Case Study: How external factors such as customer sentiments, political & global scenarios can affect the Startups?

Back Ground:

An outbreak of corona virus disease 2019 (COVID-19) was recognized in Dec, 2019, in Wuhan City, Hubei province, China. On January 30, the World Health Organization (WHO) declared the corona-virus (COVID-19) outbreak a global health emergency. Since then, it has wreaked havoc worldwide.

India’s industrial production growth had turned negative in Dec’19 contracting by 0.3%, mainly on account of a decline in manufacturing sector. In April, FDI policy of India was amended to enforce tougher scrutiny on Chinese investors looking to cut checks to firms in the country. the measure was introduced to “curb the opportunistic takeover” of Indian firms going through the pandemic distress.

A survey published that time, indicated that ~67 percent of Indians hold China responsible for the spread of COVID-19. This first wave of anti-China sentiment in Indians were still fresh when Galwan valley topic heated up. Tension had risen between the neighbors since May, which broke into violent face-off on June 6 with China’s People’s Liberation Army& 20 Indian soldiers were martyred.

On 12 May 2020, during the announcement of the corona virus pandemic related economic package, PM Modi advised nation’s 1.3 billion citizens to look for local alternatives to make the nation “self-reliant” (Aatmanirbhar) and revive the slowing Indian economy. The urge to boycott Chinese products was ignited by Prime Minister’s ‘Vocal for Local’ initiative for India. This heightened the above sentiment against foreign goods selling in India.

#BoycottChina has been trending on social media in India since may, due to growing anti-China sentiment among many citizens as a combined result of the above two situations. Popular personalities like actors and politicians have been encouraging Indian citizens to boycott goods and even software from foreign nations. This trend has perhaps been most visible on social media and in the tech space. Over 90 percent of people would prefer an Indian product over Chinese counterparts & support #BycottChina trends.

On 28 Jun 2020 Modi addressed the ongoing corona virus crisis and the escalations along the border with China. where he pushed the idea of creating an “aatmanirbhar Bharat” (self-reliant India) and presented various schemes for Indian start-ups including Innovation ‘App innovation challenge’ to boost home grown apps.” Soon, India banned 59 Chinese apps, calling it “prejudicial to sovereignty and integrity of India, defense of India, the security of the state and public order.” Indian Army also banned 89 apps from their smartphones to plug leakage of information.

COVID-19 pandemic, Indochina border tension, PM Modi's push to Atmanirbhar Bharat, #BycottChina affected Some of the leading Chinese origin start-ups in India had to pay the cost of these sentiments. However, it created an opportunity in the start-up world, boosting existing home grown start-ups & creating fertile soil for new ones. This compelled many Indian start-ups to take swift actions who wanted to seize the opportunity to use this sentiment in fever of their company.

copyright- BleedingAge

Problem Statement:

1.How external factors such as customer sentiments, political & global scenarios can affect the startup?

2. The Necessity of balance between agility to respond V/s compliance of policies, laws & product quality control.

3. Importance of “Right time” matters in start-up?

  1. TikTok

Popular Chinese short video-sharing app TikTok, allows users to create short videos with music, filters, and some other features. It had 2 billion+ downloads globally, In the first quarter of 2020, TikTok was downloaded 611 million times in the country, making up over 30% of the app’s global downloads for the quarter, as per Sensor Tower reports. This was the double of India downloads recorded last year.

In addition to anti China sentiment, many people had found many other videos on TikTok that promoted violence against women, religions, and animals as well. This led to Indians going against TikTok and hashtags such as ‘#bantiktokindia’, ‘#BanTikTok,’ ‘#TikTokExposed,’ and ‘#IndiaagainstTikTok’ began making rounds on Twitter and other social media platforms.

TikTok faced backlash in India on famous YouTube vs TikTok debate on social media when famous YouTuber CarryMinati roasted TikToker Amir Siddiqui. This was further fueled when CarryMinati’s video was removed from YouTube as it didn’t comply with its policies and the appearance of a video posted by one of the user that well-endorsed acid attack.

