Why so serious ! Need for humor at work

This happened yesterday – We settled down for a discussion first thing in the morning and a colleague says- smile guys, its a good day!

But, it was a spirited discussion . And the smiles quickly vanished.

We shared our views and debated. And I realised I was talking with a lot of emotional energy.

I told myself, its ok  – because I am committed and passionate about this. But there was clearly another voice telling me – its not ok.

And then something interesting happened later in the evening.

I was reading Pegasus Bridge  June 6 1944 – By Stephen Ambrose and came across a section where it talked about the front in North Africa.

pegasus bridge

In particular the book was introducing Hans von Luck – a protege of Rommel – who agreed with his British counterpart to fight a civilised war.

Every evening at 5 p.m. the war would stop. The Brits would break for tea and the Germans for coffee. They would then get on the radio and share the details of captured personnel and any messages these POWs may have for their families – usually messages confirming that they were ok.

In one particular instance, the Germans learnt that the Brits had got a fresh supply of cigarettes. Von Luck offered to trade a captured British officer for a million cigarettes. The British countered with 600K. And a deal was stuck.

But the prisoner refused to be exchanged because he insisted he was worth the million initially asked for !!

I was shocked !

These are men at war. They are willing to kill and die. Yet they manage to keep humour and civility intact.

I am lucky to have read about this incident the same evening I was telling myself its ok to lose my cool. It has helped put things in perspective.

I went back to my colleague and shared this story. Thanked him for opening the meeting with a request to smile.

He has decided to make sure that every meeting he attends, he would put smile(s) as the first agenda item.

And I am inspired to go a step further. To keep humor intact at the workplace – the place where we spend most of our waking hours does not need to be such a serious place.

Good rules should be designed for higher adoption

How do we drive adoption for rules in a country, a community?

Should a good rule be easily enforceable too?

I think it should be.

If we want to build a society where most follow the rules, enforceability should be an important criteria.

To decide whether a new rule should be introduced or not. Whether an existing rule needs to be modified or scrapped.

Why?

It is my belief, that when we have rules that can be easily broken without any consequences, it sends a signal to the community. And this signal usually leads to a gradual loss of respect for the law of the land and for the fellow citizens.

Effective rules implementation

Let me explain with an example of two rules, which most of us are familiar with

  • Front seat passengers should wear seat belts while traveling in a car
  • All vehicles should have a valid pollution-under-control (PUC) certificate

While both these were introduced in the last 20 years or so in NCR, the first one has seen significant levels of adoption whereas we all know that very few cars and bikes have a valid PUC certificate.

Why?

If you ask me, the reason is very simple.

For seat-belts, the fact that you are complying (or not) is visible each and every time you are driving. Any traffic-cop who sees you not wearing the seat belt can pull you over and issue a challan. So you run a very high risk of being punished if you are out on the road w/o wearing your seat belts.

Contrast this with the pollution certificate rule.

A traffic cop on the road has no clue if your vehicle currently has a valid PUC certificate or not. Hence the cop would rarely pull you aside asking for the certificate. It is usually asked for when you have already been stopped for some reason and they feel that they might put more pressure on you if you are w/o the PUC. Hence as car owners, we are usually not very afraid to drive w/o this certificate. The risk is just too low. And hence very few cars actually have a valid PUC certificate.

So while almost everyone knows that the laws need them to drive a non-polluting vehicle, very few actually end up doing so.

And I think its very simply just the issue of how easily the rule can be enforced.

In my opinion we should have few rules, but all should be enforced strictly.

What do you think?

Search Vs Social – the long tail of ad revenues

Google and Facebook together took away 64% of the total US online advertising spends. And Facebook had around 65% of the overall online display ad-spends. These are incredible levels of consolidation in the ad spends among the leaders.

search-vs-social

Enough has been said and discussed about

While one cannot argue with the numbers and the line of reasoning, I somehow felt that this discussion has ignored the long tail of ad-revenues or the lead generation aspect of these platforms. These reports are focused on big co’s with big media budgets who may typically have brand-building as the key target.

Let me explain this in some more detail.

There is no doubt that for Google or Facebook, the big marketing dollars would come in from big spenders like Ford, Coca-Cola & Pepsis, Samsung, Levis, Red Bull, Wells Fargo, Amex etc.

But if we were to evaluate these platforms from a start-up point of view (small budgets and maybe need to do lead generation instead of brand building), the story is very different.

1. Social targeting is profile based, too many bidders

On Facebook, the same user may be targeted by multiple brands, because there is hardly any other context. E.g. a 35 yr old male who lives in a metro and has liked multiple lifestyle brands would be a good target for many.

