Developing Innovation

Bringing The Global Web To India

2008-11-22T09:37:00.000-08:00

A few weeks ago I blogged about search suggestions, a feature that made it easy to enter queries in Indian language scripts. Once you are able to do that and start searching, you'll quickly discover another barrier that non-English speaking users face in India - there just isn't much good content available online. No matter how good the search engine, it can't return relevant information if it doesn't exist! This situation is beginning to change in a few areas -news and entertainment for example - where lots of Indian language websites are being created. However we still have some way to go before the Indic web has enough high-quality content to satisfy all the information needs of users.

What can we do in the meantime? Well, Google has an interesting approach to this issue - automatic translation. If you do a search in Hindi and scroll down to the last search result on the first page, you'll see a link to a result that's been translated from English. For example, try querying for सरकारी नौकरी and scroll down to the bottom of the results page. You'll see a link to a translated query result. Clicking on the link takes you to a translated query results page. Here's how this works:

1) We will take your Hindi query - "सरकारी नौकरी" - and translate it into English - "government job".
2) We'll then run the English query and get back English results.
3) We'll translate those results back into Hindi for you.

All these translations are done automatically, using a machine translation engine developed at Google. This technology allows you to translate any text or web page instantly. Here's the Times of India homepage automatically translated into Hindi. Of course, because these are machine-generated translations they will never be as good as human translations (and they can even be quite funny) but the quality should be good enough for you to understand the sense of what you're looking for.

A neat and unique way of using technology to help bring information to users, even when it doesn't exist in their language.

Better Search in Hindi

2008-10-22T08:04:00.000-07:00

One of the core value propositions on the web, and one that is certainly near and dear to Google's heart, is search. Google's mission is to organize the world's information and make it universally accessible and useful.

For our purposes, the operative words are world and universal. So how do we fulfill this core mission in India, for those who would prefer to interact in their local language rather than in English? Of course our core search technology works across languages and has been adapted to the specific needs of each language. Apart from this there are some specific features we launched on Google Hindi Search. I'd like to showcase one of them here. We launched this in response to the difficulty our users faced in entering Hindi text.

Problem: Hard to enter Hindi text on a regular english keyboard.
Solution: Easy Hindi search in 3 steps - Pictures say it louder than words.

Step 1: Start typing in English and you'll see Hindi suggestions

Step 2: Select your query from the drop-down list

Step 3: View the results of your search in Hindi

We have this feature available in seven other Indian languages:

Happy searching!

Chicken or Egg?

2008-10-19T00:50:00.000-07:00

Google India had its first ever Google Developer Day, held in Bangalore on October 18th. I spoke about our Indic Transliteration API, which makes it possible to add Indic language tying to any website in a very simple manner. (more about this API and other Indic tools a later post).

What struck me as I spoke to the developers at the conference is a sense of uncertainty about the market opportunity for Indic language products and services, so I thought I'd set down some thoughts on how I look at this market.

The opportunity.

In an earlier post, I outlined some of the demographic and socioeconomic statistics that set the context for this opportunity. Bottom-line: India is getting richer and more literate at a much faster pace than its learning English.
In every country around the world, as the internet provided compelling content and applications in local languages, people found value in them. This is true across Europe, Asia and the Americas. There is no reason to think India is different.

The ecosystem

The bottleneck is this: people won't go online until hey find value, and the value creators (content producers, application developers) won't make the investment until they find people online. How to break this logjam?
If we look at how the internet developed in the US, it may provide a useful analogy. For the purposes of our discussion, we can break down this evolution into three phases.
First came content. This was mostly produced by communities people who had a passion for putting up content they cared about. Traffic and monetization was mot the motivation.
Second came growing readership as people started discovering this content. This set off a virtuous cycle in which content eventually because a viable, monetizatable business.
Third (and final) were the application developers who could now focus on moving the online experience beyond passive consumption of information to interactivity, community building, service delivery and a host of other innovations.

The Indic market was stuck in phase one for a long time, and (I believe) has just recently entered phase two. There are some signs to back this up - the growing number of newspapers launching online editions in local languages, the growth in the number of tools available for entering local language text using an english keyboard (Google, Quillpad among others).

Are you ready?

Improving Lives Through Search

2008-09-20T23:06:00.000-07:00

One of the most common questions I'm asked when I talk to people about building products and services in Indian languages is, "Why?" The unspoken thought behind the question: those who don't know English in India are dealing with more basic sorts of problems - web search is a luxury that can have only tangential impact in their lives.

I beg to differ.

One of the most powerful features of the web is the democratization of access to information. With the web, consumers can be free of value-extracting middlemen and brokers of information. With the web, consumers can reduce information asymmetry. That isn't a luxury - it's a powerful tool to improve lives.

Imagine a sick child, and parents who have no easy access to medical care. The web can yield information to understand symptoms and help parents provide basic treatment. Imagine a bright school student who attends a poorly-run and managed school that will ill-prepare her for college and the job market. If this student could access educational content online, it could transform her life prospects.

Search can improve lives. And it helps those people most who have the least access to alternative sources of information - typically those lower down in the socio-economic ladder.

One of the things I like to do is to read Google's customer testimonials from time to time. I've reproduced a few below. This isn't a pitch for Google - you can replace "Google" with the more generic "search" and the message is equally powerful.

Message from: Abigail

"Google helped me discover that my daughter's strange medical problems are part of a rare genetic syndrome that most of her doctors had never heard of. Her doctors diagnosed her after I brought them the information, and my discovery helped her cardiologist diagnose another patient with the same syndrome. Because of my daughter's new diagnosis, we have uncovered other dangerous but treatable problems that we wouldn't have known about until they caused her serious damage. So, I'm very grateful to the people at Google who made all of this possible. Thank you."

Message from: Ann

"I just wanted to let you know that Google may well have saved my life. My sons and I were walking home from having eaten out. A half block from my house, I felt this pressure building in my chest. Immediately, I thought, 'heart attack' and ran through how I'd been feeling that the day (I had been nauseated). My first thought was, 'confirm suspicions,' and immediately, upon arriving home, I went to Google and typed in 'heart attack.' I kept thinking, 'you only have minutes...' I found a site that listed symptoms. Indeed, I was having a heart attack. I was at the Albany fire station within minutes. Five baby aspirin later, and a few squirts of nitro and I was in the ambulance on my way to the hospital. The good news is, I have no residual damage. My heart is back to normal. Thank you for providing the Google search engine. I'm sure my recovery was complete because of the speed within which I was able to get help."

Message from: Laura

"Last year my daughter, who was a senior in high school, was afraid of failing her math final. I did a search on Google and came up with more than one method of explaining the formulas...She passed the final and ended up with a B in the class instead of a C. "

Onashamsakal

2008-09-12T22:26:00.000-07:00

On this festive occasion, I'd like to wish all Malayalees Onashamsakal. To celebrate the occasion, Google just launched a News edition in Malayalam. You can learn more by reading our post on the Google News blog. Of course, if you're looking for more information on onam or on any other subject, in Malayalam, you can also use Malayalam search. It's very easy to type in Malayalam using a normal english keyboard: you start typing Malayalam words in english, and we will generate Malayalam suggestions for you to select as your query.

India by the Numbers

2008-09-11T04:24:00.000-07:00

As I mentioned in my previous post, one of the areas I focus on is Indian language products and services. The basic thesis is this: India has a huge population of people who should be using the internet but are not. One of the primary barriers to usage is language: the internet is a fairly unfriendly place in India if you don't speak English. Let's try removing or lowering this barrier, and the internet becomes useful for a much larger group of people. I'll elaborate on each of these points in subsequent posts, but for now, let's look at some numbers* (you could quibble about some of these e.g. literacy numbers supplied by state governments may be inflated, but they are in range of the true number):

Total population: 1.2 billion
Total literate population: 650 million
Total middle class population: 350 million
Total newspaper readership: 200 million
Total vernacular newspaper readership: 180 million (90% of total)
Total English-speaking population: 80 million (self-identified as speaking as first- or second-language in the 2001 census)
Total online population: 40 - 50 million

If you (quite reasonably) assume that pretty much everyone who is online in India today speaks English, then the low internet user base makes sense - it's more than a 50% penetration among English-speakers, and zero among the other 93% of the population.

We need to build the Indian language web. Who's in?

* (Sources: 2001 Indian Census and 2006 National Readership Survey)

Hello? Testing.. 1... 2... 3

2008-09-08T08:28:00.002-07:00

Is this thing still on?

My last blog post (before this one) was exactly sixteen months ago! It's amazing how time flies. I blogged back in April of 2007 about our imminent move from the Bay Area to Bangalore. Well, the move happened, and my wife and I have been in Bangalore since May last year. What with getting used to a new city, a new job (Product Manager at Google), a new social life (or lack thereof), blogging took a back seat.

What's pretty neat is that in the time that I've been away, I've actually been working on many of the themes that I've blogged about: product innovation in developing countries. My focus during the last sixteen months has been on Google's Indic language strategy and figuring out how best to bridge the language barriers that make the internet so daunting for the vast majority of India's population.

I hope to pick up where I left off in May last year. Is it possible to resuscitate a blog after a year? I hope so. I'd like to revive this blog, share my thoughts and ideas, and get your feedback. In the meantime, take a look at some of the stuff Google is doing in India.

Shift Happens

2007-05-07T14:33:00.000-07:00

Neat slideshow on technological and political shifts. It just won the "World's Best Presentation Contest" at SlideShare.

Survey of India's Consumer Market

2007-05-06T21:14:00.000-07:00

McKinsey's Global Institute has just released a report on India's consumer market. There is an executive summary as well as the full report, available for free download (although you may need to register yourself to access these). The study projects the growth and changes in the composition of India's consumer markets from today through 2025. The highlights include the following projections about the market in 2025:

India will be the fifth biggest consumer market. If India continues on its current high-growth path over the next two decades, income levels will triple, and India will climb from its position as the twelfth-largest consumer market today to become the world's fifth-largest consumer market by 2025.

The middle class will increase tenfold. As Indian incomes rise, the shape of the country's income pyramid will also change dramatically. Over 291 million people will move from desperate poverty to a more sustainable life, and India's middle class will swell by more than ten times from its current size of 50 million to 583 million people.

Marked shift away from basics towards discretionary spending. Indian spending patterns will evolve, with basic necessities such as food and apparel declining in relative importance and categories such as communications and health care growing rapidly.

The full report has a wealth of data that will be a useful reference for anyone interested in the Indian consumer market.

The 2007 e-Readiness Rankings

2007-05-06T13:08:00.000-07:00

The Economist, along with IBM, has published this year's assessment of the state of information and communications technology in 70 different countries. The rankings, which have been published since 2000, measures a wide range of factors that collectively aim to measure the ability of a country to benefit from investments in information technology and communications infrastructure. The complete report is available here (it's free and you don't need a subscription to the Economist). It's an interesting read.

