Tag Archives: business

Business: Scratch your own itch or someone elses?

The easiest, most straightforward way to create a great product or service is to make something you want to use. That lets you design what you know‚ÄĒand you’ll figure out immediately whether or not what you’re making is any good. – Jason Fried & DHH in Rework

(Image courtesy: topnews.in)

“Scratching your own itch(SYOI)” is a popular phrase amongst many startup circles. What it essentially means is to build something that solves a problem you face. The case in point cited by many is the fact that when you are solving your own problem you know what exactly the problem is and how it can be addressed while on the other hand if you are scratching someone else’s itch you are sort of taking blind shots at both the problem and the possible solution(s).

Apart from the obvious fact of knowing the problem a bit better what works for SYOI is

  1. Immediate & Direct Feedback: You can directly feel the impact that your solution creates. If for example one builds a product to manage his food expenses, the utility/futility of the product can be judged directly and immediately. One doesn’t need to do a long trial run/demo to see if the product works.
  2. Extra Incentive: You + Customers > Customers. Working on a problem that benefits oneself directly has additional incentive because of the direct personal impact. Not just this, the beauty of this scenario is that one doesn’t need to think about the customers all the time i.e one can be content by just solving his/her problem. Other customers become secondary and this is a good thing because you don’t have to worry about what they might/might not like and just focus on what works for you, simple.
  3. Passion: SYOI also makes one more passionate about the problem they are working on because they can relate a lot more to the problem and the issues that arise because of it. The direct impact of the solution on you also adds to the passion.

However having said all that, Is ‘Scratching your own itch’ the only way out? or Is ‘Scratching your own itch’ better than ‘Scratching someone else’s itch’?

While SYOI might have it’s own benefits, it certainly isn’t the only way out for entrepreneurs and not every invention/business is born out of it. For ex: A closed social networking platform for Chief Executives (CEO’s, CXO’s etc) of Fortune 500 companies built by 24-25 year olds can still work or a dating platform built by a married man is no less likely to work because he’s not scratching his own itch {assuming he’s not interested in finding himself a date through this platform ūüôā }

Also, not all’s good with SYOI and it also has its fair share of negatives

  1. Small Market: What bothers you which might not be bothering others. Thus some SYOI businesses also stand a risk of solving problems for a very small market segment. For ex: A friend of mine hates to wait in queues for getting CNG for his car and is ready to pay someone extra amount to take his car and get CNG filled in it. So if he were to start a service based just on this then it’s quite likely that there might not be a lot of people willing to pay extra money to get CNG/Petrol.
  2. Financial Feasibility/Business Model: SYOI might work great for Open source where all developers are constantly writing/modifying code to meet their needs and in the process helping scores of other fellow developers it might not work that well when it comes to doing a business. Not all personal itches and their solutions can have business models. This is not to be confused with the previous point on Small Market as having a solution for small market can still be monetized but monetizing something that appears to be a problem to you but no one else might see it as a problem can be an issue.
  3. Domain Knowledge or lack thereof: Needless to say, while starting a business it makes a lot of difference if you have enough domain expertise in your team and it might hurt if you are trying to solve your problem without having enough domain knowledge. For ex: I probably won’t land anywhere if I were to try to solve my itch of building a car that flies instead of crawling on Delhi roads. It’s worth noting that lack of domain knowledge is also likely(a bit more?) to hurt when you are trying to scratch someone else’s itch.

S0 are you scratching your itch or someone else’s? How’s it going?


Links:

  1. http://archipreneur.blogspot.com/2010/03/scratch-your-own-itch-rework-by-37.html
  2. http://gettingreal.37signals.com/ch02_Whats_Your_Problem.php
  3. http://www.instigatorblog.com/scratching-your-own-itch/2010/08/12/

The Curious Case of Customer Service and Missing Personal Touch

Customer Service would easily be one of the most oft used(and abused) words in Business. For some people, customer service means giving their customers the kind of experience they would like to get (as a customer) but for others(majority?) it’s a mere formality, a lip service that you have to offer just for the sake of it.

While customer service in itself is a big subject comprising numerous things including principles, ¬†processes and much more, there’s a particular thing that I feel is amiss especially when it comes to online businesses, i.e. Personal Touch.

