Innovation Series #8: Business Model Innovation

16 02 2009

Everyone and anyone – be it an Entrepreneur, Employee or Head of the Organization… today, every one is focusing on Innovation and how to go up the value chain. This post of mine is inspired by a presentation I saw (I sincerely apologize as I am not able to retrace the presentation) on how small thoughts can change the way we can package a service.

Project Management is one key focus area which most of the start-up community ignores when they are beginning. There is no time to define the Organization Project Life cycle. I do agree and am with you on this. However, once we start looking into this area, I assure you that your innovation will definitely have a better output. 

You have got a great idea! and you confirmed that the world has been waiting for your innovation to come into market 🙂 That’s great and good news, however, before you put in your heart and soul, you need to look into the viability of your solution, how much would it cost to make your dream a reality, time to market and end of the day the returns which you are going to get. 

Project Viability

Well, now you are at the first step and desperately waiting for your solution/product to come into the market. Before you begin, the best practice is to get inputs from your family and friends (assuming that they are your customers) if they are going to use your innovation in their daily lives. It makes a lot of sense with family and friends because they critic it very well and give you a honest feedback. If you are not satisfied with their feedback, go out into the market and speak to potential customers take their feedback. If 5 out of 10 acknowledge you for your idea, then you can dive deep and see what else they want / do not want. Accordingly shape up your idea so that you increase the chances of the 5 to definitely buy your innovation. 

Work on the Costing

As you are working towards taking feedback for your innovation, also ask your ‘potential customers’ how much they are willing to spend if a product like yours is available in the market. This is to understand/analyze/assess how your idea is accepted into the system. With this base information, you can reverse-engineer your costing model. Instead of you fixing the price, go with the price what people are willing to spend. This makes sense for you on the long run. It is better to sell 100 numbers at Re.1, rather than selling 10 numbers at Rs.10. Of course, this entirely depends on who are your target customers and what problem your solution would solve. 

Time to Market

The next aspect which you need to consider is the “Time to Market”. You are starting from the scratch and you definitely need to have enough funds and plan to take your innovation into market. With this analysis in place, you are very sure of how your project will shape up and also gives you the flexibility of time to build a quality solution. 

Returns

Well, now you have potential customers feedback, cost of your innovation and time to market. This gives you a clear picture of how things should be running for you. These become your milestones and ensure you are in track all the time, when ever you are missing your internal deadlines. 

During your journey in giving shape to your innovation, you will also need to keep working on how you are going to structure your Market entry and sales. How are you going to distribute your solution? (Internet, wholesale, retail etc). Identifying how your innovation is going to reach its customer is very important. Vague aspects like I will find someone to stock my product, will be available for download from the website etc are all very vague answers. Remember, if your innovation does not reach the right customer, at the right time and in the right way, then all your efforts are totally waste. 

What are your revenue streams? How are the customers going to pay? If yours is a wholesale/retail innovation, do you have the commission structure in place? Have you thought about the branding and positioning? We usually miss these small things. Right?

Last but not the least, ensure you have required licenses and approvals from the local authorities to ensure that these things do not delay your innovation entry to the market. The customer cannot wait and even you too… 🙂

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HeadStart – Compute 2009

14 12 2008

HeadStart has been our annual event for showcasing Startup Talents in the country. We started organizing the annual event since 2008, along with ACM (Association for Computing Machinery) Bangalore Chapter.

Why HeadStart and ACM?

HeadStart is a community of Entrepreneurs, Investors, Industry Professionals and Evangelists. We came together to contribute back to the community which has brought us to this level and given us lives.

ACM is a focused group which concentrates on future of technology and how it fits into today’s world.

As an Entrepreneur, it is very important for us to understand the Business Model, writing the Business Plan, speaking to Venture Capitalists and Angel Investors, bringing the product/service to the end user, legalities in building your organization, employee management and last but not the least – the future of your innovation.

You have a cutting edge idea and you are excited about it. You speak to various stakeholders and lo! you idea has hit everyone. What next? You are starting up your baby. That’s great news. One important and key aspect you need to consider is what is the future? Today, we see many Insurance companies advertising –For your retirement solutions and your child educational / child future plans, do contact us. In the same way, you need to understand the future of technology to ensure safety and security to your baby (your enterprise) and yourself. We feel safe when we have life insurance and few plans for our children, but we ignore our tomorrow.

