Marie Antoinette asked people to eat a cake when they were starving and was guillotined. In north Korea, Kim Jong doesn’t want to listen to his people and has taken his country backwards by over 100 years. In China, Beijing listens to everything you say (including what you search and email) and then jails you depending on what you said. And of course, among all the gloom and despair there is Switzerland in which even animals are entitled to a dialogue (Last month a Swiss citizen saw a fish being caught by an amateur, whose actions caused it to die painfully; the government hired a lawyer to file a lawsuit against the amateur fisherman on behalf of the dead fish).

Imagine if you received a regular post on your wall from Manmohan Singh about the new resolutions he was contemplating or Rahul Gandhi asking you for an opinion about how to solve a problem to which you could simply reply, comment or just read replies. If you could create a bitching page about the BMC (Bombay municipal corp) & get 1+ million people to send the commissioner a ‘go home’ message. India would be even a more amazing place to live and make a living in.

Facebook as a world is perfect.

It exists only because people communicate with other, and I consider it to as test case on how to run a country:

• People in real countries increasingly use social media to find people. This is social media turning into real people.
• Everyone is connected. Leaders, citizens and everyone in between.
• Actions are transparent and always accountable for.
• Jobs and employment are frictionless – they are created and filled because people speak to each other and know who wants what.
• Money supply is linked to its citizens’ cash flows that is always measurable.
• There is always a jury out there…To reward, punish and to administer.
• The only place in the world where the citizens of the entire country could be asked a question, given multiple choices of answers and a decision made on the results in a few hours!

Sounds very idealistic and Utopian. But if 400 million unique visitors ( Population of the USA+UK+Canada),  are converging in increasing numbers to ONE destination & half of them almost daily, there is a something here that governments and their politicians could surely learn something from.

The box devices’ guys don’t seem to have rocketing sales and they are still educating us and cajoling us to buy their magic boxes.

I put on a slightly different cap and thought of measuring this time spent on ads as an economic model. Trying to understand what people earn per minute and how and when will they presumably switch to creating a better return on their time by pre-recording content and skipping ads.

The results:

* Based on actual viewing of 12 channels across all categories and measuring the ad breaks between content.


In my estimate, those who earn more than 50k a month (6 lacs per annum) actually create a negative return on their time by watching ads and not recording content in advance.

Having said this, has everyone who earns 6 lacs+ in India converted to a TV storage device? Definitely not!

So, I decided to flip the argument by working the tables in reverse- Deriving annual incomes of consumers on the basis of what they were actually spending on pure entertainment in India:

The interesting observation therefore is that lots and lots of consumers who are below the 6 lacs per annum salary benchmark still invest heavily in pure content consumption – but still shy away from blocking ads on TV by buying recording boxes!

Is it possible that:

• The concept of recording and watching TV content is still not understood and hence not adapted?
• Ads are also entertainment!!
• Its just the way we have been brought up consuming content – TV has ads but a book does not!

Consumers natively understand the value of their time and move fast and in herds when they get options to spend their time better. There is a huge disruptive revolution waiting to happen in the business of television advertising and where better to witness it than a country with a billion consumers!

Alok would like to thank Suresh and Sanket of games2win.com for their research help for this blog update.

It’s a bull**** idea coz it’s just not possible to beat the big newspaper guys who have priced their pages in such a way that it’s impossible to do ‘trading’ on their product!

I use this example to de-mystify and de-bunk the biggest blunder of the dot com world – how start up entrepreneurs supported by their VCs encouraged new websites (and still do) to BUY ads online, in print and even on hoardings so that consumers VISIT that site – ONLY to sell ads back to them!

It’s a LOSE- LOSE model all the way.

Let me explain assuming that entrepreneur Desmond has just started ‘dressupmodels.com ’ a website that allows teens to dress up various models in different clothes as entertainment. In the process of dressing up etc, these teens are shown ads and this is Desmond’s revenue generation.

Cost when Desmond BUYS ads:

Revenue when Desmond SELLS ADS

There is a gross loss of Rs 115 (Rs 150 less Rs 36) purely trying to ARBITRAGE ads.

Sure, there are counter arguments that:

• Repeat visits from the same person will generate additional revenue.
• Viral traffic created by the first set of visitors (by them telling their friends to visit the site) will result in additional page views and ads and hence bring in more revenue.

Having been there and done that extensively, the shortfall is never made up.

