Posts filed under 'Venture Capital'

Mobile drives the Spark in Startups (notes from MobileSparks conference)

Shradha Sharma of Yourstory.com asks the Startup community to maintain that Spark, regardless of where one is in the journey of life. That Spark may be humility or grace, appreciation for others, lending a helping hand etc. Essentially the point she made, and very well so, that in our “Rat Race” for success in life, perhaps we might have forgotten the more human elements, things which bind us together and a feeling of elevation. Shradha was speaking at the recent YourStory event Mobile Sparks in Bangalore.

I couldn’t agree more. In our quest for success, perhaps we might have forgotten to remember some old friends, or forgot the fact that a good night sleep is more worthwile than achieving a Unicorn status. Big statement, but I insist.

I think the subject is about balance. Nobody is saying that one must give up on one’s dreams. But it must not drive consternation to a level that one forgets the basics of humanity – a desire to do good, be kind, have a positive impact and effect larger good. As many have said, a Startup needs to have an objective larger than valuation, or a profit or loss statement. It is about “value creation” at the end of the day, to quote my friend Manish.

Ok, with that, I come back to the startup notes. The recently concluded event MobileSparks by Yourstory had some great speakers from most of the leading firms – Flipkart, Snapdeal, Grofers, Practo, OYO Rooms, Peppertap, SAIF partners, Inventus, Matrix Partners etc.

Here are some sundry highlights from this event :

Freecharge – Initial adoption strategy – Make first transaction brag-worthy. Eg give away a burger for first recharge.
App installs is not a good metric. Transactions is good metric.

OYO rooms
OYO is envisioning a future of amazing hotel experience. Some potential ideas :
- Manages entire hotel experience.
- App – does booking. Shows nearby restaurants, gets you cab with Ola cab widget,
- Ops team does background audit regularly of hotels
- Alerts – eg room 345 not audited since last three weeks or 5 acs in a hotel broke down
- Correlation between auditor reports and customer feedback audits auditors themselves
- If AC is broken open ticket to get electrician automatically
- Pre-check in from airport. Submit ID card picture before even you reach.
- Could alert property manager that customer is about to reach.
- Mobile key to door
- Reminder to turn on AC or heater from before. Mobile can store customer temperature preference.
- Connect to WiFi automatically.
- Mobile motion sensors based DND (do not disturb). Check if person is sleeping and motionless.
- Checkout from app. Pay from mobile wallet. Feedback on the go on app.

Matrix partners (VC) :-
App distribution -
- Inmobi ads, AdMob, Adwords
- OEMS like micromax lava etc
- App stores.
- Facebook ads
- Google ads
- App Store optimisation or ASO

Lybrate :-
Online consultation app for patients and doctors
- Very less doctors in India compared to patients.
- X axis :- Online, offline
Y axis :-
Discovery – find practitioners
Transaction – create transaction
Delivery – participate in delivery or actual doctor patient communication / consultation
Lybrate is in online healthcare delivery space.
- Got doctors first ie supply first. Then demand ie consumers etc.
- Need hooks on supply side to hold doctors while demand builds up.
Opportunities :-
- Lot has happened in discovery already.
- Transaction and delivery side is left. Healthcare devices can be used. Consumer hardware is big area.
- 70 million diabetes patients in India. Devices for them.
- Revenue model – online consultation commission from user – 5% to 15% of doctor fee.

Flipkart :-
Piyush Ranjan. SVP. Flipkart.
Key idea :- Build a Cathedral. Not walls or bricks.
Eg -
Build for phones with no data. SMS or USSD as underlying protocols. Also phone to phone connection.
Eg -
Reliability is in short supply. Eg IRCTC is not reliable.
Eg -
Build for the low end.
Eg -
Building speed as a feature. Eg google suggest and google instant.
Eg -
A broad base need like education.
So far mostly online classrooms. But how about continuous learning which mimics human whole life ?

Practo
healthcare app for doctors and patients.
Started web-only in 2008. Mobile first now.
Mobile search -
2 lakh doctors
2x non metros
3x conversions
3x engagement
Weekend traffic
UGC declined in mobile though compared to web. Consumers write smaller reviews on mobile compared to web. Struggling with this now.

Practo ray
40000 doctors
2x appnts
3x records
3x engagements

Practo tab
Helps in locking in supply
20% richer data

Practo
10 million searches

Snapdeal
Anand Chandrasekaran, Chief Product Officer
- 19 m registered users
- 1.5 L sellers (I am told less than 10000 are active, more on this in a later post)
- wants to achieve 10L sellers in few years (how many will be active ?)
- 5m daily active users
- Freecharge – 2 out of 3 visitors end up transacting

Other ideas that were discussed :
125 million English speaking Indians. Leaves a billion non-English users. Need to tackle them.
300 million internet users in India currently. To grow to half billion internet users in 2-3 years. Mostly via Mobile Web.

