Category Archives: business

10 ways to hire great guns for your start-up

Just like “Marketing is too important to be left to the marketing department”, for start-ups

Hiring is too important to be left to the HR department.

In the previous post I talked about ‘Who to hire for your start-up‘. Many of you agreed to most of what I shared so the next question that comes out is how to hire these guys. As @mohak put it brilliantly

Recruitment is marketing. If you can’t hire well, you can’t market well 

If like most others you are finding it incredibly hard to recruit your A team here are some obvious and not so obvious tips

HowSuccessfulStartupsHire-poster

      1. Be Involved: Unless you have someone really well in the team who can handle this for you, be involved in hiring. Another pro tip is not to hire a standard HR professional to do the hiring for your start-up. I’m yet to see a regular HR person turn into a great start-up HR pro. Most of them just don’t have it in their DNA. To avoid bad hires, stupid hiring processes and missing out on some exceptional talent its best suggested to be on TOP yourself for as long as you can afford to be. Founders set the culture of the company and the people they hire initially defines it.
      2. Brand: Be it your founding team, your VCs, the cool tool/service that you are developing or the world changing impact you are going to have. The easiest and surest way to get talent is to be remarkable. Unless your company’s mention people go WOW, you’ll always have a tough time getting smart people to work for you. PR/Social Media/Customer Care or what ever it takes, make sure you have a plan to create a brand around your start-up
      3. Recruitment begins at home:  This bit is so obvious that most start-ups tend to forget it. Every start-up should try to leverage their existing employees to hire more people. This is applicable as much to a 10 member start-up as to a 100 member. No one is better suited to spread the word about you than your existing workforce and you never know which one of your employees gets you whom.  What’s needed for this to worka) Happy & Empowered Employees – Unless one likes their job/company they won’t spread the word and as a founder you need to make sure that your employees aren’t just having a great time working for you they are actually so proud that they’d shout out to all their great friends as invite them. However you at your end need to ensure that they are empowered enough to do this and don’t have any bad experience about the whole thing/process.
        b) Incentives (Icing on the cake) – $$ or mobile phones, might just do wonders.Keep asking them for feedback about hiring/referral process and keep getting it implemented
      4. Customers/Partners/Investors/Vendors: The second best source to get smart folks to work is to leverage the people who do business with you. Keep them in loop about your openings and you never know who they help you hire. They might not even need any incentives and would be just happy to do some matchmaking for you (Assuming you have a healthy relationship with them and serve or pay them well). A power user/customer is a great hire(obviously they need to be talented and not just power users), they’d be obsessive about the product and would already have some ideas on how to make things better. I’d given an arm to have a passionate customer join my start-up
      5. Promotion on Your Website: Sounds too obvious again? Trust me it’s not. Far from what some of you think. Only a handful of hundreds of start-ups use their website to promote their job openings. How many of you(founder) have an updated jobs page on your website? Here are some of them that “Get This”slideshare_hiring
        Visual Website Optimizer
        Heroku
      6. Social Media:
        a) Sponsored ads on Facebook
        Sponsored Updates
        b) Company Page on LinkedIn
        linkedin_twitter
        c) Email Lists
        google_groups
      7. Content Marketing: Content is King” so to speak, for it has a life of it’s own. You can leverage content  to market yourself and attract relevant employees. Interest content will find its way around layers of social media and reach places you can’t. Here are some examples
        Brandologistakosha
      8. Start-up Events/Meet-ups: I know by experience that most start-up events are as (or even less) than the websites/blogs that organize them but even those events attract some bright people who are just out to explore interesting opportunities. You should be checking these events every once in a while. Also, you can consider organizing some meet-ups/hackathons to attract enthusiastic folks.
        has
      9. Internship portals/Start-up Websites: Some of these portals provide access to ambitious and talented people. Also,the sheer fact that some is following them means they are already a bit ahead of the curve
      10. Random Pick-up: This one is as nasty as it sounds. Like somebody’s blog post on tech architecture? Find someone’s slideshow amazing? Follow this amazing sales person on twitter? Stumbled upon a script on github that you found useful?
        GO ahead and make contact. Start interacting with these folks and see if they’d like to join you in your journey.
        The entire kwippy team was hired for Mpower Mobile(in 2008) like that

These 10 ways should help you with your hiring. Do share what you think about them and if you have any experiences around start-up hiring that others can benefit from

Update:  Here’s another super geeky way to pick up nerds

BUEDhMsCcAEHmEA

 

 

Get Big Fast or Get Better Slow?

