Wednesday, October 27, 2010

Peer powered cash

This piece first appeared in the business blog on 26 October 2010

Remember the good old college days? When time flew, and money was scarce. How many of you borrowed from your friends to fuel endless chai, smokes and dates? You gave back the money when you could and you earned favors when you did the same for your pals. It was a mutually beneficial scheme where trust and faith were currencies on which small sums of money were exchanged.

Fast forward to now. What do you do when you need a small sum of money? Like this morning when I needed 150 bucks to pay for a flat and did not have the desire to go to the ATM on the other side of the road? Would it not have been nice to have a bunch of friends on my mobile phone who could chip in 150 bucks that I could return later in the day when I topped up my wallet? Social Lending? Peer powered cash?

What if there were virtual currency that one loaded onto the phone that one could send out to trusted friends when they needed small sums of money? Not actual cash but redeemable tokens which can be cashed in at cafe chains, restaurants, movie halls, book stores, petrol pumps, or any place that you can think of.

The service could do deals with the outlets and buy the products / service at a considerable discount - for example a cup of coffee at CCD for Rs 45 could be bought at a margin by the service provider and be made available to the consumer at the retail price. If worked upon there can be many models here and it creates a parallel economy of sorts that functions like a virtual wallet. Maybe eventually this can get extended by integrating banking services.

Which brings us to an important application which was the basis on which this piece was being written. There are millions of people without a proper bank account in India who manage to get a cell phone. The very basic cell phone without GPRS, camera and so on. To understand this you need to get that nose out of the metro India and into the interiors - places like Nira in Pune district, which falls off the radar ever so often. Imagine being able to load Rs 100 onto your phone like you deposit money in a bank, earn a small interest on it like you do with a bank and be able to pay, transfer and all that using just your sms enabled device. One might argue that there is too much effort involved in teaching the guy to use sms. My counter to that - trust the common man on the street to evolve faster than you and me. His needs are far greater than ours and he knows he needs to learn fast to survive.

For this idea to work, the telecom companies, RBI and postal service will have to synergise. Every large village has a post office - a perfect place where money cards can be bought and loaded onto the cell phones - like a prepaid card which is used for the calls and smses. I do not have a perfect model on how the relation between telecom ( I keep typing in telecon - a purely Freudian slip :)), postal service and consumer. But I am sure that this is something that will work. Imagine how big this economy can be. Imagine how valuable it will be for the FMCG guys who are trying to expand the rural market.

I am excited with the progress made by the telecom, banking and services sector in the last decade, but the real explosion is yet to come. The rural consumer, the consumer who does not have a banking service is the last HUGE mountain that will need to crossed and the sooner someone cracks it the earlier his IPO!!

This in my mind is more valuable than the hazaar apps and app stores that we spend good time and money building and trying to sell. But hell I am known to be wrong.

Friday, October 22, 2010

Help! I am a dial tone now and I do not mind it

Techcrunch reports that Pincus the man behind Zynga says that in 5 years time we will all be dial tones. Not just that, we will have a dial tone for our friends, for music, for games and so on. Reading through the piece and the comment I read this one comment by TahoeBlue who also happens to be the moderator of the forum. It says and I quote him here : "When I first read the remarks ("we'll all be connected to each other", and "we'll all be dial tones"), my first reaction was that Pincus was suggesting that individuals and entities on the web would be talking peer-to-peer, and not through a "social portal", in 5 years.

Given the pace of change in both the resources and capabilities of networking, the prospects of each person maintaining their own 'network' of friends, colleagues, and services on computing infrastructure domiciled on servers dedicated to, and controlled by, individuals and not monolithic portals like Facebook would seem to be both attainable and desirable."

The first thought that came to my mind is Diaspora ( seems to be down at the moment, it could be a localised problem with my internet connection too. You can read about diaspora here) and a few lines below his original comment TahoeBlue also agrees with the thought.

