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May 2013 be the year for Systematic Innovation in India

If 2012 saw a lot of buzz in India about Jugaad thanks to the Radjou/Prabhu/Ahuja bestseller, I am really hoping that 2013 will restore the balance towards systematic innovation. Indian companies need systematic innovation more than they realize because their challenges are different from the ones that multinationals face.

Why are Indian Companies afraid of Systematic Innovation?

Among Indian entrepreneurs, even in large business houses, the fear of systematic innovation is that it will hamper them from being opportunistic, and prevent them from being agile and quick. They point to multinationals who lose out to nimble local competitors, such as a Nokia being eclipsed by a Samsung.

But I wonder whether it’s fair to attribute the travails of large multinationals to their systematic innovation processes. It’s well known that as companies become large, they tend to become more focused on predictability and efficiency than on disruption or innovation. They tend to get more obsessed with “what analysts will say” than what is right for their company. And, they tend to get more bogged down by the “dominant logic” of what made them successful in the past rather than what will help them succeed in the future.

There are several recent examples that corroborate these observations: Nokia had developed touch screen phones well before the Apple iPad made them the “next big thing.” Kodak, which recently filed for bankruptcy, was one of the pioneers of digital photography technology but allowed other companies to take over that space. These examples suggest that risk aversion and “prediction disability” (and not systematic innovation processes!) prevented these otherwise iconic companies from capitalizing on their innovations.

Once you go even slightly higher up the technology ladder, systematic innovation becomes inevitable for success. Consider any of the companies that I wrote about in the last year – 3M, possibly the most innovative company of all times; IBM, still a powerhouse of innovation with more than 6,500 US patents granted in calendar 2012; or Cisco, one of the first multinationals to create a world class product end-to-end from India. Or Indian companies like Titan, whose disciplined efforts to build innovation capabilities ground up from the shopfloor have resulted in huge savings of time and precious metals; and Eureka Forbes, whose efforts to commercialize the best technologies in water purification have resulted in Amrit, a process that tackles even bio-organisms. None of these companies could have achieved even a fraction of these results without following systematic approaches to innovation.

I believe that systematic innovation has got a bad press because it has been confused with the dynamics of decision-making in large organizations. A clearer understanding of what systematic innovation is, and what it’s not, should establish why embracing systematic innovation will help rather than hinder innovation.

What Systematic Innovation Is…

An approach to innovation that enhances the number of ideas being generated and considered so as to improve the odds of innovation success. [Research shows that it often takes more than 300 ideas to result in one successful product.]

Greater, structured connections with users/customers and other stakeholders to help align innovation with market needs. [Remember my article on why the Tata Ace was much more successful than the Tata Nano?]

A focus on experimentation and testing to check out assumptions, refine and reinforce ideas, and make innovations more robust and scalable.[Remember the motto of IDEO, the leading design firm: “Enlightened trial & error succeeds over the planning of the lone genius.” With enhanced user aspirations, the “integrity” of any innovation as reflected in the experience of the user is essential to innovation success. Innovation is much more than ideation, it is about execution to provide sustained benefits to users/customers. When a company like Apple puts an inadequately tested map utility on its latest iPhone, or Tata Motors fails to address safety issues adequately in pre-launch testing as appeared to happen with the Nano, an otherwise high potential innovation loses its sheen. As does an e-commerce site when it doesn’t support all browsers!]

Leveraging the power of many rather than depending on the intelligence of the few. [Open source software development has demonstrated the power of harnessing the wider community in product development. Open source methods are now being extended to challenging domains such as drug development. And companies like P&G and Eureka Forbes have shown that open innovation can be a source of unusual ideas.]

And What its not…

Systematic innovation does not necessarily mean huge investments in R&D. In fact, studies have repeatedly shown that the most effective innovators are not those who spend the most on R&D. As consulting firm Booz showed in their 2006 innovation report, effective innovators excel at processes like ideation, project selection, and commercialization, all part of the systematic innovation process!

Systematic innovation does not mean doing basic research or trying to pioneer new technologies. Firms like Titan Industries have shown that systematic innovation works very effectively even with improvements in traditional jewellery manufacturing processes.

Systematic innovation does not necessarily mean long drawn innovation cycles. Effective innovators find low-cost and quick ways of experimenting that help them test ideas and assumptions rapidly. They try to do what A.G. Lafley calls “Doing the last experiment first” – test the assumptions that will have a critical bearing on innovation success or failure early so as to avoid going down tracks that lead to nowhere.

2013: The Year of Systematic Innovation?

Indian companies need to embrace systematic innovation so as to capitalize on their innate abilities of intuition and market sensing. Vinay Dabholkar and I hope that 2013 will be the year for systematic innovation in India. May systematic innovation go viral! Our own contribution towards this will be released soon – watch this space for more details!

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I didn’t have a Job, when I graduated. But, I was clear about Entrepreneurship – The iXiGo Story

It was an early December late afternoon that Avinash and I got together to interview Aloke Bajpai, the Co-Founder and CEO of iXiGO – one of India’s most loved travel websites. Whether you are trying to save an extra rupee by comparing air fares across portals or planning your next trip with that saved money, Aloke’s iXiGO will GO with you.

As I sat in the reception area waiting for Aloke and Avinash, a board with many yellow colored A4 size posters caught my eye. It was actually a timeline that told the story of iXiGO. Starting from 2006, the sequence of posters talked about the many successes iXiGo achieved over the years. It looked easy. Or was it? It was time for the real behind-the-posters story.

Listen to Aloke’s story(Podcast) of perseverance as he describes his tumultuous iXiGO journey in this exclusive podcast brought to you by the good people at ProductNation.

Aloke’s fling with entrepreneurship began in a business plan competition while he was still studying electrical engineering at IIT Kanpur. It took the 2000 dotcom bubble burst to get him onto the conventional job path.  Starting a career with Amadeus – a European technology travel company – Aloke realized in a few years that work wasn’t exciting. He says, he was done with code. And as he puts it, he took the “Indian Solution” of doing an MBA.  It was at INSEAD that he decided to take a serious shot at entrepreneurship taking courses pertaining to entrepreneurship and was lucky to find an iXiGO advisor in his Professor – Patrick Turner.

Aloke’s stints at Amadeus and INSEAD seem scripted, for it is here that he met his co-founders Rajneesh (Amadeus and IIT Kanpur) and Yash (INSEAD).

In the podcast, Aloke talks in a free spirited way about how one fine day – he just left his job. A quick move to Gurgaon was followed by figuring out what to really do and how iXiGO came about. He shares how his INSEAD batchmates seeded the idea on good faith and how a brave trip to Singapore got them their first serious investor – William Klippgen. This after their idea had been politely refused many times over (read as no response) by a number of angels and VC’s. Hear from Aloke the sense of exultation when they did get their first smart money.

Good times don’t last long so much so for the King of Good Times. The 2008 credit crisis and a renegade potential investor almost brought iXiGO to the brink. iXiGO not only survived but grew stronger since none of the employees left after the consensual 50% pay cuts. iXiGO’s business model was validated during that time as travelers were looking for best deals using price comparison.

