Tag: Business

Categories
Learning by Proxy

Learning by Proxy | Business of Politics and Politics of Business

Every Saturday, I publish this series called “Learning by Proxy”. It is a capsule of some of the stuff that I found interesting over the week along with some context to it. I hope you enjoy it.

Follow Up

It turns out the Indian and Chinese forces have been brawling at the border since September 2019 when the government decided to convert the Ladakh into a Union Territory. The current situation was just an escalation of the troubles that had been boiling over for a while. So – The government has kept this issue concealed from the people because they would not have wanted to be blamed for fomenting it.

In the past two months, there have been at least three clashes between Indian and Chinese soldiers in the Pangong Tso area. As seen in satellite images, the Chinese side has constructed pillboxes, shelters, breast-walls and bunkers at Finger 4, both on the bank and the ridge, where they have deployed troops in large numbers.

Source: Indian Express

Politics

Politics of Business

You know how companies owned by the Indian government, which have created an entire category, end up in a heap of losses. You need to look no further than aviation to see the shining example. Air India (né Tata Airlines) created the airline business in India. After the economy was opened up in 1990, many private airlines started to appear. The government, in its quest to ensure that cities other than metropolitans develop, created a rule forcing airlines to take up unprofitable routes to smaller cities and state capitals. Air India is a loss-making mess because it gets a disproportionate share of these routes.

Source: ET

Something similar is afoot with the telecom sector. When a company takes 50% of the market share in a country like India, it often comes with a fair amount of support. It is unprecedented in world history for a 50-year-old industry to be shattered by a new entrant in 5 years. Now, when the government employees themselves start pointing it out.

Employees of state-owned telco Bharat Sanchar Nigam Limited (BSNL) feel that the central government is favouring Mukesh Ambani-owned Reliance Jio in awarding state-funded projects to it, and denying opportunities to other players by creating an uneven playing field.

Jio was recently allocated INR 50K Cr worth government contract under the Universal Service Obligation Fund (USOF) to deploy 54 mobile towers in Ladakh’s rural areas. Moreover, impending restrictions on BSNL to extend telecom connectivity in the so-called left-wing extremism (LWE) affected villages are also denting the state-run telco’s already frail revenue numbers.

Source: Inc42

Let me put that in context – Jio Platforms has raised ONLY twice that amount through all of the fundraisings that it has undertaken in the last 3 months.

Good Old Fashioned Regime Change

When you think regime change, you think CIA. Americans have been great players of this game. Having said that, others have also learnt a thing or two along the way. Chinese aggression against India is well known. In one of my previous editions, I had mentioned the dire circumstances that Pakistan is in. This leaves other neighbours that can be encouraged to stew trouble. Of all countries, Nepal decided to change its map and declare Indian territory as a part of Nepal. Now, India seems to be creating trouble for the leadership of Nepal. The PM is Nepal has been asked to put up or shut up.

Prachanda said at the outset that Oli’s allegation against India was wrong. “Not India, it is me who is demanding your resignation. You must furnish proof of such irresponsible remarks,” Dahal is believed to have said.

Two days after Nepal Prime Minister K P Sharma Oli claimed that India was trying to topple his government with support from some politicians at home, party leaders, including three former prime ministers, Tuesday asked him to prove his allegations or quit.

Source: Indian Express

Economics

Economic War

There has been a call to boycott Chinese businesses and Chinese products for the past couple of weeks since the border clashes took place. At the same time, a lot of ink has been spilt trying to argue how impossible it would be to disengage economically from China. Further, it would be Indian manufacturers and Indian consumers who would be hurt by such moves. In the meantime, the Indian government has been putting its greatest weapon to work – Its bureaucracy. Chinese shipments have been delayed at the port of entry for “checking”. The Chinese have been returning the favour. This has caused a lot of trouble to both exporters as well as manufacturers in India. The next step seems to be apps that generate little to no revenue from India.

TikTok has been banned in India. The IT ministry has banned 59 Chinese-owned applications, including TikTok, ShareIt, UC Browser, Likee, WeChat, and Bigo Live. The Ministry stated they were “prejudicial to sovereignty and integrity of India, defence of India, the security of the state and public order.”

