I come across business plans that involve a few years of building out. Maybe it is a prototype, maybe there is R&D effort, maybe the big software piece needs to get done.

Till the point of time that this happens, there is only investment, and no revenues.

Someone needs to fund the entire effort.

Of course, the conviction in such cases usually is, that once done, the product that has been made, can be a rip-roaring success, making it worthwhile to have invested the time and the money.

But the big risk in a model of this kind is that, while one is building it out, there could be someone else also doing the exact same thing. And that they could go to market say, a few months before you are ready. And steal the thunder and the market.

OR in this period while you are building out, some fundamental inflexion point occurs, that puts the entire business model at risk. And that after, a lot of investment has already gone into building it out.

The alternative to this model of course, is something that requires lesser development time and effort, can get to market sooner, can perhaps be made in phases, so that first phase product is out, getting tested, getting validated, and perhaps earning revenues too. In a sense, there is some amount of de-risking that takes place, in the process.

The fact is that we NEED businesses with an R&D base, we need businesses that may have a long development cycle because only then, will the interesting product get born. But the validation of the model, the technology or the idea must be really strong, to justify the long time and money investment, before the product sees the light of the day.

Most importantly, the entrepreneur working on this project needs an attitude that sees such a long term vision. That sees the day-to-day progress, works with the timeline of the end delivery, keeps costs under control, and yet, is relentless in pursuit of the dream, of the big picture. Notwithstanding the fact that there are no revenues and that money is getting sunk into the project, each passing day, and the fruits will come, one day. Hopefully.

Only people with the right attitude of this kind, can nurture business models of this type.

Another scenario that this attitudinal difference can be seen is in running businesses, with a particular kind of revenue model.

There are some businesses where the revenue cycle is dependent on just a few large transactions happening in the course of the year. Say, a revenue cycle dependent on winning 3-4 large tenders in a year. In such cases, there is immense effort at the pre-sales level, often a matter of several months, in working towards a favourable closure of these revenue opportunities. And at the end of the year, getting say, 4 such deals, is a winning situation. Getting 2 deals may be break-even, getting a 3rd may mean nominal profits, and the 4th generating the large profit opportunity that the business is working towards.

For all the efforts put in the pre-sales activity, it is quite possible that ultimately, the sale does not close in your favour. WIth a binary situation of a yes or a no, in each of these large revenue opportunities, it can easily happen that there was a bad year, and one ended up with only one success.

How vulnerable is this model?!

Then again, if you are in a business of this kind, you have no choice.

Many others though might prefer, a constant trickle into their cash boxes rather than the few big-bangs.

Whether you as an entrepreneur opt for one or the other business model again depends completely on your attitude.

If you are working on the 3-4 large deals to happen in the year, can you maintain the confidence that you will get those, that you are able to fund your regular expenses even while you wait for those big deals? Can you keep investing the efforts without any sense of panic around “what if these deals don’t come in?”? That kind of attitude is required to support the business model dependent on a few large deals.

If on the other hand, you need to see the ringing of the cash box, to get comfort that ‘all is well’, you are better served doing a business model that generates regular cash, and not just the big bang large deals.

It would be a gross misfit if you were to attempt a business that gets few large deals and no cash is generated rest of the year. There is every chance that you will end up with panic very soon.

This analogy extends to the individual too. After all, the individual is akin to a proprietary business of sorts, isn’t it? Especially if you consider the professional, someone who bills for his time, on projects.

Here again, there are different kinds of professionals. Some like practising doctors or fashion designers or interior decorators, who have a “running business” and an accompanying regular inflow of revenues.

And then there could be others like film actors say (not the very top notch ones who are working three shifts, but the second notch and below ones), who work when they get a project.

Sometimes they sign on a film, which has to go to the sets in 6 months, and the earnings will really start after that. And for some reason, that start gets delayed.

Or one is just waiting for the right project. Which takes time to come in. And in the meanwhile, there is not much to do.

So again the question comes, “what if the projects do not come at all?”, “what if the project I signed up, and committed my dates to, gets delayed, and I don’t earn till it starts?”.

If one is susceptible to such insecurities, then this kind of a professional career is certainly not for that person. On the other hand, if one has adjusted to this kind of uncertainties, has prepared for the same, and has enough confidence that some or the other project WILL come by, and the incoming revenues will keep happening, that person is well suited for a career of this type.

