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.

 

Tech bandits come to Pakistan: Economic Hit[wo]men in Startup land

Pakistan has many internal and external aggressors. We cant blame every thing on external elements, as we are, ourselves to blame for letting things get out of hand. A strange thing is happening in Pakistan, in the race to the top of Tech stardom.

Before we dive in to the details, to understand what’s going on; a brief history lesson is needed. What we read in Confessions of an Economic Hit Man an autobiographical book written by John Perkins published in 2004, provides us with Perkins’ account of his career with engineering consulting firm Chas. T. Main in Boston. What we are witnessing is a page right out of the book and a chapter out of history. The aggressors are a different breed, but the methods and mandate almost similar.

 According to Perkins, his role at Main was to convince leaders of underdeveloped countries to accept substantial development loans for large construction and engineering projects that would primarily help the richest families and local elites, rather than the poor, while making sure that these projects were contracted to U.S. companies. Later these loans would give the U.S. political influence and access to natural resources for U.S. companies.[1] He refers to this as an “economic hit man.”

 In the 5 years I have been part of the larger local tech community we have seen a transition in the tech ecosystem. We went from a largely BPO and Hire-to-Build narrative to a startup hungry nation. Which is a fantastic transition to witness. Every one and every thing under the sun, progressing towards startups. The goal; to attain economic freedom and break free from middle-class shackles. That is the fantastic bit of this story. The desire, drive and success of Pakistanis trying to use the power and reach of the Internet in pursuit of their dreams is commendable. What a time to be in Pakistan.

 The not so fantastic part is, that is giving rise to a new type of technological colonialism. In the absence of domestic funding or at the right scale or without the right appreciation for the startups at home. With that, its open hunting season for foreign VCs , Funds and Angels. It is this Angel category, that is not so Angelic , once you peel the layers of the onion. (We want all the reputable VCs and Funds to come and excited by the ones reaching out to do due diligence)

Imagine this scenario: If you are a cash hungry startup, with limited access to domestic capital and un-realistic demands local of investors to take a 50-80% bite out of your equity. You are out of luck. Well typically you were, but not really. My self and many others, who are involved with mentoring the young startup community, started getting calls from eager beaver startup founders, who couldn’t contain their excitement. Just weeks prior they had given up on their dreams, they resented being in Pakistan, they thought they were being dealt with unfairly, calling into question their belief some times. A vulnerable lot. Emotionally, mentally and financially. We need to nurture them, that is where we have failed miserably.

 So what was getting them so worked up? They were calling and unanimously repeating a few names and offers of 10-100k of patient capital. They had all found their savior(s). Formerly un-heard of Angels(in the Pakistani ecosystem), mostly foreign origin(migrants them selves in their now chosen lands) and with some really prominent yet cryptic back stories. (As in you could Google them but to the unordained, they would seem fairly legit)

 Slowly but surely, seeing & seizing this opportunity from Silicon Valley and beyond, a new breed of hit[wo]men started emerging on the scene. Friendly and at first glance harmless men and women, typically multimillionaires/trust fund babies/ inheritance Angels – empathizing with the cause of Pakistan and our youth. Oh how they “believe in them” how in their own native land(s), they are the champions of causes that are challenging our Pakistan and our youth. How they want to help, “oh just do a little some thing”. I tried to ignore the misgivings I had for these types of Angels. But your “gut” is rarely wrong.

 Then an other interesting thing started to happen; this lot started traveling to Pakistan. They started identifying and socializing with what I call the bottom of the pyramid Pakistani IT folks. Not to demean any one, but the scum of the earth types, who have no real jobs, have no technical background, have never done a startup, never written a line of code, but some how show up every where and get their pictures taken. You get a fair idea, every industry has these “kalakars” we have ours, this Angelic lot started finding these “idiots” and started harvesting relationships with them. This did not happen over night.

 This too is entirely our fault, take the example of a parent who has 5 kids and plays favorite with the smartest two, the other 3 are susceptible of being naughty or just play into the hands of the less than welcome “outsiders, neighbors” etc etc. We should have watched out for our own, but we didn’t. They have 0 background in to what’s going on but they are on Whatsapp. They are living the dream, getting their pictures taken, creating and making industry events and presenting awards on subjects where they sometimes cant even spell the underlying technology let alone understand the ramifications of how they are being played. The other lot being played are CEOs from our Telcos to our Banks to our FMCGs and Govt IT bunch. You ask how? In the effort to feed the beast which is their “ego” they are championing the cause of these “kalakars”. Truly we have been trumped.

These Angelic Cyber Colonials picked up on the weakest link of the chain. They spent the better half of the last 2 years harvesting Pakistan’s cumulative equivalent of “Donald Trump supporters”. I raise my hat to them, they have single handedly with their money their gravitas and the free trips become masters of this circus of “IT Dimwits”. Given the lack of hero’s an entire breed of these folks are hero worshipers. As soon as some one familiar, reaches out to them from the West and wants to meet them; they put on their 2 sizes too small Valima Suit and show up. Slowly and gradually these “Angels” started getting invited to industry events or the lack their off, started creating with the “IT Dimwits” new events, new groups, new forums, new Whatsapp groups. With that came the condescending dis-information drive, the playing down of Pakistan and Pakistani startups along with every thing else in their way, whilst our own “village idiots”** cheered them on. Saying stuff like “Mashallah we now Have IT GURUs in Pakistan” (I am quoting from a whatsapp group). These imported gurus are cashing on the frustrations of our most vulnerable and its not just to create an “arab spring” equivalent.

These Angels are some of the worst type of people out there, they have the money the motivation and now the access to our youth to destroy and entire nation worth of rising stars and entrepreneurs, whilst leaving in their trail a sense of low self worth, self esteem and apologetic mind set. The sad part is that the one who can call out this bullshit fear the isolation within the ranks and cant live without their egos being stroked, they are the first ones to get in line to get their pictures taken, so the “Angels” are thriving.

 This proves that any one with money can get access to our most vulnerable. In this case young startup founders and the “village idiots of IT”, they are able to shape the narrative and their own glorious past stories and not a single person has fact-checked these people or their bullshit, they continue to spew hate and an agenda backed with “showing Pakistanis the way”.

 I thank them for taking the time to partake in our ecosystem. But whilst I must agree that they bring stories of and steer conversations towards building sustainable companies and ecosystems, their intent is perhaps exactly the opposite. Them downplaying Pakistani and Pakistan origin mentors and offering sage advice on domestic challenges and on mentorship is borderline arrogant without knowing the ecosystem. By flying in and meeting some folks and perhaps getting second hand info, its quite naive to think that the only veterans are the likes of them and their own friends, who actually aren’t even based here and are mostly inheritance millionaires, which no one needs to apologize for, just call a spade a spade.

 The worst part is, there are some within this lot who I am sure mean well, but they got tied up with these shallow arrogant and useless types, and are basing their view entirely on their self-hating Pakistani social circuit friends. As a participant in the ecosystem it is glaringly evident that they are cashing in on the insecurities of the “village idiots of IT”, given the fact that most their comments, engagements, awards ceremonies and media appearances are weaved around the same group of 8/10 common folks. Imagine all it takes to fuck over a large segment of our startup and investible companies, can be fuelled by 8-10 people and a few outside Angels.