Source: Indian Express

Supply Chain

Over the last 30 years slowly and steadily more and more of the manufacturing base shifted to China. First, it was due to the lower cost. Off late it has been only about convenience. China has been behaving badly using the Pandemic as a distraction to push its nationalistic agenda. From the South China Sea, Hong Kong and even up to India the country has been pushing to expand.

There is no other way to hurt them but economically. The military engagement will not end well for anyone involved. But shifting supply chains is a decades-long process. The biggest risk is chip manufacturing which is necessary not only for the phone in your hand but also for defence applications. TSMC one of the largest contract manufacturers of silicon set up a plant recently in Arizona with federal funding. It can produce as many chips in a month as their plants in China can in a day!

China’s rising costs had companies looking to broaden their sourcing well before the trade war or coronavirus, but those events are increasing the urgency. In a recent survey of 260 global supply chain leaders across different industries and regions, research and advisory firm Gartner found 33% had already moved their sourcing or manufacturing out of China or planned to do so within the next three years.

Source: Quartz

Business

Under Pressure

Facebook has been under pressure ever since Twitter flagged the Trump tweet on mail-in ballots. The Chairman of the Board, Peter Thiel; whose data company Palantir played a role in the Trump victory, was one of the prominent supported of Candidate Trump. It came as little surprise that Facebook was willing to look the other way. But when your revenues streams get threatened, you cannot continue to look the other way.

Facebook has said that it will flag all “newsworthy” posts from politicians that break its rules, including those from President Donald Trump.

Separately, Facebook’s stock dropped more than 8 per cent, erasing roughly USD 50 billion from its market valuation, after the European company behind brands such as Ben & Jerry’s and Dove announced it would boycott Facebook ads through the end of the year over the amount of hate speech and divisive rhetoric on its platform. Later in the day, Coca-Cola also announced it joined the boycott for at least 30 days.

Source: News18

Some have argued that the USD 10 Million per month or so that most of these companies spent on Facebook was a drop in the bucket. But come to think of it – USD 10 Million across a year is USD 120 Million, and 10 such clients backing out would mean a loss of a billion dollars in revenue. Anybody else wants to lose a Billion dollars in revenue during this economy?

How does the medicine taste?

Dear Chinese Tech Company, for years your government protected you. They pretended to be extending a level playing field to all but they really were not. They made life so difficult that behemoths like Google and Amazon had to call it quits and leave the country. Agreed, it was mutually beneficial. China needed you guys to win so that a local company could be beaten into submission when it came time to censor. How does it feel to be fed the same medicine by another? Hurts?

DTH Dying with Cinema

OTT is going to be the undoubted winner of Lockdown 2020. Cinemas have been shuttered and by the looks of it, are going to have to wait for a long long time before things return to business as usual. On the other hand, DTH companies are also having a hard time. In India during 2019, DTH lost 2 Million subscribers. With the glut of streaming services who wants DTH anymore?

India lost 2 Mn direct-to-home (DTH) television subscribers in 2019, findings from the Indian Telecom Services Performance Indicator Report October-December 2019 published by the Telecom Regulatory Authority of India (TRAI) revealed. The segment ended the year with 69.98 Mn subscribers, down from 72.44 Mn in March the same year. 

Source: Inc42

Technology / Science

Zoox

A few years ago, being pressured about Uber drivers not being given the same benefits as an employee, founder and CEO Travis Kalanick pushed back. He said anyway, they will all be replaced by self-driving cars and caused a slight panic amongst the drivers. The firing of Travis, a bad IPO and several dozen lawsuits later, Uber is nowhere close to bringing self-driving cars to the roads.

So it came as quite a surprise that Amazon went ahead and acquired a self-driving car company. Amazon’s logistics needs to deliver in hours or days not minutes and hence self-drive would not be valuable to Amazon as much as it would to a cab company or food delivery company. Google, Tesla and a few dozen other companies have been pursuing self-drive. Apple is rumoured to be testing something of the sort as well! Remains to be seen what road Amazon takes.

