KE is the biggest Fin-tech/Any-Tech/Data-Tech/Social Network in the Country if they wanted to be….

Love it or hate it, cant live without KE. With all the market making news around KE, there is a lot to be said and done around the assets KE has. Besides the power or energy it distributes, it has data that it doesn’t distribute or use insofar as I can tell.

Let’s look at the bill. Beyond the usual business of having consumer demographic details, their CNIC, it also has past payment history and consumption info.

From KEs Bill Explainer

If we just take the basics. KE has the ability to be single largest fin-tech play in the country. If you asked me, I would have had them apply for a digital banking license bar none. Why?

Let’s deep dive into the theory looking at their standard bill.

What do they know about the connection owner?

  1. Male/Female
  2. Actual Bill Amount
  3. Payment frequency
  4. Usage consumption, up or down co-related to weather
  5. Address
  6. At least 10+ years of all this data is digitally available

What does one need to base lending decisions on typically at a fin-tech/bank/credit co? Most if not all of the above. But wait, it doesn’t end here. This is what is non extrapolated and non implied data.

Now let’s look at what else they could know or use?

  1. They can group people into affluence/segments based on data from a neighborhood
  2. They could club neighborhoods by pay-back rates + timeliness
  3. They also have one super power no one else does or can, they know the channel where the payment was made
    • Online
    • Bank Branch
    • Which Bank
    • Cash
    • Online Transfer
    • Bill Aggregator
  4. Based on this they can build heat maps on
    • Cash based payment locations + banks + centers
    • Time of day month etc when those payments are made
    • Who are the folks that have delinquent payments
    • Who are those that pay for payment plans
    • Can you offer pre paid subscriptions and collect advance cash from Tier one customers?

What else could they monetize for them to be a 10x Valuation play?

  1. Data, data and more (small data)
  2. Make your constituents download your app or consent to giving them their home/commercial connection pin location(more on this later, if you are a KE board member email me and ask nicely)
  3. Push notifications and discounts via app (more on this)
  4. Incentivize users to go beyond the abysmal 500k Downloads today of the app
  5. As an entity KE Serves 2.5M Adult customers(whose demographic/psychographic info is in the system some where but not being used)
  6. KE’s distribution network spans across 6,500 km2 based on their data, imagine the maps applicability that could be unleashed if they actually stored and curated this data

How can a small change in their data/digital strategy make them help consumers pay their bills ?

  1. Once you drive up app installs make it the most useful app, by having video/news/games/content in it. At 1M daily active users and looking at our consumption habits you serve people with ads, if they have the ability to use part of the ad-revenue you make to pay off their bill, you would be the first electric utility company in the world to monetize a completely different channel..But wait theres more..
  2. For the above example we are assuming you turn on some one else’s content and likely googles ad-network. But if it were up to me, you would build your own/reuse some one else’s tech to run your own ad-network. Why, because you have the single most populated cities 1st party user data. Meaning what you could charge for targeted ads, google would pay you to connect to your network. No one in Pakistan(sans the dumb telcos) have this data, who also by the way have no ad-network of their own.(Tried and failed twice, because their chief digital officers are ex marketing mavens, and bad at that too-Historically speaking)
  3. But wait there is more, if you take NextDoors example from the US, the only company that has the slightest chance to build a local communal social network in Pakistan is KE leading to local commerce, payments and monetization of every transaction on that network, dont forget UGC news, health and other use cases.
  4. What KE has is the ability to build a trust network. Granted they have shitty PR, but this is what it takes. Most of this costs under 1M$ to roll out a real working product.

As the corporate changes, ownership scuffles and PE battles enrage, the operating company should be focusing on building value.

If I was a shareholder, which I am not, I would ask, Is this company, with the above data plays, a better monetized asset? When/if the eventual sales happens to the Chinese, does the valuation go up?

Should the government that is 23% strategic share holder and on the board, demand that KE innovate because these seemingly small data plays can increase revenue + reduce the burden of power costs on the end consumer by really doing some thing out of the box.

It is the consumers data, with the state involved perhaps the state can nudge KE into enhancing their outcomes. Who doesn’t want, or need better outcomes. The people of Karachi could most certainly use them and a lower bill potentially. Or have avenues to make additional money by engaging in local commerce.

I wanted to go look up the BOD of KE, sadly their profiles aren’t hyper linked any more https://www.ke.com.pk/corporate/board-of-directors/ but still show up on a google search. Interestingly enough some of the folks whose profiles aren’t on the Bod Page. Perhaps new directors to come or old ones whose links still on Google. But I digress. I wanted to take a look to understand who in this lot would have the courage to ask the Management to do some thing bold. Don’t know the answer yet.

The fact of the matter is, a lot can be done, there is immense potential both to the current share holders, the market at large and any future buyer from a resultant asset sale. The question is, will they recognize what they have? Like most Pakistani asset flips, is this just vanilla for a quick upside? Or with the change of play in the BOD they will actually go ahead and bring some critical thinking besides rubber stamping of votes for an eventual sale. I mean just basing this on historical items and nothing besides that.

I have no horse in this race, besides being a consumer, who would like continuous un interrupted power supply and if by some miracle, these guys are able to do a further turn around on the back of a real digital transformation that allows me and other end user some relief from sky high rates, whilst adding to economic progress of the constituents they serve, I’d be all for it.

**Note to BOD, if you are thinking of or are already engaged with McKinsey or Bain, on the insistence of your management team, you are better off re reading what I shared for free and save your self the same BS they took to every bank, every navigation co, every telco, every food science company in the country. Its one standard deck with whitewashed commentary that sounds better coming from some one whose not of local disposition. Sharing this so you can conserve your FX at such a critical time in the country’s history.

Key initiatives to drive the digitization of the economy and unlocking Dollar Based inflows

We all want good things to happen to us, but not many are willing to go out on a limb to share the things our government and state actors must do. In an effort to start a healthy debate and put-forth some ideas, thinking and suggestions I decided to publish a cliff notes equivalent of what we need our government to do.

As always take the ideas & suggestions with a pinch of salt. Forgive the errors as it is late night thinking translated in to some discussion points that have been shared plenty of times with those who have asked in the past. Its is far from perfect/cohesive, but it’s a starting position. Some thing that enables, mature adult conversations.

Feel free to share your ideas and thoughts here or via the twitter post that led you to this post. All I ask for is a civil and mature discourse even if you disagree with the content.

#PakistanStrong

A Simple Guide to Unlocking 300m$ in Foreign Exchange in 120 Days by Supporting Pakistans Technology Ecosystem.

We all want good things to happen to us, but not many are willing to go out on a limb to share the things our government and state actors must do. In an effort to start a healthy debate and put-forth some ideas, thinking and suggestions I decided to publish a cliff notes equivalent of what we need our government to do.

Take the ideas and suggestions with a pinch of salt, also I am not great at public math. Forgive the errors as its a one persons late night thinking translated in to some discussion points. Its is far from perfect or even cohesive, but in my mind it’s a starting point. Instead of every one suggesting the problems we face, here is an attempt at offering some solutions or a path to solving what ails us.

Feel free to share your ideas and thoughts here or via the twitter post that led you to this post. All I ask for is a civil and mature discourse even if you disagree with the content.

#PakistanStrong

Banking on Data & Stats to eliminate Transaction Trust Deficit(TTD)

VC’s, Valuations, Real Market Numbers & the race to build sustainable e-commerce in Pakistan

Let us get all the data and stats out in the open that every one seems to be using as a basis for FOMO creation in the tech ecosystem. As an angel investor very early on, this is almost advice against my self,

but advice is a mandate that is sacred. So to do right by it, one must give it without any hangups and to the best of ones understanding and ability.

Every deck that every Startup has circulated to every VC and requested not to share, has ended up with every one. Thats the first truth, people have taken screen shots of those decks and circulated to everyone in their circles of relevance. In every whatsapp group where they were circulated, an image/story/narrative started appearing

  1. Pakistan has a young Population
  2. Pakistan has a connected young Population
  3. Pakistani’s crave instant gratification
  4. Pakistans Retail Segment is in the 100bn$ space, angling for 200bn$
  5. B2B + adjacent markets will allow us to get hockey stick growth
  6. By showing crazy trajectory on their MVPs(whilst failing to mention product discounting) in a country hit by mass inflation pressures, every ones on an insane GMV ride.
  7. There is great talent and a fraternity of ex Careem & Daraz & Easypaisa folks who will build great companies (read unicorns) with 2-3 years of experience under their belt. (I hope and pray this is true as it helps Pakistan)

Assumptions circulated from startups who have raised funding based on the above:

  1. Our target market is the $152 billion retail market across Pakistan with more than 2,000,000+ retailers.
  2. “Now Commerce Penetrating 130bn$ TAM”
  3. “Retail Market size is 150Bn$(TAM), Retail market size growing 9% YoY for 20 years. Retail market through mom- and-pop stores, or the Total serviceable market is 91% of that or 137$BN”
  4. 170bn$ Retail Market, 220M- Youth led population, 70bn$ Grocery Retail, 8.2% CAGR since 2016, over 3 million tradition retail stores across categories, 900k retail stores covering >90% of total grocery sale.

Building on the assumptions from above. We have seen the following Emerge.

  1. One Startup with 27m$ in GMV got a 275M$ Valuation
  2. An other startup with 42m$ in GMV got a 100M$ Valuation
  3. Yet an other one with 65m$ in GMV got a 200M$ Valuation

But then I came across Jawwad Farids market assumption note yesterday. In which his data suggests that the market is not remotely as rich and large as the assumptions that have led to these valuations it got me thinking. That there is real opportunity to help Pakistani retail grow, if we look at this problem from a value creation lens vs. a valuation lens.


Jawwads assumption/analysis is simple and points to the direction that “All this talk of informal economy, we can’t sell more than what we produce, what we import and what we store.”

He points us to some thing very interesting and I quote

“If the overall market size is $50 billion give or take a few, growing at 5% – 10% a year, year on year, how big is the market likely to be 5 years down the road? The answer is somewhere between $63 – $84 billion. If through an act of God retail in Pakistan goes completely digital, this becomes your GMV estimate with 100% market share.”

So whats really going on here?

