After the bust...

B2B, B2C, and now... B2R - back to reality. What are the lessons from Internet space?

Between 1997, when the dotcom boom began, and 2001, when it started fading, almost every big corporation in India suffered a brain drain of sorts.

From senior vice presidents to bright young B-school alumni, whether in Indian blue-chips or multinationals, hordes of the brightest and the best readily dropped their secure, high-paying jobs. Was it the elusive lure of earning the big buck on the World Wide Web or covering uncharted territories?

Today, many dotcoms have become dotgones; most of yesterday's netpreneurs have logged out and are back in the mundane world of commerce. How do they feel now? What lessons have they learnt from their brush with entrepreneurship and working in a sunrise industry?

What do they think of doing business on the Web? To find out, we asked several former netpreneurs these questions. Here are their first-hand accounts...

The idea of egurucool was hatched when Vivek Agrawal, who had his own consultancy and advised Internet and telecom companies, realised the potential of technology in education. egurucool was launched in 1999 and later acquired by NIIT. Agrawal started another venture last year, Liqvid, which develops customised courseware and tutorials for various institutions in the US and Europe.

I was just out of the Indian Institute of Management, Kolkata, and had little hands-on experience of the corporate world. B-schools give the impression that if you get a smart MBA, you can manage anything.

Well, that isn't true. Selling toffee is not the same as selling education. Despite a sound business model, we struggled for funds. We tried several things "" from organising classes in schools to having tuition centres "" none of which gave us the thrust we needed.

In 2002, we sold egurucool to NIIT for Rs 14 crore. But that was because we were forced by the venture capitalists (VCs) to do so. I didn't want to.

But I learnt what people can't dream of understanding in 10 years. It taught me how long I could stick it out. There was a time when I found it hard to find an intermediary for getting a VC and later, I would get almost four calls a week from VCs wanting to fund the company! Today, again, no one is interested. The reality lies somewhere in between.

LESSONS LEARNT
Don't wait for the capital; if you have a good business model, the capital will come. Working in the Internet business was business in euphoria. Everybody was so kicked about eyeballs that business model was given the go by.

The Internet industry has great potential but it will take time for consumers to come around; so be patient. And remember, VCs are a double-edged sword. So be clear when you want them.

WOULD YOU DO IT AGAIN? YES

In February 2000, Manish Chandra left HSBC where he was on the board of directors, HSBC Private Equity and the director, finance, to start his own venture.

Net2travel, a travel site with a click-and-brick model, was launched in May 2000 and acquired by indya.com in November that year. Chandra is now a consultant and advises start-ups and high-growth companies on strategic planning, fund raising and systems and process improvements.

Net2travel.com came as a New Year resolution. A corporate job had started to give me a feeling of been there done that. Yes, it was a big risk since I was on a fast track of growth in an international market "" and I was saying good-bye to all that.

Also, there was a reputational aspect attached to it. If the venture were to fail, my reputation would be at risk. With net2travel, I know we would have done well if we had survived.

And we had even raised capital of $ 1 million from angel investors, but when the second round of funding came around, the market leaned the opposite way and even good Internet companies found it tough to get finance.

And since I had been a VC myself, I could foresee that it would be tough to raise more funding. So we decided to combine strengths and made a stock-swap deal at smart value with indya.com.

LESSONS LEARNT

• Large businesses can't be built overnight. The concept of Internet time meant everyone wanted to grow fast without a strong fundamental base.
• With the Internet, one can change the way business can be done. But it has to complement the old economy and has to be based on sound business models.
• The role of the Internet in a business should only be that of an enabler. You still have to incorporate the basics of the corporate world.

WOULD YOU DO IT AGAIN? YES

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Gurpal Singh left his job as transition leader with GE Capital International Services and joined jobsahead.com as vice-president, sales, in June 2000. After the dotcom bubble burst and with the BPO space booming, Singh joined Daksh, where he heads operations for a travel process.

What excited me was not dotcom per se but the role I was offered at jobsahead and its revenue model. The site was trying to bridge the huge gap between job seekers and corporations. I was responsible for setting up the sales infrastructure and processes across various cities in India.

