For the love of books

It’s been almost a month and a half since we launched LeBooks.in. Over the period we have implemented numerous features, removed various bugs and finally had a major upgrade over this past weekend. It has been a topsy-turvy ride with its ups and downs but one thing has been constant, we have learnt a lot and have come a long way since.

Both Rajat and I are essentially non-IT guys. While it did put a big constraint on us (and it still does), we did not let this hamper our plans. We went ahead and outsourced the website in August thinking that it would sustain us for the few initial months while we concentrate on other stuff and build our IT team. Though we knew that the website can make or break our business, we still thought it was an ok-acceptable decision (considering the circumstances, which I won’t dwell into here) for isn’t India an hub for outsourcing and aren’t there numerous multinational companies happy with the work done. Well we were wrong, terribly wrong.

I cannot generalize for the whole web-development and -design industry in India or even NCR based on just one experience but we believe that the state of affairs would have been the still the same if we had instead chosen any other company. This company was “supposedly” the best in the NCR region with a number of big-name clients like Sony, Hyundai, Penguin, etc. in their kitty. As a hindsight it seems to us that for them we were just a small fish to prey upon.

We had made it pretty clear before signing the contract that we need the website by the stipulated date and if it cannot be done then let us know. Also, that we are very particular of what all things we want and how we want them implemented. However, over the course of time, our inputs were totally disregarded. The code for the site was lifted from the code of their other websites. We could easily see commented out stuff such as email addresses with jobs@xxx.co.uk and page categories as Departments, Other Stores, etc. They did not even make an effort to remove this.

Things came to a head when the site crashed, when it could not even manage some 10k books because the database was not normalized, and that too when the site was already delayed by a week and was still half-completed. Attempts to communicate through to the CEO, whom we thought was a decent fellow having started-up and having being featured on “Young Turks”, were of no avail. He mysteriously disappeared after responding to our first mail. We believe that most of these web-companies make websites for clients who are either ignorant and are happy with whatever is given to them or have lots of money to shell out, which we did not.

It hit us bad – a wasted couple of months, wasted money, missed opportunity at the Delhi Book Fair, missed revenues, and more than that dented credibility with our suppliers and publishers whom we had given a launch date. Well the lesson’s been learnt:-

a) When outsourcing services, opt for a smaller company, which needs you as much as you need them. It helps in negotiating contracts. We could not get a clause put into the contract where the web company would be liable for monetary compensation in case of any delays and missed deadlines. Most of the times anyways the contracts cannot be fought out in the court.

b) If you as a start-up need to get a critical service done, then try and do it in-house only, especially when it involves a lot of feedback at every step. Don’t assume that you can outsource and be done with it. Even the best of the companies cannot stick to the exact stipulations laid down by you.

So after the crash, we were pretty much in the doldrums. I started learning coding while Rajat handled the database. My sister also really helped us out. For fully a month, we worked day and night to somehow get the website back up.

Whatever might be your degrees, whatever you might be good at, in a start-up you will eventually end up doing something, about which you may have no clue leave alone any expertise. But the learning is stupendous.

During the process we eventually realized that the basic HTML code was also horrible. The site was not at all W3C compliant with 750+ errors and warning on every page. The styling was done in-line instead of making complete use of external CSS. And then the site took up to 3 mins to load and even more so on slower net connections. Frankly, the site could hardly be used except maybe referred to just family and friends, and that’s what we had to do.

But it turned out to be a blessing in disguise. It gave us a period of trial-run where we became aware of a lot of operational issues. Even after months of planning, one cannot really anticipate all the problems that might occur when you launch a product in the market.

Since then, we have been building our IT team. As a start-up, you need people who are self-motivated, who are quick to learn and essentially don’t need you to supervise them the whole time. We found a great guy in Mayank who has been instrumental in implementing a lot of our current features over the past month. And we are still looking for more.

Finally I am glad to say that we have a website, which though might still be very basic is ready for the world!!

Amazon's Kindle

Its a well known fact that Gillette makes more money by selling razor-blades than by selling their trademark razor. HP’s Printer division makes more money selling cartridges than it makes by selling Printers. Similarly, there are a lot of companies that make money not by selling the main product, but by selling the tied-up product. This is an old business trick and is referred to as the Razor-Blade Model(Now you know who pioneered it). Today while reading about the recently launched e-book readers-Kindle and Nook, I realized how Amazon and BN(Barnes and Nobles) are relying on this old model and forecasting huge profits in the next few years.

Microeconomics says that there are three characteristics of any market structure (be it Monopoly, Oligopoly or free market)- number of players, barriers to entry and bargaining power of producers as well as consumers. The market for book retail has almost no barriers to entry and Amazon and BN being big players have over the years managed to capture a majority market-share. As time passed, both of them lured customers with heavy discounts and the price wars just got uglier. Needless to say, customers had no reason to stay loyal and made the best of this price war; while Amazon and BN just kept bleeding.

BN's Nook

Recently, with the advent of e-book readers these two giants saw an opportunity to finally establish a captive customer base by employing this tied -up products model. Amazon launched Kindle over two years back but the product did not have the potential to penetrate the market then. It wasn`t aesthetically designed and did not bring the much expected revenues. But with recent developments in LED technology and Google’s groundbreaking agreement with Publishers, there is renewed hope that e-books might prove to be a fatal blow to the conventional paper books.

Now if this is really going to change the future of the publishing industry and the way we read books, the big players of tomorrow should emerge now. And that is precisely what Amazon, Sony and BN are attempting to do. Each of them launched e-book readers with their own non-standardized formats, with the intention of hooking on a maximum number of readers to their particular product. Amazon, being the book retail giant that it is, used its clout to arm-twist publishers into providing it e-book formats for all major releases. BN joined the bandwagon too and managed to obtain most of these titles in its e-book format. In this race, Sony got left behind because of its inability to convince customers that it would be able to provide as many titles as its competitors in its own e-book format. It is this uncertainty coupled with the marginally better product aesthetics of Kindle and Nook that have led to the emergence of two leaders in the e-books business.

Coming back to the economics of this, we can understand why neither Amazon nor BN is hoping to make significant profits from the sale of e-book readers. Also, the fact that both these e-book readers are priced the same, tells us that both these Companies understand that a price war now would cause both to bleed as they do not have any margins on the e-book reader. It will be a while before either Company would have sold significant volumes to recover the enormous product development costs.

However I feel that there is a big question mark on whether these two will actually make the money that they are hoping to make. Aren’t they undermining the smartness of techies today, who would probably soon work out a way to crack each of their proprietary formats and create millions of free copies in no time. Isn’t it going to make piracy of books even easier and much more widespread. The entertainment industry has been struggling to fight this piracy for years. Won’t Amazon and BN face this same challenge when there will be on an average, 1000 copies circulating for each legitimate e-book they sell.

But none of this seems to concern Amazon and BN who are both currently focusing on meeting the high [expected] demand for e-book readers in the upcoming festive season. While these big companies fight it out in the electronic format market, the individual customer is definitely happy with the idea of have access to a cheaper electronic copy of the book, downloadable from anywhere at all. Also, the prospect of free copies of e-books being easily available in the near future has book lovers thronging stores to pick that gadget that will be their reading companion for next few years to come.