The Imitation Game

MOST GLOBAL PRODUCTS are American and Indians must have a seat at the table, wrote the co-founder of the social media app Koo while announcing the shut down of the service. This might be a legitimate desire but if the dinner began 15 years ago and a guest turns up now, then chances are the seats will all be taken. Koo, which aspired to be the Twitter of India, was started in 2020, 14 years after the original. We now know that this was also at the very end of the era defined by social media because the only wagon of the future in town at present is artificial intelligence.

Koo had a brief moment under the sun for its prospects soon after its launch when the Indian government became exasperated by Twitter’s (now X) recalcitrance to obey it when it came to censoring posts and accounts. In India, no business can survive if the state gets an allergy to it. But American companies also come with the superpower of the US government behind them and it was never going to be easy to ban Twitter overnight, like TikTok. That was not going to be Koo’s salvation.

Twitter was the public square of the world and the only reason for Indians to switch over would be a nationalist impulse, but that was shortlived. Plus Twitter itself was already becoming less of a monopoly as it got disrupted and taken over by forces in its headquarters in the US. Koo, at its highpoint, had 2 million daily users but even that was far short of the point at which network­ing effects take over—you want to be in it because everyone you know is in it.

The reason for Koo to shut down now is that it has run out of funding. The pipeline had provided all that it could without seeing any reverse flow. The Indian startup model is mostly a gamble—to take a successful idea from abroad, imitate it, get a constant stream of financing and hope that it becomes the one out of the many to become super-successful and thus make investors feel that the casino is worth playing in. But that is proving to be less and less the case. Byju’s used to have a valuation of over $20 billion two years ago; last month, an investor marked it to zero on their books. Paytm was around $20 billion at the time of its IPO; it is now around $3 billion.

No business can survive on endless infusion of investor cash, but the Indian startup ecosystem seems to have taken it as a given. It might still be warranted for radical new products in the beginning of world-changing technologies, like Facebook or Amazon or Google. To their investors, it very soon becomes evident that there is a mountain of gold beyond the horizon and that the wait will be worth it. But the rope for repackaged ideas is not very long and Indian startups like Koo will increasingly be forced to acknowledge it.

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