The f words – fight, flee or flow

Fight, flee or flow – are the three obvious approaches to any challenge.  When faced with a challenging, one can either fight it (read "change" it) or can flee away (read "give up") or flow (abandon your judgement and accept things).

While I've known myself choosing "fight" in more situations, "flee" could proven to be an equally effective approach in certain situations. My intention is not to "preach" here, but share a quick summary of my approaches to address challenging situations.


Fight is synonymous to persistence. It is the most common trait in everyone whom I admire. It defines entrepreneurs. In fact, it gives birth to entrepreneurs. Most successful products/ideas have been born, when someone fought the status quo and created a company/organization to manifest that fight. Think "Dyson" vacuum cleaners, think "Apple" computers, think "facebook", think "Kindle" and thousands of other entrepreneurial stories. Most people get this, so I'm not saying anything new here.


Fleeing means accepting that fighting may not be the most optimal approach for you, so giving up the fight (and hopefully start a new fight). It is considered a taboo to give up, especially in the entrepreneurial circles. Quitting is often not an option. "Finish what you started" is often the advice young entrepreneurs receive. Most importantly, the spirit of "fighting" is so strong, that even a thought of "fleeing" away from the situation is traumatic for the entrepreneur.

Yesterday I caught up with Peter (an old friend and the co-founder of my first startup – Securamed) over dinner. It was one of those classic "catching up" meetings and the obvious topic of discussion was – "where we were in our entrepreneurial quests." After gobling loads of fried tofu at Thai Tom in the U-district of Seattle, we asked to ourselves – "What would we have done differently at Securamed, if we were starting it today?" We discussed the interns we had hired, tens of conferences we had attended, business plan pitches we had made and hundreds of rejected sales calls, we had experienced as student entrepreneurs.

The over-arching theme of the discussion was – "We should have accepted that our product was not fit for the market conditions at the time and should have started working on another idea sooner. We could have realized the opportunity cost of pursuing the idea further at that point to pick up another fight sooner."

To set the context, we were trying to create a reverse-auction-based marketplace for health insurance by converging health insurance and personal health management. We eventually realized that despite winning five student business plan competitions and a brilliantly designed product, the market was not just ready for it. In some ways the market isn't ready yet for some of the advances in the "business of healthcare". It is apparent from the not-so-successful attempts in the healthcare realm by effective companies like Google and Microsoft. We eventually realized the opportunity cost, reduced the scope of the product and continued a very small portion of the product offering.

The highest order bit is to realize when to fight and when to flee. I'm not a huge fan of putting "stop loss" orders on my investments, but as entrepreneurs the opportunity cost of not doing so could be high.

Let's flee a dud and start a new fight.


ps: Don't just flow. It is immoral to abandon your own judgement, so either fight or flee, but don't flow.

In search of an optimal micro enterprise

I’ve believed firmly that microfinance is one of the most effective instruments to alleviate global poverty on a huge scale. I’ve been fascinated with microfinance, because it fosters entrepreneurship amongst the poor. However, the entrepreneur in me was always curious about the business plans (demand/supply, distribution, access to markets, etc.) of this class of new micro-entrepreneurs. I’ve always wondered, if there were proven micro-enterprises, which could be easily replicated or even franchised. In my search for such proven micro-enterprises, I’ve always looked for three key parameters in this order:

1. Direct access to highly scalable markets

2. Alignment of required skills in an entrepreneur

3. Transparent accountability

During my current visit to India, I got a chance to explore both rural and urban poverty and share my thoughts on poverty with several leading individuals and institutions. During these visits and conversations, I focused on finding consistent themes in finding examples of optimal micro-enterprises. After visiting a few rural areas, it has been apparent that “milk production” is clearly a micro-enterprise with the most direct access to the markets, due to the well-established dairy cooperative system in India. 

Direct access to highly scalable markets : It is safe to say that there is seemingly infinite demand for milk by the milk processors, a sophisticated distribution channel to collect milk from every village daily at a standardized rate and a well-understood payment channel which enables the milk producers to get paid thrice a week (every ten days).

If a poor person is empowered to purchase a water buffalo or a cow through a microloan, he/she can immediately become an entrepreneur and start leveraging the established distribution channels to sell the milk produced by that buffalo/cow.

Alignment of required skills in an entrepreneur: Maintaining water buffaloes is common in most rural areas in India and most rural poor are familiar with the tasks involved in maintaining water buffaloes.

Transparent accountability: Since the entrepreneur will get paid
only by the milk processor (which is part of the national dairy
cooperative system – Amul),all monetary transactions can be easily tracked, thus adding transparency and accountability.

There are several open questions and I’m working on finding answers to them by visiting more villages and talking with both the poor and thought leaders in poverty alleviation. But, from a variety of micro enterprises I’ve looked at/thought of so far, “milk production” seems to be the most optimal.


Let’s eliminate rural poverty, one buffalo at a time!


