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Wednesday, April 25, 2012

Amazon Is Going To Eat The World

9:27 PM Posted by Deepak Nayal No comments
If you ask people to name the most powerful company in technology, I can bet most of them will name Apple, Google or Facebook. These are some of the most successful and sexy technology companies and also favorites of the press and bloggers. But if you dig deeper, beyond the sexiness, you will find that these companies (and their other technology counterparts) are mostly strong in an area or two. For Google that is search (Android is just another gateway for Google to generate more search-based revenue, at least currently), Facebook social networking, Zynga games and so on and so forth. Apple is only company amongst these favorites that is [extremely] strong in more than one area - mobile devices and online stores. There is, however, one company which is not only strong in multiple areas but has also positioned itself well in gaining mind and market share of the consumers and the enterprises. Yes, you guessed it - that's Amazon. 

This is the information age where content and information are king. The value chain for digital content/information starts with the creation of content and ends with its consumption (thanks to social networks, there is now a post-consumption stage of sharing as well). While most of the successful technology companies have created strong holds in one or few aspects of this value chain, Amazon is probably the only company that has strong hold pretty much throughout the value chain (except for the sharing aspect). The company that started as an online bookstore and then moved into general e-commerce, is now also serving content, managing cloud and even providing devices to consume that content. Even Apple is not that well positioned throughout! The company founded by late Steve Jobs is extremely strong in a few areas and average or weak in others. If you overlay Amazon's business activities on top of the information value chain, you will realize the extend of power and influence that Amazon has on this world and its future potential. 

Amazon Value Chain

  • Creation - This is probably the area that Amazon is least strong at. It has been strengthening its position in this area by acquisitions (such as, IMDB and LoveFilm) and initiatives such as Amazon Publishing. By allowing independent/individual authors to publish their own books and bypassing the dependency of publishing houses, Amazon has been able to successfully connect authors directly with the readers, in effect revolutionizing the publishing industry. 
  • Delivery - Well this is Amazon's bread and butter - the area where they have been active from day one. Not only does it have, the world leading e-commerce site, but a plethora of other e-commerce sites such as Zappos, Joyo and Junglee. Using its wide and successful delivery network, Amazon has the potential to reach hundreds of millions of users. The company has strengthened its position in this area further by adding delivery networks (Kindle Store and App Store) for its consumer devices (Kindle and Kindle Fire) as well. It is now taking this a step further and adding delivery network for its cloud services - AWS Marketplace (app store of sorts for cloud software). 
  • Platform - Amazon's ability to envision cloud computing and to deliver that vision is probably the most impressive of all its feats. Not only has Amazon successfully turned its infrastructure (a cost in most companies) into a huge revenue source, it has been able to scale it and add more features at incredible speed. Amazon Cloud has now become the de-facto choice for setting up internet based ventures, for not only startups and SMEs but large enterprises as well. With thousands of companies running their technology infrastructure on Amazon's cloud, the company has become one of the most important entities in enterprise computing. And now with its cloud app store, it is adding more clout to its already dominant position. By enabling and empowering startups and entrepreneurs, Amazon Web Service is also helping the world at a social level (i.e. more companies leading to more jobs). 
  • Consumption - This is the most recent area for Amazon to enter - with which it has pretty much covered the entire content/information value chain. With its Kindle e-reader, Amazon has been able to position itself as one of the leading mobile devices company. The verdict has yet to be out on Kindle Fire; though, early reports seem to reflect positive reviews, considering which, I won't be surprised if it turns out to be the most successful Android tablet as well. 

Being strongly positioned throughout the information value chain is not the only strength of Amazon. The company also has the ability, and loads of practice, of thriving in very low margins - a strategy it has used extremely well for Kindle's dominance of e-reader market - and provide great products. This combination of serving throughout the value chain, providing great products, crucially positioned in both, consumer and enterprise, technology markets, vision and brilliant execution ability makes Amazon arguably the most dangerous player in the technology sector. And while the rest of the players in technology industry are busy suing each other, Amazon is [relatively] quietly working on its expanding its dominance further.

