4M and Netcore 2.0: A Framework for Exponential Growth

Published July 29-August 9 2023

Rationale

For the past few months, I have been thinking about the way forward for Netcore. Our business over the past 15 years has been focused on units and users: units as in volume of email and SMS sent, and users as in monthly actives for the martech (customer engagement) platform. As our enterprise customers grew, we grew with them. But as growth slows for them and marketing budgets are reduced, our growth also gets impacted. So, the question I started pondering over was: how can we create an evergreen business by solving a problem that will never go away? In doing so, what would it take to build a fast-growing business which would be independent of up-down cycles?

We have seen many such exponentially growing businesses which have had loyalty and longevity baked in: Google Search, Apple iPhone, Tesla EVs. What has been common to these businesses? Is there a way to create a framework which can help entrepreneurs reimagine their businesses in a world where competition is always just around the corner?

This is when I came up with what I call the “4M Framework”: Magical (products), Money (machine), Moat, and Monopoly. The starting point must be a product that wows. As you use the product, you wonder how it is happening. The experience is out of this world. As Arthur Clarke said, “Any sufficiently advanced technology is indistinguishable from magic.” That product experience must convert into a money machine: high sales that keep growing. To sustain the profits, there needs to be a moat which will prevent competitors from attacking thus creating a defensible franchise. Eventually, the product must become a near-monopoly with high barriers of entry. It is this which leads to creating exponential growth and an enduring great company.

During my IndiaWorld years (1997-99), Samachar became one such product. It ‘magically’ brought together headlines from many Indian newspapers on a single page with updates every 30 minutes. As word-of-mouth spread and Indians worldwide made it a habit to visit the page daily, advertising created the money machine. While there was no moat in the sense that anyone could write software to replicate what we had done, no one actually did it (and to this day I wonder why Samachar was not cloned by competitors). Within months, Samachar had a monopoly in the news space – without employing a single journalist or editor. It was the equivalent of Google News before Google was born! Samachar’s popularity rubbed off on the other sites we created – Khoj, Khel, Bawarchi, and many more. Together, they created a fortress that maximised attention from Indians globally. It was this dominance which created value — $115 million was what IndiaWorld was eventually acquired for in November 1999.

Netcore has largely operated in what can be thought of as commodity spaces. Email and SMS are seen as pipes to end customers. There are many options. Netcore has added a thin services and intelligence layer which has helped it be dominant in the email space in India and many emerging markets. The martech platforms are indistinguishable from one another and the result is price wars. So, the question I asked myself was: what magical products could we create to ensure the subsequent stages of money, moat, and monopoly? In other words, what blue ocean problem could we solve in a red ocean marketplace?

Before I get to answering the question, we will take a deeper dive into the 4M framework. It is something that every entrepreneur must think about to reduce their chances of failure.

Magical

I still remember the first time I held the iPhone in my hand. It was in August 2007 at the Apple store in New York – shortly after its launch. The experience was magical. Being able to tap the screen, seeing those colour icons, having a larger screen without a physical keypad – it was hard to believe that a mobile phone could be like this! For more than a decade, the mobile phone was defined by Nokia – small screen, text navigation, clunky keypad. Apple changed the game and powered its way to a multi-trillion dollar valuation through the years.

It was a similar experience when I first sat in a Tesla. I had gone to meet a friend in the Bay Area in a cab, and he asked me if I had ever been in a Tesla. I replied in the negative. He then took me for a ride. As we drove on 101, he activated the autonomous driving mode. For a few seconds, I was scared to see no hands on the steering wheel. The big screen as a dashboard, the smoothness (and silence) of the ride, the acceleration – it was yet another ‘magical’ experience in my life.

Google’s search when it launched did something very similar. Remember the “I’m feeling lucky” button? Type the query, click on it, and more often than not, we were magically transported to exactly the website we wanted to go to. It took search to a different level of efficiency. The ‘ten blue links’ became the standard starting point for any query we had.

The magic in the experience is the starting point. As you experience it, you wonder how it is being done. In most cases, it is multiple innovations which come together to create a wholesome outcome which is very different from what we are used to. Ask yourself: when was the last time you experienced a “wow” with a new product? [My answer: ChatGPT. Every answer is a “wow!]

In the digital world, there have been quite a few such ‘magical’ products in the past decade: Netflix, Spotify, Amazon Prime, Uber, Airbnb are some examples.

Netflix revolutionized the entertainment industry by offering a vast library of on-demand content, personalised to individual viewer preferences, disrupting traditional TV and movie distribution models, and making it a global phenomenon. I loved their idea of “binge” – sit and watch all the episodes dropped together, rather than having to do weekly appointment viewing.

