Abhinav Agarwal

Amazon Launches Prime Music in India. What It Means for the Indian e-commerce Market
O
n a day when it was reported that the online streaming music app Gaana was raising $115 million (about ₹750 crores) from Chinese Internet investment company Tencent Holdings Ltd and Times Internet Ltd (Gaana to raise $115 million from Tencent, Times Internet – Livemint), came the news that online retailer Amazon had launched its PrimeMusic streaming music service in India.

According to Amazon, “Prime Music provides unlimited, ad-free access to on-demand streaming of curated playlists and stations, plus millions of songs and albums at no additional cost for eligible Amazon Prime members.”

The Amazon Prime service in India costs ₹999 annually and provides “free One-Day, Two-Day and Standard Delivery on eligible items”, PrimeVideo – Amazon’s video streaming service, and now PrimeMusic. According to Midis Research, Amazon had become the third-largest music subscription service globally, behind Spotify (40%) and Apple Music (19%).


I gave the PrimeMusic service a spin, and after two days of trying it out, I came away reasonably impressed. If you are already a subscriber to Amazon’s Prime service, you don’t need to do anything more than downloading the PrimeMusic app (available on most mobile operating systems, including iOS and Android). The service is also available on web browsers. The selection is impressive, and the curated lists are fairly comprehensive. For someone like me who has a preference for older Hindi soundtracks and likes listening to Mohd Rafi, I was pleasantly surprised to find a broad array of choices at my disposal. I can create my own playlists, listen to curated playlists, or listen all day long to stations. I spent all Sunday streaming songs from the service to my speakers. The service restricts streaming on only one device at a time, however. For morning listening, there is an acceptable, though not comprehensive, selection of devotional songs. The price too is right. Where that leaves other services like Gaana, Saavn, Wynk, Hungama, and others remains to be seen. The future does not look very promising, to be frank. But more on this later.

From a first look, the Amazon PrimeMusic service seems to have hit the ground running.
Flashback - Flipkart First and FlyteFlipkart First graphicIt is worth noting that it was in May 2014 that Flipkart had launched Flipkart First, a membership program patterned on Amazon Prime, which cost ₹500 a year, and which promised “Free shipping on your orders*“, “in a day” delivery for most products, and “Discounted same day delivery*“. In the more than three years since its launch, Flipkart has not added any new benefits to its First program. It was more than two years after Flipkart First’s launch that Amazon launched its Prime service in India (see my article). At the time, I had remarked on the lack of focus on Flipkart’s part to promote its FlipkartFirst service.
“But for reasons best known to Flipkart, after an initial flurry of promotion and advertising, including a three-month giveaway to 75000 customers, Flipkart did not seem to pursue it with any sort of vigor. Customers complained of many products being excluded from Flipkart First, and in the absence of any sustained campaign to make customers aware of the programme, it has slowly faded from memory. … Worse, there was a news story on July 20th about Flipkart planning to launch a programme called “F-Assured”, as a replacement to Flipkart Advantage. The story suggested that the launch of F-Assured was also meant to “preempts the launch of Amazon Prime” — something that did not come to pass.”It, therefore, came as no surprise when there were news reports in late 2017 of Flipkart looking to “relaunch” its Flipkart First program in collaboration with other e-commerce vendors and startups like MakeMyTrip, Ola, and BookMyShow (article in Mint and Economic Times). The article also mentioned that Flipkart “lost focus in making it work. Customers didn’t take to it and the service fizzled out.”

Contrast this with Amazon’s focus on making its Prime program a success. So much so that this is what Amazon founder and CEO Jeff Bezos had to say in his annual letter to shareholders in 2015:
“AWS, Marketplace and Prime are all examples of bold bets at Amazon that worked, and we’re fortunate to have those three big pillars.”It is not as if Flipkart had not ventured into the music business. In Feb 2012, it had launched its online music store, Flyte, and in June 2013 shuttered it. I wrote about it in my article in DNA in 2015. According to one website, the reasons for Flyte being shut down were several, from poor marketing support, digital piracy, low revenues, and more.
“Flyte, with low revenues and low growth, remained a low priority business, and it never got the marketing support needed to push for an increase in sales. A couple of people we spoke with repeatedly emphasized the lack of marketing support as a key reason for Flyte’s lack of success – Flyte built traction almost entirely on word of mouth, while the physical goods business got all the marketing spends.”Second, the financial reasons for which Flipkart shut down Flyte, even if true, defy belief. For a company that had raised thousands of crores of rupees (billions of dollars) in funding, persisting with a new and promising line of business that would burn a hole of a few million dollars a year should have been a no-brainer. Except, that it wasn’t.
"Flyte Music had struck deals for India based music downloads on web and app by paying music labels an aggregate minimum guarantee (MG) of around $1 million (Rs 5.5-6 crores) for the year, multiple sources told MediaNama. … Revenues from song downloads were fairly low – not even 50% of the minimum guarantee amount (only around Rs 2-3 crore is what we heard), and the ARPU was around Rs 9-12 per user, which made it difficult to justify the minimum guarantee, and any significant customer acquisition costs." [Medianama article]One can only speculate what Flipkart’s competitive response would have been had it not prematurely abandoned its foray into digital music.
The Battle-lines and the BattlegroundMore pertinently, what seems to be clear is that Amazon is betting heavily on India. Having lost the race in China, it has pulled out all stops to turn its India operations into the market leader in the country. According to this article, Alibaba had a 51% market share, while Amazon had less than 1%. Clearly, India is a market Amazon can ill-afford to lose.


The battle for space on the consumer’s smartphone screen is also one of numbers. On this dimension, Flipkart has but one app in its arsenal – its shopping app. The second app is the “Flipkart Seller Hub”.
Flipkart apps on AndroidOn the other hand, Amazon has a formidable presence that allows it to land-and-expand: its shopping app, Music, Prime Video, Now (for hyperlocal grocery shopping), Kindle, Drive, Assistant, Photos, Fire TV, Go, Alexa, and more. In all but the shopping space, Flipkart is more of an out-of-sight-out-of-mind case.

Amazon apps on AndroidPeople may remember that it was in November 2015 that Flipkart had launched, on an experimental basis, its hyperlocal grocery delivery app, Flipkart Nearby. It was a smart and timely competitive, pre-emptive move against Amazon. Unfortunately, even that was shut down a short few months later in 2016 as Flipkart doubled down on clamping down on its bleeding bottom-line.

But this is only one half of the picture. To understand the other half, it is important to look at the entities that have been funding Flipkart in recent times. According to website Crunchbase, Flipkart saw investments from eBay, Microsoft, Tencent, and Softbank to the tune of $2.5 billion in its last funding round. According to online news site Recode, Flipkart is the largest e-commerce investment Softbank has made from its $100 billion fund. Furthermore, there have been persistent rumours that brick-and-mortal behemoth Walmart has been looking to invest in Flipkart. As recently as January 2018, there were several news stories that talked about the possibility of Walmart acquiring a 20% stake in Flipkart at valuations that could touch $20 billion. To put that in perspective, Walmart’s biggest acquisition to date was its purchase of online e-commerce site Jet.com in August 2016 for $3 billion in cash and $300 million in Walmart shares. Jet.com had been founded by Marc Lore, who had earlier been a co-founder of Quidsi, the company behind the website Diapers.com, and which had a very bruising battle with Amazon a decade back. This is another fascinating story that I mentioned in my article here.
ConclusionAll this points to one inescapable conclusion – the battle in India for e-commerce market leadership is no longer between just Amazon and Flipkart. On one side you have Amazon with its relentless focus on execution and remarkable track record of having won many more battles than it has lost. On the other side, you have Flipkart that is now backed not only by billions of dollars in fresh funding, but also a diverse array of interests like Tencent, Alibaba, Microsoft, eBay, Softbank, and possibly even Walmart. These entities seem to be bound by their unanimous need to put all their wood behind the arrow that is Flipkart. This is no longer about investing in the Indian e-commerce market to get a hefty multiple on their investments. It is now looking more and more like the OK Corral where the final shootout will take place. Place your bets on who will come out of this scrap as Wyatt Earp.

This article first appeared in OpIndia on March 7th, 2018.
This was also cross-posted on my personal blog.

The Fortune 500 Companies 2018 rankings came out last week, and browsing the list, the following random thoughts struck me about the list and the technology industry:

• Walmart - you can be in a very, very traditional brick-and-mortar business (yes, they have been making inroads into e-commerce, but for the most part, Walmart is a traditional retailer), but as long as you keep doing things well, you can be in the top 10. Not only that, you can be the top-ranked company by revenues for a sixth year in a row. In this case, you can be numero uno, with annual revenues that top five-hundred billion dollars - $500 billion, be more than twice the size of the second-ranked company (Exxon-Mobile is ranked second, with annual revenues of $244B), and also employ the second-most number of employers (2.3 million).
• Apple - you can be a mass-market luxury brand (yes, that is a contradiction in terms), sell only a handful of products (its Mac, iPhone, and iPad product lines bring in 79% of its revenues) and be in the top 10 - ranked fourth. You will also get to make the profits of any company - $48 billion. You also get to be the most highly valued company - at $922 billion.
• Amazon - you can sell almost everything under the sun, sell it almost all online (its foray into physical stores and its acquisition of Whole Foods notwithstanding), employ the most employers of any company in America, be a $100 billion plus company, yet grow revenues by more than thirty per-cent (to $177 billion), and crack the top 10 - ranked eighth. You also get to be the second-most highly valued company on earth, at $765 billion.
• Netflix: you do only one thing: in this case, streaming video content on-demand and producing your own content, almost triple your profits (199% jump year-on-year), not be in the top 200, and yet deliver the best 10-year returns to shareholders (48%, annualized!) 
• The top five most valuable companies on the list are all technology companies - Apple, Amazon, Alphabet (the parent company of Google), Microsoft, and Facebook.

This is an expanded version of my LinkedIn post.

© 2018, Abhinav Agarwal. All rights reserved.

On a pleasant Saturday morning in January, Prakash Kadham and I conducted a one-day workshop, "Introduction to Big Data & Analytics". As the name suggests, it was a breadth-oriented introduction to the world of Big Data and the landscape of technologies, tools, platforms, distributions, and business use-cases in the brave new world of big data.

We started out by talking about the need for analytics in general, the kinds of questions analytics - also known as business intelligence sometimes - is supposed answer, and how most analytics platforms used to look like at the beginning of the decade. We then moved to what changed this decade, and the growth of data volumes, the velocity of data generation, and the increasing variety of data that rendered traditional means of data ingestion and analysis inadequate.

A fun game with cards turned out to be an ideal way to introduce the participants to the concepts behind MapReduce, the fundamental paradigm behind the processing and ingestion of massive amounts of data. After all the slides and illustrations of MapReduce, we threw in a curve-ball to the participants by telling them that some companies, like Google, had started to move away from MapReduce since it was deemed unsuitable for data volumes greater than petabyte!

The proliferation of Apache projects in almost every sphere of the Hadoop ecosystem meant that there are many, many choices for the big data engineer to choose from. Just on the subject of data ingestion, there is Apache Flume, Apache Sqoop, Apache Kafka, Apache Samza, Apache NiFi, and many others. Or take databases, where you have columnar, noSQL, document-oriented, graph databases to choose from, each optimized for slightly different use-cases - Hbase (the granddaddy of of noSQL databases), Cassandra (that took birth at Facebook), MongoDB (most suited for documents), Neo4j (a graph database), and so on.

Working through a case-study helps bring theory closer to practice, and the participants got to work on just that - two case-studies, one in the retail segment and the other in healthcare. Coming off the slides and lectures, the participants dove into the case-studies with enthusiasm and high-decibel interactions among all the participants.

The day passed off fast enough and we ended the day with a small visualization exercise, using the popular tool, Tableau. At the end of the long but productive day, the participants had one last task to complete - fill out a feedback form, which contained six objective questions and three free-form ones. It was hugely gratifying that all but one filled out the questionnaire. After the group photo and the workshop was formally over, Prakash and I took a look at the survey questionnaire that the participants had filled out, and did a quick, back-of-the-envelope NPS (Net Promoter Score) calculation. We rechecked our calculations and found we had managed an NPS of 100!

The suggestions we received have been most useful, and we are now working to incorporate the suggestions in the workshop. Among the suggestions was for us to hold a more advanced, Level 200, workshop. That remains our second goal!

Thank you to all the participants who took time out to spend an entire Saturday with us, for their active and enthusiastic participation, and to the valuable feedback they shared with us! A most encouraging start to 2018!

This post was first published on LinkedIn on Feb 5, 2018.
© 2018, Abhinav Agarwal.

C

orporate sagas seem to come in twos. The mega-fracas that erupted in 2016 between Cyrus Mistry, then Chairman of Tata Sons, and the iconic Ratan Tata, Chairman Emeritus at Tata Sons,  was starting to come to a close by the second half of 2017 (though I fear the last words have yet to be written). Ratan Tata had annointed N Chandrasekaran, CEO of TCS, as thew Chairman of Tata Sons, and re-asserted his complete control over the sprawling Tata empire. Now comes the rather unexpected news that Vishal Sikka (@vsikka), CEO and MD of Indian IT behemoth Infosys, had tendered in his resignation, apparently unable to tolerate any longer the constant "drumbeat of distractions" from co-founder Mr. NRN Murthy, and, some speculated, a lack of support from some members of the Infosys Board itself.
— Bloomberg Technology (@technology) August 18, 2017In particular, this is what Vishal Sikka wrote in his letter to the Board:
"Over the last many months and quarters, we have all been besieged by false, baseless, malicious and increasingly personal attacks. Allegations that have been repeatedly proven false and baseless by multiple, independent investigations. But despite this, the attacks continue, and worse still, amplified by the very people from whom we all expected the most steadfast support in this great transformation." [link]In this perhaps altogether avoidable saga, no one has come out smelling of roses - not the Infosys board, not Vishal Sikka, and not Mr Murthy.
A Retrospect for Vishal Sikkaimage credit: pexels.comLet me start off by revisiting what I had written in 2014 - "A 'Vishal' opportunity awaits Infosys" - at the time of Mr Sikka's appointment as CEO and MD of Infosys.To summarize, I had made the following points:
Was Sikka a "trophy CEO"? I had written, "There will be more than one voice heard whispering that Sikka's appointment is more of a publicity gimmick meant to save face for its iconic co-founder, Narayan Murthy, who has been unable to right the floundering ship of the software services giant." This is still a pertinent question. Once the excitement of the "trophy CEO" wore out, did Mr Murthy's interest in Vishal Sikka also wane? Conversely, once the excitement of the CEO's crown wore off for Mr Sikka, did the thorns of leading and growing a company, with close to two-hundred thousand employees, in a difficult business environment, start to prick?

R
emember Chuck Noland? The character in the movie Castaway, who has to use the blade of an ice-skate to extract his abscessed tooth, without anesthesia? The scene is painful to watch, yet you can't look away.

Interviews have this habit of turning up a Chuck Noland - in the interviewee or the interviewer. You willingly agree to subject yourself to the wanton abuse by random strangers who you may have to end up working for or with. Apart from the talented few whom companies are more eager to hire than they are to get hired, most are in less enviable positions.

What about interviewers? Not all are cut from the same cloth. But there are at least six types that I think we have all met in our lives, and a seventh one.
1. The Interview As an End In Itself - Hyper-excited newbieYou know this guy. You have been this person, most likely. You have a team now. You expect your team to grow. You have to build a team. You believe that you, and you alone, know what it takes to hire the absolutely best person for the opening you have.
You sit down and explain to the harried hiring HR person what the role is, what qualifications you are looking for, why the job is special, why just ordinary programming skills in ordinary programming languages will simply not cut it, why you as the hiring manager are special, and how you will, with the new hire, change the product, the company, and eventually the whole wide world. The HR executive therefore needs to spend every waking minute of her time in the pursuance of this nobler than noble objective. You badger your hiring rep incessantly, by phone, by IM, by email, in person, several times a day, asking for better resumes if you are getting many, and more if you aren't getting enough.
You read every single resume you get, several times over. You redline the points you don't like. You redline the points you like. You make notes on the resumes. You still talk to every single candidate. You continue interviewing, never selecting, till the economic climate changes and the vacancy is no longer available.
Yes, we all know this person.
2. Knows what he is looking for and knows when he finds itThis person is a somewhat rare commodity. This person does not suffer from buyer's remorse, knows that there is no such thing as a perfect candidate, and that the best he can hope to get is a person who comes off as reasonably intelligent, hard-working, ethical, and is going to be a team player.

