Building consumer businesses in the global downturn
Downturn is here to stay, at least for
a while. So, what should entrepreneurs do? What kind of businesses makes sense
to pursue as the markets trend downwards and consumers hold on to their
wallets. I have been thinking about some new ways to look at the opportunities
ahead in the consumer Internet. First and foremost, in the down cycle,
consumers are going to be much more value conscious. They are going to expect
lot more for less and will focus on activities that either support their
current incomes, jobs or help them save money or reduce expenses. Call it the
era of “frugality” or “diet economy”, global consumers will start to look for
web services which drive greater value for them.
Crowdsourcing for value
One of the big potentials of the next
generation web is to effectively bring large number of Internet users together
for addressing a specific opportunity or a problem. How can a large population
of Internet users come together to help you find a better shopping deal? Or
help you find the dream job that you have been looking for? Or help you get
into the college of your choice? Or help you raise money for your new startup?
The idea here is to bring together people for specific purpose through your consumer
web service in a manner that they can collectively deliver significant value to
you, which otherwise cannot be made possible in the physical world.:
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Help you
“predict” stock bubbles? Is google
stock overvalued, what is the sentiment around google? Can the crowd of online
google watchers tell you something that might help you to sell your stock in
time?
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Community
to help you with your job search? You are now looking for your next gig, can
the web 2.0 help you find that job in a way that traditional job sites, and
portals are not able to help. How can one bring together the collective
intelligence of the crowd of Internet users to find the best opportunities that
might fit your profile and interests? Can professional networks like LinkedIn
or SiliconIndia.com be extended through such intelligent crowdsourcing
services?
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Imagine
consumers who are trying to lower their personal spending, shop for best
prices, or rent items for near-term use rather than buy them outright. How can
the web users help each other to accomplish this through an innovative web
service? Intelligent recommendations
from the web users can help many to lower their overall spending in the tough
down economy. You need to buy a car seat for your baby, would you rather rent
it for a fraction through the web or would you rather buy the car seat via
collective recommendations from your network friends? Innovative web sites can
help consumers with these types of value optimizations.
Purpose Based Networks
The current generation of horizontal
social networks like Facebook, Myspace, LinkedIn, hi5 etc is going to give way
to more vertical and specialized “purpose” based social and professional
communities. These communities will carefully combine proprietary content,
community members with strong emotional affiliations, and a strong vertical
purpose to differentiate themselves with the first generation of social
networks. The opportunities in successfully creating these kinds of purpose
based networks are going to be very significant, even more so than what we have
seen done by the networks of today:
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Can one
create a community or network for solving huge social problems like poverty or
healthcare?
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Can
social communities be applied to solving problems of educating the next
generation in science and maths or English?
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Can one
imaging a platform where the purpose is to develop innovative movie scripts
that are developed by a “wikipedia” style collaboration? Imagine, the movie
producers already know that the masses have a bias for its box office success?
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SiliconIndia.com
itself represents a good example of a next generation purpose based network.
The purpose at siliconindia.com is to build smarter and entrepreneurial careers
for its members thereby helping build a smarter India in the process. Every
country in the world needs something similar.
Emerging markets: The next consumer
frontier
Developed economies like the US and
Europe are going through a prolonged period of GDP correction, which is bound
to impact consumer sentiment and spending. While this has a downward effect on
emerging economies like India, China, Brazil etc., these emerging economies
will still represent GDP growth trends.
I believe that the next set of intelligent consumer web services will be
best focused on such emerging markets. In 2008, for the first time in the
history of the Internet, the Top 10 emerging markets (like India, China, Brazil
etc.) have more Internet users than the ones from the Top 10 developed
economies. Growth rates of Internet usage in emerging countries will far
outstrip those in the developed countries.
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For
example, in India, email, IM, voice messaging, career, education, search, news,
finance, social networking, represent significant areas of Internet usage
growth. Innovative web sites, which create new user experiences and value
propositions in these areas, will end up growing very well. Each of the
emerging markets is different, and hence entrepreneurs must take the time to
understand the Internet usage characteristics of each market separately.
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Emerging
economies are also embracing mobile web through smart phones. This presents an
opportunity to look for innovative mobile web services for India. Can the
mobile phone be used as a device for
making global payments, or for boarding on airplanes, or for buying etickets
for events?
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Bottom of
the pyramid represents a great market opportunity for emerging countries like
India. Can the cell phone provide a ubiquitous platform to enable information
and transactions for the 800 million people who live in villages and rural
areas? What kind of services do these people care for, and how can the mobile
web services help them? Entrepreneurs must study for opportunities in these
areas.
Hope through this article, I have at
least raised the awareness on how the downturn might have us rethink consumer
Internet and web 2.0 opportunities.
Entrepreneurs must understand the new rules of the road. And those who
change with the changing economic environment will find themselves very well
situated to create disruptive value for themselves and their investors.
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