Spotify transformed the music industry with its easy-to-use platform, vast music library, and personalised recommendation algorithms, allowing users to stream their favourite songs anytime, anywhere, effectively democratising access to music.

Amazon Prime redefined e-commerce with its two-day (or faster) shipping, comprehensive product range, and additional benefits like streaming media and e-books, creating a ‘one-stop-shop’ that caters to diverse consumer needs and habits. Doing away with ‘shipping charges’ for every order was a wow.

Uber reimagined transportation by connecting riders and drivers through an easy-to-use app, providing a convenient, cashless, and reliable ride-hailing service that challenged traditional taxi models and transformed urban mobility. When travelling in the US, it is such an efficiency and cost-saving tool for people like me who do not drive. A few taps and a car (at times a Tesla) is there to take us to our destination.

Airbnb disrupted the hospitality industry by allowing anyone with a spare room or property to become a host, offering travellers a more personal and diverse range of accommodation options, and creating a global community based on sharing and local experiences. I still remember the time I stayed in an Airbnb apartment in London on a family vacation– we had bedrooms, a kitchen and a living area all for ourselves, for a very reasonable price.

These companies have built or are on their way to dominating their categories. It all started with a product experience that was so different and dazzling from what we were used to. These products are all magical because they solve a problem in a way that is simple, elegant, and effective. They make our lives easier, more convenient, and more enjoyable. And they do so in a way that is so compelling that we are willing to pay for them, even when there are free or cheaper alternatives available.

Criteria

Before we get to the second M, I thought it would be appropriate to list criteria (with inputs from ChatGPT) to help decide if a product can be considered magical – and which has the potential to then help a business build a money machine, moat, and monopoly.

Problem-solving: A magical product addresses a pressing need or problem that the target audience faces. It does more than just address the issue—it solves it in such an efficient, effective, and intuitive way that customers can hardly imagine going back to a time before this solution existed. The problem it solves could be one that the users knew they had or one they didn’t even realize existed until the product came along.
Efficiency: In an increasingly fast-paced world, time is a valuable commodity. A magical product recognises this and optimizes processes to save users’ time. Moreover, it often also provides monetary efficiencies, either through direct cost savings or by providing such outstanding value for its price that it feels like a wise investment. These efficiencies contribute to the user’s perception of the product as an indispensable tool.
Convenience: A hallmark of a magical product is its ease of use. It is intuitive and user-friendly, removing unnecessary complexities and streamlining interactions. This convenience extends to all aspects of the user experience, from initial setup and everyday use to customer support and upgrades. It integrates seamlessly into the user’s life, lifestyle, or business operations.
Innovation and Uniqueness: A magical product often introduces a new concept, technology, or application that wasn’t previously available or thought of. It should bring something new to the table in terms of functionality, design, technology, or user experience.
Aesthetics: A magical product delights the user not just functionally but also visually. The product’s design elements—its shape, color, texture, interface—all contribute to its overall appeal. Aesthetics are not an afterthought; they’re integral to the product experience. The product is often an object of beauty or design excellence that users take pride in owning.
Emotional impact: Beyond its tangible features and benefits, a magical product has the power to touch users on an emotional level. It may evoke joy, excitement, a sense of accomplishment, or even a feeling of belonging to a community. This emotional impact often translates into user loyalty and word-of-mouth advocacy, contributing significantly to the product’s market success.
User Delight: It should evoke a sense of wonder, surprise, and delight. It should exceed user expectations and provide an experience that is remarkable and memorable, leaving the user thinking, “Wow, this is amazing! I wonder how it’s done!?”
Significant Impact or Transformation: A magical product should fundamentally alter the way things are done. It often disrupts established norms or behaviours, leading to new trends, new ways of doing things, or setting new standards in its industry.
Competitive Advantage: A magical product often cannot be easily replicated due to unique technology, patents, high development costs, or other significant barriers to entry. This makes the product a game-changer, offering a considerable advantage over competitors.
Scalability and Market Success: Regardless of how innovative or unique a product is, it won’t be seen as magical if it doesn’t achieve market success. A magical product usually appeals to a large audience, demonstrates high adoption rates, and shows evidence of strong sales or growth potential. It also has the ability to generate recurring revenue or create new income streams for the company.

As we discuss examples going forward (and we think about our own products), keep these criteria in mind. The more the criteria that are satisfied, the greater the probability that a product will make the 4M journey.

Money (Machine)

Look at Google’s revenues over the past 15 years, as shown in this chart from Statista. (While there have been other products launched in the past few years, the bulk of revenues still come from search-linked advertising.)

