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Where will Small Businesses Spend their Money in 2011?

Allison Reilly — Tue, 07 Jun 2011 17:00:09 +0000

Article first published as Small Business Spending on the Rise on Technorati.

New research has shown that small businesses are expected to spend more money in 2011 than in 2010, particularly on IT, social media, and online advertising.

According to the latest International Data Corporation forecast of small business technology news, the nearly 8 million small to-medium sized businesses in the United States will spend more than $125 billion on advanced technology in 2011. This is an increase from an increase from approximately $120 billion in 2010. This money is projected to be spent on cloud services, as SMB technology consumers are expected to raise their allocated funds appropriated towards cloud-based services from 10 to 15 percent in 2011.

“SMBs account for an increasing share of overall corporate IT spending in the U.S.,” said Justin Jaffe, senior research analyst for SMB and home office research at IDC. “Vendors that understand how changing economic conditions and emerging technologies are affecting IT acquisition for different company size segments will have a considerable advantage in developing and marketing technology products and services for SMBs.”

As for blogs and social media, small businesses are planning to spend three times more than large businesses, as marketers focus on increasing their lead generation budgets. Research has found that small businesses are planning to spend 29% of of their lead generation budget on blogs and social media.

Online advertising is beginning to overtake traditional advertising venues, as the 2011 Outlook survey from Borrell Associates asked 2,872 small and midsize businesses about their advertising budgets, and found that they plan to increase their online ad spending by 29 percent this year, compared to a 4.5 percent increase for their offline ad budgets.

The areas of online advertising that small businesses plan to invest in the most are e-mail marketing campaigns and involvement with social media, as well as improvements to their company websites. In terms of the overall online advertising picture, the survey found that small and midsize businesses make up 95 percent of all local advertising online.

The Al Dente Moment – What Pasta can teach Entrepreneurs!

Alok Kejriwal — Sat, 07 May 2011 15:00:07 +0000

I am obsessed with Pasta. Ever since I traveled to Italy to get trained in the factories there (I used to work in my father’s socks factory), I cannot get Pasta, its permutations, shapes and sizes and of course how it is cooked – out of my mind.

In the context of Pasta, Al Dente in Italian literally means ‘To the tooth’. This refers to that ‘perfect’ moment when the Pasta is firm, strong, crisp and cooked – but not soft and supple. It’s just the way it should be. The best way to get your Pasta to be Al Dente is to keep nibbling on a piece of Penne or the Fettuccini while it is boiling. The very moment you can bite into the pasta and yet feel its firmness, it’s ‘Al Dente’. Immediately drain, add whatever you have to into your Pasta and enjoy (I like it with very little garlic and mushrooms sautéed in olive oil with mixed Italian herbs and top it with grated parmesan cheese). Buona Appetito!

Now, observing the ‘Al Dente’ method has inspired me to think of ‘perfect moments’ as they appear in an Entrepreneur’s life. As they say, you can never time anything to perfection, but just like Pasta, if you know when your best time is near, you can leverage it well.

Some of the instances when an Entrepreneur can enjoy her ‘Al Dente’ or perfect moment:

I can barely cook, but my cooking is better than yours.

Sometimes, knowing little of something absolutely new is better than knowing everything of something very old. To explain – in 2003, when we began working with Sony television in India on Mobile VAS, we were the only Company in India to understand ringtones, sms gateways etc. Just the fact that we could manage ‘mobile stuff’ won us the Indian Idol business in India and 50% revenue sharing across the board. Circa 2009, everybody knew how to do everything and the party was over. But in those 6 years, we managed to fund and exit the business!

Grow the Walnut – Don’t try to eat it if you can’t open it.

In 2006, Mobile2win China was in business since the last 5 years and the operational difficulties in China were increasingly hammering us. We had a great platform, operator connectivity across the length and breath of the PRC and very scalable technology. With all this, we were still struggling to make money. We had grown and ripened a beautiful walnut but couldn’t understand how to open it and enjoy it. If we waited too long, the fruit inside would rot. As we were wondering, the Walt Disney Company came along. They were keen to have a ready-made mobile platform with operator connectivity in China! They weren’t looking for revenues in a Company but an operation with employees and licenses and the knowhow. They bought out mobile2win from us in an all cash transaction that made us 6x on our original investment. Disney was the squirrel who was destined to eat the nut. We were fortunate to find them at just the perfect time!

