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What’s your Sales Story?

Whenever faced by dilemma over any issue pertaining to sales and marketing, I recall a famous quote by Ben Feldman, who is considered one of the best salespeople in world history.

Don’t sell life insurance. Sell what life insurance can do.

Just by following this one mantra, Ben was able to insurance policies more than worth USD 1.8 billion in his life!

It would be unfair if I don’t mention Steve jobs here. Have you ever seen him selling Apple products? No! He would always sell you the idea of ‘how apple products can change your lives’. Watch his keynotes at the launch of iPhone or iPod and you will understand what I am trying to say here. Sadly I don’t see the same approach being used by Indian startups and product companies. Many of us are still struck at ‘Buy our product, this is the best; this is different; this is cheaper; this is awesome…..’.

Human brain is inherently averse to sales. The moment we realize someone is try to sell something to us, we tend to lose interest in the pitch, become defensive and start finding reasons why we don’t need the particular product (or service). So rather than doing direct selling using plain facts and figures, if you narrate a story about your product and how it can help fulfill peoples’ dreams, chances are they’ll listen to you. Research has proven that majority of the decisions are driven by emotions and not reasons. We don’t realize that because our brain tries to find logical reasons to justify the already made decision.

So triggering those emotions should be a critical component of company’s overall Sales story. Ideally the sales story should be centered around the following,

  •          Making people more powerful/ efficient/ potent through your product
  •          Making people passionate about your company and yourself
  •         Ringing alarm bells in peoples’ minds of losing out on something if they don’t buy your product
  •         Generating mystique and awe among people for your company and yourself
  •         Being just enough rebellious and loud to make some noise and stand out
  •         Developing trust among people for your company and yourself (damn important)

 

Let me take an example. I went for a sales meeting for some stakeholders from a global networking giant. Here is what I presented the first time,

‘WE are Company X. WEhave been doing this for so many years. WE have worked with companies like … WE’ll help your business grow to next level (x%). WE’ll help to save y% costs. We’ll increase your efficiency by z%, so on and so forth’

I got a good response but not a mind blowing one. We were asked to present to some other stakeholders in the follow-up meeting. I decided to try out something different this time. Here is what I presented,

‘YOU are Company Y. YOU have been doing this for so many years. YOU are doing good with a% growth, b% cost savings, etc. YOU are projected to reach here. What if we help YOU reach there. YOUR competitors are already catching up. We can help YOU leapfrog. We have already helped many companies to do the same. YOUR company is very good, we can make YOUR it awesome’  

Boom!! Applauses all around!

Notice the ‘We’ centric approach compared to ‘You’ centric one. Research has proved that customer relations are more long-run and stronger in the latter approach. I have complemented ‘company’ with ‘yourself’ because your personal branding goes hand in hand with that of the company, as people don’t perceive you much different from your company. I can’t think of any aspect of life where you don’t have to sell anything. I believe aforementioned points are relevant in every sphere of life- job interviews, user acquisition, b-school interviews, advertising, online marketing, presentations, proposals, VC pitches, etc.

For the founders, it goes without saying that you should have questions related to positioning, value add to customers, target market segments, key differentiators, etc. clearly figured out before you start creating your sales story. Answers to these should be Crisp, Short, Tangible and Simple.

Happy Selling !!

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7 tips to build a script :: a Step by Step guide

I wish it was mathematical. But it isn’t. There are unlimited combinations when building a story. That’s what makes it so much fun to consume – you never know how the storyteller tells it… 

So instead of giving you tips in a bulleted format – let’s build a script together.

What we know (or must know) before we start:

  1. This is for a 60 sec pitch video about a product called Glitch from Triton.
  2. They sell to Hotels. Their audience is clearly marked out.
  3. What the product does has been clearly documented.
  4. We need to bring out a call to action so they visit the product website.
  5. We are selling to Hotel people – they don’t have time to consume long form content – so the video should not be soggy and heavy – it should be light and brief. This means no more than 2-3 propositions. 

STEP 1: Start with a problem

” Guests want something – you deliver. Its simple. But when this doesn’t happen – your guest will get upset and then…. she’ll tell the world about it. The last thing you’d want is to read about such episodes on Social channels. “

Your product may solve many problems – choose only ONE to start with. Choose the problem that’s closest to your customer’s customer. Your customer cares about that. 

As you can see, we get to the problem quickly. The script doesn’t teach anyone. It just sketches out a scenario that will happen when the problem arises – customers will crib about your hotel’s service.

So here’s the first tip: 

TIP#1 – Get straight to the problem. Don’t beat around the bush. 

The easiest way to do that is to think like a customer and ask yourself – WHY MY FEATURE. Think what makes sense for you (you’re wearing the customer hat mind you). Think about that exact problem it solves. And then write that problem in simple words. Be direct and obnoxious if you have to – we’ll soften it later. 

STEP 2: Lets talk about our product a little

” There’s an easier way. Triton’s Glitch. Glitch alerts you when something has gone wrong in the service. And what you had to give up to … well… sort it out…. “

Part 2 of the script talks about the product. But not too much. We’re just making an overarching comment about the product. This is the main proposition or a product ‘tagline’ if you will. 

Tip #2 – Resist the urge to start talking about features here. Instead – make an overarching statement that comprehensively explains the product. 

This is around the 20 second mark. This is the time your audience will make a decision if this problem-solution pair interests them or not. 

Tip #3 – To optimize your video – ensure that the bucket personas as close to each other as possible. In every way… 

If you know what fish are in the river – you’ll be more successful in fishing. That’s because you won’t need to change the hook after every catch – you can just add the bait and cast your line again with the same hook. 

STEP 3 – Explain the feature a bit

” Whenever a service breakdown happens – all departments are instantly alerted and the right manager meets the upset guest, apologizes and offers a compensation. “

We’re going to show how the tool will work. We’re being absolutely real. This happens and then this happens and then this happens.

Tip #4 – use real cases where your customer has benefited and use that as the central pivot to build a story. This is another technique of writing a script – where you start with a situation and come back to the overarching product tagline. 

STEP 4 – play the second trump card

“What you get at the end of the day are clean reports that mark out repeated service breakdowns and compensations spent on them – across multiple properties.” 

We play our second trump card – a business benefit around data. We’re telling the hotel people that they can track and audit their expenses. No business likes to lose money and we chose to work around that sentiment when writing this line.

Tip #5 – sometimes your product may not have a ‘reporting feature’. In this case – try to bring out another feature or proposition. For eg. – X-app can also send you instant alerts…, Y-cloud will immediately shut down ports…, Z-service will raise a ticket… This is the second trump card. 

STEP 5 – Wrap it up

“No wonder a renowned Hotelier claims 18% jump in guest satisfaction scores since they implemented Glitch. Check it out today.”

We use some of our customer conversations and pick out a data point that one of the customers mentioned. This brings a reality check to the audience about the 2 claims we made earlier – step 3 and step 4. 

Tip #6 – Nothing convinces like data. Use as much data as possible in your stories. Avoid fairy tale endings and princesses and frogs. 

Tip #7 – Though I just said don’t use fable characters – one of the techniques is to start a story with a misdirection. So use these animals to start stories – not to end them. 

– – – – – – – – –

Here are 3 criteria I consider when evaluating a script:

  1. Is there any humor in the first 20 seconds. If the script doesn’t have humor – animation should. Or the screenplay. Or the audio – something must make the audience smile.
  2. After reading the script till the end – I should be able to recollect the first line of the script – without having to go back to the script. This means the script is light and catchy enough for my mind to be able to recollect what I read a few seconds ago. The information ‘stack’ on me is small enough for my mind to register and remember. 
  3. Word limit and sentence size. No more than 150 words and as small sentences as possible.

– – – – – – – – –

 Together now – this is the script in its final avatar. 

” Guests want something – you deliver. Its simple. But when this doesn’t happen – your guest will get upset and then…. she’ll tell the world about it. The last thing you’d want is to read about such episodes on Social channels.

