Posted on

How limited access to paid tools as a startup made me realize the need for a community

When I started out as an entrepreneur the journey was fueled by big dreams that were perhaps a bit too daring. It wasn’t smooth sailing and early days were tough. Life in a startup is dotted with challenges that can be overcome only by sacrifice.

Bootstrapping required a lot of restraint – both professionally and personally. Leaving a good-paying job at Zoho and trying to build a company meant cutting a lot of corners. We had to forgo luxuries, back out from family & vacation time, self-inflict pay cuts and moved into an apartment-turned office.  

However, the biggest gripe was lack of access to the tools and services we loved. From basic necessities like Mail or CRM solution to universally used tools like Photoshop and Invision seem like a luxury when bootstrapping. As the saying goes ‘Nothing good comes for free’. We were pushed to try and find open-source alternatives. But they were nothing but painful compromises! It hurt us a lot – we couldn’t get things done in the same timescale as we could’ve.

A lot of products, tools and services do have offers but there were none tailor-made for the struggling startups. We had to make do with the free stuff and somehow managed to get our product out! Our product attracted funding and things slowly started to change and got to a better place. However, we still remember the struggles of our startup life!

Here is a small tribute to startups and the struggles we face: 

Somewhere amidst the mad rush of shifting to our new office and redesigning our logo, I realized that it’s time I gave back to the startup community. The easiest option was to provide a free trial extension for startups but it rather made sense to initiate a change!

Every solution, product or service a startup requires is most likely what another startup is working on and if we are able to set up a mutual sharing, we can surge ahead as a single startup ecosystem!

This is the idea behind #RespectStartups, powered by Zarget, for the startup community. It is an opportunity for every startup, no matter how small, to make an impact and reach out in a big way. I personally urge every entrepreneur to look at this as an opportune moment to give back to the community.

Share your offers and claim the ones you need at www.respectstartups.com

Voice your opinions about the movement with #RespectStartups on social media.

Let’s say “No!” to startup sacrifices! Let’s march ahead as a startup ecosystem…

Guest Post by Arvind Parthiban, Co-founder & CEO of Zarget. He loves travelling, is a foodie and is crazy about football, a Chelsea fanatic. With 12 years of experience in the SaaS industry, now into startup life.

Posted on

I am the Product Manager

Of the various hats I have worn all these years – Founder, Sales guy, Deployment Specialist, Level 1 and Level 2 Support, DevOps, Coder, Cheque depositor – I have come to realize I was a Product Manager all along – right from the get go.

Putting a label on what you do is extremely important. It helps you define the job you do, appreciate it, read more on it and helps you improve on that particular skill.

If you are the guy/girl in charge of making the Product among the Founding Team – you are the Product Manager. Say it out aloud – “I am the Product Manager”. The fate of your entire Startup lies in your decisions.

All other designations – CEO, CTO, Director, Co-Founder all are important – for the outside world and your team-mates – but nothing is as critical as the “Product Manager” hat you are wearing now.

Strap the Product Manager Hat tight.

When I gave Sales demo – I was not trying to get a Cheque out of the customer. I was listening to their pain points, and my mind was frantically scanning to see how my Startup could alleviate those paint points. I was trying to find patterns among Customers – so my solution can solve them all. I was trying to see how much value we can give them, and price our product as a fraction of the value ( and not just features ).

When I was paying the monthly bill for AWS account – and saw it was increasing gradually, asked myself – Are such resource hogging servers really necessary – and promptly turned them off – and found better cost effective alternatives. Also when I plan a feature, I keep the cost in mind – I am not going to get sold on the hype of a technology.

When I got a customer to go live – I realised how a few small features created some of the biggest headaches and heartburns. Promptly booted them off or tweaked them.

When I had to do Marketing – do SEO, or write content for Brochrures, or create Competitor analysis – I had to analyse inwardly as well as the competition and could identify the areas we were strong and weak. I knew what areas we could pull ahead of the competition – become more stronger, and what areas we had to improve – so we cannot be beaten down with.

If you are the Product Manager of a Startup – and working 9 to 5, doing a few customer interviews, talking to the CEO/CTO/Founder, browsing competitors website/Apps, STOP – you have to do more. [ ps : Startup founders, if you have hired Product Managers – here is what they have to start doing ]

1. Accompany the Sales guys in a few demos. In fact you should constantly do this – product keeps changing, market keeps changing, competiton keeps changing.

2. Get your hands dirty and deploy a few accounts – from start to finish.

3. Write the next set of marketing material, do the next Competitor Analysis document yourself – instead of just giving inputs.

4. Do SEO, plan the adwords campaign yourself.

5. Be the DevOps and/or pay the AWS bill from your pocket and get it reimbursed – and see for yourself that one cool feature which hardly anyone uses is costing a bomb.

And for Founders of Product Startups – Say it aloud. Print and Stick this in big fonts right in front of you.

“I am the Product Manager”

Guest Post by Venkat Kandaswamy, CoFounder, ApartmentAdda

Posted on

A Framework For Building SaaS Products That Don’t Churn

When you say “reduce SaaS churn”, most people will immediately imagine tactics like drip email campaigns, great onboarding, customer marketing, gamification and automated alerts when users show signs of leaving. But this post is not about tactics. This post recognizes that users are smarter than any of the cute tricks we can come up with, and it attempts to get to the core of why there are some products that business users keep paying for, and others they discard.

A Framework For Building SaaS Products That Don’t Churn

If you’re a founder or product manager, I’ll encourage you to think deeply about this stuff, versus thinking about your next “growth hack”.

Products on which company processes are based

There are products on which organizational functions are dependent and processes are built. These are usually CRMs, Marketing Automation, HR software and Support software. The defining features are

  • they’re used by decision makers for reporting purposes and are often used to track teams’ KPIs and goals
  • they’re used to run day-to-day functions of the team and organization, for example, the process of applying for and approving employee leaves, or changing the stage of a sales opportunity
  • some people are logged in to the system during their entire working day
  • others log in once in a while to complete certain tasks
  • the system collects and retains valuable data that companies are not comfortable losing

Some observations about these products are

  • the sales cycles are usually longer than a month
  • customers will rarely buy these products without first being sure of the processes that are dependent on them
  • they need extensive API support and data integrations, because the data they collect becomes more valuable once combined with other data
  • heavy cross-functional training is required after the sale, and the product takes the blame if a customer org. doesn’t adopt and use it to the best of its capability
  • you need a lot of quality documentation so that you’re not overburdened with support tickets

An important note about products used by decision makers

When I started out at VWO a few years ago, the most important metrics were “free-trial signups” and “paid customers” (about 95% were self-service monthly subscriptions). Back then, Google Analytics (GA) was our most important source of data. We recorded free-trial signups, upgrades to a paid subscription and revenue in GA so it was what we looked at everyday.

In the past couple of years, we’ve started serving more mid-market and enterprise customers. Because of this, a few things have changed:

  • The average deal size has increased from $x00 to $x0000
  • The quality of free-trial signups matters as much as the quantity
  • A large amount of revenue comes from payments made through bank-transfers and other offline methods
  • “New MRR” is now more important than “new customers”

Because of all these changes, Google Analytics isn’t important anymore. Instead, the big decision are made after looking at reports in the CRM and our database, where all lead/deal/customer/revenue data sits. Through this shift I observed how when businesses evolve, the metrics that matter to them change, and this has a domino effect on the SaaS products that fall in and out of favor.

Now here’s another interesting anecdote: VWO has a large number of ecommerce customers. For the majority of these businesses, Google Analytics is the “source of truth”, so we simply had to build an integration with GA. In fact, we once lost a big customer because their VWO test reports didn’t agree with their GA data (completely possible and for good reasons, read this to understand why). The internal VWO champion tried to fight it out and explain the difference to management, but we lost the customer after some time.

So my point is this… it is well worth your while to build capabilities that will be used to make the important decisions, and if that’s not possible, then align your product with the primary reporting tool used by your target market.

Products that give results with minimal effort after initial setup

Some of these are:

  • Lead generation pop-ups, sidebars
  • Landing page software (specially when tied to on-going PPC campaigns or SEO keywords)
  • Retargeting software, like Perfect Audience and AdRoll
  • Exit intent pop-ups, almost always tied to lead generation
  • Personalization and behavioral targeting
  • Email automation like Vero and Intercom

While you’re building a product that keeps producing results with minimal interference, give a thought to how you can add public branding for that little bit of ‘virality’.

It’s also important to note that products tied to performance will quickly be removed when that performance isn’t enough. In this case, the product itself may be great, but it is dependent on something else working. For example, landing page software gets abandoned when the Adwords campaigns it was used for aren’t working out.

Products that monitor and provide reports and alerts on a recurring basis without needing additional effort

Few that come to mind are

  • Mention (social mention tracking, we’ve had it on for at least a couple years… rarely log in but open almost every daily email report)
  • Server Density (server monitoring)
  • SEOKeywordRanking (SEO keyword rank tracking; old school interface and not updated in a long time, but am sure its creator Will Reinhardt doesn’t need to work anymore)

While building your product, talk to users about the data they find most useful and want to look at everyday, or see what parts of your reports are accessed most often, then send that data out as daily/weekly emails. It becomes a part of users’ morning routine to check the emails and note/discuss/alert if something’s going right or wrong.

Products that enable data flow between different systems

Think Zapier, PipeMonk, Jitterbit and Informatica. Admittedly, data integration is more of an enterprise problem, but the good thing is that once put in, they’re very difficult to remove. That’s because they’re usually implemented after someone high enough has identified the need to have all the various data silos talking to each other, and that robust decisions can’t be made without a complete picture of the issue at hand.

Case study: Hubspot
  • Processes are based around the product? Yes, for marketing and sales
  • There’s someone almost always logged in? Yes, marketing
  • Managers use the product to report on performance? Yes, primarily marketing qualified leads, then customers and revenue
  • Product collects and retains valuable data that customers are not comfortable losing? Yes
  • Has components that produce results without needing on-going effort? Yes, lead-gen landing pages, website personalization, automated rule-based emails
  • Components that monitor and alert automatically? Yes, primarily alerts to sales owners about lead activity, and other alerts around social media, monthly/quarterly goals, etc.
  • Components that enable data flow between different systems? A well maintained and documented Salesforce connector, otherwise they have a platform for developers

As you can see, Hubspot is doing pretty well in minimizing churn. It seems to me that would be the case with most large, successful SaaS products. In fact, understanding the reasons why organizations keep paying for products is why large successful software are large and successful, as compared to just large.

I hope you’re able to use this post as a framework to think about what makes products stick, and apply those principles to the products you’re managing or building. Also, do you have anything else I can add to this? For some reason it seems to me the list is incomplete.

