Precisely What Is Business Capital

Global products that thrive adapting to local culture or productizing a cultural behavior or problem.

By Gregory Dsouza

"Designers are interested in Culture. But sometimes they treat it in a way corporations used to treat design: something consulted too little, too late"
-Grant McCracken


It’s 2:30 pm in Bombay. As I sip on some Kenyan coffee, at a Starbucks I cannot help but eavesdrop on 3 young 20-somethings around me chat about building their startup. They scan TechCrunch for the startups that are funded. Ah, Foodtech is the space to be. Ofcourse, everyone has to have 3 meals a day. They continue to browse websites of US startups in the space, then YourStory to research FoodTech competitors in India. Finally, after a seemingly difficult brainstorm figure out the ‘niche’ they want to be in. That’s it. They have a startup. They plan to have an app and a web presence. They delve further into how they will easily be able get funded for 5 crores (almost $1 million). It seems all to easy. FoodTech seems to be the new hype. Indian startups have been showered with capital, in lieu of the sheer market ‘potential’. US and Chinese capital are betting big on India being the new China, based on the similar demographic and growing internet enabled penetration.


Over the last decade, India has changed. More specifically, startups in India have changed. Here, when entrepreneurs and investors go to the drawing board, the instinct is building a copy of a product that is already working elsewhere. I have spent the last 2 months back in India, absorbing the new startup culture and learning how startups are evolving in India. In these 2 months, events like TiECon in Mumbai, E-summit at IIT Bombay, etc. provided me the opportunity to interact with the ‘ecosystem'. I have noticed a new thought process emerging to build products for India. Phase 1 of replicating startups in India maybe coming to an abrupt end.


I call this new hopeful shift - Design for Culture. I will elaborate the aspects of this thought process, showcase examples and provide pointers on how to products can be built differently.

Culture

Let’s start by defining culture, to set the context:


Culture refers to the cumulative deposit of knowledge, experience, beliefs, Venture Capital values, attitudes, meanings, hierarchies, religion, notions of time, roles, spatial relations, concepts of the universe, and material objects and possessions acquired by a group of people in the course of generations through individual and group striving.


Before venturing on a global expansion or replicating a startup, it is probably imperative to identify the cultural differences or behaviors that may exist between one’s home country and Venture capital intended target market. Where the differences exist, one must decide whether and to what extent the home-country practices may be adapted to the foreign environment. The market seems the same. The people seemingly have the same needs. The subtle differences of current behavior and market dynamics are often neglected.

‘This for That’ Startups in India

There has been a plague over the last decade to create ‘This-for-That’ startups. If you are unfamiliar with this, a good illustration of this plague is seeing the tagline of few startups: ‘Airbnb for this’, ‘Uber for that’ and so on. The permutations and combinations are endless as well as futile.


This new trend in ‘This-for-that’ startups represents in most cases is a successful product that has taken off in the US. This relative validation of a model excites entrepreneurs looking for inspiration and incentivizes capital to invest. The typical argument in favor of replicating a product early, has been to develop a network effect your product/service quickly. Entrepreneurs and Investors hope that if they take a bet on replicating this model, they will create a geographic monopoly that is hard to thwart. The ‘Mother Startup’ coming in would then have to come in and take a strategic position in their company.


The larger and more worrying trend is that a lot of them have been springing up chasing VC funding. From my conversations with Indian entrepreneurs raising capital in India, the usual question they are asked is ‘Is there an example of this in the US?’. In extreme cases, I have heard of VCs hunting for teams to build an replicable idea, they think has legs for funding. This invariably leads to the funding headline chasers to build or fund startups that make them feel seemingly successful. In the short run. The marginal cost of replicating software, in terms of time and resources, is now well (relatively) marginal. The execution of the idea and analysis of the true market need is often lagging behind.

Tweaking Design for Culture

I believe the need of the hour is to build products and services, Designed for Culture. Designing products for a specific market, for a specific culture. Building a successful global business is not a universal recipe. You need to define the problem from first principles for a specific market. As I have been researching this thought process, almost everyone I have discussed this with seems to agree with this notion. There does not seem to be a framework to understand how to apply this system, if any. It maybe almost impossible to create a templated solution to ‘replicate'. They exist in our collective blind spots. I will showcase successful examples of products or services that have taken this approach.


Every market is unique and you need to constantly adapt your product to achieve product-market-culture fit.

Going Global

Let’s start with global companies that have successfully tweaked their products for Venture Capital different cultures.

Facebook

Facebook started as a cultural fit for students in American universities. It replaced the scrapbook and alumni websites. It became a shared relatively public store of memories and connections. While doing this, it nailed the essence of the psychological needs of almost every human.


While Facebook embarked on it’s Global expansion in Japan, it discovered a secret. The Japanese have a blood type personality theory and believe that blood type determines your personality. Facebook provided Japanese users can post their blood type on their profile. Chamath, former VP of Growth at Facebook, did this with the help of people on the ground. A local champion is better than an American MBA who just follow templated plans.


Facebook, in Arabic speaking markets have ‘literally flipped’ the product in their internationalization efforts.