Statista shows the sales growth of Apple iPhone since its launch:

Here is a chart from Statista showing Tesla’s revenue growth since its launch:

Every magical product has similar exponential growth in users and revenues. An explainer from ChatGPT:

Magical products have a unique ability to captivate the consumer’s imagination and attention, often by fulfilling needs the consumer didn’t even know they had. They are typically the product of innovative thinking, technical excellence, and keen understanding of consumer behaviours and desires. By introducing a product that’s truly unique and provides an unrivalled solution to a problem, companies often see an initial surge of interest from early adopters and technology enthusiasts. This initial traction sets the stage for the potential exponential growth to come.

One of the key catalysts for the exponential growth of a magical product is often the network effect, where each new user increases the value of the product for other users. For example, each new seller on Amazon increases the variety of products available, attracting more buyers, which in turn attracts more sellers. Similarly, each new user on a social media platform like Facebook or a music streaming platform like Spotify contributes to the wealth of content and the personalisation of the user experience, attracting even more users. This virtuous cycle fuels a rapid and exponential increase in the user base.

As user numbers grow exponentially, the revenues often follow a similar growth pattern. Companies often initially focus on user acquisition and retention, delaying revenue generation until they have achieved significant user growth. Once a sizable and engaged user base is established, these companies can then deploy various monetisation strategies, such as advertising, subscription models, or transaction fees. The monetisation strategies are often designed in a way that adds value for the users, further fuelling the growth. The larger the user base, the more attractive the platform becomes to advertisers or the more revenue it can generate from user payments.

The magical product creates the money machine. Smart companies use the money hosepipe to then expand into adjacent areas either organically or via acquisitions. For example, Google’s advertising prowess enabled it to buy YouTube to create the next growth engine in the form of video attention and ads. Facebook’s cashflows and rising stock enabled it to buy Instagram and WhatsApp – which not only eliminated possible future competition but is now generating new revenue streams.

To ensure the money machines last, companies need to think of how they create moats to prevent attackers from taking over their castles.

Moat

The next step is to build a moat around your product. This means creating barriers to entry that make it difficult for competitors to copy your product or offer a better alternative. These advantages can be unique technology, patents, strong brand recognition, or network effects. Facebook’s large user base, for example, creates a network effect that serves as a powerful moat; the more users it has, the more valuable it becomes to each individual user, making it difficult for competitors to catch up in the social networking space. (This may now be changing with competitors like Tiktok though Facebook is fighting back with Instagram and in emerging markets with WhatsApp.)

A competitive moat is as crucial as a moat around a medieval castle. This concept, popularised by Warren Buffett and Charlie Munger, refers to a business’s ability to maintain competitive advantages over its competitors in order to protect its long-term profits and market share from competing firms. Just as a physical moat prevents adversaries from attacking a castle, a business’s ‘economic moat’ protects its market share from competitors. As Warren Buffett once aptly put it, “In business, I look for economic castles protected by unbreachable moats.”

A wide moat not only shields a company’s present earnings, but it also fortifies its future profit potential. A well-constructed moat is often the defining line between businesses that are good for a moment and those that thrive over the long run. By establishing robust moats, businesses can safeguard their success, withstand the test of time, and ensure they remain at the forefront of their industry. Thus, understanding and building moats is a vital task for any business aspiring to achieve enduring success. In the words of Charlie Munger: “We have to have a business with some inherent characteristics that give it a durable competitive advantage.”

A few quotes on the importance of moats:

“Any company whose earnings are growing consistently or more important, are likely to grow consistently has something unique about it. The competition can read these earnings records too, and fat earnings records are an invitation to come in and sample the cream. So a company that has something unique about it has something the competition cannot latch on to right away. Whatever it is that is unique is a glass wall around those profit margins.” – ‘Adam Smith’ (a pseudonym), author of The Money Game
“As research analysts, we spend most of our time understanding the competitive moat – we need confidence that those growing cash flows will not be competed away over time.” – Brian Vollmer
“Unless a company has an economic moat protecting its business, competition will soon arrive on its doorstep and eat away at its profits. Wall Street is littered with the dead husks of companies that went from hero to zero in a heartbeat.” – Pat Dorsey

Magical products generate substantial revenues, creating a veritable money machine. These earnings can then be utilised to stimulate further growth and to solidify a company’s position in the market. Successful companies don’t just sit on this wealth; they reinvest it wisely into exploring adjacent areas or acquiring potential competitors, thus ensuring sustained growth and relevance. Google, for example, leveraged the enormous profits from its search advertising business to acquire YouTube, thereby gaining a significant foothold in the burgeoning online video industry. This move has not only diversified Google’s revenue streams but has also added a new dimension to its core advertising business, strengthening its moat in advertising.

