Vinit Nijhawan: Serial Entrepreneur, Venture Capitalist

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    Predictions for 2009

    Here are my predictions for 2009:

    1. Buzz--The buzz topic of 2009 will be the shrinking of venture capital and private equity. The business model for this financial asset class is in need of change and until it does Limited Partners will lower their exposure to VC/PE.
    2. Exits--We will see a dramatic drop in M&A activity as a result of tight credit markets. We will see some recovery in the IPO market.
    3. National--We will experience a severe recession.
    4. International--India will recover from it's slowdown by Q2'09. China will not recover until 2010. 
    5. Mobile--The emergence of client-server software on smartphones and the growth of BtoC enterprise mobile apps (what I call CRM 3.0).

    Here is how I fared with my 2008 predictions:

    1. Buzz--The buzz topic of 2008 will continue to be energy and cleantech. We will see a huge growth in VC investments in such companies. I was right on. CleanTech investments by venture capital firms reached $4.1 billion up 52% with 277 deals in 2008. Source www.pwcmoneytree.com. 
    2. Exits--We will see a dramatic increase in cross-border M&A with many Indian and Chinese companies acquiring US and European companies. I was dead wrong. China cross-border M&A dropped by 30% and India by 51% in 2008. 
    3. National--We will experience a recession. Unfortunately I was right on. 
    4. International--The Flat World concept (Friedman) will be replaced with the lumpy world (Ghemawat). Companies will have to deal with a global skills shortage in very local ways. I was right on. In spite of a global recession some countries have fared much better, eg India as compared to the US and China.
    5. Mobile--Apple's greatest innovation in the iPhone is its browsing capability as a result the mobile internet will finally take off. I was right on. Browsing has taken off with the iPhone browing holding a commanding lead with a 3X increase in it's share of total (landline and mobile) browsing. 

    February 25, 2009 in Cellphone, Current Affairs, Internet, IPO, M&A, Music, Private Equity, Science, Venture Capital, Web/Tech | Permalink | Comments (1) | TrackBack (0)

    Passage to India Part 8

    Mumbai-Delhi Tuesday December 23

    I boarded the overnight train to Delhi at Bombay Central Terminal (the mixed use of old and new city names for Bombay is a metaphor for old and new India—the old structures retain the original Bombay and everything new is named Mumbai). I had forgotten to print out my e-ticket and was prepared to battle/sweet talk my way onto the train. My last train ride in India was over 20 years ago and I have a lasting memory of patiently standing in a queue to purchase a ticket that never moved as people muscled their way to the front of the queue. Getting on the train required sharp elbows and more than likely the conductor had sold your seat to the highest bidder. The contrast this time was stark. I had to pay Rs.50 ($1) to get a ticket printed out on the train. The familiar red-clad coolies/porters were still around but there was no need for their help, the boarding of the train was orderly, seats were assigned and the conductor was Amtrak-like amiable.

    The train departed Mumbai on time, the orderlies prepared my bed in the four-bed compartment, with spartan but crisply laundered sheets and I promptly went to sleep. A couple of hours later I was joined in my compartment by two gentlemen who had boarded at an unknown station. I was in the Rajdhani express train, a series of overnight trains between the metropolitan cities in India. My ticket had cost about $65, a flight would have been $110. I wanted to experience train travel and to get a sense of the geography of India’s industrial corridor, running between Mumbai and Delhi, encompassing the modern states of Maharashtra, Gujarat, the central state of Madhya Pradesh (MP), the tourist state of Rajasthan and the largest and one of the poorest states in India, Uttar Pradesh (UP). I was traveling on the most expensive ticket on the Rajdhani, the least expensive was about $1.50.

     

    I woke up at the crack of dawn when the porter entered the compartment to offer tea. I watched the sunrise over a misty, flat landscape. Everywhere I have been in India the sky is hazy. I cannot ascertain if it is industrial pollution, winter mist or smoke from wood fires, perhaps a mix of all three. Even here in the countryside the sky is hazy. It is as if the entire country is an incense filled temple. The passing landscape is a dusty brown and is dotted with patches of green marking small farms, stunted trees and an occasional herd of cows. Every thirty minutes or so we pass through a small town with a train station. Garbage is strewn everywhere on the tracks and occasionally there is a garbage dump alongside the tracks at the edge of a town, with foraging pigs and cows.

    One of my companions is a Sikh gentlemen whose cellphone jingles a bhangra ringtone every few minutes. He appears to be a little under the weather and sleeps in between calls and occasional visits from people on the train: “Papa-ji kaisay ho!” (How are you, pops?). Just passed a larger town called Ratlam. We must be in MP since this where my wife used to get off to go to Indorethe capital of MP and onto the hill station of Mau to visit her aunt.

