Why India has failed to create tech giants like Google, Apple or Facebook

Recently, I was watching a fascinated talk on TED.com about a Somali who recounted his experiences while living in Somalia's capital, Mogadishu. Somalia, a famine and war-torn country, has been devastated with unemployment and an alarming rate of terrorism. Specifically, the talk was centred on the link between unemployment and terrorism.

 

But what was hidden behind the speaker's talk was that, in spite of living in such dire circumstances, there were a select few individuals who, despite being unemployed but full of youthful energy, channelled their energy towards innovation. They looked around and did not like what they saw; but as is always the case: "Challenges bring about opportunities." These select few decided to enter headstrong into entrepreneurship, realising that their city was in need for such simple things that we, as Indians, take for granted: things such as scarves, bicycles, pencils, and even trivial things as flowers.

 

And that, in its very essence, is the power of entrepreneurship. Entrepreneurship is what creates jobs. It is what satisfies demands and creates the magical equation of 'supply = demand'; and not only fills voids in societies, but changes the entire life course of the individual embarking upon the risk-taking path. Instead of being mired by unemployment or by taking up an unsatisfactory job, the entrepreneur boldly takes the risk of meeting a need his society needs. There is a demand that is yet to be met; he is there to provide the supply.

 

Fortunately, India is a country with a relatively low rate of unemployment. Unlike countries like Somalia, which have staggering rates of unemployment, youth can find work in India. What we need, however, is a cultural system that actively promotes entrepreneurship at the most basic roots. If there is one thing that describes an entrepreneur aptly, it is that the entrepreneur is an outlier - that is, he does not fit into the 'norm' of the society. A basic example would be a computer programming teenager whiz who spends all his free time programming.

 

In the West, the teenager who spends all his time programming would surely be frowned upon by his classmates, but would still be able to find outlets to keep honing his craft, and the teenager would most likely end up having a brilliant future. He might eventually take that skill set and apply it towards creating something that has never been created before - the true tenet of an entrepreneur. The entrepreneur might not even finish college. India creates a difficult environment for that same situation to materialise. The teenager would be assigned poor grades and the cultural system makes it difficult for the individual to become an entrepreneur of the highest level.

 

A 17-year old who has a strong passion for a particular hobby and wants to turn it into business has many outlets to turn to in the West. India's emphasis on engineering, medical schools, and studies makes it difficult for the same 17-year old to pursue a business venture. It takes extreme guts to go against the grain and societal pressures to pursue a business opportunity without a steady income - an environment that makes it even more difficult doesn't help the cause.

 

For example, let's break down the IT sector. India is almost synonymous with IT and provides much of the IT outsourcing that the world needs. A country that is bound to be the most populous country in the world within 25 years, India undoubtedly has some of the brightest tech minds in the world. But when it comes to true outliers who go above and beyond and are able to create something truly revolutionary - think Google, Apple, Twitter, Microsoft or Facebook - none of these tech companies have come from India. A country filled with so much technology potential, one must wonder how not even a single brilliant entrepreneur was able to produce a world renowned technology company?

 

Innovative entrepreneurship is what is lacking in India. If India promoted the right type of environment where, instead of competing against each other, entrepreneurs could boldly innovate on a global level, true entrepreneurship would arise, where the passion to create something great can be materialised through one's environment. In other words, the environment cultivates entrepreneurship instead of inhibiting it.

 

Another pitfall for entrepreneurship in India that must be mentioned has to do with venture capitalists. Venture capitalists in India are very much like the companies that they fund: since most companies in India end up replicating things that already exist (but perhaps at a discounted price or catered towards the domestic market), venture capitalists in India in turn are more willing to fund these same companies rather than truly innovative companies. If the idea has not been tried, tested and proven, an entrepreneur is less likely to get funding in India versus the West.

 

Venture capitalists have a different approach in India. Valuation places a higher focus on cost vs. revenues and encourages funding of ideas that already exist in the West. In other words, truly innovative ideas on a global scale are less likely to get funding.

 

Despite all this, there is a silver lining to this column: we know the problems that are preventing youngsters from becoming the next Bill Gates or Steve Jobs. NRIs in the West are already spearheading cutting-edge companies that are competing on a global scale. Why should there be any reason for Indians, born and raised in India, not to do the same?

 

So the next time you come across a particularly shy 13-year-old who appears to be just a little different than his peers, who is perhaps overly obsessed with a certain hobby and who might even make you slightly uncomfortable, you might want to think twice before dismissing him as a lost cause.

 

You could very well be looking at India's first, iconic, global entrepreneur in the making.

 

Raghu Kumar is the co-founder of RKSV, a leading low-cost broking firm. The opinions expressed here are the personal opinions of the author. NDTV is not responsible for the accuracy, completeness, suitability or validity of any information given here. All information is provided on an as-is basis. The information, facts or opinions appearing on the blog do not reflect the views of NDTV and NDTV does not assume any responsibility or liability for the same.