3 x 4 = 6 x 2

I’ll get to the “weird” title of this post soon.

Over at The Paper, which Suprio Guha Thakurta and I have been writing for two months now, one of our ongoing themes (in the context of the pandemic) is that “people will continue to do the same things, but do them in a different way”. We have corollaries to this and all that.

Here is one corollary that is suited more for this blog than it is to The Paper. Basically, when people do things in a different way, they do more of and less of certain smaller things, and this more and less balance out (that explains the title). OK I don’t think you would have understood any of that so let me clarify with some examples.

People are going to commute less (more working from home, less going out and all that), but when they commute, they are far more likely to use cars than using public transport. So the amount of traffic on the road remains a constant.

There will be far fewer “casual restaurant visits”, so when people want to go out to eat, they want to make sure it counts. So they go to really nice places. The “mass luxury” mid-tier places might lose out.

There will be fewer guests at weddings, since in some places the law mandates that now, and people won’t want to go to very crowded events. However, since the number of guests is going to be smaller, people can afford more lavish weddings “per guest”. So they’ll book fancier (if smaller) halls than they would earlier. Fancier (if fewer) meals. Put up guests in hotels rather than in crowded choultries.

In all this there will be winners and losers. The wedding caterer who charges per guest is a loser. The guy supplying the more fancy stuff (or the hotel guy) might be the winner. The large wedding hall guy is a loser. The fancy small hall guy is a winner.

And so on and so forth.

So this post was triggered by two things I saw during a walk yesterday. I first passed by a small-ish (but nice) hall that used to be used for small functions back in the day. It was hosting a wedding yesterday, and the few people who were there seemed rather well dressed up. Far better dressed than people dress for weddings in Bangalore.

Two minutes later, I paused while crossing the road to make way for a bus, and started thinking about when the next time would be when I would take public transport. And then decided to write this.

 

Fulfilling needs

We’re already in that part of the crisis where people are making predictions on how the world is going to change after the crisis. In fact, using my personal example, we’ve been in this part of the crisis for a long time now. So here I come with more predictions.

There’s a mailing list I’m part of where we’re talking about how we’ll live our lives once the crisis is over. A large number of responses there are about how they won’t ever visit restaurants or cafes, or watch a movie in a theatre, or take public transport, or travel for business, for a very very long time.

While it’s easy to say this, the thing with each of these supposedly dispensable activities is that they each serve a particular purpose, or set of purposes. And unless people are able to fulfil these needs that these activities serve with near-equal substitutes, I don’t know if these activities will decline by as much as people are talking about.

Let’s start with restaurants and cafes. One purpose they serve is to serve food, and one easy substitute for that is to take the food away and consume it at home. However, that’s not their only purpose. For example, they also provide a location to consume the food. If you think of restaurants that mostly survive because working people have their midday lunch there, the place they offer for consuming the food is as important as the food itself.

Then, restaurants and cafes also serve as venues to meet people. In fact, more than half my eating (and drinking) out over the last few years has been on account of meeting someone. If you don’t want to go to a restaurant or cafe to meet someone (because you might catch the virus), what’s the alternative?

There’s a certain set of people we might be inclined to meet at home (or office), but there’s a large section of people you’re simply not comfortable enough with to meet at a personal location, and a “third place” surely helps (also now we’ll have a higher bar on people we’ll invite home or to offices). If restaurants and cafes are going to be taboo, what kind of safe “third places” can emerge?

Then there is the issue of the office. For six to eight months before the pandemic hit, I kept thinking about getting myself an office, perhaps a co-working space, so that I could separate out my work and personal lives. NED meant I didn’t execute on that plan. However, the need for an office remains.

Now there’s greater doubt on the kind of office space I’ll get. Coworking spaces (at least shared desks) are out of question. This also means that coffee shops doubling up as “computer classes” aren’t feasible any more. I hate open offices as well. Maybe I have to either stick to home or go for a private office someplace.

As for business travel – they’ve been a great costly signal. For example, there had been some clients who I’d been utterly unable to catch over the phone. One trip to their city, and they enthusiastically gave appointments, and one hour meetings did far more than multiple messages or emails or phone calls could have done. Essentially by indicating that I was willing to take a plane to meet them, I signalled that I was serious about getting things done, and that got things moving.

