Archive for January, 2011

1M/1M Strategy Roundtable For Entrepreneurs: Personalization Remains An Open Problem

I want to start today’s recap with a prayer for Steve Jobs. I just wrote a post on my blog saying, Apple Doesn’t Need Steve Jobs; Tech Industry Does. It sums up my sadness at the thought of our industry not having the privilege of Steve’s thought process. I have, most certainly, drawn tremendous inspiration from him as a thinker and a visionary. I am sure most entrepreneurs have.

With this week’s One Million by One Million roundtable, we have moved from the DimDim web conferencing platform to the ViVu video conferencing platform. DimDim, as you know, was recently acquired by Salesforce.com.

First up today was Michael Greenberg presenting Better Personal Advertising. Mike wants to manage online identity on behalf of consumers, so that they can maintain multiple identities for different types of sites, say photo, career, etc. and present themselves better in those different contexts.

Mike’s customer acquisition strategy is weak at this point, and he also has a rather broad strategy in approaching this market. While I do believe there is an interesting opportunity in identity management, I am going to need to work much more closely with Mike to extract the nuggets out of his idea, and give shape to a viable go to market strategy.

Then Kelly Fallis pitched Remote Stylist, a personalized interior decoration advice service coupled with e-commerce in the domain of furniture and furnishings. Kelly’s business has already done about $150k in 2010 revenue, which tells me that she has successfully validated at least some of her assumptions. Kelly has a lot of gaps in her customer acquisition strategy, as well as positioning, and she is seeing customers from commercial and residential clients. All this is too broad, and needs tightening up on multiple dimensions.

I like the business idea a lot, and in 1M/1M, we know a lot about building Web 3.0 and e-Commerce businesses, so I would love to work with Kelly to help her figure out the various nuances of building a successful e-commerce business, especially one that differentiates on personalization. I have repeatedly said that personalization is an open opportunity in web businesses, and needs to be tapped this decade. For Kelly, a good starting point would be the 1M/1M Curriculum, where we can offer her a lot more on the subject.

Next Sajeeva Bora with tekMunk Software Solutions discussed BizzGenie, a business software concept to help retailers manage the decision-making between “shop floors and top floors”. Sajeeva and his cofounders have good domain knowledge of the retail business, but have not yet done sufficient validation of the idea. He is looking for money and naturally, getting rejected by investors for lack of validation. As I have said before, this is not the right stage to look for money. There’s more work to be done to prepare for a funding round.

Nwenna Kai then presented Food Is Our Medicine Vision, an online training concept through which she wants to teach community leaders how to create healthier living concepts like organic gardens, etc. in urban areas. Nwenna has surveyed about 200 readers of her blog, and they have told her that they would be willing to pay $400-$800 for such courses.

Nwenna came to the roundtable with the question: what now? Where do I begin? Well, that’s a rather large question to answer in 5 minutes, but she obviously needs to start validating her business within that group of 200 users who have said they’re willing to pay for her offering.

Up last was Gagan Biyani pitching Udemy, an online marketplace for educators and experts to teach various topics. Gagan has about 150 completed courses on the site so far, and about 10 of those are monetizing. He has run some experiments within the entrepreneurship training vertical, and has seen success when he has brought on known thought leaders. However, he faces the problem that the top tier thought leaders are unwilling to set up shop on his site. They have their own programs under their own brands.

Interestingly, Nwenna, who pitched right before Gagan, would be very interested in setting up shop on Udemy, and teaching her concepts and bringing her audience onto Udemy. We did this spot validation at the roundtable, and I believe, Gagan got a customer. However, I’d like to see a more focused, vertical specific go-to-market strategy in Udemy. At some level, Gagan’s focus on entrepreneurship courses doesn’t really align with Nwenna’s target audience.

I have thought a lot about how to make an entrepreneurship education and eco-system scalable and accessible to a vastly larger number of people. The answer to that question, I believe, is the 1M/1M Premium Lounge. In fact, at a time when we’re facing severe youth unemployment in America and Europe, and the emerging markets are just starting to build their entrepreneurship eco-systems, we really need to think deeply on how more and more young people can be efficiently, rapidly and cost-effectively be trained in entrepreneurship.

You can listen to the recording of today’s roundtable here. Recordings of previous roundtables are all available here. You can register for the next roundtable here.

Speakers List at APEX ’11 PE/VC Summit; Feb.10, Mumbai

I am happy to announce the list of Investor and Entrepreneur speakers for APEX ’11, the annual conclave of the Indian Private Equity / Venture Capital industry, scheduled for February 10 at Mumbai. The event will have a special focus on Cleantech, Logistics and Real Estate.