We do NOT have additional context for the specific session on FB when the ad is being displayed. One FB session is hardly different from another in terms of the intent or maybe when mood based marketing algorithms evolve things would change.

This means, each of the target users FB session will appeal to all the brands. Multiple brands would be vying for that same ad-impression, which in turn means higher bid rates and CPMs etc etc.

And this means that small budget advertisers would be elbowed out of the platform by big budget cos.

While this article on Forbes also has the same conclusion, the logic used is very different.

2. Search has deep context, removes non-relevant advertisers

Search on the other hand has hugely relevant context. E.g. a user looking for Mortgage loan options on Google will be targeted by Financial Services brands vs someone searching for Fine Dining Options in India.

And this means, that as an advertiser you are just competing with other competitors or maybe some adjacent industry players.

Bid rates would be lower and even with small budgets one can get the message out to a relevant audience.

3. Lead qualification is efficient on search

If one is looking at online advertising for lead generation, chances are search may be a better platform.

Before the Facebook fans pounce on me, let me qualify my statement.

Many of us run “boring” ventures – we pitch services that consumers may not want to share. And/or we do not have the creative bench strength to get a funny/interesting message out. Our content strategy may still be a WIP. Realities of life.

If the message/ad we create has low viral coefficient (i.e. we do not expect people to share it much), Facebook may not be the best platform. Coz then we are burning marketing dollars to talk to a prospect who may not be primed for our services and who is also not helping spread the word.

Google, on the other hand is a very different story. If a consumer is online actively writing into the search box key words that resonate with your offerings, you may have a very interested customer. Intent is high.

Also, my guess would be that the long-tail ad-spends are stickier.


But all this is just my 2 cents on how small ventures, start-ups and SMEs should look at spending their advertising money online – across the broad theme of Search Vs Social Marketing for the long tail in particular.

What do you think?

 

Unit Economics in the times of Auction Marketing Models

Unit Economics is all we hear these days in the consumer technology world. Unfortunately for many start-ups seeking venture funds, this is the biggest hurdle they need to cross to build a strong case for their business.

What is the concept of Unit Economics

I will not go into the definition and relevance of Unit Economics. That’s well documented here and here. Or just Google it.

Lets refer to Microeconomics 101 for our discussion – Marginal Costs(MC) and Marginal Revenue(MR). We all know that its a healthy sign if Marginal Revenues are higher than Marginal costs. And this delta (MR-MC) is what is unit economics.

On the other hand, if we are losing money on each transaction, either we see the losses reducing or we stop growing transaction volumes.

At least rational individuals would choose to do so. Or so goes the basic Economics assumption.

Unit Economics in web/mobile start-ups

  1. Marginal costs are volatile

A big chunk of a start-ups costs is the customer acquisition cost. ( I am excluding businesses with very high repeat volumes in early days where the operating costs contribute heavily to the overall transaction costs).

Most start-ups need to market their products and services. They are in a continuous state of transaction ramp-up along with concurrent improvements in experience or efficiency.

And in a world where most advertising/marketing channels are bid/auction model driven – this translates into the marginal costs being highly volatile. How volatile?

  • In the early days when you don’t have the luxury of brand-pull or of time, almost 60-70% of transactions may be coming from Google Adwords/Facebook/Ad-networks. Meaning 60% of your business is not insulated from pricing shocks.
  • Bid-rates may vary as much as 30-40% to maintain the same positioning. Maybe more, if there is a competitor who has just raised a round. Also, if you are competing in a category where big brands play, anything can happen. E.g. At Deal4Loans, we had seen bid-rates on our key-words jump significantly every time a competitor raised venture money or a bank launched a new digital campaign.
  • Add to this that the conversion-rates of your campaigns have not yet stabilized. Remember, these are early days, you are experimenting on your landing pages, and funnel optimization is still underway. So the final cost per account gets even more volatile.

2. Customer Pricing is relatively in-elastic

Theoretically, if you could pass on the burden of increased bid-rates and hence the ups/downs in marginal costs on to the consumer, your unit economics would be safe. The neighborhood vegetable vendor who has daily-prices does exactly this and is hence able to retain his margins.

Unit Economics

But this is rarely possible. Pricing is just not that elastic.  Most mobile/web start-ups can not /do not change prices so frequently.

3. Marginal Cost CURVE is UNPREDICTABLE AND NOT SMOOTH

We know that the bid-rates can inflict wild fluctuations(as seen in pt1) in the cost of acquisition, thereby making it unpredictable. But a bigger challenge is that the Marginal Cost curve is not smooth.

