July 22nd, 2009
Where’s the Big Opportunity in the Indian Internet Space?
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Rajesh Jain recently wrote an interesting series on the opportunities in the Indian internet space: part 1, part 2, part 3, part 4.
Rajesh’s main point is that “the current crop of portals (horizontals and verticals)… haven’t yet become “utilities” (daily must-visits) in our lives” and there’s an opportunity “to build a hybrid net-mobile consumer media business, if one is willing to invest $5+ million over the next 2-3 years”.
I agree with Rajesh that unlimited flat-rate broadband plans will be the key to driving internet usage in India. I also agree with Rajesh’s assertion that web services need to leverage both internet and mobile to maximize reach and build in multiple revenue streams.
However, I think that Rajesh rushes through the last post and merely lists down the big sectors and players in the Indian internet space, without identifying the big business opportunities.
The big opportunity in the Indian internet space consists of three parts and here’s the missing third (first) part –
Part 1: Build a compelling vertical offering combining rich local content and a vibrant local community.
Part 2: Leverage both internet and mobile to exploit each medium’s specific strengths (the rich user experience of broadband internet, the always-accessible, location-aware nature of mobile web, and the ubiquity of SMS).
Part 3: Exploit multiple revenue streams, including, but not limited to advertising, subscription, transaction fees, micro-purchases, and business services.
When you look at these three parts together, you see that the Indian internet space has significant gaps even in the big verticals. We still don’t have an Indian Huffington Post (news 2.0), a thriving Indian travel or consumer review community, or even a vibrant cricket or Bollywood community.
Do note that I’m not talking about building an Indian Facebook or an Indian LinkedIn or even an Indian Dopplr. Facebook, LinkedIn and Dopplr are also going to be the Indian Facebook, the Indian LinkedIn and the Indian Dopplr.
I’m talking about combining local content and local community on the product side and internet, mobile web and SMS on the distribution side, which is best done by an Indian player, with a deep understanding of the Indian market.
The question is: who will be that Indian player?
Update 1:In essence, I’m visualizing a platform which has three layers –
Layer 1: A location layer to help users benefit from physical proximity, with people, places, and products and services.
Layer 2: A content and community layer to create a rich and engaging user experience on both internet and mobile.
Layer 3: An API layer to help third party developers build applications that extend the functionality of the platform and connect it with existing social networks.
Update 2: It seems that the post has struck a nerve with some of my friends.
I’m not saying that building such a community won’t take three years and millions of dollars. I’m not saying that the community will necessarily have the three-layered architecture I have mentioned. I actually put it in after writing the post, almost as an afterthought. I have now taken it out from the main post into an update as it was becoming a distraction.
My point is that, as long as Indian web players focus purely on transactions or information, they won’t be able to become “utilities” (daily must-visits) in our lives. That will only happen when they build a vibrant local community around local content.
That’s a really simple assertion, and I’m surprised that everyone doesn’t intuitively see it. So, if you disagree with that core idea, I would love to know why. Also, if you disagree, I would love to ask you: what, in your mind, is the big opportunity on the Indian internet?
- X – X – X -
Update 3: This conversation, and especially Shyam’s comment, reminds me of a post I wrote in February, on how the problem with Indian entrepreneurship is as much on the demand side, as on the supply side.
I had written that it is difficult to scale web startups in India, because the internet and mobile web penetration is still in single digits, and the market is simply not big enough to support several large players in most niches.
I had also said that even mobile VAS startups in India are finding it difficult to scale because the big numbers in SMS and voices aren’t backed up by big purchasing power.
I had concluded that the scale required to be viable in India is much bigger than elsewhere as niches that are viable in developed markets haven’t yet emerged in India. Unfortunately, not much has changed since then.
But, some players will break through nevertheless and scale, and IMHO, they are likely to be the ones who combine local content and local community on the product side and internet, mobile web and SMS on the distribution side.
