FOR DOTCOMS TO SURVIVE....

They need to find innovative ways of to make profit
Dotcoms are down, but are they out? M.A.Arun spoke to B.G.Mahesh, Co-founder and CEO of Indiainfo.com Ltd., to find out what went wrong with the dotcoms in India. Mahesh started Mahesh.com the most popular personal site ever by an Indian. In 1994 and since then has seen the industry grow and nosedive at a scorching pace. As the head of a noted dotcom, he has taken the roller-coaster ride himself.

Right Serve has closed. Indya has failed. Sify is on sale, Go4i has gone. What killed dotcoms in India?
Indian companies tried to leapfrog in eight months what the US companies did over six years without figuring out the market. So the size of companies and their spending were not in proportion to the market. You don't need to hire 40 or 50 people to run a business that can potentially sell only one bouquet of flowers a day.

Indiainfo.com realized this a year ago and was the first dotcom to scale down. We got lot of bad publicity for laying off at that time but now everyone is doing the same. Dotcoms also did not get good support from key players such as media. Even when dotcoms do something good, such as Indiainfo.com getting ISO 9001 certificate, there is hardly any reporting on it. Many Indian newspapers have their own portals. They prefer to promote them and refuse to even cover others. This is not the way CNN deals with AOL.

Further, dotcoms focused on Nasdaq and eyeballs ignoring revenue and other fundamentals.

Why were so many dotcoms mismanaged?
Most dotcoms were in a hurry. They assumed that by hiring high-flying professionals they could meet their business targets as soon as possible. They realized-as we did last August-that just hiring employees with high salaries would not work.

Also, most dotcoms had no experience in the business they were in. Many vice presidents, who looked after content, did not know that their medium was different from Print and TV.

Did dotcoms have a good understanding of what their audience wanted?Dotcoms relied more on analysts than their own users to understand what their audience wanted and tried to transplant the US experiences in India. Pets are a billion dollar Industry in the US. But in India, pets are usually given leftover food. So there is no future for channels for pets, but many portals still have them.

Dotcoms have also not been responsive to changing user needs. For example, with the slow down jobs and career issues have become critically important. Instead of focusing on topics like that, dotcoms are still talking about parties, dating and exotic holidays.

Indiainfo.com (previously Mahesh.com) has been around for seven years and shares an emotional bond with its audience. Very few dotcoms have the kind of experience we have. Even we should have done more homework before we set up our auction channel. Then, we might have realized that for auctions to succeed online, there should be a tradition of off-line auctions in the country-as there are garage sales in the US.

Is the user base adequate in India to make dotcoms profitable?The market is small. It can support only three or four dotcoms. By themselves NRIs constitute a viable market, while Indians within the country do not. But as there is some overlap between them, dotcoms can target both of them together. Along with numbers, the percentage of users who spend time online is important.

Most of Indiainfo.com's e-commerce revenues come from NRIs who shop for people in India. The percentage of Indians with the country who spend online is small, though there is a steady growth in this segment. A few companies say 80 percent of their buyers come from within the country. I am skeptical about these claims.

With online ads and e-commerce down, can dotcoms make money?
It won't work if I say I will earn my bread only through e-commerce or ads. So we are focusing on other sources, particularly off-line, to generate more revenue. We offer web solutions, develop courseware, and offer placements, among other things. The trick is to develop more revenue-streams using existing resources. We have begun offering Japanese language training for IT professionals. Even the training will be held on our premises.

Does going off-line for revenue mean that there is not much potential to do so online?
No. Our. Online and off-line operations are interdependent. For example, while we may make a placement off-line, it is great help to be able to accept applications online. Dotcoms have to find innovative ways of to make profit.

No investor or entrepreneur or employee seems to be interested in dotcoms at the moment. Is there a future for dotcoms in India?If there is a good plan I think VCs will still Invest and good talent will still come in. Dotcoms have to address the reality squarely and show profitability. Then interest in the industry will revive.