Category: Business in India

1v1: Expert vs Employee

This is second in the 1v1 series after Popular vs Pertinent

I was talking to Monica when I remembered something I had thought of about 5 months ago. Finally posting it.

Expert vs Employee.

You can be seen and known as either an expert or employee.

An employee is a “just another person”. He is competent and does his job well but that is all to him. There is no such thing as new ideas, innovation, bright sparks coming out of him. He is one amongst the crowd. No one expects anything from him.

Expert on the other hand is someone who is everything an employee is and then there is lot more to him. He is expected to change the way world moves, come up with brilliant yet simple ideas and should be as close to indispensable as someone can be. Expert belongs to the rare breed.

Expert vs Employee in one line: You would not want to meet an employee but would pay to see an expert.

And interesting thing is that the distinction between an expert and and employee is often an outcome of the way a person himself thinks and approaches things. Until you start projecting yourself as an expert, no one would consider you an expert.

What are you? Expert? Employee?

Lessons from Warren Buffet for Start-Ups

Lessons for startups from WEB’s Letter to Shareholders.

Warren E. Buffet is one of the most celebrated men in the modern history. Better known as WEB, he is a self-made billionaire made most of his money from investments. His flagship holding company, Berkshire Hathaway has stake in more than 70 businesses. WEB believes in taking a controlling stake in companies and chooses a company because of the business value and the kind of people running it. Any mention to WEB is incomplete without talking about Benjamin Graham – WEB’s mentor and Charlie Munger – WEB’s partner at Berkshire Hathaway.

I would look at his few nuggets of wisdom and look at their implications for start-ups from his 2007 letter to shareholders.

People
There could not be a better starting point than Charlie Munger. They are one of the most celebrated teams in the financial world. Everyone knows that we need to select business partners very carefully. All partners should trust the judgments of other partners and should stand behind every decision.

Most of the managers at Berkshire have “… no financial need to work“. This simply means that the people who are working are working because they love working. Rewards for them are not economic in nature but are psychological – of taking their company to a new level, of becoming leaders in what they do and pushing the limits.

WEB further states that “these managers is that they have exactly the job they want for the rest of their working years“. This is probably the most important line for a startup. Have people who like what they are doing rather then employing people.

Business Decisions
A lot of startups assume that once they reach a user base, they can sell out to a bigger player. This approach can take them only so much far. They should take a cue from WEB. He has been advocating the importance of a long-term time horizon for businesses. In my opinion, selling out is ok but only after reaching a point where you think that the other party can contribute more meaningfully to the business and its shareholders.

WEB says, “as with Berkshire, a deal is a deal.” A lot depends on the way your word is taken in the market. Especially when you are starting, a lot of reputation is on stake. As it’s said, reputation once gone is gone forever.

Businesses
WEB says, “A truly great business must have an enduring moat that protects excellent returns on invested capital“. Most of the startups are engaged in reinventing the wheel. I can recall just two Indian innovative products. For a country of a billion, just two innovative ideas? Need of the hour is to look at businesses that are different, can not be copied easily and havhttp://www.blogger.com/img/gl.link.gife a moat round it. The moat could be because of the scale (IRCTC), technology leadership (Zoho), people (??), knowledge of markets (Future Group?), low cost of operations (?) and many other factors. Startups need to identify their moat and build their company around it.

Realistic Assumptions
It’s always recommended to fly high. But the feet should be well grounded for that. Like in the report, WEB says, “Berkshire’s past record can’t be duplicated or even approached. Our base of assets and earnings is now far too large for us to make outsized gains in the future.” It would have been easy for WEB to paint rosy pictures but he chose otherwise. Startups should be realistic when they set their goals and get down to implement them.

To end it on a light note, WEB says, “Just as Adam and Eve kick-started an activity that led to six billion humans, See’s has given birth to multiple new streams of cash for us. (The biblical command to “be fruitful and multiply” is one we take seriously at Berkshire.)“. Startups need to identify a business that can grow organically and can operate for a long time.

Although WEB says “Start-ups are not our game”, I could still find these nuggets of wisdom. Anyone wants to share more?

MDI students to advice Indira Nooyi


Just In, Three students from MDI have won a contest among all business schools in India to win a chance to advice PepsiCo CEO Ms. Indira Nooyi. They would be flown to NY.

Copy pasting the news item from IBNLive.com

Students from a Gurgaon-based business management school would now advise PepsiCo chief Indra Nooyi after winning a contest.

The students – Supreet Kaur, Anand Trivedi and Anand Mohan Sharma, part of the team called Midas of Management Development Institute (MDI) – won a contest entitled “Taste the Success – Become Indra’s Advisors”.

In the competition, PepsiCo India invited business strategies for unlocking the latent demand for beverages in India from the leading management schools.

Kaur, Trivedi and Sharma would be flown to PepsiCo headquarters in New York in April, where they will present and discuss their case solution with the chairman and CEO of PepsiCo Inc.

If the business strategy is found feasible, the team may get an opportunity to engage as advisors on an ongoing basis with PepsiCo to operationalise their ideas.

