Why Indian entrepreneurs are unable to build apps for the mass Indian user

This was first published as an editorial in Economic Times with a more sedate headline. A few days later it circulated and became a bit viral under the above headline.

On a recent trip to China with a group of Indian internet entrepreneurs, it was eye-opening to see how Chinese Internet companies (especially utility apps) have silently made inroads into Indian mass markets without any fanfare.

UC Browser, ShareIt, CleanMaster, to name just three, have real and significant penetration among Indian users. This led to some soul-searching within the group about why Indian entrepreneurs are, by and large, unable to build apps for the mass Indian user.

Church Street in Bangalore. Image credit: www.ehabweb.net

Church Street in Bangalore. Image credit: http://www.ehabweb.net

My hypothesis is that most Indian entrepreneurs and product managers build products for people like themselves – elite and westernised Indians who think and speak in English. This is also why almost all Internet companies fight it out for the first 10-20 million internet users.

However, the honest truth of the Indian internet market is that to build a large Internet business, you need find a way to build for the 200 million common Indians. There’s scepticism around how you would be able to monetise these users but it won’t look too different from how FMCG companies solved it.

Being the Helpchat CEO, the change starts at home. Here are some things which we are now trying to instill at Helpchat to ensure that we build an Internet product for the common Indian.

Firstly, we need to relate to and respect the common Indian. India is still a stratified society (whether we like to admit it or not) and I’ve come across some arrogance and even condescension towards these users among the so-called elite and well-educated product makers. Given the different affluence levels, sometimes it can be genuinely be difficult to relate to their concerns.

Secondly, get out of the office and talk to them. There’s a billion dollars lying out there. One weekend, I took all product managers in our team to Church Street in Bengaluru and we spent four hours talking to security guards, waitresses and small business owners. You need to see their phones, their home screens and understand their behaviour. All of them mooch off the Starbucks internet; a guard uses Uber to pick up his family from railway station, a waitress wants news about her hometown and a business owner needs more content around jobs.

Thirdly, be Indian. Most Internet startups are too Westernised – we leave our Indianness at home. For things to resonate with the average Indian mass user, we need to embrace our Indianness. For example, our user interfaces and experiences copy Western apps instead of thinking ground up. Selling a salwar kameez online or a calendar app for India should be (or at least, could be) fundamentally different from what we are accustomed to.

Fourthly, think about Maslow’s hierarchy of mobile needs. Think about basic aspects of the phone – battery, data usage, phone space, balance on their phone. For example, most readers of ET would think that Chrome is a great mobile browser until they see how UC Browser has built a download manager, optimised for Facebook messages and reduced data usage (all features super important for the common Indian). Think about content that resonates better with such users. Go deeper than just having a vernacular version of the app; or ABCD (astrology, Bollywood, cricket and divinity).

While in theory it makes sense, generally most founders and product managers don’t do the above. One founder related the story of a product manager who came up to him and said he honestly doesn’t enjoy his work because he can’t relate to the average Indian user and wants to go back and work in Silicon Valley. Most founders don’t have that liberty.

With increasing disposable income levels and reducing cost of accessing internet, there’s a great opportunity to monetise from these users and it’s the right time for Indian internet companies to seriously start thinking about this.

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Moving away from chat: Hard-earned lessons

Since we moved away from chat a few days ago, we’ve had a lot of users come and ask us why we decided to bring chat to a bare minimum in our app.

While several of our users loved the chat feature, for a lot of our users chat was a cumbersome way of doing things (too many taps, easier if they did it themselves etc.).

After extensive debate internally, we took the call to phase out chat from our app and create the same level of experience using automation and simple user interfaces. The rest of the app remains the same – but it is simplified, fast and without any delays.

Since a lot of people believe that chat is the new universal UI (like we once passionately believed), I thought it might be useful to talk about our experience and learning.

Background

Back in early 2015, we thought that chat would become a universal UI because people were really using chat like crazy on their mobiles for P2P messaging. We thought we could build a personal assistant that helps them get things done over chat.

We built our chat process team over a period of 3 months from March to June 2015. By June 2015 – we were probably the biggest C2B (consumer to business) chat apps in the world. Probably bigger than all our Indian competitors and American counterparts like Operator and Magic combined. We were doing more than 70,000 chat sessions a day (not messages, chat sessions). The idea was that the manual chat would provide enough training data for building out a great bot.

