Paddy Srinivasan's WebLog

Malcom Gladwell on “Why we dont give our best”

MSDNArchive — Wed, 15 Mar 2006 08:16:00 GMT

One of my favorite sports writers - Bill Simmons of ESPN has op-ed his weekly column this week with Malcom Gladwell of “Blink” and “Tipping Point” fame.

http://sports.espn.go.com/espn/page2/story?page=simmons/060302

they talk about why some athletes perform the best when they are in their contract year - well thats understandable but usually they dont live up to their fat contracts the first year of their signings - thats understandable too- they jsut dont work that hard. What is interesting is the parallel drawn to regular people - if everyone gives their best at everything we do, then we will have a different world - it doesnt happen- we prioritize, laziness kicks in , 2 year olds distract us and the list goes on and on- as Malcom suggests do we really not prepare our best every time with an inherent fear of coming up short ? If we dont prepare our best, we can always use the excuse of “hey , had I put my mind to this, I would have aced this - its no big deal” - but if we put in our best and failed it would mean that we are plain stupid or inept at the task. As they say - “at the end of it all - we all will have a long list of excuses or a list of accomplishments”

Gladwell’s blog is here -> http://gladwell.typepad.com

Another interesting topic here is the “Jake Plummer” phenomenon- where do we draw teh line between an individual and a system. Tom Friedman wrote a colum on NY Times recently to the same effect in reference to Saddam and Iraq. Someone is going to make some cash by researching this one day !

World Economic Forum - Davos

MSDNArchive — Tue, 24 Jan 2006 09:40:00 GMT

The importance of the World Economic Forum cannot be overstated. Over the years it has become one of the major podiums for CEOs whether it is simply to take a gloabl stage or if it is to lobby international governments for special interests or if it is jsut to stroke egos the size of alps themsleves

http://www.usatoday.com/money/world/2006-01-20-davos-cover-usat_x.htm?csp=1

...but the Indians are taking it to a whole new level !!
http://businessweek.com/bwdaily/dnflash/jan2006/nf20060123_5900_db016.htm

Waiting for visitors at their hotel rooms will be gifts from India -- a pashmina shawl, an Apple (AAPL ) iPod loaded with Indian pop and classical music, a piece of traditional art, some ayurvedic oils -- along with a CD packed with all sorts of economic information about the country.

For the first time ever, the country is embarking on a positive PR saga - a welcome departure from the self empathising past - onto a new brashful future - way to go !!!!!

Emerging Markets Prophet

MSDNArchive — Wed, 18 Jan 2006 03:36:00 GMT

http://businessweek.com/magazine/content/06_04/b3968089.htm

The article talks about C.K Prahalad - the motivator behind the push to the "bottom of the pyramid". this topic has been well publicised so I wont go into the details but here are a couple of concepts that the article touches upon that I would like to elaborate on:

#1 Innovation can come from any part of hte value chain in emerging markets
#2 Microtransactions are here to stay esp in emerging markets

First for #1, The article quotes Bharti Telecom which has innovated by outsourcing most of the operational elements of hte telco value chain. Over the last few years, the tier 0/1 telcos have taken a beating due to overcapacity , consolidation/scams, overpromise of 3G etc. In the developed world, the innovation is still focussed squarely on the customer interaction side with triple convergene, IPTV etc but Bharti had a different challenge. It couldnt really scale its operations to reach millions and drive grass roots.

For #2, the example in the microcredit lending industry is a great one. Think of others like retail music, SMS etc that are all multi billion $$ industries in their own right in many an emerging market. Extrapolating this phenomenon to other software markets like manufacturing. People often associated with hosted software - it doesnt necessarily have to be the case. "On premise" software can be licensed in a pay as you go model.

Online advertising - Business model

MSDNArchive — Sat, 14 Jan 2006 23:41:00 GMT

I am not a financial analyst, I don’t play one on TV and neither did I stay in Holiday inn express last night but I would like to ponder on the valuation of a certain business model. There is so much clamoring for a piece of the advertising pie that I decided to check out what this hoopla I all about. I am not claiming that all these #s are totally accurate. They are back of the envelope calculations at best and take it for what its worth ( close to nothing ).

WW total spend on Advertising ( online + print+ media+ hoardings + etc ) = $500 Billion

Online advertising today = ( less than ) $20 Bil

This segment is projected to grow immensely

Say in 5 years Online advertising = ( less than ) $100 Bil ( 20% of overall advertising ) – BEST case

Google market share today is about 30 % - lets say it grown in the best case to about 40% which will put their share to 40 Billion

Margins in content publishing business will reach an equilibrium of 20% - even at a high end say it is at 30% -> GOOG’s margin is 12 Bil

For arguments sake, I am going to assume that google doesn’t really get much traction on other revenue streams other than advertising ( search, placement, display etc )

Let’s take an earnings multiple of 15-20X considering the risk, potential upside outside of this core business etc -> 180- 240Bil market cap – today GOOG’s market cap was 138 – some room for growth huh?

