Get ready for TiECON East 2007

Welcome to the blog of TiECON East, an annual event organized by TiE Boston. The conference, held once a year in spring, is attended by venture capitalists, entrepreneurs, thought leaders, and anyone who gets excited by technology.

TiECON East 2006 was held in Boston in June. Dates for the 2007 conference have not been set yet. But why wait till then? I would like to invite you to learn more about TiE and join the organization. While TiECON East is held only once a year, there are several events organized each month in the Boston area.

If you have any questions and need help, please contact the TiE Boston office.

Information on the 2007 conference will be posted here as we make progress. In the meantime, if you wish to learn more about the conference in 2006, you are welcome to peruse this blog by using the navigation on the right.

This blog is run entirely by volunteer contributors and is expected to become more active once TiECON East 2007 planning commences.

- By Jay Dwivedi

Flattening world - What are you doing?

Last month I spent a week vacationing at the remote island of Utila in the Caribbean. With a population of just 2,000 people, the island has only a handful of automobiles - we rented a golf cart to get around - and the ferry ride to the port of La Ceiba is infrequent and expensive. But I am not writing this post to talk about Utila's white sandy beaches or what a great place it is for snorkeling and diving. In fact, what struck me the most about the island was the large number of foreign entrepreneurs - they run over half of the businesses, in many cases without even speaking the local language.

So when I read a United Nations report that has found that nearly 200 million people now live outside their country of origin, I realized that Utila provides an excellent case study of how flat the world is becoming and how entrepreneurs are taking advantage of the opportunities. According to the report, the number of people who have left their birthplace is up 25% since 1990. According to the Migration Policy Institute, the foreign-born population of the United States grew by 57 percent between 1990 and 2000, representing 12 percent of the population. And as many of you already know, many business models today allow you to "work" in a foreign country without ever leaving your country.

Implications of mobility

If we take the example of Utila, we can clearly see the advantages of mobility of people - and more specifically, entrepreneurs and capital. The foreign entrepreneurs have brought international-standard entertainment, dining and lodging options for tourists to Utila. They have also influenced public policy by pushing for investment in infrastructure for telecom and energy. In other words, the island is thriving because of investment from overseas.

How are you responding to a flat world?

If you need some thoughts on how to get started, I recommend that you attend two sessions at TiECON 2006. The first one is "Global Sourcing in a Flat World" and the second is "Emerging Trends: Cross Border Investing." If you want the venture capitalist perspective, you may also want to attend the session entitled "Can VC's Innovate in a Flat World?"

Related reading: How to approach investing in India?

How to innovate in a flat world?

How to exploit the Indian capital market?

Investment opportunities in India

Consumer market in India

Innovative business models for India

- By Jay Dwivedi

How to get the most out of TiECON?

If you have not yet registered for the conference, remember that the discounts end at the end of this month. If you do not register by May 31st, you will have to pay full price.

Jay Dwivedi gave some tips on networking at TiECON in March, but Michael Weinstein of Nitron Advisors has some additional tips below on how to get the most out of attending TiECON.

1. "Dumb-down" your elevator pitch. Since conference attendees often represent many different industries, make sure that you are able to convey concisely and in laymen's terms, what you do, what your company does and why the listener should be interested so that they could easily repeat it to someone else effectively. Remember, it's not what you know, or even who you know - but whom THEY know!
2. Contact event speakers. Review the conference web site, read the bios, subscribe to the blogs and review the web sites of the keynote speaker(s), panel discussion moderators and other event speakers. For example, if you're interested in blogs, plan to check out the track called, "Emerging Trends in Social Software and Online Networks" and make plans to connect with Torsten Jacobi, CEO of Creative Weblogging.
3. Create a target list. Then, get to know them! Get the conference agenda, list of attendees, exhibitors and event committee list prior to attending and plan your schedule ahead of time. Plan to attend the panel discussions that will help you achieve your goals at the conference. For example, if you are interested in the areas that investors consider most attractive in the overall software market, be sure to go to the "State of the Software Industry 2006" track on Friday morning.
4. Offer a little self-promoting Q&A. One of the greatest and most efficient ways to let an entire group of people know who you are, is to ask insightful questions aloud at the individual sessions. If you are interested in outsourcing, for example, attend the track on "Global Sourcing in a Flat World" and ask, "As the founder of ABC Company, a developer of network security products for the financial services industry, what are the key areas of my business that I should outsource to reduce costs without impacting our excellent customer service?"
5. Become the all-knowing conference czar. Where are the big meetings? ...the private parties? ...the after-hours events? Review the agenda, contact the event coordinators prior to attending, and learn the details of the "behind-the-scenes" so that everyone will look to contact you as their information source.
6. Coordinate your own meeting. Do you know other people or companies that will be attending TieCON East 2006? Plan ahead of time to meet at lunch or dinner to facilitate introductions and offer to help each other. Looking for people who share similar interests that may want to meet with you at the conference. Check out the TiECON East Blog for some great discussions, comments and contributors.
7. Volunteer. Contact the event coordinator(s) ahead of time and offer to help out at the conference in anyway that you can. Whether making calls to confirm attendance, helping guide people as they are attending or simply letting someone know that you're available if you need them, offering to help is the greatest way to meet people, learn and build relationships - remember, you have to give to get!
8. Prepare your questions. Once you have set up meetings with the event speakers, exhibitors and other attendees, research their background and prepare at least 5 questions that you want to ask each person while meeting with them to make the interaction as productive as possible. Interested in learning more about social software and online networks? If you're interested in hedge funds and investment research, visit Nitron Advisors and make sure to connect with David Teten, CEO of Nitron Advisors, to learn more about these fast growing industries.
9. Join industry-related organizations. By joining local organizations, sites and associations that are aligned with the conference focus, you can gain access to other members, as well as invite them to attend with you while building a relationship. Most organizations can be joined online and can lead to great new avenues and discussions when attending a conference.
10. Become a virtual private detective. If you want to get to know someone and want to figure out how you can help them, start gathering intelligence online. Google them, review their web sites, go to online social networking sites and don't hesitate to let them know that you've been doing your research on them to explore ways that you could help each other. Curious what others might find out about you? Google yourself and see what you find! For more insights on how to use blogs, social network sites, virtual communities, and other online networks, read The Virtual Handshake: Opening Doors and Closing Deals Online, by David Teten and Scott Allen. You can download the entire book for free at The Virtual Handshake.

