Category Archives: Business in India

In Delhi, Every corner has two Property Broker Shop (atleast)

I am in Delhi for almost a week now, unlike last time (in January) when I almost died due to extreme cold, this time, the weather is way much better now, of course this is just the beginning of delhi summer. So during my stay in delhi, I can certainly notice few remarkable things about it which make it stands out from other metros, one of which is the number of property brokers and agents. It seems in every nook and corner, there is one property broker shop. Infact I saw a lane where out of 12 shops, 5 were of property agents!

It is not difficult to imagine that becoming a property agent do not require much skills or educatoin in India, and anyone who can talk and has good connections can start the business and there is easy and good money in it.

I think the time has come for India to start regulating properties buying/selling in a more controlled way and starts issuing licenses for being a property agent just like in USA and other countries and of course there is loads of money on the table for the government.

So where is the next BIG online Idea ?


What do you think, which is the largest and promising online business that has started in the past 3 years in India ? the chances are, you won’t be able to answer it, even I can’t because I don’t think there is any. There are some startups which are VC funded like asklaila but they are not going anywhere, there is ibibo with deep pockets but they are only copying ideas from others with offering anything new and then there are hundreds of startups which starts with good idea/concept and shuts down because of lack of traction, visibility and revenue.

So in short, India hasn’t seen any big idea taking off and I feels things won’t be changing in 2010-11 too, the most obvious business models are already been implemented in the form of transferring of print classifieds to online portals, like jobs, matrimonials, buying/selling vehicles etc and now we are seeing very vertical startups, say offering loan comparison, food ordering and even selling shoes online, I have serious doubts of any of these becoming next Naukri or shaadi or justdial (100+ crores businesses)

As the time is passing by, I am getting more and more convinced that in India, if you want to launch a successful startup, you have to merge both online and offline market as well as mobiles, you can not be successful just by offering some stand online service and hoping to make money through advertisement, which is the worst business model for a startup as you don’t want to make money from attention when the real money is in intention

10 Things which makes Onlines Business Difficult in India

difficulty

This is a quick “10 Pointer list” (could had more points easily) based on what I am seeing and have seen on Indian web space and what problems online businesses faces or common mistakes they make -

1. Majority of the people who are starting the web startups in India thinks they can make money from anything building anything, this just don’t work, the advertising model also don’t work (unless you are a 2-3 member team with little expenses).  You can look at the 2007-08 posts review of startups of plugged.in,alootechie,startupdunia  and see how many are still surviving ?

2. Last time I had covered this posting too, Too Spread Too Thin is a major problem in India, about which nothing can be done unfortunately.

3. Another mistake which founders do (I myself did couple of times) is to overestimated the market heavily, means not able to to understand the volume and value of the market. Most of the figures which are projected of various Indian sectors (say media or advertising or marketing) are often fragmented and the saying the market is of 350 crore often do not mean the market has full untapped potential of 350 crore.

4. Entry level barrier is too low and IP laws are non existing which means copycats pop up in matter of weeks in India, the cost of starting a web business has come down so much that anyone can start it in matter of days without building any business plan or revenue model, once a site starts getting some traction, 20 similar sites also pops up adding no value and just crowding the market.

5. Ignoring existing players – With online businesses, many times, when you start business, you fail to see the overlap between already existing players or players which are there but you never see them and later finds them.

6. Unlike in USA, All Venture Capitalists in India like to play safe so the money is only going into big players who knows how to pitch themselves or have good connection, of course, we can not blame VC for playing safe, it is their money and India is yet to mature.

7. People in India don’t want to use credit cards which often makes cost of acquiring customer very high, this hist cost of acquisition and retention is the reason why majority of the sites in India which starts with big bang either shuts down after 2 years or goes into maintenance mode due to not turning enough profits.

8. Payment Gateways – The situation of payment gateways haven‘t improved much, last month when I was looking to make to post on them and reviewing most of them, many of them were not even working properly, most of them have ridiculous fees (I call it ridiculous business model) where they are charging heavily on per transaction.

