The most successful Pakistani Startup since 1950 & the Story of Pakistan’s Largest Stealth Venture Fund

Hook line and sinker, you will have to wait to get past a few lines for me to reveal the biggest VC that is operating in plain sight. Actually, it’s a very phenomenally setup corporate structure, that I’ve written at length about in the past, using a different angle.  But its time to revisit it as it continues to accelerate economic growth and directly employees over 30k People, it should be an example for aspirational types to emulate.

Let me first list the verticals this VC Fund  is operating in, by way of Independent Private Limited or Listed /Unlisted companies where it is either a 100% shareholder or a large shareholder.

  1. General Insurance Co
  2. Life Assurance Co
  3. Lubricants and Distribution Co
  4. Investments Co
  5. Securities Co
  6. Aviation Services Co
  7. Weapons Ammunition, Defense Services Co
  8. Security Services for Corporations Co
  9. Development & Holding corp for Estate Co
  10. Diversified Real Estate Projects Co
  11. Projects (Woolen & Shoes) Co
  12. Farms and Seeds Co
  13. Sugar Mills Co
  14. Full Service Restaurant Co
  15. Fuels Co (Aviation and Jet)
  16. Fertilizer Company 1
  17. Fertilizer Company 2
  18. Mineral Extraction Mill*(Foreign Investment in Morocco 250M$ in 2008)
  19. Cement Company 1
  20. Cement Company 2
  21. Petroleum Company
  22. Power Company 1
  23. Power Company 2
  24. Wind Energy – I
  25. Wind Energy – II
  26. Energy Limited Co
  27. Power Company Limited Co
  28. Oil Terminal And Distribution Company
  29. Marine Terminal
  30. Transfer Terminal Co
  31. Securities Co(#2)
  32. Bank in Pakistan
  33. Foods Distribution Packaging and Manufacturing Co.
  34. Fresh n Frozen Vegetables Co
  35. Meat Packaging and Farming
Co
  36. Pasta Manufacturing
Co
  37. Gas and Services Co
  38. Sugarcane Experimental & Seed Multiplication Farm Co
  39. Overseas employment Corporation

Further in in 1977 the Principals of this VC decided to set up an other trust for an affiliate of theirs which now includes:

  1. Airport Services Co
  2. Knitwear Unit
  3. Building Complex, Karachi
  4. Building Complex, Lahore
  5. Medical Services 1
  6. Medical Services 2
  7. Advertising Company
  8. Education School System
  9. Aviation College
  10. Aviation Academy
  11. Scheme, Peshawar
  12. Air Charter Company
  13. Mall Business & REIT
  14. Insurance Corp
  15. Wind Power Co
  16. Bonded Warehouses Co For Defense Clearing

This is right out of a fairy tale, in a country marred with lack of access to capital how did one group so successfully enter every single vertical there is. Interestingly enough their website lists further ambitions of upcoming projects also.

  1. Medical Service– A PPP to create affordable health care & Repatriate funds into hold co
  2. Private Airline – Commercial
  3. Hydro Power

Its just amazing to see how much innovation and access to capital deployment and operational efficiency exists for this group to be successful over everyone else in this country. Arguably they are one of the largest Independently controlled groups, whose financial data across their operating companies is actually not public, besides their listed companies and that, which they choose to publicly disclose. With what’s in the public domain they have 4.2Bn$ In Assets and 1.3bn$ Net worth as of 2017. Turnover is $1.6bn in 2017. Net profit was 307M$ in 2017. That’s a very good run rate. Again this does not include the 40 or so companies just the ones that are reported.

This has been such a progressive group of individuals and former CEOs worthy of being on Bloomberg and teach courses at Harvard because it didn’t stop there.  They also got into doing public good, and by the mid 1950s also got into co-operative housing societies. Which ballooned to being the top real estate destination in the country. They have these housing projects in

  1. Karachi
  2. Peshawar
  3. Lahore
  4. Islamabad-Rawalpindi
  5. Bahawalpur
  6. Gujranwala
  7. Multan
  8. Nawabshah

Arguably their best project in Karachi is now known as Millionaires row owing to the fact that 500Yds home is a Million USD$.

We will get in to the real estate commercial side of the business in another post time permitting but right now its just amazing to see the scale and growth of this amazing Venture fund and its associated entities.

There is one catch, they only provide jobs typically to a “certain” type of Pakistani. They were formed on the basis of doing and providing welfare. In 2017 Their publicly reported welfare spend was 102M$.

In a country where the youth are under employed, un educated and under educated, where most people can’t get a first job, this VC has made a business out of providing jobs to a select few post retirement. So economically speaking it ensures that over 200k New jobs are not created but re-circulated annually ; Another way to look at it my tax Rupees fund this VC that decides to then get into protected businesses like its real estate or defense businesses via a complex web of Trusts, Welfare Foundations and Specialized Bills passed in Parliament where its financial data, and other items are not open for public review. This has to be one of the most brilliant businesses to get into in the world. Why talk about global trade wars and protectionism we are going through a similar situation domestically.

This is an example of monopolistic competition that is operating almost un regulated. Its an age old thing, this VC used Public Money to setup mega corporations, structures and trusts that actually discriminate against the average Pakistani youth.

So here’s a cleaner view

1)Employed person pays taxes at source

2) Their taxes are taken by the Govt

3) The largest chunk of the Govts Tax allocation is given to 1 Entity(Lets call it FundingCo)

4) This entity(Funding Co) is a Public Good State entity, so It needs to be funded no less it provides security and is critical to the countries existence at large.

5) This entity has setup at an-arms length setup with its retirees at the helm and created an SPV(Special Purpose Vehicle) which acts as a Venture Capital Fund.(VC)

6) In this case the SPV was a trust, then it made other investments thru the SPV in to foundations that deployed the capital provided by this public goods entity to get in to 20+ Sectors with over 40+ Companies

7) The original remit of setting up the trust was to re-invest in the community of the (FundingCo) company that provides security but whilst that’s happening the SPV has turned to a Mega VC, the Mega VC controls every major industry, business, vertical and impacts every facet of every average Pakistanis life.

8) Yet the average Pakistani cannot get a job with the VC in top Positions as they are only for retirees of the Funding Co or with connections or lineage to them. Its an open secret.

9) The Irony is, all this is funded by TAX rupees giving for security of the nation, not to setup entities that rely on our National resources and other items and create significant employment at the top for 1 class of people and at the bottom for another class.

10) The fear of retribution is so real that this entire article uses no names or individually identifying data for those who have in the past have been F**ked over immensely.

So a startup that got funded in in 1950 with My parents tax money has no place for me to ever have a seat at the table. This is true for every middle class Pakistani, that for all their qualifications and tax contributions over the years can never be at the helm of affairs of this VC which evolved from being a startup it self.  The story no less is phenomenal as is the growth the corporate resilience.

Interesting enough the data since 1950 is not public. No one knows the real numbers, every thing is conjecture and speculation at the size of the real depth of the ventures and their profitability. What’s missing is tech, that’s the whole purpose of this article, the “rent seeking” nature of the past can be turned on its head if the folks who control this VC decided to get into tech. Now that they have had a solid run since 1950 and gotten into industrial items here are some quick and dirty suggestions for the next 50 years of making money from tax payer rupees but returning something back to the masses.

Suggestion 1

Co Working Space(s) across 8 Cities with a universal access passes (all the cities where they have housing developments) for one flat fee or daily, weekly, monthly charges. Much like We-Work model, but these guys also own Communal Clubs in multiple cities that have “dead air” time during the morning in the lounges and club facilities. Having people, a secure place to work with Wi-Fi access, subsidized food, printing and other services. This ideal alone is a home run and could result in a multi-million-dollar revenue source, whilst solving a key issue for the youth and startups of this country to have affordable places to work from and do meetings at.

Suggestion 2

Amenity Plots for Tech Companies, Just like they provide plots for schools and hospitals etc, there should be a new program in tier 2 cities to allow these plots for opening export oriented tech businesses. Perhaps they can get a rev share if the land and cost of construction is paid for, sort of like Land/Office for equity.

Suggestion 3

 VC & PE Fund , given the startup heritage, they need to diversify to tech investments in media, news, healthcare, content development and other growth focused internet industries. The time is now, with available capital and more than favorable capital market rules or the lack their off provide the edge that is needed to totally dominate this space.

Suggestion 4

 NII- National Information Infrastructure, now listen and read closely to this one, this is not as easy as it sounds but perhaps the most profitable one out there. I am shocked that no one has decided to get into this space. So think NADRA, but think Payments + Easy Paisa + CSD/Utility Stores all rolled up into a complete vertically and horizontally integrated supply chain and e-commerce play with full payments in tow. Given you have your own bank, you have your own stores, your own production facilities and you have folks retiring all the time, you can build your own worlds first fully integrated NII that provides economic benefit plus employs 100s of Thousands in the logistics space across the nation because you have presence everywhere. This will create new employment plus re employment at mass scale. How will this run, well obviously I didn’t forget that you also have your telecommunications infrastructure across the country, imagine if you could integrate everything. This could truly be Pakistan’s first unicorn. So time to get out of making corn flakes and move up the value chain. (This solves the dirty politician problem also , when you control the money rails no one can send or hide or transfer money without the guy(s) /gal(s) controlling the NII. Food for thought. This is public good at scale.

Suggestion X

For now we will leave it at that. Given how the current situation in the country has the principals of the FundingCo busy with their day job we will take a more detailed look at the diversification angles possible and the potential Nominal GDP Impact if this VC turned its sights on to Tech at large.