Innovation is everybody's business

I have been in dozens of strategy meetings with CEO's and other senior executives and have seen their blank faces when the discussion moved to innovation. Many would even find excuses to sneak out of the conference rooms using stupid excuses like "I have to check my email," or "Need to make a few phone calls," and some even more creative ones.

When I have confronted these people about their discomfort with innovation, I have heard even more interesting excuses like, "Oh, I have a great R&D group," or "Our CTO is on top of this," or "I need to focus more on sales and growth."

Ladies and gentleman, you have it upside down. If you are a decision maker in your organization - particulary, if you are a CEO - it is YOUR responsibility to drive innovation within your organization. Leaving the techies alone in-charge of innovation is not the best strategy - I have seen hundreds of cases of R&D group developing offerings that the customers did not want. Result: money/time wasted, business opportunities lost.

While keeping on top of sales and income should clearly be the #1 priority for any business leader, if you are not in charge of innovation, very soon you will be fighting with the Chinese on price. And that's no business - that's a dog fight that you won't win.

And in case you did not notice, the theme of TiECON this year is "Innovating in a flat world."

Relted reading

Innovation in biotech sector

- By Jay Dwivedi
Photo courtesy: PP Digital

Sanjay Kadaveru shares TiECON vision

Sanjay Kadaveru, one of the architects of TiECON this year, recently attended the sister conference in Silicon Vallley and had a chance to speak to John Furrier of PodTech. Please click the link below to listen to the podcast.

Link for Sanjay Kadaveru podcast

Most conferences suck, but you should still attend them

I am sure you have attended conferences that you thought were a total waste of time. And those of you who have already registered are probably wondering if attending TiECON is worthwhile. Those of you who are yet to register, I am assuming, are also struggling about the value of attending. Let me just talk about the problems with conferences in today's information-rich economy, why you should still attend some of them, and how to make the best use of a conference.

Why do conferences suck?

1. Rarely a speaker has anything "new" to say. In most cases, they simply regurgitate what they have written in a book or a research paper or market research report or taught in the classroom - or even worse, someone in their office actually wrote their speech. Many speakers get there not because they are smart but because they have an impressive title.
2. A half-hour Google search will typically tell you more about a topic than listening to some "expert" pontificate.
3. Executives of public companies rarely share useful insights since their speeches have been extensively censored by their PR/IR departments.

So why do I still keep going to conferences?

To share knowledge. Let me clarify. If you think that you will gain pearls of wisdom in a presentation at a conference, think again. You might be better off spending some time on the web. But not everything that you want to know in life is on the web despite the advances we have made during last ten years.

Early on in my career, I worked at a management consulting firm that developed market strategy for corporations by actually talking to their customers. The premise was that despite availability of so much information just about 2% of the world's knowledge is actually documented and less that 0.1% actually searcheable. So where is the rest of the knowledge? In people's heads. While blogs enable more people to share what is in their heads, it is still a drop in the ocean.

In other words, unless you talk to people, you cannot tap into that knowledge. And that is what conferences allow you to do. I have actually found that I get more out of a conference in the hallways and dining halls than during presentations.

How to make the best of your time at conferences?

1. Do not miss a chance to speak to someone.
2. Do not hang out just with people you know.
3. Try to go to a panel discussion than a presentation - if you can choose. Since a panel discussion is free-flowing, you are more likely to hear things that you would not hear in a prepared speech.
4. Don't be afraid to ask questions or approach people. If you get "rejected," you still learned something - that person is not worth doing business with.

Related: Tips on networking

- By Jay Dwivedi
Photo courtesy: Morguefile.com

How to approach investing in India?

India has become "flavor of the month" for investors. Once I saw India on the cover of Business Week as the Next Great Market, I said "Uh-oh, now the money is really going to flood in". This is exactly what has happened over the past year and the market has rewarded those investors by seemingly scaling a new high every month or so. But, as those of you with experience investing in emerging markets know, the party ends at some point and usually ends badly. Here are a few thoughts on how to approach investing in India at these levels:

