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]

Why the SC ruling on ‘Private Players’ use of Aadhaar doesn’t say what you think it does

On behalf of iSPIRT, Sanjay Jain recently published an opinion piece regarding the recent supreme court judgement on the validity of Aadhaar. In there, we stated that section 57 had been struck down, but that should still allow some usage of Aadhaar by the private sector. iSPIRT received feedback that this reading may have been incorrect and that private sector usage would not be allowed, even on a voluntary basis. So, we dug deeper, and analyzed the judgement once again, this time trying to disprove Sanjay’s earlier statement. So, here is an update:

Section 57 of the Aadhaar act has NOT been struck down!

Given the length of the judgement, our first reading – much like everyone else’s was driven by the judge’s statement and confirmed by quickly parsing the lengthy judgement. But in this careful reanalysis, we reread the majority judgement at leisure and drilled down into the language of the operative parts around Section 57. Where ambiguities still remain, we relied on the discussions leading up to the operative conclusions. Further, to recheck our conclusions, we look at some of the other operative clauses not related to Section 57. We tested our inference against everything else that has been said and we looked for inconsistencies in our reasoning.

Having done this, we are confident in our assertion that the judges did not mean to completely blockade the use of Aadhaar by private parties, but merely enforce better guardrails for the protection of user privacy. Let’s begin!

Revisiting Section 57

Here is the original text of section 57 of the Aadhaar Act

Nothing contained in this Act shall prevent the use of Aadhaar number for establishing the identity of an individual for any purpose a purpose backed by law, whether by the State or any body corporate or person, pursuant to any law, for the time being in force, or any contract to this effect:

Provided that the use of Aadhaar number under this section shall be subject to the procedure and obligations under section 8 and Chapter VI.

Now, let us simply read through the operating part of the order with reference to Section 57, ie. on page 560. This is a part of paragraph 447 (4) (h). The judges broke this into 3 sections, and mandated changes:

  1. ‘for any purpose’ to be read down to a purpose backed by law.
  2. ‘any contract’ is not permissible.
  3. ‘any body corporate or person’ – this part is struck down.

Applying these changes to the section, we get:

Nothing contained in this Act shall prevent the use of Aadhaar number for establishing the identity of an individual for any purpose a purpose backed by law, whether by the State or any body corporate or person, pursuant to any law, for the time being in force, or any contract to this effect:

Provided that the use of Aadhaar number under this section shall be subject to the procedure and obligations under section 8 and Chapter VI.

Cleaning this up, we get:

Nothing contained in this Act shall prevent the use of Aadhaar number for establishing the identity of an individual pursuant to any law, for the time being in force:

Provided that the use of Aadhaar number under this section shall be subject to the procedure and obligations under section 8 and Chapter VI.

It is our opinion that this judgement does not completely invalidate the use of Aadhaar by private players, but rather, specifically strikes down the use for “any purpose [..] by any body corporate or person [..] (under force of) any contract”. That is, it requires the use of Aadhaar be purpose-limited, legally-backed (to give user rights & protections over their data) and privacy-protecting.

As an exercise, we took the most conservative interpretation – “all private use is struck down in any form whatsoever” – and reread the entire judgement to look for clues that support this conservative view.

Instead, we found that such an extreme view is inconsistent with multiple other statements made by the judges. As an example, earlier discussions of Section 57 in the order (paragraphs 355 to 367). The conclusion there – paragraph 367 states:

The respondents may be right in their explanation that it is only an enabling provision which entitles Aadhaar number holder to take the help of Aadhaar for the purpose of establishing his/her identity. If such a person voluntary wants to offer Aadhaar card as a proof of his/her identity, there may not be a problem.

Some pointed out that this is simply a discussion and not an operative clause of the judgement. But even in the operative clauses where the linking of Aadhaar numbers with bank accounts and telecom companies is discussed, no reference was made to Section 57 and the use of Aadhaar by private banks and telcos.

The court could have simply struck down the linking specifically because most banks and telcos are private companies. Instead, they applied their mind to the orders which directed the linking as mandatory. This further points to the idea that the court does not rule out the use of Aadhaar by private players, it simply provides stricter specifications on when and how to use it.

What private players should do today

In our previous post, we had advised private companies to relook at their use of Aadhaar, and ensure that they provide choice to all users, so that they can use an appropriate identity, and also build in better exception handling procedures for all kinds of failures (including biometric failures).

