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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.

 

 

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Towards a glorious product nation!

The biggest success of the IT industry in the country has also been its biggest challenge. The phenomenal rise of the Software services industry led by global leaders like TCS Cognizant, Infosys and Wipro and smaller firms like HCL, Mindtree, Zensar and Hexaware in hot pursuit has put India in pole position in the global IT services industry. Driven by NASSCOM with visionary leadership and full support from industry stalwarts, the services industry really gathered momentum towards the end of the last century and has never looked back since.

However many other industry segments have struggled to emerge from the shadow of the spectacularly successful services sector. Business Process Outsourcing looked like a rising star for some time followed by Engineering Services, Media and Animation and other sub-sectors but could not match the rise or the stature of IT Services. The Products industry too has had many good starts, but in a manner similar to India’s cricket openers these days, have spluttered too fast and too frequently. Barring a few successes like i-Flex, Tally and some products that germinated within the comfort of a services company, the product story from India has just not done justice to the energy enthusiasm and incredible talent that lies in this country.

There are many green shoots emerging in the hitherto parched product landscape that give us all hope that the story is destined to change and move towards a happy ending with a more focused approach to developing a new eco-system for the product industry. In the last few years, outstanding leadership of the product forum in NASSCOM and the very successful product conferences in Bengaluru have demonstrated the high energy that flows through the veins of the product entrepreneurs today. The opportunities too abound with the ubiquitous spread of the internet and cloud computing enabling “made in India” products to quickly expand their availability globally and Software as a Service enabling new methods of consumption and commercial relationships.

However mere enthusiasm does not create a product nation and there needs to be concerted efforts to build a sustained focus on the products industry. There is a need to work with this fledgling sector from the early stages of creating programs in Universities to build a product mindset to developing incubation centres and a more vibrant angel network that will enable thousands of start-ups to bloom. Since significant Government and corporate support for Indian products will also be needed akin to the support given in China to the local industry, serious efforts will be needed to educate the bureaucracy in Delhi on the very specific needs of the product companies so that enabling policies and programs are created and funded by Government.

The opportunity for the products industry to be a hundred billion dollars strong by the time India turns seventy-five in 2022 is very real but we will need to bring all the players together and build a strong platform to propel the industry into the stratosphere of global success!

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Let the world know about your software product

LaunchPad

You’ve spent months and days and hours conceptualizing your product and then taking it to market. You’ve won the first few customers who are now stable and you’re thinking about what next…if you’ve achieved this, it’s time to show your product to the world.

The NASSCOM Product Conclave LaunchPAD is the place you should be to demonstrate your product and recount your journey from CONCEPT to REALITY. We’re inviting a select community to hear about you and your product. Won’t you come?

A day before NASSCOM Product Conclave kicks-off in Bangalore (November 6, 2012), we are pleased to host an exclusive interactive session with the media, blogger and analyst community where you have the opportunity to launch your new product and enjoy your moment in the spotlight. Last year we had some of the crème-de-la-crème of press attending the event and reporting it in the print and online media.

Who is eligible?
If you are an Indian software product company that has a software product in the market for at least six months and has at least one revenue generating (not beta!) customer, then you are eligible to participate. Apply for the Product LaunchPAD here before October 25, 2012.

What happens next?
NASSCOM shortlists eligible companies and informs them by October 30, 2012 Present your software product to the media at an exclusive event.

Publish a booklet containing information about your company and software product which will be circulated to the media and available online on the NASSCOM Product Conclave website. Opportunity to interact with a focused group of professionals and hear their feedback on your product.

Some of the folks who will help us short-list some great Products are:

Amit Somani, Arun Katiyar, Suresh Sambandam

Need further help?
If you need advice on how to structure your launch pitch or presentation, then please do let us know. Also we have many curated sessions at product conclave to help you take your software product initiatives even further. If you haven’t registered, then do so NOW!

See you at the NASSCOM Product Conclave – the place to connect with Indian Products Ecosystem.

 

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Software Products Industry: Transforming India at Large

In my mind transformation is something that takes place when there is a significant change that happens and a whole genre of populace move from one condition or state to another. It is palpable, widely felt and very tangible right down to the grassroot level. One such occurrence that comes to mind is the Indian Railways reservation portal which was launched a few years back where millions across the country suddenly had the facility of bypassing greasy touts and getting a seat on a train of their choice in an honest way.

