Google Cloud vs. Amazon

gcp_next_2016_LP_logo-square-2xLast week, Google hosted their inaugural cloud conference called Google Cloud Platform Next in San Francisco. Google Cloud Platform (GCP) is Google’s answer to Amazon Web Services (AWS), IBM Bluemix and Microsoft Azure. If you were to rattle off the names of Amazon, Google, IBM and Microsoft, and ask any non-technical person to pick who is winning the cloud war…I imagine no one would pick Amazon.

Yet, Amazon is the correct answer. AWS is the gold standard when it comes to cloud computing and they have a large lead since they essentially created the market around 10 years ago. The reality is it didn’t have to be that way. Google has the intellectual knowledge and the technical ability, when you think of Big Data processing you can thank Google. The technology behind Hadoop – Google File System and MapReduce both originated at Google. However, Google didn’t realize the full market potential for cloud computing services like Amazon did.

Now Google is playing catch-up, last year it hired Diane Green to lead the GCP team. Diane Green was the co-founder of VMware, whose software allowed corporate data centers to create “virtual machines”, which is really the heart of any cloud computing platform.

The GCP Next conference was to let the world know that Google has arrived and are a force to be reckoned with. It’s clear Google is going after large enterprise customers which is a very different sales strategy then how AWS grew. AWS initially focused on developers and startups to grow their business and added features as their core audience requested them.

I believe Google has a shot at being #2 but they really need to start rolling out features on an hourly basis! That’s no exaggeration, there are days where AWS will launch 10-15 features which is just unheard of for the scale at which AWS operates.

Anyways, to prove my technical street cred, below is a tutorial I put together to show how to install WordPress on GCP:

 

 

 

On-Demand: Technology or Service Delivery?

a-little-bit-ofWho would have guessed that in 2009 the idea of hailing a taxi via a mobile app would spark a revolution. That is exactly what Uber has single-handedly done and kicked off what is now termed the “on-demand economy”. In the process, Uber has been estimated to be worth over $50 billion and continues to grow into new markets.

Because of Uber, there are a host of on demand services from delivering groceries, restaurant meals, laundry, home repair, car repair, etc… The list is long and keeps growing by the day. It’s still early days in India and the intense competition in these various verticals has led to a minimum of 10 startups in each category. Which explains why venture capitalists are still funding these “on-demand” startups because no one really knows who will come out on top. Since India is such a large and diverse country, I’m willing to bet that each vertical will end up with 2-3 large players in each vertical category.

Over the past several years I’ve been advising many startups on their product/market fit and technology stack. (Pro tip, to sound smart add stack to anything and people will think you are well versed in that area. Food stack, technology stack, retail stack, etc…). Many of the startups I’ve interacted with for the “on-demand” space are divided into 3 groups:

  1. A team of computer geeks who are looking to provide a solution to a problem
  2. A team that has domain knowledge of the space but lacking any technology strategy
  3. A team that has neither the domain knowledge nor the technology skills, these ideas usually forever remain in PowerPoint

The first group seems to have gotten all the love and media attention. How many times have you read the following headline “3 IITians launch an Uber like service for X”. Initially, I used to enjoy advising those startups because we had so much to talk about in regards to the technology stack. But, when the topic turned to service delivery, business metrics and customer engagement the response was pretty much the same – oh, we’ll just hire some business development and project managers. That should have been my first clue that they were going down the wrong path. For them, the technology was more important than the consumer.

Over the past year, I’ve had the opportunity to work with several startups that fall into the second category. They have the domain knowledge of their particular space but need some hand-holding when it comes to technology. The more that I engaged with these startups the more I realized that they would be more successful because for them it was about maintaining their brand at all costs. Which meant making sure the customer was the most important piece of the equation, not the technology stack which is really just an enabler.

