Making the tough decisions in life

Lots of people have told me that I've led a colorful life. I'll be 31 this year and have seen and experienced a lot courtesy my drive to not walk down the beaten path and my tendency to go with my heart and what I feel is the right decision as opposed to what is the easiest path. It however has never been the easy path. I have had multiple occasions when I've had to make tough decisions - whether it was to layoff staff, to fire people who were friends, to leave companies I founded and other decisions in my personal life. Today as I talk with friends I advise, I sometimes get a sense of deja vu as I see some of the decisions they are grappling with. I thought I would write a bit about some of the things I always try and keep in mind when I'm faced with tough decisions:-

1. I have obviously considered the facts and am unable to decide. What is my heart telling me when I reflect deep down inside?
2. Is the presence of loved ones and entrenched relationships coloring my decision making? Is my making the decision difficult because I know that going down the right path will hurt someone? Is that someone else rational and logical and would they have seen the merit of my decision if they were in my shoes? If so, can I work out a midway path that relieves some of their immediate discomfort as long as they let me proceed? Are they being unreasonably closed to a fair deal? If so, should I not do the right thing?
3. I am my own person and I will make every decision independent of the baggage of industry norms, cultural norms, and societal pressures. I will give people a fair chance to make it in spite of their circumstances and will stick my neck out for the meritorious side even if that means I may have to sustain short term pain.
4. Decisions always have consequences. It is foolish to expect that life is the same no matter what path you choose. Am I prepared to sustain financial, societal, reputational damage in order to make what I feel is the right decision? Are the people I am going to make this decision for prepared to stick by me even if the worst case scenario comes true?
5. Lastly,  am I being consistent with all the commitments I have made if I make this decision? Have I ever directly or indirectly signaled that I will be going down a different path and caused people to be emotionally, financially and socially invested in this decision? Can I resignal?

While thinking through the above points helps me in arriving at my decision, I also feel having an experienced friend or guide to talk things with / share a drink with or else just vent to helps me tremendously. We usually know what we need to do. We just need to hear our thoughts aloud. And we need someone to tell us what we already know - It's time to be brave and courageous.

Lastly, this is a tip to esp. people who are facing tough decisions: Believe in God. In moments when things really get tough, it is comforting to believe that someone out there is listening to you and protecting you.

I leave you with something from Shakespeare

This above all, to thine own self be true,
And it must follow, as the night the day,
Thou canst not then be false to any man.


---
Act I,. Scene 3, Hamlet


All the best!!

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Facebook, Twitter - Vitamin or Pill?

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So I had an interesting discussion today with a startup coach who mentioned to me that he loved investing in companies which were pills and not vitamins and that in his opinion Facebook and Twitter were both vitamins. I strongly disagreed with this assessment and felt I must write this blog post to detail out my views on why.

Firstly I want to write a bit about this business of investing in Pills Vs. Vitamins. I have never categorized nor do I look at companies and whether they are in the business of selling Vitamins or Pills. I believe from my experience that this is an oversimplification and categorizing something as a vitamin or a pill means that the target audience has not been segmented or identified clearly. Instead, I think of products with this viewpoint - will the product drive consumer change?- there will always be a section of consumers who adopt early or for whom the need is most - can these be targeted cheaply and made to buy the product at a higher cost? Can the money generated be used to further drive marketing that will precipitate a change in consumer behavior - effectively ensuring that the product crosses the tipping point and becomes a must have for a larger audience who then flocks to the product thus reducing customer acquisition costs and ensuring that the company can reduce the price of the product and thus ensure widespread adoption and hence become a part of everybody's lives. With widespread adoption can the company then enjoy a monopolistic position and create an entry barrier through brand, network effects and R&D? To sum up: I look at products not as vitamins or pills - I consider them all as drugs and look at whether there is a real strategy to ensure that the pill becomes widely popped over time.

Coming to the question of facebook / twitter being Vitamins or Pills - I will restrict my thoughts to Facebook as I am still studying twitter and so will restrict my comments on them till I have had some more time to firm up my views. I consider Facebook a pill and not a vitamin by my friends definitions.Why so?

I consider man a social being. Human beings live in society and meeting others, socializing, being parts of groups and communicating are in my opinion part of the very fabric of being human. Being social is not a choice that most people have. How social is a choice but being social is not one. I truly believe facebook is the future of society. It is inconceivable to me that in the future a human being will be able to live in the world without a facebook account and without socializing on facebook. It is also a business with very strong network effects. As such, it is in my opinion a true pill by my friends definition.

