Demonetisation is a lost opportunity for digital payment providers

Standard

The move made by Modi to Demonetise 86% of the notes in circulation might be a move that was triggered with various interests in mind. The one thing that it has undoubtedly made many Indians do it use digital payments. I was speaking the other day to one of the managers at National Payments Corporation of India (NPCI) and he was telling me that the numbers of transactions have spiked many folds!

For those who do not know NPCI is a quasi government body that creates the standards such as IMPS and UPI using which many of the online transaction networks function.

Yes digital payments and transactions are spiking to new levels.

This was quite possibly the best opportunity to transition the vast majority of Indians who are currently dependent on cash transactions for the most part to digital payments. Are we really doing what is necessary?

 

Let me share an incident that happened:

I had to travel to Mumbai the day after the demonetisation scheme was announced. When you land at the international airport in Mumbai for some reason they change a toll only in cash. I did not have any, so the Uber driver paid for it. We did not find a single ATM on the way which could dispense cash and hence upon reaching my destination I asked my driver if he has PayTM so I could transfer him the money. He had the app installed but did not have an account. I asked him to create an account. He looked at me uncertainly. He proceeded only to get stuck at the point where the app asked for him to put in a password. He did not wish to set a password in English, he was afraid he would forget it. PayTM does not offer the choice of any other language. So after much goading he set a password and I was able to transfer him the money.

Seems like a minor oversight; but affects Millions if not a Billion people in this country.

 

Arguably e-wallets have a critical role to play in this context since there are a lot of small and micro payments for which using the card (credit or debit) does not make a lot of sense. Besides there are a lot of small businesses and stores that do not possess the infrastructure necessary to (PoS Machines) to process payments using cards. In such cases it is very easy for the merchant to get up and going & start processing payments.

If this was the opportunity straight out of a dream, all of the wallets have blissfully squandered it away.

The most significant error in judgement that was made when all of the VC firms came rushing in to setup shop in India was to assume that India was going to be next China. India is nothing like China, with over a 100 languages, poor digital infrastructure and still poorer adoption of digital payment services; India was and still is nothing like China.

As of 2012, the best estimates put a population of 125 Million English Speakers in India. For the sake of argument let us assume that this number has grown to 200 Million today. That still leaves aside 1.07 Billion people, who do not know the language.

How many applications do you use which have a non-english version?

This was probably one time when almost every Indian has had the need to rely on digital solutions in order to make sure their lives were not hindered greatly. Under such circumstances, it is a priority to ensure that all of the solutions are able to cater to the needs to all Indians, English speaking or not.

It seems rather sad that someone like Vijay Shekhar Sharma who himself came from a Hindi medium school did not see this need. The only wallet website that at least makes an attempt is Mobiqwik, which translates ONE page on the site to Hindi. All of the other wallet or payment applications continue to be exclusively English.

As English literate technology savvy Indians take advantage of technology and make things easy for themselves, a vast majority of people in this country cannot access these services because of language barriers.

I would have expected these wallet companies to translate their apps to 30 languages over the course of a week (at least on Android) and send teams of people out with missionary zeal to convert as many merchants as possible to wallet users. For the merchants everyday is a lost opportunity and hence they would have embraced and also taken the time to educate their customers of the product to make transactions possible.

But that is not how it played out. There companies continue to target an English speaking audience and make a whole host of payment processing solutions possible for English literate customers alone.

We in the “Startup” universe need to start looking at this entire nation. To start looking beyond what is “low hanging fruit” and can be targeted through Google AdWords alone. We need to start building solutions for the people of this nation, in all of their diversity and limitations.

You can build a billion dollar enterprise by making a million people pay $1000 or by making a billion people pay $1. There has been a preposterous degree of focus on the former. While the possibility of the former going from paying $1000 to $2000 is limited; the possibility of $1 going to $10 in incredibly high.

What kind of company do you want to build?

 

Blablacar – Thoughts to ponder about India (Updated)

Standard

Blablacar is a French startup that recently scored a USD 100 Million in funding to expand beyond Europe. One of the countries that the company is considering entering is India. India is a large market and has a huge number of cars on its roads. Blablacar is a company that allows for car-pooled rides over long distances (100 Kms to 500 Kms). Let us say I am driving down from Bangalore to Mangalore alone, I could put out an invite asking others who might like to join me at a cost. I get to subsidise my ride and those who are looking to travel, would be able to hitch a ride. The ride might cost as much as the bus but would be more comfortable and faster.

