Basic legal compliance that prospective proprietors and entrepreneurs should know before starting a startup

We have come up with some of the legal compliances and regulations so that you can turn your adept ideas into business as startups.

In recent years, social platforms and technologies have aided startups to boom. Either it is Flipkart, Swiggy or Urban Company have made directly accessible at your fingertips by simplifying the tedious process.

New age startups and their contribution to the Indian economy are celebrated on the occasion of National Technology Day. So, it is equally significant for us to gain knowledge about the provision of the legal system supporting of Startups.

There are numerous questions that we must know like the laws that need to be followed, registrations are required or not or having websites and apps are enough and about the special govt. Schemes for startups.

To create an awareness about it, we have come up with some of the legal compliances and regulations so that you can turn your adept ideas into business as startups.

Choose the type of business

Importantly, understand the type of business you are starting – a sole proprietorship or a partnership firm or a limited liability partner or a private limited company.

Each structure has its own set of rules and regulations that decided whether registration is required or not, how much tax a company must pay and what kind of license is needed. For instance, sole proprietors do not require any registration whereas partnership firms have this as an option, but it is mandatory for LLPs and private limited companies.

Under Indian law, the following companies can only be considered as startups

– private limited company

– Partnership firm

– LLP



Register your startup

It is mandatory to register your startup as a legitimate business before commencing operations. As per the type of company you are starting, follow the required registration process such as acquiring the certificate of incorporation or partnership registration if required.

Register with Startup India

Startup India was launched in Aug 2015 by our Govt. To promote innovation and robust status ecosystem in the country. Registering with this provides many benefits that can be claimed easily such as tax exemption that could help to boost your startup in the early stages.

Here are the following eligibility criteria to register with Startup India

  • Your business can either be incorporated as a private limited company, registered as a partnership firm or a limited liability partnership in India.
  • Its incorporation or registration must be less than 10 years ago.
  • Either Incorporated or registered, its turnover for any of the financial year must not exceed Rs 100 crore.
  • It must be working towards innovations, development, or improvement of products/processes/services. Otherwise, it must be a scalable business model with a high potential of employment generation or wealth creation.

Note that any entity formed by splitting up or reconstruction of a business that already exist do not consider as a startup.

Founding agreements and employee contract

It is always advisable to prepare a founding agreement if your business is in partnership. This must have the roles and responsibilities of each founder along with operational details – compensation, non-compete, contingency plans in case of disagreement and the like one. Such agreements would help to have clarity in management and permitting you to scale your business.

Usually, in the early stage, it is common that people employ to their closed one and seen neglecting into employee contracts. Therefore, it can lead to jeopardy in the future. So, make sure to enter into contracts with all the people working for you.

It is notable to outline all the terms of employment such as remuneration, work outputs, and other related details in a written contract in order to avoid any complications.

Know your labour laws

You must know the responsibilities as an employer viz ensuring compliance with all requisite labour regulations. It is an important aspect while starting your business. Labour regulations include following laws on payment of additional wages cpf, provident fund and gratuity, workplace sexual harassment, maternity benefits, etc.

While registering your startup with Startup India, you can attest a self-declaration for the first one year front the date of incorporation or registration of partnership and can be exempted from inspection under the following laws:

  • The Industrial Disputes Act, 1947
  • The Contract Labour (Regulation and Abolition) Act, 1970
  • The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952
  • The Employees’ State Insurance Act, 1948
  • The Industrial Employment (Standing Orders) Act, 1946
  • The Inter-State Migrant Workmen (Regulation of Employment and Conditions of Service) Act, 1979
  • The Payment of Gratuity Act, 1972
  • The Trade Union Act, 1926
  • Building and Other Constructions Workers’ (Regulation of Employment and Conditions of Service) Act, 1996

Under this initiative, you can even file a self-certified return for the second and third year to continue to be exempted. But certification does not mean you can evade from following these labour laws.

Under the said laws, you are liable for providing safe workspaces for your employees and it will be your responsibility for any kind of derogatory.

Protect your intellectual property

Legally, intellectual property is your innovation that forms the basis of your startup. Under Startup India initiative, registering a trademark, patent or copyright become easier and affordable, otherwise, it is often a complex process.