Being the first item on the buffet table.

By 2007, lots of VCs who had made money in the MMOG (massive multiplayer online games) business in China and Korea were punting that India would be the next geographical bet for massive valuation businesses using these games. Their thinking was that China and India were similar in many ways, and if Shanda and The9 could become billion dollar plays in China, the same story could repeat itself in India. As part of this punt, VCs began looking at entrepreneurs in India who had gaming experience, and my name along with that of my co-founder – Mahesh Khambadkone popped up. A few meetings later, we had co-founded Games2win and were given a cheque of 5 million dollars by Clearstone Venture Partners to start up that business. It’s full credit to Clearstone that they quickly accepted our point that MMOG was not working and allowed us to change our business model to casual snacky browser games. But Games2win was started up because we were the first set of entrepreneurs that the VCs met when they came to the buffet table. I guess we were the right people, in the right place and at the right time.

‘When’ is a matter of personal taste..

If you look at the cases of Yahoo passing Microsoft, Groupon saying no to Google, it’s the chef saying, ‘I don’t want perfect Al Dente. I’m happy to serve the pasta maybe soft, maybe supple but at the time I want to serve it’. Nothing wrong with that! Yahoo and Groupon continue to march on. On the other hand, Sabeer Bhatia sold Hotmail much earlier than the Al Dente moment. Given the way valuations have soared, Hotmail could have fetched 4 Billion, not 400 million? Who knows?

If there was ever a perfect ‘Al Dente’ moment, it was when Steve Case sold AOL to Time Warner. A small fledgling company positioned itself so cleverly to an old media behemoth and the values that it extracted are now historical and soul shattering. Unfortunately, in the case of Time Warner, what they thought was ‘Al Dente’ Internet Pasta turned out to be Al Dente Rotting Garbage. Billions of dollars of value were destroyed cleaning up that horrible stinking kitchen (AOL+Time Warner).

Chef’s tip: Be your own Chef. Taste your Pasta at all times. When you think the time is right, just serve it – ‘Al Dente’ or not.

[via Rodinood]

A device that proves if you’re really sick

Allison Reilly — Tue, 03 May 2011 17:00:52 +0000

Calling in sick and “having a doctor’s note” won’t get you a free day off work anymore, at least not in Malaysia. A USB device, called SickVerify, will eventually substitute the role of doctors as providers of medical certificates. By August 2012, doctors across Malaysia will lose the legal authority to issue medical certificates. From then on, all workers will have to submit to a test using SickVerify to substantiate their claims for sick leave.

Using a complex series of algorithms, SickVerify measures the concentration of antibodies and cortisol (shows up specifically from stomach cramps) in the saliva sample to determine whether the subject was ill during the time period claimed for sick leave. The device is reportedly 98.9% accurate.

The test itself is blindingly simple and quick. The subject wets a fingernail-sized piece of cotton with his/her saliva. The cotton is inserted into the compartment of SickVerify, which is then plugged into any laptop or desktop via a USB socket. A program provided with SickVerify can then be run to begin the test (which takes approximately 3 minutes) and display the results.

This might not be a bad idea in the United States, as employers loss $1.8 billion from March Madness alone. But would verifying everyone’s sick leave excuses really fly in this country?

MyBestFit finds the best fit for women’s clothing

Allison Reilly — Wed, 27 Apr 2011 19:53:53 +0000

With no sizing standards for apparel manufacturers, women especially have the toughest time in finding clothes that fit. Different sizes will fit depending on the brand, meaning that venturing into a new brand will need guesswork in determining the size that fits. All that is no more with MyBestFit, a full-body scanner similar to TSA checkpoints at airports, and go through a 30-second scan which takes 200,000 measurements using low-power radio waves. After the scan, the MyBestFit kiosk uses a database of over 50 stores to spit out which numbered size at which store in the mall will fit the woman best.

Currently, the full body scanner is only in one location: the King of Prussia Mall in Pennsylvania. But, the kiosk will show up in four other malls in the coming weeks, as the technology has already received positive reviews for its accurate results. To be included in those results, stores must pay a fee, and will come up if a woman’s size and body shape are a great fit for that stores clothing. These results are put together into a Shopping Guide for shopper to take with them. The Shopping Guide lists styles that fit the exact body shape and can be filtered the list by brand, style, price or retailer. The Shopping Guide can even be accessed online at the MyBestFit website.

