In August 2016, the Turakhia brothers, Bhavin and Divyank, sold Media.net, an online advertising technology business founded by Divyank Turakhia in 2010, for $900 million to a consortium of Chinese investors. Earlier, in 2014, they had sold their web presence business for $160 million, meaning that the two brothers have realized more than $1 billion in cash in the previous two years. Forbes and Hurun both reported that each brother was worth well in excess of $1 billion.
Bhavin and Divyank had created their first start-up, Directi Group, an Internet domain registration company, in 1998 when they were aged 18 and 16; today Bhavin is 36 and Divyank is only 34. The Turakhia brothers have built their online empire without outside capital, except a Rs 25,000 ($600) initial loan from their father in 1998, which was repaid in the first month. In September 2016, the brothers announced investment plans for four new Internet-based businesses, as well as their intention to acquire 100,000 square feet of office space in Bangalore for expansion of their India-based start-ups. The world will be hearing more from the Turakhia brothers.
At the same time as I interviewed Divyank, I was talking to Colonel Vijay Reddy about the future of his business, Footprints Collateral Services. Vijay is in his sixties, a precise, correct army veteran who never expected to be an entrepreneur. After retiring from the army, he joined United Breweries Group’s (UB Group) software business and was relocated to the US to run the administration of staff moving there to service clients. Based on this work, he created an employment-background verification business in Pittsburgh to offer to other clients the same services he had delivered for the UB Group. Family pressures, ageing parents and property issues led him to relocate himself and the business back to India.
Footprints is now one of the leading verification service providers to large employers, principally IT companies, checking job applicants for identity, educational qualifications, previous employment references and criminal records. Much of this work still requires follow-up with individual sources, rather than simply accessing databases, as there are still no complete digital records for university qualifications and police First Information Reports (FIRs).
Divyank and Vijay are a generation apart in age, and more so in attitudes. One had expected to spend his whole career in government service, as had previous generations of his family, and became a businessman almost accidentally. The other saw the opportunities of the Internet as a boy, never considered seeking employment, and became a millionaire while still at school. Divyank’s business is online and global, Vijay still needs, all too often, to send a representative to a police station in a remote part of the country to check their physical records. Vijay drives to his farm outside Bangalore every weekend and switches off his phone; Divyank spends his weekends enjoying adventure sports like flying, wake-surfing and diving.
Different in many ways, Vijay and Divyank are both, nevertheless, examples of the legion of new entrepreneurs who have sprung up in India in the past few years. They represent different aspects of the upsurge of entrepreneurship that has changed much in India already and promises to change India fundamentally in the next decade and beyond. India is on the cusp of something truly exciting as it progressively emerges as one of the most exciting entrepreneurial societies in the world. Many factors have aligned, at last, to position the Indian economy on a swelling wave, with plenty of fetch to build up the surf ahead.
The cumulative and combined effect of changes over the past 25 years in government policy, technology, finance and culture has triggered an extraordinary upsurge in entrepreneurship in the country. Most importantly, the change in attitudes in the country towards business and entrepreneurialism has been striking. The entrepreneurial ecosystem is as yet immature and patchy and there will be reversals and disappointments but, looking ahead, there are myriad reasons to believe it will strengthen, deepen and spread.
This book has chronicled these developments, most importantly through the eyes and narratives of more than a hundred participants in the entrepreneurial ecosystem, 92 of whom are first-generation entrepreneurs. By their very nature, such people tend to be boundlessly optimistic and determined to drive profound change. They talk a good game. Even discounting this, the picture that emerges from a tour of the entrepreneurial front line in India is hugely encouraging. India is witnessing what I would like to term as ‘an entrepreneurial insurgency’ and there is much more yet to come.
Why then the question mark in this book’s title? Why is Boom Country followed by a question mark? Am I not fully convinced by the evidence I have assembled that India is seeing a new wave of enterprise that will transform the country and the lives of its people? The answer is clear from the evidence I have chronicled and the narratives of the entrepreneurs themselves. The fact is that I am a cheerleader for what has changed in India and a firm believer in the enormous upside of what should pan out in the decades ahead. A long-term boom in the economy from the boom of entrepreneurship is developing and strengthening. Yet, I cannot ignore that significant risks and fragilities remain.
First, the new entrepreneurship we are witnessing in India is at an early stage of development. Vani Kola of Kalaari Capital called it ‘mile five of a marathon’.
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I have identified a spectrum of weaknesses in the ecosystem today, including the reality that India remains a challenging operating environment for business, the need for further evolution in government policies and practices, lacunae in the VC-funding system, and shortcomings among the entrepreneurs themselves. The most alarming failing of too many of India’s entrepreneurs is the endemic neglect of the criticality of innovation as the fuel at the core of the entrepreneurial reactor. No doubt these issues are improving and will continue to do so, but to address them in full and bring about a significant and effective change will demand much hard work, bold leadership and significant capital.
Second, the hard learning from my 35 years of experience in India has been that, despite the massive and glaring potential, the country too often seems to underdeliver on its full promise. In 1982, when I first visited, India was on a par with China in terms of economic development. In the ensuing years, notwithstanding its manifest advantages, India has underperformed as compared to China by a significant margin both in terms of economic growth and human development. Where there have been mini-booms, a bust has almost certainly followed. The key explanation for this unrealized potential and oscillating performance has lain, historically, with a failure of political courage and leadership in the intensely febrile politics of democratic India. Reforms and changes are hard things and tend to deliver over a wave-length longer than the electoral cycle. Tough political choices have, until recently, typically been made in times of crisis. Otherwise, shorter-term electoral calculations, woolly thinking residual from the time India was a socialist economy and the shrill voices of vested interests have smothered the imperative to change things for the better. The indications remain broadly positive that Narendra Modi is determined to be different, but he too needs to remain in power long enough to see through his economic agenda and resist the seductive advice to pander to shorter-term political temptations that set back reform.
Third and last, the Indian economy is not isolated from global trends and there are clear risks over the next few years that the benign economic conditions from which India has benefitted since 1991 may be at threat. Globalization and liberalization are much in India’s interests. India’s relationship with the US, in particular, has been a critical thread of the changes that have occurred socially and economically. The agents of change who have led the entrepreneurial upsurge, the entrepreneurs and investors, have become used to moving easily in both directions between India and the US, benefitting from American education, work experience, investment and markets and applying them to India.
India’s growth companies, most notably in IT, require markets to which to export. India still depends on the availability of capital from overseas, both in terms of FDI and PE and VC investment. Looking forward, there are worrying scenarios in which the fluidity of people, ideas, goods and capital could become more challenged, to the detriment of both the US and India.