IndiaWorld Sale: 10 Years On

Ten years ago, on November 29 1999,  I sold my previous company, IndiaWorld, to Satyam Infoway. It was a defining moment for me. It was also not an easy decision to make.

Six weeks before the sale actually happened, I was wondering how I would manage to raise venture capital for the business, given that many competitors were doing so. A deal for an investment had just fallen through.

Then, it all suddenly changed. I had not one but two extremely attractive offers to buy IndiaWorld. And in the space of just over a month, the deal with Satyam Infoway materialised. That’s how life is sometimes!

I had not built IndiaWorld to sell it one day. In fact, I ran the business as if I expected to run it for the rest of life. But there are times when one has to think not just from the heart, but also from the head.

Tomorrow: The Announcement

Blog Past: Mumbai 26/11

I wrote this on December 1 last year:

There is a palpable sense of outrage and fear in people – outrage because of the failure of the politicians and bureaucrats to prevent such attacks, and fear because there is no guarantee that this will not happen again somewhere else in India in the next few months (or weeks). There is also a tremendous sense of Pride at the armed forces – whom we saw in live action through the days. Put it all together, and these mixed feelings create a restlessness within. That’s why it is not like previous times. This time, it is different. And if out of this, we finally get a government of the people, for the people, and by the people, then those 195 deaths will not have been in vain.

How wrong I was. A year on, how little things have changed. The same state government, the same Home Minister in that government. The CM then was put in the Union Cabinet. The Union Home Minister then is probably going to be a Governor soon.

Weekend Reading

This week’s links:

  • Mobile Data Apocalypse: by Michael Mace. “In the last year or so, the attitude has shifted dramatically from “no one is using mobile data” to “oh my God, there’s so much demand for mobile data that it’ll destroy the network.”
  • Best Business Books of 2009: by strategy+business.
  • 10 UI Design Patterns: from Smashing Magazine (June). A bit old, but very good and relevant. “Design patterns are solutions to recurring problems. By extension, UI design patterns are solutions to common user interface problems. This article goes over 10 interesting UI design patterns that you can use in your own projects.”
  • The World in 2010: from The Economist. Always a great read.
  • The Other Education: by David Brooks (New York Times). “We pay a great deal of attention to our scholastic educations, which are formal and supervised, and we devote much less public thought to our emotional educations, which are unsupervised and haphazard. This is odd, since our emotional educations are much more important to our long-term happiness and the quality of our lives.”

Corruption in India (Part 5)

I dream of an India that has rid itself of corruption at the highest levels of its government. (If we start at the top, the clean waters will flow down quickly to the lower levels.) I dream of an India where people in government make decisions that are right for the country, and not for themselves or their benefactors.

I dream of an India that has the money to invest in all the things we should have but never had any leftover money for – education, healthcare, infrastructure, transportation, energy, and more.

I dream that this can happen in my lifetime.

It will probably require a miracle for something like this to happen. But if we stop waiting for this miracle, perhaps we can work together to make that future happen. I don’t know how. What I do know is that right now a Few are holding Many to ransom. They have done it for 60 years, and unless we do something different, they will do it for 60 more. We can sit back and let that happen, or let our blood boil enough that we will want to do something about it.

India needs a Second War for Independence. This time, we need to fight some of our own.

Corruption in India (Part 4)

India needs to be made free of corruption before it can become developed. But  the entire existing Indian governance ecosystem will prevent this from happening.

Seen from the outside, it is quite clear that no honest business person will ever make it the top and be able to clean up the system. There are too many vested interests for that to happen.

The change has to come from within the political system. Someone needs to rise and be supported by the masses. That person has to make only one promise – to ensure a clean government – and all the development that should have happened in six decades but did not will happen in five years. That’s how much money is there in the system.

It is not going to be easy because the other politicians, whose livelihood depends on their being in power, will not allow such a person to rise to the top. This is where we need to come in. We, the People, need to say enough is enough. And we need some among us to help drive this change. Are we there yet? No way. Because we have learnt to somehow manage to survive in this corrupt system.

 Continued tomorrow.

Corruption in India (Part 3)

Once in a while, the government of the day will send out the CBI to raid a few people here and there, to show how they care about creating a corruption-free country. A few days later, the case is slowed down, and vanishes from the headlines.

