“You’ve got to do things you’re passionate about and you’ve got to do them incredibly well,” said Rajan Anandan – VP & Managing Director of Google India. He said this to the participants of the Yarl Geek Challenge Season 7. As one of the keynote speakers this year, he had quite a few tips for anyone that wanted to build startups.
But prior to that, he admitted that it’s not easy to build a startup ecosystem from scratch. It typically takes 20 or 30 years and even then, it takes a lot of blood, sweat, and hard work. Rajan shared this with everyone while acknowledging the efforts of the Yarl IT Hub over the past 7 years.
The right time to be an entrepreneur
He then went onto say, “It’s a fantastic time in the world today to be an entrepreneur.” This is especially true for entrepreneurs in the technology industry. Why? Because of time and luck. It’s the right time because over half the world is connected. “Earlier this year, we crossed the magical point of 50% of all human beings now connected to the internet,” said Rajan.
He went onto explain that this was important because only a decade ago this was impossible. “Back when I graduated in 90’s from grad school in the US, my friends started companies. They basically served only parts of the US because the internet didn’t exist. We didn’t know what it meant to build a global company. But in the past 10 to 15 years, the paradigm has changed.”
Rajan elaborated on this by pointing to the example of WhatsApp. Jan Coum & Brian Acton built WhatsApp while being based in California with a team of 55 people. Yet, they had built a messaging platform utilized by over a billion people. And then they famously sold it to Facebook for $19bn without ever taking a step out of California.
Today, an internet company can go from 0 to 50 million users in a single year. Depending on where those users are (is it a developing or developed market?) and the monetization model, the company can be worth $400 million to $500 million. “And the reason for this is you have these massive number of users on the internet,” stated Rajan.
The lucky shot for entrepreneurs
Rajan then explained that entrepreneurs were lucky because of many emerging technologies. The most prominent of these AI. “We at Google believe that AI is going to be the single most defining trend for the next 10 to 15 years. AI is going to impact every industry from automotive manufacturing to banking to agriculture. And agriculture as we know it is going to change completely,” said Rajan.
Other technologies include AR, VR, and IoT. He also included blockchain in his list, which Rajan Anandan described as, “It’s going to revolutionize financial services. Everyone talks about Bitcoin but Bitcoin isn’t the real story. The real story is blockchain!” All of these trends will have a massive impact on every industry.
This presents a great opportunity for startups. Why? Because history has shown that in the face of massive disruption, large companies are usually too slow to react. To quote Rajan, “When there are major tech disruptions, almost without exception, the winners end up being the new companies because the large companies find it very difficult to adjust.”
Having explained his two reasons, Rajan shared that the Sri Lankan company he personally found most interesting was WSO2. He went onto explain that open source technology is also an old trend that continues to be a disruptor. But what makes it an interesting company in his eye is that it started off not to compete with a tech company in Colombo or India. Rather, it decided to take Oracle, IBM, and every other middleware company in the world head-on.
The challenges of the Sri Lankan startup ecosystem
Rajan then listed a third reason for tech entrepreneurs being the cost. He explained this reason saying, “When I graduated from MIT, my friends needed to raise $5 million to $10 million to gain some sort of traction. Why? Because you had to buy servers, expensive sales people, and there were other costs. But how much does it cost to get a tech startup off the ground and get 100,000 users?”
The answer to that question he gave was zero. You can get free cloud credits to build your product from Google, Microsoft, or Amazon. Speak to an accelerator and if you have a good pitch, then you can get space for three months. Within that time frame, Rajan argues that it should be possible to build a product and gain 100,000 users thanks to the internet.
Based on these three reasons, Rajan Anandan argued that it was a great time to be a tech entrepreneur. For a country to develop rapidly, it needs to encourage entrepreneurship. And Sri Lanka he believes has the talent for it. For proof, he points to the University of Moratuwa’s success in the Google Summer of Code program.
Yet, he also pointed out that the IIT’s of India produced unicorns this year. So while we do have the talent, Rajan argues there’s not enough talent. This is why he commends efforts like Uki to create more tech talent for the industry. He also shared that he’s been investing in Sri Lankan startups for the past 8 years.
When he first came to Sri Lanka there was no ecosystem. At the time, the few startups that existed were based in Colombo. Rajan goes onto describe this era saying, “Most entrepreneurs we met wanted to know how much interest we would charge. We had to explain to them that’s not how venture capital works.” Luckily things have changed.
Rajan Anandan shared that he invested in Linear Squared. This is a company of data scientists, developers, and more that provides AI and Machine Learning solutions for businesses. It has clients across the region and is now worth Rs. 1 billion. Such companies like this he argued, proved why good talent was necessary. Furthermore, the talent must also come from different disciplines.
Don’t build for Jaffna! Build for the world!
Drawing from his experience as an investor and a mentor, Rajan had only one additional piece of advice for any potential entrepreneurs. “Don’t think Jaffna. Jaffna is not your market. Your market at the minimum should be South Asia,” he told everyone in the audience.
This is a region with a booming population and an economy worth trillions, which is expected to grow by 7.1% annually for the next two years according to the World Bank. Of course, you can create a startup in Jaffna. Your startup can be based in Jaffna. You can also try to begin by attracting customers in Jaffna. But your goal should not be to win Jaffna.
Rajan went onto say, “I can tell you that I will never in a million years fund a company that wants to win Jaffna! It’s just too small. Winning Sri Lanka? Meh….maybe.”
These words would also apply to startups based in Colombo. He reiterated the importance of celebrating early wins in Sri Lanka but always having the vision to go regional. That’s how meaningful companies are built. More importantly, these companies tackle universal problems. And we have our fair share of problems in Sri Lanka.
These problems range from agriculture to sanitation to healthcare. Yet, Rajan looks at these as opportunities for entrepreneurs to build solutions. If one could solve these problems with technology, then it’s possible to replicate these solutions regionally. But for this to happen, the most important is the team. For a startup to scale, it needs a strong team.
How startups can go beyond Sri Lanka
At every stage of the journey, the founders should ask themselves, “Do we have the right people to scale this company and take it where we want it to be?” If a company wishes to expand beyond Sri Lanka, then it needs to ensure it has the right talent.
To be precise, these startups need people that truly understand the country they’re expanding into. Many companies fail in international markets because they didn’t find the right people or form the right partnerships. “I don’t think flying Sri Lankans to capture Indonesia is the best idea. If you want to win Indonesia you need an Indonesian team,” elaborated Rajan.
However, alongside a strong team, a company would also need capital if it wishes to scale quickly. But Rajan argued that in Sri Lanka, there is very limited access to capital. However, this was a negligible problem. Rajan elaborated on this saying, “If you’re building an extraordinary company then there’s no shortage of capital in the world today.”
The closest source he recommended was India, which was a one to two-hour flight away. He shared Indian VC’s are poised to invest $15 billion in startups. And this number is only expected to increase. For startups in Sri Lanka to grab a slice of this and succeed, Rajan Anandan only had one piece of advice, “Build for big markets. Don’t build for small markets.”