iSPIRT works to transform India into a hub for new generation software products, by addressing crucial government policy, creating market catalysts and grow the maturity of product entrepreneurs. Welcome to the Official Insights!
Are you ready for the product teardown roundtable in your city
As Diwali marks a Joyous celebration and heralds a Prosperous New Year for all, we kick off a series of Product Teardown Roundtables to help our SaaS startups prepare for a successful year ahead. This series of PlaybookRT will focus on Guiding the customer journey from Discovery to Signup & Onboarding. The teardowns are being planned across our startup cities in quick succession (see tentative schedule below). We kickoff with a teardown RT in Chennai which will be facilitated by Suresh Sambandan (KiSSFLOW), Bharat Balasubramanian (FreshWorks).
Why are product teardowns important? For Explosive Growth!
Explosive growth is a common pain point for founders across startup stages, be it an early stage startup or a late stage startup. One key attribute to explosive growth is to make your customers market for you. Quoting from the article Six attributes of Explosive Growth Startups,
Nothing parallels word-of-mouth marketing
Why? Because the customers do this work for the startup. If this is to happen for your product it is important for your customers to have a clear-cut understanding of your product proposition, discovering it’s ROI and a WOW no-brainer experience of signing up and using it.
Our product teardown session is focused on exactly this evaluation for your product. Using our community of peers and leading practitioners, you would go through an intense journey and visualize how your potential customer discovers, understands, signs up and connects the product proposition and ROI to their needs. If you do a damn good job about this, you gain a big advantage because you don’t have to work so hard for marketing leads, getting you further on the path to explosive growth.
The teardown model
In this playbook series, we look at how to get your messaging right, and building a website and signup/on-boarding flow that converts with very little human intervention. This roundtable would begin with a deep dive into the company’s Idea, Discovery Process and navigate through the Landing Page, Sign Up, and its “Wow” experience. The format of the playbook is built around quick 10 minute demos, followed by peer-feedback moderated by SAAS founders & experts who have already built successful SAAS businesses.
Past teardowns
You can read some of the previous teardown experiences from the founders who participated.
If you are keen to attend this RoundTable, do let us know by filling in your details here. We will confirm your seat subject to availability. All RoundTables are conducted pro-bono. The only payment you have to make is to provide your undivided attention and active involvement in the process. Playbook-RoundTables are a dialogue and there’s no monologue. None!
These are founder invite only events. Date, Time & Venue details will be sent along with the confirmation. Since there are limited seats, we would request you to kindly apply at the earliest.
Playbook-RoundTable is one of the most sought after community events of iSPIRT. It’s a gathering of 12 like-minded product startups who are beyond the early stage. RoundTables are facilitated by an iSPIRT maven who is an accomplished practitioner of that Round-Table theme.
iSPIRT works to transform India into a hub for new generation software products, by addressing crucial government policy, creating market catalysts, building societal platforms, and assisting product entrepreneurs evolve into the next role. It’s a think-tank with an emphasis on following up our ideas with great execution. This is where you come in.
Over the past 2 years, we’ve developed the Data Empowerment and Protection Architecture (DEPA) as the final layer of the India Stack. The DEPA empowers users with freedom and choice to actualize their data in a way that benefits them.
This includes a new technology for managing user consent and for authorizing data flows, as well as a new federated architecture for efficiently sharing user data from multiple data sources to multiple destinations (referred to as the digital locker framework). Banks and other big institutions are now beginning to deploy DEPA tools to enable consented data sharing by users. You can deep dive into DEPA here
Volunteer Challenge
In alignment with RBI’s NBFC-AA Directive, we wish to develop a reference data architecture for Banks and NBFCs based on DEPA so that they can introduce new products and services to accelerate Financial Inclusion in India. You will help develop, design and evangelize this new architecture with anyone and everyone in the market. If the job description seems vague, it is because this is uncharted territory and largely, you will decide where the work takes you. What we promise you is a world-class support system and a platform to actualize those ideas.
iSPIRT also has room for a lot of other volunteers with a variety of skillsets. Even if your expertise is not technology, but want to contribute to the mission with your unique skills, do fill the form below.
Why Volunteer
Our volunteers pay-forward for a variety of reasons. Some do it for iSPIRT’s mission and cause. Others, find self-actualization in building public goods. Yet others do it to be in the company of world-class techies and entrepreneurs. You can learn more about iSPIRT from its Intro Presentation and its 2017 Annual Letter. We’d be happy to discuss what is in your future, and how volunteering with iSPIRT can get you closer to that goal. Though, we have found that many of our volunteers have gone on to unexpected pathways, as they kept an open mind through the journey.
Location
Preferably, Bangalore
How To Apply
Interested? Please fill out this simple Google form and we shall get back to you:
The Product Market Fit or PMF in short is one of the first holy grails that every entrepreneur strives to achieve. The second Holy Grail is also another “P” – Profits, which I will deal with in a blog post later.
I will share my learnings of what constitutes a Product Market Fit for an Enterprise Healthcare product, based on my journey of building HealthMacro’s DiagSmart product that is focused towards Diagnostics Labs and Radiology Centers.
I have travelled across 5-6 states spanning several cities, meeting hundreds of Diagnostic & Radiology Lab owners to come to this understanding.
An ideal product-market fit has the following characteristics:
Timeline : Usually for an enterprise product, it does take time (somewhere from 1.5 yrs to 2 years) to achieve a market fit after the product launch. Once one has achieved this, it means the following.
Strong understanding of customer needs, budget and value chain : Once you meet a customer, you know where he/she fits in the Price Chain. You have deep knowledge of his customers, his competition, his pain areas, his revenues, and his annual budget.
Acceptable across multiple segments : Usually we build the first product with more features, and then realize customers do not want all or are not willing to pay for all features. So you segment it. Segment it based on # of users or # of features to make it affordable for a wide market. We segmented it as DiagSmart Mini (lower end) to Basic (Value Product) with Enterprise and DiagSmart Premium models for top end customers. Each model has differentiating values based on the price customer is willing to pay.
Strong understanding of your competitors’ strength and weakness: Deep knowledge of your competitor’s strength and weakness, w.r.t Features and pricing is key. You need to respect your competitor as you still discuss with customer why they will benefit from your offering. In one instance, we had to segment the Product as a DiagSmart Mini to fend off competition with a lower price range model.
Acceptable across regions: In a country like ours, where there are no healthcare standards, in every region there will be local players who will have dominated the market with their product. Selling in newer regions and winning there is one important trait. For our lab product, adherence to existing NABL lab format reports was the key to driving acceptance.
Clear Value Proposition: Your demo should do the work of showing how financially beneficial the product is to the prospect. You do not explain much. User experience is key here. Ensuring a flawless demo, where various customer stakeholders (owner, lab staff, Finance, Front desk…) finds their needs met is key in the demo meeting.
Your rate chart should explain the cost in a simple manner and the customer chooses what he needs based on his budget.
Other Guidelines to ensure Successful Product Market Fit :
Single Code Base : Once you allow a customization for a particular customer, it no longer remains a product. It becomes a project. You end up with multiple versions, resulting in larger teams to maintain it.
Hence, a single code base is critical. There should be options turn on/off certain features/customizations, based on customer budget/needs.
You take inputs from the customer to the product, and based on the value to the product, you decide to add it to road map or not. All customers have one code base.
Customer Care : You have a efficient Customer Care or Post-Sales Support team to take care of all their needs, with a clearly tracked process. Customers know how to reach you and what to expect as turnaround time.
You should be able to support new cities/regions without having a local office/support center.
Strong Engagement : Customers get monthly newsletters informing them of the progress of the product and the company. They respond with their feedback, inputs.
Strong Testimonials and Referrals : You should start getting strong testimonials from customers explaining how your product or Service has helped them. They do not hesitate to recommend you.
Water tight agreement with customers : You have strong water tight agreements with customers protecting your business. There are clear descriptions of services, costs and timelines, termination clauses leaving nothing open ended.
Clear mapping of the entire Business Process : All processes Pre-Sales, Sales, Sales to Engineering handoff, Customer On-boarding process, Customer Care process are clearly defined. All process are documented, clear training plans when you hire new folks. All members follow same process.
In summary, you lead the customer/prospect overall in all aspects of business. You are not dependent on few customers for their inputs/business. Customers respect you and trust you.
