René Seifert

Entrepreneur, Global Citizen, Flat World, Internet, Web 2.0, Innovation, Start-Up

Archive for the 'Innovation' Category

Videos of my DLD Panels “E-Commerce” & “Mobile” live

So here we are with the videos which got taped last week during the two sessions I moderated during the DLD in Munich at the new format “Technology Enables Success”.

Panel “E-Commerce”

Panel “Mobile”

Link: Mobile - Panel 3 - TES

Thanks to all the great panelists with their profound knowledge and enthusiasm which they displayed during the conversation and which they display every day to run their businesses successfully.

DLD 2009: “New Realities” meet “Old Excellence”

DLD 2009 - New RealitiesAnother 3 days of DLD 2009 are over and I still feel primed by all the inspiration from this event which I consider the finest of its sort in Europe. I also explained here on video after being asked :-) The subject "New Realities" couldn't be selected better given the global gravity of circumstance we are currently in.

What impresses me every time anew at DLD is the consistency how the organizers carry its top-level theme through all the bits and pieces of the conference-experience. Overall, the panels were phenomenal, with a few people's intellect and speed of thought being in particular astounding like Marissa Meyer from Google, Max Levchin from Slide, Carlos Bhola from Celsius Capital and Mark Zuckerberg from Facebook. Mark was announced as the "surprise guest" as the very end, came, sat 3 feet away from me – unassuming and down-to-earth in the speakers' lounge – before going out on stage for his interview with David Kirkpatrick. 

DLD 2009: Forum

What in my feeling makes DLD stand out from other conferences is the ability to bring a true community to life: the event management is perfect, yet not clinically polished. Conferences in Germany in particular tend to be stiff. In that regard an international crowd brings in a relaxing element. But above all, with the inclusion of lifestyle and arts, both on the panels as well as throughout the conference area, the organizers manage to set the tone for a warm, informal and approachable setting. Here, by the way, the pictures I took from the conference. 

DLD 2009

On another note I am aware that this year human drama took place as the number of participants was almost reduced by half. I received countless requests from people "if I couldn't do something" for them to get in since they saw me on the speakers' list. I would have loved, but this was beyond my control. On the other hand, I have to admit, that perhaps this very reduction of size contributed to a more intimate and personal atmosphere which allowed for easy approaching of anybody you wanted to talk to. In that respect, it reminded me of Clay Shirkey's explanation in his book "Here comes Everybody" that the perceived group cohesion is negatively correlated with its size. 

Aenne Burda Award

Just on one critical note: The co-chairman Yossi Vardi is an amazing person, appears to be a genuine good-heart, made it in life and is fully entitled to display both his deserved independence and extroverted personality. Yet his appearance as the moderator of a high-calibre panel with Chad Hurley (YouTube), Samir Arora (Glam) and Mitchell Baker (Mozilla Foundation) was a disaster. If there is nothing left than having the audience do the "tarzan cry" and ignoring his guests on stage, then there is something going wrong. But here's the video, so go ahead and form your own opinion. 

Yesterday afternoon, in a new format called DLD-TES (technology enables success) by Burda Digital I had the honour to moderate the two sessions about E-Commerce and Mobile. The first one was the easier one as it was fairly straightforward to build a common thread along the four panellists where technology makes a difference in their strategies. Mobile is a hell of complex issue where we had to spend half of the time not just describing what each of the panelists' companies do from a tech-standpoint, but also explain where and how the panelists' companies are intertwined (a lot in fact, I swear). Overall, I had a good feeling on both panels and the feedback so far was also ok. From what I heard, the sessions have been taped on video. Once I get ahold of the URLs, I will happily share them here. 

Thanks at this point to the organizers to make this event happen again where "New Realities" met "Old Excellence" of DLD. Thanks in particular to Marcel and Steffi (picture below), Rupert and Heiko as well as Tobias. 

Marcel Reichart & Steffi Czerny at DLD  2009

Busy preparing for DLD Moderation

Temperature-wise, it makes quite a change: Last week in Lapland at -32° C I could not have thought of stepping out in shorts and T-shirt and enjoy it like I did yesterday on my terrace in Bangalore. Unfortunately there is not too much time to hang out in the sun as I have quite a tight travel schedule in the next days. 