Now coming to some more complicated examples of two products I feel illustrate how smart business people create drugs and ensure that their pills are popped.

The first is mobile telephony. In the initial phases mobile telephony was what my friend would have considered a vitamin. If you were a pill Vs. vitamin investor you would never have invested in a mobile telephony company - after all no one really needed a cell phone. It was just an indulgence for the rich who wanted to spend 20Rs. per min when the landline could do the same job at 1 Re a min. A smart entrepreneur instead would have decided to segment his audience - go after the audience for whom mobility and urgency was a must and then slowly target other market segments before the tipping point was crossed and the masses flocked to get a cell phone. In the interim, smart entrepreneurs used marketing to hasten the arrival of the tipping point. Today of course mobile telephony is a basic necessity of life - a pill for sure but for a small section of India for whom it still is a vitamin by my friends definition.

The second and a not very Indian example is Viagra. I am sure most people would consider it a vitamin. However, I would not. Again I am sure the very smart people at Pfizer recognized the huge opportunity that this drug was and decided to do the right thing - segment the market - they went after the audience that needed it most and addressed them through the right channel - the doctors. However, with time and growing awareness, I am sure that today probably less than 1/10th of the viagra being sold is for people who really need it and the rest is for people for whom it is an enabler of a better 'lifestyle'. This in my opinion is a valid reason to buy something and in my books makes it a pill that people are popping. Even in a young country like India I am sure every person in the target audience has already heard of Viagra and when and if they need it, they will be consumers of the product. This is without Pfizer having spent any advertising or marketing dollars to promote the product in India. This is what smart marketing has caused - a shift in behavior making a huge number of people - pop this pill.

To sum up:- The trick is not to look at things and decide whether they are vitamins or pills. This is a strategy that does not demonstrate gumption. Instead the things I ponder and I ask other advisors, investors and mentors to ponder: Is there value that this product is delivering? Can the target audience be segmented and targeted at a reasonable cost? Can the company precipitate a change in consumer behavior and take the product mass market in time? Do I have the vision to see far enough and see how people, companies, communities will change by adopting this product? Is that a scenario I think is likely or one I think smart marketing can precipitate in the near future? Making money is never easy and simplistic and creating markets and blockbuster products require many things to fall in place most importantly luck. What definitely does not make money is watching from the sidelines.

Related articles

• Can You Have Sale Before Scale? (tommartin.typepad.com)
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Things to notice on candidate's LinkedIN profiles

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Today LinkedIN has become a very good source of information on candidates. I find myself using it regularly when hiring Senior people as part of my team. However, I've now realized there is a particular class of person who is lurking on LinkedIN and it is very important to notice this person and to take their linkedIN profile with a pinch of salt. Here are some of the things that if I notice I generally avoid connecting with the person.

1. Over 10 recommendations (usually from people who don't matter): This usually means the person has gone out actively to seek recommendations or has asked others to recommend him. Reasons why people do this is that they have been on the job market for a long long time and at the outset are not confident of landing a job as per their expectations. Your eyebrows should esp. go up if you notice the recommendations are from former or present colleagues (former - usually an indication that the person was fired or laid off, present - person has been told to leave and is serving time). I always try and read thinking if the person who wrote was a junior, why would he feel he was entitled to recommend another person unless the person requested it.

2. The person has a large number of groups he has joined and has not participated in any discussions or contributed to the same. It usually means that they are trying to contact as many people as possible during their job search and have very limited real life contacts and so their only means of connecting with other people is to join the same groups as them.

3. You see brand name universities like IIT, IIM, Harvard etc. as part of the qualifications when all the person has done is a certificate program or a Continuing education program from these institutes. This is called 'Resume Embellishment' by recruiters and bullshitting by the rest of us.

4. Vague terms in their profile that seem disconnected with their job title or else their title itself seems Vague and something that no professional company would give them. So you might see Key Member of Management team instead of Vice President or General Manager. Job description may include references to 'opportunities' they created, 'pipeline' they generated or 'potential' business they got or 'revenue/ business they managed'. This is to portray a bigger image of their actual position to recruiters.

5. Connections who seem to have never worked with the person or who seem to be from competing companies. This is a very key flag that I look for. It is a dead giveaway that the person has been interviewing at multiple companies in the industry. Such a person cannot be trusted to not sleep with the enemy in case you apply pressure on them once they join your company.