I believe another such transformation is already being felt. The phenomenon is criss-crossing the country like never before. Suddenly from the bylanes of Indiranagar and Koramangala in Bangalore and the swank office blocks of the NCR region, not to mention localities like Aundh in Pune and other such places, a breed of software product entrepreneurs are willing to stand up and be counted. But again, mistake me not, these entrepreneurs do not necessarily come from the Tier 1 and 2 cities (as demographers like to classify) but indeed from cities like Belgaum, Udupi and Bhopal, Agra, Jalandhar and Coimbatore and so on.

These new breeds of entrepreneurs are not those who have a blueprint in mind but have actually launched a software product of their own because they have identified a need in the market. These needs are not necessarily easy opportunistic needs that some early generation product companies took but those which require a sound architecture and robust package (including pricing) to positively influence the market. So why am I excited?

The first undeniable fact (and Zinnov says so, not me) is that there are about 100 million lives being transformed across 10 million SMBs in the country. To put this in another perspective, this is virtually like CK Prahlad’s “Bottom of the Pyramid”. While the software industry has been renowned for its transformational activities among the Fortune Global 2000 list, this is a bottom up revolution.

Secondly, these recently started software product enterprises offer job opportunities not far from “home”. What I mean here is that no longer will engineering graduates have to uproot themselves from hearth and home to travel across the length and breadth of the country to the large cities in search of employment. There is already evidence of companies in towns which have a population of less than a million who have demand for such skills.

Thirdly and most importantly, these software product companies have mushroomed because of a demand that has arisen from manufacturers. Small entrepreneurs, retail enterprises, cooperative banks and a variety of other organizations have made it a point to adopt best practices that once seemed to be the preserve of only the larger conglomerates. Efficiency is the buzzword down the enterprise chain and the attraction to software products has only become greater given that it is often available on a “pay for use” model. Very often the software could come bundled with the hardware at an even more attractive price. What more could a customer ask for?

Just consider this. If a pickle manufacturer in Jaipur can streamline his inventory and manage his complex distribution and invoicing using a software product that is made locally and sold on a SaaS model and for every kilo of pickle he retails he saves 20% of the cost because of efficiency and is able to achieve lesser wastage in the process because of better inventory management, then why would he not consider using local software that is easily accessible and where service is only a call away.

The transformation has already begun and there’s no turning back.

This is part of a series and watch out for the next one.

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Do not decide what your REAL Product Strategy is until you have Version 1.0 ready! Be Ready to Pivot!

In 2006, folks at the company Odeo were brainstorming ideas for a new software product that they wanted to develop. They came up with the idea for “Twtr” for sending SMS-like messages to groups of people who may be interested in receiving it. Then they hit upon the word “Twitter” that stood for chirps from birds that also stood for “spreading inconsequential information”! That’s how Twitter was born! For a long time, Twitter was made a lot of fun of, with many people denigrating it for exactly the same thing – useless stuff for people who have too much time on their hands and not much to do!

Fast forward a few years! Try telling how “inconsequential” Twitter is to the thousands of people who sent huge numbers of tweets from Egypt trying to highlight atrocities committed by Mubarak’s people before he was overthrown!

As you read this article, Twitter is being used in Syria by both sides in the conflict to get news, pictures and other information about the conflict that is happening there to their own supporters worldwide, in real-time!

It is no longer inconsequential and has become a real-time, short, quick mechanism to get information, images out to those interested. If you have lots more information to convey than 140 characters you place them on sites and send the URLs out! Now you can send it to additional people by attaching tags!

Documentum was a document management company that was started in 1990 and grew solely as a US FDA drug approval document and workflow management company. They had their first version ready and found that pharmaceutical companies in the US were needing a system that centralized all drug approval documents, and provided document versioning when many folks, distributed geographically, needed to contribute and edit others’ edits.

Documentum was a FDA document management software for a long time before they penetrated other verticals and became a general document management software company!

Our own company started out as a Real-time Business Intelligence software company. When we showed our partically completed first version to some Business Process Outsourcing companies in Chennai just on a lark, they said that that was exactly what was needed to process their BPO SLA monitoring activities. So we became a BPO and Call Center Analytics company from a Real-Time Business Intelligence company!

From our next version, the software was dedicated to having the features that was tailored specifically for that purpose, and took a different course!

What are the  lessons from all these examples?
If you are passionate about solving some problem, go ahead and implement something first. Show it around, gather users, have them use your product, and gather feedback. See where your sweet spots are – whose pain does it solve? Does it solve that pain immediately? Is the pain large enough for them to pay something in some way immediately (or monetization in case it is a consumer oriented software product like facebook or Twitter)?

