Tag: Business

Credit Cards in India

Prasad AjinkyaLeave a comment

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!

Now find exactly how many people are bidding for your keyword

Prasad Ajinkya1 Comment

Search Engine Marketing (SEM) is often becoming the de facto traffic generating mechanism for people who have the pockets. This, in addition to the fact that Google is really aggressive about its growth in the Indian markets puts Google Adwords right up there in the strategy of any digital marketing executive.

I have been working on the Adwords interface for the past 18 months or so now and get excited whenever I discover a new and useful feature in the web app. One such awesome feature is the single keyword bidding tool.

Where do you find this?

You find this feature in the Keywords interface of any campaign. Be sure that you have enough data points (works for a weekly period for most of my keywords).

The tool is only available if you are selecting one single keyword at any point of time.

Google keyword bidding

There is a small bar graph icon for the keyword bidding tool, now simply select this keyword and view the bidding and competitors.

Google Keyword Competitors

What can you do with this?

This data is good, but what can one do with this data? Well, this gives you a wealth of information –

  • How many people are you competing against (for eg. I did not expect ask.com to be running an ad on this keyword)
  • How are you doing vis-a-vis your competitors in SEM (yes, we are beating the crap out of the rest ;-))
  • The approximate budget spends of your competitors
  • A bit more research on the landing pages can help you identify what your competitors are doing right and you are doing wrong

This is one fun tool that the folks have Google Adwords have churned out.

Economics teaches us that when information is provided to everyone, then the wealth extraction within the market is at a maximum. The adwords bidding is one such great example, wherein me (and all my competitors) have the same access to data. The two players who will end up benefiting the most after the correct usage of this tool are bidders who take fast decision and Google.

Start-up? Head to Bangalore

Prasad AjinkyaLeave a comment

If you are forming a start-up or planning to start one, then Bangalore is one of the best places where you can set this up. A simple search for jobs in bangalore will give you a huge listing of career opportunities in this city. Bangalore is definitely a contender for being the Silicon Valley of India.

What makes this city such an attractive spot for start-ups?

  • Perfectly located: Bangalore is easily reachable by air, road, rail and water. So cargo freight companies have their major offices in this city. The recent upgrade of the airport also has scaled up the air traffic capacity of the city. Visitors of the city who have been travelling in Bangalore for the past decade would know what I am talking about.
  • IT Hub: Bangalore is one of the first IT mega cities in the country. What this means is better infrastructure as compared to the other cities, a tolerant government and a nurturing ecosystem of good quality labour. Even today, it is still known that to setup a tech-based startup, you need to be in Bangalore
  • Follow the Money: A lot (and I mean A LOT) of Venture capital Firms are based in Bangalore. Firms such as Accel, Sequoia, Argonaut, DFJ are all based out of Bangalore and generally try to see whether the organization they are investing in can shift their bases to this city.
  • Awesome Weather: Throughout the year there’s only one cool temperature in this city. It amazes me as to how this can be, but there you have it.

Obviously, with such great pros there have to be a few cons (the traffic being amongst the main ones there!). Hey, its not Valhalla that we are talking about right? A lot of great tech-based startups are here … Flipkart, Myntra to name a few.

So, forget other places such as Mumbai (too expensive), or Hyderabad (no good programmers). Head on to Bangalore and setup a base there!

Rule by Fear

Prasad Ajinkya2 Comments

There’s an interesting article available at HBR on Managerial Tyranny. CEOs and executives since long have been utilizing this approach to achieve spectacular growth rates. This is even more true when the manager is expected to show quarter on quarter results. Out goes the nice guy approach and in comes the tyrant – a whip in one hand and measurable metrics in the other.

The Rule by Fear has been used in popular firms … everybody praises Steve Jobs on his design sense, but how many of them would advocate his iron fist approach during the hey days of Apple? Did you forget Jack Welch … he wasn’t called Neutron Jack without any reason.

So when should one crack the whip? Well, if your team is aware of the end outcomes and shares your desires to reach those outcomes. Then the means of cracking the whip and acting the tyrant is justified … until those goals are achieved.

Personally, I think that this approach can only be used to achieve results in the short term. Work culture in India at least is still dependant a lot on personal equations. If the team does not share the passion, then tyranny could be the main reason why they will leave the firm – this brings to mind the quote

You do not leave the job, you leave your boss

I wonder if this can be made sustainable?

Don’t hire dogs

Prasad Ajinkya6 Comments

Dog’s are a man’s best friend. They are considered as faithful, loyal and will always be there to lift you up. A dog will fetch things for you and do silly tricks such as sit, roll over, etc.

In different companies, there is one such breed of employees. Don’t get me wrong, I am not objectifying people, and this is an analogy, if anything. So this breed of employees … they behave in the exact manner like dogs.

They are generally taken from the street or from the wild, they do not have any formal skill set with them. It’s probably because of this reason that they are extremely loyal to the company. They are willing to go the extra distance and spend more time in the office working unrealistic deadlines and striving to satisfy their masters.

Obviously, who would want to say no to such employees! Right?

Well, wrong!! Change is the requirement of all organizations, especially the small ones and the ones which are growing at a fast pace. The problem now magnifies is because you can’t teach an old dog new tricks (yes, I wanted to work this cliché into this post!!). Any organization that is growing at a fast pace (60% – 100% growth YoY) would require such a huge influx of talent, that the loyal dog would now be forced to question his erstwhile unquestionable value in the company.

This is the risk, and it’s a huge one. Why is it a risk? Because at some point in the founder’s life, this loyal employee has done a favor and worked in ridiculous conditions. Now that the dog is tired and cannot do anything new, it has become a liability for the organization. Not only does it sadden the person, but the organization cannot put this figurative dog to sleep.

So if you are an entrepreneur or about to start your firm, do yourself a favor and do not hire dogs.

Addendum

Arjun Bakshi writes –

This phenomenon is not restricted to start-ups:-) Most “Big” organisations are not very different.
I feel HR / Organisations are lazy and want the easy way out. Have a template of qualifications and experience required to hire, short-list such people thru employee referrals and employment consultants and then hire them.
Why take the risk to hire people outside the template and take efforts on them?
In case you follow sports, the recent example of Jeremy Lin is a very good example of the malaise which also exists in our hiring practices. I am sending just one of the millions of articles on him. I think, Malcolm Gladwell also has a few artcles on a similar theme.

CRM is the new website

Prasad Ajinkya5 Comments

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?

Economics of Gold farming in World of Warcraft

Prasad Ajinkya2 Comments

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.

ecoConsider 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.