Archive for the ‘Open Source Innovation’ Category
Up until a couple of years ago, the concept of “First movers’ advantage” had some credit to it – atleast in the web world since it was quite nascent. Lately more and more folks are realizing, and rightly so, that whatever happened in the PC Platform, is repeating itself in the web world. If you are creating a market, moving first essentially means that you are going to be deploying a whole array of tactics – including pumping in money – to get the word out as to this mysterious problem that people have and how we’ve gone for so long without knowing that we had a need for it and now that we do, here’s the solution.
The Only analogy that fits this strategy is what happened in the US when the colonization began. Obviously, everyone was quite familiar with the “yellow Dust” that the native Indians simply didn’t care for. And when the immigrants did arrive, and realize that there was gold just lying there in the river basins, the rush was to essentially get to where no man has even been to – to enjoy the luxuries and wealth that he might find.
I am slightly against the so called first movers advantage, because it essentially means that you are planning to go find a problem – hopefully a real problem – and stake the entire zone for yourself. Hmm. It usually doesn’t work. Here’s why.
The market is global. And News travels fast. By the time you actually create that awareness wave, it will spread much faster than the company can expand operations. It will then turn into the inevitable home turf vs. foreign markets and we all know how that game goes. You start playing defense from day one.
Customer Loyalty is on a lowest low these days. There is no such thing as inherent branding that happens – especially if its in the web world. Sell someone a Sony Bravia, and since its a more tangible product, the branding aspect still sticks. When it comes to services and applications around the web, nope nobody cares. I’d flip in a jiffy if I find a better tool that does what I want to do and expands my productivity.
The First Mover advantage, (a.k.a The Goldrush strategy) works where niche products and brands are in play. For a startup, those are dangerous and long term goals to achieve and there are more pressing needs.
I am lately realizing how many of the hip companies of the internet which was so hot last year, arent anywhere now. I was fighting over everyone to get a subscription about in Scribe and I do like what they do, except that I also have plenty of alternatives. I am not even sure if I remember my username password there. I am sure you can think of many more names that I could. I want to focus on what it takes to build a company that lasts a lifetime or even more. In a day and age, when it seems that most of the hottest companies also seem to be dying off pretty rapidly, that’s a thought that almost makes me smile… and wonder.
Venture Capitalists and Entrepreneurs call it Business Models. Economists call it as Game theories. They are such fabulously mind-stimulating equations. The equation which essentially makes someone give up hard, liquid cash in order to avail a service, and enable you to make a profit. It’s really quite as simple as that.
How do you get to that, is usually the question. If you do understand game theory, then valuations and how they are raised, along with expectations, become a wee bit simpler to comprehend. If not, its time to hit the books and look into what “Game theory” is all about.
Sometimes, the valuation game that the so-called MBA founders of startups are playing, start to get simply ridiculous that its good to return to the math and make one and one add up to bring back some sanity. Here’s the basis of how companies survive. If you don’t have one of these, you are very strongly advised the drop the high valuation game, and think of a way to claim one of these.
Strategy #1: Build Long Lasting Technology Claims.
I really don’t care what you think about Microsoft, but from a perspective of Intellectual property, and strategy, Microsoft is a company to learn from. Microsoft, Intel, IBM, all thrive on creation of Intellectual Property. Microsoft is infact quite a fabulous case study to follow, as its one of the longest running companies which still claims dominance. Given the sheer amount of grasp that they have – everything from the platform underneath your feet, the diversification of devices, and especially in how standards are dictated, they have a sure footing for sometime to come. I’d even dare say that Wikia (or some such guy) might put google out of business, but Microsoft will remain.
Strategy #2: Enter a very conservative market and dominate it.
The trick is that the entry barrier is high. Atleast it is conceived to be. it is a sector that folks are scared to get in. Case in Point: Durex condoms. How many folks do you know who want to get into the condom business? How many people do you know who want to make lingerie in India? They are all very fabulous businesses, for people with guts, and pretty much an open field for them to exploit.
Strategy #3: Scarcity is a goldmine.
Look at the headlines that India is making. There is almost a civil riot that is at the verge of breaking out because of the prices of commodities going up, and there are insinuations that there are governments who are hoarding these grains so that the prices go up. More demand, raises the price. it’s quite as simple as that. To lets get to the topic. Anything that is scarce, will demand higher price. If you hold one of the three operating licenses for the 3G spectrum, yep,that will be worth a pretty penny. If you hold land in an area that is quickly running out of space, yep, thats pretty much a gold mine. I’m sure you get the idea. It has to finite, and limited. If that is the case, pricing and survival is pretty much guaranteed.
