Category Archives: Business Strategy

FLIPKART NEEDS SOME PATIENT, PERMANENT CAPITAL

The markdowns are flowing thick and fast for Flipkart. There’s a lot of noise out there painting a picture of doom and gloom. But should valuations cause so much consternation? Isn’t there a larger story waiting to be told? In the last few days I trawled through old reports, news stories and information available in the public domain to make sense of the proceedings. I also had the good fortune of catching up with Haresh Chawla, Partner at India Value Fund Advisors, and a keen observer of and commentator on the Indian e-commerce sector.

The nuance that most media reports seem to have missed out is that it is not a simple question of whether Flipkart will get future funding or not. We need to dig deeper, because Flipkart will get funded – there aren’t too many Indian e-commerce players at that scale. The real issues are: (1) the kind of investor that Flipkart needs and (2) how soon that can happen.

But first things first: what is a markdown?

There can be both a markup and a markdown. It is only a way of denoting the fair value of an asset or liability on your balance sheet. In other words, because market conditions change all the time, your books should present the truest picture possible. But it’s subjective and is further complicated by incomplete information or over-optimistic/over-pessimistic expectations.

Should we be bothered?

If you are wondering why, simply look at the markdown exercises and the implied valuation after that.

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Do you note that essentially none of them are in real agreement as to what the valuation of Flipkart should be? There is a huge deviation.

Now here is where a lot of people are running around either screaming doomsday or smirking on Twitter. In fact, some unnamed experts have been quoted as saying that if the valuation isn’t marked up soon, then Flipkart may have to accept a significantly lower valuation than its “preferred” $15 billion.

Let’s set the record straight. The figure $15 billion is obviously bigger than $5.5 billion, but to say that that is the “preferred” valuation would be wrong. It was what the market and investors expected based on the $10 billion of GMV projected by the company itself in June 2015. Mukesh Bansal, Head of Commerce, Flipkart, had told The Economic Times, “Flipkart will sell goods worth $10 billion during fiscal 2016, and nobody will be even half of that… There is not a shred of doubt based on all the market numbers we have today.” (You can read it here: https://goo.gl/FQKGy4 and here: https://goo.gl/a9UArZ)

According to Haresh, “It was expected and I have been saying it for some time. Flipkart announced that they would deliver a GMV of $10 billion and, clearly, on that expectation investors gave it a 1.5x multiple and valued it at $15 billion. But the company fell drastically short of its GMV target. The actual figure was only about $4 billion.”

In fact, it wasn’t only Flipkart that went wrong with its projection. Even the fund houses overestimated Flipkart’s GMV clout. To jog your memory – This Morgan Stanley report from early 2016 (Read that here: https://goo.gl/WWXLaa) said that in 2015 Flipkart, Snapdeal and Amazon together accounted for $13.8 billion in GMV or 83 percent of the market. That implied a market size of $16.6 billion. The report further said that Flipkart’s market share was 45 percent. That implied Flipkart’s GMV to be $7.5 billion – a gross overestimation, versus the $4 billion that Flipkart actually is said to have delivered.

Haresh pointed out one of his earlier peeves on the same issue, which he wrote about on Medium (Read it here: https://goo.gl/b1k7JW). At that time, he had noted, “Imagine when you extrapolate this error to the future. This has ended up muddying the waters, and misreporting the market share numbers.”

So, what happens next?

Let’s face it, valuations are a mix of many things – market environment, risk appetite, a fund manager’s own biases, the hot new trend, the fear of missing out, the multiples comparable companies are commanding, and of course, expected cash flows and margins. Of these, the last two are the most important and the most difficult to wrap your head around in an environment where you have to constantly burn money to stay in the game. So if an investor needs to justify why he/she is jumping onto the bandwagon he/she will constantly look at data that confirms his/her biases. Therefore, valuation is only a large headline figure; it’s not what decides your success.

Haresh concurred, “Currently, the world over, most of these companies are valued at 0.8-1.2x of GMV. Even with the markdown, Flipkart is still valued at the higher end of this range. But these valuation figures don’t reveal much. What matters is sustaining the business. The battle with Amazon will be fierce, but valuation has no relevance to Flipkart being among the top two in India.”