IMDb: onward to 100 M unique visitors through social content, personalization and Asia

I decided to skip watching Wolverine on Friday night and thought about the business of “movies” from my vantage point (as a tech entrepreneur).

I’ve used  the Internet Movie Database (imdb) for more than ten years as my primary source for all things “movies”. Along the way, I’ve also frequented Yahoo movies, Rotten Tomatoes, my college newspaper’s movie reviews and Flixster (on faceboook) for American movies and IndiaFM for Hindi movies. As IMDb continues to grow towards Col Needham’s vision of putting a Play button on every page (the Big Hairy Audacious goal of streaming all movies and TV episodes for free), it has unique opportunities to dramatically increase traffic from 57 M unique visitors per month to 100 M. In this post, I want to share my thoughts on:

  1. The mental model of a movie viewer’s intentions around movies – as a finite state model
  2. How would I approach to grow the user-base by providing an immersive and delightful “movie” experience to users
  3. Social graph, personalization and Asian markets – why they matter!

Where do people go today to find information about movies/celebrities?

While IMDb is one of the most frequented web sites in the world and the most frequented movie destination site in the world, competitors like Yahoo Movies and Flixster (200+ % growth!) have been growing at a faster rate. Here’s a comparative snapshot of US traffic from Compete.(Alexa, Quantcast, Comscore show similar relative results)


Mental model of a movie viewer’s intentions and actions:

Based on my personal experiences and conversations with friends, people visit an entertainment/movie website to read movie reviews, find out more information about a movie/celebrity, find showtimes for movies, watch trailers, buy a movie ticket or learn about upcoming/new movies. Being a computer scientist, I couldn’t help but create a finite state model.


The ideal web experience would enable the user to transition from one state to another in an intuitive and delightful way, without leaving the website. To further understand the four main scenarios, let’s take an example of a fictitious persona : Shelly Jones, who has recently graduated from college and loves movies.

  • Discover: Shelly may discover a new movie or a new celebrity through multiple sources (online and offline) – by talking with friends, watching a trailer in a movie theater, seeing a poster, watching an ad on TV, reading an article in a blog/newspaper, reading the list of upcoming movies on a website, etc.
  • Learn: After discovering about a movie or a celebrity or a TV show, Shelly wants to learn about the movie by reading synopsis, reading a review, learning more about the cast, watching trailers online, listening to/reading interviews of the cast, etc. such that it helps her to decide whether or not she should watch that movie.
  • Watch: If Shelly decides to watch the movie, she may also want to find out the
    showtimes near her location and potentially buy her tickets online. If
    feasible, she may want to watch the movie online right away on her
    computer or rent it (on Netflix or Blocksuster)
  • Discuss: After watching a movie, Shelly may want to write a review, rate the movie and discuss more about the movie with others who may have watched it. She may want to learn more about the cinematographer for the movie and watch other movies by the cast members.

While most movie sites address some or all of the above listed scenarios, the successful ones focus heavily on making the transitions (represented by numbered arrows in the diagram) obvious, intuitive and delightful, thereby reducing any friction for the user to immerse herself in the world of movies. Let’s explore the transitions:

  1. Discover > Learn: Once Shelly discovers a movie, TV show or a celebrity, she should be able to easily search for more information with at most two clicks. The search process should be enjoyable and exploratory, the content should be available and trustworthy and Shelly should be able to immerse herself into a discover > learn > discover cycle.
  2. Learn > Watch: One of Shelly’s primary objective is to decide whether she should watch that movie or not. Shelly should get objective and expert guidance/reviews about a movie/celebrity to help her decide. Shelly should be able to tag or store the information and should be able to access it later.
  3. Watch > Learn: After watching a movie, Shelly would want to learn more about the movie / celebrity.Once Shelly indicates that she has watched a movie, she could be easily shown which of her other friends have seen it, what information have they accessed, how can she use her experience of watching that movie to make decisions about discovering and watching new movies.
  4. Watch > Discuss: Invariably, whenever I go to a movie with friends, the first topic of conversation after the movie is – “Did you like it?”. Shelly is likely to rate a movie, write a review or discuss the movie/celebrity in the message boards. The key would be to highlight key topics of discussion around a movie to Shelly, allow her to share/discuss/compare her review with her friends.
  5. Discuss > Learn: Through conversations, Shelly is likely to discover information about linked movies/celebrities and learn more about it.

IMDb addresses all of the above scenarios, but it has an opportunity to make these experiences more engaging, social and personalized. Based on the affordance of IMDB’s website, today it appears to focus the most on “Learn” and “Discuss” with a long term vision to emphasize on “Watch”. Although, all three experiences are superb by themselves, Shelly’s experience can be enhanced significantly by reducing friction from the transitions.

How would I grow traffic at IMDb?

IMDb has been growing at an enviable rate for its size (almost 40-50% year over year) ans as it continues to grow towards its big goal of streaming all movies and TV episodes, I see strategic opportunities to significantly grow traffic/ad revenues while satisfying the users and advertising customers.

