Amit Paranjape’s Blog

Can Pune Emulate The Silicon Valley Technology Startup Ecosystem?

Posted in Information Technology, Pune, Science & Technology by Amit Paranjape on February 11, 2009

I have always wondered about the parallels between Silicon Valley and Pune. Some might call this farfetched, but there are some really interesting and some coincidental similarities. Pune (as does any other Indian City) has a long way to go to even get closer, but that should not stop us from brainstorming on leveraging these similarities as building blocks, and strive towards emulating the leader. Silicon Valley is unique. Maybe one day, we can indeed see a vibrant Pune Technology Startup Ecosystem, thriving and prospering – on the lines of the Great Technology Entrepreneurship Capital of the World!

 

I started this self-brainstorming exercise by simply listing those Pune characteristics that parallel Silicon Valley (The degrees of similarities might vary …):

 

·        Good quality of life (Compared to other Indian Metros).

·        Temperate Weather.

·        Technology Entrepreneurship Culture.

·        Fledgling Startup Ecosystem.

·        Education Hub:

o       Many Good Colleges

o       Leading Research Institutes

·        Magnet for people from all over India/World:

o       Pune has the highest number of foreign students (amongst Indian cities)

o       Large number of foreign expats, and visiting researchers

o       Recently, Pune has also benefited from the ‘Reverse Brain Drain’: Many highly qualified professionals and successful entrepreneurs (of Indian origin) from the US/Silicon Valley have moved back to Pune.

·        Proximity to a Financial Capital.

·        Large IT talent pool (Thanks to the many IT Outsourcing Companies).

·        Leading ‘Green’ Technology Hub in India. (Headquarters of companies like Praj and Suzlon).

·        Hub of Hi-tech manufacturing (Note: San Francisco Bay Area has quite a few high-end manufacturing companies as well).

 

And some coincidental ones …

 

·        Leading Wine Producing Region in India.

·        Developing into a key hub for specialty fruits, vegetables and Flori-culture.

·        Open (and tolerant) culture.

 

Some of the obvious things that are lacking in Pune include – Infrastructure and Sustainable Development. The other ones include greater focus on pure research, and venture funding. [I will discuss these and more in further detail in following articles in this series.]

 

As I was continuing with this brainstorming and gap-analysis, I stumbled upon a great article written by the well-known Silicon Valley Venture Capitalist and Essayist, Paul Graham on ‘How To Be Silicon Valley’, in May 2006. He describes the key characteristics of the San Francisco Bay Area that led to the development of this amazing ecosystem over the past few decades. He also explores how similar Ecosystem Development could happen in other cities/towns anywhere in the world.

 

In my article, I make an attempt to use the key characteristics identified by Paul Graham, and try to map them to Pune. I believe that Pune is amongst the best places in India where a Silicon Valley like Ecosystem can take shape. Obviously, there are many challenges. I am not going to use sobriquets such as ‘Pune – The Silicon Valley of India’. Silicon Valley is unique – there can be only one.

 

I am also not doing a comparison (either/or) between different Indian cities here. Many writers routinely refer to Bangalore as the Silicon Valley of India. While to me, Bangalore is definitely not there at this point, it might very well be on the right track. To me, if places like Bangalore, Pune and others introspect and strive for the key characteristics that are described by Paul Graham, then all of them have a shot (tough, it might be!) at creating Silicon Valley like Ecosystems someday.

 

Note – I recommend that you do read Paul Graham’s article: “How To Be Silicon Valley”, before reading further. This will enable you to better relate to my observations below.

 

I am going to follow a format, similar to that used by Paul Graham. Listed below are the key characteristics and how Pune fares with respect to these.

 

Presence of Rich People who are not Bureaucrats

 

Paul Graham argues that a technology ecosystem needs rich people who can take risks, and invest the necessary seed capital. These investors shouldn’t be purely financial investors who don’t understand the domain that they are investing in. Nor should they be bureaucrats who simply evaluate short and medium term financial returns and are risk averse.

 

Paul Graham describes the example of how the money made on the risks taken in the 1980s (e.g. Sun Microsystems) was then re-invested again in the 1990s (e.g. Google, Amazon) and now being re-invested again. Essentially, startups create startups – this how this ecosystem starts and grows.

 

Does Pune have rich people, who are technocrats? The answer is yes. Maybe nowhere enough, but the successful technology entrepreneurs of the 1980s and 1990s have built up some good reserves and have started looking for interesting technology ideas to fund.

