Delhi-born entrepreneur-turned-academic Vivek Wadhwa, who moved to the US in 1980, is among the world's top thinkers. He describes these times as the most innovative period in human history
How is the Indian startup ecosystem viewed in the US? Do you get the feeling that Indian startups are doing innovative stuff, or merely copying US ventures?
Till recently , Silicon Valley had not taken the Indian entrepreneurship ecosystem seriously because there was not much happening there. Now, with the emergence of billion-dollar technology companies and the internet boom, it is becoming clear that everything is changing: India is becoming a hub of entrepreneurship and opportunity .
At first, Indian entrepreneurs will need to catch up and learn. They will take advantage of the opportunities that are becoming available as hundreds of millions of Indians come online through their smartphones. They will do what the Chinese did: copy . Then they will start developing innovative technologies for India and the developing world.Eventually , they will take on Silicon Valley . This is what InMobi did. It first mastered and dominated advertising and mobile in the developing world. Now it is leaping ahead of everyone with its innovations. I expect that by 2020 there will be dozens of companies like this.
Do you think there's a startup valuation bubble in the US and India?
Yes, in some sectors valuations are inflated. The majority of today's socalled unicorns are going to go bankrupt. There is a lemming-like mindset in which investors follow each other off the cliff. But there are some real companies that are building new markets. These will be the next Googles and Amazons.
Despite fears that Indian startups are overvalued, this is generally not the case. The market is about to explode there. We are at the beginning of a technology boom in India, not at the end of it.
If and when there is a bust, what kind of impact do you think it will have? Which segments of new age ventures will survive and eventually come out stronger?
The fact is that this is the most innovative period in human history when advancing technologies are enabling us to devise solutions to the grand challenges of humanity . Existing industries are going to be wiped out because of technology change and new trillion-dollar industries will emerge. The companies that build value, solve real problems, create new business models and new industries will be worth billions.The overhyped me-too companies will perish. Most of India's IT services companies and many of its older businesses will decline and some will perish because they have not kept up with change.
What would be your advice to Indian startups that want to make an impact in the US market?
In general, I advise startups abroad not to focus on the US, but to dominate their markets first. They have no advantage here because they really can't understand this market unless they are part of it. And it is a crowded, competitive field here. Best to test your ideas in other markets, perfect them, and when you have developed a solid solution, then bring to the US -from a position of strength.
Indian entrepreneurs, in particular, should consider that they are in a market that is about to grow exponentially. India has become the world's fastest-growing market for smartphones. Over the next 3-4 years, half a billion Indians are going to be coming online using these devices.This market will dwarf the US market.It is a wide-open competitive field in India and there is room for 20-30 billion-dollar technology companies. Why waste your time and efforts in Silicon Valley's mature and fiercely competitive market, when you have the whole of India and the developing world?
What about an area like healthcare in the US? Considering that it's so expensive, couldn't some Indian startup disrupt that?
The US market generally is highly regulated, extremely expensive to enter, and not welcoming of foreign technology companies. If Indian entrepreneurs are smart, they will figure out how to develop new business models that let them thrive in the larger (Indian) markets. Once they have done this, they can come to the US because when they have health devices, for example, that are being used by hundreds of millions of people, regulatory agencies such as the FDA will have a hard time blocking their innovations.
There are good opportunities for Indian entrepreneurs in telemedicine, by the way , and they can pursue this from India. Americans are used to getting advice from Indian doctors -so they will feel comfortable with doctors in India.
You have been talking about jobless growth in the future, given the advances in robotics, artificial intelligence, etc. Past predictions of jobless growth on account of mechanization and computers have not really panned out the way the doomsayers anticipated. Why do you think it will be different this time?
There has never been a time such as this when multiple technologies are advancing at exponential rates and converging. Amazing -and scary -things are becoming possible. In the long term, robots and AI will do most of the jobs that humans do. But that is at least 10-15 years away in the developed world. For India this is 20-30 years away because the country needs to first catch up and build a new infrastructure. The next 20 years will be the best for India because there are so many problems to be solved and Indian entrepreneurs will have the ability to solve these.
Startups pick room service, check into budget hotels
Anand J & Shalina Pillai
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Photos of pristine beds and carpeted rooms rarely convey a true picture of India's budget hotel rooms. Now, a host of players has emerged to standardize and brand thousands of hotels, so that consumers know what to expect when they book rooms. There are signs of success, and plenty of critics too
When Sri Harichan dana, a 19-year-old law student at VIT University in Vellore, near Chennai, was planning a trip to Bengaluru, she downloaded the Oyo Rooms app to find a room that would cost less than Rs 2,000.
