The Gray Hair Speaketh

Year 2035: a viewer call on a live program on CNBC-TV18

*This post is in lighter vein*

Let’s visualise a call coming in on a live market analysis program on CNBC TV18, in the year 2035.

Okay, I hear some of you go, “will traditional TV even be around in 2035??”

So, let’s not get into that detail. The doubts about traditional TV’s survival do remain. But for now, indulge me. Let’s assume live TV is still around, let’s assume that TV18 is still around, and in case these are not, then visualise this happening on some equivalent program on some popular web platform, of 2035.

Again, before we jump there, let me give a historical reference:

This video is from Sept 2017, and since it is in Hindi, I will give you a small summary of it. Here on a live business program, a viewer calls in to say that he has some shares that were left behind by his late grandfather, that they are in physical form, and that he wants to sell them. While the experts explain the process to him, only as a matter of fact, the journalist mentions to the viewer that the shares that he has accidentally discovered now, are 20,000 shares of MRF, and which are worth a princely sum of INR 130 crores!!

With this historical background, we now switch to the year 2035, and where there is a similar business program going on, on your favourite business channel.

Year 2035

We have the host, Balaji, and the experts Mr. Kuber and Mr. Cryptic, engaging on the program. Clearly, the program is all about crypto currencies now, as normal stocks and mutual funds have been reduced to a tiny fraction of the investment pie and are traded on small niche exchanges, and there is no discussion program for those, as the interested segment is a very tiny audience. There are a few amongst those who have been holding ITC Ltd shares and have been waiting for the “imminent” rise in its share price, for almost 30 years.

On the program now, Mr. Kuber is commenting how the crypto markets have remained stable last few days, and have seen only a swing of 30% up and down, over the whole of the previous week. As he says, “I guess investors are happy with the current valuation numbers and seeing the currencies settled in the 30% swing range, which should give a lot of comfort to everyone holding these. Compare that to last month, when we were seeing an 80-90% up and down in the prices.”

Just at that moment, the host Balaji interrupts him saying, “we have a live caller, let’s hear from him”

The live caller is Ravi and he says, “Hello, Sirs, I have a question for the experts here. My grandfather had passed away in the 2021 pandemic and left behind a lot of things. We have been busy surviving and slowly figuring out his various assets. Few months back, we had found his iphone and wanted to see if there was anything on it that might be of value.

As it turns out, it was an iphone 11 and since we are now in the iphone 24 era, there is hardly anyone who can open up anything earlier than the iphone 19. So, it took us a long time to find someone who could open and read through the contents of the iphone11.

Finally, as we managed to do this, we saw some reference to some Dogecoins on his phone. We don’t know how to validate them. And whether they are worth anything. “

Mr. Cryptic responds “Ravi, this is a good question. Dogecoins are definitely around, and yours should also be valid. You can just go to the mycrypto app, put in your details, and it will give you a confirmation of their validity as well as their value, if you’d like to know.”

Ravi says, “Okay, give me 1 second to download the app (*my note: at those speeds, app downloads would literally take 1 second only!) and then let me put the details and see.”

Saying so, Ravi quickly downloads the app, while still being on the live call. After doing that, he puts the reference information from his grandfather’s iphone and finds a match. User experience designs have gone up (finally) by 2035, so that the app is intuitive enough to fetch the data quickly and not wait for the user to make 10-15 attempts with different combinations etc.

And Ravi responds back on the program, “Thank you, Sirs. Indeed, the Dogecoin shows that it is very much valid. Thank you for leading me to this app.”

And he adds, “But I think the app is misbehaving? The value that is is showing has far too many zeros. I don’t think this may be correct.”

Mr. Kuber was intrigued. He asks Ravi to share his screenshot, so the experts can understand what is happening. And Ravi finds a way to share his screen.

At which point, Mr. Kuber, Mr. Cryptic and Balaji, all of them, after reading the screen once, after re-reading it to confirm that they were reading it right, screamed wildly and jumped off their respective seats!

