#4 Reimagining Cancer Care

In the last few months, I have had the opportunity to work closely with the National Cancer Grid – a network of 150+ cancer centres in India – and in the process, better understand the workflows involved in different medical processes and the requirements of medical professionals. I have closely observed care delivery, interviewed cancer patients and oncologists, learnt about current challenges and about initiatives being undertaken by NCG and other organisations to tackle them.

This blog post is an evolved version of an earlier post, where I had talked about the use cases of health data and the implementation of a PHR (Personal Health Record). Of these, I believe that the biggest use of health data will be in improving the quality of care in complex medical cases (either acute like surgical procedures, or chronic like cancer). In this post, I will use cancer care to exemplify this.

Core idea
Let us visualise a specific application for cancer care, with oncologists as its primary users. There are only around 1000 trained oncologists in India, so let’s assume that all of them are users of this application. Let us also assume that clinical data of all patients treated by these oncologists is conveniently accessible through this application (with due privacy and security measures). What will these users do now?

Expert consultation
I attended a Virtual Tumour Board run by the National Cancer Grid – a weekly remote consultation program run on Saturday mornings where teams of doctors voluntarily join to discuss well-documented cases and their potential treatment plans. VTBs are run separately for each speciality (like head & neck tumour, gynaecology, neurology, etc.), which means that it takes up to 4-6 weeks for one’s turn. Doctors usually do not have the luxury of such long waiting periods, and therefore turn to individual consultations which are often not documented, depend on informal connects and are sometimes made with incomplete data. Formalising this process and making it asynchronous can be of huge benefit to all medical professionals.

Care team collaboration

Complex medical procedures often involve a team of doctors and other medical professionals, working responsibly for a given patient. A significant percentage of all deaths due to medical negligence is caused by lack of communication between the care team members. The communication process today is paper-based and unstructured, leading to accidents that can, in fact, be prevented – especially with the growing use of IoT devices and voice-based inputs. (I saw one such application at Narayana Health being used by their ICU teams).

Performance evaluation

Lack of organised data, changing patient care-providers and long feedback loops make it difficult for medical professionals to monitor their performance. Can we empower them with tools to do so? Doctors today lack visibility on the outcome of the treatment given and rely on intuition, experience or techniques tested in developed countries for care delivery. Such a tool would not only help doctors improve their performance, but also improve the trust equation with their patients.

User Experience
There are three crucial elements for enabling a good user experience:

Data input – Most EHR systems require text input to be typed in by doctors. This makes it difficult to use. Other input techniques for automated data transcription like touch, voice, or other innovative methods for data capture will need to be explored. Additionally, interoperability across all systems and devices will be key in enabling access to all data.

Data interpretation – Sorting through a patient’s health records takes up a substantial amount of time of a physician, especially when the data is unstructured. Developing intelligence to sort the relevant records as per the case in question will significantly enhance the user experience of the product.

Safety and PrivacyAll solutions should ensure complete privacy of patients. This could mean access controls, electronic consent, digital signatures, digital logs, tools for data anonymisation, etc. it might also be important to perform basic verification of users of the platform.

Value Discovery
The value of the platform will increase as more and more physicians become a part of it. For example, an endocrinologist might need to consult a cardiologist in a case of disease progression, or an ENT specialist might need to consult an oncologist to confirm a diagnosis. More importantly, the platform will also drive innovation, i.e., other use cases can be developed on top of it. For example, the expert opinions mentioned above can also be used for consulting patient remotely, pre-authorising claims, forming medical peer review groups, etc. Similarly, working care groups can also simultaneously enrol staff for upskilling (as practised today in an offline setting), and information about treatment outcomes can help guide better research.

Next steps
We remain on a quest to find use-cases for PHR since we believe technology pilots alone would not be enough to drive its adoption. In that context, we are looking for partners to experiment with this in different healthcare domains. If you are interested, please reach out to me at [email protected]!

#3 What does the Health Stack mean for you?

The National Health Stack is a set of foundational building blocks which will be built as shared digital infrastructure, usable by both public sector and private sector players. In our third post on the Health Stack (the first two can be found here and here), we explain how it can be leveraged to build solutions that benefit different stakeholders in the ecosystem.

Healthcare Providers

  • Faster settlement of claims: Especially in cases of social insurance schemes, delay in settlement of claims causes significant cash-flow issues for healthcare providers, impacting their day-to-day operations. The claims and coverage platform of the health stack is meant to alleviate this problem through better fraud detection and faster adjudication of claims by insurers.
  • Easier empanelment: The role of facility and provider registry is to act as verified sources of truth for different purposes. This means a convenient, one-step process for providers when empanelling for different insurance schemes or providers.
  • Quality of care: The use of personal health records can enable better clinical decision making, remote caregiving and second opinions for both patients and medical professionals.

Insurers

  • Faster and cheaper settlement of claims: claims and coverage platform, as described above
  • Easier empanelment of healthcare providers: registries, as described above
  • Diverse insurance policies: In addition to the above benefits, the policy engine of the healthstack also seeks to empower regulators with tools to experiment with different types of policies and identify the most optimum ones

Researchers and Policymakers

  • Epidemiology: the analytics engine of the healthstack can be helpful in identifying disease incidence, treatment outcomes as well as performance evaluation of medical professionals and facilities
  • Clinical trials: a combined use of analytics and PHR can help in identifying requirements and potential participants, and then carrying out randomised controlled trials

How can it be leveraged?

While the healthstack provides the underlying infrastructure, its vision can be achieved only if products benefitting the end consumer are built using the stack. This means building solutions like remote second opinions using health data from healthcare systems, as well as developing standard interfaces that allow existing systems to share this data. In the diagram below, we elaborate on potential components of both of these layers to explain where innovators can pitch in.

If you are building solutions using the health stack, please reach out to me at [email protected]!

Decoding the Aadhaar (Amendment) Bill – PMLA Amendment

The amendment made by way of the Aadhaar and Other Laws (Amendment) Bill, 2018 to the Prevention of Money Laundering Act,2002 gives true effect to the intention of the Hon’ble Supreme Court as set out in their judgment of September 2018.

It is clear from the judgment that the objective was to empower the individual and allow for the resident to be able to uniquely identify herself to avail of every service of her choice while ensuring that there are adequate protections for such use under the force of law.

Aadhaar Act Amendment

This is clearly set out in the now amended Section 4(3) of the Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Act, 2016 (the “Aadhaar Act”) as follows:

Section 4(3) – Every Aadhaar number holder to establish his identity, may voluntarily use his Aadhaar number in physical or electronic form by way of authentication or offline verification, or in such other form as may be notified, in such manner as may be specified by regulations.

Explanation-For the purposes of this Section, voluntary use of the Aadhaar number by way of authentication means the use of such Aadhaar number only with the informed consent of the Aadhaar number holder.

And further in Section 4(4)-

An entity may be allowed to perform authentication if the Authority is satisfied that the requesting entity is-

  1. Compliant with such standards of privacy and security as may be specified by regulations; and
  2. (i) permitted to offer authentication services under the provisions of any other law made by Parliament; or

(ii) seeking authentication for such purpose, as the Central Government in consultation with the Authority and in the interest of the State may prescribe.

With the above amended provisions, it is clarified that (a) the objective is to ensure that the Aadhaar number holder is empowered to establish her identity voluntarily with informed consent (b) Entities that may be permitted to offer authentication services will do so pursuant to a law made by Parliament or by way of Central Government direction in consultation with the UIDAI and in the interest of the State.

PMLA Amendment

The amendment to the Prevention of Money Laundering Act,2002 (the “PMLA”) seeks to give clear direction to the above-enunciated ideas.

The newly inserted Section 11A of the PMLA provides for the manner in which a Reporting Entity may verify the identity of its clients and beneficial owner (conduct KYC). This is by way of offline verification of Aadhaar or where the Reporting Entity is a banking company- online verification of Aadhaar.

However, it is further clarified (in tandem with the aforesaid amendments to the Aadhaar Act) that upon satisfaction of standards of privacy and security, the Central Government may, in consultation with the UIDAI and appropriate regulator provide for online authentication for Reporting Entities other than banking companies.

And it is further explicitly clarified that in the scenarios as contemplated in this provision, nobody will be denied services for not having an Aadhaar number, i.e: ensuring that the presence of Aadhaar number is not mandatory but purely enables and eases the availing of services.

As next steps on this front, distinct Reporting Entities, including NBFCs, Mutual Fund Houses and other financial institutions need to approach the Central Government with requests for access to online Aadhaar authentication services.

Organisations such as DICE would be useful in mobilising groups of different financial institutions in approaching the relevant regulators and Central Government authorities for Aadhaar authentication access.

