Archive for the ‘Uncategorized’ Category

When A Business Is VC Funded, VC Is The Business

Friday, September 15th, 2017

A couple of years ago, virtually every driver of my Uber and Ola taxi rides used to praise the two cab aggregators to high heavens for paying them huge incentives. Many of them would ask me how these startups could afford to shell out that kind of money when they were collecting less than half of that amount in fares. I used to tell them that they got oodles of cash from VCs and explain how the venture capital model was driven more by bookings than revenues or profits.

Cue to the present day. There’s still a lot of mystery shrouding VC funding.

I regularly come across hordes of people during events and on social media accusing VCs of ruining the market by promoting discounts and cash burn. Some of the haters have even gone so far as to suggest that the government should ban VCs.

In this post, I’ll share my thoughts on why this belief is wrong and explain my understanding of how the VC investment model works.

Much of the angst about VCs arises because people wrongly apply the yardstick of a traditional business to VC investments.

Let’s take a traditional business like cement. Promoters and shareholders make a large upfront investment to set up a factory, develop a distribution network and employ staff. While a plant is under construction – which can easily take 3-5 years – there’s no revenue. After production commences, sales begin, hopefully profits and dividends follow, share price goes up and shareholders start seeing a return on their investment. For the first five years or so, investors get no return on their investments. Therefore, there’s a lot of time burn in a traditional business.

On the contrary, there’s very little time burn in the VC funding model. The way it works, revenues start from Day One in the case of cab aggregation, ecommerce and many other VC-funded categories. Once they achieve product market fit, startups use the funds raised from VCs to achieve explosive – aka “hockey stick – growth in Pageviews, App Installs and Gross Merchandise Value. In a favorable market, growth on these so-called “vanity metrics” translates into a manifold jump in the valuation of startups. Angels investing in startups at the early stage can sell their to VCs, PEs and other late stage investors for a tidy profit even if the startup hasn’t started making profits.

Many people find it unreasonable that valuations keep raising when a startup’s losses are mounting.

They shouldn’t. In what’s one of the cardinal principles of investing, valuation is what the buyer and seller mutually agree upon – there’s nothing reasonable or unreasonable about it.

Not that there aren’t theories about estimating valuation or practical applications of the theoretical models.

In his blog post titled Valuation For Startups?—?9 Methods Explained, the author Stéphane Nasser explains several methods of arriving at a startup’s valuation.

According to a study cited by FORTUNE in Tech Unicorn Valuations Are In Trouble, “half the unicorns were worth less than $1 billion, and more than a dozen were overvalued by 100%”.

While these models and studies sound logical on the surface, they tend to break down when you probe them deeply.

Models use thumb rules like “P/E ratio of 30 is a bargain for a consumer internet startup”, “P/E ratio of 20 is too high for an IT services company”, and so on. There’s nothing intrinsically scientific about these rules of thumb.

By concluding that WhatsApp was overvalued by 60%, the aforementioned study cited by FORTUNE implies that the right value of WhatsApp is 40% of the $19B paid by Facebook for it. Well, if you think $7.6B (40% of $19B) is a reasonable valuation for WhatsApp – a company that posted sales of $36M when it was acquired by Facebook – you shouldn’t have a problem accepting the actual $19B figure.

Then, there are other scientific-sounding articles like Behind the global tech investing tsunami that justify exploding valuations for VC-funded startups.

But these models have limited use. They can be applied to objectify the discussion around valuation before doing a deal. However, after a transaction happens, all that matters is the price at which the deal was struck.

It’s not only me. As Stéphane Nasser concludes his aforementioned article, valuation models “are just the theoretical introduction to a more significant game of supply and demand.” In plain English, you decide on a valuation and then use a scientific model to rationalize the figure.

And, this is not just true of VC-funded startups.

As Joseph Heller wrote decades ago in his bestseller Picture This, “‘Aristotle Contemplating The Bust of Homer’ is the most valuable painting because it’s the most costly painting; it’s the most costly painting because it’s the most valuable painting”. He was referring to the Rembrandt masterpiece that was the first painting in the world to sell for more than a million dollars.

Bottomline is, as long as somebody is willing to buy shares of a startup at a certain valuation, it’s immaterial what third parties think about the valuation.

The success of the VC funding model lies in its ability to find and deliver profits to many such “somebodies”.

Early stage investors (“Angels”), who get into a startup early, make money by selling their stake to late stage investors (“VCs”). Late stage investors, who enter when the startup has started making revenues (but not profits), make money by selling their stake to later stage investors (“PEs”). Rinse and repeat until the last stage where private equity investors, who get into the startup once it makes significant revenues (but not necessarily profits), sell their stake to the man on the street via IPOs.

To be clear, “profit” does not refer to excess of the startup’s revenues over costs but the increase in the value of the investor’s stake in the startup from one round of funding to another.

While there’s cash burn, shareholders make money right from the inception of the startup. So, there’s no time burn in the VC funding model.

In the world, there are some people who are time rich and money poor and there are others who are money rich and time poor. Shareholders in traditional businesses are in the first category, so they prefer time burn to cash burn. VCs are in the second category, so they prefer cash burn to time burn.

Each to his own way. There’s no reason for the government to ban VCs for belonging to the second cohort.

That said, metrics of a conventional business like ROI are relevant in the VC model. Just that they apply to VCs, not their portfolio companies. That’s what I meant by the “VC is the Business” part of this post’s title.

VCs have a great track record on those metrics. That will be subject of a follow on post. Watch this space.

A Few UX Hacks

Friday, September 8th, 2017

Like everyone, I come across many usability-related pain areas in the software, websites and devices that I use regularly. Some of these are caused by bugs and others, by basic design flaws. Over the years, I’ve used some tools and techniques to overcome these problems and improve my UX.

Here’s a collection of my UX hacks, in no specific order.


Problem: Painful to read core content on cluttered websites.


Read these webpages via Mercury Reader. This nifty Chrome Extension strips a webpage of banners, ads and other distractions, thus enhancing the reading experience.

Have a look at Times of India. As you can see, the webpage is very busy (Exhibit 1).

