India Learns to 'Fail Fast' as Tech Startup Culture Takes Root

After ping pong tables, motivational posters and casual dress codes, India's tech startups are following Silicon Valley's lead and embracing the "fail fast" culture credited with fuelling creativity and success in the United States.

Taking failure as a norm is a major cultural shift in India, where high-achieving children are typically expected to take steady jobs at recognised firms. A failed venture hurts family status and even marriage prospects.

But that nascent acceptance, fuelled by returning engineers and billions of dollars in venture fund investment, is for many observers a sign that India's $150 billion tech industry is coming of age, moving from a back office powerhouse to a creative force.

"There is obviously increased acceptance," said Raghunandan G, co-founder of TaxiForSure, which was sold to rival Ola this year. He is now investing in others' early stage ventures.

"My co-founder Aprameya (Radhakrishna) used to have lines of prospective brides to meet ... the moment we started our own company, all those prospective alliances disappeared. No one wanted their daughters to marry a startup guy."

Srikanth Chunduri returned to India after studying at Duke University in the United States, and is now working on his second venture. "I think what's encouraging is that acceptance of failure is increasing despite the very deep-rooted Asian culture where failure is a big no," he said.

"It's ok to fail"
The shift has come about, executives say, as engineers began returning from Silicon Valley to cash in on India's own boom, as hundreds of millions of Indians go online.

"Investors too want to find the next Flipkart, and most of them come from Silicon Valley backgrounds, so they bring that culture," said Stewart Noakes, co-founder of TechHub, a global community and workspace for tech entrepreneurs. "That's changing the Indian norms. It's becoming ok to fail and try again."

Big names like Flipkart can also mean the prospect of a lucrative exit for investors, covering a multitude of failures.

To be sure, the pace of change is slow in altering a culture that has produced top software engineers for decades, but - as yet - no Google, Apple or Twitter.

Cheap engineering talent keeps startups afloat far longer than in Silicon Valley, where companies last less than two years on average. And the freedom to fail remains restricted to a small portion of India's corporate fabric, booming tech cities like Bengaluru or Gurgaon outside New Delhi.

There is also still no revolving door with big corporates, whom one senior Bengaluru headhunter described as beating down salaries of executives who dared to risk - but then came back.

Role models
But big homegrown successes like e-tailers Flipkart and Snapdeal or mobile advertising firm InMobi, as well as the multi-billion dollar firms set up by former executives from the likes of Amazon.com, Microsoft and Google, have created role models, encouraging graduates to take risks.

"With success stories, people accept it as a legitimate exercise," said Ryan Valles, former CEO of coupon site DealsandYou and a former executive at Accel Partners, now working on a new project.

Meanwhile, billions in investor funding have fed the sector.

External cash - as opposed to more traditional bank loans tied to individuals, or family savings - makes a difference. Failing there can involve walking away Silicon Valley-style, not years of court proceedings in a country with no formal bankruptcy law.

There has also been, to date, no major collapse.

"What's happening is healthy: people recognising that some things will fail, that it's largely a failure-based industry, in the same way that movies, music or pharmaceuticals are," said Shikhar Ghosh, senior lecturer at Harvard Business School.

An estimated 70-90 percent of startups fail.

But the biggest test may be the first bust after the boom.

"That will be the test: whether people come back into the market and how they treat the people who lost their money," said Ghosh.

© Thomson Reuters 2015