IMDb is an established brand with a large number of loyal users. Taking an overly simplified approach, there are two ways to grow:

  1. Provide “more” services and thereby monetize the existing demographics more
  2. Attract new demographics by offering newer services


1.1 Existing Demographics:

As shown in the tree diagram above, it would be both strategic and tactical to address the users with existing demographics, which can be further segmented as

  • 2.1 Existing Users, who already frequent the website
  • 2.2 New Users who may have similar demographics as the existing users, but do not frequent IMDb

2.1 Existing Users:

  • 3.1 Increase average time per visit:

While integrating videos is likely to increase average time spent on the site, IMDb has several assets (message boards, ratings, reviews, recommendations) which can be leveraged to have more users spend more time on the site. While most discussion on IMDb is facilitated by message boards and comments, there are tactical opportunities to make these conversations more discoverable, frequent and delightful by augmenting them with a social graph and an architecture of reputation for all user generated content. When users have an incentive to discuss movies and celebrities with their friends, they’re likely to spend more time on the site in communicating and reciprocating on the web site, in addition to the time they would spend for their personal movie-exploration.

  • 3.2 Increase frequency of visits:

Existing users typically visit a specific intent to discover/consume some information (and a relatively small percentage of users visit to just explore.) Users in the former category can be prompted to visit the site, when new content which maps directly to their preference is added to the site or when their friends have contributed some content that they may care about. Personalized and social notifications (recommendations, reviews and messages) along with an architecture of reputation could incentivise users to visit the site more frequently.

2.2 New Users:

  • 3.3 Reduce friction to discover the site

In the past three years, a certain class of web-sites and applications have become the sole way to discover, consume and access information on the web. The key in attracting new users is to reduce any friction from their current behavior/method of consuming information.While some optimization can be done through Search Engine Optimization (especially for TV-related information), the highest order bit is to make the information on the site discoverable and available through user’s existing work flow. Detailed integration with facebook and MySpace, further integration with twitter (beyond requesting information about movies) and integration with avenues where people watch movies/TV(for instance: Netflix queues, Blockbuster rental history, Tivo and fandango). This would ensure that new users will discover and use IMDb, without significantly changing their behavior.

  • 3.4 Reduce friction to use/access the site any where and on any device

Requiring a user to be using a computer (desktop/laptop) to be able to fully enjoy the movie-exploration experience may be restrictive. A new set of users could start using IMDb more frequently, if it is pervasive and accessible anywhere from any device. Investments in mobile-optimized website (for instance, trailers which work on iphone), applications on iphone/android/Windows Mobile could reduce friction to access the information. Integration with Netflix-enabled devices (for instance: XBox 360) could be another channel for a pervasive experience.

1.2 New Demographics:

Besides leveraging the users of existing demographics, it would be strategic to invest in newer markets to ensure long-term growth.

  • 2.3 New markets (both geographically and genre-wise)
  • 2.4 New content aimed at both casual users and professional users

2.3 New Markets:

  • 3.5 New geography

IMDb is the number one movie site, but caters primarily to Hollywood movies or acclaimed International movies. India boasts the world’s biggest movie industry (at least in terms of number of movies released per year) and several Indian celebrities are popular across the world (even among non-Indians). While IMDb contains title pages for several Indian movies and celebrities and syndicates news from, the experience for browsing an Indian movie is not as immersive or delightful as that of browsing a Hollywood movie. Through a combination of key partnerships with Indian content providers, SEO and seeding IMDb resumes of Indian celebrities, IMDb has an untapped opportunity to become the number one movie site for Indian movies. The same applies to movies made in rest of Asia (China/HongKong/Taiwan in particular, where the movie is going through a massive growth in the relatively liberal years currently.)

  • 3.6 New genre

While IMDb has successfully rolled out a dedicated section for all things – TV, there are opportunities to increase scope and grow by offering information about video games, user generated videos on YouTube, anime and music.

2.4 New Content:

  • 3.7 Content for casual users

While pro users contribute most of the content, casual users (who mainly seek information about a movie, TV show, trivia, celebrities, gossip, etc.) typically tend to account for the majority of visitors (I haven’t confirmed this for IMDb). Casual users could be interested in interactive games, trivia and polls, which is currently hidden in message boards. There is an opportunity to create a new set of content (games and applications) catered towards the casual visitors. The ideal avenue would be to empower the pro-users to create such content/games, by giving them tools to create, promote and distribute such content. Today, the pro-users already do that through message boards.

