How to Build a Global Tech Business from India?

I just off from a talk I gave to Wharton Students and Alumni at IIM Bangalore. The talk was organized by Prof. Kartik Hosanagar who focuses on the internet space at Wharton. Building a tech business out of India has its own share of frustrations, challenges and advantages and having beent through the journey, I would not mind sharing the same with other fellow entrepreneurs who are embarking on one.

Here’s the slides from the talk. They don’t say too much (for that you’d have to listen!) but I would be happy to answer questions!

 

Retail Store Systems 101

I gave a talk recently at the Groupon office in Palo Alto, on “Retail from the Other Side: Learning from Working with POS Systems”, and wanted to share the slides for the same.

Retail Systems are a complex bunch. If retail is all about detail, their systems are all about variety, and the variety that I have seen in retail systems over the last few years is mind boggling. If you want to build anything for these systems, you have to take into account the store layout and architecture, whether they are on a POS system, a regular PC, or a thin client, or even on a virtualized environment like Citrix. You have to deal with antiquated system configurations, low memory, challenging connectivity issues.

Perhaps some of the biggest challenges are human related – in adoption and training – retail being a very geographically distributed operation, it becomes very difficult to retrain and ensure the associates are best positioned to use complex systems, but in a simple and efficient manner. You have to deal with language issues, remote connectivity, and busy store hours.

No wonder building store system, and building for store systems is not for the faint hearted.

Pluses and Minuses

Facebook Vs Google, Round 2

The whole world seems to be going gaga over the new kid on the block, Google’s Facebook Killer, Google+. I have tried it, since I hardly every like verdicts (they sound good in retrospect, but most people eat their own words when they don’t go right), I would just share some thoughts.

Overall, Google has delivered a kickass product. It’s a great bit of engineering. For the first time in its life, Google seems to have come out of its engineering style product development and has delivered something that is quite well polished. There are hardly any kinks, the product has been thought through well, including deep integration across all google services. It’s even gone ahead and published Google+ like themes for Gmail and Gcalendar. It takes a lot to introduce a new product across all your properties (the top bar in Gmail, Google Search etc.) on day one, and I commend Google on its confidence. And its welcome change from half dash efforts earlier (Buzz, and Orkut while well done was abandoned).

At the same time, however, the product lacks any irresistible feature that will make me switch. The usual: wall/stream, notifications, @/+ etc. have been added. Circle’s is great UI but not something facebook won’t have in two weeks. Sparks and Hangout are cool, but not at the core of social networking. I don’t think I will ever have the time or inclination to “hangout” on the web with friends, unless its work. And if its work, I would rather keep out of Google+. Sparks is something that I have still not understood, and it seems something Google News should have added.

Moving the Social Web is a Mountain. I don’t imagine people suddenly switching to the new kid on the block. There are pictures, friends and family on facebook which people wouldn’t switch on day one, and I doubt given the way facebook is so deeply integrated in most people’s lives (its the first website I open after email), I doubt making the switch will be that easy. I also don’t expect my mom, my dad and so many other people to just jump on Google+, also because of its (slightly) geeky interface.

Getting rid of baggage is also a good thing.  That said, I do want a place where my new social life is better mirrored. Facebook seems to have so much baggage now – people I may not even interact with, that having a place where I can interact with a fewer people is actually better. I have heard horror stories of people meeting you after years and still knowing what you are upto (and you knowing nothing about them!). In a world where your friendships become limited to what you know from your facebook newsfeeds, having a new place to locate new content is a welcome change. I also want a place where I can interact with people with whom I share some interests and keep it distinct from the rest of the world.

Is Google trying too many things? An obvious question comes to mind. Google is planning to fight Facebook & Twitter in social, Groupon in local offers, Microsoft in enterprise and search, and everybody else in Silicon Valley somewhere or the other. Suddenly, the company that started with “Don’t be Evil” has enemies all over and is fighting all fronts.

Competition is good for Facebook. I think its going to keep it on its toes as it has suddenly in the last few months become the monopoly on your social connections. It needs to think of quite a few things – helping us keep our friends graph better organized, surfacing new and better content (I hate the spam on facebook!), and figuring out ways to become more pervasive (are we going to see facebook browser toolbars soon?).

Bad news for Twitter. The one to lose out the most may just be Twitter. What works for twitter is the one way friendship that geeks love, and celebrities take recluse in. If Google is able to capture these well (circles is in some way one way relationship – the friend connection in G+ is quite complex), it will mean people won’t mind moving to it. In this three way world of Twitter/Facebook/Google, it will be Twitter which has the least stickiness, most spam, and no way of monetizing. The dollars twitter would have hoped to get, would now get split even more. If twitter has to stay afloat, it will definitely need to start thinking quickly.

