BT Dot.com: Internet Leaders Don't Spend, Spenders Don't Lead

NOTES FROM THE TROUGH
Internet Leaders Don't Spend, Spenders Don't Lead
The secret to marketing in the connected world: don't market at all!

By Mahesh Murthy

It's not just underfunded start-ups that are perishing: the overfunded ones are dying just as quickly, if not faster. The market went through the roof, and then through the gutter. Everybody became a dotcom, then everybody removed the dotcom from their names. A few, the hardy, the foolish, the lucky survived, ekeing out a meagre living. The person at the centre of it all, the entrepreneur, is looking up from her deathbed. She asks: ''Can I come out and play again?''

What are the new rules of business success? Well, ask a Jain. In all of India, three people got rich in the dot com revolution. Coincidentally, all were from the same community. Rajesh Jain got there the hard way. He built a loyal user base, a profitable business, and then sold Indiaworld (including samachar.com) to Satyam for $100 million. But other Jains made far more money. Vineet Jain and his brother Samir of The Times of India sold ad space to everybody who wanted to become the next Rajesh Jain.

First they refused to entertain anything even remotely competitive with their own Indiatimes.com. Then wiser counsel prevailed. The policy was changed to ''if they have money, take it!'' In a now-infamous move, they sold the front page to Indya.com for a sum said to be in the $1 million-plus range-money they got off a now-repentant Rupert Murdoch.

The gates broke loose. Indiainfo spent crores on ToI. Remember them? So did Rediff. And Egurucool. And a hundred other names you won't even remember today. With the possible exception of Rediff, close to being kicked off Nasdaq, every other mega-advertiser dotcom on ToI is in well-deserved obscurity. Rediff too is hanging on by turning into a print and phonecard company, not the dotcom we all knew and gaped at.

All of them were pushed by their vcs to spend, spend, spend to get valuations, valuations, valuations. Forgetting that valuations only come when you earn, earn, earn. And forgetting the biggest lesson in recent marketing history: the only word that counts is word of mouth. Just take your eyes off this page, and tell me five or seven of the biggest names the net has brought you. Go on, do it. Here's my list: Yahoo, Amazon, eBay, Napster, ICQ, Hotmail, Google, Paypal, a couple of others. Are yours from this set too? Probably. Now, the key question: When did you ever see ads from any of these companies?

As you digest that, you're thinking: Didn't they spend a lot? Nope. Having been personally involved with the launches of both Yahoo! and Amazon, I can tell you their first year global marketing spend wasn't even a crore of Indian rupees. Their second-year worldwide ad budgets? Less than what a Hindustan Lever will spend on Uttaranchal this month. Oh, you say, they were first movers then. Hogwash. Yahoo and Amazon both had online competition when they launched. Now you'll say those were the early years? Come on, Paypal is probably younger than your company.

So how did you get to know of these brands? Somebody told you. You used them and liked them enough to tell somebody else. In short, word of mouth. And how do you get word of mouth? A classic route: build a unique product, different from everything else globally. No me-toos. Build it to capture the imagination and love of users worldwide, and delight them. And then leave it to them. Your users will become your marketing force.

These are the two routes to success. Either the Rajesh Jain path: create a product that doesn't need to be advertised. Or the Vineet and Samir way: create a product that gets money from people who aren't smart enough to follow the Rajesh Jain route. In one of these two paths lies your nirvana.

Mahesh Murthy, an angel investor, heads Passionfund. He earlier ran Channel V and, before that, helped launch Yahoo and Amazon at a Valley-based interactive marketing firm. Reach him at mahesh@passionfund.com.

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