Tapping Into the Promise of Middle India
Large-scale disasters or pandemics give rise to unlikely outcomes. And even engender positive spinoffs. One of the offshoots was this book, sparked off by conversations between Bala Srinivasa and T.N. Hari, both deeply attuned to the entrepreneurial terrain in India, as investors, advisors, evangelists and startup veterans.
While the country faced sudden disruptions – the large-scale uprooting of migrant workers, the interruption of train services, the closure of airports and restaurants – they couldn’t help but observe the stirring of other forces. Of people who had been compelled to return to small towns, or of those who had never left for the metros to begin with. Of the manner in which big city dreams were no longer confined to big cities, with many in the tier-2, tier-3 cities or villages, seizing images flickering across their smartphones. Not merely to entertain themselves, or to buy products and services. But to reimagine their worlds and remake their lives. As the authors put it, “[this] book is a story of India’s start-ups, audacious founders, technology-led solutions and a new breed of Middle India-focused entrepreneurs who are reshaping some of the largest markets in the country.”
The Size of Middle India
Despite the fizzy outlook generated by startups that largely address the uber-rich and the upper-middle segments – like Nykaa, Freshworks, Zomato – Srinivasa and Hari believe that the country’s lurking energy and talent can truly be unleashed by those that target Middle India: the approximately 120 million households that earn between $ 4000 to $ 25,000 (Rs 3 lakh to Rs 20 lakh) annually. The members of these families add up to a sizable proportion of the population: about 500 million among the surging 1.35 billion that constitute the latest census.
Rapid Digitization of Kiranas
Such a huge slice of the demographic is not easy to penetrate. The pandemic however propelled the rapid digitization of sectors that had so far resisted behavioral changes. For instance, many kirana stores had hitherto rebuffed attempts to digitize their somewhat haphazard and torturously old-fangled processes. But Covid-19 imposed supply-chain constraints that compelled many to switch from clunky wholesalers to digital alternatives. Very soon, Unilever’s “Shikhar” app, targeted at kiranas, registered a staggering 600% growth. Others like Metro Cash and Carry also reported huge upswings during this time.
When the Seniors Sign On
Another target segment that had been sluggish in its digital adoption moved with remarkable agility to a screen-dominated world: senior citizens. Now accessing phones for a host of services – groceries, medical advice, banking, entertainment, connecting with family – the silvered population kickstarted new markets and opportunities. But these were not even the most momentous changes. The big-ticket shift involved the digital transfer of financial assistance – $ 10 Bn (Rs 68,000 crores) – to 420 million Indians through Aadhar-linked bank accounts.
Creation of A Payments Infrastructure
But one of the massive transformations, possibly at a scale not visible in most other parts of the globe, was the build-out of a robust payment infrastructure via mobiles. The UPI transfers through Googlepay, Phonepe or PayTm zipped across social classes, averting clunky trips to ATMs. This in turn, spurred m-commerce products and services that shattered linguistic and regional boundaries.
Imbuing bright young minds across the country with tools helped forge solutions that well-heeled urban-dwellers could not conceive of. As Bala and Hari emphasize, many of these ideas could not have originated without the sudden proliferation of smartphones and the frenetic spread of Jio across the nation.
Startups That Address Middle-Income Problems
Some innovations inspired by these changes included Jar, a Fintech app that encourages small savings by cash-strapped millennials. Founded by Nishchay AG and Misbah Ashraf, Jar was downloaded by 4.5 million Indians within eight months of its launch. Other apps or services specifically catered to issues faced by folks in the hinterlands. RailYatri transmitted updated information on train arrivals, to prevent small business owners from frittering valuable time at Railway Stations, for trains that did not stick to printed timetables. Lokal was created to forge hyperlocal news – the kind of information that matters at village and district levels. Animall connected cattle sellers with buyers, while also offering add-on services like vets and other dairy experts.
Razorpay, founded by Harshil Mathur and Shashank Kumar in 2014, created a payment gateway for small and medium businesses to send and receive payments at a time when this wasn’t easy. They conducted events at smaller cities like Indore, with customers demonstrating the solution to peers. Moreover, they ensured that the product was extremely easy to integrate, obviating the need for any technical wizardry from customers.
The authors emphasize that such seamless onboarding is critical: “adoption in Middle India requires ensuring that the customer does not drop off due to complexity of the product.” But after establishing success with one product, growth for a startup often requires expanding into related product or service areas. In the case of Razorpay, they needed to branch out into “neo-banking” and lending services among other offerings.
Shashank Kumar, the son of a farmer in Bihar and the founder of Dehaat, witnessed the difficulties faced by cultivators. He watched his own father ride 40 km on a cycle every day to save on transport costs. Kumar himself was fortunate to make it to IIT Delhi, and then to a consulting company. But he always had a deep urge to found his own company. Why not a solution for problems he already understood, and for folks who were underserved by technologists and experts?
The resulting enterprise offered a complete suite of services to farmers and micro-entrepreneurs, to increase crop yields, predict weather patterns, optimize fertilizer use and preserve soil. In short, their solutions helped enhance farmer incomes, optimize distribution and fostered micro-entrepreneurs in regions that hadn’t yet benefited from new-age energies. So far, the organization has touched 1.4 million farmers across 12 states, with plans to grow into other regions.
Another success story was Meesho, started by Vidit Aatrey and Sanjeev Barnwal. The founders realized that many micro-entrepreneurs in Middle India were inadequately serviced by platforms like Amazon and Flipkart. Besides, small scale operations were often starved of capital. They didn’t have the resources to rapidly scale or manage logistics. And yet, there was a lot of energy and talent that was wasted in “time-pass activities” instead of being harnessed into more productive avenues.
Meesho addressed many of these pain points. For one thing, they eliminated the need for “brands”, relying instead on trust forged inside existing communities. Like the family and friends circles of small women boutique owners who already possessed loyal clientele. And who could leverage the platform to sell their wares to more distant consumers.
Moreover, Meesho heeded details. Like the fact that many in Middle India were hooked to WhatsApp Stories (the Status on WhatsApp, for those who are unfamiliar with this) rather than to Instagram Stories or Facebook reels. Ensuring their platform could seamlessly leverage such differences led to the runaway growth of the startup, which currently manages 10 million micro-entrepreneurs.
Understanding the Makeup
In general, the authors believe that targeting Middle India requires a distinct approach. Gleaning lessons from startups that have succeeded in this space, and from the failures of those who may not have grasped the nuances, they offer significant pointers. Including the need to segment the market carefully, and finetune offerings based on such divisions. Or the fact that such consumers are, in general, more risk averse. Or that you should keep customer acquisition costs low.
Reading Winning Middle India will inject potential founders and investors with a buoyancy about the nation’s prospects. Let’s hope, for the sake of millions, that their optimism is substantiated by many more triumphs.
References:
Bala Srinivasa and T.N. Hari, Winning Middle India: The Story of India’s New Age Entrepreneurs, Penguin Random House India, 2022