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Guys here comes a case GD on Real Estate that I have been working at.
There are some who have already commented on the previous GD. So I thought that I shud post something early so that they have more time to think thru. Other please comment on both the topics
Puru and Shuru, both from Jaipur have been working in Yahoo, Bangalore for about five years and are well versed in development of websites. They also had a PGSM (Post Graduate in Software management) degree from IIMB. With great ambition of starting on their own, they decided that real estate was the area where they can do something. The Indian real estate market had boomed in India in the past 3-5 years with prices at Bangalore, Gurgaon, Jaipur, Hyderabad etc doubling in the past one year itself. Similarly the online business in India was also booming with Internet coming of age. More people were using internet to gather information and also buy from the internet.
They hit upon an idea to make a website catering to all the real estate needs of people. It would include rentals and sale of properties and would avoid the broker in between. They felt that they would also be able to attract lot of advertisements from the top builders. Though they were bullish, they wanted to be cautious while making large investments as they had seen some of their friends burn their fingers. So they decided to hire about 8 people to start with and registered a website. Now they had two questions in their mind.
1. What should the location be? While Puru argued for Bangalore, Shuru really wanted to something for his hometown Jaipur and also thought it was a cheaper option
2. Should they go for a Venture Capitalist to raise money. Puru argued that the money it takes to start is not much considering their resources. Shuru said that though that was true, they need not gamble with their money when there was someone ready to invest
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Guys here comes a case GD on Real Estate that I have been working at.
There are some who have already commented on the previous GD. So I thought that I shud post something early so that they have more time to think thru. Other please comment on both the topics
Puru and Shuru, both from Jaipur have been working in Yahoo, Bangalore for about five years and are well versed in development of websites. They also had a PGSM (Post Graduate in Software management) degree from IIMB. With great ambition of starting on their own, they decided that real estate was the area where they can do something. The Indian real estate market had boomed in India in the past 3-5 years with prices at Bangalore, Gurgaon, Jaipur, Hyderabad etc doubling in the past one year itself. Similarly the online business in India was also booming with Internet coming of age. More people were using internet to gather information and also buy from the internet.
They hit upon an idea to make a website catering to all the real estate needs of people. It would include rentals and sale of properties and would avoid the broker in between. They felt that they would also be able to attract lot of advertisements from the top builders. Though they were bullish, they wanted to be cautious while making large investments as they had seen some of their friends burn their fingers. So they decided to hire about 8 people to start with and registered a website. Now they had two questions in their mind.
1. What should the location be? While Puru argued for Bangalore, Shuru really wanted to something for his hometown Jaipur and also thought it was a cheaper option
2. Should they go for a Venture Capitalist to raise money. Puru argued that the money it takes to start is not much considering their resources. Shuru said that though that was true, they need not gamble with their money when there was someone ready to invest
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Gyan-ee 10:22 PM
24 Comments:
START - Well 2 begin wid..d case study talks about Puru and Shuru who r presently working in Yahoo but being caught by d entrepreneurial bug r keen on venturing into d real estate business via providing an online marketplace 4 real estate needs of people.The big questions pertaining 2 d idea that remain undecided relate 2 d location nd d source of resources...
POINTS: (1)
(1)Puru n Shuru r settled in Bangalore 4 d past 5 years..as such they wud b aware of all d nitty gritty's related 2 d place..as opposed 2 Jaipur - a place ..which no doubt is their native place..but then bcoz of their working commitments,they wud have lost track of d events n happenings there...
(2)Their careers so far in Yahoo wud have enabled them 2 build contacts..that cud b immensely helpful in smooth conduct of operations related 2 their business.
(3)Since d boom has been d same in Bangalore nd Jaipur..it makes no difference from d point of view of future prospects of d business idea nd its profitability...since it solely depends onhow well they apply their knowledge towards implementation...
(4)A place like Bangalore ,tagged as d IT hub of India...attracts a vast pool of talent towards it..as such they wud b able 2 hire qualitywork force by choosing Bangalore as d location.
(5)Choosing Bangalore as d location has an inherent advantage in that..yhey can continue wid their present jobs..while simultaneously devote sum time towars their business...slowly n gradually when they find d idea taking off,they can quit their jobs and resume as full time businessmen...
In contrast ,4Jaipur they wud have 2 quit at d very outset with nothing 2 bank upon ..incase their iea does not bears fruit.
