Author: SK

Consolidating blogs

For the last year and a bit, I’ve maintained two other blogs – one on public policy, and the other on data and pricing and other “work stuff”. The idea was to keep the profound “work stuff” separate from all the nonsense that I write on this blog. Dedicated blogs could have dedicated readers who follow me for dedicated stuff, without being burdened by stuff that they wouldn’t normally care about.

Looking back, the experiment hasn’t gone particularly well. The “work blog” especially hardly gets any hits, and that is not something I’m particularly happy with. More importantly, I think people look at me as a “package” – the reason they follow noenthuda is that they expect to read a variety of stuff here, not my views on a particular kind of stuff. And so it perhaps makes no real sense to separate out my three blogs, thus not presenting readers the full repertoire of my fundaes!

You might have noticed that you don’t find my real name anywhere on this blog. I mean if you were to search for it, you might find it linked to the blog, but I’ve so far taken care to not put my name here. This is to ensure some kind of plausible deniability since I write a lot of possibly politically incorrect stuff on this blog. So the stuff I write on petromaxes and goalkeepers should not appear to anyone who wants to read me for my fundaes on “data strategy”. Keeping my three blogs separate allows me to maintain this plausible deniability while also letting my friends know that all three are written by the same person, etc. (I once did a google search for my full name, and this blog was not found on the first page of results. The other two were).

I’ve been thinking about this, and considering the abysmal readership of my other blogs, I’ve come to the conclusion that I should integrate all three of them, here. So starting the first of January, I will be putting all my blogs here, on this blog. I’ll also be importing all my old posts from my other two blogs here, so that you can find everything in one place. And since the cloak of plausible deniability will then be blown, I’m going to take down some of my old possibly incriminating posts. So make the most of the next four days to read my archives!

Idea types and person-event types

Last night GP, the wife and I were drinking at Brewsky, a nice microbrewery in JP Nagar, Bangalore. We were seated at the bar, and were checking out some other people who were seated elsewhere at the bar. The wife pointed to two of them and independently asked GP and me to assess which of them was potentially more interesting (the independence was achieved thanks to a timely bio break I took). Most of GP and my assessment of these people tallied, but then GP popped up with this really interesting funda that I have to blog about!

So GP said “the woman sitting across from us looks more of the ‘ideas type’ while the woman seated to the right looks more of the ‘events and people type’ “. And in that one stroke, he had introduced this rather profound method of classifying people. He had created one other dimension of putting people into two categories (and in that instant doubling the number of two by twos along which people can be plotted!). And he had brought back to memory something I had seen in Bishop Cotton’s Boys’ School back in 1996.

The board near the administrative building at Cotton’s said “great minds discuss ideas. Average minds discuss events. Small minds discuss people”. Profound in itself but a three-way classification. Now, three way classifications are not as intuitive as two-way classifications. People generally prefer the latter. And in one shot last evening, GP had reduced this cumbersome three-way classification into a rather interesting two-way classification! To use the Cotton’s framework, he had clubbed the average and small minds!

In the past I’ve blogged about the concept of “who else have you been in touch with“. This is a phrase that pops up, I’ve argued, when you have met after a long time and have nothing else to talk about. A related concept is perhaps “what movie did you see recently?” (though that can occasionally lead to fairly profound discussion on ideas). Now, analysing life from GP’s framework, you will notice that when one of the persons involved in the conversation is an events-people types, it is but obvious that the conversation will quickly devolve to discussing people or events, and the best anchor for devolving into such is to seek stories of common acquaintances!

So are you an “ideas types” or an “events-person types”? Would you think such a classification is context-sensitive (depending on who you are talking to) or context free? Would you get offended if someone were to classify you as a “events-persons types”? What happens when an I-types meets and EP-types – what do they talk about? Is is even possible to talk ideas with EP-types? And what are the odds that a largish group can sustain I-types conversation?

I’ll end this post with an anecdote. Not so long ago I met a few old friends. It was a largish group, and the entire contents of the two-hours-or-so conversation can be classified into two types – discussions on mutual friends and acquaintances and “who else you are in touch with” (standard EP-type stuff), and discussion of concepts discussed on one of my blogs! Maybe I should take credit for pulling conversation in that group to I-type stuff!

