Indian Entrepreneurs
A recent study found that one in every four engineering startups in the United States was by immigrants. People born in India constituted the biggest chunk (26%) of those entrepreneurs followed by United Kingdom (11%), China (5%), Iran (4%), and France (4%).
One wonders why Indians living in India do not produce the success Indians abroad are able to achieve. Picking from the list of Indian entrepreneurs , the following people really made wealth from scratch -- Dhirubhai Ambani (Reliance), Dr. K. Anji Reddy (Dr. Reddy's Lab), Azim Premji (Wipro), Bhai Mohan Singh (Ranbaxy), B.M. Munjal (Hero Group), Ekta Kapoor (Balaji Films), Karsanbhai Patel (Nirma), Kiran Mazumdar Shaw (Biocon India), M.S. Oberoi (The Oberoi Group), Nandan Nilekani and Narayana Murthy (Infosys), Naresh Goyal (Jet Air), Dr. Pratap Reddy (Apollo Hospital), Ramalinga Raju (Satyam Computers), Raunaq Singh (Raunaq Group which owns Apollo tyres), Shiv Nadar (HCL), Subhash Chandra (Zee TV), Subroto Roy (Sahara Group), Sunil Mittal (Bharti Group) , Tulsi Tanti (Suzlon Energy Ltd), Verghese Kurien (Amul), and Gulshan Kumar (T-Series). These people have indeed done an admirable job given all the difficulties of starting a company in India, but it hurts to say that there are so few of them.
I think there are primarily three reasons that work against an Indian trying to start a business in India --
1. Access to Capital
It takes about the same time for a IIT, Kharagpur student to reach the railway station, as it would take a Stanford University student to reach Sand Hill Road -- a road with the highest concentration of Venture Capital (VC) firms in the world. Sometimes it is possible that by the time the IIT guy reaches Calcutta by train, the Stanford guy has got a VC interested. I was at Sand Hill Road raising money for my company a few months back, and it occurred to me that in a single building which housed a few VC firms, more venture money was being managed than the GDP of a small country like Nepal !!
The Google guys secured their first investment from Andy Bechtolsheim at the end of their very first meeting. Andy Bechtolsheim, of Sun Microsystem fame, who was in a hurry and wrote a check for $100k made out to Google Inc. The problem was that Sergei Brin and Larry Page had not incorporated their company yet, and "Google Inc." did not exist! Read Google's story if you are interested.
Such a story would be impossible in India.
2. Entrepreneurial Environment
Survival of the fittest
Companies started in a garage epitomize American entrepreneurial culture. If you are a musician, you start a rock band in a garage; if you are a geek, you start a company. It usually starts with two guys in a garage wanting to change the world (HP, Apple, Microsoft, Google ...). Some of them succeed, others die trying. But the spectacular success of those few keeps the culture alive.
Its an environment in which several people are trying and the best among them filter to the top. Any historical account of the personal computer revolution in the US would mention the Homebrew Computer Club. This was the place where 24 year old Steve Wozniak, co-founder of Apple Computers, would show his brilliant designs/demos for a personal computer (Apple I and Apple II) to impress his friends. Homebrew was an informal gathering of geeks, and it created an environment in which innovation was all about fun, and earning respect of your peers. Its not a surprise that other members of the Homebrew also started their own computer companies (Processor Technology, and Osborne Computers).
Homebrew was not an isolated phenomenon, and Steve Jobs and Steve Wozniak were not the only two guys in a garage wanting to change the world. The same year as Homebrew first started meeting (1975), two guys in Boston read in Popular Electronics that a company in Albuquerque, New Mexico had developed a new microcomputer called the Altair 8800. They called up the company and offered to demonstrate an implementation of the BASIC programming language for the system. They had neither an interpreter nor an Altair system, yet in the eight weeks before the demo they developed the interpreter. The interpreter worked at the demo and 19 year old Bill Gates left Harvard University to start Microsoft with Paul Allen.
I don't think India is missing a Bill Gates or a Steve Wozniak, but it is definitely missing the garage culture. It is simply unimaginable that an opportunity could be big enough for a student at the Indian Institute of Technology (IIT) to leave without completing his degree and start a business.
Support System
The entrepreneurial environment in the US does a pretty good job of providing "free" support system to a fledgling startup. This is best explained by way of an example; my own example.
When me and my Ph.D. adviser decided to start our company, we approached the von Liebig center at the University of California, San Diego. They evaluated our application and awarded us with some seed capital, an excellent adviser (Mary Zoeller) who advised us on how to move the business forward, and a space to work. We were also able to hire a top notch Law firm and they readily agreed to defer payments until we received VC investment. In addition, people who have successful startups would readily provide advice, and get us in touch with potential investors. And most importantly, one of my lab mates introduced me to her brother Steve Branson, a brilliant programmer, who just wanted to learn some computer vision, and volunteered to help us build our prototype.
Now even if an Indian entrepreneur had the financial resources, he/she would not have the support system that makes life easier for a fledgling company.
3. Cultural Issues
Fear of the ocean
Indians did not cross the ocean then. Yes it was many centuries back, but the unwillingness of Indians to cross the ocean in the name of religion condemned several generations to mediocrity. In Europe, the desire to venture into the unknown oceans propelled the growth of both science and commerce. Of course most of those missions would be utter failures, but the few that succeeded changed the world map forever.
Not many Indian businesses cross the ocean even today. Few Indian business compete at the International level.
Higher risk
India is a land with scarce resources, and there are always many people competing for those resources. An Indian who walks away from a secured job is therefore taking a greater risk in starting a company than his American counterpart. Also, a typical Indian right out of college probably has more financial commitments to family and that reduces his/her ability to take risk. But this is a wonderful phenomenon, and if reduces our ability to succeed; so be it. Some things are simply too good to be changed, no matter how much hit personal successes takes.
Age is a barrier
Young people have two great gifts -- 1) Inexperience (which significantly increases their ability to take huge risks) and 2) Energy ( which significantly increases their chances of success). It is not surprising that many companies in the US including Microsoft, Apple, Google, Yahoo etc. were started by people in their late teens on early twenties.Also, when young people are charged with responsibilities they can come up with amazing surprises because their thinking is fresh and not diluted by training. As an example, Warren Buffet -- the second richest man in the world -- sold newspapers as a boy. He filed his first tax return at the age of 13 and claimed $35 deduction for the bicycle he used to deliver newspapers.
As compared to most Industrialized nations, the younger generation in India is not respected as much as it should be, and consequently they do not take responsibilities and make decisions. Lets pick an unrelated manifestation of this issue -- Many (most ??) Indian marriages are arranged. Now I am not inviting a debate about arranged marriages versus love marriage (Personally I don't think one form of marriage is more successful/happier than the other). All I am saying is that the older generation thinks (and the younger generation submits to the thinking) that they can do a better job of finding a match for their son/daughter. Even though this mentality of letting your elders make decisions for you may have turned ok in case of arranging a marriage, it has the effect of severely diminishing the entrepreneurial spirit, if not killing it entirely.
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I think a few VC firms are looking east, and there will be opportunities for Indian startups. I hope they aim so high that most of them fail spectacularly, but a few that succeed keep the entrepreneurial dream alive, and drag the country out of mediocrity.
" Far better it is to dare mighty things, to win glorious triumphs even though checkered by failure, than to rank with those poor spirits who neither enjoy nor suffer much because they live in the gray twilight that knows neither victory nor defeat." -- Roosevelt.