The idea seems very slick at the outset but deploying it in India is nevertheless going to be fraught with challenges and the need to overcome certain fundamental issues.

It is easy to assume that a company of this nature would find a huge market in India, since India had about 21 Million cars on road as on 31st March 2012. We can easily add another 12 -15% to arrive at the current figure. With so many cars, there are bound to be people who are not driving their vehicles filled to capacity. Blablacars offers an interesting way to monetise these empty seats while at the same time doing a little, in terms of helping the environment and reducing fuel burn.

Yes. But they are not going to have it easy in India.

In India, cars represent a status symbol. They are not just a means of transportation, because the best means of transportation for Indian roads are the two-wheeler, given the congestion and poor state of the roads; not to mention the huge gap in terms of mileage. Indians do not like to share their cars, They buy it to show off and that they do by waiting for hours at the traffic lights. I know several families who have cars but use a two-wheeler for most of their moving about. This has been part of the reason intra-city car-pooling has not taken off in any meaningful manner in India.

Coming from Europe, you might be very tempted to say; “Yes, but you cannot undertake a long distance travel in a two-wheeler”. True that, you cannot.

But.. 

India is not a country of highway loving people. Highways are seen as unsafe and it is assumed that you need some kind of training (which only taxi drivers have) to be able to drive on the highway. Yes we might travel on the highway once in a while, but we won’t put our own cars on the highway and much less drive them there. Highways are fundamentally badly built (barring a few segments/routes) and considered rather unsafe. Unlike in Europe not a lot of people take to the roads during vacations, and even if they do, they hire a cab. Most of them prefer bus and train.

Watch this Canadian driver get a load of Indian road.

There are certain segments which tend to travel by road. But the only reason for doing that is for the purpose of flexibility. When you travel by road by yourself, you get to stop where you like, take the trip at your pace, fast/slow as you may like and also the trip can be more impromptu. Most importantly, you need not follow somebody else’s time table. 

There are four segments of people who take to the highway: 
Business people who want the flexibility.
Students who do it for the thrill of a road trip. (18 to 25 years of age)
Vacationers who are used to driving on road. (Very small segment)
People who work in a city very close to their native place. (Bangalore to Chitradurga over the weekend)

When you look at it like this, the market shrinks very rapidly. 

It not all bad.

If Blablacar has to successfully enter India, it has to do it very strategically with focus on very targeted segments instead of going to the entire market. You would start by making a list of highways that are most well suited for drives. Highways which have some of the best roads in India and get frequented often, such as Delhi-Agra, Delhi-Chandigarh, Bangalore-Chennai, Mumbai-Goa, etc. These highways are a pleasure to drive and increasing numbers of people are beginning to use these roads. Focusing on these markets help define the segment that you most wish to cater to and also increases the possibility of closing greater number of transaction.

Like buses, in India there are a large number of taxis which serve a certain route. You would mostly find these taxis parked near Interstate bus terminals (ISBTs). When I used to study in Agra, I would often take these taxis, which were often Tata Sumos which would load up 9 others and drive from Delhi to Agra. They were invariably quicker than the buses would not stop as often and cost slightly more than the bus.This segment is completely disorganised, it would take someone with a keen eye and with experience to even spot these guys outside bus stops. Blablacars can do for them; what Redbus was able to do for bus operators. 

Over the years, roads have been improving in India and that will continue and probably convince more Indians to take to the roads. At such a time, Blablacar might be well poised to take advantage of the growing market.

I feel currently, this route would be best way to enter India for Blablacar. What they do, how they do, if they enter India at all, remains to be seen.

As the french say, “Nous verrons”.

Update:

I drive a lot on the highway. So during my recent trips I have been noticing another things. I have finding the many individuals who rent a car from Zoom and driving by themselves on the highway. The simplest explanation for this is since they charge by the day, it works out cheaper to rent the car and drive it by yourself rather than to take cab. Since this segment of crowd would be cost conscious and by default are not using owned cars, would be much more willing to share their ride to drink the cost down further. Should be a sweet market for Blablacar.

Modi – The Storyteller

Standard

I recently completed a course on Storytelling by Jennifer Aaker from Stanford. At the core of it, the course explains four steps to telling a story which are:

1. Single Focussed Goal

2. Grab Attention

3. Engage

4. Enable Action

In the context of the recent victory that Modi registered in the elections in India. As I was listening to Modi’s victory speech it just hit me how he had used each one of these elements in a very pointed manner, in order to win the elections.

