Twitter / Balaji Sowmyanarayan

Tuesday, September 19, 2006

Intent Gratification; Pay attention to your Attention

Idea: Intent as Commodity
Execution: ROOTS Exchange
Profit!: A whole new evolution awaits!

This week something game changing and interesting happened and as expected went unnoticed! I'm talking about Chicago Board of Trade's small investment of $1 million in ROOT exchange a marketplace for 'Internet generated consumer leads'.

What is (Chicago)Commodities Market?

When people need things and they go buy it in the neighbourhood shop. And where did the shop buy it from? A: The shop got it from the distributor who in turn buys form the manufacturers who in turn buys form a series of vendors; Creating a chain of supply and demand in the process. A commodity market injects liquidity( read money; equals gratification) into this chain so that the players in the chain need not wait forever to be gratified. More the scope( geographic, political boundary) of the market, more sophisticated and complicated the market becomes. Chicago Board of Trade is one of the most sophisticated and highly influential commodity market breathing the pulse of the global economy. The world oil prices and prices of key supplies are determined by the sentiments of the Chicago Exchange traders. Thus prices of things in your neighbourhood shop is tightly coupled to action in the Chicago Exchange trading floor. Chicago Board of Trade, founded in 1848 predates the American Civil War and a pioneer in 'Futures' contract(In simple terms it is glorified, regulated, information based speculation bordering scientific gambling.) Such an entity is investing in ROOTS markets( not just money, more importantly CB T's CEO Bernard W. Dan is joining the board of ROOTS, spearheaded by Seth Goldstien. Which brings up the question: What is ROOTS? and Why should I bother?

Intent as Commodity

The most innovative aspect of ROOTS is they are trying to make 'Intent' a commodity. Without going into the merits of it or morality of it, the idea is refreshing and daring. How they are approaching it is interesting and seems very viable.

With our the increased dependence on the Internet, we validate, amplify and gratify our intent online. Several online services facilitate, intermediate our trips through the intent origination to intent gratification process. ROOTS approach is to simply capture the intent gratification 'history' or Karma. Then it is a question of standardization to make it into a commodity. Once characterized as commodity, it can be integrated with the financial(or whatever) markets.

The first Intent commodity is going to be 'online mortgage leads' which is simply brilliant considering the almost zero resistance in the path.
By combining the direct response capabilities of the Internet with the transparency and integrity of a commodities exchange, ROOT Exchange has transformed the lead generation marketplace. Buyers can now create quality filters and receive real-time quotes while Sellers can set ask prices and increase their sales pool instantly.

But why should I care?

Just like currency system facilitated easy exchange of things( that inspired a planet full of awesome man made things) the new Intent currency will create unimaginable ways to interact with each other with our Intents.

It is said that Water is the cohesion that binds this universe. Money, being a reflection of liquid(ity), indeed is a binder that holds 'The Market'. ROOTS intent to increase liquidity of Intent, is more like adding life on to the Water: A whole evolution is hatching!

Parkade Ventures; mashup of Retail, Realestate, Autoclub

Idea: Recently multi-level computerized parking spaces got Infrastructure status. This makes investing in parkades attractive as it is an intersection intersection of organized retail, real estate, and access to automobile owning yuppy populace.

Traditionally Gold and Real-estate were the only investment avenues available for rich to grow their wealth easily. All other avenues required spending some time or effort and needed a lot of smarts and street savvy. Now there is a retail boom in-turn pushing up commercial realestate prices. And the automobile population is increasing exploding day by day. Urban parking facilities is increasingly a concern. Adding an interesting twist to the situation, recently, multi-level parkades became tax shelters due to their status as Infrastructure. Put everything together, then investing in creating a national retail chain of multi-level computurized parkade is an attractive proposition.

Execution: Buy land in by-lanes of congested business and shopping districts of congested urban areas. They will appreciate given the urbanization trend. Constructing multi-level parking facility is simple considering that it hardly needs major interior decoration like a retail space. There is no AC to be installed. And the power requirements are minimal. Thus the 'depreciating asset' capital expenses is attractive.

The running expenses and manpower requirements are even more attractive.

Computerization and customer management is the most interesting aspect of the investment. And the scale lends itself very well to create national retail chain. Here some smarts needs to be applied. This is what will differentiate the boys from the men.

With parking charges by the hour cash flow will be attractive. Smart way to bill the customer: half yearly or annual billing with 'subsidy/underwriting' by retail brands and credit card operators etc.

Profit: Retail space is set for consolidation and M&A action 3-5 years from now on. There is a lot of venture money being pumped in to India. This kind of safe ventures are good ways to create good return on exit. And venture funds investing in such ventures will also support a small innovation( GPS/GIS map, travel integration, etc) ecosystem around it. With so much talk about venture money chasing deals stable investments like these will make venture ecosystem sustainable. This will be the McDonalds of emerging India.