My Proficorn Way (Part 21)

Making Notes

Many who have seen me comment on my spiral books filled with my notes and how I seem to be forever writing in them during meetings. Much to the chagrin of my family, I take those books even for social meetings. I had to stop taking them to movie theatres and weddings after my wife Bhavana read me the riot act! My solution was to carry a folded paper in my pocket. My contention: ideas can come anywhere and so I need to write them down. This way, I don’t forget and also keep my mind clear.

There is a method to my madness of writing things down. In meetings, it keeps me focused. As I make notes, I remember better. I don’t drift into my own faraway world. I also find that some of the better ideas come when my own thoughts interplay with what I hear or say in a meeting – and it’s best to capture them as they flow. A little later, and I may have lost the context and the idea.

Over the years, I have seen many entrepreneurs with a similar mindset. They may all use different tools – iPads, a smartphone, a tablet or a notebook. I find it quite astonishing when I see the person I am meeting not making any notes – I truly find it hard to believe that a person can remember big and small points of the meeting. I guess – to each their own.

I find there is a very important side-benefit of focused note-taking in meetings. While the big points will always be remembered, I find that it is the seemingly less significant points that can have a lot of value later when one reviews the meeting. An off-comment, a phrase, a reference – all can have value if used correctly. And these can become hard to remember later especially if one has a series of back-to-back meetings.

My preferred method is a 300-page spiral book – it is easy to fold, and because it has lots of pages, I don’t have to economise on my writing. I have a big stock of these books and seamlessly move to the next when one is over. I don’t often go back to the older spiral books – but they are useful in case a specific meeting needs to be referenced.

Think of making good notes like punctuality – good habits that make for a proficorn entrepreneur.

Tomorrow: My Proficorn Way (Part 22)

Market Movers Conversation on Velvet Rope Marketing

I spoke to Al Lalani, CEO of Annex Cloud, for their Market Movers show.

The chat is “about changing from a push for acquisition to a retention-driven loyalty program. Rajesh offers advice to marketers on what areas should be focused on to aid in a company’s success in these unsure times. He also shares his approach to building a continually profitable machine through his “Next, Best, Rest” system.

An excerpt:

The framework that I like to use is really the best customers, that’s the top 20%. And then we have the other 80%, the long tail of customers, and then the next customer. So best, rest, and next.

Now the first step in this is really to collect all of the customer data, especially the transaction data, offline, online, whatever it is. And the other information about the customers that you can get through the app, on the website, et cetera. The first step is really how do we calculate CLV right as we spoke about.

Once you do the CLV calculation, then we are able to do the customer segmentation. So typically, businesses will find that the top 10, 20% of customers are generating disproportionate value, maybe 50, 60, 70% of revenue. And if they actually get down to calculating profitability, they may find that the profitability of these customers actually could exceed 100%, because there are many other customers in the long tail, who will be negative contribution because of the cost of acquisition and the cost of servicing.

So these customers, the best customers are very, very important for a business. Identifying these customers, retaining them, and then looking for the next customers who are like these customers, that becomes very, very important. So that’s really the core of this idea around Velvet Rope Marketing, think of it like Red Carpet Marketing. Basically, how do you create an amazing experience for the best customers so they never want to leave your brand?

That’s the key to growth and profitability, especially in these times. In a way we think about it, retention now is the new acquisition, given that it’s harder to acquire new customers because marketing budgets are getting slashed. And your excellent point which you made in one of your recent presentations, that in 2008, a lot of customers actually joined or changed their brands. And that’s even, therefore, more important that companies focus on their best customers at this point in time.

 

Who will elect India’s leaders – we or Xi? The answer lies in EVMs

Published in ThePrint on July 31, 2020

The soul of a democracy is in our vote. Every Indian over 18 years of age can vote. So far, we have believed that what we vote is what is counted. Election after election, we have voted in large numbers with this implicit comfort. Yes, there were stray incidents through the decades of ballot box stuffing and rumours of EVM rigging. But none have been serious enough to cause us to question the election process.

