Company Profile: CHEF

Chef (formerly known as OpsCode) is an IT Automation platform that provides solution to managing servers in the same way as developers manage code. In traditional IT, there would be team to manage the servers who would make sure all servers are running correct operating systems and apps, all security vulnerabilities have been addressed and all patches applied and servers are up to speed. If the Servers needed a change to support a change in application, the team would implement that change across all servers that are being used by the app. This works when you have a few servers. But in today’s world where the load has increased and each app uses multiple servers (especially in a cloud based infrastructure), managing each server independently is not just costly, but also slow.

Chef provides a solution to this problem. It allows IT admins to define (what they call ‘recipes’) the parameters or configurations that the server’s should be maintained at. These recipes are stored on a central server that acts as the ‘mother ship’. All virtual machines have chef client running and each server pings this mother ship daily (or at another defined frequency to check the configuration definition. If the definition matches, server does nothing. If there has been an update to the definition, the server downloads it and updates itself. This process removes a lot of manual overhead from managing the servers including running the same configuration changes on multiple servers, thus saving their customers time & money. In addition to providing the software, they also provide consultation services to help with the implementation of the software.

The market the company is pursuing is small to medium sized IT Organizations. I say IT organizations because their target customers are not just IT companies, but the IT Teams in traditional organizations that need to own and manage servers. With the current shift towards cloud based applications, focusing on customers who leverage AWS and Microsoft Cloud. To that effect, they recently entered a partnership with Microsoft to help clients set up their services on Microsoft cloud.  They are disrupting an established process – dedicated teams to manage servers, and creating a new market – automated server management.

Chef was started as an open source program by Adam Jacob by 7 years ago. Adam was working on managing server configurations and was trying to use the tools available in the market, but nothing available met his needs (remember that these were the early days of cloud infrastructure). So he wrote the first version of chef and shared code with his friends who were working on similar challenges. That led to enough early adopters that he was able to secure VC funding.

The first customers of the company were early adopters of the open source offering. First paid offering was a ‘hosted service’. Chef was offering the free open source software but would charge for management of core server (mother ship). A year later they came out with ‘Private Chef’ – a forked version of open source Chef with proprietary ‘pay to use’ features. Soon they identified that their customers needed support implementing the software and they spun off a consulting business that helps with implementation of Chef’s software. Last year, they moved back to one version of software and offered all the features as ‘paid add-ons’ thus giving their customers an ‘ala cart’ menu.

They focus on two primary channels to acquire customers. First, they attend a lot of conferences (AWS, DevOps etc) to meet potential customers and then follow-up thru email twitter etc. Second, instead of spending a lot of money on advertising, they fly people around to meet the potential customer. In these conversations, they focus more on sharing best practices than making the sale, thus building customers confidence leading to them to buy the software as well as consulting services.

The company has a “THIS” slide that is leveraged as internal positiong/vision. In order to ensure every employee is able to understand and remember it, they have kept it very simple, which I think is very effective. Here’s the “THIS” slide:

  • Fuel the love of Chef
  • Make it easy to be successful with Chef
  • Give our customers reasons to work with us
  • Be our customers and our partners’ favorite company to work with
  • Be disruptive

Blog 4 – Creepy tracking!

I visited a few products websites for the assignment, but the one that showed up on my social networking site and on a news site, was the product I was using for class – www.wix.com. I don’t think these ads are effective. In fact they seem creepy and I end up deleting cookies and clearing up cache to get rid of these. I tend not to revisit such sites (unless I don’t find an alternative).

A few months ago I was looking for Egyptian theme home décor on http://www.designtoscano.com/. In a few days those items started showing up on almost every site I visited. I ordered what I wanted from amazon.com and didn’t go back to that site.

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Assignment 3: Robinhood – “In ten years, people might think it’s crazy we used to pay to trade stocks when all it takes is a few taps.”

