google cornering local search?

is google cornering the local search market? perhaps it’s a bit too alarmist to suggest such a thing when local search as a market is still in such infancy globally. now while the world may be getting better at building and indexing structured local content, even in highly unstructured information markets (like what askme and burrp have done/are doing for india), meaningful, scalable monetization still eludes us all – another blog post altogether. let’s get back on track here. google recently launched an extension of sorts to their local search product called google places. tc describes google places best, as “a local search page for restaurants and other local businesses that brings together the address, phone number, website, maps, description, directions, photos and reviews all on one page.” sounds very much like a local business details page you might be used to finding on burrp!, or yelp, or citysearch. in fact, as you can see, it looks like one too. to be fair to google, once on a places page, almost all of the information is aggregated external links: reviews and pictures from yelp, menus from menupages, etc. even so, there are three major issues, or general shifts that i notice when i see something like this. indulge me:

1. organic search results – google set out to be an information gateway to the world wide web, quickly redirecting people to the source of information as quickly as it could. this new product calls that philosophy into question. as googlers will soon start to notice for local search queries performed on the google search engine, google places pages will begin to show up, undoubtedly in the treasured ‘first ten.’ this means that google itself will possibly claim more real estate on the search results page than other players, i.e. one box results + google places pages. it’s funny – google usually penalizes seo tricksters for trying to play the search saturation game. they seem to be dabbling in a bit of it themselves now.

2. owning the traffic – google has long had a monopoly over where and how to direct the world of internet traffic. now, it wants to hold onto it a little longer before it lets go. i generally do not have a problem with this; google is an independent company, and it is free to figure out how to monetize local search like the rest of us; but it’s interesting to see this slight shift in google’s behaviour. take a look at any google places page – wouldn’t you say that just glancing at that page is giving you about 90% of the information you need to help you make some kind of a decision on any local business? while google may be fairly linking to all the right sources, by creating this page, they have almost eliminated the need to click through at all! yikes!
more interestingly, a page like this threatens to undermine  experimental local search revenue models that exist today, all of which are primarily lead-based models (yext and yelp have the proprietary phone numbers; angieslist and redbeacon basically connect service seekers with service providers). if all pertinent information is available on a google places page, a user may be disinclined to use other local search platforms (unless of course it can help them save considerable money).

3. ads, ads, ads – not much to say here, but notice those google ads on the lower right hand corner? that’s right – yet another google-owned page that it will effectively monetize by serving relevant ads, arguably on the back of multiple content providers. fair? you decide…

it’s the ugc, stupid…

or is it?

one of the things that continues to baffle others about burrp.com is how we’ve been able to maintain such a high level of integrity and quality when it comes to our user generated reviews and comments. take a long, careful look at the indian ’social’ web if you will – it ain’t pretty. mouthshut, rediff, in.com, yahoo! india are just some of the platforms that showcase a general trend towards ugc that is polluted with sms language, all caps typing, imperfect english, subtly perverted undertones, and at times, completely illogical trains of thought. there is not much you can do about the sex-starved pervs and the unruly; but there is tremendous value hidden in people that are trying their best to say something, but just don’t have the capability to do so. this entire class of ugc should never be dismissed, ignored, or worse, cast off. understand, these are people that mustered the courage to express an opinion or a thought about a particular thing, perhaps while even knowing that they lacked a handle on the english language.

this is where a qualified, dedicated middle-tier of editors becomes a boon to your platform. the ugc purists may throttle me for believing this, but when an editorial layer can elevate a review which would have been otherwise functionally useless into something legible, readable, and moreover enjoyable, that can be nothing but a good thing. our editorial team does an amazing job of sanitizing and polishing what we call  raw ugc, while doing their best to maintain the tonality, voice and essence of what the user is trying to say. this is a win-win. the user is heard in the community, and we continue to amass high-quality professionalized user generated content. it goes without saying that this crowd-sourcing model can work brilliantly to derive meaningful conclusions about things when the underlying framework of content is of a high quality and integrity. of course, our community must have an incredibly high degree of trust in us to believe that we are not manipulating reviews for some beneficial outcome, and we’re happy that we have earned that degree of trust across our community.

as i look around the world of social media and user generated content, i think one of the things that unfortunately became instantly taboo was this idea of sanitizing the content in order to make it more useful. personally, i am a big believer of the simple idea, and think that it should be applied more widely across other platforms, especially when you can leverage a skilled labor arbitrage (i.e. india!). while it may not be the perfect analogy, i am reminded of comparisons drawn between hulu and youtube. while one has now surpassed television inventory rates in its advertising pricing, the other is still sucking wind trying to figure out how to earn a dime. no prizes for guessing which one is which…

addressable market size – follow up & responses

so after the alootechie folks decided to repost my last blog post, i’ve gotten a mixed bag of responses; everything from gleeful agreement to death threats (no, not really). i thought i would take some time to follow it up by responding directly to some of the commentary. i won’t be responding to individuals, rather to their ideas. let the truth be told.

