Interesting themes for India

In last 12 months, I have come across many interesting theme’s for India that unlock huge wealth and opportunities, while most of India is super unorganised, In the next 10 years there will be swift changes.

In last few years, the most frequent usecases went from unorganised to organised, I.e payments, food delivery, mobility.

But here are a few interesting that I am super excited about:

1. AI led spiritual experience, leverage AI to solve for access, engagement and making spiritual aspect of life much better, Bible chat AI in USA makes $10M ARR, they launched in 2023.

2. Offline experiences and gatherings are seeing massive uptake in India, especially tier 1 cities. Most farm houses acorss tier 1 cities are overbooked during weekends, A booking. com for farmhouses, private stays, home stays is super exciting opportunity.

3. While Food for small gatherings and independent orders have been solved well by QSR and food delivery apps, there’s huge opportunity in catering for food needs in 10-100 pax events category, with little research i have done, strongly feel the right form factor for this market is vertically Integrated marketplace with fulfillment.

4. There are 100’s of million teenagers who constantly need help in adulting, think of an on demand marketplace for them to discover and communicate with experts who can help them with career decisions, core subjects, dating, communicaton, language learning, mental health and finding friends to talk.

5. Credit scoring is completely broken. Credit scores have a very low penetration, needs to be solved from scratch, need to think from first principles.

6. Most relationships are remote or hybrid, as migration has been taking center stage in their lives, Consumer apps / products for couples, that will help them build better bond and engagement will show promising outcomes.

ConsumerTech in India

Last 8 years have been nothing short of amazing in India, with smartphones penetration and Internet access going through the roof, most of our life has moved online.

The hardest nut to crack was shifting financial transactions online, Which UPI did really well.

With Smartphone penetration, Interent access + UPI, building in consumertech got more interesting, but even 8 years later we haven’t even scratched the surface.

There are 1000’s of service companies, D2C brands, Saas companies but hardly consumer tech companies.

“India has very few consumer app builders and only countable good apps”

If you’re exploring to build in consumertech, I would highly encourage you to pursue it.

To make your journey little easy, I will be sharing few frameworks that helped me approve or disapprove an idea in 5mins.

• The entire startup ecosystem will teach you to think of products or ideas with an old framework → Acquisition, retention, and monetization

  The acquisition means how will you bring users to your product, would be the cost, whether is it easy or hard

  Retention means How many users are coming back to your product, what’s the reason for them to come back, is it already an established behavior or are you creating one?

  Monetization means will consumers pay for it? how much are they paying? while they pay you at regular intervals?

But on the contrary here’s how you should think about ideas,

1. Monetization first: Will the consumer pay for this? validate that first

2. Retention: Why will the users come back to the product again? how many times are they likely to come back? are you trying to create a behavior or capitalize on one?

   For example: On an app like swiggy you can keep on ordering food all your life, and you don’t have to worry about retention but imagine a learning app, it is hard to solve retention for such products because of no motivation for consumers.

3. Acquisition: How hard is it to acquire consumers? how long the sales cycle is going to be? What’s the cost per lead/cost per acquisition

A sizable business can easily be built if you have either one of these things:

1. High Monetisation: Where consumers are paying you high-value ticket sizes ex: Byju’s / unacademcy - their users churn after a certain period of time but ticket size compensates well

2. High retention: An app that high-retention users are coming back to the app again and again, ex: A payment app, a messenger app, swiggy or Rapido

3. Low Acquisition or organic acquisition: Acquiring users on your product for low cost or at least no cost - ex: Most of the online courses leverage youtube and solve for organic acquisition, that’s why they are able to sustain

   Here are few consumer apps from India, that are doing well as a product:

Insurance and Distribution

The world of insurance hasn’t been the same. It is rapidly changing and evolving.

The insurance market is changing in countries where mainly it is a norm not just an option.

But the biggest unlock even today is how the Insurance is being distributed.

