Emergic: Rajesh Jain’s Blog

Here is the list of companies I have invested in over the past 3-4, and what they do. Netcore is the company I run full-time.

Netcore: Enterprise Mail + Security; Mobile Data
Novatium: Sub-$100 Network Computers
Rajshri Media: Bollywood-centric Broadband Video Portal
mChek: Mobile Payments
Midas: Wireless Communications Equipment
New Horizon Media: Language Publishing (Books)
ValueFirst: Enterprise Mobility Solutions
Yos: Personal Healthcare Records
Greynium: Local Internet Portals and Classifieds
Intelizon: Solar for Rural Electrification
MobiFusion: Consumer Mobile Apps

Two companies I have recently committed to investing are both in the education space:
Pathfinder: Knowledge Publishing
Global Talent Track: Vocational Education

My new investing has slowed because I find very little time outside of Netcore and the current portfolio to spend time on newer opportunities.

While I was in Singapore with Bhavana and Abhishek (who is now 3 years, 4 months), I bought a 63-piece jigsaw puzzle for Abhishek. It had all kinds of ‘transportation vehicles’ in there — aeroplanes, cars, buses, vans, boats, and so on. And the pieces were nice and large. Abhishek has been doing the jigsaw puzzle daily for the past few weeks! And that’s bored me no end, since he only focuses on the road vehicles, and has me do the air and water ones.

So, in our hunt for more jigsaw puzzles, I discovered ten of them — from my childhood. My mom had kept all of them in storage. And in a day, Bhavana and I were having competitions at night doing the puzzles. They range from 150 pieces to 1500 pieces. Some of them are going to take a few days to do, given that neither of us can spend more than an hour or two daily on them.

As I started doing the tougher puzzles, memories of my days from my teens doing these puzzles started coming by. It was something I would enjoy a lot (along with listening to BBC’s World Service on my shortwave radio). Jigsaw puzzles have an amazing attraction — building the picture piece by piece, using a mix of luck and logic. I am doing one 300-piece puzzle now which has a picture of 2 kittens. It looked fairly trivial when I started, but now I think I will be spending quite a few hours on it!

What started as a toy for Abhishek has now me engaged. Abhishek knows how to find the “edge pieces” - and he has his mother’s eagle eyes. Now, if only, I can delegate the “integration” activity to him…!

Here is my typical weekday schedule:

5:10 am: Alarm 1 goes off on my iPhone

5:17 am: Alarm 2 goes off on my iPhone

5:25 am: Manage to wake-up.

5:50 am: Go for walk (in my building) or do Yoga, for 25-30 mins

6:30 am: Waiting for Abhishek to wake up (check email / news websites on iPhone; think)

6:45 am: Abhishek wakes up. We play, read, and generally keep busy.

7:50 am: Give Abhishek bath and have bath. ABhishek is then off to play-school.

8:15 am: Breakfast, and read the newspapers

8:30 am: Leave home; go to temple with Bhavana, drop her back home, and then to office

9:15 am: In office

1:00 pm: Lunch

6:30 pm: Leave office, takes about 35-40 mins to traverse the 6 kms to home

7:30 pm: Dinner

7:45 pm: Play with Abhishek till he sleeps around 9:30 pm

10:30 pm: I go to sleep

1:00 am: Alarm goes off for me to take Abhishek to the bathroom!

Sundays are much more leisurely — will take Abhishek out on a bus ride or to a bookshop, depending on what he wants to do. Bhavana can override us both should she want to go window shopping in a mall. Some Sundays we go to Bhavana’s parents’ home so Abhishek gets to spend time with his grandparents and younger cousin, Hriday.

Today, I turn 41. Last year, I wrote about my first 40 years. So, to ensure that the story is kept updated and since I did very little blogging during the past year, I am writing about the year that just went by for me.

