Q. Mr Swarup, you’ve been in the internet industry for about seven years. Did you ever imagine during the early days that the internet would be so hot?

A. After 20 years in the food and beverages industry, the reason I took the plunge with Indiatimes was that I felt that media was at the take-off stage in India. Media growth in this country was not driven by technology but by a change in the regulatory framework, unlike more liberal economies like Europe and US where technology leads the change. When India started opening up, I realised that technology would drive our economy too. In the food and beverages industry, technology takes a lot of time to impact the way they do business, whereas in media, it can make an immediate impact. That’s why I took the challenge. I joined Indiatimes when the internet bubble had burst in late 1999. But I went ahead because it was not the technology that was the cause for the
burst; it was the financial world, which accepted certain norms of evaluating the (internet) technology, as with other business. That’s where they went wrong. A business is a business. You have to evaluate technology on financial and economic parameters more than anything else.

Q. But why didn’t you get into TV, for instance. Why the internet?

A. A person of my background, and the stage of career I was in, could not have created much impact on TV as I could in a new medium. TV was already saturated with people. Content and journalists, not businessmen, have led TV in India. We can take the example of Raghav Bahl (MD of TV18) who was a finance person but he built the company on the strength of his content and personality. Similarly, there’s NDTV. But I wanted to play a larger role in the destiny of an emerging medium.

Q. But given what was happening in the internet space when you made the move, you must have thought, what have I got myself into?

A. Yes, I did. But it was only for a year. I was grappling with the fact that I am part of a game which people didn’t believe in. But we have to understand that it was actually the financial world which had written it off -- and not the consumer. People were still getting on the net and doing new things. During the so-called bust, internet adoption continued to grow. So, how can you write it off?

If I were at Indiatimes, I would just hold the baton and run faster rather than think whether I should hold that baton.

Q. It must have helped that internally, within Indiatimes, the mandate was quite strong.

A. Yes. Vineet Jain (MD, BCCL and Chairman, Times Internet Ltd) was extremely gung-ho about the medium. He said that it (the bust) was over-hyped. He wasn’t shocked by what happened. And he wasn’t dependent on funding, so it didn’t impact him so much. He continues to believe in the medium. During those days, there was a constant debate on how much time the senior management should give to the new medium and how much money should be pumped into it. Although we didn’t pump in too much money, the internet was evolving, and we experimented.

Indiatimes become a diversified portal. We put money in e-commerce, content and pioneered mobile content with the short code, 8888. I always believed that mobile would grow faster than the internet. The infrastructure was lacking for it, as it was dependent on public sector resources. I always believed that the medium of internet access would be wireless. One of the greatest inflection points will come when broadband internet and mobile 3G give seamless access to the internet. When you have another 50 million internet users and about 200 million mobile users, internet is going to take-off in the country.

Q. There was a lot of speculation when you left Indiatimes. It seemed like you left in a hurry…

A. That was not the case. Whenever a change in senior management happens in any large organisation, it is not very transparent. When there is a lack of transparency, speculation does arise. I had spent five years at Indiatimes, where my commitment was to crystallise value. Although we disinvested close to 3 per cent in the company, it was to show the value we had created, more than a lack of funds. My contract had come to an end, and the move was pre-decided. But what was not foreseen was that a lot of people went on as well, in different directions.

Q. Indeed, Times Internet Ltd has been a good breeding ground for talent.

A. I was fortunate to have such a committed team at Indiatimes. We had all gone through a bad phase and had an extreme sense of bonding and belief in the medium. We experimented a lot with the medium in those days. I allowed a lot of freedom to the people I worked with. I used to just set broad parameters. The medium expected you to unleash a sense of entrepreneurship in the manager. It couldn’t be run by the traditional structure. It was challenging, and Indiatimes was seen as rebel in the organisation. We had a style. All of them were bright.

Q. The ‘people problem’ you mentioned earlier continues to this day and is one of the key problems facing TIL. What’s your view?

A. It’s difficult for me to take a view now as I have been out of the system for a while. I guess that, if I may say, they sat back to review and take stock a little too long. If I were there, I would just hold the baton and run faster rather than think whether I should hold that baton.

