Coming up.. MoMo and Omcar

A couple of back to back conferences that I plan to attend in the coming two weeks.

Mobile Monday Delhi - 5 Jan 2008 ( Password : Android)
Agenda - Mobile VAS
Where : Perot Systems,Plot No.3, Sec 125,Near Amity University,
Greater Noida Expressway,Noida.Phone : 91-120-2432750-64

OM Careers - 12 Jan 2008
Agenda - Online marketing careers
Where : FIEO (also called Niryat Bhawan), Rao Tula Ram Marg
Opp Army Hospital Research & Referral, New Delhi – 110057, India

If you plan to attend either , leave your contact number and lets meet up!

India and clean technology

Clean tech has been the buzzword in the valley for a couple of years now. There is plenty of venture capital available to fund clean technologies. Clean tech business ventures are seen to combine the benefits of for-profit with the sustainability of non-profits. This includes using wind,solar,geothermal, biomass and other energy sources. However, it is not confined to generation of energy alone.

Where does India stand today with respect to clean technologies? And what is our government's views on pushing for cleaner technologies?

As a developing country, India's per capita fuel expenditure is very low compared to developed countries. This ultimately leads to lower per capita emission of GHG's or Greenhouse gases consisting of various oxides of Carbon,Sulphur and Nitrogen. This has been the focal point of argument that the developing countries put forward at Bali, where the 13th UN conference on climate change took place recently.

I think India and other developing countries are making a grave error by linking push for clean technology with per capita emissions. I would suggest use a new metric " per capita quality of life" or PCQOL. To start off, compare the quality of air and drinking water in top 50 Indian cities with that of top 50 cities in US. Then look at the kind of fuel used for public/private transportation, the emissions caused by industrial zones within cities, the energy efficiency of housing infrastructure and quality of water in the rivers that flow near/through the cities. I am pretty sure Indian cities would fare much worse.

The ultimate objective of addressing per capita emissions is to make quality of life better for the citizens. Does lower per capita emissions mean we wait to switch to clean energy until our per capita emission matches that of US? Can India ( or this earth) survive when per capita emissions of India and US are equal? US consumers have historically been the biggest embracers of innovation and this has been the single biggest factor why US companies are the most innovative. Clean tech is picking up momentum and while it is still not mainstream, I won't be surprised if US consumers manage to cut down emissions within 10 years. Honda already sells the largest number of Civic hybrid cars in the US. Where does that leave India? Do we want to go the path of US, and then come out of that ? Or should we address this now, when all that rapid economic growth is ahead of us ? Sustainable growth is not just a fancy buzzword.

It is a tremendous opportunity for India to carve out a future which is energy efficient and dependent on clean energy sources. The time to act is now.

The idea of idea

" Remember, Remember The fifth of November The gunpowder treason and plot. I know of no reason Why the gunpowder treason Should ever be forgot. But what of the man? I know his name was Guy Fawkes and I know that in 1605 he attempted to blow up the houses of parliament, but who was he really? What was he like? We are told to remember the idea, not the man. Because a man can fail. He can be caught. He can be killed and forgotten. But four hundred years later an idea can still change the world. I've witnessed firsthand the power of ideas. I've seen people kill in the name of them; and die defending them. But you cannot touch an idea, cannot hold it or kiss it. An idea does not bleed, it cannot feel pain, and it does not love. And it is not an idea that I miss, it is a man. A man who made me remember the fifth of November. A man I will never forget. "

- From V for Vendetta

I love this movie for its inspiring quotes about rebellion. I guess first generation entrepreneurs with zero capital are not very different from rebels of yesteryears. Think Michael Dell and Dhirubhai Ambani. Or think Guy Fawkes and Vladimir Lenin. Aren't they all rebels in some way? It takes courage and conviction to take an idea to fruition. That's why , I guess , they say execution is the key. And the people are most important.

Do you PHP?

Urgently required expert PHP developers with a proven record for a startup in Delhi-NCR. If you have it in you, briefly describe what you have done , why you enjoy coding and email me at bipin.p.singh@gmail.com.

Obscene rewards are in store. Full time preferred. Location : Delhi-NCR.

All India Institute of Mad Sciences

AIIMS or All India Institute of Medical sciences is the premier medical institute in India. Premier hospitals in India refer special cases to AIIMS for expertise. AIIMS boasts of having conducted many rare surgeries and operations.

Ask any medical aspirant in India where he/she wants to study and this is the name you will most likely hear. It is statistically nearly impossible to predict if you will get in through the undergraduate entrance examination, no matter how hard you study. Why, because for tens of thousands of applicants AIIMS selects less than 50 ( this was the number few years ago) . Does it mean they produce medical geniuses?

Take a look here . What is at stake here ? Ego or lives of 10,000 people? Why are they putting so many poor and helpless people at risk? If I had the power, I would fire all of them. They do not deserve to be called doctors. Unfortunately, this is the scene all over India. Hospitals and medical facilities all over India look upto AIIMS as a role model and a leader. And thus, they strike at whim. All this in a country which has healthcare delivery and doctors to patients ratio comparable(maybe worse) to sub-Saharan Africa.

This is not the first time AIIMS docs have stopped work. They do it for anything and everything. Recently , they stopped work on the reservation issue. As an ex-student at IIT Delhi situated nearby, I have heard horror stories of dirty student politics at AIIMS. If you happen to go to AIIMS wards, you can easily overhear stuff like " mar gaya naa, dekh ke dawai deni thee" ( See , the patient died. You should have checked properly before giving medicine) from medical interns. Try going there without a referral from a politician or a burauecrat. So much for geniuses.

Bloody spoilt brats!

Why should I be so upset, you may ask. Well , every tax payer should be. The research for which AIIMS is so famous is subsidized by my money. And yours. For what?

What can you do about it?

This is a post I had written more than a year ago, when I was working with a Bangalore based organization called Janaagraha.

What can you do about it?

