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I recently got a chance to talk to  Rakesh Antala. Co-founder and CEO of Crederity. Most  recently, he was Partner & COO of Intivia, a healthcare services startup serving organizations across the United States. In 2004 he started looking for a totally innovative idea with a business plan that he wanted to run through a formal VC process. This is how Crederity was found. Crederity was incubated in the Wharton School of Business, and was also a Wharton Business Plan Competition semi-finalist in 2004-2005. Now it is looking to grow in India. Rakesh is being advised by MVP to take this to the next level. We talked about MVP earlier here.

The name captures what they do nicely. I think it stands for credentials + identity. They are in the business of verifying your credentials and thus identity from the source. When you think of identity, things like single sign-on or digital certification comes to mind. Crederity provides similar services for credentials. Individuals could obtain a Crederity certificate that they can use to differentiate and build trust. On the flip side businesses could avail their services for reference or background checks. So the goal is identity/credential verification and fraud/inconsistency detection.

Say you want to verify someone’s degree from a university. The best way to do so would be to get the information from the university or the school. How about an address? Best way to verify that would be to contact local utility companies or ask your neighbors. But they cannot say how good you sing or dance. Rakesh puts it “you cannot verify something that no one can verify”.

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If you are in Delhi area and you haven’t heard already about Foodiebay.com, it is a great  place to find, research and review your food choices before you head out to get some grub. Recently we had an opportunity to talk to Deepinder Goyal. Deepinder is one of the founding members of the startup out of IIT Delhi.

Generally I found the site quite pleasing and all the basics are covered. Deepinder says that their biggest USP is the menu for EACH restaurant listed on the site. And I tend to agree. It is really nice to have a glance at the original menu card. Out of the other players in this space, most notable is hungryzone.com, if we discount “everything local” plays like burrp and other community driven local search sites. Foodiebay definitely wants to go where hungryzone is today in terms of features. Hungryzone seems to have larger presence with lot of  features like ordering food or make a reservation, done using Zook. What makes foodiebay so interesting is the amount of traffic it is generating as per Alexa in such a short amount of time. Take a look at the following graph. It seems like these guys have caught up to hungryzone already and looking good. I have put burrp & yepme in there to compare the niche play against broader ones. 

Generating buzz and staying on people’s mind is everything for sites like Foodiebay. So how do they do it? Deepinder tells us about one such example. “our recent joint campaign with Pankhudi Foundation (an NGO which works with underprivileged children to lift them out of poverty) where we donated Rs 3 to Pankhudi for each new visitor to FoodieBay. This campaign prompted a lot of our existing customers to refer their friends to FoodieBay thus bringing us new eyeballs and loads of funds to Pankhudi.”

I bet junta@foodiebay is working hard on their backlog, but some of the features I would love to see personally are

- mobile integration.

- Reverse IP lookup so that users destination is identified in advance.

- Phone integration so that people can call directly via the site. And it connects the users cell phone with the restaurant for ordering or reservations.

- lot of real or users pictures of the restaurant.

- And a buzzing community of reviewers.

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Morpheus Venture Partners aims to provide mentorship and advice to early stage startups. We recently got a chance to speak with the founders Sameer Guglani and Nandini Hirianniah. Here is the transcript:

How are you different from a typical seed/angel investor?

MVP is a currently only a Business Advisory Firm. We have plans of raising a fund to invest in the companies we involve ourselves with. However, the amount that we will invest is going to be a small component of what MVP has to offer. We will invest 5-10L where as, Seed and Angels look at deals in the range of 50L to 1Cr.
MVP works with companies one step before seed/angel stage, most of our companies will go on to raise their angel/seed round during their engagement with MVP.
We work with companies in very early stage/ idea stage where as angels/seed investors look for some level of maturity in the business in terms of product, customers, revenues, business model etc. We primarily back promising teams with interesting ideas.
MVP also has a strong community that’s getting created as part of MVP is invaluable for young entrepreneurs. Currently we have 11 companies and 35 odd founders/entrepreneurs as part of this community, who share their learning’s, relevant contacts and much more, which forms a support system for each of the MVP companies.

What do you look for in a startup that’s right for mentorship by Morphius?
* A rockstar team, with the right set of skills, a great vision and a lot of passion.
* Are they solving a real problem and will customers pay them for their solution
* Business targeting a large market opportunity which is growing at a rapid pace.
* Scalable business model
* The comfort level between the MVP team and the founders.
* The amount of value MVP can add to the business has to be significant.

Are there any areas of businesses that you specialize in? (example: internet, enterprise, etc.)