Ravi was startled, almost scared. He was not sure what had hit these guys. Was there some virus or something that he had shared via the screenshot that he had shared.

After they regained composure, they screamed back to Ravi, “Ravi, you are one lucky person! You know how much you are worth, thanks to this stray discovery of your grandfather’s iphone??

You are worth, ONE TRILLION DOLLARS!!

You have become India’s richest person! OH MY GOD.. !!”

May 9, 2021 Posted by Sanjay Mehta | Uncategorized | Leave a comment

Why I cannot comprehend some types of valuations?

If you are thinking that this must be about some astronomical valuations that unicorns are getting, well, this piece is NOT about those valuations.

(I cannot fathom many of those valuations also, but that is a subject for another post, someday!)

As I have been reading about the hot new topic of NFTs (“non-fungible tokens), while I appreciate the tech behind it, and the concept of NFTs per se, one of the consequential story around suddenly finding a lot of value in say, a sports card, or some other random memorabilia, got me thinking about a peeve that I have had, around some kinds of investment areas.

Say, gold, for example.

Gold or sports cards or a T-shirt autographed by someone, while of some value to you for sentimental reasons, can continue to command a rise in valuation, only provided the demand for these, continues to be higher than it’s supply.

Let me elaborate the idea.

Yes, almost everything is valued fundamentally, on a demand vs supply scale. If there were ample diamond stones available and being sold to you by street vendors, they would have cost a few cents and not the thousands of dollars of price that these command. Everything else about the product remaining the same.

It is only the limited supply and a larger demand, that continues to give the diamonds a higher price.

And then came factory manufactured diamonds, with qualities that were so close to the mined stones, that it made it hard to decipher the difference between the two. Factory manufactured diamonds, not being constrained for volume productions, suddenly skews the demand-supply gap, potentially leading to a drop in prices. While this phenomenon is a work-in-progress, the idea just explains how something valued only on basis of a demand-supply gap, can have challenges.

Let’s consider gold.

At a fundamental level, it’s a shiny yellow metal, with certain qualities, and used for jewellery making, and maybe some small industrial uses also. But often held in. raw form, as blocks of the metal, in vaults (folks who would have seen the popular series, Money Heist, might remember the vivid details!). So, just sitting idle in that vault, doing nothing “productive”, how does the value just appreciate? Since that has been the basis of gold being viewed as a part of your asset mix, in your investment portfolio?

Think about sports cards or some limited edition Barbie dolls or Marvel comics, etc., and other such “assets”! They are not even a shiny metal that can convert into a necklace. The value of these is only and only based on the assumption that there will be a continuing demand for these, from people, and being limited edition, therefore, the price will keep going up.

Is there a risk that the appetite for some sports cards or an old Barbie doll goes down? Or that people are not that fascinated by gold anymore? Since, as a hedge to currency risks (for which also gold is used), there are now other options like Bitcoins, say?

Considering the fact that these items are almost worthless, except for the inherent demand to hold them, anything that goes out of favour, stands a big risk of a sudden devaluation!

So, the question can then be that, this aspect of demand-supply drives valuation of everything, and not just the kind of examples that I listed above. You may say that an equity share is also valued thus, because of the limited number in the market, or that silver and copper or foodgrains or a piece of real estate, etc. are also valued on the same basis of demand-supply gaps.

Right, that is a fact. However, as long as these items have a functional role to play, besides the demand-supply gap, that potentially drives their value, then there remains a difference in the way you perceive them.

Say, when you invest in equity. While the price may have been dictated by the demand for the stock, once you invest, your money is part of that pool, which is being used by the company to create value, and which translated to an appreciation of the value of the stock.

The value of silver or copper is also connected to their respective utilisation in industry. And if the prospects of the produce of those industries are good, the demand for the products, and hence the supply chain in terms of silver or copper, go up. Leading to the value appreciation.