The e-commerce giant said it had agreed to acquire Bay Area-based autonomous vehicle company Zoox, a deal reportedly worth more than $1 billion. (Amazon did not respond to questions.) Since its founding in 2014, Zoox has been known for its technical chops, its secretiveness, and its sky-high ambition.[…]

In 2018, it showed off its first prototype vehicles, which look like sensor-laden golf carts on steroids. The company has also been testing its software on more conventional-looking Toyota Highlanders in San Francisco, where it is learning to handle chaotic city streets.

Source: Wired

Brain

When you see you are not really seeing. Your brain in interpreting the electrical signals being generated by your eyes upon being subjected to light. The same is true of almost every organ. Therefore there is almost no objective reality in the world. It is all subject to how your brain chooses to interpret it. This was highlighted by the ‘Yanni’ / ‘Laurel’ sound recording a few years ago, where, part of the people heard one thing while the other another. Also, perhaps why some people like classical music while other rock.

Instead of presenting his lab animals with real chemicals, he went straight into their brains. Last week, Chong and his colleagues published a study in the journal Science showing that they’d worked out some of the details of just how the olfactory bulb represents odours—by making mice smell scents that don’t actually exist in the real world.

Source: Wired

Misc

This should probably not come under Miscellaneous but the other sections are covered.

China is increasingly being isolated. Almost no country can eradicate its dependence on China for the moment but all attempts are being made. Further, there is also a push to align against China.

China is livid after the US stepped in on Wednesday evening to delay a draft press statement condemning the terrorist attack at the Karachi Stock Exchange at the UN Security Council. 

The US was the second country after Germany to delay the statement, both silent expressions of solidarity with New Delhi, after the Pakistan foreign minister Shah Mehmood Qureshi and later PM Imran Khan blamed India for the attack. 

Source: Quartz

How many enemies can you make before your luck runs out?

Cash Free India

I am very proud of the fact that when it comes to transaction protocols, India has some of the best and most secure protocols. 4 years ago, NPCI launched the UPI which made it really easy for anybody to make microtransactions right from their bank accounts. This further resulted in greater penetration of banking and online transactions.

India has been a cash-heavy country but the demonetisation coupled with the introduction of several of these technologies has changed the way things work in the country. UPI hit almost 2 Billion transactions last month. This is significant because the economy is busy taking a dump in the toilet and this number reflects the greater dependence on online transactions.

The National Payments Corporation Of India (NPCI) said that the Unified Payments Interface (UPI) recorded 1.98 Bn transactions worth INR 2,06,950 Cr in June 2020.

Source: Inc42

Signing off…

Categories
General Thinking

Positive Externality and CoronaVirus

Positive Externality is a concept of economics which describes an unintended positive outcome of an action. For example, the Singapore government wanted to reduce pollution and started charging a fee to drive in the CBD. This resulted in the CBD becoming safer for older people wishing to walk there, which was a positive externality.

I am sure none of you would have heard positive and Corona mentioned together in the same sentence, but I dare.

I think a lot of time and effort has been spent talking about the negative consequences of this lockdown. There are areas of Positive Externality and one need not look too far to find them.

What would have been thought impossible or far out in the future is happening today! I want to illustrate these through examples. There are broadly two themes that I am seeing which can represent opportunities for startups.

Trends that were considered 5 -10-15 years out might get accelerated.

Zomato getting into grocery – Under normal circumstances, I do not believe Zomato would have planned to get into grocery in 2020. In fact, given that the company was planning to shore up profitability and move towards an IPO, I doubt they would have for the foreseeable future. They were razor-focused on growth and profits. But then the spanner was thrown into the works. Eventually maybe in 7-10 years as growth slowed they would have been forced into the grocery segment to use their fleet and generate more income. This was certainly accelerated by the current circumstances. There was an opportunity and also a need because food delivery volumes took a beating.

Disney+ user growth – When Disney+ was launched in February 2020, the executives making presentations said that they expected the steaming service to garner 60 – 90 Million users by 2024. They just released figures last week. The company already had over 50 Million users. Being imprisoned at home has no doubt helped the cause of the service and expedited what looked like it was a half a decade away to being just two quarters away. Can you find a product-market fit like this at this time which can drive you?

