Walk down Silicon Alley…

Published by NishantV on May 14, 2012 in General.
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Last week I had the opportunity to spend time with startups and tech companies in New York, aka Silicon Alley. The excitement in the startup and venture circles in the city was impressive. Previously where finance used to dominate all conversations, now its about ad tech, social/mobile and Pinterest clones. VC’s seems to around each corner - from Accel, KP and Canaan, plus USV, DFJ, RRE and many more. More importantly, there is a passion towards entrepreneurship similar to what existed for maybe hedge funds previously, and investment banks before that.

The venture funding numbers confirm this transformation…(continued here).

How much revenue does it take to be a billion dollar company?

Published by Alok Mittal on May 1, 2012 in General.
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Techcrunch has a good article on the subject - in essence, emphasizing on quality of revenue. The mantra suggested is recurring revenue, low churn, high LTV and operating leverage.

For consumer companies equally, the notion of high lifetime value, repeat behavior, and margin structure are the key. A CapitalIQ analysis shows a strong correlation of the revenue multiple to (ebitda margins x revenue growth rate).

Real stories of Startup Failure

Published by Alok Mittal on April 27, 2012 in General.
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Readwriteweb has a review of The Founder’s Dilemmas: Anticipating and Avoiding the Pitfalls That Can Sink a Startup cover.

Based on extensive research of 10,000 startup founders, this book draws upon the reasons of successes and failures. Top reasons for failure - people issues, equity issues, and investor relations. Seems like a promising read.

India Expansion - Acquire & Manage Culture not just the Business

Published by GR on April 6, 2012 in Ecosystem, General and Process Maze.
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In recent months I have had the great opportunity to work  with organisations from around the world who have expanded their global footprint  through Joint Ventures/strategic Buyouts or Acquisitions.  I am happy to share, based on my experiences, some of the key elements/experiences which are important steps in business success in these types of situations . These are  indicative and not an exhaustive reflection of my experience.

- Managing Business & People independently : Many businesses identify a business leader or a senior operational director to run the operations(Hired locally or deployed from home country). However, they tend to leave thepeople part of the business decisions to be  handled by the home country HR professionals.  This makes the proposition very difficult. Firstly the Host country manager would focus on running and stabilizing business results while the HR of Home country struggle to understand the nuances of Indian business and its complexities related to people.

They face difficult situations in understanding and comprehending the Compensation Bench marking, hiring practices & success, Performance expectations Vs. Output etc.,

- Right Person but Wrong Job: Rightly many organisations deploy an Imported Indian(Indian side) to run the business when they acquire a stake in or a business in India. Many times the appointed person would have not run a business in India before  or even, in some cases,  not even run a business or business unit  in the home country. Many who work outside India may not be able to appreciate the way things transact in India and have limited ability to  add value to the Indian business  in current situations. This presents a significant challenge for this Manager deployed in India to run the business.  In the current Indian business scenario  the sooner the person comes to terms with situations and can impart information to help  top management appreciate the complexities of the  way forward the sooner he and the business can  be successful.

- My Business My Way : Many organisations would like to run their business the way it was run in their home countries.  They may be successful in their business the way they are in that country.

However, the Indian context is very different and the need for adaptation to the Indian business and  cultural impacts may be very very high, if the business is to be  successful. The entire ecosystem of business runs the way the India Culture has been imbibed into the business over 100’s of years.  The successful businesses have been the ones who adapted to the culture of India and conducted their  business around their single product or service  differentiator that is their unique value.

Prepare to Conquer:  It is helpful for the business  to look at some of the above issues  in their strategic and preparation planning and create a clear cut orientation and expectation setting practice  from the business point of view to help build a more realistic frame of reference.  . A clear understanding about the business audit from a cultural perspective (apart from the accounting,business) before even venturing to partner/acquire/buy/invest would help.  The Culturally  audit through of  the people practices, business practices  and  behaviors toward business and the preparedness for next level of expectations and delivery would provide a much more realistic approach to the market.