On the business front, the focus was almost entirely on Netcore and building the MyToday service. It was one of the busiest years for me since 1999. I finally had found something that worked - from the many ideas that we tried in Netcore over the past 7-8 years. The free SMS subscriptions service grew rapidly, and with that came more challenges. Tackling those and laying the foundation for monetisation was what much of the year was about (besides our failed attempt at raising venture capital). This was a year when vision started being converted into execution. We still have a long road to go, but the journey of a thousand miles has begun in full earnest.

On the personal front, Abhishek, our 3+ year-old son, consumes all non-work time. There are days when I wonder if I could swap places with him mom, so I can be with him all the time! The Singapore vacation that we took in mid-June was an absolute delight (until I lost one of our bags in the taxi the night before we were leaving). Nowadays, as a family, we are into jigsaw puzzles — some of them from my childhood days.

It was a year of two new toys: the iPhone that I bought last August and the Amazon Kindle (an ebook reader) that I got from the US in May. That reminds me — there is a toy train set that I had bought a year ago that still lies unused, waiting for Abhishek to grow up a little more, so it can have a long life!

The only regret that I have is that I didn’t blog at all for much of the year. But now, I have decided to re-start. It will be much more personal — unlike the linking to articles that I used to do earlier. I will try and write daily. Life has so much variety so hopefully that should not be too difficult!

[This is the second part of the article I wrote for Outlook Business. Part 1 is here.] 

What does it take for us to make this future a reality? How can we make computing available to every family, every employee and every student in India? There are three triggers that are needed to create the foundation for a Digital India:

Ubiquitous Wireless and Wired Broadband Infrastructure: For too long, India has been hamstrung by short-sighted telecom policies. We need to treat broadband as core and critical infrastructure, just like roads, ports, airports and power.

Low-cost Access Devices with a Utility Computing Model: We need to reduce the entry barrier for consumers and small- and medium-sized enterprises to adopt computing - in essence, replicating the mobile revolution of the past five years on the broadband front. To do this, computing needs to become simple and affordable - and this is where network computers and mobile internet devices can play a central role.

Content and Applications: There needs to be an open platform allowing a wide array of providers to offer their services and bill them. Just like the mobile ecosystem has an in-built microbilling facility through the operators, there needs to be an equivalent micropayments option that consumers have to the business model for monetisation is not reliant only on advertising.

To get to the future from where we are today, we need to think about the innovations needed on the two Internets that exist today. The PC-based wireline Internet has about 30-40 million users, with a majority of the users using cybercafes. With only 8 million computers in Indian homes, this Internet is still a long way from becoming a utility in people’s lives. The mobile-centric wireless Internet can potentially reach a significant portion of the nearly 300 million cellphone users in India. However, the reality is that other than voice, there are only two services which touch a large fraction of this user base - SMS and ringback tones. The mobile-as-India’s-computer paradigm still has a long way to go.

Looking at it another way, for the real boom, the wireline Internet needs more devices (home computers) and the mobile Internet needs more services. What will it take to make both happen?

To solve the device problem, one needs to rethink computing in a world where broadband exists - and thus make computers affordable and manageable. For this, the answers lie in borrowing two ideas from the mobile industry - create a device that costs Rs 5,000, and combine it with a monthly service charge of Rs 500, and make the device simple to use without requiring its owner to become a technology expert!

The solution to these twin challenges lies in thinking ‘thin’ computers for Indian homes - connected over DSL or cable to servers over high-speed networks. All the computational processing is done at the server-end, and the network computers become simple ‘on-off’ devices - without compromising on the performance that current desktop computers offer.

To make the mobile Internet a reality in India, two changes need to happen, and they have to be driven by the mobile operators since they are the ‘gatekeepers.’ First, an open publishing platform is needed to allow anyone to create a mobile website that is accessible by everyone - just like on the PC Internet.

Second, mobile operators need to change their billing philosophy for value-added services. The bulk of the revenue that users pay must be given to the content providers. Mobile operators should, instead, charge for packet data flow through their ‘pipes.’ At a broader level, just like NTT Docomo did with its i-mode service in Japan in 1999, Indian mobile operators need to encourage the creation of a value-generating ecosystem.

