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What are the three things that the Indian Startup Ecosystem can learn from the Chinese Startup Ecosystem?


There is no escaping the fact that after the Silicon Valley, the most innovative and active startup ecosystem exists in China. Whether it is Hong Kong, Shenzhen, Beijing, Shanghai or Guangzhou, the sheer volume, variation, quality and success of the startups from these cities will put any region on earth to shame. In the recent years we have witnessed a meteoric rise of the Chinese technology companies. Unlike Indian companies which chose the easy way out to service the bigger companies in the West, complacent with their position as the vassals to the mega technology companies from USA, Chinese companies went about competing with the American startups. The fact that this evolution has not come to a head is proven in the fact that all the top companies on earth today are technology companies and only two nations rule the roost – USA and China. While the Chinese companies such and Alibaba and Tencent have not yet reached the scale and size of Google, Amazon, Microsoft, Facebook or Apple, it is a matter of time. The only thing the Chinese major companies lacked was in diversity in their management and, consequently, a lack of understanding of other regions not dominated by Chinese expats. This prevented these companies from going global or being restricted to South East Asia and Far East.

However, the newer generation of Chinese startups seem to have learned their lessons well. No other economy on earth, not even the American ecosystem, can boast of the amount of capital invested in early and mid-stage startups. One of the major things I have learnt over the years, and was reinforced at the World Economic Forum, is that for every new idea that is out there, more than 10 entrepreneurs are waiting on the sidelines. Tobias Mathews, one of my fellow German entrepreneurs at the Forum recollected, “Within a year of us starting up, there were 200 Chinese companies doing what we do. More than 20 were very well funded as well, making it difficult to compete.” Tobias and his company works in 3D printing and are competing for market share even as the number of competitors have grown to 300. This sheer volume and capacity to innovate is remarkable in that it completely wipes out the slow and cautious innovation we are normally taught.

So, what can we learn from our Chinese counterparts? I can cover all the important aspects under 3 important headings.


Build for scale, build for the world

While on the face of it most Chinese innovation does not look like it is built for the world, if you simply replace the script, you will see how the Chinese have built for scale. Let us a take a few examples. Did you think Ola is big? Take a look at Didi. It is almost the same scale and size as Uber. Take Xiaomi as an example. In 5 years, they have built one of the largest mobile phone brands in the world, giving serious competition to Samsung and Apple. Why do you think they succeeded? Back in 2015, when I had suggested global expansion to a few of our local smartphones, they had told me that they are not concerned about global expansion. They would rather focus on India. Where do you think Lava and Micromax are focusing on now?

Most Indian investors will ask the startup founders to think small. They are risk averse. The ideas that get through seed stage do so because of one of the following 3 reasons:

  • The founders come from one of India’s 3-4 business communities and they like scratching each others’ backs and have their families back them up
  • The founders are IIT or IIM grads who have easy access to funding
  • The ideas are simple and show easy exits

Can you remember when you last heard of an idea that was global from India? Indian entrepreneurs who have built for the world, have done so without getting access to capital in India. My suggestion to Indian entrepreneurs and investors would be to start thinking big. If you are building a startup, think about impacting the world. If you are investing in a startup, ask how big it can get. Else, we will keep chasing that 23% IRR while our customers will rightly shift to companies that provide greater value.


Do not shy away from hard work and hardships

Building a startup is not easy. If you want easy, stay in a job (maybe). The Chinese startups, even the late stage ones, have their employees work at least 12 hrs a day. Even today I heard Jack Ma say, “If you work for Alibaba you owe 12 hrs a day to the company. If you are a Director, you owe 24hrs to the company.” How many of us care more about our weekends and our sleep more than the work we do? Real passion to win the world takes you beyond your limits. Eat, sleep and live your work if it means that you will deliver something that will take the world by storm. By the way, this work culture exists in the Silicon Valley as well if you thought otherwise. It is easy to talk about work life balance, but startups are not for the ones who say that. Startups are for the driven, the young who want to change the world, the old who want to leave behind a legacy, the people who are mavericks.


If someone has done an awesome job, it is not the end of it

If Google has figured out an awesome way to build a search engine, you can better it. Yes, you read it right. There is nothing that cannot be bettered. It is not called copying. It is called building a better version. Every time we see something great, we need to have the audacity to say that we can do better. Problem is, there is always a naysayer waiting on the side to tell you how stupid that is. Every time I pitched to an Indian investor, I heard, “What if Amazon does it?” Well, Amazon is a trillion dollar company and they can do it better. Does that mean I should not try? I never heard a Chinese person telling me what if Alibaba does it? It is always about how can you do better than the incumbents. This sheer ability to think that it can be bettered is what makes the difference between the brave and the rest. Every time a new idea is born, a hundred Chinese seek out to better it, ten receive funding and 2 make it big. Here in India, 2 will lie by the roadside seeking funding, while we will look at the next interesting IIT grad.


So, in summary, think about solving a problem that is local but will be scaled up for the rest of the world, work as hard as you can and do not listen to the person at your elbow telling you it cannot be done. I have been there. Be strong.

These are my opinions and I am sure many people will disagree. That is the point. I would like you to at least wake up and think why we are not doing as good as we should be doing. You will find out other points for yourself that will be different and better. It will also get you started on your journey.

Shayak Mazumder





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