Buying ads for selling ads is a business model for suckers.

The real success of websites that have sold ads has been viral and organic growth. That’s why you never see ads of Facebook or Orkut in newspapers or on hoardings. Sure, Yahoo advertises TODAY – but that’s after building a $6 billion business that now needs more Brand Building than additional traffic.

If this argument is true, then how does GOOGLE become the biggest success in online advertising in the history of mankind?

Because, MOST advertisers on Google sell THINGS on their websites – not ads!

Let me explain with the same example:

Cost when Desmond BUYS ADS on Google:

Revenue when Desmond SELLS GOODS on his site

* Global norm of 10% paying for virtual goods (farmville)
** ARPPU (average revenue per user is US $5 globally) – reduced to US $3 for India

There is a gross profit of Rs 200 (Rs 1200- Rs 1000) in this model.

This IS the google model that allows millions of small business owners to sell boots, tents, handicrafts, jewelry and virtual goods to direct consumers via the advertising model. The entrepreneurs keeps tweaking their ad words ‘bid’ prices on Google so that the net cost of buying traffic results in a positive outcome via sales.

Advertising was invented to introduce you to new products and services and induce you to buy them. Stick to that rather than trying to resell what you bought!

The least gratifying part of this story is that I pay his mobile bills and hence I am actually funding this spectacular entertainment strategy of his.

So what makes me do something so stupid?

Well, I have no option. This is the Indian Mobile Mafia at play that adds all kinds of value added services to their subscribers’ phones without their permission.

Maharaj has been subscribed to a monthly CRBT (caller Ring back tune) service without anyone asking him or me. If you try and call the ‘big’ telecom operator that powers his phone  and request to get that service switched off, the pain and the trauma of being passed around amongst villager sounding operators  and then pleading them to just get that damn service switched off is just too much of a pain. It’s better to hear those amazing songs.

Allow me to explain the real math behind the biggest organized crime racket in this country:

India has 50 crore mobile users and their ARPU (average revenue per user) each month is plummeting. Thanks to all out wars between so many operators, voice as a stand alone business will be a very competitive space to make money.  SMS at one time was a couple of bucks – now it’s been reduced to almost nothing.

So, if you are an operator and have massive investments to recoup, what do you do?

Enter ‘VAS’ – or value added services. Ringtones, Wallpapers, Games, blah blah. Sure they seem exciting, but it’s a relatively small % of people who are really interested. And after the newness wears off, you really don’t care. The bulk of India is oblivious to such services since they only want to speak and make calls.  Also, the remaining subscribers being added are coming from rural areas (all urban areas in India now have almost 100% mobile penetration) and these folks don’t want VAS at all.

So the next best thing is to thrust it on them!

In a mobile bill, very few consumers keep checking every small item and then calling up their operator to cancel, change schemes, etc.  Mr. Maraharj’s orchestra costs me Rs 30 a month – and I don’t have the time and effort to bother and get a ear pain calling up his service provider. It’s also amazing how many times his service provider calls him (while he is driving) to plead with him to say yes for song downloads and other useless services. Forget the embarrassing songs; these guys will cost us a car accident!

Multiply Rs 30 with 10 crore users (20% rotating guinea pigs) and you have 300 crores a month in a scam that is just too painful for consumers to switch off.

This is not just an India scam. While in China when we were operating Mobile2win (subsequently acquired by Walt Disney), we were always tempted to send mass sms messages to Chinese consumers to lure them into subscribing to Astrology and Love services. If the innocent consumer would message back, they would automatically be subscribed to 6 months of such services with very difficult ‘unwinding’ procedures. I remember a vendor showing us a machine that would be fitted with 24 sims just as a spamming device to lure subscribers.

I understand that TRAI in India (The Telecom Regulator) is really taking the operators to task and getting them to clean up their act.

Till their bullets hit Mr. Maharaj’s operator, I will merrily listen to his songs… and who knows…even hum them when I am drunk?

Read this carefully:

In a war ravaged country, there is just one city that survives the incessant bombings and air raids. In a solitary building, survivors of that country huddle together.

In 3 separate rooms live three children – all sole survivors of their families:

Andrea, a 6-year-old girl who has no belongings, money and no means of survival. While she can neither read nor write, she seems bright, very eager to learn and shows an uncanny ability to imbibe knowledge when ever given a chance. She is bright and optimistic.