Saranya Gopinath is the co-founder of DICE (Digital India Collective for Empowerment)- an industry body representation across emerging technology sectors.

She can be reached on [email protected]

Scaling Good Advice In India’s Startup Ecosystem – A Research Paper On PNGrowth Model

In January 2016 iSPIRT ran the largest software entrepreneur school in India, called PNgrowth (short for Product Nation Growth).  The central vision of PNgrowth was to create a model of peer learning where over 100 founders could give each other one-on-one advice about how to grow their startups. With peer learning as PNgrowth’s core model, this enterprise was supported by a volunteer team of venture capitalists, founders, academics, and engineers.  See iSPIRT’s volunteer handbook (https://pn.ispirt.in/presenting-the-ispirt-volunteer-handbook/)

However, unlike a regular “bootcamp” or “executive education” session, the volunteers were committed to rigorously measuring the value of the peer advice given at PNgrowth. We are excited to announce that the findings from this analysis have recently been published in the Strategic Management Journal, the top journal in the field of Strategy, as “When does advice impact startup performance?” by Aaron Chatterji, Solène Delecourt, Sharique HasanRembrand Koning (https://onlinelibrary.wiley.com/doi/10.1002/smj.2987).

TLDR: Here’s a summary of the findings:

1.
 There is a surprising amount of variability in how founders manage their startups.  To figure out how founders prioritized management, we asked them four questions:

“…develop shared goals in your team?”
“…measure employee performance using 360 reviews, interviews, or one-on-ones?”
“…provide your employees with direct feedback about their performance?”
“…set clear expectation around project outcomes and project scope?”

Founders could respond “never,” “yearly,” “monthly,” “weekly,” or “daily.”

Some founders never (that’s right, never!) set shared goals with their teams, only did yearly reviews, never provided targets, and infrequently gave feedback. Other, super-managers were more formal in their management practices and performed these activities on a weekly, sometimes daily, basis. Not surprisingly, the supermanagers led the faster-growing startups.  Most founders, however, were in the middle: doing most of these activities at a monthly frequency.

2. Since PNGrowth was a peer learning based program, we paired each founder (and to be fair, randomly) with another participant. For three intense days, the pairs worked through a rigorous process of evaluating their startup and that of their peer. Areas such as a startup’s strategy, leadership, vision, and management (especially of people) were interrogated. Peers were instructed to provide advice to help their partners.

3. We followed up on participating startups twice after the PNgrowth program. First ten months after the retreat, and then we rechecked progress two years afterwards.

We found something quite surprising: the “supermanager” founders not only managed their firms better but the advice they gave helped their partner too.  Founders who received advice from a peer who was a “formal”  manager grew their firms to be 28% larger over the next two years and increased their likelihood of survival by ten percentage points. What about the founders who received advice from a laissez-faire manager? Their startup saw no similar lift. Whether they succeeded or failed depended only on their own capabilities and resources.

4. Not all founders benefited from being paired up with an effective manager though. Surprisingly, founders with prior management training, whether from an MBA or accelerator program, did not seem to benefit from this advice.

5. The results were strongest among pairs whose startups were based in the same city and who followed up after the retreat. For many of the founders, the relationships formed at PNgrowth helped them well beyond those three days in Mysore.

So what’s the big take away: While India’s startup ecosystem is new and doesn’t yet have the deep bench of successful mentors, the results from this study are promising. Good advice can go a long way in helping startups scale.   iSPIRT has pioneered a peer-learning model in India through PlaybookRTs, Bootcamps, and PNgrowth (see: https://pn.ispirt.in/understanding-ispirts-entrepreneur-connect/).

This research shows that this model can be instrumental in improving the outcomes of India’s startups if done right. If peer-learning can be scaled up, it can have a significant impact on the Indian ecosystem.

India powers up its ‘Software Product’ potential, Introduces National Policy on Software Products (NPSP)

This is an exciting occasion for our indigenous software industry as India’s National Policy on Software Products gets rolled out. This policy offers the perfect framework to bring together the industry, academia and the government to help realise the vision of India as a dominant player in the global software product market.

For ease of reference, let us summarise some of the major things that the policy focuses on

  • Single Window Platform to facilitate issues of the software companies
  • specific tax regime for software products by distinguishing  them from software services via HS code
  • enabling Indian software product companies to set off tax against R&D  credits on the accrual basis
  • creation of a Software Product Development fund of INR 5000 crores to invest in Indian software product companies
  • grant in aid of  INR 500 Crores to support research and innovation on software products
  • encouragement to innovation via 20 Grant Challenges focusing on Education, Healthcare & Agriculture thus further enabling software products to solve societal challenges
  • enabling participation of Indian software companies in the govt. e-marketplace to improve access to opportunities in the domestic market
  • developing a framework for Indian software product companies in government procurement.
  • special focus  on Indian software product companies in international trade development programmes
  • encouraging software product development across a wide set of industries by developing software product clusters around existing industry concentrations such as in automobile, manufacturing, textiles etc.
  • nurturing the software product start-up ecosystem
  • building a sustainable talent pipeline through skilling and training programmes
  • encouraging entrepreneurship and employment generation in tier II cities
  • creating governing bodies and raising funds to enable scaling of native software product companies.

There is good cause for cheer here. The policy offers to address many of the needs of the Software Product Ecosystem. For the first time, HS codes or Harmonised Codes will be assigned to Indian software product companies that will facilitate a clear distinction from ‘Software Services’ facilitating availing of any benefits accruing under the ‘Make in India’ programme. In addition, this will enable Indian software product companies to participate in govt contracts through registration on GeM (Govt. eMarketplace).

Considering that we remain a net importer of software products at present, steps such as the inclusion of Indian software products in foreign aid programmes, setting up of specialised software product incubators in other geographies and promoting our software product capabilities through international exhibitions definitely show intent in the right direction. With a commitment to develop 10000 software product start-ups, with 1000 of them in tier II cities, technology entrepreneurs building IP driven product companies can now look forward to infrastructural and funding support. The policy also aims to go beyond metro-centric development with a commitment to develop tech clusters around existing industry concentrations, enable skilling and drive employment in non-metros and tier II cities while actively encouraging Indian software companies to solve native problems.  

This policy could not have been possible without the vision of the Honourable Minister Shri Ravi Shankar Prasad, and continuous engagement and discussions with Shri Ajay Prakash Sawhney, Rajeev Kumar and Ajai Kumar Garg from MEITY and their team.

We have seen software companies solving native problems do exceptionally well, just look at what Paytm has been able to achieve while driving digital payments in India. There is now an understanding ‘Make in India’ can help us bridge the digital divide given that Indian entrepreneurs have a greater understanding of local issues and the challenges that are unique to us.

Setting up bodies such as the National Software Products Mission in a tripartite arrangement with the industry, academia and govt. to enable creation and monitoring of schemes beneficial to native software product companies is another much-needed step that will create a forum distinct to our software product companies and help give them a strong voice.

We would like to thank Lalitesh Katragadda, Vishnu Dusad, Sharad Sharma, Rishikesha T Krishnan, Bharat Goenka, T.V. Mohandas Pai, Arvind Gupta for their diligent efforts on the continuous dialogue and inputs for the policy.

While launching the policy is a great start, its implementation is what we all will have our eyes on. Now is the moment of action. We all look forward to fast-tracking of the various proposed measures under this policy for the benefits to start showing!

Website link to the official policy –  (https://meity.gov.in/writereaddata/files/national_policy_on_software_products-2019.pdf)

References

J​ANUARY​ 15, 2019​ – ​https://tech.economictimes.indiatimes.com/news/internet/india-needs-to-win-the-software-products-race/67533374

DECEMBER 8, 2016​ – ​https://pn.ispirt.in/what-to-expect-from-draft-national-policy-on-software-products/

NOVEMBER 13, 2016​ – ​https://pn.ispirt.in/national-software-policy-2-0-needed/

MAY 10, 2016​ – ​https://pn.ispirt.in/taxation-and-digital-economy/

APRIL 29, 2016​ – ​https://pn.ispirt.in/saas-the-product-advantage-and-need/

JULY 16, 2014​ – ​https://pn.ispirt.in/government-recognizes-the-software-product-industry/

DECEMBER 11, 2013​ – ​https://pn.ispirt.in/three-waves-of-indian-software/

JULY 16, 2013​ – ​https://pn.ispirt.in/smbs-and-indian-software-product-industry-intertwined-fortunes/

JULY 4, 2013​ – ​https://pn.ispirt.in/8-truths-why-it-services-organizations-cannot-do-software-products/

Clipping The Wings Of Angel Tax

 

2000 startups. 100 meetings. 25 articles. 7 years. 3 WhatsApp groups. 2 whitepapers.