In the future, business travel will “become more costly”. While that will still serve the purpose of “extremely costly signalling”, we will need a new substitute for “moderately costly signalling”.

And so forth. What we will see in the course of the next few months is that we will discover that a lot of our activities had purposes that we hadn’t thought of. And as we discover these purposes one by one, we are likely to change our behaviours in ways that will surprise us. It is too early to say which sectors or industries will benefit from this.

Evolution of sports broadcasting

I had a pleasant surprise yesterday morning when I was watching the highlights of Liverpool’s 4-0 victory at Leicester. The picture quality suddenly looked better. The production aesthetics in the first few seconds (before coverage of the actual match began) looked “American”. I doubted myself for a minute if this was actually English football I was watching.

And then I remembered that the pictures for this  game came from Amazon Prime. The streaming service had got rights to broadcast two full rounds of Premier League games this season, making a small chink in the duopoly of Sky Sports and BT Sport.

Traditional media wasn’t too impressed by it. Streaming necessarily meant a small delay in broadcast, and that made it less exciting for some viewers. The Guardian predictably made a noise about the “corporate takeover” with Amazon’s entry. From all the reports I read (mostly across the Guardian and the Athletic), commentators seemed intent on picking holes in Amazon’s performance.

That said, the new broadcaster also brought a fresh production aesthetic. While there were the inevitable teething problems (I must confess I didn’t watch these games live – being midweek evening games, they were very late night in India), Amazon for sure brought some new ideas into the broadcast.

Just like Fox Sports had done when it had done a big launch into NFL broadcasting in the early 90s. Read this oral history of that episode. It’s rather fantastic. Among the “innovations” that Fox Sports brought into American broadcasting (based on its sports broadcast in Australia, primarily) was this box at the corner showing the time and the live score. The thing wasn’t initially well received, but is now a fixture.

For evolution to happen, you need sex. And that means mixing things up, in ways they weren’t mixed before. If we were all the children of a super-god and a super-goddess, we would all be pretty much the same since the amount of “innovation” that could happen would be limited. And things would be boring, and static. Complex forms such as human beings could have never happened.

It is similar in business, and sports broadcasting, as well. When you have the same channels covering the same sports, they get into well-set local optima, and nothing new is tried. There is no necessity for improvement in that sense.

When new players comes in, preferably from another market, however, they see the need to differentiate themselves, and bring in ideas from their former market. And this leads to a crossover of ideas. In their efforts to stand out and make an impact, they might also bring in some ideas never seen anywhere – “mutations” in the evolutionary sense.

A lot of them don’t make sense and they die out. Others score unexpected hits and catch on. And that way, this memetic evolution leads to better business.

The great thing about memetic evolution is that while bad ideas come along much more often than good ideas, they get discarded fairly quickly, while the good ideas live on. And that leads to overall better products.

Right now in India we have a duopoly in sports broadcasting, controlled by the Star family and the Sony family. I’ve ranted several times about how the latter is absolutely atrocious and does nothing to improve the game. Hopefully a new player getting rights of some sport here will shake things up and bring in fresh ideas. Even if some of the ideas turn out to be bad, there will be plenty of good ideas.

Check out the highlights of the Leicester-Liverpool game, and you’ll get an idea.

Dunzo and Urbanclap

I realise that Dunzo and Urbanclap (and many other apps) grew in a particular way. Initially they weren’t sure of the exact problem that they were solving, and instead focussed on a particular “problem class”.

And then over time, based on pattern recognition and segmentation/cluster analysis of the kind of problems that people were using these apps to solve, they started providing more targeted solutions that made better business sense.

Dunzo started off as a “we’ll do anything for you” app. People making fun of the company would talk about a Dunzo executive who would come home, collect your bean bag, get the beans refilled and bring it back to you, and only charge for the beans.

I’m pretty sure that there were many other such weird use cases in which people sort of abused Dunzo in its early days. However, most of the users of the app, I’m guessing, used it for sending packages across town, and to fetch stuff for them from shops and restaurants. And now, four years down the line, Dunzo highlights these specific streamlined use cases in the app, and has figured out a good way of charging for each of them.

