The New New Thing

Stumbled across this presentation and obvisouly had to blog about it. Prepared by a French Consult FaberNovel, this is easily one of the better speculations on Google’s Business.

Reaffirms my belief that there are people who consider Google an advertising company rather than a Search company. What business do you think Google is in .. ?

Yes, I am a fanboy of a lot of companies, people and ideas. Here is a comprehensive list. Obvisouly will keep on increasing with time ..

• Amazon
• Cleartrip
• Creativeland
• Dopplr
• Flickr
• Google
• IDEO
• Microsoft
• Shelfari
• Twitter

On 15th Oct, Jet Airways took a decision to retrench about 1900 employees (800 had already been asked to leave with another 1100 on the line). Obviously the decision was not personal and was taken to help the company battle the profitability and sustenance woes.

With all the media hype and popular delusions about the upcoming recession and job losses, the entire world went into a frenzy. From news channels to blogs to twitter to phone calls to SMSes, everyone had opinions. Opinions on how to save jobs to finding new ones to saving money in case you are retrenched by your company.

Employees obviously protested, spoke to political parties, Mr. Thackery even asked Jet to reconsider and company was held to ransom by MNS, CITU, Aviation Industry Employees Union and I dont know who all for this retrenchment.

I expected the company to stay confident and justify the move. Surprisingly, they did not. Infact, Jet Airways gave up and called back all the sacked employees. People touted this as the victory of morality, common mans’ win, employees rights and other such things. I beg to differ. In my humble opinion, India Inc lost again. A company was yet again held to ransom and was made to take a decision that does not do any shareholder any good. If I was a Jet Airways shareholder, I would have asked them how could they roll back retrenchment. How could they not work towards enhancing the shareholder value? How could they take decisions that were not in favor of the business.

Naresh Goel said that he was unaware of the decision. Makes me wonder what kind of management runs the company that forgets to update the Chairman about such a big decision. And was Mr. Goel deaf and dumb to have not heard all the news reports and noises? Mr. Goel clearly separated himself from the top management of the company and put the entire blame on them.

Obviously sacked employees would cry. There would be heart burns. Political parties would go any length to get free publicity and aligning themselves with causes. Politicians would have opinions. However, capitalist need to be firm and confident. A business owner needs to show confidence in the decisions made by him and his company. I find it absolutely ridiculous to first let go these many employees and then blame everything on the top management. I should ideally be writing this post criticizing media and politicians but with one move, Mr. Goel has lost all respect what-so-ever I had for him.

With the recent controversy around Tata and its Nano project, this comes as yet another rude shock to the business fraternity. We are clearly sending out signals that conducting business in India is getting more and more difficult. I do not want to pump in hard work and time and effort to create a company and then see it being forced to take decisions that are irrational and populist in nature. As an entrepreneur, I am skeptic. And I am scared to even think about creating businesses.

I ask why. India asks Why.

Originally written for Mutiny.in. Posted here.

This is a post on Radio Taxi business in India. I am using Meru just as an example to understand the economics of business. There are simple back of an envelop calculations and hope someone gives me a better insight on this business. The numbers look too tempting to be real.

I was traveling with Meru yesterday (27th July 2008) and I happened to strike a conversation with the driver. During our conversation, he gave me following stats

1. No of Meru taxis on Mumbai roads: 800
2. No of taxis by EOY in Mumbai: 1300
3. Average occupancy: 100% in peak-hours and 80%+ in non-peak hours
4. Peak Hours: 7AM to 10AM and 6PM to 10PM. He said that its impossible to get a Meru Cab in peak hours. This vindicates the business model and demand in the market for these call cabs.
5. Average Fare: Rs. 15 per KM. Compare this with regular taxis in Mumbai. A regular taxi is Rs. 13 per KM and a premium of Rs. 2 is not very steep considering the convenience and comfort of a call cab.