POINTS:(2)
(1) ITS always advisable 2 go 4 a safe bet...when venture capitaliists r rendering a medium 2 take that safe path.thats a blessing in disguise 4 d budding entrepreneurs of 2day.
(2)Agreed,that if their idea turns out b a success,d venture capitalist wud take his share of d trophy..but then d underlining truth is that it wud provide them d requisite freedom 2 experiment wid d idea without really bothering about d finances and obviously d risks associated wid it.
ANYA..
I feel starting the venture at Jaipur will be more favourable ..the parameters which will favour invesment in realty market at jaipur
1) Bangalore does not have good infrastructure Jaipur has better infrastructure and Rajasthen CM Vasundhra Raje has initiated a lot of plans to develop infrastructre and she has strict deadlines for it also. Jaipur is directly connected to national highway to Delhi which will be a contributing factor for people to take home , apartment , offices etc.
2) Bangalore has become very expensive city. Living cost is very high and people will prefer to go to jaipur even if they will get some less money there.
3) Now Rajashtan govenment's flexible policy to start new companies/ventures in state has very bright future and may be down the 5 years many companies will start opening up their offices in Jaipur.
4) As both of are from Jaipur . they will get better ideas about planning and execution of their plans and vision. They might get enormous help from local people and support from them .
will add more point later ..got some work :(
START:
The case begins with 2 people Puru and Shuru deciding to start their own business. As for any business, they have done enuf studies for their venture but are not quiet sure abt the place to launch. Also, as essential for any business, there seems to be fund problem as well regarding the source of funds.
POINTS:
1. Since both of them have stayed in Bangalore for quiet a while now, they know the requirements of the city which will help them in building an apt website to lure the crowd into
2. Bangalore being the IT hub will make it easy for them to get professional at much cheaper rate than Jaipur
3. They can also continue their work while building the website. This way, the risk involved will be very minimal and they can shift back in case of any problems. But Jaipur being far away from their work place doesn't give them this liberty
4. But looking at the other perspective, a home town advantage can always help in knowing the people's perspective. The contacts might also be more in hometown and language barrier also wont come into picture. Bangalore being a much bigger area than Jaipur wud require more amount of work to cover all the areas
5. As for the venture capitalist, it is always good to have someone investing on our behalf but the main concern cud be dividing the share.
They can invest only a part of the amount while taking the remainder from venture capitalist. While Shuru can take his share of money from VC and Puru can give his share of money from his own pocket. They can later divide the share accordingly
-PS
They can also build their site for Bangalore and can get in contact with some real estate people in Jaipur. With internet as their medium they can ask the person to help (birth city always helps) and get the info up regarding Jaipur which wud help them cover Jaipur very fast. this can only happen if Bangalore prototype is a success
-PS
admission nahi bhi mila , mai bahut kuch seekh raha hun:)
START - Puru and Shuru , two talented and well qualified professionals want to puruse their dreams. They have decided the sector they want to work in, but have a divided opinion on which place to chose their base and how to invest the capital.
Points -
1) They need qualified individuals for a start and Bangalore being a software hub is more likely to give them an opportunity to get better resources.
2) Since they have been in Bangalore for the last 5 years, they would have made good contacts in that place to avail certain benefits they might need.
3) Since it is a real estate industry, client would not be satisfied with only online settlements. The company will have to take care of agreements and settlements in person. Travel to locations will be important and bangalore being well connected by flights is a better option in this case than Jaipur.
4) Concentration of the real estate boom is not in the North as mentioned by my dear friend. It is equal in South as well. And this being an online site, this should not be a strong consideration. So initially as a startup they can also consider placing one or two people in jaipur, just for metting customers in person.
5) Since it is a startup, marketing will be very important. Bangalore takes a slight edge with population from different parts of the country. If a success in bangalore, the story can spread well fast in the country. People come to Bangalore from every part of the country and if they see something successfull in Bangalore, the message can spread back from where they come.
6) Placed in Bangalore , they always have th advantage of visiting their institute IIMB , in case of any advice/help needed.Successfull enterpreneurs will visit IIMB as visiting lecturers and that will provide an opportunity to both for any help needed.
Now on Self investements v Venture capitalists.
1) The business does involve risk as some of their friends have sufferred. venture Capitalists will have that in mind before financing the project and reduces their chances of approval.