The challenge of setting this up and launching our products commercially was excellent exposure. The second challenge came from HR consultants who viewed us as their competition rather than a tool to help them.

The dotcom environment was a great learning experience where the speed of execution, setting up robust processes and managing different groups of people, customers, employees and stakeholders, all at the same time, was critical. It made me execute and plan for what seemed to be unachievable at that time.

But the idea was always to come back to the BPO space at some point in time, which I did. At Daksh too, the job is similar, with key deliverables revolving around people management, service delivery excellence and customer satisfaction.

LESSONS LEARNT

• Bringing about changes in the way of functioning was not as easy we envisaged.
• The basics do not change in operations, whether you are in a dotcom or BPO or any other industry, although the levels of complexity may vary.

WOULD YOU DO IT AGAIN? YES

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In 2000, Rajiv Vij left a comfortable, high-paying job at Travel House, ITC, and co-founded net2travel with Manish Chandra. Now the CEO, Hertz, India, Vij is of the opinion that esops didn't materialise into the kind of profits they anticipated. He has devised a similar plan of sharing growth benefits with his people, but he has kept it simpler.

I have always looked at things as: if it works, great, and if it doesn't, it would mean a massive amount of learning. And all along, it was great working with young people who had a passion to try something new and were willing to work 17 to 18 hours a day!

After indya acquired net2travel and was, in turn, bought out by Star, I decided it was best to move on since the decisions were to be taken by someone else "" again, by those without an understanding of the business. And I had learnt my lesson with angel investors. Giving the go-ahead for your venture to shut down was painful, more so because I was answerable to a team.

At Hertz, decisions like how the company will grow, how much it will grow are taken by a core team of four people, all who have in-depth knowledge of the business. We keep a tab on resources before we decide business strategies or invest in marketing and advertising, something that we fell short of with net2travel.

LESSONS LEARNT

• Business partnerships should be beyond just personal relationships. Don't enter into a business partnership only on the basis of trust.
• The focus should be to achieve profitability by exploiting the "unique" proposition offered to the customer. All marketing effort should be directed to leveraging it, not at building the brand.
• The offering to the customer should be unique, which helps save time and money. The offering should be one that cannot be easily copied by someone else in the short term.
• Set up your venture without external investment.
• Have a dedicated team of professionals who understand the business and have direct ownership in the venture from day one.

WOULD YOU DO IT AGAIN? YES

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With over 15 years experience in banking and management, Alok Sethi left his job as deputy CEO in KBC Bank, a Belgian bank, and joined indya.com as executive vice-president and CFO in 1999.

Now with Mphasis as chief-of-staff, Sethi believes his stint with the Internet space helped him understand the expectations and perception of young people, which proved invaluable for managing 5,500 people around the globe.

I was of the view that if you wanted to be significant in the corporate space, you needed an exposure in the Internet space too. Also, I didn't want to be an entrepreneur with a small business. I wanted to get involved with something major and that explains my decision to join indya.

The risks involved were the same as setting up a greenfield company. However, over the two years I was there, it was clear that the Internet would not generate good revenues "" at least for some time. The shareholding structure had to change and even the ad revenue would take time.

Thus, it made sense not to use Internet space as a commercial venture. Everyone thought that working with the Internet space meant a paradigm shift, that the good old ways of doing business weren't applicable "" a fatal mistake.

But I wouldn't exchange that experience for anything. The Internet was a new industry and there was no history, no precedent. You had make your own decisions and had no one to guide you from experience. That sharpened your decision-making and analysing skills immensely. It also gave me the humility to admit mistakes.

LESSONS LEARNT
I would look at the same opportunity with more realism, look at the forecast more cautiously. The Internet has taught me that if any opportunity looks too good to be true, it probably isn't there at all "" take it with a fistful of salt. Now I will look at a Net venture more with revenues in mind than just eyeballs.