Guest Post by Siddharth Deswal, Lead Marketing at VWO.

Posted on

Volunteer Hero: Vivek Raghavan

 iSPIRT volunteers build public goods inspired by open-source Linux and Wikipedia. Our volunteers are selfless, committed and conflict-free. They are animated by a burning cause.
 
One such cause is about creating technology platforms that will help make India a Product Nation. Building a successful country-scale technology platform is hard. And doing this as an open and public platform is even more challenging. It takes talent, sweat, and toil to do this.
 
Vivek-RaghavanVivek Raghavan for instance. He stepped in as a part-time volunteer to help build Aadhaar back in late-2010. Soon he was working as a full-time volunteer. Had he known that he would be volunteering full-time even after so many years, he might not have taken the plunge! In fact, two years ago, he gave up. After all, it’s not easy to work in a government system to make things happen. But, his sense of mission sprinkled with some emotional appeal from other iSPIRT volunteers had him back in action again.
 
We have many full-time volunteers in iSPIRT who take a year or two to give back to the ecosystem. But few have done it for six years! Here is a successful entrepreneur – with two notable exits in the US – waking up every morning to make the world better for all of us. His example inspires other volunteers. He kindles the fire that keeps iSPIRT running.
 
Vivek’s uncommon ownership and determination make him an iSPIRT volunteer hero.
 
Guest post by Pramod Varma & Sanjay Jain
 
“True heroism is remarkably sober, very undramatic. It is not the urge to surpass all others at whatever cost, but the urge to serve others at whatever cost.”  – Arthur Ashe

 

Posted on

Are AI and Automation dirty words for some?

Man being replaced by machines has been a topic very well documented in our academic and social history. While, designing machines that can replicate human intelligence is ‘the dream’ for many, the idea has seen its fair share of resistance from anxious workers afraid to lose their livelihood. It would be a mistake to think that the phenomenon is only very recent. The Luddite movement, which began in Nottingham in 1811, was named after a disgruntled weaver who broke two stocking frames in a fit of rage. Destruction of machinery, as a form of protest, was carried out throughout England by groups of English textile workers and self-employed weavers. Since then, the term ‘Luddite’ has become a reference to someone opposed to industrialisation, automation, computerisation or new technologies in general.

Back to the 21st Century, Infosys’s human resources head Krishnamurthy Shankar has revealed that the company had “released” 8,000-9,000 employees in the last 12 months due to automation of lower-end jobs. The employees are not necessarily jobless and have been retrained and absorbed to carry out ‘more advanced projects’. The company also reduced its hiring in the Jan to December 2016 period to 5,700 compared to 17,000 in the first nine months of previous fiscal year. Infosys is not alone in their journey towards automation. Most Indian and global IT services companies are investing in automation of processes in their core businesses such as Application Management, Infrastructure Management and Business Process Management (BPM).

India’s IT giants are leaving no stones unturned to fill the gaps in their digital portfolio of products and services. The subjects of Internet of Things, Cloud, Artificial Intelligence and Automation figure high on each company’s organic strategy and also in their shopping list for inorganic growth (Table 1).

Table 1: Select Digital Acquisitions by Indian IT majors

Acquirer Target Value

(USD mn)

 Brief
Infosys Panaya 200 Provider of automation technology for large scale enterprise software management
Wipro Healthplan Services 460 A technology and Business Process as a Service (BPaaS) provider in the U.S. Health Insurance market
Wipro Appiro 500 A services company that helps customers create next-generation Worker and Customer Experience using the latest cloud technologies
Infosys Skava 120 A provider of digital experience solutions, including mobile commerce and in-store shopping experiences to large retail clients
Tech Mahindra The BIO Agency 52 UK-based digital transformation firm
Tech Mahindra Target Group 164 A provider of business process outsourcing and software solutions

Automation is heralding the age of Industry 4.0 which is characterised by a diminishing boundary between the cyber and physical systems. In October 2016, World Bank research announced that Automation threatens 69 % of the jobs in India, while 77% in China. Google’s AI research lab, Google Brain is working on building AI software that can build more AI software. I wouldn’t blame anyone if they started thinking about the Skynet from Terminator or the writings of James Barrat – Our Final Invention: Artificial Intelligence and the End of the Human Era.

As per research by Gartner, IT process automation (ITPA) is very underpenetrated (only 15-20%) and will move towards maturity over the next 5-10 years. Most leading vendors in the IT services space have launched an automation platform to boost delivery efficiency.

Table 2: Automation/ AI Platforms of Indian IT Players

Company Platform Offerings
Wipro Holmes An artificial-intelligence platform built on opensource computing aimed at optimising resource utilisation and reducing costs
Infosys Aikido Enables creation of intelligent robots that can resolve incident related to customer orders
TCS Ignio An Artificial intelligence-based automation platform which automates and optimizes IT processes within an organisation.
Tech Mahindra Carexa Uno Customer care, with agent virtualisation, analytics, assisted

interactions and digital channels.
HCL Technologies DryIce A digital service exchange platform enabled by ServiceNOW

Source: NASSCOM, Edelweiss

Platforms based on novel technologies will minimise the human effort required. Are the coders coding away their jobs then? Thankfully, there are learned people who believe otherwise. As per NASSCOM, the future may not be as dire. There is a distinct possibility that repetitive and labour intensive jobs such as data entry and testing may get completely automated, but there will be augmentation of cognitive jobs. New roles will emerge which will focus on training, learning and maintenance requirements of AI systems. Indian companies will also need to invest in re-training its employees or importing talent in the short term. In the long term, a joint effort with technology schools such as IITs and IISc will be needed to build a supply chain of talent. 65% of Google DeepMind’s hires were directly from academia.

The Indian IT services sector is worth approximately USD 150 billion, and it is largely export dependent. The Indian players need to enhance their digital capabilities to compete globally. Automation is a key area of this digital growth and so is the evolution of skilled workforce and their job profiles. The fear of technology destroying all the jobs is as unreasonable now as it was in the 18th century. Also, it is evident from history that technology has always led to creation of more jobs than it has destroyed.

The workforce engaged in IT services by nature is flexible and open to evolving work profiles. Workers in some other sectors may not have that option, especially at the jobs requiring less complexity. HDFC bank just announced that it has witnessed a head count reduction of 4,500 due to efficiency improvements and attritions in the last quarter alone. The Bank is planning to install up to 20 humanoids named “Íra” at its branches in the two years to assist customers. Ira has been developed by Kochi-based Asimov Robotics and the company has already received queries from airports, hospitality industry and retail chains to deploy similar humanoids. It would be a good move for all professionals in all sectors to ask themselves – “Can a Robot do my job?”, and upgrade their professional skills accordingly.

arvind-yadav

 

This is a guest post by Arvind Yadav,

Principal at Aurum Equity Partners LLP.

 

 

 

 

 

Posted on

The Product Manager’s RuleBook

The Product Manager’s RuleBook

This post is not about “tools” which will make you (integral)dx more productive. This post is about telling you rules of the Jungle called Product Management.

1-wYnDe5eOdU0UxPD0-KecOA

So you are the Product Manager, Right ?

You just graduated out of B-School (or even worse completed your bachelors degree) and you have been given the product manager tag in the company you decided to work in. Welcome to the Jungle. Unless you have a really f**ed up CEO or a clueless CTO, you are in for a hell of a ride. There are a dozen of definitions of a Product Manager but, here is the one that sticks –

You are the mini ‘CEO’

Welcome to the Jungle. People don’t follow rules here. Especially when it comes to product. Here are 49 rules that I have curated, over the course of 7 years, across Product, Operations and Sales.

Rules

As a Product Manager, you will be exposed to attention, and a lot of it. Mostly unwanted and discomforting. Don’t be surprised if your peers are jealous of your role. You will get pulled into every meeting. You will looked upto/at for every release. For every feature. For almost every client meeting/call. But that is least of your worries. Unless you have been a PM before, your biggest challenge would be not having a benchmark. You have no way to draw the line. Follow these rules and you will stumble less- I am personally still trying to master the art.

