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December - 2008 - issue > Entrepreneur 101
Building Consumer Businesses in the Global Downturn
Gunjan Sinha
Thursday, December 4, 2008
Downturn is here to stay, at least for a while. So, what should the entrepreneurs do? What kind of businesses make sense to pursue as the market’s downward trend continues and consumers hold on to their wallets. I have been thinking about some new ways to look at the opportunities ahead in some active consumer forums in the Internet. First and foremost, in the downturn, consumers are going to be much more value conscious. They are going to expect a lot more for less and will focus on activities that either support their current incomes and 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 purposes through your consumer Web service in a manner that they can collectively deliver significant value to you as listed below, which otherwise cannot be made possible in the physical world:
* 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?
* A large community to help you with your job search. You are now looking for your next gig; and the Web 2.0 can help you find that job in a way traditional job sites and portals are not capable of. One can bring together the collective intelligence of the crowd of Internet users to find the best opportunities that might fit your profile and interests. Professional networks like LinkedIn or SiliconIndia.com can be extended through such intelligent crowdsourcing services.
* Imagine consumers who are trying to lower their personal spending, shop for best prices, or rent items for short-term use rather than buy them outright. The Web users can help each other to accomplish this through an innovative Web service? Intelligent recommendations from the Web users can help people to lower their overall spending in the tough, down economy. You need to buy a car seat for your baby, would you rather take it on hire for a fraction of its cost through the Web or buy a new one via collective recommendations from your network friends? Innovative websites can help consumers with this type of value optimizations.

Purpose Based Networks
The current generation of horizontal social networks like Facebook, Myspace, LinkedIn, hi5, etc. are going to give way to more vertical and specialized purpose oriented 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 such purpose-based networks are going to be very significant, even more so than what we see with the networks of today.
* Can one create a community or network for solving huge social problems like poverty or healthcare?
* Can social communities be applied to solving problems of educating the next generation in science, mathematics, or English?
* Can one imagine a platform where the purpose is to develop innovative movie scripts that are developed by a ‘wikipedia’ type of collaboration? Imagine that the movie producers already know that the masses have a bias for its box office success?
* 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 help 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 U.S.A. and Europe are going through an extended period of GDP correction, which is bound to impact consumer sentiments and spending. While this has a downward effect on emerging economies like India, China, and Brazil, these emerging economies will still represent good 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, and so on) have recorded 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.
* For example, in India, email, IM, voice messaging, career, education, search, news, finance, and social networking represent significant areas of growth in Internet usage. Innovative websites, which create new user experiences and value propositions in these areas, are set to grow with remarkable success. Each of the emerging markets is different, and hence entrepreneurs must take the time to understand the Internet usage characteristics of each market separately.
* Emerging economies are also embracing mobile Web through smartphones. 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 airplanes, or for buying e-tickets for events?
* The bottom of the pyramid represents a great market opportunity for emerging countries like India. Can the cell phone provide a ubiquitous platform to enable access to information and transactions for the 800 million people who live in villages and remote rural areas? What kind of services do these people care for, and how can the mobile Web services help them? Entrepreneurs must study the 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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