 What these “Angels” are doing is not helping the ecosystem with their passive aggressive comments and observations, Facebook posts, Whatsapp rants and tweets about “oh how glorious Pakistan and Pakistani startups would be , IF only we could fix X or do what Y is doing ??? Btw we haven’t even gotten to the part where they are doling out money and advice on religion. The toxic mix gets worse, we will only focus on the money for now.

 They are talking down an entire fraternity of Pakistanis who are working very hard to build up the ecosystem by offering cheap cash in exchange for their even cheaper values.

 So like the Perkins’ account of the years gone by here’s what’s happening. These Angels are coming to town, they don’t need to convince governments any more, they need to just write checks to the Startups, before that they ensure, that they give board seats to their so called friends in Pakistan. So that their interest is protected. Their friends along with the Village Idiots, slowly but surely are government folks, people of political influence and any one in a position of power happy to take funds in exchange for favors or to be invited to Amreeka or elsewhere for “good time”. Cheap..Really cheap.

The reality is, where this money is going is in 3 very well calculated places. Grants to startups that would typically find it tough to scale, To them I say take the money and probably more. Use it to your benefit but don’t get driven by the Angels agenda.

 The second lot is the scary one, companies that have the potential to sit on and collect oodles of data on youth and youth related preferences (So startups in the hyper local and data space).To them I say, you have your entire life ahead of you, don’t sell short.

 Last but not least, retired so-called Pakistani veteran CEOs of Tech/Banking/Obsolete Multinationals and their “NEW” so called startup companies and ideas. These hit(wo)men have the right idea, they are trying to get into a parasitic relationship within the right constructs of society. The young, the under-funded and old guard, all where they can play to ego, cash or one final shot at making it big.

Startups, consider you self warned. If you see some one or some thing that looks to good to be true, it probably is. Fellow ships and foundations are the new tool of this economic warfare, run as far away from those as you can. If some thing is free, always remember you are the product.

 

“village idiots”** are those individuals who are perpetually free and clear to do any thing but work, not to be confused with the hard working startup entrepreneurs. But rather the free loaders at every award ceremony.

The Game of Assumptions. Road to Pakistan’s GMV

This is joint post by Jawwad Farid & Faizan Siddiqi *

Before we start let us all take a deep breath and try to ascertain what GMV means.

Gross Merchandise Volume

From Wikipedia

Gross merchandise volume or GMV is a term used in online retailing to indicate a total sales dollar value for merchandise sold through a particular marketplace over a certain time frame. Site revenue comes from fees and is different from the dollar value of items sold.

GMV or gross merchandise value for e-commerce retail companies means sale price charged to the customer multiplied by the number of items sold. For example, if a company sells 10 books at $100, the GMV is $1,000. This is also considered as “gross revenue”. In this case, the business model is based on a retail model, where the company basically purchases the items, maintains inventory (if need be) and finally, sells or delivers the items to customers. It does not tell the net sales or actual amount of audited services as GMV does not include discounts, costs involved and returns of products.

GMV Estimation

  1. In order to estimate GMV we could use three possible methodologies.A top down approach that starts off with a single piece of data from an authentic and well respected source and builds up an educated estimate on top of it
  2. A bottom up approach that tries to piece together the market size based on what we know of local market participants. We pick the top 20 players, add up the sum of their GMV, scale it up by a factor of 30% to 40% and voila we have estimate number .
  3. A forward looking approach that ignores current data looks ahead 5 years to see where our market is likely to be and work backwards from that figure for estimate number 3.

With all three approaches the objective is to keep the assumptions (moving parts) to a minimum and base the model on at least one authentic, publicly reliable data point.

In the absence of transparent market based disclosures, the true answer will likely be found somewhere in between using some exotic mix of all three approaches.

To illustrate the mechanics for purely illustrative and educational purposes we will use one approach to make a simple point. Any analysis we do at this point is going to be completely irrelevant a year down the road. Perhaps even sooner, but to have a conversation and to understand the real potential of the scale of what is to come.

Given the direction this market is going and given how this specific movie has played in other developing markets before us, the current market size or efforts to estimate it are useful for educational purposes only. You can’t put them to work or use them for deal making, acquisitions or valuations given the disparity you are likely to run into when it comes to projecting the next 5 years. Nothing is constant over 5 years let alone what we are about to project out. It can no less be a basis for getting in on the action.

Model One. SBP data set

Let’s begin with a look at the most basic of our collection of known documented facts. The source for all three statements below is the State Bank of Pakistan Annual review report of 2017.

  1. E-Commerce in Pakistan has 571 merchants offering their products online. During FY 17, 1.2 million transactions valuing PKR 9.4 Billion were processed through ecommerce[1]. Using the current exchange rate of 105.25 that translates roughly into USD 89 million – the share of the local ecommerce pie captured by credit and debit cards.
  2. There are 17.9 million debit cards and 1.2 million credits cards issued by the banking system.
  3. The 9.4 billion and 1.2 million transactions suggest an average ticket size of USD 74 per transaction.

Remember that these are all unadjusted figures. We can use them as is but its best to account for and adjust some items that may impact local market size estimates.

The likely case

We take the USD 89 million figure and trim it to account for local ad spend on Google/Facebook platforms. This trimmed figure then get scaled up since a large chunk of local e-commerce pie uses cash on delivery or COD. We put in a range of values for the distribution between COD and cards and generate our final total market size estimate.

There are two key variables.

  1. The adjusted figure that represents the share of credit cards in local ecommerce sales. We can round this up to total ecommerce sales using the second variable below.
  2. The share of COD in local ecommerce sales. If we know the dollar amount of card sales, we can use the COD component to scale up total sales.

We can plug in a range of values for both parameters and see the possible range for total market size. When we do this we end up with the grid below.

Here is how you read the grid. There are two bands that represent the two parameters. The row on top (US$) and the column on left (%) that we use for navigating to the estimated value.

The row on top gives the trimmed down estimated figure that represents the share of credit cards in total ecommerce sales. It ranges between values of US$ 30 to US$ 80 million. The column on left gives the percentage share of COD in total ecommerce sales. It ranges between 25% – 95%

The table below has 5 distinct colored bands. The one that we are interested is the light green 3×3 matrix with bold figures that represents values on which consensus can be built. Primarily because these are values that we see across vendors we track and talk to. Anything outside the grid is certainly possible but is not supported by credible, authentic, publicly available data points. If you have data that contradicts these points and are willing to share it, we will be happy to update this analysis.

The range in this specific grid is between US$ 100 to US$ 500 million per year. The likely answer for estimated GMV is somewhere between US$ 333 million to US$ 500 million based on this model.

Which implies that our trimmed down estimate for credit card share is somewhere between US$ 50 – US$ 70 million and our estimated COD share of total sales is between 85% – 90%. Market feedback suggests that the COD share could be as high as 95% but we are happy with our 90% estimate.

Now that we have these two values, we can dig a bit more and see if we can find additional data points that would support or challenge these assumptions.

There are also two new questions that we need to answer. Both deal with growth.

  1. At what rate is the ecommerce market growing?
  2. If it keeps growing at this rate for another five years what would be the total market size? Would it be large enough to be of interest to serious money?

These questions are of interest because they allow us to tackle the same problem from another angle. Where will things be 5 years down the road? From that specific perspective how attractive or unattractive does the current market or market valuations look right now?

This is the question we should really be asking ourselves. How big will the total pie be in 5 years? Using the midpoint of US$ 400 million from above and a 30% annual growth rate for the next 5 years we end up a rough estimate US$ 1.5 billion.

That is the limit of our current analytical tools. We are bound and married to data in the visible spectrum. When we stretch the visible spectrum our numbers become questionable.