Uber going from a taxi company to a logistics company – Right from the day that the Uber app was built to accommodate ‘Contractors’, Travis Kalanik always viewed Uber as a logistics company. In all of his interviews, he spoke of the fact that Uber could be used to move anything, not just people. Maybe Uber was not thinking of delivering grocery in the immediate future but the current circumstances have forced the company to move into the market and partner company and support them.

Habits and thinking that are considered too entrenched to change.

Telemedicine takes-off – Would you consult the doctor from your living room just over a phone or a laptop? It might be possible, but people would not want to do that. This was the entrenched thought process which caused clinics to be set up and for doctors to run around the city going from clinic to clinic – to consult patients. Changed in a heartbeat. The moment the shutdown was announced, the Medical Council of India issued a circular and now suddenly everyone is getting into telemedicine.

Amazon and Apple working together on Amazon Prime Video on Apple TV – You cannot buy an e-book using the Amazon app on iPhone (even today). The reason – Apple takes a 30% cut on any digital goods sold through any iOS device. For the foreseeable future, they will not change this. But they blinked when it came to Amazon app on Apple TV. They allowed Amazon to integrate their payment gateway and collect payments. With people sitting at home it made sense to allow amazon this leeway so people remain on Apple TV.

Apple and Google working together on an OS level for features – Last week Apple and Google announced that they have been developing an OS-level solution that can allow both OS to communicate with each other. Apple refers to Google as those other guys in their presentation, so this is unthinkable. They came together because they needed a cohesive solution if the proximity detection was to be used to let you know if you had been around someone who is diagnosed as infected.

Some things that have been considered impossible are happening now and happening fast. We hosted a talk session last week over Zoom where we had over 100 people join in for the webinar. Never had we seen such a turnout for a webinar, it is happening now.

So what opportunity are you not looking at? What behaviour did you wish to desperately change? Here is the window to experiment. Try that thing that was considered impossible. If you have value to deliver, you might just find a new way to do it.

Categories
Entrepreneurship General Thinking

Travel Business – will it ever be the same again?

I have always enjoyed travel and have visited quite a few nations and cities in my life. Not only that, but I have also myself been involved in the travel business and so it is close to my heart. 

A vast majority of my travels have been for work and this is possibly reflective of most travel undertaken. A vacation is taken once or twice a year at most. 

Thousands of flights are taken every day just to conduct meetings that last a few hours. With the restriction that is now being placed upon people, there is a need to avoid this travel and undertake the meeting over phone call / Online / Telepresence etc. This has meant that those who were probably, not incapable, but apprehensive of conducting meetings online are now being forced to do the same. I think a whole host of people are going to discover the comfort of online calls as well as economic gains of doing the same. It avoids the time and cost of the commute. It also ensures that you can optimise the way your time is utilised. Where you would have had one really important meeting in a day for which you travelled all the way to another city, you could instead have several.

Travel Industry need to ponder

How many people would get back to the old ways once things get normalised? Would business travel come back to the same level? What would this mean for the travel business?

I feel that for better or for worse, travel business would need to re-align itself to this new normal. It is good for the environment as well if people travel a lot less. It puts a lesser strain on the resources needed as well. But can it have other effects as well?

  • How many planes would get sold in the next 5 years?
  • What effect will this have on car sales in the coming years?
  • What does it mean for services like Uber which transport people from place to place?

These are some of the thoughts that come to mind when I think about the pain the travel industry is undergoing right now. What is it going to mean for the long term?

Categories
Entrepreneurship

Anatomy of an Investment

Investors determine their investments in various companies based on a variety of criteria. Ultimately, the investor wants to see the startups scale and grow to be a large enterprise. In order to be able to do this, the company must have certain fundamentals right. Having sat through several hundred pitch sessions, these are some of the things the investors look at, often in the order below but not necessarily.

 

Like the industry

Do I like the industry that this business is in? Animal husbandry might be a highly potential industry but if I personally have no interest in the area I am least likely do go in there and make an investment. On the contrary if travel is something that I like, despite the fact that seven hundred people might be taking a crack at the same problem, I would still perhaps invest in the segment. All you need to do it take a look at the portfolios of most investment funds to see this philosophy at work. Our personal biases matter more than any data.

