Sector Watch: India's Entertainment & Media Industry

At a time of flux in the entertainment and media industries in the United States and elsewhere (declining subscriber base for print media, disintermediation from internet video hosting), the Indian market is experiencing heady growth.According to a newly-released report, co-authored by PriceWaterhouseCoopers and the Federation of Indian Chambers of Commerce and Industry (FICCI), the Indian Media and Entertainment industry is expected to grow from its current size of $9.7 billion to $22 billion by 2011, a compound annual growth rate of 18%.

The table below summarizes the components of this growth. Some of the numbers are almost certainly understated. For example, the size of the music industry is probably distorted by piracy, while the internet advertising market is distorted because of a lack of reliable reporting services.

I'm Back (With News)

My apologies for the long silence. I've been working through some recent developments in my professional life. In fact, they pertain to the focus of this blog, so I will share them here. If you've read this blog with any regularity, you know that I am very optimistic about India's growth prospects over the next 25-30 years. Sustained growth for 25+ years is transformative - we've already seen how 15 years of growth (since the 1991 reforms) have utterly changed the urban landscape. This is arguably the most profound development globally that I will witness in my lifetime. I'd like to participate in it, and help where I can, rather than watching from afar (in my case, from the Bay Area in California).

With that in mind, my wife and I have decided to move to India. We will leave the Bay Area in a couple of months, and move to Bangalore. I will join the Google office in Bangalore (they're hiring!) as a Product Manager. It's an exciting role, in a great company, at a time of enormous opportunity. I can't wait to get started!

I intend to keep blogging, during and after the transition to India. I hope that the changed perspective I can bring from being on the ground in India will be useful.

Thank you all for your patience during the long period of silence. I'm back in the blogosphere and would love to hear from you! Send me your comments and thoughts! In particular, if any of you have moved from the US to India, I would love to get your advice as we plan our move back.

All Together Now....

Will Price (who is fast becoming one of my favorite bloggers) has another great post on the virtues of alignment. The key point he makes is that entrepreneurs can context-switch effortlessly, but that same capability cannot (and should not) be expected of the organization as a whole. In fact, this is the key test of the maturity of an early-stage company founder.

When your company starts out, you are hunting for validation, for a niche. You conduct small-scale experiments, involving marketing campaigns and product prototypes/demos. You then gather feedback and hopefully find a segment or two where the value proposition is easy to demonstrate, the need is urgent, and there is money available to solve the problem. You then double down on those segments. First, work your tail off to get anchor, referenceable customers, and then use those to streamline and accelerate the sales process. All the while, the product team is conducting small-scale experiments to identify the next couple of segments to target.

At least, that's how things should go. In practice, this discipline is very hard to achieve, and organizational alignment falls directly as a consequence of not following this disciplined approach. I've seen a couple of key areas that lead to a lack of alignment in the organization:

• Failure to set up clear, time-bound success (and failure) criteria. Early-stage companies do need to experiment; its unclear up front in most cases where you should be selling your product, who the ideal customer is etc. However, too often these experiments are not controlled. Without an up-front definition of when to consider the experiment a success, and when to walk away, its too easy to be led into one rat-hole after another, where success is just over the horizon, just one demo away. A common case is when you're able to get a toe-hold into a large enterprise and keep trying to accommodate their every request for information, for endless meetings, for product enhancements etc, without a clear idea of the end game. While the sale may eventually happen, the opportunity cost for the organization is immense.

• Trying to do too much. You've conducted a couple of experiments, and found a couple of areas in which your product might add value. However, these areas don't have a lot to do with each other. You might rationalize this away and find connections where none really exist, but really you know that you've come to a key decision-point. Do I invest in solving problem X or problem Y? The thing is: you have to pick and quickly align the organization behind your choice. If you don't, the default trajectory is that there will be people in the organization who try to solve each problem, and the organization eventually splinters.
  

Alignment is relatively easy to test for: ask your marketing and sales people what they think the company does. Then ask your engineers. Ask the back office folks: finance, adminsitration, HR. Ask your customers. Ask analysts and the press. Ask them once every quarter. If the responses are roughly the same, then congratulations! You've kept the organization aligned. If not, don't fool yourself - you've got a serious problem and you need to address it as quickly as possible. Alignment is relatively easy to test for, but I don't see it happening too often. Could it be because we don't particularly want to know the answer?

Resources for Entrepreneurs at Stanford

The fact that there are so many resources for entrepreneurs available online is both a blessing and a curse. It's hard to know which sites to focus on, and how to make sense of sometimes contradictory advice. I will not attempt to provide a comprehensive list here - it'll be obsolete as soon as it's published. Instead, I would like to point you to some entrepreneurship resources provided by my alma mater, Stanford University. There is a lot of great information, videos, podcasts among other resources, all available freely and online. Take a look at these sites - there's great information available for you here:

• Stanford Entrepreneurship Network. The umbrella organization for all entrepreneurship-related groups within Stanford.
  

• Business Association of Stanford Engineering Students (BASES). Lots of great information. Particularly recommended are the weekly newsletter that highlights entrepreneurial activity in the Bay Area, and the Thought Leaders seminar series (of which, more below).
  

• Center for Entrepreneurial Studies, Stanford University. Deals with all things entrepreneurial at Graduate School of Business. Lots of research papers, videos of speeches given by entrepreneurs and venture capitalists, and an "Entrepreneur Resource Database" that connects entrepreneurs with potential partners or investors.

• Entrepreneurial Thought Leaders lecture series. The lectures are free and open to the public; they occur every Wednesday from 4:30 to 5:30PM at the Skilling Auditorium at Stanford. If you can't go, the lectures are all available online, along with handouts and other supplemental material.
  

• Stanford Technology Ventures Program, Stanford University. Deals with all things entrepreneurial at the Engineering School. So far not a lot of useful material for entrepreneurs - most of the presentations have to do with teaching entrepreneurship - but stay tuned.

Can entrepreneurship be learned? Probably not, but you can certainly benefit from understanding what others have done, and forming your own pattern recognition rules.

This Just In: Indian VC Investment Doubles in 2006

From a new report produced by the US-India Venture Capital Association, Venture Capital firms in India invested $508 million in 92 deals in 2006. That's an average deal size of $5.5 million, which shows the bias towards growth capital rather than risk capital. These numbers are just about double the 2005 numbers of $268 million in 44 deals.