Many of the heavily funded “on-demand” startups built large marketing and technology teams but failed to monitor, measure and understand what the customer experience was. I can’t tell you how many times I’ve heard from colleagues that they used a restaurant delivery app and the food was delivered late, food was cold or something was missing. If you can’t get the basics right, it doesn’t matter how much awesomesauce technology you have running on Amazon Web Services because it’s not a technology problem, it’s all about the service delivery.

Dear Ola & Uber, Welcome to the License Raj

Bits-Bytes-CarEveryone from the Bay Area to Bangalore is talking about whether we are in a technology funding bubble or not. I think that misses the bigger question in India of whether the Indian government might have an effect on it. I woke up this morning and saw an article that Vijay Chibber the secretary of the Ministry of Road Transport and Highways, has stated that companies like Ola and Uber must be registered with the state government like any other taxi operator. Vijay refers to Section 93 of the Motor Vehicles Act which states that the state governments have jurisdiction.

Ola has raised just under Rs. 6,660 crore in funding and employs thousands of people and that is most likely going to come to a screeching halt if the government has its way. Registering with the government is not the issue but existing taxi’s are registered and it’s pretty clear no one likes the existing system. How many times have people been refused a ride from a taxi driver? How many times has the taxi driver driven like he was in an F1 race? How many times have you stepped into a taxi and the floor board has rotted and you can see through? Yup, I’m sure all of us have faced this issue.

This issue goes back to my disconnect with Modi. He will travel all around the world and meet with enthusiastic entrepreneurs like Facebook’s Mark Zuckerberg and Tesla’s Elon Musk but back at home…

Well back at home, we are back to square one with the “license raj” of yesteryear. The central government has punted on the issue and has let each state government frame the guidelines for the taxi app aggregators like Ola and Uber. This just means more work for Ola and Uber in dealing with each state government – oh, what joy for them! And, in states like Maharashtra they may impose a cap on the number of taxi’s that an operator can have, because that’s how we roll in the license raj era. VC funding meet Indian Government regulators, you may have met your match.

 

The Disconnect Between Modi and Me

modi-digital-indiaYesterday, India’s Prime Minister Narendra Modi (@narendramodi) visited ground zero for the home of many unicorns – Silicon Valley. Modi hosted a Digital India dinner to show that India wants to roll out the red carpet for companies to invest in India. Modi is an articulate salesman and its just want India needs. Someone to get out there, cold call, visit countries and get them excited about India and it’s 1.3 billion people.

When I used to live in the US, a colleague of mine at Cisco Systems would always tell me – never confuse selling with installing. In his eyes, they were two distinct activities handled by different teams. The selling was done by the sales guy and the installing was done by someone else. Of course, you really need to make sure the entire process works well or they may not buy again.

Since Modi assumed the office in May 2014 he has been busy trying to handle both sides of the equation. Traveling all over the planet in Air India One selling the vision of India and getting companies to sign on the dotted line for foreign direct investments (FDI). In India he has been battling the Congress party to get many of the needed reforms in place such as the land acquisition act and GST (Good and Services Tax).

For the uninitiated the GST bill will unify the tax code and shifts the power from the States to the Central Government. Currently, each State collects various taxes if you manufacture products and if you move goods from one state to another, it’s like moving it to another country. With GST, the Central Government handles the taxation piece and goods can freely move from state to state, which would be the logical thing to do. Of course, this creates an issue because the guys on the ground that used to get bribes to move the paperwork more quickly are effectively cut from the action.

There are many rules and regulations that need to be passed in order to get India moving in the right direction. Another example is if you are trying to open a restaurant in Bombay, you need over 40 licenses in place to be compliant. My favorite is you need a phonographic license to play music in your restaurant. You can imagine dealing with over 40 departments for running a restaurant will definitely lead to some policy violations and those representatives are all to happy to show up asking for a bribe…welcome to India.

I’ve talked to many people that run manufacturing facilities and they all say the same thing, the Make In India initiative is a joke. The disconnect is Modi is absolutely selling the vision of India but the implementation of policies to operate in India is still stuck in neutral. Fix that.