With these numbers the business sure makes a lot of sense. Only deterrents I can think of are:

1. High fixed cost of acquiring taxis. Not a huge problem. They can take long term loans from banks or PE players. They can also acquire more cabs by using the part-ownership model (where each driver pools in some money to own the taxi and Meru is just a brand name).
2. Setup of call center. Obviously each taxi needs to have a GPS device and a two-way radio. There has to be a way to connect the cab with the nearest available free taxi. And since this is a pure service offering, call center is very important.
3. Capped Potential: The earnings is directly proportional to number of taxis on the road. The scope of innovating on income stream is really low. At max you can use your taxi as an advertising medium.
4. Traffic rules and regulations: Registration with transport authorities in India is a very cumbersome and long process. Although this is a one-time stumbling block, companies would have to divert a lot of attention there initially.
5. What else? Am I missing something here?

Business Sense

1. I would want to what percentage of bookings is done for immediate travel and what percentage is booked at least 2 hours in advance. If the pre-planned travel is very high, then these companies can better utilize their capacities and go for some kind of planning.
2. I would also want to know what percentage of bookings is for large corporates (say institutional). Because moment Meru gets institutional bookings, they can again manage the fleet better and can be assured of certain minimum number of bookings.

Future

1. Is their a merit in getting into contracts with airlines, hotels,
   coporate parks etc to manage their taxi services? Again its of those
   things where you convert huge one time capex for companies into on-demand opex.
2. What innovations are possible so as to maximize the utilization of fleet and make more money from the same number of taxis? Would a thing like car-pooling work with radio taxis? Say junta going from Andheri to Town everyday can pool a Meru.
3. What else? Please send in your suggestions.

From the Meru website, I could get following details

1. After Mumbai, Meru is now available in Hyderabad, Bangalore and Delhi. As I said earlier also, the business potential is vindicated by simple calculations.
2. India Value Fund has already invested in Meru. Although I am no fortune teller, but I can easily foresee a handsome return on the investment. And I can’t understand why the Penguin effect is absent in this industry. If I had money, I would have loved to get into this business. Obviously at the right time and right price.

Other Radio Taxi Players in India

1. Meru
2. MegaCabs
3. Orix

If anyone can help me connect to someone with Meru or any other radio cab owners/managers, please drop a line. I will keep on updating this post on my wiki at s4ur4bh.pbwiki.com.

More links

• Dare Magazine, July 200

Image Credits: Andertho via Flickr

Disclaimer: I am assuming that the occupancy rates given by that driver are correct and the taxi service would have similar occupancy numbers in other cities

I recently came across this report titled “The Mobile Development Report“, published by CKS on a research commissioned by Nokia for developmental use of mobile networks in emerging economies.

The report focuses on social transformations around a new technology and its adoption. The report beautifully documents lives and ways Indians in tier 2 cities and towns use mobile phones. One of the best reports, a few highlights for me are

1. The East-West Divide: If we draw a line connecting Delhi and Chennai, the western India has seen most of the developmental efforts. East of this line still exist opportunities and possibilities. And this has largely been ignored by most of us (entrepreneurs, students, professionals, academicians etc.)
2. Understanding of India as a country. The report gives a very deep understanding of Indians and their communication behavior. What makes this one different and special is that CKS talks about the entire India – not just metros or towns or villages.
3. Classification of towns and villages. CKS has done a very good job in classifying towns and villages according the now famous pyramid by CK Prahalad. The report further classifies these rural citizens in terms of their purchasing power. Probably first such effort in India?
4. Opportunities in Rural AND Urban India. Everyone is ga-ga about opportunities in rural India and largely . While reading this report, it dawned on me that even the urban and semi-urban population is more than 500 mn. This number is more than the population of US and UK combined and there is a strong case of a business flourishing here also. Agreed that urban markets are difficult to crack considering they have plethora of options and they are picky. But is too large a segment to be ignored and is waiting to be tapped.
5. Insights from research: CKS has gone beyond regular data collection and have come up with insights such as elevation in social stature, increased credibility, ease of use of mobile phones as communication device compared to an Internet-connected PC, personal and societal welfare etc. And how does an access to a mobile communication tool helps people make their lives better.
6. Possible Applications: in micro-commerce, making travel easier, access to information, education (one of the examples look uncannily similar to latest Idea Cellular advertisement) etc. This can be coupled with findings from Jan Chipchase (more on him later) to identify new and possibly revolutionary businesses. Simple example could be use of airtime as currency and if someone can regulate this, its a huge huge market waiting to be tapped.
7. Case Studies: The way they have chosen their subjects, the methodology to conduct an interview, the detail in which they have gone while researching, they have captured the entire life of the subjects. With the kind of detail available, you can easily create character maps of these subjects and derive the way they live their lives and how they interact with brands.
8. Photographs: Awesome collection of photographs that the team has taken during their study.