  1. We lack data and transparency
  2. Seemingly there is a lack of due diligence on actual numbers vs perceived based on the 220m population size
  3. Even if Jawwad’s estimates are off, his hypothesis is accurate that documented or not, we cant be selling more than we produce or import etc, some where the numbers have to add up for retail, seemingly today they aren’t and no ones asking why not.
  4. Food for thought we co-authored a blog post on Pakistans online GMV some time back, for some color

Ok so enough talk about the gloom and doom. Let’s talk about the good stuff, the market is large, it will continue to grow, we are barely online and for better or for worse digital payment stickiness is not there yet(there in lies the opportunity). We need to build on it.

Let’s now look at things that help us get scale also look at the single biggest thing thats causing this transaction trust deficit.

Ask your self, what happens in corner store retail today?

A customer has an intent to buy some thing, they make the time to go to the seller, physically, they can touch, feel, evaluate the item then make up their mind, if they want to buy it, they do some price checking from the market by going to multiple folks. They have confidence that if they pay cash they will get the product that is in-front of them. The exchange of cash happens, they collect the product, bring it home. The deal is done.

In an online scenario, for the same product, the customer starts with a web search or goes to an existing online vendor or market place. They see the image of the product, the image varies across the sites, one of them has the label, the other doesn’t, yet an other one has a filter and the colors look off. They all feel similar but not the same because the end user cant determine if they are. The end user, either does COD from 2 stores and physically sees the goods arrive then pay the rider and close the transaction(They have nothing to loose by ordering from multiple stores- As some one who ran the largest COD service nationally, this was a common complaint from my end customers). Or they don’t bother and continue their purchase journey offline, because they are not confident of the products virtual representation and thus hesitant to buy online.

So here is where the Government comes in, from the honorable Finance Minister to the SAPM on E-commerce. Both have a vital role to play. Heres what the data tells us.

  1. Its not enough to document transactions
  2. You need context
  3. Take the line item detail and analyze it, to hold people accountable, you can only do this, if you have those details to begin with
  4. Enforce labelling standards, move toward packaged goods, that are more exportable
  5. Pakistans biggest problem is documentation and discovery of what we make to Int’l markets
  6. We suck at presentation, the government needs to help retail by having basic requirements/guidelines for product representation
  7. Require the Regulators to make Banks have APIs that work and run a local scheme of their choosing to enable digital transactions that do not take a year to apply and get access to
  8. Have Digital KYC enabled by NADRA Mandated by Law or an act
  9. Mandate Instant Merchant Settlement & full and final taxes to encourage movement away from the grey channels
  10. To Promote Startups in the commerce sector, allow Open Banking, Use the  PSD standard or similar and apply to Pakistan. A minimum set of rules, apis, interconnections and published open standards by which everyone can connect and use banking services. 

Seems like we(the community) have been talking for the better half of a decade to f*ing enable payments. Let me not even get started on logistics infrastructure and regulation. The lack of movement on these is the sum of our discontent when it comes to lack of digital enablement and having a clear path to e-commerce growth.

We need to ask our selves and the government:

  1. Do we only want large commerce to succeed in this country?
  2. Do we not want to remove our reliance on imports by creating a discovery mechanism by allowing for vendors to go online first?
  3. Do we want to continue to loose FX to AliExpress etc via credit cards by not having Made in Pakistan be listed in Pakistan?
  4. Will we continue to talk about digital payments and our large youth population or are we going to enable these folks to make money by taking part in commerce?
  5. Will we for a change spend govt/tax monies on enabling the right programs vs enabling for Airtime?

The answers are simple. Some one from government has got to be willing to participate with the stake holders and help enable these changes. We all know what they are.

If we don’t, we will move towards valuation games which are also need for a nascent ecosystem like ours, but the “awaam” will loose out on the value creation piece. There is a massive opportunity for the government to course correct and be on the right side of history. This leads to job creation, digital transactions, growth in logistics, enablement of time/value unlock, second careers etc. One leg of e-commerce are services, that we continue to discount from the narrative of online commerce.

If we do not give people the ability to go online, transact online, and deliver goods and services virtually and physically we are basically doing our selves a dis-service. At a national level, till there is a concentrated movement in tier 2, 3, 4 cities to on board, artisans, service providers, manufacturers, producers etc, we will not be collectively able to go grow domestic trade nor improve our manufacturing services.

The second leg of this enablement is to existing industry, industrial groups, help them come online, help them digitize, when they are able, capable and willing to play in the space, the over all pie will increase, there will be demands on the regulators, the politicians and the ecosystem providers to offer better, faster, more reliable services.

Net net, you can not be online if you are unwilling to accept the ground realities. The ground realities today all point to a transaction trust deficit, which has clear remedies spelled out above, all we need is a willing government to act-for once.

Today commerce is reliant on the Big players, FX losses & a cost of doing business in USD. You ask how? People opt in for international platforms, customizations and spend $s to sell products in rupees?

Where is the common sense in that???

The people we need to mobilize are the ones who have taken the first step. Meaning they are selling on Facebook, Instagram, or via WhatsApp etc. We need to transition them to Digital Store Fronts (DSFs). We need to account for them as players in the industry, we need to help vs talk about helping, we need to mobilize resources vs talking about said mobility, we need to train them to setup and sell, we need to help them get banked, or digitally financially included for real vs talking about it, we need to come up with taxation structures that help them and make the space inclusive for more first time sellers/entrepreneurs to get online vs press events. The time is now, the opportunity is real.

This country does not produce enough jobs for the youth to be employed, we need to create/enable entrepreneurs, other wise the same asset class we are banking on will be our biggest liability.

At the end of the day this TTD is only going to go away with the power of real action from the incumbent government organizations and the regulators at large. Less press conferences, less media coverage, more action.

Pakistan’s Retail Moment(s) & The Power of Digital Transformation.

Every one wants to be an omni channel retailer. Some will evolve but most cant, not because they don’t want to, but because there is a foundational basis missing in understanding the journey it self.

Let’s step back, if there is no “documented engagement process” in your organisation today, within the process(es) that lead to or generate sales; meaning if things are not codified & repeatable, the likelihood in digitising them is very slim. It may feel digital but you continue to loose all attribution data over time. Just collection of data does not equal $$$.

The SME/Startup Conundrum

Imagine your journey. You are an SME that runs targeted ad-campaigns with great ease and even better results. You attract people to your Landing Pages, or Check Out Pages. The Journey up-until then is digital as is your sales funnel. But when you take people off-page,into a WhatsApp chat or a twitter response or an Insta DM your omni channel dreams may seem to be fulfilled, but in reality you are creating noise in the channel by doing “hand overs” especially if they lack traceability.

You may argue that, all these are digital channels. You would be right in stating the obvious. These are all digital channels but any channel in the absence of traceability is just a Messaging Channel for Fulfilment (MCFF) vs a Pure Digital Channel for Fulfilment (PDCFF). Not some thing your Bachelors degree in marketing or your 2 internships at “insert leading Pakistani FMCG name here” have taught you, yet.

In our desire to push content and sales via any means possible we have veered away from mapping our internal and external journeys. Take the example of a founder who reached out recently, lets call her Ayesha in the interest of privacy. She has a 20% conversion on her FB Ads, but her order completion ratio is 8%, her online repeat customer ratios are even worse at 3.36%. She has an amazing product line up of pay-as-you-consume meal plans and her product reviews are phenomenal. Her Gross Sales are about 1.33M Pkr a month. But the potential, if she were to increase her order completion ratios + get repeat customers would be 4x without doing much. That was my working thesis. So I challenged her to critique her own process.

So what was happening? FB/Insta Ads were bringing people to her social media, where there was “no clear call to action or CTA”, there were prices mentioned but no unified menu of services. The interest in her meal plans was great, based on her views and engagement as far as I could tell. But where did it all break down?

The User flow was as follows:

  1. User discovered the product
  2. User came to Instagram
  3. User spent about 4 minutes narrowing down plans and mixing and matching what they needed (in their head and computing prices)
  4. User then messaged her on Instagram
  5. She then asked them for their Whatsapp number
  6. If they were interested further, they would provide it
  7. Then they would engage on Whatsapp
  8. She would then screenshot the Whatsapp conversation and send it to her order fulfilment team (aka one of her 2 employees)
  9. They would transcribe the order in excel and create an invoice
  10. They would then reach back the customer via a new Whatsapp Number (theirs)
  11. If the customer confirmed, they would send bank details for payment collection
  12. Customer would typically IBFT the funds between 2-3 days
  13. They would then fulfil the order
  14. Then an employee would reach back out 3 days later for a review post or feedback
  15. What I missed to tell you, was Ayesha has a retail location as well, thats how she started
  16. The process/workflow for that is when A customer walks in
  17. Has a person that greets them, there is a sampler menu to see the wares on offer
  18. The person signs up
  19. They pay in cash or via credit card (minimum signup is 2 weeks) online you can do it even for a day
  20. Her store sign-up customers typically stay with her for 7.2 Months
  21. Her online customers stay for under 48 days
  22. Interestingly most of the people that walk into the store discovered her services online
  23. She also has a gift card service
  24. Those gift cards are sold as vouchers and every time she’s run an ad-campaign for them her sales conversion is over 28%

Im sure it is getting evident, where the fault lines are.

Lets re-calibrate, in her mind she’s doing all the right things, FB Ads, Insta Ads, Whatsapp real time communication, multiple payment options, personalised services. Yet brick and mortar sales are higher as are the gift card sales. The first thing that was evident in the journey was, that a true customer experience is predicated on great faultless payment options, that have low to zero friction.(Cash/Visa/Mastercard). Hand over between multiple sales/company people from un-branded phone numbers adds delay and hesitation. The business seems like a mom and pop shop operation. Whilst the product reviews were fantastic, we did a poll on the users purchase-journey. The results were horrible. Most people said, “love the product, hate the hassle to order or cancel”

So we looked at the in store model. Fast payment, potential product test, curated menu + pricing and multiple options on the checkout counter. We replicated this by building a landing page, that had a big-ass CTA, Click here to sign up. Once you clicked, it displayed all the menus and provided in-store days if you wanted to test the samples + nutritional information (and real video testimonials). As you went through each menu item, it displayed FB/Insta reviews from real folks, You add your selection to cart, select the days of delivery then you go to integrated payment or IBFT etc, 10 seconds later you get a confirmation response email and a WhatsApp link + all other channel links to chat with the vendor if you so desired + a BIG BRANDED PHONE NUMBER. They combined all these channels, phone, WhatsApp, Insta to a single online managed help desk response agent service. With near real time FAQ and a bot to service the customer + Live help.

