Tuesday, 21 February 2017

Disappearing Act

WhatsApp has launched a new feature that promises to change the way you use the messenger app, reports Times of India. The company's new feature will allow users to share photos, videos and animated GIFs with friends and family, all of which will disappear in 24 hours. The feature which is similar to Snapchat Stories is being rolled out to WhatsApp's 1.2 billion users across Android, iOS and Windows Phone platform. Jan Koum, CEO and co-founder of WhatsApp, wrote on his blog, "Starting today, we are rolling out an update to status, which allows you to share photos and videos with your friends and contacts on WhatsApp in an easy and secure way. Yes, even your status updates are end-to-end encrypted."

In April 2016, WhatsApp announced that it is using end-to-end encryption in all communication between users. "This new and improved status feature will let you keep your friends who use WhatsApp easily updated in a fun and simple way. From all of us at WhatsApp, we hope you enjoy it," Koum added. The feature has been rolled out just days before WhatsApp's 8th birthday, which fall on February 24.

Earlier this month, WhatsApp started rolling out two-step verification feature for all users. It adds an extra layer of security to a WhatsApp account by requiring a secondary method of authentication. The feature aims to prevent others from activating a phone number on WhatsApp without a six-digit passcode. "Two-step verification is an optional feature that adds more security to your account. When you have two-step verification enabled, any attempt to verify your phone number on WhatsApp must be accompanied by the six-digit passcode that you created using this feature," the company said on its official blog post.

Monday, 20 February 2017

You need the hardware also to survive today

Do software companies like Snap need to become hardware companies also in order to compete with the tech giants like Facebook, Amazon and Google?

Snap Inc takes to the road in London to promote its initial public offering with a daring proposition: That it can build hot-selling hardware gadgets and ad-friendly software features fast enough to stay one step ahead of Facebook, reports Times of India. No longer just a purveyor of a smartphone app for disappearing messages, Snap has hired hundreds of hardware engineers, built a secretive product development lab and scoured the landscape for acquisitions as it pursues its newly stated ambition to be "a camera company." These efforts, which are aimed at developing hardware and so-called augmented reality technologies, are central to the strategy of a company that is seeking a valuation of up to $22 billion in its early March IPO despite heavy losses and the spectre of stiff competition for advertising dollars with a far-larger Facebook. It is a big gamble and the odds against Snap are long.

There is little precedent for a company with its roots in software and social networking succeeding in the notoriously difficult consumer hardware business. Few US firms aside from Apple have made big profits on hardware, and camera and wearable gadget makers have much lower valuations than Snap is seeking. Once-hot camera start-up GoPro is a cautionary tale: its stock sits 61% below its 2014 IPO price. More broadly, creating new products and features that have mass-market appeal and cannot be readily mimicked is a huge challenge, analysts say. "It's worrisome," said Paul Meeks, chief investment officer at Sloy, Dahl and Holst, which manages more than $1 billion in assets. "Snapchat is going to have to continue to be really innovative and distinctive. It's going to be very tough to trump Facebook." Snap declined to comment for this story.

Snap first signaled its new focus with the September reveal of Spectacles, funky sunglasses with an embedded video camera for posting to the Snapchat app. The company spent $184 million on research and development last year, nearly half its revenue. Augmented reality, which refers to computer-generated images overlaid on real surroundings and viewed through a smartphone or special glasses, is a big part of the plan. Snap's "lenses" image-overlay feature has been a hit, and gives Snap an advertising format that's unique, at least for now. "If you're going to make the bet longer-term on Snap, you are betting they are going to come up with innovative products that Facebook can't copy," said Nabil Elsheshai, senior equity analyst at Thrivent Financial, who is considering whether to recommend that his firm buy Snap's IPO. Facebook-owned Instagram last year rolled out a feature called Stories, modelled after Snapchat's feature by the same name. Snapchat had about 100 million fewer downloads than Instagram in 2016, according to market research firm App Annie.

Snap had 158 million daily active users in the fourth quarter, up just 3% from the previous quarter, compared to 14% growth during the same period in 2015, according to Snap's IPO filing. New gadgets that offer more ways to interact with Snapchat could help attract new users and get existing users to spend more time on the app. "Ultimately, that's what advertisers are going to be looking at," said Douglas Melsheimer, managing director at investment bank and consulting firm Bulger Partners. Snap, along with Facebook and host of online rivals ranging from Google to BuzzFeed, is capitalizing on the shift of video advertising dollars from traditional television to the internet. Snap's IPO filing reads "as if all the hard things in front of them that they have to do are already done," said Rett Wallace, cofounder and chief executive at Triton Research. But, he said, that's not the case. "How will they hold up against all the guys you don't want to be fighting against in the world - Facebook, Google and Apple ?"

Hardware is part of the answer. Snap has recruited hardware experts from Apple, Alphabet Inc's Google, Nest and Motorola , according to an analysis of LinkedIn profiles. One former employee described ample resources and support from management for the hand-picked hardware teams. Last spring, Snap set out to hire up to 300 hardware, augmented reality and virtual reality specialists in a single month, according to another former employee. It also set up Snap Labs, a group dedicated to working on secretive projects. Its members have reviewed acquisition targets in areas including wearable cameras, facial recognition and 3D scanning technology, according to people close to the discussions. Spectacles itself came from Snap's acquisition of startup Vergence Labs in 2014. The sunglasses surprised even Snap's earliest investors, who say hardware was not in Snap's initial pitch to them. "It was a disappearing messaging product, and that's it," said Jeremy Liew, a partner with Lightspeed Venture Partners, who made the initial venture investment into Snap. Like most Snap backers he lauded the Spectacles roll-out. 

Snap has acquired at least 10 startups since 2014 according to firms tracking such deals, and M and A deal makers say Snap is one of the most active shoppers they have heard from. Snap's R and D investment as a percentage of revenue is far higher than what Facebook or Twitter were spending before they went public. One result of that investment has been a wave of patent filings - about 46 total, according to research firm CB Insights. They include eye-wear patents for Spectacles, as well as patents for photo and video-capture devices, and object and facial recognition, which is key to developing augmented reality technology. One former employee said Snap is working to figure out ways to turn the warehouse of data it collects from Memories, a feature for users to save photos on Snap's server, into augmented reality or facial recognition applications.

Spectacles "opens the doors for augmented reality," Elsheshai said. "That's a different direction for the company than just adding more social media capabilities." The quirky popularity of Spectacles further endears users to Snapchat, he said, but doubted that such niche products can propel the user growth Snap needs in the long term. The greatest impediment to Snap's innovation efforts, however, may be its hefty losses: the company lost $515 million last year on $404 million in sales. Revenue from Spectacles. was "not material," according to Snap's IPO filing. Snap, like Amazon.com, is expecting public investors to allow the company to lose money for years on the promise that more investment in innovation will pay off later. "They are going to have to get the Amazon pass - investors that don't care in the short run," Elsheshai said.

Sunday, 19 February 2017

Buying and Owning Ideas in India

Buying and Owning Ideas in India

Google has begun exploratory talks with startups and venture capital investors in the country in what could lead to its first acquisition of an Indian company, according to three people directly aware of the matter. The world's largest internet company is seeking to directly invest in or acquire companies in India that cater to whom it refers to as the next billion internet users, these people said. "Two major areas of focus for them are products for the next billion users and acqui-hires in high-tech areas," one of them said, adding that a transaction is not imminent yet. Another person, an investor, said Google is unlikely to invest in consumer-internet companies such as online retailers.

Google recently hired Seema Rao, who was a vice-president at investment bank Avendus Capital, to lead corporate development, or acquisitions and strategic investments, in India and Southeast Asia. The online search giant dominates the domestic digital advertisement market but its next phase of growth in the country would depend on how fast India is able to improve its network infrastructure and expand its number of internet users.

Google's focus on tapping the next billion internet users, typically in India's small cities and towns, could see it making strategic investments or acquiring technology-enabled firms in the financial services, healthcare, education or mobile utilities sectors, said the people mentioned above. They declined to be identified because the talks are in very early stages. As for the potential acqui-hires, which refers to buying a company for its employees, Google is expected to focus on companies working in areas such as cloud computing and cybersecurity, they said. A Google India spokesperson declined to comment on the company's investment plans in India.