 

“Life, Liberty, and the Pursuit of Happiness… but only when you pay your taxes? That means your freedom is rented, leased, & not unalienable.” 
― Steve Maraboli

 

 

 

 

Cashless dreams : Time for Action & Regulation . A Primer for the CEO of Banks that Own 1LINK

A lot of talk has been on going and various claims have been made that Cashless/Mobile payments will lift the economy into its renaissance and document a lot of things that are in the grey today. All great banter, but concrete steps seem to be missing as to how the various 100 day actions or larger actions will be accomplished without focusing on the crux of the issue.

Even a betting man bets on multiple horses to diversify their odds but it seems we as a nation are focused that the Finance Minister some how; with so much other pressing items in tow, will over night wave a magic wand and things will self regulate. Had that been true, we would have had better sense prevail much sooner in the governments of the yesteryears.

Clearly we have the Central Bank, we have the Securities and Exchange Commission and we have some other players that if better sense prevails would enable by the flick of a switch(or in this case by sensible regulation or de-regulation) enable giants at our door step get into action.

On the one hand we have the likes of ANT who have already established their market lead/foresight by acquiring a Bank to get into the mobile/cashless payments race. Clearly they are giants in the space. But with all things regulatory and fit and proper tests and what not have you the time it takes from the day of the announcement to when the transaction closes, its just an engaged waltz between the investors and the investees, whilst the celebrity status seeking CEO of the carrier has spared no social media play; in the book to some how take credit for the transaction or make bold claims of when the AliPay services come to town.

It would be misguided to take these claims to be 100% on the money, most importantly because the Bank is not run by the carrier or like the carrier. The carrier commodity business, is fairly mundane and even the established folks are looking to come out on top by angling for the future. Nothing is wrong with that, they can have  Pictures with Jack Ma circulate in local and foreign media, it only helps the image of a nation struggling so hard, but clearly to those in the know or those who can see beyond the optics that the Telco doesn’t drive the destiny  of the Bank per say and the counterparts in China whilst they own the smaller 45% have this business down to a science and the real action will come from the Bank and their Chinese brethren. Every thing else is just noise.

I share the above not because I care about the optics or who is doing what, but because of the opportunity it presents. There is no way the Telco gent is over committing, he’s probably put in a buffer of sorts end of 2018 is fairly vague. Today in mid September all it takes for some one else to do this or get some interesting FDI going beyond people buying a Bank, takes very straight forward regulation that allows all the existing banks or at least the 11 or so Banks that own 1Link to be a stakeholder in the race to Cashless.

Change is coming, change is here, ANT did the industry a solid favor by going down the banking route, it made others(Banks and Telcos) uncomfortable and out priced most of the domestic competition, maybe along the way they or others buy one of the local wallet plays just for shits and giggles, but given their war chest, they could admittedly spend 2m$ and build 8X the user base in ½ the time its taken every one else. Its pure customer acquisition Math.

So here’s what worked across the border. Universal payment gateway/interconnect/interface. Its not rocket science. It exists today, it could be the rails that every one needs and wants, but no one is willing to get behind. Cant believe why with all the economists and banking evangelists and others advising the government, no one has put pen to paper on this yet.

The Banks are big and boring, they collect 10 Rs to X rupees per IBFT transaction and others, 1Link is the god send they all have that made them “Online” Meaning the shit that you don’t have to go to your own branch to bank any more. + You can transfer money via atm/web to other accounts. This gives bank additional “channel revenue” they don’t have to work hard for or perhaps never really worked for. No one wants to change a sure thing. True for the retail channel minons at the banks as well. Change has to come from the top.

But instead of every one building their own products and failing fairly miserably, to the Banks with an interest in 1LINK the best thing to do, is to call a Board meeting, invite both the regulators, the Central Bank and the SECP sit across the table and agree on a frame work to do inter bank transaction across the banks initiated by either party(Meaning Interoperable across the network). Further more have the Central Bank pass regulation to make sure this interconnect available ASAP and give 1LINK and its CEO the mandate to publish an OPEN API for any one to enable financial transactions following stringent fiduciary guidelines and KYC measures. Which BTW are fairly robust for any on with a SIM Card. SECP to make sure every one else plays ball and enabling a corporate structure that allows 1LINK to make good on said ambitions.

The Banks may loose money in the immediate short term, but as owners in the only service provider in the country that provides the rails for all future financial transactions, they would have taken the bull by the horns and made good on many fronts. 1ST would be to launch a service before the end of the year, second, sit back relax and let all the global players come in (if they don’t have the ambition to cash in on this them selves), like they did in India to use UPI and make a pretty penny when the value of 1Link grows leaps and bounds.

But first hire the requisite talent and take ownership of 1LINK across the Banks to really make it a world class institution. DO not please go out and hired a 60 some thing Banker past his prime to head 1LINK, or a box pusher or typically available talent in Pakistan, just because you are comfortable as the BANK to hire such talent even in your own roles. Do the country a service and not a dis-service, hire a professional global head hunter to recruit the talent to build these rails. There is no shame in being out of your comfort zone and asking for help.

You really want to do some thing transformative? take ownership of 1LINK buy out the other Banks if they don’t see the vision. Imagine listing the company down the road(yes further regulatory approvals will be required). Imagine the likes of Google and Whatsapp payments deciding to use these rails, you would provide the channel to them to compete against AliPay, or even allowing AliPay to strengthen its position by riding on top of these Rails. All situations point to a happy ending, only if the CEO and Boards of the banks try to understand what this means beyond building digital studios and doing asset backed loans. Where’s the fun in that?

There aren’t many sure bets in the world, this clearly looks like one. This opens the space for all the small tech/fintech startups and e-commerce companies that are forced to do COD, or those businesses that need, identity or trust issues to be managed, with 1LINK coming on side the way described above, it could be further integrated with Nadra to provide those Identity solutions as the SIM is verified today, Imagine the business applications that would be made possible if every one played ball.

The OTT services and their possibilities are endless, the Banks and their large institutional and family based shareholders must take their management teams to task and ask why no one has proposed this in any board meeting thus far? When was the last time, the Bank as a shareholder in 1LINK devised a strategy or met with the other owners to figure out whats next or have the CEO of 1LINK provide a strategic document around its API play.

Why does it take a 3rd person with admittedly very little background in Banking or Payments drag every one to discussing the possibilities?

The Banks today have this gift in the form of 1LINK, there are plenty of other quick start methods that people will bring to play and 1LINK will be made as irrelevant as it is today, if other interconnect or multi party rails come and they sure will, its just a matter of time and market need.

If the Banks don’t play ball the Central Bank should pass regulation to make the inter operably mandatory, and either Privatize 1LINK or give it to an independent Vendor or 3rd party Operator to run and manage with a clear Mandate or a new non-banking consortium that is able to buy out the shares at todays fair market value so as to not do a dis service to the population of the country, which is not even remotely touched by the foot print of all the banks combined.

The solution, what ever it may be and I am sure more financially sophisticated ones exist should be considered as long as they allow the country to unlock the value from this gift that we have and allow the startups and the youth of this country to benefit from having a level playing field where they can build out their companies and solutions and services to their hearts desire, whilst being able to exchange and transact in real time.

Here’s to hoping the Banks get their act together and appoint amongst them some one sensible enough to take the charge and similarly for the regulator to sense this opportunity and make it ever so easy for international or domestic parties to ride the rails to better financial inclusion and more transparency and larger taxation when every thing rides through documented sources of money transfer.

Last but not least, if an international player comes to bare, remember that the undocumented IT-Free lancers to the tune of XBn$ who use all kinds of un official tricks to bring in money back to Pakistan could use this and all of a sudden you’d have XBn$ of inward collections, only helping every one involved in the process being happier, richer and safer whilst appreciating our Bankers fondly.

 

“Remember when nurses, carers, teachers and students crashed the stock market, wiped out banks, took billions in bonuses and paid no tax? No, me neither.” 

― Fuad Alakbarov

 

Going from A to C(ontent). The next battle for captive eyeballs will not be fought by the Media Companies but by Ride Hailing Cos.

Think of it as the Uberization of mmmm Content. (Sorry Careem, you still need to build Careem Food Delivery and some other things to play catchup or out Uber, Uber in some other regional/clever ways.(Payments??)

The average media company will not be able to compete with Uber or Careem given the war chest of funding these 2 have. This story gets more interesting and exciting in the region(GCC/ASIA) where the 24/7 Breaking/Live culture and an average 50% population being under 25 yrs old, there is a huge potential to build a content ecosystem within the apps and beyond, with a special emphasis on “ride time enabled” content. Meaning make the most of your ride time and focus on the user.

Google, FB, Go-jek and Grab in their ways are figuring out plays outside of Pakistan and GCC in this space, as is Uber. But what about Careem?  There is no news on any partner API or ecosystem opening up just yet for content. If we look at whats happening around us, aside from related partner services, Grab is also bringing news, games and other content to its app, which got a getting a design facelift to reflect the change. In the past, Grab’s app had opened to a ride-booking screen, but now it will load a list of services and content to reflect a more diverse set of options. There’s actually nothing new there. That approach is very much similar to Go-Jek, the  Indonesian rival to Grab and is expanding across Southeast Asia and first pioneered the concept of on-demand services in Southeast Asia. Meaning Grabs ME2 approach is fairly visible. The Grab refresh also takes cues from China’s Meituan, a super app company that invested in Go-Jek and is going public in Hong Kong, and blockbuster Chinese apps WeChat from Tencent and Alipay.

Woaa. Back up one second. We already have Ali Pay coming to town with Wechat and the likes not too far away our market + the greater Middle East(Careems home turf) is in for fun times for the consumer. So its an amazing time for content service provers also, not to be mistaken for the Click-bait variety but folks who have a handle on contextually aware services and geo fenced offerings.