Private Equity: The Road Ahead

Raja Kumar, Founder & CEO, Ascent Capital
Alok Gupta, Managing Director – India, Headland Capital
K Srinivas, Managing Partner, BTS India*

Cleantech Panel

Dr. Vivek Tandon, Co-Founder, Aloe Private Equity
Inderpreet Wadhwa, CEO, Azure Power
Vinod Kala, Managing Director, Emergent Ventures
Siddhartha Das, General Partner, Ventureast

Logistics & Transportation Panel

Ashis Nain, MD, Expressit Logistics Worldwide
KK Iyer, MD, India Equity Partners
Sankalp Shukla, CEO, Inlogistics
Mohit Bhatnagar, MD, Sequoia Capital India

Real Estate Panel

Sunil Rohokale, ED, ASK Investment Holdings
Sanjeev Dasgupta, President, ICICI Venture*
P. S. Jayakumar, MD, VBHC

To view the more detailed event agenda Click Here

Happy to organize discounted participation rates for VentureWoods entrepreneur members. To request the special rates, Click Here

Mobile Payments – Shifting opportunities for startups

Interesting developments on mobile payments over past quarter or so. I think the space for startups to play has shifted significantly due to these.

First, the announcement of NPCI mobile payment service is a big development. Practically, this kills any mobile payment technology initiative in the short run. Not because it will necessarily be successful – I do hope so – but because partnering with banks for any new provider will be hard till NPCI solution plays out. So in the best case, NPCI solution takes off and relieves the electronic payment issues. In the worst case, NPCI solution doesnt take off, and private solutions get crowded out of banks’ attention zone! Some private mobile payment providers are serving the need for two factor authentication, and it remains to be seen how substantially the UID system challenges that. Overall, my sense is that erstwhile mobile payment providers potentially have to turn into more of business correspondents, or shift their position. To me the key technology gap currently is the user experience that bridges an intent of the transaction to the payment mechanism – between buying and paying. A compelling service in that area that provides great user experience would be useful.

Second, the alignment between banks and telcos is great news for large scale distribution of financial services to unbanked customers. The key bottleneck on this end so far has been the economics. It remains to be seen if the telco channels will serve comprehensive financial inclusion needs, or skim the market where the margins are – such as remittances. Another strong candidate for such partnerships are perhaps the consumer packages goods companies (unilever, p&g) who have large scale distribution. Making the financial inclusion product line attractive enough to capture retailers’ interest, but not too attractive to lose retailers’ existing product focus (such as airtime or soaps), will be a key balancing act. The overall business correspondent market is likely to remain fragmented, and challenging for startups. However, if these large partnerships do take off and land up making a substantial impact, banks will need additional pieces of technology, including augmentations to their core banking systems, to support the same. That might be another area for new technology based startups to look at.

The third obvious area are services that can use these platform facilities around electronic payments – including mcommerce.

Overall, exciting times ahead. What do you think are the opportunities these developments open up?

Onion Rs65/kg, Petrol Rs65/litre, Beer Rs65!

Very interesting perspective from an analyst from IDFC. Thought to share – these are Mumbai (Maharashtra prices)

“Onion Rs65/kg, Petrol Rs65/litre, Beer Rs65!”

For the first time in history, basic needs, life style needs, luxury needs are at the same price, prompting us to explore why basic needs like onions are so expensive.

The visit: We visited Pimpalgaon and Lasalgaon – Asia’s biggest onion wholesale markets (240km from Mumbai) – and interacted with over 25 farmers, a wholesaler, assistant to APMC chairman (Agriculture Produce Marketing Committee) and visited three farms.

Key Takeaways: The price rise is due to significant supply shortage arising from unseasonal rains, with crop yields falling to a tenth of the normal 70-80 quintals per acre in many cases. At these yields, despite farm realizations reaching 2-3x of last year (Rs2500-3000/quintal) a farmer is still unable to break even. With the next onion harvest expected only in March, supply shortage is expected to continue for at least two months. However, we see pressure on onion prices even beyond that as unseasonal rains have also damaged seeds, due to which seed plantation is likely to be lower than last year. Unseasonal rains have also damaged grapes and tomatoes and thereby prices have doubled.

Our view:
We believe pressure on the price of onion, tomatoes and grapes is going to sustain for at least 6-9 months due to supply shortage (albeit not to the same levels seen last month when onion prices touched Rs 70-80/ kg). A bigger concern, though, is the possibility of high sustained inflation continuing, especially if supply shortages occur frequently across food commodities (as seen in the past year). Even if supply gets back to normal levels, prices will not reduce to the levels last year for two reasons: 1) farmers, having seen increasing crop disruptions, will demand higher prices in normal years to create a higher safety net for a bad year; 2) having seen that the consumer is willing to pay Rs60/ kg, the entire supply chain will attempt to extract slightly higher prices than earlier (scarcity-driven prices that touch super-normal levels always settle at a higher normal due to the sticky nature of inflation). In this case, with onion prices currently at ~Rs45/ kg (up from Rs 20/ kg last year), even if supply does get back to normal in 6-9 months, it is unlikely to get back to Rs20/ kg seen earlier and is more likely to settle at ~Rs25-30/ kg (still at least a 20% increase). While government interventions in terms of export bans are likely to provide temporary relief to consumers, the threat of sustained long-term inflation is likely to stay.

