Weekend Reading

This week’s links:

  • Inside the App Economy: from Business Week.  “Beyond the goofy games is a world of useful programs that’s making fortunes and changing the rules of business.”
  • CK Prahalad Interview: from Knowledge@Wharton, on the bottom of the pyramid. “How has Prahalad’s book — a revised, fifth-anniversary edition of which has just been published — affected the behavior of companies and the well-being of consumers in the years since its publication?”
  • The next Four Billion: by Tomi Ahonen. “There are 480 million newspapers printed daily; 800 million automobiles registered on the planet; 1.1 billion personal computers including all desktops, laptops, notebooks and netbooks; 1.2 billion fixed landine phones; 1.4 billion internet users; 1.5 billion TV sets; 1.7 billion unique holders of a credit card of any type; and 2.1 billion unique holders of a banking account of any kind. But 4 billion mobile phone subscriptions.”
  • What Startups are Really Like: by Paul Graham.
  • Google redefines Disruption — The Less-than-Free Business Model: by Bill Gurley. “Google will pay you to use their mobile OS. I like to call this the “less than free” business model. This is a remarkable card to play.”

Five Disruptions in India’s Mobile Industry: 3 – 3G

About three-and-a-half- years ago, I had thought 3G was a year away. Amazingly, that is true even as of today!

In India, 3G with its promise of higher speeds and more efficient spectrum utilisation should have been rolled out ages ago. But individual greed was put ahead of national good — it is hard for people in power to make money through auctions!

3G services are already available via BSNL and MTNL, and through the EV-DO services that the CDMA operators have launched. 3G will help with better and cheaper voice, and richer and more varied data services. Each of us will discover our own killer app for the thicker pipes that will be now available. So, it should create interesting opportunities for mobile content and software companies, and give a big boost to the mobile Internet in India.

But, the reality is with we should have been auctioning spectrum for 4G/LTE now. In telecom, we cannot afford to stay a generation behind.

Monday: Voice Competition

Five Disruptions in India’s Mobile Industry: 2 – MVNO

By now, we should have seen a few real Mobile Virtual Network Operators (MVNOs) in India, and not just the single pseudo MVNO in the form of Virgin Mobile. MVNOs don’t set up their own network – they piggyback on an existing operator’s network. They do, however, create their own brand and go-to-market strategy, and also own the customer relationship.

India’s cheap voice tariffs don’t leave much room for arbitrage. So, the play may be more on the distribution side – for example, Future Group may use its retail network to sell voice minutes just like it sells tens of thousands of other products. They will make a small margin and get an entry into a vertical without having to invest in spectrum.

The real action will come when Data MVNOs start coming to the fore — on the lines of what Amazon has done with the Kindle in the US.

Tomorrow: 3G

Five Disruptions in India’s Mobile Industry: 1 – MNP

As part of my Interop keynote, I discussed five disruptions that we are going to see going ahead in the mobile industry in India. A single slide doesn’t necessarily do justice, so I thought I would elaborate on each of the five themes: MNP, MVNO, 3G, Voice Competition and VAS Competition.

Mobile Number Portability (MNP)

MNP is likely to be rolled out sometime in the next few months. It will allow people to switch operators and retain their mobile number.

Today, one of the mental blocks many people have against switching to new operators is that they would need to get a new mobile number, and then would come the perceived pain of notifying everyone in their address book of the new number. So, they stay put.

Now, that status quo is about to change. Will people switch? I think there will be some switching which will happen from Vodafone and Airtel to some of the other operators. Initially, operators will primarily try and compete on voice plans. The real opportunity, though, is to attract high ARPU customers with compelling data services — and I don’t see that happening yet. Operators still don’t have the mindset to think about anything other than voice!

Tomorrow: MVNO

Speaking at Liba Insight in Chennai on Nov 5

I will be speaking on Digital Business Models at the Insight event next week, organised by the Loyola Institute of Business Administration. My session is on “Revisiting the Digital Strategy: Internet, Mobile and Social Media Marketing.” The audience will be primarily B-school students.

I plan to look at the topic from two angles:

  • for start-ups / companies who are already in the digital space and what they need to do (eg. consider a strategy that includes both Net and mobile, and focuses on multi-monetisation), and
  • for businesses on what mix they need to look at acquire new customers and build deeper relationships with existing customers.

Cricket Overkill

Watching and following Cricket is part of the lives of most of us in India. It is pretty much the only sport that we tend to bother about.

Of late, however, I get the feeling that interest is starting to wane – in me, and others. Maybe it is the surfeit of all sorts of cricket with all varieties of times, maybe its just me growing older, maybe it is the lacklustre performance by the Indian team, maybe it is the disappearing star value of the players.

There was a time  when a cricket match was looked forward to with great anticipation, and especially the Tests. Now, there is a sense of deja vu in the matches. Australia and India started an ODI series — so what.

