Category Archives: Ecosystem

The Minimum Viable Product (MVP) trap!

Before your read this post, I suggest you go over to Hacker Street India and glance through this thread – How much time it took for the first version (MVP) of your product!

If you don’t know much about MVP, glimpse quickly through the Wikipedia post on – Minimum Viable Product. The definition: “The minimum viable product is that version of a new product which allows a team to collect the maximum amount of validated learning about customers with the least effort.”

There is much ambiguity in this definition. Lot of judgement is required by the startup founders to define what exactly is MVP version for their product since there are no bullet points to clearly define that. That exactly is a MVP trap!

If you were to build a Social Networking site today, the benchmark for minimum viable product is Facebook. A user will expect all existing features of Facebook to be in your product! For a email service the benchmark is Gmail. For a mobile phone messaging app it is WhatsApp. For a social QnA product it is Quora. For a crowd-funding platform it is Kickstarter. For a phone operating system it is Android / iOS. For search it is Google. For a tablet device it is the Apple iPad.

Early adopters loved the first version of Gmail because it was so much better (and fast) than existing products – Yahoo / Hotmail. They loved the first version of iPhone because it was much better (and usable) than Nokia or Blackberry or Palm then available. On other hand, Bing did not see a great adoption because it was another search engine with no compelling reason for users to switch from Google. Similarly, early adopters saw Microsoft Windows Phone as a different OS for mobile which did all that a Android / iOS phone did differently (different but not better).

If the idea of MVP is showing the product to early adopters and collecting quick feedback, most of that consumer feedback will be based on their comparisons with other products they use on an ongoing basis. To create a wow factor and a compelling reason for users to switch to your product, the minimum viable product you roll out should basically not just exceed current market standards but should also be much better than current offerings.

Otherwise MVP is a trap. Getting a so called minimum viable product (defined by yourself) out in 30 days makes no sense. Every product is different. No product was successful cause its minimum viable product was out in 30 days. You can boast about how quickly you rolled it out, collect feedback from users / customers (most of this feedback is predictable and chances are you would already know about it) and keep building features. Define MVP as not something you can roll out fast, but something that is more valuable than existing product. MVP should not mean Minimum Viable Product. MVP = More Valuable product! (suggested by Nischal)

This is also true for service companies. If you are building a ecommerce company today in India, customers would expect not just similar online transaction experience but also the same level of reliability in logistics or customer support as provided by Flipkart or HomeShop18..

Is there a way out of this? Yes – build really innovating products that don’t have existing benchmarks so you can define one yourself and for others to follow. Or build products in a domain were market leaders are yet to be established.

To succeed, you have to build a better product than one available in the market or innovate and build something that does not exists already! Post that stage you can – Build. Ship. Market. Learn. Build. Let the cycle go on.

Remember, the bar for Minimum Viable Product / Service is very high!

img credit: waltimo on flickr

#FoundersMeet 3 – Collective learning of 20 Early Stage Startups

Background – I was fortunate to be invited for the #FoundersMeet 2; informal get-together of 7 startup founders last year. This time around Anirudh, Sid, Nischal, Deven and I suggested to move it beyond our circle and extend it to 20 startups to come together and share our small success stories, failures and challenges. We also wanted to create a strong connect for ‘Mumbai-Pune Start-up Ecosystem’ which sort of never existed.

The 3rd #FoundersMeet happened in Mumbai on Wednesday 23rd Jan 2013 (a working day)., was expected to go on for about 7 hours, the interaction continued for 13.5 hours (yes!) with some amazing insights discussed and shared. I’m sharing this post on behalf of all the startups (& their founders) who participated.

Selling a SaaS Product:

  • International Customers are more inclined towards using self-service products. Indian counterparts expect hand holding and need assurance of customer service at arm’s length even when not required. 
  • Customers in India will insist even on customizing a standard SaaS product. This tends to be service-model trap, best avoided. 
  • As long as the user-proposition communicated during sales pitch or on the product is fulfilled, International customers are satisfied. They will switch the product fast if they find another product delivering more value. On other hand, Indian customers take time to switch product if a good relationship is established. 
  • If a competitor is offering a product for free, users will not like to pay you for that product.
  • Sell the product to the poster-boys of the industry, rest will follow by themselves. 

Product Pricing:

  • There is a disproportionate value in the word ‘Free’. Use it whenever you can. 
  • Over 90% of users will sign-up on the Free plan. When they move to the premium plan, they are most likely to use the plan that has the lowest value. Ensure that this low value plan has a disproportionate value for its price. That makes customers love you instantly.
  • When someone is making money because of your product, make sure you are making money out of it too.
  • Positioning your product / business is important. It can either be in Income side or Expense side. Always pitch / present your product on income side – “we help you generate money / your earnings will increase / your savings will multiply.”

Up-selling Product:

  • Acquire with freemium plans. Ensure enough hooks are in place that leads the customer to purchase the product post the free period or upgrade to the next paid plan.

Identifying Product Drivers:

  • A SaaS based product will not be driven by technical people, its driven by functional people. Build a product that can be installed by techies in less than 5 minutes, and can be driven by functional people without interference of tech people.
  • Sell the product to decision makers. Never pitch any product to a tech person. The tech person will always think that he can build it by himself.

User Acquisition Hacks:

  • For B2C products: Sell traction of existing users to new users. Create a feel that – Yes, there are people here, you’re not alone. That gives new users confidence about the product.
    Example – In Mumbai when you see 3 Vadapav stalls on a street, unknowingly you will go towards one that has maximum people eating and buy from there. 
  • For B2C products: Show activity. Existing activities drive more activities.
    Example – IRCTC, startup folks and early adopters think the platform sucks and fails whiles booking; common people think of IRCTC to be a big corporation that there is always high demand. That leads to perception of credibility for IRCTC.
  • Use Associations for Endorsements - IRCTC mentions – ‘A Government of India Enterprise’. This is a big endorsement for IRCTC and brings credibility to it.
  • Bounce Rate Reduction – A transactional consumer site was featured in leading newspapers. When they mentioned ‘As seen on Newspaper A, B and C’ on their homepage – it boosted its credibility and reduced the bounce rate.
  • Social Proof for User Acquisition - The Facebook widget that displays people who have liked the brand also builds credibility.
  • Real People - A SaaS based startup focusing on product for Chartered Accountant features a local/prominent CA on its homepage. That quickly build credibility for itself in eyes other CAs. It was easy to acquire more customers.
  • Investor Hack - For SaaS startups, whenever any VC reaches out to you, get them to introduce to its portfolio companies. Its quickest way to demonstrate more traction and more importantly to add new customers.
  • Physical World - Example., Printed Coupons redeemed at Restaurants are social proofs in real world. Makes other users curious on how did a customer get discount / where did he get the redemption coupon from. 

Ecommerce:

  • Thoughts on heavy discounting in current Ecommerce business in India, its like ‘Selling a Rs.100 note for Rs. 90′.
  • Potential in disrupting offline business is huge. All online businesses are not even 1% of the offline businesses.
  • Offline products are indeed cheaper than online. Consumers researching online and transacting offline is big. This market is ripe for disruption.
  • Ecommerce players are now less focused on doing marketing campaigns, but more focused on increasing conversion ratios of existing traffic.

User Experience:

  • UI is ‘relative’. Focus on User Experience.
  • Cleartrip is loved by all of us; but its clearly MakeMyTrip / Yatra that works with masses.
  • Make the product work 100% of time for what you promise.

Entrepreneurship:

  • Don’t fall in love with your product. Fall in love with being successful.
  • Things that work in west don’t work in India. Specially with funding and investments. Currency for investment in India is not traction, its revenue.
  • Be a salesman. Never miss a opportunity to make noise about your product.
  • Don’t focus on a niche market, there are very high chances of failure. Instead focus on a large market opportunity, its more likely to find success here.
  • Notice early signs if things are not going your way. Pivot fast.

Product Distribution:

  • SaaS products: Explore opportunities to integrate with large platform players – Domain Cpanels, or ecosystem creators like Shopify, BigCommerce, etc.
  • SaaS products: Label your widgets – ‘Powered by You’. They are most valuable for Inbound leads.