That’s the trick. Sustaining the business – according to data available in the public domain, while FY15-16 revenue grew 143 percent to about Rs 1,950 crore, expenses grew at an equally rapid clip of 128 percent from a much higher base. Expenses for FY15-16 were a little more than Rs 4,250 crore and losses more than doubled, to a shade over Rs 2,300 crore.

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An analyst at a VC fund that I spoke to, on condition of anonymity, pointed out that for every incremental Rs 100 of revenue, Flipkart spends Rs 200. He was also quick to point out that the losses seen in the public domain don’t add up to the “ostensibly” $2.5 billion (Rs 15,000 crore) that Flipkart is said to have lost or sunk into its business so far. Therefore, it would be safe to say that we don’t know what lies waiting in Flipkart’s balance sheet, which most people wouldn’t have seen.

But, enough said, ladies and gentlemen! This business is burning Rs 6.3 crore a day.

The management has been trying its best to cut its burn, focus on the right categories and rationalise headcount – though there have been many versions of exactly how many were let go during July 2016. (Read it here: https://goo.gl/XMXgJZ)

Haresh has a slightly different take. He feels Flipkart is doing a good job of it, given the tightrope it needs to walk. “Any drastic decisions to cut burn could result in a spiral down in marketshare making it even more vulnerable… The only option is to become lean and hold your fort at the same time – that would be the investors’ mandate and they seem to be doing a good job of it,” he said.

But, hey, existing investors have nothing to be worried about

It is unlikely that investors will lose money. The sum total of money that has been invested in Flipkart till date is about $3.4 billion. To that extent, as long as the valuation doesn’t drop below that level there is no reason to be concerned, because early investors would be protected by special rights like liquidity preference.

Haresh noted, “As far as the VCs go, they are unlikely to ‘lose’ money. Liquidation preferences protect them from any value destruction that may arise. But the wait for exits will be long. However, this protection may not be available to investors who may have entered secondary deals with founders or very early-stage investors at the higher valuations.”

Tying back to that magic $15-billion figure

So, here goes: The ‘$15 billion’ figure that people are talking about is not written in stone. It means that investors are taking a call that if Flipkart does exactly as well as they expect it to the maximum valuation they would give is $15 billion. It also means that they expect the future to be brighter than that $15-billion figure (because if someone were to invest at $15 billion valuation, they would expect much more than that in return, right?).

But, in the same breath, if the call on future valuation is not as bullish, there is nothing to stop a potential investor from adjusting it downward.

For example, if Flipkart’s GMV is $4 billion and one were to attribute a generous 1.5x multiple, then the valuation would be $6 billion. Sure, it would find buyers at that valuation, but it is unlikely that any of the previous investors would take any hit depending on the rights agreed upon during earlier funding rounds.

Therefore, it really is a question of what Flipkart needs right now

1) A control on costs – this is a given, so let’s park this for now.

2) The right kind of investor – strategic and very long term – someone whose investment horizon is a multiple of the 5-7-year typical VC horizon. That’s because Flipkart needs to take on the strategic money that Amazon has. Consider this: Amazon generated free cash flow (Amazon Annual Report: https://goo.gl/sYUIoz) of $7.3 billion for the year ended 2015 (that in itself is a multiple of Flipkart’s GMV). It can just dig in its heels in India, a market it can’t afford to lose.

Haresh said, “While they have taken steps to cut the burn, the biggest issue for Flipkart is who will buy? The company needs permanent capital on its balance sheet to take on Amazon, which has deep pockets and possibly infinite patience to win in India. When will this happen, on what terms and who it will be remains to be seen, because any investor with permanent capital, the likes of Walmart, Alibaba or JD.com, will not be interested in a minority shareholding – they will seek a path to control.”

But will Flipkart’s existing investors be willing to leave a clear path to control? They just might, because there’s definitely more to gain that way.

In a way Tiger bringing back Kalyan Krishnamurthy in a key role at Flipkart is evidence that the investors had a crisis of confidence in the team and hence are seeking to put the house in order. This allows them an opportunity to seek strategic sale with transfer of control. Remember, no VC, Tiger included, will be in it forever – they all have to provide their investors with an exit. (Also read: Saving Private Flipkart https://goo.gl/AIzsm6)

In the end, this series of markdowns has and will continue to cause a few flutters in the market, and may also affect the fundraising plans of smaller players. But the big boys may get by because there are enough strategic global investors interested in doing deals; and if they can get in after a series of markdowns, why not?