  • 3.8 Content for pro-users

Most content on IMDb is user-generated and editor-approved. Pro-users (very frequent visitors of the site, who proactively participate in discussions, write reviews, add biographies, etc.) are responsible for most of the user-generated content on IMDb. There is an opportunity to leverage this loyal base to create more and different content for the casual users to consume, by empowering the pro users with tools to create new, engaging and interesting content. Today, most of the innovation is restricted to message boards on IMDb, which restrains the creativity of the creator and discoverability of the content by a casual user. By providing tools to create games, different visualizations of content (photo albums/collages), movie guides catered towards a diverse set of users (guides for Christians, guides for immigrants, etc.), user-submitted photos, videos and fan sites – a completely new set of content can be created and offered to the users. This approach can be further optimized by adding the notion of “reputation” to incentivize pro-users to contribute more and high-quality content. Today, a user’s profile page on IMDb doesn’t distinguish a registered user who may have written 100 movie reviews from a user who may have not written any.

Decision Matrix – Which ideas to implement?

As a business owner, I would optimize the implementation on the basis of users’ satisfaction and advertisers’ satisfaction. The top left quadrant in the 2X2 matrix below indicates the changes that would add positive value to both users and advertisers while the top right quadrant indicates ideas that are positive for the users but may not be the most optimal for advertisers. Based on the opportunities described above (3.1 -3.8), I see three main themes, which would add positive value to both users and advertisers: social content, personalization, Asia.



  1. Social Content

    1. Social Graph: I’m not proposing a “me too” approach of copying “Flixster”. Instead, I’m proposing to highlight and leverage the already existing social activitiy happening through message boards on IMDb.
      1. Instead of relatively static message boards, IMDb has an opportunity to increase the reach of discussions to a larger number of users by integrating with other portable social graphs (Facebook Connect, My Space Open API, etc). It would be strategic to extend the notion of “Friends” on message boards to IMDb’s own social graph in the long run, thereby enabling scenarios for easily sharing friends’ reviews, ratings, notifications, etc. (today limited sharing is available through exchange of static links, which could be a barrier for some users)
      2. The conversation can be further extended to a conversation between celebrities and users, as opposed to amongst just users. Ashton Kutcher has proven the value of a constructive dialog between a celebrity and fans. IMDb has an opportunity to be a social interface between celebrities and fans.
      3. IMDb has an opportunity to incentivize users who add significant value to other users by implementing a notion of “reputation” based on a user’s activity
    2. More user generated Content:
      1. IMDb has an opportunity to leverage the loyal user base to create/source innovative content around movies, TV and celebrities. Empowering users to create their “fan sites” or blogs around a particular celebrity or a movie could lead to more traffic and a stronger sense of community.
      2. Enable user to comment, rate and review individual content pieces as well. For instance enable users to comment on a photo, instead of generic comments on the title page.
    3. Platform Approach:
      1. A majority of innovation could be crowdsourced to the long tail of movie fans and devlepers who would find creative ways to build new experiences around IMDb’s content. Today most content is not easily accessible (developers need to download the text files locally and pay licensing fees.) IMDb has an opportunity to selectively expose some content through a hosted API, and let movie fans innovate. There’s a minor risk of sabotaging existing licensing fees (earned from the content), but it could prove to be a strategic long term move
  2. Personalization:
    1. Instead of restricting personalization to visual appearance, IMDb has an opportunity to leverage user’s browsing habits, ratings, reviews, friends, message board participation and My Movies lists to create a very personalized movie-experience. Personalized notifications through RSS feeds about new content that may interest the user could incentivize the user to visit the site more frequently.
    2. Partnerships with Netflix, Tivo and other similar services could help automate personalization.
    3. Enable the user to fine-tune the personalized recommendations by allowing them to vote on the recommendations.
  3. Asia Readiness
    1. Focus on India: Position IMDb as the most comprehensive destination for information on Indian movies and celebrities (it is NOT today), by seeding information about Indian movies and celebrities.
    2. Raise awareness amongst the Indian audiences through SEM and partnerships with leading content providers in India.
    3. Repeat in China.

IMDB has been successful as the most comprehensive source for movie, TV and celebrity content. Fostering easily accessible and shareable conversations around this content could accelerate and nurture rapid growth.

There’s no business like show business!


Amazon Kindle College: rent textbooks – my elevator pitch to Jeff Bezos

One of the most annoying anomalies during my college education was the incredibly high and progressively increasing price of textbooks (often around $100 for most Computer Science and Economics classes). More than the price itself, the most irritating factor was the artificially-induced price-inelastic demand for text-books (no matter how high the
prices were, almost all students including myself were forced to purchase the textbooks). These high prices can be attributed to the existing business model and delivery mechanism of text-books which is dominated by a small set of publishers and distributors. While renting physical printed books does address some of the issues (I admire Chegg : Text book rentals), it doesn’t solve the problems of high cost, out-of-date content and logistical inefficiences.