  1. Get sold to the product. Believe in the product yourself. If you don’t, try again. If you still can’t make your self believe it, drop it and find something else.
  2. You will get sucked up in your work schedule. Be ready for it.
  3. Don’t get sucked up every time. At times, drop the bomb on Sales and Marketing. Reality check can never hurt
  4. Learn the art of saying no. At least in your head. Practice it over a period of time with/on your CEO, CTO, Sales and Marketing (in that order)
  5. Develop a healthy relationship with your developers, QA and designers.
  6. Avoid making value judgements. What are value judgements ? The statement that you say aloud in your head without ANY authority or reliable data to back it. You always know when you are speaking from the gut. (You know who else spoke from the gut ? George W Bush)
  7. Trust your developers. Back them up. Stand for them. Pat their back and give them credit.
  8. Bet on your Sales and Marketing. Support them. Be their favourite cheer leader. Always
  9. Keep some buffer from Day 0 itself on your delivery schedule. You are surrounded by uncertainties. Every client wanted “it” yesterday and no dev will have it ready by tomorrow.
  10. Split roles between you and your CTO. Decide, who will plan and who will drive the execution. Don’t fuck this one up. Don’t take planning, because you most likely don’t understand your dev’s code.
  11. Between your CEO, CMO and you, figure out who will OBSESS about “organic growth” (SEO). You don’t have bandwidth, don’t ever opt-in for this one.
  12. Coin and propagate your own product terminology/nomenclature, before sales “oversimplifies” it or dev “rocket-sciences” it. This is a critical to build and manage perception.
  13. Write emails with keywords that you can search. Chat with keywords that you can recall and search again. You will spend significant time in forwarding old emails to dev, sales, marketing, CEO. Skip the CTO. Your CTO barely opens your email.
  14. Park your personal choices of colors, fonts and design at home. Product is being built for customer’s delight, not yours (or your investors)
  15. Like a rhetoric, keep telling point #14 to your CEO.
  16. Get a Tee that says “Good is not fast and fast is not cheap.” Boring, cliche but still right.
  17. Pulling an all nighter for product release is cool and fun, but not if you are releasing thrice a week.
  18. Remember that you don’t understand quality assurance or testing. Like everything else, QA is a skill. Unless you have learnt it, avoid claiming it.
  19. If you are building a B2B product, you definitely need a QA. If you are building a B2C product, hell as sure you need more than 1 QA.
  20. Be friends with QA and Designer. Make them feel special. You won’t exist without them.
  21. Assumption is the mother of all fuck-ups. Under communication is an assumption. Hence, under communication is a fuck up. Over communicate and play safe.
  22. Build your own narrative as an objective and data driven person. Understand and question the objective before jumping into anything (including that market research slide for the investor deck)
  23. Document everything that is made and not made. At least try.
  24. Begin you conversations with developers and designers with context. They will feel involved, aware and productive. Context helps. Always.
  25. In the same breathe, demand context from Sales, Marketing and CEO. You will be able to address their requirement faster.
  26. You will always be able to sell better than your entire sales team combined. But again, don’t do it.
  27. Keep your Company Logo Product Logo, favicon, Product Description (1 liner, 5 lines and 1 pager) always ready. Anyone can ask for this. Anytime.
  28. Plan ahead for a week. Do so on a Saturday/Friday Evening. Do it on a Sunday night if you have to but NEVER on a Monday morning.
  29. CEO’s often talk sense. Listen to them.
  30. Not everything that your CEO said was actionable. Don’t act on everything that your CEO says. They most likely didn’t expect action themselves.
  31. Build your own opinion about the industry, domain, and the product. Attend conferences/events focused on your industry.
  32. CTO’s can/will have walls. Be inquisitive ( read pushy)
  33. You need to be aligned with your CEO, Sales, Marketing and CTO. Don’t forget your actual job (Mini CEO/Get-Shit-Done)
  34. There is nothing better than pen paper when it comes to maintaining lists. There is nothing better than pen paper when it comes to wire-framing.
  35. Don’t boil the ocean with every release planning. Every dog has his(/her) day. You will have yours on the day of bug bashing.
  36. Avoid falling sick. Exercise daily. Meditate daily. And buy a Macbook air
  37. Nothing will go wrong if you are late by two minutes late in sending that presentation/ releasing your product update. Be right and late rather than being sorry and on time. If your Sales team can’t hold for a client for 2 mins, imagine..Again, plan better next time and avoid being sorry.
  38. Next time, a Sales guy says that “it was you and your product” that costed him/her a sale. Gulp down your ego. Hear them out. They are ranting. The next day, give it back to them. Patiently.
  39. Your role needs you to seek feedback. Proactively. Ideally once a month, from all your peers. Similarly, your feedback for your peers is critical.
  40. Sales folks are hired for selling. They most likely, can’t make presentations. Live with this fact. Make a template for them. Engage your sales team by changing the template’s colours every 10th week.
  41. There is never a bad time for having chai/coffee. Though Obama doesn’t drink coffee. But again, you are not Obama.
  42. Content writing is NOT your forte. Nevertheless, write the copy for your website or someone else will write something that you never made/promised/planned. Rant about it, if you ever hire a content writer
  43. Create your own reports, dashboards and product performance benchmarks. Do this before the developers starts developing.
  44. Start your day with numbers of the previous day.
  45. Learn to let go, of things you like. Your favourite features, CEO’s favorite feature, colors, fonts, processes and evening dates.
  46. In hindsight, you will always be right. Move on.
  47. You job needs you to be a swinging pendulum. Hah. Self-Pity mode is awesome. But, don’t let it stretch for more than few hours
  48. Last but not the least, remember to laugh about that how, once upon a time, everyone including your head of sales, marketing lead, CEO, CTO and dev ops were clueless about the house of cards that “you” got “built”
  49. In the end, make your own list. And pass it on.

Author – Vivek Khandelwal

Founder of Datability Solutions, a technology startup building iZooto, a web push notification platform for user engagement and retention. 

 

Posted on

Union Budget 2017 : How’s it Set to Impact These #5 Key Domains in India

Union-Budget-2017---How’s-it-Set-to-Impact-These-#5-Key-Domains-in-India

Alright, before I take the plunge into revealing what I expect from the impending budget, let’s take a quick glance at numbers on how the Government has fared since its inception:

  • Modi’s flagship Make in India initiative launched to create employment & self-employment saw huge traction with India’s gross FDI flow jumping by 27% a.k.a $45 billion in 2015-16, an all-time high.
  • Jan Dhan Yojana witnessed 11.5 crore Indians opening bank accounts, that’s getting 99.74% households bankable.
  • Under the Swachch Bharat initiative, a total of 31.83 lakh toilets have been built between April 2014 and January 2015, 25.4% of the target. World bank has also invested $1 Bn in PM’s pet project.
    In Feb 2016 alone, under the Skill India initiative, 3,222 training centres were opened, more than 55 lakh people trained and 50% placed.
  • Nasscom had launched the “10,000 Startups programme” in 2013 in which 700 tech-driven startups were set up. After the launch of the Startup India, Stand up India initiative by 2015, the number had increased by 70% to around 1200. It is expected, there will be a 75% increase in the number to 2100 by 2020.

All said and done, looks like NDA government has fared decently in their term thus far and as the run up to the elections in 2019 rapidly advances, this year’s budget is going to be epic!

For starters this is going to be the first time that a Union Budget will be passed in February. The reason is concrete! When a budget is declared in March, it gets passed by both the houses only by mid-May thus delaying the entire process. By having a budget in Feb, the govt is making sure that it’s passed and ready to be implemented before the start of the new financial calendar.

Secondly, thanks to the demonetization move, digital commerce has been given a massive push. Furthermore, a year after PM Modi launched the visionary ‘Startup India Campaign’, there’s a lot of heat building up in the startup community which is expecting a series of initiatives that will be in their favor. 2017 is surely poised to be an exciting year.

1. For Startups

Widening of tax-free regime from the current 3 years to 5 years along with easier procedural clearances. Considering startups take a while to register profits, this move will promote entrepreneurship and innovation.
The government may also make regulations on FDI and ease institutional investment while also reducing governmental charges and taxes on it. In the long run, this will help in solving the capital need for startups since, majority of funding for startups come from venture capital funds that rely heavily on foreign investments.
With the Start-up initiative at the fore, we can see a new set of concessions on employee stock options, unlisted securities and convertible instruments.

2. Womenpreneurs: Easy access to funds

When it comes to women entrepreneurs, though, the government has been supportive in promoting women entrepreneurship, what most of us need is an easy access to funds. Additionally, since the implementation of GST will be on table for this budget, the government will come up with the new rationalized tax structure. We, women entrepreneurs, should definitely be a part of consideration in corporate taxes and loans.

3. Definitive SOPs, tax rebates, indirect taxes

The sole goal of demonetization was to put India on the path towards a cashless economy. Keeping this in mind, the Budget should include definitive SOPs and tax rebates to encourage and boost e-payments. Moreover, to achieve the goal of financial inclusion, the government should also rationalize indirect taxes and charges levied with respect to digital payment transactions and further incentivize companies operating within this space. To adapt to the need of time, government should also rationalize income tax provisions including provisions related to employee tax benefits such that payments/documents in the digital medium are treated at par with physical instruments.

4. Corporate taxes

I’m even looking at the reduction of corporate tax rate from 35 to 25% percent for startups and companies in the digital payments ecosystem. Transactions worth trillions are done in India yearly. Of these, hardly 10% are on digital platforms. The government must take more concrete steps to make digital payments ubiquitous. This budget should announce measures to upgrade digital infrastructure across the country. Steps should be taken to promote digital literacy and connect cities, towns and villages with high-speed internet networks.

5. Digital payment

While, the government has pushed for digitalization, post the demonetization move, I believe a lot still needs to be done on promoting digital payments. For instance, the government needs to reconcile and even reduce all indirect taxes on digital payments to nil. The government needs to work on a concerted effort to cut the payment gateway and bank charges on online transactions. Only then would people be truly incentivized to pay online.

The sector wants more tax concessions for customers and shopkeepers who go digital. The incentives can come in the form of income tax, service tax etc. What the budget can offer is extend the nuggets of sops on e-payments through UPI, add a dash of income tax rebates on e-payments and facilitate retailer-rebates on grocery bills, LPG payments, bus or metro card recharges and so on. The government has already introduced waiver of service tax on debit and credit card transactions of up to Rs 2,000.

In conclusion…

2016 had witnessed several markdowns in India’s ecosystem and I’m definitely looking forward to the budget and what it has in store.

Guest Post by Dr. Som Singh, Entrepreneur, Investor and founder of Unspun Consulting. This post was written for the Entrepreneur India magazine. 

Posted on

Why Your OnPage Chat Is Not Working? [How To Fix It]

Why Your OnPage Chat Is Not Working_ [How To Fix It]

A Step by Step guide on how product marketers should evaluate on page chat tools, implement and use them to start generating leads for sales.

vk1

 

 

We had rolled out the first version of our product in March. It was only in April when we saw a spike in customers signing up and we started getting lot of support enquiries. The reason for the latter was obvious – the product was broken. While we nearly choked on the support requests, we ended up creating a Ver 2 of the product. While the queries continued to flow in, the questions were different. The learning was simple – constant customer interaction and hand holding can prove to be extremely critical, especially when you are driving product adoption. The feedback that flows in, is worth its weight in gold. But again, not every beta user is an email fan and unless you are speaking to everyone ( less likely ), you will potentially be missing out on lot of feedback. It was at this stage, we decided to extend onpage chat as a support channel. The idea was simple – capture feedback whenever you can. And hence started our hunt for drilling down to the ultimate chat tool. We had a very clear requirement – we wanted to talk to people who are inside our product. Nothing more. Nothing less. We played with as many as 7 tools ( we rejected lot many ) and finally drilled down to Drift for onpage chat. I will talk about the choice in detail but before that here is how we went around with our primary research.

What’s Your Requirement ?

We tried a ticketing solution and we failed at using it. Ticketing solutions are meant for dedicated support teams. Back in March, we were 9 people. 3 of us were doing (trying to do) everything. Our requirement was very simple – we were not looking for a blown ticketing solution. At least not yet. But we also identified what we were looking for in the ideal solution –

  1. Query First. Details Later – Most of the messaging platforms, first ask users to fill in a form. These forms can have anything between 1-4 fields. That’s a catchy catch. Situations which trigger support are often desperate. Yes, desperate times call for desperate measures and the user will end up providing all details to log in a support request. The experience is clumsy and far from being ideal. The ideal experience should be the other way round, allowing users to first push their question / query and then asking them for contact details.
  2. Design Centric / Clean UI – Nothing much to say here. The design must encourage user to chat / talk.
  3. Mobile First- The day your product adoption goes beyond 3 times zones, your luxury of operating as per your own time zone goes away. Expect customers to send you emails / chats at hours which would be unearthly for you. You will realise the need to have the ability to handle these chat requests right from a mobile app. Expect your support staff to be answering queries at 2AM, on lunch desk or while sipping chai.