A couple of facts from the rankings:

Denmark is the highest ranked, while the US and Sweden are tied for second place.
The highest ranked developing countries are Estonia and Slovenia, at 28 and 29, respectively.
Among the large developing countries, South Africa is the highest ranked at 35, followed by Turkey at 42 and Brazil at 43.
Among the BRIC countries of Brazil, Russia, India and China, Brazil is the stand-out at 43. India, China and Russia are grouped more or less together at 54, 56 and 57 respectively.

The methodology used the generate the ranking is interesting and illustrative into what drives adoption of technology at a macro level. The rankings used the following six criteria, listed below along with their weight in the overall calculation:

Consumer and business adoption (25%). Per capita spending on IT, levels of e-commerce activity.
Connectivity and technological infrastructre (20%). Access, availability and cost of internet access.
Business Environment (15%). General business climate, including political stability, taxation, labor policies and opennes to investment.
Social and cultural environment. (15%). Literacy, training, and more generally, the "capacity" to ulitize the technology if it is available.
Government policy and vision (15%). Government adoption of information technology, online procurement, public services online.
Legal environment (10%). Ease of new business creation, intellectual property protection.

Interestingly, India ranks higher than China or Russia despite having a significantly poorer score for connectivity and infrastructure. It scores much higher in the legal environment and government policy and vision criteria, pushing up its overall rank.

How Do You Really Feel?

2007-05-03T11:00:00.000-07:00

While on the subject of Stanley Milgram, there is another very interesting experimental technique he pioneered which I think is directly relevant to product managers and marketers. The issue is: how can you determine how people truly feel about something? Asking them (e.g. via surveys or focus groups) can be problematic and all sorts of biases may be introduced. For instance, how you frame the question has a strong impact on the results (nice little example of framing bias by Paul Kedrosky here).

While market analysts can adjust for these biases in some cases, things become particularly troublesome when the questions are more personal and/or sensitive. People tend to respond in accordance with a social desireability bias, which basically means they will tell you what they believe to be a more socially acceptable response, rather than what they really think. How do you estimate the amount of popular support for white supremacy or neo-Nazi groups? Almost no one who holds such a view will own up to it. Election polls in many countries severely understate the support for extremist political parties for the same reason (including the famous 2002 French election in which the extreme right winger Jean-Marie Le Pen came second in the preliminary round of voting - a shocking result. In the United States, a rough analogy would be if David Duke won the Republican primary).

Milgram devised a particularly clever experimental technique that attempted to deal with these types of issues. It was called the "lost-letter" technique, and it worked as follows. Milgram would address letters to a fictitious group whose affiliation would be clear from its name (e.g. "Society For The Advancement of White Supremacy"). The letters would be stamped and addressed to a Post Office box that Milgram set up ahead of time. Hundreds of these letters would then be placed at selected locations, looking like they had somehow got lost and just needed to be placed in a mailbox to be sent along its way. He then monitored the Post Office Box to see how many letters came in.

Milgram guessed that a degree of sympathy for the organization mentioned on the envelope would make it more likely that someone would actually send the letter on its way rather than ignore it. And the anonymous and indirect nature of the transaction would make it a lot easier to act on your true feelings about an issue, not just a socially accepted feeling. To factor out the "noise" from non-responses and other random events, Milgram would do the same thing with another set of letters, this time addressed to a completely neutral sounding organization (e.g. "Industrial Corp, Inc."). This would be the control data against which the responses from the sensitive letter could be measured. The greater the response, the more the support for a particular viewpoint.

The responses to the various sets of letters he tested with were not particularly revelatory. It's the technique that was his real accomplishment, not the results of the experiment.

Stanley Milgram and The First Social Network

2007-05-02T18:18:00.000-07:00

I just finished reading a very interesting biography of the pioneering (and controversial) social psychologist Stanley Milgram. He is most famous for the Obedience to Authority experiments, whose aim was to measure the willingness of people to obey authority figures, even when those orders are in direct conflict with their own moral sense. A detailed article about the experiment can be found here, but a quick summary is this: the subject was brought into a laboratory-like setting and told to administer progressively stronger electric currents to a "victim" (actually an actor), all for the advancement of science. In an unexpected, and somewhat depressing, result, Milgram found that a full two-thirds of all subjects would administer even lethal does of the current when told to do so by the "scientist" (also an actor) even when the victim was in obvious physical distress. We are far more susceptible to manipulation by authority than we are aware. The numbers broadly hold in many variations of the experiments, and in many different countries.

More relevant to technology and development, Milgram was also a pioneer in social networks. Many decades before orkut, myspace or linkedin, Milgram researched the Small World Phenomenon, which says that the world is much more connected than people think, and any two people can be linked together by a relatively short chain of acquaintances. In fact, he first came up with the famous "six degrees of separation" idea when he found that the length of the chain connecting two pepople is, on average, six. Milgram conducted his experiments in the sixties. Today, with the rise of online social networking tools, mobile communications and cheap transportation, I wonder whether we are actually at "five degrees of separation" and trending lower.

To see the six degrees idea in action, check out the Oracle of Bacon. Type in any actor's name (past, present, any country, any language) and it will show you how they are connected to the actor Kevin Bacon. It's really hard to find a more than three links, and almost impossible to find more than four links. A generalized version is here: you specify both actors and the links are calculated for you.

Milgram is a fascinating character and a brilliant observer of the human condition. I am still processing some of his insights. More to come.

The Deployment Post Mortem

2007-04-22T16:50:00.000-07:00

Your product just released. Customers are buying your product in droves and they love it. It saves them time and money, makes them better at their work, and it even slices bread!

That's wonderful and these moments are what we Product Managers live for. However, things don't always go according to plan. What happens when things don't go so well? Inevitably, a customer deployment will go poorly. They won't be happy with your product, and may even uninstall it. What can you do in a situation like this? One approach is what I will call the Leo Tolstoy approach. The great writer said: "All happy families resemble one another, each unhappy family is unhappy in its own way." In other words, treat the failure as an outlier, an anomaly, rely on your customer support to patch things up as best they can, and move on.

A better approach is to look at the failure as an early-warning mechanism. This is your opportunity to understand whether the failure is indeed an anomaly (as some will inevitably turn out to be) or whether it points to a systemic problem that you need to take steps to address. As Product Managers, we are attuned to issues in the field and actively search for patterns or trends that point to a broader problem. Depending on the type of problem, PM's should have a checklist handy to make sure they get the information they need. The two most common types of issues I have come across are:

Failure in the field. The software caused an outage in the customer's IT environment. A PM checklist should include:

What was the problem exactly? Get a detailed explanation.
Was it due to an unexpected software/hardware configuration?
Was the configuration explicitly not supported? If so, why was it installed? Where did our internal process fail?
Was the configuration explicitly supported? If so, go back to problem determination. What must be done to include this use-case in future QA plans?
Was the configuration neither explicitly supported nor unsupported? If so, is this a configuration we did not expect to see and did not plan for? Is it an unusual combination that we're unlikely to see again? If it is likely we will see it again we should add to QA plans. In the case that this is a fairly common configuration that was not part of the QA plan, we need to go back and revisit the entire QA process. How closely does the QA test matrix map to what is encountered in the field? Do we need to do more research to ensure adequate QA coverage?
In the problem determination phase, as we uncover the root cause, can we generalize the effects? I.e. Could the same problem manifest itself in other ways? How to we prevent those other problems as well?
Once we understand the root cause, can we generalize a "graceful degradation" principle from it? Can we build in checks so that when faced with an analogous unknown situation, the software is able to adhust or "degrade" its functionality rather than cause an outage?

Mismatched expectations. The product works as specified, but it doesn't do what the customer thought it would do. They don't see value in the product. A PM checklist should include:

Did we oversell or overpromise product functionality? If we did, this could point to at least two different problems:
If we oversold, was it because the sales force was not trained adequately to know exactly what the product does and does not do? We will then need to work out a more comprehensive training plan for the sales team.
If we oversold, was it because the sales team felt cornered into "improvising" in the field? This could be an early signal that the product is not meeting the needs of the target market very well, and the sales team feels pressured into setting unrealistic expectations.
Figuring out whether it is a training issue or a product mismatch issue is extremely important - one can be fixed relatively easily, the other may require major realignment.
Did we demonstrate value? Even if the product is implemented and works flawlessly, did the customer realize the benefits and/or return on investment they were looking for?
If the customer did realize benefits, but is not aware of them or unable to articulate them, then we need to showcase these benefits better and make it easy for the customer to see it. Perhaps this needs additional reports, a dashboard, or some set of running statistics that enables customers to quantify the value they have received.
If they did not realize their expected benefits, why not? If the software was meant to replace some manual activity, is the manual activity still being carried out? Is there duplication of effort because some component was not correctly or adequately integrated?

Product Bytes Newsletter

2007-04-22T13:32:00.000-07:00

I've been a fan of Rich Mironov's newsletter, Product Bytes, for a couple of years now and wanted to provide a link to it for anyone who may be interested. It's a refreshingly BS-free take on the art and science of Product Management, and I always learn something new in every issue. It's a bit skewed towards enterprise software, reflecting Rich's long experience in that area, but I think the basic ideas apply quite broadly.

Long Bets

2007-04-20T17:03:00.000-07:00

The Ladies Home Journal from December 1900 contained an article listing predictions for the year 2000. The author writes:

These prophecies will seem strange, almost impossible. Yet, they have come from the most learned and conservative minds in America. To the wisest and most careful men in our greatest institutions of science and learning I have gone, asking each in his turn to forecast for me what, in his opinion, will have been wrought in his own field of investigation before the dawn of 2001 - a century from now. These opinions I have carefully transcribed.

Some of the more remarkable themes:

Telecommunications: "Man will See Around the World. Persons and things of all kinds will be brought within focus of cameras connected electrically with screens at opposite ends of circuits, thousands of miles at a span."

Spy satellites: "Balloons and flying machines will carry telescopes of one-hundred-mile vision with camera attachments, photographing an enemy within that radius. These photographs as distinct and large as if taken from across the street, will be lowered to the commanding officer in charge of troops below."

Genetically modified food: "peas as large as beets" and "strawberries as large as apples."

There were some exercises in wishful thinking, such as the view that we would all be athletic and fit in a hundred years:

Gymnastics will begin in the nursery, where toys and games will be designed to strengthen the muscles. Exercise will be compulsory in the schools. Every school, college and community will have a complete gymnasium. All cities will have public gymnasiums. A man or woman unable to walk ten miles at a stretch will be regarded as a weakling."

We'll try to get there in 2100. And my favorite, the somewhat mystifying prediction:

There will be No C, X or Q in our every-day alphabet. They will be abandoned because unnecessary.

The full article is available here.

Fight Poverty with Connectivity

2007-04-19T09:35:00.000-07:00

The notion that large-scale handouts of aid hasn't worked to alleviate poverty is well documented. In the worst case, it enriches corrupt, autocratic kleptocracies (e.g. as it did with Mobutu in Zaire). More commonly it's simply wasted because the institutions necessary to use it are not effective, and a sort of low-grade ineffeciency and corruption takes hold. Even the biggest provider of such development aid, the World Bank, has now recognized that aid must be linked to governance to be successful (championed by Paul Wolfowitz, whose current woes do not invalidate this notion).

