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Kae Konnect: Future of Gaming

Posted on by Kae Team

As part of our Kae Konnect Webinar Series, we hosted Nitish Mittersain, Founder & MD of Nazara, which today is one of the leading gaming companies in India with operations across 60 countries. During the one-hour fireside chat, we deep-dived into the future of gaming and how it will shape up in the next 10 years. Nitish also discussed potential opportunities that are waiting to be unlocked along with some of his key learnings during his journey with Nazara.

If you’d like to see the video for the event, please use the link: https://youtu.be/skIYCF2jbi0

Following were some of the key highlights from the discussion:

Future of Nazara and Covid-19 Impact:

While some of the verticals were impacted negatively due to Covid-19 (eg. fantasy sports etc.), edutainment has done very well for Nazara. Kiddopia (an app focused on kids’ education and entertainment) grew its revenue by 5x during this period. Companies such as Sportskeeda pivoted to double down on e-sports and become the go-to destination for esports content with ~20 Mn users a month.

In the immediate future, Nazara plans to focus on three spaces – e-sports, early learning, and sports simulation – via its companies Nodwin Gaming, Kiddopia and NextWave (owns IPs such as WCC).

Trends in Gaming:

Nitish believes that the intersection of VR and gaming is very interesting – this space is nascent right now but he believes that we will move from 20-minute sessions to a world where it will be very difficult to get out of a VR session. Another key trend is that games will evolve into social platforms. We are already seeing certain trends such as songs being released and concerts being hosted within Fortnite. Gaming will move beyond just the gaming experience per se and deliver more value in terms of engagement and social experiences. A third big trend, Nitish predicts is the gamification of activities in our day-to-day lives. Companies such as Zwift allow users to cycle at home, compete with friends and enjoy a community of enthusiasts – therefore making the entire experience more gamified and engaging.

E-sports in India:

Mobile has been a great leveller for esports. Earlier e-sports was focused on PC and Indian gamers lacked exposure to certain gaming platforms. However today because of games such as PubG, gamers have more avenues to play competitive games and are now able to compete on a global scale. Therefore mobile is an accelerator for esports and strong growth is expected from India and other continents such as Africa. In the last year or so, we’ve seen 100s of live streamers acquire 1Mn subscribers on Youtube – another sign of the growing e-sports ecosystem.

Real Money Gaming in India:

Two success stories have played out in this space i.e. fantasy sports and rummy. Nitish believes there is still more headroom for growth. Companies with differentiated core products can continue to build in this market however founders need to be mindful of regulatory risk in this space.

Monetization of Indian Gamer:

The majority of gaming revenue in India is via real money gaming today (fantasy, card games such as poker rummy, etc.) while the balance revenue is from in-app purchases and advertisements. However, Nitish is seeing green shoots in the second category where Indian users are willing to pay for games. Nitish believes a growth of 10-20x can be expected over the next 2-3 years in in-app purchases.

Being mobile gamers first, most users in India are casual gamers. However, as these users move through their gamer lifecycle, they will eventually move from hyper-casual to casual to mid-core gaming. Indians today have access to some of the best gaming content across the globe, therefore as an Indian gaming studio, you need to build games that are at par with global competitors to pique an Indian user’s interest. Localized content and IP may help grab initial eyeballs however developers need to build strong game mechanics to ensure engagement, retention and monetization. We are starting to see successes such as Ludo King which has strong retention and virality – taking the game to over 50 Mn daily active users.

Metrics in Gaming:

Founders should avoid vanity metrics such as downloads (as users may install the game but delete the game eventually). Companies should focus on metrics such as retention and time spent, as that will determine ARPU from the user. The other key metric founders should focus on is virality. In markets such as India, the propensity for a user to pay is lower, whereas in markets such as the US, users have a higher propensity to pay (therefore the LTV/CAC ratio would be better). To help distribution, game studios should bake virality into their products when building games for India.

Advice to Founders: 

“Float like a butterfly, sting like a bee” – Nitish quotes Muhammad Ali and advises founder to be light-weighted, stay asset-light, debt-free and build strong and clean corporate governance. Nitish has four independent directors and believes that they bring different perspectives and insights to the table and show founders their true picture. Bringing in an independent director early on in a company can add tremendous value to the team.