But now, for the first time, India faces a serious and looming threat from outside its borders in the form of Xi Jinping’s China. Wars of tomorrow will not just be fought in mountainous terrain but also in the digital domain – we are moving from kinetic to algorithmic warfare. We have seen past alleged attempts by Russia, to state just one example, to maliciously intervene in the 2016 US Presidential election campaigns to influence voting behaviour. Such intentions now come armed with never-before capabilities. The manipulation of the actual voting process is but a half-step away.

From ballot to EVMs

For a long time, India’s electoral process relied on the paper ballot. There were three problems with the use of paper. First, ballots could be stuffed by rogue elements. Second, the process of counting the paper votes took long. And third, it was expensive – printing and transporting ballot boxes cost money.

That is when India introduced Electronic Voting Machines, or EVMs about 20 years ago. All one had to do was to press a button to cast one’s vote. No more ballot stuffing. Results came in hours rather than days. EVMs could be moved easily. Since they were reusable, the costs across elections were also reduced.

EVMs vulnerable too

Time, however, does not stand still. The same EVMs that once provided the assurance of free and fair elections in India, are now the biggest vulnerability in the face of an external aggression. While the EVMs are manufactured in India, the device is a black box. No one knows what hardware and software lies inside – other than the Election Commission and the government-controlled manufacturers (Bharat Electronics Ltd and Electronics Corporation of India Ltd). The chips and the code are an opening for a cyber superpower like China to exploit. In fact, with the introduction of VVPATs, or voter-verified paper audit trail, there is now an added vulnerability because there is a manual transfer of data, along with information about and images of contesting candidates, from a laptop to every EVM prior to an election.

It is urgent for us citizens to worry about the machines that are central to our democracy. Not all chips are made in India. Not all code is tamper-proof. No longer can other countries be trusted to stay away from our elections, given the rising stakes in international relations. For the first time in generations, all Indians ought to be concerned about their vote and ask, “Am I certain only the vote I cast will be the one that will be counted?”

How do we ensure that we – and not Xi – will decide our next chief ministers and prime ministers?

Open EVMs for inspection

One solution was for the Election Commission to make the EVM hardware and software open to everyone who wanted to inspect it. This should have been done earlier. Simply organising EVM hackathons is no answer. When we are not sure whether our phones, apps or mobile towers broadcast sensitive information to listening posts beyond our borders, how can we be certain that EVMs will not do this? When ultra-high security nuclear plants can be infected with malware to render them dysfunctional, won’t manipulating the EVM data transfer process just before polling be child’s play? Algorithmic warfare is today a monster at the cutting edge of technology. The EVM is no longer the solution – it is now the problem.

These questions were just whispers earlier. But in the light of the heightened threat India faces from a cyber superpower like China, we need to rethink every assumption about the robustness of the electoral process. We need to learn from advanced countries – are most of them dumb not to use machines in their voting process?

Go back to paper, and record

The solution lies in two parts. The first part is a shift back to paper and away from the machine. The time taken to count the ballot is no longer a concern – Indian elections now anyway stretch for nearly 50 days. An additional three days will hardly make a difference. The additional cost is also not an issue – India can afford it. No price is too high to ensure absolute integrity and confidence in our elections.

The other issue with paper-based voting was that of ballot stuffing. Politically backed miscreants could enter the booth and stuff paper ballots to favour a specific candidate or party. This is where we bring in the second part of the solution – webcams in every booth that can live stream on the internet. A billion pairs of eyes can watch over a million booths for the ten hours of the voting process. Internet connectivity has ensured that almost every nook and corner of populated India has coverage. In the odd booth where wireless does not reach, the webcams can store and timestamp for later viewing.

This combination of paper ballots with streaming webcams in every booth is the only solution that can guarantee a clean election — free from interference of foreign powers. This is in the interest of every Indian political party — those in power and those in Opposition. No Indian political party would want an enemy of the nation to influence the election process. All of them need to unite to persuade the Election Commission. Indeed, the EC should read the writing on the wall. Every Indian citizen needs to be reassured that the democracy that we so treasure, and our vote that is so precious, is not being handed over to Xi.

