Category: Business

The Big Fat Geek’s thoughts on Business and how business processes can be automated via workflows and technology.

48craft.com

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This is an open letter to all of you.

It’s a bit personal and the subject at hand is very close to my heart. It’s about start-ups and seeing a company slowly bleed its way, somehow so stuck in day to day operations that we cannot immediately stop the bleeding and start the recuperation process.

A friend of mine, Vamsee had quit his campus job post an MBA, and started a company in the e-commerce area. Coming from the culturally different region of Andhra Pradesh (the region is a fusion of 3-4 different cultures, correct me if I am mistaken!), there are a lot of local handicrafts makers in and around this state.

Typically, artisans are local people focused on day to day sales in order to fill their bellies with a days worth of food. They do not have access to larger markets (and certainly do not have access to international markets). The site was created to primarily help these artisans reach out to bigger markets.

That in mind, 48craft was created. You can take a look at this handicrafts site here.

With a lot of work from different professionals, the 48craft was hand-crafted lovingly. As the site’s popularity grew, so did it’s product base. Today within a span of two years, 48craft hosts thousands of products and has to maintain an equally large inventory.

So if you are passionate about start-ups or handicrafts, then head on to 48craft.com and check out some of their cool ethnical stuff.

Europe Debt Crisis and Economics

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Today I was sitting with the Pristine content team and trying to figure out why are we going to see the biggest financial recession ever. Bigger than the one we faced in the year 2008. Definitely bigger than the Great Depression of 1929 that the United States had faced.

So, what’s the problem with have Debt management in first world countries? Well, a lot of the growth in such countries is fueled by increase in the GDP (which is primarily a factor of how much the citizens can consume). Linked with consumerism is the problem of having a limited income. So most organizations think how do I maximize the share of this limited income?

The correct way is to maximize the pocket share, or the mind share within this limited expendable income that an individual has. Apart from that, there are other ways … ways such as Credit! So do not pay me the entire amount now, pay me in instalments … 30 days free trial (which loosely translates into a 30 day credit period), and so on. Credit cards enable us to do that, loans, overdraft accounts … essentially all these instruments help a consumer to spend MORE. At the end of the day when this expenditure has to be met with payments, either the person defaults (in which case this debt is bad debts!) or the person raises another loan to pay off that loan.

What banks do at the other side is that when they recognize such bad debts, they try to sell such debts as forward cash liabilities to other banks. Based on these you have a new instrument which is called a Credit Derivative .. you will remember the CDO crisis of 2007-2008. The culprit is debt or lack of Debt Management.

The problem stems from the fact that Debt management in the first developed countries was not done in a proper fashion. Typically, countries in Europe such as UK, Germany, etc are so developed that a lot of individuals are running in the negative all the time.

But things are changing, in fact I am informed that the debt management in such countries is now being managed by third party agencies, for example, click here for UK debt management. The good part about having such agencies is that individuals can now de-risk themselves. So much so that the UK government is hoping to lean on the taxpayers to lend the government money to pull themselves out from the Euro-Debt crisis.

Interestingly enough, what can be done to reduce future debt crisis is to start cash utilization and stop unnecessary usage of the credit instruments. A reality check on consumerism also needs to be done, which is threatening to take the economies of most developed countries down. In the short run consumerism is definitely a helpful boost in the arm for the country’s economy, but in the longer run it has to be curbed.

Co-operation in Capitalism

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If I have ever met you in person (or if you have frequented this blog for some time now) then you would know that I often extoll the virtues of the selfishness citing Ms. Rand and her essays on Capitalism.

In fact I at one time have had a heart to heart conversation with the founder of an organization whose heart is based on contribution and co-operation, stating that the philosophy behind Capitalism is different from a contribution oriented nature. It’s a muddle anyways, in fact the more you think about it, the harder it gets to really identify between the dark and light. There are ample examples where co-operation has been utilized for filling the coffers of different capitalists.

