Solving the Innovator’s Dilemma

Each time I hear a new startup idea that is disrupting an industry in some corner of the world, I sense its originality getting diluted by a random big brother bad a$$ shark. As suckers for consumption, we might end up consuming the same idea soon, served with a silver platter and seasoning for us to devour and relish. Welcome to consumption, sheeps!

I never ever, ever had ordered groceries online from e-retailers till yesterday. My work kept me too occupied to even step out my home and buy 2–3 sabjis. Have I become too incompetent? E-commerce is one such industry which profits from other people’s laziness.

My opinions expressed are a direct consequence of shutting down a grocery biz platform which I was able to up-start with limited success. Thanks to Amazon, and we pulled the plug. The climate of business is not the same as before. As small startups with self-funded capitals, one can’t compete in a world of such grave inequality. Forget getting funded, especially e-commerce. It is more cash down the drain to get your first 20%. And, we are Indians.

“Loathe it, Ignore it, but you can’t like it.” — SMSW

The bloody lousy disgust we have for each other is the single thing that will keep us apart from innovating and co-existence. Why are we divided, I ask? We have attitudes. We have egos. We build our own walls around. And, if anyone comes knocking, we make them wait at the drawbridge.

Thanks to the terrible incompetence of the country’s politicians, who manage to reserve 10,000 crores of tax payers monies and never spent a dime even after few years of announcing it, to really cash starved startups. We lack the access to funds. We lack the capital to hire good developers. It is immensely saddening not a lot has been done to alleviate the pains of small startups who really need these funds. And, it has to be natural.

Not many sellers launch their own stores. And, problems like sourcing and production have been the top priorities. Whenever I look to discuss ideas, I find it hard to digest that many accelerators think how to out beat their 100x powerfully venture backed competitors with a stack 10x more powerful back-end? A few are obsessed only with design & user experiences of the ‘touchy’ world. I simply have lost hope what unique can we achieve in the world of skewed disproportionate awkwardness.

It is intensely saddening we are still hanging our clothes dry, and expressing our backwardness to change in many areas — especially for small firms. This is one industry where disruption is affecting us all. And, we know why we are getting out-beaten. If FDI investments have sky-rocketed in the past few years, digital colonization is in progress.

As a startup’er we can’t force feed someone the love for our country. Almost all startups, look for clients outside this deeply rotten country. We should start thanking the souls who love foreign investments. Thanks to few Indian startups. We can find great food in the remotest parts and random villages of New Zealand, but not in the most busiest parts of Mumbai? Look at the genuine concern of these startups! 2 minutes of silence to those idiots who passed a law for all cinema halls to play the national anthem before a movie. If respect is to be deserved, it is respect earned.

Even as there were large scale state-wide protests at Marina over a controversial a traditional sport that involves taming the bulls, conserving the native cow breeds, and saving the bio-diversity — nothing seemed to have stopped few globalized businesses from importing foreign cattle. Whilst a few people and organizations have been quite actively pitching the importance of using native breeds, all this shoddy things happened behind the backs.

I always get consulted by peers who want to set-up an startup/business. Most of them have stopped adventuring today, when it boils down to the money. Last year alone, Amazon has infused $190 Mn (INR 1,237 crore) into its Indian flagship firm Amazon Seller Services.

Our Angels/VCs are the most risk-averse. Having personally advising and mentoring few startups, the most common excuse we can find today from investors is how they are unwilling to spend unless we setup a US entity. Like sheeps, I had witnessed many 80:20 profit sharing Delware entities spring up the West coast, only to access the green lusted-orgy of SV investors. Bloody effing shame if you are a startup doing something like this. Why are we so poor? Has formal economy changed our lives? This gentlemen, we can’t change what is inherently flawed. One word — Greed.

We lack the infra. I don’t know how many times I’d have re-iterated in my past blogs. But, what can you expect to innovate and consume in a country that lags is poor connectivity. Sadly, we even don’t have toilets. Secondly, we are bloody dependent on USofA for our software licenses. And, we should stop being the beggars. The best example was during the country’s failed experiment called demonetization. One company called FSS had to lick the balls to get software licences for majority of the ATMs installed all over India.

Make in India, seriously? For weeks since the demonetization, we are spending our lives bearing the pains of living without money. We are forced fed into an illusion that everything in the formal sector is white and clean. And, people blindly bought into that dumb idea. Unfortunately being in a part of a system that is so broken, we can’t amplify our pain to the top. SAD!

