Entrepreneurship

Four Ways to Think like an Entrepreneur

The Premise


Entrepreneur in you

Today, a lot of things don’t work like they did before. And as a student, you know what’s happening in the world around you. A student has better idea than an existing professional about what the future is going to be, since she/he is already using stuff that would grow more popular in the future, thats the nature of your demographic. The best way to use this situation to your advantage is to think like an entrepreneur!

Why to think like an entrepreneur


Ownership –

The real reason why entrepreneurs are so valued is the sense of ownership that they bring to the table. In many ways, corporates and Startups alike love those people who take ownership. The ones who take responsibility, and own a particular metric, balance sheet, growth objective, business target – these are the people who are truly respected in the firm.

‘Hiding’ Information is not a long term competitive advantage –

In many ways, the truth about majority of industries today is that information has become much more fluid than before. This means that a lot of information, industry tips and tricks are available freely. An example of this is Google and Facebook share more data about their ecosystem than top media companies ever did. This means that you have to start thinking differently in order to stay ahead.

Achieving targets –

Every sphere of professional life is associated with a Business Goal. An entrepreneurial spirit is something that can drive you to transcend the ‘achievement’ aspect but in fact it should be ‘finding easier and scalable ways of achieving a target’.

Ways to think like an Entrepreneur


Way #1 – Competitive Benchmarking

One thing is for sure, every business line, right from HR to Analytics, has competition. Some competition within the company, some outside. Its very important to understand what works for these people, and adopt in many ways the best practices. At a firm level, there is also incentive to collaborate with peers in order to achieve a company wide goal. These collaborative projects form an ideal ground for yourself to benchmark against your peers, find your weaknesses and turn those on their head into your strengths.

Way # 2 – Intensity at work

A lot of times, intensity at work is a function of external factors such as push from top management, personal lives, even weather! This is not how entrepreneurs work. The best entrepreneurs don’t let these things act as impediments, but instead give their best intensity at work. That in a way separates the entrepreneurs from te rest.

Way # 3 – Knowhow – Read, Read and Read!

One way to create a difference at your workplace is to keep constantly reading about developments in and around you. If you are a developer, read about the latest Android update. If you are in Finance, read about the latest tool by Intuit. Read about Sales, Marketing, Ops – but surely, do Read!

Way # 4 – Problem Solving

In many ways, life has so many elements that can be traced back to one key theme – Problem Solving. This is the common thread that runs across functions, across seniority and across sectors in the professional world. A ‘Can Do’ attitude is what entrepreneurs bring to the table when it comes to Problem Solving. As such, this is what makes your professional life fun and worth it – whether you enjoy Problem solving in your expertise area or not!

In Conclusion


I feel a lot of times, our education system trains us for ‘jugaad’. Find the easiest way of doing ‘x’. To truly prosper at workplace, you don’t need the easiest way for you, but for the organisation. That takes some serious ‘un-learning’. This is the true spirit of entrepreneurship. Do check what Paul Graham has to say about Counter-intuitive aspects of startups and entrepreneurs –

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Business, Entertainment, Marketing, Web

Business of Movie Trailers

As much as I like watching movies, I like to watch movie trailers too. Sometimes, unfortunately, the best part about a movie is the trailers that run before it. The main aim of the trailer is to raise the viewer’s interest in the movie. If the trailer is successful in garnering the viewer’s interest and pulling him towards watching the movie, its purpose is served. Teaser trailers which run for like 15-20 seconds generally pique the viewer’s interest. However the longer trailers, which usually run for 2-2 ½ minutes, tell much more about the movie. These should not give away too much lest it might ruin all the fun. Nor should it be so ordinary that it completely bores the person and he/she loses any interest in the movie.

A screenshot of the yahoo movies webpage

A screenshot of the yahoo movies webpage

Now-a-days movie makers exploit every way to market the trailers. In addition to them being shown in theaters, they are up on television as well as on internet. Recently YouTube launched a new channel just for movie trailers. Yahoo already has had one for a long time. So has Apple.

But the most effective place for trailers is the movie theater. That is where a trailer is first released. These trailers are sometimes released four five months before the actual movie. And there is a lot of background work gone behind showing these trailers. Which trailers are to be shown with which movie, when should they be shown before the movie starts…all is a part of a strategy.

