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Be a part of the journey to Product Nirvana!

There has been a huge upstart in the number of product companies in India in the last 12 months. 700% is the estimate according to Zinnov Consulting. Most of them, as one keynote speaker at the recently held NASSCOM Product Conclave 2012 said ominously or more from experience being in the Silicon Valley, “will fail”. Why startups fail can be due to any number of reasons but the chances of succeeding is unarguably high if employees get product management right! So, what is Product Management? It is the art and science of creating the right product for the right user at the right time and in the process create a successful business! It is the functional domain which asks the questions what products do we build, who is it for, why do they need it, will they buy if we build it and how will the product work?

India Product Management Association (IPMA) is a voluntary, grassroots organization that is dedicated to helping product management as a function grow in maturity and capability all across the country. It is mostly focused on IT products for now. IPMA is organizing, in its second year after launch, the flagship annual event which brings together industry veterans to speak about various product management topics. This year’s theme, built on the confidence in the growth of product companies is, Journey to Product Nirvana! Journey to Product Nirvana takes the attendees from dissecting the nuances of product management across platforms and products to highlighting successes to sharing advice on specific challenges!

All this in a few hours with networking over lunch on Saturday December 8, at Microsoft office on Lavelle Road, Bangalore. The highlight of the event is the keynote by Ram Narayanan, a product management veteran on “Building customer centric product strategy”, a craft, very few get it right! The event also features Mukund Mohan, Pallav Nadhani, Pinkesh Shah, Saran Chatterjee, Sanjay Jain, Sarit Arora, Dhimant Parekh etc on panels.

IPMA has chapters in Bangalore, Pune and one more coming up in New Delhi soon. Visit http://indiapma.org for details or better yet register for this annual event before the limited seating runs out: http://indiapmaannualevent2012.doattend.com/

The event is sponsored by Confianzys and Tally Solutions and hosted by Microsoft.

 

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Should I outsource the sales function at my technology startup?

I am thinking of writing a series on technology sales, given that selling is my first functional love and I enjoy it more than anything else. (There, I admit it, and yes, more than development even though I am an “engineer” by education). So the next few posts will be focused exclusively on selling for entrepreneurs.

Yesterday I had a friend who came over to get some advice on his startup. 6 years into the business he’d built a $200K+ annual consulting company and had over 30 customers for whom he’d implemented various projects. The average sale was about $20K and since the company was fairly small, (15 people) the CEO and founder was the primary sales person.

Most of their lead generation was relegated to speaking at important conferences and events, after which they’d get a few interested people who were keen to leverage their expertise for implementing a project.

His question was around a proposal he got from another company, which was founded by a big-company sales person who’d built a good network of customers and prospects. The company was offering to help my friend outsource his sales and generate customers. In exchange they were asking for 30% (starting point) of the sale as their commission.

To my friend this seemed on the high side. He’d heard numbers like 10% or even 15%, but 30% seemed large.

So his question was “Is this the right number? Or should I negotiate a lower commission”?

We had an hour to chat about it. I was most surprised he never asked me the question “Should I outsource my sales”? Since I have been running the Microsoft accelerator for the last few months, I have refrained from answering questions I think entrepreneurs should ask, instead narrowly focusing on their specific question and giving them options they should consider or a framework they should look, at to evaluate their options.

Lets do some simple math, I told him. If you are looking to make $200K a year from a sales person, given that your ASP (Average selling price) is about $20K, you will need 10 (roughly) deals for them to make their quota. Since the projects they were selling were fairly complex in nature, the sales person they needed to hire would have to be someone who understood both the customer’s industry, the value of technology to that industry and build good relationships within that industry. So, a fresh out of school grad going for $10K – $15K (in India thats what they make annually) wont cut it.

He needed to hire someone who was a consultative sales person who could not only do the lead generation and selling but also some amount of initial “scoping” of the project. In India most of these people make about $40K annually. These folks would have about 8-10 years of experience (or more) and would have implemented several projects or performed the role of “solution architect”, at their previous role. About 60% of the annual pay of the sales person would be paid as base salary and 40% of it as commission on sale.

Since most of my friend’s customers were in India and primarily in the south, customer travel was going to be fairly minimal, which would cost about $2.5K annually at the high end. Assuming that 50% of his customers were outside the city he lived in and the average customer took 2 trips to close and some trips required 2 people (including my friend who would also help with the sales), the cost of travel was about $2.5K we determined.

To generate leads in a consistent manner, the sales person would have to supplement the speaking engagements my friend was using for lead generation with some events, and a few other techniques, which we estimated would cost another $2.5K.

So in total to generate $200K in business, my friend would have to spend about $45K in hiring, managing and helping his sales person.

Now these numbers are unique to India, but the model holds for the US as well. You might have to multiply each number by 5 to get to the US equivalent, but that’s the norm. Approximately 22.5% of his target or sales was going towards the sales person.

Realistically, the outsourced sales person asking for 30% seemed fairly reasonable.

Of course, I warned that my friend would still have to be deeply involved in the process so the “transparent costs” of the sale would increase the paid commission.

There are a few numbers that can change this equation dramatically. One is the average selling price, second the annual salary the sales person makes and third the target (quota), but by and large this is in the ballpark.

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Passion, Conviction and Approach to entrepreneurship

Many People keep wondering about the kid who rarely talks at home and not good to get grades in school but went on to become an amazing start-up genius.

Celebrated Lawyer of his time Moti lal Nehru was neither happy with the grades his son got in graduation in England nor with his career as Lawyer.  But Jawahar Lal went on to become one of the most celebrated politicians of Independent India.

So, life is not about having a packaged education and career but entrepreneurship which is more about living one’s passion and conviction in life. Passion is the fuel that drives the creation of dreams and conviction is needed to realize those dreams.

This inborn commitment gets you out of bed every day. The aim should excite you to the core and channeling of passion becomes key to success.

Sometimes the idea may give the nay-sayer dizzying nausea due to its grandness and chances of failure.

Successful entrepreneurs know that failure is part of the journey, and that without failure, there is no success. Only in dictionary “success” comes before “failure” not in real life.

Passion without conviction may make a young entrepreneur shooting star in the harsh realities of the world. Conviction streamlines your passion into a steady flow. After all, most people have innovative ideas at some point in their lives.

It is conviction that determines what you do with your ideas.

Do you let it die? Or do you go for it?

Let`s face it: Those who have achieved extreme success had some extra mettle and more importantly commitment to their goal.

It takes strong will power for never want to quit and believing in something that defines you. It is this conviction that takes you to a state of euphoria in which give you confidence to think that you can tackle get to the unachievable which others.

Gandhi successfully took to the fasting for ‘self-penance’ to use his moral force against violence which became surmountable in certain periods before and after independence.

So believe in yourself and at the end of the day, everyone who told you no will deserves some credit for making you more committed towards the coveted goal of your life.

If you are able to relate with this, congratulations!

You`re ready to be an entrepreneur. Your quiver is ready with the right arrows – set of virtues, to yield big things in life. You were born to make a difference. Get on with your idea if you believe you have something special. Challenge the paradigms that bind you, and go change the world.