 

Scale or Fail?

think-bigEvery startup idea that is sketched on the back of a napkin or talked about after 5 beers has the same eventual goal – world domination. If you don’t think big or scale to take over the universe, you suck. And when you talk to VCs their response is the same – they are not looking for small wins, they want their fund to be the next Accel Fund IX (which invested in Facebook in 2005). The Accel Fund IX is reported to be one of the most profitable VC investment vehicles in history.

If a startup fails along the way that is okay, because to get to scale you need to put everything on the line. I see more and more startups in India buying into this way of thinking. They are scaling up but their core offering is suffering. They rather be in 10 cities with a mediocre offering, then in 3 cities with a superb value proportion (yes, I just threw in a term VCs love to use at least twice in a conversation). What is painful to see, is startups that fail because of decisions from external forces – extremely vocal angel investors, over bearing VCs or a board member.

However, there is a 3rd option – organic growth with real revenues and amazing profit margins. The poster child for this option is the project management SaaS product called Basecamp. Some may call this option a lifestyle business. If that means you can throw down $4 million dollars for a one-off Pagani Zonda supercar, then sign me up. (David Heinemeier Hansson is a partner at Basecamp who reportedly paid that much for the Zonda.)

Usually, the 3rd option starts to appear once all the hype around a hot sector dies down and investors start to look at real business metrics. Not cocktail party metrics like unicorn tears, GMV, app installs or number of MBAs employed. It’s about tracking how much money is coming in, talking to customers to add more value (read: charge more), understanding how your sales funnel is working, etc… As they say, whatever it takes to make the cash register ring.

Of course, the 3rd option is not sexy enough for the press or cocktail party conversations. But, in the long run it is viable and many people have gone down that road – it’s just that you don’t read about them on TechCrunch or hear about them.

The ‘Kama Sutra’ behind building a great app for your great idea

App-buildingThese days, all the rage is about building an app. I can’t tell you how many times I’ve heard the phrase: “Hey, I’ve got this great app idea…” Over the past one year, I’ve assisted many startups with building their technology stack. Many of these startups, though, don’t have any in-house technical knowledge. It leads these startups down the path of outsourcing their app development to a different company. And that is where the idea for the Startup Engineering Cookbook for Mobile Apps slide deck came about.

I noticed many startups were getting into discussions with outsourcing firms, but had no idea where to begin the conversation or what they were talking about. In essence, the slide deck gives non-technical co-founders a quick technology cheatsheet for mobile app development. It’s a guide to give co-founders the knowledge they need to engage with an outsourcing firm, and understand the various options to them. Many times, co-founders would complain  that an outsourcing company  insisted the only way to build an app was using xyz technology. When, in fact, there are multiple ways available, but an outsourcing company may only be comfortable with a particular technology.

Although the slide deck might seem lengthy at 48 slides, it’s a rather quick review of technology options. The presentation is broken down into three main parts:

  1. Mobile App Design Process: This is where I find many non-technical co-founders spend their time. This is what they know, and they can literally touch and feel the app interface. It’s usually best to engage with a design firm that can walk you through the paper prototypes all the way to the wireframes and finally the high fidelity assets used to build the app.
  2. Mobile Architecture: How the app is built is age-old debate. It’s  where non-technical co-founders just throw their hands up and say, “I want an app that is available in X months; use whatever!”  That single statement has far-reaching implications for the life of the product. If you use a cross platform framework like PhoneGap, you can release your app faster, but you might be limited in the features you can offer, as opposed to taking the time to build a native app.
  3. Backend Architecture: If you want to see a non-technical founder’s eyes glaze over, ask them if they prefer to use a LAMP, LEMP or MEAN technology stack. This part of the presentation has many slides, as there are different components to build the backend infrastructure. There’s a new breed of infrastructure services called Mobile Backend as a Service (MBaaS). These companies take the pain away of having to deal with all the complexities of building your own infrastructure from scratch. However, they’re limited in what they offer. You might end up having only some of your technology services on an MBaaS platform.

