Tag Archive for 'vijay+anand'

Is Micro-Funding a New Trend to Come?

A lot of folks seem to be very curious as to what I am working on, since my stepping back from Proto.in. Well, quite a bit actually and on some rather serious stuff. Serious as cash, infact. One of the major concerns that has been on my mind is the scarcity of capital in this market.

I am absolutely with the camp that believes that if there are quality companies, then capital will find its way. But we also know as part of most of our risk mitigation strategies, making a leap into a market with no safety net or partners makes it a really serious gamble – even for some of the most well-versed entrepreneur to tread in. I strongly believe that unless we enable some capital to flow, we are not going to see much of a difference in the number of quality startups that spring up, and inevitably the number of startups that get funded/get recognized, and the number that make an exit. This cycle, as you know is recursive.

So What have I been obcessing about? I’m focusin on three aspects and I think all three aspects are crucial.

  1. The mechanisms for loans from banks to become accessible for startups/SMEs
  2. An effort to bring together the Angel Investment Community, educate them and help them engage in an effective manner
  3. An effort to fix the “broken VC Model”

The First and Second are fairly straightforward and I promise to come back to you with some better news soon. But this is primarily about the third one.

I think the third one warrants a closer look for a simple reason. People have been claiming as long as for the better part of the decade that the VC model is broken and there seems to be no heed to that warning. Whats worse is that given that India couldnt be farther away from whats happening in the Silicon Valley in terms of similarities, the model is a force-fit one (There are some better models in Israel, Singapore etc). If you’d understand how a VC firm works, its primarily a specialized bank which runs on a management fee and bonus paid with the return on the investment. The overheads of running such a team is so high, that the only viable way for most firms to operate is to increase the fund size, which sets the ball rolling on them getting into a soup not able to invest in early stage no more, and the next thing you know they are either full-fledged in growth stage, or are in growth stage and are disillusioned about being an early stage investment firm. Suddenly working for a VC firm or being one doesnt seem so glamorous, does it? :)

What we need in India is essentially a firm which is capable of dispensing funds as low as 50 Lakhs to a crore (I am consciously keeping figures in INR to make it a point that we arent in dollar land and the rules and requirements are different here) – which can operate at lower costs, and can also manage a sizeable portfolio.
Continue reading ‘Is Micro-Funding a New Trend to Come?’

The Tweetie Helpline | @start24x7

So, We have been kinda noticing this trend. Forums are great, and with the present rate at which the startup community seems to be growing, there is more and more a need to be real-time. We felt it, just by the way we were interacting with people on twitter, but there was certainly a need to do more.As of today, the Indian startup community has a helpline. @start24x7 Continue reading ‘The Tweetie Helpline | @start24x7′

Ideas To Toss: Advertisement Networks for Mainstream Media.

Note: This post is a rehash of a post made on my Personal Blog, about how Yahoo should alter its strategy to focus on other streams of media for contextual advertising. Realized that there are lots of hidden opportunities for Startups as well within this space and here it goes…

A friend of mine and I, over some conversations were discussing about some of the bigger brands that we see around us and something along the topics of Return on Equity. Not sure if you are aware of, but Microsoft has a 52% return on equity. Yahoo has roughly about 7% and falling drastically and Google has one which stands at around 26% – and growing steadily. Whatever you may say, Microsoft has played this game with a whole new set of balls and one most people simply won’t understand. And if you ask me, they are a much better company in terms of strategy and products compared to most other giants, anyday.

But that’s not the focus of this post.

The conversation was that, if a company has Advertisement as its core strength and has built a competence in it, then its going to be very hard for the company to drop that and adapt the advertising network of its partner/rival. Well, for the case of survival they might, but since they do have the core competence, the resources and the minds that can think in that direction, what could they possibly do, was the question.

I’d say, flip the coin, and lets look out to the horizon. Go after other streams, television and Radio… to be precise.

Continue reading ‘Ideas To Toss: Advertisement Networks for Mainstream Media.’

