Learnings from my trip to India

Victoria Memorial, Kolkata

Every December or January, like most Indians living in the US, I make the long trip back to India to visit family and friends. It usually consists of switching off and relaxing at home, vacations with family or catching up with friends. I’ve lived in the US for six and half years now and while this trip has started to feel routine, it always reminds me of how far the two places I call home really are. 

I planned my trip a bit differently this January. When I first moved to the US in 2013, my master plan was to find a job in Silicon Valley, get some experience at a fast growing startup and move back to India to work on an exciting opportunity solving a problem close to my heart. Now if you’re Indian, you’re probably reading this and chuckling. Everybody says this when they first move abroad but very few people actually maintain their conviction. Life happens and all of a sudden, it just doesn’t make sense to move back. 

Over the past six and a half years, I’ve flip-flopped between staying in the US and going back. But in 2019, I finally made up my mind. I was moving back. I realized I needed to now figure out how to best position myself for the switch, which had to start with learning more about what’s happening on the ground in India. 

I reached out to a lot of people in the Indian tech community to find some answers. Some I knew already and others I found via responses to this tweet and cold DM’ing people I’ve been following and admire.

Everyone was extremely generous with their time and I was flooded with a number of insightful opinions about what’s going on in India. 

In this post, I’ve synthesized my learnings from these conversations and added some general observations on how technology is changing everyday life in India. Through these conversations, my goal was to answer four questions – 

  • Where is the market opportunity?
  • What does the availability of talented people look like?
  • Why are people moving back to India?
  • Are there reasons to be cautious?

Bharat is wide, but shallow.

I’m not exactly sure when everyone started talking about Bharat, but it seems to have happened in 2017 when Jio started picking up momentum, demonetization briefly made PayTM the technology darling of India, and UPI usage started growing at double digit rates month over month. I even wrote this piece in Techcrunch trumpeting the same phenomenon. Turns out I was quite wrong – American companies immediately got their act together, with Walmart acquiring Flipkart and as a result PhonePe and Google riding on UPI to dominate payments with Google Pay. India surpassed 300 million smartphone users in 2017 and seemed to be on track to hit more than 800 million by 2022. It was starting to look like a lot of the infrastructure was in place for a new generation of companies focused on serving millions of people that were now coming online for the first time.

The good news in 2020 is that the expansion of digital infrastructure shows no signs of slowing down and internet subscriber numbers are increasing with McKinsey counting 560 million internet subscribers at the end of 2019. India also overtook the US to become the world’s second-largest smartphone market. It’s fairly certain that this decade will end with every single Indian equipped with a smartphone, data that’s almost too cheap to meter, and low-cost digital payments at their fingertips. 

The bad news is that Bharat hasn’t turned out to be a homogeneous demographic. As Sajith Pai pointed out this year, India isn’t just two countries — the urban affluent class and the rest of India, but four! And the fact still remains that people in India2 and India3 still do not have disposable incomes large enough to sustain a large number of companies. Just look at Sharechat’s woes

Everyone I spoke to broadly agreed with this categorization, but I heard different takes on Bharat’s trajectory. They ranged from downright pessimistic — if you want to build for the developing country mass market you’re much better of also focusing on SEA and middle class Africa, to the cautiously optimistic — regardless of how the economy does in the 2020s, startups that create novel business models and products with a high utility to simplicity ratio will have high chances of success. 

My take — there might be pockets of opportunity, but there’s unlikely to be a lot of companies serving Bharat with viable business models unless disposable incomes start rising again.

B2B marketplaces and SME focused software is taking off

While the lack of disposable incomes might present an obstacle to B2C companies, the emergent digital infrastructure has made it the best time ever to start a B2B marketplace company. I compiled a list of these startups a couple of months ago. I’ve struggled to keep it up to date, such has been the pace of fundraising and activity in this space. 

Udaan is the poster child of this trend, hopefully paving the way for a host of startups focused on specific verticals. B2B marketplaces make a lot of sense in India where supply chains are racked by inefficiencies at every stage. There’s also a new generation of SME owners coming into the picture that are either starting on their own or taking over family businesses who tend to be more open to using technology to streamline operations. 

