Monday, January 23, 2012

Yes, there is an app for that!

One of my wife's friend's mom recently gave her some advice: if your baby is crying too much, then just switch on the vacuum cleaner. Babies are fascinated by the noise and often start crying. In fact, she went through several vacuum cleaners raising her three children!

My immediate thought was - maybe, just maybe, there is an app for that. Of course! Called the 'White Noise Baby', this app plays car ride, vaccum cleaner, hair dryer etc.! Awesome!

But wait, one glitch. The free version comes with one sound. I wanted to buy the others (just costs 99 cents), but the link on the app gives an error. Please fix it dear White Noise Baby application developers, and I will gladly give my 99 cents.

Sunday, January 22, 2012

On internet marketplaces....

I have written before about two-sided markets.Harvard Business Review has a phenomenal paper on strategies for two-sided markets. I have been observing the emergence of a large number of internet business that generate value by connecting two distinct user groups, and gathering my thoughts on it. Here is how I think about these businesses.

How does the business generate value?
One needs to think about how the business generates value for both groups of users. Value is generated by one or more of the following ways:

1. Lowering costs or effort: Let's take the case of TeachStreet, a marketplace connecting students with teachers. For students, it simplifies the process of looking for a class. For teachers, it lowers marketing expenses and effort; by creating one single site that lists all teachers, TeachStreet can perform SEO much better, ensuring that its pages show up near the top of Google search results.

2. A better match: The other side to the coin is how internet marketplaces can help create a better match.

Let's take the example of eharmony. While you would not see it as a classic 'marketplace,' it is essentially matching guys to girls. No, eharmony does not support men seeking men, or women seeking women (so I heard). Anyway, back to my original point - because of a large number of men and women on the site. EHarmony is able to leverage attribute based matching and proprietary algorithms to get a supposedly better match.

Another example is EBay - you can get the exact product you are looking for, down to model, version number etc. etc.

3. A unique experience: A number of marketplace-like businesses have started provide unique experiences, not available anywhere else.

Skillshare and Sidetour are the first two that come to mind. Skillshare is 'a community marketplace to learn anything from anyone.' Which means that people who were not sharing their knowledge before, are doing so, using the platform. Sidetour, a 'Marketplace for Authentic Experiences,' provide experiences that you cannot find anywhere else. For example. 'Visit NYC's Flower Market and Create a Bouquet with a Floral Designer' by the owner of a Floral Design Boutique who has a lot of knowledge about the NYC flower market (otherwise she would be out of business).

A challenge for these marketplaces is their uniqueness - particularly, how can they scale while maintaining their uniqueness and quality. It is completely possible that as these platforms get more and more popular, more people sign up to teach. But then again, would the quality of people signing up be just as good? That remains to be seen.

Value proposition

Similar to the point above re: value generation, Marketplaces need to have a clear value proposition defined for customers. The value proposition might emphasize comprehensiveness (eBaY - the world's largest marketplace for goods, so you can find anything here), uniqueness (other than the examples above, Etsy - the marketplace for handmade goods that you cannot find elsewhere), cost (one of the main attractions of AirBnB, though so is uniqueness) or quality ( for example provides customized music lessons by handpicked teachers, to ensure quality).

One value proposition might affect another; for example, comprehensiveness = more buyers and sellers = more efficient marketplace = lower cost.

Revenue model
Several interesting revenue have emerged in marketplace businesses i.e., ways in which the marketplaces themselves make money

1. Transaction fees - from the days of eBaY, this is the most popular model. Fees might be percentage of final price plus flat fees (e.g., eBaY's listing fee, fee for using more than 5 images etc.)

2. Subscription fees - typically, one side of the marketplace is charged a subscription fees, while the other is free. Normally it is the service provider which is charged

3. Other - Some companies have other revenue models., for example, has none :). My guess is that they are aiming to build a large user base at first, and worry about monetization at a later point. This might be a great strategy; once they have regular matches on the website and people contacting teachers, they can monetize by solving various problems for their clients. One might be appointment scheduling - if a user lookup the service provider's calendar, scheduling an appointment through the web and pay up front, this might save the teacher a lot of hassle, and reduce the risk of no-shows dramatically. asks all service providers to give a free first class, and charges $20 to the student for the class.