A piece of real estate may be valued on it’s demand, but it serves a purpose of housing an office block or a factory or providing residence to people, and creating inherent value in doing so. And as long as that core functionality keeps growing, the demand and hence, the value of the real estate asset also grows.

What you see in these examples is that while, value is decided by the demand, the demand itself is not based on people’s fascination and interest to hold that asset, but rather, on basis of a core value that the product is enabling to create.

Which is why, I am unable to reconcile putting much of my money in gold (irrespective of the history of price and demand growth, whether it will continue to do so, in a changing scenario of bitcoins, NFTs etc. remains a question mark) or in sports cards or similar limited edition items (irrespective of NFTs!).

I feel more comfortable putting money in equity knowing that my money is contributing say, to more medicines being manufactured to serve the sick of the world, or to producing food stuff to feed our millions, or to entertain people with their sports or video games etc.

I know that my financial advisor is not very happy, as she shares her conventional wisdom of distributing my assets into different classes, including gold. But as you can see, somehow, I am not fully convinced.

March 31, 2021 Posted by Sanjay Mehta | Uncategorized | Leave a comment

Why is Ola getting into 2-wheeler EVs manufacturing??

Few days back, I caught the news about Ola’s plans to get into EV manufacturing at a very large scale.

While the idea is undoubtedly impressive and it is clearly a project at scale, I was wondering about why Ola would get into something like this.

As I understand their core business, it is an Uber look-alike. A cab-on-call, a business that connects freelance cabbies to passengers who need a cab, wherever, whenever. To scale that business itself across the country has been an amazing achievement. To add nuances like tying up with regular yellow-black taxis and getting these traditional taxis into the Ola system, or introducing auto-rickshaws also into Ola, or even enhancing the service to include 2-wheeler pillion seat hops, is all a great thing to do. And all of these make for the most natural enhancement of the services.

So, what are the essential elements of business that Ola has mastered in doing this?

• A very good consumer app, with the right UX / UI,
• A great back-end software that keeps the complex operations going, connecting drivers, passengers, ratings, payments, refunds, etc.
• An ability to connect across large groups of potential drivers and motivate them with the right policies and incentives, to join the Ola movement,
• Continuing engagement with government bodies, municipalities, trade unions etc. to manage the permissions and policy matters, around their services,
• Investors and investment management, since a business of this kind, with the scale they are driving at, and while keeping consumer rates to a reasonable level, would keep demanding investments and cash burn for a long time.

At a different level, one can say that the business is about efficient consumer mobility management, and doing all that it takes, to manage this operation.

This being the core, and being the skill strength that the business would have built over time, ideally, an expansion of their services, which plays to these same strengths, and continues to provide them scale growth opportunities, would be ideal to pursue.

What kind of such expansion opportunities, then, come to mind?

• Getting to other modes of transport – say, small aircraft, helicopters, yachts, luxury vehicles like limousines, etc., maybe. With the same fundamental intent of consumer mobility management
• Getting to other geographies, maybe, beyond India
• Perhaps investing into driverless cars as their business dependence on drivers is huge; some day, even in India, driverless cars can be a thing (hard as it may be to visualise that today!)

There is significant ground that Ola needs to cover in its current business and then there are these other ones that make for more natural extensions, that Ola could get into.

What then, makes them get into 2-wheeler EV manufacturing, and that too at a scale that is way bigger than their own needs, as a mobility service provider?? As far as I can see, this is a completely independent, new project, and has almost nothing in common to whatever businesses they are currently in.

Let’s consider other companies who make such moves. Put in large investments and get into business areas, that appear to be vastly away from anything that they are into, at that point.

Companies like Reliance, or the Tatas come to mind in India.

The thing with these industrial groups though, is that they are otherwise into traditional, organic growth kind of businesses, which are currently driving nominal single or low double digit growth rates. And yet, due to their business size, and earlier reserves in their balance sheet, they are sitting on large pools of cash, that need to be deployed.