Now, in addition to our previous advice, we would like to expand the advice to ask that each company look at how their specific use case draws from the respective acts, rules, regulations and procedural guidelines to ensure that these meet the tests used by this judgement. That is, they contain adequate justification and sufficient protections for the privacy of their users.

For instance, banks have been using Aadhaar eKyc to open a bank account, Aadhaar authentication to allow operation of the bank accounts, and using the Aadhaar number as a payment address to receive DBT benefits. Each of these will have to be looked at how they derive from the RBI Act and the regulations that enable these use cases.

These reviews will benefit from the following paragraphs in the judgement.

The judgement confirmed that the data collected by Aadhaar is minimal and is required to establish one’s identity.

Paragraph 193 (and repeated in other paras):

Demographic information, both mandatory and optional, and photographs does not raise a reasonable expectation of privacy under Article 21 unless under special circumstances such as juveniles in conflict of law or a rape victim’s identity. Today, all global ID cards contain photographs for identification alongwith address, date of birth, gender etc. The demographic information is readily provided by individuals globally for disclosing identity while relating with others and while seeking benefits whether provided by government or by private entities, be it registration for citizenship, elections, passports, marriage or enrolment in educational institutions …

The judgement has a lot to say in terms of what the privacy tests should be, but we would like to highlight two of those paragraphs here.

Paragraph 260:

Before we proceed to analyse the respective submissions, it has also to be kept in mind that all matters pertaining to an individual do not qualify as being an inherent part of right to privacy. Only those matters over which there would be a reasonable expectation of privacy are protected by Article 21…

Paragraph 289:

‘Reasonable Expectation’ involves two aspects. First, the individual or individuals claiming a right to privacy must establish that their claim involves a concern about some harm likely to be inflicted upon them on account of the alleged act. This concern ‘should be real and not imaginary or speculative’. Secondly, ‘the concern should not be flimsy or trivial’. It should be a reasonable concern…

Hence, the privacy risk in these use cases must be evaluated in terms of the data in the use case itself, as well as in relation to biometrics, and the Aadhaar number in the context of the user’s expectations, and real risks. Businesses must evaluate their products, and services – particularly those which use Aadhaar for privacy risks. It is helpful that the UIDAI has provided multiple means of mitigating risks, in the form of Registered Devices, Virtual Ids, Tokenization, QR Codes on eAadhaar, etc. which must be used for this purpose.

What private players should do tomorrow

In the future, the data protection bill will require a data protection impact assessment before deploying large scale systems. It is useful for businesses to bring in privacy and data protection assessments early in their development processes since it will help them better protect their users, and reduce potential liability.

This is a useful model, and we would hope that, in light of the Supreme Court judgement, the Government will introduce a similar privacy impact review, and provide a mechanism to regulate the use of Aadhaar for those use cases, where there are adequate controls to protect the privacy of the users and to prevent privacy harms. Use cases, and an audit/enforcement mechanism matter more than whether the entity is the state, a public sector organization, or a private sector organization.

Note: This is in continuation of Sanjay Jain’s previous op-ed in the Economic Times which is available here and same version on the iSPIRT blog here.

The writer is currently Partner, Bharat Innovation Fund, and Chief Innovation Officer at the Centre for Innovation, Incubation and Entrepreneurship, IIM Ahmedabad. As a volunteer at iSPIRT, he helped define many of the APIs of the India Stack.  He was the Chief Product Manager of UIDAI till 2012

(Disclaimer: This is not legal advice)

AI/ML Shift for SaaS Companies: Insights from SaaSx Fifth Edition

Early stage SaaS startups typically struggle with one of two things. When you are just starting out, the first struggle is all about mere survival. Will we find customers willing to use and pay for our product ? Good teams typically manage to find ways to negotiate that first challenge. The playbook has been sufficiently commoditized that if you execute well enough, you can actually succeed in getting those early customers. Its a challenge for sure, but is getting easier and cheaper to overcome — which takes me to the second challenge. Once you survive that initial phase, how do you continue to stay relevant and grow? For if you don’t grow, you’ve only prolonged the inevitable and will likely get disrupted into irrelevance by the next upstart that comes along. When you play in a commodity market, that’s the sad reality.