 

Guarantees in meetings

There are some events/meetings which involve strong network effects. People want to attend such events if and only if a certain number of other people are going to attend it. But then they don’t know before hand as to who else is coming, and hence are not sure whether to accept the invitation. These are events such as school reunions, for example, where if only a few people come, there isn’t much value. And it’s hard to coordinate.

In such events it’s always useful to provide a guarantee. For example, a friend from (B) school was in town last week and expressed an interest in meeting other batchmates in Bangalore. A mail thread was promptly started but until the morning of the event, people remained mostly noncommittal. Not many of us knew this guy particularly well, though he is generally well-liked. So none of us really wanted to land up and be among only one or two people along with this guy.

And then there was a guarantee. One other guy sent a mail saying he’d booked a table at a bar, and this sent a strong signal that this guy was going to be there too. Then there were a couple of other very positive replies and the guarantee having been set, some seven or eight people turned up and the meeting can be called a “success”.

Sometimes when you’re trying to organise an event, it makes sense to get unconditional attendance guarantees from a couple of people before you send out the invite to the wider world. So you tell people that “X and Y” (the early guarantors) are definitely coming, and that will pull in more people, and that can be the trigger in making the event a success! In certain circles, X and Y need to be celebrities. In smaller circles, they can be common men (or women), but people whose guarantees of attendance are generally trusted (i.e. people who don’t have a history of standing up people)!

Another small reunion of my B-school batch happened last month and in the run-up to that I realised another thing about RSVPs – yeses should be public and noes private. One guy took initiative and mailed a bunch of us proposing we meet. I hit reply all on purpose to say that it was a great idea and confirm my attendance. Soon there was another public reply confirming attendance and this snowballed to give us a successful event. There were a few invitees we didn’t hear from, who didn’t attend, and I assume they had replied privately to the invite in the negative.

The problem with events on Facebook is that your RSVP is public irrespective of your reply – so even if you say no, everyone knows you’ve said “no”. And so you think it’s rude to say “no”, and say “yes” just out of politeness, even though you have no intentions of attending.

I’ve attended a few events where the hosts estimated attendance based on a Facebook invite and grossly overestimated attendance – too many people had hit “yes” out of sheer politeness.

So the ideal protocol should be “public yes, private no”. Facebook should consider giving this as an option to event creators so that people reveal their true preferences in the RSVP rather than saying “yes” out of sheer politeness.

In that sense it’s like a Vickery auction whose basic design principle is that people reveal their true willingness to pay and not underbid to avoid the winner’s curse!

Other airlines to bail out Spice Jet?

In a rather bizarre move, the Directorate General of Civil Aviation (DGCA) has directed airlines to not charge “exorbitant fares” for passengers stood up upon cancellation of Spice Jet flights. This is a rather bizarre idea and effectively amounts to asking other airlines to partially bail out Spice Jet.

Essentially when an airline is in trouble, passengers are loathe to book tickets on it, for they know that the chances of their flight getting cancelled is high. A cancelled flight usually means either cancelling the trip itself or rebooking on another airline (sometimes airlines have arrangements with each other for taking on passengers on cancelled flights, but currently no other airline in India will give credit to Spice Jet). Either ways, it is a costly affair for the passengers.

By directing airlines to not charge “exorbitant fares”, and assuming that such a directive will be followed (very likely that this directive is meaningless for this is the busy season and other airlines are likely to be booked out), the total cost of booking a ticket on Spice Jet actually comes down, for the charge a customer will have to incur for re booking on another airline for a cancelled Spice Jet flight is likely to be reduced. And thus passengers will not abandon Spice Jet at the rate at which they normally would. And since other airlines are taking a hit on the spot fares they could potentially charge (in the absence of this directive) they are effectively subsidising and “bailing out” Spice Jet!

The other problem is that in the absence of market mechanisms (which the price cap effectively curb), how will other airlines allocate their remaining capacity among all the passengers who have been stood up by Spice Jet? Some arbitrariness is likely to ensue and passengers are likely to be left more disappointed!

