Month: December 2014

Tim Harford on Christmas Cards

Tim Harford has a wonderful post out on the concept of Christmas cards. An extract:

But perhaps the Christmas card also serves other purposes. Consider the exchange, “How do you do?”, “How do you do?” This is phatic communication. It conveys no detailed information but it acknowledges others and implies that there is nothing much to report. “I’m OK, and you’re OK, and lines of communication are open if that changes.”

A Facebook “poke” could achieve the same thing at much lower cost. But perhaps the expense and the hassle is part of the point. If someone invites you for dinner and you say “thank you” as you leave, you may still wish to follow up with a thank-you note to show that you have enough invested in the relationship to take the trouble. If relationships weren’t hard work, they would not be relationships.

This is related to why when I greet people on occasions such as birthdays, anniversaries, etc. I make sure I do so over a mode of communication which opens up channels for further communication. So I either call (calling on birthdays is a bit dicey though since birthday boys/girls are flooded with calls – except if they’re me of course), or send an email or a one-to-one message using SMS or WhatsApp.

Any other means of communication makes it hard for further lines of communication to be open (think of someone politely typing “thank you” into a hundred “happy birthday” posts on their facebook wall), so it’s not worth the effort. And wishing on a WhatsApp group only results in everyone else on the group chiming in with a “happy birthday” and doesn’t lead to any conversation at all!

Coming back to Harford, his post also has some interesting fundaes on Dunbar’s Number. Read the whole thing.

PS: I’ve redacted my post on “performance art greetings”. Upon a second reading after I’d published it, I realised it was offensive towards certain people who I quite like and who I have no intention of offending. So I decided to take it down.

The cross-selling epidemic

Cross-selling is the phenomenon where you try to get more value out of your existing customers by selling them other things. And from the looks of it it is reaching epidemic proportions in India.

Yesterday a guy came up to me at the gym and asked me to try out some “power yoga” group exercise classes. I told him I wasn’t interested, and he continued to talk (I was on the treadmill so couldn’t run away). Of course my membership includes any group classes so I don’t have to pay more to do “power yoga” but the economics are not the same from this guy’s perspective!

Then for the last two weeks my gym (Gold’s Gym in Jayanagar) has been full of advertisements for protein supplements. And today some of their salespeople had even set up shop inside the gym hawking their stuff. From conversations I overhear in the locker room I know that several other members of the gym regularly take such supplements but the kind of advertising within the gym was way too intrusive!

Later today I had gone to visit a dermatologist (who I found via Practo) for a rash I have on my hand. The doctor seemed least interested in checking me and more interested in putting me through a battery of blood tests (which were done in the lab attached to the clinic). I don’t know why I went along but after becoming poorer by a thousand and three hundred rupees I figured that the tests included liver function and thyroid function test! Why a dermatologist would need such tests I don’t know! Anyway I’ll just pick up the reports tomorrow and run! Oh and when I was walking out the receptionist helpfully pointed out that I could buy the prescribed medicines at the little pharmacy also in the clinic! I refused an walked out!

A few months back I’d gone to my ophthalmologist for a routine checkup. After having got my eyes tested I asked him to check for my power on contact lenses also. He said he’ll do so if and only if I were to buy the lenses from his clinic! Since I’d found those lenses to be of poor quality the last time I’d got them, I scooted. Oh, and this guy has been my regular ophthalmologist for over twenty years!

This brazen cross-sell seems so suboptimal that it possibly drives away customers (but from what I hear, if every doctor indulges in such practices there isn’t much choice anyway!). I wouldn’t have minded paying an additional sum (over and above what I’d paid for my generic eye test) to get my eyes tested for contact lens power also. But this option (which would’ve worked out more simply for both of us) wasn’t available! Bizarre, I tell you!

Practo and rating systems

The lack of a rating system means Practo is unlikely to take off like other similar platforms

So yesterday I found a dermatologist via Practo, a website that provides listing services for doctors in India. I visited him today and have been thoroughly disappointed with the quality of service (he subjected me to a random battery of blood tests – to be done in his own lab; and seemed more intent on cross-selling moisturising liquid soap rather than looking at the rash on my hand). Hoping to leave a bad review I went back to the Practo website but there seems to be no such mechanism.

