Category Archives: Essays

Case Study- Is your business really Internet centric?

13 Replies

Update: Readers seems to be clamouring for revealing more about the business in question; unfortunately doing that is likely to give away the identity of the person (partially if not wholly)… and I have promised not to do that. What I can say is that the business is B2C in the area of personal financial management. It is not a new service in itself, rather it facilitates an online version of what has traditionally been an offline service. The service is not technology intensive… but requires some specialised financial knowledge. Your suggestions could be directed at how personal financial advisory & management services can be scaled into a large business and whether & how the web can play a big role in this… think of any other similar examples in this space.

———————————–

This (i.e. the title) is the question I would request all web entrepreneurs to consider deeply while they are planning for their venture. The internet’s significance and hence it’s importance for different ventures is variable- for some, the web is the be-all and the end-all; for others it may represent a significant sales channel but nothing more; for some others, it may largely be a image building vehicle with no sales impact; for yet some others, the internet’s biggest role may lie in its Long Tail effect making it a not-so-significant sales channel, but something that is good to crow about in front of the media folks… there is a whole continuum. It’s possible that in the hype & hoopla surrounding the consumer internet (specially Web 2.0, social networking etc), you may end up having a disproportionate expectation of what the web can actually deliver for you. Here’s why I am saying this-

One of Webyantra’s readers wrote to me asking for advice. He runs a startup in the personal financial services domain and is trying hard to scale his business, having successfully built an initial version. He has the right academic background, he has a great team with him and he also has an initial bunch of paying customers for his service (which is proof that the basic concept works fine). His problem is to expand his business, find new customers etc. As you will find below, he has done a number of activities already. I am intentionally not naming the person, his company or his domain (though I have taken his permission to write about this and reproduce the email that he sent me).

———
Hi Amit,

I have this startup called …. It’s an online platform where one can ………. from anywhere in the world. I have been pushing sales left right and centre but have no clue how to market this online. I kinda busted most of my money building it (I know its stupid but I guess am still a bit young to get away with it) and now need some direction in terms of creating buzz in the internet community.

Till now i have been scouring forums wherever there is even a slight mention of …. and putting my two bits about the company, I have also been doing crazy ass chain mails and all and putting in discounts and quasi refferal schemes. I started late with my operations last year but invested about 30,000 bucks in google adwords and rediff.com. should I put in more money there this time? What else should I look at? I don’t have too many friends blogging but would it help if they profile my site? Should i try putting it in social networking sites? Should i try the new yahoo tool for personal advertisements? Is it effective?

Till date I was not looking at VC and all but since am kinda bust and would need to look for a job to tide over my substantial loans (I literally have about another 4 months of cash), I need to drive sales this time so that i pitch and get some damn funding.

I have been reading your blog for a while and had made sure my site was 2.0 all because of you (am serious, the guys who developed the site took 4 months to do it cause they just didn’t have a good ajax guy to integrate the damn thing.). I really would be grateful if you could give me a few pointers. I am not asking you to profile my site as i am not ready with the new rules yet, I just need pointers and am desperate!

Best

…………..

This email actually shook me up because of two reasons. Firstly, because of it’s hard-hitting frankness. And secondly, because honestly, I could give him no advice. Whatever I could have suggested, has already been attempted. However I had a phone chat with him and in the end, I think he is over-relying on the internet for his business. Its possible that he can get some sales online, but I don’t think it will be very significant. The internet may get him some random users from some God Forsaken corner of the world due to the Long Tail effect, but that’s not enough. I think he should concentrate on offline channels largely. And that’s exactly what I told him. That’s my hunch, though I have no specific knowledge of his domain.

What do you feel? Can you share some advise for him on this blog? I think he could do with some. Mine has not been very helpful till now!

Why everything from USA is great and from Asia is weird/funny? And what about India?

5 Replies

Ever wondered why everything (about the internet) from the USA is great and that from Asia is weird or funny? Why innovation on the web is the prerogative of US based companies? These are the questions that Benjamin Joffe seeks to dispel in this very popular presentation (shared on slideshare). Benjamin is the head of Plus8Star, a Beijing based consulting company that focuses on mobile & internet related ‘innovation arbitrage’ in China, South Korea & Japan. The presentation focuses on new business models in online communities and their evolution. As many of the popular global social networks grapple with their monetization strategies, they would do well to take a leaf out of their oriental counterparts. Consider this- 2007 revenues for Facebook was 150 mn, while that for Cyworld (largest SNS in Korea) was 200 mn, for MIXI (largest in Japan) was 100 mn and for QQ (largest in China) was 520 mn! QQ’s reach is almost the same as Facebook (200 mn users). The key postulate put forth is that business models for online social networks in China, Japan & South Korea are far more evolved than in the west, probably because those societies have very high digital dependencies. Do check out the slide deck … some of the facts/figures are going to hit you like a sledgehammer.

So the obvious question that you are likely to ask- what about India? How do the Indian examples stack up on this scale? Indian SNS figures actually pale into insignificance when put alongside these staggering numbers. Out of a total base of 30 mn Indian internet users, the most optimistic figure for users of social networks (Indian & global sites put together) is about 10 mn. Orkut, the biggest player in India reportedly has 7 mn users, and Facebook has 1.5 mn users. And none of the Indian homegrown websites have more than 1-1.5 mn users. These usage levels are way below the thresholds required for successful monetizations in online communities, which need a critical mass for the numbers to kick in. Lack of vernacular language content is a huge bottleneck in achieving those break-even numbers. The sheer diversity that exists in our country- different languages, ethnicities etc, coupled along with the colonial hangover for English takes a heavy toll here.

And what about perceptions of quality & innovativeness for products coming out of India? Well, given India’s overriding image as an outsourcing backend to the world, it’s not hard to imagine the typical stereotypes about India. In my role as one of the founders of a global website which is being built out of India, I’ve had quite a few notable experiences on this count. Some of these experiences are fascinating, while some are downright unpleasant. However at this point in time, I’d rather focus on my work, than get swayed by such considerations. I’ll probably touch upon them later at a more opportune moment.