The meetup took place at Ducca Restaurant, in downtown San Francisco.

Click here to visit all Blogs@Intel

Tags: Paul Otellini, Josh Hilliker, Ylian Saint-Hilaire, Shmuel (Mooly) Eden, Manny Vara, Bill Kirkus, Eric Kim, Anand Chandrasekher, Stephen L. Smith, Chris Heuer, Blogs@Intel

Ron Fellows is a racing legend, having begun his professioanl racing career in 1986, chalking up wins at Watkins Glen and in the NASCAR Busch series. In 1998, he began his long collaboration with GM’s Corvette Racing team, amassing an impressive streak of wins in the American LeMans series and other events. Ron is also an avid music lover. And legendary in the music world are Paul Reed Smith Guitars, acclaimed by such artists as Carlos Santana, Jimmy Buffett and Ted Nugent among others. So when PRS Guitars president Jack Higginbotham presented Ron with a PRS Custom guitar to commemorate the special edition Ron Fellows Z06 Corvette, it was an opportunity to speak with two icons in separate industries about what brings them together.

Reporter’s Notes: My thanks to General Motors for inviting us to cover the Chicago Auto Show. They paid for our flight, meals and accomodations, plus provided access to high level spokespeople, engineers and designers for interviews, yet required no restrictions, review or edit control of our content prior to publishing.

Tags: Ron Fellows, NASCAR, Jack Higginbotham

Control4 manufactures a complete line of home automation products that makes sophisticated home automation solutions practical and affordable for new and existing homes. Control4’s solutions integrate home theater, music, lighting, temperature controls and home security.

Prior to co-founding Control4, Eric co-founded STSN (now iBAHN), the worldwide leader in broadband services for business travelers. Eric developed the intellectual property that made it possible to simplify Internet protocols and offer fast, convenient broadband service to travelers staying in more than 175,000 hotel rooms in 200 cities around the world. Prior to STSN, Eric also co-founded PHAST Corporation, which quickly became the leading contender in the residential control systems market.

This podcast is brought to you by Rocky Mountain Voices.

Tags: Control4, Eric Smith, Dennis Wood, vSpring, v100, entrepreneurs, STSN, iBAHN, PHAST, Rocky Mountain Voices

Reporter’s Notes: We must be making quite an impression on the large automakers with our content here on The Next Gear. So much so that GM invited us for an all expense paid trip to Detroit to cover the North American International Auto Show. While there, they wined and dined us and gave us unprecedented access to designers, high level corporate bigwigs and company spokespeople, yet with no requirement that we publish anything about them, only that we disclose this enticement. It was an opportunity we are happy to share with you, our audience. I encourage you to leave your feedback!

-Matt Kelly

Tags: Chevy Camaro, Muscle Car, 2009 Camaro, Brian Smith, Jeff Perkins

This podcast is brought to you by Rocky Mountain Voices.

Transcript:
Host: Eric Smith - Control4
Guest: Bob Metcalfe - 3Com

Eric Smith - Control4
I’m Eric Smith, CTO and Founder of Control4 and I am here today at the CES show with Bob Metcalfe, doesn’t need that much introduction, inventor of Ethernet, Founder of 3Com and many other things.

Bob Metcalfe - 3Com
…and Chairman of Ember.

Eric Smith - Control4
And chairman of Ember?

Bob Metcalfe - 3Com
A ZigBee supplier.

Eric Smith - Control4
Who is one of our best providers and we’re here just kind of talking about technologies and kind of the future of automation and what’s happening and it’s exciting for us to be involved in this kind of a business.

Bob Metcalfe - 3Com
People talk about the future of Home Automation, you have to be careful, it’s here already that what we’re really talking about, it has to do with very large numbers, but as you — we were talking earlier, Home Automation has been around for 20 years and it’s beginning to develop some scale now.

Eric Smith - Control4
We founded Control4 on two fundamental technologies, which are Ethernet and Zigbee and really we wouldn’t be the company we were without those things. We need those connectivity standards and honestly for a startup company, like us that’s focus on this kind of product to develop our own networking standards, just wasn’t feasible. And the main reason we needed too, is we needed some things for high throughput, higher bit rate, user interface and things like that and so certain things I mean that kind of thing did, but we also needed kind of a low bit rate, but high reliability, very inexpensive control network. Spent a lot of time looking for a solution, we even looked at putting Wi-Fi in light switches at one point, but it was then that we discovered ZigBee and got pretty excited about it.

Bob Metcalfe - 3Com
Well, there’re different kinds of networks for different purposes and there’s large numbers of them in the notion that they’ll be in one emerging standard just doesn’t fly because of what you just said, there’s just such a diversity of the requirement.