The basic underlying lesson, according to Iqbal Qadir, founder of GrameenPhone , is that poverty can be reduced only by empowering individuals, not governments. His own involvement in setting up a cell phone company in rural Bangladesh is testament to the individual-centered, connectivity-based model of economic development. Qadir is currently a director at the MIT Center for Developmental Entrepreneurship, which has already brought to market several innovative products for developing economies.

See below for a talk that Mr. Qadir gave at the TED conference in 2005, explaining his ideas about ending poverty through connectivity. (If you don't see the embedded video, click here).

Living La Vida Local

2007-04-11T15:40:00.000-07:00

Things are different here. The first thing I noticed were the number of "IIT " bumper stickers. Around here there are more IIT bumper stickers than for all other colleges put together! The pool in our building is full of Indian kids splashing about while their parents call out to them protectively in Hindi, Gujarati or Tamil. And the once-familiar sight of clothes hanging out to dry on window ledges and balconies, is once again common.

We can walk to not one, but two, different Indian grocery stores. Steaming hot platefuls of idli and dosa are available in abundance - and cheaply! My wife and I love Keralan food, so we were delighted when we found a great little place with fantastic pepper-fried chicken. Even though we don't have kids, our friends in the neighborhood tell us about the cultural center they take their kids to on the weekends - to learn Indian classical music and dance. For us less cultural pursuits, like watching Guru, suffice. Or, if we feel like staying in, we can go pick up an Indian movie at the local video store.

No, I'm not back in Bangalore - we live in Sunnyvale, CA! Although it wasn't planned this way, it's turned out to be a great transitional place for us when we moved from San Francisco last year, and get ready to move to Bangalore next month. Sunnyvale and Fremont in the East Bay are the two centers of Indian life in the Bay Area. Everyone planning to relocate from here to India, whether Indian or not, should come and spend a couple of months here to make the transition smoother!

Coda

2007-04-09T20:30:00.000-07:00

Now that I'm moving to India in a few weeks, I find myself reflecting on the fifteen or so years I have spent in the US. When I left India in 1991, it was a country that bears little resemblance to the country I will return to next month.

The most apparent changes are the superficial ones: glitzy shopping malls (there were none in 1991) and the profusion of cable TV networks (there was no cable TV in 1991), among others. There are deeper changes too. The one that strikes me more than anything else is the sense of possibility and confidence I see in today's high school and college students. When I was in high school, the limitless possibilities that follow from rapid economic expansion was not something we really conceived of in any meaningful manner.

A nice little illustration of all this can be found in the foreign exchange situation then, and now. In 1991, right was I was getting ready to leave for the US, India's balance of payments weaknesses suddenly caused a crisis. The government was close to defaulting on its debt, and foreign exchange reserves had dropped to about three weeks worth of imports - about $6 billion. As part of a package of reforms, India moved from a fixed to a floating exchange rate, which immediately caused a severe devaluation. I remember my father being quite upset, as my education in the US suddenly became 50% more expensive than it had been a month before!
(If you're interested, you can read more about the 1991 currency crisis in this IMF paper).

Contrast that to today. For those of you who deal in India-US cross border issues, you're probably already aware of the rupee's appreciation against the dollar over the last six months. In fact, the rupee is at an at an 8-year high against the dollar.

Take a look at this exchange rate chart from Oct 06 to today:

The rupee has appreciated from 45.7 per USD in October last year, to 42.6 per USD currently. Foreign exchange reserves have ballooned to almost $200 billion today. It's a world away from 1991.

Long Lived by Design

2007-04-09T13:57:00.000-07:00

Picking up where my last post left off, the issue of data longevity is specially important to developing economies where the process of digitizing government records and making government services available online is just beginning. The lessons to be learned from data loss from the early adopters in more developed economies should be taken to heart.

There's no question that this is a well-understood problem and many projects are tackling different aspects of it. For example, open standards such as ODF reduce the risk of unreadable data. Digitization and hosting of content by service providers offloads the problem from individual consumers to service providers who are, presumably, better suited to deal with it. At the cutting edge, there's even talk of using bacteria for long-term data storage!

My point is not that adequate steps are not being taken. My point is that product design should incorporate principles with longevity in mind. What might these principles look like? A great place to start is by looking at the Clock of the Long Now, conceived by Danny Hillis (of Thinking Machines fame). As he explains the genesis of the project:

I want to build a clock that ticks once a year. The century hand advances once every one hundred years, and the cuckoo comes out on the millennium. I want the cuckoo to come out every millennium for the next 10,000 years. If I hurry I should finish the clock in time to see the cuckoo come out for the first time.

This seemingly quirky endeavor is actually a deeply insightful way to examine our notion of time and its impact on technological progress. Hillis lays out a list of design principles for his 10,000 year clock.

Longevity: The clock should be accurate even after 10,000 years, and must not contain valuable parts (such as jewels, expensive metals, or special alloys) that might be looted.

Maintainability: Future generations should be able to keep the clock working, if necessary, with nothing more advanced than Bronze Age tools and materials.

Transparency: The clock should be understandable without stopping or disassembling it; no functionality should be opaque.

Evolvability: It should be possible to improve the clock over time.

Scalability: To ensure that the final, large, clock will work properly, smaller prototypes must be built and tested.

These principles seem to me to be broadly applicable. If your product, software or hardware, may be used for any duration longer than five years, you would do well to consider each of these issues (adapted for your specific situation) and how you plan to address them in your product.

Microsoft Office v. 2100?

2007-04-08T17:06:00.000-07:00

Those of us who have an interest in technology and want to build widely adopted products will do well to consider the issue of longevity. Building products with a long-term view is a good practice in itself; but also thinking long-term yields design requirements that tend to be beneficial for the overall product.

As an example, consider the Domesday Book, a comprehensive survey of England, commissioned by William I of England, and completed in the year 1086. The book still survives and can be viewed in Britain's National Archives. Today, more than 900 years later, the book is readable, understandable, and provides valuable historical, social and economic insights to historians and scholars. Inspired by the Domesday Book, the BBC undertook to create a similar survey of England in 1986. The contents were stored as 12-inch video discs (remember those?) which are now obsolete. The digital version of the Domesday book lasted all of 20 years!

Think about how much of the information generated in the last 40 years or so is already lost to us. Data created in some proprietary format for which the program is no longer available, or stored in obsolete media which can no longer be read. Clearly we generate a lot more content that we did before, and perhaps not all of it needs to be preserved. However, since there is no way to distinguish what should be preserved from what should not (and who gets to decide this anyway?), they are treated identically. There are groups, such as the Digital Preservation Coalition, based in the UK (started as an attempt to save the 1986 version of the Domesday book as their top priority!) that are tackling the issue. But a lot more remains to be done.

Even more important than preservation efforts are design principles that allow for the creation of long-lived content. Products designed with longevity principles in mind are the only proactive and scalable way to solve the problem. Preservation will always be a reactive and expensive fall-back option and will never offer a complete solution to the problem.

How Not to Get a Job

2007-04-03T09:57:00.000-07:00

Some time ago, I blogged about connecting with your passion to find the best job opportunity for you, and also about innovation in recruiting techniques that enable companies to find these passionate people.

In an interesting, and unintentionally humorous, example of what *NOT* to do, a colleague actually received this cover letter from a job applicant today:

To Whom It May Concern:

This is an opportunity I've been searching for. I carefully have been selecting what Company’s to send my Resume. I’m honored to send my resume to your Company and possibly be considered as a team member. My skills along with personality make a perfect match for what you’re seeking. I look forward to meeting with you to discuss my future with your company. I'm confident, coach able, persistent, and consistent in achieving success independently or with a company that has a positive direction. Please call me so we can discuss a time to meet.

While I have no idea what this person's situation is, or how qualified he is for the position, this is a letter that is guaranteed to lead to failure. What was astounding was that it came through a recruiter! How could this have made it past even the most cursory due diligence? While this is obviously an extreme example, I've seen more polished cover letters that say essentially the same thing. Where's the passion?

The Decoy Effect

2007-04-02T15:30:00.000-07:00

I just finished reading "A Beautiful Mind" about the game theorist John Nash. If you haven't read the book, or seen the movie, I highly recommend that you do. Nash's life is as dramatic as it gets: genius, fame, tragedy and finally redemption.

Game theory is an interesting, if somewhat dispiriting, lens with which to view decision-making processes. It's astonishing how predictable we are. Even when we're unpredictable, we tend to be unpredictable in a systematic (i.e. predictable) manner.

How does any of this relate to software, technology and innovation? Only this: I think it provides a useful set of tools for product managers and marketers to have at their disposal as they think about their target markets and adoption of their products. There's one interesting example that I remembered reading about in grad school. It's a phenomenon called "The Decoy Effect" and provides an insight into how consumers value different attributes in a given product set. The wikipedia article explains it very well so I won't discuss this in any more detail here.

Thinking about current products within this framework can be a clarifying experience. As an example, consider the market for web-based meetings. There are two major players: Webex and GoToMeeting. Customers value two attributes: ease of use (to set up as well as to participate in meetings) and collaboration features. Based on my experience with both products, Webex is harder to use but has more powerful collaboration features than GoToMeeting. What sort of decoy product would increase adoption of Webex over GoToMeeting? What about vice-versa?

By the way, the decoy effect can be used in a wide variety of circumstances. Take a look at this fascinating article in the Washington Post about the decoy effect applied to the 2008 U.S. Presidential Elections.

Sector Watch: India's Entertainment & Media Industry

2007-03-31T09:37:00.000-07:00

At a time of flux in the entertainment and media industries in the United States and elsewhere (declining subscriber base for print media, disintermediation from internet video hosting), the Indian market is experiencing heady growth.According to a newly-released report, co-authored by PriceWaterhouseCoopers and the Federation of Indian Chambers of Commerce and Industry (FICCI), the Indian Media and Entertainment industry is expected to grow from its current size of $9.7 billion to $22 billion by 2011, a compound annual growth rate of 18%.

The table below summarizes the components of this growth. Some of the numbers are almost certainly understated. For example, the size of the music industry is probably distorted by piracy, while the internet advertising market is distorted because of a lack of reliable reporting services.

I'm Back (With News)

2007-03-29T07:32:00.000-07:00

My apologies for the long silence. I've been working through some recent developments in my professional life. In fact, they pertain to the focus of this blog, so I will share them here. If you've read this blog with any regularity, you know that I am very optimistic about India's growth prospects over the next 25-30 years. Sustained growth for 25+ years is transformative - we've already seen how 15 years of growth (since the 1991 reforms) have utterly changed the urban landscape. This is arguably the most profound development globally that I will witness in my lifetime. I'd like to participate in it, and help where I can, rather than watching from afar (in my case, from the Bay Area in California).

With that in mind, my wife and I have decided to move to India. We will leave the Bay Area in a couple of months, and move to Bangalore. I will join the Google office in Bangalore (they're hiring!) as a Product Manager. It's an exciting role, in a great company, at a time of enormous opportunity. I can't wait to get started!

