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Democratization and Consumerization – Two trends that are catalyzing enterepreneurship in India

Democratization and Consumerization

I recently spent an afternoon speaking with senior executives at Pearson, the leading education software company. The key topic of discussion was “education of the future, and future of education”. The conversation was part of a much broader exercise by Pearson to understand what it might mean for them to stay in the leadership position and quite honestly, stay relevant in the education domain several years from now. The other vector of discussion was comparing and contrasting the future of education in developed markets like the US and emerging markets, like India. The brainstorm was fascinating. Even institutions like MIT, my alma mater, are thinking about how they stay relevant in the near, mid and long term. MIT President, Rafael Reif has recently set up a taskforce specifically to understand the future of college education. As I reflected on the overall technology trends up-ending the status quo, there were two themes that became clear to me — Democratization of everything and Consumerization of everything, along with the impact of those trends, especially in emerging economies like India. Let me explain what I mean.

Democratization, in its simplest form means the availability and accessibility of resources on a level playing field, irrespective of geographic or socio-economic disparity. Technology perhaps is the biggest enabler, equalizer and example of democratization. Internet as a whole, and availability of mobile technologies and devices, has led to the leapfrog of billions from the emerging world into the four C’s that were previously privilege of the developed world — online connectivity, communication, content and community. I would argue that technology, and especially wireless technology has not only leveled the playing field in emerging markets, it has actually given consumers in those markets an edge as mobile-first and in many cases, mobile-only economies. It’s not dissimilar to adults in the US finding their kids and grand kids more at ease with leading edge technologies, devices and applications than they themselves are.

Imagine if all one has known one’s entire life are mobile devices and wireless data consumption, with no idea of what landline infrastructure even means. Then you are more easily and naturally able to embrace and leverage the mobile revolution to your advantage, without the inertia of a heavier desktop/laptop way of life. Systems and applications are architected and built from the ground up for that mobile ecosystem. I would argue that mobile applications gain massive traction (both in terms of speed and scale) in places like India and China than they do in the US. China is at a different scale altogether, but India is catching up. Whatsapp, for example, while a US company, has been catapulted in large part by its adoption in India, and has changed the way people communicate, get entertained and conduct business. Front-end, technology led democratization instantiates itself through inexpensive smart phones and proliferation of mobile applications. Back-end cloud democratization has been driven in large part by the likes of Amazon’s AWS and Microsoft Azure that have leveled the playing field globally for software developers, enterprises and entrepreneurs. No longer does one have to sit in the heart of Silicon Valley to build and scale a global software product. You could do so sitting in your pajamas on a beach in NewZealand or a dhoti in Goa cranking out world-class code. Companies like Zoho, Inmobi and Freshworks are prime examples of massive global enterprise software companies that have been created out of India, leveraging that democratization. A relatively small company out of Mumbai (and part of the Iron Pillar portfolio), NowFloats (www.nowfloats.com), is a mobile-centric platform for bringing primarily offline retailers online, easily and effectively. They use a combination of the three key technologies — Artificial Intelligence (AI), Machine Learning (ML) and Natural Language Processing (NLP) to create extremely robust, vernacular agnostic, and user-friendly websites. As a result, they have experienced strong growth in India, but also been pulled overseas. In the new mobile-only or mobile-first world (or parts of the world), companies like NowFloats can leverage the democratization of the entire technology stack and be sitting in Hyderabad serving the needs of SMB customers in different parts of the world who want their consumers to interact in the local language. Similarly Servify, another portfolio company, is the leader in the device lifecycle management space, with a vast majority of mobile OEMs as customers. Servify has been able to leverage ML and cloud infrastructure to remotely manage, optimize and service devices. Their OEM customers are pulling them into Europe and the US, and the fact that they can use third party inexpensive cloud infrastructure is a key enabler. It’s not to say that companies like Servify and NowFloats don’t have strong IP. They do, but they can focus on building IP within their application and personalization layers, rather than hardcore infrastructure (compute, databases, storage, connectivity).

Accessibility is yet another facet of democratization, not just around technology, but around product, services and expertise. Education and Healthcare are prime examples of just this type of flattening of the access pyramid. Remote access to education (either through applications, individual instructors or crowd sourced) and healthcare (again through consumers/crowd, physicians and specialists) is now commonplace, becoming more ubiquitous and has been life-changing in many parts of the emerging world. There is a long way to go, but the process has started.

Based on this theme of democratization, consumers have unprecedented access and entrepreneurs have technology resources at their fingertips, that make global products more competitive. I am not saying that it’s a complete substitute for being in Silicon Valley, but for a segment like enterprise software, entrepreneurs in emerging markets like India and Southeast Asia will have an edge. They will be able to leverage democratized technology assets and a lower cost base of smart, driven, well educated workforce to compete head on with up starts in Silicon Valley and elsewhere. I have been saying for a while that SV entrepreneurs often have little clue of what’s happening in other parts of the world, especially in Asia, with respect to technology entrepreneurship. And they will be blindsided. In India, for example, not only can companies and products be built for a fraction of what it might cost in San Francisco, in many cases, entrepreneurs have access to a sizable local market to hone/refine their product before they take it global. China has clearly demonstrated the ability to create massive technology companies (in large part due to an artificial non-competitive environment), and there will be a similar wave in India and South East Asia — not because of government intervention and subsidies, but due to the sheer intellectual capital, entrepreneurial culture, aspirational young population and sizable local markets. While large US companies like Amazon, Netflix, Google and Apple see India as a clear engine for growth, in so doing these companies have also helped create a wave of entrepreneurial energy activity around them. India is a roughly $2.5 Trillion economy, and has a clear path to $5 Trillion in the not so distant future with a steady 7–8% annual growth. Let me pause and let that sink in.