“I was a little apprehensive booking through an app,“ Harichandana says. Nevertheless, she went ahead and got confirmation from the hotel right away . She paid Rs 1,900 for a 3-in-1 room, but got Rs 500 back when her father cancelled his trip. “For a student, Oyo is good on the wallet,“ she says.
Ritesh Agarwal's Oyo was among the first to spot the opportunity to brand India's budget hotel segment, those with per room tariffs in the Rs 1,000 to Rs 3,000 range. This is a segment where quality and standards were always hazy, and where pictures of rooms, beds and bathrooms on brochures and websites rarely conveyed the real picture. Now, Oyo and a host of others -including Zo Rooms, Treebo, Vista Rooms, ZipRoom and WudStay -are creating a network of branded hotels much like Taj, ITC, Hilton, Marriott and InterContinental did decades ago in the premium segment.They work with small hotel entrepreneurs to standardize offerings, conduct physical quality checks every three to seven days, and bring technology to automate many processes. They train the staff on etiquette and give them cash benefits when customers give them good ratings. Their technology platforms handle the inventory , predicting and generating demand, and adjusting prices accordingly. And for all this, the firms charge between 15% and 20% as commission on every booking.
“We have made an impact because we did what nobody has ever done before,“ says 21-year-old Ritesh Agarwal, founder of Oyo. That's probably true. At a time when newage Indian entrepreneurs are criticized by some for copying Western ideas, Agarwal's was a truly innovative idea. “The use of technology in the hospitality industry was negligible before we entered the space. Customers can even order room service by touching their phones,“ says Agarwal.
Room aggregators also help hotels up their game. Dharamveer Chouhan, CEO and co-founder of Zo Rooms, says they are able to get the hotels crockery and furniture at cheaper rates as they work with largescale vendors, assuring them a purchase of a certain minimum number of units. “ At the rate we are growing, we are going to overshoot the promise,“ he says.
The hotels, too, are happy . Bengalurubased Bharti Diva Residency listed under Zo Rooms six months ago. Its general manager, Bharti Prakash Vazirani, says the 40-room hotel's occupancy has shot up from 50% to 100%. “Sometimes we are overbooked,“ she says, adding that some staff received cash benefits from Zo Rooms after good ratings by consumers.
The budget hotel accommodation segment is estimated to be worth Rs 88,000 crore. So the new players are sitting on a potential goldmine. No wonder investors are putting tonnes of money into these ventures. Oyo, which has 27,000 rooms under management, has received $126 million and its investors include Japanese internet firm Softbank. It is likely to be valued at over $1 billion soon. Zo has 6,600 rooms under management and has received funding of $47 million. Zen Rooms, the largest budget hotel chain in South East Asia, has raised $10 million for its Indian operations.
“This segment cannot have many players in the long run and will see consolidation. However, if you take the current growth rate and the increase in the country's purchasing power, the market is only going to get bigger,“ says Gopal Modi, president of investments at Orios Venture Partners, a VC firm that has put money in Zo Rooms.
But not everybody is as gung-ho nor is everything going right. S Ramaswamy is an unhappy customer. The 50-year-old spends just 125 days at home as he's crisscrossing the country on work the rest of the year. Flight costs are high, so he stays in branded mid-market hotels.
Ramaswamy's experiences with both Oyo and Zo were bad. The Zo Room he booked in Mumbai turned out to be completely different from what was shown on the website. “The room was full of mosquitoes and the sheets smelt. It was so bad that I cancelled my booking for the second day .I did not get my money back,“ he says.
So he experimented with Oyo in Bengaluru. It was no different. Although both the companies apologized, Ramaswamy is left with a bad taste. “Once you have a bad experience, you don't want to go back,“ he says.
Social media is full of negative comments about these brands from users, though Orios' Modi notes that Indians tend to write about bad experiences, not the good ones. Oyo, however, it must be said, responds elaborately to every single review about them on travel site TripAdvisor.
Mohan Kumar, partner at Norwest Venture Partners, which does not have investments in this space, believes these hoteliers have bitten off more than they can chew.“You may say you are a technology player, but this is ultimately a brick-and-mortar game and at a lower price point. This means margins are small. In India it is difficult to oversee so many rooms over a long term and maintain consistency ,“ he says.
However, Sidharth Gupta, co-founder of Treebo, notes that unlike the Hiltons and Marriotts, they are not managing hotel operations on a daily basis but are just overseeing operations at regular intervals. “Besides, we have automated many processes; we can even tell remotely whether the wi-fi in a room is working or whether a room is occupied,“ he says.
The startups acknowledge that theirs is a work in progress. Says Oyo's chief growth officer Kavikrut: “We haven't completely cracked the code. We are a small team and still learning from our mistakes.“