Time to throw this analysis and this model out of the window for one simple reason.

We used a similar logical rational step by step model to estimate the projected future share of smart phones in the local market in 2009-2010. The objective was to project actual smart phone in use in Pakistan in 2015. Two of our smartest analysts and a data czar took part in the exercise. With hindsight our estimate was off by about 97%. It was good thing our analysis was not released for public consumption.

Model Two – The alternate forward looking perspective

When compared to our nominal GDP basis the figure of US$ 1.5 billion is not exciting. It looks great compared to your current size but it is actually quite depressing and unlikely for reasons that we will just highlight.

One hint is the metric that measures the size of the internet economy as percentage of total GDP. The G-20 benchmark[2] for this metric is 5.5% with some economies seeing values as high as 12%. Given the availability of 4G data, the affordability of smart phones, the increasing share of data enabled phones in local phone sale and the growth of online retailers in the local economy, our benchmark figure is likely to rise.

Before you flag or question the G-20 metric let’s take a look at G-20 membership. In addition to the developed world, the G-20 also includes the following countries – India, Indonesia, Argentina, South Africa, Saudi Arabia and Turkey. We are not just talking about North America or Western Europe, some of these markets are quite similar to our own in terms of cell phone penetration, population demographics, data usage and middle class growth trajectories.

Now back to the GDP. Our estimated GDP figure on a nominal basis for 2017 is US$ 304 billion. 5 year later in 2022 this figure will hit US$ 380- US$ 400 billion using the current growth rate of 5%.

US$ 1.5 billion in ecommerce sales represents less than 0.4% of our current nominal GDP. The G-20 benchmark by 2022 is estimated to be between 7% – 12%.

Our actual number 5 year later is likely to be at least 2%. Improving logistics, lower reliance on COD, higher consumer confidence, removal of payment system frictions, better service quality, more polished players, better supply chain management, higher fulfillment rates, growing middle class, increasing prosperity and spending power are all factors that will play a part in increasing the base rate.

Some of us in the analytics world think that since we have already skipped a few steps in ecosystem evolution, our actual share may be even higher.

But let’s not be too greedy. Let’s stick with that 2%.

That 2% translates into a market size of US$ 7.6 – US$ 8 billion in 2022.   At 4% you are looking at US$ 15 – US$ 16 billion. Our current “hand waving magical wand in the air” market size estimate is US$ 400 million.

What happens to a market when it jumps from US$ 400 million to US$ 16 billion in 5 years?

When a market jumps from US$ 400 million to US$ 16 billion do you really care if your original market estimate was US$ 400 million or US$ 650 million?

If you sold out at US$ 400 million and the market jumped to US$ 16 billion… Let’s not even go there. You would be what we would define as a sucker.

If you have the staying power for 5 years, I think it’s time to buy some online real estate. If you had the foresight to buy it and have credible business management skills, it’s not time to sell, it is time to hang on to it because you are in for the ride of your life.

In English, please.

So here is what all of the above means in simple English. In case you don’t like spending too much time with tables or on numbers.

The current numbers out there, made popular by the usual suspects range between 110$M TO 170$M. The state owned official nice to have figure is 1 billion by 2020[3] subject to usual qualifications.

The question to ask your self is, if you were pitching those numbers because you work at an ecommerce store/ allied business, would you really be dumb enough to get out now or do you just need an exit valuation so you don’t get past the hype cycle you created yourself? Bonus pool? Contract renewals? End of the line?

The time is now. Raise capital and stay afloat. Sit down and plan out the long game. There is no point to get out now, as you are in the driving seat or at least have a shot at it (you know who you are). If you are cash rich it is time to diversify. Buy some of the really crazy plays out there. 500 odd players is not large enough for a country of this size and the volume we are talking about.

Imagine getting into DHA Phase 8 in 1997-98. Everyone was selling, the city was on fire, valuations were crap, sentiments and basements were both underwater and people laughed at you if you even mentioned buying real estate in Karachi. And then to make matters worse dollar account were frozen and sanctions were in place.

If only you had listened we wouldn’t be having this conversation right now and you wouldn’t need to work today.

This promises to have the DHA/Bahria style returns the average saiths are looking for – Not 10X but 100X if you call it right and have staying power. If you know what you are doing and you have the right people on side to help you scale and sustain. This isn’t for every one. Most people will die due to inexperience, greed and timing challenges. Only a few will survive.

Here is another kicker for my many friends shopping for exits and posting pictures with our esteemed friends from China. What we must all realize, is that if a Daraz type transaction goes through, it does zero for the ecosystem.

Most if not all the money exchanges hands out side of Pakistan and no value is created till such time that a new operator/player is fully involved domestically. All they buy is a brand and a functional site, albeit well known and mostly with other sister properties regionally. A regional/geographic play for the buyer and if the price is right, a fantastic one in 5 years.

Yayvo and the lot, if a transaction does go through, the buyer actually buys a really big tongue twister. A race to the bottom with out VC money to burn. Race to the bottom (cutting price) type outfits are really not needed.

The data in its true form shows that you don’t need to underprice to deliver. Investors must ask what is the rocket science in selling product at steep discounts funded by their dollars? It is the oldest question for sales team – anyone can sell at a discount – why do we need you?

The market has the appetite for real players with real service. More so if you own data, fulfillment, delivery, service quality and warehousing. Beyond self-promotion on social platforms and hashtags the substance is lacking or lost in translation. If hashtags were GMV all these social media types would be billionaires.

All others who aren’t in a race to the bottom or a rush for quick exits in the end will do better. Write this down on a piece of paper and look at it when people mention exits. Just two words, two syllables. Long Term.

A small slice of a US$ 15 billion dollar pie goes a long way. Not everyone will make it to the table or have the appetite to sit or stay on it. Those who do will all have one thing in common. A healthy respect for other people’s money and the ability to play the long game.

* All the nice informative bits in this piece including the easy to read tables in color were crafted by our resident numbers guru Mr. Jawwad – ask the right question – Farid. I would recommend a google search, if you haven’t met the gentleman or crossed his path. He is even more polite than his prose in real life as long as you don’t mention funding or short term exits in his presence.

All the other nasty, waspy, brutal parts that will eventually piss of the ecom/bankers/transaction types were crafted by yours truly.

[1] State Bank of Pakistan, Annual Review, 2017. Page 25. This is the first year that this number was tracked and reported by the central bank. That by itself is a market action trigger.

[2] The Internet economy in the G-20, Boston Consulting Group, 2013-2014

[3] Source PTA Annual Report, 2016/17

**k your Accelerator / Saith Investor & get ready for an IPO

Are you an Entrepreneur with either 100k MAU or between 30-40% Margins in your business(Not Just Tech)? Are you struggling to scale beyond this? Read on.

Are you interested in Scale? Chinook Strategy will invest its resources for an 8%-10% revenue share to either lead you to a desirable seed round, exit, IPO or institutional buy out. Provided you have the right stuff. For this lifetime opportunity CS will take 8-10% equity on the total exit value, it may choose to continue to retain its shareholding or liquidate it, depending on where the wind blows. It’s a better deal than the XYZ 60+ investor will give you for “Total Control of Your Corp” for a 100k or 20k:)

We aren’t interested in Me2 apps unless you have the users to prove us wrong 🙂 , we aren’t interested in “to be built” products or ideas, this is not a VC deal to fund your dreams, this is to take your dreams and add growth capital and fuel to it. If you are in business you better be incorporated, ideally a Delaware corporation, if not, then you must be ready to take the right advice.

