How India’s digital economy can rediscover its mojo

The recent crisis of confidence brought by the unicorn meltdowns isn't for real. India’s digital economy is actually poised for a bright future. Just that we need a new lens to look at the real opportunities

Haresh Chawla

["Pillars of Creation", a photograph of interstellar gas and dust in the Eagle Nebula, taken by the Hubble Space Telescope. They are so named because the gas and dust are in the process of creating new stars. In a similar vein, the “reset” in India’s internet market augurs well for the digital economy. Photograph by NASA, ESA, and the Hubble Heritage Team under Wikimedia Commons.]

Watch the video of our FacebookLive event #AskHaresh in which Haresh Chawla shares his perspective on how entrepreneurs need to think about addressing the big opportunities in the future and answers questions from readers.

India is arguably the most promising internet market in the world. It has attracted over $20 billion of global venture capital, primarily from Silicon Valley. The Chinese will add billions more to this pool. We are the third hottest startup nation in the world—just behind the US and the UK, with over 4,000 startups.

Also, the largest user base for Facebook, Google and WhatsApp is in India. Our mobile penetration has already crossed the billion mark. We’ve got 300 million smartphones, and growing.

By all counts, we should be happily dreaming of multibillion-dollar initial public offerings and a vibrant exit system. Yet we are not.

Look under the hood—you see a crisis of confidence today. Venture capitalists (VCs) have pulled back. Series A funding is at an all-time low and “consolidation" is the nickname for the desperate rescue of investors in dud startups which are quietly euthanised a few months later.

A slew of mega-funded startups—firms with the best talent and more money than you can dream of—have been mercilessly crucified. Take the case of Grofers, which raised $120 million—that’s over Rs 750 crore. (To put that in context, some of India’s most valuable traditional companies would have been built on a fraction of this amount.) A couple of months ago, Grofers laid off its staff, publicly admitted it loses Rs 24 lakh a day and ended up revoking offers it made to eager IITians on campus.

Across logistics, e-commerce, food tech and hyper-local services, a whole bunch of hyped-up Western clones have been decimated. A deadpool list puts the number at 800 but my hunch is that this could very well be double that.  

If you keep count, in excess of $2 billion has evaporated over the last 12 months—with nothing to show for it, except jobless techies, sales people, coordinators and courier boys. Over 10,000 pink slips have been issued in the last six months, not counting the losses at ancillary businesses that sprung up around these dollar-guzzling startups.

A bonfire of internet vanities

A few weeks ago, there was a story in The Times of India about how Flipkart’s success was important for the ecosystem. Of course, we want not just Flipkart, but Snapdeal, Zomato and others to be successful. We need all of them to become sustainable businesses, run by home-grown entrepreneurs backed by financial investors.

However, they should be regarded as successful not because they were the first to raise a billion dollars, but because they cracked a unique code of doing business in India that made their positions unassailable.

Mega-funding killed the innovation and hunger, the leanness and the sharpness. It created sprawling teams without focus

What’s more important is that the founders realise that raising lots of money is not the recipe for success. I think when we look back at this ‘failure' phase in five years’ time, we will see that the exact opposite happened: mega-funding killed the innovation and hunger, the leanness and the sharpness. It created sprawling teams without focus. Equally, investors were blinded by the growth story and did very little diligence on teams and their maturity to find product-market fit. Funding became the distraction. The biggest startups in India fell complacent by their own admission. I believe they have done huge damage—these mega-funding rounds actually attracted foreign strategic competitors like Amazon and Uber far earlier than planned.

Step back a moment and think about how mind-bogglingly inefficient our e-tailers have been. Flipkart and Snapdeal both are estimated to have burnt through $3.5 billion so far to generate gross merchandise value of about $5.5 billion this year. If you assume their “take rate” at about 8% (commission revenues they derive from a transaction on their marketplace) it will be near $400 million. Is this the kind of capital inefficiency we need our startups to idolise?

Nevertheless, from this graveyard we’ll see a few well-run businesses emerge. The hatches are down now, the focus is on demonstrating profitability. The core business model in these firms is undergoing a test-by-fire, while side initiatives and distractions are being quickly shuttered.