Realistic MC MR Curve

One rarely finds gradual changes in marginal costs with increasing through-put. It happens in unpredictable steps. Here’s why

  • Each fluctuation in effective bid-rate leads to drastic ups/downs
  • As a start-up you are experimenting with multiple channels. Success in any one will bring down the blended MC immediately.
  • Referral/Viral coefficient and % of in-bound of the campaigns can impact the costs significantly. e.g. One PR mention may bring in huge self-select traffic.
  • SEO traffic which is typically very predictable can also swing wildly with a new Google update as we saw with Penguin and Panda.

So what do we do?

  • Keep Experimenting. Do know that customer-acquisition at optimal price is a moving target. You are never really truly there. It can always be better.
  • Invest early in content. In-bound has significant ripple effects.
  • Raise money but don’t throw it all on branding. Consumer memory is short lived. Discover and test more channels, unlock access to more segments.

I would love to hear from bootstrapped ventures as to how they are/have handled the customer acqui costs. What worked, what didn’t?

Public policy, ripple effects and feedback loops

I have always been intrigued by product design and by extension policy design (& implementation). If the government were to look at itself as a start-up technology venture, the policies, schemes and guidelines issued by the government would possibly be the “products” of this venture.

And like any good product manager, one should study not just the immediate impact of change(s) in product design but also the delayed and maybe stickier changes in consumer behaviour.

And that is what I want to share with you today.

Shift in dietary habits due to Green Revolution

Sometime last month, I was visiting an uncle of mine – someone who is in his mid 70s, reasonably fit, exercises regularly and has borderline diabetes. While we sat at the lunch table, I noticed that he had multiple other grains in his roti as against mine which was from just wheat atta. It seems most physicians recommend adding ragi, chana etc in your atta mix as a healthier alternative.

And that’s how our conversation began.

Wheat Green Revolution

And what came out was quite surprising for me.

It seems in their childhood days in villages of western U.P., wheat was not the staple grain. Infact it was considered a delicacy and wheat-chapattis were made when they had guests over. And he comes from a well-to-do farmer family. This was not because of economic constraints, it was just how things were.

So as the elders started talking about this significant shift in probably the most important component in a typical North-Indian meal – roti – what emerged was that the shift was triggered by the Green Revolution in all probability.

This lunch group which included scientists and government employees, agreed to the following sequence of events:

  • Wheat was one of the chosen candidates for green revolution . Though am very curious to find out why?
  • Government stepped in on the supply side with higher yield varieties, irrigation support etc
  • It also created artificial demand by setting up floor prices thus encouraging farmers to grow wheat. Making wheat a critical component of Public Distribution System also ensured a big buyer for wheat at these prices. This in turn ensured that a higher percentage of land under cultivation now got sowed with wheat
  • This brought the otherwise-considered-premium grain into the middle-class households at a very affordable price. Imagine if suddenly, you find yourself able to afford an item which for years or maybe generations was considered premium, chances are you will buy more of it to feel good (my assumption)
  • And they all started eating wheat more, skewing our diet heavily towards this singular grain in North India.
  • And the subsequent generation(s) like ours has come to believe that our rotis have always been a wheat-only product. Coz wheat rotis is what we ever saw.

Am also very clear that India’s self-reliance on nutrition has been contributed heavily by progress on wheat and rice. So there’s no doubt that this has worked as planned.

The fact that wheat may not be the healthiest grain is probably something new. Gluten intolerance was probably unheard of during the Green Revolution.

But with the new facts before us, should the government re-evaluate its focus on just a handful of grains in its policies.

What if, the support prices on wheat are relaxed a bit? What if other “healthier” grains are encouraged similarly? Will the cost of managing supply chains and warehousing for multiple grains offset the advantages of a wider-spread in our diet?

Many questions and I don’t have any answers.

Low availability of fodder for cattle

Ask any elder who has seen standing wheat crop in the fields now-a-days vs in the old days. One thing they would tell you is that the wheat crop is now stunted. Its much much shorter.

This am told, was probably one of the biggest breakthrough in developing High-Yield-Varieties. The nutrients and water is no longer “wasted” in the growth of the non-grain-yielding parts of the crop.

But on the flip side – this has increased the cost of cattle-management for local farmers. Why?

There just isn’t enough fresh fodder for the cattle. The non-grain part of the wheat crop was used as fresh and dried fodder for the cattle that the farmer had at home. This is gone.

As my friend (who runs a dairy farm) tells me, procuring fodder is now a big challenge in most regions.