Eric Smith - Control4
I think this is why people ask me sometimes when Home Automation standardize, will Windows PC just talk to it all, would it just — how’s it all going to work together and there has been this kind of dream of a plug-and-play home, you put in a light switch, put in a thermostat and it just works. And I often tell people, “Well, look at your PC today. How many different ports are on the sides of that PC?” So, why is there an Edge Modem in it and a Wi-Fi modem underneath in that port and a traditional 56K modem and a USB and a FireWire and a parallel port and a serial port and a mouse connector and a cable connector, or a keyboard connector and a video connector, why so many ports? And that’s a pretty standardized area, it’s we’ve been working on it for a long time and that to think there one standards is going to do, everything seems pretty strange.

Bob Metcalfe - 3Com
Well the problem with that suggestion that the Windows PC would be the center of everything is just how what a bad starting point Windows is for something that supposed to be easy to use and transparent and user friendly. I mean we live in fear at our house that something will break with the computer and then we’re going to have to call somebody to come in because we can’t fix it ourselves.

Eric Smith - Control4
I’ve been seeing especially with the advent of the Media Center PC, which is a pretty fun technology, I really enjoy the Media Center PC, but just like any other experience I’ve had at the PC, it’s a PC and occasionally it falls down and people, I don’t know the last time I’ve had to reboot my Sony receiver, it’s been a long time.

Bob Metcalfe - 3Com
You have this, as you just said this Ethernet ZigBee combo in your products, so what do you use each of them for? I guess you would use the Ethernet for going up stream into the Internet and you would use ZigBee for going down stream into the control points?

Bob Metcalfe - 3Com
Yeah, generally, we just occasionally use the Ethernet to get between devices when it’s possible to, but what we really needed and Home Automation has been around for a long time. I think most consumers are becoming aware of it recently, but it’s been around for 16-17 years at least. I mean that’s how long I’ve been involved in it, but it’s always been kind of this metaphor you’ve either had these kind of, like your XTen stuffing by RadioShack that works most of the time, but was very inexpensive, or you had these very nice wired systems. The problem is what’s the odds that as you have a piece of 5-wire in a light switch box, it’s pretty low for most consumers.

ZigBee is just amazing and because it gives us a very robust, very inexpensive control network that makes all the devices talk and they talk reliably and I think most of it has to do with the mesh networking capabilities there where every device doesn’t have to see, it’s way all the way back to the controller, just as we’ll see the next device.

Bob Metcalfe - 3Com
I think you underestimated how old XTen is. I mean I think XTen was around in early 80s, so that be 20 some years ago. It’s amazing how that has persisted.

Eric Smith - Control4
It’s still around and it’s — but it has been mostly a obvious thing because it doesn’t always work. And so, it’s really hard for someone who makes a business of selling Home Automation to put in XTen, because if a certain light in the basement won’t turn off because there’s a compressor on it deep freeze down there next to it, there is nothing that do, or can do about it. And the consumer is going to say, “Why is that? You’ve said it would turn off the lights, it doesn’t turn off that light; I want my money back.” ZigBee allows us to provide the kind of reliability of the wire systems, but very close to the price points of the old XTen systems.

Bob Metcalfe - 3Com
Have you thought ahead to when every home has every device on a Control4 network whether there’ll be any interference or overlaps or security breaches are in?

Eric Smith - Control4
It’s definitely something that’s concerning that’s one of my favorite things about ZigBee, is the fact that it has encryption built into it, so that your neighbor can’t just hack your lighting system, or even worse, your security system. I love that and I love the fact that there’re different frequencies. So that there’re 16 different channels, so we can move things around and have a house next door to another house. We’re doing quite a few apartment buildings at this point and we’re finding it works quite well, even when you’ve one apartment right on top of another, there’s full security between them and they all tend to work quite well.

Bob Metcalfe - 3Com
How does ZigBee do in a Wi-Fi environment?

Eric Smith - Control4
That’s always a good interesting question too.

Bob Metcalfe - 3Com
I guess you could ask it the other way around, how does Wi-Fi do in the ZigBee environment?

Eric Smith - Control4
My best example of all of that is this trade show actually — the Consumer Electronic Show is the worst Wi-Fi nightmare on the planet, mean if you walk over the Convention Center across the street and you set an access point in a Laptop, next to each other, they will not connect. There’s so much noise in that 2.4 Giga Hertz Wi-Fi spectrum. What’s interesting is, ZigBee is in the same spectrum, but because it uses different techniques of sending data, it works better in it. We’ve got a booth right over there in the mid of that where Wi-Fi does not work in that building and the ZigBee works great and it’s a kind of an amazing thing.

Bob Metcalfe - 3Com
So, all that prior planning and engineering is paying off now.

Eric Smith - Control4
It is and it’s — companies like Ember that have made it happen for us, we’ve been very excited about that.

Bob Metcalfe - 3Com
So, introduce a long term standard like Ethernet was, like ZigBee will be, you do a lot of engineering, thinking of scalability in the long turn and then when you first come out with products, they’re too expensive because they’ve all that functionality, multi channel, encryption, frequency this, frequency that, speed and the initial instantiation of the product that you compare that to the junky proprietary things and they look better.