These days iXiGO is busy with the Travel Planner. Aloke describes how the idea came about and how they leveraged a set of early adopters to fine tune their market offering?

When it comes to team building, Aloke’s been a success. He stresses the importance of being transparent, involving the team in creating and owing new initiatives and gives some sound reasons why each employee needs to read all customer feedback. This man is sure going places.

Don’t miss the podcast. The secret is right there. If you have a 55 minute car drive, look no further, you have got the perfect companion – Aloke Bajpai of iXiGO on your car music system. Just in case, you don’t, check out the iXiGO trip planner for some 55 minute drive options.

 

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5 Lean Essentials for Product Startups!

Lean startups are not about saving money and getting development done on the cheap. They are not about saving money by doing work at home rather than a rented office. That’s not what the word lean means here!

Lean is about elimination of waste in development, marketing, selling,  and growing a company. And making course corrections quickly and efficiently so that you are precisely pointed to success. And believe me , there is a lot of wasted time, effort, money before startups start making profits and grow because of mistakes.

So where is waste when you are building a product and a startup company, you ask? Products built that users don’t buy and use, product features that are built but are not used, effort going after a market that does not pan out, partnerships that are built that do not generate business for you are all waste!

These days, there is no excuse for any startup, consumer facing or enterprise-oriented, to not know about lean startups, educate their entire founding and initial teams on this way of doing things, and practicing what they learned here in everything they do. After all, when your time, money and effort is so limited at a startup stage, who wants to waste any of it?

There are a few good places to start and that too for free! Here is a free online course – How to Build a Startup ? taught by Steve Blank. He knows what he is talking about. He has built 8 startups, a couple of them being sold for a billion dollar plus (like e.phiphany) but more importantly, has failed a number of times also!  He teaches entrepreneurship at Stanford University and a number of other top 10 universities. You can view the entire course in a few hours but it is worth taking it lesson by lesson and completing the assignments relating to your startup thoroughly before going on to the next lesson.

Did I mention that it was free? Now, there is really no excuse!

The book, The Lean Startup by Erik Ries is another good resource to start with. The nice thing about Steve Blank’s course above is that it expands on concepts put forth by Erik Ries on product development to other areas a startup needs to pay attention to, such as business models, pricing vs. revenues, marketing, selling, and partnerships.

To really understand the details of what the waste is and how lean startups avoid them, you need to spend some time with the above resources.

However, here are some of my observations presented in the form of 5 Essentials!

1. Your Idea Vs. What’s Really Needed – In my over a quarter century of programming and then, management experience, if there is one thing I have learned is that the hardest thing to manage in services is Requirements Gathering. What people actually need and what they think and say they need, may be two entirely different things. This may not show up in the beginning but at some point in time, we have all had users say “Yes… But….” when asked how useful the system is for them. On top of this, product companies are responsible for coming up with their own requirements as to what their potential users need.  This is even tougher! On top of this, you have the fast pace of technology change – hardware (from Mainframes to Minis to PCs to mobile devices now), software languages, styles of computing (centralized to distributed to mobile distributed) and delivery devices (PCs to mobile devices of various form factors). By the time your idea bears fruit, conditions have changed and your users need something different. Lean Startups provide an elegant way of addressing this – your idea or requirements you have gathered are only hypotheses and they need to be validated with a minimum viable product before you waste time, effort and money implementing the whole thing! In other words, they help you iterate towards the right product-market fit!

2. Pivoting – Failing Early and Changing Direction Quickly – When your startup grows from a startup to an on-going successful company, your product’s growth (and your business, revenue models) may be something like this:

The only problem is that you don’t have precise idea of which one of the above represents your product.  Or your pricing or your business model, revenue model, partnerships, etc. Lean methodologies require you to commit minimally at first to any of the approaches towards any of these things, test your hypotheses and then proceed. Fail early and often when you have not spent too much time, effort and resources to experiment with different approaches before settling on the right ones!

3. Startup teams need to be different from traditional management teams:  As Steve Blank emphasizes in his course, a startup is not a smaller version of a larger company. So you need to set aside the traditional larger company management team  or MBA approach and focus only on those people necessary for the startup stage. You may not need a VP-Sales as yet. You may not need a VP-Marketing as yet. Many startup companies I have been with had a technical and business founder (complementary skills) iterating the product initially, then adding a junior product management person to coordinate between what is needed in the market and the ordering of features that need to go into the product. Then they hired sales people that can actually do the selling, then a director of sales. They hired a junior marketing and social media person that actually did the work before hiring a  VP of Marketing! So what needed to be done initially drove who was hired. I have seen this happen even when some of the startups I was at had raised even a Series A round.

4. Measuring the Right Metrics:   Measuring the right metrics is important if you are a consumer facing startup or an enterprise one. If you are a mobile consumer-facing startup your metrics need to be one set, while if you are a SaaS enterprise play with a Freemium business model, your metrics may need to be another set. They may or may not be in terms of money (like facebook was for a long long time – they were just measuring members and member engagement!). Not measuring the right metrics have a lot of consequences in a startup company – being able to raise additional investor money, planning ahead in terms of people, timing, facilities and other things that go into a startup.

5.  Appropriate Product Management:   There is the story of GroupOn being born as a consumer feedback portal. When they featured the Pizza Shop’s offers, downstairs from their offices, they found takers! They pivoted and created a whole new product  and eventually a product category by themselves! Iterating product functionality helps startups discover completely new uses for the product and spin out different products with variations or address a related market with a modified product, etc. Product Management  is helped a lot by listening carefully to the people who look at your product. Especially those that need a different version of the product, a higher priced one with additional features, a lower priced one with lesser features or may be a free one since they want to try it out before making a committment. Most importantly, out of the norm features can be identified and spun off into a separate services component (consulting). We had a golden rule in one of our product companies – if 5 prospects asked for a feature it is in the next agile sprint. If 3 prospects ask for it, it goes into the next major release. If only one prospect asks for it, we make a note of it. If they would buy today if it is available, we separate it out architecturally and offer it as an additional, expensive, services component!

These are some of the Lean Essentials. Lean Startups are processes in themselves.

If there is one thing that the Lean Startup methodology does not address it is that it does not teach you how to create those hypotheses about what your prospects need. For those, you still need to build a creative culture! Here my other article in this forum – Think Big! Build a Creative Culture or Transform Into It!

Why do we exist and why should anyone care? (key question every startup should ask) – Bill Gross

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Bizosys Technologies’ Tools for Simplifying Software Development

Bizosys Technologies, launched in January 2009 in Bangalore, India, is an award winning, India-based software engineering company that has developed several tools that are available free to use online or as open-source software with downloadable source code. One of the most significant tools is HSearch, a real-time Big Data search engine for Hadoop. In this interview, Sridhar Dhulipala, co-founder and director – solutions, discusses his company’s tools and also shares lessons learned in the software development journey. This article is brought to SandHill readers in partnership with ProductNation.  

SandHill.com: What was your vision; what inspired you to launch Bizosys? 

Sridhar Dhulipala: Bizosys was born out of a question and not out of a smart business plan. The question we had was: how can one simplify software development? This translated into an engineering quest where Bizosys founders were consumed in research for the first two years, entirely self-funded, thanks to the low capex model afforded by cloud infrastructure.