Life sometimes changes its direction in unexpected ways, through an event which seems to be of little importance at the time. It happens to almost everyone and at most times the change is not so much in what we do but rather in how we think about doing things. My life changed the day I decided to skip a movie one pretty Saturday evening and landed up at Janaagraha's office . More about Janaagraha later.I have been associated with this organization for over four months now , in different programs ranging from public disclosure of BMP's finances to writing articles for their monthly publication. Across the board , a common trend is the lack of enough young people in community related activities. Almost all the people under the age of 35 are college or school students and very few of those are actually working at the local community level. But I live in Bangalore , so I must have missed counting a key segment of the population under 35. Ahaa , the young professional.Everyone , including John Kerry and a certain George W Bush, knows about the young professional in Bangalore. Highly skilled , well educated , motivated , with a well paying steady (sometimes not so steady) job, unmarried or just married , spotted often at Garuda or Forum or MG Road/Brigade road especially on weekends. Perfect! Only , sometimes I wish Kerry knew a little bit about this professional's city as well.Bangalore sucks! The awful roads , the flooded drains , the incomplete flyovers , the one ways , the smoke , the rising temperature , the electricity and water supply , the this and the that . This list is endless. Often this topic becomes a reason to engage in feel good afternoon banter about the role of a former Prime Minister. But more often than not , the young professional says , "I am unattached, I do not belong here. I abide by law and pay my taxes. I am calm and never get excited(except the one time when I watched Rang De Basanti)". Cynicism , then.Where does this cynicism come from ? How does it become so all pervasive? Is it part of our genetics or something that I imbibed along the way? To know the answer , I , the young professional need to step back in time , when I was at school. For all the history and civics and other social sciences I crammed up as a kid , was there a single moment I felt that I had a responsibility beyond my house or my school ? A responsibility not to spit my chewing gum on the street , or to keep my neighborhood park clean or to ask my mom not to empty her dustbin in the drain. No , never. If childhood is when I could have learnt to become responsible outside my house and school and my teachers and parents could not teach me such a basic thing , then maybe it is a collective failure. A lost opportunity which may not present itself again. See , it is so easy to be cynical , to blame "the system" . There is a popular phrase for such a thought process : "conventional wisdom" e.g. "the system" is corrupt , "the government" is inefficient, our "cultural values" are different and so on. John Kenneth Galbraith , the renowned American economist , defined conventional wisdom as associating truth with convenience , with what is aligned with our self interest and personal well being or promises best to avoid awkward effort or unwelcome dislocation of life. No wonder , we accept it so comfortably without understanding much about what the "government" or the "system" actually is.I do not claim to know or understand any of the problems that afflict my city , let alone the solutions. Heck , I don't even claim to know who or what a typical young professional is. But , at a personal level, I have asked this question to myself over and over again in the past few weeks. Should I leave the future of this city in the hands of "the system" and wash my hands off it? With my education , my skills, my ability to reason , my youth and my energy whether all I can do is twiddle my thumbs while the active citizenry comprising of mostly old and retired and some not so fortunate people slug it out in public meetings to solve my day to day problems , go through the budget of the ward works to make sure the drainage is working and ,in general, engage with the government to make Bangalore a better city to live in. I find it very offensive , and downright insulting , when a newly returned Indian (or NRI for the pun inclined) rattles off the list of ills that plague Bangalore and how there is no hope. It definitely helps to know that America took more than 200 years to get where it is today, and NRI's did not have any role to play in that process until the recent past.In the end , then, the debate rests on a very fine line between whether I just care about this issue and wash it down with regular pepsi at INOX or I am willing to take the extra step and let it agitate the hell out of me. What I eventually do and whether I want to shoot down a defence minister or talk to my ward sabha representative about a flooded drain is a matter of finer and minor detail which , if you believe me , can definitely be sorted out.I am sure each one of us has brilliant ideas and I invite you to generously comment on what I have written and what you think can or should be done about the issue as a whole .Remember , though , if it helps at all , that a doctor treats the disease not just the symptoms. Remember , as well , that this blog is just an effort to let a collective thought process evolve , so what YOU think is most important.

Number portability is here!

Mobile Number portability will be launched early next year starting in four metros. It will allow subscribers to switch service providers while keeping the same number. Full number portability, including that for fixed lines, will be introduced gradually thereafter.

Number Portability(NP) should have a huge impact on competition in telecom space. I said "should" and not "will" because its success will depend upon how easy/smooth the process of changing a service provider is. If the process is a long and winding one, I don't expect many to line up for the hassles ( like residence verification etc).

Historically, the introduction of NP has led to as many as 50% of subscribers changing their service providers in other countries. This implies a big premium now needs to be places on customer loyalty and controlling the churn rate. This also implies there could be differentiation of customer segments with different tariffs applicable for different sets of customers ( losing a customer who uses 600 minutes in a month is 6 times more expensive than one who uses only 100 minutes).

The new "Open" Messiah

The open source revolution that began with Linus Trovalds and his hugely popular Linux OS has a new leader. And it is none other than Google. There were a couple of announcements in recent weeks about the far reaching impact this search giant could make in our lives.

Android is a Linux based software platform for mobile devices being developed from the ground up by Google. The list of partners Google managed to rope in for this initiative, titled " Open Handset Alliance" , is astounding considering that Google has little exposure to mobile devices. From telecom carriers like Sprint and T-Mobile to semiconductor shops like Intel,Qualcomm and TI and from phone makers like Samsung,Motorola and LG to software companies including itself(!) , the alliance has all the players lined up for the game. The biggest absentee is Finnish giant Nokia. I won't be surprised if Nokia starts a similar alliance with European partners.

OpenSocial is more than an API. It is Google's response to Facebook. Facebook has transformed itself from a college social network to something of a maverick platform for sotware applications targeting fun - games,movie quizzes etc. More importantly, it is adding 200,000 users every day! OpenSocial tries to go one up on FB by allowing developers to develop application for one API and use it on multiple social networks including Engage.com, Friendster, hi5, Hyves, imeem, LinkedIn, MySpace, Ning, Oracle, orkut, Plaxo, Salesforce.com, Six Apart, Tianji, Viadeo, and XING. I guess that list covers pretty much every SN other than FB.

Building brands - Lessons from TFA

I did not know about TFA (Teach for America) until I started researching business schools for my MBA. While browsing the jobs database of the one of the so called top schools , I saw their job postings. How does an organization motivate MBA' from top business schools, arguably the top aspirators in the topmost capitalist society, to devote 2 years of their lives working for peanuts?

Answer : Branding

TFA is highly selective, rejects a high percentage of applicants. Teachers from TFA are regularly hired by top investment banks like Goldman and top consulting firms. Candidates flaunt TFA experience in their resumes for admission to top business schools.

What TFA offers in two years is a challenge of a lifetime, teaching kids in under-priviliged inner city neighborhoods in America. Anyone who has read "To Sir with love" knows how difficult this job can be for experienced campaigners, let alone fresh graduates with no teaching experience.
TFA gives rigorous training to its hires before they start teaching. Teachers are paid a stipend/salary, so it is not voluntary.

Wendy Kopp proposed the idea of TFA in her thesis at Princeton in 1989. Obviously it had no takers then and even as late as 2000 , TFA faced funding problems. But TFA's success shows that if an idea has enough takers in the people who matter, funding can't be a deterrent. And in this case, the people who mattered were the graduates from top American universities. Looking at TFA as an alternative to careers in number crunching ( spreadsheet modeling/presentation making) , the response has been amazing.

TFA is a powerful concept in social entrepreneurship. Can it replicated in India?

