Friday, October 20, 2017

Timeshare in the age of Oyo, Airbnb and OTA-does it still make sense? This excellent blogpost makes the point that memberships of Club Mahindra, Sterling, Country Club etc have hidden fineprints and costs, which make it difficult to avail it. For example, non transparent reservation of rooms, non alignment of incentives between members and owners once timeshare is sold, active resale market at 30%-50% discount etc. Also, with the Indian hotel market developing due to OYO, AirBnB and OTA(GoIbibo, MakeMyTrip, ClearTrip) and quality standards going up, it is no longer difficult to get basic quality standards met. Some of you may feel that the target segment for these memberships is different-HNI goes for timeshare while middleclass/lower middle class for OYO etc. But star hotels are increasingly discounting on OTAs, and now even timeshares offer rooms there. For example, I recently got 3 nights in Sterling, Munnar for Rs 3200/night inclusive of 18%tax. The lowest price displayed was Rs 2800/night a day before I booked(missed that unfortunately). and this for a price inclusive of breakfast. I wonder what would members think of this. After all, they have paid membership fee, and AMC sort of fee, with limited choice of hotels(often this is away from city centre, so costlier taxis etc). 

Also, timeshares are good for family vacations but these are in peak seasons in school holidays where often supply is limited. For young couples who can travel in offseason, these memberships are good. But it does not evolve with lifecycle needs

Tourist Cab business-economics

Having booked outstation cabs for self/family across Tamilnadu, Kerala, Orissa, Bengal and Maharashtra, I thought to write some points on the business model. Usually, the pricing starts from Rs 9/10 per km for a round trip with min 250km/day. Add more for bigger vehicles, and sometimes an extra payment for the driver's food/stay arrangements. Obviously, toll/parking/interstate permits is extra. If one prefers self drive, then Zoomcar offers pricing starting at approx Rs 16/km(if one uses the 10km/hr option for Sedan on Sat-Sun, with Rs 12/km for extra kms). Here, it is actually costlier than usual cabs but ok for those needing err.privacy.

Anyways, I hired a car from Kochi-Munnar for 4 days. The package was Rs 7000 for 4 days, with 500km included, and driver's cost all included. At the outset, he filled his diesel tank for 33.3litres paying Rs 2,000. The tank was only 75% depleted at the end of the 450km long trip, implying a mileage of 18km/litre for 25lts. Assuming Rs 1500 for fuel, and Rs 250/day for driver stay and meals(so Rs 1000 for 4 days), the driver still earned Rs 4500 for 4 days towards his profit/salary/car hire costs. The vehicle was an Ertiga for which 5yr EMI will be Rs 17500/month for a Rs 8.6onroad price. Hence, assuming 60% utilisation or 18days/month, Rs 1000/day goes towards that. So actually, not much profit there. The real juice comes when the driver gets tips or increases utilization. 

With marginal cost of fuel only around Rs 3-4/km, why is there not a price war like seen in local taxis(ola/Uber). Even Savaari was costlier than the local operator who serviced us, even after the Rs 5000 discount on the rack rate. Reasons for this is usually low utilisation, tourist fleecing/oligopoly etc. 

In this market however, innovations appear confined to service quality and not to business practices like garage-garage(instead of point-point), and pricing. The claims of Droptaxi/Onewaytaxi and others( are not realistic since hardly anyone confirms the pickup in advance. Unless you are ok to change your plans in the last minute(say backpackers), this won't work when you wish to take connections. 

Also, as mentioned in this post( the long distance fares(>25km/full day rental) are now the domain of app based aggregators like Savaari, Ola Outstation etc. So the local taxis are in the death spiral of smaller distances-less profitability-lower earnings-demand/need for fare hike-demand compression for long distance travel etc. 

Saturday, October 7, 2017

Hathway Broadband-Great people but poor technology-therefore poor customer experience

I took a 2month Hathway subscription and then when relatively hassle free, took the annual subscription at 50MBps speed, 300GB/month annual subscription at Rs ~8500/year(Tax inclusive). The installation was a delight with same day, and online, but post renewal, repeated technical issues cropped up. Resolution experience has been iffy as yet though. I have blogged earlier on the customer service issues of PAYTM and some others like ICICI. However, Hathway gives a competition to PAYTM. Below is the typical customer experience channels and my comments:
Automated service call asking if satisfied with the resolution of the complaint. If you say no, they ask you to enter ticket  number. As if customer will have it handy. Why not give an IVRS based choice instead or else customize the call to say “Resolution of complaint No XXX on
App to enter tickets but very limited functionality and no “Others” tab. This renders the app useless for  all but basic queries. Also, resolution comments are not mentioned.
Customer care does not take complex issues, and asks you to send an email.
To be fair however, the technical support team is quite good, and call centre team responsive. Also, their remote diagnostics tools are a delight

