Archive for 'Business Models'
By Rajesh Setty on Wed 15 Oct 2008, 11:50 PM - Leave Comment
A quick progress report on my little project (background) with my son Sumukh.
Quick Background
“Behind The Car” is a community project to collect cool and interesting bumper stickers from across the world. An example of one such bumper sticker is here:
The project was launched on his 10th birthday. So it has now been a week on the project. We spend a few minutes a couple of days a week to discuss his questions. Sumukh cleans up the photos and uploads photos that he has received to the site.
The traffic on the site is growing. Now that we have some content (a few dozen bumper stickers), we are starting to focus on marketing.
Marketing “Behind The Car”
Since there is simply no marketing budget (remember, we are a startup), we have to find innovative ways of marketing. So he is annoying his Mom to tell her colleagues about this project and asking me to post again on my blog 
The other thing we did was to get a few bumper stickers with “Behind The Car” written on them and, literally, we (Kavitha and I) have “Behind The Car” stickers behind our cars.
We didn’t know if this would work but it seems like it is working. When I look at the traffic, I see that there are many people who searched on Google for “behind the car” and landed on the site.
Thank you
Thanks to all the supporting emails, comments on the website. Some of you have taken the trouble to post about the project on your blogs and on Twitter. Special thanks to those of you.
More updates in a month or so.
Posted under Business Models.
By Rajesh Setty on Sun 12 Oct 2008, 8:19 PM - 1 Comment
It’s been a while since I used a PC. Every other computer in my home is from Apple. However, I see that McAfee was automatically renewing my Antivirus subscription for a PC 
This time I did catch the email that said “Automatic Subscription Renewal Service” and found that there is a simple option to cancel the service by chatting with a customer service representative supposed to be available 24×7.
First, I was told that there is a wait time of 5-10 minutes to “find” a chat agent.
I thought it was still OK to wait for a chat session rather than waiting for a rep on the phone. Once I filled in all the details (about why I want to chat with McAfee) I was taken to a page that made me smile
It said, please download a chat client to chat with an agent!
Imagine asking your customers to go through hoops to just reach you. Good luck to McAfee!
Posted under Business Models.
By Rajesh Setty on Tue 02 Sep 2008, 4:00 AM - 2 Comments
Be it for a commodity (like gas) or for something new like Apple iPhone or Amazon Kindle.
In case of a commodity offering, the baseline is always the price for a period in history. So if the price of the gas was hovering around $2 for a while and touches $5 and then goes back to $3, the increase from $2 to $3 is forgotten. What is remembered is the decrease from $5 to $3 – sounds like a bargain.
In case of new offerings like iPhone and Kindle, there is no precedence. So the best would be to set a higher price first and then get all the early adopters to get in the game. The people on the fence are waiting for the price to drop and after some time give them what they want – drop the price. Make it look like a SWEET DEAL and expand the reach.
Think about it. Apple says “iPhone 3G is twice as fast and it is half the price”
Or, in other words, the earlier version of iPhone was “twice the price for half the speed” as compared to this version ????
What can we do?
Actually, nothing. That is the way mind works.
The real question is whether you need any of those products. The reason to buy them should not be because there is a DEAL there but because you need it. If you can prove the ROI, then the price differential really does not matter…I think!
Posted under Business Models, Compelling Offers.
By Rajesh Setty on Mon 01 Sep 2008, 8:28 PM - 3 Comments
“Real Estate” is precious
Take Retail – The competitive advantage is in owning real estate
Take Transportation – The competitive advantage is in owning the Oil “Real Estate”
Take Web 1.0 – The competitive advantage was in Operating System “Real Estate”
Take SaaS and Web 2.0 – The competitive advantage is in Browser “Real Estate”.
Of course, hindsight 20/20 – we see that Google is entering into the “real estate” game in a big way.
Take a few things that people do normally online.
1. They search
2. They communicate
3. They share
4. They manage their businesses (they use tools)
In the web 1.0 world, the “real estate” needed to do these things was the operating system.
In the web 2.0 and SaaS world, the “real estate” required to build a big empire is the browser. The power is slowly being taken away from the operating system. Google’s move to stake a big claim makes a lot of sense (for Google, for sure)
More about Google Chrome from Michael Arrington here and here.
