Cheque – The Unsung Hero Of #CashlessIndia

November 10th, 2017

As we all know, there was a severe cash crunch in India on the back of the demonetization of high value currency notes a year ago. To ease the pain, the government of India made a big push to promote digital payments. Trending under #CashlessIndia, the drive multiplied visibility of preexisting digital payments and led to the launch of several new digital payments. Among the former category were web A2A electronic fund transfer (NEFT, IMPS, RTGS), mobile wallet (PayTM, PayZapp), credit card and debit card (Visa, MasterCard, RuPay). Among the latter category were mobile A2A electronic fund transfer (BHIM) and interoperable QR code POS payment (Bharat QR).

Still, most payments formerly made with cash went cashless due to cheques.

Household Help

Take payments to maid servants, car drivers and other household help.

Both the maid servants in my house have mobile phones, although it’s a feature phone. While some digital payments work on feature phones, their UI is in English, a language they’re not conversant with. We offered to navigate the screens of these digital payment apps but they were not comfortable taking our help. We were wondering how to pay their salaries. Then we learned that they both had bank accounts. It was easy to write a cheque in their name, fill out a pay-in slip, and deposit the cheque in their bank’s drop box. They didn’t have to make any effort to go cashless.

Service Provider

Next, take monthly payments to newspaper agents, milkmen, laundrymen and one-off but regular payments to handymen like plumbers and electricians.

As I pointed out in my blog post entitled #CashlessIndia – Why Putting Cart Before Horse Will Work, my newspaper agent was happy to accept cheques.

Ditto my milkan, laundryman and handymen.

Finextra Member Chetan Ghadge points out why cheque is popular in this category: “…it is easier for them to keep a track of who has paid and who has not. These people don’t maintain computerised records so for them reconciling digital payments is very difficult.” (Actually, reconciliation of digital payments is not a small issue even for enterprises maintaining computerized records, as I’d highlighted in Enhanced Remittance Data Could Multiply Electronic Fund Transfer Volumes).


Now, take rent payments from tenants.

Once the landlord and tenant sign a leave-and-license agreement for a typical period of 24 months, it’s customary for the landlord to take twelve PDCs (Post Dated Cheques) for a year in advance. While the agreement legally binds the tenant to paying the rent on time, PDCs provide a practical way for the landlord to enforce the tenant’s obligation without having to go to court to enforce the contract. That explains their traditional popularity for this usage scenario.

With the plethora of digital payments available post #CurrencySwitch, it should be easy to find a replacement for cheques for rent payments. Or so I thought when I had a compelling reason to explore PDC-alternatives. (This happened a few months ago when my tenant was due to handover the next batch of PDCs to me and realized that he’d forgotten his cheque book in his home town, which was 500 kms away.)

But I was mistaken.

Some of the options like credit card and debit card were ruled out straight away because I don’t have a merchant account letting me accept a card payment. Others like RTGS, IMPS and UPI were not suitable because they didn’t (still don’t) support scheduling of future-dated payments.

The digital payment that came closest to supporting this use case was NEFT. This A2A EFT method permits the payor to set up Standing Instructions for recurring future-dated payments.

But, when I dug deep, I found two shortcomings with NEFT:

  1. A tenant can set up an SI on their Internet Banking portal but, to show it to the landlord, they need to log into their online banking portal and show the SI screen to the landlord. During the process, other personal information becomes visible to the landlord. Not all tenants might be comfortable with the ensuing loss of privacy.
  2. Tenants who’re not so sensitive to privacy may go ahead but what’s the guarantee that the tenant doesn’t cancel the SIs as soon as the landlord leaves after seeing them?

In contrast, the landlord has the PDCs in their possession. While the cheques can be dishonored on the due date, cheque bouncing is a crime. The threat of fine and / or jail time is a good backstop for tenants to honor their cheques.

So, I’ve still not been able to find a digital payment equivalent of PDC. (Under the circumstances, my tenant made an IMPS payment for the following month and gave me eleven PDCs after he visited his home town and retrieved his cheque book a couple of weeks later.)

And it’s not only in India. James Furlo, Rental Property Owner/Manager in Oregon, USA, explains on Quora why he prefers cheques for rent payments despite the availability of digital payments alternatives like SQUARE, Venmo and Dwolla.


Cheques are also fairly popular in SME payments. By taking a PDC against the delivery of its goods, a supplier secures payments due in future from its customer.

