?What?s the next growth (or hot!) sector that VCs are looking to invest in?? ?Which business is going to be the next big thing, the next Reliance Industries?? I?ve often been asked these questions and I wish I knew! While I can only respond in generic terms to the first question, I cannot even pretend to have an answer to the second?even if I somehow magically knew, I wouldn?t tell, I?d just go and start the business or invest in it! How then as an entrepreneur can one predict what ?successful? businesses to start? Ones whose destinies are not foretold but will painstakingly unfold over several years in the future?
The fact of the matter is that we can only look at the situation and the trends around us and hazard guesses. Most will perhaps turn out to be wrong, but several perhaps will be right. This ability to derive meaning from the situation and trends around us is crucial to increasing the probability of creating a successful business.
Let?s take a look around us:
i) India is emerging as a fast-growing continent-sized consuming market while also becoming a supplier of goods and services.
ii) The so-called demographic dividend is in India?s favour and so aspirations to ?make it? will be energetic.
iii) Given the state of affairs, there?s enormous room to grow in all sectors of the economy from consumption to infrastructure to everything in-between.
iv) Liberalisation will continue, albeit slowly while globalisation is a force to be harnessed.
v) India will remain largely a ?value-for-money? market.
If the above assessment is real, then what kinds of start-up businesses should entrepreneurs be looking at? Clearly, at consumption-led businesses?education, hospitality, travel, entertainment, healthcare, consumer goods, financial services, and so on. In each of these sectors, given the size of the country and rising aspirations, there are enormous opportunities. There are already several entrepreneurial ventures in many of these sectors. But given the size and growth of the opportunity, there?s room for many more.
For example, in education there are huge opportunities in creating and delivering different kinds and quality of content (eg. vocational, language, soft skills) for various student segments across categories (eg. K-12, science, maths, commerce, medicine, engineering). Setting up physical infrastructure such as schools for millions can be daunting, given the issues and costs involved in real-estate acquisition. But, technology can help deliver quality content at low costs to large numbers. What about setting up online educational programmes that offer various degrees from recognised universities? Similar opportunities abound in the other categories as well. Customer propensities to pay have to be therefore well calibrated.
As India takes steps to improve its road infrastructure and become a single market governed by a uniform GST (goods and services tax), fast movement of goods will become more and more important. Logistics management will become crucial. While building roads and running trucking companies is perhaps more suitable for existing and larger players, startups can consider providing solutions for an on-demand matching of logistics providers with customers and partners; information and ratings on both the provider and the customers, contract negotiations and the like can all be streamlined?a big change from today?s.
Providing all these consumption services will require infrastructure. Low-cost energy solutions will be an important piece of this infrastructure. While solar LED lanterns and other solutions are being made, perhaps there is an opportunity to ?value-engineer? existing lighting and cooking solutions (via ethnographic studies?) to devise solutions that can be easily manufactured, distributed and supported across India. Similarly, with medical devices. While low-cost blood pressure monitors and glucometers are being made, I believe there?s opportunity to build many more low-cost medical devices for India from ventilators to incubators to keratometers to endoscopes, to many more.
To build the next Reliance Industries, of course, takes more than just spotting the broad opportunity. It takes great leadership, team work, hardwork and capital, just to name a few. And that does not come about by looking at trends but by putting one?s nose to the grindstone and working away every day. By being humble and adaptable, by unlearning and learning, by taking calibrated risks, being smart and tough and fair. Lots of people spot the same or similar opportunities, yet only a handful can create giant companies. Why is this the case? The fault is not with the opportunity but in our ability to harness limited resources, create new capabilities and make the opportunity a reality.
Sanjay Anandaram is a passionate advocate of entrepreneurship in India.He brings close to two decades of experience as an entrepreneur, corporate executive, venture investor, faculty member, advisor and mentor. He?s involved with Nasscom, TiE, IIM-Bangalore, and INSEAD business school in driving entrepreneurship. He can be reached at sanjay@jumpstartup.net. The views expressed here are his own