This person will however also suffer from blind spots. Specifically, two kinds of blindspots. The first is that he will look for and evaluate a person only on those criteria that he can assess best. The second is that he is more likely to hire candidates that are similar to other successful employees in his team, and will probably become less likely to take chances on a different type of a candidate. On the other hand, this manager also knows that conceptual skills are more important to test than specific knowledge of some arcane syntax in a geeky programming language - if you are talking of the world of software for instance.
This person is a rare commodity.
3. Hire for EmpireLike our previous type of hiring manager, this hiring manager is also very clear-headed.  But, here the interviewer is hiring to add headcount to his team. Grow the empire. More people equates to more perceived power. This person understands three things, and understands them perfectly.
First, that if he is slow in hiring, then a hiring freeze may come in, and the headcount may no longer stay open.
Second, he (or she) is also unable and equally unwilling to evaluate a candidate, so just about anyone will do.
Third, and most importantly, this manager knows that every additional person reporting to him on the organization chart elevates him in importance vis-a-vis his peers, and therefore hiring is a goal noble enough to be pursued in its own right.
It's a win-win situation for everyone - except the customers, the company, and the team.
4. I have other work to do. What am I doing here? What is he doing here?This person has little skin in the game. He has no dog in the fight. Pick your metaphor. He is there to take the interview because of someone's absence, or because in the charade of the interview "process" that exists at many companies, there exists a need to do this interview. The interviewer agrees because it is a tax that needs to be paid. You don't want to be labeled a non-team-player. Who knows when this Scarlet Letter may come to haunt you. So our interviewer sets aside half an hour or more, preferably less, of his time, and comes back wondering where thirty minutes of his life just went. That question remains unanswered.
5. Know-it-all and desperate to show itThis person perceived himself as an overachiever. This is the sort of person who will tell you with casual nonchalance that he had predicted the rise of Google in 1999  - just so you can get to know that he had heard of Google in 1999. This person knows he knows everything that there is to know, that it is his beholden duty to make you know it too, and it is your beholden duty to acknowledge this crushing sacerdotal burden he carries. This is the person who will begin the interview with a smirk, sustain a a wry smile, transform into a frown, and end with an exaggerated sense of self-importance.
Do not get fooled.
This person is as desperate, if not more, to interview you as you are to do well on the interview. He will in all likelihood end up talking more than the interviewee.
In every group in every department of every company there exists at least one such person. The successful companies have no more than one.
6. The rubber-stampThe boss has decided the person who needs to be hired. The charade needs to be completed. The requisite number of people have to interview the candidate so that HR can dot the "I"s and cross the "T"s. Our interviewer here has to speak with this person. With an air of deference. He will ask all the right questions, but the answers do not matter. You sign off with a heartfelt, "Great talking to you. Thanks a ton for your time. Take care, and we really look forward to working with/for you." No, don't belittle this rubber-stamp. He could be you.

These are not mutually exclusive sets. There are overlaps that exist, sometimes in combinations that would warm Stephen King's heart.

Oh, what about the seventh type of interviewer? He is the Interviewer as Saboteur.  I will talk about him in a separate post.

This post appeared on LinkedIn on July 31st, 2017.
This is an edited version of a post I wrote on April 23rd, 2013.

© 2017, Abhinav Agarwal. All rights reserved.

Image credit: pexels.comIn late 2015, several news sites, including the Economic Times, posted extensive photos of Flipkart's new office at the Cessna Business Park in Bengaluru. A cursory look at the office, as revealed by the photos, told a story of a no-expenses spared philosophy at work. Each floor had a "theme inspired by human greatness in various fields – science, sports, fashion, music". Hallways were designed to resemble running tracks, with the Olympic logo emblazoned prominently.





Images credit: Economic TimesBy 2016, Flipkart's numerous missteps had only compounded its woes in the face of an unrelenting foe in the form of a rampaging Amazon. In November 2016, therefore, the news came as no surprise that that Flipkart had decided to forego almost half of the office space it had signed up for a year ago. Instead of the two-million square feet, the company wanted no more than 1.2 million sq-ft. In addition, it had negotiated lowered fitment costs from ₹2400 to ₹1500 per sq-ft.

Juxtapositions are meant to contrast. They can also be cruel. 
Like when it was reported in Jan 2017 that Amazon had leased more than one million sq ft of office space in India in 2016. That Amazon had leased more office space in 2015 than it had in all its previous years of presence in India. That it was reported in June 2017 that Amazon had leased 600,000 sq ft of office space in Hyderabad.

On top of this juxtaposition, let's add a dash of irony. Both of Flipkart's founders, Sachin Bansal and Binny Bansal, had worked at Amazon before leaving to start Flipkart. Jeff Bezos' mantra of frugality had either never been learned, or had perhaps been buried under the billions of investor money.

Since we are talking about contrasts, let me end with one more. In September 2016, it was reported that Flipkart was planning to cut its staff by 800, on top of 400 "performance-related" exits in July. In May 2016, it communicated to India's premier management institutes - Indian Institutes of Management at Ahmedabad, Bangalore, Lucknow, and the Faculty of Management Studies, Delhi - that it would defer the joining dates of students it had made job offers to by six months. In response, "The authorities at IIM-A have sent a strongly worded letter to Flipkart, marking other premier B-schools such as IIM-Bangalore, IIM-Lucknow and the Faculty of Management Studies, Delhi."

 What about Amazon? The company, in a press-release in January 2017, announced that it would "Create More Than 100,000 New, Full-Time, Full-Benefit Jobs across the U.S. over the Next 18 Months."

What's the takeaway? That companies need to beware the curse of the new headquarters? Or that founders need to focus on companies that can stand on their own feet? That CEOs need to focus on execution? That boards and investors cannot function as absentee landlords?

[I have written at length on this fascinating slugfest. When I read about and witnessed its mobile-only obsession I had called it a dangerous distraction, not to mention a revenue chimera and a privacy nightmare. I warned that Flipkart was making a mistake, a big mistake, in taking its eye off the ball in competing against Amazon, using a cricket analogy that should have been familiar to the Indian founders. I wrote about how hubris-driven million-dollar hires had resulted in billion dollar erosions in valuations. I wrote about what had become an ever-revolving door of executive exits at Flipkart. I wrote about brand management snafus at Flipkart.]
© 2017, Abhinav Agarwal. All rights reserved.

L
inkedIn began as a professional networking site, has evolved into a social media behemoth, and has yet managed to maintain and sharpen its focus on the professional space. That may, in part, explain why, in 2016, Microsoft chose to put down more than $26 billion Washingtons to buy LinkedIn.
© 2017, Abhinav Agarwal. All rights reserved.

This article first appeared in LinkedIn Pulse on May 2nd, 2017.

© 2017, Abhinav Agarwal All rights reserved.

I first published this in LinkedIn Pulse on April 1, 2017.

© 2017, Abhinav Agarwal.

O
n the 27th of June, 2016, Amazon launched the first of its first AWS (Amazon Web Services) data centers in India, in Mumbai.

Amazon India announcing the launch of Prime (July 26, 2016) Less than a month later, on the 26th of July, 2016, Amazon launched Amazon Prime in India. After a free, trial period of 60 days, customers would be able to sign up for what it calls a “special, introductory price” of ₹499 a year. Prime Video was not included in Prime at the time of launch.






 comScore chart showing Amazon as leading e-commerce site (Dec 2015)e-mail from Amazon founder Jeff Bezos (December 2015)This is a significant, though not unexpected, step by Amazon India in its battle to gain primacy in the Indian e-commerce space. In Dec 2015, it announced that it had become the “most visited e-commerce site in India”, and offered a gift card worth ₹200 for customers (with some terms and conditions). It was also in some ways a sleight of hand since it did not include visitors via mobile apps. That also changed in July 2016 when an app data tracker stated that Amazon had become the most downloaded app on the Google and Apple app stores in India.

Amazon India website (July 26, 2016)Flipkart had launched its version of Amazon Prime in May 2014. Called “Flipkart First”, it also was available for an annual price of ₹500. But for reasons best known to Flipkart, after an initial flurry of promotion and advertising, including a three-month giveaway to 75000 customers, Flipkart did not seem to pursue it with any sort of vigor. Customers complained of many products being excluded from Flipkart First, and in the absence of any sustained campaign to make customers aware of the programme, it has slowly faded from memory. Flipkart also has not shared any numbers in some time about the subscriber base and growth of Flipkart First. Worse, there was a news story on July 20th about Flipkart planning to launch a programme called “F-Assured”, as a replacement to Flipkart Advantage. The story suggested that the launch of F-Assured was also meant to “preempts the launch of Amazon Prime” — something that did not come to pass.

Unlike Prime, which Amazon founder Jeff Bezos called one of the three bold bets Amazon had made (“AWS, Marketplace and Prime are all examples of bold bets at Amazon that worked” — is what Bezos wrote in a letter to shareholders), Flipkart has let First become yet one of many initiatives it has launched and failed to pursue with any meaningful degree of commitment or focus.

AWS, Marketplace and Prime are all examples of bold bets at Amazon that worked, and we’re fortunate to have those three big pillars. They have helped us grow into a large company, and there are certain things that only large companies can do. [Jeff Bezos, letter to shareholder, 2016]

"Flipkart First" emailer, 2014Flipkart launched its e-book store, Flyte, in November 2012, almost a year before Amazon launched operations in India and more than a year before Amazon launched Kindle in India. Yet, Flipkart shuttered its e-book store in late 2015, citing e-books as not “a strategic fit.” The same was the story with its digital music business, which it started in 2012, and shuttered in June 2013.


I had written more than a year back that Flipkart seemed to be losing focus, that it needed to beware of Amazon, who I called “The Whispering Death” (an allusion to the great West Indian fast bowler, Michael Holding), and even suggested what it needed to do. Cloud computing was one advice.

Amazon India Prime Announcement on the upcoming launch of Video (July 26, 2016)Flipkart continues to lose in its battle against Amazon. It has suffered a steep erosion in its valuations, Amazon is gaining market share faster than Flipkart, and now even the battle of perceptions is being won by Amazon. Flipkart seems to have fallen into a predictable pattern of making a series of flashy announcements, and not following up to make any of them a success.


After publishing this, later that day came news that Flipkart-owned fashion e-tailer Myntra had agreed to buy Jabong in an all-cash deal for $70 million. Jabong had been valued at over $500 million in 2013.

T
he contrast could not have been more striking, or poignant.
2017 began on a sombre note for Flipkart, when it announced on the 9th of Jan that Kalyan Krishnamurthy had been named CEO, and its current CEO Binny Bansal would become group CEO. It was the Indian e-commerce startup's third CEO in less than one year.
Three days later, on the 12th, Amazon let it be known via a press release that it intended "to grow its full-time U.S.-based workforce from 180,000 in 2016 to over 280,000 by mid-2018." To let that sink in, Amazon, already a company with a 180,000 employees in the US, would add another hundred-thousand full-time employees in eighteen months. Media was all over the news.

The battle for dominance of the Indian e-commerce market continues well into its third year. For all practical purposes this battle began in earnest only after Amazon entered India in 2013, and since then it has transformed into a brutal, no-holds barred, fifteen-round slugfest between Flipkart and Amazon. Yes, there is SnapDeal that is entering its end-game (there are talks of a merger between Paytm's marketplace and SnapDeal and of senior-level exits amidst rumours of a cash-crunch), there is ShopClues that has had to defer its IPO plans, and an e-commerce tragedy by the name of IndiaPlaza that was among the earliest e-commerce entities, which survived the dot-com bust of 2001, and yet folded up in a most ignominious manner. Ever since Amazon entered India in 2013, it notched up one success after another against the Indian behemoth, Flipkart. Flipkart went from strength to strength when it came to valuations even as it reeled from one blow to another in the market. Flipkart's party finally entered its long-expected yet still-painful endgame in 2016. For Amazon the costs have been equally staggering - billions of dollars sunk into its Indian operations, promises of billions more to be spent, break-even years and years away, and almost every last penny of profits from its parent company being shoveled into its Indian outpost.

Running Circles Around The Revolving Door
[Image credit: http://www.thefiscaltimes.com]People are a company's most valuable asset, so companies say. Companies more often than not think differently. More often than not, companies do not simply know who a good hire is, how an organizational culture of excellence is built upon the right employees, and that throwing money gets you expensive employees, not necessarily the right employees.

In Flipkart's case, the intent was certainly right. Shortly after it closed $1M in Series A funding in Oct 2009 and $10M in June 2010 (worth about ₹50 crores at then exchange rates), they went after hiring talent in earnest. It was not a success, to put it mildly.

"Vasudha Mangalam came in from a technology company to eventually lead HR. Vipul Bathwal, a 2008 IIM Ahmedabad graduate, came on board to identify newer categories. Satyarth Priyedarshi, a former head of merchandising for the Borders bookstore chain in Dubai, was roped in to head buying and merchandising. Tapan Kumar Das, the erstwhile finance head at venture-funded salon chain YLG, joined as VP, finance, along with Anupama Sharma, a Stanford Business School graduate who would lead marketing. Within a year, all five quit." [Can Flipkart Deliver? - Forbes, Jul 6, 2012]

It is not as if the initial exodus of high-profile talent was an aberration. The spectacle of people hired into senior management positions leaving within a year or two, or being sidelined, was a regular feature in the theater that was Flipkart - Sanjay Baweja as CFO, Punit Soni as Chief Product Officer, former Myntra head Mukesh Bansal, Anand KV as head of Customer Experience, private-label head Mausam Bhatt, Sharat Singh as engineering head for its Digital Marketing Cloud, Rajinder Sharma as Legal head, Ankit Nagori as Chief Business Officer, Manish Maheshwari as head of seller marketplace, Joy Bandekar as corporate president, Saran Chatterjee as VP of Product Management, Anurag Dod, Sameer Nigam, and more - the average tenure of senior executives at Flipkart was estimated to be as low as 11 months.

What was worse was that there was no unanimity in the hiring of these senior executives. Take the case of Puneet Soni, the high-profile hire Flipkart brought on board in 2015 at a salary of $1 million dollars (more than 6 crore rupees at the then prevailing exchange rates). He was hired when Sachin Bansal was the CEO. In Jan 2016, Binny Bansal took over as the CEO. Within three months, Puneet Soni had left the company, and was replaced by Surojit Chatterjee as Senior Vice President of Product Management. Less than a year later, in Jan 2017, Kalyan Krishnamurthy became Flipkart's third CEO. This was followed by the exits of Surojit Chatterjee, Saikiran Krishnamurthy, head of Ekart, and Samardeep Subandh, chief marketing officer.

This seemed to suggest that senior executives' tenure was linked not to their performance but to the top man at Flipkart - whoever that may have been. It is not unsurprising for CEOs to want people they know and trust to be in key roles, but in the case of Flipkart, it would have been expected that any senior hire would have had the backing of both founders. Clearly, the exits proved that was not the case.

This steady exodus of senior executives should have set off alarm bells not only with the founders, but also at the board. Senior management exits at any company are not uncommon, but Flipkart was witnessing a flood of exits, a veritable revolving door that saw senior executives stay at the company for less than a year on average. Boards ignore such warning signs at their own peril. That neither the board nor the company's founders learned any lessons became clear by the parade of high-profile hires and high-profile exits that continued. A revolving door was an apt image and metaphor.

What could the founders and the board have done differently? Three things:
First, they should have recognized that they - the founders - may not necessarily have possessed the competence to make the right choices when hiring senior executives. The board should have brought experienced heads to consult with the founders. The investors were on the board. They were the ones who were putting in substantial amounts of money into a company that had not made a single paisa of profits in its existence. The investors had leverage and a fiduciary responsibility to guide the founders.

Second, Flipkart should have asked whether talent imported from Silicon Valley and transplanted to India would work? Was Flipkart, flush with investor money, going for trophy hiring?

Third, and most importantly, Flipkart - its founders and the board - should have identified the four critical areas to focus in their hiring process:

Hire functional experts - every successful enterprise is built on a successful division and specialization of labour. Logistics, marketing, analytics, customer service, customer experience, channel management are only some of the functional areas that Flipkart needed to grow in a sustainable and efficient manner. As I will show in the next post, its hires came up short in almost every single of these areas.

Flipkart: Million-Dollar Hiring Mistakes Translate Into Billion-Dollar Valuation Erosions

As the week drew to a close, a story that broke headlines in the world of Indian e-commerce was the departure of Flipkart’s Chief Product Officer, Punit Soni. Rumours had started swirling about Punit Soni’s impending exit since the beginning of the year (link), almost immediately after Mukesh Bansal had taken over from Binny Bansal as Flipkart’s CEO (link).

Punit Soni’s LinkedIn headlinePunit Soni was among a clutch of high-profile hires made by Flipkart in 2015, rumoured to have been paid a million dollar salary (amounting to 6.2 crores at then prevailing currency exchange rates — see this and this). This was in addition to any stock options he and other similar high-profile hires earned.
One decision that Punit Soni was most closely associated with was the neutering of Flipkart’s mobile-web execution, where he killed Flipkart’s mobile site, forcing users to download the app on smartphones. The mobile app itself was poorly designed, had a mostly unusable interface, and was riddled with bugs to the point of crashing every few minutes. I had written in detail on its mobile app’s state in 2015 (see this article in dna, or from my blog). At the time I had expressed my astonishment that Myntra, the fashion e-tailer that Flipkart acquired and which had gone app-only, had a mobile app that was NOT optimized for the iPad. The same was the story with the Flipkart app — no iPad-optimized app, but a “universal” app that ran on both the iPhone and iPad devices. Even today, the Flipkart iPad app does not support landscape-mode orientation, even as Amazon’s iPad app has grown from strength to strength.

