The hydrocarbon powered Boeing jet touches down with a squeal of tires. Turbines whine down and we step off of the plane into another world completely.
It is dark out. Over 20 hours on a plane and you begin to question reality. We find ourselves in the pickup zone of Bangalore International Airport. Uber and Ola cabs whiz by. People dressed in saris and turbines scream, “Taxi, Taxi!” in a mix of Hindi, English, and a dozen other languages.
We are witness to a cacophony of sights, tropical smells, and colors as we step into the darkness of a cab, and take off into the night.
Welcome to India!
Upon traveling to Bangalore (or Bengaluru under India’s Modi administration), I had the expectation I was traveling to a developing country. What we discover is a highly developed nation facing the similar problems as every other developed nation.
In fact, what we learn is that India has a completely revolutionary approach to ideas, infrastructure, and the startup ecosystem in which we came to visit.
As I write these words, I take a moment to reflect how different India’s approach to life is. I look up from my macbook, and listen the 5:30am muslim prayer calls echoing amongst the trees and tropical birds of the suburbs of Bangalore. Imagine a mosque blasting prayer calls in America! There would be civil unrest.
Another far more absurd example is internet connectivity. 4G is plentiful and cheap around Bangalore, costing around $14 for a ~10mb/s 10GB plan! Holy Shit!
In America, Verizon charges almost $200. Even better, if you can afford it, the house in which I am staying has a fiber optic connection – almost impossible to get in San Francisco.
Now when claiming that India is highly developed, one should not ignore the fact that many problems still remain. Trash service is unreliable, tap water contains contaminants, power can be iffy at times. Like every nation, there are problems.
What is so revolutionary is that the local startup culture thinks of these problems as huge opportunities. The social, digital, and financial infrastructure encourages those willing to challenge these problems head on. Modi’s “Make in India” campaign is encouraging startups and entrepreneurs on a national level.
And the solutions to Indian problems will have a global impact. When we begin to look at India from the perspective of the world’s largest democracy, or largest youth population, or largest english speaking nation, one’s perspective shifts.
It is these perspectives that we begin to look at the world in a completely new way. The city of Bangalore has the feel of a performance just getting started. The orchestra is warming up, the streets are filled with hum of tuning instruments and chatter of what’s to come.
We walk down 80 Feet Main Road in Koramangala, the neighborhood home to the bars and coffeeshops where billion dollar companies begin. It is this neighborhood that has given birth to several of India’s top startups. Founders pitch in cafes, engineers and designers work from restaurants and bars.
The city is in motion! Surely if there was a Philz Coffee, it would be here here in Koramangala. (Sorry It’s a San Francisco thing). Instead there are are several coffee shops, Costa and Starbucks being noteworthy.
Inside Costa, we see a handful of entrepreneurs hashing it out with venture capitalists, even on the weekend. Several people use Costa Coffee as their headquarters and office.
It is this environment, open to the free exchange of ideas and knowledge that helps fuel the startup revolution in cities like Bangalore and around the globe. The first place to look is the local coffee shops.
We meet with a startup, Create To Disrupt. One of their founders speaks excitedly about the startup scene here. “We’re incubating ideas at the earliest stages,” Akshay tells us, who is a co-founder of Create to Disrupt.
“We’re building a model for pre-totyping, validating the ideas that can truly have an impact.” A few thousand US Dollars in India is all it takes to build a team and pre-totype the next big thing.
He tells us of his idea to revolutionize water delivery in India with a simple app. “We want to bootstrap ideas [that can solve humanity’s problems] at the earliest stages.”
The area is buzzing with excited youth. Engineers, designers and artists each wanting to make an impact on the world, each working to build the next big thing.
The whole place has the feel of Silicon valley in the early 1990s, the place is humming with expectation and venture capital. The only major differences I have witnessed is that Bangalore has more trees and cows in the streets, and far less homeless people dying about (as India has a much more developed human infrastructure).
Indian startups aren’t afraid to look at American or Chinese models and ask “Is this sustainable?” or “How can we mix engineering and design?” or even more controversially, “Is there a bubble?” something very faux pas to mention in San Francisco.
In my experience the modern scaling model for startups works like this: take a giant pile of money (the bigger the better), then douse it with gasoline, and light it on fire. This is called seed funding. The size of the fire roughly correlates to the startup’s presence, or traction in a given area.
Until the end of 2015, the size of the fire (for software based companies) was measured in MAUs, or monthly active users. More MAUs led to more rounds of funding. 2016 brought the end to this model, as more users doesn’t directly correlate to more profits.
