Why Google will buy Outbrain/Taboola ?

Adsense is now more than 10 year old product powering most of Google’s 22 billion dollar revenue , however i have been noticing a subtle shift in user behavior over the last 3-4 years. I have see than users are becoming smarter and tending to develop ‘ad blindness’ . This is a phenomenon which makes the user ignore the ad slot and just focus on the content.

The effect of this is that we are seeing continuous drop on adsense CTR ratio for the ads. This number was at one point as high as 1% in 2009-2010 for several of blogs which i was managing with traffic from India , US and other countries. With the same design we are seeing a drop in engagement rates and is now somewhere near 0.5%. This means that user is learning to ignore the ads. At Sportskeeda i see the effect even more pronounced as the majority of audience is younger than 19 years and these guys know how to get past the ads to reach the content which is of their interest.

New breed of content driven ad networks

Along the same time we see the emergence of a new breed of ad networks which show up as ‘Around the web’ , ‘Recommended stories’ from different companies like Taboola . Outbrain and Gravity. These are often designed to appear at the end of the content and have a visual way of showing content in the form of widgets which have large pictures which attract the attention of the users.

These ads masquerade as content which is made interesting by selecting great pictures and great quality headlines. User does not see them as ads but sees them as content which has been recommended by the brand , this does now show ‘ad-blindness’ towards these ads. We have seen engagement rates of 1- 1.2% with such ads while google adsense struggles to get past event 0.5 % in terms of the overall engagement rates. By way of such higher engagement rates now such networks are contributing more money to us than Google adsense . This has slowly happened over the last 3 to 6 months and i can clearly see that Google adsense as a product is loosing out . Given this i am predicting that Google would soon role out a product like this or could even buy out the companies.

Outbrain Widget

Outbrain Widget on Sportskeeda,comn

We have tested out various widgets and are particularly happy with their peformance and my guess is that it is only a matter of time that Google makes an buyout offer to some of them !

Lean Product Development in Offline Business

During a conversation yesterday with an entrepreneur friend of mine i came across this argument that Lean and Iterative product development is a very good concept but is use in Offline businesses is not possible at all .  I understand that it is much easier to test a product development assumption online because with little money (adense money) and some research it is easy to indentify a hypothesis and test the same within a short period of time.

This lead to an interesting discussion where i was arguing that it is possible to apply lean methods even in the offline world with some effort and some smart thinking. So a challenge was thrown at me … and here is what i proposed could be done to apply lean methods of iterative development.

Challenge -> Changing the positioning of a Biryani Chain 

Background : My friend runs 3 small quick service format Biryani chain serving local (Bangalorean/Karnataka ) style Biryani. The problem which is being faced by my friend is that with his product offering and initial positioning he is attracting a clientele which is lower middle class to middle class. This segment is extremely price sensitive hence he is unable to charge a high premium for his stuff . The business though profitable is no where compared to ‘Ammi’s Biryani’ which has made Biryani into Pizza equivalent with great packaging and positioning.  So my friend wants to change his offering so that he can appeal to different segment of middel to upper class customers and charge a higher price. The dilemma is how to test the same without effecting business in any one or the 3 outlets. Business now is profitable and has good traction so he does not want to risk existing business to try the new positioning. This means he would now have to  setup another outlet to test the positioning and new offering. Setting up a new outlet is expensive because of high real estate costs and setup costs of the basic outlet would cost anywhere between 10lakhs – 15 lakhs.

Approach Suggested by me

List out the assumptions which needed to be validated, so below are the 2 main assumptions which needed to be validated

a) Position Local Flavour of biryani in better package and see how consumers react to the offering

b) With this positioning can i charge a price of 140 Rs / plate of Biryani (instead of the current 80 Rs).

So i told him to look for a small outlet in high traffic locality like inside a mall , inside a large super market etc and explore the possibility of shop in  a shop. Upon detailed enqueries it was found that such a place exists in RT Nagar . The place is Foodworld at RT Nagar and one can rent a small space having a 4×4 counter just in front of Foodworld. The place has a rent of 20k/Month  and we need to setup a good quality kiosk inside this space of 4×4 , this would cost around 1.5 lakhs. Now we can simply offer the same biryani at increased pricing with better package and test market the concept !

Yes it is not as cheap as online hypothesis testing but is surely cheaper then setting up a new outlet.! Overall we can test market this offering for 6 months to see what is the repeat uptake of the biryani. To facilitate repeat uptake measurement i suggested that he introduce a coupon which provides 20% off for the next order.

Thus my friend was convinced that he can look at using lean approach in offline business , and he is now planning to setup the experiment. I would be helping him to required changes !