@ the “you’re just bitter because you’re not getting traction” crowd: uhhh, we got acquired for a great positive multiple of our initial investment. i don’t know what else to say!

@ the “you’re a copycat company” crowd: honestly, this is a funny one. anytime i’m approached with this argument, i ask myself, what company out there is not a copycat company? before google, there was lycos, altavista, and yahoo! yes, we are a copycat company (yelp, citysearch, etc.), but we knowingly copycatted an idea where localization of the concept would produce a potentially successful product. what better idea to copycat and localize than local search!?

@ Vineet, alootechie, who states, “…entrepreneurs identify a need-gap and than (sic) build a product/business around it…so the question of large/small addressable market does not come into play..you build a business corresponding to the need-gap, the problem you are trying to solve.” This numbnuts just doesn’t get it – entrepreneurs don’t identify a need-gap and then build a product/business around it; they identify a perceived need-gap and then build a product, business around it – and that was preceisly what my previous post was all about – perceived market size vs. actual market size.

encore: look folks, again, i’m not here to rain on anyone’s parade. i’ve spent three long, hard, tumultuous, and ultimately amazingly rewarding three years in india. i’ve sacrificed time away from a family who i dearly love. i miss them to death. the grapes would have turned sour long back if that was truly the case. i’m just trying to call it how i see it. that’s all. it’s not patriotic to look beyond challenging realities. actually, it’s just moronical. i appreciate everyone’s thoughts and responses.

addressable market size

if there’s one lesson i’ve learned from my 3-year-and-counting entrepreneurial stint in india, it’s that market size matters. vcs love it more than their mistresses, businesses cannot even begin to contemplate revenues without it, and frankly, even shitty ideas have half a shot if the market is juicy enough. many of my vc buddies (i know, you’re surprised i have vc buddies) have told me personally that they come across some smart teams with good ideas…but in the wrong market, namely, india. many of them have even admitted to me that when they were fundraising, one of the things that was a slightly easier sell to the lps was that india was a country with a population of over 1 billion people. lps were sold the lip-smacking dream of over 1 billion potential customers for the right ideas. this is where india diverges a bit from many other countries that are currently cultivating some great startup ideas. why is india different? my theory is simply this: the delta (or difference) between what many consider to be india’s market size and its addressable market size is vast.

i see this fallacy most starkly when discussing mobile opportunities or mobile businesses in india. again, i go back to discussions with vc buds to establish some context. many have now retreated back to their shells and are not actively and excitingly deploying their funds; or they’ve taken their fund deployment strategy upstream, and have essentially become more private-equity’ish in investment philosophy (less risk). the addressable market size reality has been a rude awakening; but most do still have mandates to invest early stage in mobile. the mobile market in india is closing in on just below half a billion. that’s almost twice the entire population of the united states. how many of those mobile subscribers are on prepaid plans? how many of them are below the poverty line? how many of them are unemployed? qualitatively, how many of them are just struggling to get a 4th grade education, can’t afford medicine for their illnesses, and frankly, don’t give a shit about anything except making sure their mobile allows them to talk to their circle? the point i’m trying to make is that when we sit down and try to draft up our fancy business plans, our best estimates of the addressable market size are, in actuality, just some bullshit pipe dream. the fact is none of us really know. there are stark quantitative and more importantly (and less measurable) qualitative realities in india that choke our efforts to understand who might actually use the shit we’re trying to sell to them.

i often tell anand that our next thing must target a more predictable and larger addressable market. we’ve been lucky thus far. but sometimes, you just have to put yourself in a position to get lucky. sorry, my entrepreneurial peers; india is not that place.

smsgupshup

my eternal caveat with most of my thoughts/posts, lest i repeat it over and over, is that most of the time they take birth in this innate gut feeling i get about things. my gut feelings are usually based on two things: (1) common sense – something surprisingly underrated and sadly, underutilized; and (2) being in the trenches for three years now. so today, a few gut checks on smsgupshup, funded partly by good friend and highly respected mentor ashish gupta at helion ventures (a la rakesh mathur/webaroo/junglee/ashish gupta connection? just calling a spade a spade, buddy).

