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Is Bangalore really India’s silicon valley ?

Posted on Tuesday, Apr 24th 2007

By Savita Kini, Guest Author

Any news article you have read since the emergence of the Indian IT industry often talks about Bangalore as India’s silicon valley.

It’s going to be a year very soon, since my husband & I relocated to B’lore. We have enjoyed the experience very much. The environment is dynamic here and the new generation especially those in their 20s are embracing entrepreneurship with more enthusiasm then I saw while I was growing up. Silicon valley had the same dynamism in late 1990s but after the dot.com bust, somehow life didn’t seem the same anymore. I hope things have improved in the last couple of years.

I thought it’s a decent enough time to do my own comparison between Bangalore, & the real Silicon Valley.

From the living experience point of view, Bangalore has been great – it’s definitely a much liberal city compared to other cities in India. I have got the best organic basil for Rs 6/-. :-). The weather, the greenery, the nearby hills/mountains are similar to the Bay area. The red soil, fruit orchards all remind me and make me feel nostalgic at times. As you go along the main arteries of the city, if you can keep from not being knocked off by the traffic, then the fancy buildings of the tech companies can really give you a jolt. When I first saw the Intel campus, I was sincerely shocked at how they had recreated the look & feel of the Santa Clara campus. A lot of startups have also spawned all over the city and I have come to know many of them, as well as aspiring entrepreneurs.

Bangalore’s emergence as a tech city really happened after the IT services companies picked up steam. Until then most of the innovative research & product companies coming from Bangalore never got the attention that they deserved. The IT companies started attracting the best minds from public research institutions with their salaries and onsite offerings. The growth of IT companies & cost difference attracted US/European technology companies who found it cheaper to have their own offshore development center so they could have more control over their IP and also put in place a longer term strategy.

Most of the work done today in these offshore offices, as well as the IT service companies is still the kind or cost reduction work that cannot happen in silicon valley. While definitely there has been some improvement in the kind of work that is happening here, it’s not comparable to the kind of cutting edge research and innovation that happens in Silicon Valley. The new startups are also mostly taking the beaten path as far as technology is concerned. Adding to the already skewed environment, the VCs have been flocking to the city hoping to capture the best deals. To manage their own risk, they continue to invest in late stage deals or in the services model. Some of the deals which happened in the last 1 year have majority been in the dot.com internet companies which my new friend Sramana Mitra calls Concept Arbitrage. I am not passing any judgment here. In a way it’s good because at least the entrepreneurial culture will get reinforced and more risk takers will emerge.

However, to be really compared to Silicon Valley, we need something much broader than the current mixture of IT services & products model.

We need to fund more research through public-private partnerships. Our institutions themselves need reform so that they can attract the best brains to do their PhDs. This also requires attracting the best minds into faculty positions who can do research but are also connected to the industry so that the best research also gets opportunity for commercialization. The current cream of PhDs that returned from abroad are strong enough to put up with beaurocracy in the institutions and fight it to some extent. But are they strong enough to bring to bear full-scale technological breakthroughs?

To create a more nurturing environment, we need the thought leaders in the industry to come out and openly support young entrepreneurs as angels. This piece of the puzzle is completely missing.

Apart from the part about funding, nurturing an entrepreneurial company also requires ability to provide strategic inputs. But if the current crème of the society has come from services industry, they cannot support the product companies. Most of the folks in the IT industry haven’t been strategic thinkers themselves. They excel in doing the same thing better and more efficiently. Also, they most leveraged the huge engineering population base to grow their companies quickly. Whether they really understand the challenges of a product company, it’s hard to say. Moreover, the few product companies who did try to stick it out – example: Deccanet – their failure itself has blocked out the risk-taking ability of the senior people in the industry. To address this problem we need the best entrepreneurs, I will even go so far as to say, we don’t even need entrepreneurs, but even if a few senior people from the product companies in silicon valley are able to nurture the upstarts, they will be able to provide more strategic inputs from their own experiences and challenges they faced with their products.