NPC-13 – Selling for Engineers – Geeks Turned into Sales Honchos

As part of Nasscom Product Conclave-2013 , we wanted to make sure we come up with interesting sessions which are insightful yet give you practical tips which you can implement in your startup.. One of the more popularly requested session by the startup community  is the  Selling for Engineers because most start-ups in India are started by engineers and have no exposure to sales process.

Selling for Engineers is meant for engineers who have a great idea but know they don’t have sufficient sales skills.  This session is about understanding and building the mind-set and the skills of a Sales person and is a must for most co-founders.

The session would be moderated by Manjula  has been through the transition from being a CTO to leading a sales organization in India.  Deobrat would be the speaker in this session and would share his story on how he made this transition in his start-up Gazematrix.

The aspects that would be covered in this session are 

  • Overcoming the psychological and functional changed needed to fit into a sales role- Apart from understanding the functional process of a sale , one also needs to adapt once self at the psychological level because engineers are very logical while sales is not!
  • Pricing you product – We would be covering the challenges associated with the pricing your product during the initial stages of your startup .
  •  Selling to People and not to organizations – How does one establish a ongoing rapport with the customer ? How to keep the conversation with the customer active ?  We will offer some practical tips to do this straight from the battle field.
  • Closing the deal – How to ask for your order? . This is where we have seen lot of startups fail and we will give you practical tips on how to do this.

 

The session would be conducted by

Manjula Shridhar

Director Software Engineering, CA Technologies
Manjula Sridhar is Director Engineering with CA Technologies. Previously she was head of Sales, India and spent an year in APAC as solution strategist for sales with Arcot (Acquired by CA Technologies). Manjula was the founder and CTO of Aujas Networks. She has been a Techie for most part of her career and spent few years with Lucent in US.

Deobrat Singh

CEO & Co-founder, Gazematrix
Over the past several years he has worked with startups and big corporations a like building scalable systems along the way. His specialties: Product development, Team building, Technology.

 

 

 

 

A/B Testing – Increased Ad clicks by 40% !!!

A/B testing is a simple way to test changes to your page against the current design and determine which ones produce positive results. This is made famous by Google as 1 % test wherein Google would test changes to their websites by driving only 1% of the traffic to the new design and then  measure the impact for changes. The impact is then compared with the conversions for existing  designs and then the new design is implemented on the live website.

This is a statistical and scientific way of testing your designs and making the changes based on data. I read that Redbus.in made  50 changes in their website design in the last 1 year alone and they constantly evaluate and test different varaints to find the best approach. This is a new way of design thinking where every change that is made in the system is validated by data alone !

In the past i  have been doing this to test for conversions in Ad clicks as it was generating revenue for one of my personal website. But the tests earlier were done using crude tools which means we had to write loads of code to test the different variations. But recently i discovered the wonderful too called as Optimizely.com which allows you to conduct A/B testing on your website without having to write code.

ALL You need to do is to include the Optimizely code snippnet in your HTML and then inside the Optimizely you can create different UI by visually editing the existing layout inside the Optimzely editor to create a variation of your design.

Results :  I ran several A/B tests on my websites to modify my ad placement and sizes on my main traffic website to lead to an increase in Ad Click Through Ration (CTR) from 0.96  to 1.34. This simple move ensure that i increased my ad revenue by 40 % !!

Original Design of the page

OldDesign -Page

 

Modified Design of the pageNewDesign

As you can see the changes are very subtle ..

a) Move the whole bunch of links on the original design to the top so that there is lessor space before the content is shown.

b) Reduced the Google Adsense ad size from 386x 280 into 300x 250 .

c) Removed the grey color background for the Social Share buttons.

To arrive that this final set i tried 10 different design combinations to finally get this. Thanks to Optimizely  S/W i did all the 10 different testing without writing a line of HTML/CSS code.

Note : This design approach works only when you have 1000-2000 visits for each test . Which means that the new design is seen by 1000 people on your website . Before this it is not wise to conclude on the winning design as the results are not statistically significant !

Have your A/B Tested your website yet ? If not you are missing something !!

Avinash MB

avinashmkb78@gmail.com

 

 

SUV or small Car : What makes sense ?

One more article in the series which highlights difference between emotional purchases versus rational purchases..  Just got off the phone with a friend who wants to upgrade his car from Alto to SUV/MUV(Innova or XUV 500) and i had a hard time explaining him that it does not make sense because you dont buy a Innova if all you do is to ride it in Bangalore .Because i know he is the sort who prefers a train journey any where outside .. But i got several justifications like

a) Whole family can travel together->  He has a single kid , so did not get this logic. On further questioning i understood that once in a year his in-laws or parents will come down and he can take them all together in the MPV !.

b)  Go on long drives ->  Innova is better on long drives no doubt but i think the incremental benefit is not much since most hatchbacks these days offer equally drive quality.

c) Status symbol :) -> No answer for this .. but this is surely not rational reason it is emtional reason ..