1 unwavering ask:

No More Angel Tax.

This evening, when we first got to see the circular from DPIIT/CBDT that formalized key recommendations suggested with respect to Angel Tax or section 56(2)(viib), we admit our minds went blank for a moment. After all, this one document represents the tireless, collaborative efforts of iSPIRT, the entrepreneurial community of India and ecosystem partners like IVCA, Local Circles, IAN, TiE, 3one4 Capital, Blume Ventures etc., and the proactive support from the government. It has been one relentless outreach initiative that has seen us become a permanent fixture at Udyog Bhavan and North Block (I even checked with the guards regarding the possibility of a season pass). My colleagues Sharad Sharma, TV Mohandas Pai, and partners such as Siddharth Pai, Nikunj Bubna, Sreejith Moolayil, Monika, Ashish Chaturvedi and Sachin Taporia deserve a big shout out for their diligent efforts at connecting with various ecosystem partners and initiating a regular cadence of dialogue with the government.

The key takeaways from the circular are as below

  • Blanket exemption for up to INR 25Cr of capital raised by DIPP registered startups from any sources
  • Amendment in the definition of startups in terms of tenure from 7 to 10 years
  • Increase in the revenue threshold for the definition of startups from INR 25Cr to INR 100 Cr
  • Breaking the barrier for listed company investments by excluding high-traded listed companies and their subsidiaries, with a net-worth above INR 100Cr or a Turnover of 250 cr, from section 56(2)(viib)’s ambit

Each of these points is a major win for the startup community. If one looks at the data from the LocalCircles startup survey in January 2019, nearly 96% of startups that had received notices regarding angel tax, had raised below the permissible limit of INR 10cr. Expansion of this limit to INR 25cr is a huge boost and instantaneously removes thousands of startups from the reach of angel tax. There is an effort here to critically analyse, define and differentiate genuine startups from shell corporations. It includes measures such as increase in the revenue and tenure threshold that will not only help startups with respect to the challenges posed by angel tax but also open up eligibility for benefits under Startup India schemes and policies. We have been talking about the need to encourage and protect domestic investments and the government has paid heed to our concerns by introducing accredited investor norms and by breaking the barrier for listed company investments.

Initiated in 2012 by the UPA government, Section 56(2)(viib) or the “angel tax” section has been a relentless shadow on the entrepreneurial ecosystem. It taxed as income any investment received at a premium by an Indian startup. This provision saw many entrepreneurs clash with the tax officials about the true value of their business and pitted unstoppable entrepreneurial zeal against the immovable tax department.

All of us from the policy team at iSPIRT have been at the forefront of this issue since 2015 when we began petitioning the government to exclude startups from section 56(2)(viib) as taxing investments from Indian sources would cripple the startup ecosystem. We laud the government for appreciating the urgency of the situation and prioritizing this issue.

We first had an inkling of things to come at the February 4th, 2019 meeting held by DPIIT. It was unprecedented as it saw a direct dialogue between government and entrepreneurs wherein both sides could better understand the issues facing each other – how section 56(2)(viib) was hampering founder confidence and how it is a needed tool in the government’s arsenal for combatting the circulation of unaccounted funds.

After this, a smaller working group was constituted on February 9th, to review the proposals made by DPIIT to address this issue, in consultation with the CBDT and the startup ecosystem. iSPIRT were part of both meetings and contributed actively to the discussion.

We can now heave a sigh of relief as we have finally achieved to a large extent what we had set out to do. We finally have a solution that ensures genuine startups will have no reason to fear this income tax provision and the CBDT can continue to use it against those attempting to subvert the law.

This could not have been possible without the help of well-wishers in government departments like Mr Nrpendra Misra, Mr Sanjeev Sanyal, Mr Suresh Prabhu, Mr Ramesh Abhishek, Mr Anil Chaturvedi, Mr Rajesh Kumar Bhoot, Mr Anil Agarwal, who patiently met the iSPIRT policy team and helped develop a feasible solution.

At long last, domestic pools of capital will no longer be disadvantaged as compared to foreign sources. At long last, Indian entrepreneurs will no longer have to fear the questioning of the valuations of their businesses and taxation of capital raised.

Who knows, someday we might have a movie on this. On a more serious note, it is a step that will go down in the chronicles of India’s startup story. This puts the startup engine back on track. More importantly, it shows what can be achieved when citizens and the government get together.

By Nakul Saxena and Siddharth Pai, Policy Experts – iSPIRT

An Afternoon With Don Norman In Bengaluru

Are you building products for the everyday user? Is it becoming harder and harder to manage complexity while maintaining usability? How do you design a sustainable system for a complex multi-stakeholder environment? How do you teach a user to use your product with good design? How do you reinvent an established business model in light of rapidly evolving markets and technological possibilities? How do you design a product to be truly human-centric?

If any of these questions sound relevant to you, here’s an opportunity to seek answers on 22nd February in Bengaluru! 

About Don Norman

Dr Don Norman is a living legend of the design world having operated in the field for over 40 years. He has been Vice President of Apple in charge of the Advanced Technology Group and an executive at both Hewlett Packard and UNext (a distance education company). Business Week has listed him as one of the world’s 27 most influential designers. Dr Norman brings a unique mix of the social sciences and engineering to bear on everyday products. At the heart of his approach is human and activity-centred design, combining knowledge of cognitive science, engineering, and business with design.

Presently, he is Director of the recently established Design Lab at the University of California, San Diego where he is also professor emeritus of both psychology and cognitive science and a member of the Department of Electrical and Computer Engineering. He is also the co-founder of the Nielsen Norman Group, an executive consulting firm that helps companies produce human-centred products and services.

ProgrammeTalk

Don will share valuable insights about his interactions with Indian people, products and experiences.

Fireside Chat

An informal discussion with Don about his learnings and experiences spanning his long and illustrious career.

How to participate?

We’re inviting engineers, product managers, designers and everyone else who is building for large scale impact.

If you would like to further your understanding of human-centric design and hear straight from the horse’s mouth, please register here by 18th February. (An invite will be sent out to selected participants by 21st February)

A Platform is in the Eye of the Beholder

The distinction between whether you are building a platform or a product should be made primarily to align your internal stakeholders to a particular strategic direction, as we learned in the recent iSPIRT round table.

[This is a guest post By Ben Merton]

“So are we a platform, or are we a product?” I said last month to my co-founder, Lakshman, as we put the finishing touches to our new website.

We’d been discussing the same question for about a year. The subject now bore all the characteristics of something unpleasant that refuses to flush.

However, the pressure had mounted. We now had to commit something to the menu bar.

“I think we’re a product.”

“But we want to be a platform.”

“Okay, let’s put platform then…But isn’t it a little pretentious to claim you’re a platform when you’re not?”

Eventually, we agreed to a feeble compromise: we were building a platform, made up of products.

Job done.

At least, that is, until #SaaSBoomi in Chennai last month.

Manav Garg, who has considerably more experience than both me and Lakshman at building platforms, put up the following slide:

Product = Solving a specific problem or use case

Platform = Solving multiple problems on a common infrastructure

“Here we go again”, I could hear Lakshman say to himself after I Whatsapped him the image.

“That’s his definition. It doesn’t have to be ours,” he replied tersely, “What does he mean by ‘use case’, anyway?”

“I don’t know.”

I’m in awe of the entrepreneurs who seem to bypass these semantic quandaries.

You know, the ones who say stuff like “Stop thinking so much. Just sell stuff. Make customers happy.”

For me, these are the type of questions I need to chew over for hours in bed at night.

I was therefore excited to be invited to the iSPIRT round table at EGL last week, where the topic of discussion was “Transform B2B SaaS with #PlatformThinking”. The roundtable was facilitated by iSPIRT mavens Avlesh SinghShivku Ganesan & Sampad Swain.

It takes a lot to get 20 tech founders & their leaders to travel after work from all over the city to sit in a room for three hours with no alcohol.  Fortunately, the organisers had promised a lot.  The topic description was:  

“Enable a suite of products, high interoperability, and seamless data flow for customers. This peer-learning playbookRT will help product to platform thinkers develop an effective journey through this transformation” was the topic description.”

The meeting was governed by Chatham House rules, meaning we can’t discuss the name or affiliation of those involved.

However, along with our founder mavens of large, well-known Indian technology businesses, there were 15 or so less illustrious but equally enthusiastic founders (& their +1s), including myself.

The discussions started with an overview of the experiences and lessons that had been learned by some of those who had successfully built a platform.

“We define a use case as a configuration of APIs…” the founder of a cloud communication platform started. This was going to be interesting.