So my humble request to people: let’s stop calling Bangalore Indian’s Silicon Valley. We are not even 10% of what Silicon Valley is all about. Lets get to the task of reaching there, rather than pat ourselves on the back for few $$ that we have made in the past decade.

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Interesting post … I don’t know enough to be able to comment authoritatively on it, but my guess is that you could be right …

Vasudev Ram
http://www.dancingbison.com

Vasudev Ram Tuesday, April 24, 2007 at 1:16 PM PT

[…] Savita Kini feels that it is premature to call Bangalore as India’s Silicon Valley So my humble request to people: let’s stop calling Bangalore Indian’s Silicon Valley. We are not even 10% of what Silicon Valley is all about. Lets get to the task of reaching there, rather than pat ourselves on the back for few $$ that we have made in the past decade. Linked by Krish […]

India’s Silicon Valley at Blogbharti Tuesday, April 24, 2007 at 3:31 PM PT

Bangalore, India’s silicon valley?…

Bangalore and India, Where we stand?…

Sivakanth Mundru's ramblings Tuesday, April 24, 2007 at 10:36 PM PT

You are right about the difference in the ecosystem and the mentality of people in the valley and in bangalore. Services has dominated the market and that has led to reduction of risk appetite associated with product companies. The social system & local culture does not applaud and encourage success – Income tax officials, underworld, press etc make sure that success stays hidden with a few exceptions. There a few companies that know the newances of product development, and all it needs is a framework to bring this talent together to nurture startups. Some efforts are on in this direction to increase the funnel of startups before the VC’s who are sitting on a huge pile of cash desperately seeking good deals.. We still have a long way to go to be called Silicon Plateau (we are not a valley ;-)..)

Ranga Raj Wednesday, April 25, 2007 at 12:21 AM PT

[…] In the end, just to give the Indian context – I would like to point out two posts one by Amit (His experiences from Barcamps in India) and another by Savitri Kini (compares Bangalore and Silicon Valley) […]

Too start or Not to Start? « Vinu’s Online Cloud Wednesday, April 25, 2007 at 2:44 AM PT

I’m not plugging my blog here but I recently wrote something along similar lines: http://umangjaipuria.blogspot.com/2007/04/re-bangalore-becoming-too-expensive-for.html

Umang Sunday, May 6, 2007 at 3:32 AM PT

Savita Kini wrote an excellent characterization of the situation in Bangalore. But the prescriptive solution may not be right. You do not need a PHD to be an entrepreneur. You need to know the market where customers exist with some nagging problems. You need to be able to think up novel technical solutions. You need the knowledge and skills to develop solutions (products and services). You need the environment to nurture the development of the conceptual solutions into demonstrable prototypes. During this stage, the entrepreneur should be willing to sacrifice and seek any available space and resource to get the prototype out. During this period, she has to network with local professionals (finance, technology, marketing, management, and so on). Here come the angel investors and others with funds. Of course, our Silicon Valley experts can lend a helping hand. With a small group of US Government Laboratory colleagues, I visited IISc in 1996 and all sixteen faculty members in their CS department had PHDs. They had excellent publication records. Yes! It helps if the networking groups include those professors and encourage people itching to start ventures in their living rooms rather than taking up jobs of the type described by Savita.

Som Karamchetty, PHD Tuesday, May 8, 2007 at 8:42 AM PT

It is OK that B’lore is not a Sillicon valley but there is a beginning in this context, sometimes beginning matters a lot.
i am giving one example of my own, i am a reader, dept of chemistry, deshbandhu college, DU, New Delhi-110019.
i made up my mind for research at college level but faced unbreakable troubles to get recognition as guide and space for working.
i did not give up and continued my efforts and in july 1999 i got recognition as guide, now 10 students have got their PhD degree under my guidance. for your surprise my one invention which is a instrument named ‘Survismeter’ is lauched in the market by a Delhi based company and enormous literature is available on net.
my another invention named ‘Visionmeter’ is ready to be launched, it will give employment to the visually challeged in science and technology. they can measure milk, inks, solvents, sol-gel, syrups, thinners, oils, etc.
hence i do agree to your view but please take cognizance of beginning too.