So, here’s the moot point: Did something go terribly wrong at the confluence of young startup founders, mega-round capital and proven business ideas? Or was the huge market potential in the Indian internet space a chimera?

These startups made an elementary mistake. Their business models targeted a small sliver of the Indian market—the top 15%, what I call India One—with the assumption that this could be extrapolated to the entire population of 1.25 billion. (More later on why this was an erroneous assumption.)

None of the opportunities have actually disappeared. All we need is a new lens to look at it

I, for one, genuinely believe that there’s ample headroom for growth. None of the opportunities have actually disappeared. All we need is a new lens to look at it. I’m willing to bet that the next five years will be nothing like the last five. Of course, we will need a new set of assumptions about the total addressable market, growth rates and new ideas about crafting consumer value propositions and business models that will deliver scale.

But before that, India’s internet entrepreneurs, venture capitalists and the fawning media will have to stop living in denial and be willing to learn the hard lessons from the dreadful mistakes of this last cycle.

The market that wasn’t

There are two parts to this narrative: startups hitting a glass ceiling and the fallacy of ‘one’ market. Let’s take them one by one.

1. The glass ceiling: Every e-commerce player realised this a year ago. That they have exhausted their “consumer runway”. That they have reached a saturation point with their target consumers—the Indians who speak and use English, have money for data packs and have the personal disposable income to fill their closets with clothes they don’t need based on offers they can’t resist.

They realised that they cannot acquire significantly more customers—the same ads are going to get the same consumer back. And that their consumer acquisition and retention costs come with very low payback.

Yet the math was conveniently ignored because they had to show metrics that would get them the next mega-round of funding. My-GMV-is-bigger-than-yours became the war cry, one that would entice investors from all over the world.

Further, as soon as they had to cut back discounts due to changes in government policy, e-commerce shipments tanked across the board. (It is a different matter that Amazon quietly kept executing on a trajectory that took it past Flipkart. Flipkart’s paranoia is back and hopefully it’ll fight back valiantly.) All an indication that the market had less strength than they thought.

And then came more bad news: Smartphone growth, an indicator for the potential of our consumer internet market, slowed to just 17%. More surprise were in store, our telecom operators reported slowing data pack growth for the first time in years.

Almost on cue, the narrative shifted from “India will be the next China” to “India is not China.” We were supposed to be six-seven years behind China. India was supposed to leapfrog directly from the personal computer to the mobile—from a sans-internet land to ubiquitous mobile broadband—that would help us catch up with China. But that was a pipe-dream. We’ve grown, of course, but the gap with China hasn’t shrunk at all (more on this later).

2. The fallacy of ‘one’ market: Is the market small? Not at all.

Google, Facebook, WhatsApp are huge, ubiquitous services with over 95% penetration in our market. They will truly reach our billion-strong mobile users as soon as they get their data packs activated. But these services are free. They make money from advertisers and not consumers. And their average revenue per user (ARPU) in India is a mere fraction of their global average.

So it’s not that our market is small, but the way it is configured that trips up every player who tries to treat it as ‘one’ market. The multinational companies and big box retailers in India learnt these lessons the hard way a decade ago and now we are seeing the tech startups face up to the reality. The reason to worry is this: most Indians cannot afford a decent meal, let alone buying stuff online or hailing an on-demand cab.

Let’s turn to the math.

If you stacked up a 100 Indians, here’s how our income distribution looks:

  • 1 Indian earns 30% of the total and makes over Rs 1.5 lakh a month
  • 14 Indians earn 30% of the total and make around Rs 20,000 a month each
  • The next 30 Indians earn 30% of the total and make Rs 8,000 per month each
  • The poorest 55 Indians earn 10% of the total and make only Rs 1,500 per month each

Mind you, this is total income. This is money they earn to spend on everything—roti, kapada and makaan, and of course, data. Most of this money is spent on food and groceries, and on things they “need”. Money left over to buy things they “want” is much lower as you go down the chain.

The wealth statistics are even more damning:

  • 1 Indian owns 53% of the wealth
  • 9 Indians own 23% of the wealth
  • 40 Indians own 20% of the wealth
  • 50 Indians at the bottom own only 4.1% of the total

(Note: These are rough calculations and I abstain from using the phrase ‘Indian middle class’. There is just too much confusion around how big it is.)