The three co-founders at Bizosys met during their careers at Infosys in Bangalore and decided to start Bizosys. Bizosys is self-funded and has had no sustained mentor in a formal sense — but a mentor would surely have helped from a go-to-market perspective.

We now provide IT services for enterprise and SMBs, mostly around Big Data, search and analytics, IT performance engineering, new application development targeting existing on-premises deployments or cloud architecture, addressing existing application technology stacks or emerging NoSQL technologies such as Hadoop.

Our tools are now accessed by users from over 100 countries globally. In the longer run, evangelizing our products and having vibrant user communities is a desirable goal.

SandHill.com: Is there a story behind your company name? 

Sridhar Dhulipala: The idea behind Bizosys is “business operating system.” As our quest was about simplifying software development, the application of this was to develop a business operating system that is easy to build, robust, scalable and especially intended for frequently changing, rapid deploy, long tail of applications. 

SandHill.com: Please describe the tools your company has developed. 

Sridhar Dhulipala: Bizosys has developed several tools that are available free to use online or as open-source software with downloadable source code. 10Screens is an online high-fidelity prototyping and requirements collaboration tool for remote teams. It’s free and has close to 4,000 registered users spanning more than 120 countries. HSearch is our open-source Big Data search engine with real-time capabilities on Hadoop and it has had over 2,200 downloads by users in more than 80 countries. It includes a kids-safe search engine for YouTube videos. 1line is a server-side backend.

They are ready to install and use as shrink-wrapped, off-the-shelf software. They are also available as frameworks that are compiled with custom applications. As a third option, we offer our products and frameworks as a service via robust APIs. Our tools are backed by email support today.

Read the complete interview at Sandhill.com

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5 questions for every product marketing team

When Girish Mathrubootham, CEO, Freshdesk) hired yours truly, a complete novice straight out of B-School, I was Freshdesk’s employee no. 8, and we operated out of a nondescript location deep in south Chennai, from two small rooms behind a quaint Catholic church. Painted in our company’s signature teal color and equipped with an internet connection that had a mind of its own, our old office was for me the ultimate symbol of the true entrepreneur – spare, utilitarian and with a contagious energy that infected everyone.It was then that G, as we call the boss, told me to put my Kotler away and learn by doing, rather than falling into the trap MBAs usually fall into, of analyzing everything but failing to execute even a single one.I tried to do that, and learned a lot from a world class team of marketers along the way. Our marketing has received some praise, and though we’re light years away from where we want to be, I’d love to share a few things with the product community.Here are five questions for product marketers like me –

Are you telling a great story?

The answer should be a resounding yes. If not, well, you should be. A technology product’s website is its showroom, and like showroom space is gold for the retailer, so is our website. And this is where we need to get our story across. 
We humans understand and assimilate stories much more easily than we do disparate facts. It’s just how we are. And that is why, to make it easy for the customer to understand our product offering, to digest it, there needs to be a story, told in a simple way, as clearly as possible, with a definite call to action. For tips and techniques you can use, here’s a post from Jonah Sachs, author of ‘The Storytelling Wars’. The book itself is quite good, and I highly recommend it.

 

Is the language perfect, the communication flawless?

You should be saying yes even before you read the question completely. As product marketers, more often than not, our target market is international, and there can be no compromise on grammar and language. The writing needs to be top drawer. Full stop. In fact, this was the reason I got the chance to become a product marketer in the first place. G did not hire me because of my MBA degree, G hired me because he judged me to be a good writer and because I was able to get a point across. 
When we at Freshdesk write copy for our site and content for our blog, there is great emphasis on grammatical accuracy and narrative tone. None of us is Shakespeare of course, but selling to respected companies abroad, we can’t afford to drop the ball on this – the very brand is at stake.

 

Is more time being spent on perfecting things than on getting stuff out?

This question is specifically for content marketers like me. The desirable answer is of course no, but if your answer is yes, then rejoice. You now have a chance to simplify your content delivery stream and it’s going to give you great results. 
What you need to do is this – don’t keep reviewing and perfecting the content you write or the infographics you make or the SEO pages you craft. Just get them out. Nothing is going to be absolutely perfect. Even Beethoven thought his symphonies were flawed. After a point, the difference between good enough and perfect is so negligible you’ll need a microscope to find out. Something ‘good enough’ that’s out there and garnering eyeballs always, always, trumps that ‘perfect’ thing which will take another week. 
Don’t ‘review’ over and over again. Just get it out.

 

Are there clear strategies for social, content & customer service?

Yes, you need them. Just so every employee knows what’s going on and what the organization’s outlook is. At Freshdesk, being a customer support company ourselves, our service is our brand. Every single customer of ours is treated with respect and the questions our support and sales teams ask them, boil down to roughly this – what problem of yours can we solve today? 
This is ingrained in the way we do things and it’s now in our very DNA. Our customer service strategy is clear – whatever we can do for him/her, we will. This clarity is very important. Because when different teams talk to customers and prospects, this consistency will become your brand, and then reinforce itself. This is exactly how a brand is built. Same with your content and social strategy. The key word is consistency. Just remember that with every piece of content and tweet and Facebook post you put out there, your brand is being constructed, bit by bit.

 

Are new things being tried out, and are the results being recorded?

Yes, yes and yes. If A/B testing is not (at least) a weekly activity, you are doing something wrong. You should be constantly trying out new avenues for growth and new platforms for attracting customers. A few will work, many will not. Don’t worry. This isn’t sunk cost, not at all. Write down the results and move on. This way after a point of time, you know which channels to invest in and which channels to avoid. The data you collect during all this will give you the answers you need to the channel-ROI question.
And in the age of newer platforms and channels almost every month, if you continuously try new things – you might actually be the first movers into Klondike! Give yourself that chance.

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Wingify – optimizing your website, simply!

Wingify’s vision is to develop world’s best tools for optimizing a website. Wingify launched ‘Visual Website Optimiser’ – an A/B testing software. Their products help in increasing website sales, conversions, signups and, at the same time, decreasing advertising budget. All this done by products which are really simple to use. Having hit 1900 customers in about 3 years, they sure have made internet a better place to be in, in their own way.

Aakriti Bhargava from Boring Brands, spoke with Paras Chopra, Founder & CEO Wingify on his interesting journey so far.

What was the vision, which led you to start Wingify?

Wingify started in May 2010, to make products in the marketing optimizing domain. That was the time when Google offered a very expensive and technical tool for A/B testing – we spotted the opportunity to create a powerful product at a reasonable price. Our ambition from day 1 was to simplify the testing of website for anyone and build in time – efficiency to ensure someone with no knowledge of coding could do it with ease. Having catered to over 1900 customers around the world, we hope, we are in line in fulfilling the intent of starting up.

What has worked out really well for Wingify in such a short time?

Having focussed in the simplicity of the offering seems to have helped us a lot in scaling our operations so far. Relying on self-service model, we have insisted on simple processes to create website versions in a visual designer and specify what goals are desired to optimize the website for. That’s all! No need to do complex JavaScript page tagging. No need to repeatedly fiddle with HTML code. We believe in our product so much that we also encourage our potential customers for a free 30 day trial to play around with the tool. This helps us in getting valuable feedback from the customers and further improvement.

