Month: March 2010

The market cap of China’s top digital companies (Internet and mobile companies) probably exceeds $75 billion. The top two – Tencent and Baidu – are worth over $50 billion between them. All Indian digital companies (private and public) put together have a market cap of sub-$5 billion — probably much lower.

Let’s look at this another way. The Indian digital companies market cap could be $25-50 billion in 5-7 years, if one looks at China. So, the question to ask is: how will this market cap be created? Which are the companies that are going to be the big winners?

These are still early days in the Indian digital space. More than 90% of the wealth creation is still to happen. That is what entrepreneurs, angel investors and VCs should be looking at.

I was talking to a few friends about their Internet portals that they run. The Internet portals business is about three things:

1. Reach: the raw numbers for a basic free service (on desktop and mobile web)
2. Ads: how can we monetise the free services attention via ads
3. More: how the free user can be monetised either through premium products (subscriptions) or via transactions (commerce)

On the Internet, portals have mostly focused only on 1 and 2. By itself, just web ad revenue is not good enough to cover the costs or to scale operations. This limits the portals capability to scale. The challenge in India is to also think about how to build 3.

As one thinks about one’s business, here are five questions that one should ask:

1. Is the market that we are in large enough to ensure our growth?
2. Can we ensure that the Base business continues to grow?
3. What are the Boosters that we can add through new ideas / initiatives / recruitments to incrementally grow the current business?
4. Are there adjacent markets that we can tap into?
5. What are the Breakthroughs / disruptive innovations that we can do that can create or amplify future growth opportunities – either in the current market or adjacent markets?

One way to remember these questions is 3B (Base, Boosters, Breakthroughs) +2M (Market large, adjacent Markets).

This is from a year ago (during the election season) – and still very relevant now – on thetop anxieties of Middle India that need to be addressed:

• More Economic Freedom: An assurance that liberalisation will continue, because that is what creates more jobs and opportunities. Over the past few years, liberalisation has come to a halt.
• Less Government Interference: An assurance that people will have more control of their own lives, without the spectre of a government bearing down on them. This means decisions made on merit, and elimination of unnecessary rules and regulations which hobble us and our enterprise. Also, a government that works to eliminate corruption at all levels and introduce greater accountability in its functioning.
• Best Education: If there is one thing that can make us more competitive in the global economy, it is education. India needs the education sector to be opened up.
• Security: Over the past few years, the feeling of security has slowly ebbed away with multiple acts of terrorism coming to our doorstep. India needs to feel safe again.

This week’s links:

• When to talk to VCs: David Beisel addresses the question. “In many ways, the old adage is very true: the best way to receive funding is ask for advice, and best way receive advice is to ask for funding.”
• The Commodification of Education: Atanu Dey writes on what India needs. “The commoditization of education is the only hope that the hundreds of millions of young Indians have.”
• India’s Problems in Power and Education: 2 articles from the New York Times. On the challenges re-starting the Dabhol Power Plant and the overdose of tests Indian students have to go through.
• How Apple’s Tablet will Change the World: from Wired. “The iPad offers a streamlined yet powerful intuitive experience that’s psychically in tune with our mobile, attention-challenged, super-connected new century.”
• The Next Wave of Software-as-a-Service: by Dan Woods in Forbes. “Just as multitenant software knocked on-premise vendors for a loop, new distributed, open-source models for delivery of SaaS software will have a powerful impact.”

Over the past six months, I have been increasingly using audio conferencing among two groups of 6 or more that I am part of. I have found it very efficient to keep things moving by doing weekly phone calls that everyone in the group is expected to join in. We use Asterisk, which is an open-source software, installed in my office for it, so the incremental cost for us is close to zero.

At some point of time, doing things only over email or travelling to different cities for face-to-face meetings become hard to do — especially for diverse groups.  A phone call gets everyone together – and gets them talking. That, combined with the discipline of a fixed time every week, can make groups that bit more productive.

I have had dinner thrice in the past month at “Jewel of India” at Worli in Mumbai. I recommend it whole-heartedly.

The food is extraordinarily good. (I stick to Jain food, and they have no shortage of options.) The ambience is nice – so if one is planning to do a business meeting, it offers a very nice setting. Also, there is a good gap between the tables, so there are no distractions from conversations on adjacent tables.

They have also a wonderful lunch buffet — haven’t sampled that in a while, though!

Some things should stay just the way they are.

Just because an idea didn’t work at a point in time does not mean it was a bad idea. There are multiple reasons for something failing – and one of them could be that the environment was just not right, and not that the ideas itself was flawed.

I say this in the context of an idea I used to write about a lot 5-6 years ago — server-centric computing. Now, it goes by the much trendier name of ‘cloud computing.’ I think it is an idea whose time may be coming in the Indian context — thin clients, combined with clouds (either on the LAN or on the Internet).

For me, the blog serves as a good memory of many ideas that have not worked. Some I have given up on; others I hope to revive at the right time!

Since this is the season of cricket (IPL), I will use a cricketing analogy to write about an idea that all who are heading businesses or responsible for P&Ls need to think about.

In cricket, one needs a mix of the ones and twos along with the boundaries and sixes to get to a good score. In business too, one needs to get the low-hanging fruit (or call it the bread-and-butter business) going, along with the game-changing ideas. Without the base revenue streams, it becomes hard to keep investing in the big ideas – because one runs the risk of failing (caught out). Keeping the scoreboard ticking is very important. At the same time, one does need to think about how to create a product that can provide a significant competitive advantage and be a differentiator in the marketplace.

Many times, we try and only do one of the two, and that is not good enough if one wants to create a dominant position in the industry segment.

One of my New Year Resolutions was to re-start my daily walk. It had stopped since last August – and I always found reasons to not wake up early in the morning to go for the walk. As so often happens, a New Year offers the chance for a New Beginning – even though logically speaking, it is just another day of another month.

Since Abhishek wakes up at 6 am, I have to finish my walk and be back home by then. So, I worked it backwards and figured I’d have to walk up at 4:40 am. For the most few days, it was tough — it just seemed an unearthly time to wake up. Now, nearly three months on, I have gotten used to it. One change I’ve had to make is to ensure that I go to sleep by about 10 pm.

I like the morning walks in near darkness. No people or no distractions. So, it gives the mind a free run. That kind of uninterruped time is hard to get nowadays!