Moving my blog

August 18, 2011 Leave a comment

Dear all:

Sorry to cause this inconvenience but I am now hosting my blog at

Please check out my latest post there at:  Why I wouldnt pay up for an Indian ecommerce startup?




Categories: Entrepreneurship

India as a career move (spring 2011 update)

May 12, 2011 4 comments

Article first published as India as a career move (Spring 2011 update) on Technorati.

This is the latest in a series of posts related to career options developing in India which I started putting together for business school students and professionals seeking my advice.  Most interesting developments to report on are in venture capital, private equity, investment banking, and entrepreneurship.  The previous edition is here for those who missed it.

Venture Capital / Private Equity / Growth Equity

rupee symbolThe Indian PE/VC scene is thriving as evidenced by the Ernst & Young round-up for the most recent quarter. All the fund raising of the past year has now led to a number of funds stepping up hiring at the junior levels but there continues to be an exodus of professionals at mid-to-senior levels.  As I reported recently, limited partners are very concerned about this churn and although hiring has picked up we are in a period of transition for the industry.

Before you dial the recruiters, you must consider a perceptible change in how teams are being built in India now.   Funds are now reportedly a lot less excited about candidates that do not already have several years of experience in India, a substantial deal sheet and the most important shift (especially at the senior most levels) is an expectation of exits.

In my opinion, the sector has become less attractive: even if you do break into this business, as valuations reach stratospheric levels, it has become harder for investment professionals to do good deals and generate returns for investors (and hence for themselves).

Investment Banking

Investment bankers have thrived as India Inc. continues to raise money from private and public markets and buy assets overseas.  They also serve foreign firms that are hunting for a toehold in the growing Indian market.    Hundreds of intermediary firms and investment banks have sprung up over the past few years and this robust marketplace has a broad spectrum of them:

  • Local equity capital market bulwarks (Edelweiss, Motilal Oswal and JM Financial)
  • Local upstarts (Avendus, Equirus, Centrum, etc.)
  • Advisory arms of Indian banks (Kotak, ICICI, Yes Bank , etc.)
  • Global bulge bracket firms (Credit Suisse, JP Morgan, etc.)
  • Advisory arms of accounting firms (Ernst & Young, PWC, Deloitte and Grant Thornton)
  • Prolific free-lancers who are deeply entrenched in local entrepreneur networks

As the annual bonus checks got cashed over the past few months, I have observed several bankers switch places, but more interestingly some have moved over to VC/PE funds, which has created some vacancies.    Given the number of intermediary firms active today, there should always be some room for new entrants to the business.  But as good deals get harder to source and even harder to execute, I would assume it is a lot less fun and rewarding than it used to be.


This is arguably the most exciting path that several new graduates and career changers are taking.  Enthusiasm for being part of the India’s growth story is understandable, but as this economy grows from US$1.3Tr to over US$5Tr over the next few years, entrepreneurship presents the best opportunity to capture value for oneself.  Any other career is likely to present only viewership or suboptimal positions.  India’s per-capita GDP on PPP basis is now over US$3000 and in nominal terms is over $1000.  According to BCG, at these levels countries develop a consumption boom.   Add to this other factors like the youngest workforce, a large middle class and stable macro-economic factors, there have been few better times and places to start a business than in India now.
Image courtesy: renjith krishnan

India: where are the information services?

May 2, 2011 1 comment

In the US, I was on a team that invested in data centric businesses like Verid (acquired by RSA/EMC),, Cortera, and Asset Control.  When I moved to India, I brought along a fervent interest in information centric businesses.   Some examples of success stories in this sector are:

  • Credit bureaus: Experian and TRW
  • Corporate information services: Dun & Bradstreet and Hoovers
  • Ratings agencies: Moody’s and Morningstar
  • News and pricing services: Reuters and Bloomberg

Over the past three years, I have come to realize that the information services sector in India is still very young to say the least.  The only established models are a couple of ratings bureaus (CRISIL and the new entrant, Highmark) and rudimentary pricing/news services for financial investors.