This happens because the chain of corruption goes to the highest levels of our governments (centre and state). Of course, it can never be proven in a court of law. But we all know how it works. Ministers are at the apex of a system that includes bureaucrats, businessmen and others. Anyone wanting that little ‘extra special’ gets it by paying someone off. The percentages in the incentive system for distributing money are quite clear to all.

In all this, India suffers. We are poor not because we lack resources or wealth. We are poor because we are corrupt. And it is in the interest of those in power to keep us poor. For a politician, no amount of money is ever enough.

India needs a person who can clean up the system. And it has to start at the top. India needs someone like Lee Kuan Yew, the man who led Singapore’s development. Singapore became a first world country within a generation, and it is also consistently among the top three least corrupt countries in the world. Those two facts are causally related.

Eradicating corruption at the highest levels will create a major difference in India. Firstly, more money will be available for spending. All public funds allocated for support and development will actually go towards those ends instead of it being siphoned away. Secondly, the spending priorities will be determined more rationally instead of being based on which scheme gives the most opportunity the corruption or for buying the loyalty of vote banks. Taken together, removing corruption from the highest levels of governance is the biggest game-changer for India. Nothing else can match the multiplicative benefits the country receives from eradicating corruption.

 Continued tomorrow.

Corruption in India (Part 2)

When you talk to people in the know, all kinds of stories about politicians come out. So, I cannot believe that these stories are totally unknown. Of course, the smart ones cover their tracks well through front companies and people. Much of the wealth is held in the form of land banks. As someone put it the other day, almost every politician worth his name in Maharashtra has one or more of the following three: sugar mill / co-operative bank, college, power plant. The big daddies in the state would easily make it to the top of the Forbes Richest Indians list.

Many times the corruption is quite blatant. The telecom sector has been sucked dry by various Ministers over successive decades right in front of our eyes, and we haven’t done anything about it. Look at what happened with the new operators who were literally handpicked for additional 2G licences. What happened after the election? The same person got the same ATM (Anytime Money) ministry even after it had become clear that his actions cost the country tens of thousands of crores.

In Maharashtra, it took a couple weeks to form a ministry because of the wrangling for ministerial posts. The worth of a Minister is linked to the money that his ministry has control over. There was no discussion on a vision for the future, just a battle to control the spending – and therefore the siphoning.

I am not saying anything new. We all know this. We just turn a blind eye to it all.

Continued tomorrow.

Corruption in India

A recent issue of Outlook had a cover story on Koda, the former Chief Minister of Jharkhand, who is alleged to have looted Rs 4,000 crore from the state. A related article in the magazine was on all the scams that have taken place in India and how little we seem to care about all those stories on corruption.

The Reddy brothers, YSR’s family, Koda, Raja – these are just the latest additions. They are the tip of the iceberg. For the record, all of them get away with the loot, and continue to be in positions of influence. Indeed, I cannot think of a single politician who has put behind bars for corruption.

This is a cancer that is not restricted to any particular political party. It infects the whole system. An honest politician has become an oxymoron.

Politics has become a way – and perhaps the only way in India today – to amass unimaginable wealth in the shortest possible of time. Of course, entry to the club is becoming increasingly difficult because politicians have realised that getting one or more of their offsprings into politics is the surest way of ensuring the ill-gotten wealth stays. The façade of ‘youth’ is being used to legitimise power and money procured by dubious means.

We, the voters of the country, are as much to blame. We don’t demand accountability. We keep voting back to power the same folks who keep ripping us off. And in all this, we stay a poor country – waiting forever for the date with destiny.

Continued tomorrow.

Blog Past: Newsweek on the $100 PC

Continuing from last week’s Blog Past on the Rs 5,000 PC ecosystem, here is a link to a Newsweek cover story from February 2007 on Novatium’s $100 PC. (Novatium is a company I helped co-found.)

Despite the country’s rise as an outsourcing hub, PCs are selling slowly–far more slowly than mobile phones or motorbikes–because they are too expensive, too complicated to use and too difficult to maintain. What people have been waiting for, some experts think, is a new approach to computing that boils the essence of Internet access down to its lowest cost–and lowest risk. Jain plans to offer all this in lease deals that include easy-to-use hardware, Internet connection, application software and service–for $10 a month.