Strategy #4: Control Standards.
Be part of every consortium which chews out standards and have a say in it.
Strategy # 5. Insider Info.
Imagine standing in an open view of the market and you alone know something that others dont. It could be simple as a technology trend (look at Ray Kurzweil), or something of very minute knowledge that adds to your efficiency to play your cards right.
Strategy #6: Build a reputable Brand.
Brands take ages to build, and ages to die.
Strategy #7: Superior Expertise.
This is most often the most common reason than any other for a startup. You might have heard this question a little differently as “So why do you think you are the right person to execute this idea?”. The answer to that question is essentially to figure out if you do understand something that others dont and have total grasp on the subject. This is the reason why when some senior personnel of a well established company goes out and bootstraps a startup, the valuation and expectation of the market is tuned to expect something fabulous – if nothing atleast a fabulous disaster. This is why teams make for the greatest assets and liabilities of a company.
In short, this is how things work. Lets say you have a startup and your shares are valued at INR 100, and you have enough shares allocated to put you at a valuation of One Crore. The simple math is that, whatever your current revenue is, be it six or seven paise or maybe even in the negative, people value you higher and put money into you hoping that in the long term you will benefit. It’s really the basis behind valuations. It’s all “In the long run”. But there is ofcourse a finite length to that, and people are going to constantly keep comparing their returns to the interest rates they can get from banks, ROIs on other assets and comparable other investments. You are going to have to measure up.
“In the long run” never happens, if you dont even exist. And the only way to ensure that you are there in the long run is find yourself a slot in one of these categories. If you havent, or cant, i wouldnt be too surprised to see someone sideline you and get ahead not too far in the near future.
Most enterprises in India look to “more economically viable” markets abroad as their target customers. If you ask them why is it that we are never focused on local demands, and the market that is seemingly so huge and is often quoted to be one of the fastest growing, the response is usually the same: “They Cannot afford this service”. Despite, seemingly valid claims, the stability of an economy depends on diversifying your target markets and India being this large pool of potentially huge market is being eyed by foreign companies as a last hope and last stand for their company stability, all this while we are still looking elsewhere for our hope to shine from.
An average television viewer cannot afford the cost at which shows are produced. A startup cannot afford to get a paid mentor onboard though it might essentially be the secret sauce of success. Most developing countries cannot afford the lifestyle that developed countries take for granted. Most booming economies still cannot afford the price tags of “brands”. Folks in Chennai, bangalore and most of the growin ‘n’ emerging urban centers cannot afford housing within city limits. Most people in rural India cannot afford most of what urban india consumes and produces. If you really think about it, in the economics of transactions, very little is part of the category where people can really afford it. For everything else, there is mastercard :) I wish it was simple as that.. But nope, I can only wish for that.
This is also a train of thought that has been going on in my head partly because I work with two verticals. Startups and Rural India and both of them have a small and interim cash flow problem. Alright, perhaps a slightly bigger and long term cash crunch problem. They are both probably at the extreme end of the “affordability” spectrum but they are very much alike. Both are valued and perhaps looked upon as the fastest growing, and the next big thing to happen and corporates are rightly looking at both of them for their next big growth. The parallels are really strong, and almost face the very same issues.The issue is, who pays for the services rendered to them now so that we can cash in when they grow strong.
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Mumbai, though a little late, has been turning into the happening scene for techfests and they are organizing the third edition of Barcamp (quite shortly after their second one) on popular demand it seems. Mumbai, after Bangalore, has been one of the few cities to be conducting their MoMo meets quite regularly, whether rain or shine, and there’s definitely credit to those guys for that. The event will be in IIT Mumbai and I am quite excited to see these guys bringing barcamp back in its true spirit of on-the-spot planning.
I will be attending the event, along with Colleague Sid (Chennai Open Coffee Club Fame). If you are in mumbai and would like to touch base, do leave a note.
If you haven’t registered yet, do register soon. The word is that they are close to running full already.
“Every act of creation is first of all an act of destruction.” — Pablo Picasso
What is it that makes a great startup? It’s a question that I have been pondering over for sometime now actually and I thought I’d start a conversation around the same. So What makes a startup great? Is it It’s rate of growth? The team? The market? or the amount of funds that its able to raise? Hmm.. Possibly none of the above.
Let me cite you a couple of great examples and let’s draw the parallels from there.