If you don’t have audited books and a clean tax bill of health esp if you are post revenue, you better have a very compelling reason to get in touch. If you are pre revenue but 100k MAU and are happy to be compliant with all taxation/incorporation items do connect with us.

This is patient capital, we patiently hope that for our connections, advice & fund raising to help us earn out : we take a rev share to capitalize the value of our time in the books of the business. Any incoming financial transaction is valued in relation to our capitalized value in addition to a max 10% equity sweetener. No we aren’t greedy, we are just plowing back the time we will invest with you. Nothing is free in life not even our time and advice. We will only take 5 mandates a year, we already have 2 for 2018. So we decided to change things around for the new year and share this as a post.

So consider this, we are a pay for performance 10x growth accelerator you didn’t have access to, but we take no equity upfront if you don’t grow we don’t cash out. If revenues do grow, our continued interest grows with our 8-10% rev share component. If you have no sales we will explain how the 8-10% will work in your case.(But if we have to explain you may not be ready for prime time yet).

If this excites you and you want to work with real people who have grown shit to 10-15x growth and have IPO, Exit and real world experience in tech deals and whose names dont end with Sahab or Sir. Please leave a comment with your email address and a url or initial details about your business, some one will get back to you and share detailed next steps.

 

The Worlds Biggest Startups & The Men who run the largest Accelerator @ Scale

I bet you are thinking to your self you already know the answer to this question. If I was a betting man, I would wager that you didn’t, or at the very least it would not be your first guess any way.

Saudi Arabia doesn’t come off as easily as MTV(Mountain View) or SFO(San Francisco) or Bay Area, but you cant be blamed for it just yet. What you are seeing in the news are select choice public placements in the news.

Allowing women drivers to drive, the re opening of theatres . These items have been in the making since MbS took an active role in things. (MbS you ask ? or as lovingly referred to as HRH.Mohammad Bin Salman the Crown Prince of Saudi Arabia). None of these news items are accidental; there is a massive transition about to happen, the jury is out on the what and how and when. It has been in the works for quite some time. These are not reactionary moves to say the very least. This is the time of MbS and in line with Vision 2030  which was formally ratified  by the Saudi cabinet as the National Transformation Program, it provides a blueprint for a kingdom that offers less charity and more austerity. It calls for Saudi Arabia to reduce its dependence on the energy sector, privatize state-owned enterprises, and cut state largesse. A lot of players in Saudi Arabia, want to do the following

1) Create Quick Jobs for Locals but meaningful jobs
2) Create diversification away from oil
3) Encourage locals to get involved and out of their comfort zones
4) Create Education and vocational opportunities
5) Divert subsidies to building long term human capital as opposed to a young population reliant on the state

No one in Saudi Arabia it self wants to talk about this stuff, internet crack downs and mis-understand on both ends of the aisle. The trust deficit and wholesale non police state image will be a tough sell, albeit it has to start.

Red sea resorts  and corniche investments and re development programs are part of a longer strategy it seems but that stuff is not going to happen over night.

Here comes the other force in this game, not lesser known by any stretch of the imagination but clearly not as famous as MbS but an equalizer in the dynastic politics when it comes to social/economic reform. Mr Adel Fakeih the honorable minster of Economy and Planning.

He clearly does not have an easy task. The kingdom is on an Uber ride to modernization and diversification and we all know whats going on with Uber.

Under the belly of the beast are some phenomenal items, that you can be forgiven to have missed but the sheer importance of those is a definite sign in the changing of the guard. It is good for the Muslim world and for the world at large. Imagine your rich cousin all of a sudden had a change of heart and opposed to sponsoring or funding its brand of politics its funding startups. Three cheers.

So did you know Saudi Arabia just had its first-ever YouTube FanFest in March 2017, Pakistan it is my estimate has roughly between 30-32M Monthly Active Viewers yet we dont get that kind of love from YT. Pakistan is considered a “security risk” yet Saudia isnt, let me not get into the politics of it all. But Google understands the value of having a friendly government in place as these restrictions ease of and is putting in bucket loads of concessions and resources to make YT work in Saudi Arabia.

Based on public information peppered in press releases by the best PR Machines on the planet, Google. This is what the YT data looks like :

The number of YouTubers in the MENA region have tripled in the region in the last three years. In Saudi Arabia, watch-time has grown by 50 percent and by 65 percent on mobile in 2016. More than 50 channels in MENA have more than one million subscribers, more than 20 of those in Saudi Arabia. Last year, the kingdom witnessed a 100 percent growth in total uploads coming from Saudi Arabia. The kingdom contributed a third to the total watch-time of the MENA region in 2016. 

The key stat buried in this presser is essentially this. 1/3 total watch time in the entire mena region comes from Saudia. Any surprises, there are literally no activities in the kingdom pertaining to entertainment,  culture, theatre etc. With the vast majority of population being young and no access to open television either, YT is filling the void.

A nation whose young are diabetic, Saudi Arabia has the second highest rate of diabetes in the Middle East and is seventh highest in the world, according to the World Health Organization (WHO).The prevalence of diabetes is in Kingdom is at an alarming level Over 25 percent of the adult population is suffering and that figure is expected to more than double by 2030. Half of the people over 30 years of age are prone to diabetes.

You cant brush all this stuff under the carpet, these are life style diseases and the lifestyle must change.

So what about the worlds biggest startup and incubator and what not have you?

Look around you, Saudi Arabia is doing startup building, funding, large scale growth at state level funding with 2$T to back its ambitions. The country is both incubator and accelerator and its own largest market as a burgeoning young population emerges. In a society like Saudi Arabia, there is no real middle class, when these startups disrupt the status quo, create jobs, it will create new wealth, which will create a self sustaining ecosystem outside of the compounds of Aramco.

They have started without you and me really knowing. They are launching  a massive scale global PR effort to fix their global image. As time has told us, with enough time and money you can fix any ones reputation, look at how people were mourning Hue Hefner, living and dying on his own terms. *Go back click the reputation link and see what a reputational fix means.

So where is this opportunity for Saudi Arabia and others who want to get in on the ground floor of this soon to explode startup ecosystem? But their startups may be bigger than your startups, may even be bigger than the GDP of some countries. It will be interesting no less. Here are some things that come to mind as an outsider looking in.

  1. Al Jazeera is done in Saudi Arabia, content and news aren’t.  Saudi Arabia needs its brand of news dissemination services. It is already late to that party.
  2. With such prevalence of diabetes, if the population is too sick to do shit, thats all they will do in the end, so the stage is wide and clear for innovation in life style products that capitalize on the geographic terrain of Saudi Arabia.
  3. People are watching YouTube because its content created by their own, so a huge content play is missing in Saudia, the first person to build and dominate a Saudi brand of teen /adolescent engagement via video will rule the airwaves in any format. Digital, OTT, Linear, what ever. People are dying for content.
  4. Tech, will win big, here is why. Have you ever been to a mall in Saudi Arabia? go to a GAP, select an item, go try it in on. Oh you just realized there are no changing rooms. So what you must do is you go to the malls bathroom and try it on. So how does tech fix this, e-commerce and last mile brings products to home. TV,  home shopping, ecommerce they creates massive back end employment.
  5. An other one that baffles my mind is a huge huge play on street numbering and maps + a SaudiEx like FedEx , there is no street naming to enable parcel deliveries(At large) most of it is PBOX driven and even on google maps and other data is sparse.  The national address system a good effort in the right direction only has 3M customers and 4.5 Million registered addresses for a population of 33M people. So the journey has only started. Again there is no innovation there, its state run and bland.

