Start Ups and Hiccups

We always like to idolize people who stand apart from the ordinary and make themselves noticed in a crowd. So while most people around me in college looked up to Edison, Einstein and Hawking as gods, the business minds admired the Tata, Birla and Ambani clan as inspiration. Deviation from the regular job to entrepreneurship might have clicked in the mid-80’s and the era of economic liberalization had started to build the foundation of entrepreneurship.  People who had a sufficient understanding and experience of how to do business in their domain floated on their own. This was what I shall term as the conventional approach: Learn the rules – master the rules – break the rules.

But this chain of order has now been smashed and a new order on the path of entrepreneurship has been established in recent times. It’s the culture of friends and roommates from some of the much revered technical and business schools hatching an idea, finding investors and taking on the world to break the established business practices. It is this radical and rebellion of sorts that makes people like Sachin Bansal and Binny Bansal (Flipkart), Rahul Yadav (Housing.com), Kunal Bahl and Rohit Bansal (Snapdeal) the new age business idols for the current generation.

Every single start up story has almost a similar beginning – the feeling that there is so much we can do to make things better and establish a new order. While some start up entrepreneurs have worked before they went on their own, most these days have an idea developed and launched from their hostel rooms and possibly find an investor in the idea even before they graduate. Not to mention symposiums from established giants like Microsoft Ventures have become like a breeding ground for start-ups and investors to come together and find mutually beneficial interactions – even leave the place with a deal in hand.

There is nothing to deny the fact that the entrepreneur culture is redefining the way business is done and services are provide. Technology and internet is changing the face of what we believed was the only way to do things. I’s sure we all have seen the infographic about Airbnb, Uber, Alibaba, Facebook and YouTube changing the face of various industry verticals and the perception that business can be done only in a defined manner.

While all of might be aware of the success stories, what is the success rate and why do the start-up acts fail? An idea at most times is like the USP or the competitive advantage that gives a start-up an edge and immediate traction. But this can only be in existence as long as the other either don’t catch up or innovate beyond to surge ahead. This is the space where things get a little dicey. Not to mention, investors are in for a long haul and look at break even and profits – not able to deliver is not an option at this stage.

Rahul Yadav has been in the news across for the last two weeks after being sacked as the CEO by the investors. It is not that his venture is not able to deliver; but the fact that every growth phase also needs to be made robust with consolidation and firm rooting before the next level was greatly overlooked. This is the space where great ideas need to be going together with great managers. The people who are needed to hold the company together and possibly also pull off a few decisions that keep the creative minds at rest for a while. It is the evolution of an entrepreneur from a rebel or maverick into a leader that counts at this point.

Three things I have cited recently amongst start-ups as I hunt for job opportunities:

Firstly, the scores of start-up companies which have come up and are looking for people to work with them because they have lost their way. From a number of interactions with such people, I have been able to discover a few startling facts. Yes, most start-ups begin operation with angel capital which is usually the pocket savings of the people involved. With expenses and investment in technology and infrastructure, the ideal turnaround time from the idea to implementation and acceptance needs to be under a year.

It baffles me when there are start-ups with having invested close to two years don’t even reach a beta stage. In one case, the marketing function was required to deliver results in 8 months where a target market was yet to be defined. Not to mention, the idea was already finding feet with established players like Evernote and Google to make the app redundant even before release. In another, a start-up with no clients or established service offering was looking for funding and needed media presence (castles in the air) to achieve this. I feel this is a case of tunnel vision and people often lose touch with reality having invested too much time and effort into their own obsessions.

The second being the fact that people are looking for like – minded people over more than anything else. So an IIT/IIM start up is more skewed for people from IITs and IIMs. It is not surprising that job portals can now have posts asking for a start-up partner, tech partner etc. from the premier institutes only to join the ones with ideas.

On the first level, it sounds good; like minds will gel and people will deliver. But how about another line of thought – an idea is no one’s domain and every IIT/ IIM is groomed to believe they are an invincible lot designed to rule the lesser minds. So how can one accept orders from another equal or not move out to pursue his/her own dream during the formative days? May be I’m wrong, but this seems like a complete recipe for a power struggle in the making.