This formula could provide a long-sought bridge over the digital divide–and may just change the way the average person thinks of computing. The solution would open up a huge new market for Internet service providers, starting in India but possibly spreading to other emerging markets, a possibility that is already attracting the attention of the world’s biggest computer companies. It would become a target for innovation on a global scale, forged by immense competition for new customers, and that would have a big impact on the PC world in the West.

Weekend Reading

This week’s links:

Broadband in India: Business Models

The sad state of Indian portals can be seen from the recent results of India’s leading home-grown portals – Rediff and Web18 both lost upwards of Rs 10 crore in the past quarter. Google is cleaning up on the ads front because it doesn’t do content and it links ads with context (in search). The transaction-focused companies in travel and trading are doing well. But more broadly, the Indian Internet companies need to think different if they are to survive and thrive.

They need to look no further than the value-added services business that exists around the mobile phone. Even as Internet advertising in India is at about Rs 600-700 crores, what users spend on mobile VAS is at about Rs 5,000 crore, with an additional Rs 5,000 crore spent on person-to-person SMS.

What is needed is a “user pays” model for services delivered on the Internet, along with the creation of an AppStore (publishing platform and marketplace) to enable monetisation of services. Users may still not pay for services delivered on the computer, but could be persuaded to pay if the mobile can be integrated into the experience.

What needs to be happen is that the concept of ‘cash balance’ with the ability to do microtransactions needs to also come to the computer-centric Internet for home users. This will open up creation of new services. Imagine a base of 10 million Indians willing to pay Rs 100 a month for services – this Rs 1,000 crore is already more than what the ad opportunity on the Internet is today.

Conclusion

For broadband in India to grow, many things have to fall in place quickly across the four areas that we discussed – devices, pipes, services and business models. If we can get this going, venture investment will also start flowing in and create the innovation ecosystem that India so desperately needs.

Broadband in India: Services

I have written in the past about the lack of ‘utility’ services on the Indian Internet. Little has changed in recent times. Even though many new portals keep getting launched, few of them have become part of our daily lives.

In China, the link between computers and education helped get computers into homes. The social and entertainment aspects of the Internet (connecting with friends, multi-player gaming) helped ensure the network connectivity. Can we do something similar in India for the growing ‘middle-of-the-pyramid’?

Imagine an Education portal that focuses on teaching the ‘basic concepts’ to school kids with the pitch to parents: “Give us an hour a day for Rs 100 a month, and we will help your child to learn to learn.” Schools, for the most part in India, teach, but do not instill the learning ability where the child has a deep understanding of fundamental concepts, which is what today’s (and tomorrow’s world) needs. A service like that could start becoming a reason why parents start getting connected computers at home.

For young adults, social connectivity and gaming can be two big drivers, along with education to complement what they learn (or don’t) in colleges. For usage to takeoff, there needs to be affordable flat-rate plans without data limits.

For youth, it will be good to also integrate the mobile into the value chain, and think of services which can float from one device to the other, ensuring a continuity in the experience. For example, I could start reading a book on the computer and could continue on my mobile phone during my free moments.

For Services to take-off, business models will need to start looking beyond advertising.

Tomorrow: Business Models

Broadband in India: Pipes

India made one fundamental mistake when it came to awarding wireless licences a long time ago. It gave them to BSNL and MTNL (the two dominant public sector wireline players) instead of doing what China did. China created two new companies for the mobile business. The result was that during the early days in India, the profits from wireline got diverted to building the infrastructure for the wireless instead of being reinvested to upgrade the wireline infrastructure. Now, of course, no one really cares about the wireline business since all the money and growth is in wireless. This decision, with a conscious government strategy to almost strangulate the private ISPSs, ensured that there would no broadband boom in India.

The past is over and done with. What can be done now? We do have now the private wireless telcos showing an interest in spreading broadband across the country. But that is happening too slowly since the last-mile connectivity into homes is still a challenge. It is in this context that the two things I suggested earlier in the week need to happen – and both unfortunately require government intervention.

Firstly, the last-mile wireline connectivity access (local loop, as it is called) needs to be opened up to all the private telecom players and ISPs. This will reduce costs of delivering broadband to homes that already have last mile access but without relying only on BSNL and MTNL.

