All you need to know about the Digital Lives of Indias 1, 2 & 3, circa 2018. (okay, some of it)

(If you want a quick TLDR; version, jump to the conclusion right away and then you will hopefully come back! This is a relatively long one)

For several years (say, from 2012), I have been wanting to write a post on how the various online services cater only to the top 50–100 million users in India and do not extend beyond; how ‘language’ is going to be a problem reaching out to the rest of India; the various segments of people within Indian the population; problems faced by those segments; personas for each of those said segments and so on. I did write bits & pieces about ‘language’ in a few places like these links, but never got to paint the big picture.

When the article on India 1, 2, 3 appeared in Founding Fuel (which is a must read for any working in/for Indian market for digital services) and said many things I had been thinking of, the first thought was one of — oh, I should have written that piece. But I quickly realized that there is no way I could have written such a piece, written so eloquently and with so much conviction. Even if I had written something not-as-good, it would have just reached the 2 and a half readers that my blog posts generally reach. So, it was a sort of relief that I need not write it anymore — if I write, I will only be saying the same things and add no more value, even to myself. So, I promptly deleted that (empty) entry from Evernote¹

After that, I kept on referencing to that article of Haresh Chawla in my conversations with my friends and liberally used it in many of my blog posts, including ones on SEC & India123 and many more around languages & stuff (linked above). Now, for the past few months, I have been thinking more on this topic — In particular, doing a complete survey of all services² that exist for Indias 1, 2 and 3 across the digital life³ of a consumer.

I first thought of making it a series of posts covering one digital life (or persona) at a time but later decided against it, since it may become like this still-born series on product management or my attempts at podcasting.⁴ So, what you will read below is a fairly long read on the state of digital ecosystems in India.⁵

Having done with an introduction that is the size of many articles and with 5 footnotes, let us proceed. Without any further ado, as they say. I promise, not many footnotes after this.

What constitutes Digital Life?

Digital Life is that part of a user’s everyday life where s/he interacts with a digital device to accomplish a task. The most obvious digital devices are the computer and Smartphone but you can think of any smart appliance / IOT device as one. Also, typically the services are discovered/procured/delivered/accessed over Internet but that is not a must. (Till recently I was not even clear on what ‘Digital’ meant, till I clarified it to myself)

The most basic elements needed for Digital Life are:

1. Device(s) (typically a phone/computer/tablet — a general purpose device)
2. Access (to access the Internet or other devices)
3. Platform/OS (for services to use the device)
4. Apps Store (to discover services)
5. Browser (You can call this a quasi platform)
6. Search (to discover services)

Obviously, items 3,4 are for ‘native’ services and items 5,6 are for ‘web’ services. I think both native & web will co-exist for a long time (though we sometimes say things like ‘Native has won the mobile space’ or ‘It is a matter of time before everything becomes web’).

The services that sit on top of these basic elements form the ‘digital services’ that help the user navigate the ‘digital life’. It means everything from Messaging to Entertainment to Ticket Booking to Gaming to Pornography. I have listed ~50 such services in the sections that follow.

What is a Digital ‘Ecosystem’?

A digital ecosystem is a bunch of services offered by the same company/group of companies. Some of the services may display network effects, some may be considered part of ‘shared economy’ and so on but none of those aspects are a must. Services could even be completely offline. However, what is critical to note is that if a user consumes multiple services from the same ecosystem, they may get better experience in each of those services than if they used just one service. This ‘better experience’ could be in terms of better features, usability (convenience, because the ecosystem knows more about the user’s preferences), show better defaults, or even be subsidized by one another. It is this aspect why companies want to have an ecosystem than just focus on one service, however well they can do in just that one service. More part of the user’s digital life an ecosystem covers, better its ability to make itself indispensable in the user’s life and lower the chance of it losing relevance.

The obvious examples of the ecosystems are the GAFAM (Google, Apple, Facebook, Amazon⁶, Microsoft) companies. Telcos across the world have been (mostly unsuccessfully) trying to build their own ecosystems for long. OEMs big & small have also harbored such ambitions, right from Samsung all the way to Micromax. Even VC cos (like Softbank, Naspers etc.) seem to be trying to build their own ecosystems (with their portfolio companies integrating with one another on a priority basis).

