIM & Harvard. Your experience tag at NetApp may not cut it.

Industry reports will surprise you with the claim that there are thousands of B2B startups in India.  Still funding to your kind of venture will be a trickle. [side note – Remember that an Industry report exists to make things look rosy and get someone a promotion]

Billion dollar funds may announce of writing cheques for B2B. They may momentarily focus their money hose at a few. The key to understand here is that unlike the consumer world, enterprise is not winner takes all. Raising massive funding does not give an edge over the competitor.  After not meeting their appetite size many will even drift away leaving you laden with a bloated cap table.

It will be easier to find a global executive that writes small cheque across the sea for you. Someone who is willing to make ton of phone call but for him the chasm will be more real than just mindset.

RBI and the archaic piece of regulation called FEMA will dread him with torture of moving the money in and out of India. While designed to catch fraudulent diamond merchants, it will let those exact merchants flee and but strangle the handful well intentioned angels.

Where you anchor yourself and head quarter will matter more than pundits are willing to admit.

Anchor yourself right

Customer Chasm

If you setup both front office and back office in India first, your tendency would be to hop a few neighborhoods and chase the big elephants of banks and insurance players in India. Dancing with these elephants is no different than a casting couch experience. Yet you can’t see beyond this chasm because we are all prisoner of our own experiences. An apt corollary for ‘out of sight , out of mind’ is ‘what is not in sight is not real’. It may be easy to drive a sales process across geographies but the lack of experience traps you into believing that you should sell local.

Outsourcing industry first proved it. What has not changed in last three decades is that it is easy to make a dollar than a rupee.

Data from the upstream global software products industry will tell you that half the $650 billion in software revenue comes from US.  Still that trap in the mind will stop you from thinking of yourself as a global brand from day one.

Think Global, Act Global

Product Market Fit Chasm

Product market fit is warm a fuzzy feeling. One that you get through speedy iterations of your focus. Focus of problem, messaging & pricing to a segmented set of folks. When you get it you will know you are headed in the right direction.

But product market fit is not exportable from one geography to another.

The business case you make before you get product market is a big hand waving narrative you must tell. To sell a story for fund raise at this stage you will need to be referencable.  Therefore before product market fit moving the front office (includes founder) to new geography can sometimes be fatal. It will be like putting a a star cricket player to a baseball game, he can swing his bat alright. But winning is whole new different game.

Being #ValueSaas i.e getting to product market fit capital efficiently before the move can ease that move. Your business case will be more data and less narrative. It will need less of relationship and references and stand more on the merit of business.

Don’t jump before you are ready

Distribution for Scaling Chasm

Post product market fit, distribution & scale is the next big step.

As you re-jig front office presence you realize that hiring in US does not solve the local sales and go-to market problem.

After firing the 3rd VP of sales and 2nd marketing head you will realize that you the founder is still the best sales closer.  At this stage you must move to the new geography to solve that problem.

Your situation will need a solution that needs thinking through ground up. What works for Freshdesk does not work for Whatfix. In fact quite the opposite. There is no single playbook for this.

Every one must arrive at their own. And then only rinse and repeat.  Strategic partnership can become a big part of that answer. If a lead to customer cycle can take 2 months, strategic partnerships can take 2 years. Investing efforts for this a bit in advance would be a good move

And If you have laid the foundation well during the previous three chasm then this will be lot less stressful.

Design your own playbook.

They will tell that there are no chasms, it sells more to say the world is flat. It is not.

Knowing about these chasm and being prepared in advance increases odds of becoming a global software brand whose anchor you want to start from India.

Learn from the mistakes others faced but chart your own path err playbook.