The report also mentions at one point Jan Chipchase, a Nokia employee whose job is to travel the world and observe and document novel ways in which people use and interact with mobile phones. This is his wonderful talk on TED on how we use our mobile phones.

Coming back to CKS report, one might argue that they covered only three districts and have extrapolated the data to come up with findings and recommendations. And that report was released in early 2007. But regardless of these reservations, this still remains one of the best research reports I have read in a long time.

Apart from the focus on mobile phones, the report is that detailed that you actually get tons of ideas (another post on this later) while reading it. Congratulations to CKS team for this awesome effort.

P.S.: The font size is way too small and there are 226 pages of information, worth its weight in gold.
P.S..: If anyone else is keen on serving the information and entertainment needs of a community and can foresee (or already has) a business in this domain, please contact me. You never know what might come out of a discussion.

Image Credits: manoogupta via Flickr

In India, we have a couple of famous full service carriers (Jet Airways, Kingfisher Airlines) and a plethora of no frills or low cost operators (Spicejet, Air Deccan, Go Air, Indigo). And all of these players have been in troubled waters for quite some time now.

The industry has been reeling with rising fuel costs, rising manpower costs, airport charges, taxes, consumer awareness and complaints, regulatory hurdles etc. In fact because of all these, none of the operators in India is making money. We have already seen the mergers and buyout games begin.

Of all operators, the low cost carriers are the worst hit. Especially the smaller ones. Simply because they were anyways operating on low margins and revenues from value added services were absent. And since they are not big, they cant extract efficiencies of scale by sharing ground staff and airport or negotiating prices from their vendors etc.

Then there is another industry that has mushroomed in last few years. The online ticketing industry. We have so many players now in the OTA market that even keeping a count is really difficult. So how do these companies make money? They get certain amount of brokerage (if I can take the liberties of using that term) for every ticket they sell. The number varies from operator to operator and airline to airline but its in the range of 1% to 3%. Then they make money by offering hotel bookings, weekend getaways, travel packages etc. But they still make most of their money from commission from airlines on tickets sold. With rising prices, airlines are now pushing these OTAs to the wall and cutting their margins as well. Does this signify slow and eventual death of OTAs? I don’t know and I can’t predict but next few months would be very interesting.

Apart from OTA, the newly privatized airports in the country are also facing the heat. They have pumped in so much money to create huge “world-class” structures that its not even funny. Their sources of revenues are fees from the airlines and other services like parking, restaurants, advertising etc. With drop in number of travelers, revenue from all these value added things would come down. How would these sustain? Traditional economics says that a toll gate owner or a broker would always make money as long as the number of passengers (or transactions) is high. In the long run, airports shouldn’t loose money but again you never know. Its hard to predict.

Coming back to airlines and their problems, they acted like a typical producer in a producer driven economy. They hiked prices of their tickets. So much so that these prices are now comparable to full service operators. A lot of people look at this as a very good move. They argue that with higher fares, the revenues would also increase. I beg to differ.

