Rajesh Jain is known as the man who almost single handedly brought on the dotcom boom to India after selling off his Internet venture, IndiaWorld.com, to Satyam for Rs 499 crore in 1999. He is, in effect, the first dotcom multi-millionaire that India produced. Post the deal, Jain may not have hogged as much limelight, but he has been quietly putting together an ecosystem of enterprises that combine the best of digital technology with utility and value. He is certainly sold on the idea that the mobile is the future of media and communications, and is working on making Netcore, his company which offers SMS content, a leader in that area. Tarana Khan caught up with Jain during one of his business trips to New Delhi to discuss the opportunities for permission-based mobile marketing in India.

Broadband and Mobile have to become a part of infrastructure thinking

Q. Mr Jain, how do you think the entrepreneurial environment has changed since you started off in 1995 with IndiaWorld? And how different are the challenges today for digital entrepreneurs?

A. I actually started my entrepreneurship in 1992, but I started the Internet business in 1995. If you look at these 15-odd years, it can be broken up into three phases. During 1994-2000, it was the early days of the Internet. PC penetration was low and access to the Internet was not easy. For us, the primary market was outside of India. So, most of the sites we created targeted NRIs (non-resident Indians).

And then, with the launch of BSNL and Sify, the Internet population started growing. My deal happened in 1999, which opened the floodgates for a lot of entrepreneurs. They started seeing that the medium had a lot of potential and opportunities. As with any emerging medium, it needed external funding. Unfortunately, in India, that was low because the markets in the US were down and that shut off venture capitalists (VCs). Few companies could thrive in that era. Then, there was a trough when some companies made an exit. At that time, the Internet penetration was growing, but there was another revolution happening. That was the mobile revolution. This started around 2004-05, with handset prices dropping and call charges coming down. If you look at the last few years, I have seen a lot of VCs get into the Internet and mobile space.

Now, what are the challenges? On the Internet, the challenge is the number of users and utilities - services which make a difference to people's lives. Other than email, classifieds, trading and ticketing, not much has happened there. What I think of as the N3 web - Now, New, Near Web - hasn't really happened. Part of the problem is that access is mainly from cyber cafes, so the Internet has not become a part of people's lives.

At the same time, in the mobile world, the penetration and usage patterns have grown. It presents a tremendous opportunity in the mobile ecosystem. Mobile allows micro payments to be made through billing, which is missing on the Internet, which relies mainly on advertising. While the Internet will grow in India, I believe there will be greater opportunities in the mobile space. The challenge is to figure out innovative services for the mobile and go beyond the current value added services, which are ringtones, caller ringback tones, music and wallpapers. We need services which will delight users, and which are permission based. I think entrepreneurial activity is happening, but more needs to happen… more categories need to flow into this stage and we need more early stage investment.

Q. Elaborating on your concept of the N3 Web, you have written in your blog that the Internet is more than Web 2.0 and user generated content and social networking, and that it needs to be useful in the health and education space. Could you explain that further?

A. There are two aspects to the Internet - the PC and the mobile. PC-based access is very much around the 'reference web'. The mobile has the opportunity to be the primary mode of access and interaction for the 'incremental web'. So, I can use the mobile to find directions. Today, handsets are very good in terms of utility and the price points are very attractive. The networks are also there and the tariffs are very reasonable. This creates the platform for driving new services. Where you will see the initial impact is in day to day activities. There are life's empty moments and life's 'know now' moments. When you are waiting for someone, for example, you are in an empty moment and you can use your mobile to check stock quotes or text someone. In the 'know now' moments, you want to know something immediately instead of going and searching on the web. Now, if you can overlay mobile services with permission, you can give consumers only the information they want.

Q. What about the Internet on the PC?

A. I think in the next few years, when you mention the Internet, it will primarily mean the mobile Internet. In most cases, the mobile will be the preferred mode of access to the Internet and maybe the only mode of access. You will still have a fixed computer in your life, but when you are on the move, you will use the mobile. So, you will have to create services which can work seamlessly on both devices.

On the mobile, there are multiple points of interaction such as SMS or an application. On the PC, it is ultimately the browser. On the mobile, information is push based, while on the Internet, it is pull based. So, I can subscribe to content on the mobile. Just like on the Internet, the search box has become the starting point for user interaction and monetisation of the web, my belief is that on the mobile phone, it's going to be the SMS subscription with a brand of your choice. So, if there's a special on the mall in the neighbourhood, you want to know. It's called 'invertising' - advertising that consumers invite into their lives. This is a marketer's dream (come true). For example, if you buy a new Nokia phone, you can get free updates from them about the features of the phone and about upgrading to a new model.