But will Indian businesses pay for software?

Businesses pay for software because it either helps them decrease costs by eliminating inefficiencies or increase revenues through better distribution. The problem these SME focused companies are running into is that Indian businesses have a very high tolerance for inefficiency. It’s usually due to some combination of cheap labor diminishing the value of automation, businesses being risk averse and set in their ways or a lack of trust in technology. 

The other related issue is collecting payments from these customers. Contracts don’t go very far in India. Even if customers agree to buy your software, getting paid on time is a huge hassle. And since everyone is strapped for cash, it’s hard to get anyone to make an up front payment before buying. 

It will be interesting to see how these businesses monetize as they grow. Udaan for example doesn’t yet  charge buyers and suppliers for access to it’s network. Their only revenues so far are from lending. But it does seem like they’re laying the foundation for a massive business, regardless of how they ultimately make money.

Self-service software sales approaches aren’t working yet

Business in India is very relationship driven because there’s a general lack of trust between strangers. It’s more important to know who you’re transacting with before you know anything about the transaction itself. This is why self-service software sales in India may not work very well and why both BharatPe and Google Pay are investing in manual on-boarding for merchants. Buyers need to be able to put a face to a name before doing business. 

India is becoming a global SaaS hub

You have to be careful when using Twitter to keep up with what’s going on in Indian Tech because it can be difficult to get a clear picture of the ground reality. You need to be extra skeptical to see through the hype and cheerleading. Now I believe relentless optimism, especially if you’re a founder, VC or VC-ish person is essential. It helps your ideas to get traction, which in turn drives interest in your companies from prospective employees, customers and investors. But if you’re trying to develop an impartial position as a relative outsider to the ecosystem, it can be quite distracting.

I firmly put on my skeptics hat when I started talking to people building SaaS companies out of India and quickly realized I didn’t need it. If anything, Indian SaaS isn’t hyped up enough in my opinion. All the Twitter chatter around fintech, neobanks, and DTC was drowning out strong indications that 2020 is going to be a breakout decade for Indian SaaS. For the uninitiated, this Ken article is a great place to start.

There are currently twelve homegrown SaaS companies that have crossed the $10M ARR threshold, with three — Freshworks, Zoho and Dhruva having crossed the $100M ARR. The total ARR of Indian SaaS companies today is said to be more than $1.5 billion. For context, the total ARR of companies in the BVP Cloud Index is approximately $70 billion. 

Avinash Raghava has a comprehensive list of Indian SaaS companies here

Why is the sector picking up momentum right now? The global SaaS market is booming as companies move to the cloud and Indian companies are well-placed to ride this wave. Inside sales has become the standard for small and mid-market deals making SaaS sales truly borderless. Relatively well defined playbooks exist for each ARR stage, and specialized players like Upekkha are helping companies implement them.  

Freshworks, Zoho, Dhruva and Chargebee also seem to have perfected running sales and marketing out of the Bay Area and product and engineering out of India. Freshworks and Zoho in fact are already indistinguishable from other Bay Area SaaS brands. You see them at all the major industry conferences, on billboards on the 101 and advertising on MUNI and BART quite frequently. They’re building out the playbook to get from $100M ARR to $1B ARR and it’s only a matter of time before other Indian breakout companies start down the same path.

Finally, the quality of the talent pool is only going up. The SaaS community is booming, with Chennai and Pune emerging as vibrant hubs packed with talented engineers and product people. 

However, Indian SaaS seems to be in short supply of Product Marketing talent. One SaaS founder told me that he thinks there are less than 20 people in India that really understand Product Marketing and can execute a go-to-market motion. I know that everyone that doesn’t want to do engineering wants to become a PM, but perhaps more people in India should start looking at PMM?

Fintech, everyone knows about Fintech

I definitely needed my skeptic hat during my fintech conversations, but didn’t learn anything significantly new on this trip. From Sachin Bansal going all in, to neo banks mushrooming all over the country, to account aggregator frameworks and financial infrastructure providers, a perfect storm of progressive regulation, increasing digital penetration and capital has placed India at the forefront of fintech innovation. 