Did you reach out for funding at any stage of your start-up?

We have not had a need so far and have been cash positive right from day 1 of our existence. We are primarily a B2B company, and have scaled in a humble and sustainable manner and will continue to do so.

What has been the biggest challenge so far?

Assembling the right team and hiring the best talent has been the biggest challenge so far.

Today, what are your priorities at Wingify?

I strive everyday to improve the product and build a happy team!

Who have been your customers?

Our customers include Microsoft, Groupon, FourSquare, MakeMyTrip, Rackspace, etc.

What is your Success Mantra?

We strive to provide the best customer support possible. We believe that even if competition is able to copy the product they may not be able to copy the passion that you have towards the product.


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Angel Office Hours in Mumbai

After our 1st session of #AngelOfficeHours in Bangalore, Our next Angel Investor Office Hours will be in Mumbai on 22nd January 2013 at the Mumbai Angels office at 111, Industrial Area, Hindustan Minerals Compound, Next to Chroma Store, Cinemax Lane, Sion East, Mumbai 400022.

Seasoned Angel Investors Anil Joshi and Ajeet Khurana of Mumbai will offer 8 Startups a chance to pitch to them. Startups will get candid feedback on their funding options, and can ask for actionable advice on their business plan.

Timing: 3 PM to 5 PM. Each startup will get 30 minutes with either Anil or Ajeet.

Please fill this form to sign up: http://goo.gl/0HM6a

*coordinated by Pranay Srinivasan of eVitaran

 

 

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Mindmaps for Product Startups!

In a product startup you may need to deal with lots of information about your own product features, your market, your competition, your competition’s product features, results of internal brainstorming sessions you may conduct or information about who you can partner with for various aspects of your business.

Mind-maps provide a great way of organizing all the information you gather or generate internally, and create documents or pictures that capture the relationships between them precisely. Most importantly, it can help convey the same concepts to your investors, co-founders, colleagues, employees and partners. It can help you organize mentally for your own use or convey a large amount of information to others in a short amount of time.

Wikipedia’s definition:

A mind map is a diagram used to visually outline information. A mind map is often created around a single word or text, placed in the center, to which associated ideas, words and concepts are added. Major categories radiate from a central node, and lesser categories are sub-branches of larger branches. Categories can represent words, ideas, tasks, or other items related to a central key word or idea.

Typical ways you can use MindMaps in Product Startups:

  • Analysis of the Market: How does the market you are looking at addressing organized? Mobile devices could be tablets, smartphones and feature phones. Tablets could be smaller or larger. Within each you could have iOS and Android Devices. Within Android devices you could have different versions supported by different devices, and so on. All of these branches could be captured effectively in a mind map.
  • Product Ideas Generation – What are all the different product ideas you could consider initially and in an on-going basis. How are they organized with respect to the various products and versions that you are already producing or planning to produce?
  • Generation and Organization of Product Feature Groups and Ideas – Very useful for product managers modeling existing feature groups and features, new features generated and where they might fit in.
  •  Analysis of the Competition: Competition in the market is not always straightforward. Competitors may offer products and services that may be in a related market, overlapping markets or completely unrelated markets. Competitors may be offering a service that may compete with your product. All these nuances can be captured effectively in branches off branches.
  • Analysis of Pricing Models:  If you considering different pricing models – One-time licensing vs Subscriptions, Annual or Monthly, etc., you could capture all the different variations in mind maps.

There might be plenty more uses for mindmaps once you get comfortable with what it does and how it can be used. Some of the Mind Mapping tools come up with ways of annotating each node with additional notes that can pop up once you hover over a node in the mind map with the mouse or a pointer. This can come in handy in naming each node with a short name and including more descriptions in the additional notes.

Mind mapping can come in very handy at the start-up stage even before you have a plan for your business. When you are doing your preliminary research or putting together your business plan later on. Or when you are already operating and your product management takes on a formal function!

There is a huge selection of Open Source and Commercial Mind Mapping Software that you can use – more details here in Wikipedia.

I have had very good luck with the Open Source version of FreeMind. It allows me to create mindmaps in their proprietary format and send them to others who have the same software (.mm format). For others who may not have FreeMind, I export the mind maps to PDF formats and send them along.  You can check out downloading FreeMind available for various Operating Systems and playing with it here.

Here are a few examples of Mind Maps I created using Free Mind. These are PDF versions of two mind maps I created when I read two interesting books sometime ago:

Jennifer Aaker’s Book The DragonFly Effect

Designing Brand Identity – Alina Wheeler

 A Picture is worth a Thousand Words! – Anonymous

 

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Bharat Goenka(Tally Solutions) talks to us about the company’s ‘stubborn’ decision to stay focussed on products

Bharat Goenka is the architect of what is arguably India’s most successful business solution — Tally.  Co-Founder and Managing Director of Tally Solutions, Mr. Goenka developed the famous accounting solution under the guidance of his father, the late Sri S S Goenka. Today, the product is the de facto accounting solution for many SMEs and Mr. Goenka serves as an inspiration for many aspiring software product entrepreneurs. In an interview with pn.ispirt.in, Mr. Goenka talks to us about the company’s ‘stubborn’ decision to stay focussed on products, the non-DIY nature of the Indian SME and the necessity for product companies to stay focussed on the product mentality.

Tally is one of India’s most successful product stories, and it definitely appears to have ticked all the right product story boxes: responded to a genuine market need, stayed focused and evolved with the needs of users. Given the benefit of 20:20 hindsight, would you have done anything differently?

The reality is that one doesn’t really learn from the past. We continue to do audacious things, we continue to get some success out of that as well as failure. Over our 25 year history, this has happened multiple times. Multiple times, we have taken a decision and it has gone wrong — but if the circumstance arose again would I take the same decision? In all likelihood, yes — I would have no reason to expect success, but I’d still have the optimism and think just because it went wrong in the past doesn’t mean it also has to go wrong this time. So although I would say it’s unlikely that one would have really done anything different, I can give you an example of a decision not working out for us. In 2004-2005, we changed the price of the software from 22,000 to 4,950 thinking that we would be able to sell software as a commodity. The reality was that for that time, it was difficult to sell software as a commodity in India in the B2B space. And so we suffered, massively. That proved our belief that we couldn’t sell software as a commodity, but it didn’t stop us from trying. We lost almost 50 crores in those one and half – two years, so I would say our single biggest mistake was that.

Tally – or rather Peutronics — was founded in 1986 at a time when much of the Indian software industry’s focus was on services. The decision to remain a product company when the tide seemed to be going the other way couldn’t have been easy – why did you make this decision?

Actually when we started off, virtually every company had a product. Whether it was TCS, Wipro or Mastek — everyone had a business product.  The shift to services took place in the mid-90s, particularly towards the edge of the Y2K environment. We were one of the few stubborn companies who believed that while there was a lot of money to be made in services, we would never be able to address a lot of customers. So the mandate with which my father and I started the company in 1986 was that we were going to change the way millions of people do their business. We were clear that by moving to services, we would never be able to achieve the objective.  We were unclear how long it would take us to get to a million — 25 years later, we are still trying to reach even the  1 million mark. But in 1986 we were clear that we want to be able to touch millions of customers. Therefore we remained focussed on our product line.