Generally movie studios decide to release a movie trailer with their latest movies. But the final decision rests with the theater chains. In India, there are still large numbers of single screen theaters. But the multiplex culture has developed considerably in the cities. Most of the movie followers are well aware about the recent dispute between the movie makers and the multiplex owners about the share of profits. Aamir Khan and SRK came together on that issue to resolve the dispute. The clout that the theater owners and movie chains hold over the movie industry is quite evident from this. Mostly they also have control over what trailers will be shown in the theaters.

In Hollywood, with large number of movies and big studios backing them up, there is generally a very tough competition before it is decided which trailers will be shown. The theaters cant just show trailers for all the movies that the studios want advertised. Generally there is a deal between the studio and the theater chain about the trailers. Before a movie begins, different trailers are shown for at least around 10 minutes. The deals decide which trailers will be shown and when. Efforts are made to put the trailer just before the movie starts because that is the best time when it can reach maximum audience members. The trailers that run first probably aren’t seen that much as every viewer is still not in his seat.

Hollywood executives are reported to have paid a theater chain as much as $100,000 to make sure that a particular trailer runs just before a hit movie. Also if not done explicitly, there are other ways to make deals with theaters. Some include diverting the marketing costs which are listed under print ads. Or giving the chain a bigger share of the ticket sales.

However there is always some amount of distrust between the theater owners and the movie makers. Studios even hire private companies to check on whether they are getting their money’s worth. These companies send their reps to theaters and check on whether the trailer promised to be shown in the theater is actually running. The amount spent per month on this is at least about $10K. If found that a particular chain is not running the promised trailer, results may be dire. If the studio decides against showing any of its movies in that chain, instead opting for the competition, it can mean a loss of lot of money.

Another new strategy adapted by studios is exclusive screening of trailers in theaters. Recently James Cameron showed a peek at his new movie “Avatar”. As you all know, James Cameron is the maker of the highest grossing movie ever, The Titanic, and Avatar, his next venture, is eagerly awaited. So when 20th Century Fox and James Cameron showed 15 minutes of “Avatar” at a specially ticketed event in August, more than 100,000 viewers attended the screenings. Also while marketing “The Dark Knight,” Warner Brothers had showed a few minutes of its opening sequence in theaters with paid tickets.

It is obvious though that such tactics will work when the big studios or at least big directors are behind that movie. With more and more different means to advertise and market a movie, now it just remains to be seen what new and interesting ideas the marketing guys will come up with next.

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Business, Finance

The biggest deal in the Global Steel Industry: Arcelor Mittal (2/2)

This is the second of the two posts detailing the Arcelor Mittal deal. The first post gave the background of the deal and the process in which the offer was communicated. This post details the happenings after the offer was made.

Where did they stand?

The offer was rejected almost instantaneously and it was not that it came as a surprise to Mittal Steel. The offer got instant publicity and became the talk of the business community across the globe. All stakeholders (which included multiple governments from Europe that have been known for their pro-worker stance) became active at one go.

Positions vs. Interests

The position taken by everyone on the Arcelor side was that this deal is very aggressive and not at all beneficial to them. Going into the reasons for this position, gives a better understanding of the interests involved. The management was opposed since they thought that the price was too low and there was lack of strategic fit between the two companies. They knew that a takeover would mean loss of the clout they enjoyed while managing an independent company. The Arcelor employees thought that this was more of a hostile takeover and in the merged entity, they would have a lower status as compared to Mittal Steel employees. They were also scared of the ensuing job cuts that normally follow such large mergers / acquistions. The different governments with stakes in Arcelor were afraid of workers from their countries losing jobs and the fact that they were not consulted before the bid.

As is clear, behind the positions of different parties lie specific interests, which sometimes might not match with the reasons which get stated. Though Mr. Mittal knew that these interests would have to be addressed and satisfied, he later mentioned that the process went on much longer than he anticipated.

Pooling Resources

Both sides took a stock of which stakeholders can be on their sides and started talking to them.

Arcelor management found that mostly everyone from the employees to the different governments were opposed to the deal. So, they focused their attention on these parties to convince them to oppose any deal from the Mittals.

On the other hand, the Mittals found almost no one on their side initially. They thought that the investors are the only ones who they can currently manage to get on their sides. They started contacting them but were not as successful as they would have liked.

