Bollywood in Cabo…

Posted on December 29, 2010 by

Earlier this week, in a post I postulated that, “in 10 years, it (Bollywood) will be the 2nd largest entertainment hub exporting movies, music, and fashion to the rest of the world”.

Based on today’s experience, it may already be happening. As we (Pooja and I)  were walking along the Marina in Cabo San Lucas at 11 AM, we heard the tune of Churake Dil Mera. We turned around and it was playing in Puerto Paraiso, Cabo’s best mall. We were the only Indian’s around, and it wasn’t for our benefit. Apparently, the Mexicans listen to hindi music!

When I got back to the hotel, I did some research, and international sales already account for 15-25 % of Bollywood ticket sales. And movies are exported to over 100 countries. However, the current market is largely NRIs (Non Resident Indians). What my Cabo experience indicates is that Bollywood may be developing a broader appeal.

Nirpal Dhaliwal of the Guardian UK argues that cultural differences make it impossible for Indian movies to appeal to a Western audience. Even if that is the case, there are large markets in South America, Africa and Asia where there are tremendous cultural similarities. In fact, the one thing that struck me through our trip to Cabo is how similar Mexico is to India, just cleaner. Hindi movies with Spanish sub-titles/dubbing could be a huge hit across Latin America.

What do you think ?

Posted in India | 4 Comments

India in 2020

Posted on December 25, 2010 by

Everyday, I oscillate between exhilaration and despair.

The market opportunities are evident. The energy, optimism, and passion of all Indians is infectious. The collective ambition to re-gain our rightful place in the world economic order is truly inspiring.

Yet, its hard not to despair. The infrastructure is abominable. The poverty and depravation is gut wrenching. The way the middle class treat their staff (maids, drivers, etc.) is inhumane.

Furthermore, the contradictions are inexplicable.

  1. In a country where incomes are 1/50th of the US, prices are mostly higher.  Yes, apples for apples, almost everything is more expensive in India.
  2. The Indian Administrative Service (IAS) attracts some of the brightest minds in the world, and yet our bureaucracy is our worst enemy
  3. Dr. Manmohan Singh, our prime minister, is an educated and erudite man who many regard as “the model of what a political leader should be”. And yet, our politicians are vile, uncouth, incompetent and corrupt.

Amidst all these dichotomies, the trajectory is irrevocable. In our lifetime, India will once again account for over 20% of global GDP, similar to India in 1700 and the US today.

In fact, in just 10 years,

  1. India will be the 3rd largest economy, with 1.5 B people of which 400 M can be considered “middle class”, and 500 M+ will live in urban areas.
  2. The NCR (Delhi and its surrounding towns) becomes a global metropolitan hub with 25 M + people and world class infrastructure. In all, there will be 100 + towns larger than San Francisco (~ 1 M pop.) all connected by 4 lane highways.
  3. There will be 10 (vs.3 today) world class international airports and 50 + (vs. 25) domestic airports.
  4. India will be the 3rd largest global hub for defense, aerospace and power equipment, the global hub for small car design and manufacturing and the 2nd largest global hub for ship building and repair.
  5. Every Indian will have a UID (vs. none today), 400 M + will have a bank account (vs. 75 M today),
  6. 300 M+ will have access to electronic fund transfer (vs. 10 M today) and 250 M + will have access to credit (vs. 15 M today). As a result, India will have 2nd largest electronic payments volume (after China), the 4th largest credit economy ($ 2 T +), and 5th largest market for insurance.
  7. India is already a huge mobile market. By 2020, it will be the # 1 cell phone market globally with 1 B + connections, the 2nd largest no. of broadband users (400 M+), and the 5th largest market for IT products and services.
  8. Bollywood already makes more movies than Hollywood. In 10 years, it will be the 2nd largest entertainment hub exporting movies, music, and fashion to the rest of the world.
  9. Indian companies are already global leaders in IT services. By 2020, several Indian carriers will be global players (e.g. Bharti, Reliance, TATA Telecom), 4- 5 Indian banks will be in the global 25, and TATA Motors will be a top 10 global automotive company.
  10. India is a land of entrepreneurs. Over the next decade, fueled by growing local markets, access to capital and growth in higher education (e.g. 10,000 engineering PhDs annually vs. 1000 today), India will produce its very own Google, a start-up that creates over $ 100 B in value.