There’s no denying that digital payments like BHIM have grown at a fast clip since demonetization. However, their sweet spot has been small value payments (two to three figures).

The retail and commercial payment usage scenarios covered above strongly suggest that cheque is a very compelling method of payment for large value payments (four figures and above).

On the first anniversary of #CurrencySwitch, I can’t help reaching the conclusion that cheque is the unsung hero of #CashlessIndia.

GST For Techies – Part 1

November 3rd, 2017

This is a random collection of my observations about GST based on discussions with a bunch of small business owners and a couple of Chartered Accountant firms. The objective of this post is to throw light on how GST works for a company in practice. While it’s impossible – even inadvisable – to avoid jargon when discussing any specialized topic, I’ve recast some of the GST jargon into terms that make more sense to a businessman (as against accountant or compliance officer).

In the context of this post,

  • “You” and “your company” refer to a GST-registered company that’s based out of India and is engaged in the IT products and services business
  • “Techie” / “techies” is used are as a catch-all for founders / directors / owners of IT companies, whether they come from technical or business background
  • Unless otherwise specified, “sale” and “purchase” mean “domestic” transactions i.e. not exports
  • Like in the case of common law, “man” includes woman, “businessman” includes women entrepreneurs, and so on.

I’m neither a CA nor your CA, so please take whatever I say with a pinch of salt.

With that preamble out of the way, here are my random ramblings about the Goods and Services Tax that came into effect on 1 July 2017 and underwent significant amendments on 6 October 2017.


There’s a general feeling that GST is only applicable for private and public limited companies. That’s not true. All kinds of businesses – proprietorships, partnerships, LLPs, pre-revenue startups, freelancers, etc. – are prima facie required to be registered under GST.

If you were registered under Service Tax, you must get registered under GST even if you otherwise are exempted. The way it works, you need to first carry out the so-called “GST Migration” procedure. Only then can you exit GST (if you’re exempted).

If you carry out exports, you must be registered under GST, regardless of turnover. This statement applies even to freelancers doing business on Upwork and other export-oriented portals.

The technical name for a company registered under GST is “Registered Dealer” and that for a company not registered under GST is “Unregistered Dealer”. Maybe it’s only me but I find the term “dealer” repugnant to the context of a typical IT company. Therefore, I’m substituting the two terms by “GST Co” and “Non-GST Co” respectively.


Invoices are of two types: Sales Invoice and Purchase Invoice. Sales Invoice is what you issue to your customers against a sale. Purchase Invoice is what you receive from your suppliers against a purchase.

GST mandates a template for invoices and other artefacts like debit and credit notes. Even one look at a GST-compliant invoice would make it amply clear that it contains a lot more detail – e.g. HSN / SAC, Customer’s GSTIN, Freight – than the former VAT and Service Tax invoices. To fit my company’s GST invoice into one page, I had to reduce the font size from 12 to 10 points and change the page orientation from portrait to landscape.

Like VAT and Service Tax, you add the applicable GST on your Sales Invoice and collect the billed GST from your customer. Fairly straightforward.

Where things get a bit tricky is (a) the stage at which you pay GST to the government, and (b) purchase invoices.


Like VAT and Service Tax that came before it, GST is payable to the government upon invoicing, whether or not you’ve collected your money from your customer.

This has caused the feeling that GST is payable pre-revenue.

Some have even insinuated that GST is being charged on estimated revenues.

None of these beliefs is true.

Invoice implies Revenue. You can book revenues whether or not you’ve collected your payment (it’s reflected in Accounts Receivables until you receive the payment). Since GST is payable only after invoicing, it’s not pre-revenue.

GST would be pre-collection if you don’t receive your payment from your customer by the time you need to remit the GST to the government. To that extent, GST does pose a strain on your working capital. However, that strain has reduced now: Formerly, you had to remit Service Tax by the 5th of the month following the date of your invoice. Under GST, the deadline has been extended by 15 days to the 20th of the following month.

I think the angst about GST being applicable pre-revenue or on estimated revenue is caused by the failure to distinguish between Booking, Billing and Collection. Although the common man thinks of all three terms interchangeably, they’re three distinct milestones in accounting and taxation.