All this will only happen when the likes of Careem have open APIs for the content providers to work and suggest how to partake and build service offerings. The availability of “said” Api will also help any one else to offer a Careem booking from within their APP or service for Example. Careems too busy (hopefully not) with the engineered news of Uber buying them and their folks being involved in their own fund raising and keeping up with valuation fever that It seems like the agility is dying down.

Dont get me wrong, on its primary service, Careems value proposition in Pakistan has been so compelling to me that It forced me to downsize car ownership. For my travels in the region, its the goto APP as well. But beyond that there is nothing compelling to grow the user base, engage with it, provide additional services and or use the “network effect” for content or any other type of delivery. (Albeit all these services will have to be opt-in enabled)

So heres a very simplistic view, as opposed to buying other peoples content. Careem can basically build or buy a media company to focus on this demographic or buy multiple ones to get into the Media content production business. You ask why, because their target demographic is fairly clean. Unlike a traditional media company they have the ability to cater to their audience mix because they know in real time who they are.

Out of the 14 countries it is in, Its primary market is Arabic speaking + English and Secondary Market is Urdu + English. They do not have localized language items(topic for an other day) not to forget an other goldmine that they are sitting on which is the Women demographic.

Supposedly just in Pakistan 30% of their rides are to women. The largest growth segment in the Middle East and Pakistan is CPG, thus the CPG Women Audience is what the likes of Google and FB have been un-able to crack in our part of the world due to sketchy data. This brings captive users to that ecosystem. What better than your own content delivery network to monetize this? Especially if there is an IPO coming soon. Millenial audience based Media/content plays could be had for 10-50-100M$ and  for sure add more revenue than the supposed 175M$ revenue Careem is grappling with in this primary service line. Its burning more cash and the content space can prove to be a true monetization channel coupled with an ad-network + partner content & service delivery. Uber may be out of SouthEast Asia but there is no end in sight in the Middle East or Pakistan for them. Their success may be limited but their check books aren’t. Over time if they come out with more services that engage the users more, its only a matter of time they will outspend every one else.

You may say Careem already has fashion/retail ambitions via Dukkan Careem or the acquisition of Round Menu being indicative of launching a food delivery service. Both are a bit late and without Careem Pay launched really dont complete the ecosystem. The content play can happen in parallel or even before.

Uber already experimented with Info Cards and Hyper local info and timed podcasts per ride, but it can go much farther and deeper. Media companies will suffer in the region at the hands of the super apps coming from our Chinese friends, already traffic to media sites/content is down to all time record lows and the advertising giants will have a tougher time down the road trying to monetize that content. But our Chinese friends are winning that race. Careem and others have an edge, they know demographic and geographic location and if they viewed their app/or future super app as an audience engagement tool they could arguably in the short term add more value per ride to the users and advertisers both, whilst bolstering their profits. Maybe its not profitability they are after and all they care about is market share. What better way to use the same network to build larger market share? Its like monetizing your captive user base multiple times a day, even when they aren’t taking a ride. Talk about down time monetization(DTM). No one has tried to crack that nut yet. Careem could.

Go Jek and Grab already have plays in the space, Careem doesn’t have a visible play. No one to the best of what I can gather has a media play or captive content development strategy. The former are in services/payments/and APIs already. Careem needs to also be in the Rails Business , perhaps it already is and will surprise us all.

Some thing I never understood that could help build out an insanely profitable content business has not yet been done by Careem.  Imagine this use case, Careem today is relatively exclusive to the smart phone based user and those who can use the app via english interfaces(mostly) in Pakistan at least. That leaves the other non-smart phone users out.(100m+) Why doesn’t Careem use the likes of Shop owners and Easypaisa guys to book rides from their location for people who show up to a location bearing a sign “Careem Ride Stop” or             “سواری دکان  ” any one can come, wait for the store owner to book a ride on behalf of the patron, if they had an API, send a txt msg to a dumb phone of the user, who could respond back to accept the ride terms, once they did, car showed up, once ride ended their easy paisa account could get charged or they could pay cash.

Seems like some thing fairly logical, the ride booking agent could get 5/10 Rs to book a ride. Imagine the kind of mobility this would add to under developed areas and what range of entrepreneurs this would sprout. Supplemental Income also. Similarly guys with smart phones in densely populated bazars doing real time ride bookings and pickups, outside of schools, universities, hospitals, airports…

With this level of interfacing with offline customers, they could get accurate user demographics(happy to explain the nitty gritty to whom ever is interested) and by working with carriers and having in car devices and zero rated or free internet run video/other content to every user even those without a smart phone. Imagine a Careem powered TV network or news network or content network, entertainment, cooking, food/lifestyle and  a captive daily audiences. Its some thing the Media companies only wish they could do. Monetize eyeballs you already have and open your audience for others to monetize.

Its time to think outside the box to really capitalize on this. Perhaps buying  a media or content play is too ambitious at the moment. Or maybe they have too many things going on like launching payments and food delivery to really evaluate this. But with their South East Asian friends already getting hot and heavy in the space and with the coming of the Chinese to Pakistan, disruption is coming.

Googles already hedging its last mile bet by investing in Go-Jek, I hope Careem is doing some thing similar as it would be a pity if they eventually went bust in the region.

They have done a great service by way of creating direct/indirect employment but there is potential to do a lot more. Democratize access to news/content across the GCC and Pakistan, 2 regions that need it the most. Its also a public service of sorts, imagine as Careem grows and its youth centric audience grows, it would become the largest Media Influencer in the region. Especially if they produced localized video content for incar/hyper local use from reviews to restaurants already in its menu business and then do deliveries and drive sales for its ancillary businesses. Heres to hoping that all these guys stop copying each other and figure out new use cases and build fast and build strong. All this applies to Uber too but since Careem bet on Pakistan wed like to bet on Careem.

 

 

Vote, YY? Bigo is where the Millennials are, not the polling stations any time soon.

I suspect you know what the top 20 free apps are on the Pakistani App Store? Go on, guess. WhatsApp? Uber? Facebook Messenger? All solid guesses – but there is a surprise entrant, at least for me  and  is already wreaking havoc on the charts. Its 20 on the Apple App Store and 9 on the Google Play Store.

According to SimilarWeb, top spots in both stores are claimed by Bigo Live – a live-streaming video app made by a Singaporean team. During the first week of June NASDAQ-listedd YY Inc  announced that it has invested $272 million in the Series D preferred shares of Bigo Inc as its lead investor. For perspective the AntFinancial Telenor deal was circa $180M.

Other investors that participated in the round include YY chairman and acting CEO, David Xueling Li, who invested in Bigo using his personal funds. Dont be mis-led by by Nasdaq etc,  YY is a major Chinese video-based social network with over 300 million users. It features a virtual currency which users earn through activities such as karaoke or creating tutorial videos and which is later converted to real cash.

Launched in 2005 as duowan.com (NASDAQ: YY), it originally targeted gamers, before broadening to include video streaming and chat features for uses such as concerts, fashion and sports. Users exchange “virtual roses” as a form of currency, with top users said to earn as much as $20,000 per month.

What does this have to do with voting or polling stations? Not much today, but heres the surprise kicker, this is what most of the youth of our country and countless pervs/stalkers are busy doing online. It has a few thousand listings under Pakistan meaning thousands of people are running live cams and men and women alike are cashing out using virtual currency. In a country that bans paypal, kids and pervs alike have figured out a way to circumvent the system or build on top of it to use the app but payments off platform to “talk/engage with” others supposedly like minded people.

Youd think its the same as snap but its not. Its impact is so far reaching it is pulling hordes of domestic internet/mobile traffic. Thats how I stumbled upon it looking at whats causing the seismic shift in online traffic and who after “true caller” in Pakistan was taking the lions share of traffic. Lo and behold we have Bigo.

Forget Snapchat, this app is the next big thing with teenagers in Southeast Asia and countries like Malaysia are having serious ethical moral debates around its usage and lack of controls and potential harm that it can bring to the youth if they come across unsavory individuals and the exploitation kids can face if adults are not aware of whats going on. No one is saying or implying that it is being used for explicit stuff. But since its almost growing underground not many people are even aware of what it is.

Users range from teenagers to twenty somethings and the broadcasts mostly feature them going about their lives, just with a camera pointed at them. Conversations go on between users and the broadcaster. The desire to spontaneously share details about your life that drives millennial juggernaut Snapchat – and, consequently, the desire of others to witness that – looks like a key factor to Bigo’s appeal.The content runs  from surprisingly mundane to mildly racy. Unsurprisingly, those accounts get showered with virtual gifts. That is the kicker here. Get paid to share/broadcast your life, your moments, your voice, your actions etc. Not to forget full video if you so please and depending on your fans.

So what do people do with the app why is it so popular?

The Bigo app relies heavily on game-like elements, where the more you participate (following other users, broadcasting, and so on), the more experience points you get. Experience point, kind of oxymoronic, get rewarded for nothing.

You use those to climb levels and that seems to help push your streams to more viewers. According to the app, “the best way to get [experience points] is to send more gifts.”

This is where it gets complicated. Bigo virtual gifts, Some of the virtual items available for purchase. There’s an internal currency represented by “diamonds,” which the user can buy directly through micro transactions.

You can “gift” virtual items to the streamer, from rings to tiaras to sports cars – items you buy with your diamonds. The items you gift are translated into “beans,” which the streamer can stock up. The more popular the streamer, the more beans they tend to collect. You see where this is going and the potential for exploitation. Surprisingly listings from Pakistan that have high beans are supposedly women broadcaster accounts.

The streamer can then cash out those beans for real money. The current bean exchange rate on the app is 210 beans for US$1. To cash out, the bean hoarder must have at least 6,700 beans in their account. That translates to about US$32.