Eric Smith - Control4
Absolutely.

Eric Smith - Control4
So, if there was Ethernet in the early 80s at 10 mega bits per second and put up a little ARCNET look better because it was much, much cheaper, it didn’t have all that rigmarole in it. Of course then it’s the networks scaled up and as the Ethernet got cheaper then the frailty of the proprietary things faded.

Eric Smith - Control4
I remember when the concept of an Ethernet card built into a computer was just absurd. I mean no one would think about building that in because how many people really need that with network anyway and so you buy a NIC card and put it in the PC and make it work together. And it was a pretty neat thing and I think it was like about 95 or 96, when I first started seeing Ethernet card standard in the PCs. And I think the problem was, as I said earlier we looked into it for control systems, but it was in the neighborhood of $80 to $90 back in 1995 to put Ethernet on a device, now it’s $5 or $6.

Bob Metcalfe - 3Com
Well, the first Ethernet card I sold cost 5000.

Eric Smith - Control4
I can imagine?

Bob Metcalfe - 3Com
But ZigBee has a similar problem in that. It is — because now we’re down to some $5, way below $5 single chip solutions and that’s continuing to go down. So, as the network scale up and as the Control4 networks get bigger so that the features of ZigBee are more appreciated and then as we manage at Ember to get ZigBee to be cheaper and cheaper, a little take off.

Eric Smith - Control4
Volume plays the game almost everywhere in the — we’re seeing it happened already and I think when you get to. If you go right now — Control4 sells dimmers their $99 and that honestly shocks regular people, $99 for light switch? Because they’re used to that $2 home depot that a rocker and that seems expensive, but if you look that as compared to the other technologies, they’ve historically have been the lighting systems, they were $350 - $400 and so people in this industry tend to go, “Wow, $99 dimmer? That’s just as affordable as anything I’ve ever seen.” But I do believe, we’ll get down to where they were at the $25 to $29 dimmer, which is about the price of a decent dimmer, home depot right now. If you want to go buy nice dimmer that you can put on your wall, that’s would it cost and I think that’s when it becomes ubiquitous. I think we’re on the right curve to get there.

Bob Metcalfe - 3Com
It’s all inevitable really just at the moment — it sort of feels like it’s coming, but it’s inevitable, it’s going to happen. Those curves always happen.

Eric Smith - Control4
The one I’d like to look at is similar I talk about is, one of our evidences that Home Automation will hit the broad market, is that rich people and regular people are the same, they want the same things, just rich people can afford them. And high-end homes tend to have these systems. They’ve been for at least for last five years most high-end homes that are being built, have a Multi-room Audio System, have a dedicated media room, have lighting control, have an integration system.

If you look back 30 years ago, how many cars had power locks and power windows? It was only the very high-end cars because it’s quite of an expensive feature. Well I just read something a couple of months ago and one the papers saying that, Apple-Ford and Chrysler aren’t going to offer crank Windows anymore because that mechanical crank is more expensive than the power window motors,” because they’ve gone into a volume now that that’s less expensive and I think we’ll get there.

Bob Metcalfe - 3Com
Well, look at the GPS I am never going to buy a car without a GPS.

Eric Smith - Control4
Absolutely.

Bob Metcalfe - 3Com
How long will it be before all cars have GPS in them, five years, two years, eight years?

Eric Smith - Control4
I don’t think it’s very long.

Bob Metcalfe - 3Com
Not very long.

Eric Smith - Control4
It’s the best thing for men because we don’t have to ask for directions ever again.

Bob Metcalfe - 3Com
So, Eric, I have been — as to ensure the expert in Home Automation and I’m just the expert on networking. How do you see things rolling out over the next 10 years, so you can use our networks in your Home Automation systems?

Eric Smith - Control4
I believe the prices will go to the point in the next 10 years that most consumers, almost all consumers will have, like the same kinds of consumers that have TVs, will have Automation. I think we’re going to get there because the price points are going to get there and…

Bob Metcalfe - 3Com
Yeah, but there’s another point, there’s price points and I take your — I’m not just agreeing, but then there’s usability points, that’s right now a lot of our systems they’re as like my Honeywell Thermostats that I have on that, which are very old. I still can’t program those things. I go through the manual pressing all those silly buttons, so when you’re going to reach a — when do you think, or have you already reached the usability price point where things take off?

Eric Smith - Control4
Well, fundamentally when you look at Home Automation, it’s about two issues. It’s about networking all devices so they talk to each other and then building up a common user interface to all those devices. And the thermostats is a very good question because programming a setback thermostat with a little cryptic buttons and keys, trying to figure out what you’re doing is almost impossible, it’s a real pain. And one of the things we do because we talk to the thermostat whether it be one that we build or someone else does, we can present that UI on your home PC, which is a much better user interface, you have a much better ability to do things on that.

