‘I want to do something disruptive on television’

The ongoing recession in the US and elsewhere may have set the stage for a disruptive development, feels Ajit Balakrishnan, the founder chairman and CEO of Rediff.com. And what gives him reason to suppose so? Well, each of the last seven recessions has been followed by something that changed the way the world did business until then. DNA met Balakrishnan at his modest office for an interview.
Excerpts:

Can you compare this recession with anything that has happened earlier?
(Starts a Power Point presentation)
1969 — UNIX OS was devised
1981-82 — High inflation rates in US; Punjab problem in India
1988-89 — Tiananmen Square in China; oil prices collapse; Soviet Union collapse; in India liberalisation
2000 — Internet bubble burst; we saw the rise of Google

The current recession indicates a major change that’s round the corner; we do not know what that change would be. There is no doubt it will happen. High level people in the US tell me that commercial banks and investment banks will restructure the way they do business. The world auto industry will change beyond recognition — SUVs and all would go. Move towards public transportation would be clearer.

Is this the most massive since ‘69?
I don’t know. In India, the ’88-’89 recession had the maximum impact. It led to virtual bankruptcy. But good things happen always after you recover from recession.

There is a lot of pain involved…
Ask any mother of the labour pain.

Do you see any change in the way capitalism works?
There will be changes in the way the market allocates resources. There is a debate that markets have been pushed too far. There will be a correction to the age-old Washington Consensus that says the government has no role in the market.

What all do you see getting uprooted in this downturn? For example, the classic investment banking model…
There are some secular trends going on. And then there are some which are attributed to the recession. Still others were accentuated by recession downwards or upwards. I can give some examples.

The substitution of the Internet for the printed newspaper was a trend that started in 1995 in the US. This process was continuing steadily year after year. But right now, this has actually accelerated in the US. The demise of a class of newspapers, not all, seems to have accelerated. Will print go away? I don’t think so. We adjust to a life which is much less vicious than before, that’s all.

Do you see Internet emerging as ‘the’ medium for news?
I hope not. The diversity of voices in news is very much desired. We need news through TV, newspaper, Internet. Internet penetration in India is relatively low. The number of people surfing the Internet in India is about 30 million, whereas the total number of people reading any newspaper is roughly 75 million. Interestingly, both the numbers are low and thus provide huge scope for growth. If only 60-70 million people out of over a billion are participating in the news, which is a core element in the democratic process, then there is a problem. So, both have to and will expand. Even television reaches only 30% of our population. Our case is different from the US, which is the other extreme we always look to compare with. In the US, the Internet penetration is about 70%. Will all news be consumed through Internet? I don’t think so. The cell phone has become a very major medium of access.

In the US, Rediff has about 1.2 million users, of which most are techies. I discovered that 100% of them checks news, stock status through mobile phones. These days, we are piloting a new site for the US users, which will be pictographic.

In India where PC penetration is still quite low, do you think mobile-based access of Internet will take off soon?
It is hard to say. It all depends. The pace at which things happen in India, it is hard to tell.

Do you see a fundamental change that may get accelerated now? Say in the way the online business works. Since the entry of AdWords, banner ads have been impacted...
50% of the ads are still banner ads.

Is Rediff offering anything new in this changing scenario?
We are working on some things already. One is utilising video as a mode of advertising. We are currently running pilot of a site that crawls on one thousand news sites and publishes every minute. It kind of categorises news into topics.

Is it similar to Google news?
Yes it is. It is done automatically. No editor. This is a big trend. The fastest growing part of our site is iShare.

What has been the growth rate of iShare?
It kind of grows 10-15% month on month. I will not be surprised if trends like iShare can rival TV channels in reach.

But what stops TV channels from doing the same online?
It will take a while for them to adjust to the fact that user generated video is as important. It will take a while. Today the user generated portion is fast climbing. But nothing stops them (the TV channels).