Acquisitions can serve dual purposes: eliminating potential competition and opening up new avenues for revenue. Apple used the profits from its iPhone business to build a formidable ecosystem comprising the App Store, iCloud, Apple Music and Apple TV, thereby adding value to the iPhone and making it even more indispensable to its users.

Another way of creating a moat is through technological superiority and branding. Tesla has managed to create a moat around its business with its electric vehicles’ high performance, superior range, and innovative features, like Autopilot. Tesla’s proprietary charging network also sets it apart from the competition, and its brand is synonymous with electric vehicles, further strengthening its market position.

While building moats, it’s crucial for companies to consider their long-term sustainability. The aim should be to create defensible positions that are hard to breach, while continuously innovating to stay ahead. By reinvesting their profits into R&D, acquisitions, and customer value, these companies ensure the longevity of their moats, protecting their castles from competition, and keeping their money machines humming.

A perfect, unbreachable moat is what leads to a monopoly.

Monopoly

Peter Thiel has said, “All happy companies are different: each one earns a monopoly by solving a unique problem. All failed companies are the same: they failed to escape competition… Competition is for losers. If you want to create and capture lasting value, look to build a monopoly.” The 4^th M is about leveraging the moat to create a monopoly. This means becoming the only game in town. This can be done through a variety of methods, such as mergers and acquisitions, or simply by being so good at what you do that no one else can compete.

Once a company has a solid moat around its business, it’s poised to leverage it into a monopoly. This often involves outpacing competitors, continually innovating, and making strategic moves to corner the market. A perfect example is Google. Its dominant position in the search engine market is fortified by its unparalleled algorithm and vast amounts of data, representing a moat that competitors find hard to breach. By leveraging this moat, Google has effectively turned itself into a monopoly, controlling over 90% of the global search engine market share. [Google now is being challenged in search for the first time in two decades by Microsoft Bing with its OpenAI partnership.]

Mergers and acquisitions are another common strategy to create a monopoly. Disney, for instance, has used this strategy to great effect. By acquiring Pixar, Marvel, Lucasfilm, and 21st Century Fox, Disney has amassed an unparalleled portfolio of intellectual property that spans across many of the most beloved franchises in film and television. These acquisitions have made Disney a dominant player in the entertainment industry, essentially creating a monopoly in that space. This awesome chart by Cartoon Brew (from 2019) shows Disney’s dominance:

Simply being excellent at what you do can also lead to a monopoly. Apple’s relentless focus on design, innovation, and customer experience has allowed it to command a significant share of the premium smartphone market. Its ecosystem of interlocking products and services creates a powerful network effect that drives customer loyalty and discourages users from switching to competitors. Apple is now extending its dominance into fintech, as this chart from Flagship Advisory Partners (early 2023) shows.

Lastly, some companies turn their moats into monopolies by leveraging regulatory privileges or patents. Pharmaceutical companies, for instance, are granted exclusive rights to sell a new drug for a certain period. This monopoly is legally protected, ensuring that competitors cannot undercut them during that time. ChatGPT: “Lipitor, Pfizer’s cholesterol-lowering drug, became one of the best-selling pharmaceuticals of all time. Sales of the drug created a money machine, and patent protection formed a strong moat. For many years, Lipitor had a monopoly on its specific formulation.” Statista: “For around a decade cholesterol-lowering drug Lipitor was one of the company’s top blockbusters, with record-high revenues of approximately 13 billion dollars in 2006.”

A good playbook for creating moats and developing them into monopolies come from “7 Powers: The Foundations of Business Strategy” by Hamilton Helmer. The book presents a framework that centres around the concept of strategic “powers” that create and protect a business’s long-term economic value. I asked ChatGPT to summarise the seven powers:

Counter Positioning: A newcomer adopts a new, superior business model which the incumbent does not mimic due to anticipated damage to their existing business.
Switching Costs: It’s expensive for customers to switch away from a product, which locks them into continuing to use it. This can be seen in software services where migrating to a new system would be costly and disruptive.
Network Economies: These are the classic network effects, where the value of a product increases as more people use it. Social networks like Facebook and transaction platforms like Amazon Marketplace are examples.
Scale Economies: These refer to the declining incremental costs associated with one more unit of output. Many manufacturing and software businesses benefit from these economies.
Brand: This power arises when consumers trust a company and come back to it time and again. Brands like Coca-Cola and Apple have this power.
Cornered Resource: This power arises when a business has exclusive access to a valuable resource. This could be intellectual property, talent, or physical resources.
Process Power: This is the power gained through unique and superior methods of production or delivery that can’t be easily copied by competitors.