This is not surprising since doctors won’t want bad reviews about them to be public information. In the medical profession, reputational risk is massive and if bad word gets around about you, your career is doomed. Thus even if Practo were to implement a rating system, any doctors who were to get bad ratings (even the best doctors have off-days and that can lead to nasty ratings) would want to delist from the service for such ratings would do them much harm. This would in turn affect Practo’s business (since the more the doctors listed the more the searches and appointments), so they don’t have a rating system.

The question is if the lack of a rating system is going to hinder Practo’s growth as a platform. One of the reasons I would go to a website like Practo is when I don’t know any reliable doctors of the specialisation that I’m looking for. Now, Practo puts out some “objective” statistics about every doctor on its website – like their qualifications, number of years of experience and for some, the number of people who clicked through (like the doctor I went to today was a “most clicked” doctor, whatever that means), but none of them are really correlated with quality.

And healthcare is a sector where as Sangeet Paul Chaudary of Platform Thinking puts it, “sampling costs are high”. To quote him:

There are scenarios where sampling costs can be so high as to discourage sampling. Healthcare, for example, has extremely high sampling costs. Going to the wrong doctor could cost you your life. In such cases, some form of expert or editorial discretion needs to add the first layer of input to a curation system.

So the lack of a rating system means that Practo will end up at best as a directory listing service rather than as a recommendation service. Every time people find a “sub-optimal” doctor via Practo, their faith in the “platform” goes down and they become less likely to use the platform in the future for recommendation and curation. I expect Practo to reach the asymptotic state as a software platform for doctors to manage their appointments, where you can go to request an appointment after you’ve decided which doctor you want to visit!

Potential investors would do well to keep this in mind.

Update

Today I got an SMS from Practo asking me if I was happy with my experience. I voted by giving a missed call to one of the two given numbers. I don’t know how they’ll use it, though. The page only says how many upvotes each doctor got (for my search it was all in the low single digits), so is again of little use to the user.

Why app based taxi services should not be banned

The move towards banning Uber and other app-based taxi services is devoid of logic on several counts

Writing during the Takshashila Hudson conference on India’s growth I had argued that an easy way to increase the level of business activity in the country, and thus GDP was by means of reducing transaction costs. Transaction costs are costs borne by buyers of a good or Service which don’t accrue to the seller.

The thing with transaction costs is that they introduce friction in the market – the cost ends up reducing both the market clearing price (as it accrues to the seller) and the market clearing quantity. And transaction costs are usually to no ones gain and thus reducing them is a quick and pareto optimal method of boosting GDP.

In this regard, the government must encourage all means that result in reduction of transaction costs. For example better road and rail network significantly reduce the transaction cost of moving goods and people. Removal of interstate taxes on goods and services results in more optimal setups of warehouses and plants.

Similarly apps such as Uber play an important role in reducing transaction costs in the local taxi market. By reducing the distance and time to be traveled by the driver, and by reducing the amount of the the passenger has to wait for the cab, these services significantly reduce the cost of local transport and benefit drive and users alike.

Thus moves such as banning such services are utterly brainless and devoid of logic. Moreover such moves will dampen investor sentiment in India and kill off any positive vibes that have been generated ever since the current government came to power.

I hope better logic prevails and the government focuses on improving law and order (a public good that can further reduce transaction costs) rather than knee jerk actions like banning taxi services which seek to reduce transaction costs.

Writing can be hard

There are certain pieces that are a breeze to write – you start writing, the thoughts flow, the words flow, your fingers do the needful and before you know it you’ve written a thousand words. Once you’ve published you’re feeling all good and high and kicked to take on your next task for the day.

But then there’s writing that can drain you. For example I just wrote a piece on my policy blog. It took forty minutes to write. I kept hitting backspace and cancelling out sentences. It was extremely laboured. And having written that I’m feeling all completely drained out. This blog post on the other hand is unlikely to have that effect.

