Recently, the news has been full of Indian startups -- absurdly still regarded as such despite commanding market caps of $3-4 billion -- wading confidently into large new markets such as China and the US.
Even just a decade ago it would have been an act of hubris to imagine that young Indian companies could become global giants so quickly. Those that burnished their reputations abroad were most often industrial outfits like those owned by the Tata or Godrej families, who sell everything from soap to steel. Or, they happened to be software ones like Infosys, propelling the country into a software outsourcing powerhouse. Either way, this took either vast capital or methodical, nose-to-the-grindstone hard work, or both. And of course, time.
Commerce has always thrived in India but entrepreneurship was effectively throttled when the British, through its colonial project, either stymied or destroyed the country's local industry in an effort to push its own, like Manchester textiles, for instance. In fact, Cambridge University economic historian Angus Maddison says that prior to the East India Company setting foot on Indian soil, India was the world's largest economy for close to 1,700 years, only to suffer a precipitous collapse during the over 200 years of British rule.
So, despite commerce being deeply ingrained amongst many of India's castes and communities, India's GDP went from a whopping 24 percent of global GDP in the 1700s -- more than all of Europe's and close to 10 times the size of Britain's economy -- to 4.2 percent of global output when the curtain went down on the Empire. Later, it didn't help that India decided to adopt a Soviet-style economic model post its independence in 1947 that eschewed the market for state control of enterprise. A few more nails were thus duly pounded into the coffin of entrepreneurship.
So when you read about a company like Indian rideshare outfit Ola, headquartered in Bengaluru, entering the UK market after embedding itself firmly in six of Australia's cities despite ruthless competition there from other global biggies such as Uber, Go Catch, and Taxify, the colonial history of industry and enterprise in India resonates more than ever.
In the UK, Ola has already secured licences to operate in South Wales and Greater Manchester and is launching operations in the former within the next month. And it's not just Ola. Hotel chain Oyo just announced that it has expanded to 1,000 hotels across 28 provinces in China -- its third international market after Nepal and Malaysia. Benagluru-based healthcare startup Practo is already in the Philippines, Indonesia, Singapore, and Brazil. They have all taken a page from food tech company Zomato, which is now in 24 countries despite being just over five years old.
The great injustice in market economics today ensures that a company less than five years in the making that has architected a technology platform that simply connects drivers and passengers has the same gargantuan market cap (theoretical, until its exit of course) of a car manufacturer or a software services giant. It doesn't have to worry about working capital, supply chains, and distribution on foreign shores quite like its bricks-and-mortar brethren do. Here, "if you build it (well) they will come" seems to work like a cinch.
Of course, it isn't all caviar and champagne for these internet voyagers. If you happen to recruit a driver who goes on to sexually abuse your passengers or have your car piloted by either human or AI algorithms and sensors that kill humans at stop signs, you are going to suffer a public relations debacle from which you may never recover. If your technology platform is glitchy and unreliable your customers will abandon you in droves. Maintaining the quality quotient of rooms that have your brand imprint on it as Oyu now does versus just acting as a marketplace as it once was brings a whole new dimension of vulnerability.
Then, there is the need to understand the complexities of different cultures, tastes, and preferences that exist in individual markets, necessitating tailor-made advertising, sales, and marketing campaigns to those geographies -- not exactly something an internet startup is familiar with at least when compared to a consumer goods giant for whom this has always been bread and butter.
Simply look at what happened to Zomato and Oyu just a few years ago before they righted their ships: In 2016, Zomato was forced to eject from nine major international markets such as the US, Chile, the UK, Ireland, and Sri Lanka because they were burning money while battling foes who were the market leaders. Oyo had to slam the brakes on expansion plans because the vast array of hotels in its portfolio were qualitatively underperforming.
And of course, not everyone can or should go global. Those requiring a complex logistics network along with on-ground infrastructure investments, like an ecommerce company, will find a foreign campaign exorbitant. An ecommerce company like Flipkart or Alibaba, for instance, finds enough rewards at home and wouldn't think of venturing overseas and competing with the likes of Amazon.
Yet, the benefits to going global for this new breed of Indian companies may not be easy to ignore. Doing so brings them in close proximity to a whole new slate of financial investors with deep pockets, market expertise, and access to global management talent, all of which lead to higher valuations -- ultimately the toughest carrot to ignore for those toying between riding the fortunes of the local market and a global one.
How successful they are in the long run will depend on how well they manage their growth, attract global talent, and compete with their well-funded rivals regardless of -- or some say in spite of -- their country of origin.
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