A statement made by Punit Soni in 2015 revealed a disturbing focus with technology instead of the customer experience — “The Mindshare in the Company Is Going to Be App Only” (link) — a case of techno-solutionism if you will. At one point, there were strong rumours of Flipkart going app-only (link) — killing off its desktop website completely. I had written on this mobile-only obsession ( Mobile advertising and how the numbers game can be misleading, Mobile Apps: There’s Something (Profitable) About Your Privacy).
Suroji Chatterjee’s LinkedIn headlineIf hiring Punit Soni was a million-dollar mistake, or whether there was simply a mismatch of expectations between employee and employer, or whether Punit Soni’s exit the inevitable consequence of the favoured falling out of favor with the ascension of a new emperor, it does not appear as if Flipkart has learned any lessons. His replacement is said to be yet another ex-Googler, Surojit Chatterjee.

Whether Surojit will fare any better than his predecessor is best left to time or tea-leaf readers, this hire however does exemplify the curse of VC money in more ways than one. First, free money leads to the hubris of mistaking outlay with outcomes — splurging a million dollars on a paycheck with the outcome of success in the e-commerce battles. Second, VCs pay the piper (Flipkart is nowhere close to being profitable), and therefore they decide the tune. If VCs want an executive from a marquee company like Google, Flipkart’s founders may well have no say in the matter. Third, in the closed network of venture funding and Silicon Valley, the you-scratch-my-back club ensures lucrative job mobility for professionals and VCs alike.

Costly though million-dollar hiring mistakes can be, they can translate into even bigger billion-dollar erosion in valuations, as Flipkart would have found out, when Morgan Stanley Institutional Fund Trust Mid Cap Growth Portfolio, Fidelity Rutland Square Trust Strategic Advisers Growth Fund, and Variable Annuity Life Insurance Co.’s Valic Company I Mid Cap Strategic Growth Fund marked down the value of their Flipkart holdings by 23%, 23%, and 11% respectively ( Flipkart Valuation Cuts Spark Concern for India’s Billion Dollar Startups — WSJ).

Is Flipkart listening? In its battle with Amazon, it cannot afford to ignore the Whispering Death.

Related Links:

• Mobile Apps: There’s Something (Profitable) About Your Privacy
• Mobile advertising and how the numbers game can be misleading
• Why Flipkart seems to be losing focus
• Flipkart, Focus and Free Advice
• Flipkart vs Amazon: Beware the Whispering Death

I first published this post on Medium on Apr 15, 2016.

This post first appeared in LinkedIn Pulse on June 23, 2016.
Screenshot of article on LinkedIn Pulse

Rise of the Robots: Technology and the Threat of a Jobless Future
Martin Ford

Part 1 of 3

"I'm smart; you're dumb. I'm big; you're small. I'm right; you're wrong. And there's nothing you can do about it."

Thus spake Harry Wormwood in the movie "Matilda". This well could be the message that robots will have for us in the not too distant future. The dramatic improvements in the speed, the accuracy, and the areas in which computers have begun to comprehensively outperform humans leads one to believe that while a so-called singularity may well be some ways off, the more immediate effects of this automation are already being felt in permanent job losses. In a country like India, which has used digital technologies quite effectively in the last decade and a half to grow a $150 billion IT-BPM industry, the impact could be devastating - especially where an estimated 10 million people are employed.
In many spheres - chess for example - they could utter these lines to us humans today and there's nothing we can do about it - for the computer is right. The puniest of computers in the tiniest of smartphones possesses enough computing horsepower and smart-enough algorithms (written by us humans - oh yes, the irony!) to defeat the best of us humans in chess, every single time, without breaking a sweat. Computers have been able to add, subtract, divide, square, multiply faster and more accurately than us for decades now, and there's nothing we can do about that either.

From the time of the Luddites - who rose up against the machines of the Industrial Revolution in the early years of the nineteenth century - to the present-day "Judgment Day" Sarah Connor avatars, inspired as much by an acute awareness of the march of technology as by James Cameroon's "Terminator" movies, the refrain of the chorus has been more or less unchanging: the machines are coming for our jobs, our livelihoods, and will finally come for us (the Matrix was premised on a variant of one such dystopian future). Computing power of computers exploded in the second half of the twentieth century, obeying the inexorable pull of Moore's Law, and made feasible by advances in semiconductors, fabrication techniques, and electrical engineering. As did fears that similar software advances could somehow endow machines with intelligence - Artificial Intelligence. These fears however did not quite come to pass. For several decades, there were several false hopes and starts that were kindled and then extinguished. Till this decade. The congruence of seemingly infinite computing power - thanks to massive server farms running in the "cloud" (a mangled metaphor if ever there was one), cheap and lightning fast bandwidth available on tap, storage and memory that keeps getting impossibly cheaper every year, and sophisticated software algorithms - has however made it clear that "machine intelligence" is no longer an oxymoron. We are well and truly living in the middle of the machine age. The "singularity" may well be witnessed in our lifetimes, within a decade or two even.

Martin Ford's book, "The Rise of the Robots: Technology and the Threat of a Jobless Future" lays out the case for a not-so-distant future where machines make possible the automation of almost every task imaginable, but at a great social and economic cost. The book is neatly organized, lucidly argued, and except for a lengthy and somewhat incongruous chapter on the medical system, the book stays on point. Ford makes it clear that neither is this technological progress reversible, nor wholly desirable. Its consequences therefore cannot be wished away - income inequality as an example, which economists for three decades have been explaining away as a temporary anomaly. The last section, which is more contemplative and prescriptive, as opposed to the earlier sections which are descriptive, discusses possible solutions, some of which will shock free market proponents. Whether there are more practical, workable answers is quite another thing though.

This post was first published on LinkedIn on 20th May, 2015.

"Hi, I'm Chucky. Wanna play?"[1]  Fans of the horror film genre will surely recall these lines - innocent-sounding on their own, yet bone-chilling in the context of the scene in the movie - that Chucky, the possessed demonic doll, utters in the cult classic, "Child's Play". Called a "cheerfully energetic horror film" by Roger Ebert [2], the movie was released to more than a thousand screens on its debut in November 1988 [3]. It went on to spawn at least five sequels and developed a cult following of sorts over the next two decades [4].

Chucky the doll
(image credit: http://www.shocktillyoudrop.com/)In "Child's Play", Chucky the killer doll stays quiet around the adults - at least initially - but carries on secret conversations with Andy, and is persuasive enough to convince him to skip school and travel to downtown Chicago. Chucky understands how children think, and can evidently manipulate - or convince, depending on how you frame it - Andy into doing little favours for him. A doll that could speak, hear, see, understand, and have a conversation with a human in the eighties was the stuff out of science fiction, or in the case of "Child's Play" - out of a horror movie.

Edison Talking Doll.
Image credit: www.davescooltoys.comA realistic doll that could talk and converse was for long the "holy grail" of dollmakers [5]. It will come as a huge surprise to many - at least it did to me - that within a few years of the invention of the phonograph by Thomas Edison in 1877, a doll with a pre-recorded voice had been developed and marketed in 1890! It didn't have a very happy debut however. After "several years of experimentation and development", the Edison Talking Doll, when it launched in 1890, "was a dismal failure that was only marketed for a few short weeks."[6] Talking dolls seem to have made their entry into mainstream retail only with the advent of "Chatty Cathy" - released by Mattel in the 1960s - and which worked on a simple pull-string mechanism. The quest to make these dolls more interactive and more "intelligent" continued; "Amazing Amanda" was another milestone in this development; it incorporated "voice-recognition and memory chips, sensory technology and facial animatronics" [7]. It was touted as an "an evolutionary leap from earlier talking dolls like Chatty Cathy of the 1960's" by some analysts [8]. In some ways that assessment was not off-the-mark. After all, "Amazing Amanda" utilized RFID technology - among the hottest technology buzzwords a decade back. "Radio-frequency tags in Amanda's accessories - including toy food, potty and clothing - wirelessly inform the doll of what it is interacting with." This is what enabled "Amazing Amanda" to differentiate between "food" (pizza, or "cookies, pancakes and spaghetti") and "juice"[9]. "However, even with all these developments and capabilities, the universe of what these toys could was severely limited. At most they could recognize the voice of the child as its "mommy".
Amazing Amanda doll.
Image credit:amazing-amanda.fuzzup.netThey were constrained by both the high price of storage (Flash storage is much sturdier than spinning hard drives, but an order of magnitude costlier; this limits the amount of storage possible) and limited computational capability (putting in a high-end microprocessor inside every doll would make them prohibitively expensive). The flip side was that what the toys spoke in home to the children stayed at home. These toys had a limited set of pre-programmed sentences and emotions they could convey, and if you wanted something different, you went out and bought a new toy, or in some cases, a different cartridge.

That's where things stood. Till now.

Screenshot of ToyFair websiteBetween February 14-17, 2015, the Jacob K. Javits Convention Center in New York saw "the Western Hemisphere’s largest and most important toy show"[10] - the 2015 Toy Fair. This was a trade-show, which meant that "Toy Fair is not open to the public. NO ONE under the age of 18, including infants, will be admitted."[11] It featured a "record-breaking 422,000+ net square feet of exhibit space"[12] and hundreds of thousands of toys. Yet no children were allowed. Be that as it may, there was no dearth of, let's say, "innovative" toys. Apart from an "ultra creepy mechanical doll, complete with dead eyes", a fake fish pet that taken to a "whole new level of weird", or a "Doo Doo Head" doll that had the shape of you-guessed-it [13], of particular interest was a "Hello Barbie" doll, launched by the Fortune 500 behemoth, Mattel. This doll had several USPs to its credit. It featured voice-recognition software, voice recording capabilities, the ability to upload recorded conversations to a server (presumably Mattel's or ToyTalk's) in the cloud, over "Wi-Fi" - as a representative at the exhibition took pains to emphasize, repeatedly - and give "chatty responses."[14] This voice data would be processed and analyzed by the company's servers. The doll would learn the child's interests, and be able to carry on a conversation on those topics - made possible by the fact that the entire computational and learning capabilities of a server farm in the cloud could be accessed by every such toy. That the Barbie franchise is a vital one to Mattel could not be understated. The Barbie brand netted Mattel $1.2 billion in FY 2013 [15], but this represented a six per cent year-on-year decline. Mattel attributed that this decline in Barbie sales in part to "product innovation not being strong enough to drive growth." The message was clear. Something very "innovative" was needed to jump-start sales. To make that technological leap forward, Mattel decided to team up with ToyTalk.

ToyTalk is a San Francisco-based start-up, and its platform powered the voice-recognition software used by "Hello Barbie". ToyTalk is headed by "CEO Oren Jacob, Pixar's former CTO, who worked at the groundbreaking animation company for 20 years" [16], and which claimed "$31M in funding from Greylock Partners, Charles River Ventures, Khosla Ventures, True Ventures and First Round Capital as well as a number of angel investors." [17]
Cover of Misery, by Stephen King.
Published by Viking Press.The voice recognition software would allow Mattel and ToyTalk to learn the preferences of the child, and over time refine the responses that Barbie would communicate back. As the Mattel representative put it, "She's going to get to know all my likes and all my dislikes..."[18] - a statement that at one level reminds one of Annie Wilkes when she says, "I'm your number one fan."[19] We certainly don't want to be in Paul Sheldon shoes.

Hello Barbie's learning would start happening from the time the doll was switched on and connected to a Wi-Fi network. ToyTalk CEO Oren Jacob said, "we'll see week one what kids want to talk about or not" [20]. These recordings, once uploaded to the company's servers, would be used by "ToyTalk's speech recognition platform, currently powering the company's own interactive iPad apps including The Winston Show, SpeakaLegend, and SpeakaZoo" and which then "allows writers to create branching dialogue based on what children will potentially actually say, and collects kids' replies in the cloud for the writers to study and use in an evolving environment of topics and responses."[20]. Some unknown set of people. sitting in some unknown location, would potentially get to hear and listen to entire conversations of a child before his parents would.
If Mattel or ToyTalk did not anticipate the reaction this doll would generate, one can only put it down to the blissful disconnect from the real-world that Silicon Valley entrepreneurs often develop, surrounded as they are by similar-thinking digerati. In any case, the responses were swift, and in most cases brutal. The German magazine "Stern" headlined an article on the doll - "Mattel entwickelt die Stasi-Barbie" [21] Even without the benefit of translation, the word "Stasi" stood out like a red flag. In any case, if you wondered, the headline translated to "Mattel developed the Stasi Barbie" [22]. Stern "curtly re-baptised" it "Barbie IM". "The initials stand for “Inoffizieller Mitarbeiter”, informants who worked for East Germany’s infamous secret police, the Stasi, during the Cold War." [23] [24]. A Newsweek article carried a story, "Privacy Advocates Call Talking Barbie 'Surveillance Barbie'"[25]. France 24 wrote - "Germans balk at new ‘Soviet snitch’ Barbie" [26]. The ever-acerbic The Register digged into ToyTalk's privacy policy on the company's web site, and found these gems out [27]:
Screenshot of ToyTalk's Privacy page- "When users interact with ToyTalk, we may capture photographs or audio or video recordings (the "Recordings") of such interactions, depending upon the particular application being used.
- We may use, transcribe and store such Recordings to provide and maintain the Service, to develop, test or improve speech recognition technology and artificial intelligence algorithms, and for other research and development or internal purposes."

Further reading revealed that what your child spoke to the doll in the confines of his home in, say, suburban Troy Michigan, could end up travelling half the way across the world, to be stored on a server in a foreign country - "We may store and process personal information in the United States and other countries." [28]

What information would ToyTalk share with "Third Parties" was equally disturbing, both for the amount of information that could potentially be shared as well as for the vagueness in defining who these third-parties could possibly be - "Personal information"; "in an aggregated or anonymized form that does not directly identify you or others;"; "in connection with, or during negotiations of, any merger, sale of company assets, financing or acquisition, or in any other situation where personal information may be disclosed or transferred as one of the business assets of ToyTalk"; "We may also share feature extracted data and transcripts that are created from such Recordings, but from which any personal information has been removed, with Service Providers or other third parties for their use in developing, testing and improving speech recognition technology and artificial intelligence algorithms and for research and development or other purposes."[28] A child's speech, words, conversation, voice - as recorded by the doll - was the "business asset" of the company.

And lest the reader have any concerns about safety and security of the data on the company's servers, the following disclaimer put paid to any reassurances on that front also: "no security measures are perfect or impenetrable and no method of data transmission that can be guaranteed against any interception or other type of misuse."[28] If the sound of hands being washed-off could be put down on paper, that sentence above is what it could conceivably look like.

Apart from the firestorm of criticism described above, the advocacy group "Campaign for a Commercial Free Childhood" started a campaign to petition Mattel "CEO Christopher Sinclair to stop "Hello Barbie" immediately." [29]

The brouhaha over "Hello Barbie" is however only symptomatic of several larger issues that have emerged and intersect each other in varying degrees, raising important questions about technology, including the cloud, big data, the Internet of Things, data mining, analytics; privacy in an increasingly digital world; advertising and the ethics of marketing to children; law and how it is able to or unable to cope with an increasingly digitized society; and the impact on children and teens - sociological as well as psychological. Technology and Moore's Law [30] have combined with the convenience of broadband to make possible what would have been in the realm of science fiction even two decades ago.

The Internet, while opening up untold avenues of betterment for society at large, has however also revealed itself as not without a dark side - a dilemma universally common to almost every transformative change in society. From the possibly alienating effects of excessive addiction to the Internet to physiological changes that the very nature of the hyperlinked web engenders in humans - these are issues that are only recently beginning to attract the attention of academics and researchers. The basic and most fundamental notions of what people commonly understood as "privacy" are not only being challenged in today's digital world, but in most cases without even a modicum of understanding on the part of the affected party - you. In the nebulous space that hopefully still exists between those who believe in technology as the only solution capable of delivering a digital nirvana to all and every imaginable problem in society on the one hand and the Luddites who see every bit of technology as a rabid byte (that's a bad pun) against humanity lies a saner middle ground that seeks to understand and adapt technology for the betterment of humanity, society, and the world at large.