There’s huge merit in the space Flipkart occupies. We have barely scratched the surface of e-commerce in India. Flipkart is definitely India’s biggest calling card in the sector; it has inspired thousands of entrepreneurs and brought to the forefront a new way of doing business. But, Flipkart, on its part, will have to find ways to make its way deep inside customers’ wallets by constantly cross-selling and up-selling, while at the same time tightening its own belt.

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Rethinking Content Distribution

This article first appeared on YourStory.com

Almost five years ago, in a conversation with the CEO of a disruptive division of India’s largest media house, I had opined that Facebook would be the primary media vehicle, irrespective of how we interact with it. What I had not accounted for was how “primary” it would become.

While content distribution and discovery through the social network is now commonplace, I feel that the next growth platform will be instant messenger (IM) apps like WhatsApp, Messenger, WeChat, Viber, etc. As we’ll see later in this piece, all of them are giving the established social platforms a run for their money. Well, not exactly. Facebook owns two of them and hence, gets away with straddling the best of both worlds.

Coming back to the topic, IM should be the place for any content producer to start distributing heavily. But even as small businesses have embraced WhatsApp and Messenger, why aren’t the content guys shifting to messaging platforms as quickly?

There are some green shoots — a few niche information/storytelling content startups who are running very active messenger strategies — in areas of youth entertainment, citizen journalism, and rural reporting. There are those who have started using Messenger through chatbots to deliver content. They are all reaping the benefits of audience engagement, brand recall, and actually being where the consumer needs them — in their hands!

A few things to bear in mind

One, content has to be really sharable for it to have a huge multiplicative impact — it can’t be vanilla news or information. It has to be something that people are proud of sharing, something that will show them as being ahead of their peers or something that will establish them as the cool people to hang with.

Two, getting people to sign up to the group itself requires some effort — there’s more lethargy in signing up to the WhatsApp group of a brand versus one that has your college friends in it. But if number one promises value, creating communities, either large multi-dimensional or various smaller special interest ones, should not be difficult.

To execute this successfully, content heads and editors need to rethink the format in which they present content. Simple long text stories interspersed with some images are no longer standard. Content has to be created in byte sizes — a paragraph here, an infographic there, a short video thrown in, a sound clip attached — all of which come together to tell the whole story and yet are easily pushed and shared on messaging platforms.

1Three, is lack of measurability beyond the initial group — you don’t know how many of your subscribers are sharing the content further with their friends and how many of those friends share it and so on. The same goes for conversions — you can gauge whether it’s a smartphone that the content request is coming from, but you can’t tell whether it came via WhatsApp.

But, I believe if number one promises value, number two will be easier and when those two roll together, you might be happy with only a rough estimate of number three (at least until some mechanism is put in place).

However, the big boys feel uncomfortable when they can’t measure something well. That is why we don’t see the needle moving on the use of IMs. Maybe they will sit up and take notice as more and more new startups create greater engagement and much more value through communities and two-way content creation on messaging groups.

The audience is already in place

Desktops are passé; smartphones are commonplace; virtual reality, while promising, is still taking baby steps. Of the others— glasses didn’t exactly offer a smooth experience, and watches are not deemed to be very practical.

According to a BI Intelligence report citing a Salesforce.com study, smartphone activities like accessing mails, text messaging, social networking, and getting news alerts account for 80 percent of all activities on an average.

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It would be interesting to note that even though social networking is huge, and a lot of content discovery is happening across Facebook, YouTube, Instagram, and Twitter, among others, the user base for messaging is also huge. WhatsApp alone crossed more than a billion monthly active users in February 2016, while Messenger did that at the end of June. There are others, too, that are no pushovers; developed by China’s Tencent, WeChat has crossed 800 million approximately and Rakuten’s Israeli acquisition, Viber, is snapping at its heels with another 780-odd million (all data from Statista.com). Snapchat, though smaller, deserves as honourable mention with its 150 million daily active users surpassing that of Twitter (source: Bloomberg.com).

