The Auntie-Factor and the Myth of Indian Entrepreneurism

Automatons

Everyone sees that India’s economy is doing well – if we measure success by international competitiveness rather than, say, the successful distribution of wealth within the country – and the prognosis for the immediate future is good. This buoyancy, coupled with the gaudy success of the Indian technology sector, leads many people to hail Indian entreprenuerism.

I see creative enterprise in India very differently.

At the outset, let me discard and disclaim the broad, literal definition of an entrepreneur as anyone who assumes the financial risk of operating a business. This has ceased to be an interesting or meaningful use of the word since the post-war industrial boom of the second half of the twentieth century, and the new patterns of consumption it inspired, unlocked a wild commercial ingenuity and compulsion to innovate. Today, entrepreneurship means more than running the family grocery for the third generation, it implies bringing something new to the party. It embraces the spirit of Bill Hewitt and Dave Packard, toiling in the wee hours in a small garage to develop new technology — even if it is usually found in substantially less dramatic and successful renderings. At the very least, it connotes starting something. To use entrepreneurship in its more encompassing denotation is to say very little about the commercial topography of almost any place, least of all a place like India where the number of small business is vast and tend to pass within the family. The interesting question is: to what extent are those businesses creating significant social change, if not true innovation? And more critical and interesting still: who has the guts to start such an enterprise?

Entreprenuerism in India is a very rare and courageous thing – at least for the middle class and upward. (Those lower in the economic pecking order display an astonishing economic self-reliance and initiative, if only as a matter of survival.) This is not to say that there are no entrepreneurs – in a country of one billion people and an enormous economy, the only thing of which there is nothing is nothing. But the shocking thing in India, particularly given the enormous success of tech, is how few entrepreneurs there are, not how many. This is true in every sector of the economy. For every Infosys or Airtel, there are a score of multinationals and a small handful of domestic corporate conglomerates driving the marketplace. Indian start-ups, where they exist, generally address proven solutions for proven markets, translating an international model within the Indian context. This is a far more cautious entrepreneurism, where the risks depend on the viability of the business model, not the birthing of an outside-the-box, revolutionary technology.

In the US, many of the best and most creative minds are willing to dedicate themselves to new and compelling ideas, and our finance systems have developed to back their enthusiasm with capital. The assessment of risk-and-reward is skewed by two social factors. First, there is adventure in starting a new venture. In American culture, entrpreneurism is high-spirited, optimistic, and fun-despite-the-hard-work. Second, failure (should it occur), is not the end of one’s professional road, much less the end of one’s life. It is simply the point at which one dusts themselves off, considers the lessons of the experience, and tries something else.

In India, these interrelated psychological factors are markedly absent. There is little joy in striking out on one’s own because the personal risks are so high. Failure in India is, as they say, not an option. Our good friend, Madhu Metha, designed a fascinating, brilliant program for young entrepreneurs at NirmaLabs, in Ahmedabad. Here’s how they describe the program:

At NirmaLabs, you are groomed to identify an idea, understand hi-tech markets and emerging technologies, gain insights of high-growth businesses, form a team and create a business plan, develop value proposition during incubation, interact with mentors and venture capitalists and spin-off to start your venture.

Each incubated project gets seed funding up to Rs.20 lakhs and each team member gets sustenance of
Rs. 8000/- per month.

It is part MBA program and part hot-house for innovative new businesses. In the U.S., a program like this would need riot police to stave off the waves of applicants; but Nirma Labs simply cannot attract the top students it seeks.

How can Indian start-ups garner the talent they need when the entire society conspires to thwart the fearlessness required for entrepreneurism? Very few of India’s best minds are able to resist the immense pressure of family and friends to play-it-safe with their careers; and they wind up taking stultifying jobs in established corporations. To apply one’s talents to a new venture always carries the possibility of failure, despite the brilliance of the idea and the excellence of the execution. Entrepreneurs the world over understand that this substantial risk carries with it the potential of great reward, both personal and financial. But in India, the personal doesn’t really matter, and the financial is too speculative. There is nothing that will doom one’s prospects in life faster here than being branded a “failure”. Indian “aunties” love nothing better to wag their tongues about this kind of thing; and Indian families invariably feel profound shame, rather than the appropriate dismissiveness, when the gossip machine kicks in.

