India Has Its First $1 Billion Dot-Com: Is 2011 the Year of the Indian Internet?
A little over a year ago, I issued five tech predictions for 2010. Looking back, it turns out my track record was pretty good, though really, only two of my predictions were bold and out there.
One was that Google would finally buy Twitter: Wrong, wrong, wrong. But my other bold prognostication was that India would see its first blockbuster technology startup emerge from its nascent tech sector. And on that one, I was right on the money.
I had actually forgotten about my prediction until my friend, entrepreneur and academic Vivek Wadhwa, sent me a message congratulating me on my prescience. An online travel company called MakeMyTrip.com (MMYT) had gone public on the Nasdaq and risen over the course of the year to a market capitalization of more than $1 billion.
Not Just Outsourcing Anymore
What's particularly interesting about this story is that MakeMyTrip is primarily focused on travel within India, or to and from that country, and the majority of its users are Indian nationals. While Internet market in China has seen more than its fair share of blockbuster IPOs and high-flying companies, India has long lagged behind its neighboring giant in the consumer Internet.
This is true for a number of reasons, but primarily because India's middle class hadn't grown as quickly as China's. That's not to say India isn't growing quickly, in part due to the torrid pace of growth in technology jobs. As Vivek has pointed out on numerous occasions, the Indian tech sector has morphed from a business based on outsourcing to a font of innovation, buoyed by businesses performing core R&D and product development for big, leading multinationals like Cisco (CSCO), GE (GE), Google (GOOG), and Microsoft (MSFT).
But that hasn't yet translated into growth in the country's consumer Internet segment.
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That's going to change in a hurry in 2011. In fact, it's already changing. Witness moves by Intuit (INTU) to build a beachhead in India for its online personal finance offerings. (When I interviewed Aaron Patzer, head of Intuit's personal finance unit, in late 2009, international expansion was on his mind.) And earlier this week, Groupon reportedly made its first India acquisition.
Most of the major U.S. venture capital firms have had India presences for several years, and they've been doling out money in multimillion dollar doses to Indian startups that inhabit many of the same online niches as U.S. startups.
So here's another prediction: In 2011, India will go from bit player to major market as more of those Web startups morph into billion-dollar companies, riding upward on the twin tides of rising interest in online and a rapidly improving economy with a growing middle class. No, it won't be China 2.0 -- but, finally, after a long warmup, the Subcontinent will start to get its due.
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