Archive for April, 2013

The Future is Internet Access. not Devices

Frugal innovation that’s just good enough to enable free mobile Internet access in order to supports a focus on education for billions of low-income people. That’s both the personal and business mission of Suneet Singh Tuli, CEO, Datawind. The outcome? The first $40 tablet computer – the Aakash – launched first by the president of India, then by the UN Secretary General and today in use by thousands of students in India.

Suneet’s business goal is to create a low-price product that impacts people’s lives and, yes, make money from it. “I am not a charity,” he declaims. The Datawind business model is to forgo most of the company’s hardware margins and to focus instead on recurring revenue from content and apps in order to go after and, in time, own the price-sensitive consumer.

He believes everyone should focus on education. Education corrects everything, he says. No, the low-cost computer is not intended to replace teachers but to supplement what they can do. His sons get answers to all the questions they have after school from YouTube! And Forbes International recently recognized Suneet in its annual impact 15 list of education innovators.

Lesson No. 1 for US entrepreneurs: “just good enough” should be part of innovation. It’s not disruptive technology that wins; it’s the one the gorilla ignores – as we learned from Clayton Christiansen. Large companies, such as Apple and Samsung, could own the low-cost tablet market but it would dilute their brands to say nothing of their margins. Their business model is based on creating and producing high-quality, highly profitable hardware. Suneet’s, on the other hand, is to use hardware as a customer acquisition tool.

Lesson No. 2: the future is Internet access, not devices, in Suneet’s view – with money coming not from devices but from content, apps and advertising. In fact, Suneet’s next goal, in addition to bringing the cost of the Aakash down to $25, is to spark a global ecosystem of socially positive apps that empower women.

Whither Online Content?

Sponsored content may not be new, but its role as a replacement for traditional advertising certainly is. So is the new acceptance of the collapse of the long-standing wall that separated content and advertising. What makes this new situation acceptable is transparency about the sponsor and assurance that the editorial content was created independently of the sponsor.

These were among the takeaways of a lively discussion among content and advertising experts about Content and Commerce organized by Gotham Media Strategies and Frankfurt Kurnit at yesterdays digital breakfast. Rick Kurnit, of Frankfurt Kurnit, moderated; Glenn Hall, of TheBlazecom; Eason Jordan, of NowThisNews; Scott Kurnit, of KEEP Holdings; Rob Rasmussen, of Story Worldwide and Rebecca Sanhueza, of Time, inc. were panelists.

However “native ads,” i.e., branded content, is not acceptable when it tries to trick people into believing it’s not advertising. And everyone agrees that advertising sucks when it’s annoying and intrusive. But even overt paid content, i.e., ads, can be great. Three campaigns were cited that have won universal acclaim; Nike’s advertising, which delivers inspirational content that empowers consumers; Dove’s, which establishes a relationship with consumers about beauty and how you see yourself and is more like direct marketing, and AT&T’s It’s Not Complicated series, which uses kids’ imaginations to turn boring brand attributes into pure fun.

Interestingly, online e-commerce businesses like KEEP, are bypassing advertising altogether and simply delivering thousands of products for consumers to buy and share.

So then comes the question can any brand create content? The answer is a flat No. Not all brands have the legitimacy to create content. They need to have both a point of view that carries throughout all the brand’s actions and audience respect for that point of view.

The big question about unbranded content, i.e., pure news, or journalism, is the business model. Originally, this relied on the monopoly of news media, which enabled content scarcity and exclusivity. Gone! Today, we have content abundance and ubiquity. One requirement has never changed: relevance to viewer/user interests and needs. So traditional media, like Time Inc.’s magazines, aim to serve both consumers and advertisers by delivering targeted niche audiences to advertisers and targeted content to those audience segments.

What TheBlaze is attempting carries this one step further, developing special content products appropriate to specific advertiser messages and also relevant to TheBlaze audience.

What’s the future business model for journalism? No one knows. But probably a hybrid of subscription fees and advertising with quite probably some commerce as well!

Extreme Customer Development

Staying ahead of the curve. That’s the challenge in the Innovation Economy, where knowledge, technology, entrepreneurship and innovation are at the center of the model, driving growth. It’s also the only possible basis for sustainable differentiation in a time of accelerated change – and commoditization. Without it, you’re just another me-too company. With it, you have a chance – if you play the rest of the cards right – to win big.

For start-ups, the No. 1 secret for this, according to Promod Haque, Senior Managing Partner, Norwest Venture Partners, is bringing product marketing and product development together from Day 1. It’s not that difficult to build anything, he said in an interview at a recent TiE event. The right engineer can do it. But does anyone care? Is the market large enough?

Even beyond this, the company needs a top sales person who can give the new business access to, say, 50 customers in three months in an effort to validate the product from the customer perspective –or pivot if, in the end, that’s what you learn is needed from customers.

The No. 2 Haque secret is to network your way to people who understand your industry, get to know them, not just meet them, build relationships, seek real feedback and take it seriously. Many people learn from their own mistakes but the smart ones learn from mistakes others make as well!

So, how does a penniless start-up compensate a strategic marketing person – and that’s what we’re talking about here, not marketing communications? Haque’s suggestion is to find the right consultant, put them on an advisory board and compensate them with options that vest at intervals.

If you’re familiar with Steve Blank’s customer development process, endorsed by Eric Ries as part of his lean start-up approach, you’ll notice striking parallels. Steve’s “4 epiphanies” of customer discovery, customer validation, customer creation and company building fit right in. But here’s the thing. The Haque approach is extreme customer development because it combines marketing and product development at the outset. Not something many engineers will be comfortable with – and some will fail as a result – but probably essential in today’s environment if you want to stay ahead of the curve.