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As you can see, Facebook controls a large swathe of media real estate — it owns WhatsApp, Messenger, and Instagram. Add to that the fact that almost all of the use case is in a smartphone environment (FB had 1.57 billion MAUs on mobile, as per the company’s quarterly filings), and you have a potent winning platform. Because it is ubiquitous, very well spread across the world, and boasts high usage patterns, it makes for the ideal distribution platform.

Also, it seems that the generation of users that most people are interested in, can’t seem to live without their smartphones and messaging apps.

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Where does India fit in?

Inexpensive smartphones and much better broadband infrastructure have enabled a culture of being forever online. I do not define being online as overtly accessing a website or logging on to a social media platform. I define it as being constantly connected through the muted pings of IM apps and email.

This is adding millions of low-end android users who require apps that are small and run light. Guess which the two most popular ones are? Facebook and WhatsApp.

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In fact, by 2017, India is expected to have more than 350 million smartphones. Consumers have shown increased preference towards short-form content, with the average length of video viewed in India being less than 20 minutes (Source: EY). The short-form and snackable content will drive growth through storytelling that is optimised from a story point of view, and not by length.

In fact, this is how India is consuming content:

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In conclusion

It is quite logical to expect that the ubiquity of smartphone and IM distribution will enable a lot of individual content consumption. This will lead to a lot of new opportunities for content creators who will need to think through the utility of their content from a platform, device, and time-of-use perspective. Communities, whether segregated by demographics or special interests, would also yield much better monetisation opportunities, but more on this later.

Disclaimer: “At the time of writing, Google’s messaging app Allo hadn’t been launched and was therefore not considered in this analysis.”

Investing in Media? Junk Traditional Models

The business of media, especially news media, is a curious one. You wield a lot of power, but often the economics of running the business is tricky. It is a business that delivers above-normal returns to the top 2-3 players, and practically nothing to the rest.

The reason is that success is dependent on the quality/quantity of content and the TG reached – each feeding off the other to form a positive feedback loop – something that lesser players will not be able to replicate. But, on both ends, you need to pump in a lot of money and keep at it.

Unlike a content aggregation and curation business, which may be more of a play on content marketing and tech, core content creation is extremely human-skill-intensive.  Therefore, typical success parameters like revenue, efficiency ratios, margins, active users, returns, exit opportunities, etc. will all come to naught if one doesn’t add Editorial Talent & Patience to the mixture – These two require investment and conviction.

A content-heavy media business is not amenable to the regular cookie cutter method of investing/business modelling. There are three essential components – content creation (input), content discovery & engagement (output).

Creation

Let’s face it quality news/informative content is inherently not exponentially scalable, regardless of the technology that you might deploy. This is because one requires human skills that can identify trends, smell out stories, contextualize them and produce compelling content (text, videos, pictures, infographics, etc.). This means you need to seriously invest in good talent and then give them time. Every time you wish to ramp up quantity of content, you need invest in more talent, and so on and so forth.

Yes, there’s user generated content & citizen journalism, but if you are a serious player you would mandate serious fact-checking and editing. That implies equally dedicated editorial process/teams. Curation is an option but there’s no long term benefit, as you would want to own the content and the associated value chain.

Discovery/Distribution

The next leg, discovery of content, is perhaps where one could apply a traditional business prism of marketing and audience building. Discovery is dominated by platforms like Facebook, WhatsApp, YouTube, Twitter, Snapchat, etc. and stories are being discovered by contextual shares.

Therefore, you need to be (1) creative; (2) iterative; (3) able to crunch data; (4) repurpose content; and (5) most importantly, prepared to spend money. Given constant algorithmic tweaks by discovery platforms like Facebook, pumping up organic reach is not easy and paid reach is getting expensive. Hence, one needs adequate funding and a healthy disregard for instant gratification.

Moreover, you need to focus on where the trend is, where your TG hangs out, how the content fits in that spectrum, and what is it that will drive discovery into engagement. Once again, it boils down to investing in talent that can straddle content creation and community building, and empowering that talent to do so every day.

Engagement

Home pages are no longer the entry point, which means that you need to figure out more meaningful UI/UX across your entire product. It also means being able to create an affinity with your content in the time it takes to scroll from one time to the other on the feed of any of the discovery platforms.

Need I mention it again that it boils down to the right talent? Content businesses need leaders & teams that can integrate tech and content in a way that they are able to tell a story and distribute it across several channels for maximum impact. And the talent that can do that is scarce.