So what happened to Chucky? Well, as we know, it spawned a successful and profitable franchise of sequels and other assorted franchise. Which direction "Hello Barbie" takes is of less interest to me as the broader questions I raised in the previous paragraph.
References:
[1] http://www.imdb.com/title/tt0094862/quotes?item=qt0289926 
[2] "Child's Play" review, http://www.rogerebert.com/reviews/childs-play-1988
[3] http://www.the-numbers.com/movie/Childs-Play#tab=box-office
[4] https://en.wikipedia.org/wiki/Child%27s_Play_%28franchise%29
[5] "A Brief History of Talking Dolls--From Bebe Phonographe to Amazing Amanda", http://collectdolls.about.com/od/dollsbymaterial/a/talkingdolls.htm
[6] "Edison Talking Doll", http://www.edisontinfoil.com/doll.htm
[7] http://www.canada.com/story.html?id=f4370a3c-903d-4728-a9a4-3d3f941055a6
[8] http://www.nytimes.com/2005/08/25/technology/circuits/25doll.html?pagewanted=all&_r=0
[9] http://www.canada.com/story.html?id=f4370a3c-903d-4728-a9a4-3d3f941055a6
[10] http://www.toyfairny.com/toyfair/Toy_Fair/Show_Info/A_Look_Back.aspx
[11] http://www.toyfairny.com/ToyFair/ShowInfo/About_the_Show/Toy_Fair/Show_Info/About_the_Show.aspx
[12] http://www.toyfairny.com/ToyFair/ShowInfo/About_the_Show/Toy_Fair/Show_Info/About_the_Show.aspx
[13] http://mashable.com/2015/02/15/weird-toys-2015-toy-fair/
[14] https://www.youtube.com/watch?feature=player_embedded&v=RJMvmVCwoNM
[15] http://corporate.mattel.com/PDFs/2013_AR_Report_Mattel%20Inc.pdf
[16] http://www.fastcompany.com/3042430/most-creative-people/using-toytalk-technology-new-hello-barbie-will-have-real-conversations-
[17] https://www.toytalk.com/about/
[18] https://www.youtube.com/watch?feature=player_embedded&v=RJMvmVCwoNM
[19] http://www.imdb.com/title/tt0100157/quotes?item=qt0269492
[20] http://www.fastcompany.com/3042430/most-creative-people/using-toytalk-technology-new-hello-barbie-will-have-real-conversations-
[21] http://www.stern.de/digital/ueberwachung/barbie-wird-zum-spion-im-kinderzimmer-2173997.html
[22] https://translate.google.co.in/?ie=UTF-8&hl=en&client=tw-ob#auto/en/Mattel%20entwickelt%20die%20Stasi-Barbie
[23] http://www.france24.com/en/20150224-hello-barbie-germany-stasi-data-collection/
[24] http://www.stern.de/digital/ueberwachung/barbie-wird-zum-spion-im-kinderzimmer-2173997.html
[25] http://www.newsweek.com/privacy-advocates-want-take-wifi-connected-hello-barbie-offline-313432
[26] http://www.france24.com/en/20150224-hello-barbie-germany-stasi-data-collection/
[27] http://www.theregister.co.uk/2015/02/19/hello_barbie/
[28] https://www.toytalk.com/legal/privacy/
[29] http://org.salsalabs.com/o/621/p/dia/action3/common/public/?action_KEY=17347
[30] http://en.wikipedia.org/wiki/Moore's_law


Disclaimer: Views expressed are personal.

I wrote about the obsession of Flipkart (and Myntra) with "mobile-only" without even having an iPad-optimized app! I also talked about the stunning advances being made in voice-search by using machine learning, cognitive learning, natural language processing, even as voice-based search capabilities of e-commerce companies - including Amazon - remain abysmal. Finally, I also included several use-cases that these companies need to work on incorporating into their capabilities.

That piece, Flipkart, Focus and Free Advice, appeared in DNA on June 27th, 2015.


My earlier pieces on the same topic:

1. Flipkart vs Amazon: Beware the Whispering Death - 20th April '15 (blog, dna)
2. Mobile Apps: There’s Something (Profitable) About Your Privacy - 18th April '15  (blog, dna)
3. Mobile advertising and how the numbers game can be misleading - 14th April '15  (blog, dna)
4. Is Flipkart losing focus - 12th April '15  (blog, dna)

Flipkart, Focus, and Free Advice – Shipping Charges Also Waived!What is one to make of a statement like this - “India is not mobile-first, but mobile-only country[1]”? Especially so if it is from the co-founder of the largest ecommerce company in India, and it turns out the company does not even have an app for the Apple iPad?

I have written at length on the distractions that seem to have been plaguing Flipkart and why it cannot afford to drop its guard in this fiercely contested space[2] - especially in light of all the noise surrounding its mobile ambitions. Somewhat paradoxically, this post is about offering advice to Flipkart that calls for some diversification!

As a logical next step, I wanted to take a look at Flipkart’s mobile apps – both on the iOS and Android platforms – to see how well they were executing on their very bold ambitions. As an aside, I also wanted to see if these (and competitive) mobile apps were leveraging all the computing power now available on tap inside these tiny devices. After all, apart from the recent – and amazing – advances Google has made in its voice-based search capabilities[3], there was this stunning demo from Hound[4] that gave a glimpse into the huge advances that voice-recognition, search, and machine-learning technologies have made in the last decade.
— Harini Calamur (@calamur) June 28, 2015
— dna (@dna) June 27, 2015The results were, to put it mildly, massively disappointing – which I will describe in some detail.
It should be clear that Amazon and Flipkart and SnapDeal are going to be at each other’s throats in the Indian online retail market. This is one battle from which neither player can walk away. Amazon has lost the China market to Alibaba (“In the first quarter of 2014, Alibaba's e-tailing site had a 48.4 per cent market share against Amazon China's less than 3 per cent.”[5] If that was not enough, Alibaba and Foxconn are in talks with SnapDeal for a rumoured $500 million investment![6]).

Amazon cannot afford to now lose the India market to a local upstart. Flipkart, on the other hand, has even less choice. It plays only in the Indian market. It cannot walk away either; there is no other market for it to walk towards. Its valuations – expected to rise to $15 billion after its next round of funding[7] make it way too costly for it to be acquired – at least profitably so for those funders who have put in hundreds of millions of dollars at these later and higher valuations. Amazon and Flipkart have deep pockets; Flipkart can afford to bleed hundreds of millions of dollars a year even as it grows, while Amazon has conditioned Wall Street to grant it the currency of ultra-high valuations even as it operates on razor-thin margins. It is unlikely that either will be able to deliver a knockout punch to the other anytime soon. This is a fifteen-round slugfest that will be decided by who can keep soaking in the blows and keep standing at the end of the fifteenth round; while they fight, the customer continues to win. Amazon has more diversity in its portfolio of business divisions than does Flipkart – ecommerce, cloud computing services, streaming audio and video, MRO and industrial supplies, smartphones, tablets, and more. While these divisions may at times face off against each other in expectedly healthy and sometimes unhealthy rivalry, they still form a formidable front against the competition. To quote these immortal lines from the Mahabharata, “we may be five against a hundred, but against a common enemy we are a hundred and five.”

So what does Flipkart do? Three things, to begin with.

First, it needs to get serious about software.
When you have a web site that offers millions of products from tens of thousands of resellers to millions of customers that reside in tens of thousands of cities and towns and villages, you need to make sure that your customers are seeing the products that are of most relevance to them, and which they are most likely to buy. If that problems looks like a nail to you, specifically a large-scale optimization problem with a huge number of decision variables, then large-scale computing and regression modelling are the hammer. You need to be applying this hammer to the almost infinite number of nails in front of you, all day and all night long. This is what enables you to present an ever-relevant basket of products to your customers, which keeps them engaged when on your site, and which hopefully makes them buy more often than not. Flipkart needs to take a close, long, hard look at its search capabilities – about which I will talk later in this post – and its suggestions engine, because both are very subpar at this point. If it’s any consolation, while Amazon is certainly better in the search department, its capabilities in this area are nothing great either, yet. Where Amazon scores over its competitors – every single one of them - is its huge and ever-growing corpus of customer reviews. Flipkart probably recognizes the important of this corpus of customer reviews, but has run into rough weather over the expected problem of fake reviews[8].

For inspiration on where the trifecta of search, machine learning, and e-commerce could venture – with Big Data in tow - one can turn to the story of how the popular American TV game show “Jeopardy” became the battleground for IBM researchers to build upon their experience with Deep Blue (the computer that had beaten world chess champion Gary Kasparov in 1997[9]) and to build a computer that would defeat the reigning champion of Jeopardy. That happened in February 2011, after four years of work led by IBM researcher David Ferucci and “about twenty researchers”[10].
This required advances in machine learning and other esoteric concepts like LAT (Lexical Answer Type), IDF (Inverse Document Frequency), temporal and even geospatial reasoning.[11] A new suite of software and platforms, built on a concept called genetic programming (“a technique inspired by biological evolution”) has started to make its way into mainstream commercial applications.  The algorithm here “begins by randomly combining various mathematical building blocks into equations and then testing to see how well the equations fit the data. Equations that fail the test are discarded, while those that show promise are retained and recombined in new ways so that the system ultimately converges on an accurate mathematical model.”[12] What this essentially means is going beyond keyword search-based correlations and moving to more semantic-oriented searches that combine machine learning with natural language processing. This in turn requires serious software brains (smart programmers using and refining the right algorithms and models) and muscle (massive learning and training sets in the hundreds of gigabytes running on clusters of tens of thousands of nodes).
If Flipkart is serious about the mobile ad business (about which I have expressed my reservations), even then it needs to get to the holy grail of deep-learning in ad-tech – “Inferring Without Interfering” the customer’s intent.”[13] In any event, this policy will only stand Flipkart in good stead. If they are already doing so, then good, but the proof is not in the pudding as much as in the eating of the pudding.

A critical differentiator in the coming times is not, I repeat, not, going to be driven by slick UIs or gimmicks on mobile apps like “shake to see offers”, but by offering truly intelligent and immersive experience that are feasible even today. Advances in machine learning, and capabilities such as voice, video, location, and more, when used in tandem will power the next set of innovations. Rather than stick to the tried and tested and old way of making users search using simple keywords and correlations and prior history, e-tailers need to make the shopping experience more intelligent.

Appendix 2 and 3 outline possible use-cases. It should be clear that both Flipkart and Amazon have a long, long way to go before realizing anything close to the vision outlined, but without such advances, competitors like Google will find the wedge they need to prise open this market for themselves.

Second, Flipkart (or even Amazon for that matter, or SnapDeal, or whichever competitor you happen to care about, though in this case the admonition is more targeted at Flipkart in light of its mobile-only pronouncements) needs to get serious about the mobile platform.

Browse to either Flipkart or Myntra’s websites from a browser on an iPad and you are asked to use their app instead. Would you believe if I told you Flipkart does not have an iPad app (as of 15th June 2015)? No? Go check for yourself – I did! Ditto for Myntra (the online fashion retailer Flipkart acquired in 2014)! See Appendix 1 for what I found when I downloaded their apps on my iPad tablet. This would be comedically farcical if serious money weren’t riding on such decisions.

Third, Flipkart needs to get into the cloud business.

Yes, I am serious.

Let’s look at the competition – Amazon. It is the 800 pound gorilla in the cloud computing industry, where its offering goes by the umbrella of AWS (Amazon Web Services) and offers almost everything you could think of under the cloud – platform, infrastructure, software, database, email, storage, even machine learning, and much more. How gorilla-ish? “AWS offers five times the utilized compute capacity of the other 14 cloud providers in the Gartner Magic Quadrant. Combined.[14]” Since 2005, Amazon has spent “roughly $12 billion” on its infrastructure[15]. It competes with the likes of Microsoft and Google in this space. Yet, Amazon’s cloud revenues are estimated to be “30 times bigger than Microsoft’s.[16]”

And yet I argue that Flipkart should get into the cloud business. As I wrote last year[17], Flipkart had to invest substantially (per my estimates, more than one hundred crore rupees, or somewhere in the vicinity of $15-$20 million dollars – which is not chump change) to build its capacity to stand up to the traffic it expected for its “Big Billion Day”. This is in addition to the regular additions it must be making to its computing infrastructure. All this is not surprising, given that the retail business is prone to lumpiness in traffic – a disproportionate amount of traffic is concentrated around sale events, or holidays.

For example, while Amazon reportedly had ten million Prime subscribers in March 2013, it reported that over 10 million “tried Prime for the first time” over the holidays in 2014 (traditionally the period between Thanksgiving and Christmas).[18] To prevent web sites from keeling over under the crush of holiday traffic, companies invest substantially, in advance, to make sure the web site keeps chugging along. The flip side is that for those periods when traffic is more average and a fraction of peak traffic, all those thousands of computers, the hundreds of gigabytes of memory, terabytes of disk space, and gobs of network bandwidth capacity are lying idle – depreciating away, obsolescing away.

Amazon realized this a decade ago and started building a rental model around its excess capacity – this was the genesis behind Amazon Web Services. There is no reason for Flipkart to not do the same. What works for Amazon has worked quite well for Flipkart[19]. If it spins off its entire e-commerce infrastructure into a separate entity, it can palm much off the capital costs of its computing infrastructure to the cloud computing subsidiary, substantially improving its balance sheet in the process. You could argue this is nothing but an accounting gimmick, and I am not going to argue with that aspect of the decision - there would be undeniable and real benefits to this decision, and it’s childish to expect a business to be run on utopian principles. As things stand, the state government of Telangana is already assiduously wooing Amazon to invest in an AWS centre in the state[20]. Once operating on Indian soil, Amazon will be able to meet legal requirements that require certain categories of data to remain with the national borders.

Any industry so heavily influenced and shaped by technology as the e-commerce industry would do well to listen to the winds of change. If unheard and unheeded, these winds of change turn into gale storms of disruption that blow away incumbents faster than you can imagine. “Mobile-only” is a useful-enough mantra, but translating that into an “app-only” sermon hints at myopic thinking – a troubling sign for sure. It turns out that Google “secretly” acquired a company that specializes in “streaming native mobile apps”. Is this a shape of the things to come? How will this transform the world of mobile apps, or even the mobile landscape in general? Time will tell, but “lock-in” may well be a wise strategy for your customers, but a terrible one to apply to yourself.[21].

Appendix 1 - App-solutely Serious about Apps?Fire up your favourite mobile browser on an Apple iPad and browse to Myntra’s website (that would be www.myntra.com). You are greeted with a message to vamoose to their mobile app, because after all, Myntra is all about mobility – social mobility in fashion, and mobile devices when speaking more literally.

Incredulity hits you in the face when you realize that (on the Apple App Store) the Myntra app is “optimized for iPhone 5, iPhone 6 and iPhone 6 Plus”, but not the iPad. Yes, you read that right – the web site that tells you have to use its mobile app and mobile app only on an iPad does not have an app optimized for the iPad.

I am, however, somewhat of a cynical person. I tried searching for the keyword “myntra” on the Apple App Store. The only filter applied was to look for “iPad Only” apps. Here are the beatific search results. Indian gave the world the concept of zero, and the search results page gave one practical application of that elegant mathematical concept.

So where was that Myntra app hiding? I changed the filter to “iPhone Only”, and true-enough, there was that Myntra app.

In case you are wondering how that was even possible, know that most apps created for the iPhone (or iPod Touch) can run on an iPad without any modifications – all that is required for you to keep this in mind when compiling the app. Apple calls this a “Universal app”[22].

Now that can’t be so bad, right? After all, the app is available on the iPhone and the iPad, so where and what is the grouse? I will come to that in just a bit, but take a look at what the Myntra app looks like when run on the iPad.
This is how the app runs inside an iPad. You have the option of tapping the “2x” button, after which the app uses the full screen, but by scaling everything to twice its size. There is no other intelligence here being applied – like changing the icons, or the text, or adding more features. This is iOS doing what little work you see.
Why this arouses incredulity is due to the stunning dissonance one experiences – between the statements of the Myntra (and Flipkart) executives going to town about a “mobile-only” world[23] on the one hand and the reality of a missing-in-action iPad-optimized app on the other. Yes, one could make the argument that Apple commanded a stunningly low single-digit share of 7% of the tablet market in India[24], but to make this argument is to negate your very philosophy of a “mobile-only” world. Mobile includes smartphones, tablets, phablets, wearables (for which Flipkart does have an app![25]), smart-TVs, and even embedded devices.
Flipkart’s mobile web site works - at least for now - on the iPad (though it does not on a smartphone – you have no option but to use their app), but the story is not much different there. No iPad-optimized app, but a smartphone app that does duty on the iPad by virtue of it being a “Universal” app.

 It’s not as if Amazon’s iPad app is much better. Yes, they do have an iPad app, but it looks more like a hybrid app – a native shell with an embedded browser snuck in, and very little by way of any tablet optimizations.

Appendix 2 – Natural Speech SearchesMobile shopping apps like Flipkart and Amazon provide you the option of inputting your search query via voice (more because of the support the underlying mobile OS provides), but that forces you say out aloud what you have typed – keywords, and nothing more.
Unlike the stunning Hound demo or the capabilities of Google Now[26], e-tailers have yet to leave the stone age in search capabilities. While Hound can understand and answer (correctly) queries like “Show me hotels in Seattle for Friday, staying one night” and then support refinements to the query like “Show only the ones costing less than $300” or “Show only the ones that have three or four or five stars that are pet friendly, that have a gym and a pool, within 4.5 miles of the Space Needle”[27], and Google Now can understand foreign accents (like my Indian English accent) and parse phrases like “ghat”, “jyotirling” and more, a relatively simple phrase like - “What are the best sellers in fiction” – leads to disappointment on both Amazon and Flipkart’s mobile apps.
And to be clear, what was presented was not the bestsellers list, because the bestseller list looked like this:

I tried another search – “Suggest books for children”. I don’t know what to call the search results, but one with “*divorce* your Child” as the first result is surreal.