Google, one of the world's most-acquisitive technology companies, has not bought a single startup in India yet. Globally, it has acquired more than 70 companies since the beginning of 2014, according to data from CB Insights. The Mountain View, California-headquartered company presently invests in domestic startups through its venture capital arm, CapitalG, which recently led a $15 million financing round in education technology startup Cuemath. Google India posted a 44% jump in turnover to Rs 5,904 crore for the year to March 2016, aided by a smartphones powered expansion of the country's internet user base and an ecommerce boom. But India's estimated 462 million internet users are merely about 35% of its 1.3-billion population and pale against China's 731million internet users.

Even so, India accounts for the largest number of users of Google's mobile operating system Android and has become a key test market for products like YouTube Offline. The company is trying to boost internet use in India, including by providing free WiFi at certain railway stations through a collaboration with RailTel, the telecom arm of Indian Railways. Google is training its investment focus on startups that can help it expand among low-bandwidth internet users, similar to what microblogging Twitter tried to do with its acquisition of missed call marketing platform ZipDial in 2015, said a third person aware of Google's investment plans for India.

SJP @DigitalAsian - ShareYaar

Saturday, 18 February 2017

App Monetization in India

There has never been a better time to be an app developer in India, reports Times of India in an article by Sreeraman Thiagarajan. According to reports referenced in the Economic Times, app downloads on Google Play from India grew from 3.5 billion downloads in 2015 to 6.2 billion downloads in 2016. Based on this report, India now holds the top spot in the world for apps downloaded on Google Play, even outranking the US and Brazil.

As noted in a recent article by Quartz India, nearly 90% of India's over 220 million smartphone users have Android smartphones, so the about 6 billion app download figures comes as no surprise. However, from a revenue perspective, the Times of India reported that India is far behind and does not feature as one of the top ten markets. (According to Android Authority Japan, US, and South Korea rank highest). World over, an article in MarketWire states that iOS and Android app publishers earned over 89 billion dollars in 2016 as revenue from their app, which includes paid apps, in-app purchases (IAP), and of course ad revenue. Indian app developers are in need of proven app monetization techniques. When exploring revenue generation opportunities by deploying Google's in-app advertising suite, AdMob is a great starting point.

Here's how:

Don't be shy or scared of using in-app ads. In my interaction with many startups and app developers, there is a disturbing insight I have discovered. Many developers think using in-app ads are a cliched way of generating revenue, and that they must come up with a unique and novel way of making money. Nope, it is not necessary to reinvent the wheel. Ad supported businesses have been thriving for decades. Besides being a source of income for a publisher, advertising subsidizes the price of a product for consumers. For example, if not for ads in a local newspaper, we may have to pay 10x or more than its current selling price. The concept of freemium apps may never have picked up as well.

Many of the largest and most recognizable apps use advertising to support their business model. Rather than reinventing their revenue models, they constantly innovate to maximize the ad revenue. From major sporting events to longstanding publishing houses to new age tech-based content providers, every one of them smartly leverages the power of monetizing the massive eyeballs they receive by showing ads, without disrupting the user experience.

An app or game is no different than our above examples. These apps and games can generate money through ads if they can garner users at scale and engage them frequently (converting them into DAU's or daily active users). Google's AdMob can help developers' immensely in building an ad-supported app and in diversifying revenue streams beyond paid subscriptions or in-app upgrades and purchases.

Picking the right in-app ad platform: There are many options to chose from when picking an ad monetization platform. In fact, there are over 50 ad networks that app developers can choose from, or they can even build their own ad serving mechanism within the app to show 'house ads' - the ability to cross promote other apps or services of yours.

Or one can also sell ad inventory (such as a masthead, a branded product placed within an app, or branded power-ups in games, etc.) through direct sales teams. However, building one's own ad suite or depending largely on direct ads is not scalable, and warrants too much time and effort of developers and ad sales team alike to make this work profitably. This is where AdMob makes its biggest contribution in making life easy for both iOS and Android developers. AdMob has a built-in mechanism that lets developers show 'house ads' to cross promote their portfolio of other apps for free. AdMob can also power your direct deals, which lets you run your own directly-negotiated ad deals with advertisers.

Another exciting feature of AdMob is 'mediation'. Mediation is a technology which helps apps to maximize the number of ads shown in an app, and thus helps increase revenue. Through AdMob mediation, one can integrate nearly 40 different mobile ads networks and even engage in SDK-less mediation for a select set of networks. With mediation, apps can enjoy the benefit of dynamic bidding and direct integration with other ad networks, which allows automatic CPM updates. This eliminates time and effort taken to manually adjust bidding floors. In terms of in-app monetization, AdMob is one handy tool that has all you need to survive - and thrive.

Watch out for the Part 2 in this series where we will discuss optimizing and measuring app monetization. Google has made a lot of resources available on AdMob and if you are a developer with apps that has over 100,000 downloads you can request a free consultation.

Optimising revenue and volume: A counter question I often get goes like this, "But other networks offer better eCPM (more dollar for every one thousand impressions served), why must I choose AdMob?" Answer for this lies in understanding two metrics and the two respective fundamentals behind each of these metrics.

The first metric is 'fill rate' which means how many relevant ads can the ad network fulfill as requested by your app? A simple demand-supply equation is the fundamental behind this metric, because there are a lot of advertisers on Google, nearly 1million plus advertisers who want to show their ads (demand) to a potential audience who could be using your app (supply). This equation generates a very high amount of 'ad requests' of 200 billion per month, globally. With AdMob on your app, you can join the supply side.

The second metric of eCPM is how much money per thousand impression your app can earn? eCPM differs from network to network, however, a simple multiplication of eCPM with fill rate answers this question. If network A offers $1 at a fill rate of 85% then you get 85 cents revenue per thousand ad request (aka RPM). Now if network B offers twice as much at $2 but with a lower fill rate of 30% then you only get 60 cents of RPM. That's a 25% loss on potential earnings.

Choosing the type of ads to show: There a few standard types of ads, namely Banners, Interstitials, Rewarded, and Native. There's no fixed formula for which type of banner to use, but one principle developers must strongly adhere to is to 'preserve user experience' by integrating ads as unobtrusively and as natively as possible. Game developers have an advantage in using rewarded ads, this a form of interstitial ad units that enables you to reward users with in-app items such as an extra life, a level jump, a feature unlock, etc., for watching video ads.

Native ads is a boon for publishers and content based apps. It is a component based ad format that matches the look and feel of the app where the ad is being displayed. This makes the ads look like they are a part of the app and reduces obtrusiveness. A simple example of this is a promoted tweet on Twitter or a promoted post on Facebook. It is essentially a tweet or post like any other, but an identified sponsor has paid to promote it.

Banners and interstitials are pretty standard formats. Apps can choose to display banners at fixed positions on screen like the top or bottom. The full-screen ads are called interstitials, these are displayed at natural transition points in the user journey such as between two levels in a game, between two news articles, etc.

Stop guessing and start testing: App developers often suffer from the curse of knowledge, that is, they assume their users know and use the app the way it was meant to be. But more often than not, this is not true and building the app's advertising strategy on gut feel is bad for business. Optimal monetization happens when users' journey from acquisition to retention is deeply understood. Thanks to the integration of Google Firebase with AdMob, app developers can use Firebase's free & unlimited analytics solution for deploying intelligent ad monetization strategies.

Importing Firebase SDK into apps requires no complicated coding. Once integrated, developers can get details like sessions, demographics of users, revenue from in-app purchases, etc., from Firebase Analytics. Besides this, AdMob's own reports will give you a ringside view on how revenue is generated. To optimize monetization, it is imperative developers inculcate a habit of continuous testing and tweaking their product strategy based on data and hard insights.