I intend to keep blogging, during and after the transition to India. I hope that the changed perspective I can bring from being on the ground in India will be useful.

Thank you all for your patience during the long period of silence. I'm back in the blogosphere and would love to hear from you! Send me your comments and thoughts! In particular, if any of you have moved from the US to India, I would love to get your advice as we plan our move back.

All Together Now....

2007-03-11T11:34:00.000-07:00

Will Price (who is fast becoming one of my favorite bloggers) has another great post on the virtues of alignment. The key point he makes is that entrepreneurs can context-switch effortlessly, but that same capability cannot (and should not) be expected of the organization as a whole. In fact, this is the key test of the maturity of an early-stage company founder.

When your company starts out, you are hunting for validation, for a niche. You conduct small-scale experiments, involving marketing campaigns and product prototypes/demos. You then gather feedback and hopefully find a segment or two where the value proposition is easy to demonstrate, the need is urgent, and there is money available to solve the problem. You then double down on those segments. First, work your tail off to get anchor, referenceable customers, and then use those to streamline and accelerate the sales process. All the while, the product team is conducting small-scale experiments to identify the next couple of segments to target.

At least, that's how things should go. In practice, this discipline is very hard to achieve, and organizational alignment falls directly as a consequence of not following this disciplined approach. I've seen a couple of key areas that lead to a lack of alignment in the organization:

Failure to set up clear, time-bound success (and failure) criteria. Early-stage companies do need to experiment; its unclear up front in most cases where you should be selling your product, who the ideal customer is etc. However, too often these experiments are not controlled. Without an up-front definition of when to consider the experiment a success, and when to walk away, its too easy to be led into one rat-hole after another, where success is just over the horizon, just one demo away. A common case is when you're able to get a toe-hold into a large enterprise and keep trying to accommodate their every request for information, for endless meetings, for product enhancements etc, without a clear idea of the end game. While the sale may eventually happen, the opportunity cost for the organization is immense.

Trying to do too much. You've conducted a couple of experiments, and found a couple of areas in which your product might add value. However, these areas don't have a lot to do with each other. You might rationalize this away and find connections where none really exist, but really you know that you've come to a key decision-point. Do I invest in solving problem X or problem Y? The thing is: you have to pick and quickly align the organization behind your choice. If you don't, the default trajectory is that there will be people in the organization who try to solve each problem, and the organization eventually splinters.

Alignment is relatively easy to test for: ask your marketing and sales people what they think the company does. Then ask your engineers. Ask the back office folks: finance, adminsitration, HR. Ask your customers. Ask analysts and the press. Ask them once every quarter. If the responses are roughly the same, then congratulations! You've kept the organization aligned. If not, don't fool yourself - you've got a serious problem and you need to address it as quickly as possible. Alignment is relatively easy to test for, but I don't see it happening too often. Could it be because we don't particularly want to know the answer?

Resources for Entrepreneurs at Stanford

2007-03-10T08:17:00.000-08:00

The fact that there are so many resources for entrepreneurs available online is both a blessing and a curse. It's hard to know which sites to focus on, and how to make sense of sometimes contradictory advice. I will not attempt to provide a comprehensive list here - it'll be obsolete as soon as it's published. Instead, I would like to point you to some entrepreneurship resources provided by my alma mater, Stanford University. There is a lot of great information, videos, podcasts among other resources, all available freely and online. Take a look at these sites - there's great information available for you here:

Stanford Entrepreneurship Network. The umbrella organization for all entrepreneurship-related groups within Stanford.

Business Association of Stanford Engineering Students (BASES). Lots of great information. Particularly recommended are the weekly newsletter that highlights entrepreneurial activity in the Bay Area, and the Thought Leaders seminar series (of which, more below).

Center for Entrepreneurial Studies, Stanford University. Deals with all things entrepreneurial at Graduate School of Business. Lots of research papers, videos of speeches given by entrepreneurs and venture capitalists, and an "Entrepreneur Resource Database" that connects entrepreneurs with potential partners or investors.

Entrepreneurial Thought Leaders lecture series. The lectures are free and open to the public; they occur every Wednesday from 4:30 to 5:30PM at the Skilling Auditorium at Stanford. If you can't go, the lectures are all available online, along with handouts and other supplemental material.

Stanford Technology Ventures Program, Stanford University. Deals with all things entrepreneurial at the Engineering School. So far not a lot of useful material for entrepreneurs - most of the presentations have to do with teaching entrepreneurship - but stay tuned.

Can entrepreneurship be learned? Probably not, but you can certainly benefit from understanding what others have done, and forming your own pattern recognition rules.

This Just In: Indian VC Investment Doubles in 2006

2007-03-07T19:43:00.000-08:00

From a new report produced by the US-India Venture Capital Association, Venture Capital firms in India invested $508 million in 92 deals in 2006. That's an average deal size of $5.5 million, which shows the bias towards growth capital rather than risk capital. These numbers are just about double the 2005 numbers of $268 million in 44 deals.

Peter Bamkole's MISFIT Framework

2007-03-06T22:14:00.000-08:00

The mission statement of this blog is to examine the effects of innovation in developing economies. It's ended up becoming very focused on India, mostly because of my own background and experience. I will attempt to remedy this as much as I can and provide a broader perspective. I plan to bring in guest bloggers from Brazil, South Africa and China in the coming months. But let's start with Nigeria.

The Nigerian government has recognized the importance of entrepreneurship in their economic development, and has made its study required for all university students. Leaving aside the irony of government mandated entrepreneurship, it is a worthy cause. To promote entrepreneurship in Nigeria, the government set up an organization called Enterprise Development Services, funded by, among others, the World Bank and HP Nigeria.

Peter Bamkole, General Manager, Enterprise Development Services, was in the US recently, and spoke about the challenges of setting up the conditions to support entrepreneurship and innovation in Nigeria. It's very interesting reading, particularly his method of analyzing the conditions that negatively affect entrepreneurship. He calls it the "MISFIT" framework. It's an acronym that expands to:

M – Market. How do you provide people access to markets and an understanding of the requirements of that market? For example, how is a small business owner in Nigeria to tackle the US market? Where does she get information about regulations, for example?

I – Infrastructure. Lack of predictable and stable power supply; high transportation costs.

S – Support Services. Support organizations that provide mentorship and guidance to entrepreneurs are too few and far between to provide the level of service needed.

F – Finance. Lack of risk capital available to entrepreneurs. Some of this is also due to entrenched mindset of debt vs equity, since that was the only option for a long time.

I – Information. As Mr. Bamkole puts it: "lack of access to information significantly reduces the motivation to venture. In the USA and other developed countries, information abounds. This in no small way helps entrepreneurs make “informed” decisions when venturing. They can research the sector/industry they are about to venture into and the best strategy to adopt, etc. Where there is no access to information, it's like venturing in the dark."

T – Technology. The entrepreneur lacks access to the tools to drive efficiency and productivity gains.

The interview is worth reading and/or listening to, and the MISFIT framework applies to all developing economies to one degree or another. Good luck to you Mr. Bamkole!

50 Most Important People on the Web?

2007-03-05T18:44:00.000-08:00

PC World has a list of the "50 Most Important People on The Web." Yes, we all know that these lists are marketing gimmicks and not serious attempts at analysis and measurement of influence. Still, it's a lot of fun to go through them. This list is interesting because it contained names I had never heard of before and because it has informative blurbs against each entry. While there will be endless quibbling about the choices in this list, there was one stark reality that leapt out at me: the lack of non-US spots on the list. I could count only five:

#13 Henry Chon, CEO of Cyworld. The Korean site that inspired MySpace.
#15 Niklas Zennstrom and Janus Friis, the creators of Kazaa, Skype and now Joost.
#20 Jack Ma, COO of Alibaba.com. Business to business portal and control of Yahoo! China.
#43 Mikko H. Hypponen, F-Secure. Finnish security maven.
#48 Mohammed and Omar Fadhil, Iraqi bloggers. Writing about the situation in Iraq from the ground in Baghdad.

There's no question that the vast majority of content, as well as underlying infrastructure and tools, come from the United States. Even so, just 10% of the total list representing the world outside of the US seems like a very low number to me. Keep in mind that the US accounts for about 20% of all internet users and is growing slower than every other region in the world.

I'm sure the compilers of the list had no plan to consciously exclude, but I really hope to see this number increase over time.

India Poised

2007-03-05T10:07:00.000-08:00

Some of you might be familiar with the "India Poised" ad campaign organized by the Times of India media group. It's an ambitious undertaking, and basically amounts to a nationwide call to action that consists of three points:

Think big. Think scale.
Don't ignore social inequality.
Build an engaged civil society.

The website is an interesting combination of the positive (e.g celebrating unsung heroes) and the cautionary (e.g. underperforming sectors). They even have a slick TV ad that's worth a watch.

This is the second large scale branding/nation-building campaign I've seen out of India in the recent past. The first was meant for an external audience, the India Everywhere campaign at Davos last year, while this is targeted domestically. It's an interesting use of marketing to drive economic growth & empowerment. I wonder if there are analogues in other developing countries, and if so, how effective these campaigns tend to be.

Cultural Context in a Global Era (Part 1)

2007-03-04T10:00:00.000-08:00

A few weeks ago, there was an interesting article in CIO magazine, advising American tech leads how to manage relationships with their Indian vendors. While there is no question that the values and work ethos of an increasingly globalized elite are converging, these cultural differences are real, and should not be underestimated. The article starts out with a very broad generalization:

...it helps to look at the cultures of India and the United States in broad strokes. India is a deeply traditional group-oriented society; tightly knit extended families place a premium on harmony. Survival depends on interdependency, on keeping each other happy. “Your first goal is to make sure nobody is upset by what you say,” says Storti. “If the group is not strong, if it is upset by confrontation, you are in trouble.”

Compare that with America’s fractured families scattered throughout the country, an ethos of individualism and lore filled with Wild West cowboys and a promise that anything is possible if you work hard enough. The United States is a land of grab-for-it. Subtlety is the exception, in both speech and manner. And when an American talks, it’s usually to get his point across, not to create harmony.

While obviously very broad and sweeping, this strikes me as a pretty accurate representation about how business in conducted in either place. Anyone looking to work with an Indian service provider would do well to read this article. In my last post, I talked about the importance of social networks (the physical kind) in conducting business. I pointed out one reason for this: as a way to bypass non-functioning institutions in the redress of problems. The more general reason is brought out in this article: the difference between group-centered and individual -centered cultures.

Articles of this sort tend to go in one of two extreme directions: either dismiss any differences at all as an outdated concept for knowledge workers in the information age, or emphasize the differences to such an extent as to "exoticize" the other. This article has struck the right balance in accepting the global nature of work, while acknowledging the tribal nature of human relationships.

This article obviously begs the question: what cultural advice could you give Indian vendors working with US companies? More to come on this topic.