Contributed by Ajay Data, Data Infosys

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Differentiate or Die – learning’s from the NPC -12 session

Coming back to busy corporate life after NPC (NASSCOM Product Conclave – 2012) is like starting the second innings 🙂 I thoroughly enjoyed being a core volunteer managing 140+ speakers, and the speaker lounge itself on the day of the event. Not just that but was also managing, choreographing and moderating the session “Differentiate or Die – there is a brutal market outside” with the speakers being Rajesh Setty and Bob Wright both from silicon valley and are champions in their own way in the field of marketing and has been delivering guest lectures and speeches on this topic for a long time, and many companies across the world are thoroughly benefited by them. It was time at NPC for Indian product startups to be benefitted by them.

As much as I enjoyed being a moderator, creator and actually a spectator of his event, would like to bring the summary and core points to those who could not attend the event.  It was a 90 minute event with Raj going first on the stage and man he will tickle your funny bone but make no mistake, he will drive the point firm and hard and this is what I can summarize form his session:

“Being part of crowd is cheap; being different is premium and just be different even if you are addressing a small segment” was his clear message. His idea was very clearly driven that if you have the will you can differentiate and still stand out in the crowd and best is he took an example of overcrowded and saturated market of cars to drive his point. He showed that even today and even in that “overcrowded-saturated-done & dusted” market people are finding ways to differentiate and thrive and survive and more important with profits. Take this: buy a car and there are 100s of brands and each one has a different story to tell – one is on safety, one is on family, one is on fast, one is luxury – all done and now you want to enter and how will you do? The common attribute among all is “owning the car”. Let’s change that to “renting the car” and then came a bunch of companies who do it, better, faster, quicker service, cheaper etc. and started another industry around this saturated car industry. Now what – further saturated and cannot go further – say most people but comes smart entrepreneurs who say the common attribute for all is “renting from airport” and lets change it to “renting from home or anywhere” and a new rental company comes up and again created a niche for itself!! Ok that’s it and you cannot do anything further on this market – come-on there should be a limit on a saturated market. So we all l thought but someone came out with a nice idea about renting cars in the locality of those which are sitting idle and why not rent it in the community and there starts another industry which says “why rent from a company” attribute – amazing isn’t it. If that is not enough another company comes and says “rent and drive” when you can “rent with a driver” and if that is not enough, there comes another company which says ride along so that we can zip faster on the “car-pool” lane. Isn’t it amazing on how an over saturated legacy industry can be even now differentiated!! And we complain how crowded the technology market is and we cannot differentiate at all – I think this should be an inspiring as well as an awakening story for all of us who complain about saturation in the technology market!!!

Raj concluded with his Mantras which I feel are very critical and we should follow religiously which I list below:

(Really) Decide to be different

Don’t forget to create meaning – empathize with the people and their problems

Most important, tell a good story

More important than that, live up to the story (otherwise 1,2 & 3 has no meaning and will hit you on the face)

And he ended up with a famous Buddhist Quote

“When deciding among opportunities choose the most difficult path” – So true!!

What an amazing presentation it was!!

Then Bob followed with his presentation and was another amazing one straight to the point.  He is an expert in positioning which is nothing but differentiation and how you drive that differentiation into the minds of the prospect so that it is “positioned” well in that whatever mm by whatever mm size the brain is. Actually my theory is just create the best product and it will sell automatically with no gtm, positioning, marketing, branding, advertising, etc. etc. as long as  they are selected by a set of machines and not humans but as long as humans make the choice, make sure you do all these right!!!! 🙂

He quoted Al Ries “Positioning in the mind of the prospect. It’s how you differentiate your solution in their mind. It cuts through the clutter. It focuses on the perceptions of the prospect”. According to Bob you should position customer centric and around his problem and what you are trying to solve and not product centric.  The 7 gems he stated which I repeat here are:

Fortune 500 or SMB is not a market

Who is your “Mary”? (Manju: Find that right person to who you like to sell and write down his characteristics – not all are same and you need to know the position and characteristics of the person you likely to sell)

Own a problem (Manju: try stating the problem you own in less than 140 characters – give it a shot – if you can’t I say you are suffering from Laser Focus 🙂 )

Have a point of view

Take a corner of the room (Manju: assume room is the market you are jumping into and don’t try to be everywhere in the room)

Communicate with Stories (this story should answer why your company, how are you different and how will be life be better with your product)

No geek-speak  (Manju: please don’t do this like talking on how many layers in TCP/IP and how you get through that network stack and how that packet flows and how IPSEC works and why the IPS and the IDS works the way it works etc etc – please address what problem you are solving for him)

He ended his wonderful speech with a proposed 10-slide solution, which are

  • Slide 1: Big results from customers like you
  • Slide 2: recent market dynamics: your world has changed
  • Slide 3: Causing a big problem
  • Slide4: …And you may lose your job
  • Slide 5: Traditional approaches no longer work
  • Slide 6: what you need to fix the problem
  • Slide 7:The Answer: Our Company
  • Slide 8: 3-4 reasons why customers like to choose us
  • Slide 9: Cleaned up problem: How your life will be different
  • Slide 10: Call to Action

I am just curious, how many slides talk about your technology? Almost None. Now have a look into your deck and see how different it is from the above. Call to action????

Next, I will come out exclusively for “ProductNation” on not just differentiation but how to find one 🙂 🙂 Watch out this space!!!!

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How far should you go with Professional Services in your product business?

For any products company, product support is a given, and part of the products business fabric. However, almost all Enterprise Products Companies end-up offering the professional services beyond basic product support. These services could range from simplistic implementation support, to integration, to solutions-building, to architectural consulting, to IT advisory support. The decision to perform professional services could be driven by customer-demand, or by the intrinsic need of the product being sold, or even driven by the business strategy itself to generate peripheral revenue.

It’s important to understand where the boundaries lie, and what goal does a certain type of professional services serve. The decision to commit to a particular type of professional services needs to be driven by a conscious thought process. This is important because the time & resources required to build various skills & operating models for serving the various flavors, change dramatically from one to the other.

Professional Services in Products Business

1. Product Support

This is the core to the products model and serves as just that – support to the main products revenue, and to ensure customer satisfaction. While the core strategy for any product should be to make it so good that it requires minimal support, there’s always a need for support – offline and real-time for the customers.

2. Implementation Services

An ideal product is ready-to-use off-the-shelf, however, in case of Enterprise products the need to configure & customize could wary. Most times, customers demand for an implementation service packaged in the license deal initially, in order to ensure success. Most times, products businesses have to employ this mechanism also to close sales cycle and to ensure a consistent source of post-sale revenue from such services, and also indirectly to ensure expansion of the product usage through consistent personnel presence on the customer premises.

3. Integration Services

This is where it starts going slightly further away from the core skills that the organization may possess organically. Integration with the existing IT systems and other products at the customer premises would require the skills & management practices beyond the core areas of the organization. An extra source of revenue is one of the temptations, but there are also scenarios where integration of the product is critical to the success of the product, making such services mandatory. This is especially true if the product interfaces are not built with open-standards, and require the integrators to know the details of how the product is built internally. The correct approach would be to build the product interfaces in a way that doesn’t force the business into such compromise to induct professional services for integration. There’s an indirect impact of diversion of core product resources to such integration projects unless such professional services are pursued by design, and resources built accordingly.

4. Solutions & Consulting Services

This is where the game gets strategic, and resources expensive. And the reasons to do this are not any more intrinsically important, but strategically targeted to higher value to the customers and hence, access to the larger pie of the wallet. However, this is easier said than done. Unless there’s enough scale & case in the existing business to allow the focus on such services, strategic, and by design, a business is better off focusing on building the core products business stronger by investing resources there. This makes sense for the products, which are more like Platforms that provide larger leverage than in a Point-solution product.