Can you imagine trying to do — like buy a new computer on your thermostat, but buying it on a Web page isn’t that hard. If you can program your thermostats through a Web interface, you can give them a better user experience. If you can do it through your TV and things like that. The other things that happens, if we have a setback thermostat, I know you live somewhere it’s kind of cold, in most of the year. Most people have their thermostats setbacks so that in the evening, it turns out that sets back to heat a little bit, then brings a backup in the morning at 6:30, say, but have you ever had to catch a flight earlier than that? Did you actually reprogram your thermostat to bring out the heat? No, it’s too difficult.

But if you have an automation system, your alarm clock could be integrated to your thermostat. So, now when you set your alarm clock to wake you up an hour earlier, because you’re going to go catch a flight, they track automatically adapts to turn on 20 minutes before that wake up and that really makes a great experience for the consumer.

Bob Metcalfe - 3Com
I need that, absolutely. Because my situation is so bad that when Daylight Savings Times comes, we just let the heat come on an hour earlier or later depending on (voice overlap) we can figure it out.

Eric Smith - Control4
It is too difficult to program this stupid thing. It is very difficult and that’s one of the benefits of automation. And another one I’d like talk about a lot, is people say why automate things? I mean I’ve got all these separate systems, but there’re real synergies to come when you integrate the systems. The best example I can think of is, if you have a smoke detection system, that’s integrated with your heating and air conditioning system and that’s integrated with your lighting system and that’s integrated to your motorization, like motorized blinds, or garage door and that’s also integrated with your audio system, there’re some really interesting synergies that can come.

Let’s say the smoke detectors go off, when people are in a fire what kills them? It’s usually not the fire, it’s the smoke. Well, a heating air conditioning system is a perfect mover of smoke in your house, so I call it the equal opportunity killer. Doesn’t matter where the fire is in the house? The HVAC will make sure that the smoke gets to every room; it also provides fresh Oxygen. So, if the smoke detectors could immediately turn off the heating systems, the fan doesn’t blow. That has some real tangible benefit for a consumer. Usually when fires kill people tonight…

Bob Metcalfe - 3Com
Turning the lights on.

Eric Smith - Control4
…dark, turn the lights on. Maybe not full blast — though because it might do the fog light a whole, but bring up 20% so you don’t blind yourself in the middle of night. How about making the motorized blinds in the garage door, automatically pop open so you get quicker escapes, so you don’t have to wait for door to go. How about having the audio system announce over the house, system where the fire is? By law, all smoke detectors have to go off, even if one senses the fire, but if the audio system could say, “You know the fire downstairs in the office, or the storage room,” that would be very helpful to people getting out of the house.

Another the problem is, fire trucks come at down the street at night. It’s a little bit hard to see address numbers on a house and truthfully if the flames are coming out the roof, it’s too late. The fires usually are hidden if you could have your front porch lights and yard lights are flashing that has some real tangible benefit, that kind of shows how you feel — integrate all those systems. That really has benefit because there’s so much…

Bob Metcalfe - 3Com
So, there’s three sort of triggers, there’s price point, there’s usability point and then there’s systemic value point to connecting everything together. Those three things are driving adoption I’m guessing.

Eric Smith - Control4
People have been looking. I’ve spoken at probably 15 conferences, where the topic was, “What’s killer app of Home Automation,” and they’re looking for the killer app, kind of like the Spreadsheet was for the PC, what’s the killer app for Automation? The challenge I think is that the killer app is the integration itself. It’s the making the things work together that is the killer app, I don’t think there’s anyone item of a Home Automation that’s going to be the reason why people buy it all by itself.

Bob Metcalfe - 3Com
So, that’s another benefit of standardized networking. When you have a standardized network, not only does it get cheaper more quickly because there’re a lot of people using it driving volume, but then there’s also the value of being able to connect products from many different companies together, so that you can — “Oh, there’s a light I will use ZigBee that talk to it.”

Eric Smith - Control4
Absolutely. Well, thank you Bob it’s been great talking to you and it’s been good to spend some time with you.

Bob Metcalfe - 3Com
It’s exciting being here at CES with you.

Announcer
This has been a RockyMountainVoices Podcast. Visit us on the Internet at www.rockymountainvoices.com.

Copyright ©2006 PodTech.net. All rights reserved. Privacy policy

Tags: automated home, networking, Eric Smith, Control4, 3Com, Bob Metcalfe, venture capitalist, ZigBee, Smart Home, Rocky Mountain Voices

Transcript:
Host: Rio Pesino - PodTech
Guest: Cory Smith - ESPNradio.com

Rio Pesino - PodTech
This is Rio Pesino for PodTech.net here at CES 2007. I’m here with Cory Smith with ESPNradio.com, right?

Cory Smith - ESPNradio.com
That’s right.

Rio Pesino - PodTech
Product Manager, correct?