Startup India initiative also provides financial schemes to support MSME (Micro, Small and Medium Enterprises) and technology startup units in filing international patents. Basically, it is to encourage innovation and recognise the value and capabilities of global intellectual property alongside capturing growth opportunities in the ICTE sector.

Hence, these are a few important legal compliances that you must know before starting your startup. There are many more regulations to comply with, that depends as per the nature of your business. Therefore, it is better to consult a lawyer or an accountant who can assist you in these processes.



5 Characteristics common to almost all successful online businesses

Not all websites are doing well because understanding the core of the online market is not easy and requires certain characteristics and features will enhance the website and its offerings.

The online e-commerce market has been catching up in India like wildfire and is growing leaps and bounds. However, where some players in the market are doing very well, the others are struggling to keep up. The reputation a business builds in the local as well as the national market is crucial for its sales and the clientele it attracts.

With advancements in the field of technology and growing consumer awareness, the online markets are dynamic and changing with time. Almost all walk-in stores are trying to expand markets by going digital as it is more convenient and offers better outreach. But, not all websites are doing well because understanding the core of the online market is not easy and requires certain characteristics and features will enhance the website and its offerings. One name that you can vouch for is Amazon. This is the biggest place where you can sell your products across the world using the option of Amazon vendor central.

Here are 5 things common to almost all successful online businesses:

1. Good image of the online brand in the minds of the consumers

The online businesses which are very successful have built a positive perception in the mind of their consumer base which is why they keep coming back for repeat purchases. Also, through their existing base and communication strategies, they attract a potential target audience.

Amazon.in, BookMyShow and Swiggy are online business in different markets which are successful because of the positive image and great service rendered out to customers.

Even though Snapdeal is a leading market player, people don’t perceive Snapdeal to be great because of repeated late deliveries and low quality of products faced by some customers.

2. Shopping cart abandonment solutions

Every Online business has faced the shopping cart abandonment issue where customers just add things to their cart but never really purchase them. This happens due to various reasons- the customer might change his/her mind, better deals on other sites, coupons not working etc. Installation of live chats has hit the online markets by a storm and businesses are trying to use this method to stop customers from abandoning their cart during checkout.

Offers like “30% off on shipping if you complete this transaction in the next 30 minutes” along with cart abandonment e-mailers sent out can also reduce this problem. Also, offer you customers the option of wish list so that they can save items for later.



3. Live chat services

Customers feel more satisfied if they have someone to live chat with while shopping as they might require assistance. This also plays with consumer behaviour as the customer believes that he can avail real-time assistance whenever he wants to. in this way, the business is connected to the customer and can provide solutions instantly.

This is an easy method to gain more customers as a chat window is all it takes to make the customers more likely to buy your products.

4. Customer satisfaction

For an online business to prosper and do well, it is very important to focus on the customer satisfaction aspect as a loyal base assures repeat purchases. When people have a good shopping experience with a website, they are more likely to come back and shop for more products the next time.

For instance, Amazon.in gives utmost importance to customer service through prompt e-mails and query solutions.

5. Constant growth and expansion

Because the online markets are so dynamic, a business cannot afford to become stagnant in the scenario. Hence, all business keep launching new products and venturing into new markets to expand their business.

For instance, OYO rooms started off with offering rooms at budget hotels but has now expanded into OYO prime and OYO cafe as well.





5 EdTech start-ups in India you should know about

EduTech or EdTech is a form of teaching and learning that makes use of technology.

Educational technology, sometimes referred to as EduTech or EdTech is a form of teaching and learning that makes use of technology.

There are currently 3,500 edtech startups in India. Some of them are mentioned as follows:

Leverage Edu

It started off as a college admission platform. It helps students in their careers through mentorship products, end-to-end college admissions guidance, programmes to help get first-job ready, as well as one-to-one virtual career advisory for multiple career streams. It also helps students with exclusive scholarships, educational loans, help on housing, forex/VISA, and more, through multiple global partnerships.

NoPaperForms

It aims to fundamentally transform the admission process in the educational institutions in India and abroad.

