I was invited by Moneycontrol.com to participate in their ‘Letters to the Finance Minister’ series as part of the run up to budget 2013.
The letter is here but you can see the original here.
Dear Mr Finance Minister,
I am writing to you as an Internet entrepreneur in India. Like many others, I too returned from the UK to participate in this buzzing entrepreneurship economy. In India, ideas for start-ups are dime a dozen; the real challenge is implementing them. We are in dire need of the government easing the regulatory overhead for start-ups.
Make It Easier
A typical businessman in India has to pay income tax, service tax, value-added tax, excise duty, shops and establishments’ tax, professional tax and also participate in employer provident funds and employee state insurance schemes. Each tax is managed by different departments and involves various compliance activities including monthly payments, quarterly returns and annual returns. Each state has different rules with different forms, which change on a regular basis.
With Software as a Service (SaaS) and Cloud Computing trends, traditional definitions of VAT and Service Tax do not apply. Most IT companies are now charging both goods tax and service tax simply to ensure compliance.
First, I request you to rapidly roll out the unified GST to simplify taxation. Second, I request clarity on taxation for tech companies with respect to VAT versus service tax.
Working capital schemes don’t work
Payment collections are the bane of every small business in India. India’s domestic clients have higher debtor days and higher bad debt ratios. Young companies need support to weather the storms.
The government has great schemes like CGTMSE (Credit Guarantee Fund Trust for Micro and Small Enterprises). Banks are also supposed to provide SME credit of upto Rs 5 lakh without demanding any collateral. But these banks are very hesitant to offer these schemes and they almost never offer them to IT start-ups due to lack of stock/inventory.
My third request, Mr Finance Minister, is to strengthen working capital schemes
Prepare kids for the marketplace
The mainstream higher education curriculum is a complete mismatch for the industry’s requirements. Students have to take up additional corporate training programmes to ensure employment. At the same time, companies have to train fresh graduates for at least three months before they can become economically productive.
My final request, Sir, is that the government revise the syllabus and contemporary education resources for mainstream colleges and professional courses, keeping this in mind.
I had the opportunity to attend a CMO event for Octane’s 2012 eMarketing report launch. Other than a good networking opportunity, it was a source of great insight. Annurag Batra of exchange4media fame was part of the panel and one of his insights stood out strong in my mind.
” The CMO and CTO are not spending enough time together. Instead, the CMO’s are spending too much time with the media fraternity”
You can also catch his views on trends for 2013 at India Marketing Review.
In a separate conversation with digital manager for a fast moving healthcare company, she said,
“With people getting used to Tata Sky +, the ads are not working as before. So there’s no choice but for brands to move towards digital”
This is the genesis of Digital Digital. In our work with Fortune 500 companies and with startups, we have realised that the ability of a brand to differentiate in marketing is becoming heavily tech dependent.
Tech here means data and granular analytics. It means mobile and the possibilites of augmented reality that comes with it. It means responsive design to adapt to multiple browsers, devices and environments. It means email vs. SMS. It means video and viral and viral videos. It means content. Lots of it. And understanding how the search engines get through to that content. It’s about gesture recognition a la minority report. It means user experience testing
Digital Digital is an attempt to provide that bridge between the CMO and CTO. It’s a resource platform for tech trends for marketing. It’s a platform to showcase demo’s and prototypes.
Thanks for the articulation Annurag. As always, you were pithy and prescient
I had a great July with the team in Bangalore … here are some pics
(Please excuse the pink shirt.)
A birthday, team lunch, cricket Saturday, two interns were offered permanent positions, movie night, a farewell 🙁 and of course training exercises combined with quarterly strategy discussions.
Looking forward to the next 90 days. We have 5 new interns joining us straight from the NITs as part of the FTP (Fresher’s Training Programme)
Ok – maybe Oliver Twist had it tougher than me. But telcos are sure making it tough for the digital citizens to give them their money. With the Mercury touching 44 Degrees Celcius… my modem (+ inbuilt wifi router) konked off after a decent 3-4 year service (never once turned it off).