 

August 10th, 2015

The Startup Nation

Today India witnesses a unique revolution. It is like another freedom movement, a moment par excellence. A new Silicon Valley is created among the potholed roads, roaming cows, un-interested traffic cops and massive traffic jams. What a combination ?

Who would have thought that amid the chaos of this ancient country and the cacophony of auto noise and massive no of folks everywhere, slowly and surely, a new breed of entrepreneurs emerges – providing hope to a beleaguered nation that our time has come, perhaps !

I picture the Founders of Snapdeal, in their early days, waiting outside that restaurant in Delhi, in Delhi’s terrible heat, for the restaurant owner to come out and so that they can clinch a deal, a coupon which they can send by email (or was it paper coupons) to their growing email audience. Even they did not imagine that their amazing commitment to their mission would create a $5 billion behemoth that Snapdeal is today with 5000 jobs, several paying crore (or nearly there) packages.

The folks at InMobi, now giving Google and Facebook a run for their money with the new Miip tech platform, or the Bansals at Flipkart – packing books in their Koramangala apartment and now disrupting the retail in India, as we know it.

How about the dozens (hundreds ?) of captive units in BLR and Gurgaon by every foreign (mostly American ?) MNC worth it’s salt.

Not to say, this is Round 1. The latter happened in 80s and 90s, with Murthy of Infosys and Premji of Wipro, not to discount the TCS, the largest of them all.

Certainly this is Round 2. and what a Round ? Billion dollar valuation becoming an operating unit – a dream which is now seen by thousands of new wannabe entrepreneurs. Driven by almost 900 mobile subscriptions – a fifth of world total almost. Certainly mobile is driving this growth.

Mobile web penetration went from 2 million to 200 million from 2009 to 2015. PC Web penetration increased 20 million to 40 million in same period. 100 times growth in mobile web, 2 time growth in PC Web.

Certainly mobile is to blame, or praise, for this upheaval. That and Whatsapp – the app which brought mobile web to the lowest rung of the society, and as far as everybody’s grandma, who can barely handle a smarphone, but is adept at Whatsapp.

Well, this is the beginning. The revolution just begins. Hordes of rich foreign investors, PE funds, hedge funds, are still not here with their billions, or trillions. They will be, soon perhaps. We will be waiting, for our piece of the dream !

August 6th, 2015

Start-ups Dilemmas

Envisioning success is key when it comes to establishing a startup. After all, if you’re an entrepreneur and you don’t think big, chances of ever seeing your idea materialise are close to nil. But often times – especially in a startup’s first year – entrepreneurs find themselves in Catch-22 situations and don’t quite know how to escape them. Two of the many  possible examples below with solutions teach us a lot:

1.  No money, no honey

PROBLEM

In order for start-ups to finalise their product and establish a proof-of-concept, they need funding – and lots of it. The dilemma is that you need money to finish the product, but it is difficult to obtain funding without that finished product.

How can entrepreneurs get their hands on some cash so they can start operations and launch their product?

SOLUTION

Three words: Minimum Viable Product (MVP). This is one of the most important principles of “The Lean Startup”. MVP is a version of a new product that allows a team to collect and gather the greatest amount of knowledge about customers with the minimum amount of effort or resources involved. By employing this technique, startups with limited resources can carry out a strategic plan and focus on the creation and selling of their product to customers.

2. You get what you pay for

PROBLEM

It has been reported that when investors evaluate a startup’s proposal, around 25 per cent of their final decision is based on the team alone. In fact, most investors believe the success or failure of a startup rests in the assembly and quality of the team.

Most of the high-tech products built today are very complex and require a handful of experts to take part in the creation and launch of the product. Having the right mix of people with diverse backgrounds and skill-sets is necessary for the operation of the startup and will be the key to success.

However, the problem is that it is rare for startups to offer a substantial salary to attract Grade-A employees when building their team.

SOLUTION

Build a strong team using equity. Be generous to the team – few investors will look at a one-person company. If the team members won’t join until the money comes in, sign a letter of intent that will allow you to include them in your team and secure funds.

Alternatively, you can hire junior members or interns that don’t demand high wages for ancillary positions. However, you will definitely need to have enough funds to hire experienced and highly qualified people for specialised positions, such as programmers.

One of the main strengths of successful startups is the ability to pivot. It’s possible that the product or service isn’t groundbreaking, but the company succeeds because it was able to adapt and overcome the challenges they were confronted with. Think Microsoft versus Apple.