It helps institutions to increase their outreach capabilities, enhance recruitment efforts, expand customer service offerings.

“One of the strategies is to deploy Application kiosk infrastructure in Institutions, banks & post offices to bring the next level of masses online. We strive to process 30-35 Mn applications by 2020,” said Suraj Sapra, the chief strategy officer at NoPaperForms.

Quizizz

Ankit Gupta and Deepak Joy Cheenath are the founders of Quizizz. It helps teachers turn homework and tests into self-paced games.

“Our mission is to motivate every learner. When we hear that a student initially struggled on a math assignment but then replayed it six or seven times because he/she wanted to improve, we know we’re on the right track”, said Ankit Gupta.



Smartivity

It caters to the education requirements of children aged between 3 to 14-year old and introduce them to core STEM fundamentals through plug and play. For instance, with its virtual reality product VRX, students studying in class 9 and 10 will be able to access virtual reality experiences designed to understand complex concepts in Physics, Chemistry and Biology.

Unacademy

Unacademy was initially launched as a YouTube Channel in 2010 by Gaurav Munjal.
As an online learning platform, it aims to empower educators to create courses on various subjects. It hosts more than two lakh lessons in more than 10 Indian languages.





10 innovative transport aggregator startups in India

With the advent of cab aggregator giants like Uber, Ola and Meru in the market, travelling has got easier. But the story does not end here.

With the advent of cab aggregator giants like Uber, Ola, and Meru in the market, traveling has got easier. But the story does not end here. Ever since these big brands revolutionized the transport industry, new and innovative transport aggregator startups are popping up every now and then. And some already existing transport aggregator startups are getting popularized as well. There was a time when commuting to a place was difficult with inadequate buses, taxis and autos but now with these app-based services, you don’t need to chase cabs anymore. So let us check out some of the very innovative transport aggregator startups in India

SheTaxi

The first transport aggregator startup is the 24X7 SheTaxi project which is initiated by Gender Park, under the Social Justice Department, the government of Kerala. Therefore, the service is offered solely in Kerala. This transport aggregator startup is an initiative where you will find cabs driven only by women. This entrepreneurship driven model aims to bring about social and economic empowerment of women. The service guarantees the safety and security of fellow women passengers and tourists.

Women On Wheels

This is another transport aggregator startup with an initiative of women driven cabs. This service is available in Bangalore. Women On Wheels is an initiative of R2R Ventures LLP. All the drivers are highly skilled and trained in self-defense and thus ensure complete safety of the passengers.



ApnaCabs

ApnaCabs is a government licensed cab aggregator startup based in Mumbai. The company was launched by Srikanth Lingidi in 2015. Their cabs are decorated in the classic yellow and black combination and therefore are called the “kali- peeli” taxis. At present, it has a network of over 1,600 Kaali Peeli taxis and Cool Cabs in Mumbai.

AUTOnCAB

Vinti Doshi is the co-founder of AUTOnCAB. She decided to start this transport aggregator startup when she realized the problems of transportation in Gurgaon for the common fellows. Vinti says that AUTOnCAB is focussed on the needs and demands of both the auto-drivers and commuters. “We don’t treat autos as just another vehicle of commute. It’s a strong business driver for the auto community as well,” adds Vinti. This is a one stop service for autos. You can download their app and ask for a ride whenever you need one.

Jugnoo

Jugnoo was founded in November 2014, by a handful of IITians. This transport aggregator startup was launched as a small organization and now it has grown into a very popular and well connected on-demand auto rickshaw app, which connects passengers wishing to travel from one point to another within a particular city.

Savaari

Savaari Car Rental is an online cab booking aggregator that provides affordable and safe outstation taxi services to travelers. They operate across 60 cities in India including Bangalore, Hyderabad, Chennai, Mumbai, Pune & Delhi. Savaari happens to be the largest car rental company in terms of geographical reach. Savaari provides competitive Intercity Taxi Booking Service, cabs for outstation travel as well as intracity local cabs. You can travel unlimited kilometers for 8 hrs – 10 hrs without any restriction on the kilometers traveled.



