Business Models!

For a person who is far from having a strong business acumen, when I sit around dreaming about my future and refreshing my past, occasionally I end up thinking if at all I start a company of my own (which for my “free spirited day dreaming Piscean” nature is a remote possibility) what would be kind of strategy that I would adopt. Having worked in a highly volatile industry for just over a decade which includes a couple of startups, I guess I have been able to vaguely figure out, two distinct ways of achieving success!! To someone who raves about time pass, good ol days, cricket, fun and frolic, buzz words such as “strategy”, “business model” seem alien,  but for a while I just thought I could put my thinking hat on,  dish out a comparative studies about two of my perceived  business models which could probably succeed. 

Disclaimer: I am hard core Linux professional, and my only connection to business and management, is that my wife is an MBA graduate, and the connection ends there! All that is written below, is my take on going further in sticky matters of business, and probably a self-reference material if at all one day, I decide to call it a day for my 9 to 7 career and take the plunge!

Time to put the Blazer on, and say, “Hello and Welcome!!”

So what’s that ONE deciding factor that everyone who ever wishes to start a company, need to be absolutely certain about? Because that one decision affects everything else you do in aid of that budding company, your dream baby! You need to figure out whether the company is going to grow slowly, steadily, bit squeamish but profitably or whether the company is going to have a big bang with fast growth and lot of capital investment.  To keep up the reference further down; I would call the first model as a “Steady Model” and the second one as a “Land Grab Model”

The fundamental concept of the Steady model is to start small, with limited goals, and slowly build a business over a long period of time. The product that you would be trying launch in the market, would have lot of established competitors.

The second one, the “Land Grab Model” works on that one brilliant concept/idea which no one has thought about till date, and work on that idea to materialize it into a feasible product as quickly as if your life is depended on it, and release it to the market fast!!  This calls for raising a lot of capital and that’s where your Giorgio Armani clad technocrat image will come in handy in selling that brilliant idea into a feasible business proposal to the VC, that they would instantly invest the moolah, so that you don’t have to work for the next 25 years!!If you don’t have any real competition, because you are the first in the market, there is a pretty good chance that you succeed in the land grab, that is, get as many customers as possible, and establish a customer base as quickly as possible, so that later competitors will have a serious entry-barrier into that market. But if you're going into an industry where there is already a well-established set of competitors, the land-grab idea doesn't make sense. You need to create your customer base by getting customers to switch over from competitors. And that takes time!!!

What’s wrong in taking time? The problem is that you need to create a network of customers and create that network pretty fast and somehow make them stick to you, so that they have no other way of getting away! This is like a snow ball effect, because the more customers you have, the more customers you will get! eBay is a good example. Suppose you want to sell your vintage bike you're going to get a better price on eBay, because there are more buyers there. If you want to buy a vintage bike, you're going to look on eBay, because there are more sellers there!! 

Another extremely effective network effect is in proprietary chat systems like say for example, Skype. If many of your friends use Skype, then obviously you need to go to Skype, if you want to chat with them. Rather than asking all of them to come over to the chat system that you use, it would definitely make lot of sense for you to create an id on Skype, and start chatting. One more customer added to Skype, because of network effects, and nothing more! That’s where the customers are locked in!

But how do you throw the bait initially? That’s a simple thing, as giving free service for say around 6 months, and then when you have enough customers locked in, start a monthly subscription! Similar to all these banks offering various services such as paying all your bills from your account like an ECS or a standing instruction. After some months of very less service charge, you would be a bit grumpy if they increase the service charge, but still to avoid the hassles of changing the account for each and every payment that you have authorized the bank to pay for, you allow them to suck your pocket just that extra little bit!

Hence, there are certain businesses that have these natural network affects and if your business strategy is a brilliant one as that, you may as well set the stone rolling for the “land grab model” before anyone else do and make a fortune!

Steady model companies start with a limited capital amount! VC s isn’t interested in funding you, and hence break even as early as possible would be the Numero Uno goal initially. If you are lucky, and get profitable, reinvest the profit and hope to get bigger! If it fails, fair enough, it is very little investment that you lose and you lost the time, but you got valuable experience as to how not to do something you started! Steady models keep churning out little profits and ensure that they walk the banana skin carefully! Occasional huge profits should not blow the confidence through the roof, and prompt the employers to think that they have enough capital now, and hence go for the land grab model!! This is where the founders of the firm should instill corporate values, which would lay down ground rules about the acceptable growth rate at which that culture can be promulgated throughout the employees in the firm. The Corporate values are worth their weight in gold in such companies, and the whole bunch of guys working for the firm live and die by those values! 