National Do Not Call register

NDNC register is a database of numbers maintained by the government. The owners of these numbers do not want Unsolicited Commercial Communication(UCC). It is a strong step in safeguarding consumer interests in the Indian telecom sector. There are illegal and unauthorised consumer databases used by almost every telemarketer and they are readily bought and sold.

A telemarketer now faces a fine of upto 500 rupees for calling a number registered on the NDNC. The advent of NDNC is also generating new business models built around permission marketing.

This site shows how the process will work.

If you reside in India, please register on the NDNC and save yourself from spam and unwanted calls.

Ginger or Garlic?

We all know copy-cats exist everywhere, including the world of startups. But this copy is destined to take the top award. Not only does it copy the business model , but also takes a dig on the original's name.

Original - mginger

Copy - mgarlic

The copy is currently down, trying to make a more exciting paste for your curry.

Does it get funnier in the world of startups?

Of golden triangles and lost cities

My first road trip through the golden triangle of Delhi-Agra-Jaipur , covering 700 kms in less than 3 days , was as exciting as the the first and only time I sky-dived , head first, from a 12 seater Fokker in California wine country. The feelings were all the same , adrenaline rush in the beginning followed by a state of bewilderment and ending in a sense of resignation.


To be fair, the road infrastruture has definitely improved , especially the Indian highways. However, the road sense remains pretty much the same, on or off the road. Some of the things that you see on Indian national highways are probably so unique that , as a tourist, you would even pay to see them.


1) Tempo vehicles carrying 25 people, about 10 of them clinging for dear life while cars and trucks whizz by.

2) Cattle ( Yes, no fencing)

3) Overtaking - Keep a lookout on your left and right. You never know who decides to overtake and when.

4) Tractors and bullock carts - They have right of way and no rear view mirrors. Overtake them at your own risk.

5) Processions and bandhs - For some strange reason , every group which is demanding something from the government decides to block a section of the national highway. This is a form of protest unique to India. It definitely sends the message across.

Inspite of these problems, the quality of NH-2 is excellent, road signs are all there including emergency numbers , traffic is handled decently in case of blockages and speed limit is 90 km/hr. 200 odd kms from Agra to Delhi took me 4 hours. All slowdowns were due to points noted above.

The Alwar-Mathura highway(?) is a neat example of a road that makes you cringe and curse yourself. You start regretting why you ventured out of the comfortable confines of a metro city. 5 hours for 95 kms at an astounding speed of 19 km/hr. The road also threw up some surprises, like the heritage city of Deeg where a magnificent fort and palace lie rotting away. From the moment you enter the city, you realize it is god-forsaken , the dusty winding roads , the forlorn look on the faces and the ruins. There is not a single dhaba ( eating place) along the way. There is not even one place to buy water. At one place, a state roadways bus had got stuck in a narrow stretch running through a village. Another state roadways bus was trying to pull it out using a rope and was blocking the entire highway in the process! At another place, a woman had covered half the width of the highway to bathe her children. Mind you, the entire road is an arc 150 odd kms from the national capital. So much for 9% GDP growth.

Startup cheatsheet(s)

How does one get information about building a startup from an idea in a particular geography? I read a lot of generic stuff about entreprenuership but still haven't come across , what I may call , a " startup cheatsheet" .

A cheatsheet, for the uninitiated, is a documentation of steps to quickly accomplish a task without understanding all the details. For a unix novice, it could be as simple as a set of commands to create a directory structure of required format. The steps you see on the printer dashboard when paper is jammed is another example of a cheat sheet.

Cheat sheets make life easier by saving time and effort on tasks where the result is guaranteed to be repeatable by following the steps. As I think today about launching a startup, I want to focus on two key areas : a) building the product/service and b) strategy for getting customers . I imagine everything else could be documented in a cheatsheet. This could include basic legal stuff, setting up the basic infrastructure like office, industry specific hiring strategies, promotions and so on. Sure, the startup's mandate would be to typically go beyond these but trust me , for someone who hasn't started one in a particular vertical in a particular geography, this kind of information would be a huge support mechanism.

Google checkout

Google checkout is a payment gateway offering by Google. For merchants, it offers easy integration and theoretically zero transaction cost if merchants spend 10% of sales money on Adwords. Without an adwords account, it costs 2% + 0.20 USD. This is close to or better than other offerings. It is totally free till January 1,2008.

It is available for merchants in US/UK only as of now but buyers from 140 countries can use Google checkout to buy products online.

These days, the most interesting page that you should read when using an google product is - privacy policy.

Sample this :

Transaction information - When you use Google Checkout to conduct a transaction, we collect information about each transaction, including the transaction amount, a description provided by the seller of the goods or services being purchased, the names of the seller and buyer, and the type of payment used.

Or this :

Google cookies - When you access a Google Checkout webpage, we send one or more cookies - a small file containing a string of characters - to your computer that uniquely identifies your browser. We use cookies to improve the quality of our service by storing user preferences and tracking user trends. Most browsers are initially set up to accept cookies, but you can reset your browser to refuse all cookies or to indicate when a cookie is being sent. Please note that you will not be able to access Google Checkout if your cookies are disabled

Google has had skirmishes with privacy issues in US. I think the issue of privacy has to be seen in the context of how confidential information is used. Customized ads suited to your preferences might be welcome to most online shoppers but people , especially in US, do not want to share private info with a third party. This is something Google , as a brand, will have to manage properly given its motto of " Do No Evil".

If you overlook privacy concerns, Google checkout looks like an admirable product allowing small businesses to launch online efficiently and quickly. I am waiting for it to launch in India where its transaction costs will easily be the lowest and the google brand will hopefully convince more Indian buyers ( worried about fraud/security) to shop online.

Online comparison, Offline shopping

CompareIndia , an online comparison site which I reviewed a few months back, has become much more comprehensive and interesting. I had mentioned how a lot of Indians would like to look up and compare products online and then go to a local retailer which offers the best deal for that product. This is exactly what is happening at CompareIndia. In addition, now they have user reviews, expert advice and product Q&A. You can also become an expert or write a review.

Revenue model currently seems to be hot deal ads by local retailers and google ads.

Disclaimer - I don't work for or have any sort of relationship with Network 18.

Do you know of other ventures working on this model? I am interested in finding out the price points of this advertising for small/mid-size/large retailers.

Innovating Venture Capital - A new model?

I came across this interesting article from IEEE which takes a close look at why VC's are traditionally risk-averse when it comes to true innovation. Although the article's scale of innovation is self developed and debatable, I agree with the gist of its analysis. Institutional investors chasing better than stock market returns would like these returns within a fixed time frame ( say 3-5 years) and with greatest possible certainity. They don't care about technology. This forces general partners to avoid risk and invest in startups which are riding the wave.