AHA Taxis

AHA Taxis (a division of WAAH Taxis Pvt Ltd) is India’s leading online aggregator for outstation travel. They offer online taxi booking to customers for one-way fares, return journeys and multi-city booking. This transport aggregator aims to provide freedom of choice to the customers worldwide for traveling safely where they wish to while saving costs and at the same time benefit the taxi drivers with increased profits.

Baxi

Baxi is India’s first on-demand motorcycle Taxi Company. The service of this transport aggregator startup is available in Gurgaon and Faridabad. So with Baxi you can travel swiftly to your destinations. Baxi provided trained drivers and insurance for both the passenger and driver. They have an SOS service in case of emergencies as well. So with Baxi you need not to worry about getting stuck in traffic for hours.

One Ryder

One Ryder is a unique approach towards transportation. With One Ryder you can actually transport yourself in a scotty-taxi. This transport aggregator service is for the people who want to travel swiftly but in a more cost-effective way. One Ryder is made exclusively for busy cities with terrible traffics. Traditional transports like rickshaws, auto, buses, and taxis take a lot of time. But One Ryder will drop you to your destination faster than all the other options. So, open the app, find the nearest Ryder and reach to the desired place on time.

Shuttl

Shuttl is an app based office bus service that is committed to making traveling to office easy and stress-free bucks for fuel & shared cabs. The startup provides cashless travel, real-time tracking, and reserved seats. Shuttl is available in Delhi.

If these services are available in your city and you did not know about them then try them out soon. Experience hassle-free traveling experiences which are safe and secure. So gone are the days of waiting hours for a bus or being refused by a cab or auto. Let us know which one of the startups you found the most innovative!





Lists of important government schemes for the startups in India

Run through the list to know more about Startup India schemes.

Government tweaks startup resolutions by introducing comprehensive list of schemes! Startup India action plan which was launched on January 16, 2016 by PM Narendra Modi opened doors to many knowledge based and technology driven innovations in diverse industries. In the past few months Indian Government has introduced innumerable schemes providing funds, loans and other benefits to startup. These Startup India schemes support new ideas and research programmes methodically by following standard regulations.

Unlocking astonishing facts & figures:

• India’s rank in number of startups-3rd place behind Britain and US

• Technology startups that exists in India- Around 4,400

• Expected number of startups by 2020-Over 12,000



Run through the below list to know more about Startup India schemes:

1. Support for International Patent Protection in Electronics & Information Technology (SIP-EIT)

Headed by: DeitY (Department of electronics and Information and Technology)

Industry: IT services, analytics, enterprise software, technology hardware

Fiscal Incentives: Up to 15 Lakhs per invention or 50% of expenses (whichever is lesser)

SIP-EIT scheme under digital India provides financial support to Startups and MSMEs for international patent filing, funding for inventions and leverage growth opportunities.

2. Multiplier Grants Schemes (MGS)

Headed by: DeitY (Department of electronics and Information and Technology)

Industry: IT services, analytics, enterprise software, technology hardware

Fiscal Incentives: Maximum INR 2 Cr per project within duration of less than 2 years and INR 4 Cr with 3 years for industry consortiums

Multiplier Grants Schemes (MGS) is the main growth drivers of ITES (Information Technology Enabled Services) and IT companies and aims to initiate collaborative R&D between industry and institutions.



3. New Gen Innovation and Entrepreneurship Development Centre (New Gen IEDC)

Headed by: New Gen IEDC

Industry: Chemicals, technology hardware, healthcare & life sciences, aeronautics/ aerospace, defence, agriculture, automotive, construction, nanotechnology, food &beverages;, textiles & apparel etc.

Fiscal Incentives: Limited, one-time, non recurring financial assistance, up to maximum of INR 25 Lakhs.

IEDC projects are promoted in educational institutions to develop to create an entrepreneurial culture. New Gen IEDC strives to uplift knowledge based and technology driven startups by harnessing young minds.

4. Aspire (Scheme for promoting innovations and entrepreneurship)

Headed by: Steering Committee, Ministry of MSME

Industry: Agriculture, Pets & animals, health care & life sciences, social impact

Fiscal Incentives: Based on the existence of incubator project

Aspire promotes development of rural economy by supporting Agro industry which is promoted by MSME (Ministry of micro, small & medium enterprise). Aspire is one of the Startup India scheme initiative which is not only focused on solving problems, but also creating employment.