So what was that inspiring moment for you? Did you wake up one morning and decide that this was what what you wanted to do — to change the way these millions of customer did their business, or was it a gradual evolution?

In the months before we got the product Tally out, one was into the product mindset but for developing systems related products like compilers and operating systems. So I was preparing myself to do those kind of products. At that time, my father was searching for a business product for our our own small-scale industry business. He examined multiple products, but couldn’t make sense of any of them. He very famously said: “When I’m buying a car I want to be a driver and not a mechanic.” Similarly, he was looking for a product that would help him run his business — not his computer! Every product that he was looking at required him to change the way he thought about his business.   So because I was interested in software, he said these guys can’t do anything can you do something? So I was trying to solve his problem. After six months of development, I would say that it was his inspiration and thinking that formed the idea and belief that the product should be something that the country should also use.

The belief is that Indian SME’s need to be “sold to” – the job that’s conventionally handled by IT resellers who are critical to Tally’s business model. What are your thoughts on the changes that Cloud technology might bring to this scenario, with the whole “self-service” angle coming into play?

India is not a DIY country, and this is unlikely to change in the SME sector.

The way the market works in India is like this : SME’s expect people to come and sell something to them, even if it’s bottled water. You expect it to be delivered, and you expect to pay for it in a different way. In India, SME’s behave identical to the way enterprises behave abroad. Abroad, SME’s behave identical to consumers.  That’s why in most MNCs, you see that the SME and SO/HO market being handled by a common head while the enterprise head is separate, because they need to be sold to. In India — actually, in all developing markets — the SME and the enterprise behave similarly. In the west, the cost arbitrage of selling to a business is so high that the small business has no other option but to behave like a consumer. In developing markets, the cost arbitrage is low enough to send people to do the sales. And therefore, the buyer expects someone to come and do the sales. It is not about whether the visit is required because of the software complexity or the commercial complexity — it is an expected visit.

In your opinion, what are the three most common things that mislead or cause the downfall of Indian product companies today? What advice would you give them to overcome these?

I think it would boil down to one — which is to be clear about which business you’re in. Most people believe they are in the business of making money. Okay, even I am in the business of making money but my point is this: you can never be in the business of making money, you have to be in a business — money is an outcome of that. To explain it better, imagine that you are a software developer who wants to start your own product company. Capital costs are not very high — a single computer will cost about 20k, and assuming you develop the skill, it will some months to develop a software, and you’ll get your software out. You might put together an infrastructure, sales people etc and you’ll put up a monthly expenditure of about 25 – 30k. You start seeking customers — you  find me. You sell me your product for say 10k. In all likelihood, I bought your product because I like your software development style and perhaps your product solved two or three problems I had — but I still have twenty more. Now because I like your software development style, I’ll ask you to do more work for me. I might ask you to expand the product features, solve some HR problem that I have which this software doesn’t solve and I’m willing to pay you for it.

Your first ten customers will give you so much work, you won’t have time to go out and find your next 100. Or even if you find your next 100, they will give you so much work that you won’t be able to look for your next 1000.

So ultimately, you will still continue to successfully make money, but you will never be able to create a successful product company. This is the single trap that I see almost all product companies fall into today. They all make money, and that’s why they’re still in the business but they stop eyeing the fact that they were supposed to be in the product business and not the services business. Now imagine taking a strategic decision like this in the early days when there was no competition in the market– today you can take a decision to change over night. But in the early days, while we did do services for companies (if someone asked you to do something extra, you did do it) we refused to take a single penny for any services that we did. That forced us to focus on selling new licenses. Otherwise once you’re able to get money from services, there’s no requirement to sell new licenses!

In your opinion, what’s the reason behind Tally’s popularity? At the risk of being politically incorrect, is it because of its “accessibility” due to piracy? Or is it largely because it’s simple and user-friendly?

Pirated software doesn’t become popular — popular software gets pirated. We strongly believe in one thing: if my software is not valuable to you, your money is not valuable to me. So customers are able to see tangible value in our software after they’ve paid for it, and therefore they tell their friends to also buy our software. Word of mouth has been the principle pivot of popularity, and we’ve told people on a number of occasions that if our software has not been of value to them, we would return their money. Even after three years, people have returned and we have returned their money. In 25 years, this has happened nine times to us. But fundamentally, if our software doesn’t work for them, their money doesn’t work for us.

We see a lot of product start-ups coming up in both the enterprise and consumer space. What would be your advice to start-ups — where do you think they are lacking, and how should they go about correcting these issues?

I would ask them this: are they solving the problem for someone else vs are they solving the problem for themselves? If they are unable to be the most prolific users of their own solutions, they will find it difficult to put it elsewhere. It’s the problem of architects, right? The architect is building for you — so they build and go away, but you have to live in the mess. I think as a company we had the privilege of this insight from my father. My most famous depiction of his words was in this context: in the early days, I had asked me a question against a certain context and when I was trying to explain to him that it was very difficult to solve the problem in that manner in software, which was why it was done in a particular way he asked me “Are you writing programs to make the life of the programmer easier or the life of the user easier?”. The general tendency I have seen is that very few start-ups are willing to take the challenge of solving the complexity of the product themselves so that they give simplicity to the end-customer — and this is a fundamental requirement of the product.

The second problem that I find with product start-ups in the country is that most people design the software as if they are going to be present when the software is going to be used. It makes great sense for them to explain to someone how to use it, but if you want to be a software product company you have to design a product that can be used when you are not there. So, from a technical viewpoint fundamentally I would say that it is about being able to sit back and reflect upon these issues that impact your design. From a operational viewpoint, from day one you have to design as if you are not selling. It’s easy for you to design a product and for you to go sell it, because you’ll design your sales processes which are centered around your ability to sell. And this ability, because of your intimate knowledge of the product, will always be higher than someone else. So be able to design sales and service processes that are not operated by you will truly bring the product into the product category

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Top 10 mistakes Product Entrepreneurs Make

Inspired from Pallav Nadhani’s interview – this infographic is meant for all those entrepreneurs who dream of building a global product.  From delegating to hiring a sales team and to putting an end to customizing products – these tips are invaluable. Pallav, you rock! and thanks for sharing these precious jewels of entrepreneurship! 

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7 Critical Things to Understand about Venture Capital for Product Start-ups

If I had a Rupee every time I heard the words “If only Venture Capitalists were more active in building the Indian Product Eco-system….”, I would be a rich man!

I am guessing that this is because of a lot of mis-conceptions about Venture Capital and how they play in the product space, in India as well as elsewhere. As a Software Product entrepreneur, you owe it to yourself to understand VC money in all its complexity to make wise decisions about whether it is even suitable for you, and if it is,  how to get it, and if you get it, what are you in for?

