Lack of Trust in India, and how startups should deal with it

@dkhare of Lightspeed India Venture Partners has an interesting article about the problems with the Indian startup ecosystem that makes it difficult to start and grow a startup in India, title The Silent Killers of Startup Growth.

While some of it is the usual whining about the usual problems, there are parts that I liked, especially section about lack of trust across the board in India, the problems it causes, and how to deal with it:

Lack of trust is endemic in India, whether you are driving through the streets (and perhaps Delhi is an extreme example of lack of trust!) or negotiating with corporate partners. Examples include:

  • (some) people misrepresent themselves materially without any consequences (eg overselling).
  • (some) founders focus on control at the expense of value creation.
  • potential buyers have a hard time parting with payment details or paying for off-the-shelf software.
  • (some) people negotiate all the corner cases in extreme detail, to the point where the law of diminishing returns kicks in pretty strongly.
  • trust gap between regulators, law enforcement and business.
  • trust gap between promoters (aka founders) and investors and potential misalignment on timelines and strategy.
  • (some) government and companies focus on protecting themselves from the 1% of customers who are gaming the system at the expense of the 99% remaining customers.

Relationships, not contracts, govern deals. Many brands in India are created from execution reliability at scale rather than product differentiation. Brands in India are disproportionately more valuable as they represent a trusted provider of products or services – think about the enduring value of the Tata brand in multiple unrelated categories. As one consequence, I believe more startups should think about brand-building here in India relative to if they were in the US.

I think the takeaway message is important: in India, build relationships and reputation and the contracts will take care of themselves. Read the full article here

A validation of this same idea comes to me from an entirely different source. My father-in-law, Badri Baldawa, a self-made successful entrepreneur has this blog post on Trust vs Written Agreements which says pretty much the same thing.

Wiio’s Law: Communication usually fails, except by accident

Just found this interesting set of laws, called Wiio’s laws:

  1. Communication usually fails, except by accident.
    • If communication can fail, it will.
    • If communication cannot fail, it still most usually fails.
    • If communication seems to succeed in the intended way, there’s a misunderstanding.
    • If you are content with your message, communication certainly fails.
  2. If a message can be interpreted in several ways, it will be interpreted in a manner that maximizes the damage.
  3. There is always someone who knows better than you what you meant with your message.
  4. The more we communicate, the worse communication succeeds.
    • The more we communicate, the faster misunderstandings propagate.
  5. In mass communication, the important thing is not how things are but how they seem to be.
  6. The importance of a news item is inversely proportional to the square of the distance.
  7. The more important the situation is, the more probably you forget an essential thing that you remembered a moment ago.

And there are three corollaries by Korpela:

  1. If nobody barks at you, your message did not get through
  2. Search for information fails, except by accident
  3. Give the student a chance to realize he misunderstood it all

These are all taken from this blog post.

At this time, I don’t have any thing else to add to these laws. But I’m sure that in the years to come, I am going to quote Wiio’s laws #1 and #2, and Korpela’s corollary #1 repeatedly to people. (Just like I love to quote the Three Chinese Curses:

  • Third Chinese curse: May you live in interesting times
  • Second Chinese curse: May you come to the attention of important people
  • First (and most dangerous) Chinese curse: May you get what you wish for

And this concludes my first ever parenthetical remark which has a bullet list embedded in it (And also concludes this blog post))