In 10 years, I hope that despair will be a thing of the past, and we will all wake up exhilarated very day. In 10 years, I hope that we will all come to regard Hans Rosling’s predictions as incontrovertible.

Posted in India | 10 Comments

Android crushes Apple…

Posted on August 14, 2010 by

In several posts in July, including one titled, “Mobile OSs/Platforms: will Apple win in India?”, I shared data indicating that Android is gaining market share. I went on to predict that in India, Android will have 50% market share within 3 years, and that Apple will be relegated to 5th position behind Blackberry. I also predicted that this would mark, but a milestone for Android as it took global leadership. Well, recent data from IDC and Gartner suggests that this might happen sooner than 2013.

  1. IDC just announced, that in its opinion, Android will become the 2nd most popular mobile platform by 2013. That prediction will probably be true by next year since Gartner just announced that in Q2 2010, Android is a close #3. Android now has 17.2% market share vs. 1.8% a year ago; its ahead of Apple, nipping at RIM’s heels and has half of Nokia’s market share.
  2. In the US, Android is now the #1 platform ahead of RIM with 34 % market share while iOS has 22% share.

Its still early days in this platform war. Too early for Android to declare victory. And too early to rule Microsoft out. Microsoft’s secret weapon is its developer ecosystem which it put to good use against Netscape, Linux, and is now trying to align behind Windows 7 Mobile. Who knows if the developers will come? But if they do, the legend of the rising phoenix may still hold true. What do you think?

Posted in Mobile | 2 Comments

Make My Trip IPO: Flash in the Pan or Harbinger of the Future?

Posted on August 12, 2010 by

Make My Trip (MMYT) IPOed yesterday on the NASDAQ, and posted the biggest first-day gain for a U.S. initial public offering since 2007. It is valued at over $900 M, and more than 9 X forward revenues. By comparision, Naukri is valued at $ 750 M. MMYT also happens to be just the 4th Indian company to list in the US while there are 200+ Chinese companies listed on US exchanges, and at least 14 Chinese companies went public in the US in 2010 alone.

Back to my question. Is MMYT a Flash in the Pan or the Harbinger of the Future? I happen to believe its the latter, and over the next decade, 10s of Indian internet and technology companies will list on US exchanges.

  1. The internet in India is taking off and while there is unlikely to be an Indian Baidu (because English is so widely spoken), there could well be an Indian Tencent or Shanda or Amazon or Zappos or….
  2. Venture capital has been around in China since the early 90s while venture funded companies were as rare as the Indian snow leopard till a few years ago
  3. The biggest change in India in the last 5 years (IMO) is the change in scale of ambition. To illustrate the point, let me share a story. I recently met a college classmate who is now a very successful investment banker after more than a decade. Over a drink, I asked him what his goal was, and without batting an eyelid, he said, “I plan to make $ 100M in this gig“. I almost fell off my chair!
  4. Till recently, the Indian economy was both too small and growing too slowly to create global scale companies. In 2000, China’s GDP was just over $ 1 T (more than 2 X India) and in 2010, it will be around $ 5 T (more than 3 X India). With Indian growth rates finally creeping above 8 % on a sustained basis, the Indian economy will be $ 3-4 T (current prices) by 2020

What do you think? What needs to change to make this happen? Who do you think will ring the bell on NASDAQ in 2015?

Posted in India | 4 Comments

Is Google Over?

Posted on August 8, 2010 by

Fortune’s latest cover story argues that Google “is transitioning from a growth company to-and there is no other way to put it-cash cow” It goes on to say “that ranks up there with being a former super model”

Google clearly has challenges:

  1. Its search business is expected to grow at 15-20 % p.a. instead of the 30-40% growth it enjoyed till recently
  2. Google’s social networking initiatives have failed while Twitter and Facebook are becoming plausible alternatives to search (at least for certain use cases)
  3. Despite making ~ 80 acquisitions (for more than $ 6 B), and entering half a dozen new businesses, Google still makes 99% of its profit from search.