9. Last Mile connectivity – The lesser the said about this, the better it is. India seriously needs a package  like Reliance Moonsoon Hungama which was offered by reliance in 2000 for Rs 500 which created a revolution and people went crazy for mobiles which now had resulted in 640 million mobile connections, now mobile connections being getting saturated, it is good time to get into broadband war for these operators and start offering Internet for free or for Rs 99. let people get the “taste” of internet, once they get it, they will automatically start using it.  The reason for such long Rant is, though TRAI  says India has 8 crore active users online (those who uses internet once per month), from what ever I have seen, I think India has about 3-4 crore active users, mostly in the range of 16 to 32 crowd.

10 – Short Sightedness of founders for long term – Though I really can’t blame founders for this, but many times i have seen founders looking to make huge profits or looking to exit in second or third year, this is not very unlikely scenario in India. For example, Faisal Farooqui started Mouthshut in 2000 and is still running it. he could had sold it for a decent price in 2006, may be in 2008 as well but he kept it, a good lesson for others too.

I can think of few more points but will cut down the list here only

Too Spread Too Thin is the main Problem with Indian Online Space

The biggest problem any Indian startup targeting online space facing is the medium being “Too Spread Too Thin

Indian Online Space is way too Spread and is way too thin, making each startup to push extra hard to find, convince, acquire and retain customer meaning the startup to put more resources hence higher burn ratio something which I am seeing more and more often.

As a startup, you can not do anything to change the market other then evolving and remolding yourself to be what the market yourself to be and the great thing about Indian market is, the rewards are huge for the players who have followed what the market want them to be.

Best Cities to Launch Startup and Business in India

I had experience of working in couple of major cities of India in startup environment and I certainly know someone running a successful startup and business from all the 8 major IT hubs/business centers of India – Delhi, Mumbai, Chennai, Kolkata, Bangalore, Hyderabad, NCR/Gurgaon and Pune (I have no idea about Ahmedabad but afaik, it is more of an old school biz center).

Here are few factors which everyone should consider before choosing any city (assuming you do not live in any of the above mentioned city, in which case, you should ALWAYS start from that place only)

  • Where you and your team will stay ? How far it is from your office ?
  • How costly the work place is ? can you afford it for next 18 months without making any profit from your startup
  • What is Commuting Time ?
  • How costly is Food and other basic things ?
  • How easy it is to get quality Human Resources

1. Bangalore – Hub of almost all web startups and if you are looking for quality and experienced programmers or people with already having experience working in startups, this has to be the place to be. It is not cheap by any means though but if you can get a place to live (you can easily find a shared apartment) and a nice place to work from, Bangalore is thee best place for your startup. It has a great culture and lot of similar minded people so you can easily get lot of guidance not to mention, you can make good connections too.

2. Mumbai – Too costly but a good number of offline startups are based in mumbai, specially those who are looking for local business. Mumbai is the perfect testing ground for your business idea, if you are looking to offer some B2B service, start with Mumbai (or delhi) for sure.

3. Delhi – Delhi is often considered to be relatively cheap as compared to mumbai, and is a good place to start business if you can get a decent office or working place. It doesn’t have that much power problem and you can get human resources easily.

4. Hyderabad – I have spent our 5 years in the city and its a great place for a startup specially IT based, it is certainly cheaper than Bangalore and you can get an office for real cheap in non IT centric areas. If you are not new to Hyderabad then I say go for it!

5. NCR/Gurgaon – I am seeing lot of startups having offices in NCR/Gurgaon too, I think most of them were working there in some IT companies and then after few years, founded their own startup (this is how it works everyone actually). From whatever I have seen, there is NO point in going to NCR/Gurgaon if you don’t have any strategic advantage like oen of the co-founders already has a house and can manage an office too for cheap.

6. Chennai – Haven’t seen anyone, not of chennai going to Chennai for his startup, I know few companies though doing well from there but the founders were from chennai itself.

7. Pune – I honestly don’t know much about it other then the fact that it has made lot of growth in becoming an IT hub of India, though I am not much sure about offline business. For someone who is not aware of the city, he can certainly skip it.