Case #1: The telecom world has been known for skimming the market. While technically the cost of landing a call across the globe was quite insignificant, most operators have charged ridiculous prices for one simple reason – there were no other options. With having no options came the fact that they can price calls at the tags that they want to, and the public innocently was willing to pay for it. All went on as normal till the internet boomed and high speed internet became a reality, and Voice over IP (VoIP) was born. As much as there were a lot of initial attempts (even microsoft and yahoo tried internet telephony and discontinued), the fact that most of the world was yet not on broadband didn’t help the cause at all. Then along came skype with its compression codec which worked on narrowband connections, the way they democratized (decentralized) access and limitations, and the rules of the game were forever changed.
As the story goes, the founders didn’t start with skype, but with Kazaa, which did the same thing for internet file sharing. Kazzaa did for file sharing what Napster started with for music sharing within intranets
Case #2: Before the telecom revolution happened in India, the cost of a telephone line was close to Rs. 10,000. There was a man who had the vision, the drive and the determination to make sure that that cost was sub Rs. 500. Sounds very crazy doesnt it? But it happened, and thats how the TeNeT Group was formed, and thats one of the greatest momentum on which it rides till this day.
Case #3: There was once a time when searching for anything on the internet meant a lot of pain. The closest you will get to anything will be loads and loads of adult websites, which had covered just about every meta tag under the sun and were the default results no matter what you were looking for. Search for your mother’s favorite dessert recipe and you know what you’d get. Then came dogpile, and within the undercurrents came a company which just blew your mind away with the accuracy of information it got to you. Just when most of us, had given up hope of digging out anything useful out of the internet, Google helped make sense of the oodles of information that the cyberworld was churning up.
Case #4: There was once a time when people thought that four wheeler drives were meant only for the highly rich. Ratan Tata took to new levels what Henry Ford started off, with his vision and in delivering on his word, the Tata Nano.
I think we have enough to start with. Can you see the commonality that runs between all these cases. If I have to pick a word for it, I’d choose “controversy”. These are all essentially and rightly so, companies, teams and ideas that challenged the norm.
There was once a wise man who advised me that it was okay to be considered controversial. It’s not a crime, actually a compliment and a pride for an entrepreneur to be controversial. If you are an entrepreneur and you are not controversial, it just means you are just another one of the same – nothing more than wasting everyone’s breathe in the ecosystem. In other words, there is a remote chance that you are actually breaking new ground, when you are controversial.
There is also another reason why I think this makes a lot of sense. When you are starting off with a new company, and with a revolutionary mission in mind (assuming that you do want to break some new ground), it is absolutely essential that you polarize people. There will always be people who will love you and those who hate you no matter what. But the only choice you have is to ensure that there are not many people who are indifferent about what you do. You want to make sure that people choose a side, whether loving or hating your idea for whatever reason it is, and from time to time even swing sides. That’s what a “Buzz” really is all about. If you have that going for you, you are going to have no problems in having people spinning around you, in your new world.
So coming back to our original question, What makes a great Startup? I think it starts off with the vision itself. And the vision of course is something that is grown on the fertile soil of the founders’ imaginations. A great startup is one that changes the rules of the game – and what most refer to as disrupting markets. Not all technology disruptions necessarily disrupt markets and lifestyle as well. But there’s the magic that an entrepreneur brings in and one that differentiates him from a pure scientist.
As per the new economy, free is no longer controversial. It’s actually the norm these days. Discounts and free are words that people have heard and demand for no apparent reason. “Free” has cheapened a lot of services. It is also made possible by the various other laws and economic conditions that make it happen, but might not be something that will go on for long. The “Free” marketing strategy (started off by Gillette) is one of the several marketing strategies, not THE only marketing strategy.
Let me ask. If there is something that everybody keeps saying cant be done, there is probably a good chance that it can be proven otherwise. Does it come close to the where you are standing and aiming for right now?
Lately there is this thought running into my head, that in most circumstances I am starting to count and make a mental note of all the “computing” devices around me. As of now, I have my mobile phone which is in arms reach, my laptop that i am working on and my server which is quietly buzzing from the corner. All of them have varying levels of computational power, starting with the server on high and ending with the mobile phone.
Virtualization is a term that started ages ago and the term has been ubiquitously been used in many things. The way virtual processing happens inside an operating system, to How a virtual software layer within an OS to run an instance of another OS – which is what VMware does, and does quite beautifully. Lately virtualization has found its new use in grid computing and in clubbing together of resources without the differentiation of physical attributes. It’s quite a steaming industry as of now, and does have some very positive implications for remote management and so on.