With the order process automated and a workflow digitised the most useful information they got was customer information, with every delivery at day end they instituted an SMS or WhatsApp bot, based on the customers preference. They got feedback from the customer digitally vs some one calling them at 2 am asking how their meal plan was.

In the 6 months since these changes were instituted gross sales are around 7.63M, 80% of them are via online channels now and they have moved to a store in store model to reduce brick and mortar expenses during Covid.

As they scaled they learnt a few new things:

  1. Category Management is a lost art (SMEs dont think about it a lot, we will get to this shortly)
  2. CRM data is king yet SMEs don’t capture it till its too late
  3. What the customers say they want vs what they like are 2 very different things
  4. SMEs are top candidates for Digital Transformation
  5. Process & Workflows are key, Whatsapp and FB are bad at this inherently
  6. Customer segmentation analysis allows for better AD-Targeting & Hockey stick growth
  7. Gift cards with fantastic checkout options bring in the highest margin if you have a video testimonial library

I took the above example as a starting point as its atypical but growing in relevance as online sellers are mushroom and not typically in the FMCG/CPG space and away from the current hoopla around B2B Retail and B2B2C Retail or even our favourite Kiryana store. But this is poised to grow and if the FMCG/CPG brands are smart they will keep an eye on this space and acquire the upcoming D2C brands. If you are a startup think about UX of Omni channel retail and keep adjusting for growth.

FMCG/CPG & Retails Moment in the Spotlight

Shifting gears, let’s look at the FMCG, CPG vertical as its very relevant and increasingly unique. It only operates on the periphery of data, because of one key component that has been missing in our market up-until recently. Product Information Data (PIM). Along with that, what has been missing from on-line and off-line channels both is exacting data on category management and consumer trends in near-real time.

Whilst it would be totally unfair to the say that, Shan, National, Unilever, P&G, Reckitt, IFFCO, PTC, Coke, Pepsi, EBM, Engro, Vital, Nestle, Hamdard, Qarshi and the rest aren’t aware of this, I would venture to say that most if not all are relying on international best practices(for the global brands) and local derivates from transient employees(X Sahab, sr brand man as an example) when they shuttle between firms vs concrete defined, data-based strategies and nuances derived from on ground data and the ability to take “small data” and piece it into execution material. I could be wrong but so far in my experience, the talk around digital transformation and omni channel is much larger than the execution.

Why would I venture to make such a claim? Simple. I will list the questions that come to my mind that I would pose to brand teams locally.

  1. What if any category management framework do you use?
  2. How do you consolidate, curate, house & distribute your product information?
  3. Do you do universe planning?
  4. Do you have an-asset refresh policy?
  5. Do you have Marketplace SLAs for product information?
  6. What industry benchmarks do you codify your digital process against?
  7. What is your digital transformation journey and who owns it?
  8. Does your organisation have digital champions?
  9. Do you have a a 3PL or 5PL strategy? Are you as a brand custodian involved with it?
  10. Do you work on or execute retailer equity programs?

If you aren’t using a category management framework best to start off by looking at this webinar series on CatMan2.0 an industry standard for CPG/FMCG companies & beyond world wide.

We are an evolving market with X 100K Kiryana stores, they aren’t digital nor is their sales data, a great situation to be in. Why you ask? Because if you digitise a few 100k stores & their footprint across retail you will, for the first time get actionable and real time data compared to previous long standing guesstimates and market sizing power points handed down from generation to generation of brand managers.

Yes we have the likes of Salesflo and others who are operating in the distribution management, digital merchandising and in-store marketing and data analytics space, but that is still a mouthful and whilst great services no doubt they are working on a different part of the supply chain. As are the likes of retailo and tajir etc, raising millions is validation that this space is about to get interesting, making money will be validation that we are choosing to solve for the right sub-area. In the Kiyrana tech space this wont happen with non-feature rich East of the border copy cat products in Pakistan. At some level copying the model would be acceptable but when we cant evolve past the same name moniker from India along with colour scheme and UI, are we really innovating, granted some times a good copy does better than the original, time will tell.

Im generally not a fan of ME2 products, unless they are engineered to local specs with unique USPs and helping solve for real local issues. Valuation driven copycat apps, that lack ingenuity even in their look and feel wont likely solve for local problems because their prime motivation to build is not to solve for a unique local problem, but to follow the RocketInternet Model of cut-copy-paste and exit(CP&E). Granted it has worked in the past but I am more focused on sustainable local growth and companies and products that will make a true impact on the ecosystem, making the lives of Pakistanis better. The B2B players have it pretty tightly locked down in the value prop space and there are some formidable players in the b2c space as well sans copycats.

The jury is out, on when they become profitable ventures. In the intervening time of price wars and VC funded dreams, this should be cherry picking time for Brands/FMCGs/CPGs to really play their hand vs being locked in by technology players.

Just because most of these CPG/FMCG brands do not have the technical, operational and industrial supply chain bench-strength beyond what they have seen domestically they continue to have FOMO. Also this is not a swipe at them, its the reality of the items at hand. What this opens the space up for, is true digital transformation within the FMCG sector so they start to un-learn the Suzuki from warehouse to distributor model and go deeper in the value chain by understanding the step change in their own valuations that will come if they were to actively participate in owning “the digital last mile of supply chain data”. Whilst there is a massive push to be the “digital supplier” to all or most retailers, in the end FMCGs will win big if they get their act together as they have new buyers with likely better documented sales and order histories & reach. But as this grows the lack of proper 3PL & 5PL understanding on the distribution side and the harsh reality of unit economics on the instant fulfilment / retail side, will pose challenges at scale that are new, but solvable.

I feel:

Supply chains will be king, people who understand them will be king makers, people who use the most efficient ones with a keen understanding of real time data and traceability will be the prophets of retail.

But do we understand enough besides the press releases? Yes we do, to a fair degree, but can we operationalise it?

Not as much. So that a first time buyer of X brand sachet of shampoo in Parichanar shows up both as a first time consumer, has attribution data stored, is primed for re-marketing, aspirational spend, has language localisation elements built in, have native voice engagement available to them and for the first time be visible to the brand as User-X vs (Shipment 1 of 5000 sent to distributor in Kurram District in the province of Khyber Pakhtunkhwa) and based on census data have a likelyhood of being part of a 30% female cohort. This is the tough ask.

Every brand, FMCG, CPG, CEO wants and needs this data, but they do not have a clear cut strategy in place to make early bets to fund the growth in this space. My view is, most will be late, will try to make acquisitions in the space, will fail with integrations and then blame IT:). Best to note, IT ≠ Digital Transformation. Far from it, we continue to confuse the narrative at the top, thats why we have seriously dis-functional organisations. If digitization doesn’t have a clear owner and a mandate, you as the brand custodian should go some where, it does. If the CFO of an organisation has this mandate, short their stock if possible. Here is a model for you to keep in mind when thinking about the elements of digital transformation in any organisation.

Mindsets & Change Management, How to Transform Digitally?

It is a journey, that traditionally started with an ERP mind set that has to evolve.While a PIM system helps businesses consolidate, manage and enrich product information in a centralised repository and distribute consistent product information to every customer touchpoint, an ERP system carries out everyday business related processes like accounting, compliance, distribution, project management, supply chain operations, risk management, etc. We have to have an organisational shift from transactional to operational and understanding the building blocks around the digital infrastructure required will help organisations transform digitally. It has to have board room sponsors along with people who are willing to stay up nights in corridors holding doors open for the funnel of change to flow through in the right direction vs guarding their doors and not letting change management through.

Following the same thesis, its easier to measure things digitally but when your end product is being sold in an off-line first model for decades how to do you collect this info?

Well one traditional yet digital method is to work with the B2B startups who collect distribution data. But the better way is to own your “asset streams” across market places and digital channels, then use the same streams to enable the Kiryana stores to start selling via online channels. If any thing don’t think of becoming a shopify service provider. Think Instant stores backed by the brands them selves and deploying marketing and sales incentives to start “capturing” the offline footprint that goes online. Use local tech where possible vs jerry rigged foreign tech. Till you start the enablement of a digital first store, you cant do much around brand equity surveys in near real time. This journey is based on a thesis and you as the CPG/FMCG must build your view on the thesis vs the eyewash being sold in all segments of b2b/b2c/b2b2c enablers and tech. Tech only solves part of the problem at hand. It unlocks a channel, how you unlock it starts with an evolved digital mindset of having both a short term and long term strategy. This is not a race, but a cycle of growth, invest in the right tools, systems, thesis and products. Ensure your teams are trained. Getting outside help for training, consulting and advisory in

  1. 3PL/5PL
  2. Distribution
  3. Logistics
  4. Fulfilment
  5. BrandEquitySurveys
  6. Offline2OnlineAttribution
  7. Online Payments

Will be key tools in your future success. You cant do it alone, but you can go further faster with subject matter expertise.

Let me leave you with what a Brand Equity Survey’s starting position should be. Similarly you could work with experts to carve out tool-kits in each area as you map your digital journey.

The Fast Fashion + Affiliate Opportunity

Oh I didn’t forget you Khaadi & Sana Safinaz, Elo, Limelight and Bonanzas of the world. You have an outsized opportunity. You are all fairly digitally inclined but with people copy-catting lower end version of your brands, I am caught thinking to my self why you haven’t co-opted the mass market yet? Beyond taking out copycats, why not enable your retail partners to sell further and wider?

Granted not all of you have retail partners since you moved in to the flagship store in every city model. But what about tier 3, 4, 5, & 6 cities? Why put out your infrastructure when you can work with others who already have the distribution channels. Why not enable them to go digital and become fulfilment agents or go drop ship? Why can I in 2021 not build a drop ship store for Limelight in Bannu?

Digital mindsets like all other mind-sets are transformative and happen over time, you cant do what you haven’t experienced even if you copy very hard. There is a massive opportunity to think about digital transformation beyond having a website and thinking about the cheapest delivery rates. Over time all those things are commodities, if you aren’t strengthening your supply chain by building resilience & reach, you your self will loose the opportunity to digitally enable new markets and thus new consumers.