So considering this blog is focused to startups and for startup entrepreneurs, the thought to consider is an examination of your personal attitude on these fronts.

Can you work for a big prize, wait it out for a longer duration for the same, be confident and comfortable in the waiting period, be focused to keep working towards the goal, then and only then, should you opt for a business model of that kind.

Else what you need is something that can go to market fast, start generating revenues fast, and keep funding your cash flows, as well as soothing your nerves!!

What do you say??

Be that as it may be, it is an amazing story.

One of the side stories that went around last night was whether India can at all have it’s own Instagram. And this post that I read suggested an emphatic “no”.

I also see the challenge of building an Instagram like idea in India. For various reasons. And I will come to those in a bit.

But one of the most important, relevant and significant reasons is the number story. We need a perspective and a strong drive towards numbers.

Let me share with you three very independent stories, all about “numbers in 24 hours”.

1. The Android app of Instagram clocked 1 million downloads in 24 hours of it’s launch.

2. I met this person whose company sets up Internet kiosks in villages of West Bengal, on a franchising model, and hence, has to create income opportunities for the franchisees, on these kiosks. They have put many paid services on offer. He mentioned that he clocks 20 air tickets in a day – yes, 20 air ticket bookings in 24 hours – via those village kiosks!

3. A personal experience. I spoke at the India Social Summit on April 3. I put up my presentation on slideshare on April 4, and put out exactly one tweet and one Facebook update about this, and in a matter of 24 hours, the presentation got close to 450 views.

Yes, three disparate facts. And a matter of numbers!

I was impressed by all three of these. What it showed me clearly was that:

- we live in a small and connected world

- and hence, we can reach a large, far flung consumer base, for products and services that we can offer

You’d say that these facts are true from the time that the Internet came into being.

True. And I should know. Having been in the space since the time Internet came into India! Since 1997-98.

What impresses me today is the natural, organic viral growth opportunity. And the possibility then, of clocking significant numbers rapidly!

What made the three cases mentioned above, to happen?

1. Instagram was already a hugely popular app, on the iPhone platform. Widely talked about. The Android app was way overdue. It was announced and people had to sign up in advance. With all that pre-release build up, it was not surprising that when they actually released it, Android users were rushing to go and grab it. Quite like the queue you see at an Apple store when they release a new iPhone or an iPad. Yes, it is going to be available the next day too, but one wants to be amongst the earliest ones to get it!

2. The case of the air ticket bookings in the village kiosks is akin to the success of IRCTC for rail bookings. Irrespective of the quality of the website, since it met a dire need, and the alternate way to get that service had a lot more pain, this one was lapped up. What was true of IRCTC for many years was now true for the air ticket purchases in villages!

3. As for my deck on slideshare, I guess it was a series of factors. On April 4 when I uploaded the deck, the event was still on, and many were following it on Twitter. The hashtag #IndiaSocial12 was popular that day. And I tagged my post with the same hashtag. Where other speaker presentations of the event would go up later, post-event, mine was up that day, even as people were following the live proceedings. And it generated interest for people to click and view. And hopefully the content gave it a little organic push, and it hit those 400-odd views that it did.

So in all three cases, there was a reason – be it content or a needed service – which got across to the target audience, and a viral push happened. And numbers followed.

That is the beauty of our times! You could be sitting in any corner of the country, but if you can get this content or service mix right, hit the specific target audience pockets, it CAN fly!

So with that scenario, can India have it’s own Instagram? And if not, what are the challenges?

Note the facts first:

Instagram has run for about two years now. Has almost no serious revenues. Has had a small team of a dozen or so now (for a long time they were even smaller), but they probably work with some outsourced partners too, I reckon. That said, the costs to support are the small team and large servers and bandwidth capacities, mainly.

So first of all, if you have a product of this kind, with a potential upside of this nature, will an Indian VC buy?

I don’t think so. The Indian VC will put his money on the 27th daily deal site and the 45th e-commerce site, because it is the flavor of the day, but rarely if at all, will he bet on a new concept, unproven, something that could potentially be a global winner. So you are stuck if you are dependent on VC financing.

