Notes: NON MEMBER DATA

To: Nirmit / SriRam / Raju

cc: Ashni / Vital

Date: 15-10-03

Capturing “Non-Member Data” from Various Sources

(e.g. Newspapers / Magazines / Directories / CDs / Bought-out Databases / Pamphlets etc.)

Enclosed find:

Print-out of data-capture screen
My interpretation/suggestion of “Display Result” screen

In data-capture screen, there is no field for “Entered on (date)”,

but, I suppose “System Date” can be shown.

While entering any person’s details into Non-Member database, no checking is done to know whether any data already exists in the database about that person.

This has been done purposely.

Purpose:

▶ We don’t want person entering these details to waste any time.

▶ Just having same name (first name / last name) does not guarantee that the data belongs to the same person.
There could be more than one person with same name.

Best thing is to allow data entry of different persons having same name — and go ahead & enter.

▶ Finally, say we are searching for AMIT CHANDRA.

The search may display a result-screen like one enclosed.

It should be possible to rearrange/regroup the display by date (chronology) or company name.

Now it is up to the consultant concerned to draw conclusion as to whether this data belongs to one person — or many persons.

If it is the same person, this table will show us how, over a period of time, he has moved from one company to another.

In fact, if we build up a meticulous / vigorous / deliberate process of entering data about senior industry executives over a period of (say) 10 years — and from published sources —

then, we have managed to capture his entire career history!

Next time, when any of our consultants phones him, it would be amazing how much knowledge we have about him!

He will be impressed — and respect us for our professional thoroughness!

It is like we have been tracking him silently.

Q: Have we made provision to capture “source”? Is this important?

(signature mark)

Kartavya / Abhi / Sanjeev

cc: Nirmit

15-10-03

Leveraging Techies

▶ Yesterday we discussed how we can rope in thousands of S/W developers around the country to help us make GumMine a robust product.

▶ Enclosed find an email which we may consider sending to these techies in this regard.

▶ Of course, before we can send out such an email, you will need to make some advance preparations, e.g.:

→ Hyperlinks

→ Online Entry Form (with all rules) where a participant should fill in. Besides capturing his/her basic details (Name / Name of current employer / E-mail ID / City, etc.), we need for him to say / confirm:

“I have read the rules governing this contest ‘Turning Point’ and agree to abide by the same.”
[Submit]

→ Modified GumMine — with all unnecessary links removed — where he can paste his resume, see side-by-side:

Structured (indexed) résumé (with RED fields)
His own plain email résumé

→ Ability to “EDIT” (esp. Career History)

→ Click on ERROR-REPORT (as a side box/window) where he can enter his observations/suggestions while doing this editing.

All along, he must be able to see both structured database (i.e., extracted fields) as well as his plain email résumé.

He must be able to see, at all times:

What went wrong (i.e., RED fields)
Whether value was actually available in his résumé or not — if yes, where exactly it got hidden.
Only then he can figure out what logic could have been used to capture this field/value.

I have a feeling that such a contest will arouse tremendous curiosity amongst techies — and their friends/colleagues — and will bring in a lot of publicity for RecruitGuru.

How soon can we do this?

(signature mark)

Draft of email to be sent to 20,000+ Software Developers whose email IDs we have in our database (from 1,87,000 email resumes which we are currently trying to upload on Recruitguru).

Dear Sir/Madam,

Turning Point

Do you like to be challenged? — and in the process, win Rs. 10,000?

If so, you would want to read the attachment!

Regards,
Recruitguru.com

Dear Sir/Madam,

Are you listening — Bills & Carlys?

As a technocrat, you love challenges — above everything else.

Here is one to test your skill — and should you succeed, to win Rs. 10,000!

All you have to do is:

▶ Click here (to go to www.Recruitguru.com)

▶ Paste your email resume (unstructured).

▶ Watch our software convert your plain/unstructured resume into a structured database of 23 fields (takes 6 seconds).

