Archive for November, 2005

Indian IT boom: B-O-R-I-N-G

It is educational to compare and contrast the two tech. booms that this world is witnessing right now. Silicon Valley is going thru a mini deja-vu of sorts, what with the spurt of so called web 2.0 companies mushrooming all over the place. The buzz word this time around is “build to flip” – build something cool and innovative and hope it catches the eyes of one of the big three – Google, Microsoft or Yahoo (affectionately termed as GYM). The VC community can’t hide its excitement as well and funds have come up to focus exclusively on emerging technologies like RSS. Earlier this year, during my visit to the Valley, I happened to go to the Canvas cafe with Marc. We were able to spot half a dozen leading thinkers there deep in conversation and bainstorming ideas. In short, a boom in Silicon Valley means lots of new startups, exciting ideas, coolio conferences and most importantly small companies giving big companies a run for their money. Exciting times indeed!

Now, let us turn our attention to our own..ahem… IT boom. What we term as a boom is actually creation of behemoth billion dollar companies with tens of thousands of employees. This has led to rising salaries and growing concerns about attrition and employee retention. Don’t get me wrong – it is great that the software sector has been able to generate such wealth and employment. But, unfortunately, our boom has so far not been about technology or innovation. Our tech. industry has its head buried so deep down in servicing offshore clients, that we are taking no notice of the other boom on that side of atlantic. Everyday I still run into tech. savvy engineers who don’t know the silicon valley has already moved onto web 2.0. We are running way behind the curve and not making much of an effort to catch up. The outsourcing business is so huge and lucrative, that it has almost become an albatross around our neck. The big 3 – Infy, Wipro and TCS should be investing in creating more awareness and spurring innovation – but they are not. Why do we see no or few technology conferences? Why is this IT boom just about outsourcing? Where are the startups, I ask!

I think our VC community can play a big role in changing things. They need to make some big bets. Fund a risky idea. Bet a few million on something that is untested and never done before (of course easy to say for me coz it ain’t my money!) Encourage technology development for local market. Convince Indian engineers and entrepreneurs abroad to return back and do statups. Even during the dotcom boom we saw much more buzz and excitement in India (India World, Naukri, Jobsahead etc all started before or around that time). But since Y2K, its been all downhill.

This outsourcing thing killed the startup culture!

No Shanda – MMORPG

I just read this article on Shanda the leading MMORPG ( Massively multiplayer online role playing games) company in China .

I have seen number of business plans in the last few months but suprisingly none on gaming. I wonder why ? Clearly online penetration and usage is currently low. Maybe thats the reason ?

W3C

I attended a W3C conference in Delhi about a fortnight ago. W3C works on developing standards to make the web more pervasive. They have an office at CDAC in Noida. I am pretty certain that in the next decade some of these standards will help produce elephants just as the http standard created a revolution. Besides XML,RSS etc. one standard that is becoming popular is Voice XML.

Most of the technical stuff at the conference was too much for me but the business implications of the stuff being worked on were clear. For anyone who claims to be on the cutting edge technically it would seem to me that being aware of W3C is important.

What is more interesting from an entrepreneurial perspective is to leverage the work at W3C to create elephants. It would also seem that these elephants may not be that infrastructure dependent so the lack of quality infrastructure in India may not prove to be such a bottleneck.

Maybe there are other initiatives like W3C that entrepreneurs in India can leverage or may be W3C is not something that will help. If you have any thoughts on this please comment.

Mapping – Ideas & Execution

A lot of us have heard the cliche ” Ideas are a dime a dozen. It is execution that counts” .

My previous post on mapping has got some people thinking. Here is a reply that I sent to one of them.

“The little that I know of this domain may help you. I would encourage you to tap experts. My thoughts are

1. GIS data exists for free

2. This GIS data has to be manipulated to produce usable maps in two dimensions. India has lot of cheap labor. If there is a plan and good supervision, labor can create detailed usable maps of a city/district. This is similar to a strategy that A9 a search engine on Amazon used except they used vehicles with video cameras to give pictures of storefronts.

3. Using collaborative technology like Wikipidea this data could be improved over time.

4. On this map landmarks would be identified and distance/routing calculated from point x to nearest landmark (using labor/collaborative data). From landmark to nearest landmark to point y would be done using algorithms ( these algorithms can be licensed I am told). The route from nearest landmark to point y would again be done using labor /collaborative data.

5. Every business on the map would be able to enhance its listing/ advertise which is where the revenue component would come in.

Big picture vs Tactical Entrepreneurs

Recently came across a couple of entrepreneurs who have built significant businesses on back of very tactical opportunities — great ability to spot that niche and move aggressively to service it. Now these entrepreneurs want to go to the next level — in a bid to do so, they need to transform themselves from tactical entrepreneurs to the big picture entrepeneurs (overall space, “strategy”, big fund raising, etc.)