Product Scaling:

  • Don’t just design products for scale / growth; also ensure you design the business model for scale.

Essential Traits of Consumer Product:

  • Curiosity. Rely on Curiosity – (Example LinkedIn – 2 people have seen your profile today).
  • Build the – Theory of Reciprocation into your product.
  • Gamify some features, let users do free marketing for you before unlocking information. (Example – Tweet about something to show details).
  • Understand show-off value in your product. People love to show off on Twitter & Facebook. Capture such points to your product.

Social Media Marketing:

  • Twitter links have a CTR of 0.5% to 0.8%. Customer acquisition here happens in scale. Spend energy wisely.
  • Don’t spend time on talking to random folks on Twitter based on their conversations. Extremely time consuming and most unlikely to convert.
  • Facebook advertising does not lead to conversion. Its best suited for brand building.
  • Facebook Contests that involve sharing real pictures of users online brings lot of credibility to brand.

Competition:

  • Once a user has signed up for the product; make sure it works it. Don’t bother about competition. He has taken pain to signup to your product, make the promise work.
  • You’re the only one who know about your competitors; not your customers.
  • Many SaaS verticals are getting crowded to an extent that price remains only factor to decide. Only the ones that are able to innovate will survive.

Visibility:

  • Founders should be visible on Social Media. Talk about the product and should be able to convince their followers about their passion. Only passion attracts initial traction.

Market Penetration:

  • If you are doing something innovative (either B2C or B2B) – you will need to spend good amount of time on educating your users / customers. Its easy to get frustrated in this loop.

Content Focus:

  • Don’t get carried away by ‘Content Marketing’ or ‘Content Sharing’.
  • Building products that have content plays is difficult – content creators are few and content sharers are in plenty (Usually 1% to 99%)
  • Look for plays that involves sharing of content already created.

Building Relationships:

  • B2B: Build great relationships with your marquee customers. Keep them educated on new initiatives, new market dynamics and help them monetize better.
  • B2C: Continuously stay connected with your early adopters and take feedback from them. Keep them informed of new updates, they’ll love you. Whenever any suggestion is considered, incorporated into the product – communicate to users.

Driving Engagement:

  • Build features that would enable discovery of relevant / contextual information – that leads to higher engagement on the product.
  • Keep users involved… the trick is dashboard views. They create the “I’m in control” feeling for users.

Search Engine Optimization:

  • Figure out what you are optimizing for & the competition on that. Example., if you are trying to optimize now for ‘Apple iPhone’ – you would be the millionth website trying to do that. Get your own niche, it works best.

Mobile Apps:

  • Discovery of mobile apps is biggest challenge for them. Notice that many apps are trying a generic name for better discovery while users are searching for any other app.
  • Integrate app with key functions of phone. For example, on Android – phone book integration, and so on.
  • There are many hurdles in mobile app development cycle, best to understand from multiple startups who have built mobile apps earlier.
  • App Ratings matters, a big consideration factor for user to download the app. Get the initial ratings by distributing the app between family & friends.

PR:

  • A press release in India goes not get you much traffic. Its great channel for visibility, but don’t depend too much on this channel.
  • International Blogs & Coverage had a higher conversion ratio for products. International users give a try to product, sign-up, explore and use it.

Mobile Advertising:

  • Despite all the hype, Mobile Advertising is still considered as experimental budget.
  • Mobile Industry – one cannot be stuck in a region or one product for more than 18 months. Fast innovation required.

Venture Capital:

  • Stop chasing VCs or attending events that have VC meets or Demo Days. Hardly any investments happens that way.
  • A VC is most likely to invest in your startup when he is chasing you.
  • Indian VCs are yet to understand product driven consumer web-plays despite traction. Skip them and move to the west, it also brings lot of traction.

Biggest Learning of #FoundersMeet: Keep Plumbing. (Those who were present would understand this!)

Note: Some of these thoughts/hacks listed above may sound very generic since we have decided not to mention the context / startup involved. Providing too much information in public domain would not be right for startups who participated. You can connect with any of them directly, the founders would be glad to help you.

#FoundersMeet 3 Participating founders: Anirudh, Deven, Nishcal, Siddharth, Kunal, Sahil, Pravin, Kulin, Sameer, Talvinder, Gargi, Garima, Shekhar, Avlesh, Rohan, Sushrut, Sarang, Raxit, Noel, Soum, Nitin, Ronak, Pranay, Annkur, Divyanshu

Many thanks to all startups who participated in the #FoundersMeet 3. Thanks to Nischal, Deven, Anirudh and Sid for reading/editing the draft of this post. Special Thanks to the wonderful folks at The Playce (a great co-working place for startups), Mumbai for hosting us.

Stay tuned for the next #FoundersMeet 4!

Tracking My Tech Predictions: The ones that came true!

Over past few years I have been tracking technology trends, analyzing and love predicting things through posts on this blogs, on twitter or through my annual technology trends & predictions. I recently started tracking them in a attempt to see how good is hit ratio. Here are a few of those that really saw the light of day.

Other Tech Predictions mentioned on this Blog:

  • Feb 2010: Social Platform intermediaries in Social Commerce space with no clear value propositions will fail as larger eCommerce players will self-integrate.
    May 2011: Blippy / Swipely pivoted from core proposition – sharing purchases.
  • May 2011: TRPs will be questioned. Future of TRP is digital. Crowdsourced TRPs,
    Aug 2012: NDTV submits a lawsuit against Nielson alleging rigging TRP data.
    Oct 2012: Startup iDubba launches iTRPs
    Dec 2012: Nielson annouces partnership with Twitter for Twitter based ratings.
  • Sept 2011: Google+ will head no where as Social Product
    Today: Its evident! When did you last visit your Google+ profile.

From 2012 Tech Predictions:

  • April 2012: LinkedIn will acquire SlideShare
    May 2012: Yes, LinkedIn acquired SlideShare for $119 Mn
  • April 2012: Indian Ecommerce will see Acqui-hires
    May 2012: Snapdeal acquires eSportsBuy and then shuts it down.
    May 2012: Yebhi acquires StylishYou and shuts it down.
    Aug 2012: Hushbabies acquires MangoStreet and shuts it down.
    Aug 2012: FashionandYou acquires UrbanTouch, UrbanTouch management takes over.
    Related Post by me: Why Ecommerce acquisitions make no sense in early stage.
  • April 2012: Jabong will be aggressive play by Rocket Internet. Will be in Top 5 Ecommerce players in India
    May 2012: NextBigWhat apparently pointed out that they are.
  • April 2012: Series B crunch for players focused on vertical ecommerce.
    Evident: Many ecommerce startups who raised Series A struggling raising a follow on round.

From 2011 Tech Predictions: 

  • Jan 2011: VCs will consolidate Indian Ecommerce plays within own portfolio
    Feb 2012: Flipkart acquires LetsBuy
    Nov 2012: Myntra acquires SherSingh / Exclusively.in
  • Jan 2011: A large player will enter Group Buying / Coupons space
    May 2011: Times Group enters daily deals business with Times Deal
  • Jan 2011: Pubmatic will be acquired
    Nov 2011: Rumors of Pubmatic in acquisition talks by Amazon. Pubmatic turned it down for IPO
  • Jan 2011: AdMax Network
    Feb 2012: Hinted towards AdMax Network in SE Asia which leveraged local inventory and is a leader in these countries. While I expected something like this to happen in India, interestingly Komli acquired AdMax (No direct prediction here).

Why Mobile First is not the Right Strategy!

Startup events and Investor talks today have this catch phrase – ‘Mobile First’. Its actually started two years back when Fred Wilson wrote a post that says “Mobile First Web Second.

I recently tweeted, “Can write a post why ‘Mobile First’ is not a right strategy!”. The response to that made me write this post.

Why I said that?
There are some brilliant mobile apps created by startups in recent years, the biggest challenge for all of them is discovery. Few startups are working in this problem too – helping users to discover your mobile apps. The problem is – these startups themselves are struggling in getting users to discover them first.