What if , instead of institutional investors, retail investors were roped in to raise funds? One way this happens already is the stock market, but to IPO a company needs to reach a certain level of maturity. Is it legally possible( in India, or in US?) for a private VC firm to raise money from retail investors for investment in seed/early stage startups?

I haven't done much analysis, nor am I a financial expert. But if you had invested 500 rupees in Bharti Airtel when Sunil Mittal was just starting , you can imagine how much that would be worth today. To put it in perspective, Warburg Pincus realized 1.6 billion USD from a 300 million USD investment they did in Bharti as late as 1999.

India's strength is in numbers. Delhi's population alone is 130 million , if you get 1 million to commit 1000 rupees as a one time investment you have a 1000 million rupee fund. How many seed stage startups can it sustain today at 1-10 million INR per startup? 100-1000. Let the fund make bold , but not stupid, investments which go beyond ecommerce and travel portals. Let the fund hire full time engineers to evaluate opportunities. The question is how soon those 1 million retail investors are looking for returns on their 1000 bucks. 1 year , 5 years or 10 years? I bet you could convince them to wait much longer than an average institutional investor. 1000 bucks is the key.

I know this is all in theory but the idea sounds intriguing to me on three fronts. First, retail investors get a piece of action in VC space. Second, seed stage funding is no longer a pipe dream.
Third, innovation gets a kick.

Do chip in with your comments.

Investing in research

Do you know how much India's software companies invest in research every year? Have you heard of Infosys research Labs, Wipro research labs or TCS research labs? I haven't. I bet they don't exist.

IBM and HP continue to transition into services based business models. This makes sense because corporates worldwide want to outsource complicated tasks like setting up and managing IT infrastructure. But both IBM and HP continue to spend billions of dollars annually in research ranging from microprocessors to storage technologies. You could argue that they are rich. But don't forget that TCS alone has a market capitalisation of 27 billion USD. So, money is not the constraint.

It is anybody's argument whether companies like Infosys have pockets deep enough to attract the best researchers from anywhere in the world. I think the problem lies in the mindset.

A decade or more of successful cost arbitrage based business model has made these companies think that services based business model does not require research. I do not have anything against the peanut pay model. ( Peanut pay : working for peanuts). India's strength is in numbers and we will continue to churn out software engineers by the millions. But does that preclude investing in research?

American companies invest heavily in technology research , either through grants to universities or setting up their own research labs. China is fast catching up, by providing huge federal funds to their universities. The thing with research is it rarely pays dividends in the short term. In the long term as well, unless a company has its own research lab, university research cannot be claimed as proprietary. However, good quality research helps every one in the technology business by creating a culture of innovation which benefits the risk takers. The T J Watson center of IBM research labs does outstanding research but not every project becomes a product. However , as a company, it gives IBM a definitive edge whether it is a new Service Oriented Architecture (SOA) or a new mass storage solution.

Indian software companies should re-think their strategies and start investing in research. By doing this, they will only help themselves in the long run.

Indian TV News : bad to worse?

For those who missed the point, here's latest story.

Uma Khurana is a teacher in a government girls school in New Delhi. Few days ago, Live India reported a sting operation where she was exposed as a flesh trade dealer. Worse, she was accused of converting girl students into prostitutes. I understand that the modern society , our Indian society included, is morally corrupt and most unexpected perversities can happen. And sometimes, they do happen. Even by my utterly low expectations, this news item came as a shock.

The latest reports say that the reporter is being investigated for framing Uma Khurana as revenge for her personal dispute with the reporter's friend. The girl shown in the sting operation was exposed as an aspiring journalist.

Live India is a Hindi news , err, newtertainment channel . Newtertainment = Perverse Entertaintment packaged as news.

The masses of India claim English as their own, but a vast majority watches Hindi news channels. This includes those in posh bungalows, the Jhuggi Jhopri clusters, the builder apartments , the small town folks, the urban pretenders and everyone you meet on the streets of North to Central India. The market is huge. The stakes are high.

If you ask me , I think the English news channels have also become pretty loud and trigger happy ( Sachin's retirement being the latest gaffe). But Hindi ones are a class apart. Not only are they loud,obscene, pointless and perverse, they may actually be promoting crime.

Code of conduct, anyone?

The English Fallacy

Wikipedia ranks India as Number 1 in the list of English speaking populations with about 350 million people able to use English. I am deeply suspicious of this number. Infact, I am filled with disgust since this is yet another number disguising bitter reality.

Sample this :

hello sir iam a.**** i complited my b.tech and iam starting an industry and i want to join our party at the same time i want to meet our head ******* sir how can i get oppintment pls replay me

Humans , particularly Indians, have a tremendous ability to adapt and this trait should enable you to understand the true purport of the sample above. If you still don't , email me.

I got this message through a social networking website popular amongst young Indians. It is not the first time I have witnessed such radical use of English syntax and semantics. I have a feeling it won't be the last, either.

Numbers are what make Indians proud these days - be it demographics ,GDP or the sensex. But beyond the euphoria, one must take a deeper and closer look at quality.That is, the quality of English being spoken by the Indian masses. There are deep-rooted socio-cultural factors at play here. English has made the leap from the lingua-franca of the Indian elite to that of the Indian masses. About 350 million of them, to be precise. But the problem is not many of those joining the league want to accept that their English is not only imprecise, it is precisely defunct. They don't accept this shortcoming because it is "uncool", almost an embarassment in their social circles. These are the kids who never learnt English properly in their primary schools , mainly due to teachers who were incompetent. You will be surprised to know how many of the private school kids cannot speak or write correct English. These are the kids who will get found out , and will lag their peers by a margin.

Does it matter? I think it does. The services industry has been complaining for a while about employability of college graduates. A lot of it has to do with basic spoken and written English. No body wants Byrons or Shakespeares. But atleast ,pretty please, can we get the spellings right?

Technology and the Indian VC

Exercise1 : Look at the array of companies that Indian venture capitalists are investing or have invested in India. Name one company which truly excites you as innovative. And when I say you , think of a hard core risk taking technologist.

Let me try to explain it with a comparison.

Sequoia capital is a very respected global VC firm. It has teams set up to invest in 4 geographies, US, India,China and Israel.

Exercise 2: Check out two observations - for India and for Israel.

• How many partners of Sequoia have technology focus in India versus in Israel?
• How many Israeli investees versus Indian investees do you believe focus on a technological innovation versus business/services innovation?

I wouldn't go into numbers here since I personally don't know these people or companies. But let me just profile one Israeli investee for you. It is called ScaleMP.

http://www.scalemp.com/

ScaleMP has developed the versatile SMP (vSMP) architecture, a unique approach that enables server vendors to create industry-standard, high-end x86-based symmetric multi-processor (SMP) systems. ScaleMP and its industry-leading partners team-up to deliver vSMPowered™ systems with superior performance at x86 server prices.

