Amid rampant failures of new-age entrepreneurs, few dotcom models excelled. Saji M.P. takes a look at some of them.
“If I were to join the dotcom bandwagon in 1999, I would not have done that, “says Dinesh Agarwal, one of a few in Delhi who survived in dotcom crash. This 32 year old successful entrepreneur dotcommend with his Indiamart in 1996, when hardly any one knew about the potentials of the Internet economy.
The successive years, especially 1998-99, saw small and medium enterpreneurs swarming around the ‘get-rich-quick’ idea. “I didn’t understand why people were getting into the business without realising the viability, “says Dinesh.
Most of these start ups had ideas as capital and a couple of PCs with a net connection as infrastructure. Needless to say, the ones who had VC (venture capitalist) back up had sound infrastructure. Three out of four metros viz Mumbai, Bangalore and Delhi suddenly turned out to be potential breeding grounds of dotcommers.
Faring in bad weather
Dotcom was a novel concept indeed. It still is. But once the boom set in, the idea spread at epidemic pace. In two years, it left a major chunk of new economy entrepreneurs financially dead. With the dotcom bubble bust, many entered the blue book of Dotcom extinction.
It seemed, regarding Internet business nobody could be as prophetic as Rohit Bhasin, Executive Director of PricewaterhouseCoopers, who in December of 2000 predicted a bleak future for the mushrooming start ups. He had said, “Ninety percent will die a natural death while nine percent of the rest will be sold out to brick and mortar companies. Only one percent of the existing dotcoms will be able to sail through as a stand alone business.”
The present dotcom status of Delhi elucidates his prophecy. The Capital, once a haven of portals with around 900-1000 players, has had its dotcom population dropped to eight to ten survivors!
The survivor community here, who fared even in the bad weather of weak economy, includes three B2B (Business-to-Business) portals namely Indiamart, Trade2Gain, Freemarket, India’s first job portal Naukri, Firstandsecond (on line bookshop), Archiesonline (gift site), and two education sites eGurucool and Careerlauncher.
There are scores of others, who have not closed down yet, but have gone into a self styled hibernation with their defunct portals and unupdated sites. While, some others are still humming and trying to be around when the net boom happens again.
Some dotcom instances show it is not absolutely a hopeless situation. For a few got merged while a host of others were taken over. Jaldi.com which stuttered the brink of a disaster, got merged with its parent company KLG, a software solution provider. “Jaldi is still doing business through KLG. We’re awaiting the right time to re-launch it,” says Kumud goyal, MD, KLG Systel Ltd. Nearly two months ago, Star TV took over bust affected Indya.com.
Shakeout : boon or bane ?
There were many who thought that filtering out of misfits and unfits was inevitable. They believe that the bust was a boon in disguise. Primarily, they point out, it has given them more space to play in their respective segments, which was ‘infested’ and ‘spoiled’ by so many players with ‘shoddy’ ideas. Secondly, this has given a whack to new entrants to think twice before investing in dotcom.
The washed away companies seem to have been paid for their innumerable mistakes. Their non-viable ideas, careless money spends, and attempts to replicate the abrupt successes of others annoyed the market.
The survivors allege, the busted companies could not even think of a new possible segment where they could operate. Instead, they tried to enter segments, where somebody had already taken a lead, without knowing how long they could stay there. Says Sanjeev Bikhchandani, CEO, Naukri.com, “The mistake everyone did was that they thought that the net was different from real world.”
Besides, the problem got aggravated when Internet and market remained immature to have so many ideas implemented. ” Only around ten percent of the netizens have matured enough to use the net for their benefits or business,” says Dinesh. In situations like this, Darwin’s theory of the fittest will rule the roost.
Early birds and vertical flight
Two major reasons for survival pointed out by many are the early mover advantage and the benefits of being vertical. In their respective competitive space, the first movers’ edge over the late comers is ‘eye balls’ (database of registered users in dotcom parlance) and traffic or hits, which they have gleaned over years.
This apart, many do agree to the viability of a vertical portal. In their opinion, it is more feasible than a horizontal portal and it can also specialise in that particular niche. Says B.V. Raman, President eGurucool, “We’ve been doing well because of the advantage of being vertical and our specialisation and well-defined approach.”
The risk factor involved in a horizontal portal is believed to have caused lots of dotcom casualties. The two horizontal sites Rediff and Indiatimes, despite having sound financial and infrastructure back-up, shook during economic slowdown. However, given the words of market feelers, both are now working towarards viability and profitability.
Indiamart, an early bird, is claimed to have over hundred per cent year-to- year growth and a profitability even during the fall out and recession. Naukri has also the same claim. Both reiterate their advantage of being pioneers in their respective spaces. Trade2Gain has also shown an 80 percent growth.
The surviving rest including Archiesonline are heading towards viability even though they admit having been affected. Archiesonline, which started in 2000, has a gestation period of two to two to five years for cash inflow. The company’s business during 2001 Diwali grew six times against same season in the previous year. “This shows we are growing and the market is still potential,” says Youhan Aria, Chief Officer, Logistics and finance, Archiesonline.com
However, brick and click, a hybrid of online and offline business, has also been pointed out as an enabler of more viable business. The practitioners of this mixed business insist that Internet should only be complementary to business. Purely web-enabled business, they say, will not succeed. Says Rakesh Malik, CEO, Trade2Gain, “Twenty five percent of business proposition can be done on the net and the rest should be in real world. This has led to our success.”
Back to banks
It was not mere lure of money that attracted so many entrepreneurs to dotcoms. They had ideas too. The VCs stopped funding once they found ‘fast buck’ ideas not working and business nonviable. Subsequently, thousands of new pasture seekers were pink slipped. However, attempts of some vanishing dotcoms to avoid retrenchment are really praiseworthy. Jaldi has retained 40 percent of its people with its parent company.
Many of dotcommers had left previous jobs mostly in banks and other FIs (financial institutions) like City bank and Morgan Stanley found themselves in no man’s land. They had none but one option- to go back to their old employers.
One man of ideas, who had quit City Bank to head Hindustan Times’ Portal goforI.com, had to make a ‘return to native.’ The survivors reparaphrased the old acronym B2B into ‘ back to banks’ to describe the new phenomenon.
Nevertheless, there are some people who would not give in so easily. The previous CEO of Indya.com was such one. He started his own marketing consultancy especially for online business.
Future holds in store
There was a time when adding the suffix ‘.com’ to every word was fashionable. The latest trend is to drop that sufix. Now, other business communities look down upon anything that is dotcom. There are at least survivors who really want to retrieve the past glory of dotcoms. “If there are some wonderful and smarter ideas that can work magic, that will definitely regain the lost fame of dotcoms,” says Rakesh.
The success stories of survivors have proved that ideas can definitely work wonders and make internet economy stronger. So far, so much of entrepreneurial abilities have come alive. This will definitely inspire more people. So many entrepreneurs are still hopeful and are ready to invest in this area. The survivors still anticipate competition from the new comers.
No matter what happens. Internet and online business and here to stay,portals will continue to be viewed, content will continue to attract surfers. And at the end of the day, there will be more survivors.