Initially, we had a great response – customers hadn’t seen an experience like this before and loved the fact that there was a real human being on the other end helping them with their queries.

Learning on chat

The only problem with chat was that customers who tried it weren’t coming back. So we tried harder, optimised first response times, average response times, our knowledge base, canned responses and built better dashboards for monitoring all of these (all the while scaling the backend for the chat volume). That still didn’t work.

We thought that at some point users would get trained to use chat in the right way (like how people got trained to use Google). It now seems foolhardy to even think like that but we really thought that chat UI will truly work, if only we worked hard enough.

Next we thought – how about using a NLP-based chat bot and also experiment with reimagining chat (make it into a series of simple clicks with graphic UI elements).

The chat bot irritated the users no end (our data science team built a large set of training data, but coping with Hinglish, SMS lingo, vernacular language to write a general purpose chat bot becomes a 5 year science project very quickly). Breaking up across different channels didn’t make the task any easier.

Reimagining chat worked where the permutations and combinations were very limited. Example, we wrote a laundry bot where you didn’t have to type – just select options. It worked to some degree. Then we decided to implement it for ordering food but in user studies the users kept saying that it was very painful to use.

The hard truth (for us)

Finally somewhere in Sept 2015 it became obvious that the problem was chat (there were lots of learning along the way but this one was the biggest). The number of taps required to get anything done was just way too many, no matter what you do. People often confuse the debate with bots, AI etc. but does it really make sense to chat to get a cab when you can simply tap once and book (no matter what you think, our user data was very obvious on this. The answer is no.).

The customer would try it once out of curiosity but never come back. Other ways (simple UI) was just way faster and on the internet people will ALWAYS choose what is faster. Chat might be great for long tail use cases (that random philosophy book that you had always wanted but couldn’t find easily) but mobile businesses in India don’t get built on them.

This Dan Grover (WeChat product manager)  article nailed it and before that it was Connie Chan’s (A16Z partner) tweetstorm.

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This tweet is the TLDR of this blog post.

 

We had learned this the hard way more than 6 months earlier.

Learning and changing

So in September 2015, we took stock and decided to introspect. To use a Charlie Mungerism, we were behaving like a man with a hammer (chat) and everything looked like a nail to us.

We decided to think with first principles and asked ourselves – What does a personal assistant do? What is the easiest/fastest way to do things? What is required to create a personal assistant for millions of Indians? What should be the principles based on which the product team should build? Etc. etc.

New launch and traction

We finally launched the redesigned app in January 2016 and we haven’t looked back since. It was based on a simple insight – don’t force fit chat, just build for the user.

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We’ve been growing super fast with probably the best cross category transaction behavior of any app in India and it looks like we’ve gotten something right.

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Our main screen. Do all things from one app. But without chat.

More than 20 API integrations are already live (and for most of our partners, we are the biggest partners in terms of transactions or traffic). Another 15-20 APIs will be live in the next 3 months.

It also proved to us that chat or voice didn’t have anything to do with building a personal assistant (people also confuse chat/bots with AI etc. We believe AI/Machine Learning/advanced algos are relevant even more so outside of building a chat bot – you’ll at least have actual usage and be able to train the system). Just focus on what is the easiest way to do things for the user and the rest will figure itself out.

The need for speed

We are on our way to creating the world’s fastest product and tech team. We launched recharge, bill payments, cabs, deals, news, journey cards – all in 5 months. In the next 3 months, we’ll be launching many more things. Some will wow our users, some will be duds. But that’s the only way to create an awesome personal assistance platform. Fail, learn, ship, fail, learn, ship…

Personal note

This tweet kind of sums it up.

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While it is supposed to be tough, the toughest of all was the decision regarding our chat operations team. We have taken the decision to let go of most of our chat colleagues. We looked at the retention cohorts or uninstall cohorts for all our chat users but they were always much worse than others (for reasons explained above). No matter which way we looked at it, it made sense for us to take this decision.

