At scale, every Indian consumer startup is into
- Logistics
- Lending
- Ecommerce
- Marketplace
- Payments
At scale, the core product loses its meaning and it shows up in the horizontal strategy of most of these companies.
Most Indian startups move horizontally and tend to not go very deep in their current market.
The question is why! Why are most Indian (consumer) startups moving horizontally? What stops them going deep?
There are 2 prime reasons for this:
- The Market
- Lack of Product Leadership
The Market Dynamics
The ‘actual’ transacting market in India is MUCH much much smaller than what they show in media or pitch decks.
Most founders (and investors) know the reality of market numbers – but the race is to ‘grab’ land share and most of the times, big bold promises work better than market numbers.
Once startups hit a certain traction, they just don’t see any point in evaluating adjacent markets where transaction isn’t way of life.
Creating couple of new consumer behaviors is solving a deep challenge and most startups aren’t ready for it – needs a lot of patience and experiments, which investors won’t accept.
Take the case of most food delivery companies – they suck in tier-2 cities and soon log out of these markets because scaling operations in these markets is a tough task. So naturally, you try to milk the most out of existing customers (given the cap on tech/operations).
Otherwise how else can you justify your valuation?
Which is why Swiggy gets into Dunzo space, Dunzo gets into Swiggy space and don’t be surprised if they get into lending space (or movie streaming) as well.
After all, customer ko sab kuchh chahiye. If not us, somebody else will do it. So why not us.
Lack of Product-First Thinking?
“Great products do one thing”
That’s your typical Silicon Valley thinking.
But in countries like India and China, they actually end up doing everything. While China has the advantage of transacting population (and the great Chinese wall), Indian startups while trying to copy the China (horizontal strategy) and US strategy (idea/concept), often stand on the verge of becoming irrelevant (ad blitz compensates for loss of focus)
And then a Chinese company comes and wipes out the market – the latest being TikTok, which is an extremely minimal product.
If TikTok was born in India, you would be dancing to ‘news’ and ‘cricket’ updates 🙂
What does this point to? At its core, lack of product leadership in Indian companies.
Most Indian startups are marketing-driven, while most US and Chinese startups are product-driven. Growth is embedded inside the product (viral loops in case of consumer startups), and not outside (Facebook/Google/TV ads).
It’s not that these Chinese or US startups do not spend in marketing – they do, but they have a product-first approach towards building things.
And unless we change our attitude towards how we build and scale startups, we will always be looking at China and US for leadership and dancing to their tune.
Reminds me of Pink Floyd’s Us and Them
Black and Blue
And who knows which is which and who is who
Up and Down
And in the end it’s only round and round and round
Haven’t you heard it’s a battle of words
The poster bearer cried
Listen son, said the man with the gun
There’s room for you inside
Down and Out