1. Take a long term view. An amazing statistic is that the majority of trades in India are day-trades. Taking a one day or even one year view can be dangerous when markets have moved up sharply as they have in India the past couple of years. You are best off taking a 3-5 year view on investments you make in India, whether in individual stocks or in fund managers (like us and others).
2. Avoid stop losses and price targets. Investing blindly with price targets or stop losses is, in my humble opinion, a foolish way to invest. Instead, you should focus on the fundamentals of the companies in which you have invested and focus in particular on the long-term strategy and on the management depth of the companies. This will help you build the conviction to continue to buys shares when the stock is down 50% and when the stock is up 100%. Remember that in a growth market like India, the best companies will return many times your investment if you have the patience to hold on through the volatility.
3. Invest within your circle of competence. Don't invest in a company simply because you hear a rumor about it, or because your cousin in Delhi has invested in it, or because you think the company has "buzz". Instead, invest in areas you understand and do your own due diligence on the company. If you aren't able to do this, particularly while living here in the U.S., then invest in a manager who can a large presence in India and can do this kind of detailed due diligence.
4. Invest in companies with the most scalable management teams. This is obviously a truism, but success for most companies boils down to management execution. This, in turn, is a function of their scalability, span of control, and philosophy around decision-making. Focus more on the management than on the product/service offering when evaluating the company. As we used to say in the venture capital industry, "a great CEO will take a mediocre business and turn it into a great business, while a mediocre CEO will turn a great business into an awful business".
5. Focus on management integrity and on how well management will treat minority shareholders. In India, you are most often going to be investing with companies that are effectively controlled and perhaps managed by individual families. Because of this, you need to develop a view about how this management will treat minority shareholders. Use past corporate actions as a guide.

Related articles

How to exploit the Indian capital market?

Investment opportunities in India

India is emerging as a consumer market

Opportunities for exporting to India

- By Gautam Prakash

- Photo courtesy: Jane M Sawyer

We should all be social entrepreneurs?

That's right. If we cannot do it full time, there is absolutely no reason why we can't do our part by joining the movement and contributing in whatever we can. And I appeal to the TiE community to do their part because you understand the value of bringing solid business approaches to solving problems of the world.

According to the latest UNICEF report, India is among the worst countries in the world when it comes to feeding children under five. 47% of the Indian children are undernourished (compared to 2% here at home, though I still don't understand why this number should not be zero in the richest country in the world with two out of us clearly "over-nourished"). As many as 7.8 million Indian babies are born underweight every year.

While India offers tremendous opportunities for new business, we cannot forget the importance of helping the poorest, particularly children. I am very proud of the fact that TiE community has responded to this challenge and all the way from charity work to impacting public policy, it has done its part. It is clear that social-entrepreneurship is taken as seriously as other areas of entrepreneurship. But there is still more to be done.

We have to agree that we collecitvely have more powerful voices and policymakers in India pay attention when we speak. In fact a few of them will be attending TiECON this year. I invite you to attend the session on Social Enterpreneurship and learn how you can be part of the process. We will have Vanessa Kirsch of New Profit and Iqbal Qadr, Founder of GrameenPhone to talk about how they are employing the principles of entrepreneurship for social change.

- By Jay Dwivedi

Photo courtesy: Faisal Sohail

How to protect your intellectual property?

If you are merely worried about protecting your brand, patents, and other intellectual property, the following story should come as a shock. According to the International Herald Tribune, a company in China literally set up a parallel NEC brand in the country with links to about 50 factories in China, Hong Kong, and Taiwan. This was not one of those basic operations in which a company reverse-engineers your product and starts selling fake products through underground channels. This group of people actually developed a complete line of consumer electronics under the NEC brand and then coordinated manufacturing and distribution while the NEC offices in China and Japan had no clue.

NEC, as you might know, is a global conglomerate (~$50 billion in sales; 140,000 employees) and had all the conventional systems in place to protect its intellectual assets but they never expected something like this to happen. They learnt about the scam only when they received complaints about products that they did not even know were sold under their brand name.

So what can you do?

Doing business successfully and profitably in a flattening world is not just completing the paperwork with the local government to protect your intellectual property. In addition to that you may need a full-fledged investigation and enforcement infrastructure to protect it since authorities in most countries outside the OECD do not have the systems that we expect them to have.

To develop a better understanding of these challenges and how you can navigate them, I invite you to listen to Ashley Wills, Senior International Business Advisor at WilmerHale (focusing on India and South Asia). His understanding of the business and legal environment has not been gathered from books and travel - he has actually lived in India for three years.

Why TiE members are scared of blogs?

When you think of TiE, you think of people who live, breathe, and dream technology. However, there is one area of technology that has not caught the imagination of the TiE community: blogging. And here is why:

1. A survey early this year by TiE-Boston of its membership base to find out the number of bloggers elicited just three responses.
2. TiE Boston has never addressed the issue of blogging in any talk/speech/panel discussion - probably, one of the most remarkable technological developments during last two years.
3. The TiECON blog has been a disappointment on two metrics: number of links from TiE Boston members pointing to the blog and the number of comments left.

How to leverage blogs for personal and professional success?

There is enough information in the public domain about the value of a blog and I don't need to repeat that here. So here are some tips on how you can make blogging a part of your professional life:

1. If your boss/employer lives under a stone, or has never heard about blogs, or has never read/written one, and bans you from blogging, take the time to teach her/him the basics of blogs and how they are a great business tool. Cite examples of companies like Microsoft and Sun Microsystems that are very effectively using blogs for internal/external communication.
2. While you are encouraged to read your employer's HR policies, generally speaking, an employer has no control when you blog during your private time (though I consider blogging as a business activity if the blog's focus is related to your area of work) as long as you do not divulge company secrets in your blog. Thus, if you work for a semiconductor company, you can blog about semiconductors provided you do not share information that is not meant for public consumption.
3. If you would like to improve your writing skills, join a creative writings class. In the meantime, start a blog talking about your family or hobby or vacation. Great way to become familiar with the tools.
4. If you are cheap, open a blog at Blogger. Otherwise, get your own domain name and blog like a professional - I only spend five bucks a month for my blog.
5. And if you think bloggers are wasting their time, think again. Apart from the brand that I have built, I make a pretty respectable living.