As a point to prove his case, this founder asked me to read a book … the Evolution of Co-operation. If you think game theory is fun, then you should definitely read this book! It’s highly recommended. I did read through the book, but I think it has taken me a bit long to fully understand it … just around 2 years or so!

Today, as I was reading a blog article on a news article based on that very book, a blog article by CFA Institute, I realized what the founder meant to say. That Co-operation can exist within a capitalistic system. The problem with most systems (and this is possibly the places which Ms. Rand glosses over) is that they have a tendency to go corrupt, to go weak. Socialism and Communism suffer from it and this was faced by Ayn Rand all through out her life.

But the solution to that problem is not Capitalism (as suggested by Ms. Rand), a corrupt Capitalistic system is worse if not the same as a corrupt Communist system.

However, that’s not the point of this post, the point is simple. That competition can occur only if there are implicit co-operative signals within the market. Signals such as agglomeration wherein competitors flock together at the same place such as an expo, exhibition or a khau galli to sell their goods.

Another personal lesson learnt – ideals are just that … ideal. In real life, you have to deal with corrupted ideals.

Series on CRM

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Today, I sat down and started writing a post on Customer Relationship Management (CRM) implementations and it’s failures in most organizations.

The idea came to me as I was reading one of Andrew McAfee’s posts on his blog, the business Impact of IT. In case if you do not know about Andrew McAfee, you can read up on his blog at HBR.

There have been many theories and reasons on how to start implementing a CRM and what are the typical pitfalls. If you search for this on Google there will be pages on pages of do’s and don’ts. Of these I have read a good number, however theory as always is so vastly different from practice that when you are on the ground, it becomes difficult to relate (and subsequently apply) theory to real life problems.

I consider the CRM implementation at Pristine a failure. It’s not fully implemented yet, and its not fully being used as well … but those are precise points why I consider it a failure. I was intending to write a piece on this on my blog.

As I kept on writing relating my experiences with the implementation, adoption and failures of CRM systems, I realized that one post won’t do justice to this (I had touched around 1000+ words and there was room left for more!) and decided to split this into a series of posts.

In the next few weeks, I will keep writing regular posts on the CRM system at Pristine and how it has failed … and how it can be revitalized.

Updating this post after 5 years, the CRM system we installed has been a resounding success and a continuous source of business insights for the organization.

Android driving up the Mobile Growth Rate

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In the world of venture funded start-ups, a lot of the tactical operations of the firm actually are based upon the latest buzz word. This buzz word can be anything from Web 2.0 to semantic web to HTML5. The start-up is actually trying to get more traction in the market using some gimmick or marketing stint … working on developing technologies doesn’t bring in the big bucks, but it sure as hell does bring you the attention that a start-up strives to get.

For example, the current industry buzzwords are HTML5 based app for mobile. Why mobile? Well because mobiles have been consistently beating the PC market for the past 5 years … smart-phone sales have been out-stripping the desktop sales by far. Operating Systems such as the Android system (which is a collaboration effort between different organizations) have started taking the majority of market share than the giant Apple. What’s important is that the Android OS allows mobile manufacturers to bundle up the operating system with their custom hardware. The best example of a company doing this is Samsung, these Samsung Galaxy deals just go to show the sheer variety that is offered to the consumer … using the same Android OS. I am not speaking out of my hat, there are well established industry reports and widely renowned business analysts who are singing the same song!

Mary Meeker from Kleiner Perkins has released this internet trends report of 2012, if you jump to slide 10 you can see that Android based device sales are outstripping iPhone sales by 5 times! You can find an Android device on almost every price point in the market. Compare this to an iPhone or any other smart phone (Blackberry … meh!) and you will notice the immediate difference in the pricing policies adopted by Apple. This is one of the main reasons why adoption rates of Android based phones have gone up and will continue to grow at an exponential rate.

This is one of the main reasons why LinkedIn has immediately released an HTML5 based app for mobiles, Facebook is buying more and more mobile based organizations (Tagtile, Instagram, etc). The internet is slowly shifting from desktops to smartphones, and there is no emergent leader in this area at present. Well, there’s always Google and Apple for operating systems, Samsung and HTC for devices … but what about apps? The App market that Android offers is way better and offers a higher variety as compared to the other app markets.