5. Advisory Services

This is important for the products that are targeted for larger ticket sizes and are built for Enterprise-wide deployments. The IT strategy alignment as well as the strategic positioning of the product becomes important, and it also requires much larger IT leadership level involvement. For Enterprise Platforms, or even for departmental level strategic investments, this approach to professional services can bear fruits. However, building it into a business line requires the core product business to be strong, ready for the leap.

So what?

While the Businesses can look at starting off with the lower scale of Professional Services and build up over time, the decision is very strategic and long term. Professional Services, while offering additional top-line, could actually be a resource-intensice and money-draining proposition if not built properly. The mindset that governs the professional services line of business is drastically different from the product side of business. The operational efficiency is paramount, & profitability can very quickly take a hit. Even more importantly, professional services are more intensely people-driven and the skill sets required to build and sustain this business over long term are not trivial. Look, think, and think hard, before you leap.

PS: There are other considerations on Professional Services that directly or indirectly impact the core product business. I will cover in those in the next post. Until then, hope this helps! 🙂

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The Challenge of “Reverse Innovation”

MNC Structures can impede innovation flows….

In the mid-1970s, the Xerox Corporation faced the first real threat to its domination of the photocopying industry. This threat did not come from IBM or Kodak, the large American companies that had entered the industry. Instead it came from Canon and Ricoh, at that time relatively small Japanese companies.

Xerox had fortified the technological lead it enjoyed due to its patent-protected technology with strong customer relationships, a renowned service network, and a business model built around leasing large and fast copiers to central photocopying facilities within company locations. Realizing that they couldn’t possibly beat Xerox in head-on competition, Canon and Ricoh chose to change the rules of the game. They sold small, relatively slow copiers with limited functionality yet high reliability to individual managers within companies who were looking for options to meet their own copying needs.

Xerox was caught on the wrong foot. With a large base of machines leased out to customers, it was difficult for the company to shift to a model of outright sales. Further, within the US operations, they lacked a small copier product that could compete with what the Japanese were offering.

Ironically though, Xerox’s Japanese affiliate – Fuji Xerox, a joint venture with Fuji Photo Film – had developed small copiers of its own that were particularly suited to the Japanese market. Yet, in a typical case of one-way information flows that often seems to characterize MNCs, Xerox failed to immediately recognize or exploit the products created by Fuji Xerox to compete more effectively with Canon and Ricoh in the US market. By the time they did it was too late.

…But subsidiary initiative can at least deal with local competitive challenges

Innovation by MNC subsidiaries and affiliates has happened in the past when subsidiaries have had to be locally responsive to competitive challenges. In India, we saw the celebrated case of how Hindustan Lever launched Wheel to combat Nirma in the detergent marketplace. In the process, Hindustan Lever had to “borrow” several aspects of its business model from its local Indian competitors. But, such innovations often remained restricted to the host country market, and in the past were seen more as aberrations than an integral part of the company’s strategy.

In several MNCs, subsidiaries still struggle to get the authority to create new products for specific needs of their markets. Subsidiary leaders often have to display entrepreneurship or initiative to overcome the dominant logic that products and technologies flow from the headquarters to the subsidiary and not vice versa.

Govindarajan & Trimble argue for a new logic

In Reverse Innovation (Harvard Business Review Press, 2012), Vijay Govindarajan (VG) and Chris Trimble argue that multinationals need to change this perspective of innovation. And they go one step further – MNCs should not only encourage subsidiaries in large emerging markets to develop “lower cost + lower performance” products for their markets, but should actively create structures and processes to support such innovation.

The rationale for this is simple. Emerging markets are the growth markets of the future, but existing products and services are often not well-suited to these markets – they are over-designed, have too many unnecessary features, and are hence too expensive. If MNCs fail to develop products for emerging markets, they will not only lose out on important growth opportunities, but could potentially create well endowed competitors from these markets who could ultimately threaten them in their home markets.

Reverse Innovation contains some insightful case studies of companies like GE, P&G and Logitech that strategically created products for emerging markets, some of which have subsequently found markets in the developed world as well. The authors call this phenomenon “reverse innovation” because of this latter phenomenon. This constitutes a flow of innovation in a direction opposite to that of what we traditionally saw in MNCs (like in the Xerox story with which I started this post). And, the authors believe that this reverse flow may well be important for the developed world as they face declining growth, lower disposable incomes, and increasing ecological concerns.

The Challenges of Reverse Innovation

I have some reservations about the use of the term “reverse innovation.” It seems somewhat patronizing to the developing world. Notwithstanding this, it appears to be sticking, thanks in no small measure to the Harvard Business Review article by the authors of this book, and GE chairman Jeff Immelt.

But, more importantly, there are some fundamental issues with this phenomenon itself. The first issue is whether MNCs, whose competitive advantage comes traditionally from superior technology and features, can really compete in a price-sensitive, cost-driven market. Anecdotal evidence from the Indian market suggests that GE (the focal company of this book – one of the authors, VG, was a consultant and Professor in Residence at the company) has been struggling to make a commercial success of its reverse-innovated ECG machines and associated products because local competitors have been undercutting GE’s prices. This raises the question of whether, given their overhead structures, MNCs can ever hope to compete on cost with frugal local competitors.

 

 

 

 

This doubt is reinforced by one of the case studies in the book about a P&G sanitary napkin product specially developed for the Mexican market which suggests that this product enjoys less intellectual property protection than a typical P&G product does, presumably because it doesn’t have such a high degree of proprietary technology in it. At least in India, if it’s a competition for better adaptation and cost efficiency, I would be inclined to put my money on local companies to prevail.

Successful innovation often involves innovating on multiple dimensions. Studies by Doblin, an innovation consulting firm now owned by the Monitor Group, suggest that innovations are more likely to be successful if they incorporate innovation in at least 6 of the 10 dimensions of innovation they have identified. This suggests that MNCs will have to innovate on supply chain, distribution and a host of other business dimensions if they are to make reverse innovation work. (This is reinforced by Hindustan Lever’s success with Wheel where they did exactly that). But, it will be difficult for MNC subsidiaries to make that many changes unless they are really determined to do so. It’s tough to imagine the average GE channel partner selling high ticket price medical equipment being interested in selling low-priced scanners, and the challenge of setting up alternate distribution channels (which the authors say GE is doing) shouldn’t be underestimated.

While the authors should be congratulated for taking the bull by its horns in asking MNCs to embrace complete bottom-up product design if they want to be relevant in emerging markets, they should in my view put greater emphasis on the criticality of fundamental changes in business models that will be required for these newly designed products to be successful in these markets.

And, finally, I wonder whether Clayton Christensen’s theory of disruptive innovation (see my earlier post comparing disruptive and radical innovation) isn’t adequate to describe the nature of innovation VG and Trimble advocate. If so, the major contribution of this book is the emphasis on the changes needed in MNC structures and processes to facilitate such innovation by MNC subsidiaries in emerging markets.

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10 Advantages in Thinking Big for Product Startups!

Sometime ago I wrote two posts in this forum:

Expect a Microsoft, Google or facebook out of India? Won’t happen unless we THINK BIG!

and

How to Think Big in Software Products? .

This post is a continuation of this thought process.