MVP is a sector agnostic business advisory firm open to all kind of startups, at the same time we may not the best choice for all startups. Some of the primary selection criteria are:
* The startup has a rockstar team, with the right set of skills, a great vision and a lot of passion.
* Startup is targeting a large market opportunity which is growing at a rapid pace.
* Can the MVP add significant value to the startup to justify the engagement
* Most importantly, there is a lot of comfort level between the MVP team and the founders.
* Currently we have 11 companies in the portfolio some which are B2B, some are B2C and some are both. Around 40% of our companies are creating products for global markets and the rest are only focusing on Indian market.

Current portfolio spans following sectors:
News, Micro finance / finance, Wellness / Preventive Health, Online Content sharing, HR/hiring, Saas / Online collaboration, VOIP, Local search, Food, Web Services
MVP has also built a panel of Subject Matter Experts with varied expertise and experiences, who are available to work with MVP companies either on a one-off basis or for a longer advisory role, with specific timelines/deliverables built in. These are people who are experts from different fields, entrepreneurs, investors, etc. They come with in depth knowledge of their field of expertise and make available 3-4 hrs every month for the MVP companies.

Do you mind sharing the names of a few companies that you are currently working with?

Following are some of the names from our portfolio companies:
Instablogs (www.instablogs.com )
Commonfloor (www.commonfloor.com)
Foodathome (www.foodathome.in )
moblf (www.moblf.com)
Call Graph (www.callgraph.in)
Crederity (www.crederity.com)
Deskaway (www.deskaway.com)
Dhanax (www.dhanax.com)
Fachak (www.fachak.com)
LifeMojo (www.lifemojo.com)
SutraHR (www.sutrahr.com / www.sutrajobs.com)

6% equity for zero money and 6 months of formal guidance, isn’t that steep?

As a response to this question, I’d like to quote Paul Graham’s views about the quantum of the equity. Although we are not investing any money at this point in time like Ycombinator, but the same reasoning applies in our case too. Below is a link to the interview in reference and I have pasted the relevant section of the interview down here:
http://paulgraham.com/frinterview.html

Question asked to PG: I read that when you call Y Combinator winners, the founders have only five minutes to accept. (”If people turn us down,” he says, “as far as we’re concerned they’ve failed an IQ test.”) Have startups turned you down? Are there any that have turned Y Combinator down and still gone on to succeed with a liquidity event?

Relevant part of PG’s response: The “IQ test” quote refers not to how fast they have to decide, but the amount of equity we usually ask for. In the median case it’s 6%. If we take 6%, we have to improve a startup’s outcome by 6.4% for them to end up net ahead. That’s a ridiculously low bar. So the IQ test is whether they grasp that.

How do you measure the progress of startups working with you? What metrics do you use?
Since every startup is different from each other, we track each one of them separately with different set of metrics/KPIS. At the same time we use common frameworks to ensure scalability. MVP has created an agile start-up framework, which includes
* Weekly meetings, Monthly meetings
* Daily 10 minute calls
* Business goals documents (monthly/quarterly)
* KPIs
We work with each startup to create a set of KPIs (Key performance Indicators) which make sense for their business and these are tracked on weekly and monthly meetings both by us and the founders.
Here are some of the important metrics that are tracked across our portfolio:
* Unique visitors
* Time spent on the website
* VAC (Visitor acquisition Cost) – applies to online visitors
* LAC (Lead acquisition Cost) – applies to offline leads
* TAC (trial customer acquisition Cost) - only applies to SAAS type services where one acquired trial customers and later coverts into paid ones
* CAC (customer acquisition cost)
* ARPU (Average Revenue per user)
* Customer lifetime
* Customer lifetime growth rate
* Monthly expenses
* Monthly revenues
* Monthly Cash flow
* Cash in Bank
* How many months of cash is available
* Product Activity (different for different startups)

The progress is measured based on two criteria:
* Comparing planned Business goals and the achievement done
* Tracking the movement of KPIs again against what was planned as part of business goals

Most of our portfolio companies use the online project management solution from Deskaway (also MVP company) to manage their projects and collaboration. Google docs is also used heavily for document sharing and collaboration on the documents. Callgraph (another of MVP companies) is used to record and share daily/weekly and scheduled discussions that happen over skype.

How is the current market affecting startups in India? Do you see it as an opportunity or death of startups due to lack of funding?
It’s an absolute opportunity for startups and situations like this always separate wheat from the chaff. There will be a set of “Not so good” startups that may panic and succumb to an early death. At the same time the good startups with good teams will figure ways to stick it out, last thru the current market scenario and come out STRONGER on the other side.
Below are some of the measures startups should implement:
* Closely re-examine all costs and eliminate costs which are not needed or which are optional. Also squeeze costs in necessary areas as well.
* Think harder before making any significant cash investment/commitment
* Increase priority of revenue generation activities and initiatives
* Get to positive cash flow scenario asap
* Come up with a product / service which can allow the startup to take advantage of the current market conditions. A good product which can allow people to save money, which is what most customers/enterprises will look to do, will have an good potential to succeed.