To complete my brief experiment on Amazon, I tried “Show me best sellers in electronics”. That also did not yield any relevant results.
Flipkart is not much better, and at this point we are really looking at rock-bottom as the baseline. Even a marginal improvement would be welcome here. Sadly, not the case. Though, Flipkart does separate each word out and allow you to delete any one word to refine your search. Given the abysmal quality of search results, it is somewhat of a zero-divide-by-zero case, resulting in only infinite misery trying to find the right combination of keywords that will yield the desired results.

Does the Myntra app fare any better? Predictably, it doesn’t. If semantic search in the e-commerce space was a problem that had been cracked by either Flipkart or Myntra, it would have been shared across both platforms by now.

Even Google, with its oft-stated e-commerce ambitions[28],[29] , and the eye-popping advances that it has made with its voice-based search (Siri from Apple and lately Cortana from Microsoft also deserve to be included, but neither company seems to be quite interested in e-commerce at the scale of Amazon, yet) left me disappointed with a simple search like – “what are the fiction best sellers in India”.

Appendix 3What do I have in mind with respect to the kinds of queries that Flipkart (or Amazon) should be trying to enable? Without any further context, I present the following examples:
One:
(this is a comparatively simpler form of the semantic search capabilities I propose)
Me: show me the best sellers in non-fiction
App: [displays a list of book best sellers in non-fiction] [Optionally, excludes or places the ones I have bought at the bottom of the list; or marks them differently and provides me with an option of reading them online – assuming I had purchased an e-book version]
Me: show me only those books that have been published in the last three months;
App: [filters the previous set of search results to show only those non-fiction best sellers that have been published in the last three months]
Me: also include books that were on the bestseller list this year
App: [adds books that were in the top 10/20 bestsellers list in 2015 but have now dropped out of the rankings]
Me: cancel the last search, and show me those books that are also available as e-books, and then sort them by price
App: [displays a list of book best sellers in non-fiction, filtered by those available on the Kindle, and sorts by price, ascending]
Me: send me free e-book samples of the first five books from this list and remind me in one week whether I want to purchase them.
App: [downloads free samples of the first three books to my e-book app] [creates a reminder to remind me in one week]

…
Two:
(this is a more social and more nuanced form of the semantic search outlined above)
Me: show me a list of LED TVs
App: [displays a list of the bestselling LED TVs]
Me: show me LED TVs that are HD, 40 inches or larger, cost no more than Rs 60,000, and can be delivered in the next three days.
App: [displays a list of TVs matching the criteria, and adds – “there are only three TVs that match your search criteria, so I have changed the price to Rs 70,000, which has resulted in five more search results. Say “cancel” to undo.”]
Me: Which among these would be most relevant to me?
App: [displays the list sorted based on popularity in my postal code] [offers to show the list sorted on TVs sold in the last three months to the housing community I live in – or the company I work at – or based on people with my profile of educational qualifications or marital/family status – based on privacy settings of course]
Me: summarize the most useful reviews for the first TVs, and keep each under two minutes.
App: [summarizes the most useful reviews and then reads out a software-generated summary, in less than two minutes. Also sends a text summary to my WhatsApp or email]
Far-distant utopia? Naah, I don’t think so. This is within the realm of the possible, and I expect to see this become reality in the next two years. Today, however, we are some ways off from the innovations where online shopping will become a truly immersive, interactive experience akin to having a natural conversation with an incredibly knowledgeable yet infinitely patient salesperson.

Three:
(ratcheting things up one more notch)
Me: (standing amidst the ruins of Hampi) Suggest some good books about this place.
App: [suggests bestsellers or highest-rated books on three categories: coffee-table books on Hampi; history of Hampi and the Vijayanagar Empire; historical fiction books set in the fifteenth/sixteenth century Vijaynagara Empire]
Me: Also suggest something on the significance of this chariot temple
App: …

Four:
App: [reminds me that I have a party at my house this weekend where four families are coming over]
Me: I need some snacks and also suggest some recent action movies to rent
App: [suggests food-items to order and shows a list of the five top grossing movies of the year in the “Action” genre and shows options: buy, rent (really?), stream]
Me: place the first, third, and fifth items in the shopping cart, record this and deliver to my wife. Then rent to stream the third movie in HD format on Saturday evening.
App: [places these items in the shopping cart, records a 15 second video and pings the spouse via a notification/alert to view the video. It also places an order for the selected movie]

Disclaimer: views expressed are personal.

 References:
[1] "India is not mobile-first, but mobile-only country: Sachin Bansal, Flipkart's founder and Mukesh Bansal, Myntra's CEO - timesofindia-economictimes", http://articles.economictimes.indiatimes.com/2015-05-13/news/62124447_1_myntra-sachin-bansal-ceo-mukesh-bansal
[2] See http://www.dnaindia.com/analysis/standpoint-flipkart-vs-amazon-beware-the-whispering-death-2079185 and http://www.dnaindia.com/analysis/standpoint-why-flipkart-seems-to-be-losing-focus-2076806
[3] "Google Launches Custom Voice Actions For Third Party Apps", http://searchengineland.com/google-launches-custom-voice-actions-for-third-party-apps-220148
[4] "After Nine Years of Secret Development, Hound Voice Search App Has a Dazzling Demo | Re/code", http://recode.net/2015/06/02/after-nine-years-of-secret-development-hound-voice-search-app-has-a-dazzling-demo/
[5] "A missed opportunity in China has Amazon founder Jeff Bezos backing his India venture", http://indiatoday.intoday.in/story/amazon-jeff-bezos-india-business-venture-flipkart-snapdeal/1/393933.html
[6] "Alibaba, Foxconn in Talks to Invest $500 Million in India’s Snapdeal - India Real Time - WSJ", http://blogs.wsj.com/indiarealtime/2015/06/16/alibaba-foxconn-in-talks-to-invest-500-million-in-indias-snapdeal/
[7] "Flipkart set to raise up to $800 million - Livemint", http://www.livemint.com/Companies/j2B9ax1SNS4JrDdJAU19sO/Flipkart-set-to-raise-up-to-800-mn.html
[8] See "How e-retailers such as Flipkart, Amazon are keeping fake products at bay - timesofindia-economictimes", http://articles.economictimes.indiatimes.com/2015-01-08/news/57791521_1_amazon-india-sellers-mystery-shoppers, "Who Reviews the Reviewers? How India's Online Businesses Are Fighting Fake Reviews | NDTV Gadgets", http://gadgets.ndtv.com/internet/features/who-reviews-the-reviewers-how-indias-online-business-are-fighting-fake-reviews-697112, and "How genuine are product reviews on FlipKart? - Quora", http://www.quora.com/How-genuine-are-product-reviews-on-FlipKart
[9] "Deep Blue (chess computer) - Wikipedia, the free encyclopedia", https://en.wikipedia.org/wiki/Deep_Blue_(chess_computer)
[10] "Rise of the Robots: Technology and the Threat of a Jobless Future”, by Martin Ford, Jeff Cummings, ISBN 9781480574779, http://www.amazon.com/Rise-Robots-Technology-Threat-Jobless/dp/1480574775
[11] Ibid and "The AI Behind Watson — The Technical Article", http://www.aaai.org/Magazine/Watson/watson.php
[12] "Rise of the Robots: Technology and the Threat of a Jobless Future”
[13] Gregory Piatetsky on Twitter: "The #DeepLearning future of ads: "Inferring Without Interfering with what moves the Customer most" - J. Kobelius http://t.co/zh96DC6DDG" https://twitter.com/kdnuggets/status/610848069672927232
[14] "Gartner: AWS Now Five Times The Size Of Other Cloud Vendors Combined - ReadWrite", http://readwrite.com/2013/08/21/gartner-aws-now-5-times-the-size-of-other-cloud-vendors-combined
[15] Ibid.
[16] "How much bigger is Amazon’s cloud vs. Microsoft and Google?", http://www.networkworld.com/article/2837910/public-cloud/how-much-bigger-is-amazon-s-cloud-vs-microsoft-and-google.html
[17] "A Billion Dollar Sale, And A Few Questions", http://www.dnaindia.com/analysis/standpoint-a-billion-dollar-sale-and-a-few-questions-2047853
[18] "Amazon added 10M new Prime subscribers over the holidays, could make up to $1B in annual revenue | VentureBeat | Business | by Harrison Weber", http://venturebeat.com/2014/12/26/amazon-made-nearly-1b-from-new-prime-subscriptions-over-the-holidays/
[19] See http://www.dnaindia.com/analysis/standpoint-flipkart-vs-amazon-beware-the-whispering-death-2079185
[20] "Amazon likely to bring Web Services to Telangana | Business Standard News", http://www.business-standard.com/article/companies/amazon-likely-to-bring-web-services-to-telangana-115061000659_1.html
[21] "Report: Last Year Google Secretly Acquired Agawi, A Specialist In Streaming Native Mobile Apps | TechCrunch", http://techcrunch.com/2015/06/18/report-last-year-google-secretly-acquired-agawi-a-specialist-in-streaming-native-mobile-apps/
[22] "Start Developing iOS Apps Today: Tutorial: Basics", https://developer.apple.com/library/ios/referencelibrary/GettingStarted/RoadMapiOS/FirstTutorial.html
[23] http://articles.economictimes.indiatimes.com/2015-05-13/news/62124447_1_myntra-sachin-bansal-ceo-mukesh-bansal
[24] "Samsung Tops Indian Tablet Market Share, Followed By Micromax, iBall", http://trak.in/tags/business/2014/11/28/indian-tablet-market-share-growth/
[25] "Flipkart launches an app for Android Wear sporting wearables - Tech2", http://tech.firstpost.com/news-analysis/flipkart-launches-an-app-for-android-wear-sporting-wearables-240070.html
[26] See this for a comparison between Hound and Google Now - "Here’s how Hound beta compares to Google Now (Video) | 9to5Google", http://9to5google.com/2015/06/05/hound-beta-vs-google-now-video/
[27] "After Nine Years of Secret Development, Hound Voice Search App Has a Dazzling Demo | Re/code", http://recode.net/2015/06/02/after-nine-years-of-secret-development-hound-voice-search-app-has-a-dazzling-demo/
[28] "Google Preps Shopping Site to Challenge Amazon - WSJ", http://www.wsj.com/articles/google-preps-shopping-site-to-challenge-amazon-1418673413
[29] "Google Finds Partners To Help It Compete With Amazon - Forbes", http://www.forbes.com/sites/benkepes/2015/04/13/google-finds-partners-to-help-it-compete-with-amazon/

The fourth part of my series on Flipkart and its apparent loss of Focus and its battle with Amazon appeared in DNA on April 20th, 2015.

Part 4 – Beware the Whispering Death
Monopolies may have the luxury of getting distracted. If you were a Microsoft in the 1990s, you could force computer manufacturers to pay you a MS-DOS royalty for every computer they sold, irrespective of whether the computer had a Microsoft operating system installed on it or not[1]. You dared not go against Microsoft, because if you did, it could snuff you out – “cut off the oxygen supply[2]”, to put it more evocatively. But if you are a monopoly, you do have to keep one eye on the regulator[3], which distracts you. If you are not a monopoly, you have to keep one eye on the competition (despite what Amazon may keep saying to the contrary, that they “just ignore the competition”[4]).



Few companies exist in a competitive vacuum. In Flipkart’s case, the competition is Amazon – make no mistake about it. Yes, there is SnapDeal, eBay India, and even HomeShop18; but the numbers speak for themselves. Flipkart has pulled ahead of the pack. As long as Amazon had not entered the Indian market, Flipkart’s rise was more or less certain, thanks to its sharp focus on expanding its offerings, honing its supply-chain, and successfully raising enough capital to not have to worry about its bottom-line while it furiously expanded. Amazon India made a quiet entry on the fifth of June 2013[5], with two categories – books, Movies & TV shows, but followed up with a very splashy blitz two months later in August (it offered 66% discounts on many books[6] to mark India’s 66 years of Indian independence – I should know, I binge-bought about twenty books!). A little more than a year later, in September 2014, Amazon turned the screws even more when its iconic founder-CEO, Jeff Bezos, visited India. In a very showy display that earned it a ton of free advertising, Bezos wore a sherwani and got himself photographed swinging from an Indian truck[7], met Narendra Modi, the Indian Prime Minister[8], and reiterated Amazon’s commitment and confidence in the Indian market[9] - all this without ever taking Flipkart’s name. It didn’t help Flipkart that on July 30th 2014, Amazon India had announced an additional $2 billion investment in India[10]. It didn’t hurt Amazon either that it timed the press release exactly one day after Flipkart closed $1 billion in funding[11] - this was entirely in Amazon’s way of jiu jitsu-ing its competitors (so much for “ignoring the competition”). Flipkart on its part ran into yet more needless problems with its much-touted “Big Billion” sale that was mercilessly ambushed by competitors[12], and which resulted in its founders having to tender an apology[13] for several glitches its customers faced during the sale. Then there were questions on just how much money it actually made from the event, which I analyzed[14].

Flipkart seemed to be getting distracted.

When facing a charged-up Michael Holding, you cannot afford to let your guard down, even if you are batting on 91. Ask the legendary Sunil Gavaskar[15]. Amazon is the Michael Holding of competitors. Ask Marc Lore, the founder of Jet, “which is planning to launch a sort of online Costco later this spring with 10 million discounted products”[16]. Marc who? He is the co-founder of Quidsi. Quidsi who? Quidsi is (was) the company behind the website Diapers.com, and which was acquired by Amazon. Therein lies a tale.

Diapers.com was the website of Quidsi, a New Jersey start-up founded in 2005 by Marc Lore and Vinit Bharara to solve a very real problem: children running through diapers at a crazy pace, and “dragging screaming children to the store is a well-known parental hassle.” What made selling diapers online unviable for retailers was the cost involved in “shipping big, bulky, low-margin products like jumbo packs of Huggies Snug and Dry to people’s front doors.” Diapers.com solved the problem by using “software to match every order with the smallest possible shipping box, minimizing excess weight and thus reducing the per-order shipping cost.” Within a few years, it grew from zero to over $300 million in annual sales. It was only when VC firms, including Accel Partners, pumped in $50 million that Amazon and Jeff Bezos started to pay attention. Sometime in 2009, Amazon started to drop prices on diapers and other baby products by up to 30 percent. Quidsi (the company behind Diapers.com) lowered prices – as an experiment – only to watch Amazon’s website change prices accordingly. Quidsi fared well under Amazon’s assault, “at least at first.” However, growth slowed. “Investors were reluctant to furnish Quidsi with additional capital, and the company was not yet mature enough for an IPO.” Quidsi and WalMart vice chairman (and head of WalMart.com) Eduardo Castro-Wright spoke, but Quidsi’s asking price of $900 million more than what WalMart was willing to pay. Even as Lore and Bharara travelled to Seattle to meet with Amazon for a possible deal, Amazon launched Amazon Mom – literally while the two were in the air and therefore unreachable by a frantic Quidsi staff! “Quidsi executives took what they knew about shipping rates, factored in Procter and Gamble’s wholesale prices, and calculated that Amazon was on track to lose $100 million over three months in the diapers category alone.” Amazon offered $580 million. WalMart upped its offer to $600 million – this offer was revealed to Amazon, because of the conditions in the preliminary term sheet that required Quidsi “to turn over information about any subsequent offers.” When Amazon executives learned of this offer, “they ratcheted up the pressure even further, threatening the Quidsi founders that “sensei,” being such a furious competitor, would drive diaper prices to zero if they went with Walmart.” Quidsi folded, sold to Amazon, and the deal was announced on November 8, 2010[17]. Marc Lore continued with Amazon for two years after that – most likely the result of a typical retention and no-compete clause in such acquisitions.

The tale of Quidsi is one cautionary tale for any company going head-to-head with Amazon. For more details on the fascinating history of Amazon, I would recommend Brad Stone’s book, “The Everything Store: Jeff Bezos and the Age of Amazon”[18] – from which I have adapted the example of Diapers.com above. You can read another report here[19]. I suspect you may well find some copies of the book lying around in Flipkart’s Bengaluru offices!