The first runners-up team from Faculty of Management Studies of the Delhi University received a cash award of Rs.100,000 and the second runners-up, another team from MDI, received a cash award of Rs.50,000.

The top six teams from MDI, FMS and Indian Institute of Management Indore will get an opportunity to appear for a pre-placement interview without going through the initial screening process.

Three cheers for MDI. As we said back then, MDI rocks.

For the record, I passed out of MDI in 2006.

Kishore Biyani – Future Group – India Tomorrow

Kishore Biyani is a model businessman at least for me. He is sowing seeds into a lot of interesting businesses and when the time comes, he would reap rich rewards. He is displaying the true spirits of entrepreneurship. In the process of building his companies, he is helping his customers realize his dreams. His way of creating a company is dreaming big, getting the right people on the board and backing all efforts with solid research and relying on intuition and insight.

Lessons to be learnt? Get the right people on the team, let them take risks, invest in the future and try to empower your customers.

Today in Economics Times article, he made clear his thoughts when he said,

…we want to create a strong sectoral play to capture the transition from a savings-led economy to a consumption-led economy.

Now this small piece of comment has a lot to say about Mr. Biyani and his thought process. He has identified, at the right time, that Indians are changing the way they live. There was a time when they were saving more than 50% of their earnings and living on basis necessities. Now slowly and gradually they are living lavishly and often spending the entire monthly earnings before a month is over. They are now more confident about opportunities and their economic well being.

I can easily see Future Group leading the new India.

And by the way, look out for BCCL (NO, not the cricket board but the Times of India group) and TV18 group also in times to come.

Food For Thought

Yet another blog (located at FooForThought.Wordpress.com). This time, I shall be talking about technology, businesses and perspectives of customers.

Here is a brief QnA with myself about Foo For Thought.

Why a new blog?

I realized that War of Words is a personal blog with too many things that a reader might not want to read. Hence a new location and a new start.

How is it different from other similar blogs?

First and foremost, I would not be peddling news like a lot of other blogs. I would talk about things that I think are relevant for businesses and what most people often ignore. These are softer issues related to how humans use and interact with businesses. I would act as a customer advocate, an eager student and an egomaniac visionary.

Are you trying to say that you are a visionary and an evangelist?

Not at all. I am not an expert and dont want to be one. I just want to meet new people, interact with them and learn from them.

What tools would you use?

I would use the most potent tool of them all – commonsense. Then I would rely a lot on feedback and observations. I would also use few examples from history, biology, anthropology, physics, politics, economics, design etc. One of my gurus taught me the importance of multidisciplinary thinking and Foo For Thought would echo that.

Keep watching it for action. I would give occasional updates here also.

Please leave your comments and thoughts.
(As if there are going to be a lot of visitors)

Presentation1.ppt

For my work, I have to make a lot of presentations. And lazy me takes the first shortcut available and calls all my presentations with the default word – Presentation1.ppt.

Today I was asked to hunt for a file and I keyed in .ppt on the search bar. I got a list of some 20 presentation1.ppts. No points for guessing how happy I was with the search results. I did not get the work done and now I am renaming all those files to something that is more searchable.

The key lesson here is that search plays an important role in the way we humans work. More than search, retrival plays even more critical role. It is so easy to stuff a closet with million things and it is equally difficult to retrieve one particular thing from that heap of million things. No wonder Google has done so well as a company. It makes the entire process of retrival so easy and intuitive. Google for me is more of a retrival compay rather than search.

And this leads me to my lesson # 1 for the day. Any business that I get into will have to have a minimal search cost. I define the search cost as the amount of effort on part of end user to identify a service provider (as one of the alternatives to fulfill the demand). And by virtue of this definition, lesser the search cost, easier it is for the end user to find your service.

In fact advertising is a way to reduce the search cost for consumers. Your product might be the best in the world but the customers will never be able to find it if the search cost is too high. The good news is that there are ways to reduce or eliminate this search cost. Case in point, Bisleri. Bisleri by virtue of age has now replaced “mineral water” in vocabulary of Indians. Search cost for Bisleri is hence zero.

Now this concept of search cost can be extended to any business activity. Take for example hiring. You are a growing company. You want to attract and eventually hire the best talent. There are two problems now. One, you dont know where to look for good talent. And two, even though you might find awesome talent, the talent might not know about you. He hasnt heard about you and in all likelihood he would join one of the better known brands.

Think about the Internet. On Internet, a lot of things are noise and a very very few are actually signals. Search cost for anyone on Internet is very high. All of us use feed readers, aggregators, social bookmarking etc. to discover content. Discovery is getting more and more difficult as more and more spam blogs are being published.

How do you then reduce this search cost? How do you make yourself as the default choice for any customer? Is advertising the only way? Is this the core function of advertising?

Any thoughts?

PlaygroundOnline.com > Review

Playground Online
PlaygroundOnline.com is yet another entrant in the Indian e-commerce space. It retails sports related media and equipment. They currently offer books, CDs, equipments, apparel etc. This is probably first of its kind online store in India. I took PGO for a spin and here is my feedback.