smsgupshup is a group sms messaging service that allows users to basically create reply-to-all interest-based sms groups. so yeah, it’s along the lines of twitter, but less of a micro-blogging platform, more of a group messaging platform. the platform has boasted amazing growth, and claims to capture a significant chunk (4% – 5%) of the total sms traffic in india. the business model is basically ad-supported smses. recently, the company claimed to be doing about $150,000 (or about 75 lacs) per month in topline revenues. great. now what could be wrong with a business like this? well, in india, many things.

first of all, my sense is that smsgupshup probably suffers from the ‘garbage in, garbage out’ syndrome: basically, while we may question the numbers, it’s the content that i am wary of. most of the messaging must be promotional spam, semi-porn, bollywood, or cricket related crap; basically, a dirtier, sms-based ‘ebay india’ (excuse the analogy; only meant that today ebay india is not a true p2p exchange forum; more of a b2b, or b2c at best).

secondly, let’s analyze the revenue figure. today, a bulk sms purchaser, by promising volumes, can purchase smses at about 5-6 paisa per sms. from my discussions with other platforms trying to monetize sms traffic, they claim it is in fact smsgupshup’s pricing that has killed the market; so i’m assuming they’re charging the dirt lowest rates in the market. if we assume 25 paisa to be the charge per sms impression to an advertiser, at a revenue number of 75 lacs per month, this assumes that the company is monetizing 30 million smses per month. not impossible, but i scratch my head a bit…

lastly, twitter. need i say more? it works everywhere across the world, is the flavor of the year, and doesn’t seem to have any intentions of slowing down or being gobbled up (yet). getting stiff competition in a market where very few differentiators can actually be built is a tough game to play.

i could be dead wrong about most of this stuff, but again, i’m just listening to the gut.

navigating through these weird times

securitization of sub prime mortgages, tertiary credit markets, meltdowns, bailouts, corporations colluding with bond rating agencies – what the f*ck is really going on? does any of this actually make sense to anyone, and why is the united states seemingly at the center of it all? and why should i as an indian entrepreneur actually give a sh*t? let us try to really dumb down what’s going on here, and see if our brains forge ahead. first things first: let’s all understand full well that the united states is a credit-based economy (as opposed to a cash-based economy). people buy everything using the diabolical plastic rectangle. so, now that we’ve set up the story, here’s the rundown: interest rates were deliciously low, making it cheaper for people to borrow money, even those that shouldn’t have been borrowing money. banks sensed an opportunity to ensnare the arithmetically challenged and extended loans to anyone, in exchange for stiffer, more predatory terms. these loans had a honeymoon period, which, when over, would completely screw the borrower. these subprime loans were then bundled neatly into securities, or rather a portfolio of shi*ty loans, and then sold to secondary and tertiary markets. for some reason, someone thought that lumping all these sh*t loans together would actually make them more valuable. smart. then, the perfect storm. the housing market in the us starts to spiral downwards, while honeymoon loan terms come to a close. mr. borrower can’t make his payment, so the bank takes over a house worth half of what it was 6 months ago. simultaneously, since so many large banks had taken large positions in these securitized subprime mortgages, all of a sudden, there is no return on their capital. and banks are in the business of moving capital. oh oh, sh*t hits the fan, all hell breaks loose, and the gov’t is reduced to socializing the losses of these rich, fat bastard ceos who were irresponsibly hording crappy loan portfolios in hopes of achieving much higher returns. phew. don’t skewer my balls for oversimplification. there are many nuances not discussed here, such as the theory that aggressive short-selling by large hedge funds may have been a suspect correlative to the current sky-is-falling atmosphere around the world. my intentions were not to educate you on the ‘economic crisis’, rather, it was to introspect and determine whether any courses of action could help younger, cash-strapped entrepreneurs in india.

here are the phenomena i am witnessing in our business:

• sh*tload of lehman bros resumes on my desk
• advertising revenues starting to dry up
• valuations going south
• vcs taking their finger off the trigger (wondering when it was ever on the trigger)

so what can we do to navigate through these crazy times, even if some of the fear is purely a function of media hype and paranoia? the fear is real, and it is driving business decisions, so combating it is a must.

some suggestions:

hire cautiously – now might be the time to find some great talent on the cheap. people would trade job security these days for a more modest salary, so take advantage of it. only freeze hiring if it drastically increases your cash burn/ability to break even/make a profit/[fill in the blank with business goal].
low-cost/no-cost marketing – talk to the press, engage in other pr activities, leverage communities on existing platforms such as facebook and orkut, and find other cheap or free ways to spread the word.
become revenue-obsessive – we at burrp.com have been primarily focused on enhancing and building new products, with the intention of generating more and more traction across all types of mediums. times have changed in the past 6 months, so we have redirected a lot energy towards significant revenue-generating opportunities. yes, this will put your product roadmaps on hold and may also require you to build additional functionality/products advertisers require. but remember, cash is king.
stay active – because times are tough is no reason to clam up in a shell. keep building, keep your products fresh, and don’t give the outside world the impression that the downturn is affecting you. you’ve got a customer/user base with expectations. those won’t change, so honor them.