Uber has been quite nifty in customizing their product to every market they step into. Uber has meticulously tried to understand every market and hiring the right people that can execute with them. Indian consumers tend to care more about getting to their destination cheaper rather than "in style," Uber launched a rickshaw-on-demand service


As a thought experiment, could Uber have been built in India? Maybe. Maybe not. Building an Uber in India for the top-end of the market does not seem obvious, even in hindsight. A probable reason for this would be that since most of the rich people had drivers and ‘everyone’s private driver’ seemed a privilege reserved for the rich.

Didi Chuxing

Didi Chuxing, the merged conglomerate of Didi Dache and Kuaidi Dache built their product keeping Chinese needs in mind. They solved a seemingly minor but valuable problem.


Instead of just blatantly replicating a model of GPS enabled location tracking, they enhanced it with voice. A Chinese person typically shares addresses by vocally visualizing directions to a location, Didi provides a simple feature to record a voice message. This voice message contains details of how to get to them along with their GPS location.


Instead of SurgePricing, included in your audio message you can also indicate an additional offer for the cab driver.

JD.com

JD.com, based in China, developed an infrastructure that enabled the same delivery guy to deliver your package, every time you order.


In a society that values familiarity, this is an interesting aspect that builds a lock-in. The delivery guy ends up being part of your extended family.


Additionally, you can also indicate your preferred date and time for delivery and ‘your’ delivery guy will co-ordinate with you.


Your JD delivery boy also makes use of the above modified vehicles creating a unique, personalized inter-city delivery network.

WeChat

Along with its basic communication features, WeChat users in China can access services to hail a taxi, order food delivery, buy movie tickets, play casual games, check in for a flight, send money to friends, access fitness tracker data, book a doctor appointment, get banking statements, pay the water bill, find geo-targeted coupons, recognize music, search for a book at the local library, meet strangers around you, follow celebrity news, read magazine articles, and even donate to charity … all in a single, integrated app.


US startups chase single use cases with exceptional UI/UX to do one thing well. It seems like Chinese and maybe Indians, prefer the complexity and simplicity of trusting just 1 app to manage everything.

Single’s Day (a product of Alibaba via Taobao/Tmall)

Typically, Venture Capital celebrated on 11/11 enables consumers, actually singles in China to gift themselves a gift. It’s also called Double 11 but I prefer to call it anti-Valentine’s day. It’s a unique cultural phenomenon and Alibaba has developed a unique channel to deliver value to consumers.

Quora

Quora is wildly popular in India. It almost seems like an Indian product more than a US/Global product. I believe Quora took off in India, since Indians have a tendency give ‘gyaan’ - basically translated to knowledge or wisdom. Throughout the course of history, Indians have built up a highly intelligent society that immensely valued intelligence and wisdom.

Tinder

Tinder became a mainstay owing to the hookup culture. In India, Shaadi.com or BharatMatrimony are probably the more culturally familiar than Tinder. Bollywood and culture has deeply entrenched a notion of love at first sight. Tinder’s hookup image does not collude well with the mass market. Though it could be more attractive to a niche market.!


Truly Madly and Aisle have done a much better job at customizing their product to Indian culture. Aisle uses LinkedIn as a sign procedure which automatically implies a marriage hunt. It is quite amusing but you can’t fight culture.

Staying Local

At inception, there have been products that tapped in a truly local behavior of a culture. They made a product, based on a cultural secret and blindspot that enabled themselves to latch onto that behavior. These products seem like an extension of the consumer’s current behavior.

ZipDial

Missed calls have been an inherently Indian behavior that almost everyone in India used. This emerged since call rates were initially quite expensive.


It is simply a widely socially acceptable form of dialing someone and hanging up after 1 ring. This usually has been done with the outcome of the action already planned or implied.

Hike

Hike, started out as a product that built a messaging tool similar to Whatsapp. As a differentiator, it innovated its way to staying relevant.


Using Hidden mode in Hike Messenger, you can hide your private chats, such that no one even knows they’re hidden, and access them only with the right password. In a country like India, where teenagers stay with their parents and families; where their need for privacy is constantly challenged; this feature solved a simple need.

Goqii

Goqii, started by Vishal Gondal, developed a model that provided coaches to guide you towards a healthier lifestyle. From inception, they believed that health bands were a commodity and beloved the real value is providing a coach to guide you on a healthier path. In a country, Venture Capital that values tutoring it makes Goqii blend into the Indian consumer mindset better.

Freecharge

FreeCharge.in provides an online facility to recharge any prepaid mobile phone, postpaid mobile, DTH & Data Cards in India.


They had a deep understanding of the Indian consumer behavior. Consumers who are transacting offline need a little incentive to come online and transact. Giving coupons and subsidizing things made people do that.

SMSGyaan (by Innoz)

India was primarily a feature phone market. Until recently, when the shift to smartphones has begun to accelerate. Innoz built a tool that enable a service that enabled consumers to SMS a question and receive a response.


SMSGyan is totally SMS-based - you can not only send a search query through SMS, but can receive the answer via SMS as well.