Now look at the overall costs of this emotional decision which my friend wants to make .

1) Cost of a good hatchack (i20 CRDI) => 7 lakhs on road  (approx)

2) Cost Innova MPV (Mid-range) => 11.5 lakhs on road (approx)

So the delta is 4.5 lakhs right ?? … No if one were to consider the fact that the car is bought on EMI the overall cost comes to 5.8 lakhs over 4 years.

So the question is if this 4.5 lakhs(current value) is worth it for all the non-emotional reasons. To calculate this lets see how we can overcome the cost of going on long drives and cost of taking the whole family together.

Lets assume we will go on 2 long drives in a year and 1 single day drive in a year we  can have an occasion to take family together.

Cost of 2 long drives  and 1 single day drive apart from cost of  fuel which you need to spend even if you had a innova=>   Rs 2500 x 3 Days = 7.5K (COST of hiring a  Scorpio http://www.zoomcar.in/tariff.php) .

Compare this versus what you can earn from Rs 4.5 lakhs in 1 year . At 9 % interest one can easily earn Rs 40k/year in a Fixed deposit…

I have not yet mentioned the hassles of driving a big car in City … parking is such a hassle and driving in general is more tedious compared to a MPV/SUV.

So you guys decide now !!!

Find out the secret sauce of Instagram, Pinterest, Facebook and Foursquare

One of the questions which come to mind while reading about the stupendous success of Instagram is “How a company which has only 12 employees built a product which hooked up 30+million users in a short span of time?” What is the secret sauce which makes Instagram drive its 30+ million users to use the product frequently?

During my search, I discovered the concept of ‘Desire Engine‘ by Nir Eyal which takes a fundamental approach to explain success of consumer products by linking it to consumers’ psyche. Nir has managed to create a fantastic framework to explain habit formation which can be used to create products or validate product features towards habit formation amongst its consumers. Once you start seeing popular products through this lens, you can appreciate why Instagram was successful despite many clones in the market.

To get an understanding of ‘Desire Engine’ I recommend viewing the two videos on Nir’s blog “FIRST VIDEO OF MY “BEHAVIOR BY DESIGN” TALK: CREATING ADDICTIVE PRODUCTS“. The rest of this article makes full sense only after watching these videos

Desire Engine a summary

In short, Nir’s framework shows an approach used by consumer web companies like Facebook, Instagram, Pinterest etc to manufacture ‘Desire’ in consumers. Yes you heard that right ‘manufacture a desire’ in you to get addicted to using the product. To achieve this, these products attach themselves to frequently occurring internal emotions like loneliness, boredom, willingness to show-off skills etc. Whenever internal emotions like loneliness or boredom occurs, the consumer would feel the urge to login and check Facebook, Pinterest etc depending on the emotion. By repeating this many times, you simply get hooked to these products so much that you would use them even when internal emotion is not triggered. Hence you get addicted to them. Though I must admit I found the term addicted a bit too harsh initially, but think about what you feel if you have not checked your Facebook account for the whole day and you are suddenly reminded of it. Don’t we all feel a slight pain which magically goes away once you are done with browsing your Facebook friend stream, so I begin to accept it is a form of addiction.

To really understand how the ‘Desire engine’ can be used to build our next version of ShoutOut product, we thought we should first learn the fundamentals by applying the framework to understand how it is being used by successful products companies. Here goes the analysis for 4 products. Note that you should watch the 2 videos before you can appreciate analysis completely.

Instagram: The success of Instagram can be attributed to the fact that they were able to create this desire of  showing off  ‘photography’ skills in the users of the app and then slowly converting this desire into a habit by giving him variable rewards.  Instagram has not only used the desire engine to hook users, they have also excelled in the user action department by making the lower resolution pictures taken from a mobile phone look great and help the user quickly upload pictures to facebook or twitter. Here is the desire engine summary for most popularly used features on Instagram.

Pinterest: The phenomenal interest in Pinterest is the result of the service being able to form a desire and habit out of sharing interests with others.  Its meteoric rise can be partly attributed to the easy to consume and create content on Pinterest. Humans are wired to consume visual information more easily than textual information like Twitter hence Pinterest ‘s user base is raising faster than Twitter did at the same stage of its evolution. Pinterest has simplified the act of showing off your interests like no other product has done. Here is the desire engine summary for most popularly used features on Pinterest.

