In India entrepreneurship has got a lot of attention and buzz, especially in the IT and tech sector. Is there such a thing as youthful optimism when it comes to entrepreneurship? Do you need to be in “the” location for your startup to succeed? Does your startup have to be in the IT and tech sector to succeed? What are the challenges of doing a startup in India, where the ecosystem of entrepreneurs is still sketchy with lots of gaps? And, is it always cheaper to get things done in India? You will be surprised by some of the answers. These are some of the questions that Deepak Shenoy, CEO and co-founder of Moneyoga answers in this Q&A.

This is how Deepak describes what his young startup does: “Moneyoga is a stock market information and analysis company, crunching stock market data and providing it to investors in an easily understandable format. Community features are in the pipeline to promote social interaction which in turn helps the community make market decisions.”

The founder recently relocated from Bangalore to Mumbai, which is the financial epicenter of India. The company boasts of just two employees Deepak and his co-founder Kaushik Gala.

KB: Could you explain what Moneyoga does?

DS: Moneyoga (single Y) provides stock market investing concepts, data and analysis for the Indian Stock Markets, best described as “smarter investing”. There’s an enormous amount of information out there - more than 1000 companies, various futures, options and indices. We break that down and bring it to investors in a more actionable format.

We are one of the few sites that also focus on the immensely popular Futures and Options (F&O) markets. We provide analysis and screens for the F&O bazaar. We’re also adding a number of community features. Apart from shares, we allow people to track their F&O positions as well. From a community angle, we’ll be adding features for managing money, sharing ideas and our idea of showing the “wisdom of crowds” in the stock markets.

KB: Could you please explain what future and options mean?

DS: Futures and Options are derivative products based on stocks ordinances, which allow investors to “hedge” their risk of owning the stocks themselves. These products are also used for speculation - for
instance they are the only product that allows you to profit if the price of a stock goes down. For a more detailed introduction go to http://blog.investraction.com/2006/12/futures-and-options-introduction.html.

KB: Who came up with the name Moneyoga and what does it mean?

DS: Kaushik and I started off with the idea of “disciplined investing” which is the underlying theme of our site. Investing is a science, not an art, as many are led to believe, and investors and traders must create rules that they stick to, in order to eventually profit. This idea has been lost on most investors who look upon the markets as a “gamble” rather than a process. Money and Yoga come together to bring about disciplined investing.

KB: What is the level of financial understanding or saviness does a user need to have to use your services?

DS: Our typical user would be a reasonably knowledgeable investor or stock market trader. We target the short term investor - someone who would like to realize profits within a year of investing. This may sound like anathema to most, but our surveys show that most investors are short term in nature, in India at least. The entire F&O market is a short term market, and that accounts for a very large percentage of retail trade.

KB: What does one need to know to use our site? That there are stocks listed, that they can be bought or sold (the user would typically have a brokerage account) and that prices change every day. To look at a stock we provide a broad set of parameters, color coded - red for not-good and green for good. Even our charts color code the areas we recognize as bullish and bearish, the former meaning where prices tend to go up, and the latter where they go the other way. Some parameters are understandable by novices and others are for the more knowledgeable (like Moving averages, Relative Strength, and MACD).

Are we then throwing out the novice investors? Our long term plans include financial education as a part of our offering, with courses being available offline and online. We will specifically focus on F&O training and in areas that seem relatively complex like commodity futures, hedging and risk management.

KB: How is Moneyoga different from other financial sites?

DS: For one, there is very little correlation of stocks with futures and options in most other sites. We address that gap. Second, we attempt to provide “actionable” information - what we consider can be used to decide “buy” or “sell”. Most sites tend to provide a large amount of data, which may be good in theory but is of little use to most investors.

Also most sites tend to advise people to invest for the long term. We address the needs of the shorter term investor.

KB: How do you collect and parse reams and reams of financial information to be useful to the end user? Can you describe this process?

DS: There are more than a 1000 stocks traded every day, and many stocks have futures and options on them. And then, on a daily basis, there is news on each stock, financial results are announced, insider trading statistics are revealed and a lot of other data is made available. For most users, tracking all this information is near impossible - so what Moneyoga does is collect all this data from various sources, and we try to recognize “outliers”. That is - data that falls outside “normal” ranges, which makes it easier for an investor to understand where the action is.

For instance, our screens bring to users stocks making new price highs, or rapid changes in volume, or where futures or options activity is wildly abnormal. This can reduce the effective set of stocks that need to be scanned to a handful, which saves a lot of time. Plus, by recognizing outliers you can see stocks which you would otherwise not follow.

With our community features we will add these too - the ability for users to enter portfolios already exists, but we’ll provide alerts when your stocks show any abnormal action. We’ll eventually provide this on email and SMS as well.

KB: What is your revenue model?

DS: We’ll figure it out. We’re going to be ad supported but there may be additional revenue streams later for subscriptions (where we believe we can provide “real time” analytics rather than a delayed stream). There will be specific additional services we can provide to institutions as well, at a later point.