Taken together, these innovations can help build the Digital India, and create a framework for other emerging markets to emulate and provide a large domestic market for companies to finally think India First.

I wrote an article for Outlook Business as part of their Independence Day special issue (August 23 issue, page 96). The title given is “Waking Up to a Digital Dawn.” The first part is a small story set in the future.

Pooja lives in with her parents in a modest two-bedroom apartment in a middle-class neighborhood in Mumbai. She is studying in class V. It is early in the evening. Entering the living room, she switches on a light and then pushes a button on a little blue box the size of a shoe-box sitting next to a monitor. The monitor lights up immediately displays what looks like a PC desktop. A little dialog box blinks, “Who is it?” She types her login name “pooja101″. “What is our secret word, Pooja?” She responds.In a flash the desktop changes to resume where she had left off earlier that day when she had accessed “MyComputer” at the school computing center. An ad appears in a little window. It lasts for about 10 seconds informing her of a sale on school supplies going on in her neighborhood supermarket. She clicks on the “ToDo List” and makes a note in there to buy some stationery and dismisses the ad window.

Pooja is in a hurry to get to her assignment from the biology class done. On the desktop, that file sits exactly as she had left it. She “googles” for some more information on ‘platypus‘, collates a few images and videos together, and adds a voice-over commentary. Satisfied, she mails it off to the teacher, well before the 9 pm deadline.Now comes the part she really enjoys. She is learning French. She clicks an icon and a streaming video resumes from where she had left off a few days ago. It is a multimedia course and it is world-class and on top of it all, it is free. She takes a little test in the end and is happy with the results. Later her father, Ashok, logs in and balances his checkbook, pays a few bills, and makes a call to his brother in the US. After Pooja and Ashok have gone to sleep, their mother, Lata, logs in via the NetPC. For the past year, she has been working as a Tutor for a local education company. She likes it because she can work the hours she wants - without ever having to leave home. More than the extra income, she is glad that her teaching skills now are helping students the world over.

Next morning, Ashok , who is an executive with a media company handling their international operations, has a weekly international business review meeting at the office. He logs in to the video conference and talks with each of the seven region heads. He still remembers the time a few years ago when he had to travel country by country and be away from his family for long periods of time. This is now a thing of the past with live interactions via video with anyone he desires as often as he wants.Ashok’s thoughts were interrupted with a message from his assistant who informed him that he could check the latest episodes. Ashok now views the episodes online directly from the producer’s studio before they are transferred to Hong Kong for uplinking to all international channels. With the big data pipes, Ashok has been also able to save on huge tape costs. Ashok is a happy man as he winds up his work and goes to sleep. He has not only been able to save time, but was also recently promoted because his was the most profitable department. He was able to this because he grew the business and managed his costs well across travel, tapes and other operations.

(Part 2 is here.)

Recently, TRAI (Telecom Regulatory Authority of India) had published a consultation paper on Value-Added Services. My company submitted a response to the questions they had asked. Here is the response we submitted.

After that, TRAI had an open-house, in which I participated. Nikhil Pahwa captured the discussion that took place.

More recently, we submitted a brief paper articulating the need for licencing of VAS in India and detailing the specific proposal we had. Here it is.

I have submitted a proposal to speak at GSMA Mobile Asia Congress later this year. Let’s see if I get selected! Here is the abstract that I wrote with a couple of my colleagues.

Monetising the Mobile Millions as Value Shifts Away from Voice: The Coming Age of VAS Operators

World over, VAS services are synonymous with the ‘subscriber pays’ paradigm. The list of services is also limited- Ringtones, Wallpapers, Games, CRBT, SMS Subscriptions, Pull services, GPRS Data, on-demand Music & (bandwidth permitting) on-demand video. Innovation is stymied as the control still rests with the Telcos & revenue shares are not attractive in many countries including India.

