On a recent thread on India's startup ecosystem vis-a-vis the idea of the startup visa that's doing the rounds, someone mentioned that in the US they saw a lot of support for the underdog - which is what startups are. This support came in the form of users signing up, the biggies willing to work with startups and angels and VCs more readily putting their weight behind ideas.
In India, its a tougher battle, to put it mildly.
Most users are less than enthusiastic, and even nervous, about signing up for a startup's service. Unless it is purely (small) transactional with very low risk, or comes as a huge deal, or serves a so-far unserved, desperate need. Anything less than this, and we need the weight of a big brand.
Big enterprise doing business with small guys is the same story - except it needs a much lower risk or a much stronger need. Else, no go.
I almost don't blame the VCs for following this trend. Few buyers, few users - would you put your money into it ?
The startups that are working are doing it around transactions. Sell books, tickets. Anything that needs some longer "commitment" falters. It can happen as a grey/white label, or with some smart dealmaking, but else is very very tough.
How do we solve this, and do it right ?
- Start with something transactional/low risk. Even if you intend to solve longer term problems, drive stickiness, etc. Tryouts are important.
- Get a dealmaker or two on your side. Easier said than done, of course :)
- Do NOT pay users to use stuff. It might give you a spike, but it isn't worth it. Avoid freebies, except for being thankful.
- Persist :) The curve will take its time. Goes hand in hand with lean-burn too.
These are some things startups can do to work around the problem. The core of it - i.e. making startups feel a little more "secure" and "weighty" in the eyes of the user, investor, big-biz, is still an open problem.