While the main focus is to attract and retain users, we do want to be able to sustain ourselves fairly soon.

KB: Who are the other players in this field and how big is the market?

DS: There are about 8 million investors currently, and public data puts the growth at 40% annually. Retail trade (by this I mean individual investor volume, rather than institutions like FIIs or mutual funds) accounts for nearly 1/3rd the volumes of the exchange - which are currently about 45,000 cr. per day. There are a number of players that address the investor market - Moneycontrol from TV18, Equitymaster for stock research, and Value Research Online for mutual funds and so on. Some new startups are also addressing this space actively, and we’re glad the area is getting more attention.

KB: Who is the competitor you respect most?

DS: Moneycontrol.com. They are by far the biggest and most well funded competitor in the business.

KB: What were your reasons for starting your business?

DS: Kaushik and I have been writing blogs on investment for over four years each and when we met we realized the need for a better offering. That we’re both programmers helped in that we didn’t have to hire anyone to write code, and we decided to give up our cushy jobs to do this full time. We started because we saw the opportunity in providing more high quality analysis. Now no one needs that kind of analysis when your index is moving up 40% a year. We realized this was the end of the bull market, and that going forward it would be more difficult to generate high returns - and figured that if we encouraged smarter investing, we could actually generate better returns even in difficult times.

KB: What was the most difficult decision? How difficult or easy was it make a decision to start your own business?

DS: I’ve personally been a co-founder before and have the entrepreneurial “bug”, so I was all for it. Kaushik was very enthusiastic too - while it might seem that the transition is tough, it wasn’t.

What made it all the more interesting was - we both have families and small children. And we both decided to move to Mumbai - that’s where all the action is, in this space.

KB: What were some of the misconceptions you had before you started your business? Biggest misconceptions?

DS: That if you build it, they will come. You have to build it, make it better, promote it, fix bugs, make it even better, raise funding, and ensure you have a PR department, Promote some more, hire people, hire more people, and make sure that all your systems work fine every single day. And after all that, you need a good amount of luck on your side.

The misconception is more from youthful optimism than anything else. But the fact that we both have young children must have taught us enough patience - we don’t get frustrated that easy.

KB: As an entrepreneur what do you think are the challenges of doing a startup in India? What are some of the challenges that people tend to overlook when they do a startup in India?

DS: Startup challenges (some of these are not specific to India):
1) Infrastructure costs. While home offices etc. are ok, it’s horrendously expensive to set up a real office - the rentals, deposit, and basic workstations cost quite a bit.
2) Finding people: We started a company we could run with very few people - the plan has about 40-50 at the peak - because it’s very ,very difficult to find good people, and if you find them, chances are they don’t stick around. It may actually be better to outsource abroad. (We got our logo designed by a U.S. designer and not only was it more professional an experience; it was actually cheaper than local work in Bangalore!)
3) Regulation: There are a number of procedures one needs to follow - and it’s best to get a good accountant to handle this. It’s limiting in a small way.
4) Funding: This is difficult everywhere, and one needs a serious level of patience. (Child rearing experience to the rescue again!)
5) The social impact: Startups are lonely. You don’t even get a label for it, except you can write whatever you want on your business card. Plus, people seem to ask you “You didn’t get a job at Infosys?” type of questions, but thankfully we are thick-skinned and have a sense of humor. But the social impact can be a serious problem for a number of people.

I think people overrate entrepreneurship. It’s not the Holy Grail, and it definitely won’t make things happen any better than if you worked at big-name company. That disappointment tends to kill a lot of startups way early in the process.

KB: Does location matter when you do a startup in India?

DS: Yes. In that if you address Indian customers, you better be where your customers are. We chose to be in Mumbai, and moved lock, stock and barrel from Bangalore to make it happen. Because our customers are located in this part of the world, and although we are just a web site today, being in Mumbai will open doors that would have been unavailable in Bangalore.

If your customers don’t care where you are - say if you create a Facebook application - then you can do it anywhere, even Cochin, if that works for you. What matters is what works for you rather than looking at any specific stereotypes. I hear a lot of people say that Delhi is the best for business (maybe political schmoozing applies) or that Bangalore gets you the right people - but that is just baloney. You find phenomenal businesses everywhere, and you can build your business where it works best for you. Warren Buffet works out of Omaha, and look where that took him

.KB: What is your Plan B for the company? What keeps you awake at night?

DS: If anything in our current plan doesn’t work, we’ll adapt and change to whatever the market asks of us. Short of doing anything illegal or becoming glorified coolies, we intend to do whatever it takes. If it takes more than we can give, then we’ll figure out a plan B. I wish I could say we knew it, but we don’t. We just know we can make one when it’s needed.

What keeps me awake at night? My one-year-old son, for the most part. More seriously, I worry about this market drop taking with it all the retail investors that were there. Less than 5% of Indian savings are in equities and we shouldn’t be reducing it further.

KB: What is one word that best describes you?

DS: I can do two - Smarter Investing. Clichéd perhaps, but it fits.

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