If you get the same kind of positive feedback from some subset of your users consistently, you have found your sweet spot! Focus more on that market, be ready to pivot your direction towards that for a while forgetting all other markets! You can always come back to those other ones, once you are successful in that market.

Product startups may not be able to completely predict accurately who exactly might use their software and result in revenues for you in some way, right out of the gate! So get something out early, sign up users and get feedback and observe!

And be ready to pivot towards where you are finding your sweetspots! As a young startup it is very easy to get distracted and start going after all markets and all directions, but paradoxically the right strategy for rapid growth is always narrower focus! Focus in one area, one market, one group of users. Make it successful there, and then you can explore the other areas.

It is very easy to invest too much of your ego in your original direction and get stuck. This is especially a problem with technical founders. If your objective is just to do some hacking and have some technical fun, that may be OK. But if you want to build a successful business, you need to keep your ego in check and be ready to change direction nimbly, especially in the beginning.

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Why aren’t more developers creating serious Mobile App Products?

Mobile Apps

These are the times, when every third person that you meet in Technology world has an idea for an App. It could be every alternate person if you’re hanging out in geeky groups or among heavy Smartphone users.

The Industry trends suggest a phenomenal surge as well. According to Gartner, Mobile Apps Store downloads worldwide for the year 2012 will surpass 45.6 billion. Out of these, nearly 90% are free Apps, while out of the rest of 5 billion downloads majority (90% again) cost less than $3 per download. This trend has a strong growth curve for the next five years. (See Table 1. Mobile App Store Downloads, courtesy: Gartner) 

Another report suggests that 78% of US mobile App Companies are small businesses (based on the Apple and Android App Stores based research). The typical apps that dominate this market are games, education, productivity, and business.

Mobile App Store Downloads - Gartner 2012

This comes as no surprise. There is a huge divide between the Enterprise Mobility (dominated by the Enterprise Architecture, existing platforms and mobility extensions to the platforms that ensure business continuity) and End-User (Consumer) Mobile Apps dominated by the App Stores supported Small and Mid-size App Development Companies. The barriers to entry in the Smart phone Apps Market seem pretty low with the supporting ecosystem from Apple, Amazon, Google, and Telecom carriers.

However, let’s get back to the fact that majority of these Apps “do not” generate direct revenue.

While the entry seems without barriers, there are multiple hurdles on the race track:

1. Developers need to focus on the User Experience. The smartphone apps pick-up is highly skewed toward Apps that offer a good user experience even for minimal functionality. After the initial success, the App makers end up adding functionality for sustained interest, but the User Experience tops. It’s difficult to focus on UX while still trying to do everything right at the underlying architecture level for long term.

2. Marketing is important. Getting the early eyeballs is key for the App developers. Any serious App needs an immediate initial take-off, and among the things that they need to do to make it happen is to market the App beforehand and to get the authoritative reviews in place.

3. Initial Take-off is just the first hurdle. App needs to be able to handle traffic bursts, it needs scale with increased traction, support virality & social connects inherently, and also build an effective User ecosystem. None of these may seem like the core functional features of the App, but are most critical for the broad-based success.

4. The Freemium model is very popular, but it can kill the business if the marginal costs are not sustainable. The paradox of the Free model is that unless the 10% paid users are able to pay for your 100% costs, every additional user takes you closer to the grave. With this come in two questions – how do you keep the infrastructural costs low, and how do you build additional revenue models around the app.

  • IaaS can solve some of the infrastructural headache, but doesn’t provide you with the other functional layers that every App needs. You need to still build them. PaaS providers provide the scalable platform for building Apps, but you still need to build some of the functional features such as Gaming Rooms support, Messaging, User Authentication & authorization models, and so on. Mobile developers are still doing a lot of repetitive work across the smartphone Apps that can be consolidated into a framework.
  • Supporting the additional revenue models require integration with external Ad-services, Payment systems and more importantly the bandwidth to deal with this even more fragmented set of agencies.

5. The End-point device platforms are fragmented and getting even more so. A typical model for App developers is to develop an Android App, iOS App or a Windows App and then support the other platforms as they go along. However, keeping up with these multiple platforms is only getting more and more difficult with the speed with which Apple, Microsoft, and Google keep rolling out the OS. There’s tremendous pressure to release the App within the 1-3 days window of the release of the underlying platform.