Mind you , this is just a software company. But look at how it can fundamentally change the rules of the data center game. This is hardcore technological innovation.

Let me also profile the Sequoia partner who led this investment.

Benny Hanigal

Benny Hanigal is a Partner with Sequoia Capital Israel and focuses on semiconductor and systems investments. Prior to joining Sequoia Capital in 2001, he was a Partner in Star Seed, where he led the investment activities in Israel and abroad. Before establishing Star Seed, Benny was Founder and President of Lannet until it merged with Madge Networks where he continued as a SVP for Product Development and Marketing. Earlier, Benny was Co-Founder and Chairman of Alvarion (ALVR). Benny has BS in Electrical Engineering from the Technion - Israel Institute of Technology.

What is the point you might ask? After all, Israel and India are apples and oranges. But my question is very simple - why are such companies not getting funded in India? Is it the case that Indian engineers are not capable of such innovation? Or is it that they are , but such startups have absolutely no hope of getting funded in the short to medium term? I think the answer is latter. If VC's are funding me-too travel portals and e-commerce websites ( I have no grudge against them; Infact, I think they deserve to be funded for creating value) then what do you expect the brightest engineers in India to go after?

Are the Indian VC's fundamentally risk averse when it comes to technological innovation? Will this be the major obstacle in preventing India from becoming a technology leader ? Is that good or bad?

The ountrepreneurs

The frontpage news of KPO/BPO/LPO companies doesn't tell the complete story about outsourcing. Revenue projections or the tom-tomming of India's leadership doesn't tell it, either. The real story , in my opinion, is unfolding in the small by-lanes of Bengaluru,Hyderabad,Pune,Noida and Gurgaon.

Silicon valley in the early-to-late 90's was probably similar. Everyone , from the retired pensioner to the school going teenager, thought he/she could build a hotmail and walk away with 400 million dollars. People who went through the tech bubble and subsequent bust talk about an invisible force , a certain madness, which had gripped everyone who knew anything about technology.

A similar scene ,albeit in outsourcing, is unfolding in India. "Show me a business model and I will show you where outsourcing fits in" say the ountrepreneurs. From editing to teaching to hiring to intellectual property , everything is up for grabs - for the right price. Having personally seen the kind of talent pool (and growing) we have and the kind of money they are willing to work for - it really borders on the insane. I looked at the Mckinsey report on Indian consumer projections and even by 2025 , only about 2% of Indians will earn more than 10 lakh INR per year. And the average annual income in US is today 16 lakh+ INR at today's exhange rate. Do you see the boom now?

And who is cashing in? Answer - everyone you dismissed as a nobody - housewives, college dropouts, second generation family businesses, also-ran graduates etc etc. These are the ountrepreneurs - who have understood the power of outsourcing and are using it to generate real value. Big outsourcing firms have their place under the sun , but these small operators , with 10-50 employees at maximum, will be the real drivers of the Indian outsourcing juggernaut. And they are distributing wealth much more than the bottom heavy , top light big Indian multinationals. Ironically, the word "outsourcing" still carries a largely negative connotation atleast in the circles I have been - you get into outsourcing because you are not good enough for the top IT MNC's. If you have a degree from premier institutes like IITs/IIMs , outsourcing is a complete no-no. Guess who is having the last laugh now?

iPhone uncensored.

The sight of humans in all shapes and sizes camping in front of an AT&T store for days , waiting for their beloved iPhone, was as amusing as I have ever seen in recent times. It reminded me of queues that Indians are ( or were ) quite familiar with - ration shops, community taps and voting. But few Indians would queue up for what is essentially a luxury item. And to buy luxury items, people (all over the world) typically want a luxurious experience. With one exception. If you a self-professed cool dude/junkie/geek/tech analyst , you will walk over hot charcoal to get first to that next bleeding edge technology product.

But wait, is iPhone really a bleeding edge technology product? People have their opinions on this but largely the answer is no. Still , People will buy iPhone because it is made by Apple and it has a catchy name which rhymes with iPod which most of them would already have. Some of them would even have iMacs. Or Powerbooks. Or some such expensive , sleek looking accessories. This is yet another feather in the marketing acumen ( some call it gimmickry) of Steve Jobs and Apple. They have perfected the classic art of mass marketing in the guise of niche marketing.

Blackle

All you google worshippers - try Blackle. No , its not a different search engine but your favorite one wrapped in an energy saving blanket. I think this idea in itself may not amount to much but it could be a trigger for rationalizing energy consumption on the internet. On a sombre note , all your Googling amounts to 450,000 servers ( @ conservative 200 Watt per server) burning close to 100 MW just at the data center. Now start adding the communication costs and the end user terminal power and numbers become frightening.

Stanford India Bio-design

SIB is offering a two year fellowship for medical technology innovation - the program is conducted by Stanford in association with AIIMS and IIT-Delhi.

I think this is a wonderful opportunity for aspiring entrepreneurs and other players in the Indian biomedical industry. Please do check it out here.

The great Indian electronics opportunity

When I stepped into my first job after college, the one tag I never wanted from ignorant friends and relatives was that of an "IT engineer". IT is different, I claimed - Java,C++, blah blah. Every Tom,Dick and Harry could do "IT" but I was into "VLSI" - a priviliged domain. It was a tough task to explain the difference. After all these years, I have finally managed to convince my parents that I make ( rather , design but explaining that subtlety is not worth the effort) chips of the non-edible variety, and have nothing to do with website software.

Compared to giant leaps in software services of the Infosys/Wipro/TCS variety , the semiconductor industry in India has been relatively anonymous. But if Frost and Sullivan's report on Indian electronics opportunity is to be believed, the electronics consumption is at the cusp of an explosion - reaching a staggering 363 billion dollars , and still growing, in 2015. The majority of this demand would be fueled by cellphones, PCs, media players and consumer electronics. This translates into 40 billion USD worth of semiconductor opportunity starting from 3 billion in 2005 - a ten fold increase in 10 years.

Today , almost 80% of the revenues and workforce in Indian semiconductor industry fall in the embedded software domain. I suspect this percentage will persist or even increase as we move to 2015 , simply because chips are becoming smarter, more complicated to design, yet cheaper to manufacture due to increased wafer sizes, increasing yields and ultra efficient super-fabs. This paradox works well for those with deep pockets. Scale is everything in the chip design industry and those who don't achieve it either disappear or get gobbled up no matter how superior their design is on any number of parameters.

The biggest opportunities in the next 10 odd years would be
a) electronics equipment manufacturing ( 150 billion USD)- local production more cost effective, customisation for local consumption.
b) embedded software (30 billion USD)- endless supply of smart software engineers , customisation for local consumption.

