Archives for: February 2007

02/26/07

02:35:26 pm, Categories: Entrepreneurship, Business Trends, KPO  

Entrepreneurship in the high-tech sector will undergo some dramatic changes over the next decade. I have developed a little visual model for the processes used by entrepreneurs to raise money, hire exec talent and develop & support products. Big caveat here. My experience is primarily in the high-tech sector and the only offshore experience I have today is in India. So, please extrapolate to other sectors and the BRIC (Brazil, Russia, India, China) block as appropriate.

A couple of notes on how I came up with the above model.

  • The model in the 1980s is pretty obvious. This how the Ciscos & Oracles started
  • The model in the 1990s started leveraging the BPO trend to move the product development & support functions to India
  • The 2000s, particularly 2005 - 2006, have seen the emergence of a new breed of start-ups in India. By some accounts, over 200 KPO startups have been launched in India in 2006. Also, we saw most Tier 1 & 2 VC firms from the Bay Area set aside funds to seed India based companies. On average, these funds have corpuses to the tune of multiple hundred million dollars! Sequoia Cap, for example, has an India focused fund of $400M. Today, the situation in India is that there is too much money chasing too few deals. My unvarnished assessment is that this smells like the Bay Area of the mid 1990s where there were many good technologists but few seasoned entrepreneurs. But as with most dire situations, this too shall improve. Which leads us to the 2010s
  • The 2010s, I believe, will see a good set of start-ups in India, particularly focused on KPO (Knowledge Process Outsourcing) offerings. The availability of money, a sustained advantage in the KPO market, improving infrastructure & a maturing labor force will be the cornerstones for a large number of these start-ups. By some measures, the Indian KPO market will be the same size as its BPO market ($17B) by 2010. I have already run across several KPO firms that have good ideas & less than stellar management, but have secured seed funding. Deja vu, anyone? Hopefully we will have the business discipline to not get too excited and remember the key lessons from the mid-1990s.

So what does this mean for the entrepreneur? I think the entrepreneur of the 2010s has to:

  • Develop global expertise in short-order. GPs at tier 1 VC firms are on record saying that outsourcing of some sort is now a requisite in business plans, because otherwise, the start-up is wasting the VC's money
  • Hire cross border exec teams. Critically, the entrepreneur will need to ensure that his professional network is well balanced and reflects the reality on the ground
  • Gain first hand experience of the emerging markets. It is a question of when, not if, the BRIC block will transform itself from a cost center to a key market that entrepreneurs will need to be acutely aware of. My bet is that will happen in the early part of next decade (2011 - 2015)

Would be glad to hear what you have to say ...

Sampath

Permalink 508 words by Sampath, 1677 views • Send feedback

02/07/07

There is a mind-numbing amount of information in the public domain about how Web 2.0 and Enterprise 2.0 will change the world for ever. This article attempts to provide an entrepreneur’s perspective on these trends and distill the key issues with a bit of common sense. The term Web 2.0 was first coined by Tim O’Reilly to denote a new breed of Internet services companies. The key traits of companies in this new breed, according to O’Reilly, were:

  • They were platform plays. E.g. eBay & YouTube
  • They had a social networking component. E.g. MySpace, Skype & Amazon
  • They had community driven content. E.g. Wikipedia & eBay
  • They released users from the software development lifecycle, meaning that users would access Web 2.0 services using a simple web browser. In tech-speak, this is called Software as a Service or Saas

Whether the above differentiators really warrant a new category or not is debatable. One could easily argue that these basic characteristics should have been incorporated into most, well thought-out “Web 1.0” Internet companies that were launched in the mid 1990s and that we are only now coming around to fully understand the implications. Nevertheless, Web 2.0 is a handy way to characterize these companies & somewhat comprehend the implications.

From its consumer underpinnings, Web 2.0 evolved over 2005 – 2006 to take on an enterprise flavor. Terms like Me, Inc., Prosumer and Enterprise 2.0 have been used to describe companies adopting this approach. Examples of companies in this space include SalesForce.com, SugarCRM, NetSuite etc. The case that is being made here is that business services can be delivered using a consumer model to professionals, hence the Prosumer go-to-market strategy. According to Philip Lay at TCG Advisors, the cornerstones of Enterprise 2.0 are

  • Software as a Service or SaaS
  • Service Oriented Architecture (SOA, read Web Services) and
  • Open Source Computing (E.g. Ajax)

Philip rightly points out that now (2007) is not the time for us to get overly excited about Enterprise 2.0. We are not going to see Fortune 500 companies jump onto this bandwagon and move all their front & back office applications to an Enterprise 2.0 model in a big way. What we will see is niche solutions being brought to market with this model, focusing on narrow audiences & their key business problems. Over the next decade or so, the broader Enterprise 2.0 market should pick up a good bit of steam.

OK, now for the entrepreneur’s perspective. My thoughts on launching an Enterprise 2.0 start-up:

  • It is seductive to get caught in the jargon / tech-speak and draw analogies with companies with eBay, Google & Amazon. Have been guilty of getting caught in that trap myself on several occasions. Instead of getting carried away with technologies and analogies, focus on pressing business problems that your core audience loses sleep over today
  • Deliver compelling, comprehensive solutions & value propositions to these critical business problems. How will you get your target audience what they need faster, better, & cheaper? SaaS & Web2.0 are just enablers. How will you deliver highly targeted, personalized, context-driven business services to individual professionals? How will you incorporate “mass-customization” into your solutions?
  • Ensure that there is a large market for the solutions you are offering and that you have a scalable plan to get to the finish line

Thoughts?

Sampath

Permalink 543 words by Sampath, 1446 views • Send feedback