Exhibit 1

Now, click the Mercury Reader button on the Chrome Extensions panel. You can see a clean version of the page with all the distracting material stripped off (Exhibit 2).

Exhibit 2

You can send the cleaned-up page to Kindle or share it on Facebook, Twitter and Email. If you want to save it as a PDF file, follow these steps:

  • Click inside Mercury Reader frame
  • Right click and select Print, or type Ctrl+P, to open the Chrome Print menu
  • Set Destination to Save as PDF.
  • Click the Save button.

Voilà. You now have a clean PDF of the webpage.

#ProTip: In my experience, the clutter on many pages is not merely restricted to the left and right hand sides of the page – it can extend for many pages after the core content has ended. To avoid saving all the junk in your PDF file, scroll through the Preview window on the Chrome Print menu, spot the last page of the core content (say 7), enter “1-7” in the Pages box instead of leaving it at the default value of All, and click Save. This will save only the first seven pages – i.e. core content – to the PDF file.


Problem: Many people find it hard to read long articles onscreen without having a pen and paper beside them to take notes.


While there’s nothing wrong with pen and paper, there are some advantages of “going digital” while taking notes. LINER is a Chrome Extension that lets you highlight passages on a webpage and attach notes to them. Unlike good old bookmarking tools like that let you only bookmark a full page, Liner allows you to highlight a specific portion of a webpage in which you’re interested (“Highlight”).

Liner works as follows: Select one or more paragraphs on a webpage (example) and click the Liner button on the Chrome Extensions Panel. This will change the color of your selection to yellow (by default, but you can change it to your favorite color).

You can add a note to your Highlight (see Exhibit 3).

Exhibit 3

Apart from online notes, Liner has another great feature, which is especially useful for content marketing professionals: It gives you a URL for your Highlight within a webpage e.g. This is unlike a standard page URL that drops you at the top of a webpage.

To collect the Liner URL, click the Copy Link button displayed on the Liner box that pops up as soon as you click the Liner button (see Exhibit 4).

Exhibit 4

You can share the Liner URL via Email and Social Networks. When your recipient clicks it, they will reach your highlight on the given webpage.

By sending a Liner URL to someone, you can draw their attention to the specific portion on a webpage that is relevant to a given context – instead of dumping the URL of the webpage on them and expecting them to take the trouble of finding the proverbial needle in the haystack.

You can also export your Highlights to popular apps like Word, Email, Google Drive, Evernote, and so on.

All your Highlights are stored in the Liner Dashboard, from where you can access a specific Highlight via browse or search (premium feature).

#ProTip: If you want a tool for annotating and adding notes to PDFs in your local hard drive, I recommend Adobe Acrobat Reader DC, a free desktop software from Adobe Systems Inc.



Phantom names of MP3 files copied from a Laptop to a Smartphone.

I started listening to music on my mobile phone well before smartphones and streaming sites came into existence. As I wrote in How Mobile Phone MP3 Players Have Changed Lifestyles over a decade ago, I’ve accumulated a sizeable collection of songs on my Laptop, from where I sideload a bunch of them to my smartphone. While smartphones have kept pace with laptops with respect to RAM capacities (e.g. 4GB on both), they still lag laptops by a mile when it comes to storage (e.g. 32GB on Smartphone versus 1TB on Laptop). As a result, the hard disk on my Laptop continues to be my “Single Source of Truth” for my digital music collection and I continue to copy songs from my Laptop to my Smartphone periodically to this day.

While assembling my collection of digital music on the Laptop, I take the trouble to name MP3 files by their song names (e.g. PF Wish You Were Here.mp3). As a result, when I play them using (say) Windows Media Player, the song names display correctly on the Laptop. However, once I sideload them to the Smartphone, these songs lose their original filenames and show up under phantom names (e.g. TRACK03) while I listen to them on the Smartphone’s Music Player app. This mars the music-listening experience and makes it painful to create Playlists on the Smartphone.


Use MP3TAG software to process the MP3 files on the Laptop before copying them to the Smartphone.


  1. Exhibit 5

    Open mp3tag app on the Laptop

  2. Select the Source Folder on the Laptop containing the song collection you want to copy to the Smartphone
  3. Drag the Source Folder and drop on the RHS pane of mp3tag’s dashboard
  4. Click Ctrl-A to select all files displayed in the mp3tag pane
  5. Right Click to open conversion menu, then click Convert > Tag-Tag (Exhibit 5)
  6. Set “Field” = TITLE
  7. Click small right arrow next to “Format string:” field
  8. From next screen, select “Information Fields” > filename
  9. Click OK
  10. All files will be “renamed”. The file names themselves won’t change but the TITLE of each file will be corrected from the spurious one (e.g. TRACK03) to the proper song name
  11. Sideload the songs from the Laptop to the Smartphone via USB cable / Bluetooth.
  12. When you open the Music Player app on the Smartphone and tap Refresh, you will see all songs appearing by their name. Mission accomplished!
  13. As a housekeeping step, right click the file selection on mp3tag RHS pane and click Remove. This cleans up mp3tag and makes it ready for the next conversion session. Don’t worry, this command does not delete the files in the Source Folder.

This hack is courtesy my friend Gunwant Suryawanshi.

#FunFact: mp3tag works in-situ i.e. it processes files in their original location. This is unlike Dropbox and many other desktop applications that copy files into a proprietary folder, which is a waste of storage space and a cause of version management headaches.

I hope you find these hacks useful.

If you have any UX hacks of your own, please share them in the comments. Thanks in advance.

With The Bar Raising, FORTUNE GLOBAL 500 Eludes The Indian IT Industry

Friday, September 1st, 2017

The company ranked #500 in this year’s FORTUNE GLOBAL 500 generated revenues of US$ 21.609 billion compared to US$ 20.923 billion posted by its counterpart last year. In other words, the Global 500 Qualifying Revenue increased this year. This is a constant trend except for last year, when the Global 500 entry bar actually fell from the previous year’s level.

