After spending 30 years in Silicon Valley, one would think a move back to India would come with its fair share of challenges. But not for Dhimant Bhayani, Founder and CEO, iRevo Multimedia, who seeks out experiences and makes the most of them. While on a quick visit to New Delhi, Bhayani spoke to The Dollar Business on his learnings in India and his reasons for being very bullish on iRevo

Interview by Neha Dewan | The Dollar Business

TDB: What do you like more – heading iRevo or being an angel investor in tech startups?

Dhimant Bhayani (DB): That’s such a difficult question! I like both. Being an angel investor helps me meet very intellectual and highly driven people. But what I am doing in India is of equal importance because I have the opportunity to impact lives of a very large portion of the society, either directly or indirectly. By bringing iRevo’s vision to the masses in a very cost effective way via a unique business model, I think we will contribute in a small way to Digital India.

TDB: What prompted you to shift base from Silicon Valley in 2008? Do you regret the move, particularly since the NASDAQ is back at 5,000?

DB: I don’t regret because along with the market, my portfolio is doing well. As far as shifting base is concerned, I look at this as an opportunity to do something in India. It’s more than just a business opportunity. There are a lot of positives and a lot of negatives, but at the end of the day, I just look at it as an experience. What is very interesting is that everything that we are doing in India is state-of-the-art. Someday, I will take iRevo India platform to US and make it even bigger. So, I am not losing out in anyway. I am just deferring it.

TDB: How has the journey been for iRevo since it shifted base to India?

DB: There is a lot of frustration at times. In India, we have more hurdles than in other places. But this is something that I have chosen to do. No one has forced me to shift base to India. I am on a long journey and this is part of that journey. Someday, I will go back (to US). But that doesn’t mean I won’t spend substantial time in India. Today, if you are in a global business, you spend 30% of your time in travelling. It’s very routine. And this 30% is good enough to run the business in this modern, connected world.

I would say India is very different. Management in India is not how we look at management in US. There are owners and there is a management. Things don’t get done unless you are really interacting with the owner. That has been the biggest eye opener.

TDB: Which segment is a bigger contributor to your revenue – platforms or apps and devices? Which segment are you more bullish on going forward?

DB: iRevo is a very deep technology company. We are really showcasing the entire company. We have a digital signage; we have an advertising platform for cable TV; we have smart TV; and we have smart PC. These are the four products that are ready for revenue generation. And each one of these has the potential of a few hundred billion dollars business.

The mass market is, of course, B2C and that is the closest to the consumer. So, we spend a lot of energy on smart TV and smart PC in terms of profitability and scaling. I would say this fiscal, we are looking at Rs.25-100 crore revenue for smart TV and smart PC. The other two businesses are also equally attractive.

 

 

TDB: You mainly import from China. What are the main challenges that you face while importing from there?

DB: Two challenges – communication and customs. Since the Modi government is trying to make it easy to do business, it really needs to look at Customs. For nothing that you want to make in India has a fully vertical industry. You will have to have substantial imports. It’s just that what you are importing will change. But hurdles in imports makes the business uncertain. If one day I am paying a duty of 16% and the other day I am paying a duty of 30%, how do I price my product?

TDB: TV imports attract countervailing duties in India. Do you think it is justified? What changes would you like in India’s upcoming Foreign Trade Policy?

DB: The duties are not justified. But at the same time, I will say it is extremely bad for our economy to import the level of consumer goods – particularly electronics – that we are importing. At this rate, our electronic goods imports will exceed our oil imports in another three-four years.

If as a society, we are going to spend so much money on electronic goods, shouldn’t the government help the private sector manufacture them? Why do we own ONGC? Why do we own Indian Railways? These are 18th century infrastructure companies. 21st century is about semi-conductors and software. When I was in Silicon Valley, every time there was a government delegation, even ministers and officers would say, if you want to progress, stay away from the government! The reality is that Indian IT grew because it was not dealing in India. The internal software revenue of the top five software companies of India is less than 10% of foreign revenue. Why? Why are we not being able to cater to our own society?

I think the government should look at duty relaxation for products below a certain price point, at least for products that are marketed by domestic companies under their brand. This will minimise the trading that happens between China and India.

 

 

TDB: Are you looking forward to manufacturing as well? Has the government’s thrust on ‘Make in India’ persuaded you in anyway?

DB: I would love to do ‘Make in India’ but not at the expense of my customer. If I am not able to deliver the same quality at the same price, my customer suffers. It doesn’t make sense. So, it is the policy makers’ responsibility to ensure that domestic business is as competitive, if not more, as imports. Manufacturing isn’t very complex in today’s world. Our plan is very simple – when it makes business sense, we would love to ‘Make in India’.

TDB: Your smart TVs are priced at Rs.8,000. Is it a conscious strategy to keep prices lower than competition? Also, can you give us a sense of your margins.

DB: We are not a trading company. Our research shows that popular price point in India falls between Rs.5,000 and Rs.6,000. The way the distribution channel in India is, you have to leave about 30-40% margin in the channel. In US, distribution channel is 5-12%. It is no longer 40%. Despite this, at the right time and with the right volume, we can bring our smart TVs to within the Rs.6,000 range.

Our hardware business is just marginally profitable. Our hardware business is to gain users. I don’t want to make money on hardware. It’s via service. A large company needs to figure a recurring revenue generation model. It is a challenge that we have taken up, in which, if we are successful, scaling will be huge. An Indian trader wouldn’t operate the way we do. They concentrate more on margins, not service.

TDB: Technology is a segment that sees big innovations every other day. How do you stay ahead of the curve?

DB: Everything we build is for the market as a whole. The adaptation of what we build is for the Indian market. There are not even a dozen companies that do the kind of innovative work we do. For three years, we went into hibernation. We were not selling, we were just building. Possibilities ahead of us are endless. I can assure you that going forward, no one would be able to compete with us. The only ones competing with us would be the likes of Apple and Google!