Foursquare: The analysis of Foursquare using the desire engine frame work is interesting because the App has recently repositioned itself. From being a check-in service, the App now aspires to be a recommendation engine for experiences near you. In the redesign, it has retained most parts of the check-in service while adding newer functionality in the explore tab. Due to this, the product is aiming to target 2 different internal emotions, one which is about showing-off where you are and what your doing. The other emotion is the hunger of  discovering new experiences around you. Thus in effect, Foursquare has two different desire engines implemented  into the same product. Here is the desire engine summary for most popularly used features on FourSquare.

Facebook: The analysis of Facebook using the desire engine framework is tricky one as  Facebook associates itself to several internal triggers like loneliness, showing-off, venting anger etc. To keep the analysis simple, i have tried to combine several desire engines into one for Facebook and kept only a few internal triggers and usecases of the service . The massive popularity and high usage time on Facebook can be partly attributed to the fact that many internal triggers are satisfied by Facebook thus making it easier to form a habit of checking Facebook multiple times a day.

Ability to do things quickly

All through this analysis, well again like Nir says, i noticed another common thread in all these successful products. They make the user action with as little friction as possible thus making the consumer do only what is necessary in the most effective manner. This helps in making the consumer to go through the desire engine faster thus aiding in quicker habit formation.

  •  Instagram: The product makes it really easy to take pictures from mobile phone and upload them to social networks like Facebook quickly. The UI is devoid of too many options with only few filters to add effects to photos. The uploading of pictures  is so fast that the Facebook’s app seems like a tortoise racing with a bullet train in comparison with Instagram. (with Indian upload speeds) :)
  • Pinterest: The product makes it very easy to consume and create content that we are left wondering why someone else had not thought of this easy way to share ones interests.
  • Foursquare : The app is designed to perform the task of check-in and leaving a tip for any local business a breeze.
  • Facebook :  The friends stream is the most intuitive piece of design ever as it solves the complex problem of keeping up with friends into a simple UI of flowing updates from your friends. The algorithm does a wonderful job to bringing the most relevant content up your stream thus ensuring that you get updated about friends quickly.

So the combination of using the desire engine to build a product/service and making the experience of the user as frictionless as possible makes products like Instagram, Pinterest, FourSquare and Facebook so popular. I hope this article is an eye opener to many of you to understand that you may have got addicted to one of these services already :)

We think that by using ‘Desire Engine’, we can effectively fast-track habits and manufacture desire in consumers to ShoutOut their experiences as it happens.

Note: ShoutOut aims at making it easy for consumers to say their experiences about products or local places as it happens. then and there.

What are your thoughts? Leave your comments below.

Does buying a 90 lakh apartment make sense as an investment ?

At 30 years of age should you buy that 90Lakh(1500 sqft) Apartment in a large city ?   Is the question which many of my friends have asked me over the last 2-3 years and each time i wanted to tell them it is a foolish thing to do because …. But held myself back  and advised them to really think if is makes sense  allowing them to commit hara-kiri. Most of my friends tell try to justify this as retirement planning  , i think that’s a convenient justification  . Today after reading the wonderful article on <Children in parents ego trap> i felt that this needs to be examined in several lights (Practically as well as from a Finance point of view)

Buying an apartment at 30 years  thinking that you are making an investment towards retirement planning  is almost akin to buying a car and using it for the rest of your life , the car will simply not last long enough. Let me explain