Like the market

I might like travel and I might think that there is a market for it everywhere in the world! Even so, if you were to start a tour service in Siberia, which by the way is underserved, I might not be necessarily jumping on board the bandwagon. We all want to be playing in the markets that we like, where we have connections and we have the ability to affect the destiny of the business. While data might point us in another direction, we would still gravitate towards markets that we like. Just go search for Siberian tour operators, you will find all 10 of them. And then you will feel so bad for not having undertaken the tour to Siberia, its gorgeous!

Like the founder

People invest in people because people like people. At the end of the day, all said and done we invest in people. To me Airbnb sounds like a dumb shit idea even today! If someone came to me pitching Airbnb, I would probably chase them away, unless… Its the energy and the charisma of a person that guides your judgement on whether to invest in them or not. We all get carried away by the founder, the pitch and the energy. Even the best of us has fallen prey to it. If you are not a likeable person, you are shit out of luck. There is no way that you are going to land money.

Like the business

What you are going to be doing comes after this. Invariably the business plan with which you would enter the business and the business plan with which you would exit it will not be the same. So, while we see what you are doing with your business it is how you are doing it which is more important.

Like the Modus operandi

Which brings us to the how? How are you going about doing what you are doing? Does it seem scalable. Ok it isn’t but would you flip to a direction that perhaps is? Are you mentorable? Would you listen? What happens when I poke holes at what you are doing? This will determine the anatomy of the relationship going forward once the investment is made. So how things are going to be done matters.

 

This has been my experience, would love to hear from others.

Categories
Entrepreneurship

Turning a Startup into an Organisation

smoothpathentrepreneurs

I have been working with startups for a fairly long time now. The fun part of working with startups is that there is absolutely no way to anticipate what would come next. You have to be fast and nimble, constantly adjusting to the changes that are happening around you.

This is precisely what makes building a startup really challenging as well. There are those who thrive under these circumstances and then, there are those who don’t. The trouble is that as one proceeds through the life cycle of a startup, the things that are an asset at the beginning turn out to be a liability later on. Founders need to constantly adapt and change to the changing realities of their business.

Working with startups, I have come across three distinct phases of building a business. I am going to focus on product businesses since most other businesses cannot be deemed startups according to me, simply due to the challenges posed in scaling such businesses rapidly.

 

Building a Product

The first phase of embarking on a startups is to build a product. But even before you build a product you need to verify that the problem you are looking to solve is real and that the customer you are going after feels it.

 

Every business is built on the basis of a keen insight into human behaviour, businesses exploit the behaviour to make a profit.

 

The need to test the behaviour hypothesis and ensuring that it is correct is extremely important to ensure that the product does not fail once it has been developed. We have worked with startups that have used all kind of tools including whatsapp, Facebook page and groups, Pinterest, etc. to build the quick and dirty manifestations of what the product is likely to do. In certain cases, we have had startups run the product like a service before taking a dive towards developing it. Running it like a service tends to be people heavy and hence cousins, friends, siblings, etc are exploited to pitch in from time to time. Once the same can be tested with small groups of 100 to 200 people, the proof of the behaviour is surely in place.

In the case of hardware related products, prototyping the product is crucial. Thanks to the advent of crowdfunding, it is possible to gauge the demand for a product in the market fairly quickly, sometime even before the prototype is ready.

At this stage it makes sense to take the time and invest the resources necessary to build the product. If you have a founding team that is solid on the tech side, it is possible to build out versions of the product that are extremely simple and addresses 2 or 3 of the most critical features that the end product will have. Trying to get all of the features or functionality of the product into the first version is difficult and dangerous.

Apart from establishing the hypothesis, the advantage of doing the quick and dirty product is pure insight.

I tend to compare most things to mathematical equations and if you were to look at a business as a mathematical equation, there are several variables that you may know but several that you cannot even foresee when starting out. This process gives you an insight into many of the variables that you would have normally missed out on.

Building a product is hard – You need to take all of these insights and turn it into a workflow that would be well suited to the use case that you are building for. The product has to be able to accommodate all of the exceptional requirements that would arise and function intuitively.