People owning their own social networks is a powerful thought and in time it might become a default standard like owning a telephone or a cell phone connection. One might want to snigger at the mavens at KP and their large $250 million fund, but the truth is that the connected mass of people will become more and more social and it will not just be about poking someone or liking a story or even recommending the a new cafe. Social networks make it easy for people to keep in touch without the costs of keeping in touch. It is similar to the way email changed communication. Only this time the people will also want to share their thoughts and ideas and issues with people they know. Eventually there will be two kinds of social networks - an individuals private space meant for family and close friends, another for their co workers and finally one for their outer circle. Social networks mimic the real world and the quicker we realise this the easier it will be for us to adapt and adopt.

In time this dial tone world will learn to pick out the lines it wants to connect to and ignore the rest. If Google and search gave the connected world the sum total of intentions of humanity. The next generation of social networking platform will give it its voice. We can already see it being reflected in the status messages and the tweets around us, but imagine a global connected thought, of grief and joy and rising. It feels complex and at the same time feels liberating.

Mark Pincus thinks in 5 years the world will change again and these dial tones will be the signal flags of the global connected human mass. It sounds profound, and to imagine when Google started, search and then social networking seemed like geek toys!

Think of how it will change the consumer, consumption, media planning, buying, selling advertising. Each will need new models and new initiative, either the incumbents evolve fast or a new breed of people will start knocking the doors of the VCs for funds to power themselves.

What fun!

Wednesday, October 20, 2010

can there be another yahoo? or for that matter Rediff

This post was first published on on 20 October 2010

The answer is - no. There can never be another Yahoo or AOL or Rediff. Its just not conceivable for anyone to start from scratch and build traffic that these portals have acquired over the years. A good friend recently estimated upwards of 200 crores to be the amount needed to achieve the scale that has today if one were to start as a standalone venture. And most of it will have to spent on product finesse - forget the ad spends that would be required to create awareness. Even has not been able to reach the depth in the minds of the internet audience despite the 360 degree influence of Network18's television channels.

Sure there will be Facebooks and Twitter and Foursquares that will dominate mindspace of the attention deficient blackberry boys and iPhone junkies. And the connected world might end up being in your back pocket via an app. The value of the portals who have been around for the last ten odd years will never diminish. All other access points on the devices and the social media will just become the vehicles for the content on these portals to be consumed or discovered. The problem here is then what happens to the carefully built up traffic of so many years. A survey done by AC Neilsen exactly a year ago ( report here ) says that while people still use portals and search engines for information, social media is increasingly becoming dominant.

It is clear then that anyone starting afresh will not just have to scale the traffic mountain and then create enough value for the consumer to adopt the content as their own. The 'my space is more valuable than your space' phenomenon will come to play and increasingly more and more users would prefer to have a sort of a facebook style page where things of interest come to them instead of going to twenty different places. Remember that when you click on a link shared by your friend on facebook or twitter, you are sent to that page. In apps where content gets pulled from the repostories the same I assume would apply (please correct me if I am wrong). The focus will have to move away from the homepage to specific interest areas that are likely to be adopted by consumers. This makes's home page style have greater sense because I assume the grand man of Indian internet realises that direct to homepage traffic will reduce over period in time and hence internal sub home pages are more likely to have greater value and hence be more valuable to advertisers.

If am sure sometime in the near future, we might have a facebook OS powering a netbook which boots direct to FB using the interface as an window to what people who influence me are telling me. The only drawback is that I might miss out on the stuff that is not so popular, not top of mind. Then what do I do? Go back to the portal?

It is similar to going to the first 15% of a book shop, you will find all the stuff that everyone reads. But if your interest lies in Sufi poetry or screenplays, you will have to spend quality time trawling across the book store or even go to the gallis in fort seeking nirvana. To echo an old coffee ad for filter coffee - real pleasure cannot come in an instant.

The next 3 years will be the time for consolidation. No new yahoos will be born but the old ones will evolve, merge, be mashed up and exist as destinations and also as little niches in our back pockets.

Monday, October 18, 2010

Microfinance is good if we accept that everyone needs to make money

This blogpost first appeared in on 18 October 2010

Some twenty years ago in the dusty suburb of Pune called Pimpri Camp there used to live a Sindhi businesssman. His fame in the industrial mess in that godforsaken place was due to his business model. Say if you were the owner of a handcart and wanted Rs 100 to buy bananas from the wholesale market, the Sindhi gent would give the money to you if you promised to return the money along with a small fee of Rs 15 at the end of the day. Yes you heard me right - take Rs 100 at seven in the morning and return Rs 115 at seven in the evening.