Personal Touch in customer service for online businesses is according to me a great value add given the fact that unlike offline businesses the customers are not talking to a company rep face to face or they can’t talk at length(or decide to wait in the company’s office) till their issue gets resolved. In fact Customer Service, especially over email, which is the most prominent way of offering Customer Service/Support is by design(asynchronous) a customer-unfriendly method. Given the fact that instead of talking to someone in person or over phone you are literally talking to a computer and unless the guys at other end make some real effort to add some personal elements things are bound to not be smooth.Adding Personal Touch to any non-verbal communication not only helps build credibility/trust but also ensures smooth resolution of any issues that a customer might have.

Over the last few months I’ve run into(online) customer service reps of various services including E-commerce and Mobile operators and almost¬†NONE of them have what one can say Personal Touch in their customer service. As expected, almost all of them just work on a few standard templates which their customer service reps copy and paste. What further intrigues me is the fact that contrary to being Personal some of these online businesses try to be the opposite i.e. being as impersonal as they can be.

While this reply Personal Touch - Kinda Personal

is still acceptable, these ones

Personal Touch - Company Name and Address

Personal Touch - Site Name

are completely unacceptable.
I completely fail to understand what is the ingenious thought behind hiding the identity of the person who is responding to these emails. Could it be the CEO/CTO/CFO himself?

Not only is the case of missing identity a big barrier in building any sort of rapport with the business it also complicates things as the customer never gets to know who was the person whom they last spoke to(over mail), who are they talking to now and how much do they already know about their issue.

It’s not Rocket Science that small things like how your customer service team addresses their customers (Dear Customer Vs Dear Mr Dhingra), the tone/format in which they talk or type emails(Pre-decided formats or customized replies), how they sign off their emails(Customer Service, XYZ.com or Shantanu, Post Sales Support, XYZ.com, Email:-, Ph:-) matter a lot. They especially matter a lot when you are an online business and even more so when you are just starting up. ¬†BTW Dell India is an exception in this regard(at least)

Personal Touch- Dell

Isn’t it great to actually see the “Full Name”(unlike just the first name) of the person who just mailed you back?
Isn’t it re-assuring to know that you also have their professional email id, telephone number and even extension in their email signature?

Besides other things, businesses should realize that by adding “Personal Touch” in their customer service, not only can they solve customer vows more quickly and efficiently, they can expect to get more/repeat business from them.

So having said all that, does your Customer Service have enough Personal Touch?

Lessons in Business from Bala Balachandran

About a couple weeks back I happened to come to know about Mr Bala Balachandran from a friend of mine who also shared with me the printouts of an article titled “I firmly believe that all customers are not equal” that ¬†appeared in Business Standard on 24th December 2002(couldn’t manage to find a link). It’s not often that one comes across this much business wisdom in a 4 page printout.

After giving that article a re-read yesterday, I searched a bit on Mr Bala Balachandran and amongst other things I stumbled upon this series of fantastic videos on everything from Cost Management to Customer Astonishment. This would by far be the best material on business I’ve come across in 2010 and the fact that these gems are hidden from the world is reflected in the fact that these videos had been viewed 2-5 times at max. It’s only now after repeated views from me that these numbers have jumped up :). Also, Balachandran not only shares his business wisdom, he does so in a nice and funny manner. At 72, he has contagious energy and passion.

Only if someone could stitch these  small 2-3 minute videos together would they make into an amazing video.

To treat or not to treat different customers differently is the question

This is a classic dilemma that many entrepreneurs(especially the offline one’s) are likely to run into. Customers as we all know come in all shapes and sizes(and mindsets). While there will be some customers who will talk nicely to you and your employees, pay their bills on time and offer you a piece of advice or feedback whenever needed, there’s also a bunch of customers that’ll act as if they are doing you a big favor by using your product or services, they’ll negotiate endlessly on the price and keep getting into endless debates about the most minute(and irrelevant) issues possible.

