Roundtable Recap: February 3 – Indian Entrepreneurs Are Maturing

For this week’s One Million by One Million roundtable, we partnered with the Indian Angel Network (IAN). India, as you all know, is a rising power in the entrepreneurship firmament, and the country’s entrepreneurs are making a long-awaited switch from pure outsourcing and labor arbitrage to now venturing into building Internet companies, cloud businesses, and, as you will see in today’s presenters, some cool hybrid businesses that leverage India’s cheap labor pool and combined with sophisticated technology, deliver solutions to hairy and hard-core problem domains.

It is particularly satisfying for me to work with these entrepreneurs, because I have long believed that India needs to diversify out of pure labor arbitrage. I deliberately wrote a highly controversial series of articles in 2008 [Death Of Indian Outsourcing] to provoke a debate on the topic. Other discussions on India’s need for product companies have been equally controversial. But in the end, I believe, we have arrived at a better place as an industry where Indian entrepreneurs are thinking beyond outsourcing.

Meanwhile, outsourcing itself is absolutely booming. You can read more on the topic in Top 10 Outsourcing Trends Of The Decade, while I discuss some of the entrepreneur pitches we discussed today.

First up today was Ankur Tripathi with IRTEX: Indian Road Transportation Exchange. Ankur has underscored a very real and substantial problem in the transportation industry spanning road, rail, ship – that very often vehicle capacity goes underutilized due to lack of information on cargo and its whereabouts and lack of communication among shippers and their clients. I like this business very much and believe it can be a large and important company. It reminds me somewhat of RedBus, India’s largest online bus-ticketing company, which went into a very low-tech, inefficient industry and completely changed its dynamics.

In today’s session, we primarily discussed Ankur’s scaling challenges and prioritization issues. We also discussed how to move this cash transaction-oriented business to a more efficient, electronic payment mode. The industry is extremely low-tech, but in today’s India, everyone uses mobile phones. I pointed Ankur to Obopay, a mobile payment solution, by which, conceivably, he can turn the cash-intensive nature of the business to a more efficient and accurate workflow.

Then Praful Thachery pitched Delyver Retail Network – a home delivery solution through which Praful is already delivering food, flowers, and a variety of other products and services (like dry cleaning) to over 5,000 customers in Bangalore. The value proposition is sound. Indian cities are incredibly crowded today, and traffic is nightmare. Upwardly mobile consumers, I am sure, would welcome a service like Delyver.

Praful is looking to scale his business and needs cash to open additional hubs in Bangalore, as well as elsewhere. He also wants to build optimization technology to make the delivery process – today managed largely by hand – better optimized.

For an investor, Praful needs to present a thorough financial analysis – based on his first 5,000 customers – on what are the margins and mechanics of the business he is trying to build, and also a clear articulation of the growth levers.

Next Kiran Reddy presented Saagam.com. I learned that there are educational institutions in India that cater to non-resident Indians, and out-of-state students on a quota basis, but the information flow is extremely limited. Kiran is trying to bring transparency to the industry that currently has some awkward behavior like admission in exchange for donations!

I detected a major flaw in Kiran’s business model assumption. He wants 8% commission off the admission fee for every students that he helps the institutes recruit; yet, the institute wants to slap that fee on top of their regular fee and pass the charge on to the student. This creates a pricing model disparity whereby the tuition fee on Kiran’s site is 8% higher than if the student goes directly to the institute. Well, guess what? Students will do all their research on Kiran’s site, and then go buy from the institute directly!

Up last was Tuanni Price presenting Zuri Wine Tasting, a wine education service for African American women with a household income of $40,000 a year. Tuanni has come to realize that this segment has a somewhat specific palette – they like sweeter wines. And of course, at a $40k HHI, they cannot afford to buy Opus One or Stag’s Leap. But in their price range, say, $10-$25 a bottle, there are very nice wines from different parts of the world, and of those there are some that are better suited to the African American palette than others.

I like the precision of the positioning in Tuanni’s business. I also think this is a perfect e-Commerce/Web 3.0 opportunity with a well-defined context. And she is also interested in doing a somewhat hybrid business with a physical tasting room in Los Angeles.

Speaking of which, I like this trend of hybrid online businesses. I like the way Ankur is using physical resources to address the challenge that his clientele is low-tech, non computer-savvy (forget Internet savvy), and hence unable to provide data through electronic means. Over time, Ankur will be in a position to solve this with technology, but for now, human intervention is just fine.

Similarly, Praful’s business is very much a hybrid business where, conceivably, consumers would order online (or by phone), and human beings do the actual delivery. I think hybrid e-commerce will be a trend this decade. A very good case study to refer to is Fresh Diet in this context.

Overall, I’d like to suggest that entrepreneurs look at the trend more carefully, especially since these kinds of businesses also create a lot of jobs.

You can listen to the recording of today’s roundtable here. Recordings of previous roundtables are all available here. You can register for the next roundtable here.

