View from India: Start-up companies thrive through value creation
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Diverse start-ups share insights about their journey and look back on their early days.
As an industry SaaS, an acronym for software as a service, offers tremendous opportunities. Many companies have made a mark in this segment, still a lot more can be done.
“There is ample scope for the Indian SaaS companies to showcase their expertise globally, as India attributes to only 2 per cent of the global SaaS industry,” notes Rajan Anandan, managing director of Sequoia Capital. “There could be a great explosion of product companies, vertical SaaS, sales tech enterprises, increasing development roles and early traction of crypto. The exponential growth which is expected from this diversity can attract seed funding,” he told the 30th Edition of the NASSCOM Technology and Leadership Forum 2022.
Girish Mathrubootham understood the potential of SaaS and forayed into the space with Shan Krishnasamy. Together, they founded Freshdesk in 2010, rebranded as Freshworks in 2017. The early SaaS entrant looked at the market slightly differently. “We decided to make business software for companies that works for everyone, making it easy for IT, customer service, sales, marketers and HR to do their job. We didn’t want to confine ourselves to just the Fortune 500 companies,” explained Mathrubootham, CEO and founder, Freshworks.
Given this outlook, it’s understandable that Freshworks achieved a billion-dollar valuation in 2019 and was listed in the US Nasdaq last year. In both cases, Freshworks is the first Indian SaaS start-up to make the mark. “India is witnessing an explosion of developer tools coming from Indian start-ups in addition to early traction in Web3 and in the crypto space,” added Mathrubootham. However, finding experienced professionals to execute a wide range of SaaS responsibilities may pose a challenge. What may be a pressing issue is to create a talent pool to take this forward. Freshworks is now headquartered in California, but its engineering staff is based out of Chennai, where it was founded.
Flashback to 2007. The country was home to 50 million internet users, with a relatively uncommon card payment system, unknown internet banking and a modest e-commerce market. This background seems far from encouraging. Nevertheless, Mukesh Bansal decided to navigate that unfamiliar route. Having worked in the US and witnessed the dotcom boom, he returned to the Indian shores to start Myntra in 2007 with Ashutosh Lawania and Vineet Saxena, his juniors from IIT (Indian Institute of Technology) Kanpur. Myntra, which grew into a reputed e-commerce fashion-lifestyle site, was sold to Flipkart.
Myntra had given Bansal the bandwidth to explore newer opportunities. Bansal with Ankit Nagori co-founded CureFit, owner of the Cult.fit brand, in 2016. An online to offline fitness and wellbeing brand, it addresses people’s stress-related issues. “Healthcare has seen a transition during the pandemic. Awareness and health concerns have made people more conscious to stay healthy. Looking ahead, the start-up scenario may diversify to include areas like clean energy, healthcare, upskilling education,” reasoned Mukesh Bansal, co-founder and CEO, CureFit, and president, TATA Digital.
Throwing light on the buying trends, Bansal said that spending power is concentrated among the top 10 million households, which accounts for around 80 per cent of the GMV (gross merchandise value) product. The base of spending households could be scaled up by softening the average price points across categories. Futuristically, e-commerce companies may increase revenue through private labels, category positioning, additional monetisation and advertisements. Several e-commerce consumer brand companies have positioned themselves in the B2C category. They sustain themselves through value creation around the brands.
Hurdles in e-commerce calls for attention. “The internet size has grown to 650 million, but the spending power remains a challenge. It needs to be unlocked and increase the base of spending households from 10 million to 40 million-50 million,” said Bansal, whose latest foray into TATA Digital could give a new dimension to his portfolio.
It’s an acknowledged fact that the millennial generation is tech-savvy and their lifestyle choices differ from those of the previous generation. They could prefer digital shopping to bricks-and-mortar stores. Delhi-based Suchita Salwan had understood this. The thought line led her to host a Tumblr blog that documents interesting things along with recommendations that the Delhi Millennial wants. It was more to do with discovering the place. A stint with BBC Entertainment India had already given her exposure to digital marketing. It broadened her outlook to include social media and online communities. Understandably the Tumblr blog gained enough traction for her to create an online information marketplace which we know as Little Black Book (LBB). “Local lifestyle brands and small merchants that are not conglomerates are brought under our umbrella. A business account on Instagram is a pivot. Data points about clients, backed by deliverables is another highlight. All this has helped build an active user base of four million millennials,” said Suchita Salwan, founder and CEO, Little Black Book (LBB).
Breaking down the process, Salwan said that one needs to quantify what is being done, think about the product and what the consumer wants. “E-commerce is hyper competitive and massive funding is on. The long-term perspective is to avoid setting out farfetched early targets. After all, every product category requires a different kind of problem solving,” she observed. Once the product strategy is in place, content around it is generated and then the product is showcased at scale.
Co-founder Dhruv Mathur, a Carnegie Mellon graduate, has built the technology platform. Technology and community have been integrated to enable discovery-led commerce for retailers. Being a web and app-based content led platform, LBB capitalises on the needs of the millennial. It gives recommendations for local food, events and shopping across eight cities in India.
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