Get Big Fast, a phrase most commonly attributed to Amazon Phenomenon of acquiring significant market share in your category in very little time but growing extremely fast. The numbers in cases such as these don’t grow linearly but exponentially. The Get Big Fast philosophy requires extreme focus on scaling operations, hiring, aggressive marketing and short product cycles. The targets set for the growth might look unreasonably high to some but that’s the only way this works, Get Big Fast and become the leader in your category before anyone else so that now your Scale also works as a Differentiator.

The other or rather opposite approach that most businesses wittingly or unwittingly end up with is what I call Get Better Slow. This happens in most startups. They have reasonable growth targets and work on a moderate or slow pace to achieve them. Part of the reason is lack of clarity or conviction about the end goal and part is the lack of firepower among other things. Interestingly the Get Better Slow option is the default for most startups and many a times without the founders realizing they approach this with the perspective of doing more groundwork, thinking deep, organic growth and what not.

While I don’t mean to say that a startup growing slowly would stay like that forever but what I really mean is that unless the founders and team consciously choose to set and attain unreasonably high growth targets, their chances of staying in the business as a significant player are quite less. To give you some context, for someone doubling the revenue in six months might be great but for someone doubling revenue in 2 months is the desperate need and unless the need is desperate, ones chances of getting there are a bit less.

Also, in many cases Get Big Fast Vs Get Better Slow turns into Growth Vs Revenue. While one startup might keep focus on revenue/monetization, the other might just do the opposite to make sure that monetization doesn’t distract them from growth. It’s actually one of most crucial decisions for a startup, a HUGE BET which in most cases doesn’t pay off well.

The more I think about it, the more I am inclined to like the Get Big Fast philosophy which involves stretching out to the hilt, tons of small and big experiments and very short learning cycles. On the contrary the Get Better Slow philosophy which appears to be grounded on the thought of making a sustainable, quality/customer centric business actually hurts the startups more because of the comparatively slower iteration cycles which in most cases lead to losing traction or a considerable part of the market to competitors who manage to Get Big Fast, which effectively means that tough you think you are doing a great job for your customers but your customer set is so small that it doesn’t change much in the bigger scheme of things

Get Better Slow:  Get Big Fast:: Passion: Obsession

What do you think?

The Best of Web: 1/1/2012

Here are some of the links that I found worth sharing

  1. Mark Suster on should startups focus on profitability or not
  2. Joel Spolksy’s Strategy Letter I: Ben and Jerry’s vs. Amazon
  3. Jason Zimba on understanding exponential growth
  4. Jason Freedman on Obliterating Startup Depression (H/T @dipankarsarkar)
  5. via TheGuardian UK Humans have the need to read

Cash on Delivery(COD): The Good, the Bad and the Ugly

COD or Cash on Delivery as we now know it wasn’t no where near its popularity today a few years back. Today quite a few people (who call us at dialabook and otherwise) know and talk about Cash upon Delivery as a concept (books milne ke baad paise de sakte hain?) if not the exact term. COD as we know has taken the entire e-commerce Industry(if we can call it) by a storm.

To give you some perspective, about 2 years back when we(@dialabook) started collecting payment for books on delivery, we had no idea about this term and no notable e-commerce site had this option. Fast forward it to today and almost all e-commerce sites(and a few others like the one below) accept(or rather promote) COD to lure more customers.

While COD as a concept has been there for ages under the name VPP (Value Payable Post) by India Post. Here’s how their website defines VPP

The value payable system is designed to meet the requirements of persons who wish to pay for articles sent to them at the time of receipt of the articles or of the bills or railway receipts relating to them, and also to meet the requirements of traders and others who wish to recover, through the agency of the Post Office the value of article supplied by them.

Govt VPP however seems to have an upper limit of Rs 5000/-, which means you can’t send goods worth more than 5k through them.

Not just VPP, some courier companies in India have been supporting COD since March 2009 at least. Though some  startups like @dialabook might have been offering COD locally before, the big shift happened in April 2010 when country’s leading e-commerce player Flipkart introduced COD in April 2010 with a cash limit of Rs 2500/-, followed eight months later by Infibeam (FYI: Indiaplaza announced COD on 25th March 2010, a few days ahead of Flipkart ). It is also worth noting that some services like travelguru.com were offering COD option at least 2 years before e-commerce companies started adopting it. Seeing its success elsewhere, online travel portals yatra and Ezeego1 also launched COD in year 2011

As it turns out India isn’t the only breeding ground for COD. China,Russia etc have been a witness to the popularity of COD for long.