More from Google’s Official Blog here.
This is a very nice lesson about extending the value chain one step at a time. Not just Google, every business can design and execute on this. Of course, not at this scale but the thinking has to be the same. For a brilliant explanation of the concept, please refer to Adrian Slywotzky’s work. Overview can be found in this book “How to Grow When Markets Don’t”
All the best!
Posted under Business Models, Innovation.
By Rajesh Setty on Sun 24 Aug 2008, 11:01 PM - 6 Comments
It is interesting to note that long ago Netflix ignited the change in the way DVD rental market worked.
Netflix model was simple and the core still continues to be the same. For a flat monthly fee, you can rent as many DVDs as possible and you can keep them for as long as you want. Depending on your plan, you could have as little as 1 DVD or as much as 5 DVDs with you.
It seemed like there is no stopping for Netflix.
Today, I think the playing field is changing again. While Netflix continues to enjoy the advantage of their innovation, it is now being attacked by a number of players. Here is the list of companies that are not allies but each one of them are trying to take a piece of the market.
1. Blockbuster: Has an offline and online strategy. You can rent online and return offline. Netflix cannot do it unless it has an offline presence. Plus, Blockbuster dropped the rental fee for old movies to $1 for five days
2. RedBox: Redbox has installed kiosks in several supermarkets and MacDonalds stores. The focus of Redbox is to rent only the latest 100 movies or so for $1/day.
3. Hulu and Other Online Venues: Watch movies totally free
Add to this the Cable Networks and Digital Video Recorders (like TiVo) and there is a battle zone in the making.
I am sure there are more innovations coming up. This is a case where whoever innovates first and fast will ultimately win. Will wait and watch
Posted under Business Models, Innovation.
By Rajesh Setty on Sat 16 Aug 2008, 6:37 AM - 5 Comments
Chris Albrecht at GigaOm writes a story about a Luis von Ahn (Assistant Professor of Computer Science at Carnegie Mellon University) who is one of guys who developed Captcha technology.
The story is about how NY Times is using CAPTCHA technology to fix errors that crop up in their effort to digitize old issues. I put together a schematic to explain what they are doing.
As you can see whatever words OCR (Optical Character Recognition software) could not recognize well enough are handed off to reCAPTCHA which sends them to various websites to be used as “challenge words” for spam protection. When humans decode them as part of their “response” to “challenge words” they go back to the database as “error fixes”
This story for me is simply an example of brilliant use of leverage. You are breaking down the problem (OCR errors) into small pieces and parceling them out to individual websites. These individual problem pieces are part of a SOLUTION to a different problem (spam protection). People are engaging in solving the first problem as a side benefit of solving the second problem – meaning at no cost at all.
Simply brilliant.
You can read the whole story here:
CAPTCHA’s Can Be useful, Don’tcha Know
Posted under Business Models, Innovation.
By Rajesh Setty on Fri 15 Aug 2008, 6:24 PM - Leave Comment
The Beijing Olympics is going full swing, and we sports enthusiasts love being in the thick of action, right? You’ll probably be interested to know that you can be an Olympics participant as well. No kidding! Before you think it’s too true, let me clarify; it’s the Virtual Olympics game on Facebook. You get to represent your country by predicting the real Olympic winners for various events.
This game is developed by Pramati Technologies, the leading product development company, based in Hyderabad. Here’s what I found out from Pramati’s Co-founder & CTO Vijay Prasanna Pullur.
RS: Congratulations on the new Facebook game release. Can you tell us what is this application?
VP: myPicks Beijing 2008, allows participants to pick Beijing Olympics Gold, Silver and Bronze winners for each event. First time when you add the game to your Facebook profile, you choose the country you want to play for. You win points for each correct prediction, these points gets added to the country your are playing for. At the conclusion of the Olympics, the country with the highest point total will be declared the winner of the “myPicks Beijing 2008”. It is a fun social game to play with friends and other fellow countrymen while you are plugged into the real Olympics events.
RS: How did you come up with this idea?
VP: myPicks Beijing 2008 was developed by Pramati Technologies in collaboration with Sun Microsystems.
