Where Implementation Meets MBA

When I was debating whether to pursue an MBA or remain comfortably nestled in the extremes of startup life, one of the primary arguments against MBA pursuits came from my bosses: “you or someone like you would be much more valuable to me with two more years of this type of experience than you would be with those same two years spent in business school.” The answer made sense to me in a kind of vacuum, yet did not explain away the fact that all of my bosses had MBAs, and most of their closest business connections had MBAs, and that none of them regretted collecting their own MBA. Clearly they had reaped enormous value of some sort from their MBA, yet in that moment they were speaking directly to the tactical – something that one could argue is indeed missing in that graduate pursuit. What they may not have realized, however, is how deeply aware most MBA professors are of the missing tactical piece, and what those professors are doing to remedy the stigma.

I am currently enrolled in two tech-focused classes, and both of the professors have gone to great lengths to underscore the importance of technical ability of some sort, and sought to at least introduce students to core concepts. I firmly believe that MBA programs should invest heavily in at least introductory technical training (even more than what I experienced this semester) in order to graduate students who are as prepared in this tech-heavy world as they used to be graduating into a management-heavy world.

One of my two classes focused on statistical analytics, kicking off with anecdotes from the professor detailing visits to companies whose own decision makers were not capable of running and analyzing testing (even in cases when they believed they were). This to me seems deeply irresponsible, all the more so in a world so rich with data waiting to change the path of a company for the better. While not all individuals will be naturally analytical thinkers, an MBA program has no excuse for not at the very least teaching the steps required in an analytical process. Worst case, the student will then be able to recognize the questions he or she should be asking and whether they are up to the task, such that if not, they can hire the right analytics team to keep their company competitive.

The second of the two classes focused on SQL, the importance of which I personally found to be incredibly high. Upon joining the ecommerce company I was a part of for three years I found that there were really only two of us proficient in SQL. In a situation like this one learns very quickly just how widely applicable company data is to day-to-day operations, how dramatically different individuals’ job performance can increase with access to pertinent data, and how critical good data is for making company-altering decisions. An MBA who can walk into a startup and immediately access, dissect, understand, and utilize that company’s data will be a very different MBA than the one who cannot. One can add value immediately in a variety of ways, while the other will constantly be adding to the bottleneck of those who can.

As it becomes more and more rare for companies to exist completely offline, tactical tech savviness only becomes more and more critical for those purporting to be leaders in the business world. While mobilization, attracting users, and monetization are all foundational, it is the implementation that allows them to be so at all. I look forward to the day when questions like mine – to-business-school or not-to-business school – will be met with absolute confidence in the implementation ability of those graduates, truly a killer complement to the softer value offered in MBAs today.

By: Anya Hayden


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Navigating the World of Digital Mapping

To the cursory observer, online map services like Google Maps or Bing Maps may seem like simple tools, simply placing a searchable compilation of points of interest on a scrolling set of map images. In reality, it’s a very complex business with immense potential going forward, with demand coming from transport electrification, autonomous cars, consumerization of ground logistics (UPS -> Uber/Lyft), and broader use cases for unmanned aerial vehicles, among other areas.

Mapping entails digitizing the physical world, so every map service at its root needs access to mapping data. This consists of the actual imagery – satellite images, aerial photos, and street level photos, for instance – mapped to a digital overlay of roads containing all manner of metadata (e.g. street name, type, traffic direction, speed limit, toll road). Collecting these data is an immensely labor-intensive on-ground task that is never complete (as roads and buildings keep changing), so there are really only a few global players in this space that almost all map-based services ultimately get their map data from – namely HERE (originally Navteq; recently sold by Nokia to Daimler/BMW/VW), Google, and TomTom.

There are a few hybrid players – e.g. Microsoft sources map data from HERE and others, but also had a hundred employees building out their own map data via street vans, aerial imagery, and such (a division recently sold to Uber), and Apple, which recently entered the mapping space with Apple Maps, gets its data from TomTom but is also building out a fleet of its own mapping vans.

On top of map data, you need routing algorithms, address and point-of-interest data, search, and lots more.

Below I will start with an anecdote about my introduction to the world of mapping and then discuss some opportunities in the space today.