But say, you had inherited wealth or you begged, borrowed or even stole money to support your venture. Where is the next pitfall?

From my experience with startups in India – and I have met several over various interactions at various fora – the one trait that I often see, is that they get excited about the initial numbers and get somewhat complacent.

How often have I heard stories like “we just started few months back, and I have already got 40 orders” or “we get 3-4 email enquiries daily” or things like that. There are ventures that clock up a few thousand subscribers / users and get pumped up. Most of the time, these are free registrations, and so people have not really spent money on the platform. But there is excitement and a feeling of achievement.

While I have nothing against this excitement, the reality is that a few hundred or a few thousands are NOT GETTING YOU ANYWHERE. If you are looking to do a big one, the world is your market potentially, and you need to think in millions of users.

So the two biggest reasons holding us back, from creating our own Instagrams or what have you, are potentially a lack of funding for such business models, and secondly, a tendency to not see the very large picture. For the latter part, obviously there have been the exceptions and which have succeeded big time, like Naukri, Shaadi, BharatMatrimony, Cleartrip, MakeMyTrip, Carwale, Games2Win, IndiaGames and a handful others.

But the typical startup that I encounter at TiE or at some Startup event, is somehow not seeing the big, big picture. And which is where we don’t have our potential Instagrams!

But I hope to see change. As I am the eternal optimist.. next one, hopefully from India. Happening in some lab somewhere in Mumbai or Gurgaon or Bangalore, even as I am posting this..

I would think the difference, if any, is marginal. At least perception wise.

Sure, there are more options, perhaps some innovation in loyalty programs (marginal again), etc. If anything, there are challenges as you shop. All the time.

Long queues at the checkout counter. Not finding the item you are looking for, as it is tucked into some inner shelf (because of space constraints, among other things), hassled shelves with products here and there, as people have handled them and the staff has not been able to rearrange them.

So yes, it’s pretty much the same-old-same-old. Retailers have not been able to really crack the code and make the shopping experience significantly better for the shoppers.

And then you see this amazing innovation from Korea:

A virtual store that is “real”!!

So sure, we had e-commerce. Where you saw a picture on a computer screen, small in size, not getting the perception of just how big a packing it may be, and then paying by credit card or whatever, and then waiting for the finite time to receive the products.

And it worked to an extent. But did not significantly dent the offline store business.

People, it seems, still wanted to go to the store and shop. And get a feel of the real thing. Pick up the bags and come back. Make it an interesting experience of walking around, window shop, see new things that have come, maybe talk to someone, and then shop. That experience still rocked! Compared to the computer screen one.

But this Korean way gets you the best of both ways.

Visualize this…

Put these LCD screens with full sized product shelves look inside your store. Beautiful back-lit screens with absolutely life-life images. In anything, better looking than the packaging!! Leave ample space for people to walk around. Except without the shopping carts.

Packaged goods are finally bought largely from the packaging, not so much from touch-and-feel.

Use QR code or some other device* to enable shopping.

She walks around, selects what she wants using the QR codes, and then lands up at the check out counter.

If technology of automated assembly is implemented at the back-end (like a warehouse management system that is used in busy warehouses), the customer’s selected order could be ready by the time she comes to the check-out counter, duly packed. She pays and picks up the bags and walks out. Since the entire billing process is eliminated at the check out counter, the queue also moves rapidly.

Seriously path-breaking, what?

And why can’t some retailer make a first move of this kind in India? I think all it requires is to be bold enough?!

Yeah, yeah… you will ask, “what about the non-packaged products like fresh fruits and veggies, or what about those packaged products that customers like to smell (soaps, perfumes, maybe..)?”

Okay, so a small hybrid model can still happen. All of the packaged goods lines, which do not require anything special (which will be what, 80% of the items at least?!) can still be the virtual LCD panel way, and then 1 or 2 aisles can have the rest of the stuff.

It will still have tremendous impact, and will be a “real” innovation, as compared to trivial ones that retailers love to talk about..

Guess someone’s got to make the first move? Looking forward to this..

(* “Some other device”? – how about giving a small hand-held scan unit to a person when he she walks into the store. Unit has it’s unique code, so whatever that shopper scans around, is recorded for HIS ‘virtual shopping cart’; the code does not have to QR or it could be. Alternate simple coding structures could also be adopted. Shopper brings the unit back to check-out counter and picks up his bags!)