5. Single Point Registration Schemes (SPRS)

Headed by: National Small Industries Corporation (NSIC)

Industry: Agnostic

Fiscal Incentives: Micro and small enterprise will be issued tender sets for free, which means they get exemption from EMD (Earnest Money Deposit)

MSEs willing to register under Single Point Registration Schemes can either do nsic registration online or contact nearest NSIC office for registration.



6. Infrastructure Development scheme

Headed by: National Small Industries Corporation (NSIC)

Industry: Agnostic

Fiscal Incentives: A deposit of 6 months refundable rent and an office space of 465 sq.ft. to 8,657 sqft is provided. The allotment process of leasable space is based on first come, first serve basis.

This scheme by Indian Government was initiated to solve office space issues of MSMEs. The Corporation also provides office space on a lease rental basis of perspective units.

7. International Cooperation (IC) Scheme

Headed by: Office if the Development Commissioner (MSME)

Industry: Travel & tourism, human resources, events and advertising

Fiscal Incentives: The amount may differ depending on the organization category

Under this scheme the department supports travel and marketing expenditures relating to the development of MSME sector. This initiative contributes in making MSME’s capable of competing internationally by leveraging technology and other resources that are provided by Indian Government.

8. Sparsh (Social Innovation programme for products which are affordable and relevant to Societal Health)

Headed by: Biotechnology Industry Research Assistance Council (BIRAC)

Industry: Healthcare & life sciences

Fiscal Incentives- The loan and grant are provided according to the startup stage

BIRAC initiated financial and technical support social innovators who make efforts to identify the needs and gaps in healthcare. This is a promising step towards making revolutionary changes in the healthcare industry, and also giving boost to many young social innovators who bring life-saving changes with the help of various technologies.



Some Important points keep in mind:

• Most of the above scheme required a registered entity. Means you have to require a private limited company registration or some other license like GST Registration etc.

• Some scheme also required the recommendation letter from the government of India authorized incubators regarding validation of the ideas.

Final thoughts:

Apply for Startup India registration to avail these schemes or simply download startup India app and even now there a new portal as Startup India hub. Flipkart, Paytm, Snapdeal, Ola, Zomato, Quickr and Hike are few popular startups that inspire Government and innovators to shed light on such result oriented schemes. It remains to be seen what startup schemes will be coming up in future to bring new developments.

About the Author :

Devyash Patel is CEO, Founder at myonlineca which deals in online legal services across India at your fingertips.





The true value of Indian unicorns: Investment game

Investments in start-ups come attached with downside protection clauses, which are like a put option written by existing investors in favour of new investors.

A report in Mint earlier this month mentioned that Indian e-commerce firms Flipkart and Snapdeal have hit a “valuation wall”, with prospective investors unwilling to meet their latest headline valuations of $15.2 billion and $6.5 billion, respectively. This followed moves by T Rowe Price and Morgan Stanley in marking down the valuation of Flipkart to $12.75 billion and $11 billion respectively in their investor declarations.

Taken together, this possibly suggests that these e-commerce biggies might be in trouble, and possibly unable to compete with the Indian arm of Amazon.com Inc. While that is a plausible conclusion, there is another factor that might explain both the valuation discount and companies’ unwillingness to raise money at lower valuations—the optionality granted to investors.

When an investor invests Rs.1 crore for a 10% stake in a start-up, it is a common practice to assume that this investment values the start-up at Rs.10 crore. While this is intuitive and arithmetically sound, the problem is that it ignores the optionality that is inherent in any start-up investment.

Given the risks associated with investing in a start-up, investors usually demand some downside protection. While this downside protection comes in various forms, one of the most popular (and simple to understand) structures is called the “full ratchet”. According to this, existing investors in a company (this usually includes the founders) underwrite the new investor’s investment, and agree to fully compensate the new investor in case of a subsequent fall in the company’s valuation.