TA Maps and Google

After college, I shipped out to India to work at Mahindra, which is India’s largest automaker (and also the world’s largest farm equipment manufacturer, among other things). After moving into my apartment in Mumbai, I realized a few things—one, the Google Maps app, which back home in the U.S. I used quite extensively on my phones at the time, an iPhone and an HTC HD2 (running Windows Mobile 6.5), had incomplete data in some parts of the city, so pretty often I’d be switching between Google and other map apps. Then I upgraded to an HTC HD7, running Microsoft’s rebooted-from-scratch Windows Phone 7 OS (whose story I’ve written about), and there was no Google Maps app in the store at all.

Windows Mobile had earlier conquered the pre-iPhone high-end PDA/smartphone market, crushing Palm OS with a remarkably feature-packed and open OS. So if Google wanted its mapping service in high-end mobile users’ hands, it had to be on Windows Mobile (just as it had to be on iOS later). Yet as many large tech companies often do (e.g. MS ceasing development on Internet Explorer after IE6, having beaten Netscape, only to be woken up later by the upstart Firefox project), Microsoft was busy running a victory lap when the iPhone launched and took a while to respond, by jettisoning Windows Mobile completely in favor of the ground-up Windows Phone 7. Meanwhile Google’s acquisition, Android, launched as a very Windows Mobile 6-like response to the iPhone. By the time Windows Phone launched, Google felt it could forego its biggest rival’s platform entirely and thereby perhaps gain a competitive advantage for Android.

So, with an incredibly smooth Windows Phone 7 device that I wanted to use daily, and no Google Maps in front of me, I sought to fix the problem by writing my own mapping app – TA Maps – that would initially serve as a Google Maps client and then expand to include multiple map sources, thereby solving the constant switching problem I had with Google Maps on iOS and Windows Mobile 6.x. To do this, I sourced map tiles from Google (and later Bing, OpenStreetMap, and others), plugged into their point-of-interest search and directions APIs, and then handled a bunch of curiously complicated tasks like reverse-engineering Google’s compression algorithm for map polylines (e.g. route lines on a map for directions).

With multiple data sources, I solved my own navigation problem and others’ too (e.g. building in OpenCycleMap for bicyclists). In the process, I put the app up on the app store and gained thousands of free and paying customers across the world, learning a ton about mapping in the process (e.g. when customers in China all reported the map as being off by a certain distance, I found that the Chinese government had at some point built a location offset from the (US military-run) GPS system, as a rudimentary security measure ensuring that all non-China-specific maps would be off unless they specifically compensated for the offset).

Then Google began to restrict access to its map data, deprecating old versions of its API and forcing users onto its new API, which required 1) authenticated tokens that identified the particular client requesting map data, and 2) agreeing to ever-narrower usage terms. When the API was updated to essentially ban native third-party navigation clients from using Google Maps, I received a not-so-friendly email from the Google Maps team – not quite a takedown notice yet, but clearly on the way. At that point, I decided to just take down the app (it still had standalone value sans Google, but I was too busy with my actual job to maintain it). Around the same time, another app emerged, as a pure-play Google Maps client that was even (egregiously) called “gMaps” and used a modified version of Google’s own Maps icon as its own. The difference? Those developers were in Russia and had no qualms agreeing to terms that they’d then explicitly violate (and then fight a technical cat-and-mouse war around Google’s API access blocking).

Google clearly saw map services as a tool to gain a competitive advantage in other areas of its business. For instance, when Motorola – then one of the top Android phone manufacturers – decided to use the services of the startup Skyhook Wireless to provide its users better location sensing than Google could provide, Google’s top executives responded with fury to the threat of losing consumer location data, forcing Motorola to switch course on Google’s supposedly “open” Android platform.

A couple years later, in January 2013, I and some others online discovered that Google had begun to specifically block Windows phones from accessing its own Google Maps website—presumably trying to get users to switch to Android. Google somewhat absurdly claimed that this was because Google Maps only worked well on browsers built on Webkit (i.e. Chrome, Safari) – strange, as the site worked fine on desktop Internet Explorer, Firefox, etc.