I realise that there are two kinds of pieces that I write – the first are “flow pieces” – where I do the thinking as I write. I start writing only with an initial sketch, or paragraph, or opening line. And then I build the piece linearly thinking as I write along. These pieces are a breeze and a pleasure to write. And it is incredible the number of insights I stumble upon while writing such pieces.

On the other hand you have “planned pieces” – where you know exactly what you want to communicate and how, and you only have to implement it and put it all together while you’re writing. The problem with such writing is that you would have imagined certain sentences at different points in time while thinking of the ideas and now you try and fit all those sentences into a coherent piece. And that leads to a lot of jigsaw-fitting and labouring and backspacing. It’s hell!

For a while I wanted to write Op-Eds, but I’ve now simply given up on those. It requires me to write in an impersonal formal voice which is something I find extremely hard to summon. And such pieces are more likely than not planned pieces, and writing them can be extremely draining. I’d rather write when I want to, building pieces as I please, and publishing them as blog posts! The effort to write Op-Eds is simply not worth it!

Andrew Gelman has a nice piece on why academic writing is bad. Basically two points – writing is hard, and academic pieces are not selected based on their quality of writing. So the quality of writing in such pieces is far inferior to say writing in a newspaper!

Implementation and rule of law

Draconian laws coupled with lax implementation deliver too much power to regulators. This makes the business environment unpredictable and makes it harder to do business.

Following the arrest for rape of a taxi driver who was hailed using the Uber app, the Delhi government has gone on to ban Uber. Not satisfied with that, it has gone on to ban all other app-based taxi hailing services (Ola and TaxiForSure are the other big ones). Following the incident last weekend, the government has suddenly decided to throw the rule book at these aggregators and accused them of running taxi services without a license. The point to note here is that until the weekend’s alleged rape, it seems that these businesses were all kosher.

A few months back Mint had an excellent piece (I hope I’ve got the link right) on the absurdities of some of India’s labour laws, and pointed out that most companies are in the breach of such laws. Essentially while the labour laws in India are not very short of being Draconian, what allows businesses to do business and people to go about their lives is lax implementation. And it seems that this issue of draconian laws and lax implementation is not restricted to labour alone.

The iconic Bangalore Club in Bangalore has had its liquor license withdrawn following a raid by the excise department last week. The trigger for this raid is alleged to be a case where a security guard of the club refused to let in the car of a police officer who was not carrying his membership card. This is alleged to have led to a series of cases which finally led to the excise raid and the cancellation of the license. It seems that before the police officer’s car was stopped, there was no violation of excise rules.

In a recent dispute on VAT, the Karnataka government has forced Amazon to stop storing third party goods in its “fulfilment centres”. There has since been back and forth on this and the commissioner of commercial taxes who implemented the order has since been transferred. It was initially expected that the Karnataka government would take the legislative route to clarify this tax dispute in the current Assembly session at Belagavi, but that seems to now be put on hold. Instead, it is likely that the laws are going to remain the way they are and Amazon will by “spared” on account of lax implementation.

Lax implementation of laws is a major impediment to doing business, for it removes predicability. Clear laws which are implemented well set down clear rules for businesses and there is little in terms of what is right or wrong. Such laws make it possible for businesses that choose to be “100% legal” to take a path where there is no ambiguity on their activities. Lax implementation, however, biases the playing field in favour of players who are willing to play on the borders of legality and who rely on lax implementation and benevolence by regulators to continue doing business which is technically illegal. Soon, this results in an equilibrium where everyone is in violation of some rule or the other and remains in business only due to the “benevolence” of regulators.

This implies that regulators who are in charge of implementing these draconian laws have enormous powers over the business they regulate, for any move by the business that the regulator does not like can be responded to by a throw of the proverbial rule-book. This places these businesses at the effective control of these regulators and helps perpetrate what Amit Varma calls the “mai-baap sarkar” – where you function solely due to the benevolence of the government or people acting on behalf of it.