2) Finance required for initial setup is less and hence both can invest themseleves and once the company starts showing profits, they can call in Venture capitalists to invest more. That will also make the VCs more motivated and both of these have a stronger say in the policies / guidelines set up for the investment and returns.
3)
Start-> This is a typical case of people with a flair for enterpreneurship but who are a bit risk averse. The decision to be taken has to depend upon a group of factors viz cost benefit analysis, future benefit, requirement of additional funds.
1) Since they want to start the firm with permanent staff, getting a office space in a city like jaipur will be a more cheaper option. The land prices as well as the average salaries of software professionals is less in tier 2 cities. On the other hand, A city like bangalore will provide them with a lot of talent as well as future growth. The initial investment will be more but if they can raise hte money from a venture capitalist then that issue will be addressed.
2) Having a office in bangalore willhelp them to monitor the business at first hand if they are planning to continue their job at Yahoo.Since their business plan doesnt requires much interaction with the client, they can hire a marketing team to take care of the revenue targets from advertisers.
3) In the future Jaipur may as well develop as the next software hub seeing the support provided by Rajasthan govt which even the Infosys CEO has termed as very good. So the decision has to depend upon whether both of them are ready to relocate to jaipur or not.
4) The money they have to chip in not large but it will take a good amount of money in order to hire the best of web designers as well as for the marketing of the website.
If professionally done at a large scale, it will require a d3ecent sum of money. So they should go for a venture capitalist.
Regarding admissionmilega's 3rd point, the money they are aiming at has to come largely fromt eh advertisors and builders but not from the clients. People are not likely to pay a sum before having a detailed physical analysis of the site. Also, the whole idea of this venture is to remove themiddlemen from the real extate market and make people meet directly and negotiate.
REagrding the 4th point, as its a web based company, the concentration of tech boom hardly matters. They can even start it form the silicon valley till they have their marketing guys placed in potential locations.
regardingPS;s first point, i want to say that the website is aimed at real estate market of all major cities in India so its not favourable to just concentrate on conditions of bangalore. Also, how does having a knowledge of requirements of city will help in designing or running the website??
Also regarding the VC question, a point->> If they have decided to go ahead with this idea and finding a VC is not a issue then instead of chipping in less money and doing it in stages, they should get all their guns blazing and should start the venture at a large scale with all possibilities covered as nobody has a copyright over any idea on world wide web. the hundreds of myspace and youtube clones in China are a glaring example.If someone likes their idea and starts a similar venture with marketing at a greater scale and steals the firstc omer advantage from them, they will be at the losing end.
also, i feel that having a seperate post for analysis is a better option then having it in the commments section....:)
START: These are 2 budding MBA graduates, with good amount of experience, about projects, & coding. Their idea is sure to have some weight & thought behind it. We can also assume that their estimate of the workforce is accurate. It is also possible, that since they were both working for Yahoo for 5 years, they would have decent savings.One has professed a desire to return to their hometown Jaipur. With these factors in mind:
For the 1st Qn:
1) Banglore seems to be a good place to start the business in. For even though the costs will be much higher, it is the best place to be in, for a real estate business. The rates are doubling in a span of 6 months! They would benefit from the huge demand as compared to Jaipur.
2)They would need to establish contacts with builders initially, for which personal meetings are necessary. Most of these builders, will be housed in or around Banglore. Later they may send agents, or representatives for the same.
3)In order to get those 8 resources, they would be much better off in an IT savvy place like Banglore, where their requirements will be met soon.
4)In order for the site to succeed, they need a customer base, that is comfortable with credit cards, & net payments. This includes a large number of young working professionals. The number of such people in Banglore will be much higher than that in Jaipur.
5)The initial advertising binge, would have to cover all types of media: print, TV & radio. The audience for such a campaign is very high in Banglore as well. The age bracket that use such media, is also young, & so their penetration will be good.
6)They will have to face the high cost of real estate for themselves as well, but since the exposure is very high, they can make this investment. They can later shift their head office to Jaipur, if necessary.
7)In case they decide to go for VC funding, the number of Venture Capitalists in Banglore will be much more.
Ans to Q2:
1)Since both of them are essentially software professionals, their estimate of the cost of the venture, probably does not factor in the advertising costs, or the initial investment while making deals with builders. They may also not have a fair idea of the ball-park, since noone has tried this initiative. So, they would be better off approaching Venture Capitalists for these unknown costs.