There’s an easier way. Triton’s Glitch. 

Glitch alerts you when something has gone wrong in the service. And what you had to give up to … well… sort it out…. 

Whenever a service breakdown happens – all departments are instantly alerted and the right manager meets the upset guest, apologizes and offers a compensation. 

What you get at the end of the day are clean reports that mark out repeated service breakdowns and compensations spent on them – across multiple properties.

No wonder a renowned Hotelier claims 18% jump in guest satisfaction scores since they implemented Glitch. Check it out today. “

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Where is my story?

Most startups talk about product features and how they are better than their competition in terms of their offerings. They really don’t tell stories, however people remember stories for long and not the facts and figures. Most often than not, people say we are a startup, we don’t have paying customers and we do not have stories to communicate. The fact that they are developing a product itself is towards addressing a market gap that the incumbent solutions are not addressing – product creation story. Why don’t you communicate that as a story?

Let me give you a couple of examples.

I was consulting one of the product startups in the education space, which provides smart classrooms. They also were communicating features, benefits as a part of their communication, but they realized that they wanted to do stories. I asked them, why did you choose to develop this product and how did you go product startups about doing this?

In fact, when they wanted to develop their product, they understood the gaps in the market and they had an idea about how to address the gap but they weren’t very clear. In order to get the clarity, they interviewed hundreds of students and hundreds of teachers from across the country before beginning to design their courses. These interviews provided them with a clear idea of the instructional methods followed and what was lacking in it. With this, they started to develop the courses and after about 36 months of work, they have more than 6000 classrooms using their product. This is their product creation story, which they started to communicate very efficiently.

They also prided themselves on the usability of their product and its intuitiveness. I asked them, what does your customer feel about the usability of your product? They said that they are completely positive about the experience. I persisted, what do your prospects who are evaluating the product feel about usability? They weren’t very sure about it. That’s when, we wanted to influence their perception and we decided to do this as a story as well.

We decided that we would not demonstrate the product to the prospects; instead, we will install the setup and get a couple of volunteers from the school to play around with the product. Once they did that, they understood the usability experience, they felt a part of the experience and they started championing the product sales, which resulted in improved conversions.  This became their usability story, which is a part of their pitch now.

These examples are only triggers for you to identify where your stories are. I am sure that this would act as a starting point for you to find your stories.

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Quick Research / Usability Methods: Expert Usability Review

(Post 1 of a series on quick research and usability techniques. Start-up’s can use these techniques fairly easily to connect to and understand their end users better, as well as maintain usability standards on their products.)

ProductNation in collaboration with a few like-minded design professionals, recently put together an informal forum for designers, engineers, product managers & entrepreneurs in the Delhi NCR region. The objective of this forum was to evangelize and encourage a dialog around Design Thinking among the start-up community.

I conducted a short workshop on this topic at the forum’s launch event – a day long interactive meet up – hosted at the MakeMyTrip office in Gurgaon.

During the workshop, I introduced participants to the concept of Design Thinking and touched upon a few design research and usability methods that they could use to support design thinking within their organizations. A brief recap:

Design Thinking is an approach to design rather than a specific technique or method.
A core principle central to supporting design thinking is iteration. A ‘prototype and test’ focused approach fuelled by empathy for the people who will ultimately use the product, is recommended to be followed throughout the product development lifecycle.
There are several user research methods that can help companies connect to and understand their end users better. Guerrilla Research techniques in particular, are especially useful  in context to the start-up environment – Where time is of essence, budget is limited, teams are small, people are typically multitasking and playing multiple roles.
Guerrilla Research includes research techniques that can be done more quickly, with less effort and budget, as compared to formal or traditional user research techniques. Remote  / Informal Usability Testing, Man on the Street Interviews, Micro-surveys, Fake Doors, ‘Design the Box’ and Personal Inventory are a few examples of quick research techniques that can be learnt and implemented fairly well by a newbie researcher / anyone on a start-up team doubling up as a researcher.

In this first post, I want to introduce a discount usability engineering method called the ‘Expert Usability Review.’

Like Guerrilla Research methods, a Usability Review is an effective way to quickly identify usability and ease-of-use issues on a product. However, unlike user research, this method does not involve talking to end users at all.

What it involves is ‘expert evaluators’ reviewing a product, to identify usability and ease of use issues across different UI areas like Navigation and Structure, Layout, Visual Design, Interaction, Error Handling, Content etc. The experts are able to identify issues by drawing on their own experience in the areas of design and usability.

Subjectivity is minimized and issue validity maximized (or attempted to!) by ensuring that issues identified map onto existing and recognized design guidelines / principles / best practices or heuristics.

The issues identified through review, can then be fixed as part of an iterative design process. The kinds of issues that a Usability Review typically identifies are the ‘low hanging fruit’ or obvious usability problems.

Doing a review helps to highlight any aspect of an interface that violates usability and design principles.

The issues that surface through a review are different from the type of issues that come up while using user based methods like Usability Testing. So a review is a good complement to other user research techniques that may also be employed.

(More on typical issues found through Heuristic Evaluation and Usability Testing vs. Expert Reviews)

To demonstrate the type of issues typically found through a Usability Review, I evaluated the ‘Submit Ticket’ function on Freshdesk. Freshdesk is an online customer support software, targeted at small and medium sized businesses looking for a cloud based solution.

Here are some of the issues that I found:

Note: This is not an exhaustive review of the ‘Submit Ticket’ page, but a few example issues that help illustrate the type of issues that may be found through a usability review.
The products selected to be used as examples in this series of posts are products that are well designed in general. This highlights the importance of iterative design / the type of issues that can be unearthed even in well-designed products, by using various usability and research techniques.

issue observation 1issue observation 2issue observation 3issue observation 4issue observation 5issue observation 6The examples shown above are just a fraction of the issues that a Usability Review could highlight.
The success and effectiveness of this technique is dependent on the experience and skill of the reviewer. A review is typically done by three or four experts in the field of usability and design.

This method is best suited for start-up’s who have access to skilled and experienced usability / design professionals who can conduct a Usability Review.

Post 2 coming up soon, will introduce a related technique called ‘Heuristic Evaluation’.
With similar goals to an Expert Usability Review, a Heuristic Evaluation is a relatively easier starting point for novice researchers – Ideal for start-ups who don’t have a formal design / usability team in place, but want to try their hand at usability evaluation.

Are you a design thinker evangelizing or facilitating user research and usability methods within your start-up?

We would love to hear about your experience / answer any questions that you have about the methods that you used.

We also invite members of the start-up community to volunteer their screens / functions for use as examples in upcoming posts showcasing additional research techniques. Email me  at devika(at)anagramresearch.com to check whether your screen is eligible for selection. 

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Announcing ProductNation OutSights – Structured reports showcasing #MadeInIndia Software Products

As a lead up to India’s 66th Independence Day, ProductNation announces the launch of our OutSights Series. As there are a large number of thought leaders who have a lot of insights on a lot of topics, we decided that what we have, are OutSights.

We start this series with structured reports showcasing #MadeInIndia Software Products with Global Outlook. We will create a ready listing of software products #MadeInIndia that have the potential to take the international market by storm and may pose serious competition to established market leaders in their respective fields.

While this is not a competitive series, these reports will compare companies and their products, on the basis of published criteria. ProductNation intends to conduct in depth analysis of products submitted for review in order to arrive on the list of finalists, who make it into the final report. These reports will be published and syndicated across channels and will be available as a buying guide for those shopping in these categories. The finalists will also receive the ProductNation OutSights Badge which they can display on their web properties with pride.

Here are the list of reports that are scheduled for release between July, August and September, 2013:

  •      Enterprise Cloud Apps from India to watch out for
  •      Innovative Big Data Analytics Companies from India
  •      Indian CRM apps changing customer experience
  •      VAS providers from India for global telcos
  •      Amazing Indian software products with poor marketing

ProductNation welcomes all Indian software makers who wish to participate in ProductNation OutSights, for their respective product categories. Keep watching this space for eligibility and cut-off dates for entry.