 

Building a Business

Now that the product is done, one needs to build a business around the product.

People only spend money on something when they believe that the value that they get would be greater that the cost they must incur

Value is a belief – This is exactly the reason why some people would go and spend 1,00,000 rupees to buy a trouser at Prada and others would stand around haggling for a 1000 rupee trouser at the local market.

Building a business involves instilling the ‘belief’ that the product that you are selling is worth a lot more than the cost that they would be incurring.

 

Steve Jobs was neither a hardware guy, nor a software guy. What did he bring to the business?

Well, he brought this thing called belief.

 

Making money is all about making the other person believe that there is value in what you are looking to offer them. This comes down to two things.

Firstly, how well has the pain been understood. If you understand that pain felt by the customer well enough, you would have a clear understanding of how willing or unwilling the customer is going to be to get rid of it. The bigger the problem, the easier it is to perceive value. Secondly, how well is the solution being projected. Most luxury businesses are just projection alone.

I had written another post on the art of selling here.

Turning the product that you built into a torrent of money is challenging because this is where being fast and nimble has a huge role to play. As an entrepreneur you need to get constant feedback from the customer fine tune your product repeatedly and iteratively in order to reach the state of perfection investors like to call the ‘Product-Market Fit’.

According to me, you reach product-market fit when you have clarity of what the market requires. Most often the consequence of this understanding reflects in being able to tell the returns one can expect from investment in marketing.

‘If I spend $10 Million in marketing, we should be able to triple our user base over the next 18 months and gather a 5% share in the category that we are targeting.’ When you have ‘Product-Market Fit’, you can essentially express scaling-up in the form of an equation.

 

Building an Organisation

The final stage is to move towards organisation building. If you thought building a product and the business was hard, this is far and away the hardest.

 

A successful business is one which has a high degree of predictability of Income.

 

In a startup things tend to be rather impromptu, most of the decisions are taken in response to the market. Strategies can flip in a matter of months.

Once the company has established a market position and a certain degree of predictability has set into the business, the focus of strategy has to shift away from exploring many pint sized markets to addressing fewer barrel sized market. This involves building an organisation that can take care of certain repetitive functions. You must first of all define these functions, these revenue units, these business vertical and hand them over to appropriately talented individuals.

In my experience it is important to think about organisation building, when you pass the product stage. Thoughts on organisation building has to begin simultaneously with the process of developing the business.

What would a 100 people organisation look like?

What roles are people going to play?

What are the kinds of skill sets may be required?

Recruitment is a long and arduous process, especially in today’s world. If you find someone who is talented, make a mental note of what role you would want them to play in your business and where you would see them fitting in. Its like a game of chess where you are setting up your pieces for the right time to come along.

Some founders have a latent network available to them which is quite powerful. Some have to go out and build them. Preferably bring in people who have equally strong networks in their area.

At the end of the day any organisation is only as good as the people who are a part of it. Bringing together people who are consistently better than yourself, and nurturing them, is the best way to build an organisation.

The best organisations are ones where the job of the leadership is only to provide direction.

Categories
General Thinking

Entropy

Physics provides the best models to understand the physical world. But sometimes, it also provides the best models to understand the metaphysical.

Entropy refers to the rate of change that can be seen in a system. As the entropy in a system increases it becomes increasingly difficult to predict the next few moments. The more you heat a pot of water, the more bubble formation takes place and it becomes increasingly difficult to find patterns.

The only reason the earth as a planet is alive is due to its ability to hold onto heat. Heat creates entropy. Entropy creates change and that is essential to the existence of life. Mars by comparison lacks an atmosphere and hence does not have any heat in the system, the lack of entropy means nothing lives on the planet. At the other extreme you have a planet like Jupiter, where the entropy is too high, much like the boiling pot of water, making it impossible to support life.

Sorry for the long convoluted way in which this post is going, it came to me when I was watching ‘The Martian’ on the plane.

In business and in relationship entropy is important to move things forward.

If you own a startup and far too many days, you find that nothing much has changed, you know that you are already deep in trouble because the system lacks entropy. Its as if the engine has no heat in it.