3 month severance package and outplacement

We’ve given a 3-months’ severance package to everyone who was let go (i.e. our chat colleagues) and we will do our best to help them find new jobs. I’m working with our HR team on this and we have already roped in 12 startups and big companies for out-placing them into the right job profiles (chat ops, voice ops etc.).

I feel proud of the fact that I am working with such smart people in our team who are insanely passionate about our mission. Building a AI-powered personal assistance platform is exciting beyond words.

Ankur
Founder and CEO
Helpchat

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Books which changed something for me

All of us (well, most of us) look for things that could have a very defining impact on us. For me, apart from meeting people, the best things have been books. These books made me super excited when I first read them and I could almost feel them changing something inside me. Thoughts which were so new to my brain that it was truly an alive moment. (I’m a sucker for books).

So here goes:

– Business Maharajas
– The Fountainhead
– Suitable Boy
– Poor Charlie’s Almanack
– Zero to One
– Hackers and Painters
– Hard things about hard things
– The Everything Store
– Stay Hungry, Stay Foolish
– Emperor of all Maladies
– Age of Risk
– Superforecasters
– 1984

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On evolving and letting go

One of the most difficult decisions that a CEO has to take involves taking calls which impact the people who work in their company.

We recently evolved from our earlier business model of helping consumers in getting their complaints resolved (called Akosha) and focussed on building a personal assistant for millions of Indians (called Helpchat). As we evolved, there were 2-3 teams from the earlier model (call center, quality etc.) who we tried hard to scale up and help become relevant within the new reality of the company. We were able to do that for almost half of the people, but that still left some others who couldn’t make the cut.

Asking them to leave was a tough decision but the right one. They wouldn’t have had much work and yet the right way ahead for the company was to stop taking complaints and focus on building the personal assistant.

We decided to do the right thing – communicate clearly with the employees, figure out outplacement by talking to other companies/startups and give proper notice and an additional month’s pay. In addition, we extended all help in terms of introductions / recommendations etc.

In addition to those let go because of evolving our earlier business, we also downsized our innovative work-from-home program for chat experts. Despite several attempts at bringing accountability among WFH experts, we saw that it was extremely difficult to control their behaviour (attendance, training, response times etc.) and therefore control the experience they give to our customers. If it had scaled further, it would have led to a really great model for bringing work to WFH women, but despite a lot of perseverance, the time came to close that experiment. Everyone says that failure teaches you more than success but it’s never pleasant while you are in the middle of it.

All this meant that there were some disgruntled ex-employees going out and talking about this in social forums or to the press. There anguish is understandable.

The other side of the coin

While all this was happening, we were simultaneously hiring furiously for other teams. Sometimes the dissonance can be tough to deal with but once you know it is the right thing, you just focus and execute. For example, we have hired more than 30 engineers, product managers and data scientists in the last 3 months in our Bangalore office. Similarly, we acquired a 30 people, really awesome team at Niffler. We’ve grown by more than 30X in the last 6 months and the product roadmap has really exciting things up ahead which will radically evolve where we are today.

We are, in fact, hiring more engineers, product managers, category managers and analysts as we speak.

Conclusion

I think such times test the CEO’s ability to do the right thing and take a tough call. Such instances will come again and again and a lot of times it will be difficult to get a proper night’s sleep – it is never easy to let go of people who you have hired with so much effort in the first place.

However, this round of alignment is behind us and we will continue to build the company the right way.

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The acquisition that got away

With the growing number of people turning entrepreneurs, the search for great talent has become difficult. However, a lot of these entrepreneurs will find it difficult to raise beyond seed stage money. Sometimes the team is great and yet they can’t raise money for reasons outside their control – e.g. they took seed from a VC firm and the VC firm is not not keen to follow on for various reasons (portfolio conflicts, traction, idea etc.). And this has created a reasonably active market for acqui-hires in India.

We did our first one recently when we acquired Niffler – we all hit it off in the first meeting itself and we had a term sheet ready within 48 hours.

But before this acquisition, in another acquisition, we had sent out the term sheet, and at the last minute the target’s investors asked them to talk to another one of their large portfolio companies and they matched our term sheet and closed the deal.

The deal had taken close to a month and a half to stitch up (multiple meetings with the founder to share the vision, negotiations on pricing and roles for all the team members etc.) and it felt bad when it didn’t go through.