At Kae, we resonate with Nitish’s excitement in the gaming space and believe multiple massive opportunities are waiting to be unlocked.

If you are building something in gaming, we would love to hear from you. You can drop an email at sarthak@kae-capital.com to discuss your venture.

Changing Nature of B2B Transactions: The Rise of B2B Marketplaces

Posted on by Gaurav Chaturvedi

The history of e-commerce is intertwined with the history and boom of online marketplaces. Using technology to connect buyers with sellers and efficiently facilitate transactions, these online marketplaces have overcome the limitations of an offline market. In an offline world, transactions are limited by geographical reach/information asymmetry and are facilitated by intermediaries, online marketplaces however opens a broader market for the buyers and sellers to meet and transact. Marketplaces also have been a go-to model for tech entrepreneurs and investors because if executed well, they have inherent structural advantages to create a large scale and unlock huge values. Some of the most successful innovative businesses of the last few decades have been online marketplaces.

Consumer marketplaces (B2C) have been around for quite some time and have gone through multiple evolutions of business models, starting from listing-focused classifieds, they evolved into transactional ‘open’ and ‘managed’ marketplaces. While we have large horizontal marketplaces like amazon where you can find anything, we also have vertical marketplaces for a specific categories like fashion, furniture, makeup, etc. Now as a consumer, we have an efficient way of buying almost everything online.

While B2C marketplaces have evolved, innovated, and have become ubiquitous in a consumer’s life, the same can’t be said about B2B. In most economies, B2B transactions usually gross up much more than B2C as every supply chain has multiple businesses in between a producer and a consumer. Unlike B2C where the transactions are usually for personal consumptions, here the purchase is typically part of a chain and the cost of delay or quality failure can be very high. Most industries have complex supply chains, low transparencies, and rely on inefficient intermediaries for trust. B2B transactions happen in different value chains/supply lanes wherein the dynamics and participants don’t usually overlap. Inefficiencies in the value chains make sure that there is a very strong case for efficient B2B marketplaces.

The Indian Landscape

India presents an even more interesting landscape. We are an economy of small businesses. 99% of Indian businesses are what is classified as a ‘micro’ business. These firms are usually ‘family’ or ‘single person’ owned, have very few employees, and turnovers in the range of a few crores of rupees per annum. Most of these micro-businesses have poor margins/efficiencies and also have low levels of technology adoption. While these small businesses are millions in number, they contribute to about 30% of the Indian GDP resulting in smaller throughput. Being largely a fragmented market dotted with millions of suppliers and buyers transacting largely in localized markets, India represents a strong case for B2B marketplaces to disrupt the traditional procurement models. Recent changes like GST, digital penetration, and a generational shift can prove to be tailwinds for this.

All market(place)s are not equal

B2B marketplaces have not always worked out. For every successful one, there are numerous more that have faltered in the long run. There can be a lot of reasons for failure like a bad economic model, poor execution, lack of investment and most importantly choosing the wrong market. There are some markets where an online marketplace (or intermediary) creates value while somewhere it does not.

Before jumping in and start building a digital B2B business, it is better to look through some factors that affect the success of one. There are numerous resources to read about it but Bill Gurley’s 2012 article “All markets are not created equal” is still probably the best starting point. There are quite a few things to think through before building a marketplace, we have listed down some of the important ones for a B2B marketplace

  1. Use of technology- First and foremost it is important to understand, what is the value technology can bring to this supply chain: Is it discovery? (increasing the number of buyers and sellers), is it user experience? (better workflows) or efficiency? (intelligent matchmaking). Also, marketplaces tend to be side oriented i.e. will solve the key problem(s) on either one of supply or demand, think through where is the bigger pain point to be solved using technology.

  2. Fragmentation- This is one of the most important factors to consider before jumping in with a marketplace. The biggest problem that a marketplace solves is discovery and transaction facilitation (by inducing trust), this is what creates value for the intermediary. In the case of supply and demand concentration, this value tends to diminish very quickly. All other things remaining equal, High fragmentation in buyers and suppliers is positive for the marketplace. High concentration on both sides, practically renders a marketplace (or intermediary) redundant. If you have to look at a market with a concentration on one side, it is usually better to build in markets where supply is fragmented.