One place where the ‘local’ ecosystem has played out well is in China. There are the BAT companies (Baidu, Alibaba, Tencent) who have their own ecosystems and arguably have been able to better integrate/establish synergies between the services than the GAFAMs. Other companies in China like Xiaomi, LeEco etc. have also tried to create ecosystems (hardware/IOT ecosystem, Content Ecosystem respectively) but the successes have not been as good. In any case, none of the Chinese ecosystems have been able to replicate those successes outside of China. And also, none of the other ecosystems have been able to replicate their successes in China.

What about Digital Ecosystems in India?

With Western markets dominated by GAFAM ecosystems and China by BAT ecosystems, India looks to be a big prize for all of them to win — a virgin market, if you will. Of course, there are places like South East Asia, Africa, Australia, Latin America and others, but the sheer size of the population of India is very attractive for all of them I guess.⁷

So, India as a market is being targeted by Western (GAFAM) as well as Chinese (BAT) ecosystems — some more conspicuously (like Google’s next billion, with products like Tej, Datally & lots of work on Indic) and others (typically the Chinese) more as a network of investments. Chinese cos like LeEco tried to build a ‘content ecosystem’ but it became a non-starter. Xiaomi, I think is happy with the device sales for now while companies like Alibaba are still trying some ‘UGC content strategy’ for India. They even have an ‘Ads’ strategy.

Locally, while there are companies that focus & are successful in some parts of the digital life (say, eCommerce, Transportation, Finance etc.), no one seems to be building a deliberate ‘ecosystem’ approach except Jio & Times Group. The number of services Jio offers is mind boggling. And surprisingly (for a Telco), with good UX as well. I suspect the VCs that have invested in Indian companies may have a better ecosystem strategy than the companies themselves. But that too is complicated because of cross holdings.

As Haresh wrote in his now-classic article mentioned before, all the fight that ecosystems are having seem to be only for India-1 and may be a bit of India-2. Solutions built specifically for India-2 are far & few and none of them have been very successful. India-3 is far out of anyone’s purview/focus now. Find out from these Economist articles on how MNCs have burnt their fingers thinking of a big Indian middle class. (Here is a response/counter to that in LiveMint from people who work for NITI Aayog — though this is cited as their personal view)

What is this Indias 1, 2, 3 thing?

Let us directly read Haresh Chawla on this:

If you stacked up a 100 Indians, here’s how our income distribution looks:

1 Indian earns 30% of the total and makes over Rs 1.5 lakh a month

14 Indians earn 30% of the total and make around Rs 20,000 a month each

The next 30 Indians earn 30% of the total and make Rs 8,000 per month each

The poorest 55 Indians earn 10% of the total and make only Rs 1,500 per month each

Mind you, this is total income. This is money they earn to spend on everything — roti, kapada and makaan, and of course, data. Most of this money is spent on food and groceries, and on things they “need”. Money left over to buy things they “want” is much lower as you go down the chain.

He then clubs the first two into one and makes a total of 3 Indias, as follows:

India One: Club the top 2-tiers above and you find that the top 15% of Indians, i.e. about 150–180 million, earning an average of Rs 30,000 per month, are the ones who have money left over after buying necessities. These 15% of Indians control over half the spending power of the economy and almost its entire discretionary spending. They consume their data plans without thinking about the bills. They install the shiny new apps without bothering about the gigabytes they consume on their oversized and expensive smartphones. They have Wi-Fi at home and office, power generators at home and are connected 24x7. They are equivalent to a country with the population of Canada and live the lifestyle of a European nation (if you equate them on purchasing power parity, or PPP basis) — and with better lifestyle to boot. They have chauffeurs, maids, cooks, cleaners, peons to take care of onerous chores. And no, they won’t step out of their air-conditioned homes into our dirty streets and traffic — everything has to be served instantly, at home. Assisted living at the age of 20, I call it.