Heres what wont work and why

  1. Just importing talent (many years of that already evident) since the average person cant even get to Saudi Arabia without a hassle free visa process and further immigration nightmares its not the default location for the best talent to show up. America for all its quirks works because for most of the world it is still easy to get in and stay in.
  2. Launching actual incubators and accelerators for tech alone, because who will run them? who will be part of them? where is the ecosystem, will you import your muslim brothers startups from say Pakistan or Indonesia? Then what happens? There wont be any shape shifting till Saudi Investors and investment funds go out and invest in the startups of these great nations and build investor confidence. Much like the American who then repatriate their best talent using L1 Visas. Saudis need the same, also No ITS NOT cool to hold on to my passport when I come to your country. So a lot of that has to change too.
  3. Move away from Branch Plant mentality. Look around you, every thing Saudia has is a branch plant of some big company, Toyota, Honda, GE and many more and then you add the franchises and the whole country is the SUM of other people innovations. Every entity is just a surrogate. That has to change, dollars can help change that, but it cant fix it over night. A lot of systemic change has to happen for this to really become effective. No amount of money can fix generational items over night the right strategy can fix it, no less in time.
  4. They need to be able to have outsiders operate out side of fear. Hence perception must change, people must be free and able to discuss things. That will be the first step towards building a startup culture. Saudi Aarabia doesnt need any more yes men or consultants, its already spend 1.5bn$ in 2015 on consultants.

Mckinsey already does that job really well there. According to the Financial Times, Saudi businessmen have sarcastically dubbed the Ministry of Planning as the “McKinsey Ministry.” If the pattern seems familiar, it is. The company teams up with young heirs to the throne, who are eager to make their countries’ economies conform to their vision of the future. A less palatable similarity for someone like Prince Salman is how many of the countries who drank the McKinsey Kool-Aid became epicenters of the Arab Spring. Bahrain, Egypt, Libya, Yemen — each was convulsed by demonstrations, often animated by economic grievances.

 McKinsey’s approach to reforming foreign governments is dangerously flawed. The company’s school-lunch approach to economic reform — one size fits all, regardless of appetite and culture — makes no effort to consider each country’s unique history or social background. It also fails to consider whether the recipient’s political structures are robust enough to withstand the unrest that often emanates from job losses, privatization of state-owned enterprises and social services, subsidy cuts, and increases in the cost of living.

Coming back to point 2 above. Ecosystem and Startups, you can be forgiven for missing the news of a 100bn$ fund that the Saudis have setup up along with SoftBank out of Japan. So there will seemingly be a best buy moment for Saudi Arabia and Softbank they can go to the tech candy store and make more investments like the 3BN$ one the Saudis did earlier in UBER. This is the new reality and they are the new investors in town, they will need to look beyond their shores to fuel long term growth within their shores.  The initiative they have kick started to amounts to future shock for a conservative society. Specific targets include tripling non-oil revenue by 2020, to roughly $141 billion, and the creation of 450,000 jobs outside the government sector.

So my question to  Pakistani entrepreneurs is, are you ready because a funding revolution is coming to a city near you.

“The race is not to the swift or the battle to the Strong but time and chance happen to them all”

Alibaba and its Chaalis (40) choices in Pakistan | 阿里巴巴及其在巴基斯坦的40個選擇

These days its seems like not a day goes by and some one or the other publishes a picture, a leaked story, an input a whisper about Alibaba talking to some one in the country. That in it self is fantastic and super exciting. The choices for Ali Baba are literally unlimited in what they do and I have no magic ball to foretell the future. But the implications for Pakistan will either be really good or really bad.

Lets list the public rumors in place over the past week or so.

  1. Alibabas Ant Financial services to acquire stake in Telenor Bank in Pakistan.
  2. TCS putting out pictures of Alibabas visits to Pakistan
  3. Daraz not being far behind saying again some one is buying them, this has been on going since a few months after they came in to being

 

Lets evaluate the Telenor news first, minus the percentage stakes being discussed at this stage that’s immaterial to any one unless you are a shareholder, given you are not, lets focus away from the noise.

 

So if Alibaba does buy out the stake say at 40%, what happens? Look at the shareholding structure above. Whilst the news it self will be great for Pakistan(consumer confidence etc). Just my sense is, the monies wont land here post acquisition the B.V/Dutch Hold Co will probably partake in that transaction. The company is setup for tax optimization and there is nothing wrong with that either, all businesses are setup to maximize shareholder value, there should be no apology expected from Telenor for watching out for their shareholder interest.

So all this celebration of Ant Financial coming to town, could be misguided, as it may not really have any short term benefit unless the government mandates domestic injection, then it’s a different story, given our Chinese friendship that should be a baseline ask. I neither know any info nor do I want to speculate, I am analyzing the data and facts available in the public domain.

What no one is talking about what Alibaba’s entry to Pakistan will mean for digital marketing and advertising and the potential blow it will deal to OLX, Daraz,  Classifieds online and offline and Ad-Networks like FB Audience Network and Google ADX.

You are probably wondering what the sale of shares in a Microfinance Bank has to do with advertising? You cant be blamed for wondering, its simple, some thing you have never heard of, but it is a rising tiger in the world of advertising to rival Google and FB, Its called Alimama .

Launched in November 2007, Alimama (www.alimama.com) is an online marketing technology platform that offers sellers on Alibaba Group’s marketplaces online marketing services. Now that is the real Crouching Tiger, Hidden Dragon that will come to town when/if Alibaba comes here.

Coming back to our friends at Google and FB, they don’t have an office here, they don’t have a presence, the bulk of their advertising revenue are generated through product advertising, FMCGS, CPGS, Brands, Product Pushers. The success of FB viz a vi the advertising agencies they work with, is lukewarm at best, both companies have struggled to keep the conversations ongoing with counterparts in the country. Google has been more serious with boots on the ground, FB is still enjoying the consumer play of people using credit cards to buy ads.

But where is the real commitment to operate in Pakistan a market of over 200M consumers? Perhaps we shouldn’t blame them, has any one from Government really gone to FB beyond data requests and to Google beyond resetting passwords for accounts and offered them a real stake on the ground in the country from location to access to talent to tax breaks to legal protection? If not then we will continue to wait for them to show up at our door step where as other markets that welcome them will prosper.

Look at this example from Amazon,  shopping for a city to bid for amazon to come to it to build a second head quarter. That’s what government commitment is and should be if you want to attract the best.

Given what Google has done in healthcare alone, for a country like Pakistan where Chikungunya and others abound our government should be bending over backwards to invite Verily to de-bug our cities and towns if  it is not interested in the digital play, the human life play should matter.

Lets look at what will happen, when Alibaba in any form comes to Pakistan, they aren’t going to just sit idle and away from the Marketplace business which is their core. When that comes, so will Alimama, that will wipe off the entire value from product listings and classifieds businesses and thus wipe major value of AD Exchanges but wait, there is more, none of this will happen tomorrow. Some specialized verticals may continue to operate but it will be only a matter of time till they also become irrelevant or be bought out in the process.