What I am talking about is hardware resource virtualization. I wish i could come up with a new term for it, and as the thinking deepens, I perhaps might write a longer post about it. The idea is simple. Going back to the fact that there are quite a few computational resources and some more powerful than the rest, is it possible that the resources could be shared so that “on-demand” the one that needs it could make use of it?
I know that laptops in order to consume less power have also been built with a little bit of stupider chips which dont provide as high throughput as server machines, or even desktops do. The convenience of a laptop is great, but if possible, could i link this laptop to the server so that i could make use of those extra cycles to perhaps compile the new kernel, or launch the photoshop application faster, and maybe even manage to do something in Illustrator, if required? (Illustrator as of now, hogs my machine to a standstill).
Things like this are possible, mostly cause what I am talking about is essentially cluster computing. Sharing of processes and memory space so that the one in need could use it. But I am also talking about hot-plugging this as a resource, so that i could technically walk out of the room with my laptop, or shut it down and the server would not go berserk losing a resource. Imagine, if mobile phones could have an extra shot of computing power… we wouldn’t even know what to do with it.
I am assuming that the general trend as we move on into the future would be that, computing power is going to remain pretty much the same. I think we’ve already hit a plateau and the only way we could enhance more clock cycles is if we start looking at going 3 dimensional and that is going to take a lot of power. Considering that we still haven’t come up with more efficient fuel cells yet, we do have a problem.
But imagine walking into a coffee shop and just like how you share Wifi access, you could “plug” into their server and use some computational power, and get your work done faster, wouldn’t that be amazing?
Just the other day I met some very interesting folks from the National Institute of Fashion technology and was quite enlightened to know about the various departments they have; Apparently there is design, textile and Production – which on explanation makes a lot of sense. There was a lot of talk about the budget and its infavourability to the textile industry, and how clusters such as Tirupur are going to be affected by it. Personally, I am not too sure.
If you have heard the story, Tirupur, the cluster known for making garments is essentially setting up shops in Bangladesh so that they can produce the same quality at a much lower cost. So what value does the Tirupur cluster bring in? They are moving up the value chain in terms of design and innovation in new material. If you look back at some case studies, It’s kinda the same thing that happened with some clusters in Italy. They used to make a lot of stuff, and then the chinese and asian market started imitating and they were forced to move up the value chain and start designing and innovating every season so that the asian markets eventually gave up. The originals were always the “in-season” trend, and what was coming out of Asia was passe, as far as the fashion savvy were concerned.
I am expecting that the same will happen with Tirupur as well. So overall its good news for us. If there is one thing that we can totally bet on, its the fact that ecosystems, and humans will adapt. Thats what they are built and programmed for. Evolution is part of their natural lifecycle – especially with the changing market dynamics.
So what does this have to do with the title that I started off with? Well, there is.
I believe that production is going to head two ways from here on. Thanks to the freely available networks and the personality traits that people are showing, there are only two ways to go.
Distributed Production Centres:
Ever heard why the Cheetahs are such a small population? Too much inbreeding and what happens is that you build a culture, and an entire ecosystem that is endangered by a single threat. Single point of failure, as they call it in the hardware world. The entire DNA of the cluster is geared towards one purpose that a slight change in plans affects the entire colony. As much as Tirupur survived because of its resilience, and clusters such as Sivakasi will also survive because of its ability to innovate and differentiate, it is not going to be a long term prognosis for change. Whether we like it or not, we are part of the global economy and a blip in global markets do find its way home, miles away. There is also another reason why this makes sense.
Production doesnt just limit itself to goods. Production also goes for what we call as Knowledge workers, essentially everyone ranging from Programmers to BPO workers. The cost of housing all these workers under one roof is getting too high, with the margins dropping that most centres are looking at ‘work from home’ options. Azim Premji, of Wipro has been talking about this for quite sometime, as Distributed Call centres, and Technology today has the luxury and the opportunity to make this happen. Infact, it is already happening in small scales already. More than all the luxuries of saving costs and managing margins, if you do realize the fact that while our demand for more knowledge workers doesnt seem to be slowing down, our infrastructures arent keeping up.
Distributed Production Centres, are the way to go.
The Second Interesting trend that is happening is essentially Personalization. We might be one among the six billion population, but we seem to want, crave, desire, relentlessly hunt for products that are engraved and suited to our style and taste, at the cost of mass production. Seems complicated? It’s already possible.