When the founder shared that they were talking to another company, here’s the letter I sent him. They still ended up going with the other guy.

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Hey XXX

I couldn’t say much on the call but my overall feeling is that as the CEO you should do whatever is right for ABCD.

That said, in my role as the CEO of Akosha, it would be wrong if I didn’t tell you why we love you guys and why I feel Akosha is actually a better home for you and the whole ABCD team.

Here are my thoughts:

Relevance – I think it’s about the journey and not just the end point. For a company like ours, you guys will be in the top 7-8 people in the company working closely with me and the rest of the senior team to build the company. Being part of the strategic discussions and making an impact on the where things will go is a lot more possible in a company at our stage.

Upside – In terms of pure upside, being an earlier stage company, being at Akosha actually gives you the chance to create 10-20X potentially compared to a later stage company.

Cultural fit – I think for us this isn’t opportunistic – it was always about you guys and that is what we we really liked and I believe such a cultural fit creates a lot more joy and happiness in the long run. We are not reacting to someone else’s offer but were willing to think and come to the table from first principles.

Consumer business – The chance of seeing your product used by millions of Indian consumers is something that Akosha provides. Of course it is riskier but then we all live only once.🙂

I can imagine it being a reasonably tougher decision for you to go for Akosha (location, B2C etc.) but I would have taken a similar call based on your gut. I think we’ve had fairly good conversations and we weren’t doing it because you guys are hot or had another offer – we truly felt that what we spoke about in terms of product / chat / B2C was quite exciting and that you guys got it.

Whichever way this goes, I’m really glad I met you. Koi fight nahi hai.🙂

I look forward to hearing from you.

Cheers,
Ankur

PS: What would have I done? Basically, my mental model is only relevance. Joining XXXXXXXXX would definitely be the safer and easier option but it may or may not be the right call. I do have tremendous respect for the company and for their founder, but from what I understand of org building, had you guys joined them 18-24 months ago, you would have been super relevant within the company. Today, I’m not sure.

My two “biased” cents.🙂

——–

You win some, you lose some. Most important lesson learnt – move insanely fast if the intent is clear. Close it, quickly.

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Letter explaining ESOPs to the team

Sometime ago, I sat down and wrote down a letter to our employees trying to explain what exactly it means to own stock options in a startup. Context is that from my practical experience of talking to hundreds of startup employees, ESOPs are one of the least understood and most under-appreciated aspect of startups here in India.

So here goes (with some minor edits):

——————-

Hey there,

I am really happy to welcome you as a co-owner of Akosha. It is both a recognition of your efforts and a huge responsibility.

First, let’s get the basics out of the way.

1. If you are not familiar with ESOPs or venture capital, please watch video recording of my talk on venture capital (internal link), because without understanding capital appreciation, you may find it difficult to grasp the value of getting ESOPs.

2. There was a traditional thought process that employees shouldn’t really value stock options. The reason for that is that all the way till 2011-12, apart from a few success stories like Infosys etc., people hadn’t really seen meaningful wealth creation for employees. All this has changed forever in the last 2-3 years and in the coming years (unless we hit a bust), we are likely to see a lot of wealth creation for founders and early employee-stakeholders. That is also the reason why you will find that most senior management folks value stock compensation while sometimes junior employees can be lazy in understanding them or risk averse towards them.

3. ESOP creation is more complicated than it seems. There are 4-5 ways of structuring (equity/preferred, stock appreciation plan / options etc), changes in the new Companies Act and lots of different tax rules applicable on employees and the company, decisions regarding acquisition, winding up or the company or IPO etc. Here are some of the things we kept in mind while creating it:

– we need to keep it as simple as possible for everyone
– the plan should be fair to employees, the company and any potential acquirer
– the plan should ensure that under no circumstances can one person’s behaviour impact the overall exit for rest of the company and employees
– we need to ensure that overall unfairness should not be there (i.e. handle cases of death, unethical conduct, illness etc.)
– any tax liability should only come when there is a corresponding cash event for a person (i.e. you should not have to pay real cash in tax unless the upside of the stock is also in cash).