What are the advantages for me in Thinking Big if I am a product startup?

Again, thinking big does not mean abandoning what you are doing currently for something fancier but extending your thought process in figuring out the bigger picture in which your product, consumer or enterprise, fits in. And communicating it to all stake holders every chance you get – first your employees, then potential investors, current investors, customers, prospects, your local government, government agencies and so on!

It needs to become part of your pitch – and you need three or four versions that – 30 seconds for someone with whom you share an elevator ride, 2 minutes when you are in a corner during a networking sesssion at a conference and 5 t0 10 minutes when you are in a pitching competition, 30 min to 45 min when you have a one hour meeting with an investor! All including a phrase or a sentence on what the big picture is!

Now, here are 10 solid advantages in Thinking Big if you are product start-up.

1. Hire Good People – Good people don’t join a company. They join a mission with a clear vision and big thinking! Especially in today’s Indian product scene, many potential employees have a fair idea of the risks they are taking with a start-up company and may join anyway. But you need to sell them as much as you sell your investors. And they would make all the difference. It’s easy to hire average people. It takes work to hire good people and they are inspired by big thinkers. That’s how they address their own anxieties about taking a risk with you and your start-up.

2. Convince Potential Investors – In software product companies, investors are looking for a large potential addressable market even if your current product addresses a small part of it currently. If it is a consumer-facing product, you need to chart a large enough course for ramp up and showing hockey stick shaped growth. So unless you think big, this is not going to happen. They will not be convinced. If it is an enterprise product, your bigger vision must include how your current product fits in naturally with additional features and additional products you are planning. How will you scale? Thinking big helps you address how you will scale.

3. Help explore partnerships – Even if your current product is a small part of a larger market, thinking about how it fits it with the bigger picture helps you identify partners early. They will  complete the other parts of the bigger picture. Given your bandwidth with people, money and other resources, you will never be able to build the products your potential partners have already built. It will help you paint the larger picture for your partners and help sign them on.

4. Spur Internal Innovation – Thinking about the bigger picture and conveying it clearly to your employees gives them a clear sense of how they can come up with good ideas and paint within the lines you have drawn for them.Somewhere I read a blog entry from  the CEO of a startup product company wondering about how to keep employees’ innovation focused and useful and not stray too much into wild and unconnected ideas. If you are a consumer focused company in the mobile space, there may be  hardly any point in your employees coming up with new ideas in the enterprise space and vice-versa. Defining your mission in larger terms makes it clear for you and your employees, the boundaries within which they can innovate.

5. Have a Product Pipeline Ready – Thinking Big helps you prioritize your product pipeline beyond your current product. You can then outline this to all of your prospects and customers and obtain their feedback. Remember that unlike software services companies, in product companies you don’t get paid to do requirements gathering for your next products. That’s all at your own expense. Before you actually write a line of code, you can sound out your future plans with your prospects and customers and refine, rearrange your own plans!  You may discover that products that you thought were the hottest ideas were not and discover the real products they need. Talking about a product pipeline with prospects and customers  and outlining their reactions and feedback  have a lot of credibility with your investors. Plus you can have contacts and phone numbers for them to do their due diligence. And rest assured, they will do it; you are just prepared for it, ahead of time!

6. Helps you Pivot to somewhere close when you need to – Sooner or later every eventually successful product company had to pivot to something else.  Twitter was dreamed up by one employee when the parent company was running out of money and they had to come up with some other idea. Thinking Big and having an idea of where your original idea fits in gives you a lot more options for you to pivot, especially if you have sounded them out with your prospects and customers. When you pivot you may be pivoting to something that your prospects and customers already told you they wanted!

7. Acquire Other Companies for Growth –  When you are successful with your initial idea, Thinking Big has helped you already visualize where you fit in and what other start-up companies are there for you to acquire when you go raise additional rounds of money. Flipkart is going around acquiring other companies that deal with similar or different products or operating in other geographic areas. Whether you are a consumer focused startup or an enterprise focused one, you are always a part of the larger picture. You may not be able to address all of the larger market but it doesn’t cost you anything to think of where you fit in!

8. Be Acquired –  This is the reverse of the previous advantage. Investors participate in software product companies for the possible big exit, either through an IPO or an acquisition. If you can think of the larger picture, it helps you get in the sights of those that are bigger than you and can acquire you. They complete their bigger picture, you  and your investors get your exit. Everybody wins!

9. Become Thought Leaders and Gain Credibility –   Thinking Big allows you to do a lot of subtle marketing through Thought Leadership. When we built an Analytics company for BPOs and Call Centers, we became thought leaders in Continuous Process Improvement which is a logical extension of what you do once you collect metrics about a process. What’s ahead of what you do? This helps you provide for free, something that’s of value to your prospects; and is not pitching your products directly, and is a lot of subtle marketing. Writing a blog about the features in your product is OK but is not compelling enough for your users to come back for information useful for them often. And it can be done, no matter what you do. You do a start-up company that does imaging on a mobile phone, start writing about image processing in general. If you are doing a SaaS enterprise play in HR in India, write about HR problems that are unique to India and write about companies that address them in a unique way. They won’t consider it spam when you send information useful to them every month and not too many things about your own product! Keep your product information to “exciting new features coming!”.

10. Helps you get started with Guerilla Marketing –  Collect published online articles about the larger market you are addressing. Post them on your facebook page, tweet them and Google+ them! That’s not spam if you are providing links to interesting approaches, news and images. And you are in front of them every week, month or quarter with your brand!

 As long as your going to be thinking anyway, think big. – Donald Trump

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5 speaker quotes @NPC12 & what they mean

5 phrases I heard and overheard at NPC12 and what they mean. I’m open to a thrash-out on this.

1. “Initially I was skeptical about coming to NPC. Now I want to come here every year.”

– First time at NPC + US based speaker with 100% audience feedback. 

Achievers in America are looking towards India. There’s a reason.

The PULSE that ignited so many industries in the 90s with the sudden wave of IT based services has had no follow up. Companies were able to generate value from the cost arbitrage. Labour was (is) cheap and American companies found (find) Indians to be extremely high ROI.

Until now.

The ITES model has not been able to add the same value as earlier. The pipes are drying out. Software demand has moved away from custom services to problem-solving-price-effective-free-support software.

Almost no one wants to pay for software that doesn’t save lives or makes money.

The ITES ecosystem is attracting the lowest ranks of talent. The good and smart ones that remain are breaking out and building products. Or at least in deep contemplation. Much expected – as a nation of the smartest chimps on earth – we’ve been solving the world’s software problems for over 2 decades now. It’s time we build products. And that’s what we are doing. And these speakers now want to come here every year because its helping them.

Watch this space as I share a video about MR asking Ram Shriram a few questions – one of which is a very interesting angle on why bandwidth is a problem solver.

2. “They (Indian s/w products) are looking inwards to solve the problem. India’s HUGE as a market”

– American born and based speaker.

The Indian SMB industry is upwards of $40Bn worth. But adoption is where the challenges are. If I get your payroll problem solved for INR 1.00 per employee per day – would you still worry about hooking yourself up to this system? At its least – you’ll give my system a shot won’t you?

The cost arbitrage that existed earlier through the service model is now visible through the product model. Companies are not just building the problem solution pairs. But they are creating disruption and then asking for very little money in exchange for it.

