Who? Me??

Back in 2000, the dot com market in India was booming. Every company who wanted to have it’s presence online was scrambling to find domain names, hosting, email solutions, etc. Companies such as Net4India sprung up and came up with offerings with ridiculous prices (some of these offerings still exist to date!). Executives bought these websites thinking that somehow building a website would translate into revenues. In fact even today, the average “Indian IT company” continues to dole out development costs of websites propelled by content management systems (CMS) to be around 5-6 lakhs. If you are lucky, then that figure can go as high as 14-15 lakhs !!

What was the mistake then?

The single minded assumption that building a website will translate into revenues.

I still see folks who nurture this piece of ticking bomb waiting to explode and set their businesses to ruins. As a result, all derived-demand business also went bustville. It took a fair amount of years to clear the damage, and come back on track.

So why bring this up Now?

These days, whomsoever that I am talking (and you can include me in this list as well!!), is thinking about having an online enterprise. A sweet setup, where the person can run a business irrespective of where this aforesaid individual is. There are more than a fair share of success stories around, and these people have become heralded role models.

Yes, the online dream can become true. Yes.

Feels good to hear these words, don’t they? These days I am seeing a lot more structured approach, newsletters, opt-in forms, CRM systems, mass emailing systems, affiliate management systems, advertising networks, etc … the systems are all there. People just need to start using them and start churning the proverbial money mill.

But …

Back then it was IT firms, now I am seeing a large growth of Digital Marketing firms. It’s the same plot, just the players are different now. Organizations are again back to setting up websites, now with complex marketing and sales systems. But how are you doing in terms of sales? Is the juice worth the squeeze?

If you do own a website, could you share with me what are the plans that you are thinking of to generate sales? Are you creating value to generate those sales?

I have been playing World of Warcraft (WoW) for over a year now, and I am thoroughly enjoying the break it provides over the weekends. It’s a great product and has been running for the past six years or so. Blizzard has done a real good job there, especially in capturing the player versus player interactions (PVP). One such place is the auction house (AH), wherein players can buy and sell items offered by other players in the virtual marketplace. In fact, the concept of auction within its games have been so popular that Blizzard has decided to include real currency in it’s beta version of Diablo III.

But, other than the in-game auctions, a surge of enterprises have sprung up around the game, right from WoW based clothes, to power leveling services (which I think are pretty pointless! If you want to play only the end-game content, then you are missing out on a lot of good content and not to mention the lore!!). That brings us to this post’s topic, ever since 2006, people have realized that players will be willing to pay up good money to buy virtual currency. That’s where a horde of enterprising gamers realized that they can make their game-plat profitable, and even into a scalable business enterprise. This is called Gold-farming.

How it works

Whenever you complete a quest in WoW, or sell any item to a Non-Playing Character (NPC), or sell an item on the AH you get paid in the virtual currency which is Gold pieces. The higher your level, the more gold you get. A dedicated player who plays the game for 8-10 hours can easily collect 3000 gold pieces a day (there are players who make higher as well, as high as 3000 per hour!!). You put 3 different people to do the same thing and keep farming and you have a gold generating machine. Currently (in the year 2012), a 1000 gold pieces are selling for USD 2.7 (roughly 120 INR).

I know it’s not much, but consider the fact that you have to pay USD 15 per month per account. Now you make around USD 27 per day per account. That’s approximately INR 35k per month. A gamer who is farming, will get paid around 6k-8k per month, leaving a profit of 10k per account.

Where

Obviously, one major assumption I have taken over here is the gamer remuneration. This salary will only work in places where the cost of labour is low … namely third world countries. In fact in China, one prison was making the prisoners farm gold all day!!

Threats

Now, all was hunky dory at the start, but there is a teensy-weensy problem here. Laws of Economics.

Consider this graph, those are the demand and supply curves. As the quantity available for the same demand increases, the price that people are willing to pay for that good goes down, and vice-versa that as the quantity available for the same demand decreases, the price that people are willing to pay for that good goes up (since its going to be rare!!).

Now apply this to the gold farming business in WoW. Over the years, the number of people playing the game has seen upswings and downswings (in fact with the recent release of Rift, it has reduced quite a bit). Hence, the demand has actually gone down.

Also, the amount available/supplied is ever increasing … what I mean is that since its virtual currency, there is no limit to it. In the real world, the total volume of gold is 300673 cubic feet, but in WoW the virtual gold is infinite. You can farm as much as you like, its not going to be depleted. EVER.

What that means, is that over a period of time, the price of the virtual currency is going to drop. I did some searching, and this is true. The price for 5000 gold pieces in WoW in 2007 … was a maidenhead. Now, its just 600 INR .

Not a sustainable business, this gold farming thing no? I wonder what that girl must be feeling now that those very epic mounts are being sold within WoW for 80 Gold a piece.