Meanwhile, Arcelor management continued doing their bit to remove any possibility of the bid going through. They kept their aggressive pursuit for Dofasco, declared a huge dividend, laid out its medium-term aggressive acquisition strategy and promised healthy growth of the company. It subsequently acquired Dofasco and locked it into an independent Dutch trust making it impossible for Mittal Steel to part with it (in case Arcelor gets acquired).

Rationale vs. Emotions

The most difficult task before the Mittals was to deal with the emotions of the European population. There was widespread concern in some of the stakeholder countries about the increased globalization and how that is leading to jobs moving oversees and is adversely affecting their economies. These countries had invested heavily in the steel industry and were worried about the future of the large scale employment provided by the industry.

As a result, before the Mittals could sufficiently communicate their proposal, there was heavy backlash against them. The Mittals had expected the emotional uproar but were confident that rational thinking would soon takeover, once the concerns were addressed. What they did not plan for was the fact that nobody would want to listen to their proposal in the first place.

Working their way through

The Mittals were clearly the disadvanteged side in this process of getting to a deal. Research shows that the negotiations that seek to neutralize differences among various stakeholders in a multistakeholder negotiation, pose considerable risks for the disadvantaged groups. They say that negotiations that involve selective alliance-building, among other things, promise better outcomes for disadvantaged groups.

As we interpret it, the Mittals decided to do the same and select specific stakeholders with which an alliance can be built and then branch out.

Selective Alliances

The Mittals believed that investors / shareholders would be willing to agree if the deal is sweetened in terms of the price. They thought that this can be done sooner or later and so is not the immediate priority. The main issue was emotions and the different governments personified these. If the governments can be explained the proposal and their concerns incorporated, a major fight would be won (though not the war).

So, Mr. Lakshmi Mittal decided to have a round of face-to-face meetings with all the government representatives. Face-to-face meetings are very critical for there is a large amount of risk of mis-communication in such cases. Also, such meetings allow for instant responses to concerns raised. The Mittals had to make concessions ranging from guaranteeing the pension, healthcare benefits to restraining any kind of job losses. They even had to agree to make Luxembourg as the headquarters of the merged entity (and not Netherlands in which Mittal Steel was headquartered nor London where Mr. Mittal has his residence). Slowly but surely, the governments agreed to the modified agreement and the European Commission gave a nod to the deal.

Double whammy

As soon as it became clear that the governments would start supporting the deal (or at least they would be neutral towards it), Mr. Mittal formally launched the hostile takeover and upped the bid price.

The Arcelor management and board found itself cut short at two ends. On the one hand, the government no longer was opposed to the deal. On the other hand, the investors starting flocking towards the Mittals on account of the premium price being offered. The only recourse the management had would be to convince another player (white knight) to pitch in a more attractive counter bid.

Counter bid does the trick

In its quest to keep away the Mittals, it had become clear that Arcelor management was not thinking in the best interest of the shareholders. Arcelor executives, in a way alienated them. The shareholders also were angry at the outright disinterest shown by the Executives to the Mittal deal and the lack of thought given to evaluate it. Arcelor management had refused to meet with the Mittals even after repeated requests.

Arcelor convinced Severstal, a Russian steel company, by May end  to bid for it at a higher price than Mittal Steel. Though shareholders were not too happy with the management, the better offer was always welcome.

The actions that followed show how one side can use the trick of the other side and leave them armless. In negotiations, it is important to realize that one would have to stick by the rules set by oneself or else your integrity might be lost.

The Mittals started publicizing how the merged entity (Severstal and Arcelor) would be fully controlled by the Severstal’s Russian CEO, Mr. Aleksei Mordashov. The different governments started listening and saw how he would be holding a substantial stake. Also, the merger would lead to a Russian steel company with European operations (rather than it remaining a European steel company as was the case in the Mittal deal), something that they were very afraid of. They had opposed the Mittal deal initially on the basis of the harmful effects of globalization and this was a more severe case of that.

In addition, the Arcelor management kept behaving as if it did not need to take the shareholders into confidence. It called for a vote on the merger with Severstal and allowed the deal to be approved unless, the meeting was attended by an unprecedented number of Arcelor shareholders and they voted it down. This angered the shareholders and investors and even the government had to stop supporting the Executives seeing this wrath.

Mittal Steel raised the offer again (and increased the cash component %) so that it would be higher than the Severstal’s offer and there would be no reason why it should not be chosen.