How  the Pandemic  will drive Digital Politics

Mint published my Long Read essay on how politics and campaigns will change after Covid-19. (I will publish the full essay on this blog in a week.) Here are a few excerpts:

We have a split of roughly 30-30-30 in the 90 crore voters: 30 crore loyalists who vote and vote based on the symbol for their favourite party, 30 crore non-aligned (NA) who wait until close to polling day to decide whom to vote for, and 30 crore non-voters (NV) who skip the vote. The key challenge that politicians will face is how to persuade the NA and NV segments…The basics of every election campaign are constant: identify, register, persuade and turnout the right voters. What the world of data and digital does is bring precision to the process of targeting. This is the world which digital technology will impact and transform even more in the months and years ahead.

At a basic level, politicians have five key jobs to be done: manage a hierarchy of workers and volunteers; build a voter file of their constituents; communicate with their supporters (loyalists and some of the non-aligned) to get their message across; get feedback from voters on their pain points and expectations; and manage the booths for the get-out-the-vote on election day…Digital politics will need one database and three apps to do the five jobs that politicians need to get done.

My Proficorn Way (Part 20)

Tracking Cashflow

I am not much of a finance person – except for one thing. Tracking cashflow. Because if there is one sure way a business dies, it is because of a lack of cash.

I cannot read financial statements and haven’t bothered to learn how to analyse balance sheets and P&L statements. But what I always track is the cashflow. Cash is the oxygen of every business. Without cash, you cannot pay salaries or vendors. And that creates a negative spiral from which it can be very difficult to recover.

It is possible to be profitable and yet have cash challenges if you do not get your payments on time. In India, this is especially difficult because of four issues. First, customers take their own sweet time to pay – 90-120-150 day payment cycles are not uncommon. Second, salaries, rents and even some vendors expect to be paid on time. Third, statutory payments to the government have to be made on schedule. Fourth, because rule of law doesn’t exist in India (justice delayed is justice denied), higher write-offs are a reality of life.

What this means is that the business needs some working capital. That can either come from past profits or one has to raise it externally. Growth also requires deploying additional capital since there is a gap between money coming in (later) and money going out (early).

That is why in IndiaWorld I was very keen to make the business cashflow positive as soon as possible. In the early days, subscriptions and website development fees sustained the business until advertising took off. We kept a sharp eye on our cashflows to ensure we never would get squeezed for cash.

I had learnt these lessons in my childhood – writing a daily cash diary for my mother. Each month, my father would give her a certain amount for household expenses. At the end of each day, she and I would sit and write down all the day’s expenses under different headings and calculate the amount left for the month. This way, there would be no surprises until the next cash inflow came when my father got paid at the start of the following month.

No proficorn can be built without attention to cashflows from the early days. And once there is a cash buffer available, keep it safe in liquid investments so it is always accessible. Take the risks in business, but not with your hard-earned cash.

Will be continued soon.

My Proficorn Way (Part 19)

Punctuality

One of the good things that the lockdown has done is to make us Indians punctual! There is zero travel time so no traffic excuses. All one has to do is to click a link to join a meeting from home – so it becomes harder to be late. “My previous meeting ran over” can only work so many times.

Punctuality has been part of my DNA since I can remember. I don’t know when it began. Maybe it was because I grew up listening to BBC World Service radio – and news on the hour wouldn’t wait for me to switch on the radio!

I find my early attention on punctuality quite surprising since I haven’t worn a watch since I was 12 years old. (I had an old Favre Leuba wrist watch in school, and I lost it on a picnic to Gorai Beach – it fell out of my shirt pocket and got washed away with the waves. I was so upset with myself then that I decided not to buy another watch.) I soon learnt to estimate time quite accurately and realised that I didn’t need it – even in the pre-mobile era.