Tomorrow, it's going to Delhi for the "Regional Integration Event" (=RIE 2009), a congregation of all Indian Chapters of the Entrepreneurs' Organization (EO). These events used to be always a blast in terms of enthusiasm, bonding, speakers, learning and fun. Last year it happened in Bombay, to be precise in the lately heroic Taj Mahal Hotel (see my blog post here). 

Unfortunately, I will only be able to stay for the whole Saturday and leave one day earlier, as my bed for the night to Sunday will be in LH 761 Delhi to Frankfurt in order to make it on time at 2 pm for the opening of the DLD. In my view the finest conference of Digital, Lifestyle and Design in Europe, featuring digital innovation in a broader context of science and culture. 

Like last year around the subject of "India", I will have the honour this year to moderate two panels within the newly created format "Technology enables Success" which will take place on Tuesday afternoon. "My" two panels revolve around mobile and e-commerce, whereby we will focus on the critical role of technology as a strategic differentiator for business. The good thing for the audience is that I am not alone, but will have four distinguished thought leaders on each panel from big incumbent players to new start-up which intend to disrupt the current landscape – guess what, by technology.

So the preparation these panels besides day-to-day business is keeping me quite busy. As I learned from old school moderation of 10 years in radio: Lots of preparation allows for lots of spontaneity. So I am siphoning through the CVs of the panelists, calling each and every one up for a small up-front chat, reading up on their companies and piece by piece formulating questions and ultimately some common thread to spin a meaningful conversation on stage. 

Moreover, besides all the facts, atmosphere is essential: Relaxing the situation from the very beginning with everyone involved. That's something one could really obeserve from the new U.S. president during his campaign which got a name I really like: "No drama Obama" :-)

Excellent Health Check-Up at Koramangala Clinic (Bangalore)

What I experienced yesterday at Apollo Koramangala Clinic is the best what India has to offer, one of those increasing experiences I have labelled “NCA”: neat – clean – affordable.

As I haven’t been to the doctor for a few years (luckily I didn’t have to, apart from the medicals for my pilot license), I decided to do a full check-up. From a positively perceived reputation for the owner Apollo in combination with googling, I found the package “comprehensive health check-up”. I showed up yesterday morning at 9 am, had fasted for the first blood test, went for ECG, lung volume check, breast X-Ray, ultrasound scan of liver, stomach and kidneys by a radiologist and got some yummy Idli with Sambar as South Indian breakfast. After a little break I proceeded to the urologist (the examination was harmless :-), physiotherapist and to the second blood test (now with the metabolism at work after breakfast). Went back to the office at 12.30 pm.

Came back for the second round in the late afternoon at 5.30 pm, the test results were already prepared, got called to the consultation with the general physician who did a thorough anamneses, looked over my lab-values: so far ok, just cholesterol marginally elevated. (No wonder after the sins of Christmas overeating like lately in Awtar, Dubai.) Next was the cardiologist with the Doppler-Test for bloodstream around the heart, EKG in quiet position as well as on the treadmill. For the final I spoke to the dietician on nutrition advice, went out and home at 7.15 p.m.

Besides of all the details and steps I underwent, I found the clinic very well organized, I got regularly communicated where I was in the process and what was next for me to be expected. Two doctors whom I kept in particularly good memory: the general physician Dr. Prethi and the cardiologist Dr. Nagami, two ladies who were extremely knowledgeable, also from the scientific standpoint of their profession, very focussed on the issue as well as its follow-up and at the same time approachable by answering patiently each of my annoying “I want to know it all”-questions and not lacking some warm sublime Indian humour.

If you come from Germany like I do, then medicine doesn’t have a price tag. This is very unfortunate because you end up paying much more anyway though mandatory contributions to an inflated apparatus of public health. Of course I am privately health insured which jumps in soon as the cost of treatment is above a certain threshold. Since then, I started to look at the cost of medicine as a service and develop a certain sensitivity to price. From the perspective of a for-profit organization like Apollo Clinic it means that my payment must not only cover their cost, but also yield some reasonable margin.

And? And? What do you guess did this whole health check-up cost (payable up-front in cash or via credit card)? I found that completely unbelievable: Rs. 5,350 which corresponds at the current exchange rate EUR 79 (seventy nine only). I am sure had I done the same in Germany, I would have paid at least 15 times the amount and I wouldn’t expect treatment to be any better.