In 1985, New York life insurance was $ 10 billion in annual premiums, and mass mutual life insurance was $ 1 billion in annual premiums. As Mass Mutual pivoted to new ways of distribution as of 2023 they grew by 9x to achieve $9.2B in annual premiums and New York Life Group grew by 30% in 2 decades to crack $13B in annual premiums

The problem has always been that with the traditional approach, you don’t own the customer:

If the existing relationship manager/sales rep makes a move, consumers are less likely to discontinue or be retained for your insurance products. With the traditional approach, the sales agents carry the clientele as their distribution everywhere.

There have been many tech-led initiatives by the biggest financial service companies to build a massive distribution, sharing them here:

1. Embedded way of insurance:

Embedded insurance, part of a broader movement towards embedded finance, is about getting more affordable, relevant, and personalised insurance for people when and where they need it most.

It is more like “add-on insurance” that could be easily integrated with high-frequency use cases for ex: Paying bills, making payments, Booking a cab, ordering food, booking travel tickets or making online purchases.

Acquiring users via Embedded Insurance:

As more business moves online a long tail of smaller retailers and product manufacturers with razor-thin margins are looking to offer add-on services like theft and damage protection at point of sale. They need to be tailored to the niche requirements of their customers, affordable and flexible. For some, these sorts of ancillary services can equate to up to 50% of their net profits

B. Uber is another big online platform with a close relationship with its users including its 3 million drivers worldwide.

At any one time, depending on local regulations, competitive threats and new market opportunities, Uber requires the flexibility to provide its drivers with different types of insurance, benefits and incentives, related to vehicle and personal injury coverage, sickness, paternity pay or other income loss.

Some of its insurance solutions are provided to drivers for free, some are invisible, and some are optional add-ons. Some are related to when the driver is ‘in service’, some not.

In all cases, Uber prides itself on the simplicity of its user experience and requires insurance solutions that are easy to adopt, good value and quick to claim against. The problem has been that traditional insurers have not been attuned to the need for such flexible, niche products at the speed that Uber moves and within categories that are new to the industry. Drivers are not ‘employees’, Uber does not own a ‘fleet’, its drivers don’t want ‘annual policies’, and any downtime is lost income.

As a result, Uber, like other digital native organisations, is increasingly working with a new breed of insurers (‘digital MGAs’ and others) who are providing more relevant solutions that can be embedded more easily in their driver experiences.

C. Insurers can also benefit from embedding other financial services into their offerings. For example, SingLife recently worked with Railsbank to offer a combined savings, spending, investment and insurance plan with a Visa debit card and no withdrawal restrictions, to create a closer, daily relationship with its customers and gather more data on their habits.

In the past, this would have been complicated, costly and time-consuming to launch such a service. SingLife managed to launch its new product within a few months.

Even if automotive claims can be processed quickly today with camera phones, disbursements are often made by cheque (costing insurers $10 each time!). Insurers can now use real-time payments from bank-as-a-service platforms to improve this poor experience

Today, If you look at countries that have higher internet penetration like India, the USA or even China - all of them have moved their point of contact with consumers to “Tech”

Build a mobile or web-first approach to learning, buy, manage and claim insurance

Lemonade Insurance built a consumer-facing product and gained distribution via performance marketing, they achieved $450M in revenue

In fact, max life insurance in India the biggest competitor to LIC insurance has Gross Written Premium of $4 Billion , Assets Under Management is Rs. $25B+ and their revenues for FY24 $4.5B

They achieved this scale with just 19,000 employees.

It's because they optimised for tech to create operational efficiency, for instance they built a Mobile App for consumers to learn, buy, renew and claim their insurance.

They built internal tools for their agents to track productivity, conversions, upload paper work and disburse layouts.

2. Policy Bazaar, Turtlemint: POSP Model

IRDAI introduced the Point of Sales Person (PoSP) model to make it easier to sell simple insurance products and drive penetration.

This model is a compelling blend of technology and a human interface that makes the insurance journey smoother and more credible for consumers.

