Entrepreneurship in India
Some reflections on what entrepreneurship is in today’s India, and what it tells us about our society. Who is truly an “authentic” Indian entrepreneur?
Entrepreneurship is hard because of the uncertainty around starting and running a business. Also the risks associated with all businesses are not equal. If you are running a trading business, then there is less complexity and hence less risk. If you are doing something deeper, capital intensive and innovative like manufacturing (or creating software products), then there is a long payback cycle. That is if you manage to get a product that is stable available with the right features and quality at the right price. This is where social institutions can help by providing support to entrepreneurs, from learning communities and finance. Even the stories we tell ourselves as a society or a nation matter, because we all seek solace in being part of a whole.
In our national narrative, I don’t think India is a country of entrepreneurs. Our oldest stories are around morality and spiritualism, righteousness and family feuds. India, being a land of surplus, never probably had a need of trading goods (other than gold). In the ancient epics, the merchants have almost no role to play. There is very little original study of economics or commerce in India. While Indians have been crafts people and traders for millennia, the idea of structured enterprises has been absent.
The idea of enterprises came to India from Europe and the British East India Company. The oldest Indian surviving company is the Wadia Group which is now 300 years old. Most of the oldest Indian companies were started by the British or the Parsis, who were very close to the British and adapted their lifestyles the fastest. The next set of Indians to follow were the Marwari merchants from Rajasthan who had also been early allies of the British. So it is safe to say that modern entrepreneurship in India is a British import.
Companies in India also tend to be concentrated around the port cities of Mumbai, Kolkata and Chennai, with Mumbai garnering the lion’s share with its close proximity to the rapidly developing Europe. Once the Suez Canal was opened, Mumbai became the de-facto hub of entrepreneurs. The first large “industry” was textiles and Mumbai flourished in the textile era. The next set of Indians who became entrepreneurs were the Gujarati merchants who also had close proximity to the ports and the British. The other 99% of the country that was not connected to global trade had no clue about what was about to hit them.
Industrialisation also led to massive displacement of the rural craft and trade economy. Things could be produced faster and cheaper in factories, hence this led to loss of livelihood in the villages. Gandhi was the first to grasp the massive change and decided to make hand-spun cotton (khadi) his symbol of nationalism. But Gandhi’s ideas came in too late and India would not remain immune to the wave of modernism and industrialisation. Even independent India under Nehru chose to promote modern ideas and called the large industries and power plants as the Temples of Modern India. India limped along in the cold war years choosing a part of socialism and actively shunning private enterprises, leaving the trade and crafts people to the margins of society.
A wave of capital led entrepreneurship came via the liberalisation of the 1990s triggered by the collapse of Soviet style socialism. This coincided with the IT boom led by internet and the Y2K bug, a black swan event that forced many companies to rewrite their software, there by creating a boom of service led growth in India. Along with IT, thousands of foreign companies that started investing in Indian companies across industries. This also led to a rapid transformation of pop culture with MTV and Pepsi Cola. Even our family business, which was started 1951, was eventually acquired by a foreign company. This led to massive growth in the value of financial assets and a 30 year stock market boom that has led to the creation of a large market from auto-mobiles to real estate.
It seems that the adoption of entrepreneurship in India is the process of modernisation of the economy coming from mostly first Europe and then America. It feels like a powerful wave of culture that swamped the country and Indians had no choice but to accept. The bucolic life of leisure and family feuds was forever destroyed. This was replaced in equal measures by large scale poverty and small but fast growing enterprises. In the last decade, since maybe 2015, entrepreneurship has gone mainstream with popular TV shows like Shark Tank celebrating hustle and experimentation and “startups” being a household thing.
While we have learnt to celebrate success and wealth, enterprises in India are mostly about “executing” an opportunity rather than experimenting with new ideas. Even execution forces you to invent and innovate, specially if you don’t have access to capital and technology from someone. This is what we call as jugaad innovation. Our national champions are still the large industrial houses. The influx of capital has created a new generation of companies like Flipkart and Zomato that have started to challenge the incumbents while also creating a local market.
To summarise, some of the movements or waves in Indian entrepreneurship are:
- Large industrial houses continue to expand and dominate day to day life.
- Foreign companies (Samsung, Apple, Amazon etc) are very much a part of the Indian social fabric.
- Mid-sized companies are also prospering quietly due to expanding market opportunities but are dependent on networks and capital.
- New age entrepreneurship is very internet and media first and social.
- The rest of millions will continue to barely survive in the trenches of low income neighbourhoods and towns.
Since India was very late to the innovation led entrepreneurship game, ecosystems outside India were already innovating much faster and inventing products and services. Once something is invented, there is very little motivation in re-inventing it. Ideas spread surprisingly fast and have a life of their own.
Even looking at my own journey, this idea of creating an enterprise with a long gestation cycle seems such a big fight with the environment. Not having such an environment in the first place, means that there no cultures that new companies can benefit from. This is why innovation gets restricted to places like Silicon Valley. Maybe while information can travel at the speed of photons, but cultures are still spread by people-to-people contact.
The current state of Indian entrepreneurship does not leave me either hopeful or hopeless. As long as we continue to integrate with global economies, we will continue to benefit from international companies. Indian entrepreneurs who want to execute things will continue to get capital and support from the growing financial ecosystem. Unlike America or Japan we will not be able to create our own cultures of running companies.
One of the few things that gives me some satisfaction is that maybe Frappe is an experiment running with kind of Indian (Gandhian?) ethos of the search for truth, spirituality and simplicity that is embedded in our culture. This is expressed as our commitment to openness, community and sharing. This seems delusional even to me, so I am not sure how much the team buys in to all of this. Frappe is forever embroiled in this battle between materialism and the search for “truth”. The lure of wealth is just too strong, but so is the lure of authenticity.