Going by the stats in India, as much as 60% customers of top 5 e-commerce sites in India use the option of paying by cash on delivery (COD) and many of these sites have credited COD  for fueling their rapid growth. While COD for obvious reasons makes a lot of sense for Indian customers and definitely opens a new market (students etc) to e-commerce it isn’t exactly what the doc prescribed or should prescribe. Here are some of the things wrong with COD

  1. Cost: Nearly all courier companies charge extra for collecting cash. This cost is divided in two parts
    Fixed Cost: Rs 20-150/- ;  Variable Cost: 1-3% of the COD Amount. (This is mostly for high price items like mobile phones, laptops etc). If the item is priced low then the COD charges at times exceed one’s margin in the product and if the item is priced very high then the % COD charge turns out to be in hundreds or even thousands
  2. Delay in payment: Unlike credit card transactions, COD payment generally takes 1-2 weeks or more to be transferred to your account. This bites your cash flow especially as the COD amounts start becoming huge.
  3. Delay in deliveries: On an average COD deliveries are delayed by 12-36 hours when compared to normal deliveries. The reasons for the same are mostly non-availability of customer or cash and many a times both. Here unlike regular deliveries the parcel can’t be dropped to a neighbors place
  4. Higher Returns/Cancellations: Since the customer hasn’t paid in advance, they can always cancel/refuse to take the delivery and sight reasons like I found this phone cheaper locally and have bought it from there or I have changed my mind, will buy a new laptop later
  5. Overheads: Collecting the cash, collating the receipts and maintaining records et all is a nightmare

With increasingly every online business offering it despite its disadvantages(to retailers) the situation might just go out of hand and turn into a death spiral (at least for some non/less funded businesses that rely heavily on their internal cash flows). Small startups are the ones that should be really concerned about these issues instead of blindly aping others and starting COD.

With time as the e-commerce market in India matures, there *might* be more trust in established mechanisms of swiping cards for paying and some people will get over the liking for COD and prefer pre-payments. But, given the case in China, Russia etc it looks like unless the e-commerce majors deliberately start demoting COD and promoting other payment options we just might replicate what’s happening elsewhere i.e 60-85% people using e-commerce sites paying by COD.

Some ways around COD

  1. Multiple Payment Options (at least 5-6)
  2. Pre-payment methods (like wallets, cards)
  3. Mobile banking and SMS payments
  4. Card on Delivery
  5. Giving incentives to users for choosing online payment against COD
  6. Alternative payment methods such as paypal etc

While COD is a good option to have in some cases its double edged sword which should be used with a lot of caution and foresight. What do you think?

The Perseverance Myth !!

I try to read a business/management book every month and happened to pick The Lean Startup‘ by Eric Ries as an impulse buy based on a recommendation on Twitter. Its an interesting book and quite different from the books that I’ve read on this subject. For one it doesn’t talk about grand ideas and other sexy start up stuff (Funding. Marketing Blitzkrieg etc) instead it focus on the most practical aspects of running a startup(esp a product startup) and building a scalable business out of it.

One of the things that struck a chord with me was this thing called ‘The Myth of Perseverance’, which essentially means falling into the trap of believing that the hardwork one is doing for their startup will eventually pay off and result in success. A typical example of this could be a team of engineers & designers working a web product, adding features and making changes regularly and thinking that they are creating value and after a period of time their product will become popular/profitable and their efforts will reap good returns.

This phenomenon is quite commonplace at the individual level as well. There are plenty people who continue to slog in the jobs routinely spending hours at stretch and hoping their designation/pay etc will improve just because they are putting in a lot of hard work.

While there is nothing wrong with doing hard work in startups or jobs it also has its fallout. The biggest fallout  here is focusing too much on the hard work in hope that it will somehow work out and in doing this they delay/don’t realize if things aren’t working out the way they were supposed to and thus preventing them from making any effort in this direction. This gets particularly tricky when the business/product seems to be running but not running well enough, this illusion of progress can be really dangerous

In short, be it a job or a startup it doesn’t have to necessarily take years of hard work  for finding the stairway to success.