  • If you decided to buy  a  90 Lakh apartment(1500 sft)  for which you have made down-payment of  30lakhs  and the rest of the 60 lakhs is own loan it would mean that you will pay ₹59k EMI over 20 years . This means that the total cost of apartment would be  Rs 1.4 crores(towards EMI) +1.3 crores (30 lakhs down-payment earning  compounded interest of 8 %). Thus the apartment costs 2.7 crores Rs in practical terms and not 90 lakhs as u imagined . This is the most important aspect which is missed in investment i.e people always say i paid 90 lakhs for my apartment and now it is valued at 1.5 crores  and boost about it to friends.
  • Average Life expectancy of Indian male is now 68 years , since this is the average across people living with access to lower income and healthcare level , it would be safe to assume that you and ur wife would live for 75 years. You may live longer , but hey am quoting statistics here :)
  • Average life of a RCC structure is 30-40  years, with enough focus being given on maintenance of the building else  it would be much lower at 20-25 years .  This means that when u are 70 years and still statistically can live for another 5 years your home may not be livable ! or worse you may need to spend money out of your pocket for repairing the home to make it livable. This is the reason why flats are never to be seen as investment opportunity because the value of the building starts to depreciate fast  in fact most bankers start depreciating the value of the building in 10 years !
  • Now come to the value of land (undivided share of the land belonging to you) i.e if the building is demolished and sold how much will your share be worth !  . As the building as such is not worth anything after 15-20 years only thing that is valuable is your share of land.  From my personal experience and discussion with several of my friends who  own apartment i understood that a 1500 sq ft apartment  would mean  that you get an undivided share of 600 to 800 sft (depending on project having open amenities like garden , swimming etc) . So the valuable portion of what you have invested in an apartment is only 800 sft (higher side), which means that when you are investing  Rs 2.7 crores towards the 800 sqft of land this translates to Rs 33,000 /sqft in real terms.  Now what is expectation of the land prices after 20 years ?  Will it be more than Rs 33000/sqft  if so by how much more ?  i will leave the judgement to you … If Mumbai was a benchmark i think it is possible that in a city like Bangalore we may have a rate of 33000 Rs  in a normal locality of Bangalore after 20 years . So it really is not an investment as there is no returns or returns if at all would be very low !!!
  • Also when we consider the practical issue of flats aging and needing to be demolished . Imagine what would be the situation then ? You need to get all the owners together to agree to demolish the building before you can sell the land to another developer . Each owner would have his /her own dynamics so getting all of them to agree to a common terms will be a big challenge. I know this has been done in Mumbai where apartments over 50 years have been demolished and the land sold to new developers , but imagine the hassle of doing this when u are old !

So what is the practical way out, should one not invest in an apartment at all ?   I think it would be simpler to do the following

  • Stay in a rented home  during most of your working life (say till u are 55) => Lets calculate  what this means . Lets us assume you  would spend 15k to rent a apartment of your choice(similar apartment to what you can buy) . Assuming rental inflation of  5% each year you would end-up spending 85lakhs over 25 years. This way you always get to njoy the best maintained properties without the hassles of owning it !!! , but you dont own any asset ..:( . Yes that is a downside but upside is that you have only spent 85 Lakhs as against 2.7 crores , so you still have 1.9 crores in net savings as opposed to a home purchase !.
  • Now when it time to retire i think of 2 real options => Move to another city (tier-2 or tier-3) . Remember that 25 years down the line most cities will have all infrastructure that we will take from granted in a major metro cities , so moving to tie-3 town does not mean you are compromising on any thing at all in terms of life style , but yes properties there will be much more lower prices than the major cities. So buy an apartment with your corpus of 1.9 crores …
  • Second option would be to continue to stay in rented home , but of lesser requirements i.e move into a 1 bhk instead of 3 bhk now . Anyways kids will not be around then :)

I am sure these options may be sounding outlandish and too idealistic , but what am trying to highlight is that your 90 lakh apartment is not an investment !!! At best it is a way of saving money up for long term. The same objective can be achieved by putting money into stocks, fixed deposits over a long time. To give you the prespective , it is believed that over long term 20-25 years equities offer 10 -15 % returns thus instead of investing into an apartment you can save up a bigger corpus from the same money spent towards EMI. I can understand the emotional angle to own a house is also there but my point is that we should never mix up the emotional parts and the financial parts.  Purely from financial point of view i think buying an expensive apartment  (90 lakhs +) is akin to buying a lottery and hoping that you make much more than what you have paid for !…

To discuss more you are always welcom to write me @ avinashmkb78@gmail.com …

Rgds

Avinash MB

 

 

IRCTC Tatkal – Practical Tips to beat others in race

IRCTC  is the sole website from which one can book railways tickets  online in Indian Railways . The only other way of  booking a rail ticket is to head to the nearest Railway booking counter in your city . Knowing the amount of crowd in the booking center it is preferable to book tickets online  , but for people whose travel has been decided in the short term booking tickets by ‘irctc login‘ and then selecting the tatkal option is the online way we can get tickets for travel in the next 24 hours. But we all know how painful this experience can be

IRCTC login Tatkal joke
Joke on how difficult it is to book tatkal tickets

The main issue which is faced during the IRCTC ticket booking  is that as many as 8 lakh people are vying to get the tickets booked before it is taken by others and since the book window opens at 10:00 am people all want to book tickets at the same time. Below are some pratical tips on how one can avoid the errors like Session expired, Service unavailable type of errors after ‘irctc login‘.

a)  IRCTC login 10 mins before 10:00 am : Tatkal window open at 10:00 am daily and one must not try to login to IRCTC at exactly 10:00 am  as the IRCTC website will now all login to the website after 10:00 am to limit the number of  users competing for tatkal tickets. So please login to the website by 9:50 am.

b) Avoid session expired message after irctc login : The second biggest issue which one faces during the irctc ticket booking is the session expired message. If this message appears then it means  you need to perform  irctc login again and this may mean that you may not get your tickets are login will be disabled for upto 1 hour from 10:00 am.