India Two: This is the middle 30% or 400-odd million Indians, earning an average of Rs 7,000 a month. This would be a country about three times the size of Bangladesh with a similar level of purchasing power. They are the ones who “service” the $1 trillion market (yes, read that again) that India One represents. That’s the money that trickles down to them.

They have managed to change their fate and climbed out of poverty over the last two decades by migrating from their tiny bits of un-arable land to the mega cities of India and taken up jobs to serve the needs of these markets. They work two shifts as Uber/Ola drivers or as cooks in our burgeoning restaurant chains, or set up small businesses — and send money back home to their families in the villages. Luckily for us, they still see hard work, family values and education as a ticket to a better future. Most save all their money to get their kids an education. You see them break through the barriers every day. Most of their income is spent on food and rent, and whatever little is left they use to try and escape from life in their smartphone screens by buying movies or songs on an SD card from the neighbourhood store. They buy second-hand smartphones and tiny sub-hundred rupee data packs to keep in touch. Of course, we report them as internet consumers in our slick presentations on Startup India.

India Three: These are the forgotten 650 million who subsist and don’t have the money to buy two square meals. Their incomes rival that of sub-Saharan Africa. They are the ones who did not leave our road-less, school-less, toilet-less, and power-less villages and instead chose to send a child or a sibling to work in the big cities. They live on the mercy of our monsoons and whatever little reaches them through our poverty alleviation programmes. They live on the periphery of our economy and for all practical purposes don’t participate in it. However, they are the ones who form our vote banks and determine the political future of our nation.

And no, these three India’s are not split geographically. The steady urbanisation of our nation has seen to it that all three mingle together in our metropolises — from Dharavi to Dadar to Malabar Hill in a city like Mumbai. We share the same roads, air pollution, and same GSM spectrum from our favourite cellphone operator. What joins our existence at the hip is the cellphone and the constant fear of its battery running out. Net, net we are three countries. One with the size and wealth of a developed nation, another of 400 million people like a developing nation, and a third large continent of 650 million people whose lives rival that of a poor nation.

So, that is India 1, 2, 3 for you. Neat classification, no?

Survey of Digital Services

I have tried to map services across 50 categories in this Google Sheet, right from basics like access, device, OS to verticals like real estate and utilities like data saver apps, across Indias 1, 2 & 3.

You can see a sample screenshot here:

Or visit this Google Docs link to see all the services. This is by no means comprehensive and there would be obvious misses in various areas (or even some areas missing). I have enabled Commenting on this so please drop a comment with a new area or a service to add and I will. (Let us have a rule of at least 10K downloads in Google or some such thing for a service to be included — otherwise, we may have to add every service that was ever tried into this — not necessarily a bad thing but that is not the purpose here).

(Huge shout out to @ArunDevarajan for help in putting this sheet together. This article has morphed into much more but started with the sheet & he filling it)

As you can see, India-3 rows are so sparsely populated. Even India-2 is sparse in many areas. In a sense, those are the ‘opportunity’ points for start-ups (or even large companies) in India to operate.

The problems and solutions are likely not going to be found by looking at what worked elsewhere in the world or by sitting at home (like I am doing now) or in an office writing blog posts and articles. It will be found on the ground, as we go about our life and notice/observe India 2. While we had a bunch of Food Tech start-ups in the last couple of years, did any of them cater to the people who eat at the roadside eateries? In Bangalore, you would see a lot of Uber/Ola drivers eating in such places. The places themselves are makeshift, typically Maruti Omnis with the back door open to serve food. How about an app for them to understand the demand for the day, an app for their customers to order/pack food as they pass by, an app to show them their calories/nutrition etc.? This segment may actually have more food related health issues than India 1. (Again, understand that this is someone sitting at home on a lazy Sunday afternoon, writing as he pleases! No effort whatsoever was expended to get out of the building & understand the problem)

So, why is there no focus on Indias 2 & 3 among people who build digital services?

Apart from laziness of people like me, IMO, there are at least 4 reasons for this.