That’s when you have achieved “The Product Market Fit…”
“Be the change that you wish to see in the world” – Mahatma Gandhi
When I was invited to attend Niti Aayog’s event held recently with our Honourable Prime Minister, Narendra Modi, for a two-day focussed discussion on creating ideas for a ‘New India by 2022,’ I wasn’t entirely sure as to what to expect. But, I went with an open mind and armed myself with a presentation.
Well, I couldn’t be more surprised. The event had an overwhelming participation from some of the leading figures in the tech-corporate world in India, cabinet ministers and secretaries, all brought together with one intent – to enable ‘Change.’
Enough has been written and spoken about the event on social media and news channels alike. I’m writing this post to list down some of my own observations on how I foresee things changing in India from a business point of view:
Domestic market will come-of-age: I grew up in India in a small town of Punjab called Moga. Like many other people in my time, I grew up wanting to do something for my country, but career prospects took me outside. I returned to India 14 years ago to create a global product company and eventually realising the “Make in India” dream from Bangalore. Although, most of our opportunities still came from other markets. With the Indian government rewiring the regulatory and policy framework and through its other related initiatives, things are set to change. Besides creating an environment that will ease up doing business here, the domestic market will open-up substantially with opportunities stemming from some of the major sectors of Indian economy such as agriculture, small and medium businesses (SMBs), energy, infrastructure and mobility – all focussed on improving efficiency and raising productivity. The increased focus on sustainable and inclusive development will also present opportunities to come up with solutions that will help address some of the more fundamental problems namely sanitation, affordable housing and such.
Technology will be the key driver for India’s transformation: Digital India will get real. The speed at which people have adopted tech-applications has been remarkable, its impact profound. Cashless transaction is just the beginning, technology will redefine the way businesses are conducted across sectors. Agriculture will get more connected and farmers will get unique IDs thus enabling credit scoring for loans and classification for subsidies, energy metering will get smarter, and Indian SMBs will drive demand for enterprise software. Technology will play a key role in driving opportunities across all these sectors. The rise in tech-prevalence will bring down the adoption barriers significantly. This will further lead to more opportunities for entrepreneurs to come up with solutions that are unique to the Indian market.
Prepare for global competition and collaboration in the home turf: All this will make India an attractive destination for domestic and international players alike – giving rise to competition and as well as opportunities for collaboration. To make most of this opportunity in the coming years, entrepreneurs in India need to start thinking scale.
This is where the Indian tech-community gets to play a key role. We need to leverage the power of its collective experience in conquering global markets and its understanding of the Indian markets, merge them and arrive at a playbook (figuratively speaking) on building a sustainable and a scalable business in India. This will require conscious efforts towards build leadership, training executive talent and sharing best practices in this area.
Unless we achieve excellence in executing at scale, we will not be able to make most of the opportunities that change will bring with itself in India.
The Indian tech industry evolved from being predominantly services oriented to taking ownership of building products from scratch. Despite several flaws and hurdles in the system, it has made an indelible mark on the world map.
The new India is going to present exciting opportunities. I’m confident, Indian entrepreneurs will win as they will be prepared, stay focused and execute at scale.
Since conception, the India Stack has always been presented as having 4 layers. The first 3, paperless, presence-less and cashless, would essentially combat the price of doing transactions. Whether government to consumer or business to consumer, these layers significantly drive down the cost of interacting with your end consumer. With reduced cost, came increased access. Sachetization of services was possible, and we started seeing more and more businesses target India-2 and India-3, making them data rich.
Slide Showing the 4 layers of the India Stack
The 4th layer, that was nicknamed the “consent layer” was different, and hasn’t received much attention thus far. Unlike, the other 3 layers, it does not seek to drive down the cost of delivering services, but is a tool to, as Nandan Nilekani puts it, “invert the data”. That means that it allows the user to assert ownership over the data, and exercise certain choices in how it is used. The Data Empowerment & Protection Architecture (DEPA) brings us closer to achieving a Data Democracy, where the user can share his data with service providers. The slides attached here, present iSPIRT’s outlook on what DEPA is, what it does and most importantly, how does it empower the user.
Before we get into details of Data Empowerment, it is useful to acknowledge that Data is not a homogeneous commodity. There is a hierarchy within Data, and not all forms of Data can be treated equally.
The five types of Data that needs regulation
In the table above, as we go from left to right, data goes from more intimate, to more public. Even in today’s muddled regulatory framework around Data, non-shareable data such as biometrics, or passwords is seen as user-owned and a big no-no to share. But as we move towards the right, where ownership of the user ends, and that of the Data Controller begins, is murky at best.
Second, as you go reverse from right to left, the data becomes more individualistic. Anonymous Datasets, and Public Datasets are clearly about group data, whereas the rest are coupled with one or more individuals. Generated Data on e-commerce marketplaces, for example, may involve 3 or even 4 parties. Non-shareable data is typically intimate to a single user
Everything that we talk about in this post or the slides that follow, focus on the shareable middle of this chart, highlighted in yellow. At a principle level, we assert that any data, that has an individual identifier to it, is co-owned by every individual whose identifier is present in the data set. This may not give you complete rights over your data, but it gives you two rights, that DEPA enshrines in technology.
The first right, is that you can ask for access to your data from the data provider where this data originated, in a machine-readable format. The second right, is to share with user consent, your personal, generated or derived data with any other service provider you wish. To be clear, this is a right to consented sharing, and not consented collection. The right to what data is collected is a tricky issue, and requires policy, legal & regulatory clarity, before we can build tools to protect it. But we believe that the right for a user to claim stake on collected, generated or derived data about themselves has clear legal and moral precedent.
DEPA engages with Consent to Collect, not Consent to Share
How do we enshrine these rights in technology? The Electronic Data Consent. But before we introduce the hero, I’d like to get into a little back story to set the stage.
When UIDAI first issued Aadhaar cards, it noticed that despite it’s portable, digital nature, people used Aadhaar cards as Proof of Identity in the same way they used other IDs, through self-attested photocopies. Most of the time, these photocopies would not contain the explicit purpose of why they were photocopied. These photocopies were impossible to manage, and inadvertently some bad actors would steal say PAN or Aadhaar xeroxes, and use them as paper identity documents for fraudulent transactions.
So the UIDAI launched eKYC. The premise was simple, UIDAI could authenticate the identity of the individual. Combined with explicit consent of the user to share their data, the encrypted data would go directly to the service provider, digitally signed from UIDAI. This copy of the KYC document was safer, more trustworthy as well as faster and cheaper.
So the basic equation became :
The eKYC equation
But this thinking was pretty powerful, and the MeitY decided to abstract it and create the Digital Locker Ecosystem. Where instead of only one source of truth (UIDAI), any government or private entity can become an issuer of documents. Authentication was also abstracted and need not be tied to Aadhaar. You could retrieve marksheets linked to your roll number, or mobile bills linked to your mobile number. This lead to the following equation :
The Digital Locker System Equation
If you’ve been following this so far, you’ll realize there’s a pretty big missing piece in these equations so far. The “User Consent to Share” bit doesn’t seem to have the same sort of granularity as the other two parts of the equation. Consent is more nuanced than a simple yes or no. By forcing consent into a binary, data providers reduce their offerings to a “take it” or “leave it” choice. This is a meaningless choice for the consumer.
To really capture user intent, we must expand our understanding of consent. We must try to capture the granularity of the customer’s intent to consent. Does the customer consent to sharing of his data forever or for a limited period of time? Does the customer consent to further downstream sharing of the data, or does he not want his data to leave the service provider? This is where the hero we mentioned earlier enters.
Sample Flows of Data and Consent under EDC
Introducing Electronic Data Consent (EDC). It is a mechanism to abstract consent flows, from data flows. Which means, that you can capture the user’s intent to consent in bits, digitally signed by the user for authenticity, and share it with other providers to retrieve user data seamlessly.
Flowing through the pipes of EDC is an open, extensible XML file called the Consent Artefact. The Consent Artefact has some pretty cool features. It captures all the parties involved in the transaction, it explicitly states what data is being shared and for how long. There are options for the user to decide if the data consumer is allowed storage and further sharing of this data. Also, all parties are immediately notified to any updates in the consent and all changes are logged. This facilitates data audits, not just for regulators, but also to enhance trust between Data Providers and Consumers, and unlock the data economy.
The Consent Artefact enables differential privacy measures such as Virtual Data Rooms. For e.g., a lending startup could know if your income in the bank account matches the one on your salary slip, without having to hand over your entire financial transaction history from your bank to the NBFC. It can just raise a query to your bank “Is income > x?”, and get a simple yes/no in return. The Consent Artefact’s logging and notice, can enable newer ways of pricing and doing business on data. The Consent Artefact deserves another post just for itself, and you will get one, in the next couple of weeks.
