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Some Silicon Valley-Style Pioneers Head East

Many Indians are wary of starting business on their own. With a poor economy in the West, many are giving up jobs in Silicon Valley to return home and organize their own startups. The emerging economy offers a huge test market along with low costs and dependable workers. The returnees offer “an unprecedented innovation boost,” reports Saritha Rai, but must first overcome “a seeming aversion towards entrepreneurship.” She interviews founders of Haichi, CostPrize and MyGola, who describe the challenges for Indian startups: Skilled engineers and their parents prefer steady salaries over promises of equities and small fortunes. Families question their children’s decisions to return to India rather than remain in California, but the adult children prefer being close to family and raising children in a familiar culture. Of course, the entrepreneurs do not break off Silicon Valley ties, relying on mentors for advice and venture capital. Offices of Bangalore startups mimic those in Silicon Valley. The risk-taking is genuine, and the innovative spirit is contagious. – YaleGlobal

Some Silicon Valley-Style Pioneers Head East

Returnees fight odds to try startups, giving India boost in innovation
Saritha Rai
YaleGlobal, 3 October 2012
Homeward bound: Entrepreneur Anshuman Bapna (left) with his cofounder in his first home-office (top); greeters wait for arriving passengers in Bangalore airport (below)

BANGALORE: When Rachna Singh returned to India in early 2011 after a successful seven-year career run in the Silicon Valley to start up Hachi Labs, she was staggered. Not by Bangalore’s horrendous traffic jams, infuriatingly-frequent power shutdowns or shoddy roads, all of which she had come to expect. Rather, Singh was stunned by a seeming cultural aversion towards entrepreneurship.

Hundreds of Bay Area returnees are getting off the plane in Bangalore to plunge straight into entrepreneurship, giving India  an unprecedented innovation boost. This is a major shift from a few years ago when returnees preferred safe-landing in multinational jobs and living in expensive California-style gated communities. At the same time, new batches of returnees have to deal with an entrepreneurial deficit alongside several other challenges. Things are changing certainly, but the new returnees are finding it prudent not to sever their umbilical cord with the Silicon Valley.

In Bangalore, the aversion towards entrepreneurship manifests in many ways, Singh has found. As she started building a startup team for Hachi, a “meta connector” that mines social and other networks to find the smartest way to reach out to anybody, she encountered her first challenge. Skilled young candidates were not hard to find but, unlike their Silicon Valley counterparts, they were unimpressed by offers of equity. These risk-averse engineers wanted market salaries. In India, entry-level salaries are still a fourth of what fresh engineers get paid in the United States.

To pass muster as a serious employer, Hachi had to allow parents of young hires to inspect the startup’s office.

To pass muster as a serious employer, Hachi had to allow parents of prospective young hires to physically inspect the startup’s office and meet the boss. Topping it all, Singh’s own family could not understand why she was in India launching a startup. In a culture where failing is taboo, they questioned her for giving up “a fairytale life in the Silicon Valley where I drove a fabulous car and lived in a sexy home.” 

Singh’s experience as a Silicon Valley returnee echoes those of her fellow journeymen. Many Indians are forsaking their adopted land for fresh prospects. Drawn to the allure of India’s sizable talent pool, low costs and a ready test market for all kinds of products and services, many are making the voyage homeward to plunge headlong into entrepreneurship. As they start getting their enterprise off the ground, however, they find that unlike in the Silicon Valley the odds are stacked against the risk-takers. 

Singh said she has found it surprisingly easy to build friendships in Bangalore, not only around her passion for endurance running but also enjoying evenings out at the city’s many pubs. However, when it comes to problem solving and mentoring, she still leans on her Silicon Valley network. “The best advice, whether technical, legal or otherwise, comes from my expert friends in the Bay Area.”

Still, many find Bangalore has plenty of positives.

In the last half-decade, striking changes in the city are mimicking Silicon Valley’s early days. Talented professionals no longer feel compelled to go westwards to seek a challenging career. That has dramatically improved the skill pool in India’s own technology hub, turning it into an underpinning of innovation. 

Talented professionals no longer feel compelled to go westwards to seek a challenging career.

Meanwhile, after years of blazing economic growth, the domestic market too is evolving from merely cost-conscious to value-conscious consumers, a ready test bed for global products and services. A small fraction of the population, say 0.1 percent, represents a million-plus consumers.

All of this is a powerful magnet for returnees disembarking in Bangalore.

Roopa Hungund returned in early 2011 after spending 14 years with multinationals like Oracle and Cisco in the Bay Area. She and her husband, Sanjay, zeroed in on Bangalore to be close to both sets of parents who live within a few hours of commute. On the personal front, returned professionals like Hungund say that the “social aspects” are immeasurably better, whether being on call for aging, ailing parents, reconnecting with family and friends, or allowing their young children to experience the culture. 

Within a year of arriving, Hungund had founded an e-commerce startup based on an idea that evolved during her Valley years. CostPrize is a geography-specific, context-sensitive deal-aggregator portal that gives customers deep discounts and cash-back offers. She describes India as still-virgin territory, unlike the crowded markets targeted by entrepreneurs in the West. 

“Bangalore is where Silicon Valley was just prior to the dot-com bust,” raves Hungund about the potency of the timing and the vast opportunities. “Creative ideas are bubbling up, and entrepreneurs, investors and consumers are devouring these ideas.”

In an ultra-networked world, returnees are slowly spreading the Valley’s vigor and creative processes in Bangalore.