EDA,VLSI and board design would also continue to grow but opportunity would be relatively limited at <10 billion USD. More importantly, newer players would find it more and more difficult to enter these markets.

As for chip fabrication, lets just say we are late into the game, notwithstanding SemIndia's persistence. After all, if one wants to speak Mandarin fluently, the age to start is 5 , not 25. Incidentally, the Chinese entered this game in early 1980's.

mGinger

Few posts back , I had written about Onyomo - a local search engine for Indian cities. mGinger has come up with a business model of targeted SMS advertising albeit with a catch. The end user selects what category of ads he/she wants to receive and earns money on every SMS received. mGinger folks write about the chicken and egg problem in their blog. Maybe they should get in touch with OnYoMo. There could be some interesting synergy when you can receive ads based on your sms search results and the sms search results are based on a) your interest and b) your location. I think SMS advertising is not for big impact; a Nike user will not switch to Adidas with an sms ad. Infact, I believe sms is suitable only for local deal advertising i.e. discounts, new products, etc.

Asking people to sign up for ads to earn money is so stone age. And passe. Whether it works , time will tell. I am more interested in the way mginger is trying to attract new users - through social networking sites and word of mouth. Lets see how far it goes.

On a more cautious note, mginger is still in early early beta stage, so website will be down and you may not get enough ads to pay your bills , as they claim. On a pessimistic note, online media spend last year was not more than 300 mn USD. What amount of media spend was sms based? I would be surprised if it was in multiple tens of millions USD.

Ooh la la la ole o

Many years ago, in ancient 1994, Intel faced a problem it had not anticipated as a company which made microprocessors. A minor floating point flaw in Pentium could give you a whopping error rate of one in nine billion random FP calculations. The bug was caught by a professor , and systematically exposed by others. As expected Intel chose to downplay it initially. Public outcry followed and internet jokes abounded. IBM recalled Pentium shipments. Intel eventually gave up and offered free replacement to anybody who wanted one. It was an event which made Intel realize the power of its brand ; and the responsibility which comes with it.

It was all down to the "Intel inside" marketing campaign , launched in 1991, which depicted this logo on all PC's with an Intel microprocessor dubbing it "the brain" of computers. Consumers knew they were buying an Intel computer. Intel has since grown manifold , and despite hiccups, remains the most dominant hardware company in the PC world. Contrast this with the cell phones you buy. Do you know who makes the "brains" of cellphones? The power of branding , or lack of it, at work again.

Arguably, there is no Indian IT company which can claim to have a strong global brand. Few people in India ( outside the Bombay Stock Exchange , that is) would have more respect for the Infosys brand than the IBM brand although both may now be competing in the same software services domain. ( Check out the IBM ad on TV. Isn't it snazzy? )I think this is one area where Indian IT companies have failed miserably.

So it gives me great pleasure that the Kingfisher "king" will finally give us an "Indian" Scotch. Raise a toast! Lets hope we get a few Vijay Mallyas and "Ooh la la .. " marketing from Indian IT companies.

Micro-VC

Micro-VC , not exactly a revolutionary idea , has been discussed here . Basically, it is VC for new micro-ventures. One could define these ventures more specifically, but generally these would be profitable in a duration of 1 year , risk would be lower than in traditional VC , technology may not be cutting edge , and business model would be relatively more stable. An example - a real time price tracking mechanism for buyers/sellers of agricultural produce in a large district level mandi(market). Or an urban transport solutions system for white collar workers in a large metropolitan area. These ventures may never get acquired or publicly listed , the means a traditional VC depends upon for rewards, but they would have a greater chance of consistent profitability.

The government , for its part, could give generous tax concessions to the profits made by the micro VC firm and give them preferential treatment in fund raising from public sector financial institutions.

I think it has some relevance for a country like India where substantial entreprenurial energy could be unleashed with easy availability of fair-risk capital to the masses.

How the mighty have fallen.

If you have not read this NY times article, you must. It is time the Web2.0 wannabes learnt a few lessons :

• Architect- Your website for scale. The boundaries should be designed to be elastic.
• Spend - A few more bucks on quality backend infrastructure. If you are broke, at least plan to relocate.
• KISS ( Keep it Simple, Stupid) - Everyone uses dynamic content, but should you? And where?
• Listen -First to your user,everyday, then to the ad agencies, whenever possible.
• Filter - Advice about new technology or new features coming from anyone who is not a regular user. Or not an engineer.
• Resist - Overinflated Ego. Undue pressure from investors. Rigidity.
• Ideas- Are good. Execution,though, is better.

Friendster's example clearly shows that first mover advantage can get you to the top. But it can't keep you there.

Identity 2.0

Chances are , you have not heard about this service. Call it Trust 2.0 or Identity 2.0 , the central theme here is verification - in this case of a person or her work. It may yet turn out to be a killer theme globally as well as in the Indian context.

Indians are definitely not alone in fudging resumes , as this NY Times article shows. I feel more credit card fraud probably happens in US/UK than in India , and some recent call center cases gained much more adverse publicity courtesy the anti-outsourcing brigade.

There are some startups out there building job referral sites, that is , akin to LinkedIn, you could refer someone you know for a job opening. I think this is not a fool proof solution for the majority. And here is why.

The number of white collar jobs in IT/ITES companies in India is a fraction of the number of students graduating each year in different fields. An even smaller fraction is the number of students deemed "employable". Sure, there are lot of smart kids coming out of colleges. But given our demographics, the "also-rans" are huge in number. This leads to competition , but mostly at the entry level. Once you cross the threshold into an MNC or an Infy/Wipro/TCS/likes and bag a handful of years as experience, its pretty much your world for the taking.

If you don't know what I am talking about, go visit the open walk-in for a big software company in Bangalore. Someone I know almost got killed in a stampede during one such walk-in.

Job consultants have been around in India for a long enough time. But most of these smaller shops have a really bad reputation for screening quality freshers. Their screening process is as transparent as a wall, inside jobs are common, and test administration is closer to a farce. No wonder IT/ITES companies discover fudged resumes and poor communicators down the line.

The pressing need ,or shall we say opportunity,therefore, is of an identity verification cum selection company, targeted mainly at freshers in IT/ITES and having the following three attributes : 1) Inviolability 2) Transparency 3) Flexibility. Doas any such company exist in India?

India and the Internet

While browsing aimlessly, I stumbled upon this piece of data at http://www.internetworldstats.com/stats3.htm. You might already know some of these figures , but being a DI freak, I made some interesting observations-

* There is a strong correlation between internet penetration and economic development. Japan, SouthKorea,Singapore,Taiwan and South Korea at the highest tier; Bangladesh,Myanmar,Nepal and some central Asian countries at the lowest tier; while China,Indonesia,Phillipines and Thailand form the bulk of the middle tier. India, with 3.5% penetration, is still way way closer to the lower tier than the middle tier.