Yesterday, I met an aspiring entrepreneur and he invited me to be his Devil’s advocate (I am not going into details of his idea or our conversation with due respects to him). He shared his idea with me and I honestly did not see a tomorrow in that. I did not see a strong bonding of the idea with the stakeholders. But he is passionate. Passionate about the idea and his tomorrow. I am sure he would succeed in what he is doing, but definitely few of my questions have kept his bells ringing.

During HeadStart – Compute 2008, we had two eminent personalities from GE to speak on the future of Database. The two scientists shared their research information on how the future of Database would change. This is what is needed for an Entrepreneur.

A classic example of not looking into the future is the Y2K. Many organizations realized and started working on this issue a bit late in the 90’s. What if these organizations had the guidance to think about this earlier during their startup stage? Things would have been different. If everyone took the necessary precaution, I am sure there would not have been many people who would have got job’s in the west during late 90’s.

HeadStart and Compute are dedicated to create the perfect ecosystem for Entrepreneurs. If you recollect the Project Triangle, then it is very easy to relate to what we do. We do exactly the same – Ensuring for a healthy startup focusing on the key parameters – Technology, Capital and Eco-System.

HS Model

Be there on the January 09-10, 2009 and participate to help create the ecosystem for Startup’s.





Innovation Series #7: Innovation Gap – Part 2

8 12 2008

I wrote about how the “Auto-Rickshaw” saw stagnant innovation in the last two decades of playing active role in commuting across the country. In this post, I will be short and sweet on my observations in mobile space. 

I am fortunate to be part of HeadStart, a not-for-profit organization working towards building entrepreneurial eco-system in India. We have been active more close to one-and-half years and during 2008, I interacted with many entrepreneurs and budding entrepreneurs. 

Quite a few of the entrepreneurs and wanna-be entrepreneurs I met are into mobile space and working on one feature or the other. Many are quite optimistic of the solutions they provide and how the end-user can benefit by their innovation. Even the potential investors are very active in mobile space. 

Well, being an active GPRS user, I am happy to try various applications and how friendly they are to me. I love the BTIS map on my mobile and the Google search tool bar which really helps to me quickly search for what I want. There are a whole range of mobile products which come in handy too. Fring is one application which is useful for people who which to be connected to friends all the time and Twitter has made its mark. 

There are other useful applications being developed too. Take a look at Numo, a mobile platform for BulkSMS and SMS Reminders for key aspects of life (Health, Pet Health etc). 

I do not have a list off my finger-tips to share with you the other innovative ideas, but would like to focus on a simple case study and Destructive Innovation coming from a major player in search – Google.

Population of Bangalore is around 62 Lakhs (6.2 Million). For benefit of this illustration, let us consider that 100% of the population carries a mobile. In the 100%, let us assume that 50% (3.1 Million)use GPRS service. In the 50% user base of GPRS users, how many actually take time to search for a particular service / product in the area they are currently located? I am not under-estimating, but let us assume that around 50% of the 50% GPRS users use the service, which brings the number close to 1.5 Million (1,500,000). This is a classic example of the Bottom of the Pyramid concept. We are looking at the top of the pyramid user base and estimating the idea to be changing the way we live. What we need to remember here is the middle and bottom of the pyramid users who are not even knowing about the service. So, the target population for a value added service on mobile (with GPRS account) is very less. 

Google, on the contrary came up with an innovative solution – Voice Search. This search is already launched in Hyderabad, India. We have other search companies like – Just-Dial etc, and differentiating the search is up to you, as a user. Now, this is what I call Destructive Innovation. Just look at the outreach for this value added service – it is 100% of the users. Added to the service, the number users have to call is a toll free number too. In simple words, without spending a single penny, any mobile user can use this service. How different! 

Innovation is just not about an idea reaching the end user, but how well it dissolves in the DNA of the system is what need to be identified.





Interesting OpenSource Sites

16 11 2008

Over the period of time, organizations have evolved and changed the way they played the game. Once upon a time, organizations were masters in what they produced and most of the time played their cards well. With the growth of Internet, organizations have not only capitalized the advantages, but also working day and night to grow along with their competition.