Not a bad payout for mostly sitting around and talking to your phone’s front-facing camera –  Could be I didn’t analyze all the points systems and missed some thing, but clearly this thing is wildly popular and has huge demand and the Chinese have beat every one to the punch.

Imagine when Chinese payment companies come to town and those who are already integrated in terms of payments will increase the transaction potential for every one involved thus raising the stakes further and making this phenomena even more wild.

The Malaysian Communication and Multimedia Commission has been urged to probe into the ”Bigo Live” application and to take action.

Senator Datuk Mustapa Kamal Mohd Yusoff when debating the motion of thanks on the royal address at the Dewan Negara sitting  said the application was deemed  a a threat to the development of young generation, especially schoolchildren.

The kids are busy with this stuff and thus further involved in their own reality than the reality around them to do with politics, elections, votes and or to participate in a joint future given that more than half the population of the country is under 25. If the download rates are any indication and the type of channels and engagement is representative of whats going on, then clearly we are mis-directed if we feel these kids with participate in their own future.

Right now the data points to them wanting to become social media darlings aware from the peering eyes of their FB/Twitter family and friends in a cocoon that is seemingly not mass market yet so they are ok for now being on here.

Like true-caller, that no one suspects on the amount of traffic it draws, this is going down a similar trajectory. (More on TrueCaller in a future post)

Whats actually going on in the app?

The users’ young age lend an inherent creepiness in the core concept. Obviously, no one is forcing all those people to broadcast but the combination of overexposure-happy attitudes and transactional nature of the app makes watching those streams (and the accompanying chat messages) a little uncomfortable.

Google searches of popular streamers from other South Asian countries(given they are most popular on the leader boards), make this seriously worry some as you see forums pop up dedicated to sharing pictures of popular streamers (mostly female) with people who seem to know them or where they live or work in real life.

This has less to do with the app itself and more with how people tend to handle their online presence nowadays, this doesn’t make this any less creepy, Bigo has apparently cracked the nut where its incentivizing people to share en mass.  The app it self is not doing any thing wrong, the same app can be used to run video tutorials.

Whats the potential for businesses?

Given that this a product that has already displaced online traffic away from traditional online publishers and content producers not just in Pakistan but across South Asia, perhaps its a good medium to use for content distribution from print/news/tv to the millennials given thats where they are.

Huge payments play to be had especially if in-country payments are added for real services and not just beans for your face on screen. Further its time for domestic and international businesses to figure out how they will compete with this and many others to come.

The one thing that is positive is that there is still time to get in line and figure out what else is coming to us by way of CPEC and OBOR and if these are the signs of the direction stuff is taking, we must have digital equivalents to engage our youth in some thing productive. For a country that makes every ones Footballs and software, its time for some thing indigenous to come up that is good for all.

Or if some one had the Bigo logo on a ballot paper and a campaign on the app, Id bet they’d stand a decent chance to win. Perhaps we have been solving the wrong problem all along?

The camera makes you forget you’re there. It’s not like you are hiding but you forget, you are just looking so much. Annie Leibovitz

(Ali) Ba Ba Black Sheep and the game of market/mind share

Our friends from across the border are carefully rolling out a well thought out strategy for growth in Pakistan. Whilst they have access to human capital at scale in China, yet as they come across the border some surprises await.

No one buys into e-commerce plays and banking(payments) for letting it run on welfare. Clearly looking at the acquisition costs in Pakistan vs other developing economies they have acquired assets pennies on the dollar. Before you point out that they paid millions, let me assure you their game plan calls for turning it in to billions. Look at how many X returns their valuations have gotten them with Paytm etc.

The reason why they acquired and continue to acquire and should, is because the businesses are not only undervalued but under their current management mix, they could only grow it out this point and not beyond, else the current owners would have extracted large premiums had they been able to scale past the Hundreds of thousands of SKUs and shoddy customer service plagued by un-happy customers at large. (Just do a google search to check the sentiment for the ecom play).

There are a couple of reasons why for example they bought in to Daraz, it is because Daraz did a good job of bringing the business up to a point ready for an exit at an X value that its orignal investors needed. Daraz’s long term ambition was not to become an Alibaba, far from it, their ambition was to build enough traction where it became a conduit for a real player to enter the market, cash in on the operational setup and have a vehicle ready for growth but for some one else to get in for the hockey stick numbers. I feel bad for those who thought otherwise.

Had they equipped them selves for Alibaba style growth, they would have built the human capital to go with it. Either they couldn’t find the requisite expertise or their ambition had a cash-in date. From my vantage point it seems like its a bit of both.

Alls not lost, out with the old, in with the new. For Baba to scale, they will need to inject, groom and scale talent across the enterprise(s) to do the following:

  1. Split/reorganize the current Daraz into multiple verticals ( from TaoBao to Tmall to Fliggy to Lazada to Ali Express to 11main meaning category growth and expansion, in some areas, virgin market entry domestically)
  2. Quickly solve the last mile logistics problem by acquiring a domestic player or maybe a few (The cleanest deal would be TCS and/or  a long over due consolidation of the excess capacity all the local players built by leasing planes) The bonus with TCS will be sentiments express as a conduit for quick growth once the tech is scrapped and the brands cashed in. Yayvo is just that, yayvo.
  3. In parallel build out an Internet payment play/gateway and rolling up AntFinancials Alipay to a homogenous country wide platform and system beyond what EasyPaisa is today.
  4. Figure out how easypaisa grows up to cash in on every thing its got going for it right now and evolve from the clutches of binary thinking
  5. Make sure the “telco” led thinking is parked some where and true operational excellence and growth hungry metrics are put into place. Not the kind that focus only on TVC led market building, but fundamentally UP the game in every aspect.

The Chinese didn’t come without a plan. I am sure they have a solid one. The only thing missing from my point of view is exponential human capital growth. Whilst these acquisitions need to be run like startups and they will, no one better than Baba to know and understand that,  but how does Baba manage its partners and integrate its acquisitions and its raw man power?

The super hierarchal nature of the Baba types wont play well with any/most existing corporate setups they have acquired. Yet they need the agility to scale, just money and tech wont cut it, nor will the language challenge help. Dont get me wrong, they will get it done, but where-in you and me and the market  is looking at this in terms of 2 acquisitions down and maybe one coming in logistics, nothing could be farther from the truth.

This is the quickest most familiar way to get in and get mind share. What we are all forgetting is what else Baba has to offer. Namely:

Cloud computing and AI technology:  by way of Alibaba Cloud (Aliyun) and AliGenie  and AliOS .

Entertainment services:  AliMusic , Alibaba Pictures , Youku Tudou

Others plays: Aliwangwang , AliHealth, AliSports , AutoNavi (Mapping) , Laiwang, South China Morning Post  and  UCWeb.

Baba has more diverse tech centric companies with both revenues and human capital grater than our entire countries technical output. As an outsider what I see missing, is the speed at which these transactions instituted top tier management post close.

Seemingly they have a lot of patience and are shopping for the best talent. Perhaps time for them to get in to HR in Pakistan and build out their own systems and recruitment portfolio. Like all others that came before them, including but not limited to Daraz, where surrogate leadership was injected, the jury is out if they had found real domestic leadership would they have done a better job?

But the clash of cultures and the execution strategies at Daraz show, things could have surely been better. But perhaps Daraz was happy with its implanted leadership and its horizon was exactly this, no way of knowing that, but for Baba to be successful it needs operational expertise at scale, industry agnostic preferably so they can quickly take new leadership through their process and find people who dont have to un-learn other crap to be successful.

Some natural things that will follow suit, that should scare the bejesus out of Google and FB are simply: UC browser and Content plays. This should be equally scary for publishers of every kind. With a near dominant browser, their own advertising platform + having the background and wherewith-all to be in the news business by virtue of  already owning the South China Morning Post, all they have to do is do a find replace and build domestic content or acquire it.

This would also mark the near end of players like iflix etc and other 3rd parties, because if Baba decides to bring capital to the space it will essentially be no match for mid-sized regional or local companies.

With pro China sentiment and open access to market they can in 12-18 months start replacing Google and FB as the dominant players in the ad-monetization space. Once they weave payments, banking, lifestyle, shopping, retails and content in to a universal platform, the next billion users will be too familiar with every thing they use already to transition to Google or FB products. Remains to be seen whats Babas vision is for Pakistan, but all these are plausible actions. They also play well into the One Belt One Road stuff. One Platform.

All the country-teams FB/Google built should be open hunting season, the many years of market access built by systematically working with Pakistani audiences, publishers and others will be good prey for the taking for Baba in terms of human capital. Plus it would give Baba, insights into or the lack-thereof of its two global rivals. Easy pickings. There will be border crossings across company lines soon. Fun times ahead. Retention managers beware.. The summer of your discontent is about to start.  Ex employees of Pakistani origin will be prized commodity, but buyer beware, those who dont have domestic operating experience will be tactical artillery with no strategic use, in the short term. Each re-location comes with a honeymoon period and that is not a robust strategy to play with. Unless Baba will outspend and outlive its competitors. I also see serious Chinese led lobbying coming to Pakistan to keep out the Western players. only time will tell.

The thirst for market share will see a lot of ad-dollars come up, the biggest race to the top will ensure $$s being spent in print and tv, there is likely going to be less reliance on rival ad-networks to access market share. Thats where if the telco assets are used properly Baba should get into building its own ad-network with pin point accuracy and re-marketing ability using its browser and AliMama assets. Not be confused with the crapshoot Telenor was trying to build. Also Zero rating its sites/apps/services on telco networks and doing it right. What “lal duppatay wala” carrier wanted to do by way of VEON, which turned to the Venom that poisoned its ill thought out and strategically shoddy strategy, Baba can borrow a page from the strategy but use common sense and do the exact opposite in terms of roll out and execution. Some ones already made an all too big expensive mistake.