Yet, it may be too early to write Google off. Afterall, search accounts for 3.5 % of time spent online and almost 50% of total online advertising spend. As Google and others figure out how to extract more value from the other 97% time spent online, the pie will continue to grow. And Google has several aces up its sleeve:

  1. Android is now selling 200,000 new phones every day, and has surpassed the iPhone. While Google makes very little revenues from the Android OS today, since the OS is free, over time, the ad revenues could exceed its current search revenues. After all, Google makes more per PC user (via search) than Microsoft does from selling Windows, and there will probably 1 B+ internet connected mobile phones by 2015
  2. YouTube accounts for 10% of all time spent on-line and 43% of all on-line video. And this is the beginning: on-line video consumption is up 100% YoY. A recent comScore press release indicated that 178 M US users watched 30.3 B videos in April 2010(100% growth YoY), and yet these numbers are a fraction of the time spent watching TV. On-line viewership will continue to take share from TV. As that happens, its anyone’s guess how much of the $175B that advertisers spend on TV (WW) will move to on-line video. Given’s Google’s dominance in on-line video, is it beyond the realm of imagination that Google might have a $ 10B + video advertising business by 2015?
  3. Google’s display advertising platform (acquired via the acquisition of DoubleClick, Teracent and Invite Media) is growing at 40% YoY and will probably do $ 1 B in revenues in 2010.

Clearly Google has competition. And thank god for that! But it’s a little early to write it off!

Posted in Internet, On-Line Advertising | 2 Comments

Rodinhood…

Posted on August 3, 2010 by
One of my favorite blogs is Rodinhood by Alok Kejriwal. Alok’s latest post on “What Entrepreneurs must learn from Fashion Models!” is both hilarious and insightful. Its a must read, in my book.
Posted in Personal Reflections | Leave a comment

Gandhian Innovation

Posted on August 2, 2010 by

HBR calls it Gandhian innovation, the BusinessWeek refers to it as jugaad, and Carlos Ghosn (Renault/Nissan CEO) calls it frugal engineering. These are just some of the buzzwords used to describe a uniquely Indian model of innovation, one that builds global quality products at price points that are affordable for the Indian masses. While the Indian IT Services story is very well known (Infosys/Wipro/TCS and dozens of Indian out-sourcers charge a fraction of their global competitors and still have higher margins), there are many other equally impressive examples:

  1. Bharti Airtel which charges 1cent/minute (vs. 8 cent/minute in the US), has an ARPU of $ 5 (vs. $50 in the US) and is still the one of the largest and most profitable carriers in the world.
  2. Narayana Hrudayalaya (NH) Heart Hospital in Bangalore charges less than $ 2000 for open heart surgery (vs. $ 100,000 in the US) and has mortality rates that are comparable with or better than the US/UK. If you like details, this case study on Indian innovation in healthcare is worth a read.
  3. The Tata Nano, India’s $ 2000 car, attracted a lot of publicity when it was launched last year.
  4. Nirma’s success against Unilever in the 70s is less well known but no less important. It re-defined the detergents market by launching a product that was priced at ~1/5th of Surf, the market leader. Today, Nirma is a $ 1 B company (in revenues) and has led the way for many other Indian multi-nationals in the CPG space.

My personal favorite is EMRI, an emergency response management (medical 911) service. EMRI was initially set up by the Satyam foundation and is now supported by the GVK Group. It offers emergency response (think ambulances) services to almost 400 million people across 7 states. EMRI handles 60,000-80,000 calls a day, has a fleet of 2,600 ambulances and responds to 7000 emergencies/day. Its average response time in urban areas is 14 minutes and ~30 minutes in rural India. And it has achieved these amazing statistics within 6 years of being set up, with Indian traffic and after spending 1/200 of what it would cost to build similar infrastructure in the US. And off-course the cost per emergency is ~ 1/50th of the cost in the US.