The third and the one I believe is the breaking point – rapid expansions with no control on costs or break even periods. Most start-ups are technology driven and technology obsolesce cycles are shorter than even what Moore’s Law would have defined. Who could have thought that Orkut could have died and Whatsapp could have almost wiped Blackberry messenger. Not to forget, we are still debating if Amazon has ever reached a break-even point to date. Amidst such confusion, investors are pumping in billions in anticipation of backing the next big idea. These billions are being spent on expansions and hiring people at amazing pay scales. Offices are like party zones and massive monies are spent under employee welfare. So the big question is will there be a pay back to the investor at some point in the recent future and how long will the party last?

It was funny at times where I came across start-ups that were over 5 years old and were yet to make a big impact. Having spent their initial investor monies, they had now taken over a few other smaller players in a bid to attract more funding. Open fissures amongst the founding team, power struggles and crumbling client and revenues were just too evident.

I’ll like to end with a lighter note, a series by TVF called Pitchers which revolves around a bunch of guys preparing to build a start-up. The manager accepts the resignation of this employee, but runs him across a list of names – all his classmates but only a few who made it big. It is easy to think of a start-up, it is much tougher to manage the hiccups. 

Towards a Phony World

We all take pride in the fact that the world is shrinking; thanks to exponential improvement in technology and avenues to communicate. A 2010 movie named Udaan had a small joke about the state of telephony in India. A student being rusticated from a school has a small moment of ecstasy when the school master mentions about reporting matters to his father on phone- ‘You mean my house now has a phone line???’ I guess the joke shall fall flat today when India has more mobile phone connections than landlines.

While I have nothing against development or technology, I am coming to believe that technology is actually breaking the human bonds of the society by making us more and more impersonal. Today, almost all of us have a mobile phone, but the so called educated lot have given up calling and gone deeper into messaging. The charm of writing a hand written letter has now become something of a novelty (no wonder guys still try to impress girls by writing letters). I fail to recollect an ad I has seen some time back where there was a statement was, ‘technology today can tell you about what your distant cousin is doing in the US, but let aside mingling- we fail to even know or acknowledge our next door neighbours.’  The bottom line, Nokia may still say we connect people- but the human touch seems to be losing its grip.

Back in the days when I started working in GE Healthcare, the mobile phone became a need to connect with people towards getting solutions to field problems. In those day, my job role demanded me to be reachable round the clock for any emergency as a machine could go down at 7 in the morning or even 11 at night. With every breakdown having a rider attached of ‘human life at stake’, I was paranoid to a level where my phone had to be in the same room and as close to me each time I laid my head down. When I entered media, I got to learn that I was under a behavioural illness termed as Nomophobia.

Coined in 2010 in UK, Nomophobia (No-Mobile-Phobia) was a condition where a subject was living under a fear of losing mobile connectivity either by loss of the instrument, no network coverage, no credits or even the battery losing all juice. At that point, I remember there were stats like more than 70% people sleep with a phone at an arm’s length, 30% indulge in messaging during meetings, loss of a phone book record is more disturbing than losing a book etc. I cannot agree more that all this is happening. In fact, I had to take some forceful steps for myself like no phones during lunch/dinner, no phones when out with friends, phones on silent at night etc. to get me off this.

The next term that joined this list of new age phobias has been propelled by the increasing use of social media in recent times- FOMA (Fear Of Missing Out). It is not a stand-up joke anymore for people to visit Facebook or WhatsApp before the washroom after we getting up from bed or the finishing statement switching off the lights is hitting like on the last comment.  (http://www.warc.com/LatestNews/News/Online_India_gripped_by_FOMO_.news?ID=33659)

Let me just shoot you some numbers from this survey by Tata Communications undertaken in India, Singapore, UK, US and Germany. (China would have been interesting as well). With the 9417 respondents across these countries, 29% of the total spent more than six hours daily on the internet; the number for India being the highest at 46%. Of the total respondents, 56% could not survive for more than 5 hours without internet. For 12 hours without the internet, the Asians collapsed while the rest has over 70% survival. 82% Indians showed signs of FOMA and the gender ratio for anxiety was skewed towards women. What’s more, 43% Indians were prepared to give up on TV for more time on their tablets and smart phones.