IRCTC Login session expired
Dreaded IRCTC Login expired window

To prevent this from happening one needs to ensure that the session is kept active. Once you have initiated the booking it is best to keep this link <IRCT Terms & Conditions> opened in another tab of the browser and this needs to be refreshed every 2-3 minutes so that the IRCTC system does not timeout the session which you are using to book the tickets. The key is to open the link in another tab of the same browser link which is being used to book login to irctc website.

c)  Use Autofill for ticket details : The 3rd most important tip which may use to speeden up the Tatkal ticket bookings after ‘IRCTC Login‘ would be to use the ‘Magic Autofill‘ tool to prefill the details of your tickets into this tool and just invoke the ‘Magic Autofill’ tool bar on your browser (Chrome/Firefox). This will ensure that all the ticket detailed filled up earlier are simple filled into the ticket form in 1 click , this saving precious few minutes of data-entry time during the tatkal booking rush.

Magic Autofill for IRCTC Tatkal
Use Magic Autofill after IRCTC Login

To do this you need to visit the ‘Magic Autorefill’ page and prefill all the ticket details and then click on ‘I am feeling lucky’ button. This will generate a blue box called as ‘Magic autofill’ , just drag this to the browser status bar (see detailed steps on attached video too).This will crease a clickable button in the browser toolbar which when clicked will lead to 1 touch filling of the ticket forms on IRCTC website after you have logged to the website using your user name and password.

d) Use chrome browser:  For ‘irctc login’ it is preferable to use Chrome browser over Firefox or Internet Explorer. We have noticed that Chrome browser tends to perform better in ticket bookings.

e)  Keep station codes and other details handy :  One of the other issues which we have seen is that in the rush hour (10:00 am to 11:00 am) functionality to search from and destination will not work . It is better to keep the 3 digit code for both the source and destination for tickets stored on a notepad earlier. This can save precious few minutes during the Tatkal peak hour of 10:00 am to 11:00 am.

f) IRCTC Login using mobile :  Another little trick which has been observed is that when the tickets are booked via the mobile lead to higher success rate as the page expiry does not get displayed again and again . So one may use this feature by visting the mobile link https://www.irctc.co.in/mobile and  then performing irctc login using your regular user name and password.

IRCTC Login Mobile Screen 1      
IRCTC Login Mobile Screen 1

 

Should you look for a tech co-founder ?

Preface : This article chronicles our experience in Opendoor Technologies in finding the technical skills to develop our product  and i hope that it gives a idea of startup challenges and also answer the question of  ‘Should you look for a technical co-founder’ for your startup

———————————————————–

Its been 8 months since we started off our startup journey  and we tried to chronicle our experiences in Santosh’s blog post in the new year at <2012 was one hell of a year>. Now  i thought its is appropriate to share some of other learning’s which may help others to gain perspectives and get a fair idea of challengers involved . Out of the many things which we learned during our journey so-far , there is one thing which stands out and that has been our journey to gain ‘Technical Skills‘ to build our product.  We have been through several phases in our technology journey  in the last 8 months and i think each of them is a learning by itself and would save an prospective entrepreneur lots of time if he/she is able to learn from our experiences.

 Stage 1 : Technical Skills can  be outsourced 

In the initial phase of our journey we thought that we could hire quality technical skills to make our product and we would focus all our efforts on design , branding and SEO (Search Engine Marketing). We thought this combination was good because we had extensive experience in SEO (based on our past experiences of making money through SEO)and had good experience of branding and positioning (or so we thought due to the fact that we both were MBAs) . The thought process was since technology involved was fairly low tech and commodity we should not focus on this and get the job done with hiring a freelancer.

Costs :Oh boy !! This turned out to be big mistake as it is not possible to hire good tech freelancers at reasonable prices . The good ones ask for the moon (40$ /hour pricing) and the ones who are charging low prices never are able to deliver.  Basically the good ones were either having their own startups or were freelancing for big brands like FabIndia. So we ended up hiring an average guy in chennai to work for our first version of ShoutOut website (roughly 80k cost). Boy he took ages to deliver  and after 4 months we did not want the website as we wanted something else. See my next point.

Flexibility: Once we got deeply engrossed in the website development we realized that we wanted to change the design of the website on a daily basis  so we could not adopt the waterfall model or development . We needed to be agile !!(Not pseudo-agile as we practice in large companies) because we needed to change the design and features of the website almost on a daily basis based on what we saw and read. Thus outsourced model will not simply work.