My summary for Apollo’s Koramangala Clinic: Outstanding quality, high competence, very well run, with lot of care for the detail (e.g. smoothing music concept in the building) and no frills (who needs them, I am not in a spa) taken together allows for such a price which is even for Indian standards reasonable. Comparison: You can easily blow that money at wining & dinner for two in one of Bangalore’s high-flying restaurants.

The only thing where I believe the clinic could improve is the first point of contact on the phone: Yes, friendly, answering every question, but this exactly can fall short when I don’t even know what to actually ask. So a bit more of “consultative sales” from the supplier’s perspective would provide the entire picture of what is to come and certainly thereby increase the “conversion rate” of customers taking a positive decision to show-up.

Many companies not just in India, but all over could take an example for such a well executed concept of “NCA”.

Indian Winter at 14° C warmed by “Benny Lava”

After a quality-wise mixed LeWeb-conference in Paris last week (pictures here) which is close to to revive the diplomatic American-French rift and a brief intermediary stop in Munich, I arrived in India on early Sunday morning with my good friend and business partner Dirk Schornstein. Actually, the flight LH 754 from Frankfurt to Bangalore added those few missing miles to become a Lufthansa HON-Circle.

HON Circle confirmed

607,771 miles in 2 years, uffz, so I kind of deserve it for spending half of my life on a plane :-)

Bangalore at this time of the year has it's coldest season of the year where I almost feel like a sissy wearing a pyjama during the night in South India, but it's just these 14° C during the night which make it slightly chilly.

It's Dirk's first time to India and for me it's almost a bit of re-discovery through his "virgin eyes" for this country which with tomorrow's date exactly for 5 years has become the centre for my little universe. Dirk is doing very well, with learning fast how to cross a street alive by running like a headless chicken (Quoting his last tweet: "Crossing streets is like playing Frogger. Difference: only 1 life. #india #traffic") and eating spicy food with his hands.

Dirk at Nagarjuna in Bangalore

We are here half-business, half-fun, later the day we'll attend the TIE Summit with the most impressive entrepreneurs from various industries in India. For the fun part we'll have two journeys. The first starting tomorrow by flying to Coimbatore, taking the toy-train to Ooty, spending two nights in the Mudulamai National Park and driving back to Bangalore with a stop-over in Mysore. The second trip from next Monday to Goa over Christmas and one night in Bombay.

After the terrible terrorist attacks in Mumbai three weeks ago, I was very carefully assessing the situation. In terms of risk I had identified three possible scenarios: Another attack, either by the same group or some other who wants to take a "free ride" in an anyway tense situation, a clash between Hindus and Muslims like it had happened in 1993 already and rising military temperature between India and Pakistan. The latter is becoming increasingly unlikely thanks to India's prudent reaction to Pakistan which has to be considered a failed state in all the harshness of the expression. Or as Shashi Tharoor put in in the current print edition of the Time Magazine: "India is a state with an army, Pakistan is an army with a state." 

If there is anything of a good in all the evil which has been done, it is the fact the honest hard-working Indians from the middle and upper class are waking up, saying "enough is enough" to it's incapable political leadership and reclaiming democracy from those who have corrupted it. A good read on the "State of the Union" is the country-special in the current "The Economist" where it for instance says about India's progress in the abysmal infrastructure everywhere: "But India will not meet its target; it never does."

Richmond Road in Bangalore: Creepy Infrastructure

Still, the subcontinent is always full of surprises and nothing would be further from reality than writing India off. Dirk and I will have a good time in the next days and weeks for sure. If you want to follow our trip, here we are:

Finally, to end this post with something extremely, tremendously funny, a music video from a Bollywood dance-scene which is even by Indian standards on the rather "extreme" side of the scale by itself. What makes it, however, completely OTT (=over the top) are its "subtitles" which are "explaining" what is being sung. Check this out, because at the end of the day we are all "Benny Lava" :-)

You need to a flashplayer enabled browser to view this YouTube video

Viren Khanna and the Internet changing Bangalore Nightlife

Internet penetration in India is still relatively low, only around 30 mn of the Indian 1.1 bn population are online, growing at a fast pace of 27 % p.a. Yet, as everything in India, one has to put things into a context before making a conclusion, one has to put a frame around what one ist going to say. The context that I'd like to narrow down is the increasingly affluent group of people who like going out for a good night's party in Bangalore. Indians usually in their 20s, and a bit elderly expats in their rather 30s (like me ;-). Although the "good night's party" in Bangalore is strangulated by a curfew at 11.30 pm including a no-dancing policy whose zeal of enforcement reminds me rather of the Islamic police in Iran that in the allegedly "biggest democracy in the world", one thing has changed for the better in the last 1.5 years or so. 