Entrepreneurs see a list of problems in front of them and can quickly grow discouraged. In these cases it is imperative for entrepreneurs to acknowledge the problems they are faced with, seek valuable advice and understand that there are always solutions that could help them put this ongoing dilemma cycle to an end – once and for all.

December 2nd, 2014

Online Store Vs. Physical Store With 4P’s Of Marketing

Offline Shopping(shop from the physical store) was the only option for almost 20 years ago, but then came into picture the E-commerce, leveraging Online Shopping model with deals, discounts, offers and much more to the customers. At early stage many prefer to look at a product online and then shop offline from the store, now it’s changing from going to store first, selecting the product and then shopping online from site.  Here are some factors, including 4P’s of marketing on which we can differentiate both the models:

1) 1st P – Price/Cost/Initial Capital - The main factor behind any business is to raise initial capital and finally convert it to profit. Looking at Offline Store, it costs much more for renting the land, building the office and infrastructure. Either you alone can handle the store or you need 2-3 persons to contribute. While the Online concept can easily be implemented without having office space, even some incubators can help initially. You just need to build a online store connect vendors and start selling. But yes, it takes much less time to start a physical store as online needs technical things to be build up first.

2) 2nd P – Place/Location/Access - The traffic of the customers depends on the location of your store, which place it is setup and how easily public can access it. This issue always remains while dealing with physical retail until you start building-up your chain of stores across the glob. Offline stores can be started with only one, mostly, whereas online store can be accessed anywhere in the world with just internet access. Scalability is much harder to achieve in physical store, because more you build the stores, more capital you need. Online is much flexible in this scenario, just develop a site with cart, host it and let any customer from anywhere purchase products from it.

3) 3rd P – Product/Category/Quantity - Giving customers a wide variety of choice increases his second shopping and loyalty probability. This is an challenge with physical stores, they can’t include much categories, their many sub-categories and wide range of products in each sub-categories. This happens as it again requires high intensive capital and warehouse issue. Even if you consider every products, one can’t afford it in a large quantity. Whereas in online dropship model, you can accommodate as many number of products as you can because you neither have to purchase it nor store it, when order arrives, inform particular vendor with product code, they’ll ship it to customer’s doorstep. The category/product management can be the challenge in online store as per the various vendors you are signing, but can be adjusted. Touch-Look-Feel is the main challenge in online shopping as none of the customer can feel the product, get chance to touch it, and try it and that’s the reason why high end products can’t be sold online.

4) 4th P – Promotion/Deals/Coupon/Discounts - Only two things that customer thinks of while purchasing product are, Price & Brand, and that’s the reason for brutal competition in retail business. If one sells 10% disc, you’ve increase to minimum 15% to increase customer traffic. Though offline stores are having these factors to attract customers, but online stores are leveraging these factors day-by-day, focusing on price discounts. You get coupons with discounts, vouchers on sign-up, credit balance that can be used in next purchase, combos and much more. Availing these all things are very hard in physical stores, as you can’t give vouchers to customers as they enter your store, can’t have discounts or credit balance on next purchase and so on.

5) The M – Marketing - Customers will not know your existence in the market until you market your brand. For physical stores, most of them relies on word-of-mouth strategy to increase the traffic, or pamphlets in newspapers or posters in various buildings. Most of them don’t use most common strategies like newsletters, social media, digital media, testimonials, etc. This is the place where online store overtakes the other as most of them are well aware of these marketing techniques and keeping them as their base, word-of-mouth comes as secondary.

The above post was related to start-ups and medium level businesses. Yet many other factors still were not emphasized as the above are the best ones. Offline or Online depends on the personal experience and thinking about to start and grow their model, it’s still two sides of coins, neither of them can be balanced nor compared in every aspect.

July 25th, 2013

E-commerce : Definition & Its Types

E-commerce (eCommerce) or Electronic Commerce, a subset of ebusiness, is the purchasing, selling, and exchanging of goods and services over computer networks (such as the Internet) through which transactions or terms of sale are performed electronically. Contrary to popular belief, eCommerce is not just on the Web. In fact, eCommerce was alive and well in business to business transactions before the Web back in the 70s via EDI (Electronic Data Interchange) through VANs (Value-Added Networks). E-commerce can be broken into four main categories: B2B, B2C, C2B, and C2C.

1. B2B (Business-to-Business)
Companies doing business with each other such as manufacturers selling to distributors and wholesalers selling to retailers. Pricing is based on quantity of order and is often negotiable. The whole organization has to target other one rather than focusing on individual customers. Though the customer would be focused as the goods and commodity B2B has deal with, its going to be used by the end customer.