Hence, while there are millions of people developing smartphone Apps as we speak, there are only a fraction that get built at serious level, and even smaller fraction that gets built for sustainable business success.

And considering these hurdles, the arrival of the Backend-as-a-Service (BaaS) is a blessing for the App Developers. Forrster’s Michael Facemire refers to them as “The New Lightweight Middleware”. He goes ahead and lists out some of the basic tenets of what makes a Mobile Backend as a Service, but I see this list evolving as the vendors offer more and more functionality to the customers leading to en ecosystem.

And the term “ecosystem” is going to be the key. That’s because a successful mobile App doesn’t stop at the user starting the app, using the app, and leaving the app. A successful App creates an ecosystem for the viral growth, user engagement, social functionality, in-built broad-based connectivity for multi-user interactions, and more importantly the ability for cross-platform usage. In a Gaming scenario, the user interactions and the relevant immediate feedbacks are paramount. Most successful apps build an ecosystem. Instagram, 4Square, Pinterest are the common household examples today.

ShepHertz App42 Cloud API is complete backend as service to help app developers develop, buid and deploy their app on the cloud.While Michael lists out the usual suspects in his post, most of them in the Silicon Valley, there is a very interesting player in Shephertz’s App42 platform, right here in India. The ecosystem approach that they have taken seems pretty much what may be required for serious app developers that need a robust backend provided as a service, so that they can focus on the app functionality, user experience, and more importantly the marketing aspects of the App.

Now why, still, aren’t more and more developers building even more serious mobile App products? Why shouldn’t they be? I think, they will!

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Product companies will constantly change business plans, product ideas, and offerings to meet the ever-changing market opportunities, Piyush Singh, CIO, Great American Insurance Co.

Piyush Singh is the Chief Information Office (CIO) and Senior Vice President at the Great American Insurance Company—a property and casualty insurance company, and Vice President of it’s parent company, American Financial Group [NYSE:AFG]. Under his direction and vision, Great American’s IT department has transitioned from supporting a legacy IT environment to become a trusted player in the company’s business success—offering agility and adaptability to align with the executive vision. In this interview, Mr. Singh shares his observations on innovation in Indian software companies, product development, and how large IT companies could accelerate the pace of product innovation. 

Piyush, you have been watching the Indian software industry over a period of time. What are some of the changes you see now especially in the context of the software product industry in India?

The Indian software Industry is the envy of many countries around the world, and numerous governments and business associations have been trying to emulate its model. It has made a significant difference in elevating the professional services job market and provided the necessary fillip to the country’s infrastructure—transforming sleepy suburbs into high-tech cities with world-class facilities. The Indian software Industry contributes $67B to the economy in direct revenue, but delivers a bigger economic impact (probably tenfold) when you think of all the tertiary employment it generates and the indirect revenues created.

Yet, this phenomenal growth has been a result of labor pricing arbitrage, and many of the large companies that lead the software services are today challenged by lack of innovation and intellectual property (IP). Yes, outsourcing and large services contracts are definitely attractive but unsustainable in the long-term. Sustainable growth and maintaining unique value propositions demand significant investment in IP—and this needs to be more than just systematizing processes. I do not see IT services companies investing in actual development of product portfolios that might address vertical markets or provide horizontal solutions. Typically, I see global services brands create deliberate pools of internal innovation that harnesses the knowledge of its workforce or buy IP-based companies to provide them the necessary scale for reach and investment. So far, I’ve seen neither processes here, but am hopeful that this will change.

Culturally, do you think Indians (and this is very broad considering our diversity) are risk takers and willing to start out businesses? Or are they averse to taking risks?

I don’t think so, and there are numerous examples of our appetite for risk—numerous Indians in the Silicon Valley have taken their start-ups all the way to public offerings. What I have noticed is, we tend to invest in real estate—really investing for the long haul.

Today, I find ourselves increasingly accepting entrepreneurship and its risks, even as senior executives leave large corporations to do something more meaningful, and different. But these new companies will need significant capital and gestation periods before they begin to show results. This is in contrast to the services industry growth that sets an average 20-30% growth every year—leaving start-ups struggling to showcase such growth. The risks and returns are completely different in a product company—Oracle, SAP, Microsoft, Apple are all shining examples of IP-led revenue-generators. Their valuation and market sizes are incredibly spectacular. But they didn’t grow into such successes overnight.