To summarise: the journey from magical product to money machine to moat and monopoly isn’t a linear or predictable one. It requires innovation, strategic planning, and a deep understanding of customers’ needs and wants. However, when done successfully, it can propel a company to unmatched success, exponential growth, and longevity. It’s a journey that not only changes the fortune of the company but can also redefine consumer expectations and reshape industries.

Beyond Consumer Tech

Most of the examples I had given in the 4M framework writing have been from tech. I asked ChatGPT and Bard for non-tech examples.

Here is ChatGPT’s list.

mRNA COVID-19 Vaccines (Pfizer-BioNTech and Moderna): These vaccines were developed in record time in response to the COVID-19 pandemic. The use of mRNA technology was revolutionary, leading to high efficacy rates and offering hope amidst a global crisis.
Dyson Vacuum Cleaners: James Dyson revolutionized vacuum cleaners with his cyclone technology which improved suction and eliminated the need for vacuum bags. The design and performance of Dyson vacuums elicited a ‘Wow’ response from consumers.
Under Armour HeatGear: When Under Armour introduced HeatGear, it truly disrupted the sports apparel industry. Its moisture-wicking technology keeps athletes cool, dry, and light, an innovation that changed performance wear.
Impossible Foods and Beyond Meat Products: These companies created plant-based meat substitutes that taste remarkably like real meat, transforming the food industry and providing environmentally-friendly alternatives.
IKEA’s Flat-Pack Furniture: IKEA’s innovative flat-pack design changed the furniture industry. The ready-to-assemble products not only made furniture more accessible and affordable but also created a unique customer experience.
3M’s Post-it Notes: A small, re-stickable note that can be placed and re-placed, transforming the way we jot down reminders and organize our thoughts.
Gore-Tex Fabric: This material, invented by W. L. Gore and Associates, is designed to be fully waterproof, windproof, and breathable. Its introduction was revolutionary in outdoor clothing.
Lego Bricks: The interlocking toy bricks introduced by Lego created a completely new playground for imagination and have remained popular, innovative, and often imitated since their introduction.

This is from Bard.

The Instant Pot (by Instant Brands) is a magical product because it solves the problem of cooking food quickly and easily. It can cook a variety of dishes in a fraction of the time it would take to cook them on the stove or in the oven. It is also versatile, able to cook a variety of dishes, from soups and stews to rice and beans to chicken and fish. And it is affordable, costing less than a traditional pressure cooker.
The Apple Watch is a magical product because it solves the problem of staying connected and informed without having to pull out our phones. It can make and receive calls, send and receive text messages, and access our email and other notifications. It can also track our fitness and health data, and it can be used to pay for purchases. And it is stylish, looking like a traditional watch rather than a bulky piece of technology.
The Tesla Model S is a magical product because it solves the problem of driving without emissions. It is an electric car that can travel up to 370 miles on a single charge. It is also fast, accelerating from 0 to 60 mph in as little as 2.3 seconds. And it is luxurious, with a spacious interior and a variety of features that make driving a pleasure.
The Nike Air Jordan is a magical product because it solves the problem of looking good while playing sports. It is a basketball shoe that is designed to provide support and comfort, while also looking stylish. It is also popular among celebrities and fashion icons, making it a status symbol.
The Lego brick is a magical product because it solves the problem of boredom. It is a construction toy that can be used to build anything imaginable. It is also educational, teaching children about engineering and problem-solving. And it is fun, providing hours of entertainment for children of all ages.

I also asked ChatGPT for some industrial examples. The response:

ABB’s YuMi Robot: Launched as the world’s first truly collaborative robot, YuMi was designed to work side-by-side with humans on the same tasks. Its precision and safety have been transformative in the manufacturing sector, particularly for tasks like small parts assembly.
GE’s Haliade-X Wind Turbine: As the most powerful offshore wind turbine to date, the Haliade-X represents a major leap forward in the renewable energy sector. Its higher capacity factor increases output and efficiency, fundamentally changing the economics of offshore wind energy.
Caterpillar Autonomous Mining Trucks: Caterpillar’s autonomous trucks can move high volumes of material at lower costs per tonne, with better fuel efficiency and safety levels than trucks with human drivers. This technology represents a significant innovation in the mining industry.
3D Systems’ Industrial 3D Printers: These printers revolutionized prototyping and production in various industries. With additive manufacturing, businesses can create complex, customized parts with shorter lead times, reducing costs and improving efficiency.
Siemens’ SGT5-8000H Gas Turbine: This turbine set new standards for efficiency in power generation, reducing CO2 emissions while producing a significant amount of energy. It’s an example of transformative technology in the power generation sector.
Bosch’s Industry 4.0 Solutions: Bosch’s smart factory solutions, powered by IoT and AI, are transforming manufacturing by enabling real-time data exchange for predictive maintenance, improved productivity, and greater flexibility.