In conclusion, ads are above fifty percent of total revenue generated by apps. According to data point by App Annie and IDC, in-app ads are projected to grow at 3.2X in next two years. As stated by Gartner, this year, over 268 billion apps are expected to be downloaded worldwide; apps have no boundary and you never know audience from which country maybe your biggest fans. Successful app monetization happens when there's a mind-set of growth. Grow your audience base, preserve user experience, integrate AdMob, and ad revenue will start taking care of itself. Thus giving developers bandwidth to build more products or enhance existing features. Google has made a lot of resources available on AdMob (you can click here) and if you are a developer with apps that has over 100,000 downloads you can request a free consultation (you can click here). Both the resources are free of cost. Godspeed and love to see India rise up in charts for generating app revenue.

Friday, 17 February 2017

Co-Working Capitol: NCR offers Shared Workspace

Co-Working Capitol. NCR offers Shared Workspace. Cafes, pubs, bars and hotels offering co-working facilities for additional revenue.

It's still six hours before Nowhere Terrace Pub in Sushant Lok's Cross Point Mall gets its first set of regular tipplers. But there are already people seated inside - all of them working on their laptops. Strange? Well, that's because the pub turns into a shared workspace during the day. It's not the only one. There are at least five pubs in Gurgaon, and one five-star hotel, that have started renting out space - in this case, tables - to those looking for a place to work out of. You can take it for a day or get a deal for a month. Facilities like WiFi and, sometimes, snacks and coffee are part of the package. This also helps the pubs make some money in off-peak hours.

Sameer Dhar, the owner of Nowhere Terrace Pub, says, "I started out as an entrepreneur myself 18 years ago and I understand that, while starting up, every penny matters and an office is a big expenditure, hence the idea of co-working space," The pub has a dedicated area where people can work for just Rs 99 per day. The tariff includes free WiFi, unlimited tea, coffee and munchies. "We don't follow any specific revenue model but it helps us cover cost because we are anyway spending on the space and air-conditioning. Also, when there are people inside, customers feel more comfortable walking in for brunch," says Dhar.

Cafe Di Ghent happens to be another such place. "I love it here," says Harsh, who runs a startup named Hey Pulp. Factory by Sutra, another pub, located in Sector 29, also offers co-working spaces to start-ups and businesses. Their package starts at Rs 5,000 per person a month, which covers WiFi, unlimited coffee, tea and stationery. The idea of working out of a pub or bar isn't restricted to small entrepreneurs starting up. Many of the big names from the industry are also warming up to the idea, only their address is comparatively fancier.

One such address is The Trident, Gurgaon, which started a similar service six months back. The Trident offers free WiFi, munchies, tea, coffee, stationery box and business concierge services at Rs 575 a day. "A lot of business leaders have their meetings at Trident and we realised they hated wasting time commuting, especially in rush hours. So, we came up with a service that lets them work out of our bar where they can work and network," says Ramandeep Singh Kaur, assistant food and beverage service manager, NCR, Trident Hotels.

SJP @DigitalAsian - ShareYaar

Thursday, 16 February 2017

Warning: Disruption Ahead

Could the Uber and Ola drivers organise and become a union of sorts, whether formal or informal? How will this affect other service aggregators?

As the Uber and Ola drivers' strike threatens to spread across the country, it is turning into a windfall for car-sharing platforms and self-drive car rental service companies. Rental companies like Revv, Eco Rent A Car and Zoom have witnessed 20-40% increase in bookings while car pool companies like Orahi and Jugnoo have also seen up to 100% increase in demand in certain critical markets like New Delhi, Gurugram and Bengaluru. As conventional public transport gets more crowded, the app-cab demand is shifting to self-drive rental platforms and car pool services, say industry experts. Take car sharing platform Revv which has seen 40% increase in bookings on weekdays.

Wednesday, 15 February 2017

Cloud Communications

US online giant Amazon has announced the launch of a "unified communications service" which offers video and audio conferencing through its cloud computing service, reports Times of India. The new service called Amazon Chime from Amazon Web Services -- which provides the online computing power for thousands of businesses -- enables customers to have conversations and video-conferences whether they are using desktop computers, Apple iPhones or Android devices. "Most meeting applications or services are hard to use, deliver bad audio and video, require constant switching between multiple tools to do everything they want, and are way too expensive," said Amazon vice president Gene Farrell.

"Amazon Chime delivers frustration-free meetings, allowing users to be productive from anywhere. And with no ongoing maintenance or management fees, Amazon Chime is a great choice for companies that are looking for a solution to meetings that their employees will love to use." The cloud computing unit of Amazon is among the fastest growing segments for the US tech giant, which has expanded from its roots as an online retailer into fields such as streaming video, music and artificial intelligence.

Chime was developed with telecom partners Level 3 and Vonage and is expected to be available in the second quarter of this year. Amazon said its first customers for the new platform would include US apparel retailer Brooks Brothers, e-commerce group Connexity and the LED lighting maker Soraa.

Tuesday, 14 February 2017

Name of the Game in India

Online gaming leagues are becoming big business in India, with mobile game publisher Nazara Games committing to invest Rs 136 crore in its eSports venture and serial entrepreneur Ronnie Screwvala earmarking Rs 80-100 crore for setting up a tournament, reports Times of India. Online games that were once common in neighbourhood cafes and a part of local gaming tournaments are now bringing in big money with winners eyeing cash prize pools worth lakhs of rupees. Nazara Games eSports league will enable gamers hooked on online games such as Dota 2 and League of Legends to participate in tournaments, catch live webtv programs and chat on forums. The Mumbai-based company's investment in the venture will be spread over 5 years. "The league will have two seasons per year and six teams will be selected through free online qualifier tournaments, primarily focusing on games like Dota, Counter Strike and League of Legends," said Manish Agarwal, chief executive of Nazara Games. "For mid-core and hard-core gamers we didn't have an offering, so this is to meet that set of users."

eSports is slowly picking up in India as a growing number of casual gamers are turning professionals, with nearly 2,000 Indian online gaming teams being sponsored by brands and wealthy individuals. The number of tournaments and cash prize pools are steadily increasing. Domestic gaming startups including Nova Gaming Ventures, Nodwin Gaming, eGamers Arena and leading international players such as ESL are making investments in setting up national-level tournaments every other month, a stark contrast from what the situation was like a few years ago. Presently, three to four online and offline tournaments take place once a week in India, compared to two years ago when a tournament would take place once every few months.

Most recently, eGamers Arena exclusively partnered with World Cyber Arena (WCA), one of the largest gaming championships worldwide, to host the national qualifiers in India for a championship that will be held in China at the end of 2017. At stake is a $28-million jackpot that winners of online games like Counter Strike and Overwatch get to take home. "In 2017 and the next two to three years we are going to see both domestic and international gaming companies eye the Indian eSports gaming scene, which will pick up even further because of the growing number of gamers," said Ajay Shah, media and entertainment, transaction advisory services partner at EY. "As far as revenue is concerned in the initial stages, advertisement based revenue will be a major focus. Companies will look at acquiring players for now to grow the scene in India."

In May last year, ESL, one of the world's largest eSports companies, partnered with Indian eSports gaming company Nodwin to announce a domestic gaming tournament with Rs 42 lakh in cash prize pool.American gaming company Valve has also partnered with Indian gaming companies during tournaments. According to Nodwin CEO Akshat Rathee, through partnerships with brands such as RedBull and Mountain Dew as well as the Taiwanese government, the total prize pool of cash released through tournaments in India last year was nearly Rs 95 lakh. Globally, online gaming is touted to be a $150-billion (Rs 10 lakh crore) industry . The eSports industry in India amounted to over Rs 2,000 crore in revenue in fiscal 2014-15, according to Netherlands-based Newzoo, a gaming, eSports and mobile market intelligence company.

Monday, 13 February 2017

Decisions, Decisions

When you browse online for a new pair of shoes, pick a movie to stream on Netflix or apply for a car loan, an algorithm likely has its word to say on the outcome, reports Times of India. The complex mathematical formulas are playing a growing role in all walks of life: from detecting skin cancers to suggesting new Facebook friends, deciding who gets a job, how police resources are deployed, who gets insurance at what cost, or who is on a “no fly” list. Algorithms are being used — experimentally — to write news articles from raw data, while Donald Trump’s presidential campaign was helped by behavioural marke­ters who used an algorithm to locate the highest concentrations of “persuadable voters.” But while automated tools can inject a measure of objectivity into erstwhile subjective decisions, fears are rising over the lack of transparency these can entail, with pressure growing to apply standards of ethics or “accountability.” Data scientist Cathy O’Neil cautions about “blindly trusting” formulas to determine a fair outcome. “Algorithms are not inherently fair, because the person who builds the model defines success,” she said.