Simply put, we live in three countries

Simply put, we live in three countries:

India One: Club the top 2-tiers above and you find that the top 15% of Indians, i.e. about 150-180 million, earning an average of Rs 30,000 per month, are the ones who have money left over after buying necessities. These 15% of Indians control over half the spending power of the economy and almost its entire discretionary spending. They consume their data plans without thinking about the bills. They install the shiny new apps without bothering about the gigabytes they consume on their oversized and expensive smartphones. They have Wi-Fi at home and office, power generators at home and are connected 24x7.

They are equivalent to a country with the population of Canada and live the lifestyle of a European nation (if you equate them on purchasing power parity, or PPP basis)—and with better lifestyle to boot. They have chauffeurs, maids, cooks, cleaners, peons to take care of onerous chores. And no, they won’t step out of their air-conditioned homes into our dirty streets and traffic—everything has to be served instantly, at home. Assisted living at the age of 20, I call it.

India Two: This is the middle 30% or 400-odd million Indians, earning an average of Rs 7,000 a month. This would be a country about three times the size of Bangladesh with a similar level of purchasing power.

They are the ones who “service” the $1 trillion market (yes, read that again) that India One represents. That’s the money that trickles down to them.  

They have managed to change their fate and climbed out of poverty over the last two decades by migrating from their tiny bits of un-arable land to the mega cities of India and taken up jobs to serve the needs of these markets. They work two shifts as Uber/Ola drivers or as cooks in our burgeoning restaurant chains, or set up small businesses—and send money back home to their families in the villages.

Luckily for us, they still see hard work, family values and education as a ticket to a better future. Most save all their money to get their kids an education. You see them break through the barriers every day. Most of their income is spent on food and rent, and whatever little is left they use to try and escape from life in their smartphone screens by buying movies or songs on an SD card from the neighbourhood store. They buy second-hand smartphones and tiny sub-hundred rupee data packs to keep in touch. Of course, we report them as internet consumers in our slick presentations on Startup India.

India Three: These are the forgotten 650 million who subsist and don’t have the money to buy two square meals. Their incomes rival that of sub-Saharan Africa. They are the ones who did not leave our road-less, school-less, toilet-less, and power-less villages and instead chose to send a child or a sibling to work in the big cities. They live on the mercy of our monsoons and whatever little reaches them through our poverty alleviation programmes. They live on the periphery of our economy and for all practical purposes don’t participate in it. However, they are the ones who form our vote banks and determine the political future of our nation.

And no, these three India’s are not split geographically. The steady urbanisation of our nation has seen to it that all three mingle together in our metropolises—from Dharavi to Dadar to Malabar Hill in a city like Mumbai. We share the same roads, air pollution, and same GSM spectrum from our favourite cellphone operator. What joins our existence at the hip is the cellphone and the constant fear of its battery running out.

Net, net we are three countries. One with the size and wealth of a developed nation, another of 400 million people like a developing nation, and a third large continent of 650 million people whose lives rival that of a poor nation. The Pew research presents an even bleaker picture: 80% of our population is classified as low-income by global standards.

The failure to distinguish between “internet users” and “internet consumers” has messed up every estimate of the market

Failure of the smartphone proxy

The failure to distinguish between “internet users” (India Two) and “internet consumers” (India One) has messed up every estimate of the market. This destroyed the Total Addressable Market (TAM) calculations that have driven most VC funding and valuations.

In a real sense, TAM—of people who can afford to actually habitually spend on the current offerings of our internet giants—is not one billion people, it is about 150 million people. A sixth of the total!

In a real sense, TAM is not one billion people, it is about 150 million people

This changes things. Let’s see how.

E-commerce players talk about how their penetration levels are low and they have a huge upside. But the moment you redefine the addressable base—i.e. assume it’s not 250 million households but closer to 40-50 million with discretionary income—our online shopping penetration suddenly rivals the best markets in the world. It is obvious that with so much media blitzkrieg and mind-boggling discounting, most of the households that could afford to make online shopping a habit have converted. The market has saturated, and growth will slow.