What is mind-boggling, for me at least, is that this correlation holds even when you look at figures from Europe ; with Nordic countries leading the pack followed by western europe and then central and eastern europe.

* Pakistan, India's never-to-be forgotten neighbor, increased penetration by a staggering 9000% over 2000-2007. Even though it started off with a small base, this is a stupendous achievement nonetheless and something India could look at. I personally think for too long the IT mandarins in the Indian government(both union and state) have focused on aspects like outsourcing and FDI without looking at domestic penetration as a critical component.

* Broadband penetration in India is around 0.1% but is growing the fastest(about 20% per month). No prizes for guessing if this growth is primarily urban or rural. Why do MTNL and BSNL ,both public sector companies, continue to the most dominant broadband ISP's? My answer- existing infrastructure and right of way. Can we have a fairer playing field please? 256 Kbps isn't exactly the fastest, I could do with 2-4 times more. I want to live my SecondLife minus the display hiccups and work from home.

* Worldwide, urbanization and Internet penetration are correlated. Countries of Western and northern Europe and US are more than 80% urban and penetration is close to 70%. I think this makes sense , with the much higher urban population density a good incentive for ISP's , especially broadband. With more than 50% of India's population continuing to be rural by 2025, more than 500 million rural people would live on the other side of the digital divide. Maybe Intel is right- WiMax is the way to go in India. After all, who is going to lay DSL cables in 0.5 million villages with fewer than 10,000 residents each?

*Add the fact that 40% of India is below 15 years of age, you get a closer picture of who you are designing your website for.

Next up , I will look at the split of young,urban internet users across different segments.

Do It Online - The Indian way

What do www.seventymm.com , www.compareindia.com and www.hungrybangalore.com have in common?

These are all internet ventures targeted at the Indian consumer albeit none of them is an online shopping site ( remember the baazee wannabes?). Indians just don't like to shop online, partly because there aren't a whole lot of really good (read cheap) deals available. Moreover , buying something more expensive or long lasting than an FMCG tends to be a see-touch-feel collective family shopping exercise for the vast majority who are "just" able to afford the widest TV, the hottest (literally) microwave or the tallest hatchback. This is the biggest reason Dell has not been able to make a dent in the Indian PC market. Note how even the advertisements position these goods for the whole family. This is the reality of a developing country with a growing,family oriented, middle class.

Does this make internet ventures obsolete? Far from it. Each of the three companies I listed above , I suspect , understand the psyche of the internet savvy Indian consumer. They address real needs - searching and renting a movie title for your movie buff daughter , comparing brands of washing machines for your mom(sorry, barring exceptions, this is a decision that moms make in most Indian households. Call me sexist if you will.) or ordering late night dinner from a restaurant 10 km away. None of these ventures claim to be substitues of real shopping , rather each provides a service where either a) Brick & Mortar mom-pop stores are unreliable,non-existent or unorganized , like movie rentals and food delivery or b) the website is just a precursor, like compareindia, to the actual shopping. Note the common theme is that the stakes for the consumer are minimal if the product- a movie rental or a family dinner- turns out to be lower than expected quality. And no one ever lost anything by visiting a comparison only site. The same lower stakes will make customers fickle- don't expect them to stick if your services ( delivery time for dinner , for example) are not of the best quality every time.

There are others , online bus ticketing (www.redbus.in) and comparing real estate ( www.magicbricks.com) , which are taking a similar approach and are worth a dekko.

India Technology Fund

Intel Capital is an arm of Intel Corp which invests worldwide in technology companies which are strategially aligned with Intel's plans for creating more IT growth/spend. It is , in a sense , a corporate VC whose aim is not only handsome financial return from its investments but more importantly newer/bigger markets to sell products from the parent company.

Intel Cap has a 250 million dollar India Technology Fund aimed primarily at companies targeting the Indian IT market. See the link :
https://www.intelportfolio.com/cps/portlist_fund.asp?fund=itf

From optical networking to media/entertainment to rural e-governance , the range of investments by ITF is impressive.

Interested entrepreneurs can contact them at http://www.intel.com/capital/submit.htm

A document which could be very useful to entrepreneurs approaching Intel Capital is at
http://www.intel.com/capital/download/Talking%20_to_a_VC.pdf

This doc goes into a bit of detail about points to keep in mind while raising VC money

Key issues and steps in the investment process include the following:
• Raising capital with venture capital is about growing a business.
• Put yourself in the investor’s shoes and criticize your own proposals.
• Know your audience.
• Prepare a business plan and an executive summary.
• Value your business and set your negotiating boundaries.
• It costs time and real money to raise capital.
• You will likely need experienced legal advice.
• Get ready for a road show.
• Be prepared to start the negotiation and open your company for external scrutiny.
• Be prepared for changes in governance.
• Understand the different roles of the entrepreneur, the CEO, and the shareholder.

More inside the doc.

OnYoMo

No , this is not a Japanese horror flick. It is the name of a search based startup incubated at IIT-Delhi and stands for , quite simply, On Your Move. See www.onyomo.com for more details.

I like the fact the problem(s) this company is trying to solve is a)real and b) relevant. With a growing economy , people travel more , for shorter periods, and to places which change and become unfamiliar at a rapid pace. So , if I am in Delhi for a 2 day trip and have the evening to myself , I might want to go and have a drink in a nearby bar. Or have a relaxing(!) bungee jump. I have tried such searches on google and yahoo and have never got good responses within my attention span which , admittedly, is quite short. But I guess that is the case with most people who use search engines. How many of you really go on to the next page of search results unless you are a) an academic or b) a geek or c) your life (or job) depended on it or d) all of the above ?

I think it is also a myth that most people know their cities - you might have heard of "parathe waali gali" in chandni chowk but you wouldn't know of every such street in Delhi. Even if you are a Delhiite, you probably wouldn't know that QBA is probably the only classy lounge in Connaught Place. Most of our cities are already headed towards becoming gigantic urban agglomerations : Delhi and Mumbai are already there and Bangalore is getting there too. There is too much information out there which I don't know and don't need to know until I want a drink :) .

A clincher for this product may be that they are ramping it up to work on mobiles through sms ,which is the way to go for an average Indian city user. After all , most people don't have/use GPRS on their mobiles ( to connect to web) nor would they want to look for a PC while they are out on a metro station. I also think that this market is quite niche and not big enough for the googles and yahoos to chase. They are addressing global problems.

All in all , a good idea and I hope it creates some solid momentum.

Virtualization

Virtualization in computer parlance is the abstraction of real resources into virtual ones. One of the first steps in virtualization was taken when the Operating System was invented. The OS allows multiple applications to share the resources of the computer - microprocessor as well as peripherals.