Take away :

 a)If your main offering is based on technology then never outsource this !! This has to be in-house and we need to have complete control of this else you would not be able to achieve what you set out do .

b) Waterfall model never works in startups simply because we are not 100 % clear on what we want to develop. This means you never have a 100 % clear requirements when you start off and evolve very quickly based on feedback received from your users and evolving landscape.

Stage 2: Bring a co-founder on board  

During our initial days we were told by several mentors pointed out  that our lack of hard-core tech background was a problem and suggested us to bring someone on board either as an employee or as a co-founder. The question of hiring an employee was a difficult one as it would cost us upwards of 1 lakh/month to hire a decent tech guy who can be our tech backbone . Also we realised that the good ones either have their own startup already or want higher salaries than market .

Faced with this dilemma , we choose to bring a tech-cofounder on board by placing ad in HasGeek.  We soon realized that we were not alone in this race to get a tech co-founder as every second ad in HasGeek was for a co-founder who was a techie ! . Got some responses but some how we did not find the wavelengths matching. After several discussions we finally met Jerry Kurian whose wave length matched ours and decided to bring him on-board as a co-founder. We started to work with him to develop our new product.

It was during this time that we met senior mentor to seek his advice on ShoutOut  and he told us how technology had become so simple that he was a developer himself. We did not believe him when he said that we can build a prototype of your product in 2 weeks time !!

Stage 3 : Getting to be a hacker  and why you dont need a  tech-cofounder always(The topic of this post and the meatier portion is here)

The words mentioned by the senior mentor stuck in our minds ‘Is it so easy that we can build a website in 2 weeks’ ? I had severe doubts about this as this was miraculous considering that we had spend 4 months to get 1 version of our ShoutOut website ! . We decided to take the dip to see what this changed world was .. How was it possible to develop a fully working website in 2 weeks .

There are 2 popular frameworks which make for quick development…a) Ruby on Rails b) Python on Django. We choose Ruby on Rails as it was recommended for first time programmers!   and spent 4 weeks to learn HTML/CSS/Ruby etc. After which we got down to developing our front end portions in RoR (Ruby on Rails) and the backend was developed on Scala by our tech co-founder.

Boy the productivity boost that these frameworks gives us really meant that we had a working protoype of our website in 4 weeks flat (not 2 weeks ..but more about that later). As i went along i realized that with the combination of a great framework and support available on online forums like Stackoverflow , no problem was insurmountable. In fact complex implmentations like Facebook integrations , Natural Language processing etc can be completed in a matter of hours as opposed to days in traditional programming. This meant that you are 70% more productive as you focus on the business logic rather than focusing on technology or coding aspect.

The RoR is so powerful because it(Python and Django have similar advantages)

a) It brings in a framework which allows a basic website to be up and running by using 3-4 commands (yes you read that right..). Once the basic framework is up you can configure and customize the framework to quickly develop your business usecases.

b)  Availability of gems (libraries)  which can perform complex tasks like Facebook integration , Google maps integration or any requirement into a matter of writing 2 to 3 lines of code. From my personal experience FB integration of our app to post feedback received from SMS was done in 3-4 hours by writing 10 lines of code.

c) Availability of  forums like stackoverflow means even your most toughest challenges can be overcome by just searching google or posting a question on stackoverflow.

d) RoR community has embraced the open culture where people readily share the source code which they have written  with others using Github so i can now see what other experience developer have done to solve a similar problems. This means i am learning at a faster pace than traditional methods !!

Apart from this the availability of API’s to do the complex part like NLP (Natural Language processing), Maps ,Social integration etc means that you can stich together worldclass solutions by really having to do very little coding . Thus with the combination of RoR like platforms and API’s from 3 parties the development complexity is reduced greatly . So much so that i call this as configuration rather than coding :)

2 week Milestone : Is it real ?

We did achieve that 2 week mile-stone which senior mentor mentioned when we decided to port our backend implementation from Scala to RoR.  We could replicate the whole backend processes on Rails in no time and in-fact we are now live with the Rails stack which is developed by me . All this was done in a period of 6 weeks (4 weeks frontend and 2 weeks backend) by a person who is not a programmer ( have been a tester all my life with very little coding experience).

We had to part ways with the Jerry (our tech co-founder) as he wanted to spent time to focus on B2C startups and we wanted to focus on B2B startups .Now am a full time developer looking to take on my next challenge.

So our take is that a tech-founder  may not be needed in all startups ! You can become one …  some startups which work in core technologies may be exceptions to the rule.