Supporting evidence

I know that you are itching to ask me why I took an revenue multiple and not an earnings multiple- the answer is that I think the earnings ( driven largely by the margins ) are going to wildly fluctuate in the next few years before it reaches an equilibrium. Of 20%. It might even increase in the short run before it starts coming down.

The science of "Long Tail"

MSDNArchive — Wed, 11 Jan 2006 19:51:00 GMT

Ever heard of the "Long Tail of the market" ? This phenom is ringing bells recenlty in discussions around the residual value of content aggregation businesses and how content providers like goog derive value etc. I found this useful in thinking about the business model of how economics in emerging market software would look. It is a simple Zipfian distribution if you think about it. the essence of this model is that Rank * Frequency = Constant which essentially means that the perpetuity of the business model tends towards infinity and if you plot it along a logarithimically, it will turn out to be a straight line. This is important in the emerging markets setting? it is relevant if you think about how the emerging market opportunties are essentially a compositio of several long tails. Hence one has to keep distribution, sales and maintenance costs to an absolute minimum to derive the maximum benefits of scale. Chris Anderson of Wired is writing a book on this topic and has an excellent blog on this topic.

Top ten Lies of Entrepreneurs

MSDNArchive — Tue, 10 Jan 2006 17:27:00 GMT

Guy Kawasaki writes about the mistakes Entrepreneurs usually make

Here are a couple I thought were funny -

“All we have to do is get 1% of the market.”
This is not isolated to startups. We see it every day in valuating new business opportunties. A corollary of this is how almost everyone wants just 1% of the chinese population for their consumer product !!

“Key employees are set to join us as soon as we get funded.”

Wish it was this easy- IMHO, the most difficult thing ( next to getting customers ) is to get great people. I have a tough time hiring at a great group at microsoft - cant imagine how hard it might be to hire at a start up

10 things I think I learnt writing a book

MSDNArchive — Mon, 26 Dec 2005 23:03:00 GMT

1. Writing is much harder than "thinking"
2. I have a much more acute problem of attention disorder than my friends and my wife give me grief on
3. MS Word can be "very" annoying
4. "Search" technologies are in their infancy
5. It *does* rain a lot in Seattle
6. I sure can drink a lot of coffee
7. Creative writers deserve a hefty paycheck
8. Writer's "block" is real and could last weeks :)
9. Writing is a creative art form
10. I love writing !!!

Holiday book list

MSDNArchive — Tue, 20 Dec 2005 02:11:00 GMT

Here is a quick list of books that I am either currently reading or have just read in the last 6 months or so:

1. The Next Global Stage: Kenichi Ohmae
2. The 86% solution
3. Blue Ocean Strategies
4. The World is Flat
5. The Competitive advantage of Nations- Michael Porter - old classic
6. Freakonomics
7. Das Kapital - Carl MArx ( dont ask me why I read this )
8. The New Silk Route - coming :)

RSS, VOIP, Speech etc.

MSDNArchive — Fri, 21 Oct 2005 06:48:00 GMT

I am doing some research on how RSS can be used in non consumer scenarios. For ex, Can RSS be used to create an alarm management platform in a process control system or can it be used to deliver information to financial services clients from content providers. Yes, you can do all the above usign native technolgies but RSS makes it easy and interoperable. A RSS platform should also be able to provide other platform services like archiving,searching, security, etc. It is fascinating once you start thinking about RSS above and beyond the standard consumer scnearios where it is used for reading news headlines and blogs. It also got me thinking about a variety of other technolgies like VOIP and how companies can use it as a strategic advantage rather than jsut for cost reasons. As with many other technologies, voip is primarily used as a cost reduction mechanism and not many are realizing its potential to build a sustainable edge on competition. Same goes for speech software. Call center IVR apps use it as a way to reduce staffing costs. and did you know that there is a venture fund exclusively for RSS based companies for $100 mil ? Go figure !

$100 Laptop from the MIT lab

MSDNArchive — Tue, 11 Oct 2005 07:19:00 GMT

http://laptop.media.mit.edu/faq.html

From the Economist - "The idea is as audacious as it noble: provide a personal laptop computer to every schoolchild—particularly in the poorest parts of the world. The first step to making that happen is whittling the price down to $100. And that is the goal of a group of American techno-gurus led by Nicholas Negroponte, the founder of the fabled MIT Media Lab. When he unveiled the idea at the World Economic Forum in January it seemed wildly ambitious. But surprisingly, it is starting to become a reality. Mr Negroponte plans to display the first prototype in November at a UN summit. Five countries—China, Brazil, Egypt, Thailand and South Africa—have said they will buy over 1m units each. Production is due to start in late 2006"

The altruistic goal of this laptop notwithstanding, the economics of such an undertaking puzzles me. Negroponte has to ship about 150 Million of these puppies to make ends meet - truly astounding by any yardstick. How in the world is he going to find 150 Million dual mode LCD displays, same # of processors and other stuff. What about distribution and support ? Maybe things will fall into place like it did for all those companies in the late 90's whose business plans called for just 1% of the market as an exit strategy :)