It’s similar with Urbanclap. While I didn’t use them in the early days, I used their competitor HouseJoy. I used the app to request for “a plumber”. A plumber duly arrived and did all sorts of odd jobs in our apartment building, some of which were dangerous. And then at the end we paid him in cash, and he told us that “if someone from the app calls, tell them you paid me only 200 rupees” (we had paid him 2000).

Soon, after being a marketplace for all sorts of odd jobs, Urbanclap and its ilk noticed patterns and started specific services. So last week we got someone from Urbanclap to “repair our water heater” (this had a fixed fee on the app). It is another set of such specific services that UrbanClap offers.

I may not have said much new in this post, but it’s basically a crystallisation of some of my thoughts of late – sometimes it’s okay to not have a particularly precise business plan as long as you know what problem class you’re tackling. If you manage to get funded and are willing to burn money, you can learn the best set of problems from the market (within your identified class).

It’s an expensive process for sure, since until you figure this out you’ll be spending a lot of time and money doing random shit, but if you and your investors are willing to bear this kind of expense, it might be worth it.

The worst thing that can happen to you, though, is that after you’ve burnt your company’s money in learning about the market’s precise problem statement, another well-capitalised firm moves faster than you to address this specific market. The question is how well you can put to use your learnings from the early period for later on.

Housewife Careers

This is something I’ve been wanting to write about for a very long time, but have kept putting it off. The ultimate trigger for writing this is this article about women with children in Amazon asking for backup child care at work. Since this hits rather close home, this is a good enough trigger to write.

Quoting the article:

“Everyone wants to act really tough and pretend they don’t have human needs,” says Kristi Coulter, who worked in various roles at Amazon for almost 12 years and observed that many senior executives had stay-at-home wives.

(emphasis mine)

While this might be true of Amazon (though not necessarily for other large tech companies), it is true for other careers as well. The nature of the job means that it is impossible to function if you even have partial child-care responsibilities. And that implies that the only way you can do this job is if you have a spouse whose full time job is bringing up the kids.

Without loss of generality (considering that in most cases it’s the women who give up their careers for child-rearing), we can call these jobs “housewife jobs”.

Housewife jobs are jobs where you can do a good job if an only if you have a spouse who spends all her time taking care of the kids. 

The main feature (I would say it is a bug, but whatever) of such a job is usually long work hours that require you to “overlap both ways” – both leave home early in the morning and return late every night, implying that even if you have to drop your kid to day care, it is your spouse who has to do so. And as I’ve found from personal experience, it is simply not possible to work profitably when you have both child-dropping and child-picking-up duties on a single day (unless you have zero commute, like I’ve had for the last eight months).

Housewife jobs also involve lots of travel. Whether it is overnight or not doesn’t matter, since you are likely to be away early mornings and late evenings at least, and this means (once again) that the spouse has to pick up the slack.

Housewife jobs also involve a lot of pressure, which means that even when you are done with work and want to relax with the kids, you are unable to take your mind off work. So it turns out to be rather unprofitable time with the kids – so you might as well spend that working. Which again means the spouse picks up the slack.

Sometimes a job may not be inherently stressful or require long hours, but might be housewife because the company is led by a bunch of people with housewives (the article linked above claims this about Amazon). What this means is that when there is a sufficient number of (mostly) men in senior management who have housewives taking care of kids, their way of working percolates through the culture of the organisation.

These organisations are more likely to demand “facetime” (not the Apple variety). They are more likely to value input more than output (thus privileging fighter work?). And soon people without housewives get crowded out of such organisations, making it even more housewife organisations.

Finally, you may argue that I’ve used UK-style nurseries as the dominant child care mechanism in my post (these usually run 8-6), and that it might be possible to hedge the situations completely with 24/7 nannies or Singapore-style “helpers”. Now, even with full time child care, there are some emergencies that occur from time to time which require the presence of at least one parent. And it can’t be the same parent providing that presence all the time. So if one of the parents is in a “housewife job”, things don’t really work out.

I guess it is not hard to work out a list of jobs or sectors which are inherently “housewife”. Look at where people quit once they have kids. Look at where people quit once they get married. Look at jobs that are staffed by rolling legions of fresh graduates (if you don’t have a kid, you don’t need a housewife).