As an entrepreneur and consultant both I too have run into the thought of¬†segmenting¬†customers into good,bad and ugly but I am not completely convinced if that’s such a good idea. I mean on one hand there’s a thought of optimizing the whole thing for a better ROI on other hand there’s this idealistic thought that customers/clients should be treated fairly and equally irrespective of their spending powers and other¬†behaviors. I for sure would like to get a fair/equal treatment in all the products and services that I use irrespective of the segment I belong to.
If you are committed to offering a delightful customer service the non-segmentation of your customers is highly likely to come in your way. As pointed by Seth Godin here

If you’re going to be obsessed with delighting customers, it’s a lot more efficient to focus on customers that are able to be delighted.

A case in point being if a particular bunch of customers is impossible or way too difficult to delight/please why waste your resources on them when you could focus ’em on some other set of customers that are more likely to be delighted by what you are offering?

A few things I could think of that one needs to keep in mind if such a situation arises are

  1. Is the customer bad or your offering?
    A situation like this can also be a opportunity to give your offering another in-depth look. Maybe the customer is right and there’s indeed a scope for offering a better solution at the same or reduced price or maybe the customer service offered isn’t up to the mark. So before branding a customer as a bad apple, give a second thought to their feedback and see if there’s a genuine problem there.
  2. How would it affect the Word of Mouth?
    While not giving the same time, attention etc to a not so good customer might be a good utilization for your resources it might have a spill over effect. In cases like these it is also pragmatic to ensure that your segmented behaviour will not spiral into a bad WOM loop. To avoid that ensure that this bunch/segment are not influencers/thought leaders or highly connected individuals from your target segment. For ex: If you are targeting a product or service aimed at doctors and for some reason you decide to segment them, try to ensure that your segmentation policy will not spill over to other doctors and doctors as a community tend to be highly connected to each other
  3. Customer Segmentation != Spending power segmentation
    While you’ll find plenty of real life instances in which retailers/suppliers and many more tend to treat customers with high spending powers differently, it’s not the most wise thing to do. When I started this discussion though I included “paying bills on time” ¬†and negotiation I never mentioned spending power as the deciding factor. I strongly feel segmenting your customers based on just their spending power isn’t such a good idea
  4. Do not do unto others as you would expect they should do unto you
    One should always keep “The Golden Rule” in mind before taking any call on customer segmentation. This will most certainly save you from some bad decisions

What do you think about treating different customers differently?

5th Annual Small Business Summit 2010 Highlights

About 8 months ago I complied a presentation containing best tweets from Social Gaming Summit 2009 which got a good response and appreciation so I thought of doing the same for #smallbizsummit.

Here’s a crowdsourced summary(in form of tweets) of the 5th Annual Small Business Summit 2010 held at NYC on 16th March. Hope you like it

Small Business Summit 2010

View more presentations from Mayank Dhingra.

Why Web Startups Need To Think small

I’ve been a fan of 37signals ever since I first used Basecamp during my stint at Slideshare in 2007 and later while working on Kwippy. What’s also special about 37signals is that not only they build great products that make money, they are also doing a fabulous job at sharing their experiences and learnings with the community using Social Media long before it was a buzz word. If you haven’t done it already, you should checkout their blog where they talk about design, business and other things.

Sometime back I happened to listen to this talk given by DHH on ‘Making money online’. Despite a cheesy sounding title the talk is a great primer for web entrepreneurs ¬†starting up or thinking of starting up. DHH touches upon a great point when he says

The odds of you in here making the next Facebook or YouTube or MySpace are tiny, the odds of you just actually just creating a product that few people will like and pay more for, not that shabby.

It’s kinda like reverse terror alerts, the probability of something like this happening, like the probability of you being crashed in the plane, tiny, but the fear you have of it or the desire you have to be the next Facebook, Huge, because it’s been broadcasted over and over again, you are being brainwashed

DHH further goes down to put forward the maths behind making a million dollars in an year by having  2000 customers and charging them 40$/month. Adding decent  conversion rate(5%) to the equation it would take about 40,000 signed up users to get 2000 paid customers. Taking it down one more level to make 200,000$ a year you would need just 400 customers at 40$/month.