    The landscape is greener now, dotted with yellow fields of mustard, irrigation fed no doubt as the last rainfall was likely during monsoons in July/August. The train passes over largely dry riverbeds. Power lines and telecom towers are everywhere. Motorcycles and trucks wait at level crossings. Kachrod station passes by in a flash of yellow walls and red bougainvillea. A field of cotton with a dozen men and women hand picking. A southbound flatbed freight train passes by, our train slows down with jerky braking, dwarf palms dot the sides of the tracks. I recall Yasheng Huang of MIT mentioning that the India is a tropical country while China is a temperate country and life is more difficult in tropical climates. Two days before Christmas I am sitting in an air conditioned train looking out at laborers working in what appears to be hot sun. In the bathroom I poke my hand out the open window and air feels cool. We fly by Nagda, a larger town in MP. I have a conversation with a porter in the hallway. Apparently this is a special Rajdhani that runs during holiday periods. He says that is not as luxurious as the daily Rajdhani from Mumbai to Delhi.

    I don a long-sleeved t-shirt as the AC is slightly chilly. I have managed to avoid sickness so far, neither catching a virus nor bacteria via contaminated food or water. My travelling companion has a bad cold and I want to be cautious. I offer him a Motrin from my medicine kit.

    We slow down to pass by Suwasa. There are a few schoolgirls riding their bicycles on the road parallel to the train tracks, all dressed in a school colored salwar kamiz. Their braided ponytails and dopatas (long scarves) trail in the breeze as they chat and ride. The landscape is increasingly turning yellow, with fields and fields of mustard. The country side appears to have more people. A child is flying a kite, apparently not made of traditional tissue paper but of foil. I had met a businessman who is supplying foil for kites and my first thought was the environmental damage all these abandoned kits would cause.

     

    Stopped in Kota for 10 minutes. Got a chance to step out and stretch my legs. Lunch was being loaded. Crossed the Chambol river really a stream threading the middle of a huge flood plain. Got into a vigorous conversation with my cabin mates about the problems in India. This seems to be a favorite topic of conversation. Just found out the Sikh gentleman Pratap Singh Fouzdar who is a minor television celebrity who won the 2nd season of reality TV show The Great Indian Laughter Challenge. That’s why everyone keeps stopping by to say hello to him. On top of this he is a minor industrialist, manufacturing synchromesh gears for jeeps and army vehicles out of Agra. I am astonished by the level of entrepreneurship in India. There is no social safety net so everyone is hustling to make a living. Every commercial transaction has an element of negotiation, generally humorously exchanged. There is surprisingly very little pleading or bitterness evident from the poorest of street hawkers when you don’t buy—someone else from the mass of consumers will.

    The other cabin mate is a Bihari from Patna who is a project manager for Neptune, a manufacturer of industrial power conditioning equipment. They commented on the sarkari (subservient) nature of Indians: conditioned in pre-colonial and colonial times to a hierarchy that exploited them: peasants by landowners (zamindars); they in turn by the Raja’s and the Raja’s by the British. This hierarchy sucked wealth out of the country during colonial times.

    We arrived in Delhi almost two hours late, so much for Lalu-inspired efficiency! The car park at the Nizammudin train station was packed and chaotic. As with most activities in India, great intent, lousy execution.

    Nizammudin Limited

     

     DSC00029

    The Great Indian Laughter Champion

    DSC00088

    January 03, 2009 in Cellphone, Current Affairs, Film, Food and Drink, Internet, Music, Religion, Television, Travel, Web/Tech | Permalink | Comments (1) | TrackBack (0)

    Predictions for 2007

    A little into the year but here are my predictions for 2007:

    1. Buzz--The buzz topic of 2007 will be energy and cleantech. We will see a huge growth in VC investments in such companies.
    2. Exits--After a six year hiatus Nasdaq IPOs are back and we will see a significant increase in Nasdaq technology company IPOs.
    3. National--We will see a slowdown in growth and may even experience a recession.
    4. International--There will be significant growth in US VC firms investing in India, especially in Infrastructure related growth opportunities.
    5. Mobile--The Apple iPhone will have disappointing sales.