Prime Minister Narendra Modi has stated that one of his goals is to improve the ease of doing business in India. As long as we do not have predictable and rule-based implementation of law, it results in giving significantly higher powers to the regulators, which makes the business environment unpredictable, and makes it harder to do business. If we have to improve our ease of doing business ranking to 50 (as stated by Modi), a necessary step is to implement each of our laws in letter and spirit, without any room for ambiguity. Of course this will lead to the diminishing of power of the regulators over their “regulatees”, but solving that is a political problem which the government ought to solve.

Pricing markets in cabs and beer

Earlier this evening Udhay and I shared a cab back after beer and biryani. We don’t stay particularly close by (using the place we met as point of reference), but I think it was pareto optimal for us to share the cab rather than take two cabs. I got off first at my place and Udhay went on to his place. We used Uber’s fare splitting feature for the trip.

I just got the bill and saw that I’ve been charged exactly half of the total bill. Given the distance from our meeting point to my place and Udhay’s place it perhaps was pareto optimal but had we met any closer it may not have been a fair split – if the place we met was closer to my place than my place is to Udhay’s, then splitting the fare equally would have been unfair to me – for I would have paid more for sharing the ride than I would have had I taken a cab by myself! Can Uber do better?

Once we have enabled the ride sharing and splitting thing, Uber knows who all are travelling, and Uber knows where each of us gets off (if our phones are on, that is). Based on where we break off from the cab, can Uber estimate where each of us got off and split the fare accordingly? Given how good their app has been so far, I would expect them to tweak their ride splitting algorithm and introduce this measure soon.

Going a little back in the day, Udhay and I were at Punjabi By Nature in SuddgunTepALya. We were there during the restaurant’s “happy hours” where they have a buy-one-get-one-free offer on beer. However, it was after we had ordered a “tray” of samplers that we were told that the Bogof didn’t apply to the tray. We also ordered another glass of beer, which duly arrived with a “partner”.

There are two things about Punjabi By Nature’s pricing that I found interesting. The first bit was the non-applicability of “happy hours” to the tray. Is it a measure by them to reward their regular customers who know what to drink at the cost of first-timers who invariably ask for the sampler set? Any other explanation for happy hours not applying to the tray?

The second interesting bit is about the pricing of the drinks itself. A 500ml glass of beer was priced at Rs. 240 plus taxes, which is par for the course for a microbrewery in Bangalore. In most other microbreweries, the sampler trays are priced “reasonably”, approximately at the same per-ml price as the glasses of beer. Here, though, the tray (on which we didn’t get Bogof, remember) was prices at Rs. 625 per taxes! Of course, there were six beers that were sampled in the tray and the quantity was also significantly more than at other sampler trays (here it was at least 150ml per glass if I’m not wrong; in other microbreweries in Bangalore it’s more like 100ml), yet the premium in pricing for the samplers was significant!

I wonder what makes other microbreweries price their samplers at about the same per-ml cost as their glasses – given that the standard practice is to incentivise customers to buy in larger units. I also wonder what makes Punjabi By Nature impose a “penal” price (assuming it was 150ml per sample, it works out to about 70 paisa per ml. The glass of beer (not accounting for happy hours) costs 240/500 = 48 paisa per ml, so the sampler is 50% more expensive) on its samplers. For now that I know how it’s priced, the next time I go to Punjabi By Nature I’m going to order glasses of beer (hopefully in happy hours) and not the sampler!

Pricing is a funny game, I tell you!

Languages as memes

A while back on this blog I had compared religious and cultural practices to memes (in the original Richard Dawkins sense of the word). Back then I had written:

So if you were to look at it in terms of responsibility to society, you need to propagate only those cultural traits that you deem to be relevant and important. “So what if everyone stops celebrating Ganesh Chaturthi?” you may ask. If that would happen that would simply mean a vote of no confidence for the festival and an indication that the festival needs to be phased out. If everyone were to propagate only those cultural traits they find useful, traits that a significant proportion of society finds significant will continue to survive and thrive. For Ganesh Chaturthi to exist 30 years hence, it isn’t necessary for ALL families that have inherited it to celebrate it now. As long as a critical mass of families celebrate it, the festival will survive. If not, it probably doesn’t need to exist.