This myth is applicable to anything from Business to Relationships. When things don’t seem to work even after doing everything you can think of, maybe its time to ‘Pivot

 

Bookselling in the Time of VC $$

I’ve been wanting to write this post for quite a while now, glad this long weekend gave me enough time to finally sit on it.

A lot has changed since I started working on Dial-a-Book some 2 years or so back(then part time though). Back in Q4 – 2009 e-commerce was quite nascent and VC funding for it was not even half as common as it is today. There were just 2-3 online bookstore or e-commerce sites that looked like they could go anywhere and every week a new online bookstore was being launched. Indiaplaza was probably the most popular one.

All these existing and upcoming online bookstores were pretty much doing the same things, building a half decent website, listing a lakh odd books and giving heavy discounts in hopes of wooing the online audience. Two years into it, a couple of the popular sites at that time have grown enormously, another couple new sites have emerged and attained very good scale  and almost all the remaining ones have either shut down or are doing just well enough to sustain the owners.

I’ve always been a price conscious book buyer with likings but hardly any loyalty to a bookstore.  I remember when i first discovered Midlands who offered me 20% discount on all books how I moved almost all(leaving a few impulse buys here and there) my book purchases to  them. Kinda same thing happened when I discovered the desi online stores, the fact that they offered even more discounts and could home deliver(for free) almost any book in a few days time was a good enough reason for me to move all my book shopping( a few books/month on average) to them.

Back then I was one of the only few people in my circle to buy books online and almost none of my friends/colleagues had much clue about the online book buying scene. The booksellers on the whole turned out to be surprisingly unaware of the developments in the e-commerce(mostly book selling) space.  They hardly had any idea about online bookstores and those who did were quite dismissive of them by saying ‘Such things work in the US not in India, here people want to touch and feel before buying’, ‘These online sites give too much discounts, they can’t last long’.

Circa 2011,  the same bookseller is now offering a recently released book by Amish Tripathi at 1/3rd discount, which is just 3 Rs more than the price (Rs 192) at which it is being sold at most online bookstores.

So what changed? More importantly, what led this change?

Q 1. What Changed?
A 1. The Market Dynamics  

1) More for Less 



Giving a 33.33 % discount on a newly released book would have been unthinkable for any bookstore, especially the ones which sells 200+ copies of each new release every month with a standard discount.  But now the whole game has changed, today’s reader is exposed(and addicted) to heavy discounts, highly efficient and user friendly customer experience and the only way to survive is to offer competitive pricing coupled with widest possible range and great overall experience. Gone are the days when the booksellers used to decide which books to import/stock, how to price them and to procure locally available books on customer request (if at all) and take a week for it.

Every search on twitter(for a big online store) would reveal at least a couple tweets mentioning how people now browse books at landmark/crossword and buy them online. You can see the shift happening right there.

2) Let’s Get Online

Seeing the stellar growth of some of the famous online stores a few bookstore chains also woke up from slumber and started developing and promoting their online stores. Landmark, Crossword, Odyssey et all now have online stores where they claim to offer hugh discounts  (interestingly on some books the discounts are even even more than anywhere else)

Not just this, even the smaller chains(like Sapna, oxford) and individual bookstores are online and spending money on google ads and social media to promote themselves.

Apart from these there are some publishers (like Pearson) and some distributors(like Prakash) who couldn’t resist the temptation of taking a shot and online bookselling and thus too have jumped the bandwagon and are doing their best to well, give more discounts.

Going further all the e-commerce stores which were focusing on other categories (mobiles etc) also have started adding books to their product list. In news recently was Homeshop18′s acquisition of Coinjoos

That’s not it, the grapewine has it that still more companies from different sectors dazzled by the million and billion dollar valuations of popular Indian e-commerce stores are planning to take the plunge and well start another online bookstore

3) Better Support

Thanks to the success of round 2 of e-commerce especially for books a lot has improved on the backend i.e at the end of publishers and distributors. Lots of processes have been initiated and followed regularly at the vendors end. Most distributors now stock their data and share stock reports bi weekly/weekly, publishers regularly share information about new and upcoming releases. Most of these guys are no better than sloppy govt officials who take enormous time and effort to do things but in order to survive some of them have learned to be better organized and efficient.

Q 2. What Led To The Change?
A 2. Lofty Ambitions Backed By VC $’s

A quick look at the new release section of most online book stores will put many a booksellers into depression. A new release on an average is on a 30% discount and depending on the hype surrounding it, publisher and competition it could go up to 50 % (Yes, that’s the cost which even the publishers might not give to their distributors but if you are luck that’s what a new release could cost you with free home delivery).