So here is the challenge. Start your blog, come back here, and add a comment below pointing to your blog. Or even better, blog about this initiative on your blog. It will be nice to see a few more bloggers in the TiE community.

- By Jay Dwivedi, who not only blogs for himself but blogs for TiE too.

Is digital media convergence a meaningful concept?

Let me start off with a caveat. The discussion here will focus on next 6-12 months since I believe that with the pace of technological change in this space, to predict anything beyond that is merely entertaining ourselves with fantasies.

Convergence is a concept that has been pushed by technologists for years but consumers have largely rejected the concept. While there are numerous examples of how consumers prefer to consume their media to have the most enriching experience, let me just discuss one case study to illustrate the point that any discussion of convergence is more complex than it appears to be.

Camera phones

Camera phones started to become available on a big scale during the 2002-2003 period and by 2004, they took off - selling about a quarter billion units that year. I have not seen the final numbers for 2005 yet in the public domain, but the estimates range from 280 million to 300 million units. If you add it all up, some estimates indicate that there could be as many as one billion camera phones out there.

You would expect then that consumers must be going nuts taking pictures with their camera phones. On the contrary, if you take a look at Flickr, almost all photos are taken with a full-fledged digital camera. I think a phone camera does make sense when you are sipping a martini at "Pure" and Paris Hilton walks in. You quickly snap a few photos to post on your blog the same day or even blog by email almost immediately. However, when you want to build a good photo album online or to print your pictures, a digital camera is the only option.

And what consumers are indirectly saying is supported by Kodak research. The company found that nearly two-thirds of camera phone owners rarely, if ever, upload pictures to a computer. And 70 percent never (or rarely) send photos to other phones. In other words, consumers understand that mobile phones are best suited for having a phone conversation - not for taking pictures.

Where are we likely to see convergence?

Consumers are saying that they are willing to use some applications of convergence. For instance, most sane people do not watch "The Daily Show" on their computers, but if they miss an episode and there is particularly funny clip, they don't mind looking at only that clip (not the whole episode) on the web. I have seen people kill time playing games on their mobile phones while waiting in line at the RMV, but don't expect these game enthusiasts to abandon their PS2 or XBOX. There are numerous other instances of how convergence is happening on a limited scale.

What does it mean from an investment perspective?

Just because a bunch of technologists have come up with something they think is "cool," it doesn't mean that it is cool for an average consumer. Merely packing more features in a device may actually be counter-productive, making it bulkier, slower, less user-friendly, and expensive. So as you evaluate a potential new product and when you have listened to those entrepreneurs who think that their device will change the world (remember the refrigerators connected to the web - not many of them are sold each year), step outside the conference room and show it to a bunch of teenagers. You will get better data on the potential that way.

How to learn more?

If you are excited by technological developments in the world of media, entertainment, and technology, and want to find out where the business opportunities lie, I invite you attend a panel discussion on the topic of convergence at TiECON moderated by Josh Bernoff.

- By Jay Dwivedi

Biotech sector needs innovation, not government help

If Christopher R. Anderson, president of the Massachusetts High Technology Council, is really speaking on behalf of the state's biotech/pharma industry, it is disappointing to see that the industry is running away from innovation and wants to use regulation as a way to protect its turf.

In an opinion piece in Mass High Tech "Drug importation is bad policy and bad politics," his arguments sound so outdated in 2006. Here we are living in a world that seems to flatten each day, and apparently the Massachusetts biotech firms are arguing for more regulation, rather than for opening markets globally.

Anderson argues against free trade in drugs for the following reasons:

1. It harms the state economy. In the short run, it absolutely will (companies that resist change may go out of business, some people may lose jobs, etc.), but the solution is not protectionism. The right approach will be to develop a more powerful business model that takes into consideration the new reality - a flat world in which drugs will soon move as freely as apparel or electronics do.
2. It puts patients in harm's way. First of all, this issue is not yet settled. Both the FDA and the GAO have admitted that amount of data that they have collected on imported counterfeit drugs is extremely small. Since it is illegal to import, many crooks are currently in business. In other words, if it were made legal, legitimate companies will emerge and do what is needed, and checks and balances would be put in place to guarantee safety. The way we have systems in place to assure safety of pharmaceutical ingredients (that's right, we import a lot of fine chemicals that eventually end up in prescription drugs) from overseas, we can also have the same safety systems for drugs.
3. It harms the drug discovery pipeline. No, it doesn't. To say so is to resist change and to try to transform your business model. If the cost of development of a drug is high (~ $1 billion), and that is a good enough reason to argue for trade barriers, somehow reminds me of the steel industry. We are seeing that in many other sectors (IT, software, business services, auto, etc.), where the cost of business has been fairly high, companies have found ways to optimize their supply chains and lower their costs to stay competitive.

The only good news is that some pharma executives can see the future and are already redesigning their business processes using some very innovative approaches. If you are a biotech executive and see the current business environment as an opportunity (rather than a threat) to transform your business, I invite you to attend sessions on "Cross-Border Models of Life Sciences: A View Across the Value Chain" and "Global Sourcing in a Flat World" during TiECon East 2006.

Recommended article: How to innovate in a flat world?

- By Jay Dwivedi

How to innovate in a flat world?