Transition from Lal to Peela, really was just that, a piss fest of spending ad-dollars that made networks and ad-people rich. I digress, but clearly Baba has more smart people to understand that crap like  that doesn’t work here. I use the Lal Peela example to demonstrate that ideas dreamed up outside the shores of the country and entrusted to people who believe their own bullshit(getting fb likes and paid reach to satisfy their inhouse KPIs) eventually leads to result we all have in front of us. Its total Global downloads = 1,000,000+ as per the play store. I dont know any 2 people who use it religiously. Perhaps a tell tale sign of things of how it went down. Wonder how this was sold to the board as a success.

Baba has more sense than it, I would assume.

The next best thing after these two acquisitions would be to get in to the capacity and bandwidth game, you want to buy your biggest upcoming bottlenecks and fine tune the roads that will become the highways of information exchange on which all of Babas(Pakistani) fortunes will be built.

Also in a single move crush Googles Next Billion/Google Station/free-wifi ambitions by getting in to the space in parallel. Googles arguably too busy in India and the way its leadership incentives are structured, Baba has nothing to worry about. By ensuring ubiquity of apps/services/data, it can also trivialize any plans or ambitions FB has by way of Whatsapp payments. The time is now. Its good there is a third leg in this competition.  They should no less, not under estimate Google or FB, they have been here longer, they understand the market dynamics better and they have one thing that Baba doest yet have; Pakistani folks who to some degree understand the operating market. Baba is exporting Made in China talent and trying to retrofit for a Made as Pakistan dynamic.(If you are not a 70s/80s kid you wont get the reference-Image below to illustrate)

 

The good news is, Pakistani consumers win in the short term. Better access to products, better prices, better services and global competition. Not to mention a world of opportunity for those who can make the Pak Cheen dosti work.

 

He Said Xi Said: The looming threat of Data Privacy in Pakistan. The Currency of the Future.

The writing is on the wall. We just got bail out funds from Xi, its not a bad thing. Who else would underwrite the plundering of all our combined leadership or the lack thereof.

“China comes with a lot of money and says you can borrow this money,” Dr. Mahathir said in an interview before the vote in Malaysia. “But you must think, ‘How do I repay?’ Some countries see only the project and not the payment part of it. That’s how they lose chunks of their country. We don’t want that.”

There are 170 million surveillance cameras in China. By 2020, the country hopes to have 570 million — that’s nearly one camera for every two citizens. This should be an eye opener for the Pakistani government and the powers be. Do we think that some one investing this much money will not safeguard their interest? Actually they will get a first mover advantage by way of access to the new digital currency, data on you and me.

At the same time, China is a building a national database that will recognize any citizen within three seconds. Though that system probably won’t be unveiled for a number of years, facial recognition is widespread in China as a single google search will demonstrate.

Thanks to a large sample population and lax privacy laws, police and private companies have led the way in developing surveillance technology that is now being used to track travel, shopping, crime, and even toilet paper usage. While the West is engrossed in GDPR and debates on the ethics of AI, China already has production grade citizen surveillance deployed.

So we already have Ali Baba in town, we have Ant Financial and we have TenCent on the heels of both these companies making a market entry. So what does this really mean? Given we do not have any capacity locally to capture, house, store, manipulate, process, analyze and transmit any size-able capacity of Data, with the arrival of all the Chinese centric companies all our data is bound to be kept in the cloud, offshore in the safe custody of China.

I haven’t seen any privacy stipulations yet around data security, management and storage for Pakistani Citizen data as these companies get access to oodles of citizen data, transactions, internet usage, shopping habits, financial habits and abilities. In short, we are sitting ducks, the currency of the future is not going to be Bitcoin for the Pakistani ecosystem but it will be the access to last mile citizen data from every corner of the country. (Eat your heart out Google and FB)

We need to have a data privacy guideline that are enforced unilaterally else, as the dream of financial inclusion becomes a reality and as the Chinese companies come to shop in Pakistan for under valued deals, they will laugh all the way to the bank.

They would have done what Google and Facebook only dream of doing, getting last mile data or online to offline attribution. That is valuable stuff and we must protect both the rights of the citizens and the economic interests of domestic players by not co-opting all our future digital currency without any thought-out legislation in place.

Key Privacy Facts

1. Constitutional privacy protections: Article 14(1) of the Constitution of the Islamic Republic of Pakistan states that “[t]he dignity of man and, subject to law, the privacy of home, shall be inviolable.”

2. Data protection laws: Pakistan does not at present have direct data protection legislation.

3. Data protection agency: Pakistan does not at present have a data protection authority.

4. Recent scandals: Interception across Pakistani networks is pervasive; some of it is also unlawful, according to investigative and media reports.

5. ID regime: Pakistan has one of the world’s most extensive citizen registration regimes. This is run by the National Database & Registration Authority (NADRA)

The above is a Molotov cocktail waiting to combust on contact.

To share perspective that this is not some Pipe dream, Alibaba has  developed its own systems that will soon be used in Shanghai’s metro to identify commuters via their face and voice.( Paranoid much?)

Alibaba also has a chain of cashless stores called Hema.(See Image Below)

Shoppers use their face and phone number to approve payments from their Alipay account. (Ant didnt buy a bank to streamline their core-baking or to retrofit the bank in a top ten micro finance bank, they were acquired to get entry in to the space, then build scoring models to flush the market with inexpensive credit(which btw typically is very positive for financial inclusion).

The other side of this equation is pattern development and  score attribution  based off existing usage patters of patrons, their sms or phone usage data, without any opt-ins or without any domestically built technology or housed data.

What happens in the future, would be pure speculation, but to ensure transparency and protection of citizen data we must ensure data management and privacy laws are enacted, beyond the central banks guidance on storing data locally and to encompass future integration with NADRA data and to set out clear privacy guidelines before hand.

The above two are already at play. It only grows more interesting as other Chinese and global players show up at our doorstep with little to no regulation in place. This is opening hunting season for any one with a little bit of structured capital to get in to this space and get generational advantage of citizen information.

Tecent is one of the top applicants of facial recognition patents in China.

Below is a Tencent patent on a 3-dimensional human facial recognition method and system.

This is in line with the efforts of Tencent’s YouTu Lab, which provides image and facial recognition tech support to over 50 Tencent initiatives, like its social networking platform Qzone and image processing utility software Pitu.

Take a deep breath thats 50 things they are doing with image processing data alone, imagine the co-relation tables they are building and the amount of raw data being captured. If they implement a 1/3 of this when they come to town, the first and basic question to ask is Where will this data be housed? Will govt have access to its use? Will other domestic 3rd parties be allowed to build rails in to it? Will it be open for use? Whats the national policy on this? Does any one even understand the implication of what this means.

Tencent recently open sourced YouTu to other developers. YouTu technology is also accessible to users via WeChat apps, spurring concerns that this could kill smaller image recognition startups. Now we come to the other side of the equation, with all this tech, raw horse power coming in, will there be a national policy to get Pakistani citizens involved in the use/development and scaling of these platforms as a national security interest, just like we treat NADRA. Because the implications of this much data at scale will be much more profound . NADRA is just a building block enabler(that too the best kind) to come in and plug in all this AI/Facial Recognition etc on top of and build customized scores on citizens and their actions.

With all this computer vision, pattern recognition, machine learning, data mining, deep learning and audio analysis coming to our shores, who will police all this?

China already has social credit in place, where by citizens for various behaviors have been denied flights, or train rides etc, because now “the system” is tracking them and rewarding/punishing them based on their social behavior. We aren’t too far away from that reality domestically.  Btw this has less to do with China and more to do with local policy and structuring items for our self interest. Great technology coming in; is good for all, managing it and ensuring there are laws to govern its use, is on us.

TenCent  is already working with clients like China Unicom and WeBank for facial id authentication.  (Note: Tencent is also a major shareholder in WeBank.) Yea so they own a bank too, no surprise there, The rumor mill puts them on the heels of Ant financial to acquire a license/micro finance bank , they typically go after the number 2 players in most operating geographies if they are late to the party.

So paishgey Eid Mubarak to “Laal Duppaty wala” carrier and their Maybe cash. Its a solid will be at the moment when  DasPaisa (TenCent) pvt ltd comes to town.

In addition to the above applications, at least three provinces in China have announced they’re issuing electronic identification cards for their citizens using WeChat or Alipay’s facial recognition technology. So imagine the scenario where there is integration of all this tech into NADRA. It does wonders to bring social services and lending and identification and management of bad guys. But it opens up a pandoras box of sh*t we dont know and that we are not equipped to manage. We dont have enough data folks and policy folks and watchdogs bodies to administer the use of this tech.

The mobile IDs can be used for authentication instead of carrying physical ID cards – mandatory for citizens at all times in China – for travel booking, real name registration at internet cafés, and other security checks. Plus tracking?

Insofar as my research allows, theres no opt out from this, you cant tell the state to not track you. This tech will have other serious and crazy implications once it arrives on our shores, from tracking of all kinds of PMR(political, military, religious)  activities and players.

Google and Facebook are sitting pretty while all this is happening, their next billion dreams are likely to be managed by all this Chinese competition coming to town, because without a registered entity in Pakistan, unlike the Chinese they have Zero mind share in the local space when it comes to Online to Offline attribution.

