Author: Rajesh Jain

An Entrepreneur based in Mumbai, India.

Prahalad on India

It is always fascinating and extremely educating to read what CK Prahalad has to say. On his recent trip to India, he spoke about his vision for India. [1 2] A few excerpts:

It’s possible for India to achieve 10-15 per cent growth rate and add 10-15 million jobs a year. In 1929, we said ‘Poorna Swaraj’. Did it sound realistic then? We need to desperately want to solve the problems. If we don’t want it bad enough, it won’t happen…There’s an emerging sense of entrepreneurship, trapped resources almost to the tune of $1 trillion, market opportunities and emerging competence base. India has world’s largest food stocks, yet there are famines and malnourishment. We need to ask why?

Dont start from where you are (the fundamental fault in our planning process), but from where the future could be. Plan the desirable future and then fold it back, on what to do to get there. Run 400 metres at a time, but run the marathon.

Best practices never take you to leadership. It is the next practice that will. Gather courage to invent the next practice.

His mantra: “India Inside is for yours to take. If you dont someone else will and Ill haunt you.”

Prahalad’s “Competing for the Future” was the inspiration for me for IndiaWorld. Many of his “Bottom of the Pyramid” ideas are driving Emergic. We will invent the future, and we will do it from India. India first. Other emerging markets next.

Continue reading Prahalad on India

TECH TALK: Entrepreneur’s Enigmas (Part 4)

Building a Management Team

No entrepreneur can do everything by himself. At some point of time, he realises the need to build a management team of people as good, if not smarter, than him. That also means learning to delegate and trust others to do the job. This doesnt come easily to most entrepreneurs.

This is because for the entrepreneur, his venture is all-consuming. It is life. There is little distinction or separation between personal and business time. Everything is related to the business. This same belief is not necessarily shared by others who become part of the management team. This is where the entrepreneur needs to respect their time and space. He needs to accept that while they may not share the same passion as him, they are also now part of the venture and as committed to its success.

Recruiting the management is a challenge in itself. Paying a headhunter to find these people can become a very expensive. More often than not, the entrepreneur will look for people he has known or worked with in the past, and shares some common threads with. The danger here is that the new team can become all too similar. It is necessary to introduce variety and get people with differing, even opposing, viewpoints.

People make the business. And people will also be the cause for most of the entrepreneurs heartaches, enigmas and delights. Even as the people come together to form a team, the entrepreneur needs to continue to be the motivator-in-chief. After all, he is the reason why the others are there.

Product Promotion

One of the dilemmas an entrepreneur faces is how much to spend on product promotion and how. Putting up advertisements is a great thrill, but there is a problem in the early stages, the venture is unlikely to sustain an advertising campaign. The entrepreneur will typically look for returns on each ad put up, and that may not be the best way to build a brand. At the same time, it may not be easy to allocate funds for a large campaign.

What needs to be done is that the entrepreneur needs to look at more cost-effective ways of promotion. Meeting people he knows, speaking at seminars and conferences, writing for publications, blogging are all cost-effective techniques to generate buzz. They have a cost only in terms of the entrepreneurs time, and not hard (and scarce) cash.

The entrepreneurs passion is the best advocate for the product and that needs to be visible. In the early stages, customers are making a bet as much on him as the product. The entrepreneurs infectious enthusiasm must be visible to everyone. He has to be confident about success, balanced with humility. The entrepreneur must talk to as wide a number of people as possible one doesnt know which connection will trigger off a chain of positive events.

The entrepreneur must be open and transparent. There is little to lose ideas can be copied, but its very difficult to replicate the entire thinking that the entrepreneur has. In todays world, entrepreneurs must think of sharing their ideas with one and all it will get them a lot of feedback from the outside world. Think of this as open-source company.

Tomorrow: Entrepreneurs Enigmas (continued)

Continue reading TECH TALK: Entrepreneur’s Enigmas (Part 4)

Business Standard Story

Today’s Business Standard’s ICE World has a feature on us. The story is by Nandini Lakshman: “A Cheap PC dream” and asks “Rajesh Jain wants to to bridge the digital divide with a Rs 5,000 PC. Can he hit the jackpot yet again?”

Overall, it is a very balanced story. Nandini had met with me a week ago, and was thorough in her questioning and understanding on what we are doing. She also spoke with people from the industry for the story. She has summarised our gameplan as follows:

  • Refurbish used PCs to lower costs for low-end users
  • Mildly alter Linux open source applications and charge a minimum of Rs 250 a month for the software
  • Use WiFi technology for broadband connectivity
  • Applications will be served by a “thick server” which will also store mails and files
  • Tap schools, hospitals and companies before entering homes

    • TECH TALK: Entrepreneur’s Enigmas (Part 3)

    Generating Cash

    This is related to the previous enigma of managing the near-term and the long-term. A growing business needs cash. A question facing the entrepreneur constantly is how to generate cash to fund the business. As the entrepreneur attempts to build out his key ideas, it is very tempting to fund the business through externally raised capital. In todays times, raising VC money is not just difficult, it is well nigh impossible for most entrepreneurs. That is where the entrepreneur has to look at generating cash from an existing bread-and-butter business.

