Product entrepreneurs don’t have templates; they don’t find it easy. They fight odds. What they need is some dose of inspiration. And that came from Rajan Anandan, MD of Google India, at NPC 2013. Backed by data, he said many billion dollar companies are being created in India. Stating that we in India tend to be too self-critical about ourselves that we don’t notice stellar achievements, he provided examples of enterprises in India that have surpassed global giants.
TCS has a market value of $70 billion, much higher than hp. India has seven publicly traded ITES companies that have a market value of more than $1 billion. Saying that in the United States, there are 30 publicly traded consumer Internet companies at more than $1billion in market value in addition to 10 publicly traded SaaS companies that are worth over $1 billion and China has 17 publicly traded Internet companies worth over $1 billion, he made a positive prediction that India will have at least 10 to 12 companies in Internet and product space having a market value of $1 billion by 2020. The lone shining star in the product space is JustDial valued at $1.2 billion right now.
Private valuations put InMobi and Flipkart also in the billion dollar range. Close on the heels of the billion dollar valuations are InfoEdge and MakeMyTrip. “Instead of buying gold, buy the stocks of InfoEdge and MakeMyTrip,” he said in a lighter vein. In fact, InfoEdge’s valuation of $700 million is higher than its global competitor Monster.
So, where are the next billion dollar opportunities? According to Rajan Anandan, these are in SaaS, ad tech, local, e-commerce and payments.
SaaS: Rajan Anandan estimates that out of 100 million SMBs globally, 20 million have an online presence. Over the next decade, 90% of SMBs (which makes it 90 million) are likely to get online. This provides unparalleled opportunities to build SaaS businesses focused on SMBs.
Ad tech: The global ad industry currently valued at $100 billion will get to $200 billion by 2020, according to Rajan. Hyperlocal ads and video ads will challenge existing ad models. Several key trends including mobile, video, local and major changes in display advertising such as exchanges and real-time bidding (RTB) are creating many new opportunities to innovate in ad tech. Building large ad tech businesses would require a global focus. InMobi is an example of a company out of India that can be built from India with a global focus. Vizury and Adnear are early-stage companies in India providing differentiated services.
Local: India has over 12 million small businesses having more than 5 employees. Currently, only 150,000 of them advertise in print. In the following decade, millions of these businesses will advertise on digital and mobile for the first time, creating very interesting growth opportunities for companies are both horizontally (JustDial, Getit, Quickr) and vertically (Zomato) focussed.
e-commerce: Rajan dispelled the notion that e-commerce is a bubble. Given that India is going to be having 200 million users of Internet by end of 2013 (adding 3 to 4 million every month), already 30 million of them are transacting online. Excluding travel, 12 million transact online at present. Rajan predicted that the number of Internet users will grow to 500 million by 2020 and at least 100 million of them are likely to transact online. This will lead to creation of an ecommerce industry with over $50 billion in gross merchandise value.
Payments: Payments online is going to explode given the sheer number of users on Internet. This space presents another interesting opportunity.