The scary realisation I’m coming to is that most jobs are housewife jobs, and it is really not easy being a DI(>=1)K household.

Acceptable forms of help

I was reading this note by Kunal Bahl, CEO and co-founder of Snapdeal on the company’s turnaround after the failed acquisition by Flipkart last year. It’s a very interesting note – while I’ve never been a fan of the company (never considered buying from them), this story seems rather interesting, especially given the deep shit it was in a year ago.

What caught my eye is this little note about getting help from a small network of mentors. Bahl writes:

I was able to get the guidance and counsel from some of the most respected and leading business persons in the country. […] In our time of need, it was those who had the least to gain, and most to give, that came to our help. Not with money. But with their wisdom and encouragement. I recall sitting in the room with one of the above persons in August 2017, staring down the barrel with only months of money left in the bank. The gentleman, probably seeing how dire our situation was, picked up the phone and called six of the top business people in the country in quick succession explaining our situation to them – that we were good guys stuck in a bad situation – and requesting them to meet me to see if there were any synergies with their businesses[…]

(emphasis added)

What this got me thinking was about why it’s considered okay to give or take help in the form of intangibles, but not in terms of money. It’s rather common that people help each other out by way of providing advice, making introductions and sometimes just hearing them out. It’s not that common, though, that people help each other out with money.

To take a personal example, if someone asks to talk to me to get some advice, or asks for some connections, it’s very likely that I’ll help them out. On the other hand, if someone were to ask me for money I’ll start seeing them suspiciously.

One quick reason as to why intangibles is okay is that it is sometimes “cheap”. Making introductions doesn’t cost you much as long as you think it’s mutually beneficial for both parties (and in that, it seriously helps if you do double consent introductions – talk to both parties independently before introducing). Advice costs you maybe half an hour or an hour of your time, and if you feel like your time is being wasted, it’s not hard to cut losses. And the value that the recipient gets from this can far exceed the cost incurred by the “giver”.

Another reason is that intangibles are intangible – they’re hard to measure. And by that measure, you don’t rack up some sort of debt. If I take money from you, then what I owe you becomes precisely measurable. And until I repay you, things between us can be awkward. Introductions or advice, on the other hand, keep the value of the “debt” fuzzy, and in most case it gets “written off” any way, permitting the two parties to continue their relationship normally.

Anything else that I might have missed out?

Triangle marketing

This blog post is based more on how I have bought rather than how I have sold. The basic concept is that when you hear about a product or service from two or more independent sources, you are more likely to buy it.

The threshold varies by the kind of product you are looking at. When it is a low touch item like a book, two independent recommendations are enough. When it involves higher cost and has higher impact, like a phone, it might be five recommendations. For something life changing like a keto diet, it might be ten (I must mention I tried keto for half a day and gave up, not least because I figured I don’t really need it – I’m barely 3-4 kg overweight).

The important point to note is that the recommendations need to come from independent sources – if two people who you didn’t expect to have a similar taste in books were to recommend the same book, the second of these recommendations is likely to create an “aha moment” (ok I’m getting into consultant-speak now), and that is likely to drive a purchase (or at least trying a Kindle sample).

In some ways, exposure to the same product through independent sources is likely to create a feeling of a self-fulfilling prophecy. “Alice is also using this. Bob is also using this” will soon go into “everybody seems to be using it. I should also use it”.

So what does this mean to you if you are a seller? Basically you need to hit your target audience through various channels. I had mentioned in my post earlier this week about how branding creates a “position of strength“, and how direct sales is normally hard because it is done through a position of weakness.

The idea is that before you hit your audience with a direct sale, you need to “warm them up” with your brand, and you need to do this through various channels. Your brand needs to impact on your audience through multiple independent channels, so that it has become a self-fulfilling prophecy before you approach to make the sale.

What these precise channels are depends on your business and the product that you’re trying to sell, but the important thing is that they are independent. So for example, putting advertisements in various places won’t help since the target will treat all of them as coming from the same source.

Finally, where is the “triangle” in this marketing? It is in the idea that you complete the branding and sales by means of “triangulation”. You send out vectors in seemingly random directions trying to build your brand, and they will get reflected till a time when they intersect, or “triangulate”. Ok I know my maths here is messy ant not up to my usual standard, but I guess you know what I’m getting at!