the sky may be falling, but stay focused and keep moving along. you’ve come a long way, and a lot of your peers have already fallen by the wayside. if you can get through this, you just might find yourself alone on the mountain, and that’s a good place to be.

vcs in india – what do they want?

sorry folks. have i really been that busy? perhaps, but inexcusable nonetheless. i’m going to make it a point to try and blog at least twice a week. few followers i may have, but they humble me with requests to stay regular. i shall try my best.

so, let’s start a quick discussion on the topic – vcs in india – what are they really looking for in early-stage startups? allow me to hypothesize: vcs will invest in businesses where the nodes from company to cash are few. i can elucidate quickly by giving stark examples.

online travel: user comes to yetanotheronlinetravelportal.com, finds information, clicks on a button, company makes money then and there. a vc will fund that – and i would venture to guess that vcs will fund another 1-2 online travel players this year. 

ad networks: publishers (consumer facing websites like ours) come to nothingnewadnetwork.com with nothing to lose, and thus offer their inventory to them and any other network claiming to make publishers big bucks! advertisers come to ad networks looking to advertise, and pay the networks to place their ads across their network of publishers. ad network makes money then and there. vc likes, vc drools…

using this hypothesis, i would bet that even below-average-to-average e-commerce startups (again, user clicks, company makes money) will get funded this year. 

no knock on these particular verticals whatsoever – we all know that online travel, ad networks, e-commerce, etc. are much needed and extremely convenient ways of transacting and doing business. the market is evolving in india, including early-stage capital deployment. vcs will have different definitions of risk, and varying risk appetites, but showing them a clear, unobstructed, non-convoluted path to money is a sure-fire way of increasing your chances of getting funded. 

your thoughts?

grammar a victim of ibibo’s growth

apparently, grammar wasn’t a part of ibibo’s growth plans. india’s safest social network is also india’s least grammatically correct….

iburrp! for iphone??

iphone users don’t like to wait. i know this now. prabhu over at desistartups.in hacked our local search widget to create an app for the iphone, and it rocks! take a look at his process flow here. hats off to you, prabhu. if my last blog post lit a fire under the right kind of asses, i’ll just have to blog a bit more often!

p.s. we are trying to make burrp! completely iphone friendly, so just stay tuned for an announcement on that!

hiring (still) sucks here…

sorry folks, nothing new to report here, but hiring still sucks big time in india. a small list of some situations we’ve encountered over the past month:

• interviewee, while being screened on the phone, decides to hang up abruptly to take another call (we could tell from that funny buzzing noise that speakers make when mobile phones ring). we call him back and ask him if he hung up on us to take another call. he responds “yes”
• interviewee does not show up at previously agreed upon time. we call him, only to learn that he’ll be coming 4 hours later. he shows up to the restated time 1 hour late, only to tell us he doesn’t feel well. he sits for the interview and doesn’t last more than 10 minutes
• we ask interviewee what his strength is, as we’ll focus our questioning only on his strengths. he says “ask me anything!” we encourage him to specifically state his strength, so that we can hear a well-thought out response, but again, defiantly, he seems to be einstein’s lost kin. we ask him a question, and he chokes up, unable to answer.

i don’t know about you guys, but when i was interviewing for jobs years ago, i made sure any angle of my self-projection was put together as best as possible, whether it was the way i looked, dressed, the manner in which i answered questions, my body language, the way i sat, etc. we’re a far cry away from that here in india. the job market here, especially within these “shallow skilled” jobs (bpo, junior level engineering, support, financial services, etc.) is way too forgiving. person x with a limited range of shallow skills can easily get (and will expect) a 20-30% pay increase no matter how long his tenure at his previous job. what the f*ck!? there are a few major issues with the candidates that we’re seeing coming through the door:

1. resume fabrication
2. shallow skill set/complete lack of depth
3. no interview etiquette

while this may (hopefully) be a medium-term issue for us small companies trying our best to hire best-of-breed talent, this also smells like an amazing business opportunity. there is talent out there, but you need to weed through this landfill of candidates before you can find a respectable, deep, passionate candidate. what is the best way to do that while minimizing the time that an entrepreneur has to spend meandering through some of the ridiculous situations listed above?