And they can do it cause they’re based in India. It costs virtually nothing to setup and build a product from India. Selling it globally may seem lucrative – but not everyone intends to go global immediately. Don’t need to.

Flipkart.

3. “Failing is no longer a social taboo” – everyone.

As a social fabric – we Indians have had this problem for a long time. The class topper is celebrated. She gets the biggest chocolate – both in school and at home. The second in class gets a smaller chocolate.

The one who was failing in Math all along but passed this year without any cheating – is considered a failure.

Not anymore. Finding your own battles and winning them is more important than winning battles others have set for you.

Its the pursuit to excellence that’s taken precedence now. Companies and founders are realizing their shortcomings. And are working to address them quickly. And that signifies a major shift in thinking.

Accepting the possibility of failure makes it easier to accept risk. And risk precedes rewards. So as the Indian smartie moves away from the cushy air conditioned cabins to the street side hustle – the ecosystem around him will prevent him from being ridiculed for his failures.

Every little success is being celebrated here.

4. “Indian products still don’t understand their TG perfectly” – Entrepreneur with thorough experience with software products in the valley.

This one is a serious flaw. Not understanding the target group (TG) is a recipe for disaster. And of all the entrepreneurs I met – finding the TG was in many ways the biggest challenge.

This is because what works and what doesn’t needs a qualitative feedback. This means you tell someone what you think they’re doing wrong. And then superimpose that opinion with what can be done right. Perspective is what the NPC community now offers through the Open source model.

See this video to wrap your head around this ‘open-source’ model. Sharad’s articulate mind encapsulates the theory. If you were at NPC – you would have seen it in action. You’re reading this on ProductNation ! 🙂

5. “Stop wasting time on the Blogosphere” – Ex Facebook, ex AOL, investor who speaks harsh truths.

Though in many ways this is important – it also signifies the importance of content and content marketing. I missed cornering Naren Gupta on why he feels marketing talent is low in India and how we can improve it. But to cut a long story short – the noise on the blogosphere is preventing the Indian product owner from creating, marketing, measuring the effectiveness of content and marketing. Independently and as a whole.

Investors, angels, and startups all seem to agree that products with initial traction need to increase the effectiveness of content and its marketing. Reading techcrunch is great to sound smart – but its got no relevance to the Indian ecosystem and how technology products can be built and grown here.

Conferences like the Nasscom Product Conclave are by design meant to share and exchange ideas. It takes a little time for a new comer to get acquainted. But my first time experience volunteering with this community taught me so much. The software product ecosystem is brimming with energy and confidence.

Yes on many fronts we Indians are at rock bottom. But from here,  the only place you can go is up.

If you’re on the boat – grab an oar and start paddling. We gotta take this ship to the other side. Wish you all a very happy good-wins-over-evil festival of lights – Diwali.

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How to Think Big in Software Products?

Sometime ago, I wrote another post in this forum – Expect a Microsoft, Google or facebook out of India? Won’t happen unless we THINK BIG! .

Thinking Big is a process with definite and specific benefits, about which I will write in a future post.

But this post is about How to Think Big?

Again, some disclaimers! This is only for entrepreneurs and people in the software product ecosystem who want to build something of the scale of Google or Microsoft in India.

You can certainly build great companies that serve the Indian market with Software Products or Services and make a really good living out of it.  You can build services companies that target the whole world and make them very successful like we have seen the past three decades. It is in no way less noble, profitable and good for society than software product companies that target the whole world.

So if you are of the belief that global companies do not map to the Indian market (which is complete non-sense given the reality of what people use in India everyday either as individuals or enterprises)  or Indian companies cannot be built to a global scale, this article is not for you. You can stop reading it right here! This is only for entrepreneurs in India wondering what it takes to build a software company of the scale of a Google or a Facebook or Microsoft targeting the global marketplace.

And there are lots of them today, in India!  – Check out  the article – We are very very bullish on India, Paul Singh, Partner, 500 Startups.

Thinking Big does not mean you spend days day dreaming about big things and dropping what you do today and starting to think about big things. In fact, quite the opposite is true! Big companies have been built with building something small first but quickly redefining what you do in terms of larger markets, larger visions, larger missions and tactics.

Facebook started as a silly college prank site to post pilfered pictures of pretty people and others rating them “Hot or Not”! Once they found out that its better as a virtual meeting place and for status updates about what’s happening in the students’ lives, the redefined it as a business that targets only colleges. For a long time, facebook was limited to colleges only and they rolled them out college by college. Then they realized that it is useful for everyone in the world. Today facebook defines its business as a virtual meeting place for everyone in the world!

Google started as a search company for information in websites. Now they are defining themselves as helping you search for a location (maps), videos, audios and is the business of indexing all information in the world and helping you find it!

On the enterprise products side, PeopleSoft concentrated for a long time on enterprise HR functions and then expanded out to CRM, Manufacturing, Accounting and Finance, etc.

Summly.com is a great example of someone thinking big, right at the beginning but targeting a problem everyone faces everyday. Watch this company started by a 17 year old Nick D’Aloisio – this could be one one of the next big things, and this kid could be very successful! That’s because Summly is addressing a very pressing problem in a very large market! Summly is an iPhone app that automatically summarizes in one paragraph, important stories from all major news sources. I tried it and it’s very useful. In about 10 minutes you can get yourself updated with important things that are happening in all facets of news. Google News is good but you still need to go through entire articles yourself. People don’t have time to do this on a consistent basis day in and day out.  This company could go places quickly.

So how do you Think Big?

  • Are you addressing a pressing need for your target market for the whole world? – In my previous post I outlined a number of problems individuals still face everyday – information in many form factors – smartphones, laptops and desktops. In many software packages – documents, spreadsheets, databases, calendars, notes software, etc. Enterprises are still dealing with pressing problems like security, backups, disaster recovery, incompatible data within the same company and between companies. So whether you target the consumer world or the enterprise world, there are unresolved problems everyday. I bet that no matter what you do today,it can be conceptually mapped to a larger target market anytime. It’s in your own thinking!  There are always other things that are close in affinity to what you do, to expand the market into a larger one. If you are developing a software solution for hospitals in India, how can you generalize this into a solution for hospitals in Europe, US or Asia-Pacific?. While doing this just remember that your technology delivery mechanisms may need to change also. Hospitals in India may be using desktops and laptops but elsewhere it may need to be tablets and smartphones. Summly above is a great example in the consumer marketplace – thinking big to solve a common problem for everyone in the world – Too much information, too little time. You think that such companies cannot be built in India? I don’t think so! Resources to build such companies are available to Indian Entrepreneurs just as easily and cheaply to any body in Silicon Valley or elsewhere! What’s holding us back is our own thinking, nothing else!
  • Is it a large enough and fast-growing market?  – Both the words large and fast-growing are important if you want to build something of the scale of Google or Microsoft. That has everything to do with the problem you are solving as well as the timing of it. Oracle was aggressive with its Relational Database product when the demand for databases was growing fast since it was the beginning of the IT automation in many companies. Microsoft grew with the fast growth or personal computing. Google grew with the fast growth of websites and the need to search for a needle in a haystack of billions of websites. So you may ask, what are the corresponding trends today?  If I were to start a company today (for the global market, not just India) , I will not bother about laptops and desktops and enterprise systems. The future of computing is small form factor systems like Smart Phones and Tablets with cloud-powered backends. In five years’ time tablets and smartphones will be the laptops and desktops of today. But each of those platforms are different from even each other. Smartphone apps need to do something quickly, simply and not too complicated. People realistically spend at most a minute with apps in a Smartphone. Tablets have more screen space, have space for complex applications but they have other problems that need to be addressed properly like security, online and offline modes of working that you did not encounter with laptops and desktops. These are the problems that create opportunities in both the consumer and business global marketplaces!
It’s as simple as that! Thinking Big is about  – Is it a pressing need and is it addressing a large enough and fast growing market? It does not matter that you address all of that market right away but can you see how your current products can be expanded to cover more and more of the larger market?
So it boils down to – Are you Thinking Big if you are just starting out and if you have an existing company with software products, are you Thinking Bigger?
In my next post I will address definite and specific benefits to a startup company or an existing company with software products on Thinking Big!
Look at things not as they are, but as they can be. Visualization adds value to everything. A big thinker always visualizes what can be done in the future. He isn’t stuck with the present. – David J. Schwartz.