It is evidently clear- technology is taking over our world too rapidly and eroding all other forms of media and inter-personal communication. In an interaction with students in their late teens, newspapers had made way for news apps on phones. It was not uncommon to spot a few smiling as they looked down to their groin. I threw a fit when recently on a vacation to Goa, my friend spent more time looking into his phone while sitting on a beach. The habit is so common amongst people that beach side shacks advertise being WiFi enabled. It was there by a refreshing sight when one shack declared it was a place with no frills but perfect for family time and live 90’s style.

I fail to understand how people can participate in twitter battles while watching a Federer- Nadal match or contribute to an absurd poll about Dhoni’s haircut while watching IPL. It actually beats the human nature of reward oriented actions as at end of the day, your tweet was one of a million that day. What an amazing date it is when the girl and the guy are both more interested in clicking a selfie with each other and tagging where they went and missing out on enjoying each other’s company.  

I am certain the scenario has risen out of two key components- easy access to mobile internet and social media applications for phones which are actually destroying the physical and inter personal relations in the real human society. It is thereby not uncommon to see some people taking a sabbatical from social media networks from time to time; it is a kind of a self-imposed restrain (or detox) to avoid the complete annihilation of their physical social structure. I just hope this doesn’t mushroom into a clinical mode of treatment- the indicators do suggest: we are after all moving very close to a phony world. 

No more Chicken 'n Egg: the rise of mass consumerism in India

It is not s scenario uncommon in India. We don't buy  fancy cars coz the roads are not the ones meant for them. Brands don't want shops in malls with no footfalls and we can't buy brands in our small towns. Some parts of the country have no flights or very few one's with expensive tickets, so we don't prefer to travel. We all might have had these thoughts and the solution we bring in is: Let's do it after someone else improves things for us. But I guess this cycle of 'someone else' has been broken by some sectors. 

There are possibly three things currently in India that rank high in terms of share of voice in news media- e-commerce, mobile handset devices and airlines. While their individual contributions towards boosting the Indian economy might be an interesting point of study; what they are doing in a big way is improving of accessibility of products and services to the far corners of India.

Some definite trends which are emerging though is a rise in mass consumerism across, larger spread in terms of variety and market penetration for businesses which ally with either of these three. What make it further interesting is the fact that e-commerce, mobile devices and airlines are somewhat related symbiotically in each other’s growth.

The airline industry is actually not at its peak; but there definitely frantic activity in the sector over the last 3 months. The first was the fact that Air Asia started operations in the Indian domestic sector from June. The LCC has certainly caused some waves in the segment where Spice Jet and IndiGo started offering heavy discounts. Some more knee jerk action: Tata-Singapore Airline launch a full service brand Vistara and Jet Airways is looking to dump its low cost Jet Konnect and concentrate on being full service again.

Recent news suggested that Air Asia within its first month incurred a loss of Rs. 26 Cr. within its first 18 days. Though the airline is hopeful it will break even by the year end with more operations on the charts; the plan here is to build more connections. So as of now the score is 1-0 in favour is the Indian competition; but how did this happen? Pretty simple, as against 10 years back, most of the tickets today are booked online through ticketing and travel portals instead of travel agents or directly through airlines. The TG that can fly has made booking portals their choice of purchase point and possibly been the earliest and most popular form of e-commerce so far. In turn, it has increased competition and better connectivity across the country for men and materials to move.

The reason is simple; portals offer a wider choice, have a larger database than any single airline has and it has a larger reach and quicker reaction towards announcing discounted fares. Sure I would have loved to see some numbers here; but take this as an example- large size travel agents like Akbar travels offer online ticketing facility. Want more; I always associated Balmer Laurie as the lubricant and grease company who also were CNF agents at ports- they have started an online ticketing portal. So I guess a safe assumption can be made here- airline ticketing has shifted online as more people are having access to internet.