Google and FB have to  take notice(More FB than Google). That is a fairly tough ask when Google is rightfully busy in the region with India, their interests aligned with launching payment tech (Tez) and their Next Billion obsession. FB on the other hand lacks even the commitment to operate out of market, they roll up from SG to UAE, where the hummus isn’t playing the unifier role it should between the German-Venezuelan + Pakistani mix . The UAE based leadership team responsible for PK has probably come here less than a dozen times. Credit where its due, Google guys are practically here every other week.

If FB , had they not put partnership folks and not just hired entry level talent from this country, would eat away at least 30% of other Ad Networks existing business and probably increase their pie by an other 80%, all they had to do was pay attention, there is still time if the interest level changes. Data is great, but context is the killer, it feels strange to be preaching context to Facebook.

Even beyond FB , WhatsApp related growth could potentially outpace all other business related growth in the months and years to come, no less for that you need to come to Pakistan beyond conferences and meet real businesses and hire customer advocates that have some real experience beyond trips to incubators, it has no real material output for Pakistanis beyond photo ops. Its time for the industry to grow up. Besides pretend to be grown up and promoting  self recognition.

Google is in a far better position, but I fear all their market education that had the best of intent will be ridden out by Alibaba in weeks, months and years to come. Their(Google’s) teams have really done a stellar job to educate the market. Fb is trying hard, they had a better value proposition, its easier to market on FB. Every one uses FB no new account is needed to market, any kid can do it all you need is a credit card ( what happens when the central bank decides that it is no longer cool to loose out 45m$ in FX via card or third party transaction. Invoicing becomes key.) Hence the conversation is much easier from FBs perspective with marketers; the results on the other hand are debatable as are the conversions.

The market is missing a unified sales platform and payments, when both of those arrive, any guesses as to what will happen?

This brings me to TCS/YAYVO, from a Pakistani standpoint that deal makes the most sense for the exchequer, but from a value perspective Alibaba gets more out of buying TCS for logistics and fulfillment than it does to buy Yayvo for e-commerce. (Even if it paid 3/4x Revenues it would be a sweetheart deal)

Neither the TCS Ecommerce brand nor the way the operations are structured offer any thing that 2M$ cant replicate in 6 months. That is all it takes. TCS should be courting Alibaba to offload equity in the overall entity, e-commerce is some thing they should throw in for free. Make no mistake, Alibaba is already Pakistan’s largest e-commerce player by volume, you ask how? AliExpress.

Once FTA between China and Pakistan is sorted out, none of these brands will matter every one already knows Aliexpress, at least they get their products on time. The logistics game is a serious deal, check this out Amazon building an airline/Distro hub.

In the mean while if Alibaba wants to buy some thing to just try out and experiment, its not a bad deal to get Yayvo too. But by way of technology and talent, there is no real value to be driven from Alibaba’s perspective in buying Yayvo. Every other week, some Investment banker, market broker or some one is pitching the Yayvo deal, that is an indicator that they have run out of growth capital. Any plans of grandeur they may have had are actually on hold from the looks of things. Their SKU base is stagnant. Their systems are a mis mash, the sites performance are basic at best. So this is not going to be a tech buy for Alibaba an accu-hire for mid level talent yes for sure.

Which brings us to Daraz, perhaps Alibaba should do real due diligence there. Its simple, buy 5 products a day for a month and deliver to 5 cities a day, figure out the fulfillment ratios vs order placement and go from there. In developing markets that a better test than looking at a PowerPoint deck prepared by some one else.

Daraz will be a multi country Rocket Internet deal involving Alibaba so where-in other markets Rocket may have inherent business or operations value, in Pakistan : besides burning cash on brand building, iffy customer experiences, multiple management team exits and struggling market place/drop shipper experiments they have been consistently underwhelming consumers.

A cursory glance at  FB posts or comments on paid adverts in local publications will tell part of the story. Its not easy being the first here. Just cant blame them alone, they have done more for market making than any one locally has. User sentiment abound. I am sure some one as sophisticated as Alibaba would try to get a discount on the offer given the customer toxicity. No one does “one day sales” better than Alibaba and its singles day, just apply that metric to compute GMV and if all holds true, perhaps Daraz really has value beyond what meets the eye.

Daraz is a foreign owned venture, if Alibaba does acquire Daraz / or its parent co, that money wont see the light of day in Pakistan. Again not a great deal for Pakistan or Pakistanis, the value of the transaction will unlock offshore most likely. Long term e-commerce will come, but short term No cigar.

All these factors to one side, a real funded player in any one of these 3 domains comes to town, it will be good news long term. So heres to hoping that we at least get a true payments play first, every thing else will find its way on its own once that happens.

 

 

 

 

 

 

 

 

The Nuts and Bolts of Digital Innovation & Transformation | Part Science, Part Art & Part Fiction.

This article has been updated with the PPT used at the 021Disrupt Conference on Sat Nov4th 2017.Disrupt-Faizan Siddiqi

Digital Innovation is not easy, actually its more difficult than transformation. Because Innovation is real touchy feely stuff, transformation at its core is the vernacular of the C suite chaps who like LBOs of the 80 and CDOs of 90s invented stuff that the average person couldn’t really understand. We all fell for it, but how many of us really understand at its core what it means?

Lets try to deconstruct why Innovation is so hard “Being active in youth may change the inner workings of brain cells much later in life and sharpen some types of thinking, according to a remarkable new neurological study involving rats.​” So for the new experiment, which was published this month in eNeuro, researchers at the University of Toronto and other institutions basically distilled it down to the following premise: Moving When Young May Strengthen the Adult Brain.

If you look at it rationally organizations are looking for younger folks(generally) to run and head Digital Innovation and Transformation initiatives because at some cellular level being in their 40-50s/60s they realize that as they cope with their cognitive issues at large its best to farm this work out to some one from the right generation. They are not very wrong in this assumption but they arrived at it because they them selves cant do it and its easier to appoint a person, a function a role to take the fall when their organizations falter at the seams as they fight off the startups eating away at their margins. I understand this is a very large scale generalization but it is backed up by what we see at corporations large and small. Find me a Chief Innovation Officer in their 50s.

Until you understand the principles behind innovation, you’re going to fall short. There is no innovation “formula” that magically works for every company. Don’t settle for fad management tactics or blanket solutions that lack nuance. There is no innovation “formula” that magically works for every situation. As a baseline your need to gain a deep understanding of principles, frameworks and skills that help you see the world differently. When you learn to see the world differently, you begin to think creatively.

Given the information overload and information paralysis we go through every day, we are victims to filter bubbles.

WTF are Filter Bubbles, let me demonstrate. Imagine your average day. What do you do?You read the headlines, tap, scroll, tap, tap, scroll.It is a typical day and you are browsing your usual news site. The New Yorker, BuzzFeed, The New York Times, take your pick. As you skim through articles, you share the best ones with like-minded friends and followers. Perhaps you add a comment. Few of us sit down and decide to inform ourselves on a particular topic.For the most part, we pick up our smartphones or open a new tab, scroll through a favored site and click on whatever looks interesting.Or we look at Facebook or Twitter feeds to see what people are sharing.Chances are high that we are not doing this intending to become educated on a certain topic.

No, we are probably waiting in line, reading on the bus or at the gym, procrastinating, or grappling with insomnia, looking for some form of entertainment.

We all do this skimming and sharing and clicking, and it seems so innocent.But many of us are uninformed about or uninterested in the forces affecting what we see online and how content affects us in return.That ignorance has consequences.