Sofia, a 10-year-old girl who seems confident, calm and self-sufficient. She has just enough means to survive and is keenest to share her thoughts and ideas. She loves to teach  when ever given a chance. She is practical and motivated.

Pascal, a 12-year-old boy, definitely from an aristocratic family who has survived and has with him some money, clothes and lots and lots of books. He possesses a library that would be  sufficient to teach a child to read, write and learn almost the basics of everything. He refuses to share anything with anybody and is paranoid about lending even a rag to anyone, given the state of skepticism the war has left him in. He is introverted and withdrawn.

None of the children speak to each other.

As the administrator of the building, Sofia comes to you with a fervent plea – She wants you to get her access to Pascal’s  library, so that she can read and learn and more importantly teach young Andrea who is illiterate and helpless. It’s certain that this war will not be over for a few years more and she needs your help. Knowing Pascal, he will react violently to anyone touching his books, save even taking them out of his room. And every time you see young Andrea,  helpless and hungry to learn, your heart wells up..

What will you do?

Remember that it’s easy to jump to a conclusion – but think of right and wrong in the purest sense.  The concept is not just about who needs what but also about who owns what is rightfully theirs… Think in shades of concepts of communism, socialism and democracy and apply ideals of who you really are, how you have lived, your religious ideas and maybe what you respect to solve this…

Would be happy to post rational well-rounded comments…

Consider this:  More people play Farmville than watch the Oprah Winfrey show. Players have generated more than 40 million farms (20 times more than the number of farms in the United States), own more than 500,000 tractors, and conduct more than 80 million harvests each day. So far, 1.75 crores in real cash has been raised for charity through the selling of an exclusive kind of sweet potato in the game. On the darker side, over 3 crore people are now part of ‘Mafia Wars’ – a game that makes you kill, rob and loot people. The more your friends help you in ‘supari’ jobs, the bigger you grow in status.

Read this to believe it -

Indians spent 4.4 CRORE MINUTES on just facebook.com  and orkut.com alone in November!

Social Games for the first time seem to be THE PERFECT source of Entertainment. No more waiting for TV programs, zapping ads and hoping that the movie on Star Movies is not the one you’ve seen the 4th time already. This is what entertainment was supposed to be!

The business of Social Games is also a BIG BUSINESS:

The economic model is no longer advertising, but actually selling ‘VIRTUAL GOODS’ (like tractors in Farmville and Poker Chips in Texas Hold Em Up) to consumers like you and me.

Zynga – the company behind Farmville, Mafia Wars etc is now clocking a MONTHLY revenue of 16 million US$ or 80 Crores in sales of these virtual goods.

So, what makes a Social Game really successful?

Something we* call VICTORY:

*Games2win created an internal team of diverse folks from Art, Sales, Consumer Support, Product Management and Traffic to huddle together and create this benchmark and further rank the top 10 social gaming apps in the world using this metric.

The ‘recipe book’ for social games is a structured approach to help understand the various elements that make the world’s biggest games successful and use this guideline to make great games.

The VICTORY benchmark for the World’s top 10 gaming apps  (produced below) brings out the top 3 gaming apps clearly:

No 1 – Zynga’s Mafia Wars (yup it’s not Farmville)

No 2 – Zynga’s Farmville

No 3 – Zynga’s Café World

VICTORY RANKING OF THE WORLDS MOST POPULAR SOCIAL games:

contests2win.com – my first start up was just closing its round with E-Ventures, and I remember sitting with Rajesh in a classic mahogany conference room with deep burgundy leather chairs discussing the business of c2w.

Rajesh knew I was a marwari (a business entrepreneur community in India that is quite classical and old fashioned) and that my wife and I had just had our second daughter.

He started a very interesting discussion with me:

Alok’ he said ‘ You have 2 girls now, and I am sure you,  like all good Marwari fathers, will already be planning long term for them – that would include making sure that they get married into the right families, etc ?’

While I didn’t immediately react, Rajesh had sure hit a soft spot. Our community is over protective, and old school in its way of thinking. The older family folks usually ‘match’ girls and boys – living  the legend that families marry each other, not just a couple.

His reference was an analogy to an amazing insight. He told me ‘ Alok, just like young girls can be groomed in the right and appropriate way to marry into business and famous families, you will have to groom your newly started business into becoming a beautiful and very attractive ‘bride’ so that all the most famous ‘men’ in the world – a la Yahoo, MSN, Google etc will be anxious to marry (acquire) you!