Many business people that I have met have this wrong idea that innovation is something that techies need to worry about - something that needs to be discussed in the R&D group meeting rather than the boardroom. The concept of innovation is so powerful that it can be applied to each and every aspect of doing business - in other words, to the business model itself. And as we contemplate the theme of TiECON, here is an excellent case study of how we can all take advantage of flattening world to drive our costs down and enhance the customer experience.

According to a story in the New York Times, "The Long-Distance Journey of a Fast-Food Order," Matt Richtel reports that when you drive up to some McDonald's locations, do not assume that the person you speak to to place your order is working inside the restaurant (old model). On the contrary, that person is a customer-service rep at a call center (in California). The order is transmitted to the restaurant almost immediately and is prepared for you during the time it will take you to drive to the pickup window.

How does McDonald's create value?

1. It lowers the cost of doing business. Employees who traditionally answer the phone can be eliminated or asked to do prepare the order in a shorter time.
2. The company can train a small group of reps to treat customers more consistently. For fast food restaurants it is a nightmare to train teenagers and employees (most of whom do not speak English as their first language) to be courteous and efficient.

Will the call center move overseas?

You bet. Since this is only a trial, I expect that eventually your order may be taken by call center employee in a less expensive location.

What a great way to make optimum use of resources scattered globally!

- Posted by Jay Dwivedi

Opportunities for exporting to India

A big deal is being made by Indian politicians about the jump in their exports to 100 billion dollars (I think they are still measly compared to China at over $700 billions), but that is not what was interesting to me. I was actually more curious about what India was importing. Like us, India is also importing more than it exports. Of course, oil and petrochemicals have a role to play, but if I exclude those products, the market for foreign products in India is just shy of 100 billion dollars.

And what are Indians importing?

I found the list to be somewhat interesting. There were things that I did not expect. Here are the top five categories:

1. Natural or cultured pearls, precious or semiprecious stones, precious metals, jewelry, coins, etc. 18%
2. Nuclear reactors, boilers, machinery and mechanical appliances, etc. 8.5%
3. Electrical machinery and equipment and parts thereof; sound recorders and reproducers, television image and sound recorders and reproducers, and parts 7%
4. Iron and steel 4%
5. Organic chemicals 3.5%

- By Jay Dwivedi

How to improve infrastructure in India?

While I have been advocating investment in India, but one of the things that frustrates me as that when I try to dig opportunities there, the sad state of infrastructure in the country is a serious risk. The moment you land there, you realize that India has a long way to go. And I am not even talking about other things that make doing business in India so difficult - widespread corruption and clueless bureaucrats.

I do not intend to use this post to whine about inadequate infrastructure in India or the nuisances of doing business there. On the contrary, let me point out how you can make a difference this year at TiECon.

As I had mentioned in a previous post, I am particularly delighted to know that we have a few folks attending who can actually do something about the infrastructure. That's right; we have several members of Indian parliament who will be attending.

While each one of you may have your own wish list and you are welcome to discuss it with them, but here are two broad guidelines on what you must definitely try to highlight:

1. No infrastructure, no investment: Unless the state of infrastructure improves, you will NOT consider making major investments. Like any risk management analysis will point out, a country that cannot provide reliable sources of power, transportation network, and telecom is low on the attractiveness ladder. It is not that we are playing hardball - it is just the way we have to manage our investment risk.
2. Deregulation and privatization to encourage investment in infrastructure: When investors allocate capital for infrastructure that should have been provided by someone else (not necessarily the Government) at a much lower cost, nobody wins. In other words, when companies set up their own mini power plants at their facilities, everybody loses. Therefore, the lead on this has to come from the policymakers in form of deregulation and privatization.

UBS did a report in which it found that ROCE in India during the 1998-2003 period was 17% versus 11% in China (the actual number may actually be much lower due to subsidized capital in China), and the productivity/competitiveness in India is far higher than that in China, but it still lags China in attracting investors. We should tell policymakers the reasons.

- By Jay Dwivedi

Photo courtesy: Tom Maisey (Used under creative commons license)

How to exploit the Indian capital market?

First things first! A reminder that the discounted rates for registration will last only till Friday so if you would like to save, you must register right away.

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And now to more important stuff!

It is very tempting to think of India as a third-world country (which it is) that can only provide cheap labor, not just for BPO but also for value-added work like analyzing X-rays or pharma research or tax accounting. In our cost-cutting obsession, however, we may be overlooking what else India may have to offer.

Previously I have talked about tapping into the consumer market that is exploding in India. I have also emphasized the need for innovative business models to target the Indian consumer, but there is another path to participating - through investment into public companies.

As the chart below shows, the Indian stock market (Bombay Stock Exchange index in blue) is at an all-time high. When I plotted it against S&P500 (in red), the first thought that struck me was that for some of you it may already be somewhat late to enter. While I do not expect the market to drop in the near future, I do expect that it will continue to rise at a steady pace for one simple reason - it started from a very small base and only now it has arrived to a point that global investors are taking it seriously. In other words, it still has a huge upside potential though do not expect it to double in less than three years.

So how do you capitalize on some of the emerging areas of growth and maximize your return? How will the current economic policies impact India's growth? These are some of the issues we plan to dwell on during TiECon. And do not forget that this time we are going to have several Indian policymakers at the conference. And while they will get an opportunity to make their pitch on why we should invest in India and their efforts towards further liberalization in the financial and retail sectors, we also will get a chance to impress upon them the changes that we would like to see so that Bombay Stock exchange will be as easy to navigate as New York, London, and Tokyo exchanges are.