Previously, due to the reason mentioned above, the entire nightlife was entirely fragmented across the various locations in Bangalore. No doubt, that there is nothing more boring that going to a bar or a club and having the impression to be almost the only guest. So today 23-year old Entrepreneur Viren Khanna seized the opportunity of aggregating the dispersed crowd. He made a deal with existing clubs and started to send out text messages to people of his address book on the mobile phone which he systematically grew with every event; a typical example of "building momentum". Since then, the so called "Viren-Parties" have become a synonym for "something is happening" at least two times a week in Bangalore.

Viren Khanna

In a not surprising quest to grow his business, he went on to organize fashion shows. What is more, the platforms of communication got enhanced as well, getting into the Web 2.0, an environment that the mentioned target group is very familiar with. For one, a group called "Viren's Nightlife Group – Blitzkrieg" on Facebook with 789 members at the time of my writing. For second, in order to provide a higher level of proprietary branding, a social network of its own, "The Ives Club". 

Positioned as a club for interns, trainees and expats in Bangalore, I was astonished in the first place about the technological sophistication of it and wondered what huge effort it would have taken it to engineer this monster. When I digged deeper into the souce code, it dawned on me that the platform entirely uses Ning, which allows you to "create a social network for anything". Co-Founded by Marc Andreessen, the founder of Netscape in the 90s, Ning is an amazing example of the Über-Plattform, as Marc elaborately explains in his blog-post on "The three kinds of platforms you meet on the internet". When I asked Viren how long it took to build The Ives Club based on Ning , he replied "It did not take me much long to stitch this thing together, but it did take me an extremely long time and a lot of fidgeting with CRM softwares, phpBB and 3 versions of it to find out about Ning and use it."

ives club

As the fundamentals of Web 2.0 go, these services become better the more people use them. So besides just having a distibution channel to annouce further events, the members among each other begin to interact before and after the events. So the shy ones for instance get the opportunity to address a girl onlline which they have failed to do while seeing her "in da club". Subject to some positive response he will be able catch up during the next party and prove that is is not that shy, though … 

Microfinance explained by Anal Jain (Microventures India)

Catching up from our first encounter at NASSCOM's "IT Product Conclave" in August, I felt very proud and privileged to receive an invitation from Anal K. Jain today to Bangalore's pristine Golf Course at the Karnataka Golf Association. Anal has an amazing career behind him with setting up IBM India as employee #1 and after that likewise starting-up the Indian operations for Sun Microsystems. He is strongly involved in mentoring young IT-companies together with NASSCOM, India'a industry association for companies in the space of software development and business process outsourcing (BPO).

Anal K Jain in the Golf Club Bangalore

His major focus, however, is his current involvement into Microventures, a for-profit fund in the space of microfinance. The sector has recently gained strong public awareness after Mohammed Yunus' got awarded the Nobel Peace Prize for his Grameen Bank, a micro-finance institution from Bangladesh. Indeed, the beautiful thing about micro-finance is three-fold: One, it is ideally suited to raise people out of (absolute) poverty in a sustainable way. Second, giving these people a sense of dignity as the improvement of their lives is the immediate result of the empowerment towards entrepreneurship. And third, yet another confirmation that profit is good – both for the new entrepreneurs, the bank as the mediator in between and ultimately the investor on the financial supply side. Microfinance proves to be a perfect example for the "Bottom of the Pyramid"-principle, where  "the poor" are not just considered from a philanthropic perspective, but as equal participants in a vivid economy: As entrepreneurs and customers.   