Ultimately, it all boils down to a founder’s/investor’s commitment to the cause and her stamina to run the course every day of her life. The shelf life of news/informative content is low and one cannot afford to take their eyes off the meter even for a day.

The question is how does one sustain such a business? Constant fund raising is not the solution. It calls for looking for revenue sources outside of regular advertising & branded content. Can we put the bad genie of free content back in the bottle? Can our wish for patient capital be fulfilled?

Pay For Content Or Watch Ads

AdvertorialAdvertorials – not everyone likes them. No. Not even if you call it branded content. But then are these “evil” and “misleading”? I don’t think so. As long as the intent is clearly mentioned in the header (the image alongside prominently shows that this is an “advertorial”) and the publication does not pass it off as journalism.

Yes it is an eye sore and maybe it treads on the thin line between editorial sanctity and commercialism, and one could argue that since the publication mentioned has a separate supplement for advertorials, why not place it there?

The reason is the tussle between revenue yield (that’s much, much higher on page 1), cost of publication and brand visibility.

But why do brands and publications do it? One is that mainstream newspapers are still growing in India and therefore the reach is unparalleled. Second, just like internet and radio you can target campaigns either for national dissemination or limit them to a geography Vs. television where there is a lot of leakage. Third, advertorials – the well-executed & well-written ones – work better than mere ads. This is because they are more informative and co-opt the readers mind rather than push a message. Fourth, if the space can be monetized, why not? After all, somebody’s got to pay the bills.

Let’s also take a look at some other factors. India is a very price sensitive market. Even now, most people would rather not pay for content (it’s been an uphill battle for TV & internet). So, if newspapers X or Y were to suddenly charge a realistic Rs 15 for the daily paper (leave alone the Sunday glossies), the elasticity would ensure that demand plummets overnight. In that scenario, the paper that prices lower would capture significant market share.

Hence, every publication is deeply discounted on subscription, and looks at selling ads all over to subsidise that cost. The same goes for TV news. When you are being armed with information that can help you execute trades worth millions, why should your TV news channel fees be a paltry Rs 11 or 12 per month? (check this TRAI pay channel a-la-carte rates)

So why shouldn’t a publication or channel not seek to monetize their inventory innovatively? After all, they are all for profit businesses – their business being to bring you information.

heatmapIn the online world, this transforms itself into what is called native ads, which nest in your regular feed, but are marked distinctively as being “advertorials” or “sponsored”. This is because however fantastic your banner ads or flash animations, reader studies have shown that eyeballs rarely register those ads. Look at the heat-map alongside showing banner blindness.

But why do fewer people raise a stink over these native ads? Maybe it is because they are more contextualised and individualised to a person’s taste and hence, one doesn’t deem it to be too much of interference. Also, creating multiple access parameters is easier online. Those who pay are not shown ads, those who don’t pay have to bear the ads.

But the bottomline is those who will not pay a fee for content will have to pay the content creators’ bills by watching ads.

Media Industry and Digital Business Models: HBR

It has been a great 20 years for U.S. media innovators, with hundreds of billions of dollars created by companies that are helping democratize content production and distribution while developing new ways to connect advertisers and customers. Google and its disruptive advertising model leads the pack with a $370 billion market capitalization, but consider also companies like Facebook ($225 billion), LinkedIn ($25 billion), Twitter ($24 billion), TripAdvisor ($11 billion), and Yelp ($3 billion).

Of course, for most traditional publishing incumbents, “great” is not the word that springs to mind.

This article has appeared on Harvard Business Review. Read more HERE

Not Too Stale, Is It?

About nine months ago, July 2014, within the span of a week, both Amazon India and Flipkart got in billion-dollar-plus commitments.

Strategically, they would both have the same agenda… In the interest of scale and repeat clientele, both would have to spread their wings beyond discretionary purchases and into the most habit-forming & repeat purchase zone of shoppers a.k.a. groceries (see my write-up on how online-groceries are changing consumer behavior HERE )

Both Amazon and Flipkart would also have to follow suit, and it seemed that Flipkart would perhaps be the more aggressive one given its need to ringfence itself against a much bigger giant.

Hence, looking at that situation and trying to extrapolate how it would pan out, I had made a key suggestion on July 30th, 2014, to sell / partially sell one of our portfolio companies to Flipkart. The portfolio company was at the time vying for leadership in Mumbai’s online groceries space (now it has expanded much more).

