To Rediff.com, the dotcom business isn't exactly a dotcom business. In fact, Nitin Gupta, President, Rediff.com, begs to differ on Rediff being classified as a dotcom business. Says Gupta, "Just because it is a dotcom it does not mean it's a different business. All the traditional rules of business do apply." Gupta, the former president, retail finance, GE Capital services, is looking at mating the business ethics and principles of GE with the speed and dynamism that he says is characteristic of Rediff. In the interview that follows, he outlines the business philosophy of Rediff.com :



What is it that Rediff has that other portals do not have?

The way our business model works is quite similar to the way Yahoo! does. There are two sides to it. A right and a left. The left hand side creates a lot of value for millions of consumers and therefore gets these consumers to think of Rediff.com a their brand. The right hand side has got our customers to adopt consumers, and convert that value to corporations, in order to generate revenue.
Why only a few such businesses will survive is that in the short to medium term, the market cannot support more than a few portals. That's where the differentiation of Rediff comes in.

If you ask me what the factors are that will make portals survive, I would say, first of all the early mover advantage is a major factor. We started way back in 1995. It translates into a tangible advantage in terms of number of consumers, brands and reputation. The second biggest factor is, who has the funds to survive. There is only one other company in the country that has access to public funds. That is Sify.com. All the others have private funding, and there is a limited patience term for private funding. So much so, a lot of funding has been withdrawn. Those who don't have adequate funds to last out the inevitable period when a business like this will lose money, will fail.



Where has the differentiation got built up ?

I think that the biggest differentiation today is that Rediff.com is a brand recognized by millions of consumers. It is also trusted for different reasons. Our Indian consumers in the US, for example, go to the site every morning for the news. It helps them to keep in touch with India. In fact, we had started sending our US visitors to our US edition home page. But consumers resisted. They wanted to know about India. For Indian consumers, it’s a way to have a fast email service. We keep people connected this way. The translation of the brand means different things to different people.

The brand does not get built in a vacuum. It’s a combination of brand and product. With our benefits (channels) different people get different advantages. Also the fact that we are well-funded helps.



When you say well-funded, how deep are your pockets ? And when will this pay off ?

We have about $55 million in cash in the bank. At the current rate of expenses we can carry on for five years without any more money. As to when, we will start making profits, analysts project that by the end of 2001, we will break even. We will then be cash positive. This is what the six prominent analysts who track us, project. We don’t really need deep pockets that way. It’s a good position to be in.



What do you see happening in India, with so many other portals that have come up with a similar business model to Rediff ?

There’s something peculiar about the internet. It’s a place where people have to adopt you themselves. You cannot force it down their throat. Over advertising is a very wrong thing to do. If you advertise too much, people feel that its not something that they really need. Viral marketing is a better way. There are brands and products on the internet that have become really successful without major advertising. Hotmail is a case in point. There are millions of Hotmail users around the world without much advertising. The same with Amazon. In 20 months they built up a consumer base of 10 million. They were not advertising at all. Spending money is not the way to build a brand. But it does help.

Till October 1999, we too had done virtually no advertising. But we were already leaders by then. We do not believe in overpowering the media in order to build the brand. Advertising is required just to announce new services and technologies, just to keep people aware of it. If we force ourselves on consumers, they would rebel. A brand is a relationship, and cannot be built by just full page ads. Also you need to offer a product that works. People feel that our mail system is fast. They are now telling one another about it. It’s an email system that been built in-house. We’ve also installed servers around the country, which enhance the speed to consumers. We now have about for million email accounts with us.



What kind of problems did you come across while implementing technologies ?



We have had problems. One such problem was in March 2000. We had a peculiar problem with our email service, where ‘in-boxes’ of people disappeared. So we sent out tens of thousands of chocolate boxes to our customers apologizing for the problem. This gesture gives the consumer a good feeling. Now we add nearly one email boxes per month.



What kind of traffic do you get for online shopping on Rediff.com, presently ?

For shopping to take place, you have to get suppliers to use you as a marketplace. As of now, we have about 175 manufacturers of goods, who use us as a marketplace. We have a sales force of about 15 people that talk to companies to get them to use our marketplace. We had initially used IBM Net.commerce technology for the shopping platform, but now we have our own technology. You need to offer security and different payment mechanisms to consumers, as not many have credit cards, or are comfortable with them. So we accept cheques, cash-on-delivery, and direct debit. Multiple options to the customer. Roughly about one tenth of our customers go to our shopping area. A certain proportion of them buy. It's at a stage where people are getting used to the Net. In 2001, there will be roughly 17 million users of the Internet in India. Rediff is now touching roughly 158 million page views per month. As far as ecommerce is concerned, we account only for the Net revenue. We only go by value of commissions. That's roughly seven per cent of our total revenues. Five years down the line it will be about 70 per cent of total revenue.



Rediff's business model includes other portals coming under the Rediff umbrella. Is this the only viable business model that a portal such as yours can use?

Yes, our business model acts as a mother brand. And when you have a large number of visitors coming to you, you can provide the benefit of that visitor base to other portals that are our channel partners. Around 50 per cent of all traffic on the Net in India happens on our site. In this quarter, we have started the US edition (Rediff USA). That's a new market altogether. In 2001, we will start in at least three other markets. Rediff's ambition is to be the portal of choice of Indians, wherever they are in the world. Goldman Sachs says that there are going to be 70 million Indians on the Net in 2004. Around 11 million Indian citizens live outside India. They are rich, educated and online. You can say that the golden age of India is beginning all over again. So we're sitting on an interesting proposition here. It's built on an emotional proposition.



But don’t you think that with so many portals going after the same NRI audience, there will be overcrowding of a single NRI's mind space?

No, I think people will have very specific choices. There's not enough space, funds, markets, clients, revenue or customers for all to survive. The question is who will survive. I hope brands such as Yahoo! and Rediff will survive. The online audience of Indians varies from one country to another. The online population in the US of this is 65 to 70 per cent. And in the UK about 40 to 50 per cent. Totally that's about 5 to 7 million online Indians. But its growing really fast. More than 50 per cent of the H1B visas issued, are to Indians.



When is the industry going to consolidate?



The dotcom hype is already gone. It's a business and needs to be run as a business. The year 2001 is a year of consolidation. The patience of private investors is wearing out. Though our stock prices have fallen, I don't see how that affects us, our routine functioning. Capital markets often overreact. The problem was that the capital markets funded ventures that ought not to have been funded. It's a mistake, that's now being corrected. A rising tide lifts all boats, and a falling tide puts all boats on the rocks!



Against which companies would you benchmark yourselves?



I would like to benchmark ourselves against companies such as GE, as it's the world's most admired company, and I've worked there. However, Rediff is a company that's small and entrepreneurial. This helps us to take decisions much faster. Time is very precious. I would like to mix the business processes of GE with the speed and agility of Rediff. This will get rid of inefficiencies. Look at Yahoo, it's only five years old. We too will be a great brand, given time.