  3. Throughput- It is important to look at what is going to be the Average order value in the supply chain and also what is the frequency of transactions. A high AOV enables the marketplace to grow faster. A high-frequency marketplace tends to be stickier with high recall value and so (generally) higher cost of shifting. Ultimately, the average transaction value, frequency, and margins (take rate) define the long-term economic viability of the marketplace. It’s important to remember that in B2B, more often than not, margins are lower than in B2C, on a per-transaction basis the unit economics (most of the time) makes sense if the average transaction value is high.

  4. Value chain margins- A key difference between consumer and B2B markets is that the inherent motivation for a business to transact is economic rather than consumption, this makes the value extraction by the marketplace to be mostly dependent on (and capped to) the overall value chain margins. Given that one of the key lures for the participants (supply and demand) is going to be an economic advantage, the take rate will be a smaller piece of the value chain margin. Interestingly, there are cases where the value chain margin is not rigid but expandable, in cases where capacity utilization/inventory liquidation/ ‘sweating the asset’ is important, dynamic pricing can unlock better margins.

  5. Commodity v/s specialized product- An online marketplace usually brings in value of discovery and trust between the transacting parties. In the case of a commoditized or branded product, trust is not that big an issue, in such cases, generally, margins tend to be much lower than specialized/custom products/services.

  6. Direct v/s Indirect- Whether the underlying product/service is direct (eg-raw material) or indirect (eg stationary) expense, defines the underlying motivation for the customer. For a direct spend, price becomes a top priority along with the expectation of zero failure rate in fulfilment. Inertia to change vendors is high in this case which results in lower take rates and longer sales cycles. If successfully executed, direct spending provides a recurring, predictable, and sticky business to a marketplace. For indirect spends, take rates can be higher but the barrier to replacement for the marketplace is comparatively lower.

  7. Monetization and business model- Depending on the value chain margins and overall marketplace dynamics, the business models can go from an open marketplace to a managed marketplace. Similarly, the monetization at scale can be through transaction take rate, subscriptions/advertising, or ancillary services (logistics, credit).

  8. Network effects/Moats- Typically open marketplaces have strong network effects and moats. For managed marketplaces specific workflows, data, and allied services can help create effective structural moats.

 

To summarize, it’s critical to choose the right market and business model before diving in to build a B2B marketplace. The marketplace for a custom/specialized product in a highly fragmented market has a better chance of success compared to a marketplace in a highly concentrated market with a standard product. Also in B2B specifically, it’s critical to think through how you can acquire, onboard, and manage the customers and suppliers efficiently. Because of higher-order values and the criticality of transactions, the zero human touch model is difficult to succeed (at least in the initial days). Business workflows, decision-making, and payment terms are also not simple and straightforward, one of the big challenges that the B2B marketplaces have to navigate (which their consumer siblings don’t) is managing collections, working capital, and credit. It is critical to keep it on a tight leash and put-in processes to skip the downward spiral of the cash trap.

We at Kae Capital continue to be very bullish on B2B commerce and are early investors in Zetwerk, 1K, and a vertical B2B e-commerce marketplace (to be announced soon). If you are building something in B2B, give us a shout at gaurav@kae-capital.com

Event Takeaway: Marketing Growth Hacks

Posted on by Kinjal Gosar

As part of the Kae Webinar Series, Kae Capital organized a webinar with Praveen Rajaretnam on the topic “Marketing Growth Hacks (B2B & B2C)”. Praveen was the Co-founder & CMO at Wooplr and then Head of Product Marketing at InMobi. He currently works as Sr. Manager, Product Marketing at Freshdesk.

Praveen shared his playbook with our portfolio which you can find here

Following are some of the key takeaways from the webinar:

1. The motto of every advertiser – To understand and be understood.

An ad should reflect the fact that you understand your audience and also it should clearly convey your message. This can be achieved by keeping four things in mind – having a simple layout, a short and concise copy, legible text and a clear CTA (Call to action).

2. Data Speaks!

While coming up with ideas for ads it is important to keep your perception of the brand separate from that of the audience. Also, following current marketing and advertising trends specific to your sector without understanding what your audience really wants would do no good for your brand. Relevance is key.