If all your brand marketing is focused at, is one Target Segment are you even really digitally inclined? Agreed that not all products are mass market, but there is a market that you haven’t explored yet. Very likely, because you have not unlocked all your data.

Fast fashion has the most potential to grow, with the right world view and investment in digital transformation, beyond just lip service. Because most of these businesses are not run by boomers, there is a real appetite to scale the digital channels, which is great news for all. The roadblock is in human capital. Leaders within these organisations beyond the “saith” or “solo-preneur” are a line up of yes men and women who agree with the know it all brand masters(aka owner) and thus a sense of fresh thinking and experimentation is vastly missing. I could be biased, granted, but when was the last time an online or in-store experience in fast fashion, left you begging for more? That is because the rest of the industries standards are so shoddy, that when we get a package in time for the right price we are grateful and we as consumers haven’t evolved either to what can be, yet the same consumers have a very different mind-set when they order via Amazon.

Coming back to affiliate stores, both digital and offline, the data capture and inventory consolidation opportunities are plenty. Even before that, accurate product shots, the right handling of merchandise and a fast outsourced PIM could reduce 1000s of $s worth of photoshoots and product cataloguing every week. If I was the owner of these brands, I would do a multiyear planning and strategy session and build out the internal asset classes. AKA what to outsource and in turn allocate marketing spend on distribution channel experimentation. There is so much to do, if they were really smart they’d look at local shopify models and build affiliate on boarding for people that bring on & offline traffic and given them a digitally enabled sales tool kit.

Repeat after me, there is no shame in outsourcing, there is no shame in working with startups and even incumbents, there is no shame in accepting that you don’t know a lot around the digital value chain. If you accept the known unknowns and the unknown, unknowns your brand will evolve faster. Take comfort in knowing you built a power house of a brand-now rely on the experts to Scale it 10x.

So what is Digital Transformation in our Local Context?

The what!

First of all take stock of where you are in your digital maturity/e-commerce maturity. Especially before you embark on the how. You must define your what statement. Again no one size fits all but this should give you a better starting position than if you haven’t aggressively thought about it recently.

The How?

This is the tough part, knowing what needs to be done is listed above, since not all companies, organisations, brands, teams are made equal, the kick off process is extremely challenging. Ive spent the better half of the last decade working on framework and models that help companies and individuals more so, navigate the challenges of change management and transformation. The How to do it, whilst seemingly easy needs a lot of perseverance to execute. So I’m borrowing an excerpt from my (soon to be published book on digital transformation) to help guide you in how to even get started. I write extensively on the FAS-T Methodology in my weekly news letter here.

The When?

Not soon enough. You are already late if you are asking this question. Some Retailers/E-tailers, Brands, CPG, Managers, Product folks will read this and think they already have on-line presence, they are exploring partnerships with startups and have MOUs in place. You sir/ladies are the ones that will be left behind by a generation of execution mavens who truly understand the transformative power of actions. It is on the shoulders of such folks that new brands, D2C and otherwise will be built. If you rely on your “agency” for guidance on all things digital, I am already betting against you.

I don’t have any or most of the answers, but what I know for a fact, is that if you are the Owner, CEO, Partner, Change Maker, within any of these industries or verticals and you are struggling to frame “where to next“? Then let the hand written note above be the starting point, in having an honest conversation with your self before you embark on your digital transformation journey in the retail world – (or any world).

I wish you the very best of luck. If you want to operate beyond luck alone, I can be reached via Twitter and typically reply to all questions if you say please!

OLP + Establishment|M|ilitary- style executive leadership. Our Un Tapped Potential

We will get to OLP in a second. Let us first define the opportunity. We have many (100s/1000s) of officers retiring or leaving service honourably at a reasonable age (Between say 40-50) Keep in mind most successful entrepreneurs are around the 45 yr mark. We have limited number of employment choices for them post service, there aren’t enough ICIs, ENGROs and Nishat’s or even AWTs, Fauji Foundations, DHAs or CSD Stores that need head of Security, Internal admin, Government relations or HR. (SIGH) this has to stop.

Why? Because we have built a mould that needs to be broken. How many branches does the military have? How many officers are trained in strategy, war games, mission readiness, surprise attacks, logistics, real time assessment, engineering, health, peace keeping, technology, defence systems, secrecy, legal affairs, counter intelligence etc? So the best we typically offer them and extract value is because of the recognition their titles bring? It is an un-fair equation for all. Let me elaborate.

We invest in our officers and they are considered some of the best trained in the world. An officer is trained in adaptability, risk management, motivation, leadership and most importantly commitment and loyalty…all sought after skills in the corporate world and missing from young founders/founding teams. The skills need to be complimented with training in tech, digital and future skills to ensure that we are not losing the best amongst us to admin and security roles.

We are doing them a dis service of epic proportions by making them in-charge of CCTVs and Reference letters. We need to have a far better appreciation of their service, their duty & their commitment to our sovereignty. They have paid for us by their service as they stood in place of us and we have paid for theirs when they did by supporting them. Lets not get emotions get the best of us. Let us try to figure out how to propel this in to a strategic benefit for the country, retired service people and our economy. Yes you read that right. Our Economy.

Since we have a framework of what post retirement means, we do not challenge the status quo or build new channels. Most officers will struggle economically, but they dont have too. If we had a structured approach to on-board them and used their retirement as a feeder opportunity in to the new economic activity and reality of the post Corona World. That funnel is missing and we dont need to really re invent the wheel. But I want to actively build that funnel with others who want to.

Former Army & Intelligence forces recognition is a badge of honour in some countries when people launch startups. Others like the US where I was classically trained in the art of being productive had a great program at a little known company called GE. That program took in fresh grads(like my self at the time) and discharged service people and put them in to training programs. GE is known to have some of the best corporate leadership development and training programs in the world and some of their top internal talent that has come from the program has gone on to run and build some of the largest companies in the world.

Therein comes OLP. We need to have a startup vehicle that does Officer Leadership Programs, so that we train, re train, re launch and re activate people coming off-ramp from the forces to on-ramp in to companies + pairing with startups in the defence/manufacturing and other sectors locally and internationally as SMEs/Advisors/Coaches/Mentors/Operators/Supervisors/Partners/Shareholders. We need to breathe new life and build bridges between Adjudent General, (AG) branch that has the Welfare and Rehabilitation, W&R Directorate. We have to think beyond welfare and think of it more of a Unicorn Breeder. When you have arguably last level data on people their specialisation and service history. Whats missing is “Establishment|M” a for profit entity that on one end works with startups, industry, academia, incubators, accelerators, international partners to source requirement for talent + expertise + also train people in specialised vertical & skills to become chargeable in the corporate world and grow to be an in house incubator + accelerator.

The Three Areas of Establishment|M|

One that would pair existing startups and companies + founders with off-ramp(retiring) talent, for deployment locally.

Secondly, take off ramp talent and pair them with co-founders/talent/capital to launch their own companies add to that those who have immovable and value locked resources like land etc that can be brought in as founders equity.

Thirdly, take a mix of the above and deploy them for international work with partners and platforms needing specialised resources from the many verticals of services these officers are retiring from. So think re-deployment on to upwork but for military/tech/educational careers. There are 100s/1000s of military/lineage jobs online for developing countries where defence /tactical/strategic/3PL/maintenance/ offshore experience is key.

Before 3 comes 1 (B3C1)

So before the three stages, Establishment|M will run a cohort style incubation process for all the talent it intakes. Structured courses/bootcamps of a different kind to up skill and upscale the talent and to define and allocate their user journeys within the three potential streams. By harnessing what our military men and women already possess, and enabling them to be productive building blocks of Pakistan’s digital and economic future, we would have ensured that not only do we honour their service, rather continue it in other forms long after they leave their uniforms behind.

There may be raw talent who want to be entrepreneurs and want to start companies/businesses etc, there may be talent that has hard to acquire skill that want to make it billable, there may be a mix of the two that is looking to be matched to global opportunities but do not have a starting point to locate those opportunities or to engage with them.

Some say that when you are dealing with officers there may be a hesitation to be re-trained or even ego, I say, let me prove you wrong. Every smart officer, which is every officer, will truly work to make them selves deployable and be dependable as they have always been but this time for them selves first.

OLP(Officer Leadership Program)| Not your average Boot Camp

The mission for ESTABLISHMENT|M through the Officer Leadership Program, is to find the best and the brightest of those officers as they are leaving active duty and to transfer their loyalties to its platform and them selves to build a better economic future for all. Most specifically for the officers, their families, their future partners employers & employees.

The goal is to produce executives/talent who can bring the natural leadership skills they displayed in the Pakistan military to the right careers via ESTABLISHMENT|M. This is not a placement service. Far from it. This is a part accelerator part incubator part re-deployment platform away from the already established and scarce roles that are not value additive as they could be.

The pitch to the officers is simple “From this point forward, when you are in any kind of environment, you have to think that the best entrepreneurs are in the room with you, watching your every move. When you are wearing anything that’s got ‘E|M|’ on its label, you’re representing a new company and a new loyalty, to your self, to grow your second career. “

It is an allegiance that the former officers will understand and embrace we just have to create the environment and provide the tools instead of shoe-horning them in to existing moulds and career choices which pale in comparison to both their talent and the availability of said roles. Why not create a new ecosystem a new pie and breed unicorns instead?

How does this start?

Keeping in touch

The program seeks to enlist soon-to-be-civilian officers. The company will not start the formal review process until the officers have filed their retirement papers, but program should keep in contact with interested officers for a year or more prior to their departure from the military so there can be a proper/planned in-take and off-take scenario. So that the skills and aspirations are mapped. Given the sensitivity and privacy the info can be collected but anonymised and kept with the relevant military department but a working system be developed. Those are all operating mechanics. The reason to put all this out there is to socialise the idea and get feedback to making sure any such company, program, bootcamp or service in any form is useful to all the constituents and that others copy it.

How can this be operationalised?

The minimum rank for admission into the Boot Camp is captain, or equivalent and the bootcamp lasts through three to eight-months with rotation to organisations that partner with the program or induction into startup(s), or helping find co-founders and incubating & launching new enterprises or pairing with international assignments and the internal consulting organisation to build our McKinseyesque service. There will be three distinct tracks for ensuring the best talent gets paired with the best possibility for the highest success.