It is impossible to capture all of the complexity of Venture Capital in a single article but here are seven basics every software product company in India should be aware of:

  1. Understanding exactly what business Venture Capitalists are in – They are not in the technology advancement business, not in the entrepreneur eco-system business but in the money multiplying business! They have bosses too – people who have given them money to invest expecting at least 10 to 20 times back! Unlike a bank that loans money to low-risk, low-reward businesses, VCs are expected to invest in high risk, high reward businesses. They can afford to take losses on 5 to 10 startups to make a 100 times return on that one big block buster – an Instagram, a facebook or Google!. Many startups return them 5 to 10 times the money and across all startups with other failures, they will be successful if they return 20% per annum over 10 years.  After the Dot com bust, many VC firms returned less money than was invested and Of course, they are out of business also! You get an idea of why VCs are looking for that big block buster company! So you will be wasting your time and theirs, if your startup does not promise that kind of growth quickly!
  2. Understanding Exit Strategies for you and them –  If you are planning to build a software product company, grow slowly over 10 to 20 years and have a leisurely IPO, Venture Capital may not be suitable for you. VCs need to return the money their investors have given them – usually in a 10 year time frame. So they really have a clock they are working against. Exits through acquisition by a larger company or through an Initial Public Offering (IPO) is how they get the money they have invested out. So if this does not suit your plans, VC money is not for you.
  3. Understanding what can increase your valuation periodically– VCs like to bring on other VCs to share the risks in the companies they invest in. They also would like to see the valuation of their investments rise rapidly so that the acquisition price or the IPO price is justified when that event is reached. Valuation is a notional concept (just what someone else is willing to invest their money for) till it hits the acquisition event or IPO when it becomes validated by the general marketplace (till then it is done by the private VC marketplace). Growth metrics usually provide the justification for the increase in valuations.
  4. Understanding how Market Adoption Rates and Penetration Help you get there – If your startup is dependent upon the 4% smartphone adoption rate in India as opposed to the 56% adoption rate in the US, you can get an idea of how fast your key metrics will grow to make your case for the first or the next round of VC money. It does not mean you are in a bad business. It just means that your business may not be a good candidate for VC money! If your business is already making money, then that needs to reflect this rapid growth or at least the promise. If you are following a freemium model or you are postponing the question of monetization for a later date but are focused on building membership, visitors and engagement, your metrics need to show this hockey stick growth. It is not because VCs have an illogical liking for hockey stick growth rates – those are the ones they can show the next group of VCs or others that want to invest in subsequent rounds and ask for a higher valuation! I wrote about this topic in my previous article – Develop and Pray is Bad Planning in Product Startups!
  5. Understanding what Riding the Tiger means –  When you watch Flipkart raise more money and doing all kinds of acquisitions, what you are seeing is catching the tiger by the tail, getting on it, and riding it! You don’t have an option of getting off, since the tiger will eat you if you do! Once you raise venture money, you need to plan for rapid growth and riding the tiger. Don’t even look for venture money if this kind of company building is not for you.
  6. Understanding that Venture Money is not the only way to build a Software Product Company – If you have a secret sauce in your product that no one else can copy in their product easily and you have a five to ten year advantage, you can afford to build your company at a slower pace, taking one or two rounds of angel investor money, keeping expenses low and ploughing back initial profits into building the company organically! Unfortunately it is less likely in the consumer space that you have Intellectual Property that cannot be copied easily than in the enterprise space. Also if you are successful in the consumer space, just for building out your infrastructure you may need to raise large amounts of money – usually that’s venture capital. You might have seen this portrayed in the movie The Social Network with what happened to facebook in its initial years.
  7. Go Big or Go Home if you plan on taking Venture Money – Unlike Services Companies, software product companies depend upon rapidly establishing a large market share in an emerging space. In almost every market, consumer or enterprise, you will see one or two large players splitting almost 70% of the market between them and a couple of other players splitting the rest.  The bright side of this is that there is so much innovation possible in the software product space that you can always define a new marketplace and become a leader in it! But for that you need to show rapid growth in revenue, members, visitors and active engagement. So it’s Go Big or Go Home!

Venture Capital is a vast subject with nuanced differences with every VC company, country or company they typically invest in. For the software product entrepreneur there are some common basics that can help them understand how they all operate in general, whether you are a good candidate for VC money and if you are, what is expected once you take it! At worst, if VC money is not for you, it will force you to do better planning. How will you sustain your company and grow, even if it is at a slower place that you are comfortable with? Have you thought about all of this?

An Investment in knowledge pays the best interest – Benjamin Franklin
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Three Podcast Links Worth Checking Out

I was listening to the podcast – Happiness. Todd Kashdan, Eric Lambin, Eva Hoffman. 22 Dec 2012.  Some ideas from the podcast:

  • Learn to be curious. When we are curious, we like to explore, discover things. Exploration helps us grow, evolve.
  • Happiness depends on the ability to tolerate pain ( it never occurred to me to link happiness to pain)
  • Invest in relations – having a sense of connection with other human beings increases happiness
  • Happiness is related to the way you experience time
  • Happiness is also related to the way you experience experience

While listening to the podcast, I heard two other links mentioned, which are worth investigating.

I hope you enjoy these podcasts as much as I do. Did you find others, you like? Please share them.

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Re-positioning and Re-imaging India

Over the last year or so, the image of India, like the Indian Test team, has taken a beating. The halcyon days of India Shining, of India Everywhere and the world’s “fastest growing free market economy” are now over; the brand-builders and spin-masters are not able to conjure up the magic of old. Instead, we have the picture of a struggling economy, just chugging along at barely over 5% a year; simmering social unrest fuelled by a hugely inequitous society; scam-a-day revealations of corruption; a divisive polity and – certainly till recently – an indecisive leadership. Many feel that if BRIC is the new power-house of the global economy, the “I” in it should now mean Indonesia, not India.

Yet, any attempt to write-off India may be, as Mark Twain said about false reports of his demise “The report of my death was an exaggeration”. After all, the fundamental underlying factors driving the India economy have not changed: demographics, a huge domestic market, an extensive education system with a sufficient topping of high quality, a thrifty and hard-working population, and a strong institutional base. However, converting these potential advantages to real economic benefit requires appropriate action.

The gains of a proportionately large young population, the “demographic dividend”, can be reaped only if they are imparted sufficient education and trained in skills that the economy needs. While recent years have seen a major thrust on education – through both the Right to Education at the school level and a huge expansion at the university level – and an ambitious skills development programme, their results depend on efficient implementation. It will not be easy to simultaneously achieve the goals of expansion, equity and excellence. The veneer of a few institutions producing high-quality professionals will no longer be sufficient, especially in an evolving, globally-competitive market for goods, services and ideas. We will need to be flexible and innovative not only in content and pedagogy, but also in the administration and structures of the education system.

The advantages of a large domestic market are currently reduced by regulations and structural barriers, inhibiting the free and easy movement of goods across the country. These include barriers to movement of agricultural commodities, octroi, and too many and inefficient toll collection points, causing unnecessary harassment and delays. Poor infrastructure slows movement. The introduction of GST – much delayed, already – will certainly ease the numerous tax-related obstacles and provide a big boost to the economy. Similarly, changes in the APMC regulations, and better management and use of technology at toll collection points on highways, can lower costs in the movement of goods.