Since startups will have hard time to get money, do you think your business will get affected due to current market conditions?
We don’t think startups will stop happening, India is seeing a good momentum of quality startups and we expect the same to continue. This is one of the best times to work with early stage startups as the valuations are favorable and the weaker startups are automatically disappearing, leaving behind quality startups.
Also, the VCs are saying they intend to continue doing deals but they will look harder and deeper and hence take more time on each deal. So the startups today need to make more progress than before in order to secure funding and will need to make the same money last longer, reach cash flow positive and figure out ways to do stuff without spending money. This presents MVP with a good market opportunity.

Here is a great opportunity to tell your story of the challenges you faced and how you tackled them while doing business in an underserved market. I am sure there are a lot of entrepreneurs in India who might have a story or two that they can tell.

Call for entries open right now. 500-1000 word essay. Deadline - October 5th, 2008. Here’s the link for more details:
2nd Annual Base of the Pyramid Narrative Competition - 2008

According to the site, in summary:
“The Center for Sustainable Global Enterprise at Cornell University’s Johnson Graduate School of Management is accepting submissions for its 2008 Base of the Pyramid (BoP) Narrative Competition. This short-essay competition seeks to highlight the challenges of implementing business in underserved markets and identify innovative business initiatives or solutions to those challenges.”

Is anyone interested? We can work on this together.

With US economy taking a big hit with subprime mortgage and credit crunch, concerns of oil and election not helping either, everyone in India is talking about what does US recession mean for them. A very timely piece from our guest contributor Ranjith Pavithran. Ranjith is founder of the web consulting firm Kapston. Read on ..
—–

According to a majority of economists, the US economy has already fallen into a recession.

When recession grips US, it naturally worries all the businesses depending mainly on US consumers and economy. The recession 1.0 or the dot-com bubble did not really impact most of the “global” Indian companies, as they were either non-existent then or was in their early stages with no dependence on US. This may be the first time a majority of Indian companies are facing such a situation, head-on. Are they prepared for recession 2.0?

Opportunity or threat

It’s tougher to take the customer through the sales funnel from awareness to a buying decision during a recession. So when there is a slowdown, the top-line and bottom-line are both pressured. As normal operations cannot suffer and it is easier to cut advertisements than people, the ad budget takes the first and major jolt. Traditionally and unfortunately, the weaker and short sighted companies start the downward spiral during and after recessions. On the other hand, a quick look at the popular brands today reveals that they all got stronger during one or two recession periods.

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We spoke to Yusuf Motiwala from TringMe.com recently. The conversation covered various aspects including the technology involved, the revenue model, funding and staffing.

iLeher: How did TringMe come about?
Yusuf: We were looking to build a Voice 2.0 platform. This was the TringSwitch that we were planning to push to enterprises so that they could support all types of voice terminations - SIP, Mobiles, VoIP, IM (Jabber), etc. When we built this, we came up with TringMe as a way to demonstrate this platform that we had built and thats how TringMe came about. Then we got covered by TechCrunch and the site took off

iLeher: So how many users do you have now?
Yusuf: 60,000+ plus.

iLeher: Cool!
Yusuf: Yes, we are already generating revenues as well. A lot of these users pay to use the site.

iLeher: That brings us to our next question. Whats the revenue model that you are envisioning? Mostly the Skype-like Call In/Out kind of model?
Yusuf: Not at all. Like I already mentioned, we built a platform that we could sell to enterprises. That remains a revenue model we are going after.

iLeher: So you basically install the boxes in enterprise networks?
Yusuf: Not necessarily. We are also looking at Hosted Services where the enterprise need not spend extra on installing the box. We can take care of the back-end for them. In addition to this, we are looking at licensing our technology to different websites where a real-time interaction between different parties makes sense.

iLeher: Such as?
Yusuf: Dating, travel, reservations (for hotels, travel, etc). There are lots of areas one can think of.

iLeher: Alright. Any other revenue model?
Yusuf: Yes, we are also looking at partnering with developers who have ideas and are looking to build on top of this platform. We will provide them with SDKs which they can use to build their apps.

iLeher: So do you charge them for it?
Yusuf: Depends on the company. We could do a cash deal or take equity. Depends. We absolutely reserve the right to partner in these cases. We will evaluate the company and only then partner with them. Having said that, if we believe in the company, we will see how we can work with them.