One of the most interesting business models is from restaurant reservation site Savored. Started by SLP fellow Benjamin Kean, Savored helps restaurants solve capacity management issues; essentially, you can reserve a table at a restaurant for an off-peak time, and get 40% off food and alcohol. You get money off the meal, and the restaurant gets to fill in idle capacity and generate incremental revenue. For this, you pay $10 to make a reservation through Savored. As of now, 635 restaurants have signed up for Savored, and the website is reportedly doing very well.

Success factors

So what determines success in this business? Simply put two things:

1. Are you able to build a large user base on both sides of the marketplace?

2. Is your customer lifetime value significantly higher than your user acquisition cost?

Let's look at both factors in detail.

1. Building a large user base: The first problem in building a large user base is getting the initial users. Marketplaces face the chicken and egg problem at first. Why would parties on one side of the platform sign up, without enough users from the other side?

Startups often give one side offers such as free trial period, in which they have no upfront costs, and won't see any costs until they see some sort of indication that they are benefiting from the marketplace. This indication could take the form of people signing up for their service, or even visiting their page.

Sometimes this trial is not enough, especially if it takes some effort to sign up, create a profile etc. Startups can further boost the initial signups by making the process as simple as possible, and providing some kind of value to the user immediately upon signing up. Betterfly for instance providers teachers a set of Marketing tools that allow teachers to market themselves in other venues such as Google Places, Craigslist etc.

Sometimes the trial is necessary for both sides. For example a site connecting buyers and sellers of goods could give the buyers $5 off first purchase etc.

The second problem in increasing the user base is capitalizing on the initial set of users to make sure that your business grows virally. Word of mouth marketing plays a big role in this. In the age of Facebook and Twitter, websites must make it simple for users to spread the word about their Marketplace. For example, if someone signed up for an event through your website? Share on Facebook. The next most emerging channel might be Pinterest

2. Making sure LTV>> CAC: Let's talk about both LTV and CAC with an example. Take the case of a marketplace that matches teachers with students. Let's say the cost of acquiring a student is a dollar through a combination of SEO/SEM/Social Media and Inbound marketing. What will determine the success of the business is whether LTV is much bigger than the the initial acquisition cost. Let's also assume that the revenue model is percentage of transaction - Let's say 5% of transaction.

Suppose the student finds a teacher through the website, and signs up for the first class online. If the cost of the class is 20 dollars, revenue generated is 5% of $20 or $1. Which is equal to the acquisition cost of the user.

The key question is - what happens next? Does the student meet the teacher, and decide to do more classes? If he/she does so, is the transaction through the website, or does the teacher tell the student to just email him/her directly next time, and pay in cash? Or does the startup have a way or controlling, or atleast influencing that the transaction continues through the website? Also, does the student continue to look for other teachers in different subjects? The key is to increase customer loyalty, and prevent leakage. Common ways of doing this are loyalty programs, email marketing.

23 and 1/2 hours: What is the single best thing we can do for our health?

Alloparenting - or - allo there, parenting

Steve Jobs on having kids: ‘It’s 10,000 times better than anything I’ve ever done.’

And this was the man who changed the world. Many times. Who am I to argue with him

It's been over a month since our daughter Simran Abigail Chugh was born; and it has been the most wonderful experience of my life. Some of the best moments have been just chilling with her awake, hanging out, making faces. Like here.

But sometimes I wonder, why is it so hard! I mean, think of it? Getting up every 2 hours, diaper changes, walking around with the baby, cleaning up, burping, holding the baby's head up; not to forget coming stages, like school etc. It doesn't seem to be the same way for animals; kittens mature within three to four months, and are off to the races! While we humans take around 18 years to mature (or in some cases, 80). What is it about humans that causes parenting to be so much work?