But what has transformed internet in India has been the faster penetration of mobile phone networks across the country. While the network quality is still debatable, it has eliminated the formidable Indian Postal services to a very high extent. And what has definitely changed the internet access mode to mobile devices is the easy access, availability and affordable mobile handsets. The launch of the Firefox based i-Ball handset at Rs 1999 is pretty remarkable as it will further improve on the smart phone device perpetration in the country. It is not uncommon to see that for a lot of people around, the first phone is a smart phone with an internet enabled connection. 

The penetration of these internet enabled mobile devices is boosting internet led transaction as compared to computers largely due to their affordability. The vast array of apps and services on mobiles is surely the driving force. This aspect is being taken seriously by e-commerce sites with launching apps for online shopping, trading and classifieds. What’s more is the number of special offers and discounts offered by Makemytrip, Flipkart, SnapDeal, Amazon exclusive for customers who use their mobile app. Even on standard product offers, there are additional benefits like next day delivery, zero freight charges and additional discounts over and above the standard pricing. The move is definitely aimed at a greater shift to mobile apps which the sites are seeking.

But another angle of the mobile- e-commerce relation is how the e-retail portals are making full use of the internet capabilities to mutually boost their business. With no requirement for a physical presence, mobile companies are now forming exclusive alliances with e-retail companies and creating a shop-in-shop environment in the virtual space.

The first move was when Flipkart and Motorola launched the Moto-G series exclusively through the portal and with no shop retails. Next, Flipkart associated with Xiaomi in the same way and the lot on sale was pre-booked in 5 minutes. Flipkart now has an exclusive push for budget smart phones; a move I believe is to convert the remaining part of the smart phone transition. Today SnapDeal is going in for a similar arrangement with i-Ball for its phones. In fact, they taking things a step further through an exclusive partnership with Tata Value Homes in selling real estate.

In togetherness, this is how the cycle has broken- Thanks to mobile enabled internet physical presence and distance is no longer a hindrance to access the best products and services from any part of India. Goods can now travel rapidly and to your door step due to better connectivity. And the very phones to enable the access are available through the internet at an affordable price. The biggest beneficiary- the end consumer; the result- mass consumerism across India. 

Demystifying Modi- A marketing perspective

The General Elections of 2014 have officially gone down as the biggest democratic exercise globally and the mandate has been an epic one for India. For the first time since 1984, a national party has the majority to form the government on its own and based on some indicatives, possibly the first time after 1972, a national leader selected by the people out of choice rather than the lack of it.

Yes, the BJP has emerged absolutely dominant across 5 states and enjoys over 80% votes in 5 others and the credit for this should go down to the grass root party workers. But for holding over 200 public addresses, inspiring and infusing enthusiasm in the party workers and building himself as a force to reckon with; it will be a complete three act dominated by Narendra Modi.

Leaving the debate whether brand Modi won the election or was it anything else to the political experts, I am only going to apply basic marketing principles to the success and place forth a simple perspective.

Give the people what they want: The very definition of marketing is focussed towards the needs of people. One factor India has been missing for a long time has been a strong and decisive central leadership. Possibly Indira Gandhi was the last known exponent of this trade and it reflected her resounding re-election in 1972; all thanks to her transformation from the ‘moom ki gudiya’ to the lady behind the victory in the Bangladesh liberation war.

Beyond elections have been just a series of counter actions and replacements to previous governments but never based on leadership. Morarji led coalition in 1977 an outcome of public dissent against the Indira governance. The re-election of Mrs Gandhi was due to the failure of the Janta Party. Rajiv Gandhi in 1984 got a massive sympathy wave, VP Singh in 1989, succeeded on the misdeeds of Rajiv, Chandrashekhar was a stop-gap and Narshimha Rao in 1991 got the benefits of another sympathy wave for Rajiv.

The 13 day Vajpayee government in 1996 failed an absolute mandate, Deve Gowda and I K Gujral were again stop gap arrangements. Vajpayee managed a coalition finally in 1999, but it failed to be decisive as it was always held at ransom by its allies. Manmohan Singh in 2004 was a last minute socially acceptable alternative and in 2009 there were little or no alternatives.

