The first-generation tech entrepreneur story in India is perhaps just a few decades old. Somewhere around the turn of the millennium, we saw more people move away from the “Engineering + MBA = Banking Job” formula to strike out on their own.
Within those, we saw people who started businesses for unique Indian opportunities, like Phanindra Sama at RedBus, Mohit Dubey at CarWale, Vikram Vora at SabKaDentist, Vivek Prabhakar at Chumbak or, my namesake, Mahesh Peri at Careers360.
Each of these folks worked hard to build businesses that earned more than they spent and only took capital to help grow businesses that were already fundamentally profitable. (Full disclosure: I am happy to have backed all these great founders.)
Then there were the folks who took a different part. They quickly built and scaled the “X of India”, which on the face of it, were copy-cat companies to those that already existed elsewhere. Flipkart tried to build the Amazon of India, just like Snapdeal and so many others did. Guruji tried to build the Google of India. Another Bengaluru firm Minglebox tried to be the Facebook of India.
And the trend continues. Jumping into the fray when India blocked Chinese apps were MX TakaTak and ShareChat Moj, which tried to be India’s TikTok. Koo has capitalised on the Central government’s dislike of Twitter’s independence to try and be the very obedient Twitter of India. And, of course, Ola has tried forever to be the Uber of India.
These firms have not really worried about profitability or building a sound business. They have taken funding to overcome fundamental holes in the balance sheet and still grow. Their plan has always been to sell out to the “X from elsewhere” before the company finances hit the fan.
Sure, there is not really a business that stands on its own at the end of sale. But, the founders walk away with a pile of cash. Flipkart showed the way here, persuading—to put it mildly—Walmart to buy the loss-making firm for $16 billion that left the founders billionaires. Walmart took a hit to its balance sheet and market cap and has long since tried to plug the red in Flipkart’s finances and build a real business out of it.
But the bet does not always play out. Guruji and Minglebox did not get the money to go the distance. Masayoshi Son, who backed both Uber and Ola, could not get the former to buy the latter. So, Ola has since needed to try and diversify into making e-scooters to try find a solid footing. And, the jury’s out on Koo, ShareChat’s Moj, TakaTak and the others.
As an investor, it is a bitter-sweet moment for me to look back on calls we took. We passed on the Flipkart opportunity over 15 years ago. We guessed then that the company could never hit cash flow break even in a long time.
While we were right on that, we did not imagine that we could have still backed it and made a 1000x return on our investment in, admittedly, a company that was built to be sold, and not to really make any money itself. This was then an alien concept to us.
Other funds have backed these “built to sell and actually not make any money themselves” start-ups and done really well for themselves. More power to them from my end!
This, of course, leaves a discussion pending on what a venture capitalist should back: the companies they can flip or the companies that can actually make a difference. It is not a debate which can be easily settled, anyway. It all comes down to one’s purpose.
But, it does bring us down to the present, some 20 years after I started investing in Indian founders and their companies.
Today, I spend an increasing amount of time outside India. I come across Indian founders everywhere. There is more I seem to meet in a month in Dubai than I do in a year in Mumbai.
I hear what they are up to, and I am increasingly warming up to it. Sure, many of them have moved because Singapore is no longer the expat-friendly place it used to be. The UAE government is making the right moves with golden visas in this regard, pulling the cream from those who had moved to the garden city earlier.
But, there is an increasing number who are here because they are seriously focusing on markets in the region. MENA, EMEA and other market terms are increasingly being bandied about—that is the “Middle East and North Africa” and “Europe, Middle East and Africa” for you.
Lenskart has opened a bunch of stores in the Middle East. PolicyBazaar is here. So is Naukri. As is Ferns N Petals from the gifting business. Zomato has grown here. My friends at Sequoia seem to now be based in the UAE.
I hear the adages already: “if the UAE market is X, then Saudi Arabia is 2x, Egypt is another X, the rest of the GCC yet another X and put it all together, the 5x amounts to another India.”
These entrepreneurs all have strong back offices (and front offices in some cases) in India. But they have grown beyond the “India is my only market” mantra and are looking to solve real problems in other geographies as well. Some have set up branches. Others have moved their head offices out of India.
When Indian services firms once went blindly to Singapore and the US to set up offices, Indian product firms are now seeing these geographically closer markets as easier to crack. It certainly does help that you can sell in the Gulf Cooperation Council (GCC) region at more than twice the price you do in India and not have to pay taxes on it.
It is not just the UAE that is seeing this new diaspora. I have bumped into founders on the streets of Amsterdam, looking to grow their businesses on the continent after the UK painted itself into a corner with Brexit. A few others are domiciling their firms and their families in Portugal, inspired no doubt by their liberal residence visa regimen.
It is the 2020s-edition Indian entrepreneurs that I call the “ex of India”. They are the people who do not think that their business is just limited to the Indian market. And, they have their reasons to feel so. Some think that India is becoming more of a centrally controlled economy, like China, and talk of what befalls Chinese entrepreneurs when they get too big there—like the tall poppy syndrome that happened to Jack Ma. These entrepreneurs seek to broad-base themselves, like CZ of Binance.
Some others believe India is a great back office for their product offerings while the front office and customers should be where currencies are stronger—think of Zoho’s earnings in dollars versus what it earns in rupees.
Yet some more are simply explorers on the frontier, sniffing out opportunities and then using their formidable back-office strength from India to create a globally competitive offering. They could be the next F.C. Kohli from the next TCS.
They are the trailblazers, and they are inspiring many to follow in their footsteps. The other day, I heard someone being referred to as the Zomato of Saudi Arabia, and it felt good to hear that.
In sociological terms, a generation is a period of 20 to 30 years. If the spark that set off the Indian tech entrepreneur revolution was Sabeer Bhatia selling Hotmail to Microsoft in 1997, now 25 years later, we are bang in the next generation of entrepreneurs.
We have come from the copycats to the cats who are being copied. And, it is all good.
There is no longer one formula that defines the Indian tech entrepreneur. There are folks going deeper into the riches of B, C and D towns in India and others finding markets outside the shores.
While the last 25 years have been exciting, and we have seen the rise of superstar Indian entrepreneurs, the next 25 years will see the rise of superstar global entrepreneurs who would have started from India.
I look forward to writing the sequel to this piece then!
Mahesh Murthy, Founder, Pinstorm and Seedfund
