New Delhi Friday December 12
In this flat world the news that Congress was not going to bail out Detroit was the topic of conversation everywhere. Everyone is wondering how Obama is going to play the awful hand he has been dealt and save the world economy. My bother-in-law just returned from a BRIC related conference in Moscow and related that China was being very sympathetic about the predicament that America was in. Several people mentioned that China held many cards now as their economy was not only integrated with America’s but also many emerging countries. There is a feeling in the air that in this global poker game, fortunes are about to be made and lost.
I have had a chance to meet a couple of early and growth stage VCs and entrepreneurs in the past couple of days. In Boston the startup ecosystem appears to have hit the pause button in Q4 as a result of the financial meltdown. While not paused, the startup ecosystem in India appears to have hit the slow motion button. While VC firms here are not shrinking they appear have put expansion plans on hold. Some observations:
I saw an advertisement for a new Bollywood film that is an Indian version of one my favorite films, Memento. Like Bollywood many startups have been formed with Indian versions of successful U.S. business models. Investors like these companies because the bet is on execution not technology. There are very few management teams or entrepreneurs who have taken company from an idea to scale. It feels very like the mid-80s in Boston with the twist that markets are now global. There are very few growth stage companies that are both growing 30+% and maintaining decent gross margins. Everybody in India seems to be competing on price to gain market share. VCs in India are generally more passive in managing their portfolio companies than Boston VCs. There is a feeling this needs to change since many startup entrepreneurs are first time CEOs. There is a huge “bottom-of-the-pyramid” focus. Most consumers and enterprises just cannot afford to pay US prices for products and services. This requires local knowledge and considerable innovation. There are several of these companies in healthcare, a few in telecom but I haven’t seen any in information technology.
Bollywood Hollywood
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