As per a report by Sensor Tower, TikTok downloads in India went down from 35.7 million to 17 million between March and May due to negative reactions from people in India The downloads are for both the Google Play Store and the App Store. This accounts for around 51% dip in the app’s number of downloads in the country. Following this, the app’s ratings went way down on the Play Store with negative reviews and various Indian alternatives came to surface. However, TikTok lost its rating on Google play store from 4.2 to 1.3.

A video from one of its users seems to have cost TikTok a lot and with netizens continuing to trend the ban against them. However soon after TikTok revived the rating back to 4.3. Soon after this India put a ban on 59 Chinese apps including TikTok which costed the parent company $6 bn.

TikTok, the ByteDance-owned leader in the category, began losing users over its inappropriate content and the escalating Indo-China situation long before the ban from Indian Govt. Now that, all three ByteDance apps — TikTok, Vigo Video, and Helo — have become unavailable in Indian market. It will cause the company a loss of about $6 billion affecting ByteDance’s business significantly. The place vacated by TikTok, Vigo Video, and Helo have already started to accumulated by home-grown apps like Mitron, Chingari, Roposo, and ShareChat.

2. Mitron

Made in India Rivals emerged to capitalized on the anti-China and anti-TikTok sentiments prevailing in the country such as Mitron TV, Tik Kik and Bolo Indya. Mitron was launched in Google Play store less than two months ago Mitron’s claims of being a “made-in-India” alternative for TikTok. The app called itself a ‘free short video and social platform based out of Bengaluru, India’, and its user interface is very similar to that of TikTok. The Mitron app had over 5 million downloads with a 4.7 rating.

However, it was later revealed that the app was not made in India; The app owner bought the source code of the app from a Pakistani coding company Qboxus and re-branded the app as Mitron and launched in India to seize to opportunity to capitalize on the anti-China sentiment. Irfan Sheikh of Qboxus from Lahore confirmed to that app owner shivank agarwal reached out to them to buy the source code of TicTic app for $34, roughly Rs 2,500 and later launched it as Mitron in India.

It din’t had any additional firewall or software security on top of the source code. The weak privacy policy could put user data at risk. The app was reported to have a vulnerability that could allow an attacker to compromise user accounts and send messages on behalf of a specific user. Cyber experts suggested, “5 million Mitron app users are vulnerable & It’s risky to use Mitron app. In the hurry to cash in on the negative sentiments against TikTok & the creator of Mitron, seems to have missed out on making necessary changes to the source code of TicTic, a TikTok ripoff created by Pakistan-based coding company.

On June 2 had pulled Mitron from Google Play, claiming that its policy doesn’t allow apps that offer ‘the same experience as other apps already on Google Play.’ The reason Google removed the app is that it violates Google’s “junk apps and least features” policy. Under the policy, the application should provide basic functionality and respect for the user experience for the user. Another provision of the policy refers to “duplicate content,” which means that “copying content from other Apps without adding any original content or value” amounts to a violation. The policy reads, “Apps should provide value to users through the creation of unique content or services.” It also states that the app should provide a “basic degree of functionality and a respectful user experience.”

Google issued a statement saying, a video app was removed for a number of technical policy violations & google has established a process of working with developers to help them fix issues and resubmit their apps. Google is working to have a set of strict protocols to be followed before an app is listed on the Play store to avoid issues like this in the future.

Mitron app was available via Google Play store with New changes in the updated privacy policy& resolved issues. But dropped to 3.7 after re-submission from 4.5 stars.

3. Chingari

Chingari debuted as a short video app back in 2018 but gained traction in 2020 when The border tensions between India and China and the ensuing crackdown on 59 Chinese applications has surged ‘vocal for local’ calls, marking a major push for Chingari and its user base.

Inspired by viral video of Indian innovator Sonam Wangchuk, an Instagram campaign launched promoting about Chingari being a “Made in India” product to boost its popularity. It went viral reaching 5 lakh downloads within 72 hours. As people flocked Chingari, its downloads kept increasing. By end of June, the app had media attention, momentum, and the backing of Anand Mahindra on twitter.

Also it promoted the aspect of privacy, promoting that data of Chingari users is safely stored on Amazon Web Services servers located in Mumbai, collect very minimal user data and don’t mine anything we don’t need or anything that could violate user privacy.