Have a great year ahead !!!

Feel free to comment or write to me at gr@husys.net

What’s NXT : Digital Content – Where is Money – 3rd April 2012, New Delhi

Published by Shailesh on March 28, 2012 in News/ Events.
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Digital Content : What’s NXT - Where is Money

Britannica closing down its print publication after 244 years to focus on online version!  The number of Internet users in India – estimated at around 140 million today – exceeds the number of TV sets in our homes. Facebook, with its 44 million Indian members reaches more of us than any single TV channel, Doordarshan included. While YouTube, with over 31 million Indian viewers a month, is far and away our largest English television channel. Meanwhile Twitter and Google Plus each get to about 14 million of us in a month – a number that is twice the circulation of India’s largest newspaper.  Is Digital Content be next wave in the internet world post e-commerce / mobile vas …

What will work in Digital media and what won’t. With new paradigms of tablets, Apps and micro payment gateway  reshaping the CPM economy , its time to explore and understand new business model which will drive Digital Media in new age !

Meet / interact and understand key issues surrounding digital content at “Digital Content : What’s NXT”  conference and understand these issues from leading Venture Capitalists and digital publishers / editors about the future of Digital content in India.

Speakers 

Key Note address : Mahendra Swarup, President - IVCA

1.  TCM Sundaram , MD & Co founder IDG Ventures

2.  Sanjay Trehan, Head MSN India

3.  R Sukumar , Editor Mint

4. Alok Mittal, Cannan Partners

5.  Sreekant Khandekar , Chairman & CEO – Banyan Netfaqs

6. Mukul Singhal, VP SAIF Partners

7. Shailesh Vickram Singh, Executive Director, SeedFund ( Moderator)

WHERE

Taj Vivanta ( Taj Ambassdor) Near Khan Market, New Delhi

WHEN

Tuesday, 3rd April 2012,

Register Now.

Register here at  http://bit.ly/GPLAHM

Missing Link - the HR plan

Published by Prashant on March 22, 2012 in General and Process Maze.
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Having managed HR departments for over 110 companies in last 5 years, I am amazed to see the consistent absence of comprehensive HR plan inside or even alongside the annual business plan. And this remains the top reason why goal alignments, reviews and resource agility remains perpetual challenge. Most managers end up reacting to situations rather than anticipating and large part of workforce has no idea whats happening around. How difficult is it to give one week of think time to top management and put together clearly aligned operating plans that include people plan (numbers, roles, goals, metrics, reports, rythms, huddles, key programs, training runs, content and cheer)?

Problem with not thinking through enough, is that then, doing and thinking goes on together, forcing execution teams to either take random shots or keep running back to top for decisions, both create huge risk to plan achievement.

Incidentally, its been easier to put this together for privately funded companies as the basic discipline of planning and review exists quite rigidly, though ensuring that HR plan isn’t given a miss is still a task. Companies run by professional CEOs come next and family businesses remain a tough one to crack inspite of their sincere intention.

Planning discipline impacts ability to retain talent to a great extent as it simplifies everyone’s job, if HR teams are fully engaged to operating plan and there is clarity on annual HR plan, whole organization achieves amazing operational seamlessness. You still have two weeks to go for another execution run to begin, it might be a bit last minute but you can save the year.

Cheers
Feel free to comment here or write to me at prashant@plugHR.com

A Different VC Model

Published by Freeman on March 22, 2012 in General.
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Having made a number of investments in very young technology companies in India over the years I came to the somewhat obvious conclusion that it is relatively easy for startups  here to become ‘ramen profitable‘, but relatively difficult for them to exit. Making equity based investments in this scenario is problematic for the obvious reason that without an exit, investors don’t get paid. The alternatives I have heard people talk about to address this are dividends & convertible debt. Dividends are difficult to extract as the entrepreneurs would always prefer to reinvest revenue to fuel further growth. Debt is risky as it can lead to a scenario in which founders lose control of their company.