“Why did you define it that way?” I asked.

“Based on observations of our business.”

I began to understand that the term ‘use case’ was being used differently by platform and product companies.  

“A use case of a platform is usually tangential but complementary to the core business. A use case for a product is something that just solves a problem,” someone clarified, guaranteeing me a slightly more restful night.

As the discussions continued, it also became clear that there were a large number of possible markers that distinguish a platform from a product, but there was no agreement on the exact composition.

To resolve the impasse, we listed out the names of well-known technology companies to build a consensus on whether they were a platform or a product.

Suffice to say, we failed to reach any consensus.  The conversation went something like this:

“Stripe?”

“Platform.”

“Product.”

“A suite of products.”

“AirBNB?”

“A marketplace.”

“A marketplace built on a platform.”

Etc etc

Even companies that initially appeared to be dyed-in-the-wool platforms like Segment and Zapier eventually had someone or the other questioning the underlying assumptions.

“Why can’t they be products?” murmured voices of dissent at the back of the room.

This was going nowhere. A few people sought solace from the cashew nuts that had been placed on conference table in front of us.

“Does the customer care whether you’re a product or a platform?” someone said.

Finally, something everyone could agree on. The customer doesn’t care.  Your product or platform just needs to solve a problem for them.

“Then why does any of this matter at all?” became the obvious next question.

“I found it mattered hugely in setting the direction of the company, especially for the engineering and design teams,” the Co-Founder of a large payment gateway said.

“And investors?”

“Yes, of course. And investors. However, I think the biggest impact that our decision to build a platform had on my business was in the design more than anything else,” he explained, “For the engineering team, it was just a question of ‘we need this to integrate with this’. But the UX/UI and the…language… needed to be thought about very carefully because of this decision.”

“So, in effect, the platform/product debate is primarily a proxy for the cultural direction of the company?”

“Exactly.”

Logically, therefore, the only way you can really understand whether a company is a platform or a product is to have an insight into the direction its management wishes to take it.

A company might appear to be a product from the outside but, since it intends to evolve into a platform, it needs to start aligning its internal stakeholders to this evolution much earlier.

“So, a startup like mine should call itself a platform even if we are years away from actually being one?” I asked cautiously after I had enough time to process these insights.

“Yes,” was the resounding, satisfying response that virtually guaranteed me a full night’s sleep.

“And when should the actual transition from product to platform happen?”

“Well, Jason Lemkin says it should happen only when your ARR reaches USD 15m-20m, but that’s just another of those rules that doesn’t apply in India,” the co-founder of a marketing automation software said.

“The important thing is that this transition – when it does happen – is very hard for businesses,” he continued, “There is a lot of risk, but it opens up new revenue streams, helps you scale and build a moat.  We hugely benefited from our decision to become a platform, but it was tough.”

It’s unlikely that we completely resolved the product vs platform debate for all founders. However, I feel that all of us came away from that meeting with a deeper insight into the subject.

Ultimately, whether you’re building a product or a platform will depend on your perspective. Most companies lie somewhere in between.

Where does your company lie on this sliding scale? And if that makes you a platform vs. a product, does it make any difference to the way you think?

We want to thank Techstars India for hosting the first of the roundtables on this critical topic.

Ben Merton

Ben is a Co-Founder of Unifize, a B2B SaaS company that builds a communication platform for manufacturing and engineering teams. He is also a contributor for various publications on business, technology and entrepreneurship, including the Wall Street Journal, the Financial Times and Business Standard. You can follow him on LinkedIn here, and Twitter here.

© Ben Merton 2018

Featured Image: Source: https://filosofiadavidadiaria.blogspot.com/2018/01/o-principio-mistico-da-verdadeira-causa.html

#2 Federated Personal Health Records – The Quest For Use Cases

Last week we wrote about India’s Health Leapfrog and the role of Health Stack in enabling that (you can read it here). Today, we talk about one component of the National Health Stack – Federated Personal Health Records: its design, the role of policy and potential use cases.

Overview

A federated personal health record refers to an individual’s ability to access and share her longitudinal health history without centralised storage of data. This means that if she has visited different healthcare providers in the past (which is often the case in a real life scenario), she should be able to fetch her records from all these sources, view them and present them when and where needed. Today, this objective is achieved by a paper-based ‘patient file’ which is used when seeking healthcare. However, with increasing adoption of digital infrastructure in the healthcare ecosystem, it should now be possible to do the same electronically. This has many benefits – patients need not remember to carry their files, hospitals can better manage patient data using IT systems, patients can seek remote consultations with complete information, insurance claims can be settled faster, and so on. This post is an attempt to look at the factors that would help make this a reality.

What does it take?

There are fundamentally three steps involved in making a PHR happen:

  1. Capture of information – Even though a large part of health data remains in paper format, records such as diagnostic reports are often generated digitally. Moreover, hospitals have started adopting EMR systems to generate and store clinical records such as discharge summaries electronically. These can act as starting points to build a PHR.
  2. Flow of information- In order to make information flow between different entities, it is important to have the right technical and regulatory framework. On the regulatory front, the Personal Data Protection Bill which was published by MeitY in August last year clearly classifies health records as sensitive personal data, allows individuals to have control over their data, and establishes the right to data portability. On the technical front, the Data Empowerment and Protection Architecture allows individuals to access and share their data using electronic consent and data access fiduciaries. (We are working closely with the National Cancer Grid to pilot this effort in the healthcare domain. A detailed approach along with the technical standards can be found here.)
  3. Use of information – With the technical and regulatory frameworks in place, we are now looking to understand use cases of a PHR. Indeed, a technology becomes meaningless without a true application of it! Especially in the case of PHR, the “build it and they will come” approach has not worked in the past. The world is replete with technology pilots that don’t translate into good health outcomes. We, in iSPIRT,  don’t want to go down this path. Our view is that only pilots that emerge from a clear focus on human-centred design thinking have a chance of success.

Use cases of Personal Health Records

Clinical Decision Making

Description: Patient health records are primarily used by doctors to improve quality of care. Information about past history, prior conditions, diagnoses and medications can significantly alter the treatment prescribed by a medical professional. Today, this information is captured from any paper records that a patient might carry (which are often not complete), with an over-reliance on oral histories – electronic health records can ensure decisions about a patient’s health are made based on complete information. This can prove to be especially beneficial in emergency cases and systemic illnesses.

Problem: The current fee-for-service model of healthcare delivery does not tie patient outcomes to care delivery. Therefore, in the absence of healthcare professionals being penalised for incorrect treatment, it is unclear who would pay for such a service; since patients often do not possess the know-how to realise the importance of health history.

Chronic Disease Management

Description: Chronic conditions such as diabetes, hypertension, cardiovascular diseases, etc. require regular monitoring, strict treatment adherence, lifestyle management and routine follow-ups. Some complex conditions even require second opinions and joint decision-making by a team of doctors. By having access to a patient’s entire health history, services that facilitate remote consultations, follow-ups and improve adherence can be enabled in a more precise manner.

Problem: Services such as treatment adherence or lifestyle management require self-input data by the patient, which might not work with the majority. Other services such as remote consultations can still be achieved through emails or scanned copies of reports. The true value of a PHR is in providing complete information (which might be missed in cases of manual emails/ uploads, especially in chronic cases where the volume and variety of reports are huge) – this too requires the patient to understand its importance.

Insurance

Description: One problem that can be resolved through patient records is incorrect declaration of pre-existing conditions, which causes post-purchase dissonance. Another area of benefit is claims settlement, where instant access to patient records can enable faster and seamless settlement of claims. Both of these can be use cases of a patient’s health records.

Problem: Claim settlement in most cases is based on pre-authorisation and does not depend solely on health records. Information about pre-existing conditions can be obtained from diagnostic tests conducted at the time of purchase. Since alternatives for both exist, it is unclear if these use cases are strong enough to push for a PHR.

Research

Description: Clinical trials often require identifying the right pool of participants for a study and tracking their progress over time. Today, this process is conducted in a closed-door setting, with select healthcare providers taking on the onus of identifying the right set of patients. With electronic health records, identification, as well as monitoring, become frictionless.

Problem: Participants in clinical trials represent a very niche segment of the population. It is unclear how this would expand into a mainstream use of PHR.

Next steps

We are looking for partners to brainstorm for more use cases, build prototypes, test and implement them. If you work or wish to volunteer in the Healthtech domain and are passionate about improving healthcare delivery in India, please reach out to me at [email protected].

SaaS 3.0 – Data, Platforms, and the AI/ML gold rush

An impending recession, the AI/ML gold rush, Data as the new oil, SaaS Explosion…
The SaaS landscape is changing rapidly and so are the customer expectations!