I gave a call to our service provider, airtel, but they weren’t that friendly. I was faced with a bill for a new modem+router, so I thought this is an incentive for me to explore new providers. Chalo – they have bigger battles to fight out with the moving target telecom policy and the associated scams
So, I googled for keyphrases such as Broadband Delhi, broadband delhi plans, cheap broadband plans etc. Like most googlers, I didn’t bother looking beyond top 6-7 results.
– MTNL seemed to have the best organic results.
– Airtel, reliance, tata photon, aircel, hughes (for business) seem to be front runners in Google adwords
– I felt the need for a price comparison site – which is fairly common in western markets. I found a couple
Price India – What kind of price comparison site doesn’t give you links to the product page if you want to buy it. They should also put in dates because price information is going to change frequently.
Broadband Plan – Terrific comparison interface with some nice interactions – you can filter on the plans using a slider for cost, speed or data usage limits. Or you can do any combination of the three. It’s a pity that they haven’t mentioned dates either and once you’ve decided which plan you like – the contact details are corporate addresses and generic URLs.
The real switching cost – trying to choose a broadband plan
So from top of my mind, I could think of airtel, tata, reliance, tikona and MTNL. So I decided to look at their broadband plans or order a new connection online (HA!)
– Each provider has atleast 10 plans based on permutations and combinations data usage, speed and cost.
– Choosing the plan is a tough proposition – but the telcos certainly don’t help.
– Let’s break into two parts:
- How do you help people find you and
- Once, they’ve found you, how do you help them buy one of your products.
I’m always confused between Tata Communications, Tata Docomo and Tata Indicom. I suspect Tata Communications is for corporates (Gaboli has a lease line from Tata Communications) but it’s strange that the URL http://www.tataindicombroadband.in/tariffs.html shows Tata Communications.
It’s also strange that they don’t have any plan for less than Rs. 1000 per month. Perhaps they are not interested in retail customers. However, the user interface was simple, clean and didn’t throw any bugs. Full marks to them there.
I reached two different pages on two different site – both seem to be official MTNL sites. Which one is correct? this http://delhi.mtnl.net.in/commercial/broadband_tariff.htm or this http://mtnldelhi.in/broadband/postpaid_broadband_tariff_plans.htm
Needless to say the design seemed two decades old.
This is a case of ‘coolness’ over ‘usable’ or ‘form’ before ‘function’. The code doesn’t work on chrome. Half the page is blank while the other is cluttered and needs a scroll. There are redundant steps and questions which are bound to turn customers away.
I’m still surprise by the hesitance towards paying for user experience (design and management) services. The internet is not a place for just reproducing print material. It’s a place for interactions and transactions.
Here are 3 things which I often mention in our presentations to clients:
– Search: The Google SERPs page is now as important as the front of your corporate building. If I search for broadband and you are not in the top few organic results, then 80-90% of the people will not be able to reach you. Think about how much you invest in the front of your building.
– Navigation: In a shop, would you build an obstacle course between the counters? Every click brings a threat of ‘customer dropping out’. Make it quicker and easier for folks to buy your products.
– You’re mistaken when you say aam janta is not online. Railway bookings (IRCTC) for individuals and online tax transactions (VAT, service tax etc.) for small businesses have changed the scenario.
After all, nobody wants to step out when it’s 44 degrees. Please sir … let us buy online!
This week threw a couple of surprise bans. Shahrukh Khan gets banned from the Wankhede stadium for 5 years. File sharing sites (read Torrent) were banned in India. It seems the enthu cutlet ISPs also decided that vimeo.com (which is like youtube) fell in the banned category and hence, has been inaccessible for that last two days. ISPs have reverted on vimeo and the service seems to be getting restored now.