8. Kolkata – I was told that if you are looking to start a company in Kolkata, you will be facing lot of bureaucratic problems and certainly, until and unless you have real strong reason (the only that I can think of is you live in kolkata) you should avoid it. It does have offices of almost all IT companies as it is the biggest city of eastern India but I don’t see any startup culture there.

Final Conclusion – If you are looking for online startup, go with Bangalore and for offline startup (most likely in B2B) go with mumbai. If you think otherwise, please do post in comment why you think so

Facts and Problems about eCommerce and online shopping in India

I have decent experience of working with management/marketing people who are running e-commerce stores in India as well as in USA and as a hardcore online buyer, here are my 2 paisa comments/review/facts on eCommerce in India.

1. Things are not moving that fast as figures shows (but this is the case in almost any industry)
2. The market is not that huge as figures shows (Never believed in those inflated figures of 1000 crore, 2000 crore etc)
3. Market is still very unorganized and fragmented, most of the bigger online stores are just like a layer over eBay model where the buyer and seller are directly interacting. Infact when I bought my blackberry, I just got the sellername, put his name in google, found his phone number and called him directly and saved Rs 2000!
4. The payment gateway sucks!
5. Only appeal to net savvy people – online shopping still appeals to net savvy people, its not easy to make people to make first purchase
6. Shockingly, majority of people fails to use netbanking too. “Aam Janta” don’t even remember their login/passwords (I don’t remember it too but I have saved it on my laptop)
7. Zero support by online shopping stores – It happened with me twice when I ordered somehting on rediff and seller shipped something else, there was No phone support so I had to mail them, I got an automated reply of thank you for contacting us and one day later I got a mail from them saying to contact seller and shipped the product back. Since it was a Rs 250 bermuda (I think its market cost might be Rs 40 though the seller was claiming it to be of International exported quality), I just kept it instead of wasting time in sending it and going through all the hassle.

I can probably stretch the list to 20 but no point in doing it. The biggest problem is, the cost of operation in running an e commerce store is very high as compared to returns but I still see potential for small players, people who are looking to target local market (like online shopping store for delhi/mumbai/bangalore only) and who are willing to take orders on phone and will take the money while delivering the product (not very onlne, huh?)

Power of Scaling – width and depth of vertical matters in India

So today after using justdial umpteenth time (and the umpteenth  time I got same result from phone which I already searched in the web which shows that the operators themselves search same db which makes me wonders why I even call them?), I just spent some comparing various successful web businesses in India (we can call it new media though its adulterated term but hey, we are talking about India here)

So in terms of evaluation, I think naukri, shaadi and justdial were almost same back in 2006 (in the range of 50M to 125M being the market leader in their vertical and potential of future growth), now in 2009, they naukri and shaadi might have become 2x (actually I don’t see much growth potential in naukri unless they stop selling their db and themselve take over of this recruiting work which they should had done along time back to cut on the middleman). So where naukri and shaadi have grown 100% in last 3 years (approx), I bet justdial grew 4x to 5x and they can maintain the same pace with for next 5 years tapping on the 490 million indian phone users.

And its not only about growth but also about revenue streams, shaadi dont’ have too many option, they have to charge fro premium service (they can probably start charging on volume basis to make more revenue, like a person can call 100 ppl only and need to pay more for calling more profiles etc), similar with naukri, both of them need to offer more services for higher revenue and to move to next strep.

for justdial, well they have tons of revenue streams which they haven’t tapped on. I mean God, USA has multi billion dollar lead generation business, now in India, because of extremely slow growth of broadband thanks to poor last mile service and because of low priority of broadband usage among service providers (they prefers to focus more on mobiles) India only has 80 million broadband users. Now comparing 80 million to 490 million, just dial owns Everything!!! and by own, I mean properly own (snatch reference)

The company should hit a billion dollar evaluation in coming years easily which brings us to the main point of this post, Scaling matters in India.

PS – a friend of mine, Porush (check out his blog, he has good stuff there) said that merging online and offline will give you more chances of success, makes sense. I think merging multiple media is also a option to look for.