It is hard to imagine that the entire $1.3 Trillion Indian economy is supported by less than $200M worth of information services (by my estimate which includes the $140M of CRISIL revenues and the Indian components of global information providers).

As we look at the prospects of a $5 Trillion economy  in India over the next ten years, this anomaly surely has to correct itself.

India: state of the mobile app business

April 29, 2011 6 comments

Cellstrat hosted Mobile App Conclave 2011 in Bangalore today.  The agenda was not published ahead of time so those of us that showed up were pleasantly surprised to see a quality lineup.  Excellent keynotes by Pratapa Bernard of Vodafone, Sridhar Ranganathan of InMobi and Sunny Rao of Nuance were punctuated by interesting panel discussions which brought together the leading lights of the Indian mobilility scene.  Some of my takeaways follow.

Platform wars

  • Nokia+Symbian: India still has a large installed base of smart/feature phones consuming data.  Although the death-knell for Symbian may have been sounded, for the foreseeable future, mobile apps in India cannot ignore it.
  • Apple: Although iPhones and iPads get a lot more ink and attention, the reality is that a negligible fraction of the userbase is on iOS.
  • Blackberry, Java, Android: all these platforms are significant but Android is growing fastest

Browsers vs. Apps:

  • Where Apps win:  Usability is the *sole* driver of adoption, not technology enhancements (e.g. screen size, USB ports, 3G network, etc.).   Apps are better suited to deliver optimal experiences.  Browser experiences continue to suffer from lack of usability just like the failed promise of WAP’s first run 10+ years ago.  Apps can support next generation user-interfaces including local language speech, pre-integration between multiple apps (e.g. linking Yelp reviews to Google Maps and FourSquare).
  • Where Apps lose: Lack of stickiness plagues apps; most downloaded apps are seldom used after a few attempts.  Major publishers favor the control that a mobile site offers, especially when it comes to ad-supported revenue models.

The Ecosystem

  • Appstores aren’t working for India focused apps: the Apple appstore is the only one that has figured out how to get developers paid but unfortunately very few Indian users exist on their platform.  Android/Nokia/Microsoft need to get their act together.
  • Development skills are scarce:  those that are available are working on outsourced app development projects for the US market.   This makes them hard to hire for apps focused on India where app revenues are likely to be much lower.
  • Mobile payments are caught up in a regulatory quagmire.

Despite all the challenges, a number of interesting companies are betting their future on the development of the app world, both locally in India and globally.  Some of my more memorable conversations today:

  • Telibrahma:  Apps that use “augmented reality” to enhance the effectiveness of traditional advertising media
  • TrackEveryCoin:  Personal finance management
  • Infosys Flypp: a white-labeled AppStore platform
  • July Systems: mobility middleware for media businesses and enterprises
  • Guruji: a mobile ad network serving (over 1.5B impressions a month)
  • InMobi: claims to be the largest independent mobile ad network (over 40B impressions a month)

Notes from China

April 28, 2011 Leave a comment

The highlight of the past two months (during which this blog went quiet) was my first visit to mainland China.   I was filled with much anticipation as we landed in Hangzhou on a cold afternoon in March but  I had no misconceptions about the city I was visiting.

Hangzhou is the tenth largest city in China (purportedly), scenically set on the Yangtze River, historically significant for having been a seat of power, and has developed as the equivalent of the Hamptons for wealthy Shanghainese to use for weekend homes.   More recently it has grown into a high-tech hub.

There were symbols of affluence everywhere – Lamborghini and Ashton Martin cars driven by young men and women from American style coffeeshops to villas dotting West Lake.  In short, this was surely not representative of mainstream China!   But yet my experiences here were powerful and enlightening.

China’s much touted world-class infrastructure was in evidence everywhere.   Highways, bridges, high-speed rail and airports are being designed to be not just world class but the world’s best in class.  What is less obvious is how these projects get executed.