In their evolution and growth as an online retailer, Flipkart has adopted and emulated several of Amazon’s successful features. Arguably the most successful innovation from Amazon has been to reduce, or entirely eliminate in some cases, the friction of ordering goods from their website. The pace and extent of innovation is quite breath-taking. A brief overview will help illustrate the point.
Amazon used to charge for every order placed in addition to a handling charge per item (typically 99 cents). In 2002, it launched “Free Super Saver Shipping on qualifying orders over $49” as a test. After seeing the results, it lowered this threshold to $25[20]. For over ten years that price held, till 2013, when it raised this minimum to $35[21]. Not content with this, to lure in that segment of customers who wanted to order even a single item, and have it delivered in two days or less, Amazon launched a new express shipping option – Amazon Prime – where “for a flat membership fee of $79 per year, members get unlimited, express two-day shipping for free, with no minimum purchase requirement.”[22] This proved to be a blockbuster hit for Amazon, and the company piled on goodies to this program – Amazon Instant Video, an “instant streaming of selected movies and TV shows” at no additional cost[23]. That same year it launched “Library Lending for Kindle Books”, which allowed customers to “to borrow Kindle books from over 11,000 local libraries to read on Kindle and free Kindle reading apps”[24], with no due date, and added that to the Prime program, at no extra cost. In 2011 it launched “Subscribe & Save” – that let customers order certain items on a regular basis at a discounted price – basically you had to select the frequency, and the item would be delivered every month/quarter without your having to re-order it. Amazon launched “Kindle Matchbook”, where, “For thousands of qualifying books, your past, present, and future print-edition purchases now allow you to buy the Kindle edition for $2.99 or less.[25]” Similarly, its “AutoRip” program allowed customers to receive free MP3 format versions of CDs they had purchased from Amazon (since 1998)[26], and which was extended to Vinyl Records[27].

If all this was not enough, in 2015 Amazon launched a physical button called Dash Button – on April 1st, no less – that would let customers order an item of their selection with one press of the button. It could be their favourite detergent, dog food, paper towels, diapers – an expanding selection. You could stick that button anywhere – your refrigerator, car dashboard, anywhere. It was indeed so outlandish that many thought it was an April Fool’s gimmick[28].
Amazon has been relentless in eliminating friction between the customer and the buying process on Amazon on the one hand, and on squeezing out its competitors with a relentless, ruthless pressure on the other. It manages to do all this while topping customer satisfaction surveys[29], year after year[30].

Flipkart has certainly not been caught flat-footed. It’s been busy introducing several similar programs. It began with free shipping, then raised the minimum to ?100, then ?200, and eventually ?500. Somewhere in between, it modified that to exclude books fulfilled by WS Retail (which was co-founded by Flipkart founders and which accounts for more than three-fourths of all products sold on Flipkart[31]) from that minimum. In May 2014, it launched Flipkart First, an Amazon Prime-like membership program that entitled customers to free “in-a-day” shipping for an annual fees of ?500[32]. It also tied up with Mumbai’s famed “dabbawalas” to solve the last-mile connectivity problem for deliveries[33].

Flipkart’s foray into digital music however was less than successful. It shuttered its online music store, Flyte, in June 2013, a little over a year after launching it[34]. Some speculated it was unable to compete with free offerings like Saavn, Gaana, etc… and was unable to meet the annual minimum guarantees it had signed up with music labels for[35]. Whether it really needed to pull the plug so soon is debatable – for all purposes it may have signalled weakness to the world. Competitors watch these developments very, very closely. Its e-book business has been around for a little over two years, but is not clear how much traction they have in the market. With the launch of Amazon Kindle in India, Flipkart will see it being squeezed even more. The history of the ebook market is not a happy tale – if you are not Amazon or the customer.

The market for instant-gratification refuses to stand still. Amazon upped the ante by launching Amazon Prime Now in December 2014. Prime program customers were guaranteed one-hour delivery on tens of thousands of items for $7.99 (two-hour delivery was free)[36]. This program was launched in Manhattan, and rapidly expanded to half a dozen cities in the US by April 2015[37]. Closer to home, in India, it launched KiranaNow in March 2015, in Bangalore, promising delivery of groceries and related items in four hours[38].

More than anything else, the online retail world is a race to eliminate friction from the buying process, to accelerate and enable buying decisions – as frequently as possible, and to provide instant gratification through instant delivery (in the case of e-books or streaming music or video) or one-hour deliveries. Flipkart may well be the incumbent and the player to beat in the Indian market, but Amazon brings with it close to two decades of experience – experience of battling it out in conditions that are very similar to the Indian market in several respects. More ominously, for Flipkart, Amazon has won many more battles than it has lost. Distraction can prove to be a fatal attraction and affliction.

[1] This is described in James Wallace’s book, “Overdrive: Bill Gates and the Race to Control Cyberspace”, http://www.amazon.in/gp/product/B00J348MXG/ref=as_li_tl?ie=UTF8&camp=3626&creative=24822&creativeASIN=B00J348MXG&linkCode=as2&tag=abhisblog-21&linkId=XIHAIBIQ3H6L6NMH
[2] "BBC NEWS | Special Report | 1998 | 04/98 | Microsoft | USA versus Microsoft: The first two days", http://news.bbc.co.uk/2/hi/special_report/1998/04/98/microsoft/198390.stm
[3] " Justice to Launch Probe of Microsoft ", http://www.washingtonpost.com/wp-srv/business/longterm/microsoft/stories/1993/launch082193.htm
[4] "We just ignore our competitors, never felt pressure from Alibaba's rise: Jeff Bezos, CEO Amazon ", http://articles.economictimes.indiatimes.com/2014-09-29/news/54437158_1_amazon-india-expectations-competitors
[5] "Amazon Launches In India", http://www.amazon.in/gp/feature.html/ref=amb_link_183716847_70?ie=UTF8&docId=1000728823&pf_rd_m=A1VBAL9TL5WCBF&pf_rd_s=center-4&pf_rd_r=05DGNQKB48Z6RV3KZV1G&pf_rd_t=1401&pf_rd_p=605972407&pf_rd_i=1000834593
[6] https://www.dropbox.com/s/jb9wa2vqu1x0p4x/AmazonIn_2013.png?dl=0
[7] "jeff bezos truck bangalore - Google Search", https://www.google.co.in/search?q=jeff+bezos+truck+bangalore&tbm=isch&tbo=u&source=univ&sa=X&ei=_IszVc3QGc-LuAT5i4CADw&ved=0CB0QsAQ&biw=1600&bih=741
[8] "Amazon chief Jeffrey Bezos calls on Prime Minister Modi - The Times of India", http://timesofindia.indiatimes.com/business/india-business/Amazon-chief-Jeffrey-Bezos-calls-on-Prime-Minister-Modi/articleshow/44229776.cms
[9] "No obstacles to growth in India: Amazon CEO Jeff Bezos", http://www.hindustantimes.com/business-news/no-obstacles-to-growth-in-india-says-amazon-ceo-jeff-bezos/article1-1269464.aspx
[10] "Amazon Announces Additional US $2 Billion Investment in India", http://www.amazon.in/gp/feature.html?ie=UTF8&docId=1000818573
[11] "India's Flipkart Raises $1 Billion in Fresh Funding - WSJ", http://www.wsj.com/articles/indias-flipkart-raises-1-billion-in-fresh-funding-1406641579?mod=LS1
[12] "Ambushed: When Flipkart’s Big Billion Sale turned into a nightmare | Best Media Info, News and Analysis on Indian Advertising, Marketing and Media Industry.", http://www.bestmediainfo.com/2014/10/ambushed-when-flipkarts-big-billion-sale-turned-into-a-nightmare/
[13] "Flipkart’s ‘Big Billion Day Sale’ Prompts Big Apology - India Real Time - WSJ", http://blogs.wsj.com/indiarealtime/2014/10/08/flipkarts-big-billion-day-sale-prompts-big-apology/
[14] "A Billion Dollar Sale, And A Few Questions", http://www.dnaindia.com/analysis/standpoint-a-billion-dollar-sale-and-a-few-questions-2047853
[15] "3rd Test: India v West Indies at Ahmedabad, Nov 12-16, 1983", http://www.espncricinfo.com/ci/engine/match/63352.html
[16] "Why Amazon Refuses to Wear Purple Lanyards in Vegas", http://www.bloomberg.com/news/articles/2015-04-01/why-amazon-refuses-to-wear-purple-lanyards-in-vegas
[17] "Amazon.com to Acquire Diapers.com and Soap.com", http://phx.corporate-ir.net/phoenix.zhtml?c=176060&p=irol-newsArticle&ID=1493202
[18] “The Everything Store: Jeff Bezos and the Age of Amazon”, by Brad Ston, http://www.amazon.in/Everything-Store-Brad-Stone/dp/0593070461/tag=abhisblog-21&ref=sr_1_1?ie=UTF8&qid=1429439636&sr=8-1&keywords=the+everything+store#reader_0593070461
[19] "Amazon vs. Jet.com: Marc Lore Aims to Beat Bezos", http://www.bloomberg.com/news/features/2015-01-07/amazon-bought-this-mans-company-now-hes-coming-for-them-correct
[20] "Amazon Media Room: Press Releases", http://phx.corporate-ir.net/phoenix.zhtml?c=176060&p=irol-newsArticle&ID=503037
[21] "Amazon Raises Free Shipping Threshold From $25 to $35", http://www.pcmag.com/article2/0,2817,2426202,00.asp
[22] "Amazon Media Room: Press Releases", http://phx.corporate-ir.net/phoenix.zhtml?c=176060&p=irol-newsArticle&ID=669786
[23] "Amazon Media Room: Press Releases", http://phx.corporate-ir.net/phoenix.zhtml?c=176060&p=irol-newsArticle&ID=1531234
[24] "Amazon Media Room: Press Releases", http://phx.corporate-ir.net/phoenix.zhtml?c=176060&p=irol-newsArticle&ID=1552678
[25] "Amazon.com: Kindle MatchBook", https://www.amazon.com/gp/digital/ep-landing-page?ie=UTF8&*Version*=1&*entries*=0
[26] "Introducing “Amazon AutoRip” – Customers Now Receive Free MP3 Versions of CDs Purchased From Amazon – Past, Present and Future", http://phx.corporate-ir.net/phoenix.zhtml?c=176060&p=irol-newsArticle&ID=1773251
[27] "Amazon Media Room: Press Releases", http://phx.corporate-ir.net/phoenix.zhtml?c=176060&p=irol-newsArticle&ID=1802939
[28] "Amazon launches a product so gimmicky we thought it was an April Fools' joke", http://venturebeat.com/2015/03/31/amazon-launches-a-product-so-gimmicky-we-thought-it-was-an-april-fools-joke/
[29] "Customer Satisfaction Lowest at Wal-Mart, Highest at Nordstrom and Amazon", http://247wallst.com/retail/2015/02/18/customer-satisfaction-lowest-at-wal-mart-highest-at-nordstrom-and-amazon/
[30] "Customers Rank Amazon #1 in Customer Satisfaction", http://www.amazon.com/gp/feature.html?ie=UTF8&docId=1001924291
[31] "Flipkart top seller WS Retail to separate logistics arm Ekart into wholly-owned unit", http://articles.economictimes.indiatimes.com/2015-01-21/news/58306262_1_ekart-ws-retail-logistics-arm
[32] "India's Flipkart Launches Subscription Service for Customers", http://thenextweb.com/in/2014/05/08/indias-flipkart-launching-amazon-prime-like-subscription-service-called-flipkart-first/
[33] "Now Mumbai's famed dabbawalas will deliver your Flipkart buys", http://www.dnaindia.com/money/report-now-mumbai-s-famed-dabbawalas-will-deliver-your-flipkart-buys-2076276
[34] "Flipkart closes Flyte MP3 store a year after launch", http://www.livemint.com/Consumer/TJOoP9he0fq0EG7S8lRXYK/Flipkart-closes-Flyte-MP3-store-a-year-after-launch.html
[35] "Why Flipkart Shut Down Flyte Music - MediaNama", http://www.medianama.com/2013/05/223-why-flipkart-shut-flyte-music/
[36] "Amazon Media Room: Press Releases", http://phx.corporate-ir.net/phoenix.zhtml?c=176060&p=irol-newsArticle&ID=2000521
[37] "Amazon again expands 'Prime Now' one-hour delivery service, this time to Austin", http://www.geekwire.com/2015/amazon-again-expands-prime-now-one-hour-delivery-service-this-time-to-austin/

[38] "Now Amazon will deliver from your local kirana store", http://www.dnaindia.com/money/report-now-amazon-will-deliver-from-your-local-kirana-store-2076280

Part III – There’s Something (Profitable) About Your Privacy
Why do so many companies hanker after apps? Smartphone apps, tablet apps, iOS apps, Android apps, app-this, app-that….
Leave aside for a moment the techno-pubescent excitement that accompanies the launch of every new technology (if you are not old enough to remember words like “client-server[1]”, then “soa[2]” will surely sound familiar enough). Every Marketing 101 course drills into its students that acquiring a new customer is way costlier than retain an existing. Loyal customers (leaving aside the pejorative connotation the word “loyal” carries, implying that customers who shop elsewhere for a better deal are of dubious moral character) are what you should aspire to – that keep buying from you for a longer period of time[3] – and which allows you to refocus your marketing and advertising dollars towards the acquisition of newer customers, faster. If you spend less on unnecessary discounts and expensive retention schemes then margins from existing customers are automatically higher.



Customers can stay loyal if you can build a bond of affinity with them. You should aspire to be more like the local kirana owner (only infinitely richer), who in a perfect world knew everything about you – your likes, dislikes, which festivals you celebrated, and therefore which sweets you would buy, when your relatives came over to stay and what their likes were, what exotic food items you wanted, and so on. And who knew your name. Hence the marketer’s love for loyalty programs[4], no matter that customer loyalty is notoriously difficult to guarantee[5].

In the world of online retailing (actually, it applies just as well to any kind of retailing), how do you get to acquire a deep level of intimacy with your customer? Smartphone apps provide this degree of intimacy that desktop / laptop browsers cannot. This is by simple virtue of the fact that the smartphone travels with the user, the user is constantly logged on to the app, and the app knows where you go and where you are. So no wonder that in December 2011, Amazon offered a “brazen[6]” deal to its customers in brick-and-mortar stores to do an “in-store” price-check of items using the Amazon Price Check app[7], and if the same product was available on Amazon, get it at a discount off the store’s price. Though termed “not a very good deal[8]”, it nonetheless angered[9] the Retail Industry Leaders Association, and elsewhere was described as “Evil But It's the Future[10]”. The combination of availability – the app was installed on the smartphone that was with the user – and the integrated capabilities in the device – a camera that fed into a barcode scanner app –made this possible. The appeal of apps is undeniable.

The magical answer is – “app”. Your best-thing-since-sliced-bread app is installed on the customer’s smartphone (or tablet or phablet), is always running (even when it is not supposed to be running), knows everyone in your contacts (from your proctologist to the illegal cricket bookie), can hear what you speak (even your TV can do this now[11]), knows where you are, who you call, what text messages you send and receive, knows what other apps you have installed on your smartphone (presumably so it can see how potentially disloyal you could be), which Wi-Fi networks you connect to, access what photos and videos you have taken (naughty!) and so on and so forth. All this the better to hear you with, the better to see you with, and ultimately the better to eat you (your wallet) with – with due apologies to Little Red Riding Hood[12]. You may want to take a closer look at the permissions your favorite app wants when you install it – like Amazon India[13], eBay[14], Flipkart[15], Freecharge[16], HomeShiop18[17], Jabong[18], MakeMyTrip[19], Myntra[20], SnapDeal[21]. Great minds do seem to think alike, don’t they?

[Technical aside: I covered the red herrings thrown in favour of apps in the first part, but here is some more… You can store more data, more effectively, and process that data better using an app than you can with a plain browser-based approach. True. But not quite. The ever-evolving world of HTML5 (the standard that underpins how information is structured and presented on the web) has progressed to make both these points moot – with offline storage[22] and local SQL database support[23]. Yes, there are arguments to be made about handling large amounts of data offline with browser-based mechanisms, but these are for the most part edge-cases. To be fair, there are some high-profile cases of companies switching to native apps after experimenting with HTML5-based apps (hybrid apps that wrapped a browser-based UI with a native shell), like LinkedIn[24] and Facebook[25]. The appeal of apps therefore is undeniable. But, as I argued earlier, the appeal of apps does not negate the utility of browser-based interfaces.]

What is all this useful for? Your app now knows that you Ram, Shyam, and Laxman in your contacts have birthdays coming up, and it can suggest an appropriate gift for them. Convenient, isn’t it? While driving to work, you can simply tell your app – speak out the commands – to search for the latest perfume that was launched last week and to have it gift wrapped and delivered to your wife. The app already has your credit card details, and it knows your address. Your app knows that you are going on a vacation next week (because it can access your calendar, your SMS-es, and perhaps even your email) to Sikkim; it helpfully suggests a wonderful travel book and some warm clothing that you may need. The imagined benefits are immense.

But, there is a distinctly dark side to apps – as it relates to privacy – that should be a bigger reason of concern for customers and smartphone users alike. Three sets of examples should suffice.
You get a flyer from your favourite brick-and-mortar store, letting you know that you can buy those items that your pregnant daughter will need in the coming weeks. You head over to the store, furious – because your daughter is most certainly not pregnant. Later you find out that she is, and that the store hadn’t made a mistake. It turns out the truth is a little more subtler than that[26], and a little more sedate than what tabloid-ish coverage - with headlines like “How Companies Learn Your Secrets[27]” - made it out to be (the original presentation made at the PAW Conference is also available online[28]).