Q. There is another round of excitement around the internet, though less exuberant. And you’re in the midst of it all, donning many hats.

A. (When I left Indiatimes) I wanted to continue in this space, but I realised that internet in India will grow through small and medium entrepreneurs rather than large industrial houses. This medium is best run by individual initiatives -- this I realised pretty early. I could have been an entrepreneur on my own, but having worked for large organisations and at the stage of my career and my age, I couldn’t have started from scratch. I scanned around for young, bright people who I could invest in with finance and experience.

What is important for today’s internet entrepreneur is to have resources of your own with the ability to sustain yourself for 3 to 5 years.

Q. Were these your own resources or did you have access to resources?

A. Both. There is a tendency among young entrepreneurs to do everything possible. They want a hold in every space -- be it social networking or jobs -- and there are no barriers to entry in this space. You can have a group of four people sharing a workstation, and you can create a business. But people don’t realise that creating a business and scaling it are two different things. The earlier days of creating something and getting immediate value in it no longer exist. What is important for today’s internet entrepreneur is to have resources of your own with the ability to sustain yourself for 3 to 5 years. My advice is to never take easy money.

Q. Even if somebody comes up to you with a decent idea and you are convinced about his potential? They may have the bandwidth to succeed but not enough money…

A. We have an incubation programme, which I am heading. It’s the reason I am here. The idea has to be good. We would come in with the infrastructure and managerial inputs for him to sustain, and put an organisation around that idea. If you do get easy money in the beginning, you tend to lose your own conviction and commitment about what you came in for.

Q. There are too many people in the industry who want a regular job rather than those with passion…

A. I think there is no lack of people with passion. But the game is not the same as earlier. Most of the entrepreneurs who leave a comfortable job cannot all succeed. In the real world, three out of ten ideas succeed, it’s the same in the case of the internet. In fact, the internet is worse. If you don’t succeed, there are five people who could succeed based on your model. So, the internet is far more ruthless than the real world where you create real assets. For you to create an IPR, it could take ages. Like with travel portals. As there’s a shakeout in the real world with low-cost airlines, I don’t see a reason why there should not be a shakeout in travel portals. The internet is an integral part of the real world.

Q. What’s your take on Web 2.0 and social networking?

A. Just before I left Indiatimes, we had envisioned Web 2.0. Very few people know that Indiatimes had a networking product called O2. No one paid attention to it. It could have been the largest one, with the clout of Indiatimes. I had foreseen a change happening. The strength of internet is that it can reach a large number of people relatively fast. It is ideally suited for networking. Anything, which connects people, will succeed on the net.

Basic needs will evolve into a more sophisticated economic model. For example, I don’t see any need for jobs portals in the future.

Q. Where would that have a parallel with creating value in the offline world? Will connections by itself be enough?

A. Once you start connecting, the first fulfilment is social and then it’s emotional. What comes next is economic fulfilment. There are far too many intermediaries in the real world. When you have 100,000 people connected through a network, there’s no reason why they should not enter into an economic relationship. Now, people just talk about products like mobiles. Later, people would start trading their mobiles on this platform. These basic needs will evolve into a more sophisticated economic model. For example, I don’t see any need for jobs portals in the future.

Q. Why do you think so?

A. When there are many people together, they would exchange job opportunities themselves. From our own experience, if we have opportunities in the Smile Interactive Technologies Group, the responses in social networking and blogs are far better and quicker. The consumption rate is much higher, because there are like-minded people. This is the beginning of the economic model of social networking.

Q. Are there, in your opinion, any sociological issues that might stem Indians using networking media?

A. Parental influence is always there in Indian society because you tend to have that linkage forever. I think that’s breaking now, which is more obvious in the real world. On the internet, you can get away by not getting noticed. The normal inference of the parent is that you are doing something which is a waste of time, like chatting. Like any other medium, 10 to 15 per cent of the content is something which society scoffs at. The other 85 to 90 per cent is “right”.