What I like about PGO?
First and foremost, although they want to sell things online but they have put a lot of focus on customer friendliness and costumer interaction. Things like polls, news, forums can make this website a default place for sports enthusiasts. These initiatives help build a strong and loyal community and eventually garner sales.

The range of products on PGO is really wide. From a t-shirt worth Rs. 280 to a bicycle worth Rs. 46000 (obviously for a professional), PGO had a lot of things for offer. I could not check if this range is comprehensive but everything I could think of was either there or they were accounted for and being worked upon. This is a good thing for an e-commerce business. I can think of people visiting PGO to find out more about sporting goods and then buying it offline. Challenge will be to convert these information scouts into customers.

Design
The website interface is impressive for an Indian startup and they have used a good mix of traditional style web design and Web 2 functionality. They still need to work on few things though. Like for example when you are trying to signup, the errors are reported in a pop-up box. This should ideally be a Web 2 pop-up where errors are notified the moment they are encountered. I should never get a Windows pop-up.

Team
PGO has been started by a team of 4 people with average work experience of 15 years. Experience of 60 man-years could be a good thing and a bad thing at the same time. With experience comes rigidity; you might start shooting down ideas even before you give them enough time to fruit. You start living on assumptions. You are scared of breaking out of the mold.

And with experience one develops the knack of running businesses. The team is experienced enough to know what is to be done to make the business run efficiently. Looking at the website and they have used their experience well.

What I like about their team is the fact that all 4 co-founders have different and diverse backgrounds. From client relationships to technology to marketing to customer insights, they have it all. The roles could thus be clear and they can concentrate on larger things.

Competition
They don’t seem to have one large competitor right now. However they compete with bookstores (fabmall, om books etc), apparel stores (rediff, sify) and obviously with traditional retail stores. The business model is new in India and looks lucrative. There should be many more players in the market soon.

Payment Options
One of the key reasons why e-commerce is still in nascent stages is lack of adequate payment options. Credit cards penetration is still low in India. People are still skeptic of using their cards online. And finally they are not really convinced about credibility of these websites.

At PGO, there are limited payment options currently but they have mentioned that they are working on more methods. I would love to see them implement a cash-on-delivery method. COD gives an online merchant immediate access to people who dont have cards and people with cards who are scared of using the cards online.

What more can PGO do?
Comparison between brands and products. When buying a product, people love to understand the features, benefits and differences. I don’t see a link for comparing two items. If they can somehow implement a comparison, it would be great.

User community. All the ecommerce websites have been adding users to forums. If PGO is really convinced about sports as a leisure or a lifestyle activity in India, create special interest groups of people with similar interests. Give them things like competitions to participate in, platforms to talk about their interests etc. Basically in one word, give something more than a typical forum or a social network.

Final thoughts
PGO has done a good job with their store. The only thing that might let them down is the very acceptance of the business model. If I was a VC with money, I would have invested in the business, obvisouly after talking to the owners and looking at the projected cash flow statements.

And finally, since we are talking about ecommerce, lets try to see what can be sold successfully over the Internet? Something that is standardized. Something that you are confident would be similar irrespective of place you bought it from. Something like an airplace ticket. Something like a computer. Something like a book. Sporting equipment – I am not sure. Lessons for other players? Make the products standardized, eliminate shopping pains and have in place an awesome customer service.

Questions to ponder on?
Are sporting goods similar to airline tickets? Books?

Cleartrip.com introduces Train Search

My favorite travel site has come up with yet another feature. Train search. Now I have alternatives to irctc and indianrail.

Try it here.

You cant book the tickets just now. You can just see a list of stations the train would go through.

What does it mean for cleartrip?
1. They move beyond just air fares (and occasion hotels) and go a step closer to being a complete travel solution provider.
2. Get more traffic (of people interested in trains).
3. More conversions from train travelers. If cleartrip could introduce another widget right next to the train search results and show the traveler that air travel is real cheap, bookings rate would shoot up. And I can bet, this feature is on its way.

Currently, apart from IRCTC, Makemytrip.com offers trains. But they also are limited to rail tours. They don’t have a listing of stations (the way Cleartrip has). After all the hoopla about train bookings, looks like Cleartrip has emerged the winner. Yet again.

Keep watching. The online travel operator war is just beginning to start.

Related Links
Online Travel Agents in India
Cleartrip.com earning report

Reliance Power IPO Allocation Status

I just checked stats for this blog and I was surprised to see a lot of hits for Reliance Power IPO Allocation status. And since this is what people want, here it is.

Every retail investor who applied for 225 shares of Reliance Power in the IPO at the cut-off price will get 15 shares. People can check the status of apllotment at this link.

Sadly, Investors who did not apply for 225 shares at cut-off price are not getting any.

Share listing is happening sometime in Feb. Obvisouly I dont know the exact date.

Related Posts
Relaince Power IPO Fast Facts
Reliance Power IPO. Power On. India On.