These are two suggestions from Bard:

The Cricut is a magical product because it solves the problem of crafting. It is a cutting machine that can be used to cut a variety of materials, from paper to fabric to vinyl. It is also easy to use, making it accessible to people of all skill levels.
The Magic Eraser is a magical product because it solves the problem of cleaning. It is a sponge that can be used to remove dirt, grime, and stains from a variety of surfaces. It is also affordable and easy to find, making it a popular choice for people who want to keep their homes clean.

Moreover

I decided to think through other products where I experienced the “Wow” factor in my life. Some of them are associated with a company, while others created new categories.

Microsoft Office: all the 3 products are what I have been using a lot for the past 30+ years. I still remember (faintly) when I first used Excel – the joy and relief of seeing numbers across cells change as I made one change.
Zoom: I had not used Zoom until the pandemic lockdown started. Video conferencing as a category was something for big companies. My first Zoom meeting in late March 2020 sold me completely. The ease of use, the clarity of video, the comfort of home – all made me a complete convert.
WhatsApp (and Slack): I was a long-time holdout to WhatsApp. I didn’t want to be flooded with messages. I had to adopt it because my colleagues at the office were finding it difficult to connect with me – sending emails just to me instead of WhatsApp messages was becoming too much! I now use both WhatsApp and Slack – and they have a very important role in our daily work and social lives.
Dropbox: I use multiple computers – desktops at home and office (I like the big screens and full-sized keyboards), and a laptop when I travel. When I first installed Dropbox, I was delighted by its simplicity and ease. I had to do nothing else – just put a file in a folder and it was synced across all devices. No more copying files on USB sticks from one device to another.
Bose Noise Cancellation Headsets: I never liked having something in or over my ears for listening. But when I had a US trip with a lot of travel coming up, I decided to buy the Bose QC headset. The first time I put them on, I was astonished at the “quiet comfort” – all external sounds blocked putting me in a zone by myself. I have grown to love these, and I use them often with music at low volume to transport myself into a world of my own.
Settlers of Catan: I have never fallen in love with a game as much as I did with this one (except perhaps Scrabble). I think it redefined the board games category and showed what imagination could do. It needed a mix of strategy and luck, and every game was so different. Over 40 million copies have been sold since it was launched in 1995.
Bloomberg Terminal: I have a subscription to the full terminal, probably one of the few non-investors. I use it primarily to access company research in the CPaaS and Martech space. It’s an amazing (though very expensive) product. Almost anything in the world of business and finance is available with just a few clicks.

There are many more I could list – Bic Round Stic pens which are so reliable and smooth for the writing I do, Apple iPad, and the Orbi Mesh Wifi routers which extend the network to places which otherwise would have been dark. These are all magical products which make life better.

So, back to the question I had begun this series with: how can Netcore use the 4M framework and move beyond the commoditised world of email, SMS and martech automation platforms? It is time to connect a lot of my past writings into a cohesive whole.

Netcore Next – 1

Let us start with the problems faced by consumer-facing digital businesses. There are three key challenges:

Boosting the Best: how to generate more sales from the top 20-30% customers as they account for the majority of transactions.
Reactivating the Rest: how to rebuild relationships with those customers who have gone dormant as an alternative to retargeting them via Big Adtech platforms.
Near-Zero CAC for the Next: how to acquire the right new customers without breaking the bank and thus reducing AdWaste due to wrong acquisition and reacquisition.

Solving these three intertwined problems is the crux to building an exponential forever profitable growth business en route to creating a profits monopoly (profipoly). This is where the opportunities lie for martech companies like Netcore. So far, Netcore’s focus has been to help brands with their communications across channels (email, SMS, push notifications, WhatsApp) and with customer engagement (campaign management, journey orchestration, omnichannel personalisation, and onsite search and recommendations). Netcore’s revenue model has been to charge based on units of messages sent and monthly active users. In a macro environment where brands are getting increasingly conscious of their marketing spending, the budgets which Netcore taps into are flatlining or being cut. Intense competition from other martech companies each seeking to go full-stack (like Netcore) has made the marketplace a red ocean.

It was in this context that I started pondering the 4M framework: what magical products can we create in Netcore which can power the next money machine, and create a moat and monopoly?

In today’s dynamic and rapidly changing business environment, the wisdom encapsulated in Dr. Spencer Johnson’s bestselling book, “Who Moved My Cheese?”, holds greater relevance than ever before. The parable highlights the necessity to adapt to change rather than cling to old ways, even if they had been successful in the past. The world is a living organism, ceaselessly evolving and adapting. Markets, consumer behaviours, technologies, competitors – they are in a state of constant flux. It is the companies that can pivot and adapt, the ones that can identify when the ‘cheese has moved’, that survive and thrive in this new environment. This is what Netcore has done during its 25-year existence. We need to do so again to survive and thrive in a new world where brands are seeking efficiency, differentiation, sustainable growth, and accelerating profitability.