From my vantage point, Amazon Kindle’s adoption, usability and content-distribution mechanism makes it far more superior both functionally and experientially for the college student. I believe firmly that Amazon Kindle for college students has an opportunity to make a substantial dent in the $4.9 billion text books market by shifting the focus from “used books” to affordable and up-to-date new digital book rentals. If I ever bump into Jeff Bezos in the next few months (you never know – Seattle’s a small city), here’s my elevator pitch:


  • Amazon Kindle College could offer college students with rental textbooks at dramatically lower costs than used text books, thus substantially reducing the student expenses on textbooks by more than half. College students who are often cash-strapped are frustrated by the ever-increasing costs of text-books and the hassles associated with re-selling them back.
  • Kindle could enable to publishers to gain substantially larger aggregate margins for a textbook unlike contemporary model where the publishers get margins/profit-share only from the first sale of a new book, even though an average textbook may be sold multiple times over in the used books market.
  • Kindle could leverage technology and a significantly better customer-experience to eliminate the inefficiencies associated with the used books market, which is estimated at a $1.9 billion per year.


Textbooks are expensive and prices keep increasing:

Textbooks account for a major expense for college education, ranging up to $1000 per year per student. Since the supply chain (publishers and distributors) is an oligopoly (just five major publishers – Thomson, McGraw-hill, Wiley, Houghton-Mifflin and Peason, and just four major distributors/wholesellers – Follet, Barnes and Noble, Nebraska and College Bookstores of America), price of new textbooks is not controlled by market forces. The demand for textbooks is almost inelastic (see the graph above). Nonetheless, students are forced to purchase textbooks.

The market for used books is inefficient and wasteful

Students waste significant mindshare and resources at the beginning of every semeseter/quarter to sell their textbooks back (either to other students or to a bookstore), and are often forced to do so due to financial constraints. The “used books” market is typically driven by bookstores (online and offline) and is often full of inefficiencies related to pricing and logistics. The “used books” market is optimized for the benefit of the bookstores/distributors while publishers as well as authors are kept out of the loop.

Renting physical printed textbooks has shown positive results, but is neither scalable nor optimal.

Owing to large initial investment requirements and conflicting interests with existing profit streams of bookstores, bookstores/universities often don’t rollout rental programs. In the last few years, there have been some progressive startups like Chegg, who rent textbooks for typically 1/3rd price of the cost of a new book. But these models work only for beginner classes (with a large and predictable enrollment of students). These models also keep the publishers out of the loop of sharing margins of book-rentals, thus giving them incentives to publish new books more frequently.


Amazon Kindle for College could rent textbooks to students for a semester/quarter at a substantially lower price than that of used books. Incentivize publishers and authors by sharing revenues from each book rental. Shift the cost savings from “not having to move around used books” and “not paying hefty margins on used books at bookstores” to the customers, while providing them with an incredibly superior “Textbook” experience.


Overall the market textbooks in the US is estimated at $4.9 billion per year. Used books account for about $1.9 billion per year market annually. There are bout 17.5 million college students in the US (addressable market size.)

Benefits of innovation:

  • Students get a superior and up-to-date textbook experience for a significantly lower price
  • Publishers get a share from every book consumed by a student, thereby increasing their aggregate profit.
  • Authors get a royalty for every book consumed by a student and can publish updated content seamlessly at a marginal cost.

Distribution and go to market:

  • Offer students with an offer they cannot refuse. Price the books such that, the cost of a Kindle College and first semester rentals would be less than what students would pay otherwise for textbooks for one semester.
  • Add value to the Kindle College experience by opening the Kindle platform to developers to develop value-added applications

Napkin Numbers: These are some numbers that I came up with based on my college experience and some napkin math. These numbers, may not be exactly accurate, but should be in the ballpark. I had purchased a Computer Science textbook “Introduction to Algorithms” by Cormen for about $100 and am sure that it is still being circulated in the used-books market, benefitting the bookstores.

After being forced into buying a new book for $100, I could have sold it for $40 to the local bookstore, who would resell it for $70 and the cycle could continue, until the publisher publishes a newer version of that book. Although the book would be experienced by multiple readers, the publishers and authors wouldn’t get any royalties/margins from the subsequent purchases.



Rentals on Kindle may eat into profits of existing “used books” business of Amazon in the short term, but it is THE right thing to do for customers in the long run.

Most numbers about the market and supporting data are quoted from a comprehensive study done by Dr. James Koch (smart man) which can be found here.

On a personal note, this has truly been one of the most irritating things about my college experience and I had attempted the following means at various times to deal with it:

  • Bought the same textbooks at significantly cheaper prices from India (typically for the spring semester, whenever I went to India for Christmas break.)
  • Attempted to rent my textbooks to juniors.
  • Sold my used books on Amazon zShops.
  • Did not buy a text book for a class (as an experiment) and managed to get a decent grade (had almost bought the textbook on the eve of a midterm exam)
  • Mostly ended up buying used books on or (they offered the cheapest used books)

Let’s fix this!

Berkshire Hathaway letter – what I enjoyed

Warren Buffett does it again. Here are some verbatim statements, that I enjoyed in his latest letter to the investors of Berkshire Hathaway.

By year end, investors of all stripes were bloodied and confused, much as if they were small birds that had strayed into a badminton game.

In God we trust; all others pay cash.

