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Indian Startups – Cloning Works?

Source | LinkedIn : By Jayashree Patnaik

A friend staying in US wanted a home stay in Coorg for a few days during her annual India holiday trip. As she was looking for an Airbnb like comfort and convenience in India, I told her to check out Stayzilla, an Indian startup. She was amazed at the great experience with Stayzilla.

Welcome to the world of Indian startups! Today, India is the home of numerous startups in different verticals mushrooming across the entire country .

As one analyses the startup scene, it is astonishing to find the number of tech startups that have sprung in the country within a short span of time. This makes sense as India is now the second largest internet market in the world. Every day, more and more people in India gain access to broadband internet via either mobile or desktop.

This is good news.

However, further analyses reveal that most of the tech startups are cloning business models from the West, without much thought on how to Make in India, resulting in growth of numerous players in the same market space.

Recent data reveal that various pain points are being discovered in cloning sectors like food tech, hyperlocal e-commerce companies, and online groceries, to name a few.

This raises a fundamental question whether cloning works and how effective is it in the Indian environment?

Can clones become sustainable enterprises?

Additionally, can they win against their global rivals on home-turf?

Comfort Zone
Entrepreneurs in India find it easy to launch clones of western models because they perceive a general comfort around financing, lower risk in future funding rounds and possibilities of a strategic sale. They see glaring and promising examples of unicorns, or mega-funding rounds from the west. Not to mention the fact that the model has already been validated and there is a potential market for it, maybe even a global one. Clearly, there is strong belief that even if things do not work out too well, they will be able to sell the startup to global strategic players. The potential seems endless. An Indian market with millions of smartphone users, appears very tempting for a successful US business model, to be launched in India. The effect ripples to the launch of a multitude of clones. This can lead to a devastating problem with startups having to pay the price if they forget that the clone war is being fought on Indian soil.

Extravagant Cost
Backed by heavy funding. Indian startups leave no stone unturned for spending. It is utterly baffling to find that while startup entrepreneurs keep global stars like Amazon, Uber and Airbnb as their idols, they never actually focus on the nitty-gritty details of execution of these players. It is ironic that while Amazon prides itself on frugality, the clones in India hire huge number of people and set up fancy offices.Their fixed costs are astronomical with salaries paid to man-power in near-dollar terms.

Do startups really need so many high-cost resources in India?

Another reality is that discerning Indian consumers spend little and that too carefully. This simple fact needs to be understood by most startups to be viable.

Read On…

 

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2 Comments

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