This is just the beginning. Over the next decade, there will be 100s of such success stories. 100s of Indian innovation led companies will become global market leaders in pharmaceuticals/healthcare, software (products), infrastructure, telecom, consumer packaged products (CPG), automobiles, and energy services. These companies will leverage:

  1. The exploding domestic market to develop and perfect their products/offerings and then roll them out globally. Bharti, Tata Motors, Bajaj and Godrej are all global companies today, but none of these would have been possible without a substantial domestic market.
  2. The Indian talent pool with its associated cost structures and their willingness to travel/live abroad for extended periods of time. While costs are rising in India, especially for software engineers, it is still possible to hire skilled functional talent (think designer, teacher, lab technician) for less than 1/5th of what they cost in the US.
  3. Access to venture capital and private equity that has deep pockets, patience, and a global perspective
  4. Access to global skills/expertise via acquisition and/or partnerships. The Nano is a great example of this – Germany’s Bosch designed the engine management system, Italy’s IDEA and Trilix did its styling, America’s Johnson Controls built its seating system, and Japan’s Toyo created its engine cooling module. Other Indian companies like Fortis (acquired Parkway) and Godrej are making global acquisitions to acquire brands and/expertise. Godrej has leveraged acquisitions (e.g. Tura in Nigeria, Megasari in Indonesia and Issue group and Argencos in Argentina) to acquire distribution and critical mass. As a result, it doubled its CPG business to roughly $ 1 B in the last 2 years

While the opportunity is immense and there is a lot of momentum, there are a few challenges ahead.

  1. Management talent. India lacks great product managers; people like Girish Wagh who built the Nano. CEOs are also in short supply, especially CEOs who have the experience of building substantial businesses and yet are willing to bet on a start-up (and all that it involves). More broadly, even when you can find them, seasoned India based executives are now as expensive as the Bay Area, and much more risk averse.
  2. Angel investors/super angels. For start-ups, the first source of capital is friends and family and then angel investors. There is lots of annectodal evidence and now even an HBS study to show that angels play a critical role in the supporting start-ups through their earliest years.
  3. Lack of a supportive ecosystem for young companies. Start-ups depend on cheap real estate (one can’t imagine the Bay Area without its $1-2 /sq ft/month sub-leases), an easy to do business environment, and board members/advisors who will invest time in return for the joy of mentoring and a modest amount of equity. Getting off the ground is so hard in India that it puts an undue premium on a certain type of operational/execution skills, and often deters innovators

All of these are solvable challenges, and Indian jugaad will have a role to play in crafting uniquely Indian solutions. If you have ideas or know companies that you believe are stepping out, do drop me a line.

Posted in India, Personal Reflections | 8 Comments

Mobile OSs/Platforms: will Apple win in India ?

Posted on July 22, 2010 by

In an earlier post predicting that there will be 200M BB connections in India by 2015, I raised the following questions

  1. Which OS/platform will dominate?
  2. Will incumbents like Microsoft and Nokia maintain leadership in the new paradigm?
  3. Will the iPhone become the way to access the web in India? Or will India be the country where Google first takes market leadership with Android and Chrome?
  4. And finally, will it matter who wins?

Soon after I wrote the post, Apple announced fabulous results. Apple announced that in 3 years, it has sold 100 M iOS devices. Interestingly Blackberry also announced that it had sold 100M BB devices, albeit with the difference that Blackberry has been in the market since 2002. With such a backdrop, is the issue of which platform will win even worth debating?

I think so. What Apple did not announce is that it is losing market share – Google is activating 160,000 Android phones every day as against ~100,000 for Apple. And the HTC EVO 4G which is being sold by Sprint has a significant order backlog. Or that both the 4G networks being rolled out in the US (Sprint, T-Mobile’s HSPA Plus) are only offering Android phones. Read Walt Mossberg’s review of the new Samsung Galaxy phones to see how far Android phones have come. And All of this pales beside the fact that, in China, Android is winning against iOS hands down. In a recent TechCrunch post, Richard Yu talks about how Android’s open source business model is fueling a virtuous cycle of innovation on 2 fronts: devices and applications. In an earlier post, I already talked about how prices for smartphones and tablets are dropping. Since then, I got a quote from a Chinese vendor willing to supply an “APad” with a 7″ screen for $ 65.


It looks pretty good, huh? The catch is that it has a 500 MHz processor which will struggle to render HD or to multi-task. But for many, its good enough. And the $ 65 price wins vs. $449 for an iPad.

On the application front, there are ~100,000 apps in the Android marketplace and it could catch up with iTunes in a year. And the fact that both China Mobile can launch Ophone (which its own Android marketplace) and Motorola can launch Android devices with Baidu in China is further evidence of the innovation underway in the Android ecosystem.