SMS is the Platform

2007-03-02T08:40:00.000-08:00

A good friend of mine, Rishi Bhargava, recently returned from a trip to India. He shares my interest in technology, innovation, and the emerging Indian market. We had a long chat after he returned and he had some very interesting observations, which I'm going to summarize here:

SMS is the Platform. We already know about the importance of mobile devices to technology adoption in India, but my friend made an even more pointed observation: your product or service has to be accessible via SMS to have any chance of gaining a large user base. Even when people buy data-enabled smartphones, they often have no interest in mastering a new interface when SMS is familiar and easy-to-use. For example, jewelers are paying for SMS-based alerts for price changes in precious metals. These same people are not familiar with the internet and are unlikely to be early adopters of an internet-based marketplace for precious metals.

Lack of Trust Hinders Adoption. The medium for social networking is the clearest indication of the generation gap. In India, for people in their 30's or older, social networks are largely physical. Business is done in this way and social relations are conducted in this way. It's a perfectly rational response to the lack of effective remediation and redress. If you got cheated out of some money, how would you get it back? The police are often inept and/or corrupt and the court system is notoriously slow moving. The only rational thing to do is to minimize your risk by dealing only with people in your social network. Today's teenagers are comfortable moving their social networks online, but this generally tends to reflect their physical networks. The same issue of trust, just in a different medium.

Internet Connectivity is Cumbersome. Beyond a small number of tech-savvy users in large cities, the internet has largely not touched people's lives in a meaningful manner. Even when people sign up for email accounts, they don't check them on a regular basis (and certainly not at the frequency that has become the norm in the US). Setting up and managing a broadband connection can still be cumbersome. Customer service at providers like BSNL and VSNL are universally acknowledged to be terrible. Even providers such as Airtel are getting poor reviews in this department. This has resulted in a cottage industry of "computer service" technicians who often do nothing more than apply the latest Windows patch. Still, they are needed to provide peace of mind to the non tech-savvy. Pricing plans are still archaic in terms of pricing by bandwidth usage (as if people actually know their expected bandwidth usage!) This entire process has to become a lot more streamlined before we can expect wider adoption.

I Got Blog Tagged

2007-03-01T17:38:00.000-08:00

In case you're not familiar with this concept, the way it works is that when another blogger tags you, you're supposed to post five things about yourself that other people might not necessarily know, and then tag five other people in turn. I just got blog tagged by my old buddy Ashesh Badani (stay off the kerosene Ashesh!). Here goes:

I once got out of a speeding ticket because the car I was driving was so old that the cop couldn't believe I was actually speeding and figured his equipment must have malfunctioned.
I once ate a guinea pig. Really. It's a delicacy in Peru, and quite tasty.
I love African music and have a pretty good collection of CD's.
When I finished my undergraduate degree, I wanted to be an academic, and enrolled in the PhD program in Computer Science at Columbia. I was ABD (all but dissertation) when I realized that academia was not for me, and got a real job :-)
My paternal grandmother was British, which makes me a quarter British and three quarters Indian.

I am going to tag: Nikhil Roychowdhury, Mrinal Desai, Dave Beisel, Arun Natarajan and Hunter Walk.

Yahoo Panama: Initial Data

2007-03-01T13:45:00.000-08:00

The web design and advertising firm Avenue A/Razorfish has some preliminary data about the impact of Yahoo's new Panama platform. Here are their key statistics:

Search Impressions – Up an average of 5%
Cost Per Click – Down an average of 6%
Click Rate – Up an average of 10%
Conversion Rates – Down an average of 5%
Overall CPA – Up an average of 6%

The results look underwhelming, and could reflect either early teething problems with the platform, or just poor statistics. I'm inclined to believe it's the latter: the results reflect 33 data points, with a wide variation in performance. The jury's still out on this one.

(via Paul Kedrosky)

This Time It's Different...

2007-03-01T07:44:00.000-08:00

I keep hearing about how this time is different. There will be no repeat of the 2001 bust. The reasoning, as I understand it, goes something like this: we learned our lesson the last time, clear evidence of a business model is a prerequisite this time around, its cheaper to start a company now, so risk is more widely spread, and so on. However, all that VC money still has to go somewhere, and I see more examples of "irrational exuberance" than before. There are two classes of companies that I think are leading indicators of an overly lax investment climate:

Great products with no business model.
A feature trying to pass off as a product.

(The third class - "really bad companies" - is, unfortunately, a lagging indicator; whether a company belongs in this class or not is only clear after the fact)

Just in the last 24 hours, I came across two companies that fall into these categories. There are many more where this came from:

Virtual Ubiquity. They bill themselves as the "first real word processor for the web" and you have to love that chutzpah. Based on Flash rather than HTML, it's been getting rave reviews and it does look very cool. Check out the screenshots in the GigaOM post about them. Very cool product, but what's the business model? Paid subscriptions seem unlikely, given the number of free alternatives. An ad-based model is possible, but a tough slog given the difficulty of driving enough traffic to make it worthwhile. Interoperability with other online productivity apps will be an issue. Online suites will have an edge here, even with a smaller feature set.

Seriosity. Allows the creation of an email "economy." Everyone is allocated a certain amount of a virtual currency, and you can attach different amounts of your "money" to emails you send to indicate its importance. It's an interesting, though overly complex, approach to the real problem of information overload. But this is not a product - it's a feature. $6MM in VC funding to date.

Will it really be different this time around?

Partying Like It's 2001

2007-02-28T22:00:00.000-08:00

Startups seem to be sprouting everywhere these days, like mushrooms. Silicon Valley is back! If you feel like you're hearing about more interesting new startups these days than before, you're right. There's money sloshing around as VC investment in 2006 hit $25 billion, its highest level in five years. Silicon Valley got more VC money in 2006 than at any time since 2001. Then there's the more tangible effects for people who work in the valley.

There's jobs for the taking. The number of jobs in Silicon Valley increased for the first time since 2001, with a net 33,000 increase in 2006.

Incomes are on the rise. Median household income rose 6.5% in 2006, after falling about a percent in the period 2001 - 2004.

If you're interested in exploring statistics about Silicon Valley, take a look at the 2007 Index of Silicon Valley, an excellent statistical summary of the area.

Diagnosing Startup Problems

2007-02-18T11:46:00.000-08:00

One of the classic issues that every startup is faced with is identifying causality in the face of uncertainty and noise. This is true for both positive and negative outcomes. For example:

A large bank just bought your software - great news! But can you isolate the specific reasons why they bought and make it repeatable? Or is it a special situation or relationship driven sale?

If sales are stalling, what's the issue? Is it the product, the market or sales execution? If the organization is heading towards dysfunction, this often leads to finger pointing and a revolving door among the executive team.

I recently came across one of the best posts I've ever read on the subject. Will Price of Hummer Winblad, has a post called "Isolating Causality: Bad Market or Bad Company." This should be required reading for entrepreneurs and employees in any early-stage startup.

Hardwired for the Web

2007-02-14T17:47:00.000-08:00

I recently came across the wonderful "Hole in the Wall" project, run by Sugata Mitra, a computer scientist in New Delhi. PBS has an eight minute video segment you can watch here. It's well worth watching. Yes, the sociological implications are significant, but its also just a wonderful, heart-warming story of some impressive young kids realizing their unlimited potential.

The case of the missing address book

2007-02-13T08:30:00.000-08:00

Tim O'Reilly blogs about the missing Web 2.0 address book. He says:

What really needs to be done is not just to connect the various social networks that do exist in internet network-of-networks style, but also to social-network enable our real social network apps: our IM, our email, our phone. Where, I keep asking vendors, is the Web 2.0 address book?

Spot-on Tim! Why is it that, in spite of all this emphasis on community and collaboration, managing my address book is still painful? The various elements of our communications tools need to be linked together effectively, and the best place for that link is in an address book. My address book is still largely an offline entity, despite some rudimentary efforts at linking it to my online world (e.g. the Outlook Toolbar from LinkedIn). I can import my Outlook contacts into Gmail, but I can't keep them in sync. Plaxo was a promising start to solving this problem, but they became yet another social network, not the linking mechanism between networks.

What should a web 2.0 address book look like? Here are some characteristics I think are key:

Always available. It goes without saying - I should have my address book available online and offline, on all my computers and mobile devices, and they should always be in sync. This has been an area of active investment, and solutions are getting better, but its still cumbersome to keep things in sync.

Easily portable. I own my address book, and no vendor should use their functionality, no matter how cool, for lock-in. Ideally the address book should store data in a human-readable format to begin with. If not, I should always be able to export into a variety of standard formats.

Proactive. Today's model requires my active participation for every contact that gets stored in my address book. A good address book should anticipate some of my needs and act for me. For example, if I've exchanged a couple of emails with someone who is not in my address book, it should try and find that person's contact info (e.g. from LinkedIn, or some other source) and add it to my address book (perhaps asking me for confirmation first). If someone updates an email address on orkut and that person is connected to me, my address book should know about it and act appropriately. Plaxo tried to do some of this, but their fatal flaw was that they were not neutral. Which brings me to my next point.

Neutral. The provider of this functionality must be neutral in the areas of social networking and collaboration. If LinkedIn provided this functionality they would attempt to lock my address book to their network. If Yahoo IM provided this functionality, they would likely restrict access to Gmail, and so on. The address book provider must not have a stake in the network, but only in the links between them.
Mediate trust relationships. I already have multiple places in which I've placed indications of trust. Anyone linked to me on LinkedIn list is a trusted relationship. Anyone on my Yahoo IM list is probably also a trusted relationship. Ditto for people I've had multiple email exchanges with. How can I aggregate this information in one place and manage trust centrally. One way in which this could be useful, for example, is that recommendation sites could use my trust information to appropriately weight the recommendations I got. Amazon.com would recommend stuff not only based on their collaboration filtering techniques (essentially statistical analysis) but also factor in my trusted relationships. If I was looking for an Italian restaurant in Palo Alto, I'd much rather hear what a few trusted people have to say about it than a mass of strangers.

Geo-aware. The contacts in my address book usually have location information stored in the record. Why is this information not used for a visual representation of my address book? For example, if I'm going to Chicago for a weekend trip, wouldn't it be great to map my friends in Chicago, so that I might get in touch with them while I'm there? And wouldn't it be even better if I could find restaurants in the vicinity so that we could meet for dinner at a mutually convenient location.

Presence-aware. My address book should have a notion of where I am, and take appropriate action based on my preferences. E.g. point out a good used-book store in the neighborhood (I'm always up for browsing in a good used-book store). Or alert me that a friend is nearby and I might want to get in touch.

How would this ideal address book provider make money? I leave that as an exercise for the reader. :-)

First there was HTML...

2007-02-07T22:58:00.000-08:00

Evolution of the web in less than five minutes by an anthropologist at Kansas State. This is one for the ages...

(via John Battelle)

Hire talent, not skills

2007-02-07T08:40:00.000-08:00

Following up on all the HR/recruiting related posts last week, I want to point you to a great article on the subject by Nick Corcodilos. It's a two-parter (Part 1, Part 2) but well worth the read. He makes the point that there is no talent shortage; there is a shortage of the management depth required to nurture and grow it. Weak managers hire skills, but strong managers hire talented people and teach specific skills.