Corporate values mean a little in a company that’s on the land grab mission! The tearing rush to get big fast, leaves little room for someone to sit and think about decisions that may change by the minute! Also, the employees working for these firms get the impression that things are really working out in this firm! When they see 50 odd guys joining the company every week, the employees get a feel (mind you only a feel) that they are a part of something really big!

As a rule of thumb, you can make a nice place to work, or you can promise people they'll get rich quick. But you have to do one of those, or you won't be able to hire.Some of your employees will be impressed by a company with a high chance of an IPO that gives out lots of stock options. Such people will be willing to put in three or four years at a company like this, even if they hate every minute of their working days, because they see the pot at the end of the rainbow.

If you're growing slowly and organically, the pot may be farther off. In that case, you have no choice but to make a work environment where the journey is the reward. It can't be hectic 80 hour workweeks. You have to give people decent vacations. People have to be friends with their co-workers, not just co-workers. Sociology and community at work matter. Managers have to be enlightened and get off people's backs, they can't be micro managers. If you do all this, you'll attract plenty of people who have been fooled too many times by dreams of becoming a millionaire in the next IPO; now they are just looking for something sustainable. If you're even reasonably smart company, you're going to succeed. It may be a bit of a struggle, there may be good years and bad years, but you're certainly not going to lose too much money, because you didn't put in too much to begin with.

To conclude if you are going into a market with no existing competition, lock-in, and network effects, you better use the land grab model and of course if you're going into an established market, getting big fast is a fantastic way of wasting tons of money. Your best hope is to do something sustainable and profitable, so that you have years to slowly take over your competition and this happens in a Steady Model.

The worst strategy is probably having a vision of a land grab model for your company, and work like a steady model company (However, denying it all the time!!!)

OK folks, the blazer is catching me short of breath, and someone like me to sustain even writing about business strategy for so long is making me sulk, time to head back to day dreaming!!

A[V]I

Perils of Multitasking!

For all the posts that have made an entry to my blog, I have been dwelling for a high percentage of time in the past! For all that I have cursed about my studies in school, PU and in engineering, which for most part of the time made me feel like a cow on ice, I am today a manager, albeit a technical one, shepherding a herd of cats called programmers! I felt I need to pen down what I consider as the most difficult job for a manager… managing people!! But wait, isn’t it what I am supposed to do as per my designation? Man management isn’t an easy job! When you're managing a team of programmers, one of the first things you have to learn to get right is task allocation. Two words that make you load one program into the startup menu, the MPP!! 

In an old world office, it would be as simple as sorting out files,(the paper cardboard ones, with lots of papers in them), and “file dumping” them in the peoples’ lap!! Poor souls with their single minded devotion towards “closing” the file, would work at their pace, file after file in a sequential manner. 

Cometh the age of computers and software, the buzz words such as “parallel”, “simultaneous” seem to be omnipresent in a manager’s vocabulary and they unleash it on the poor programmers in a status meeting in its full ferocity ! The result; unhappy subordinates venting it out on their keyboards and near coffee machines in the office or in the canteen with other colleagues! Although me being in the same manager league, beg to differ completely about working on two things at a time!! And since I am technical manager, my analogy would invariably take an example of programming! 

Hypothetically let me assume there are two CPUs, one which performs tasks in a sequential manner, and the other (more likened by the manager!!!) performs tasks in parallel!! Each CPU is required to perform two separate computations A and B, each consuming 10 seconds of CPU time. Our CPU that performs tasks sequentially would perform the tasks this way.

Computation A										Computation B
1	2	3	4	5	6	7	8	9	10	11	12	13	14	15	16	17	18	19	20

Another CPU that is multi-tasking would perform both the tasks simultaneously however its execution would be as follows:

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

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19

20

Hmmm, so what’s the fuss all about?? Most people's gut reaction is that multitasking is better. In both cases, you have to wait 20 seconds to get both of your answers. But think about how long it takes to get the results to each computation. 

In both cases, the results of Computation B (shown in orange) take 20 seconds to arrive. But look at Computation A. With multitasking, its results take 19 seconds to arrive... yet with sequential processing one of them is ready in only 10 seconds :) Yay Yay!!! Even if you consider the average computation times, a sequential execution would take on an average (10+10)/2, 10 seconds, whereas parallel execution takes (19+20)/2 which is 19.5 seconds. I am not even considering the amount of time taken for task switching and already we have a difference of 9.5 seconds on an average computation!! Before you readers stop reading further and click the tiny Red Cross mark on the right hand corner of your screen, I will stop my technical analysis here. However, computers are built modeling themselves on humans and parallel processing of work even in humans in pretty difficult, well, next to impossible actually!! 