Also without a Payments play (at-least for now) they are squarely going through FOMO at the moment and soon enough they will be blaming their policy teams for being too slow on their feet to understand the market opportunity in town. The only strategic advantage the FB/Google have is to take some pray and spray capital and start seeding investment in local fintechs and doing partnerships with banks and the logistics and ride hailing players who are trying to build their own rails.  Local fintechs/banks also have a long way to go, so I wouldn’t blame Google and FB to be hesitant to partner up, also both lack a singular focus on Pakistan as a market because both in their own ways and rightfully so are looking at solving the India next billion items first. Who can blame them they have amazing government traction and they have been welcomed with open arms.

FB and Google continue to be caught up in small bullshit items of tax related matters in a country that has 200+M opportunities to offer. Some times the logic in that escapes me, worse off, the Pakistani origin folks at both and other silicon valley companies continue to be apologetic towards the issue of taxation. I say grow a pair and ask your bosses to read some of these articles or others & stop sugar coating this stuff as the governments fault. That boat has sailed, be ready for the now, if you have any serious Pakistani tech aspirational targets.

WTF? Both of these companies can surely settle the tax mans bill, its an easy one, they need to recognize that they had a good 10 year tax free run, as inconsequential as it may have been, it was free money at the cost of the exchequer, if they stand any chance against the Chinese they need to get past soliciting advice from their ” country sales teams” who they are setting up for failure.

I say that because  if their day job is sales and the ask is to be involved in national level strategic plays or the identification of maters as diverse as tax, market scanning or M&A opportunities, surely with billions in the bank these companies can not be making such rookie mistakes. There is some serious strategic mis alignment. This has opened up the space for the Chinese companies to come in droves to Pakistan and will continue to do so, because they have a seat at the table given they are present physically and serious about doing business. If managed properly with data privacy regimes in place, dont get me wrong, this is the best thing since sliced bread. But if its let to spiral without any adult supervision, soon we are the ones that are going to be supervised.

I sincerely hope the incoming government and policy makers bring-in; change makers who can understand the dynamics at play and instead of still being stuck in the era of PSEB and PTA  they move the fu*k on.  Having folks who have never written a line of code trying to decide the future of our generations to come is going to be unfortunate at best and disastrous at worst.

This “Sahab” bullshit has gone on for too long and its time to unilaterally vote in public servants who serve at the pleasure of the tax payers and not serve at their own pleasure at cost of the tax payers. Some one needs to engage with all global players unilaterally and get the ball rolling, we are already late to the tech party in many ways so we need to get the data protection rails in place as we look East and West for partners.

 

Sometimes we stare so long at a door that is closing that we see too late the one that is open. 

Alexander Graham Bell

 

 

 

 

 

Dais nay tum ko chora tha ya tum nay dais ko chora tha ? (Did you leave your country or did your country leave you?)

 

 

Before you start reading. I urge you to watch the above first to get the context.

If you cant relate to it. Dont read further.

In the summer of 2017 I put out a survey based on the  request from all those friends, colleagues, family members professional acquaintances and aspirants from the Pakistani diaspora who wanted to find out the real financial cost of moving back. The survey was geared towards finding data points but from respondents all across Pakistan. I spent some time, to build an average cost basis for a potential return relocation back to Karachi, Pakistan. This is transactional cost, not the emotional cost.

This by no means is scientific(and no ones compelling you to use it nor do I care to listen to counter arguments about the variables), but it has had 17k responses that have been analyzed and averaged out as best as possible to normalize the data. If you ask nicely I may give you the data set and you can build your own hypothesis.

The real issue is not the financial cost, this is just a conversation starter. You know who you are.  The ones who say, i’ll move if, ill move when. This is geared towards the Senior executives who are 15+ yrs in to their careers and into CXO roles and who have been dying to do a startup, or dying to join a game changing organization in Pakistan.

The headline my friends is,  that no ones going to build a game changing organization for you, and every ones doing well without you:). Unless you decide to come, no ones going to beg you to relocate, no one gives a shit frankly. You are chicken, you aint coming back. I am trying to do my part to actualize the one component in your decision making process, which is you not asking the tough questions about relocation costs, cuz frankly you’ve moved on, you have grown, you value your independence, you left to create better economic outcomes for your self, so dont apologize for your sucess, people who you left behind are in different economic conditions than your self, your preferences have evolved or maybe they haven’t, may be its tough for you to send your kids to the American School cuz your brothers kids go to their neighborhood  school, granted you dont want to sound like a prick. So heres a first pass at all the shit that was holding you back. If you are one of those who want to buy an Audi in Pakistan and worry about the fuel costs, this guide is not for you.

If this doesn’t kick start the conversation, nothing else will. You are not ready to take the plunge. You tell your self you are. Its ok, we all get home sick, but you have to rationalize if you are home sick or if you really want to do this. Are you fat happy and comfortable with what you are doing with not having to worry about water tankers and the other so called horror stories you have heard. If you are a corporate whore, admit it to your self, thats the first step in the healing process.

Dont believe every thing you hear, some of this shit is worse than you can imagine, other stuff not as much. But till you are ready, no amount of Cost benefit analysis is bringing you back. Its a life style choice. You have to make the choice, no one else can or will.

Yes Fintech is hot, yes digital transformation is hot, yet digital every thing is hot, yes starting a restaurant is hot too, but are you ready? There are some 100k 200k USD jobs in Pakistan, no denying that. But there are dozens of people like you and a handful of these positions.  There are many like you and me, but not enough roles to go around, we are a commodity. So best to leverage all your pardesi store bought commonsense and take the plunge, but not without having a year long runway for life + your startup or your idea. Dont move to Pakistan to “find your self” there is no fucking Starbucks to sip your venti soy lattes here.

This is no time for self discovery. Only the fully committed will succeed. No half ass ideas no me2 shit is going to work. The stuff that will work is when you solve for local challenges or you create IP and or leverage the human capital arbitrage in your favor.

“Be careful whose advice you buy, but, be patient with those who supply it. Advice is a form of nostalgia, dispensing it is a way of fishing the past from the disposal, wiping it off, painting over the ugly parts and recycling it for more than it’s worth.”  Baz Luhrmann

 

Special thanks to the WordPress wizard who built the form.

These figures are net of taxes, if you will against better advice try to land one of those 200k$ jobs then you need to factor in 35% taxes to your operating plan. If you end up being self employed or live off your savings then not as much. Post June 30th 2018 if the new tax plan goes into play that number will be 15% per the new simplified tax regime.

Enemies at the Gate. Bas Kardo yeah pouchna kay PayPal Kab Aye ga?

There’s a lullaby for suffering

And a paradox to blame

But it’s written in the scriptures

And it’s not some idle claim

 

Every month, every week, every day, someone is hell bent on asking, probing or claiming something to do with a payments play. I say “stop it.” The answer is self evident. Like all good things its linked to patience and has less to do with payments and more to do with “Rails”. Remember that word…

I have read with interest the claims of how Ant/Alipay will redefine the game, how Pakistani Banks need to be scared. Headline news ‘chippy’ is that, Ant also bought into a Bank. Albeit not a 100 lb industry gorilla but the multiples it paid totally make it feel like that.

Minus the inconsequential independent players, not for their lack of trying, product, or smarts, but lack of burn capital, my sense is, that before there is real traction they will be long gone.

We also have the self professed successful entrepreneurs /VC wanna bees also trying to lend their name to other people’s dreams in hope of collecting when they build the user base, but at the moment all those efforts are really just that.  Efforts..

Fonepay 100k+ downloads, please shut off ad monetization, first make your app work. Keenu 50k+ Downloads, can’t find any real places to use the app really. SimSim just wont work, wont link won’t do much.100k+ downloads. Even if it’s in the next band of downloads, and combined the three market entrants in the private space that have prob done the most market dev activities dont have more than 400k Downloads combined, then this really is a non starter as I saw some of the folks discounting products to acquire customers like crazy. It takes roughly 2-3$ to acquire customers online. So 400,000 X $3 =1.2M  so if the aggregate customer acquisition cost is higher than this for the three, the writing’s on the wall already. Simply some one can build a better product and run ad-campaigns target people and in 5m$ if they have the tech they can acquire 1.6M customers give or take. One of the cheapest places in the world to drive online traffic atleast for now.

This is not a naming and shaming exercise but an exercise in introspection on the state of play. But not a single one of the wallets or payments app worked in the first go, some didn’t get a confirmation code, some couldn’t link to the bank account(if i cant add money i cant use it), others aren’t accepted anywhere besides random places where I would have no need to go, let alone do a cashless transaction. It’s just not fun the use case is there, but the traction is missing, because frankly with all the Wallets/Apps and products out there most are led/made/created/engineered by traditionalists(Bankers) in hipsters clothings Or guys who made stuff for the financial service sectors and decided to take a swing at this. We need a mindset shift of speak to the user as opposed to speaking at the user. Some of the CEO comments on FB have been short of respectful. Saying”your phone has an issue” etc etc. That wont win hearts and minds, the Play Store reviews tell the same story from a consumer perspective.

An other set of potential players are the old hard ware guys(Think Unisys, IBM, NCR etc) Some retired some not, they have the horsepower and the connections to the regulators and the old guard, they also have access to old money and access to the policy makers at large. Groups of these rat-packs are also surfacing up in conversations. They overlap in the “services to the banks” segment but they have grey matter and greenbacks. I just hope they speed up the game, some are as usual just busy at “Award Ceremonies/Local events” daily so its tough to tell how much of the real product work has been done.

What about our friendly neighborhood Banks you ask?  Here’s the CliffNotes version of it all:

HBL: Probably best aligned, gets the big picture, has had past failed attempts to do payments and is the 100lb gorilla that will ultimately build a walled garden for all its talk about openness. Is working in stealth on a new play.

ABL: PayPak and back nothing much seems to be going on, at least there’s no public narrative to a payments play

MCB: MCB MCB aye, they got an IPG going for them but besides that not much really happening, they seem to be happy to be a switch and to have a wallet app. 50k Downloads. Not impressive.