A Funded Startup: An Alienated Brother?

I have seen this cycle happen over and over again. There would be a set of guys who’d be around in most barcamps and social circles and someday they’d decide to start a company, and eventually build a product that’d gain quite a bit of traction from the “first adopters” that you find in barcamps, MoMos etc and then the worst thing happens – they get funded.

I have stats that show that more than 80% of companies whose growth and traction flatten out after getting funded by a VC firm. I’m asking myself the question if the founders were such shrewed and capable executioners that they planned the entire stunt just so that the popularity lasts till they get funded – but I doubt thats the case. So what then?

I came across a note where someone mentioned that people who get funded barely go back to the social circles after that. Partly cause those circles disown them because of whatever has happened to them. VC funding is not the golden egg, its more of the long-term, high interest, loan that is given to a company hoping that it would make it big, but for most folks getting funded is the end goal and such folks starts treating companies that have gotten funding as if they are Cinderella’s step sisters. The welcome is not there anymore, and there is no reason for these founders to go back to those circles anymore. They retire to the boring life of going out to meet peeps in baristas and coffee days where more pleasantries are exchanged than the actual meaning or weight of words.

This is actually very bad news. For the funded startup its very much so cause these early adopters essentially have dropped a baby on its head, just when someone agreed that it had potential. For the rest of the community, its also very bad since its a loss of a resource who probably had figured out how things work here and most certainly had knowledge worth sharing.

If you think I am just randomly spewing out stuff, I’ll make the entire point with one reference. J’lo’s single titled “I’m still Jenny from the Block”. That pretty much drives the point across. When your folks on the block are essentially who your early adopters are, and they disown you, it becomes radically hard for your company to survive without burning hard cold cash to see if someone would take you in for some cash in return. In the language of the hood, there is no love from the brothers no more.

I for one think that VC firms should stop advertising the amount they invested. Startups that get funded should make this a mandatory point with their investors. I know quite a few firms, like Ixigo for example who have gotten funding, yet not knowing the amount keeps things quiet, calm and life still goes on. Take any company that you know of [ and probably hate ], saying millions have been funded and crazy things like that and all of a sudden I am wondering if someone “deserves” that sorta valuation. Everybody thinks or says it out loud that its unfair and a lot of enmity grows in this little pool for absolutely no reason whatsoever.

Some companies would claim that announcing the investment amount adds credibility that will get you clients. Who are we really kidding? When you are small you need to embrace your brotherhood close to your heart and they will be your first set of customers whether you like it or not. An enterprise is a hard sell and probably is only worth aiming at when you are looking at your second round. If it happens, I’d be extremely happy but do be prepared to know and realize that your first set of customers are all folks you know, startups and SMEs. By the second round, you’d have grown to a much different positioning and would also have the strength to stand on your feet that you’d survive, and also would have weaned off the support system by then.

Until then, make no mistake, you need your community and the community needs you. Some things being in secret will make that happen.

Note: The media loves to flaunt numbers. So if you are not going to disclose numbers, don’t be surprised if they don’t run your story. Its okay, they too need to evolve, understand and adapt.

A Repost from the Author’s Personal Blog, The Startup Guy.

Startups Exploited: An Open Letter.

This might be very personal, but I doubt it can be avoided. For the past two years, there has been a lot of time, commitment, travel, stress, energy, and personal money that has gone into a really ridiculous goal – one of creating a culture of oneness, open communication and one where startups stand a chance to win. The mission does go on, and I strongly believe that the journey lies ahead for a few more years, before we can step back and let things slide on its own.

But this is not about what I am doing. This is about what is happening.

They say, that what is nice from far is far from nice. Once you get into the ground, roll up your sleeves and start digging, you start to smell the intentions of a lot of well-to-do people, which kinda make you wonder a lot of things. This post is one of warning for the startup community to take heed from, so that you don’t allow yourself to be exploited mercilessly, by any means.
Continue reading ‘Startups Exploited: An Open Letter.’