iLeher: So what is next on the horizon as far as TringMe is concerned?
Yusuf: We have just announced a mobile solution for low cost handsets. You can check out the announcement on the blog. Our blog has a lot of information about our various offerings- what all we support, etc.

iLeher: Yes, coming to that. You support a lot of terminations. What is your team size and how long did you take?
Yusuf: We are about 9 people

iLeher: Thats all?
Yusuf: Yes, we started around May-June last year. I started the company and then slowly the team grew to its current size

iLeher: Thats a lot of work for this short a time and this small a team!
Yusuf: Well, we have a lot of experience in this field and we were able to apply it to get things working.

iLeher: How about money?
Yusuf: We are self-financed at the moment. Friends and family besides our own money.

iLeher: So are you planning to bootstrap your way to an IPO?
Yusuf: We will go in for a round of VC funding at some stage. We will let you know as and when that happens.

iLeher: Thanks a lot for talking to us
Yusuf: My pleasure!

We spoke to a Yusuf about a few other things which are already covered on the TringMe blog. Please hop over after leaving your comments here.

We wish TringMe all the very best for the future.

Yes I know, things have been slow at iLeher for some time. As Vivek pointed out earlier, the team members have been busy individually in their own stuff. Anyways,`I wanted to assure our audience that we are not fading away. The Internet activity in Indian space is as buzzing as ever. I was catching up on my reading and came across a couple of interesting thought-provoking posts by industry experts.

Darpan Munjal has this great post on ecommerce in India, where he talks about what are the gaps that need to be filled and what it might take to create a successful business in online commerce. I completely agree with him on all the points, and believe that starting an eCommerce venture is going to be much more challenging in India. It involves proving the audience about the value of online shopping, which of course can only happen if some one can execute on the points that the post talks about - not an easy ask. I have my own personal doubts on whether we have the critical online mass for that in India right now. But that doesn’t mean that now is not the right time to venture into ecommerce. I am sure there exists a model that will fit the Indian market and to get that model right, now is probably the best time to start, falter, learn, evolve and get the early mover advantage. What are your thoughts? When will we see an Amazon in India?

Anurag Gupta ponders on the much talked about web 2.0 brands in India. Whether Indian firms can compete with the global biggies. Do we have the resources, talent, mindset to come up with offerings that can pull users and make money. All I have to say on this is that web2.0 is just fancy term for a combination of some web technologies and business models that leverage the power of community. If there is a compelling online service that solves a problem or adds value (e.g. travel, matri, job sites) or even just lot of fun (e.g. orkut) to customers’ online experience, we can do just as good a job as any global biggie. Now whether a new site can start making money or not is a different question. If you ask me, if its pure advertising based model, I’d not bet my money on it today, but online advertising market is surely evolving. On the other hand, this presents an opportunity to invent new business models to leverage the online traffic maybe by adding subscription based premium services, sending leads to transaction oriented sites such as ticketing, online shopping etc.

On a side note, do you think Reliance Entertainment is worth $3 billion ?!

I wrote about VAKOW earlier and how much I liked their interface; but I could never use it to forward these awesome jokes to my friends in India. This new year I wanted to wish family/friends in India through SMS. I wanted to do the same thing around Diwali. Every time I want to do so, VAKOW comes to mind but being in USA I cannot register on their site. So far you can only register on VAKOW if you have a (+91) number. RG, one of the founder tells me that it is on horizon. Here is why they haven’t done it so far

“mostly because of higher pricing and seemingly less demand in certain geographies/economies. We believe that SMS Forwarding is a very developing economies phenomenon where other means of entertainment are few”

I can understand the high price concern, but I am not sure SMS forwarding being only in developing economies. I do know people out here in USA who are constantly texting. Maybe not as much as being in India, but VAKOW can bridge that gap for the Indians residing outside.

Good news is they are going social. They have Orkut integration where one can forward SMS to their friends scrapbook. Not exactly SMS to SMS but this is SMS to social networking. And it seems to work. Yesterday, VAKOW took this social integration one step further. They have launched VAKOWAPP. VAKOW’s facebook application that I can use to forward SMS to my friends in my network.

RG tells me that this should solve half of my problem before they launch international registration. And he is right. I am loving this integration.

I would like to think of this as their second step

1. First step was to launch a great interface around a simple idea (SMS-> SMS)

2. Second step is to provide SMS -> social networks (Orkut/Facebook/Opensocial)

3. What is third? May be this is the time they should start thinking of mobile advertisements? What do you think are different ways of making money around VAKOW?

Let VAKOW know what you think of their facebook app !!