Before we deep-dive into how this impacts the Indian IT industry, here’s a quick overview of the list published by Fortune magazine on 1 August 2017:

  • WAL-MART STORES (USA) continues its reign at the top spot. AUTONATION (USA) closes out the list at the last position. Their financials are shown below:

  • For all the talk of disruption by fintechs for the past several years, financials continues to be the most profitable sector in the world, with seven out of 10 most profitable companies in the world belonging to financial services. If this is what wannabe disruption can do, many other sectors must be dying to get disrupted!
  • The rise of China is unbelievable. A decade ago, the country had 29 companies on Global 500. Now it has 109. The #2, 3 and 4 companies in this year’s list are all Chinese. Fortune predicts that China may soon overtake USA, which has the most number of companies on the list (132).
  • In the 20+ years that I’ve been tracking this list, India’s GDP has nearly quadrupled but the number of Indian entries in Global 500 has stagnated at around 5-8 companies. This year’s list has just seven Indian companies. I don’t know whether it implies that the country’s GDP has grown by virtue of the big companies getting bigger or small companies becoming midsized but not big enough to enter Global 500 or something else. If you have any thoughts, please share them in the comments below.

  • After debuting at #285 in 2012, STATE BANK OF INDIA (India) has inched up to #217 in the latest Global 500. SBI is now larger than many more-well known global financial powerhouses like ANZ, BARCLAYS, NAB, UBS, et al.
  • Just one year after entering the list at #423, RAJESH EXPORTS (India) has zoomed up to #295, with 43.1% revenue growth.

Now, coming to the Indian IT industry.

When the Global 500 entry barrier went down last year, I predicted that one or two Indian IT companies would enter the Global 500 as early as 2018. Alas, that’s not to be. Not because their growth has slowed down but because the Qualifying Revenue has gone up. I’ve reworked my model to reflect the latest figures. This is how it looks:

(Click here to download my Excel model).

Based on the revised figures:

  • TCS will become a FORTUNE GLOBAL 500 corporation in 2025
  • None of the other four featured companies are likely to enter the hallowed list within the 10 year horizon of my model
  • The next rung of Indian IT companies stand virtually no chance of entering Global 500, so I haven’t introduced them into my model.

As before, my model is based on the assumption that future CAGRs will mirror the latest year-on-year growth rate. This assumption has held up well so far but I expect it to be challenged in the near future because of two reasons. As you’ll see shortly, that’s not a bad thing.

The first challenge to the assumption comes from the behavior of the Global 500 Qualifying Revenue. As you can see from the following chart, it has been spinning like a yo-yo during the last five years.

Therefore, it’s too simplistic to use the latest y-o-y growth rate to predict future Qualifying Revenues. If Qualifying Revenue continues to behave in such a volatile manner, I’ll start using 5-year moving averages in my predictions from next year.

The bigger challenge to the CAGR assumption will come from the high level of inorganic growth expected in the Indian IT industry. Beset with digital, AI, automation and other growth impediments, industry leaders are under increasing pressure from their shareholders to use their huge cash hoard to buy up new-age companies to get a jumpstart on emerging growth opportunities.

During the recent fracas at Infosys, there were strong rumors that Infosys attempted to sell itself to TCS, which is India’s largest IT company. Had this deal happened, the merged entity would have entered the Global 500 at #400, with a combined revenue of over US$ 27 billion.

While nothing seems to have come out of this specific overture, the general M&A buzz is too loud to be ignored any longer. When – not if – the inevitable happens, revenues of some Indian IT companies will go through the roof. CAGR of acquiring companies will be way above the figures assumed in my model.

Here’s my bold prediction: In a year or two, at least one of the logos in my present model will be gone, and at least one of the remaining logos will appear on that year’s FORTUNE GLOBAL 500 list. And that’s surely a good thing!

We Want Another One, Not Like The Other One

Friday, August 25th, 2017

emr-cook-hostIn Robin Cook’s latest novel HOST, patients go into a comatose state during simple surgeries. Click here to read my review of this medical thriller. After reading the novel, I had a vague sense of déjà vu feeling. I thought it had a striking resemblance to the author’s 1977 bestseller COMA. So many years later, I can barely remember if I’ve read a certain book, let alone remember its plot. Therefore, I dug deeper. I struck paydirt in this review of HOST, which made the link between the two books explicit: “Robin Cook takes readers back to where the genre began  and the questions posed in Coma”.

After looking up COMA on Wikipedia, I was totally convinced that HOST was a carbon copy of COMA.

Published in 2015, HOST has the same plot as COMA although it has all the trappings of the zeitgeist in terms of lingo, gadgets and technology. Both plots use virtually the same modus-operandi, even if the nitty gritty of the antagonists’ intentions are slightly different.

As a marketer, I know that repurposing old content is okay in Content Marketing. But what about Publishing? When an author “repurposes” his old book into a new book, is that plagiarization?

Not familiar with the nuances of the publishing industry, I consulted my sister, Roopa Swaminathan, who is the author of a book that won the Swarna Kamal National Award for Best Book in Film award. Here’s what I learned:

  1. selfp-fiThe copyright of a book is co-owned by the author and the publisher. It’s entirely up to the two of them to agree to publish another book identical to the first one.
  2. Even if the second book is written by a different author, as long as its author and publisher enter into an agreement with the first book’s author and publisher to publish a carbon copy of the first book – with or without attribution – that’s also fair game.
  3. In any case, the author and publisher of the second book don’t owe any disclosure to readers.
  4. While self-plagiarization is not illegal, it’s not common.

Therefore, Cook is well within his rights to do what he did with HOST.

That said, as a long time Robin Cook fan who has been reading his medical thrillers since his teens, I feel a bit let down that he didn’t declare his act of self-plagiarization upfront. When I got over my feeling of betrayal, I could think of only one explanation for Cook’s behavior. I know I’m being a big generous but he probably never expected somebody who read COMA in the seventies to read HOST almost 40 years later AND spot the similarity between the two books!

flashboys-michaellewisOn another note, I’ve always wondered why no doctor, hospital or insurance company in the USA has been caught commiting the kind of dastardly acts Cook wrote about in COMA nearly 40 years ago (and in nearly every book thereafter) and why American regulators haven’t chastisted the healthcare industry despite Cook’s claims of rampant malpractices in its ranks going back to the 1970s.