 

Not Just Buildings

 

Large buildings and nice campuses don’t make the Silicon Valley! The massive new IT Parks we see today in many Indian cities, don’t equate to Silicon Valley. We need the DNA of a startup that was founded here and grew.

 

Unfortunately, Pune doesn’t have many IT firms that became very big (like Infosys – though one could argue that Infosys in fact started in Pune, and moved on…). However, there are a few good examples of non-IT technology companies (Manufacturing, Industrial Automation, Green Energy, etc.) that made it big.

 

Universities & Research Institutions

 

Pune has a strong education culture and some excellent engineering and science & technology colleges, including the 2nd oldest engineering college in India. A new Indian Institute of Science Campus is also being planned. Distance wise one can argue that IIT Bombay is less than 3 hours (150 km) from Pune.

 

In addition to the universities, Pune has many leading research institutions in a variety of technology areas – National Chemical Laboratory, Institute of Virology, Indian Meteorological Office, Inter-University Center for Astronomy & Astro-Physics, Agricultural Research Institute, Various Defense Research Organizations, etc.

 

Personality

 

Paul Graham talks about a city/town having a ‘personality’. He further states that you don’t build such a personality – you let it grow. I believe that Pune has grown a strong personality over the past many decades. In fact, this is one of the attributes that Pune is quite famous for. A ‘Punekar’ (resident of Pune) can be identified by many interesting traits!

 

Pune has a personality of a small city/town; a personality of knowledge & learning; a personality of creativity (not just in technology, but in other areas such as arts and music); a personality of a distinctive life-style; a personality of tolerance & openness to new ideas. Historically, it has embraced and assimilated people from different parts of India (and the world).

 

And while the new Pune is morphing into a cookie-cutter solution of suburban development seen in other metros, the old – new Pune combination still maintains a distinct identity.

 

Nerds

 

According to Paul Graham, ‘Nerds’ constitute one of the most critical building blocks of such an ecosystem. You can call them anything – But Pune is increasingly a preferred destination for many techies (or nerds, or whatever you want to call them!). Historically, Pune has always been a center of attraction for the learned – not only in technology areas, but in other areas such as History, Sociology, Arts, Music and Languages.

 

Many of these people find Mumbai and other Metros to be too big, too fast, and too glamorous. Pune is compact, liberal and relatively quiet in comparison to most Indian cities. These nerds don’t mind paying a lot more to live in such a place with it’s unique identity (see earlier section). Quality of life is important for them.  Note – Pune real estate is quite expensive, and the overall cost of living is amongst the highest in India.

 

Youth

 

Given Pune’s strong education ecosystem, Pune is a ‘young’ city. It is vibrant with fresh energy and drive. Culturally, it is less conservative/more liberal – whichever way you want to look at it. There are also quite a few people here who are ‘young at heart’.

 

Time

 

Even after having all the right mix of the above key characteristics, you need to provide ‘Time’ for a Silicon Valley to be built. While Pune has many of the desirable ingredients, it still needs more time. And it is critical that these characteristics don’t degrade/disintegrate over that time period. I will discuss this further in future articles in this series.

 

Competing with the ‘Original Silicon Valley’

 

Paul Graham’s last point relates to competing with the ‘original Silicon Valley’. Any new challenger will definitely face competition from the original one!

 

I do think that there is room for more challengers. Speaking about Pune/India, we have an advantage of having more generalists (engineers who are more application oriented that theory oriented; and can quickly span interdisciplinary boundaries). The costs in India have risen significantly this decade, but still remain low compared to the west. Thus, if planned and used correctly, the same capital can stretch longer here. Pune and India have a large and growing young population. Many innovative ideas are driven by young people – both as innovators, as well as consumers. It is here where India in general and Pune in particular has a strong credential.

 

In future articles in this series, I will explore specific steps that I think Pune needs to take towards its goal of emulating a Silicon Valley like technology ecosystem.

 

Please provide your feedback, other ideas and comments on this article. I will try to incorporate these in the future articles in this series.

 

This is a very important topic for all people interested in and/or working in the technology area in Pune!

 

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12 Responses

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  1. Prasanna Walimbe said, on February 17, 2009 at 5:02 pm

    Without being racist, one of the essential ingredients that is needed is “entrepreneurial” culture by the citizens of that area. Having lived at many places in and outside of India, I think Pune is definitely one of the laggards in that aspect (although it is improving by leaps and bounds now). If that could be improved to a “significant” extent, I agree that this ecosystem would be hard to beat at any other place in India.

    Prasanna

  2. Shashank Jogi said, on February 19, 2009 at 11:09 pm

    Amit,

    I know that you are passionate about this, but I view it a little skeptically.