“In ten years, people might think it’s crazy we used to pay to trade stocks when all it takes is a few taps.” Josh Constine via TechCrunch

Robin Hood is a heroic outlaw found in English folklore who is often portrayed as “robbing from the rich and giving to the poor”. The app ‘Robinhood’ does not rob from the ‘rich’, but it does give ‘poor’ (or ‘economical’) people a better opportunity to explore the stock market. Tech Revolution was probably a late in the stock trading business. Most of the trading houses have very manual processes for executing, managing and reporting trades. Be ready to dish out about $30 if you wish to talk to a trader to execute a trade. But it is understandable as a real person is spending time with you and he needs to get paid for his time. But even if you execute a so called ‘online’ trade, trading sites charge anywhere from $6 to $10 per trade.

Robinhood plans to capitalize on this opportunity. By automating everything that is needed to execute a trade, they will minimize the overhead costs to a limit which allows them to offer free trades. Although spending $10 on a trade does not seem like much, but if you are a newbie like me, you’d want to try buying and selling multiple stocks over a small period to get a hang of the market. If you try doing that on a traditional platform, the cost quickly adds up. Robinhood will provide the flexibility to invest small amounts in multiple stocks as there is no overhead in buying and selling.

In addition, stocks generally move very quickly. It is very difficult to sit in front of a computer waiting for prices to change before you see or buy. This problem has been addressed traditionally by setting a ‘limit order’ which only executes if the stock hits the price you have set. This has it’s own challenges. If the stock is on an upward trend and  you had set you stocks to sell based on limit order, when you review your portfolio end of day, you will not feel successful. If only you could have seen the trend and held off on selling the stocks, you could have made more money. Robin hood addresses this point by making it a mobile app. You have access to all the market related information, at any time, on your phone. This combined with ability to buy or sell in a few clicks makes it easier to execute a trade while you are shopping for groceries.

Now the million dollar (or 16M dollar) question is, if Robin hood lets users trade for free, how will they make money? Is it all for goodwill? The answer is No. There are smart guys running the company who are planning on getting rich. They are targeting multiple avenues to generate revenues. First, they will make money from something called “payment for order flow”. They will get compensated by the stock exchanges where they direct their orders as they are boosting the trade volume on that exchange. Second, they will charge for the API, so anyone trying to build apps on Robinhood API will pay them. Third, they plan on investing the money that investors leave idle in their Robinhood account, and make money on that. Fourth, they will charge interest on money that investors borrow while they are waiting for the cash from their sales to land in their account. And I think at some point they might add some advertisements on the app which will be allow them to access to another steady revenue stream. Net net, they have a plan to make money.

There are challenges that Robinhood has to look out for and be ready to deal with. If RobonHood can make an app, what is stopping other entrepreneurs to make one of their own. Granted Robinhood has first mover advantage, but if it does not keep up with technology and upgrades, it will leave opportunities for other tech entrepreneurs. As of today, Robinhood only has an app for iOS. The Android and Windows phone markets are still up for grabs if someone can take the leap. And the challenge that is bigger than tech entrepreneurs, are the big trading houses like Fidelity, Charles Schwab,  Ameritrade, Scottrade. They already have an established brand and business model. All they need to do is get their IT department in order, automate things and build an app and viola! Robinhood has a competitor.

The sign up line is long (366,126 + me) and is growing. People are ready to give a chance to Robinhood. Now we wait and watch if this modern era Robinhood is up for the challenge!

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Image Credits: Robinhood.com

Owlet Baby Care: A little help for the hardest job in the world

Owlet Baby Care is a company that is trying to solve the same problem we have targeted – ability to monitor baby’s wellness when a parent not near the baby. They are building electronic equipment that can be attached to a sock – owlet smart sock. As long as the baby is wearing the sock, the equipment will monitor baby’s vital signs like oxygen level, heart rate etc and send it to phone app and website thru the wifi network. In addition, it will also tell the parents if the baby needs attentions. If the baby has rolled over while sleeping, it will alert the parent so the parent can put the baby on his back.

Being a father of a 6 month of old, I think this product in incredible. My wife and I stayed up countless nights just making sure our son was breathing while asleep. We bought a HD camera to monitor while he was in crib, to ensure we can see his chest moving while he breathes. Reading about articles on SIDS made us even more cautious and we decided to move him to our bed. Having a product like owlet care could have made these months so much easier for us.