Netcore has succeeded in creating a unique new model of VAS through its award-winning product portfolio ‘MyToday’ (GSMA Mobile Innovation Global awards 2008, Runner-up, ‘True Mobile Startup’ Category). It has created a phenomenally successful direct-to-consumer service, MyToday SMS dailies, building up a subscriber base of over 3.5 million users in less than 2 years. This new ‘digital mass media’ service is currently ad-supported & free to user, demonstrating for the first time that VAS services need not always be paid for by subscribers. Businesses can contribute to generating revenue as well. This new model needs to evolve to a broader definition of VAS wherein a Right of Way is created to a subscriber & businesses pay for that right of way. We believe that subscriptions will be key driver in this ‘VAS 2.0’ paradigm.

In emerging markets like India, mobile growth continues to explode because of new users who are coming in from the bottom of pyramid. They have limited ability to spend and 45% of mobile users have low cost handsets. Given some of the other unique qualities of India’s mobile users -80% or more prepaid subscribers, speaking numerous languages, mainly youth, heavy rural spread, with little or no exposure to the Internet – the possibilities for new innovative VAS services are limitless.

These services will drive the emergence of a different class of companies from the VAS 1.0 companies we see now. The positioning of VAS 2.0 companies will shift from being at the Telco’s back-end to directly facing the end consumer. We propose to name this new entity – ‘A VAS Operator’ - one who will manage their own consumer relationships & generate multiple monetisation streams. These can be significantly larger than the current industry revenues and can include advertising, invertising, mCommerce & subscriber-paid services with alternate billing options. MyToday permission-based marketing platform already supports multiple monetisation models including a) Subscriber pays – for premium & PULL services, b) Advertiser pays – for SMS ads, WAP ads & lead generation, c) Merchants pay – for transactions & Enterprises pay- for mobile business solutions.

Netcore’s success with the disruptive MyToday SMS Dailies service only underlines the fact that many more innovative ideas for new VAS services can come from non-Telcos & smaller players provided the right environment can be created. In the presentation we will share key learnings from our experience which have helped us flesh out what the ‘right environment’ and the VAS Operator concept could be.

Our experience with running MyToday SMS Dailies has also provided us with valuable insights into the support required from regulatory authorities on redefining & supporting VAS 2.0 which we will also share in the presentation. For VAS 2.0 to flourish, Telcos need to play a different role, that of enabling smaller players. This role needs to be defined & regulated since it is in direct conflict with their more prominent role as VAS provider. The emergence of VAS Operators can be complemented and enhanced by a shift in the Telco’s mindset from a one-sided business model towards becoming a platform facilitating the interactions between VAS Operators & users. Telcos will of course benefit from data charges, billing relationship & more network usage.

While MVNO is a proven & well-known concept, VAS operator is a new & original concept that Netcore is seeking to establish. We will share many ideas in this regard which can also be implemented elsewhere in the world.

I have tried to put together some numbers to give a better perspective of India’s MVAS industry. Would love to get feedback on the numbers. These have been assembled from multiple sources, and are not completely accurate but they give an idea of the revenue streams. The key point: what is touted as a $1+ billion industry (what subscribers pay) is in reality only a $200 million industry from the VAS providers point of view, thanks to the skewed revenue shares between the operators and the VAS players.

Key Numbers as of March 2008

 
ARPU Split of Rs 250

VAS Revenues by Category

Points to note:

• P2P SMS Penetration is about 35-40%, while VAS Penetration is at best 25-30% of all users
• SMS in all its forms (P2P, P2A, Subscriptions, A2P) is the biggest revenue generator after voice
• Music (as part of a broader Entertainment category) is the bedrock of the VAS Industry accounting for over 50% of non-Voice/SMS revenues (CRBT, Ringtones)
• Voice Portals are the other big revenue generator, as they are the gateway to a wide variety of content

I had made a presentation entitled “Emerging Technologies, Emerging Markets and Entrepreneurship” in mid-June at Singapore’s Nanyang Business School, thanks to an invitation by the Dean, Prof. Jitendra Singh. Here is the presentation.