    One may disagree with me: a new business needs focus, and one has to take risks. My point is that one cannot hope to build businesses on other peoples money. Even if it takes time, the entrepreneur must use his small initial capital combined with creativity to build out a business which is not unrelated to what he finally wants to do but which at the same time generates the necessary cash to meet expenses every month. Dependency on external sources of capital in todays times is a surefire recipe for disaster.

    The best time to raise venture capital is when the entrepreneur is absolutely certain that the business is on firm footing, and that the investors will get returns on their capital. In other words, there is more growth and less risk to look forward to. Of course, this is easier said than done money is the engine for a business. My contrarian point is that in the early days of a business, this engine should be powered as much as possible by customers and not by investors.

    Target Markets

    Entrepreneurs coming out with new ideas need to decide which markets they will address. One market is the current set of users for whom the product or service may offer additional functionality or better price points or greater convenience. The other market is where the competition is nonconsumption the product/service is a disruptive innovation which seeks to open up new markets. The first market will entail battles with entrenched competitors, while the second will require pioneering efforts in concept selling. The enigma an entrepreneur faces is which are the first markets that he should target.

    It is not an easy question to answer. Besides, the answer depends much on the type of product and service that is on offer. One point I do want to make is that in today’s world, the opportunities in targeting the newer markets at the bottom of the pyramid are likely to be far greater. These are markets which current players probably find unattractive. So, if entrepreneurs could use a mix of innovation and affordable pricing strategies, they could find the new markets very attractive and profitable. Over time, there is no reason why they cannot then move up the value chain.

    These new markets are in countries like India and China the world’s emerging markets. They need solutions at much lower price points. This requires a radical rethink of the value chain and feature list of products. An entrepreneurs, with little legacy to hold him back, is ideally placed to carve open these markets. The enigma arises from the fact that these are markets which are invisible to everyone else. It appears far easier to tread the beaten path than to create a new one.

    Tomorrow: Entrepreneur’s Enigmas (continued)

    Continue reading TECH TALK: Entrepreneur’s Enigmas (Part 3)

    BlogStreet in The Hindu

    The Hindu writes about BlogStreet’s Neighbourhood Analysis:

    In a weblog, the weblogger logs all the web pages that interest her. That is, a weblog compiled by an expert on a specific subject will contain valuable links related to her subject. Apart from presenting interesting links with comments and writing stories on a specific subject, a blogger generally lists out the URLs of other blogs with similar content, which she reads quite often. This practice is called blogrolling. In fact from being just an on-line diary, blogs have evolved into an excellent collaboration tool.

    What we can infer from this is that there is an automatic categorisation or self-organisation of blogs taking place. It is obvious that if we can locate weblogs with similar content or weblog neighbourhood as it is commonly called a Netizen can directly go to those sites that deal with his subject instead of spending time on search engines.

    The challenge is how to identify related weblogs. That is, if you know about a blog that deals with, say, economics, how to identify weblogs that are in the neighbourhood of this blog? The blog neighbourhood analyser of Blogstreet is an attempt to locate related weblogs.

    By providing the service with the URL of a blog, it displays related weblogs of this blog site by analysing its blogroll data. For example, if you input the address of the `ArgMax Economics Weblog’ (http://www.argmax.com/mt_blog/), Blogstreet’s weblog neighbourhood analyser it will immediately display a list of blogs related to this weblog. Apart from this service you will also find a reference page with a wealth of weblog related links at Blogstreet site.

    Continue reading BlogStreet in The Hindu

    SMBmeta Initiative

    Dan Bricklin has a very interesting idea to make it easier for SMEs “to communicate information such as the physical location of the business and the area it serves, as well at the type of business, to search engines and other services.”

    One of the major drivers of the US economy are small and medium businesses (which we’ll call “SMBs”). These range from restaurants, machine shops, lumber yards, advertising agencies and law offices, to carpenters, musicians, and locksmiths, to weekend DJs and grandmothers selling their knitting. This document describes a data file format and associated services designed to help those businesses in their use of the Internet.

    One of the concerns of businesses is having their web site found by customers. One of the concerns of customers is being able to find an appropriate set of businesses from which to choose to meet their needs. Web sites and normal search engines meet some of these needs. Unfortunately, it has been difficult for search engines to ascertain specific information such as the particular locale served by a business, the type of the business, the languages spoken by the staff, etc. A human being can often find out this and a wide variety of other information by reading a web site, but it can be hard to automatically find it out for constructing a reliable database. The goal of this “SMBmeta” project is to provide a way to amass this additional data to aid in searching. It is not to provide the data that you would find on the web site itself, just the data you use in searching.