A White House report last year said algorithmic systems “are not infallible — they rely on the imperfect inputs, logic, probability, and people who design them”. Zeynep Tufekci, a University of North Carolina professor who studies technology and society, said automated decisions are often based on data collected about people, sometimes without their knowledge. “These computational systems can infer your sexual orientation, your personality traits, your political leanings. They have predictive power with high levels of accuracy,” Tufekci said. Frank Pasquale, a University of Maryland law professor and author of ‘The Black Box Society: The Secret Algorithms That Control Money and Information,’ points at the EU’s data protection law, set from next year to create a “right of explanation” when consumers are impacted by an algorithmic decision, as a model that could be expanded.

SJP @DigitalAsian - ShareYaar

Sunday, 12 February 2017

It's a Kind of Magic - using AI to predict the future of a customer's needs

It's a Kind of Magic - using AI to predict the future of a customer's needs.

Kunal Sinha thought it was some kind of a black magic, reports Economic Times. Chatting on WhatsApp, the 20-year-old asked his friend to join him at Domino's in North Delhi. Suddenly, a Zomato pop-up appeared on his chat screen, giving him an option of ordering online. He ignored it. The nearest Domino's outlet was 25 minutes from his place. So booking a cab was the best option, Sinha informed his friend. Again, a popup, offering him a cab ride, jumped on his chat window. Somebody, he presumed, was reading his mind.

Fortunately, for Sinha that 'somebody' was neither a human nor a spirit. It was Xploree - the smart mobile keyboard app in Sinha's Karbonn handset-which was performing 'magic.' "It seems as if there's a personal assistant in my mobile who understands my needs," grins Sinha.

Launched in June 2015, Xploree goes beyond the realms of a conventional keyboard to offer more than just next word prediction and auto correction. Powered by artificial intelligence and natural language processing, it doubles up as a discovery platform and augments predictions, not just that of words but also intent. It allows users to receive relevant suggestions and content while they chat or browse apps, says Sunil Motaparti, CEO of KeyPoint Technologies, the maker of Xploree.

Even before users realise, Motaparti points out, Xploree gauges user's intent and suggests recommendations based on who and what the users care about, current context and their likelihood to care about things when in a similar context. The app has had over 3 million downloads so far, has partnered with brands such as Zomato, Shopclues, Daily Motion, Snapdeal, Flipkart and Amazon, and comes pre-loaded on handsets of Coolpad, Lava, Infocus, Karbonn, Xolo, Panasonic, iBall, Celkon and Zen.

Motaparti contends that it's not only the smart features that give Xploree an edge over other mobile keyboards. Take, for instance, its cross-app reach. As keyboards are universal across apps, one gets seamless contextual recommendations across chat, email, texting or browsing, without the hassle of switching. Another feature is personalised keyboard for users, who can save new words to the dictionary or opt for themes. They can also get their unique user login to maintain keyboard preferences across all devices.

"The keyboard supports over 110 languages and does not capture, store or map users' data," claims Motaparti, adding that the recommendations shown on the app are purely contextual and is never stored beyond the keyboard session. Also, users will see the discoveries only when they wish to see them.

Marketing experts believe that in a digitally-enabled world, continuous innovation is needed to engage with consumers. Creating positive moments of truth has never been so important for marketer and Xploree manages to do that.

Xploree, says Ashita Aggarwal, head of marketing at SP Jain Institute of Management and Research, personalises the entire experience to converse on phone. It understands your language and moods using artificial intelligence, making the consumer feel as if 'someone is reading my mind'. Though everyone enjoys attention, if technology does it then it not only makes consumer feel special but also enhances their engagement experience. "Xploree not only saves time and effort, it also makes switching and searching easy," she avers.

However, the biggest plus could also be its toughest challenge. While Xploree is a hit because its gives certain additional value to the customer, the future innovation is its biggest challenge. "Any value addition will make this obsolete," she reckons.

Another challenge, points out Aggarwal, is the utilitarian nature of consumers, especially millennials. They seek performance and any additional feature leading to better performance can make them shift to new brand. "So there could be a boredom which may act as a catalyst to switch," she avers.

Motaparti, for his part, sounds confident. Xploree, he points out, is striving to add new features, improvise on intent detections, get more partners on board and integrate utility and transactional services within the keyboard. "It can disrupt and bring about a sea change in mobile usage and app download behaviour of the consumers," he says.

Saturday, 11 February 2017

AI Wars

Fighting the Disruptors. Brick-and-mortar retailers and manufacturers are fighting back against the tech giants by investing in AI themselves. Tech giants themselves have and are continuing to invest heavily in AI.

Want a coffee while you shop? A glass of wine? Those are just few of the gimmicks being rolled out by retailers as they fight to boost store traffic -- and ensure their survival in the Amazon era, reports Times of India. Stores are testing artificial intelligence programs to guide shoppers through their aisles, and swipe-right, swipe-left games, that borrow from dating apps to offer them personalized pickings. Others have added coffee shops, restaurants and even alcohol in an attempt to drag consumers away from their laptops and back in the dressing room. "It has to be a better experience" and not just "a simple warehouse of goods," said Chris Donnelly, managing director at Accenture Strategy, a business consultancy. "There's got to be more of an emotional, experiential connection."

The new tech and add-on perks look set to become even more critical following another bad holiday shopping season that has sharpened focus on the over-sized US retail footprint. Experts predict some brick-and-mortar stores will survive the period of reckoning, but there will be fewer of them, and the survivors will be more customer-friendly. A recent Accenture report predicted the next decade will be "the golden age of the consumer," offering a "growing array of products and services, often personalized to their specific needs and wants." But with that comes disruption and Accenture warned of a painful shakeout ahead as old-fashioned malls close and jobs are lost.

Ford Motor Co. is investing $1 billion over the next five years in artificial intelligence startup Argo AI to help build the brains of its robot cars, reports Times of India. The Pittsburgh company, founded last year, specializes in robotics and virtual driver systems. It will compliment Ford's autonomous vehicle team that's preparing to market a fully self-driving car in 2021. Argo was founded by Bryan Salesky, formerly of Google , and Peter Rander, formerly of Uber. Both are alumni of the Carnegie Mellon National Robotics Engineering Center and left their respective companies late last year to form Argo AI. "When talent like that comes up, you don't ignore that availability," said Raj Nair, Ford's product chief and chief technical officer. "This really increases the robustness of our ability to deliver this vehicle in 2021."

As part of the investment, Ford will become a majority stakeholder in Argo. Mr. Nair and John Casesa, Ford's group vice president of global strategy, will sit on Argo's five-person board. By the end of this year, Argo will have offices in southeastern Michigan and California, according to Ford, along with its Pittsburgh headquarters. It will employ more than 200 workers at the three sites. A yet-to-be-determined amount of Ford employees will transition to working for Argo, executives said.

SJP @DigitalAsian - ShareYaar

Friday, 10 February 2017

Remote Control Content

Remote Control Content

When Samsung Electronics remotely disabled the last of its flawed Galaxy Note 7 smartphones last month, it further blurred the lines between who ultimately controls your phone, or computer, car or appliance: You, or the companies that make it work? reports Times of India. Industry executives and analysts say companies are exerting greater remote control over their devices - changing how and whether they work, removing or adding software and content, or collecting personal data from them - not always with permission or with the user's best interests at heart. "(The Samsung case) is exactly an example of how devices...are no longer objects we own, but rather services we've subscribed to and which can be revoked at a moment's notice," said Stefano Zanero, an Italian computer security expert. Mahbubul Alam, chief technology officer at Movimento, a car tech firm now owned by Delphi Automotive, says manufacturers have moved on from just selling a device and hoping there's no recall to a world where they are in touch with users through internet-connected devices that they can "change, modify, adjust" as they see fit. "With power comes responsibility," he adds. "It's a new power that the device manufacturers and telcos have. How they exercise their responsibility is very important."

