Nasscom Product Conclave 2010 – a tech-investor perspective

The annual product focused technology conference that concluded on November 11th, brings together the leading lights of India’s fledgling technology product community.  I am sure the use of the word “fledgling” is irksome to some when used in this context; there are, after all, several examples of world class products being developed in India now and I would use three broad buckets to organize their credentials.

1. Arguably, banking software from Infosys (Finacle), TCS (Bancs), Tally (ERP) are strong contenders to make such a list.
2. There are also umpteen examples of captive product development centres of global majors like Yahoo, Oracle, Microsoft, Intel, etc. which may claim legitimacy as India-based technology products performing on the global stage.  I would put outsourced product development teams (e.g. Persistent Systems) in the same category.
3. Then there are the rare start-up ventures who have made a mark for themselves with global customers: Zoho (CRM) and Manthan Systems (retail business intelligence – disclosure: I have invested in this business).    SaaS and cloud infrastructure has also empowered promising businesses like ImpelCRM and OrangeScape.

Notwithstanding the list above, I will insist on calling the tech  product business in India “fledgling” since the ecosystem to support software products is far from mature.

• Indian customers traditionally do not value software (even today) so the domestic market is largely one of technology enabled services. This makes every budding and true product entrepreneur look for markets abroad.
• Early stage investors and angels have eschewed product businesses which tend to need two or three years for revenues and profits to materialize.   This again steers entrepreneurs to service oriented business models.
• Those that do embark on the product development journey quickly discover the paucity of product management and product marketing skills in this country (long ranting previous post on this topic here).
• To compete with the global software majors and the start-ups bred in Boston, Silicon Valley and Israel, Indian product entrepreneurs have had to get very creative.  Some have imported product managers and others have cobbled together teams that work.  But the largest part of their expenses is in sales and marketing and as they grow their sales teams around the world, they quickly lose India’s low-cost advantage in product development.

In summary: Indian product companies suffer from the disadvantages of  limited funding sources, paucity of skills and a small domestic market.  Unless one or more of these changes, they are going to be hamstrung in their quest for growth. The good news is that the perseverance and “jugaad” skills of a few is already bearing fruit and their success will fix the financing and skill set problems in the medium to long term.

This brings me back to a discussion of the Nasscom event this past week.   The show had ostensibly garnered 500+ companies as attendees but as per my estimates there were fewer than 15 real product companies there and fewer than five that could tickle an investor’s fancy.   I know of several young start-ups that stayed away from the show as the costs of attending and exhibiting are prohibitive, especially since there are very few customer prospects at this show.  At best, it’s a product managers’ and developers’ meet and predictably, the sessions on product management, developer skills and thematic ones like UID and mobile computing were reportedly well received.  The rest of the show was a mix of sales pitches and underachievement.  The keynotes were good although the one I attended with Carol Bartz, the CEO of Yahoo, was damp and listless (thanks to unimaginative questions from the moderator).

Despite all of the above, I think Nasscom Product Conclave 2010 in Bangalore was a great success and kudos to the team that put it together.  My support stems from my yardstick for a good show: the networking opportunities it presents.  I spent two full days here but couldn’t attend a single session (except for the Carol Bartz keynote) since I was instead meeting with key contributors from every nook and cranny of the budding ecosystem: angel investors, my counterparts at other venture funds, product managers at large and small businesses, and some very promising entrepreneurs.

Some broad themes of interest that I heard across all these meetings: eCommerce, mobile commerce,  and cloud computing.   Nasscom PC brought together the best of the product ecosystem in India but almost all of the participants are sitting with feet dangling over the bleeding edge of entrepreneurship in this country.