6. People who send you connection requests in spite of not knowing you, knowing you very briefly. It means that the person is highly insecure in his/present present position and is putting you down as a valuable contact who he will approach for a job or some matlabi reason in the future.

7. Anything emphasizing that they did something major in a short time. This means that they were quickly fired for not doing anything and they were expecting the firing and so did some bullshit to show activity in the short time they were around. Real achievers know nothing real and major happens in a short time.

On the flip side here are certain things that I see which add to the credibility of the person:-
1. Recommendations from other individuals whose enjoy credibility in the marketplace and who would not recommend lightly.

2. A LinkedIN paid user - this means the person is serious about using LinkedIN as a business tool.

3. A very brief outline for technical staff. This means the techie is right about not needing to put himself up on LinkedIN. It is more a resource for business development people.

4. A person who has made sense through their postings on LinkedIN groups as opposed to one who is just commenting to get noticed.

5. A person who is from an A-grade university and  has mentioned societies he was part of during university days, is part of specific alumni groups - Harvard Grads of 2000 for instance. These groups are usually moderated and so very difficult for a poser to join.

Hope this was useful and welcome any comments. Sorry If I sound a bit harsh and judgmental but for me hiring the right team is one of the most important aspects of building a great company and these are things I wish I had known earlier.

Building a Viable Merchant Network - An exercise in Critical Mass

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I often get approached by a range of people looking to build Merchant Networks in different parts of the world. This business plan bores me as I have seen and analyzed over the past 3 years possibly every variation on this core theme. I wanted to give a tip to entrepreneurs and managers building Merchant Networks.

Firstly, the merchant network has three main components - The Merchants, The End Consumer and The Operator (yourself) of the Merchant Network. Running this business successfully is an exercise in building immediate value for each of these stakeholders. So in effect in order to do this business successfully, you must create three Financial Analysis sheets- one for the merchant, one for the consumer and one for the operator of the network. List out the financial benefits that an average participant in each class - an average merchant or an average consumer or you - will enjoy and do a common sense check on two things:-
1. Whether the financial benefit is positive. (It is surprising how many merchant network business plans are built on propositions which are loss making for the average merchant)
2. Whether the financial benefit is significantly lucrative on an absolute basis for the average merchant and average consumer. I call this the significance test and a lot of products in my opinion fail this test. I firmly believe most loyalty programs, cash card programs and other merchant rewards programs will fail this test.

If your analysis leads you to believe that the above two checks are not going to be met by a large margin, my view is that the Merchant Network will not be viable.

So if they do, is everything hunky dory? I wish life was so simple.

The more usual situation will end up being the following:-
Your Merchant Network will need scale to be viable. What I mean by scale is the following - The Merchant Network is a network akin to other networks like the phone network - I would encourage you to think of your application in a similar frame of mind as SMS - the short messaging service. The value of the network becomes more compelling as the number of network participants increases - i.e. the number of merchants increases. Once there are a larger number of merchants the average customer is more motivated to join the network and once there are a large number of customers on the network, the average merchant who is sitting on the fence also will be eager to join the network further strengthening it.

As such, it is important to scale the network significant in the initial days in order to get to the critical mass required where the target customer encounters the network multiple times in your circle of competence. 


How is this done? Some tips:-
1. Focus geographically. This is in my opinion the best strategy someone trying to build a large merchant network can adopt. Ensure you focus on a small geographic location which is self-contained and manageable. Ensure that you narrow your target consumer down to a resident of that geographic area and acquire enough merchants to get to critical mass in that area and make participating in the network a must-have for the target consumer.
2. Focus on Narrow easily addressed Target Groups (more difficult but more profitable on a percentage basis). This could be identified niches e.g. foodies, movie buffs, frequent travelers, train commuters and ensure that you sign up enough merchants to be relevant to this target audience.
3. Build a hub and spoke model - Ideally, own the hubs yourself so that you are closer to the market and are investing adequate resources to ensure that the cluster is viable. Do not succumb to temptation to do away with the hubs or replace them with hubs owned by third parties - e.g. Distributors.
4. Do the math- Calculate precisely how many spokes and what volume of commerce is required to ensure viability of a hub. Only invest in a hub when there exists demonstrable commerce of that volume. Believe marketing when they say that the commerce will improve due to their efforts. That additional volume will be much needed free cash to invest in a new hub. The intention is to make money and not to just break even with every hub.
5. Stress test all partnerships, systems and economic assumptions in the concentrated first geography before expanding to another geography. The trick is to drive around a new track once to familiarize yourself and then drive the next 9 laps at full speed when you know what to expect.  