What’s your take on user generated content vs guaranteed content from news channels?
Both will exist. After this terrorist attack, we got a phone clip of a guy who got shot at one of the locations. It is just that with camera enabled phones, there is a huge mass of people who can provide real images, videos. This is unimaginable for a news channel with 150 reporters, with as many cameras. So you are likely to get more and more action shots.

Why would you need a news organisation at all?
See, you would still need a news organisation for the analysis, the insight etc. But in the media segment, user generated content is definitely a secular trend.

Rediff is a pioneering company but has lagged a bit in terms of innovation. Your iShare or Connexions may not be the first of their kind…
I accept these criticisms. But innovation is not restricted to any one country. It is a worldwide phenomenon. Most people think of Facebook as the innovator, but the real innovator is Cyworld in Korea. Facebook took the idea from them. Connexions was launched two years before Facebook. The Apple iPhone has come out of experiments in Japan, which have been going on for 10 years. So, innovation is a worldwide phenomenon. It is incremental. And even if one is not the first to innovate, one has to be in the first five, and run up the curve. Clearly in India, we are ahead of anybody. In some cases, we will be among the top five.

Are you trying to evolve any special process to ensure that innovation thrives as a culture? Because innovation tends to vanish as a company matures...
Part of it is believing in it. I personally believe innovation drives the success of a company. So for me, that is central. We try to be on top of general trends. For example, a couple of my people and I keep attending major technology and innovation oriented conferences, I attend about five of them annually across the globe.

Do you encourage lateral flow of ideas in the company irrespective of an employee’s position, because a lot of young people might have a fair grasp?
It is not just leaving young employees to think, we need a university cross-fertilisation. What we have done quite aggressively in the last 2-3 years is build links with the Bay Area in the US where you have the Stanford and other pioneering institutions that have been known to breed innovative thinking. In India, we have associations with IITs who send extremely talented students. The associations are important because a company can do only so much. For example, the parts of speech tagging that we need to crawl languages on the Internet... Now, that tagging can be done by universities and other research institutes. We have done some work with IISc Bangalore. The Rediff Bol piece came from them. So we are pushing them hard. Indian universities also take time to respond. Thus innovation comes from all over the place. The original idea for World Wide Web came from a Brit, Tim Berners-Lee, who was working in Switzerland. What matters for innovation is how quickly you can covert the idea into a commercial product. MP3 idea came from Germany. Europeans are actually ahead in the cutting edge of innovation, but what they lack is a supporting venture capital ecosystem at this point. There are big companies and no innovation like the IT services firms.

Are you able to ensure that the IIT grads stay on?
You can’t guarantee that. If they stay on for two years, it’s ok. Hopefully, the current recession will help check that. The US recession has actually helped us get a few talents from there who are working in our office here. In India unfortunately, we are the only web company that is doing anything. Who else is there? So it’s not easy.

Is getting people a problem?
See, getting talent to work is absolutely not a problem in India. But they are not from the innovation culture, for instance, what is available in the Bay Area. You must have some ideas from professionals who can judge what works and what doesn’t. That comes from other companies in similar business. You look at the Google top management. They are all ex-Apple, IBM, and other companies. That talent pool is not easy in India. I have given an instruction to my HR people that by the end of 2009, 10% of our workforce has to be international. At the moment, we have one American working for us.

Is there something non-entrepreneurial about Indian talent?
No, no, I don’t think so. These last 60 days I have attended at least 20 entrepreneurial summits of various professional colleges in India. Every IIT and IIM has some entrepreneurial associations and the students are much more entrepreneurial and bent on risk-taking than perhaps we were after our college days.

Do you think of retiring?
No, retirement would mean doing something else, which is equally interesting. I am very involved in the management schools... I run a football school in Cananore. The current Kerala (football) team’s 50% from there…

Is there nothing left on your to-do list?
I want do something disruptive on television. I am trying to think what. The industry needs a little shaking up... ‘saas bahu’ is a little too much. I wish I was your age, I could do more.