3. Sell less – This is how your brand will stand out

Sell less and keep the content engaging. Quality and differentiation are the two key factors for coming up with the best ad. By being original, you help build your brand identity. Be open to experimenting with the features of various platforms and with the kind of content you put out. A fine example would be Wooplr using the carousel feature of Facebook to put content in ads.

4. Understanding the platform and audience can do wonders for your ad

Study the platform and understand its features and the kind of audience using the platform before publishing your ad. Leverage the constraints of the platform to your advantage.

5. Humour helps!

This is a no-brainer- everyone knows that the funnier the post, the more chances of it making an impact and delighting the target audience! Humour gives the brand a more humane touch and a personality, thereby helping to build brand loyalty.

6. Work on making better creatives

Multivariate testing will help you figure out your core audience in depth. Use the learnings to make better ads specific to your Brand/Product/Service. Keep on experimenting with the colour, font, copy, elements, template, etc. via A/B Testing. Collect and study the data to zero down on what works best for your brand.

To summarise- Data speaks, all you’ve got to do is listen carefully and be consistent.

You can find Praveen’s Presentation on Slideshare. Click here

How Founders Should Think About Scale Before Pitching to a VC

Posted on by Gaurav Chaturvedi

So you have started up recently, have just launched the product six months back, have a few paying customers, good margins, and a clear plan for the next eighteen months! You recently got introduced to this venture capitalist through a common friend and are excited to meet and pitch for a seed round.

For the last couple of years as a venture capital investor, I have had a chance to interact with hundreds of entrepreneurs. Most of them were with solid ideas, great teams and a passion to build something out. 

One of the most difficult things that I have had to do is to say ‘no’ to a lot of ideas with great founding teams which had a solid underlying business, revenue and even path (sometimes imminent) to profit. Still, that business is not a great fit with the venture capital model. 

There has always been a lack of clarity in the mind of a lot of entrepreneurs about what exactly is a ‘venture fundable’ business and why venture capitalists say no to profitable ideas while pouring millions of dollars into (seemingly) loss-making, cash-guzzling businesses!

Most of the founders do not fully understand how the venture capital business model works, (although the share of founders, who understand it is much higher than what it was 5-10 years ago). I always recommend founders first understand the venture capital business before engaging with one. A lot of good reads are already available on this topic. What I really want to convey is a simple actionable framework that can help entrepreneurs to think through before approaching venture capitalists, especially from the perspective of scale.

A <TLDR> from all the stuff that you will find about the venture capital model is that the returns follow power laws and hence first and foremost, scale matters. You will see venture capitalists can (and almost always will), take bets on seemingly difficult businesses (with a higher chance of failure) but the ones which can grow very large. Simply put, high risk but high-reward models. 

Ten minutes into a pitching session, the first question is ‘Can this become large? How large should you be thinking?’
That’s the real (100) million-dollar question.

A rule of thumb that we follow is to try and answer ‘can this business reach a $100 million, high-quality annualised revenue, in the next 7-8 years’. If the answer is yes, you have got (our) attention!

Now let us dissect each aspect of this question and flesh this whole out a little, shall we?

  1. Revenue: It’s important to emphasise here on ‘revenue’. This is not GMV, not GTV, not LTV. In case you are into an intermediary business, (for example, a marketplace), then you should think of this as the commission/take rate or gross margins. This is essentially the price, customers are paying for the value that ‘your business’ is providing.

  2. High quality: This is super important! A good quality revenue is high gross margins (usually software margins of 70 to 90%), strong predictability/repeatability (nothing like a long-term subscription revenue model), and good cashflows (generate positive cashflows with growth and you are golden). This is why SaaS (software-as-a-service) businesses are highly valued — that is as high quality as you can get.

  3. 7-8 years: Are you going to grow fast? Are the conditions (both business as well as market) conducive now for you to quickly scale? Most of the fast-growing businesses can do that because they ride some ‘wave’. New technologies usually change customer behaviours and enable businesses to grow fast.


An important point to also think through is if capital is really going to help your business grow fast. As an example, most B2B businesses traditionally could not grow very fast because of structural reasons and so even though they were in a large market, they were not as attractive to investors. The SaaS wave has changed all of that, as now companies selling to even SMBs can scale very fast.

Having understood the question, before you answer a yes or a no, take some time to also nuance some finer points and visualise how your business and the market look at scale.

