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Koo Shutdown & Indian Startup Landscape

Since I was a child, I have always wondered why we do not have significant tech innovations in India. In the name of startups, all we did was produce clones or copies of something else – a Zomato, a Flipkart, an Ola – all essentially transaction-based services. These are clones of models that have been successful worldwide or at least trying to be.

When it comes to products that are not purely transactional, we do not have a record of producing something like Google, Facebook, WhatsApp, or Telegram. Now that I have tried to build something a couple of times and failed, I think I have some answers.

Reading about Koo and its shutdown reminded me of my own attempts in 2013-14 and again in 2015-16 to capture user-generated content and create a social network that could harness all that content meaningfully. Unfortunately, I had to shut both down simply because of the costs associated with running them.

Now that I am more seasoned as an entrepreneur and more comfortable with the tech space, I think the answer is clear. Indian audiences are notorious for being of low value in the internet space. India, its neighboring countries, and some African countries command the lowest CPM (Cost Per Mille) on the internet. This means that advertisers are not willing to pay as much as they do in other countries because the buying power of the audience is very low. Even though the numbers are huge, they do not translate into enough products or services being bought, resulting in extremely low revenue compared to almost anywhere else in the world.

The situation is compounded by the fact that tech costs are the same. We also use Google Cloud, AWS, or Digital Ocean to host our services and end up paying similar amounts to what someone in the USA would pay. More users mean higher server bills and less revenue. You can already see where this is going.

The cost of handling and managing user data collected over the years, including all those media files, gets expensive – very expensive. It just keeps adding up regardless of the revenue you are making. Even if you are not capturing new users and are just maintaining a regular base of a few thousand users who keep sharing and adding to your network, they might not contribute much to the revenue but would permanently add to your server bills.

In conclusion, one of the main challenge for tech innovation in India is the low revenue generated from a large user base, combined with the high costs of technology and data management. This makes it difficult for startups to sustain and grow, ultimately leading to their shutdown despite their potential.

Yet, I remain hopeful. Every failure has been a lesson, and every shutdown, a stepping stone. The entrepreneurial spirit in India is unyielding, and I believe that one day, we will overcome these challenges. The dream of creating world-changing innovations is alive, and it’s only a matter of time before it becomes a reality.

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