A New Kind of Incubation Model. Part III

Ever since the journey with Proto.in started, about two years ago, I can safely say that I’ve sifted through atleast 300+ company profiles. I’ll hit you with the bad news first: Most of them are hopeless. They are half-baked solutions. They probably are great hobby projects and shouldn’t even allowed to be classified as a “startup” or a Product. Most of them lack business sense – to the point that if you did get a chance to see some of them, you might totally lose hope on the startup scene in India altogether.

Of course, the good news, is that the evolution is happening extremely rapidly. I am seeing lesser and lesser of the type of companies that I described above, and more holistic companies starting to appear. So what’s the issue? Not all is happy and merry yet.

Lately, I am seeing quite a bit of companies that seem to be addressing some very valid problems, and coming up with solutions that do make sense and would work. The only issue is that since most of them have a problem hiring, and a much bigger issue validating the concept and running the pilot that they end up building one piece of the puzzle and it takes them far too long to roll out the “solution”. The funny thing is that, mentally I can clearly see that there are different pieces of the same puzzle being put together by different groups. I simply can’t understand why they can’t collaborate and work together to target the problem.

So, yes, there are issues with this. First of all, since all of them are startups, and all being run by founders, there would be some issues with personality clashes as to how things are done. But lets face it. There are atleast seven players for every single component that is being made for the same problem out there. I think there are plenty of options of teams to choose from.

Before I do get blamed for pulling this out of thin air, here’s an example of something that works somewhere else. There is a Firm that I am aware of that operates out of an emerging nation. The way they work is that they fund certain entities to create knowledge and IP. Their IP could be as simple as a new recipe for a cake (quite seriously!). The firm identifies entrepreneurs in a location, and helps this entrepreneur create a franchisee location, and is given the know-how as to how to create these recipes and sell them. He is given just about six months of time when he is hand-held and guided on the art of running a businesses.

Six months later, the firm goes and finds an entrepreneur, exactly in the opposite side of the country and does the same thing. Follows up in another three months with another entrepreneur in another location, etc etc and repeats all above steps till they have five or six stable entrepreneurs who are running local units in different parts across the country. Then their only focus is to pump all their energy, and resources into these five units and watch with whom the entrepreneurial leadership kicks in. Once that is identified, they create a new entity, merge all these five units under it, place this “leader” as the manager, and take a stake out of this new entity.

The positive note for the firm in all this is that, they take equity out of a firm which has a high chance of success since its run by not one but five entrepreneurs who are well versed in the same business, understand local diversity, and have crossed the issue of scalability, and probably are leaders and hence will ensure that their local unit grows and thrives.

If you take that model and see how to apply a version of it in the context of India, and the technology space, I’d say that for most problems, the solution is broken and built by various companies – mostly small teams, two or three people. It would be interesting for a firm, or an incubator to pick a aching problem, and bring together startups who are building pieces of the puzzle. Come up with a formula (perhaps on revenue, team size, and product readiness) as metrics and figure out the percentage each company will hold, on a new entity that will be created and promoted as the solution to this problem.

Simple case in point: Ordering Food over the net. It is going to require a hotel network front, a logistics front, and perhaps a LBS, technology front. Hungry Bangalore + OrderMonger + Yulop is a solution to go with. You at least need these three bare minimum teams to come together if the Seamless web is the kind of end-result that they are aiming for. I am sure there are other alternatives and maybe other elements as well, that other companies can bring in.

Firms, since they do enjoy the same bird’s eye view that Proto.in enjoys can definitely put together this high level working arrangement, and someone will have to “architect” and manage these teams, atleast initially till their co-existence structure gets ironed out and they find their roles. But its certainly do-able.a

I strongly believe that this kind of lego-work will probably increase a few more holistic startups in the indian scene. If it does come together and work, it will probably one of the most high energy teams, since all the founders will be the guys who will be driving this, and there is no comparison to that – ever.