This was not the first experience for me. I make it a point to connect with this breed, at various other startup events and mentoring opportunities, including Headstart’s StartUp Saturday, at the MentorEdge Rendezvous sessions, and TiE’s mentoring events, amongst others.

And almost always, I come back feeling very impressed. By the entrepreneurial energy in the first place. And sometimes, by the quality of business ventures that some of them are working on.

I think back to the many years back, when we graduated from engineering school. I do not remember a single classmate of mine, who went out, straight from college, to start a venture of his own. There were few who went and joined their family businesses. Which is an entirely different thing. But none that I remember, who started new ventures of their own, straight out of college.

Years later, many of my batchmates are today, running successful entrepreneurial ventures. But they all started after taking a few years experience, working in industry. Typically.

As against that, I am seeing just so many keen final year students (of engineering or management schools, typically) and students who have just passed out of college, who are all set to get into a business venture of theirs, I am amazed by it all!

That one has the dare at the early age, to chuck job offers, and venture out on one’s own.

To take on the challenges, not just of giving life to your idea, but also to take on other accompanying challenges of finance, team building, marketing, etc.

So irrespective of how good or viable these ideas are, that we have so many attempting to create their own businesses, it is truly impressive.

Coming the actual quality of the plans though, perhaps 1 out of 20, are good enough (by my assessment – and I could be wrong, of course!) to potentially become decent successes.

But that is not a bad ratio.

I was completely impressed for example, by this one entrepreneur, who had finished college few weeks back, and who demo-ed to me, a completely working and commercially viable, SaaS based video conferencing tool, with some excellent features. He may still have some challenges to get the UI improved, and of course, to figure out the pricing model and the marketing, but he has a full-fledged working prototype out there. Obviously made, even as he was a student in college.

Now that takes some doing.

And there are more like that.

I have this one other group of students, from another engineering college, who have set up an e-commerce venture, for selling text books. Again straight out of college. And a business model that I think, is extremely attractive, and can become very successful, if they can execute it right. They interact with me once in a while, and I am very bullish about this venture.

Indeed, these are excellent times, for India’s economy, and this level of confidence and dare, amongst the youth, can only help propel the growth rates. I am very happy about the entrepreneurial ecosystem in the country now. And I am happy to have occasional run-ins with these smart youngsters, and also happy to share the occasional gray hair wisdom with them

I have said this before and I say it again.

Because I have seen this before and I see this YET AGAIN!

Rediff.com always wants to be LIKE someone else.

And mostly like the best new thing that has happened out there, and is already established and famous.

And THEN, Rediff.com will come with its version of the same thing!

I have seen ALL of these transformations at Rediff.com:

1. Early on, they went and replicated virtually, the complete Yahoo.com look. Directory and news and email and everything. They wanted to be India’s Yahoo…

2. Ebay became big and Rediff invested in their own auction business, an Ebay look alike.  Rediff wanted to be India’s Ebay then..

3. The Rediff.com interface was clustered like Yahoo’s or Indiatimes’. And then Google came along and showed what a clean, uncluttered interface can be like. And yes, we saw Rediff turning over into a clean and simple interface. No matter the fact that, where Google was fundamentally ONE big thing, viz. search, and it could offer that in a clean and simple screen, Rediff in fact, was a portal. And a portal needs to show more of its links and cater to users with different kinds of needs.

But then, Rediff wanted to be a Google that time!

4. Then came Facebook time. And after Facebook had probably gone past 300 mn user base or so, and was already the default, Rediff came up with their look-alike social network. Again Rediff now wanted to be a Facebook..

Once more, too little, too late.

5. And now they have done it one more time. In the space of daily deals and group buying, where perhaps, there are 32 players already, and the big daddy of the world, Groupon having come into India too, Rediff now wants people to do their deals on Rediff.

So Rediff now wants to be a Groupon!!

More than anything else, I feel sad.

Rediff.com really had a great opportunity, it was first off the blocks in India, it had a great start, it got the Nasdaq IPO (that’s the only reason its been able to hang on, by the way – the cash in the bank!) in time. It could have been India’s most prolific and default dot com address.