Using best practices such as Live chat, predictive diagnostics and fault correction without waiting for complaints, proactive service credits for poor service, would improve the service

Sunday, September 24, 2017

1GB per day-the new data normal due to Reliance Jio

In the 2016-17 annual report of Reliance Industries, they disclosed that the average data consumption per Reliance Jio user is  10GB/month (as against a quota of 1GB/day or 30GB/month). This implies a data pack utilization of 33%, that too on a daily basis w/o usage accumulation, which is great. The icing on the cake, introductory pricing of Rs 100/month. In parallel, smartphones are getting cheaper, with a 4GB RAM, 64GB storage and 400Mah battery phone now costing Rs 9,000(or more). This is beneficial for content owners and apps since folks have more money to spend on their services, and ability to consume on the move(this was earlier not feasible due to high mobile data costs, but with someone who takes the JioFi dongle along, they have their own hotspot in lieu of mobile data)

The implications of this are
-Cloud based services like Wynk(Rs 99/mth), Hotstar(199/mth) and Kindle Unlimited(150/mth) are getting a great audience
-Video hungry channels like Sports, TVF, Comedy, Amazon Central which are usually consumed during commute also gain
-Losers are telcos who got very high data ARPU customers due to the propensity to consume on the same SIM, but now using JioFi dongle, they have their own 24*7 Wifi hotspot using the same phone
-To be fair, Jio has its hassles such as network disruption, dongle life around 6hrs and potential radiation concerns by carrying the dongle with you. Also, employers may not be overjoyed with people using Wifi in office.

Yet, with other companies following suit, the data revolution in India is now in progress

Saturday, September 9, 2017

Upfront Rates and more responsive customer service-Why Urbanclap trumps Housejoy

Let me disclose upfront that Urbanclap is cofounded by an IIM Ahmedabad senior of mine Abhiraj Bahl, but this fact does not bias my views. As someone having used both these apps for home and beauty services (electrician, carpenter, home cleaning, beauty) etc, I find the UI of UrbanClap to be better for the following reason

  1. Most services have upfront rate card(eg carpenter repairs Rs 250/hr) and not the 'On inspection' tariff where you may feel gouged at times. Housejoy by contrast has a visit fee which is adjustable 
  2. Prices usually (but not always) inclusive of tax
  3. Super responsive customer service available on chat from 9am to 7pm. Opposed to this, Housejoy has email or call. 
  4. Intuitive questions to help better identify the service provider and help them scope work. For example, computer repair requests are asked the model type/repair reason. UrbanClap pioneered this before copied by others
Housejoy has recently revamped their app/UI maybe to address #1, and are offering discount codes perhaps to make up for lost time. But for now, UC rocks.

Hope is not lost however for Housejoy. When Uber entered India, they kicked ass of Ola's customer care. But in the last few months, Ola is in my view, much better than Uber now. So with enough management focus, one can always make up lost time

Tuesday, September 5, 2017

Some musings over the last one year

Recently, I read an article by the Collaborative Fund Blogger Morgan Hausel about why everyone should write
In this blogpost, I take a stab at addressing the 4 questions he mentioned

What is your edge over competitors? Skills in excel, PPT, financial modelling are generic skills, however the initial edge in my view is the ability to understand accounting better than a MBA, and business better than a CA. This is cumulatively improved by  the softskills such as empathy, willingness to get your hands dirty in the trenches, and lack of ego. Successive bosses and mentors have the credit for instilling this in me. However, I am aware of the power of compounding and everyday changes, so it is a mission to become better daily amidst the information overload.
How do you react to unforeseen risk? I interpret this question to exclude insurable risks, since that would be hedged against. But for risk such as 10% market swings against your open futures positions, the stock you just entered being called out as a fraud, your much thought over positional trade failing, these are unavoidable. Hence, I try to structure the portfolio to be within my staying power. For example, I recently purchased the listed Indian private bank YESBANK, on the day before it released its annual report in which it disclosed divergence from the central bank suggested provisioning norms, for certain non-performing assets. This disclosure was not voluntary being mandated by the securities regulator SEBI, and the stock promptly corrected ~10%-15%. Thankfully, I did not have to exit at firesale prices, and could hold and exit at a profit(now the stock is 10% over that initial entry price, after having swung back 25%). So correct risk management applies. In personal life, this maxim would be not to be dependeant on just one income source, professional development etc. You don’t know which one will work.
What have you changed your mind about recently? That there are companies who can grow at double digit CAGR without reverting to terminal growth rates. This is not an excuse however to write fiction in excel and justify outlandish P/E multiples, but rather is an effort to learn from them. To the end, focus on business insight rather than news, and on knowledge with a longer half life. 
What part of your job are you not good at? I’d suppose this would entail dealing with what I consider non value added and ego massaging work, which finally does not serve any economic purpose. This is integral to any corporate job especially as you climb the ladder (notable exceptions are the owner-operator driven companies out there).

