Redbus and Entreprenuership

One of my friends from Bangalore, Phanindra Sama started . Redbus is the largest online portal to purchase bus tickets in India. This segment has the largest volume of travellers between cities in India. He was recently featured in a number of news articles including Techcrunch.

When I met Phanindra a few years ago in Bangalore he had just quit his high paying job from Texas Instruments - this was his first job out of college. A couple of 23 year olds and they were just getting started changing this travel segment. He was mentioning how it seemed crazy to a lot of folks that he would quit his well paying job to start a company.

What he and his team have accomplished in such a short time with so little capital is amazing. They have over 50,000 operators signed up and grown to generating significant revenues with just over $1mm in capital. He is in a space where there a ton of big players who have raised significant capital and have huge teams.

They did this by working hard, being scrappy and nailing their core value proposition first. Raising a lot of capital brings its set of challenges. A bunch of social networking companies in India raised a ton of money and have had no where the level of success redbus has had. Who knows maybe if redbus had raised $10mm, they may have added a bunch of social networking features in 2007.

The redbus story is truly inspirational and it is as entreprenuerial as it gets - quit your job to pursue your vision in a risk averse environment, build your product cheaply, get core audience, improve constantly and be focused and do all this without raising capital and getting distracted.

We can all learn from Phani and co.

Congratulations Phanindra....

What should Amazon do with Kindle?

Last weekend I met a couple of friends from Microsoft and Amazon and as usual our conversation at some point turned into something techie - "Is Kindle screwed with the IPad coming out soon"



The folks in the microsoft camp seemed to think Kindle is done, whereas the guys from Amazon said 'Kindle's plans are not affected by IPad'.

If you were running Amazon Kindle what would your game plan be?

Should they care?

Amazon is the biggest eretailer making $40 billion dollars a year, they sell all kinds of stuff online not tied to books like furniture, grocery. The also have a significant presence in the cloud computing environment. Kindle may have sold a total of 1 million units last year and is less than 1% of their business now. Apple has launched a product that could threaten that 1%. Why should Amazon care so much? Its not like Apple launched an online site to sell goods?

I believe the reason Amazon should care is that Kindle is a transformational device in the book market. Its safe to bet most of the print will move to an ereader. The benefits are just enormous - lower costs, easier to carry, acquire, publish etc. While it represents a small portion of Amazon's business, going forward it could give them significant leverage in the printed reading segment. However if IPad is the predominant device then, just like itunes and music, Apple could control a big portion of the book sale business and Amazon cannot allow that.

There are a lot of posts on the technical and feature comparisons between the IPad and Kindle. I won't repeat any of it. Each device will do well at what its supposed to do.

What should Amazon do?

To compete with the IPad: On the one hand Amazon could change the Kindle to do more things - color screen, applications, browse, video.. i.e. try to make it more multi purpose device than it is. On the other hand, they could try to focus on the core reader market and continue to improve the device for them. While color screen maybe inevitable, they would prioritize the battery and readability in day light over say video.

It will be tricky for Amazon to compete on the device level by building a cooler multipurpose device. Fight the IPad on its turf and Apple will likely win that battle and Amazon will have moved away from its core focus.

However I believe that kindle is only a piece of the puzzle and to create a strategy for Kindle, we would be better served by first looking at the target market.

Who is the target segment anyways?

If you segment the present market for this device, it looks like the following:



The type of person who buys a kindle now is someone who reads more then 3 books a month - Avid Reader. A very small portion of the general population reads more than 3 books a month. The average time people spend reading in the US is 2.0 hours/month. 40% of the population does not read 1 book a year. [ Book Statistics ].

The IPad is targeted at a more casual consumer who watches video, browses, checks email, facebook, reads blogs, news and maybe read a few pages of a book on it. [The average adult never gets past page 18 of a book they buy].

The student market which is a potentially big market ( Over $15 billion is spent on textbooks every year) - They have to read a lot of textbooks ( Kindle has advantage here), but they also browse etc. and the IPad would be a great device for them.


Amazon strategy for each segment will need to be different to achieve best product/market fit.


Amazon should not try to make the Kindle a better device for the general consumer instead it should continue to focus on making this device very good for avid readers, and students.

The serious readers and students are best served by a device that's

1. Optimized for reading ( e.g. read in daylight, battery life, lightweight)
2. Cheap cost of ownership
3. Widest/Best prices of selection
4. Additional tools ( for students) and general services like say buying used ebooks for say half price.
   

I believe by just focusing on people who have to spend a lot of time reading, Kindle has a good shot at winning this game on their turf. Eventually for avid readers it will be an easy choice. Kindle is a better device to read books on since it has been optimized for that purpose.

Students are not going to buy the IPad right away. A few students will because its cool but at the end of the day they all buy laptops since they have to do heavy writing and processing work on them. You cannot really write term papers on your IPad.

Overtime the textbook content will blend with video, audio etc. and that point, the Kindle will have to morph to support that but they are some years from that. Right now they should just focus on making it the best environment to read for over a few hours a month.


For general population,

1. Amazon should build a really good app on the IPad and focus on selling ebooks through their site.
   
2. People who buy an iPad could still buy ebooks on Amazon because it has the biggest selection (today its 200,000 books on Amazon versus 60,000 on iBookstore) and maybe future services (e.g. used books or book rentals).

Eventually Kindle will just be one of the devices for reading books and Amazon should focus on being the best platform for selling ebooks with the widest selection.

To summarize, I think Amazon should

1. Make the Kindle a really good device for on reading
2. Make the price for this single purpose device very low
3. Build an app for IPad and make their site great for buying ebooks across a range of devices.
4. Have best selection of ebooks and additional services for these ebooks.
   

Ofcourse I would have loved to be a fly on the wall in one of those Kindle meetings with Bezos when they decided what to do. It will be a classic business case study in tomorrows bschools

Going from product concept to production quickly

The traditional software development follows a sequence like this:

Decide a high level roadmap, decide which features go out in the next release say 2 month cycle, write a spec for each of these features, scope the work in development, implement, test release.

There are lots of challenges with the above model:

• Waiting months to test iterations on production is unacceptable,
  
• It's impossible to write specs that capture every case upfront
  
• It's not easy to understand whats even possible in 2 months when you write the spec,
  
• Not everything done in a cycle is high priority.... etc. etc....
  

You can reduce the cycle but the challenges remains the same. Its unlikely a web startup will be successful doing big releases this way. Developing for a website is very different in that you should always be experimenting and iterating on the site based on data.

However switching to something more agile requires a change in mindset in how you approach every release.

• Instead of thinking of a feature at a high level as Go/No Go - its better to always think of everything as a series of steps required to complete that feature.
  
• Compare most important steps of each feature against each other. Don't do step 3 of Feature 1 if its less important than step 1 of Feature 2
• Keep your sprints to production very short that way its easier to tell someone we cannot do step 3 now but it will be in next sprint and on production in 4 weeks from now instead of 2
• For each task, the PM and Developers (dev, qa) should discuss while working on it. This will require the PM to spend more time during the implementation as compared to waterfall above.
• Track progress for these tasks daily and know where you are w.r.t sprint completion date
  

Sometimes you do need bigger releases to get something on production e.g. say if you are building a new mobile product and you need to adjust accordingly. But you could still do it as a series of sprints just that they don't go to production.