Funding crunches, massive losses, and employee churn: India’s startup sector’s growing pains are no different from those of the Silicon Valley’s.
Yet, there are huge differences, too.
Rahul Ganjoo, vice-president—technology, Snapdeal, has seen the best and worst of both worlds. He has traversed the two very different ecosystems of New Delhi, where Snapdeal is based, and Silicon Valley, home to some of the biggest names in the global startup system, including Twitter, where he worked before joining Snapdeal.
A product of Pune Institute of Computer Technology (PICT) and BITS Pilani, Ganjoo moved to San Francisco in 2006. What he expected to be a short stay turned into a nearly decade-long run in the Bay Area. “I lived nine years in one apartment thinking that, next year, I will move anyway,” Ganjoo said. During his time in the US, he went from working for technology consultancy Thoughtworks to cyber security firm Symantec to blog solution provider Six Apart. Ganjoo eventually bagged a stint as technical program manager at one of America’s buzziest startups, Twitter, half-a-year before it went public in 2013.
Since August 2015, he has been with Snapdeal, one of India’s 10 unicorns (private startups worth over $1 billion). And he is seeing the west’s story of struggle play out in the east. In a conversation with Quartz in San Francisco, he stressed that the sector is way too nascent to get things right from the get-go. Startups need room to make their own mistakes and learn from them.
Does bringing in people with Silicon Valley experience help when startups are trying to scale?
A lot of things with Indian e-commerce are so different from problems that, say, Amazon may have faced here. Here (in the US), the infrastructure is totally reliable, right? They don’t have to worry about FedEx, for example. Out there (in India), there are at least seven courier companies that started off after I went to India and they’re no longer in operation now. So, somebody from Amazon cannot go and translate that. He has to now think about supply chain very deeply.
What are some of the problems that e-commerce companies face that are unique to India?
This is not a general comment on Indians, but I don’t know how much people value design aesthetics in an app. They’re still primarily a price-sensitive audience. Literally, the only thing that moves the needle for anybody is pricing and discounting.
In terms of challenges, I feel infrastructure is a huge one. Predictability, like how do you account for a Ganpati (festival) in Bombay (Mumbai) disrupting service for three days or a Chennai strike in some warehouse? There are always these one-off events that can just derail your (plans).
The thing that we celebrate a lot in India, jugaad, actually hurts more than it helps. We’ll always look at these small hacks to get our stuff done but it may not be for the greater good. You’ll drive on the wrong side on a one-way (road) and be happy you reached early but you screwed 1,000 peoples’ commute. That is the jugaad we always do: A lot of the focus initially is on small hacks versus systemic fixes. A lot of companies (in India) just let it linger, so when they get to a bigger size, they have a lot of underlying issues that must be cleaned up.
Amazon is a clear leader in the Indian market today. What is it getting right?
Who’s talking about Amazon’s profitability right now? In some months, they spend $150 million on marketing. If an Indian startup did that, (people) will be saying “they’re so arrogant, they don’t have any business sense, they’re going to just die.” It’s not to say that Amazon is not doing other things right, (but) it’s just jarring that it’s happening in front of you.
I also laugh when (an Amazon) guy says we’ve built this thing in five years. I’m like, dude, don’t even try. You have this global playbook of launching in 10 to 15 countries and learning over a decade. For others (like Snapdeal), it’s existential. They don’t have 10 other cash cows to look at.
So what is the key to cracking the Indian market?
The thing about India is that it’s not one country; the user feedback we get from the north is totally different from the west and the south. South is more loyal and they’re decided, like, “OK, this is my e-commerce app.” North people are very price-sensitive. They always have all the apps. Anybody I talk to in Delhi, for example, or UP, they say “we always check.”
The thing about India is that it’s not one country. What’s important, and what we’ve been doing in the last few years, is to understand how you win. Do you win Diwali by selling “X” number of goods or by getting a good cohort of first-time users who’ll stay, or by having solid margins? I think every company has to figure out what winning for them means.
Most Indian startups, Snapdeal included, have been incurring losses. Is profitability important for success?
A lot of startups here as well—Uber is not profitable. I’m trying to remember the last profitable company I worked for in the Valley.
Having said that, increasingly, people are learning from this previous set of companies that (losing money) doesn’t work for everyone. Especially if you don’t have some centers of profitability. Uber probably is profitable in San Francisco and a bunch of other cities. They have cash flows. They know that if they have to dilute or control some stuff, they can do something quickly and (still) be in a healthy position.
In India, maybe, a lot of capital came too early. I do feel a lot of companies accepted capital without knowing its repercussions. Sometimes you have to be ready. Not everybody can spend $100 million right.
Is it worrisome that many Indian unicorns have not announced plans for a public debut?
I, again, don’t think that (not going public) is different from the cycle we had in the Valley. Uber still refuses to think of an IPO as there’s so much private equity available. We saw with Twitter how going public changes the game for you. You have to be so quarter-focused…(you don’t) have the flexibility now to make a longer term decision.
Is it a bad sign that startups are losing people and firing others—Snapdeal laid off nearly 600 employees in February—or is it normal in the growth phase?
First of all, I think there are double standards in reporting on Indian startups. Everybody in the Valley made the same mistakes. And it was not really a mistake, it was the need of the hour. Twitter probably hired a 1,000 engineers the year I joined and laid off half of them the next year. Similar things happened in India. People were growing with certain targets in mind, knowing that once they are steady, they may not require this workforce. So, some sort of correction was always on the cards.
A lot of these folks (were) hired to solve (the problem of lacking structure). Even here, for fast-growing startups, the last thing that people think about is structure. A lot of focus is on the outcome, no matter how you get there. That becomes a problem at scale.
Working in a startup is not for everyone. They think startups are a win-win. “I’ll get all the cool work and cool perks, and also all the upside of a stable company.” I don’t think they’ve factored in the risk that comes along. Out of a 100 startups, only one or two will make it. Here, you talk to anybody in this cafe (where Gunjoo met with Quartz), and they’ve been at failed startups. (In India), there’s a lot of stigma attached still to something like layoffs or having a failed attempt.
Does openness work for or against startups?
Indian companies are (traditionally) hierarchical and the flip-side is that employees kind of expect it. It gives them comfort. Obviously, the startup culture is different. Founders are very accessible. They have an open-door policy but that doesn’t mean people will approach them.
We are trying to break some of the stereotypes of working in India. And that’s not just unique to us. If you go to any startup in Bangalore (Bengaluru), the offices don’t look any different from the ones in the Valley. That’s on a superficial level; from a work culture-level, too, they’re slowly getting there.
Does India have enough companies or mentors to learn from?
There’s a lot more networking now in India. All the founders, co-founders, they talk to each other. One thing India will still have to learn a lot from the Valley (is) sharing information. It’s not always about bringing each other down. There’s a lot of value in just understanding how others are doing things.
So, will India ever play host to a Silicon Valley-esque tech scene?
You can’t compare right now because the Valley’s been around for so long and they have such a deep network. People at Twitter probably did 20 startups before they got there. In India, 10 years later, we’ll have a lot of successes to look to and lot of failures to learn from.