The government had started off by handling the Spice Jet case rather well, as Devika Kher has argued here. However, of late, the wheels of the DGCA seem to have come off in his aspect, and there seems to be a concerted attempt to let Spice Jet stay afloat against the wishes of the market. The Airports Authority of India and oil companies have been asked to extend credit for fifteen days.

It seems Devika spoke too soon!

Receiving people and waiting for luggage

This morning was the first time ever that I’ve successfully received someone at the airport. Yes, the “successfully” was purposely inserted there, for I’d once driven up all the way to the Bangalore Airport only to find that the wife, who I had gone to receive, had already left by cab (her flight had landed early and baggage come out quickly). Apart from that one attempt in 2011, I’ve never ever gone to receive anyone at any airport – done a lot of receptions (not that kind of reception, silly) in railway stations, though!

So this morning I was again receiving the wife, who has come to town on vacation having completed one term of her MBA. I took the bus to the airport and reached at 8:30, in anticipation of the 8:50 flight, only to see that the flight from Dubai had “landed”, harbouring visions of the last time I’d (unsuccessfully) gone to receive her! Moreover, there was no way for me to reach her, for her Spain number doesn’t work here, and her India number was in my phone (I have a dual SIM phone!)! And so I stood at the arrival gate and waited, hoping that she had not missed me!

And while I was waiting there I realised that waiting for someone at the airport is like waiting for your luggage once you land. You know the flight has landed (in one of the cases, you actually travelled by it). But you know that the time taken for either your luggage or the person you’re waiting for to come is stochastic! And you hope that you’ve had a good day, and that the person/luggage comes asap!

In the luggage case, for a while the baggage belt is empty, and then bags start appearing. That’s when you start getting hopeful, waiting for your bag to arrive! Till there is baggage on the belt, you are at peace, using the restroom and retying your shoelaces and getting hold of a trolley if necessary! But once the baggage is on the belt you start getting anxious, and start harbouring notions of what if your baggage has not arrived!

Receiving your wife at the airport is also similar. Till you know that people from her flight have started to come out, you are at peace. You go get yourself a cup of coffee (have you noticed that coffee at Hatti Kaapi at the Bangalore arrival gate is much cheaper than that at Maiya’s at the other end of the airport? That’s for another blogpost!). You people watch, you observe the structure of the airport and (if you are a first-time receiver like me) observe what the arrival gate looks like from the outside.

And then people start arriving with Dubai Duty Free shopping bags (the wife flew Emirates) and that is the equivalent of the first bag arriving on the belt! And now you become tense, start wondering if the wife successfully made it to the flight (she was connecting via Dubai), and if her baggage made it to the flight, and why she’s taking so long. And then she arrives. It’s the kind of joy you have when you see your bag on the far end of the carousel and can’t wait for it to get to you! And then it arrives and you pick it up (in case of the wife, not literally) and off you go!

Uber, Meru and Service Taxes

The use of arbitrary barriers in regulation, like the Rs. 10 lakh limit on Service Taxes is counterproductive and can lead to a non-level playing field. More importantly such barriers encourage small-scale operations which can act against efficiency

A couple of months back, the Service Tax Department slapped a notice on Uber, demanding that the cab aggregation service pay service tax on its revenues. Cab services fall under the service tax net, and recently other cab service providers such as Meru and Mega have started adding a service tax component to their bills.

What queers the pitch in the case of Uber is who pays, and whether they pay at all. Uber claims to be an aggregation platform, bringing together cabbies and passengers, and says that it is the cabbies who are in charge of paying service tax on the revenues they make through the platform. From the Tax Department’s perspective though, going after thousands of cabbies demanding taxes is not very feasible, so they are trying to get Uber to pay the service tax.

More importantly, Service Tax becomes payable only if the annual revenues from the service cross Rs. 10 lakh and it is unlikely that too many of Uber’s cabbies will cross that threshold. So if we were to look at Uber strictly as an aggregator (which it actually is), it is unlikely that any service tax can be collected on its services!

What it also means that this gives platforms like Uber an unfair advantage over companies such as Meru which own their taxis – the latter’s revenue is much more than Rs. 10 lakh per annum and thus service tax has to be paid on the entire revenue! And this means that the playing field when it comes to taxi services is not level – for it is cheaper for an individual running a single taxi to offer service rather than a company offering a fleet.