For queries or suggestions for report categories write an email to madeinindia@pn.ispirt.in. Please submit your product details online before 20th July 2013.

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India’s Need For Entrepreneurs and the MindSet

In 1991, the second Independence of India took place – there was an opening up of the economy that led, in its own tortuous Indian way, to the opening up of the minds of a section of the population. The educated middle class that had till then either left the country for greener pastures or taken up jobs in the government or with the few MNCs operating then started looking around at opportunities that were being created in India. Entrepreneurship still seemed like something only two sections of society ventured into – those with family wealth or traditional business backgrounds or those without any other option namely, the roadside food shop, the barber and the small store owner. Very few consciously chose entrepreneurship as an option. Then, towards the end of that decade, a remarkable thing began to happen. Young educated middle class Indians suddenly started taking an interest in India: a host of environmental factors played a catalytic role in this phenomenon: the rise of Indian entrepreneurship in the US, the emergence of 1st generation educated middle class Indian entrepreneurs, the creation of aspirations in a increasingly mobile workforce and the media, increased availability of capital and the like. India started getting noticed in the West and India’s arrival on the global stage started getting reported in breathless hyperbole. However, all this euphoric talk about India’s growth and success hid the fact that crony socialism had quietly given way to crony capitalism which was as insidious. Governance and policy making took not just the last rows in the stadium that was cheering “India’s arrival” but were not even in the stadium! The penny naturally dropped on the India story.

Today, we’re confronted by the stark realities of India that the breathless comparisons with China and other countries had somehow managed to paper over. The hubris is slowly and painfully giving away to the realization that the parties celebrating India as a super power had begun too soon. And that there was, quite simply, an enormous amount of work to be done.

In 2012, as India enters its 66th year, our first prime minister’s rousing speech “Tryst with Destiny” is yet again worth reading. Are we anywhere close to redeeming the pledge made, has the new star of hope provided succour and whether hope still springs in the hearts and minds of all of us? While very impressive strides have been made in many areas, especially given the desperate condition at the start of our country’s birth, it is important that we keep in mind the fact that 15% of the world lives in India and over 68%  ie about 700million of our people live on less than US$2 a day. Over 17 million people are born (equivalent to the population of The Netherlands), an estimated 40million are unemployed, over 500,000 students graduate each year from various colleges and over  12 million join the workforce each year . The investment required to educate, train, and deploy these large numbers into gainful jobs is in the tens of thousands of crores. And remember, these millions of jobs have to be yet created! Now imagine the public healthcare, water and sanitation, education, travel, housing, electricity, entertainment, banking and financial services that need to be provided to these huge numbers assuming there’re jobs that lead to incomes being generated leading to consumption and investment. Imagine a scenario where tens of millions of young energetic citizens become disillusioned job seekers – the social upheaval possibilities are terribly explosive even to contemplate, particularly in our country.

For far too long, we have been plagued by poverty – of ideas, of ideology and of course economically. Misplaced socialistic policies in the early years of India ensured that poverty was distributed while cronyism ensured that a few made unconscionable amounts of money and enjoyed the trappings of power.

Jobs are created by entrepreneurs. Governments are facilitators and regulators to make sure that everyone’s playing fairly and by the rules that have been created to facilitate the creation of jobs. Wealth is then created by entrepreneurial actions. Only when wealth is created, can there be investments in creating the support infrastructure and services necessary for India to seriously consider redeeming its pledge. And a crucial pre-requisite for this is the need for an entrepreneurial mindset.

Change in every society, in every age, in every sphere of human endeavor has come about because some people, a minority, decided to put their entrepreneurial mindsets to work. And they were able to put their entrepreneurial mindsets to work because they were incredibly passionate about what they believed in. This minority is the entrepreneurial community. And while the term “entrepreneur” is generally used in the context of business and startups, it is important to realize that the entrepreneurial mindset has been, is and will be on display all around us.

Anyone with an entrepreneurial mindset dreams big, is interested in solving problems, seizes opportunities, is unafraid to experiment with new ways of doing things in order to achieve the dream, demonstrates leadership in creating new resources while marshalling existing resources, energizes people to work collectively to executing the dream, is conscious of the need to be fair, is respectful of the laws of the land, realizes the need to act with speed, engages and responds to feedback with a recalibrated approach, is unapologetic about effecting positive change by challenging a prevailing status quo and works incredibly hard. Possibilities of effecting change and making a difference to oneself and to others as against complaining about constraints (“I have no resources, I don’t know too many people, don’t have the knowledge or experience”) is what distinguishes those with the entrepreneurial mindset from the others. They spend positive energy in figuring out ways to create, seek and aggregate resources (team members, finances, networks) to make the possibilities come true. They are not afraid of failure but instead as Vinod Khosla says, “My willingness to fail gives me the ability to succeed”. In other words, keep shooting multiple arrows at the target.

What is it that drove Andrew Wiles for 30 long frustrating and difficult years to solve Fermat’s Last Theorem – ever since he first came face to face with it at the age of 10 – that had confounded mathematicians for over 350 years? What is it that makes a Reinhold Messner, the greatest mountaineer of all time, climb mountains on every continent, losing several of his fingers and toes and putting himself through extreme life threatening hardships such as climbing Mount Everest without oxygen? Surely, it wasn’t the money! What is it that made a significantly deaf, unschooled child grow up to become Thomas Edison, one of the most prolific inventors of all time with over a 1000 patents? Well before IPL, the stuffy establishment of cricket was changed forever in 1978 when Kerry Packer an Australian media baron challenged status quo by signing up 51 of the world’s top cricketers and introduced limited overs cricket under flood lights, with fielding restrictions, with coloured clothing, cheer leaders and the like. How come no one else thought of this before Packer? Would there have been a Nano if not for a Ratan Tata daring to think of a $2000 car for the middle class Indian?

The mightiest empire the world has ever known was shaken to its very foundations by the incredible demonstration of the entrepreneurial mindset by Mahatma Gandhi. For example, he had this to say about Swaraj “we must have a proper picture of what we want before we can have something approaching it”. Landing in India in 1915 as a 46 year old without any real understanding of India and without any mass following, but shaped by his South African experiences on the need for social justice, driven only by a set of passionate beliefs about the need for freedom for India, developed his concept of Satyagraha and energised people through his own unique blend of non-violent politics, lifestyle and use of symbols like the Dandi March.

We all have heard of Amul. It is India’s largest branded impact making organization Amul today impacts over 3 million milk producers and generates over $2 billion in revenues. It is world’s largest vegetarian cheese brand, India’s largest food brand and the largest pouched milk brand. It would be hard to imagine that an Amul could have been created without the entrepreneurial mindset and leadership of Dr Verghese Kurien, who led Amul as it innovated across the value chain. Amul incidentally was founded in 1946 before India’s independence!

From the few less than obvious examples cited above, it is clear that the manifestations of an entrepreneurial mindset are visible across very many areas of human endeavor.  As we contemplate an India that can  redeem its tryst with destiny, where jobs create economic security for hundreds of millions, we absolutely cannot ignore the seemingly intractable problems that confront us all as citizens. I have long believed that change in India will gain irreversible momentum when the generation born after 1991 enters the work-force. This is the generation that is confident, knowledgeable, technology savvy, is aware, well traveled and is impatient. Fortunately, India is the home to the largest number of such people anywhere in the world.

Resolving these problems requires the energizing of the entrepreneurial mindset that’s latent in each of us. Each of us can make a difference if only we dare to think differently. Changes in the way things are done in government, in politics, in society, in business, in education, healthcare are all eminently possible through entrepreneurial thinking with job creation and facilitation as the important outcome.

