India not the ideal place for online, mobile entrepreneurs

In an insightful post, Deap Ubhi, co-founder and CEO of Burrp, says that India is not yet ready for online or mobile entrepreneurship.

this is where india diverges a bit from many other countries that are currently cultivating some great startup ideas. why is india different? my theory is simply this: the delta (or difference) between what many consider to be india’s market size and its addressable market size is vast.

the mobile market in india is closing in on just below half a billion. that’s almost twice the entire population of the united states. how many of those mobile subscribers are on prepaid plans? how many of them are below the poverty line? how many of them are unemployed? qualitatively, how many of them are just struggling to get a 4th grade education, can’t afford medicine for their illnesses, and frankly, don’t give a shit about anything except making sure their mobile allows them to talk to their circle

The post definitely gives us some food for thought. Deap has had the experience of running Burrp for about 3+ years now and it’d be foolish to dismiss his opinion as lame.

I had touched upon a similar topic way back in 2007 — even though India’s potential seems huge (1 Billion), actual figures are pretty dismal.

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  1. Yes, Pranav that’s somewhat the fact. We usually brag about total Indian Mobile Users and also say that total Internet population would increase as more and more users start accessing net from their Mobiles.
    The fact however remains that almost 80% of the Mobile users who will use Internet on mobile will be using it as a tool to stay in touch with whatever they are missing while they are on move.
    But in fact, the opportunity for Mobile VAS is still huge. Airtel has consistently innovated different services which are first of their kind in the World.
    So my verdict– Online Entrepreneurs still need to wait till real desktop internet users number increase. Mobile Entrepreneurs still have loads of opportunities in Mobile VAS related areas.

  2. I dont consider that a great post. Its always easy for companies to estimate the size of the market and take a pie of it, rather when they work the bottom up way, they will find their estimates are more reliable. Further, I am amazed if entrepreneurs make plan without considering the essential factors such as Average revenue per user, churn rate, (whatever is required that is ) before estimating market size. If they dont thats clearly their fault and if a VC cant raise these fundamental questions, he might as well reconsider investment as a career!

  3. I disagreed about the web entrepreneurs part …. I thought I will add my 2 cents here …

  4. First of all, I think the term entrepreneur is used very loosely in India.

    I have seen “startups” with only an idea,a website and no revenue model qualifying as a “startup” in big-name competitions. I wonder if we need a change-of-definition in Indian context.

    Most of the times, I have seen “startups” in a rat race : “Hey! my code is better than yours”, “hey! I got mentioned on so-and-so A list blog”, etc. None of them ever come back to tell what kind of money they have made.

    “Entrepreneurs” here are more focused on displaying their coding skills rather than monetizing skills. It does not take even a pint of brain to come out with idea, but it takes much more to come with something that will actually sell. And this is where they loose.

    Web and mobile entrepreneurs are more focused on accessory services rather than fundamental or core services for which there is already a demand.

    • boy – do you seem ticked off these days or what…

      • no yaar, its just that I am seeing more of stupid services that one would ever pay for using. And yeah, I am speaking mostly about the web startups….not manufacturing, etc.

        Making money has to be the aim of any business.

  5. if this guy is the ceo of some company ……. god save that company….

    i dont see why you call it insightful…. the language itself ticked me off…….

    and the last time i checked burrp it looked an exact replica of yelp…… am i wrong or had any one else seen this ???

    • rohit,

      deap has had the experience of being an entrepreneur for the past 3+ years in the Indian internet landscape – so I’d definitely give some value to his thoughts — after all, he’s basing it on his experience.

      besides, i dont see anything that should tick you off..

      • I would more value to thought coming from the original……Jeremy Stoppelman rather than hearing from someone who copied it ……

        read deap’s other posts about the language…..

  6. The article is very insigtful. Coming from a person who has a lot of experience in running his own company it really urges you to think in that direction. I personally believe services that are ‘Add on’ should be avoided instead services that can be included in day to day activity and solve a pain point can earn well in India.

    I recently read an article on SiliconIndia where they mentioned that most profitable web companies in India were those that were running subscription businesses e.g other b2c companies that get money from advertising are not making much.Mostly if they do get bought over then they make some money.

    Also indian web startups should target people abroad as well (there is no harm in doing that, i am not sure about tax laws / or any legal stuff though).

