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New Business Model from Very Unlikely of Places #Publishing

August 23, 2013 Leave a comment

I stumbled upon The New Enquiry by chance and was totally blown away, both by their content and their business mdoel.

They are an Ad-Free online magazine & survive by the way of subscriptions (2$ per month) & donations. And they don’t have a firewall.

So, for all practical purposes, they create and share content that is free for anyone to consume but still people are willing to pay subscription to receive the same content but in coherent, thematic clusters, which is more intuitive and easy to read.

In an interview given to “Columbia Journalism Review“, the founders claim that they recieve 30 to 50 new subscribers every week.

They also serve a very niche audience, the one’s that want to be at the intersection of culture, arts and politics.

They describe themselves on their about page as below:

The New Inquiry is a space for discussion that aspires to enrich cultural and public life by putting all available resources—both digital and material—toward the promotion and exploration of ideas.
Though these are early days for them, I am sure that they will find ways to not only survive in this hyper-competitive world, but will also become more and more relevant to thier tribes (as Seth would describe their subscribers).
This also reminds me of the TED talk by Amanda Palmer where she talks about her exeprience with her fans. She talks about the art of asking. Can this be a valid pricing model?
Both Amanda and TNI have identified their niche audience and have sought their support successfully.
Their story also make me realize that we strive to find complex solutions for problems, while simple and easy solutions to the same problems could exist right infront of our eyes.
Almost every one complains about advertising and advertisors, the disruption in the advertising & publishing industry;  they just went ahead and eliminated advertisements altogether. What an idea!
How many such things do we complain about can be removed? A wise man once shared his wisdom about solving problems:
  • Connect the un-connected & vice versa
  • Bundle the seperate and unbundle the bundled
  • Turn a product to a service and a service to a product

The best way to solve a problem is to “SKIP IT” and I think this is exactly what these folks did.

The question that you need to answer yourself is the following:

What problem or challenge are we struggling with and one that you would be better off SKIPPING? What product are you going to turn into a service?

Do join in the conversation by sharing your thoughts by commenting below.

You can connect with me at Twitter, LinkedIn or Facebook.

PS: Pay as you want pricing model has been around for a long time now. More information @ http://en.wikipedia.org/wiki/Pay_what_you_want. What happens when the newspaper industry adopts this model?

Elon Musk’s HyperLoop – Hope or Hype

August 13, 2013 Leave a comment

At last Elan Musk unvieled his design for ultra speed travel system – HyperLoop. I think that the idea that he laid out in a 57 page document, is as good an idea as we might have currently.

However, After having read through the generic description, I think that this is a good start to the pursuit of sub-sonic ground transportation. However, in its current state, this concept is impractical due to the fact that the entire concept seems to have been designed with the Los Angeles to San Fransisco route in mind, which, is mostly without much curves in the route. I am not sure how many such routes exist across many different cities.

The design that has been shared has two options:

  • Capsules that can take about 48 passengers, with a capsule leaving every 2 minutes
  • Capsules that can take 3 fully sized passenger cars in addition to the passengers.

Now, Elan has already indicated that he is too busy to build the network himself and would like to see someone take this concept design, use open-source contributions and build the line. He also indicated that he  could build a working prototype in about  three to four years (if no one comes forward to build this).

Now, the design itself is of not much interest to me as I am sure that with any project that is as ambitious, this will not finish on time or on budget. However, what is interesting to me is the following:

  • There seems to be a growing need for significantly safer, faster, cheaper and greener travel options between pairs of cities (Los Angeles – San Fransisco; Delhi – Mumbai and similar) which have a lot of traffic between the cities.
  • The hype and interest that Mr. Musk was able to generate for the concept. There is a lot of learning for marketers here on how to build expectations and get media attention on their terms. This, I shall cover in a separate post shortly.
  • HyperLoop is conceptualized assuming that the current mode of transportations (Air, Rail, Road & Boat) have reached their limits and can’t be improved further to make them significantly safer, faster, cheaper and greener. I do think that this may not be the case. There could be potential ideas on how to make one of these transportation modes significantly to enable us to travel at about 600 – 700 kms an hour. Now, the question is if we are even looking at these options as well before we set out to create a totally new network which will not only cost billions of dollars but will take years or maybe even decades to complete. As I had mentioned in one of my earlier post, the solution proposed by Elon might look sexy and innovative, but, in my opinion, is not the best solution to the transportation challenge that we face – Significantly safer, faster, cheaper and greener alternative to the current options.
  • It would be interesting to watch this space to see if the idea of having an open-source concept development in such a large scale public project attracts interest. If there is significant interest in improving the concept and design from the community, this could also pave the way for a possiblity of a much more deeper engagement with the community in all future large scale public projects, which in a way could lead to a cheaper cost of the project and could also enable us to contribute in any which way possible. This will herald us in a true era of private-public partnership.