One fine day, Sony and BMG, the leading music company woke up just to see how MP3 (a particular compression technology for music tracks) shook the roots of their empires. They knew all about the technology, but were over confident that their homes were the safest places and over-looked how the new technology was building its strength under their own homes. When they realized, they cried foul, but it was too late.

IBM was struggling with its server software, which was not a huge success in the then market. Intelligently, it was following the success of Linux and Apache, the open source Web server software. IBM did not give up on any of its hopes and understood the rules of the “Open Source” game. It quickly acted and came into an agreement with Apache and soon, IBM’s server hardware was rolling out with Apache running on Linux. IBM has dedicated teams that Contribute to Linux and Apache. An intelligent move that only bettered IBM’s market place rather than hampering it.

When the concept of Open Source initially came out, many organizations did not pay serious attention. How can people around the world write software when it is not controlled or checked by anyone?  This is an Interesting question, which cannot be answered in a line or two.

Over the series of my posts, we will discuss and share ideas on how Open Source will be the major contributor to tomorrow’s world.

Let me begin by listing few web organizations, which are built around interesting and innovative ideas.

Taking IT Global – Taking IT Global is a not-for-profit organization bringing people together to share and work on projects that are beneficial to the world. The idea revolves around people in the community listing their ideas and projects and community members come together to support and work on the projects.

SpikeSource – You have been using open source software. The key element is that the code changes every minute and new functionality keeps on getting added. How can you manage these changes? Spike Source is an open-source source code integrator. This integrator runs periodically and runs through various open source code, test and integrate the same to your base code. Sounds interesting? Try it out?

43Things – A Social Networking site with a difference. List your professional / personal goals, search for people with similar aspirations and work together. Also, you can keep updating your goals with the progress and get encouragement from your peer members.

InnoCentive – The most interesting site I came across. This is a web based innovation center. Organizations / people list their problem for which they are looking for solution and if you are a master in the subject, feel free to solve the problem. There are many chances you are paid if you provide the most innovative solution and also, you are a celeb 🙂 

NineSigma, InnovationXChange Network, Eureka Medical, YourEncore and Innovation Relay Centers are quite similar to InnoCentive. 

I really like the TakingITGlobal and Innocentive. Over the period of time, I will deep dive into OpenSource in various fields concentrating on HealthCare and Social Innovations





Startup Saturday 1/2/3 – 2008

14 04 2008

After a long time, I am back in action with my blogging. However, I am back with some real good information which could definitely help you if you are looking at understanding and being part of Entrepreneurship eco-system in India, especially , in Bangalore.

As you are already aware of KickStart, our initiative to support Entrepreneurship and its activities, I will not dig deep into them; but would highlight our new activity – Startup Saturday.

SS

Our main motive behind this activity, is to provide a platform for entrepreneurs and entrepreneur wanna-be’s to come together and discuss various aspects of entrepreneurship. I know I am being a bit vague here, but I can assure you of what I wrote. We wanted to have this as a monthly event and started of the activity in February 2008. Startup Saturday happens on second Saturday of every month at the Indian Institute of Management campus in Bangalore. This is completely supported by NSRCEL, the incubation center of IIM B. Along with discussion, we provide a platform for entrepreneur’s to showcase their innovation to fellow entrepreneurs. Total time allocated for this event is 3 Hours.

We had 3 Startup Saturday’s till date and below is a summary of each of the Saturdays. I could not attend the second one, and hence will not speak about it much 😦

Startup Saturday – Feb 16, 2008

This has been our first SS and we have been a bit tensed with the number of attendees who would turn up. We did no great marketing for this event, just used all mailing lists we have been part of. We invited Prateek and Nitya of Muziboo to speak of their experiences and it was very nice of them to accept our invitation and be part of the first event (knowing the uncertainties of attendees and the organization of the event).

There were around 25 people who joined us to share our passion. The room is full and the atmosphere is exciting on this warm Saturday morning.

Here is a summary of their experiences…

Muziboo is an online music community with more than 1200 registered members and 1000+ music uploads.

Features of Muziboo

  • You can join for free
  • Upload your music
  • Tag yourself and your music
  • Comment music
  • Create, join, write on music groups

Growth Plan

  • To be 10,000 users by end of 2008
  • More channels for consumers
  • “One stop huddle” for music

Competitors
None as on date
Soundclick, Esnips come close

Few questions asked by audience…
Do you want to build Muziboo as a brand/comapny?
Prateek – Brand.

