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2011 Rewind-2012 Forward
2011 Rewind-2012 Forward
By: Rammohan Sundaram

2011 has been a funny year for our industry. While on one hand, it has taken away some of the star-studded personalities from different creative fields; on the other we have seen some great valuations for a few online brands, money pouring into ecommerce, some big brands getting listed on Nasdaq, deal sites getting a reality check and of course, Anna Hazare teaching us what social media could do as a revolution.

Let’s take each of the above one by one and rewind 2011.

Star-Studded Personalities:

The big one was Steve Jobs - a man who has been an epitome of creativity in the field of art and science. This genius really got into the groove at a time when the world was looking at technology in awe. Typewriters were the norm and the Chairman of IBM, Thomas J Watson Sr. in 1943 is known to have famously said, “I think there is a world market for about 5 computers.” From there to where we are today, it is indeed one of the most innovative stories that Apple has created and the spectrum of touch points across ages is unbelievable. From Lisa to Mac to Pixar’s Cars to iPad, the journey is something even the neighbours won’t envy because such is the genius of one man that everyone stands up, takes notice, and just salutes!

We will all miss Steve jobs but the legacy continues through his Apple.

Shammi Kapoor was better known as Elvis Presley of India but that was something that he transformed himself to after a series of failures over years of struggle. His first hit came at an age when most actors think of giving up. At 30, Junglee got him into that big league though he had a couple of successes before that through Naseer Hussain’s banners. However, to carve a niche for himself, he had to literally choreograph his own steps that differentiated him from some of the biggest names in the industry including Raj Kapoor, Dev Anand and Dilip Kumar.

He was a fighter and even during the 3 days in hospital for dialysis, he was always available on Twitter and has several times responded to my best wishes even when I had never met him ever. Such was his humbleness. He was considered the most tech savvy of his generation.

RIP Shammi.

Then there was the sudden demise of our evergreen hero Dev Anand. I can’t believe he isn’t there anymore with us. For me he was one of those people who was born to live forever like Bhishma Pitama, someone whom I thought would live a 100 yrs old. His energy can beat Shah Rukh Khan who is supposed to be the most charged actors of our time.

However, what is important is to recognize a man who not only shaped musical careers of several artists, but also boldly introduced some of our modern day heroines including Zeenat. Dev Saab was producing, directing and acting in movies even when he was 85 years old.

My secret santa this year gifted me with his autobiography titled, “Romancing with life” – indeed he romanced with life to the fullest and left behind memories for us to cherish during our lifetime.

Valuations of online brands:

This is very close to my heart simply because it shows clearly a value proposition created by a couple of brands focusing on the consumer’s need and thanks to the belief that has increased in the online space, there is so much more shopping that happens online now. This is also a clear indicator that consumers  have become comfortable using their credit cards online, and also states how the penetration of the internet has gone to the deepest pockets of India. Though the number is way too small (125M users) compared to the overall opportunity, this is only going to increase going forward.

  1. Homeshop 18 is valued at 1B USD
  2. Flipkart is valued at 1B USD
  3. Fashionandyou is valued at 400M USD
  4. Naaptol is valued at 250M USD
  5. Snapdeal is valued at 250M USD
  6. One 97 is valued at 250M USD
  7. Komli is valued at 100M USD 
  8. Dealsandyou is valued between 85 – 100M USD
  9. Mydala is valued at 50+M USD
  10. Fetise is valued at 25M USD

Please note that the above has no source and is just my calculation keeping in mind the kind of money that has been raised by these respective companies over the last several rounds.

Most of the above businesses are a combination of Web, Mobile and TV; and they all have seen tremendous traction in their respective businesses. It is evident that the consumer today is looking at value, price, convenience, and quality which in short, is what defines as product and service for all the brands mentioned above. Since the consumer is happy with what is being delivered (though I am sure atleast 25% of customers are not fully happy but that’s the task which all of them I am sure will be focusing on), the sentiments have automatically increased at the investor’s level too.

There are atleast a dozen more brands in the shopping and mobile space focusing on both consumer business and on trade side of the ecosystem that I haven’t mentioned above. Clearly shows that maturity has arrived and some of the above will become huge successes.

VCs betting on Ecommerce:

I have always believed that VCs are like herds because no one wants to take that first big step due to various reasons. I am in no way suggesting that they are wrong in their judgment, however ,it needs that one VC to take that bold step and then a dozen start scouting for deals in the same space. I think Canaan Partners were the first one to take that bold step with Naaptol and bang followed a bunch of others, which is why I feel they have a herd mentality. And why not? It’s money after all and it is very difficult to be correct in ones judgment at times. With many bets they place just, a few succeed. So they are right in their way of thinking. But for entrepreneurs it gets difficult. Same category players with similar traction gets just 25% of its competitor on the single raise. Baffles me, however that is something that no one has an answer for till date. I mean, if a player A raised 25M with similar business traction on all parameters then player B should raise equivalent. To me that’s common sense but strangely player B raises just 5M, which makes it extremely difficult for the entrepreneur to compete, scale, and grow at the rate player A would do.