Cory Smith - ESPNradio.com
That’s right.

Rio Pesino - PodTech
Cory welcome to the Podcast, thanks for joining us.

Cory Smith - ESPNradio.com
Thank you very much, thanks for having me.

Rio Pesino - PodTech
Cory, we are at CES in front of the ESPN booth. I didn’t even know ESPN had a booth here at CES 2007 passing by. What are you guys doing here?

Cory Smith - ESPNradio.com
We’re just kind of showcase with some of our new technologies and how we’re I implementing with the latest and greatest things that are out there. We have partnered with EA Sports for some our video games. We have ESPN (Inaudible) which is our on demand and content with some of our videos, then we have our podcasting as well, which we launched back in last April of 2006.

Rio Pesino - PodTech
Now, the rises here with ESPN and EA Sports, tell us something about this.

Cory Smith - ESPNradio.com
Basically, EA is a one of the leaders in video games and we also think that ESPN is a leader in sports content. So, it’s just kind of a natural partnership. So, we’ve partnered with them and it’s a pretty interactive, it’s a cool feature that once you’re playing these games and you’re log in it, you can get live ESPN updates while you’re playing the games.

Rio Pesino - PodTech
Right.

Cory Smith - ESPNradio.com
So, you have both of video content, SportsCenter and some other clips and podcasting from a live episodes are available as well.

Rio Pesino - PodTech
I know you guys implemented that with NBA Live, you guys had, you go watch SportsCenter like you’ve mentioned before…

Cory Smith - ESPNradio.com
Right.

Rio Pesino - PodTech
…you get Podcast going on over there, with Anti-AA with Mark Landis with (Inaudible) coming out. Are you guys implementing those same things to that game as well?

Cory Smith - ESPNradio.com
Yeah, we’re pretty much trying to implement a trust board on all of our sports games, so I’ll be available on all of them.

Rio Pesino - PodTech
Now, I’m a fan of your site, I can’t go to ESPN.com checking out the Warriors and the Niners and the Giants, so they might see them from the Bay Area. What I’ve noticed about you guys, your site is that you guys have implemented blogs, podcasts, most of the sites your daily Podcast there is also Eric (Inaudible) Super Bowl Podcast that’s prior (ph) to that. Probably get some Super Bowl and I want the damn thing.

Cory Smith - ESPNradio.com
Oh, great.

Rio Pesino – PodTech
Let’s talk about some of the changes you’ve made with pods and in podcasting, what do you think that’s going with your site with espn.com in general?

Cory Smith - ESPNradio.com
Yeah, yeah, we’re really proud of our Podcast initiatives. Right now, we currently have about 24 podcasts that we’re offering, both national podcasts and some local podcasts that we’re offering on entrepreneurial platform. Then we’re always trying to come with new shows as well. We have (Inaudible) where all this coming out. We have NASCAR with ESPN and NASCAR again. So, we’re launching a Race Day Podcast as well. It’s really two-fold. One trying to find podcasts that advertisement is one of the part of and then also more importantly podcasts our listeners want so here — so, ESPN is always trying to get through of our sports fans at every single avenue out there. So, (Inaudible) is one of the new initiatives that we feel that we can really help them to get ESPN on the go.

Rio Pesino - PodTech
Cory, how are your reporters dealing with the transition from old-school media into the new media?

Cory Smith - ESPNradio.com
Yeah, they’ve been great to work with. They’ve really strongly embraced it and ESPN has been growing so much, they’re kind of an innovator in the sports arena. So, I think a lot of our town is used to doing new things in embracing that and the great with podcasting is that we think kind of figured in some of our smaller town and making just some of our espn.com writers in news there, the sports now is a great Podcast there as well, so in that instance, they’re definitely strongly embracing it as then can kind of get their name out there a little bit boring get the content out there as well.

Rio Pesino - PodTech
Right. Mike and Mike is one of my favorite shows and I subscribed that Podcast as well. Are there any new things that we can expect in the near future, when it comes to ESPN in their inner content?

Cory Smith - ESPNradio.com
We’re just going everyday. The same announces that day, what kinds of mail we have from users, the great about podcasts and they’ve been on iTunes is that we’re closely monitoring some of the feedback that we get, which is just from the users and what they want. So, the (Inaudible) is a perfect example, we had a lot of demand for an NHL Podcast, so we saw that through our iTunes and through some other feedback that people can submit through espn.com as well through podcenter (ph). So, just whatever the demand is for, we want to create it for them.

Rio Pesino - PodTech
You guys have numbers as far as like number of download metrics on your podcast.

Cory Smith - ESPNradio.com
It’s doing great. We have we first launched that back in April 2006, we had about 40,000-50,000 downloads a week. We’re now at about 700,000 downloads per week…

Rio Pesino - PodTech
Wow!

Cory Smith - ESPNradio.com
…with PTI been our largest Podcast, which is about 175,000-200,000 downloads a week just for that one Podcast.