Related Posts:

A New Kind of Incubation Model. Part I

A New Kind of Incubation Model. Part II

Please leave your comments and what you think here

2008: Is the UMPC a wave to ride?

UMPC, the Ultra Mobile Personal Computer. The design initially came out of Microsoft roughly about an year or so ago, and there were quite a few skeptics who raced to make claims that this would die the same death that the tablet PC had. Though the Tablet PC is quite an interesting form factor, it hasnt taken mass adoption. The UMPC very much seems like its going to beat all the odds and catch up on that adoption curve.

I am usually blamed for not giving enough numbers, so let me start with statistics. The number of laptops that were sold last year saw a massive jump of 85.6% from the year before compared to what is happening with other forms of PCs. For example the PC saw a growth of close to 12-16%. With that backdrop, 85% is quite a significant jump and one that has never happened for a technology so late in the life cycle.

So what does it all mean? Its a given that desktops are gonna head out and more and more laptops are taking up their space. Considering that you can get a laptop for Rs. 30,000, almost at the same price at what a decent desktop costs, I am not surprised at the adoption rate jump. But there might be more to it.

Type UMPC in google image search and hit enter. I am currently getting close to 1.5 million images and all different variations of the same specification. It’s certainly quite interesting to see how many companies are betting behind the adoption of this device.

There are a couple of reasons why I think this would work. For one, the Sony Vaio (the Miniature version) has been providing one with a similar form factor and it is quite well received. It comes at a hefty price tag and there are a lot of up-and-coming executives who are willing to pay something a bit less to join that ivy league. Pride and desire is very well served.

Continue reading ’2008: Is the UMPC a wave to ride?’

Selling to the Unaffordable. Part I

Most enterprises in India look to “more economically viable” markets abroad as their target customers. If you ask them why is it that we are never focused on local demands, and the market that is seemingly so huge and is often quoted to be one of the fastest growing, the response is usually the same: “They Cannot afford this service”. Despite, seemingly valid claims, the stability of an economy depends on diversifying your target markets and India being this large pool of potentially huge market is being eyed by foreign companies as a last hope and last stand for their company stability, all this while we are still looking elsewhere for our hope to shine from.

An average television viewer cannot afford the cost at which shows are produced. A startup cannot afford to get a paid mentor onboard though it might essentially be the secret sauce of success. Most developing countries cannot afford the lifestyle that developed countries take for granted. Most booming economies still cannot afford the price tags of “brands”. Folks in Chennai, bangalore and most of the growin ‘n’ emerging urban centers cannot afford housing within city limits. Most people in rural India cannot afford most of what urban india consumes and produces. If you really think about it, in the economics of transactions, very little is part of the category where people can really afford it. For everything else, there is mastercard :) I wish it was simple as that.. But nope, I can only wish for that.

Continue reading ‘Selling to the Unaffordable. Part I’

The Pyramid is actually a Lollipop.

Everyone, and Just about anyone with a background in Economics and can understand the market will tell you that a healthy market is supposed to be somewhat close to what C.K.Prahalad defined and popularized as – atleast here in India – a Pyramid. But is our economy, atleast when it comes to the Industrial sector anywhere close to it? Hmmm… One has to really think about that one.

I am not even for a second going to even go near the point of saying that I am enlightened here with this revelation that our economy is not a pyramid. Infact, this conversation has been initiated, argued, debated, chewed and spat on in most economic forums in the country and everyone is very well aware that we dont have a healthy Pyramid. I am just thinking through, what it means in terms of repercussions to the industry as a whole and to the entrepreneurial community.

Let’s start from the basics: The pyramid usually has about three segments. The 20% of the huge corporations and conglomerates, and the rest 80% which are pretty much the SME segment and the Startups. Now, do the numbers really add up? I’d have to think about that one, yet again.