It sounds simple enough but this is Military to Civilian Transformation for Economic Development. MCTED. This also helps us in a host of different areas and removed taboos associated between civil and military interactions at large. If both parties build joint successes that too in new verticals, new services and create economic growth, every one wins long term. The harder we work the luckier we get, so lets work on this together and give |E|M a fighting chance.

Here’s my 2 cents for organisations who want to build just intake programs like OLP minus any incubation/acceleration, feel free to share this idea concept internally and reach out for any help you may need to kick start the effort. For incubators that want to work with retired officers to bring new co-founders to the front, feel free to pick up any thing from this note or to ping me directly.

For officers who have ideas who have retired or soon to retire and in search of the next phase in their life, it would be a privilege and an honour to connect and interact and see how we can work together even before a formal program is launched.

We owe it to our nation to our soldiers and to our selves to work together to build brave new companies with brave people and popularise the idea, so future generations know that post service there a new world waiting to be explored that can scale and monetize their skills. #PakistanStrong

“No soldier outlives a thousand chances. But every soldier believes in Chance and trusts his luck.”
― Erich Maria Remarque

COD |240 years in the making & ripe for disruption ‘again’

COD “cash on delivery” and “collect on delivery” mean effectively the same thing and have been used interchangeably since 240 yrs or so. At least based on the oldest published newspaper clipping available(1781) on newspapers.com as evident below.

Myths busted by the above

  1. Asians invented COD
  2. Brown people popularised it
  3. Credit cards came before COD
  4. Its a developing world innovation
  5. Its time has come to be replaced

Before postal systems came into place, delivering goods basically required a cash-on-delivery approach. This even pre dated credit. So COD has been here for ages, all other systems methods, even the postal services system came after it. Historically speaking it was in 1864, The year that Congress passed a bill establishing a system for money orders. This law, championed by then-Postmaster General Montgomery Blair, allowed the U.S. to replicate a popular British system for sending the equivalent through the mail.

Whilst across the pond the money order system was established by a private firm in Great Britain in 1792 and was expensive and not very successful. Around 1836 it was sold to another private firm which lowered the fees, significantly increasing the popularity and usage of the system. The Post Office noted the success and profitability, and it took over the system in 1838. Imagine our public postal infra taking over any thing even today.

Fees were further reduced and usage increased further, making the money order system reasonably profitable. The only draw-back was the need to send an advance to the paying post office before payment could be tendered to the recipient of the order. This drawback was likely the primary incentive for establishment of the Postal Order System on 1 January 1881—but helping to prevent theft in the process by not sending actual money through the mail. Money orders enabled cash-on-delivery systems to thrive in the days before credit cards.

Collect on Delivery tag with three part form, c. 1917-1919. From right to left, the three portions of the form were to be retained by the sender, the post office, and attached to the parcel. This last part also served as the money order application. National Post Museum

USPS’ collect-on-delivery system

A Harry H. Charles, of Quincy, Illinois, deserves most if not all the praise for doing something very important whose impact can be felt on the modern use of e-commerce even today: In 1899, he successfully pitched the United States Postal Service on the idea of collect-on-delivery. You don’t hear about Charles, but maybe you should know, every time you get a COD delivery that some one some where many moons ago had an original idea in relation to a problem; yet he didn’t go on Twitter creating content or talk about how hard it was he instead solved for it. Granted there was no twitter then..But you get my drift.

Charles had 900 reasons to celebrate. He didn’t give up, as outlined in the document of the Proceedings of the National Board of Trade from 1901

A little more than a year ago Mr. Charles decided to send a few of these parcels through the mails, collect on delivery, in exact accordance with the plan heretofore outlined. In every case the parcel was promptly delivered and the collection made and returned by the postmaster. Then Mr. Charles presented his plan to the attention of the Department officials at Washington, and was advised by them to give it still further trial. This he has done. In the past year he has sent over 900 “C.O.D.” parcels through the mails, to post-offices in every State and Territory, and in every single case, save one, has received prompt returns, the remittances being made in all cases by money order, registered letter or postage stamps. On investigating the single failure for the year, it was found that the postal car containing the “C.O.D.” package was ground to pieces in a wreck, and not even the wrapper of the parcel could be located.

Judging from the extended and satisfactory experience of this manufacturing concern, this feature seems in a fair way to work out its own salvation.

We got here in the present, in the today because, USPS was willing to experiment which led to innovations such as registered mail and the use of the money order, two features that Charles’ test took advantage of.

Perhaps a lesson for our postal service as well. So before we credit the Asian economies or the Indian e-commerce segment for revolutionising payments and bringing services for the masses, it has/had all been done before, for decades, this was a primary use of money orders, only to be changed in 1987, when checks were allowed into the system.

Please note, whilst you can still send things collect-on-delivery even today, the convenience of credit cards had killed the segment in the time of amazon prime. Id go so far as saying that Visa and Mastercard should thank Charles because had it not for been a problem he faced credit cards would have likely not come about in their present iteration.

The Western world may have given up on C.O.D., but many parts of the world have not, they are just getting started..

To be able to disrupt some thing, we must first try to understand its origins. A key missing component with folks/disrupters/wannapreneurs around us where 80-90% of our domestic ecom delivered are done via COD. Most folks have no idea about the origins, versatility, need or the shift that it brought when it came about.

Unless you have an acute understanding of the domestic market; & understand the challenge of low credit card usage in Pakistan and realise that customers prefer to pay cash only if they were satisfied with the delivery you cant really disrupt the model.

We have a credit card problem/credit problem. We also have a larger fundamental problem in understanding who we are transaction with. Lets try to understand this further.

Person A, Sees some thing forwarded to them via a friendly whatsapp. With a picture + price. Person A decides this is a good deal. Person A places an order with “friendly whatsapp/fb/insta, unknown seller”. Friendly XYZ seller uses a reliable delivery service, to send shipment. (they want to get their money in time hence they use a reliable service) The shipment is sight un seen by the messenger. Messenger delivers to Person A. Person A pay for it, takes it inside the house, doesn’t like it.

They go berserk on social media in blaming /shooting the messenger. Because their last interaction was with the only known entity in the transaction, the delivery co. The seller then blocks them on Whatsapp and goes on to sell more Italian dreams made in China at affordable prices sans quality.

Whilst its easy to go online and hurl colourful language at the messenger, this is single most common outcome of buying from un-trusted sources , who in turn rely on known brand delivery agents and thus creating a trust deficit for e-commerce, not for the delivery partner.

The underlying issue is of trust, till the public at large becomes savvy to not be conned by folks or check credentials or give in on their urge to buy PKR 600 Gucci slippers and then be shocked that they didn’t come from Italy is less a function of COD or E-commerce failure but more a function of a market whose time has not yet come(fully). You get what you pay for, if folks screened better they would do better over all, but element of greed on the side of the sellers, fake representations and instant gratification on part of an aspirational/millennial crowd with disposable income is adding jet-fuel to this issue. Its literally a communal problem but we fail to recognise it.

What are we really trying to disrupt then?

The first thing to understand is that e-commerce/sales/online startups/insta sellers/fb sellers/whatsapp sellers/wfh producers are all a microcosm of the country. People forget before they transact what the environment around them looks like.

Its like for a short while people really do step in to a magical place and consider their shopping journey online will be different from a real life experiences. Therein lies the “trust deficit” but it only kicks in post transaction.

Most people also lack the basic background check hygiene, or their guard is lower for e-commerce. Cant really say. But for all the payment companies, digital channels, marketing mavens, startups, etc solving for “e-money” there are other pieces to this puzzle that need to be solved equally hard. I see a dozen payment players come in to existence thanks to our regulators kind/timely approvals, but the question I struggle with, what are they all going to disrupt? If they are all solving for COD. I also don’t understand what they think, having the ability to pay electronically will do to move or create seismic shifts in a system and process thats been around for over 240 years. I am rooting for all yet cautiously optimistic only.

Questions every disruptor must ask them selves? What is the problem?

Looked an other way, away from payments alone, What are the things that must align for COD to work:

  1. The consumer needs to be physically available to receive the goods in order to provide payment. (That could very well be “credit/digital payment on delivery if you choose a card”
  2. Often times the consumer is not available, which means that multiple delivery attempts are made for one order
  3. The average number of delivery attempts per order is 1.24, (say an educated industry approximation normalised across similar markets).
  4. This translates into an extra 8-32% of labor costs in last-mile delivery for the seller depending on the size of the shipper/the delivery co the network/urban density

Furthermore, e-commerce retailers with high/exclusively COD orders potentially also face higher cancellation rates due to the consumer refusing the order. For example, the consumer may not be satisfied with their purchase & upon seeing it and refuse payment. They have nothing to loose…In such a case, the seller is responsible for all costs associated with the return of the item, increasing logistics costs.

Do I still have you with me?

So COD is not just a payment vector problem. Faster check outs will help the existing install base already familiar with the e-com world, more product range or established retailers can not also solve for buyers remorse leading to refusing parcel on arrival. So COD in isolation may seem like a large cash problem but in reality it has many complex layers.

D2C Brands starting off now, don’t believe what you hear. Payment gateways alone wont make this go away. Trust will. Build audiences, tell stories, content marketing is king as is a community. The future of COD will be increasingly in favour of those who take these steps.

There are lots of reasons C.O.D. goes on and on and on and on in e-commerce in the modern day, one of the largest being digital security weaknesses in developing countries. Also in an all cash economy, consumer preference are equally hard hard to shake, especially in Pakistan and especially in tier 3-4-5 cities.

Tier III,IV, V and beyond.

COD has a mapping problem as well. As recently demonstrated by our dear friends at Google nothing remains free for ever and with the lack of google being able to map beyond the major cities and the utter lack of any local mapping solution being up to scratch, what we need and I shudder as I verbalise this, A Nadra for Maps. COD, ecom, payments, KYC are all part of the same hypocrisy. That in my mind gets closer to being solved with an indigenous mapping solution, system & service. Cloud based systems are bigger larger than machines running in foreign lands, they are platforms and services that allow businesses to scale. We really need to understand that there is 0 indigenous stuff commercially available today that helps any startup play in the beyond KLI market at scale for years to come. We can’t be hustling backwards(saying use local when they are not up to scratch) because of faux patriotism.(line credit my dear friend https://twitter.com/asemota)

Focus on one big thing and solve for it.