2. B2C (Business-to-Consumer)
Businesses selling to the general public typically through catalogs utilizing shopping cart software. By dollar volume, B2B takes the prize, however B2C is really what the average has in mind with regards to eCommerce as a whole. Having a hard time finding a book? Need to purchase a custom, high-end computer system? How about a first class, all-inclusive trip to a tropical island? With the advent eCommerce, all three things can be purchased literally in minutes without human interaction.

3. C2B (Consumer-to-Business)
A consumer posts his project with a set budget online and within hours companies review the consumer’s requirements and bid on the project. The consumer reviews the bids and selects the company that will complete the project. Elance empowers consumers around the world by providing the meeting ground and platform for such transactions.

4. C2C (Consumer-to-Consumer)
There are many sites offering free classifieds, auctions, and forums where individuals can buy and sell thanks to online payment systems like PayPal where people can send and receive money online with ease. eBay’s auction service is a great example of where person-to-person transactions take place everyday and now a days its growing in numbers. This business can also be treated as Marketplace, where users get online login in one web-portal itself and these users are nothing but one being buyer and another being the seller.

 

Companies using internal networks to offer their employees products and services online–not necessarily online on the Web–are engaging in B2E (Business-to-Employee) eCommerce.

G2G (Government-to-Government), G2E (Government-to-Employee), G2B (Government-to-Business), B2G (Business-to-Government), G2C (Government-to-Citizen), C2G (Citizen-to-Government) are other forms of eCommerce that involve transactions with the government–from procurement to filing taxes to business registrations to renewing licenses. There are other categories of eCommerce out there, but they tend to be superfluous.

July 12th, 2013

Business Development Plan : Do’s And Don’ts

By – Prof. Nandini Vaidyanathan – Founder & Mentor @ Carma Venture Pvt Ltd. Date – 10th May, 2013

Prof. Nandini has worked for many MNC’s for almost 20 years, within many domains and fields, she’s Board of several companies, Mentor & Promoter of Startup(forstartups.blogspot.com), India’s leading Strategist in management. She has even been a Teaching Entrepreneur in US, UK Premier Business School, Princeton, IIM-B, etc, etc, etc. If I still continue to introduce her, then I think I’ll just end up with her intro itself.

The webinar was awesome, never got so many meaningful and important things to learn just within 2 hours. Prof. Nandini was clear and sound, very straight to her points that were to be conveyed to the audience. So let’s get to her talks about Business Development Plan, I’ll narrate point wise:-

What is a Business Plan ?
“A Business Plan is nothing but your Wishlist that you want within specified period of time, anyhow. Make sure Entrepreneurship and Wishlist goes hand-in-hand.”

  1. If you are a new Entrepreneur, forget everything else and first approach to get Mentorship from a good Mentor, without which you may have very less chance to survive for long.
  2. Don’t ever write a plan just because you’re very eager or desperate to start a business or to attract an investor. Write a plan to capture an vision and fulfill your Wishlist.
  3. Don’t do copy-paste in your business plan, don’t come with a plan and say currently this is there in the market and we can do the same in an efficient way, never think of it. Your plan has a product, if someone sells this product to you then how much you’ll spend from your pocket? The more the price figure comes, the stronger your plan is…!
  4. Don’t make a business plan that has monopoly kind of business, research for the competitors and make a plan that defers from them. No one can win without competitors, if you don’t have competitors what you’ll compare & with whom you’ll compare, they’re the one who’ll point out your defects. Eg- Imagine everyone in the world with Mercedes Benz…!
  5. Don’t ask or refer your business plan to any of your friends, family members or relatives, they’ll support you because they wanna see you happy, they’ll speak what you want to hear. Eg. Hitler asked his Army Chief during war, “What’s our status?”. Chief:”We are going to win”. Ultimately Germany got defeated. Hitler:”Why you lied to me?”. Chief:”That’s the thing you always wanted to heat from us…!”
  6. Equity is Entrepreneur’s Blood, don’t plan to donate it at very early stage. Don’t let anyone rule over you, your team and your org. at an early stage. If you still need to raise funding at early stage, don’t look for Venture Capitalist, look Strategic investor. Never divide your Equity in 1:1, keep at least 51:49 ratio to make good future decisions in an easier way.
  7. Don’t consider that market is easy to cover with your awesome product, you are still a Starfish and Big Whales are already roaming there in the market. Have a point in your business plan that how your product will change, influence and grow the market. Get a Differentiator in your plan.
  8. Differentiator in plan can’t always be only in ideas, it can be in Execution too. Eg. Lays Vs. Bingo. Lays introduces itself in market flavours by flavours whereas Bingo introduced by 12 various flavours. They say every Bingo retailer in the market will have at least 12 packets…! Whatever Differentiator you have, it should be very unique and innovative.
  9. Market research is very important to get boom into the market. Eg. Kurkure researched that most of them want snacks while working on computers, so they introduced Kurkure in Cyber Cafe’s initially and boomed the market.
  10. Have your idea feasible, scalable and profitable. You should plan for innovation but not at that extent that it becomes hard to implement. It should be profitable, it you can’t take out profit from your idea, then just generate it. If one is not interested in generating the profit, then tell him to book his/her domain as .org instead of any other.
  11. During hiring process decide you want, a cat or a camel, because later you can’t expect them to change as per your expectation. Even if you get your cat, decide you want which specific cat- big, small, fat,etc. If you can groom your employee, you’re intelligent Entrepreneur, if you can’t (most of them) then deal with them.
  12. Discuss your plan with every employee, you know the plan very well because its your baby, but do your team know the plan? Does your team know what are your dreams and for what they are working? If you make your employees to work for the salary, they won’t deliver you your expectations, because they don’t know actually.
  13. Use simple English to communicate, simplify the high-tech and jargon words so that every one gets your idea thoroughly.
  14. Don’t chose Co-founders like tomatoes and potatoes. Every Co-founder should have complementary skill set. All should want same thing from the company. All should share same value.
  15. Best point to raise fund is when you don’t need it, that will make you stand above the VC’s. Raise funds only and as per your requirement, if you go for more than your requirement, you may lose control over your expenditure.