Anyone else get the same feeling?

PS: Just saw this cover story in OPEN magazine!

Blog Past: Enterprise IT Operator

I wrote this a year ago:

In recent times, cloud computing has become a more fashionable way to refer to the ASP (application service provider) business. In India, given the lack of legacy in terms of IT deployment that exists in many SMEs, there is a powerful opportunity to get them to leapfrog to using services from the cloud which are also mobile-enabled from day one.

Another way to think of this is as an “Enterprise IT Operator” offering a wide array of services. Here are some that I can think of:

  • Computing
    • Desktop Network Computer
  • Connectivity / Communications
    • DSL
    • Fixed-Mobile Convergence
  • Server Infra and Apps
    • OS, Desktop Apps
    • Collaboration Apps / Document Sharing
    • Business Apps: Accounting / CRM •
  • Cloud Services
    • VPN; Backup
    • Remote Desktops (Windows / Linux)
    • Video Conferencing
  • Mobilising Apps
    • Email, CRM, SFA… -Integration of Mobility into Business Processes (eg. Email2SMS, Alerts)
  • Mobile Marketing
    • Mobile Presence
    • Ads, Leads, Transactions
  • AppStore (for ISVs)

Weekend Reading

This week’s links:

  • What’s holding India Back: from Business Week. “Business is battling farmers over land, putting $98 billion in investments—and an industrial revolution—on hold.”
  • India’s Demographic Moment: by Nandan Nilekani (in strategy+business). “It’s clear that if a country’s colleges and schools are in good health and if a significant proportion of the population is graduating from them, the prospects of economic growth are promising. When conditions are right, large numbers of young workers can drive a nation’s growth to remarkable levels. This theory is known as the “demographic dividend,” a phrase coined by demographer David Bloom.”
  • Kill Your Darlings: from Forbes. “It’s not about the good ideas you have–but the ones that you kill.”
  • Wisdom from Scott Cook: by Will Price. On The Power of Word-of-Mouth, Be Where the Customers Are, How Do you Create WOM.
  • Mary Meeker Internet Trends presentation: At Web 2.0 Summit, via TechCrunch.

Rajasthan Visit – Part 4

On the way back from Rajasthan by train, I woke up just as the train (Aravali Express) pulled in to Ahmedabad a few minutes behind schedule at 10:15 pm. I got down from the upper berth and walked out on the platform. And as I looked around, I was transported back in time to when I was in my early teens.

Ahmedabad station was a station I knew well then – this was where we could change from the broad gauge Bombay line to the metre gauge train that would us through part of Gujarat and into Rajasthan. We could spend a couple hours at the station on each leg of our journey. And it was a journey I did with my parents and sister once a year.

My father had set up a marble factory in Abu Road and later an edible oil factory in Sheoganj (near Falna). During the late 1970s and early 1980s, we would make an obligatory annual week-long trip to Rajasthan by train. I could accompany my father to some of the marble mines, and we would mix in some temple visits also.

Now, of course the metre gauge has also become broad gauge, so the Ahmedabad interchange has been eliminated.

For about 15 minutes that night, I wandered around the platform re-living childhood memories, and marveling at the ecosystem at the platform that was so alive with food stalls and passengers.

Rajasthan Visit – Part 3

The irony is that these problems have for the most part been self-inflicted because we have allowed our rulers to systemically siphon away money. As Atanu Dey put it, “India is poor because India is corrupt.”

Rajasthan and its people are part of the other India we like to call ‘Bharat.’ We give it a different name because we want to distance ourselves from it. Traveling through some of the small towns and villages, I could not help but look at the horrific sanitation situation. I should have become immune to it after all these years, but that Bharat is still part of our country – and we cannot give up expecting better so easily.

We have been horribly wrong in the 60 years since Independence. Many of us who should be aware of the situation have removed ourselves from the realities of the country and created a happy cocoon around us. We have the resources to bring about a transformation of our nation, but it cannot be done with the class of people who get us in there.

India needs a revolution from us, its people. We haven’t yet reached that turning point yet, but some of us will reach it soon. And we will decide enough is enough. We will start taking our country back from our rulers. Then, we can start building India right, and claim to be truly an Independent democratic nation.

Rajasthan Visit – Part 2

Rajasthan is one of India’s less developed states. One could blame it on the desert-like terrain. Tourism is a mainstay for some of the cities like Jaipur, Udaipur and Jodhpur with their palaces and historical relevance. But when I see the still parched land, I cannot but help think of how our government has failed the state.

As I spoke with some of the locals, it became clear that the biggest problem in the future is going to be that of drinking water. With inadequate rains common to many parts of India), the situation has worsened. We should have worked towards solving this problem 10 years ago, but we haven’t done anything. The repercussions will be dire.

