The Indian market came to Houzz, which is based in Palo Alto, California and is an online home renovation and design giant, and the company didn’t start out with a plan to enter the Indian market. A million customers and more than 60,000 service providers in India had signed up to use the site, realized the site, which draws some 40 million visitors each month. Houzz launched a custom site for the Indian market in January of this year responding to the strong interest.
“These homeowners and professionals expressed strong interest in helping us localize Houzz for India, and we’re excited to work with them to further tailor the experience,” says Adi Tatarko, CEO and co-founder of Houzz.
Reflecting the growing importance of the South Asian country of 1.3 billion people as a strong consumer market in its own right, Houzz is one of several companies on this year’s Disruptor list that is focusing on India. Reaching 7.1 percent GDP growth last year, India has a fast-growing economy for a large country. A large middle class with disposable income has emerged although a majority of Indians remains poor. 300 million is the rough estimate of the size of the new Indian middle class. And attention of the domestic start-ups as well as those of the U.S. Internet giants has bene drawn to this number.
The Indian market has bene tackled by a number of big players. Flipkart, an Indian start-up that raised $1.4 billion in its last venture round in April, is the current rival of online retailer Amazon in the Indian market. And after giving up a solo bid in China and merging its assets there with rival Didi Chuxing, ride-hailing service Uber is chasing India’s Ola.
“The Indian market is far more open than China,” says Arun Natarajan, CEO of Chennai-based Venture Intelligence, which tracks private equity and venture investment in the Indian market. “Companies from the U.S. and elsewhere don’t have to do joint ventures to come in here.”
It the Indian market is both attractive and treacherous for foreign companies, even given its accessibility. “Because India is a very open market, it’s cutthroat,” says Abhijit “Bobby” Bose, co-founder and CEO of Indian mobile payments provider Ezetap, which turns smartphones into point-of-sale devices. “There are a million reasons you may not succeed.”
It will be disappointment for venture capitalists expecting a quick return on investment in India, he says. “It will take five to seven years.”
Adjusting to the market is essential for success, agree those who enter the Indian market. different languages in addition to English, various degrees of bureaucracy and wildly different regulations can be present in the Indian states. For slower internet speeds in some parts of India, web applications need to be optimized.
India is the second-largest English-language market after the United States among 168 countries for Udacity, an online learning company based in Mountain View, California, was founded by Stanford University artificial intelligence professor Sebastian Thrun, who created Google’s autonomous vehicle program, and which offers technical courses to 4 million students. To have a local presence and better support its students, Udacity opened offices in New Delhi and Bangalore, India.
“Our Android program is co-created with Google,” says Ishan Gupta, managing director of Udacity India. He says that it was important to understand the motivations of Indian students even though the company didn’t change the content of its courses for India. “What is it people look for in education?” asked Gupta. “In the U.S. it might be learning, then jobs. In India it’s mostly jobs.” And pricing had to be different in a market where incomes are far lower even though the Indian economy is growing fast.
And words can mean different things and Houzz had to learn that when it comes to home decorating. “Beach” style in the United States is “coastal” in India. “Traditional” furniture is in traditional Indian style and is very different from the American version.
But the size of the consumer market and its potential were the factors that attracted both Houzz and Udacity to India. They have been able to raise all the money they want in the U.S. market being companies with billion-dollar valuations. In four venture capital rounds, Udacity has raised $163 million. Ezetap’s founders have also raised their funding from U.S.-based VCs and have moved to India to launch their company after careers in the United States.
(Adapted from CNBC)