The logic championed first by Amazon (and thus replicated ad infinitum) is, give heavy discounts on new books to get more eyeballs/buzz and bigger volumes thus better topline and better pricing from suppliers.  Repeat.

You don’t expect a regular customer to understand(or bother with) all this but seeing massive discounts on the online portals make them feel that there’s a huge margin in books and as if all this while their neighborhood/favourite bookstore chain was ripping them of by not giving as much discounts.

For a customer who has bought a book at 30-40% discount will hardly ever buy a book at 10% or no discount at all

Though as a customer this would have been a dream come true for me but being on the other side of the business I too am surprised at how its working for some sites. You can now order a 95 Rs chetan bhagat book for Rs 57-60, make it two books and its free home delivery and the book is home delivered in 1-2 working days via class A courier (Bluedart if you are lucky).  It doesn’t leave much to imagination that no one, even the publisher can possibly make any money in these transactions.

A lot of small booksellers ask me “How can online sites give this much discounts when the big distributors themselves don’t get as much discount from the publishers?”

The answer more often that not lies in the fact that most sites are not focusing on making money on these transactions here but on just getting more customers. With  millions of $’s in VC funding the formula is simple

  1. Position yourself as the cheapest place to buy stuff online.
  2. Buy a lot of online ad inventory from Google/Yahoo et all
  3. Point these ads to a web page on your site which list books at ridiculously low prices

However in all this merry making of deep discounted prices there’s a catch.

For every 5 or 10 super cheap transactions there’s 1 transaction on most popular online bookstore in which the customer ends up paying price more than the its price on a bookstore of at times even worse paying more than the MRP/MRP for Indian Market.

‘The Goddess In India: The Five Faces Of The Eternal Feminine’ by Devdutt Pattnaik (ISBN: 9780892818075) is one such title. I personally bought a few copies with Rs 395/- sticker on them and on checking online the same book (picked from the same source because I can compare the delivery time on the site) being sold for almost 4 times the price.
A possible trick here could be: Stock a few copies as per the local market MRP of book which is scarcely  available, once the copies at suppliers run out, sell them at international market MRP and deliver them in 2-5 days (because its in your stock).

Such cases are more common in categories other than general books/novels, especially where chances of price comparison are less. This is clearly a minority case

This is kinda similar to what a popular bookstore in Delhi does with their super discounted sales. Buy books as per local market MRP(which is easily half or less than the international market MRP) and then sell it on the MRP pretending it to be on heavy discounts . Ex: A book with local MRP of Rs 350 is being tauted as being for Rs 1200 and after 70 % discount it comes to be for Rs 350/-. So the customer ends up paying the local market MRP (no discount at all) but might think he saved 70 % and got a great deal

Going online one can leverage efficiencies like just in time inventory, virtually unlimited list of products, pre-orders etc which in itself offers a significant advantage over traditional bookstores but selling books with -ve margins, plastering the internet(or TV) with your ads is something that cannot be competed against.

I’ve heard of some booksellers and publishers taking up this issue of excessive discounting with online bookstores and they apparently have made some progress like this popular publisher of general books has told one big online store to not offer more than 35% discount on their new releases. For every big publisher that is able to get their concern heard and acted upon there are five smaller publishers that are given a choice to shut up completely or face de-listing from the site all together.

Having said all this I feel the time has arrived for every bookseller to re-think their way of doing business and figure out how are they going to sustain themselves in these times where their much bigger and deep pocketed competitors are willing to do anything that it takes to own more customers.

And if you are beginning to start an online bookstore(e-commerce store if you will), you better have a really well thought out execution and funding plan.

E-commerce to M-Commerce?

This post is partly meant to be a rant and partly to share what I feel. Feel free to agree/disagree.

In middle of a telephonic conversation with a friend(web entrepreneur) I popped a question,

Did you see Indian e-commerce stores putting up phone numbers on their website/product pages to help people buy (read order) products?

Gladly, as expected he replied with a “NO” which brings me to the question if/why/how do things change in the startup/business world with new things being introduced and then blatantly reused (copied) by others.

When we started Dial-a-Book some 1.5 years back, we were the ONLY ones that took orders on phone and accepted Cash on Delivery(COD).  Yes, none of the existing players had anything remotely similar in their way of working.