 

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What is that we have to build?

Every now and then, we hear people arguing about building “Microsoft” and “Google” of India. Companies like Microsoft, Google have built up incredible technologies and their contributions in improving our life is significant. When started, they started with big vision, a tough and relevant problem to solve, and brilliant team behind the vision. While I cannot look into minds of founders of those companies and say what they were thinking, the problems they chose to solve had enormous relevance and potential at their time and place.

When some people talk of building product companies, they want to build another “Facebook”, another “Google”, etc. And some people want to build “Valley” here in Bangalore or Hyderabad. If all we’re doing is trying to build another “Google”, replicate ecosystem of “Silicon Valley” here in an Indian city, sorry people. Your attempts are futile. Suppose we go to Kashmir, and like apples very much there. We come back to Karnataka, want to grow apples. Can we grow apples here? No. Climate, and soil conditions in Karnataka is different from that of Kashmir. If we are still trying to grow apples in Karnataka, we’re just wasting our time and effort. But Karnataka grows sandalwood. This is a tree that grows here very well. And we can grow best Sandalwood in the world.

Don’t mistake the analogy here. I’m in no way suggesting that Indians can’t build a technological giant such as Google or Facebook. What I mean is, we should not build product companies for the sake of it. If you can solve a problem really well without building a product, and build a great business out of it, that should be the way. When we’re building a company or building ecosystems, we’ve to encourage startups to be best in what they are building or doing. It doesn’t really matter after a point if you are building a product or offering a service, what matters is quality of your work. It should solve real problems of the people. In doing so, it only makes sense to utilize existing ingredients of ecosystem to the fullest.

What we should aim at is building a culture of solving problems and solving efficiently. To solve a big tough problem, if we’ve have to build a product for that, we’ll build a product. If we’ve to invent, we’ll invent. If we have to offer an innovative service, we’ll do that. Once we start solving big problems, once we start setting standards of excellence in everything we do, may be we’ll realize product companies are by-products.

Guest Post Contributed by Mahesha Hiremath, Boson Research

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Expect a Microsoft, Google or facebook out of India? Won’t happen unless we THINK BIG!

When VCs from the US flooded into India about 5 to 10 years ago, they were expecting to invest and make happen, a number of Microsofts, Google and facebooks!

They ended up buying shares of existing public companies and became more of Private Equity investors rather than VCs who could put in a 1$ in 100 companies and have 5 block-busters like facebook or Google that returned $100 each! That’s the nature of Venture Capital – taking risks on 20 companies so that one becomes facebook or Google or Microsoft and makes up for all the losses in those 19 other companies.

This is as much an indictment of Indian start-ups not being bold enough as much as VCs turning into Private Equity investors. They did not find enough companies that were bold enough or thinking big enough!

First, some disclaimers! If you are building an Indian version of a successful US company or targeting a unique vertical in India with your SaaS or Cloud solution or trying different Consumer plays, all success to you! You can still be very successful and thrive!

This is not an indictment of the Software Services business! It helped enormous numbers of Indians stabilize and improve their lives and others that depend upon them, building a huge economy around them. But we need to move to the next stage. The thinking needs to be different this time. When the first services companies like Infosys, Tata Burroughs and Tata Consultancy Services started, you needed lots of  money to buy mainframes and minicomputers. Today, it does not take the same amount of resources to get started in the software business. The only thing that will make a difference now are Innovative Ideas!

This article is for people who wonder what it takes to build a global blockbuster like facebook and Google!

That has to do with NOT THINKING BIG ENOUGH! It does not mean just doing products for the Global Market or going for a huge blockbuster IPOs! That may come later. It has everything to do with going after BIG problems. Big What-Ifs! Big Experiments, Big Thinking!

This has to do with our general instinct to jump too quickly into “how do I make money” and risk aversion and the inability to postpone these questions and address some fundamental problems and find innovative solutions for them, not thinking about immediate payoffs!

Opportunities are everywhere if ONLY we stop being followers and start being leaders! In Consumer oriented startup companies, everybody is still dealing with information – work and social in many different platforms – smart phones, laptops, desktops. They are trapped in multiple formats that are incompatible with each other and causing endless frustration. Documents, status updates, photographs, videos, spreadsheets, presentations, databases are all still in many repositories leading us to waste enormous amounts of time just shuffling all of this!

On the enterprise side, Cyber Security is still a large, large problem! Nuclear facilities, Utilities, Government systems of every kind are subject to Cyber Terrorism more than ever before!

Companies are moving rapidly to the cloud; cloud security is even more scary than internal systems that can be cutoff from external access if someone suspects break-ins. Credit card information and online banking have only led to even less secure places to handle money.

Two days ago Amazon Web Services in Virginia ground to a halt because a monitoring system developed a memory leak and brought many, many companies’ servers to a grinding halt for hours!

Backups and Disaster Recovery are still problems that many enterprises have not found good solutions for yet, globally! There are technologies like Cassandra databases that can have three or four copies of the database automatically synched and updated. No need for backups – they are already backed up in real-time in multiple locations. You can almost build indestructible computing if you wanted to, if you choose cloud resources in multiple geographic locations, even across continents. The video streaming service NetFlix already does this with databases synched up across the Atlantic between US and European Data centers of Amazon!

Companies are just getting into collecting lots of Big Data – social media mentions of their companies, products, detailed information about what every visitor to their websites and online presences did when they are there and wondering how to use all of this information with customer and order information they already have in traditional database systems.

All of these are BIG PROBLEMS begging for BIG THINKING!

When Thinking Big, pick any of these above or other problems, they could lead to the next Microsoft, Google and facebook! It requires an obsession with ONE of those problems and a relentless drive to solve that, first.

When you solve big problems, you don’t need to worry about sales, investors and global blockbuster status. They will come as surely as night after day and high tide after low tide.

We have a tendency to equate technical knowledge, prowess and hacking with success. In software services they are important. But not elsewhere in the software business!

They are important tools but not your mission when it comes to building fast growing, large companies. You need to address problems and create innovative solutions that have clearly identifiable benefits. The benefits are the only things users care about. They do not care about Java or Python or Oracle or MySQL. They have a problem; do you have a solution?

The thing that is holding us back is our own thinking! Getting out of that box is the first step towards THINKING BIG! Thinking big takes the same amount of effort as thinking small but the payoffs are disproportional.

Think little goals and expect little achievements. Think big goals and win big success – David Joseph Schwartz.