So we had some very big raises this year, starting with Flipkart to Fashionandyou to Fetise. All of them raised in the range of 5M USD to 150M USD. Incidentally, all brands starting with “F” seems to rule the roost in the commerce space. Kidding!

I was recently speaking to Manish Vij of VUN Network (Manish has a personal stake at Letsbuy.com funded by Tiger) and he was saying how in the last one and half years there has been investments of over a 1,000 crores in the space and now it is drying up. One wonders, why is this drying up? The reasons are clear, valuations are one story and ground realities are another and most of us know that some bets work and some won’t, which will be evident as we move forward.

Nasdaq/NYSE Listing:

It was indeed a proud moment for all of us when Rediff listed itself at Nasdaq way back in 2001. But not many knew the significance then since the maturity of the space in India took its time. Now we know what a significant effort that was.

We had our very own Makemytrip.com listed in August 2010 and has been doing phenomenally well.

Personally, I am waiting for Yatra.com, one of the other big success stories in the travel space to get listed, for they are valued at more than a billion dollars and will only grow as they near a listing.

LinkedIn’s much awaited IPO brought back the cheers in the community and it has only shown how a strong business model with great focus on product delivery along with steady stream of revenue showing tremendous growth trajectory can beat all odds and still manage to win its way even during the most turbulent times. LinkedIn was listed at NYSE in May this year and has brought back the confidence within the tech investor community and we will be seeing a series of listing including Groupon and Zynga in 2012.

Deal Sites:

I believe that deal sites with a niche model focusing on a few items can do well than the mass deals that one gets to see on various sites today. While I can call myself a fan of deals, I am certainly not a fan of the model online. As a consumer, I am a fan, I scout for deals; but as an entrepreneur I think if the scale isn’t big then at some stage the merchants will realize that their regular customers are the ones who are losing out on deals. Since it does not bring back a new customer acquired from a deal site again, it certainly means a clear loss in the revenue. They will end up being mailing lists someday if they don’t get the balance right. Discounting has always been the word for every shopper and bringing that alive on an ecommerce platform was a novel idea but that alone won’t solve the purpose. Most sites thrive on Spa deals, for instance numerous such spa offers flashes on each site in Gurgaon itself, it’s insane. However, many tables are filled by these deal sites at Punjabi By Nature in Gurgaon, which supposedly is a great restaurant for dine out. People who flock there, are loyal customers and they don’t need to be listed on a deal site to bring in more walk-ins.

Again, these are purely based on my observation and do not have data to back it up. However, I do speak to these owners whenever I go there and do get a grip on how things are moving for various retail outlets.

I spoke to Juxt Consult’s co-founder Mryuntunjay Mishra a few days ago who told me how difficult it is for a deal site to ensure they retail a customer. While acquisition is easy in the online space, it gets equally difficult to get them taste an offering and even if they do, they are not repeat customers. This clearly states challenges that exist for these businesses.

We all saw what happened to Groupon in the US, right from how they accounted for, to how they were valued at, and to how stupid of them to have not sold their business to Google; it all got them down to a 12B valuation from a 20B on their IPO when they were having aspirations of listing. That has now got pushed and hopefully will happen in 2012.

Anna Hazare:

What Indian youth does, this man, who won the CNN IBN Indian of The Year Award did at the age of 76. A Gandhian, who stood tall and focused on getting the Lokpal Bill passed caught the entire world by storm through Twitter, Facebook and every other possible social media that existed. During his 13+day fasting a couple of months ago, every 3rd Indian on social media platforms had atleast one interaction, comment, post, tweet or some form of engagement in the virtual world.

That was his power. His entire story on India Against Corruption is an epitome of success. Keeping in mind that every individual in his team was vocal, on twitter including, Kiran Bedi. She has been Anna’s voice online. If someone has leveraged social media to an extent where a revolution can take place then it’s Hazare.

I have been a big Anna Hazare fan myself and I just counted that till date on Anna Hazare I have posted over 85 tweets and since my accounts are all synched, the same number of posts appeared on my Facebook and LinkedIn accounts as well.

2012 – Predictions are something I normally love making and 70% of the times, most of my predictions have come true. 2012 will see buy outs, listings at Nasdaq, more start-ups, mobile story take off, closures of businesses and recession worldwide but India should be stable with no growth though on its GDP.

Buy Outs:

India will see a definite consolidation in the digital space. There will be a mushrooming of home grown advertising agencies that will be bought out, I am pretty certain on this bit. We have already seen an acquisition in the form of Quasar to WPP 3yrs ago, to me that was early but it surely did wonders for the Smile Group, today they are one of the leaders in the digital space.

I feel home grown agencies have the best talent in creative, which is why they have managed to do some wonderful work and given the right value and acquisition partners. They have been standalones in India and will witness them being approached for an outright buyout. To me by October 2012 atleast 3 agencies will be bought over by international biggies who would want to focus on clean growth markets such as India.

We already saw mobile agencies coming to India like D2C through Affle. Clearly, an indication that this is just a beginning.