Gotta love the irony
The ban stems from a petition to the High Court by Copyright Labs on behalf of the makers of the movies ‘3’ and ‘Dammu’. 3, of course, is the movie with the soundtrack ‘kolaveri di’. Kolaveri’s count, today, is at 55 million views. The kolaveri spoofs and related videos would add up to a similar number. In digital marketing terms, they couldn’t possibly have had a better promotion campaign for the movie (mind boggling worldwide reach at zero cost, super high level of engagement)… and the guys behind ‘3’ go after the site which is exactly like youtube!!
In the same vein, with a rapidly shrinking audience, the IPL (and Mumbai Cricket Association) desperately need ambassadors like Shahrukh Khan. What would happen if KKR reaches the finals in 2013 and they are to play in Wankhede. SRK decides the team won’t play if he’s not let in the stadium. Or better yet, the players refuse to play if their team owner is not allowed for the game… then what happens. 🙂
Music and Movie Piracy.
Something’s gotta give. It seems the old laws and practices around copyright infringement for the entertainment industry are just not going to work anymore.
Example – Songs.pk
While I was teaching e-marketing in 2010, I had included a case study around the business model of music portals (such as itunes, songs.pk etc.) in the final exam. Out of a whim, I asked one question on whether the site songs.pk (one of the most popular sites in that demographic) was legal or not and roughly 50% felt the site was legal. Many students wrote ‘because the site was available and accessible and it was charging advertisers, hence it must be legal!’
Now Songs.pk was banned earlier this year, which is fair enough… but it didn’t take the owners long to re-launch the site as songspk.pk. How do things proceed from here? Potentially, the Indian film industry body will spends lakhs of rupees in re-petitioning the high court and getting a ban on songspk.pk. They will get another ban order. While in another world (perhaps, Pakistan) the 19 year old owner of songspk.pk will notice his site’s traffic taking a big dip. He’ll read the Indian news. Shrug his shoulder at the pesky Indian lawyers and courts and go ahead and buy a new URL – perhaps, pksongs.pk and re-launch for a cost of Rs. 500/ year with an effort of 45 minutes at his computer.
Is there any hope of music labels winning this game? There has to be a new model. There has to be some disruption in this space.. the itunes model of granularity in the product will help <feels Sarika Grover>… but file copying and sharing is here to stay.
To be clear – I avoid using torrent and using pirated software/ music – but can’t help feel there’s a tipping point building up.
Judiciary in action
The courts reacted with lightening speed in this case. (Given the backlog in clearing cases). This is even more surprising considering the judgement is probably from the vacation bench as the courts are on summer vacation right now! FYI – In 2011, the Supreme court had 85 days as holidays, plus national holidays plus 2 day weekends. It’s true! But more importantly, here’s what’s striking:
- Providing a ban order without any explanation or insight into the various types of file sharing sites. Where and how do you draw the line? for e.g. is dropbox too far from the business model of those sites included in this ban?
- How did Vimeo get into the mix? Whoever thought of vimeo – why didn’t they include youtube?
- Why did the March order go into effect only now?
- WSJ quotes some legal experts on the matter
Experts attacked ISPs for clamping down on free speech on the web.
“Why and how did telecom giants target select websites,” said Pranesh Prakash, a program manager at Bangalore based-Centre for Internet and Society, a non-profit group advocating free speech on the web. He pointed out that the High Court did not spell out the names of websites that should be blocked.
“Shutting websites merely on the basis of suspicion amounts to private crackdown on free speech of the web,” he said. “Why didn’t the telecom ministry repeal or object to the move, knowing that the court didn’t spell out the websites to be blocked?”
Bhupendra Kainthola, a spokesman for the telecom ministry, noted that the “government or the telecom ministry had nothing to do with the high court ruling.” When asked why the ministry did not intervene, Mr. Kainthola responded: “What can we do? If an order has been passed, we have to follow it… that is the law of the land.”