Google’s Android has over 700,000 apps in Play Store. Apple’s iOS App Store has over 700,000 apps. Assuming these were unique, as a entrepreneur, your startup has to fight with over 699,999 competitors on user’s smartphone, who on an average has only 65 apps installed. Another trend, many users regularly uninstall apps they do not use; once uninstalled – it is very unlikely they will install it again!

Building a successful startup requires two skills – building a product and marketing it. I tweeted that few days back – “Building a product is one thing. Marketing it is another. Remember that!”

Building the Product
Product development in startup is not easy. Everyday there are at least 3-5 updates to the live web application. Even before users realize, they are using on the latest version of web app.

On mobile this is tricky, its impossible to send 3-5 daily releases for your mobile app everyday. Its even more trickier to get your users to download and upgrade the latest version of mobile app every time.

Marketing the Product
Turn around and look at web – what are the ways you can get your start up discovered – Natural Search, Paid Search, Display Marketing (Advt based or Behavior based targeting), Social, Email Marketing and so on. Most of these is very flexible, you can do it all.

On mobile, there is only one mode of discovery that works – Mobile Advertising. Its still not a easy mode of advertising; far expensive; spray and pray approach as its not intent driven (remember – no one is asking for your app!) like Google Adwords and extremely less efficient since its end result is not landing page with one-click sign-up, but its downloading the app, registering the user and retaining him as well.

Btw, I am a believer in products that are driven by value to customers; and not through marketing.

So how does one get Mobile Strategy right?
Glance through the smartphone and check the apps you are most actively using. Its Facebook, Twitter, Gmail, Evernote, Quora and so on. These are essentially web first, mobile later products.

Effective Mobile Strategy is simple – get your product right on the web, acquire initial users, iterate your product (fast), get it right quickly, ensure engagement is in place. Once you have users engaged on the web, they will see value in your product to download your app and stay connected.

Hint – Look at Quora. It was valuable to its initial set of users who were so engaged with the product that they were screaming for getting a mobile app. Quora launched iOS app in Sept 2011; Android App a full year later in Sept 2012.

As a product manager, know that driving adoption and driving engagement for a product are two different things. Don’t try to drive adoption of your product through mobile, its extremely challenging and next to impossible. Instead use mobile as a extension of your product to drive engagement.

Then what about WhatsApp, Instagram, FourSquare, Pulse, Angry Birds and others?
I don’t think anyone has defined this yet, so let me say what are truly mobile first verticals -

  • Communication – If core of your product is deep integration with phone address book. (Eg, WhatsApp)
  • Location – If core of your product starts with location awareness. (Eg. FourSquare)
  • Camera – If core of your product starts with ‘taking’ photos. (Eg. Instagram)
  • Free Time – If core of your product is being valuable to user on the move or leisure time. (Eg. Games, News aggregation services like Pulse). Again extremely difficult category – you compete with Facebook, Twitter and 1000s of apps in this segment.

Yes. These products are not exceptions – they are truly mobile first products.

Wait, will VCs invest in my startup if I dump Mobile First approach?
Next time anyone suggests you or advises you to go Mobile First, just ask them tips to hack app discovery and drive adoption.

The games of investing are simple. VCs will invest only if -

  1. A proven team or experience entrepreneurs (at least 1X entrepreneurs)
  2. If consumer startup – then traction; if enterprise startup – then revenue.

I don’t think any VC will invest in your startup just because you are Mobile first. Take any strategy – web first or mobile first; as long as you get the above two things right for your product – VCs will chase you!

Concluding Notes:
While I was drafting this post, two interesting posts related to this topic came up.

Fred Wilson wrote following in his post “What has changed“, – “Distribution is much harder on mobile than web and we see a lot of mobile first startups getting stuck in the transition from successful product to large user base. strong product market fit is no longer enough to get to a large user base. you need to master the “download app, use app, keep using app, put it on your home screen” flow and that is a hard one to master.”

Cristina Cordova put up some interesting stats about User Retention in her post – “The Biggest Problem in Mobile: Retention.

Restating it again as concluding remarks: “Mobile Strategy is simple. Get your product right on the web, acquire initial users, iterate your product, get it right, ensure engagement is in place. Once you have users engaged on the web, they will see value in your product to download your app to stay connected.”

Update: I received few notes from startup founders to also include a important note in this article which I missed – ‘Even when you build a web application, design your product as a responsive web design’. I completely agree.

475 Days of Unemployment (Read Entrepreneurship)

This is not one of the regular posts I usually write about. There is so much advice about Entrepreneurship already, many founders have shared detail about their journey. When I started my entrepreneurship journey, I wrote a post – ‘Lets blame it on Rio and not the ecosystem‘.

I meet people who want to start-up. Most have a brilliant idea, many talk about selling their companies after 2-3 years and retiring from work at early age. Raising venture capital is today considered success by wannabe entrepreneurs, which is not. 1 out of every 100 startups succeeds; given the amount of startups coming up – this will soon be 1 out of 1,000 or even 10,000. I guess there is too much press about startups these days, about getting funded, million dollar exits.

All this is attracting many people towards entrepreneurship without realizing how difficult the journey is. Sharing my entrepreneurship experience and hoping others don’t go through mistakes I made.

 

1. Control your own Fate.
To get stuff done fast, the very next day of quitting job – I outsourced product development to another company. Estimated 60 days task took 180+ days. This arrangement continued for more months. Burnt loads of cash, I consider that my biggest mistake.

Lesson Learned: Our success (or failure) is now in our hands, not in anyone else’s.

Advice:

  1. If you are an entrepreneur, please check who is deciding/controlling the fate of your startup? If its not you, you’re in trouble.
  2. If you’re planning to startup, get your own team in place; Don’t start your startup by outsourcing development.

 

2. Things will go wrong. Again and again.
This is the 4th time we’re writing our code from scratch. First two attempts were with product iterations for Tyched, next was alpha release of Wishberg. Its initial version was written by the outsourced company, it started crumbling under its own weight as users and data grew, dumped it when we hit roadblocks. Our team is now building the beta version on own custom framework, that will help us ship product fast. Really fast.

Lesson Learned:

  • When users & data starts growing quickly, you should be able to iterate quickly. We lost about 4 months with legacy code. Choose product / tech architecture with tons of flexibility.

 

3. Stay connected with ecosystem.
I started blogging on beingpractical.com about 3 years back when I had no intention of starting up. I also manage the Internet & Mobile product management groups on LinkedIn through which I connected with product professionals across the world.

Being a product guy – helped, tested other’s alpha & beta products, provided feedback, tips on product management, gave suggestions to scale up products, user acquisition hacks. Thanks to that – it connected me with many founders, product geeks and few people in investment community. Many of them were kind enough to help me back whenever I asked.

Over last 12 months, I have a built a network of about 500 early adopters to help us on Wishberg; another 1000+ are on my list.

Advice:

  • Plug into startup ecosystem well before you start up.
  • Don’t shy away from asking. People in startup community are always willing to help.

 

4. The flawed assumption about lack of early adopters.
I see more Indians on Quora these day, I recently tweeted - Future Generations may think Quora is a Indian product, like current generation thinks about Bata. India is among the top countries by users for many global products – Facebook, Twitter, LinkedIn and so.

Almost everyone who claims about the lack of early adopters in India are from startup ecosystem. Many of them have not yet tried out products from other Indian startups. I’m a founder / entrepreneur and have decided to be early adopter. I try out every new product that comes my way. Anyone who has written to me about their product, I’ve signed up – provided feedback / suggestions to the best of my experience & knowledge.

Advice:

  • As founders we can continue to complain about lack of early adopters or decide to be one ourselves. My 2 cents are here.

 

5. Have a product roadmap. Don’t build your startup on just one idea.
Many product startups that hit dead pool rely only on just one idea. We only know successful pivots like Inmobi, Instagram, Fab, etc – but there are plenty of unsuccessful ones we never heard of. Pivot is not easy, extremely difficult in both ways – managing expectations of stakeholders as well as your own.

Talk to folks before starting up on potential of your idea, its possibilities. Avoid situations where you have build all that you could in 3 months and are clueless on whats to be done next. There is no thumb-rule to this; but at least have a product roadmap that extends into next 12-18 months, talk to users / customers in this while. They will tell you more.

