India not conducive to Silicon Startups.. But why?

Silicon Startups mushroom by the hundreds in cities like California, Boston, Chicago and Miami. Why don't we see a similar effect in our own backyard ?We have the necessary human resource, the best institutions for higher education, the same democratic setup that America has. Even venture funding is big business in India these days having its own share of multi millionaires who have made it to the Forbes list. With Web 2.0 close to 2 years old now, we still see a precipitation of Web 2.0 application startups in America that get listed everyday on various sites like TechCrunch, TechMeme, etc on the Blogosphere. Why is it that India or any other developing nation does not see a similar hatchlings?

The answer partly came in the form of Paul Graham's detailed analysis of what is it that other nations lack in comparision with America that makes them non-conducive to silicon startups. In the article that is incidentally the keynote address delivered by him at some conference, he takes the case of each country that is a key candidate for a possible spurt of silicon startups and lists the key deficiencies vis-a-vis the USA that act as the key barrier for a replication of the success that America has enjoyed over the years and continues to do so. In India's case, the key deficiency that Paul puts forth is the poverty ridden society. Though he acknoledges the steady improvement India has been registering with each passing year since the economy opened up in the 90s, he is unsure of how much time it might take for India to fully walk the distance from being a land where one still sees swarms of beggars, to one where we can see swarms of silicon startups. The reasons he puts forth are two
  1. Poverty brings with it the lack of infrastructure and the slow pace of development.
  2. The incremental changes in the attitudes of a society that take several generations to span a new line of thought.
I have my own set of reasons that I feel might be apt if thrown in here.
  1. The culture of the country also is a key determinant. Ours is a 'relational culture' where we do not see anything wrong when we patronise our relatives, friends and people of importance to us. Of whether they will be able to add value to the team is a secondary matter.
  2. The lack of huge consumer based local market that does its business over the Internet.
  3. Red-tapism and bureacracy...[More of an extension of the 2nd point by Paul.]
  4. The lack of a unified de-facto language across the nation, making it necessary for regional language support to tap the 25 odd, million-strong regional market in India.

The article goes on taking up China, Japan, Singapore, Europe on a case by case basis. Though there are points where I beg to differ from the author, it does give a fresh look at the oft asked question. Worth a read.


Bit Hawk said…
I think the biggest reason for having too many startups is the mindset we have. Our society as such does not encourage people to take risks. I dont think poverty is a reason at all. If a few graduates have a great idea and decide to start a company, it does not matter whether the country has a 10% poverty or 20%. We play "safe" - get a good job, after sometime change the job, try for onsite, get married, settle - thats the mindset in India.
Vijay said…
Playing "Safe" is all about the attitudes that are prevalent in the society. This is what Paul tries to put forth in the second point that he makes. Poverty definitely has no effect on people pregnant with ideas who decide to start a company, but poverty does have a sharp indirect effect when it comes to marketing what the company is trying to do. Marketing might have to do with trying to find a suitable local ground for incubating the service/product to prove its feasibility. The same poverty also prevents, the very education (that helped students come up with brilliant ideas), from reaching the lowest echelons of the society. What this does is quite comprehensible. Even with us taking a magnanimous guess that 1 in 50 Indians has got all the necessary education (when I say necessary, I mean higher education, not just a X grade pass) to come up with necessary ideas and has it in him to go the full distance and see to it that it is put in operation we can see how minuscule a number that comes to. Now suppose we had the ratio as 1 in 20 Indians, then the odds improve dramatically for us to see a spurt of silicon startups. Swaminathan Aiyar who pens the Swamionomics column in Times of India, portrays a similar point here.. Poverty may not be as great a factor as Paul has made it out to be, or else we wouldn't be seeing so many indigenous Indian silicon startups, but poverty is not a factor that we can brush off the board easily.
Anonymous said…
Playing "Safe" is all about the attitudes that are prevalant in the society. This is what Paul tries to put forth in the second point that he makes. Poverty deto be taken to the upper-room for passover. you are a saint gebron. bron.
Eduardo Flores said…
As Mexican, I've made myself the same question. And my best bet is that culture and society are the main obstacles. But in the case of India, I am sure that it's matter of time to see a extraordinary startup market flourishing. Cultural, financial and market-size obstacles will be overcomed by people assimilating a global culture, and they will target the global market (what the emergence of these elite communities will provoke on the rest of the society is another topic). Unfortunately, I'm not so optimistic in the case of our latam countries. But we are working on it ;)
I see a bright future for Indian technologiest!
Apun Ka Desh said…
The Number 1 Reason is of course Government Red Tape. Not just in matters of the simple act of Registering a Company, but in countless other ways, like Taxation Rules, And More.

Unless Politicians and Bureaucrats are keen on eradicating poverty it will take several generations for it to go away on its own.

Read on:
Maatina Mane said…
Main reason I feel is the background that many of us come from.As a person working in a startup in India I have come across many people who thinks that I am spoiling my career!!.There were some occasions I had to face some awkward questions regarding my efficacy and crdiblity.
I have a strong feeling,though that this is a transitional phase.People are yet to come out of Infosys-Wipro era.Also,red-tapism has nothing to do with startups alone.It has plagued even moderate sized companies.Its more of a social perspective and how do we react to it.
Anonymous said…
1/2 the country poops on the ground. The top 15% of our minds go to school in America or Europe. Mostly because it sucks to live in a place covered with poop. Basic infrastructure has to come before high-tech innovation.