They are targeting all the traditional online channels outlets: TV, Blog, News sites and Radio, to increase awareness about their product. There are several news articles talking about the product. They also have a beautifully designed website where they post monthly updates. Considering the product has not launched yet, I think they have done a good job of getting the word out.

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For parents of newborns, Owlet is the baby monitor that delivers detailed health statistic on phone so parents don’t have to keep looking over the baby, because only owlet has state of art monitoring technology that fits easily on the baby’s feet and is comfortable. Owlet is competing against traditional baby monitors that mostly provide audio/video monitoring. There are a few products in the market that monitor baby’s vital, but they are not as comfortable to put on a baby, they have too many wires and can cause problems if the baby rolls over or moves around. Owlets value proposition is that while it provide more information that standard audio/video monitors, it is comfortable to put on a baby. It is basically an extension of a sock that can be taken out when the sock needs to be cleaned. It would also stay in position when the baby roles over or moves around.

Owlet’s target customers are parents of newborns who are affluent ( can afford a $250 monitoring system). Although it has done a pretty good job at getting the word out, I don’t think it has reached it’s target customer yet. Most parents of newborns don’t have enough time to listen to the news or go to news site websites, so Owlets marketing thru those channels doesn’t work for this audience. When these parents are searching for monitoring products online (search engines and retailer websites), owlet does not show up as an option, probably because they have not invested in adwords. There is no print marketing campaign to reach the parents of newborns as well. So although owlet has a great product, they still need to go a long way to ensure their target customers are aware of their existence.

Photo Credits: https://www.owletcare.com/

Assignment 1 – Redfin

You can’t always remove the middleman from the deal, but you can automate parts of the process to help reduce costs! Redfin did this for the real estate market. Traditionally, if someone wanted to sell or buy a house, they would reach out to a real estate agent who would either put their house on the market or show them houses that were up for sale in the area. When the deal was finally closed, the seller would pay 3% of the house price to seller’s agent and 3% of the house price to the buyer’s agent. Which means the seller makes 6% less money and the house price for the buyer has to appreciate by atleast 6% for them to break even. This process works well people who are new to the area or not technically savvy. But for the educated and tech savvy population of Seattle metro area, this is waste of money.

 

Redfin simplified the process by providing online listing services similar to traditional websites, but also having real estate agents who help you with paper work and close the deal once you have decided which house to buy. The redfin agents don’t spend as much time showing houses as their target customers are expected to have spent time reviewing the information about houses online and building a shortlist of houses that meet their needs. This saving in time/money is passed on the customer in terms of cash back.  

 

Redfin’s website has multiple search filters that help buyer narrow down the options from a vast pool. You can also save the search criterion and redfin will notify you if a new house matching the criterion is listed. You can add a house as a favorite and redfin will send updates to your inbox if anything about the house changes. Redfin also has user friendly phone apps that let you search and monitor houses you like. The entire buying and selling process can be managed online with step by step updates. Redfin has recently introduced 3D walkthrough that provides interactive HD view of the house interiors, so users can make a better shortlist of the homes they would like to see and save time and energy. In addition to having the publicly available data about the house listed on the website, Redfin agents also add their insights when they tour the house giving buys one more perspective.

 

All these features in addition to cost savings, which is significant considering houses are not cheap, gives Redfin a unique competitive advantage. They don’t have any direct competition but traditional lead generating websites like Zillow and traditional real estate agents are it’s two biggest competitors. The target segment for Redfin are young tech savvy people who can use the features of redfin to narrow down the list of houses they want to look at, are comfortable managing the buying/selling process online, do not have time or do not want to spend a lot of time going thru the traditional buying/selling channels and want to save money in the process.

 

I still don’t understand why we end up paying thousands of dollars to real estate agents for a job that is not very complex and in some cases, does not require a lot of time. I believe website like redfin will take over the real estate market in the next few year. So if you looking to buy/sell a house, spend 30 mins on redfin’s website before you sign up to lose 6% of your property’s value!