▶ Look up fields where software failed to extract (marked red) or extracted wrong values (assuming that the correct value was, in fact, available/present in your email resume).

▶ Click ERROR REPORT and tell us (your entry to the contest):

→ Why our software failed (where it failed).

What logic/algorithm would you have used to prevent such failures? (Your detailed technical suggestion.)

Obviously, if the data-value itself is missing/absent from your original resume, it is not a failure.
But even here, do fill in the missing values (Edit) — especially in the Career History section — and after a few weeks you will receive frequency-distribution graphs of resumes in relation to your peers/co-professionals!
(Eg: Are you currently underpaid?)

There is a possibility that your resume is already existing in Recruitguru’s database (having been received earlier from other job sites).

But that does not debar you from participating in this contest or from winning the prize.

The contest will close on [date] and the Winner will be intimated by email, besides an announcement on Recruitguru.

This contest is governed by the following rules:

▶ Employees of Recruitguru — and their relatives — are not eligible to participate.

▶ As regards the Winning entry, the decision of Recruitguru’s management is final and binding on all participants.

▶ Recruitguru management reserves the right to reject any entry without assigning a reason.

▶ Recruitguru management reserves the right to incorporate in its software any suggestion, logic, or code provided by any participant, without assuming any liability in regard to any compensation/monetary payment/acknowledgment, etc.

▶ Recruitguru management will not entertain any questions or offer any explanation to any participant regarding this contest.

Wishing you all the best,

Kartavya
Chief Technology Officer

Recruitguru.com

Kartavya
cc: Abhi

cc: Sanjeev

cc: Nirmit

07-11-03 (Friday)

Earlier Ref:

▶ Flight Deck Folder dated 29-09-03 containing User Interface

▶ My note dated 07-10-03 (Gumshoe & Recruitguru Consoles)

▶ Our meeting (last week) to discuss Major/Minor Improvements to GumMine/GumSearch Consoles
▶ On handwritten notes given to Abhi for Scoring / Ranking of Priorities

Whereas I appreciate that the tech team was busy last week trying to solve the problem of MACRO,
there is an urgent need to:

▶ Prioritise balance pending work

▶ Draw up a timeframe/project plan based on resources available

Password/User IDs to 66 companies will get sent today evening, followed by a general circular to some 1000 placement agencies by end of next week (as soon as Raju has finalised auto-emailing of User IDs/Passwords).

This means, 66 companies will complete their FREE TRIAL periods by 8 DEC.

(2/2)

By that date, Recruitguru has to be ready at any cost to be able to:

▶ Permit subscribers to tick/select transactions of their choice

▶ Enable subscribers to make online payment

via Credit Card Payment Gateway

OR
make online entry of cheque no./DD no. etc.

send cheque/DD by courier along with a print-out of that page/form of the website

To ensure that this happens by Dec 8, enclosed find my proposal/plan for completion of various software development activities, with some tentative dates.

Given this firm deadline, we have to plan accordingly.

Since we do not have the option of shifting that date!

If required, tech team must work over weekends too, to strictly adhere to the targets mentioned in enclosed Gantt chart.

While others are working on this, you may prepare Project Plan for PHASE 3, viz.:

▶ Recruitguru Flight Deck

▶ Major/Minor Improvements + My notes with Abhi

▶ Common Features

(signed)
07-11-03

Kartavya
Abhi
Sanjeev
Nirmit

04-11-03

Project TRAP

Marketing Recruitguru

Our long-term goal is to make Recruitguru

THE INDUSTRY PLATFORM

for all recruitment activities taking place in India (to begin with).

Goal is also to make ImageBuilder the NEW CURRENCY of recruitment by withdrawing/substituting the old/existing currency — i.e. plain email resumes.

To achieve these goals, we have identified Placement Agencies as our initial:

▶ Niche market

▶ Bowling Alley / Beachhead (Geoffrey Moore, in “Crossing the Chasm” / “Inside the Tornado”)

Once we have captured this niche, we will move on to:

▶ Licensing our technology (GumMine / GumSearch / GumSelect, etc.) to various Indian job sites (starting perhaps with TimesJobs.com)

(who has no “revenue model” as of now, and who has realised that

It is better to make yourself obsolete rather than let others do it.)