• India 1 is not yet saturated: India 1, which fairly resembles the Western markets, is itself not saturated yet. Though it resembles Western markets in terms of demographics, it might not resemble so much in terms of psychographics and in particular, intention to pay 😃 So, India 1 itself is not a ‘solved’ market or a ‘saturated’ one.
• There is not enough money to be made in India 2 & 3: The income levels of most people in India-2 and all people in India-3 are not high enough to really ‘pay’ for the digital services, like how someone in Western markets / China might. Sure, they are aspirational (most people consider themselves middle class) and tend to spend money on digital services even over basic human necessities (insert your favorite example like more phones than toilets here). Also, whenever value has been demonstrated and the service has been sachetized, people have taken it up. Counter-intuitively, India 2 pays for digital services (think of Mobile VAS) more than India 1. (Yeah the old maxim of ‘It is expensive to be poor’ applies well here too). This starts from sachetization of hair shampoo to the mobile recharges and data packs. However, this is a game of the large guys with deep pockets. It is difficult for start-ups to not make money for long. The state of Indian apps in the Top lists of Google Play says it all.
• We do not know how to solve things for India 2 & 3: Most people (all?) who build digital solutions are from India-1 and do not really understand the life of Indias 2 and 3. The surface level knowledge of things is not enough to build solutions. It might be enough to write articles like this and give (mostly wrong) ideas. But to build a solution, one needs to really spend time in understanding their life, problems and needs. Sure, we do have good enthno-graphers, user researchers and the like in the country but all of them are focusing on India 1 (or providing services to products being built for Western markets). No offense here, I am one of those. Just the reality we need to accept. One of the more important aspects of this is the ‘language’ issue. People who build the services are most comfortable in English and only a bit so in Indian languages (that too, may be 1 or 2 languages only). While the people from Indias 2 & 3 who will consume those services are most comfortable in their own language (there are at least tens of big enough languages) and only a bit in English (if at all). This matters, in a big big way. And IMHO, the single most reason for digital divide in India, starting from the PC revolution and continuing to Smartphones is the ‘Language Divide’.
• India 2 & 3 are not monolithic: Extending what we said above, the multitudes of languages, cultures and subtleties is so overwhelming that we simply cannot build something for ‘India 2’ and leave it at that. A few more layers would need to be peeled before seeing anything useful.
• No one has succeeded well yet: There has not been a big success story for someone who built a service for Indias 2 & 3 (beyond Telcos — purely for access & FMCG cos) as yet. There have of course been a lot of services that have received popularity, like BabaJob, Notion Ink etc. but none really successful in the long term. The most romantic of all would be Simputer. There are some new companies like Indus OS, Sharechat (Sharechat’s local language interface is my favorite now and conforms to my laws — search for laws in the link) that are making waves but it is yet to be seen if they can break the jinx. Several big companies too have stumbled in this area. Specifically, I can call out stuff built by Nokia (Music, Tej, LiveTools) and Intuit (SMS, Fasal), which had special teams focusing on India 2 & 3 as markets. Their intentions were genuine for sure but exactly for reasons mentioned above, even they could not succeed. Personally, I have been part of several such efforts in Samsung & Vodafone earlier in my career too. Google has been trying quite some services too, as part of its ‘Next Billion’ initiative (with India as test market & then extending to other emerging markets — incidentally, similar stuff I have heard in my earlier companies too). Its results are yet to be seen but I honestly think many of them are still in the ‘India 1’ and say ‘creamy part of India 2’ territory. I think we can call it a success (in terms of addressing India 2 & 3) when we have a service that has >250Mn users in India (or >100Mn users exclusively from India 2 & 3).

Has really no one succeeded In India 2 & 3, ever?

It is not that no one has succeeded in reaching to Indias 2 and 3. It is only in the digital world that we are seeing this. In old economy companies, there have been several successes — right from shampoos to mopeds to telecom operators. Of course digital services are unique and involve ‘personalizing’ it to the user through its life, but there surely is something to learn from the old economy companies (be it in terms of user research they do or beyond, but that is a topic for another article).

Not just the big MNC FMCG cos, even several Indian companies have succeeded, like Velvet Shampoo, Nirma, Promise toothpaste, Bisleri and so on, so much so that the big MNCs had to do things like ‘Operation STING’ [8]. In fact, FMCG companies are still fighting local players (read: Patanjali) in several sectors and learning to ‘localize’ their products. Like: HUL’s India strategy (Winning In Many Indias’ (WIMI) with country category business teams (CCBTs).