For the uninitiated, Booking happens when you collect a purchase order from your customer. Billing happens when you fulfill the order (in part or whole) and raise your sales invoice (for the completed portion of the order). You book revenues at this stage. This is also the stage at which GST is payable to the government. Collection happens when you get paid by your customer. If you’re unable to collect on an invoice beyond a certain number of days, you write off the revenue by issuing a credit note. AFAIK, at that point, you can claim refund of the GST you’ve paid before.


Under the previous Service Tax regime, you had to file only two returns a year. Under GST, the number of returns has shot up to 13 per year for companies with annual turnover below INR 1.5 crores (@ 3 returns per quarter, 1 annual return) and 37 per year for companies with annual turnover exceeding INR 1.5 crores (@ 3 returns per month and 1 annual return).  This is a massive overhead on filers.

The GST Return calls for a staggering amount of information. You need to enter virtually every line item of every sales invoice and purchase invoice in your GST return. It’s obvious even to a non-techie like me that the GST Portal would require humungous amount of storage and computing capacity. I hope the powers that be took this into consideration when they wrote the rules on GST returns.

That’s it for now. In a follow-on post, I’ll cover a few more elements of GST.

(Spoiler Alert: The real fun begins in Part 2!)

When & How To Use Negative Copy In Customer Outreach Campaigns

October 27th, 2017

In When Does Negative Copy Drive Positive Outcomes?, we saw how the Loss Aversion principle in consumer behavior makes negative copy very effective. At the end of the post, I’d cautioned vendors against using negative copy indiscriminately and implored them to handle campaigns based on negative copy with a lot of care.

In this post, I’ll share my thoughts on when and how to use negative copy in customer outreach campaigns.

First the “when” of using negative copy.

It’s a no brainer that negative copy should be used selectively. Based on my experience, I recommend it when your prospective customer’s vitals would take a nosedive without your intervention. “Vitals” include operations, revenue, CSAT, brand image and any other KPIs of your customer. “Your intervention” means your product, service or consulting.

While the nuances of the “when” can vary from product to product and market to market, the above guidance can be used to quickly dipstick whether a certain context lends itself to the use of negative copy or not.

Let me “backtest” this guidance on the two examples described in my previous post.

  1. The retailer would lose money if its stock got pilfered from its warehouse
  2. My company’s operations would come to a standstill if my phone stopped working.

In both situations, the respective company’s vitals would take a nosedive if it did nothing. Therefore, both vendors were justified in using negative copy to communicate their call to action (CTA).

Next, the “how” of using negative copy.

There are right ways and wrong ways of executing any marketing campaign. When it comes to outreach campaigns based on negative copy, the stakes are higher on account of the sensitivity of the message. Therefore, such campaigns need to be run with greater sensitivity towards the best practices.

I’ll take the example of my bank’s recent outreach campaign to “organically” arrive at the right ways of running a campaign based on negative copy.

Every time I logged on to this bank’s Internet Banking portal, I was “greeted” by the following scary-looking banner.

The same banner was also attached to email transaction alert sent by the bank for my company’s bank account.

For the uninitiated, the campaign seeks to drive the so-called “Aadhaar Seeding” activity whereby all bank accounts in India must be linked to their holders’ Aadhaar Number (which is a biometric ID issued by UIDAI). The government has mandated this step to curb money laundering. There’s a lot of hue and cry on the mainstream and social media that Aadhaar Seeding infringes upon the Right to Privacy. But I digress. In the context of this post, Aadhaar Seeding is taken as a non-negotiable requirement.

Since my company’s operations would come to a standstill if its bank account was frozen – in other words, its vitals would take a nosedive – the bank was justified in using negative copy in its outreach campaign.

However, the bank bungled the execution of the campaign.

The bank showed me this banner whenever I logged in to my personal savings account. When I clicked on the Link Now button in the banner, the landing page displayed my Aadhaar Number correctly. This was a confirmation of the fact that I’d already linked my Aadhaar Number to this account. No surprises there because I’d completed this activity way back in 2013, pursuant to an ordeal that I’d described in what became the second most viewed post on Finextra that year. So, this message was not relevant for my savings account.

The bank also showed me this banner whenever I logged in to my company’s current account. Since Aadhaar is not applicable for companies, this message essentially made no sense. Besides, when I clicked the Link Now button, the resulting page informed me that my company’s Customer ID wasn’t linked to any savings account. Duh, Captain Obvious, didn’t I already know that?

This got very frustrating.