    Any ecosystem develops spontaneously, one thing leads to another and to more…these developments are unpredictable in terms of time and in nature. Ex-post it looks obvious that the developments HAD to take place. In hindsight, we are all smart and wise. They are mostly products of ‘accidents’ rather than of design.

    Silicon Valley has roots in radio and military technology development. Without the ample support of the US defense money, I am not sure we would have seen what we see of Silicon Valley now. Then you had Stanford University with good research. The silicon chip, semiconductors development, venture capital formation all followed and software was much later as was the tech bubble.

    Having lived in Delhi for over 10 years, and having stayed in Pune for a longer time, I sense a lack of drive, a sense of being laid-back amongst the Pune culture, to the extent that even a lazy person like me cannot identify himself with this culture. Outside Pune, the risk taking ability is far greater.

    Pune has many positives, but there are issues that you have rightly mentioned. Infrastructure, high cost of living, research of questionable quality, many educational institutes but mediocre education, lack of serious VC funding (my perception) or of committed funds from other sources, and the possibility of a favourable catalyst.

    Make no mistake, Pune would do well. But I am not sure it has the potential YET to become the silicon valley of India…nothing in India has!!

  3. Narayan Venkatasubramanyan said, on February 19, 2009 at 11:32 pm

    i think you overlook one key component that is buried in paul graham’s article: “The companies that rule Silicon Valley now are all descended in various ways from Shockley Semiconductor.” if i had to write a one-line summary of the article it would be this: nerds + money + one great germ of an idea.

    in a sense, there cannot be another *silicon* valley. you could have successful clones of silicon valley but none of them will rise to the same status as the original. the true successor of silicon valley will come up with the next great idea that will fuel the next 50 years of innovation.

  4. Vivek Tuljapurkar said, on February 20, 2009 at 12:10 am

    Silicon Valley is full of people that are capable of operating at the bleeding edge of technology. Don’t know about Pune … perhaps in the Indian context it is a distant second after Bangalore?

  5. Anthony said, on February 20, 2009 at 12:47 am

    Hey, my two cents:
    It’s not quite enough, and not quite there, really. Many of the reasons I came to Pune (from Europe) are basically summarized by yourself, but I think some of the ground realities are, unfortunately, different. I say this as an outsider-turned insider’s perspective.

    Colleges:
    I’ve read all these McKinsey reports talking about the great access to talented engineers, 150k new graduates a year, and all that stuff. I just disagree. I think I remember NASCOM (or someone else representative) admitting that only about 15% of engineering graduates are ’employable’, and while I haven’t got the whole picture, i would definitly agree that quantity and quality are very disaligned here.

    I don’t want to rant on about the educational system, but there are definitly two crucial things that is not the case with the ‘large talent pool of IT people’ here in Pune, or indeed in India. With exception of the top institutes, which definitly producec world class graduates, and here I would go beyond the IITs and include other top institutions, there are just too many ‘unsuitable’ freshers. What startups need most are passionate people, and if you’re studying IT because you think you can earn a good salary, i think that’s not the best pre-composition to be fuelling a startup ecosystem with passionate freshers. Also, the way they are educated is often, and again i am generalizing here, but speaking from experience, inadequate: problem solving and creativity don’t seem to be the strong points of many graduates here, who are being bombarded with new media and other forms of entertainment.

    Enough about that, my bottom line is that while there are many young bright engineers, these are hard to come by, especially for poor startups with nothing more than a dream/vision and a mediocre office who have to compete with omnipresent and fancy infosys, etc.

    But your point about the Fledgling Startup ecosystem is quite valid. While i’m painting quite a dark image of the freshers (please forgive me, I am exaggerating), there is hope. The startups here are close, they are kind of self-organised, and as you say, with the reverse brain drain of NRIs returning with experience and often money, there’s a great new composition of people building up – not unnoticed by some clever freshers – who want more than a 9-5 in some BPO or ITServices MNC.

    So my thumbs up to the PuneStartups – we haven’t seen a twitter, google, digg or some fancy facebook app come out of india recently (though SlideShare, Zoho, amongst others are really holding up the flag high), there’s potential. As I always say, I think in 20 years we’ll look back and say ‘Right place at the right time’.