Here, therefore, is a question for us to ponder over:

Is it possible for us to imagine that each of us, in our lifetimes, creates – either directly or indirectly – a 100 jobs? Are there not 100,000 people – educated, experienced, entrepreneurial and energetic – who can each take up this challenge? Ten million jobs can be created by this group, indirectly benefiting 50 million.

If it is possible, it is do-able!

The Brihadaranyaka Upanishada has this to say:

“You are what your deep, driving desire is. As your desire, so is your will. As your will is, so is your deed. As your deed is, so is your destiny.”

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Explara – The new journey begins…

There are some companies which start their business with a bang but can’t sustain their growth. Then there are other firms who seize market opportunities and add value to it. These companies succeed in the Indian Market and then get ready to go Global, including taking on the hard to penetrate Asian Markets. The following Interview is of a company that has reached a turning point and  is ready to leave their footprint on the world markets. With new products in the making and a new brand name,they are ready to take Asia by storm. In discussion with Product Nation, Santosh Panda Founder Explara (formerly Ayojak) shares his strategy on the company’s plans ahead.

What was the vision with which you launched the company and how has the journey been so far? 

We saw a need in the small to medium event organizers to streamline their businesses. These organizers did not have any technology input/help and we thought we could provide the same through this platform. We launched Ayojak in September 2008 and after adding ticketing and other features to the product we upgraded it the following year. In 2008 we started with listing of events with 4-5 customers. At that time event organizers were using handouts etc. to reach out to their customers and could not anticipate how many customers would come for the event. In 2009 our turnover was 1.5 Lakhs with 5 customers that went up to Rs.30 Lakhs in 2010, clearly establishing that there was a need in the market for the product which we were offering. In 2011 we clocked revenues of Rs. 1.69 crores and since then have been growing at over 75% year on year and today we handle over 300 events per month.

What was the competition like in 2009?

There was hardly any competition, the infrastructure was getting built, we had to call customers and tell them how to use it. There were people who sold only a particular event and nobody was looking at the platform as a one stop solution for all event needs.

Ayojak has gone in for a rebranding exercise; do tell us about the same. What prompted you to choose a different name? 

Initially we were looking at solving a B to B problem, as in how to run an event, get details of people who are coming, collection of entry fee etc. We chose to address these problems for the event organizers. Therefore the focus was event organizers. But after some time the name which we had  chosen – Ayojak, was perceived to be more of a name for an event management company and thus called for rebranding. Also since we were operating only in India, even then people had problems pronouncing the name clearly.

We thought, that if we need to target B to C customers and look international we should have a name which will be easy to pronounce and at the same time clearly be able to define to the customers what we were all about.

We want to be known as the go to site for any event organizer. Hence an opportunity to all event organizers and customer to Explore hence – Explara

Which other markets other than India are you looking at operating in and why?

We are looking at Singapore, South Africa, Philippines, to begin with, since we have already operated in a tough market like India, the learning has been immense and we feel that we will be able to apply the same in other developing markets, which are equally challenging. Our foray into international arena would be by end July.

What are the new features which you are planning to launch to supplement your existing product lines?

In our view the next two features could very well be the game changers. Any event organizer today still has two problems, Firstly, to identify who all have come for an event and who are yet to come. Through a new product  – Entry Management, we will enable organizers through a smart phone to read the bar code/QR Code/NFC for every visitor attending the event, thus will at all times know the details of people who are in the event, yet to come or are outside the event.

Secondly, In India 30-40% of the attendees still come directly at the event. To help the organizers with this problem, we will give them an app based Box Office application which they can use to scan credit cards, debit cards etc, at the venue itself, thus ensuring that end moment gate collections are just as easy.

What advice would you give to product startups based on your early experience in the last few years?

Communicate clearly too all employees that you are there to stay, thereby keep reiterating to your employees the same message amplifying the fact that you are there for the long term.

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Lead, but consciously nurture talent

My wife forwarded me an article recently that Booz & Co. had written on India’s leadership challenge. You can read the full article here.

This confirmed something I have long suspected. While there are great leaders in the Indian business, there are very few great companies. Let me explain what I mean by that. In the business, we are in, i.e. IT, some companies have done very well financially, and yet, if you talk to employees at the very same companies, you will realize very quickly that folks aren’t happy. That they feel they are under-valued and under-utilized. That they have limited growth opportunities. That they are stuck in a rut. That has made for companies that can execute well, but cannot innovate.

That niggly attrition problem that so plagues the India IT business? Well, guess what, it doesn’t have anything to do with making an extra buck somewhere else. It has everything to do with having equally dreary workplaces that stifle growth. So if one has a choice to make a little more money doing the exact same mind-numbing work, well, that’s what one does. This is not just me talking. Check this out

I can empathize. I’ve been there too. 

So what’s the point of this post? After all this is supposed to be a blog about the software product business in India. 

The reason I write this is because we have an opportunity to create an eco-system of companies in India that are creative workplaces. Where individuals want to have fun and innovate. If we want world-class innovation out of India it has to start with the work culture. So to that end, I jotted down some thoughts on what we should be consciously thinking about.

Money is only a motivator in the short-term  – Many companies believe, IMO incorrectly, that giving people great compensation is more than enough. This thinking is especially prevalent in sales groups within companies. While you have to compensate your employees adequately and at wages that are competitive, money is really not a great motivator. And if this is the only carrot you have, there is nothing stopping your best employees from seeking greener (more carroty) pastures. 

MBAs are great managers(leaders), NOT – Many years back, just starting out in the workplace,  there was a clear hierarchy in new hires. There were the MBAs (preferably from IIMs) at the top of the heap, then there were the engineers (preferably from IITs) in the middle, and then were MCAs. The MBAs were fast tracked on to management roles whereas the rest of the people were expected to be the worker bees. That is a ridiculous way to build an organization. Many years later, the thinking persists and the results are evident. A degree does not make a great manager. Empathy and interpersonal skills, among other things, do. 

Doing a job well is not a predictor of management/leadership talent – I have seen this many times in my work life. In one particular instance, a person who was a fabulous individual contributor was an exceptionally bad team player. Well, he was elevated to a very senior position because of the fantastic work he had done as an individual contributor. I have lost touch with him so I don’t know how he fared. He is a very smart individual so I assume he figured things out but the company had done no favors to him or the company, by not grooming him for that role.

Just some thoughts on a topic I feel strongly about. I keep hearing of all the fabulous things that are happening in the Indian product eco-system and I am excited about that. But we must always be aware of the cultural baggage we come with. And the cultural baggage has a strong authoritarian component to it. Where commands are given and dissent is not tolerated. If we want to build a generation of leaders that can spawn multiple companies doing innovative work, this needs to change.

But all is not doom and gloom. Things are changing. One of my clients, Moonraft Innovation Labs, a UX design shop out of Bangalore has created a relaxed work environment to foster creativity. Titles are fluid, no assigned seating and an entire floor devoted to artsy endeavors. The quality of work they are putting out shows their approach is working. This is just one example. I am sure there are many more. The objective should be to drive the old command-and-control structure into extinction.

Agree. Disagree. Or have another viewpoint. Would love to hear your thoughts.

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Aurus Network CourseHub: Delivering on the promise of classroom-in-the-cloud

Aurus Network was founded in 2010 with the vision to make quality education accessible to masses at affordable prices. It is revolutionizing the way distance/online education is delivered. Aurus offers CourseHub, its flagship product, which is a cloud-based solution for educational institutions (higher education, test prep and training,schools, etc.) to capture, store and deliver (live or on-demand) lectures online. The company has been funded by Indian Angel Networks and is the recipient of Microsoft Bizspark 2012 Startup Challenge in cloud category. This is a review of their flagship product CourseHub and the company.

