Friday, January 9th, 2009...3:58 pm

Mumbai Business (India Post)

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I decided to extend my trip by a few days and head down to Mumbai. These days, most people recognize Mumbai as the city in India that was attacked by terrorists in November. But Mumbai is much more than that. It’s a hustling and bustling international city of over twenty million people. Much of the international business in India is conducted in Mumbai. For me to get the most out of this trip, especially from a business perspective, I needed to check it out. After all, global business (along with digital and energy/environment) is one triangle of the LittyHoops Tri-Force of opportunity.

In Delhi, I had a dozen or so great casual business conversations with other guests at Param’s wedding. Most of these centered around a family business that was both established and profitable and is being handed down within the family. These businesses were in everything from manufacturing, construction, software and hospitality. In many ways it reminded me how my family started in America with my grandfather starting a successful shoe business that was passed down to my father and uncle. Their successful business stories sounded very much like my family’s story just unfolding one generation later.

The guys from the Saavn team were all heading down to Mumbai so I tagged along with them. Saavn is a sister company of Sportsvite (both are portfolio companies of 212[Media]). We share office space so I’ve picked up a good understanding of their Bollywood business by being around them everyday. Saavn is also a joint venture with an entertainment company in India. Saavn’s main business is securing Bollywood music and movie rights and then distributing that content through iTunes, Video on Demand, IPTV, mobile and other digital platforms. Saavn has set up parts of their operations in Mumbai because of the cheaper production costs and the proximity to most Bollywood businesses.

One thing that is strikingly apparent after only a few days in the Mumbai office is that one’s view of business in India is very much dependent on how high you set the bar for India’s burgeoning economy and industry. To be honest, I didn’t expect much. My simple Americanized and ignorant view of India didn’t go much further then the scene when you fight against Dhalsim in Street Fighter II. So when I saw a young, smart team trying to figure out the file encoding and transcoding processes for Saavn I was impressed. The people I met were intelligent, knowledgeable and hard working.

Saavn’s India partner is currently in the midst of a re-branding and is also celebrating their ten year anniversary. Everyday in the office there is a different theme for the day with a special event during lunch for the employees. India business isn’t just tackling the technical output that they are known for, but it is also making huge strides in marketing, human resources and organizational behavior. Here is a video from the office event.


But the longer I spent in Mumbai, and the more people that I met, I began to understand some of the challenges in doing business in India. Everything is still so young and so new that there are many obstacles that you just take for granted in the US. That’s fine if India was an insulated economy, but they are expected to produce output that is acceptable in the US and the overall global economy. This is where things get tricky. If you set the bar high, or high enough to match expectations in the US, it can be incredible frustrating. Although business in India has exploded it’s still very raw. Besides the management team, most of the people in the India office are young (under 30). For many, they are the first generation that have been educated and are part of a corporate workforce. Although they are intelligent, they are still learning how to efficiently and productively conduct business up to global standards. The cultural indifference for punctuality can be debilitating in business. Throughout the day it hit me that while their growth was super impressive it’s still not there yet. Perhaps one analogy is if you replaced all of your colleagues with very bright high school kids. You would be excited by the talent and potential of the students but also frustrated with their lack of business skills. Perhaps all that is lacking is experience and maturity. Those are major issues when you need to hit a deadline, appease a client or implement quality control. All these things will happen, just not as quickly as the global economy is demanding

One night I had dinner with a dude from Michigan who recently moved to Mumbai to work for a private equity fund focused on infrastructure. When I put the word out (through this blog, facebook and LinkedIn) that I was looking to meet people in India a few contacts mentioned I should get in touch with him. I didn’t know him directly at school but shot him a note through Facebook. He was super cool about connecting and even offered me a place to crash. I was interested to learn what kind of opportunity it would take for a dude in my boat (white/jewish in NYC, Michigan b-school, good job, etc.) to pack his bags and move to India.