In such cases, the concerned industrial groups do consider and invest into completely new areas of business, as a means to diversify and perhaps looking for higher growth rates in such businesses, compared to their current areas of business.

Any company with significantly large base of reserves, earned out of profits over the years, can potentially contemplate such completely new and diversified areas of investment. Names like Microsoft and Apple come to mind, as companies who may have the luxury to get into new areas of business, on account of the large pools of cash they are sitting on. But in reality, even they choose their battles with care, and are generally seen to go into areas of relevant interest and extension.

A company sitting on a large pool of cash that it has got in the form of investment capital (and not accrued out of its profits) does not sound like a perfect candidate for someone who should be putting that cash into completely new areas of expansion! Ordinarily, the investors who have put in their moneys, would find this to be a problem. They would have put the money with the idea that the company is going to thrive in their identified area of focus and leadership, and not into something totally new!

Which is where this move of Ola seems to be a surprise, to say the least.

Why would the investors agree to let a mobility business to get into hardcore manufacturing in this manner??

Maybe the major investors, including Softbank, want to make 2-wheeler EVs in India, and use this as a hub, to supply these to other geographies? And think of using Ola as a vehicle (pun unintended!) to be that manufacturing hub? While I am trying to digest this possibility, I still find it questionable since the investors would typically prefer China as a manufacturing hub, rather than India?!

If that is not the case, WHY should Ola be getting into this??

2-wheeler EVs may be thought as a very exciting business to get into. But why should a company specialised in a consumer business like Ola, with software skills, skills of managing drivers and trade unions, and managing payment gateways, etc., be thought of as the perfect business / management, to handle a large scale manufacturing facility, with assembly lines, robots, supply chains, battery tech, sales distribution logistics, etc. etc.??

Yeah, everyone’s response to such questions is that if Elon Musk can straddle an EV company, a space vehicle business, a batteries business and what not, all of which are at high growth, why can’t Ola do so too? Fair question. But it’s like the typical question we marketers get asked that if Apple can manage such fandom and get traction for their brand and business, from its consumers, why can’t their business do so too? Just like Apple is exceptional, so is Elon Musk. One cannot make that as a reference, and reckon that “we too can do it”. And at least not until the point that your own core business provides enough growth opportunities that you have not fully exploited and until you have not given a profitable return to your existing investors!

So, clearly the move by Ola to get into hardcore 2-wheeler EVs manufacturing surprises me, and I would be happy to hear logical perspectives to some of the points raised by me, here, to challenge my thoughts on the subject.

March 9, 2021 Posted by Sanjay Mehta | Uncategorized | 2 Comments

A counter viewpoint to Vaithee’s piece, “the dark side of starting up”

It was nice to see my friend and old e-commerce industry compatriot, K. Vaitheeswaran (fondly referred to as Vaithee), in the Times of India today, with this piece around the dark side of starting up, in the e-commerce space.

For those who don’t want to follow the link and read the piece, here’s a snapshot of the article:

It is an interesting conversation here. But I have a viewpoint slightly different from Vaithee’s on some of the questions, and I thought this will be a good time to give my perspective as well.

During these times of social media activism, I need to put this disclaimer! The purpose of my counter viewpoint is absolutely not to create any controversy, nor to discredit Vaithee, for a moment. I have a lot of respect for him, and we have been contemporaries for long, in the early stage of the e-commerce industry in India. I respect him for his persistence in the space, and the tremendous learnings he would have picked up being there for so long.

So the point of this piece is just to share a different viewpoint on some of these questions, from yours truly who had also been in the space for about as long and who has since moved into other facets of the digital space and seen some more of startup world and investments and M&A and the like. Yeah, that’s me.