As I wrote here, if you changed the user agent (UA – a piece of identifying text by which the browser tells websites about itself and the device it’s running on) of Google’s own desktop Chrome browser to pretend that it was running on Windows Phone, it would no longer load Google Maps, and conversely, when a different UA was used on a Windows phone, the site loaded perfectly fine. Eventually the mainstream tech media picked up the story, and having been caught red-handed, Google was forced to re-allow access to its site. (incidentally, so much for “Don’t be evil”)

HERE, Uber, and Waze

Last year, Nokia put its market-leading maps service on the market, by then rebranded from Navteq / Nokia Maps to HERE. This was part of its exit from consumer-facing businesses (selling its best-known mobile phone unit to Microsoft, whose then-CEO Steve Ballmer apparently also wanted to buy HERE, but was turned down by a board so skeptical of any Nokia deal that Ballmer essentially sacrificed his job for it, agreeing to a timetable for stepping down as CEO in exchange for board approval on the Nokia phone deal).

A bidding war ensued for HERE, in which Uber battled a consortium of the German car manufacturers – Daimler, BMW, and Volkswagen. Why would either of these parties be interested in what might seem like off-core-competency offerings for either? The answer is simple – the future of transportation will depend on distributed data collection.

An Israeli startup, Waze, was an early entrant on the consumer side of this space, with the basic premise that if you collected position and speed data via a smartphone app running inside consumers’ cars, and had enough users, you could get a good idea of real-time traffic flows (better than existing sources of traffic data, such as government-installed highway car counters that at best can estimate traffic at particular locations) and use this to provide better traffic-adaptive routing. Waze executed exceedingly well and was acquired by Google for $1 billion.

Waze is dependent on a smartphone running inside a car, though. What if one thought of the car itself as a device—as an increasingly sensor-laden rolling connected device? Every car on the road could provide all of what Waze sees and much more (e.g. road grades, potholes, lane markers, more precise positioning, etc.)? Herein lies the problem for carmakers—platform companies like Google (Android Auto), Apple (CarPlay), Microsoft (Windows Embedded Auto), and BlackBerry (QNX) have designs on moving beyond where they currently play – in-dash infotainment systems – and into the car as a data platform.

Carmakers hate the thought of being reduced to commodity device builders like the no-profit world of Android smartphone/tablet manufacturers. Hence the German automakers’ interest in HERE, to preemptively build out the car as a digital platform and avoid getting marginalized by Google (which is the second largest mapping player and now, with Waze, also the leader in crowdsourced road data). HERE has its own infotainment platform, but more importantly, soon every Mercedes, BMW, and VW (meaning VW, Audi, Porsche, etc.) will provide Waze-like data to HERE, building up a strong, Google-free Waze alternative. HERE’s ambition is to power both tomorrow’s cars and location-based applications of all sorts.

Meanwhile car dispatch apps like Uber, Lyft, Didi Kuaidi, Ola, and such are essentially in the logistics business. The better they can route cars, the faster customers and drivers meet, the more transactions the companies process, and the more they profit, consequently. The business of route optimization, previously limited to delivery companies like UPS (whose in-house routing famously avoids left turns at almost all costs, reducing wait time in turning lanes and avoiding accidents), is now squarely within the sights of Uber and its ilk. Uber’s driver app on Android (but not iOS) currently bounces drivers out to Waze by default for optimized routing. But that’s a ton of useful data that Uber’s feeding to Google instead of itself, and at the same time, Google’s looking to directly encroach on Uber’s terrain (with its own car sharing service), so for Uber, becoming Google-free as quickly as it can is a priority.

One route was for Uber to buy HERE and have a full-fledged mapping business on its hands. With its huge market cap, Uber could probably afford to outbid the German automakers too (which itself is something worth reflecting on). Yet Uber eventually lost that bid and opted for another strategy, which was to make a deal with Microsoft. Under CEO Satya Nadella, Microsoft is focusing heavily on cloud-enabled services and treating everything below that in the stack as a commodity (its own offerings there will eventually just be demand drivers). Part of that is a new strategy for its map services (such as Bing Maps) in which, rather than driving imaging vans around the world, Microsoft will have strategic deals with map vendors like HERE to source imagery while focusing on higher-end services (such as 3D mapping and integrating mapping into other services). So Uber and Microsoft struck a deal by which Microsoft is transferring its surface imaging unit (and the technology entailed) to Uber, and Uber will integrate deeply into Microsoft services like Office and Cortana. With this, Uber can eventually turn its global network of drivers and riders into a huge source of map data that’ll be of value for its own routing but potentially also to others.

