Articles for September 2013

Evernote Market – Selling software alone is not enough?

On 26th September 2013, Evernote launched Evernote Market continuing the transformation from just software company to merchandising complementary products like scanners to now selling backpacks, socks, etc. Is this because money alone from software is not enough or is this to cash in till you are popular move?

Phil Libin in 2012 explained how Evernote’s 1 billion dollar valuation is based on hope to make money in future. His words were “Evernote is not valued at $1 billion because our current business is worth a billion dollars today but because there is a good chance that it will be worth $100 billion in a few years.”

Evernote today is used by 50 million users. Let’s say ratio of paying customers to users increased from 4% in 2012 to 6% in 2013 suggesting 3 million paying customers today. They each pay $45 per year translating in to revenue of $135 millions, way shy of billion dollar revenue per valuation. Remains to be seen if merchandising can help realize revenue as expected by investors.

Scary thing is how quickly software is loosing its value forcing companies to use it as a bait rather than leading with it. Is this trend going to continue even further?

iOS apps is a business or not? Apple’s 5S & 5C launch raises the question, again

Three things I am left with after watching Apple’s iPhone 5S and 5C keynote.

  1. Experience not price
    For last few weeks we all read about how Apple should and will launch new cheap iPhone. In fact letter C in 5C was interpreted as cheap by analysts and pundits way ahead of actual launch. Well, cat is out of the bag now and it is nice to know that in spite of market/wall street forces, Apple decided not to make iPhone 5C free or cheap NEW iPhone. See the opening video about iTunes festival, 5C video, and Infinity Blade III demo, all screaming experience you will have as a part of Apple community essentially justifying price.
  2. 64-bit architecture hardware and software
    Launch event confirmed the speculations, A7 chip in iPhone 5S boasts 64-bit processing while iOS 7 provides 64-bit support. At the event, Infinity Blade III team was chosen to demonstrate power of new hardware and software. Watch the demo and you will know how statement was made about user experience, again.
  3. iPhoto, iMovie, Keynote, Numbers, and Pages apps are free with purchase of new iOS7 compatible hardware
    This really made me think again about my earlier post When if ever Apple will enable sustainable business on the app store? If apps are sold at low price (even the cool Infinity Blade III will be $6.99 only) or free (Apple’s productivity apps) I am not sure how an indie developer can build a sustainable business. Anyway, Apple made a point again about overall experience you can get out of the box if you are part of Apple’s ecosystem.

There is a cost for free

Nikos Moraitakis of Workable recently shared his thoughts about why they dropped free plan from service plans they offer. Read the article for details. To me summary is simple, free is not a sustainable business model. I am sure others have shared similar thoughts but it is important we highlight them as they are rare.

I keep going back to Malcolm Gladwell’s classic review of Chris Anderson’s book Free. Malcolm is spot on describing why making product and services free is not that simple. In Malcolm’s words

There are four strands of argument here: a technological claim (digital infrastructure is effectively Free), a psychological claim (consumers love Free), a procedural claim (Free means never having to make a judgment), and a commercial claim (the market created by the technological Free and the psychological Free can make you a lot of money).

I am sure you will agree that there is a cost to invent / create product and or service. Then there is cost of acquiring millions of users . Of course even though digital infrastructure is getting cheaper but for millions of users, cost cannot be simply rounded to zero. Add all this and we know well that there is a cost for free. Free is interesting and can draw initial attention no doubt. However I think if not impossible, free product and or service is very difficult to sustain.

++++
PS: Even Chris in his response could not actually defend all the questions Malcolm raised. See some of the comments on his response as well.

Agricultural policies, food prices and home cooking – Part 3

This post is third and concluding part of the three part series on agricultural policies, food prices, and cooking at home. Part one was about agricultural policies and its impact if any on food prices. In part two there was a comparison between eating out and cooking at home. In part three I am sharing my personal experience with home cooking.

My first job was in a big metro city, Delhi far away from my home town. I was leaving in a shared apartment with my friends. There were many restaurants and fast food places close to our apartment. Travel in and around Delhi was part of the job and thus I was exposed to lot of good eat out places. No wonder I was not thinking about cooking at home. As I look back now, my reasons not to cook were similar to comments on Mark Bittman’s article. I don’t have tools, time, and skills required for cooking.

My decision to eat out sounded well thought and tasty till one of us started getting sick often. We wondered what could be the root cause? Few visits to doctor’s office clarified things. My friend was advised to eat healthy fresh food rather than deep fried food we all were devouring. Seeing impact on our friends’s health, we all questioned our eat out decision. Best we could think in order to follow the  doctors advice was to cook at home, easier said than done.

We bought some pots and pans, nothing fancy just basics. Then a cooking gas cylinder. We were ready to cook, except we didn’t know how to cook. Thank god, mom helpline is always there in times of need. I called my mom asked her some recipes. Considering our skill level, learning to make rice and lentils first was no brainer. We thought how hard it could be to cook rice and lentils. As it turned out we either undercooked lentils or rice many times. We somehow learned how to cook rice and lentils in about two weeks or so.

But then eating rice daily is tough, we were missing nice warm bread, veggies, and other morsels. Enough is enough, we decided to try making a bread. Good that we decided to try it on Sunday afternoon. We wrestled with making dough for two hours or so. We had no clue about the right proportion. Flour was too much initially so we added more water. Then dough was runny so we added flour which helped but then we were not able to knead the dough properly so we added water again. You get the story now. After an hour or so we got the dough we could use. Bread tasted so well after all that labour as well supply lasted for more than a week : -)

We thought some hand holding through proper simple to follow cooking instructions would have helped the situation. Nonetheless in few weeks we started cooking decent meals and had fun while cooking.

From this experience I can certainly say that it was cheaper also to cook at home, yes even including cost of pots, pans, and gas used for cooking. With little bit of planning and cooperation from all, we were even saving time also by cooking at home. We realized how much time we used to spend driving to and from the food joint, waiting for food etc. Lot more than time it takes to cook and even clean afterwards. Of course huge benefit was knowing that we were using good ingredients and preparation was more healthy. My friend’s health improved and to me that was a good testimony of heathy eating.

Fast forward to present. I am fortunate to have a wonderful wife, Mrunal. She really knows how to cook tasty meals. Mrunal is also very eager to share her recipes and cooking experience with friends and family. We eat out sometimes but home cook meal is what we enjoy daily.