The hackers were quick to react too, taking down the Supreme Court and Congress party site… as my classmate from ISB says “PS: As an information security enthusiast, I firmly believe, it is not a question of if we will get jacked.. but when.”
Don ko rokna mushkil hi nahin, namumkin hai! Kyoon Shahrukh?
I’d be lying if I said that I am not impacted by the Instagram valuation and the Facebook IPO. As an entrepreneur/ investor in startups, I’m now thinking about internet ideas where the market could be the whole world. Having said that, let’s look into more detail on whether Facebook’s is worth $100 billion.
Forbes has done some excellent research here
- At $100 bn, facebook is valued at 30 times trailing revenue.
- Who else is valued at that level? Google is at 5.5 times trailing revenue…
- For Q1 revenues – Facebook is at $1.06 billion (down 6.5%). Google is at $2.9 billion (up by 1%)
- Micsrosoft is a shade over $200bn valuation with a whopping $25 bn as pure profit. There’s an interesting piece on MS over here. Even though its unfair to bucket MS with these companies, there’s a point to be made about value and valuation of companies.
- S&P 500 is has a price/ sales ratio of 1.3 (industry average 3.7)
What about the last round of funding? The previous valuation at $50 bn with the Goldman investment was also questioned heavily by analysts. Some are even suggesting that fees Goldman will generate from Facebook eventually could pay for the whole investment. Read more here.
All about the Advertising
Facebook’s revenue comes from advertisers. My younger brother Vikas is convinced that advertisers won’t find the right customers while they are browsing social networks social networks will never find the audience at the right time/mindset for the advertiser’s benefit. Therefore they will struggle to drive transactions through it and will struggle to define ROI like on other online channels… but on the other hand one of my customers was delighted by the hyper targeting ability (18-14 year olds in Ahmedabad) for their advertising and immediately see benefit over google adwords which is approximate at best on demographics and geography based targeting.
Let’s look at the data:
- Click Through Rate for the web is generally 0.1%
- Google is at 0.4%
- Facebook is at 0.051%
- Facebook reaches 51% of all internet users, Google reaches 90% of all internet users
- Once you strip out the payments Facebook is receiving from app makers like Zynga, the rate of ad revenue growth is much closer to that of Google—but from a much smaller base, and it’s declining. From the quarter ended in September 2011 to the quarter ended December 2011, it fell 33.3 percent to 44 percent. From December to March, it fell 7.1 percent to 36.9 percent.
But then again does facebook even want to play this game?
“So far, Facebook’s advertising platform hasn’t kept pace with the explosive growth of its social network, and it remains to be seen if CEO Mark Zuckerberg even wants to focus on advertising as a source of revenue. In his 2,500+ word letter to shareholders this month, he mentioned advertising just once,” said Larry Kim, Founder and CTO of WordStream.
The other day, the wife was reading out the age classifications for Baby boomers, Gen X and Gen Y. As I am in the 18-32 bracket today, I have squeezed into the Gen Y generation by the skin of my teeth. Can’t say I completely relate with the kids who have only grown up on touch screen interfaces.. but what the heck… I’m still young! yippee!
The reason I bring this up is, following Schumpeterian economics, the gale of creative destruction is possibly due now. How long will facebook remain cool and hip and yong. It’s 8 years old – the novelty is gone. In the US, the number of accounts are possibly on the decline. Given, Zuckerberg’s knee jerk reaction with Instagram – you get the feeling they feel the threat of becoming obsolete. Orkut had 20 mn. users in India in one year… and down to zero in the next.
To summarise, if I were the head of a pension fund … I’d run away from this one. It’s extremely high risk…. with an unclear plan for returns.
Just noticed the video from my speech at i5 talks is now up – you can find it here. http://mahindrasatyam.com/i5talks/past-i5Talks-jan2012.html (Scroll to the bottom!)