What do I recommend?

If you are a sell/buy-side portfolio manager or analyst, investment banker or an economist, TiECon will provide an excellent opportunity to get a first-hand understanding of the capital markets in India. And the session I recommend is the one entitled "Emerging Trends: Cross Border Investing" on June 16 at 0115 PM. And while many attendees find it difficult to attend sessions on Saturday, if you are serious about studying India as a potential investment opportunity, I also recommend that you come just for the "Investing in India" session right after lunch.

Related article: Investment opportunities in India

- Posted by Jay Dwivedi

Investment opportunities in India

In my previous post I had discussed the somewhat gloomy investment climate in the United States. While we continue to make modest investments in highly promising ideas, we are taking lesser risk than we did just a few years ago. A lot of this shift in investment patterns is driven by the returns we are currently getting. As pointed out in the 2005 Venture Capital Report by Wilmer Cutler Pickering Hale and Dorr (a TiECON sponsor), a very successful sale today is a fraction of what we used to get. For instance, the report says, last year just two venture-backed companies were purchased for more than half-a-billion dollars and only 15 were purchased for more than a quarter billion. Ouch!

So where are the most attractive investment opportunities?

Apart from China, which continues to attract high levels of investment, India is another attractive market. Venture capital investment has crossed over $1B in India. And according to projections, the India biotech sector hopes to generate investments of $10B by 2010.

The country is experiencing GDP growth rates that are 2-3X of US GDP growth. The Venture Capital Report predicts that more VC firms will invest in overseas companies, sometimes with a local investment partner. I do not expect that most investments in India will result in billion or multi-billion dollar deals that we would like to see, but my research shows that the time horizons for an IPO can be relatively shorter and probability of a higher return on investment (ROI) higher in India during the next 3-5 years.

How can you get a first hand understanding of the investment climate in India?

As you plan your schedule for the conference, you might want to attend the session "Emerging Trends: Cross Border Investing" on June 16 at 0115 PM and another session at 0200 PM on June 17th that focuses specifically on investment in India.

Other related post: Using innovative business models for India

- Posted by Jay Dwivedi

India emerging as a consumer market

If you have not seen Sanjay Kadaveru (co-chair of the organizing committee) around for a while, there is a reason for it - he is networking with Members of Parliament (MPs') in India. The Indian Parliament is like our Congress and its members play an important role in policymaking. MP's also make an effort to bring investment to their districts.

And here is the update. We have confirmation from as many as five MP's to attend TiECon East 2006, including Madhu Yakshi and Sachin Pilot. They will be the members on a panel on infrastructure and governance in India.

Why are we inviting Indian policymakers?

As many of you have experienced during last 2-3 years, TiE has gradually evolved into a conduit to investment opportunities in India (either directly through network access that it provides or through entrepreneurs that choose to have management teams based in the US while locating the development and other process in India). By providing access to Indian policymakers, not only are we ensuring that they understand what we need from them, we are also giving them a chance to demonstrate to us what they will do for us to attract our dollars as they highlight India's transition from a offshoring to a market opportunity.

India's role in global economy changing from a BPO center to a consumer market

India's recent entry into the global economy was triggered by our desire to cut costs by offshoring low-end jobs. While most experts agree that relocation of these jobs has benefited American corporations, there has been another unintended social/economic outcome - India can now claim to have a real middle class that has rapidly growing discretionary income. In many cases, they are already consuming what we take for granted. During a recent trip, my jaw dropped when I was invited to visit the Shipra Mall on the outskirts of New Delhi - it was better than some of the malls in the Boston area, according to my wife who knows this better than I do. And the prices were actually higher than those in the US for most product categories since these new malls predominantly carry luxury goods by Indian standards.

In summary, it may be the right time to look at the country as a growth opportunity. You might also want to read my thoughts on why you should build a new business model for India if you want to serve the Indian consumer.

- Posted by Jay Dwivedi

Five reasons to register now

Al Kapoor and Sanjay Kadaveru, the co-chairs of the organizing committee, gave a very strong reason yesterday for you to register right away. Only the first 400 registrants will be able to reserve a seat in the special pre-event reception with Clayton Christensen - “How to predict whether your idea would succeed or fail.”

However, for those of you who are planning to attend, but have not registered yet, here are four more reasons why you should register now:

1. TiECON East is organized entirely by a group of volunteers. The longer you hold off on registering, the more we have to focus on marketing/advertising. Not only does this cost money, it also takes away valuable time of our volunteers who would rather focus on making the conference itself better, than making phone calls or sending reminders to you - not the best utilization of our talents/time. For instance, I would rather do the research to tell you about how to improve venture capital activity or how to start your networking now or why we need need new business models for India, than to write posts like this one. In order to keep attracting the best pool of volunteers each year, we want to make sure that they get to work on challenging assignments and focus on what is important.
2. TiECON is a not a profit-making machine. Whatever money we can save in marketing/advertising will help you, the conference, and the organization.
3. We do not have rigid cancellation policies. If you register now and realize later that you cannot attend the conference, just call the TiE Boston office. We are very accommodating.
4. And finally, while TiE gets a hundred bucks less if you sign up now, everyone is still better off if you register early.

Posted by Jay Dwivedi

How to improve venture capital activity?

I just received my copy of the 2005 Venture Capital Report from Wilmer Cutler Pickering Hale and Dorr LLP (a TiECON East 2006 sponsor) and a few things stood out. Over the next few days I will be picking a few relevant findings for you to ponder as you prepare to attend the conference which is just about three months away.

