Archive for February, 2012

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

 (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?

Don’t let the ecommerce bust fool you

It seems that past 6-9 months have played out a full boom and bust cycle as far as ecommerce in India is concerned. Where as in july-august timeframe, 10 million dollar fundraises were being inflated to 40, and investors seemed to be willing to pay 5-8 times the gross merchandize value as premoney valuations, suddenly the world seemed to turn cold over past three months. What does this mean for entrepreneurs?

  • Customers continue to buy: Not unlike 1999/2000 experience, customers seem unaffected by all the kolaveri around. Keep the focus on customers and deliver great consumer experience – that is the essence of building a great business
  • Build a business, not transactions: The only currency of a good ecommerce business till now has been transaction volume. Now is the opportunity to answer more fundamental questions – why would customers buy from you (apart from getting products below your cost price), what really differentiates your business from the guy next door (no, really!), what will drive profitability in your business, which customers do you want to target and who do you want not to, etc. “Internet is cheaper than retail stores” is not enough anymore.
  • Time for innovation: Premium will shift back on great teams with propensity to innovate, rather than the best search engine marketer. If you do have a customer proposition that goes beyond discounting, can you run the business at 25%+ gross margins (including logistics costs)? How can you build a business without investing $100M in inventory, and still ensure great consumer experience? Whats uniquely Indian about ecommerce?
  • Investment is still available: Ecommerce in India is not a space that investors can ignore (even Mahesh is investing in ecommerce now :)) – they just seem to be correcting themselves to look at the right things.

Lets get back on the roller coster. The party has just begun!

Brave new world…

Think about what role the mobile operator has been playing to-date:

  1. They own a pipe to transmit information (voice + data)
  2. They own a touch point to the customer (and hence impact the choices I make)
  3. They own a mechanism to charge the customer – either stored value or monthly billing

Long-term which of these will be critical? (continued here…)

Connecting a World Changer / George Page

Every now and then, my team stumbles upon an amazing individual who is destined to change the world. I try and tell these stories to as many people as I can. So forgive me if you have received a personal note but enjoy the story if you haven’t.

George Page is an extraordinary inventor. He is on an obsessive mission to make clean drinking water available wherever it is not. Scientist and Philanthropist – George has invented PocketPure – an engineer’s dream, a simple, elegant and portable water purificator that is already helping disaster affected communities in Haiti and Japan to drink straight up from dirty rivers, streams and lakes.

Read about his story as we break it at and give us a LIKE there if you think the world needs PocketPure! Write to him at gpage(at) to encourage his work and find out how you can join minds and forces with him.

George is trying to change the world.
He cannot do this alone. Help Us Help George.

Steve Jobs – Book Review

Steve JobsJust finished reading Steve Jobs’ Biography by Walter Isaacson — Great account of a genius. As someone whose only impressions of Steve Jobs are formed by this book, it is an amazing story of personal passion and entrepreneurial possibilities. At a more sublime level, its a story of a person who almost everyone would have liked to change, but whose weaknesses were intertwined with what made him immensely successful. Be yourself.

And once again, hoping we see more of such intense product people.

Visiting India


I run Tandem Entrepreneurs, a mobile accelerator in San Francisco Bay Area. I am visiting India and will be in Pune from Tuesday 7th Feb for about 10 days. I would be happy to meet with a few entrepreneurs if you want to use me as a sounding board.

At Tandem we work with 6 companies at a time. We invests $200k in each mobile startup and works closely with the team for an initial 6-month period. This allows each team to focus on gaining traction without having to wait for other capital. We work with founders to bring in other investors as the business gains momentum.Tandem has the ability to invest considerable additional time and capital in each business as needed.

You can learn more about us at You can also look at this discussion on Quora

If you want to meet with me please fill out an application at Apply and if I think I can help I will ping you.

Just to be clear I am not going to consider these applications for an investment, unless we meet and things make sense and you can move to the Bay Area for the six months that we work together. (Just dont want to set any false expectations).