After all, they swooped down on Wall Street after Michael Lewis wrote merely one book – Flash Boys – insinuating that the American algo trading market is rigged for the benefit of insiders.

I guess Cook’s books didn’t cause too many ripples because all the bad things he wrote in them are merely figments of his imagination. Perhaps he has just been indulging in scaremongering to hit the bestseller lists. There’s nothing wrong with that per se – the copyright pages in his novels do state that the books are works of fiction – but we should stop taking his conspiracy theories and doomsday predictions about American healthcare seriously.

Overdraft Protection – Another Hot Opportunity For BPOs?

Friday, August 18th, 2017

Consumer advocates ranted about overdraft protection fees in 2008, saying the service was forced down upon consumers.

While the uninitiated can Google “overdraft protection” for a prosaic definition of the term, Stanley Bing offers the following tongue-in-cheek description for this money-spinner service of US banks:

“No matter what you spend with your debit card, even if you have no money in your account, the guys at the bank will make sure that you’re not embarrassed. They’ll pay your tab!”

To appease consumers, the US government passed Reg. E that required banks to seek customers’ opt-in for overdraft protection.

Banks went after their customers aggressively to do this. I’d called out marketing campaigns for enrolling consumers for overdraft protection (ODP) as a big opportunity for Indian BPO industry at the time. More on this in my post entitled Overdraft Opt-In Presents A Huge Opportunity For BPOs.

Seven years later, US Banking industry’s overdraft protection business has bounced back to 2009 levels. According to Wall Street Journal, “overdraft fees totaled $33.3 billion in 2016”.

Consumer advocates are now back with a fresh raft of complaints.

In a new lawsuit filed recently, the consumer protection regulator CFPB has charged TCF National Bank with “tricking consumers” into overdraft services by using misleading language that enrolled “people who said yes to a question over the phone about wanting their debit card to continue to work as it had been.” The CFPB further claimed the bank asked new customers about opting in “immediately after a series of mandatory items the consumer had to agree to in order [to] open the account…most consumers fell into the rhythm of initialing the terms of the agreement and signed on.”

A survey by overdraft regulation proponent Pew Charitable Trusts found that 52% of consumers who have paid a debit-card overdraft fee don’t recall opting in to this service.

Meanwhile, there’s the usual outrage on Twitter:

IMO these rants are groundless and deserve to be be dismissed summarily. Maybe sensing this, the guy I trolled on Twitter has deleted his tweet.

Because it really doesn’t matter how consumers signed up for overdraft protection or whether they remember doing so.

If they’re incurring overdraft protection fees today, it’s because their bank account ran out of funds while they were paying their latest (say) telephone bill. Not because they enrolled for their bank’s overdraft protection service several years ago. If their bank hadn’t covered the shortfall, their bill would have remained unpaid. Their TELCO would have slapped a late payment fine or even disconnected their phone.

This is the true context of overdraft protection.

But that won’t stop the furore. Thanks to the Great Financial Crisis, the reputation of banks has taken a massive beating on Main Street. Unjustifiedly so, in my opinion, for credit rating agencies are ones really culpable for what happened in 2007. More on that in Credit Rating Agencies & The Financial Meltdown. But I digress.

Consumer advocates are making bank-bashing hay while the GFC sun shines.

Some banks are responding proactively with measures to warn customers of the likely occurrence of overdraft. According to the Wells Fargo spokesperson quoted by WSJ, her bank has already provided low-balance alerts and is in the process of introducing a zero-balance alert that will be sent intraday when a customer’s available balance is zero or negative.

That won’t suffice.

I expect the regulator to ask banks to provide evidence that consumers who are being charged ODP fees had indeed signed up the service. I’m sure banks captured customers’ opt-in confirmations in their systems and will be able to pull out the required proof from their databases quite easily.

But I suspect it won’t end there.

I expect the regulator to require banks to take the customer’s approval for every overdraft transaction. The way ODP works today, once a customer opts in for overdraft protection – a onetime action – the bank automatically covers every incident of overdraft without any reference to the customer. Under the new paradigm, the bank will need to notify customers each time they’re overdrawn, ask them whether they want the specific incident of shortfall to be covered, and go ahead only if the customer says yes.

Considering that retail payment systems are highly automated and handle extremely high volumes, it might seem impossible to seek a transaction-by-transaction approval.

But that’s not true any longer.

Technologies like 2-way SMS Alerts are already available that can help banks to manage individual overdraft transactions.

To see how this would work, let me continue with the example of the aforementioned consumer whose account didn’t have enough balance to cover their telephone bill. As soon as the bank covered the shortfall, it would send out a text message to the customer saying “Your account was overdrawn and we made it good. We charged you $XX fee for doing this. Do nothing if you want this transaction to stay. Reply back with NO if you want to cancel this transaction. If you cancel, your telephone company may slap late payment charges or even disconnect your service”. If the customer doesn’t respond, the bank does nothing. Both the original payment to the TELCO and the ODP fee debited to the consumer stay. If the customer replies with NO, the bank reverses the payment to the telephone company and credits back the ODP fee to the consumer’s account.

The Indian banking industry offers a good example of the use of 2-way SMS Alerts in retail payments. For the past five years or so, everytime a consumer uses their credit / debit card, they get an SMS notifying them of the transaction. As of now, this SMS is one-way: If a consumer wishes to report the transaction as fraudulent, they have to phone the bank that issued their card. Phone means wait time, hold music, phone tree and, eventually, a live agent who has no clue about the purpose of the call. This poses tremendous friction, especially when the consumer is in an agitated state of mind, having just experienced a fraudulent transaction on their card. As a result, most cardholders don’t feel confident of being able to report a fraud. To address their concern, the Indian banking regulator Reserve Bank of India has recently stipulated that customers should be able to report fraud by replying to the SMS message they get from their banks. To do this, banks will need to upgrade their card transaction notifications to 2-way SMS Alerts.