    The way we do this is with an “smbmeta.xml” file.

    The smbmeta.xml file is an XML file stored at the top level of a domain that contains machine readable information about the business the web site is connected to. It is an open, distributed way for small and medium businesses to communicate information such as the physical location of the business and the area it serves, as well at the type of business, to search engines and other services. Hopefully, it will open up innovation that will result in a wide variety of new services that will benefit the SMBs and their customers.

    I like the idea – it can, for example, plug right into an RSS aggregator, so I could subscribe to SMEs in my area of interest or even in my neighbourhood. Getting SMEs to interact with other SMEs and end-users is the next big challenge.

    Microsoft’s Pricing

    Jacques Surveyer writes (in Globe and Mail):

    Let us examine the notion that Microsoft has become like butter, the high-priced spread. For Office XP Standard Edition, CNET’s November 18th average price was $390; for Corel Word Perfect 2002 Suite it was $270; for Lotus Smart Suite Millenium, $210; Sun Star Office was $80; and Open Office was and still is $0 (free download at OpenOffice.org). It is estimated that the Office Suite alone accounts for $10-billion of Microsft’s $30-billion in annual revenue. For Windows XP Home the price was $190; for Mandrake Linux 8 it was $27 ($0 on direct download); for Windows 2000 Advanced Server it was $2,350 for one CPU 25 users; Redhat 8 Enterprise edition with unlimited users was $149; Solaris 9 on x86 with unlimited users, $90. The estimates vary from $8-billion to $12-billion for the revenue brought in by the Windows server and desktop editions. Microsoft’s Visual Studio.NET was $750; GCC and other GPL developer software on Linux, $0.

    So for more than two-thirds of Microsoft’s software portfolio by revenue the company is no longer the best price/performance producer, but in fact often has one of the highest purchase costs.

    This is the opportunity for open-source software, which is now more than good enough for 80% of the new users in emerging markets.

    95% Features at Half the Price

    That is the essence, according to WSJ about China’s strategy in consumer electronics.

    China is ramping up to do the same thing for big-ticket consumer-electronics items — especially wide-screen, high-definition television sets for the living room — that it has already done for smaller items such as DVD players, which now can be bought for $50.

    Many medium-size booths were set up at the CES from companies you never heard of — Norcent, Sampo — that were showing off 40-inch and 50-inch HD-TV screens priced $1,500 below the current $4,000 to $6,000 asking prices from the A-list set makers. Expect all of those prices to keep dropping.

    China has an inexpensive but well-trained work force, along with access to the very latest semiconductor technology used inside these consumer-technology devices. The country’s basic strategy seems to be to make products with 95% of the performance of the very best from Japan, Korea or Europe, but at one-half to two-thirds of the price.

    Indian companies have an opportunity to do the same in enterprise software.

    Dell to sell Retail-store Systems

    I found this item about Dell in WSJ interesting:

    Dell Computer Corp. plans to begin selling retail-store systems including electronic cash registers as the world’s largest personal-computer maker continues to expand its ambitions beyond its traditional turf. The company aims to provide the customized equipment required to automate department-store and convenience-store operations.

    Mr. Farello, Dell’s vice president of retail-business development, said Dell has been encouraged to enter the market by large retailers looking to lower their point-of-sale systems’ cost.

    Dell’s new marketing will pit it against traditional point-of-sale suppliers including International Business Machines Corp., NCR Corp. and Wincor Nixdorf GmbH, as well as newer entries from Hewlett-Packard Co. and Sun Microsystems Inc.

    IHL estimates the North American market for checkout systems at $4 billion a year. IBM, the largest supplier of point-of-sale systems, holds an as much as 75% share of the systems installed at the top grocery-store and retail chains.

    I think there’s also an opportunity to look at Linux-based Point-of-sale systems in emerging markets like India. I haven’t researched the segment but this could be an area ripe for disruption. For the most part, the competition is nonconsumption – most retailers don’t use any system at all.

    Steve Case Resigns

    An era comes to an end with the resignation of AOL-TW chairman Steve Case. Says WSJ: “The departure of Mr. Case, effective in May, represents a coda to America Online’s short-lived and unsuccessful reign over Time Warner. Initially heralded as a sign of the new Internet era, the deal quickly became a failure as America Online’s business badly stumbled and cultural clashes between the two companies led to severe infighting. The stock price of the combined company has plummeted, wiping out nearly $200 billion in market value in the past two years.”

    The AOL-Time Warner deal in January 2000 was a defining moment in business history – an Internet company acquiring one of the world’s largest media conglomerates. It also made most CEOs and managers sit up and take notice of the New Economy (if they hadn’t already noticed the booming Net valuations by then!)

    Things have changed a lot since then. The Internet has melded more in the background and there really isn’t a “New Economy” or an “Internet way of doing business”.

    Case is only 44 years. So, it will be interesting to see what he does next.