Advice:

  • A idea that can be finished in 3 months might be a hack. It ‘may’ not be a product or company. Build your product around a vision, it may takes years to execute.

 

6. Don’t divulge what is not shipped yet.
This is a tough one to explain. To put it simply (or wisely) – ‘You can’t build a reputation on what you are going to do.’ Here the context is different. Everyone is looking for ideas, you don’t give it to them.

We met with one angel investor, had a detailed discussion about our product – how we intend to market / acquire consumers. Few days later, one of his invested startup came up with remarkably similar approach. On another instance, one investor met us twice in a span on 10 days, insisted we share our detailed road map ASAP. A week later his firm announced a investment in an over lapping category; he was leading the deal.

Learning:

  • We could crib or just move on. We moved on to building our product without complaining. I feel the line of differentiation between startups in decreasing. There are too many similar products in investor portfolio, make conscious decisions on which investors you want to talk with, do a small ‘check’ on their investments and portfolio.

 

7. Do whats impossible, not what is easy.

If you have a brilliant idea and you think its easy to execute, there probably are another 100 startups doing it already. You are operating in a crowded space.

I have often got this advice or being questioned, why am I building another social commerce product, there are already plenty of them. Here’s the answer – we’re not building a social commerce product. We’re attempting a new method of social discovery for product intents. Its different, will talk of what we intend to build – once we build it (my rule: don’t divulge what is not shipped yet!)

I usually classify start-ups in 3 segments -

  1. One where making money looks real easily. (Enabling transactions, affiliates, advertising, lead generation)
  2. One that solves problems. (Usually loved by VCs)
  3. One that changes user habits. (Paul Graham calls them – The Black Swans)

I wrote about the third type of startup last year – The biggest innovations never solved any (stated) problem.  They are difficult, high failure rate – but once they succeed, there is no looking back.

Suggestion:

  • There is enough competition for me-too ideas or easy/obvious ones. Don’t be a part of that, unless you can completely re-define that vertical. Take up something that can radically change user behavior / habits.

 

8. Your health is important.
In this period, I’ve suffered from hypertension, blood pressure has shot up multiple times. Twice I went unconscious – had to be check’ed in at hospital.

Long working hours, erratic sleeping times is way of startup life. Managing time is myth, work manages your time. For last 15 months I’ve been working for 12-14 hours daily; 3-4 hours of daily commute (I reside the farthest if compared to all my team. Conscious decision – office is conveniently located for all team members. They can put in more time without bothering about commuting in Mumbai).

Advice:

  • Amount of stress first-time founders will go through in start-up journey is unimaginable. I’ve learned to relax and have started paying good attention towards my health.

 

9. Take breaks from Startup Life at times
Entrepreneurship makes you so passionate about your product / work, that you end up talking about your product, vision, things you plan, how you intend to change the world, etc to almost everyone.
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You tell folks stories about Facebook, Instagram, and so on. Be grounded to reality – there is life outside your startup too, find some time to be a part of it, unwind and get back. Time is most precious for every startup / founder. And startup life can be a trap., you’ll always end up postponing personal commitments for work very often, in fact all the time.
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Advice:
  • Take breaks in a while. Spend time with your family and friends; make sure you live life outside the startup ecosystem as well.
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10. Technically, you’re unemployed. Accept that.
Though the respect for startup founders is improving in the startup-ecosystem, to the outside world you are unemployed.
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You will be often reminded of that by folks you will never expect – like the customer support staff at credit card department – “Aapke pass to job hi nahi hai. 3 years ka company IT returns aap submit kijiye.” (Translates to – ‘You don’t have a job. You will have to submit 3 years income tax returns of your company to apply for one’). This is a top Indian bank, I’m their premier customer since last 10 years and it doesn’t matter.
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This is the reason why the post title says – 475 Days of Unemployment.

Advice:

  • Plan your startup well. Talk to other startup founders before you start – understand what difficulties they went through. Startup life is not for everyone.

 

11. Learn to stay calm. You will feel humiliated.
Few people talk / act exactly opposite to what they say. One investor spoke at a conference how he thought Social was the next big thing with some awesome statistics. Kulin (my co-founder) and I caught up with him a week later – he was a different person now, had only one thing to say – ‘Facebook can do this. They can kill you!’

A known investor turned up 35 minutes late for a meeting, did not apologize, later he ordered food and drinks with no courtesy to offer us. During the discussion he was ogling at girls in the restaurant all the time, found someone he knew and told her he will see her in 5 minutes – all this right in front of us. We ended the meeting in next 2 minutes and walked away.

Another day, another prominent investor met us. He disagreed on one of our points, he started off, “Do you know whom you’re talking to? Do you know who I am?” We maintained our cool, thanked him for his time with a smile and promised ourselves never to see him again.

Advice:

  1. Though this offended us like anything, we stayed calm. We live in small world of founders & investors, never want to burn bridges.
  2. Don’t take names. Not online. Not offline. Not anytime.

Maybe those investors will never know, but I have given good amount of feedback and advice on product to founders of startups they have invested in. On other side, there are some extremely professional individuals and investors, they still continue to advice us, given us time whenever we’ve asked and have continued to open connections from time to time.

 

12. Choose your investors / mentors carefully. 

We had many funny incidents around getting funded, looking for mentors or folks we came across in this journey.

  • One investor extending a term sheet on a condition that we agree to monetize from Day 1 (something I have not believed in).
  • One senior executive at MNC insisted we take him on the board of directors and he will open doors for us. (Since then I have felt being on board of directors is the new Page 3)
  • An incubator claiming they are better than Y-Combinator or 500 Startups. ‘We can give you what they cannot.’
  • A so-called angel investor claiming to have invested in many startups, not ready to name a single since its private and confidential. (Rocket Science? Even SpaceX investors were known.)
  • Someone who does not know ‘C’ of Coding telling us we should hire a Chief Technology Officer (he even suggested one with 22 Lac INR salary, who could join us at minimal hike).
  • Feedback on Design: ‘Use bright red color instead of blue. Red means attention, users should pay attention.’

Throughout my startup journey, most of the folks I connected with in India had the common set of questions to ask -

  • Almost everyone asked: “How will you make money?” / “When will you make money?”
  • Very few asked: “How will you acquire users?”
  • Just one person asked: “How will you build this product to match your vision?” He himself is a very well known entrepreneur and angel investor. We hold him in high regards for his advice and support from time to time, even without no formal association.

There is nothing wrong with this question, businesses have to monetize and make money. But few here realize that Social Products need to monetize at scale . The ratio was just reverse when we spoke to folks from the Valley, very few asked the ‘Money’ question.

Kulin and me share this funny thought. Had Instagram pitched to some of these investors, wonder what sort of feedback they would have got. Maybe – ‘Stop coloring photos. Do some serious business.’ :D

Maybe we met wrong people. But yes, there some really great folks available in India too. My general observation is – if you’re doing a B2B start up – there is good advice / mentors / investors available in India who can open connections, get initial customers. For B2C product startups, India has very few people who can advice on Product, Design, Growth Hacking, Technology and User Experience. We eventually started connecting with people from successful startups or individuals with relevant skills from Silicon Valley / US to help us.

Advice:

  • Take money/advice from someone you respect. If you take money from someone you don’t respect – he will kill you with his advice.
  • Spend more time with people who can help you with your product than the ones who can help you raise money. If you have a right product, things will happen to you.

I’ll write someday on how to identify good people who can advice you.

 

13. Of hiring, people and team.

Till May this year we occupied a shared office (paying per seat and amenities as used). We hired 3 engineers in a month – our costs went up 3X; We decided to quit that place and we were left without office space. During this time, one of our team members offered we operate from his home. And we did the same while our office got ready.

The only thing that matters for any product startup is quality of its team. There is only one rule for hiring at startups – Hire the best engineering team, and pay them well. 1 Good Engineer = 3 Mediocre Engineers.

Have heard of tons of advice on hiring – tell potential hires about startup, culture, fun @ work, ESOPs, etc. This does not work. Don’t try to sell future employees what they have not experienced. Let them join you – create a personal bonding with every team member, nurture your ‘friendship’ with team members, they will be your extended family. They will put in their best. Most of our team members joined us through referrals. Don’t talk with them about passion or commitment, show them yours.