Elements Of Business Plan:-

  1. Have a snapshot summary; its easy to read index page than 1000 pages of a novel.
  2. Product and Customer must be focused.
  3. Hire a team that is die-hard, self-motivated and that can fly your ship.
  4. Market & Competitors. Your every competitor has a drawback, make it your strongest point.
  5. Good monetisation model excluding ads.
  6. Don’t have just one innovation, have a whole pipeline, a series of innovations.
  7. Budget planning for at least 3 years. Revenue and Expenses must have assumptions.
  8. Milestones- break your plan/wishlist into milestones.
  9. Monthly Profit & Loss Sheet should be there.
  10. Differentiate between Risks & Opportunities.
  11. Plan your Elevator Pitch. Say you are in elevator with Warren Buffet and you got just 30 secs to impress him so that he’ll give you a check in 30 secs, what you’ll say?
  12. Build Evangelical Team that will bring Evangelical Customers.
  13. Check where you stand . Give customer what he wants -> Colgate gave. Give customer more than he wants -> Google gave. Give customer which he never dreamed of -> Facebook gave.

So these were the great advices and suggestion by Prof. Nandini represented here in front of you. Hope you found it interesting and learned at least one point to follow your journey of Entrepreneurship…!

May 14th, 2013

Main Themes from Nasscom Product Conclave (7-8th Nov), Bangalore

(from our Bangalore desk)

I attended this conference in Bangalore earlier this week – it was most interesting with hundreds of company execs, entrepreneurs and thought leaders speaking about product innovation, development strategies and emerging technologies.