It is pathetic that the inability to successfully launch a new business is seen as failure, while the joining the ranks of corporate automatons working for a paycheck is seen as success. The initiative and resources required to address the challenge of innovation and entrepreneurship are impressive; the ability to land a job at Infosys, Wipro, or Cisco Systems just is not. Until Indian kids are able to bring their parents and aunties around to the same point-of-view, entrepreneurism in India will remain elusive.

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18 Responses to “The Auntie-Factor and the Myth of Indian Entrepreneurism”


  1. 1 Khushru 16 April 2007 at 9:08 am

    Well put.
    The ‘American’ brand of ‘just-do-it’ enterpreneurship will take time to be widely seen in India because the last 5-6 years is probably the first time ever that the Indian economy has seen salaries that people can live well of. So the ‘I can’t believe I’m being paid so well’ syndrome will need to subside before people will want to step out of the box. Rise in salaries is directly responsible for this lack of enterpreneurship.
    Take for example the architecture field in India. There are hundreds/thousands of architects in every Indian city, having set up their shops trying to make a living, often doing uninteresting work. They are ‘forced’ to be enterpreneurial because architecture firms are notorious for poor salaries. (The boom in the BPO and tech industries in the last 10 years also saw many architects jumping streams). Now that is changing with a number of MNCs offering higher salaries, and attrition (particularly at mid- and senior levels) in smaller firms becoming such a problem that salaries have to move with the times. People are more likely to work for a secure good salary, on interesting, large projects, than try and break out on their own to do some small apartment retro-fit.

  2. 2 Jasmine Jouissance 12 May 2007 at 11:35 pm

    Its a real problem. In a one horse town-city like Chandigarh, where I am right now, young people are damn near suicidal with boredom and most of them keep supplement their misery with alcoholism. Why do they do this? Why do they stay here? Because after going abroad for educations they are hardly making any use of they have begun indentured servant labor work for the family business or have been married off to someone who has. God forbid you might aspire to being a writer, academic, musician or artist. If you are a girl you may be able to do these things as a “hobby.” If you are a guy people want to know just one thing about what you do; how much money are you making? This is the kind of thing that makes people want to flee to other countries where a career can take the form of experimenting with different lines of work and where everyone isn’t predicting doomsday whenever you take a risk.

  3. 3 Archana 14 June 2007 at 7:07 pm

    Mark, I must call you out for this article, its horribly insulting. Lets fight using kitchen knives on the Pondy beach on the second full moon day in July.

    -Archana

  4. 4 nitin 17 July 2007 at 5:36 pm

    Hi Mark,

    This is a good post and you have correctly pointed out our weakness.I wont give examples showing how grt guns are we going with out economy.
    The only problem is funding and taking risk.Indians seldom take risk with money matter..and those who do ..are very few.
    Middle class wud never venture in to stock market and buisness fearing getting burned in the process.

    But things are certainly improving …

  5. 5 Akshay bhat 23 February 2009 at 4:55 am

    I Agree with everything you have written, especially the auntie part.

  6. 6 Niki 21 December 2009 at 3:25 pm

    What you say is true. I guess the reason that this is so, is because it comes down to basic human need. In places like the US, most people I have noticed do not need to worry about basic necessities. Back home the reason that people worry about how much I/you make is because it satisfies this need. Fields such as music, art etc. come into picture when your stomachs are full and you have a roof over your head. Don’t get me wrong, I don’t mean to say that all of India is homeless and hungry. Not at all. But when these basic necessities are well satisfied and abundant, man starts to look at more “challenging” ventures. I grew up in a “common man’s home”. I notice people around me “from the same strata of society” had similar thoughts like you state. But kids whose parents were really really well off would talk about starting rock bands and performance bike parts companies.

    Well that and the fact that (at least in the US, according to what I’ve noticed), people have an undying, unsatisfying sense of achieving something they set their mind to. Not many Americans will settle for something that ‘well it works, duh!’. It’s always… “hmmmm… now how can we make this better…”

  7. 7 ABiggerPlace 22 January 2010 at 6:29 am

    The difference between starting your own business in India vs the US lies in the absolute need on personal capital – banks in India regard smaller entrepreneures with nothing less than hostility and suspicion. Throw in institutionalised corruption and bureaucracy into the mix, and you have many talented would be entrepreneurs steering clear of the precipice.

