Boeing- Built to Last !

Just got this mail from a friend in the US-truly inspiring-

boeing“I happened to see this in passing at the backside of a Boeing newsletter few months back. Simply love the raw determination of the human spirit. What a privilege to belong to the same species!!”

I’ve tried to make the men around me feel, as I do, that we embarked as pioneers upon a new science and industry in which our problems are so new and unusual that it behooves no one to dismiss any novel idea with the statement that “it can’t be done!”. Our job is to keep everlasting at research and experimentation, to adapt our laboratories to production as soon as possible, and to let no new improvement in flying and flying equipment pass us by.”

William E. Boeing, founder The Boeing Company, 1929

Mobile Advertising & the Indian market

Advertising on the small screen aka the mobile handset has been a hot area for quite some time. We have seen multiple models come – some to stay & many more to just fizzle out after their two moments of glory.

The excitement is well founded, its a screen that probably gets the maximum impressions and has the highest reach.

Mobile AdvertisingWhat makes it even more interesting is the numerous models all of which seem to have found their individual niches. Some of the more prominent ones that I found are listed below:

1. Google’s forte- Advertising on mobile search. This model just replicates the adwords to a mobile context. To get the advertising $ the pitch is that the consumer is actively looking for that specific product/service (as highlighted by the searched keyword). Moreover the consumer can not only browse to the advertisers webpage, but could immediately call or SMS an advertised number

2. Banners on WAP sites- This is akin to the online adnetworks with a twist that the banners & the sites being referred to are now optimised for viewing on the mobile screen. AdMob was the largest player  in this segment & GOOG justified its acquisition of AdMob with a detailed note.

3. Ads within Applications: Here again AdMob is supposed to be a big player, but the biggest player of them all is the iPhone. iPhone not only has the biggest app library but has shown other handset manufacturers how to make this a dominant revenue line.

The above models currently have a low adoption in India due to low % of handsets with GPRS connectivity and low penetration of mobile apps. What has worked in the country is good ol SMS. Here again there are multiple models

4. SMS/MMS ads sent to users. This promises scale to the advertiser and pure pain to the consumer. Coz everytime the new ad reacher her, her phone would ring/buzz. Moreover most of the advertisers are not the bigger brands offering great deals.

5. Ads in half of the SMS text- This is typically clubbed with alerts (to cross subsidise) or with free online SMS offered(e.g. Way2SMS) to consumers. Advertisers have issues with both the options. In the first the consumer is more concerned with the alert content rather than the ad e.g. if I get an alert from HDFC Bank about the balance in my current account I am probably not too keen on the Life Insurance being pitched to me at that point of time. In the 2nd option, most advertisers will NOT want to spend money on getting consumers who are sending free SMS online (or so I am told !)

SMS Gupshup which is touted to be the biggest mobile ad network in India, provides multiple channels that a customer can subscribe to. Here the main lever to get the consumer is the content & they use the ads in a contextual fashion (since the content & advertising logic both sit on their servers, its easy to match).

Vodafone (in its previous avtar as Hutch) had experimented with an operator owned full screen broadcasting model. Their technology provider Celltick was capable of targeting consumers basis the cell tower & showing rich media ads through their proprietary broadcasting technology.

Which model will finally become a dominant one in the Indian market?

Will Indian market also get polarised in terms of handset, in which case the handset provider will control this segment?How can Nokia drive more of its clients to its Ovi Store?

Can the operator control the ad ecosystem? They seem to be in the most advantageous position as they control the maximum touchpoints with the consumer.

Will 3rd party operators control the market? Can they build a model which is neat, scaleable & engages the customer in an exciting way?

Mobile operators & financial Services

The telecom operators in our country have a really enviable position. They are probably the only ones who have in such a short span created a consumer base that cuts across almost all economic and geographic boundaries. Their elder cousins from the FMCG sector are still way behind in capturing the imagination of the rural consumers.

While it is debatable whether there is a genuine need for high mobile penetration in the rural markets, what we have to accept is that mobile industry can today provide a scaleable distribution platform- something that can be leveraged for very many things.

Mobile operators

One of the most obvious (or so we would want to believe) is the financial services. Telecom co’s have been lobbying with the Finance Ministry to allow the Telcos to operate as NBFCs (or some similar avatar). They have used the argument that the government’s stated objective of financial inclusion can be best achieved through the mobile platform. One cannot ignore the sheer numbers that the Airtel, TATA indicom & Reliance report month on month to TRAI.