What Options Do We Have – “The List”

First things first – Find the list. Best thing is to go to G2Crowd or GetApp and start from top to bottom. This will save a lot of time. Our first website was built on WordPress, so the WordPress plugin could also be a great place to start your primary research. Not that it’s critical to have a plugin but again it’s a handy. Here are some other places to start your hunt

  • G2Crowd: Live Chat Reviews / GetApp Live Chat Reviews– This can be overwhelming
  • WordPress Plugin – Not a great list
  • Google for – Live Chat / OnPage Chat tools / Chat Based Support Tools. Scan through the first 3 pages on Google.
  • Product Hunt is a great place to search for the newer tools – This can be great because you get on to the Beta list and have access to early bird pricing. Pricing which typically changes after 4-8 weeks ( depending upon the product’s release cycle et al )

“The Free List” – Getting these out of the way

Elimination is extremely helpful, especially when you are hunting for a software and have a couple of dozen options to choose from. There are a dozen free live website chat tools out there. I have always believed that there are no free lunches. These tools come at a cost – user data, limiting experience, weird packaging or dev involvement. I am not saying that these tools are bad. For a business up to a certain scale, free might work. For most, it does not. If you are looking at messaging/chat seriously (Read Here On Why You Should), throw this list out of the window.

Experiencing the Experience

For obvious reasons, all these tools, without fail use their own product for onpage live chat. While experiencing the onpage chat support and talking to sales reps on chat, we realised some key points that influenced our decision.

Live Means “Real Time”. Nothing Else Is Acceptable

 

Onpage ChatUnlike Yahoo chat rooms where users had a lifetime to respond, in case of an onpage chat, the expected response time is seconds. If you are a B2B SaaS product, your average bounce rate ranges between 50% – 70%. Top this up with the fact that the average attention span of a human is less than that of a Goldfish. If your response time exceeds 30-45 seconds, the user has most likely moved on from the page. You have lost a potential lead and valuable feedback. You have to be on your toes to respond to these incoming chats within seconds. This is the real game changer. When you attend a visitor on chat within seconds, you have already won of half of your battle. The rest half is won, when you address their query. Yes, you can’t be available 24*7 but again that’s the idea. You can put together some great copy telling them how you are busy fighting aliens in a parallel universe and are offline but that’s a second option. And you should treat it like that.

Mobile Interface Is Super Critical

Onpage Chat

Because the conversation with the end visitor must be in real time, having a mobile interface for your customer support team / agents is critical. You are strapped out of resources and money to have dedicated agents manning the chat window. It is because of this reason, your Sales / Marketing / Content team should have the ability to reply to these incoming chats – right from their mobile device. This allows them to respond swiftly when you cannot. Imagine being on a client call / heading back home late night / being in the elevator and still converting visitors into paying leads. Most of the tools do offer a dedicated App ( both for iOS and Android) for agents.

Chatting But Only At The Right Time

If you could build an offline store for your product, would you want your sales reps nagging your visitors the minute they entered the store ? If the answer is no, identify simple metrics on when / where / on doing what – you want to prompt your users. These could be basic triggers such as –

  •   Amount of the page scrolled
  •   Time spent on the page
  •   Did a specific action / event on the page

These proxy signals will help you in filtering the spam. Gauging the user’s intent basis some proxies is extremely important – especially when your sales reps will be investing time here.

Getting The Messaging Right

Onpage Chat

More than often, most of the onpage chat prompts that popped up on the website, irrespective of the page had the same messaging. One size fits all approach really doesn’t work. This messaging can be far more personalised basis the history of user or your knowledge about the user – again, something that needs to be done at a later date. Not Day 0. If you were to build an offline store for your product with every page of the website as a full blown section in the store and you had the luxury of having dedicated reps manning each station, how would you like these reps to greet the visitors ? Can this be quirky – Why not. No harm in experimenting.

Smart Conversations with Context

Onpage Chat

In the Utopian world, I would want to know everything about the visitor who I am talking with. Where they are from, which company do they work in, what is their function, what is their objective and so on. Conversations with context are far better than just plain hello. Pick up a tool that allows you to know bit more about the customer. You don’t need to know which other website they are looking at but simpler things like which city they are from – can help your sales reps in break the ice. This is referred to as data enrichment / knowing more about your customer. This can literally take you down the rabbit hole but remember, you don’t have to boil the ocean by knowing everything about the visitor. After all, you do have the option of talking. 🙂

Alright. What Are Your Drilled Down Options ?

Here is what our final list looked like before you apply filters of cost, features, support, API’s, customization et al.

Zeroing In

As a young startup, we follow a simple framework while evaluating third party tools  –

  1. Time vs Value
  2. Effort vs Value
  3. Cost vs Value

The semantics of an early stage startup require the software value to follow the Brontosaurus Curve.Onpage chat

  • Stage 1-  In the initial stage, Founders want to see value without investing too many resources. Stage can be defined as Trial period / Trial period + another month. Once the value is established in the product and support has been evaluated, you are fundamentally good to go.
  • Stage 2 -Post this, the team would put the tool on an auto pilot mode, moving to the next task. Waiting for developer bandwidth to get allocated.
  • Stage 3 -Once developer bandwidth, the next level of value is unlocked. This typically involves personalisation, integration with CRM et al.

Good to have’s at this stage are pre-built integration with CRM, 1 Click Installation ( like a WordPress plugin / Zapier based integration et al )

It is for this reason, we went ahead with Drift. Drift is not a live chat software – it is a customer support and sales tool. Drift’s slack integration is what makes it indispensable for our customer support and sales team. It comes in with a pre-built integration with Hubspot – helping us push and pull data fluently. The fact that it is priced optimally – only helped us pick up the paid version immediately.  Today, 10% of our current leads / signups are because of conversations that our website visitors have with our sales and support team. This number is improving on a daily basis and we are excited about scaling up this channel. Here are some of the handy metrics to be tracked are simple –

  • Open Rates
  • Click Through Rates
  • New Subscribers and
  • New Leads

We @iZooto work hard every week to ensure that we beat our past week stats for all the 4 pointers. There really are no benchmarks besides whatever it is that you have achieved so far. The focus area is simple – to outperform the numbers of last week. Tools in hand – limited dev bandwidth. Access to creative resources for copy and design, followed by sheer execution and constant iteration.

 

Author – Vivek Khandelwal

Founder of Datability Solutions, a technology startup building iZooto, a web push notification platform for user engagement and retention. 

 

 

Posted on

What the U.S. can learn from India’s move toward a cashless society

Looking from Silicon Valley upon the progress that India has made in building a digital infrastructure, I am in awe.  The U.S. tech industry fancies itself as the global leader in innovation, yet India has leapt far ahead of it.  Silicon Valley’s tech investors hype complex technologies such as Bitcoin and blockchain.  But India, with simple and practical innovations and massive grunt work, has built a digital infrastructure that will soon process billions more transactions than these do.

India is about to skip two generations of financial technologies and build something as monumental as China’s Great Wall and America’s interstate highways.

Though few people in the West know of Aadhar, it has been the largest and most successful I.T. project in the world.  There was widespread skepticism that a billion people could be provided with a verifiable digital identity, yet it has occurred, in a short six years.  Hundreds of millions of people who were doomed to live in the shadows of the informal economy can now participate as equals in the global economy.  Thanks to Jan Dhan Yojana, they also have bank accounts; these already haveRs. 69000 crores in deposits.

The reason investors are pouring billions of dollars into technologies such as Bitcoin is that they provide a secure way of linking a person to and recording a transaction.  But Bitcoin requires massive, wasteful, computing resources to do what is called mining: transactions’ mathematical verification.  And this complex computing infrastructure needs constantly improvement as it hits transaction limits.

The simple design of India’s digital payments infrastructure, Unified Payments Interface (UPI), allows banks to transfer money directly to each other based on an Aadhar number or mobile-phone number plus pin.  Yes, this doesn’t have the anonymity of Bitcoin, but I would argue that anonymity is mainly for money laundering and tax evasion—which need to be eliminated.  There is almost no overhead in UPI, and transactions happen within seconds rather than the 10 minutes that Bitcoin takes.

In the U.S., we pay an indirect tax of 2–3% on consumer transactions because of the use of credit cards.  Companies such as Visa, Mastercard, and American Express don’t even manage the money or provide banking services; all they do is to act as an intermediary between banks.  The merchant has the responsibility of verifying the identity of a customer.  With UPI, India doesn’t need credit cards or middlemen, it can build the next generation of finance.

The instant and non-repudiable proof of identity that Aadhaar’s know your customer technology, e-KYC, provides, gives India a big advantage. Most people in the U.S. have drivers licenses and social security numbers. But these are not verifiable with biometrics or mobile numbers, so complex verification technologies need to be built into every financial system.  Indian entrepreneurs building applications don’t need to worry about all this.

Going beyond money, India Stack provides a digital locker through which to store and share personal data such as addresses, medical records, and employment records.  With this, the government is providing a public service that is the digital equivalent of roads and electricity.  I don’t know of any other country that has anything comparable; India will soon have the digital equivalent of super-highways.

There are all sorts of benefits.  For example, the opening of a mobile-phone account is a lengthy process everywhere, because telecom carriers must verify the user’s identity and credit history.  With India Stack, all it requires is a thumbprint or retina scan and permission to share digital documents.  The typical villager presently has no chance of getting a small-business loan, because he or she does not have a credit history or verifiable credentials.  With India Stack, he or she can share digital copies of bank statements and utility-bill payments, and life-insurance policies and loans can receive instantaneous approval.

Nandan Nilekeni is right when he says that these advances “represent the biggest advance globally in public digital infrastructure since the Internet and GPS”.  In an email to me, he predicted that they will “lead to a leapfrogging on many fronts, including a digital financial platform for a billion people which does not require cards, POS machines or ATMs but will be entirely driven by what is in your hand—your finger and your phone”.

Prime Minister Modi has taken a lot of fire for demonetization.  This is understandable, given the hardships and the disruption to the economy that it created.  But it was a bold move and one that will produce tremendous long-term benefit—because it will accelerate the push to digital currency.  India has the opportunity to enter an age of transparency and be at the forefront of digital technologies.

Nobel Prize–winning economist Joseph Stiglitz said in Davos that the U.S. should follow Modi’s lead in phasing out currency and moving toward a digital economy, because it would have “benefits that outweigh the cost”.  Speaking of the inequity and corruption that is becoming an issue in the U.S. and all over the world, he said “I believe very strongly that countries like the United States could and should move to a digital currency so that you would have the ability to trace this kind of corruption”.

Yes, India is ahead and America can learn from it.

Guest post by Prof. Vivek Wadhwa, Distinguished Fellow, Carnegie Mellon University Engineering at Silicon Valley. Former entrepreneur. Syndicated columnist for Washington Post.