But to summarize, the EDC abstracts consent flows, from data flows. It allows for collection, management and audit of granular consent to share data in an open XML file called the Consent Artefact. Now, time for the big question. So What?
Well, today you can open a Bank Account instantly with eKYC. You can get your bank statements on a digital locker without lifting a finger, if the bank is enrolled as an issuer on a digital locker. But to get a personalized flow-based loan, you need EDC. Electronic consent unlocks the value of your data sitting in multiple databases of multiple service providers and gives you granular control over who gets to see what. Together these 3 tools give us a stack for Consented Data Sharing that we call Data Empowerment & Protection Architecture. DEPA opens up whole new models for Privacy Protection and Auditing Data flows while keeping the user in the center. More tools will be added to this Architecture that encourage the unlocking of value in disparate data sources, such as the healthcare combiner.
The 3 Tools that make up DEPA. Upcoming tools such as the Health Record Combiner will be introduced in another blog post.
We believe that the 4th layer of the India Stack is the most critical. While the other 3 were useful operationally, the consent layer is useful strategically. It forces you to think about how best to align Data for the empowerment of the user. By opening up the data, it removes all monopoly value attached to the Data, whilst still retaining the inherent value of the Data. Innovation moves away from who can hoard the most user Data, to who can make the best use of the Data for the user.
If you’re curious to see EDC in action, please do have a look at the talk by Sanjay Jain & team here. The slides used in that talk are shared here.
When we launched iKen two years ago, (The Way of Successful Entrepreneurs and Launching Pre Entrepreneur Program) we weren’t sure if a “reality-focussed”, “deep-dive format”, “away from jingoism”, bootcamp would have many takers. More importantly we weren’t sure of the impact that we would have. This was after all a side project for everyone involved.
Two years hence, this is a post looking back at that journey. We have covered quite a distance and have some great wins and have undergone few reality checks as well.
Wins
First the good news.
We have three chapters (Bangalore, Pune Atlanta), have given talks on iKen in four countries (USA, France, Nepal, India) and ten cities(and counting). More than hundred participants (from 10 batches) and more than 6000 impressions (people who attended iKen talks). And most important metric of all, we have fifteen+ revenue making companies. Some have taken the investment route and have raised seed funds.
But the most important metric of all for me is many graduates have become dedicated anchors themselves, teaching, learning and owning the program. The online tools and the “train the anchor” manuals have made the program a smooth automated engine.
30% of the folks decided to temporarily park the idea and went back to jobs but continue to attend iKen sessions at regular intervals.
While we are immensely proud of what we have accomplished, however there are certain targets, which we did miss by a wide margin.
First lets look at the genesis. The model we had in mind was that of a toastmaster. Peer supported skill building bootcamp with a rigorous structure of tasks.
The idea is to provide the following :
Learn entrepreneurial decision models (primarily effectuation but we also have lean components (business canvas) used in certain sections)
A space for deep and contextual discussions on entrepreneurship for early enterpreneurs (people who want to startup) as early enterpreneurs are either ignored or misguided(sometimes even taken for a ride).
Antidote for the sensational, shallow and sometimes wrong information spread by media.
Enable co-creation and collaboration and build the space and environment for that to happen.
A neutral space (as opposed to cheerleading skeptical or derisive) where people are comfortable in deciding even not to do a startup.
Lessons
Roadblocks with Peer-to-Peer Models
Trust or lack of it is the major factor for failure of peer to peer learning. Lack of trust is actually two fold, one is doubt in capability and other is of trust in intentions and focus on control. The prevalent thought process that someone more knowledgeable and powerful (read mentor) will show the right way also contributes to devaluing what one has around them.
We have created the some tasks and rituals for participants to get over that habit but it has been hard. The teacher student model becomes more prevalent as you navigate away from Bangalore. However as they graduate and continue to attend the chapter the peer to peer collaboration has been immense.
Unlearning the Predictive Behaviour
One of the common patterns across all the cohorts is this belief that there is a way to game this “Startup” journey. Its almost like the cracking the interview; originality doesn’t matter, there are some packaged right answers and one needs to learn them.
I remember this one time in Sikkim where I spent an hour and half explaining why “starting with investors” is not the right way to think about a startup in early stages. The first question I got asked after the talk was “What is the right way to write the business plan so that I get funded ?”
Effectuation and iKen is nothing but intellectual support for common sense, but sometimes the power of accumulated “knowledge” is hard to ignore or wipe away.
Chapter’s Growth and Format
We expected at least 50% people to continue to attend the sessions even after completion of mandatory the 6-8 weeks. But that is reduced to one or two per cohort i.e 10%. There are two-three reasons why this is happening :
Folks do not see the value in continued attendance as the focus shifts to the new batch.
People who have not started their ventures are shy of attending.
People don’t understand the value of agenda less networking.
The last one is really important and most people undervalue it. The trust is built overtime and we have seen incredible examples of camaraderie and trust built amongst the folks (mostly anchors but few regular attendees too) who attend at least two session in a month.
We have also realised the chapter’s success is dependent largely on the geographic location and the first few champions that get involved in the Chapter. Inorganic growth doesn’t get the right people and often dies away. Self-selected stake holders are the way to go in growing chapters and that takes time.
What Next ?
We will continue to focus on quality and continue to grow effectually. We have incredible set of anchors and a nation aspiring to break all barriers. Join us at https://ikenstartup.com/. Follow us @ https://twitter.com/ikenstartup; Watch founder stories @ iKen YouTube
iSPIRT does not fit into known mental model for many folks, they often ask what exactly is it? Few say it is hard to pin it inside a known category or even describe it in words.
The 2017 annual letter contains thoughts on what iSPIRT stands for. Some more explanation below on the why who and the how of iSPIRT.
Folks involved with iSPIRT are people with a passion for seeing “India as a Product Nation”. It is a grand vision of seeing the Indian product industry to be at least five times the size of the IT services industry.
The why and the what.
India’s answer to global product winner may get shaped through two siblings. The fist is in Saas (Software as Service), India will be for global Saas what Israel is for cyber security. The second is that “India 2″ also known Bharat market will be the envy of the world.
In either case winning the battle of platforms and ecosystems ie essential. Additionally, a new mindset to help win in the global rules of the game is critical. iSPIRT efforts affect both.
Difference between historically ace sprinters Jesse Owens and Usain Bolt of 14 strides is in the ecosystem where they ran.
Amiya Malik had the potential and the ecosystem support to be an Usain Bolt. But he declared victory too early in his mind by not having an underdog mindset.
Think tank, 30 year architect
Most apt technical description of iSPIRT is that it is a think tank. Which mean it is not an association, not a trade body, not a lobbyist group, or not academia.
A think tank is best understood as “university without students”. It takes the necessary long-term time scale view to solving hard problems.
iSPIRT works with all ecosystem stakeholders for the necessary influence of change. Yet it stands for the product founder who is the man in the arena.
Four pillars of public goods
All iSPIRT initiatives fall under one of the four pillars of public goods generated.
Public technology platform that can create local markets,
Policy work to educate and remove irritants of doing product business.
Market access program that brings buyers and sellers together who have not met before. Indian startups & Global Corporates for example.
Playbook for product business skill so that as an ecosystem we make newer mistakes.
Initiatives are levers that are stage dependent
Volunteer Engine, Belief, Credo keep us together
iSPIRT while is a think tank has a heavy bias for action. Several people volunteer and ‘pay it forward’ through time, donation and other contribution.
The operating model is inspired by Wikipedia. Two broad type of volunteers, the ones who lead an initiative called as Fellows. Other contributors have different names based intiatives Saarthi, Maven, Policy Sherpa etc.
Currently there are 24 Fellows and ~195 contributors. Volunteers sign a code of conduct to help address any conflict of interest while creating the public goods.
To put in a tweet-size “iSPIRT is like the Olympic Gold Quest for India’s Product Winners”
Customer feedback is gradually becoming the cornerstone of growth initiatives.
A new research published in the Harvard Business Review found that the act of just asking for customer feedback in itself is enough to help keep customers satisfied and coming back for more — even when they do not respond to your request.
Several theories of consumer psychology point to the fact that even a simple satisfaction survey appeals to your customers’ desire to be coddled, reinforcing the positive feelings they might already have about your product, and making them more likely to buy from you.