For those who may not be aware, I co-founded Homeindia.com, one of India’s earliest Internet businesses, and e-commerce companies (to slightly correct the editors of Times of India who mention in the above piece, Fabmart as being India’s first e-com venture, in fact, Homeindia.com was founded in 1997 and was doing B2C e-commerce on the site, since 1998!), and ran it for 9 years, before divesting our stake in 2007, and then moving on to start a digital media agency in 2009, which has since been acquired by WPP group, and now runs as a full-services digital agency called Mirum, and where I am the Joince CEO. So hopefully, the perspectives I bring will be appreciated to be coming equally from hands-on experience, and not armchair commentary 🙂

So on to the questions posed to Vaithee in this piece, and my perspective on those.

1. The first question posed was “Were you caught on the wrong foot by trying to build a profitable company at a time when big bucks were coming in?” 

Vaithee speaks about profitability vs GMV (gross merchandise value) and contends that GMV won out.

The way I see this is that in retail, you can opt to be a successful local store / kirana or have a vision to be a pan-India organized retail player. The business models are very different. The kirana can and will easily be profitable. In spite of there being organized retail around, he will spell out his value to his local customers and keep his margins. But he runs that as a boutique business. As soon as a retail player aims to go national, become a brand, there are other factors that come in, and which include a variety of costs. And for which money needs to be pumped in. For supporting infrastructure and for getting marketshare.

The profitability vs GMV debate is somewhat of that nature. Through very focused, differential value creation for your customers, even an e-retailer could remain profitable. But it will be a niche business, and would not compete with the larger players on size. On the other hand, if one wants to play the scale game, there is no choice but to fight for your share of that large and fiercely growing market. And the game is also not just about discounts, but also about bringing in sharp operational efficiencies. But as the market is growing rapidly, and you want to maintain or grow your share of it, and for which there is no choice but to pump in more and more cash.

2. Another question posed to Vaithee was “Do you think the current Indian e-commerce companies will ever be profitable?”

Vaithee’s opinion was that he didn’t think so. Because someone will always pump in more money and then businesses will keep throwing more discounts etc.

That is a fair visualization of where this could go. However, I believe that with Amazon going so aggressive and strong, it is a matter of time before a lot of the viable competition folds down. What will be left is Amazon and some niche players. Whether it happens in 2 years or 5 years, I cannot say. But once the growth of new users to acquire starts slowing down, and the need to desperately acquire customers at any cost reduces, gradually the survivors will find a way to make money. Also e-commerce differs from physical retail, in that it is not just about selling physical goods that you carry inventory of. What a successful e-commerce player is doing is attracting large number of users to its destination with a promise of good service and value. That can translate beyond selling physical products, to conveniently sell insurance or loans or advertising banners or subscriptions etc. And thus, the ARPU can substantially go up, enabling a quicker passage to profitability, at that point.

3. A further question posed was “How would you take on a company like Amazon?”

I am not sure if too many people on the planet know this answer, so I am not going to hazard one! However, I want to comment on a sentence Vaithee uses in response to this question, where he says that “you have to be clear that you are a retail company, not a technology company”.

I wonder about this! Technology is so integral to retail today, even in the physical stores, and most certainly in the online stores, that it is hard to say that you’re only a retail company. Can a e-commerce company for example, outsource it’s technology? I would emphatically say, ‘no’! Technology and core retail are working together to make success happen. And this is true whether you are taking on Amazon, or not.

4. Another question: “Isn’t Flipkart doing that with its focus on smartphones and electronics?”

And I absolutely agree with Vaithee’s response here. That Flipkart plays in the low margin categories, there is little hope of overcoming the large overheads to ever become profitable.

Most retail businesses, especially multi-category types have some low-margin commodities to draw the consumers in. Even kiranas would have those – the grains and the cooking oils, and such. However, the game is to get the consumer to enhance his cart with a mix of few higher margin items too. Like apparels in case of e-commerce, or imported chocolates and cheeses in case of the neighborhood kirana, because that is the ONLY way you come out on top, in terms of profits.

