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.

Services On Airtel DTH: Indiatimes Shopping, MakeMyTrip, WorldSpace, MapUnity, AskLaila, StarsTell

Internet companies feature prominently on Airtel Digital TV (DTH), and services appears to be a significant differentiator for Airtel. Some of the content and media services on offer:

- iAstro: powered by StarsTell, a services from WorldPhone, a VoIP player which is a part of Times Private Treaties (screencap)
- iCity: has two components. The Maps are powered by MapUnity, and the estimations of traffic are a function of the number of mobile phones on a particular road. The other component is local business information (restaurants) and events, being powered by AskLaila. . Screencaps: Mapunity 1, Mapunity 2 , Asklaila
- iLearn: is being powered by Edurite, and developed by Infosys (screencap)
- iMatinee: powered by BookMyShow, a Web18 site
- iNet: isn’t really Internet access on the mobile, but actually widgets which you can place on your TV screen. Widgets cover sports, news, stocks, a world time clock. The data is refreshed real time. (screencap)
- iShop: powered by Indiatimes
- iTravel: travel packages are powered by MakeMyTrip. You can’t book a ticket, but you can SMS a package to a number, and MMT will call back to close the deal. (screencap)
- Games: provided by NDS. The content will be refreshed on a regular basis.
- Worldspace: 10 Wordspace radio channels are available for free. (screencap)

The deals are essentially on revenue share. As far as the customer is concerned, depending on the package he opts for, he’ll get access to an application.

What’s interesting is that there’s a section called “Airtel Live”, like in case of the mobile WAP deck. Some of the services on offer on Airtel Live are free, while others are paid. As far as services are concerned, Airtel appears to be taking the mobile approach to DTH, where they will provide TV channels, and then bundle in other services that users can subscribe pay for.

More on IPTV and Airtels strategy, and slides from their presentation:

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Updated: Expedia Acquires India OTA TravelGuru: Report; TravelGuru Denies

TravelGuru CEO Ashwin Damera’s response to Medianama.com regarding the story about the company being acquired by Expedia:

Dear Nikhil,
I’m disappointed that mere speculation is being published in the form of a “story”. Many people have called me based on this hearsay and what they have read online.

There are many inaccuracies in these reports – the biggest being – there has been no deal signed!

What more is there to deny?

Warm regards,

Ashwin

Translation: The valuations reported were completely out of whack. No deal has been signed yet, but that doesn’t mean one will not be. It will be difficult for me to deny anything else on the record, so this is all I have to say.

Original Story: Online travel portal TravelGuru has sold a majority stake to Expedia, the largest OTA in the world, reports VCCircle. We had also heard that TravelGuru had been acquired, but weren’t able to confirm this last week. BCCL also had a Private Treaties investment in TravelGuru, and I’d asked Private Treaties CEO S. Sivakumar about the TravelGuru being bought by Expedia last week, but he offered no comment. As per the report, the majority stake has been acquired for $17 million, at a valuation of $30 million for the combination of TravelGuru and Desiya.com.

Something about these numbers doesn’t seem to be correct. If you go by earlier news reports, TravelGuru had acquired hotel aggregator Desiya for $25 million. So either the Desiya acquisition was overstated by a significant margin, or the $30 million combined valuation for TravelGuru and Desiya is understated. Either way, this doesn’t seem to be a good sign for the OTA business, which has attracted significant VC Funding.

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