May be a better thing for them to do is to hire “big picture” people, and leverage their own strength of being able to spot more niches. Being comfortable with oneself and playing to one’s strengths (rather than focussing on addressing weaknesses alone) is a key to success and to enjoying one’s worklife!

Eco knowledge

Both in my last assignment with JobsAhead and current, I travelled the length and breadth of country interacting with a number of wannabe enterpreneurs. One thing that clearly stands out is the lack of awareness (or the lack of) of the enterpreneurial support system available within the country. Lot of exposure has been provided to the valley with almost no visibility of stuff available in say 51 miles.

May be its a good idea to put together local resources well and increase ground level interaction somehow. TiE Mumbai had put together some events (I went to one recently on mobile marketing), but the participation largely remains confined to same faces.

Hope I will be able to contribute my bit.

Turning 40

I managed to find the article Jay mentioned in his post. Times of India has an e-paper. Subroto Bagchi talks of angst at 40. I can relate to that. I was 42 when I left Citibank and after trying to do a startup ended up joining the management team of PayPal.

Talking of opportunity cost . I think it is lowest in your twenties or forties. Good times to think of doing or joining start ups.

How to bootstrap

So you have a big idea but very little money. The best way to bootstrap is to tap friends and family. There is an amazing amount of work that you can do with very little money. You can build prototypes, get angel employees, study the domain and the competition. In most cases you may be able to talk to potential customers and find your USP.

Lets say you have done all this and are prepared to work for free but still need that extra $20,000 for operating expenses before you can close an angel round. I thought there was no answer because you will need to give too much of your company away to a bootstrap investor which may then make it hard for you to build a big company.

DFJ ( Draper Fisher Jurvetson) have an interesting way of providing bootstrap money without taking too much of the equity. They issue convertibles which will convert at the same valuation as the next round of funding that the entrepreneur takes.

So bottom line is if you can find a bootstrap investor who is excited enough to give you the $20,000 with the same structure that DFJ uses then you may have a way out of the bootstrap dilemma without giving up too much equity.

Opportunity Cost

Entrepreneurship is not about taking a lot of risk.

Most entrepreneurs operate on the principle of a very big upside if the venture suceeds and a small downside if it fails.

If as a young person you have a big idea and you give yourselves two years to give it a shot what do you lose and gain over a lifetime if your venture fails. You lose some compensation but save 30% on the taxes on that extra compensation. You gain valuable experience which probably makes you do better as a corporate executive if you decide on that route. In Silicon Valley quite a few move on and try again. Some of them join promising start ups instead of trying to do their own.

I think most of the successful entrepreneurs in India over the next decade will not be from IIT or IIM because of their view of opportunity cost.

I am sure lot of you who read this post will have views on this topic. Personally my view is that being a lead entrepreneur is right for very few, joining an early stage start up is right for a lot more and being a corporate executive, investment banker or VC associate is the right choice for the majority.

With the current environment in India are the opportunity cost dice loaded in favor of entrepreneurs ?

Who wants to be an Entrepreneur?

I read this beautiful piece written by Subroto Bagchi in today’s TOI. Can anyone locate the clip, I tried but couldn’t. While it’s easy to generalise and say that Mr. Bagchi has a gift in expressing his thoughts lucidly, what he also manages to do is query existing myths and beliefs and perhaps, stir up a new line of thought.
Today’s line on entrepreneurship vs “MNC jobs”- challenges the Indian professional middle class mentality- in higher education is freedom! You slog your best years for degrees, land cushy jobs in MNC’s, slog some more and live happily ever after. i.e. you’re a cog in a global wheel, and as time goes by, you become a bigger cog and that means you spend more of your waking hours ignoring family and friends to deliver greater value to an enterprise you had no role in setting up. Why? because you’re a professional and this is your job? OK so you change companies, join another MNC, and you’re still doing the same thing, playing bigger roles in more massive acts.
The alternative scenario is, of course, entrepreneurship, where there is a greater role for creativity- as in to start you have to be chief cook, bottle washer and diaper changer, para-phrasing Bagchi’s sexist line “entrepreneurship is the closest thing a man can do to giving birth to a child”. But, are you willing to let the creative passions that nurture innovation, creativity and ultimately breakthroughs in not just your life but countless others, whose livelihoods you influence, wreck your safe haven thinking of “in MNC jobs is respect” is the question he puts forth?
I think the dividing line is where Steve Jobs about to be sacked from Apple had turned the famous Godfather line ( this is just business, nothing personal) on its head and stated to be an entrepreneur “It’s is not just business, everything is personal”.
Some of us know it inside, how are we spreading the word?