Posted on

85 Things I learned being a CEO

  1. It is going to be an extremely hard job. No amount of preparation or education is going to prepare you for what it demands.
  2. You will feel like quitting at so many instances. Don’t, just persist.
  3. It’s a lonely job. There will be no one who you can tell everything about your work.
  4. Uncertainty is the hallmark of entrepreneurship. You have no guarantee that you will last a year, at times a month and sometimes even a week. Learn to embrace this uncertainty.
  5. You will wake up crying at times. Don’t fret about it, deal with it.
  6. If you are married, your spouse will play a very crucial role. They are going to be the only person who you can tell everything. They can give you the third-person view to take unbiased decisions. They are going to be your rock when you are the lowest.
  7. Being a CEO is all about transitioning from doing everything in the early days of the company to delegating everything as the company matures.


Key Responsibilities

  1. You are going to make a lot of decisions in the company. If you are overly careful in your decision making you will slow down the growth, if you are too impulsive you will end up taking the wrong decisions.
  2. Setting the vision and talking about it is your responsibility. You cannot crowd-source the vision from your team. You must listen to everyone but at the end you set the vision.
  3. You define the culture and most importantly you guard it. People will ultimately emulate what you do.
  4. As a founder-CEO it’s your number 1 duty to ensure that the company never runs out of money.
  5. CEO should always be involved in the product. You can go away from any other function but not product.
  6. The success of your organization depends on how well your team is equipped. No one comes knowing it all at the job, it’s your responsibility to ensure that you train everyone.

Decision Making

  1. You will never have the complete information that you need to make decisions. Your gut/hunch will play a big role in such situations.
  2. It may sound counter-intuitive but gut-thinking can be developed. Great founders take right decisions not because they have all the information but because they have vast amount of knowledge. That’s what constitutes the gut-thinking.
  3. You will be wrong more often than you will be right. The trick is to detect your mistakes early, learn from them and never repeat them.
  4. You must stand by the wrong decisions you make. People will respect you if you are willing to accept your mistakes.
  5. Take time to explain your decisions. People around you need to know what is the thought process behind your decisions.
  6. Don’t fall in the trap of over-deliberation. Most of the times speed is more important than the right decision. You will always get time for course correction later. Good is better than best.
  7. There will be times when you are going to take decisions that nobody will believe in. If you have 100% confidence in yourself, go forward unabashed, because no one else has the full picture other than you.
  8. When taking strategic decisions, step out of your day-to-day operational work. Decompress completely. Swipe the board clean. Forget everything that’s going on currently. And then think about whatever you want to think. Think, how your future will change if you take this decision and not what benefit your present will get out of it.
  9. There will be some decisions that can significantly alter the direction of the company. You can’t always white-board a conclusion out of them. At times, you need to mull over them, you need to let serendipity happen.
  10. All good decisions seem obvious in hindsight because it’s easier to explain a chain of events, rather than predict one. Don’t mistake yourself in believing that you have found a pattern.
  11. For decisions like letting a misfit go, shutting down a product line etc. it’s always better to do it sooner rather than later.

Culture

  1. You are the guardian of the culture. You define what is to be appreciated and what is not acceptable. If you don’t do it ardently you are fucking up the culture.
  2. It’s always easier to hire people who believe in your culture than to try and convince non-believers. If someone doesn’t fit your culture, don’t hire them no matter how good they are on skills.
  3. You have to speak, shout, repeat, chant, recite and roar about your culture. Culture becomes culture only when it’s spoken about all the time.
  4. There is no definition of what a good culture is. More than being Utopian it has to have universal resonance.
  5. Your culture is never set in stone. The basic tenets will be defined but the shape and form of culture will rapidly evolve as the company grows.
  6. A good culture must breed 2 things — respect for each other’s work and open communication.

Leadership

  1. Soon you will realize the impact you can create through your individual contribution is meaningless when compared to the impact you can create by leading people.
  2. The best way to lead is to lead by example. A good leader tells you how it’s done, a great one shows you how.
  3. As a leader, the biggest thing that you can give your team members is your time. A lot of them will go through a bad phase or will be clueless about what to do. At those times, they need to know you are there.
  4. People will look up to you. At times, even for things in which they are far more skilled than you. You don’t have to take their decisions, just provide them your confidence so that they can take their decisions.
  5. Good leadership is when people are not afraid of bringing bad news to you.
  6. Politics starts at the top, if you start taking sides, everyone else in the company will too.
  7. In no situation can you afford to shout at your people. Things will go wrong, you will loose your calm, you can be stern with them but not disrespectfully shout at them.
  8. People need inspiration. To be a leader you will have to inspire them and it’s best if you do it by story-telling.
  9. Talk to/address the entire team at regular intervals. The format and frequency depends on you. It could be for 30 mins every week or 3 hours every month. I do an ‘All Hands’ every month. It has been 3 years and the All Hands has always had above 80% attendance.
  10. Very few employees are going to critique your decisions, particularly if you are a vocal leader. It’s very easy to get blindsided because you will rarely get a critical feedback. There are two ways to mitigate it a) have a close network of advisers who can say harsh things to your face b) consciously create a culture where people are not afraid of you.

Self-Management

  1. The first thing you need to learn is how to manage your time. Your time is a scarce resource, you must be very protective about it. Say no to anything that doesn’t add value.
  2. Learn to manage emails. No matter what communication tools yor organisation uses, you cannot escape emails. This particular trick has been extremely useful for me in managing my inbox — https://blog.hubspot.com/sales/email-multiple-inboxes#sm.000a54r0d14a2ct5r3d1yoluod5vf
  3. Manage your calendar — every Sunday spend 30 minutes analyzing your calendar for the week.
  4. Learn to manage your cash-flow situation. You need to keep track of the following every month — cash outflow in the month, revenue collected in that month, money spent on salaries and money in the bank. Setup a process so that you receive this information regularly.
  5. Every thing that goes on in the company will come to you. Very soon it becomes over-whelming to manage this information barrage. You need to learn to deal with it.

People Management and HR

  1. Hire a HR early in your company. 30 employees is the right stage to hire a HR.
  2. The sooner you introduce an objective performance management system, the better it is. In the early days you know about what everyone is doing, but as you grow you will loose control. The right stage for introducing a formal process is when you are 40–50 employees.
  3. One on Ones are absolutely critical. Ensure that you do one-on-ones, at least once a month, with everyone who directly reports to you and so do the other leaders in the company. In his book ‘High Output Management’, Andy Grove talks about the right way of doing one on ones.
  4. Set Goals — Every employee needs goals in order to contribute effectively. Most of the time people don’t under-perform because they don’t want to work but because they need direction. A quarter is the right time frame to set goals.
  5. Providing Feedback — Provide both negative and positive feedback with the same demeanor. It’s very important to come prepared when giving feedback. Provide negative feedback not based on your feelings but based on facts. Don’t use the Sandwich Approach, discuss the positives and the negatives as is.
  6. Just providing negative feedback is not enough, it’s your duty to also provide them a direction on how they can improve. If you are feedback is not accompanied by how they can improve then you are wasting their time.
  7. Appreciation — Everyone needs appreciation, do it often. Appreciate people at the time they do well (don’t save it for later) and be genuine when you appreciate.
  8. People don’t leave because they are underpaid, they leave because they feel you haven’t been fair. You are not supposed to compete with the best paymaster out there, but you do the best you can and they need to know that you are being fair.
  9. Setup an on-boarding process. When the company is small it’s easier for people to understand everything happening in the organization. Once you are beyond 30 it can be daunting for a new employee. Setup an on-boarding process where they get introduced to the product and people.
  10. Set a rigorous reporting process: Having access to the maximum amount of information across organization is going to be your biggest asset. As the organization grows you will find extremely hard to get all the information. You need to set up a rigorous process of updates with your direct reportees. Every function head should share updates with you in-person as frequently as every 14 days.

Meetings

  1. Whether you like it or not, you will have to do meetings. The point is how to make sure that your meetings are productive. There are only 2 types of meetings that you should attend — a) where you have to take a decision b) where you get updates/information. The productivity of the first depends solely on you and the latter on how you have trained your team. Step out from any meeting where you are not going to take any decision and you are not getting information you already don’t have.
  2. In his book High Output Management, Andy Grove talks about the concept of ‘Chairman of a meeting’. This is the person who is going to lead the meeting, facilitate discussions and take decisions. You will be the chairman for a lot of meetings as a CEO. If you are not going to prepare for these meetings you will waste everyone’s time. As a rule of thumb for a 1 hour meeting, you must spend at least 30 minutes in preparation.
  3. You don’t have to take charge of every meeting. As founder, you would be tempted to do that in any meeting you are part of. Refrain!
  4. Explicitly ask people if you are needed to be part of a meeting. Wherever you are needed, ask them for an agenda and also ask what is expected from you in the meeting. Else say no.

Hiring

  1. No matter how careful you are, you will make wrong hiring decisions. There is no definitive science for interviewing so don’t beat yourself up for wrong hires.
  2. Add a layer of objectivity in hiring. Every role should have some form of objective evaluation, like a task.
  3. Don’t interview people on what they have done in the past, interview for the role they are coming in for.
  4. Go prepared to interviews — put down a list of questions that you definitely need to ask. You don’t have to ask them in any specific order but you must ask all the questions.
  5. Ask your interviewers to give a Yes, Weak Yes or No. If there is a single No then don’t hire. There should be a majority of Yes in the verdict.
  6. Ask people where they screwed up in the past. Their failures will tell you more about them, than their success.
  7. Set an interview target for yourself — commit to doing at least 15 interviews per week in the first 2 years.
  8. Don’t look for patterns, there are none. Some people are good at giving interviews some are not.
  9. You need to create a circle of people (not necessary everyone in the company) whose loyalty is unshakable. These are the people you will rely on when shit hits the ceiling. Look for this trait when hiring key people.

Fundraising

  1. Whether you like it or not you are always fundraising. Practice the pitch incessantly, so that you can pitch anytime, anywhere.
  2. Fundraising is not a milestone, it’s not an achievement, it’s just a necessary evil.
  3. Fundraising is about story-telling. More than facts, investors are interested in your story.
  4. Choose your investors carefully. These are the folks with whom you are going to take some of the toughest decisions for your company, you want someone you can play with.
  5. Choose friendly terms over extra money. It’s okay to get half a million less in the bank if you can get less restrictive terms.
  6. You don’t raise money when you need it, you raise money in the good times, and as soon as possible.
  7. Raise as much as possible. Your company can fail because of reasons completely out of your control. Having a war chest at that time could be invaluable.
  8. Become immune to rejection. Most of them will turn you down not because you are not good but because they don’t understand what you do. 99 rejections are worth it for that one who says yes.
  9. Don’t let fundraising get over your head. It’s your number 1 duty but not your only job. You can’t compromise with running the company just because you are fundraising.