Anal's role for Microventures is an advisor for directing the incoming funds from the European headquarter of Microventures into prospective channels in India. The exiting thing is to understand how the company tackles this challenge in probably the most unsystematic, fragmented, long-tail market that lacks any supportive eco-system so far. Clearly, the opportunity in the aggregate is huge with 70 % of India's 1.1  bn population living in the rural areas being potential customer for micro-finance. My key insights:

  1. As it is entirely impossible to reach out to each and every of the few hundred million potential customer directly, one has to rely on existing structures of microfinance-institutions which – again – are structurally fragmented and widespread all over the country. Microventures acts as a "fund in fund", i.e. like a meta-layer on top of these existing institutions by taking an equity share in exchange for a cash-injection.
  2. This cash will be supplemented by bank-loans and then dispersed down to the village level by local employees of the same institution. There the employee will invest into a group of women. Why women? It has proved – reality bites – that men against all promises tend to spend any incoming money at the bar around the corner while women prove to use it for the purpose of their small enterprise. Why groups? Addressing a little community seems to provide a joint sense of ownership, better performance and a lower default rate.
  3. On average, one loan will amount to Rs. 5,000/- (app. EUR 80.-) which is repayable within one year in 50 instalments where the credit-employee will show up for weekly collection. In the absence of formalized agreements, not to mention their legal enforcement, the personal rapport between the bank's local representative and the recipients is essential. Ultimately, you don't want to either fool or disappoint someone whom you consider a friend by defaulting on your debt.
  4. Interest rate is usually a reflection of two factors: risk and cost of capital deployment. By nature the risk of such a loan without any collateral is high. Astonishingly, the default rate is relatively low due to the measures explained above. On the other hand, as one can easily fathom, the cost of deployment along these various cascades of intermediaries as well a logistic issues of transporting money back and forth is painstakingly high. Therefore, the annual interest comes at a price around 20 percent.
  5. Mircoventures' role, besides the allocation the funds in the investments phase, consists in the governance of the investee companies. The model to earn its money back could be either a trade sale of the stake to some strategic investor or possibly an IPO which would create a liquid event for the limited investors. The fund itself makes its money in the typical two-fold model of a fee as the share of funds under management plus some carry in case of disproportionate returns. 

Anal being a seasoned businessman was very candid that "if you are looking for pure economic profit, then there are easier industries to go into than microfinance in India". That's why the limited partners of Mircoventures are predominantly wealthy individuals who want to invest and do some good at the same time. Who are seeking for both a return on capital gains and a return on social benefit. In the microfinance industry the term coined for that aspiration is called "double bottom line".

I really like that expression. Maybe we should all look for whatever we do, a bit more for that "double bottom line". 

I joined MumbaiAngels: Private Equity investments in India

 What I wanted to briefly write about already in the last few weeks is my engagement in an amazing group of entrepreneurs and top-executives in Bombay (Mumbai): The MumbaiAngels. What we would call a “Verein” in Germany, has the shape of an association of currently 40 individuals who have an interest in investing their money in prospective start-ups and early-stage companies in India.

The association has been set up one year ago, spearheaded by my friend Sasha Mirchandani who is a seasoned entrepreneur and currently the Head of India for BlueRun Ventures. How MumbaiAngels works is easily explained: We meet every 6 weeks in Bombay and three to five pre-selected companies would pitch in front of us: 15 minutes sharp followed by a friendly but critical Q&A-session by the potential investors. Each angel is entirely free to express independently interest in a particular company through a feedback form. At the end all the forms get aggregated internally whereby the level of interest in a particular company could (and maybe should) also help as an indicator of attractiveness from the “wisdom-of-crowds” perspective.

In the next step, say if 9 people have interest in a particular company, they would go along for a joint due diligence, deal structure into which each individual would invest the amount of money he or she wants to commit. Overall, from my experience of building up an incubator, I am quite impress about the level of maturity for the processes which are critical to come to terms from filtering interesting investment targets to having the investment in place.

The sectors we are looking at have not been defined too narrow, and right so. Ultimately, it should be something that scales well, because it either organizes and unstructured industry in India with its huge market potential behind, addresses a clear need or something which contains a technology-driven nucleus whose economics are prone to disproportionately fast distribution and foreseeable revenues. (My personal investment-appetite goes very much to the latter, certainly because I have some sort of expertise in the tech, media, internet and mobile-space.)