2005 was not a great year for financing of new ventures

As the chart below shows, while things have stabilized since the downturn started in 2000, we are still at the same level as we were in 1997. And if you are not depressed yet, the report says, "We do not see any developments of trends likely to result in a significant change in the level of venture capital investments in 2006." Ouch!

So what went wrong?

1. There are fewer high-quality investment options.
2. My research shows that investors have become better at managing risk and no longer trust the entrepreneurs as they did in the past. While it means better scrutiny of business models and working with more conservative estimates, it also means that some promising ideas do not get funded.
3. Lack of innovation. That's right. Those of us who watched what happened during the 90s remember very well that some of the best ideas came from innovation (not slick marketing). For instance, e-commerce, nano-technology, broadband, etc.

What can we do to energize the investment climate?

While a lot of TiE community members are too excited about globalization of venture capital activity and argue that merely investing in India and/or China will somehow solve all the problems in the world of investing, the reality is that smart investors do not invest in companies that plan to merely sell more widgets (at some point all markets commoditize). They are desperately trying to find the startups that come up with new business models.

In summary, as you work on new business ideas or seek funding for your existing business, take a look at the degree of innovation in your business. We often tend to forget the importance of innovation, as Clayton M. Christensen (a speaker this year) would tell you.

Posted by: Jay Dwivedi

How to start networking now for TiECON?

So you have signed up for the conference and are planning to show up in June at the Hynes Convention Center. In the meantime, you have no other plans for the conference. If that describes you, here are a few tips for you to start your networking now and to get the best out of your investment in attending.

How to network prior to the conference?

1. Develop a list of specific individuals/organizations that you would like to contact. You can get ideas by reviewing the list of sponsors/speakers/attendees. If you are not sure about who to reach out to, just pick up the phone and call someone that you know within the TiE community or the TiE Boston office.
2. Identify the right individual. This is extremely important since chances that you will make the right connection will depend on who you try to network with. For instance, unless you are a C-level officer in a Fortune 500 company, you might want to avoid contacting Rajat Gupta directly. Identify someone who will benefit as much from you as you would from her/him. Peer-level networking is always the best way to get started and then you can find your way up through that initial contact.
3. Make the initial contact. Start off by establishing the TiECON connection (you/your colleague is speaking; your firm is sponsoring, etc.). Then quickly get to why you would like to establish a relationship (planning to run my business plan by a few industry experts; have an established business, but need growth capital; interested in investing in India biotech sector and need to identify investment opportunities; etc.). Suggest next steps (would like to email more information; set up a time to talk prior to/during the conference; etc.).

Hopefully, you will do fine from here on. Remember that almost everyone that is attending the conference is there to meet people that can help them succeed professionally. As long as you can make that happen for them, they will be delighted to network with you.

I will share more tips on networking at the conference in a separate article.

- Posted by Jay Dwivedi

Using innovation to do business in India

Anu Chitrapu is right. India has been a lot in the news lately because of the World Economic Forum and the visit by President Bush to India. And it is very encouraging to hear that the President appreciates the forces of globalization and how they are likely to benefit the whole world. "People do lose jobs as a result of globalization and it's painful for those who lose jobs," the President said and strongly defended the outsourcing of American jobs to India as the reality of a global economy. He added that the US should instead focus on India as a vital new market for American goods. Which brings me to something that I want to talk about - Innovation!

Finding business opportunities in India

We in the world of investors, venture capitalists, and entrepreneurs tend to focus so much on the ~300 million people (the so-called Indian middle class) that we overlook the rest of the population (~2.5X of this number). In my opinion, any idiot can sell to the Indian middle class by treating it as just another market segment that happens to be growing at 3X the US GDP growth rate. These people speak/understand English, desire American products, are seeing huge growth in disposable incomes, and are ready to spend it on consumer goods. But where is the innovation here? Where is the value created? In no time, India too will become like the United States (price-based competition in every sector leading to erosion of profits) and if there was no value proposition to begin with, your Indian business may be in trouble. We all know what happened to the so-called Asian Tigers.

Need for new business models in India - only true innovators will create shareholder value

What will distinguish the "me-too" businesses from the true innovators are the new business models are:

1. Products and services that can be consumed by a broader section of the Indian society, not just the middle class.
2. Offerings that are less susceptible to commoditization.

And both these elements of the business model can only be achieved if we wear our "innovation hats" and think creatively about a new value proposition.

So when President Bush is challenging American companies to stop fighting globalization and see it as an opportunity for innovation, he is alluding to cell phone companies that have made cell phones affordable to the Indian masses or the companies that are trying to sell the Rs. 10,000 PC or the Rs. 100,000 family sedan.

I am hoping that as we delve into these issues at TieCon East 2006, we will get an opportunity to hear about some new business models. In other words, how do we leverage innovation to create more compelling value propositions.

- Posted by Jay Dwivedi

India in the news

It is amazing to see how much India is in the news nowadays. I don’t mean just now – that is expected with President Bush’s visit – but this past year I have seen more news articles than I could read on India. My favorite article is the one called “Davos days and Bollywood nights” which talks about India at the World Economic Forum conference at Davos this year. From being a country that was barely noticeable in Davos, India went on to center stage with a pomp and glory not associated with a third world country. The so called “poor” country was greeting all guests with a goody bag filled with great gifts from India including a pashmina shawl, some ayurvedic oils and an ipod with Indian music! The most striking thing was that India sent 115 delegates compared to China with 30.

