About all things unimportant

If you have looked at the previous two posts , then you would have figured out that it is next to impossible to differentiate a potential successful idea from a failure ( atleast at initial stages ).

So how do VC’s make the call  - They dont make a call on the idea, they make a call on the people behind the idea. My personal take is that no idea in this world is a waste ( in absolute value terms ). Its just that the intrinsic value of the idea would decide if the people behind the idea would be willing to put their efforts behind it.

Failed ventures arise when companies ( people behind these ventures ) are unable to correctly estimate the potential returns from a venture and do a comparison of this return with their expectations on a rate of return they expect.

Calculating the expected rate of return is not easy and at times is made up of not so easily measurable attributes like "happiness, pride et al". If you had an option of working for a firm doing perl scripting at monthly salary of 80 K rupees and running your own magazine that got you only 40 K per month.  On a simple rate of return , you might immediately discard the Magazine idea, but in terms of valuing the pride associated with running something on your own versus SSH’ing into a unix box to run a few perl scripts for the next few years. Whats your take ..

This blog post has been all over the place .. so dont know if you have got the gist of what i have tried to say .. may be i should take blogging lessons

Parting question - Do you LIVE your life or Do your RATIONALIZE your life ?  

Ragu had posted a few comments and you can read them here

Decided to work the numbers for this idea also and figure out if and Upscale movie magazine idea makes sense

Target Audience

1) Film fraternity - Anyone who has to do anything remotely connected to the Business of movie making

2) Film buffs - People like me who would love to figure out Mani ratnam visualized a scene and how Ram gopal varma does research for gangster flicks ( his better one’s of course ).

3) Any amateur videgraphers - right from the guy who does the visual fx for your marriage DVD to your cousing who posts his holiday videos on youtube or better still on Y! Video 

4) Any person who is interested in performing arts ( say theatre, television ) 

 It might be easy to research numbers for 1, but how do we measure the potential customer from those who would fall under 2,3 and 4 ?

Boils down again to the "Bias for analysis / Bias for action" discussion from the previous post. Can we build the most thorough mathematical model and state for sure that we are looking at a market of 10 lakhs.

Revenue streams

1) Subscription revenue from the magazine

2) Content syndication revenue - assuming that you generate fairly compelling content, it should be possible to build content syndication partnerships with general magazines like India Today, Outlook and so on and with online partners like Y! India and Rediff.

3) Advertisement revenue from our own online presence - Given the decreasing costs of having an online presence, could we monetize the hits on our web page by shown advetisements ( say for Subhash Ghai’s actor training school or for the local animation tranining school in bangalore).  

Arguments for the Idea

1) If we use the american magazine market as a surrogate for how Indian market will shape up in a few years, then things look promising since the first place is by a TV guide ( assuming that in theme this magazine is close enough to our end product ).

Argument against the Idea  

1) It is a paradox , but the contents of the proposed magazine would actually try to distinguish itself from magazines that dished out content high on gossip value.  So in this case, the fact that you dont have a "Movie" magazine in the top 20 is disappoiting.

    To do a flip flop again, what worked well for America may not necessarily make sense for India, so may be there is still hope for an upscale Movie magazine. 

I could go on and on jumping both sides of the fence .. but my gut feel tells me that this idea in the right hands could be a potential success. It definitely wont be a 1000 crore idea but with good execution it could easily become a 25 crore idea in 2-3 years.
 

Ragu had posted a comment about the Elevator adveritsing, added my 2 cents on why it might work and why it may not

Why it will not work 

It is difficult to crunch numbers for captive audience

1)  Lets assume that the average height of an indian commercial/residential building is about 5 floors and there are 5000 such buildings in Bangalore. Assuming that we start operations only in Bangalore and that the captive audience from ground floor to average floor ( 5 in this case ) and the journey time from the ground floor to the average floor would be 15 seconds and the average stoppage time at each of the floors ( people getting off at particular floors ) is about another 10 seconds ( accounting for non peak hours ). Another assumption is that on an average , the elevator makes about 50 trips from ground floor to top most floor and back and that on an average you have 2 people per trip.

You would have realized by now that a lot of assumptions have to be made to even arrive at a rough estimate of potential captive audience. For a more serious analysis you might need to read something like this to get started. We can make some simplifying assumptions by stating that we will look only at Commercial complexes which are more than 10 storeys tall. Who knows, this might just make the business model viable. In fact, there is every chance that viability of this business model depends on following

a) Selecting buildings which are beyond some threshold height ( say 10 storeys )

b) Ensuring that targetting advertisements are  dished out intelligently ( say a short 5 second promo ) if the doors closed and the only storey pressed was 3 ( out of 15 storeys ) and dishing out a longer advertisement of 20 seconds if the storeys that were selected were say beyond a threshold length ( 2 seconds per floor * optimum storey count ( say 7 in this case ) ).

 
Why it may work  

In short we can create the most amazing mathematical models and will still not be able to say convincingly if the business idea would be successful or not. This boils down to an issue of "Bias for action, Bias for analysis" that we learnt in our Enterpreneurship elective. When do you draw a line and say that any more analysis would just make minor refinements in our understanding .. and that the best way of validating this idea is to just jump in and "Just do it".

In this particular case, people who jump in to implement this idea might just figure out a way of making this a viable business.