The advantage for entrepreneurs seeking for investments to address Mumbai Angels is manifold: The investors involved bring extensive experience in building and growing business to the table, where the Q&A session during the pitch alone can ask the right questions to tweak and turn something in the plan or model. Moreover, MumbaiAngels are far beyond just throwing “dumb money” at you, then sitting on our hands and waiting what returns we’ll receive. What we are looking for is an active role via ongoing mentoring, door-opening to customers or partners and access to capital for the subsequent rounds of funding.

I am glad to be part of that fine group. If you are an entrepreneur seeking start-up capital for a venture in the Indian market, feel free to address me. I will see what I can do for you and what I can do for us – the MumbaiAngels.

Bryan Adams in Zurich: 7 Steps for a powerful PR-Campaign

Its neutrality, order and cosiness alone make Switzerland a worthwhile place to visit again and again. Moreover, Zurich with its 380,000 inhabitants small by usual cosmopolitan standards has a flourishing cultural life. The ubiquitously visible wealth of the city is certainly not an impediment to it. Yesterday, it was Bryan Adams who had a sold-out concert in Zurich whereby his management accurately planned a PR-appearance beforehand. The venue, Puls 5, is a worn down industrial manufacturing hall with high ceilings and old steel structures all which creates an honest ambience for an exhibition.

CIMG2631

The event “Hear the World” has been touring around various cities in the world for quite a while and is an initiative of Phonak, a Swiss manufacturer of hearing aids. From my own 15-year old experience in media, this concept definitely hails in the upper range of PR-formats. What most companies get wrong in PR is a too aggressive push of their company name or worse, its products. Phonak did well to put the emphasis on an issue which allegedly affects 15-20 % of global population: hearing problems, along with the stigma not really admitting to the problem or worse, not doing something about it.

As I write these lines, I realize how well this event platform was crafted: I never thought about the problem before, I even doubt that these numbers are in their severity as high or that this is one of the most daunting problems of this world today, but nevertheless the event left some sort of impact on me thinking and even blogging about the issue. That’s what you call successful agenda-setting which deserves at least professional respect.

The ingredients for the event could hardly be hand-picked any better:

  1. Take an issue worth alleviating (see paragraph above).
  2. Engage a VIP who is unsuspicious of being a sponsor-whore for everything: In this case Bryan Adams, a world-famous rock star who builds bridged between continents and generations alike and who – for his age of 48 years – looks extremely juvenile. Furthermore, what I was not aware of, Bryan Adams is also a highly talented photographer which brings us to the next point.

    Bryan Adams

  3. Make the issue tangible: Connect with the VIP, whereby keeping the message subtle: Bryan Adams has taken a series of pictures with musicians where he asked them if they would pose for something which reflects them hearing or listening. Apart from one (name undisclosed) all agreed and there you go with an exhibition of artistic big-sized black-and white photographs.

    CIMG2657

  4. Deliver immediate remedy: As these photographs are unique, they are or have been already auctioned off with the income going directly to several schools and institutions in the third world dealing with children who have hearing problems.
  5. Create an event-platform: The exhibition is open till Sunday, yet the gala-opening was clearly a highlight where Bryan Adams showed up himself, albeit with app. 10 minutes only very briefly, stating “no interview” and buggering off to his concert. Yet, if you have Bryan Adams for such an event, all the VIPs and wannabe VIPs will come all by themselves. Apparently, the hall must have been full with Swiss actors, models and celebrities (which I admittedly did not recognize). Food and drinks were excellent, too.
  6. Roll out the red carpet, literally: The presence of these VIPs will in turn attract the press which will thankfully cover such an event with many, many nice pictures its audience wants to see. (No wonder, the day after 2 major Zurich tabloids had the event and Bryan Adams on the front-page).

    CIMG2632

  7. Keep a low profile as the initiator: Phonak knows pretty well that 80 % of the people in this world long for its products as much as they long for Malaria. Yet, when they need it, they will notably improve their lives. Hence, the CEO of the company on stage was quite up-front to admit: “We want to create awareness for a problem that nobody wants to hear and talk about.”

That’s it. Good event, nice motives for pictures also from my side here on the Flickr-Set and myself last but not least looking at Amy and Amy looking at me.