And yet, it chose to be a Yahoo, an Ebay, an Amazon, a Google, a Facebook and now a Groupon..

It NEVER tried to be a Rediff.com of its own!!

What do you think? Any alternate views??

I spent a few hours at the recent Enterprising India Summit, organized by the Mumbai Chapter of TiE.

In the short time that I was there, I happened to catch a talk by Sachin Bansal, founder of Flipkart. As a part of his presentation, he talked about himself and his co-founder, and about how they were so alike that they could virtually replace each other. Well, at least on the work front. And of course, he was making it look like a great advantage that he had, in having two founders, with very similar backgrounds and skills.

I have wondered about this, though. Of course, not for Flipkart in particular, but for any entrepreneurial venture, in general.

It is an easier route often, for two (or more) classmates or good friends (with similar mindsets) to think about getting together, and starting an entrepreneurial venture. And quite likely, they may have the same background, skills, aptitude, approach etc.  And maybe due to this factor, there is a fundamental comfort, as they may end up agreeing more than disagreeing. This may also make for good chemistry.

But is this good for the venture?

Think about it from these perspectives:

1. A startup is usually a lean organization. Each person of the startup team is contributing in his / her own way, so as to make the whole. There is usually no room for buffer and no room for redundancy. Then, having two (or more) very crucial members of the team, viz. the co-founders, to have similar backgrounds, is it not an expensive redundancy for the startup?

2. We have also read stories of the so-well-constructed founding team of Mindtree where they were absolutely clear of the kind of skills that were necessary to build Mindtree as a company, and how they looked for, and found and lured people in, to be a part of that founding team. Recent events have put a question mark on the company, but that apart, the effort at the time of founding, and the process, was exemplary. Is that a better way to go about it? Identify key skills that will be necessary for your mission, and then look for partners who can be co-founders in your venture??

3. When things are going fine, it is good to have people who ‘get along well’ and have a similar mindset. However at the first signs of challenge, what if the co-founders all, only think in one common way? What if there is no counter point of view? There is no challenge to the proposal? While different mindsets can sometimes cause potentially, the ship to go in different directions (however, that happens when there is a lack of maturity in the team), on the positive side, different mindsets or approaches give you multiple perspectives on the same issue. And at different times, there may be value and relevance of a different approach. In that respect, non-uniformity of thought, a certain diversity in fact, is a great asset to have, at the founding team level.

So I do wonder on the best approach here? I think startups need a mix, at the founding team level. Success of Flipkart may not be because the founders are so-alike, but in spite of it! Sometimes, we look at success and try to draw all inspiration from it. Try to ape the entire model. Flipkart may not have succeeded because the partners are so alike, but because of managing to do many other things right.

Also it may be appreciated that two or more people, going to the same college or the same program, do not necessarily make for identical people. Yes, their educational background would be same (and if technical skills are crucial, then this may again be a challenge – that all founders know only the one same thing!), but in terms of aptitude or creativity or other characteristics, they could easily be chalk and cheese.

So that is the crucial element. Have the chemistry to work together well, the maturity to respect each other’s points of view and take decisions only and only, in the interest of the venture, but yet be different enough, to bring variety of skills and approaches to the table, for the venture to get the best value!

What is your opinion on this? Are you a part of a co-founders team? What kind of mix you have in your founding team? Would love to know about his.

** This post is also cross posted in my personal blog, Random Musings. **

And it beats me as to how many times, I keep coming across the same (well, similar) business idea!

I am not referring to two entrepreneurs, coincidentally working on the same brilliant idea. I am referring to entrepreneurs working on an idea, where there are multiple dominant players already in place.

Like the 35th Group Buying business.

Ok, irrespective of my personal feelings about Group Buying (and which you can read in this blog, across more than one posts), assuming that it will be a successful model, what is the different thing you want to do, where as a 35th entrant, you still expect to come out successful / leader??

In the world, there may be examples to prove ANY theory.

So one would try and justify their entry by saying that wasn’t Google a late entrant in the search engine market, and did it still not come out on top?

Just the same way, people like to quote Apple as an example in many different arguments (“Apple does not do much of its own Social Media – the users create the buzz for it. Can we also expect that?” for example).

