The Billion Dollar Indian Dilemma(avlesh.wordpress.com)
avlesh.wordpress.com
The Billion Dollar Indian Dilemma
http://avlesh.wordpress.com/2014/01/29/the-billion-dollar-indian-dilemma/
7 comments
Fair points smoyer. The post doesn't emphasize on exists, or the lack of it. In India, the approach to determining valuations is very conservative. This deeply hurts b2c startups.
- Avlesh
- Avlesh
When competing globally, everything important is measured in US dollars.
Yes ... it is in some ways the lingua franca of global finance, but since the 1E9 is completely arbitrary too I'm guessing it was only picked as a round number that's in the same league as admired companies. My contention is that this particular number is not "important" (or in the set of "everything important").
One of my bosses (now a professor teaching entrepreneurship to engineering students) once told me that the next target for any company should be a magnitude greater than its current gross (or net) income. I've read a couple of articles that say the same thing about customers.
One of my bosses (now a professor teaching entrepreneurship to engineering students) once told me that the next target for any company should be a magnitude greater than its current gross (or net) income. I've read a couple of articles that say the same thing about customers.
I think one big problem in India is the lack of big exits.
For instance, Nest was a "billion dollar company" because it got acquired by Google at a high price for a small company. Perhaps that reflects its value but it also reflects the dynamics of the U.S. stock market.
In India you might get bought by Wipro but they are the kind of people (for better and for worse) who have their feet on the ground when it comes to valuing things.
For instance, Nest was a "billion dollar company" because it got acquired by Google at a high price for a small company. Perhaps that reflects its value but it also reflects the dynamics of the U.S. stock market.
In India you might get bought by Wipro but they are the kind of people (for better and for worse) who have their feet on the ground when it comes to valuing things.
Yes Paul, you are right. Lack of exits definitely hurts.
> A typical valley based startup will “graduate” into the billion dollar club within 4-5 years
This is survivor bias. The truly magnificent ones hit the billion dollar club within 4-5 years. But there are plenty of highly successful that not only survive but thrive and are profitable and fail to meet your objective
> Is it end of the road? Hell, NO! We WILL create billion dollar companies. More importantly, we will create stories – far more impactful than our global counterparts. Why? Because our heart is where it should be – in the right place.
Sorry to burst your bubble, but being successful requires more than wishful thinking. Much more.
This is survivor bias. The truly magnificent ones hit the billion dollar club within 4-5 years. But there are plenty of highly successful that not only survive but thrive and are profitable and fail to meet your objective
> Is it end of the road? Hell, NO! We WILL create billion dollar companies. More importantly, we will create stories – far more impactful than our global counterparts. Why? Because our heart is where it should be – in the right place.
Sorry to burst your bubble, but being successful requires more than wishful thinking. Much more.
Wouldn't it be better to increase the rate of companies that have viable financial models? What if you could tune a model where 50% of all companies survived for 10 years or more. In some ways, I'd rather have 20 successful $50M companies. And if they were all in my portfolio, I'm sure I'd encourage them to grow in a way that led to increased value AND longevity.
A question to Indian entrepreneurs who are in India: Since you have a culture with a long history and many notable firsts, why is the goal even stated in US dollars?