The lament of the online travel portals has also been that their biggest volumes are from domestic air tickets which are wafer thin margin products, and they have just not managed to sell hotels or tour packages at scale, where larger margins are available!

5. Felt sad for the system and for Vaithee in context of this question: “How did you deal with the aftermath?”

All I can react to in this case, is to feel fortunate to have had an amazing set of investors. We too, were clearly ahead of our times with the e-commerce startup that we built from way back in 1998 to 2007 (before divesting out). Thankfully, it was the investors who prodded us to take a few big bets, and then if they didn’t work out, then get out and do something else with our lives. And that we managed to exit with very clean books, taking care of all liabilities of our team as well as vendors.

But it could so easily have been different. Quite like what Vaithee seems to have gone through. Yes, we were fortunate comparatively.

6. This was an interesting question posed to Vaithee: “You compare the startup ecosystem to the caste system”

And I agree with him, that the Indian VC system is a cosy comfort zone of staying with what are perceived to be “safe bets”. Like they say, no one’s going to fire you for buying IBM, likewise, perhaps no investor in a VC fund is going to fire the VC management for backing an IIT / IIM team, or someone from an HBS network or a Goldman Sachs name!

But if they back a smart young team that does not have these badges on them, they may be questioned. Which is where good startups may starve for funds sometime.

However, I don’t believe that is the case with the global investor space. I have heard more than 100 startup stories via podcasts and I can recall several who were completely unlikely entrepreneurs, with none of those so-called badge values. And yet today these are super successful brands and stories, and these happened only because, at some stage, someone took a bet on their ideas and backed them.

7. This was an interesting question: “You say ‘Don’t pivot, don’t fail fast.’ It goes against the current popular narrative of failing fast.”

Well, Vaithee mentions, as an example, a period like 6 weeks. So yes, most certainly, one cannot be knee-jerk to keep pivoting every quarter or something like that.

However, if there is one big learning I retain from our Homeindia.com experience, it is simply that we should have attempted to scale much faster, and if that did not happen, we should have exited quicker. While the nine-year stint was great experience, the one wish that I have in hindsight is that it would have been great if I had managed to shrink that entire experience in 5 years, instead of 9. Do almost all that we did, but took lesser time on it. So yes, I believe in “Fail Fast” in that sense!

Overall, it was really good to see that exchange with Vaithee as it took me back to the days of our previous venture. Almost nostalgic in many ways!

And like Vaithee, we have a book on its way too, based on the learnings from those days. So watch this space for news about it!

July 9, 2017 Posted by Sanjay Mehta | Uncategorized | Leave a comment

A core consumer fundamental driving the success of Uber and Airbnb

Over the last couple of decades, where the world has seen many unicorns emerge, these have pursued different fundamental business models, as a path to their success.

There have been many that created new paradigms that did not exist, and got people to behave differently, and yet had them hooked to this different behavior. A Facebook that connected all of your known contacts at one place, and enabling you to literally bring together various aspects of your life (childhood, work, student days, family, etc.) and interact with them, all at one place, was unheard of. Although the desire to stay in touch with your various contacts, was probably more intuitive to human behavior and which is why, the model worked.

Or perhaps how a Twitter goaded us to communicate in short form or an Instagram proposed that we talk through pictures, etc. These are all examples of a ‘new way’ that didn’t quite exist before, and which people embraced and stuck on to (beyond the fad value), due to some inherent connect with what humans like to do, anyway.

Then there are business models that enabled us to do things we were already doing offline, but brought immense efficiencies and scale, thanks to being on the Internet.

A jobs site than enabled job seekers and recruiters find each other, or a matrimonial site that connected prospective brides and grooms, are examples of these.

In fact, these sites are also examples of what are called as ‘exchanges’, which at the most fundamental level, play the role of matchmaker, while taking a small sliver of a fee, in return.

So coming to Uber and Airbnb, at one level, these are also matchmakers or exchanges, connecting vehicle owners / drivers to those seeking a ride, or home / room owners to those seeking an overnight stay.