I am not an economist or an agriculture scientist and probably have understood just a very small part of the whole picture here.

But I learnt few important lessons from this lunch conversation :

  1. There are usually multiple ripple-effects of any new policy change ( or product change)
  2. While the product may deliver on the core metrics initially identified as measurements of success, we should zoom-out and ask ourselves, what else has changed
  3. I should start eating healthier. Right now  🙂

Thin Mobile App or a Fat one – Digital banking toolkit

Mobile is the new frontier and banks know this well.

Amongst the various choices to make as part of the bank’s overall mobile initiative, is the decision around the structuring of mobile app(s).

Thin App Vs a Fat App.

These might sound strange terms especially in reference to mobile apps and no, we are not talking about the size of the app in MBs.

A Thin Mobile App is a niche solution available for select instances or customers, which allows a small subset of activities to be handled.

On the contrary, a Fat app is one where all the possible features and functionalities are available in the single app.

Banks have chosen to tread either of the paths. E.g. ICICI Bank has multiple apps in the playstore and HDFC Bank has just one main app.

Bank Mobile App - Fat or Thin

As one would expect, there are pros and cons of both, and I am listing a few here that come to my mind.

Attribute Thin App Fat App
 Clean UI  Easy to deliver  Needs design assistance
 User Engagement  Higher – as less distractions  Lower as many features irrelevant
 App Marketing  App adoption slows as marketing dollars split across multiple apps  Overall downloads look better as one single app
 App Development  Becomes complicated with multiple apps in market  Easier since tracking just one app
 Channel Migration  Depends on how the bank approaches it   Depends on how the bank approaches it

I personally feel, more than the final choice, it is the reasons that drive the choice which are important e.g.

  • It makes more sense to have a separate thin mobile app, if there is a unique customer segment that seems to have very different transaction or enquiry profile as compared to the others. E.g. Retail bank customers vs SME business owners
  • Building Traction. Many banks want to keep their mobile banking app for transactions only and do not see value in building any pre-login use-case. This makes the mobile adoption target so much tougher as there has to be a very precise value that the customer foresees in using the mobile platform for transacting. Plus its a two stage goal, get downloads and then get usage. It might be useful to break it down into easier goals, get downloads by providing a use-case even if its a pre-login e.g. offers on debit and credit cards. And then get the customer who already has your app to start using it for transactions.

What do you think?

SMS is reborn as an acqui channel in the Smartphone age

In the early days of Deal4Loans, we used to get a lot of traffic and leads through SMS campaigns. Especially for products like Personal Loans (Simple pitch and high-urgency in a need based product)

SMS reborn in smartphone ageDuring those days, NDNC (National DO NOT CALL) list was not introduced and there were very few players who were sending bulk SMS for lead generation. Response rates were high.

Market quickly figured out that this was a cost effective and easy channel to scale up. A tsunami of SMS campaigns started to happen and finally the National government had to intervene with its NDNC initiative.

And while SMS acquisition campaigns have largely died out, it seems to be back again.  And with even more potential.

In a recent campaign we closely observed, a bank reached out to a select base of consumers through SMS and emails. The resulting traffic on the portal was significantly higher in case of SMS.

Why?

Apart from all the other factors (higher delivery rates, targeting time of intervention), now most recipients have a 3G or Wifi enabled smartphone, where CTAs are simple. This campaign had a short URL taking to the Landing Page after a crisp text talking about the offer.

Lesson learnt:

If you can withhold the temptation to abuse your mobile registered users, SMS can deliver amazing results even in marketing campaigns.

Easier to be Krishna than to be Arjun

The other day, my mom shared a powerful and thought-provoking quote, that she has just read.

It’s easier to be Krishna, than to be Arjun !!

And she went on to explain, that being Krishna requires one to look inside and discover the highest qualities that each of us are bestowed with.

But to be an Arjun, one needs to be full of faith.

Infact have so much faith and trust, that you see a Guru in your friend, who then becomes the Krishna in your life.

Krishna ArjunaIts a very powerful thought.

To be able to trust someone or something so much, must infact be very liberating.

Coz then you surrender all your worries, doubts and fears.

I guess that’s why our ancient traditions laid so much importance on the role of a Guru.

And its definitely true in our corporate lives too.

We all need mentors. And for mentors to be effective, one has to let go of all fears, doubts and insecurities and share what we truly feel.