The PoSP model is a win-win for consumers, agents, and insurers. The model has seen rapid adoption with over 20 lakh PoSP agents in India. It gives agents better earning opportunities, insurers get the ideal means to tap underserved sections, and customers can have a local touchpoint to all their insurance needs.

PoSP model lies in the empowerment of agents through comprehensive training, access to advanced technology, and attractive compensation structures.

This empowerment enables agents to provide personalised guidance and support to policyholders, facilitating informed decision-making in insurance purchases. By seamlessly integrating traditional agent networks with digital tools, the PoSP model enhances distribution efficiency while preserving the human touch in sales interactions

The PB Partner network is spread across 19.1k pin codes across India. All in all, Tier-II and Tier-III cities account for almost 50 per cent of the incoming business.

3. Leverage Telecom Providers:

There’s been an interesting partnership between Telecom companies X insurers, there have been users not paying bills on time, and introducing Bill Protect Act, an innovative solution that addresses the issue of late or unpaid bills by providing a safety net for service providers and consumers alike.

Similarly, Orient could partner with DU Telecoms, and Saudi Telecom and sell a low ticket-size insurance plan that consumers could pay with the billing. The method has worked globally very well.

A. Airtel Insurance (India): Airtel partnered with Bharti AXA Life Insurance to offer life insurance to its customers. The offering was a term life insurance plan with a sum assured of ₹1 lakh (approximately USD 1,370).

Scale: Over 1 million policies sold within the first year.

B. MTN Insurance (South Africa): MTN partnered with Sanlam to offer life insurance to its customers. The offering was a funeral insurance plan with a sum assured of R10,000 (approximately USD 670).

Scale: Over 2 million policies sold within the first year.

C. Ooredoo Insurance (Indonesia): Ooredoo partnered with Asuransi Jiwa Sinarmas to offer life insurance to its customers. The offering was a term life insurance plan with a sum assured of IDR 10 million (approximately USD 670).

Scale: Over 1 million policies sold within the first year.

4. Dittoinsurance - content-led insurance

The modern consumer is much different, they are much influenced by the internet - most of their decisions made by them are influenced by the content they have consumed.

Ditto built a library of educational content on their website for anyone to browse and learn without any pressure – no collection of phone numbers or email addresses that lead to harassing calls or spam.

They hired insurance freshers as an ‘advisory’ team on salary, gave them 3 months of training per category and then no sales targets. The incentives do include closing deals but with customer satisfaction. They don’t have any complaints of mis-selling on the contrary, customers rave about them and give them referrals.

They built the tech to make the advisory team more productive including calculating and comparing premia for policies across companies in minutes.

Their marketing funnel is still the much-loved newsletter and some affiliate marketing with influencers.

5. Affinity Group:

Affinity group-based Insurance sales target a cohort of consumers that have similar needs, similar geography or similar behavioural characteristics. The use case could be a company providing insurance to its employees, a non-profit org providing insurance for people they care about, or a doctor association/community providing insurance to their community.

In the USA, many companies have cracked huge distribution and impact by choosing to sell insurance via affinity groups, for instance, for over 70 years USI Affinity has been recognized as an industry leader, consistently among the top Affinity Insurance Administrators in the United States serving more than 400 partner organizations and representing more than 20 million members.

In 2017, private equity firm KKR and institutional investor CDPQ acquired USI Insurance Services from Onex Corporation for $4.3 billion

Today, USI has more than $2.7+ billion in revenue and over 10,000 associates across 200+ offices nationwide.

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Future with AI

Over the last few months, I have been super busy exploring and interacting with people building in AI, I Have spoken to folks from SF, who are creating great institutions and a few other people who have actively been investing,

Here are a few thoughts on what the future of AI is going to look like

AI transforming tools is a small function, but AI is going to change how consumers think and operate. Consumers will make more informed and better decisions in all aspects of life.