Infrastructure is a key issue for the future growth of India and it is generally accepted that there will be billions of dollars in projects to improve roads, rail, highways, subways, etc. in the next decade. In India, government isn’t that strong so most projects are sold to the private sector. I was expecting to hear that companies were doing more deals than is imaginable in the US and collecting piles of cash. This isn’t exactly the case. While everyone agrees that there will be substantial investment in infrastructure in the long-term, there are still many obstacles. As the global economy came crashing down in 2008, much of the “hot money” that was placed in emerging markets was pulled out by professional investors. India’s forecasted economic growth in the next few years has been reduced significantly. Infrastructure projects don’t look as attractive as they were when capital was cheaper. Add in the inherent risks of trying to complete actually construction projects in India (risks include unreliable local government, weather, labor, sub-contractors, etc.) and it makes these projects even more daunting. In the last few months, the terrorists attacks in Mumbai and the corporate scandal at Satyam makes India an even shakier proposition for global investment.

I also spent some time with a few students who are currently at Wharton Business School. There is a contingent of 15-20 first year MBA students that are looking to secure summer internships and then hopefully full-time positions in consulting or finance. Some of these students are from India and just came to the US for B-school. Others are of Indian descent and some are students who just are enticed by the opportunities within India. All the major banks and private equity firms have shops set up in India but students have to do most of the networking and secure their position on their own. The prevailing thought is that a fresh MBA graduate will have significantly greater responsibility and opportunity working in India than in the US. Factor in that India will just become more dominant in the future and these students see India as their best chance to make it big.

One of the biggest opportunities in India is to try and capitilize on the growth of the burgeoning middle class. As more people become educated and enter the corporate workforce they will have more disposable income and that will lead to more demand for all kinds of goods. I met a girl who worked at Pepsi in marketing for seven years in the US and moved back to India to be closer to family. She teamed up with a few people and is now leading Burberry’s entrance into India. They’ve opened three stores and now are going to “chill” for awhile but plan on eventually expanding to dozens of stores. While Burberry is certainly an exclusive brand, every day in India more and more people are able to (and want to) purchase these kinds of items.

When you think in these terms, as India being a gigantic consumer class, the possibilities are exciting. After having a meeting with the head of Hungama’s marketing arm (who was absolutely brilliant), one idea that popped into my brain was that kids in India would love cricket trading cards. I asked around and no company is doing this. If you’ve ever been to India one of the things that pops out is that there are kids everywhere. They basically roam around without adult supervision often holding each other hands and playing (yes, exactly like they do in Slumdog millionaire). Ask them about cricket and their eyes light up! As more parents have a few extra rubies it seems like cricket cards would be a great little gift for their kids. Throw a piece of Indian candy in the pack instead of the stick of gum and have a sponsor offset some of the costs so that packs can be super affordable. It seems like a business that inevitable will succeed but just hasn’t been done yet. In my excitement, I’ve already sent out a note to my contact at Topps and he wrote me back that it sounds interesting. I have a meeting next week to discuss it. It’s exciting.

As I read over this post, it’s disorganized and I’m not all that sure if I have any kind of thesis. That’s about right because I’m really not sure how the economic growth in India will unfold. Some people think India is primed for prolonged stagflation. Their thinking is that India exploded in growth in the last decade but may have grown a bit too quickly and now the rest of the country has to catch up before it can move forward again. Others believe they are growing correctly but that it just will take another generation for them to be actual movers and shakers on the global playing field. Others believe they are already there despite all of the remaining hurdles.

Many in India often compare their business growth to China. Interestingly, they seem to envy China for their strong government, manufacturing efficiency and forced growth. India could never have organized an event as huge as the Olympics. It seems like this is a case of the grass is always greener though. For all of China’s efficiency they have serious issues when it comes to working conditions, human rights violations and personal freedoms. Who the heck knows all of the actions China pulled off to pull off the Olympics. India seems to be improving those issues as they grow and in the long run that could lead to a healthier society.

I’m interested to see how this competition plays out as I think it will define the future of business growth around the globe. I guess the only thing to do now is head off to China! Do you know any Asians getting married?

  • rajeev

    i work as an investment banker in bombay. i am on facebook.