Overview: Building Businesses in a Meltdown (Analyst Perspective)

Posted by Paritosh Sharma

at January 30, 2009

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Overview: Building Businesses in a Meltdown (Analyst Perspective) Mr. Sanjeev Bikhchandani (Founder & CEO) (Naukri.com) is opening the session, its 9:25 and the room is almost brimming up with people, good to see an enthusiastic crowd in the morning, discussing probably the most relevant topic which is doing the rounds in the corporate arena today: the downturn and how do you survive. The day is going to be an exciting one, with internet companies presenting their case studies on how they survived the entire downturn.

OMLogic is Blogging the entire event LIVE announcing the launch of its maiden online event and conferences promotion platform OMShare.

The session hasn’t even started and the room is already abuzz with the discussions on downturn and what people are doing, I think you would not probably need an ice –breaker in this session. Mr. Mahendra Swarup (Chief Mentor, SITG) is being invited on stage by Sanjeev. Mahendra is now introducing Jai Saxena (Associate Director, Ernst and Young). Jai has worked with premier financial institutions and hence would definitely be able to give many an insights into the topic. Jai starts with introducing what is the Internet being used for today, I think the slide clearly reflects a good amount of research which has gone in. Jai also presents the demographical aspect of how Internet is being used, by discussing the rate of permeation. Internet is permeating in non metros. mahendra-swarup at TiE Internet SiG, Delhi

mahendra-swarup at TiE Internet SiG, Delhi

“office is a large place from where people access the internet”

Almost 50 million users today that we have. Mobile device will clearly be the medium to access the net in the times to come. Out of the billion people who access the net every day, almost 50 million are in India. The online advertising market, Jai says it’s a small market, if you compared it with TV for example. The long term outlook always remains bullish. If we look at it from investment perspective, its actually pretty healthy. Jai shows the PE deals which have happened in India in the internet companies.

“Investment climate has now turned uncertain”

They have had their personal wealth impacted

Earning a carry is no motivation

The quantum of startups getting funded in the coming period will come down as I see it, says Jai Jai presents a good perspective of the investment scenario, and he gives a clear indication of the fact that most historical parallels won’t work today.

“There’s blood on the street”, if you look back in history, on how downturns have gotten out, well clearly this time as well, this is not going to be a 6 month phenomena.

The advertising markets have crashed

Building Businesses In A Meltdown Analyst Perspective

View more presentations from Omshare Community. (tags: meltodown building)

What should entrepreneurs do? Business model innovation is highly overrated. Customizing conventional services online offers the surer path.

Focus on today and the big picture. Ignore the rest
Be revenue driven rather than valuation driven

“the challenge is to manage for the short term while continuing to dream for the long term” – Jack Welch I think it’s very very true for the internet industry.

“what internet gurus are talking about, I searched on the net”

Use a zero based budgeting approach
Keep cost structures as low as possible
Manage cash flows expeditiously

“Successful strategies form last downturn”

Focus on transaction revenue (shaadi.com)
Reduce dependence on singular revenue streams (online advertising)
Create a need based pull model

So from the investor’s perspective, most deals are likely to be fire-sales

According to me, investors would be looking at your business like any other business; there is no other kind of prism that online market is being looked at.

The time to put the dollars on the table will definitely be prolonged.

For internet businesses specifically, valuation is not the most critical parameter in these times Jai also focuses on what kinds of ventures will raise growth capital

Businesses who set shop well before the boom
Something starting up right now as everything was imploding
Ventures who have strategic fit

In a downturn you can establish successful businesses, I believe.

Can I put my money into a bank, well the question is does the bank exist, can I be a realty magnet, well does the market exist? Jai ends the session with the session open for Q&A. This is one of the most interesting Q&A sessions in times. The whole session has now gone into a discussion mode