You Ain't Seen Nothin' Yet

One of the highlights of BT MindRush was a discussion featuring some of India's top internet companies. The panel comprised Radhika Aggarwal, co-founder and Chief Business Officer, Shopclues.com; Limeroad Founder and CEO, Suchi Mukherjee; Amit Jain, President, Uber India; and Amarjit Singh Batra, CEO, OLX India. The discussion was moderated by Sanjeev Aggarwal, Co-founder and Senior Managing Director at venture firm Helion Advisors, one of India's leading start-up investors.

Helion's Aggarwal started off by pointing out that the size of the Indian internet economy is only $30 billion, compared to the $2-trillion digital economy of the US - including companies like Apple, Google, Uber and so on - and $1 trillion of China. "The reason I cite these numbers is that many people question whether the story has played out, but to my mind these architects of modern India [pointing to the panellists] are just starting this journey," he said. "We believe that $500 billion-$1 trillion of market cap will be created in India over the next decade."

Radhika Aggarwal of Shopclues, a mass market marketplace with 300,000 merchants shipping out three million products each month, could not agree more. "We get asked the question often - has the war been fought already, and have the winners been announced? We feel that we have just scratched the surface."

Batra of OLX India pointed out that while globally the online classifieds market is about $100 billion, the market had not existed in India till recently, and companies like OLX had changed old habits of Indians by urging them to sell old stuff instead of passing on to others or letting them gather dust. "I believe that India is going through a very interesting curve. There are lots of great ideas."

Limeroad's Mukherjee delved on the opportunity beyond market size and said that the huge difference between retail prices and manufacturing costs allows for a lot of disruption. "15-20 per cent of Indian women come to Limeroad, and our conversion rate is nine per cent," she said. "What that means is that we are mimicking offline behaviour."

For others like Uber, there is an opportunity to create an impact on peoples lives. "The vision is to make transportation available to everyone just like water and electricity," said Jain of Uber India. "We have about 250,000 driver partners in India and we are offering them a fundamental difference to their lifestyle by helping them earn more and providing them the flexibility of entrepreneurship."

However, with all the hype around such businesses raising huge rounds of investment at sky high valuations, Aggarwal of Helion raised concerns of sustainability of such businesses, which are driven by high cash burn. "Will the wheels come off?" was the question to all entrepreneurs on the panel.

The panellists offered some justification to burning huge amounts of cash to lure consumers into buying online. "When you are building a new industry, there are certain hooks that you have to give the consumer. This is what discounting did for the first two to three years. But now investors want to know about the path to profitability. That's a question that will be answered fairly soon," said Aggarwal of Shopclues.

Mukherjee added: "The hook has to be sustainable for industries to be sustainable. You have to create something that fundamentally solves a problem for a user for a lifetime," However, she agreed that capital has been easier to come for ecommerce than other businesses. "Initially, the burn is higher because the cost of capital was lower. Cheap capital does make you a little bit lazy and indisciplined." To overcome that, Limeroad accelerated growth, she said.

Helion's Aggarwal said that the practice of losing money to become monopolies is being dealt by investors across the globe and the trend is not specific to India. He also brought up the issue of local Indian players competing hard with global players. To which Ubers Jain said: "You have to be a local company to understand the environment. Companies are becoming better at adapting to local conditions. We are in 67 countries. Tech-nology and processes come to our aid."

The discussion ended on an interesting note, when Shopclues's Aggarwal turned to the investor - Sanjeev Aggarwal -and asked him whether he was seeing any models that would disrupt the current internet businesses. "When we invest, we see two things - the horse, which is the market that you are trying to disrupt, and the jockey, which is people like you," said Sanjeev. "No one can answer where disruption will come from."