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Your neighborhood mom-and-pop Shop is an SBI Branch, thanks to EKO

It is not a usual day if Bill Gates pays a surprise visit to your office. And if the Microsoft Founder spends two hours understanding your business and your product, you might be onto something with a potential to change the world. Hence, the ProductNation team caught up with the Co-Founder and CEO of EKO – Abhishek Sinha – to find out if the World had indeed changed since the Gates visit.

ProductNation: Abhishek, thank you for speaking to Product Nation. Please share the story of your entrepreneurial journey.
Abhishek Sinha: After completing my engineering, I joined Satyam in 2000 and was posted in Hyderabad. Following the usual onboarding and training; I was deputed to Jaipur to work on assignments at couple of mobile network operators. I was never great with coding, however, it was on these projects, that I met Abhilash with whom I co-founded my first company – 6d Technologies.

There was no detailed business plan, we just wanted to do something on our own and since we were in the mobile space, we decided to hit it out by offering communication solutions to Mobile Network Operators through 6d Technologies. At that time, we were pretty much newbies, no family or home pressures. So it was manageable to do all this crazy stuff.

As we went about building 6d, we were on the ropes most of the times. It was a deal that we got from Oman that swung our fortunes. I still remember the generous credit line that our travel agent offered us. For some reason, he believed in us more than we did on ourselves. So this is how, it all started happening for me.

ProductNation: Wow. Thanks for sharing, Abhishek. Who inspires you?
Abhishek Sinha: (In a Snap) – Mahatma Gandhi. I am also encouraged by Dhirubhai, Google founders, Mark Zuckerberg and Flipkart founders. Gandhiji certainly has been a huge inspiration.

ProductNation: Tell us about EKO. How did you start? Why the name?
Abhishek Sinha: Abhinav (Co-Founder & COO – EKO), my brother and I were in Bangalore. We saw a number of people approaching a nearby shop to recharge their mobile phones. Perhaps, oblivious to the shop owner, there was a sophisticated m-commerce transaction happening, right there. It was this exchange that prompted us to think about EKO with the objective of providing financial access to the unbanked. So I left 6d to build EKO.  As far as the name is concerned, it stands for “Echo” and luckily we managed a shorter form.

ProductNation: Please tell us about your customers and your future plans with EKO.
Abhishek Sinha: Our initial market was focused towards Delhi-NCR, Bihar and Jharkhand. We have expanded to 11 states in the country. Importantly, this financial year we are expanding to Mumbai, Hyderabad, Kolkata and industrial areas in North India – Baddi, Ludhiana, Amritsar, Panipat, Sonipat, Murthal, Jaipur, Kanpur, Lucknow among others.

Over the last one year, the model has matured and stabilized. Since June this year, we are adding in excess of 200 outlets per month and should close this year with more than 5000 EKO outlets. The idea is to increase our presence and be a dominant player in the domestic money transfer space. Money transfer segment is attracting tremendous interest from the unbanked population. Moreover, fungibility provided by EKO is fueling it further.

ProductNation: Abhishek, what have been you BIG lessons in your entrepreneurial journey? And what would you like to share with other young entrepreneurs?
Abhishek Sinha:  People say that you should not repeat mistakes, but I must confess that I have repeated mistakes. It takes a lot of time to understand and comprehend that you are committing and repeating mistakes. It takes a while.

The advantage of starting young is absolutely unmatched. Start Young. The naivety and foolishness helps. It is important to persevere and consciously exhaust ones options to loose. At 6d, there were situations when survival itself was at stake and such episodes would worsen the family pressure to get back to a job. However, doing my own thing was and remains my identity, very thought of going back to a job would make me shudder. I thought I would lose my self-respect. I was very conscious that I must exhaust all my options to lose. One has to increase their stakes substantially. One has to be continually hungry.

I never thought in college that I would be an entrepreneur and start a company. Even five years ago, if somebody had told me that I would have to raise tons of money to get this company started and bring it stability, I would have never started. I had no experience of a consumer-facing or payments business. Sometimes following your heart and taking the plunge without analyzing, helps. With EKO, we lost money and we could have gone down-under but I had to take my chances. There is no harm in facing failure. The loss due to failure is measurable, but the gains of success are gratifying and limitless. This is what I have experienced in my last ten years as an entrepreneur.

Product Nation: Abhishek, very profound insights indeed. We wish you and EKO super success.

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The Product Ecosystem in India is at the Inflection point…

We have been long hearing that the product ecosystem in India is at the inflection point and will grow significantly over the next few years (different consultants look at 2015, 2020 or 2025 to be that period :)). More than we hear this, we do hear lot of people talking about how the ecosystem is constrained, a number of challenges that exist and that India is not yet a “start-up” nation. Sure they have lot of data to support these as well. I also had more or less the same picture in my mind for a long time, but this is fast changing as I see some quality action in this space. Below are my quick observations on the “product ecosystem in India”:

1. It’s not just evolving, it’s happening: The product ecosystem has finally arrived and that too with full force. There are over 3,000 start-ups in the country today and 500 new start-ups are taking birth every year. The interesting fact is these start-ups are not a replica (or “copy”) of a globally successful company, but are truly innovative companies who are trying to address a genuine pain point (in their own way of course) in the global or domestic market. Most of the top VC firms globally have made commitments to India market, industry associations are aggressively looking at the start-up space, global incubators and accelerators are eyeing the Indian entrepreneurial landscape.

2. Modern IT is the new buzz word: Modern IT (Cloud, big data, social and mobility) is the new buzz word in the start-up space. While Indian ecosystem may have lagged behind in the traditional IT areas (don’t have enough data to prove this though) however these modern technologies are whitespaces worldwide and surely Indian start-ups do realize this. Over 70% of the new start-ups formed in India are focused on modern IT. In fact most of the 40 start-ups I met recently were based on modern IT. It is interesting to note the way these start-ups are defining use cases based on convergence of these modern technologies (cloud + Big Data OR Social + Mobile OR Social + Big Data etc.) and competing with some of the top companies worldwide

3. Indian entrepreneur is equal to a confident entrepreneur: I must say I was thoroughly impressed by the confidence that most of these start-ups had while talking about their vision, mission and the company. In my recent meetings with start-ups, it was fascinating to note how well prepared each of these entrepreneurs were, no one fumbled on the “tough questions” and everyone seems to believe thoroughly in what they were doing. While some of them went to the extent of being arrogant about this, most of them were flexible enough to take feedback and keep going

4. Indian start-ups as leader in their own niches: “No, we do not have any competition”, “We are the market leaders in this space”, “We haven’t come across a company like us worldwide” were very commonly heard statements during my recent meetings with start-ups. Of course they had a lot of data to prove this as well. Everyone was eyeing a large opportunity and a bigger market share in the times to come. I think we certainly have a few billion dollar companies in making from India

5. Who says enterprises only prefer working with big IT companies: This was a perception (at least I had one) that large Indian enterprises only prefer working with bigger IT companies. However, it was thrilling to note that many start-ups today work with some of the biggest Indian enterprises including Airtel, SBI, ICICI, Reliance, and many others. Some of the start-ups have also extended the customer list to include large global enterprises. Many of these engagements are enterprise scale and the pipeline for many of these start-ups looks very strong

I am personally thrilled by the progress seen in this landscape (and can go on writing about the same :)). While the ecosystem may have been weak for the last decade, that does not hold true for the current decade (beware consultants :)). It is time that we start recognizing this and help accelerate the ecosystem faster. Obviously, start-ups will need more support from the industry, associations, government as well as VCs/ angels/ incubators to evolve faster from the current state.