The very process of asking questions or seeking opinions induces people to form judgments that otherwise wouldn’t occur to them. They might not consciously realize that they love a feature unless you seek feedback about it.
Customer feedback has become one of the primary drivers for long term growth. Present day organizations jump at every opportunity to talk to the customer or learn about them. Businesses are spending millions of dollars on setting up feedback channels: emails, reviews, surveys, website analytics.
The pertinent question now is: how do you utilize these channels to actually learn from the feedback? Before you establish the viability of a channel, it is crucial to develop a clear picture of WHY you are collecting feedback.
Are you seeking first-hand advice on product improvement? Are you building a new feature for which you’re seeking the users’ inputs? Have you been receiving a lot of complaints? Once you have the end goal clear, proceed to the tactical part: how do you collect feedback?
There is no one-size-fits-all tactic to gain information from your users. Different situations require different methods of collecting customer feedback. For example, a survey form sent to an already disgruntled user will only make matters worse; a phone call works better here.
Let’s find out what are the best methods of collecting customer feedback:
THE BEST WAYS TO COLLECT CUSTOMER FEEDBACK
There are hundreds of ways to collect feedback from customers. The ones we’ll talk about here are the most popular — they are the most effective too.
1. Long form-based surveys
These most common way of collecting customer feedback are survey forms with a set of questions that are usually sent in an email.
The one thing you have to always keep in mind here is to not get carried away and ask too many questions.
QuickTapSurvey states that the connection between the number of questions and the time spent answering each question is not linear. The more questions your survey has, the less time your respondents spend, on an average, answering each.
In other words, the more questions you ask your respondents, the more likely they will “speed” through it, and the quality and reliability of your data will suffer:
It is clear from the above table that the longer the survey, the less time will the respondents spend on each question. The takeaway is to make the survey as short as possible.
There is, however, no ‘ideal’ length for a survey. A few experts do say that anything between 5 and 10 questions is a decent number.
To keep your surveys short, a good rule of thumb to keep in mind is: only ask questions that fulfill your end goal. Ensure that every question serves a clear purpose. If you do not intend to use the information, do not ask that question. The aim is to collect customer feedback and not to have them write an essay.
For example: If you are surveying a customer who has just exited your paid plan, there is no point asking them if the onboarding was easy! Your only aim should be to understand why they are leaving and what can you do to prevent that.
It is also important to start with open-ended questions. Let your customers surprise you. Multiple choice questions will give you answers based on your own assumptions. If you really want to know what the customer is thinking, give them an open-ended question.
A great open-ended question is: What do you love the most about the product. It is also a great hook to have your respondents start the survey on a positive note.
When to use form-based surveys to collect customer feedback
The best place to use this is when we want detailed inputs and have some open-ended questions to ask. This should only be sent to an engaged user, who you’re sure would like to take the time to provide feedback to you.
One way we used this in Hiver was to understand from our users which integrations we should build. We asked customers open-ended questions about how they use Hiver. Then asked them which integration they’d like to see, which was an MCQ, followed by another open-ended question about how they’d like to put the integration to use.
2. Short in-app surveys
Customers are constantly thinking of ways your product can work better for them. Maybe parts of your app do not have what they are looking for, or maybe the design could look a little better, or maybe they found something that is broken.
More often than not, they will not reach out to you on your support address. That happens only when the problem is big. But for the minor lapses, your users will just give up and walk away slightly frustrated.
A great idea is to offer a survey while your customer is using your app. The survey can be prompted the moment a user has finished interacting with a particular feature in the app. Since the user is already in the process of using that feature, it is very likely that their feedback will be very precise and to the point, and not ambiguous.
Remember: Your users are on the app for a certain purpose, it is not a great idea to throw a long survey at them. Keep it to two to three questions that are relevant to the page that it’s being displayed on.
Intercom.io is a fantastic tool to trigger in-app surveys in your app. For example, the moment a user finishes using a particular feature, a quick question like the one below is a great way to get their ideas about improving it.
When to use In-app surveys to collect customer feedback
When you want a quick feedback from someone who has performed a certain action. Timing is of the essence here — you have to trigger the survey at the very moment a transaction ends.
The questions should be specific to what the user is using or has just used, and NOT about the product in general.
3. Phone calls
It’s said that if you truly want to understand someone, you will have to talk to them.
The surveys and tests will give you tons of data but they can never tell you what a person truly feels about your product. This is when you need to reach out to your users through the phone. It is a personalized and proactive method that generates the best responses.
Hearing a person’s voice and tone is the best way to sense what they actually feel about your product.
A call will help you tell the features that get users excited, features that really make their lives easier.
The key here is that the person calling the user should genuinely want to understand their problem and offer solutions. Do not do it because you have to do it. Do it because you care. This is not a sales call.
The second factor to keep in mind is the time when you call. Studies have shown that customers are more likely to respond between 8 am and 9 am, and between 4 pm and 5 pm. Lunchtime, between 1 pm and 2 pm is the absolute worst time to reach out to anyone.
When to use phone calls to collect customer feedback
Scheduling calls with your users, talking to them, and making sense of feedback which is not as structured as entries in a form is a lot of hard work. The key here is to focus on the users who can give you the best feedback to improve your product or service.
It makes sense to do phone calls only with the users who are avid users, have deep knowledge about the area you operate in and can give you actionable feedback.
This is not a good avenue when you want to reach out to a lot of people at the same time.
4. Transactional emails
Transactional emails are the ones that you receive right after signing up for a new service, or upgrading to a new plan, and so on. Basically, these are emails triggered by a certain interaction between the user and your app.
More often than not, transactional emails are treated like a necessary notice and companies would not put much effort in creating a dialogue with the customer. These emails often lack the aesthetic appeal of the website and the newsletters and deliver an inconsistent customer experience — that’s a shame.
Contrary to this popular practice, transactional emails can be used as a powerful weapon to foster a dialogue with customers. If we look at email open rates, these emails do better than all other emails, says an Experian report. The reason is that people actually want to receive these emails — for instance, they want to know if an upgrade went through or not. Asking the right feedback question in these emails will certainly get good responses.
Viking does a great job at it by asking users to rate their delivery right after they have delivered a product:
In situations when you do not have a question to ask, it’s a good idea to give your users a very easy way of getting in touch with you. Buffer does it neatly:
Interestingly, the peak-end rule states that ‘our memory of past experience does not correspond to an average level of positive or negative feelings but to the most extreme point and the end of the episode’.
Say a user receives a transactional email just after they’ve upgraded — asking a question at that juncture would evoke positive feelings about the product and set them on the path to loyalty.
When to use transactional emails to collect customer feedback
When a user does something significant: signs up, upgrades to or exits a plan, and so on. You can send them a quick one-liner question or a short multiple choice question. The key is to gain an insight at the right time without burdening them with too many questions.
5. Net Promoter Score Surveys
It’s the simplest question you can ask your customers: ‘’how likely are you to recommend us to a friend or colleague?’’ It is, basically, a method to measure your customers’ sentiment about your product.
People who rate you 0 through 6 are known as “Detractors”, those who rate you 7 or 8 are known as “Passives”, and those who give you a 9 or 10 are known as “Promoters”, as illustrated here:
Net Promoter Score (NPS) = Percent Promoters — Percent Detractors
Let’s take an example. Say there are 100 respondents.
10 responses were in the range 0 to 6 (Detractors)
40 responses were in the range 7 to 8 (Passives)
50 responses were in the range 9 to 10 (Promoters)
NPS: [(50/100)*100] minus [(10/100)*100] = 40
The worst score you can get is -100 and the best score you can get is +100.
Apple uses NPS surveys to find detractors and improve their retail store experience. Whether a customer made a purchase or scheduled an appointment to try on an Apple Watch, they e-mail a survey to rate the in-store experience.
Remember: Any score above zero is good, anything above +50 is excellent, and over +70 is considered world-class.
The greatest advantage of NPS is its simplicity and ease of use. It can be set up in minutes and is easily understood by everyone in the organization. It also makes it very easy to compare yourself with the industry standards.
When to use NPS to collect customer feedback
When you want to understand the general sentiment of your users about a transaction. You can use NPS for any of the touchpoints that the customer might have with a team: sales, customer support, etc. For example, it is a good practice to send an NPS survey after a support query is resolved.
6. Suggestion boards
Suggestion boards take collecting feedback a notch up: it allows users to collaborate on ideas with not just the company, but also with other users.