18 months ago, I came across a message that India is a premier hub for global B2B SaaS, just like Israel is a hub for cybersecurity. At first, I did not think much of it, but after having interacted with many SaaS founders and observing their painful growth journey, I realized the potential in these words. Yet, a series of market shifts are changing the world order of SaaS putting at test India’s position as a premier hub for SaaS.

TL;DR

The SaaS 3.0 market shifts are changing how global customers perceive value from SaaS products:

  • Tools which provide higher levels of automation & augmentation are valued more.
  • Comprehensive solutions in place of single point products is a preference.
  • Interoperability across the gamut of systems is an expected norm.

Startups, you have to build your new orbit to solve for these evolving needs. First, focus on delivering a 5x increase in customer value through an AI-enabled proposition. Next, build your proprietary data pot of gold, which can also serve as a sustainable moat. Lastly, leverage platforms & partnerships to offer a suite of products and solve comprehensive customer scenarios.

Read more on how the convergence of market shifts are impacting SaaS 3.0.

Quick background

While the SaaS industry began over 2 decades ago, many say it is only now entering the teenage years. Similar to the surge of hormones which recently brought my teenage daughter face-to-face with her first pimple. And she is facing a completely new almost losing battle with creams and home remedies. In the same vein, convergence of several market shifts – technology, data, economics, geopolitics – combined with deep SaaS penetration is evolving the industry to a new era. This rare convergence – like the convergence of the nine realms in Thor Dark World – is also rapidly changing how customers perceive the capability of SaaS products.

Convergence #1 – SaaS penetration is exploding!

I learned from Bala at Techstars India that they received a record number of applications for their first accelerator program. 60% of these were building or ideating some form of B2B SaaS offering. It would seem to justify the message above, that SaaS in India has grown legs, building a true viral movement, replicating momentum. Yet in these large numbers, there is also a substantial ratio of repetitive products to innovations. Repetitive in say building yet another CRM, or mindlessly riding a trend wave such as chatbots. Without an increased pace of innovation beyond our existing successes, we cannot continue to be a premier hub.

In 2018 SaaS continued to be the largest contributor to cloud revenue growth at 17.8% (it was down from 20.2% in 2017). Competition is heating up in all categories of SaaS. 10 years ago, an average SME customer was using 2 apps, now it averages at 16 apps. 5 years ago, a SaaS startup had on average 3 competitors, now a SaaS startups averages at 10 customers right out the door. Many popular SaaS categories are  “Red Oceans”. Competing in these areas is typically on the basis of features or price, dimensions which are easy for any competition to catch up on. There is a need for startups to venture deeper into the sea and discover unserved & unmet customer needs in a “Blue Ocean” where they have ample opportunity to fish and build a sustainable moat.

AppZen started with an opportunity to build conversational chatbots for employees, helping them in an enterprise workflows on various aspects like sales & expenses, and several other companies are doing the same. But as they went deeper to understand the customer pains, they were able to identify an unserved need and pivoted, leveraging the same AI technology they had built, to solve for T&E expense auditing. Being a first mover to solve this problem, they are carving out leadership in this underserved space and is one of the fastest growing SaaS startups of 2018.

Convergence #2 – Impending recession in 2019/2020!

On average recessions come every four years and we are currently 9 years from the last recession. The war between the Fed vs the US govt on interest rates, the recent US govt shutdown on a frivolous $B wall, the tariff and trade war between the US and China, are all indicative reasons for an upcoming recession. In such an uncertain economy, customers experience reduced business activity and alter their behavior and preferences:

  • Customers will become crystal clear about satisfying their core needs versus nice-to-haves.
  • They will seek high automation tools to help not only cut costs but also to make strategic decisions for an upside.
  • Many will prefer a suite of tools instead of buying multiple single point products.
  • They will also slow down POC, investment, partnership activities.

In a way, this is mixed news. Companies often pursue low-cost digital products with SaaS being a natural choice. However, combined with the competitive SaaS landscape, businesses become very selective. To be recession-proof startups must:

  1. Collaborate and partner with other vendors to build a shared view of the larger customer scenarios. Innovate to share (anonymized) data/intelligence.
  2. Partner to deliver a comprehensive solution instead of solving for a gap. 
  3. Invest & experiment in building solid AI-enabled automation for improving efficiency and decision making.

E.g. Clearbit’s approach to provide API and allow customers to leverage the value it provides, by integrating with common platforms such as Slack or Gmail which customers frequently use. In this approach they are reducing app switching and embedding the niche usecase into the larger customer workflow environment.

Another e.g. Tact.ai is helping increase sales team efficiency and bring visibility of field data to the leadership team. They are not only solving the core salesforce data entry problem for field sales, but with better data in the system, businesses now get better visibility about sales activities and can take effective strategic decisions.

Convergence #3 – the AI/ML gold rush!

During the dot com & mobile rush in early 2000, I watched many a friend jump ship to build a startup. At that time the web was flush with rich content, but the mobile web was in its early growth and innovative ways to bring web content onto mobile phones were being explored. Automated conversion of HTML to WML was a hot topic. But the ecosystem conditions were not aligned for completely automated WML transformations. Several startups in this space including my friend’s startup shut for such reasons.

More recently in 2016-17 Chatbots were projected to be the next big thing and it too suffered from similar misalignment. Chatbots were the first attempt to bring AI/NLP for customer interaction. However, they lacked the depth of ecosystem conditions to make them successful. 

  1. Bots were treated as a panacea for all kinds of customer interactions and were blindly applied to problems. 70% of the 100,000+ bots on Facebook Messenger fail to fulfill simple user requests. This is partly a result of not focusing on one strong area of focus for user interaction.
  2. Bots were implemented with rule-based dialogues, there was no conversational design built into it. NLP is still in its infancy and most bots lacked data to provide meaningful interactions. They were purely a reflection of the level of detail and thought that went into the creation of the bots.

AI/ML, however, is suffering from the “hype” of an “AI/ML hype”. There is a considerable depth within the AI/ML ecosystem iceberg. Amazon, Google, Microsoft…OpenSource are continuously evolving their AI stack with higher and higher fidelity of tools & algorithms. You no longer need fancy degrees to work the AI tools and automate important customer workflows or scenarios. 

Yet it is easier said than done. Most startups on the AI journey struggle to get sufficient data to build effective ML models. Further, data privacy has increased the complexity of sharing data, which now resides in distant silos. While internal proprietary data is a rich source of patterns, often times it is incomplete. In such cases, entrepreneurs must innovate, partner, source to build complete data as part of their data collection strategy. A strong data collection strategy allows for a sustainable moat. 

AIndra multiplied 7000 stains into 7M data points by splitting into microdata records. DataGen a startup in Israel, is generating fake data to help startups train models. The fake data is close enough to real data that the use is ethical and effective. Startups like Datum are building data marketplaces using blockchain to democratize data access. 

As mentioned many of the AI tools are limited in their constraints. Meanwhile, getting familiar with the capabilities and limitations of the necessary tools will help form a strategy path to solving the larger customer scenarios. 

Tact.ai faced the constraint by the limitations of the Alexa API. However, instead of building their own NLP they focused on working around the constraints, leveraging Alexa’s phrase based recognition to iteratively build value into their product. During this time, they continue to build a corpus of valuable data which will set them up for high growth when the NLP stack reaches higher fidelity.

Solving for the Hierarchy of Customer Needs

The convergence of SaaS penetration, AI/ML, data & privacy, uncertain economy & global policies… the customer expectations are rising up the Maslow’s hierarchy of needs. SaaS 1.0 was all about digital transformation on the cloud. SaaS 2.0 focused on solving problems for the mobile first scenarios. In the SaaS 3.0 era, the customer expectations are moving to the next higher levels. They will:

  • Prefer comprehensive solutions in place of single point products.
  • Expect interoperability across the gamut of systems.
  • Need tools which provide higher levels of automation & augmentation.

For startups who want to fortify their presence in the SaaS 3.0 era :

  1. Begin with a strong AI value proposition in mind, regardless if it is AI-first or AI-second. Articulate the 5x increase in value you can deliver using AI, which wasn’t feasible without AI. 
  2. Build your proprietary data pot of gold. And, where necessary augment with external data through strategic partnerships. A strong data lever will enable a sustainable moat. 
  3. Leverage platforms & partnerships to offer a suite of products for solving a comprehensive customer scenario.

Remember it is a multi-year journey, Start Now!

 

I would like to acknowledge Ashish Sinha (NextBigWhat), Bala Girisabala (Techstars India), Manish Singhal (Pi Ventures), Suresh Sambandam (KiSSFlow), and Sharad Sharma (iSPIRT) who helped with data, insights and critical feedback in crafting this writeup. Sheeba Sheikh (Freelance Designer) worked her wonderful illustrations which brought the content to life. 