Come 2011: The two biggest e-commerce players in India have started COD (about 6-8 months back for one and  2-3 months back for another) and now they also have put phone numbers on their portals to take orders.  Surprising? Hardly.

Wait for a couple months and you’ll see almost everyone following steps. In fact I remember one of the young and aspiring e-commerce startups went to the extend of launching a service similar to ‘Dial-a-Book‘ and branding it as “X.com’s Dial-a-Book”, Duh.

I don’t mean to say we are the inspiration behind these but definitely the uncanny resemblances are a bit too much for them to be completely independent in thinking and execution. I know it might be really difficult to acknowledge but that’s how it is. The idea of sharing this here was that I felt like putting it done of paper/web for records.

Copying a feature or idea is one thing and doing justice to it is completely different. The most painful part of it being the big guys almost always get the credit for doing new things which aren’t really new.

It will be interesting to see how things change going forward with the e-commerce scene also extending to the phone commerce scene. Stay Tuned !!

Will the real Indian e-commerce start-up please stand up?

First off let me acknowledge that the title of this post is a bit exaggerated and not really apt but I wanted to use it anyways. Onto the topic now.

I’ve been kinda following(not very regularly though) the Indian startup scene ever since my Slideshare days and things have definitely changed in the last year or two. There are a lot more startups(of all sorts) now ranging from deal a day sites like snapdeal to comics companies like Vimanika. It’s absolutely amazing to see people from non tech background also coming forward and creating products/services in their respective fields. However being from a tech(web) background I am particularly interested in web startups.

The majority of current crop of Indian web startups is (not surprisingly) focused on e-commerce and as with the previous wave of Indian social web startups are religiously following the same path. Somebody whom I met last month mentioned that some 20 e-commerce sites or so are registered with payment gateways every month and a vast majority of them are into selling books. Yes, that’s the “thing” I am talking about. Suddenly everyone wants to do e-commerce and guess what they want to sell? Yes, BOOKS.

While it is not at all difficult to understand why selling books online is one of easiest (especially if you are an ex-amazon) and probably lucrative thing to do what defies me is WHY everyone who sets up an e-commerce store can’t seem to think beyond books? Unless I am missing something obvious here (point me if I am) selling books(particularly to begin with) might not be the best thing these days.

Here are a few reasons why I feel selling books isn’t the best way to start e-commerce

  1. Differentiation: I have told this to at least a couple aspiring entrepreneurs the biggest reason why I feel an e-commerce startup should not start by selling books is differentiation. How on world will you differentiate yourself from half a dozen almost established and established online bookstores out there in the market?
    It becomes particularly difficult when you are late in the book market by at least 2 years and will take at least another 8-12 months to figure out(if at all) how the Indian book market works.
  2. Red Ocean: Loosely related to the first point is the second point of competition. Online book market in India is easily one of the most sought after pie. From independent online retail companies to established bookchains everybody is trying to own as much as they can of this market and unless you have a significant edge in terms of vision/talent, money/resources and distribution/publishing it doesn’t make a lot of sense to join the chaos.
  3. Logistics: Based on my experience of selling books I’ve realized that this is highly logistics oriented business. Since the whole model is based on economics of scale one needs to sell as many books as possible(very low average cost per item). Handling lots of books means lots of procurement, stocking, handling, shipping etc. This can be a huge pain during the initial days of a startup. This problem of high logistics can be avoided by dealing in other items of higher values where despite having lesser % margins one can make good amount of money.

Having said that I think people who want to start an e-commerce business should actively consider other options which have a demand but no one else is focusing on. Though I must say I haven’t deeply thought about the business/feasibility aspect I would actually love to see some Indian e-commerce company sell the following(in a proper way with due diligence)

  • Clothes
  • Watches
  • Grocery
  • Automobile Accessories/Spare parts
  • Furniture
  • Gift Items
  • Food Items/Snacks
  • Fashion Items

Let your customers be *Unreasonable*

Almost every business irrespective of the stage it is in finds itself in a situation where the customer demands/expectations in terms of service,urgency or flexibility are way beyond what you offer. Young businesses find it particularly tough to cope up with customers like these who demand the best of everything and in many cases least willing to pay anything(extra) for these services. Because of the inherent lack of resources(in a young business especially the self-funded/bootstrapped ones) and other reasons the question that occurs is of which customers or their demands to relent to and which ones to let go. All this is despite the fact that nobody wants to lose a customer or an even an order from them.