More here

The mystery of the absent Onions

1M/1M Strategy Roundtable For Entrepreneurs: Top 10 Online Advertising Trends For The Decade

We started this week’s One Million by One Million roundtable with a discussion of online advertising trends, looking at them from the perspective of cost-effective customer acquisition and brand building, as well as entrepreneurial opportunities. You can find more on the topic on my blog at Top 10 Online Advertising Trends For The Decade.

While on this topic, I want to particularly emphasize the social media advertising trend, and my observation that the infrastructure to measure, analyze, optimize, and target is really wide open, and I’d like to hear from entrepreneurs working on the various nuances of that particular problem. My Facebook’s Strategy In Perspective piece has more on the issue.

Next, we had two very interesting entrepreneurs.

Meeting Wave

First up today was John Boyd with MeetingWave, a social media platform that caters to university alumni associations and addresses the challenge of helping them create walled garden professional and social networking groups under their own brand, as opposed to groups within Facebook or LinkedIn.

John’s idea completely resonated with me, having run the MIT Club of Northern California’s Entrepreneurship program for many years, and being intimately involved with the inner workings of that alumni association (10,000 members).

We discussed various segments for John’s go-to-market strategy and pricing model options. In particular, I saw a number of different strategies that John has been nibbling on – different segments, different delivery models (white label vs. MeetingWave branded domains), different pricing strategies. In my opinion, the strategy is too broad, and needs to be reined in, focused, and tighter. While I like the idea, I don’t as much like all the various options at this stage, because each has implications on the execution side, and leaving so many options open would mean the complexity of the business will simply be exponential, and thus the risk of failure will also be high.

For example, instead of pursuing universities, trade show organizers, hotels, resorts, corporations, I am of the opinion that John should focus squarely on colleges and universities and their alumni associations for now. The rest can be on the back burner for the moment.

RDimensio

Then Umashankar Balasubramanian of RDimensio pitched an SMS-based classified service. Uma is a member of the 1M/1M premium program, and has already started validating his idea with several online classified players in India.

He is using natural language processing to translate free text SMS queries to classified queries, and then translating the responses back to SMS format.

Uma too has too many segments, and I asked him to focus 100% of his energy on online classified vendors, and forget newspapers (unless they also already have online classified offerings) and so forth. Instead, he should broaden his geographical scope to include international classified vendors.

Also, I think Uma’s offering is under-priced, and I asked him to do some homework on pricing which I will review next week to advise him better on the pricing strategy.

Interesting technology, and I will be working with him to build a comprehensive go-to-market strategy as part of the premium program.

I have thought a lot about how to make an entrepreneurship education and eco-system scalable and accessible to a vastly larger number of people. The answer to that question, I believe, is the 1M/1M Premium Lounge. In fact, at a time when we’re facing severe youth unemployment in America and Europe, and the emerging markets are just starting to build their entrepreneurship eco-systems, we really need to think deeply on how more and more young people can be efficiently, rapidly and cost-effectively be trained in entrepreneurship.

Yesterday, I posed two questions on my blog: one, to high school and college students as well as recent grads, asking how they were viewing this deep recession, and whether they are taking destiny in their own hands, starting companies, becoming entrepreneurs.

And a second, to educators, teachers, and mentors in various schools, colleges, and universities who are preparing the youth to face a depressing job market, asking whether they are steering them towards entrepreneurship, and how.

If any of you would like to participate in these discussions and help me with the research, please feel to comment on the issues. I will be writing more on the topics here and elsewhere.

You can listen to the recording of today’s roundtable here. Recordings of previous roundtables are all available here. You can register for the next roundtable here.

 

Motorexchange raises second round financing

Motorexchange just announced their second round financing led by Epiphany. As early stage investors, its always an anticipated moment when your early investment goes out to raise their next round of capital. While at the initial investment, one would have bought into the team and the space, this is typically the first time there is an external examination of what the company has really been able to demonstrate. For Motorexchange, it was about validating some of the concept risks that the company had bet on – will online auctions work, will we be able to create an effective currency, can we provide monetary lift to our customers, and so on. The team did a great job of working through these validation points, and found endorsement of the same in form of next round of financing.