Introduction

When I was in college and bunked classes (which was fairly often; it was hard to get up for 8 am classes), what usually got me through the course were the notes photocopied from one of the studious guys of the class. It was not the best solution, but was good enough. Then, in my 3rd year, my college introduced a special studio classroom where one of the course professors used to hold his lectures – a sound-proof, sanitized room where the professor used to write on a paper with marker which would show up on screen for us, and for recording. The recording was supposed to be available as a bunch of video cassettes (yes, I am that old!) in the library. It was painful to attend these classes because they felt so unlike a classroom, and of course, it was too complex to watch these recordings so I never watched any, and photocopied notes continued to save the day.

I was 15 years too early! If it was 2013, I probably would be sitting in a regular classroom whose lectures were being recorded, and recordings were available right after the class, on my course portal online, in an easy-to-consume format on the various devices I own. Recorded (and indexed) lectures would allow me to have lectures-on-demand, which is so cool.

This is what Aurus Network offers through its flagship product CourseHub. It is a cloud-based solution for educational institutions (higher education, test prep and training schools, etc.) to capture, store and deliver (live or on-demand) lectures online. CourseHub is also offered to corporates to manage remote training sessions and schools for capturing their classes.

Aurus Network was founded in 2010 by Piyush Agrawal and Sujeet Kumar, and is based in Bangalore. 

The Product

Usage Scenarios

There are 3 primary usage scenarios for CourseHub:

  1. Lecture Capture: A lecturer captures his/her lecture for offline viewing by students or for creating blended learning content (for MOOC or other delivery mechanisms).
  2. Self-paced learning: A lecturer’s class is recorded to be viewed later by students to allow them to review the content at their own pace. Lecturer can edit the video and add pop quizzes and assessments online. This is usually used by universities.
  3. Extend the classroom: In this scenario, a lecturer’s class is streamed in real-time to remotely located classrooms or students. This allows the lecturer to have a very large classroom and have it closer to where the students are, without spending time in physical travel or money to build a single-location large classroom. This is usually used by training and test preparation centers.

For all of these scenarios to work, the capture device needs to be set up in a studio or classroom, which is a 1-time activity.  This is typically done with a server class machine connected to internet via high speed broadband connection (higher the speed, better is the quality of video streamed and stored) and a capture device (HD camera and microphone) connected to the machine.

Development

The product was conceptualized in Nov 2010 in response to the problem posed by their first client. Their V1 was released in Nov 2010 and V2 in Feb 2011 with the first deployment and roll-out to 10 centers across India. Their tech team comprises of about 10 people, who are working on various technologies like video compression, video streaming, computer vision, large scale load balancing and engaging front end technologies.

Most of the innovation in the product has been achieved by applying technically simple but important insights about customer behavior and preferences. For e.g., one of the USPs of the solution is that they are able to deliver almost HD quality videos at as low as 200 Kbps, while other conventional solutions (web conferencing, video conferencing) require atleast 1 Mbps or more for the same. This has been achieved by prioritizing the encoding parameters which matter more for the viewer while watching educational videos (like clear audio, sharp writing etc.) rather than doing a one-size fits all kind of video encoding.

Features

Some of the product features are as follows:

  1. Record video with any HD camera and microphone
  2. Enable automatic focusing on teacher with Intelligent software based tracker
  3. Teachers can teach in their natural style
  4. Schedule captures in advance
  5. Automatic archiving to create media library in the cloud
  6. Integration with client’s website
  7. Integration with Learning Management Systems like Moodle, Blackboard, etc.

Differentiators

There are a few standout features in the product which are well worth the mention:

  1. They can deliver HD video quality at 200Kbps, which makes this available to all students who have a broadband connection. Other solutions use much higher bandwidth (around 1 Mbps in some cases). The reason they are able to do this is because they can optimize their compression algorithms using their knowledge of what is important for students (clear audio and writing is much more important than clearly visible instructor for example).
  2. No human intervention is required (after initial setup) to capture, store and deliver lectures, they have fully automated the solution (including tracking the presenter, managing connectivity disruption, etc.).
  3. It is a cloud-based solution, so clients can try out their solution without any hardware setup.
  4. Aurus provides a home-grown Learning and Content Management System which allows their clients to manage users and lecturers, edit video lectures, and add quizzes and assessments to the videos. This means that the clients get a complete product.

Market Adoption

Typical market for CourseHub in India are test preparation and training institutes like Career Point, Career Launcher, etc. and universities. CourseHub is sold on a monthly/yearly subscription model, for example Rs. 20K a month can get you 500 hours of lecture time (1 lecture + 99 students in a 1-hour lecture will constitute 100 hours of lecture time) and 50GB of storage (500 hours will fit into 50GB). However, for someone in the market for such a solution, there are many options to choose from:

  1. VSAT based classrooms (Hughes is the biggest player) – These are expensive to set up and require dedicated hardware, but offer highly reliable infrastructure
  2. Internet-based classrooms (like Aurus) – Some of these require expensive studio setup, while others, like Aurus, can work with regular hardware.
  3. Ad-hoc systems: You can use youtube (or other video streaming sites), Google Hangouts and some local capture method to enable a large part of functionality of capture, store and distribute, and save some money. Operational hassle will be larger.
  4. No system: this is still not a critical need for educational institutes and a large number of these institutes just don’t have any solution in place.

For all these solutions, technology is an important piece, but so is the overall package (that includes setup, operations, essentially IT-free solution), since the clients are not likely to be tech-savvy enough to manage these technological solutions.

Currently, Aurus is the technology solution provider of type #2 – allowing their clients to create internet-based classrooms. They have about 30 clients out of which around 20 are actively using their system. They have a healthy pipeline of future deals, sales cycle tends to be long and seasonal (because of academic session dependency).

The Roadmap

With the goals of capturing more clients in India in different segments (Corporate, Training and Test Prep, Schools) and also expanding outside India, Aurus has an ambition pipeline of features and innovations.

Product Roadmap

Over next 12 months or so, Aurus intends to deliver the following to its clients:

  1. Launching a completely Do-It-Yourself version of CourseHub, which will allow institutes based out of India to use the product
  2. Launching more features to allow professors/trainers to effectively analyze student performance and take pro-active actions
  3. For professors, adding multiple ways to lecture capture in their classrooms – using a dedicated capture appliance, an android app or manual uploading

Technology Roadmap

Aurus hopes to deliver following technology enhancements in this period:

  1. Enhanced Capture – Enhance and decouple capture process from software so that the solution can work with any kind of capture device and hence can allow them to go global. This includes allowing the use of high-end camera (which ship with Android OS) and remotely controlling it from server through an Android app.
  2. Deep LMS integration – Current LMS integrations are very shallow since it uses LTI. Deeper LMS integrations will enable more complex use cases to be supported.
  3. API solution – Allowing API level access to the video catalog to enable integration into client’s portal will allow CourseHub to be more tightly integrate with client portals.

Competitive Landscape

Companies offering such a solution (capture, store and distribute – live or on-demand) are very hot in US. Echo360 is a Steve Case backed venture that focuses purely on universities and offers socializing the learning (learn in groups and collaborate using social tools) and flipping the classroom (use classroom to discuss and clarify doubts rather than lecturing). Sonic Foundry is a public company, and Tegrity is a McGraw Hill company, both offering solution similar to CourseHub.

One of the reasons for this space being hot is the fact that flipping the classroom is becoming the craze, and with MOOC (Massively Open Online Course) also being the next big thing; capture, store and distribute of video lectures suddenly seems like a key technology piece to allow everyone to offer a MOOC.

In India, it is still early days for flipping classrooms and offering MOOCs. CourseHub is primarily being used to extend the classroom, and make star lecturers available in remote classrooms, in addition to using it for self-paced learning by making recorded lectures available for later viewing. However, as Indian universities catch up to these concepts, Aurus seems to be well-positioned to be a leader in the space if it plays its cards well.

The Road Ahead

If I have to go to college again, I will probably bunk again (while managing the attendances somehow since they are mandatory now). When I do so, I will probably still go for photocopied notes because they are so brief and quick to go through. I would really love to look up appropriate pieces of short video clips of the lecture when I get stuck in the notes so having notes and videos cross-indexed will be so useful; also useful will be the ability to find other lectures on the same micro-topic and try to really understand it from different perspectives. Essentially, videos become any other type of content which can be searched, used and mashed up together to create learning assets that are reusable and easily consumable.

