RSSPune’s too expensive, outsource to Nashik - Interview of Sushrut Bidwai (StartupForStartups)
Written by navin on September 25th, 2008 in In Depth, Interview
Nashik based StartupForStartups (SFS) is marketing itself as a “facility to help early stage companies with limited resources to build first cut of the product (V0.5/V1.0)”. Founder Sushrut Bidwai is a regular fixture at Pune startup events, and is trying to convince Pune-based startups to outsource work to his programmers in Nashik, promising that it will be cheaper than doing it themselves. PuneTech interviewed Sushrut to get a first-hand take on SFS’ value proposition.
Can you give an overview of StartupForStartups?
Many times people have good ideas, but dont have guts OR are shouldering family responsibilities, which does not allow them to pursue these ideas further. In some cases none of the founding team members are from tech background, so even getting a good CTO is difficult for them (salary wise as well skill wise) . StartupForStartups (SFS for short) is meant for such teams. Its better to have something ready before taking the risk of quitting (high paying) jobs. It gives you more insight into product you are building as well domain you are targeting.
What SFS does is, it provides you resources required to build that beta version which you will show to investors (if its a big product) or will launch to limited audience and see how market reacts to it. After having this beta ready and some reactions from market or investors it becomes easier to take the risk and pursue it further full time.
Why are you doing this in Nashik? I would have thought that being in Pune or Bangalore (near all the startups, who are your customers) would make more sense for you?
Problems with Pune and Banglore are operational costs and resource costs. Also Nasik will have lower attrition rates and keeping people happy is easier. With technologies pushing the boundaries, we have so many tools available which makes working in distributed teams far easier. We even can do pair programming with two people sitting 5000 miles away from each other using WebEx/dimdim/Skype. Also it provides lot of cost advantages to startups we are working with.
As a customer, one of the worries I would have with StartupForStartups, is the availability of quality talent in Nashik. How are you tackling this?
We have developed a unique training program called “Implementing Concepts” which all our engineers go through before joining any startup team. So even if a particular engineer has gone through it once for a particular project, he/she will go through it again using the technologies which are going to be used in new project. This kind of a very elaborate HelloWorld for a project. Also, my experience in working on tech products is 80% of work is trivial and 20% is core work which is complex. So even if a startup is working on a product which is complex, they can take help of our resource in rest of 80% work. Though this does not mean we do not have expertise to take up complex work, it just means we are flexible and are okay with working as part of larger team. Also this is not outsourcing model, it is collaboration model. So you know who is working on your product and what that persons skills are and you can choose from the pool available. Also, to keep high availability of quality talent we are in process of collaborating with colleges here in Nasik. In this we will take the training program to colleges and have students go through them while working on final year projects. Please note that we do not assign interns on the projects.
Considering that most of your customers are early-stage startups who are strapped for cash, how do you plan on charging them for your services?
Charging is transparent. We send details about salaries we are paying to engineers assgined assigned to work on a particular startup and plus typically 20% operational costs. Now if you consider Nasik and typical salaries engineers expect and are more than happy with are much lesser than in Pune/Banglore. We already have the infrastructure and are building team. We are planning to build a team of 12-15 people by Dec end.
Could you give us an idea of what kind of savings I can expect compared to outsourcing to a company in Pune? (Where are the savings coming from: lower salaries, or other factors too?)
Lower costs for resources.
Lower operational costs. Just to give you indicator of savings, an Entry level GWT/J2EE programmer will draw salaries in the range of 17-22K in Pune/Banglore same programmer if he/she is from Nasik will be more than content to work on a good startup team if given around 9-10K salary. Plus you have to keep him/her happy so there is no attrition. Spend money on infrastructure like office space/ furniture/ hardware/ software / electricity / lunch facilities and many non-tangible costs like FBTs/Mediclaim facilities etc etc. you save these costs by almost 70%.
What do you see as your key competencies?
- Experience of working in large scale product companies as well as early stage startups.
- Top management has excellent problems solving and product designing skills.
- Understand working on an Idea and processes involved in the same.
