The Indian start-up ecosystem has long had a close relationship with Silicon Valley. But now, as Chinese firms make big investments in India and Chinese venture funds become more aggressive here, there’s a growing feeling that we can learn as much, or more, from China, as from the US. At the Nasscom Product Conclave in Bengaluru recently, STOI brought together experts on the India-China relationship to discuss the trend.

Q: Tuck, you are looking at making significant investments in India.What excites you?
A: Koh : There are a lot of similarities between the two countries -densely populated cities, developing countries, and talented people. We are an investor in Xiaomi, and in my first few trips to India last year when I met entrepreneurs, I found many of them using different Xioami products -smartphones, power banks, etc.

The sense I got is, back in 2012 when I met  entrepreneurs in China, it was these geeks using a lot of Xiaomi products. So I thought, maybe there is a lot of experience that can be transported to India. We are in advanced stages of closing our first few investments and we have arranged meetings for these entrepreneurs with comparable companies in China and they all found it very interesting.

Q: Which areas are you likely to focus on?
A: Koh : Essentially, we are looking at business models that we already understand. I don’t know India as well as you guys. My advantage is, I understand business models and realize what has worked and not worked in China. So we will work with companies like Vani’s.

Q: Vani, you have visited China. What can we learn from them?
A: Kola In May , we did a deep trip -met some entrepreneurs, public companies, many of the leading Chinese investors and so forth.Anything I say comes from the first impressions and the first trip.First of all, I asked myself, why haven’t we done this (visit) sooner.Our experience in China was, almost anybody we wanted to meet, met us, we were welcomed they spent time with us. So it’s more about not being afraid and building bridges.

Most Asian countries work on relationships, unlike the Western way of being deal-oriented. Having said that, the most important insight I gained was interesting. Almost all investors in India, including us, tell entrepreneurs to keep the focus. While it’s important what we found with the Chinese entrepreneurs is, they are willing to do a lot of things that expand their universe rapidly . It’s a kind of a DNA – they are like imperialists, they want to go grab market share very rapidly . Xioami is a phone company , but they have a rice cooker, air purifier. What we have not done here is build big platforms like these.

Q: What do you mean by large platforms?

A: Kola : Blackberry and Motorola thought of themselves as phone companies, so they didn’t want to integrate the camera too soon.But the consumer is looking at the phone as a controlling device that happens to be a phone as well. These insights allow you to think what the relationship with the customer is. You’re thinking ahead in a way in which you are changing customer behaviour. In telecom, we wrote our own story .What I see in China is big platforms like Tencent,

doing a lot in terms of payments, information services. Is it because of the ambition of entrepreneurs, is it because of VCs, or is it because of a great firewall? In India, we are not sure who will own payments or logistics. Will there be part ecommerce, part logistics, part payment, and part entertainment? All you know is you have a customer and you have access to their wallets, so how do you continue to increase their wallet share – so how do you continue to increase their wallet share – do you sell them a house, do you sell them insurance, or sell them dreams?

Chandrashekhar : Like in the telecom story, at the end of the day, it might be a third version of the story. That’s where you need a very discerning guy and an experienced hand to figure out what lessons to take and, equally important, what lessons not to take.Some years ago, most startups in India were doing what had already worked in the US.

Some of it worked in India and some didn’t.Only now we are seeing a generation of entrepreneurs who are more confident of saying, we know what the problems are and we have some sense of what the answers could be, so let’s build a product. As a country , are we going to have mega successes like the Googles and Facebooks where investors expect mind-boggling returns, or are we going to see a number of much smaller successes, which may be a very different kind of wildfire in India, and it has been a hallmark in India – maybe because of the way we are governed, the way we think, and the way we have evolved with multiple cultures.

Q: Are the Chinese more entrepreneurial than we are?
A: Koh : The Chinese and Indian people are equally talented. I would hesitate to comment on this as I don’t know India that well, but my gut feel is, India is equally entrepreneurial.

Kola : Entrepreneurial is one step and ambitious is another. For me, the biggest learning living in the Valley was, and I’m using it in a good sense, people can think crazy. The think crazy’ might have been beaten out of us, we are more systematized from childhood. For a private company to say I will put a man on Mars, you have to be slightly warped. India has always been a land of millions of entrepreneurs, but how ambitious you are -to me there is a difference between the two. When will there be a group of Indian entrepreneurs who will play for high stakes?

K : In China, the first wave of internet IPOs happened around 2005-06 and there have been many role models for entrepreneurs, many internet billionaires. Startups are concentrated in a few big cities -Beijing, Hangzhou and Shenzhen, where three big internet companies Baidu, Alibaba and Tencent are based. India still lacks role models, because here we have yet to see big exits and IPOs.

Chandrashekhar : A corollary to that. A lot of the role models – Narayana Murthy and so on, who spurred a lot of entrepreneurs, took one kind of risk. What we are talking about now is a totally different kind of risk. We need newer role models who take a different kind of risk.

Source: The Economic Times