In poker terms, the Treasury
and the Fed have gone “all in.”

In good years and bad, Charlie and I simply focus on four goals:
(1) maintaining Berkshire’s Gibraltar-like financial position, which features huge amounts of excess liquidity, near-term obligations that are modest, and dozens of sources ofearnings and cash;
(2) widening the “moats” around our operating businesses that give them durable competitive advantages;
(3) acquiring and developing new and varied streams of earnings;
(4) expanding and nurturing the cadre of outstanding operating managers who, over the years, have delivered Berkshire exceptional results.

During 2008 I did some dumb things in investments. I made at least one major mistake of commission and several lesser ones that also hurt.

Furthermore, I made some errors of omission, sucking my thumb when new facts came in that should have caused me to re-examine my thinking and promptly take action.

As we view GEICO’s current opportunities, Tony and I feel like two hungry mosquitoes in a nudist camp. Juicy targets are everywhere. First, and most important, our new business in auto insurance is now exploding. Americans are focused on saving money as never before, and they are flocking to GEICO.

A promise is no better than the person or institution making it. That’s where General Re excels: It is the only reinsurer that is backed by an AAA corporation. Ben Franklin once said, “It’s difficult for an empty sack to stand upright

Ajit came to Berkshire in 1986. Very quickly, I realized that we had acquired an extraordinary talent. So I did the logical thing: I wrote his parents in New Delhi and asked if they had another one like him at home. Of course, I knew the answer before writing. There isn’t anyone like Ajit.

I described it as involving “borrowers who shouldn’t have borrowed being financed bylenders who shouldn’t have lent.”

capitalism at its best..

on poverty elimination: scope and my approach

Poverty-elimination is one of my life-goals. Recently, I took some time to scope the problem of poverty-elimination and attempted to come up with an initial approach. I approached it in the same way, I would approach any new product launch – by segmenting the market and understanding each segment's role. Here's a snapshot of my early analysis. I would love to hear your thoughts:

Question: What can I do to eliminate global poverty in the next 35 years?

Answer: Assuming that microfinance works, most obvious thing to start with would be to make microfinance more accessible in a measurable and leverage-able way.

More on the answer..(I don't know answers to the questions in red, but the search is on..I'll post the answers as I find them..)

Segmentation: In an effort to understand the market needs, following segmentation of the addressable market seem to make sense to me, but there are some fundamental questions (listed in red.)

1. Poor versus Ultra poor: At a very high level, needy poor can be divided into two categories:

1. People living just above the poverty line (say $2 per day) and

2. People living below poverty line (ultra poor)

Out of the two billion+ poor in the world, how many fall in #1 vs #2?

I’m assuming that microfinance typically addresses the needs of the economically active poor (i.e. those who live above the poverty line). With sophistication of the industry, more commercial institutions (banks, commercial lending groups, etc.) are likely to enter the market, but would serve the needs of the poor who are living above the poverty line. NGOs are most likely to serve the ultra poor in these circumstances. Would the NGOs be able to meet the demands of the ultra poor in terms of scale and type of services? Also, when resources-laden commercial banks enter the market how would the existing MFIs differentiate themselves/maintain a competitive advantage?

2. Willingness versus readiness versus access to microfinance:

Another way to segment the poor could be:

  • ·         Those who are not willing to borrow, due to social beliefs, fear of debt, etc.
  • ·         Those who are not ready to borrow, due to lack of markets, political/geographic instability, etc.
  • ·         Those who don’t have access to microfinance, due to lack of access to MFIs or lack of enough MFIs in the market.

    Is this segmentation apt and  how many of the poor fall in “not willing” vs “not ready” vs “don’t have access” category?

Innovation: I believe that three types of entities have a bigger opportunity as well as higher probabilities to innovate and add value in measurable and leverage-able ways:


Type of Innovation

Potential value-adds



Service Innovation

a.       MFIs could design and implement newer delivery mechanisms of microcredit to make it more accessible to a larger set of poor and decrease the number of  (not willing + not ready + don’t have access).

b.      MFIs could design and implement newer ways to offer micro-credit at a cheaper rate than today, by introducing technical/process innovation (for instance: automatic credit approval and lending, auto-payment options, etc. to reduce manual inefficiencies from the microfinance value chain)

c.       MFIs could design  and implement new services that span beyond just microcredit  (for eg: money management, health insurance, credit rating, etc.)



Social Innovation

d.      Test and deliver high cost/riskier programs to address the needs of the ultra-poor.


Social Enterprises

Product Innovation

e.      Design and distribute products that directly impact the bottom line of occupation/work that the poor are typically involved in (for instance, Grameen Phone initiatives in Africa, Cheaper irrigation products by Paul Polak, etc.)

This is a first step in doing something measurable and leverage-able towards poverty-elimination.

Let's eliminate poverty!