So how does one look at the market today? Quite simply, investors and founders who took our explosive mobile and smartphone growth as a proxy for the potential of our consumer internet market are paying the price. The bubbles are not just in their valuations but in the business models that assumed a far larger addressable market than there is.

The smartphone is not an indicator of spending power, it is an instrument for survival. From Syrian refugees in war-torn regions who said that “the smartphone is the most precious possession they own” to have-not Indians who are willing to sacrifice other luxuries (like soap and powder) to get data access to stay in touch and watch movies or listen to music to escape from the grim realities of their existence. Almost 60% of internet users in India don’t access it more than once a day. These are not internet consumers, but just internet users—they use it like a utility, with an eye on the data consumption.

The addressable market for your startup will now need to be tested for real—not on some pretty Haiku deck presentation. Someone will have to go and check on the ground whether the customer can actually afford it, repeatedly, or will it be a one-time sign-up driven by the incentive of a free Rs 20 talktime recharge—something that sounds pretty good to someone living on a data plan of Rs 100 a month.

The Golden Age

If anything this “reset” augurs well for our future. The golden moment for India’s internet market is coming. VC dollars will now naturally get directed towards India Two and India Three. But they need a different mindset and solutions. They may not live up to the script of I-will-be-a-unicorn-in-24-months, but will have the potential to give birth to several “centaurs” for the next decade.

What will aid them is the fact that the country is about to get data-charged. We will add 200 million smartphone customers as smartphone prices dip below Rs 3,000. Reliance Jio’s entry will reset data prices in India. My guess is that entry-level data packs will cost a third of what they are sold for today—in just a few months.

And wired broadband, which has been ignored far too long by our successive governments, will take off finally. A 10% increase in broadband penetration increases the per capita GDP by 1.38% in developing countries, according to the World Bank. India ranks No. 4 on smartphone ownership, but 122 on broadband. Access to cheap, good-quality bandwidth will make vernacular and video the accessible language of digital interaction. Data will be the new arterial network of India.

Cheap internet access and low-priced smartphones, combined with the public digital goods (the identity and trust layer provided by the India Stack) being built around Aadhaar, and a maturing startup ecosystem will create the next set of uniquely Indian technology startups.

India Stack will craft a new friction-free, lower-transaction-cost highway that will be accessible on the mobiles of Indians regardless of their income and literacy. It will create a truly integrated market. A year ago, I had tweeted that there is a billion dollar opportunity in building your business on this platform.

As India Two and India Three go online, the people who could not participate in the economy as roads haven’t reached them, and bank branches probably won’t (they won’t need bricks-and-mortar branches), will now get included and turn into consumers.

This inclusion will also allow thousands of “micro-entrepreneurs” to emerge from among them. I make the distinction because though we pride ourselves as a country of entrepreneurs, we make a big mistake. Most of our self-employed in India are entrepreneurs by default for lack of other opportunities. They work in small shops and farms, often in poor conditions. They lack the capital and tools to grow and are forever stuck in the uncertainty of self-employment and the vagaries of the market and weather. These sub-scale firms that barely sustain the livelihood of one family are a drain on our economy and resources. We have to de-clog from millions of tiny businesses and get employment going. The kind of entrepreneurs I am talking about will embrace technology and the connected ecosystem to scale their business, creating wealth and jobs.

This is the Green Revolution, the Milk Revolution at 100x the scale and impact—something that has never been seen in any market in the world.

So what does it mean for startups and VCs?

For VCs: Let’s get to the VCs first, since they will be the primary providers of capital for the next wave. Though they have temporarily gone into hibernation or suddenly found software as a service (SaaS) businesses their “flight to safety”, they will have to rethink their strategy.

Indian VCs need to balance a ‘nurture and grow’ versus a ‘spray, burn and pray’ mindset

The traditional VC model bets on a few winners and deep markets, which are quickly penetrated by access to mobile-connected audiences and are mega-funded to disrupt traditional markets. Indian VCs will need to balance a ‘nurture and grow’ versus a ‘spray, burn and pray’ mindset (flush the startup with funds, achieve scorching growth, and then use the cost leverage and network effects to scale up).