Let us assume that company XYZ raises Rs.1 crore from an investor, Alpha Partners, in exchange for a 10% stake. This investment gives XYZ a “pre-money” (excluding the fresh investment) valuation of Rs.9 crore, and a “post-money” (including the investment ) valuation of Rs.10 crore. Let’s say that a few months down the line, XYZ hasn’t done as well as expected, but needs fresh funds, which Beta Partners agrees to provide. Beta, however, insists on a pre-money valuation of Rs.8 crore.

Ordinarily, the value of Alpha’s investment would go down from Rs.1 crore to Rs.80 lakh (10% of Rs.8 crore). However, because Alpha had a “full ratchet” clause attached to its investments, the earlier investors (including founders) have to compensate Alpha with shares worth Rs.20 lakh (the difference in valuation). This way, despite the firm having not done too well, Alpha’s investment has remained protected, with older investors bearing the downside risk.



In other words, while the original agreement gave Alpha a tenth of the shares, Beta’s investment at a lower valuation means that Alpha now has an eighth of the remaining shares (though the total value of these shares remains the same). An even lower pre-money valuation by Beta would have resulted in a higher transfer from the original investors to Alpha.

This way, it is not hard to see that the full ratchet that was part of Alpha’s investment agreement is essentially a put option written by the older investors in favour of Alpha. There would be no problem if Beta’s pre-money valuation was higher than Alpha’s post-money valuation.

The lower Beta’s pre-money valuation is, the more the original investors must transfer to Alpha (this is limited by the number of shares the original investors retain. If Beta’s pre-money valuation is lower than Alpha’s investment, the original investors are completely wiped out, and we can assume that the company itself might cease to exist then).

Thus, for the Rs.1 crore that Alpha Partners invested in XYZ, it not only got a 10% stake in the company, but also a put option that protects its investment against a lower valuation in a further round. This put option is written by the existing investors in the company at the time of Alpha’s investment.

This implies that a share of the company held by Alpha partners includes a long put option, while a share of the company held by earlier investors includes a short put option (since they have implicitly written this option). In other words, a share held by the new investors is worth much more than a share held by earlier investors. Alpha might have invested Rs.1 crore for a 10% stake, but the value of the company is far less than Rs.10 crore. In order to determine the precise valuation, we need to value the put option.

Valuing a put option in a start-up is different from valuing one in a publicly traded company. The most important difference is the way in which the price moves—while it is slow and steady for a public company, start-ups either grow fast or die, implying we need a different process for prices or returns. Moreover, opportunities for trading in start-up companies are fewer, and the full ratchets don’t come with an expiry date attached, implying we need a different model to value such options.

With the formula in hand, we can now value the option embedded in investments in start-ups, and what this tells us about the overall valuation of the company. Starting with our example, for a Rs.1 crore investment for a 10% share of the company, the value of the full ratchet option can be derived from this formula as Rs.27.8 lakh. In other words, the Rs.1 crore that Alpha invested pays for both a 10% stake in XYZ as well as an option worth Rs.27.8 lakh. The stake itself thus costs only Rs.72.2 lakh, implying that the full company can be valued at Rs.7.2 crore (compared to the Rs.10 crore headline valuation).



We can now apply the formula to the latest round of venture capital investments in a few popular Indian private companies. It must be noted, though, that these investments need not have come with a full ratchet protection, and the valuation is sensitive to the nature of protection used (sometimes the ratchet can be set at a higher strike price. At other times, a “weighted average” method could be used to determine the transfer of shares, which decreases the option payout).

It is interesting to note that Morgan Stanley’s reported valuation of Flipkart is not very far from the value we have calculated assuming a full ratchet downside protection (along with other assumptions).

An additional feature of downside protection instruments such as ratchets is that they “telescope”. Each round of investors is long an option that comes along with their investment, but short another option that comes with the next round of investment! Thus, with every succeeding round of increasing valuations, investors from the previous round can go from being long a put option to being short an option. And this creates conflicts when it comes to fund raising.