OK, back to the more interesting topic of managing humans, not CPUs. The trick here is that when you manage programmers specifically, task switches take a really, really long time. That's because programming is the kind of task where you have to keep a lot of things in your head at once. The more things you remember at once, the more productive you are at programming. A programmer coding at full throttle is keeping lot of things in their head at once: everything from names of variables, data structures, important APIs, the names of utility functions that they wrote and call a lot, even the name of the subdirectory where they store their source code. Bump into him to update him about your Facebook update, Disturb the programmer for a clarification, just poke him to send a neat little document about his work, or just in between out of nowhere, pop up a very small task of changing the variable names in another person’s code; his memory is down like a pack of cards…The human brain seems to move it out of short-term RAM and swaps it out onto a backup drive where it takes forever to retrieve. It really takes time to gather back thoughts, logic all over again and align back to that “zone”. Three or four such task switches or interruptions a day, are enough to ruin his day, and the quality of the software he is writing. The overall productivity and other dependencies down the chain like schedule take a hit. At the end of the day, it is you as a manager, who would be frantically playing number games in the MPP, to accommodate the schedule.

From my personal experience I have noticed that whenever one job is assigned to one person, they'll do a great job, but if you assign two jobs to that person, they won't really get anything done. They'll either do one job well and neglect the other, or they'll do both jobs so slowly you feel traffic on a Monday morning in busy Bangalore road in moving faster. That's because programming tasks take so long to task switch. As it turns out, if you give somebody two things to work on, you should be grateful if they starve one task and only work on one, because they're going to get more stuff done and finish the task sooner. In fact, the real lesson from all this is that you should never let people work on more than one thing at a time. Good managers see their obligation as removing obstacles so that people can focus on one thing and really get it done. When emergencies come up, they think about whether they can handle it by themselves before delegating it to a programmer who is deeply inundated in a project.

Things are easier said than done!! Being a manager myself, I strive really hard to ensure that one person is working on one and only one thing at a time but it is real hard work!! The end objective achieved, when I have a happy subordinate who is always willing to work for me, and also have super-efficient robust software running in our product. Win-Win situation all round!!!A dream day when I just keep browsing, updating my blog whole day, drinking tea!!! occasionally poking my team mates asking "Whats the status?" :)

A[V]I

College for Social Networking!

A boy with neatly combed hair very well oiled, half sleeve “printed shirt” tucked in a pant with a belt comfortably making at least three rounds around a 24 inch waist, just to make sure the pant doesn’t fall off :), slipped his legs into a pair of Bata slippers, a bag on the back, vehemently protesting against carrying the “dabbi”, with some cash in his pocket, hopped on to his HERO cycle, started his journey to the whole new world of boys in jeans, boys in jeans riding Yamaha/shogun bikes, boys in jeans riding Yamaha/shogun bikes with girls hugging them tightly sitting in the back seat, (so tightly that it went on to become an inspiration for the Fevicol advertisement ;)) girls and boys sitting in a dry gutter chatting away... As he reached closer and closer to the destination, the college culture which he had only heard and imagined before that time, slowly started opening itself up in front of him. Groups of students few with books, few with cigarettes, few with helmets (yeah wearing a helmet was fashionable, then!!!) were spread on either side of the road leading to the college entrance.  Although he was not a little town boy, he hardly had any “social” life outside his cricket and studies and hence all these students seemed to be from a different planet altogether! The dry gutters at the road junctions around the college were packed to the brim….. with.. with students, both genders, clasping each other so tightly that there was always room for more from the gang to seat his/her bum in that coveted place, the alma mater of total time pass!! Amazed at the space management of these seniors, the boy started looking around for some familiar faces. It was easy to identify who were the first timers for the college, Girls with their mom, dad or brother along with them, small groups of boys in a huddle at a distant corner away from the seniors, he could identify them all!!!

But where is his group? Frantically he was looking around for familiar faces so that he could hide from the seniors of the college, when familiar voices “Lo avi baaro illi”… was heard. Much to his relief, the boy hurriedly ran to the comfort of his group, in which he had friends/acquaintances for the past few years!!! Few were his classmates from his school, few from his same school, but different sections, and few were friends of his friends!! All in that huddle, giggling, bubbling with enthusiasm about the so called very good college that they had secured a seat in.  Yes, human mind feels far more comfortable in known territory, and about certainties in life!!

I had always been the happy Joe in the sense that I used to go with the flow. All my friends had chosen Sanskrit as the first language and English as the second language. I dint have any special love towards Hindi and hence I went with what my friends had chosen. When I was wondering how the students would be divided into two different classes, one simple logic put my friends away from me, not far, they were only put in an adjacent class. The simple logic was an alphabetical order! Students whose first name started with letters between A-K would be one class, from K – P would be in another class!! S – Z in another class!! Prashanth, Prabhu, Pramod, Shashi kiran were thus pushed to other classes! Few guys and girls, whom I had perceived as “nerds” during my Excellence Class anecdotes in 10^th standard, were my class mates at 1^st PU B Section in M E S College of Arts Science and Commerce!!! The first steps in an environment where I would cherish two wonderful years of life had begun!!