Finally, Arcelor management had to budge and meet the Mittals. Still they opposed their offer and urged the shareholders to support the Severstal offer. At this point, Mr. Mittal took the case in the public forum and put in ads in the newspapers. These were directed to the Arcelor shareholders and asked them to veto the Severstal deal. Severstal did better the offer one more time, but the intentions of the management supporting the deal came under suspicion. We here see the cost of losing one’s integrity and once that happens, even better deals are seen skeptically.

Finally, the Arcelor board had to approve the Mittal offer, which was followed by the shareholder approval.

(The numbers involved in the various offers are not specified for that is not the focus of the post.)

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The biggest deal in the Global Steel Industry: Arcelor Mittal (1/2)

In this and the next post, I would try to give an account as to how the “impossible” Arcelor-Mittal merger became possible.

Arcelor Mittal

With a large number of parties involved, with different cultures in play, and a lot at stake, this deal promises to give many insights into the negotiation techniques used.

Background

Mr. Lakshmi Mittal founded Mittal Steel in 1976 in India. After a few years, Mr. Mittal found that it would take him long to grow to a significant size and wanted a way to grow fast. He found that there were various steel companies around the world, which had been performing badly, due to cyclical nature of the industry and poor management of the companies. He started acquiring these companies and turning them around through better management and economies of scale.

In 2005, when Mittal Steel acquired the American steel company, ISG, it overtook Arcelor as the world’s largest steel maker, in terms of output. Towards the end of 2005, it made up its mind to acquire Arcelor, the second largest steel producer by output and the largest by turnover. Mittal Steel was headquartered in Netherlands.

Arcelor was created in 2002 through merger of three major European steel companies, Arbed (Luxembourg), Aceralia (Spain) and Usinor (France). The idea was to leverage their technical, industrial, and commercial resources in order to create a global leader in the steel industry. It was headquartered in Luxembourg and Mr. Guy Dollé was the CEO. Arcelor employed thousands of people across 60 countries. Most of the employees were from Western Europe and in countries with a traditionally strong labor union. Arcelor were still in the process of integrating the business and were neither expecting nor ready for any deal, let alone a takeover offer.

It is important to understand where the main people stood when the deal was proposed. This is because, finally it is after all these individuals who would consider and negotiate the deal. The personal interests would play a critical role in the entire process.

Mr. Mittal, aged 55 and Mr. Dollé, aged 63 shared the same vision. They believed that the steel industry was too fragmented (top 5 companies controlled just 20% business) and was being exploited by the raw material / commodity producers (top 3 iron ore companies controlled 70% business) as well as consumer companies (top 5 automobile companies control 70% business). Consolidation was required and both wanted to emerge as the leader once it gets achieved. Both had contributed their fair share to this process of consolidation in the industry. Their aim was to do things in a way that, before they retire, the companies reach a dominating position in the industry. And that they are considered responsible for that leading position of their companies.

The Offer

On January 27, 2006, Mittal Steel unveiled an unsolicited $22.7 billion bid for Luxembourg-based Arcelor.

As we have already seen, that both companies had been acquiring others in the industry. Both thought that it was a competition against each other. They had been part of various bidding fights for acquisitions of steel companies. But at least one side was not thinking of both going hand in hand against all others.

In one such typical bidding, the steel company, Kryvorizhstal of Ukraine was on the block. Many companies entered the fray and the price kept on increasing. Mittal Steel and Arcelor were the last two remaining in the tussle, and the price increased from $3.5bn (when the last company left leaving these two) to $4.8bn where Mittal Steel won the bid.

There was clear scope for “saving” money in such context. Mr. Aditya Mittal, son of Lakshmi Mittal, was of the view that there were a large number of synergies between the two companies – not to mention getting better valuations while buying different companies. There were complementary strengths that could be leveraged. After intense internal discussions, they decided to take the leap, and find ways to make this acquisition possible.

The Process of the Initial Offer

Generally, in such acquisitions, the acquirer company would like to have a co-operative discussion and settlement. After acquiring, the acquirer is dependent on the target firm for collaboration – from executives, employees etc. In addition, the acquirer would like to be seen not as a predator but someone who would make the company achieve greater heights and also help the employees improve their standard of living – something which makes it preferable to go for a co-operative process.

As we know that, they finally had to resort to go towards a competitive process but they did that when it became a necessity. I believe one has to be ready for this as well for the other side’s rationale might be very different and sometimes there might be seemingly irrational behavior as well that would necessitate such a process.

