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  • Jeremy J. Wade

The Death of Armadillo Digital: The Story of Our American Startup Failure in India

In 2017, we launched Armadillo Digital against the backdrop of India’s explosive digital surge, with the internet user base increasing from 137 million in 2012 to 422 million in 2017. This growth story was foundational to our motivation to start Armadillo Digital; a creative agency focused on the growing Indian digital economy.

View from the metro in Gurgaon with DLF Cyber City in the background

Founded by two Americans in New Delhi, Armadillo Digital was a pioneering experiment in the truest sense—first-time founders launching a startup in a foreign market, where even the basics proved challenging.

Starting Armadillo Digital in New Delhi created numerous operational complexities. The incorporation process was our first hurdle, requiring a commercial lease before we could even file the paperwork—a surprising prerequisite that delayed our plans. Further, naming restrictions prevented us from using 'Armadillo' or 'Digital' in our official name, leading us to settle on 'Armadigi Design Private Limited.' Setting up a bank account added to our early challenges, involving extensive paperwork and requiring a literal physical rubber stamp to authenticate hundreds of documents. These initial administrative obstacles were incredibly time-consuming and took us more than 6 months to finalize.

But six months later, we were finally in business - even achieving official recognition as a startup by the Indian government.

Certificate of recognition from the Startup India initiative

Our challenges didn't stop there. Our initial business development efforts were widely unsuccessful. Our pricing was too high for the local market. We also found potential clients preferred local trusted firms with family relationships. In a few cases (we found out later) the potential client simply shared our proposals with competitors to implement at a lower cost.

Next, we explored strategic partnerships with established public relations and communication firms operating in Delhi. These firms already had an existing client base looking to expand into digital services. That worked.

Our first client was a new modern art gallery and museum starting in Calcutta. We travelled from Delhi to Calcutta on a first-class train to meet them. They wanted an updated logo, brand guide, website, social media, brochures, flyers, and venue signage.

Next, we got contacted by a leading India-based alcohol company. They wanted to reimagine their branding to attract the emerging young Indian consumer.

Armadillo Digital was always a bootstrapped startup, and we learned hard lessons about cash flow management while operating in India, which is notorious for slow-paying (sometimes never-paying) accounts receivable. We also learned India's court system is hopelessly backed up, it would literally take 300 years to clear the country's judicial backlog.

We needed to pivot.

We began focusing on international clients, harnessing high-performing but lower-cost Indian talent for better margins. This worked. We started getting traction and expanded quickly. Why didn't we start out doing this? Good question.

Within a few months, we had numerous clients in multiple countries. A Bill & Melinda Gates-funded healthcare company based in Kenya, a new intelligent backpack startup based in Shenzhen, China, an online learning platform based out of London, and a global fintech company from Estonia.

Seeing potential opportunities everywhere, we launched a venture studio in 2019. We partnered with local entrepreneurs, sharing equity and building new digital startups from the ground up. We collaboratively launched an e-commerce fashion brand startup and a digital media venture focused on tourism.

With the WeWork team wearing Armadillo Digital shirts

But it was difficult to sustain, and we were losing focus. The new global strategy required higher-quality business development processes, and the venture studio model was draining our cash reserves. We needed growth capital.

Then, in April 2020, COVID-19 hit, and the Indian economy went into a complete nationwide lockdown for several months.

India experienced a nationwide lockdown for 68 days

The death of Armadillo Digital was a death by a thousand cuts. For years, we operated purely in survival mode.

The COVID lockdown provided time for us to pause, reflect and reaccess. We realized it was time to move on. But the lessons learned from this experience will last a lifetime.


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