    BTW, here is my scorecard on my 2006 predictions:

    1. Buzz--Like Web 2.0 was the buzz topic of 2005, the buzz topic of 2006 will be video over the internet. We will see an explosion of amateur video content creation with distribution to PCs . I was dead on: Google acquired YouTube for billions, and internet video companies raised hundreds of millions from VCs.
    2. Exits--We will see many US technology companies looking to exit on the London Stock Exchange's AIM exchange which has a lower hurdle than Nasdaq but is increasingly providing liquidity. I was partially right, there were a few AIM listings but not as many as I thought there would be.
    3. National--After being eclipsed by silicon valley in 2005 Massachusetts will be back: companies to watch are Airvana, Netezza, Starent, Virtusa, Airwide, Confluent Surgical. I was dead on: Airvana, Netezza, Starent and Virtusa all filed for Nasdaq IPOs. Confluent Surgical was acquired for $245M by Tyco. The CEOs of all these companies will be on a panel at www.tieconeast.com on June 16th. Airwide added over 15 new wireless operator customers.
    4. International--Indian IT companies will acquire US and European IT companies. I was dead on: 60% of total M&A or $8.4B was outbound M&A, though pharma was in the lead and accounted for $2.2B. IT M&A was second.
    5. Mobile--Music downloads to cellphones (songs not ringtones) will become a billion dollar market. Wireless broadband for "last-mile" internet access by companies will expand dramatically. I was partially right, Clearwire had a billion dollar IPO. Music downloads grew more slowly than wireless "last mile".

    May 06, 2007 in Cellphone, Internet, IPO, M&A, Music, Private Equity, Venture Capital, Web/Tech | Permalink | Comments (1) | TrackBack (0)

    The Battle of the Smartphone-- Google Phone vs Apple iPhone vs Microsoft

    There is a huge amount of interest in the lowly cellphone, why, because a 960M of them were sold last year. The majority of them were so-called feature and entry-level phones. Only 50M or so were smartphones, the category that Google and Apple are planning to dominate by leveraging their ubiquitous branding and user interface (UI) skills. So what exactly are Google and Apple planning?

    There has been a great deal of speculation in the blogosphere about the nature of the upcoming Google Phone: http://blogs.business2.com/apple/2007/03/photo_is_this_t.html and http://www.engadget.com/2007/03/15/google-exec-confirms-phone-in-the-labs/. Much of what is being discussed is nonsense. Here are my predictions:

    Apple: Enough has been written on the iPhone's features but not on Apple's strategic moves. The most important is Apple sees the necessity of partnering with wireless carriers. This partnership is unlike the relationship other handset vendors have with carriers. Nokia, Motorola, Samsung and other handset vendors do develop new handset concepts but in the end they customise "standard" handsets to carrier specifications. Apple's iPhone is more akin to RIM where the carrier is a distribution channel for a standard iPhone handset. As far as the iPhone's two differentiated features: a touchscreen and voicemail integration, these remind of the Apple Newton, Steve Jobs' invention of the PDA category. It was not a huge success and I am betting that the iPhone will not be a huge success. It is very hard to change user behavior and the telephone keypad and Qwerty keyboard have been around for over 30 years. Nonetheless I hope the iPhone makes me a convert to touchscreens.

    Google: Google's business model is slightly different for their Google phone. Google has spent more than $50M to acquire companies (i.e. Android) and software licenses to create a handset operating system (OS) that I believe Google intends to offer handset manufacturers for free (essentially open source like Linux). Just like most PC users enter the internet via Google's home page, Google's intention is to have cellphone users do the same by making their handset OS ubiquitous. So far HTC is running the Google OS on a handset but I believe many other handset ODMs will follow. In this business model the handset ODMs will offer the Google Phone to carriers for distribution.

    Microsoft: Microsoft is about the release Windows Mobile 6.0. When I was CEO of Kinetic we developed the first Windows Mobile (then called Windows CE) vehicle computer using version 2.0. We were on the bleeding edge and soon discovered that Microsoft had no idea how to develop an embedded OS nor understood user behavior for mobile phones. Microsoft's strategy of connecting Windows Mobile to Windows Office appeals to large enterprises but I'm certain they will lose out in the consumer market. I was urging Microsoft's Windows CE product managers to focus on the enterprise market back in 1999 but they felt that market was too small. Just deserts--Microsoft sold just 10M Windows Mobile OSs in 2006.

    Nokia: Nokia's wholly owned OS subsidiary Symbian is more ubiquitous than any of the other smartphone OSs as it dominates the high end of the feature phone market. My prediction is that Symbian will soon be used only in Nokia handsets. I also believe that it will be the big loser in the smartphone OS battles.

    Motorola: Motorola is betting on all the above OSs including embedded Linux but not Symbian. They will eventually become like Dell, dependent on TI (equivalent to Intel in the PC world) and OS vendors.

    March 16, 2007 in Cellphone, Current Affairs, Games, Internet, Music, Web/Tech | Permalink | Comments (1) | TrackBack (0)