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Cyntax Blog — Cyntax Labs

Cyntax Who?

If I told someone that I work with Cyntax, and if they found my pitch interesting, instinctively they would Google/Bing/Yahoo us and dig for more information. I did the same to see what the search engines think of us.

More than what search engines thought of us, I was surprised to know that there are atleast SIX more companies businesses called Cyntax. Yes six. Two of them are tax guys (1, 2), two are web design companies (1, 2), one is a website of a poet and thespian. And then there is a CyntaxGroup as well.

I dint know our choice of name would be this popular. Do you know any more Cyntaxes?

And next up is a post with their logos. BTW we are still looking for a logo for OUR cyntax. Any help?

10 years later

It took us 10 years. To finally put those cogs together. And give that final nudge to our giant-wheel.

We first thought about Cyntax sometime in 1999/2000. We have been thinking on it off and on. At play, home and work. Officially and unofficially. Frivolously  and seriously. Today, we are on.

We are working on the identity, website and service offerings right now. Keep watching this space for more. Subscribing to our blog feed would be a good idea.

And as always, appreciate all the help. Drop a line here and lets talk :)

Value Add - Price Premium

While creating a philosophy for Cyntax, I have been thinking what kind of businesses can command a price premium. I think the businesses in the value chain that add “unique” value to the end product are the ones where you can ask for money. This is probably as old and as commonsensical as Michael Porter’s work on value chains, but realizing it myself, was an achievement.

Let me take an example. The tee shirts business. Three most important components are the supplier, the designer and the retailer. The supplier can not ask for a premium. Simply because he is manufacturing a commodity. There are bound to be many suppliers with similar or near similar offerings and only thing that all suppliers can compete on is the price. A retailer, might command premium if he is a large player and has a ready set of customers. Someone like, say Big Bazaar. But over a period of time, with Internet eliminating all kinds of middle men, a marketer would no longer need a retailer to sell his products. Cases in point being zappos (ok, zappos is a retailer), threadless and cafepress.
On the other hand, if you are someone like Tantra or People Tree or Play Clan, you add value to a basic white tee shirt. You add a unique design and print that design. You dont sell just a tee shirt. You sell this design that no one else can do. And you thus ask for a premium. To compete with a Tantra, I wont need the supplier, I wont need the retailer but I would need a designer. Obviously I am assuming that I would be able to squeeze the suppliers and command terms to the retailers and create a fantastic online community (and a shop).
Tee shirt business is ok. What about travel business? Who will command a premium?

Travel chain has two components - service providers (airlines, railways) and agents (Traditional, OTA). Off the two, agents can only sell the inventory that service providers make available. And its a simple business where you add zilch value (online agents add value in the sense that they make available the inventory real time) and hence they cant command a premium. Moment an agent asks for a premium, the user would move on to the next agent. You compete on mindshare and again, cost!

What about HR consultancies? Petrol pumps? FMCG companies? Who do you think commands a premium? What to you guys think?

[update: 21 May 2009] Today in my reading list I saw two posts, from two very different people, talking about roughly the same idea. I reposted this on Saurabh Garg blog.

  • One is from Scott Goodson, StrawberryFrog. The post is here. He says “In the future, suppliers will be valued less and less and squeezed more and more. It is idea generators who will be most valued – because “ideaspeople” create the greatest value, across every industry sector, not just our own.
  • Other is from KK, editor at Dare. The post is here. BTW his blog needs to be made more readable. Bad formatting et al.

Both these posts bring me back to that philosophical discussion on value add and price premium a business can command. Will update this as and when I can think of more.

The blinding glimpse of the bleeding obvious

IDEO is one of those companies that have inspired us over a period of years.

This talk from IDEOer Paul Bennett at TED (in 2005) is really interesting and inspires you to think … of the obvious. He uses the phrase “the blinding glimpse of the bleeding obvious” and it strikes a chord. Please see talk for inspiration on how IDEO looks at design.

BTW, he also mentions that we need to “pick battles big enough to matter, small enough to win”. Now this is what I call a lesson.

Pricing and Demand

Lets say I am selling shoes. These shoes are not meant for the entire world, but for a select few. Lets say shoes for computer gamers. Something that all gamers would want for sure.

Once I have a product to sell, I have a few options of creating a pseudo demand (and inflate prices). Let me call them models.

Model 1
I create 500 pairs and sell each at say Rs. 100. Like a typical sales process happen.

Model 2
I create 500 pairs. Sell them in lots of 50 at Rs. 50 each. Once each lot gets over, I jack up the price by Rs. 25. I create that “rush” where everyone would want to buy the shoe when its still 50. If lot 1, gets over, everyone knows that if they dint buy it for 75 (and miss this lot), the price would go up at 100. So on and so forth. Also, since these shoes are limited in number, by raising the “price”, I raise the “value” of the shoes that have been earlier purchased. I theoretically sell faster and make more money.

Model 3
Reverse of Model 2. Lets say I want at least Rs. 100 per pair. I create lots. I sell the first lot for Rs. 200. Every incremental lot, I reduce the price. I think this is the worst of all. This is infact the winners curse. The price for other users falls as a result of actions of the winners. But there is something interesting. Moment I slash the prices from Rs. 200 to Rs. 100, I think a lot of people would compare the two prices and use models like contrast and grounding to buy in herds.

Is there a merit in thinking about pricing and economics before you create a business? Which of the three is advisable in the long run if your product is not a commodity? Is there a fourth, fifth, sixth .. way to think about pricing and generate demand.

Thoughts?

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