Venture capitalists are now looking at a revenue model instead, based on the assumption that revenue will eventually be converted into profit. Think of revenue as the rate that money is being shoveled into the fire. If we shovel more money into the fire than can be burned, the access money is growth.
This shift in investing has turned San Francisco upside down during 2016’s Q1, and has lead to me personally wandering the planet, searching for a better solution.
Again, this is highly controversial, but operating at a loss is how companies like Amazon, Alibaba, Uber, Tesla… etc have scaled to the size they are today. These companies operate at substantial loss (we’re talking millions of dollars annually) to grow and dominate a market. What keeps them alive is the fact that they are taking in billions of dollars in revenues.
How this relates to India, and what makes me so excited is that here in India it is culturally acceptable to question such methodologies. In San Francisco VCs say “Shutup, this is just the way we do things. And we’re not ever investing in hardware startups.” But in Bangalore people are asking, “What if there’s a better way?” It’s this thinking that is breeding the next renaissance in innovation.
No one is really sure what happens next. When a billion dollar company (in terms of revenue) is operating at a loss, they will eventually have to raise prices to make a profit. Now this is easier to do with large amounts of revenue to work with. The problem is that another player willing to operate at a loss can come in and drive out competition.
An economic war is playing out before us.
In a global landscape, companies like Amazon can come into India, burn cash, and put pressures on local e-commerce giants like Flipkart. If Amazon loses their stake in India, their stake in the US could be at risk.
There is another card waiting to be played, China. Companies like Alibaba can come into the US and burn cash (Alibaba is much larger than Amazon and Flipkart in terms of revenue), and now Amazon could be in trouble.
E-commerce is just one example.
This cannot go on forever! Or can it? It is this debate that is heating up in the global startup space, and from my experience, very few people are openly talking about these issues in San Francisco.
Perhaps it was this absolute insanity that drove me to take a break from San Francisco and explore new perspectives. Many others are asking “What’s next? What else can be done?”
An anonymous marketing expert told me that the failure point is that companies are marketing for India’s poor, both locally and internationally.
“Indians don’t aspire to be poor,” He tells me, “They aspire to be rich, not in terms of dollars, but in a fulfilling life.” It is these incorrect assumptions about India’s population that are giving startups here in Bangalore the cutting edge over companies in San Francisco. “We market our products for the [contemporary Indians], yet make them accessible to everyone.”
This is why we see international companies building offices and shoveling capital into Bangalore. India is a market too valuable to lose.
An intimate sense of change permeates Indian culture, and is spurring the next billion dollar startups. This is encouraged by a complete renaissance in design. Demand for designers in Bangalore has increased exponentially in the past six months.
I meet with dozens of designers and they tell me, “Something is happening here.” People here are embracing innovation in design thinking itself.
With over 1.2 billion people, the Indian market can support these new ideas. India’s smartphone penetration is only around 20% (they skipped the desktop computer revolution almost completely).
In comparison, USA has around 300 million people, roughly the number of Indians using smartphones! And India’s smartphone penetration will double in just a few years. Again the perspective begins to shift.
A cultural and economic revolution is taking place, and Bangalore stands at the center of it. I have a strong love for San Francisco, it is a beautiful city, even with its flaws. But even more importantly, I have a love for humanity as a global species. If we keep thinking in terms of just one country there are going to be problems.
We live in a global world. Ideas pass through fiber, reaching other lands in nanoseconds. If we aren’t open to new ideas, new ways of thinking, an openness to question reality, then we will all be in trouble.
In our previous article I explained how I grew up in the rust belt of America. My childhood was spent playing in the rusted-out manufacturing centers of industry moved to China. A shift is happening in now finance and ideas, and I want to see global participation.
In San Francisco, albeit even in India, there is a huge resistance to investing in hardware startups (short-term returns for hardware startups are generally less than software startups).
We must look from a global perspective, and see that this “hardware is hard” thinking is not only bad for local manufacturing, but global sustainability as a human race.
It is up to everyone to be asking the right questions, learning not just from the people around us, but the companies and international communities that make up our tiny globe. We are at the dawn of the 21st century, America, India and China are the emerging superpowers. Countries all over the Earth are growing and coming online.
There will soon be 10 billion people on Earth, each requiring food, water, energy and Internet. Today, no sustainable way to provide any of these resources exist. These solutions will require software, but more importantly a hardware infrastructure.
If we continue to believe “hardware is hard” then we could soon find ourselves in the dark ages. It is only a global perspective, and in our willingness to learn that we will find the solutions to humanity’s direst of problems.
I see India a the perfect testing ground.