Product companies will constantly change business plans, product ideas, and offerings to meet the ever-changing market opportunities. These evolutions take time, effort, and capital—ask any Silicon Valley venture capitalist.

On the other hand, if you read the balance sheets of many of the services firms, they have idle cash, and great market reach. It will be a win-win for all if they use the cash to fund or accelerate the incubation of products that they can take back to their markets.

What is your take on emerging companies in the product space? We see, for example, many of them are developing apps and very few seem to be venturing into the enterprise or B2B space. Do you agree?

I agree completely. In the insurance space, for example, of all the companies out of India I’ve worked with, only a few have made any real IP investments—MajescoMastek, PlanetSoft (acquired by Ebix), L&T Infotech, and Mphasis. But if you see the revenue portfolio of the top 200 services firms out of India, the financial services industry is a leader in driving investments. And only a handful companies have made any IP-led investments. Strange, don’t you think?

What’s interesting is that it’s not that India doesn’t have the talent: every large US-based company (Microsoft, HP, Cisco, IBM) have a lot of product development out of India. The capabilities and talent definitely exists—we need the larger Indian companies to show the way.  They should make use of the talent that exists in their own setups, sponsor ideation, build incubators and make a directional investment in product development. They should stand up to explain their actions and the promise it holds. Analysts might not like the idea initially as it does not fit in their current forecasting models  but as they realize the potential and see results over time, they will warm up to the concept and probably push for higher investment. I would argue that Indian companies do bring in a lot of process expertise in any project that they manage, so  they can definitely build processes that would seek ideation and lead to valuable IP.

What’s your view on innovation in the Corporate environments?

Innovation has become a necessity for existence. As Robert Murdoch, Chairman and CEO of News Corp aptly said, “The world is changing very fast.  Big will not beat small anymore.  It will be the fast beating the slow.”  Innovation is being taken out of R&D labs and becoming the fabric of the entire company and an integral part of the culture at all levels. If it’s not happening, it can hurt them. Look at what’s happened to Kodak—they invented the digital camera concept but now the only value left is in the patents which they filed.    Blackberry (RIM) is facing a similar situation – in May of 2008, of the corporate companies surveyed 82% of them were looking at buying RIM based Blackberry’s.  Their lack of innovation in the world of user experience design has left them in a situation no one wants their company to be.

Do you think a major contributing factor in the last couple of years has been contributed by bandwidth availability, relatively easier capital and technology disruptions from areas like cloud computing? Have these leveled the playing field?

Well, these not only level the playing field but also give you an opportunity to differentiate your offering. For example, cloud computing levels the playing field, making it a lot easier for people to invest in or explore new products as long as you provide open integration points,a level of flexibility and a blueprint for future innovation. Commoditization brings prices down but forces you to decide on the USP that would help your company stand out.  You need to balance commodity with strong uniqueness so you can leverage both benefits. People who are going to be nimble and fast, and people who respond to these paradigm shifts are going to emerge the winner.  The key lies in how quickly you react to market forces and how adaptable you are. Any country that can produce a model of constant adaptability becomes a much more stronger player in the long haul.

Five years ago a typical software strategy didn’t take into account elements like user experience design, predictable analytics/big data, mobility and enterprise social networking. If you’re a ten-year old product company or a large services firm, it’s a little tougher to make a shift to embrace these elements. If you’re a smaller company though, and you’re nimble and watching these trends closely you can adapt to them quickly. It depends on how leading edge you are, because people are always talking in the context of ‘now.’ Mobility has been on the forefront since early 2008—but companies are still exploring mobile apps. Big data has been there for 3 plus years—but how many people are truly exploiting the value of this data? Enterprise social networking helps companies capitalize on people, collaboration and sharing better. It provides individuals more command and control—if the person at the lowest level comes up with a bright idea, everybody knows who to give credit to!

So you Piyush – if you had to give some advise to product companies or people who are venturing into the software product element India, what would you say?

  • Identify a domain where you see that there is market opportunity and don’t look at what is currently being offered as a solution.  Try to look 3 years ahead and try to build it around the emerging model of doing business—it’s about how you’re going to do business tomorrow, not how people work today.
  • You’ve got to balance domain expertise with people from outside so that you can think differently. You can’t have people who think the same way all the time. You need to understand how to incorporate User Experience Design—making people react and say “It is obvious.” Product companies have the advantage of disrupting the existing ways and changing the model—that’s what DELL did with PCs, Amazon with the book store, and Netflix changed movie watching at home.
  • You should be willing to find a charter partner who can help you to bring about change and  break the current paradigm.  Once you have this, you’re on the path to building a product that will succeed.
  • Don’t just be happy with what you have and what you build. You really have to be dissatisfied with the present and galvanize resources into action. This requires a fundamental shift in the group mindset, how we operate and how the company is structured. We need to learn from the old Chinese saying ‘let a thousand flowers bloom’ – not just the management ranks!
  • Don’t make random calls and hope that there will be sales. Learn the market, understand the potential buyer fully and then target with laser focus. Do not take a shot gun approach and hope that it succeeds.