It needs to be understood that Google or Apple or their business models or their marketing strategies have been exceptions rather than the rule. Also that, fundamentally, both (and others of their kind) have a phenomenal product behind them, and even if they were to not do anything, maybe people would queue up outside their doors, with their cheque books open, looking to purchase!

So first of all, every entrepreneur must not think that he is a Google in the making. Without trying to reduce any ambition or aspiration of the entrepreneur, it is necessary to have feet on the ground, while planning the business strategy, and the positioning.

So while I have seen a bunch of Group Buying plans that did not differentiate from the many existing ones (at least in my mind), recently I came across another business model, that was similar to at least 4 other existing players. All 4 are reasonably well established, and this was the 5th one, entering the same space.

Basically a content vertical, largely ad dependent for revenues, significantly demanding to maintain (at least for good quality). The entrepreneur was trying to show me the differences that he had made in his model, vs the other prevalent ones. Even though he may be right, in pointing those out, to me (and I’d be like a typical consumer for his content), I could not spot those differences, without his explanation. And for a content heavy site,  a typical user is not going to run over it, with a microscope to see those differences.

Why then, would a consumer change habit and come and read content here, instead of the others which he was familiar with? I was not able to see it. And I told the entrepreneur in as less discouraging a tone, as I possibly could.

Of course, entrepreneurs are optimistic, if anything. All of us are. We want to give it our best shot, we feel we have the way to make this happen, we reckon that all things being the same, WE are that difference! So I am sure he is going on with it, and my best wishes to him too. And in a few years, he could have gone past the incumbents and emerged number 1. Again, I would only wish the best for him.

But my point is for one who is planning a business. Where do you start? Do you look for existing successes, and want to try and do one of the same kind? Or you come up with something entirely new, something different, something that the world has not seen just yet?? But which you recognize, would have value?

It is often easier to look at existing successes, and which is perhaps the reason why we see more me-toos, than original ideas. It takes a different vision, a certain imagination, creativity, and then a significant dare, to get into path breaking new thoughts, new ideas, new businesses. And which is why these are rare.

I urge entrepreneurs to look to being different, being unique. More than being clones.

Especially in an online business.

In an offline business, due to various factors, including geographical relevance, many brands of the same business model, can survive. Perhaps be successful too.

Online, everyone’s just a click away. There is no compelling reason (like geography) that a user will land to your site, even when there is a better site, more known, more popular, already around! Have we found a serious second auction site, after Ebay? NO!! Because Ebay is a click away. Why would anyone go anywhere else?!

Think about it.. being different can be more challenging, but can also be more rewarding!

I attended a talk by Prof. Nirmalya Kumar a couple of weeks back, and he was talking about how CMOs and CEOs need to worry not just about the short term, but also about the long term. He gave an example about how Coke could get away with absolutely no marketing spend for a year, and it may not impact its sales for the year. And yet, what does it do for Coke, in the longer term?

So a CEO / CMO has to take into account not just the next quarter’s results, but also the long legacy of the brand!

So what happens when such brands get lured by the GroupOns and the SnapDeals of the world? When a brand starts selling for 10% of its price, or even 50% of its price, no matter what justification marketers give internally to justify these moves, there are two consequences in the eyes of the consumer:

- that if they can sell for 10% of the price, they have been taking 90% too much from us, all these years!

- that I will wait for these discounts, and not buy at the full price at all!

Is this doing good for a brand?

Yes, the justification is that, instead of putting expensive advertising, I divert those marketing dollars into deep discounts, and get people to buy. To experience my product. And get a better and immediately measurable ROI on my “marketing” money! Sounds like a perfect plan, something that the CFO may like for the short term.

But who carries the responsibility for the brand, in the long term??

The moves would have been fine, during recessionary times. When you have capacity and the consumer offtake has reduced drastically. And you still want to keep your factories busy. At that time, a deep discount strategy is good.

But in India, at this time, it is a booming economy. Brands who are getting their act half right have cash registering ringing away to glory, and those who are doing better, are putting up new factories to cope with the demands!

In such times, who wants to sell cheap? Who wants to give those deep, deep discounts?