- We are young, enthu, full of energy and love working on good ideas. (This is probably the most important quality.)
In the context of StartupForStartups, I’ve heard you talk about having a startup ecosystem. Can you elaborate on that?
This eco system is for people who are still in jobs and want pursue ideas. Though part of it can be used by full time entrepreneurs.
- We are signing an MoU with a financial and legal service provider company having experienced in handling these services for startups.
- We are creating pool of consultants (Architects, Performance engineering, Marketing/Advertising, HR, Viral Video creators etc).
- We are collaborating with engineering colleges here in Nasik. We have designed an unique training program “Implementing Concepts” which is focused on training engineering students with latest technology and early stage product engineering.
- We are talking to people who have the expertise of providing mentoring to early stage companies even before product is built OR evolved. Though we are in early stages of discussions with these people, but hopefully it will happen.
- We are building a tool (looking to raise funds for this tool) which is designed around a process called Super-Agile, which I will be publishing shortly. This tool and process are targeted for early stage product development. The tool will make writing code almost a trivial thing and even non-tech background people after a little training can build the products first cut on their own.
- Network. Not all startup founders are well connected. It takes lot of time to connect with people who can provide you help in building the startup. We can help there by connecting you with people we know, so its some starting point.
- Knowledge-base. Startup entrepreneurs does not have time to go through lengthy tax stuff etc. Or does not have time to design their documents like Offer letters, seperation letters, NDAs. Over a period of time we will collect such documents and put them in an inventory. This inventory can be very valuable to startups.
Note that all the services mentioned above does not necessarily come with a price tag. Some are out of goodwill some are for money :-) . Our main problem is we are young, have the skillsets necessary to pursue an idea and make it to successful business. But we do not have the idea. So we want to work with people who do have it.
For those interested in meeting, Sushrut is in Pune today (25th September 2008) and is likely to attend the CSI Pune Seminar on Entrepreneurship. I know that there are a bunch of PuneTech readers who have an idea for a startup but haven’t made much progress yet because they haven’t been able to quit their job and take the plunge. If you are one of those, would you be willing to outsource some of this development to StartupForStartups or a similar company? Do you think this model will work? Let us know in the comments section below.
September 25th, 2008 at 2:13 pm
“We have developed a unique training program called “Implementing Concepts” ”
“Nasik will have lower attrition rates and keeping people happy is easier.”
“We are creating pool of consultants”
“We are building a tool (looking to raise funds for this tool) which is designed around a process called Super-Agile,”
“Plus you have to keep him/her happy so there is no attrition”
“an Entry level GWT/J2EE programmer will draw salaries in the range of 17-22K in Pune/Banglore same programmer if he/she is from Nasik will be more than content to work on a good startup team if given around 9-10K salary.”
This is by far the most bullshit interview I have ever read. Do you think ppl will believe this is an interview and not marketing ? This is a joke.
September 25th, 2008 at 4:15 pm
Ankur, obviously in any interview, the person being interviewed is going to try and market his/her own services. That is why he is there. Obviously, you found the interview lacking - can you ask some specific questions that you would like answers to, and we can get then answered by Sushrut.
September 26th, 2008 at 12:51 pm
I have seen better attempts at PR.
Having interacted and understood the business model, I would say, SFS is trying to cash in on the startup buzz going in India. It is packaging the same old stuff in a new packet.
Not being too negative on the initiative, I must applaud the effort and concept to market themselves in the already competitive market.
I remember coming across a similar claim in Sybrant from Chennai a few months back.
If the motive is to pursue an idea coz they do not have one, where does paying for the development comes into picture. I, personally would not buy this logic to develop an idea.
September 26th, 2008 at 2:28 pm
Rashmi Ranjan, there are actually quite a few players trying to cash in on the startup buss going in India. The PuneTech wiki lists three Pune-based companies that claim ‘outsourcing development work from startups’ as their primary USP (CoreObjects, BetterLabs, Synerzip). This does not include large service providers like Global Logic which are very actively pitching to startups (for example Pune-based Mobikon is their customer), and others like Xpansion which are also getting into this game. Also, there are examples of small startups that start out as services and slowly become partners with a product startup, as is the case with True Sparrow and social|median. And I’m sure I’m missing many more such examples.