Democratization, especially in the realm of technology, is and will be a catalyst bringing entrepreneurs from emerging economies to the forefront. I would not be surprised at all if massive companies are created over the coming ten to twenty years in places like India, Indonesia and eventually Africa.

The other trend that seems to have taken hold in the developed world, and will be pervasive throughout the emerging world, is one of technology-led consumerization. What is consumerization you might ask — it is a technology enabled, consumer-centric view of the world where the individual customer is in charge of one’s own analysis and remedy. As I mentioned earlier, health and education are the two early verticals where consumerization is taking hold.

Let’s take a look at healthcare first. This is a sector of particular interest to Iron Pillar. There are technology tools available today that empower the consumer to be able to monitor, manage and control his/her health. Proliferation of portable medical devices, wearables and virtually thousands of mobile apps is enabling real-time measurement and impact on one’s health and wellness, both physical and emotional. Healthcare is going through a transition from a reactive (seek help once symptoms arise) phase to a pre-emptive (prevent a chronic condition from occurring) and eventually highly personalized, based on one’s own genomic and physiological data. One can leverage data from devices and applications to detect/diagnose a condition and take necessary pre-emptive actions either through remote connection with a physician or specialist online or through other intervention one can research online. Now clearly, I am not recommending that the consumer becomes the specialist and starts performing surgery on oneself. But, one can be much more in control of one’s own destiny thanks to the real time measurements that are now quite literally in the palm of our hands. Additionally, in a market like India the wireless leapfrog has been a game changer for the consumer. With phones getting smarter and more affordable, mobile devices have become a true consumerization catalyst. Portable, mobile-device attached diagnostic tools are becoming more pervasive, whether it’s an ECG, eye exam, activity, sleep, diet, oxygenation, pulse or other vitals or activity levels. It’s not too far into the future that based on one’s real time readings via their smart phone, an AI and/or an expert will either push a notification or indicate needed actions. In a place like India where the doctor-patient ratio in extremely poor, this wave of consumerization is quite literally a life saver.

At Iron Pillar, we are taking a very comprehensive look at the overall healthcare market, especially where mobility and portability can help with efficiency, efficacy and affordability.

Similarly, going back to my original comment in the Pearson conversation context — Education of the future and future of education is going to be very different than the status quo. With the pace of innovation continuing to accelerate, typical college education of the future will have to change. Else, students ending with a degree in computer science after four years will realize that the entire application development ecosystem has completely changed, and their four-year degree is or near obsolete. Now, that is admittedly an extreme scenario. But the point is that one will simply not be able to rely on a traditional education to have a productive lasting career. There will have to be continual upgrade of one’s capabilities. And for that, the individual will not necessarily go to a brick and mortar institution, but rather conduct regular gap analyses of his/her credentials and use online and mobile platforms to continuously learn and upgrade one’s skillset. The software upgrade analogy will have to apply to individuals, almost irrespective of a particular field of employment. That continuous learning will go from a “nice to have” differentiator to a “must-have” hygiene factor. The emerging markets have a second order challenge (within which lies a massive opportunity). In a country like India, with a young population (the average age is 23), there are roughly ten-twelve million people entering the work force every year. The economy has to grow and create jobs simply to keep the unemployment rate under control. India will have to morph from a largely agrarian and services based economy to a more product and manufacturing one as the population grows and young people migrate from rural to urban areas. Vast swaths of the population will need tools to create an on-ramp to a productive work force and over time, stay relevant. Technology will provide the platform, but the young (and aging) population will have to take the initiative and avoid obsolescence and being leapfrogged. The old saying “God helps those who help themselves” is the essence of consumerization, and one that is going to be even more relevant in the future.

Democratization and consumerization are waves that are leveling the playing field across the globe, especially for technology entrepreneurs and consumers in emerging markets. A market like India is poised to turn those movements to its advantage not only to improve the quality of life for hundreds of millions of people, but in so doing, provide an opportunity for entrepreneurs to create sizable, lasting companies. This will happen in the enterprise software domain where they can leverage democratization along with lower cost, high quality talent. It is bound to happen in consumer centric applications, given the massive and growing local markets, pent up demand and rising middle class. Iron Pillar is bullish on the positive compound effect that these two waves will create in India. The rest of the world better wake up and take notice.

About Mohanjit Jolly

Mohanjit Jolly

Partner at Iron Pillar bringing to the table more than 2 decades of investing and operation experience.