First, it is critical to see if you are attacking a market where the ‘target addressable market — TAM’ is large enough to support such a business. When looking at the TAM, most of the founders go with public data and a top-down approach. The usual gist is — billions of dollars in market size and only a 0.1% market capture yields 100s of millions in revenue. This almost always doesn’t work — you wouldn’t be able to find many valuable companies with a 0.1% market share in a large market, it’s usually a larger percentage of a much smaller but highly targeted market.

While calculating ‘TAM’, I always encourage founders to do a ‘bottoms up’ market sizing to go with a top-down approach. It usually will start with you being able to define your core customer segment. The total universe of your core target customer and the price per customer will give a good estimate of the market size, at scale assume that there would be two-three large competitors eying for most of the market share and make reasonable assumptions.

It’s important to also remember that the best companies always end up increasing the TAM! Especially if you are riding a wave, it is difficult to estimate the market size ten years in the future. Still, when you are looking to bet the best part of your productive career, it is prudent to start with a large enough TAM rather than depending only on expanding market size.

There are a lot of other things that go in while evaluating a business for an investment – team, competition, business model, technology and so on, but the deeper dive is contingent on crossing the line on ‘team’ and ‘TAM’.

Now, what if after this consideration, the answer to this question is a ‘no’? In that case, you go with the good old way of building businesses — profits and cashflows. Although this way is less glamorised, this is how most of the large businesses in India (and globally) have been built. They have been financed by conventional debt and public and private equity financing. Family offices and HNIs (with patient capital) are good partners for such a business in the early days, a lot more options open up with a scale.

If the answer to the 100 million dollar question is a ‘yes’ for you, go ahead — a lot of VCs including us at Kae Capital are waiting with (our) chequebooks!

Who Is Your Customer?

Posted on by Akansh Jain

Founders are often tempted to capture as much value (or revenue) as possible from different types of customers. To do this, they often wastefully spend their energies and company resources on capturing multiple types/avatars of customers and therefore lose sight of the company’s core value proposition and focus.

At Kae Capital, I’ve seen maximum value and growth generated when founders have a laser-sharp focus on one customer avatar. These founders then go ahead to build every aspect of the company around that one customer avatar (be it marketing, branding, value proposition, any hooks of engagement etc.)

This is my take on what you could do:

Defining core customer avatar: Go deep in defining the customer avatar – age, gender, ethnicity, behavioural traits and habits etc. The idea is to build all aspects of the company around the avatar and what appeals best to that customer

Firing your customer: Anyone who does not fit the above profile is not an area of focus. Fire the customer!

To help you build further on this, at Kae we came up with a framework. I think it’s a great exercise to work as a team and come up with answers to these 8 key questions.

Defining core customer avatar:

Q1. Hypothesis – Who is your core target customer? 

Be as detailed as possible in defining your core target customer. In certain B2C cases, this would be a “user” which is different from the “customer” e.g. social networks / audio platforms where the users are part of the network/consumers of content

Q2. What is your company’s core value proposition for your customers?

It’s also important to define the core value proposition of your company. What makes your offering so compelling for the customers? Why would you win against the competition? Is the core value proposition really valuable for the core target customer?

A good way to summarise the core value proposition for the core target customer is coming up with a one-line ‘positioning statement’

Q3. Validating the hypothesis – Is your core target customer deriving maximum value out of the offering?

Once you have defined the core target customer and the core value proposition, it’s critical to validate that thesis. Go deep into the customer mix and the value derivation by the customers, and look for evidence of who and in what way is deriving the maximum value out of your offering. There are a few tools that you can use to measure the value derivation and to find/ identify core customers

  • Usage/Engagement trends – Look through the usage/engagement data and notice the trends. Looking at the power user curve is a good tool for this.
  • Customer Retention/Renewal/Churn data and trends
  • NPS – Segmental NPS data can give a lot of ideas about core customer
  • Sales process and conversion data

If you do find a mismatch in the answers to Q1 and Q3, it is time to go back to the drawing board and iterate till you reach a broad match in Q1 and Q3.  

Q4. Aligning efforts – What percentage (number and revenue) does the above core customer occupy of your entire customer base?

This will help you understand how focused your energies truly are today.

Q5. Once you’ve identified your customer, what has your company done to build around this core customer?

