Prat Moghe and I are doing a NASSCOM workshop this Thursday for early-stage product companies. We’ll be focusing the three main traps that pre-Series A companies encounter - weak product architecture, incomplete team, and unclear market strategy (see workshop program). But before fixing any of these issues, one has to first deal with the cultural legacy of a strong IT Services ecosystem. What am I talking about?
Well, last year, I had stepped on some friendly toes when I asserted in an article that…
…our uniquely Indian problem has been that IT services companies have sucked out the oxygen from product companies. Their success has not only drained away talent, but has created an instruction-led and risk-averse mindset. They have turned our smart guys into mental coolies. After all, even now most of the IT Services companies get paid for head count and so there is not much business incentive to promote world-class technical talent. It’s only in product companies that technical talent is really appreciated and rewarded.
In a product company you have to be at the cutting edge of technology. Product and technology innovation is the currency that you bring to the market. It requires risk-taking. It requires a market focus as opposed to a customer focus. It requires being out in front with your ideas. It requires an ability to evangelize. It’s a completely different DNA.
It’s time for software product companies in India to break free from the IT Services ecosystem.
So if you are a product startup, you need to be aware of this cultural gravity that that exists in India on account of the IT Services firms. In this context, here are my top five cultural changes that are needed:
1. Having a pioneering mindset in place of delivery mindset. The IT Services industry thrives on a delivery mindset. In contrast, product startups need a pioneering mindset. They have to break new ground.
2. Being market-led rather than being customer-fed. Product companies have to anticipate needs of a group of customers. Merely reacting to one customer’s need, one at a time, doesn’t build a product business.
3. Thriving on challenge instead of being risk averse. In the IT Services business you don’t have to bet-the-company on a single market insight like you do in product companies. No deal is life-threatening. No investment is a multi-year act of faith. In fact, being risk averse is an advantage. In product companies it’s a curse.
4. Going beyond selling to evangelizing. The most successful product startups create or reshape the market. They do that with the force of ideas. That’s why they do more than sell. They evangelize their product category.
5. Thinking four, not forty. You can think of a product startup as a way to compress your whole working life into a few years. Instead of working at a low intensity for forty years, you work as hard as you possibly can for four.
I am sure you can add to this list!
Sharad,
We ( DSIR) had a brain storming session yesterday 16th April on the missing eco system for product start-ups. The discussion was inline with yr well reasoned argument.The participants including VCs,innovators, incubation managers felt the need for substantive action on several fronts to see the first product innovated, incubated , produced in India and sold in a large volume -high growth market.
Parthasarathy of Mindtree had once commented on this. He said that one must not incubate a product within a software services Organization because it takes time for the product to take off and the services Org. is always torn between revenues today (from services) and potential revenues tomorrow (from the product). the implication of this is that the best people working on the product will constantly be pulled away to fix urgent issues or deliver urgent features for the existing customers, thus bleeding the product initiative white.
He also said the best way to do it was to spin off a separate organization with it’s own people, funding and structure and let it sink or swim.
I completely agree with this. In my experience, even within product organization, the pulls of maintaining existing products tend to drain resources from the next gen work. Especially, if the next-gen work does not have a customer waiting for it.
Clicked “submit” too fast, I had a few more inputs.
Essentially the difference between Product and services is:
a. An ability to view the product strategically and look well past the current release to understand what the current and future impact will be.
b. A deep understanding of the target market of the product and having a point of view (POV) of the direction the industry will take. The best managers actually make their POV the Industry’s direction.
Sharad,
Instead of market led, I would say it is more of an ability of staying slightly ahead of the market and making the market realize where it wants to go. Examples are the IBM PC or the iPod.
It seems like I am just re-phrasing your points, but I d say it anyways:
* Solve markets’s (people’s) problem and not yours: Many of us tend to digress into solving problems that confront us. We fail to see if it really is a problem that the customer faces.
* Start from the customer and not money: I may not understand all the dynamics involved, but I have seen many people starting to talk about “how to make money” even before they have actually “solved the problem”. I think can be very harmful to what you are trying to do!
I dont agree with 5. Though I am yet to do one myself, Startups can be fun and you can/should be doing it over and over again if you are good at it.