I agree with the general point, and it has helped me crystallize some of the issues I see with the recruiting industry today. Weak management may be an issue, but a broader issue is that the recruiting pipeline has been set up to screen for skills, not talent. Matching algorithms are keyword-based - an indication of skill. Even if a manager is strong and understands the need to hire for talent, the process is stacked against her finding the right person. The need for talent over skills is only growing stronger as work becomes global and mobile, and rapid technology shifts require adaptability above all else. This is such a central issue in most people's lives: finding the right position in which to grow and thrive vs. a non-challenging job in order to collect a paycheck. Why is there no urgency around finding better solutions?

What's your blood commit?

2007-02-05T11:02:00.000-08:00

There is a great article in the always informative Infectious Greed blog by Paul Kedrosky. The article talks about putting together a board package, but it provides great insights into the challenges of forecasting/planning at software startups. What metrics are appropriate to track? How can you create the right incentives for the field sales reps? How do you get visibility into the sales pipeline - what is real vs. what is wishful thinking. The underlying issue, apart from accurate forecasting, is about ironing out revenue lumpiness. Lumpy revenue is valued significantly less than smooth revenue and any planned exit needs a plan to decrease lumpiness.

The question of metrics is an interesting one and one that needs careful thought through in a start-up environment. I''ll save that issue for a future post, though, and just focus on the sales process. Here are some rules of thumb that I've seen work well at start-ups.

Hire sales reps familiar with how your product is bought, not how it works. What I mean by that is the specific domain knowledge of the sales rep is much less important that their familiarity with the selling process that your company requires. For example, lets say that you're selling a specific type of data security product, one that is useful for CFO's and the financial department. You have two possible sales reps in the hiring queue: one has sold a financial app to CFO's in his past job, and one has sold security software to the CIO in her past role. Who should you hire? You're much better off hiring the person who is familiar with your buyer - the guy who sold the financial app, not the woman who sold security software. Domain knowledge can be learned pretty easily during the course of a sales-kick-off meeting or two, but understanding the modus operandi of your buyer, their concerns, their quirks and sensibilities - that's invaluable and it can't be taught.

Fear is not a substitute for metrics. Often, sales leadership will compensate for a lack of metrics by ratcheting up the pressure on sales reps. The title of this post, "What's your blood commit?" is an actual question I've heard asked. I love the term: its very evocative of the near-desperation at the exec level when management doesn't have a good handle on forecast. While the intent is good (to understand what sort of discount factor to apply to over-optimistic forecasts), the approach is almost always counter-productive. Sales reps will respond to pressure by telling you what you want to hear. Use whatever management tool works for you, but it cannot be a substitute for hard numbers.

Be the ant, not the grasshopper. The old fable, about the importance of hard work and preparation, is very relevant in sales territory development. A common scenario with a new sales rep is that they come on board and start working their Rolodex. It may work for a couple of quarters, but once its done, like the ant, they find they have no pipeline to work with. Reps should be plugged into the marketing, lead generation and follow up process as soon as possible. This is the only sustainable way for them to develop their pipeline. This means that sales reps should allocate some time for cold-calling every week, develop local relationships such as those with industry trade groups and participate in trade shows and other events. These activities need to be built into their compensation plans.

What are some other sales lessons you've learned from your own start-up experiences?

HR Innovation: The Story So Far

2007-02-02T10:00:00.000-08:00

I've written about some of the issues with HR/recruitment this week. How can we do a better job connecting people with their passion? I've seen a couple of innovative approaches to the solution, which I'll mention here. These approaches are not standardized or wide-spread, but at least it's an acknowledgment of the issue.

Align incentives (Amazon.com). The folks at Amazon.com took the referral model and extended it. The idea behind referrals is good - your current employees are a good gauge of what it takes to be successful. If they refer people like themselves (and we almost always do this) then odds are those people will also be successful. However, some people better embody the ideal characteristics of success than others, so Amazon recognized and rewarded those people who not only referred people, but referred people who went on to perform well at the company. In other words, if I referred person X, and person X went on to be successful at the company, I was recognized as having brought on a star performer. This created the right incentives, and in fact often led to mentoring relationships.

Statistical analysis (Google): If there is an algorithmic solution to this problem, we would expect Google to solve it! And in fact, that's exactly what they are trying to do. According to an article in the New York Times a few weeks ago, Google has recognized the shortcomings of the current approach to recruiting and is trying to change their recruiting practices to set up a deeper match between job and job seeker. They found that a factor they considered essential to success at the company - GPA - was actually not a good predictor of performance.

Psychological profiling (McKinsey). Anyone who has worked at a large consulting firm or dealt in group dynamics is familiar with psychological testing tools. The best-known example of this is the Myers-Briggs test. The test essentially tries to figure out how you express yourself (extrovert vs introvert), how you reason (analytical vs intuition) and how you organize yourself (planned vs improvised). There's no "good" or "bad" result on the test - just a better sense of you as a person. At McKinsey, employees generally take this test for the purpose of group dynamics - to ensure that a project team is well balanced. I've not come across any company using this in the recruiting process. Have you?

There have been so many innovations in technology and sociology that can be applied to the art and science of recruiting. It's time they were!

Daily Product Fix: Zink

2007-02-01T10:11:00.000-08:00

The only reason for this post is that I recently came across a fantastic product.

Inkless, portable printing in a beautifully designed device - how cool is that! The company responsible for it - Zink - was started by ex-Polaroid folks. Endgadget has a nice writeup here.

Connect with your passion

2007-01-31T18:00:00.000-08:00

In a previous post, I went through a scenario to show why many job seekers and hiring managers end up with poor outcomes. In fact there is data to suggest that this is widely true. Online recruiting typically results in an 11% yield - a classic outcome of the scattershot approach to finding the right opportunity and the right candidate. And even if placements rates were higher, there is very little information about placement success - i.e. the longevity and performance of the candidate in the position post-hire. Did they like their job? Were they successful?

Here's what I think the missing link is: job requirements have become harder to state explicitly while job matching techniques have remained stuck in the "keyword matching" phase. Job requirements have become more subjective for a number of reasons, among them increased globalization, an emphasis on collaboration, individual empowerment and hands-off management styles. Job matching still largely consists of keywords searches on online databases, or quickly reading through a resume (which also amounts to a keyword search).

What's needed is for matching techniques to catch up to the increased complexity of job requirements. Can you really communicate in a resume or a set of keywords what you really want to be, what excites you, what your hopes and dreams are? We need a way to connect people with their passion. I recently met a talented entrepreneur - Siamak Salimpour - who is trying to do exactly that at CareerSpice. In some ways, CareerSpice is attempting to do for the job placement market what eHarmony claimed to do for the personals market - i.e. a better job of matching people based on a much deeper analysis of the relevant attributes. He's still in the early stages of his product launch, but I wish him every success - we need more ways of connecting people to what they really want to do.

Enterprise Software: Feeding Frenzy Continues

2007-01-30T09:15:00.000-08:00

Yesterday Symantec (NASDAQ: SYMC) bought Altiris (NASDAQ:ATRS) for $830 million. Today shares in BusinessObjects (NASDAQ:BOBJ) rose on rumors of a takeover bid by Oracle (NASDAQ:ORCL). Looks like 2007 is off to a roaring start as consolidation in the enterprise software market continues after a record 2006.

Jumping through hoops

2007-01-30T08:26:00.000-08:00

Imagine this scenario.....

Hiring Manager
You are looking to hire a candidate, and you know exactly the sort of person you want: skills, experience, "fit" etc. You post the job online, contact recruiters, get the word out, and the resumes start rolling in. In short order, you start the interview process - you're off to a flying start,

A month has now gone by since you started your search. You've interviewed 15 people for the position so far, and you haven't been happy with any of them. For some reason, the background information you got - resume, call with recruiter - looked great on paper but didn't translate into the right candidate. For a technical role, these ineffable qualities might include problem solving ability and the desire to take on challenging tasks. For a marketing role it might include comfort with public speaking and an engaging style of interaction.

What happens next? Invariably, consciously or not, you start lowering your expectations. Your point of reference becomes the last five interview candidates, not your original idea of what you were looking for. The next person that comes along to exceed this lower bar gets the job. They may not be the superstar you had in mind, but they'll probably do an OK job, and you don't have to deal with the hiring process anymore.

Job Seeker
You're stagnating at your job, not being challenged, and you decide its time for a change. You submit your resume to a couple job boards, contact a few recruiters, and sit back and wait for interview calls. You're pretty clear about what you want - the money should be better than your current position, but most of all, you're looking for an intellectual challenge; an interesting problem to solve.

A couple of weeks go by - you've had a bunch of interviews (it is a hot market after all), and you're getting a bit tired of the process. A couple of them didn't go so well - they were looking for someone to work with an offshore team in India, and you didn't relish the idea of a lot of late night phone calls, or you came across an arrogant interviewer who gave you his favorite brain teaser and you weren't able to solve it on the spot, ensuring you wouldn't be called back (you would ordinarily have solved it - it just wasn't your day). You do end up getting a couple of offers, but you're not that excited about them - the pay is only marginally better than your current salary, and the work just doesn't seem that interesting. In fact, your current position doesn't look so bad after all.

Finally, you get tired of the whole process. It wears you out. Consciously or not, you lower your expectations. Your point of reference becomes your current job, not the ideal you had in mind when you started out. You pick the first job that exceeds your lowered expectations.

Does this resonate? Share your stories. This is "HR week" at Developing Innovation. I will look into why the scenarios described in this post happen so often (and there's evidence to suggest that it does) even in a bull market, and what can be done to change it. Please share your thoughts.

The war for talent

2007-01-29T06:54:00.000-08:00

If you've followed the labor market in India, you probably know that it's a red-hot market for job seekers. This is not a new phenomenon - this BusinessWeek article from 2005 talks about the issue - but it has taken on an added urgency as the shortage becomes increasingly acute. There's a huge scarcity of people with the required technical or managerial skills to fill the positions that the fast-growing knowledge industries require.. Attrition rates are high, wage inflation is sky-rocketing and poaching by rival firms is a full contact sport.

At the macro level, the only solution is to increase the supply of qualified workers. Everyone understands this, and the education sector is booming as a result of this. At the micro level, companies (at least large ones) will increasingly shoulder the burden themselves. Some already do: Infosys runs what is probably the world's largest and most sophisticated training operation. Other companies are looking to follow suit. However, attrition rates are still high at Infosys (many hires leave after their training period).

I've been involved in the dynamic first-hand. Based on what I've seen, here are three recommendations I would make to alleviate the problem, at least at the micro level.