List down 3-4 initiatives your company has taken up (in the last 6-9 months) to build a value proposition that resonates with the customer 

Q6. Going forward, how do you plan to further strengthen your value proposition for the identified customer?

As a team come up with 3-4 levers you plan to implement in the next 6-9 months which would strengthen your value proposition

Focus, focus, focus!

Fire customers who do not fit the core avatar!

Firing your customer:

Q7. Who have you fired in the last 6 months?

One of our health-tech portfolio companies fired customers who were above the age of 65 as it was a herculean task to onboard them and their ability to pay for services was low. Which avatars have you fired in the last 6 months and do you have any key learnings through this exercise?

Q8. What efforts are being taken to fire the remaining customers?

What steps are you undertaking to fire the remaining customer avatars (avatars that are not core to the business) in the next 6 months

__________________

We ask our portfolio founders to document these answers and share them company-wide – this helps every team member to align and work towards the goal.

If you are working on a consumer internet idea – I would love to discuss and brainstorm over a cup of coffee. Hope this helps!

Also, thanking Gaurav Chaturvedi and Vidushi Kamani who helped in creating this framework.

What I Learnt With Fynd

Posted on by Vidushi Kamani

The genesis of Fynd – Harsh tells the full story here….but here’s an extract to get you started.

Since Sept 27, 2012 (when addSale was officially registered in Mumbai), we have gone through two industries, two serious potential buyers, three ground-up built teams, three names, five offices, 10 internal and external products, trying to sell in 15 countries, 22 names on the cap table, deployments across 25 cities in 100+ stores and 120+ team members.

Along all of this, we have always remained true to our passion to build products that help people shop.

Our vision was to be at the intersection of technology and retail. We wanted to straddle the gap between the ease, convenience and personalization of digital technology with the instant gratification, touch and feel experience of physical retail.


So how did we become one of the 22 names on the cap table?

I will never forget the meeting with 7 of us crammed in our very tiny conference room in Nariman Point looking at a demo video where Harsh was at a Diesel store mixing and matching looks on a touch screen powered by (then) addSale. The pitch was that retail was going to go digital and in order to stay relevant, physical retailers and brands needed to up their game and introduce digital experiences in-store to enhance sales. While in February 2013, this required a little bit of mind-bending by us. Harsh, Farooq and SMG exuded confidence, conviction, optimism and a real passion for solving for this Physical-Digital divide. That is what we bought into. Their conviction and commitment.

Over the last 6 years, spending time with the founders and the team has been like being in an entrepreneurship boot camp of sorts for me. I have learnt that doing more with less is an art, but building a data-driven organisation is a science. For a founder, knowing and believing in their purpose is central to persevering and ignoring the noise that surrounds them. Brutal honesty and transparency is directly linked to speed of execution.

To paraphrase what Farooq says, “great leaders build great cultures that build great companies”, (read the full blog here for more on Fynd’s culture.) and there are two things that have really stood out for me.

Data-driven has never been a buzzword, it is a religion at Fynd. Every (and I mean every) single person in the company is an expert on all the internal data systems and SQL literate. This means, that everyone can query data and find their own insights that help them take better decisions in real-time. There are giant screens all over the office that are constantly streaming dashboards. Transparency rules here.

The second is their grit. Farooq says “ We have had a fairly difficult fundraising history, but that has never stopped us from thinking big and then executing relentlessly.” It is this ability to never give in to what looks impossible, but to in fact turn that into an advantage that has made the Fynd team and their journey special. It is their infallible grit and grind that keeps them moving forward.

Kae Capital was the first institutional investor in addSale which rebranded to ShopSense and then again in Fynd. We have been privileged to see this journey from its inception to rapid scale to exiting an investor who has big plans for retail in India. We wish the Fynd team the very best on this new adventure of theirs.

We have always backed exceptional founders through good times but especially through bad times and will continue to do that. 

Kae Konnect: How to Make Better Ads

Posted on by Navin Honagudi

We concluded a wonderful event in Bengaluru at Axilor Transit.

We started with a fireside chat with Mr S.D. Shibulal (Co-founder of Infosys and Axilor Ventures). He talked about his journey throughout 33 years in Infosys and what it takes to build such a large company.