The term “filter bubble” refers to the results of the algorithms that dictate what we encounter online. So how can you innovate when all you are doing is consuming stuff and re hashing it. There is no net new creativity. Most days.

Much of the content we consume, the cord cutting shows we watch, the papers we read offer personalized content selections, based on our browsing history, age, gender, location, and other data.We become the subject as opposed to becoming the subject matter expert and we fully understand that we cant innovate till we at least have some grounding as an expert in a discipline, that grounding doesn’t come only via having a Phd or classical training in a field it comes with interactions and the ability to think within the constructs of the issue at hand with a view to find a solution.

In the absence of which and by being digital consumers alone, the result is a flood of articles and posts that support our current opinions and perspectives to ensure that we enjoy what we see. We program our selves to enjoy the mundane. Even when a site is not offering specifically targeted content, we all tend to follow people whose views align with ours.When those people share a piece of content, we can be sure it will be something we are also interested in. Take this blog post for example.

That might not sound so bad, but filter bubbles create echo chambers. We assume that everyone thinks like us, and we forget that other perspectives exist, which is a cardinal sin when you are tasked with innovating.

Filter bubbles transcend web surfing. In important ways, your social circle is a filter bubble; so is your neighborhood. If you’re living in a gated community, for example, you might think that reality is only BMWs, Teslas, and Mercedes and kids going to private prep schools because that will make them scions of industry and get other perks in life.

Your work circle acts as a filter bubble too, depending on whom you know and at what level you operate at.

One of the great problems with filters is our human tendency to think that what we see is all there is, without realizing that what we see is being filtered. There in lies the core issue around why most of us suck at innovating and why we are whole heartedly engaged in hero worship or having our ideas and thoughts being shaped by the bias in every thing around us. Let me demonstrate, watch the following:

If you watched this you have a very real sense of why filter bubbles are the crux of the problem of innovation.

Filter bubbles can cause cognitive biases and shortcuts to manifest, amplifying their negative impact on our ability to think in a logical and critical manner. A combination of social proof, availability bias, confirmation bias, and bias from disliking/liking is prevalent.

We have an inherent desire to be around those who are like us and reinforce our worldview.  People form tribes based on interests, location, employment, affiliation, and other details.  Within groups (even if members never meet each other), beliefs intensify. Anyone who disagrees may be ousted from the community. Sociologists frame this as “communal reinforcement” and stress that the ideas perpetuated can have no relation to reality or empirical evidence.

Thats why when you join an organization that wants you to lead their innovation function and or digital transformation, the organizational bias that exists actually sets you up for failure. Only when the Leadership allows you to be free spirited can this be counteracted but in most cases and on most days that is not the case, hence the best of intentions to hire a hipster to innovate fails. The sum of the organizations attitudes make sure that 9/10 times that is the case.

Organizational Systems — be they people, cultures, or work groups, to name a few examples — naturally have to filter information and thus they reduce options. Sometimes people make decisions, sometimes corporate cultures make them, and increasingly algorithms make them. As the speed of information flowing through these systems increases, filters will play an even more important role.

You have to be able to see past them to really innovate. If you innovate at a steady state your transformation journey becomes easier, so my take is, without innovation digital transformation is just a fad that will have no new results when you try to solve old problems without innovating first.

Making time for deep reflection in your daily life in incredibly valuable. Do not miss an opportunity /any opportunity to simplify, clarify and get back to the essence of what it means to innovate.

I firmly believe that understanding without experience is worthless. Unless you are immersed in activities that allow you to discuss, execute workshops and practice newfound skills, rather than regurgitate them. You wont be able to innovate.

There is a  truckload of bullshit in organizational truths,  When I say [BS], I mean arguments, data, publications, or even the official policies of  organizations that give every impression of being perfectly reasonable of being well-supported by the highest quality of evidence, and so forth but which don’t hold up if you look beyond the surface.

Bullshit  has the veneer of truth-like plausibility. It looks good. It sounds right. But when you get right down to it, it stinks. So you gotta watch out for organizational BS. Before you can think at scale you cant innovate, till you can innovate you cant transform and till you cant transform you will be at the same place you started besides the fact that you’d have put on a fresh coat of lipstick on the pig.

As the programmer Alberto Brandolini is reputed to have said: “The amount of energy necessary to refute bullshit is an order of magnitude bigger than to produce it.” So even if your heart is in the right place at your organization and you are having to refute the old way of doing some thing before you can really innovate, most of your energy will be spent on refuting past truths. But there in lies the art part of my title, you must know the art of making sure you are not refuting all the time but that you have a balancing act. The fiction part is the story you must tell of a future, that by virtue of transformation will yield better results, so you have to have a truth well told. The science part is that once you get it right every one will start to believe that you have a method to the madness, hence it becomes as irrefutable as science , data and facts, because growing up we were all led to believe that most scientific truths hold true till proven other wise.

Understanding that what we see is not all there is will help us realize that we’re living in a distorted world and remind us to take off the glasses. Trust me, you need those glasses off to innovate and to transform, be it digital or other wise.

 

Disclosure: This article and every thing else on this site draws heavily from my daily filter bubbles and is a social experiment to see how many people have the same bias.

Pakistani banks have nothing to fear when it comes to Fintech!

You read that right, but what you missed was that they are barely mobile and or digital to really fear the paradigm shift that is essentially Fintech.  Fintech wont take down Pakistani banks, they will try to totally blame that(in time), but what will take these banks down are the 50-60 Yr old CEOs lack of understanding around what digital is or means and the industry hero worship around “aray falanay sahab to baray puranay IT kay admi hain” 🙂 .

Exactly my point, you cant teach a “Purana admi” new tricks.

This lack of understanding also extends to the board members of these banks too. You ask why? because these guy do not use their own services digitally(ever), they are not the net new consumer so they can never understand why it sucks so bad. They call their admin, who calls the bank manager…you get the picture.

The first step to solving any major problem is the recognition that a problem exists. In the case of these mis guided banks and many other tech centric businesses in Pakistan is that they compete with each other and do not get out of their own comfort zone. Or they buy technology from global vendors without knowing what it is, because every one of their peers are doing the same.

When you compete with at the bottom rung of the ladder in terms of innovation and technical innovation all you end up with is a site/app/system whose success is measured by how many times your CEO sees the AD on TV about his/her product. Mis guided benchmarks about mis guided items demonstrated by more misguided people.

The best story I ever heard as to why the chief digital officer of a bank refused to buy online ads was as follows. He told me, that they wanted to go and acquire female customers between the age of 25-45 and ran an online adwords and fb campaign across the networks in Pakistan. Their CEO called and said you have spent 50k USD on this, I have browsed every major site in the country all week yet to see a single ad online but I see ads for “unani nuskhas” all over the internet, any site that I go to. The irony of targeted marketing was lost on the CEO. Where in both Google and FB delivered on those campaigns the CEO didn’t understand why he didn’t see the AD because he always saw it when he spent 50k USD on TV. Has any one ever measured how many millions of customers have banks signed up after every major TVC?

I will stay away from acceptable service levels of the technical initiatives of the banks but what I will talk about is the thinking behind digital and what is an acceptable baseline  by way of mobile banking in the year 2017. I will further not go down the security exposures rabbit hole,  because that doesn’t warrant a public disclosure of the weakness of the systems in place (of which there are a few dozen examples if not more). We will focus on the basic nuts and bolts of their front end customer sites/ digital customer engagement and the evolution of mobile banking or the lack their off.

I am selecting these banks in no particular order. Lets start with the mind set of digital and servicing banking customers in the age of technology.