Well, there’s always the dragon mounts.

If you are in India and watch Television, then you surely must have watched this ad -

The ad is targeted towards working women who take charge of their lives and planning their future on their terms. The ad which is timed brilliantly is launched in sync with the India International Jewelry Week, talks to the right sentiments, however the product itself is questionable.

Tanishq Gold Harvest Offer is a scheme where one has to make 11 monthly payments and at the end of the year, you get the same value in jewelry. At a first glance, I thought that the financial returns amount to roughly 8% of the investment. Turns out that I had valuated it in the wrong way from the start itself, the formula to be used should have been XIRR, and it gives a 15% return.

Jyothi, our resident content creator then pointed out that it’s a loss making investment. Consider the inflation of gold (or the Indian Rupee for that matter) over the period of one year, and you end up with a loss-making product. Average Indian Consumer, beware of this product!

People who are in Social Media would already know of influence monitoring tools such as Klout, Peerindex, and Rapportive.

I started using Klout the minute I discovered it using the Rapportive add-on for Firefox. Measuring and monitoring your klout score seemed cool. Soon after that I chanced on Peerindex as well.

The approaches employed by Klout and Peerindex are slightly different. Whereas Peerindex considered the reach of your tweets and conversations, Klout seemed to focus on the richness. Both the web-apps seemed cool, since both of them gave you an indication of what and how to increase your respective scores. So I managed to hike up my Klout score from the low 40s to the low 60s. I was happy with what I had achieved, until one conversation with Sushrut at a Tweet-up made me realize, that a high Klout score or a high Peerindex score is not really the outcome.

The business model that both these web-apps adopt to monetize their influence measuring algorithms is pretty much the same. Organizations that need to reach out to the influencers and decision-makers in their particular niches can now do so … at a price of course. Peerindex for example, charges 50 GBP for identifying a single influencer in the topic of your choosing. Of course there are people who are willing to pay, but the question I want to raise is till when?

I recently read this article on the openview blog, and found this great directory of twitterati – Twellow. One simple search confirmed this, the application is a directory of topic-wise experts, whereas this might seem commonplace, what this means for Klout and Peerindex is that their premium services now seem overpriced. Why would an organization pay a premium for the same information which is available for free?

Agreed, that Klout and Peerindex do provide “perks” for influencers, but at the end of the day, the deliverable for which the organization is paying up good money is to get twitter handles of influencers to start engaging with them. Perhaps, if the engagement can be somehow integrated into these perks … but till then I am firmly sticking to Twellow!

First came Best Buy.

People were happy, they got good deals, saved some money. Good … but meh! Perhaps their launch was before time. Avante Garde.

Then came Groupon.

A multi-billion dollar valuation, e-commerce 2.0 buzz, social media tongues wagging about. It was the next big thing since the Internet.

I guess over a period of time, folks soon realized that the business model was pretty simple really. Get bulk, negotiate with vendors and give back a small share back to the users. That was also the eYantra model. I hear its gotten its second round of funding as well.

Followed by a slew of Groupon clones … there are too many of them really to name a few. The unfortunate thing is that not one of them is willing to call themselves a Groupon mee-to. We are different is what they all say.

Everybody on this planet is unique, just like 7 billion other people.

If you thought that I would be writing another nerdy review of Star Wars, you are mistaken, Ser.

With Groupon clones sprouting everywhere on the Indian e-commerce scene, its going to be a war out there. The war is going to be played out in our inboxes, on our cellphones, on our social media pages and in our tweets. Our credit cards will be the trophies, each transaction a battle on who will get us the cheapest deal. If you thought that it would make me happy, its not.

All the discounts in the world are not worth the beauty of a spam free life. It’s been ages since I have seen an empty inbox, gotten no sms-es. The Clone Wars are on, and you are the next battle!

With the Indian economy shifting from an agrarian focus to a service-based industry, a lot of foreign investors are attracted to the nation. However, the sustainability of this is under question. As service experiences from bad to worse and consumers are crying bloody murder in the courts, how will the Great Indian Dream be achieved?

The word service comes from the term – to serve, i.e. to work for another.

I am sure you will agree with me that this is hardly the case these days. To measure the quality of service, all service providers have come up with an excuse called as SLAs (Service Level Agreements). What it means is that the service provider is giving certain time limits for each of his failures, and he won’t recognize the failure until and unless that SLA has been crossed.

Ironically, its very logical and you can’t argue against this. But zoom out a bit and think seriously, if you are providing SLAs for life and death services, what would happen? I won’t call you sick, until you have been sick for three days. Dead until, you have been dead for a day.

I won’t spring into action until and unless the given time goes by.

I will ignore your pleas, until you start shouting murder at me. Then I will create tickets, and play the game of the escalation matrix. Then I will care, and once the issue is resolved, I will stop caring.