Things you should do

  1. Read voraciously, set a target to read at least one book a month.
  2. Network — In the early days of the company meet as many people as you can. In the later days of the company, choose who you want to meet and reach out to them.
  3. Take holidays — don’t feel guilty about it, you need it more than anyone else. Take spontaneous and frequent holidays, you will be amazed at the kind of thoughts that will come to you when you are relaxed.
  4. You will have to do a lot of public speaking — internally to your employees and externally to the world. Rather than being forced to do it, do it consciously. Practice before every major speech.
  5. Your job is to protect the downside of the company. The upsides will anyways take care of themselves. You should be constantly sniffing for what can go wrong.
  6. Exercise — Being a CEO will take a massive toll on your mental health. One way to keep your sanity is to exercise. Make it a habit to exercise at least 5 days a week (you can pick a sport).
  7. You are always negotiating — negotiating with your investors, your clients, your employees, prospective hires and everyone else. Master the art of negotiation, at the end it’s all give and take.
  8. Every time you say ‘Yes’ to something, you will be saying ‘No’ to something else. Choose your ‘Yes’ wisely.

Guest Post by Sachin Gupta @ HackerEarth. Original Post can be seen here

Posted on

eKYC – Know Your Customer unassisted using Aadhaar, OTP and Face Biometrics

Context

Know Your Customer (KYC) is essential for obtaining Financial, Healthcare, Insurance, and Telecom services around the world. In the Indian context, until Aadhaar opened up its APIs, KYC was a laborious process costing billions to services providers and inconveniencing customers with a mountain of paper identity documents. The thoughts here are confined to the Banking sector but applies to other sectors equally.

eKYC “assisted”

With the advent of electronic KYC or eKYC using the Aadhaar biometrics platform, things haven’t changed a lot. It certainly has reduced paper documents. However, eKYC is still done in “assisted” mode – meaning either the customer has to be present at the Bank or a Bank Executive has to reach the customer to collect the biometric data. Besides, in most Banks, a paper trail is still maintained despite the biometrics data – reasons best known to themselves. What was costing the Banks earlier is what is costing today – perhaps more with the new biometric devices and the cost to maintain them.

eKYC “unassisted”

The Reserve Bank of India (RBI) took a significant step in December 2016 to allow opening of deposits and borrower accounts using OTP based eKYC, albeit with some restrictions (RBI notification on 08 December 2016, Chapter VI – Customer Due Diligence (CDD) Procedure – Clause 17 and 38 amendments). This has opened up the opportunity to provide this service to customers at the comfort of their homes at a vastly reduced cost to Banks. This would satisfy the two-factor authentication needed by RBI and would suffice to open an Account. However, with increasing volumes (500 million eKYCs projected for 2020 by UIDAI), and the possibility for this service to be abused through third party fraud, this would need additional authentication to ensure that the person completing the transaction is who he really says he is (as close to a physical check).

eKYC “unassisted” with three factor authentication – Aadhaar, OTP and Face Biometrics

To solve this particular problem, FRS Labs rolled out the “Atlas eKYC” solution – fully integrated with Aadhaar – with face biometrics as the third factor of authentication (watch the 60 second video here). While the face is captured by UIDAI as the third biometric element (fingerprints and IRIS being the other two), RBI has not mandated the use of face for biometric authentications – for reasons that face is considered not as unique as fingerprints and certainly not IRIS – and the false acceptance rates (e.g. twins) could be high and that people’s faces change over time – but as always research contradicts this notion and there are plenty of evidence to prove that face is a reliable biometric feature. And it can only get better.

Notwithstanding, RBI has not specified that face could not be used if a commercial organisation wishes to do so as additional factor of authentication to protect their businesses and consumers, so long as the mandatory 2 factor authentication is in force. In a similar tone, RBI has not ruled out authenticating customers using their voice (another biometric element not in Aadhaar). ICICI Bank and Citibank have rolled out voice biometrics to authenticate customers to call centres is a case in point – It is still two factor authentication (the registered mobile phone as the first factor and the consumer’s voice as the second factor of authentication). Therefore, there is a great opportunity here for Banks to provide face biometrics as the third factor of authentication for secure “unassisted” OTP based eKYC without the need for biometric devices. I can only begin to image the convenience for consumers and cost savings for Banks.

Author: P. Shankar – Founder & CEO of FRS Labs.

Posted on

Freemium Model for SaaS – The Good, The Bad, and The In-between

In 1999, Vistaprint, a four-year-old French startup, launched its internet-based printing services in the highly competitive US market.

Going against the popular advice to target the bigger companies (who would spend more money on printing), the Vistaprint team went for the micro businesses (who were then considered as a terrible market, as they were close to impossible to reach).

To tackle that, the Vistaprint team came up with a direct marketing strategy, which turned out to be a runaway success, becoming their core acquisition flywheel in no time.

And, it’s simpler than you think.

Basically, this was their offer: Customers could get 250 full-color business cards (that were being sold for about $85 online and about $200 to $300 offline, in those days) printed for free, and pay just a nominal charge of $5.67 for shipping and processing.

They could place this order as many times as they wanted, and Vistaprint would fulfil it for them, under a few conditions:

● The free cards will be printed only using one of a set of 40 designs

● It will take three weeks to deliver them

The customers who wanted a different card design, or wanted to get their cards delivered faster, would have to pay a premium price.

This strategy, that worked wonders for the printing company (which had about 17 million people individually buy from them by 2009), lies behind the freemium model in the present-day lexicon.

(Note: If you’re new to the freemium concept, head over to this post that outlines what the freemium model is and how it works, and then get back here. We’ll wait for you.)

However, all is not perfect in the freemium fields.

Even though a plethora of SaaS success stories including SurveyMonkey, FreshBooks, and Prezi have managed to make the model dance to their tunes, we can quote an equal number of accounts where businesses have fallen prey to its deceptive allure – Baremetrics, Ning, and Bidsketch, to name a few.

So what’s the deal with this elusive model? What does it take to win over it?

When does the freemium model go wrong?

VistaPrint already had a full-fledged card publishing and manufacturing technology in place, when they started providing business cards for free. Thanks to the economies of scale, the more cards they printed, the lower their manufacturing cost.

As you’d probably know by now, the basic premise that the freemium business model operates on is this:

Several hundred thousands of users sign up for the freemium plan, and then a good cohort of them will convert into paying customers.

“The easiest way to get 1 million people paying is to get 1 billion people using.” – Phil Libin, CEO of Evernote

So for the freemium model to work out, one specific product attribute must already be in place – low marginal distribution and production cost. Only if you can keep the cost as low as possible, an additional free user will cost you nothing more than a database entry.

SourceMicrosoft, in one of their whitepapers, showing how the cost plummets with quantity

Although this is an inherent characteristic of SaaS products (as shown above), if you’re not careful enough, your freemium pricing can still go completely awry.

The number road to failure is pretty straightforward: Keep investing in more and more infrastructure to handle new users, without generating additional revenue (or having a backup plan) to offset the growing cost.

A majority of websites that sell downloadable content fall under this category. These businesses don’t charge their freemium customers and rely solely on ads for revenue. So when they can’t make enough money from the ads, every new freemium user will exert a bit more strain on their existing infrastructure, to ease which, they will have no other option but to augment their resources.

About 11 weeks after having launched their free plan, things were looking positive for the Baremetrics team – over a 1000 free accounts had been created, of which the eligible paying customers sported a conversion rate of about 11.5%.

And over a period of two years, their free users outnumbered their paid customers, and they found themselves grappling with increasing server and performance issues. The result? More dissatisfied customers began leaving them, because of the “down time, delayed data and inaccurate metrics”.

Source“Our free plan was causing our business to slowly implode.” – Josh Pigford, Founder, Baremetrics

Countless such services have gone under because they weren’t able to bear the weight of the overwhelming scale of operations, both financial and infrastructural.1

But, that isn’t the only reason that leads SaaS businesses to succumb to the dark side of the freemium model and shut shop (or pivot, if they’re smart).

Had the Baremetrics team restricted the data import/export for the free users, they could’ve saved up on the server usage, and have in turn strengthened the reason to upgrade.

Here’s our next SaaS example, Bidsketch’s free to paid conversion rate over the weeks:

SourceFrom “Great!” to “Grmph.” to “Grrrr!”

What’s happened here is a textbook example of how the different kinds of adopters operate as per the “Diffusion of innovations” theory.

The real game begins after you move past the Early Majority adopters

Once the Early Majority customers have moved up the pricing ladder, the conversion rate starts tapering down, as the Late Majority and Laggards are more averse to change. The trick is to keep innovating and adding more value to your premium plan, thereby nudging them down the conversion funnel.

Summarizing this section, the main reasons that contributed to the failure of the freemium model in these businesses are:

● Not having a business model that’s cut out for freemium, where every new user puts more pressure on the existing resources. Adding to that – under such circumstances – not having been equipped with a solid strategy to accommodate the growing load.

● Not striking the right balance between your freemium and premium offerings – if the freemium plan isn’t attractive enough, then you won’t attract new users, and if the freemium plan is too heavy, then the new users won’t move to the premium plan.

● Not communicating well to the free users, a straightforward and solid benefit of upgrading to a paid plan.

● Not constantly hitting on the innovation pedal and making your premium product more and more lucrative, to convince the users in the Late Majority and Laggards categories to upgrade.

When does the freemium model pay off?

1. A DIY product/service, where the cost of servicing a new customer is close to nil. These are the businesses that are designed for the freemium model by default.

SaaS examples: Massive Open Online Courses (MOOCs), Webflow.

This business model accommodates the main ingredients that were missing in the previous section – economies of scale, and low marginal cost.

While MOOCs incur an initial significant fixed cost on course development, contrary to a regular classroom, they don’t have a restriction on the number of students. So a $500,000 fixed cost will be brought down to about $5 per student, if 100,000 students enroll for the course.

Also, the marginal cost of serving an additional student can also be brought down to $1 per student, as there’s no personalization of the service, the product doesn’t have a steep learning curve, and a community-based support will suffice.

The premium plans usually consist of certificates from reputed universities, and according to Daphne Koller, Coursera’s co-founder, they’re able to monetize around 20% of the total registrations.

Moreover, a majority of the students drop out mid-way, thus lowering their streaming cost (their biggest marginal cost). Only around 10-20% students make it to the final exam, and they are the ones who will most likely be interested in paying for certificates.

Now these aspects aside, the other deciding factor for the success of your freemium plan is your value metric.

Check out Webflow’s pricing for instance.