To implement the 2-way SMS Alert technology, the bank needs to know the customer’s mobile phone number. This is not a big caveat in countries – like India – where people give out their mobile numbers freely and it’s virtually impossible to open a bank account without disclosing your mobile number to the bank (See Privacy Does Not Equal Security). However, it’s not common for customers to share their mobile numbers with their banks in the USA.  So banks will have to find a way to coax mobile numbers out of their ODP-enrolled customers. Given that privacy is a big thing stateside, this step might prove as difficult as getting the customer to opt-in for overdraft protection in the first place!

Marketing campaigns to collect customers’ mobile numbers might become another hot opportunity for the Indian BPO industry.

Forget Frugal Marketing. It’s Time For Frugal Engineering

Friday, August 11th, 2017

The asphalt road outside my house was getting concreted last year. When I was walking down on the road one day, I noticed that a narrow gully of around two feet width was left untouched on one side of road.

When I saw this, I thought there was a massive goof-up somwhere. In all probability, so went my cynical thinking, Pune Municipal Corporation – the local authority that is responsible for all public works in the city – must’ve placed an order for concreting of 100 feet width whereas the road construction contractor might’ve found out while executing the order that the actual width was 102 feet, hence the two feet strip went unconcreted.

Life went on and I forgot about this over time.

Until I saw the gully being dug up a month or so later.

From one of the workmen, I found out that the gang was laying a natural gas pipeline. This is pursuant to replacement of LPG cooking gas cylinders by piped compressed natural gas (CNG)  in certain parts of Western India including the city of Pune where I live.

In the good old days, the road contractor would concrete the entire road and go away. The pipeline contractor would come a month later and dig up the brand new road.

And not just in Pune / India. As Janette Sadik-Khan, ex-Commissioner of New York City Transport Department, says in her foreword to the New York City Department of Transportation Streetworks Manual:

Nearly every New Yorker seems to have a story about a work crew digging up a freshly surfaced city street.

Whereas what possibly happened this time was, the road contractor was instructed to leave the gully unconcreted for the gas pipeline contractor to lay the pipe a month later. Far from the goof-up I suspected, this reflects solid coordination between these two contractors.

The UK government has invested hundreds of millions of pounds in streetworks regulation, processes and technology to achieve this kind of coordination between different “public utilities” that excavate city streets for laying various types of piping, cabling, etc. In fact, the specific feature that prevents repetitive digging of the same stretch of a road one after the other by two different utilities is called “pinchpoint avoidance”. As far as I know, the local authority in Pune doesn’t have such a software. Despite that, it has achieved this favorable outcome.

This is very impressive.

And it’s not an isolated incident. There are many more instances where government / public sector organizations are using technology to deliver superior citizen / customer experience without spending too much time or money:

  • A friend went to the passport office to renew his passport. By the time he reached back home around 45 minutes later, he got an SMS saying his passport had already gone for printing and lamination. Sure enough, he got the renewed passport the next evening.
  • Indian Railways provides very responsive service on Twitter. More on this in my blog post entitled Why Social Media Has Become My First Port Of Call For Customer Service. I believe that this initiative by @RailMinIndia is handled by a team of around 20 people aided by a few open-source sentiment analysis tools. This is an amazing feat, given the huge network size, massive volumes, 24/7/365 operations and ultrafast response times.
  • The demonetization of high value currency notes in November 2016 caused a severe cash crunch in India during the last two months of 2016. The government began promoting digital payments to replace cash. In response, many banks released A2A mobile payment apps based on Universal Payment Interface (UPI), the payment system launched by the nation’s retail payments body National Payments Corporation of India (NPCI) a few months earlier. Within days, there was a proliferation of UPI apps – at peak, a Play Store search for “UPI” yielded 23 apps. The average citizen was thoroughly confused about which UPI app they should download. Realizing that the chaos could torpedo #CashlessIndia – the Twitter hashtag for the move to digital payments in India – NPCI swung into action and released a single UPI app. Called BHIM, the app could be linked to accounts in any one of dozens of participating banks. Customers of all banks now got one single UPI app to download, install and use. End of confusion. Start of adoption. BHIM was launched in barely 45 days. For comparison, development of the equivalent PayM app in UK took almost a year.

I’m convinced by these events that some kind of digital revolution is going on behind the scenes. As my friend said, it looks like government agencies are achieving a lot by reengineering their backend for a small cost.

I call this “frugal engineering”.

IT product and services companies in India have traditionally clamored for “frugal marketing”.

Well, it’s now time for them to embrace frugal engineering.

That said, mere reengineering of the backend can drive adoption only of government systems where users – citizens, employees of government agencies, local authorities and public utilities and others – are compelled to use the systems regardless of the frontend and the overall user experience.

For commercial systems, adoption requires true digital transformation, which combines the latest in forms, social, mobility, analytics and AI technologies with best practices in UI, UX and CX. On that count, there’s a lot of scope for improvement in many applications, as I’d pointed out in the Redefine Digital section of Indian IT – Turning Crisis Into Opportunity: Part 2. To achieve the desired end state, a lot of work needs to be done around usability, uptime, education and marketing. I doubt if that will happen with a frugal approach but only time will tell.

Taking Persona Based Marketing To New Heights With Persona 2.0

Friday, August 4th, 2017

In Use And Misuse Of Personas In Marketing, I’d defended personas from being lampooned by some misguided marketers.

That doesn’t mean I believe everything is hunky-dory with personas.

There are at least three problems I see in the way personas are created and used in Persona Based Marketing (PBM) campaigns today.


I read the following comment on an article about personas:

‘There’s too much focus on “Who is the buyer?”. Marketers should rather focus on “What does her company want?”’.

This is very true, especially in B2B products and services where purchase decisions are made by committees. Since a committee comprises of people with varying personalities, it tends to place the company’s needs above any individual’s persona. Ergo, persona based marketing has its limitations. That’s the best case scenario. In the worst case scenario, PBM based on simplistic personas of the committee members can actually backfire.


Traditional personas are too macro, can’t be updated in real time, and suffer from other issues highlighted by Venkat Nagaswamy, Co-founder and CEO at Mariana, in Kiss your personas goodbye (and say hello, AI)!.