It could have been a strategic opportunity, where the acquirer would have been an established e-commerce player buying into an online grocery start-up that had refined its act. It would have given Flipkart immediate entry into the grocery market.

But then, one can never time these things to perfection. It’s a trade-off between waiting & nurturing an investment in hope of higher value or taking an exit route when it comes. Maybe it’s still not too late. Consolidation is key in an industry where large scale sourcing, large scale operations & large scope of customer choice are big competitive advantages. Who knows?

Only New; Not New & Improved

This is a short post – largely motivated by some questions that we are asking ourselves. How do we survive in an established market which already has so many service competitors? Is our strategy wrong or are we just not trying hard enough. Maybe we should figure out what clients want and then carve out a niche for ourselves, or maybe we should only go after a particular type of client? Or maybe we can invest a bit of time and effort to create long-lasting insights that open our clients’ eyes to the possibilities of tomorrow? Yes. That last one sounds like a plan. At least we won’t be creating a host of “me-too” offerings.

It’s important that we refrain from telling our customers what they need. In fact, we should open their eyes to things that they might need in the future. Do they know what could potentially disrupt their comfortable lives? Can we become their partner in future-proofing? At the very least, we would be doing a favour to both ourselves and our clients by creating new categories, instead of fighting for market share.

Market research is good. It spouts a lot of data, is exciting for the quants, but it comes with a bias. Customer feedback will mostly be about things that customers know about and hence, all their preferences & non-preferences will be constrained by their knowledge of needs. If one were to ask the average media consumer of the ’70s and ’80s, not many would have asked for the internet or a smartphone. Or maybe 150 years ago people would have voted for faster horse-carriages instead of a car.

Similarly brand communications also need to undergo a more forward looking change. Instead of increasing their messaging frequencies, brands should work to create a higher purpose of existence. Technology is on our side. There is great fragmentation of media. Brands can really get close to customers and create tailored conversations. Brands can afford to wean themselves from preachy/informing advertising and give the stakeholders something to talk about, engage them, co-opt them, titillate them and be their friend.

What’s Your Story? Branding For Start-ups

At the heart of all brand-building and marketing lies storytelling. But haven’t we all learned that product is the most critical of all Ps? Yes, that remains true. However, a super product with a poor storyline is as unlikely to cut much ice as is a super storyline with a poor product. Innovation in both is important. Especially when starting out and you don’t have huge marketing budgets, and are spending most of your time fund-raising, it’s important that you develop the story very carefully.

Here are some of my thoughts. Please feel free to add to these and/or suggest modifications, or some new viewpoint.

Develop A Story, Own The Conversation

Harry’s is a shaving brand that’s shaking up a market, which has rarely seen a leader past Gillette. That’s not a mean achievement, given that this industry requires constant product innovation, expensive R&D, high volume advertising.

For Harry’s it has been a case of good storytelling. They focused on giving really awesome looking products, with a strong core of message – creative, affordable & equally efficient. This is especially true when the goal is to sell and experience, whether that’s shaving or selling groceries. And when, the story is strong it reflects in every aspect of your value chain – factory shop floor to customer’s shelf.

The customer should feel compelled to talk about it. Therefore, it might be instructive to create engagement that creates conversations. These engagements can be as simple – for example: in the context of shaving, style competitions or creating a National Shaving Day after ‘Movember’. (Harry’s does the latter, but also goes the slightly expensive route of having its own salons, creating a magazine, etc)

Innovate, Innovate, Innovate

As we said in the beginning, the story should reflect in every aspect. The same should most importantly flow into the product or the service that your customer will be interacting with and taking home or coming back for more.

So if your story is creating a hub where musicians around the word can collaborate, then your entire product team’s innovation should be focused on the technology that will create the low latency, making available the easiest modes of recording, creating a pipeline that will compress and decompress data in sync with available bandwidth, etc.

Create your own space for growth. Do good, good will happen to you – take the case of Warby Parker which distributes free glasses to those in need, apart from selling quality, designer eyewear at affordable prices. It gets them huge brand equity, because there is a very unique story to tell – one that surpasses all costs of distributing those free glasses. It creates customer conversations, it creates brand innovation and it definitely creates revenue.