Q. What about gaming?

A. A lot of people think that gaming is going to take off in India. I am not so gung-ho about gaming in this country. The Indian youth does not get involved in wasteful activities themselves. That’s how our social upbringing is. You may get excited about gaming in a certain stage of your life. It’s not like in Japan or South Korea where it carries on with you till you are 50 or 60. In some countries, this phase lasts from three to seven years. In India, I would guess that period is about six to eight months.

Q. Six to eight months? And what period of their life would this be? And where does this leave big players like Zapak?

A. It could be at any age, twelve to eighteen years. I think gaming could be a good point of entry on to the internet. Gaming sites are able to capture people and give them other platforms like social networking. Like, e-mail was considered the point of entry in the earlier days. Then came IM.

I am not so gung-ho about gaming in this country. The Indian youth does not get involved in wasteful activities themselves.

Q. Isn’t e-mail still the point of entry? Rediff seems to have that opinion. Zapak has also launched an e-mail service.

A. No. E-mail is passé. E-mail is a commodity, like you have a postal address. It’s like a business card. Having an e-mail id doesn’t mean I am going to transact on the net. I think social networking sites are bigger entry points than e-mail. If you can interact with 100 or 150 people on a network, why do you need e-mail? We still need e-mail companies though, which try to find different ways of monetising their product. Rediff is a strong e-mail company and that’s where they should continue to invest and think of innovative ways of monetising them.

Q. Rediff is also facing the perception that they are only an e-mail company. But they have come up with social products too. And they have 53 million users who they have to introduce the new products to.

A. Imagine if they had 50 million users on social networking! They would have been able to monetise it much better. I think: once an e-mail company, always an e-mail company. Indiatimes and Rediff and the others will find it difficult to get out of that trap.

Q. From Indiatimes point of view, you would have been involved in the email push. It must have been a conscious decision.

A. One of the criticisms I faced while I was at Indiatimes was that I was not investing enough in e-mail. It was there but it wasn’t worth investing a lot in. Looking forward, the e-mail registered users cannot be claimed as users for your entire portal. If you are heavily dependent on e-mail users, you never get market value out of that. In the valuation pyramid, e-mail forms the bulk, but at the lower end of value creation.

Q. For the record, what is your take on the internet numbers in India?

A. I take a long-term view of numbers. What’s important in a country like India is the awareness number. I would not like to go into the active and passive debate. My guess is that in a high-growth medium, which internet is, it’s more important to know how many people are aware of the medium. If the mobile population is 250 million, twice that number would be aware of internet. The biggest barrier is creating awareness for your product. That’s where the biggest spend happens.

Once an e-mail company, always an e-mail company. Indiatimes and Rediff and the others will find it difficult to get out of that trap.

Q. That sounds a lot like what you would have said in your Pepsi days.

A. Even internet could be entirely different tomorrow. People have adapted to the mobile very fast in this country. People on the lowest rung of the ladder know how to make calls on mobiles. Very soon they will be able to send SMS. Then, what can stop them from pressing a button and logging on to the internet from their mobile? With an FMCG product, you have a choice. But with the internet you don’t have a choice. Even while VAS in mobile is growing, there is no compelling reason to access the internet. Now everything is centred on Bollywood and ringtones. It will go beyond that.

Q. There are carrier issues are well.

A. Everybody is selling the same commodity -- everybody is selling ringtones, so no one bothers.

Q. You are very hot on mobile, even more so than the internet. There is no exciting content on mobile now, where do you see it going?

A. I think the next big thing in India is going to be social networking on mobile. If you can create a social networking platform on mobile, that is one big thing, which may even be a bigger reason to buy a mobile than anything else.

Q. Mobile advertising is also not happening. When do you see that taking off?

A. Mobile ad networks are something, which I am personally very hot about. Unfortunately, there are still low penetration levels of GPRS, which is a great impediment to serving ads on mobile. When 3G happens, then mobile advertising will definitely catch up. I would guess that 2009 is a big year for mobile and internet integration, and that’s the opportunity people should start working on now.

I don’t think digital agencies need to dictate to advertisers what they need to be doing. We are not in the business of educating our clients.