Whom to approach – The best foot forward

One important issue is how the discussion with the target should get started. Research suggests that extroversion, agreeableness and cognitive ability of the negotiators play a major role in the negotiation. So, a person on the other side with these attributes should be preferred, especially when it comes to the initial stages. This particular person is the potential harbinger of the proposed deal in the target.

The Mittals found such a person at Arcelor – Mr. Alain Davezac, Senior Vice-President, International Business Development, Arcelor (Cognitive Ability). He had been dealing with the extended Mittal family before (Agreeableness) and was an outgoing person (Extroversion). He was enchanted with Buddhism and had dealt with Indians & Indian Companies extensively before in his career.

Mr. Aditya thought that it was important to make Mr. Alain up to terms with what has been going on at the Mittals side, and show him the benefits of the collaboration between the two companies. In addition, if everything goes on well, it is Aditya and Alain that would have to do bulk of the work during integration, and so it was best that they became acquainted with each other at the earliest.

Where to discuss and the occasion?

Issues such as where do the meetings take place; who all are part of the meeting; how are they treated etc, though they might seem trivial, play a very important role.

After discussions with Alain for some time and a couple of meets, the Mittals thought that it was now time to involve the CEO of Arcelor, Mr. Dollé. Instead of having a formal meeting at some office or hotel, Mr. Dollé and Mr. Alain were invited to a dinner meeting on 13th January, 2006 at the grand Mittal’s home in London (the world’s most expensive house at that time). We believe that it was a way to show the other party that they would be dealing with someone who is not less equal in any possible way. It was also to settle any apprehensions regarding the Mittal’s ability to handle the large company, that might arise once they come to know about their proposal. The Mittals might also be looking to gain an upper hand (through the venue and the fact that they are the hosts) before the start of the formal negotiations.

The negotiations before the negotiation – The notorious dinner

When the dinner was planned, little did anyone know that it would become such a quoted event in the future. The Mittals did not want to indicate on an outright basis that there would be a deal coming. They wanted to explore the possibility and see the reaction of the other side. As per Mittal Steel’s prospectus for the Arcelor offer, the issue of the merger was brought up at the dinner meeting but Mr. Dollé’s reaction was “non-committal” and that he pointed out the issues that would arise and the risks involved.

The part of the conversation related to the merger was only for 4-5 minutes. Mr Dollé later said that the conversation was friendly but did not give any details. A week after the dinner, both sides decided to meet again to discuss about the merger specifically, but the meeting could not take place as Mr Dollé had to follow-up on their proposed acquisition of the Canadian company, Dofasco.

Now or Never

This was an inflection point in the whole deal. The Mittals knew that if Arcelor went ahead with the Dofasco deal, it would get tougher to merge, possibly due to anti-trust conditions and due to Arcelor becoming a larger company. So that Dofasco can be done away with, they needed to find an alternate for Dofasco in case they are successful in going ahead with merging with Arcelor. They signed a binding agreement with ThyssenKrupp AG (that was also involved previously in bidding for Dofasco) about selling Dofasco to them, after the merger.

Without wasting any more time, the Mittals informed Mr. Dollé (who reportedly hung up on hearing about the Offer announcement) and Mr. Alain on 26th January, 2006 (after markets closed) about their plans to announce an Offer on 27th January. The Mittals had gotten the sense that management at Arcelor, specifically Mr. Dollé would not be too keen on such a proposal. However, they wanted to do as much as possible that would make them look as if the were on the “right” side; and it was their counterparts that did not co-operate.

The offer was announced the next day.

(Edit: Response to queries about references: Any reference to prior published literature would be purely coincidental)

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Business, Entrepreneurship, Finance, Strategy

About Porsche and Volkswagen

Europe’s biggest carmaker, Volkswagen, will soon takeover Porsche after the Porsche CEO, Wendelin Wiedeking, resigned from his position on Thursday. The takeover deal is supposed to be worth $11.3 Billion.

The surprising aspect in this deal is that for the past few years, it was Porsche who was steadily and strongly increasing its efforts to takeover Volkswagen even with Volkswagen being 16 times the size of Porsche.

images4Before the current mess that Porsche has ended in, the outgoing CEO, Wiedeking, was responsible for turning around Porsche’s fortunes and making it one of the most profitable automobile companies in the world. Wiedeking joined Porsche in 1983 and became its CEO in 1993. At that time Porsche was nearly bankrupt. However, Wiedeking through his business skills made the company immensely profitable. His aim was to merge VW and Porsche into a single giant automaker.