Best part? The service is free for shoppers

The body-scanning technology won’t stop at apparel, said Bob Kutnick, the company’s vice president of Technology. Within the year, the machines will work in a variety of different settings, including the health, fitness and automotive industries.

“Right now, it’s simply recommending some apparel, but since we have your body dimensionality, it will tell us what bikes and cars best fit you,” Kutnick said. “We can also work with you on toning your body, so rather than just weight loss, a number on the scale, you can see how your body has changed, let’s say from fat to muscle. So if you wanted to take off stuff in your waistline, we can actually show this visually and highlight it in green, for example. If you gained, we could highlight that in yellow.”

Are you happily married?

Alok Kejriwal — Tue, 26 Apr 2011 10:06:08 +0000

They say that happily married couples begin to look like each other as they age and grow older. I don’t know how far that is true, but I do know for sure that getting the right co-founder(s) for your business can be as rewarding as the soul mate you may have found or may still be searching for.

It takes two to tango

Hewlett Packard, Google, Microsoft, Yahoo, Larsen and Toubro – look around and will be stunned by the number of legendary firms that have been built by two or more partners. There is a magic that comes alive when like-minded people come together to create an enterprise. Sure, there are businesses like Facebook or Apple that are one man armies, but if you speak to Marc Zuckerberg or Steve Jobs, I am sure they would agree to some of these concepts:

Ownership:

The Soul of a Company rests with its founders. Sure, the heart lies with key executives and senior management but there is that critical heartbeat that only founders can emit. Pain is what founders feel whereas discomfort is what employees feel.

Ask any start up entrepreneur and she will understand. Hired folks who seem so dedicated and committed to your business suddenly become cold and unattached when it is appraisal time or even the weekend. It’s co-founders who have 2 hearts that beat simultaneously.

Race Tactics:

I often say that a start up is like a relay race. You run your course and then hand over the baton (Company) to the next runner (acquirer) who runs his lap. In reality, after the first lap, when the entrepreneur looks around for the acquirer, there isn’t anybody there. That’s when you need your partner to really take the lead so that you can slow down for a couple of laps at least.

I remember what Gaurav Deepak of Avendus Capital told me once. He said ‘Alok, when I get beaten down and am completely dispirited, I look forward to my partners to take over from me’. It’s similar to professional bicycle racing. The lead racer takes on the headwinds for a few laps and then slowly slips behind for the next biker to take the lead in rotation, always making sure that their team is leading.

I meet so many older generation and very successful entrepreneurs who run small and medium businesses. They have no co-founders and lead very sad lifestyles. They rarely take holidays, work almost all days in a year and seem so distanced from their families. They just haven’t understood the concept of co-owners.

Ditch the Horoscopes:

In the arranged marriage circuit, the easy way to drop the discussion for either the boy or the girl being matched together is to inform the mediator that ‘the horoscopes didn’t match’.

In my humble start up experience, my belief is that the similarity of the mindsets (more than training and skills) is what actually makes the value creation happen.

If your co-founders have the same set of principles, goals and dos and don’ts, then everything falls into place. It’s not about ‘I am the marketing guy and my co-founder is the tech guy’. It’s about a couple that THINKS in the same manner, even before doing.

Try this test – take Co-founders of a great Company into separate rooms and ask them ethically challenging questions – you will notice that their answers will be identical.

Role Playing:

There is a fine balance of role-playing in a relationship that works well. In the highly complex business world of today, you need clear demarcations of who is the aggressor- the person who fires and screams, the mild mannered founder – who should always be in front of the investors, the motivator – the leader and sure enough the partner who can call you in the middle of the night without any hesitation.

Study successful marriages carefully and you will see how beautifully role-playing is carved out. Couples quickly figure out their strengths and weaknesses and then distribute who does what as they start and raise their families.

In my businesses, I am the bad guy. The maniac, who loses his patience and just blows up like a fuse. But how do I get away with it? All thanks to my co-founders who balance my destructive behavior beautifully.

Sometimes it’s time to let go:

Sure, the best of relationships drift apart. Sometimes the departure can be ugly and sometimes just smooth and easy. The real challenge is to accept it and move on. I see folks clinging on to partnerships and co-founders who have stopped creating value and are actually destroying equity. It’s your role to step up and actually have the heart to tell your partner to move on.