This is similar to regulations in manufacturing that make it much more expensive (in terms of enhanced labour regulations and disclosures for companies beyond a certain size) for larger companies to operate vis-a-vis smaller ones. Even in the proposed relaxation of labour laws, a number of relaxations are to do with the minimum size of a company for doing the disclosures, and not with the easing of regulations themselves. All that it means is that just the threshold is raised – it becomes easier for companies to grow beyond their current levels of inefficiency, but they will soon hit a new level of inefficiency!

The problem for all this is the arbitrary fixing of slabs. An ostensible reason for fixing the minimum slab for service tax at Rs. 10 lakh is that enforcement for people earning less is going to be difficult. But as can be seen in the Uber case, this can lead to inefficient structures of industrial organisations, by keeping them small, and is hence not prudent. The government would do well to remove such arbitrary numbers from its regulation!

The other thing about service tax is that once your income crosses Rs. 10 lakh, you pay service tax on your entire income rather than the excess over 10 lakh, which is how income tax is structured. This is again inefficient, for someone who is making Rs. 9.8 lakh is now dissuaded from taking new business since it can literally subtract value! Another reason for arbitrary barriers to go.

Meru’s pricing strategy

Let’s assume I’m writing this post two weeks back when Uber, Ola and TaxiForSure were still running successfully in most places in India. Since then, they’ve been banned to various degrees and it’s gotten harder for customers to get them and for drivers there to find customers leading to a sharp drop in volumes.

Thanks to the entry of app-based taxi booking services such as Uber, Ola and TaxiForSure, entrenched players such as Meru Cabs and Easy Cabs started losing business. This is not unexpected, for the former operated at around Rs. 13-15 per km range (depending on discounts, time of day, etc.) while the latter operated around the Rs. 20 per km price point. This meant that for immediate trips and mostly intra-city movement consumers eschewed the likes of Meru and embraced the likes of Ola.

In the last few weeks I’ve spoken to taxi drivers (mostly Uber; Ola drivers don’t inspire much confidence and so I don’t indulge them in conversation; and I’ve never got a cab via TaxiForSure) who have been affiliated to more than one aggregator, and from that I get what the problem with Meru’s pricing is.

What sets apart Meru, KSTDC and Mega Cabs is that the three are the only operators with a license to pick up passengers from the taxi rank at the Bangalore Airport. Any other taxi that you might book (Ola or Uber or a local cabwallah) don’t have the rights to pick up passengers there and park in the airport’s taxi parking zone. They instead have to park in the space allocated to private cars, paying the parking fees there, and  there is usually a delay from the time when the driver meets the customer at the arrival gate to the customer actually getting into the car. This distinction means that the likes of Meru and Mega offer superior service to the other operators at the airport and thus can command a premium price. Getting into anecdata territory but I always prefer to get a cab from the taxi rank (though the queue occasionally gets long) than to book a cab for which I’ve to wait.

At the city end, the difference between Meru and Uber (Ola is in an intermediate state) is that you can pre-book a Meru, while Uber only accepts “spot bookings”. This difference in service levels means that you can never be assured of getting an Uber at the time you want to leave for the airport – there is a statistically high chance of getting one but you don’t want to take the risk, and thus prefer to pre-book a Meru or a Mega, which lets you know at the time of booking if they are able to service you.

Now, this guarantee from a Meru or a Mega comes at a cost. An Uber cabbie who also drove for Easycabs told me that Easycabs would allocate his trip an hour before it was scheduled to start. Since Easycabs would have assured the customer of a cab reaching his place at the appointed time, this means that they need to account for a sufficient buffer to ensure that the cab does reach on time. Thus the allocation an hour in advance. This cabbie told me that from his point of view that was inefficient, for in the one hour of buffer that EasyCabs would add, he could complete one additional trip through Uber!

So it is clear as to why Meru is more expensive than Uber/Ola – their pre-booking provision means that they have to potentially ground your cab for an hour before pickup, and there is a license fee they have paid the airport for the right to pick up passengers from the taxi rank there. Notice that both these factors also result in increased convenience for passengers. So effectively, Meru is justified in charging a premium. The question is if the current structure is optimal.