I will list some major themes I picked up at this conference:-

  • In India, next decade belongs to Product development and these will have major impact on business and social empowerment.
  • Hiring best practices and product quality differentiate successful organizations and individuals from all others.
  • In the new world, individuals and professionals which take initiative and drive innovation will take their organizations to leadership positions. This applies to large and small firms alike. These individuals will be the ones in most demand going forward.
  • Design and Image is crucial in the new world – this translates to User Experience and Engagement in all we do. Think Apple or Amazon.com
  • The big opportunities are in Smartphones / tablets, Mobile, Cloud, Analytics, Big Data, Social – all usual suspects. These are all big enablers of new innovation and present opportunities for growth. At the same time, these technologies create a level playing field. As a result, larger firms now find that small startups can cause immense disruption in the former’s usual businesses – hence executives in the larger firms must think like entrepreneurs to create new opportunities and ensure customer delight via superb delivery and engagement.
  • India has 900 million feature phones and only 10% of these are smartphones. So Mobile Apps and Enterprise Mobility offer incredible opportunity growing forward – this is true of western markets as well, as Enterprises there adopt mobile in a big way for all their applications. Mobile has truly gone from Mobile Also -> Mobile First – >Mobile Only strategy. Now, major new programs and initiatives in leading firms are planning to do a Mobile only strategy.
  • Cloud Computing is the new way of doing almost everything in IT for end clients – IT investments are shifting to Cloud at an incredible space – so much so that most new projects or initiatives are looking at Cloud as a preferred solution over an in-house hosting strategy.
  • Big Data is not a fad – with all the Social channels and frenetic transaction activity, Big Data is a problem which is growing in size everyday – as such, it offers major opportunities for solution providers and product developers to slice, dice and analyze, in order to achieve actionable intelligence and business decisioning.
  • Open source technologies are now fully mainstream and driving major new development.
  • Collaboration and leadership are key aspects in driving success. Most new innovation requires good collaboration and partnership skills as well as passion to succeed.
  • Naveen Tewari, Founder and CEO of InMobi, said that the three critical factors for success for a startup are :
    • Thing Big – you can do it
    • Hire the best
    • Focus on product quality. Good products sell themselves
  • Naeem Zafar, Founder and CEO of Bitzer Mobile as well as more than a dozen startups earlier, said that for each CEO, the main responsibility is “Don’t run out of money”.
  • IBM-mers Peter Coldicott (Chief Product Architect), Robert High (IBM Fellow in IBM Watson), and Daniel Yellin (Enterprise Mobility Chief Engineer) spoke about IBM’s Smarter cities program, Cloud and the new IBM super-computer Watson which is making waves.
  • Sharad Sharma (ex-MD, Yahoo India), spoke about product entrepreneurs as transformers of the society.
  • Deep Kalra, Founder and CEO of MakeMyTrip, spoke about his entrepreneurial journey and the Indian startup ecosystem.

The event is one power-packed event with almost 1300 delegates which included almost 150+ blue-chip speakers and thought leaders from India and abroad. The presence of so many Silicon Valley luminaries seems to indicate that action in Bangalore is accelerating and many westward folks are now looking east to this part of the world for next revolutions in tech and digital.

Kudos to Nasscom, Nasscom President Mr Som Mittal and all the dedicated NPC volunteers for putting together what we consider is a remarkable show.

For more updates from this event, click here.

November 12th, 2012

Indian e-commerce market valuations take a dip

(with some ideas from The Wall Street Journal article dated 11 Sept, 2012)

The Wall Street Journal has an article today on how the Indian ecommerce is loosing it’s allure. Flipkart, Myntra and Snapdeal were once being hailed as the next-big-things in the India tech scene but that image is now loosing some shine. It has to do with a variety of factors, the predominant one being the Web bubble burst Phase 2 in the West. As we know, the valuations of Facebook, Zynga and Groupon have been halved or even lower on the western bourses. Indian ecommerce firms, which are considered equivalent in India, are also seeing a declining shareholder and venture capital interest due to this. The valuation of ecommerce firms in India has been chopped into half (roughly) for now.

The Indian economic slowdown and the realization that such models face issues in monetization, has led to further decline in venture capital land grab of Indian ecommerce outfits, a trend widely prevalent last year; it was just last year when the India ecommerce firms like Flipkart and Snapdeal were flying high on the valuation scales. In 2011, VC investing in Indian ecommerce firms rose to $344.4 million from $49.2 million in the prior year.

But, despite the recent downturn, Indian ecommerce market holds stupendous promise. According to Zinnov Management Consultants, India’s e-commerce industry is expected to accelerate from $10 billion in 2011 to $260 billion by 2025, a whopping 26 times growth factor. Only 10% of India’s 1.2 billion people are online so far, as per comScore, which tracks online usage patterns.

Some consolidation is now happening where the big firms are gobbling up some others. Eg Flipkart bought out rival electronics online retailer letsbuy.com while fashionandyou.com bought online rival urbantouch.com in August.

To read the Wall Street Journal article, click here.

What should the Indian ecommerce entrepreneurs do going forward :

a) Market is too big over the long term for entrepreneurs to ignore

b) Entrepreneurs need a viable business model which can sustain over a long period. These startups need to develop brand recognition and sustained marketing over a long term to survive and thrive.

c) Customer service and customer experience is key to customer acquisition and retention.

d) There are a variety of niches which can be targeted eg location-based services, home and lifestyle, kids and women, healthcare services, infrastructure-oriented ventures, education and many others.

e) Offline retail partnerships and arrangements are key to drive down costs and warehousing challenges.

f) A gradual drive for product innovation and clean websites can help entrepreneurs differentiate their offering from the hodge-podge of ecommerce outfits emerging everyday.

g) Mobile, Social and Local convergence (or MoSoLo) can drive a lot of the innovation in ecommerce business model and delivery.

h) Mobile and Tablets are perhaps the most suitable channels for market reach and scalability. PC / laptop penetration may remain low and grow slowly.

i) Tier 2 towns and unexplored markets like rural may offer interesting possibilities for online entrepreneurs.