How many are writing code for you?
Prateek – Only me. Have been using Ruby on rails.

Can I just listen to music and not signup?
Prateek – Definitely.

How much did you sunk in till date?
Prateek – Less than Rs. 40,000.

How are you marketing?
Started with Orkut. Searched with “music” and scrapped each of them individually.

What amount of traffic is from search engines?
Prateek – Around 30%-35%.

Do you want to start your own Radio channel?
Prateek – Yes.

Prateek – We are also working on creating an online music composition tool which will help musicians to record online and upload.
Even though I did not sign-up to submit my music composition 🙂 I like the concept and I on behalf of KickStart team wish Prateek and Nitya all the very best in their endeavor. If you have not yet visited Musiboo, it is time you go and have a taste of good music.

Startup Saturday – March 09, 2008

As I mentioned earlier, I missed this event, but I know that it has been an exciting one and there were close to 50 participants this time – a whooping 100% increase 🙂

Startup Saturday – April 12, 2008

This has been more streamlined. We had the SS website up and made this a wiki which will help people to register if they were coming to the event. We had 91 registrations on the site and close to 50 attended the event.

Ms. Dhanya Menon, a startup legal expert and partner at ALMT Legal, Bangalore accepted to speak on Term Sheet. Here are some notes I made during her talk.

What is a Term Sheet?
Term sheet is an ‘indicative’ document.

What is ‘indicative’?
Indicating the terms and conditions of the venture.

From an entrepreneur’s perspective, a term sheet is very important – I will not go to any other investor, discussing about investments in the organization.
One needs to be very clear about the terms and conditions in the term sheet, and without one, no investor would invest without a term sheet sign-off.

While there is a term sheet signed off between investor and entrepreneur and in-between (with in the time lines), if the entrepreneur goes to another investor and signs a new term sheet, the first investor has all rights to sue the entrepreneur.

Clauses
1.Breach of Contract (Exclusivity)
2.Confidentiality
3.Drop-debt fields (What ever expenses investor have incurred in this contract, the entrepreneur needs to repay)
4.Public Announcements
5.Term Promoters
6.Size of funding (try to mention money in INR)
7.Valuation

What is the typical timelines in term-sheet.
Between 3 – 6 months.

Promoters
Only people who run the organiation on a day-to-day basis should be calld ‘promoters’.

Right of first refusal (RoFR)
Right of first offer (RoFO)
Series B investment should not happen immediately. Focus should be on business. The investor can make the clause for series B funding.

What are definitive documents?
Share subscription document
Employment agreement

Anti-Dilution
This is not good from investors perspective.

PS: I know that my above notes are not very information, however, I will work towards getting more structured information and post more information on Term Sheet as I learn about it more in detail.

Along with her knowledge sharing session, we had a demo of Storzz by Chandan Maruti, CEO of the startup. Storrz is an on-line mall. Yes, I used the term “mall”. Even though there are many differences in a real mall and a virtual mall, this mall gives you the flexibility of serious shopping. If you are looking for a particular product and looking for its rating in the market and customer feedback, this is the place to go.

Storrz is created as a platform for opening a virtual mall. If you have a business, and want to sell on-line without any hazels of creating an online shop, Storrz is the place to go.

You will be surprised with what is available on Storrz – From vegetables to groceries to Camcorders and Digital Cameras and with price comparison along with customer feedback. Check out the site and experience for yourself.

If you want to keep yourself updated about KickStart activities, please do sign up for our mailing list and I am sure you would benefit from it.

The next Startup Saturday is scheduled for 10 May 2008. However, on 19/20 April we have BarCamp Bangalore 6 coming up. So, stay tuned and be there.





DevCamp Bangalore

9 02 2008

BarCamp has opened doors for un-conferences around the world (FooCamp started the movement though). In Bangalore, the Silicon Valley of the East, BarCamp has had a profound effect on how conferences are being organized.

DevCamp – A Developer unConference is born to be an annual meet for all the Developers.