Let me demonstrate how UBL is handling customer engagement on the Google Play Store.

 

This has to be a world first, an Eid Mubarak message within play store comments responses. Before the trolls start about oh we should be proud of Eid and whats wrong with wishing people on Eid, absolutely nothing. This just demonstrates the mindset of the person replying to these messages and the mind set of the folks who run or comprise  the digital function at UBL. Perhaps its not their fault either as the strategy arms of these banks are forcing down digital as a department vs trying to instill digital across the enterprise as an activity of transformation.  The image that comes to my mind is that of a an uber sweet 50+ uncle at UBL who has been assigned the task of responding to these messages after 30 years at the bank(BCCI Era) and with a view to give him his final pre retirement role. You dont believe me? See the an other example below.

A lovely message before Sehri. I mean talk about keeping it professional. What I am trying to get at is the fact that before Fintech destroys traditional banking in Pakistan, the traditional banking IT/Digital/Strategy guys would have already helped the cause fueled by their respective CEOs desire to “be digital” without knowing what the hell it means.

In the year 2017, the least I’d like to see is a functional mobile site. Lets see Bank Al Falah’s latest and great foray into this space. First of all half the text on the site is not legible due to bad font selection and sizing. Secondly the site barely cuts as a responsive site. Let us not even get started on thematic and lay out mistakes and the color red.

 

Trust me there is no way you can read the font the arrows are pointing towards. In this day and age of responsive, this design in it self is circa 1998 at best. Who makes sites like these? let alone banking site, where consumer education is key and information clarity is the difference between engagement only and engagement + conversion. This truly sucks.

One could over look a few UI/UX items but this site is riddled with them. No call to action any where, when a consumer comes to the site they come online to BANK or to Interact with the services. The drones who are building these sites are using them as a corporate/marketing site. There in is the issue, these rock stars of digital have not figured out the difference between a corp site and a consumer site.

I think a basic pre-requisite should be spell check.

But I digress. See this:)

In the year 2017 it should be a crime to have an info scroll menu being cut off (see the arrows).The slider box contents have to slide right to be displayed on mobile. I rest my case, if you cant pass on your information on a mobile platform let alone in a single interaction, why are you even in business? Is no one asking what the cost of rolling out these sites + the cost of the digital departments is, in relation to the online conversion and reduction to 1st level call center support. They should be directly proportional, first call resolution services should see a decline of 20% if an online site is capable of doing that for consumers.

But the best is yet to come.

The award for sloppiness, and lack of imagination goes to this main page, which has not one 1 menu, but see the arrows, 2 menus. Had the bank like a billion new exciting digital features that they wanted people to discover I’d get excited about this cardinal design sign. But it even the content is the same/similar in both menus.

Head of digital much? This is a question for basic common sense.

This stuff didn’t happen over night, nor can it be fixed over night. Banks give rise to  the most un imaginative breed in this country. To look at mobile evolution, you have to look at web evolution. I couldn’t resist going back to way back machine and look at HBL. I will let you decide, how far they have come in their evolutionary journey.

 

From 2008-2013 literally nothing changed online for HBL.

Lets look at 2017

Not much has changed either visually or operationally, same center image construct, with a menu on the right/in this case its kept with technical advancements:), same/similar top menu. So since 2013 what is the innovation that happened here? How can the largest bank in Pakistan innovate if the custodians of digital cant even get the basics right.

They arent doing any better on the Mobile banking side either.

As a consumer, when I come online to the Banks site the first thing I should be able to do is login to my account. Every single one of these so called digitally innovative or leading edge banks have failed at the first call to action(Login). I wonder how their CEOs judge the KPIs of their digital folks. How can you in this day an age build a banking website that doesn’t have a logon item front and center.

Interestingly as I browsed through various banking sites in my effort to find one decent example, I wasnt let down. Perhaps there are many others, but in terms of size scale and resources Summit bank actually had a call to action/LOGIN and an URDU button visible on mobile + their UAN and email address.

Alfalah and HBL both had it post one click meaning within an other menu. Summit also had the 2 menu problem(see next to the Urdu icon) but luckily one menu is just a CSS mistake and doesn’t do much on responsive:) But clearly there is no QA any where.

Coming back to UBL. They seem confused, their site opens up with a site selector on mobile to select region. It clearly doesn’t look responsive, it looks like a mobile ready site no less:) from 2001.

It should pick up your ip and take you to where you need to go, that stuff is free to implement and reduces one click.

When you do get to your so called mobile site, the following disappointment awaits you.

I mean look at the dead space. This has to be criminal in this day and age to have a mobile site that looks/works like this.

This stuff is followed up by the following stunts and I quote from the Banks own PR. http://bit.ly/2y0YIKt

KARACHI, PAKISTAN – 21 August 2017: IBM (NYSE: IBM) today announced that United Bank Limited (UBL) has selected IBM to support its digital transformation journey by establishing a Digital Design Lab, the first of its kind in Pakistan, to weave a seamless digital banking experience into customers’ daily lives. The lab will provide an environment for UBL’s interdisciplinary teams as well as its network of start-ups, fintechs, ecosystem partners, and academia to develop personalized and engaging digital customer experiences.

I dont know who should be more ashamed, the Banks CEO, IBM(for being an opportunist) or the banks Head of Digital, if they have one. For a bank that cant make decent responsive website the above sounds like hot air at the least and misguided adventure at best.

I hope the bank sees the irony in the disconnect. IBM Pakistan must be lauded for their foresight to make some money off folks who are clueless about what the digital journey means. This market and these banks are ripe for the taking.

In the same spirit. Lets talk about speed and some basic form of technical serviceability bench marks. In the mobile space to leapfrog from mobile to fintech to consumer fintech the one thing every one must get right to get the unbanked on to your platforms and services is speed and delivery of your technical site(payload)/service in the least amount of data streams as the consumer is conscious of their data spend. Lets look at how most of the banks in the country perform on the speed to performance co efficient. In no particular order.

 

 

Lets not go too far to compare. The first bank that came to my mind in India ICIC bank. I ran the same test on.

 

It has a 30 + point lead as compared to our banks on average. Its a mind set thing, you don’t have to be 100 on the scale to be great. You just have to work towards improving. What I have seen so far is a lot of mis guided non sense labelled as digital strategy.

I dont claim to know every thing, heck the intent of this blog post is from the point of a consumer who wishes to use mobile banking, I am happy to sit down with any one who has the wherewithal to recognize that a problem exists and then work on trying to find a solution so that this eco system of Fintech’s can actually benefit from the banking players(due to regulatory hurdles), who at this stage first need to get their own house in order to even remotely be competitive as banks let alone against Fintech companies.

Its a matter of time only, as the regulations ease out, the Fintech’s wont need the banks, the banks will be a dying breed looking to partner with Fintech’s to stay alive. Right now the banks have an unfair advantage viz a vi regulation, it is their hour to exploit it to their benefit. Sooner rather than later all this Digital strategy stuff will go down the drain and shareholders of these banks will be left without knowing what hit them.

If you are the head of digital at a bank, hopefully the CEO of your bank doesn’t read blogs and you can dismiss this as what ever you want to dismiss it as, if you are the CEO of any of the banks I mentioned, you need to sit down with your chieftains and figure this basic stuff out, before you are mis led in to believing numbers and indexes and kpi’s that were invented to make these digital types look good, you have a real issue on your hands. If you dont innovate fast enough its over.