Related articles

• More on the economics of credit cards (marginalrevolution.com)
• It's Loyalty Stupid... (chainringaction.blogspot.com)
• What will it take to make mobile payments mainstream in the US? (venturebeat.com)

Good reasons to have a meeting

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So I started off writing a post on 10 things to do so that meetings remain useful. As soon as I started typing, I realized that I did not feel motivated enough to write that post. I personally believe 90% of all face to face meetings are useless and could have been avoided. As such, did not want to write something which then others would use primarily (9 cases out of 10) for meetings which did not need to happen. So I thought instead I would list out some of the reasons why I feel meetings are important:-

1. Social meetings are important. I would never want to underestimate the rapport one can build over a heart to heart chat, a drink or over lunch or dinner. Successful people become successful because they very rarely lie and while in a corporate situation they may try to be diplomatic, in a heart to heart chat they would be upfront and direct with you. Getting to this level of comfort takes time otherwise and so I feel doing such social meetings are important. Social meet and greet meetings are also great where the leader meets people across the spectrum of the company and builds empathy and gets ground level feedback.

2. All hands meetings or meetings where the top boss is present (Any other meeting does not qualify as an 'All' Hands). I don't support all hands meetings where the leader is talking or taking questions. I feel this is much better done over email. I feel All hands meetings are best called on a regular basis to cut through corporate bureaucracy and to ensure that there are no silly wait times because some department is 'waiting' for information that they don't have or for some other department to act. 

3. Briefing meetings. This is when you are working with an external company / contractor and you need to brief them on your requirements. I have found in such situations, the RFP may not be comprehensive enough and so it may be best to spend some time with the sales guy front ending the deal to ensure he has absorbed exactly what you want from the solution. 

4. Meetings with important people. This one is bound to be controversial but I feel these meetings need to happen in person. Unfortunately, super important people are super busy. It is very difficult - sometimes near impossible for them to respond to email or to schedule a meeting. My feeling is if you have got a relationship with such a person it is worth your while to head to their office and wait in line to see them. 

5. Show of support meetings. This is where you are trying to drive a larger industry wide issue and where it is necessary for a bunch of people from the same Special Interest Group to meet a third party who can make a difference. I feel here things are best done faces to face where they can appreciate that a bunch of high powered people are serious about pushing through an agenda. This is just not effectively done through email. 

Ideal Times for such meetings -Social Meetings-45-60mins, All Hands Meetings- 20mins, Briefing Meetings-10mins, Imp people meetings-20mins, Show of support meetings-45mins 

I've been recently trying a new strategy to keep meetings short which is to do meetings standing up. I will post my analysis on the effectiveness of this strategy once I have more experience with it. 

P.S. I have made some changes to my blog template. Wanted some feedback on how it is displaying in blog readers. Do let me know if you feel your reader is not displaying my posts in a reader friendly manner.

Life should be busy

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So I watched two people living their lives recently and they've inspired me to work harder. One is of course the Indian Film Star Shahrukh Khan who I've been following on twitter. He's either got a very good team around him or else it's inspiring to see him put in the effort to connect with his fans. I am seriously amazed that he spends time responding to queries, interacting with his fans and showing off his personal side. The tweets come in really late at night and so I imagine he must be a workaholic.

The other person who I noticed is Dr. Nozer Sheriar - our baby doctor. He's one of the well known baby doctors in Mumbai and I was very inspired to see that on a regular day he works till mid-night. A doctor's job as you all know is not like a regular desk job. He was seeing a patient every 15mins and I don't think a single patient went away with a feeling that the doctor did not give her the necessary time and attention. I remember thinking the same when visiting Dr. Milind Kirtane - a very renowned ENT specialist in Mumbai along with my dad. His appointment slots were of 15mins each and needed to be booked 15 days in advance. I'm don't know if it was a stroke of luck or providence but in a 15minute consultation he diagnosed and fixed an ailment that my dad has been battling for over 15 years with multiple specialists across the globe. These two Doctors and a lot of the other doctors must love their work in order to sacrifice their personal life, rest, relaxation etc. for it.

I am inspired to work longer hours and put in even more energy into meeting my professional goals having seen these people. Thanks Guys!!