1. The future of entertainment is AI-generated, for instance, your favourite actor and director won’t have to spend huge resources to craft a film, instead their character will be used to make movies via AI. There will be platforms that will be like “Netflix for AI movies”

2. AI will become a personal assistant, ordering food, groceries, and housekeeping work will be taken over by AI

3. AI will solve loneliness, it is great at variability and connection, and this use case will become much stronger as we achieve AGI.

4. In Spiritual space, I’m seeing an AI priest / AI pastor take over, think of this as an AI priest/pastor for every believer, where the AI spiritual guru helps believers to become spiritual and follow rituals with better discipline.

5. Education will become affordable but interestingly will be a lot more personalised, it will teach, assess and strengthen the student’s skills based on their unique behaviour.

6. AI is going to change the game of lending, Profile assessment will become super fast, and the AI models will share digital footprints and unique data points about every consumer. Companies can assess the “ personal AI” of the consumer to decide if someone is creditworthy or not.

7. Ad-tech will become more personalised, the LLM could push the businesses that pay higher bid amounts in the recommendations. perplexity will become a better ad-tech company. Ad tech only works when you don’t know it as an ad.

8. AI will become the greatest matchmaker, especially in countries like India where 90% of marriages are arranged. Think of this, An AI platform you interact with most frequently is well-positioned to decide and offer you matches.

9. The next Big travel company will be an AI company, that gives the best offers, and options and guides the consumers. Think of it as a personal travel agent/guide.

I feel an AI product will become powerful when consumers keep interacting with it, it’s similar to marketplaces - they become stronger as more and more transactions take place on the platform.

How to get traction?

I am Aarihant Aaryan! Welcome to the Iron Sharpen Iron newsletter,

I share my weekly homework from my startup journey, learning about human behaviour, and sometimes decoding industries and business models for fun.

I can’t control my curiosity :) )

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When I was building my first company, It was a nightmare for me to create traction - most founders I knew were clueless then.

Even today if you look at India’s tech talent, we have very few people who can grow apps, products or services. The worst part is I’m yet to meet an Indian version of Nikita Bier

Since it is a struggle for first-time founders or founders who don’t have a growth mindset - I am sharing a quick guide on how to get traction for your product and scale it from there.

1. List your product on Product Hunt, and ask people to upvote it so that it gets some visibility

2. Please write on LinkedIn and Twitter, mention what you are building at the end of the post and ask people to check it out. During the first year of my company, I wrote every day on LinkedIn, which helped us get more than 100k visitors on our website in a year, and get a few thousand users on our waitlist. Because I was active on the internet we also found our investors and team members.

3. Become part of communities, if you are building a developer tool or tool for D2C get into their communities and understand them.

4. Write blogs around the problem statement and publish, drive organic growth

5. Create videos, first double down on Instagram reels, if you create relatable content - you will reach a great number of followers and you will make your first 10L in revenue without much effort

6. Build communities, if you’re building for India your community should be on WhatsApp - engage them with great content, and keep distributing your product, updates and content in these communities.

7. Create a YouTube channel but it is a very long game, if you can crack it - ideally your customer acquisition cost becomes lesser than all your competitors by many multiples.

8. If you’re targeting enterprise customers cold DM’s on the internet is the best, make it crisp - tell them what you are solving, what impact it could have - and the impact your solution created for others. Another great hack is creating a demo for your enterprise clients and tagging them on social media.

9. Think, about what potentially can be the most neutral place for your target group and keep targeting that place. For example, If you are targeting anyone below 21, the most neutral place would be colleges/schools or universities - share your pamphlets, QR code, and products or tell them all the good-looking women in their college are on the app :)

10. There are 100 other hacks that you could do, which largely depends on the market and target group you are solving for. But one last thing I would recommend is doing ads on Facebook or Google ads, you don’t need an ad expert - it’s pretty much self-explanatory. If you can spend 7000 to 10,000 on ads you’ll get 1000+ users and more than 20+ paid users.

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