We interviewed Roy from Sequoia Capital India as he is someone with extensive experience in technology and start-ups. He has a very unique vantage point, having worked both in India and in the US, in the leadership of Zynga - the fastest growing consumer tech business in the late 2000s. He now serves as an investment advisor looking at both India and Singapore.
What are your views on the consumer products emerging in India today?
“Around the time I grew up, I essentially spent time working in India and the US in B2B and B2C companies. Bright in many ways is a pioneer because it is one of the first ever US consumer products primarily built out of India. While it may be the first, it definitely will not be the last. There will be a lot of companies lining up to do the same for two reasons:
There exists a better understanding of the US consumer behavior now in India due to all the cross-pollination that has happened. People keep going back and forth.
As trends propagate on the internet, you find that people naturally gravitate towards finding their ‘tribe’ on the internet. Hence, the geo-related peculiarities that existed in the past remain, but they are not being shared in these global tribes.
It’s almost like I’m in a book club and it’s a global one. These are all possibilities today. The appreciation of what the consumer goes through and the pain that can be solved by building software from India, that is very exciting. There are a lot more interesting things to come.”
In India for tech export companies, we have seen that IT services boomed in the late 1990s and B2B SaaS boomed in the 2010s. When is it going to be the time for India-built consumer tech?
“I think in the next ten years, we will see a whole bunch of them start up. Especially the whole “elite production” concept where an upper middle-class child growing up naturally considers a US education to round out his/her post grad in the US. As you start thinking like that, this thought process is shared with the consumers in the US and so, it all boils down to how much of our thought process is less “Indian” and more global.
As the world flattens out, we will be able to build more and more from here. The other thing is to simply build massive consumer products. For example, the games we built at Zynga were primarily played in North America. What happens at scale is that you no longer need consumer insights; you just need a data-driven mindset.
If you are able to get the initial hypothesis going, then the work that follows does not require a lot of domain understanding; rather it requires an ability to conduct experiments and to be able to read and interpret data well. This is something that Indians are strong at. The consumer products that hence take off will look a lot like Bright, ones that are purely data-centric.
I don’t see a lot of successful consumer entertainment apps coming out of India which would see success in the US - but I definitely see data-oriented, behavioral consumer applications kicking off from here.”
Five years ago no one imagined India might build an EdTech unicorn. Now we see EdTech deca-corns. We know that you have played a part in some. When will we see this moment for consumer tech businesses built for the world’s consumers?
“This is a hard one to predict. We didn’t anticipate that the EdTechs investments Sequoia India made would become such deca-corns in such a short time. In many ways, these markets are much deeper than we imagine. It’s the same with Indian-built global consumer tech companies, the combination of these markets is so much deeper than what we anticipate today.
The availability of engineering talent, the ability to build and deliver cost-effective architectures on technology makes these companies harder to beat. Zoom is a classic case in point. Their R&D and ingenuity makes them significantly hard to beat in terms of stock performance, because their numbers are just so good. Their costs are low while their consumption is obviously high.
Consumer tech is like capturing lightning in a bottle. It is hard to predict when it will happen but when it does, it will be amazing.”
What are the unique challenges to make this possible? We have seen what has been achieved by a Chinese company like TikTok, but there are also many challenges. What are the unique challenges India consumer tech companies targeting Western and Asian consumers will have?
“It’s the mindset. Just being able to inhabit the minds of the consumers is the fundamental challenge of all consumer apps. You have to eliminate the friction and understand how a certain segment thinks and then build for that segment. That’s how you generate interesting value. Snapchat was famous for that. It was incredibly hard to use as a product, built to be unfriendly. Not everyone got the tech part of it. Tiktok too, dropped a lot of friction but brought in an interesting usage pattern. Hence, what I mentioned in the beginning about inhabiting the minds of consumers is most critical.
Another important aspect is to determine how good you are with data. In India, we have good data-driven companies but we don’t have a large number of them. Folks who come from that background (like InMobi or Bright) can add real value. I would want to see more of that. In my view, this too is a challenge.”
Why are the tech export companies we have seen been InMobi and FreshDesk in the last decade, why haven’t we seen more successes for tech export companies at scale in recent years?
“It is interesting because up until a decade ago, there was a lot of focus within India. A lot of our best talent started to solve Indian problems with Indian tech. That is great, but the pendulum has started to swing again and companies have become global. It’s got to do with how deep the Indian middle-class really is and what their spending power is like. But it’s good that we took time to solve our problems at home before looking outside. However, a lot of companies still look at solving for India before reaching out globally.”
Is the Bangalore ecosystem well set-up to support the growth of such companies? What are the pros and cons?
“Bangalore is spectacular. If you wish to start a tech company, there are only about 2-3 places in the world where you can truly, successfully set up. The Bay area in San Francisco, and then I’d place Bangalore next. I would actually rank Bangalore above Shanghai & Beijing even. Simply because you get a diverse, international crowd in Bangalore and that really matters when you are trying to solve specific problems - as that exposure is required.”
As an investment advisor, what do you need to see in a team or your company for you to believe there will really be a chance of achieving something big?
“It’s mainly three things:
Market - I have to believe that the market is very big now or can become big if the company is choosing to solve some very interesting problems.
Quality of insights - Lots of companies present very shallow insights. It’s shallow because it isn’t interesting, they haven’t spent enough time on it and the idea is very common. That’s not actionable. Insights have to be behavioral and profound.
Team quality - How strong is the team? What’s their track record like? These are the important questions. They need to care about building something great while being reasonable. That doesn’t mean that thinking needs to be limited, it just means that you need to see something nobody else is seeing.”
You do a lot of work in recruiting to actually support your portfolio companies, and you are an investment advisor evaluating every company as an investment, What is your advice to young engineers who are considering such companies? What should they look for?
“The biggest advantage of working for startups is that you get to do some fantastic things. These opportunities are hard to find in large companies where decisions might have already been made when they were small. You can make truly groundbreaking and transformative decisions in startups, and these decisions carry on for decades. And you get to play a role in forming that foundation.
If you think you are smart and talented, then you should be in a startup where you will be tested. It is challenging and exciting. With so many startups to choose from today, it’s hard to pick. What we do is we try to get validation for the companies we support using the parameters of the team quality and assessment of the market. If you’re an engineer, it’s quite hard to figure this out. That doesn’t fall under your core skills. But these aspects taken into consideration can help you make a sound decision.”
Would you advise change for more senior engineers with ten years experience? What types of companies and roles should they look for?
“It’s a hot market and the downside is minimal, especially if you are good at what you do. You should really go for startups at this stage because it’s the most fun you can have while building new things. There are certain kinds of people who only concentrate on deepening their skills in one particular area and hence, such a change might not work for them. But for the rest who love to problem solve, like to make an impact and want to leave a mark on a business in this industry, this is for them. For those who want to leave a legacy, working at a startup is as good as it gets, it’s a privilege.
There were no startups in India 30 years ago. You stood in line waiting to get a job in a big company, hoping someday you would get your shot. The people who came before you had to push really hard. Today, you have Sequoia Capital India’s scale-up program Surge funding 20 companies every six months. It’s pretty awesome and so you should definitely make the most of it.”