Alternately, overheating is also a problem. So, it should not be a case, where things are changing much too rapidly. This removes the possibility of the system reaching any kind of stable state. The business would be in a constant state of change and there is no way to find a model that works efficiently and sustainably.

If your business depends of building relationships, the same axioms hold true. Many B2B companies start to take their accounts for granted since they are already with them. They do not make substantial changes to their products, eventually they lose the account to a more nimble and agile competitor. To the contrary if you keep suggesting too many changes to the client, eventually the client is going to grow tired and cease the relationship.

The challenge is to find balance. Is that not the problem with everything in life?

 

Categories
Entrepreneurship General Thinking

Belief is the most valuable currency for a startup

If the owner of a pharmaceutical company that produces Vitamin tablets; says that he believes that Vitamin tablets are a very important source of nutrients for the body and he eats the tablets everyday.

Do you think, he really believes it?

He may or he may not, you can’t tell.

His beliefs are within him.

But do YOU really believe that it helps? Within yourself you should be able to tell for certain. No? Let us say that you do not believe what the man is saying.

I would like to bring to your attention, a recent study that indicates that over the past century the availability of vitamin tablets has increased the quality of life and helped increase life expectancy amongst individuals. In the early 1900’s, life expectancy at birth was 31 years, these alternative nutrients have increase life expectancy to 67 years. The lack of access to these medicines has meant that in parts of interior Africa, life expectancy is still close to 40 years.

Life Expectacy

Source : Wikipedia

Now what do you think?

Are you at least questioning yourself?

 

 

The study that I just quoted was made up! I connected various pieces of data to spin this story.

The truth of the matter is that no matter how strong your belief might be, that belief can be easily influenced by information that someone else offers. So our beliefs are not set in stone.

In my experience, belief often separates success from failure. Hence it is the most valuable currency that anyone can bring to a startup. More valuable than any skill or money. A strong belief makes you push and try to achieve things that others would not. This is what separates the ordinary from the extra-ordinary.

During a startup journey you will come across challenges that at first glance might seem insurmountable. If you have strong belief in what you are doing, you will find a way to make it work.

Doubt has killed more dreams than failure ever can.

I have always maintained that when Steve Jobs came back to Apple he brought this one important ingredient to Apple. He brought belief to Apple. He brought a belief that a world with Apple is better than a world without. All the great, talented and gifted people at Apple were able to rally behind that belief. Look what they have achieved.

P.S. – When I talk about belief I am referring to WHAT you seek to achieve, not HOW. The how will keep changing based on how the market responds.

Categories
General Thinking

What makes a business, a ‘Startup’?

All too often I come across young entrepreneurs, who are just starting a business through which they intend to hawk their skills. Starting a business does not necessarily make it a startup. It makes you an entrepreneur certainly, but not a startup.

Anybody, who engages in any kind of business is an entrepreneur but only a few among them can be deemed startups. I can’t go around saying, I have a startup just because I setup a Dhaba on NH7!

Unless… the business meets certain conditions; I shall list them below.

 

Attack a problem that has not already been solved

When you attack a problem that has not already been solved, you are creating a market for yourself. The kind of solution that you offer cannot be bought off the shelf and hence it makes the offering compelling.

I know web development and hence I started a web development company. Well, sure you did! But the problem with that is, you are not solving anything new, you are invariably going to compete with the many thousands of web development agencies that are out there already. You lack experience and most certainly the manpower that some of the more established peers have. From that point forward, it is an uphill climb. Besides, since this is a well-worn path, many entrepreneurs have tested and tried all kinds of permutations and combinations of selling the product or service. I do not deem such a business a startup.

Unless… you have found a way of doing the business differently.

 

Building a business model which breaks convention

Take a company like Uber; it is able to get into a business that is as old as the motor vehicle and able to find scale like no other business has been able to, till date. Many companies have tried  running a taxi business. Invariably the biggest problem with running the business successfully has been that the incentive of the owners and the drivers has been misaligned. This has meant that there is no global taxi business; until, Uber.

Uber used a mix of technology coupled with a business model, which is unlike any that existed till then. Most importantly, the company does not own any inventory of vehicles unlike every other cab business prior to it. They own the platform through which they are able to generate demand and they manage to match that with individual taxi owners who are able to deliver a standard product quality.