Aurus is a pure technology provider in education space. It becomes apparent when you go through their solutions, their brochure, or the cool features they showcase on their website – they are technology-heavy. However, education sector doesn’t yield itself well to pure technology players, primarily because technology is hard to use, and very few institutes have technical/IT teams on their rolls. So what they need is complete solution (including service, personnel, etc.) so that it becomes plug-and-play for them. Aurus needs to be on top of its clients’ complete technology needs and should be willing to offer various value-added services.

Blended learning holds lots of potential, be it universities, training institutes, corporates or schools. Aurus seems to be well poised to help them deliver on this promise through technology.

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How to Become a Super Associate

Being an Associate in a Venture Capital firm is a dead-end job*, that you can’t leap without entrepreneurial experience. And, entrepreneurs hate you for your pesky, clueless mails. Here’s hoping to help you out – and help ourselves.

Dear Associate / Analyst,

I know I took a big stab at you [1] and went public with it. I know you are trying to do your job, but the way you are going about it right now sucks big time. If you are wasting the time of an entrepreneur – and especially one in my fold and care [2] – well, you can expect more coming your way.

That said, I know its pointless to be critical instead of being helpful. So here are some tips to be awesome at what you do:

1. Introduce yourself with your title

You represent the firm, but what you do there will set expectations right with the entrepreneurs. Most Firms have a lousy habit of not even updating their current website and partner list, so an Introduction that says “Hi, I am So-and-so, an Associate with XYZ firm and I work closely with Partner Mr. X on Deals related to a,b,c sectors” would make it a better intro.

2. Be Clear

Please do not make claims about funding and all – Try very very hard not to set false hopes. We know the power you have is only to get names in a pipeline. Not even the principals have power to make that claim [3], so be very clear why you are reaching out to a startup – “To get the startup in your list of startups to watch” aka the dealflow pipeline. Entrepreneurs are racing against all the odds set against them, letting them know that this is a relationship building excercise, not a funding excercise, will also give them the opportunity to prioritize accordingly.

3. Think twice, thrice before asking teams to work on a document

I have met startups who sit and slog making market projections and research – well, thats kinda your job, isnt it? – and in trying to make business plans with five year projections.

Hint: the startup still doesn’t have a product, they don’t have a customer and they don’t know who might pay for it. That’s a hell of a lot of variables, and what you are asking them to produce is nothing short of writing fiction. Let us do more realism and less fiction, please?

4. Be hands on.

And by that we mean, be useful. If you love tech, what we really really lack in India (and globally) are guys who can look at a product and give feedback. If you sign up, give the product a try, recommend it to a few users, get them to try and send the team an email with genuine usability, functionality and customer feedback, guess what? its two birds in one stone – you don’t have to ask questions about who uses the product anymore because tada! you yourself know, and you also get on the good side of startups and the advisors / accelerators who are helping them.

5. Can you get them customers?

If you are talking to a startup that has its beta / product launched, can you push it internally within your team and your portfolio and get them to adopt it? You might have to build a system where your portfolio entrepreneurs get a single point/vote in the companies you are looking at (Tell them Y Combinator does stuff like that, internally to sell it) – which helps in two ways;

a) You get an entrepreneur’s perspective that can really help startups and

b) if they are solving a real problem, they might get paying customers.

6. Add Meaningful Value.

You know that there are only four defined roles in a VC firm, and you are at a dead end job if you are not an entrepreneur because its not easy becoming a partner, climbing up the associate route. You know what will put you up there? Proving that you can work with entrepreneurs and can be the second mind (head). So be selfish. I have been blown away by the value add some of the associates and principals like Anshoo of Lightspeed, Anand Daniel of Accel do for companies (in India) – so much so that I ask teams to talk to them. See, how it works?

All of this gets you on the good books of entrepreneurs, startups and folks like me. If you are an awesome associate/analyst, I’d love to meet you sometime and lets do this work together. We are all on the same side of the table. [4]

Do Entrepreneurs really Care? Here’s a requote of a quote from Kris Nair’s blogpost [5], of Sampad from Instamojo [6]:

I hardly see an investor saying that:

Hey, I used your product and it’s awesome / awful / sucked etc and I think you can do this or that from his/her experience which can help the founder achieve little bit more on reach, retention or revenue metric of the company.

You know where to start to build moat – almost always it starts with what most others wouldn’t care doing or looking at. Be an awesome associate – don’t suck.

————————————————————————————————
[1] http://www.vijayanand.name/2013/06/darn-the-associates/
[2] http://www.thestartupcentre.com
[3] http://www.vijayanand.name/2013/05/ask-vijay-what-goes-on-inside-a-vc-firm/
[4] http://www.vijayanand.name/2013/05/the-same-side-of-the-table/
[5] http://krisnair.com/post/34818850722/vc-associates
[6] http://www.instamojo.com/

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Pixel Jobs – Product review of a job portal by designers for designers

Pixel Jobs Image

Pixel Jobs, designed by the talented folks at Sparklin, is a refreshing look at the boring world of job portals. The problem to solve was simply, “How to get a job post seen by the best creative talent?” An old fashion job-board served as a physical metaphor to yield a clean, simple and inviting job portal cheekily named – Pixel Jobs. It has nifty filters to make searching easy and a straightforward form that allows you post a job in a few minutes.

Pixeljobs Screenshot

 

 

On April 3rd, Avinash and I had freewheeling chat with the young founders of Team Sparklin – Gurpreet Bedi and Himanshu Khanna – on the hows and whys behind the product. 

How did it all began? Are you trying to become Cleartrip for the job space?

“Pixel Jobs really started based on internal need of hiring the best designers. Sparklin started a Facebook group last year to reach out to the designers through personal networks and within a short time close to 1200 people had signed up. That clearly indicated a need for a specialized job site for designers. There are already sites for coders, so why not for designers. This is purely a niche product,” on the why.

“There was a concern on excessive moderating to ensure the postings to be creatively-relevant and accurate. I had to overly moderate the Facebook group for the first couple of months. But then everything kind of fell in line. The relevancy and quality of postings sort of improved on their own. Very little moderation was required. That’s when an open job forum became a viable next step. We still moderate but only for completeness.”

So what is the initial marketing strategy?

“We have deliberately taken a slow approach towards marketing this portal. First, we want to ensure that the platform is robust enough to handle large volumes. Second, by only allowing a selected well-known companies in the creative domain to post (for now) will increase the quality and credibility enough to not warrant a serious marketing push,” elaborating on the initial word of mouth approach.

How is the product going to evolve over next few months? Semantic search, LinkedIn connect, company-based hosting, additional views, etc. are some gaps.

“This is only a version 0. We are improving the product on a daily basis. All these features and many more are in the pipeline and you will see a gradual improvement over next few months. For instance we are working on an Android app to launched soon and targeting companies to use Pixel Jobs to host jobs on their sites. They can just use our embed our code with their branding on their site. There is a big need for this. For example, some of our clients already have a job board on their site but prefer to here.”

Even though the initial version is impressive, there are some user experience improvements to consider. For instance, extending the card metaphor by not going to the next page for a more fluid interaction (too many new windows), introducing category tags as alternate searching mechanism (search only for graphic designers), making search more central to the experience, introduce shared vocabulary (minimal difference between UX Designer and UI Designer), personalizing content based on previous searches and making it easy to follow-up on interesting jobs.

“We agree with all these points. Most of these are being worked on currently. For example, in the Android app you can favourite your job and city. Only those jobs will then be shown by default. These will help personalize your experience. Easier to do this on Android for now and eventually we will introduce them on the web as well.”

How do you plan to distinguish the experience between job seekers and posters?