The RBI on the other hand has to play the devil’s advocate & so far it has done  a very convincing act, worthy of an academy nomination 🙂 RBI issued its guidelines on August 14th 2009 allowing “other persons” to issue mobile based semi-closed system based pre-paid instruments:

The mobile phone based semi-closed payment instruments issued by other persons shall also comply with the following conditions:-
i) The maximum value of such instruments shall not exceed Rs 5000/-.
ii) The purchase/reloading of these instruments against the value of airtime/talktime shall not be permitted.
iii) This facility shall be enabled only to facilitate purchase of goods and services. Person-to-person transfer of value shall not be permitted.

The mobile phone based semi-closed payment instruments issued by other persons shall also comply with the following conditions:-

i) The maximum value of such instruments shall not exceed Rs 5000/-.

ii) The purchase/reloading of these instruments against the value of airtime/talktime shall not be permitted.

iii) This facility shall be enabled only to facilitate purchase of goods and services. Person-to-person transfer of value shall not be permitted.

Most of us were tempted to assume that the next gradual step would be complete mobile wallets- something that gives a really exciting opportunity to Telecom operators to move into the Financial domain. But just last week RBI came out with its clear instructions that mwallets is an option which it is NOT comfortable with- more from a KYC & regulatory perspective.

Will be interesting to see how this payments space pans out. From what I hear, TATA Indicom is already doing semi-closed pilots with the Rs 5000/- limit by being the merchant on both ends of transactions i.e. the TATA Indicom user walks into a kiosk – pays Rs 5000/- cash & gets his virtual prepaid loaded with that same amount (no news on the transaction or other fees). The same can then be redeemed for transactions where TATA Indicom would play the merchant role again (e.g. a shopkeeper with whom they have a tie-up)

New challenges in retail banking

I was having a conversation on CIBIL and how it has changed the lending process at most institutions in India when someone asked me this – ” A large segment of the population has become CIBIL -ve due to various reasons incl the slowdown. Will these guys ever get credit in future once the economy revives?”

The question is interesting coz when the banks want to grow their loan books again, they would have to become less credit-risk averse or increase their reach.

a)Assuming that the distribution cannot ramp up fast enough (due to branch license issues etc)it would mean more aggression in looking at borderline cases (in terms of credit profile). Banks would have to find innovative ways to lower the credit cut off. Am told its already started happening — reduction in the CIBIL cut-off for cards sourcing and some are looking at a lower CIBIL score (if the track history on own products is fine).

But the risk attached to this approach is pretty obvious. You are looking down another cycle soon with probably a bigger exposure this time.

b)what will be more exciting is how banks other lending institutions innovate on their distribution channels. Now we all know that the fast ramp up in loan books happened thru the DSA channel- which amongst other things was costlier but easy scaleable. The cost element meant that this channel was suited for only cases with significant ticket size, so that the DSA covered his costs and made exciting enough profits.

As I look at it, the next wave of credit growth will come from channel innovation– Looking at identifying, building and scaling channels which will make sourcing profitable- even for smaller ticket sizes.

Once this happens, the whole dynamics of lending side profitability will change.
Coz account management (of already sourced customers) is mostly automated and hence costs do not vary with ticket size – infact the more accounts the cheaper it is to manage them due to cost amortizaton. Its sourcing which has significant variable costs and needs to be efficient to handle not only small tickets but find CIBIL OK profiles upfront.

Agree? or you think it would be back to DSA days with larger marketing spends across channels?

Will TATA’s Nano command a premium

The much hyped release of Nano was a welcome change in these recession hit times. For once both the consumers and the manufacturers were speaking in highly positive tones.

It prompted a strange discussion at my house. My dad feels the euphoria around Nano is so much that its booking delivery process would command a premium. Something which has largely been unheard since Maruti days.

He tells me that the kind of excitement is similar to when Maruti had entered the Indian market – once a domain of only Fiat Ambassador. A friend also tells me that they had booked two Maruti cars in those days and sold the 2nd one at a almost 100% premium. Phew!


My dad insists that in this age of communication, the dream of NANO has already been sold to millions and not just in metros but in smaller towns also. Point taken. So, he says, this means that the # of people who would book will far exceed the manufacturing capacity (atleast in the first few months) and this would lead to a substantial waiting period- the trigger for market assigning a premium on Nano.