There are enough real dangers in this world without making it easier to use technology to make it even more unsafe. Considering how unsafe[29] air travel can be for women[30] and even girls[31], one has to question the wisdom of making it even[32] more so[33]. If this does not creep you out, then perhaps the Tinder app – which uses your location and “displays a pile of snapshots of potential dates in a user’s immediate area”[34], to as close as within 100 feet[35] - may give you pause for thought.

Do apps need all the permissions they ask for? No. But, … no! Would they work if they didn’t have all those permissions? 99% of the time, yes – they would work without a problem. For example, an app would need to access your camera if you wanted to scan a barcode to look up a product. The app would need access to your microphone if you wanted to speak out your query rather than type it in the app. What if you don’t particularly care about pointing your camera at the back of books to scan their barcodes, or speaking like Captain Kirk into your phone? Sorry, you are out of luck. You cannot selectively choose to not grant to certain privileges to an app – at least on a device running the Android mobile operating system. In other words, it is a take-it-or-leave-it world, where the app developer is in control. Not you. And wanting to know your location? Even if you are a dating app, it’s still creepy.

But surely app makers will ask you before slurping your very personal, very private information to its servers in the cloud? Yes, of course – you believe that to be true, especially if you are still in kindergarten.

A few weeks before its IPO[36], JustDial’s app was removed from the Google Play Store[37]. It was alleged that the updated version of the JustDial app had “started retrieving and storing the user’s entire phone book, without a warning or disclaimer. [38],[39]” Thereafter, JustDial’s mobile “Terms and Conditions” were updated to include the following line: “You hereby give your express consent to Justdial to access your contact list and/or address book for mobile phone numbers in order to provide and use the Service.[40]”

In 2013, US-based social networking app Path was caught as it “secretly copied all its users’ iPhone address books to its private servers.”[41] Action was swift. The FTC investigated and reached a settlement with Path, which required “Path, Inc. to establish a comprehensive privacy program and to obtain independent privacy assessments every other year for the next 20 years. The company also will pay $800,000 to settle charges that it illegally collected personal information from children without their parents’ consent.”[42] In the US, a person’s address book “is protected under the First Amendment[43].” When the controversy erupted, it was also reported that “A person’s contacts are so sensitive that Alec Ross, a senior adviser on innovation to Secretary of State Hillary Rodham Clinton, said the State Department was supporting the development of an application that would act as a “panic button” on a smartphone, enabling people to erase all contacts with one click if they are arrested during a protest[44].” Of course, politics is not without its dose of de-rigueur dose of irony. That dose was delivered in 2015 when it emerged that Hillary Clinton had maintained a private email account even as she was Secretary of State in the Barack Obama presidency and refused to turn over those emails[45].

So what happened to Just Dial for allegedly breaching its users’ privacy? Nothing. No investigation. No fine. No settlement. No admission. No mea-culpa. In short, nothing. It was business as usual.
Apps can be incredibly liberating in eliminating friction in the buying process. But hitching your strategy to an app-only world is needless. It is an expensive choice – from many, many perspectives, and not just monetary. The biggest costs are of making you look immature should you have to reverse direction. As a case-in-point, one can point to the entirely avoidable brouhaha over Flipkart, Airtel, and Net Neutrality[46]. In this battle, no one came smelling like roses, least of all Flipkart, which attracted mostly negative attention[47] from the ill-advised step, notwithstanding post-fact attempts to bolt the stable door[48].

Let me end with an analogy. The trackpad on your laptop is very, very useful. Do you then disable the use of an externally connected mouse?

Disclaimer: views expressed are personal.


[1] "Computerworld - Google Books", https://books.google.co.in/books?id=c2t_-WWE1VAC&pg=PA109&lpg=PA109&dq=client-server+hype&source=bl&ots=SJGHWFM-M5&sig=g6sagoJV_xVSvp22-rgOonfLpNY&hl=en&sa=X&ei=x1ExVb3NKYeumAX2_IGICQ&ved=0CDYQ6AEwBA#v=onepage&q=client-server%20hype&f=false
[2] "SOA: Hype vs. Reality - Datamation", http://www.datamation.com/entdev/article.php/3671061/SOA-Hype-vs-Reality.htm
[3] "How Valuable Are Your Customers? - HBR", https://hbr.org/2014/07/how-valuable-are-your-customers/
[4] "Loyalty programmes: Are points that consumers stockpile juicy enough to keep them coming back? - timesofindia-economictimes", http://articles.economictimes.indiatimes.com/2013-06-30/news/40272286_1_loyalty-programmes-loyalty-card-loyalty-management
[5] "What Loyalty? High-End Customers are First to Flee — HBS Working Knowledge", http://hbswk.hbs.edu/item/6679.html
[6] "Amazon's Price Check App Undercuts Brick-and-Mortar Stores Prices | TIME.com", http://business.time.com/2011/12/08/use-amazons-price-check-app-and-save-15-this-saturday/
[7] "Amazon.com Help: About the Amazon Price Check App", http://www.amazon.com/gp/help/customer/display.html?nodeId=200777320
[8] "Amazon pushing Price Check app with controversial online discounts | The Verge", http://www.theverge.com/2011/12/10/2626703/amazon-price-check-app-competition-discount
[9] "Retail association pissed about Amazon.com's Price Check app - GeekWire", http://www.geekwire.com/2011/retail-association-pissed-amazoncoms-price-check-app/
[10] "Amazon Price Check May Be Evil But It's the Future - Forbes", http://www.forbes.com/sites/erikkain/2011/12/14/amazon-price-check-may-be-evil-but-its-the-future/
[11] "Samsung smart TV issues personal privacy warning - BBC News", http://www.bbc.com/news/technology-31324892
[12] "Little Red Riding Hood - Wikipedia, the free encyclopedia", http://en.wikipedia.org/wiki/Little_Red_Riding_Hood
[13] https://www.dropbox.com/s/63zk6oyt9tqad4p/AmazonIndia_app.png?dl=0
[14] https://www.dropbox.com/s/g4tj1k5d5yfbqex/ebay_app.png?dl=0
[15] https://www.dropbox.com/s/wq0spvgzo9il6rx/Flipkart_app.png?dl=0
[16] https://www.dropbox.com/s/jxvur4g1jqdb03k/freecharge_app.png?dl=0
[17] https://www.dropbox.com/s/7aza8ipjvqhn6m1/HomeShop18_app.png?dl=0
[18] https://www.dropbox.com/s/jgel7ltka5u5ogr/Jabong_app.png?dl=0
[19] https://www.dropbox.com/s/wkqhewbizxpcw7w/MakeMyTrip_app.png?dl=0
[20] https://www.dropbox.com/s/pcp6hoy38pfkiw3/Myntra_app.png?dl=0
[21] https://www.dropbox.com/s/0gngd11rz2fpu3q/snapdeal_app.png?dl=0
[22] "Web Storage", http://dev.w3.org/html5/webstorage/
[23] "Offline Web Applications", http://www.w3.org/TR/offline-webapps/#sql
[24] "Why LinkedIn dumped HTML5 & went native for its mobile apps | VentureBeat | Dev | by J. O'Dell", http://venturebeat.com/2013/04/17/linkedin-mobile-web-breakup/
[25] "Mark Zuckerberg: Our Biggest Mistake Was Betting Too Much On HTML5 | TechCrunch", http://techcrunch.com/2012/09/11/mark-zuckerberg-our-biggest-mistake-with-mobile-was-betting-too-much-on-html5/
[26] "Did Target Really Predict a Teen’s Pregnancy? The Inside Story", http://www.kdnuggets.com/2014/05/target-predict-teen-pregnancy-inside-story.html
[27] "How Companies Learn Your Secrets - NYTimes.com", http://www.nytimes.com/2012/02/19/magazine/shopping-habits.html?_r=0
[28] "Predictive Analytics World Conference: Agenda - October, 2010", http://www.predictiveanalyticsworld.com/dc/2010/agenda.php#day1-8a
[29] "Federal judge upholds verdict that North Bergen man molested woman on flight ‹ Cliffview Pilot", http://cliffviewpilot.com/federal-judge-upholds-verdict-that-north-bergen-man-molested-woman-on-flight/
[30] "Man accused of groping woman on flight to Newark - NY Daily News", http://www.nydailynews.com/new-york/man-accused-groping-woman-flight-newark-article-1.1709952
[31] "Man jailed for molesting girl, 12, on flight to Dubai | The National", http://www.thenational.ae/uae/courts/man-jailed-for-molesting-girl-12-on-flight-to-dubai
[32] "Virgin is Going to Turn Your Flight Into a Creepy Bar You Can't Leave", http://mic.com/articles/37807/virgin-is-going-to-turn-your-flight-into-a-creepy-bar-you-can-t-leave
[33] "KLM Introduces A New Way To Be Creepy On An Airplane - Business Insider", http://www.businessinsider.com/klm-introduces-a-new-way-to-be-creepy-on-an-airplane-2012-2?IR=T
[34] "Tinder Dating App Users Are Playing With Privacy Fire - Forbes", http://www.forbes.com/sites/anthonykosner/2014/02/18/tinder-dating-app-users-are-playing-with-privacy-fire/
[35] "Include Security Blog | As the ROT13 turns….: How I was able to track the location of any Tinder user.", http://blog.includesecurity.com/2014/02/how-i-was-able-to-track-location-of-any.html
[36] http://en.wikipedia.org/wiki/Justdial, accessed April 11, 2015
[37] "Updated: JustDial App Pulled From Google Play Store; Privacy Concerns? - MediaNama", http://www.medianama.com/2012/09/223-justdial-app-pulled-from-google-play-store-privacy-concerns/
[38] "Updated: JustDial App Pulled From Google Play Store; Privacy Concerns? - MediaNama", http://www.medianama.com/2012/09/223-justdial-app-pulled-from-google-play-store-privacy-concerns/
[39] "Bad App Reviews for Justdial JD", http://www.badappreviews.com/apps/147872/justdial-jd-search-anything, accessed April 09, 2015
[40] "Terms Of Use”, http://www.justdial.com/MobileTC, accessed April 09, 2015
[41] "The Path Fiasco Wasn't A Privacy Breach, It Was A Data Ownership Breach - The Cloud to Cloud Backup Blog", http://blog.backupify.com/2012/02/09/the-path-fiasco-wasnt-a-privacy-breach-it-was-a-data-ownership-breach/
[42] "Path Social Networking App Settles FTC Charges it Deceived Consumers and Improperly Collected Personal Information from Users' Mobile Address Books | Federal Trade Commission", https://www.ftc.gov/news-events/press-releases/2013/02/path-social-networking-app-settles-ftc-charges-it-deceived
[43] "Anger for Path Social Network After Privacy Breach - NYTimes.com", http://bits.blogs.nytimes.com/2012/02/12/disruptions-so-many-apologies-so-much-data-mining/?_r=0
[44] Ibid.
[45] "Hillary Clinton deleted 32,000 'private' emails, refuses to turn over server - Washington Times", http://www.washingtontimes.com/news/2015/mar/10/hillary-clinton-deleted-32000-private-emails-refus/
[46] "Flipkart Pulls Out of Airtel Deal Amid Backlash Over Net Neutrality", http://www.ndtv.com/india-news/flipkart-pulls-out-of-airtel-deal-amid-backlash-over-net-neutrality-754829
[47] "Flipkart's stand on net neutrality - The Hindu", http://www.thehindu.com/business/flipkarts-stand-on-net-neutrality/article7106072.ece

[48] "Our Internet is headed in the right direction: Amod Malviya - Livemint", http://www.livemint.com/Companies/1J4CaeGnXvKCbwvWW76J6H/Our-Internet-is-headed-in-the-right-direction-Amod-Malviya.html

The second part of my series of articles on why I believed Flipkart was at losing focus, at the wrong time, when faced with its most serious competition to date. This one focused on why a fascination with mobile advertising numbers could be very misleading.
It was published in DNA on April 14, 2015.

The Numbers Game Can be Very Misleading
According to the Internet Trends report of 2014, mobile internet advertising spend grew 47% year-on-year in 2013 to reach $12.7 billion, or 11% of the total global internet advertising spend. This mobile ad spend number was about 32 per cent of total mobile app revenues of $38 billion. Clearly mobile ad spend has been growing several times faster than non-mobile ad spend.
Facebook, the world’s largest social network, has been stunningly successful in growing its mobile revenues. So much so that “In the final three months of 2014, Facebook served 65% fewer ads than a year earlier, but the average cost of those ads to advertisers was 335% higher.[i]” As much as $2.5 billion in Facebook’s annual revenues came from these mobile ads – shown on smartphones or tablets. So successful has Facebook been in making money from selling these mobile ads that it “launched its in-app mobile ad network” in 2014[ii] to sell ads within other apps,


Meanwhile, Google has not been standing still. It is by far the largest player on the internet when it comes to online ads with estimated annual mobile ad revenues of $8 billion in 2013[iii], but its presence on the mobile platform has seen some hiccups. Its overall slice of the mobile ad pie has been shrinking, thanks to Facebook’s steroidal growth in the segment, but as an overall number Google’s mobile ad revenues continue to grow. It was estimated that Google and Facebook held a combined 50 per cent share of the global mobile ad revenue market in 2014[iv]. It is however a given that not only will it continue to persevere in that segment, but will sooner or later figure out the right approach to get growth back on track – given that less and less users were spending time on mobile browsers than on apps. For example, Google added deep-links[v] to its mobile search results[vi], so that users could click to be taken directly to a specific page (or its equivalent) in an app if they had that app installed[vii]. It also announced that it would start using “mobile-friendliness as a ranking signal” in its mobile search results[viii]. In yet another effort to boost ads on its app store, Google Play, it announced a pilot program to help app developers build targeted ads for search results on Google Play[ix]. It is expected that these will yields results in the coming quarters. Nor is it the case that everything is negative for Google on the mobile front. YouTube, for example, continued to be a star performer for Google. Google CFO stated that “YouTube’s mobile revenue (in 2014) increased more than 100 percent over[x]”

Let’s not forget Twitter. “Mobile advertising revenue was 85% of total advertising revenue[xi]”, or $272 million, in in its third quarter of 2014.
In a somewhat incongruous presence, we also have Indian startup InMobi, with estimated annual revenues of $372 million, and which is also estimated to be the “biggest non-public mobile ad business on the planet.[xii]” Yes, that is very, very impressive and creditable. There are several other start-ups in this space; for example, Kenshoo, whose “CEO Izhar-Prato Says $15 Billion In Annual, Online Sales Revenue Flowing Through Platform[xiii]."

So, the decision to enter the mobile ad business should seem like a non-brainer, right? After all, didn’t Google CEO Eric Schmidt say that Amazon was Google’s biggest competitor in search[xiv]? Also, didn’t Amazon have search ambitions, seeking to start first with replacing Google ads that are served on Amazon’s pages[xv]?

Not quite, one hopes.

Before you gush over the fact that 98% of Facebook’s revenue growth in its latest quarter were accounted for by mobile ads[xvi], also note that Facebook has 745 million users on an average day (that is more than 22 billion visits a month) visiting its site via mobile devices[xvii]. By the by, Facebook crossed one trillion page views in 2011[xviii], so the company does not quite have a burning problem of engagement either on its hands.

Twitter’s numbers were achieved on the back of 181 billion (yes, that is 181 followed by nine zeros) timeline views by its 284 million monthly active users, of which 227 million were mobile users[xix].
Flipkart, by contrast, had “8 million daily visits” to its web sites – I assume desktop, mobile, and app combined – as of December 2014[xx].

Amazon, despite not being known as a search player, is still estimated to have sold $1 billion in search ads in 2014[xxi].

Much has been said and written about Google’s search business; so I will add just one more point here – Google AdWords has more than one million advertisers[xxii].

And if you are a start-up hoping to make it big by either acquiring or getting acquired, do take a minute to ponder on the sobering reality-check in the form of Velti’s meltdown[xxiii].

This is not to pour cold water over Flipkart’s acquisition of Bangalore-based AdIquity[xxiv] (which had raised $15 million from VC firms and was at one point known as Guruji[xxv]), or on Sachin Bansal’s statement, “"I believe it (mobile advertising) can be a big business for us[xxvi]". Far from it. Every company should look aggressively for avenues to disrupt existing business models as well as leverage strengths in one area to prise open a market in another area. That is what every leader aspires to do.

But, if you believe, as a start-up locked in a duel with a company like Amazon that has planted its feet in the Indian market and which is comfortable with having earned less profits in its entire existence than Apple in one quarter[xxvii],[xxviii], with no profits on the horizon (I touched on this in the previous post), VCs that would be getting increasingly worried about their exit strategy (and hopefully profitable exit strategy at that), you have the luxury of entering a market such as mobile ads – on a global level – and where the competition consists of companies like Google, Facebook, and Twitter, then do not be surprised if you are accused of having lost focus.

In the next part I will take a look at why Flipkart may still believe that its app-only drive and mobile ad ambitions could provide synergies.