  8. 8 Abhyaan 22 January 2010 at 7:13 pm

    This is quite an insightful analysis. However, a better attribute than entrepreneurial to describe us would be ‘resourceful’. In a country where modern infrastructure is hopelessly inadequate, the resourcefulness and ingenuity of the people is all but on display. After all, not too many companies can boast a logistical efficiency rating of ‘Six sigma’- something the Mumbai dabbawalluhs have managed to achieve with little more than a half-dozen felt markers, a wooden gig, a turban and their own diligent, unyielding hard work. Not too many vegetable grocers would claim starting their day at 4 o’clock in the morning at the wholesale market, and ending it at 10 at night with a ride to the Viraar ‘burbs. Entrepreneurship is an inherent quality, I would argue, judging from Indian trading wealth and volumes between the first and the sixth centuries, and then again in the eleventh. However, it requires a favourable and conducive climate for its operation – one that has not prevailed to a large extent despite the economic reforms of the post-liberalization era and modernization. Bureaucratic laxity has definitely ameliorated since the beginning of the 1990′s, anyone living in India will tell you that. However, there is still a long way to go, before we can call ourselves anything approaching ‘entrepreneurial’, and unleash to its fullest extent the wave of the quality we have come to imbibe through the ages.

  9. 9 mbjesq 22 January 2010 at 8:57 pm

    Abhyaan:

    I think you hit on something interesting and important. It squares with my thesis — that timidity infects the upper and upper-middle classes, but that resourcefulness, as you put it, resides in the lower and lower-middle classes. Necessity, as Jonathan Swift said, is the mother of invention. Social status is the auntie of constraint.

    Cheers,

    MBJ

  10. 10 smita 25 January 2010 at 9:02 pm

    MBJ:
    As both a “Massi” and a “Phoi” I feel the need to take exception to this belittling of aunties that you indulge in. As for your thesis, it may just be the middle that’s flabby. With the Tatas buying Jaguar and Laxmi Mittal moving into Kensington Gardens (not to mention throwing an obscenely extravagant wedding for his daughter), the upper-class Indians seem to be doing pretty well for themselves.

    -s

    • 11 Srinin 9 October 2012 at 5:22 am

      I am amused by the reference to Tatas and Mittals. These guys with long business history and formidable connections have only feathered their own nests. I may sound like an old fashioned commie but how is that huge profits are made by them? Hammering small suppliers to lowest possible prices and low cost labor and govt subsidised (read taxpayer funded) infrastructure. If the big wigs price their products at cost of capital plus a reasonable risk premium rather than spectacularly donate to charities and set up ‘foundations’ affordability of the common man would have increased multifold. Like Dr Iqbal Qadir says, (http://www.ted.com/talks/iqbal_quadir_says_mobiles_fight_poverty.html) we dont need charity but technology and govt as a facilitator. Just honest business that creates value from ideas not by sweating labour and crony capitalism.

      Check this video out.
      http://bits.blogs.nytimes.com/2012/10/08/from-the-land-of-angry-birds-a-mobile-game-maker-lifts-off/?emc=eta1

      4 years of drinking water reserve to cover four years of drought, 25 years worth electricity. All in a model village build by its own inhabitants without any aid. Contrast this with govt and PPPs are achieving. This is enterprise. There are many more such examples but they need to become mainstream.

      And the mental model of the Indian middle class must change. Even affluent middle class parents want their kids to follow their footprint and build estates but do not encourage them to follow their own stars. Saving and building for 3 generations is the driving force out there. Study well, get a plush job, marry and ‘settle’ is the formula. Anyone who defies it is the butt of ridicule – ofcourse behind his/her back. (comes from a middle class guy who became an entrepreneur by circumstance at age 45!)

      Development institutions baulk at promoting real innovative and inventive pioneers. Ofcourse they have been taken for a ride by unscrupulous elements and so cannot be blamed wholly for being too conservative.

      Things are changing. But too slowly. And there lies the risk of being out run by other nations.

