'Future of internet will be built around mobile phone'
Here's talking to Rajesh Jain, CEO, Netcore. Jain ignited a dotcom storm in India when his portal - IndiaWorld - was sold in November ’99 for $115m to Sify
Rajesh Jain has a lot in common with Marc Andreeson, co-founder of Netscape. Just as the Netscape IPO in 1995 is widely believed to have sparked the internet boom in the US, Jain ignited a dotcom storm in India when his portal — IndiaWorld — was sold in November ’99 for $115m to Sify.
That deal signaled to millions in that country that the web was not just a passing techie fad and that entrepreneurs could make serious money from it. In recent years, Jain, 39, has deliberately kept a low profile, though he makes his views on technology issues widely known through his blog, emergic.org.
Jain, who is now the CEO of Netcore, a Linux-based messaging software company, was a panelist earlier this year at the ’06 Supernova conference in San Francisco. He met with Knowledge@Wharton in his offices in Mumbai to discuss how mobile phones could hold the key to the internet’s evolution in India and other emerging economies.
What was your assessment of the infrastructure of the web at ‘that’ time, and how does it compare with your view of the internet in India today?
When we launched IndiaWorld in March ’95, commercial internet access was not available in India. In fact, the portal that we launched at that time was essentially meant for Indians who lived outside the country. Commercial internet access in India became available in August ’95. So initially we had to dial the US in order to upload our content; we had our servers there.
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Since then, of course, the internet has grown quite a bit in India, but I believe that it has two real shortcomings. One is the low PC penetration and limited broadband, which really restricts usage of the web. The second problem is that the services that are available on the internet in India are still very limited. If you go beyond the news, email, and those kinds of things, they still don’t touch other facets of daily life. As a result, the internet still hasn’t become a utility in people’s lives. If the Internet has not yet become a utility in people’s lives because of the low PC penetration, what does this mean for the future?
I believe another dimension will define the future of the internet in India, and that’s going to be built around the mobile phone. Given the way that mobile phones have taken off in India during the past four to five years, I am convinced that more people in India will access the internet through mobile phones than through computers linked to narrowband or broadband connections. We need to start thinking about the mobile internet differently than we do about the PC internet.
How rapidly is the mobile platform growing in India?
Today India has more than 110m mobile users — and this is growing by 4m to 5m a month. People are not really using their cells for mobile data services in terms of the internet and related services. They are limiting it to voice and SMS and perhaps a few other features, such as using the camera.
One of the mistakes we have made with telecom policy in India is that we haven’t unbundled the local loop. The government-owned telecom firms — Bharat Sanchar Nigam and Mahanagar Telephone Nigam — control about 45m lines. In contrast, in China they set up a different company for the mobile business.
What implications does the growth of the mobile platform in India have for content providers?
I think for content providers the mobile internet really is the opportunity. This is not just about scaling down pages you could access through a PC to a small screen. It means thinking about how a connected device in the hands of tens of millions of people could make a difference.
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It involves the whole issue of user-generated content, since these devices support the ability to take photographs or videos and share these with other people. For example, you could have citizen reporters take pictures of traffic jams and ask people to avoid certain routes — and other people could subscribe to such services. Today this is reported on FM radio but the reach is still very limited.
Where do you see opportunities for software and telecom companies?
For software companies, the opportunity is to build the technologies required for some of these services. India could become their test market, and then these services could be rolled out to other emerging markets. The telecom companies and mobile operators need to start looking at value-added services.
Average revenues per user are falling even though the customer base is growing dramatically, and there is enough room for growth. The user base of 100m today will probably grow to 250m in the next couple of years. What is important now is that operators should start thinking about creating an ecosystem that allows content providers and software companies to thrive in this environment. That is what NTT DoCoMo did in Japan with it’s i-Mode service — it built out the ecosystem.
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Where are the most interesting opportunities for entrepreneurs, especially in the mobile market?
The focus of most of the venture capitalists I have spoken with seems to be on the consumer internet and the mobile market. Having said that, there don’t seem to be too many companies in which the VCs can invest. Most VCs are looking at investing $3m to $5m, but a lot of the start-ups actually need investments of $1m. Given their fund sizes, it’s difficult for VCs to have lots of these $1m investments. That is their challenge.
I believe we need a new approach to venture capital in India. There is a very limited legacy, so it’s not going to evolve the way the US did or even perhaps the way China did. In India there are lots of gaps across multiple value chains.
Sometimes the VCs tend to behave more like private equity firms by investing in companies that don’t need the capital, or which are pre-IPO companies. For example, the investment by Kleiner Perkins into job-search web site Naukri.com was a pre-IPO investment. There was really nothing “venture” about it. Westbridge’s investment in Times Internet was of the same type. Those things need to change. You need to really get in there, work with people and focus on building out the ecosystem.
What are the principal risks?
This is a “build-it-and-they-will-come” approach. If you build it and they don’t come, that’s a problem. If you are too early, you lose. If you are too late, you lose. The risk is that you may be too early or too late. But that’s what all the great successes in the entrepreneurial world have faced. You need luck on your side also to make it work.
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If the broadband infrastructure were to improve dramatically five years from now, could that disrupt the growth of the mobile platform in India?
I don’t see that happening. My view of the future is that there will be two screens in people’s lives: a small screen that they carry around and a large one that is available to them at home, at the office, or through cybercafés. You need both. Connectivity should be available wherever you go through wireless networks.
(Reproduced with permission from Knowledge@Wharton © 2006. The Trustees of the University of Pennsylvania. All rights reserved.)
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