So, on a medium where people get opt-in content, it can also be a channel for businesses to interact directly with their consumers. On one side is customer acquisition and on the other side is deepening the relationship with customers. I think we have only hit the tip of the iceberg in terms of the services we have seen in the first phase of the mobile era in India.

On the Internet, we are seeing two transitions. One is from 'me' to 'us' where you are part of some community such as Facebook. The second transition is from text and images to rich media in flash and video clips. I think we will see the same transitions on the mobile.

Q. So, do you think that the future will essentially be mobile centric?

A. Absolutely, because you can see the richness in mobile phones. On the iPhone, you can access the web as you see it on the PC. If you look at the macro picture, a vast majority of the people with the ability to spend have a mobile phone. The advertising and marketing industry is not yet recognising this fact. Now, they have to think of building user engagement. The reality has moved a little ahead, I think, of where the industry is. Companies need to make the appropriate shift in their budgets.

Q. With the DNC (Do-not-call) list, we have initiated permission marketing guidelines. How challenging is it going to be for a marketer in this environment?

A. The DNC list is only a part of it (permission marketing). At the end of the day, less than three per cent of the user base has actually registered for it. But whether people have registered or not, we have to be cognisant of the fact that you do not want to spam people. Actually, users do want interactions, but they don't know how to go about it... The essence is that each one of us has a desire to create multiple relationships with the kirana store or the book shop in our locality. There are a lot of things in life where it's more convenient to get things instead of going and looking for them. So, little bits of information are there, which companies need to integrate together. That's where invertising comes in.

Q. But why do you think we are not seeing enough innovation in mobile content and mobile advertising?

A. I think, because something has worked very well in the industry... because ringtones, wallpapers, Bollywood, cricket, etc., have become a Rs 4,000 crore industry, where users are spending on consuming this content, we are not looking beyond.

On the Internet, at one time, banner advertising was great, but something new came with text advertising. In the same way, we can leverage the power of SMS to build the right of way. Perhaps we need different types of players to come in who are more open to trying out new things.

Q. So, do you think the operators need to evolve or the content providers?

A. I think it is a combination of both. Operators are a key part of the value chain and have deep knowledge about the consumers. They know about my social circle. But I think they need to start seeing themselves as customer relationship managers. They need to see how they can work with content providers to deepen their relationship with customers. Operators should be looking at building a platform which allows service and content providers to come and thrive in the ecosystem. And India really has the ability to lead in the mobile data services segment. This is partly because we have a large market and partly because we have a market which is present across the spectrum, with people paying between zero rupees a month and Rs 5,000 a month.

Actually, there are four new media which are coming up at the same time - OOH, FM, Internet and mobile. Each medium has its own attributes, but the mobile, because of its interactive nature, has the greatest potential. However, it requires out-of-box thinking to realise its potential.

Q. How was MyToday conceptualised and how did you manage build a two million-plus subscriber base?

A. We first started with a mobile portal (mytoday.mobi), which was a natural thing for me to do after my experience with Internet portals. But what we realised was that 3G is still a year away. And we realised SMS subscription is the best way to provide bite-sized content. For example, if you have a book on health, you may just keep it on the shelf, but if I give you health tips one at a time, you will read it and may even follow it! But we did not want to make it a pure request-supply model, which everyone else is doing. We decided to do an SMS based publish-subscribe model, which is how MyToday got launched.

Once we launched it, we saw the service pick up completely on its own through word of mouth. People liked the content they were getting and shared it with their friends. The simplicity of the service with the 'Start' and 'Stop' metaphors makes it easy for people to try new services, where they can subscribe and unsubscribe easily. People can decide whether they want to receive the MyToday service or not. These factors helped the service proliferate over the last year and a half.

Q. And how forthcoming have advertisers been on MyToday?

A. We started selling advertising only in the last few months because we needed to achieve a critical mass. In the last four-five months, we have had more than 50 campaigns. There are five types of campaigns we do: the first is top of mind recall, which is the reinforcement of an existing campaign. So, Big Bazaar and Shopper's Stop advertised to reinforce the sales they were having. All ad messages are tagged on the content, and no ad is sent separately. The second type of advertising is interactive: to drive a response. Outlook Profit did a campaign recently when the new magazine was launched. There were two serial ads - to make people aware about the product and to offer them a discount on the subscription.