As for me , my bias for Analysis tells me that "In Elevator advertising" may not work in India because of the shorter buildings and the fact that "Building density" in India is not as good enough to make this business model successful.

Have been talking to a few folks who understand the media business and there are numerous problems in elevator advertising

Cost - What is the media that you use ( Poster/audio et al ) to reach out to the audience in an elevator and what is the cost of targetting the advertisements. With television, you are one of the thousands of advertisers but your work is limited to creating the creatives and handing over the transmitter and monitoring the impressions.

   If you had to replace advertisements in 1000 elevators in bangalore , what would the cost be .. Would use of audio advertising be too different from radio advertising .. There are several other such reasons which might In Elevator advertising not so cost effective. Also, how do you provde ROI to the prospective advertiser ? and how easy is to ascribe a particular action to an elevator advertisement as against advertisements in any other media ( Though this is slightly easier to achieve in local advertisments ).

Cost of placing advertisements could be the biggest reason why advertisements are not run actively in elevators.

Even though i agree that "Ideas come cheap and Execution is all that matters", ideation is a very important process in a potential entrepreneurs journey. Listed below are a few ideas that i have been getting of late ( all courtesy the number of hours i have to kill during train journeys ).

 i Intend to develop the discussion about these ideas. I may not have enough beef ( or patience ) to do a thorough evaluation of each idea in the subsequent posts but will try to keep readers engaged with some thing useful. In case you think certain ideas are too dumb or think that you want others to provide comments on few of the ideas mentioned here .. please spread the word .. would love to discuss the feasability of these ideas.

Idea 1 - "Movie magazine" -

The other day i spent close to 20 minutes just staring at the magazines that were available at that news stand ( a rather big one ) and was disappointed that not one magazine had focus on the technicalities of Movie making. I would love to read about how a director like Mani rathnam visualizes his screen play. I would love to see how editors go back and forth to unlock "entertainment value" from loads of reels.

     I would love to know the economics of a movie business. I would love to get amateur movie tips so that i can do a near professional job with my low end camera. Given the low costs of CD’s/DVD’s and copyright protection that exists for using a small piece of a work of art ( say a 5 minute clip ) , wouldnt it be facinating to get the thoughts of top directors and film buffs on why a scene was an awesome moment or a damp squibb.

    If you have read the trash that is dished out in in terms of film magazines .. you would know what i am looking for and the wide gap between what is there and what an avid film buff like me would be interested in.

    Assuming that in 2 years you can notch up a conservative circulation of 1,00,000 copies a month and make it a monthly and charge 80 bucks, you are talking about 80 lakhs per month in subscription money.  Lucrative .. not lucrative .. If you think that you would buy such a magazine .. drop me a line. 

Idea 2 - In elevator advertising

Disclaimer - I over heard the term "In elevator adverstising" in the elevator and didnt pay too much thought to it then. In the meantime i imagined situations in which "In elevator" advertising would be very effective and think that there are situations where it might be an amazing way of getting targetted ads.

Would it make sense to target audio ads ( something like radio broadcasts ) at people who use the elevator. Given below are some of the use cases of the possible impact of "In elevator advertising".

  a) You are leaving from work at 8:00 pm in the evening and you are taking the elevator down. You listed to an add that says - " Watch the investigation of Mumbai bomb blasts in Nat Geo Investigates" on National Geographic channel at 9:30 pm today. How likely are you to surf channels and settle down on National geographic chaneel at 9:25 pm.

  b) You and your team are taking the elevator down at about lunch time and the local restaurant plays a small audio clip about how they have launched this new executive lunch buffet at just 120/- ( sic .. just 120/- ) . How likely is this team of 4-5 likely to consider going there ?

  There are several other reasons as to why "In elevator advertising", either local or national advertisements might be a very effective way of reaching out to people. Think about it .. in case you come across reasons why this model fill fall flat on the face .. let me know .. we can initiate a discussion on this topic.
 

Idea 3 -  Ad supported movie shows -
 

 If you are like me, you would agree that Multiplex prices for tickets are very very stiff - Rs 160/- and going up to Rs 200/- on weekends. Assuming that it is possible to scroll ads at the bottom of the movie screen .. would you consider watching "Don" for the second time ( Why would anyone want to do this .. watch Don a second time .. yucks ) if you had to pay only 40 rupees and the Multiplex recovered the difference in prices by subjecting you to scroll ads or intermittent advertisements that show up every 30 minutes .

For advertisers , assuming that they can advertise in a way that does not damage their brand perception, would it make sense if they get access to 300 ( or whatever be the count of people who turned up to watch the movie ) and had to pay 30 rupees per person ( 30 * 300 = Rs 9000 ) for say ten impressions of their latest product. As long as advertisers can figure out a non obtrusive way of showing ads ( ala Google search ) , i dont see why users would mind watching a movie which also runs unobtrusive advertisements in the parallel. The advertisers are relatively better off since they have reached a target audience that is bound to be more attentive than normal television viewers and they have an exact count of number of people who have watched their advertisements. The caveat is that these adverisements have to be non-obtrusive.

once again .. your suggestions are welcome on whether this model would work or not.

In case you have more zany ideas, please jot them in the comments section. If we have lots of ideas (atleast one idea)  we could possibly start a collaborative blog just to throw around ideas and dissect them.

Cheers

Chandrashekhar V