2)They have 5 years of good experience behind them, plus a great MBA degree.This would hold a lot of ground with the VCs, & they could get a fair number of offers, with reasonable conditions.
3)The VCs, being huge companies, would also have invested in some development projects, & would be able to provide them the initial backing & contacts needed.
4)The knowhow of the type of advertising needed, the people to manage the launch of the site, could also be provided for by the VCs. Puru & Shuru could negotiate that the VCs should handle the launch.
5)The VCs backing the comapny, would hold much more weight, & make the builders less hesitant about taking the plunge.
6)The costly office space, etc, would also get some help from the VCs ,who could provide them some space or some subsidies in rates.
7)Like Shuru said, they would get good money, for which they wouldnt have to worry.
8)They might overshoot their budget because of the large funding, but a little prudence is required in that aspect.
Aparna
PS. I am a little unclear about how to start a case study. Should we answer the questions, or lay out the assumptions? When do we start answering the questions?
We have two guys Puru and Shuru aiming at starting a web site catering to real estate needs of Customers. Both of them have different opinions about the location and Capital resources for their venture but before that we must look at the Customer segments, Cities and finally Venture Capital.
1) What is meant by Location here? A place where they are going to open their offices? or, the cities whose real estate building will be listed on their website. Please note that a website can be operated from anywhere and as far as their employee strength is concerned, it is only 8. So, they can open office in any garage also, for that matter.
2) What is meant by Jaipur being cheaper option here also needs to considered. Since their business models involves meeting of the customers who want to buy real estate or want house apartments for rent, with the sellers. We need to understand the business model. As per the case study given, there is no cost involved on the basis of city location. Simply speaking, in their business model what they are doing is simply removing middlemen and, facilitating meeting between buyers and sellers. They are not earning any commission on any house sold or rented(It is nowhere given in case study). The only source of their money is Advertisements from bigger builders(similar to classifieds appearing in newspapers). Therefore, the concept of Jaipur being cheaper becomes void here.
3) Their major expenditure will be website development and persuading builders to post Advertisements on their site for charges much less than newspapers. As the broker gets removed from the process, The seller gains by selling his house at a higher rate while the buyer gets the house at a lower rate compared to market. This value-proposition has to be clearly marketed to both the builders as well as the consumers of real estate.
4) Coming to their target consumer segment, In India, population using IT lying in SECA to SECA+ segment and wants to live in bangalore is certainly higher compared to any other city. Compared to that, chances that a person intending to buy real estate in Jaipur won't use internet for searching information are high. It would be better if they concentrate on Bangalore right now in the initial stages of development of their company. Later on, they can move to other cities.
5) As regards with Venture Capital, The VC will always like to give Puru and Shuru more money than they need because it will give him a bigger shareholding in their business. This thing has to be kept in mind while taking money from VC. As they have been working in Yahoo for past five years and are passouts from IIM-B, it can be assumed that they might have collectively saved Rs. 10 lakhs in these five years. They should aim to work at this idea for about 1 year and quit if it doesn't succeeds by then. Regarding their 8 workers, one or two might work on website development and maintenance. Other might work on talking to builders and advertising their real estate site on other media. (e.g. Naukri.com ads in Business magazines). They should take some money from VC because in case idea fails, they won't come on roads(due to concept of limited liability). But the shareholding should be distributed in such a way that it is Puru and Shuru who benefit the most by the venture and not the VC.
Hi Aparna, You've put forward some very good points but i disagree on few of them.
1) With regards to your Q1, Answer4 - customers in bangalore being more comfortable with credit card, net payments. I believe that real estate isn't bought and sold at a website because a person wants to see the house he's buying and the landlord wants to meet the person whom he's renting his house to check his credentials. May be somthing of this sort might be possible if Puru and Shuru are able to introduce credible rating system based on past website history of User. Still, i believe in the initial stages of their company, it would be a wastage to their resources to spend on net-payment services. However, for the real estate sellers and builders ready to give advertisements on their site and make payments online, such measures might work.(Whoa!! I contradicted myself.. you won :) Perhaps it might become their killer App but i still believe that you didn't thought about their business model in this way :) you thought that people will start buying and selling on the site itself. tell me if i'm correct :) )
2) Regarding your Q1-Answer6, their office cost being very high in Bangalore. I don't think they need a very big office or, a office situated in posh locality because never will the buyer or seller come to their place (Due to your point mentioned above). They can open their office anywhere, continue working with yahoo and still manage the cost. In fact, Jaipur will be a rather costly option as both will have to give up their jobs.