Interesting Reads

#1 India’s Health Leapfrog – Towards A Holistic Healthcare Ecosystem

In July 2018, NITI Aayog published a Strategy and Approach document on the National Health Stack. The document underscored the need for Universal Health Coverage (UHC) and laid down the technology framework for implementing the Ayushman Bharat programme which is meant to provide UHC to the bottom 500 million of the country. While the Health Stack provides a technological backbone for delivering affordable healthcare to all Indians, we, at iSPIRT, believe that it has the potential to go beyond that and to completely transform the healthcare ecosystem in the country. We are indeed headed for a health leapfrog in India! Over the last few months, we have worked extensively to understand the current challenges in the industry as well as the role and design of individual components of the Health Stack. In this post, we elaborate on the leapfrog that will be enabled by blending this technology with care delivery.

What is the health leapfrog?

Healthcare delivery in India faces multiple challenges today. The doctor-patient ratio in the country is extremely poor, a problem that is further exacerbated by their skewed distribution. Insurance penetration remains low leading to out-of-pocket expenses of over 80% (something that is being addressed by the Ayushman Bharat program). Additionally, the current view on healthcare amongst citizens as well as policymakers is largely around curative care. Preventive care, which is equally important for the health of individuals, is generally overlooked.  

The leapfrog we envision is that of public, precision healthcare. This means that not only would every citizen have access to affordable healthcare, but the care delivered would be holistic (as opposed to symptomatic) and preventive (and not just curative) in nature. This will require a complete redesign of operations, regulations and incentives – a transformation that, we believe, can be enabled by the Health Stack.

How will this leapfrog be enabled by the Health Stack?

At the first level, the Health Stack will enable a seamless flow of information across all stakeholders in the ecosystem, which will help in enhancing trust and decision-making. For example, access to an individual’s claims history helps in better claims management, a patient’s longitudinal health record aids clinical decision-making while information about disease incidence enables better policymaking. This is the role of some of the fundamental Health Stack components, namely, the health registries, personal health records (PHR) and the analytics framework. Of course, it is essential to maintain strict data security and privacy boundaries, which is already considered in the design of the stack, through features like non-repudiable audit logs and electronic consent.

At the second level, the Health Stack will improve cost efficiency of healthcare. For out-of-pocket expenditures to come down, we have to enable healthcare financing (via insurance or assurance schemes) to become more efficient and in particular, the costs of health claims management to reduce. The main costs around claims management relate to eligibility determination, claims processing and fraud detection. An open source coverage and claims platform, a key component of the Health Stack, is meant to deal with these inefficiencies. This component will not only bring down the cost of processing a claim but along with increased access to information about an individual’s health and claims history (level 1), will also enable the creation of personalised, sachet-sized insurance policies.

At the final level, the Health Stack will leverage information and cost efficiencies to make care delivery more holistic in nature. For this, we need a policy engine that creates care policies that are not only personalized in nature but that also incentivize good healthcare practices amongst consumers and providers. We have coined a new term for such policies – “gamifier” policies – since they will be used to gamify health decision-making amongst different stakeholders.

Gamifier policies, if implemented well, can have a transformative impact on the healthcare landscape of the country. We present our first proposal on the design of gamifier policies, We suggest the use of techniques from microeconomics to manage incentives for care providers, and those from behavioural economics to incentivise consumers. We also give examples of policies created by combining different techniques.

 

What’s next?

The success of the policy engine rests on real-world experiments around policies and in the document we lay down the contours of an experimentation framework for driving these experiments. The role of the regulator will be key in implementing this experimentation framework: in standardizing the policy language, in auditing policies and in ensuring the privacy-preserving exchange of data derived from different policy experiments. Creating the framework is an extensive exercise and requires engagement with economists as well as computer scientists. We invite people with expertise in either of these areas to join us on this journey and help us sharpen our thinking around it.

Do you wish to volunteer?

Please read our volunteer handbook and fill out this Google form if you’re interested in joining us in our effort to develop the design of Health Stack further and to take us closer to the goal of achieving universal and holistic healthcare in India!

Update: Our volunteer, Saurabh Panjawani, author of gamifier policies, recently gave a talk at ACM (Association for Computing Machinery)/MSR (Microsoft Research) India’s AI Summit in IIT Madras! Please view the talk here: https://www.microsoft.com/en-us/research/video/gamifier-policies-a-tool-for-creating-a-holistic-healthcare-ecosystem/

 

What lies beyond the horizon: Digital Sky & the future of drones in India

Drones have been around for a long time, going back as far as World War II. For most of their history, they were considered part of the military arsenal and developed and deployed almost exclusively by the military.

However, the past decade has seen a tremendous amount of research and development in the area of using drones for civilian purposes. This has led industry experts to predict that drones will be disrupting some of the mainstay industries of the global economy such as logistics, transportation, mining, construction and agriculture to name a few. Analysts estimate a $100 billion market opportunity for drones in the coming few years  [1]. In spite of the overwhelming evidence in favour of the value created by drones, it has taken quite a few years for the drone industry to take off in a commercial sense globally.

The main reason for this has been the regulatory challenges around what is allowed to fly in the air and where is it allowed to fly. A common theme around the world is the unconventional challenges that old governmental structures have to face as they try to understand and regulate new technologies. Hence the default approach so far for governments has been reactionary caution as they try to control what are, essentially, flying robots in the sky.

However, with electronic costs coming down, the hardware becoming more accessible and the software interpreting data becomes more powerful a number of humanitarian, civilian and industrial application have emerged and as governments across the world are realizing the potential of drones, we are starting to see the first version of regulations being drafted and adopted across the globe.[2]

Closer home India has a relatively adverse approach to drones or more lackadaisical rather. [3]

But as India continues to drive to become a more technology-oriented economy the role of drones in the worlds fastest growing economy and the potential benefits it can bring are hard to ignore.[4]

However, India’s approach to drone regulations cannot be that of other major economies that have the luxury of friendly neighbours and a large network of monitoring apparatus, India has had to take an approach that has to be novel and robust. Something that balances the security landscape while also being designed to allow maximum utilization of the potential that drones offer. Out of this need to both regulate secure how and where a drone can fly and keep multi-ministerial stakeholder interests accounted for was born the Digital Sky, India’s foundational framework for all things drones.

What is the Digital Sky and how does it work?

What the Digital Sky accomplishes beautifully is to fill the institutional void that needs to be collectively fulfilled by so many institutions and make it easier for the industry and consumers to interface with the government legally through one platform. Permission to fly drone no longer requires a 90-day intimation with an arbitrary number of NOCs to be approved by umpteen number of ministerial bodies at the central and federal level. The industry and the public now know one place to interact with in order to register their drone, get recognised as a certified operator and apply for permissions and all concerned government agencies ensure their overarching interests do not interfere with the large-scale adoption of drones.  

There are crucial components required for the Digital Sky concept to work, the most central being that drone operators should not be able to fly drones if they are not approved by the government. To accomplish this the Drone 1.0 regulations revolve around the concept of No-Permission-No-Takeoff (NPNT).

Our maven Tanuj Bhojwani explaining NPNT at the DigitalSky RoundTable on 4 Dec 2018 in Bengaluru

What this implies is that unless a drone has got valid permission for a particular flight through tamper-proof digitally signed permission tokens, it will not be able to take off. The Digital Sky is the platform to automate the processing of these permission tokens as they flow in from different parts of the country without overwhelming the authorities through a flight information management system (one of only three countries to build this nationally after China and the USA). In order for this vision to come true, there will be an enormous change in the way drones are manufactured and operated. Entire new industry verticals around getting existing drones compliant, developing interfaces that interact with the Digital Sky platform and making applications for India’s needs will develop. Hence this begs the question.

How are the current state of the industry are changing with 1.0 regulations

Until the introduction of the regulations companies especially in the UAV operations were doing non-restricted work and end up becoming the jack-of-all-trades. Companies in the manufacturing domain were unclear of who is their target customer and what they needed to build. All the companies in this domain were working with no clarity on the safety and permissions.

With the introduction of the Drone Policy 1.0, there is a buzz which has been created and efforts are being made to understand the regulations by all the entities who are set to gain from it. They understand that there will be a new aspect that needs to cater to i.e. the sense of accountability.