Advice:

  • Genuinely love your team and be concerned of their well being. Create a bond with all your team members.

 

14. And in the end, its not always about the money.

We failed innumerable times in this startup journey. Its fourth time that we are coding our platform from scratch. Multiple mistakes made. And there were plenty of distractions – most of them come to you as lucrative job offers. When I quit my job, the very same week I got a call from the HR Head of a FMCG company to join their Online Marketing team, I was interviewed for that position few months back. I said no, and the next week Kulin confirmed to join me as Co-founder. I’ve passed many other job opportunities that came up in last 18 months, including one in Silicon Valley.

So all those who are considering entrepreneurship for money or funding; the reality is different. Its not money that drives startups, its the passion. There will be events that will test your passion – multiple failures & many distractions.

Learning:

  • Startup life is difficult, daily struggle to make ends meet. The only thing that keeps you going is your focus, passion and belief in yourself, your team and your product. Nothing else matters.

————–

If you are new on beingpractical, please view my profile. If you are a founder and think I could be any help to you, feel free to write to me on pj [at] beingpractical.com or follow me at @beingpractical

Thanks to my co-founder Kulin for reading / editing drafts of this post.

Why Ecommerce acquisitions make no sense in early / nascent stage

Few (Series B / Series C) funded ecommerce companies in India have started making/announcing acquisitions of smaller players. Recently when I posted about the 2012 Predictions & Trends, I made an comment that in an early ecommerce market, acquisitions of competition or startups really makes no sense. Trying to put few thoughts on that here.

A typical such small ecommerce startup that gets acquired by larger & known ecommerce player is structured as follows -

  • About 2-4 founding team members; 5 to 10 employees; up to 25 or so if the venture has received any institutional stage funding
  • Focused on one vertical – sports; electronics; kids; jewellery – Catalog of 1000 to 10000 product SKUs
  • Order Acquisition Channels – Direct Traffic, SEO, SEM, Social, Affiliates, Email Marketing, Display Advertising.
  • Team Structure: Founders, Product Development & Management Team, Online Marketing, Category Managers, Logistics & Operations Managers, Customer Support
  • Social Media presence – Fans on Facebook; Followers on Twitter
  • Business Partners – Vendors for Procurement, Logistics, Payment Gateway, Customer Support
  • Product, Platform & Technology
  • Warehouses & In-house logistics for Series A funded players
  • Gross Orders – between 50 to 100 per day; few Series A funded players may have from 200 to 500 per day.

What happens when a considerably large & deeply funded ecommerce player (say LargeEcom.com) acquires a small startup (SmallEcom.com) with assets as mentioned above -

  • Category Focus:
    SmallEcom.com will be either a horizontal player or vertical focused player. If horizontal, then most of the products will be already present in acquiring company. If vertical then it might be a small ecommerce startup with about 500 to 5000 SKUs, the acquisition further does not make any sense. The acquiring LargeEcom.com could have directly poached category managers or could have developed that category in-house just by hiring few more category managers!
  • Order Acquisition Channels:
    Any online ecommerce venture’s assets are how they are acquiring new customers. The biggest challenge is not acquiring SmallEcom.com, but making the most of these channels. Post acquisition, these channels are ‘unfortunately useless’ to the acquiring company – LargeEcom.com. Here is why -
    .
    • Direct Traffic >
      If website of SmallEcom.com needs to be shut, the direct traffic will be redirected to LargeEcom.com post acquisition, doing that quickly reduces the value to its existing users. If website is shut – value of all other channels die on its own, explained below.
    • Natural Search or SEO >
      SmallEcom.com’s URLs in Google Index no matter how well optimized will lose rankings when the traffic is diverted to another domain. All time and money invested in search optimization over months / years is diminished immediately.
      .
    • Paid Advertising: SEM & Display >
      Search Campaigns are optimized over a period of time to reach lower the cost per clicks. Though the same can copied from SmallEcom.com in to account of LargeEcom.com’s adwords account, the same CPCs will not be maintained. Well, otherwise the acquiring company LargeEcom.com’s has its own online marketing team, it will be a max one week job to create new campaigns for the catalog of SmallEcom.com.
      .
    • Social >
      Post acquisition, SmallEcom.com’s Facebook Fans & Twitter followers cannot be moved to LargeEcom.com’s brand page or twitter handle. Again – value of the time and money spend behind this channel is reduced to zero on day 1 itself.
      .
    • Affiliates >
      There are few affiliate marketing companies in India, they work with all ecommerce companies. Most likely LargeEcom.com would have better negotiated rates (cost of acquisition) with the same affiliate partners thats SmallEcom.com has partnered with.
      .
    • Email >
      There might be few duplicate email addresses, but is this a reason for LargeEcom.com to acquire a ecom startup with a small number of email addresses knowing that email marketing has diminishing returns over a period of time.
      .

The conclusion is – to retain the value of the startup’s order acquisition channels, the venture needs to be up and running. The big question for large acquiring company – should be it done at a cost of duplicating every resource available – two marketing teams, two product teams, two tech teams, two customer support teams or two operations teams?

The answer is No in both the cases – that is why acquiring a ecommerce startup is senseless; and most of them happening in India now can be termed as Acqui-hires, hired for talent.

  • Founding Team:
    The founders are retained, most likely to quit post the expiry of retention period. Once entrepreneur is always a entrepreneur by heart.
    .
  • Team Structure:
    Post acquisition, most roles will be dual and overlapping in both organizations. Unfortunately many cannot be accommodated since the larger entity cannot have – say two Online Marketing Heads or two Operations Head. Only in the case when the acquiring company has open positions, high chances that the team members are accommodated, else asked to quit.
    .
  • Business Partners:
    Vendors for Procurement – will be added to LargeEcom.com if it was acquiring a vertical ecommerce player and was not present in the same category. Most likely, this will not be more than 100 new vendors; again which could have been easily acquired just by hiring 2-3 new category managers (so why acquire?). If horizontal player was acquired – there would a overlap in vendors too.
    .
  • Logistics & Payment Gateway:
    LargeEcom.com would already enjoy better pricing for both with its partners, needless to say they both work with similar service providers for logistics. Acquiring a startup will not increase footprint in terms of pin-codes served.
    .
  • Customer Support:
    In a small startup, customer support is usually handled by a very small team; often by founders. If acquisition is across city – a Delhi based startup is acquired by Bangalore based one, clearly means that the team is either axed or goes on job hunting mode as they would not be open to relocation. This also holds true for other teams as well.
    .
  • Product, Platform & Technology: 
    The smaller startup that gets acquired will probably be running a ready-to-integrate ecommerce platform. Surprisingly, even the larger acquiring company might be as well running on some ready to use ecommerce platform and struggling to hold it up. There is absolutely no question of seamless integration here, ask your engineering folks! Either ways, since the acquisition is not for technology, the product and platform improvements on the smaller startup’s ecommerce platform will be lost as well.
    .
  • Warehouse & In-house Logistics:
    Few funded startups today have started with own warehouse & in-house logistics. Post acquisition, the lease on such warehouses expire (for two reasons – acquiring ecom startup already has own warehouse in that location with excess space + managing two warehouses in same city at a distance from each other means doubling operational costs). In-house logistics employees are either temps or contract workforce or on rolls of another company.
    .
  • Gross Orders:
    The SmallEcom.com site that was just acquired was doing about 50 to 200 daily gross orders; The LargeEcom.com site who acquired it will usually claim to do between 10,000 to 25,000 daily transactions. On order to order basis – acquiring an loss making ecommerce startup that will does 0.5% to 1% transactions will add any value to large entity? No.
    .

So why are these acquisitions happening?

  • New Vertical?
    No. It is not right to acquire a company for say $1 Mn or even 1 Crore to add new category to your product portfolio. Hire two category managers and have the new vertical rolling in 3 months.
    .
  • Acqui-hires?
    No. They happen if it was a case of known proven talent who build a super kewl product / technology platform but did not hit a right idea or execute it well. Examples – Oink (by Milk), or Gowalla and so on.
    .
  • Revenues?
    No. A large loss making ecommerce entity acquiring another loss making small ecommerce startup – two negatives don’t add up to positives.
  • Assets? No.
    Clearly no assets are doubled post the acquisition. Nothing on revenue, product, process or technology.