During a conversation with a friend recently, the conversation revolved around which city provides a better atmosphere for a startup, from a perspective of providing that initial feedback, customer insights and etc, so that there is clarity past the ideation stage before the prototype is built. I had this perplexed look on my face trying to figure out if there is yet a city which provides that here in India. While most do cry out “Bangalore”, if you ask me, that city is the most startup-unfriendly territory that I am observing.* Whilst there is a very active group of people, and some with disposable incomes, who have started an entire community of unconference events and discussions that surround that, very little is happening past that. Bangalore, as per the count that we have on the number of startups, measures quite low. Salaries are high, infrastructure is expensive, branding is a very costly affair, attracting talent is a dance on the pole – let alone quality talent, and there a dozen startups fighting for the starving number of resources who are available and will actually provide that high caliber value for a startup. On the number of new startups that are emerging, the city ranks quite low. But at the sametime there is quite an active number of “startups” in the city which have been lurking around for a while – and when I say a while, it means for roughly around a decade. They have neither joined the SME alliance, nor are they really a newborn child. And this is essentially the company of alliance that is available in most places to get “that initial feedback” that we were discussing about. When these companies themselves are struggling to make that jump after a decade, I am not sure what sort of real feedback they can provide their new wave, that is coming up. I do hope that you understand the conundrum that we are facing here.

So that roughly puts things in perspective. If you break down an industry vertical, lets say the internet space, we have the likes of the public sector companies, and then we have companies such as Rediff and Indiatimes which form the bottom hemisphere of the lollipop, and then there is this ultrafine line of companies which are not more than a handful, which are to be the SME and startup companies put together. Lo! and behold, not the pyramid, but the lollipop. And in this Lollipop economy, the upper circle is competition and fiercely guards anything, anyone from the bottom is trying to pull. Feedback, and initial discussions are absolutely out of the question in most cases.

This is a concern, cause in an efficient ecosystem, I strongly believe that Incubators will have much less of a role to play. If knowledge was freely available, and people could catch up over a cup of coffee to vet out an idea, and that validation process could happen over conversations in a much more fluid manner – eventually leading to mindshare, market traction, talent referral, intial client base and even funding, then there is absolutely no need for a third element to facilitate this. Today, Incubators become an essential part of this conversation, since they are the only ones who can moderate and manage the intellectual property talks that are carried out and have any say with these bigger guys, who if they wish could squish these startups in as much time as it takes to blink.

It is quite beautifully put: Markets are inherently conversational. The more conversations we have, the faster we mature, and we need to have them in a much more open manner with all our cards on the table and as early as possible – if you are building a startup, or contributing towards the ecosystem. But unless the economic bifurcation by quantity and numbers is a pyramid, and not a lollipop, it is going to be a tough stroll up that mountain as we grow.

*While it is my opinion that, if a valley-type of ecosystem comes together in India it will be in a tier 2 city such as Pune or Hyderabad, that’s a conversation separate for another day.

Note: Repost of an article.

The Impending Revolution in Production.

Just the other day I met some very interesting folks from the National Institute of Fashion technology and was quite enlightened to know about the various departments they have; Apparently there is design, textile and Production – which on explanation makes a lot of sense. There was a lot of talk about the budget and its infavourability to the textile industry, and how clusters such as Tirupur are going to be affected by it. Personally, I am not too sure.

If you have heard the story, Tirupur, the cluster known for making garments is essentially setting up shops in Bangladesh so that they can produce the same quality at a much lower cost. So what value does the Tirupur cluster bring in? They are moving up the value chain in terms of design and innovation in new material. If you look back at some case studies, It’s kinda the same thing that happened with some clusters in Italy. They used to make a lot of stuff, and then the chinese and asian market started imitating and they were forced to move up the value chain and start designing and innovating every season so that the asian markets eventually gave up. The originals were always the “in-season” trend, and what was coming out of Asia was passe, as far as the fashion savvy were concerned.

