In 1999, at the peak of the dot-com bubble in the United States, a group of people in China led by a former English-language teacher started an internet business. In 2000, their first investor came on board — the American giant Goldman Sachs. Later, several other funds joined in, including Softbank of Japan, Fidelity, Yahoo, and Venture TDF from the United States.
This company, Alibaba, now leads the Chinese internet armada as it conquers global digital frontiers. Its founder, a former teacher of English named Jack Ma, is one of the tallest and most influential figures in online commerce today. Stop for a moment and ponder this: what is Jack Ma's shareholding in Alibaba? A shade below 8%. And who are the biggest two shareholders in Alibaba? Softbank and Yahoo, which collectively own close to 50% of the company.
Flipkart and OIa, conceived by Indian entrepreneurial minds and backed by foreign funders, are as much India's pride as are the IIMs or Delhi Metro or Infosys or HDFC Bank.
Yet, nobody accuses Alibaba of being a foreign-owned company or foreign-funded company. Alibaba is celebrated by the Chinese and by the entire world for bringing in a new paradigm in global e-commerce. It is feted as a true-blue Chinese brand.
A spate of editorials and opinion pieces by several industry pundits have attempted to cast Flipkart and Ola as foreign-funded and foreign money-backed companies, implying that both these home-grown companies are undeserving of any support as Indian brands. These commentaries betray an acute lack of knowledge of the Indian startup ecosystem or the growth of consumer internet in India, leave alone the history of other, more established Indian institutions.
Let us examine this contention. Delhi Metro, for example, is one of the modern Indian institutions in which Indians take a great amount of pride. It is talked of as an example of Indian engineering acumen, great project management skills, and helmed by an Indian engineer, the indefatigable Elattuvalapil Sreedharan. All of this is true. Yet, Delhi Metro would have remained on the drawing board had there not been an influx of much-needed foreign funds to make it a reality. In fact, 60% of the project cost of the Phase 1 of Delhi Metro Rail Corporation was realised as a soft loan from the Government of Japan, which continued to fund Phase 2 and Phase 3 as well. These are well known facts. However, does anybody talk about Delhi Metro being foreign-funded or backed.
Consider another Indian institution — the venerated Indian Institute of Management. The IIMs became a reality thanks to American counsel and financial aid. It was Professor George Robbins of the University of California who recommended setting up IIMs in India. IIM-Ahmedabad, the first of these institutions, was set up with the help of Harvard Business School. IIM-Calcutta was set up in collaboration with the MIT Sloan School of Management. Were they foreign-backed? Yes. Are they undeniably Indian institutions? Yes.
If we go to the private sector, some of India's biggest brands have similar stories. The largest shareholders of an Infosys or HDFC bank are not the original Indian promoters but foreign funds and foreign institutions. Have Infosys and HDFC bank become foreign-backed and owned because of this fact.
Going by this premise, it is abundantly clear that companies such as Flipkart and OIa, conceived by Indian entrepreneurial minds and backed by foreign funders, are as much India's pride as are the IIMs or Delhi Metro or Infosys or HDFC Bank.
The blinkered opinion of the pundits [is] that truly home-grown Indian entrepreneurs are those that reject foreign money and foreign expertise. This is far from the truth.
When Flipkart's Sachin Bansal and Ola's Bhavish Aggarwal recently spoke up at the Carnegie Global Summit in Bengaluru about the need to safeguard the interests of India first & India centred businesses, they were not demanding a return to the much-reviled "license raj" or even a China-inspired model of protectionism as some commentators have inferred. On the other hand, theirs was a plea for a level playing field, to give Indian startups a fighting chance against the deep war-chests of multinationals that can potentially outmuscle Indian companies and manipulate market conditions by dumping capital.
However, the blinkered opinion of the pundits who took umbrage at the statements of these entrepreneurs suggests that truly home-grown Indian entrepreneurs are those that reject foreign money and foreign expertise as well. This is far from the truth.
Another oft-repeated but weak argument is about Flipkart, Ola and Paytm being copycat businesses. The votaries of this line of thought could do well to revisit their sources of fact. Google was by no means the first but the 21st search engine in the world. Neither was Facebook the first social networking site. Amazon, one of the oldest companies in the business, was neither the first online retailer nor the first online bookseller. The first online bookseller started two years before Amazon and it had a most apt name — Books.com. By that logic, answer this: Does it make Google, Amazon and Facebook copycat businesses?
The IITs, which have produced both Indian entrepreneurs and engineers who helm some of the top technology companies in the world, came about after the Sarkar Committee recommended in 1945 the establishment of higher technical institutes on the lines of MIT in USA. Does it make the IITs copycat institutes? Similarly, ISRO was inspired by the establishment and success of NASA and the Soviet space agency.
Flipkart is not India's first e-commerce site, nor is Ola the first taxi aggregator in India. These companies are number one... because of the brilliant entrepreneurs at the helm.
Flipkart is not India's first e-commerce site, nor is Ola the first taxi aggregator in India. Neither is Paytm the first online wallet. These companies are number one in their respective fields because of the brilliant entrepreneurs at the helm. They have innovated for the customer. They have built great businesses that power the industry forward, create competitive differentiation, and generate thousands of high-paying jobs for highly skilled people.
Today, if millions of college kids across India dream not about joining a multinational company but of starting up their own, it is because of the beacon light of success that Flipkart, Ola and Paytm have shone upon the road.
Let's give these Indian innovators their due. India needs hundreds of consumer tech brands that succeed in India and then go out to conquer the world. There's plenty of catching up to do.
Ola And Flipkart Are Not 'Less Indian' Just Because They Have Foreign Funding