Select for fit. This is as much a mis-allocation problem as a supply and demand problem. What I mean is that prospective employees often don't look at "soft" but important factors such as the work environment, the dynamics of their future team etc, when making their decision. The decision is usually based on compensation and, in some engineering positions, on the programming tools used and the complexity of the problem to be solved. This is a myopic view, and can often result in dissatisfied employees that are a poor fit in the new organization. Company recruiters do not focus on the "fit" either, and hire based on skills and experience, with the same result.
Use better recruiting metrics. Today recruiters are often able to measure "yield" - the number of hires made from a specific source, so that they can focus their efforts on the highest yielding sources. However, in an environment where attrition rates are so high, yield is not enough. Recruiters should track the progress of personnel, and add a "longevity" metric to their "yield" metrics. Better yet, try and isolate those characteristics that describe the employees that end up staying longer. Select for those characteristics, and focus on those sources that provide the most people with them. Reinforce success.
Build recruiting feedback loop. In addition to isolating those characteristics that tend to be associated with success at the company, find those that don't. When people leave the company, follow a standardized exit interview process and collect the data in a form that can be analyzed (the advantage of high attrition: you'll have a lot of data!). Isolate patterns to try and determine retrospectively what could have been done differently. If there is a consistent "fit" problem, start screening for those characteristics during the interview process. If there is a consistent "dissatisfaction" problem, try and remedy it by either adjusting expectations during the recruiting process, or by changing the company's practices.

India is not the only country facing this problem. Its a global war for talent, and fast-growing emerging economies are the vanguard. How India and other developing economies tackle this problem will provide valuable insight to the rest of the world in how to manage and nurture talent.

India Startup Tracker: The Wisdom of Crowds

2007-01-27T13:21:00.000-08:00

As someone who follows the goings-on in the Indian start-up world, I'm finding it increasingly difficult to keep up with all the activity in this area. This is great! That's a good problem to have. In an attempt to keep track of it all, I've decided to start tracking companies, investments and exits in a spreadsheet. No big deal, you say. True, but wait - there's a twist. The spreadsheet is online and I'd like to make it available for everyone to update. Like a good software design, let's parallelize to scale up. You can view the spreadsheet here. The spreadsheet has two worksheets:

Silicon Valley 2.0: List of Indian start-ups, and funding details, if applicable.
Wall Street 2.0: List of M&A activity and IPO's in the start-up world.

I'm open to changing the names - please send me suggestions! I will continue to work on it; I hope that if we all keep this updated collaboratively, we'll have the best, most up-to-date source of information available in any one place.

Some ground rules, and a mini FAQ below.

Ground rules

Restrict the list to start-ups: This is meant as a listing of start-up companies, not larger companies getting funded by late-stage private equity. What's the exact definition of a start-up? There isn't one - use your judgment.
When listing funding details, please provide a source. And it goes without saying that the spreadsheet should only contain publicly available information.

Other than that, let's build this together and see what develops.

FAQ

Q: How do I edit the spreadsheet?
A: Send me an email at: rahul [dot] roychowdhury [at] gmail [dot] com and I will give you permission to edit the spreadsheet.

Q: Why use Google Spreadsheets rather than a wiki?
A: Good question, and its something I thought about. Wikis generally provide better collaboration than Google Spreadsheets currently does. On the other hand, having the information in tabular form will allow some interesting trend analysis and summary displays once the data set gets large enough. And even if Google Spreadsheets doesn't currently provide charting and analysis tools (#1 on my Google wish list!) you can always download the data to Excel and do the analysis. In general, I think this capability outweighs other considerations.

Q: The format looks pretty awful. Can I change it?
A: By all means.

Proto.in: Showcasing startups in India

2007-01-26T06:06:00.000-08:00

Proto.in, the Indian equivalent to the DEMO conference in the US, took place last weekend in Chennai, India. Blogger tggokul provides a good summary and Swaroop gives his thoughts on the companies presenting. The complete list of participating companies is available from the proto.in website.

Enterprise software in flux

2007-01-24T18:02:00.000-08:00

The world of enterprise software is fundamentally changing. This is not the enterprise software market of old with its bloatware, n-year implementations, painful upgrade cycles, fragile interfaces and ROI analyses that can charitably be described as "aspirational". Just look at two news releases today:

First, SAP announces a hosted solution for the middle market. This in the face of a negative market reaction to their mid-market foray due to increased customer acquisition costs and lower margins.

Then, hot on the heels of IBM's announcement yesterday, Oracle announced WebCenter Suite - its own Web 2.0 offering. A great example of "me-too" press, although Oracle had actually first talked about this product a few months ago and failed to capitalize on it.

I don't recall a time when there was this much uncertainty in the enterprise software market. The large vendors are scrambling to accommodate entirely new areas of functionality (collaboration, participation) that are antithetical to today's centralized way of providing IT-enabled value. At the same time, the delivery models have shifted to subscription-based, hosted services. The big players are struggling to keep up while not abandoning their current , highly profitable, product franchises.

All this means there's a huge opportunity to innovate in enterprise software. And the place to start is in fast-growing but still-developing countries with a need for IT, but under served by the large global players. The need is acute, the new delivery models match well with the lower capital expense outlays common in these countries, and there is no legacy to overcome. Just like the old order is slowly turning over in consumer software, there is no reason to believe that today's dominant providers of business solutions will be dominant tomorrow.

Davos Update: Sunil Mittal on the "Shifting Power Equation"

2007-01-24T08:54:00.000-08:00

Sunil Mittal, CEO of Bharti Telecom (large mobile operator in India) speaks about the power of emerging marketings in Asia and Eastern Europe.

India Everywhere?

2007-01-23T21:22:00.000-08:00

It's that time of year again. As we speak, the rich and powerful of the world have gathered together in the beautiful Swiss town of Davos for the 2007 World Economic Forum. (For more info, check out the New York Times Davos blog). This got me thinking about the last Davos conference.

Last year, India was the topic du jour. The marketing/branding team at the India Brand Equity Foundation did a spectacular job at grabbing people's attention with their India Everywhere campaign. The press were all over it (see here, here and here). Nandan Nilekani, CEO of Infosys was even blogging from Davos.

So what happened this year? I saw no media coverage, no India marketing campaign at all. Was I missing something. As it happens, I wasn't. It turns out, after some investigation, that there is no campaign this year. This year is all about participation without the glitz. More delegates, more meetings, and less buzz.

I found this rather dry and tactful comment from Peter Torreele, Managing Director of the World Economic Forum, instructive:

The feedback from the participants was that it was extremely well-done, because it was business driven. There is need for follow-through and this has to come from Indian CEOs taking a clear place at the plenary discussions and have to be seen to be part of the global discussions. If India wants to be seen as part of an upcoming global economic power, then it has to play its role globally.

In other words, if 2006 was about marketing, 2007 is about execution. Like an entrepreneurial venture.

Big Blue Gets Hip

2007-01-23T11:52:00.000-08:00

IBM just announced its entrance into the world of Web 2.0 with the release of Lotus Connections , announced yesterday at Lotusphere. They're calling this category social software for business and it includes collaboration tools such as user profiles and connections, blogging, shared bookmarks, online communities, shared workspaces, search and tagging.

Clearest indications that Big Blue is getting hip to the ways of Web 2.0:

IBM has a virtual marketing booth for Lotusphere in Second Life (launching today).
They're following the "-kr or -zr endings are cool" philosophy by naming a content repository product Lotus Quickr.

It's getting a lot of press coverage, including ZDNet and BusinessWeek. The always interesting John Paczkowski of Good Morning Silicon Valley blogs about it here.

This is being billed as an IBM vs Microsoft battle, but the IBM offering seems at first glance a much stronger contender to bring collaboration to the enterprise than Microsoft's SharePoint 2007. Watch this space!

Chicken or Egg?

2007-01-22T16:02:00.000-08:00

The Economic Times of India has a debate about whether or not India is ready to produce great software product companies. The arguments are interesting on both sides, though not particularly new. On the pro side, the writer brings up the development of an eco-system of VC's, the social acceptance of entrepreneurship and the emergence of a domestic market. The con argument talks about the lack of skills and product knowledge.

The basic issue is one that is not mentioned in the article but is an implicit assumption on both sides. This is the issue of demand. Supply issues such as social acceptance, available funding etc, are not the bottleneck - demand is. If India grows a large domestic IT market, Indian product companies will thrive. If not, they won't. Necessity, as they say, is the mother of invention: a demand-side argument if there ever was one!

The underlying cause of disagreement in the article is really about how large the Indian market will be. The pro side says big, the con side says, not quite yet. That's the real question that needs to be analyzed and debated.

I've been surprised to see very little emphasis in the media and the blogosphere on this question. Mobile phone adoption rates are well-known, and there is some information available on internet usage in India, although sometimes the numbers should be taken with a grain of salt. Enterprise demand in India is not even discussed at all. Time to change the debate from supply to demand!

Enterprise Mashups

2007-01-21T12:42:00.000-08:00

Great post by Dion Hinchcliffe on enterprise mashups. Unlike consumer mashups, there is no monetization issue. The tools are getting simple enough to allow non-IT staff to build their own. More grist for the mill for The End of IT....

Take Web 2.0, add a dash of mobile and mix well

2007-01-21T10:32:00.000-08:00

That seems to be the recipe followed by many Indian Web 2.0 start-ups. There is a good overview article in the Telegraph, a newspaper in Kolkata.

Looking at the current crop of Web 2.0 startups in India, I see the following general pattern.

Pick an existing product category in the US, whether social networking, local content aggregation or peer to peer file sharing.
Add an India "lens". The India lens can be in the form of context (pick generalized functionality and adapt to Indian context) or content (generalized functionality but locally generated content).

Examples of the various ways in which Indian start-ups have applied the India "lens" include:

Local Context: Guruji.com, the Indian search engine. General-purpose search engine with an India filter built in.
Local Content: Pixrat.com, the Indian Flickr and indialistings.com, an Indian classified ad site. Nothing is particular to India in the platform, but the content is local.

It seems to be that the vast majority of Indian web 2.0 start-ups are applying the content lens, with no real innovation in the context yet. However, that's precisely where the opportunity for product innovation lies - in adapting to the Indian context. I look forward to seeing more of that coming from the bright and driven entrpreneurs profiled in the Telepgraph article. What's the biggest opportunity in the Indian context? Clearly, mobile. There is already a ton of innovation in mobile, on the technology front (e.g. BubbleMotion, which allows voice SMS). Cloning Flickr, Orkut et al is not a sustainable strategy. Innovative mobile functionality added to existing Web 2.0 businesses is where the real opportunity lies for Indian consumer internet companies.

Flips and leapfrogs: Evaluating new technologies

2007-01-15T18:09:00.000-08:00

Harvard Business School professor Andrew McAfee has a thought-provoking post, A Technology Flip Test, in which he discusses a useful new framework for evaluating technology. Imagine a world in which the new emerging technology trend (e.g. software as a service) is actually the incumbent technology. Would the current incumbent technology (e.g. traditional enterprise software) make inroads against it? Seems to me that is a useful construct for evaluating technology trends in general, and for leapfrogging trends in particular.

The end of IT?