He had a Single Focussed Goal of winning the elections and becoming the Prime Minister.

In terms of Grabbing Attention, he did something that was never done in India. He ran the campaign like a presidential campaign. The entire campaign was centred around himself. It was not about the party or its values or anything of that sort. It was a huge risk given the 2002 riot issue was sure to rear its head, but he was confident enough that he could pull it off.

He captured the imagination of the country by promising decisive leadership. He spoke of his track record in Gujarat as the Chief Minister and there were sufficient people willing to back his credentials (definitely more than the number of detractors). He promised the same kind of development for the entire country if he was made PM.

He engaged the people of the country through social media as well as the ‘Chai pe Charcha’ meetings that were held in different cities.

#AbKiBaarModiSarkaar was trending on twitter. If only to make jokes about him, but still. Who was talking about Congress? Any publicity is better than no publicity.

He also engaged by extensively travelling, addressing rallies, BJP say that he travelled 300,000 Kms. How much did Rahul Gandhi travel? To add to that he even used technology, holographic projections to address gathering where he could not be personally present.

BlrAM7WCIAAsz9b.jpg-large

The call for action was simple, get out and vote. The positive externality of all this was campaigns such as ‘You Vote, You Decide’ which was run in Bangalore.

8-Will-India-Rise-_-You-Vote-You-Decide

The result – Well, all of us know.

As I watched the speech that he gave after he won the election, I could not help but compare it with the ‘Dear Sophie’ ad which Google rolled a few years back. Modi repeatedly made the voter the hero and the achiever in the entire story. He said, he was there to serve to act a tool to help India reach the development goals which should have been achieved many years back.

Modi, the PM is the tool. The voter is the protagonist who is able to see great things done through this tool. Just as in Dear Sophie, where the user is the protagonist and google merely provides the tools.

All in all a great story told and a great story sold. What happen here forward will determine if this story can be sold again or not!

Investing in a Startup

Standard

I have always thought that investors had the easier end of the bargain. They had people coming to them to present their proposals, which they would evaluate based on their knowledge and accept or reject. All that changed since we put in place a Student Project Grant at VIT University, Vellore.

The premise was that there are a lot of engineering students who have great ideas that they wish to pursue but are unable to find the base seed money that they need to get off the ground. We thought if this support was provided they could get going. We had planned to support between 5 and 10 student projects. Bare in mind, we were just trying to stimulate the eco-system not profit from it!

Well… It was not all that simple. What was even more surprising was that we faced problems with sourcing quality proposals!

In the first round of call for proposals, we got 24 proposals out of which 4 were given the grant. In the next round we got 33 proposals, out of which we have still to approve even one. Looking at the odds we might have to seek a third round.

The first challenge was that most proposals although extremely great research projects but did not make good business proposition. They lacked any kind of validation (Technical, Consumer, etc.).

50% of the proposals were rejected for this reason alone.

Then there were proposals which were extremely great on paper, but we did not feel that the students would be able to execute the Project that they were proposing with the kind of resources, financial and otherwise at their disposal.

This ensured that another 35% of the proposals left aside.

Then can the few which seemed interesting enough. There was a possibility that those projects could see the light of day. The ability to execute was there, but we felt that there was a lack of sincerity. In the sense that I had my doubts that they would follow through on it.

This took out about 7% of the proposals.

With that gone, we have a very small basket of proposal that we are actually supporting. Not to mention, there is money left behind in the grant.

So the fun does not end there. So, we went like, this needs an eco-system boost and there needs to be more exposure and education about Startups and what is possible. We setup The Blueprints Club as a means of reaching out to students and giving them learning and support.

Guess what happens?

We get a dozen students who are actually working on a real product and even have a prototype ready! They are just too vary of trying to do a real business with it. I got to see some real amazing stuff, which may be ripe for commercialisation; if only the students would be willing to take a plunge! We tell them there is grant available.

At this point you get three categories for students:

  • Those who wanted to apply for the grant, but did not really bother about it
  • Those who will go ahead with a startup idea ONLY if they get the grant
  • Those who don’t want the money at all; all they need is inspiration!

This got me thinking, is this the same problem that most VC Funds face in India. People with ideas and probably capabilities as well, just lacking the inspiration or the courage to go out there and build a business!

Is this really the problem that confronts VC investors in India?