▶ The mainstream market of Indian corporates (end-employers)

Having set out this ROADMAP, the question arises:

▶ How do we capture the niche market of placement agencies?

Answer is obvious:

Make them an offer which they cannot resist — an offer which increases their business / client-base / candidate-base!

Order-execution productivity / awareness / profits etc. manifold — and at very little intro investment.

In enclosed tabulation, I have tried to outline such an offer. I am sure you will come up with further ideas to improve it.

The “CORE” of my offer is to:

▶ Give away our Order Execution Software (OES) free to any subscriber who will make the very first subscription of Rs. 1 lakh at the start.

Of course, in order that the subscribing placement agencies can take full advantage of our offer, it would be essential to ensure that:

▶ Search-results from Recruitguru can be seamlessly migrated into (offline) OES.
(This is 3P’s problem too!)

If they cannot, the very purpose of giving away OES free to them will be defeated!

But, if it does, the whole thing—

— becomes a COMPLETE END-TO-END SOLUTION.

It becomes a total recruitment platform!

While giving away OES free, we will make it “self-destruct” after Jan 2005.

By that time, we will modify OES / convert it into .NET and then upload it to Recruitguru as an integrated system.

We’ll make this clear to placement agencies right in the beginning so that there is no misunderstanding.

We will also assure these placement agencies that whatever data lies in their offline OES, as on Jan 2005, will get migrated into online OES, so they will not lose any data — and they will be able to continue to use online OES to track / monitor / execute all of their current assignments (as on Jan 2005).

Of course, data re: assignments already completed / closed as on Jan 2005 will also get migrated to Recruitguru.

Apart from this core offer, I suggest we also give away some other useful databases free to subscribers who …pay us different FIRST subscription amounts.

There is hardly any cost attached to these “freebies”, and subscribers would find these very useful for expanding their own marketing/sales.

I believe some of these databases would be of great value to American corporates —

who already have some business/trade relationships with Indian corporates, or who wish to establish such relationships.

And for them, first-time subscription of Rs. 1 lakh is about $2000 — only! not a big deal.

Problems that will arise:

Whereas installing and using various databases will not pose any problem to most of the placement agencies,
it would be very different with OES.

Installing and subsequent trouble-free use of OES would pose a lot of problems — apart from the resistance of the people who have to use it.

It would require a lot of training and a lot of “hand-holding” over the next 1 year (till OES goes online).

But the advantage is that —

if placement agencies make a serious/sincere effort to learn & use OES offline for one year, then when it moves online they are thoroughly trained & ready!

There will be few hiccups; migration would be easy.

Online product will NOT get blamed because it is so unfamiliar or never encountered on the ground.

At this stage, a parallel is in order.

Would any manufacturer of automobiles or tractors introduce his product in a country where there are:
→ No car-repair garages?

→ No auto-mechanics?

That would be inviting disaster!

On the other hand, no manufacturer can afford to set up a countrywide chain of owned garages and thousands of employee auto-mechanics either!

That too, would be a disaster!

Situation is not much different with a software (product) like OES.

If we cannot/do not “support” it very thoroughly, it would be a disaster (on our experience at 3P is a pointer!).

If we “employ” 20 software engineers for support, that would cost us a fortune — especially when Recruitguru has no revenue worth speaking of.

SOLUTION

▶ Give OES free,

but

▶ Charge for installing / commissioning / trouble-shooting etc.

@ Rs. 500/day (Mumbai)

@ Rs. 2000/day (Outstation)

▶ Hire 5 diploma software engineers as OES Trainees, at zero salary.

▶ Train them for 2 months in-house.

▶ Whenever they are sent out to a subscriber’s premises for installation / commissioning / troubleshooting etc., pay them 50% commission on the billing they manage.