WOULD YOU DO IT AGAIN? NO

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Madhavan Gopalarathnam left The Hindu where he was a senior officer, advertising, and eagerly joined Satyam Infoway Limited (Sify) as business manager, music channel, in 1998. He then joined Yahoo! India, where he was the only one chosen for the post of account manager, south, out of 3,000 candidates.

Gopalarathnam is now an external project consultant for a few companies in the US and India and owns a business, Ektara, which is working on restoring a heritage collection of Carnatic music recordings.

My entry into the dotcom space happened by chance when Sify came forward to support my idea of building an exclusive Carnatic music website.

With time, I found myself getting involved in the Internet business too. And simultaneously, I went far away from music, which was the very reason for my presence in Sify. It was with this background that I landed up in Yahoo! India.

At both Sify and Yahoo! India, it was exciting working in a dynamic environment for a growing business segment like the Internet. On a day-to-day basis, there was tremendous learning about an industry everyone was exploring. Adding to the excitement was the fact that business was coming in thick and fast.

On an average, I travelled four days a week. With a laptop and a cellphone, you are a mobile office round-the-clock, racing against time, competition, revenue goals, proposal writing, brainstorming for ideas, collection, post-sale client servicing, reporting, quarterly/annual planning...

The consequences were health risks "" high blood pressure at the age of 29 "" distance from the family, absence of any social life; a dry life, despite the fact that I travelled in luxury cars and enjoyed other "perks".

I started to feel that organisational growth in the medium did not mean new challenges, new responsibilities or substantial personal growth. More importantly, I felt I owe my family and myself more attention. I needed time to bring back all that really mattered to me.

But I cannot deny the fact that I have developed a deep sense of affinity to this medium over these six years and cannot go far away from this in my future endeavours. Currently, I am working as an external project consultant for a few companies in India and the US and play an active role in all Internet-based initiatives of my clients.

LESSONS LEARNT

• Never let decisions defy logic.
  
• Don't misinterpret derived values from the medium.
  
• Web presence is becoming an essential part of business.
  
• Cost-effective tools should be put to extensive use, thereby fuelling the growth of the medium.

WOULD YOU DO IT AGAIN? YES

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Sunil Lulla shifted base to Bangalore, quit his job as vice-president, marketing, United Distillers Vitners to become the CEO of indya.com. And though the risk of leaving a secure job was big, he felt it was worth the reward of learning and working with some of the talent there. Now executive vice-president, Sony Entertainment Television, Lulla says his approach to business has been consistent.

Each day was a struggle against tough deadlines, towards constantly building, adding people, an office, customers and so on. The motivation and excitement that came from learning the management of technology was very significant and made the entire experience invaluable.

But gradually, it came to light that all the projections made for the dotcom scene in India were incorrect. The hardware penetration just didn't take place.

Moreover, consumer spending was slowing, hence limiting the growth of the Internet. Unlike the US, the Indian dotcom summer had a very short window.

After News Corp bought over indya in 2001, it decided it was going to scale the site as a support for Star TV and hence, there was a limited role for all of us. But all along, indya had a spirit that was sky high.

In fact, on the last day, all of us celebrated with a "Pink Party", a reiteration of the fact that one has to learn to roll on with life.

Even now, with Sony Entertainment Television, my approach to business and work has been consistent. Work hard. Play hard. God is in the details. Empower people. Create a vision. Be different. These would not change. Also, in new businesses, one cannot have all the ground reality in place; or else it would not be a new business.

LESSONS LEARNT

• I have learnt a lot more about managing people, creating ideas and about technology. I have learnt to move swiftly and execute with detail. It has helped enhance my own skills.
• Always work with the best of the breed "" be it employees, investors, customers or vendors.
• Customers come first and that has only been more ingrained. I have also understood better the perspective of share holders
• Now I validate the risks associated with anything better.

WOULD YOU DO IT AGAIN? YES

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Vinod Giri, director, marketing, Sab Miller, Shaw Wallace Breweries Limited, joined Tata Internet in 2000 as CMO and the business head for tatanova.com. He had left Coke as senior manager, brands, but is back in the FMCG sector since he wants to be where the customer is king.

