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The Internet is exploding in the US and Internet companies are becoming the best of blue chip stocks. In India, the Web is still in its infancy and Internet companies are struggling. Why?

Not because people in the US have more brains. Indians are just as good, if not better. What they lack is the capital to sustain their ventures for the years it takes to achieve success. In the US, web companies’ ideas are financed by venture capital companies, that realise that in this field the ideas are all important. But in India, providers of capital want quick profits and hence they ignore the men with ideas.

These are the views of Venky Harinarayan, one of the founders of Junglee.com, which is the success story of 1998. Junglee, which was started with a moderate amount of funds provided by a venture capital company, was acquired by Amazon for an amazing $250 million. Venky gave an exclusive interview to Chennai Online when he was here in December.

Chennai Online: How often do you visit India?

Venky Harinarayan:  No particular pattern; once in three or four years. In fact I came in January 1998 and again in December. Normally what happens is that after leaving India you visit it almost every year, since you become homesick. But after you finish your studies and get a job, you start worrying about your green card and so you can't come for three to four years.

CO: In which batch and which hostel were you in IIT Madras?

Venky: I was in IITM from 1984 to 88. I was in Tapti for one year and then was moved to Godavari, as they made Tapti a PG hostel. I did computer science.

CO: Did you go to the US immediately after IIT?

A: I joined UCLA after IIT. After doing my masters in two years' time, I worked for a Silicon Valley company for 3 years and moved to Stanford for my Ph.D. What I was doing as research was the basis for starting Junglee. The other founders of the company were also in Stanford.

CO: There was an article on Rakesh Mathur in the Economic Times.

Venky: Yeah, he is here in India. Sudha( Venky’s wife) said she would kill me if I spoke to the Press on our trip to India. In fact, you are the only people I'm talking to. A couple of Press guys wanted to talk to me but it was strictly no go. Rakesh is here to find out what is happening in India and also spread our name. He visited India last year on a holiday. This trip is probably holiday cum business.

CO: How did you think of starting Junglee? Did you always want to be on your own?

Venky: We were all together in Stanford. We were all doing research on how to integrate data sources. And big things were happening on the Web in early 1995. There were thousands, why millions, of data sources. We thought of using the Web as the platform for integrating the data sources.

CO: What is your personal side of the story?

Venky: I was looking for a job for my girl friend, now my wife. So I searched through a number of sitesThey had hundreds of listings and it took me more than four hours to get the info I wanted. I thought people should be able to find job opportunities by submitting information about their degree, area of interest etc. And I felt that an engine that could search all databases and bring the results to the user would be of great service.

That was the great vision. Technology was available for this. That gave us a great start. There was another group in Stanford which was into similar research. We approached them to join us. They said it was a great idea, but they were not interested . Anyway, they had a huge funding for their research so there was no way they were going to leave that.

CO: How did you translate your dream into reality?

Venky: For about five to six months, we wondered how to start the company and how to commercialise our idea. One day, I attended a lecture by the founder of Yahoo. After the talk, we spoke to him. He called us over and chatted for two to three hours. He said we had a great idea and he asked us to join Yahoo. We told him we wanted to be on our own but his encouragement gave us confidence. We started doing something and the whole process started snowballing.

We first created a website on renting apartments in Silicon Valley. We got the information from the local newspapers. For instance, if someone wanted a two- bedroom apartment in Palo Alto, they could visit the site to see what the various newspapers had to offer. In fact, we used it to find our own apartments. It was useful and interesting; people really loved it and the site was a big hit.

We then showed the site to a few guys. One of them was Rakesh Mathur. He was a professional business guy. He said he would come on board and he arranged for seed capital.

CO: What kind of association did you have with Yahoo?

Venky: Our fates were closely linked right from the beginning. Yahoo was responsible for our starting Junglee and I had been interacting quite closely with Yahoo. Yahoo inspired us. It is really great being first on the Internet. Yahoo began with five people and grew to employ 500 persons. Its market capitalisation rose from $ 5 million to $40 billion in three to four years. It was a great inspiration to see that.

CO: How did you think of the name Junglee?

Venky: That's very interesting! We were thinking of all kinds of names like Net Blah and Web Blah. One of our friends suggested Junglee. We sat down and wrote a few more names, but kept coming back to Junglee. The next day we went to meet our venture capital investor, a Japanese guy, with the list of names.

One look and he said Junglee was the name! Junglee has a nice Asian ring about it. Not many people may know the meaning and many may find it hard to pronounce it but the great thing about Junglee is that once people know the name it stays in their heads. Once you get the newspapers to mention the name a few times, it doesn't leave people's heads.