Extra: I had asked similar questions to Paul Polak – "Can we eliminate global poverty in the next 35 years?" His answer was Yes (with conviction). I liked how he explained pragmatically : Considering that half of the world's poor rely on agriculture for their livelihood, desiging innovative and affordable products to make effective agriculture accessible to the poor farmers – can solve half of the problem. Similarly product innovation can help with the other remaining half as well…

on Competition: knowing the other players

"As an entrepreneur, if you think that you don't have any competition, then it means one of two things:

  1. What you're working on is not worth working upon or
  2. You don't know how to use Google"

Guy Kawasaki had once told this to Peter Panas and me during a global student business plan competition years ago, after we had just pitched the business plan for Securamed at the Stanford global e-challenge in Singapore. Competitiveness is the essence of any business and you need to know the competition to be competitive.

It must be obvious that you need to know who your present competitors are, but it is even more important to know the following three facets about your competitors:

  1. How will your competition react to your strategies?
  2. What is your strongest point and your competitors' weakest point?
  3. Who is likely to be your competitor in the short term vs the long term?

In this this post, I'll share my thoughts on #1 – proactively predicting the competitor's moves/reactions:
Just knowing the names and basic offerings of your competitors is never enough. Basic information about the obvious competitors is typically very easy to find. If it is a large company it is pretty straight forward to find the basics from the company's website. If the competitor is a public company, then it is even better. For large companies, which are private, you may find the basic information from the Dunn And Bradstreet reports. For large companies, which are publicly listed, most information is available from the EDGAR reports or the annual reports. Hoover's database (easily accessible from any decent library) is also very comprehensive. It starts getting trickier as the size of a competitor starts decreasing. Not only can a smaller company harder to spot, but their strategies/reactions are harder to predict. Most effective small companies are fairly agile and can adapt easily to changing market conditions.

Despite the size of the company, there are two proven ways to learn the most about a competitor.
One, be a customer of the competitor. Eat the competitor's dogfood. Empathize with the experience offered by your competitor to their customers. Use the competitor's product. Talk to their customer support personnel. Post a question on their help forum (if one exists.) I'm not suggesting espionage. There are legal ways of purchasing and using a competitor's products. Don't hide your identity. It is OK to say that you work for your company and disclose who you are. The competitors assume that you know everything about their product, anyway.The goal of this exercise is not to find the good things about a competitor and copy them. The key is in understanding the guiding principles of the competitor's execution strategy. Is the competitor focusing a lot on customer service? Is the competitor's product sold on the merits of its user interface? How has the competitor's product matured over time? Has the backend being made more robust or has the competitor focused more on improving the user interface over time? What are their customers/users liking/disliking about their product (can be found easily through newsgroups/blog posts, etc.)? Buy the best possible version of the competitor's product and renew your service subscriptions. Keep up with the competition as a pro-customer and get a pulse of their business.

Second and most important aspect is to really really know the people involved in the competition. Is the CEO of the competition a strategiest or a people manager? Is he/she a technologist or a marketer or a deal maker? What does the DNA of the competition's leadership look like? Is it dominated by technocrats or sales people? Where have most people worked before (this gives a pretty clear picture of their work-style or their approach?) Who is likely to succeed the current leadership? The goal of this exercise is to really understand how your competition is likely to react, when you execute your strategies. For instance, if you introduce a new product, is the competitor likely to introduce a more technically robust product, or is it likely to strike a deal with another competitor to combat you or is it likely to reduce the price of their offerings. These things can only be found out by investing heavily in understanding the minds of the key leaders at your competitor. All decisions and strategies are implemented by people and not organizations/companies. It is important to be able to understand their value system, their guiding principles and their likely reactions. If you know the likely reaction from a competitor, you can always be prepared for it or even use it to deceive the competition. Data about people, their past experiences and their workstyles can be easily found on LinkedIn/facebook. Be aware that the competitor would also  be trying to sum you up, so control how you project yourself through LinkedIn/facebook/blog posts/replies to newsgroups, etc.

If you play any competitive sport, these things may seem like "common sense", because it is common sense. Remember to use it. Tennis and chess provide a very straightforward way to simulate one:one competitive environment and practice your strategies. My most favorite board game – RISK, is the best way to simulate competition amongst multiple players and try out strategies.

A lot have been written on competition by both academicians and practitioners. Works of Michael Porter and Sun Tzu (The Art of War) remain the most admired. Read these works, if you haven't.


Why I blog?

A friend recently asked me – why I blog? Simple answer - I get to connect with several like-minded people by sharing my thoughts. I've met several folks from around the world who are now my very good friends. Here's one of the recent mails I received from a reader. Messages like this makes it worthwhile to blog and share ideas.


Hello Kintan,

I am currently pursuing Masters in Information Management from University of Washington, Seattle. I have been a follower of your blog for a very long time and I really appreciate your taking time out to write about Program Management.

Your blog was one of the reason, I applied for the PM position at Microsoft and I actually crossed the initial screening. I will be on Microsoft Campus very soon for the on site interviewing.