These boards allow users to create feedback posts which can be upvoted or commented by other users. Top posts that have been upvoted or highly commented can help you discover what the majority of your users need.
The best thing about suggestion boards is that ideas that had been suggested by some customers became popular ideas among others who hadn’t thought of the benefits those ideas could bring.
Aha.io is a wonderful tool for creating these boards.
It is important to make the board very easy to navigate. Users should be able to add new posts with ease. Creating categories, allowing your customers to view the most popular ideas, and making it searchable are key.
Results will take some time to develop. Feedback will not be accumulated immediately. Wait till your users leave enough feedback so that you can determine which ones are popular to your entire base as a whole.
When to use suggestion boards to collect customer feedback
When you are looking for new ideas from your users. You should start with inviting the extensive users first — they know your product well and will be in a better position to suggest improvements or new features.
After you have a few ideas on the board, you can start inviting more users — they can upvote or comment others’ ideas even if they do not have one.
—
Once you’ve collected the feedback you want to pay attention to, the next step is to analyze the data and take actual steps to make things better for all stakeholders.
WHAT TO DO WITH THE FEEDBACK YOU’VE COLLECTED
“Every day, companies solicit feedback from customers, yet only a few translate that feedback into meaning. An even smaller fraction of companies actually take action or close the loop with the customer, to let them know their voice was heard,” says Whitney Wood, managing partner of the Phelon Group.
If you handle it right, the dialogue between you and your customers can become the biggest growth driver for your business.
The only way to reward your vocal and consultative customers is to roll with the punches and bring in actual changes.
Let’s talk about taking the feedback data to actual use:
1. Identify product improvement areas
More often than not, your loyal users would have developed an expertise of your product features; some of our users understand the product as much as our product managers do.
The standup product improvement meetings can only take you so far — the real insight comes from the ones who use your product regularly.
No matter how hard you try to empathize with them and put yourself in their shoes, your users will always have some exciting ideas that you did not think of.
So, stop brainstorming and start following the advice your customers give you. Not only will your customers appreciate your willingness to listen and implement their ideas, but you will set yourself apart from your competitors, as a business that genuinely cares.
LEGO Ideas is quite possibly one of the best examples of how customer insight can be used for product development. Enthusiasts can easily submit their own designs on this mini site. The projects gathering more than 10,000 votes from the community undergo LEGO review and are turned into new sets if the review is favorable.
Nobody understands the pain points of the product as well as the customers. If companies are able to incorporate customer feedback into the product roadmap successfully, they have certainly come very close to the ideal market-fit.
It is crucial to classify feedback into improvements and game changers. Let’s take a couple of examples from Hiver itself.
A few of our customers thought shared labels can have different colors as that would help them manage their inboxes better. Now, this is a product improvement — we added it to our ‘task manager’ and had implemented in almost no time!
After we built the shared mailbox, a few customers suggested we implement automation that will allow emails to be assigned based on a few pre-set conditions. Now, this is a game changer as it would significantly reduce the time people spend on task assignment. We added it to our ‘brainstorming session’ and discussed the pros and cons of doing it. It took us a few weeks to build it, but it’s been worth it.
The biggest challenge is to get your customers to suggest. Would they really bother to spend time suggesting a feature?
Fitbit implemented the suggestion boards and noticed that even the ones who did not have a suggestion were either upvoting and downvoting. Ideas suggested by other customers became popular among others who hadn’t thought of benefits those ideas could bring.
Most companies are not a hundred percent sure about the verticals they should focus on. It is never an exact science and companies end up spending huge amounts on trial and experimentation.
Customer feedback can be a good way to find out where you belong.
During the process of analyzing feedback from customers from a broad spectrum of verticals, you will begin to see patterns as to where do the majority of your happy customers come from.
Once you have discovered the verticals where the majority of your happy customers exist, start working on strengthening the relations you already have with them. Strive to make them your advocates and seek recommendations.
4. Prevent customer churn
Are you stuck with the principle that negative feedback should be swept under the rug and kept silent? It is a clear indication that you have set your customer success goal to a low ‘simply meeting customer expectations’. It is crucial to use feedback to improve customer service.
A customer who has taken the effort to call you is a lot more likely to tell their friend about the same problem — ignoring the negative feedback will have a compounding effect.
Contrary to what most businesses think, a negative feedback is an opportunity to prevent customer churn and foster a long-term relationship with the customer. These are the guys who’d need a little extra work: call them, understand their problem and ensure you do your best to make them happy. Ensure that you check on them regularly — make them feel ‘cared’. Showing that you care goes a long way in building a healthy business relationship.
By keeping the two-way conversation open and building trust gradually, you can turn these problem customers into raging evangelists.
Remember: they have taken the time out to give you a feedback when they could have just switched to another product. Any feedback is a display of interest in your product. Be wise and use feedback to improve customer service.
5. Discover potential advocates and nurture them
Customer satisfaction is the primary indicator of how happy they are with your product. Gathering feedback will help you quickly identify the happiest of your users.
The next step is to nurture them into advocates. Get them sufficiently excited to rave about your product and recommend it to friends and colleagues. Monetary rewards do not motivate advocates. Do simple things — thank you notes is a great idea.
HEX is one cool company that attributes a lot of their success to the handwritten notes they send to their customers.
Here are some great ideas to turn your customers into advocates.
Imagine the world where most of your new customers came from business referrals. This can be achieved only when you know who your advocates are.
6. Motivate your team
Customer feedback can act as a secret driver to motivate employees.
Say you’ve been hearing praise about a feature — pass compliments directly to the person who built the feature, and ensure the team knows it too. It is a good way to encourage healthy competition among your team members.
Say you’ve been getting some brickbats about a certain feature — pass it to the person who built the feature and let them talk to the irate customer directly. It makes them feel in charge of that feature and they will be ready to take more ownership in the future.
Share conversations that are interesting and come up with new ideas about the product (improvements or game changers) with the whole team. It would help everyone understand the larger picture.
Wrapping Up: Feedback matters
A startling truth about most SaaS companies: your support team always understands more about what the customer needs than your product team.
It is time you start discussing your product roadmap with the support team as well — they are the ones who know about the ‘actual’ problems your customers face.
Building a good product and marketing it well is the job only half done. A lasting commitment to evangelizing a customer-centric culture, followed by a fierce commitment to gathering, analyzing, and sharing the feedback across the company plays a vital role in propelling your product and the business forward.
Always go back to your users and tell them you implemented something they suggested — this is a solid step in building a long term relation with them.
Originally published by Niraj Ranjan Rout at hiverhq.com on April 5, 2017.
Recently was having a conversation with a Private Equity friend and was trying to explain the challenge that has captured my imagination and full attention, ie exits for software product startups in India. He felt that the data about the exit structural deficit that I was trying to point out felt too bearish to be true. My counter argument was that my intent is not to sound bearish but instead be a realist, after all acknowledgement of a problem is first step to solving one. Post that conversation I thought should put this data out publicly so that through crowdsourcing can at the very least improve my understanding if it is off by wide margins.
Above data indicates that Israel was able to generate 1.8X of the money that went in while in India in the same period it was 0.2X. The right comparison is exits from 2012-2016 with VC investments from 2005-2009, iSPIRT report does that comparison but results are even less encouraging.
Exits follow a power law distribution, however in India it seems like a power law’s power law.
Not only is the volume of exit a challenge but also the structure, any ecosystem exits follow a typical power law. For every $1 bn exit, there are ten $100m deal, for every $100m there are hundred $10m deals.
Top 7 deals in India account for ~$2.5b of the $4b in exit. About 250 of 391 deals total a deal volume of $97m which means the size of an acqui hire i.e in long tail is about 0.5m, which is inadequate even for an angel investor (in other ecosystem long tail is >$10 m, hence being referred to as power’s law power law). Lack of many $10-100m deal means there is a missing middle of the long tail.
Anything in the data above that does not feel kosher ?
iSPIRT M&A Connect program takes a multiyear view to design interventions that can address the middle and long tail of the market coordination challenge.
TiE Nagpur and iSPIRT – two iconic initiatives, committed to building a great startup ecosystem for startups in India, came together to create magic at the Nagpur Innofest on the 5th of March 2017. Innofest is a platform where innovators can connect with enablers, experts, mentors to build, create, connect, improvise & explore. It’s a movement on ‘Innovation’ in India.