Q. You also have a travel search engine, Zoomtra. Search advertising is seen as a non-intrusive method…

A. I would agree that search is extremely powerful advertising opportunity. But at the same time, search advertising is more call for action and it doesn’t help in brand creation. You always need a brand for people to have confidence to transact. And people don’t mind being intercepted if there’s a good message being communicated. People say that advertising on TV is intrusive, but you do look at a good ad. When there is clutter and competition for consumers’ attention, it only takes you up the creativity chain. Both kinds of advertising will survive. When the Colgates and HLLs of this world put big money behind the net, things will change. They will put big format advertising on the net. Brand building will happen in the traditional way. TV is continuing to grow.

Q. How easy would it be for a traditional brand like Colgate to translate brand values on the net? There are other advertisers who don’t want to do brand building on the net, but want measurable returns. There is a debate happening here.

A. It has to be a mix of both. You can’t debate on that. Net is delivering an audience, and the advertiser needs to come. Advertisers need to look at the kind of audience being delivered to them and decide what to do with that. I don’t think digital agencies need to dictate to advertisers what they need to be doing. We are not in the business of educating our clients. That’s the mistake we made five years ago. You educate them with the type of audience. They know best what to do with that audience.

Q. A lot of stuff is happening on IPTV too. What do you think about that?

A. Indiatimes had the first initiative on IPTV. We were the first people to do a pilot with BSNL in Gurgaon. This was three years ago. I think IPTV is a long way, and the reason is that the kind of copper cable, which is laid, is not really of that high quality. Cable and DTH is very much out there and easier to navigate than IPTV and it’s still a long way.

Q. Why Paprika Media? And what plans there?

A. That’s an interesting question. One needs to be in touch with the real world. The value lies in integrating the two rather than working on them independently. I think that’s an exciting area to be in. We are looking at integrating the publications with the mobile and the internet. We believe that city-centric content will move on to the net than in a printed form. You don’t want to wait for 15 days to see what’s happening in your city. You want to know there and then.

The Indian attitude is to just start off, and see where things go. That’s why they don’t get anywhere.

Q. Coming back to social networking, it’s easy for the members to create economic value. But what about the networking portals? How will they create value and sustain themselves? Today, they are only driven by AdSense.

A. I think they are going to continue being driven by advertising. Google AdSense and other ad networks will be the mainstay in the years to come. When people start having economic relationships on the network, which is a natural evolution, the portals will have to build up to that objective. They will have to enable people to do commerce among themselves through a kind of exchange system, where you can get a commission. That’s where Indian net entrepreneurs are poor. They don’t visualise the end game, like the Silicon Valley ones who are very clear from the beginning about what end value they want. The Indian attitude is to just start off, and see where things go. That’s why they don’t get anywhere. On the internet, you need to be very clear and sure about your goals, and you need to keep building your back-end and technology towards that, and help your community to evolve to reach your ends. That’s what Google is doing. They didn’t suddenly discover AdSense.

Q. It’s the same with video sites. How will they sustain themselves?

A. I think the next big thing will be serving video ads on the net. I think travel and hotel sites should all go video.

Q. A little on the Smile incubation programme. How does it work?

A. Tyroo and Zoomtra have been incubated by Smile. They are both doing extremely well. We are actually in the process of incubating five or six independent firms under the same umbrella. A couple of them are in the social networking space and mobile advertising, one of them is into mobile VAS delivery. What we do is that we invest in them, not only financially, but also in providing them the infrastructure and technology. We take stakes of anywhere between 15 to 60 per cent depending on how we believe in it. We help them get strategic partner but we discourage them from taking easy money or financial investors. But if the business scales up and we are not able to bring money in, we act as catalysts in helping them get VC funds.

We have our own fund of $5 million, to which we intend to add another $10 million. A lot of people who come to us do need cash infusion and we have started to change our model. I meet about three to four people a month, who have ideas to share. But I don’t want to be seen as a venture capitalist or an angel investor. I am more of a mentor. I look for good people who are passionate about their idea. Sometimes we have to tweak their ideas and align their base models to the end game.

Thank you, Mr Swarup.

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