  11. 12 mbjesq 26 January 2010 at 12:05 pm

    S:

    My thesis does not deny that the industrial combines and ginormous family trading companies aren’t making money hand-over-fist. It asserts that neither they, nor much of anyone else are doing so by imagining, or creating anything new. Buying Jaguar is a fundamentally different commercial enterprise than sending your wife to work to provide the working capital so you and your partner can burn the midnight oil in your garage inventing and commercializing a precision audio oscillator. For that matter, there’s essentially nothing terribly novel about the Tata’s “one lakh” Nano, other than the extravagant externalization of social costs that contribute to the low sticker price. These guys are simply taking proven industrial models and applying them in India. That may have tremendous wealth building consequences, for their companies and others, but it does not embody the spirit and creative force of game-changing innovation.

    And it’s surprising world-changing innovation hasn’t happened at the economic level of the fabulously wealthy. After all, if Ratan Tata set aside a billion dollars to, say, develop cold fusion or develop a vaccine against HIV, and he failed, I’m pretty sure he’s well insulated against any petty backstabbing his aunties might muster. Although he might need to worry just a bit since he’s still not married.

    MBJ

  12. 13 smita 26 January 2010 at 11:04 pm

    But MBJ:

    For an Indian growing up in the shadow of British colonialism, buying the ultimate symbol of British wealth and power could be as novel, thrilling, revolutionary, high-spirited and optimistic as inventing a precision audio oscillator in one’s garage would be(for, say, a couple of white Stanford grads in California).

    Perhaps when it comes to Indian entrepreneurism, the spirit is willing, but the definition is weak?

    -s

    p.s. Not being married is actually an effective insulator against social pressure. The uncles can’t use the “suffering” of your spouse and children against you.

  13. 14 mbjesq 27 January 2010 at 10:03 am

    Smita:

    True, there is a nice smack-down in the Indian ownership of Jaguar and Land Rover. But it would have been even better if Tata hadn’t bought the brands from Ford.

    MBJ

  14. 15 Guha Rajan 26 June 2010 at 7:43 pm

    Nice post.

    I have written something similar, the reason behind why there are less entreprenuers in Indian society. Take a look when you find time

    http://indian-amps.blogspot.com/2009/02/indian-technology-product-company.html

  15. 16 duff man 30 August 2010 at 6:35 am

    One of the big lies that is repeated all over the world is that innovation is cheap. Innovation is tough and expensive. Lots of mollah goes into making a truly innovative product. Innovation appears cheap coz the truly successful companies cater to huge markets and thats where the economies of scale kick in .

    Lack of capital ( getting a loan from a bank without mortgaging your house ) , practically non-functioning judicial system ( dealing with a bounced bank cheque in India from one of your customers ), endemic corruption ( chai-paani expenses are tough for small time companies to deal with ), poor payment schedules from customers, non-existent infrastructure, poor employee work ethic, etc make developing innovative product impossible.

    Big money from India [ business plan ]
    - find foreigners ( Americans, Canadians, Europeans, British, Japanese, etc ) with work that they do not want to or cannot do
    - undercharge all the competition by 90%, if your competition charges 60$ per hour, you charge 6$.
    - hire slaves ( computer programmers, CA’s, call center employees, lawyers, medical doctors, MBAs, etc ) to do the work, almost always on contract, make them work 15 hours a day at 1$ per hour with no benefits.

    Plan in action :
    - assume you operations cost are fixed ( 3000$ per month )
    - assume you can get source work for a 50 people each an every month
    - Money made = 50 people X 15 hours per day X 6 days a week X 4 weeks per month X 6 dollars an hour – $3000 fixed expense per month = $105000 per month.

    that makes it a $1,260,000 per year. In a country where the per capita income is ~$1000 , you can live like a king,

    if you can do this for 2-3 years some dolt will come and buy your company for 8 times annual revenue, and you are now worth US $10,000,000.

  16. 17 mbjesq 25 September 2012 at 11:38 pm

    It seems that entrepreneur Varun Agarwal agrees with my assessment. Check-out this profile of his new book, “How I Braved Anu Auntie and Co-Founded a Million Dollar Company” in the New York Times.

    MBJ

  17. 18 human anatomy animation download 9 June 2013 at 5:23 am

    The tail or flagellum has a vital role in fertilization.
    Even when tests show no leukemia cells can be found,
    there may still be some left. Adversities are a part of living,
    and we choose the way we react to each adversity in our lives.


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