Punctuality is a personality trait. You are either punctual or not. There is no halfway house. And it is not difficult – one has to factor in a little buffer for meetings. You cannot expect others to be punctual if you are not. Of course, there are some unavoidable situations – in which case the host needs to be informed, even if it is a matter of a minute or two delay.

In business and in life, punctuality helps. It can be seen as a proxy for reliability and willingness to keep commitments – if you cannot be on time, what is the guarantee that you will honour a contract. This may be a bit of exaggeration, but given that many people neglect being on time, it becomes easy to stand out.

Starting meetings on time is the right thing to do – else you penalise people who are punctual. The “let’s give the others a few minutes” line is ridiculous – what it actually means is “it was stupid of you to come on time because the later-comers will decide when the meeting starts.” This attitude can easily spread to other aspects.

An entrepreneur needs many things to be successful – punctuality is one of them.

Tomorrow: My Proficorn Way (Part 20)

My Proficorn Way (Part 18)

Entry and Exit

An entrepreneur has a good sense when to enter a business. What is not so clear is when to exit.

I faced such a decision in late 1999. I had unsuccessfully tried to raise venture capital many times over the preceding few years. And then, suddenly, almost against the run of play, I had two acquisition offers on the table. I had been looking to just raise some capital so I could keep running my “forever business.” But now I faced the prospect of selling. The offers were good – way beyond what I could ever have imagined. But giving up my entire business for money? I had not considered that eventuality.

I had toiled hard for a few years growing IndiaWorld. Even vacation time was filled with thinking about what to do next. And there was so much to do. I never imagined myself doing anything else.

I had hired DSP Merrill Lynch as my investment banker to help me raise some capital so I could better compete in the marketplace. We were profitable, but the game in 1999 seemed to be shifting from passion and profits to capital and cash-burn. I was going to have to adapt. Profits were too small for me to make the large investments the business was inevitably going to need down the line.

I was confused. It was then that Hemendra Kothari, DSMPL’s Chairman, gave me advice that I have given many others. He sat me down one day and said, “Rajesh, in a business, even more important than knowing when to enter is to know when to exit. The valuation that you are getting today – it will be difficult to get the same again for a long time. You have many ideas. Sell this business and build others. You will have the freedom to do many other things in life if you do this deal.”

Those words of Hemendra bhai – “know when to exit” – turned out to be prophetic. A few months later, the stock markets tanked and a long dotcom winter began. Even though I didn’t know it then, it was his wisdom that saved IndiaWorld and perhaps my future.

So, for proficorns, there will be a moment when they may have to decide – continue to build, or sell and move on. At these times, one will have to keep the emotional aspect aside and remember those words from Hemendra bhai, “Even more important than knowing when to enter is to know when to exit.”

Tomorrow: My Proficorn Way (Part 19)

My Proficorn Way (Part 17)

Me-Time

During the IndiaWorld days when we were a small company, I used to often think about my day job as fire-fighting. I would wake up every morning and make a list of the 10-15 things that needed to get done for the day. And then, reality would hit! Something or the other would come up during the course of the day, and before I realised it, the day was over. Looking back at my list, I would find that I had barely done a handful of the tasks that I wanted to – and another dozen or so new tasks would get added to the list! That’s the feeling one has to like as an entrepreneur. Over time, I have come to realise that the ToDos list is an infinite one. It will never be over. The important ones will bubble to the top and get done.

But to make that happen, the entrepreneur needs “me-time”. It is time when you are alone and with yourself. No people, no meetings, no phone calls, no emails, no Whatsapp. Just you. Solitude. So, you can focus on the flow that’s coming, reflect on the meetings that have happened and the ideas that came, tap into the inner sixth sense to know when there is a new idea that is germinating or something bad that needs to be stopped.

In the past few years, the me-time bubble has become harder to come up. There are so many distractions that beckon. There is always that next urgent task that needs to be done. And before you realise it, life has become a clickstream of such tasks which while useful will not give the elevation needed for take-off.