Looking Forward

At Mahindra, I eventually headed strategy and tech planning for the electric car venture, Mahindra Reva (a startup in Bangalore that we had acquired). One of my focus areas was building out a vision for the connected car, and as part of that, I looked at areas in which we could build EV-specific experiences. One idea that came to mind was in mapping— electric powertrains are drastically more efficient than internal combustion engines (ICEs), so when looking to improve efficiency and maximize range, one starts to look at things like aerodynamic drag and road grade much earlier than with ICEs (where these things only really matter for racing cars).

Could we create map routing that would optimize energy consumption by, say, sticking to flat or downhill roads? I met with map vendors and realized the idea would be a bit challenging to implement because most navigation apps calculate the crow’s flight distance (i.e. if the land were all flat from a top view), not a 3D-mapped altitude-sensitive true distance. Further, in some regions, grade data were not available at all. We would’ve had to develop grade-sensitive navigation routines in-house, which was beyond our core competence, but the opportunity here remains significant.

There are lots of potential applications in robotic navigation as well – how would an Amazon delivery drone best navigate an urban environment (FAA rules permitting), for instance?

Clearly, much remains to be done in mapping, and it’s quite an exciting field today.

By: Ashish Bakshi


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What is Poshmark?

Poshmark is a platform that allows users to buy and sell clothing and accessories from each other’s “closets”. Although items are shoppable on desktop, a user can only sell goods through the mobile app. Users can post items to sell “in less than 60 seconds”, and Poshmark makes 20% commission on all items sold. Although Poshmark provides the shipping label for sellers, the buyer is responsible for paying the standard shipping price of $4.99.

With over 700K users, Poshmark has raised $47.2 million in outside funding and has over 10 million items for sale at any point in time. Items for sale are displayed in an instagram like feed that can easily be liked, commented, or shared.

Magic Sauce: The Community

Users love interacting with each other and will even shop for a “posh friend” they have met through the app. This makes users more likely to share not only their own items, but other user’s items with their followers. Users are constantly looking for more followers and other user to follow you. This cycle continues then continues over and over. Once a user has reached a certain threshold they can become a suggested user and will appear on the many users timelines as someone they should follow.

A Like acts as a watch feature for items a user may want to buy. All liked items are stored in the app and users are notified when the price of a liked item has dropped.

Bundling allows sellers to provide a discount to buyers who buy multiple items from their closet. It incentivizes more sales at a faster rate. One common bundle is buy 3 items and receive 15% off total purchase.

Shopping Parties are blocks of time where items of a certain theme are available for purchase. Users enter the party to shop or share their items for sale. The limited time encourages users to act

Community Meetups is Poshmark’s way of taking the online offline by bringing together poshers in the same physical community to share tips and talk about their experience. This continues the user buyin to the Poshmark brand.

Platform Risks

Although all transactions should occur on the app, there are many users who leave comments on items and request that they be sold through Mercari or direct with Paypal. Mercari is a hugely successful mobile shopping app in Japan that launched in the US in July. They do not charge any fees or take a portion of the sales and the seller is responsible for shipping. Because Mercari does not take any fees, sellers could potentially get 20% more for their items.

Any time your business is a platform, there is a risk that users can bypass the platform. Some users simply list clothes on Poshmark to reach a broad base of potential customers and then conduct all of their transactions through Paypal, cutting Poshmark out completely. When buyers do this, they leave behind all of their protection. However, the Poshmark community feels trustworthy due to all the communication and interaction that happens between users.

There is also the buying and selling of counterfeit goods. Poshmark offers a $35 authentication service for goods over $500. The buyer purchases an item through the app and the seller ships the item to Poshmark. Once the item has been verified as authentic, it is then sent to the buyer. Given this high threshold, there are complaints of many counterfeit goods being sold.

The Future

There is so much competition in this space that it is too early to tell who will be the market leader. However, Poshmark has built a strong community and can continue to build services and features to add to the stickiness of their platform, which will position it for success in the future.