    I think at this stage, it is also worth considering and listing out reasons where Pune (or India) needs to urgently improve:
    – the police is a bully. I don’t know if it’s just me, or whether I am overestimating this problem, but the police in this city (country?) is the bully that stops traffic flow, restricts freedom, bothers you at night when you’re walking home after a long 20h day and just generally seems to be too incompetent to be helpful, and too bored to just let us be…

    – Bureaucracy – ok, i’ve seen things work in Switzerland, and singapore and i know that this is probably the other end of the extreme, but seriously, guys, if deputy comissioner of police of this city tells me that a) he has no answers to the messed up system and bureaucracy and b) that there’s noone in control and everyone just does his own thing, then I’m sorry, that’s just not going to attract any entrepreneur, but be proactively discouraging.

    – Traffic. I thin it’s a great pity that this city is expandig so rapidly horizontally. Traversing the city has become a nightmare, there’s no public transport, and if you want to source great people from all over the place, it’s literally impossible, unless you put them all into one hostel on top of your office, or put them through a toxic 1h commute every day. Pune’s CTO is making great changes as far as IT and traffic is concerned, but unless there’s some public transport system, pollution control, and efficient traffic flow (without police randomly blocking roads and creating bottlenecks), it’s just making things really difficult for any entrepreneur – and let’s face it, we’re soldiers fighting a tough war on the global markets, and if it’s already difficult to get to my war (to work), then how am I supposed to fight it?

    – Infrastructure (no need to mention it again, I think)

    Ok, i don’t want to make this into a rant, I love pune more than I hate certain aspects of it, and am glad to be here, but as a bottom line, I would say that lots more work needs to be done, which won’t happen overnight. But to paraphrase my friend Iqbal, Pune’s building it’s own SiValley, one startup at a time!

  6. Old Hand said, on February 20, 2009 at 7:32 am

    I see wishful thinking in this article. Many of the conclusions are not fact-based. Also it is lacking in actual examples to support the conclusions.

    e.g. “Pune has rich people who are willing to invest in startups”. At least I have not yet seen a single such investment.

    “Pune has academic institutes” Yes, but do they do R&D, incubation, and tech commercialization like a Stanford? Do we know how pathetic the R&D in Pune University is?

    A Praj and Suzlon don’t make Pune a “green tech hub”. Have Praj and Suzlon spawned an ecosystem of suppliers, research, and fungible talent pool around them? The answer is no. These two companies could have existed anywhere. They just happen to be in Pune. Honestly, they themselves are struggling in the economic crisis as well.

    I have a completely different theory of why Pune “worked” for the tech industry and the auto industry.

    – Pune’s critical mass is middle class Maharashtrians who are famous for less expectations, low greed, and lots of hard work and loyalty. You won’t get that in Mumbai or Delhi. This allowed the Bajajs and Kalyanis to grow their companies steadily and become global leaders.

    – Pune’s original IT growth happened originally due to the likes of Infy, Kanbay, and so on. And the reason was purely coincidental. They wanted an alternative location to B’lore to grow and they liked the weather here. Pune’s new IT growth is happening because of the returning Maharashtrian techie entrepreneurs who love the city due to its culture and residual Marathiness which they won’t find in Mumbai.

  7. Sam said, on February 20, 2009 at 11:08 am

    Economics times have a contest on innovative ideas [i think it ends today]. Among few 1000 ideas submitted from various cities, Pune does not figure anywhere in top 10. Is that to be taken as a negative indicator, or what !?

  8. Amit Paranjape said, on February 20, 2009 at 1:10 pm

    Narayan, Anthony, Prasanna, Vivek, Shashank: Many thanks for your comments.

    Sam: Can you post a link to this Economic Times Contest?

    thanks
    Amit

  9. Anupam Saraph said, on February 20, 2009 at 2:23 pm

    Would you want Pune to be a Silicon Valley by nature or nurture?
    Perhaps more importantly: What is it that makes the Silicon Valley a desirable goal- the people, the processes, the plan, the business, the money, the lifestyle? What is your vision for Pune? See http://YesWeCan.wikia.com/wiki/Talk:Vision_for_Pune and make your statement.

  10. atul said, on February 20, 2009 at 2:33 pm

    I think Silicon Valley itself is in a state of turmoil. The traditional startup and venture capital model itself seems to be in flux. So another way to ask the same question is: What kind of tech companies can best be built in Pune? If is novel enough and we are successful enough, it can become *the* model for the next silicon-valley like ecosystem.

  11. Netwala said, on February 20, 2009 at 3:50 pm

    Hi Amit,
    Well, I must appreciate the well-grounded study, you have made to put Pune as Silicon Valley. [destination]

    Thank you for your efforts and making us all aware of Pune🙂

    Cheers!
    Netwala

  12. […] article is cross-posted from Amit Paranjape’s […]


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