You know, the name is very important. I mean, Yahoo was awesome and the name had a lot to do with its success. The Internet has been like that; Amazon for example. Our name was also really a good one; looking back I wouldn't have picked any other! We gave $50 to each of the employees and asked them to decorate their cubicles in a jungle theme. It was really great for morale and identification.

CO: How did Amazon get interested in Junglee?

Venky: There was a group that was interested in buying us out before the Amazon thing happened, but we found our interests did not really match. Merger is like a marriage.

The top management’s spend a considerable amount of time in discussions and when it doesn't happen you have to come back and pull in the reins. You lose a lot of momentum in the interregnum. We decided we would not go by this path.

Later, we went to Amazon for some business and they liked us so much they immediately wanted to acquire us. We said we were not interested and that we were extremely focussed on Junglee. But they came back and said they would make it quick and painless. They said we would work quickly and without any friction. So we said "yes". The personal chemistry was very good and there were a lot of synergies, just like in any good marriage.

CO: Can you give us some insights into how to set up and develop a web services company?

Venky: There are two phases. In phase one, you build your core assets. In phase two you monetise the assets built. Take the case of newspapers. They don't hope to make money as soon as they start. Therefore, in phase one you should not be greedy and try to make a lot of money.

Take Amazon, for instance. Building the assets involves huge investments. And there will be losses. The core assets are built up as quickly as possible. Then you can franchise or do other things and you start making money. This is how Amazon became a success. That is the model that works. In the US, investors and analysts are convinced about this.

CO: Do you think this model will work in India?

Venky: Yes. But in India it is difficult to sell this concept. That is the challenge really. In India no one is willing to take the risk; they are more interested in getting their interest on their money. There is no real venture capital. No one is interested in equity.

I met a couple of guys who had some great ideas; but no way will these ideas take off. No funding. In India it is too much of a hassle; either you have to invest personally or you have to take a loan. When we started Junglee, we did not risk our personal resources; the investment was by the investor in exchange for the ideas. In India, it is so much harder. You have to invest your money, all your hard earned resources.

Companies in Silicon Valley succeed whereas in India it is difficult. This is not because those guys are smarter or brainier but because capital is available. That is the essential difference. I'm willing to bet that Indian Internet and IT companies will also be successful if capital is available. There is a need for a professionally managed venture capital fund in India with an organisational set up. The fund will also help in marketing etc.

CO: How many years do you think it will take for a website to become a success like Amazon, for instance?

Venky: It is both harder and easier. It has become more and more difficult to brand yourself. But things are easier because more and more people are getting online. But you have to get up and shout. The space is getting more and more crowded.

You have to make a visit to your site a great experience. A customer comes in and loves what he sees and gets it quickly. That is the base line. After that, it is a question of marketing. If you are an early player in the game, there is a snowball effect. The later players have more difficulty in getting a place in people's minds. It is a standard law of positioning; if you are number one, you get almost all the value. Coke and Pepsi are classic examples. Coke's market capitalisation is five times that of Pepsi, not because there is any great difference in the products but because Coke was first.

CO: How do you see the future of Internet companies and websites?

Venky: Let me call it "infoseek". More and more people will use the Net till it becomes like a telephone or a TV. And they will be coming there for all kinds of information. I use the Net for everything, but I am probably ahead of the curve.

For a lot of companies, Commerce, E-commerce will be the business model rather than advertising. The whole organic nature of the Web will change in this direction. Take ebay for example (ebay is an online auction site). Customers and communities come and use the services and buy and sell things. ebay only facilitates the process.

CO: What about the future of Internet in India?

Venky: They say there are a huge number of Hotmail users from India. Therefore, Internet usage is quite high. The other day, someone was saying India is a small market with only 200000 users but the US model of PC penetration is not valid, with so many Netcafes around. My estimate is that at least 5 million people in India use the Net.

CO: What do you do outside of your work?

Venky: I like to visit natural game parks, go camping. Last year we went to Alaska.

CO: What do you think of Chennai Online? What role do sites like this have to play?

Venky: I think it is very useful. I'm pretty impressed. People want to know where a restaurant is, what show is playing where, movie tickets etc. On the Internet, one can do so much more than what a newspaper can do. That is the touchstone according to me. I'm very optimistic about the future of sites like Chennai Online.

CO: What are your views on personalisation and membership(P&M)? People say P&M is a must for content sites like ours.

Venky: I differ. You should concentrate on content, giving the customer a lot of value in the site. Make it a worthwhile experience to visit the site; you should make it a compelling experience. He should come again and again. If you cannot do this, no matter what else you do, you are going to lose customers.

L.Ravichandran

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