There are pros and cons to each decision made. They have to be weighed against the overall goal of the product/app. As one of the introductory slides mentions- Building a mobile app is like the Kama Sutra… many ways to accomplish “it.”

The above article was syndicated on YourStory.com.

Zenefits New Take on the Freemium SaaS Model

zenefitsWhen people talk about running their business as a SaaS (Software as a Service) model that usually means the software is hosted somewhere in the cloud and they charge customers on a monthly basis for those services. One of the first companies to jump on this business model was Salesforce.com which started as a customer relationship management (CRM) tool in 1999. This allowed customers to be more flexible and buy monthly access to the software without having to purchase a software license outright that might have a large upfront cost.

Then in 2006, the word “freemium” came into existence. It was first uttered on the blog of Fred Wilson, a noted venture capitalist with Union Square Ventures. From the freemium Wikipedia page:

Freemium is a pricing strategy by which a product or service (typically a digital offering or application such as software, media, games or web services) is provided free of charge, but money (premium) is charged for proprietary features, functionality, or virtual goods.

Dropbox is the poster child of this pricing strategy, they give you 2GB of free cloud storage but if you want more you have to pay for it.  This strategy has worked brilliantly for 1000’s of companies and continues to be the pricing model many startups follow.  From a consumer/enterprise standpoint it’s a slam dunk because you get to “try before you buy” and only when the company has proven its usefulness then you can hand over your hard earned money.

Enter 2013 and Zenefits. Since Zenefits is a business to business (B2B) offering they don’t get much mainstream media love, but they have taken the freemium SaaS model and completely blown it to bits. Zenefits is an online human resource offering which lets businesses manage their payroll and taxes, compliance, new employee onboarding, vacation tracking, time and attendance, benefits administration, stock options tracking and much more.

What makes Zenefits business model so different is that all of the features are free whether you have 5 or 1,000s of employees. In a typical freemium model they would have given away their service for free for the first 20 employees then start charging after that. So how does Zenefits makes money? They make money from a single feature – insurance. If you decide you want Zenefits to help you find and manage your insurance plans then they take a commission from that. In essence, you could use all the features (minus insurance) and never have to pay a nickel to Zenefits.

Evolution of software pricing models:
Phase 1 – Upfront site license cost and software installed on local computers (Microsoft Office)
Phase 2 – SaaS model that charges for incremental use (Salesforce)
Phase 3 – SaaS freemium model, give customers a free taste of the product (Dropbox)
Phase 4 – SaaS model that is essentially free to use without any limitations except that “one thing” (Zenefits)

I see a whole host of businesses deploying a similar pricing strategy to Zenefits. The key is to figure out that “one thing” you want to monetize which has enough margin in it. It’s the same strategy that open source companies have been using, they give away the software (like Red Hat) and then charge for that “one thing” which in this case is the service and support for Red Hat software.

Another example could be in the medical field where a doctor needs a tool for his office staff to on board new patients, book appointments, bill patients, patient records, etc…  Yes, there are companies like ZocDoc and Practo that do that today with a traditional SaaS model that charge for incremental usage. But in this new model the platform would give away everything for free and monetize via the diagnostic laboratory services (i.e. blood work) that it offers. In essense, the company is really a diagnostic lab (technically known as a phlebotomy laboratory) that just happens to have a free CRM tool for the medical office. Which is really what Zenefits has done, they are an insurance broker that just happens to have an amazing set of human resource tools that companies can use.

Many people argue that when you give away something for free that no one values it…I call bullshit on that. Look no further then the current valuations of Zenefits and decide for yourself. The following quote from Chris Dixon of VC firm Andreessen Horowitz resonates with this new SaaS model:

Come for the tool, stay for the network