Only those who have no means to sell it right. Yes, I think that Deep Discounts are the last resort for the failed salesmen! When they can do no better, they discount. Well, if you give it away for free, you are sure to “sell” well (I heard an interesting rejoinder to this also, in fact, in reference to a specific community in India, and it said “if you give it free to them, they will ask for money to take it”!). And the reason for the inability to sell well, is their lack of understanding of how a consumer’s buying process has changed. If all that a marketer can do, is to blast advertising into the face of the customer, and the customer refuses to acknowledge these and purchase his brand, it is the marketer’s fault that he has not changed his ways. To the tunes of the new consumer buying decision journey (I cover some of that in this presentation).

If you do not get your marketing and sales right, you go and sell off cheap. Even in boom times! Report good numbers, get your bonuses, and walk away. And leave the brand bleeding in the long term.

No can do. If I hold shares in companies that are doing this, I would sell those shares, and get out. As I’m sure the future isn’t bright!!

Well, the movie ‘The Social Network’ is an entrepreneur’s movie, if anything! And there are many learnings to pick up, for entrepreneurs, and hence, I felt that this was the right place for this movie review.

The story is supposed to be of Mark Zuckerberg, the youngest billionaire in the world, and the founder of Facebook. Well, there have been some liberties taken, and hence I state that this is ‘supposed to be’ Mark’s story. Be that as it ma be, even if it is close to being Mark’s story, it is fascinating to learn about the man behind the name. Biographies of successful people are always interesting from that point of view. Usually of course, these are written (or made into movies) when the person concerned, is of advanced age. But in this case, the person has achieved success – stupendous at that – at a very early age, and so you see a movie about him, while he is still very young.

And perhaps there will be room to add a sequel. For there is no mention in this one, about the Microsoft investment. Or for that matter, about the move to take Facebook beyond the schools and colleges, and out into the public. And of course, I am sure bigger things are in store. Be it his battles with Google, or building pieces to take on the likes of Twitter, Foursquare or Paypal, there are interesting new things happening in Mark’s life, and in his business, and a sequel few years down the line, could well be in order!

For now, lets look at this first film on him, The Social Network.

The story is engrossing, for understanding the drive and the passion that it took to make Facebook. Like my daughter remarked after she saw the movie, “he was coding non-stop for 36 hours”. Well, that was just a part of it. But a crucial part, where there was amazing conviction, and which was supported by the commitment to ‘make it happen’.

I was not aware of the Sean Parker connection, so it was good to see that part. About how his biggest contribution was about dropping the ‘the’ from ‘thefacebook.com’ and making it to what it is today, viz. simply facebook.com. Or how he showed Mark, the path to California, and how it was a crucial shift for Mark and for Facebook.

The conviction that he saw, where he realized that reaching 75,000 users, or even a million for that matter, was just about taking smaller steps to the very big goal that he had in his mind. Many, including his co-founder, could have got satisfied, felt that they had already achieved a lot, and tried to monetize early. And which would not only have meant the lack of further growth, but would have stunted what was already there, due to drop-outs on account of the monetization drive!

These, however, are the most crucial three moments that I picked in the movie, and which are my key questions to fellow and budding entrepreneurs. Whether you have got these moments for your business yet, or not?

1. After the short-lived success of Facemesh, when Mark is working towards the new project (what became Facebook), he learns from the Facemesh experience, that people jumped on to Facemesh, not to see hot girls (which can be seen at many other places), but to see girls whom they knew.

It is a very crucial observation, and a very critical one too. Do you pick these nuances, naturally, in your business too??

2. The second Eureka moment is what lead Mark to put the ‘relationship’ field in the Facebook profile. Where he was trying to replicate the physical Harvard experience on a social network, and he could have simply put all the physical activities and efforts into the virtual world, the important thing was about identifying the key driver. Sensing that ‘relationship status’ will be one such factor, was an excellent breakthrough.

Other Social Networks have replicated many of the standard features that work on social networks. Say,Orkut for example, has done that. But they have not picked those crucial driving moments. And due to which they have not struck the serious growth levels that Facebook has managed.

So have you got those defining aspects that can be the game changers, in your business??

3. The third crucial dialog is what Mark has with Eduardo, after he has blocked the account. That money is required, to ensure that business flows without slightest interruption, to ensure the servers keep chugging away. As he says, “Facebook cannot stop. These are friends who know friends and so on. Even a few moving out, can be like a domino effect!”.