The latest round of investors usually don’t mind a “down round” (an investment round that values the company lower than the preceding round) since their ratchets protect them, but earlier investors are short such ratchets, and don’t want to see their stakes diluted. Thus, when a company is unable to find investors who are willing to meet its current round of valuation, it can lead to conflict between different sets of investors in the company itself. When US-based payments company Square went public in 2015, about $93 million worth of stock had to be paid out to its last round of private investors. These investors had been promised a 20% return on their investments, and when the initial public offering (IPO) had to be priced low, they had to be compensated with additional stocks. It is interesting to note that Goldman Sachs and JPMorgan Chase & Co., who held ratchet options after having invested in the last private round, were also among the underwriters to the IPO.

Image credit: www.alleywatch.com



Why do Indian entrepreneurs ignore the Indian-Ness of their customers?

In India most entrepreneurs and businessman tend to attach themselves to the western aspect of what a startup means – the coolness, the techiness, putting things into place, coding something. They forget that the chole kulche vala is also a startup!

You know well that the term startup comes from the West and is mostly associated with building something in terms of complete uncertainty and absence of business model. On the other hand startup also means solving a problem, seeing through a real pain point, truly seeing your customer and empathize with him.

Now why we tell you this is because in India most entrepreneurs and businessman tend to attach themselves to the western aspect of what a startup means – the coolness, the techiness, putting things into place, coding something. They forget that the chole kulche vala is also a startup!

The Varanasi saree vendor is also a startup. Just look at the way the entire floor of the shop is being turned into a sitting place and hundreds of Indians spend hours going through the pieces of clothes. It is no more just an act of buying, it’s a ritual.

So why do the young Indian entrepreneurs forget this? Why do they no longer do darshan? “Gazing” at their customers? Darshan karo? Well, not really!

Why do they choose to ignore the Indian-ness of their customers and then when their businesses fail they again try to seek the reasons through Western lenses, theories and rationalizations? In the West a success of a startup is defined in vertical means. Building something viral that will skyrocket and launch the owner in the stratosphere.

But that was never the case in India.

In India a successful startup is one where you see people around it. It all revolves around the collective and family. You start an Indian story and it immediately begins with parents, evil maid, wife, son being prosecuted into the forest for 14 years. In contrast, you start narrating a Western story and it starts with Hercules, Achilles, a sole hero, all of them killing the weird looking creature, the Minotaur, Chimera.

Let’s get back at the chole kulche vendor. Observe his day. He creates a crowd around his small barrow with sometimes tens of people waiting around him to get the snack?

Is this a successful startup?

Per Western thought – No, because it doesn’t scale!

Per Indian thought – Yes, it is because it creates a collective around him, mass of people who come there because their tastes are being understood and personalized right here on the spot.

Collectiveness. Darshan. Adjustment. Jugaad!

In the West, you bring the warm up snack, the main course and finally the dessert.



In India, you are given an Indian thali where all the food is put together in one go. I may decide to deep my roti into the kheer first. You may decide to roll it and put sabzi on it. Same plate but the food will taste differently for different people. Unfortunately, Indian entrepreneurs subscribe to the Western thought of standardization and scale fast while forgetting that in fact they live in a market far more diverse. I find this so disappointing and ironic in a country like India with such diverse market and traditions.

Customer Hi Bhagwan Hai

Indians will know what “kolam” or “rangoli” in North India means – Creating a design by connecting the dots. Kolam is an offering, which means that the person who makes it know exactly who is it meant for. Unfortunately, Indian entrepreneurs make the kolam before asking for whom that kolam is in the first place.

The people of India do aarti every morning and evening, an act of telling their god which part of their demands has he fulfilled and what is still pending. To “motivate” him to bestow the rest of their demands on them they do offering, swaha, in exchange for tatastu, the benediction. This happens every day in India where millions of gods are been given aarti every day. But mind this. Every god accepts a particular type of offering. The Indian customer would never offer bhel to Krishna or tulsi to Shiva. Why don’t all make aarti to the millions of customers in this country. Why following the Western logic of standardization instead of customizing the experience for your customers (tulsi or bhel)?

Entrepreneurs. It’s time that you get off that shiny flight you have boarded and get back here in order to truly see your customers and his uniqueness.

In other words:

1. Darshan karo
2. Aarti karo

May all of us who are building their small businesses start the day of tomorrow by gazing at our customer and talk to him the way we talk and love and fight every day to bhagwan, to our personal god.