[MUSIC] They say, let me just go raise some money, and then I'll worry about whether I can get customers. And if I don't, then what? Are they thinking about that? Or are they just not really thinking that far down the road? >> Given that despite the very positive funding outcome, far fewer than half of the startups actually raise money, the question is what happens to the rest? They do go back and try to improve their metrics. Having focused on metrics such as downloads and all the other non-revenue, non-monetary metrics, seven of them will start looking at the options of coming up with customer attraction. However, this is where I think they make the second mistake and get a very self-serving customer pool, such as people they know, or people who they can directly influence. Or even if there are genuine real customers, maybe a set of few early adopters and then they come back using listen, I spent zero money or closed to zero money and see I got 25 paying customers, or depending on depending on the sector, it might be 200 paying customers. Just imagine had you given me $100,000 US, imagine how many more I could get? That is their second line of action, pretty commonly done. Except that I think investors are fairly smart now to recognize that that too isn't real traction. >> I think about India, there is kind of built-in scarcity in some parts of India, in a sense, in that what's available in big cities like Mumbai and Delhi for example, simply isn't available in the small towns, the tier two, tier three cities or the rural parts of India. To what extent are entrepreneurs seeing that scarcity as an opportunity to go serve those kind of markets? >> I have seen both kind of situations. One, where entrepreneurs deliberately try to go bridge the gap and even out the scarcity and two, right out of their league, a broad based approach, and noticed that the maximum positive outcomes were coming areas where there was no scarcity. Here's an example for you. There was this e-commerce website solely selling brand name cosmetics. Now brand name cosmetics are pretty commonly available because these are the regular brands. But despite that, they found that they got a pretty good fraction in the Northeastern part of India, which they eventually realized was not well served by the supply chains of these cosmetic companies. As a result, they started just shipping, in some cases, their courier companies could not access those areas but the Indian post, the postal department does. So they just started posting out these cosmetic products to them and they made a very good business out of it. Like I said, you're absolutely found out a significant opportunity in India, just like there are others such as the absence of infrastructure and hence, creating solutions around that. The fact is there are pockets, where there's a lot of scarcity and it may not just be the rural or inaccessible areas such as you listed or I gave an example of. Sometimes it might also be that urban areas lack these. For instance, and this is kind of a really crazy example, to the best of my knowledge, there's only one city in India, which is Goa, which allows motorbikes to be used as taxis. You get somebody to sit behind you on a motorbike, and I'll be a taxi and almost no other city does it. Now that they became a startup, it was trying to aggregate these motorbike taxis. They did not see any reason why the bigger cities shouldn't have this also. So they have been lobbying to get into bigger cities. The biggest cities have not yet allowed it, but they have managed to open up some new cities. They have located scarcities even in the reverse fashion, which means in more major metropolitan areas. >> Yeah, very interesting. One of the interesting challenges, it seems to me, in setting up new ventures, especially digital ventures, today in India, is the question about do I do it on mobile? Do I do it on the web? PC penetration is nothing like mobile penetration in India. What do you see happening in that regard today? Are people skipping web and going directly to mobile for e-commerce, for example, or are they doing one, they doing migration to the other? How's that playing out? >> The two common slogans are mobile first or mobile only. I have found that, at least, in the e-commerce space, there's not even a single successful story coming out of either of those slogans. The reason is that to get the user to download yet another app and use it is successful only when you're giving them an outrageous deal and continues to remain successful only as long as that outrageous deal is with you. The greatest success on mobile related e-commerce and other transactions are coming from fairly large players who had already established a good business on the web and now are encouraging people to download their app. Though the amount of mobile penetration and mobile internet penetration has far surpassed that of the desktop, to use the mobile platform as your first platform hasn't yielded dividend yet. >> Very interesting. Myntra, for example, decided that it would shut down its web platform and migrate to mobile but it was able to do that only after establishing a strong presence on the web in the first place. Is that the prototypical example? >> That would be, but since you mention Myntra, here's the interesting part about that. Myntra is now owned by Flipkart. >> Right. >> Now, just about the time when Myntra said that they would go app-only, which none of us believed they would actually do, because why would you give up a channel of marketing, was the conventional wisdom. But around the same time, they said that shortly after Myntra goes app-only, Flipkart also would go app-only. Now Myntra, to that extent that we realized, was probably an experiment, to see if Myntra works, then Flipkart, which is probably 10x the size of Myntra, and owns Myntra, would also move to app-only. But that didn't happen. In fact, they are no longer even talking about it. Though they have not gone back to the web model but the fact that the parent company that made the decision of taking them into app-only has not done app-only, the mothership, that says something about the efficacy of the product. >> Yeah, interesting. Entrepreneurs may get all enamored with the level of smartphone penetration, not only in India, but in other developing places too. Africa, Latin America, we have the same phenomenon? They get enamored of those numbers but you're saying the consumer doesn't behave that way and if you can't establish it first on the web, then maybe that's not the way to go. >> Absolutely, the only exception would be applications which are intrinsically only mobile. >> Such as what? >> For instance, such as, for example, digital wallets which means you can go to an off-line retailer and pay digitally. No you're not going to carry your desktop or your web device, so buying such applications or maybe listening to streaming music on the go. Both kinds of applications which only make sense if you are on a mobile device, a moving device which really is mobile. I think that barring that you have got to be web first and this is not just my opinion, my opinion is driven by what I have observed over the majority. >> Yeah, what about tablets, is there a role for tables in India today, or is it either mobiles or laptops and desktops? >> I think that mobile phones are tablets today. Unlike the earlier, I would say about like five years ago, when people wanted to have a sleeker, the slimmest mobile phone, the emergence of the smartphone has just made mobile phones larger and larger. Even a global giant like Apple earlier would not have these large phablets, that is phones which are also tablets. But if you can see, with every generations of the phone, and including the most recent success I believe, they have allowed still some more space on the screen. >> Yeah, they get bigger. >> I think that is an actual way to go. Tablets, in the classic sense, which were like the iPad or something which have screens as large as your desktop, I do not see them being used as much, unless they are being used as a laptop as well as a tablet. But phones themselves have become tablets for the. >> What other things are on your mind that might be interesting for entrepreneurs who are in the early stages of starting a business and who could learn something from India and from an investor in India? [MUSIC]