Uber and Free Market Economics

Uber has changed the way we travel within cities. On a recent trip to Jaipur, the first thing I did on reaching the city, was to top-up my PayTm wallet to get going on Uber. (yeah no card-on-file yet 🙂 )

Uber Free Market Economics
Uber Jaipur

And over the next 3 days I took more than 12 rides across the Pink city. Here are some of the interesting observations I had:

  • Jaipur is really a small city – Only one ride was over Rs 100/-. All others barely crossed the Rs 75/- mark. Given the distances are not too much, the per ride fare is expected to be low. This is a critical point because the supply-demand balance can be easily titlted in a small-population. Also the per ride metrics are sensitive to even the slightest changes.
  • Free market economies tend to be cyclical – Almost all the drivers I spoke to talked about the good old times they have had, driving around as Uber cabs upto almost 6 months back. It seems back then Uber was super aggressive in signing up cabbies and were paying as high as Rs 1800/- per day. Guaranteed. This came down to 1600, 1400 and now is at 1200/-. And its all because of the immensely huge supply. Most cabbies now complained of getting too few rides on a daily basis. Add to that the low average per ride fare and it is clear that this city needs volume of rides to be high. Or to quickly reach an optimal sweet-spot of supply and demand match. As the word of tough times (for the cabbies) is spreading,  fewer are joining and many who had joined Uber are reportedly quitting it. Some can’t even pay their loan EMIs.
  • There is no consistency of vehicle experience – I got from a Nano to an Innova under UberGo. Firstly, UberGo is where most customers go, hence even cabbies are registering themselves as UberGo. So you are better off choosing an UberGo. The Innova guy said that he wasnt getting any rides so he switched from UberX to Uber Go. Also it seems you make the same per ride across both categories. Hence UberGo seemed a logical preference. The Nano guy was proud of his decision, he claimed that he would recover his investment much faster. And thats true. I think this is a classic example of how the market evolves when its close to a free market.
  • Drivers understand and give importance to rider feedback – I have never seen so much sensitivity from an Uber Driver towards the feedback/rating. To have been able to crack this is really commendable on Uber’s part. The drivers have strong appreciation for this feedback being utilized for giving them ride bookings. Again, there might not be a completely transparent system but the fact that information and feedback is flowing across the supply and demand side, is strong enough motivator to influence decisions.
  • Locals are avoiding taking own vehicles – Lot of areas constantly face bad traffic due to construction activities. Parking is a challenge. Most of my local friends have either started using an Ola or Uber over self-drive or are seriously considering to do so. Atleast till the fares are this low !

Update:

And back in Delhi.

  • There was a surge charge of 1.9X due to high demand and unmatched supply I guess. This allowed UberX  guys to also pick up UberGo customers without formally registering into the UberGo. Complete reverse of what’s happening in Jaipur. I guess Delhi customers prefer the more spacious UberX and there is sufficient demand therein.
  • The first cabbie who picked my request, called me and asked me where I need to go (instead of asking me where to pick me up from), and hearing my destination – declined. Just put the phone down and on my Uber screen I was back at fresh request. No way to even go and give feedback on this bloke ! So I guess Delhi cabbies have a hack to the feedback-driving-behaviour loop also. Land of Jugaad !!

Digital India – its already here

Today’s the launch of the Digital India initiative and quite a coincidence that I had an experience which makes me believe that Digital India is already here.

Digital India

Here’s what happened.

I was in Mumbai and called for an Uber. I started talking to the cabbie to understand the target market for a specific use case for mTuzo . We are pitching to banks that with mTuzo we can help move their debit card customer from an ATM only to ATM + POS relationship.

So I asked him which bank account he gets his Uber payments in – it was a SBI account and it was his choice. Uber gives him complete freedom to choose the banking partner.

Next I asked him if he had a debit card for that account . Turned out he did.

I asked him if he’s been using that card at ATM or for shopping also. As expected he had been using it only for cash withdrawals.

Probing further I asked him what if he got 15-20% discount if he shopped using his debit card, would he consider switching from cash to card. And his response just stumped me.

He said he’s already used his card for online purchases at SnapDeal. He did his first purchase using COD (cash on delivery) but once he was sure that they delivered just fine, his next transaction was through his debit card,

Let me repeat that – a 30 something male who has been driving a cab in Mumbai for last 10 years, is only schooled till class 10th, who uses his debit card only for cash withdrawal, has used it online at SnapDeal.

And what really really shocked me was his first purchase on SnapDeal. I can bet you will never be able to guess it.

 

 

Take a few guesses…..

 

 

 

…….

He bought a selfie stick for Rs 300 (after a 66% discount). A selfie stick !!!!

I rest my case, Digital India is here.

Maybe we need a Digital Bharat initiative.