4. The exact ESOP options granted to each employee is a subjective determination by the senior team. While deciding this we looked at your experience, performance, current market salary, market adjustments, your alignment with the company’s goals, your thinking/flexibility, attitude etc. Every time, we’ve tried our best to be fair and reasonable and generous.

Here are some of questions that people are likely to ask around ESOPs:

1. What is a stock option?

A stock option is a share in the company. As the value of the company increases, the value of the shares of the company increases. A stock is granted by the company by issuing a grant letter.

2. What is the vesting period?

Stock options are granted over a period of 4 years with a 1 year cliff (which means that if you leave before the end of the first year, you don’t get any stock). Post the end of one year, the stock options vest 25% each year till the end of year 4. The vesting happens monthly. In many companies the vesting happens 10%, 20%, 30% and 40% over 4 years. We went with 25% yearly. This applicable for the current grants but might change in the future.

3. What is the exercise price?

To keep things simple and give the maximum value to you, we have kept the exercise price at Rs.X per stock option. It is the price will be adjusted against any sales proceeds at the time of sale of your shares to an acquirer or during an IPO.

4. What happens to my stock options in case I leave the company?

All stock options which are vested will remain with you. All stock options which are unvested will lapse. You will not be required to exercise any of these options at the time of leaving, unless the context otherwise requires.

5. How did you calculate the number of options in my case?

Whatever amount of ESOPs was promised to you during your discussion with your reporting manager, we simply divided it by the valuation of the company as specified to you on that date. Then we calculated the number of ESOPs.

Let’s say, hypothetically, a company has 10000 shares and the total value of the company is Rs.10,00,00,000 (Rs.10 crores). If you are promised ESOPs worth Rs.1 lakhs, you will get 10 options.

Different people are granted ESOPs at different stages depending on context, performance, when they joined etc. The earlier you are part of the company, the better the outcomes for you.

6. That’s okay, but the number of options sounds really low. My friend got XXXX options!

Yeah, we spoke to our consultants. One of the things that a lot of companies do to make the options look more meaningful is to simply do a share split (i.e. split a Rs.10 share into 10 shares of Rs.1 each) and then issue the options. Materially it doesn’t change anything.

So in the above example, let’s assume that the company is worth Rs.10 crore but the number of shares in the company were 10,00,000 (i.e. 10 lakhs instead of 10,000). So suddenly, you will end up getting 1,000 options (instead of 10 options) though economically nothing has changed.

Instead of artificially splitting the stock, our advisors told us to not do it and keep it simple.

7. What kind of returns should I expect?

No one knows. If we work hard and succeed in building a great company, the upside can be immense. But make sure you don’t spend real cash or change your lifestyle based on this.

8. When will I see the money?

Money or liquidity as it is called will only come if and when either of the following happens – a) when someone buys us; b) we IPO. Both events are not predictable and usually involve a long and arduous journey to get to.

I hope I have answered most of your questions but there are bound to be more questions. A lot of the people are still not clear about ESOPs and please don’t hesitate in asking questions. We’ve retained faith in you that you would have to confidence to ask us if you have any questions.

————-

Now, the responsibilities bit.

Our goal is to include as many people as possible in equity ownership – we want to change many lives and create wealth for everyone. However, this comes with responsibilities.

– we expect you to have a very long term outlook. Companies take 10-15 years to build and a lot of learning and wealth creation is loaded towards the back i.e. it happens in the later years. Patience and perseverance are your friends.

– we expect you to put the company before yourself. It is sometimes tough to do this but this is expected in a lot of different ways.

– we expect you to be wise. Wisdom is difficult to define. It includes not falling for short term gains, being loyal, having the ability to talk about issues, having the right mental models, being calm in face of adversity and sifting signal from the noise.

– we expect you to have fun. Work is the most underrated form of having fun and I truly believe that. People who have fun at work are generally the happiest. If you not having fun, talk to someone and fix it.

– we expect you to be honest. As owners, you think and behave honestly both with other owners and with yourself.

You will find enclosed the following documents:

1. ESOP grant letter specifying the number of options granted to you; and
2. ESOP Plan document containing the detailed terms and conditions of your grant.

That’s it. Let’s enjoy this ride together.

Welcome aboard.

Ankur

 

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