Good Luck Cafe, Pune. QR codes are everywhere!

Repeat founders

I heard this in every single conversation I had about talent in India. There are more people with experience starting companies starting companies today than ever before. Starting a company is now widely accepted as a genuine career in Indian society, making it easy for both successful and failed founders to give it another shot. The abundance of capital is certainly a huge factor, but the cultural changes happening away from the spotlight of fundraising announcements are very encouraging. Accel has even launched a new program dedicated to bringing repeat founders together to share knowledge and gather feedback called Rebound

H1-B woes

When I first started working in the US, I thought I’d come to accept the restrictions of working under an H1-B. If anything, the opposite has happened six years later and I wasn’t surprised to hear that everyone I spoke to that had moved back felt the same way.

They were all sick and tired of living in the US under the H1-B regime. Yes, they get to live in the US which in itself can be the goal for some people, and yes, some of them got to work at fast growing companies and have life-changing experiences. They were all acutely aware of this, and grateful for the opportunities they had in the US. 

But for a lot of them, the benefits started to seem less compelling as the years went by. They felt stifled by their inability to take risks and seek out new challenges. They were sick of the anxiety they felt every three years when their visas were up for renewal, or the trepidation with which they needed to approach a new job opportunity at another company. 

More of an edge in India

Usually when I talk to people that have moved back, they cite family, professional opportunity and belonging as their top reasons. The weight ascribed to each usually varies between people. This time around I was surprised to talk to a number of people that moved back purely for professional reasons. Some felt that their network in India increased their odds of successfully raising money and hiring and others felt they had a better chance of getting more responsibility and authority faster at an Indian company than in the US. The presence of a stronger support system was also a major factor for others, especially those looking to start up. 

Emotional connection

If you’ve grown up in India, there’s only so much affinity you can feel towards the problems of another country. Entrepreneurship can be a lot harder without a genuine connection to the problem you’re solving and the impact you’re looking to create. 

I believe money is just one reason among many for why people start up or join startups. Most reasons are highly personal, like wanting to prove yourself or create a legacy while others can be more driven by values, like wanting to create jobs or meaningfully improve the lives of certain groups of people. What I kept hearing, either implicitly or explicitly, was that people had moved back because their emotional connection to India and its people was an essential motivating factor for them to want to attempt something as difficult as starting a company, or joining a startup. 


I’m very grateful to everyone that took the time to speak with me and hopeful that I’ve done a fairly accurate job of representing what I heard. I’ll be writing more posts like these as I continue learning about the massive opportunity back home, and continuing to update my beliefs on the trends and themes I’ve highlighted here.

How Daniel Ek runs Spotify

I’m obsessed with Spotify. It’s not just because I love the product and find it thoroughly indispensable.  It’s because I’m fascinated by the company, it’s vision and how it’s leadership makes decisions. In an extremely cut-throat music streaming market, Spotify seems to be thriving. Their Q3 2019 results announced last month sent the stock climbing. The business is growing at 28% year-over-year on top of a billion dollar run rate, posting revenues of $1.88 billion. They beat estimates on gross margins, which have consistently been cited as a major weakness in their business model, and continue to generate free cash flow. 

Spotify’s success, in addition to being a very disciplined business, is in large part down to their product vision. They understand how instant access to the world’s music from any device is changing our relationship with music better than anyone else. If iTunes unbundled the music album, Spotify is at the forefront of another powerful bundling and distribution mechanism – the playlist. By focusing on the playlist experience very early on, Spotify was able to leverage their user’s listening habits to create the richest data set for music on the planet. When I first heard their Chief R&D Officer Gustav Soderstrom talk about this earlier this year, my mind was blown at the foresight and vision that went into creating this product experience. They’ve used this data set to build differentiated products like Discover Weekly that keep users hooked to the service. Revenue from premium subscribers grew 29% year over year and the number of premium subscribers grew from 87 million to 113 million. 

That’s why when I saw Daniel Ek was a guest on Invest like the Best, I sat down and listened to the entire podcast in one go. I found myself taking notes as I was listening because of how knowledgeable and insightful the conversation was. 