Create a product/service that is truly needed; not just one that will try to chase share in an already existent market.

Don’t Feel Shy of Highlighting Your Expertise

So you feel you have stumbled upon something new that the market needs? Good for you. But why is yours the only team that can do it? Maybe you might have some kickass coders, some brilliant marketers, a rainmaker from heaven, the best guy handling finances and the best VCs backing you.

So once again, please do tell your story. Don’t feel shy of telling the world how great you are. It’s a mistake that a lot of people make – they equate marketing of their individual expertise as boasting. It’s not.

Share Insights, Help People Decide

We are all here to buy and sell services/products and we all want to make informed decisions. Whether you are in the field of mobile technology or food, share your knowledge. Tell people what’s happening around the world, what are the latest improvements in technology, what are the latest trends in menu designs, why X is better than Y, or why customers should opt for Z.

Be the thought leader. Let your potential customers feel comfortable in the knowledge that you know your stuff. Let them feel sure that they are going to be investing in the right product/service.

This is not just about maintaining blogs, tweeting, or having an active Facebook page. Try to be out there at conferences, or if no one invites you, create mini audience-connect sessions of your own at the nearby café.

Ultimately, it’s about positioning your expertise in as helpful a way as possible.

Creative Execution – Flexible & Shareable

Creatively, you do need to go the entire path. The level of creative execution depends from sector to sector and story to story. Be careful about the visual identity and brand language that permeates all stages.

Communicate a single end-to-end experience. It’s very important to establish the mood in your creative execution that fits exactly the story you are trying to tell. Not any more, not any less.

Also, while crafting the creative strategy – think about the future and be careful while creating the story and positioning. You might want to add certain verticals to your business at a later date. In that case, the brand name that you choose, the logo that is designed and the communication that is drafted must leave enough leeway for the audience to connect with even your extended business line at a later date.

Needless to say, plan upfront with your agency, but keep the freedom to do something different. An elaborate storyboard might lock you into something, even if the final product is not in the right direction. That doesn’t mean you micro-manage the creative agency – some rough sketches before shoots work best but after that let their brilliance take over.

Creative content generated must be inspirational, aspirational and easily shareable. The last one is very important these days. Even your website must evoke the same emotions as your story and rest of the creative.

Lastly, of course, plan your campaign release well – media, timing, regions, etc.

E-Groceries: Changing Consumer Behaviour

I recently read an article, which said, “Online grocery stores require large investments, deeper technology and complex supply chain. Hence it does not pose a wide start-up opportunity.” Since, I have had the opportunity of working very closely with some companies in this space, it set me thinking. To start with I don’t agree that this business does not pose a wide start-up opportunity. Same as in any emerging business, there are various models at work, which will get fine-tuned as time goes. But at the heart of it is achieving a change in consumer behaviour which will contribute to scale.

Yes, you need to have a strong technology backbone in order to process ordering, picking, packing & delivering, but that is not insurmountable. In many ways, technology has today become commoditized – in the sense that there are plenty of solutions that you can buy and tweak as per your requirements, or if you know a good techie or two, you can get it done on your own. And, if you are far-sighted enough you would have spent upfront on a technology that is scalable and hence requires minimal repeat spends as you grow.

At the heart of any business working or growing profitably is scale. Online grocery is no exception. But executing scale, while holding inventory, can be a stress on capital expenses. Imagine having to keep on adding warehouses at each location. The asset light model employs inventory management that procures stuff only when they have been ordered. In other words: Just-In-Time. Stock a tiny fraction of the fastest moving SKUs and pick from large wholesalers only what your current lot of orders requires. The same goes for perishables. You can instantly cut out not just warehouse cost, but also cost of large scale industrial-level air conditioning.

Supply chain is also something that is slightly more complicated in the case of an asset light model, compared to an inventory-based or offline model. But, there are ways to make it work right and it all boils down to scale. So even though you might not want to take the capital costs of the delivery infrastructure on your own books, you can sweat each inbound & outbound vehicle that much more as your scale grows. In fact, a mobile hub and spoke model is something that is being experimented with. You don’t really need to have tie-ups with offline store to be efficient. Yes, some big players are entering the market with that model, but they will have to work very hard to maintain consistent service levels across the entire network of offline stores.