  • Capital: To begin with, the government has made capital “freely” available.  As long as competent developers show up and bid to develop a project, government backed funding schemes make capital available at almost no cost.  There are strong incentives for developers to do a good job.
  • Execution: We met property developers who had executed large scale commercial projects (like a mall) from conception to full-scale operations in less than 20 months
  • Red tape: In India, it takes about 80 licenses to execute a typical construction project.  China has whittled this down to less than 20; getting these licenses can be cumbersome but it is a predictable, well-understood process.
  • Work ethic: The lay person is industrious, and singularly focused on doing his/her job well (I am generalizing of course).

Generational Change

  • Consumption: although luxury brands were conspicuous in the city, there was a palpable trend among the youth towards more western-style consumption of small luxuries like ready to wear clothes, eating out, partying, etc.  Hangzhou has  a disproportionate number of luxury cars, but the automobile has now displaced the bicycle as the symbol of China’s mobility.
  • Technology was evident everywhere.  Mobile phones are a mainstay for voice and data services.  But computers, wi-fi, electronic signage, cable and satellite services, Imax screens, automation of civic services, etc., are taken for granted.
  • Gastronomic preferences are changing.  I had several memorable meals around the city.  There is more acceptance of non-Chinese food of course but even within their own cuisines, affluence is prompting the locals to eat more meat, seafood and vegetables.  Most “special ” meals rarely include traditional noodle or rice fillers.
  • “Westernization” of the youth was inevitable but local traditions endure.  Restaurants and nightclubs are replete with NBA logos, baseball caps worn backwards, rap music, and hip-hop dance moves; I could have been in any city in the world, except for the local touches.   We played a very local drinking game with friendly strangers dressed in western couture.  Dice were rolled to determine who drinks from a pitcher of top-shelf Scotch laced with sweetened iced-tea, and as Eminem lyrics drowned out any possible conversation, “Google Translate” on our mobile phones allowed us to exchange pleasantries across the language divide.  All this along with the food accompaniment of choice when drinking in this part of China: a platter of sliced melons, cucumbers,  and spiced duck-tongue.

I was fortunate to meet some world class entrepreneurs in China.  They displayed the same traits I have seen in America, Europe or India: vision, charismatic leadership, an appetite for risk, and a strong drive to “create.”  A visit to the Alibaba campus was particularly inspiring; we were early investors in the business that Jack Ma has built to be a lifeline of the Chinese economy.

From China I came away impressed (and awed) – by a nation obsessed with progress and aspiring to world domination in the next few decades.  As I have previously opined, some would like to compare India to China but for some years now it will remain a game of catch up.

VCPE interest in India, China more guarded now

February 24, 2011 Leave a comment

During my recent trip (Feb 2011) to Europe I spent some time with several investors, limited partners (LPs) and analysts who monitor fund flows into venture capital and private equity funds in Asia, Europe and the US.    I was intrigued to learn that investors are suddenly more guarded in their enthusiasm about Asia while interest in the US and Europe is returning.

  • On an aggregate basis LPs continue to have an appetite for India and China as they seek GDP and consumption led growth but their concerns are growing.
  • On China, they are overweight relative to traditional allocations, but with some trepidation as the specter of  inflation and exchange rate policy changes looms.  Even more worrying is the rise of domestic (RMB) funds which could disturb the level playing field.
  • On India, they are slightly underweight relative to recommended allocations.   There is continuing concern about governance, currency and inflation issues.   However, the one solid aspect of investing in India has been backing investment teams with long histories of working together and delivering results.  That has changed recently: the breakaway funds launched by some heavyweights (Ajay Relan left CVCI, Renuka Ramnath left ICICI-Ventures, Rajesh Khanna left Warburg Pincus, just to name a few) have caused more concern than the geo-politico-economic factors that previously bothered investors;  I heard this lament even before news of the recent Sequoia decapitation broke last week.
  • Europe and US are looking up as the public markets have bounced back and VCs/PEs have seen some exits recently.
  • Sector focused funds seem to be slightly out of favor: recall the frenzy for cleantech funds of recent vintage? Not so much fun anymore.

Team, strategy, stage, and geography (in that order) seem to be priorities that indicate a return to basics.