Here are a few ideas from their discussion that really stood out to me:

Daniel thinks globalization, automation and digitization are the 3 macro trends shaping business today.

According to him, the implication of these trends is that there will only be two types of business models in the future — those that operate at a massive global scale and others that go deep within a niche. The middle has completely dropped out. This view is similar to the one articulated by Josh Wolfe when he talks about there only being the ‘megas and the minnows’ anymore. Ben Thompson also made a similar observation a few years back when he discussed the Internet Rainforest

The jobs-to-be-done framework is at the heart of a lot of his product decisions. 

Clay Christensen first developed this framework to complement his theory of disruptive innovation as a way to help companies understand how to avoid being disrupted. Daniel made a couple observations here that I hadn’t heard before. Even if the job to be done is the same or similar, it may not make sense for the same company or product to do that job if the user persona is fundamentally different.This is why Spotify decided to launch a separate app for kids.

From the press release:

Beyond the content, the entire Spotify Kids user experience looks and feels different from the Spotify app. And that’s intentional. It’s built for kids, with their specific cognitive skills in mind, and exudes a fun, familiar, playful, and bright atmosphere. This look and feel also varies by age group—for example, the artwork for younger kids is softer and character-based, while content for older kids is more realistic and detailed. 

The second observation he made was complementary to the first in a lot of ways. What might seem as distinct jobs to be done initially can turn out to be similar once you consolidate the supply side. Spotify acquired Gimlet, Anchor and Cutler this year because they don’t see music and podcasts as different jobs to be done. Their market is audio, more precisely the ~3 billion people that want to ‘hire’ audio experiences to do the job of entertaining and educating them. By integrating podcasts into the core Spotify product experience, they hope to become a one stop shop for their users audio needs. I wonder if they’ll add audiobooks next. 

Spotify’s commoditized complements.

Spotify’s complements, or complements to audio experiences, which tend to be products like bluetooth headphones, phones, smart speakers and data services are only getting cheaper and better. Gwern Branwen explains how this works in this excellent post. Essentially, there are two types of products in the market when viewed relative to your product – substitutes and complements. Substitutes compete with your product for the same job to be done. Complements help, or might even be necessary for people to buy your product. 

Why becoming a label doesn’t make sense for Spotify.

A lot of people think Spotify needs to become a music label to reduce or eliminate the wholesale transfer pricing power the labels have over them, but he doesn’t think that’s the right long term approach. It’s not just that he wants to avoid upsetting the labels (which he does), but that the music and audio market is fundamentally different from video. Artists today make most of their revenue through ticket sales, which means their music needs to find the widest distribution possible to drive people to their concerts. Signing artists directly and restricting their music distribution to the Spotify platform would be severely detrimental to their business model. While It is tempting for Spotify to emulate the Netflix approach, that would amount to reasoning by analogy and not by first principles.  

He does see Spotify investing more and more in original podcasts and making them exclusive to Spotify Premium subscribers, but they need to think very carefully about the genre and format because people expect podcasts to be free and most podcast creators monetize via advertising. He thinks exclusive content makes more sense for genres like true crime, documentaries and short stories for example. VICE is developing three original podcasts exclusively for Spotify. 

How Spotify got into the music streaming business. 

Similar to how Apple convinced the labels to partner with them on iTunes, Spotify could license music from the labels in Sweden because their business had been completely decimated by piracy. This lead to an interesting discussion on whether identifying ‘weakened or fragmented’ suppliers can be a viable strategy to get a wedge into an industry and build a business. Without piracy, Spotify may not exist.    

Working at Spotify lets you see culture emerge in real time.

Daniel tracked the rise of Reggaeton into a global sensation over the past five years. Today he’s seeing a resurgence in gospel music, especially in Brazil. Is that why Kanye’s new album is all gospel? 

Measuring product performance at massive scale.

The larger you become the more important it is to move away from looking at averages and towards looking at distinct segments within your business. Spotify probably has hundreds of artist and listener archetypes. Metrics that use averages across their user base tend to not be useful in helping you understand product performance and the impact of your decisions.