Inspired by the Vodafone ‘Internet is Fun’ campaign, I realised I hadn’t written about my meandering on the web for a while. You can see some of my previous posts here. (Even one about the Vodafone zoozoos)
Before that, on a serious note, its been over 5 years that I’ve been working in the internet business and I’m reminded of the statement from the Cluetrain Manifesto that has remained as inspiring and relevant as it was 5 years ago.
“Hypertext is inherently nonhierarchical and antibureaucratic. It does not reinforce loyalty and obedience; it encourages idle speculation and loose talk. It encourages stories.”
So here are some highlights of my browsing from the last few days.
– You can always expect something fun from Ryan Germick, who’s a doodler in Google. (I know! what a cool job!). Last week, he posted about the Zerg Rush game from Google. Just type in zerg rush in Google and your screen will be attacked by flying O’s. Each O needs to be clicked on 3 times to destroy it. Remember to scroll down to save your world.
– I love Digitalbuzzblog. Here was a recent post about an ING promotion at basketball events. Passers by could use their smartphone to simulate a basketball free throw on a giant digital billboard screen. Check out the video here
– I’ve also recently started following Kevin Kelly. He’s been a TED speaker and is a technology philosopher. Often he does a curation of sourced quotes. See version 14 here. He’s due to come to India early May … I wonder how we can catch hold of him. Any ideas?
– For those who love to hate maths (like me) – you’re bound to relate to this one.
– Finally, XKCD never fails to amuse. I love their cartoons. How about this one and then keep hitting the random button for more…
‘Internet is Fun’ is an understatement. Looks like its always going to be superfun!
The last few days have seen the election campaigns for MCD heating up. I’m still surprised to see that apart from my parents, I don’t really know anyone in my circles who’s planning on voting. I thought of doing some active research into the candidates. But, please do read the PS section at the bottom for my cribbing on the lack of local journalism.
My first question was – What does an MCD councillor really do? What’s the job about? Here’s a good synopsis:
1. The official government published list show 3 candidates from Chirag Delhi ward (which includes Greater Kailash 2).
2. These are from Congress, BJP and BSP
- Ramandeep (BSP) – Most educated, least wealthy (couldn’t find her last name)
- Sarla Gurliya (INC) – Middle educated, middle wealthy
- Sunita Gulia (BJP) – Least educated, most wealthy, following in husband’s footsteps (MCD councillor Rakesh Gulia).
3. There is either very little information/ debate available online about the cadidates or it is not showing up on Google
4. In my view, given the responsibilities for a MCD councillor, the top issues from this ward would be:
– Re-opening of Savitri cinema (Can it be stopped?). Maybe the MCD doesn’t have much role but we’ll need all parts of the government to be activated.
– Parking is becoming tougher and tougher in residential and market areas.
– Water Logging. In the first dust storm in April this year, we saw water logging at Chirag Dilli flyover and traffic backed up for miles. What will happen in the monsoon?
– Development of parks shouldn’t be a horticulture activity alone. There needs to be a complete development for sporting activity.
So, I don’t really understand why I need to listen to references of CW games on the radio for these elections…
5. In just one party there are 7 wives of current politicians who are running for the post for the first time (I’m pretty sure). Is this what the women’s bill was aiming for? While I’m centre-left on the issue of reservations… clearly political parties need to focus on talent management.
PS – Local Journalism.
It took me 20 minutes to finally find the list online! All popular media have done a good job of listing all Congress and all BJP candidates. Only myneta.info has done a ward wise presentation. There’s a dearth of insightful information on any of these candidates.
This re-affirms my belief about the complete lack of local journalism (print or digital). There is a population of about 25,000 people in this MCD ward. Surely it could support a local dedicated newspaper or even a digital newsletter. If you can get enough ads to distribute free classifieds books (yellow pages) every month, I’m sure an enterprising media company/ journalist/ student would find it worthwhile to have a dedicated fortnightly/ monthly newspaper.
Wouldn’t you like to read about the teacher retiring after 30 years from the local school your kid went to?