We couldn’t agree more. As a result of their unchanging nature, personas widen the already-gaping chasm between sales and marketing.


Personas are currently obsessed with human beings. As a result, they may become irrelevant in the digital world.


While the current generation of personas are still useful in PBM, they face the risk of becoming obsolete in the near future. We need a new generation of personas that address the above maladies.

Good news is tools and technologies are already available to develop the future-proof Persona 2.0.


According to CEB Marketing, B2B purchase committees comprising of members with varying personalities manifest a so-called “Interpersonal Persona”.

Ignoring group dynamics and continuing to run PBM campaigns on the basis of individual personas can backfire. Therefore, B2B marketers need to replace their simplistic personas with Interpersonal Personas. But this can take time.

In the immediate term, we recommend supplementing PBM with Marketable Items, which package product features and service capabilities into compelling reasons to buy that resonate strongly with the target market’s pain areas and hot topics. As you can see from the examples of Marketable Items we’ve created for several technology product and services companies, a Marketable Item vibes with the buyer company’s needs. This helps marketers overcome the shortcomings caused by PBM’s sole concern with the “who is the buyer” question.


Marketers can use a combination of social media and AI to add online behavior and many other attributes to the current generation of personas, thus making them dynamic and actionable. Such personas will help marketers extract more bang for their PBM buck.


Algorithms are playing an increasing role in the purchase of stocks, media and other products. Robo-advisors are exhibiting human-traits like conflict of interest. Personas can’t remain exclusively focused on human beings.

To stay relevant in today’s digital world, personas must cover bots. By doing that, they will help PBM target algorithms, robo-advisors and other non-human buyers.

Persona 2.0 created by using the aforementioned tools and technologies can overcome the shortcomings of the current generation of personas and take PBM to new heights.

Indian IT – Turning Crisis Into Opportunity: Part 2

Friday, July 28th, 2017

The ink on my previous post Indian IT – Turning Crisis Into Opportunity has hardly dried when two Indian IT majors Infosys and Wipro have announced better-than-expected quarterly results. Much as I’d like to attribute their superior performance to the guidance given in my post (!), these IT veterans have been doing all this and more for a long time.

The pall of gloom over the industry’s prospects has temporarily lifted. The industry can get rid of it permanently by taking the following measures:

  1. Go up the value chain
  2. Target the CMO organization
  3. Set up component factories
  4. Extract additional revenues from fixed price deals
  5. Redefine digital

I covered the first two imperatives in Part 1 of this post.

In this follow on post, I’ll cover the next three measures.


There’s a lot of buzz around assembling software from prebuilt functionality instead of developing it from scratch. In my two decades’ experience in the industry, the pressure for reuse keeps cropping up whenever the economy goes through uncertain times, like now. In Why Is Software Still Built From Scratch?, I’d shared my thoughts on how to crack the Holy Grail of assembling software from reusable components. To recap, it requires a repository of components and a business model that together let customers

  • discover software components in an open catalog
  • find out their specifications and select which components they need to assemble their system with
  • buy the selected components outright without onerous licensing terms or dependency upon any form of first- or third-party IP
  • be assured of getting the same functionality throughout the life of the software, and
  • modify components without having to share the source code with external entities.

Product companies won’t like to get involved in this endeavor since it goes against the grain of their license / subscription-based business model.

On the other hand, this is right up the alley of services companies. Indian IT Services industry should take the lead to set up component factories for making reusable code. A few enterprising services companies have already done this – I know a fintech that set up a component factory for producing electronic billing components and used co-visioning to assemble eBilling solutions from these components instead of building each solution from scratch.

For help with spec’ccing resuable components and developing business models like co-visioning, please contact us.


According to common wisdom, the value of a fixed price deal is frozen at the time of signing the contract. Accordingly, the notion of extracting more revenue from a fixed price deal may sound like an oxymoron. But that’s only because a combination of delivery pressures and a general lack of commercial acumen in the delivery organization makes most Indian IT project managers forget clauses like “Fixed Price for Fixed Scope” and “Change Control” that form a part of a fixed price contract. And savvy customers like Dilbert’s pointy-hair boss have found nice ways to hasten the memory-loss!

For the uninitiated, a fixed price contract means that the vendor agrees to deliver a fixed scope of work for a fixed price. Normally, any fixed price contract has a change control clause that allows a vendor to charge separately for additional work not covered in the original scope. In medium to large software development projects executed over several months or years, the scope rarely remains fixed. Changes to scope happen in the form of new functionality, additional support, unforeseen training needs, sudden requirements for data migration, and so on. They’re driven by factors related to business, regulations and overall program. As and when the scope changes, a fixed price contract allows the vendor to raise Change Requests to provide additional services for an additional price.

To take an example, one of the go-live requirements of the program mentioned in point #1 of my earlier blog post entitled Indian IT – Turning Crisis Into Opportunity was reconciliation of payment transactions between the said bank’s existing mainframe-based accounting system and the new payment scheme. Before the program began, the Bank had entrusted the development of the reconciliation module to the owner the accounting system. However, midway through the program, the application owner was diverted by a rush job from another program. Since mainframe skills were in short supply, the application owner threw up its hands and regretted its inability to deliver the reconciliation module within the pre-agreed timelines. This threatened to derail our program. We stepped in and developed the RECON module and billed ££££££ for this additional work.

This is how vendors can make more money from fixed price deals.

Of course, doing so in actual practice requires business skills on the part of a vendor’s delivery organization because people like Dilbert’s pointy-hair boss can be found in all companies – hence the term “extract”. When we presented our solution for the RECON module, the Executive Sponsor and MD of the bank cooly turned around and said, “How can a payment system not have reconciliation functionality? Don’t expect me to pay for such a basic feature”. Some day, I’ll tell you how we overcome this objection and turned this Change Request into a source of revenue – instead of buckling under pressure and letting this additional work cause a fixed price project to bleed. Spoiler Alert: We not only earned additional revenues in the process but also won brownie points from the bank’s C-Suite for keeping the program on track.