Tuesday, June 27, 2017

Is it fair to exclude student loans(education loans) from personal insolvency? Some possible reforms

While reading the Indian Insolvency Code 2016( , I realized that student loan debt is excluded from discharge during insolvency/fresh start process. The definition below states that:
Sectin 79(15) "excluded debt" means—
(a) liability to pay fine imposed by a court or tribunal;
 (b) liability to pay damages for negligence, nuisance or breach of a statutory, contractual or other legal obligation;
(c) liability to pay maintenance to any person under any law for the time being in force;
 (d) liability in relation to a student loan; and
 (e) any other debt as may be prescribed

While matters of (a)-(c) are public policy items, it is difficult to fathom why student loans should be singled out for unfavorable treatment. One argument could be that these loans are typically unsecured and single borrower so to avoid the risk of student moral hazard of building their skills and non repayment, these are excluded from personal insolvency. This is the case in USA also, but there, if the college has been fraudulent, de-recognized etc, this debt is forgiven. In my view, this provision should be accompanied by

  1. Allowing bankruptcy protection for only those student loans which were unsecured and not under co-guarantee/co-borrower of parents. Reason being these were secured at time of sanction, and therefore should not get special treatment
  2. Allowing student loan protection to the extent the interest charges were less than the equivalent home loan rates by the same lender. If the lender had charged ~13% under floating, why should they get special treatment here
  3. Not allowing retirement annuities of parents to be attached to repay their children's loans for which they had done guarantees
  4. Allowing case/case student loan waiver where the default is not wilful. Possible indicators could be
    1. Income after graduation<200 emi="" li="" loan="" of="">
    2. Person continued jobless
    3. Institute placement records/academic credentials under question
    4. Evidence of kickbacks between lender and institute 
  5. Fine/Recovery from the concerned education institute where fraud by them is proven(Eg advertise 100% placements or facilities which do not exist)-then the bank should be able to attach and auction the institute. 
  6. Similar to RERA Code, liability on education/admission agents 
In the era prior to this Code, I have seen cases of friends debarred from bank jobs since they fell behind on student loan repayment. This leads to a vicious cycle in this economy and should stop

Monday, March 20, 2017

The success of Instamojo

Since the last 7months, I’ve been using Instamojo to collect payments for an event which I co-host. Having collected close to Rs ~80,000 over ~300 transactions(average ticket size is around 160, skew due to one-off Mar-17 event), my experience of the platform has been that it delivers what it promises- an inexpensive, swift, efficient way to collect payments for various purposes(in my case, events). Why do I like it so much, or prefer this to UPI/direct account transfer? Preregistration for events is helpful to build seriousness and minimize dropouts- while Prepayment for events builds a trackable database, and lowers credit risk and operational cash issues, so that you can focus on enjoying the event rather than on who has paid(or not). Besides, while in our case, even Rs 150-200 is a pittance actually, this lowers the odds of overplanning and wasting food/resources.

1.       Sleek and elegant web UI-Easy for payments and vendors
2.       Only option I could locate for individuals(non registered entities) which allows you the full payment gateway functionality
3.       Allows to collect fields beyond name/email/mobile-this can be used to pre-qualify people during signups, and update the database. No need to seek and update spreadsheets
4.       Protects your and the payor’s payment information-neither party is aware of the source or recipient payment method.
5.       Allows different variants and discount codes-useful for price differentiation
6.       Excellent reporting interface, downloadable 24*7
7.       Avoids payment hassles for you and various options for those who need to pay you-no more frequent logging into bank account to check who paid out
8.       Instant receipt-allows confirmation to those who paid that their funds are safe
9.       Easy refunds without time limit-useful if you cancel the event OR issue a discretionary refund.
10.   Premium options for SEO etc which I have not used.
Some things which could be better
1.       Micro Loans on T+1 at 0.25%-This might give a perverse incentive to delay payments
2.       Better Wallet Integration-They don’t have PAYTM for example, and till recently used to charge money for even offering this facility
3.       Mode of payment/Device Type meta data-this could be provided in the payments dashboard for vendor to analyze better his customer profile
4.       Not passing on TDR/MDR benefit from RBI-In the months RBI lowered the transaction charges, they could have reduced it for end customers also. But they chose not to affect the standard pricing, thus demonstrating their pricing power. Not kosher!
For all this, paying Rs 3+1.99%(+service tax) is totally worth it even though it works out to 3.5%-4.0% of my overall proceeds. But considering the time it saves me, it is totally worth it.
Kudos to the team and to their backers(their website includes names like  Kalaari Capital, Blume Ventures, 500 Startups,  Rajan Anandan, Sunil Kalra, Dave McClure, Rob de Heus, Thijs Gitmans, Pankaj Jain,  Shailesh Rao, Bharathram Thothadri, Avlesh Singh.)