Startups in the d2c, last mile, payments, fin tech, insurance tech space, mapping etc are all solving for different pieces of the equation. Yet the equation has been broken down into small parts above. In your area(s)/realm of experience you can only help solve the larger COD item or innovate if you focus on ONE BIG THING at a time. Every one seems to want to solve for the other “channels” core issues without first solving for their own. Mapping companies want to build payment gates ways. Bro first build a better map. Payment companies want do QR implementations, Bro first fix the mdr issue. D2C Companies want to solve for “locally made, better than imported” Bro first focus on quality and scale…I can go on, but I will not win a popularity contest. Banking regulator wants to use “Western successes stories” Bro focus on regulation and let the free market come up with the solutions instead. Buyers want to go online and shame the “delivery cos” Bro focus on ordering hygiene….

COD is not going any where….

This is the good news, it shows the ecosystem is thriving and self regulating, there will be progress and many will contribute to it. The next revolution is being shaped and fuelled by aspiration buying, smaller niche ticket items and staples. The biggest seismic shift will come from TikTok. There I said the T word. As the creator economy grows, so will the consumer economy, there will be more and more focus on locally sourced, locally available instant gratification, a merger of Home Shopping Network and Live Stream fuelled by Local Commerce. If you are not a stake holder in either of these, you are likely going to loose hard. COD will evolve, the transaction structure will evolve, the creator economy will give rise to lower end, but trusted community based commerce. Be ready to evolve to CDCOD*(Community Driven COD). Just like micro finance banks give loans to people who can bring in 2 references, shopping and consumption based on TikTok community based activities will give rise to trust models we don’t know today but are bound to come and will only favour those who are ready to play in the new evolving world of COD.

From 1781 to 2021, we are only just getting started.

“Yesterday I was clever, so I wanted to change the world. Today I am wise, so I am changing myself.”
― Rumi

Pakistan’s Instant Payment System What I think Ive understood about Raast (so far)|Developing story.

TL;DR: All the items below are based on publicly available info that you are too lazy to Google, so if your understanding is different than mine, leave a comment.

On Jan 11th I saw like many others a news paper announcement for the long awaited MPG(Micro Payment Gateway) project, launched as Raast + The standard govt fare of online PR etc.

It had all the right things in this advert, but not a whole lot of context for the otherwise curious. The rest of the PR also had somewhat vague timelines, a hurried launch perhaps or a final push (also read as IMF/FATF Pressure)

But the need, context, impact and bottom line were fully evident along with the hard work of the partners and the regulator. These things aren’t easy to stand up especially in markets like ours where almost every one is disincentivized to not get any thing into the documented economy or where you are able to add traceability. There will always be some one who challenges the thinking the process the execution, we aren’t here to do any of that. But rather make sense of it all as a consumers, merchants + think through the future role of banks/aggregators and existing payment systems.

Interesting choice of name. Commonly interpreted as straight or in Urdu Seedha, Mustaqeem, Nishanay Par Baithnay Wala, Khara, Hamwar and Theek. Logical inclination to look at if the domains taken. Lo and behold it was registered on the 8th of Jan 2021 per PKNIC.

Raast.com not as much as its been registered since 2005. Unless some kind sole will donate it or they end buying it in the secondary market. Perhaps not as relevant but interesting no less.

I sent an email to the link on Raast.com, apparently for $3300 you can buy it.

I also saw a fantastic explainer thread from Khurram Zafar who is on the Board of Karandaaz, the not for profit that is front and center on this initiative.

Up-until now, what I for one understood, is that a lot of clarification/insights being provided to tell every one that its not just an other digital payment switch or similar to existing transfer mechanisms. Fair point, it is not, then what is it really?

I can fully understand why the big guys, Telcos who have spent billions getting us to this point will not take lightly to the usage of their pipes for “free” in conjunction with Raast esp since they have been used to a “fee” based model, the mechanics of their predatory pricing notwithstanding, but then nothing is built for free. They are commercial enterprises so there must be continued opportunity to make money with consensus and on the basis of “fair value”.

Similarly for 1Link and all the Banks that own it, what a silly way to be marginalised. Goes to show that had they done some transformative thinking in 2017/18, when the tendering etc from MPG was being rolled out, they would have not been sitting ducks in this process, had they even attended the stake holder meetings the SBP ran up until 2019 they would have seen the fault in their ways or perhaps contributed to partake. In dec 2017 1Link was doing an RFP For an OPEN API Platform.

One would assume they would have figured out what was coming. I’m shocked the Banks didn’t gear up to put forth an indigenous solution vs being told what to do now. No less its a +1 for the common man when this rolls out. The elephant in the room will be fees and interconnect, whilst the feature set of Raast make it fully interoperable, the questions that come to mind are many as to how it will actually happen? We will get to those in a minute.

So Whats 1Link then & how does it work?

The following diagram shows the overall architecture of 1LINK with co-networks. There is no direct interaction with Alternate Delivery Channels (ADCs) of member banks. Transactions are received from the Acquiring bank ATM Switch / Middleware to 1LINK switching platform. 1LINK supports all type of cards transaction along with EMV transactions on VISA, MasterCard, UPI and JCB.

Image from 1Links RFP Doc

Pakistani Telco Numbers & The case for digital transaction adoption/or not.

With say around 169M 3G/4G folks how is it that we have under 50M bank accounts? Some thing clearly doesn’t add up. Are the services being pitched correctly, is there a knowledge gap, access gap?

So heres my simplistic take on Raast, these are finally the rails on which all else will be built(for the future) as opposed to 1Link type push only services. For now the assumption is that either by regulation, coercion, friendship or legislation all the existing players in the eco system, meaning banks, fin techs, payment companies will have to connect to this going forward, only then can ubiquity and interoperability become real. Till then it’s any ones guess really. Time lines and availability of the stack and guidelines + pricing will make the difference between mass adoption and success or a theoretical exercise.

What are Digital Financial Services? (A simplistic view)

Digital Financial Services (DFS) include a broad range of financial services accessed and delivered through digital channels, including payments, credit, savings, remittances and insurance.
– Digital channels refers to the internet, mobile phones, ATMs, POS terminals etc.
– DFS concept includes mobile financial services (MFS).
■ MFS is the use of a mobile phone to access financial services and execute financial transactions.
– Includes both transactional services and non-transactional services
– MFS include M-Banking, M-payments, M-money.
■ M-Money is a mobile based service facilitating electronic transfers and other transactional and non transactional services using mobile networks
■ M-Banking is the use of a mobile phone to access banking services and execute financial transactions.
– Often used to refer only to customers with bank accounts.

What Problems exist in the DFS space in Pakistan today?

  1. Inadequate digital ecosystem and processes to drive digital payments adoption(also read lack of incentives and in-expensive access to drive change)
  2. Difficulty to integrate with existing financial and non-financial systems (laggard and myopic view of the payment/scheme operators, local and international both)
  3. High cost of digital transactions (not suitable when you want bottom of pyramid inclusion)
  4. End user experience, limiting convenience vs cash (consumers, merchants, etc.)
  5. No full sector wide interoperability (e.g. USSD-branchless banking)

Why Digital Financial Services?

■ Reach larger audience of customers untapped by the existing banking
infrastructure
■ Increases financial inclusion
■ Increase efficiency of delivery
■ Improve quality of service
■ Revenue growth
– Reaching new market segments
– Offering new products and services enabled by technology
■ Cost reduction to companies and customers
– Operational cost by reducing branch costs and manpower costs
– Reducing transactional costs by being accurate and context aware

So How does Raast Really work & What does it do?

Thats a loaded question with a loaded response. The first thing to understand about Raast is that it is built on some thing called the ISO 20022 Standard. This is key. This will keep on coming up so pay attention.

In the financial services industry where trust, interoperability and resilience are
key requirements, the quality of data exchanged between parties, closer and closer to real time, and between increasingly diverse stakeholders in the value chain, is of paramount importance. So to keep this quality up and running there had to be a standard to make sure every ones on the same page.

This is why financial services industry experts have developed ISO 20022, a global and open standard for information exchange, that is being adopted by a growing number of users in various domains: securities, payments, foreign exchange, cards and related services . . . notably for end-to-end straight through processing, components management or regulatory reporting. We are neither alone nor the first to adopt this but clearly in the right for doing so.

The ISO 20022 standard provides a methodology to describe business processes and a common business language, which can be rendered in different syntaxes enabling implementations for messaging and application programming interfaces (APIs). It is
supported by a central repository, which includes a data dictionary and a catalog of messages – and is accessible to all.

This is ground breaking stuff because it removes the need for the user to be “payment context aware” or like edge computing takes the processing to the cloud from the device. The onus or burden of responsibility to decipher inter scheme or inter payment method operability moves from the users domain to the systems (Raast’s) domain using the addressability feature. In short, from what I am seeing, between a combination of your phone number and your NIC there is little to nothing else you as a user need, to transact with any one irrespective of their bank or wallet of choice.

From a business point of view, the usage of this universal messaging standard, improves efficiencies in delivering products and services. In my mind ISO 20022 is essentially:

● “A single standardisation approach (methodology, process, repository) to be
used by all financial standards initiatives”
● An international standard for communication between financial institutions
● An Introduction of a dictionary of business terms used in financial communications, (catalogue of messages ) so that everyone uses the same vocabulary
ISO 20022 is a standard to develop standards
● A Super structure that has Three layers:
1) key business processes and concepts,
2) logical messages or message models,
3) syntax (XML)

Syntax and semantics, Why they are important?

To be able to eliminate the need for human intervention to interpret data, the financial industry needs message definitions – that is, agreements on how to organise the data they want to exchange in structured formats (syntax) and meaning (semantics). Based on such message definitions, Raast will exchange messages thus being completely different from existing payments system in the country.

If you are really inclined here is a snap shot I found of an example that helped me better understand the transaction/msg flow and what really is happening.