If they spend 20 days/month in Mumbai, the set (by way of commission):
250 (i.e., 50% of Rs. 500) × 20 = Rs. 5,000/month.

(Page 8)

After a while, subscriber would “bypass” Recruitguru and offer these guys Rs. 400/day directly!
Subscriber would save Rs. 100/day and software engineers would make extra Rs. 150/day — both are happy!
We too!!

Auto manufacturers do not want to make a profit from garage owners / garage mechanics’ salary or labour.
He makes his money on the original sale of cars and repeat sale of spare parts —

which he can do only if he first creates a repairing infrastructure.

So, we must train 100 diploma engineers to troubleshoot OES at 5,000 placement agencies —
then make our money online on Recruitguru.

“Change-Over”

To:
Mitchelle, Megha, Edina, Riya, Mangal, Priti, Amol, Saquata

Cc: Nimit, Raju, Sri Ram, Abhi, Kartavya, Sanjeev, Deepa

(Individual copies to all)

Change-Over

From next Monday — Oct 13 — we will shut off Module 1 (ISYS) and change over to Recruitguru.
Amil will be responsible for shutting down Module 1 (ISYS) on Saturday.
Starting that day, all consultants will use GunMine / GunSearch only within Recruitguru.
Sanjeev will make available the User ID / Password to all consultants (3P as a client).
For this entire week, Sanjeev & Deepa will be available to help consultants learn/master the use of GunMine / GunSearch.
Sanjeev will co-ordinate with Kartavya for any difficulties faced by consultants.
Sanjeev will keep me informed (at least twice a day) as to how things are progressing.
Nearly all Placement Agencies are registered for Free Trial at Recruitguru.
If everything goes as planned, Sanjeev will send to them their User ID / Password on Monday 13th morning, asking them to log in & start their trials.

(signed)
06-10-03

3P Consultants as Brand Ambassadors”

To: Kartavya / Abhi / Sanjeev

Cc: Nimit / Raju / Sri Ram

If we are to discontinue use of Module 1 (ISYS) from next Monday, it is important that before end of this week we provide 3P with facility to —

→ Remove

WWW.Recruitguru.com

and paste

3P Consultants

For Executives -----------

on all ImageBuilders.

This is because we very much want them (3P Consultants) to use ImageBuilder only while forwarding any resume to any client.

(See my earlier note — Doctor, Heal Thyself!)

We want our 3P Consultants (≈11) to act as Recruitguru’s Brand Ambassadors.

(signed)
06 / 10 / 03

“Non-Member Database”

(Addressed to: Sri Ram / Raju / Nimit → HCP)

Non-Member Database

✓ Now stands at ≈ 130,000 executive-names.

But “executive database” is a perishable commodity. Although an executive’s name does not change, his employer name and designation can / will keep changing. So it is important to pick up such data DAILY (from newspapers / magazines etc.) and keep adding / deleting Non-Member database.

Ideally, old employer names + old designations should also be preserved (against each executive name) so that any consultant knows the progress.

One person should be ear-marked for this R&D only.

17 / 09 / 03

“Doctor – Heal Thyself !”

(Addressed to: Sri Ram / Raju / Nimit)

Dated 30 / 09 / 03

Doctor – Heal Thyself !

We are nearing that time.

By Wednesday, Recruitment application will get deployed.

Tech team will vigorously test it online on Thursday / Friday / Saturday – (and if it is completed, then even on Sunday).

By next Monday it will be made available to our own consultants. They should spend next whole week uploading resumes (singly & in large batches) online against the same.

All 40000 / 50000 stored in Module 1 must be uploaded starting next week. No compromise on this.
Conversion of entire Module 1 should not take more than 100 clock-hours (i.e. 1½ days).

→ Conducting Online “Searches” using GuruSearch

By a copy of this note I am requesting Sanjeev Deshpande to make time-names available to any consultant for guided demonstration.

For Sanjeev Deshpande this PILOT PROJECT will be excellent REAL-LIFE hands-on experience. They will get to know, first hand, the requirements, customs and guidelines, and the kind of questions they will ask. This experience will help them prepare FAQ.