 

Now, thinking about it, you can consider language to also be a meme. When a bunch of you find that there is a concept for which the language you speak in has no word, you invent a word and add it to the language (this is like a genetic mutation). If enough people like this mutation (i.e. if it is “fit”) it will propagate, and soon become part of the language.

If there is a word in the language that is archaic and not useful for describing any of the phenomena that you are likely to encounter, you stop using it. When people stop using such words, they become “archaic” (ok I see circular reasoning in this paragraph) and effectively drop out of the language. Thus, a living language is always dynamic, receptive to new words (to describe concepts that earlier didn’t need description) and receptive to discarding words that are not useful any more. Thus, the feature that defines a living language is dynamism and change.

This has several policy implications.

1. The concept of “purity” of language is wrong. Some people want to speak in the “pure form” of a language. As long as it is a language that has been truly alive (and not kept alive mostly by ancient literature) there exists no “pure form”, for the definition of a successful language involves frequent “mutations”. So if you ask me to talk in “pure Kannada” it is nonsense. Pure Sanskrit, on the other hand, has some meaning, for the language has been so little used that it’s stopped evolving and mutating.

2. People like to appoint themselves guardians of culture and dictate top-down what words should be part of a particular language. For example, there exists a body under the Government of Karnataka (if I’m not wrong) which dictates what “Kannada words” must be used for different new concepts. This is wrong, and a recipe for such words not being used.

Instead, “memetics” must be respected and evolution must be bottom up. People find the need to describe phenomena around themselves and if they don’t find a word in their language that describes it, they will either invent or borrow one such word. Some such new words become widely used, at which point of time they can be introduced into the language dictionary. Usage should precede presence in the dictionary, not the other way round.

3. “Slang” is a part of language, and a leading indicator of how the language is going to evolve. It should be encouraged and not denounced. For it exists because the language as it stands now cannot effectively enough describe certain concepts.

I’m currently reading this book called The Information by James Gleick, which has a chapter or two dedicated to languages and dictionaries. It was while reading it that I realised how languages are memes.

 

Return gift – combined feed

Today is my happy birthday. After a very long time I’ve turned a power of two (not hard to guess which one!). On this occasion I think it’s my duty to give you all a return gift.

Some of you might know that I have two other blogs – one “work blog” and one “public policy blog”. That might explain why some “funda-posts” have disappeared from this blog which has mostly nonsense nowadays.

While some of you are aware of this, some are not, so I thought it makes sense to offer you a combined RSS feed of all my blogs. Currently I don’t write anywhere else, but in case I do I’m sure to link to it from this blog. If I write elsewhere on a regular basis (like Mint, perhaps) I’ll add the feed to that also to the combined feed so that you need to go to only one place to find all my stuff.

I’ve used this site called Chimpfeedr for the purpose, and my combined feed is available here (http://mix.chimpfeedr.com/0140e-SKimpy). I recommend that you subscribe to that to be updated on all my writing.

Update: How (in)appropriate that today being the 6th of December, the gift has to do something with RSS!

Customised Google Doodle

I’m very impressed with Google for having customised a Doodle for my birthday. I’m always logged in to Chrome, and I’ve told Google Plus when my birthday is, so it’s rather trivial to do this. However, that they have done this is rather impressive, and I’m happy with them.

Customised Google Doodle

I’m also happy with most financial institutions I have a relationship with, for since morning my mailbox has been flooded with messages from all these institutions wishing me a happy birthday. I don’t know what information other e-commerce sites have about be, but not many of them have bothered to wish me so far  (not that I’m complaining). The only exception is FabFurnish (which is bizarre since I’ve never bought from them) which has not only wished me but also sent me a discount code!

This whole business of Customer Relationship Management is bizarre, I tell you!