CIMG2681

And what I now do hear very loud and clear is my friends calling for another round of Oktoberfest :-)

“IT Product Conclave” in Bangalore: Moving Upscale

Recently I have reduced a little bit on my conference tourism, but didn’t want to miss the opportunity while being at home in Bangalore. On Monday and yesterday, there was the IT Product Conclave & Expo of the India’s formidable IT-association NASSCOM . Formidable for the reason as I have attended the NASSCOM Leadership Conference twice already which attracted speakers like Thomas Friedman, Amartya Sen or then India's President A.P.J. Abdul Kalam.

This was in the heydays of the industry which so far has relied entirely on services, this means running a business model which scales predominantly by adding more and more people based on  – however sophisticated – labour arbitrage. As one of the forte's if the industry has evolved the capability for designing, building and maintaining e.g. a complex and specific system for a particular banking client. Obviously, as markets tend to gravitate towards efficiency, the realizable margin gets squeezed by the supply-side soaking up the available scarce talent. Moreover, macro-factors like the rising Rupee against the US-$ have added additional pressure on the profitability, not to mention the ugly “R-Word” (for recession) which is spooking around.

Things are not outright shitty nowadays, but the concern has been for quite some while where the growth will come from. Therefore, with some foresight, 4 years ago NASSCOM initiated an innovation agenda which got conceptually supported by Boston Consulting Group, addressing the question how to build industries which will sustain the next 20-25 years on a much wider canvas. One of the key conclusions was that “software products” would prove a path to higher value businesses than just army of “programming coolies” (old quote from Sharad Sharma, CEO Yahoo! R&D India). Products are ultimately the best way to “package, store and disseminate organizational knowledge”, as my fellow EO-member Atul Jalan from Manthan Software set forth. Moreover, as products implicate a more immediate level of competition, they foster stronger innovation which in turn is able to churn up better products which in turn will command a higher price. Here the Indian cost-advantage clearly plays into the hands of product-companies and can get a virtuous cycle started.

It is worthwhile taking a look at the current state of the Indian software product industry:  In the FY 2008 it turned over US-$ 1.42 bn with a CAGR of 44 % within the last 3 years – (which is a 50 % higher growth rate that the much more mature older brother of “IT services”). Another good sign is that from the currently 370 software product companies in the Indian market, two-thirds have been incepted within the last three years. However, looking at how the revenues are distributed, there is a typical “long tail” or a power law (or as a proper German would say “a problem of justice” ;-) The Top 10 together aggregate 84 % of the market – and the rest of 360 companies, well, the rest.

NASSCOM Product Forum 08

Equally interesting is to take a step back to slice and dice what “software products” actually means. Not too surprisingly, as the Indian IT-industry has had extensive time to gain experience in the last 10 odd years, the clear focus lies in B2B-enterprise-applications within the following areas.

NASSCOM Product Forum 09

Interestingly my other major field of entrepreneurial activity, the B2C high-scale internet platforms do not show up here – or to put it the other way around NASSCOM does not categorize them here under products and/or does not feel that those fall under NASSCOM’s primary mentoring requirements. And I frankly don’t have a clue why this is as many of the abstract criteria used for “IT products” clearly apply also to portals, platform, social networks and the likes. Or NASSCOM has an incomprehensive view on that sector because e.g. “search engines” or “online search” are being named, likewise in another study “mobile games” morphing more generally speaking to “mobile applications”.

NASSCOM sees its role as a catalyst for achieving the BGAG (big hairy audacious goal) of catapulting the software product industry to a volume of something between US-$ 9 to 12 bn by 2015. The support of the organization would happen on multiple levels like exactly this and further conferences, providing best practises, incepting its own fund, but above all providing a shift in the hearts and minds of entrepreneurs to go the more difficult but more rewarding product route.

Finally, looking at markets, one true “paradigm shift” (I am really careful with this overused term) is taking place. In the first place, India as a domestic market in various sectors like Telecom or Retail is all of a sudden sufficiently big to get a software product to market. Moreover, the normal and necessary route for internationalization would have always led to the U.S. – This is no longer so. The Chinese market has proved to be a potential “next territory”, given a similar maturity of the industries into which to sell. And, last but not least, the Middle East. There, as IDG Ventures India CEO Sudhir Sethi explained “buyers feel much more comfortable buying security software from Indian vendors than from those based in the U.S. or Israel.”

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