In India, I think we will see more of standalone niche consumer internet business models rather than the next Google or Amazon in the immediate future.

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Let me give you a prologue before you think I’m too cocky to state that. Yes, some might think that. But for them, what the heck – you can always bounce me off in the most powerful section of this blog called comments through your words of wisdom or may be simple bashing. Whatever suits you!

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Now to some important things – yes, as I was saying about the prologue thing. Last week, I met at least 10 people from the start-up fraternity (both investors & entrepreneurs) who are on their way to build their next business models which you might get hooked onto or miss it below the radar.

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Whatever it is, I tried to understand the psyche behind those ideas which they are hatching. In total, the ideas or my point of view is a culmination of all the ideas which I’ve been part of; some heard, some in which people seeked my advice and my bit of research over the internet about the kind of consumer internet business models that have come up lately in India.

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So to set the cat amongst the pigeons, I already said that I see the start-up ecosystem evolving in India is more biased towards niche consumer internet business models rather than becoming the next big internet behemoths like Google or Amazon. More biased because building a company is a not an easy task. More so, building a great company which can stand the test of time is somewhat a difficult proposition. Also, building a company which has scale, scope and more importantly sustainable monetization model is quite a task.

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What most of them I met are trying to build niche products. Not the big ones which will require higher upfront investment, time to scale and market. It’s imperative to say that internet obviously marginalizes the barrier to entry axiom but surely this fosters more entrepreneurs to try their luck.

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So what I’ve been seeing recently are plethora of ideas catering to different niche problems. For example, how about making the information local doctors easier or how about making the legal information like making your will easier or how about making it easier for online users to buy products with an easier & surprisingly amazing UI.

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These sort of ideas are relatively easier to build and quick to market unlike trying to make the next big Google or Amazon or even Rediff for that matter.

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Surely there are couple of reasons for this:

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1. Diversity: India is country of more than a billion population but internet population hasn’t yet achieved a critical mass of active users who can be mass targeted. Blame it to diversity in language, buying habits, cultural preferences etc. So this makes the task of any entrepreneur to build the next big thing much harder. May be that’s why we don’t see much horizontal portals like Rediff, Indiatimes coming our way in the last couple of years. Also the competition is pretty high in such areas which are primarily dominated by big media houses till now since they have the money & can afford a high-burn rate initially.

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2. Investment: “Cash is king” is the holy grail for any web entrepreneur. But if we think about raising capital from other than friends, family & fools (FFF), the whole system is still fragmented broken. We don’t see prominent venture capital funds investing in smaller amounts (which is the need of the hour) which calls for Angels or seed funds to do so which is again lacking in numbers since they are very cautious about taking high risks with unproven business models and especially which has a high probability of getting copied soon by competitors. And rightly so.

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But I’m not undermining the possibility of niche business models working for India. Actually, I feel niche is the right way in Indian scenario for internet business models.

Some of the reasons I feel so are:

1. As I mentioned earlier, building niche consumer internet products are relatively easier to build and market with low investments. Now that’s the most important factor for any web entrepreneur. Build the product>>launch>>take feedback>>keep working on it. This way, the burn-rate is more manageable and its easier to understand the hit rate.

2. Also, going niche helps to mitigate the risks. Let me explain how: risks in terms of initial investment which is way lesser than going for the big kill initially. Later, scalability becomes easier since experience curve plays a bigger role.

3. Finally, lets face it. In internet, starting niche has a probability of higher payout in terms of bringing a new solution to a problem with a totally new service. For example, internet job market is one of the largest service accessed by people. Now since jobs are getting diverse, newer services targeting specific verticals are coming into picture – like for mobile industry – a big job portal will have different vertical jobs (without concentrating on any specific niche one). But people who want only VAS jobs or only mobile apps building jobs would like to visit websites which only focuses on such jobs. So there’s much possibility to target those individuals. Though scale in terms of number of active users initially would be low initially but engagement and referrals to such site would be more than bigger job portals; which again reduces your marketing costs and adds to your bottomline. And since industry like mobile is growing in India, people would be interested in more niche job opportunity than mainstream ones.

So these are my thoughts on how niche is the next phase of growth for Indian internet market and why being the next Google, Amazon or Rediff might not be the right approach for new-age web entrepreneurs in India.

Would like to know more from you guys. So calling all entrepreneurs, investors, stakeholders or anybody & everybody who think that I’m making some amount of sense here. Care to share some of your wisdom?

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