In India, where consumers are ultra-price sensitive, Apple has virtually no presence, and Google/Nokia/Microsoft are very well entrenched, it’s hard to see Apple being a major player. In India (IMO),

  1. Android shall rule and will likely have ~50% market share in the “smart phone+ tablet” market within 3 years
  2. Nokia, with 60% market share, cannot be ruled out and it will end up with 25 % of the mobile + tablet market
  3. Microsoft could actually claw back some market share in India, given its overall dominance/brand position but it will end up being # 3 with 15-20 %
  4. Blackberry will be next, leaving Apple behind in the dust

Now for the real question, does it matter? For consumers, the platform battle will fuel innovation and drive costs down and so, they win, irrespective of how this plays out. With HTML5 and development platforms like PhoneGap, I suspect that most app developers will feel the same way and say, “chalta hai” (Hindi for “whatever dude!”)

What do you think?

Posted in India, Mobile | 8 Comments

“We are What We Choose”

Posted on July 22, 2010 by

Jeff Bezos’s commencement address to the Princeton class of 2010; “We are What We Choose” struck a chord for me.  In this, Jeff recounts a story from his childhood, making the point that “Cleverness is a gift, kindness is a choice. Gifts are easy — they’re given after all. Choices can be hard. You can seduce yourself with your gifts if you’re not careful, and if you do, it’ll probably be to the detriment of your choice“. Its worth reading or even better, watching on YouTube.

He ends by saying, “I will hazard a prediction. When you are 80 years old, and in a quiet moment of reflection narrating for only yourself the most personal version of your life story, the telling that will be most compact and meaningful will be the series of choices you have made. In the end, we are our choices. Build yourself a great story“

Posted in Personal Reflections | Leave a comment

200 M broadband users in India by 2015: crazy or plausible ?

Posted on July 20, 2010 by

In an earlier post, I stated that I think there will be 200 M broadband connections (access speed > 1 Mbps) by 2015. I got some feedback that the prediction seems unrealistic (some called it crazy) given that there are less than 10 M broadband connections today and probably less than 2 M connections with speeds greater than 1 Mbps. I agree that a 10-100X increase in the number of BB connections in 5 years is aggressive. Its also plausible. Here are some factoids to keep in mind:

  1. A MediaTek chip set based 3G phone (with a 2-2.5” screen) costs $ 35 to make (BOM cost) and sells for $ 50-60
  2. iPhone copycat phones are available for $ 70-100 today on ebay
  3. There are 200M + mobile internet users in China today, and projected to grow to 1 B+ by 2015
  4. 3 G data access costs $3-10/month in China today, see link

Is it crazy to think that by 2015, mobile phones with 3.5” screen size and features similar to the iPhone 4 will cost $ 50 (Rs 2500)? Or that iPad like tablets will be available for $100 (Rs 5000) ? Or that netbooks will cost less than $ 150 (Rs 7,500)? Or that an always on broadband connection will cost most consumers less than $ 10/month (Rs 500)?

If you believe the above, then, why is it hard to believe that there will be 125 M+ mobile (smart) phones with 3/4 G connections, and another 100 M PCs/tablets/net books with broadband access ?

If you buy into my vision of ubiquitous broadband in India, then the following questions arise?

  1. Which OS/platform will dominate? Will incumbents like Microsoft and Nokia maintain leadership in the new paradigm? Will the iPhone become the way to access the web in India? Or will India be the country where Google first takes market leadership with Android and Chrome? And will it matter who wins?
  2. How will consumers discover content and applications? Will the web paradigm of Google.com being the start page extend to the mobile web? Or will operators continue to exert the same stranglehold that they do on SMS/VAS services?
  3. What will be the killer application? Communication or shopping or gaming or….Will FB dominate mobile social networking? Or will networks like RockeTalk and SMS GupShup be the new Facebook?
  4. What will be the payment platform? Will Indian consumers take the plunge and begin to make on-line payments via credit/debit cards? And do credit/debit cards have adequate penetration to be relevant? Or will the ease of use of pre-paid cards win the day?

Let me know what you think?

Posted in India, Internet, Mobile | 6 Comments