For manufacturer’s The NP-NT mandate will be the most immediate requirement, the most common route to implement the mandate will be through changes to existing firmware architecture. The changes themselves are being driven by open source initiatives with various operators, system integrators and manufacturers contributing to the shift to NP-NT for all major drone platforms in the country. The Digital Sky has inadvertently catalysed the first industry-wide initiative to bring together all members of the ecosystem. Other requirements such as ETA bring in much-needed standardisation in the hardware space, this allows benchmarking of products, easier availability of information about the standards to look out for end users.

For operators, a massive increase in the volume of business is expected as they can now focus on getting certified drones into the air, and not so much on getting approvals. The Digital Sky brings in much-needed certainty and predictability into an industry that will be focused on balancing demand and supply of drone-related operations in a market that has a huge need for drones and their data but limited expertise to acquire and process it. This also puts onus an industry to become security and privacy conscious and insurance agencies will play an important role in this regard. It will also immensely help in changing the thought process of the companies providing services and their customers. Customers will start understanding that they also need to have a defined plan, process and execution instead of a haphazard existing process of execution.

How industry/playground will change over the coming years?

With the introduction on the regulations and a platform like Digital sky enabling the ease of doing business for the companies who are serious stakeholders in this domain, there is no limit to what developments will occur in the coming years. It opens up possibilities for utilization of Drone and its related technologies in Agriculture, Medical, Energy and Infrastructure and transportation.

The existing players will become more mature and more focused. They will understand that with regulations in place a more focused approach is the key to scale. They will look at opportunities to compete with the global market also as the solutions that are developed around the Drone Regulations 1.0 and 2.0 will be key factors that contribute to the Indian ecosystem to becoming a global standard to test, adapt and innovate drone applications and management.

What are the opportunities? What does that mean for the current and new players?

UAV/ Drones as a business was a far-fetched thought for many entrepreneurs and has been a struggling industry in the past in India. Going forward it is guaranteed that it will be one of the biggest markets in the world for UAV as a business. What the regulations and Digital Sky platform will enable is a new levelled playground ground for the UAV companies to initiate good scalable business models both existing and the ones entering new to the sector.

The existing companies with the right resources can now plan to scale their operations and also have the added advantage of doing work for the private sector in India. Due to the restrictive method of operations adapted previously the solutions to private agencies was unavailable. Now going forward the companies will shift their focus from being a B2G entity to a B2B entity. Many new businesses for UAV air traffic management, surveillance, AI and ML-based UAV solutions and deliveries will emerge out of India with technology specific to India.

If you want to join our future roundtable sessions on Digital Sky and more, please register your interest here.

The blog is co-authored by Anurag A Joshi from INDrone Aero systems, Abhiroop Bhatnagar from Algopixel Technologies and Gokul Kumaravelu from Skylark Drones

White Paper On Section 56(2)(viib) And Section 68 And Its Impact on Startups In India

Angel Tax (Section 56(2)(viib)) has become a cause celebre in Indian startup circles due to its broad-reaching ramifications on all startups raising capital.

This paper traces the origin of this section, it’s analysis, impact, how it adversely affects startups. Special mention is also made of the seldom covered Section 68 and it’s used in conjunction with Section 56(2)(viib). The paper also proposes recommendations to ensure that genuine companies are not aggrieved by this while the original intent of the section is preserved.

For any support or query, please write to us at [email protected]

India Financial Services – Disrupt or Be Disrupted

Matrix India recently hosted two firebrands of the financial services world, Mr Sanjay Agarwal, founder AU Small Finance Bank and Mr Sharad Sharma, founder iSPIRT Foundation, Volunteer at India Stack, for a no holds barred discussion at the Matrix Rooftop in Bangalore. Here is an excerpt from the evening and some of our learnings for fin-tech entrepreneurs.

Part 1 of the two-part series features the untold story of AU Bank, in the words of Sanjay Agarwal himself, as below:

Sanjay Agarwal – on his background and early days before starting AU:

“In my early Chartered Accountancy days, I started out by doing audit work, taxation, and managing clients. I had studied hard and was naïve and enthusiastic at that time hoping, to solve the world’s problems. This pushed me to work harder and I had a desire to do something more.

I believe that we are the choices we make. While evaluating various choices, I eliminated all the options that I didn’t want to pursue e.g. to work for a fee or commission and then I started digging deeper on what really interests me – that was when the concept of AU Financiers was formed.

In 1996, as 26 years old, I began approaching HNIs to raise capital, as back then, there were no VCs. I was fortunate to raise INR 10 cr at a 12% hurdle rate and I had to secure the funding with a personal guarantee. But what is the guarantee of the guarantor? No one questioned this at that time. So, I technically became one of the first P2P lenders, and structured a product that didn’t exist– short term, secured and at a 30% rate of interest. That was the start of the AU journey.”

The Early Days of AU:

“I started off AU as a one-man army. I was everything from the treasurer to the collector. Slowly we built our team and rotated the 10 cr of capital to disburse 100 cr of loans – not a single rupee was lost. There were several challenges at that time for e.g., there was no CIBIL score, financial discipline was lacking, people were still learning how to take a loan and repay it and customer ids didn’t even have a photograph. But somehow, we managed.

The period from 1996 to 2002 taught me everything I needed to learn – how to lend, how to collect, how to manage people, read people’s body language, and most importantly how to manage yourself in different situations. I follow all of that until today, and my team also benefits or suffers from those learnings of mine even today. In those 7 years, we would have dealt with 2000 customers out of which 500 defaulted. That was the ratio of defaulters – 25%. But we managed and there were actually no NPL’s.”

Partnering with HDFC Bank

“In 2002, retail credit was beginning to take off, but our HNIs started pulling their money out, as they wanted a higher return. However, at that time, the most premium bank in the country, HDFC Bank, appointed us as their channel partner. The model we followed was very simple – AU was responsible for sourcing the customer, KYC processing and doing on the ground diligence while loans were booked on HDFC’s balance sheet. HDFC is perceived to be a conservative bank, and it is – however, they gave me Rs 400 cr, on a net worth of only Rs 5 cr! They made an exception in our case due to our strong track record, through execution, sound knowledge of the market, and most importantly our integrity.

By 2008, our net worth had increased to Rs 10 crore through internal accruals. At that time, HDFC told us that we can’t give you any more capital, as we were overleveraged, and that we now needed to bring in equity capital if we wanted to grow.”

Growing the balance sheet and partnering right

“I had two choices at that point, I could continue in Jaipur, keep my ambition under control and live comfortably or figure out what else is possible. I chose the latter and this marked the beginning of my partnership with Motilal Oswal. Its easier to raise equity now, back in the day shareholder agreements used to look like loan agreements with min IRR requirements, etc. As luck would have it, a few months after we raised equity, the Lehman Brothers crisis broke out and most banks stopped funding. We were supported once again by HDFC – they were our saviour and I will cherish my relationship with them always. Once the market settled down, having survived this negative environment, there was no looking back.

Our next major investor was IFC. For the entrepreneurs here, I want to say that you have to be selective about your investors, who will help with not just capital – there should be added value they bring to the table apart from money. IFC was giving me 20% lower valuation, but I knew that I didn’t have any lineage to fall back on. As a first-generation entrepreneur, I had to raise money on the strength of my balance sheet and not basis my family name. I knew that partnering with IFC would shift the perception of AU within the industry, especially for PSU banks. After their investment, we grew from one bank relationship with HDFC to 40 bank partnerships. One thing led to another and Warburg Pincus, ChrysCapital, and Kedaara Capital all came on board after that.”

Consistent performance

“From 2008 onwards, we started diversifying from vehicle lending and got into other forms of secured lending like a loan against property, home loans etc. We never tried unsecured lending and never ventured into microfinance or gold finance. Those were very popular products at that time but focusing on what we were good at resulted in a consistently strong performance. We never had a bad year. In the world of finance, the margin of error is very less. If you have a bad year you can almost never come back. Good companies survive regardless of the market condition, you can never blame the market for your company’s poor performance. In 2015-16, we were a successful NBFC, our RoA was close to 3% with an asset base of close to 8,000 crores, with a RoE of 27-28% and everyone was chasing us – the question at that time before us was, what next?”

How we became a bank

“As an NBFC, it is very hard to manage a book of Rs 50,000 cr with the same efficiency and effectiveness as it’s a people dependent business, there are limits to the kind of products you can do and you can’t keep raising capital. Hence, we became a bank because we wanted to be there for the next 100 years and that perpetual platform can only be created through a bank. That is the biggest platform and it is not available at a price. It’s available through your integrity, business plan and execution. Today, we receive Rs 100 cr of money every single day. This is the same person who was struggling to raise Rs 10 cr in 1996, and is now getting money at the speed of Rs 100 cr every day – it feels amazing but there is a lot of responsibility!”