Will keep it short and sweet :)
Start ::
Puru and Shuru are both trained Post Graduate in Software Management from IIM Bangalore. And they now want to utilize their expertise in IT and pitch it together with real estate and bring real estate in the domain of common day today activities.
Their background suggest that they have a lengthy IT field experience since that is the eligibility of PGSEM course. So we all would be confident of their ability to put up the backend IT infrastructure which would be needed for the new company.
That aside some of the question for choice of location would have to be decided on.
A) Target Market Area- This would depend on which market the company is going to lean more on. Would it be the rental market or it would be the buyers-sellers market.
There business model would have to be evaluated in various aspects.
If they are targeting the real estate market buyers sellers market,
This is constrained by
1) Indian real estate market has not matured to the point that a user in Delhi can buy a tract of land in Bangalore online. There is issue of trust needed and certain sense of localized presence needed to make that happen.
2) The land which we are talking of would need huge investments. This involves not only the huge risks of market fluctuation but also the lost of opportunity cost with the money.
The rentals market would involve
1) Identifying the patterns of the end users. Who are they going to be? How much is the churn in this market. The average holding of say rental apartments, flats under the venture?
2) Are the users IT professionals/students/other private sector employees?
3) Which target customers would have the average rentals higher? And hence profit high for the venture.
A point to note is that Bangalore, Hyderabad has booming sales of new properties which are coming up, and they are also a big rental market for the IT workers population and the students (Bangalore is home to hundreds of colleges)
B) VC money: The point to note is that money which VC would bring in does not represent only monetary benefits. It brings in more credibility for your venture which helps in tie-ups and selling your products to end user or other partners. They would bring in a host of expertise in forms of networks, market identification, bringing in relevant Board of Directors for guidance. They help vet your ideas so that the venture has more focus and teeth to bite on that.
Conclusion
Looking at both the points, it looks that the initial choice of Jaipur by Shuru seems more driven to do something for Jaipur and not by the cost aspects. Even though Jaipur offers cost benefits in rental prices, we can’t ignore the facts that Bangalore has hosts of other plus which includes, excellent IT infrastructure support, booming rental market, pool of well trained IT professionals. If these can be provided by Jaipur, they can think of moving there. And VC money should be more welcome because it increases the chances of shaping the venture to a more authentic e- real estate venture rather than just another real estate shop.
The point to note that, the business model i have envisaged is the one where in they would have a cut in each transaction. This is a more lucrative for low user base model. Besides people wont mind paying if the site is able to get both parties together since brokers take far larger cut in such deals.
As they keep on growing in size. They can go on for advertising model but it should be in addition to the percentage per deal which they would be taking.
The decision needs to be driven by factors like cost-effectiveness, availability of resources and future planning.
Some points to be considered in this regard:
1> Bangalore is a place where influx of people specially IT-people is increasing day-by-day. Thus, they can expect a large customer base in Bangalore.
Short term goal
As they want to eliminate middle-man, they can do a tie-up with various IT companies that recommend real estate brokers for the new joinees. Here their contacts in Bangalore would also help. Also, it would help them establish a credibilty in the market.
Long term goal
On their established credibilty they can go in for the kill by launching themselves full time in sale of property. The realtors would also trust coz of their already established credibility.
2> They can recruit some good talent from Bangalore which wud b tough in Jaipur. Also if the idea fails to take-off, they can easily conitnue with their jobs. If the idea becomes a success, then they can recruit more people in Bangalore which would again give Bangalore an edge over Jaipur.
3>They can get money from venture capitalist as this won't jeopardise their savings and careers. They can enter into an agreement where the majority stake remains with them if the idea is a success.
I think that bangalore thus becomes an ideal place and taking money from venture capitalist is not a bad idea.
appikap
For the lcoation,I think just lacting at Jaipur for the benfeit of home-town would be a naive idea.
They should also factor in several other aspects---
1.The area they require to set up the office and the cost-advantage they will have vis-a-vis any other city.