When asked how much digital contributes to Infosys’ revenues, its CEO Vishal Sikka quipped, “100% of our business is digital. We don’t write software for analog computers anymore.”

While Mr. Sikka may have said this in jest, many IT vendors seem to perceive digital as nothing more than good-old computerization; in other words, their version of digital involves typing information into a computer form instead of writing it on a paper form by hand.

When a vendor does digital transformation based on this paradigm, a substandard solution results. At best, the software matches the paper-based process but lacks intelligence or personalization. At worst, the software is so cumbersome that it drives users back to the paper-based process.

I came across several examples of poor digital transformations in government and the private sector while someone in my family applied for 20+ products / services in the last year viz.:

  • Apply for Income Tax PAN card
  • Register for courses at a private college
  • Apply for a new connection with a private sector Mobile Network Operator
  • Open a fixed deposit at a private sector bank.

Barring one or two exceptions, I preferred paper. Most digital processes had lousy CX. To give you an example, one of them asked me to upload a photograph complying with the following specs: 3.5 x 5 cms, 300 DPI, PDF, <50Kb. There’s no way an average user of this service would be able to create such an image file. I took me an hour or two but I managed the feat since I had access to a scanner and a couple of image manipulation tools. After jumping through several hoops, I hit the submit button, only to be informed that I was not eligible for the online route. The website told me to print the application form and snail-mail it to a postal address. I couldn’t help noticing that it was so much easier to paste a passsport-size photograph on the paper form compared to the hassles I went through to upload the image file on the website.

Vendors doing such substandard digital transformation work will have a tough time persuading customers in mature markets that they’re the right partners in their customers’ digital journey. Not surprisingly, Indian vendors are “struggling to capture a large share of the new digital market” in the USA and Europe, as highlighted by Peter Bendor-Samuel, CEO of outsourcing advisory firm Everest Group.

Indian IT should pause to rethink its approach to digital. Digital transformation is not just computerization – that ship sailed several decades ago. True digital combines the latest in forms, social, mobility, analytics and AI technologies with best practices in UI, UX and CX to deliver modern solutions that elevate customers’ revenue, profits and customer experience to the next level.

When applied to the above example, going truly digital would mean redesign of the software such that it has (a) a microservice that automatically creates an image file of the required specifications from a standard passport-size photograph uploaded by the user, and (b) a gate at the start of the digital journey to determine whether the given user is qualified for the digital process or needs to be diverted to the paper-based alternative.

If they truly get digital, Indian IT companies can increase their share of large digital transformation deals from their core markets in the West. On the other hand, if the industry continues to do pseudo-digital work, it will dig itself deeper in the hole that the media claims it has fallen into.

These are just a few imperatives that I could think of.

I’m sure there are many more areas in which Indian IT + ITES can play a vital role. Vivek Wadhwa, Distinguished Fellow and Professor at Carnegie Mellon University, offers a few pointers in his Times of India article entitled “Indian IT needs to reinvent itself for the age of automation and AI”:

  • Bring manufacturing back to USA by helping US firms design new factory floors and workflows and install robots
  • Management consulting for optimizing supply chains and inventory management
  • Manage manufacturing and construction operations remotely.

Services has a lot of headroom for growth, as highlighted recently by Mr. N Chandrasekharan, ex-CEO of India’s largest IT company Tata Consultancy Services and currently Chairman of TCS’ holding group Tata Sons. There’s no shortage of ways in which Indian IT companies can ward off the looming crisis. If it gets its act together – as it has done several times in the past – the Indian IT industry can scale newer heights.

Use And Misuse Of Personas In Marketing

Friday, July 21st, 2017

Buyer persona is the bedrock of targeted marketing. HubSpot provides a succinct definition of the term:

“A buyer persona is a semi-fictional representation of your ideal customer based on market research and real data about your existing customers.”

A sample persona is shown below:

Persona-based marketing has become increasingly popular in recent times, both in B2C and B2B realms. Maybe it’s only me but I see a strong correlation between PBM and the rise of Facebook Ads, which is arguably the first platform to provide the ability to run ads at scale segmented by buyer attributes like demographics, behavior, and preferences. (In contrast, Linkedin Ads helps you target ads by title and Google Ads, by purchase intent.)

We develop personas for companies in IT, BFSI and other technology-intensive industries. After doing that, we create persona-specific messaging and content for our customers’ technology products and services. Campaigns based on personas help our customers’ offerings resonate better with their buyers’ goals and preferences, thus accelerating lead flow and improving lead-to-deal conversion rates.

Like all popular tactics, persona is susceptible to overuse. A few marketing professionals have already started panning personas e.g. Marketoonist, which lampooned personas in a recent article with the following cartoon:

The article went on to say:

“Marketers have more customer insights at their disposal than ever. Buyer Personas can be one useful tool to turn this customer data into a story. They can help capture an abstract target audience as a tangible character sketch. But buyer personas are only as useful as what they help you to do. Marketers can get carried away with the fiction. I’ve literally seen “watches Game of Thrones” in the personality sketches of buyer personas for enterprise software. These personality-driven personas may read well, but aren’t necessarily actionable.”

Reading the reference to Beatles in the cartoon, I was reminded of an ad released by one of my ex-employers years ago. The company had just become the distributor for Sun Microsystems in India. The launch ad proclaimed in bold letters, “Here comes the sun”. Even if you’re not a Bealesmaniac, you’d recognize the name of one of the band’s most popular songs in the copy.

Given this experience, I wouldn’t dismiss references to music bands in a buyer persona so easily. The key is to use them – as well as automobile brands or TV shows – in the right context.

This is where I think Marketoonist has gone wrong: Its cartoon depicts a classic case of misuse of persona.

I’m not alone. Like commenter ALLEN ROBERTS says:

“Like any complex tool, personas can be misunderstood, misused, and give crap results, but in the right hands, and right context, can be very useful.”

The misuse stems out of targeting the persona at Sales. While the output of personas can be shared with sales, personas themselves are meant strictly for Marketing.