In a very simple way he had influenced me forever:

• Exits of start ups firms especially funded by VCs need to be planned almost simultaneously along with actually creating the business. The entrepreneur must understand that his business will need to be sold or IPOed (in whichever way giving up a large stake for outsiders)
• It’s essential to understand the DNA of the buyer who will find the eventual business attractive and hence build basis a certain TG (target group) in mind.

A caveat to this – in no way does this mean that originality of business concepts or first in the world ideas need to be shunned – its just that as the business evolves, understand which birds of similar feathers can you start hanging out with.

• Getting into the radar of the prospective bridgegrooms is as important as being an attractive bride. Hey, you need to bump into each other casually in parties (conferences), in common friends functions (VC sponsored meets and retreats) and in friends’ weddings (common entrepreneur friends’ settings) to date ( start discussing business interests) and eventually marry!! (get acquired)

Hmm…. If you’re wondering what happened to what we Indians call ‘love marriage’ – meeting someone in the bus and falling in love or glancing at someone at the bar and making him your spouse….errrr…. I’d rather settle for pre arranged bride who can cook like my mom

]]> http://rodinhood.com/2010/01/08/what-indian-brides-start-ups-and-vc-have-in-common/feed/ 3 rodinhood http://rodinhood.com/2010/01/02/what-babies-and-their-socks-can-teach-ceos/ http://rodinhood.com/2010/01/02/what-babies-and-their-socks-can-teach-ceos/#comments Sat, 02 Jan 2010 08:47:55 +0000 rodinhood http://rodinhood.wordpress.com/?p=118 ]]> In my past life (10 years ago) I used to make socks for my father in his hosiery factory. After 5 long and laborious years of trying to establish an export division, I got a lucky break with the European leading retail chain store of that time called ‘C&A’ (you may remember their bags that had a rainbow color stripes on them).

I had my first order of $ 10,000 worth of Baby Socks to ship to their stores in Germany and the UK.

Before starting production, I was invited to the C&A India office for an orientation on best practices and dos and don’ts for producing goods for them. Assembled in that conference room was a motley group of exporters all dealing with C&A for the first time.

A tall imposing German sporting a blond crew cut  entered the room and greeted us, and then asked us one question ‘ I assume some of you have babies or have been around them – what do you observe they do the most?’  As usual at first no one spoke and then there was muttering of ‘crying’ or ‘wetting their nappies’ etc , etc… The German gentleman looked puzzled and said ‘I doubt if Indian babies are different, but in Europe, the first thing a baby does is put things in its mouth. It takes typically seven minutes or less for a parent to discover the same and pull the item out. Hence, all the goods we buy for babies are tested for how safe are they for a baby when it remains in their mouth for seven minutes.’

I was explained how C&A had created artificial baby saliva and how our socks would be immersed in it for seven minutes to check for chemical emissions and other harmful reactive releases.

The next revelation was the German White Sofa test. We were explained that lots of households in Germany have very expensive white leather sofas and it was not uncommon for Germans to enter their homes drenched by the rain or snow or after playing a vigorous sport and immediately collapse on the sofa. In our case, Babies could wet their nappies followed by their socks while sitting on that sofa. Hence all clothes had to be white leather ‘color stain proof ‘ to prevent massive lawsuits against the retailer who sold them to the consumer.

My Baby socks experience really taught me some very valuable lessons:

• Prepare solutions that are based on real life observations rather than just theory. I started contests2win.com just because I was so frustrated at how difficult it was to cut and paste competitions in postcards to weird sounding post box numbers. That became a real business!
• Ideas and offerings will have far more extensions and uses than ever imagined by you. Our business of competitions led to us making games for brands. That led us to China with mobile gaming. And we now make games for consumers without brands getting involved.
• When I wanted to price my socks, I did the obvious – I went to the London C&A store to note the selling prices of all kinds of socks and then worked them backwards, deducting margins, etc so that it would be compelling to C&A and also profitable to us. I was shocked to realize that Baby Socks were priced exactly like Men and Women’s socks! It was so obvious – a mother or father who bought them equated their baby to be at least equal and in most cases more important than themselves – hence intuitively they accepted prices that applied to grown ups! Hence I learnt that value pricing was so subjective – not typically the ‘hours + labor’ formulae that so many Indian firms are used to…

I run a digital entertainment business now, but when I see babies & socks & CEOs, I chuckle and remember some important lessons learnt!