May be signs of desperation. May be lets try out something new. May be even VC / PE signaling – ‘Hey, we guys are growing inorganically, new category, new vertical and so on – we will require more investment capital in next rounds, care to participate?’. They may participate or may not – but is this a right strategy to present or package to existing investors where the net value of acquisition post 12 months (or even on day of acquisition) is zero.

However, some acquisitions do make sense – Homeshop18 acquiring Coinjoos or Flipkart acquiring Mime360. (Sorry – I don’t name bad acquisitions). Venturing into new vertical at times makes sense for acquisition – for verticals like huge catalog driven businesses – Books & Digital Music. It takes months together to build a team and build this massive catalog and then start business operations; acquisition makes more sense than building it grounds up; but not for any other category.
.
So Amazon.com acquires? Why can’t we?
Amazon acquires cause it should acquire and own large ecommerce companies to maintain its undisputed lead. It is a listed company, needs to focus on growing is topline revenues and at the massive size that Amazon.com is – it has capacity to absorb losses and yet show some superb green numbers in balance sheet.

My guess is Amazon keeps all acquired ecommerce properties (Zappos, Woot, Diapers, Soap, Audible, etc, etc) live and independent post acquisition not alone for the culture of startups – but for reasons explained above. They need to maintain order acquisition channels for these acquired companies active and generate revenues.

While in India, a Series B / Series C funded ecommerce venture cannot run dual operations or two loss making entities.
.
Concluding Notes:
I am not against acquisitions & exits, they are must for startup ecosystem. And they should be in plenty to keep the ecosystem building. But don’t agree with such acquisitions made by Series B / Series C funded ecommerce companies which end up adding no value to the company. They hurt in long run, when multiple investors get involved – burn their hands and then completely give up on the sector or market itself.

Otherwise I will stick to what I wrote earlier on predications for investments made in both horizontal & vertical ecommerce in India.

 

Google+ may be miles away from being a great Social Product!

A Product Manager’s view – Why Google+ may be miles away from being a great Social Product!

There are various reports on super adoption of Google+, earlier about 10 Mn users and today it reaching 50 Mn users.  The key question is – How many users are engaged there? Also echoed by The Lean Startup author Eric Ries while Facebook has 750Mn active and engaged users.

I am trying to tell myself that first signs of product usage and assumptions change over time. It happened with me for Groupon where the business model was innovative, but not scalable; for Quora post initial adoption; for Twitter (where I was a early adopter) but found no one else there and stayed away for 2-3 years before becoming active again.

Same happened with Google+ my first reaction was Facebook killer, then next was Twitter killer - and over a period of time with my Product Manager’s hat – I feel that it may be miles away from being a great Social Attempt!

 

1. What is Google+? No one cared to answer!

A standard product management and product marketing practice is to tell consumers what the product is. The world knows about Facebook, despite its 750Mn+ active users – every time you visit Facebook homepage it tells you what it is.

  • Facebook – Facebook helps you connect and share with the people in your life.
  • Twitter – Follow your interests. Instant updates from your friends, industry experts, favorite celebrities, and what’s happening around the world.
  • Flickr – Share your life in photos.
  • YouTube – Join the largest worldwide video-sharing community!
  • Foursquare – Check in. Find your Friends. Unlock your City.
  • Quora – A continually improving collection of questions and answers.

While for Google+ – No one cared to answer what product use-case it solves or what should users are expected to do on it.

 

2. How does a user access Google+ ?

Users access Facebook on www.facebook.com; Twitter on www.twitter.com; and so on – is it www.google+.com?

And to prove this point – look at Google+ suggestions on Search -

Accessibility is a big question mark for Google+. The correct way to access Google+ is plus.google.com – which a technology early adopter shall ‘probably’ remember – but even he or she will end up accessing (most of the time) Google+ from within GMail on the notification bar at the top.

This point is also related with next set of arguments – User Psychology & Naming & Identification Psychology. I feel these factors are extremely important to consider while building any consumer product.

 

3. User Psychology for Consumer Products

For any Internet or mobile product – consumers are quick to label it with its strongest product use-case – which is typically the recall product value of the user. Simply stated for a normal user -

  • “I visit GMail to check my emails!”
  • “I visit Google to search the web.”
  • “I visit Facebook to view what my friends are up to.”

Now it is extremely difficult for any product to have a “and use-case” for a product -

  • “I visit GMail to check my emails and Social Networking.” – No!
  • “I visit Google to search the web and Social Networking.” – No!
  • “I visit Facebook to view what my friends are up to and also searching the world wide web.” – No!

“And use-case” works for features that support any product’s core value. Features that would be to better manage emails (for Gmail), to better display search rankings (for Google Search), to show more types of friend’s activities (for Facebook) and so on.

Google is aiming to take on Facebook with a Social Networking product. But launched it like a feature on Google Homepage (Search) & Gmail (Notification Header). In current avatar, Google+ is a feature – and will gain traction as much as a feature can. It will not gain identity as a social-networking stand-alone product.

Also note the big failures of other “And use-cases” -

  • “I visit Facebook to view what my friends are up to and also Buy Local Deals.” – Deals was abandoned by Facebook
  • “I visit Facebook to view what my friends are up to and also to check-in in places” – Places as stand-alone attempt within Facebook failed, but as feature is gaining traction.
  • “I visit Gmail to check mails and Buzz up articles.” – Google Buzz… remember?

“And use-cases” work for B2B products, but have never worked for any consumer web product.

.

4. Naming & Identification Psychology

Social Graphs & Social Networks are all about giving identity to users. Currently, Google+ itself needs an identity. Users think and will continue to think of Search when they think of Google, and it is virtually impossible for them to perceive Google as a Social Network.

How consumers relate with social activities – “Are you on FB?” “Can you tweet this?” “Let me share it on FB” and so on. The terminology “Google” or “Googled” is built over last 13 years – will be impossible to change from search to a social context.

For sake of Product identity or for its different product use-case, Google+ should have been outside of Google identity with its own identity (probably a www.plus.com if it was available). But the lure of exploring existing user-base is too difficult to give away – and if that logic was to succeed Yahoo! would have still been the largest internet company in this world. They tried to do everything under Yahoo! brand name (Yahoo! Search, Yahoo! Shopping, Yahoo! Finance, Yahoo! Hotjobs, Yahoo! This & Yahoo! That), but for consumers Yahoo! was and always remained a content play.

Even Google’s largely successful consumer products outside Search – Gmail & YouTube were successful because consumers saw it as an independent product identity outside the core of Google’s Search. While Google Video, Google Buzz, Google Answers – all failed. I am strong advocate of one-product = one-identity for consumer web businesses.

 

5. Social Graphs are occupied; No place for Google+ to fit in

I mentioned in my previous post Building Awesome Social Products – successful social products are reflection of people’s offline behavior in the real world. Similarly – successful social graphs are also reflection of people’s social relationships in real world. Social Products reflect activities, Social Graphs reflect relationships.

A typical user’s social relationships involve -

  • Close Relationships – Friends, Family, Friendly Colleagues (present and past) – more importantly people you know personally.
  • Professional Relationships – Colleagues, Business Relationships, Partners
  • Loose Relationships – People you know, but they probably don’t know you. Celebrities, known professionals, domain experts

Facebook covers Close Relationships, LinkedIn covers Professional Relationships, Twitter covers Loose Relationships. So if Google+ is trying to create a new Social Graph, it will be a struggle (big struggle) – simply cause there is no use-case for a new social graph. Social graphs are distinct; by nature, by user behavior and are established over a period of time.

Features don’t make a product success by itself and expect it to later evolve in to a Social Graph; Instead having a use-case for social graph is essential and the features should evolve.

6. It is important to know whom to kill – Facebook, Blogs, Twitter, or what -?

Google+ though it presently looks like a Facebook killer – it is not. None of my friends are using it the way they use Facebook, instead I see more updates from technology adopters in Silicon Valley – and the posts look like extended tweets (beyond the 140 characters). I follow these technology adopters on Twitter, and hence my own assumption that probably it is a Twitter-killer.

