Day: October 10, 2005

Investing in India

[via Arun Natarajan] Anand Sridharan of Bessemer Venture Partners becomes India’s first VC blogger. Some interesting insights into investing in India:

what does this mean for investors and entrepreneurs looking to build billion-$ businesses:

1. Stick to basic needs

It will take us a while to get to self-actualization needs. Health spas, blogging and other self-indulgent pastimes will remain pastimes, not businesses. Billion $ businesses are most likely in food, clothes, basic infrastructure (roads, houses, health, education), communication, transport, household goods.

2. Think utility, not fun

Middle-class Indian households are used to an all-encompassing entertainment budget of $1/month/head for unlimited cricket, news, songs and movies. And this even includes the EMI on the TV (in addition to the cable bill and a newspaper subscription). No one is in a hurry to pay $5 a pop for a mobile phone game.

3. Price rules but think VFM, affordability, TCO

Necessity makes us smart consumers. I worry whenever entrepreneurs talk of convenience and choice, without mentioning price. Classic example Indians buy 2 million cellphones a month, compared to under 100,000 PCs (only consumer sales). Why? Greater value-for-money (most small businessmen actually make up for its cost through higher revenues). Low entry cost ($10-20 to go mobile). No other costs that add to TCO (PC ownership cost equation gets messed up by expensive home internet costs).

4. Unorganized sector is here to stay

With plentiful & cheap labor, there will always be an unorganized sector that is extremely efficient. Factory-processed foods will compete against local kitchen-help. The latter can typically deliver better taste, freshness and convenience, at a lower cost (remember, no overhead, no taxes). So, its going to be far harder to create the next General Mills or Campbell Soup in India. Similarly, kirana shops will stay long after FDI in retail is opened up.

5. Think hard before substituting capital for labor

Western capital-intensive models are often uncompetitive. Both at home (vacuum cleaners never took off, since maids are inexpensive) and in companies (high-volume flour mills still cannot match local chakki-atta costs, in the $15 billion wheat-flour market)

Technorati’s David Sifry

The Economist profiles David Sifry:

Mr Sifry’s web-as-conversation metaphor is no longer eccentric. In fact, it is receiving the sincerest form of flattery (imitation) from the big librarians. In September, Google also unveiled a search engine for blogs (to decidedly mixed reviews), and Yahoo! is poised to launch its own. Mr Sifry says he is unintimidated by the arrival of these giant competitors. Architecture follows from metaphor, he proclaims grandly, and Google and Yahoo! just started out with the wrong metaphor. Tracking the web’s conversations has only so much to do with algorithms, which is Google’s prowess, and more with sociological insightwho responds to which blog, who recommends or snubs whom.

This, in fact, is what may give Mr Sifry a competitive advantage. He is that very rare thing, a geek who can use his right brain (social interaction), in addition to his left (computer code). On the left side, his geek credentials are impeccable. He has a degree in computer science and has been founding start-ups in Silicon Valley for a decade, dealing mostly with such nerdy obsessions as open-source software and radio-spectrum allocation.

A Tale of Two Product Launches

hypocritical analyses the launch of 37signals’ Writeboard and Google’s Reader, and concludes:

n the end, 37signals delivered something that improved upon a concept and solved a need. Google, at least at this writing, didnt. And the market, subconsciously or not, understood. And because of that, Writeboard was heralded as another work of genius. Google Reader was sidelined as an also-ran, Johnny-come-lately. Which is a wee bit sad, given that, for so long, Googles brand has been associated with, first and foremost, solving problems.

Which brings me to the point at which I take a few puffs from my pipe and cast a cocked eyebrow to the audience. You see, kids. All the money in the world and all the power of brand? It doesnt matter if you put the customer second. Because when it comes right down to it, thats where your brand lives: with the customer. And all the money in the world, all the development resources in the Valley, wont change that.

Mobile 2.0

Pete Cashmore writes:

The phrase Mobile 2.0 really seems to capture what this trend is about – the convergence of mobile devices and web services creating an entirely new dynamic. Once the web is truly a platform (although some would argue that it will never reach this stage), our mobiles wont need to run applications or store massive amounts of data. The vast majority of these applications will exist on the network, with our data spread across the wide array of loosely coupled web services we use everyday.
…
One likely scenario is the emergence of location-based advertising. It seems that Google, with its movement towards local search, its mapping expertise and its successful contextual ad system, is well-positioned to take advantage of the new dynamic.

TECH TALK: Web 2.0: Conference Highlights

The past week saw the Web 2.0 conference take place in San Francisco along with a number of Web 2.0ish developments. Yahoo acquired Upcoming.org, AOL bought Weblogs, Inc, Verisign bought Dave Winers weblogs.com, Google launched its RSS reader, Brightcove and Nings launches. Building on last weeks posts, I am doing a summary of Web 2.0 writings from across the blogosphere so we can put some of the happenings in this fast-moving world in context.

There is definitely a new excitement around along with a new vocabulary. It is like the early days of the Web. That time it was about surfacing content; this time it is about interactive services. In India, we have only barely scratched the surface with Web 1.0. There are plenty of opportunities about to leapfrog into the Web 2.0 space with services which make a difference to our lives. The question is: will there be any local companies who will take the lead, or will it the likes of Yahoo, Google and MSN which will call the shots? Opportunities for innovation abound as the Web gets an upgrade. India will need a mix of both entrepreneurs and investors if we are to create start-ups in this space.

For now, sit back and enjoy the ride as each day sees at least one new Web 2.0 service being launched!

Let us start looking back at the week that was with Silicon Beat:

We talked with people in the hallways of [the] conference in San Francisco, trying to figure out what single theme trumps all others.

There are all kinds of trends, from the Ajax framework, to RSS, to tagging and more. But what is the uber concept? Our conclusion, perhaps not revolutionary for accomplices of the Internet revolution, boils down to one word: OPEN

It is a familiar, perhaps hackneyed concept. Being open means opening your company’s platform for integration with other services, and for users to be able to communicate back to you, and with other users at other sites.

Fred Wilson is worried about the second derivatives.

What was a budding movement three years ago, at the dawn of the revival in technology, internet, and silicon valley, has become a full blown mania.
Everyone is on this game. That goes for both entrepreneurs, who seem to be hatching new businesses at as rapid a rate as we saw at the height of the web 1.0 bubble, and VCs, who are quickly remaking themselves from enterprise software investors to consumer internet investors.

Last year at this time we were talking about interesting companies like Skype, Flickr, MySpace, etc.

Many of them are gone, gobbled up by the web 1.0 giants or the mainstream media companies.

In their places we are seeing second derivatives. I heard one business described as Google Maps meets delicious, and another described as Skype meets MySpace. When the first derivative hasn’t fully figured its long term business model (other than getting bought), the second derivatives are pretty scary.

Tomorrow: Conference Highlights (continued)

Continue reading TECH TALK: Web 2.0: Conference Highlights