Every morning atleast a few hundred men and women would queue up along the bylane where he had setup shop. My father used to talk about him with the reverence given to true social workers. He used to say that he knew atleast twenty families that supplemented their income by using this Rs 100 loan everyday. The women in these families bought wheat flour, oil and kerosene and made chappatis everyday and sold them at 1 rupee each to the TELCO factory. The economics was sane - you could make around 200 chappatis at an average with that money - an income of Rs 85 per day.

The security deposit that you gave the 'moneylender' was just a reference of someone who used the service for atleast 3 months. That's it. If you did not pay back for three days your reference would not get the money and would be blacklisted. The system worked it seems till the gent passed away. But he extended his line of business to renting handcarts and then rickshaws.

In recent times if you travel down to Borivali - the northern most outpost of Mumbai using the Malad Link Road post midnight, you are likely to see rows and rows of rickshaws along the road. These form an organised 'rent by the day' method of working. You provide a copy of your license and a reference and hire a rickshaw for 12 hours for x amount, you can keep the money that you earn minus the daily rent and the cost of fuel. Efficient and enterprising politicians of all hues and colour own atleast 200 plus rickshaws and rumours are that they make around Rupees 100 - 150 per day - thats Rs 20000 per day on the lower side or Rs 600000 per month, tax free I assume.

The point I am making is that microfinance is nothing new. It has existed for a long long time. The workings have been exposed and outrage has piled up on the corporate ones only now when moneyed, educated, sophisticates have entered the fray with truck loads of money - from other banks and the public and have stopped pretending that they are here for doing good. Once we accept that microfinance like any other form of business has the aim of making money for its stakeholders, including the borrower, the bitterness goes away.

If anyone needs to take the blame for the lack of options for the women who need Rs 3000 a month to buy wheat flour, or Rs 2500 for buying a sewing machine, it is the existing banking infrastructure. When the treat people like you and me like a piece of thrash, I can imagine what they would do to the people at the lower strata. It makes me wonder when Mr O P Bhatt, Chairman of State Bank of India - one of the largest banking networks in India says in the Times of India he is surprised by the numbers of the microfinance companies. I am surprised that the postal network, the branch network and the reach of the cooperative movement has not been used to lead the way. Atleast you would not express surprise!

What we need is not mega venture funded companies - they serve their purpose too but are not easy to digest :), we need a thousand people who are like the Sindhi businessman from Pimpri Camp or even the politicians of Mumbai who provide a source of income to the a few hundred migrants. Their aims must be dubious but they do serve a purpose. And how different are they from the microfinance guys anyways?

I recently invested a modest amount of Rs 500 through Of the amount Rs 400 went to Rama Dipak of Maharashtra who wants to setup a diary business and Rs 100 to Ujjwala Santosh who wants to buy a sewing machine. Between the two they needed to raise Rs 7500 and thirteen people contributed towards the amount. None of us are expecting to make any money on this investment, though the promised rate is of 3.5% per annum. If this experiment works I am willing to invest a small sum every month and hopefully a few people will raise themselves and live with dignity. I think its a great thought, only problem is that if RangDe succeed twenty similar ventures will be setup and the same story would get repeated.

I can bet that the social - collective - investing is a fantastic idea and the ones who want to get involved can start small. Locality based startups that work closely with the people who want to volunteer with money and time. We used to call this Social Service under the NSS in college. I wonder if it exists!

Friday, October 15, 2010

revive, renew ?

Ok, so here I am! after having cleaned up this blog of its cobwebs. Should have done it long ago, no excuses here - am tardy to a fault.

I want to revive this blog. I want to write again on areas that matter to me and to the space around me.

Hope this time I don't stop when something really big comes along.


In the last 7 years so many things changed, facebook to twitter to the entire debate on the death of the www. Yahoo! is no longer yahooing and it is possible for anyone to be a celebrity blogger by virtue of self promotion :)

Let us begin.