The world is waking up to this fact that mobile growth rate is going to fuel the way for internet penetration. In mobile, its going to be open technologies such as the Android to drive this growth.

Credit Cards in India

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With the e-commerce sector in India booming, a lot of foreign investors are looking to invest as PE funds in Indian e-commerce ventures. Unlike the Indian outsourcing story, wherein the business is a case of derived demand, the e-commerce stories are catering to the domestic market. With different reports sizing this industry around 5000+ Crores in INR per annum, this is one of the moments in the India Shining dream. One of the major factors in driving this has been the credit card and personal finance industry in India.

The ease with which private banks are issuing credit cards is a testament to the process orientation of this industry. What unnerves me about this is that the same ease is shown when the same credit card user switches to a different card. Over a period of time, users wake up to this and start becoming consumers … demanding better deals on their cards and switching without a moment’s hesitation. What this results into is an easy way out to avoid paying one credit card and get access to another card. Yes … a credit card fraud. The first world nations have already faced this threat and have put up centralized agencies to monitor credit scores.

In the UK, you can do a credit check for free … and that too online. The thing is that such organizations have superior processes powered by reliable and cutting edge technology. Nowadays, I am reading about Credit Cards with Digital Displays. In fact, in the UK the industry is so mature that nation level reporting can be done to find out the country’s credit risk. There are 30 million UK credit card customers holding 66 million cards. Out of these, 62% of all UK adults had at least one credit card. What is great about this is that the government is keenly following this industry and has mandated to the credit card industry to clean-up all malpractices.

India, is still far behind it n these matters … we do have the Credit Information Bureau (India) Limited, but I tried getting a report online and I could not. I had to first make a payment of INR 470, at which I balked. I mean, shouldn’t this data be made available for free? At least to the user on whom its about!

The Credit Card industry in India needs to mature and fast! Otherwise the boon which is fuelling the start-up boom can suddenly become the bane of financial institutions. Proablems such as credit fraud and CIBIL look-ups for all credit related transactions should be institutionalized across the country. Private banks need to stop running after numbers and start working on how to reduce churn. Business analysts need to figure better predictive models for detecting possible frauds (ala Minority Report).

The credit card industry in India is still in the nascent phase, with rural areas still vastly unexplored, there is a huge scope of growth and this industry does require the support of the country to grow. Personal finance will increase personal funding … which will fuel the country’s GDP … reducing the Balance of Payments (BoP) … increasing the Rupee value. An aggressive consumerist movement can give this economy a shot in the arm, and the credit card industry is just winding up for that!

Price of information

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Rajat Gupta, the head honcho who was caught in the scam with Rajaratnam, the fund manager of Galleon. Little do we realize what was his crime … his crime was to provide information that he was privy to, to the hedge fund manager. In a world where markets are made on information asymmetry, the price of information can sometimes be very high. Rajat  Gupta who had pleaded non-guilty had to provide a bail of 10 million USD. That’s whopping … but what’s worse that his otherwise impeccable profile has now been embellished with the marks of corruption and scam.

I am sure that over a period he will reach a compromise agreement with his organization. In case if you do not know what compromise agreement is, then click the link. The price that the top guy paid for this is with a dream career. A career path which most IITians only dream about. The question is, were the risks taken by the duo really worth this? Are there other modern Gordon Geckos out there who trade their integrity for hard cash?

What is the sad part from this story is that this one mistake shadows a lifetime of achievements. Being one of the only 5 non-media people in the world to interview the Prime Minister of India, being an advisor to the United Nations … all now lies in ruins of shame and regret. The ripples of this fiasco will shake some of the most well known educational institutions in the country … right from IIT Delhi and IIM Ahemadabad (where he graduated) to ISB (which he founded). Places where values such as Ethics and Corporate Responsibility are given the utmost of importance in pedagogy.

Was this price of information really worth it?