Well, against this obsession, we also have Twitter where fail-whale is a regular occurrence. And yet, it has managed to hang in there, as a business. But I would call it the exception!

The obsession of Mark to do all he can, to ensure that users get an uninterrupted, perfect experience, is what all businesses should strive for. It is more crucial perhaps for Facebook, where people are friends, and as Mark says, few guys moving, could cause a domino effect. But in today’s connected world, this is true for ANY business or service. If you do not do everything in your means to keep your existing customers, and few start leaving, you do not know when you could have a domino exodus away from you!

Are you as obsessed as Mark is about keeping each and every customer of yours??

All in all, it is a fascinating story to learn about a successful person. And it is clear that he is brilliant, but also extremely focused on what can work, how he wants to provide clear value, and how he has a bigger picture in mind, to take Facebook to newer and newer highs!

Looking forward to see where the business goes further, and to a possible sequel to this.

And looking forward to entrepreneurs being inspired by the story!

Have you seen ‘The Social Network’? What did you think of it? Do share your thoughts in comments below..

Like a two-wheeler at 50% of its price? Or a TV at 40% of its selling price? Or even gold – at 30% discount??!

My own first reaction (tampered as it is by standard thought process on gross margins available, etc.) is that it cannot happen! Or that maybe it’s a scam. It is not the real thing. It is second-hand. It is fake gold, etc. etc. etc.

And then you look deeper. And get a bigger understanding of the process.

Every advertiser is looking for that eternal ROI. How many crores spent on making the VW Vento ad speak to Times of India readers? How many increased walk-ins to the showrooms? How many cars sold?

And calculations of that kind!

So when a group buying company suggests to you that:

-          you spend money on expensive advertising (hoarding, print, TV etc.)?

-          you want to drive footfalls and sales

-          what if that is assured to you anway

-          and you cut to the chase

So that, essentially is the model for group buying!

Divert the money out of advertising.

Put the same budget in offering exciting discounts.

Use the group buying vehicle to reach the customers who want your product.

There.. the ROI is in for the budget allocated.

But.. is it really that simple?

If its not that new mousetrap, but rather the unbelievably cheap mousetrap, there are good chances that you’d have a queue outside your door, and you can sell as much as you want.

But the questions then, are:

1. Did you advertise only to reach those few buyers who would walk-in or purchase? If that was your intention, then some means of targeted direct marketing / telemarketing would have been better options, than mass media advertising, right?
2. Your purpose of advertising was to also reach those were not going to walk-in today or purchase in the near future. People who may still register your brand somewhere in their heads, and think about you, as and when they get to a point of purchasing your product category. Or to create a general brand hype / visibility etc. Just cutting to the chase and getting those 40 walk-ins, gives you ROI, but does it give you that visibility at all?
3. Will the buyer perceive that maybe your product is actually worth 50% of your selling price, and the rest of your normal mark up, is your huge profit. And which you should not be earning, really? Could that actually cause more harm than good, in the long run?
4. Also where do you create your market for tomorrow? If you have not pushed the brand out as much, and have resorted largely to the short cut, discount driven, group buying options, the rest of the world has not been impacted by your brand. And you have left tomorrow’s market open for your competitor to lap up?!

At a time when brand managers are pushed to deliver ROI and a group buying option appears to get them there, there will be temptation to pick it up. And sell at less than cost, by explaining the difference to the marketing budget account. But I wonder if this is sustainable in the long run.

So is all group buying bad for brands? Certainly not.

Where you have perishable inventory, group buying is a beauty. Airline seats, hotel room nights, even food products approaching ‘best by’ dates. Better sold at cheap than not sold at all. And good for the buyers too. Perfect win-win.

Or for categories like services. Where each new service customer is not draining away real cost, but only utilizing the excess capacity that is anyway, idle. Theatre seats, saloon chairs, gym memberships are the examples I refer here.

What I have concern about, are physical product areas, where attempts are made to sell cheaper than cost price – by a lot – and which can over time, potentially do more harm than good, to the concerned brands.

What do you think? Love to read alternate opinions on this.. please comment below!