How to spark a ‘product innovation’ revolution in India?

Continued From: Why doesn’t Indian startup ecosystem churn out product companies?

Let me start by picking up a few ideas from Paul Graham.

Not Buildings
If you go to see Silicon Valley, what you'll see are buildings. But it's the people that make it Silicon Valley, not the buildings. I read occasionally about attempts to set up "technology parks" in other places, as if the active ingredient of Silicon Valley were the office space.

Building office buildings for technology companies won't get you a silicon valley, because the key stage in the life of a startup happens before they want that kind of space. The key stage is when they're three guys operating out of an apartment.

So if you want to reproduce Silicon Valley, what you need to reproduce is those two or three founders sitting around a kitchen table deciding to start a company. And to reproduce that you need those people.

Universities
The exciting thing is, [if] all you need are the people, If you could attract a critical mass of nerds and investors to live somewhere, you could reproduce Silicon Valley. And both groups are highly mobile. They'll go where life is good. So what makes a place good to them?

What nerds like is other nerds. Smart people will go wherever other smart people are. And in particular, to great universities. In theory there could be other ways to attract them, but so far universities seem to be indispensable. Within the US, there are no technology hubs without first-rate universities-- or at least, first-rate computer science departments.

Personality
… merely creating a new university would not be enough to start a silicon valley. To spawn startups, your university has to be in a town ... where investors want to live, and students want to stay after they graduate.

Most nerds like quieter pleasures. They like cafes instead of clubs; used bookshops instead of fashionable clothing shops; hiking instead of dancing; sunlight instead of tall buildings. ... they like well-preserved old neighborhoods instead of cookie-cutter suburbs, and locally-owned shops and restaurants instead of national chains. Like the rest of the creative class, they want to live somewhere with personality.

One reason why Bangalore could rise - though it is nothing close to Silicon Valley - is because it contains many elements described above. Bangalore when it started growing into an IT hub was a town of HAL, DRDO and other quasi-academic research institutions; it had a decent presence of educational institutions, and most importantly it was a city with Personality as described by Paul above.

The Bangalore of today (or the new Bengaluru) however does not continue to be the same city as it used to be in the 80s-early 90s. Its like any other Metropolis - Mumbai or Delhi. So while new businesses will continue to be incubated in Bangalore, so will they be in Mumbai, Delhi, Hyderabad, Kolkata and Chennai - I doubt if we will see game changers coming from here. Pune is a possible opportunity, but it has also been saddled with a huge IT Park in Hinjewadi and may soon loose the window of being the 'town of product startups'.

But what Paul has described in the elements of a 'Silicon Valley Ecosystem' is precisely what the PSU Townships of 70s-80s were - calm, quite, decent infrastructure and most of them also have good colleges / universities around them. In fact, one thing which I have observed personally is that a good number of corporate professionals in India today have had an upbringing in such townships - several corporate honchos and MBA's today are wards of PSU employees.

However, the major difference between an Indian 'Valley' (aka PSU town) and The Silicon Valley is - a risk taking culture and unbridled optimism. Most erstwhile PSU towns are shrinking or giving way to commercial cities as Government's investments reduce to a trickle, employee attrition combined with outsourcing reduce the number of people - the infrastructure in these towns is crippling for the want to maintenance. The 'optimism' is definitely going away , if at all it existed all these years.

So here's what I propose!

The location

Lets pick up one or more PSU towns in India with decent infrastructure and a University close by. Request the PSU / govt to lease out its ailing/dilapidated buildings, land, amenities for a cheap rental to build a startup park. These start up parks will offer cheap office spaces and infrastructure say using WiMaX to provide cheap internet. May be a few old employee quarters could be thrown in as residential suppliments as well.

Location Options: Bhopal (BHEL), Bhilai (SAIL), Rourkela (SAIL), Durgapur (SAIL), Tiruchirapalli (BHEL), Panvel (ONGC / JNPT), Korba (NTPC), Vadodara (IOCL / ONGC), Dona Paula - Goa (NIO), Noida (NTPC)

The operating model

Techcrunch has a mention of Freeman Murray's Y-combinator style venture funding model. I propose a group of industrialists, former entrepreneurs and some Govt funding could be used to kick start such a Y-combinator style fund (I know this is a tough part - but getting the Govt to agree to part with its PSU's assets would be harder!)

The Final Mix

The final mix to induce product companies needs to worked out with presence of efficient partners - entrepreneurs, technologists, visionaries - who will need to join an evangelization effort; who will also be out venture funding company's mentors. As techCrunch puts it:

The truth is India’s dream of building the next big fast-growing powerhouses will have less to do with angel money or Western venture money and more to do with getting around that ingrained fear of risk-taking.

Walking away from a prestigious and high-paying multinational job when you don’t have an angel to catch you isn’t easy, especially in a year when India has seen some of the first corporate layoffs.

Criticism invited!

Update:

I found someone doing it - he's chosen Chandigarh, not a bad choice I'd say! Way to go L-Pad - all the very best from me!