At TiEcon2008: On OnMobile, Nokia And Entry Barriers; What They Said, Didn’t Say, And What Can Change The Game

What they said
Cutting a deal with an operator is difficult
Arvind Rao, CEO of OnMobile: In the telco space, winning your first customer is the most difficult thing. Telcos aren’t dinosaurs, but they’re very very complex entities to deal with - they’re risk averse. They’ll say ‘go deploy with someone else show me it works, and consumers want it.’ It’s a chicken and egg problem. You’ll have to wheel, deal, do anything to get your first customer, but be fair and cut a deal that you can renegotiate at a later point. We had access to all the operators through our VC contacts, but we couldn’t get a break.

Scale is an issue, and we’ve already have the distribution, revenue model, and access to the consumer
Arvind Rao: We have our platforms installed in almost all operators in India. We are migrating to a point of opening the platform, and launching the OnMobile Developer Platform. Entrepreneurs can create companies and application, and wont need to go through the hassle of negotiating with operators, discussing commercials and integrating with such huge systems. You can’t manage with 20-25 people - for managing telcos, you need Industrial strength. A telco sent us such a team to us - they liked the technology and didn’t want to deploy, so they asked OnMobile to deploy. We liked the technology, and decided to buy them. So the thing you have to think about is “Why am I doing this? Am I looking to build an institution and a large company? Or something that I’ll sell in 3 years. There is consolidation in the VAS space in India.

What they didn’t say
If you don’t partner, we’ll just take you out
Look at what OnMobile has done in South India - they went into the market, and signed up 40 odd deals with SIMCA, using the money at their disposal to take many of the existing players out. Nokia also has in the works a music service, just as Motorola has MotoMusic. With larger distribution network and operator tie-ups, if you’re not creating exclusive content or have a large community at your disposal, it looks like you don’t have an opportunity in the mobile space.

In a way, Nokia did respond to this situation - very soon the consumer will have to choose between one location based service ad the other. You don’t know who will win. When people approach the same consumer and same market from different sides, they will approach it differently. Internet companies approach messaging from a web base point of view. Operators will approach it from revenue point of view. Nokia looks at messaging as a part of every service that we offer - even N-Gage. When Nokia enters the space, we don’t just look at one payment or distribution mechanism, so there’s opportunity for entrepreneurs.

What can change the game?
Sitting pretty at the top of this value chain, but apparently not-very-interested, are the mobile operators. They’re tedious to work with, but by opening up to smaller players, they can easily take the opportunity away from Nokia, OnMobile and everyone else who’s moving from their traditional role (as a platform company or a handset manufacturer) and to a services role. A step has perhaps been taken in the right direction, with Airtel launching its incubation fund. One opportunity is in going off-portal - whatever their cost of operation, MyToday and SMSGupShup have shown that if you spend big, you can create a large enough consumer base, irrespective of the operators, VAS players and handset manufacturers.

At TiEcon2008: Exits, Motivation And Speed; Diversify, Diversify, Diversify

On Startups And VCs
– Exits: On the first day, one VC said that many Indian startups are really don’t help the VCs who’ve given them money - once the VCs start talking to startups about an exit for the VCs, they act as if they’re being betrayed and tell them to figure out how to get the exit.
– Motivation: The most significant challenge for Venture Capitalists right now is in keeping entrepreneurs and startup employees. At the same time, VCs feel there’s a feeling that this is the perfect time to hire the riht people, and the suggestion for startups is - look at your team, and figure out whom you need to hire.
– Opportunity for entrepreneurs and companies that are adding value is still there. There’s opportunity in transformation in India - in transforming schools and colleges, who are still very open to evolving.
– There needs to be a clear path to profitability, but we (VCs) really need a road to revenues. Need to build a base of loyal customers.
– Entrepreneurship is more about speed than perfection. If you can get the timing right, you can change the story.

Diversify, Diversify, Diversify

Deep Kalra, CEO of MakeMyTrip
“IBM has a cut its travel spending by around 75 percent - all executives below the CEO are going to travel Coach. AOL has cut all travel for a while. ICI, and Indian company, has cut all travel except sales related travel. So there’s going to be a huge impact on travel. Aviation in India is down 17 percent. We’ll have to brace up. I think it’s acid test time. I don’t think it’s as if no one will do well, but it’ll separate the boys from the men. In spaces where there are too many players, you’ll see a shakeup.

It’s deja vu for Me. We started MMT in 2000. I think that’s going to help us now. We run a really tight ship, but we’re benefiting from the diversification which we started 18 months ago - we make money from things other than just airline ticketing. In fact, when we began shopping, we went against the entire board, apart from one independent director, Sanjeev Bikhchandani. We weren’t cutting any ice on holidays, and we set up 12 lines of business, including small holidays. Domestic holidays is making up for us. You don’t want to be exposed just to Airline tickets.”

Shantanu Prakash, Founder of Educomp
Important to reinvest cash and reinvent customer value propositions. Our business has a core proposition, and businesses like concentric circles around that core proposition. We will still be impacted, because of cost of debt has gone up. We’re building schols, and it’s capital intensive. Also, financial capital isn’t everything. You can build a business around intellectual capital, over financial capital.

Some comments on the Economic Crisis
– We’re seeing a time that we’ve not seen before; It’s almost like capitalism is being questioned. We’re entering territory where we’ll be questioning how capitalism works.
– The reality is that at the same time India started growing to 9 percent growth, there was a credit boom in the US. It was as if someone just printing cash, that spilt over to the rest of the world. We are going back to reality. As a country, we’ve only reformed when we’ve had a crisis.

From Proto.in: Mahesh Murthy’s Advice For Entrepreneurs; Left Handed Hockey Sticks

Some great tips from Mahesh Murthy of Seed Fund and Pinstorm, during his talk at Proto.

1. Spend as little as possible on advertising.
2. The only thing that builds your brand, with no advertising, is price. Price is unique - look at super premium products with super premium pricing. Competition is not as worried about companies that price their products cheaper, as they are about companies that price their product higher. Price is your first positioning weapon - and should not be based on your cost. No company has won the market by simply pricing a product cheaper.
3. Have great User Interface (Ed: later in the day, someone also mentioned that there aren’t enough UI experts in India)
4. Market your product - go to conferences and be a speaker (they get in free). Challenge speakers, and be seen as a thought leader
5. How to get media attention ( ed: I took that as - how to con journalists *grin*) - when you go to journalists, have data to back you up. Have a unique positioning, no matter how niche it is. Be the world expert in “left handed hockey sticks”. Position your product well, and back that up with data. They want to communicate new and interesting things to their audience, and how you position your product is important. (ed: very true)
6. Dont follow a trend: if you cant be 1st, 2nd or 3rd in the market - get out. Don’t follow a trend. Chances are, if you’ve read about a segment covered in a newspaper - it is probably too late already. You can almost never be successful by following a trend. In short - “The Trend Means The End”
7. Market Research is Crap: Every future expectation of market size is bullshit. You have to create a market, you’ll got to get feet on the ground.
8. Finding the right employees - if you’ve found someone who wants a raise to join your startup, that’s a clear indication that he’s not the right guy. You can’t hire a mercenary to fight your battles. It is your passion that will get people on board. Don’t go for the IITs, but get guys from small colleges, who have something to prove.

I also wanted to listen to Sanjay Anandram of Jumpstart Ventures, but had to leave early for our own Seminar and mixer. Hope the WiFi at Proto is up…will be there for the second half of day today.