Now, let’s see what can happen if the persona described in the aforementioned cartoon is consumed by Marketing – i.e used in the right way. Based on this persona, Marketing can shape the content, messaging and medium of the software in the following ways (if not many more):

  1. Pepper the marketing collateral of the product with Acura-related terminology. From personal experience of marketing ERPs, an enterprise application offers tremendous scope for flaunting a wide range of terms. Slipping in an Acura-related term or two in the product and / or marketing collateral is a piece of cake!
  2. Seek product placement and / or advertising in Game of Thrones
  3. Lace the ad copy and demo videos with Beatles lyrics and background music respectively.

Needless to say, a campaign based on such persona-shaped elements will have a higher success rate than a “spray-and-pray” campaign, as my ex-employer’s Sun launch ad did.

Beatles was popular at the time. The reference to the band’s popular song “Here comes the sun” in the copy of the ad for Sun servers elicited an immediate connect with the thousands of Beatles fans in the target audience. The ad elicited a chuckle or two from the early adopters of the product and triggered a strong brand recall for the distributor amongst prospective buyers of RISC-based servers for years to come. (If you knew that the product manager of the company’s Sun division went by the initials of SUN, you might even spot another pun in the copy!).

Ergo, in the right hands, personas – including the one described in the cartoon – can be very valuable.

That said, everything is not hunky-dory in the world of personas. In a follow-on post, I’ll describe three ways in which personas are misused nowadays. Stay tuned.

How To Fight Card Payment Surcharge And Take #CashlessIndia To Next Level

Friday, July 14th, 2017

I recently read the following tweet:

I replied back pointing out that:

He replied back with the following tweet:

@logic was implying that merchants will definitely pass on the MDR cost to consumers.

Even if that’s true, he was confusing MDR for Surcharge. While both amount to a charge on card payments, they’re not the same. By definition, MDR is borne by a Merchant whereas Surcharge is slapped on a Cardholder. There are many other differences between them. Before I list them and explain why they matter to a common man, here’s a graphical depiction of how a card payment works.

The key entities in the so-called “card payment value chain” that processes a card payment are as follows:

  1. Cardholder: The consumer that uses a credit or debit card to buy something e.g. John Doe, Jane Doe
  2. Merchant: The business that sells that “something” to the Consumer and receives payment via payment card e.g. ASDA, Big Bazaar
  3. Issuer: The bank that issues the card used by the Consumer e.g. Barclays, State Bank of India
  4. Acquirer: The bank that issues a Merchant Account and POS (or POS alternatives like Bharat QR) to the Merchant, both of which are required for the Merchant to accept card payments e.g. Citi, HDFC Bank
  5. Card Network: The company that owns the infrastructure – aka “rails” – for processing card payments e.g. Visa, MasterCard.

The card payment value chain is also called a “4-corner marketplace”. Created over 50 years ago, it’s subject to the so-called “network effect”, which explains its popularity and longevity. The Merchant incurs a cost for using this infrastructure to accept card payments. This cost is called MDR or Merchant Discount Rate.

With the basics of card payment out out of the way, let me come back to the key differences between MDR and Surcharge. They’re as follows:

  1. MDR is the fee incurred by the Merchant for accepting card payments. Any charge levied by the Merchant on a consumer paying by card (over and above the price of the product or service purchased by the Cardholder) is called Surcharge. As we’ll see shortly, Surcharge need not equal MDR (and often does not)
  2. Set by the Card Network, the schedule of MDRs forms a part of the Merchant Account signed between the Merchant and the Acquirer. As a consequence, MDR is pre-defined, strictly regulated and ranges from 0.5-3% depending upon the product purchased and the type of card used for payment. (For the sake of convenience, I’ll assume a uniform MDR rate of 2% during the rest of this post.) On the other hand, Surcharge is totally arbitrary – it’s whatever the Merchant says it is. I’ve come across Surcharges ranging from 2 to 10%. In other words, Merchants slap Surcharge – masked as ‘Convenience Charges’ – that’s as high as 5X of the MDR cost they incur
  3. MDR is deductive. That is, if the sale value at the till is £100, the acquirer retains £2 and passes on £98 to the Merchant. On the other hand, Surcharge is additive. That is, against the purchase value of £100, the consumer incurs a cost of £102 at checkout (or even higher, if the Merchant passes on costs in excess of MDR to the Cardholder).
  4. Being deductive, MDR attracts no taxes. Whereas, being additive, Surcharge attracts taxes. So, the total debit the Cardholder sees on their statement is even higher than £102
  5. In return for MDR, a Merchant gets many freebies from the Acquirer e.g. fire insurance for store. Cardholder gets nothing for shelling out Surcharge.

In case all this sounds a bit technical, that’s because it is. However, there’s a reason why it matters to an average John / Jane Doe consumer and impacts the adoption of card payments.

I’ve made no secret of my distaste for Surcharge. The way I see it, MDR is the Merchant’s cost of doing business – if they don’t accept card payments, they can lose business. Like rent, electricity, employee and other costs, Merchants have to recover their card processing fees from their sales and can’t pass it on to me explicitly. If a Merchant still insists on a Surcharge, I can walk out and buy the same thing somewhere else without paying Surcharge.

Armed with this knowledge, I flatly refuse to pay Surcharge for paying with my credit card.

When Merchants try to justify their demand for Surcharge on the grounds that they pay this fee to banks, I turn the last point mentioned above to my advantage and fire back: “You get fire insurance for your store by paying MDR. Will you give me fire insurance for my home if I pay you Surcharge?” When they hear this, many Merchants quietly accept my credit card without any Surcharge.

Of course, my tactic only works when there’s a human being on the other side whom I can challenge with this logic.

Whenever a website demands a Surcharge, I abandon my shopping cart and rant to the company via Twitter.

Somtimes it works!

I know you “can’t win ’em all” but that’s no reason why you shouldn’t try!

I know many people who use cash because they don’t want to pay extra charges for using their cards. This is a serious stumbling block in front of greater spread of digital payments. I hope this post gives such consumers enough ammunition to fight Merchants’ demand for Surcharge so that they pay by card without incurring any extra charges and, in the process, take the adoption of #CashlessIndia to the next level.