In China, internet retailing grew 50x in the seven year period 2007-2014 on the back of 7x growth in user adoption and 7x growth in their annual spend on e-commerce. In 2014, China had 10x the number of middle income households compared with India. We can’t catch up to that anytime soon. That kind of growth is still 10 years (or more?) away in India. So VCs need to recalibrate their thinking. Of course, you may find a startup with great product market fit, but the viscosity and the shallowness of the Indian market will slow you down. So you have to have the patience to see it achieve scale. In some segments, the pioneer’s curse is clear and present, as the early movers are paying the price of developing a market that really wasn’t ready for their offering.

VCs need to see India as a market where you have to fund and nurture ten tiny disruptions rather than just one big one

For startups: If VCs realise that they need to see India as a market where you have to fund and nurture ten tiny disruptions rather than just one big one, founders will have to play the game very differently. For a start, they need to throw away the Western lenses and look at the real opportunities that India Two and India Three throw up.

We need a “Nirma moment” in our startups: home-grown, grounded thinking that disrupts

We need a “Nirma moment” in our startups: home-grown, grounded thinking that disrupts and breaks the affordability and access barrier. And the Nirma moment does not strike you while you sit in the cozy quarters of Koramangala. It’s out there in the dirty, dusty streets of India where our millions live.

Let’s get India One out of the way first. Sure, the India One consumer has the spirit and the power to spend. But this is also the market that everyone wants. It will remain hyper-competitive with the global players always ready to jump in. This market needs startups that are cut to the knitting, that tailor their offerings to these audiences who value convenience over economy, and build loyalty. Here the challenge would be to drive both usage and ticket size. This will be a tough market to fight. Winning here won’t guarantee that you will still be relevant in a few years’ time, since you’ll miss the benefits of scale if you ignore the India Two and India Three markets.

Now that consumer internet has lost a bit of its glitter, the unsexy opportunity to look beyond and disrupt most of India’s traditional businesses should look attractive. Every sector has infirmities and yawning gaps that a startup can drive a truck through. You need to discard the Western lens and you’ll see that you will be able to exploit a wedge in these markets by creating platforms that use data to discover, bundle, unbundle and overhaul our traditional markets. Players who are doing this, for example, in the trucking business are seeing success. And it is easy pickings. Most Indian old-economy companies are caught like deer in headlights—every CEO wants an app or a website but few have a clue on how to make it a real business. A quick glance at the websites of the offline retailers will tell you that even after they’ve been hit by the online tsunami over three years ago, they’ve yet to put up a semblance of a fight. Their singular problem is talent. They find it difficult to attract and nurture the talent that can get them to ride this wave.

The “real India” startups: The consumer internet businesses for India Two and Three will have a different agenda—they will need to focus on reducing costs and friction, and not just on overloading the consumer with choice.

So how can one frame the opportunities? While it’ll be most interesting to get the reader’s take on it, I’ve tried to bucket them into three types:

1. Bridging the divide: These are firms that would build the bridge between India One and India Two—that rework their offerings to match the aspirations and affordability of India Two. Who can refurbish goods, sell more affordable unbranded products, and communicate with the India Two consumers in their language. Group-buying platforms for consumers and small and medium enterprises, second-hand cars and two-wheelers are some examples. A player like Shopclues is the Indian dollar store or the flea market has made a dent here.

As urbanisation increases over the next decade, India Two will descend upon our metros looking for opportunities. And our startups will now know who they are, where they live, because they will be empowered with a digital identity, and can help them lead a better life by integrating them into the services needed by India One, helping them get jobs and offer their services. Their smartphone can be their ticket to a better future.

Startups need to learn how to “sachetise”

2. Create new markets: Startups need to learn how to “sachetise”—how to strip down ideas and services and match the affordability and aspirations of India Two. For instance, they need predictable and cheap transport. Can we be one of the biggest markets for bike-hailing firms, like Go-Jek in Indonesia?

We need to think about how to learn from the large packaged consumer goods firms and how they used sachets to deepen their engagement with rural India. They used local language, local icons and have created local markets.