Rio Pesino - PodTech
So, all for our listeners who don’t know what PTI is, ‘Pardon the Interruption.’

Cory Smith - ESPNradio.com
That’s right with Tony Kornheiser and Michael Wilbon.

Rio Pesino - PodTech
Last question for you, who’s winning the Super Bowl this year?

Cory Smith - ESPNradio.com
Oh, God. Well, it certainly not going to be in New York Times.

Rio Pesino - PodTech
Definitely not, I am with the Bears. The Bears?

Cory Smith - ESPNradio.com
Who knows man, who knows that they’re going to ball this year.

Rio Pesino - PodTech
Well, I am thinking the past, I am thinking the past man, you can’t count them out that’s long date, so we’ll see.

Cory Smith - ESPNradio.com
I hope so.

Rio Pesino - PodTech
We could decide things up at the podcast.

Cory Smith - ESPNradio.com
Hey great, thanks for having me.

Copyright ©2006 PodTech.net. All rights reserved. Privacy policy

Tags: ESPN, CES, EA Sports, Rio Pesino, Cory Smith, ESPNradio.com

CEO and co-founder Sanjeev Bikhchandani was a featured speaker at the recently concluded first TiE India entrepreneurial conference in Mumbai. We caught up with Sanjeev at the conference and spoke to him on a whole range of issue ranging from what it takes to go IPO on the Indian stock market, and what are the similarities and dissimilarities when compared to an American IPO.

Info Edge was founded in May 1995. Sanjeev and his team bootstrapped their company before they landed their first round of funding from the venture arm of ICICI. Sanjeev talks about how the environment for entrepreneurs has changed in the past 10 years, and how organizations like TiE help foster entrepreneurship.

Sanjeev also offers advice to first entrepreneurs and some of the do’s and don’ts when starting a business. Sanjeev holds a bachelors degree in Economics from St. Stephens College, Delhi and an MBA from IIM, Ahmedabad.

Transcript:
Host: Kamla Bhatt - IndiaTech
Guest: Sanjeev Bikhchandani - Info Edge (India) Ltd.

Kamla Bhatt - IndiaTech
This is Kamla Bhatt for PodTech. Today, we have Sanjeev Bikhchandani, Founder and CEO of Info Edge (India) Ltd. Info Edge recently went IPO. It was the first Indian Internet based company that went IPO. Info Edge owns properties like Naukri.com, which is a job portal, Jeevansathi.com, a matchmaking portal, and 99 acres, a real estate portal. Welcome to the show Sanjeev.

Sanjeev Bikhchandani - Info Edge (India) Ltd.
Thank you.

Kamla Bhatt - IndiaTech
Congratulations on your fantastic IPO. You are the first Indian Internet company to go IPO.

Sanjeev Bikhchandani - Info Edge (India) Ltd.
On Indian markets.

Kamla Bhatt - IndiaTech
On Indian markets.

Sanjeev Bikhchandani - Info Edge (India) Ltd.
Rediff and Sify went earlier in 1999-2000, on NASDAQ.

Kamla Bhatt - IndiaTech
What was the process for going IPO in India?

Sanjeev Bikhchandani - Info Edge (India) Ltd.
There are a lot of similarities between IPOs in India and the US. There you have the SEC here you’ve SEBI, which is Securities and Exchange Board of India. There you have Sarbanes-Oxley, here you have Clause 49. You have investment bankers in both places. Many of the investment bankers here are also there in the US for there are Morgan Stanley, Merrill Lynch, anybody. So, therefore, there are many similarities, but you know listeners (ph) in the US, there are a couple of differences, which I’d like to point out. The first difference is that by law in India, any Indian company — any company incorporated in India has to list in India before it lists overseas or at least, it cannot not list overseas before it list in India.

So, therefore, if you’re incorporated in India, you would IPO in India first. The second big difference is that there is no open auction process in India for IPOs. There are silos, so, for example you have two IB component of 60%. In the book-built IPO you have a retail component of 30% and a high net worth individual component of 10% and therefore, within these silos there are levels of subscription, under subscription, over subscription, and therefore allocation. The third big difference in IPOs in India versus the US is that there is no discretionary allotment of stock among institutions.

So, the banker and the company cannot decide whom to give how much allocation to. It is all pro rata, all proportioned allotment depending on how much you applied for, you will get a certain percentage of that in case the issue is over subscribed you’ll just scale back. These are three differences that I’d like to highlight, but otherwise road shows, investment bankers, process, DRHP, RHP are very similar.

Kamla Bhatt - IndiaTech
What was the initial offer that you had?

Sanjeev Bikhchandani - Info Edge (India) Ltd.
Well, we raised about $37 million of capital. Although, the IPO was open for 4 days, we had gone in with the price band of 290 to 320.