An attractive freemium plan + an even more appealing paid offering = a very satisfied cash register + an even more satisfied customer

These guys have nailed it in coming up with a super compelling reason to upgrade – they have used the collaboration feature (they call it the Team Dashboard) – one of the fundamental activities of website building – as the value metric.

This ingenious move set them up for success, and it wasn’t as easy as you think it was.

Only when you have a crystal clear idea about your customers’ Jobs to be Done (JTBD), will you be able to pinpoint the exact feature that will deliver the ultimate value for the price that you’re charging them.

So if they get a freelancer web developer on board, Webflow can either have them in the freemium plan, or they can make a decent sum of money in the Professional plan, and the moment the freelancer grows into a company of at least 2 members, they directly take them to the Team plan and charge them $78 per month.

The product is designed in such a way that it keeps track of the IP addresses; you can’t log in with the same ID more than once, and you won’t be allowed to view the same folder. For a user who is thoroughly impressed with the product, and is looking to collaborate, these enforcements act as a natural motivator to upgrade to the higher tier.

Which highlights the next factor: it all comes down to how irrefutable your offering is to the customer, and how effectively it gets their job done.

2. Businesses which deliberately try to assimilate and absorb the cost of operations, support, and service, to have a freemium model up and running.

Now why would anyone do that, you ask? Well, for one or more of the following reasons:

● When you’re having your freemium plan as a differentiator in the market.

About 75 startups were already operating in the American market when VistaPrint set foot on it. Millions of dollars were being raised by e-printing companies, and the competition was cut-throat. And they counted on their strategy to target a different market and to offer a freemium deal to give them a spotlight.

SaaS example: SALESManago.

This Polish marketing automation startup knows what it’s up against – giants like HubSpot, Pardot, and Eloqua. And that’s precisely why they double downed on nailing their pricing strategy, to stand out from the crowd of Goliaths.

Notice how the 0’s stand out in the collage of screenshots with numbers strewn all over them? There you go.

And they seem to have done a great job at it. This February, they have raised about $6 million, following a 200% growth over the previous year,  2015.

Let’s examine their pricing plans for a moment – clearly segmented free plans, each with their own specific set of benefits, and the introduction of a premium plan only when the customer’s business grows large enough to integrate and automate the marketing activities. Just like Webflow, it is evident that the SALESManago team has a thorough knowledge of their customers’ JTBDs and pain points that they’re solving.

The result? The customers get an offer that they can’t refuse.

● When you’re employing your freemium plan as a free branding tool.

Wait. The VistaPrint team didn’t have just two conditions attached to their freemium offering. There was one more. Apologies for missing it in the introduction.

Yet another tactic of theirs is that all their free cards will have “Business Cards are FREE at VistaPrint.com!” printed in small fonts at the backside bottom. Those customers who wanted to get the line removed, will have to pay.

SourceViral branding at zero cost – Check.

SaaS examples: Zendesk and Typeform

At the time when they had just launched, Twitter was Zendesk’s highest referrer. Zendesk had a freemium tier back then, where they’d brand the Help Center’s URL. So everyone who was on Twitter and had to get in touch with the support team had to do so via twitter.zendesk.com. Easy, free, referral program to earn new customers!

Typeform does that at present. With the “Powered by Typeform” signature on the bottom right corner of the free forms.

SourceWant to replace Typeform’s brand with yours? Become a PRO!

If just by including a line at the bottom or by adding your brand name to the URL, you’re able to generate ample volume of new users through your existing customers, why would you mind giving it away for free? The cost that you incur because of the freemium plan can then be brought down under your marketing costs.

● When you’re having your freemium product to market your paid product

VistaPrint’s objective was clear. They wanted to sell anything and everything that will help their customers to brand their own businesses – brochures, presentation folders, stationery, apparel etc, and printing business cards was the starting point to get there. Give away business cards for free, and use them to market/sell your other paid products.

Even though this particular category doesn’t fit the textbook definition of the freemium model, the underlying intent is very much aligned to that of the model. And the SaaS world has a name for this: Side Projects.

SaaS examples: Crew and Intercom

When the Crew team was running low on money and were desperate to turn the tables, they created Unsplash, a website that curates and gives away hi-resolution stock photographs for free. The results? Unsplash was (and still is) the number one referral source to Crew, that brought in around 5 million unique visitors.

Mikael Cho, Crew’s founder, quotes Jay Baer to back his faith in side projects (they have since developed a truckload of free side projects – 13 to be precise).

“Due to enormous shifts in technology and consumer behavior, customers want a new approach that cuts through the clutter: marketing that is truly, inherently useful.” – Jay Baer, Youtility

Intercom does that too. Their free product? A customer intelligence platform.

In short, businesses that belong to these three categories, spend those extra dollars to sustain their freemium product, because they know that the free users are paying through one medium or the other –

● They will either use the product and allow it to become a part of their workflow, thus pay for it with their mindshare, or

● They will pay for it by marketing the product

How to find out if the freemium model is right for you?

There’s one school of thought that argues that freemium is dead and gone, and businesses must shift to the next big thing to stay afloat. Then there’s another side that vouches for the abundance mindset, where websites like Craigslist let people post ads for free, and still manage to earn $400 million. Both make sense, and both are equally right.

Vistaprint entered the US market just after the infamous dot-com crash, as a result of which they weren’t able to raise much money compared to the other bubble companies. And its founder believes that that situation, in fact, saved them; because they weren’t able to pool in investments, they had to operate leaner, come up with better strategies, and work harder to make a profit. And that set them apart from the rest of the venture-backed companies.

This is also the reason why they were able to go big with free products and over-the-top distribution strategies, which backfired for most of those latter companies; Vistaprint was clear about its customers and what they wanted, and in turn, the right fodder that will fuel its growth.

Ultimately, it all comes down to how well you understand the value that you’re bringing forth to the market, and how well it aligns with the freemium model.

Dan Martell sums it up in four crisp points, and says that you’ll have to get 3 of them right, to evaluate if the freemium model will work for you:

  1. The number of potential users in your market: The more, the better – remember, only around 5% of the free users will eventually end up paying you
  2. The specific market advantage required to win: What do you want the freemium model to win for your business? Is it a competitive advantage? Is it free distribution? Is it getting more referrals? And how realistic is this goal?
  3. The max complexity of your product and how it works: How simple and straightforward is your product? Does your offering set itself apart from the din around? Is it lucrative enough for your customers to ascend the pricing tiers?
  4. The specific cost each additional user can have: Is the marginal cost of serving an additional customer negligible? Can you ramp up your operations without shooting up your cost? Do you have the capacity to handle the exponential escalation in scale?

MailChimp launched their freemium plan after about 8 years of building a “powerful, affordable, profitable, self-serve product,” and after gathering and analyzing “tons of pricing data”, to justify the 10:1 ratio of free to paid users of the freemium model.

“The question to ask yourself is whether or not your “one” is big enough to pay your bills yet. For eight years, our company never thought about freemium. We didn’t even know the concept existed. For eight loooong years, we were focused on nothing but growing profits… … In other words, we’ve been laser-focused on the “1” side of that 10:1 ratio. We’d never consider freemium until our “1” was big enough. Enough to pay for 70+ employees, their health benefits, stash some cash for the future, etc.” Ben Chestnut, Co-founder of MailChimp

Guest post by Sadhana Balaji, ChargeBee. The blog was originally published here

Posted on

The Need for Product Thinking and Successes

“The role of a product manager is to discover a product that is valuable, usable and feasible.” – Marty Cagan, Partner, Silicon Valley Product Group

In a few simple words, this quote capture the essence of what this article is all about.

At a recent conference with several venture capitalists, product managers and executives from both corporates and upcoming start-ups, one of the VCs in the room asked, “212 Indian start-ups did not survive 2016. Investments plunged by 44.3%. VCs have started reviewing their investments closely and are being stingier when it comes to spreading their money too thin. How will you convince us and other stakeholders about your product and ensure that it succeeds?”

The answer lies within the approach to product management. Think about it! The lack of an efficient approach to product management is the root cause of start-up failure. Through a systematic approach, you can detect early enough what projects are likely to succeed in the long-term, and invest your time and money more wisely – as compared to investing in several short-term experimentative projects. This is the strategy employed by successful product companies, and if you look closely, a pattern tends to emerge in the practices employed by the best product managers, and these are:

  • Inside-Out Thinking Is a Big NO-NO
  • Building Long-term Sustainable Vision, Innovation & Roadmap
  • Evidence Or Insight-Based Decision-Making
  • Let’s deep-dive into these practices:
  • Inside-Out Thinking Is a Big NO-NO

Our existing products are a success -> The executives who built these products have an intuition that the new product is the next big thing -> Therefore, customers will definitely like our new product

This the basis of Inside-out thinking where the wrong reasons are used to decide which products should be invested in and developed. Some of the common inside-out situations are intuition that a product will work, pressure from CEOs, the assumption that customers don’t know what they want, the feeling that the product will definitely sell and so on.

It’s a clear violation of what we call the First Law of Product: Customer decide what products they like, not companies.

The best product managers employ customer-informed decision making and see these situations as warning signs when it comes to making product decisions.

Building Long-term Sustainable Vision, Innovation & Roadmap

A great product roadmap is a Product Managers’ secret weapon. Product road-mapping works best when you start with a long-term vision and strategy, prioritize the product itself over the features, and manage ideas smartly.

Not having a long-term visions and strategy is the fastest route to product management failure. All great roadmaps start with a vision and a strategy to achieve that vision, which keeps the various teams invested in the same shared success of the product.

Next is prioritization. One needs to prioritize the product over features. One that’s done, certain features need to be prioritized over others. It’s not that features aren’t important but that they are often secondary to the reason a customer or user buys a product.

Lastly, being able to say “No” is extremely crucial to developing a successful product. The best product managers are excellent at managing new ideas that come from the various stakeholders involved. There is no shortage of new and innovative ideas, and the best product managers know whether these ideas roll up to their product strategy or not. They consider all ideas, rank them against the product strategy, make a decision to employ them or not, and keep everyone informed about the “why” in their decision-making process.

Evidence or Insight-Based Decision-Making

A key component that successful product managers use to drive the product team forward with insights. This is critical because they help validate that the team is pursuing the right course of action. With real-world user data, customer feedback, and metrics on the product, one already has an excellent source of business intelligence to make the best decisions for the product. When asked why you’ve selected one direction over another for the next iteration of the product, your ability to present a compelling explanation backed by real data will go a long way toward earning everyone’s buy-in.