UBL: Omni was a confused product with no plans of growing up to be a payments services business. UBL digital is the new banking ++ app again with 100k+ downloads. They are busy building design centers with screens and areas to showcase UX/UI innovation. Too distracted by pretending to be something they are not, also fyi, by adding a picture of your new building to every piece of collateral you produce is just a tad much.

BAF: Monet, Monet,Monet, I guess they have run out of favours with their Sugar DUDS (Dadies under the Desert Sun). The Banks seemingly up for sale based on market “hawa” The MBILL app from days gone by 2014 has 500+Installs. I guess the Dhabi Group pulled the plug. Too focused on the fees driven models at large.

Faysal: Another contender looking for a suitor. Lost the cards lead, did not innovate to catapult in to mobile/payments space.  Wholesale management changes, seems like it had more marketers per capita than cards.

Meezan: Too much cash, no where to deploy, no focus on tech, also time for the foreign partners to exit. No one seems to be bullish on Pakistan long term from the GCC so thats 3 banks confirmed primed for a sale or partial offloading.

JS: Small scrappy, saying all the right big words, API storm up the ying yang, a lot of talk a lot of coordinated PR. Outcomes will determine the fate long term. How open will open be?

TMB: The luckiest F off them all bar some folks who got out too soon. Jury is out, Telenor is telenor its driven by ARPU , ANT could give a lesser F about ARPU. Short term lots of stuff to do to really build out the tech.

The common theme at most banks is a recipe. The recipe calls for one part ex-Telenor/Easypaisa resource + one part internal ADC + Ceo’s New Vision = Digital Play. Whilst Telenor and Easypaisa have helped create the brand and create consumer value, its dis service is that everyone claims to have been the “key” person at Telenor as they fish out to other banks. That combined talent pool barring a few extra ordinary people 5th , 6th level down staffers with no idea of the big picture.

From the looks of it, there is no promising marriage of masters of big data and global finance happening any time soon in Pakistan. There are unions yes, but not marriages yet. That needs a lot of work. I bet you, Google is eyeing this , even if from the sidelines. There is too much FOMO at Google. They missed so many markets in so many verticals, but they got into India on time. Their wallet is “THE” Wallet. Tez.. They have crushed Paytm which is backed by Ant. So now you get who the enemies at the gate are?

Let me spell it out for you, Its Google and Ant. Tez had 7.5m Users in India right off the bat. But then something more interesting happened. While the growing user-base is a decent indicator of the app’s early success, Google was even happier with the actual usage stats. At an event, Google’s VP of Product Management for the Next Billion Users program, Caesar Sengupta, said that the app has now processed a whopping 140 million total transactions. Not only that but the average transaction today is now four times higher than during the app’s launch period. In addition, National Payments Corporation of India (NPCI) data suggests that Tez accounted for 70% of all UPI transactions between October and November. Sengupta also proudly announced that there are now over 500,000 (“5.25 lack”) merchants on Tez, with more and more small businesses making and receiving payments through the service every day. Scale much? Caesar tweeted this on march 1st “From 17.6M (Aug) to 171M trans (Feb). 10X in 6 months! Amazing growth in UPI. “

As I was updating the post to publish, this just happened. To give you an idea of what real scale means. Compare the above data to the tweet below:

Albeit its Google but this is how do shit right. Starts with the “rails”. Google went in early and went in big, Not every thing worked but they had a plan.

So Ants rails are TMB, not any fancy tech, they have enough of their Alipay stuff hanging around to borrow a leaf, a page or a stack or say everything. TMB is the conduit to build AliPay Dreams on top. Ant got an operating license a local player, an astute management team and clearly Easypaisa the most formidable brand in the country powered by TMB. So can Easypaisa do 171m transactions today, probably not. Can Ant make it happen ? for sure it can. So Both Ant and Google have battled this out In India, Ant backed Paytm is doing 30% payments vs Googles doing almost 70%.

Build the rails everyone, so that the last mile delivery/delivery platforms/services/OTT/Biller aggregation/bill presentment/everything you want to be able to do is possible in an app or on a platform.  If some one can dream it they can connect to your rails.(API)

Gotta build the plumbing before you build a fancy house. If the plumbing is great everything flows through. Please dont ask when PayPals coming, it’s almost irrelevant. We need the enemies we have at the gates to faceoff in person so that the real benefit comes to the market. Google has surprised me personally. From its experience in India this market is similar yet they’re not even present on the ground in Pakistan. There is much talk but no action. Just market sensing using their stellar sales teams.

A multi 100bn$ companies only excuses is that they don’t have the might, muscle, man power   to be incorporated in Pakistan given potential legal issues. For all the lip service about inclusion and other things. Ant jumped in, feet first. Ant didn’t have legacy,  legal or taxation issues that Google has in relation to AD-Sales and dollars being exported out of the country(I’ve written about those challenges in the past extensively)

The Google GO-Jek style marriage is great for Pakistan. Google missed Grab but couldn’t miss Go-jek, there’s more to Go-Jek than ride hailing ….Its a Payments play and POS play and eventually rich data from malls, eateries, public domains, travel drop off points, offline to online attribution. If Google knows where you are going, what route you are taking, what transport type you are in, imagine the use case where in,  it predicts your fuel usage routes you to the nearest gas station, does deals with “energy suppliers”, knows that you like to buy candies before you pick up kids on the weekend from practice, it sends you not just digital mail it will eventually re establish direct mail, coupons either offline/online or hybrid, so it control the entire experience and best of all a share of grocery basket by adding those points of data and putting a mental marker/aka pixel on you as a person and your habits and locally predict what comes next in your retail and personal experiences.  You cant accuse Google of not doing its HW. See what Go-Jek is doing:

By going after it(Go-Jek) Google personified hyper local at its best, It had the maps and the online piece it now needs the hyper local pieces to weave the next generation narrative for the next billion users. Google recently got street level addressing in Pakistan also. Just fyi, its location services will allow it better economies of scale now compared to any other map provider.

Now we come to Ant, they have the other end of the spectrum figured out, they have payments and credit scores and lending, 95+Bn$ worth of it. They did what banks couldn’t do in 50 years. Case in Point below. Payments, Wealth Management, Credit & VirtualBank all rolled into one.

 

 

So their 150bn$ rock star Unicorn status is well deserved. They are the other party at the Gate. Neither Google nor Ant are our enemies, they are each others arch rivals. For us they are frenemies at worse, and economic agents of change at best. But our governments have been unable embrace or invite either. Ant came based on a strategic need to find consumers for products and expand to support OBOR. They could care less about issues related to opening offices, like Google and FB(I forgot, FB is also the Frenemy here) and their overly protective hovering helicopter parents in (Policy) . Ant has Alibaba going for it and with it, complete and unconditional access to China, its exports and goods and services, there is some talk about to setup a TaoBao style model with the potential acquisition of one of the local players just for ease of brand and export PK made goods overseas. Remains to be seen.

The Chinese came here of their volition they didn’t need to be cajoled and courted, they are entering emerging markets and need new users for their good services, technologies and beta testing. The Americans need to be invited, no one in Govt has gone to the likes of FB or Google and said, we welcome you, but I suspect that’s the expectation, if India is any cue, where in the Google Vps continually thank the Govt as its anchor partner and vice versa. There’s a lot of song and dance. Google employees 5k+ ppl in India. The whole NBU(next billion users) focus is in India. Even though Google won’t publicly admit but as can be seen by data that its Railway based Internet Tie up didn’t really work out as expected no less its space saver app and Tez are doing gang busters. So maybe there is hope for them coming to Pakistan and changing up the mix some what. But you have to come here to play you cant just use Android devices to collect Maps data etc and build services:)

FB is doing Whatsapp payments in India, it came late to the party too, but its a great use case for PK where in every one with a smart phone seemingly is on Whatsapp, no additional app needed for payments and you can get all the hyper local stuff you can with Tez  or AliPay for example. Google had to add messaging to Tez in India from what I can tell in a retaliatory market move with Whatsapp’s payments coming to town.

As of February 2018,  WhatsApp had 200 million Monthly Active Users (MAUs) from India that apparently make up a size-able chunk of its 1.5 billion global MAUs. Because of the numbers and its popularity in the region, India is the perfect location to test a potential moneymaker like the WhatsApp Payments feature.

But with every new modification and addition to the product, WhatsApp Payments is certainly nearing a global rollout.

So as these enemies eye the prized Pakistani consumer, its anyone’s guess what happens next. If PayPal was really smart, they’d beat these 3 to the prize and get started. Just the brand equity would drive it to universal adoption. But that’s just my thinking could be a completely different scenario in reality. The first one to tie up Remittances and ACH+BCH will win hard and fast. The use case to be solved is: an App where a user, say in the the US, adds their credit card or their local bank account and selects a biller in Pakistan(say their parents electric bill) and pays it real time. That will be the game changer, not alliances with the payment transfer companies to do cash-outs, gotta remove as many middle men as possible and in the process build apps that can do real scoring models and get in to the micro lending model, if you can get Islamic finance built in to it, that will be the big differentiator that will make banks and cards completely irrelevant in Pakistan.

Most of all if the regulator was smart they would do away with this PSO/PSP stuff and figure out a quick model to initiate the global/local players.

If the domestic/international investors were smart they would consolidate their assets and see the news happening around them in the hyper local space. I.e Insurance companies making a play for the likes of Go-Jek with follow on investment after Googles. Smart money says, its time to bet now, and bet high.

 

Its Complicated. The curious case of Fintechs, Banks and Asma.