I had my doubts given the economic slowdown and lack of credit etc etc. But yday I went to drop some one at the station and during the time it took me to get my car out from the messy parking lot I could hear a group of auto-drivers talking excitedly about how they would use the Nano as their “taxi”- something I thought as a distant reality.

I have started to believe that Nano might end up commanding a premium in the market. But I am more interested to know what u think

Organic farming – tough road ahead

I went on a trip to Sikkim, with a pal who works for organic farming certification in that state. And while I was doing my sightseeing, managed to enquire a bit about how organic farming is structured and marketed in the country.

Quite an interesting case study it is.

Organic farming

Organic farming involves complete dependency on natural products during the agricultural cycle, which means organic seeds, no fertilisers, no pesticides, no weedicides- all these chemicals replaced by organic/natural stuff. It is claimed that organic farming restores the “natural” composition of the soil and keeps it productive for a sustained period- unlike fertilizers which will give higher productivity in the short term but spoil the soil so that eventually it would be unfit for agriculture.

While I have no doubts on the benefits of organic farming (better health, soil conservation etc) I developed some really serious doubts about its adoption in a country like ours. Here’s why:

– The financial motivation to the farmer is not very strong. This is primarily because the end consumer demand for organic products is low, which means there is not a big enough market for the farmers to go to where they might get a handsome premium.

–  Organic farming is a slow process as in takes almost 2 years for the soil to come back to its same productive levels that you would have seen with moderate use of chemicals and its only in the 3/4th year that you see substantial incremental benefits of refraining from using chemicals. Most Indian farmers would not have enough security to afford a cut in production/revenues for 2-3 years. And I guess thats why some of the govt entities are trying out ways to subsidise this.

– The true  local effects of organic farming can be seen only if its a community level initiative. One of the ways Organic farming is “sold” to farmers is by telling them that the chemicals are not only spoiling the soil but also contaminating the ground water that your children and family consume. Now even if I have some financial security to take in a cut in production- how will the ground water be un polluted if the farmer next door doesnt adopt Organic farming techniques. So i guess in a way its like starting a revolution- creating an awareness in villages so that people start using it simulatenously.

–  Complex implementation process. Now comes the tricky adoption bit. It seems for your farm’s produce to sell under organic umbrella, you need a certification. Sounds acceptable. But in order to get the certification one needs to practise it for 6 years and maintain a log-book which carries all the relevant details of what has been added to the farm on which date in what quantities. This overhead means that the farms cannot be too widespread or remote. Logic is thus- the co. which will deploy a dedicated resource to maintain this field book would be able to recover costs only if the resource is shared between enough number of plots. So organic farming will flourish only in big enough villages till some tech smarts are implemented.

–  Access to markets . From what I understand perishables are most in demand when it comes to organic produce BUT given the complex logistics its tough to guarantee profitability unless the farm is close to the market itself. In most cases where it isnt, its the staple crops like pulses, grains etc that are cultivated the organic way- where in the inherent demand is not too high..

The way I would have attacked this is:

–  Extensive lobbying  with state governments for subsidies where demand for organic products already exists. I would assume metros and centres with cosmopolitan lifestyles.

– Start  doing branded stuff/span in small niche areas and use technology in demand estimation. That way atleast the spoilage losses would be minimised and one would be able to mature the logistics as the demand picks up.

– Since awareness for organic products its benefits is low- create a forum of stakeholders who collectively manage PR around this. Look at high profile evangelists who can easily make this an in thing 🙂

– Make  certification move towards self-assesment/span with regular checks. This would bring the cost of certification down.

–  Build data models/span which can plug in local factors to come up with estimates of harvest for each plot under organic farming- aggregate the same and find buyers well before the stock moves out of the fields.

Global slowdown- right time for cherrypicking?

Its known to the kid next door (a keen stamp collector) that its a good deal if a stamp which was worth five triangular stamps (in the network) is now available for just 2 ! In business language, its called “timing your buy” when the price is lower than the target or true value.

So why is it that the cash rich investors (retail corporate likewise) are not doing this when corporate valuations have been eroded to half their values.Surely there must be cash rich investors, who would have been scanning companies before the global meltdown. Why are they not picking up these targets with potential to deliver, at “dirt-cheap-rates”?I usually get two answers:

a) That the usual investors are no longer playing in the market as they have cash commitments to fulfill- meaning the BIG multinational investors who have seen the worst of this crash

b.Sentiment- And I have a tough time understanding this (as I have never been an active investor). My friend tells me that most investors are scared with the bloodbath and think its safe to assume that the bourse fall will continue for some more time to come.