Uber is just one of the examples of how an old world business has found a new avatar through an innovative business model.

Examples of such companies include Airbnb, HotelsTonight, Google, Spotify, Pandora

The success of each of these businesses hinges on the fact that they did things differently. They changed the way the business was done in the past. Before Google, all search engines used to push the sponsored listing up on the search results without informing the users; precisely why the ‘Don’t be evil’ motto was coined. Spotify and Pandora changed how music was consumed and thereby changed how users pay for them as well. Airbnb changed the ad-hoc renting market forever; not only for home-owners who wished to rent out their houses/rooms as holiday accommodation but also for travellers who seek for cheaper stay options. Each of them have been able to change the way business used to be done, which brought them leadership role in the market and helped them get recognised.

 

Ability to grow across geographies and scale, providing exponential returns

Most of the businesses established prior to the onset of computers usually consisted of certain assets, which cost a lot to replicate across countries, which in turn slowed down the growth of the business. In the case of most startups, one of the defining features is that they are easy to replicate in different geographies and hence lead to rapid expansion across not only domestic but also international geographies. [Caveat: Certain problems are country specific and therefore cannot be scaled in a similar manner internationally]

In all of the cases mentioned above the companies were able to quickly spread the same model across boundaries and ensure rapid growth of their businesses. The increase in scale means exponential returns for any investment that has been made in such businesses.

Despite being restricted by copyrights, companies like Spotify and Pandora have been able to expand to tens of countries resulting in very high turnovers for them.

Scale is by far the greatest defining attribute of a startup. Companies that can cater to a relatively large market can scale continuously and therefore generate greater value for the investors in the long run by unlocking value in untapped markets. Squeezing more money out of the same set of customers often proves challenging and also results in companies acting in a manner which is seem to be contrary to the interests of the consumer.

 

These three attributes are by far, the most important for the business to be classified as a startup.

Categories
Entrepreneurship

Vision and its role in achieving success

I travel a lot and I drive very often. I always try to reach the destination as fast as possible.

I use to think that the speed at which you drive is related to the width of the road. The wider road affords you a lot of room to make errors and therefore allowing you to drive faster.

As I drove on the narrow road to Hyderabad, I realise that speed has nothing to do with the width of the road, but is the function of how far you can see. The further you can see with certainty, the faster your able to proceed.

photo copy              photo

When you think of businesses, the same principle translates into an extremely clear vision behind which you are ready to put or commit all of your resources. If the vision for the business is extremely clear than, you have the ability to throw all your weight behind achieving the same. Not only that, you also have the added ability to push forward against all detractors, of which you may find many.

Apple did not come up with an idea of a tablet, but they were the first company who had a clear vision and the belief to commit to the vision. There were many other competitors who came up with the same form factor, but did not have the vision or the belief to pursue it. In fact the success of the iPad is just due to that belief, you can see the difference in the results achieved by Apple and a competitor like Microsoft, HP, Lenovo, et al.

Clarity of vision is by far the best gift that you can give to your business.

 

Categories
Entrepreneurship

Business is all about Trust

I had put this topic down a long time time back. I had wanted to write about this subject, but it is probably better that I write about it now.

It is better that I write about it now because of what has happened with a small company called Healbe. Healbe is a small startup that decided to crowd fund a device that they were developing called GoBe. The device what supposed to be able to calculate your calories, hydration, stress, and many more things. You can find the campaign that they had put up on Indiegogo here.

Everything was going good, they were on the way to a Million dollar funding campaign, when trouble began to brew. First they were not able to trace the business or the business people. Then many of the experts began to question the claims that the company was making. Some of them said it was “bullshit”. And today, people have started asking for their money back, because they no longer trust the company.

The money made its way in because of trust and is now beginning to make its way out because of distrust!

For any business small or big, “TRUST” plays a massive role in how the business is perceived and how well it is able to do. A consumer or client puts money on the table because they are willing to trust that the product or service that a person is selling would perform as promised.

If that trust is lost, there is no way that a business is going to be able to survive.