Slowly Wendelin Wiedeking and Porsche CFO Holger Härter started buying up VW stake. Around mid 2007, Porsche raised its stake in Volkswagen past 30%. According to the German law this necessitated that Porsche submit a bid to buy Volkswagen. The offer made was a bare minimum then and was rejected by Volkswagen anyway.

About a year later, Porsche raised its stake in Volkswagen from 31 percent to more than 50 percent. All the time the imagesvw1Porsche CEO and the CFO used sophisticated options-trading strategy. By late 2008, Porsche secretly raised its stake in VW to 75%. The hedge funds were however betting that the prize of VW shares would go down. When it was announced that the amount of VW shares bought by Porsche was as high as almost 75% of the total, the VW shares rallied to huge values, rising by up to 400%. For a brief period VW became the biggest company in the world by market value. Porsche ended up making huge profits while those who bet on the shares going down made immense losses.

However in the end, Porsche also amassed a debt of €10 billion ($14 billion) in its efforts to buy out Volkswagen. Under normal circumstances, Porsche would have no trouble financing that debt with all the profits it had made in hedge funds. However the credit crisis ruined Mr. Wiedeking’s plans. With the German government refusing to help, Wiedeking also tried to make a deal with a government owned company from Qatar for the much needed cash, but failed to reach any deal.

In this scene of crisis, Ferdinand Piëch, the head of Volkswagen, used the opportunity to turn the tables on Porsche and acquire the company. Pietch also wanted Mr. Wiedeking and Mr. Härter out before a final deal was settled. According to him the men were responsible for Porsche’s present financial position. VW’s labor unions also did not want the Porsche management, with Wiedeking being known as a pretty strict manager.

Now that Mr. Wiedking is out, Volkswagen will purchase a 49.9 percent stake in Porsche and at a later date acquire the rest. The Volkswagen group will now have 10 brands under it — Volkswagen, Lamborghini, Skoda, Bentley, Bugatti, Audi, Scania, Seat and Volkswagen Commercial Vehicles. With the merger, VW will raise the necessary money to pay off all the debts that Porsche had incurred over the past few years in its takeover hunt, but which ended with the hunter itself becoming the prey.

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Business, Entrepreneurship, Finance, Planning, Strategy, Web

Google v/s Microsoft: The Showdown Continues…….

Ding Ding Ding:

Round 1:
Microsoft and Google enter the ring. Microsoft has been the reigning heavyweight champ for years. But Google has grown in size and strength rapidly and has become one of the top rivals to Microsoft.
Microsoft needs to make a move. It tries to beat Google by taking over Yahoo’s search engine, but fails badly. Now it jabs at Google with its own search engine: Bing. Microsoft scores some points with that one, but the young and strong Google parries the blow and seems unaffected. Instead some competitors in the search engine business to both MS and Google are affected. Microsoft manages to gain some respect in this round but things largely remain unchanged.

images2 boxing_ring2 imagesms4

Round 2:
Google decides to get back. And boy it does. It lands a strong punch by declaring its intention to launch its own Operating System: Chrome OS. Microsoft has ruled the OS arena for years with Windows. Millions use it and prefer it to other Operating Systems, even to the free ones like Linux. But things are changing. Google, the king of the internet, is trying to lure the customers into its domain. Chrome OS is internet based, not desktop based. Why would you need desktop based applications when we provide you with everything online? Just open the browser (Chrome of course) and we provide all you need: email service, search engine, Google apps with Google Docs, photos with Picasa, music on YouTube, Google maps, you name it we have it and for free!!! Google wins round 2 hands down. Microsoft is shaken but tries to regroup.


