Why are Indian Startups Failing Miserably? : Business lessons from Indian start up Crash EXPLAINED
Executive Summary
A Think School business case study from July 2022 asking why Indian startups were failing, using the dot-com bubble as the template. The presenter describes four types of dot-com failures (no product-market fit, overspending on unviable channels, regulatory shocks, being too early) and maps each to Indian examples, then gives three tests for startup worth. The sponsor is named as Deserve in the caption. The caption text covers the whole video but stops when he begins the study materials and assignment, so that closing part is not covered. His views on quick commerce, Zomato and Swiggy are opinions made in 2022 and are not investment advice or independently checked. Captions are automatic with errors. Topics are untimed; metadata follows YouTube. Source: https://youtubetotranscript.com/transcript?v=k-51exmR9R4
Key Takeaways
The 2022 crash
The presenter says Indian startups raised 41.4 billion dollars and made 42 unicorns in 2021, then 2022 brought layoffs of over 9,000 to 11,000 people at firms such as Vedantu, Cars24, Ola, Unacademy, Meesho and Byju's units.
Use the past
He argues that to predict the future you study a similar earlier bubble, the dot-com boom of the 1990s, when even a website could raise about a million dollars.
Failure type one: no edge
He says Pets.com sold little that nearby stores did not, and warns in his own opinion that quick commerce resembles it because local shops deliver cheaply in India.
Failure type two: wasted spend
He cites a wedding invitation site that spent 4 million dollars on a Super Bowl ad with less revenue, comparing it to IPL ads costing more than a firm's revenue.
Failure type three: regulation
He says Napster was shut by piracy suits while Spotify later succeeded, and warns that rules and the ONDC network could hurt Zomato and Swiggy.
Failure type four: too early
He says Z.com was a 1990s video site held back by slow broadband and codecs, while YouTube succeeded two years after it closed.
Three tests of worth
He lists barrier to entry, overlap with the national agenda such as hydrogen, EVs and solar, and customer lifetime value versus acquisition cost, using Skillshare and Byju's numbers.
The Conversation Breakdown
The 2022 crash
⏱ Untimed topicThe presenter says Indian startups raised 41.4 billion dollars and made 42 unicorns in 2021, then 2022 brought layoffs of over 9,000 to 11,000 people at firms such as Vedantu, Cars24, Ola, Unacademy, Meesho and Byju's units.
Use the past
⏱ Untimed topicHe argues that to predict the future you study a similar earlier bubble, the dot-com boom of the 1990s, when even a website could raise about a million dollars.
Failure type one: no edge
⏱ Untimed topicHe says Pets.com sold little that nearby stores did not, and warns in his own opinion that quick commerce resembles it because local shops deliver cheaply in India.
Failure type two: wasted spend
⏱ Untimed topicHe cites a wedding invitation site that spent 4 million dollars on a Super Bowl ad with less revenue, comparing it to IPL ads costing more than a firm's revenue.
Failure type three: regulation
⏱ Untimed topicHe says Napster was shut by piracy suits while Spotify later succeeded, and warns that rules and the ONDC network could hurt Zomato and Swiggy.
Failure type four: too early
⏱ Untimed topicHe says Z.com was a 1990s video site held back by slow broadband and codecs, while YouTube succeeded two years after it closed.
Three tests of worth
⏱ Untimed topicHe lists barrier to entry, overlap with the national agenda such as hydrogen, EVs and solar, and customer lifetime value versus acquisition cost, using Skillshare and Byju's numbers.
Core Frameworks & Ideas
Barrier to entry - presenter's test
Ask what makes it harder for rivals to catch up, such as trust or data.
National agenda overlap - presenter's test
Sectors the government backs, like EVs, may survive on policy support.
LTV versus CAC - presenter's ratio
Compare a customer's lifetime revenue with the cost of acquiring them.
Actionable Next Steps
- ✓Calculate your customer acquisition cost and lifetime value for one product.
- ✓List what stops a rival from copying your edge in six months.
- ✓Check whether a rule change could hit your model the way it hit Napster.
- ✓Treat his stock and company opinions as one view and check them against current filings.
Notable Quotes
“if you want to understand the future go back and study the past”
“this ratio of average customer lifetime value versus customer acquisition cost is very very important”
“they are losing seven thousand eight forty rupees with each passing customer”
The One Thing to Remember
Study the last bubble: companies without an edge, unviable spend, regulatory exposure or bad timing fail first.