Narendra Modi in 2014 was a sign of definite leadership put forth before the Indian electorate. Who will be the PM had a definitive answer for months leading up to the elections and it was the biggest thing to have worked. Critics, party members and even media has come out saying that in a record turnout voting exercise; Modi was instrumental in installing confidence in the minds of a voter to give up on their inertia and apathy towards the government and exercise their vote.

A robust product: As a 3^rd term CM of one of India’s most rapidly developing state, Modi had suitable credentials to back him as a leader with decision making abilities. Gujarat under Modi was becoming a model state. The biggest beneficiary of the Sardar Sarovar project, water had now reached desert regions of Kutch and combined with hydro and solar power projects on the Narmada canal, Gujarat was now a power surplus state.

From an economic perspective, the swift action for the shift of the Tata Nano project in Sanand with the record time approvals and land allocations was a demonstration of the commanding stature of Modi against other state governments. No one could make such a profound statement by getting the approval from Tata, the gold standard in Indian industry, for their dream project.

Modi has gradually developed as a mark of decisive, progressive and development led governance. This was a much higher product promise presented to the Indians in a long time.   

Power of promotion: Like most others who have risen through the ranks of Rashtriya Swayamsevak Sangh (RSS), Modi has the mass appealing oratory skills that we seek in a leader. He had been a crowd puller with his well-articulated language and confident words.

In addition, the BJP left no stone unturned to build a nationwide campaign across every form of media. Apart from the effective use of social media, television interviews, radio ads, ground activities, rallies and even use of holographic at places- it was a complete and through media campaign.

Going places: Addressing 185 rallies in 45 days leading up to the final phase of elections is no mean feat; it averages to 4 rallies everyday across various parts of the country. To add to it, Modi never stayed over at any place post his address and made sure he was back in Gandhinagar every night. What this super human effort achieved was connecting to the last mile of voters and a gratification of sorts to every single person that the man has taken the effort to meet me in my town.

Multi- appeal positioning: Modi was remarkable positioned to appeal to every Indian in some or the other way to counter the political shortcomings on his resume. A 3^rd term CM with a reputation for global recognition towards good governance was the solution at hand for a country ridden by corruption and scams. For the corporate world, he was a morphine shot in the waiting to aid a crawling economy. His modest backgrounds echoed the sentiments of a commoner while his rise thought the RSS ranks was an encouragement to his party workers.

If religious fundamentalism was a stumbling block, the development model was a redeemer. If zero national experience was a flaw, his work under similar conditions in Gujarat was a strong point. If his age was a spot of concern as compared to other campaigners, his experience overruled the matters.

In an overall, there can be many more factors which we can draw; these were some prime in my opinion. The only hope I hold in my mind is for the faith rested by the voters on this one man leads him to make an incremental change to the lives of every Indian. 

A disaster of Nano proportions

I just saw an episode of ‘The Men who built America’ on TV where the US courts broke down the empire of Andrew Rockefeller’s Standard Oil into smaller fragments under the anti-trust law and paved the way for competitive markets to replace the oil monopoly. The same also coincided with the rise of Henry Ford and the model T becoming the first car people from the American middle class could buy. This changed the whole landscape for the automobile sector in the US in the 1900’s.

India saw a similar shift when Maruti & Suzuki launched the Maruti Suzuki 800 (the Indian version of the Suzuki Fronte) hit the Indian roads in 1983. Beating the long waiting periods and the virtual dearth of India to think beyond the Ambassador, Premier Padmini, Jeeps and an odd Standard Gazelle or Herald, Maruti 800 forged the way for the Indian middle class to realize the Car dream. The parallel progress was the 2-wheeler market which moved from the age old Bajaj 150 Super to sleeker motorcycles built most by Indo-Japanese collaborations with Suzuki, Honda, Kawasaki etc. All of a sudden, the Indian families found mobility.