The first Innofest of 2017 was held at Nagpur, with over 150 slated to attend the event. However, the organisers were pleasantly surprised to cater to over 250 people that eventually attended the event. The keynote addresses were made by Sharad Sharma, Co-Founder iSPIRT and Nagaprakasham, who is an investor. There were multiple workshops during the entire day.
Over 10 interesting hardware products were showcased at the event. Right from a 3D printing machine, collision-detecting devices, IoT based tracking devices, ultrasonic sensors, drone technology to the very unique e-funnel.
Nagaprakasham talked about the trend of creating copycat technologies and emphasized how innovation must ensure that newer technologies are able to touch more and more Indian lives. India’s strength lies in its humongous manpower, ample farmers, cheap labour and last but not the least, its vast natural beauty. And they all must be leveraged for innovation.
Subinder Khurana, held a session on Product innovation, where he talked about the essential ingredients of innovation. He pointed out that every venture must have a story of its own that is inspiring enough for not only the customers, but also family, friends, investors and other collateral stakeholders.
On the concept of disruption, he clarified that breaking something is easy, but it must be done creatively. Has some new technology being leveraged? Is there a good story around it? Is some equilibrium being challenged, which will add value to the customers?
Sharad Sharma spoke about IndiaStack and why it will be a critical step in helping creating new innovations for Bharath, he also explained about the building blocks as part of IndiaStack which include Aadhaar. He also spoke about how SAAS will be for India as Cyber Security is for Israel. He spoke so passionately that later during an audience interaction, Shashikant Choudhary, TiE Nagpur President felt that the entire stage was shaking and the podium would fall off. We had Radhesh Kanumury, Country Lead, Global Entrepreneur Program, IBM India Ltd having a fire side chat with Prajakt Raut. Radhesh spoke on the various technology trends giving good insights about them along with examples of innovative Startups working on those areas.
Another session, led by Prajakt Raut was on creating Business Plans. According to him b-plans are critical indicators of the real status of the business as it gives us a framework for assessing the business. The plans give us early warning signals of something that is not going right. It is important for every Founder to know the answers to these questions: What problem or opportunity are we addressing? (The market/ target audience). How are we addressing it?
How are we planning to do it? (Organisations & operations planning) what skills are required? (What are the competencies that are required to handle the business). Why are you doing it?
We also held the iKen Workshop which was facilitated by Rakesh Debur and Kavita Arora of Bangalore Makerspaces joined us to mentor the innovators. This entire activity was possible because of the support of TiE Nagpur and the people of Nagpur who joined us on a Sunday.
Some of the innovations showcased…
Traxafe is an advanced, tiny IOT based tracking device for kids, elders and cars. It’s based on GPS, GSM and BEACON technology connected with a user-friendly app to keep track of your loved ones.
E-Funnel is an electronic fluid gauging device. It measures any quantum of fluid flowing through it. All the information information of every fluid filling can be accessed through a mobile app or through our website on your desktop. It will be available for different variants of diesel generators, trucks and buses.
ISCREAM is a device which can perform numerous operations from detecting vehicle
collision to analysing the vehicle analytics.i-Scream is assisted with our IoT-based crash sensor and emergency response software which helps us to both keep a track on you and make you feel safe at the same time.
It has been a nervous month for the professionals working for internet and e-commerce companies in India. Shutdowns and layoffs have been the flavour of the month, and business models have come under scrutiny. The effects of recent events at Stayzilla and Snapdeal have not been limited to job losses only. Weighed down by these developments in the sector, Rakuten, the Japanese e-tailer, has puts its India plans on the back-burner.
Stayzilla, an alternate and homestay aggregator, has shut operations. Investors including Nexus Venture Partners and Matrix Partners have invested USD 33 million across multiple rounds in the company. The founders have promised to bounce back ‘with a different business model’.
Snapdeal, announced that it will lay-off about 600 employees from the company including from its Vulcan (logistics) and Freecharge (payments) business divisions. The company has so far raised USD 1.75 billion from investors which include global heavyweights such as Softbank, Kalaari Capital, Temasek, Alibaba Group and eBay. However, Snapdeal reportedly is left with less than enough cash to survive the next 12 months. The merger talks with Paytm, facilitated by the common investor Alibaba, are not murmurs anymore and seem to be the logical next step in many ways. A very honest and important insight on the business model emerged from this episode, in which the founders admitted to ‘doing too many things’ and ‘diversifying and starting new projects while we still hadn’t perfected the first or made it profitable’.
The above incidents highlight the fact that Indian e-commerce in 2016 has been significantly different from its ‘glory days’ in 2015. GMV growth in 2016 was flat, even though long term prospects remain intact for now. The year-end sales were also impacted due to the demonetisation exercise carried out by the government. The cash on delivery (CoD) transactions, which account for approximately 50% of total GMV, were severely impacted due to the lack of availability of the new currency notes.
Figure 1: India e-tailing GMV (USD mn)
Source: Company data, IAMAI, Euromonitor, Credit Suisse
GMV, as the supreme emperor of metrics, has lost its sheen and the challengers which have come to the fore include revenue per customer (function of number of orders per year, value per order and commission), net promoter score (a measure of customer satisfaction) and overall user monetisation (including alternative sources such as advertising as well as new service offerings such as hyperlocal services).
The sustainability of business model is back in focus as a tool to evaluate potential winners and losers. Throwing money at the customers as discounts has not worked out very well for a lot of players. There has been a definite move towards trying to find other means of retaining customers. Going forward, winners are most likely to be companies that provide a differentiated customer experience. An obvious example is Amazon Prime which now brings more personalized experience to the company’s customers. Flipkart (Flipkart Assured) and Snapdeal (Snapdeal Gold) have similar offerings to enhance the stickiness of their customers. While ‘Flipkart Assured’ has seen limited success so far, Amazon Prime, launched at a very attractive price point of INR 499 per year, seems to be more suited for success going forward. Amazon has also clubbed its Netflix challenge – Prime Video offering with Amazon Prime subscription. With these offerings, the companies are trying to take focus away from discounts and towards customisation, quick delivery, consistency and reliability of shopping experience.
The control over supply side is a key element of constructing an enhanced and consistent experience for customers. Logistics is one of most prominent cost items for ecommerce firms, and depending on the category and value of the goods being delivered, could be 10% to 20% of GMV.
In India, the number of Amazon fulfilment centres has grown to 27 by the end of 2016. Shipping from stores is less efficient than from dedicated fulfilment centres. Amazon is looking to replicate their success in North America where they have invested billions in network of fulfilment centres. It has more than 75 such centres in North America, covering 25 US states. This gives Amazon an easy two-day reach over the entire US. Snapdeal has opened 6 logistics hub during 2016, with an estimated investment of USD 300 million. Paytm, flush with a USD 200 million funding from Alibaba, is reportedly firming up plans for a significant strategic investment in a logistics firm to improve its deliveries process.
The key growth drivers for e-commerce in India remain in place. There is a large aspirational population, faster and wider internet access, a never before push on digital payments and an opportunity to further penetrate the offline organised retail market. Nevertheless, the year 2016 has been a reality check. The Indian players have had to review their business models and take some tough calls to focus on sustainability. While the market may continue to be volatile in the short term, with more potential shutdowns and/or consolidation in the offing, we can now be more confident that the firms that do survive will turn profitable soon.
Finance minister had announced during budget 2016 that place of effective management (POEM) will determine if a company is resident in India or not. Accordingly, this was notified in Finance ACT 2016 as under.
The details of what will determine the place of business rules was not decided in the Finance Act 2016. The POEM provisions was supposed to become effective from April 2017. The detailed guidelines of what rules and conditions will determine the POEM has been issued by CBDT on 24 January 2017.
Ever since the announcement in 2016 there were many apprehensions on POEM, especially in SaaS companies.
In order to clear this apprehension a PolicyHacks session of iSPIRT was conducted.
The video discussion on POEM attended by Girish Rowjee, Founder CEO of Greytrip; Mrigank, Mrigank Tripathi, Founder CEO of Qustn Technologies; Sanjay Khan Nagra, of Khaitan and Co.; Avinash Raghava and Sudhir Singh, iSPIRT is given below.
What does the above POEM ruling incorporate in finance bill imply?
In simple terms the place of effective management in above act means a place where key management or commercial decisions that are necessary for the conduct of the business of an entity are made, in substance. This implies Indian resident status on a company will apply even when the entity is incorporated outside India, if the place of effective management is proven to be in India.