INTELLECTUAL PROPERTY

Links / Slogans / Punchlines & Intellectual Property

In mid-1990’s, FOX TV channel started calling its news-reports

“Fair & Balanced.”

In fact, FOX adopted “Fair & Balanced” as its motto.

Last week (or month), author Al Franken published a book titled,

“Lies and the Lying Liars who tell them: A Fair & Balanced Look at the Right.”

Now FOX has sued Franken for using the words “Fair & Balanced”!

FOX says the words “Fair & Balanced” are FOX’s intellectual property, and no one can use these without FOX’s permission!

Does this sound absurd / lunatic?

Not to lawyer Randy Mastro of Gibson, Dunn & Crutcher, who claims—

“Fair & Balanced” are not mere adjectives of the English language!

This is a motto that FOX built up over the past 7 years, at a cost of $6 million plus thousands of hours of promotion!

Now Franken (author) is trying to expropriate this motto for commercial gain (money he will receive from his book).

We don’t know what the Court will rule — but precedents tell that FOX might win!

We may think that would be “absurd” — but we have to survive & grow within the legal framework of the country where we operate. There is no running away.

Therefore, it is very, very important to pay close attention to this aspect of

BRANDING / POSITIONING

and, in the process, acquiring (through long & continuous usage)

INTELLECTUAL PROPERTY RIGHTS!

e.g.:
For 2/3 years now, we have been using the slogan—

“For Executive Search – Corporate India’s First Choice.”

We have displayed this boldly on the homepage of www.3pjobs.com.

I don’t remember whether we have displayed this on other pages too. If not, we should do so — pronto! (Abhi, pl. note.)

And by a copy of this note, I recommend to Nimit that this slogan should also find prominent place on our (3P):

Letterheads
Visiting cards
Brochures
Proposals / Interview Assessment Sheets
Emails
On the rear window of our cars
Any place where corporate HR may read
Our adverts (we have done this in past)
etc.

In thousand different ways, we must convey to the world that this slogan is our INTELLECTUAL PROPERTY.

Ideally, we should “register” it — first in India, then in the USA. Same with 3P’s logo.

It is no different with RecruitGum — and the time is NOW!

In my note on Branding / Positioning of RecruitGum (I have misplaced my copy), I had coined a few slogans / punchlines — e.g.,

For “GumSearch”

“Shortlisting Competences / Not Resumes.”

Not only must we use these (I believe there were four) on RecruitGum website (on appropriate pages),
but — as mentioned earlier (in respect of 3P) —

we must use these slogans absolutely everywhere that we can (letterheads, visiting cards, brochures, etc.) — boldly and visibly.

Through first — and then continuous usage — we must appropriate these as our Intellectual Property before someone else does!

Once again, ideally, we should “register” these.

This (creation of Intellectual Property) is part of Sanjeev’s job, and he must take the initiative in this matter (creating artwork / contacting patent attorney, etc.).

In this context, also see Annex.

Here I have listed some subject titles used by Economic Times / Financial Express for their various pages, columns, and features, etc.

Some of these titles are self-explanatory, whereas some are (deliberately?) made mysterious — to arouse readers’ curiosity.

Some newspapers do list these on their front page, mentioning page numbers for each of these features/topics.

This is quite like a website homepage displaying its “links”. The only difference is that in case of a website, we could (and must) display all links on all pages (on left sidebar) so that a surfer can jump from any webpage to any other.

Once one newspaper has started calling its feature by a given name (e.g., people speak), then it is very unlikely that other newspapers will copy the same.

It is a matter of creative ego — and copy is a form of flattery!

So let us be the FIRST with our slogans / punchlines / mottos / links, etc. — and FAST.