Trust me, when you put on that Armor of Steel and let go, you will be so relieved by the burden that was crushing you and in a few months or years, your co-founder will thank you for the move.

Partners are what make life successful. Don’t ignore them.

[via Rodinhood]

Which floor are you on?

Alok Kejriwal — Tue, 19 Apr 2011 11:46:21 +0000

I consciously notice the floors of the buildings that I visit and try to indentify the people who occupy these floors.

That’s where I see interesting patterns between management styles and the floors of buildings:

The Ground Floor

The people on the ground floor are ‘hands on’.

Mop in the hand, doing the dirty work. Sitting in an office that has no cabins. Talking to the people around them while trying to manage the crowds that come in. Quickly getting hot and tired. Blowing their fuse while trying to be civil. Just wanting to do everything themselves.

The challenge being on the ground floor is that it’s easy to lose perspective. You can’t elevate yourself and peep outside – to get a chance to view what’s new & happening in the big wide world outside or spot encroachments that appear dangerously near you. Your life begins and ends on the ground floor.

All the firms I work with and respect in my personal capacity – my PR & Travel agencies, Tax and Investment Consultants, etc. neatly fall in this category. The more the business leans towards ‘service’, the more it seems rooted on the ground floor. The owners of these ground floor shops are busy running their businesses while personally attending to demanding customers like myself. They rarely get a break to do ‘bigger’ things.

They are martyrs who are happy the way they are.

The 5th Floor

It’s that in-between, hanging, middle floor. Stuck between the ground floor and the top floors. If you operate from the 5th floor, you are involved in day-to-day ops and once in a while manage to get out and lean forward. You can leave your job or work unattended for say a week, before things go crazy.

It takes hard working people a while to reach the 5th floor. So it’s not even easy to abandon.

This also seems to be the ‘inflection’ floor for lots of entrepreneurs. You can get a view of the world outside and can really see where you stand in your current position and where you can reach.

In early 2008, I met an entrepreneur in San Francisco who ran a Photo Sharing website (piczo.com) for teen and tween girls. The business was fully funded by Sierra Venture Partners. Clearly, this Company and the entrepreneur were on the 5th Floor. The CEO could see the Facebook Tsunami hurtling towards him and yet could do very little to escape. He was so patient during our girls’ games discussion while silently acknowledging the death by drowning that awaited him.

My humble advise to those on the 5th floor is to stand on your window ledge and try to climb upwards. Do whatever you can to ascend that building even if it means using your bare hands & feet like Spiderman – with lots of hard work, prayers and hope thrown in. In the end, if you stumble and fall, it will be worth it because it’s better to launch again and aim for the to once again rather than getting stuck on the 5th floor.

The Club Floor (One below the top).

It’s the floor that belongs to those who have arrived. The kind of floor that’s always granted a special status. It’s the floor everyone wants to visit and check out. The occupants have the world at their feet, silently comfortable with the fact that they are living with one more floor above them.

Unfortunately, heights make some people nauseous. You have to have a strong demeanor to enjoy the height – while not falling sick.

I place Jerry Yang and Yahoo! at the Club Level. Both are cult brands and have attained a very lofty status. However the height of success made Yahoo dizzy. It fumbled. The mist surrounding that floor made Jerry Yang miss the big revolution of Search and Social and he along with his Company now remain humbled forever.

Say what you may, Yahoo will always remain an iconic media brand worth billions of dollars. They have their name etched in Gold on the ‘floor plan’ in the building lobby forever.

The Penthouse (with high speed elevators)

Google occupies the Penthouse. So does Facebook. Twitter and Linkedin will join them soon. These Penthouses come with special elevators, which are only meant for the owners of that floor.

The promoters of all these Companies have one amazing similarity – they ride their Penthouse’s high-speed elevators with a vengeance! One moment they are on the ground floor starting up new features and businesses from scratch – the next they are on the 5th floor reviewing what’s happened within the business and then, kaboom – they are back in their Penthouse doing mega deals.

Just look at the way Google monopolized search, bought Youtube, Admob and routinely buys businesses almost every week.

Larry Page, Sergey Brin and Marc Zuckerberg actually own not just the Penthouse but also THE Building. Each and every floor belongs to them and they are comfortable being on whichever floor the situation demands.

The Terrace (with the Helipad)

Rupert Murdoch and Steve Ballmer come to my mind when I think of Terraces with Helipads.