The Evolution of Mobile Based Loyalty Marketing

(Originally Posted on the Capillary ShopTalk June 2011 newsletter. To see entire contents click here)

Customer Engagement: a 21^st Century Concept?

Customer Engagement is the lifeline of retail and it has long been established that loyal customers form the bedrock of aprofitable retail business. One of the first known instances of customer loyalty marketing dates back as far as 1793, when a US merchant started giving out copper tokens which could be exchanged for free items in the store.

Gradually, the customer engagement efforts moved through time and space to create newer media to reach out to customer s, including Product Catalogues and Direct Mails and to the most modern ones – plastic cards, electronic mail an d paper vouchers and are very successfully being used by retailers.

Loyalty Programs have become an important part of revenues for many retailers. For instance, in India, according to the Indian financial daily, Economic Times, the loyalty program members in India in 2010 is estimated to be 20 million. Lifestyle, for example, draws 50% of its annual revenue from about 2 mill ion members of its ‘The Inner Circle’ programme, while Shoppers Stop derives 73% of its business from its more than 1.9-million ‘First Citizen’ members(Source: Economic Times).

 

 

The Evolved Customer and Mobile Phones

The arrival of the mobile phone, one of the most disruptive pieces of technology ever developed, has changed the human civilization radically over last decade. With almost 4.9 billion subscribers (77% of the world population) today, the mobile as a device is at once personal; its always on, always present, and always connected, and has changed some of our most deeply set habits.

In the same time, the customer herself has changed; she doesn’t carry loyalty cards all the time or remembers the long membership numbers. The mobile phone as a device plugs in beautifully to the changing shopper behavior and rapid proliferation of plastic cards: simplifying the consumer interface and making the loyalty programs easy to participate and maintain.

 

 

 

Mobile Based Customer Engagement Programs

In principle, Mobile Customer Engagement Programs are very simple – the mobile number of the customer is used as the main customer key, leading to simplicity of customer engagement. It enables uniquely identifying a customer, communicate with her easily and cost-effectively, and authenticate her while rewarding – the three most critical aspects of the customer interface for any loyalty programs. Along with this, by combining this with real time communication, m-vouchers, point of purchase analytics, the simple concept of mobile engagement can become a very potent weapon in the retailer’s arsenal.

Simple, Low-Cost and Effective

The most important aspect of using Mobile CRM is to vastly increase the customer base. Our research indicates that most mobile based CRM programs are able to sign up as high as 80-90%, against 10-15% in card based programs. Operating cost of a cardless program is close to zero, cutting out the cost of cards, the effort in logistics and management, paper based forms and data entry, relying on m-vouchers for gratification and  SMS/Email for communication thereby generating massive ROI on investments. The fact that its environment friendly also helps in reducing the perceived cost.

One of the key benefits of mobile CRM is that a retailer can launch a simple engagement scheme with data capture without a formal points based loyalty program. For instance, a simple seasonal milestone program (Buy worth USD 200, and get a USD 25 m-Voucher) program can be used to build customer understanding. After studying the program for a few months, a well modeled points based loyalty initiative can be launched with a far better understanding of the consumer buying patterns.

A few Caveats

Easy as it may sound, its also easy to get the initiative wrong. The systems have to be very robust and simple to use so that data is captured in clean and validated formats otherwise the retailer ends up realizing after months of effort that the data is unusable. Quick search tools across the customer base are an absolute must and the customer database from all the stores must be available at real time at the store level.

 

It’s also very important to instantly communicate with the customer to give her the reassurance that the data has been captured in the system and cannot be put to misuse by the store staff. Additional features can be developed to ensure store staff doesn’t get access to contact numbers to ensure customer satisfaction. There are additional expectations of personalization of communication which have to be met.

In a form free environment, the customer understanding has to be built using past purchases, including the SKUs she buys. Customer Understanding and Analytics become a necessity to ensure meaningful engagement. The ubiquity of mobile numbers also means that fraud detection and mitigation systems need to be very robust and based on analytical techniques to ensure invalid entries are quickly flagged and investigated.