Praveen Rajaretnam (Co-founder of Wooplr) also took a very insightful session on “How to make better ads”.

Here is the presentation he used:

How To Make Display Ads That Work from Praveen Rajaretnam

Here are some of the glimpses of the event:

Does India Need Its Own Vernacular Internet?

Posted on by Navin Honagudi

India has 22 official languages, excluding English, each of which has millions of speakers.

88 percent of Indians can’t speak English (let alone read it), yet when you look at the languages on the internet in India, it’s only in English.

Hindi is used by less than 0.05 percent of websites on the internet, Bengali by less than 0.018 percent, Tamil by less than 0.007 percent, and so on. I hope you get the drift.

I have thrown a lot of numbers up till now, but the ultimate point is this:

99.9 percent of the internet is in languages 90 percent of Indians don’t understand. Is it possible to make a “Digital India” without changing the language of the internet?

Far from infinite, the internet seems to be only as big as the languages you speak. For a non-English Bengali, it is just a few government sites, news sites, apps, and movies on Youtube. However, a couple of new-generation startups have started their local language versions.

I tried living in this pond for the last week and the experience has been highly frustrating. I changed my Android system setting to Hindi (as that’s the only other language I know), changed my Keyboard to Google Indic Keyboard, and tried avoiding all English content that was thrown at me.

Here are a few things I realized in this eye-opening exercise:

  • No SwiftKey for Hindi. This is the first thing I realized. (I also realized how much I’ve taken SwiftKey for granted in my life.)
  • Content creation in English is indeed 90 percent faster than in Hindi.
  • There’s no camera app for Hindi. I can’t use the filters and lenses on Instagram or Snapchat without bumping into English roadblocks
  • A lot of apps that I took for granted don’t exist for vernacular users. Zomato and Swiggy don’t exist in this small pond.
  • I can do google searches, but the results in Hindi are very limited, and no meaningful information comes out of them.

Let us now look at some of the most in-demand digital categories and how vernacular is faring in our most popular startups’ priorities.

Ecommerce

Snapdeal is the only e-commerce company that offers their platform in multiple languages. Earlier this year, they launched their multi-lingual mobile web interface in 12 languages. However, their mobile app and desktop website are still only in English.

Neither Flipkart nor Amazon offers multi-lingual support at the moment. Even companies in the long tail of commerce such as Shopclues and Craftsvilla are currently only available in English.

Paytm does allow for multi-lingual support upon changing the language of the phone but only for certain sections of the website.

Travel and transport

In the cab-hailing space, while Ola doesn’t support multiple languages, Uber does change its interface based on the mobile OS setting (Android in my case).

In the travel space, both Makemytrip and ixigo have their train apps in multiple languages. However, both their main apps are still only in English. I couldn’t find any other travel app which supported any Indian language. Even IRCTC’s official mobile app didn’t. (Their website does support Hindi though.)

Leisure and entertainment

This is a category in which vernacular users do have some relief, not because of any Indian startup, but because of two apps: WhatsApp and Facebook.

Whatsapp is available in about 10 Indian languages; it changes depending on the language of your phone. (It also has a crowdsourcing platform for its language translations.) Facebook, similarly, changes languages depending on your phone and is available in 12 regional languages.

Apart from these two, back home, Bookmyshow offers support for five Indian languages.

Very recently, apps like Sharechat and Pratilipi are trying to tap the same market, but there’s yet to be a verdict on these apps.

News

This is probably the only category where certain standalone players have made it big (or at least seem to). While Facebook and Whatsapp do tend to provide the daily dose of content, more organized news apps like DailyHunt and UC News are also getting a lot of love from vernacular users (both sites with more than 10 million downloads on PlayStore).

Very recently, InShorts has also started with Hindi news. Most of the offline newspaper companies also have vernacular websites which get millions of hits themselves.

Of all the segments, news seems like the only segment where the needs of vernacular users haven’t been ignored completely — although there’s still a lot to yearn for.

Games

Candy Crush and Subway Surfers seem to have the same addictive effect on vernacular users as on English users. There have also been a few other games made specifically for Indian tastes like variants of Teen Patti and Chhota Bheem but the vernacular aspect is still missing.

While vernacular users still get a steady supply of casual games, there are virtually no serious or strategy-type games in the market for them.