Why are women fascinated by big handbags? And why do they buy new ones ever so often?

• It’s primitive DNA gene:

I think women were the hoarders or safe keepers in the caves and that’s why clutching bushel like parcels is hard wired in their brains. The bag replicates that experience – it makes them feel that they are in possession of something very material and hence the comfort of the big wobbly cushiony thing near them.

• It is a baby-cradling fetish:

The bag is a surrogate baby. Cradling and holding it delivers the same effect. Stuffed with things women never use, the weight and proportion is almost that of a baby. It’s a good way to feel.

• Its that industrious feeling:

In India, women in rural areas carry  large water vessels on their heads. Or on their waist. It makes them industrious. Some toil with sickles in the paddy fields. Are handbags the avant garde tools of industriousness of the modern woman ?

• It feels like protection

These large handbags are perfect for swinging and protection.  Think of carrying a soft manageable boulder hanging out with you. A swig or two can do the job. It’s a nice feel safe thing.

• None of the above – women are just richer than men.

The economics of the handbag business are mind boggling. Women buy them like clothes and its just plain simple economics – They have a better cash flow than us men.

I’ve given up reasoning and hope to get some answers.  And watch out – the next handbag is going to become the trolley bag.  I’m gonna get my car an overhead bin!

Perfect timing for President Obama to hand over (US government owned) General Motors and Chrysler to Mr. Jobs and get Apple to build the ultimate American car.

7 simple reasons why this could be the biggest thing ever for the USA car economy:

1.     Mr. Jobs and Apple are the Gods of Materials.

Just look at the way Apple has conquered the material science space. The iPhone, the iPod variants, and of course the Mac machines – all masterpieces of blending metal, plastics, electronics into goods that consumers queue up to buy.  Have any of Apple products ever failed on you? Aren’t cars almost made up of the same things, and needs someone who understands how to make magic of them all?

2.     Apple gets the consumer right all the time.

We always want to buy what Apple makes. It’s because Apple understands what consumers want and aspire for. The US car industry has been cursed by too many car companies stamping out cars that consumers don’t want. Someone in that industry needs to understand consumers first.

3.     Mr. Jobs knows to how beat the Japanese at their own game.

The iPod buried the Walkman.  While the Walkman created music on the go, Apple recreated the magic in the digital renaissance. The same way, there has to be a way to rethink the magic of Japanese cars and make the American car great again.

4.     Apple knows a thing or two about consumer loyalty.

Once an Apple customer, always an Apple customer.  iTunes makes sure that almost all iPod owners stay connected to Apple always. The App store online does the same for the iPhone and iTouch owners. When was the last time you remembered Sony after buying your Bravia TV?

Haven’t you experienced that feel good rush when you walk into a brick and mortar Apple store? Car companies need to rethink their relationship with their customers pretty much the way Apple has done with consumers, and recreate that incredible sense of magic when car buyers walk into their car showrooms.

5.     Want a new Business Model? Ask Mr. Jobs.

The new business lines of Apple have all remodeled conventional revenue models. iTunes makes money in an otherwise dying music industry. The Mac is almost price insensitive to competition in a piranha like infested PC business.

The US car industry needs some serious rethinking about how to invent its now failed business model. Maybe car companies need to earn profits over a long term relationship with customers rather than a one time sale?  Almost the Gillette and HP model and not this buy me and forget me model?

I would think that Apple would be an ideal Company to entrust in helping create this new equation.

6.     Outsourcing, global competition etc etc – Apple understand this and how.

Apple has mastered outsourcing of its products.  It makes its goods all over the world. It’s an ideal company to figure out where to make the iCar once it has designed it. Efficiency, cost consciousness, etc etc – all come naturally to Apple. Apple will make sure that if a car needs to be made, it will be made in the most cost effective way on this planet.

7.     Branding, Marketing and all that jazz – ask Steve how much he spends on Advertising?

Almost Shunya (zero). The marketing approach of Apple is no longer case study material – it’s the way the new world is supposed to be. Show & Tell people what you have made, and they will do the rest. They will blog, call their friends, boast about their new toy and get consumers lined up to your store.

All that wasted advertising and marketing in the global auto economy needs serious examination.

What it now takes now is to get Steve Jobs excited into creating something far bigger and everlasting than his previous products.

President Obama needs to make that phone call, motivate Steve and do the world a big favor.