Startups need to unbundle education from the classroom, unbundle things from ownership. These markets need the sharing economy more than the young couples looking for furniture in Gurgaon. Look at vocational training or opportunities like Sheroes (a startup aimed at creating employability for women) provides—if these scale well, it can lead to huge wealth creation, both for the startups and the consumers.

Businesses that provide a lifeline to these consumers have thrived—Google, WhatsApp, IRCTC, Redbus are some examples. Microfinance businesses are doing well and if layered with the India Stack they can scale faster at lower costs.

I hear startups say they have a “revenue challenge”, but let’s accept that monetisation and unit economics will remain challenging well into the next decade. It’s up to you to see how to reframe it as a “cost challenge” and ask yourself, “How can I deliver on this offering to the customer at the price he can afford and still make money?” Startups that find creative and frugal ways to leverage technology and manpower to be the cost leaders will be the ones that will be able to straddle our distinct markets to win.

3. Inform, empower and entertain: How about services that uplift, inform, educate? That help people chose which crop to plant, how to look after their health. Startups that can make a village act as one, which can create mechanisms for collective bargaining, which can improve information to our farmers. Ones that reduce friction and empower the India Three customer—who can help them share capital assets like tractors and farm equipment. Who can advise how to save their daily wages and invest.

These consumers need startups that can disintermediate the middlemen who exploit them. For example, “direct to farmer” m-commerce platforms like AgroStar. We need solutions that can help India Three meet their aspirations for a better life, more employment, cheaper and better education.

Firms that embraced vernacular early, like Dailyhunt (earlier known as Newshunt) and Indus OS, or even the English-learning app Hello English have clearly shown that if you create services that are relevant and priced for the Indian masses, the take-off is fantastic.

A big round of funding doesn’t mean you can create a successful business. Ingenuity comes first


These are lessons for the new lot of founders: A big round of funding doesn’t mean you can create a successful business. Ingenuity comes first. But yes, if you get it right, the funding ecosystem is now large and deep enough to back you as you scale.

I believe it is time to get fascinated with India Two and Three for the next five years. These are the markets where you can create moats—and stickiness. These are the first-time internet consumers. They need guidance, they need solutions that can transform their lives. And they live next door, in the chawls of your city, so you don’t have to go far to understand what they need. Learn from Patanjali as much as you learn from Amazon and maybe you’ll truly find the pot of gold beneath our pyramid.

It is time to get fascinated with India Two and Three

Every startup doesn't have to be a unicorn. No need to burn up like the legendary Icarus as he affixed wings made of wax which melted when he tried to embrace the Sun. I’d say, instead work on growing real wings and soaring—they take time to grow, and the journey is longer, but they won’t melt at the first sign of heat.

Correction: An earlier version of this article said that Google, Facebook and WhatsApp will reach India's billion-strong internet users as soon as they get their data packs activated. It is mobile users, not internet users.

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Ganesh Narayanan on Oct 28, 2019 7:06 a.m. said

I wish that this article was seen by me few days ago just when I was explaining in Italian as how the mkt is India is ONE. The Maths model is a eye opener .

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Sameer Soman on Sep 20, 2016 4:07 p.m. said

A terrific article ... very well written. Nandan referred to "WhatsApp moment in Banking" and you coin "Nirma moment"

Arpit Choudhury on Sep 09, 2016 7:17 a.m. said

Yet again a fantastic read and one that resonates so well. I don't say this often but I really look up to the way you think, and the connotations you use are spot on. Thanks for sharing this piece.

Alhad Pofali on Sep 09, 2016 3:29 a.m. said

Thanks Haresh.
I always love your mathematical approach. Numbers do open up new insights. This is something that you have talked in your earlier articles too with prophecy of maths not adding up delivery startups and now their demise...
I feel that this funding of billion $ is creating a skewed and biased market. This funding is leading to excessive and unsustainable discounting in name of revenue and rush for customer base be it in e commerce or taxi hailing services. This is definitely challenge to an unorganized forced entrepreneurs from "India Two". Probably that's where the new start ups come into picture as you conclude...