(signed)
cc: Nimit

Annex

Topic Titles in Eco. Times & eFinancial Express


Line Up	Property / General Realities
Nice to Know	Dateline India
Inside Track / The Speed Zone	Money & You
Briefly	World Update
Boundary Line	Corporate Counsel
Spectrum	Opinion
First Look	Punchline
Newsmakers	Mailbox
Executive Briefing	Special Reports
Quote / Unquote	The Knowledge Society
Week in Review	Business Banter
Short Takes	Tidbytes
Fact File
Best Sellers
In Person
Off the Shelf
People Speak
Movers & Shakers
Dial Up
City Lights
Watch Out
First Notes
On the Box
Brainstorm
Corporate Workout

PRICING OF WEB SERVICES

Nirmit
Sanjeev
Raju
Kartavya / Abhi

SriRam
11-09-03
(1/17)

Pricing of our Webservices

Enclosed find yesterday’s news-cutting which says Apple have succeeded in “selling” (i.e. permitting online downloading) from iTunes —

10 million songs in 4 months (16 weeks).

In my earlier notes on Napster / Apple comparison, dated May 15–16, I had pointed out that Apple had sold

2 million songs in first 2 weeks of launch @ 99 cents / song.

So downloads have a bit slowed down, but it is still quite impressive!

$9.9 million in 4 months.

How did Apple manage to pull this off?

Possibly because:

Apple tie-up with Recording Companies offered a legal download — avoiding anger / enmity of recording companies.
Apple made them partners (by paying a certain percentage of what it earned) rather than competitors.

Record companies had the “content.”

Apple had the “technology.”

A marriage of both resulted in a win-win situation for both.

Music-lovers were downloading “legal” versions without feeling guilty — a large psychological motivator for users!

Apple priced each song so low (99 cents) that it removed the incentive from users’ minds to become “dishonest thieves” engaging in pirating.

Apple apparently succeeded in figuring out the “price” (of songs) at which pirates would turn into respectable law-abiding citizens. Apple guessed correctly the size of the potential market and the exact price-point at which...

it can “swing” the market in its favour.

The Apple episode has some useful lessons for us as far as our webservice pricing strategy is concerned.

Keeping our initial — and ongoing — “development costs” (salary, investment in new office, running expenses + overheads) out for a moment, let us figure out:

COST OF WEBSERVER

Item	Per Year
▶ Rental (for 2 servers)	Rs. 3,20,000
▶ Depreciation (@ 50%)	Rs. 1,25,000
▶ Capital cost of 2 servers	Rs. 2,50,000
▶ Interest (@ 10%) on above	Rs. 25,000
▶ Cost of UPS	Rs. 25,000
▶ Bandwidth usage	Rs. 1,00,000
▶ Cost of proprietary software licenses (written off in first year itself)	Rs. 1,00,000

Total = Rs. 6,70,000 / year

We have 24×365 hours in a year (since server is “on” 24 hours, we can schedule extraction batches around the clock)

= 8,760 hours

So our hourly cost becomes:

Now, let us add “development” costs as well.

Item	Cost per year
▶ Salaries	Rs. 24 lakh / year
▶ Interest on Rs. 20L capital cost of new office (@10%)	Rs. 2 lakh
▶ Depreciation on computers + other hardware (@10% on Rs. 20L)	Rs. 2 lakh
▶ Other overhead expenses (marketing, travelling)	Rs. 5 lakh

Total = Rs. 33 lakh / year

So, hourly cost (for development costs)

(B)

Hence,
Total hourly cost = A + B = 76.5 + 376.5 = Rs. 444 / hour

Let us round off to Rs. 500 / hour.

Now if we assume that all of these 8,760 hours the server is just doing one thing, viz.:
EXTRACTING / CONVERTING RESUMES

and nothing else.

And if the server manages to extract 500 resumes per hour, then our cost per resume extracted works out to:

So even if we charge Rs. 2 per resume extraction, we are OK!

Only hitch is that this would mean we must get for processing, in one year:

or
12,000 resumes each day (365 days).

Question:
Can we really manage to get that many resumes to convert daily?

If you may recollect, we had originally thought of charging

Rs. 10 per resume extraction.

