Ritesh Baglani from IDG Ventures Speaks at Web Innovation 2009.

Posted by Deepanwita Chatterjee

at April 29, 2009

(1 votes, average: 5.00 out of 5)

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Ritesh Baglani from IDG Ventures is speaking at Web Innovation 2009, and I am LIVE Blogging the event, and its a pleasure listening to Ritesh!

Ritesh starts by introducing IDG Ventures, which is a technology focussed early stage VC Funding house which focusses on software and product services, Internet, Mobile, Engineering and manufacturing side.

He makes certain interesting and useful observations about the internet market.

He speaks about the ‘Utility leads the online market’, where he mentions the ‘holy trinity’ - travel, jobs and matrimony.

He says that these businesses took an offline process, which was a basic service and replicted it online. He says that property and education are fairly important areas. They are need based and provide real value to the consumer and their business model was similar to the job business model. He also says that ‘Auto’ is a place where there is similar dynamics are into play.

He mentiones that there is a conception that pure advertising business model is unviable. He mentions Rediff makes 1 dollar advertising money per unique user. For other players who do not have as big a user base this amount is even less. Acquisition and retainment cost is a huge portion of the revenue. Exceptions are there for sites with high engagement like Facebook.

He mentiones that in the online, travel and matrimony businesses the end user pays. Though e-commerce is an emerging area but there are many issues in e-commerce like payment handling and logistics. For travel the acquisition cost for one ticket sale is very high and a online travel agent can make a maximum of rs 200 for one ticket sale. So, it is important to scale up in order to create real value.

Customized e-commerce

He makes an interesting point by mentioning customized e-commerce like user designed t-shirts. The margins are very high as compared to the usual e-commerce sites. Though the cost of logistics are still high for customized e-commerce portals but the profits are also high.

Rich media models

He says that rich media models are unviable in india, reasons being bandwidth being a severe constraint. But exceptions are there example being YouTube which is very popular. Global partners dominate this area as there are less local differentiators.

Tech enables and intermediaries

He says that tech enables and intermediaries will create value. Business models like web hosting, online advertising companies are profitable. How successful they are depends upon whether or not they can scale. But still there is less than 10 pure technology companies on the internet.

Thank you Ritesh, I am sure this information will be very useful for budding entrepreneurs.