What can a bank in a similar situation do differently? Sugarcoat the basic message? No. But it can

  • Refrain from showing this banner when I log into my savings account
  • Explain the relevance of Aadhaar for a business / current account
  • Provide a way (that works!) to complete Aadhaar seeding for the given account.

Abstracted one level above, this would mean that a vendor running a campaign based on negative copy should

  1. Target the campaign accurately instead of blasting it to all and sundry
  2. Use copy that expresses the problem clearly
  3. Provide a workable solution to solve the problem.

When applied to the WMS software developer featured in my previous post, the above best practices would translate to the following guidance for the vendor’s “cut losses” campaign:

  • The campaign should target only retailers, FMCG and other industries that have warehouses. It should skip BFSI, Telecom and other services verticals for whom warehouse is not a thing
  • The copy should clearly state that it’s referring to losses caused by pilferage of goods from warehouses
  • Explain how WMS would help curb such pilferage.

Coming back to my bank, I was anxious to complete my pending Aadhaar Seeding activity. I reached out to its senior management to share the above best practices.

After a bit of back and forth, the bank incorporated my guidance. Accordingly:

  • I no longer see the scary-looking banner when I log on to my savings account. Check best practice #1
  • The bank now makes it clear upfront that, in the case of current accounts, Aadhaar seeding refers to the Aadhaar Number of the authorized signatory of the company’s account. Check best practice #2
  • Upon clicking the Link Now button appearing on the welcome screen, customers are directed to a landing page where they can enter the concerned person’s Aadhaar Number (including authorized signatory of a company in the case of a current account). Check best practice #3.
  • Once customers enter their particulars and click the SUBMIT button, they see the following confirmation:

Called “positive reinforcement” in Consumer Behavior, this is a very important step especially when it comes to outreach campaigns that ask customers to complete CTAs mandated by regulation e.g. Aadhaar Seeding, KYC Verification, and so on. Such a confirmation is par for the course for pure-play online companies but, for a bank, I can imagine that thinking of it was the result of going the extra mile.
As a result of these changes, the CX of Aadhaar Seeding journey has improved.

While I don’t have the figures, I’m sure the new customer journey has helped the bank achieve a manifold increase in conversion of online customers to “Aadhaar Seeders”.

In summary, negative copy can be very effective if used in the right context and handled with kid gloves.

When Does Negative Copy Drive Positive Outcomes?

October 20th, 2017

All through my career in sales and marketing in the corporate world, I’ve been exhorted to write in positive style. The strong guidance applied to ads, email marketing, datasheets, brochures, case studies and other forms of marketing collateral (hereinafter referred to as “copy”).

In my early days in software marketing, I used to work for a company that developed a warehouse management software (“WMS”). By curbing theft from warehouses, WMS helped retailers and other industries prevent pilferage losses. Accordingly, the most natural way to position it was as a tool to “cut losses”. However my boss at the time told me to put across the value proposition positively. Since I was a marketing greenhorn at the time, I went ahead and pitched it as “grow profits with WMS”.

But I was never comfortable with the contrived positive spin.

Sure enough, over the following years, I’ve regularly come across negative copy in business communications. For example:


Peter Sondergaard, SVP & Global Head of Research at Gartner, does not say “your org should optimize and create new digital biz models to march ahead”.


In The future of grocery—in store and online, McKinsey Partner Louise Herring asserts “…there’s no reason why some of the technologies that can work in a financial-services world couldn’t also apply to many of the retailers that we have around the world.”

She does not put a positive spin by saying “there’s every reason why some of the technologies that can work in a financial-services world could also apply to many of the retailers we have around the world”.


In his interview with the Financial Times (subscription required), Satya Nadella, CEO of Microsoft, declares “There is no walk of life that is not going to require computational understanding”.

He does not say “Every walk of life is going to require computational understanding.”


Have a look at the launch ad of Quikr’s Audience Platform:

India’s #1 classified ads platform does not claim that “your brand and audience will always be matched”.

It’s not just in business.

Take popular literature. The Acknowledgments section of Neal Stephenson’s Quicksilver is full of negative lines.

Or politics:

Or coaching:

This sales management coach is actually telling his audience to reframe a positive statement into a negative warning:


When we’re taught to think positively, why’re so many famous and successful people using negative style in their written communications?

I think it’s because of the so-called Loss Aversion principle in consumer behavior theory.