Sanjay Swamy was among that first wave of returnees. After a 14-year career in the Valley, he arrived in 2003 to head the India operations of a US-based technology company. That was back in the day when entrepreneurship was not much of an option.

Swamy, who traversed multiple startups as an employee before setting up his own angel investing firm in 2010, says the lag between getting off the plane from San Francisco and getting a startup off the ground in Bangalore is shrinking. That makes the cultural attitudes towards entrepreneurship even more painful and obvious. The unbridled romance with entrepreneurship in Silicon Valley is absent, and it appears a distant planet, says the angel investor. “So I just go back there from time to time to just breathe in that air.”

Bangalore lacks that sense of urgency that pervades Silicon Valley, says Anshuman Bapna, a recent returnee. Bapna graduated from Stanford University’s Graduate School of Business and worked for Deloitte and Google before returning to India in 2009 to set up MyGola, a travel website that focuses on the global market. MyGola has received funding from two Silicon Valley venture capitalists. Many Bangalore startups covet funding by Valley VCs because it throws open up new networks and brings fresh expertise.

It may not be immediately apparent, but the influx of returnees is an unexpected windfall for Bangalore’s entrepreneurial and innovation ecosystem. Going back and forth in an ultra-networked world, returnees are slowly spreading the Valley’s vigor and creative processes in Bangalore.

Bapna, for instance, has found it much easier to stand out as an employer with his work culture transported from the Valley. His startup has a spacious open workspace, paintings on the wall, free food, yoga classes, a foosball table and open vacation policies. “All this may be standard stuff in the Valley, but continues to amaze folks who walk into our office for interviews,” he says. 

Many returnees see their homecoming not as a one-way ticket but as a more fluid situation where they can go back and forth, and work the two disparate situations to their advantage. Bapna bristles at the term “returnees” and expects to shuttle back and forth every year. 

In treading two worlds, he and other returnee entrepreneurs are rearranging the global innovation order a little at a time. They are soaking in the culture and comforts of home and family while partaking in the abundant and inexpensive skills of India’s young workforce, even using its vast markets as a testing ground. On the other hand, they continue to have robust connections with Silicon Valley, returning there frequently to inhale its entrepreneurial air.

 

Saritha Rai is a journalist and commentator who tracks the economic, social and cultural changes sweeping India. She’s based in Bangalore.

Rights:Copyright © 2012 Yale Center for the Study of Globalization

Comments on this Article

5 October 2012
all pr = good pr
-SA , US
5 October 2012
Dear Rachna,
Please do not take yourself so seriously. A journalist needs to do more than just parrot what you tell her.
Though it is completely unintentional (from your perspective), your points 1, 2 and 3 in a funny way strengthens the story and shows that Saritha's interpretations are very credible. If you want journalists to promote your company by writing only what YOU want them to, you can always jump on the 'paid news' bandwagon in Bangalore. On a more serious note, your trivial objections suggest that you don't tolerate dissent and diverse world-views much. In my experience, this is a particularly unhealthy trait for a founder of an entrepreneurial start-up to have.
All the best!
Shankar
-Shankar , Bangalore
4 October 2012
Throwing light on aspects beyond the economic potency of starting/running businesses in India is what I appreciated the most in the article. Good one Saritha.
-Roopa Hungund , Bangalore
4 October 2012
NOTE FROM YALEGLOBAL EDITOR: Rachna Singh does not question the veracity of quoted material, but rather the journalist's interpretations resulting from that report. For example, the definition of aversion is broad, ranging from revulsion to mere avoidance. We appreciate Ms. Singh providing clarifications of her thoughts about entrepreneurship and startups in India. YaleGlobal stands by Saritha Rai's report.
___________________________________________________
Hi, I am Rachna Singh, founder of Hachi Labs. My views have been incorrectly captured in this article. It is misleading, and portrays a wrong picture. It seems sensationalist. Very uncool!
It comes across that I see a lot of negatives in Bangalore and doing a startup here - that's so not true! Infact, I explicitly mentioned multiple times during the conversation with Saritha (the reporter) that I actually enjoy Bangalore, way more than what I thought I would before moving here.
1) "When Rachna Singh returned to India in early 2011 after a successful seven-year career run in the Silicon Valley to start up Hachi Labs, she was staggered. Not by Bangalore’s horrendous traffic jams, infuriatingly-frequent power shutdowns or shoddy roads, all of which she had come to expect. Rather, Singh was stunned by a seeming cultural aversion towards entrepreneurship."
[rachna]
I like Bangalore and told the same to Saritha, unambiguously. Also, when "she asked me" if I had any problems with traffic, power shutdowns, pollution, etc. - I told her that these things don't really bother me much as I stay within walking distance from my office, and we have power backup.
Also, I said that we don't usually encourage entrepreneurship, and failure is not taken that well. Not encouraging entrepreneurship is very different from "aversion" towards it! Also, I never indicated that I was "staggered" or any similar emotion/feeling.
2) "These risk-averse engineers wanted market salaries."
[rachna] I said that since failure is not accepted, and we don't have many examples of employees becoming millionaires out of startup stocks unlike silicon valley, so the engineers usually don't buy into equity.
3) " In a culture where failing is taboo, they questioned her for giving up “a fairytale life in the Silicon Valley where I drove a fabulous car and lived in a sexy home.” "
[rachna] My family never ever "questioned" - just that they weren't thrilled with the idea of giving up a cushy valley job and doing a startup in India, which is understandable.
I hope Saritha / Yale will make the due corrections in the article.
-Rachna Singh , India