2007-01-11T18:45:00.000-08:00

I was struck by two articles I read recently. The first was this little nugget from the more comprehensive survey conducted annually by the good people at CIO Magazine:

The average CIO makes $23,562 less in real dollars today than five years ago.

The average salary for CIO's at large companies is still almost $300,000, so I'm not shedding any tears. Still, these numbers are certainly on a trajectory that suggests that the IT department is becoming less, not more, important, to the businesses they serve. Notice that I said "the IT department" not IT itself. The importance of IT is not in question here, its how it is delivered and accessed that is the issue. Which brings me to the second article. This article, subtitled "Consumer technologies are invading corporate computing" (subscription required) appeared in the last issue of the Economist magazine. It talks about business users taking more control of their productivity tools, from IM and VoIP to Email and Calendaring. If the IT department is not on board, they are simply bypassed by their users. The article mentions Adrian Sennier, CIO at Arizona State University, who recently moved the entire university to a productivity bundle from Google called Google Apps for your Domain. The article goes on to say:

For Mr Sannier, however, a bigger reason than money for switching from traditional software to web-based alternatives has to do with the pace and trajectory of technological change. Using the new Google service, for instance, students can share calendars, which they could not easily do before. Soon Google will integrate its online word processor and spreadsheet software into the service, so that students and teachers can share coursework. Eventually, Google may add blogs and wikis—it has bought firms with these technologies. Mr Sannier says it is “absolutely inconceivable” that he and his staff could roll out improvements at this speed in the traditional way—by buying software and installing it on the university's own computers.

Is this the end of IT as we know it? Software as a service, empowered users, tools to allow encoding of business rules and workflows by non-technical users - what will this mean for the IT department of tomorrow? Or, for that matter, to the legions of IT consultants (whether onsite or offshore) who assist them?

Google Checkout for Mobile?

2007-01-09T12:40:00.000-08:00

Picking up where the last post left off, the ideal market for mobile payment systems should have three characteristics:

Rapidly rising income levels (demand is high)
Small internet footprint, and even smaller e-commerce footprint (supply is low)
Large mobile penetration (potential is large)

Countries like India and Brazil provide great markets to test products before moving them more broadly to other markets.

The basic requirements for mobile payments systems include:

Ease of use. No-hassle account setup and configuration.
Wide device support. In developing economies this means not required data-enabled phones to provide the service.
Built-in security. Specially important if service is provided on non-data-enabled phones.
Flexible payment options. This includes support for different credit/debit cards, links to bank accounts and stored value (pre-paid) options.
Localization. Gaining wide user adoption will require localization features, including language support and tie-ins to local payment processing (regional banks, microcredit organizations).
Leverage existing infrastructure. Critical to building a large merchant base quickly is to make it as easy as possible for them to accept the new payment form factor using their existing technology investments, where possible.

The key shift is to use mobile payments as a "leapfrog" technology rather than a substitute technology. In other words, move the market from online last-click replacement to physical store retailing, or TV-based retailing.

There are two small entrants into the market, recently VC-funded, that I'm aware of:

Paymate: Kleiner Perkins invested $5M. Broad device coverage (works on SMS), but only for Citibank customers.

Ji Grahak: Helion Ventures invested $2M. Broad financial institution coverage, but requires a credit card and requires a GPRS java-enabled phone.

How far off do you think Google Checkout for Mobile is? And where do you think they will launch?

Mobile Payments: Where's the opportunity?

2007-01-08T17:40:00.000-08:00

There's been a lot of buzz at the Consumer Electronics Show in Las Vegas this week about mobile payment systems. See here and here for product announcements. Let's take a step back and look at two different, but related, questions:

How important is a mobile payments solution to you, the consumer?
What are the requirements for an effective solution.

First, how important is the problem? Let's look at this question in terms of supply and demand. If you live in a part of the world that has a large base of sophisticated consumers, demand for a solution is high. If you live in a part of the world in which the payment infrastructure is already quite sophisticated, then good quality supply is also likely to be high. When demand is matched with good quality supply, then the bar for a solution will be correspondingly high (factoring in switching costs). In the US, this explains the lack of take-up with mobile payment solutions. The problem that mobile payment providers are trying to solve in the US is really not a major pain point for most consumers. The low hanging fruit is clearly where high demand is not matched with enough high-quality supply. This is precisely the definition of an developing economy that has developed a large mobile subscriber base (which happens quickly) but does not yet have an efficient payment processing infrastructure (which happens slowly).

What does this mean for entrepreneurs? In my view, it means that if you have a mobile payments solution, you need to enter the market where the need is greatest. No matter where you are located, you will need to enter emerging markets like India, Brazil, South Africa and others. Build a product that meets the needs of those consumers and learn how to build a successful mobile payments product that gains wide distribution. Once you can successfully do that, the offering will be of sufficiently high quality to surpass the switching cost hurdle in more mature markets like the US. At that point, you're ready to market your payments solution in these markets. But you have to start with the consumer who does not have alternatives today, otherwise you'll be struggling to jump over the high (and still unknown) switching cost hurdle.

Indian Demographics

2007-01-07T17:31:00.000-08:00

I recently came across a statistic that astounded me: the median age in India is 27. In fact, 75% of the population is younger than 35 today. Is anyone else surprised at how incredibly *young* Indians are?

Thinking about the ramifications of this reminded me of the famous BRIC report released by Goldman Sachs in 2003. If you're not familiar with it, BRIC is Brazil, Russia, India and China, which represent the largest emerging economies in the world today. The report caused quite a stir when it was released because of these predictions:

In less than 40 years, the BRICs economies together could be larger than theG6 in US dollar terms. (They were worth less than 15% in 2003).

Of the current G6, only the US and Japan may be among the six largest economies in US dollar terms in 2050.

The graph below neatly shows when each of the BRIC countries overtakes the current G6 economies.

In the three years since the study came out, their projections look to be conservative, if anything. Growth rates in India and China have been far higher than their assumed rate during the period from 2000 - 2005.

The reason I bring up this study is that India's demographics are cited as a key reason for India's high growth. India is the only country projected to grow at above 5% for the entire period of the projection (upto 2050). This means a per-capita income of over 35 times what it is today. However, India is still projected to have a significantly lower per-capita income than the other BRIC countries, even in 2050.

The report is a great read and still very topical, even though its now three years old.

Are you being served?

2006-12-06T08:36:00.000-08:00

Great video here from a talk that Seth Godin gave at Google. His central premise is that the only way to bring products of lasting value to the market is "permission marketing." He defines this as "the privilege of marketing/selling to people who do not want to be marketed/sold to." Essentially, make a product that is worth talking about, that spreads virally, and that contains network efforts (he calls these "permission assets"). A great case in point is "Gmail" which grew mostly by word-of-mouth because their users saw so much value in the product.

It strikes me that this notion has yet to reach India. I'm amazed at the levels of intrusiveness that Indians put up with from marketing campaigns. Spam SMS messages, hundreds of pop-up windows on websites: direct marketing hell. In India, you can still shove a product down people's throat by sheer force of outbound marketing. Why is this the case? I'm guessing it's because direct marketing is a relatively recent phenomenon; its still a novelty for people. Consumers tend to be more credulous and less cynical about what they hear from direct marketing campaigns. I still get forwards from friends in India who think the notorious Nigerian email scams are for real. Maybe a backlash will begin in a few years, as consumers get jaded and the volume of intrusiveness increases to painful levels. Until then, I'm not sure that product quality will win against a carpet-bombing direct marketing strategy.

Place thumb here for your money

2006-12-04T08:28:00.000-08:00

Interesting article in the Financial Times about Citigroup introducing fingerprint-based ATM's in India. From the article:

"The machines will recognise account holders' thumbprints, eliminating the need for a personal identification number, and will have colour-coded screen instructions and voiceovers to help guide them through transactions."

Seems like an interesting innovation that could be extended to other developing economies as well. How serious is Citigroup about this? The article goes on to say that Citigroup currently has two such ATM's installed (in Mumbai and Hyderabad) and plans to expand to "25-35 machines within 18 months." This seems like an extraordinarily low growth target! If the new systems is not going to be material to their operations in India even in two years, what's the big deal?

C.K. Prahalad first identified the "Fortune at the bottom of the Pyramid." It's far better to treat the world's poor as consumers to be served with specific, unique needs, not with paternalistic earnestness. There's a lot of innovation still to come in the financial sector for the "unbanked" population. Microcredit. Mobile payment systems. Stored-value ("prepaid") cards. What else?

The Indian Enterprise: Hot or not?

2006-12-03T09:42:00.000-08:00

Conventional wisdom has it that the domestic enterprise software market should be shunned like the plague. After all, the argument goes, Indian enterprises don't place strategic value on IT, don't want to spend money on IT, are comfortable using pirated software and are too hide-bound to restructure their processes to make them more efficient. Besides, in a place where the relative costs of labor and capital often favor labor, why invest in automation and process efficiency?

The numbers seem to bear the cynics out: India, despite all the hype, is still a tiny market. According to IDC, the entire IT market in India in 2005 was $12.5 billion, with the bulk of that amount ($7.5 billion) going to hardware. Services accounted for $3.5 billion and packaged software just $1.5 billion. The software market is predicted to grow at a annual rate of about 20% over the next 5 years. At that growth rate, the entire software market will be less than $4 billion in 2010.

Hmm.. pretty gloomy stuff. So is there an opportunity? If I were to start an enterprise software company specifically for the Indian market, would I be mad, a decade ahead of my time, or both?

Yet another blog on innovation?

2006-12-02T14:22:00.000-08:00

What is this blog about? Well you might ask: this blogosphere of ours is already thick with treatises on innovation. Virtual forests have been felled to explore this topic in every conceivable way and from every possible angle. Can anything, well, innovative, be said on innovation? Read on and decide for yourself.

Developing Innovation is dedicated to exploring software innovation in developing countries. I've been interested in technology adoption and software for a while. As an Indian, I've followed the technology outsourcing boom, and the creation of world class IT services companies such as Infosys and Satyam in the last decade. More recently, I've observed innovative software solutions developed in India for the local market. In many instances, the new technology is more advanced than that available in the US (e.g. in the areas of mobile and wireless). Yet, the vast majority of Indians remain unaware of technology and its potential to improve their lives. How to reconcile this "leapfrogging" adoption on one hand, and a complete lack of awareness on the other?

Is this an opportunity for software innovators to step into the breach? Or is India decades away from using technology in any broad-based manner? Are there similarities between India and other developing countries in the way technology can be built and used? Can those synergies be leveraged to go after ever-larger markets if your own market is too small for you to grow? The answer to all the questions, I believe, is a resounding YES. I think it is an opportunity: a very large opportunity. Here are a couple of reasons why (and I'll expand on these in future posts):

High Growth: Emerging economies are undergoing higher rates of growth than they have in 50 years.
Demographics: Developing countries are generally younger and more open to technological innovation.
Greenfield Opportunity: Current software investment in most emerging economies is negligible.
Local requirements: In many cases, the requirements for software products in the developing world are substantially different than those in the developed world. Not just product features, but also pricing and delivery models.