So what is it that Uber and Airbnb are doing, BEYOND being matchmakers, and what in particular, has led to their amazing success?

Yes, sure they have great software behind them, and the mobile phone has been instrumental in driving rapid adoption, especially in the case of Uber.

But here’s something that is even more fundamental, and which has contributed to their big successes, as per my reckoning.

Both of these services are using assets that people own, and which are grossly underutilized (and hence, there is spare capacity) and putting these to use!

Take Uber first.

Many, many people in this world own cars. To go from one place to another.

And yet, for most people, the actual “use time” of the car, is no more than 10% of their waking hours. For the rest of the time, that asset is sitting idle in a garage, or a parking spot (maybe, even COSTING money, to be parked there!).

Uber finds a way to put that to use.

Likewise, take Airbnb.

Here again, a very large number of people around the world own homes which are somewhat bigger than their immediate needs. Now there’s nothing that one can do about the extra room or two in your own home, except continue to maintain it, pay taxes on it, or pay rent on it, if it’s a rented property.

Airbnb put that to use.

What you can see as a pattern here is as follows:

There are assets that you own (car / home), that you need to use partially (the car for limited time, the limited number of rooms in the home), and whose excess “capacity” could seemingly not be sliced out and offered to anyone.

Until Uber and Airbnb found a way to do so!

There have been other manifestations of this same core consumer insight.

For example, shared vacation ownership businesses. Where you “own” a week of a vacation home, but the rest are “given out” to others. As against you investing into your own vacation home, using it just for a week or two, and the asset being wasted for the rest of the year.

While vacation ownership businesses of this kind have been successful, the secret of Uber’s and Airbnb’s success is because of its usage of a far more prevalent asset around the world, a far more day-to-day usage of the same (and one ‘one week in a year’) and the flexibility of offering the slices of the asset for others to use, and for you to generate some value from the same.

The one more use of an “asset” that people have space capacity of, especially in the case of Uber, is “TIME”.

So you’re a student or work part time or even work full time, but still have a few hours of waking hours on hand. And these are a different number of hours, perhaps a different time each day, which you have free.

It was not the easiest thing to find a productive use of such excess hours.

Till Uber gave you the option of using them (along with the available unused time of your car) productively, while driving around passengers from one place to another, and make some money out of it too!

In some sense, the original model of Ebay, when it started out as a pure P2P service, was also around a similar insight.

People had excess of stuff at home. Clothes they had grown out of. Toys that the kids had gone beyond. Gfits received that were not likely to be used. Or simply the excess that one sometimes piles up, due to impulsive shopping binges.

Over time, when the basements start swelling up, or when you get fed up seeing stuff all around, you want to get rid of those things.

Before Ebay days, one used to do garage sales, and such, to get rid of such excess at home. And sure enough, one would find a buyer, most of the times, but also because you were selling at next-to-nothing.

Then came Ebay, and it enabled you to sell off such stuff more easily, and almost always at better value. This was also accomplished by the auction model then, as it allowed “water to find its own level”, in terms of getting the right ‘market price’ for any product that you put up for sale there.

So again, while the simplistic Ebay model was one of person-to-person buy-and-sell via the auction model, more specifically, it thrived on the fact that people always had excess of assets (see the connect to earlier explained Uber and Airbnb models), which they wanted to sell off.

And in all these cases, there was a connected demand, for sure.

Ample number of people looking for rides (Uber), ample number of people travelling to different places and needing overnight stays (Airbnb) and ample number of people wanting to get into that size of T-shirt that you have outgrown, or having younger kids who can use the toys that your child has grown beyond etc. (Ebay).

Are there other “unused or underutilized assets” that you can identify, that people have, and which you can find a way to monetize?

Hey, you could be on your way to creating the next unicorn!!

Think about it!

🙂

February 27, 2016 Posted by Sanjay Mehta | Uncategorized | Leave a comment