They have the Capital to ‘land’ anywhere, arrive on top of any building as they please and then buy it if they want. ‘Hey – the MySpace building looks interesting; let’s just buy the damn thing. I like this tower called ‘Search’. Let’s just call it Bing.com and party like never before.’

The guys on terraces with helipads fly out when they feel like. One building more or less doesn’t mean anything for them. Observe how MySpace is crumbling and Bing.com is going nowhere. Now look carefully and see that the party is getting wound up as the helicopter’s pilot is whipping up his blades to fly the owners to the terrace of another building.

The Murdochs and Ballmers of the world can never repeat the glory of starting at the Ground Floor and climbing to the Penthouse. They are too spoilt and old.

The Terrace (without a Helipad)

ADAG and the Sahara Group are on terraces, which, unfortunately, don’t have a Helipad.

Their buildings are on fire (ADAG earned the distinction of being the ultimate wealth destroyer last year).

All the floors (see the businesses of these groups) have major problems on them. There are leaks, foul smells and a general rot in their buildings. Sure, from the outside they still look attractive, but those are pretty looking scaffoldings that will soon unravel.

ADAG ‘inherited’ the building with all the floors which is surrounded by crooks and sycophants whose interest is only in looting the furniture and valuables of the building and then take off (Career plan for the unambitious – join ADAG for few years, make a salary of a lifetime and then quit happily ever after).

Such buildings are not only self-destructive but also dangerous – they will ruin the buildings around them when they fall.

Finally, given that we have traveled from the Ground Floor to the Terrace, the point to ponder is not to get stuck on the floor that you are on but to make sure you carefully move UP from whichever floor you are on.

[via Rodinhood]

Entrepreneur Advice: Madam, Are you Pregnant?

Alok Kejriwal — Tue, 29 Mar 2011 12:00:06 +0000

We had established a 30 odd headcount office in Shanghai in early 2001 and were steadily ramping up our operations as Mobile2win, China. Contests2win and Softbank were the original investors and we were operating under strict Mainland China’s government’s guidelines.

As the paperwork increased, we began looking around to hire secretarial staff. As soon as we had spread the word, we intriguingly began receiving resumes of many women – all in their twenties, married and well settled. One afternoon, one of our rather talkative and assertive Sales Head took me in confidence and revealed something quite chilling – He said that all those women who had applied were actually pregnant and were applying for jobs, that they could lock into and then claim maternity benefits as per the dictated statutory guidelines. This was a standard ploy of gaining ‘free employment’ and we should be avoid falling into such traps.

Simultaneously, I was pavement pounding the streets & meeting clients in frozen China. I had a strange situation on my hands. Across Shanghai, Beijing and Guangzhou, large Chinese local Brands dominated the marketing scene and were big budget spenders. Sure, the Fortune 500 brands were around, but the Chinese brands made quick spend decisions on Internet marketing and were lucrative customers.

The only problem was that all these Chinese brand managers expected ‘gifts’ to be left behind for them. It was not money but surely enough a bribe in exchange for business. My local Chinese team members who accompanied me told me, ‘Sir, this is the way business is done in China’.

Both the cases above presented ethical dilemmas to me. They forced me to walk the tight rope of being ‘righteous’ vs. ‘practical’, ‘academic’ vs. ‘practical’ and most importantly a ‘rigid businessman’ vs. a ‘practical one’.

Was I supposed to ask the ladies who came for the interviews indirect questions leading to figuring out if they were indeed pregnant? Pretend that we needed men secretaries’ because they might be required to work the night shift?

In my meetings with the local Chinese firms, was I supposed to carry gifts bought in China and pretend they were from India and just hand them over as a token of friendship?

This blog post examines the challenges of ethics and principles in entrepreneurial and start up life.

Don’t become a cheat if someone cheats you.

Very recently, in one of the group Companies, my COO and I had vocally assured a newly recruited Business Development executive (21 years old, 15k monthly salary) that she would be compensated for the value of ‘barter’ deals that she bought into the company.

Just after a few television spots in return for a couple of web pages, she produced a commission statement of Rs 81,000 for just the first month!! I first thought she was confused but quickly understood she had the mind of a cheat.

