Most Indian sites spend millions on hoardings, but don’t even have proper links

In other words, you are doing a rethink? And you have no problem inbacking off after making the launch announcement?
I have no problem in stopping and rethinking. If you are hurtling down acliff, you would be crazy to say I have chosen this path and therefore Iwill go the whole way and take the investor with you. I would rather stopand rethink. Every smart business does that.

So where did you stop and what do you do now?
We have the product ready, but we don’t want to go out with it. In thisbusiness it would take me $ 10 to $ 20 million to build a brand. If youfound that business-to-commerce is not generating revenue, why go out andspend money and get subscribers and yet make no money? So we have decided tohold that back and apply the technology to business to business (b2b). I amalso looking to see how I can leverage this b2b expertise and apply it inIndia. I plan to go there soon.

So you have b2b plans for India? You think there’s scope there?
The Internet is a great medium to streamline retail business. Trading inIndia is all about middleman and we can eliminate the middleman. In India,the whole supply chain is extremely inefficient. But if we can enable buyersand sellers to meet online instead of being physically present, we open upnew markets. The seller gets a higher price, the buyer gets a lower price.

But at the same time you are saying b2c won’t work.
Consumers in India will never buy on the Internet. First of all PCpenetration in India is extremely low and bandwidth is still a problem.Secondly, there isn’t a backend fulfillment mechanism that can handleorders. To this day I cannot send a magazine to India without it beingripped open. So when even in the US, with all its fulfillment mechanism,sites like Drugstore.com and Webvan.com are failing, e-commerce sites don’tstand a chance in India. I mean all this whyindia.com, oyeindia.com, theywill all go belly up. (laughs uproariously)

Is there a chance that some may survive, like Priceline.com is hanging inin the US?
Do you know which is the most sticky site in India? Hotmail. Everyone usesit. It is the most visited site. Yet it does not make money because there isnot enough advertising in India. Besides, people don’t look at ads on theweb. Even if PC prices come down to ten to fifteen thousand rupees in Indiaand connectivity improves, there cannot be any money in b2c in India unlessthere is a fulfillment mechanism in place. And that (the infrastucture todeliver goods) is not there.

So why are so many people in India going nuts over e-commerceportals?
Here is my theory: they want to get their money out on the hype. They willput up a portal, hype it up, get an insane valuation, go public, and get themoney out. The people who will be left holding the can will be theinvestors. That’s what happened in Hong Kong.

So where do you get in to India on the b2b front?
I am seriously looking to see if whatever we have developed can be used forb2b in India, whether it can be leveraged to bring about enormous economicbenefits. In the US, b2b is well developed and there are systems. Fortransactional b2b, engineering companies have ERP systems for which theyhave spent millions to hook into central data bases, inventory managementand control etc. That’s not there in India. So there is enormous opportunityto tie both these in – to tie platforms on the Internet to do b2b e-commerceand also provide the infrastructure parts at different ends to encouragebusinesses to automate their systems better. There is real opportunity inIndia and Arzoo might move in a big way into India.

Even without great PC penetration and connectivity?
In b2b, if you are paying ten rupees for a product and your competitor ispaying seven rupees to get tons of the same stuff, he is saving a lot. Sothere is a real opportunity to communicate information to the sellers andbuyers. Even if PCs and connectivity cost thousands,it is worth it becauseyou are saving crores. This is the opportunity to tap into. Not thisphoo-phoo advertising driven e-commerce.

So what does the future of the Internet look like in India?
If anything, wireless seems to have a great future in India. So it could beInternet over the phone. So a browser on the phone makes so much more sensein India. Like in Europe and Japan, phone penetration may be greater thanthat of PC.

What other opportunities do you see in India?
There are lot of opportunities in the infrastructure business – bandwidth,wireless, access through LMDS and MMDS frequencies, laying of fibre opticcable through the whole country etc. But people are going down the wrongpath. The real money to be made is in infrastructure.