Lets divert from the debate and try to see a traveler in action. A traveler can choose a low cost carrier, lug all his bags with him, sit in really cramped seats with his legs folded, pay for every thing he uses in the plane (except for the loo – and paid loo can be a good idea :D) and come out of the travel feeling harrowed and hassled. This traveler could alternatively pick a full service carrier, have a valet help him with bags, relax with enough leg room on the aircraft, have a choice of three course meal on the aircraft, pampered by the staff of the airline and get to his destination feeling good about his travel.

Again back to the debate, in my opinion if fares for no frills carriers are comparable to full service carriers, any rational person would opt for service and comfort levels offered by full service operators. And with limited choices, fare hike by low cost operators mean more business for full service operators.

And this is not all. As flying gets out of the reach of the common man, more and more travel would happen for business reasons (leisure and casual air travel would reduce substantially) and these fliers would choose full service operators. This would translate into lesser capacity utilization for low cost operators. And empty seats means more losses for low cost operators.

What about full service carriers? With this hike, they might get better occupancy rates but how can they survive the spiraling costs and dwindling margins?

And for how long can these airlines operate on losses? What about the investors? Air Sahara (acquired by Jet Airways) and Air Deccan (merged with Kingfisher) have already succumbed to their losses and growth costs. Are there more in pipeline? What is in it for existing players?

Airline operators have never ever made money anywhere in the world. Will it be different in India? Can there be solutions? Can they come up with more creative ways of making money (like charging for check-in luggage)?

Whats your take?

In this post I shall talk about brands as I understand them and as they are applicable to digital brands. Please note that this list is still in beta and will evolve with time. Your feedback would be really appreciated.

This is required because we need to stop looking at startups as just startups but serious businesses where branding plays a vital role. Often, the way you look at the business makes a lot of difference to way you work.

Coming to the point, I think there are three principles. Utility, Emotional Connect and Relationship that goes beyond just one product.

A: Utility

• Customers never talk about a brand they are going to use. They talk about the action they will perform. What problem does the brand solves?
  • I need to book and air ticket. I will use Cleartrip.
  • I need to upload slides and show them to friends. Let me use Slideshare.
• The brands that can make themselves synonymous to utility invariable become the leaders.
  • Can you Google the data on number of Internet users in India?
  • Can you Slideshare your presentation please?
• The utility could be functional, mechanical, emotional, psychological or any of those –al things.
  • Using Twitter helps me stay in touch with friends on the go.
  • I use FB because the elite Internet users in India are on FB.

B: Emotional Connect

• A customer will use a brand that he can associate himself with.
  • I like Apple products because they stand for innovation, user interface and simplicity.
  • Google stands for open culture. I am an open source evangelist and hence I will use and promote Google initiatives.
• If possible, the association with the brand should elevate the status of the user.
  • Google could have invited everyone when they launched Gmail. Limited invite was a way to get traction. All limited launches are like that.
  • Alltop gave away batches like “featured on alltop”. People displayed these batches because it was a way to show off that you belonged to the best of the category (as rated by alltop).

C: Relationship extending beyond single product

• The relationship should start with one product and when the company launches more products, I should be aspiring to buy them too. This is very important for creating sustainable businesses that go beyond one time relationship.
  • My relationship with Apple started with an Ipod. I have already bought a MacBook and have pre-ordered the iPhone.
  • I started using Google as a search engine. Then I started using groups. Then it was Gmail. And then calendar. The list continues.

Which one of the three things are valid about your brand? If it does only one, how can it do other things?

Please give your feedback to me at saurabh.garg+digitalbrands@gmail.com

Today India won their first ever Grand Prix Lion at the Cannes Lions. JWT won the award for their work on Lead India campaign for The Times of India Group. The idea was simple yet effective. JWT created a reality TV show to choose an Indian that can become a political leader in times to come. This campaign was executed on print, tv, radio, BTL, Internet, on-ground and almost all the platforms available to reach the consumer.

This Grand Prix is important because it marks the arrival of Indian Advertising on the global scene. Indian advertisers have now proved that they are at par with (if not better than) their counterparts from other markets. It is also important because Lead India was a very visible campaign (compared to other winning ideas that are hardly seen in main stream media).