“This will be a very important strategy once we build some traction and gain volume. For now the obvious focus is job seekers which will help drive better companies to the portal.”

Why is there a disconnect between brand Pixel Jobs and the URL (jobs.pixelonomics.com)? This could split the brand between Pixel Jobs and Pixelonomics. Better to build a single brand for consistent messaging.

Without elaborating on this too much, “We will merge these very shortly under a new brand name in the next release. We could also launch series of boards across other verticals as well – mobile developers, etc. under the same brand.”

It will be hard for the creatives to search on cluttered and difficult to use popular job sites from now on. 

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How Much is your Company Worth? – A Valuation Toolkit for Software Product Startups

When you see Yahoo offer $1.1B in cash for Tumblr or it pays $30M for Summly, the reactions around the world range from kudos to the founders and initial investors, to “I’ll have some of what they are smoking”! But most of the time, there is some sanity behind all that madness but there have been times when it has been more of insanity as at the peak of the Dot.com boom, in the early 2000’s. The question is a confounding, personal one, whether it’s your start-up company that you are trying to value, or considering investing in one. Company valuations are usually a science when it is a mature company with products already in the market, with revenues and profits. It moves more to the Art side of the continuum, the more early stage, the start-up is. It is different if you are consumer or enterprise focused, pre-revenue or post, traditional software model or SaaS based.  It is better to be armed with a toolkit of various valuation approaches, picking and choosing what may apply in a specific situation. Typically valuations could be arrived at as a cumulative of various components all added up together as appropriate. Some of the approaches that make up this toolkit, when and where they may be applicable, are:

a. Asset Valuation: If the company has a product and is making revenues already, the current contracts, and those close to signing, may have their own value and these need to be added up to the revenues and hence, the value of the company.  The cost to replace existing assets can also be used to add to the valuation, especially in acqui-hire kinds of situations – where a company buys another company for its engineers and talent, rather than the products themselves. This may be of special interest in start-ups based in India. How much time and effort would it take for another company to assemble the talent and experiences the employees of your company may represent? In the simplest case you can add up all the recruitment expenses for assembling the talent you have over the years adding a premium for the time-value of the whole thing!

b. Similar Company Comparisons: There is nothing like comparables with recent valuations of companies similar to yours, in business model and stage of development. Other companies that have received funding recently may be good justifications for your own valuations. This is why networking not just with VCs and Angels but also fellow startup company founders and chief executives is important. They should feel comfortable enough with you to share this kind of highly confidential information with you! Think about it!

c. Market Size and Growth Potential:  For those that think “why should Tumblr be valued at $1.1B”, have you looked at the first year revenues of Google and Facebook? In no other industry would you see companies go from $0 to $1B in as short a time as some of these companies with just ad revenues! Traditional brick and mortar companies would take decades to reach this level of revenues! According to Yahoo!’s May 20 letter to shareholders, Tumblr site has 300 million active monthly users, meaning, Yahoo! is paying around $3 per user, while Facebook paid around $30 per Instagram user; apparently Yahoo! is doing a good deal. So as this article on The Motley Fool says, it’s all about traffic, stupid!  Eyeballs may not be dead if you can make it work still, although it will be harder these days! This is where we may want to think about the advantages of going global vs going for the Indian market alone! The Indian Smartphone Market has grown from 4% growth to 6% growth from 2012  to 2013! So it may may still make sense to focus on the Global consumer smartphone market instead of the Indian market alone if you want to grow fast! But the SMB market in India seems to be large already and growing at a reasonable rate! So if your startup is focusing on the Indian SMB market, market, more power to you!

d. Intellectual Property, Barriers to Entry and Ecosystem Building Potential:   Think about Microsoft SQL server or The Oracle Database Management system.  Think about the millions of people around the globe that make a living out of these ecosystems – providing skills in these products, skills in the applications built around these products, having jobs around the globe with companies that use these products and applications built around them. Those are ecosystems! These are worth trillions of dollars just around the ecosystem building potential of these! Google and facebook are in the process of building their own ecosystems now. If your Intellectual Property is anything like this, you may want to increase your valuations proportionately. What barriers to entry have you built around your technology? What prevents any tom, dick and harry from replicating what you do? If that’s solid, it’s worth a lot of money and you can confidently reflect that in your valuation and articulate the same to your investors. Here’s a link that explains different kinds of ecosystems you can build!

e. Income Valuation Approaches: If your start-up already has revenues and profits, the Income Valuation approach may be used  to arrive at the income component of the valuation. The usual methods used are Discounted Cash Flow (DCF) methods. At their essential simplicity, they are estimating future revenues and profits and arriving at the Discounted Present Value of those profits given an interest rate. For example, if you are projecting profits of $100, $150 and $300 at the end of years 3, 4 and 5, what are their current values? What amounts today if invested at say 8% would  yield incomes of $100, $150 and $300 in years 3,4 and 5?, You add those profit values as of today and calculate valuations based on those! Usually Earnings Before Interest, Depreciation and Taxes (EBITDA) are used instead of Net Profits since EBITDA reflects much more accurately the exact earnings potential of your startup! You can also use some rough rules of thumb for valuations based on sales –  Horizontal Software between 1.35x and 2.1x. Vertical Software from 1.4x to 2.1x.  Consumer Software a bit lower, 0.5x to a just under 1x sales.  Infrastructure  – 1.5x to 2.5x sales.  Internet and Software is 2.19x to 2.7x.  IT Services, which is people intensive, is lower, 0.6x to 0.74x.  The actual numbers don’t matter as much as the difference in how different kinds of startup companies are valued, in relation to each other and why.

f. Scarcity Premiums: The basic principles of Economics – Demand and Supply may apply to startup company valuations, just as well. If too many investors are chasing after a limited number of  shares available in a start-up company, the valuation goes up! This is the reason you need to create an imbalance between investors interested in your company and the number of investors and the money you are willing to take in – creating a scarcity! This is also the reason you need to start build as big a network of investors way before you need them to invest in you! You expand your demand way ahead of time! However, Scarcity Premiums can come back to bite you in your next round of investments if you have oversold your value and cannot meet your revenue, profit or product development goals before the next round. Down rounds are no fun! If you raise this round at a high valuation and the next round is a down round, your company may be perceived as a failure. That’s why you need to be careful about taking money at higher valuations, even if you could!

h. Insanity Premiums:  There have been times like the Dot.Com boom when insane valuations prevailed and entrepreneurs took full advantage of them. Mark Cuban sold Broadcast.com to Yahoo.com for $5.7B . This is acknowledged as one of the worst acquisitions in history! Mark Cuban was not the worse off from this deal since he cashed out and moved on to other investments on his own. If it’s not a total exit, the same caveat about subsequent down rounds still may apply!

As a start up company, you owe it to yourself to take a systematic approach to valuing your own company and conveying your logic to your investors if they ask for it. In the worst case, experienced investors may choose the methodology that gives you the worst valuation and you can be ready with your own bargaining position with careful, considered logic and a better valuation!

 Price is what you pay. Value is what you get. – Warren Buffett

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Insights on Building Sustainable, High-Growth Product Company

Manav Garg’s career exemplifies the statement “where there is big risk, there is big reward”. Throwing up a lucrative, six-figure plus salary and bonus as a commodities trader to start a software company that would build a commodities trading product required guts. Manav took it in his stride and today has built a world-class company that competes globally with its commodities trading software. He’s also built a company – EKA Software – that is domain driven and highly customer centric. In this interview with ProductNation, Manav talks about the origins of his company and some key factors that went into building it. 

You began a career in trading commodities. So when and how did you foray into the software industry? 

Yes, I am not a techie. I used to trade commodities enjoying import and export for a firm in Mumbai. But during this time, I saw a need for software for commodity trading. So, I spent more almost 24 months meeting with customers as a trader, trying to understand how to fill the gap and how systems would be a boon to traders like me. Since I have no background in software, I researched for a year on the requirements of the commodity trading industry, how it works, how to install a system for a particular pain point.  I moved to Bangalore, and set up shop, hired people and started out, spending almost 50% of my time meeting and talking to people on the benefits they would get from the software. This was how I educated myself about software.