Mobile Venture Forum at MWC Barcelona

February 20, 2011 2 comments

This past week at the Mobile World Congress in Barcelona, I was fortunate to attend an exclusive forum for venture capital investors and entrepreneurs focused on the mobile ecosystem.   Some of the questions and answers that came up may be of interest to my entrepreneur friends so I reproduce what I thought were the highlights of the discussion here.   The GSMA host who moderated the event (his name I now forget) did a decent job of getting a conversation going.

[Note:  These notes are heavily paraphrased, and quotes may not be attributed accurately.   More pictures below.]


The panelists were:

Q. The world is moving towards apps and legions of developers are clamoring for our attention.   How do apps get noticed?
Matt:   Clearly Apple and Google do a good job promoting applications on their marketplaces, but operators can also help app developers get noticed.   Getting promoted there is not easy but we also have ad networks now promoting apps, so there is always that option.

Q. How are location-based services working?
Roberto:  Location based services have been spoken about for many years but we can now see them working at least in two dimensions.  The “checking in” paradigm is working well for so many companies and they are now able to monetize location.   Another that is beginning to look up is the tie-in to location that “augmented reality” applications offer.

Q. What is going on with mobile payments and  mobile wallets?
David: Buying goods consumed on the phone is in place already.  But as transactions move to being more off the phone, operators will likely get left out of this.  It is already visible with folks like Visa demonstrating NFC payments here at the show which runs around the operator completely.
Matt:  A fight over the secure element in NFC chips will likely stifle innovation.  I prefer  iPhone-like integration of payments into the phone; the iPhone app market  gets 7x the conversion of Android from free to paid apps.
Others:  Mobile payments are finally beginning to take root and more so in the developing markets where models like mPesa are working well.

Q. How do we entrepreneurs and start-ups work with operators?
Roberto:  Operators need to make it easier for us to work with them.   Yes, we need technical APIs into their systems, but we also need an “organizational API” which will allow us to work with them for mutual benefit.

Q. Is Machine-to-Machine (M2M) communication going to be big?
David:  The idea of machine to machine communication sounds cool but there are still too many unknowns.   Smartgrid is cool now (where machines communicate their power needs to the grid and the grid controls appliances and hence consumption directly) but how much value is it going to create is unknown.   What I like to see is the use of M2M to augment our current systems.  For example, mHealth could see more penetration of iPads for point of care applications.   Similarly a device called Square makes iPads behave like Point of Sale machines.   I do think there are M2M opportunities in payments and object tracking.
Martin: I agree with David that there are too many unknowns  but for a startup “fail fast” is important (i.e. experiment with business models but abandon those that do not work very quickly).   This will help us overcome the uncertainty.  And yes Enterprises are buying into iPad in a big way and using it in all kinds of applications we could not have imagined when the device was launched.

Q. What about Google and Apple? These are two companies that are new to the mobile space and are now dominating it.  Ho w can/will operators respond?
David: Operators can’t really compete except perhaps payments.
Roberto: The largest social network in the recent past was Vodafone but they lost control over the address book.  And now others are building very cool applications centered on the address book.

Q. Is Mobile Advertising working?
Matt: eCPMs are still low but we are now getting much better at targeting for mobile ads which should improve yields
Roberto: Mobile ads need to use mobility features like context, location, history, etc. else they will not be effective.
David: Finally mobile advertising make sense now when video is possible.  How much can you convey in text messages or display ads?

Q. How can operators be more than the bit pipe?
(I was surprised that we could not get any good answers from the panel on this one).

Q. How about Television?
Although everybody has been forecasting the death of TV for years now, TV is surprisingly still around, and we are watching many more hours of it than we did ten years ago.   How we consume it has surely changed: in addition to broadcast, satellite and cable, services like Hulu and Netflix are a big part of our lives.    So consumption of TV on mobile is a phenomenon likely to grow.   We already see that cable TV is being delivered to iPads.  It is important to remember that “Cable” is based on content and less on access.  So the core business of Comcast and Time Warner may not change much regardless of where the content gets delivered.

The forum ended with a networking event that capped off a great day of discussions held under the impressive dome of the Palau Nacional de Montjuic.

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