It truly is complicated, every one just graduated from MAU(Monthly Active Users) to AI (Artificial Intelligence) and now on to Blockchain. (Formerly known as Block Chain). We are still catching up on financial inclusion.

Before we get in to Artificial Intelligence lets talk about basic intelligence or due diligence. With news daily of X “local” company meeting Y “foreign” company and productive and constructive meetings + now news of strategic partnerships etc is very interesting, but has any one really looked at the fundamentals of taking financial services to the un banked? Or to grow financial services access beyond where they are.

To this date as an individual I cant plug in to any National Registry API to do citizen lookup or verification. So If I/any one else wanted to build an app to verify some ones ID, we cant actually do that. Happy to pay a service fee to do that lookup(Binary, Y/N). Why is that not possible? Why is public data not publicly available? For a fee of course, if it is, why isn’t this info public and being advertised nationally? Forget big data, we cant even get small data sorted out.

Data is going to be king even in Pakistan soon enough, so as a paying customer of the National Registry why can they offer enterprise services and access control and bio metric services? when I cant build my own, especially when as a citizen I’ve paid for the cost of building that system by taxes and fees. What happened to my right to access information and build services on top? Basically the state has decided it wants to be in that business hence it will not be good for the ecosystem long term(Discussion for a different day). But what that means is, innovation beyond the state paid actors and Telcos and Banks is really limited because the average App developer cant get to it via API or build innovative services that linked to identity in any way. Banks may/maynot allow you to interconnect with their APIs to run some of these verifications but that’s a walled garden approach. Rest assured, Scammers and the other lot don’t need API access they have and will continue to thrive by figuring out simple exploits. That truly is why its complicated, because it is fairly simple to counter these exploits but no one seems to be paying attention.

No less the real issue is with the floating copies of ID cards every where, god knows what happens to them when you give them to you bank or to you mobile operator or to the travel agent or where ever else you use the hard copy version(Schools/Clubs/Real Estate/Wills/Contracts, etc). Or what they can be used for.

Fintechs and Banks cant grow up and expand till there is absolute consumer confidence that your information is secure and a consumer protection agency is on the hook for it along with the regulators, because at best their (Fintech/Banks) tech is dated more so the mentality. There are good people every where. Every time I had the mis fortune of going into a bank branch and or try to open a domestic “wallet” account the experience is less than pleasant. My opinion will change when my experience changes.

Maybe the bottom of the pyramid market where they(telcos/fintechs/banks) intend to service customers is not yet aware, but soon they will be, and if this(financial inclusion) grows at any exponential scale, then the problem will become bigger to rectify.

My confidence in third parties is at all time low, you should try to do the following test, borrow a secondary phone number from a friend (say from Maybelink, UffPhone, CpecMobile) then take your own ID and try to open say an account in the most popular recently 45% strategically partnered branchless banking product. A little birdy says you will be pleasantly surprised that you will be able to open an account as the SIM to ID check is not where its supposed to be.

(Again all this is hypothetical and no one is encouraging you or any other member of the public to do some thing they shouldn’t and this is purely an academic hypothesis)

Meaning if you took say a number from the other 3 Telcos, used your own NIC or some one else’s, likely you could open a brand spanking new account, that you could use to send “Asma” as many loads as she wanted or you wanted. Because the Sim + ID combination seemingly is not being validated by Asmas service provider.

Do you see a problem with that? No “Asma” is still single and will gladly take your money. As will any one else who has your ID and an unused phone #(on an other network), they can open a (insert “Asmas” favorite product here) account using your name and hypothetically make transactions, receive payments.

You can potentially reverse the experiment and the carriers and the products but the central idea is, Asma remains single because the suitors all addressing the wrong problem(s).

Maybe with all this hype and PR is just in time, may be there is a dire need to bring in vilayati(imported) tech to fix digital payments/fintech/banking because truly its not ours to solve. Maybe Asma is also tired of all the local suitors, maybe its time for her to get serious and thats why she looked Eastwards to her Ant*.

Get. Set. Go ; Stupidity Avoidance Filter (It’s a real thing)

Every day when people wake up in Silicon Valley, they get up , set eyes on their mission and get going to deliver on their vision. This btw is not only limited to California but from Tel Aviv to New Delhi and from Jakarta to Sao Polo all the places that are going places have their GSG synced to some inter galactic clock.

But California is perhaps more special. If you step through the pages of history from Steve Jobs to Bill Hewlett to Vint Cerf there was always some thing in California that seems to be missing from every where else.

At 12, Jobs wanted to build a frequency counter, but he didn’t have the parts. Ever sensible, he suspected that Bill Hewlett, then the CEO of HP, might have some extras. And so, with the bizarre confidence of an 8th grader, he found Hewlett’s number in the telephone book and called it. How many 8th graders do we now know who demonstrate those chops? For example most 8th Graders in our NA250 demographic are making tough choices on what to order on FoodPanda vs building a FoodPanda. Its not their fault, generations before them are to fault for this.

Vint Cerf was born in New Haven, Connecticut, the son of Muriel (née Gray), a housewife, and Vinton Thurston Cerf, an aerospace executive. Cerf went to Van Nuys High School in California along with Jon Postel and Steve Crocker; Both were also instrumental in the creation of the Internet .

None of this happened by sheer luck, it happened because the galaxy came together in some mysterious way every single time each one of these events needed to place and connected a host of un-connected folks to achieve greatness, their unifier was the state of California or rather the mix it offered for success .

This is not a history lesson about California. This is a very primal review of why when you nurture people by having the right mix of education, industry and the dream to win big you continue to produce effective results.

We are ways away from replicating the success and my confidence continues to be eroded by the patrons of industry at large. On my return trip home the first tweet I saw was this:

Elon Musk is sending cars into space and the collective intellectual horsepower of the Neslte advertising/brand gurus could only come up with building the worlds largest saucepan. I am just shocked how in this day and age a corporation of that size comes up with such stupid publicity stunts. If that money was spent to make just 1 Nestle powered school it would make for better a cause.

But I digress, if you’ve ever met the brain trust at these organizations at least locally; the highlight of their career is to get to Thailand to shoot an ad. Given that kind of mis guided sense of achievement there is no wonder why their aspirational target is building F**ing saucepans. At least its moved on from buying fake likes to appease their middle managers to having promoted tweets.

This continues to happen and I don’t mean just at one brand or an other but collectively in society because we have completely missed the boat on building a conducive ecosystem.

We all get lucky. Once in a while we do something really stupid that could have resulted in death, but didn’t. Recently I saw someone who was texting while crossing the road on to oncoming traffic , narrowly avoiding the car whose driver slammed on the brakes. Post event, we realize that was not an ideal way to go about doings ones business. What can we do? We can make the most of our second chances by building margins of safety into our lives. We need to build that into our country and our ecosystems at large, ranging from education to industry to just the way we operate as human beings.

Ever notice how your fuel tank indicator goes on long before you’re really on empty? It’s the same idea. The difference between waiting until the last minute and refueling comfortably early gives us a margin of safety. We need to add that principle to our lives else the GSG dream will remain elusive for generations to come and next we will be building the biggest Karahi(wok).

Charlie Munger, the business partner of Warren Buffett and Vice Chairman of Berkshire Hathaway, is famous for his quote “All I want to know is where I’m going to die, so I’ll never go there.”

That thinking was inspired by the German mathematician Carl Gustav Jacob Jacobi often solved difficult problems by following a simple strategy: “man muss immer umkehren” (or loosely translated, “invert, always invert.”)

Jacobi knew that it is in the nature of things that many hard problems are best solved when they are addressed backward some things just cant be solved backward and our predicament seems to be the same, be it companies that operate in our midst our government or policy makers and even citizens can use thinking for the net benefit of society.

Simply, if you want to improve innovation in your organization. Thinking forward, you’d think about all of the things you or others could do to achieve that goal. If you look at the problem by inversion, however, you’d think about all the things you could do that would discourage innovation. Ideally, you’d avoid those things. Sounds fairly straight forward. But I bet your organization does some of those ‘stupid’ things today? Just like our saucepan example proved, thinking forward/innovating is not easy, but looking at the same problem from inversion should dissuade future generation of brand marketers in avoiding these kind of idiotic moves.

Despite ones best intentions, thinking forward increases the odds that you’ll cause harm especially in our context. But thinking backward, call it subtractive avoidance or inversion, is less likely to cause harm hopefully.

Inverting the problem won’t always solve it, don’t get me wrong but it will help you avoid trouble or at least spot it from a mile away. You can think of it as the avoiding stupidity filter. It’s not sexy but it’s a very easy way to improve. For us to foster an ecosystem like California we need an industrial level Stupidity Avoidance Filter. Its an uphill task but it must start with the realization of what we are individually and collectively doing wrong as part of the society we make up. We are all at fault in some ways, saucepan guys more so than others.

So what does this mean in reality?

Spending time thinking about the opposite of what you want doesn’t come naturally to most people. And yet may of the smartest people in history, have done this naturally. So we must borrow a page from history. Hearing Vint Cerf recently the central theme of how the internet came about started with avoiding things in the past that made it difficult for communication to happen between machines, Lo and behold the invention of packet switching or the TCP/IP protocols that power every thing on the internet today.

Inversion will help improve understanding of the problem(s) at hand. By forcing you to do the work necessary to have an opinion you’re forced to consider different perspectives. We need to have opinions beyond watching talk shows and regurgitating what we see as our own brilliance. We must get into the mind set of GSG and for that to happen we need some serious inversion in our thinking.

To all the startups out there specifically, if you want to have one key take away: Spend less time trying to be brilliant and more time trying to avoid obvious stupidity. IMHO avoiding stupidity is easier than seeking brilliance.

Brilliance comes over time, avoiding stupidity shouldn’t.