India’s institutional base – a strong and fair legal framework and an independent judiciary, in particular – have long been projected as major strengths and a comparative advantage. In addition to the Election Commission, independent regulators, including SEBI and RBI, are much respected around the world. All these contribute to business confidence, especially amongst foreign companies and investors. However, the gains of many years have been endangered by retrospective tax laws, cancellation of contracts/licenses which had been entered into within existing laws, and perceptions of government pressure on regulators. Institutions and their credibility are built over decades; destroying them is, unfortunately, much faster and easier. Government needs to tread with caution to sustain and build on the respect that our institutions command overseas.

Globalisation has been driven not only by trade and investment, but equally through bonds of religion and ideology, which – aided by new communication technologies – transcend national boundaries. The battles of today are for the hearts and minds of people rather than territory. In a world where wars between countries have become rare, “soft power” has become far more important. While recognizing the importance of the economic dimension, the image of India needs to go beyond that. India’s unique advantages lie, in fact, in other areas.

India has substantial soft power assets: its rich culture – including films, music, yoga and spirituality – cuisines, historical heritage and natural beauty. These are a powerful magnet for people around the world. Of late, the country is also recognized as a hub for innovation. In the developing world – and, often, elsewhere too – its democracy and electoral process is highly regarded. A large number of countries admire India’s higher education system, despite its many flaws, and the top institutions are held in awe even in the developed world.

Leveraging these advantages can position India strongly in the mind-space of the global community. This, however, demands strong and pro-active action by both, government and industry. Image building without substance is like a soufflé: hot air will hold it up, but it will soon collapse. Therefore, in each area, concrete steps on the ground are necessary. In education, for example, the high drop-out rates and very poor quality at school level need to be quickly remedied. Higher education calls for major reform. In addition, a large scheme of scholarships (say, 5000 a year) for foreign students for study in top universities and professional institutions will engender much goodwill and be an investment for the future (foreign students develop a special relationship with the country; Suu Kyi is but one example). Similarly, promoting Indian cinema, music and tourism abroad can lead to great benefits. An independent global TV channel – aimed at viewers beyond the Indian diaspora –  which sees world events through Indian eyes can be another contributor.

It is time to re-image India, going beyond the purely economic. A private-public partnership, like the Brand India Fund, could be the best means. Such re-positioning will certainly provide business and economic advantages, but will also give India a greater share of voice resulting in geo-strategic benefits.

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Develop and Pray is Bad Planning in Product Startups!

Total Addressable Market, Technology and Market Adoption Rates are crucial for Product Startups! Ignoring them early on will only cause immense heart ache down the road for you, your family, your company, your employees and their families!

It’s all well and good to follow your “passion” and do your startup purely for your passion. It will be a great hobby and extracurricular activity. You can still build a lifestyle product startup, with revenues and profits growing slowly, addressing the global marketplace or the Indian marketplace at a pace you like as long as you are NOT trying to raise investor money, angel or VC!

But if you are a product startup that believes in rapid growth, would be in the market for Angel or VC money, this is very important! I will write in a follow-on blog entry about that connection in more detail. In this one, more about the basics!

With the popularity of FlipKart and other e-commerce sites, you may be thinking that Indian e-commerce sites make for great e-commerce startups. After all, you see Indians signing on to the web in droves, right? You think that it will be easy for you to raise money for your e-commerce startup, correct?

You may want to read this recent report , Analysis of VC Funding in the Indian E-Commerce Space.  This report predicts that the funding scene for e-commerce sites in India will be drying up soon and it will be very difficult to raise money for such ventures!

I have personal experience chasing the Indian Enterprise marketplace with our software products and services some time ago and it wasn’t very good. We might have been a bit early for the Indian enterprise market but with the recent weaknesses in the Indian economy, IT companies in the doldrums, I don’t think that the situation has changed too much.

When you have invested years and years of your time, effort, passion and money in a startup company, you tend to put on rose colored glasses and look at only information that seems to confirm your hypothesis that your company will be successful no matter what is happening in the market you are addressing!

You tend to discount facts that don’t fit with your ideas and dismiss them offhand. Bad Idea!

Total addressable markets and adoption rates are absolutely crucial in predicting your own success in the market you are addressing.

For example, take a look at this latest analysis of global mobile and web trends by the famous venture capital firm, KPCB.

Whether your product addresses the global or the Indian market place, statistics like the ones provided in the above presentation will help you get a dispassionate, realistic, and useful handle on what’s really happening in the marketplace, in spite of what you think is happening or wish were happening!

Even with these kinds of statistics, you may need to adjust for personal knowledge you have of the marketplace. For example, if you think that 900 million mobile connections are reported for the Indian market, does it mean 900 million people? How about people who have multiple SIM cards and connections? How about people who obtained prepaid connections from multiple service providers, using some and not using others?

That gives you an idea of  how to arrive at the Total Addressable Market. If your product addresses the Indian Small and Medium sized businesses, do you have statistics on how many of these are there? SMBs of various sizes?

Technology Adoption rates are a very crucial thing you want to pay attention to. Just seeing all of your friends buying smartphones in your urban area in India is not a good indication of Indian Smartphone adoption rates! The Mary Meeker presentation above shows that the Chinese smartphone adoption rate is 24%, Canada’s is even higher than the US and the Indian one is a paltry 4%.  Let’s assume that even if this statistics is wrong by a factor of 4, 16% instead of 4%. Is it still enough for you to address the Indian smartphone market with your product? It is hard enough to sell apps for smartphones. Is your plan for revenues realistic when your app is addressing a slower growing market and may be competing for attention in app stores with more than half a million apps?  Now does the picture change for you when you tweak your product to address markets other than the Indian one? Is that large enough for comfort? Of course, you also need to plan for how to get to the other markets (sales and marketing efforts)  if you are targeting them also?

Last, but not least, you may all be familiar with the Market Adoption Lifecycle and Gartner’s Hype Cycle, Geoffrey Moore’s Crossing the Chasm problem.

Briefly back in 1962, a group of researchers proposed the Market Adoption Lifecycle with any new technology being dependent upon Innovators and Early Adopters being the earliest to try some new technology or product followed by early majority. Late majority and laggards will complete the adoption and by the time they come on board, the next wave of innovation is on.

Geoffrey Moore proposed that unless the product or technology is very useful and the price is right, a chasm will prevent the early majority users from adopting it.

Gartner’s Hype Cycle extends this with further modifications and extensions.

The implication here is that of the total addressable market, you are going to have a smaller percentage adopting and using your product. Consumers or enterprises, is that large enough for you to grow as you predict in your business plan?

The bottom line is if your individual beliefs are based on anecdotal evidence (All my friends have an iPhone or all my friends shop on Flipkart), as product startups, you owe it to yourself to collect statistics, facts and combine them with your own intuition about where things are going!

If you wait till all facts are known with certainty, it may be too late. There may be many competitors in the market and market may be mature already.

The key is taking Informed Bets with your startups. It is never too late to do this analysis. You can pivot from your existing products to ones that actually make sense with a larger addressable market and observable technology and market adoption rates!

I would not underestimate the battle between the heart and the head when it comes to your product startup. The head will always intuit you with the real picture. Your heart will mislead you, simply because you have invested your ego, time, money and passion in something that you know is not in a fast growing market!