The guidelines issued on 24th January 2017 by CBDT will be used to determine if a business of non-Indian entity or a subsidiary of Indian entity will fall under the place of business rules or not. The Guide lines can be accessed here.
POEM is an internationally recognised test for determination of residence of a company incorporated in a foreign jurisdiction.
Why this regulation has been brought in?
POEM require Indian firms with overseas subsidiaries or foreign companies in India to pay local taxes based on where the business is effectively controlled.
The main intention of this regulation is to capture the income in shell companies incorporated outside India that are held by resident Indians with a basic intention of retaining the income outside India.
The regulation is not intended to discourage valid Indian businesses to setup an entity outside India or operate in global markets.
Does it impact Software sector?
It is very common for the India Software companies to open an office in foreign geography, many times as a subsidiary of Indian company and sometimes a new entity with mixed local and Indian management. Hence, the POEM has been worrying entrepreneurs in this sector. For SaaS segment, it is very normal to have a foreign entity, either for reasons of funding or market penetration.
As mentioned above, for a valid global business the POEM will not be a hurdle. Businesses, having global operation but not retaining income in foreign companies (i.e repatriating profits to Indian company) through authorised route and after complying with other regulations, POEM will not be a a worrying factor.
There may be a very few Software Companies, who may need to be concerned, to pass the test of POEM. Any determination of the POEM will depend upon the facts and circumstances of a given case. The POEM concept is one of substance over form. If POEM is established to be in India for businesses operating outside India, they will be taxed in India.
It is not possible to generalize the impact of POEM on Software sector or illustrate few used cases. Whether a business operating outside India will get classified as POEM can only be ascertained after detailed examination.
Exemption for turnover less than 50 Crore
There is good news for startups as per the Press release accessible here, it has been decided that the POEM guidelines shall not apply to companies having turnover or gross receipts of Rs. 50 crore or less in a financial year.
This was not clear before video discussion and doubts were expressed during discussion, as this rule has not been described in the guideline circular of CBDT but has been mentioned in the press release of same date from CBDT.
Hence, we can expect that the rule of less than 50 crore income shall be embedded in income tax rules to be notified later.
Other salient features
The provision would be effective from 1st April 2017 and will apply to Assessment Year 2017-18 and subsequent assessment years.
The Assessing Officer (AO) shall, before initiating any proceedings for holding a company incorporated outside India, on the basis of its POEM, as being resident in India, seek prior approval of the Principal Commissioner or the Commissioner, as the case may be.
Further, in case the AO proposes to hold a company incorporated outside India, on the basis of its POEM, as being resident in India then any such finding shall be given by the AO after seeking prior approval of the collegium of three members consisting of the Principal Commissioners or the Commissioners, as the case may be, to be constituted by the Principal Chief Commissioner of the region concerned, in this regard. The collegium so constituted shall provide an opportunity of being heard to the company before issuing any directions in the matter.
The point 2 and 3 mentioned above will ascertain that there is no arbitrary discretion exercised by Assessing officers on ground.
The Guidelines issued can be accessed here, also provides examples that explains when an active business outside India will be treated as Indian business based on POEM. These examples do not explain each and every case.
Also the exemption of 50 Crore is neither given in Finance Act or in the Guidelines but mentioned in press release.
CBDT may therefore issue further circulars to clarify these positions.
We spoke to couple of Indian product founders (who went through M&A or strategic investments) and friendly lawyers to extract advice on tips that they will keep in mind when making their next deal. Two key things emerged
Unlike a product sale where the value to different buyer is roughly the same, in case of companies dynamics are different. Here the value is completely based on what is perceived by the buyer much like art. Moreover price communication involves negotiation and it is a function of both the scarcity and perceived utility of the buyer.
Every transaction is unique and complex, complexity is one of the biggest deal killer so some forethought and operational hygiene readiness goes a long way in winning or losing a deal.
While it is hard to cover a generic playbook for point #1, some forethought on operational structure and preparedness goes a long way in increasing the odds of making deals happen. The deck captures many of these operational points.
As an eco-system builder, I’m always challenged with finding more Founders to contribute or help other early stage Founders. Normally, successful people have very little time to contribute and many a times, there is no formal platform which allows them to engage on an ongoing basis. Unfortunately, our eco-system has many fake mentors and founders who know it all 🙁
I have been fortunate to have access to a lot of Founders who are willing to help and share their learnings with early stage, growth stage companies..,but it has always been a challenge to expand this pool.
A couple of months back, Amarpreet Kalkat of Frrole had reached out to me on why most of the iSPIRT activities are focused only around Founders. How do we extend the same by involving some of the team members in a startup to leverage and also contribute back to the eco-system?
Sometime back, I got a call from Laxman Papineni of AppVirality, he came up with a brilliant suggestion on how he as a Founder would like to get more value from the heads of growth, marketing, product, tech from a well established company. I remember one of the Playbook done by Paras Chopra, Wingify in Delhi on Content marketing, he invited his head of Growth to share their learnings on what worked and what didn’t work for them. Girish Mathrubootham from Freshdesk at SaaSx3 had invited his team to share their learnings and few months back Ankit Oberoi of AdPushUp invited his colleagues to share their learnings on Content Marketing Playbook.
So, I believe there is a lot of knowledge sitting inside a company which is still untapped and the eco-system is yet to leverage that. Thanks to Laxman, who put a working document and has been kind enough to be an early customer for this beta program called #BeyondFounders.
So, What is that we are trying to solve?
If you’re a founder of SaaS company having trouble figuring/building outbound sales channel. It’s not necessary that you have to wait for Girish (Freshdesk) suggestion or mentorship, you can simply talk to the person who is incharge of Outbound sales at Freshdesk. But, how could you find them? That’s what we are gonna solve here.
Let’s just say that you have persistent problems with breaking that glass ceiling of the elusive 1K/10K MRR figure in Sales – and now you fear plateauing from here on. What if someone just showed you that small process refinement in your Sales cycle that could do the trick and turn the tide?
Apart from Sales, we would like to explore areas like Product Management, Operational Excellence, Growth Hacking.
How do we solve this?
BeyondFounders is an initiative to help startup Founders, equipped with a clear vision and a pinpoint challenge, find the right person (Founder or an executive from a fellow successful startup) to solve their burning problems.
For example: A startup founder with $10K MRR finding it hard to build the right sales process and team to scale further, is looking for an advice from Founder/Head of Sales at a successful startup who have reached $100K MRR.
The Mechanics of #BeyondFounders
How does this work? – Entrepreneurs-in-need fill a detailed form about themselves, their startup, stage they are at, challenges they face, who would they want to talk to (if any preference, so we can request them), etc.
Is this FREE? No, you would be paying back to the community by helping your fellow Entrepreneurs-in-need.
Mentors:
Why should I help? What’s in it for me? You would be really proud helping build a great company from India. Entrepreneurs would appreciate your time and valuable suggestions and may give credits wherever possible. As a Mentor, we expect you to spend at least 60-minutes per week, whenever possible.
You, as a mentor, can either give in-person slots or virtual (Phone/Skype/Hangouts).
If you would like to contribute as a mentor, do send out an email to me at avinash(at)ispirt.in on where you would like to help, the startups that you are currently with and what kind of startups would you be keen to help.
Entrepreneurs:
What type of questions can I ask? You should be really really straight with the challenge/problem you’re facing. You can’t come up with a broad problem like “How can I improve my revenue” or “How can I scale by tech infra”. Instead, you should come with questions like “I’m doing XYZ already, how can I generate more leads via outbound” or “How do I improve API response time handling data update asynchronously”.
If you are a startup who would like to be part of this program, do fill out this form, we are only looking at doing a beta program with 5 companies for the next 3-4 months. Please apply before 20th February 2017. We hope to start the first batch of 5 companies by 2nd March 2017
If you would like to volunteer and help in this program managing this, do write to me at avinash(at)ispirt.in
Thanks to Laxman Papineni of AppVirality whose brainchild this program is. Hoping that you can leverage and also contribute here.
I missed the 4th anniversary celebrations of iSPIRT in Bangalore today as my father has been unwell for the last couple of weeks and I have been avoiding travel. I thought it will be good to refresh my memory by reading up some of the old emails and also share the journey of the 9 months of preparation before we officially launched iSPIRT. In the early months we called ourselves as SPIRT — Software Product Industry Roundtable.
iSPIRT officially got launched on 4th Feb 2013 after missing the launch date on 26th January 2013. You should read up the annual letter issued today which talks about the journey, the good progress made and why India has the potential to innovate for the next six billion.