Sources
https://poshmark.com/what_is_poshmark
http://fashionista.com/2015/04/poshmark-funding-round
http://techcrunch.com/2015/04/21/fashion-marketplace-poshmark-raises-25-million-more-heads-to-apple-watch
http://blog.poshmark.com/community-meet-ups/”

By: Anndrea Moore


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cyber security banner

Have you ever experienced identity theft that forced you into a zero-cash state for an amount of time that feels like forever? Or have you ever wondered how that app knows you so well—your habits, your route to work each week, your interests? The more we shift towards personalization, the more data is collected about your every move.  And that’s borderline cyber stalking, no?

This makes cyber security ever more important. What is it, you ask? According to TechTarget:

“Cyber security is the body of technologies, processes and practices designed to protect networks, computers, programs and data from attack, damage or unauthorized access” [1].

For any app, website, or technology in this online economy that collects personal data, one may hope that the company does just as much to protect it. However, this is an area that constantly faces challenges. A survey conducted by the ISACA and RSA showed that 76.6% of respondents expected an increase in security attacks in 2014 compared to 2013 [2]. In fact, the top 5 cyber security risks for 2015 as mentioned by CNBC are as follows [3]:

  1. Ransomware: Malware that restricts access to your own data and then requires ransom payments for re-access.
  2. The Internet of Things: Vulnerability of physical devices connected to the internet.
  3. Cyber-espionage: A war between national governments fought on the keyboard.
  4. Cyber theft increases: Stolen financial information, such as credit or debit cards, on the black market
  5. Insecure Passwords: Passwords that can be cracked effortlessly

These are no small risks and they appear to be inter-related to a degree. Moreover, cyber security is a national security issue and a hot topic among presidential candidates – a cyber war against China and Russia [4]. Additionally, according to a report on CNBC, China attacked Apple’s iCloud to steal data related to iMessages, photos, and contacts [5].  Apple has the reputation of ultimate security, yet weak passwords and public access to data make it easier to crack passwords and answer security questions. On the other hand, as technology companies increase privacy and security on apps and devices, the country’s intelligence services will continue to go dark reducing their capability to prevent such attacks. Perhaps this is why cyber security continues to be a challenge, it is an ever-lasting complex battle with a lot of gray area.

Fortunately, VCs are continuing to invest in cyber security startups each year. In 2014, 240 cyber security startup deals collectively amounted to $2.5B in funding, and 2015 is on the same trajectory [6].  As startups continue to mobilize, founders should ensure that an adequate amount of resources are invested in cyber security.

Sources

  1. http://whatis.techtarget.com/definition/cybersecurity
  2.  http://www.isaca.org/cyber/Documents/State-of-Cybersecurity_Res_Eng_0415.pdf
  3. http://www.cnbc.com/2014/12/19/top-5-cyber-security-risks-for-2015.html
  4. http://www.wired.com/2015/08/lets-school-presidential-hopefuls-cybersecurity/?mbid=social_gplus
  5. http://www.cnbc.com/2014/10/21/china-targets-apples-icloud-with-hacking-attack-report.html
  6. http://www.inc.com/will-yakowicz/cybersecurity-companies-on-pace-to-raise-2.5-billion-2015.html

By: Shemeka Neville

 


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There has been a lot of activity in the market for peer-to-peer (P2P) payments lately. While the concept of P2P payments is not new (one could argue it started once upon a time with the barter system), multiple products are trying to capture a share of this market today in the world of mobile. PayPal’s latest quarterly earnings report notes that $2.1 billion of payments were processed through Venmo in Q3–2015, growing at the rate of 200% a year! Venmo is just one of the products, although arguably the most popular, and competes with many other products such as Square Cash, Google Wallet, Facebook Messenger and PayPal itself. Apple is also planning to launch a P2P payment service, according to the New York Times.

The objective of this post is to analyze

  1. Whether P2P payments is a winner-takes-all market and
  2. Brief strategies that both larger incumbents and newer entrants can pursue to succeed in this market.

This post does not cover the market size, different features and nuances of the various products (unless they’re relevant to the above objectives), various stakeholders involved in building such products and their incentives (e.g. banks, credit card network operators etc.) and other considerations such as security and privacy.

