The Indian Startup Moment

Hello, fellow Olio enthusiasts! 👋

Happy Hump Day and welcome to the 23rd edition of Weekly Olio - your weekly dose of giggles, wisdom, and a sprinkle of intrigue with our tantalizing thought piece (yes, we're talking about Publisher's Parmesan here). 🤭

A big shoutout to all of you for the fantastic support and feedback. Let's keep the momentum going in the days and weeks ahead! 😊

Today’s Publisher’s Parmesan is in collaboration with Anil Padmanabhan where he explores the Indian Startup phenomenon through the lens of the Indus Valley Report.

As a matter of introduction, Anil has been a journalist for the last 36 years. He has worked in various capacities in several publications including Afternoon Despatch & Courier, Press Trust of India, Business Standard, Mint and was based in New York for India Today.

Exciting, right? 👏

Will come to that, but let’s first start with the curation.

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The Quote󠀢 💭

The Tweet 🐦

In a 2014 interview with BBC Radio 4's Today programme, Christopher Nolan stated that he believes in using practical effects and achieving as much as possible with the camera during filming, rather than relying heavily on digital effects.

He said, "My own feeling about visual effects is that they should always be a means to an end, and the end is to get the shot or the sequence or the effect that you want. And, wherever possible, I try to achieve that effect in camera, in the principal photography." 🤯

The Infographic 💹

People in South America spend more than a fifth of their waking time using social media. But the Japanese spend less than 5% and Koreans spend less than 10%. Cool graphic showing how important social media is across different countries!

The Short Read 📝

Dilip Mahalanabis - by Financial Times

Dilip Mahalanabis was an Indian statistician and demographer. He co-founded the Indian Statistical Institute in Kolkata and was instrumental in establishing the National Sample Survey.

Mahalanabis made dedicated efforts to improve the life circumstances of the poor in India, promoting the use of oral rehydration therapy to combat childhood diarrhoea. His numerous contributions to the field of statistics and his advocacy for social and economic development make him a notable figure in Indian history.

The above article is an obituary to the doctor behind the widespread adoption of ORS to treat diarrhoea and related symptoms.

His pioneering medical work among refugees fleeing war in the 1970s demonstrated that oral rehydration therapy — a simple solution of glucose, salts and water designed to replace vital fluids lost during bouts of infectious disease — could be successfully administered at scale, even during a desperate humanitarian crisis. The Lancet estimates this treatment has helped save 54 million lives over the past half-century.

The Long Read 📜

6 Harsh Truths That Will Make You a Better Person - by Cracked

Feel free to ignore this piece if your career is going great, you're thrilled with your life, and you're happy with your relationships. Enjoy the rest of your day, friend, this article is not for you. 😜

Are you sure, you don’t want to read this?

The article is quite brutal yet subtle. It suggests that the world is focused on self-interest and that utopian ideals are impractical. The article also emphasizes the importance of creating value for others, being productive, reflecting on one's character in actions, and overcoming internal barriers for personal growth.

Publisher’s Parmesan 🧀

The Indian Startup Moment

Disclaimer: This article was originally published by Anil in his weekly newsletter edition, edited and republished here with the author’s permission.

Last week I interviewed Sajith Pai, a seed investor, at the Indian Tech Fund Bloom Ventures, for StratNews Global. Sajith is the co-author of the Indus Valley Report—often described as the holy grail of the Indian startup ecosystem.

The interview with Sajith explored the fascinating insights and trends captured in the report. The biggest takeaway is that this is the coming out moment for Indian startups—mirroring the transformation of the Indian economy—and how they are rewiring the Indian economy.

India Unpacked

Anecdotally, especially given our personal experiences with frictionless payments using the Unified Payments Interface (UPI), e-commerce transactions and accessing utilities online, we are aware that India is transforming. These examples have constantly resonated in this newsletter over the last two years.