Wednesday, April 18, 2012

State Of Online Travel

Online travel is a multi-billion dollar business, contributing nearly a third to the global e-commerce activity. Consumers and businesses in this [online travel] sector, one of the early adopters of internet, have been quick in jumping to the technology bandwagon. However, not much has changed in the sector since the early days. Internet shifted the power in this ecosystem, from the suppliers, to the aggregators and search engines, which brought in more transparency and simplified the process of managing trips. However, since then it has lagged in innovation and still misses a true champion of the users, which can take away the pains of managing end-to-end process of managing travel experiences - from deciding the destination to arranging conveyances and accommodation to preserving post-trip memories - while making it all fun. 

Online travel companies have been mostly focusing on only one part of the overall travel experience - managing conveyance and accommodation. Most of the online travel portals, applications and companies compete in this area. Lately, however, this sector has seen activity from companies which, instead of focusing on the logistics of travel, are focusing on the core reason we travel - to see [new] things; to have new travel experiences. While some of this activity has been done by the established players, the transformation has been largely led by new startups. 

Trip Advisor's Trip Friends is an initiative in that direction. The idea behind Trip Friends is to leverage TripAdvisor's travel database and Facebook's social graph, so that you can get travel advice and reviews from your friends. 

Wanderfly (founded in 2009) is another interesting initiative with a focus on travel experiences, rather the logistics. A travel recommendation engine, Wanderfly taps into existing databases of its partners to provide best recommendations for a trip. 

Trippy (founded in 2011) seems like is pretty much a Pinterest rip-off. At first glance, almost everything about it has been "inspired" or lifted from the famous social networking website. You can pin your favorite travel locations and manage boards. Their "Create Trip" feature is probably the only non-Pinterest-inspired one. 

GTrot (founded in 2009) urges its users to share information about their city. The site seems to be working towards building a database of information on cities. In addition to places, it also allows people to share food, shopping and entertainment related activities.

These initiatives/startups are trying to break the age-old mould of online travel industry and bringing the focus back to the user and travel experience. Having said that, we still lack a truly integrated product that takes care of online travel end-to-end and puts the fun back in trips again.

Wednesday, April 11, 2012

Sharing and Discovering Experiences

9:02 PM Posted by Deepak Nayal , , No comments
Since the early days of internet, people have been fascinated with its potential to connect humans (and even things) from all over the world. With recent advancements, such as the ones in SoLoMo and cloud computing, that dream has started to take a clear shape now - with a lot of potential to be much more than what it currently is. Based on this premise many industries and areas are still waiting to be disrupted, and of these the one that I found most interesting is that of experiences.

Currently, the experiences market is mostly dominated by the travel industry and the packages that travel agents and companies offer. However, even though these companies and agents talk about experiences they are still pretty much all about booking cars, flights and hotels. You do not go to places to live in a hotel or drive in a car. You go to places to check out new things - to have new experiences. 

There aren't many popular web-based applications around that allow people to discover and book experiences online. Sites such as TripAdvisor and Expedia are more about travel than experiences. Plus, their user interface can be too intimidating for many people. Some of the applications that I have come across that actually allow people to view and book experiences on the web 
(such as Virgin Experience Days and Red Letter Days) do not do a good job in terms of the user experience and design. They still look like web applications from the old world. Because of this absence of good online applications for discovering [and booking] experiences, most of the people take on to Google. The problem, however, here is that Google is a generic search engine. It was designed to discover web pages and links, not life experiences. And while Google's constraint in discovery can be overcome by social networks - where people discover experiences that others have lived and recommended - none of the social networks is looking into experiences in particular. They are all happy being generic platforms for connecting people, making them play games and upload photos of babies and spouses. 