That is why it is important to create contiguous time and a comfortable space for me-time. You have to get comfortable with yourself and solitude. Let the mind wander. I typically sit in a chair with my notebook and let the ideas flow. I think better when I write. For you, it may be walking or exercising or anything else. Whatever it is, each day needs a me-time slot. Because there is no one else in your company who can do this better – connect the dots, feel the new opportunities, think of the future. Your me-time may not ensure success, but lack of it can definitely stunt or kill the proficorn.

Tomorrow: My Proficorn Way (Part 18)

My Proficorn Way (Part 16)

An Advisory Board

When one is running a business on a day-to-day basis, it is easy to lose sight of the forest for the trees. Each day brings with it new challenges to be solved. One is deeply involved in every aspect of the business. Failure often becomes personal – because one is the engine driver in a train wreck. It becomes hard to hold people accountable – because everyone is in it together. You as the leader are part of every decision, so the responsibility for failure is yours. This is especially true in the early stages of a venture.

When Netcore was struggling to grow, I decided that I needed an outside-in view. I wanted a couple of people who could provide a view at a higher-level, and question me and the team. (Since I had no external investors, we did not have a formal Board.) It was then that I decided to set up what I later called the Advisory Board. It started with one member, and has since grown to 6 members. They have no fiduciary responsibility. We all meet once a quarter for 4-5 hours where the management team presents the quarter’s performance and the plans. It has worked very well in bringing discussion and debate which did not exist earlier.

The Advisory Board is now intimately familiar with the business and the team. They bring in their own experience to give us suggestions on what to do – this is something I lack since my only external work experience was 30 years ago! There is a good mix of expertise in our Advisory Board – management, strategy, financial and marketing.

As for the team, they present the numbers and plan as if we were a listed entity – because one day we will be. This creates a discipline of ensuring targets are given – and hopefully met. For the management team, there is not just an oversight (other than me) but also insight (on what can be done better). These quarterly meetings for the past decade have been a major factor in Netcore’s growth.

I would strongly recommend an Advisory Board for every entrepreneur at an early stage. Get a few people you respect and who have diverse industry knowledge. And then make it a discipline to do the quarterly reviews. This additional layer will go a long way in identifying mistakes early and reducing the prospects of failure.

Tomorrow: My Proficorn Way (Part 17)

Rethinking Referral Marketing (Part 11)

For me, thinking deeply about marketing is something that is quite new. It is only in the past few months that I have started probing into how the current marketing techniques can be improved in a world of digital customers, unlimited data and low barriers to customer churn. I have to the field as somewhat of an outsider, even though Netcore has been in the business of selling marketing solutions for many years. That has helped me bring a new perspective to the existing knowledge base of ideas.

Velvet Rope Marketing was the first big idea. While the core concept that a small number of customers can account for a disproportionate share of revenues and profits has been around for a long time, what I tried to do is to put together an end-to-end framework that covered concept to execution to measurement. It was during this process and through the conversations that I had with many CMOs and digital heads that the problem statement for thinking about referral marketing emerged.

As happens so often with new ideas, all that’s needed at times is for a newcomer to come in and combine existing building blocks differently to create something different. This is what I have tried to do in this series on referral marketing – by combining three elements that already existed:

  • Best customers, who can get others like them through their social networks
  • Lifetime value, which can create greater rewards and incentive for best customers for referring others like them
  • Multi-level network, that further enhances the value of referrals for the best customers

Some additional tech-led tweaks can also help in making referral marketing as core to marketing as adtech and martech are: ensuring that both referrer and the person referred get the same initial benefits (either both get it, or none get it), simplifying the process of referring (ask a new customer at sign-up about who provided the nudge), and creating a cross-brand rewards program and adding game-like elements to provide far greater incentives than what a single brand could do.

Hopefully, these ideas can serve as the foundation for transforming referral marketing. Perhaps, Velvet Rope Marketing has found its perfect companion – Velvet Circle Marketing?!