In plain English, loss aversion means that individuals (as well as companies) will make double the efforts to retain what they have than to get something new. The terms “what they have” and “something” in the previous sentence refer not only to materialistic items (e.g. money, house, car) but also intangible things (e.g. status, self-esteem, brand image).

When applied to the context of warehouse theft, the loss aversion principle suggests that a company will be motivated more strongly to avoid losses caused by pilferage than to grow profits resulting from reduced pilferage. Hence “cut losses” is a more powerful message in theory. This was borne out in practice when we created a Marketable Item based on the “cut losses” angle for one of our customers many years later. The lead generation campaign based on this negative theme received a better response than the earlier one using the positive “grow profits” variant.


While marketers need to be careful about the use of negative copy, a campaign based on contrived positive language can backfire badly.

I came across a great example of this when a company sugarcoated its message when the situation called for negative copy and suffered a serious blow to its reputation as a result. This was a leading Mobile Network Operator from whom I’ve bought several mobile phone connections over the past 10+ years. All connections were in my personal name.

Consequent to the Goods & Services Tax regime that came into effect from 1 July 2017, my CA firm pointed out that I could claim tax credit on my mobile phone bills if the connections were in my company’s name. I visited the MNO’s store to request a transfer of some of my connections to my company’s name and submitted the required KYC documents. One day later, the new SIM card in my company’s name got activated. So far so good.

A couple of days later, I got the following SMS from the MNO:

Since my new connection was already active, I didn’t believe anything was pending from my side. Besides, this MNO has a track record of sending messages that even its own staff don’t understand.

Therefore, I ignored this Call To Action.

Two days later, I couldn’t make any calls. Whenever I tapped the green-colored call button on my smartphone, I got an automated message informing me that my outgoing calls were blocked due to failure of my KYC verification.

I was very upset – this was the first time my connection was blocked in 15+ years of my using a mobile phone. If someone had conducted a survey at that point, I’d have rated this MNO’s CX as the worst in the world (across all industries!).

Anyway, what was done was done. I went back to the store, jumped through several hoops and got this problem sorted out. But I vowed to myself that I’d never buy any Value Added Service from this company (For some reason apparently mandated by the telecom regulator, every VAS purchase entails fresh KYC).

Had the MNO had used a more direct Call To Action – e.g. “Your verification has failed. Please visit our store for re-verification” – I wouldn’t have suffered loss of connection or written off this brand. While the alternative message sounds negative, it’d have invoked immediate action instead of its sugarcoated message that lulled me into inaction and put me through a lot of trouble a couple of days later.

My takeaway from the overall experience was that the MNO had made the unpardonable mistake of stopping service for a paying customer. In the end, it didn’t matter that its CTA was worded positively.

Once marketers see the power of negative copy, they might be tempted to recast the messaging of all their offerings.

They shouldn’t. Negative copy needs to be used very selectively and handled with kid gloves when used.

In a follow-on post, I’ll share my thoughts on the right context for using negative copy and outline a few best practices for running campaigns based on them. Watch this space!

Aspirational Selling Is Not Overselling

October 13th, 2017

Every now and then I come across a techie complaining that their sales is overselling, thus making their job of creating a satisfied customer harder.

For example, take this OP on Quora, who asks:

Is it common to oversell in B2B? My boss has a tendency to oversell our company services, but the tech team can’t keep up. I’m new to the B2B setting.

These guys should realize that there’s a big difference between overselling and aspirational selling.

Overselling is selling something and not delivering it.

Aspirational selling is selling to aspirational goals of the customer with every intention and proven track record of achieving those goals.

Aspirational selling is a fairly common practice in the software industry.

Take office automation software, for example.

It’s widely believed that customers use only 30–40% of features in Word, Excel, etc. Despite that, Microsoft has been releasing newer versions of Office with more functionality for nearly three decades. That’s because, during the entire lifetime of MS Office, one characteristic of consumer behavior hasn’t changed: Users’ hunger for more features whether they use them or not. Microsoft didn’t stop developing future versions of Office on the basis of the reality that customers were not using 70% of the previous versions’ functionality. Instead, it released a new version almost every two years during the 30 year lifetime of MS Office. And the rest is history. (For a deep dive into this topic, see my blog posts SaaS Will Change The Outcome Of The Bloatware Versus Light Apps Debate and Introducing “Multiply UI” To Solve The Software Industry’s 95% Problem).

Now, when it comes to enterprise applications, aspirational selling is even more common.