As it turns out, its the very reason that humans rule the earth - our brain! I am reading this amazing book 'Brain Rules for Baby' for the second time now, and it explains this in detail. Essentially, as the brain developed, and we started to walk upright, the head size increased, and the pelvic canal size decreased. So now there there was a trade-off between the size of the brain and the mother's ability to push the baby out.

Nature's solution? Push the baby out before she is fully developed. The result? Parenthood.

But that is not all. The brain made us all so social. Which resulted in us working as a team, and groups of females each other raise children, with males acting in a supporting role. A phenomena called alloparenting. So if it feels like raising a kid is a five person job - it is. Suddenly the Indian joint family system seems to make a lot of sense.

Wednesday, January 11, 2012


Gamification, or applying Game mechanics to everyday activities, is a trend thats super interesting to me. has already been known to apply game Mechanics to motivate people to achieve financial goals. Just today, announced a $2MM fundraising round. The intent of the site is to motivate people achieve financial goals Product Explanation from on Vimeo.

Three problems. First, I get this error when trying to add an account to the site on the iPad. That is not good. It does not give this error when used on Firefox on a PC.

Second, effort involved in importing all my financial information (which is already in is too much. Especially as I run into more issues on my PC! For example, accounts were in progress of being added, and then I get this error.

And the third? Just by adding an account, I got a Super Saver badge. I have no idea what this badge means - and unlike a Foursquare Mayor badge, it has no significance to me. Especially since it is not proportional to my action!

The concept certainly is promising, and I sincerely hope that the product gets there too!

A baby Roomba!

I have been on parental leave for the past 3 weeks, taking care of my daughter Simran. It's been an amazing time! Now having some free time has led to some ideas for products for parents and kids. One of them is baby Roomba.

Roomba, as you might already know, is a robotic vacuum cleaner that cleans your house on its own.It has collision detection sensors and complex algorithm so that it travels throughout your house, cleaning every nook and corner, while you might be away at work. And at the end, it heads back to the charging station.

Now how does this apply to kids? My daughter, and kids in general, love it when you carry them around the house. They love the warmth of you holding them, and the motion that puts them to sleep. While this is one of the best times of the day for me to bond with my daughter, depending on the kid, it can get tiring. Especially if you haven't had time to sleep much.

Enter the Kid Roomba, a heated chair where you strap in the kid, which moves around the house. Similar to a Roomba, it will detect collisions and switch directions; giving the kid a similar experience as being carried around the house. There are already vibrating chairs like this one, why not a moving chair?

The only downfall I see is that parents over-use it, and bond with the kid less and less. But other than that - someone should invent it!

Update: Here are some YouTube videos of parents who actually hacked a solution! And rabbits like to rid the Roomba!

Sunday, January 8, 2012

Bye Bye Delicious. Hello evernote

I have been a loyal user of Delicious since early 2010. Finally, I have decided to move on - to Evernote! There were several reasons why I decided to make the switch:

1. We live in a world where we use several services together. For example, I use Read it Later to mark items I want to - well, read later. I also use Evernote for my notes, web clippings, thoughts etc. And I used to user Delicious for my bookmarks. They worked seamlessly with each other - I could mark an item as 'Read later' using my Read It Later web browser plugin, then read it on my Read it Later iPad app, and then save it to my delicious bookmarks list from the app while marking it as read. Until the delicious API started failing on me - especially from Read It Later iPad app. All, apparently because of some changes to the API which broke the connection with the Read It App. Lesson: Please do not break your most basic API services - people will leave

2. When I looked at what my alternatives were, the best one was to just export all by Bookmarks to Evernote. I found an article here that allowed me to export my book marks and import to Evernote with a little bit of work. There was a little bit extra work required, as the Delicious bookmark only returns the first 1000 results, and I had to repeat this process again, passing the argument 'start=1000' to retreive the next 1000 results, to get all my bookmarks. Ultimately, in 30 minutes, I had all my bookmarks in Evernote. Now the tags still do not work properly - but I see this as an opportunity to read through some of my bookmarks and consolidate them, so that I can actually find things I need. A painful process, but well worth the effort.

Now I use Shareholic and Read it Later plugin in my browser to move things where appropriate. So bye bye Delicious. Hello again, Evernote!