September 11th, 2012

Mobile Payments dogfight

Recently, we heard that Starbucks – the behemoth in coffee retailing business, invested in Square – the American Mobile Payment startup; as well Starbucks stores will be accepting payments via Square mobile app. Starbucks already had their mobile wallet solution and had seen a record number of transactions via this platform, wherein the customers would just wave the starbuck app barcode on their smarphones in front of a reader in a Starbuck store and the amount gets deducted from the user’s Starbucks mobile wallet.

Now Starbucks is betting on Square – that zingy startup which has attracted tons of VC money from big name investors. Starbucks buyin gives Square the credibility that is needed by the tech firm to sell into big name retail. So far Square app was popular for mobile payments, but primarily limited to thousands of small businesses which had adopted this solution. Starbucks approval puts Square square and centre in the Mobile payment contender space – along with the traditional digital payment firm Paypal. Paypal has been experimenting with Mobile Payments for sometime now and has the backing of millions of consumers and merchants who use Paypal daily for moving around money online.

Paypal, in turn, announced a partnership with Discover Card financial services, Paypal mobile app will mediate a Discover payment in select stores. Discover is the smallest of the 4 big Credit Card vendors in United States. Visa, Mastercard and American Express cards are working on their own mobile payment solutions or partnering with other internet and telco players. Discover is relying on Paypal to carry the smaller card vendor into the Mobile payments vertical (although Discover works in Mobile Payments via telco partnerships as well).

It seems like a dogfight between Square and Paypal has begin to try to dominate this upcoming area. Although there are other heavyweights in the ring – namely, ISIS (telecom carrier joint venture), Google Wallet, Apple potentially, banks and some others. It would be interesting to see what tricks Apple has up it’s sleeve. Apple is a killer firm which, when it enters a market, comes up with such innovations that few are able to compete with it.

The Mobile Payments space is fragmented and there is no clear winner or dominant player yet. The complexity in financial regulation and the difficulty in scaling this business over a large number of merchants has kept this area into the hobby domain so far. As it seems, it seems to be breaking out now with some startups and large firms making aggressive moves to create a market in this now. We watch this space with keen interest.

As far as India goes, there are local startups who have tried to tackle this space – firms like ngpay, paytm, obopay and some others. But most are still small and captive scale is not there yet. Many of these firms have survived in India by doing things other than Mobile payments. Eg Ngpay has become a mobile shopping mall, PayTM has gotten into recharge business and so on.

August 23rd, 2012

Notes from TIE Bangalore Seminar on Mobile App Monetisation

(from our Bangalore desk)

This week I attended a seminar organized by TIE Bangalore on the topic of Mobile App Monetization. This is a vexing problem which has bedeviled most Mobile Apps developers around the world. Problems of app discovery, app marketing, too many apps, app development fatigue are well known.

This was an interesting panel discussion sponsored by Qualcomm Ventures. The speaker lineup was top-notch and included the following speakers :

  • Karthee Madasamy, Sr. Director, India and Israel, Qualcomm Ventures
  • Manik Arora, Founder & Managing Director, IDG Ventures India
  • B. Vamshi Reddy, Co-Founder & CEO, Apalya Technologies
  • Rahul Chowdhri, Director, Helion Venture Capital
  • Suresh Narasimha, Founder & CEO, TELiBrahma Convergent Communications
  • V. V. Ravindra, Managing Director, Idea Brahma

The discussion was riveting and inspiring with this star speaker lineup. Below are the key points of discussion from this seminar :

Karthee’s keynote :

  • Globally, there exist 6 billion wireless connections now out of which 1.6 billion are 3G connections. This number is expected to swell to 3.1 billion 3G connections by 2015. Also, by 2015, emerging markets will contribute 50% of smartphone market share.
  • A smartphone is now a full blown computing device. A smartphone now embeds more and more electronic functions like camera, GPS, watch etc. Tight silicon integration is driving this trend. Mobile processors now offering full windows experience Eg Windows 8 may run on the same processor has as the Windows 8 phone.
  • As to India, in 2012, 200 million phones are expected to be sold in India. By 2015, 300 million phones will be sold in India. Smartphone sales will multiply by 4 times in India by 2015, compared to now. At the same time, the costs of high-end smartphones keep falling.
  • Another great trend is that of the rise of mobile broadband users in India. Today, there are 52 million active users in India. 42% Facebook users in India are mobile users. India has 37 million 3G HSPA users today.
  • India is very interesting in that, here, a phone is the first computer for a user, it is often the first camera as well as it is the first gaming device a person might have.
  • India has a huge amount of mobile opportunity. In fact, for India, mobile may be the only primary computing device which a huge amount of users might have.
  • 3G tariffs have dropped drastically in India. India is one of the cheapest 3G markets now, anywhere.
  • There was a time when there were hardly any Indian-brand devices. Now India has seen several homegrown device brands – who have increased market share using innovative strategies like dual SIM or Tier 2 market penetration. Indian brands like Micromax and Lava now own 20-30% of the market in India.
  • There are too many apps now and app fatigue exists, however good apps can still see a bright future.

