So how does one figure out what to start …

As there is no fixed formula for starting a venture, I will re-count how we set out to doing what we do today at Ventuno.  

Srini and I used to work at TIBCO – a software company based out of Palo Alto.  Both of us were not happy with what we were doing.  I decided to come back to India and run a manufacturing unit – totally unrelated to what my background was and its a whole other story.  Srini decided to go back to school for his MBA at ISB.  After his MBA he ended up doing the same old routine and wanted to try out a hand in business.

We had some ideas on building something that would help outsourcing management more structured using an online software application.  Went about validating the idea with friends in the community and soon realized that everyone has an opinion Eventually after speaking to lots of people we decided against doing it and in hindsight it was a good decision.  

But we wanted to do something and were impatient.  My dad suggested taht if you want to do a startup, first register a company, get a space, get some services going in your area of expertise and figure out what you want to do; then you have no option.  Our ignorance and eagerness to start something helped us follow that thought. We did get some service assignments and did that for a year full time and still do some services to keep up our commitments.  But this really helped us setup basic infrastructure needed for any company like space, employees, cash flows, etc.  

Very soon we figured out that services is a head count game and multiples will never be attractive.  So we had to move away from it.  Internet had the promise and low investment needs to start got us thinking about doing something in that space.  Web 2.0 was the buzz word at that time and MySpace, Digg, and YouTube where written up about more than Coke, GE, and Boeing.  Will it work in India? I never thought it would but felt that a hybrid approach to 1.0 and 2.0 would be nice transistion to pureplay web 2.0.  We launched indiainteracts.com a social media site which marries professional content with user generated content for text and video and had some intial success. 

Soon we realized that although its easy to start an internet company with low investment, scaling it up needs deep pockets and we knew that we couldnt do that spending.  However, there was a silver lining in our efforts with indiainteracts.com – Video.  More people contacted us to find out about our video portion of indiainteracts than any other thing out there.  Thats when we realized that video unlike text is not easy to create, and make available online – let alone monetizing it.

We diverted all our attention to solve this problem and after a year at it we seem to have solved it satisfactorily and are currently in the process of figuring out how to scale it out in this troubled economic times.  

I guess what I am trying to say is there is no formula to figure out what to start, when to start or how to start.  Basically you dive in the pool and learn to swim.  The devil is in the details and those details are not very glamorus.  Its the passion that keeps you going.  Every entrepreneur will have his own story, most will not talk about the failures and details as its a very humbling experience and you have to find out on your own.  The ones that live through it will succeed and they deserve it. The ones that fail will go on to being great professionals as they will see things in a different light which a professional will never be able to do.

Ventuno; Due Diligence …

 

When you want to start something new, and there is no indicators on where and how to start; start with Google.  I started out with a framework to deliver the service – basically four boxes that made up the ecosystem for the proposed service and then set out to validate it by looking at history, trends in business and technology, and then a lots of assumptions.  I found writing about it made me think more clearly.  This is what I wrote and I stuck with it and after a year its started to pay off.

Every media distribution technology was built upon its predecessor. Television did not simply appear – it evolved from the radio. TV’s evolution is marked by a series of milestones; and several inventors, scientists, artists, financiers, corporations and even nations contributed to its progress. Most radio operators considered TV as an investment in future technology and did not see profits till the late 40s worked on two business models, namely subscriptions and advertisements.

Online video, like TV, is an outcome of a series of milestones rather than a single event. Traditional media companies embraced the Internet, both in the web 1.0 and 2.0 era, and have worked with both subscription and advertisement models. They have had little success with the subscription model making it clear that what worked in one medium will not necessarily work in another.

In the TV world, the consumer is bored of the normal linear scheduled television programming because you can’t interact with it, view it when and where you want, and easily distribute it. The content producers’ revenue potential is limited in the absence of on-demand services, limited artistic freedom, and lack of global reach. The marketer cannot target and measure his campaigns, and hence hopes their ads work andhave little control over the effectiveness of their marketing spend. Online video overcomes all these obstacles, paving a new way to consume, create, and distribute, video content.

In India, the success of online video depends on PC and broadband penetration. We add roughly 5.5 million PCs per year and our total broadband connections is 2.5 million against a target of 9 million by the year 2007! In spite of the low penetration, Alexa.com lists youtube.com as the 6^th most trafficked site in India making it clear that even at these penetration levels online video consumption is healthy. Reducing the cost of PCs and broadband connections and government’s speedy release of spectrum to enable rollout of 3G and WiMAX services and use of power lines will accelerate the broadband growth.

Success also depends on more players creating and publishing online videos. Traditional media companies are sitting on a huge inventory of quality video content. This is not available online because of costs involved for conversion to online format, effective monetization avenues, and complexity of building and maintaining a video infrastructure. Internet companies are not skilled enough to create quality video content and video sourcing avenues, too, were not only limited, but also is very expensive to them. Right approach to bridging this gap would exponentially increase online video content in a very short span of time.

Indian online ad market is 400 crores today and this is expected to touch 4000 crores by 2012. What percentage of this is going to be from video ads or ads leveraging videos depends on the video ad inventory available and effective means to target and measure these ads. Once this is in place there is little that needs to be done, as the benefits of video ads far out weigh text/banner ads, to move existing and new advertisers to leverage video ad inventory.

The recent spurt of ad networks in India, elicited comments like “India doesn’t need another ad network, but more publishers”. This is truer in the case of video as there is not only a lack of content, but also a lesser number of publishers.  For this reason ad networks will fail as they are prone to just add video ads to their existing offerings. A better approach is to create an eco-system where content producers, content publishers, advertisers and platform owners come together to create value for all stakeholders.