1 st Lap of the Roller Coaster Ride

Hi ,

This would be my second update on our entrepreneurial journey after my previous post <Start of an entrepreneurial Journey>. As i write this update  i sense the adrenaline rush of having gone through a roller coaster ride in the last 2 .5 months hence the title of the post “1st lap” ! . Along the line we have had to unlearn the big company mindset which both me and Santosh had got used to and learn the quickly the world of start-ups . To not let the cat out of the bag , i would first talk about the changes which we have made to our business and then would  i would like to document some quick learning’s which i hope would be useful for startUp enthusiasts.

Business of Complaints -> Venting Platform -> Realtime Feedback for businesses

The title of this section lets it all away :). Yes we are no longer in the business of  handling complaints from consumers and we changed our primary business twice in the last 2.5 months !

Business of Complaints: After a month of working on consumer complaints we realised that people who are raising complaints on our platform are hoping to get a resolution by coming to our platform  and the only way we could have happy customers was to resolve their complaints.  The primary premise that companies would respond to negative publicity was not working even after we got 10s of complaints against a single company. This meant that in order to keep our user happy we had to follow up their complaints individually with the companies and soon we realised that the companies were  either too slow in responding to followup from our side or were not approachable because no one person was responsible for complaint handling in the company  . At the same time we met a top-tier VC who advised us that this business is not scale able due to the fact that we need to  hire more employees to followup on complaints to scale up which means that we did not meet the criteria of scale-able businesses. The investors are looking for scale-able businesses to invest  so we decided to move on and try to pivot into another area.

Venting Platform : The venting platform or rather a platform where we could say anything about any product or place was our next idea. The basic premise of this business idea was to provide a platform which is different from FB and Twitter (friends and followers) where i could say anything i wanted to say about a place or product to other consumers who have been to the same place or have used the product. In simple words if you had a great experience about place or product you want to not only share it with your friend but would also love to interact with other people who have had the same experience.

Before executing this idea  we made analysis of what makes a successful B2C product like instagram <Find out the secret sauce of Instagram, Pinterest, Facebook and Foursquare>  and then started to chart our features of our product and also started to work on the product. During this time we met another investor who gave us some insights into B2C business which we did not have earlier . The point made by him was that  the Indian market  is too premature to make a product like this as the user base in India is too low and asked  us not to get carried away by numbers like 100 million internet users in India . He bought out a prospective that even a super successful business like Flipkart has only 2 million consumers only thus we have very low real internet savvy users  and to make a successful B2C product supported by only ad revenue  we need 10 million users or more (FourSquare is still struggling with 20 million subscribers with no revenue model in sight after 5 years). The message was simple this is a long haul game with no investor appetite in India and weaning investor appetite globally and hence not something that 1 st time entrepreneurs should try. We were glad to get this advice as it bought us back to reality and asked us to focus on a problem which can be monetised quickly.

Realtime Consumer Feedback:  During our study of the venting business we realized that there are other problems which we could tackle headon . One of the most obvious ones which struck us was that the businesses don’t have an easy way to understand the pulse of consumers and hence look at many proxies like mystery shoppers , feedback forms (who fills those still !!) , CSAT survey and what not. But still we figured that the forms of gathering feedback are not effective either because they are cumbersome for consumer (e.g  feedback forms) or miss the moment of truth in an experience because they are not gathered then and there !.  This gave birth to our next idea “Realtime Business feedback”. The experience which the user has had is often expressed in a single sentence e.g “The Cafe latte at CCD was super” or “The toilet at Shopper’s stop sucks , will never come back”. The companies don’t ever get to hear such feedback because they don’t make the effort to capture such feedback simply because the tools used by them are not meant for this sort of feedback . Normally a company would give the consumer a feedback form which had loads of unnecessary details in it or could make a CSAT call a week later by when it is probably too late.  This is the need which we want to address and after some study we realised that any easy to use approach for this could be an in-store request to give feedback using an SMS ! . The appeal of SMS is simple as all we are asking the consumer to do is to summarize his experience in a single sentence in a medium he is already used to (SMS) and  that the feedback is captured then and there.  The feedback mechanism also allows businesses to react in real time as we are raise alerts based on the content of the text e.g In case the customer complaints about AC we can immediately alert the facilities manager of a store in realtime. Thus a business can gather feedback and react immediately to correct problems.

We are now working in full flow on this business idea by speaking to several businesses to validate the idea before starting our development. As of now we have started to develop our product which would take SMSes from end consumers and analyze the sentiment of the sentence (positive , negative , neutral). Apart from this we would use NLP (Natural Language processing)

This was a short summary of our journey as a start-up and boy it has been a wondeful exciting journey till date.