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Raghav Kher, founder and CEO, Seventymm.
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November 08, 2006

From small town Dharwad in Karnataka to Silicon Valley, California, Raghav Kher's journey has been an exciting one.

Kher is now back in India with his latest venture, Seventymm, an online movie rental company that promises to deliver the movie you want to watch at your doorstep, from more than 10,000 titles from Hollywood, Bollywood and seven regional language films.

Kher, founder and chief executive officer, Seventymm, says: "Consumer is the king here and people have money in their pockets. Besides, DVD prices have crashed to below Rs 3,000. So I thought about a product, which people could use throughout the year. India has supply of 900 movies a year. There is a lot of content here. I also looked at how people watch movies and I found the market completely fragmented -- each store carries only 200-500 titles."

Kher talks about his experience as a professional in Microsoft and his transition to an entrepreneur and how he plans to make his latest venture a grand success in an interview with Manu A B, at the TiE-ISB Connect 2006 in Hyderabad recently.

Tell us all about you latest venture, Seventymm.

Seventymm is India's first online DVD rental service operating in Delhi and Bangalore. We intend to make watching movies a hassle-free experience. All you need to do is log in to the site, register and specify your office or home address, where you want the DVDs to be delivered and it will be done in 24 hours.

How did you get the idea to start this venture?

I came to India in March 2005 on a vacation. After a month I got bored and I wanted to do something new in India. The booming entertainment industry was an eye opener. I was amazed to see that PVR Cinemas charged Rs 500 for a gold class ticket. I grew up in a small town called Dharwad where we had to pay just Rs 2.50 to see a movie!

Here families are ready to spend even Rs 1,000 for a film! It's a completely different India from the one that I grew up in. Consumer is the king here and people have money in their pockets. Besides, DVD prices have crashed to below Rs 3000. So I thought about a product, which people could use throughout the year.

India has supply of 900 movies a year. There is a lot of content here. I also looked at how people watch movies and I found the market completely fragmented -- each store carries only 200-500 titles.

When was the company formed and how easy was it to get funding?

The company was founded in August 2005 and we launched the service in March this year in Bangalore. We received $2 million from DFJ in November last year. We received another round of funding of $7 million with Matrix Partners recently. Today, we have raised a total $10 million.

What are the rental schemes on offer?

We have two plans Rs 199 for four movies (DVD/VCD) per month or Rs 549 for unlimited movies per month. The registration fee for both the schemes is Rs 499. You have to pay a refundable deposit of Rs 999 for both the schemes. You can pay by cash, cheque or credit card.

Select the movies you want to watch, make a list and the first two films will be delivered within 24 hours. There is no late fee, so you can keep them as long as you want, when you finish watching, log in to the site and schedule a pick up or just send an SMS and the next two movies in your list will be delivered to you.

The films will be from Bollywood and Hollywood, regional languages like Hindi, Kannada, Tamil, Malayalam, Telugu, Bengali, Gujarati and Marathi.

How do you plan to offset competition from other players?

If you want to rent a movie on Friday you have to drive to the nearest outlet. Suppose you want Spiderman, it is not available and the local shop gives you Batman. You may get it cheap but when you take it home you find it is not clear and realise it is a pirated copy.

So consumer expectations are not satisfied. Home delivery in India has taken off unlike food delivery business which has become big business in India.

Convenience is what people looking at along with the choice of content and variety of languages. You can also check how others have rated the film on the site and refer it to friends.

This is a disorganised sector and consolidation is happening in various sectors of retail, we being an organised player would like to make the best use of the opportunity.

How many start-ups have you launched so far and how was the experience?

I started three companies in six years. I started a company called Rendition Networks before this. It was a software technology firm with an elite clientele. Last year, Opsware acquired it for $40 million. Prior to that, I founded iMandi, an Internet marketplace to serve households in the United States.

Suppose if you want to get your house cleaned, or want a lawn moving service, you could get it done with our service. It's like the next version of yellow pages. We had over 300 categories in house cleaning and tied up with 200,000 merchants in the US and had about 1 million users. It was a great experience.

How was the experience working at Microsoft? Did you get to interact with Bill Gates?

It is very exciting. Microsoft was a great experience. When I joined Microsoft there were only 6,000 people. I spend 8 years in Microsoft, when I left MS it had 30,000 people and it had become bureaucratic.

I loved working at Microsoft, it's an awesome company but as more people joined, it was a totally different feeling. I left Microsoft in 1998. MS was one of the hottest companies to work with. The last two years I was in the finance group.

I was part of the Hotmail acquisition; I used to interact with him (Microsoft boss Bill Gates) on a project basis. He is a shrewd businessman and you have to prepare really well before you go for a meeting with him. You have to back up what you are saying.

The best thing about MS is they have hired very smart people. They have done an exemplary job in hiring the right talent. People are very passionate about their ideas, and even get confrontational! But the best way is to win and do well.

How important is education for an entrepreneur?

Education is important for an entrepreneur. In my case, the masters in mechanical engineering did not help. A bachelor's degree in engineering helps as it gives a good base, but if I can redo my education, I will not opt for MTech. A degree in computer science has been very helpful, I can understand technology very well.

The business school taught me a structured way of thinking and analyse market opportunities. My family also had a business in Karnataka but my father can't think of big deals and diversifying business. He cannot think about evaluating risks. . . they only think about what coming in and what is going out than about the large picture of business and how you can grow further.

A B-school teaches you to understand opportunities and risks. It also teaches you to grow big, create customer value and think about the competition.

What would be your advice to budding entrepreneurs in India?

What are the reasons for your success?

The drive to succeed is very important. Clarity of thought and ability to focus on the right things have helped me. I have been able to focus on making changes and have the ability to solve unstructured problems.

I also believe prioritising and execution. I believe that strategy is 20 per cent and execution is 80 per cent.

What are the challenges you face in India?

The biggest challenge in India is hiring. I spend 90 per cent of my time on hiring people. Attrition rate and salaries are very high. And when people come for interviews, they are not keen on finding out how challenging and interesting their job would be, they straightway ask, "What's my package?"

Indians historically are very conservative and don't want to work with a start-up. It's because we did not grow up in a society with many start-ups. In Bangalore, people want to work only for IT companies or BPOs (business process outsourcing units).

We have solid team in place. We have a staff of 70 in our Bangalore office and will hire about 50 in Delhi.

Why do Indians lag behind in product innovation?

Ten years ago, Indians who were in Silicon Valley were engineers. After 1995, many company CEOs were Indians. Now, 50 per cent of Silicon Valley companies are run by Indians.

We have climbed the ladder to leadership positions. We have shown the world we can run companies. We started with business process outsourcing, started with small projects and are now getting bigger deals. We have done value addition to the existing projects.

Next step will be in product innovation. Small companies and start-ups are already making products. It is true that Indians who have gone to US have become good product developers but in India they are not as creative. I still can't figure out the reason.

What are your future plans?

We plan to launch operations in Mumbai by the end of this year. We will also be launching in Chennai, Hyderabad and Kolkata by the first quarter of next year. We plan to have 1 million users in 5 years generating revenue of $100 million. Every month about 1 million DVD players and 1 million VCD players are sold.

So 24 million players will be sold every year. In 5 years, this will grow to 60-80 million. When you have 80 million players what good is it if you can't watch your favourite movies? So rental schemes will do very well!

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