Netcore addresses the challenges of customer communications, engagement, and retention well. But the next battleground will be around sales growth, savings, and supersizing profits. How can Netcore be relevant in this world for global B2C/D2C companies? This is our crux.

Netcore Next – 2

In the context of Netcore, it is evident that what worked in the past for us might not necessarily guarantee future success. The rapid expansion and evolution of the martech space, the increasing consciousness of brands around marketing expenditure, and the growth of competing full-stack solutions all signify a shifting cheese scenario for us. It’s a call for reinvention, a push to transform Netcore 1.0 into a reimagined and more relevant Netcore 2.0.

This new incarnation, Netcore 2.0, must be grounded in a clear understanding of the new realities of the marketplace. It’s no longer about how many messages are sent or how many active users are on the platform each month. Instead, the emphasis must shift to demonstrating tangible value to brands.

Netcore’s revenue model too must evolve, moving away from flat-rate charges to a performance-based model. In this new paradigm, Netcore’s success is directly tied to the success we drive for our clients. The more incremental sales we drive or the more AdWaste we help reduce for brands, the more revenue we generate. Such a shift not only ties Netcore’s growth to the value we provide to our customers but also differentiates us in a crowded marketplace, paving the way for a new chapter of sustainable growth and success.

In essence, Netcore 2.0 is not just a version upgrade, it’s a metamorphosis – a strategic pivot to a new way of thinking, a new way of delivering value, and a new way of growing. The ultimate goal is to create new kinds of ‘magical’ products – those that can power the next money machine, build an unassailable moat, and carve out a monopoly in the martech space. By focusing on utility and driving demonstrable value for brands, Netcore 2.0 can set itself on the path towards achieving these objectives.

In a previous essay, I had written: “Instead of us chasing customers, we needed to get customers to chase us for the products which delivered great value to them. And to do this, we needed to change our approach – from thinking about our solutions to solving problems for our customers. We needed to move beyond thinking retention, engagement, and personalisation to helping customers grow revenues, cut costs, and supersize their profits – laying a foundation for their exponential, forever, profitable growth. We needed to help them create the best moat in their business – a “profits monopoly” (profipoly).” If we do this right, we will also become a profipoly.

The task is a transformative one – moving from today’s Netcore, anchored in units, users and our unistack (unified stack), towards the Netcore of tomorrow, powered by ubiquity, utility, and uplift:

Ubiquity: Our initial move involves defining Netcore’s comprehensive reach – being an omnipresent force that mirrors the ubiquity of the brand’s customer interactions.
Utility: Building on our ubiquity, we turn towards infusing practicality and efficiency into the marketing process, thereby enabling cost savings and process optimisation.
Uplift: The culmination of our efforts is creating an uplift – a tangible boost in sales that directly and positively influences the growth and profitability of our customers’ businesses.

In essence, Netcore’s evolution involves evolving from a ‘units and users’ martech company with a comprehensive unistack, to a ubiquitous entity providing tangible utility and meaningful uplift. This transformation enables us to accelerate our customers towards their ‘profipoly’ goals. In doing so, Netcore transcends from being a mere tool to becoming an indispensable ally in our customers’ quest to create their unique profipolies.

So, how do we make this happen? What are the pioneering, magical products that can energise Netcore 2.0, and set in motion our transformative 4M journey?

PxL, Email Shops, Progency

There are two products which can serve as the starting point for Netcore 2.0 in its PxL avatar: Email Shops and a Reactivation Progency. Here is a summary.

PxL: “The ProfitXL (PxL) framework focuses on three categories of customers: the top 20% Best customers, the 80% Rest customers, and then the Next acquisitions… The PxL plan [is to] create 3 teams to focus on each of the Best-Rest-Next segments. The one-word missions for the three teams: Maximise (Best), Energise (Rest), Minimise (Next). Done right, there is no reason why eCommerce companies should not be able to drive an additional 10% upside on revenue (and gross margin), and a halving of spending on new customer acquisition costs. This will address the twin problems of low conversions and rising CAC, thus having a multiplier impact on EBIDTA, supersizing profits, and transforming the brand’s P&L… There are 5 key interventions which can help brands convert profit killing moments into profit creators: addressing dormant users, engaging [email] non-openers, incentivising [email] non-clickers, improving website and app engagement, and reducing cart abandonment.”