Having said all this, my opinion is that, this concept does fill me with hope that significantly safer, faster, cheaper and greener transportation options will be devised within this decade.

What do you make of this concept? Would you like to participate in an open-source project to enhance this design or even to work on creating ideas to significantly improve the current transportation options? Do let me know by commenting below or by tweeting to me at @rmukeshgupta.

Some Advice for Start-ups with Ad based Biz Models

August 12, 2013 Leave a comment

I believe that start-ups that are working on ad-based revenue models are in for a rude shock.

In my opinion, this model has lead to the demise of one too many interesting start-ups.

Some reasons for me to having arrived at this decision are as below:

  • Advertising industry itself is going through a major tectonic shift and will need to re-discover itself in a new avatar before it can support any new business model.
  • Having an ad-based revenue model is worse than having no revenue model at all as it provides start-ups with an illusion of revenue sooner than it will ever come.
  • Not betting on ad-based revenue model, will force a start-up to think about other revenue models and if thought well, there are always other models that can enable them to survive. Also, this puts a serious cap on the burn rate as they will spend much more carefully and give more time for their products/services to gain traction in the market.
  • There are very few start-ups which are able to consistently get funded so that they can keep working on product that will need some serious traction before they can expect to generate any revenue at all, which in turn means, that a bulk of new start-ups will need to think of revenue models other than advertisements.

The advertisements, if and when they come, can be the icing on the top.

These are some of my thoughts. What do you think?  Do you agree or disagree? Please share your thoughts by commenting on this post or by tweeting to me at @rmukeshgupta.

Categories: Business Model, Startups

Lessons from a Failed (Billion Dollar) Business Model Innovation Attempt

July 8, 2013 4 comments

In May this year, Better Place, an auto tech company filed for bankruptcy, burning close to a billion dollars. They had a brilliant solution to a complex problem.

Their idea was to replace fossil fuels with batteries – literally. What this meant was that as you re-fuel your cars with gasoline, you could get your batteries changed at a fuel station. This was in stark contrast to all the other start-ups in this space, who have been working on increasing the range of their batteries to go longer distances or increase the speed at which one could charge the batteries on-the-go. 

There has been enough written about their strategy and why it did not work. Some of the reasons that have been proposed for the failure of the business model are: 

  • The most important cause was the fact that the very need to create a network of fuel stations where battery could be switched was very expensive and was a pre-requisite to start acquiring customers.
  • They got too ambitious by expanding to other markets even before they won in their home market (Israel).
  • They were not able to offer choice of different car models to their customers, which was a mistake.

However, no one has written about what would have given them a fighting chance at success.

I would like to stick my neck out and outline what I would have done if I were running the company.

I think that the business model that they were pursuing was and is still a great model. This ensures that the behavior of the end customer does not change and with the improving quality of batteries, my cost over time would reduce while my revenue would continue to increase, which is a perfect situation to be in.

One of the most important lessons that we can learn from this exercise is that the choice of your initial market is the most important decision you have to make. The choice of markets (Australia, California, Canada, Denmark, Hawaii and Israel) in this case was a mistake.

If I were in their position, I would have chosen a city based approach rather than pick a country as a market. I would have also chosen a city in densely populated area where, the populations do not generally drive very far (thus reducing the number of switching stations necessary to serve the market.

I would have franchised these switching stations (just like Shell or other Oil players do, mostly to the same franchisees) and signed a revenue sharing agreement with them, thereby eliminating a lot of cost in creating a network of switching station. Also, this would have been much faster and would have provided the momentum to the start-up.