Is P2P payments a winner-takes-all market? ?

To evaluate the extent to which this is a winner-takes-all market, we can evaluate the following:

  1. Strength of network effects

    In a P2P payment transaction, by definition, there is a ‘payer’ and a ‘receiver’. The products above clearly exhibit network effects in these terms because more payers in a network attract more receivers and vice versa. A user can play the role of both ‘payer’ and ‘receiver’ across different transactions and, hence, each additional user increases the value of the network to the other users too.

    But how strong are these network effects? In P2P payments, a user could potentially want to use this service with multiple other people (including friends, family, colleagues at work, an acquitance at a party etc.). It is also not easy to predict in advance when or with whom a user will transact. However, there is not much value in the ability to transact with a ‘random’ person (unlike the ability to check the profile of or connect with a ‘random’ new person on Facebook). Hence, on a scale from 0 (none) to 5 (high), I would rate the strength of network effects in this market as 4.

  2. Multi-homing costs

    Multi-homing means the ability to check multiple products offering the same functionality in parallel (which product the user ultimately decides to use depends on various other factors such as cost, user experience and so on). The process of homing has 1 to 2 steps in this case: installing the product and signing up for it (if not already done) and making a transaction.

    How high are the multi-homing costs? I would argue that the first step of installing a product and signing up is costly. While some products allow signing up through a debit or credit card, they may charge fees in making P2P payments (especially when using a credit card). The one mode of payment that is mostly free across several products is transacting through a bank account. However, signing up through a bank account takes time: the user needs to recall the bank account number, routing number and wait for a day or two to verify the account (usually done through a debit and credit of random amounts less than $1).

    However, once a user has signed up for another product, multi-homing is not as costly. It depends primarily on the user experience (e.g. details the user would need to enter to make a transaction and the ease of use).

    Overall, on a scale of 0 (none) to 5 (high), I would rate multi-homing costs in this market as 3.5.

  3. Demand for differentiated products

    While the core functionality may not be different across products, users would appreciate differentiation of the products in terms of the user experience (e.g. ability to start a transaction even without signing up, a feature of Square Cash and Google Wallet), platforms it is available on (e.g. mobile-only or both mobile and desktop) and other related features such as tracking, security and so on.

Overall, while there are strong network effects and strong (although less so) multi-homing costs, there is also a demand for differentiated products. Hence, the P2P payments market is not likely to be winner-takes-all and will likely have multiple products competing in the long-term. At the same time, due to the network effects and multi-homing costs, I would not expect more than 3–4 players competing in the long run.

Strategies to succeed

Given the above drivers of the extent to which this market is winner-takes-all, both large incumbents and new entrants can follow different strategies to succeed. A few of the strategies (certainly not exhaustive) are very briefly discussed below:

  1. Reduce ‘friction’ in signing up and using the functionality for the first time

    This is especially important for new entrants so that they reduce multi-homing costs, but this is not easy. Companies like Apple may have an advantage on this front: If P2P payment is added to Apple Pay, existing Apple Pay users are signed up by default. Companies like Facebook and Google are also making it relatively simpler by adding ‘$’ buttons to Facebook Messenger and Gmail respectively which already have large user bases.

  2. Provide a superior user experience when making transactions

    This is one of the definite ways to differentiate the product. For example, Apple Pay can have a mechanism where the user double-taps the home button, scans the fingerprint and pays/requests another iPhone nearby, all this without even unlocking the phone! Of course, not all better user experiences are necessarily appreciated by the users. Careful attention should be paid to user experiences that actually solve a pain point. For example, is the ability to pay/request a nearby iPhone without unlocking the phone actually valuable to users?

  3. Develop a differentiated and valuable offering, perhaps for a specific niche in the market

    One of the differentiating factors of these products is cost. For example, some of the big incumbents may not necessarily aim to make money through this ‘feature’ and hence have a lower charge. Their aim may be to increase usage and engagement of their products and monetize through exisiting or other means. New entrants may also start by serving specific niches and developing a differentiated offering for them. For example, one specific niche could be an offering optimized for payments and settlement between users in a large group.

Finding good strategies and executing them is easier said than done, but it would be fun to see how this market plays out.

What do you think?

By: Shankar Vellal


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