The big hoopla surrounding the perceived “College” environment was evident from the way my friends were dressed. Forget branded clothes, even a jeans pant was considered a novelty by me and believed it was the same even for all of my friends. But no, not for all, few of them wore the best of the brands, shoes and even had got themselves a bike to travel to college! And yes, there were always these little vehicles fitted with a 60 cc engine; few with gears, few without, which fuelled the urge of these kids to showcase their newly learnt macho driving skills!!! And of course there were these typical Bollywood hero types, who could flirt with girls all day long, zip around the college in shogun/Yamaha bikes and yet get a first rank in the class, with attendance shortage in every subject. Looking at all these various species of homo sapiens, I felt a bit inferior, but to my relief there were others too who peddled their way to college, wore a non-catalogued dress and were almost bare foot except for the Bata slippers that adorned their feet! Made me realize why we wore uniforms to school!!!

For a college that was conventionally traditional, the percentage of students of both the genders that were together was surprisingly high! There were only two places in the whole college where the boys and girls could not move around together!! The first place is quite obvious… and the second place was surprisingly the staircase!! For some strange reason two separate stairs were made for boys and girls, as if it caused inconvenience to the students who used them. I guess the college authorities felt that soon after the prayer, (one of the many hilarious events right at the beginning of the day) the students would be in a tearing hurry to attend the classes, hence two separate stairs would offer convenience go to the respective classes in the above floors. How witty!! The fatheads forgot that single stairs would have made the boys find convenience in inconvenience and yet reach the classes along with the respective female classmates without even complaining! The fairer gender in the anxiety of missing the classes would eventually make it to the class, despite the hardships (supposedly!!)  However, why gender bias was made only in using the stairs is something which I fail to comprehend even to date!! Coming back to the prayer, the Sanskrit lecturer, Ramakrishna, (The Cacofonix of our college!!!) standing inches away from the mike, would recite the prayer (I personally felt in his vociferous best, he dint need a mike, however, I guess the prayer was supposed to signal the entire Malleshwaram locality that the college had started!) and in the excitement of performing this mundane activity, would sprinkle his sputum in all generosity on its head. As he hit the high notes, the sprinkle would get extended to the potted plants in front of the stage, a few feet away from the first person standing in the row for the prayer!! I had always stood almost at the end of the line for the prayer, hence never got a chance to see or talk to the person who could have at least once received the “abhishekham”, albeit only a couple of drops!!  No prizes for guessing why the Sanskrit lecturer was the chosen one for performing this activity; be it Prayer or Scolding, Sanskrit was his language of preference!!! ;) The seniors from the college generally gave the prayer a skip and would run to the busiest and most happening place on the campus, its Social Networking Site!!! (in an non internet environment, the verbatim would translate to CANTEEN!!)

This site in MES College was strangely tucked in one corner of its campus, and was cramped for space throughout the day I must say! Jam packed during lunch hours!! More the rush more the fun!! Yes the college canteen had stood witness to many budding love stories, romantic encounters, wannabe lover boys campaigning with the best of their wits, trying to woo that one gorgeous looking girl from the class!, groups of boys admonished as reserved snobs generally having a hearty laughter at a naughty joke in an “All Boys” group, students completing the never completed lab records, groups of boys and girls yapping happily sipping coffee/tea. Amidst all this, the CANTEEN owner Sudarshan, would churn out not exactly lip-smacking delicacies, but something that would satiate our appetite!! After all canteen is not the place meant only for eating food!!

Another popular social networking site was the parking lot in front of the college main entrance. Ideally two girls would be sitting on a kinetic Honda, and adjacent to that, in another Kinetic Honda or a Yamaha bike a guy would be seated, frantically making attempts at wooing at least one of them!! A guy standing in the middle of these two vehicles, would either be a common friend or be waiting for the guy on the bike to get started as he was supposed to drop him! Also, there would be guys under the pretext of copying notes, would take an eternity to take their vehicles out of parking lot, so that they could speak to their probable love interests for a couple of minutes more. The Valentino Rossis of the college and other colleges would definitely find the platform to showcase their talent of riding their bikes on single wheel in front of same parking lot!! 

As I look back, many from my generation and the previous who studied in MES College, would agree that they would have spent the best part of lives in that college! Even now, while I drive past this college, my car slows down, and as l happily look back at the stone building, Bryan Adams belts out “Those were the best days of life….” in my car stereo!!  

A[V]I