 

Branding and positions of strength

I had an invitation to attend a data science networking event today. I had accepted the free pass for option value, but decided today to not exercise the option. Given I was not going to speak at the event, I realised that the value of the conversations at the event for me would be limited.

One of the internet gurus (it might be Naval Ravikant, but I’m unable to locate the source) has this principle that you shouldn’t go to networking events unless you’re speaking. Now, if everyone applied this principle events would look very different, with speakers speaking to one another (like in NED Talks!).

Thinking about it, though, I see clear value in this maxim. Basically when you go to a networking event and speak, you can network from a position of strength, especially after you’ve spoken. This is assuming you’ve done a good job of your speech, of course, but apart from elevating your status as a “speaker”, speaking at the event allows potential counterparties in conversations to have prior information about you before they talk to you.

So there is context in the conversation, and since you know they know something about you, you can speak from a position of strength, and hopefully make a greater impact.

It is not just about speaking and events. For a long time, a lot of my consulting business came from readers of this blog (yes, really!). This was because these people had been reading me, and knew me, and so when I spoke to them, there was already a “prior” on which I could base my sale. Of late, I’ve been putting out a lot of work-related content here and on LinkedIn, and that has sparked several conversations, which I have been able to navigate from a position of strength.

A possibly simpler word to describe this is “branding”. By speaking at an event or putting out content or indulging in other activities that let people know about you and what you do, you are building a brand. And then when the conversation happens, the brand you have thus built puts you in a position of strength which makes the sale far easier than if you didn’t have the brand.

You need to remember that position of strength as I’ve described here is not relative. It is not always necessary for the brand to elevate you to a level higher than the counterparty. All that is necessary is for it to put you at a high enough level that you don’t need to talk from a position of weakness. And if you think about it, cold calling and door to door sales is basically selling from a position of weakness – while it might have worked occasionally (which makes for fantastic stories), it is on the most part not successful.

And in some way, this concept of branding and positions of strength is well correlated to what I recently described as “the secret of my happiness“. By being really good at what you are good at, you are essentially putting yourself in a position of strength, so that people have no choice but to tolerate your inadequacies in other areas. Putting it another way, being really good at what you are good at is another exercise in brand building!

Brand building efforts can sometimes fail. There are times when I have given talks and got few questions – clearly indicating it was a wasted talk (either I didn’t talk well, or the audience didn’t get it). I have put out content that has just sank without a trace or any feedback. The important thing to know is that somewhere it all adds up – that these small efforts in branding can come together at some point in time, and make it work for you.

 

The missing middle in data science

Over a year back, when I had just moved to London and was job-hunting, I was getting frustrated by the fact that potential employers didn’t recognise my combination of skills of wrangling data and analysing businesses. A few saw me purely as a business guy, and most saw me purely as a data guy, trying to slot me into machine learning roles I was thoroughly unsuited for.

Around this time, I happened to mention to my wife about this lack of fit, and she had then remarked that the reason companies either want pure business people or pure data people is that you can’t scale a business with people with a unique combination of skills. “There are possibly very few people with your combination of skills”, she had said, and hence companies had gotten around the problem by getting some very good business people and some very good data people, and hope that they can add value together.

More recently, I was talking to her about some of the problems that she was dealing with at work, and recognised one of them as being similar to what I had solved for a client a few years ago. I quickly took her through the fundamentals of K-means clustering, and showed her how to implement it in R (and in the process, taught her the basics of R). As it had with my client many years ago, clustering did its magic, and the results were literally there to see, the business problem solved. My wife, however, was unimpressed. “This requires too much analytical work on my part”, she said, adding that “If I have to do with this level of analytical work, I won’t have enough time to execute my managerial duties”.

This made me think about the (yet unanswered) question of who should be solving this kind of a problem – to take a business problem, recognise it can be solved using data, figuring out the right technique to apply to it, and then communicating the results in a way that the business can easily understand. And this was a one-time problem, not something you would need to solve repeatedly, and so without the requirement to set up a pipeline and data engineering and IT infrastructure around it.