Sun’s Zembly platform is the world’s first social programming environment specifically designed for creating and hosting social applications targeting the most popular platforms on the web, including Facebook, Meebo, OpenSocial, the iPhone and more.
The idea behind this game was to showcase Zembly and Pramati’s social application development capability.
RS: How long it took to develop the game and what were some of the challenges?
VP: This is a good question. We started this project about 8 weeks ago. There were 2 major challenges
1. Olympics game has a hard cut-off, no scope for any slip. So we had to build the spec, develop, test and launch the game in this short period.
2. The game has to scale, as the viral effect will start kicking-in any social game. We have tested this game for 300,000 simultaneous users in this short time.
RS: Can I see how others are performing in predicting?
VP: Yes. We have created a Leader board, where you can see:
1. Ranking by country
2. Ranking by individuals across countries
3. Ranking of players playing for your country
4. Ranking among my Facebook friends
RS: Do you think India has a fair chance of winning in the Virtual Olympics <smiling>?
VP: Yes. While we aren’t sure about India’s chances of winning the actual Beijing Olympics, the Virtual Olympics will definitely give India a chance to win. More participants from a country, better are the chances for the country winning this Facebook game.
RS: How many have registered with myPicks Beijing 2008 so far?
VP: It is just 4 days into the game and we have seen the users double each day. I think it is around 3000 active users today.
RS: How can anyone spread the word?
VP: You can click on ‘Invite Friends’ tab in the game and include up to 40 from your Facebook contact list.
We have also created fan pages for all countries http://olympics.socialtwist.com. You can choose the country from the drop down and tell other friends to play for your country.
Posted under Business Models.
By Rajesh Setty on Tue 05 Aug 2008, 9:26 PM - Leave Comment
People really can’t compare dis-similar objects. Research has proven that (ref Dan Ariely’s marvelous book Predictably Irrational)
So, when I saw this Valero Ad asking people to buy their gas because it’s “All American” I couldn’t help smile.
With the rising gas prices, what will the consumers think?
$4.49 per gallon or All American Gas?
Note: For other 37 posts in the same series, please visit my Squidoo Lens on the same topic. Here is the link:
Squidoo Lens: Smile Please
Posted under Business Models, Main Page.
By Rajesh Setty on Sun 03 Aug 2008, 5:54 AM - 3 Comments
With so much going on online when it comes to books (eBooks, multimedia books, kindle, book summaries etc.) you would think that there is nothing you can do to innovate on the business model of selling physical books. Read and Return comes along hoping to change the game.
I saw this at a bookstore in San Francisco Airport. The business model is simple
* You buy the book
* Return it within 6 months along with the original receipt and get back 50% of what you paid.
Now I have not done a detailed analysis on whether this might work or not. However, I thought about what the company might have been thinking when it came up with this business model. Here are my thoughts on that.
* An online book store already sells at a discount of about 35%. So all they are promising is a discount of 15% more. Now that’s a big incentive but if you think about it, they are getting the book back and if they can sell that book for 25% of the original price on eBay, they have made the model work.
* Only a small percentage of people will return the book. So for all the majority who don’t return, the bookstore has charged 100% of the price. It’s already a big win right there.
* They have also created a feeling of “risk free” purchase and created a “perceived incentive” to make the purchase NOW.
Like any other innovation, ultimately the verdict is handed out by the marketplace but I wish them the very best.
Posted under Business Models, Main Page.
By Rajesh Setty on Thu 31 Jul 2008, 2:35 PM - Leave Comment
Imagine you are running a restaurant. Won’t it be nice to have your customers take a copy of your menu with them. It’s like a walking advertisement.
What would make someone pick up a menu and take it home?
Here is one answer:
Create compelling content targeted at your regular customers. Pack so much information in them that they want to take it home and read it. Make it so compelling that they will share it with their friends.
That’s what you see at Bucks Woodside. The menu is almost like a nicely created newsletter with relevant information to target audience (technology professionals, entrepreneurs, venture capitalists etc.)
You feel compelled to pick up that newsletter (sorry menu) and spread the message.
Now the real question:
What can you do in your business that will make it a “no-brainer” for your customers to spread your message.
Posted under Business Models, Compelling Offers.
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