Listings at Nasdaq:

This seems to be a no brainer but Zynga, Groupon and maybe our very own, Yatra may go Nasdaq and it will be a very proud moment for all of us if Yatra makes the cut in 2012.

More Start-ups:

I am very excited about this bit. Every day I see so many young talents who come up with some brilliant ideas and that is an indicator that someone will make a Valley out of nothing in India, in the digital space in particular.

I am told that there are atleast 8 new ideas that a VCs get every day and though a bunch of these are not even entertained it clearly shows that youth of India is wanting to go the entrepreneurial route and want to build atleast one Facebook kind of a success with a worldwide product appeal over the next 5 yrs. I can assure you that it will be the most exciting times of our life time for all my peers in the digital space. There are multiple reasons to this. To me the biggest reason is the price factor and with recession round the corner the only medium that will be looked upto for all cost saving purposes will be digital. Whether it is advertising, whether it is discounting or group buying, pricing will play a big role and that one reason will ensure that digital grows to the next level in India.

Further to that, with Reliance about to launch their 4G ready services, I am very convinced that data will be a driver for people across 6000 towns in India to embrace digital. India will be shining and like wow! and the core driver to this shine will be digital, life is going to get faster, simpler and more efficient.

Mobile Story:

I am eagerly looking forward to Reliance Industry’s launch of what would be a defining moment in our digital experiences. With the focus on data and 4G ready launch scheduled in Maythey will surely turn the revolution on for India. The investments are huge close to 4B USD and we would be seeing data speeds that we have never experienced in the past. With just 3G I am so hooked onto my device, the aspect of 4G is just making me go more thirsty for data consumption.

Imagine 6000 towns of India being connected on data through a hand held device that will also carry voice over data. The benefits are unreal, below are few of my favourite picks:

  1. First time internet users from tier 2 and 3 cities in India
  2. First time internet users going online through a mobile device
  3. Increase in user base
  4. Massive growth in commerce
  5. Great advertising opportunities

The above five pointers will take our industry to a 5B industry in the next 5yrs, are we going to embrace it well. We got to be ready and ensure we adapt ourselves to the changing need of the digital space.

InMobi, Vserve, One97, Admob Google are just a few names I am taking here but I know that the kind of work they are doing in the space is unbelievable, especially InMobi, they will absolutely rule the roost in Mobile Advertising with some of their brilliant ad-product offerings through HTML 5 that will get brands to plough in the requisite money during times of revolution such as this. InMobi’s 200M USD raise is focused on building products and services that is scalable worldwide, to an extent that this is the only company valued at over a billion dollars in the mobile advertising play worldwide. Mobile advertising will be massive starting mid of next year and will become bigger than the internet advertising market in just 1year to what internet has taken in a decade.

Closures of Business:

We already saw Taggle shut shop and I think it was a wise decision. However, there will be more such closures and though I can’t predict, which one of those will actually shut it is evident that VCs won’t let more money to be burnt if a business is not taking the shape it was envisaged to and that will bring some rationalization into the scheme of things on valuations and businesses alike. To get the dust settled, it would take a minimum of 14 months and any business that is launched during this time with clear differentiation will be a runaway success. While there will be shutters down, new ones will make an entry with the right kind of valuations and arrest all the mistakes committed by the ones that have shut down and bring back the glory. So entrepreneurs who are wishing to launch an ecommerce venture, the right time will be now. As long as you know how to sustain, build and be correct in your cash flow and expenditure, April 2013 – Sep 2013 will be a great time to raise big monies for building and scaling businesses.

Recession Worldwide:

Let’s be clear and face reality. Recession is in and there will be massive cuts on costs across board worldwide, India will feel the heat too, but with some robust policy changes and with a sound fundamental base, India will be looking good for sustaining 6% GDP growth in 2012-13.

This is absolutely not a good time for folks who are looking to change jobs, just stay put and continue doing a good job of what you have already been doing to ensure you make your earnings every month on time.

Europe is under siege except for Germany and this is one country that will be a huge driver and will propel growth for markets worldwide.

At NetworkPlay, we love recession. We launched NetworkPlay when the world markets first collapsed in September 2008 and we grew from strength to strength. We exactly know what is right and what is wrong to do during such times and we are poised well, thank God for that. But over all 2011 has been the best year of NetworkPlay’s 3.5yrs of existence. We have not only grown as an organization tremendously, we have also helped the eco-system grow through some of our innovative offerings across board on Web, DTH, Mobile and events. Some of our adventures have really paid off well and with ad:tech and iMedia Summits, the industry has just come together to ensure we deal with reality we are all about to face. With super exciting times ahead, it is also a tender time, we all have to be correct in what we do and be on top of what is going to be the biggest digital revolution that will take place starting 2012. With ad:tech, New Delhi scheduled in February and followed by iMedia Summits, we are doing our part and we thank everyone for having supported us. The big daddies are playing the big bets and we wish everyone in our eco-system the very best for 2012.

Peter Drucker once said, “There is only one valid definition of business purpose: to create a customer”

Let the revolution begin!

Belated Christmas Wishes and an advance New Year Wish to everyone who has read this long article.