Samsung said it retrieved 96% of the more than three million Note 7s it had sold and activated. That left more than 120,000 unreturned phones that were put out of action by over-the-air software updates or by telecom operators barring them from their networks. "We assume the majority of unreturned devices are not actually used," said a spokesperson for the South Korean firm. In another example, HP last year used a software update to prevent unauthorised cartridges being used with some of its printers. After some users complained, HP offered an optional update. HP did not respond to requests for comment. In other cases, manufacturers use so-called firmware updates to stop people using their devices in ways they don't want. Apple , for example, routinely upgrades the firmware on iPhones to outwit users' attempts to open up the software to unapproved apps and functions - dubbed jailbreaking - said Bunnie Huang, a hardware entrepreneur.

Bryan Hale of Resin.io, which distributes software updates to connected devices, says gadget makers increasingly realise that connected products are only as good as the software on them. That means they can't afford not to figure out how to update that software. Hacking attacks on appliances like CCTV and webcams highlight the pitfalls of not keeping devices updated. At the other extreme, some companies see this channel to the device as a marketing opportunity, using over-the-air updates to collect user information and push services and apps on to their devices. In the United States, Chinese firm Shanghai ADUPS Technology faces two class-action suits after a security company found it installed software on thousands of mobile devices that collected data without users' permission. One suit alleges the software "could also remotely reprogram the devices and install applications on consumers' phones without their knowledge or consent." ADUPS Technology did not respond to requests for comment.

Whatever the motivation, companies see advantages in being able to retain some degree of remote control. Not least, manufacturers can reduce the costs of service centres and staff, said Emma Wright, UK-based commercial technology partner at law firm Kemp Little. "This ... is an extremely useful way of providing updates on devices without users having to take it in to a store." Samsung could have saved itself a lot of trouble, says Julie Purves, CEO of UK-based remote management software company B2M Solutions, if it had exerted even greater remote control. Smart batteries, she says, would have allowed her software to remotely detect and report on abnormal behaviour. Samsung's battery issue, she says, could have been "identified much sooner and potentially prevented altogether if spotted and addressed early enough." This approach is also slowly transforming the automotive world, where nearly a third of users never respond to a product recall, says Alam at Movimento. Consultant Michael Sena says the economics of the car industry are not unlike those of the mobile sector, and car companies are coming to terms with the changes wrought by Tesla , which pushes updates and features to its cars wirelessly, removing the need for dealers.

This, in turn, raises the issue of privacy. European Union law, Sena says, will next year be more stringent on data protection, and will effectively mean "if I own a device, what happens with that device is up to me." So far, he says, companies like Tesla in autos and consumer players have operated in a grey area that sometimes helps the consumer, and sometimes doesn't. But there are signs that is changing. The US Federal Trade Commission this week settled with Vizio , a US-based appliance maker being acquired by Chinese conglomerate LeEco , over software that automatically collected data on viewing habits from its smart TVs. As part of the settlement, Vizio agreed to ensure it makes clear to users what data it wants to collect, and seek their approval. More regulation from government is likely. "What's needed here is oversight," said Bryce Boland, Asia-Pacific chief technology officer at FireEye, an internet security company. "Some cases may be legitimate, such as devices that need to be modified to prevent forest fires or human deaths; others might be more difficult to assess."

SJP @DigitalAsian - ShareYaar

Thursday, 9 February 2017

Bitcoin Anonymity

Bitcoin Anonymity

Researchers have developed a Bitcoin-compatible system that could make it significantly more difficult for observers to identify or track the parties involved in any given transaction of the cryptocurrency, reports Times of India. Bitcoin was initially conceived as a way for people to exchange money anonymously. However, it was discovered that anyone could track all Bitcoin transactions and often identify the parties involved, researchers said. Bitcoin operates by giving each user a unique public key, which is a string of numbers. Users can transmit money in the form of digital bitcoins from one public key to another. This is made possible by a system that ensures a user has enough bitcoins in their account to make the transfer.

The use of the public keys gave users a sense of anonymity, even though all of the transactions were visible on the public Bitcoin blockchain which lists all transactions. Over time, experts and private companies have developed highly effective methods of de-anonymising those public keys. Now, researchers from North Carolina State University, Boston University and George Mason University in the US have developed a system called TumbleBit, which is a computer protocol that runs on top of Bitcoin. TumbleBit takes advantage of an existing concept called "mixing service." In the concept, instead of Party A paying Party B directly, many different Parties A pay an intermdiary "tumbler," which then pays the Parties B. The more parties are involved, the harder it is to determine which Party A paid which Party B. "However, this still has a security flaw. Namely, if an outside observer can compromise the tumbler, it could figure out who was paying whom," said Alessandra Scafuro, an assistant professor at NC State.

To address this, TumbleBit takes a three-phased approach. In the first phase, called escrow, the Parties A notify the tumbler that they would like to make a payment, and the Parties B notify the tumbler that they would like to be paid. This is all done on the public blockchain. For the second phase, the researchers have put cryptographic tools into place that allow the tumbler to pay the correct parties without actually knowing which parties are involved. Phase two does not appear on the blockchain. In the third phase, called cashout, all of the transactions are conducted simultaneously, making it more difficult to identify which parties are involved in any specific transaction. Phase three does appear in the public blockchain. "We tested TumbleBit with 800 Bitcoin users, and found that the second phase only took seconds to complete," Scafuro said.

Wednesday, 8 February 2017

Original Digital Content Creators in India

Original Digital Content Creators in India

Amazon's video streaming service has so far committed at least Rs.500 crore to creating original content in India, outspending its top domestic rivals as it signs up some of the country's most high-profile production houses, reports Times of India. Amazon Prime Video has invested about one-fourth of its Rs 2,000-crore India budget in local production houses, including those of filmmakers Farhan Akhtar and Anurag Kashyap, according to executives at production firms Amazon has been in talks with. That is more than the annual budgets of market leader Hotstar, Eros Now, SonyLiv, Voot and Balaji Telefilm's ALT, according to these executives and analysts tracking India's nascent so-called over-the-top video streaming industry. While ALT's budget for 2017 is about Rs 120 crore, the other providers have allocations under Rs 400 crore each, according to analysts.

Amazon's aggressive spending on original content is expected to give it a firm edge in India over the world's largest online TV network, Netflix, which is focused on streaming global content and Hindi and regional movies here. Amazon Prime Video began streaming in India in December, nearly a year after Netflix launched its local service. "Amazon Prime is definitely giving the best monetary benefits to many of us creatives. Netflix is also paying but there are fewer deals happening where they are concerned," said a film director working with multiple production houses, on condition of anonymity. Amazon Prime Video is estimated to have paid Rs 40 crore to Akhtar and his business partner Ritesh Sidhwani's production house Excel Media and Entertainment, and similar or smaller sums to other digital content players including Kashyap's production house Phantom Films, according to the industry executives ET spoke with.

Overall, the company has signed up at least 15 production houses and digital content creators including All India Bakchod (AIB), Only Much Louder and Big Synergy, these people said. "We are looking at diverse genres. In the long term, our original content will build our brand in India," said Nitesh Kripalani, country head of Amazon Video India. "Our aim is to launch our first India original show by the end of March or early April." Kripalani did not reply to emailed questions on Amazon Prime Video's investments in India.

Eros Now and Star India's Hotstar declined to participate in this report, and SonyLiv could not be reached for comment. ALT, which is set to begin its streaming service this month, is focused on creating regional language content and has eight shows ready. "We have committed Rs 50 crore out of this year's budget toward creating original content and are looking to launch 30-35 shows," said chief executive Nachiket Pantvaidya. "Besides Hindi and English, we have also shot a show in Tamil and one in Punjabi is being shot right now. We have two concepts in Bengali.''