2.Bangalore and Jaipur would ideally be more preferrable as one is their home-town and another the city where they have been working for last five years.so,they will have local contacts in both the cities through whom they can get information for different real-estate ventures which they might wish to use for publishing in their websites.
3.The physical location might also become irrelevant for their business later,since it is a mainly online business model and so their office might actually end up being a back office for website updation and maintenance.
4.Some plan for future growth could also be imagined....do they later visualise their expansion by setting up customer contact points--like we have the icici hoam loan melas...(Though this might be irrelevant now!)
For raising the money the following factors can be considered:-
1.The money required will depend on the location where they decide to set up the office.
2.Also,since it is an online portal much of the money will be required in brand building..If they get get a VC who have access to media channel or who can get them a good advertising agency..it would be prudent for them to rake him as an investor as it would help their business expand faster.
3.Since the money required is not much more and they both agree on that...one strategy would be to start the business and establish the proof of concept.the first round of funding can be done by themselves and they can go in for a VC in the second round.
4.They should asses the risk,Since both of them r highly qualified they can afford to take a bit of risk with their money which might be beneficial tto them in long run.If the business runs..they might earn a lot more ..After all "No risk no gains"
START: Puru and Shuru, well-qualified web developmemt professionals decide to combine their skills with the booming real estate industry to start their own e-real estate venture. But they have a difference in opinion as far as the location and the source of money is concerned.
Assumptions:
We can assume that their sole work is to remove the brokers from the process and facilitate the meeting of the buyer with the seller and their earnings will be from advertisements only.
Also the location where they start, will be the only area their website will be catering to.
POINTS:
1. The low cost of land and low living-cost in Jaipur makes it a favourable location.
2. Since the prices are rising at the same rate in Jaipur and Blore, it would be better for them to be at their hometown.
3. Also, B'lore is reaching a saturation (overheating) as far as real estate prices are concerned, whereas Jaipur has just started on the road to development. So, right now Jaipur is THE place to start a real-estate venture.
4. Considering that its an internet based business, the people in B'lore will definitely be more comfortable with internet as compared to those in Jaipur.
5. The builders in B'lore will be more in number and high in class as compared to that in Jaipur. Builders being the sole source of their income, it would prove beneficial if they start it in B'lore.
6. As far as money is concerned, they should neither be too bullish nor too bearish. They should seek half of the investment from VC, so that VC's share in the profits is limited.
Queries:
1. When is the right time to mention the assumptions, if in the 'START', then what about the rest of the elements of the 'START' part? Or shall we shorten the 'START' then e.g. - Puru and Shuru, the future business partners are facing a dilemna due to different opinions on professional matters. Here, we can assume that.....(assumptions). Is it fine this way?
2. And each one would have a different set of assumptions, then what?
3. I have posted some queries in PI Prep thread. Please answer them as well.
- anamika
Hey Sumit,
Good points from you. I am sure, with some more time and thought, you would have been able to consolidate better. Please look for specific comments on the main analysis
Hey Dilip,
You are going a little on the tangent. Be more careful on that.
PS,
Need to improve on the start. You have just restated the problem.
B2b,
Many good points made. A brownie point for the approach itself. Don’t feel bad that you did not get many brownie points, but that’s because some points were made earlier
I have split my comments into points that need improvements and good points (with minor tweakings). For summary analysis, click here http://catfundae.blogspot.com/2007/01/topic-real-estate-case-complete.html#links .
Points that need improvements
In case they decide to go for VC funding, the number of Venture Capitalists in Banglore will be much more --- should they ‘locate’ to Bangalore for that?
They should take some money from VC because in case idea fails, they won't come on roads. the shareholding should be distributed in such a way that it is Puru and Shuru who benefit the most by the venture and not the VC ---- Do VCs look so gullible to you. Don’t you think VCs are more experienced in getting better deals for themselves.
In order to get those 8 resources, they would be much better off in an IT savvy place like Banglore, where their requirements will be met soon --- it is more difficult to hire people in Bangalore since people have more options. Walk into a website development training center (e.g., NIIT) in Jaipur and walk out with 8 people
Their careers so far in Yahoo wud have enabled them 2 build contacts..that cud b immensely helpful in smooth conduct of operations related 2 their business ---- No. Only in developing websites and nothing else
A good brand of IIM B, along with the knowledge of the place(Jaipur)will provide them an Edge and an easier path than settling In Bangalore and starting up from scratch --- you need to tell in what sense they know Jaipur better.
