Startups and governments.
Startups and their grind
Starting up

Can governments give startups office space? Of course they can. Can governments give out some funds? Of course. Can governments make some equipment and laboratory facilities available? Sure, they can.

These are easy to do and all it takes is some amount of money. I am not trying to quibble about governments doing these. I do feel some of these are best left to other agencies (possibly government owned) like colleges and universities or even some of the R&D establishments, and that is exactly what many governments do. However, that is not what this post is about.

Unfortunately, these are all facilitators, of sorts. Their contribution to the success of a startup is limited. If done well, this makes life a little easier for the entrepreneur and if not done right, it ends up doing two things. Firstly, in some of the supported startups, going the startup way becomes something less than an overpowering passion. I believe this passion, and the resulting tunnel vision, is an essential ingredient of startup success. Essential, but not sufficient. Secondly, when the funding game goes off kilter, the entrepreneurs end up spending time chasing funding while some of this time should go into beefing up for revenue.

I feel it is very difficult for governments and bureaucracies to get the startup game right, if they see themselves as “givers” of some kind.

Another thing governments try to do is to buy up stuff from startups (erstwhile small scale industries in India). This again prevents the necessary culling, fosters favoritism and can promote a lot of inefficiencies.

So, the question almost becomes, is there anything at all that all governments can do to help startups?

I feel there is something substantial governments can do and should do, however it is both difficult to do and runs against the grain of people who “govern”.

The problem

What is the biggest problem startups face? The biggest problem they face is in selling whatever it is that they are trying to sell. There are many reasons for this. A few that come to mind (and mine is an Indian mind operating in Bangalore):

  1. The problem the startup is trying to solve is not really important.
  2. The ecosystem of the problem is elsewhere (typically the US), and so the startup has two disadvantages. Firstly, it has a distorted and limited view of the problem. Secondly, and more importantly, the startup’s ability is limited to generating a possible solution and releasing it. Post that, it is basically pray that everything else falls in place.
  3. When the problem and its environment is accessible (local), the startup often finds that scale is considered more important than innovation. Literacy programs, passport service kendras, garbage management and irctc are a few examples. That is, assuming everyone involved has a clean motive. Often, this is not the case either. Given the problems of scale vs. innovation and ulterior motives, the startup’s sandbox becomes limited.
What can be done

Stated thus, what can be done follows naturally. Governments desperately need innovative solutions to meet their responsibilities and startups are probably a good source of such solutions. If governments make it possible for startups to work on solutions to some of the government’s problems, that would be the best way for startups to thrive.

This does not mean problems are parceled out by governments. It means startups that solve problems are rewarded in proportion to the magnitude of the impact of the solutions.

Firstly, this requires governments to have a very different self-image. In this scenario, the government is not a wise and rich uncle who doles out favors to a bunch of kids. Instead, governments need to see themselves as struggling to meet their goals and hence seeking all the help they can.

Secondly, this role is at least an order of dimension more difficult than “helping startups”. That is because the government will have to play a very skilled and professional role. In this avatar, the government has to do many things. Two of the most important are:

  1. Identify and carve out (maybe include is a better term) problems where needs exist and startups can contribute.
  2. Be capable of choosing among different solutions that come up. This would call for objective measures to be defined up front.
Thirdly, a few examples:
  1. One of India’s banes is its inability to achieve universal schooling. I feel this is a nice problem for startups to tackle. Let the government set goals, indicate budgets and then permit a vibrant mix of love for teaching, technology, local strengths and plain old enterprise to have a go at this problem.
  2. India has not cracked the potholes problem. A major issue, but something that can be addressed at different scales. I think this is a good problem for startups.
  3. Finally, something to do with computers, internet and all that jazz. My first instinct is to talk about the PSK (passport) or IRCTC, but I will take a shot at something else. There is a major problem with antibiotic misuse in particular and inappropriate usage of medicines in general. Most studies are sample based. Can’t it become more comprehensive? I am not saying that the government gets someone build an App, and then stipulate that anyone who doesn’t enter a whole bunch of data each day would lose their citizenship. Instead the thrust of my argument is that governments a) decide to confront the problem b) figure out a way to use data corresponding to medicine usage c) define the data required and d) make it profitable for anyone who can provide this data. Startups can do d and maybe b and c also.

Here is a related story: http://indianexpress.com/article/business/business-others/start-up-action-plan-funding-crawls-20-months-rs-70-crore-ffs-4856880/

Here is a little something on Steve Jobs, the quintessential entrepreneur.

Steve Jobs – The Story of a Mastermind