Email Shops: “Email so far has been largely one-way: send a list of items or an image (poster) and hope that consumers will click through to the website or app. It is this friction that has kept action rates low. From our early campaigns using AMP in India, the increase in actions has been astounding across the customer journey… The transformative solution in eCommerce is to think of websites and apps inside emails – where the entire journey from search and browse to purchase can be completed right inside the inbox. AMP makes this possible. These “email shops” are the next storefronts – and one which marketers can control because they can “push” these messages to their customers rather than relying on them to remember to visit their properties. Combined with Atomic Rewards to incentivise opens and other non-transactional actions, email shops have the potential to increase conversions exponentially, thus reducing the need for expensive and continuous new acquisitions to drive revenue growth. Email shops can thus become the profitability drivers for brands.”

Reactivation Progency: “[The Rest] customers who while they generate some revenue could negatively impact profitability because of the marketing and servicing costs. This is where a brand should consider outsourcing management of these customers to a “Progency” (product-led agency) whose focus should be activate them, engage with them, and get them to create carts ready for checkout using the breakthrough innovation of Email Shops.” [from PxL “[Progency is] a new-gen martech services entity where product (unistack) meets agency. A progency can work like a performance marketing entity taking on KPIs and delivering the outcomes marketers want. For this, a progency will need to combine software and analytical skills with traditional creative skills, uniting left-brain and right-brain resources. It can work as an extension of the marketing department taking on specific tasks with success-linked compensation.” [from ProfitXL] “The progency can…work on the [dormant] customers and reactivate them by using push messaging, rewards, affinity-based content, the full stack DXP (digital experience platform), and a touch of paid media if needed. The key point is that the progency takes complete responsibility for the dormant database and delivers activated customers at a lower price point than what reacquisition would cost.” [from The Coming Martech Era: Driving Exponential Forever Profitable Growth].

The PxL mindset of transforming the brand’s P&L builds on the “ubiquity, utility, and uplift” theme I had mentioned earlier. The two “blue ocean” products are email shops to bring the conversion funnel closer to the engaged Best customers, and a progency to focus on reactivating the Rest customers. If both these are done right, the Next customers challenge can also be addressed and CAC can be brought down substantially: reactivation replaces reacquisition, referrals from the Best customers slashes CAC, and the Best Customer Genome (BCG) can be used for targeted new acquisition via Adtech.

Day 1 Again

Over the past 25 years, Netcore has carved a unique niche, blossoming into a $100 million revenue proficorn in the competitive tech landscape. But resting on laurels isn’t an option when disruptive innovation is reshaping industries. To thrive in the unfolding “Generative AI” era, Netcore must leverage its strengths, infusing them with ground-breaking ideas to stay ahead of the curve. It’s time for Netcore 2.0 to embrace the Day 1 mindset – the tenacity, agility, customer focus, and innovative spirit emblematic of a startup.

Netcore is uniquely positioned with its core strengths:

World-class ESP (email service provider) platform
Support for all push channels (email, SMS, push notifications, WhatsApp, RCS)
Full-stack customer engagement platform
Unbxd’s strengths in onsite search and recommendations, and AI-based catalog enrichment
Our India base delivers both a large, cost-effective talent pool and first customers
A global presence via Netcore International
Our profitability which has helped us survive and thrive through the years

Netcore 2.0 aspires to be an innovation factory, providing differentiation in its products. An array of new ideas and technologies provide the foundation:

AMP in Email, to enable mini-websites and apps inside email (as part of Inbox Commerce)
Atomic Rewards, to provide micro-incentives for actions delinked from transactions
Velvet Rope Marketing, which correctly identifies the Best customers based on CLV (customer lifetime value)
Generative AI, to underpin all that we do
A synergistic and complementary “Netcore Constellation” via our investments in ProfitWheel, Comsense, EasyRewardz, and Customer Capital.

The first ‘M’, Magical Products, refers to products that revolutionise the status quo and create substantial value for users. Email Shops, underpinned by AMP in Email, allows for the entire consumer journey to occur within an email. This breakthrough reduces the steps, time, and friction inherent in traditional e-commerce transactions, leading to remarkable increases in customer engagement and conversions. This transformative product exemplifies the magical spark that sets us apart in the marketplace. Reactivation Progency, on the other hand, targets the often-ignored segment of dormant customers. By reactivating these users, we are breathing new life into a segment that would otherwise require costly and time-consuming reacquisition efforts. In essence, we are converting a potential liability into an asset. Together, they are the keys to the 4M journey and alignment with PxL – transforming the brand’s P&L. For far too long, companies have focused on the small pool of martech spending even as the bigger ocean of adtech spending (with 50% AdWaste) has gone unnoticed and untapped. This is the opportunity for Netcore 2.0 along with its partners.

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