Karthee also mentioned about the Qualcomm program to find successful startup models – this program is called the QPrize and it has total 1 million USD available in prize finding. One of the previous QPrize winner has been Capillary Tech.

Question : Is mobile apps just extension of VAS ?

Vamshi – Apps are to engage and entertain customers as far as Service Provider is concerned. Monetization of Apps, however, does have a VAS feel in India.

Suresh – TeliBrahma had decided early on not to work with operators and focus on domestic markets, however it is now trying to work with operators and is also marketing abroad. Advertising is a tough market. Need a billion impressions to make 1 million dollars.

Rahul – Their firm is concious that VAS market is challenging. As to working with carriers, it is a country specific issue and mostly an Indian problem. Mobile payments is a tough business to crack (but one of Helion investments ngpay has succeeded after some efforts). App monetization is generally difficult, somehow apps have to go local to add value. B2B2C seems to be a monetization model so far.

Question : How to make money on apps ?

Ravindra – To make money, need persistence. Positioning is important. For mHealth, doctors have to be targeted. App Store is not a good model – need to go through B2B channel eg via clinics or other healthcare firms. Selling via B2B2C seems only viable option in India to make money so far.

Vamshi – Apalya is selling via operators and direct to consumers also now. Collecting money today is via operators – that is one of rare ways to collect money. Apart from that, app monetization is very hard. Sheer persistence is key to get to inflection point in environment. Collection agent today is service provider. Another model – Vodafone is trying to act as change agent and willing to take only 30% app revenue share
similar to the app stores. Discovery thru app stores etc is hard.

Manik – with app stores, mobile social networking or mobile travel firms are hot again. Mobile is anytime anywhere location-based experience. Internet penetration is low but mobile penetrations is high. Especially, targeting tier two cities and local language support can help.

Social networks in India and search are in India are not promising as global guys do this. Mobile Commerce or m-Commerce requires local people, and hence is promising.

Angry bird started with a Finnish operator first, and then reached scale. And then Apple accepted them.

Rahul – ngpay – primary monetization is via payments. It has been difficult for ngpay in the beginning. Making money directly from end users is hard but possible.

Question : Paid apps vs ad-based apps?

Suresh – brand advertising is interesting but it is not easy. Eg Angry Birds became success after Rovio had tried many other apps. Mobile CPMs are too low compared to web CPMs. Mobile ad based revenue is not a viable model. White label apps do not work as IP gets transferred to the customer.

Manik – has a mobile advertising firm-vserv – in app advertising. It is early days for sure. if a firm has a little bit success, need to promote that. Eg Angry Birds. Long tail for mobile advertising in India is quite long. Only two media agencies in India have a dedicated mobile guy. Digital ad budgets will double at least in the next few years. But next growth has to come from mobile. Clearly there is a shift in positioning.

India has 900 million subscribers. So critical mass is there. Vserv has 60 million addressable users.

Vamshi – Angry birds focused on viral marketing.

Ravindra – India is about sheer size. Just smartphones are 15 million.

Rahul – invested in Dhingana. If one has a single app firm, need to have a deep app. Stay in low burn mode. Show engagement. Dhingana is radio ad market as radio has 100s of crores in ad revenue

Predictions :-

Manik – IDG is bottom up firm. Sees app opportunities in :

1) Infrastructure and enablers – eg advertising , security, discovery
2) enterprise mobility – still very new in India
3) cool movie movie hits type approach

Rahul –

1) B2B2C model is promising, that is hwere mobile and tablets are interchangeably used.
2) LBS services can be interesting
3) Global markets are promising

Karthee – Tablets are interesting – have a larger screen.

Vamshi – tablets market is still very small.

Suresh – tablets are promising. Eg winstores on tablets. Tablet will be bigger than PC at some point.

Ravindra – very bullish on tablet growth. Everybody knows tablets now and people understand their use now. People see PC replacement to a large extent. Clinics are good use cases for tablets. As doctors and radiologists are small compared to population, healthcare sector needs productivity improvements using mobile devices.

August 16th, 2012

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