As consumers, what can we do?

Well for starters -

1. Read the SLA’s before taking on the service. Do they seem reasonable? Try negotiating on the SLAs and make them sharp.
2. Clearly define the Plan ‘B’ – What happens if the impossible does happen? What happens if a service promising 99.95% uptime goes down? Who takes the risk and who takes the hit?
3. Danda works top-down. Sad, but true. Remember that. If you want the cronies to spring into action, knock at the top.
4. Get a back-up. It’s expensive, it’s redundant, but it’s a safety net ready to catch you when Plan ‘A’ fails.
5. There’s an interesting start-up Akosha, consider contacting them
6. Lastly, switch providers and rinse repeat!

Dear Channel providers,

I am sure that all of you are complaining about piracy of your shows and content over the internet. In fact I won’t be surprised if you think the bit torrent technology is the scourge of all paid content models. Here is a suggestions -

If you can’t beat them, join them

Why don’t you start providing your premium content for download over the internet? Go ahead put your advertisements in them as well. Not only are you increasing your advertisement exposure, but also you are making money off the very thing which was a threat to you earlier.

The cool part is that even if your content then gets pirated, you are still getting the advertisement exposure. Isn’t that what you wanted?

Edit: I was browsing through my Picasa albums, when I found those photos of Nathula pass. Posting them. As I said in the post, the photos are not that glamorous, but you should have been there to feel the awesomeness of that place!

You got that right. It’s awesomeness in the right set of circumstances.

Certain business and product have such a high recall and such a narrow niche that they stand out in the memory of the consumer.

Take for example the only store at Nathula Pass, its perennially cold there, so cold that you could freeze your toes off. In that frigid weather, near the Toll booth, there is one structure that stands out. Its completely made of wood, with a chimney and all the paraphernalia. A place you would not think twice about, much less enter had it been in your city.

In that cold weather, the wispy smoke billowing out from the chimney are a welcome sight. An indication of the warmth of the fire available inside the cottage. You enter the place, and sure enough the place is a couple of degrees warmer. A group is already huddled around a drum-like stove. You are glad to join that huddle. The shopkeeper looks at you and takes down your order … a maggi and a fruitcake. There is no menu, those two things are the only things available there.

The maggi is watery, and you gladly gulp down the soup and noodles. You warm the cake in front of the fire and gladly share it with the people around you. More maggi follows. WIth the stomach full and the cockles warmed, you are ready for the journey ahead.

Yes the maggi was watery, yes the fruitcake was stale. But boy in those circumstances it was the best maggi I ever had. I guess the cottage does not see much traffic and the volume of people going through that pass is highly seasonal, but I rate the experience right there on top of my culinary experiences.

Everybody you know, will probably agree with this, that Technology can be a great enabler.

It’s one of those motherhood statements (like “Shit happens” or “Life sucks”) that arguably can’t be denied. As someone who has often taken upon himself to forge this enablement with the demands of the business, I want to take a different stand.

Technology CAN be an enabler, only if you possess the know-how of implementation and your audience possesses the temerity to bear the brunt of teething and adoption problems, then can it be an enabler. How many cases have we seen that an organization wide technology upgrade has failed simply because the intended audience does not adopt it, but merely reverts to the easily available alternative.

My mother heads the medical department of State Bank of India, she in fact is the Chief Medical Officer. She tells me that they had tried three times to implement some form of an enterprise system for their department, Each time it had failed. Why did it fail? Not because the implementation was incorrect. We can’t say that, the moment we do – the implementation partner will pull out the requirements sheet, the scope document or some form of agreement which indicates that there was no breach of contract from their side.

And that is the problem I want to point out. Technology is not a function which can run in a silo. It permeates through the organization, from the most mundane of activities like checking email, to most complex of them like implementing a Decision Support System to help the top brass in strategic decision making.

Technology adoption therefore has to be intense. So intense that it should change the identity of the organization. If done properly, it can vault the firm into the next level.

The next time someone tells me that technology CAN be a great enabler, I will tell them that if my aunt had a moustache, then she CAN be my uncle.

The world of business talks fondly of the batch of 1989 from the Indian Institute of Management Ahmedabad. This is due to the fact that a lot of participants in this class turned towards entrepreneurship and launched successful ventures of their own. The likes of Sanjeev Bhikchandani of Naukri.com, Rashesh Shah of Edelweiss Capital and many more.

Yesterday I was talking to some of my seniors, and suddenly there has been a tipping point in almost 30% of their careers. These 30% have left their well paying cushy jobs and started on the road to entrepreneurship. Some of them have already made a name for themselves, some of them are in the making.

I wish them all the best and hope that the batch of 2005, IIM-I is someday as famous (if not more) as the batch of 1989, IIM-A!