The Social Network vs. The Street Network

by Sumeet Swarup

The image of the successful Silicon Valley startup is this – a genius geek develops a brilliant tech product and rolls it out over cyberspace and takes over the world – facebook, google, Airbnb, Dropbox, linkedin, Twitter, Youtube – the list goes on. The image is epitomized by the movie “The Social Network” – Harvard dropout codes while sitting in his pyjamas and rolling out his product into university after university.

This is not just an image, but true in most of the tech startups from the Valley. The product is treated very seriously and is by far the most important asset of the startup. The founders spend most of their time on the product – the technology and a clean UI and smooth UX. They have a rockstar team that huddles together to do designing and coding. The philosophy is that if you roll out a knockout product, everything else will take care of itself. The story of Whatsapp and its 30 employees earning $19 Billion through their sale is the envy of every tech entrepreneur.

Contrast this to the model that is more successful in India. The Indian founders realize that India is not an easy or predictable market to roll out new products and models, and they have to create the market and adapt rapidly with the growth – the fintech startups have rolled out their products, but are also on the ground enrolling retailers and merchants, doing KYC and educating the customer. Oyo has rolled out its platform, but is proactively signing up hotels after checking the property and doing verifications, and now is setting up Oyo Townhouses and a kitchen to back it up (likely acquisition of Freshmenu). Makemytrip is a successful travel platform, but it also has feet on the street to sign up hotels, do travel packages for groups and tie up with corporates to create demand. Zomato learnt this truth the hard way – they successfully rolled out their technology based listings platform (like the US based Yelp) and were building on that for many years, until Swiggy came galloping along, ate half their lunch, and Zomato is fighting to keep the other half.

Some global players have realized this truth and adapted rapidly, example Amazon and Uber. If you are a retail marketplace, you can’t just open a platform and expect suppliers to automatically and smoothly sell. You have to worry about enrolling suppliers, quality checks on their products, taking action against fake products, customer care, ratings, complaints, returns and logistics. For this, you have to have thousands of staff on the ground every day.

But other global players have not had that foresight. Step Out was a dating app that entered the Indian market with a disruptive and creative idea but exited after 2 years. Meetup is a platform that allows people to create virtual groups – it’s a brilliant idea, but after 5 years in India, most of their online groups were either inactive or spammed.

Feet on the street and offline operations to supplement the online reach can actually deepen the market, give the online platform customer stickiness, increase repeat orders and build barriers for entry for new competitors.

Isn’t it time that Bollywood makes a movie called “The Street Network”

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