Challenges

There is a multitude of challenges that this digital language divide possesses; the opinions of Vernacular users are not expressed on the internet. Digital Language Death researcher Andras Kornai claims that 95 percent of all languages in use today will never gain traction online. According to him, it is a real danger that new users, influenced by the volume of content in dominant languages, will abandon their mother tongues online. This seems to be happening to a lot of vernacular users already.

In 2011, the UN declared access to the internet as a basic human right. However, it seems like it is only dominated by a certain elite. On the internet, dominant languages are amplified and end up largely speaking for those with less powerful voices.

But is it possible to bridge this digital language divide? There are quite a few arguments against it.

Bi-lingual users, who can understand English partially, will always prefer the internet in English because of its vast reach.

However, China has a lot of platforms specifically built for Mandarin. They have been able to make their own versions of Google, Facebook, Twitter, and Youtube primarily because less than 1 percent of their population speaks English (this number stands at more than 10 percent in India). Because many Indians aspire to speak English, it is virtually impossible to create separate vernacular platforms.

Another argument on this is that vernacular consumers are not monetizable. Very recently, Mohit Bhatnagar of Sequoia Capital put forward excellent data points countering this myth.

It is clear that advertisers have found local language consumers to be a better TG in the offline space (TV, films, and newspapers).

While the share of local language on advertising spend is 86 percent for TV, 86 percent for films, and 64 percent for newspapers, it is only 5 percent on digital.

Opportunities

In a recent talk, Kevin Bharti Mittal pointed out that while the media talks about hundreds of millions of mobile internet users in India, in fact, we have no more than 90 million.

With data becoming cheaper, many proclaim that new users will come on board. I think it will be virtually impossible for them to do this unless full-fledged, self-serving native language apps are provided. Technology and mobile apps will always remain an alien concept to them until it becomes something they understand.

DoT has already made it mandatory to have local language support in smartphones from July 2017 onward. Companies like Google (with its Indian Language Internet Alliance) are paving the way by making Indic Keyboard, local language fonts, and Unicode standard to provide the base for content creation and discovery.

Here are a few ideas that come to mind:

Needs

Improve business productivity: There is a pent-up demand for bridging the regional language information asymmetry in agriculture and farming. Millions of Whatsapp communities also point towards a need for organized channels for promoting trade in vernacular.

Banking and payment services: The success of MFIs is not just with rural but urban consumers as well. This clearly shows the potential and demand for banking solutions. Current strides towards a cashless economy provide the perfect launchpad for the next wave of banking and payment solutions to be in vernacular. Last-mile banking solutions are also set to be disrupted.

Employment: English has become almost a prerequisite for employability in India. The National Skill Development Council has recognized it as an essential skill to complement over half of 21 core skills. A plethora of opportunities lie in vocational training, employee training, and employment; the same portals that brought jobs to English speakers over the last two decades won’t suffice the unique needs of this section.

Education: Given the digital divide and the aspirational nature of English, learning this language has become a no-brainer opportunity. While Indian English users have multiple online platforms, local language learners have to rely on just physical books for their learning needs. The waves of personalization and interactivity disrupting education are yet to reach regional language learners.

Wants

Entertainment

Various content players have started creating video content in Hindi, but not so much for other regional languages.

Ecommerce

  1. Vernacular reviews-based, social, and curated shopping networks, which aggregate all e-commerce products and their reviews.
  2. Audio/video-based assisted e-commerce

 

Content Creation

  1. Camera apps that allow users to associate their favourite film/TV content with their images/videos. Dubsmash does allow for something similar with videos but much more innovations seem possible.
  2. Keyboards that allow for easier Indian language input. Initiatives like IIT Bombay IDC’s Swarachakra seem to be a step in this direction.

All I’ve mentioned above could become opportunities for new-age startups to tap. It is time we saw platforms built for Indian languages.

If typing in Hindi is harder, it is time we make it 100 times easier by using images, audio, or video to communicate (or making an easier keyboard itself). If no good Bengali fonts exist, let’s make them. If no Telugu camera apps exist, let’s make one which puts global players to shame.

The timing can’t be better than this. Smartphone sales are at all-time highs and data prices are getting cheaper by the day. We literally are left with no excuses.

The facts and opinions mentioned above hold true as of December 13, 2016.