While one would have to agree that most of the online grocery businesses have been city specific, these are only early days. I have no doubt that templates being set in one city are highly replicable in the next. Also, apart from the traditional arguments of overcoming inconvenience, a few of the biggest advantages of online grocery retailing are (1) Unlimited shelf space, leading to thousands of SKUs being available at no large real estate cost; (2) Ability to dynamically upsell and/or generate offers based on user profiles & past purchases; and (3) Ability to offer deliveries at any time of the day, as per the consumers’ preference (with so many double income households, late-night deliveries are now very prevalent). Yes, you have to be patient with any business in the beginning. This is a business which is disrupting consumer behaviour. In its current avatar, a lot of regular purchasers will obviously be the more savvy lot. But we’ve seen from other ecommerce models, that it didn’t take long for others to catch on.

Changing consumer behaviour was never easy, but it has always yielded good returns. Therefore, upfront costs on marketing & brand building are perhaps going to be much higher in the case of these organizations. But behaviour once changed, is tough to go back on. And when you combine that with a repeat-purchase habit like grocery shopping, it would only yield ever increasing volumes. Owning the consumer also leads to many other related revenue streams.

It’s still early days for the space. As in every emerging sector, not everyone might crack the model. But those who do would not only have made a lot of money for their investors, they would have created a completely new market. And that, to me, makes a suitable case for a start-up opportunity.

Content Monetization

Monetizing content is more of an art rather than a science. That’s because content appeals to the cognitive senses of a person rather than logical and analytical. I’m sure there is an equally competent counter-view to this. One might say that entertainment content appeals to softer senses and factual content to the harder senses. But my submission is that content – whether fiction of non-fiction – is consumed from the prism of being exposed to new ideas, thoughts, being entertained and being able to absorb a fresh perspective that will enable the person to transact his/her life with peers.

So getting back to the monetization bit – Engagement and making a difference to people’s lives get you quality viewers and the same also encourages sticky content. So even though a channel may log huge GRPs week-in week-out and have a hoard of advertisers knocking on its doors, would it be better to have sharper segmentation and programming that’s amenable to engagement (ATL/BTL/Online/Offline) in order to have a more efficient spend-GRP ratio. Advertisers go back happy having reached audiences in a more meaningful way, audiences go back more enriched having been reached by content & ads in less superficial ways.

The questions to ask while creating such a marketing/positioning strategy are – What can bring about a change in consumption pattern – not only from the point of viewing/interacting with the channel, but also in the viewer’s own life choices. What can expand the advertiser pie beyond the traditional ones? Is it a wise idea to have to the same content across a spectrum of audiences on-air, online and offline?

Each content re-purposing can act as a marketing statement and each content re-purposing can help an advertiser reach a new set of audience. The sum of the parts of really engaged audiences will be larger and the probability of them buying your advertisers’ products will also be higher.

For instance, are your viewers switching channels during ad-breaks? Are they recording the programming and skipping the ads? Are they ignoring the banner ads? Yes? Can you take away the choice from them? Yes! How about digital product placements as per the nature of content re-purposing? So if your soap has a protagonist sipping a glass of water in its original version, a digital edit for on-air purpose can have him sipping a glass of Coke, a re-purposed clip on your Facebook feed can have him drinking Sprite or Red Bull… The choice is limitless and the technology is available.

This is very different from traditional product placements in that editors can drop whatever they like, wherever they like, into programmes or films during post-production.

Digital placement firm MirriAd is cashing in on this trend. To quote Mark Popkiewicz in a recent BBC article (full details here): “These are not just logos, they can be video, signage and products, even cars… When brands are integrated they are placed in such a way so it is clear to the audience that they were always there and are part of the scene. For example beverages are placed as open cans or bottles with glasses containing the beverage alongside – that way they look like they are being consumed… The technology is capable of placing or replacing moving objects and even replacing products being handled by actors like mobile phones… Early trials show almost double the engagements of traditional campaigns… This is because when a consumer watches a show they are not defensive against advertising as they might be with advertising online or commercials on TV – they are in receive mode and are not blocking.”

This is just one of the strategies that one can use. Similarly, there are umpteen things that can be done to increase engagement offline, serve up content at places where your target audience socialize, constantly contextualize content as per changing trends, etc. What are your views? Eager to hear them!