Many other times, what is perceived as progress internally may be discounted by the market. Another customer – sure, but will it really scale? Better product – yes, but… “Yes, but” as an entrepreneur knows, is the moment of truth – and that is equally true in subsequent rounds of financing. Hence it becomes very important to not only look at business milestones from customers’ standpoint, but also from prospective investors’ standpoint – if your business can’t scale without more capital, then catering to capital providers is part of the game. One thing that typically helps is to listen to prospective investors and factor their inputs (on what they like or not, or what progress they’d like to see) into the short term plans of the company.

Best wishes MotorExchange, for building the next phase of your vision!

1M/1M Strategy Roundtable For Entrepreneurs: Top 10 Vertical And Social Web Trends For The Decade

On January 6, 2011 we hosted our 64th FREE One Million by One Million (1M/1M) strategy roundtable for entrepreneurs, and the first for this year.  

We started this week’s roundtable with a discussion of all the resources we have brought together over the last three years to help entrepreneurs, including a comprehensive curriculum for entrepreneurship development on a large scale. This curriculum is based on the various questions entrepreneurs have asked me over these 64 sessions, spanning financing, positioning, customer acquisition, marketing, sales, channel, and various other early stage startup related issues. 

As usual, then, I worked with three entrepreneurs working on specific businesses. 

First up today was John Bertoni with Mava Consulting, who is setting up a part-time sales force for companies to use without having to invest the fully loaded cost of a direct sales rep per geography. John has rightly observed that many small companies, as well as foreign companies trying to get into the United States, have limited budget, and could use 25% of the time of a sales rep in each geography, say, New York, San Francisco, Chicago, and Seattle. So, effectively, at the cost of one full-time sales rep, they can access coverage in four different regions. 

I like the idea, and recognize the problem. John already has a couple of customers, and needs about 50 customers to get to $1M in annual revenue. I offered to help him market his services through 1M/1M, since his target customer base overlaps rather nicely with the 1M/1M community. 

Next Julie Acevedo presented Juju Band, a newborn navel protection band to cover the umbilical cord for about eight weeks from birth. Drawing on traditions in the Latin American community, Julie and her partner are bringing to market a very specific product to address a very specific pain, and I believe, she can build a very successful e-commerce business based on this idea. In 1M/1M, we have extensive expertise on bootstrapping e-commerce businesses, and will be happy to help her navigate the paths of customer acquisition, inventory, merchandising, and financing. To begin with, today, I gave her a set of immediate action items, including starting a blog, a PPC campaign with some ideas on how to position her keywords, as well as some guidance on merchandising. 

Then J.J. Yosh presented Ancient Tomorrow, a concept for a TV show drawing upon ancient wisdom to unearth alternative energy innovations used by ancient cultures. Very cool concept, designed by an energy scientist, upon which J.J. wants to develop a mystery show. He has written a first season with nine episodes, and has built some relationships on the production side. He is looking for financing for the show. 

My knowledge of television show financing is limited, although a friend of mine was the COO of Magical Elves, a Hollywood production company that has produced Top Chef and Project Runway. I’ve had several conversations over the years on TV show financing, and the basic formula is that you have to get a network to finance your show. This means, you have to convince a network that focuses on your topic – in this case, A&E, National Geographic, Discovery Channel, or perhaps History Channel – to buy into your concept, and agree to fund the production. And that is what I advised J.J. to pursue. 

In the Entrepreneur Journeys methodology, we focus on customer validation as early as possible. In the case of J.J’s business, the customer is the Network. Unless he can get a Network to buy in, there will be no point in producing the show. 

Finally, I spent the last part of the session on the methodology that we teach in 1M/1M, as well as few minutes on Trends. 

In fact, in the discussion on JuJu brands is yet another validation of the verticalization and niche-ization of the Internet. This week, I published an article called The Top 10 Vertical and Social Web Trends where I have discussed this at length. I am pretty convinced that the web will get increasingly more verticalized, where appropriate, localized, and niche businesses will do very, very well. This is my core assumption on Web 3.0. In 1M/1M, we have a huge emphasis on helping today’s web entrepreneurs navigate their ways into a Web 3.0 tomorrow. 

It is clear to me, after doing these strategy sessions for over two years, that entrepreneurs need a lot more training on positioning and go-to-market, financing strategies, including alternative financing besides venture capital. As such, I have created video lecture modules with case studies in the 1M/1M premium lounge on these topics with very specific guidance on what analysis to perform and how. The easiest way for me to teach a large number of entrepreneurs some of these basics is to have you spend 30-40 hours on the curriculum I have created, and THEN have you come work with me on refining your strategies and positioning at the private roundtables.   

I have thought a lot about how to make an entrepreneurship education and eco-system scalable and accessible to a vastly larger number of people. The answer to that question, I believe, is the 1M/1M Premium Lounge. 

You can listen to the recording of today’s roundtable here. Recordings of previous roundtables are all available here. You can register for the next roundtable here.