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India Web2.0 - troubling signs ahead ?

April 9, 2007 · Posted in Entrepreneurship, Tech tidbit 

As per this story in ET, Indian startups focusing on Web2.0 are less attractive to VC’s and these startups are finding a longer waiting period from the VC community. These ventures which fall into the category of Web 2.0 are the social networking sites, localised city portals and specialized verticals. Prashanth Prakash of Erasmic Investment Ventures says that for the last three-four months, there has not been much of investment decisions taking place, with the VC community largely sitting on the sidelines.

Just a couple of days earlier, Deepak Kamra, general partner - Canaan Partners said:

“We are closely looking at start-ups in the Internet and product development space. Even if the models are cloned from the West, we insist on a high level of localisation.” He, however, added that Web 2.0 companies are not on his “priority list”. “Yes, there’s a frenzy in the US over these models such as YouTube clones, etc. However, we are excited only about transaction-based models.”

Two news stories offering perspectives of two early stage VC’s in India. Both echoing the same cautious, alarming tone.

Discouraging news ? Hardly. I think its a good indicator about the plausibility about pure-play Web2.0 sites in India.

My perspective:

I think the single biggest reason impeding Indian Web2.0 can probably be attributed to the low level of Internet penetration in India.

Besides that, I think part of the reason is also the way that the Indian Internet landscape has evolved. The next breed of Indian startups are hoping to clone some of the Web2.0 success stories - social networking, video sharing, photo sharing - in the Indian market. And in my opinion, the Indian Internet market has not matured enough for some of these ideas to be successful (other than Orkut - SN space). To me, it seems more like we skipped puberty and are directly entering adulthood.

Let me explain what I mean.

In the US, Web2.0 has been a culmination of the market evolving slowly with increased Internet adoption by the users. Web2.0 has not been an overnight phenomenon. The Internet adoption increased, digital advertising became commonplace, online payments and payment systems took shape, more and more verticals emerged and finally Internet became pervasive. On the contrary, Internet adoption is still very low in India. Digital advertising, the sole means of revenue generation for pure-play-Web2.0 sites, is still in its infancy in India. We’re yet to see a online payment system to take shape in India. Other than the pre-Web-1.0 portals (Rediff, Sify, Indiatimes), you have the matrimonial portals (Shaadi, BharatMatrimony), job portals (Monster India, naukri),news portals (NDTV, AajTak) and travel portals (Yatra, MakeMyTrip). Where are some of the other verticals in India ?

Where are the equivalents of Weather.com, Ticketmaster.com, Webmd.com, CitySearch.com ? Where is the Indian Paypal ?

Murugavel Janakiraman, founder and CEO, BharatMatrimony.com puts it very succintly (echoes exactly the thoughts I captured here):

several services are yet to come online in India. For example, there is no one service in India – similar to Ticketmaster in the US - that consumers can go to for ordering tickets for concerts and other events. He recommended entrepreneurs to avoid becoming “me too” players – like creating yet another social networking/photo-sharing/blogging/video-sharing site – and focus instead on doing something “fundamentally different” and keep the Indian context in mind.

Besides this, Web2.0 pure-play sites also need to consider the fact that majority of the online Indian population has already adopted YouTube, Flickr, Orkut etc. You would face an uphill battle in luring the Indian users from these sites to your site. Not to mention that monetization would also be a daunting task.

What do you think ? Is Indian Web2.0 a hype or reality ? Do you agree - disagree ?


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Comments

4 Responses to “India Web2.0 - troubling signs ahead ?”

  1. Rahul Roy-Chowdhury on April 10th, 2007 12:24 am

    India’s web 2.0 is mobile. I agree with your general point about too much hype around internet-based services. As you point out, an ad-support revenue model is not sustainable in India today. However, I think the comparison with the US is a bit misleading because all issues around wide availabaility and transaction-based revenue are being solved for mobile today. This will happen much before they will be solved for internet-based apps.

  2. pranav on April 10th, 2007 3:37 pm

    Well Rahul, thats true. India is making great strides on the mobile front. However, when it comes to browsing the web / filling online forms, I personally dont prefer the mobile medium. for emails / sms / entertainment / games etc, mobile is fine.

    The two main hindrances facing the mobile medium in my view:
    1) clunky method of key inputs
    2) Small screen size

    Unless something changes drastically in the mobile handset design, these two reasons may become a hindrance in Internet access via the mobile. SMS is great and very widely used - but SMS has a limitation on # of characters.

  3. Web2.0 and India feasibility « Startup Dunia - Indian startups and Entrepreneurship on April 26th, 2007 4:07 pm

    [...] Yes..I think so. We are still missing a large chunk of the first generation websites - a point that I’ve tried to capture earlier (I’ll try to refrain from rehashing the same thing again). At the same time, We’ve had the benefit of observing the evolution of websites in the US. Based on these observations, one of the lessons we can learn is that the Web2.0 paradigm is a better way of connecting with users, increasing usability and building an online community. So, if and when these missing online services emerge in India, we can apply the Web2.0 paradigm to these services. Note that when I talk about applying the Web2.0 paradigm, I imply the above (2) points - usability and interactivity features. I dont mean that we can fast forward directly from portals and news sites to video sharing sites. We still need an online payment system, a WebMd, a TicketMaster, a citysearch etc.. [...]

  4. Bill Compton on June 4th, 2007 5:32 pm

    Hi Jim. Photos i received. Thanks