I am expecting that the same will happen with Tirupur as well. So overall its good news for us. If there is one thing that we can totally bet on, its the fact that ecosystems, and humans will adapt. Thats what they are built and programmed for. Evolution is part of their natural lifecycle – especially with the changing market dynamics.

So what does this have to do with the title that I started off with? Well, there is.

I believe that production is going to head two ways from here on. Thanks to the freely available networks and the personality traits that people are showing, there are only two ways to go.

Distributed Production Centres:
Ever heard why the Cheetahs are such a small population? Too much inbreeding and what happens is that you build a culture, and an entire ecosystem that is endangered by a single threat. Single point of failure, as they call it in the hardware world. The entire DNA of the cluster is geared towards one purpose that a slight change in plans affects the entire colony. As much as Tirupur survived because of its resilience, and clusters such as Sivakasi will also survive because of its ability to innovate and differentiate, it is not going to be a long term prognosis for change. Whether we like it or not, we are part of the global economy and a blip in global markets do find its way home, miles away. There is also another reason why this makes sense.

Production doesnt just limit itself to goods. Production also goes for what we call as Knowledge workers, essentially everyone ranging from Programmers to BPO workers. The cost of housing all these workers under one roof is getting too high, with the margins dropping that most centres are looking at ‘work from home’ options. Azim Premji, of Wipro has been talking about this for quite sometime, as Distributed Call centres, and Technology today has the luxury and the opportunity to make this happen. Infact, it is already happening in small scales already. More than all the luxuries of saving costs and managing margins, if you do realize the fact that while our demand for more knowledge workers doesnt seem to be slowing down, our infrastructures arent keeping up.

Distributed Production Centres, are the way to go.

The Second Interesting trend that is happening is essentially Personalization. We might be one among the six billion population, but we seem to want, crave, desire, relentlessly hunt for products that are engraved and suited to our style and taste, at the cost of mass production. Seems complicated? It’s already possible.

Think of the trends that Cafepress, DilseBol, Myntra, Pringoo and all are after. It is essentially that. A friend of mine and I, sat and drafted a very elegant looking business plan and execution strategy along the same lines till we figured that three Indian companies had popped in the same space trying to cater to that need. I am still seeing them missing some crucial elements to hit it big, but they are definitely on the right track.

This is almost a very interesting problem for those who are into fashion technology, especially the production aspect. I came to know that the entire curriculum of the Production department of fashion technology deals with one aspect. How do you produce, ensure quality and keep costs low and keep the machine going. This is certainly an interesting challenge and prospect to tackle for those who are in this line of work. There are no easy answers, but some interesting cues.

For one, nobody talked about customized garments yet. We are talking about personalized products, out of mass produced items. So take the T-Shirt for example. The ordinary black wrangler T-shirt could be mass produced, but the text that goes on it is where the secret sauce comes in.

While this is happening in the textile and accessories space in on side, It is also happening with Publishing on the other hand. Xerox, I believe has launched an entire array of machinery which can print custom work – which means, I can give a print order for 500 calendars, with variable content using the same Template/layout. Think, calendars with the same template, but different images. Essentially the easiest way to explain it is “mail merging” of images and print jobs.

I wouldn’t be too surprised to hear about our friendly computer supplier, who made computers “Personal again” embarks on this route of also styling your machine for you.

The same is also happening with book publishing. Gone are the days when you had to go look for a publisher to print your newly, freshly, insightfully written book *cough cough*. While there was an interim solution to self-publish, it has evolved pretty much into “Print on demand”. There are companies that can give you one single print of your book, for the same price it would cost per unit price if it was printed on the thousands. Imagine that!

Of course, engraving personal messages on your ipod, is pretty much an extension of the same thing. And the trend is going to continue on.

According to reports that foresee trends, personalization is essentially going to be one of the biggest booming markets for this decade. I am almost quite certain about that. More than just printing your names on it, the market and demand will push it to some very interesting limits. Future itself and alone can unveil all those possibilities.

Reposted here from the Author’s Blog.