Today, I am here at DevCamp. The wiki had more than 600 registrations and only the first 225 are allowed. I rushed in the morning forgetting that the weekend has just begun. I reached here at around 9 AM thinking that i might not be allowed, but I was on time 🙂

One of the attractions to this camp is that Martin Fowler is here in person. My expectations were high and was looking forward for some good discussions on open source and technology. When Siddu introduced him to the participants, he just spoke about his participation with other unconferences and did not intend to involve himself here, rather wanted to see how we participated and what we speak. Disappointed a bit….

Sessions began at 10 AM in the four rooms provided at the ThoughtWorks venue. Here is the list of sessions which happened/happening at the event today:

  • Designing a Phishing IDS : Bipin
  • PoshZones – A baazaar approach to the semantic web :  Sriram Narayan
  • DTRACE : Sanjeev
  • CallGraph Skype Indexing : Rajeev Poddar
  • Adobe Integrated Runtim (ATR) RIA’s on Desktop
  • Lightning Talks : Talks in random by participants in 3 minutes
  • Easy Software Development : Prasanth
  • Getting Started with Mrcurial : Biju Chacko
  • Intruder Alert PoC to Sig Snort IDS : Akash
  • Eclipse Plugin development and Android Plugin Internals
  • BDD: Learn from JBehav, do it in JUnit
  • Working with Data in a Natural Way : Bijoy
  • RORR –  Zero to Beta of a Publishing Platform : Gokul
  • Nintendo DS Homebrew Hackery – Siddu
  • Writing wargaming aids in DJango – Manoj Govindan
  • A discusson of Ruby
  • MONADS : Ravi M
  • What really is “enerpris” grade app? Open Discussion : Pradeep BV
  • Mobile Eco-system : Janakiram
  • AAKRAMAN – The Ruby war : Chirag/Akshay
  • MOOSE – A Biological simulation system
  • Building Social application on Facebook/Orkut : Himanshu Baneja
  • Enhancing Firefox, Password Manage with OpenID
  • Load Testing weapps with ERLang : Kartik SR
  • Bringing web application to desktop : Suresh
  • Develop voice/speech enabled web 2.0 application using TringMe API
  • Tye in any Language – on any website
  • Twitter API + WordPress Plugin API: Ujjwal
  • Automation testing for win apps : Vivek Singh
  • Fault tolerance load balancing in JMS : Sandil
  • Mobile application made easy : Mobisy
  • BDD – Liz is painting during this time
  • OpenSolaris virtulization : Ajesh
  • Programming with ANDROID : Selvan
  • Lets Develop a J2ME Game : Zarina
  • API manipulation Rest & JSon : Sebastin
  • Web Security – A Discussion
  • Clutter – Fun with Building Interfaces : Shreyas
  • The state of JavaScript
  • Symantic Web : Harish

Well, the boards are full and so are the rooms. Am heading off now for a session…

I have DevCamp pictures on my Flickr account. Pradeep has few, check them out.

One Day, I would love to co-ordinate in organizing or be part of Burning Man in India. Hope the day is not far away 🙂





Innovation Series #2

9 02 2008

Well Well, the week has been pretty hectic for me. In this issue I have few interesting links to share with you and before that, let me share you interesting information on 1.6 Lakh ($3500) Tractor which is making rounds in news. Bhanjibhai Mathukiya, a small time innovator from Junagadh, has created a mini tractor of 10 HP (Horse Power), after being moved by the plight of the small groundnut and orchard farmers in Saurashtra. This is the power of thinking minds. We definitely need 1 Lakh car and a Rs.10,000 2-wheeler, but we also need innovation at the grass root level to sustain our living. Just imagine having huge building, good houses, affordable and comfortable transport systems etc provide quality of life, however, what if we dont have any thing to eat? Does it make sense? In the last 10 Years, the price of rice which we buy from the dealer has not gone up by more than 5% at the farmers end. But, we have been seeing huge price raise in the rice we buy at regular intervals. This simply means that the more money you are paying the shop is actually going to the trader who is selling rice and almost negligible amount is going to the farmer. There is another similar innovation to the poor farmer – “Bullet Sathi” where there is a lost cost equipment which is fitted to an Bullet (2 wheeler brand in India) which can help the farmer in various activities during farming.The above two are classic examples of innovation at the roots and affordable solutions to the bottom of the pyramid farmers.Found an interesting link on Pluggd.In by Sharada on choosing your firms Legal Avatar