Take the following ad from ERP leader SAP for example.

The copy drives prospective customers to aspire to become a world-class company by buying SAP.

There’s a very strong reason why aspirational selling is the standard selling style in ERP, CRM, Configure-Price-Quote, Learning Management Systems, and many other enterprise software products. Companies already use a “system” to carry out the business processes automated by these products. The basic nature of many of these business processes hasn’t changed radically. Therefore, a prospect upgrades to a new enterprise software product not to do something drastically new but because they aspire to improve the way of doing existing things.

Let’s taking invoicing as an example. Whether a company sells goods or services, uses offline, online or omnichannel, deploys ATL or BTL tactics to drive sales, it always raises an invoice against a sale. That basic principle of accounting has remained constant during the entire history of business.

To generate an invoice, a company can use a range of “systems” like pen and paper, calculator, Excel, point invoicing software or an ERP. Why would it want to upgrade to an ERP? Not to generate some “gold coated” invoice, I’m sure, but more likely to achieve one or more of the following goals:

  1. Cut operating costs by harmonizing the invoice process / template across all business units, offices and factories
  2. Compute revenues at SBU and enterprise levels in realtime
  3. Support manifold increase in invoicing volumes without a proportionate increase in manpower
  4. Gain visibility into inventory across all stocking points
  5. Prevent stock-outs and resultant loss of revenues by triggering stock transfers from one warehouse / store to another

These are aspirational goals because they seek to raise the company to the next level of revenues, profits and customer experience. It’s obvious that sales needs to sell an enterprise software as a way of fulfilling these aspirations.

Now, all these techie versus sales conflicts and charges of overselling start when the aspiration rubber hits the reality road.

Once the vendor receives the order and its tech team kicks off the implementation of the product, many unforseen challenges surface at the customer company e.g. organizational politics, disjointed data structure across operating units, differing regulations across operating locations, lack of top management bandwidth, and so on.

Before sales bags the deal, these challenges are either not forseen or appear minor to everyone. So there’s no way a salesperson can win the deal by bringing them up.

Which is why aspirational selling is practice du jour in software.

And it’s not only me.

AMR Research, the onetime leading supply chain research firm, once quipped:

“2nd Law of Software Marketing: Don’t let the product come in the way of the story.”

(Before you ask, the research firm that was subsequently acquired by Gartner didn’t propound a 1st Law of Software Marketing!)

The aforementioned challenges prevent invoice harmonization i.e rollout of a single, common invoicing process / invoice template across the whole company.

The customer has two options at this point:

(A) Keep the implementation on hold until these issues are resolved


(B) Recalibrate the scope of invoice harmonization to a subset of the operating units, and move forward with the implementation according to the original schedule.

Under Option A, the go-live deadline will be missed but all the features will be implemented upon go-live. There’s no aspirational selling or overselling.

Under Option B, the deadline will be met but certain features will be pushed out to the second phase. But there’s still no overselling, because, had the customer selected Option A, the tech team could’ve very well implemented invoice harmonization as projected by sales.

A savvy tech team helps the customer take the right decision and optimizes the implementation to fit the given circumstances.

That’s the key to creating a satisfied customer. Not whining about overselling.

I’m The Proud Author Of A Book!

October 6th, 2017

I’m happy to announce that I’ve published a book!

Entitled FROM DISLOYALTY TO OMNICHANNEL CUSTOMER ENGAGEMENT, my book is available in Kindle and EPUB formats.

In this eBook, I trace the arc of loyalty programs run by brands during the last 5-7 years and predict the trajectory of their customer engagement management strategies over the remaining 3-4 years of the current decade. Contrary to popular opinion, loyalty is still a thing and many brands are making sizeable investments to go beyond discounts and promotions to build cult loyalty à la 3M, Amazon et al.

Brands covered in this book include 3M, Amazon, Allerghan, DMART, Go Daddy, ICICI Bank, IHG, Nescafe, Ola, PayTM, SBI, Shopper’s Stop, Snickers, Tic Tac and Uber.

You can find the Kindle version of the book on Amazon.

I’m currently navigating the challenges of publishing the EPUB version, one of them being the fact that the world’s leading EPUB platform NOOK restricts self-publishing to U.S residents. I’m hoping to sort this out in the coming days. I’ll update this post when the EPUB goes live on NOOK (or another EPUB platform).