Talking of China, there have been quite a few articles on India Vs. China too. At MIT Sloan we are now offered a course on India Vs. China taught by Professor Yasheng Huang, an expert in the field. There was also the New York Times editorial which talked about how the infrastructure in India is bursting at its seams. Airplanes apparently circle above the airports in Bombay and Delhi and waste precious fuel all because there are not enough runways and gates at the airports. But with all the FDI coming into the country I think it is just a matter of time before India fixes its infrastructure problems.

The TiECON organizing work is picking up intensity. We are all very excited with the keynote speakers. If you have not done so already check out our speakers.

Anu Chitrapu

Play quizzes, have fun, and network

Over the years as we have organized the conference, a common theme that we hear is about more networking opportunities. Like other years, we are working hard this year as well to find new ways for you to meet the type of people that you want to.

If you look at the agenda, you will notice that there is plenty of time for networking (we will give more tips on how to network in a subsquent post), but how about starting some networking now.

Yes, we have just launched a quiz program for you to start networking the fun way. You build a team, participate in quizzes, and network in a more informal atomosphere. For those of you who cannot make it to the quiz, there is the option of an online quiz (you can participate in both quizzes also).

Ray Kurzweil joins impressive list of keynote speakers

Who could have been a better speaker than Ray Kurzweil to speak on innovation? Not only is Kurzweil an entrepreneur (he has successfully founded and developed as many as nine businesses in such diverse areas of technology as OCR, music synthesis, speech recognition, reading technology, virtual reality, financial investment, and cybernetic art - in almost all cases leveraging artificial intelligence), he is also a visionary and futurist. And for a lot of people like me, he inspires us as a prolific writer and blogger.

Kurzweil joins what is emerging out to be an excellent slate of keynote speakers that includes Kofi Annan (UN Secretary General), Clayton M. Christensen and Howard H. Stevenson (both professors at Harvard Business School), and Rajat Gupta (senior partner at McKinsey).


- Posted by Jay Dwivedi

Marketing TiECon East 2006

The marketing team finally had its first "real" meeting. It is amazing how much work can be done virtually. We all recognize that marketing TiECon in 2006 is a monumental task since we are looking to make a monumental improvement in attendance.

And who will market TiECon East 2006?

You! Being a non-profit organization means that we do not have the resources for advertising. Every dollar that is spent on marketing means that either we raise the registration fee (something no one wants) or we cut back on the quality of the conference (again, something that no one wants).

So we are relying on people who already know TiE as an organization or have attended other TiE conferences or events to reach out to their colleagues, peers, and friends. If you see the value in being a member of this organization or attending the events, particularly TiECon, then we ask you to let others know about it. And in doing so, if you need our help in any way, just ask. You can simply shoot an email to the TiE Boston office.

Posted by Jay Dwivedi

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Tags: tiecon - innovation - marketing - entrepreneurs

TiECON Blog

Hello!

We are about 4 months away from TiECON 2006. Things are falling into place and the level of activity amongst the organizers has increased perceptibly. The flurry of emails, the weekly phone calls, the planning meetings – all of these have reached a new heightened level of intensity.

I have had numerous conversations with Sanjay, one of the co-chairs, on projects that I could be involved in and the one that seemed right up my alley was the “Blog” project (I am trying to come up with a better name for this but for now “Blog project” it is). I am an official blogger (if there is a term like this) for MIT Sloan. I maintain a journal on my life at Sloan for applicants, students and others interested in the school to know more about Sloan. It is fun to write a blog for many reasons. One, you chronicle your life digitally which is very cool, two, there is a high probability you will be recognized because of your blog and three because you will never be bored with nothing to do.

We have great plans for the TiECON blog project. We envision the blog site to be a place where business leaders will share anecdotes about their lives, their business endeavors etc. In addition, our charter members will talk to us about various things they are involved with. The coolest part is the podcast initiative. Given the fact that many of the potential bloggers are very time constrained, we thought of an easy way for them to blog. Instead of typing away at their computers and uploading document we figured it would be much easier for them (and way cooler!) to record their thoughts and upload them so we can hear them as podcasts. And for those who prefer the tried and tested interview method, we are more than happy to conduct interviews either in person or over the phone and publish them for all our readers.

As you can see this is not going to be a traditional blog site. Journal entries will be mingled with podcasts, interviews will be sprinkled throughout the site and our organizers will chime in every now and then with key learnings and funny anecdotes. Obviously, our blog project will become a success story only if we have readers and writers. I personally think it is the writers who will draw the readers. If you would like to write a blog or you know someone who you would like to recommend please do get in touch with me – I am always ON as far as email goes. My email address is achitrapu@sloan.mit.edu – I look forward to hearing from you.

Anu Chitrapu

TieCON East 2006 conference is being organized

TiE Boston is organizing a conference titled "Innovation in a Flat World". This blog attached to the conference is another medium for disseminating information relevant to the theme of the conference.

Blogs will feature news headlines and news analysis that capture the essence of the conference theme. Enjoy, provide comments, and let us know what else you would like to hear about....

United press recently carried an article about the growth of entrepreneurship in India. There is a growing awareness that in order to continue the current pace of growth, India has to invest in education, infrastructure, and innovation.

Stepping beyond the traditional barriers attributed to a developing country, India is prepared to move ahead and do what it takes to get to the top, say Indian innovators and analysts. For more details, continue to read on Growing Indian innovation