The third type of campaign is voting, which was used by RK Misra for the Lead India campaign. He used the medium to encourage people to vote for him. The fourth type is where something can be downloaded. So, the ad can have a link which leads to a page or an application. Moneycontrol.com did a campaign where they offered their finance application for download.

The fifth is where there can be serial or storyboard ads. We can have a sequential campaign, where there is a set of messages. Birla Sunlife did this type of campaign for its Saral insurance product with five serial messages.

Q. Looking at the companies you have invested in, many of them are in the mobile space, but there are a couple in rural services, too. What are your plans in that sector?

A. . I think what you will see going ahead is that a lot of the new user addition coming from semi-urban, rural India. I think the focus has to be different for rural India. For urban India, it's mostly lifestyle and convenience services. For rural India, we have to look at services which bridge the information gap, which are more utility oriented and help in increasing income, and which are livelihood enhancing. For this, we could look at voice services, for one.

Q. You have also invested in a company which is creating a $100 PC. How is that progressing?

A. Yes, the company, Novatium, has launched a solution with three partners - a cable provider in Chennai, which has achieved 500 users in a year and a half; a cable provider in Guwahati, and we recently tied up with MTNL in Delhi. It has also been deployed in Mauritius through Mauritius Telecom. We have more than 2,000 users across all these entities at this time. The technology, user experience and business model have been perfected in the last year. We are planning to make the PC a utility device, and customers pay Rs 5,000 upfront and Rs 400-500 per month for the service, that is, computing, connectivity and applications. Our primary target is people who go to cyber cafes. There, they have limited time and the experience is very different. Apart from affordability, we also want to make it simple. We are putting together applications to make it easy to maintain the computer, because the next set of users is not tech savvy.

What we are looking at now is how to drive more services. For example, video services. We can actually drive rich media bandwidth on the server, which was not possible earlier. We want to enrich the PC experience through multiple dimensions.

Q. Are you developing other applications besides MyToday at Netcore?

A. I think our primary focus is on leveraging SMS, where the potential is significant. Over time, we believe access to our mobile portal, Mytoday.mobi, will increase. Over the next few years, as we have 3G and 3.5G in India, there will be players in rich media. One of the companies we have invested in is Rajshri Media, which has significant assets in video. That will help us graduate from text based services to Internet based services and finally to multimedia based services.

Q. You mean to say that Rajshri Media will also get on to the mobile?

A. Absolutely. You could possibly get video clips of yoga aasans (postures) on your mobile. Or you could have funny clips or short stories for kids. It's really up to our imagination on what can be done.

The medium is so rich that it can support a diversity of business models and that is for the industry to come in and leverage.

Q. What are the other areas you are looking at investing in?

A. I think the few areas which have great potential going ahead are re-thinking education in India, not just by building another good school, but by using the digital infrastructure and giving mass education to 200 million people in India. That's the greatest contribution technology can make. I think India cannot afford to lose the opportunity for having a skilled workforce in the future.

The other thing is to take the models which are working in India to other emerging markets - such as companies in the field of mobile payments, personal health-care records and wireless communication. They can take their products outside India, and build a success story.

Q. One last question...as broadband and mobile penetration increases in the country, how do you think it will impact the advertising industry in India? Currently, digital forms only a small part of the advertisers' budgets...

A. You can segment this into two parts. One part of this is the spends which happen on brand building, lead generation, new customer acquisition, and so on. And that's really what's happening on the Internet. But where I think there is a tremendous opportunity is how you can use the interactivity of the mobile for building deeper relationships. This is something we could not have imagined a few years ago because it was just not possible. For example, if you use the location of the mobile user, you can open up a new set of location based services. Lots of people have talked about this, but I believe India has the ability to become the forerunner here.

For that to happen, broadband and mobile really have to become part of the infrastructure thinking. Just as we think of roads, airports and power, we need to start thinking of the digital environment as core infrastructure for this country. I think there is no reason why we cannot have state of the art innovation in services here in India. That's going to spur entrepreneurship and will create the next set of large companies in India. Once we make that happen, it's better for advertisers, marketers and businesses.

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