Congrats to JWT and winning team. Hope this would give inspiration to everyone else in the Indian creative community to create more commercial good work.

UPDATE: JWT also won the Integrated Lion 2008 for the campaign. Two big wins for India in one year. Kudos.

Not caring for literary flowerification and language style critics around here, this is going to be rude post. For people who dont know that specifics, Reliance ADAG is Anil Ambani and Reliance Industries is Mukesh Ambani.

Reliance ADAG has made clear their intentions on getting into organized retail. People might remember that ADAG and Reliance Industries had a non-compete agreement when Mukesh Ambani and Anil Ambani agreed to split in 2006. Terms of this agreement were not made public but how in the world can Anil Ambani get into organized retail when everyone knows about Reliance Retail and its hazaar different retail formats and more than 500 stores?

And if this was not enough, ADAG’s retail venture is called Reliance Big Bazar. Surprised? Not really. Shocking? Yes. What about Kishore Biyani’s company called Pantaloon Retail and their flagship retail store Big Bazaar?

Perfectly understandable that ADAG calls all their businesses BIG. Big FM, Big Music, Big Flix, Big Entertainment etc. but Big Bazar? I always thought that CGA will not allow you to name your company that confuses customer will an already existing brand. If there was small guy in some class C town in India doing the same thing, he would have been sued for his every penny for corporate lawyers.

If the name was stupid, the reason given by ADAG is even more stupid. They are saying that Kishore Biyani’s company is called Bazaar with two a’s and their’s is called Bazar with a single a. With even bad Photoshop skills, one can very easily make the two logos very similar and rest can be left to anyone’s imagination. They have said that they would not use the word “Bazar” or “Big Bazar” on standalone basis. They will always use “Reliance Big Bazar”. And this saves some grace for them.

But overall a very bad move. And Isn’t this piggybacking on someone who has put in time and effort to create a huge brand? What about customers? Isn’t this a cheap way to get customers?

India asks Y.

Image Credits: http://farm1.static.flickr.com/142/349070891_d279d63b80.jpg

Cast Away is an awesome movie. You see it and you come back with two things.  One, Tom Hanks survives the lonely island. And Two, he is a FedEx employee and he delivers that Wilson ball in the end.

Then there is a book called How Starbucks saved my life. You read the book and you again remember two things. One is making tough decisions. And two how Starbucks helped a guy discover what he wanted in life.

Both these, the movie and the book are awesome pieces of entertainment. People have seen these, talked about these and recommended these to their friends. On a standalone basis both of them are pieces of art. And most probably, both were original productions created by individuals without any influence by the company they talk about. And this is where the idea comes. What if both of them were sponsored and paid by the company they talk about?

I have been thinking about a company that creates these branded entertainment products for money. Obviously there are limitations and issues but none that stops the company from flourishing. Please note that this is very different from product placements in media. This is creating the product first and then inserting the brand.

Business Need: Advertising as we know it, would be dead very soon. People would start filtering advertisements automatically and recommendations from influences would start loosing meaning. then what? The solution lies in creating media around brand. Think of The Truman Show done at a smaller scale.

Possible Entertainment Options: This could be a very very long list. Starting with movies, television shows, radio shows to print media (newspaper, magazines, books, travelogues etc.) to interactive media (Internet, blogs, websites), others (computer games, hotspots, retail). The list is long.

Problem Areas: There are quite a few. Biggest one is obsolescence. Once an entertainment outlet is used for a brand, it becomes difficult to innovate and use the same medium for another brand. Then there are other petty issues like it being very expensive for brands. We are talking about professional book writers, movie makers, gaming companies working on the brand. We can explore cheaper options like blogs and websites but how many consumers of a brand like say Rin, be on Internet? They would be on TV for sure.

A lot more thought needs to go in place. I have about 4 more pages of random thoughts and comments. If anyone is interesting in talking more about it, please let me know and I shall share those docs.

Any opinions? thoughts?