Google+ still does not have a clear proposition – and is trying to overlap between all three Social Graphs (Close Relationships, Professional Relationships & Loose Relationships) without taking a clear positioning against one of them.

I am personally not happy with the killer-suffix (no products killers have ever killed anyone – they are still trying to kill iPhone & iPad). But its also important to know who your competition or what your benchmark really is. Or you might just try running behind all, but never able to catch up with any one of them.

7. Developer APIs will not enable Social Graphs; Instead Gmail invite contacts are more powerful.

There has been lot of noise about speculated Google+ APIs for developers to build applications and its release dates or so on. Developer APIs will provide access to features – posting an Google+ update, ability to do +1 through applications, and so on – but this sounds (unfortunately once again) like Twitter APIs or FB app APIs that allow you to post status updates and share pictures and so on. Most importantly, Google+ will not be able to build a Facebook Connect equivalent.

Today Social Graphs when referred are mostly Facebook explored through Facebook Connect (unless you write some algorithms on top of them to bring context to your product). F-Connect allows applications & developers to enable Social Graphs (of friends); which clearly explains why 1000s of applications prefer to have Sign-up with Facebook buttons.

Google+ has multiple circles (friends, acquaintances, doctors, techies – and you can delete and rename any other circle); relationships in these circle are mutually not dependent on each other – and hence cannot be explored even if Google+ comes out with a API to access them. Let me explain this below -

a. A user Larry might add another user Zuck in friends circle; Zuck may add Larry in My Gang circle. Hence social relationship between them is not mutual (as friends).
b. Further Larry might name his friends circle as Buddies; Zuck names his friends circles as Pals; Hence the social graph definition itself is flawed.


This is a huge flaw – Through APIs the developer’s applications cannot reach mutually accepted graph of both connections (mutual friends) or an validated status of their relationships (close friends, professional or loose). Hence at this stage it would be more preferred to use the Gmail Invite Contacts module – for simple reason that it is more powerful and treats all contacts at a same level (a social graph of email contacts / connections).

 

8. Not the best attempt at Social Networking

Google already knows so much about its users – whom do you chat (on GTalk), whom do you mail (on Gmail) or who are my most contacted people in real world (on Android). Google could have actually used a lot of this data, recommended people with circles (I still hate sorting people in circle all the time, but pre-cooked circles by associations would still have been so much better).

With Google holding so much data and wanting to go ahead with a strong social product; it is expecting users to do it again from scratch. Makes one feel that Google+ is a half-baked attempt.

Facebook users usually have about 150 to even 5000 friends. Usually added over years, and all added at a same level – ‘Friends’. However cool the task of adding people to circle is in execution – to add those many people again to circles is a pain. While most people that users see on Google+ are those who are discovered through the people you follow. Every time to add someone to a circle is little more effort than just adding as a friend (on Facebook) or just following the user (on Twitter).

Circle looks like Twitter lists – People get added on them once, later everyone forgets which user is put in what circle. And while the News feed (or stream) stays common for all – the Circles might as well be forgotten just like Twitter Lists.

The next point makes it more clear – why it is not the best attempt at Social Networking.

 

9. Real Capabilities of Social Graphs (or Networks) are absent -

Get this right – Friends (or Connections!) are the minimum one expects out of a Social Network. What stands out are the capabilities to engage those connections. Remember Orkut? – it had all connections; but Facebook just made the engagement so much better.

  • Ability to discover Friends or Connections in context -
    Google+ has done a simple job or fetching contact list from GMail and enabled it with the painful process (yes!) of adding to circles. But by enabling discovery of friends or connections who are active on Google+ – the suggestion engine for friends could have been so much better.
    .
    Example -
    1. I end of following lot of product enthusiasts & early adopters. There are mutual connections that could be added to my circles – which currently not recommended.
    2. My Gmail contacts list have endless email addresses of people I really don’t want to follow in circles or on any social network. So a smart recommendation based on whom I chat with, mutual friends, top contacts on Android and others need to be made discoverable.
    .
  • Stream or Newsfeed -
    The most important discovery tool on any Social Platform is Newsfeed. In its current stage – the Stream on Google+ is very Twitterish – a timeline of all people you follow.

    Facebook raised the standard with algorithms that help you discover feeds that is most relevant to every user, ranking every story contextually around a user. Newsfeed makes or breaks any Social Product and single most important activity & engagement enabler for any Social Product or Social Graph.
    .
  • Communication or Chat -
    The most cut-copy-paste feature of Google+ is chat – where user can chat with contacts he otherwise can also on Gmail or Gtalk. Quite honestly, this is the most ridiculous feature, with no context to people any user has put in his circles.
    .
    In context of chat (or video chat) – expecting users to do Hangouts with webcam is a big No. Hangouts are not conversation starters, but should be featured alongside as planned video conversations.
    .
  • Ability to drive Traffic -
    Remember Google Buzz? There was nothing wrong in the idea – attempting a Digg or Facebook Share or Tweet Share. Once a user Buzz’ed an article – it was critical to reach his Social Graph and drive viral traffic to that article. This story failed cause of poor dissemination of activity in user Social Graph. Google should learn lessons from Google Buzz chapter.
    .
    Social Networks like Facebook & Twitter are popular with publishers or businesses due to their ability to drive traffic to their own websites. While few publishers have added the +1 button to their webpages – still drives only an insignificant proportion of traffic to them; and lot of unclarity on how the dynamics of +1 button works for publishers and its benefits to them eventually.+1, Like, Share, Tweet this – are big distribution mechanisms for a Social Network. Should be given its required TLC.

.

As mentioned earlier – the product use-case should be driven by features; and not the other way round. Google can always come back and say – we are working on this. But hey, if a product is coming from a product & technology resource-heavy company like Google – even user expectations also very high.

Even these are early days for Google+, web is dynamic and consumer interests change quickly and Google can still do lots of changes quickly and innovate, possibly even work on the above arguments if they agree with it.

This post is written over last several days with some last minute additions on stats before hitting the publish button. Meanwhile Facebook has launched a series of new features, which looks like they are (over)reacting to Google+. Facebook, you are miles ahead, don’t make mistakes, please.

 

The Biggest Innovations never solved any problem!

Being an entrepreneur is exciting. And one question you hear often is – “What is the consumer problem that you are trying to solve?

We try to reserve our weekend lunches for some awesome conversations over products, companies and where the world is heading in connected world. Last Saturday, Anupam Mittal (Founder & CEO of People Group, Entrepreneur behind Shaadi.com), my co-founder and myself discussed this over lunch – “Did Google or Facebook  solved any consumer problem?

Our interaction inspired me to write this post -

Solving a problem and creating a market are two different ways to look at any company or any product idea. Products or Companies that solve a problem are the Million dollar companies, while products or individuals who look at the industry from a radically different approach – are the most disruptive, innovative and create Billion dollar opportunities as they grow.

My conclusions were -
- The biggest innovations never solved any consumer problem
- The founders or entrepreneurs had a different approach to the industry
- In almost all cases, the entrepreneurs did not belong to the industry, had little or no experience in that industry.

Further thoughts are embedded in this SlideShare presentation -

Have a different approach. Think different!

Lets Blame It on Rio (and not the Ecosystem!)

Having read so much on blogs, forums, one on one interactions with entrepreneurs, VCs – I conclude that “Blame It on Ecosystem” is the favorite game for people in Indian startup space (both included – entrepreneurs & the investors). And the blame game continues – Entrepreneur complaining that this VC just “does not get it” when their pitch does not make it; Investors complaining that they are “yet to find a Bn dollar company” from India.

There is a lot of rant already over this topic without much reasoning. Unlike my other posts on this blog – I will not try to express any personal opinion about a business domain here; but just highlight why the Indian Startup scene is about 10 years behind Silicon Valley.

.

Indian VCs don’t take risks -
Entrepreneurs have higher appetite for risk than investors. Every investment in any investor portfolio is a risk. There is a calculated risk that every VC takes, be it Indian or US investor. Indian VCs don’t take risk is a incorrect statement, the right way to put this is – risk appetite of Indian VCs is more inclined towards proven business models of west. After all a entrepreneur takes a risk with belief in his idea, VC with his money in entrepreneur’s belief to execute.

