The Game

The name of The Game is… Consumer Services.
The object of The Game is… a revenue stream of Rs. 1 crore (~ $250,000) per year.

All you need to do is find something which

  1. 40 people pay 250,000 per year (forget it)
  2. 400 people pay 25,000 per year (schools, daycares, tuitions, vocational education)
  3. 850 people pay 12,000 per year (the psychological 1,000 per month mark, telecom, internet)
  4. 4000 people pay 2,500 per year (250 per month. Almost lost in the noise.)

A good place to play is somewhere between 3 and 4.

Now I’ll make the game simpler, to avoid the “oh-we-don’t-know-what-customers-want” song. You now have a large enough peer group of IT professionals who think sufficiently like you, so you should not have problems empathizing with their needs. They constitute a big enough TAM (total addressable market, as we business gurus call it) to easily hit 3 and 4, even if you restrict yourself to one city, even to just 2-3 companies! IT folks also have sufficient money sloshing around in their pockets and are more willing to spend.

Here is one example.

The gas stove cleaning scam: Clean-cut chap comes to your house and says, you sign up for this service, pay this small amount in advance and we’ll come clean your gas stove every month. You pay up and get a yellow cleaning schedule card. You never see the guy again. Although it’s a scam, it has some points of interest which can be usefully emulated.

  1. It picks an activity which you know you should be doing, but don’t (and therefore have some guilt)
  2. It appeals to your laziness by coming to your house, doing a “professional” job and charging a modest fee which you don’t mind. No action is required on your part.
  3. Even if something goes wrong, you don’t get very upset because the amount involved is not large.

And here is a more realistic example.

Door-step backup: You go to people’s houses once in a quarter. Backup their entire machine (for bare metal restore) or part of it (user-generated data, photos, home videos, etc). See how it maps to the gas-stove principles:

  1. Nobody ever backs up of their home machines, but it’s always at the back of their minds and they always feel guilty about not doing it. Regular backup requires discipline and few folks are organized enough to do it. Like insurance salesmen, it’s easy to give a stern lecture about your responsibilities for backing up your priceless photos, “If… God forbid… some virus wiped your disk…” etc.
  2. Appeal to laziness. Someone comes to your house to do it. You don’t even need to install software or visit a website. This is particularly appealing to the Mom-and-Pop demographic.
  3. The charges are small enough that people won’t get very upset when they realize that you only promised backup and nothing about restore 🙂

Some optional extras:

  1. Privacy option: Give the customer a shiny key and assure them that without the key, nothing can be read from their backups and he is hereby charged with keeping the key safe. Gives him a feeling of responsibility and control.
  2. Online archival, incremental backup/restore option with Amazon S3. See http://www.jungledisk.com/ and http://www.codinghorror.com/blog/archives/000808.html
  3. Physical copy of his backup, in DVDs.

Other details

  1. You could partner with someone who already has the “last mile” connectivity i.e. someone who has the infrastructure to go to people’s places, collect bills, with basic computer skills, etc. One example is a local ISP. Your value add is to come up with a simple, fool-proof (well, as much as possible) backup architecture and the software to implement it.
  2. Graceful exit possible – just give everyone their backup copies in physical form, say ta-ta.

FAQ

  1. Why services? I have this brilliant product idea…
    • Product ideas are difficult to germinate, very risky (especially financial, unless you can con a VC) Services are lower risk. That’s why most of Indian IT is in Services.
    • The idea is, in fact, not to do product innovation, but to integrate well-known, well-understood pieces of technology and create a workflow which can be run and managed with relatively low-cost manpower.
    • Subscription-based services, if done even half-decently, tend to be very sticky, again because of the laziness factor. People are too lazy to even cancel unless you provide some serious negative value. This results in a much more assured and steady revenue stream.
    • Once you’ve built critical mass, you can just float without having to continuously search for new customers, because every customer gives periodic and continuous revenue.
  2. This is a very different ball game, need to recruit a different set of people…
    • Hiring is actually easier for such services. You don’t need the high-skill, expensive, flighty talent which is required for product development.
    • Or simply build the infrastructure for the service, partner with someone who already has the ability to deliver the service to the last mile.
  3. Why not a web-only service?
    • Sure. The main appeal of a web-only approach is the elimination of the physical last-mile connectivity requirement. Bookeazy is an excellent local example. But there are many services which, by their nature, need last-mile connectivity. Also, certain web-only services may have too low a barrier to entry, making it difficult to distinguish yourself from the herd.
Advertisements

2 responses to “The Game

  1. Dude, you are reading my mind. I made up almost exactly such a post for my Intranet blog, visualizing various ways to get to $1 Billion in new revenue. In particular, I was getting at the fact that while you can easily brainstorm hundreds of realistic ideas for the $1 million range, thinking up billion dollar ideas that aren’t silly is really really hard.

    And yup, totally right on products vs. services, a conundrum my company is figuring out right now (I’ve bet my career on services).

  2. This was partly inspired by a great talk on C.K. Prahalad’s The Fortune At The Bottom Of the Pyramid.

    Mobile phones provide a great way to tap into the pockets of the bottom of the pyramid. Once mobile service providers create a platform to enable third parties to use their infrastructure to provide services and collect money, we should see some “killer” apps.
    This is one place where pearls of great price await the smart entrepreneur.

    SMS and WAP-based services exist today, but I’m not overly excited about any of them.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s