Two other challenges that are common to much of semi-urban and rural India are the poor equality of education for the young, and the resulting lack of adequate skills for them to get a good first job which could set up a bright future for India to start reaping its ‘demographic dividend.’ We have school and college buildings but little education. Just like there are bridges but no water flowing beneath.

Rajasthan Visit – Part 1

Bhavana and I have been doing an annual pilgrimage to Rajasthan since 1997. She maps out a route and we visit various temples over a 3-4 day period. The two constants are Nakodaji and Osiyanji, temples on either side of Jodhpur.

This year, we were joined by Bhavana’s sister’s family. Their daughter is a year older to Abhishek, so both the kids had good company.

We took the train to and from Rajasthan (about 14 hours each way). Due to the holiday season rush, we only managed to get tickets for second class, three-tier, non AC. It turned out to be a good thing since Abhishek could actually look out of the window!

We drove about 800 kms over 3 days in Rajasthan, starting at Abu Road, and visiting Jirawala, Pavapuri, Sheoganj (where my father had set up an edible factory a couple decades ago, but which has since been shut down), Nakodaji, Osiyanji, Ranakpur, Muchhala Mahavir, and ending at Falna, from where we took the train back.

The long rides in the trains and a Toyota Qualis gave me plenty of time to ponder – about previous Rajasthan visits, and the state of the state. It is a state which is home to my ancestors – my parents were both born there. Every visit creates some hope but also depresses. More on that tomorrow.

NASSCOM Product Conclave Panel on Telecom

I will be a panelist on the Telecom panel at the NASSCOM Product Conclave in Bangalore (Oct 27-28). My panel is on Oct 27 from 12:30-1:30 pm. The theme is: “Product strategies in the telecom sector: potential for global leadership.” Here is a brief abstract:

Telecom, especially mobile, is a unique vertical. It offers a domestic market which is one of the largest in the world, and is also a world leader in products, solutions, and evolution. And being the most competitive in the world, very dynamic, innovative and willing to experiment with new product deployments. Just the right ingredients for product companies to find an anchor client in their home market, perfect the offering, and even aspire to be a global leader. Mobile VAS companies, mobile commerce companies, mobile advertising and marketing companies are mushrooming. A few companies are also in the infrastructure space, like BSS products and switches. Other companies are working on energy conservation and rural focused products. The session explores some early success and discusses some emerging trends as well as points out why it is still an early stage market and hence a highly potential market for product companies to focus on.

As I outlined in my Interop presentation, there are a number of potentially disruptive structural changes which will happen in the next year in the Indian mobile industry. These five game-changers — Mobile Number Portability, MVNO regulation, 3G, Voice competition and VAS competition — will create openings for new players.  My belief is that the next global tech major can emerge from emerging markets and it will be focused on mobile data services. Just like China and South Korea became the first markets for online gaming and created openings for domestic market leaders to be global, India can be the first market for such companies in the mobile data services space. I will talk more on one such opportunity — the Digital Services Operator.

What would you like to see discussed as part of the panel?

Blog Past: Rajasthan Ruminations

I will be writing about my recent trip to Rajasthan in the coming week. Meanwhile, here are links to two series I wrote in the past in February 2004 and September 2005. This is how I had ended my last series:

We need a Grand Vision for a Great India – an India that includes the hundreds of millions for whom life has barely changed over a generation. Our leaders have failed us consistently (but then it is we who elect them). We can wait for the Messiah to come and lead us to the Promised Future – or we can try and use the emerging technologies to create a New India, bottom-up. For example, a mobile phone will be available with every tenth Indian. How can that be used as an agent for change and development?

As I made my way back to Mumbai, I thought once again of Rajasthan’s temples. They withstood invaders and nature. Today, their past is what attracts the modern travellers. Do we want India to be known for its past – or for its future? That is a choice we have to make.

Weekend Reading

This week’s links:

  • Corruption in India: by Atanu Dey. “Corruption is seriously like a cancer for an economy. It eventually kills it. Like a cancer, corruption has something to do with the DNA at the cellular level of the organism…India is poor because it is corrupt. No other factor can adequately and fully explain its horrifying poverty.”
  • Disruption vs Deep Dive: by Lee Gomes in Forbes. “A Deep Dive happens when a company spends a lot of time and energy solving what at first seems to be a narrow problem but, because of the thoroughness of its answer, ends up creating new and unexpected opportunities.”
  • The Coming Energy Revolution: from Business Week. “Smart-grid technology will bring huge savings to companies as varied as Cisco, PG&E, and Cargill, and to consumers, too. But who will foot the bill?”
  • Ray Ozzie on the Real-time Wave: from TechCrunchIT. An interview by Steve Gillmor.
  • Healthcare Start-ups: from the New York Times. “The doctor’s office seems to be one of the last places not yet transformed by Web technology, but a handful of tech start-ups are trying to change that.”