My dad was a software entrepreneur. When I was a kid he was always at work on the computer on the dining room table writing software to help scientists design experiments.  After borrowing as much as he could from his father, he talked to a number of investors around us in Silicon Valley, but ended up taking money from John Wiley & Sons. At that point book publishers saw software as something that got sold in the back of books and they already had a model for providing risk capital to authors. In exchange for an advance of $50,000 and a promise of ongoing royalty payments, my dad signed over the rights to the product he was developing. The package sold reasonably for several years, and after 4 years John Wiley gave my dad another advance so that he could create version 2 of the software.

John Wiley & Sons made money on the venture. My dad made money. Everyone was happy. It is unlikely my dad would have been funded under the traditional VC model. Is experiment design a billion $ business ? Is an IPO possible, aquisition likely ? No.

I believe there are far more tech business opportunities that look like my dad’s business than Facebook. These businesses are largely ignored in Silicon Valley where the cost of living is high and the opportunity cost of not going big makes people shut down marginally profitable businesses.

In India, I feel we should embrace this type of business. Rather than bemoan the lack of an Indian Facebook or Google, we should strive to create thousands of small profitable online businesses that earn their promoters above market salaries and their investors above market returns.

The financing vehicle we use to do this will look more like the publishing industry and less like Venture Capital. Earlier this month I saw this article by Om Malik, Why Apps Need a Different Kind of VC Funding about Vision+ which appears to be a Finish VC making these types of investments in young companies. I think this will work well here.

Indian Microfinance - Infographic from Legatum

Published by Alok Mittal on March 15, 2012 in General.
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Interesting infographic from Legatum on impact of AP ordinance on Indian microfinance industry.

20120313 infographic indian microfinance
View more presentations from Alok Mittal.

Apart from effective blacklisting of millions of poor women in AP from access to private credit, the ordinance has impacted availability of credit across the country. All in name of protecting the SHG initiative, and backed by suspect claims damages that MFIs were causing.

Export Import Business Online-Business Idea

Published by vikasshah on March 11, 2012 in Ideas & Companies.
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 Logistics is big business.And freight forwarding (export -import) contributes significantly to logistics business.

Having worked with Air India Ltd at its Cargo SBU, I wonder whether are there any companies in world which facilitates export and import business online.This business can be classified into 2-3 ways.First is via air or sea.Second is big shipments (in tons) v/s small shipments (in kgs).While online model would be useful for small shipments as discounts given by airlines is too good in that.

Hindrance of digitising this business is influence of stakeholders like customs and shipper’s export /import division.

VC’s and entrepreneurs in logistics domain may wish to brainstorm on this idea.Contact vikaschandrashah@yahoo.com .

The New Model of ecommerce (is the old model of business) - Profitable, Innovative…

Published by Suresh on February 25, 2012 in General.
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 (This post was triggered by Alok’ s recent post about  new capital efficient, profitable models of ecommerce)

The current crop of poster boys of ecommerce ventures in India - FK, Snapdeal, FnY etc are all horizontal - sell everything to everybody.

They have built a business which has scaled - they have served millions of transactions.

They have generated scale with VC money, but profits have to be generated with customers’ money. How will they do that?

What is the new model of business that Alok is talking about?

Could it be the newer ecomm ventures will be -

  • Vertical sites - means focusing on a one or a set of product categories or customer segments. Vertical means that more information on site about how to use the product, etc. Vertical also means that they will offer more products per category compared to the general ecomm store.
  • horizontal sites based on made to order/just in time purchasing instead of made to stock/buy to stock models
  • focused on building targeted relationships with customers using technology which ensure repeat purchase.

These also require eco system in place including logistics, payment systems, analytics and reliable partners who will supply merchandise just in time.

What do you think?