Dr. Man Singh Wednesday, May 23, 2007 at 8:47 AM PT

The funny thing is everybody and their mother talks about India not producing any products. Who will buy Indian software/hardware products in the first place? Indian companies are quite smart and CAN develop products that matter in the industry. But can they market it globally? Perhaps NO for a long conceivable time.

Stop thinking that Indians are not enterpreuners. The definition of enterprenuers are not about building product companies, but build companies that matter in the service/product companies. As long as you have build a smart, money making companies, who gives a damn if they are product based or services based?.

There is nothing you can do about until there is a huge money in the services industry, more Indian companies milk and continue to milk it. There is notthing wrong about services industry.

End of the day idiotic VCs that are sitting on top of public money and enterprenuers especially Web 2.0 that are milking these idiots are morons not Indian services industry enterprenuers.

ddd Monday, March 17, 2008 at 7:16 PM PT

This is an excellent post. I could not agree more.

The issue is – do you believe that Indian product companies will in fact emerge in the future? I don’t see it for at least 5 years.

The issues appear to be:

Lack of Angel / VC funding availability: Many note that VCs from all over the world are setting up shop in India. But on a capital-deployed basis, please note that Sequoia and others are investing more in “infrastructure” companies (eg hotels, construction companies etc) vs tech startups as we know them. This should tell us something right there.

Lack of good ideas: Another difficult one – Concept Arbitrage will work less and less in the future. Products (services / software / hardware) are globalizing rapidly. And copy cat companies typically don’t command valuations of the original innovators which means lower returns for VCs … I am not saying Indians can’t invent great things. Of course they can. But not being close to the market where they want to sell, it’s extremely hard to innovate. The exception would be products for Indian markets. That would be a natural fit for Indian product companies vs US companies…

Lack of entrepreneurs and mentors. Another killer issue. For example, I have been in the valley for many years, and do mentor many entrepreneurs here. And, I absolutely love visiting India. But even though the atmosphere in the Valley has dampened, I would never consider moving back permanently. I just love the environment here (both physical and people related) and the traffic, pollution and so on in most Indian cities would drive me nuts after the first 3-4 months. I know many Angels / Mentors here who feel the same way.

Lack of liquidity opportunities for startups: Rupee for rupee, US companies have more liquidity options at least at this stage…

Again – great post!
Nimish

Nimish Mehta Wednesday, March 19, 2008 at 8:50 AM PT

I think the killer issue is that lack of entrepreneurs and mentors. The truth is- and I applaud you for being open about it – that while all of us who are qualified to mentor, love to visit, most of us won’t consider moving back permanently.

There are some exceptions. But the vast majority of the “successful” Indian diaspora in Silicon Valley is entrenched here. They are not moving back.

The other day I was having breakfast with Tim Guleri of Sierra Ventures. Sierra is looking to place someone in India. He asked me if I would move back. I looked at him as if he was nuts.

It summarizes the situation.

On the other hand, I had coffee with Varun Nagarajan, an experienced startup guy who is hanging out at Charles River these days … he is considering moving back, along with a couple of other friends.

So, there are people who are “thinking” of addressing the gap in “mentor capital” that exists in India today.

But on balance, you are probably right, that it will take at least 5 years for a somewhat mature product oriented venture / startup industry to come together.

Meanwhile, I think it’s okay to do concept arbitrage.

Sramana Mitra Wednesday, March 19, 2008 at 7:21 PM PT

this site is very good. we can find many thing from here. thank you google.

sukanya koner Friday, October 10, 2008 at 11:10 PM PT