I need your suggestion on designing in particularly "software". I understood the concept of designing the "physical objects" like a kitchen, or a building. But while thinking of designing a software, I wanted to know whether the interviewer means the UML design (like the way it is given in OO Design Patterns by Gang of 4) of the software or something else. And what modifications will you suggest in your "design template" specifically for Software.

Looking forward to your reply.




back to business after a “think month”

Every year, I set aside some time to "think". Typically, it has been during the month of December, but this year it ended up being the month of October. While throughout the year, mind is always on a relentless pursuit of thought, followed by action, I make conscious efforts to prioritize thoughts, share thinking points with friends/mentors and select three concrete areas to work on.

I've found this process very helpful and in fact addictive over the last six years. Several people I know and respect have been doing it for years. For me, the "think" day/week/month entails three things : 

1. Emptying your mind and organizing all thoughts in the mind: Open up a journal (I prefer paper journal, but OneNote works as well) and write down all thoughts that have been lingering around in the mind – things you've wanted to learn, things that have been bothering you, things that you've wanted to get done, people you've wanted to meet, etc. After listing down all thoughts – sort, bucketize, prioritize these thoughts/themes.

2. Deliberately add new thinking points to the mind: Since our mind is always receiving information/thinking points from a gamut of sources, "think time" is a good opportunity to put a filter on the information sources and seek out to learn more about a few specific topics. Seek out the experts on these topics, read books, read blogs and take notes.

3. Executing: The entire exercise is not worth it, if it is not acted upon. Prioritize three or four themes/areas to focus on, create milestones and action items, between now and the next "think time."

None of these points are new and most of us use this (or an even more complex/scientific process) for work-related projects. I've gotten myself to do several insightfully satisfying things and thereby increase the portfolio of my passions through these "think times". Starting companies, painting, blogging, getting passionately involved in poverty-elimination/Unitus, travelling to specific places, some very close friends – have been results of my past "think times." Pixtoria is one of the results of my most recent "think time".

A wide variety of themes dominated this year's "think month":

  • relationships: family, friends, personal vs professional circle of influence
  • opportunities/industries: unified communications, social networks, mobile, microfinance, healthcare

  • poverty elimination vs environment protection, micro econ vs macro econ
  • living in Seattle vs San Francisco
  • portfolio of passions: painting vs photography, car racing, travelling

I typically don't suspend my regular activities/work during this "think time" (in fact, I try out things that I've been wanting to do for a long time, but haven't gotten a chance to do so – for instance, sky diving, reading books that were on hold for a long time). I don't blog during this time.

The duration of "think time" does not have to be a month, but at least a day or a weekend. It is hard to go in detailed depths, if you don't invest sufficient time. I'll share some of my thinking points during subsequent posts.

let's think!

Rebel without a crew : which company should I start?

(last in series  – which company should I start?)

We’ve identified factors/criteria that an entrepreneur could use to select a venture, and have talked about the importance of Bigness of the idea and understanding of people’s needs. I believe that the most important traits of an entrepreneur is relentless passion and that should help you select the idea to start the new venture.

  1. What are you most passionate about (and where can you add value)?
  2. Ask Maslow: Which need in Maslow’s hierarchy of needs is your idea addressing?
  3. How BIG, HAIRY and AUDACIOUS is your idea?

Starting anything up is characterized with difficulties. Honestly, it can get very rough (series of setbacks, unplanned time-wasters, interestingly wierd people to deal with, changing market conditions, etc.) One can only survive these setbacks and emerge out successfully, if he/she is supremely passionate about that idea. Life’s too short, so please don’t postpone it by working on things you’re not passionate about.

Sometimes it may not be clear as to what you’re really passionate about. I use this simple test by asking myself some fundamental questions:

  • If today’s the last day of my life, would I still work on this idea?
  • How much am I willing to pay to somebody to allow me to work on this idea? (This is the extreme opposite of – "how much would I get paid, if I decide to work on this idea?")
  • What do I like more/want more than this idea?

This applies to anyone who’s starting up, not just entrepreneurs, but also actors, filmmakers, authors, teachers, etc. One of the best stories that depicts passion in a true sense is that of one of my favorite filmmakers – Robert Rodriguez. As a broke undergrad student at UT Austin, he subjected himself to medical experimentation to raise a few thousand dollars and make a short film. He has outlined his story in a very cool journal/diary-like format in his book : Rebel without a crew – How a 23-year old filmmaker with $7999 became a Hollywood player.

Some of my favorite quotes from the book:

"I mean, I think everyone has a few bad movies in them, the sooner you get them out the better off you are."

"I’m twenty-three years old. Orson Welles made Citizen Kane when he was twenty-five. Spielberg made Jaws at twenty-six. So I’ve only got about two or three years to make my break-through film. I’ve got to get moving."

Passion it is!


Technorati tags: entrepreneur , passion , venture capital , investment philosophy , Which idea should I invest in? , Which company should I start?