The problem with Meru is that their fare structure doesn’t appropriately represent cost. A pre-booked taxi costs as much as a taxi hailed at the time of demand. A taxi from the airport (where they have paid license fee) costs as much as a taxi from anywhere else. So while their cost structure might be optimal for travel to and from the airport, the structure simply doesn’t work out for other rides. And they are getting priced out of non-airport rides.

Assuming that they want to get more non-airport rides for their fleet, how do they do it? The answer is rather simple – let the fare structure reflect cost. Rather than tacking on every piece of cost to the per kilometer fare, they can have a multi-part fare structure which is possibly more “fair”.

A typical trip from the airport to the city is about 40 km, and costs around Rs. 800 (excluding service tax). Instead of charging Rs. 20 per trip, how about charging Rs. 16 (Ola’s rate) per kilometer and an additional Rs. 200 “airport charge”? At the other end, how about charging an additional Rs. 100 or Rs. 200 as pre-booking charge in order to account for driver’s idle time on account of the pre-booking? If they were to charge this way, they will both make as much money as they currently do on airport trips, and also compete with Ola and Uber on intra-city immediate-ride trips.

To take an extreme analogy, this is like asset-liability management – prudent banking dictates that the term structure of your assets reflects that of your liabilities. Similarly, prudent pricing (to the extent it is practically implementable) dictates that your price structure reflects on your cost structure!

The trouble with quizzers

Quizzers are fundamentally interesting people. At least they are supposed to be. They have above-average skills in connecting things, and “working out” answers to quiz questions. And the fact that they have attended so many quizzes means that they will know lots of “fundaes”. And have knowledge of lots of interesting “stories”.

Above-average skills in connecting stuff, and above average knowledge of the world and how it works should naturally make you more interesting than most people. And I’m sure most quizzers have the potential to be supremely interesting. But the sad fact is that in general conversation they seldom exhibit such interestingness.

The trouble with quizzers is that when you put a bunch of them together in a room, they naturally gravitate to discussing quizzes, and quizzers. Now, if they were to discuss specific questions and expand the discussion around the topic of interest to the question, it would still be interesting – for most quiz questions (of the Bangalore variety at least, not sure about Kolkata) have the potential to be great conversation seeds.

However, quizzers don’t discuss that. They instead discuss about how the quiz progressed in terms of relative standings – like they were discussing a horse race. They discuss stories around quizzes – which is more about the people involved in the quiz rather than the fundaes involved. They bitch about fellow-quizzers (this blogpost falls in that category, perhaps?) and talk about why this quizzer is an asshole and that quizzer is a copycat. And go into expositions on why a certain kind of quizzers are better than the other. You get the drift.

Now, from my (forced – I’d rather discuss fundaes with these guys than quizzers) participation in such bitching sessions, I understand that some of this lack of interestingness is strategic – quizzers don’t want to discuss fundaes because they are afraid that they might “give away” some of their hard-earned knowledge which might help a competitor in a subsequent quiz! One prominent quizzer who had once-upon-a-time been my regular teammate once apparently (I got this info from one such bitching session) set an entire quiz based on the last one week’s newspapers – the logic being he didn’t want to give away fundas that he might use to answer in a quiz sometime later!

Thinking about it, it’s not just quizzers who indulge in such behaviour. Such conversations are a staple at “tweetups” also, I’m told. People who know each other mainly through twitter get together, bitch about other people on twitter, and talk about what they’ve already tweeted (this is from hearsay). But then they can be forgiven for the median tweetup-attender is not anywhere as potentially interesting as the median quizzer!

Then again, it is known that a large number of “successful” quizzers are “database quizzers” – who rely on their prowess for mugging up entire fundaes which they can then spit out in a quiz, rather than actually knowing them and using them to work things out. Perhaps the fact that they talk inanities in general conversation is an attempt to cover up the fact that they’re actually uninteresting? And to not get found out that they’re database quizzers (database quizzing is “anti-big data” in that a lot of people do it but no one claims to do it!)?