But look at it from my point of view- if i was sitting on cash had been tracking the market really well before the crash- i would have a definite point of view about some stocks. I would have definitely invested in some companies for a medium term investment. And looks like at least Malvinder Singh is doing just that with his financial services venture- Religare.

If i was someone holding money in US $ i would have been happier, coz with the depreciated rupee and eroded valuations my Indian target co. – would have cost me almost zilch. So I wonder what the few cash rich investors are thinking/doing? Is it that they:

– Always relied on the now failed investment banks to handle their portfolios- and are just not too sure right now.

– Want to have a huge war chest to bail themselves out- if the recession hits them also

– Have their targets in sight and are hoping (backed with some insights) that the valuations of the targets would fall further.

What do u think?

In the business of breaking (the) news…

I dont spend too much time infront of the idiot box, but I have been a witness to the news blitzkrieg that Indian consumers are forced to live with. With so many news channels, i usually end up pressing the “Up channel” button almost 20 times before I get out of the “breaking news” zone.

I have never ceased to admire these guys coz I guess it takes a lot of practise to present most of these Breaking News with a straight face. Tell me how can you not laugh when you are on Live TV telling the world that there are aliens living under the sea- when you are talking about the Bermuda Triangle. The other commendable feature they have is “creativity”. One would expect, creativity to limited to departments like editing, presentation etc while referring to News- but I guess these truly creative folks have taken it to the “content” part of news- the only holy grail of this business.

They are no longer in the Business of “”breaking news”, they are in the Business of “Breaking the news”. All this used to be funny and I also indulged in the humor. But now the desperation of these channels to get new content has started affecting the common man.

The TRPs of most of the Breaking News channels has only been rising and its hard to explain why this is happening.Maybe the answer lies in the fact that most of the viewers are ill-informed and highly gullible. Why else would someone believe that the world was coming to an end with the CERN experiment and commit suicide in India?The IB ministry needs to take this outright ridiculing of journalism, little more seriously….

Why Google launched Chrome ?

Google launched its very own Internet Browser- Chrome- and die hard fans apart, early experimenters also say- that its cool !

Google Chrome BrowserWhile the industry pundits discuss the features and the strategy behind launching of Chrome- i came up with my very own answer- as to why Google launched Chrome?

And the answer lies in the above image….It was done coz the guys in the Google analytics team wanted to see their name in the reports …. 🙂

I can understand, if you disagree with me…

Floods in Bihar- India’s lack of focus towards Infrastructure

The flooding of Kosi has brought to fore the apparent lack of focus government after government has had towards Infrastructure development. Lemme explain why.

Floods in BiharThe Kosi it seems has been changing course every year that it flows above the danger mark- apparently due to high level of silt. The only water flow management in its entire course is a barrage in Nepal- which has become inaccessible to Indian Engineers.

I ask these simple Questions:

– How could we the fastest grpwing economy rely on a dam in Nepal to control floods that affect 20 Lakh people regularly. This year the scale is higher, but fact remains that Kosi has been flooding every year. If our people are affected by floods we need an instrument developed managed by us, to control the nature’s fury.

– The changing political conditions of Nepal, should have provided us enough more cues that we can no more continue to assesrt ourselves on our Himalayan neighbour.

– How can there be floods drought in the same district? As reported in Breaking News – about this distrcit in Maharastra.I spoke to a few villagers in western UP- they said “Saare nahar to angrezon ne banwaye the… unmein se bhi jaydatar band ho gaye hein”- Most of the canals were built by the Britishers and most of those also are now dysfunctional. Even if I discount what they are saying by 60%, the fact remains that in the eyes of the common man, the infrastructure growth has not been in line with expectations.

Look at the few achievements we are all proud of

– Golden Quadrilateral has added thousands of Kms of highways and it has surely reduced surface transportation delays BUT various mini projects are marred with controvesy over corruption and delays.

– Delhi Metro is now the preferred mode for many of us Dilliwallas BUT the traffic congestion has only increased in the Capital.

– We bagged the Venue for Common Wealth Games some want us to bid for Olympics also. But the reality is that we are no where close to providing the visitors with a facility which is par-excellence.I dont know why we have failed so miserably in Infrastructure, but the time to get our act together is now. Coz good infrastructure is the foundation for a thriving economy.