The globalization of the Indian economy in 1991 saw an avalanche of car manufacturers flood the Indian markets. Asian giants from Japan like Toyota, Honda, Mitsubishi, South Koreans with Hyundai and Daewoo and the Europeans like Peugeot, Mercedes, FIAT saw India as the hot bed. Some perished, some survived- but their success was all due to the revolution started off by Maruti; which survived every new entrant. It was only a matter of time before Indian heavy vehicle giant TATA stepped into the ring with passenger cars. Success came to TATA when the Sumo picked up in the rental segment and the Indica V2delivered in the family car.

While the affluent and middle class migrated from the small Maruti 800 to sedans from Honda, the gap between the 50K motorcycle to a 250K Maruti 800 still kept most of India in search of the 4 wheels. This was the gap which the Tata Nano was out to bridge since 2006; a car which costs just about 100K to appeal to the large volume of smaller Indian pockets. I can vouch for the excitement it created; there were so many designs floating on the net to claim to be the Indian people’s car.

The buzz was so high that the chief of the Nano team; Girish Wagh found his way into my General Awareness exam papers in MBA. Not to mention, Nano was formally launched on my birthday in 2009. People I remember spent hours to get a test drive of the new car and interest levels were so high that the car allotment had to be done through a lottery method by filling out forms through State Bank of India branches across India. It was spacious beyond imagination and gave driving comfort which small cars usually cannot offer. Yes, it was a little under powered for some; but perfect for city driving.

So why after 4 years of its launch, there are less than 800 Nano’s hitting Indian roads each month with sales dipping every month. Why is a car offering over 20kmpl not ringing the registers for TATA? Experts cite a lot of possible errors ranging from their marketing to the Singur issue. But what really is it? I feel it was a lot of factors coming together.

Promises a little too long: The initial buzz that caught the frenzy of the Indian market was the fact that Nano was going to be a car with space for a family at a price tag of INR 100K.  The initial offer from the TATA’s on the base model was just a fraction above the promised pricing. But the promise soon faded away amidst global pressures arising due to higher costs for steel. As prices went higher and reached closer to the 2^nd hand car market, Nano was o longer the 1^st choice. Why will anyone go for a car which has no frills when a decent 2^nd hand can come in the same price?

Positioning: I don’t think you need to take a lot of marketing effort for a car that is so much in buzz, positive vibe through test drives and booking rush that you had to go in for a lottery system. You can’t buy that kind of PR and buzz that Nano lost its relevance with iPod for some. Not to mention the advertising which showed even a BEST bus driver going to work in a Nano, the joy of the child when a Nano reached a far off village in Ladakh did its job of creating the awareness.

Now the demand was high, but where was this demand coming from? Was it the urban middle class looking for its 2^nd car; or it was in fact serving as the means to someone meeting his dream of 4 wheels? I believe it was more of the first and this was one area where the market started to deviate from the vision of TATA. Though the ads positioned it in one way, the market attracted was a different one.

Time to Market: So let us call this a case of a car that was wrongly positioned- but that hardly discounts the kind of interest and numbers reflected in the participation of the lottery. So was the lottery a bad idea?

Honestly, it was not the first time it was happening in India. The first Maruti 800 customer was an Indian Airlines employee who got the privilege by a lottery, while the rest with the moughals of the 80’s with money and even political power had to wait. What was different now was that there were options for the customers who did not wish to wait and try a hand with lottery. The exit barrier was low and it actually did not matter much to just let go.

Teething trouble: Once bitten, twice shy- Indian markets today are ruthless in this regard. While the world was waiting to hear how the Nano performed in the real, sporadic cases of the car catching fire sank the interests even more. ‘Nano should be offered with a fire extinguisher’ spread like a wild fire and didn’t help the cause. In any category, it takes ten times the effort to win back a customer. While the competition was cutting down prices, offering warranties and making the markets tough, the hazards of fire was damaging.

When I see the new ad from Nano with the youthful feel, all I wish for is that let this one click and the fortunes of the Nano move in the right direction. I also read that Girish Wagh after a small disappearing act is back on the job. Let the new management divert the future of this car to greater heights and away from which is closer to its name.