Vedant Desai on Sep 05, 2016 8:06 a.m. said

Once again an insightful article. You have rightly and repeatedly pointed out that getting funded is not a guarantee of suceess.What I would want to ask is : when do know that our business is on the path of success? Now , I believe that there can be no generalized answer for it and it largely a matter of intuition ,but I would like to hear your thoughts on it. And matrices are very unreliable for this purpose because no sooner we form the metrices , the people who are going to be measured by it will start formulating ways to hack such metrices.

Mohammad Farooq on Sep 02, 2016 9:33 a.m. said

This has been such a good and eye-opening read. Inspiring to say the least. Thanks for this!

Shashidhar Jayaraman on Aug 31, 2016 1:12 p.m. said

80% of our markets are unorganised and they cater primarily to India 2 and 3. If the e-com companies were to streamline their model and work with them, there in lies the opportunity to service India 2 and 3. The brick and mortar models have slowly but steadily trying to penetrate this segment, wonder why e-com firms did not look at this opportunity.

Chirag Barot on Aug 31, 2016 12:17 p.m. said

Superb article. Cannot understand how the VC's failed to see the huge gap between India1,2&3 and just pumped in money even beyond saturation point of the TAM. Or is it a case of herd mentality with the VC's too with probably the same presentation, rather, same slide of TAM in all the presentations that the VC's get during pitching of the idea by the startups?

Sanjay Laddha on Aug 31, 2016 9:41 a.m. said

Concept of India 1,2 & 3 is quite brilliant and pops up a moot question-were these VC & other learned guys so dumb to overlook these basic,fundamental aspects of Indian economy.You have truly captured the essence of doomed online businesses-it remains to be seen whether your theory if India 2&3 really translate into viable businesses in next decade.
Overall,a wonderful piece of knowledge based writing-Do keep on spreading the right words!

Aniket Banerjee on Aug 31, 2016 6:48 a.m. said

I really liked the way you have interpreted the current situation with respect to digital economy in India. And, I completely agree that the industry need to learn to sachetise to survive and may be even champion it. The opportunity is enormous but we need an indigenous approach to seize the same.

Vikash Singh on Aug 31, 2016 6:46 a.m. said

This was deadly stuff. I mean after a long time someone has put up so many things in just one article. Long read but really makes sense to go through it.

I Srinivas Murthy on Aug 31, 2016 6:17 a.m. said

Dear Haresh, You've absolutely nailed it! Thanks so much. Would love to hear more from you in future articles on the management styles, skillsets which go into making companies succeed in India. From your own Network-18 success to true 'Indian-operators' like Nirma, ICICI, Haldiram, HUL, so on.

About the author

Haresh Chawla
Haresh Chawla


True North (formerly India Value Fund)

Haresh Chawla is currently a Partner at True North (formerly India Value Fund Advisors). True North is one of India's most experienced and respected private equity funds, with over $1.5 billion under management. At True North, he focuses on investments in the food and consumer sectors where he identifies and helps transform mid-size businesses.

He is best known though for his leadership in transforming the Network18 Group into a formidable media network. Under his watch as Founding CEO, Network 18 became India's fastest growing Media and Entertainment network.

In his dual leadership roles at Network18 and Viacom18, he built a media conglomerate that reached over 300 million households across platforms including television, print, films, mobile and internet.

His career at Network18 spanned 12 years, and he grew revenues from $3 million in 1999 to $500 million in 2012. He transformed the company from a TV production house to India's leading multi-media house with over 11 TV channels including Colors, CNBC-TV18, CNN IBN, MTV India and Nick India. He forged joint ventures and long-term partnerships with the world's largest media companies including NBC (Comcast), CNN, Viacom, Forbes, A&E Networks.

Haresh has also been keenly engaged in the consumer internet revolution in India from the early nineties. He is credited with building India's largest most well-known internet businesses like Moneycontrol, Bookmyshow, Yatra, Firstpost and Homeshop18. He continues as a successful investor and mentor to several internet and consumer start-ups today.

Earlier, Haresh has been part of founding teams at the HCL Comnet; ABCL, where he set up the Film Distribution Business, and at the Times of India Group where he launched Times Music.
Haresh holds a Bachelor's degree in Engineering from IIT Bombay and a Master's degree in Business Management from IIM Calcutta. He lives with his wife and two children in Mumbai.

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