Things for me were coming to a halt in the FMCG sector. Also, the biggest attraction with the Internet was that it was a sunrise industry and there has always been a strong desire in me to be a part of anything that is new.

The challenges were huge. You had to set and run a portal, have enough resources to keep it going, develop a sound business model. But the biggest challenge for me was that it involved a huge amount of technology savviness.

Back then, the mad rush for Internet had just started, most of it without a vision. Since it was a new business, everything was part of the learning process.

Though we didn't have the fear of funding being taken away, there was the huge pressure of standing up to the board, making them believe in your business model, literally selling it to them and talking to those who always didn't know what the Internet industry was all about.

I moved out after a while because I started to miss the place where the customer is king and gets what he wants, instead of having to choose from what he is given, which was the case with the Internet. I discovered that I am a person for the consumer-driven industry.

I believe that an online business is not an end in itself. It is going to be driven by technology for some time to come. Remember that a dotcom is only a part of your business. Until it becomes accessible to all, it will be restricted to only those who are tech-savvy.

LESSONS LEARNT

• People tend to think that a dotcoms is an end in itself and is sufficient to bring the money in. But you should remember that it is only a part of your business. My stint with the Internet space has not only made me extremely tech savvy, it has also taught me to work in an environment that poses more challenge than a place that is already successful and doing great.
• It was great learning to sell your idea, telling people "" who don't understand the nuances of the medium "" what you are doing and why.

WOULD YOU DO IT AGAIN? NO

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Rajesh Jain, managing director, Netcore Solutions Pvt Ltd, launched Indiaworld.com in 1995, which was acquired by Sify in November 1999 for $115 million. With his focus back to Netcore Solutions, which creates innovations to bridge the digital divide in small- and medium-sized enterprises as well as the rural populace in developing countries, Jain is still working with technology and the Internet space.

I am an entrepreneur to the core and understand the risks involved with anything new. I know that sometimes, things work, sometimes, they don't. If things fail, it is back to the drawing board. I also believe that entrepreneurs (including me) work not with maps, but with compasses "" you know the direction, but do not have the territory charted out.

Indiaworld was launched with a vision to bridge the gap between Indians worldwide and grew to be one of the largest collection of India-centric websites "" Samachar (news), newsASIA, Khel (cricket), Khoj (search engine), Man Pasand (favourites), Dhan (personal finance), Bawarchi (food), Itihaas (history) and Indialine (Internet).

The sale to Sify was not because of a financial crunch. It was because we felt that, in order to grow our Indiaworld business, we needed a bigger partner and more funds.

Setting up a business in India is non-trivial. There is little help from VCs or banks. Being small is almost a bane. So, it is very important for a business to be profitable at an early stage. Being acquired is not a long-term strategy (or for that matter, even a short-term one).

The challenge, of course, is to ensure that short-term profit motives are balanced by long-term strategic decisions. In our case, the home pages business generated the short-term revenues, while the investment in a network of websites offered a longer-term opportunity for building up page views so as to target advertisers.

LESSONS LEARNT

• Entrepreneurs have a vision of how tomorrow can be different and better, something that is not so obvious to others. In doing so, they have to convince non-believers and naysayers. They have to build a team and get customers, battling odds at every stage. Envisioning how tomorrow can be different is the starting point of the dream. For this, look beyond the immediate area of interest to other areas that can impact it.
• No business is a 100-metre sprint. To win the marathon, entrepreneurs need to first ensure that they can last the distance. Look beyond the near-term. A new business must not be pressured by time at the start. But it also becomes harder to look further ahead. That is the challenge: this ability to build a framework "" a mental map "" of the landscape in the future is what can help create the right foundation for the business.
• While the natural instinct on starting up may be to go and raise capital so you can build a business top down (with money and a strong management team), the best way to build a lasting business is by being profitable as quickly as possible.
• Running a start-up is a "life-and-death" business. An entrepreneur is perhaps no more than two or three mistakes away from business death.

WOULD YOU DO IT AGAIN? YES