Why I started?
The idea of setting up a product body came about after I ended my ten-year stint with NASSCOM in February 2012, where I was lucky to have worked closely with a number of inspiring individuals in the software product space. While my next career milestone took me back to the corporate world at One97 and I remember Paytm was in the early day: I never knew VSS would make it so BIG one day.
The desire to contribute to the start-up and software product eco-system in the country never left me. This desire in me forced me to reach out to Vishnu Dusad, MD of Nucleus Software. I met him at his office and he encouraged me to stay focussed and he will put all efforts behind convincing and engaging with people like Bharat Goenka of Tally & Sharad Sharmawho chaired the NASSCOM Product Council.
While I was at One97, I had a candid conversation (of leaving One97. I was just 3 months in the system) with Vijay Shekhar Sharma about my passion as I didn’t want to be unfair to a friend who had offered me a job when I needed. I still remember the brief conversation that I had with Vijay where he said “You go ahead and follow your passion, I will support you in whatever you do, be it on the rolls of One97 or outside”. I think that was a big commitment, I know very few people who can do things like that. He said — don’t worry about sustaining yourself, I will take care of that, you go and follow your dream.
I still thank him as he was the first person who freed me and became the angel for the Product mission.
How the key people came together
Vishnu was able to convince Bharat & Sharad that it was time to focus on creating something unique for the Software Product companies in India. We also engaged with Pari Natarajan of Zinnov as he had a good understanding of the ecosystem and also knew some of the gaps that had to be filled. I remember, we did few calls and everything would stop for few weeks as people got busy. I had to again nudge people so that they start contributing back. Many a times, I thought it was difficult to pull something together, but something inside me didn’t allow me to stop.
We always were trying to identify more people, but early on someone had suggested that it is better to start with a small team and then keep adding more people. I remember in one of the calls, how Bharat had motivated me by giving some valuable advice. I remember I had written it down somewhere, but it was more on the lines of when you have a dream and when you discover your mission, it will fill you with enthusiasm and a burning desire to work on it. It was always good to hear Bharat on how much passionate he was for India and for Software Products from India.
Once everyone was aligned, we virtually laid the foundation for SPIRT on 15th August 2012 where Bharat & Sharad met at the Tally office and Vishnu and I joined on the call from Delhi. I came officially on board after that.
How we ideated on the mission and the core beliefs…
After lot of back and forth and around 8–10 calls, we arrived at the Draft 1 of what SPIRT should be focussing on. Once in a while, we would also get an outsider to share their perspective and we got advice on how to create another trade body on software products. I’m glad we did not go ahead with the trade-body concept and created a think tank thanks to Sharad.
Also, since most of the conversations were done on phone, i don’t have any photographs of the team in the early days. Normally, startups always show their photographs from the garages 🙂
Sharing what Pari of Zinnov had put together on. Since beginning, we had lot of confusion on the name, as you can see, SPIRT became SPIRIT 🙂
In one of the initial meetings, it was decided that we will be taking the 3 pillar approach — Policy, Market Catalyst & Playbooks. This was articulated beautifully by Sharad and what SPIRT would be focussing on..
Over the period of time, Bharat, Sharad and Vishnu crystallized the vision and we put together this document, although I remember lot of efforts went behind this.
Launch of ProductNation — the community for Product Founders
Once the core team had decided launch the mission, I was assigned the task to build the community for software products. I remember i had proposed few names to Sharad out of which ProductNation was picked up. The other two names which were close were ProductoNomy.com & ProductsFrom.In
The other list which got dropped was:
TheIndusValley.com & theindusvalley.in are available (this is inspired from The Silicon Valley).
The ProductNation Blog was launched in the first week of September 2012 and I was fortunate that many product folks came and supported this by writing blogs, doing interviews and few meetups.
One of the early versions of the ProductNation newsletters
This is a writeup that I had done at that time
Productnation aims to be a forum for these individuals to contribute their points of view and opinions and energize the software product industry with their passion for enhancing the product eco-system. The citizens of this great “nation” bring experience, diversity, information, knowledge and cut across caste, creed, race and color! In a nutshell, Productnation.in is by the product guys, for the product guys.
The initial name was SPIRT and why we changed to iSPIRT.
Sharad came up with the name of SPIRT which stands for Software Product Industry Roundtable. I guess after few weeks, Sharad came up with this beautiful analogy of why a think-tank positioning is better than the trade body approach. He had all his facts & data ready with him and others also agreed and we were all set.We tried the following domains early
SPIRuT.in (Software Products Industry RoUndTable )
But when we applied for the name at MCA, it got rejected twice and that’s when we thought about adding i for India. Luckily, the third attempt(i was told it is the last attempt) was successful and we got the name registered as Indian Software Product Industry Roundtable Foundation and called it as iSPIRT Foundation. I added the i in the name 🙂
the first version of the iSPIRT website
We again had a tough challenge in getting the domain as someone had registered ispirt.org and few other domains that we wanted. I also wanted to block ispirit.in as many people continued to call us iSPIRT(with the I) in the end.
Joy from WoodApple, a dear friend helped us with the design of the iSPIRT logo…and you can see the wonderful options that he created and I think we picked up the best.
Joy put his heart in designing the logo which is why it came out so well. We didn’t do any iteration, change of colour, style nothing. We just picked one of them.
How the funding happened…
It was clear that iSPIRT will not be a trade body and will not have members. Instead it will be funded by grants and contributions from products firms and individuals. So, we made a list of 30–35 product founders in the month of December 2013 and started to reach out to them.
VAS: One97, OnMobile, NetCore
SaaS/PaaS: OrangeScape, Zoho (has announced India launch)
Most of my meetings with Sharad would happen at KGA, that was the place where all discussions would be done on the donor funding.
In the first list, I remember we had not even put Freshdesk and today, you can’t do anything in the product eco-system without the Girish’s touch. So happy to see that Girish has built a powerful brand in the last 4 years.
This would be a 20–30 minute led by Sharad on why we are setting up iSPIRT, how it will be different from a trade body model and how they can be part of this movement and support it. To our surprise, most of the founders believed in the story and came forward and donated money to iSPIRT.
Some of the meetings in Bangalore were face to face whereas the meetings in other cities were on phone. The meeting with Naveen of InMobi was pretty good as he gave us lot of insights on what kind of companies/Founders we should be adding in the first 30. The meeting with Shashank of Practo was also insightful as he shared some pain areas of a growing startup and no help he was getting from the eco-system.
The meeting with Pallav happened at Mainland China and Pallav was on full fire, he asked so many tough questions on why we are starting? 🙂
The conversation with Suresh of Orangescape was the easiest as he was one of the early guys who always believed and supported the work been done by us.
I remember collecting 4 lakhs form companies which were in the early stages, but believed so much in the mission, that they did not even question us on the mission or on where the money would be used.
Before the launch, we had 30 founders who had signed up for the mission and came for the first meeting scheduled at Pramati’s office in Bangalore.
The Launch
We had most of the founders who attended the first meeting on 4th Feb, some of them flew from different places to be part of the meeting. You can see some photographs here. It was good to share the mission, what we had planned to do and also how we were planning to execute it.
The Founder Circle at iSPIRT launch on 4th Feb 2013 at Pramati office
Before the launch, Sujit John & Shlipa Phadnis of TOI did a breaking story of the launch by calling it as 30 software product firms break free from Nasscom. This created lot of issue for me & Sharad as both had played an active role in NPC and the EMERGE forum.
Luckily those days, I think @Sumanthr was not active or he did not notice us and hence we never got some mileage 🙂
When we launched iSPIRT, I remember after few weeks we had Manish Bahl of Forrester questioned that iSPIRT will not be able to make an impact as it is driven by volunteers and doesn’t have a proper secretariat, etc. Based on his blog post, i remember there were couple of stories written about iSPIRT as why we might not be able to do what we have set up as a mission.
Surviving and thriving against all odds!
Initially, some of the leaders also thought that iSPIRT will be an experiment for 1 year, if it worked, we will continue, if it failed, the spirit will just evaporate 🙂 I’m glad that we continued the spirit and good to see the movement has taken off. I can see that now we are a large number of volunteers with many initiatives and happy to be one of the volunteers part of this amazing journey, onwards to many more years of thought leadership as #iSPIRTturns4. It has been an awesome journey!
Special thanks to my friend Sairam who did take a look at the blog inspite of his offsite.