Now, the latest Indus Valley Report (2023) from Bloom Ventures has pulled all these trends together to etch a compelling, comprehensive narrative about ‘New India’. In a nutshell, it argues that the makeover of the Indian economy is still a work in progress, and its best is yet to come.

The best part of the Indus Valley report, in my view, is how it identifies the layers that go to make up India.

An overall picture of the country conveys the snapshot shared above—which actually hides more than it shows.

However, an India divided into an India-1 of 120 million people ($12,000 per capita income); India-2 of 100 million people ($3,000 per capita income); and, India-3 of 1.2 billion people ($1,500 per capita income), unpacks the story of a country operating at different speeds and needs.

India-1, the report adds, includes 25 million people with a per capita income of a very impressive $35,000.

Not only does this structuring reveal the dynamics of the Indian economy, but it also explains how investors often misread the market by looking at the overall numbers, rather than this disaggregated consumer stack.

The Indian consumer story so far is, unfortunately, the power of few. Exactly why it is a work in progress. I would say a cup that is half-full.

It will be tempting to make strong conclusions about inequality from the above graphic. Actually, it is nothing but a sorry record of decades of neglect, wherein people denied basic material needs like electricity, food, water, housing, cooking gas and so on were consigned to living below the poverty line.

The India-3 (as Sajith explains in the interview) has witnessed a rapid expansion after a record 430 million were pulled out of poverty between 2005-2021. Yes, they are out of extreme poverty, but they still do not command purchasing power to be part of India’s consumer economy.

Presumably, their lot will change as the strategy to provide material basic needs proceeds slowly and steadily to attain saturation levels. It will be a long haul, but one has cause for hope.

The India Way

Now that we have the backdrop, it is time to take a closer look at the report, which argues that India’s innovation path is unique. Importantly, it has moved startups to the front and centre of this rapid transformation of the Indian economy.

The graphic above, sourced from the Indus Valley Report, very pithily sums up the model inspiring the growth of ‘New India’.

A big reason is the Digital Public Infrastructure that India has spawned. These digital highways eliminate entry costs and allow innovators to focus on creating products that ride on this digital public infrastructure. A great example is the way payments took off with UPI as the base. Today, India is recording 1,500 UPI transactions per second.

Further, unlike the East Asian countries, India does not enjoy the benefits of global trade tailwinds. This is what makes the domestic consumer economy super important; at the moment, India’s consumer economy is firing on one cylinder—India-1—and this is not sustainable.

Policy tweaks, like the introduction of Goods and Services Tax (inspiring the idea of ‘One Nation, One Tax’), and digitalisation using the Digital Public Infrastructure, have reduced, if not eliminated, friction in the economy. Further, the resulting disintermediation and formalisation are also reducing corruption, which in turn further prunes the diseconomies faced by Indian enterprises.

Another good example is the generation of startups that have sprung up to exploit the potential that arises from grouping the collective economic power of small and medium enterprises (SMEs). Not only is it good business for them, it is also drawing these enterprises into the mainstream.

Zetwerk (industrial products, apparel), nexprt (home decor), Groyyo (apparel), FASHiNZA (apparel) are manufacturing tech startups that have aggregated demand and then created cloud factories—parallel manufacturing— for SMEs to manufacture these products.

The Gig Class

The impact of Indian startups is clearly visible in one metric: They account for 10% of the white-collar workforce. And, all this in a span of less than a decade.

Check out the graphic above, it is clear that the gig labour force has almost doubled in the last five years. Indeed, this is the low end of the pecking order of jobs; but in the current circumstances, it is the vehicle for trading up.

Sajith has a nice moniker to describe the newfound status of the Indian startup ecosystem: The New IT sector.

Only appropriate that I let him have the last word:

In case you are curious about the video, check it out here.

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Disclaimer: The views, thoughts, and opinions expressed in the text belong solely to the author, and not necessarily to the author's employer, organization, committee or other group or individual