So you are saying that your entrepreneurial spirit was lit by your ability to identify an opportunity.  While there are opportunities everywhere, the main point is you  need to  have the guts to take a risk, and the research to back it to believe that  the opportunity can be translated into business success. 

Obviously, in my experience this is exactly what happened — careful research combined with my intuition that this opportunity will be a success.  Many times too much research is done with no action. I do not believe in market reports. I believe that research and  study done by yourself and through interaction with customers and feel of the market is what will make your product a success.   

How do you identify customers and ensure that they will give you the right picture while your product is being built?   

Since I was in touch with customers for 24 months before starting the business, it was easy to contact them.   It is important to know how to convey the right message to your customers, tell them about the kind of solutions you are proposing.  Moreover, if you are connected on LinkedIn through your professional contacts and friends, you can easily connect with customers. 

I don’t think it’s a big a challenge to identify customers. I think the biggest challenge is the right approach. I recall when I contacted people whom I have known for at least five years, be it in Hamburg or Amsterdam, we were able to relate because they felt that I understood their pain points and were confident that I would bring to the table valuable solutions.

So your next step was to build the team.  So how did you form the right team, especially the founding team? 

You must be passionate about your product because then you can speak with conviction about the advantages of your product. 

When I started, I used the personal contacts route. At that time, I did not know anybody in the IT sales or products fields.  All that I was confident about was that Bangalore is a good place to do business in the IT field.  I met people, worked with them for some time, and they helped me understand how the whole industry works. 

For product development, I also reached for professional assistance to some of the larger technology MNCs who had more experienced talent. Since I did not have a software background, I decided to concentrate on sales from inception. 

For any start-up I think it is very important to decide from an early stage as to what is the main driver in the business. If you are doing business applications then sales is key driver, if you are doing online sales then marketing will be the key driver and if you are making tech based products then technology is the key driver here. But if it is very important to identify the key driver that will then help decide the skill set of the team. 

Today, what would you say are the key things that differentiate EKA in the market? 

For many years, people have been trading in rice, sugar, wheat and metals. It is important to have a good supply chain to manage this trading.  And for this you need excellent software that simplifies the supply chain. This was the challenge as a trader I was trying to overcome.  We basically cover that need in EKA today.  

A lot of our competition, mainly in the US, is focused on crude oil, gas, trading industry. We were the first one to focus on the commodities industry and therefore had an edge in the market.  We carved a niche for ourselves. 

Please share with newer entrepreneurs the learning’s that you have had over last five years, especially  amidst the challenges you and other emerging companies in India face?

The biggest challenge is putting together the right sales team. The product might be good, but it is the taking of it to the market that will bear fruit.  You also need an efficient global online distribution model. Another serious issue is how to retain employees. How do you convince people that your product is here to stay for a long time and not just a couple of years.  Emerging companies need to convince employees that their products are not fly by night, but bring value to customers and, thereby, employees over a longer span of time.

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Indian Product Industry: How Far We’ve Come And How Much More To Go

These are exciting times for us in the Indian software products industry. The air is pregnant with cautious, yet very strong optimism that some truly great product companies will emerge out of India in the coming years. There is a significant shift in the mindset of Indian entrepreneurs, with a focus now on building great products and not just good enough products. A talent pool of  highly qualified and experienced professionals who have worked with MNCs across various functions and roles is now available. The support system has also gotten stronger with more angel investors, accelerators and incubators, focused events and meetups with founders, entrepreneurs and experienced professionals coming together, sharing their knowledge and helping each other. Entrepreneurs now have more exposure to the Valley and other innovation hotbeds and international markets by virtue of their interaction and participation with accelerators, investors and entrepreneurs outside of India. More importantly, we already have examples of successful Indian product companies that have built products for the world and are now well-established names in their businesses.

I’ve stated this earlier as well, that it is my firm belief that the software product industry will lift India out of its poverty. While I strongly believe we’re firmly on track to make the prediction come true, I would also like to strike a note of caution. Having been in the industry for close to 25 years new wearing multiple hats and seen it evolve, there are some observations I would like to share with the readers.

Rome wasn’t built in a day. It’s probably the most cliched phrase, but I think it makes sense repeating the cliche once more in the current context. As entrepreneurs and investors, it is indeed important that we celebrate key wins and milestones like funding, new hires, entry into new markets etc. However, we also need look at the larger, long time picture and focus on what is needed to build a meaningfully successful company, a company that creates value for all the stakeholders – founders, employees, investors and most importantly the customers. And it is that part, of envisaging the larger picture and actually painting it, which is a true test of one’s faith in their core beliefs, their endurance and perseverance.

It is said that dramatic changes happen in a dog’s lifetime. Dogs usually live between 10-15 years on an average, and if they were to follow technology they’d be witnesses to some incredible and eventful happenings. Ten years maybe doesn’t seem like too long a time for us humans, but I were to borrow from the tagline of a very popular coffee chain, a lot can happen in ten years! Rewind ten years to this day, and this is what we would be looking at. Facebook, Groupon, Zynga did not exist. Google’s AdSense & LinkedIn were just about to be launched. On the mobile side, Nokia was the largest vendor of mobile phones and Samsung hadn’t introduced mobiles phones in India yet. Seeds of iOS and Android had probably just been sown in the minds of their creators. In the fast-paced world we live in, it’s very easy to miss how much can happen in what now seems like a short period of ten years. But if you take a step back and notice each of the happenings, you’ll realise how impactful and significant these changes are.

The observations and insights from the points mentioned above hold a lot of meaning for us in the Indian software product industry. While it’s very natural and fair to expect things to move quicker, people to be smarter, government and regulators be more friendly, investors be less risk-averse and so on, but it is also important to remember that magic doesn’t happen overnight. However, small wins and milestones added up over time will see your product and your company achieve something significant over time. Moreover, as an entrepreneur, you’ll need to believe in non-linear growth and that there’ll always be a point from where your growth will take off and go the hockey stick way. Remember, that Angry Birds was Rovio’s 52nd game and they were almost bankrupt at the time they released Angry Birds. What if they had given up after their 50th game? Of course I believe in overnight success, and the only overnight success is getting a good night’s sleep! For all other kinds of overnight success, there are miles to go before one sleeps!

I’m reminded of a tagline that Timex watches had for a long time. (A Timex watch)…takes a licking, but keeps on ticking. That’s some inspiration for us entrepreneurs there! I’ll leave you with some vintage Timex commercials. Hope you enjoy them.

http://vintagetimex.homestead.com/farmer.jpg


YouTube Video – http://www.youtube.com/watch?v=7_fKppH8B0g

Happy Building,

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Promoting Design Thinking in the NCR

design thinking

In the last 2-3 years there have been well designed products coming out of the NCR startup ecosystem. Mettl, Visual Website Optimizer, Paytm, and Oogwave, especially come to mind where Design Thinking has been an integral part of the product development process, and not an after thought by giving it just a cosmetic veneer.

There is a noticeable increase in design sensibility while attending various Meetups and pitching design services to startups. However, there is still a gap in how to make it happen. In other words, how do startups and product managers cover the distance between thinking of design and making it actually happen.

With support from ProductNation, a few design professionals from Design For Use, MakeMyTrip, WoodApple, DSYN, Zomato and U2opia Mobile have formed an informal coalition to help promote the how-tos of design thinking,

Please join us for our launch session this Saturday (May 18th) at the MakeMyTrip office. There will be a talk by Mettl founder, Tonmoy Shinghal, followed up a 3-hour workshop on how to practice Design Thinking in your company by Devika Ganapathy of Anagram Research. Not to mention plenty of networking opportunities during coffee breaks and lunch. Please check out the details and register soon (only 30 participants).