Kamla Bhatt - IndiaTech
Rs 293

Sanjeev Bikhchandani - Info Edge (India) Ltd.
Rs 290 to Rs 320 and that Rs 320 for delivering about 19.5% of the company, we would have raised $37.5 million, which is what we did.

Kamla Bhatt - IndiaTech
What is the trading at today?

Sanjeev Bikhchandani - Info Edge (India) Ltd.
Well, today, I don’t know, but it fluctuates between somewhere in the 500s.

Kamla Bhatt - IndiaTech
So, it doubled.

Sanjeev Bikhchandani - Info Edge (India) Ltd.
Well, it slightly less than doubled, yes.

Kamla Bhatt - IndiaTech
What are you going to do with the money that you’ve raised?

Sanjeev Bikhchandani – Info Edge (India) Ltd.
This is more or less — we’ll stick to what we’ve committed in the prospectus. This is basically growth capital, so we’re looking at new businesses and new markets, potential acquisitions. We’re looking at consolidating our Noida operations into one premises, therefore, possibly a campus. These are some of the uses of this profit money.

Kamla Bhatt - IndiaTech
You’re not a young company. You founded your company 10 years ago, so, it took you 10 long years before you went IPO. What does it take to run a company in India?

Sanjeev Bikhchandani - Info Edge (India) Ltd.
Well, I think if I go back to the early days, clearly the struggle was we didn’t have enough capital. That’s different now, I mean, there is a lot more venture funding available now. There was only one or two venture capitalists maybe in India, when we started out in ’97 and the second is the — because you don’t have capital you don’t have access to good infrastructure, office infrastructure, connectivity and so on. So therefore, almost every business in India would start on a bootstrap mode, self-funded mode or your family is already in business and therefore, is able to fund you.

So, you’ve either access to capital, which is personal capital. Clearly, for ventures like ours debt was not an option, so, while India did have debt available from banks, but, the banks would basically do asset based lending, which is that you‘re buying land, building. Okay, and then they will lend you money, but they would look at your cash flows. Can you sustain the repayments? So, for startups, it is very hard to get money.

So, clearly, access to capital was one thing. I think that’s changing. I think entrepreneurship as a career choice for educated white-collar youths who are not from a family business background, whose family is not in business, it was a brave and bold decision in the ‘90s. I think that is changing because there are enough success stories now. I think the presence of an entrepreneurial network like TiE, mentoring, meeting other people, I think that is a big help. We had nobody. So, it took a lot of bootstrapping when actually — while we started Naukri in 1997 — I have been an entrepreneur since 1990, and the first 10 years we struggled. Then, finally, we got venture capital from ICICI venture in early 2000.

Kamla Bhatt - IndiaTech
What was the first venture you started?

Sanjeev Bikhchandani - Info Edge (India) Ltd.
The company was still the same, it was Info Edge and it was in various avatars. First there was a partnership, then there was proprietorship and finally, there was a private limited company in which we launch Naukri. We were doing salary surveys, databases; we were basically selling information — ideas, whatever came over, we were struggling, we were running out of servant quarter after paying 800 rupees rent. We had one employee, then two employees, finally we had nine employees when we launched Naukri. So, there was 10 years of sort of struggle out servant quarters.

Kamla Bhatt - IndiaTech
So, the inspiration for Naukri, which is a jobs portal, I am assuming came out of the online job portals in the US?

Sanjeev Bikhchandani - Info Edge (India) Ltd.
Well actually, no. I didn’t visit any online job portal on the Internet till about two years after we launched Naukri. This was an idea, which came to me when — in 1990 I was working in a company, early in 1990 late 1989, which is now called GlaxoSmithKline. I would observe my colleagues — we were sitting in a hall and I’d observe my colleagues would always look at appointment ads in business magazines before reading the rest of the magazine and then they would discuss.

So, I came to the conclusion that jobs are a high interest category of information and the next thing I noticed was that every week five or six headhunters would call and try and hit at one or the other of my colleagues. These jobs were never advertised and they were different headhunters each time with a different job. I figured there’s a whole fragmented database of jobs out there, which is not advertised and jobs are a high interest category of information.

So, if somebody would compile a database of jobs, keep it live and current and a national kind of archive, which is current, it would be a very powerful product. The only thing I didn’t know was how to implement it because there was no Internet that time. So, when the Internet came in ’95 in India and I saw it the first time in ’96 is when I revived this idea and I said look we can do this. So, the initial sort of Website we launched in March ’97, was something which was pure job listings. There was no resume database, so, we didn’t have the benefit of looking at other job sites around the world otherwise, we’d have launched with a much wider range of products, initially.

So, that’s how the idea came out. Of course, we evolved as we looked at competition, we looked at customers, we’d began to speak to people, we saw what’s happening. So, now it’s a very different product, but initially, it was an idea we just got by observing job seekers.

Kamla Bhatt - IndiaTech
What is the status of the job market today? What percentage of the classifieds does Naukri have?

