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?

congrats to desimartini.com

the mint, a daily business periodical in india, carried a story today that reported indian social networking site desimartini.com has been acquired by hindustan times media (ht media) for “under $10MM” as was quoted by an ht executive. i was honestly left a bit speechless, but i tip my hat to vivek pahwa and the team for pulling this off. after reading the paper, though, i tried to see if anything had changed at desimartini since the last time i visited the site, and i found this:

wow…hmmm…*cough*….$10MM….yeahhhhh………..

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.

local merchants: the longtail of advertising?

so i think it’s safe to say that monetizing local merchants through new media advertising has been a global challenge. no matter how mature or savvy the local merchant market may be, local merchants are just not hopping on the new media advertising boat in a big way. either they don’t get it (“what’s internet advertising?”); they don’t need it (“you’ll increase footfalls? i’m packed every night, thank you”); or they can’t afford it (“umm, i list in the yellow pages for $5/month – what can that buy me?”). you see, i believe local merchants have different objectives when it comes to outreach. mainly, i believe they just want to build goodwill with customers. larger players do need to worry about brand management, awareness, customer acquisition, footfalls, etc. the local guy just wants the customer to like their stuff, tell other people, and come back. it’s all about womm, baby. so is there an opportunity for a player to become the clearinghouse for local advertising dollars on new media? perhaps, but not without a much deeper understanding of how one can change the answers to the three questions above. ’nuff said.

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.