PS: This is purely a review without any commercial or other benefit from the gateway. 

Thursday, January 26, 2017

Who is to blame for Tamil music and dance fading out in Mumbai?

There were three distinct events last week which provoked me to write this post

  1. The lament of the Mulund Fine Arts Society that they had to cancel their annual program because of inadequate contributions to fund the extra expenses due to unavailability of the usual rented hall which is now undergoing renovation. The Society has three main revenue streams, music/dance classes(~40% of revenue, but hardly 10% of this revenue is a surplus), minor entry fees/subscriptions(~15% of revenue) and interest income(~45% revenue). Total budget ~Rs 2 Mn. For a place like Mulund with a sizeable population, this is a pity. That too in a place where stand up comedy/multiplexes routinely fill up despite costing ~1000-2000 for a family. 
  2. My wife's dance senior from Chennai had a Bharatnatyam performance at Chembur FineArts society (a premier hall). Despite this being a free performance (thanks to Mahindra Finance which sponsored it), the hall was just 1/3rd full at starting time, though it did fill up to capacity by 30min into the show. This would not have happened in Chennai.
  3. I read a book on how memorizing is important, and why distributing our memory to the cloud makes us struggle to remember. I connected the dots and realized its implications for performing arts, which needs time devoted AWAY from the screen along with memorizing dance steps
I suppose addressing this topic needs conceted actions from community organizations, venue owners and citizens. Those further interested in this topic can see

Uber/Ola surge pricing proves that we need a regulated public transport

In Jan-17, Uber euphemistically announced 'price adjustments' as their communication of  increased fares. With them earlier having abolished time/distance pricing and surge multiplier in favour of 'flat fares', there was no new benchmark or way to compare the impact of this adjustment. If a government agency had done this, there would have been a hue and cry about opaque rule making, edicts etc, but when private companies like Google/Uber make decisions using Black Box algorithms, they cloak their rationale or data under the guise of 'proprietary business secrets'. Anyways, while regulation is usually considered bad by those negatively impacted, it is essential to address market failure which happens in public transportation. Imagine your fire safety, water supply, and utilities tariffs being determined opaquely and with time of day pricing. Would you accept it? Answer is probably no. A player with deep pockets(eg Uber) can sweep into a city, under cut the existing public transport systems by cherrypicking profitable business, and then increase tariffs and profits instead of expanding supply. This is my apprehension with allowing 'innovative' startups to operate under a non level playing field, in such an important field. Those with private cars or ability to afford taxis can probably cope with surge pricing, but the vulnerable folks who rely on public transport which eventually hollows out to Ola/Uber, would not have any back up option. I have covered some of these problems in another blog post here

So what is the solution? Regulations like below are a good starting point once refined in the consumers favour.

But the fact remains is that unless the new age startups address age old problems of access, discrimination, non refusal of rides, regulated tariffs with surge limits, we risk later issues

Lessons from Bollywood movie Kaabil

Yesterday, I watched Kaabil, a movie starring Hrithik Roshan and Yami Gautam, which centred around the story of a blind couple whose married life is shattered by two hooligans who have political and police backing owing to one of them being a corporator's brother. This ends up in Hrithik Roshan taking revenge, and finally (as in any Bollywood movie), committing the perfect crime and remaining free. Following thoughts came in:

  1. Quit when you are ahead/Dont gloat: Hrithik discovered the suicide note of his wife due to a chance remark from the corporator. If that guy had not mentioned it in his sarcastic effort to rub salt in his wounds, the plot would have been quite different
  2. Public places hardly 'accessible'  Crowded malls are a difficult place for the blind, and this was evident from the way Hrithik struggled to find Yami when they got separated in the crowd.
  3. One can profit WITHOUT giving back to the cause: The producers could have given a symbolic profit share to the NAB(National Association for the Blind) to promote welfare of visually impaired people, but they did not. So this is one lost cause unlike say Paa, Anand etc which threw light on otherwise neglected segments
  4. The motivation to succeed: The title name comes from the fact that Hrithik wishes to become 'capable' enough to fulfill the dreams of his beloved. Often, PWD(People with Disabilities) have more motivation than their non challenged peers, simply because they need to try harder. 
  5. Importance of a support system: The couple is able to lead a normal life due to their close friends and neighbours. Each of us has the responsibility to help PWDs 
Watching the movie needs one to suspend some belief in mobiles phones(who uses PCOs these days), DNA testing etc, but it is a feel good. With 2.2% of Indians disabled, with just 40% of them in the workforce, and 54% overall literacy rate, PWDs lag the general population on several indicators. If such movies increase empathy for PWDs and narrows this gap, it is goo.  Data is sourced from below link