NowFloats

NowFloats platform marries location and mobile to help local businesses create and manage their SEO optimized websites via SMS in 13 minutes. The startup makes a website for SMEs and Venture Capital then optimizes their updated messages to ensure local discovery through automated Search Engine Optimisation (SEO). Additionally, businesses can use it to update promos, offers, product information, and sales, etc. on the go.

Oyo Rooms

Three years ago, Ritesh Agarwal founded Oravel, a clone of peer-to-peer lodging website Airbnb.


A specific Indian market nuance is not finding standardized properties. If you liked this article and you simply would like to obtain more info with regards to Venture Capital i implore you to visit the website. This coupled with large families that live in apartments, typically does not leave ‘room’ for a home-stay. Its branding provides a franchise-like consistency of product.

HomeVeda

Homeveda, a health video content site focusing on natural health. The company provides short 2 to 3 min do-it-yourself (DIY) videos on its website. People in India typically have a wealth of health hacks that seem to work and HomeVeda capitalizes on that trend.

SaaS Products

Products built for businesses or as it normally referred to as B2B have had a hard-time scaling in India. There is no inherent culture of paying for software in India. This could be because companies in India typically are not used to valuing time spent by their employees and is accounted for more as fixed cost than variable cost.


Maybe the way to build SaaS startups for India, is to provide the software for free to gain mass adoption. Enable a transactional layer on top of it to extract value from the product. For instance, if one of the hyperlocal delivery startups were to build a inventory management app and give it away for free. Post that, provide value for consumers to search for relevant products. Though this may seem like building a bank to take out a loan from it. It could just work.


Another approach could be, Venture Capital designing for a local culture/behavior and take it similar cultures overseas later. It is a good idea to productize human behavior locally and standardize human behavior globally. It’s how most movements have spread.

M-pesa (mobile money) -

M-Pesa is a mobile phone-based money transfer, financing and micro-financing. M-Pesa allows users to deposit, withdraw, transfer money and Venture Capital pay for Venture Capital goods and services easily with a mobile device. then using it or reselling it. It started commoditizing a behavior to transfer talk time minutes as a currency.

Zippr

Zippr’s primary objective is to make ‘Zippr’ a mainstream alternative to long address. Zippr is a personalized identity-layer on maps which can be shared with people you know.


It wants to solve the severe problem of an inconsistent postal address format that was not designed to keep up with the growth that India is currently going through. Zippr can evolve into a unique platform to provide Indians with a unique code that can enable new products on top of their API.

Hurdles in Design for Culture

There are some obvious hurdles in designing for culture.


Mission: Having a Global vision right from the outset, Venture Capital will be paramount. While expanding your business, it is easy to get distracted and build products that make every product different in every market.

Product Design: Design your product for flexibility either when you start out but more prudently when you are ready to take your product global. Uber has done this spectacularly well and is commendable. Mina Rad, Fmr. Director of product at Uber has described the journey from complexity to simplicity.

Marketing: Discounting products to be the last man standing is a very Chinese invention that has been replicated in India. These work to get customers into your door but ends up being a one-night stand (or multiple-night) instead of a marriage. Carefully, ensure that your product is designed to take your consumers to an ‘aha’ moment and you can capture the additional value created for consumers.

Design: The US tech industry is typically focussed on making products simple with amazing UI/UX. In China and India, the successful apps are a cluttered brouhaha. These cultures prefer the figuring out complexity and the nuances along the way. Once they are comfortable in your app, that’s your comfort zone.

Regulations & Taxes: It is incredibly hard to keep track and navigate through all the regulations and taxes at the conception of your business. However, if you plan on expanding globally it is imperative that you would want to comply regulations in a country. As a locally targeted startup, this is where your strength could lie, find secrets/blind spots that enable you to be better.

Compliance: Nicolas Colin from TheFamily writes Papers, has this wonderful illustration to develop a model to map your business’s ability to scale globally. Though most of these products, have had success outside their founding borders. They have relentlessly focussed on customizing their product for a local market.

To summarize, Designing for Culture has a few aspects:


Replicating a product/service for a new market: This is probably the most common approach in designing for a particular market.

Tweaking a product to match the cultural norms for a particular market: Even if you decide to replicate, pay close attention to the cultural norms and different aspects that will empower your product or service to achieve mass market adoption. Just observe and build from first principles of culture.

Create products for cultural behaviors: Develop products that commoditize a deep cultural and obvious (in hindsight) secret of a particular culture. These products have the opportunity to create something users in your market love and grow into quickly.

Business Model Innovation: Most of the above, need you to constantly innovate on your Business Model for that country. For instance, Cash on Delivery is almost imperative as an option, if you open an e-commerce venture in India or China.

Operational Tweaking: It is estimated that in countries like India where Logistics infrastructure for products is absent, upto 30 people could end up touching your product. This has a dramatic increase in the cost of delivery in these markets.

So when you are thinking on expanding globally or thinking of cloning a startup for your market? Think first. Observe the culture. Understand the essence of a product and see how you can tweak it to your market.