business

1. Throw out the slackers. Do not even think much about it
2. Pull out your current revenue figure, slash it by half
3. Sit with every employee and figure out what their basic living costs are
4. DO NOT leave the executive level staff out of this
5. Renegotiate all salaries at basic living costs + 10% of what is currently being paid
6. Make up the difference in preferred stocks or as bonuses that are payable under conditions at a later date
7. Give the option to leave or sign up for the program for employees with loans and other problems
8. Renegotiate every contract that you have and extend credit lines till they break
9. See if the halved revenue number now tallies with the expenses
10. Route a percentage of the saved money into enabling every possible sale

Logic behind the steps:

This is an environment in which everything -- from fear to opportunities -- are irrational. The key is to survive. If you survive, you'll win big too.

Keep as much cash in the bank as possible. Having liquidity at your end not only helps you to keep going, but it also works wonders for your valuation and ability to get credit.

It is easy to fire people, but it is not easy to function without the right people on board. Ask them to have some faith in you by showing some faith in them.

The employees get a buy-in into what is being attempted, but they also are better off with having a job than being on the street without one.

Talent is easy to let go, but harder to make up for or replace. Invest in them.

Sell, sell, sell.

business, business models, startups

Starting on a new journey [via Nikhil] seems to be the theme among a lot of people these days. While the downpour of entrepreneurial attempts is to be expected, there is also a subtle shift that is happening in the innovation landscape towards a newer breed of companies that help bootstrap and run new properties than to focus on building up one product as a segment leader and then defend that positioning for the rest of the product's life.

The trend for now is weak, but it is substantial enough to be perceived as a trend. Every conversation that I've had with people in the innovation space these days seems to veer dramatically towards the role of an enabler of a lot more, than being restricted to standalone properties. Everyone has the gut feeling that something more needs to be done (not only from the perspective of evening out the risk spread), but there is not much of an idea in terms of what exactly needs to be done. I will tackle that point, but later in the post.

Traditionally, bootstrapping is a space that has been occupied by incubators, seed and angel investors. Venture Capitalists generally steer clear of this of this segment because the bite-sized piece of the pie is considerably smaller than their average investment foray and they also tend to work with products that have progressed beyond the proof-of-concept stage. Even then, players on both sides of the divide tend to not get into bed with the companies they are bootstrapping/investing into other than the regularly scheduled meetings or so-called 'adult supervision' in the case of VCs.

The end of June saw the launch of the latest product from NDTV Convergence's stable, which, for some odd reason has been called 'No Gyan." Ostensibly, the name is the conveyor of some cool quotient that is lacking in others. Maybe it is even a take on the famous Sprite campaign that said "Sprite bujhaye pyaas, baaki sab bakwaas." The mysterious reasons behind the branding of the site notwithstanding, the one thing that stands out in the product is the thinking (rather, the lack of it) is an unambiguous sad reflection and continuation of the scourge of using users/readers nothing but page view fodder.

While I am singling out the website for the lack of a specific purpose for its existence beyond attracting the leering clickstanders of the Internet as an easy shortcut to advertising-driven profit, the malaise is an industry-wide one, where product development is a cursory visit in the morning to Techcrunch and Mashable to find the latest horizontally transitioned, dissolved and blended JQuery-driven web 2.0 shiny-bells-and-whistles product as the essential amount of 'thought' that gets screen-captured and copy-pasted wantonly into the waiting arms of a Photoshop layer.

There are events and then there are not-so-ordinary events that give us hints, even in their disassociation, about the direction that technological (or any other type, for that matter) developments will head.

In the past week we have seen three such events – Microsoft’s formal overture towards Yahoo!, Facebook’s less-than-stellar numbers and Twitter’s ongoing saga in trying to keep a web-scale messaging framework up and running – that give us tasty hints as to where we may be headed.

The simpler, shorter version of the Microsoft – Yahoo! story is that companies that do business in the old school way – a manner similar to a behemoth, clumsy and ugly in gait – are history on the internet. Lock-in of the user and his/her data to platforms or products is a strategy that is history. It is only a stellar product that will keep companies alive in the future. And neither Microsoft, nor Yahoo! have built and in-house hit web-scale product in recent times.

The feeling that keeps coming back to my mind is that Microsoft and Yahoo! will be one of those weddings that look perfect as a mental image (for the shareholders and business wonks), but in practice it ends up being an absolute nightmare. There is a staggering amount of redundancy (for every Yahoo! product you can think of, there is almost a competing one with MSN/Live.com) and the integration will also be rotten in terms of platforms and cultures.

Even if you set apart the strong stench of desperation in the move, the fact remains that these are two companies that are struggling to catch the imagination of the younger and upcoming generation. By the time the dust settles on this one, much confusion would have ensued, which would tick off the loyal users who make up a vast majority of the numbers that make the deal look exciting.

That said, it is indeed a sad development to see an internet icon like Yahoo! being in the position that it finds itself in now. And in that state of distress lies a story for everyone who makes a living off the internet – don’t take anything for granted. Earlier, a company’s lifecycle – from inception to success to the demise – used to take decades, now the same is being compressed into ten years.

It is a theme that I will never tire of telling everyone I know: being nimble is a priceless asset in doing business now – nurture it, grow it and covet it with as much care as you covet your bottom line.

Just a quick note before the day starts in full flow choc-a-bloc with meetings. For all those really loud people who have dismissed outsourcing and given it so much grief, go and take a look at IBM's Q4 2007 earnings call. A lot of IBMers in the US are getting to keep their jobs because of their company's strong performance have to thank outsourcing for it. Services, which is mostly driven by outsourcing has been their rock star performer:

Looking at our results by segment, Services continued the momentum we’ve seen over the year. Global Technology Services revenue was up 16%, profit up 26%. Global Business Services revenue was up 17%, profit up 9%. And we signed $15.4 billion of new business, and importantly short term signings were up 8%.

They have also benefited from having a truly global operation, which enables them to focus on emerging markets, that drew in a 3rd of their revenue for the quarter. You can expect a similar set of results from Google (growth, but at a much slower rate) and from other geographically diverse companies who can limit their exposure to the carnage that we will see this year in the US market. Google itself crossed the crucial landmark a while ago, when, in Q1 2007, their international revenues pretty much hit 50% of their total revenue.

Once again, companies that will take a huge hit are ones like Apple, who depend extensively on retail spending in the US markets, which is why they have been gradually moving into other segments (iPhone) for which you can look at recurring revenues per customer than a one time engagement. 2008 will be critical for Apple and if they have to escape the carnage, they have no choice but to forge ahead with the launch of the iPhone in other markets.

Then again, the iPhone is vastly overpriced for a market like India, even if you were to assume something like INR 16,000 as the price point. If they need a winner, they'll need something in the sub-INR 10,000 price range to set the market alight and I don't see something like that coming from Apple.

On an unrelated parting note, I think I've linked to David Manners' blog on the semiconductor trade, but it is an absolutely lovely blog to read even if you are not a semiconductor wonk. Highly suggested.

Update: HP too, apparently, is in on the same game.