Think of the trends that Cafepress, DilseBol, Myntra, Pringoo and all are after. It is essentially that. A friend of mine and I, sat and drafted a very elegant looking business plan and execution strategy along the same lines till we figured that three Indian companies had popped in the same space trying to cater to that need. I am still seeing them missing some crucial elements to hit it big, but they are definitely on the right track.
This is almost a very interesting problem for those who are into fashion technology, especially the production aspect. I came to know that the entire curriculum of the Production department of fashion technology deals with one aspect. How do you produce, ensure quality and keep costs low and keep the machine going. This is certainly an interesting challenge and prospect to tackle for those who are in this line of work. There are no easy answers, but some interesting cues.
For one, nobody talked about customized garments yet. We are talking about personalized products, out of mass produced items. So take the T-Shirt for example. The ordinary black wrangler T-shirt could be mass produced, but the text that goes on it is where the secret sauce comes in.
While this is happening in the textile and accessories space in on side, It is also happening with Publishing on the other hand. Xerox, I believe has launched an entire array of machinery which can print custom work – which means, I can give a print order for 500 calendars, with variable content using the same Template/layout. Think, calendars with the same template, but different images. Essentially the easiest way to explain it is “mail merging” of images and print jobs.
I wouldn’t be too surprised to hear about our friendly computer supplier, who made computers “Personal again” embarks on this route of also styling your machine for you.
The same is also happening with book publishing. Gone are the days when you had to go look for a publisher to print your newly, freshly, insightfully written book *cough cough*. While there was an interim solution to self-publish, it has evolved pretty much into “Print on demand”. There are companies that can give you one single print of your book, for the same price it would cost per unit price if it was printed on the thousands. Imagine that!
Of course, engraving personal messages on your ipod, is pretty much an extension of the same thing. And the trend is going to continue on.
According to reports that foresee trends, personalization is essentially going to be one of the biggest booming markets for this decade. I am almost quite certain about that. More than just printing your names on it, the market and demand will push it to some very interesting limits. Future itself and alone can unveil all those possibilities.
Reposted here from the Author’s Blog.
Did you know that the best job for a fresher is in a startup? Well, it is.
Did you know that the best job for a growing professional or someone who loves challenges, is in a startup? Well, it is.
Proto.in is taking on new heights and I am quite proud of it, everyday that I get to work more on it and sit and disseminate some of the ground level issues that companies, teams and individuals are facing to make things happen. Efficiency is the name of the game in the valley and that is essentially what makes things click. Well, we are gonna have to work a little to get this machine well oiled and get to that point. But there is certainly pleasure and a privilege in laying the groundwork for it all to come through.
I Probably should be making this announcement on the Proto blog first, but since I have been dripping sweat and bleeding a lot more on this matter, I shall have the honor of having you all read it from here first. Alright, alright, I shall get onto the topic:
One of the biggest problems that startups have is in hiring people. During the last OpenCoffeeClub meet that we had here in Chennai, this was pretty much the topic, and I raised all the questions that I wanted answers to and have been working on it since we broke off that day to go our ways. It is a very solvable problem, just needs the right partners in place to make it happen and Proto.in has just that – all the right partners you need.
There are essentially three elements, to this problem:
1. Students are not even aware that startups are an option.
2. Startups don’t have the medium to gather mass. Most of them require one or two people, compared to the 800 people that TCS requires. End result, no placement office is all that very keen on small numbers.
3. Students need training on development platforms that make sense for startups.
Point #3 is actually a very nice business proposition. Imagine a centre like Aptech or NIIT which trains people on Python, Ruby, AJAX etc, on project (read hands-on) mode. The business can possibly make money by developing projects for smaller clients, and the very projects could also serve as assignments for the students to practice and nurture their programming talents on. As long as the centre delivers quality programmers, the startups will keep pounding to have more human resources from them, and the cycle will go on.
When I spoke about this to someone, the first thing she mentioned was, get me a centre to do this in Chennai and lets work out a franchisee model to spawn this across to various cities. I don’t see a reason why it wouldn’t work. It has all the necessary ingredients to make it work. NIIT and centres such as that, should definitely look into such options.
As for #1 and #2, I have been suggesting within the Open coffee club group in Chennai towards forming a group within the startup community so that they can be tackled. There is a large scale solution of this that we are working on, which we will be unveiling during Proto (in January) and will be on fullswing starting february.
Excited? You should be. The Ecosystem is one step closer to being efficient.