Which 5 product companies or fields are you interested in meeting?

I would rather choose three fields that are of interest for me:

  • Companies that are working in the insurance sector – what are they doing and what’s innovative
  • Companies involved in infrastructure–what are you doing to improve the end user experience/reliability and availability in the modern complex world
  • Companies that are involved in new and novel concepts that challenges any business model. I want to be challenged to look outside my standard thinking model.

If you are keen to meet with Piyush at NPC. Do drop in a mail to us at [email protected] and we will get back to you.

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Want Software Product Success? Narrow the gap between the User and Technology!

Guess what’s the #1 Business Intelligence Tool in the world is?

Oracle BI?

Microsoft BI?

Informatica? Cognos?

None of the above! The ugly and the real truth is that the #1 Business Intelligence tool in the world today is…..

…… The Spreadsheet!

Yes! The lowly spreadsheet is the most used BI tool in the world, including every Indian IT company that we have come in contact with.

Companies invest millions of dollars (or rupees) on expensive Data Warehousing and BI tools but secretly everybody is using spreadsheets to download the data from these data sources into spreadsheets and doing their own Business Intelligence!

The simple secret is that the lowly spreadsheet bridges the last mile gap between the USER AND THE TECHNOLOGY!

The formalism is very simple – you, as the user can get very far by doing your own programming, as long as it is something simple, with formulas and macros!

Now with support for Pivot tables,  they allow this self-programming to go even farther than that! You can drill-down and see how composite numbers are made of simpler numbers!

That’s the real secret of software product innovation. Bridge that last mile gap between the user and the technology and you have a winner!

I have personal experience with this!

BPO and Call Centers in India were struggling with Key Performance Indicators (KPIs) and SLAs. Clients in the US and Europe write BPO and Call Center contracts with Incentives for meeting SLAs with KPIs and penalties for not meeting them!

There you go – if your product is directly tied to money, you have a winner already!

If your Average Handling Time for a call is within 3 minutes you get an additional incentive. If not your total payment got a penalty deducted from it. If your Customer Satisfaction Index average for a process is less than 3.0 on a scale of 1  to 5, you got a penalty. If it is more, you got an incentive!

Every large BPO company had anywhere from 1 to 20 clients, each client has 1 to 20 processes, each process had about 5 to 20 KPIs, each KPI was calculated with about 2 or 3 pieces of information.

That was a lot of information to process, more so, when the information came from backend databases, excel spreadsheets and just simple text information reports or CSV file extracts from clients’ systems in the US and Europe.

So we built an ETL framework that handled inputs from may different sources, we used Microsoft SQL servers, built automated tools that built data cubes automatically and populated them automatically using MDX queries. Drill-down Queries got translated into MDX queries automatically.

When you queried stuff or imported raw data , we built tools that were friendly with Excel spreadsheets, allowed export/import, since we knew that was the most popular mechanism used.

Yes. we were successful in selling enterprise licenses to Indian companies that were trying to find a comprehensive solution for this problem for a long time.

We bridged the gap between the user and the technology and were successful!

That’s always the secret, whatever your passion is, software product innovation for the consumer or business!

Figure out what that gap is , between the user and the technology, and bridge it, you have a winner!

 

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Is Software Innovation an Art or a Science? It’s Artful Science or Scientific Art!

When we think of Software Product Innovation, we imagine getting “Eureka!” moments 3 am in the morning, getting up and writing down inspired thoughts and coding them the next morning!

Reality is much more mundane and is more of evolution rather than sudden insprirations from the sky!

Yahoo started because Jerry Yang and Filo just wanted to create a searchable directory of information first at Stanford University and then San Francisco in general!

facebook started as a teenage testorone-fueled comparion site for Harvard students to post pictures of fellow girl students and rate who’s hot and who’s not! From there it evolved into directories of students in universities to find each other for dating more than anythingelse. For a long time, facebook signed up university by university and not the general public-oriented thing it is now!

