On Koo, failures and successes in India’s startup ecosystem

The shuttering of Koo, a microblogging website similar to Twitter (now X), has rekindled discussions about why India doesn’t have its own Google, Facebook, or WhatsApp, and whether a protectionist approach like China’s is necessary to build such services. But what would Indian versions of these platforms offer?

Indian social networking startups like Koo and ShareChat have typically focused on Indian language users. While initially successful, this strategy hasn’t stood the test of time. In 2008, when Google rolled out search in Gujarati and Marathi, Webdunia and Guruji.com already had search in these languages. Despite initial success, these platforms couldn’t compete with Google. For instance, Guruji.com pivoted to music search before shutting down and being acquired for its ad network business. Similarly, numerous internet messaging services that launched after 2011, including Gupshup, HookUP, Imsy, Plustxt, and Hike, failed to compete with WhatsApp, which had already gained popularity in India. Plustxt, focusing on Indian languages, struggled and was eventually acquired by One97, Paytm’s parent company, and shuttered.

India can’t be compared to markets like China, South Korea, or Japan. English and its script are widely used and accepted in India, with many people communicating in their mother tongue using the Roman script. Global companies have increased their presence by offering services in Indian scripts. Building local products that scale is a long, difficult process requiring significant funds, time, and innovation, and generating revenue in social media products via advertising is especially difficult. Social media also has a tourism problem: as Facebook has probably found out after launching its Twitter competitor Threads, people sign up, look around, stay for a few days, and leave. Making these products sticky requires network effects, product innovation and a unique use case. LinkedIn is for professionals, Twitter now X for news and common interests, and Facebook and Instagram are for friends and family. Without substantial funds and unique offerings, Koo struggled in a mature market.

In their parting note, its funders Aprameya Radhakrishna and Mayank Bidawatka point towards the fact that partnership talks fell through with larger internet companies and media houses who didn’t want to deal with “user generated content and the wild nature of a social media company”. This is a telling comment: social media platforms are expensive and complicated to manage. India’s IT Rules have increased compliance requirements and content moderation costs beyond what the IT Act had intended. These are likely to increase further. In March last year, during his meetings about the proposed Digital India Act, former junior IT minister Rajeev Chandrasekhar proposed doing away with the ‘safe harbour’ provision that provides platforms immunity from the content posted by users, saying that “it is the responsibility of the platforms that post the content.” No online platform will survive this, and it’s no surprise that Koo didn’t find buyers given this potentially fatal blow to social media in India.

The push for digital sovereignty like China’s leads to increased regulation, surveillance, censorship and crony-capitalism, with digital authoritarianism around the corner. I doubt there will be venture capital funding available for companies in a market that behaves like it’s the 1970s.

Instead of focusing on startup failures and lamenting the lack of competition for global giants, we should celebrate the successes of Indian startups that have beaten them. Naukri.com, arguably India’s most successful Internet company, beat global major Monster.com. IndiaMart survived multiple attempts by Alibaba.com to enter India. Ola and Flipkart (eventually bought by Walmart) are homegrown successes, and have successfully battled Uber and Amazon. Zomato and Swiggy overcame the Uber Eats and foodpanda challenge. MakeMyTrip, Ixigo and EaseMyTrip are Indian success stories in travel. India’s startup ecosystem is thriving and innovating, and there’s no reason for us to mess with its market dynamics by emulating China or Europe.

Startup founders are also not defined by one or two failures. Wishberg, a wishlist site launched in 2012 by Pravin Jadhav and Kulin Shah, struggled and was acquired by Freecharge in 2014, which Snapdeal bought in 2015. Jadhav was then brought on board at Paytm to start Paytm Money for stock trading, and eventually started his own, called DhanHQ. Shah worked at Acko before founding Onsurity, an employee health benefits platform. India’s internet ecosystem is full of stories of founders starting up, shutting down, being acquired, of being forced out, before they build something that works. Many founders who exit their businesses reinvest in new ventures. Freecharge’s Kunal Shah has funded over 200 startups so far. Venture capitalists also often back founders who have tried something new and failed. India’s startup ecosystem is still innovating and is in the process of maturing. The tough experience that Aprameya Radhakrishna and Mayank Bidawatka have gone through at Koo will eventually lead to success. As they say: companies fail, founders don’t.