Part 2 of the two-part series features insights from Sharad Sharma:

Recognizing the Athletic Gavaskar moment in Indian Financial Services

“Indian financial services industry is going through its equivalent of the Athletic Gavaskar project of Indian cricket. The motive behind this project was to instil the importance of being athletic to successfully compete in the modern game. A new team was created with the rule that if you are not athletic, you cannot be a part of the team, regardless of other skills that you bring to the table. Virat Kohli eventually became the captain of this team and the results are for everyone to see. Similar yet contrasting stories played out in hockey and wrestling. In hockey, we lost for 20 years because we refused to adapt to the introduction of astroturf. However, in wrestling, the Akhadas in Haryana embraced the move from mud to mat with rigour, and Indian wrestling is already punching above its weight class and hopefully will do even better over time. The idea of sharing this is that similar to sports, sometimes an industry goes through a radical shift. Take the telecom space, for example, if Graham Bell came alive in 1995, he would recognize the telephone system, 20 years later he wouldn’t recognize it at all. The banking industry is going to go through a hockey/wrestling or communications type disruption and a lot of us are working hard to make it happen.”

Infrastructure changes lead to New Playgrounds

“All the banks and NBFCs put together are not serving the real India today. We have 10 million+ businesses that have GST id’s, out of which 8 million+ are big enough to pay GST on a monthly basis, but only 1.2 million have access to NBFC or bank finance. This is a gap that needs to be addressed and it cannot be solved through incremental innovations.

Entrepreneurs and incumbents should learn from what happened in the TV industry when new infrastructure became available. When India went from state-run TV towers in 34 cities to cable and satellite TV in pretty much every town, there was a massive new market that was unlocked that did not want to watch the same Ramayan or Hum Log TV serials. What transpired was an explosion of entertainment products because of the high demand stemming from the new markets and the TV channel players that reinvented their content is thriving today while others that did not, are barely surviving or have shut down.

So where does this leave the bankers? I think it is the biggest opportunity for the right banker who understands this problem, wants to serve this section of the market and is willing to reinvent the way they do their business and take advantage of the new infrastructure that will be available.”

Dual-immersed entrepreneurs have the biggest advantage

“Entrepreneurs who are immersed in the messiness of both the new infrastructure and the old problem are “dual immersed entrepreneurs”. They are the ones that succeed when a market shift is underway. Today this is not happening. Some of our city-bred entrepreneurs are more comfortable with California rather than Bharat. And some of our sales-oriented entrepreneurs are intimidated by the messiness of the new technology infrastructure.”

New Playgrounds need new Gameplay

“In a world where eKYC exists, and we can transfer money through UPI from a phone, and sign documents digitally – we are ready to deliver financial products on the phone and this is the disruption that is required. Access to credit drives the economy and with this new infrastructure, it is now possible to lend to the real India. However, it’s easy to give money, but the ability to get it back and keeping defaults at a minimum is the real trick. Even there we are moving towards seeing a radical improvement. Debt providers now have powers they never had and defaulters are being brought to book. Customers are now incentivized to build their own credit history to get better and lower interest rates over time. A new Public Credit Registry is coming to enable this at scale. But the biggest innovation is related to the dramatic shortening of the tenor. One can structure a one-year loan into 12 monthly loans or 52 weekly loans. This rewards positive customer behaviour and brings about the behaviour change that is needed.

There is no secret sauce here, it requires gumption – like that shown by Reed Hastings, founder of Netflix. He disrupted the TV and home video industry by first having the wisdom to go from ground to cloud and then again when they started developing original content. In both cases, he had little support from the board or investors. If you can reinvent yourself before it becomes necessary, you’re a winner but this is harder to do for a successful company. The legacy of success provides resisters with the clout to block change. The real beneficiary of Aadhaar based eKYC in the telecom world was not the incumbents but Jio – eKYC allowed Jio to acquire customers at an unprecedented scale and they saved INR 5000 crores on KYC costs as well.”

About iSPIRT

iSPIRT is a non-profit think tank that builds public goods for Indian product startup to thrive and grow. iSPIRT aims to do for Indian startups what DARPA or Stanford did in Silicon Valley. iSPIRT builds four types of public goods – technology building blocks (aka India stack), startup-friendly policies, market access programs like M&A Connect and Playbooks that codify scarce tacit knowledge for product entrepreneurs of India.

About AU Small Finance Bank:

AU Small Finance Bank Limited (AU Bank) started in 1996 as a vehicle financing NBFC, AU Financiers and scaled to touch over a million underbanked and unbanked customers across 11 states of North, West and Central India, prior to becoming a bank in April 2017. During this time, AU attracted equity investments from marquee investors such as IFC, Warburg Pincus, Chrys Capital, Kedaara Capital and recently went public when its IPO was oversubscribed ~54 times. Over the years, AU Bank, led by its founder Sanjay Agarwal, has created significant shareholder value with its equity value growing from ~$120 million in 2012 to current market capitalization of ~$3 billion.

Please Note: The blog was first published and authored by Matrix India Team and you can read the original post here: matrixpartners.in/blog

AI/ML is not Sexy

One would think that the new sexy in the startup capital of the world is self-driving cars, AI/ML… I got news for you! AI/ML (esp. Machine Learning) is not listed in Gartner’s hype cycle for 2018.

Source: https://commons.wikimedia.org/wiki/File:Hype-Cycle-General.png

This was corroborated on my recent trip to the valley and the US east coast, where I met several investors, founders, corp dev and other partners of the startup community. It was evident that the AI/ML hype which peaked in 2016 & 2017 is no longer considered a buzzword. It is assumed to be table stakes. What you do with AI/ML is something everyone is willing to listen to. Using AI/ML to solve a high-value B2B SaaS problem is Sexy! (Gartner trends for 2018).

As the hype with AI/ML settles down, B2B startups across the globe are discovering the realities of working the AI/ML shifts for SaaS. Many AI tools & frameworks in the tech stack are still evolving and early pioneers are discovering constraints in the stack and creatively building workarounds as they build their products.

Many entrepreneurs are watching from the sidelines the unfolding of the AI/ML hype, wondering on many valid questions like these (and more):

Q: Do I have to stop what we are building and jump onto the AI bandwagon? No.
Q: Are the AI/ML resources mature & stable to build better value products? No, they are still evolving.
Q: Do I need expensive investments in constrained resources? No, not until you have a high-value problem to solve.

B2B SaaS startups go through 2 key struggles. How to find market-fit and survive? And how to stay relevant and grow. And if you don’t evolve or reinvent as the market factors change, there are high chances for an upstart to come by and disrupt you. The iSPIRT entrepreneur playbooks look to help entrepreneurs get clarity on such queries and more. Our goal is to help our startups navigate such market shifts, stay relevant and grow. Our mini roundtables Playing with AI/ML are focused on WhyAI for SaaS discussions in multiple cities. If you or a startup you know may benefit do register

The MiniRT Agenda

Seeding & creating an active discussion on Why AI/ML? What is the higher order value being created? How to identify the value & opportunities to leverage AI? How to get started with an AI playground (if not already running)? How to think of data needs for AI/ML investments, How to address the impact on Product & Business… Insights from these sessions are meant to help refine our approach & readiness to leverage AI/ML for building higher order value products. And in doing so building a vibrant community focused around navigating this shift.

Upcoming PlaybookRTs on AI/ML

6-Oct (Chennai) 10 am – 1 pm – MiniRoundTable on WhyAI for B2B SaaS – Shrikanth Jagannathan, PipeCandy Inc
18-Oct (Bangalore) 6 pm – 8 pm MiniRoundTable with Dr Viral Shah on AI/ML Tools & discuss your ML/DeepLearning challenges
27-Oct (Delhi/Gurgaon) 2 pm – 6 pmMiniRoundTable on WhyAI for B2B SaaS, Adarsh Natarajan, CEO & Founder – Aindra Systems
TBD (Bangalore)MiniRoundTable on WhyAI for B2B SaaS, (based on registered interest)
TBD (Mumbai)MiniRoundTable on WhyAI for B2B SaaS, (based on registered interest)

The AI+SaaS game has just begun and it is the right time for our hungry entrepreneurs to Aspire for the Gold, on a reasonable level playing field.

Click to Register for the AI/ML Playbooks Track.

Please note: All iSPIRT playbooks are pro-bono, closed room, founder-level, invite-only sessions. The only thing we require is a strong commitment to attend all sessions completely and to come prepared, to be open to learning & unlearning, and to share your context within a trusted environment. All key learnings are public goods & the sessions are governed by the Chatham House Rule.

Image source: https://commons.wikimedia.org/wiki/File:Hype-Cycle-General.png

Interesting Reads

The slow, light touch of AI in Indian Saas