Will the record high VC investments, catalyzed by E-Commerce deals, sustain?

Hi All,

The following data points from the Venture Intelligence India Venture Capital Report-2011 report quantifies the resurgence of VC investments in India catalyzed by the well known excitement for the E-Commerce segment:

Venture Capital firms invested about $1.09 billion over 209 deals in India during the twelve months ended December 2011 to touch all time high levels. The amount invested during 2011 was significantly higher compared to 2010 (which had witnessed $699 million being invested across 132 deals) and also compared to the previous record year of 2008 (which had witnessed $980 million being invested across 173 deals).

§ With 111 investments worth about $506 million, IT & ITES companies account for 53% and 46% of VC investments in volume and value terms respectively. Four out of the top five IT deals went to Online Services companies (including especially E-Commerce), which as a sector attracted a record 64 VC investments worth $238 million in 2011 (compared to just 19 investments worth $91 million in 2010). Mobile VAS companies attracted 13 VC investments worth $48 million in 2011. (Since our definition of VC investment caps out at $20 million, these figures do not include the “private equity” rounds in these sectors like the $200 million commitment by SoftBank to mobile advertising firm InMobi or the $40 million rounds raised by e-commerce firms and Fashion and You).

§ Early Stage investments (1st or 2nd round investments into companies < 5 years old, in our definition) accounted for 70% of all VC investments in volume terms and 52% in value terms during 2011

Is this pace of VC investments going to be sustained in 2012 and beyond? What do entrepreneurs and investors – both young and “old” – in this sector feel? I hope to find out some answers at the Venture Intelligence APEX’12 Private Equity & Venture Capital Summit, on February 14 at Mumbai, which features a special panel discussion on the Internet & Mobile sector. The panel includes entrepreneur speakers like Alok Kejriwal, Co-founder & CEO, Games2Win and Vikhyat Srivastava, Co-founder, Groffr and investor speakers like Mahesh Murthy, Founding Partner, Seedfund and Sunil Goyal, CEO of YourNest.

We have requested the speakers to provide, apart from their outlook for the sector over the next 3-5 years, actionable takeaways in terms of “what works, what doesn’t” – on important aspects like execution, fund raising, etc. – in the Indian context. The event will also feature other interesting panel discussions including “Big Debate: Majority Control” in which speakers will provide their perspective on the advantages and problems associated with investors holding controlling stakes in the ventures they fund. Other PE/VC Firms participating in the event include Ascent Capital, Exponentia Capital, FootPrint Ventures, Gaja Capital, Headland Capital, India Value Fund, Matrix Partners India, Peepul Capital, Sequoia Capital India, etc. A more detailed agenda of the APEX’12 Summit can be viewed at

Hope some members of this forum will be able to join us at the event. For participation details, please email or call Gaurav at +91-44-4218-5180



Delivering Happiness – Must Read

Delivering HappinessJust finished reading Delivering Happiness by Tony Hsieh of Zappos. Most amazing story of an entrepreneurs undying conviction, ability to think first principles, focus on customers and employees, just sound business, and great sense of humor.

Grab a copy.

Andreessen-Horowitz raises $1.5B for its new fund

As the New York Times reported last week, Andreessen-Horowitz has raised, yet again, a Very Large fund.

Andreessen Horowitz (or a16z, as it’s sometimes called) announced today that it has raised $1.5 billion for its Fund III. The venture capital firm has now raised a total of $2.7 billion since its founding in June 2009.

Co-founder and General Partner Ben Horowitz has a post on his blog with some detail on the thought process behind this step:

Since Marc and I founded Andreessen Horowitz three years ago, we have raised $2.7 billion. That statement begs a few questions. The two most obvious are:

  • Why did such a new venture capital firm raise so much money?
  • How did such a new venture capital firm raise so much money?

And for the answer to those questions, read the post above, since it isn’t very condensable into a soundbite. 🙂