Apart from such nation-wide success stories by local players, there have been local brands in each state/region — The top ones to come to mind are brands like Bovonto, Ramraj Dhotis, Ponvandu, Power Soap, Jewelers like Kalyan etc. in South India. Even hospital chains are more or less region based. You do not find too many Agarwals & Apollos in North India, do you?

Similar to them, we should be able to have specific ‘Digital’ services catering to a region (or even a niche). The obvious question would be about how profitable they would be. Even if someone builds services for them, what are the monetization options? Can it extend beyond being a lifestyle business for the founder, at best? Why would VCs fund such a company? If we look at the current crop of such services (say, someone who builds a ‘Tamil Calendar, Almanac & Daily Astrology’ app), their monetization is primarily from Ads. In-App advertising might be a distant second. And we know that it is difficult to make people pay for such services, particularly after they have been given free for long. So, Ads it is going to be, for a long while. Now, what are these ads and how are they performing? Well, it is either the Top App Install advertisers (like Game companies) or Spammy ads (linking to porn/semi-porn) that is seen. Recently, I saw ads from Content ad networks (the smaller ones of the Taboola/Outbrain kind) in Hindi — once again helping with hair growth, enlargement of you-know-what etc. Definitely, that is a slippery slope.

However, as the ecosystem matures (okay, I do not really understand what ‘maturing’ means, let us simply call it — as time passes), we are likely to have local advertisers coming in. Like regional TV channels having regional advertisers (Sun TV having Ramraj dhotis), we should have regional advertisers jumping in on the digital services too. Google, Facebook & other such large advertising cos cannot expect these local brands to use the Self-Serve model. Or let it to the local digital agencies to get such brands on board. They would need to work with the agencies in a pro-active way to get such brands on board. We need a virtuous cycle or a flywheel set in motion for this. More users consuming in local language, more such local services, more such local advertisers in a virtuous cycle. Even if not to the scale of VC funding, this may become a sustainable model.

Well, why am I jumping to the solution space already?

Segmenting the Indias further

While India 1,2,3 forms a good starting point and will help with strategy & even with marketing, it is not enough for product design. We need to have further segmentation and create personas for each. We can refer to the old & new SEC classification as well. Also, here is a good chart from Deepak Abbot:

Before anything else, let us tabulate Haresh’s classification first:

(This is a faithful reproduction of the text from Haresh’s article with no additions/removals)

While it is a great starting point, as we think of services, we need to break each of it into multiple segments and find then target/position the service. As a lazy first cut, I will exclude India 1 (who are already served in one way or another) & India 3 (who first need the basics in life before ‘digital’ kicks in) and find how we can further segment India 2. Following are just some of the potential segments we can have:

India 2.1

• Lives in a Large City (NCR, Mumbai, Chennai, Bangalore, Pune, Hyderabad. Not sure if Kolkata is similar)
• Driver/Cook/Baby-Sitter/BeautyParlourEmployee/CourierDeliveryExec/Similar
• Speaks English/Hindi at least sparsely and mother tongue (native language or migrant)
• High awareness levels of various services used by India-1
• Includes both male & female
• Age Group 20–40

India 2.2

• Lives in a Tier-2 City in South India (Trivandrum, Coimbatore, Mysore etc.)
• Driver, Mobile Shop (or similar shop) owner, AquaGuard Service Man, Bike/Car Chief Mechanic or Similar
• Speaks English (sparse) and native language
• Knows Google, Facebook, WhatsApp, Olx and a few other super popular services
• Typically Male
• Age Group 20–35

India 2.3

• Lives in a Tier-3 City (Hassan, Alwar, Warangal, Meerut, Solan etc.)
• Multi Purpose Fancy Shop Owner, Travel Agent, Am running out of thoughts haha
• Speaks Hindi (if in North India), Sparse English and Local Language (Hindi Dialect if in North India)
• Knows Google, Facebook & WhatsApp
• Typically Male
• Age Group 20–35

I think we can easily have at least 15 different such segments within India-2, adhering to MECE on most parameters. And more parameters can be added. Depending on what happens to this article, I will potentially write down all of it some day (within my own bounded rationality, that is).