What can we hope to see when the above is executed?(SBP/Karandaaz view)

Image adapted from SBP Decks online, by Aun Zaidi

  1. Real time transfers: Instant availability of funds and near real time settlement of low value payments
  2. Sector wide interoperability and open governance: Connectivity across all licensed & other entities (Banks,MFBs, PSPs, relevant government entities) removing need for bi-lateral tie ups|NO MORE FFING MOUS & Mutual Admiration Clubs|
  3. Simple, account-agnostic payment forms: Alias-based (e.g. phone number) simple payments, standardised across the industry
  4. Drive new product introductions and innovation: New message standard, request to pay, sector wide bulk payments) supported by a dedicated testing environment
  5. Easy and cost effective participant on-boarding: API architecture allowing quick and efficient on-boarding mechanisms and integration requirements
  6. Low to no transaction cost for end-users: Cost recovery model, maximising benefit to end-users and participants
  7. Built in security and authentication: Robust end-user data verification and security


What does this translate to, for the ecosystem of players?

How does Raast/MPG solve for the above?

Image adapted from SBP Decks online, by Aun Zaidi

If all goes to Plan then what happens?

Image adapted from SBP Decks online, by Aun Zaidi

What could be some Initial Challenges particularly for Incumbent Banks?

  1. Ensure 24×7 real time processing in core banking (some can barely get their core banking to work internally)
  2. Ability to credit and debit within 5-15 seconds (Again, for banks used to doing day end processes, this will be akin to landing on the moon)
  3. Adjustment in reconciliation procedures (See above)
  4. Adjustments to business process (More mind set than process, but both will need a re-set)
  5. Figuring out pricing.

What could be some Initial Challenges particularly for Incumbent Wallets?

  1. Pricing
  2. Pricing
  3. Pricing
  4. Re configuration of settlement basis
  5. Re think on internet payment gateway and mobile top ups
  6. Re think on inward payment /settlement systems like items with Payoneer etc.

Where to next & by when?

Image adapted from SBP Decks + Published Interview of CDO Karandaaz, by Aun Zaidi

Step 1:
Every one must connect to Raast for Raast to be useful (Think regulation)

Step 2:
Raast Usage will be priced nominally, so what happens to the existing Players and use cases? (Think lots of resistance to change/to connect/to forgo fees/or let others use pre built wiring for new use-cases for free)

Step 3:
Will Raast deliver technically and on time?(The time lines are vague see image above)

Step 4:
Will the industry wait 1-2 years for all the underlying use cases and tech to opened up or will some one come in and do this better faster cheaper?

Step 5:
Will the regulator successfully be able to build an internal organic payment scheme on top of Raast for ecom-merchant-internet enablement use cases to work? What will the likes of Sadapay, Safepay, Nayapay, Foree do to pivot when Raast is up and running? And Visa + Mastercard. This is a sure fire way to stop FX settlement offshore for onshore services.

Net net, this is development in the right direction. I feel this has to be done in a consultative fashion and with all parties working towards solving for the citizenry whilst keeping healthy economic outcomes for self & others. Onwards and forwards, Karandaaz + The Gates Foundation + SBP + Policy makers all seem to have gotten the premise right, let’s just hope the economics makes sense and leads to adoption vs infighting.

Budgets.Ministries.Digital Pipe Dreams & Tweets that mean nothing. A look back at MOITT for 2020.

Let’s start with the fact that we have an entire telecom corporation that is responsible for providing ICT services to the government. Likely well intentioned in a different era, but what caught my attention was a tweet that was taking credit for video call that a kid with a laptop and a zoom connection could likely execute. This ladies and gentlemen is the output of tax rupees & well intentioned dreams.

This was not enough on its own. I then happened to visit The Ministry of Information Technology and Telecommunications (MoITTs) website. First things first, I wanted to see the projects of the ministry, as a citizen with interest in such matters. Not only is the site nearly non-accessible on a mobile device, none of the projects are hyperlinked to any details. Not to mention items 8-10. A publicly facing listing that lists “expension” vs “expansion”. The urban dictionary offers some help.

It defines expension as

A bitter sweet realisation that all we are likely doing tax payer money is expension as most of this makes no sense. I then came across a treasure trove i.e the various projects and their likely budgets.

The list is nothing short of impressive. I shall try to break down the familiar, the not so familiar, the absurd and the moonshots. The first item here is PKR 786M for “Certification of IT Professionals”. Thats about 4.9M$ if I didn’t mess up the conversions. What expertise does the ministry have to train people? Why not take the allocation and hand it over to those with a track record in the space. I am more interested in a break down of use of proceeds of how the allocated “spent” money was used, where it went, who was impacted and how many people did we add to the value chain as trained/certified professionals or that we will in the future if the money is not yet spent.

Further what Certifications were selected, what criteria etc? Then we have an item of PKR 338M or 2.1M$ on holding boot camps. If the bootcamps were any thing like the certifications the ministry has been touting on twitter with no detailed info. I am already mourning the loss of this public money.

Every thing is coming soon but not soon enough. But I digress, let’s go down the list and evaluate some other items of interest. Like the criteria for selection the purveyors of the bootcamp. Essentially no local player can participate if you are looking for a training business with revenues between 5m$ to 10m$. Is it to soon to ask which international partner of a local services firm this tender was drafted for and who is likely the net beneficiary, because it most certainly aren’t the youth or public of Pakistan who are listed as claimants of this.

Next we have the expansion plan for NICs. Yet an other government initiative that has failed to resonate with the people it’s targeted towards but created high paying jobs and lot of Photo of Ops fo KPK(in recent times), well because KPK needs our love and the ministers love to show the PM that he is worthy of this post to make sure KPK comes out on top. PKR 751M or 4.6M$ at large for NIC.. Crazy allocation/use of funds with no material output. Some glimpses of recent NIC twitter content ala KPK love.

Even the image doesn’t have a 33% engagement or participation rate of female founders

Next we have the National Freelance Training Program All over Pakistan, for 367M PKR or USD 2.28M$.

Project Monitoring and Digital Transformation Cell 146M PKR or roughly 1M$ PKR. Who the f* is monitoring projects for 1M$ some one should monitor and report where the money is going instead.

Technology Parks Development Project (TDP) at Islamabad (Phase-I) (EDCF
Loan Exim Bank Korea) this is the real nugget. 57M$ or 9.24BN PKR. God knows what going on here.

Blended Virtual Education 5.99BN PKR or 37M$. The questions one must ask who is being educated, where is this money being spent. These things don’t add up, we have a national deficit of education, talent etc.

My favourite, is Construction of SCO Education and Accommodation Complex for Employees Families at Rawalpindi (Phase-I). I mean, was there a doubt in any ones mind that the families need housing on tax payer money given the stellar performance every one has had. Shouldn’t public servants offspring go to the same public schools the rest of the awam must send their kids too? Why an education complex for SCO folks. MOITT is turning out to have a heart of gold. https://en.wikipedia.org/wiki/Special_Communications_Organization .

720 M PkR or 4.5M$ being spent to provide housing for an organisation that could very well just be privatised and the best operators could run it vs carrying legacy issues forward, like PIA and others. Strategic intent well understood of why we would have an SCO but it should be run for strategic interests of the nation vs building an employee complex in Pindi when the stated objective of the SCO is

“SCO is a public sector organization working under Ministry of Information Technology and Telecommunication (MoITT) of Government of Pakistan (GOP), established in 1976[3] to develop, operate and maintain telecom services in Azad Jammu & Kashmir and Gilgit Baltistan”

So one must assume that any one working in the SCO needs to be from Pindi? or does this reflect the current makeup of the organisation where the housing needs are localised to Pindi vs AJK & GB? The irony of it all is lost on the folks running the show.

770M Pkr for a data center which is 4.7M$ for the Establishment of SCO Data Center for Providing Cloud Based Services in AJ&K and GB. How about building one for Karachi first which drives the bulk of economic activity in Pakistan?

The list is beyond interesting. But I will select one last one and move along to other items related to MOITT. President Initiative of Cyber Efficient Parliament (Feasibility) April 6th 2020 is the date, capped at 10M Pkr or 62k USD this is funniest of the lot, given the context below. Pictures, Mutual admiration club and press conferences later. The allocation seems lower than what was spent on the publicity machinery by the President already in nov 2020. This is bizzaro land. We do a meeting to chair meetings on meetings about making meetings digital, about 20 public servants per the photo, in attendance.

It doesn’t end here, this was one small snippet of inefficiency, bureaucracy, lack of domain knowledge, a bloated ministry with no functional output, but better yet a minister who made a public statement on the Digital Pakistan Vision at the GSMA Thrive Asia Pacific on 3-5 November.

I have spent 6 minutes of my life so you don’t have to. to summarise what the Honourable minister had trouble reading from his prepared notes.

Minister reading prepared notes on the vision of Digital Pakistan yet not once defining it.

1.Pakistan is a country of over 200M People
2.Pakistan offers an open deregulated market with a supportive licensing regime fo biz
3.Due to internationally friendly business policies of govt of Pakistan we have foreign telcos operating in PK as a testament to our good work.
4.Govt is striving to improve citizens quality of life and economic well being by ensuring ICT services
5.170M Cell connections 80% teled density 85M Ppl accessing internet via mobile broad band
6.DFS led by telecom sector, Telecom impact = gdp impact during corona
7.45m Branchless banking agents = motivating 158b PKR per BISP disbursement by Digital financial system
8.56bn utility bill payment
9.750m Internet bill payment
10.17bn Mobile top up
11.Govt believes in mass adoption of  emerging digital tech to enable realising the vision of a true welfare state like Madina.
12.SDG goals = Telco is critical
13.Uplift of low income segment is key focus, 
14.We would like to invite GSMA/TELECOM industry for participating with the govt of Pakistan to realise the vision
15.As part of Digital Transformation the government is pursing a pronged program that encompasses
16.Policy intervention for harmonised regulatory environment 
17.Digital awareness
18.Skill development
19.Govt has recognised the significance the imp of digital tech
20.To unlock economic competitiveness, Heavy investment in underserved areas for digital tech/infra Resulted in equitable sharing of opportunities and resources, paving the way for conducive economic growth.
21. USF= Self praise on digital transformation and telecom service revolution and how Minister has involved him self to bridge the digital divide. Working on more spectrum and fix taxation issues. Planning 5g and increasing 4g penetration. Values GSMA contribution, signing of an MOU= is his commitment as digital leader. He for-sees more collaboration with GSMA, to come towards our common objective of  “Digital Pakistan” (5.03 IN VIDEO).
22.Importance of mobile sector is growing = vital to economy (Blah blah)
23.Policy reference without any connects items
24.Speaks about policy formation of spectrum auction as he says in APAC it has helped the economy.
25.Ecosystem needs to work towards solving common objective of digital Pakistan
26. Thank you note to GSMA= Saying “ I am thankful to GSMA to give opportunity to discuss Pakistan vision on such a great regional platform”

So the minister made 25+ Points . Not once does he define the vision, he starts by quoting stats, he talks about transaction volumes on DFS(digital financial services), He talks about BISP without explaining what it is, and he has fully encapsulated the PMs rhetoric about a welfare state. There is a time and place for every thing but these public servants have no idea on how to optimise for audience and messaging.