What, if any, is the “Price / Demand” elasticity for this service?

(Simple hand-drawn graph labeled “Demand (Lakhs)” vs “Price / resume (Rs.)” — downward sloping line from 1→20 to 7→5.)

Will corporates process / convert many more resumes if price is Rs. 2 instead of Rs. 10?

We don’t know. I don’t think anyone knows!

There are no comparable products in the market which we can benchmark for our own pricing.

There is even temptation that since there are no comparable products, let’s fix a high price (since buyer/user has no means to compare, in any case) to start with.

If the corporate subscribers discover, through usage, that they are getting good “VALUE FOR THEIR MONEY,”

Even at our “high” price, the demand will pick up gradually.

On the other hand, if we find in 3/6 months that the demand is not picking up as targeted, then we can always stimulate the demand by dropping prices. Nothing stops us.

Does this argument have a familiar ring?

Same as: most cellphone companies started out 4 years ago at Rs. 16 per minute.

Then as more and more competitors got attracted (– because of this lucrative price –), capacity got built up, and the prices kept falling / falling / falling to now, maybe Rs. 0.40 per minute.

And the bottom is still not in sight!

But when Reliance set up base with a huge installed capacity, their goal was very simple:

Forget what the competitors are charging.

(I don’t think Reliance ever used competitors’ prices as benchmark.)

Simply declare that price at which 90 % of built-up capacity gets utilized.

Rationale was quite simple.

When you are in a “commodity” business,

you are in a “process industry.”

You are in a business of delivering

DIGITAL SERVICE (Internet / Wireless)

—all of your costs are fixed costs!

Hardly any cost varies with volumes.

Your break-even volumes are, therefore, very high.

(Graph illustration:)

A line chart showing Revenues and Costs vs Volume (Capacity Utilization).

X-axis: Volume → (0 %, 50 %, 90 %, 100 %).
Y-axis: Revenue and Costs.
Fixed cost shown as a horizontal line.
Variable cost starts from 0 % and rises gradually.
Break-even point marked around 90 % capacity.

Caption below:

“You make money only after you exceed 90 % capacity usage.”

And, from page 3/4, it is quite clear that our total costs of Rs. 40 lakhs (approx.) per year are almost FIXED!

So, we must ensure that our webserver is working every hour of those 8760 hours!

Not just ready to serve but actually serving.

And we must reach this capacity utilization within 3 months of launch.

Gradual ramping up just won’t do! There is too much at stake.

This (achieving 100% capacity usage) is Sanjeev’s job.

The only way for Sanjeev to look at his job —

he is not selling a product or a service —

he is simply selling our webserver’s INSTALLED CAPACITY!

As simple as that.

It is only through 100% utilization of this HUGE investment that we have made (in people, building, hardware, software, etc.) that we can recover our fixed costs — which is all of our costs.

Now, at this stage, it may be legitimate to ask,

If our hourly total cost of server is

then why not simply “sell” this processing capacity

@ Rs. 1000 / hour?

— irrespective of what subscriber uses it for,

which applications he runs, what he uploads/downloads.

But if we did that, in a year, we would earn only

i.e. approximately twice our fixed costs.

That seems ridiculously / absurdly low!

We might have succeeded in filling up the capacity (8760 hours) but priced ourselves so low that in a whole year we end up earning Rs. 80 L!

Can we think of pricing / selling one “server-hour” for, say, Rs. 5000 / hour?

That would help us earn

That looks more reasonable / acceptable / justifiable (from our point of view).

But the question is —

Who will buy a webserver processing hour at Rs. 5000 per hour, even with GunMine / GunSearch applications thrown in?

If Microsoft were to offer even their best software at Rs. 5000 per hour (i.e. Rs. 40,000 per 8-hour shift), how many corporates would buy how many such processing-hours?

I doubt if any would.

If we were to make such an “hourly-charge” proposal to our subscribers, we would kill the business even before it’s born. People would simply laugh at us.

So, we have to stick to ‘mouse-click’ based Tariff Structure.