Sanjeev Bikhchandani - Info Edge (India) Ltd.
You know, market share figures are — there is no sort of industry documentation. Market share figures are therefore are hard to come by, but if you look at online classifieds and you look at data like comScore or Alexa, on traffic share if you define the market as consisting of Naukri, Monster Plus Jobs and TimesJobs. You define traffic as total page use. According to comScore, we’re somewhere in the 50%-ish range, 54%-55% and according to Alexa, we’re in the 60’s. So, this is the kind of percentage we have. So, we’re definitely clear leaders with higher than 50% market share.

Kamla Bhatt - IndiaTech
You’re also running AdSense on your Websites?

Sanjeev Bikhchandani - Info Edge (India) Ltd.
We’re running AdSense on our Websites.

Kamla Bhatt - IndiaTech
So, that’s also a big revenue.

Sanjeev Bikhchandani - Info Edge (India) Ltd.
Well, I won’t say it’s big revenue, but it is good revenue. It’s passive revenue, it doesn’t require sales force and therefore it’s very good margin revenue.

Kamla Bhatt - IndiaTech
How has your company changed the online jobs market, the matchmaking and the real estate market, because all three are in many ways fragmented, they share a lot of characteristics in common?

Sanjeev Bikhchandani - Info Edge (India) Ltd.
Well, see on the online jobs, obviously, we’re clear pioneers and leaders in India, on matrimonials, we are the Number 3 player, also we started early in ’98, but this is a company we acquired in 2004, so, Jeevansathi started in ’98. We had a minority shareholding from 2000 to 2004 and then in 2004 we bought it from the other partners and began to run it ourselves. We’re Number 3 there. So, clearly, you know, but we’re catching up and it’ll be hopefully in the next — we’ll have some good news to report in the next 12 to 18 months on Jeevansathi. As far as real estate is concerned, see nobody did anything significant on real estate, right from the midst down. There were no prior players prior to the met down who succeeded.

So, this is a huge empty space and when we looked at the amount of money being spent in print media, on television, on radio, on outdoor in promoting real estate project, we figured there was a better way of doing this and if we did something on the Internet we’d be able to get some share of that ads spend (ph) and that’s what the target is. Having said that, it’s a bit early, it’s very new. Right now what we’ve is proof of concept, we’ve got a few clients, we’ve got traffic, we’ve got people getting – getting enquiries and leads. So, that’s happened and that’s good news, but it’s still a long way away from being called a large category on the Internet.

Kamla Bhatt - IndiaTech
Final question is, what advise would you give to young entrepreneurs today who have stars in their eyes and are looking for — because there are many VCs who are out here? There’s a lot of money chasing very few ideas that’s something that I keep repeating.

Sanjeev Bikhchandani - Info Edge (India) Ltd.
Well, a few things. First is, get some experience first. While there have been a lot of success stories of people who succeeded in businesses without working anywhere else, my recommendation is get some experience. It’s a good idea to have good reality check before you start a venture of your own because it’s kind of harder to lead large team, in the organization scales unless you‘ve had some experience from being at the bottom of the organization. Second is, start businesses in those areas where you’ve domain expertise. The third is, don’t just copy an idea either from the US or from anybody else in India; be different.

Ultimately, it’s the differentiated ideas that will succeed and become big. Being different also enables you to sort of learn early and to make mistakes when it’s cheap to make mistakes before competition comes in and that’s what helped us also, because we launched in ’97 and there was no competition. First competitor came in 2000, by that time we’d learned the business. Competition took a lot longer to learn.

Kamla Bhatt - IndiaTech
But today, though you may not have that luxury of learning the business because things are evolving so fast, so, what do you do?

Sanjeev Bikhchandani - Info Edge (India) Ltd.
Well, that’s not true, actually, if you’re focused on the customer and you know your customers really well and you know what his real needs are. You’ve got to base your business proposition, your value proposition, on some deep customer insight. You’ve got to solve the problem that is currently not being solved or in a method that it’s not being solved and it will take, possibly years for competition to get that insight. So, build your business around focused customer insights.

Kamla Bhatt - IndiaTech
Thank you so much for your time.

Sanjeev Bikhchandani - Info Edge (India) Ltd.
Thank you.

Kamla Bhatt - IndiaTech
You were listening to Sanjeev Bikhchandani Co-Founder and CEO of Info Edge. This interview was recorded at the TiE conference in Mumbai, on December 18th, 2006. This is Kamla Bhatt for PodTech and as always, thank you for tuning in.

Copyright ©2006 PodTech.net. All rights reserved. Privacy policy

Tags: Info Edge, Naukri, 99 acres, Jeevansathi, Sanjeev Bikhchandani, ICICI, entrepreneurs

LINK: http://www.microsoft.com/products/expression/en/web_designer/default.mspx

Click here for transcript.

Tags: Eric Zocher, Wayne Smith, Microsoft, Expression Web, Web development