Since d boom has been d same in Bangalore and Jaipur..it makes no difference from d point of view of future prospects of d business idea nd its profitability...since it solely depends onhow well they apply their knowledge towards implementation ---- note that Bangalore is bigger in area and also has more internet savvy people
They can continue wid their present jobs..while simultaneously devote sum time towars their business ---- doubt the effectiveness of it
CM Vasundhra Raje has initiated a lot of plans to develop infrastructre and she has strict deadlines for it also. --- you are talking about which would grow faster. Would be a little offtrack I guess
They can also continue their work while building the website. This way, the risk involved will be very minimal and they can shift back in case of any problems. But Jaipur being far away from their work place doesn't give them this liberty ---- A new venture needs more commitment. And what are they achieving. Only a couple of months salary. I think they have earned decent and the priority is to get the website faster
They can invest only a part of the amount while taking the remainder from venture capitalist. While Shuru can take his share of money from VC and Puru can give his share of money from his own pocket. They can later divide the share accordingly ---- No No No. The final share is not proportional to the investment. A VC always invests lot higher than the people who bring in the idea.
Since it is a startup, marketing will be very important. Bangalore takes a slight edge with population from different parts of the country --- it depends on how you do the marketing.
Successful entrepreneurs will visit IIMB as visiting lecturers and that will provide an opportunity to both for any help needed ---- haven’t seen that in 2 years at IIMB
In the future Jaipur may as well develop as the next software hub ---- then they can shift later when that happens
It will take a good amount of money in order to hire the best of web designers --- where will they make use of their experience
Nobody has a copyright over any idea on world wide web --- that’s wrong. The idea of bringing users together to share videos is not a unique idea and hence not copyright of Youtube. But the layout, design, algorithms etc are copyrights of youtube.
Banglore seems to be a good place to start the business in. They would benefit from the huge demand as compared to Jaipur --- the idea then is to have a website catering to Bangalore. But should they have their office in Bangalore?
The point to note that, the business model i have envisaged is the one where in they would have a cut in each transaction. This is a more lucrative for low user base model --- it is a good idea but very difficult to implement. Think about it. Even if possible, they should do only after initial success
On their established credibilty they can go in for the kill by launching themselves full time in sale of property. The realtors would also trust coz of their already established credibility --- they are becoming middlemen themselves. This is why companies have mottos so that they don’t digress
The builders in B'lore will be more in number and high in class as compared to that in Jaipur. Builders being the sole source of their income, it would prove beneficial if they start it in B'lore ---- though a good point, note that most builders of Bangalore are also pan-India
As far as money is concerned, they should neither be too bullish nor too bearish. They should seek half of the investment from VC, so that VC's share in the profits is limited ---- that’s a suggestion. In a GD you have to put in arguments and tell why they should be not bearish/bullish
Good points
As most of the business will be internet based so the investment should be minimised on catering to the place and rather should be streamlined towards marketing and Brand building for the network they are setting ---- but also note that the marketing cost may go up
The geographic location is also better when Jaipur is compared to Bangalore, and with the boom more closely concenterated to Northern region, it would provide a cheap transporation to both clients and marketing people ---- Jaipur’s proximity to Delhi, Gurgaon and Noida makes it cover more area. And note that Delhi in size is bigger than Bangalore and hence more business . But do you need an office in Jaipur for that.
Puru n Shuru r settled in Bangalore 4 d past 5 years..as such they wud b aware of all d nitty gritty's related 2 d place..as opposed 2 Jaipur - a place ..which no doubt is their native place..but then bcoz of their working commitments,they wud have lost track of d events n happenings there ---- fair assumption. Note that they would as tenants/buyers be aware of the real estate prices and rise in Bangalore better. But do they require that knowledge?
They wud b able 2 hire qualitywork force by choosing Bangalore as d location ---- but there is also a cost associated with it
Venture capitalists offer a safe bet. Even though they may lose some profits, it is worth it as they need not think about the finances.
As both of are from Jaipur . they will get better ideas about planning and execution of their plans and vision. They might get enormous help from local people and support from them --- local support is a good point, though it is doubtful
Bangalore being the IT hub will make it easy for them to get professional at much cheaper rate than Jaipur --- get professionals true, but cheaper is doubtful
Make Bangalore a prototype and take data from external people for Jaipur if it is a success in Bangalore --- very good point. But the question remains if they should develop the website from Jaipur or Bangalore
They need qualified individuals for a start and Bangalore being a software hub is more likely to give them an opportunity to get better resources --- What about their own qualification?