All she had done was reproduced the top ‘rack rate’ (stated nominal value) of the media of the TV spots we had received as barter (Rs. 40 lacs), without considering that the value we had provided in exchange to the channel was actually only Rs 1 lac . This rack rate is the typical exorbitant rate you see at the back of a hotel room door (for statutory purposes) – despite you having paid less than half for it. I logically tried to explain to her that Companies exchange the ‘true’ value of goods in the end – so despite the printed rate of the media value being 40 lacs, since we had provided the channel value of just Rs 1 lac, the TV spots we had received were also worth 1 lac since that inventory was unsold by the channel! Simply explained, if I gave you a ball point pen and took another one in return from you, the real value exchanged was Rs. 10(actual value of buying the ball point pen). Sure, as a kid (or better as cheats), I can pretend that my ball point is worth Rs 400 by putting a sticker on it but I was still exchanging it with you for Rs 10! (And hence I am not a kid –just a fraudster).

She insisted that she be compensated on this ‘notional’ value of 40 lacs- given the commitment made to her.

We paid her without any more discussion and surely ‘relieved’ her of her post also.

The lesson here is that we DID not stoop down to cheating even though we were cheated upon. There was no written agreement we had with her for this payment and could have easily refused to pay but we did not.

Why did we pay her?

Because these situations test the principles and the moral fiber of a Company. There is no other way of ‘testing’ where you stand on ethics without such real situations!

In the evening, I chuckled and thought of the 80k paid as fees for an expensive GMAT test of Integrity – whose results thankfully were instantaneous and on which we had received a perfect score!

Being practical.

A couple of years ago, a labor inspector arrived in our office to check our provident fund records. To his utter disappointment, he found that everything was perfect and hence there was no scope for a bribe.

He still insisted on a ‘gift’. When we refused, he did the unthinkable – he sat down on the visitor’s sofa and refused to move. Not just the first day but 3 days in a row!

On the 4^th day, tired of having an ugly, smelly owl in our pristine office, we paid him some cash and bid him a happy departure.

I found it practical to bend my ethics a bit in return for the sake of sanity and the healthy atmosphere of the office!

Taking a bullet

A few months ago, one of my ex co-founders ‘informally’ partnered with c2w (contests2win) to launch some niche vertical sports sites.

He came from a real world economy and had lost touch with the digital media world for over 5 years. He spent months in our office learning the ropes, getting lots of art and programming development work done and just leveraging the entire resources made available to him.

A few weeks before launch, this partner took me in a conference room and declared that he had new ‘views’ on the partnership %’s that were earlier agreed upon and that he was not happy to stick to the original commitment.

We had this meeting at 12:58 pm. I told him that I would think about it and revert. At 1:01 pm, I wrote a mail to him saying that there was a fracture in our business thinking and hence the deal would not be possible.

He offered to buy out what we had made in terms of the product, but we took a call and swallowed a Rs 25-lacs hit (actual cost of time and money) rather than selling out on our ethics and principles.

In this case, we made the gun & the bullet and trained the shooter – only to have him shoot us in the face.

The satisfaction was going home with the headline that we don’t SELL principles, but only our services. And they cannot be bartered!

So how did we deal with the China situation?

I did not heed my China Sales head’s warning and continued with our interviews. Amongst the 3 ladies short-listed, we finally selected a simple, homely (and possibly pregnant) lady.

9 months later, there was no baby.

I later found out that the Sales Head was trying to place a couple of his cousin brothers in the Company and hence had fabricated the entire story!

As far as the Chinese brands went, we did not work for them. Instead we focused on the Fortune 500 brands and won strong business from them – leading to Siemens investing into the Company in 2003 and the Walt Disney Company buying out Mobile2win China in 2006. Neither Siemens nor Disney would have touched us if we had started bribing our way into business.

Mao said – behind every great fortune, there is a great crime.

Rodinhood says – Inside every great entrepreneur throbs an ethical heart.

[via Rodinhood]

Startup Talk: ebook lending picks up steam, ebookfling launched.

Akshaya Murthy — Mon, 28 Mar 2011 11:51:32 +0000

We know how popular ebook readers have become off late, growing at a higher rate than ever. Sure there are tablets spoiling their niche party but ebook vendors have found their way around by introducing ebook stores on all mobile OS and PC platforms. The industry saw an eye popping $1b spent on ebooks by consumers in 2010 which will triple by 2015 according to a report by Forrester Research. Although the market is growing via first time users the industry had to find a way to make money out of ebooks already sold to consumers.