I admit this is just one data point (my wife), but based on observations from elsewhere, managers are usually loathe to get their hands dirty with data, beyond perhaps doing some basic MS Excel work. Data science specialists, on the other hand, will find it hard to quickly get intuition for a one-time problem, get data in a “dirty” manner, and then apply the right technique to solving it, and communicate the results in a business-friendly manner. Moreover, data scientists are highly likely to be involved in regular repeatable activities, making it an organisational nightmare to “lease” them for such one-time efforts.

This is what I call as the “missing middle problem” in data science. Problems whose solutions will without doubt add value to the business, but which most businesses are unable to address because of a lack of adequate skillset in solving the issue; and whose one-time nature makes it difficult for businesses to dedicate permanent resources to solve.

I guess so far this post has all the makings of a sales pitch, so let me turn it into one – this is precisely the kind of problem that my company Bespoke Data Insights is geared to solving. We specialise in solving problems that lie at the cusp of business and data. We provide end-to-end quantitative solutions for typically one-time business problems.

We come in, understand your business needs, and use a hypothesis-driven approach to model the problem in data terms. We select methods that in our opinion are best suited for the precise problem, not hesitating to build our own models if necessary (hence the Bespoke in the name). And finally, we synthesise the analysis in the form of recommendations that any business person can easily digest and action on.

So – if you’re facing a business problem where you think data might help, but don’t know how to proceed; or if you are curious about all this talk about AI and ML and data science and all that, and want to include it in your business; or you want your business managers to figure out how to use the data  teams better, hire us.

Lessons from Shoe Dog

I first came across Shoe Dog, Nike founder Phil Knight’s memoir, from this post on Tren Griffin’s blog. Soon enough, I saw the book pop up multiple times on my GoodReads, and when I got the Kindle sample last week, I noticed that all my friends on GoodReads had given it a five star rating.

So while I normally don’t read autobiographies (the only other one that I remember liking is Andrea Pirlo’s), the recommendations made this one hard to resist. And it was a brilliant read. Finished the book in two days.

It’s a story very well told, written in an engaging style that makes you sometimes wonder if it is a work of fiction. Knight has eschewed the boring details and focussed on the interesting, and impactful, stuff, and the book is full of stories about the early days of the firm (it basically “ends” with Nike going public).

What struck me about Nike’s story is the number of times it nearly went under (which is what possibly makes it such a great story). In the light of those challenges (lawsuits, supply issues, constant working capital troubles, leverage), it is a wonder that the company survived long enough to thrive! In that sense, while it makes sense to draw business lessons from Nike’s story, I sometimes wonder if it’s simply a case of survivorship bias.

For starters, for nearly twenty years after founding, Nike remained a closely held private company, with little outside investment. While the company was mostly profitable (except on one occasion when it broke up with a supplier), it was forever cash poor. Well into its fifteenth year of operations, Knight talks about the company “not having money” for stuff like advertising (for example).

Instead, the company relied on heavy leverage, borrowing as much as it could from any bank that would deal with it (which was basically all banks in Oregon – in the 1960s and 70s, there was no inter-state banking in the US). Several times, the company came close to running out of money, when banks refused to extend its credit. But then it survived.

Griffin’s review of the book shows all this as “learnings” – innovative sources of financing, high growth, dealing with crises, but to me it looks like a lot of bad financial management. Too little equity for too long, an obsession for control (finally Nike went public only when Knight figured he could issue dual class stock), high leverage and all that.

The other thing that struck me about Nike is that even in the late 70s, when the company was 15 years old, it seemed like a bunch of buddies of Knight running it – there wasn’t that much of professional management around, and this could again be attributed to the business being continuously short on cash. I guess times are different now, and equity financing is more available, and firms can start hiring professional managers early, but a 15 year old company being seemingly run in a chaotic manner seemed odd.

Finally, back in business school, we were told that when applying to companies such as Nike or Adidas, we should highlight whatever sporting achievements we might have on our CVs. That struck me as odd – what impact could having played cricket for my hostel wing possibly have on how I could sell shoes?

Reading the book, though, it seems like a culture issue. In several places in the book Knight talks about the firm being driven by a “passion for sport”, with the early employees all being sportsmen. Culture permeates, and you hire more people like you. There is this vague sense of brotherhood, among people who have played competitive sport, and that’s hard to permeate for non sportspersons. And the culture goes on. Whether this lack of diversity is good for the company is another matter!