In this structure, each tariff amount looks so small / so insignificant that you

literally “ignore” it!

When you see a “Tariff chart,” your mind does not start multiplying and adding!

It is quite like an “À la carte” menu containing 40 food items, each priced at Rs. 40 / 50 / 20 / 10 etc.

vs.

A “lunch / dinner Thali” priced at Rs. 400 (even with unlimited consumption!).

The high figure puts you off.

Very often, you also think that in any case, you will be unable to consume everything that’s in the Thali — then why go for it?

Why not pay for only what you want to consume — even if it adds up to more than Rs. 400?

In pay-per-use, you are able to establish a “correspondence,” a one-to-one relation between the price and the value.

In a “Thali” or “Per-hour” scenario, you are not sure whether you’ll manage

…to derive the value for the money paid.

This is why cellphone tariffs are also “pay-per-use.”

And to entice you to use more & more, service providers are daily coming out with ever-newer “uses” and additional “tariffs” for each use.

It’s the same principle of pay-per-use in:

▶ Electricity → Units consumed
▶ Gas → Cubic metres (c. m.)
▶ Water → Cubic metres
▶ Travel → Km travelled × class of travel
▶ Freight → Volume used (cubic feet) or weight loaded (tons) (again per km taken)

“Per unit” of consumption/usage, the amounts look insignificant / small.

And this attracts both small users & big users.

They know that their damage / risk / commitment / cash outflow etc. is something they themselves are going to control.

Anytime, they can speed up or slow down.

They are in control at all times.

And especially, if you are not “watching” the meter continuously, you are not too much perturbed.

A classic example is that of a self-service supermarket.

Goods are arranged very attractively, tempting you to pick up & add to the “shopping cart.”

Although you do look up the price when picking up, you are not carrying a calculator & “adding up” as you move along the aisles — happily picking up even those things which you have no immediate need for!

Quite often, it is only as you are passing by an especially attractive display that you realize you need that item or that it would make a nice addition to your bedroom / living room / kitchen / wardrobe etc.

It was not even on your shopping list when you left home!

But now you want it just because it is there in front of your eyes!

Shopping malls first CREATE a need — then fulfill it!

Quite often, it is a question of “pride of possession”

and has nothing to do with any real or any “perceived” need!

Digressing a bit,

Once its capacity utilization (of its network) exceeds 80%, Reliance — & all others — will slowly raise their prices once customers have got “hooked” (no portability of numbers!).

And their price rises will be quite small but frequent (2–3 times / year) so that users won’t even notice that their monthly bills are slowly creeping up, month after month!

After all, as a consumer, you know that costs/prices of all goods & services are rising by 8–10% each year, so you don’t get agitated. A long annual price-rise is within these limits — your systems are able to absorb/adjust such increases.

This equally applies to individuals as to corporates.

Hence, our pricing strategy shall consist of:

▶ A wide variety of “products” (buttons)

▶ Each priced low / insignificant in order to make it readily acceptable to users without batting an eye.

▶ Continuously watching the “response” (daily no. of transactions for each type of transaction) to forecast:

which transactions (products) are popular / in great demand & with whom,
rate of growth of each.

This must be watched “subscriber-wise” & “overall.”

▶ Based on such daily watch, periodically increase the “tariff” just so slightly that customer does not even feel the difference (except, maybe, on a year-to-year basis).

▶ Do not show to a customer the METERS (transaction-wise or overall) — except them being logged by ADMIN only.

▶ (Not part of pricing) — Arrange products (buttons) very invitingly / very suggestively, tempting him to click! (Remember,

“Need” must not be a criteria for clicking!

As Mallory said,

“I climb Mount Everest because it is there!”

▶ Keep adding new buttons (new services)

and announce these additions on homepage (which is our “storefront”).

▶ Create a buzz about:

“You will be left out of a GREAT! GREAT experience if you do not subscribe.”

(“Keep up with the Joneses” syndrome.)

“You are in great company when you do.”