Since it is a real estate industry, client would not be satisfied with only online settlements. The company will have to take care of agreements and settlements in person. Travel to locations will be important and bangalore being well connected by flights is a better option in this case than Jaipur ----- brownie point. But do they want to be mediators
Since it is an online business, they can build a website for people across India.
Finance required for initial setup is less and hence both can invest themselves and once the company starts showing profits, they can call in Venture capitalists to invest more --- Good. You go to a VC only when you need substantial money. And only after your idea is well developed. Once you start developing the website, your idea will start taking concrete shape.
Since their business plan doesnt requires much interaction with the client, they can hire a marketing team to take care of the revenue targets from advertisers --- brownie point. Hire where you don’t have the expertise. Remember these people may not be good at marketing
The money they are aiming at has to come largely fromt eh advertisors and builders but not from the clients --- but that’s a business decision that they are yet to take, but a good point since the idea was to remove middlemen
It is a web based company, the concentration of tech boom hardly matters. They can even start it form the silicon valley till they have their marketing guys placed in potential locations ---- brownie point
How does having a knowledge of requirements of city will help in designing or running the website ---- though it may seem that the knowledge is required, if you dig deeper, you may not require it
They should get all their guns blazing. If someone likes their idea and starts a similar venture with marketing at a greater scale and steals the firstc omer advantage from them, they will be at the losing end --- brownie here again. Internet is prone to cloning faster because of greater access.
Since they were both working for Yahoo for 5 years, they would have decent savings --- cool point. Will help derive lot of things down the discussion
They would need to establish contacts with builders initially, for which personal meetings are necessary. Later they may send agents, or representatives for the same --- Move one level above and say that they should be involved in all parts of business till they can take care of themselves. Have more control to start with
In order for the site to succeed, they need a customer base, that is comfortable with credit cards, & net payments. This includes a large number of young working professionals. The number of such people in Banglore will be much higher than that in Jaipur ---- So the target customers are to be in Bangalore. Lets say net savvy rather than buying on the net. But they may want to charge in future
The initial advertising binge, would have to cover all types of media: print, TV & radio. The audience for such a campaign is very high in Banglore as well. The age bracket that use such media, is also young, & so their penetration will be good --- brownie point again.
They have 5 years of good experience behind them, plus a great MBA degree.This would hold a lot of ground with the VCs, & they could get a fair number of offers, with reasonable conditions ---- very good to see someone bringing in the ‘bargaining
The VCs, being huge companies, would also have invested in some development projects, & would be able to provide them the initial backing & contacts needed. The knowhow of the type of advertising needed, the people to manage the launch of the site, could also be provided for by the VCs --- brownies galore
The only source of their money is Advertisements from bigger builders(similar to classifieds appearing in newspapers). Therefore, the concept of Jaipur being cheaper becomes void here --- though many had alluded to the above, a brownie point for putting it very well.
However, for the real estate sellers and builders ready to give advertisements on their site and make payments online ---- Cool point. Good thinking midway.
I don't think they need a very big office or, a office situated in posh locality because never will the buyer or seller come to their place ---- Wonderful point. The credit goes to Mr/Ms anonymous, but can we have your name/pseudoname please
The point to note is that money which VC would bring in does not represent only monetary benefits. It brings in more credibility for your venture which helps in tie-ups and selling your products to end user or other partners. They would bring in a host of expertise in forms of networks, market identification, bringing in relevant Board of Directors for guidance. They help vet your ideas so that the venture has more focus and teeth to bite on that ---- it’s a wow sum up
Some plan for future growth could also be imagined....do they later visualise their expansion by setting up customer contact points--like we have the icici hoam loan melas --- Since the group has come with lot of ideas, I am sure they would have had time to discuss future too
Good sum up points --- the first round of funding can be done by themselves and they can go in for a VC in the second round. No risk no gains.
Hi gyanee.. Mr. Anonymous is me - Himanshu.. For last two posts, your blog's comment section isn't diplaying my name. Perhaps it has got bugged by my comments :)
- Himanshu
Ha ha... thats cool.. I think the blogger wanted to collect the brownie points for itself....
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