This segment is a part in the series : Roundtable Recap
. March 25 – A Mixed Bag Of Advice . April 1 – Bootstrapping Tips . April 8 – A Focus On E-Commerce . April 15 – Small Is OK; The Goal Is Profitability . April 22 – The Original Runners . April 29 – Finding The Right Direction . May 6 – Defining Value Proposition . May 20 – Validation, Validation, Validation . May 27 – Is The Venture Worth Your Time? . June 3 – Defining Market Segments . June 10 – Efficient Targeting . June 17 – Online Education Startups . June 24 – Three Startups That Can Hit One Million Dollars . July 1 - Get Your Pricing Model Validated . July 8 - The EJ Methodology . July 15 - A Market Of Late Adopters . July 22 - Bootstrap Using Services . July 29 - Startups In Malaysia . August 5 - Paying Customers =>Validation =>Valuation . August 19 - Niche E-Commerce Is Great For Bootstrapping . August 26 - 85%-90% Of Search Traffic Comes From Organic Search . September 2 - Find High Velocity Channels . September 9 - Open Opportunities In Cloud Computing And Rural BPO . September 16 – 5 Cloud Computing Opportunities for Entrepreneurs . September 23 - Do Not Spray And Pray . September 30 - Investors Don't Fund Broad Ideas . October 7 - Try To Get At Least $2M Pre-Money In Seed Round Valuation . October 14 - Professional Investors Do Not Invest In $20 Million Markets . October 21 - Bootstrapping Comes In Many Flavors . October 28 – Convert Potential Competitors To Partners . November 4 - Premium Lounge Sneak Preview . November 11 - African Tech Entrepreneurs Emerging . November 18 - Not Coming To The Rescue Of Victory . December 2 - Niche Marketplace Businesses Can Be Interesting . December 9 - Where Should You Raise Money? . December 16 - Top 10 Tech Trends To Watch . January 6 - Top 10 Vertical and Social Web Trends For The Decade . January 13 - Top 10 Online Advertising Trends For The Decade . January 20 - Personalization Remains An Open Problem . January 27 - Non-Dilutive Financing Through Revenue Sharing . February 3 - Indian Entrepreneurs Are Maturing . February 10 - When Keywords Are Competitive . February 17 - Indian Company Plugs Gap In Google’s Enterprise Solution . February 24 - VCs, Angels, Incubators, Accelerators – What Are You Doing With Your Rejects? . March 3 - Spotlight On The Northwest . March 10 - Spotlight On India . March 17 - Spotlight On Latin And Central America . March 24 - 75th Session Spotlights The Midwest . March 31 - Microsoft’s $100,000 India Startup Challenge Grant . April 6 - 1M/1M Announces Important Partnership With MAD Incubator, Malaysia . April 9 - 1M/1M Announces Partnership With TiE Chennai . April 16 - 1M/1M Partners With Indian Angel Network Incubator . April 17 - High-Octane Energy In Pune . April 21- Incubators Are Reaching Out To 1M/1M . April 28 - Guerrilla P.R. & SEO Most Profitable Customer Acquisition Strategies . May 5 - Ownership Matters . May 12 - Two Really Cool Companies . May 19, Making Money From Blogs . May 26 - Twitter, LinkedIn - Why Not Affiliates? . June 2 - 1M/1M And Incubators - What We Have Learned . June 9 - Silicon Valley . June 16 - Exciting Companies Lined Up For Microsoft Startup Grant Finals . June 23 - New Assessment Tool For Entrepreneurs . June 30 - Continued International Participation . July 21 - Crowd Sourced Funding Exchanges - An Emerging Trend . July 28 - Investors And Incubators Need To Look At Pre-Incubation . August 4 - How Do You Bootstrap Freemium Ventures? . August 11 - Menlo Park And The Silicon Valley Renaissance . August 25 - How To Use Twitter For Lead Generation . September 1 - Fall Call To Action . September 8 - A View Into Israeli Start-ups . September 15 - Do Your Homework First . September 22 - How Do You Catalyze A Region’s Entrepreneurship? . September 29 - From Poland To Argentina . October 6 - Dedicated To Steve Jobs, Reinforcing Mission To Restructure Capitalism . October 13 - FREE Is Not A Business Model . October 20 - Non-profits And For-profits . October 27 - Check Out Stanzr . November 3 - VCs Are Not Always Right . November 17 - Business Schools And Early Stage Entrepreneurship . December 1 - 1M/1M Premium Company Freshdesk Wins Funding From Accel Partners . December 8 - Three Open Opportunities For 2012 . December 15 - Web 3.0 And Social Dancing; Romania Emerging . December 22 - Free Apps, Ad-Supported Business Models => Dangerous! . January 5 - ERP Galore . January 12-13 - Spotlight On IIT Kharagpur, India . January 19 - Are Media Sites Fundable? . January 26th - Spotlight On Jacksonville, Florida . February 2 - YCombinator vs. 1M/1M . February 9 - Are You Fundable? . February 16 - What’s Happening In Turkey? . February 23 - Microsoft Israel To Offer 1M/1M Scholarships . March 1 - Strategy Gaps Need To Be Plugged . March 12 - Winners Of Microsoft Israel Scholarships . March 15 - Spotlight On 3 Day Startup Tel-Aviv . April 3 - Rendezvous In Bangalore . April 12 - More From Indian Entrepreneurs . April 19 - Tyranny Of The TAM . April 26 - A Rare Women-Only Session . May 3 - Some Wonderful Opportunities With Corporate Partners . May 10 - BlueSnap-Elance Contest Applications Deadline This Weekend . May 22 - Winners Of TechHub-A&N Media Battle Of The Startups Contest In London Win 1M/1M Scholarships