My Two Cents 

I can imagine a good online experience engine to be able to allow people to upload their experiences; discover new experiences based on location, time and budget; connect or follow people who have lived or would like to live similar experiences; follow certain types of experiences so that they can get informed when something new comes up on the radar. In effect a good experience application will be a combination of Google (for search), Facebook and Twitter (for social networking) customized to just serve the experiences

In addition to that, such an experience service has to be driven by design. As startups such as AirBnB and Fab have shown us, good design can be very a powerful differentiator. And you could definitely use some differentiation in an overcrowded, easily imitate-able market such as that of experiences. While good design might seem a luxury at the beginning, it certainly has the potential to be a powerful crowd puller. 

A good online experience application can help people live their lives better, as they will be able to better plan their free time; check out things they can do on the days they are free, or places they can go in the weekends or for vacations. One of the most exciting things about such a service can be that it can introduce people to places and experiences that they have never heard of before, instead of the same old popular destinations everyone knows about. I believe that a good [online] experience application has the potential to really change and improve our real [offline] lives.

[Image from]

Wednesday, April 04, 2012

New Ventures Should Not Fear Big Players

8:32 PM Posted by Deepak Nayal , No comments
[Image from]
Big technology companies have become goto brands providing leading solutions in their respective areas. Google is for search; Facebook is for social networking; Apple is for mobile devices; Salesforce is for CRM; Oracle is for databases. These companies and their solutions make many people believe that any new venture in any of these (or other) areas will put them in direct competition with the leader - and its immense resources - which is definitely not good. While it is quite possible that these leaders can compete (and win) with new ventures in their area, it is not very likely. The small companies do not really have to lose their sleep on competing with the big boys, and for good reasons. 

Big Players Have Generic Solutions - Scope For Focused Approach

First of all, what these leaders provide are generic solutions. Facebook's social networking platform is a generic one and so is Google's search. Existence of these generic solutions does not take away the need for more specific and focused solutions, such as a social networking platform for entrepreneurs and investors (AngelList) or music lovers ( or software developers (GitHub), or a search platform for research journals (Jstor) or jobs (Indeed). Similarly, while the world is going crazy over smartphones, some companies are actually doing well making low-tech cell phones for seniors and poor people. And while Oracle and IBM are the leading database software provider in the world, there is now a lot of demand for specific NoSQL solutions (such as MongoDB and Hadoop) as well. No matter how big and successful the leading player is, there is always demand and scope for focused approach. 

Too Much Investment In Existing Solution 

Big companies are already invested heavily in their existing products in terms of technology and money. They have roadmaps going at least a year out. It is not easy for them to change their product direction just because a small unknown irrelevant company is doing something in the area that they dominate. And even if something does show up in their radar, it is very expensive for them to make major change to their product, both technically and financially. Typically these decisions will need to be run by senior management before they are acted upon. Their investment in the existing solution does not allow them to change their direction or add extra features to the product quickly enough.

Size and Success Works Against Them 

I have read many startup articles about investments, and one of the common questions that investors apparently ask entrepreneurs is, "What if Google (or Facebook) does what you are trying to do?". Well, to be honest I find that a very dumb question. First of all, just because some one or some company can do something does not mean that it will do it. And second, even if it does, it is not necessary that it will be able to pull it off successfully, case in point Google+ and Bing. The fact that these companies are successful and big, actually kinda works against them. Their size and success does not allow them to make decisions quickly and execute them fast enough. And in addition to that they have their own priorities and roadmaps to follow. A small company or a startup, however, does not have this disadvantage. It is much more agile than its more successful counterparts. 

Even though general understanding is that if you are launching a new venture you are competing with the big boys right away, it is not true. Big companies are not really your competitors, and will not be so for a long time. In fact, instead of smaller players fearing the big ones, it should be the other way round i.e. big players fearing the small ones, especially because of their agility and focused approach. And this is one of the reasons why we are seeing a trend of these big players acquiring or "acqu-hiring" startups.