Round 3:

Microsoft gets back at Google with a hook. To counter the free online applications like Google Docs and other software, it declares that the other weapon in its profit making arsenal, MS Office, will be free as part of Microsoft’s Windows Live service, which has more than 400 million users, when the new Office 2010 is launched next year. The public is not exactly sure whether Microsoft deserves any points for this. After all, it’s giving away its major revenue earner for free! Yes, there have been other free equivalents to Word, Excel and PowerPoint like Google apps, Zoho and SlideShare. But they have not created any dents to Microsoft’s market share. But Microsoft knows that there are an increasing number of users who are opting for these free online applications. Adobe and Cisco are also planning to provide online equivalents to MS Office. If MS does not act now, it will lose the edge. MS also makes it clear: Only the online Office 2010 versions will be free. You can use Word, Excel, PowerPoint and One-Note free online but to use it on the desktop, you need to buy it. And of course not all features will be available in the online version. These include ability to broadcast PowerPoint presentations over the web, edit video in PowerPoint and manipulate images in Word to name a few. Also in addition to revenue that will be earned through the sales of the full Office 2010 packages, MS will earn considerable money through advertising on its online applications. MS makes a good comeback. Its stocks go up. Round 3 goes to Microsoft. And the showdown continues……

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Business

Where only a few men have gone before….. Part 2 of 2

MirCorp, the first company in the area of space tourism, ended in bankruptcy and shut down in 2003. However, The X Prize foundation, in 1996 had declared a prize of $10 million to encourage private participation in this area. The challenge was to build and launch a spacecraft capable of carrying three people to 100 kilometers above the earth’s surface, twice within two weeks. 26 private companies slugged it out for nearly 8 years. Finally in 2004, Scaled Composites, owned by aerospace designer Burt Rutan and financed by Microsoft co-founder Paul Allen won the prize.

SpaceShipOne in flight

The aircraft (shown on the left), as described by Scaled Composites “consists of two stages: a carrier aircraft, the White Knight, and a second stage rocket, SpaceShipOne (SS1). The White Knight is a manned, twin-turbojet research aircraft intended for high-altitude missions. The design mission of White Knight is to provide a high-altitude airborne launch of a manned suborbital spacecraft, SS1.”

Here’s a link to the video of the SpaceShipOne in flight that I found on youtube.(You might find it better with the volume down)

Immediately after the success of SpaceShipOne, in September 2004, Richard Branson, the flamboyant British businessman and owner of the Virgin brand, entered into a deal with Scaled Composites. Just like MirCorp and RSC Energia had a deal where MirCorp saw all the business aspect, here Branson’s newly formed company “Virgin Galactic” will handle the marketing and business while Scaled Composites would take care of the technology. The company has already started selling flight tickets to the public.

With the cost at a US $200,000 and 10% initial deposit you can book a ticket right away. The cost is just 1/100th of what the first space tourist Dennis Tito paid for his flight in 2001 on the Soyuz TM-32. The prize drop has happened within less than a decade.

Virgin Galactic has not specified any exact dates when its services will be launched. According to the company, it “does not regard itself as being in a race. We have no absolute or forced deadlines for launch” An early estimate would be late 2009. The launch site will be Mojave Spaceport, in the Californian desert. The ticket will also include pre-flight 3 day necessary training before launching into space. The passengers will be able to experience weightlessness and see space from beyond the earth’s atmosphere. The experience no doubt would be one of a kind.

However Virgin Galactic has also got some competition coming its way. SpaceX, EADS Astrium, CSI (Constellation Services International) and other companies are also planning to enter the space market soon. EADS Astrium, formed by the merger of three European companies is planning to launch its own services by 2012. With more companies in the fray and stiffer competition and further technological advances, the future of space tourism definitely seems interesting. The dream of the rest of the earthly population to reach out to space can now definitely be realized pretty soon.

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Entrepreneurship, Public Issues

Billions of Entrepreneurs in India?

China and India have always been compared; being the two most populous nations with diverse cultures and being neighbors on the map, they are expected to be similar, but in reality they are starkly different – be it economically, socially or politically. In this blog, I will share and extend some of the ideas of Prof Tarun Khanna, Harvard Business School, in his book Billions of Entrepreneurs: How China and India Are Reshaping Their Futures and Yours. In the book, Prof Khanna compares the millions of budding entrepreneurs in India and China; and how the economic, social, political situations in India and China affect its growth, culture and entrepreneurship ecosystem.

Well, this blog talks about the setting of our nation – the largest democracy and how an entrepreneur in India differs to its counterpart in America (or for that matter in most developed nations).