Amazon and B&N did what was natural to physical books – allow users to rent books from friends (only). This limited scope of book sharing has spurred the emergence of new startups in the book lending space like Lendle, Booklending and Ebookfling that are aiming to transform an already evolving industry. Lendle and Booklending allows lending and borrowing ebooks on the Kindle platform (on any mobile OS or PC) while Ebookfling allows you to rent and borrow ebooks on both the Kindle and Nook platforms. But how does Ebookfling stand out from the rest? Well, they let you borrow and lend books using what they call a credit system within the Ebookfling ecosystem where you get 1 credit point for every book you lend which can be used to borrow another ebook through the system.

First time user? No problem – you can purchase credits at $1.99 a credit point. So how does it change the ebook ecosystem? This model potentially limits the amount of money flowing into the Amazon and B&N’s coffers by cutting off a substantial number of first time ebook buyers. For example, if Ebookfling has 1000 books available for renting and the system takes off, no new ebook adopter has a reason to purchase books directly from Amazon of B&N. Instead of spending an average of $10 per book, a lent book only costs 20% of the price although it stays with you only for 14 days before it goes back to the original user. Plus the used ebook is always in mint condition no matter how many people you lend it to.

So will it permanently damage the revenue source for Amazon and B&N? That aspect is yet to be explored. The recent API block episode where Amazon blocked its lending API to Lendle should serve as a notice to future entrepreneurs treading this path. Although Amazon reinstated the API’s access to Lendle, it was not before heavy media exposure to the issue. just like Apple’s App store policies frustrated developers (even today it does!) the ebook lending policies will require a lot of fine tuning and tweaking before it becomes a sustainable, profitable model and eventually create an ecosystem like the Apple App store. Ebookfling CEO George Burke notes that “the initial reaction may be a negative. Publishers and authors will claim the lending feature is being abused and causing cannibalization of sales. Authors are already bending over backwards by giving away many of their backlist (older) books free in the Kindle never needing to purchase.”

From an analyst’s perspective the market is ripe for more than 5 lending services to co-exist and be profitable in the long term. Let’s just hope Amazon and B&N do the right things over the next year.

Startup Talk: Happy Grasshopper wants to convert everyone you meet into a referral

Akshaya Murthy — Thu, 24 Mar 2011 15:11:59 +0000

We have written about Publishedin and about how the referral landscape is changing. Today, we have another submission from a rather interesting startup that wants to make sure everyone you meet, not just email becomes a referral source. The startup – Happy Grasshopper is again changing the way you keep your contacts productive.

Happy Grasshopper is a referral marketing service that helps you turn anyone you meet into a referral source. All that you have to do is upload the email addresses of past clients and people you have just met. Happy Grasshopper’s writers will draft and send a friendly, relationship building message for you about every 3 weeks. Unlike traditional e-newsletters, the messages sent by Happy Grasshopper are designed as conversation starters and help you build relationships. You simply edit and/or approve the messages before they are sent. They are delivered from your email address and all replies go directly into your inbox.

This is an interesting model since it brings a personal touch to email marketing. This could be a game changer since email marketing has more or less been tagged as “spam” for the most part. After all. who does not want to maintain relationships in the world of global business that compels you to keep the conversation going.

Entrepreneur Outfitters out Startup Checklist mobile App for those daunting government contracts

Akshaya Murthy — Tue, 22 Mar 2011 05:54:32 +0000

Government contracts are like unicorns, at least for startups. The super stringent norms and red tape could discourage any entrepreneur from making a bid in the all too closed world of government contracts. However, there’s help at hand. Entrepreneur Outfitters – an early stage VC firm has outed a mobile app that could make lives of entrepreneurs a little more streamlined when trying to bid for a government contract. Aptly named Start up checklist the app lets entrepreneurs prepare for Uncle Sam’s contracts through a 36 step checklist.

The checklist allows an entrepreneur to make sure she gets everything right before and after landing a contract. This app is quite cool since a lot of fine points are covered by the app that only an expert could tell you. This was earlier available as a handbook from EO for $150. But now you can get the app for about 8 bucks. It’s a great deal given that you don;t have to maintain the papers anymore. Go give it a try, it’s available for Android and iOS.

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Entrepreneur Outfitters out Startup Checklist mobile App for those daunting government contracts

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