What does it take to pioneer a new industry from India? Particularly if the industry is just emerging globally, and the rules of the game and factors for success are not clear? In The Wave Rider, Ajit Balakrishnan, founder of Rediff.com provides a first-person account of such an experience.
Ajit Balakrishnan & Computers
Ajit’s introduction to computers was at IIM Calcutta when he was doing his MBA. But his involvement with the computer industry began in the early 1980s. Till I read this book, I didn’t realize that Ajit Balakrishnan was one of the co-founder of PSI Datasystems, one of the early computer pioneers in India. (By that time, Ajit had already been successful in co-founding Rediffusion with Arun Nanda, one of the first of a new generation of less constrained and more creative advertising companies. Rediffusion became famous at the national level for working with the Congress party on one of the first political advertising campaigns in India).
PSI was one of those brave companies back in the 1980s that dared to think it could make computer hardware for the Indian market in spite of the then extant import restrictions and crippling duties. A lack of venture funding made things worse. Not surprisingly, the company struggled, and the Indian promoters ultimately brought in Bull, a French company, as a joint venture partner. But even Bull’s participation couldn’t save PSI in those days of tight controls and a limited domestic market. (Other companies which tried to make hardware at that time including HCL and Wipro finally found their salvation in moving to the software business. Ajit relates how PSI-Bull had the opportunity to do that too, but PSI-Bull turned down the possibility of software development for GE in the early 1990s because Bull had no interest in being in software outsourcing!).
Trigger for Rediff.com
Ajit’s trigger to start what would ultimately become Rediff came from attending a management program at Harvard Business School, soon after the decline of the hardware venture. A case study discussion on CompuServe, one of the first companies to try and create virtual communities aroused Ajit’s interest. This interest got sharpened further in 1993 when, during a stint in the UK, he had the experience of visiting CompuServe chat rooms.
One important thing I realized from this book is that Ajit got a whole lot more first-hand international exposure than the average Indian. All credit to him that he used this to do something different. As I wrote in my earlier post on Steve Jobs, greater exposure to a broad variety of experiences and contexts is critical if we want Indians to be radical innovators!
The advent of the browser made the fledgling internet accessible to the individual user. In 1996, Ajit got a leased line from VSNL (I am quite surprised that he got it so easily, Ajit explains this away by saying that he was one of the only people seeking a leased line at that time!) and rediff.com was into business. By 1998, the company started providing “lightning fast email” when it realized that users were spending very little time at the rediff site itself. That was a very successful initiative, many people continue to have rediffmail.com IDs even today!
The Role of Global Capital
One point that comes through clearly from Ajit’s account is the role played by global capital and the flavor of the season in an enterprise accessing capital. As an early player in the Indian internet space, rediff.com was the focus of interest of investors in the heady days of the internet boom. Ajit recounts how investment bankers chased him to do an issue of American Depository Receipts to capitalize on this interest. Though Ajit was unsure about whether he needed the money, and even less sure about how he would service the capital once it was raised, he realized that bankers were likely to invest in some other company in case he demurred. By the time he decided to go ahead with this, the internet boom was beginning to stall, so there were anxious moments before the issue was successful. But the end result was that rediff.com was the first Indian internet company listed in the US and now had a war chest to work with. However this did not prevent the struggle of trying to meet investor expectations
Redif.com went public in 2000 and faced a baptism by fire when they had to face a class action lawsuit from disappointed investors as early as mid-2001. The financial damages were minimal as rediff had insurance against this eventuality, but this was the first time that Ajit had to face the litigious nature of American investors. (In recent years, companies as tony as Infosys have had to face up to the reality of American lawsuits. My fear is that as Indian companies become larger and more successful, much more of this will follow. But Indian companies are ill-prepared for such eventualities.)
Ajit’s close involvement with some of the new legal challenges posed by the internet persuaded him to get involved in the drafting of new cyberlaws. Interestingly , though, he seems to have some sympathy for the government’s position and is not a supporter of unfettered privacy on the net.
The Difficulty in Riding Waves
The difficulty in riding waves, the subject of this book is reflected in the experience of Rediff.com itself. Considering it has been around for such a long time, it still remains small, and is currently not profitable. Why did this happen? (The book doesn’t cover this, the following comments are my own).
I can recall a time when I used to visit the rediff site to get consolidated Indian news. But that was before Google News India became available and provided an “easy to scan” page with all the top headlines. At one time, rediff.com was a major source of India news to the NRI community. But now several alternate channels including live television exist. At some point, Rediff bought India Abroad, a well-regarded Indian community newspaper in the US, but that doesn’t seem to be doing well amidst the steep decline in print in the US.
Rediff was one of the pioneers in the online marketplace space as well, though it appears that they have been overshadowed by the aggressive growth of specialized online retailers like flipkart.
Another Rediff.com business is a corporate email business that has large Indian corporations as customers. Though they have some big clients, I wonder about the future of this business when you have competition like google .
One business that looks exciting (and is growing fast too) is a local TV advertising business that allows local merchants to insert advertisements on a set of national channels in select cities.
On the whole, rediff seems to have caught the broad trends well, but not been as successful in consolidating and “winning” the trend.
But, I wouldn’t be too critical of Ajit and his team. At one time, Orkut was lauded as the pioneer of social media. But, just a few years later, Orkut was overtaken by Facebook. People have different explanations for why orkut failed – poor speed, badly designed UI, wrong technology choice, poor understanding of customers, engineering-driven, lack of fun, etc. Deciphering trends and what consumers will prefer is not always easy!
Returning to the book, I only wish that Ajit had devoted a larger part to narrating his personal experiences. The few experiences he has related are quite insightful, and I would have loved to read more.