What contributes to the growth is pretty amazing. Our own incompetence, perhaps? Our own governance has allowed a lot of unhealthy competition from foreign investment. Markets need support from local vendors. Most of the company is focus on how to beat the competition instead of the client. The customer is the focus. Providing variety is something which this company has adapted. From the point of profitability the basic measure of the success is the shareholder value that they had created in their long term. The value is a direct result of their ability to inspire into small markets and strengthen their position.

Amazon had made a considerable investment in its website services subsidiary, and it is growing as we speak. No wonder Amazon is called ‘The Everything Store’. One thing what I can really appreciate about this company is its culture for decentralization self decision making and the responsibility it has provided to the employees.

They make a group small enough (5–6 members) to work in case of a delay and each member of the group granted 2 pizzas. Amazon is a company which is accepting to slaughter itself for the immediate pain — because it can. Most of the traditional businesses don’t challenge this manner. It is quite a risk they can afford to take.

Introducing market space was a wonderful way how Amazon could keep its prices low. This way they could identify how and where they could so was the materials cheaply. There is an indirect unethical competitive drive within the culture of Amazon. Recent episode of the Amazon hijacking the Google keywords of a small startup based in Chennai was itself a good example why Amazon is such an evil corp. Fucking bezos.

Cheap is the word. The world cheap drives sales! The success of Amazon has made Jeff bezos more than about 30 million dollars.

Amazon today is growing threat in India, and it is growing big time for small companies. Started in India with the aim of thwarting its closest competitor Flipkart, Amazon has definitely improved the market by offering its impeccable customer services aided with admirable packaging. The same is the situation in Philippines, Indonesia, Malaysia. Behind all this, the drive to crush competition is increasingly obvious. Amazon is slowly and steadily eating away into the other smaller start ups.

Firstly, what we see today in the online retail space is a clear bubble — and one large growing bubble it is, waiting to burst. Neither Flipkart, nor Snapdeal and definitely not Amazon have been able to make profits despite operating for years now.

In other words, the business model is obviously not sustainable. Creating the market in the first place (kudos to Flipkart for that) and then offering superb prices for customers to adopt online retailing bled these retailers extensively. When it was time to consolidate and make a more viable business model, in entered Amazon, starting what was an unsustainable price war.

Instead of focusing on profits, the retailers are busy slashing at each others’ throats and making losses heavily. While Amazon has a global footprint, it can sustain these losses, but how long can the smaller ventures continue?

Not long enough — it’s no wonder that there have been so many acquisitions in recent years (remember Jabong and Myntra?). Amazon is clearly trying to outspend its competitors until they are left empty and dry. It can then operate as a monopoly in the online retailing space.

But this is not all. Amazon is spreading its tentacles quite fast in an attempt to capture as much market as it can. It has launched Amazon Pantry that will offer grocery and household articles. Nor is it good news for people like us this field like Grocer Box (that sadly does not have the deep pockets as Amazon). PS. Bigbasket sucks big time now.

To open a shop is easy — the hard part is keeping it open.

Well, if it helps the farmers and manufacturers, that’s good. But sadly that’s not the reality. When these organizations buy from farmers in futures, the prices are fixed for 2 years ahead. And, farmers irrespective of the losses, have to sell at cheap prices. At times from my personal experiences, I won’t take sides.

But they have! They have everything! … The farmers have won. Not us.

In today’s age of DINK (Double income no kids) couples who go to work and return late — opting to buy online through a click is not only convenient but ‘cool’ as well. But that’s not definitely not great news for the local mom and pop stores.

Then there’s Amazon Prime Video Services that will offer exclusive access to movies and TV shows. Well, that might jolly well be the goodbye for smaller players like Hotstar and BoxTV.

Sadly, that is how the cookie crumbles! Yes, it is great to have competition, but is it healthy? Bringing in new operating models to India, but the question is at what expense? With a large cash reserve larger than GDPs of few countries combined, it is playing hard on prices and drive others out of the market soon, creating a monopoly. How the market — the consumers, competitors and the regulators — react need to be seen. Until then, its one behemoth’s uneasy growth in the Indian markets.

A good client doesn’t change shop in three years, a good shop doesn’t change clients in three years.

My kind opinion to small startups is — never stop exploring. Any body can out-beat competition. Have the faith to compete against the tide. Yes, there have been success stories how a small team of 10, worked together to make a product in rival to Amazon. Crisis brings opportunity and change. Keep discovering. This is a small world.

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