Since we recently got invited to be a panelist at The Indus Entrepreneur (TiE) event in Hubli, I was thinking about questions that we had interesting answers to/we get asked the most often. The top question: Why Hubli?
I thought it would be interesting to go through the Pros and Cons of starting in a Tier II city (as opposed to a Tier I city like Mumbai or Bangalore).
I’ll start with the Cons:
- Banking: It’s is pretty tough. Trying to get Foreign Direct Investment through the Indian banking system is tough enough without having to deal with the fact most Tier II city branches have never dealt with it before.
- Human Resources: It’s much harder to get top talent to move to Hubli. The US equivalent is basically choosing between a job in San Francisco or a job in Wichita, Kansas.
- Location: Given the fact it there are only 2 flights into and out of Hubli (which actually shut down for the last 8 months and just reopened), it’s difficult to get places. To get to Delhi, it would take about 2 days (because I don’t want to land at night for…safety reasons). Also, you don’t get many visitors (again, hard to get to).
The Workarounds/Business Hacks (to overcome the Cons)
- Banking: There was a very large learning curve there, but after a while, I think they got the pattern. Once a pattern is established, things go smoothly. It took about a year, but it’s good now. If we were to do it again, I think we may have had our “local” branch in a big city (because we go there once a month anyway). I don’t know if it’s any better, but I think I’d like to try it that way. Most things can be done online now anyway, so I think it could work.
- Human Resources: This one is pretty interesting. I was talking to one of the founders of a pretty famous Hubli company, Sankalp, and they said their competitive advantage is really by training students from Tier II city colleges (the ones that didn’t get accepted into the prestigious semi conductor companies) and just make them stellar. This seems to be the trend in India because I know other famous companies like Infosys, Wipro, Accenture, IBM etc.. do it too. Their training programs last between 6 months-2 years (Crazy, right?!) But it’s the Indian corporate workaround for the fact the Indian college education system does not really seem to prepare students for the corporate world. But what does a startup in Hubli do when you need people, and you need them… yesterday? Sankalp worked around it by starting in Bangalore, and then when they got big, moved to Hubli. They already had built enough reputation for people to take a risk and join the company. Their solution for small startups like ours (whichI thought was incredibly insightful/pretty much what we ended up doing): The founders just need to do be incredibly hands on and do most of the work/train their staff. Let me say that again, because I felt like this was a huge nugget of wisdom that most people can learn from: the founders need to be on the ground and put the proper systems in place/train their staff to reach the levels of excellence they expect. Essentially, you need to create a 6month-2 year training course, implement, and execute it (in real time/while you grow your business).
- Location: Batching meetings so you can just make one trip and knock out 3-4 things. It makes you more focused and saves you money anyway (because you won’t leave unless you have 3-4 compelling reasons why!) Also, honestly, in the beginning, you don’t really want people coming by to visit because you don’t have much to show that’s interesting yet. It’s better to fly under the radar until you have something good.
- Focus: The problems that we are working on are the same across India, just at different levels of complexity. So when you start out, you want to isolate one variable, and figure it out. In Hubli, we asked one question: Can we get useful and accurate information from the valvemen? The answer: Yes. That’s the only thing we tried to solve, and that’s what we did. If we had started in a much larger city, we’d be spending so much time figuring out the pipe network, who reports to who, the politics, and navigating the beauracracy, we wouldn’t have time to answer the most pressing questions.
- Human Resources: Back in high school, our basketball team had a very effective strategy to see who would make the team. Anyone who made 5am practices (getting there by 4:45am) for a whole summer, made the cut. Guess what- our team was undefeated and we won our league every year. It’s the same with starting in a Tier II city. The upside is that you know that the people who do join you are incredibly committed to your cause, and will do anything to make it survive.
- Less Red Tape: Related to the first point, it’s much easier to navigate…everything really, in a Tier II city. And for a startup, that’s really one of the most important things it can ask for. The people in power are much more amenable to trying new things, and the systems are much more straightforward (which is still incredibly complicated!) But figuring the path of least resistence in a smaller city and then applying the same concepts to a larger city, I think, gives you the most bang for your buck.
- Location: Similar to the Human Resource answer, you know that the people who do visit you (investors, interested individuals), are really interested in what you do. Also, we mostly travel by bus/train, and tickets are really cheap- I can book at the last minute and still get a good ticket (~$20 round trip gets me to Mumbai or Bangalore in a sleeper bus!)
- Cost: Hands down, super cheap to live and work in Hubli (Compared to a bigger city). Food is great, and housing/transport/office rent is inexpensive. We’ve kept our burn rate considerably lower because we live in Hubli.
Overall, if I had to do it again, I would still start in Hubli. Yes, it’s much less glamorous, but the pro’s, in my head, definitely outweigh the cons. I would also encourage any other social enterprise starting out to really figure out the overall problem they are trying to solve, work backwards, and figure out the first key question they need to answer. Then ask yourself: what’s the easiest geography to answer the question in?
As always, thoughts/questions/comments are much appreciated!