Then, TikTok was banned by the government and Chingari got a much larger push as ‘India’s own answer to the Chinese app’ leading to 17–18 million downloads, raking 2 million downloads a day, organically.

4. ‘Remove China Apps

The same anti-China sentiment led to the arrival of the ‘Remove China Apps’ app to get rid of the apps from the China mainland and go for other alternatives. The Remove China Apps app was designed to feed off this sentiment. It could scan your phone’s list of apps and alert you to any China-made apps on your device. The app also gave you the option of quickly deleting any offending apps. Presumably this latter feature is what caused Google to take action. Some popular app names with Chinese origin include Tencent’s PUBG Mobile battle royale game, ByteDance’s TikTok, ShareIt, UC Browser, CamScanner, from Chinese developers, and ByteDance’s music app Resso.

The Remove China Apps application made its debut on the Google Play store on May 17,2020. The popularity of the app coincided with the growing anti-China sentiments in the country and was downloaded over 50 lakh times. As per data from Google Play it was developed by Jaipur-based start-up One Touch App Labs has become the top free app on Google Play Store. In just 10 days, it was having 1.89 lakh reviews and holds a 4.9 star rating on the Google Play Store. While the app claimed to be developed for “educational purposes,” it was capitalizing on the anti-China sentiment prevalent across the country.

However, it was also pulled from the Play Store on 3rd June 2020 for violating Google Play Store’s Deceptive Behavior Policy, under this policy an app on Google Play Store cannot make changes to a user’s device settings, or features outside of the app, without the user’s knowledge and consent, and it cannot encourage or incentivize users into removing or disabling third-party apps.

Sameer Samat, vice president of Android and Google Play, said that when apps are allowed to specifically target other apps we don’t allow an app that “encourages or incentivizes users into removing or disabling third-party apps or modifying device settings or features unless it is part of a verifiable security service”, it can lead to behavior that Google believes is detrimental towards both its developers and consumers. “This is a longstanding rule, designed to ensure a healthy, competitive environment where developers can succeed based upon design and innovation. We have enforced this policy against other apps in many countries consistently in the past, just as we did here,” he said.

5. JioMeet :

The key to success is making a move at the right time and established organizations are no lagging in the race.

Zoom, which was one of the top downloaded apps during the lock-down as companies started to work from home and even educational institutes went online. However, in April, the Ministry of Home Affairs had red flagged concerns over data safety and security around Zoom.

Zoom became Amidst data security concerns, when Video conferencing app JioMeet was launched by Reliance Jio on 3rd July. JioMeet has been launched taking the advantage of the timing. JioMeet officials have ensured that app met various segments of the government to assuage all fears. It has been downloaded 5 million times within days of its launch.

6.Instagram reels

Now, Facebook-owned Instagram has officially launched Reels, its own short-video product. It has made a move at the right time the TikTok.

An already active user base of short video consumers and creators/influencers, Instagram is best positioned to fill the gap created by TikTok’s departure. Several cases of TikTok users migrating to Instagram following the announcement of the ban. TikTok had over 200 million users in India.

Many more organizations are looking at this shift in the tide as an opportunity to expand its footprint in India using the gap created by Chinese product’s departure from the country.

  1. Shift in trends are more important for start-up’s than trend itself to seize the next opportunity. The key to success is making a move at the right time.
  2. Entrepreneurs must ensure the fool-proofing to safeguard product quality as this creates a brand image in customer’s mind-set & can make or break the business.
  3. Regulation & policy compliance play an important role in long term sustainable success. Compromise in terms of the policies & violations can put you in the tight spot & can also create a long lasting negative effect to the business (Mitron, Remove China Apps).
  4. Data security has proved to be important aspect of business & it can-not be compromised.
  5. Customer sentiment has exponential impact in this digital era more than ever hence more robust strategy need to be ensured.

There are many factors can affect the business & get you on the top of business or can cost you billions, one can’t always control these factors but entrepreneurs can be aware take actions to utilize the situation for advantage & ride on the shift in the tide.