 

Rapid Adoption

Apparel major Indus League was one of the first retailers to adopt mobile based loyalty programs. Within months, the loyalty conversion for One League increased by almost 75% compared to its predecessors. Rachna Aggarwal, CEO, Indus Leagu Clothing Ltd. Said, “The biggest benefit members enjoy is that ONE League is now Instant! Earlier, it took upto 15 days to credit points to a loyalty account, now it is done the moment the purchase is made. . Capillary’s !nTouch allows us to gratify our customer instantly through SMS updates, m-vouchers etc. the moment a transaction is done.” Similarly, marquee Indian brands like Peter England, Dabur’s newU, Odyssey Bookstores and Puma India have also successfully launched mobile loyalty programs.

The simplicity of Mobile Based Customer Engagement means that retailers of all sizes can now use powerful data capture tools to build a large customer data base, learning about them and effectively analyzing their behavior and using insights to drive repeat visits and higher transaction values – all that at a low cost.

 

Apple’s Vision of the Cloud and why its flawed

Yesterday, Apple announced its new iCloud service along with a lot of improvements to the Max OS X and iOS 5, and while I did like what I saw, there are a number of reasons I may not use it.

First, what I liked:

1. I like Apple’s vision of the cloud, as against Google’s. I don’t think the cloud is going to replace our rich applications. Having used both cloud as well as native rich apps – rich apps are here to stay the cloud will make them stronger. They are a lot easier to use, documents look a lot better and they are far more handy. A browser based app may be present as a fallback option when you don’t have anything handy but that’s far from becoming the default.
2. I like Apple’s cloud being a personal cloud rather than complicating with as a “family cloud” or “friends cloud”where everything automatically gets shared with everybody. I think that just befuddles the hell out of things and these have never taken off.
3. The iCloud makes the cloud wire-free. You no longer need to connect your PC / iPhone / iPad and sync all of them. Just importing pictures from a camera is such a big chore usually and Apple’s a master at cutting out chores.
4. The iTunes Match service is a killer. Of course, I still wonder how they managed to negotiate out such a deal with the music publishers but the fact that they did, and hid all the junk under the carpet is very commendable.

And now, what I don’t like:

1. Apple’s Cloud is closed. It essentially locks me in to Apple’s technology. As a person, I like to keep trying out new things – I use a
   PC, an iPad and a Blackberry and I am usually happier to navigate diversity, and the iCloud service means that I either need to change my habits or look for alternatives (Hey you dropbox, instapaper, remember the milk – you still have a future!). I would like to write a document on my PC – read it on my iPad, edit it there and use it on the go with my Blackberry. With Apple’s iCloud, my world would begin and end with Apple, which is a compromise I am unwilling to make.
2. Apple iCloud doesn’t give me any integration options. There doesn’t seem to be a way for app developers to retrieve stuff from the cloud onto other platforms. This is precisely why I don’t use Google’s Buzz but I use facebook or twitter – because they are everywhere!
3. I still can’t get over MS Office. I have not really found an alternative that can make me switch – openoffice, google office, pages – and I really wonder if I will be able to use anything else for sometime to come.
4. iTunes doesn’t support enough regional content, and I hardly buy any music from there as a result. There’s a whole world out there beyond what we see – and I wouldn’t want to close my ears to it. Also, I would want my content to be available on my non Apple devices. And they may not be as good today, but I wouldn’t want to rule out innovation.
5. Apple doesn’t give me a fallback web based interface for accessing my cloud stuff – a lot of times, I end up checking my mail from others computers since I travel a lot and find myself in places where Wifi is locked and I don’t have a data plan on my iPad/phone. I want at least some way to check things out.

I guess, I just like way too much diversity and I will continue to use all the other services that I used earlier – and use the iCloud only for things which don’t lock me in.

We are the Champions: Lessons for a Startup

Champions

Congratulations on the World Cup Victory! A nation’s hopes have been pinned on this victory and this is what our boys have achieved in Mumbai. A billion (and a quarter) hearts pounding together can product a massive impact, and it’s in that din and glory that we will always remember forever our lives.

The Cup of Victory

A victory, however, doesn’t come easy. It takes years of hard work, it takes months of preparation, a lifetime of determination and all that culminates in that one day when all your hard work can either puff up in smoke or create a bang that lifts a nation’s spirits. Champions are forged in this journey – people the nation looks up to, ordinary folks like you and I – who came into this journey as boys but leave as men who leave a mark. However, individual brilliance cannot win alone – the Indian victory was a true team effort – where each man worked harder, complemented each other, backed up his neighbour, and produced a result that far grander than an individual performance – they all gave it their 200% to achieve what not many of us have seen in our own lifetime – a World Cup victory. It’s the story of believing in yourself, it’s the story of the silence that you feel when the whole stadium is erupting but all you see is the next ball. It is the story of chasing a dream – a shooting star, a wish, an idea, a passion – whose true denouement is the victory lap.