The interesting twist as far as SFS is concerned, in my opinion, was the fact that they are based in Nashik - a city that you wouldn’t really associate with startups, or tech in general. And the claim that this will be significantly cheaper than Pune/Bangalore. I would love to see a facts-based discussion of whether any of those claims are true (is TCO lower in Nashik? Is attrition lower? are either of those enough to justify the geographical separation?) and also, even if all the claims where true, I’d like to know whether a startup would, as you rightly said, “buy this logic”.
September 27th, 2008 at 8:25 am
@Navin Thanks for publishing our interview.
@Ankur Excuse me for giving the interview like a marketing pitch, but it’s a first attempt at it so will get better over time.
@Rashmy Yes we are trying to cash in on startup buzz in India. The response we are getting is tremendous. And lot of people who would never have thought of pursuing the idea full time are now at least thinking about it and I think that is a big boost. Also domain experts from various fields like biology, medicine, retail, manufacturing are also now thinking of solving there pain points using SFS technology solutions. So not only they are looking to partner with us but they are including our advisors, core team in finding the bottlenecks and solving the bottlenecks. Plus no one had tried to build an entire eco-system around product startups (Metro or non-metro) ie right from connecting talent to startups to advisors, mentors, investors. I will be shortly publishing training program “Implementing Concepts” course contents on SFS website, so keep checking.
September 30th, 2008 at 1:58 pm
I don’t believe attrition at Nashik would be any lower than in, say, Pune considering that the two cities are closer, but you get what you pay for and the 9-10k talent can certainly not be compared with “expensive” talent. I’m not saying cheaper programmers are bad, but from the interview it just sounds like SFS is going after the 80% routine tasks rather than the 20% core complex areas of developing of solution, as Sushrat himself says.
While there is value in what SFS is trying to do, this is not new and I don’t see much value in it.
September 30th, 2008 at 2:28 pm
Sharminder, SFS is basically outsourcing. It’s obviously not new. That’s what Indian IT industry has been thriving on for so many years. Isn’t it? SFS is slightly novel in the sense that it is targeting a very niche area - startups which are not very rich (the rich ones can go to more established players if they want).
Time and market will eventually decide how much value is there in SFS model.
September 30th, 2008 at 2:33 pm
@manas: Yes, I agree SFS is only outsourcing but from the interview it just seems that their business model is based only on the fact that they’re based at Nashik. I don’t see that taking them too far.
Outsourcing is not new and I’d love to see more startups coming out of small towns and making it big, I just wasn’t impressed with the content of the interview :-)
October 18th, 2008 at 6:34 pm
[...] startupforstartups - Helping a wannabe entrepreneur build the first prototype of their startup without having to spend a lot, or build a team, or even quit your current job. See PuneTech interview with the founder. [...]
October 23rd, 2008 at 4:59 pm
The whole point of doing a startup is that you (the founders) actively participate in the bottom up creation of your “company”. For start-ups the concept/Product IS your company. Outsourcing the core of your company to another team seems very conter-productive at the least.
Granted, if you do not have core competencies in the areas then you may be tempted to do this…but in that case you have no business starting the company in the first place.
October 24th, 2008 at 6:00 am
@AM, that is an arguable point. There is no dearth of examples of people who started a company and outsourced the development to someone else. I could come up with 10 or more Pune-based startups that have done that, and I’m sure in reality there are many more.
This doesn’t mean that the founders are not involved. They are handling the customers: the sales, marketing, business development. They are also deciding what the product should do. Only the development is outsourced.
Think of it this way: the technology might not be the “core” of your company, in which case outsourcing it might be fine.
October 24th, 2008 at 9:35 am
@AM, I should also mention that there is an interesting discussion going on about this topic on the Pune OpenCoffee Club mailing list. See here. There appear to be opinions from both sides of the fence. You should check it out.