Secondly, the 3G and BWA auctions need to happen on time and transparently. This will start the process of using wireless options (3G, WiMax) to provide connectivity into homes. For this, the public good has to be put above government greed – which is easier said than done, given past experience!

What we need in India is 1 Mbps to homes for Rs 250 on wireline and Rs 500 on wireless – with no data transfer limits. That will then drive the growth of Services.

Tomorrow: Services

Broadband in India: Devices

The interesting change in the world of computers is the diversity of devices that are now becoming available. We have netbooks, network computers (thin clients), smartbooks, eBook readers, gaming consoles – and tablet computers are on the way. In all cases, the form factor will likely be much bigger than what a conventional smartphone offers.

In India, these devices will need to be offered on a monthly installment plan for quick mass market adoption. There will be two key price points: sub-Rs 5,000 for the device (the one-time upfront payment), and a monthly subscription fee of Rs 400-500 (which includes broadband access).  This is where the telcos will have to take the lead. It is a model they are familiar with – be it with landlines or mobiles.

Devices also must have simplified user interfaces. We are targeting the next set of computer users who don’t need all the bells and whistles that Windows offers. While the browser will be good for a lot of the functionality, a limited icon-based interface (like on a mobile phone) could go some way in breaking the usability barrier. In addition, by leveraging server-centric (cloud) computing and management, the device itself can be simplified.

In India, PC sales are about 8-9 million a year. Of these, about a third end up in homes. The new devices have the potential to drive consumption to 2-3X of that, thus creating the necessary demand for broadband pipes.

Tomorrow: Pipes

Broadband in India: Overview

Among the many areas that India has not invested in is broadband infrastructure. In fact, not only has the government not invested enough through its telecom companies, it also effectively prevented the ISPs from doing anything to bridge the last-mile.

A friend mentioned that TRAI was doing a consultation paper on broadband. I couldn’t help thinking about the pointlessness of the exercise – there was a similar exercise done three years ago. What needs to be done is clear, but there seems to be little interest in doing it.

So, knowing what we know now about our government, what is it that we can ask them to do so we can start creating a thriving ecosystem around broadband? According to me, there are two things – and only two things – that the government should do:

  • Open up the 40+ million wireline local loops owned by BSNL and MTNL lines so that private telecom operators have last mile access to those customers
  • Ensure the 3G and Broadband Wireless spectrum auctions get done in Jan 2010 (we are already many years late with this), and do it in a way that those who lose the auction don’t more the whole allocation in legal tangles. And of course ensure that the winners start using the spectrum won as quickly as possible

Beyond this, it is for the industry to make things happen. There are many ideas and solutions that can come into play for the devices, pipes, services and business models. We will visit those areas in the coming days.

Tomorrow: Devices

Blog Past: The Rs 5,000 PC Ecosystem

I wrote this series in early 2003:

By themselves, the 5KPC and many of the ideas discussed in the past columns are not new. What’s new is the markets that need to be targeted, and the focus on “value-added aggregation” – putting together whole solutions for different verticals. In a sense, the markets need an iMode-like solution with hardware (the 5KPC), software (open-source components) and network connectivity (via WiFi, cable, dial-up or LAN) integrated together. In fact, much like iMode, the additional services that can be layered on top will be the key.

For emerging markets, the 5KPC offers an opportunity to leapfrog in terms of computing and a connected citizenry. It is very difficult to imagine the impact of making technology available to whole nations in a very short period of time. In fact, in countries like India, the two revolutions of computing and communications could run in parallel – making available – suddenly – voice and data services to the masses in their homes and offices. By making technology a utility, the 5KPC can herald the creation of a New World Order.

The 5KPC is an idea whose time has come. It is an idea which by itself will not bridge the digital divide, increase growth rates or eliminate poverty. But for the world’s poorest countries, the 5KPC can be an equaliser. It can open up new vistas and fire up people’s imaginations. After that, it is to the individuals and the enterprises to convert these openings into dramatically better futures. It is up to this generation of entrepreneurs to go and build out the 5KPC Ecosystem. The Next 90% is waiting.