Key Takeaways

  • Every product organization will save significant money by investing at the right time for the right product initiative
  • End-to-end vision, planning and execution processes will differentiate product companies in the market place
  • A systematic approach to product road mapping and management drastically reduces the risk of product failure
  • Gathering valuable intelligence and insights from various stakeholders, customers and the market will go a long way in defining the success of your product.
  • The harsh reality of 2016 might just be the wake-up call that the start-up world needed, and our prediction is that 2017 is going to be a great year for Indian start-ups!

Guest Post by Mr. R.N. Prasad, Consultant at Manipal Global Academy of Information Technology (MGAIT). 

He comes with over 35 years of Enterprise IT experience. He has served various IT giants like Wipro, Satyam, IBM, INNOSOFT and Infosys in leadership positions. In his last corporate engagement, Mr. Prasad was the AVP, Education and Research at Infosys, and was heading the Business Intelligence and Analytics Practice. His other areas of focus and expertise include IT Product Development Management, and IT Strategy Consulting. Mr. Prasad is a Harvard Certified “Teaching for Understanding” practitioner and a Franklin Covey Gold Certified 4DX Coach.

Posted on

Disruption of Chit Funds and the Role of the India Stack.

Disruption of Chit Funds and the Role of the India Stack

Chit Funds are indigenous financial institutions in India. It is a mechanism that combines credit and savings in a single scheme. In a chit fund scheme, a group of individuals come together for a predetermined time period and contribute to a common pool at regular intervals. Every month, up until the end of the tenure of the scheme, the collected pool of money is loaned out internally through a bidding mechanism to the most deserving member. This way, people who are in need of funds and those who want to save are able to meet their requirements. Similar schemes have been known to be popular across the developing world, generally referred to as Rotating Saving and Credit Associations (ROSCA)

An interesting aspect of Chit Funds in India is that the industry is highly regulated and institutionalized. A Chit Fund can be either “registered” or “unregistered”. Registered Chit funds are organized by Chit Fund firms/companies and regulated by the Chit Fund Act. They are in essence impersonal contracts that depend on market forces. Unregistered Chit Funds which exceed Rs. 100 ($2) in chit value are illegal in India, although it is widely known that the unregistered Chit Funds industry is still very popular.

While no official or government estimates of the industry exist, The All India Chit Fund Association estimates that “the size of industry is Rs 35,000 crore, with the unregistered part estimated to be at least 100 times the registered one”

Value to the consumer

Prof Mary Kay Gugerty, in her paper, “You Can’t Save Alone: Commitment in Rotating Savings and Credit Associations in Kenya” argues that, “saving requires self-discipline, and ROSCAS provide a collective mechanism for individual self-control in the presence of time-inconsistent preferences and in the absence of alternative commitment technologies”

This conclusion, although based in data from Kenya, is also supported by the data collected in India, which suggests that 72.1% of consumers participate in chit funds(Estimate of Chit Fund Industry size) to save.  While 95% of these consumers have bank accounts(Reason for Chit participation : Table 3-7), they still prefer chit funds as a saving mechanism due to higher perceived returns, paperless documentation(Banking Details : Table 3-4), familiarity and doorstep service.

While the actual rate of returns (for savers) and cost of borrowing are highly variable based on a given fund, on average(Reason for participating in Chit Funds : Table 3-11) 6%-42% per annum(Rate of return calculated based on the cost of borrowing, assuming 5% commision, 10 people, Rs 10,000 chit fund and 1 borrower plus 9 savers. Cost of borrowing from Table 5-4 Outside Options – Interest Rates for Loans,)

Housewives and Small business owners are the two most prominent cohorts within the chit fund users(Figure 3-1  Frequency of Occupation based on Gender). Daily chits are popular with small business owners, presumably because it allows them to manage their daily cash flow and allows control over their interest rate when the need for a loan arises(Section 9, Chit funds and Small Business, Para 3).

The chit funds are also perceived to be liquid, Most consumers bid to get the pot when they had an emergency need or when an lucrative business investment came about(Reason for participating in Chit Funds : Table 3-11).

Finally 96% of chit members overall think that the Chit Funds they participate in are safe and about 85% of these chit members are loyal to fund company they are participating in.

Legal framework for Chit Funds

The Government of India passed the Chit Fund Act in 1982, with implementation of the Act left to the Registrar of Chit Funds in each state. This Act, it is relevant to note, contains many restrictions like a minimum Capital requirement (Section 8), prohibition of transacting business other than Chit Business (Section 12), a ceiling on the aggregate chit amount which is 10 times of the net-owned funds (Section 13), Utilization of funds (Section 14), security to be given for full value of chit (Section 20), a self-contained machinery for settlement of disputes etc and a number of penal provision for various defaults(All India Chit Funds Association submission to parliamentary committee), etc.. Notably there are stringent requirements on written formalities like notice to the customer, minutes of the meeting, record keeping and audit by certified chartered accountant(6(1), 15, 35, 40-Chit Agreement, 22(2)- Intimation to Registrar of deposits, 26(1), 34(1) Withdrawal of foreman 28(1) Removal of defaulting subscribers 33(1) Demand note 38(1) Minutes of the meeting).

The regulatory hurdles that the chit companies face due to the stringent rules proposed by the Government progressively, have been a setback to the growth of the industry. The effect of the increased costs of operations for the registered chit companies has been to push these companies ’underground’. Many companies have, in the recent past, either folded up or shifted their operations entirely to the informal arena becoming an ’unregistered’ chit fund(Chit Funds Boon to Small Enterprise).

Economics of running a Chit Fund

Apart from the capital and compliance requirements highlighted above, the key risk of running a chit fund is default. The default rates in the chit industry hover around a meager 1-2%. This is because the chit members are, in most cases, personally known to the chit managers(Section 5, Defaults How are they handled ? – Chit Funds Boon to Small Enterprises). Also,  Defaulters are sanctioned socially as well as being prevented from any further participation(Page 794, Paragraph 2, Economics of Rotating Saving and Credit Associations).

The key source of revenue for a Chit fund manager is commission which is capped at 5%. Alternatively the chit fund managers take the first installment in full. The chit manager can also generate revenue from float interest charges i.e. by disbursing the loan a month after the money is collected, he can earn the interest on the full amount(Section 7 : Sources of Income to the Chit Manager) 

Role of the India Stack

With the size and scope of the chit fund industry, as outlined above, it is clear that there is a large addressable market for innovators. What makes this opportunity more lucrative is the presence of India Stack. India Stack is set of technologies (primarily Aadhaar authentication, e-KYC, e-Sign, Digital locker and UPI) that together dramatically reduce the cost of transactions. For example, an analysis on the Mutual funds business indicated that by use of India stack, the  average transaction cost would drop from Rs 50 to Rs 2, making it viable for Mutual funds to go after the small ticket business.

Opportunities for Start Ups

Given the background above, following is the most promising opportunity for startups:

Organize the unregistered chit fund companies

  1. Hypothesis: With the recent crackdown on black money and tax evasion, it will become more difficult to run unregistered chit funds circumventing the law. This will give the unregistered chit funds incentive to become registered and follow the law
  2. Product: An easy platform that allows management of chit funds through mobile phone app/apps and make it compliant with the law
  3. Key Customers :  Unregistered chit funds
  4. Key Stakeholders : State Government, Unregistered Chit Funds, Users of chit funds
  5. Key activities:
    1. Build technology based on India Stack to meet KYC requirements, sign chit agreements using e-sign, transfer money between people using UPI and keep an account.
    2. Strong sales network to bring the chit funds onboard
    3. Product and legal expertise to liaison with the state governments and registered chit funds to build products that meets all requirements
  6. Need for funding:
    1. Initial product could be built with a relatively small investment
    2. Scaling with scale will likely need venture investments (but no access to large capital should be needed)
  7. Revenue generating activity:
    1. Pay per instance or per user from the funds
    2. Lead generation for Chartered Accountants
    3. Aggregate data reports could be sold
    4. Could also build a government facing interface for monitoring
  8. Competitive Advantage:
    1. No real competition at this point
    2. Network effects could become significant advantage
    3. Implicit or explicit endorsement from Government agencies
  9. Key Risks:
    1. Product adoption risk: The success of the idea is hinged on pressure from government creating the need, which drives adoption. In the absence which it will be significantly harder to move people from the familiar. The risk is somewhat contained because of a supreme court order directing government to act on this.
    2. Regulation risk: A parliamentary committee has recommended that the government revise the regulation. This means that government could do away with a number of provisions, making compliance much easier of chit funds thus eliminating the need for such a company. Again this is low likelihood event given the scrutiny on this sector
    3. Reputation risk: The company will have to be careful not to associate with chit funds with malicious intents. Being associated could result in penalties and damage to reputation.

Guest Post by Kunal Kashyap, IIT KGP graduate, Spent 8 years at Capital One, a US based Fortune 100 Fintech company. Volunteer for iSPIRT.  

Posted on

Strategies for MNCs Engaging with Start-ups in Emerging Markets

Strategies for MNCs Engaging with Start-ups in Emerging Markets

For large global companies, forging effective partnerships with high-potential start-ups is easier said than done. The very traits that make such start-ups potentially complementary as partners also make it difficult for large companies to engage with them in the first place. Multinational corporations often struggle event to identify promising potential start-up partners, while start-ups find it difficult to identify and reach the relevant decision makers within the often-confusing hierarchies of giant multinationals. The challenge is even greater for both sides in emerging markets.

To understand how multinational companies have partnered successfully with start-ups in emerging markets, CEIBS Associate Professor of International Business & Strategy Shameen Prashantham has co-authored a research study in three major emerging market economies: India, China and South Africa. The study focussed on non-equity partnering through start-up engagement programmes such as Microsoft’s BizSpark, IBM’s Global Entrepreneur Programme, and SAP’s Start-up Focus programme.

The research uncovered four key factors that multinational companies confront in such partnerships in emerging markets, and corresponding strategies that can help multinationals engage with start-ups in  emerging markets. The challenges and the strategies to address them are as follows:

Immature Entrepreneurial Ecosystem → Compensate for Deficiencies

Appetite for Entrepreneurship → Commit Resources to tapping the Entrepreneurial Energy

Outsider Status of Western Multinationals → Work with Local Groups

Access to Novel Innovations → Co-innovate with Start-ups

The findings also highlight the importance for Western multinationals to recognize differences among emerging markets. Different emerging markets have distinct national priorities, regulations, and differing scales of economic activity and entrepreneurship which will affect the strategies of multinationals. These things must also be taken into account if multinational companies are to succeed in creating mutual value for themselves and their start-up partners.

The results of the study are featured in the Winter 2017 edition of MIT Sloan Management Review which Prof. Prashantham co-authored with Prof. George S. Yip of Imperial College Business School in London. Read the article here.