How do i know this? Been there, done that! Made mistakes that were very painful!

You owe it to yourself, your family, your employees and their families to combine facts with your own gut instinct about where a market is headed and how your product line up can ride that wave!

Is your plan realistic? After all, you will be spending your next 2 to 5 years with your product startup.

Forget the hype! For your own sake, you need to have a clear idea of the addressable market, a good sense of  your early adopters, what they are looking for, and whether the adoption rates are going in the right direction, even if they are currently small!  Are they accelerating? These are the facts you need to check out and be comfortable with, for your own set of products.

The hype machine would have moved on to the next big one. You will left holding your own bucket.

Develop and Pray is a bad plan!

Reality is merely an illusion, albeit a very persistent one – Albert Einstein.

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The little Spark with great promise – Inaugural #PNMeetup on Pricing for Enterprise Sales

When a bunch (around 45-50, I didn’t keep the count) of Product enthusiasts – with experience accumulating into decades – gather at a single place to share their learning on specific topic in a compact & well-moderated session of 2 hours, it’s worth every bit. That’s how I felt coming out of the inaugural session of #PNMeetup – Pricing for Enterprise Sales: Specific & Important Topic, Quality Participation, Richness of Experiences, and Quality Conversations.

The location, Hauz Khas Village in New Delhi, carries a constant buzz and energy. Very apt for a meet-up like this. Kunzum Travel Café (Thanks for being a great host for the event!), should be happy because participants used up every nook & corner of the place. Many of us had to settle down on the carpet with no more sitting or standing space left! Of course, the snacks & coffee was great too. But, that’s not what everyone coming in was specifically looking for (especially since the last 500 yards got harder to make with the traffic and parking situation ;-)).

We were looking for some great (practical, experience based, relevant) conversations and takeaways on Pricing. And, there was plenty of it, coming from speakers as well as from the participants. As much as is possible in 2 hours of time, that is, also thanks to some great moderating & counter-questioning by Arvind Jha during speaker sessions, and Rajat Garg & Vivek Agarwal in the un-conference session.

Tushar Bhatia, Founder of Saigun Technologies, set the tone for Enterprise Products Pricing by sharing his experiences on Pricing Strategies and Sales tactics. Tushar emphasized that Pricing is not a linear decision, but a complex process and subject to assessment from multiple parameters. He also differentiated the Pricing Strategy from Sales Process. Pricing, as per him (in the context set of Business Planning, Scalability, Consistency, Standardization, and a reflection of the Value Proposition) is a guide at broader level, while on sales tactics front, one should be willing to consider the customer & geographic circumstances as well. The decision matrix for Pricing decisions typically is pretty complex, and a product undergoes multiple iterations of pricing models

Pricing for Enterprise Sales
Pricing for Enterprise Sales – Tushar

before arriving at the sweet spot. However, various types of customers may need to be assessed in their own contexts when deciding on a deal pricing, especially in the traditional Enterprise Sales scenario.

Tushar also emphasized that the Enterprise Licensing deals should consider not only the product pricing, but also the other costs (such as, hardware) and provisions (such as, for Product Support). The considerations on TCO are critical, because the customers assess the products, not only functionally, but also very critically from an operational viability perspective in longer term. Tushar also laid out few questions that need to be answered while deciding the pricing model. The detailed presentation from Tushar on “Pricing for Enterprise Sales” can be found here.

The discussion, then, veered towards the product pricing strategies in areas such as Telcos, serving also as a cue for Tarun Anand (CTO & Co-founder at Semusi) to pitch in and provide his perspective. He shared his experiences in working with the big Telcos on working out product strategies and pricing models. They tried out various pricing models, in partnership with Telcos especially, and had mixed results over time before arriving at something that seemed to work. However, pricing remains a volatile when dealing with the larger partners and in more complex ecosystems, such as Telcos.

In Tarun’s experience, one needs to ascertain that the partners in the ecosystem are ready to take your product to the market if that is the expectation. It is also important to ensure that the pricing terms & conditions are clear, and you are able to hold the customers as well as partners accountable in the operational limits as much as you can. After all, you want to focus on running the business and do not want complications of financial & legal nature. In the context of Pricing and products strategy, in areas such as VAS, as per Tarun, one needs to be very careful. “VAS is dead” in his words! 🙂

Tarun also emphasized “there are takers for product at ANY price point”. One need to clearly understand whom one wants to target, and also understand that it’s not only a question of moving the pricing point up & down in inverse proportionality with the volume of customer base. There are various triggers for the pricing, one of which is the “premium value perception”, and also the fact that once you move into a market with a particular price point, increasing it later on is almost impossible without hurting your customer base and overall strategy.

App Pricing Tactics
App Pricing Tactics – Prashant

The heat in the Mobile Apps makes the App Pricing a very sought after topic, and that’s where Prashant Singh (Co-founder at Signals) came in and provided a good framework for the high level App pricing approach. There are two clear distinct possibilities – Free & Paid. Complete Free, as per Prashant, directly leads to an Ad based model for revenue that shouldn’t be a preferred model as such for most app developers. In fact the question is not whether to go Free or Paid. Question is when is the user ready for monetization. “You hit when the iron is hot, as simple as that”, Prashant says.

Prashant provided a high level framework to judge which approach should be adopted by the App Developers, based on the two parameters: “App Life Span” and “Time to Realization of Value”. Based on a combination of the two, one can decide on the high level strategy (Portfolio/Platform/Utility/Device Embedding/Brand Apps…) and Pricing model (Advertisement, Paid, Transaction based, Freemium, Development level, and so on). Check out this presentation – App Pricing Tactics for more details.

One key point that drew interest was around the Price Point for App at the launch time. Contrary to the normal belief, Prashant says, one needs to launch the app at a price point that is higher than the Median price point for the App store. That provides the App Store an incentive to showcase the App, and it is important since App Stores control the downloads more than the “content” or “quality”, at least until critical mass. Growth Curve of the app can be maintained around Median and depending on the value prop of the App, the baseline pricing can be used at sustenance phase. Another strong point of view from Prashant came around the Advertisement model, which as per him is the last to be considered. And if Ad model is considered, his advice is to “not” let the control away – “Always have your server in loop”.

While all the content and discussion, and few laughs in between, served well to our appetites, snacks were served amidst a quick “Unconference” session moderated by Rajat and Vivek. We discussed and debated on some great points. I’m finding it harder to capture every bit here and I don’t want to be partial to only what I remember right now! I hope that if you attended and are reading this, you would be able to add your takeaways in comments section! 🙂

Overall, I had a great time. The highlight of the session, for me at least, was the richness of experience and passion for products. And I met some really cool folks! Many of us hung out until later in the night and continued the conversations, which is a great sign. A small impetus can go a long way, and I’m very excited that Avinash has triggered this spark that all of us as a community have to fuel into a passionate ecosystem around products. Great initiative, ProductNation! Looking forward to the next edition on Jan 19th 2013!

PS 1: And, there was a cake-cutting for Avinash on his Birthday! Great gesture!

PS 2: Some Tweets from the session!