[i] "Facebook's Mobile Revenue Hits $2.5 Billion as Prices Soar | Digital - Advertising Age", http://adage.com/article/digital/facebook-s-mobile-revenue-hits-2-5-billion-prices-soar/296869/
[ii] "With Ad Network, Facebook Targets Rest of Mobile World | Digital - Advertising Age", http://adage.com/article/digital/ad-network-facebook-targets-rest-mobile-world/292959/
[iii] "Google's 2013 Mobile Search Revs Were Roughly $8 Billion", http://searchengineland.com/googles-2013-mobile-search-revenues-nearly-8-billion-globally-201227
[iv] "Google, Facebook combined for 50% of mobile ad revenues in 2014", http://www.networkworld.com/article/2881132/wireless/google-facebook-combined-for-50-of-mobile-ad-revenues-in-2014.html
[v] "Google To Offer Targeted Mobile App Install Ads In Search And YouTube; Expands App Deep Linking To AdWords | TechCrunch", http://techcrunch.com/2014/04/22/google-to-offer-mobile-app-install-ads-in-search-and-youtube-expands-app-deep-linking-to-adwords/
[vi] "Will Deep Linking Shake Google’s Ad and Search Supremacy?", http://www.cheatsheet.com/technology/will-deep-linking-shake-googles-ad-and-search-supremacy.html/?a=viewall
[vii] "Overview - App Indexing for Google Search — Google Developers", https://developers.google.com/app-indexing/
[viii] "Official Google Webmaster Central Blog: Finding more mobile-friendly search results", http://googlewebmastercentral.blogspot.in/2015/02/finding-more-mobile-friendly-search.html
[ix] "A New Way to Promote Your App on Google Play | Android Developers Blog", http://android-developers.blogspot.in/2015/02/a-new-way-to-promote-your-app-on-google.html
[x] "Google Continues To Miss Revenue Estimates In Fourth Quarter Earnings", http://www.forbes.com/sites/aarontilley/2015/01/29/google-continues-to-miss-revenue-estimates-in-fourth-quarter-earnings/
[xi] "Twitter Reports Third Quarter 2014 Results (NYSE:TWTR)", https://investor.twitterinc.com/releasedetail.cfm?releaseid=878170
[xii] "2. Inmobi: Probably The Biggest Non-Public Mobile Ad Business On The Planet- Business Insider India", http://www.businessinsider.in/RANKED-The-Hottest-Pre-IPO-Adtech-Startups-Of-2014/2-INMOBI-PROBABLY-THE-BIGGEST-NON-PUBLIC-MOBILE-AD-BUSINESS-ON-THE-PLANET/slideshow/34262656.cms
[xiii] "Kenshoo CEO Izhar-Prato Says $15 Billion In Annual, Online Sales Revenue Flowing Through Platform – AdExchanger", http://adexchanger.com/online-advertising/kenshoo/
[xiv] "Google's Eric Schmidt: Our biggest search competitor is Amazon — not Microsoft or Yahoo - GeekWire", http://www.geekwire.com/2014/google-amazon/
[xv] "Amazon to challenge Google in online-ad business - MarketWatch", http://www.marketwatch.com/story/amazon-to-challenge-google-in-online-ad-business-2014-08-24
[xvi] "Chart: Mobile Ads Account for 98% of Facebook's Revenue Growth | Statista", http://www.statista.com/chart/2496/facebook-revenue-by-segment/
[xvii] Ibid.
[xviii] "Facebook is first with 1 trillion page views, according to Google | ZDNet", http://www.zdnet.com/article/facebook-is-first-with-1-trillion-page-views-according-to-google/
[xix] "Twitter Reports Third Quarter 2014 Results (NYSE:TWTR)", https://investor.twitterinc.com/releasedetail.cfm?releaseid=878170
[xx] "Flipkart.com", http://www.flipkart.com/s/press and http://www.entrepreneurindia.com/news/Flipkart-join-hands-with-EPCH-VTPC-and-KASSIA-to-help-small-entrepreneurs-5801/
[xxi] "Amazon to challenge Google in online-ad business - MarketWatch", http://www.marketwatch.com/story/amazon-to-challenge-google-in-online-ad-business-2014-08-24
[xxii] Ibid.
[xxiii] "How Velti, One Of The Largest Mobile Ad Companies On The Planet, Lost $130 Million | Business Insider India", http://www.businessinsider.in/How-Velti-One-Of-The-Largest-Mobile-Ad-Companies-On-The-Planet-Lost-130-Million/articleshow/22238675.cms
[xxiv] "Flipkart eyes more buys to boost mobile advertisement business - The Times of India", http://timesofindia.indiatimes.com/business/india-business/Flipkart-eyes-more-buys-to-boost-mobile-advertisement-business/articleshow/46616114.cms
[xxv] "Flipkart Acquires Mobile Ad Platform, Adiquity » NextBigWhat", http://www.nextbigwhat.com/flipkart-acquires-adiquity-297/
[xxvi] "Flipkart eyes more buys to boost mobile advertisement business - The Times of India", http://timesofindia.indiatimes.com/business/india-business/Flipkart-eyes-more-buys-to-boost-mobile-advertisement-business/articleshow/46616114.cms
[xxvii] "Amazon earnings: How Jeff Bezos gets investors to believe in him.", http://www.slate.com/articles/business/moneybox/2014/01/amazon_earnings_how_jeff_bezos_gets_investors_to_believe_in_him.html
[xxviii] "Rolfe Winkler on Twitter: "Apple's operating cash flow in Q4 -- $33.7 billion. Amazon's since 1994 -- $27.0 billion."", https://twitter.com/rolfewinkler/status/560214596532043776

This is the first of a series of articles I wrote for DNA in April on why I believed Flipkart (India's largest online retailer and among the most highly valued startups in the world) was at losing focus, at the wrong time, when faced with its most serious competition to date.

"Why Flipkart seems to be losing focus", appeared in DNA on Sunday, April 12, 2015.

Part I
Among all start-ups that have emerged from India in recent and not-so recent times, Flipkart is likely to be at the top of most people’s minds. The list is admittedly weighted heavily in favour of newer companies, given that the Indian start-up ecosystem has only in the last decade or so started to pick up steam. But that is changing, and the list is getting longer and diverse, with such names as Urban Ladder, Zomato, Reel, Druva Software, WebEngage, etc…[1] in just the online segment. But today, in 2015, Flipkart is the big daddy of them; with total equity funding of US $2.5 billion and a valuation of a whopping US$11 billion as of April 2015, it was ranked the seventh most valuable start-up in the world[2] (though that was still a far cry from the $178 billion market cap enjoyed by US online retailer Amazon[3] and $220 billion market cap of Chinese online retailer Alibaba[4]).

Yet Flipkart seems to be in trouble.


Let’s ignore for the time being the fact that it loses much more money than it makes, and that scale does not seem to have lessened the bleeding of money – it’s caught in a situation where the more it sells the more it loses[5],[6]. How much of it is by design – i.e., a result of a decision to focus on scale and top-line, consciously sacrificing the bottom-line in the interim – is up for debate, but that Flipkart is a long way from profitability is undeniable. Let’s ignore this for the time being.

First off, it is no mean feat to start a company out of the proverbial garage and grow it, in less than a decade (since its start in 2007), into a billion dollar start-up[7]. And make it a leader in an industry. And do it in India. Flipkart has managed to do all that, and more. It has established, spectacularly so, that an Indian start-up can make it to the very top in a fiercely-contested space. Flipkart is, for the most part, has been a spectacularly successful start-up by most counts. Let nothing distract from that fact.

So why the hand-wringing? In one word, focus. Flipkart seems to be losing focus. Three reasons stand out in my mind.

First, the ongoing controversy and its decision to shutter its browser-based web site and force customers to use only its mobile app – on smartphones and tablets.
It has already shut down the mobile browser site of Mnytra – the online fashion retailer it acquired in 2014[8]. Navigate to Flipkart’s website on your browser from your smartphone or tablet and you have no choice but to download and install the app. Come May 1st, and Myntra’s website is planned to be shutdown completely![9] Elsewhere, there have been more than a whiff of rumours that Flipkart is contemplating shutting down its website[10]. This seems not only quite unnecessary, but more importantly, indicative of the grandstanding that is coming to mark some of Flipkart’s actions. Shutting down the web site to become an app-only retailer harms the company in tangible, monetary terms, while benefitting it in the currency of zero-value digital media ink.

WhatsApp, the world’s largest instant-messaging application and which started out and since its launch existed as only a mobile app – with more than 700 million users[11] - launched a browser version of its application in January 2015[12]. Facebook, the world’s largest social network, launched a browser version of its mobile app[13], Facebook Messenger. In case you are tempted to argue that Facebook took that step out of some sort of desperate need to boost numbers, keep in mind that Facebook Messenger had 500 million users in March 2015[14], before it launched its browser version of Messenger. Let’s round off with one more example: Flipboard, with more than 100 million users in 2014[15], launched a browser version in Feb 2015[16]. Yet Flipkart wants to shut down its website.

Is it because of technology? Limitations of mobile browsers? Well, yes, if you are still living in 2010. Half a decade is an eternity in Internet years! Small screen sizes were a big reason why apps were preferred a few years ago, where browser chrome (the title bar, address bar, footer, etc…) would eat up a substantial amount of precious screen real-estate. But in today’s world of gigantic 5” and larger screens, with HD or higher resolutions, this is a moot point[17]. Smartphones are becoming faster and more powerful – quad-core processors and multiple gigabytes of memory are more and more commonplace, 3G is gaining increased adoption even in emerging markets as India. With the availability of UI systems like jQuery Mobile and frameworks like PhoneGap that make a web site adapt to different form factors and which provide substantial support for gestural interactions without additional coding, old arguments hold little water. Unless perhaps you are a gaming developer.

Which Flipkart is not.

Another much-touted argument is that in a country like India, most of the online usage is now coming from mobile devices – smartphones and tablets. India has been ahead of the curve – perversely thanks to its anemic and sparse broadband coverage. According to Mary Meeker’s much-watched-read-downloaded “Internet Trends” presentation at the D10 Conference in May 2012, “Mobile Internet Usage Surpassed More Highly Monetized Desktop Internet Usage in May, 2012, in India”[18]. Indicative of this shift is the fact that in 2014 global smartphone sales overtook feature phone sales, for the first time. A little more than a billion phones were sold of each type[19]. Most of India’s billion mobile users will move towards smartphones by 2020. However, there is, and should be, scepticism over numbers – especially that project into the future. A report that estimated the number of Internet users in India at 300 million by Dec 2014 was questioned by NextBigWhat, a “A Global Media Platform For Technology Entrepreneurs”[20].

But with so little revenue coming from the web site, a Flipkart cannot afford to continue to maintain its website. “It just isn’t viable to have three separate platforms” - so goes one argument[21]. But this thinking betrays a lack of understanding of the distinction between a platform and a consumption channel on the one hand and an even poorer understanding of how complex software applications have been architected for many years now (and especially those that live in the cloud). The code, APIs, database, web server, middleware, identity management, authentication, shopping cart, order fulfilment, security – all of these are common whether you are accessing a site through a website or a mobile app or a mobile browser or even via a wearable device. If you prefer techno-alphabet-soup to describe this, you use a SOA-based approach to software design[22]. Developing a new user interface – desktop, mobile, tablet, etc… - becomes an incremental effort rather than a multi-year, multi-million dollar exercise.

Yes, many technology innovations in the world of retailing are happening in a way that is inextricably intertwined with mobile – like mobile payments and hyperlocal retailing for instance. Wal-Mart uses its mobile app to guide customers to and within its stores (using location tracking via GPS[23]). But they are not shutting down their website either.

If you are in the happy situation of having too many customers, and are ok with ceding a third or more of the online retail market to your competition[24], then shutting down an important channel for your sales is a good idea. And no, let’s not have the argument about cars and buggies either[25].

So why is Flipkart so obsessed, to the point of distraction, with the mobile app strategy?
Customer information and its mobile search ambitions for one.

End of Part I

[1] See "80+ Indian startups to work for in 2015", http://yourstory.com/2014/12/top-startups-india-work-job-employee/ , "80+ Indian startups to work for in 2015", http://yourstory.com/2014/12/top-startups-india-work-job-employee/, and "India Top | Startup Ranking", http://www.startupranking.com/top/india for a more exhaustive list.
[2] "The Billion Dollar Startup Club - WSJ.com", http://graphics.wsj.com/billion-dollar-club/ - accessed April 8, 2015.
[3] "Amazon.com, Inc.: NASDAQ:AMZN quotes & news - Google Finance", http://www.google.com/finance?chdnp=1&chdd=1&chds=1&chdv=1&chvs=maximized&chdeh=0&chfdeh=0&chdet=1428639923069&chddm=1173&chls=IntervalBasedLine&q=NASDAQ:AMZN&ntsp=0&ei=sFAnVeC4NpD6uAT5zIHoCg, accessed April 10, 2015
[4] "Alibaba Group Holding Ltd: NYSE:BABA quotes & news - Google Finance", http://www.google.com/finance?chdnp=1&chdd=1&chds=1&chdv=1&chvs=maximized&chdeh=0&chfdeh=0&chdet=1428640100641&chddm=1173&chls=IntervalBasedLine&q=NYSE:BABA&ntsp=0&ei=X1EnVamuCInwuAS5koAo , accessed April 10, 2015
[5] Per http://www.livemint.com/Companies/nEzvGCknQDBY2RgzcVAKdO/Flipkart-India-reports-loss-of-2817-crore.html, for the year ending March 31, 2013, “Revenue soared fivefold to more than Rs.1,180 crore from Rs.204.8 crore in the previous year”, but “expenses jumped more than five times to Rs.1,366 crore from Rs.265.6 crore last year” – clearly, they were not yet at the point where they could reap economies of scale. As an aside, Flipkart’s Mar 2009 FY revenues were approximately 2.5 crore rupees - http://www.sramanamitra.com/2010/10/06/building-indias-amazon-flipkart-ceo-sachin-bansal-part-3/ - and approximately 30 crore rupees for FY 2010 - http://www.sramanamitra.com/2010/10/07/building-indias-amazon-flipkart-ceo-sachin-bansal-part-4/.
[6] "For the year ended 31 March 2014, the losses of all Flipkart India entities amounted to Rs.719.5 crore on revenue of Rs.3,035.8 crore, according to data compiled by Mint from the Registrar of Companies (RoC) and Acra.", http://www.livemint.com/Companies/VXr8oJzNJ4daOYSO5wNETN/Inside-Flipkarts-complex-structure.html This tells us that both expenses and revenues are growing almost in lock-step – economies of scale are still elusive.
[7] "Flipkart claims to have hit a run rate of $1 bn in gross sales", http://www.business-standard.com/article/companies/flipkart-claims-to-have-hit-a-run-rate-of-1-bn-in-gross-sales-114030700029_1.html
[8] "Press Release - Flipkart.com", http://www.flipkart.com/s/press
[9] "Flipkart, Myntra Shut Mobile Websites, Force Visitors To Install Mobile App", http://trak.in/tags/business/2015/03/23/flipkart-myntra-shut-mobile-websites-force-mobile-app-install/
[10] "Flipkart moves towards becoming app-only platform - Livemint", http://www.livemint.com/Industry/J9VeQxowSOlHU8ZMUParUL/Flipkart-moves-towards-becoming-apponly-platform.html
[11] "• WhatsApp: number of monthly active users 2013-2015 | Statistic", http://www.statista.com/statistics/260819/number-of-monthly-active-whatsapp-users/
[12] "WhatsApp Web - WhatsApp Blog", https://blog.whatsapp.com/614/WhatsApp-Web
[13] "Facebook Launches Messenger for Web Browsers | Re/code", http://recode.net/2015/04/08/facebook-launches-messenger-for-web-browsers/
[14] "Facebook new Messenger service reaches 500 million users - BBC News", http://www.bbc.com/news/technology-29999776
[15] "The Inside Story of Flipboard, the App That Makes Digital Content Look Magazine Glossy", http://www.entrepreneur.com/article/234925
[16] "Flipboard Launches a Web Version For Reading Anywhere", http://thenextweb.com/apps/2015/02/10/flipboard-launches-full-web-version-display-feeds-browser/
[17] "The Surprising Winner of the HTML5 Versus Native Apps War | Inside BlackBerry", http://blogs.blackberry.com/2015/01/surprising-winner-of-html5-apps-war/
[18] "KPCB_Internet_Trends_2012_FINAL.pdf", http://kpcbweb2.s3.amazonaws.com/files/58/KPCB_Internet_Trends_2012_FINAL.pdf?1340750868
[19] "Global feature phone and smartphone shipments 2008-2020 | Forecast", http://www.statista.com/statistics/225321/global-feature-phone-and-smartphone-shipment-forecast/
[20] "300 million Internet Users in India By Dec? Grossly Wrong [10+ Questions to IAMAI] » NextBigWhat", http://www.nextbigwhat.com/300-million-india-internet-users-iamai-297/
[21] "Flipkart, Myntra’s app-only move draws mixed reactions - Livemint", http://www.livemint.com/Industry/v6SCQhhl94uriMLM3Qev6N/Flipkart-Myntras-apponly-move-draws-mixed-reactions.html
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