The number of problems/niches one can attack trying to get this many customers are a lot, but not surprisingly we still find most web start-ups aiming at building the next Facebook or YouTube. Its not uncommon to find entrepreneurs by the dozen running after VCs and Angels to raise money for the next big thing on the internet despite the fact that most of them can get their venture started without too much money. One of the primary reason for this is the fact that raising million¬†dollars¬†for building(or the mere thought of) a global product that might be used by millions is SEXY however building a web product that’s being used by a few hundred or thousand users while making you some money isn’t.
This frenzy is fueled by media and consumers alike and the entrepreneurs(esp first timers) get unknowingly drawn into this trap and the next thing you know is everyone trying to make it big without even trying to taste success in building a smaller yet useful product.

While I won’t discourage anyone from taking big shots right from the start, I strongly feel its a lot better(and practical) to solve a small problem first before going for the bigger one.

Equals in Business ?

Most people start their businesses in partnernships/collaboration with some one they know. It could be a family member, friend, relative or just a known too. Trust is the first thing that people look for before getting into a venture with other things being what the other person brings to the table; money, connections, skill set etc. It’s commonplace to find businesses being run in a fashion where one or more partners put the money(or maybe contacts) and other(s) put skills and effort(or maybe contacts).

Due to inherent nature of the factors in place(time, effort etc), things get a bit difficult at times as contributions start to vary from what they were initially agreed upon. For example: If two people start a business with one person putting the funds and infrastructure and the other bringing in clients and contacts needed to get the job done. Now in this case it’s easy to quantify the funds spent on infrastructure and other activities but it’s a bit difficult to quantify other inputs like efforts, time spent etc. What further makes the puzzle difficult is when both partners feel they are doing their share of the job as initally agreed upon.

A situation like this can easy reach a deadlock with both parties proclaiming to be doing their bit of the business. What further makes matter worse is if both the partners have agreed upon equal share in the profits. The matter gets really complex if ¬†say the guy who was supposed to get business and contacts with his effort isn’t doing his part efficiently but believes he is doing it right and thus deserves and equal share in the profit(which they make due to the efforts of the other partner who was just supposed to put funds for infrastruce etc) as mutually agreed upon initially.

Human Ego is another factor in play in situations like these as even though a person might know that he isn’t putting in the required effort in the job but his ego will prevent him from accepting it and agreeing to get an unequal share in the profits. I’ve had a few direct and indirect experiences in this regard which have forced me to think of a way to reduce the possibility of such situations.

A couple possible solutions that I could think of  are

1) To partner with someone who is as equal as you are

If both partners are equal in most respects like finances, contacts etc then I think the scope of running into situations where ¬†one feels the other isn’t doing enough is reduced. By quantifying one’s contribution in terms of money, contacts or other resources, the factors which could cause confusion/dissatisfaction are reduced. Also, I feel with equal partners it’s a bit easy to find out and accept if one isn’t doing his bit properly

So it’s a good idea to find out in the start what the other person is bringing to the table and ensure that it’s not too high or too low for your contribution.

2) ¬†Decide on a profit sharing model based on one’s contribution:

In case of partners with unequal inputs, it’s a good idea to decide on different profit sharing models based on situations with varying contributions. For ex:

a) For every deal where person X does this and this and person Y does this, X gets 66% of the profit and Y gets 33%
b) For every deal where person X does this and person Y does this and this, Y gets 66%  of the profit and X gets 33%.
c) For every deal where person X does this and this and this and Person Y doesn’t do anything, X gets all the profit and vice-e-versa.

I feel predeciding things like revenue/profit sharing in various situations where there’s a possibility of unequal contributions will serve as a base and reduce the number of potential conflicts.

What do you think?

LinkedIn and The New York Times Team up

In a recent development(or is it?), LinkedIn and The New York Times have joined hands for a tie up. I stumbled upon this while surfing NYT and a few clicks revealed how it works. Here’s the deal for you.

Linkedin members will have an option to be served customized headline feature on Business and Technology article pages of¬† NYTimes.com that’ll comprise five latest stories from NYT. For ex: someone working in biotechnology sector will be served latest news from that sector.

Here’s the story in a few pics

linkedin_nyttimes

via NYtimes.com

linkedin_nyt

via LinkedIn.com

Linkedin_Newyork Times

An article on NYT

linkedin_newyorktimes

on clicking “what’s this?” on the right side in

newyorktimes_linkedin

“five stories” based on my LinkedIn profile