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.

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?

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?

no time for “strategizing”

over the course of these tumultuous 20 months of doing burrp.com, we’ve certainly grown in every aspect of the word. what we have not done, and very consciously mind you, is switch our focus from being a hands-on, execution-oriented team, to something more abstract. i’ve shamelessly copied/pasted a few excerpts from an excellent blog post on successful startup entrepreneurs, and why staying away from the “strategery”, as our good friend mr. bush calls it, is the only way to go. read a snippet below…

Execution Counts More Than Strategy: In a big company, managers can often overly focus on strategy. They plot big, company-changing things. They think out-the-box. They pontificate on what they think will drive innovation, quality, service, sales, or whatever it is that they happened to be focused on. This is all fine and good, but it takes a while to measure whether a given manager’s strategy was actually “good” (i.e. effective). At startups, managers are more often than not measured by less lofty things: like what they get done, or help get done. Nothing wrong with strategic thinking, but I’ve never read a Dlibert cartoon where the pointy-haired boss actually did something useful and productive. He’s usually doing something “strategic” (and lame).

who’s your wall?

after months and months of doing the startup thing, i’m ready to expose one of the primary reasons behind even the mildest of successes – my wall. what is a wall? simply put, our wall is that one pillar of strength in our lives. a lot of what entrepreneurs need during the course of a startup is a strong stomach and a lot of positive motivation. during these usually incredibly trying and testing times, nothing is more important than having the support and full understanding of your wall. admittedly, startup entrepreneurs devote most of their time and attention to their businesses, so it becomes that much more important for their walls, their significant others, those closest to them, to not only understand, but to positively reinforce and motivate them to go the distance. my wall is my fiance, without whom i could not even imagine stomaching my time with burrp! she’s much smarter than i, and even so, she’s there for me, backing me up, making sure that i don’t give up. whether it’s your mother, your girlfriend, your wife, your kids, whoever – if they’re not bought in to your efforts, i don’t see how any level of success can be meaningful. so who’s your wall?

f*cked business (for now)

i sat down on saturday with a very respectable, senior leader in the media space. this guy really “gets it” and i respect him for that, so it was a treat to pick his brain. one thing he asked me that caught me off guard: “do you know you’re in a fucked business?” i thought to myself, man, bad first impression, this guy really doesn’t like what we’re doing. but he wasn’t talking about a particular business. he mas making a comment on the space. “you’re in a fucked business, and as long as you know that and you can stomach that for the next few years, you’ll do fine.” he also made a funny comment about vcs, one that i thought was worth passing on to ya’ll: “there are two scenarios under which a vc won’t trouble you – if you’re company is going gangbusters; & and if you’re company is totally up shit creek. in the former, well, it goes without saying. in the case of the latter, they’ll run for the hills, i.e. prepare for the write-off.  it’s when you’re performing at about the expected or average level when they really come and fuck you in the head with their own ideas.” i couldn’t keep myself from laughing after he recited this to me. we shared a good laugh about it.

coming back to the original point, a valuable takeaway for me was in learning how to not only understand and accept reality, but also realizing how this understanding and acceptance in itself is a big competitive advantage. you’d be amazed at how many people, when realizing that reality will break the constructs of their safe little engineered concept of how the world works, will still fail to take the necessary steps to prepare themselves for ground level realities. i’ll borrow a great analogy from mr. nassim taleb – the turkey who is fed like a king for 364 days of the year can either believe that there is no reason for him to think the 365th will be any different; or he can learn about the important role the turkey plays in the great tradition of thanksgiving. wake up and smell the f*cking coffee, people.

grapes are candy…

i just returned from a trip to bangalore, where i was asked to meet some senior level dudes from nokia corporate and help them understand what would make mobile internet tip in india, i.e. what localization features, both physical and at the application level, would make sense for indians? see, nokia is now positioning themselves not as a handset manufacturer, but as an internet company that focuses on products and services. with their insane mobile device market share in india, they’re really feeling the pressure to crack this nut. a small group of smart startup dudes, each representing their own space, made solid cases for applications that could help tip the market – everything from data collection apps, to spatial traffic updates and governance apps, to local listings information and of course, mobile social networking. i then took a shot at elevating the conversation to a more macro level – what is mobile internet? what does mobile internet mean for indians? more importantly, what does mobile internet mean on an entry level phone vs. an e-series or an n-series nokia?

my ex-boss was a very fit and health-conscious dude. he raised his kids the same way, and at very early ages, would refuse to expose them to traditional candy, such as chocolates, gum, etc. mostly all kids have a sweet tooth, and he understood this, so fruit was the default “candy” of choice, especially grapes. he would tell us that when his kid saw grapes, he would start jumping up and down with joy, as if someone handed him a kit-kat. you see, grapes were candy to that little kid. and who’s to tell him that it’s not?

similarly, the big boys who have a chance at making a big impact in india with respect to mobile internet, whether it’s nokia, reliance or even google, will have the monumental task of defining the internet for each segment of mobile device users. my guess is that the guys flaunting the blackberries, e-series nokias, et al will expect a pc-like internet experience. how about the guy with the dinky black-and-white nokia with the tiny screen? what is his internet? maybe it’s just pre-specified content pushed via sms. i don’t know, but what i do know is that his needs are different, his form factor is smaller, he’s probably not rich, and he may have more or less time than others – these are all major factors in how we experience the internet.

i’m looking forward to continue helping nokia figure this out – i think they have a great opportunity to be the catalyst – but they have to understand, grapes are candy.

my visit to iim calcutta

yesterday, the entrepreneurship cell at iim calcutta invited me to be a part of a panel and give a lecture on how to create buzz about your startup in the early stages, as well as to discuss various potholes (and mitigation strategies) for startups in india today. the euphoria in the market is such that a lot of smart people from prestigious institutions are seriously considering giving up seven figure salaries to dive into the unknown. across the panel, whether other entrepreneurs were focused on b2b enterprise products and services or true consumer-facing internet products such as ours, a common thread could definitely be inferred:

• your product must speak for itself – no amount of marketing can save a shitty product. eventually, it will die.
• set a high bar with technology – build the best technology possible within your domain. for us, it just means that all of our features work, and work brilliantly and better than anyone else. setting up a front-end marketing and sales function while outsourcing all of your technology in the early stages is most likely doomed to fail.
• invest in the best team – build the best team you can, don’t lower your expectations bar, and create a collaborative, fun environment that will foster loyalty to the organization.

many thanks to ankur gattani and the entire entrepreneurship cell at iim calcutta – truly a very kind, generous and hospitable group of people that are well on their way to achieve big things. remember, it’s harvard mbas that tick me off, not iim calcutta mbas!

pluggd.in interview

ashish sinha, who runs an india-focused entrepreneurship blog and podcast called pluggd.in, recently asked me some questions about burrp!, india, and generally, entrepreneurship. i feel both humbled and embarrassed to have these kind of opportunities, because i’m barely an entrepreneur by the skin of my teeth…but as long as it is valuable for someone to listen to this stuff, i guess it’s a good thing. have a listen here.