Virtualization in the current scenario is targeted towards the data center that houses a company's information. It makes much more sense today because the advent of multi-core chips makes available as much computing power on one chip as was available on a mid-range server a decade ago. The optimal sharing of physical resources allows possibility of greater power savings in the data center translating into lower cost. If done correctly , it can also make the job of IT administrators easier by presenting a single unified operating environment.

Virtualization comes in two flavors - software virtualization and hardware-software virtualization. The first type allows multiple Operating Systems to run on a virtualization software which fools the OSes to think that each OS is in full control of the machine. In reality , the virtualization software runs on a native OS (Windows , for example) and isolates the higher level OSes from one another. Thus you could run multiple copies of Windows on one machine. VMWare is the biggest player in this market. (www.vmware.com) . Java virtual machine(JVM) is another example of virtualization software which allows java code to run on any platform.

The second type is more comprehensive and more ambitious. SW virtualization is not very efficient due to overhead of multiple software layers. SW-HW virtualization provides a hardware operating environment which allows multiple OSes to run simulataneously with each OS isolated from another. This requires support in hardware , both in the processor as well as the peripheral controllers. IBM,Sun,Intel and AMD , all microprocessor makers, now provide support for virtualization. I called this SW-HW virtualization since depending on the implementation , the OS also needs to change to support it. This is clearly possible for Sun and IBM since they make OS for their own computers but next to impossible for x86 makers -Intel and AMD- who have to contend with an independent and humunguous Microsoft. This also explains the somewhat different approaches taken by Sun and IBM on one hand and x86 on the other. Intel also has Itanium but as of now , it is nowhere as important as x86.


A less mentioned aspect of virtualization is the ability to virtualize peripheral resources - commonly called IO virtualization. An important subset of IOV ( not to be confused with an intel technology of same name) is storage virtualization. I think SV is the hottest market opportunity in computer world today given the exponential growth of information to be stored and the flux in the SV technologies with no clear leader and no established standards. HP,EMC(which acquired VMware) and the traditional storage players like LSI logic and Adaptec are curently slugging it out here.

Looking into the crystal ball, I see virtualization picking up pace in the cellphone space as well with power savings ( and increased ON time) as the major driver. Virtualization could also maket things easier between incompatible software and cellphone vendors. A lot of mobile games and apps are Java based so a single interface , similar to a JVM for mobiles, may be the next killer idea.

Cricket World cup 2007

Like most Indians, I am a cricket fanatic but I prefer to play football these days due to time contraints. Now that the world cup is on , I will be hooked on to cricinfo and/or the telly for the next 1.5 months. However , I find the articles on cricinfo much more interesting and insightful than the kind of drivel that TV commentators dish out.

Which makes me wonder if I can watch live cricket/highlights on my cellphone while sitting in a Wi-Fi enabled Barista or coffee day. Thoughts? What about just commentary on the phone? Like the good old radio days. Sounds pretty good to me. Or what about watching an MMS based on subscription - remember "that" six Sachin hit off Shoaib Akhtar in 2003 world cup. Or the "cup" that Gibbs dropped in 1999.

Information on Indian VC space

These are some of the blogs and links for those interested in the Indian VC space.

http://www.vccircle.com/blog
http://ventureintelligence.blogspot.com/
http://www.venturewoods.org/

There is some pretty useful information out there to be mined. Also , check out
http://www.indiavca.org/
and
http://www.us-ivca.org/

http://www.nvca.org/ is the equivalent of indiavca in the US.

Introduction to Venture Capital

A very concise and effective slideshow on VC by Will Price of the Hummer WinBald Venture partners.
http://www.slideshare.net/pricew/introduction-to-venture-capital/

What exactly is Private Equity?

VC is one of the types of private equity - as opposed to public equity- where an individual or a group of individual funds your business to reap a much better return later through sale or IPO. To understand VC , it is important to understand the larger PE picture.

An excellent note detailing careers in Private Equity is found here :
http://mba.tuck.dartmouth.edu/pages/clubs/peclub/pdfs/Private_Equity_Careers.pdf

In typical PE language , General Partners are the folks who raise a fund and Limited Partners are folks who invest their money in the fund. The PE firm charges fees for fund management during the lifetime of a fund, the fees being typically 1-3% , and when an investment is sold or publicly listed , LP's share is returned at hurdle rate : 8-10% . Profits above the hurdle rate are split between GP's and LP's according to a prior formula. The GP's share is called Carried Interest or just Carry. Usually , non-partners in a PE firm receive a salary but minimum to no carry.

A quick summary would describe different PE investment types as :

VC - Early stage companies , typically these companies would have already raised seed funding through a wealthy individual , also known as an angel investor. Few VC's invest directly at the seed stage.

LBO/Leveraged Buy Out - Mature companies with a recent history of underperformance or business groups which are not directly relevant to a company's goals anymore. PE folks expect to add value and then sell it to another company or to the public via the stock market.

Mezzanine - These funds usually invest in companies with strong growth potential. Its basically a kind of compound interest loan where the investee does not have to pay full interest until maturity - say 5 years. On maturity , the interest repayment rate would be higher than a straight debt instrument , so typically Mezzanine funds invest in companies which will have excellent cash flow in near to mid term future.

Secondaries/Funds of Funds - These are firms/organizations which invest in other funds - including both VC and LBO - by buying a stake from Limited partners before the fund matures.
This generates some short term cash flow for LP's since lifetime of a fund can be upto 10 years.

The Holy grail of Indian VC

Why? Everyone I have spoken to so far shakes his/her head when they hear I aim to ride the VC wave in India. This blog is an attempt to understand the entire VC scene in India , not just tech VC. No , what you read about in businessworld is the PE(Private Equity) boom. PE folks typically invest in mature companies looking to expand/grow. In contrast , a venture capitalist invests in early stage companies. And if you have just an idea and/or a business plan , you are looking for angel investors - individuals who will bet their own little fortune on you.

Seed funding is still hard to come by in India. A report by Rafiq Dossani at Stanford University, sponsored by TiE, puts the percent of total risk capital invested in early/seed stage firms in India at 6.9. (FY2004). The corresponding figures for Israel,UK and US are 32,39 and 29. Even China's figure is nearly double - 12.5.

Read the report here :

http://aparc.stanford.edu/publications/accessing_earlystage_risk_capital_in_india/

The aim of this blog is two fold. First , discuss what prevents the emergence of the truly innovative startups from India. Second, challenge the conventional/classical model of VC as it exists today and discuss what model would be better suited to the Indian ecosystem.

More than the numbers or the theories , which you can find in the report above or elsewhere, I would attempt to discuss this with real examples - early stage startups,entrepreneurs,VCs ,deals which went through and which didn't. Any implicit networking would be an added bonus , ofcourse.