Weekend Reading

This week’s links:

  • The decade of Steve: Fortune on Steve Jobs. “How Apple’s imperious, brilliant CEO transformed American business.”
  • Conversation with Unilever’s CEO Paul Polman: from McKinsey Quarterly. “Unilever’s chief executive reflects on lessons learned at three major consumer goods companies, including how to manage people in a global context, the obligations corporations have to society, and why you should never waste a good crisis.”
  • Ideas of the Year: from Pragati, the Indian National Interest Review (PDF).
  • Startup Ecosystems take time: by Fred Wilson. ” I think it is good to think about decades when you think about the development of new startup hotbeds.” And we in India need to start now.
  • Air India: Sucking Blood from the Poor: by Atanu Dey. “Perhaps this is in keeping with the pathological dread of profits that socialism is founded on. Socialism leads to immense waste of human and other resources, which carried out over decades, leads to extreme dehumanizing poverty of the people. That dehumanizing poverty of the population is good for the leaders of socialistic economies. Poverty makes the population malleable and the leaders can then milk the system to enrich themselves by the billions.”

Mumbai Airport Dysfunctional

Mumbai airport has to be the worst that exists in any major city in the world. With two runways that crisscross each other,  arrivals and departures are severely constrained. Add to that the increasing stories of near misses on the ground and in the air that keep filtering through.

In addition, of late, these runways have been getting some work with the result that the airport is actually shut down every Tuesday between 12 noon and 6 pm. Believe that? Mumbai — “India’s answer to Shanghai” — has its airport shutdown for 6 hours during the day once a week.

The result is that almost every arrival and departure is delayed. My 6:10 am flight to Chennai took off around 6:45 am. Airlines have aded 10-15 minutes to their schedules for Mumbai.

Of course, the airport cannot expand since a significant portion of its territory is occupied by voters who cannot be moved. A new airport is nowhere on the horizon.

Mumbai airport has been privatised. But just building or refurbishing the terminals is not enough. We need to make the whole travel process more efficient. In that chain, the runways are the weakest links. Amazingly, we don’t seem to have any way to fix that.

So, we are resigned to our fate. And we bear it stoically and silently.

PS: Don’t get me talking about the approach road to the Bandra train terminus. We never learn.

Chennai to Mumbai via Ahmedabad

I was on SpiceJet coming back from Chennai last Thursday. The flight took off about 15 minutes late at 8:10 pm. It was scheduled to land in Mumbai around 10 pm. At 9:15 pm, the pilot announced that Mumbai airport had been temporarily closed because an aircraft had burst a tyre on landing. So we would be circling for some time – we were number 5 in the arrival sequence then.

Half hour later, he had bad news for us. We were now between 15 and 20 in the landing sequence, and that meant we would run out of fuel. So, we were going to Ahmedabad for fuel, and we would then come to Mumbai.

We landed in Ahmedabad at 10:45 pm. The “20-minute refueling halt” became a 90-minute  fuel, food and crew change halt (since the crew had flown their quota for the day). We finally took past 12:15 am, and landed in Mumbai shortly after 1:15 am, a total of 3+ hours behind schedule.

These are the facts of the case. Tomorrow, we’ll discuss the stupidity of it all.

A2P SMS: Interconnect Issue (Part 2)

TRAI needs to intervene immediately in the matter of SMS Interconnect charges and do the following:

  • Change the “forbearance” policy to “Bill-and-Keep” until further direction. This will ensure that arbitrary charges between operators do not start creating havoc for SMS aggregators, enterprises and consumer SMS companies.
  • Start a consultation process to determine SMS costs and then decide on the issue of SMS interconnect charge (should it be there, and if so, what should it be)

What TRAI will find is that the cost of carrying an A2P SMS in the system is about 1 paisa or less. The cost of carrying a P2P SMS is 2 paise – the additional 1 paisa comes primarily due to the billing that needs to be done.  Interconnect needs to be cost-based — and there are three elements to the SMS value chain: the originating operator, the long-distance carriage, the termianting operator. The IUC (interconnection usage charge) is paid by the originating operator to the terminating operator. So the IUC that TRAI can possibly levy will need to be will probably be 0.25 paisa for an A2P SMS and 0.50 paisa for a P2P SMS.

Given these ‘nano’-charges, TRAI may perhaps determine that Bill-and-Keep is better for all parties as compared to keeping track of the SMS counts back and forth.

PS: On the issue of SMS Spam, here is what I had written earlier.