Instead of trying to get Auto manufacturers on-board as a partner, I would have signed-up with them as a customer. I would have co-designed a few models along with the auto manufacturers and placed an order for these cars, thereby eliminating the risk for them, thereby creating choice for the customers.

Once the auto companies have made the models, adding or improving them is not much cost or effort and would lead to them developing more models by themselves (if the initial model was successful in the market).

I would then lease or if possible rent these models (co-branded with the auto manufacturers) on a rental based on either the kilometers driven or for every battery being replaced. This makes it more attractive for a customer to rent a car than to buy it (capex to opex).

This would have allowed me to win one city at a time and then expand to an ever larger network. Once the concept is validated in a few cities, I would then scale like hell and create a network (again franchised) across a nation. If the revenue sharing is fair for the franchisees, it would be easy to create a nationwide network.

This would have allowed me to iterate and learn about the operational challenge and find answers to these challenges with the least risk exposure and perfect the model to enable fast scale.

This would have also reduced my total cash burn and given the start-up a longer play in the market.

I believe 6 years is too long a time to prove your concept, which led to Nissan moving out and others not too keen. The key in this case was the inability to win a single market that led to the fall-out of the business model.

Also, I think that one of the key aspects of business model innovation is the velocity with which you are able to execute and validate your business model in the market, failing which you will find ever increasing resistance from the ecosystem and inertia will kill the project.

What would you have done differently if you were the CEO of Better Place? Do you think that someone should still pursue the business model that they were pursuing?

Let me know your thoughts by commenting below or tweeting to me at @rmukeshgupta. 

PS: Interesting news about speed charging your electric vehicle. 

Disrupting the paints industry…

What happens if the cement manufacturers start doing research and find a way to add color to the concrete itself? Will consumers accept this approach to color their homes?

I do not know if this will disrupt the paints industry, but sure will open up a lot more opportunities for the cement companies to differntiate their offerings (as currently, all cements look the same and the only differntiation is in the branding).

Add to this, if the cement manufacturers find a way to create concretes blocks with designs in different colors, I am sure that will make an interesting phase for the construction industry.

 

 

 

 

 

Categories: Ideas, Ideas, Startups Tags: , ,

This is a very interesting post by Jonathan. He talks about the two differing points of view on decision making – Instintive decisions (as argued by Malcolm Gladwell in his book “Blink” and taking time to make your decisions (as argued by Frank Partnoy in his book “Wait: The art and science of Delay”.

In my opinion, what style you use to make decisions is mainly a function of your personality. For example, I prefer instinctive decision making and that has worked really well for me.

So, we should reflect about our own personality and use what works best for us. Though knowing more about both styles does provide some food for thought on why a specific style works for one.

Manage By Walking Around

Remember Malcolm Gladwell’s book called Blink?

Gladwell argued that we should trust our snap judgments, using examples from science, advertising, medicine and music.  These examples showed that spontaneous decisions were as good as, and usually better than, carefully considered ones.

In Wait: The Art and Science of Delay, Frank Partnoy takes the exact opposite point of view.  After interviewing more than 100 experts from different fields and examining several hundred studies, Partnoy claims that most people don’t take enough time to make decisions.  Using a Gladwell-esque style, Partnoy argues that the best decision makers – premier athletes, expert investors, and even popular comedians – hone the ability to wait as long as possible before deciding or acting.

I’m writing this blog  while watching a professional baseball game and the game itself reinforces Partnoy’s claim.  The best hitters are the ones who wait the longest time to make a decision…

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Categories: Ideas, Ideas, Startups Tags:

The true potential of enterprise mobility

June 6, 2012 2 comments

is when you re-think & re-design all your processes, work-flows for a world where everyone (yes, everyone) only uses a mobile device.

How will all the processes (purchasing, invoicing, production planning, material handling, etc) change?

How will the applications that you use change? How will your ERP system need to change?

What will be the effect on how you manage production?

How will you service your clients?

How and where will your employees work from?

What will your reporting change?

Will you still require so many middle managers?

Mobility offers you this possibility to re-wire, re-design and re-write the DNA of your organization and that is where the true potential of mobility lies.

The day is not far when we will have an entire enterprise run solely on mobile devices. The day will arrive sooner than you think.

So, anticipate this and be prepared instead of getting surprised!