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Only Validated Business Ideas get VC invested -
OTAs, Daily Coupon Sites, eCommerce, Finance Lead Generation & similar., these are proven business models with metrics that are well defined.
- X visits result on Y transactions at average value of Z
- X spends result in Y leads and Z conversions from it

This is a low risk appetite investment, where it is not a rocket science to determine how to scale up the business and predict profitability & revenue projections. Knowing these metrics and a good team – the VC is more comfortable & confident with such investments in India.

Compare the same for an Facebook, Foursquare, Quora, Twitter, Dropbox or Evernote. If such businesses are pitched at early stage to VCs here, most of them would have no clue on what metrics to use for basis of their investment. All such platforms raised a angel round or small VC round before the metrics were clear.

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Lack of 2nd/3rd Generation Entrepreneurs -
Now why did I mention initially in this post that India is ten years behind Silicon Valley? – because Silicon Valley today has entrepreneurs & investors who have done 2X/3X exits. Living up a 2X or 3X full company life cycle till exit gives an incomparable experience, the next company they build is ‘better product & platform’ than the earlier and so on.

In India, with notables of Naukri, MakeMyTrip and few others we have started seeing first generation exits now, both Sanjeev Bikhchandani & Deep Kalra are doing the right things with spotting new investments for the next mile. To have more entrepreneurs going 1X, 2X or 3X exits, is anywhere between a 5-10 year game plan.

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Pre-Revenue Investments -
There is a big misconception that in Silicon Valley companies get funded in pre-revenue stage. Yes, they do – but not all; not the ones without strong user engagement, not the ones without a solid team behind the product or platform. And for B2B products, not the ones who have initial set of customers who swear by the product!

This might not be false for India as well. If Sanjeev or Deep Kalra want to start their next entrepreneurial journey – who will not invest?

Pre-Revenue Startups like Facebook, Foursquare and many others did not raise large investments or achieve high valuations in their first round. These companies themselves raised either an angel investment or a very low value Series A investment to start, validate their product, get users/customers and then went for a big round of investment/valuation.

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There are no Early Adopters -
Unless an entrepreneur agrees that his product is bad or not a market-fit or has not tried enough, in my opinion this is the biggest excuse. How can one justify the same in a country of 1 Billion people. In a country which easily figures among the top 10 countries by users for any successful web product in valley – from Orkut, Facebook, LinkedIn, Twitter, Foursquare, Quora and many others!

For B2C products – you have not tried enough!
For B2B or Enterprise SaaS products – did you guys not hear of Wingify or Fusion Charts or InMobi. This is digitally connected world – no one has bounded a company by geographical limits. These are proven models of product driven startups from India.

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Disconnect with Valley -
The kind of companies that are funded in India today are the ones that were funded in US about ten years back. I have no disrespect for the Indian companies – infact they are building the base for the next wave of Internet boom – exactly the same that happened with US.

With a whole lot of first generation entrepreneurs in India – we expect at least the VCs to bring an perspective on whats happening in US & other parts of the world, not the obvious answers that everyone knows. The learning from valley does not come or has not reached to many investors in India.

My point of disconnect with valley here is that many in investment community today are still unaware of Quora, Spotify, Dropbox, Evernote, Airbnb, Rovio, and so many others. In one of my meetings I had to tell a investment analyst about 500startups, Angellist and in another one that Ashton Kutcher is also a technology investor! And in one more, someone explained if a American company like Lenovo can be big in China, others too can (? – OK)! And that people in investor circles are still unaware of Yuri Milner & DST.

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No Product Focus -
There is a buzz within investor circles that the next Google, Facebook, Amazon of the world will come from India. With comfortable investment decisions in validated business models like eCommerce – post my above experiences I sincerely doubt if Indian investors will be able to spot such opportunities when it knocks your doors?

The current series of investments about eCommerce in India are a hunt to find the next Amazon. But, Amazon itself has ceased being an eCommerce company long time back, it is a product/ a platform and much more beyond all that – view Amazon’s Hidden Empire .

In US, investors invest in products & platforms; in India – they invest in companies. Huge Difference! When did you last hear of an eCommerce (leaving aside daily deals and private shopping, though a format of eCommerce itself) or Online Travel company getting funded in Silicon Valley?. If you are building a B2B or B2C product/platform company in India, all investors will be to help you with money & connections, but only handful of investors in India will be help you with product or platform – choose wisely!

Disclosure: Experience – I reached out to two venture capitalists at some point of time for role as investment analyst with experience in diverse products & platforms – was rejected outright for lack of ‘relevant experience’. No sour grapes, but I could have saved some millions for them :-)

I am of a strong opinion that there is a huge need of in-house product & platform management advisory in many Indian venture capitalists. All ecosystem changes are driven by improvement & innovations in products & platforms, not by revenues. Lastly, it is only the consumer products that will scale up and be a billion dollar company!

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Everyone wants to invest Early Stage / Series A
Everyone wants to invest at early stage, but no one wants to take risk. So investments will happen early – but validated business models only. Some good examples for early stage investments in India are redBus, InMobi – while some good early stage misses are Infibeam (which has grown significantly larger without any outside investment).

Angels and Seed stage funds are well positioned to spot early opportunities than institutional investors.

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Premature Incubation Model
Going for a incubation model – make sure you choose the right one among the ones you are joining. Reason to say this – incubation models in US have mentors who have great experience in building products & platforms at scale. Y Combinator – has Paul Buchheit (creator of Gmail & Google Adsense), 500startups has Dave McClure (PayPal, FBfund, Simply Hired and more) and mentors from hottest companies and startups in valley; and so many others.

I have simple belief – Internet & Mobile startups are as good or as bad as the products you build. If you are choosing a incubation model – make sure it compliments your actual requirements. Last reason an entrepreneur should choose a incubation mode is money!

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The Know-It-All Attitude
This goes to Entrepreneurs – if you have, please shed away this attitude and get in a mode to learn, to take advice and asking right questions. Relationship status between an Entrepreneur and Investor is complicated – you can’t live with them or you can’t live without them, so you might as well accept them the way they are.

While closing your meetings / pitch with prospective investors – take feedback on the product, business model and the pitch. They will advice you based on their best strengths and experience, but only if you ask! In my personal experience – I managed to get some key improvements & suggestions on the product I am building.

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Please learn to say No
Entrepreneurs learn to say no to investors who do not see and agree with the vision you hold for the product.
Investors learn to say no, and fast. Entrepreneur’s time is equally important as yours! If the product does not match your investment interest – communicate it as fast as possible. Saying no immediately may not so bad; but keep a hope alive may be frustrating for the entrepreneur.

PS: Please respond faster to emails! I exchanged few notes with some of ‘the investors’ in Silicon Valley – always found a reply within 12 hours in all cases, some of them in less than 30 minutes.

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Quality of Press Releases & Coverage
The state of ecosystem is also reflected by the type of news coverage & press releases one reads on Indian Blogs. People movements – in most cases of those names who we have never heard of before, New sales office in Middle East, Forward looking statements on revenues & projections, Surveys that say the obvious in press releases, Claims & unacceptable figures, and so much more! Damn – we would like to know more about your products & platforms, everything else is just crap!

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Concluding Remarks -

Startup ecosystem is built with entrepreneurs, their companies, their early customers and then the investors. You control 75% of the ecosystem already, investors will follow. In the same context I remember one of Sameer Guglani’s tweet – “Founders r creators / accelerators, angels, VCs r service providers. our business runs because founders start companies & not other way arnd.”

The point I am trying to convey here is that if you think or perceive that ecosystem is not evolved in Indian start up scenario, stop complaining and don’t be an entrepreneur. There is no point in waiting for a right time to build your startup, the time to start is now. Get started!

Ecosystem or no Ecosystem – it did not stop a redBus, Naukri, MakeMyTrip, Flipkart, InMobi or SlideShare* to be what they are from India. Why should it stop you!

The term ecosystem means lot of other components as well. Feel free to add more to the comments based on your experiences.