From here on, any quizzer who in a group of quizzers talks more about quizzes and quizzers, rather than talking fundaes, is prime suspect in being a “database quizzer”. Hopefully this will be deterrent enough for non-database quizzers to show their interestingness!

Offline marketing of online services

Using snail-mail for marketing is an effective strategy for it grabs more of your attention. But messages need to be more personalised to have effect.

This came in the mail yesterday. If you are an old-timer like me, you will recognise it as an “inland letter card”. The edges are frayed because it had been so long since I’d received one such card that I’ve forgotten how to open them.

bigbasket

You will notice that this inland letter came from Bigbasket, the online grocery shopping firm. At first look, it is bizarre that an e-commerce firm is using snail mail for its marketing. On second thoughts, though, it isn’t that bizarre!

The thing with online modes of communication such as email or SMS is that the cost of sending a message is low, very close to zero. What this leads marketers to do is to bombard you with messages. For example, I bought something from Jabong a couple of weeks back and they’ve since sent me at least an SMS a day. I promptly delete them without reading. On my email, I’ve been unsubscribing wherever possible from promotional lists from which I get messages – for they are too frequent and too “vanilla” (it’s bizarre that even marketers who know much about me refuse to use that information in their communication).

In short, there is too much clutter in online (email/SMS) marketing, and the chances of any promotion really standing out and getting the user’s attention is minuscule.

Sending snail-mail, on the other hand, is expensive. It costs you to buy the paper, print out the letters and then you pay for postage. This means that with the advent of cheaper means of communication, most marketers have moved away from it. What that has done is that you get much lesser snail-mail than you used to a few years ago. Which means that the amount of attention you devote to each snail-mail is actually more!

So with snail-mail being the more expensive form of marketing, it is actually more effective for marketers because it draws your attention! (You can think of it as a multi-player prisoner’s dilemma where the marketer wants to maximise her claim on your attention (relative to her costs), and can do so by either using email or snail-mail. The optimal solution, I believe, is a kind of “mixed strategy” – mostly email, but the odd snail-mail here!)

So an online sales company reaching out to you by snail mail is not that bizarre after all. If only they had customised the mail to put my name on it (not hard to do at all), and made it seem like a personal letter, it would have been even more effective!

There have been two occasions in the last five years when I’ve actually responded to upsell campaigns. One was by Airtel who called and offered me a 3G data plan for almost the same price as what I was then paying for my 2G plan. I had been intending to upgrade and I took it.

The other was by Tata Sky, who sent me a beautifully crafted personalised letter printed on thick A4 paper, indicating I was a “premium subscriber” and asking if I wanted to upgrade to Tata Sky+ HD, and giving me a number of a dedicated call center who I had to call to upgrade. It is likely that had it been email I might have discarded it (or if I were using today’s Inbox, marked it as “Done”). Snail mail drew more attention, and the personalisation made me feel good. And I upgraded.

The Unpopular People’s Network

Recently I had blogged about how I find it hard to get along with people who are generally “popular”, and find it so much easier to get along with oddballs, people who have a reputation of being “arrogant”. So I’ve been discussing this with this one old friend, who is far from being universally popular, and (back when we had a large common network) had a reputation of being arrogant.

So we were recently talking about a mutual acquaintance and she said “She’s very cool. You’d like her. She’s far from ordinary and normal 🙂 “. Now, I must point out that this conversation was conditioned by our earlier discussion about my blog post, but it is interesting how this friend assumes that I’m going to like this mutual acquaintance because she’s also, like the two of us, an “oddball”!

So I wonder if there’s something about us oddballs that attracts us to each other. If there is some kind of inherent solidarity between us because we are all of the type that don’t make us particularly popular. There is no guarantee of course that a randomly chosen pair of oddballs get along, but I wonder if the probability that two randomly chosen oddballs get along is higher than the probability that one “normal guy” and one oddball getting along!

And coming to the data that Christian Rudder has put in Dataclysm, on people getting 1s and 5s being more likely to get a date than straight 3s, I wonder how it will look if we are going to condition the data on the rating profile of the reviewer – maybe someone who has a lot of 1s and 5s is more likely to give 1 and 5 ratings to others? And 3s give 3s to others? It would be interesting to find out, except that the data is not public!