Why don’t we try one ‘Persona’ too for this? (This is my own template, by the way, which is a combination of the usual demographics/psychographic stuff plus some things from the realm of consumer behavior).

This is a generic-persona for India 2.1. When we build a particular product, we would need to write a few (primary, secondary, anti-persona) for it, with this as the base. We should get a lot more specific in those.

Do we really need for build things afresh for India 2,3?

Even as I think all these, I also wonder if this whole line of reasoning (that we need to think of services for India 2 & 3 ground up) is wrong. Just like other cases (like fashion), what if India 2 & 3 change, adapt & become India 1 (the whole Sanksritization/Westernization at work)? The same set of products will then work, in a decade or two. On the other hand, how much of India 1 is actually really like Western markets? How much of India 2 & 3 influence will impact India 1 and the products & services thought ground up for them will be useful to India 1? If only I knew the answer.

Conclusion

We touched upon so many things here but I think we can conclude the article as follows for TLDR; purposes:

• Digital Life includes anything from device to browser to the app on it
• India does not have any big ecosystem apart from the global majors
• India can be segmented as multiple markets (1, 2 & 3 as defined by Haresh)
• A survey of digital services for India shows that most services focus on India 1. The list for India 2 & 3 is sparsely populated
• Services are not getting built for India 2 & 3 (or are not yet successful) because India 1 is not saturated, India 2 & 3 are not monolithic, we do not know how to solve things for India 2 & 3 and there is not enough money to make in India 2 & 3
• Old Economy companies (Indian & Foreign) have succeeded in India 2 & 3 and there are things that we can learn from them
• We can segment India 1,2 & 3 further into multiple segments. Probably India 2 is the easiest opportunity. We should segment them into 10–15 segments and then target/position the services. Example Segments & Persona is provided.
• The risk with building services ground up for India 2 & 3 is that, like other domains (say fashion) they may simply copy India 1 over time

Footnotes:

[1] I do this procrastination stuff often — the one I remember well is a blog post (Tamil) of Jeyamohan on Hinduism that I so wanted to translate into English, it languished in Evernote for years together till someone else (Gokul) did it for Swarajya magazine! With great relief, I deleted that entry too. Also, I used to dream of making a movie of a crappy short story I had written on Tamils living in Thailand for 1000 years to protect their King, until this movie came out with a slightly similar concept. And no, I am not a film maker or even a writer per se — dreaming is allowed for anyone, right?

[2] I specifically chose not to pick any enterprise service since it would end up confusing the topic. It might be an easier exercise to do enterprise at a later date. We would probably have an India 1, 2 and 3 among enterprises too and it would be great to cover problems and services used by small & medium enterprises (India 2 & 3) in India

[3] I picked up the concepts of ‘digital life’ and % coverage of ecosystems from Radio Free Mobile’s blog posts, though I should say that I do not really know what all services are covered by their research papers — never bought any of those.

[4] Seriously universe, get someone to do all the operational work of getting a podcast done and I promise to produce a brilliant podcast at the intersection of product management & emerging economies

[5] That is, if I ever complete this and no such article does it in the next 5 or so years haha — this is written on 17 Oct 17. I am that lazy. Well, a couple of articles recently promised something on these lines — one by Dinesh (Walnut Product Manager) and many by Osama Manzar — but did not quite cover it all, so hope is still on that I will offer something fresh!

[6] I am employed at Amazon currently but none of what I write is influenced by that, except that I use the computer provided by them to write this. This applies to all my past employers too.

[7] This glorification of India as a market could be a biased view because of me living in India and reading more India stuff. However, I think it is fair to say that India is ‘one of the’ most attractive markets for all ecosystems to focus on.

[8] Apparently, HUL had this project called STING (Strategy To Infringe Nirma Growth) in the late 80s or early 90s. This is something I remember from a guest lecture I had in one of the marketing courses in IIMB. Do not know how true it was.