  7. Yelp is barely profitable in the US where a strictly ads-based revenue has historically proven it’s worth (unlike India). Burrp was copied from Yelp for the Indian market. I think this guy thought he could be the early bird and get the worm. But the Indian internet & mobile market is so different from the US. How many people in India eat at restaurants and drink at bars enough to make this type of site a hit. Internet users in India still mostly use service like Naukri, email sites, and marriage sites. If you want a piece of the Indian market, fix the infrastructure.

  8. Dear Pranav,

    Replicating any U.S/Foreign Business model in India without any thinking about the viability in Indian Context is really hazardous to entrepreneurs. Entrepreneurs has first listen to the ground(Indian Ground of course) & offer services which is fine tuned to to indian customer’s Requirements & Environment.

    For eg., IRCTC has done quite successfully pioneered online train ticket booking. Similarly other private players like ClearTrip has offered better UI to train ticket booking which is a Hit. But when we try to book Tatkal Tickets Online (5 days before journey, the quota is open for booking at 8 AM), all the online services fail. Railways Officials / Travel Agents advice people to go to Railway Reservation Office for Tatkal Ticket Booking. Also there are inconvenience/disadvantage in booking wait listed train tickets online.

    But also just check how many people are checking their PNR status using their mobile phones(Even people who are not net savvy also use it). At the end of the day, whether a service is online/mobile or offline does not matter as long as the service offers good utility/value to customers.

    A comment from me : If one Indian director remakes Hollywood film by copying everything, frame by frame(names, sequence, dialogue etc/) , that film will not go well with the audience. But the same director, gets the concept of story in that same Hollywood film and adds masala items( songs, dance, indian names,sentiments etc) which the audience will be able to identify with himself and his environment, then that film will be a successful hit.

    Whichever be the idea, it needs to be thought in the Indian Context and whether the idea can be sold to the Indian Customer, then only the enterprise will succeed.

    Thank You
    With Regards

    • thats true — there’s no contention about that.

      but i guess the point that deap is trying to make is about the potential market size. its just too small in India.

      so – size and context — both matter.

  9. Among other things affordability of computers and internet access may be holding back growth. Mobiles started at Rs. 16 per minute and handsets that cost 10s of thousands … and effectively stayed out of reach of every one. I suspect we would have never reached the 100s of MNs of subscribers we boast today, if they stayed like that. A similar revolution may be required to get computers and internet to reach masses … need cheapest computers and internet in the world !!

    Given revenue models are often unclear with most internet businesses (Facebook is just $500 MN today?) and usage online is lower in India to begin with … it is hard to break the chick and egg of content vs. consumers first. Blended models (offline or non-internet channels) rather than pure internet / pure mobile … may be more successful in the next 4-5 years.

    Even justdial gets at least 5-6 times more calls than visitors online … and “probably” 80% of their revenue from the phone service. Not surprisingly burrp now has a magazine and I’d guess the advertising revenue from that may be much more attractive than online today. Don’t MoneyControl or Yatra ride a lot on the power of TV18?

  10. Hi Sridhar,
    As you mentioned ‘may be more successful in the next 4-5 years. ‘, i also agree to this.
    Something in the history of web also tells me that people who are the first movers in that market (i.e. after 4-5 years) will have the strong footing in the web business at that time.So what i meant to say is even if burrp has a magazine now, they must continue their website and hold on to their web business for next few years, nobody knows tomorrow.

  11. well, mr Deap Ubhi – when will india will be ready in your opinion?

  12. It is going to be a while before Informational based websites to become a viable business model in India

  13. I really don’t think that market is not ready yet, rather i believe that market is just PERFECT now to enter into web based and mobile based business, its just about what kind of business you provide and how you provide, if you are meeting the demands of the customer or solving an existing problem, Why not?? You will certainly a Hit..
    So i feel focus should be on solving a problem and providing quality services, that way customer’s faith will strengthen and online market will mature.

  14. Give online time to grow, It has large potential in India. Simply consider India’s large middle class population base, one of the highest middle class section in the world, which will be the key in generating the leap for online and mobile businesses.

    Vicky Pradhan

  15. Things are changing dramatically in India. in last couple of years picture have changed a lot. I am not sure whether were having a pessimistic bent of mind (only negative data) or not but the stats of today are way different than 2009. According to Nasscom, India is the third largest mobile internet users across the globe, 75% of India’s online population is under the age of 35 years. These all are the symbols of growth in India’s online industry/domain. Today, India is completely ready for it’s next generation, young and determined online/mobile entrepreneurs.

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