Viacom18's Voot, which began streaming original productions last year, said it gets 5-7 million views for each show. Of its more than 18 million monthly active users, at least 2 million log in daily for 50 minutes of show time, the company said. Despite Amazon Prime Video's aggressive spending, analysts expect domestic services to continue to invest on creating original content for the next few years until a few begin to dominate the market. Domestic video streaming services "will have the appetite to sustain losses for two to three years, after which the bosses will start asking budget questions and then you will see a shakeout", said Jehil Thakkar, media and entertainment head at KPMG. Stay updated on the go with Times of India News App. Click here to download it for your device.

Tuesday, 7 February 2017

Keeping Unicorns in the US

Keeping Unicorns in the US.

US Democrat Zoe Lofgren's bill introduced last week is set to ensure that the US retains the crown when it comes to creation of billion dollar startups, reports Times of India. The bill seeks to curb job outsourcing through H1B program which has been long used by large IT companies, and make way only for the highly skilled like those who go on to build unicorn startups. "My legislation refocuses the H-1B program to its original intent - to seek out and find the best and brightest from around the world, and to supplement the US workforce with talented, highly-paid, and highly-skilled workers who help create jobs here in America, not replace them," said Lofgren.

What is interesting to note is that while US leads with the most number of unicorns or startups that are valued at over a billion dollars, a majority of these are founded by immigrants. A 2016 study by the National Foundation for American Policy shows that 51% of US-based unicorns i.e 44 out of 87 startups were founded by immigrants. Amongst countries, India leads with 14 unicorn founders being of Indian origin. Ash Ashutosh of data management startup Actifio, Jay Chaudhry of Zscaler, Dheeraj Pandey , Ajeet Singh and Mohit Aron of Nutanix, Dhiraj Rajaram of Mu Sigma, KR Sridhar of Bloom Energy , Jyoti Bansal of AppDynamics are just a few names. "Typically, the use of H1B route is not towards startups but employees of large IT companies. Hence, the impact will be minimal.

Startup founders are mainly those who come to America as international students or those who used the H1B route and then got a greencard," said Sashi Chimala, serial entrepreneur who has spent several decades in the US and particularly, Silicon Valley. For the skilled across the world including India, America's Silicon Valley has been the promised land. California, San Jose and Palo Alto has seen several successful companies being founded such as Google, Uber, Intel and Facebook. "In the 1980s, even in cricket, many players used to play for a few clubs in the UK and earn in pounds over a couple of seasons. India then grew as a cricketing nation and today provides opportunities to the best foreign players to come and play here. Likewise, we already have a bunch of Dhonis and Kohlis of the start-up world. It is time for us to tell the next generation of entrepreneurs that India has the largest playing ground, thanks to the demographic dividend and incentivise them to play here," said Pavan Kachibhatla, founder, MeritLane.

While many refer Bengaluru to be the Silicon Valley of India, industry veterans say we need not build a similar ecosystem here. "In Silicon Valley , startups have gone through multiple cycles and many companies have exited. In India, we are yet to see a massive IPO by a startup. What India needs is a different ecosystem that supports the first generation of founders," added Chimala. For Kaladhar Bapu, a design consultant, it was a childhood dream to study in Pratt University . Bapu took a break to study and decided to settle in New York.

SJP @DigitalAsian - ShareYaar

Monday, 6 February 2017

Acquihiring: On the Lookout for Distressed Startups

Acquihiring: On the Lookout for Distressed Startups

In May 2016, two young entrepreneurs, Deepak Modak and Abhishek Periwal, cofounders of online lending marketplace KountMoney, arrived at the offices of their larger rival Lendingkart in Bengaluru, reports Economic Times. Over the past year or so, the duo had built a promising venture, but in a market where funding was scarce and competition fierce, KountMoney needed help. Lendingkart had raised millions in funding (it would announce a $32 million tranche weeks after this meeting), and had ambitious growth plans. This meeting, orchestrated by common investor Ashish Goenka, was meant to provide some wise counsel for KountMoney’s founders. Instead, over the next two months, as it became apparent that their business was running aground, they opted to be acquihired by Lendingkart. “These entrepreneurs can hit the ground running from day zero... this is very valuable for a fast-growing company,” says Harshvardhan Lunia, cofounder, Lendingkart.      

If the first exploratory meeting was held over cups of coffee at Lendingkart’s rooftop cafeteria, it took a couple of months and multiple interactions to seal the deal. In the end, Modak and Periwal made the shift, betting that their entrepreneurial energy and ambition would be better served at another flourishing venture, rather than risk running out of runway at their own startup. Twenty kilometres to the north, Sujayath Ali, cofounder of Sequoia Capital-backed Voonik, an online apparel venture, is using a patchwork of acquihires to grow his business. In the past year or so, Voonik has added a diverse set of technology and talent to its portfolio, by bringing aboard the founding team of fledgling (sceptics would call it floundering) startups TrialKart, Dekkoh and Zohraa, giving the company access to new technology and domain expertise. While TrialKart gives Voonik — which is in a door-die battle with the likes of Myntra and Limeroad — access to image recognition technology, Zohraa offers experts in ethnic silk apparel. Ali has kept his eyes peeled on distressed startups and swooped in to pick up the pieces.      

By his own estimate, there are about 25 former CEOs working in Voonik, and acquihiring has been a successful way to hire the best talent and get access to technology and domain expertise. “Each of our acquihires has been working better than expected for us,” he says. “We like hiring founders of startups, because they are entrepreneurial and energetic and willing to chase seemingly impossible goals.”      

For ambitious entrepreneurs, an acquihire is often the last option before a business is wound up. While a founder would ideally like to see his business grow, not everyone can expect it. Inevitably, some startups fail and entrepreneurs try to find themselves a soft landing when the funding fuel runs out — in the form of an acquihire. While large companies are often targets, their less nimble work culture often sees such deals failing. For example, Paytm acquihired online education marketplace Edu-Kart, but its founders left within months. Similarly, the founders of Appiterate and AdIQuity, acquihired by Flipkart, too quit.     

While Paytm declined to get into details, a Flipkart spokesperson contended that other larger internet commerce ventures needn’t be bad destinations for such deals. The spokesperson pointed to PhonePe, the UPI-based payment service in the country, which has crossed 10 million downloads. The founders first came to Flipkart via an acquihire, built Flyte, its music business (which shut), stayed on in the company and were given senior roles. They left and worked on a new venture, which was again taken over and they returned to launch PhonePe last year.  

In the past year or so, startups of all sizes have come face-to-face with a harsh new reality in India. If 2014 and 2015 were years of excess — in valuations and funding — 2016 was the year of bitter reckoning (See The Startup Stutter). Funding has dried up and many startups and entrepreneurs have been stranded. Some entrepreneurs have turned this distress into an opportunity, by acquihiring just the founders (and/or a select few team members), to survive this startup winter. “We are telling companies to do more with less,” says Bejul Somaia, managing director, Lightspeed Venture Partners, a venture capital firm. “There is significant focus on capital efficiency and building companies sustainably.”

While a traditional acquisition may net some returns for investors like him, an acquihire offers little chance of redeeming their investments, much less making a profit. “To investors, the difference between acquihire and winding down a business is not that different.” If startups benefited, arguably, from netting more capital than they should have, now they are compelled to sort things out — if a company is not working everyone has to take the next logical step.

As this happens, the ones which survived the clear-out, are circling with interest. “There are plenty of young, energetic and passionate folk out there,” says Alok Bajpai, cofounder of Ixigo, a travel meta search platform. “Unfortunately, due to the inhospitable funding climate, many have struggled and, with increased competition, look unlikely to make it to the next level.” Ixigo hasn’t been afraid to swoop in and cut some deals; In December last year, it announced an acquihire of Reach, a mobile content-sharing venture.      

While Ankur Warikoo, an angel investor for both companies, played matchmaker, it was a skillset match that sealed the deal. In the months since the deal was signed, both cofounders have been given prominent roles at Ixigo and seem to be sticking around. “For such a deal to be successful, entrepreneurs need to be given the freedom to executive bold plans,” Bajpai contends. If you are running a well-funded startup, odds are that one of your stressed peers may have reached out, to try to broker such an acquihiring deal. Dhruvil Sanghvi, cofounder of LogiNext, a logistics platform, says he has been approached by 25 to 30 founders, trying to get themselves in through the door. He’s not convinced on any of their plans. 

