LordsOfOdds is a startup based on the concept of prediction markets. It enables users to “bet” on the outcome of Indian events in sports, politics or entertainment. But betting is just a small part of it; the prediction market concept has a far greater potential as a source of information. Did you know that Rahul Gandhi has a 44% chance of becoming the congress prime mininsterial candidate?

What is a prediction market

A prediction market is like a stock market, except that instead of buying or selling stocks in a company, you are buying or selling “stocks” in a prediction. The prediction can be something like “India will win more than 3 gold medals at the 2008 Olympics”. At the end of the 2008 Olympics, if India actually wins 3 or more medals, each stock will pay out a dividend of 100 units. Otherwise, you get 0 units. After this point, this particular stock ceases to exist.

However, before the 2008 Olympics, nobody knows for sure whether India will win 3 medals or not. Hence, it is not clear whether the price of the stock will be 100 units or 0 units. Somebody who thinks that the probability of the prediction coming true is about 30%, should be willing to pay about 30 units for each stock. Someone else who thinks that the probability is 60% should be willing to pay 60 units for each stock. And the guy who bought at 30 units should be happy to sell it to the guy who is willing to pay 60.

As new information becomes available, the price goes up or down. If Anju Bobby George gets injured, the probability of winning 3 medals goes down and the stock will fall. If KPS Gill is removed as IHF chief, the stock will probably go up.

LordsOfOdds has a really nice, detailed example if you want to understand it better.

Why bother?

At the very least, the game can be a lot of fun once you get hooked.

But there is more. Prediction markets are actually useful to get an idea of what the crowd thinks of the probability of success of any prediction. (The current stock price of the prediction directly gives the predicted success percentage.) Combine this with research that says that the average wisdom of the crowds is as good as that of highly-paid experts, and you can suddenly see how a prediction market is a great tool for getting “expert opinion” on any topic.

This has been found to be rather useful in the context of large corporations. Anybody who has worked in one, can attest to the fact that communication and information flow are rather pathetic and nobody really has an idea of what is going on. Enter prediction markets. They actually become sneaky way of getting information out of the employees while they think they are playing a fun game.

HP started using prediction markets internally in sales forecasting. Now they use prediction markets in several business units. Intel uses them in relation to manufacturing capacity. Google uses them to forecast product launch dates, new office openings, and many other things of strategic importance to Google. Microsoft uses it to predict number of bugs in a software package. GE uses it to generate new product ideas from employees. (Sources: wikipedia, and LordsOfOdds)

LordsOfOdds – What’s there now

Currently, LordsOfOdds is being pitched more as an online betting site. You pick favorites in sports events (“Sachin Tendulkar will be man of the match for the first India-South Africa Test” is trading at 23.5), or entertainment (“The movie Race will be a hit” is trading at 34.4), or politics (“Rahul Gandhi to be Congress Prime Ministerial candidate” is trading at 44).

And since betting is illegal in India, the site operates using a virtual currency (“Loots”). And the only thing players get out of the exercise is bragging rights. But stay tuned, because they are building a prize inventory.

LordsOfOdds – The future

I am hoping to get answers from the founders on the following questions:

• In the future, are you planning on using the predictions that your market produces in some way?
• What is your monetization strategy?

The answers to these should be interesting.

LordsOfOdds – The founders

Rajesh Kallidumbil who was working in London, and Siddhartha Saha who was in Hyderabad debated the idea for over a month on Google Talk and then decided to start it up in Pune. Hariharan K who has a tremendous passion for Sports, decided that his job as an Investment Banking analyst wasn’t half as interesting as LordsOfOdds and joined the team.

Read the company blog if you want to follow their progress. LordsOfOdds has also been covered by StartupDunia.

You must be the change you wish to see in the world

— Mahatma Gandhi

Pune based brothers Abhay and Vijay Badhe appear to have taken this quote to heart. They got tired of the long delays in restaurants in getting tables, food and even the bills. So, instead of just whining about it, they went and built a business that sells solutions to restaurants that fixes the problem. Two years ago, they formed Wings iNet, with the intention of of providing “complete end-to-end solutions to hotel and restaurant industry through its innovative approach and use of the latest cutting edge technology”. Its first product is CaptainPad a wireless system that uses handheld devices for automating restaurant ordering systems.

In Pune restaurants like Rajwada, Green Park, who are now users of CaptainPad, gone are the days where waiter/captain takes order on a paper pad, physically takes it to billing counter and a kitchen. Now the captain carries a smart wireless touch pad device. The whole menu card is loaded in the CaptainPad device. Captain can now send the order from his device wirelessly to the kitchen and billing station. KOT (Kitchen Order Ticket) and billing information will generate instantaneously. Captain need not go to anywhere.

Cooks see a printout of the order immediately after the order is taken. No delay. Also, the system automatically routes the appropriate orders to the appropriate cooks. Waiters also have devices which tell them which dishes to take where. When the customer wants the bill, the captain just clicks an icon on his screen and the bill is printed.

Sounds great in theory, but does it work in practice? I went to Green Park this weekend and to me it seemed that the processing was indeed faster. (But this could simply be a case of confirmation bias.) In any case, the owners/managers of the restaurant seem to be happy with the system. Processing is faster, customers are happier, and for those owners who have a GPRS cellphone, the complete information about the restaurant operations would be available on his mobile device, irrespective of the location. Restaurants are reporting that after the installation of the CaptainPad, the table recurrence ratio has also gone up – i.e. they serve more customers per table per day than earlier.

But what about the actual grunts who have to deal with the system – the captains and the waiters? I tried enticing one of them to complain about the system – to see if there were problems, and whether he preferred the older way of doing things. No dice. He was quite happy with the system.

For a large restaurant, this system appears to be a good investment at Rs 2.5 lakh to Rs 6 lakh depending on the number of captains which the restaurant has. No wonder Wings iNet is hoping to have a 100 customers by the end of the year.