  1. In developed countries, most resources are already in or near their highest value use. Any increase in the value of a product/service is due to new and improved technologies. While in India, where technology is much behind compared to the developed nations, a simple import of the technology from the US works best in most cases. Obviously, big business houses compete better in this than a start –up. For example, did Reliance do break through research in mobile technology? Did they spend an equal amount in research as their US counterparts? Or was it economies of scale and import of technology which they exploited! Therefore, one of the important roles that entrepreneurs play in the US, namely, their role in early-stage innovation, has relatively little value in India.
  2. An interesting observation amongst early stage entrepreneurs (within 5 years of startup) in India is that they look forward to diversify rather than to expand. In US, normally early stage entrepreneurs look forward to expand in the customer base and compete with already established market players or sell to players who can use economies of scale or scope for better market positioning.
  3. Another interesting observation is that most early startups in India, have a starting capital of around Rs 5,00,000 which is about 10 times the per capital income in India; while a typical US startup capital is about ½ of US per capita incomes. Naturally, this should mean that Indian entrepreneurs should create greater jobs as compared to the US. This is quite not the case, because a typical US startup has revenues approximately 10 times of an Indian startup and hence they create more job opportunities.

Following from this blog, quite a many of us are deemed to think that Entrepreneurs are lagging a lot behind their US counterparts. This would be wrong to say, because the US markets and Indian markets are two different settings. This blog realizes the differences in the optimal roles that the US and Indian Entrepreneurs can play. The reasons for the differences in the optimum role are open ended and not discussed in the blog.

I myself am the founder of a campus sustainability campaign, Delta Climate. And from what I hear from all corners – academia, industry and investors, it surely is a good time to be an entrepreneur in India.

(Gaurav is an undergraduate student at the IIT Bombay in Computer Science. His interests include entrepreneurship, climate change mitigation, finance and  information technology. He is a member of the winning team at business plan competitions Eureka! 2008 and finalist in the McGinnis Venture Competition 2009. He is currently interning at Microsoft Research India and also blogs with Forbes columnist Sramana Mitra as an intern.)

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Entrepreneurship, Web

(Don’t) Talk to Strangers!

If that’s the advice that you have got from your parents, a new web service called omegle.com advises just the opposite. It’s a new chat service where you can start the chat at the click of a button with any random person. It requires no registration, no user name or identity. The only handles used are “You” and “Stranger”. However Omegle is not exactly the first website to have introduced the concept of anonymous chat. Another website called “A Nice Chat” established earlier also links you with unknown strangers although you are expected to pick a nickname for yourself first.

Omegle was launched by an 18-yr old high school boy named Leaf K. Brooks from Brattleboro, Vermont, US on 25th March this year. Less than 3 months old, this service has encountered an increasing number of visitors each day. On an average about 2500 users are signed in at a time. Currently the site was reported to be getting 150,000 hits per day.

omegle

Brooks idea behind Omegle: “The usual chats were getting a bit stagnant. It’s hard to learn new things from someone who’s just like you. So my goal with Omegle is to bring together people who maybe aren’t all that similar, and let them talk in an anonymous, safe environment.”

There have been polarized views of this service. Some people have praised the opportunity that this service provides to chat with new people from different corners of the world, belonging to any nationality/religion/culture which might help you to learn so many new things, whereas detractors have called it nothing but an amazing waste of time. Omegle also has its one big problem as it is with many online communities and chat rooms: Trolls.

For the uninitiated, Trolls are people who post unrelated, inflammatory, controversial messages on online communities with the intent to disrupt normal discussions. The founder acknowledges this problem on his official Omegle blog and says that he is working on ways to control this problem.
I myself signed into a chat once to see how it all works. My first chat went pretty nicely although it was a bit weird talking to a completely unknown person. I had a short clean conversation with some person in another state. We did not exchange any personal information but as the home page for Omegle says, there is nothing to stop you from revealing personal details if you would like. My second chat unfortunately was with a troll. I haven’t done much chatting after that though.

In case you are lucky enough to find a stranger with common interests and are having a great conversation, but the conversation implodes, there are already some blogs sprouting up which can help you to find that person.

On the technical side, Omegle has been written in Python, using the Twisted networking library and is hosted on a medium-end Linode virtual private server. Brooks makes some money by selling advertising on Omegle’s home page. His plan is to add more features over time, building on the core that has already been established.

(About the author: Anup P. Joshi is the latest to join strat.in . Anup is currently pursuing a Masters Degree at The University Of Texas at Austin in the field of VLSI and Digital IC Design. He finished his BE in Electrical Engineering at VJTI, Mumbai in 2007. His interests lie in a wide variety of topics. He will be posting articles on Politics, sports, business, technology, movies etc.  Contact him on twitter at anup_joshi

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