In a startup, we chase a similar dream. It’s born of an idea – an idea that we can build something that is larger than ourselves, an idea that one has the ability to build a winning company that the hearts and minds of its employees, customers, stakeholders all around. An idea that innovation can produce a killer product and when you back it up with awe inspiring service – it produces a cracker and the world sits up and takes notice.

Most importantly, it needs the team, its employees to have played like champions. Each an every person – from the smallest right upto the top, has to play his or her part in this larger story, essay a brilliant individual performance in this difficult stage, and at the same time, play the ultimate team sport, come together as a collective, back each other up, and come up with a whole which is far greater than the sum of its parts.

The most exciting part of a startup is not what you build, or what you earn, its about chasing that dream, living that vision, winning in each step, the small battles and the big war, the ability to do something for which one is known always. It’s a long and arduous journey – its never gonna be easy, but its your co-passengers who make sure it never gets too hard. It’s a journey of following an idea till you get to an appropriate climax – and even if the climax is not to your expectations, in most cases you would enjoy the journey. Because at the end of this journey, we would have been there and done that. It’s never about where you end up – it *IS* about chasing a dream.

Congratulations once again on the World Cup win, but remember, the time is NOW.

The Maruti Story

by R.C. Bhargava

Maruti is one of the few (perhaps only) shining example of a public sector companies in India to have achieved global competitiveness and made it big, giving the leading private companies a run for their money, and its story has to make for very interesting reading. What was the vision behind starting a car company in India? Why did they chose Suzuki as a partner? How did they navigate the red tape that ails most of Indian industry? How did they build a leader in quality, changed the rules of the game to make auto manufacturing customer centric?

Who better to tell this story than R.C. Bhargava, the man who built Maruti during its formative years and is still associated with it as its Chairman. In a very intruiguing account spread over two-and-a-half decades, Bhargava describes how Maruti was conceived, nursed, nurtured, grown and built into a giant of our industry.

What makes the story very interesting is the light it sheds on the changing face of Indian industry, since Maruti as a company owed its origin to the Emergency, nationalization, the license raj and saw through the changing economic climate of the country. The anecdotes of the author show how the company and the economy as a whole transformed, and gives us a view into times completely alien to our young existence.

I have read a number of books by the giants of the Auto industry – My Years with General Motors by Alfred Sloan, Lee Iacocca’s auto-biography, and I can actually identify with many of the things Bhargava describes as a result – the focus on quality, worker relations, dealer relations, focus on marketing and model development, emphasis on servicing – all of which were unknown to Indian industry at the time, and the way Bhargava describes how each of them were envisioned, and implemented, shows their foresight, strength of will and commitment.

Apart from that, Bhargava also describes some unique problems of being an Indian company – that too a PSU – where accountability and responsibility is a big issue. While we blame PSUs and the Government of demonstrating red tape and acting slow, the book also gives the lay reader an idea of why its so – most managers and civil servants will rather follow protocol and ensure that their decisions are always above board and measure up to the right standards of probity since the downside of being caught in a political storm is very high. Bhargava himself describes a number of CBI enquiries and charges of corruption being levied by him by political opponents who wanted to settle an old score. It’s only justified that in all of these cases, the individual manager would want decisions to be taken in such a manner that responsibility is shared and nobody can be “blamed” for any particular decision later. The fact that the Maruti management was able to cut through this red tape and still build a company of its stature is remarkable (of coursing, having Suzuki as a JV partner and blaming tough decisions on them is an important aspect of it).

Some key take aways for me were:

1. Having a lofty vision and very high ideals to begin with are very important to build a sense of purpose amongst the team
2. Having a shoulder from which to shoot from – and people who are above the circle of responsibility which enables justification of key decisions and pushing them through
3. Communicating the right ideals of all stakeholders, and leading by example (uniforms in Maruti are still followed; I had even heard one of my classmates from IIT complain about it!)
4. Managing bureaucracy, relationships, governments, partners can be extremely tricky and once again one has to be strong up front
5. No compromises on quality

One grudge I have against the authors is that there are so many anecdotes that some of them are not as well covered – perhaps the editor could have given some direction on pacing the book well. Similarly, the book seems to sag in places and its easy to lose interest.

For anybody who really wants to understand the evolution of Indian industry, this is a great resource.