This stands for enterprise software products also – Oracle Relational Databases were less expensive, clumsy knock-offs and replacements for Digital Equipment Corporation’s RDB/VMS relational database system.

Before Microsoft Word and Excel spreadsheets, there were Lotus Ami Pro and Lotus 123!

Before Google search, there were DEC Alta Vista search engine and Yahoo!

What made all the successful ones innovations in their own right were not just technical superiority but they took useful innovations and products before them and fixed annoying problems with their usages or expanded the concept of who can use them additionally or fixed usability problems with them.

Or they took an older concept and applied it to a new platform!

Or took an older concept and applied it to a newer market!

So if you want to innovate, you don’t necessarily to invent something new. You can innovate by doing one of these:

—- Is there something useful but not so easy to use? Can I fix it by making it easier to use? (Google’s single search box in the middle is a great example – Alta Vista got lost in boolean searches and requiring ANDs and ORs when specifying search. Google said – don’t worry about all of that stuff. We will take care of it. Just type in what you want into that box!)

— Can I take something useful and apply it to a new market? eBay India was another company before it became eBay bought it and made it eBay India. Flipkart is India’s Amazon. Cleartrip is India’s Expedia! Make no mistake. They are not just copies. Flipkart uses courier delivery. Cleartrip is useful for buying train tickets less painfully than when going to the IRCTC website. They all add some value and difference!

— Can I take something in one platform and make it suitable and applicable to another platform? Mobiile versions of applications may need to be differently designed and executed than an online, browser version of something.

— Can I build a family of products around one idea with more features? Personal, Professional, Enterprise versions of software is a fairly standardized way of adding additional features but orienting them towards different markets.

— Can I build a family of products that are related to each other but different from each other in functionality? Word, Powerpoint, Visio, Excel are all examples of slightly related products but providing different kinds of functionality.

Many times, we think that innovation is coming up with something completely new,. Successful innovations have all fixed or fine-tuned something useful but had some problems that were preventing widespread adoption.

Sometimes it is as simple as figuring out what these are and fixing them. And also thinking about related things so that you are thinking about a “family of products” rather than a single “one hit wonder”.

Wikipedia provides a clear definition of Innovation:

Innovation is the development of new customer value through solutions that meet new needs, unarticulated needs, or old customer and market needs in new ways. This is accomplished through different or more effective products, processes, services,technologies, or ideas that are readily available to markets, governments, and society. Innovation differs from invention in that innovation refers to the use of a better and, as a result, novel idea or method, whereas invention refers more directly to the creation of the idea or method itself. Innovation differs from improvement in that innovation refers to the notion of doing something different (Lat. innovare: “to change”) rather than doing the same thing better.

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Be There or You Will regret it – Product Conclave 2012

NASSCOM Product Conclave (NPC) 2012 is an exclusive forum for product entrepreneurs looking to get actionable takeaways and learn from experts, peers and practitioners on their Go-to-market strategy. NPC 2012 promises to motivate, inspire and educate. An all star cast of product entrepreneurs, including Ram Shriram (Sherpalo Ventures), Sajiv Sidhu (i2 technologies) will share their proven techniques for product success. Over 60+ hours of goal oriented track sessions in the areas of product management, marketing, sales and business development will help you learn from people who have previously built, are currently building or are looking to build global product organizations.

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The frustration of “lack of progress” with your product

On the outside looking in, its extremely frustrating to hear of product teams shipping product multiple times a day.

I tend to often question: “What in devil’s name am I doing wrong”?

  • Is it that I have not defined the product requirements right?
  • Have we hired the wrong people? Does our team not have enough experience?
  • Is our culture not supportive of mistakes?
  • Are we not focusing on the right things?
  • Do we not have the capability to get stuff done quickly?

Experience with multiple startups has taught me that its ignorant to compare your company with others (who might have stated at the same time) who have more “visible progress” than yours does.

But I hate that experience.

Its hard not to compare and question why is someone else doing so well with a smaller team than you have.

Experience has also taught me that startups for most parts (like kids) have a step function in progress. Its rarely a smooth “up and to the right”.

I hate that experience as well.

Should all that experience not make the next go around a lot smoother?

So the question – “What the value of all that experience”?

There’s only one answer – Its overvalued.

There’s one solution to most of these questions and although it is a cliche and often repeated, the answer is “Hire right” – whether its consultants or contractors or full-time employees, you need to constantly evaluate and hire the right people.