For the one deal he agreed on, for YourGuy, a last-mile delivery platform, he spent two months speaking to the founders and a few select team members he wanted to bring aboard. The time was spent judging not just their numbers, but also how they would fit into LogiNext and the kind of goals they had set themselves. In LogiNext’s case, the temptation was also to get talent, for cheap. This doesn’t mean that they were poorly compensated but that a three-year-old venture, which was sipping on its funds, could attract top technical talent and not burn cash to pay them. “We got access to top-tier talent willing to be primarily compensated in stock,” says Sanghvi. “That would be almost impossible to find in the market.” Then he repeated the process with another undisclosed Bengaluru-based tech platform: it was acquihired in late 2016. In a fast-consolidating startup market, GirnarSoft (which owns, among others, the CarDekho brand) is snapping up companies. 

While some are traditional takeovers, it more recently acquihired Drishya 360s, a virtual and augmented reality venture, and Valueserve Consulting, a boutique consultancy. “These entrepreneurs are a key driver to our long-term plans to change how people buy and sell automobiles,” says Anurag Jain, cofounder, GirnarSoft. Such deals help GirnarSoft think ahead of the rivals — it lets the company measure better who is using the site/ app, and predict with greater confidence who will buy a car and when.      It also allows the firm to personalise content for users, Jain adds. In the case of Drishya, the technology is futuristic, letting GirnarSoft consider new ways (virtual and augmented reality) of showing what is for sale.      

An acquihire can also handsomely benefit the company that is being acquired. In March 2016, Ritu Srivastava, cofounder of Obino, a fitness and wellness venture, met the founders of Fitard, a fitness gamification company, to discuss plans to be a rewards partner.      That conversation, initiated by a common investor, quickly pivoted to an acquihire as Fitard’s founders discovered by August-September that it was better to be part of a larger team. The duo found themselves playing new — and pivotal — roles at Obino. “The levels of motivation these entrepreneurs have and the minimal supervision they need are key reasons to use this strategy,” says Srivastava.      

For a startup in a hurry, it helps that it doesn’t have to supervise top management. In the case of Obino, Srivastava is steering the company’s fortunes beyond its initial focus on weight loss into five or six new areas. For one, it has built a strong premium subscription fitness business as its core offering and is now adding layers to this, like lead generation for insurance and health companies, an outsourced dietician provider for small hospitals, a white label product to be installed in a million Intex handsets. It also plans to build a custom news feed and be an affiliate marketer for brands. “Entrepreneurs need to be handled differently,” says Srivastava. “They thrive on being needed… they need to feel that their presence makes a difference.”

SJP @DigitalAsian - ShareYaar

Sunday, 5 February 2017

Whether to List Locally or Abroad for Late-Stage Funding

Whether to list locally or abroad, is a tough question for startups seeking late-stage funding.

In 2010, a decade after it was founded, online travel portal MakeMyTrip (MMT) was ready to get listed on the stock exchanges, reports Economic Times. The only problem? The investors in MMT were split down the middle on where it should be listed: in India or the US. Two large investors along with a few independent directors were keen on a US listing, whereas another investor along with an independent director reckoned a local listing was best.   Cofounder Deep Kalra was torn. To make a decision, he decided to look beyond MMT, to at least six of India Inc’s best minds, including Ajit Balakrishnan, founder of digital content firm Rediff.com — which listed on Nasdaq in 2000 — and Infosys director TV Mohandas Pai. Based on their inputs, Kalra took the call to list on the American exchange. “We wanted to raise $80 million in 2010, and we ended up collecting 15x,” recalls Kalra.   In the seven years since, only two Indian companies — Azure Power and travel portal Yatra in 2016 — have gone on to list on the American exchange. But as valuations come under pressure and raising further rounds of funding becomes increasingly difficult, a listing may be one of the very few options for Indian tech and digital firms. And where better than the exchange that’s home to tech and internet bellwethers like Microsoft, Intel, Cisco and Amazon?   

Newspapers have been reporting since mid-2015 about etailer Flipkart readying for an IPO on Nasdaq. Last month, Business Standard reported that the decade-old ecommerce firm had hired top auditing firms to begin the process of filing for an IPO on the American bourse. Flipkart did not respond to queries from ET Magazine on a proposed listing.   

Flipkart may not be the only internet firm eyeing a US listing. Another ecommerce unicorn ShopClues says it is planning to make its debut on the Nasdaq by the end of the year; online insurance platform PolicyBazaar is exploring a listing on the US stock exchange; and GirnarSoft, which runs auto portals CarDekho, Gaadi and Zig-Wheels, may also take the plunge.   So, are Indian startups finally ready for Nasdaq? Kalra reckons so. The ecosystem is maturing, even as another round of high-value funding looks tough. Entrepreneurs, contends Kalra, would look to go to a place where they would get a depth of investors — who are more likely to buy into their story than back home, where appetite for the new economy is still low. What’s more, a listing is impossible for loss-making firms — which most online ventures are.   “Even if you are unprofitable but have a sustainable business model, you will find takers at Nasdaq who realise the value of scale,” adds Kalra.   

For Yatra, the second online travel portal from India to get listed on Nasdaq through a reverse merger, it was a huge leap of faith. “We had the right internal structure, processes and systems in place to take this huge leap forward,” says CEO Dhruv Shringi. Yatra was founded in August 2006, had raised $222 million before it got listed and counts Reliance Capital, IDG Ventures India, Intel Capital and Norwest Venture Partners among its investors. The company with a network of some 61,000 hotels, 14,000 travel agents across 1,100 cities and gross bookings of $897 million in fiscal 2016 has a market value of some $347 million after listing. Nasdaq provides established valuation benchmarks for companies, which is something missing in India, says Shringi.    

Venture capitalists contend that Nasdaq is better suited to, and more appreciative of, the nuances of a new tech company than the Indian stock exchanges. So, it can offer better price realisation. “Time seems ripe for getting listed,” says Shubhankar Bhattacharya, venture partner at Kae Capital.   The relative dearth of funding will not only enforce frugality and more prudent business decisions, but also lead to a rationalisation of valuations that will be closer to public market norms, he says.   

Apart from injecting the much needed liquidity, a listing provides an avenue for investors to make an exit. Any company — whether unicorn or otherwise — that has had investors for 10 years is under pressure to give investors a lucrative way out, says Sandeep Murthy, partner at Lightbox Ventures. “The pressure to get listed is real,” he adds.   Last November, Morgan Stanley marked down the value of its holdings in Flipkart by about 38% — a fourth valuation markdown in a year — which pegged the etailer’s valuation at $5.54 billion. And, last week, US mutual fund giant Fidelity Investments slashed the valuation of its holdings in Flipkart by more than a third, at roughly $5.58 billion.   

For a highly funded company, explains a foreign VC who is an investor in one of the Indian unicorns, listing appears to be the only way out as raising a new round of funding at a drastically marked-down value would do more bad than good. “How long can investors burn money in any company? They are getting edgy,” he says, requesting anonymity.   Radhika Aggarwal, cofounder of ecommerce marketplace ShopClues, insists it is not pressure from investors that’s nudging her towards Nasdaq. Rather, it’s a well-calibrated plan and a key stopover on the roadmap for growth. Aggarwal pegs ShopClues’ valuation at over $1.1 billion; the firm that has raised $200 million so far from the likes of Nexus Venture, Helion and Tiger Global claims to be on track to break even in 2017-18. “We will be ready to list by year-end,” she says, adding that the long-term goal of the company was always to go the IPO way.   

Aggarwal stresses that “VCs are not running out of patience”, and that the private pool of capital is still dense enough to delay listing.   For instance, Uber or Airbnb, which who have raised billions of dollars, are nowhere close to going public. “They feel that there is so much of opportunity to grow that way,” she says. Yet, she maintains that ShopClues is on track to be one of the fastest — if not the fastest — unicorns to get listed.   Experts say that a listing is no walk in the park. To go public, says venture capitalist Sid Talwar, one needs to have strong corporate governance, discipline and excellent processes. “You go public when you have your business figured out,” says Talwar, cofounder of Lightbox Ventures. And, once public, valuations normally reflect the profitability of a company or at least a roadmap to profitability at some point.   

