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

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?

It was great interacting with the attendees most of them are already working on their startups. If you happened to attend the talk, please drop a comment here.

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.

For those of you who might not know, TiE is the world’s biggest formal network of Entrepreneurs and Professionals. The thing I love most about TiE events is the wonderful opportunity they offer of meeting loads of interesting people from various profiles spread across different industries and hailing from different parts of the country and world.

It took me some time to realize and appreciate that the kind of audience TiE events attract is a lot different from what similar events(Startup etc) attract and that’s what sets them apart from other events in the same category. Also, as mentioned previously I strongly feel that TiE events are especially designed to make networking more easy and often, for example this time around(for SmashUP) there was a “Power Breakfast” in which you were asked to choose 3 out of 5 established VC’s/Successful Entrepreneurs and the orgaziners would try to arrange you(and 8-9 other folks) to have breakfast with one of them on a separate table. Having attended a Power Breakfast yesterday I can say it was a simple yet very effective thing. To discuss and network with 8-9 attendees and a VC/Successful Entrepreneur in just an hour couldn’t have been easier and better.

Having said all that I’d like to conclude this post by saying that if you are one of those who like professional networking with people and you haven’t yet attended a TiE event, you should give it a try.

I personally was quite excited about the talk as we generally don’t talk about products much in the regular Twitter, Bloggers and other Social Media related meets and I feel this is something that we should do often to create awareness amongst the attendees and if possible encourage people to build new products.

(Pic courtesy Gaurav Mishra)

Here’s the presentation from the talk

Talking about web products they can be categorized into two categories, “Innovation” (a completely new concept, first of its kind) and “Improvisation” ( a slight modification in an innovative idea and/or a slight modification in its implementation). From what I’ve observed most social web products in India belog to the “Improvisation” category with focus on the Indian market. Be it a social network, a platform to share pictures or microblog.

Though there is nothing wrong in improvising on someone’s concept and building a product for the local market but I guess most of the products in this segment fail to add any substantial value to the concept or it’s localised execution. Also, what  makes me wonder is why there aren’t many popular Indian web products in other categories particularly Global products based on an Innovative concept(from India) and Global products based on Improvisation(from India) of some innovative concept.

I feel there’s a lot of scope in both Made in India, for India and Made in India for World categories and I would keep a close watch for products in these two categories and now that I have moved out of Kwippy(will detail out in a seperate post) maybe work on something myself sometime soon

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?

India's 25 Hot Web 2.0 Start-Ups

Preserving Status Quo:

This btw is one of the best descriptions that I’ve read about kwippy and hey there’s a mention of “Slideshare” there too. Also, this would be the first appearance of “yours socially” in print media

Three Cheers to Kwippy !!!

About Proto(from their site):

Proto.in, Today, is about giving entrepreneurs a platform to express their visions and showcase their imagination, with a working prototype, for the world to see. It’s about increasing partnership, collaboration and mindshare among a distinguished, qualified and well-connected audience. Proto.in provides a unique platform for promising startup talent to communicate their creativity and innovation potential. As a meeting place for the smartest entrepreneurs, venture capitalists and professionals, Proto.in stands true to its mantra “Create, Contribute, Collaborate.”

Proto is about celebrating entrepreneurship, and encouraging it where it matters the most – at the startup level!

1. To Showcase Innovative technology products borne out of India
2. To Encourage, grow and create entrepreneurial awareness
3. To create a community of startup entrepreneurs, who can grow in strength and numbers, drawing wisdom from each other.
4. To act as a bridge between well-established companies, veteran entrepreneurs, venture capitalists, analysts, journalists, professionals and grass-root entrepreneurs.

I’ve said this before that Proto is THE place to be for all startup junkies, entrepreneurs and wanna be entrepreneurs. This edition of Proto has some really interesting sessions/camps including

Shotgun Startups – Teams of technologists, programmers, designers, and product architects compete with each other to build a product in 24 hours, and get them voted by the audience at Proto.in, with one emerging as the winner.

Pitchcamp! – The first pitch that you make, be it an investor, partner, employee or client about what you do, makes all the difference to that first impression. Pitchcamp will be a workshop for startups to help them sculpt their pitch that will sell every time.

Innovation Jam – Ideation is a simpler process. With the success of the process that started last time, at this proto.in, here’s a chance for the entire audience to participate, in chipping and brewing fresh ideas off of their head. If you have a creative block, this will ensure that its flushed out.

Registrations open on Monday, go book yourself a seat. Checkout their blog for more and for any queries Vijay is the man.

If you like kwippy and what we are doing please nominate us for Mashable Open Web Awards. All you need to do is to just enter your email id in the form below and click the link in confirmation email that you’ll get. Come on guys show your support. Also, just drop a comment below if you vote.