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MediaNama Launch Discussion: In Case Of A Downturn – Reduce Spending On Technology, Double Your Sales Team, Merge To Scale

MediaNama went live a month ago, and on the 18th of July, we held a launch discussion and mixer at the PHD house, with Mahendra Swarup, Chief Mentor of Smile Interactive, Murugavel Janakiraman, CEO of Consim Info (Bharatmatrimony Group), Sanjeev Bikhchandani, MD of Info Edge (India) and Sidharth Rao, CEO and co-Founder of WebChutney on the panel, moderated by Kushan Mitra, Assistant Editor of Business Today, and me.

Mint has a nice writeup on our launch discussion and mixer, and Siddharth Puri also blogged about it here. Some notes from the discussion on “Surviving a downturn”:

What To Do In A Downturn

Mahendra Swarup:
Stop innovating where it costs you. Technology absorbs a lot of money and costs. Stay put with whatever you have, and look for a strategy where you have alternative revenue streams.

Sanjeev Bikhchandani: If you look at what happened to Info Edge, March 2000 we closed the financial year at Rs. 36 lakhs. In March 2004, when we were climbing out of the downturn, the turnover was around Rs. 24 crores. We grew around 60 times during the recession. How did we do it? The first thing is exactly what Mahendra (Swarup) said – we were very very underinvested in technology then. We said – this is the product. we have a tech team of four and just do what needs to be done and what’s essential.

We just kept opening new branches, kept adding new sales people. Sure we made losses for two years, but it was a low cost operation. Our strategy was – how long will one sales guy take to break even. When there’s a sign of a slowdown focus on- ensure your product is doing well, and if it is, don’t over-invest in your product. Ensure that the value is measurable, and then cut your costs and double your sales team. Go out and sell.

Sidharth Rao: Most entrepreneurs who start out, start out thinking what can I do so I can raise money. Interestingly, while we are known for WebChutney, we launched with a B2B site in the publishing space. We were waiting for the phones to ring and they never rang – we launched in 1999 something in the B2B publishing space, the day that Nasdaq melted. Three weeks on, we knew the phones wouldn’t ring and we shut the site down, and switched to marketing services.

J Murugavel: Explore tie-ups. We tied up with Sify, Rediff and others as a matrimony channel partner. During the recession, they were willing to tie-up even though we were not VC funded. So there was an opportunity. One has to be careful about putting the money where you have better ROI. Look at innovative ways of promotions – like media companies are giving advertising inventory for equity, you can go to portals for the same thing, so you can put money behind better ROI.

On VC Funding, Me-Too sites, working margins vs scale and more.

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On VC Funding In A Downturn
Sanjeev Bikhchandani– in my opinion, fewer businesses will get funding in case of a slowdown. VCs will be more careful, and valuations will be lower. Our take is that companies that focus on building traffic, and we’ll figure out the revenue model later – that kind of stuff has a slightly lower chance of getting funded.
Mahendra Swarup: The Indian entrepreneur is too focused on getting VC funding. We haven’t looked at merging with others to create scale, instead of waiting for funding. Take, for example, Bharatmatrimony and Naukri could have merged… When US goes into a recession, pension funds that fund VC funds become conservative, and VC funding will dry up. Your end game is not to get funded – it is to create value.

Me-Too Sites
J Murugavel: it is riskier to have a me-too site, and more chances of failures. Even these need to be adapted for markets. Match.com – the dating site – wouldn’t work in India, so that model was adapted into the matrimonial model.
Mahendra Swarup: MeToo sites are an essential part of an entrepreneurial ecosystem. You can have a very good site. If you’re a me-too, you should clearly do it with the ultimate objective of being acquired by the target site. Who are you a me-too to? You know of eBay’s method of growth – by acquiring all the baby me-too. What you can deliver to an acquirer is not the technology, but just the scale of people with you. So when you get acquired, you get acquired for different reasons. You have to focus on businesses which can scale up in terms of the sheer numbers who are visiting your site.

Other Comments:
Amit Ranjan (Co-Founder, Slideshare): (On whether there’s a downturn) Nothing worrying as such, but companies in the mobile space aren’t as gung ho as they were last year. But I wouldn’t attribute that to the state of the economy.
Rajat Gupta (CEO, Fotolink): Wish I had heard this panel before, because we were invested too heavily in technology, and not as much in sales. We always benchmark ourselves with the US industry, but tend to forget that Old Media is also growing alongwith Digital Media.
Shyam Somanadh (Network18): Companies have been working economies of scale over the past two years. Now we’re shifting towards working margins. Most of the companies aren’t yet used to work margins, and they need to switch from working scale to working margins.
Mrutyunjay Mishra (Co-Founder, Juxtconsult): What is the total base of women on the net? 18-20 percent of the Internet base is women? Why would a marketer or an FMCG world look at the Internet as the medium? (J Murugavel’s response: If a brand wants want to reach unmarried women – you know where to reach them (Bharatmatrimony.com).

Note: We will be uploading the videos soon, shot by the iimagiineers.

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MediaNama’s mission is to help build a digital ecosystem which is open, fair, global and competitive.



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