Also don’t discount him shaking his chair in the first few minutes of the presentation and reading from prepared notes and not looking up. What a “shit show” If there was an only fans for ministers embarrassing nations, this would be as profitable a venture as the budget allocations they have in MOITT. At 5 mins and 3 seconds he makes all but a passing reference. Lest I remind the ministry has been struggling to define “Digital Pakistan Vision” it self.

Lets take a deep breath and analyse this statement ” Ministry of IT and Telecom, under the #DigitalPakistan vision is actively working on mobile phone applications, web portals, e-commerce, e-government, online jobs, digital payments, establishment of IT parks & all other avenues to facilitate our citizens.”

So we have a ministry that is:

1) Developing Mobile phone applications(Stealth startups any one? or competing with the public sector?)
2) Web portals (god knows what for)
3) E-commerce (Ali baba we have MOITT baba coming soon)
4) Online Jobs (What we need is some one to develop a job redundancy platform for Govt)
5) Digital Payments (How so?)
6) Establishment of IT Parks (Are we importing wildlife for them too?)

This circle jerking rhetoric is to a point where some one needs to call this nonsense out. No one knows what any of this means(including folks in the ministry), it has zero impact on our combined digital health or well being, there is literally no vision, just a graphic designer some where deep in the ministry who outsources the content creation to a friendly ad agency that comes up with this consistent yet underwhelmingly mind numbing non sense.

We have these guys representing us at large; in media, in the public sphere and internationally. We are dependent and reliant on them for policy views, public engagement, growth, education and utilisation of tax payer money + aid. Some one should ask the honourable PM, “Do only commerce and finance ministries deserve attention what about the only sector that can truly be transformative at scale?” But PM is busy fighting political items. Who has time for these things?

As a tech professional and a citizen of the land, I would like to know if this our fate or is some one in government ready to listen for a change and truly find folks who are willing and able to lead the change vs babus who cant read a written statement correctly.

Truth is stranger than fiction, you cant make this shit up. The ministry and its budgets in the hands of these folks is a sad reality that we must demand answers for. Or be prepared to witness en-mass, what others in the profession have chosen to do, immigrate and forever hold their peace.

Hopefully there is a better plan of action than that.

Pakistan Inc. “Retiree Entrepreneurs, Saith-a-preneurs, Startups & Failure Dollars.”

What an amazing & resilient country. Even after decades of less than adequate governance, economic progress, security challenges and internal issues; if you ask the average Pakistani how they are doing, their initial response is “sab theek ho jaye ga inshallah/all will be well by grace of god” There is no other way to explain this response but a deep bond between man his creator and the belief that better days are coming. Or the absolute lack of education and access to understanding economic fall out.

In some ways it is this, that keeps us going because our rulers, law makers & security apparatus have not given us any thing to write home about. To understand how Pakistan Inc operates we must understand and evaluate how the top 1% of businesses function in this country & perhaps most developing countries.

Before we go down that path we must understand that the 1% are divided after 70 yrs of independence in two very distinct categories. Those who were Born-rich and those who Built-Rich but most of those who built wealth also had the Born-rich on their side. There is a slight nuance but not a lot because in the end the rich are the rich.

The narrative of wealth and achievement ignores the other side of the coin namely, that the opportunity to build wealth is not equally or broadly shared in society especially in ours. Those who are born-rich typically continue to fund those who will eventually be the Built-rich. The real heroes (far and few in between are) those who Built-rich without stealing, nepotism, politics, power, or being born-rich. But it is a vicious cycle. The children of Built-rich are Born-rich. That creates an all other kind of 2nd generation dystopia.

Part of that dystopia is that The born-rich have trouble relating with the built-rich. Ironically, it’s the built rich parent’s fault their kids are born rich. That has a deep rooted impact on how business , our economy and our political structures work.

Keeping this premise in mind the Built-Rich know how money works and can scale wealth compared to Born-rich. We are at a tipping point in our society that the 2nd/3rd generation that has inherited or underway to inheritance is not looking good from the eyes of the first generation. To manage for that, the system has been further broken down.

Let me share the make up of a “Rich-Family office” in Pakistan. I have seen, interacted and engaged with many. When the patriarch feels that the wealth created by them(who are in the category between born-rich and built-rich) is about to go die behind the family barn once they go to meet their maker, they do some thing incredible.

Like any parent they feel preservation of money = preservation of their offspring. So they go in a multi pronged multi faceted approach of recruiting what I fondly call the best “Retirees of the Country”

We are perhaps in very unique position in this country where post 60 yrs of age people begin some of the best corporate careers any one can dream of having. The price of admission is to have been retired a federal secretary, Judge, some one from the forces, police, ministers and the religious right. If you were average all your life but a product of the system fuelled by taxpayer subsidy your value goes up by 10x post retirement.

This is what startup dreams are made of. The real entrepreneurs and startups in this country are this retired lot. Can’t fault them for capitalising on this as they are the definition of capitalists, the folks hiring them are the real venture capitalists of our society.

What is happening here is the creation of a system that will continue to f*** us for generations to come. Because old money found old stall-warts and created a system that went from separating wealth from creating value vs extracting it (e.g. founding vs rent-seeking).

Any family office over 20m$ of wealth to preserve, has built its ‘Retiree Militia‘. The average day job entails coming to an executive suite perched in the head office of the company around 11 am with the company provided Mercedes + 1M PKR monthly retainer, with the job description to “assist” the kids “assist the ceos of the various businesses” ensuring they don’t fall out of favour with the ruling elite or the law. Using their profiles in the boards of their listed companies, some times with the status of Chairman. A good party trick no less on having cracked the system and giving further and extended momentum to cronyism. There is a reason why the systems or systemic changes in this country the average person desires, will never happen because the rich have built an insulation layer to make sure the rent-seeking behaviour continues past their life time.

Behind this shiny veneer of continuity is a sad admission. People who don’t trust their kids directly with an inheritance or to be self sufficient in running the businesses they created, or to go out in to their own and figure out their own shit, admit they failed to raise good stewards. So besides this retired militia the second best thing to handing over all of the families crown jewels and on Mother Dears insistence that “malik sbs kids are so involved with business” , “chowdhry sb decides to setup an investment fund for their offspring” you can replace malik/chowdhry, with a saith of any ilk, the execution remains the same.

This brings us to act 2. Newly minted Saith-a-preneurs (SAPs) with a fancier office than dads, backed by the Militia and knowing they can do no wrong, fuelled by daddy dollars launch in to Pakistan Inc to make their mark. One only has to be reasonably smart to not f**k this up.

The complexity with this structure is that SAPs/new money spends on trends old money spends on tradition. Creating a conflict because for all their fancy offices, daddy dear and his militia just don’t get startups and tech companies. They only get licenses, quotas, dividends, rent-seeking, tax-evasion and representative monopolies. Even the SAPs that have a good head on their shoulders dont get too far because of this overbearance. The real decisions go to daddy dear, this is a golden cage for the SAPs, with their moms and wives happy that chotu sarkar now has a day job and a line up at the mutual admiration club dinners + events, they have finally come of age. The reality couldn’t be farther from the truth.

We likely wont be able to create the Ambanis or Tatas of our world by doing these things. Only a select few families and rich large local conglomerates have their children fully entrenched, but most dont. Those who dont are actually also killing the real chance any startups have at success by making these “band camp boys” in-charge of VC $s that they didn’t earn to invest in startups and founders who have zero in common with them, but like their forefathers who were at the mercy of the saith’s shitty job for 20 yrs. now they are at the mercy of the same blood money to be invested in to their companies. The trigger of investment go-no-go remains with daddy dear and the retiree militia. Delaying the aspirational target of the founders and most cases, mis leading, mis representing because they dont have the ability to make real commitments without permission. This is creating a slew of hungry startups whose time, effort and energy is being wasted chasing the “house of X” for money or the “X Group”.

This is the circle of life we are faced with in Pakistan Inc. The good news is the inflow of foreign capital, but that capital also gravitates to the band camp boys because they take the incoming money to visit daddy’s industrial estates/parks/fertiliser/chemical/food processing/packaging businesses or bank and the incoming money also feel safe in the company of old money.

So if you are a no-body with some money in the tank, this is how you help break this circle of life by funding entrepreneurs in this country at a low low entry price sans daddy dollars. The concept is simple, you need to enable others to build either your idea, a shared idea or their idea, but with the catch that they deploy the MVP or business in under 60 days. It could be as simple as funding some ones inventory or as complex as a Monetization idea for m-commerce.

This concept is called “failure dollars” You need to be able to part with 5k USD for some one else to invest their time to do a pilot of a business idea/concept/company/product/tool . The thesis behind this 5k is, you can afford to loose it but what if you both win? If the idea is successful the person you funded gets to keep 80% of the idea/equity/reward, but if it fails you pick up 100% of the losses. Why would you do this? Because it’s late for you to retire as a federal secretary or be a judge or be a retired general. Also instead of bit**in and moaning this is a concrete way to steer outcomes for people who otherwise will never have an opportunity to take a bet on them selves because they always need a “job” to run their affairs, create the leverage in some ones life by doing this.

It builds trust. With guys/gals who have ability and the capacity to make time & build but no access to capital. It covers their prototype time and the assurance that the failure funding is yours, makes them work 10x harder. Victory is shared and they own it, you get a continuous residual piece and if you can scale this model, you become a cottage industry equivalent of an aarti without being predatory. We don’t need VCs and Angels we need folks with dry powder who can fund small experiments at scale and bring others to do the same. The only way out of the mess and nepotism we have created, is to create a few 1000 M$ revenue business that generate value vs extract value. It has to start some where and it can start from you. It’s time the Pakistani people and government realised that it’s the country’s ambitious young people who are building the future, not its retirees.

Rich men are more harmful than rich food. But then, who cares for the health, be it ours or the nation’s.