Having spent a good part of my professional career in marketing, I’m no stranger to developing content but this is my first go at writing a book.

If You Think VCs Create Bubbles, Meet ICOs

September 22nd, 2017

In When A Business Is VC Funded, VC Is The Business, we saw how VCs – though not the startups in their portfolio of investments – are driven by traditional business metrics like profitability and ROI.

Contrary to common wisdom, the VC industry has a stellar track record on these conventional KPIs. In this post, I’ll explain why I say that.

First, let’s take profitability.

SoftBank is adequate testimony of the VC industry’s profitability. It’s no secret that many portfolio companies of the leading Japanese VC / PE company are running at a huge loss.


Despite that, SoftBank itself is the 19th most profitable company in the world (Source: 2017 FORTUNE GLOBAL 500).

Now let’s come to ROI.

In a traditional business, an investor earns steady returns on most of their investments. Whereas, in a VC business, 50% of investments are written off on startups that fail to scale. VCs recover 30% of their investments and, unlike in a traditional business, they make multibagger returns on the remaining 20% of their investments. As a result, a VC fund delivers an overall return of ~20% per year (Source: Steve Blank). This well exceeds the hurdle rate of hardnose investors like hedge funds and pension funds who have pumped in record sums of money into VC funds last year.

Given below are a few examples of the multibagger returns earned by VCs:

  • SAIF Partners’ $70M seed investment in PayTM, India’s #1 mobile wallet company, is now worth $2B  – despite the thousands of crores of losses made by PayTM (Source: Economic Times)
  • Leading Silicon Valley VC Sequoia made 50X return from its $60M investment in WhatsApp when the latter was acquired by Facebook for $19B – despite the fact that WhatsApp had measly revenues of $36M at the time (Source: Techcrunch)
  • For all the blame that Tiger Global Management gets for causing the cash burn in Indian ecommerce, the New York VC’s $1B investment in Flipkart is currently worth $3B (Source: Economic Times)
  • Altimeter Capital, General Atlantic, and the remaining Series F investors took only 15 months to double their investments in AppDynamics. When Cisco acquired AppDynamics for $3.7B, the Silicon Valley application monitoring startup had posted whopping losses on sales of $130M (Source: CNBC)
  • And, in what is perhaps the mother of all investments at any stage of the VC investment model, angel investors earned 250X of their seed investment in Oyo Rooms (Source: Economic Times).

As you can see, multibagger returns span all stages of VC investments viz. Seed, Angel, Venture Capital (Series A, B and C), and Private Equity (Series D and E through to IPO). From this, it would appear that the critical success factor of the VC investment model lies in its ability to constanly pump up valuations over time and encash from the higher valuations from time to time. Wags call this approach “pump and dump”.

As Geoffrey Moore says in his article titled A Quantum Theory of Venture Capital Valuations, “The purpose of a round of venture funding is to get your company from one valuation state to the next.” When they see how the VC investment model pours money to drive up valuation, the man on the street tends to believe that it creates bubbles waiting to burst. While that belief is not misplaced, fact is:

  1. Valuations of VC-funded startups have remained fairly stable so far
  2. After doing down-rounds in the past, Flipkart and Zomato have enjoyed an uptick in their valuations in recent times
  3. Once a startup does an IPO, the parcel is passed on to the common man
  4. Even if the music stops eventually, lots of people in the VC ecosystem will have made tons of money by then.

Not surprisingly, the VC investment model has stood the test of time and attracted a record amount of investment from Limited Partners in recent times.

Not just globally but also in India. According to Times of India, “nearly $15 billion of funds is lying as dry powder, the highest amount of free cash to date sitting and waiting to be invested in Indian ventures.”

If you’re still skeptical about the VC model, meet Initial Coin Offering.

This new kid on the blockchain allows startups to raise funds without even a product, let alone pageviews, installs, bookings and other vanity metrics. Investors plonk down millions to buy digital tokens sold by a startup on the basis of a white paper that explains its vision of a futuristic product.

If you thought VC was speculative, ICOs take speculation to the next level.


When I titled the first post in this series “When A Business Is VC Funded, VC Is The Business”, I paraphrased the famous saying “When a product is free, the user is the product” to the VC world.

You may ask, “What happens to the startup in this world?”

Well, the startup becomes an asset class.

This was implicit in the VC world. ICO makes it obvious.

When A Business Is VC Funded, VC Is The Business

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

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

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!