So, how do you hire right? And how do you define “right”?

So lets start with not the job description, but with your culture and values. Hire the right person that fits your culture and can align with your values.

If you culture is defined by moving fast, hire and attract people that can do that.

How do you determine if someone “fits” your culture if all you can do is interview them for 1 hour or so?

Write down questions to situations where you feel your culture will make them act one way versus the other. Ask those questions during the interview.

Depending on the answer to those questions you can determine if they can align.

What I have learned is people rarely change. So its hopeless to expect someone who is not a good cultural fit, to come in and get “religion”.

Original Post can be accessed at BestEngagingCommunities.com

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The new age startup – Build a feature not a product

Its a well known fact that the infrastructure costs of building a software / Internet startup have dramatically reduced. Although the costs of developers have dramatically gone up by the same percentage, the productivity per employee hired has also gone up dramatically. Given that a developer can now manage instances, push to production etc., the need for DevOps is moved to a much later day, lowering the number of people needed at a startup.

A decade ago most companies were focused on building a business – long term focus, building processes to scale and grow.

5 years ago companies started to focus on building a good product.

The new law of the valley startup (2012) is build a feature.

See if there’s any traction.

Build next feature.

See if traction has increased.

<Rinse & Repeat>

Why has this happened?

1. MVP: Most people are taking the Minimum viable product to its extreme (or bare minimum) and valuing a shipping feature over a feature rich product delivered later.

2. Try your idea out: Most of us have a idea (we think) is going to change the world. The world though, has other plans. It does not like change. Small, incremental changes are acceptable (maybe) but large ones, take time. So lets push a simple small change to the user (customer) and see their reaction.

3. Too small to fail. If all a feature takes is 3-4 weeks to build, the cost of the development is low. Amazingly low. And at that point, failure (or lack of traction) does not matter. Its okay for the product to not fit the market, because the product  was not built anyway. Its just a feature that was built.

4. It helps with prioritizing features of your product. If all you build is one feature, the next one is customer driven (mostly). If a feature does not get traction, it does not matter. Remove it to add another.

5.There’s no long term without short term. I heard PG say this from another friend. If you dont get some short term traction or wins, there’s no point in thinking what the world would look like when you are dominating it.

So my fellow entrepreneurs, build a feature.

Ship. See if it gets traction. Build more. Keep shipping.

>>Original Post can be accessed at BestEngagingCommunities.com

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The Product Business is Like the Movie Business

I read the cover story in Forbes on the success of Dropbox, which is set to do about $240 million in sales in 2011, with only 70 employees. As Forbes points out, that is about 3x the revenue per employee of Google, which is no slouch in the revenue per employee department itself. First, congratulations, Dropbox! This is the type of breathtaking number that makes the ordinarily successful companies like, well, Zoho, to wonder “What are we doing wrong?”

In our 15 year history in Zoho Corporation – which is bigger than the Zoho product suite itself – we have shipped over 70 products, of which we would say about 30 have been successful in the sense of being nicely profitable. Yet, even with that group of 30 products, we have seen the 10x effect: a set of two products that have taken approximately the same amount of effort to build, by similarly situated teams, yet one of them does 10x the sales of the other, with both of them being profitable. Of course the 10-bagger is much more profitable but the key point is that both of them could be counted as successful in the sense of being profitable. We have even seen 100x difference for approximately the same effort, but in our case, that is the difference between doing only $100K a year in sales vs $10 million a year, and I would not count that as 100x because the $100K product either grows up or we would eventually discontinue it because it is not profitable.

Dropbox is a logical extension of this phenomenon, where a product does 100x the sales, without taking much more by way of engineering effort than a profitable 1x product. And then the grand daddy of them all – Google search, which in its heyday reached $1 billion in sales, on not much more than the effort of a single engineering team – the headcount gets added later to diversify the company but the original search was a small team. I believe there has only been one Google search so far, so the ordinarily successful (ahem!) shouldn’t feel too bad.

Y Combinator, which has funded over 300 companies so far, is a perfect illustration. All these teams are similarly situated, with similar founder profiles and they all get similar initial funding, and they spend similar initial effort. If we consider only the universe of profitable YC companies, my guess is that so far there is only one 100-bagger i.e Dropbox, in the YC portfolio. Based on Zoho experience, I would estimate YC has about ten 10-baggers, and about fifty one-baggers (i.e just about profitable).

Welcome to the product business, which looks very much like the movie business!