When such decisive moments occur regularly the business has two(obvious) choices

  1. Drawing a fine line of what can and what cannot be done(A policy)
  2. Stretching themselves to accommodate the  extra needs/demands of the customers (A policy of not having a policy)

I have an intuition(and some experience too) that most businesses though try for option 2 but settle for option 1 sooner than later. Pragmatically speaking it makes perfect business sense but I feel for some businesses it makes sense to bend a little more and choose option 2. The option to accommodate all the whims and fancies of a customer to the extent of them being unreasonable. Yes, in short “let your customers be unreasonable”. While this might sound unreasonable itself I feel its worth giving a try. The rationale(A bit optimistic and Utopian) behind the same being

  • If you offer the kind of services which are really tough to deliver, your value in eyes of the customer is quite likely to get a raise. Do this again and they will set you up a notch up than others in your market and will most likely return to you again and again.
  • By wowing the customer you stand great chances of them spreading the word about you. This works particularly well since no competitor of yours would have offered that service to them and you did.
  • You test your limits and that of your system
  • By accommodating all sorts of customer needs regularly you get some unexpected insights on how to do certain things or how to do them better or even better that of a new/better business Idea.

What do you think?

PS: I was inspired to write this post after our team at Dial-a-Book completed a book delivery around 9:45 PM to a place quite far from our office and home. The customer wanted the book after 9 PM in the night or before 6:30 AM in the morning and we were happy to push our limits :)

Product Vs Service Based Businesses

Here’s a post I recently wrote for Shack’s blog.

I’ve been into the business of building web applications for a good part of my professional career. During this period(around 3.5 years) I’ve worked for a MNC, two start-ups and also started two companies on my own. A couple days back while thinking about some business it dawned upon  that there are basically two types of businesses (guess you probably know this already) as far as my view point is concerned (Otherwise trading is also a business). If you are not working for someone else (basically a job) and doing your own thing you are either

  1. Building a product (A website, a facebook app or something else for Ex: Kwippy)
  2. Providing a service ( Social Media Marketing, Website design/development, SEO or something else for ex: Dial-a-Book)
  3. Mix of both (for ex: Shack Companis)

These two kinds of businesses (product and service) have almost equal scope when it comes to growing big, becoming popular etc. However what’s interesting is what it takes to get them to that level. I’ve been on both sides of the line that separates a  product business and a services business. I’ve build a product and am now building a service . Kwippy and Dial-a-Book are as different a business as they can get. While Kwippy was all about building a web product from India that had a global appeal, Dial-a-Book is a over the phone service that’s aimed at the local/domestic market(for now at least).

If you think about it product and service based businesses require way different inputs and take way different life forms once they start to grow. I’ll attempt to explore those differences and what we can do to leverage/optimize them

Product Vs Service Based Businesses:

1) Starting Capital: Product based businesses on an average require more capital to startup than the service based businesses due to the raw material and infrastructure needed. While web products don’t require as much starting capital, services will more often than not be relatively cheaper

2) R&D: Irrespective of the line/domain in which you are building a product, you’ll need to spend considerable amount of time as a team or as an individual to understand what’s been done before, what’s not been done, latest technologies involved, costs, maintenance and other issues. While (most) service based businesses don’t need to think as much(it’s a plus if they do) before starting up.

3) Time to go Live: Product based businesses by their sheer nature will take longer time to go live as compared to almost no-time to launch for a service based business. Essentially a service based business is live from the minute the founder(s) decide to start.

4) Business Development/Marketing: How good a services based business will do depends significantly on the founders interpersonal/selling skills the same gets tough for a product based business. For a product based business you need to have the product right, you need to make it easy to find and spread(viral) and market it in a completely different way.

5) Technology/People Balance: I kinda feel that after a while product based businesses are more dependent on the technology than the people as compared to the service ones. For a company that makes diapers for example, the machines, the processes, raw materials are an important bit and once the basics are taken care of it can run without as much involvement  on the founders part. However for a services based business, say a consultancy service started by 5 guys with a finance background the business depends a lot on the people. Even when the organization grows big it will be known/trusted for the few names of smart/senior guys and once they leave for some other company, the clients might just follow them to their new home.

These are some of the differences I could feel and keeping them in mind I feel one might be (slightly)better of choosing the kind of business they want to do depending on their personality/skill set etc.

Guess you know what I mean, if not drop in a comment and we’ll take the discussion forward.

Link to Shack’s post: http://shackcompanis.com/post/1521371790/service-vs-product-business