Venture Investing (Part 2)

What we need in India to get more start-ups created and more importantly, create the environment for them to succeed is a combination of an Incubator and Venture Capital Fund. This is something on the lines of what Kai-Fu Lee is doing in China or perhaps Y Combinator.

There needs to be a core team at the Incubator that can explore new ideas, and see their potential in them becoming companies. In India, one thing I have seen is that start-ups require a lot more hand holding. That is where an experience team at the Incubator can help nurture companies (teams) through the difficult early days. Venture capital funds typically don’t have the bandwidth to spend more time at many early stage companies.

So, think of a multi-stage to create the ecosystem needed for driving innovation and entrepreneurship. Start by creating an incubator which can seed tens of ideas and teams with say Rs 10-50L ($20K-100K). This needs to be a continuous process. Then, pick a few from there for the next stage of funding, which can be 10X the initial funding, with a third stage to get some companies funded with 5-10X more capital (a few million dollars). The fund size should be about $60 million, with about $10 million set aside to build a top-notch core team of peoplewho are committed to helping build the companies over a 4-5 year period.

Many ideas and companies  will fail, but it is out of these failures that the successes will emerge. India needscompanies that can create billions of dollars in wealth over the next decade. We have starting talent, but we need to do more to fill in the gaps that exist. An integrated incubator-fund helps bridge these gaps.

Venture Investing

I can’t but help think that we are missing out on creating a deep-rooted start-up culture in India because we do not have the first two stages of the investing pipeline: angels, and first round investing. In the Indian context, angels should typically invest 1-2 cr ($200-400K) to give enough money for the company to get started and through to the early product prototype. First round investing (typically by a venture firm) should be between Rs 5-15 cr ($1-3 million) for products focused on the Indian market.

What we do have are plenty of Indian funds willing to invest Rs 25-100 crore ($5-20 million) – ideally into companies that are profitable and looking for growth capital. At this stage, the company is expected to be profitable.

The net result is, as someone put it to me: VCs in India act like PEs (Private equity funds), and PEs act like banks!

So, is there a way out from this? I’ll outline an idea tomorrow.

Numbers Discipline

I have written on this topic in a different context in the past but it probably is worth repeating. Every company, however small, must develop a “numbers discipline” when it comes to revenues and costs. For much of my business life, this is not something I bothered to do – and so am assuming that there are plenty others like me! Hence there is a need to reinforce this point.

I used to think that (a) small companies could not estimate accurately about what numbers they do each month or quarter since business is generally unpredictable, and (b) it didn’t really matter whether we met whatever targets we set or not. I was wrong on both counts. And habits once formed become hard to change. Over time, missing numbers becomes an acceptable thing, and that culture then sets in – both on the sales front and on the expenses side.

It took us a long time even after we started to instill the discipline of meeting numbers. There used to be big gaps earlier, but the past six months have seen a dramatic change – enough to deliver for ourselves two cashflow positive quarters. Now, we need to make sure we maintain the momentum.

New Ideas

The one thing I cannot stop doing is coming up with New Ideas. Nowadays, I also try and note the trail of how a particular idea could built up. There are three elements which I have found are particularly useful in the ideation process:

  • Talking to people and listening carefully to the questions they ask
  • Writing or doing a presentation – helps in structuring it
  • Deep thinking for an extended period of time

Of these, the third is perhaps the hardest to do. There are so many things that need our attention – now! It is easy to lose oneself on answering emails, randomly surfing the web, or reading through Facebook status updates from dozens or even hundreds of friends. In other words, it is easy to get lost in the data streams that exist all around us. At times, it is very critical to step back and force a deep think – imagining what the future can be. That requires a few hours of uninterrupted thought — easier said than done.

One thing I have realised is that even not-so-good Ideas can be moulded over time with enough thought and interaction with others. One needs a base framework to begin with – and the courage to share half-baked thoughts with others! And then let things simmer fora while to make magic happen.

Hobby Ideas

One of the interesting stores to spend time is “Hobby Ideas.” It is billed as India’s first craft and hobby store. It is one chain concept that deserves to expand and be present in every neighbourhood to be accessible to a lot more people. It is also a concept that I think needs some creative promotion to get more people into the stores.

I had visited the store at Mahalaxmi in Mumbai after it was launched a few years ago. And then, I never went there for a long time. Recently, I paid another visit –I was looking for some stuff to do a “maglev train” project with Abhishek. (Had bought a do-it-yourself science project kit via Amazon becuase – you guessed it – it had a train in there!) As I walked through the store, I realised that there are so many activity ideas that Abhishek and I could do together. They also have workshops in the store which is good.

I think part of the problem in India is that we are not used to doing too many things with our hands. Stores like Hobby Ideas can hopefully change this!