In today’s market, Talwar explains, for many potential IPO candidates, there’s the added burden of high valuations pre-IPO. Will they be able to achieve a publicly tradable price in the same range, irrespective of the quality of the business? One has to remember that less than 300 venture-backed technology companies have ever gone public.   “And that’s before you look at how many of them struggle post IPO,” he says, asserting that Indian startups are not prepared, for one reason or the other, to list. “I do hope they will be soon.”   PolicyBazaar, an online financial products platform that has raised Rs 500 crore since its inception in June 2008, believes that it is prepared for listing. “We are open to the idea of exploring listing on Nasdaq,” says Alok Bansal, cofounder of PolicyBazaar.   
The company claims to be on track to break even this fiscal, has investors such as InfoEdge (Naukri.com), Tiger Global and Premji Invest, and claims to have a valuation of over Rs 2,500 crore. Bansal dismisses the theory that a funding crunch is making companies tread the listing path. “I don’t think any of the scaled-up businesses have a liquidity problem,” he says.   Bansal believes that listing serves multiple purposes: it shows to the world that the company has come of age, and the business model is settled. And listing on Nasdaq gives an added edge as investor mindset in the US is slightly different than in India.   

The US market, he reckons, would focus on growth for a digital business, even if it’s a loss making one. Back home a strong balance sheet and profitability are bigger concerns on the bourses. If the market is not rewarding one for growth, then the whole strategic positioning at the management level undergoes a makeover and can impact the business severely, explains Bansal.   Umesh Hora, chief financial officer of GirnarSoft, too maintains that it may be worth exploring Nasdaq listing as the US platform is the go-to stock exchange for growth-oriented tech companies.   However, Hora sounds a word of caution for overzealous startups. An IPO requires introspection, a certain scale of business and long-term planning as going public, among other things, translates into additional corporate governance, and increased regulatory and investor scrutiny and costs. Moreover, one needs to understand that the current funding crunch is simply a much needed course correction, he says.   Rather than consider Nasdaq listing as the best option, the time is ripe for startups to rework their business models to get to a stage where they are able to build truly sustainable and profitable companies.   

In sharp contrast to Hora, there are others like serial entrepreneur K Ganesh who prefer an Indian listing. Reason: norms of disclosures and compliance have been relaxed, the government is open to feedback and the authorities would be willing to go the extra mile to ensure that more startups get listed in India. “Listing in India provides good visibility, reinforces trust, brand recognition and gives credibility across the country among retail investors,” he says.   While conceding that US listing gives access to the largest source of capital in the world and access to debt improves, Ganesh believes that the cost of listing, compliance and ongoing follow-up is substantial and off-putting for the Indian companies. The Securities and Exchange Commission’s (SEC) accounting, disclosure and reporting requirements are cumbersome and a big distraction for an Indian company in the startup stage.   

The investors might get wary more easily, leading to price variations unconnected to the core business metrics, he adds.   Though listing, lets on Ganesh, is definitely the best way to monetise in terms of returns to investors and shareholders, it is a tough life with continuous quarter– on-quarter pressures of disclosure and scrutiny by analysts. While companies like Infosys have managed it brilliantly, there have been many who got listed and withered away, he adds.   Last April, Rediff announced that it had applied to the US SEC to delist from the Nasdaq Capital Market. The decision came a couple of months after the portal received a notice from Nasdaq that it had failed to satisfy the minimum bid price requirement of $1 per share.   “The company believes that it may be difficult and expensive to try to regain compliance… and therefore has determined to voluntarily delist from Nasdaq,” Rediff had said in a media communication. Clearly, one way to avoid such a fate is not to list at all if one is not ready for the big leap.

SJP @DigitalAsian - ShareYaar

Thursday, 2 February 2017

Keeping Users Logged On

Keeping users logged on to their mobile social media platforms for as much as possible.

From billboards to TV ads to endless notifications, Facebook is furiously promoting its live video feature as it tries to get more users to shoot and watch such videos, reports Times of India. But will it be a big business for the social network? The prospects for advertisers are uncertain, and even when users do "go live" - broadcasting their toddler's first steps to family or showing footage from protests around the world, for instance - their friends often don't see it until after the fact, just like any other recorded video. So why all the big fuss?

Fishing for users in the live stream: Some analysts believe it's just another in Facebook's ongoing efforts to keep people attached to its service as long as possible. "It's a usage thing - keeping them engaged, keeping them on Facebook, giving them an avenue to share," says eMarketer analyst Debra Aho Williamson. "As long as Facebook can be successful with that, it can show ads to them."

As is its custom, the company is first pushing the service to as many of its 1.8 billion users as possible. Users get special notifications when their friends go live, and ads prompting them to do the same have been prevalent in the last few weeks. But making money off live streams isn't easy, starting with the fact that they offer few opportunities to display video ads. But that's OK, Williamson says, arguing that now is the time for marketers to experiment with the feature. Some are already doing just that - not by advertising on other live broadcasts, but by streaming themselves. General Motors, for example, was the first automaker to livestream on Facebook, rolling out its Chevy Bolt EV at the 2016 Consumer Electronics Show.

Live from everywhere: Mobile video, especially live video, is already transforming how we experience the world online, whether that means puppies and kittens or witnessing crime, social unrest and other world events. We can stream official channels and news, as well as individual people's perspectives in a way that was not possible just a few years ago.

Last October, Facebook started an ad campaign featuring real users doing weird, quirky but generally upbeat stuff live with the goal of introducing more, possibly reluctant users to the feature. Think: Pile of teddy bears, girl singing with a guitar, someone recording lightning in the distance. While the company isn't disclosing data on how many users have gone live or watched a live video, anecdotally at least it seems to be catching on - somewhat. The company says people comment more than 10 times more on live videos than on regular ones, and that the number of people broadcasting live at any given minute has grown by fourfold since last May. Facebook gave regular users the ability to create live videos in April.

News outlets live streamed the presidential debates, as well as election night and Donald Trump's inauguration and Tuesday's Supreme Court nomination. Users, meanwhile, are broadcasting from sports events, protests and their living rooms. Live video provides "an immediate, synchronous conversation experience," says Forrester Research analyst Melissa Parrish. Tools that increase the "immediacy of interaction," such as messaging platforms, are growing more and more popular.
At the same time, live videos that have gotten outsize attention - those showing police shootings, for instance - are not exactly good PR for the company. While the vast majority of live streams don't involve violence or crime, Williamson says the negative connotations are "definitely a red flag and could cause advertisers to take a second look on whether it makes sense for them."

Less is more? Facebook warned last year that "ad load" - that is, the number of ads it can push in front of users without clogging up their feeds - is unlikely to keep increasing. After all, the company can't keep endlessly shoving more advertisements before users without souring them on the experience. To maintain growth, Facebook needs higher-priced ad products. Live video, Parrish says, is a good platform for that. Even if advertisers themselves are not yet "going live" with their own videos, splicing ads into live broadcasts could be a lucrative option to reach highly engaged eyeballs.

There's another upside for live video: Anecdotally, it is popular with young users, the generation that's following millennials, according to Parrish. For Facebook, this could be a good way to fend off criticism that it's losing popularity with the younger set. On Wednesday, Facebook blew past Wall Street's expectations again with its quarterly earnings report, despite some concerns that its ad load has reached its limit. The company reported fourth-quarter earnings of $3.56 billion, up sharply from $1.56 billion in the same period a year earlier. On a per-share basis, the Menlo Park, California-based company said it had net income of $1.21, up from 54 cents per share. Earnings, adjusted for one-time gains and costs, were $1.41 per share in the latest quarter. The company posted revenue of $8.81 billion, up 51% from $5.84 billion a year ago. Facebook's monthly user base, meanwhile, grew 17% to 1.86 billion.

SJP @DigitalAsian - ShareYaar