 

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The future is bright for product companies, Vishnu Dusad, MD, Nucleus Software

Vishnu R. Dusad is one of the founders of Nucleus Software Exports Ltd, and is presently the company’s Managing Director. An alumnus of IIT-Delhi, Mr.Dusad’s vision and passionate belief in product development has helped establish Nucleus Software Exports Ltd as a leading, global software product company. His experience spans areas of software development, creation of strategic alliances, business development, and strategic planning. In an interview with pn.ispirt.in, Mr. Dusad talks about why Nucleus Software Exports Ltd ventured into the product space, transitioning from a services company to a product company and the importance of family support for entrepreneurs

You started Nucleus in 1996, at a time when the flood was to get to the US and provide software services. You went against the tide and concentrated on doing something in products. What caused you to go for this differentiator – why did you get into products?

The whole world at that time was talking about how no products were coming out of India and this was something that was a point of concern for me. So initially we got into this space to demonstrate that India can create world class intellectual property, and that’s what drove us into this direction. At the board level, we took a very conscious decision that despite the fact that the trend was to concentrate on providing services outside the country, we would not have any revenue coming from this area because it would divert our attention from the focus on products.

So one factor was this conscious decision to do something different – but then why choose financial services?

This was actually coincidental because we started Nucleus Software in 1986 and for a good six or seven years, Citibank was our only customer. So we felt that this gave us a good understanding of the banking and financial services sector, and it felt like a good idea to stay in that domain and build a product.

The risk factor at that time must have been high, so what was your mind-set at that time?

You’re right; the risk factor was very high. We came out with an IPO, where shares cost 50 a piece and soon after — thanks to our product focus — our revenues fell to a share price of 9! We were not used to the stock market, and we did feel bad because of the huge risk we had taken. However, at the same time we were confident that we could do a reasonable job in the track we had chosen. There were a few weak moments when we had doubts in our minds, like the time when we lost an order for an account we had pursued for nearly seven months. At times like that we questioned if we were doing justice to shareholders’ money, but we felt we had the spirit to make things happen.

After six years of having Citibank as your primary customer, you took a call to do product development and you probably had to undergo a major shift in thinking internally. How did you tackle the HR factor – how did you get your people to re-align to a product development methodology? Or did you get a different team in place?

I would say that both things happened: we brought in a separate team who was oriented towards product development. That team started working on new products, independent of our services revenue. In terms of our services team, we thankfully were never into the business model where we worked according to x number of people multiplied by y hours per person per month – we were always into projects. In fact, we were already used to taking on fixed-price projects right from 1991 – 1992. So we were confident about making the transition into a product company, because our services team was halfway oriented with achieving something within a limited time frame. To make sure that the customer was always deriving business benefits out of the work we were doing, we never talked to technology teams alone. We were always talking to the business team also. So to align the entire company around product development wasn’t very difficult.

How did you manage talent in those days? Did you have to invest a lot in terms of re-training them?

For hiring talent, we went to places like the Delhi College of Engineering and BITS – Pilani. I would say re-training wasn’t such an issue because thanks to our business practices and opportunities, we’ve had a whole lot of people who stayed with us for a decade and more. This helped us ensure that domain and business knowledge was retained within the company, and could we could preserve the shape of the project.

As a company who focused on aspects like cash-management and products around core-banking loans, there was competition on the landscape. There were other smaller niche players like CashTek, as well as Citibank’s own captive business in the country. So was competition ever a concern or did you feel the pie big enough? How did you tackle expansion?

Around the time our product was ready, we were already aware that our existing competition were running their own product. We did fear that the market wouldn’t be big enough in the country and that we’d have to go overseas – but we were wrong. Surprisingly, when we bumped into one of our earliest customers at a conference and we showed them our product, they started asking “Where were you all this time?” So this gave us the perspective that there was definitely a sizeable market, and we didn’t have to be unnecessarily concerned.

In terms of growing the company, we recognized that the existing team comprised mostly hard-core techies, so we brought in sales people to join the team. Initially, we were worried that to drive sales they would need to have an exhaustive understanding of the domain and the technology – but again we surprised to find that it was not such a big challenge. We then started participating in events, we started making cold calls and we were able to bid in the international markets. We started having MNCs signing up with is in India, who would be happy with our work and would recommend us to other companies and we’d get the next contract. This took us to the next level globally, and that’s how we built up the business. We didn’t hesitate in investing in marketing – as our services business continued to grow, we ploughed that revenue into the marketing.

There’s been a lot happening in the product development space, like a change in momentum and the development of the SaaS model. You’ve been a solid player in the market now so how do you see the future for product development? How do you see product companies going forward?

We believe the future is bright for product companies as long as they are committed to understanding the domain and are focused on providing meaningful solutions. There will be no dearth of market for companies like these. There is a lot of technological development happening, so it’s up to these product companies to leverage these developments on and on-going basis. This should be with the focus of using this technology for customers in your domain and continue to add value.

You’re an alumnus of IIT-Delhi, and there are a lot of companies today who are getting into the product space in the start-up category who are being led by CEOs from IIT. So in a sense, they are jumping straight into forming companies. Would you say this is a big asset, since they come already orientated with technology and create companies that offer a technology solution?

I would say that if you have a bent of mind which says that “I have to add some value to society” and you are passionate about it, then experience is immaterial. There are global brands which have been created by dropouts, or people who have just graduated. According to me, the only components that are required are the passion to make a successful product and the passion to bring value to customers.

You are an entrepreneur who took the plunge at a time when the future wasn’t very clear. Today, there are a lot of guys who are standing on the edge of this pool are undecided about whether they want to jump in or not. What are the things that you would advise them to keep their eye on when they start a product enterprise?

Depending on the age at which the individual is getting into the software product development space, family support is very important. This is different before marriage and after! This support may not be just financial, but also psychological. In my case, I was fortunate since I was not required to get a job and straight away start sending money home – I could choose to do whatever I wanted. I came from a family where getting into business was the thing to. So I am lucky to have a family who provides me with unflinching support. So this is one core component, in my opinion.

Another thing you need to have is the passion to make things happen, because you can’t afford to give up. There will be enough moments and situations where you will ask yourself, “Am I going to pass this hurdle or will I collapse on the way?” You need your internal support system to let yourself and everyone around know that you are going to deal with this. You also need to give this support to customers and show them your internal strength to inspire confidence. Go in with the intention to understand your customers’ needs and bring your technical (and other) capabilities to fulfill those needs. It’s natural to feel that when you have created something, customers are going to line up at your door but it doesn’t work like that. You need to find out what the pain areas are and what customers are excited about.

5 key take-aways from Vishnu Dusad’s interview

No products were coming out of India and this was something that was a point of concern for me.

To make sure that the customer was always deriving business benefits out of the work we were doing, we talked to both technology and business teams together.

Nucleus Software Exports Ltd.’s business practices and opportunities helped retain talent for considerable periods. This ensured that domain and business knowledge was retained within the company.

The future is bright for product companies as long as they are committed to understanding the domain and are focused on providing meaningful solutions.

The only components that are required are the passion to make a successful product and the passion to bring value to customers.