If you find yourself gaining customer adoption, you can be fairly certain that competition isn’t far behind. Unless you find a way to establish sustainable differentiation while you have that head start, you will ultimately die. And that differentiation now increasingly comes down to the value of the data flowing through your platform and how you are able to leverage it better than your competition. In other words, if you are not thinking about constantly learning from the data that you are gathering and enabling implicit intelligence via your products, the odds of survival are going to be stacked against you. Given the significance this topic carries for us at Swym, I was really excited to have the chance to sit in on Ashwini Asokan and Anand Chandrasekaran’s session on AI/ML for SaaS at SaaSx5. And they most certainly didn’t disappoint. With a lucidly laid out argument, their talk served as a strong wake-up call for the SaaS founders in the room that weren’t sufficiently worrying about this topic.

SaaS growth is slowing

Ashwini started out by underscoring the fact that SaaS growth was slowing in general. There’s no denying that most solutions are rapidly becoming commoditized — building a good product has gotten fairly prescriptive, costs have come down and barriers to customer adoption are a lot lower than they used to be. That inevitably leads to markets getting very crowded, making survival increasingly difficult. If you don’t stand out in very defensible ways, you will perish. To make matters worse, AI is slowly but surely causing entire categories of work to disappear — Customer Support, SDRs, Financial/Market Analysts, to name just a few examples. If those workers were your market and you were helping them be more efficient, you are in trouble because your market is disappearing with them. You better be evolving from being software that’s serving those people that in turn serve a function, to actually serving the function itself. Of course you do this with human assistance, but in a progressively intelligent fashion that makes you indispensable.

Embrace the platform mindset

In order to stay relevant, you really need to create a viable roadmap for yourself to graduate from being a simple feature that’s part of a larger platform (No one likes being told they are nothing but a feature, but this really is where most early stage SaaS products sit today) to becoming the platform itself over time. It can most certainly be done because the opportunity exists, and the access you have to your data and how you are able to leverage it is likely to be the most effective weapon to get you there. Think really hard about new use cases you can light up, automations you can now enable, important solutions that hitherto weren’t possible or practical — enabling those capabilities is what will give you stickiness. And you can in turn leverage that stickiness to allow others to build on the data platform you’ve created to expand your moat. Easier said than done of course, but it is the only path to staying relevant. Alexa, Salesforce, Adobe, Hubspot, and most recently Stripe with their just announced app store, all come to mind as stellar examples of execution on this strategy.

How should I be thinking about Data Science?

Anand followed that up with some really good advice on how to go about this, especially touching on what not to do, and it was clearly resonating with the audience. For instance, when he highlighted the fact that most AI initiatives that start with “Here’s the data I have…what can I do with it?” are doomed from the get go, a lot of heads in the room were nodding in agreement — seemed like a pretty common trap that folks had fallen into. Instead, his advice was to identify the end goal that mattered first, with the caution that this could be deceptively challenging. Once that goal is well understood, then focus on the data you have and the gaps that exist — and your challenge basically boils down to filling those gaps and cleansing/validating your data. Those are your most critical, time-consuming steps in the process for once you get the data quality you want, it becomes much simpler to build and iterate your model around that and figure out how to engineer this into a repeatable part of your workflow. The sub par data quality is one of the most common causes for AI projects “failing” and no amount of modeling proficiency will save you from bad data or a poorly understood problem statement.

Get on the train, but don’t lose sight of what got you here

I’m really glad to have had the benefit of listening to their talk in person, and now that I’ve let the arguments sink in over the past couple of weeks, a few truths have become indisputably clear in my head. The AI shift is not one you can ignore as a SaaS founder. If you don’t get on the train, you’ll likely end up under it. And no, getting on the train doesn’t mean simply attaching a “.ai” to your domain name and claiming success. It really comes down to internalizing your vision for why you exist, identifying in very clear terms how your roadmap to making that vision a reality will need to evolve given the AI shift. How do you see your problem space changing in the the next 2–5 years thanks to AI, and what does that mean for you? And given your existing strengths, what can you do to make the most of that shift?

Its important to remember that a lot of the fundamentals of a good SaaS story still don’t change. For instance, a sound distribution strategy is still very much necessary, for without sustainable access to customers, the rest of it is moot. Likewise, you want to be able to protect the access you have to your most valuable asset, your data) and lower the barriers enough for adjacent players to be able to work seamlessly with your offering. All those advantages you have still very much matter. Really, the biggest mental shift you need to make is thinking very deliberately about how the world around you is changing because of AI, and how you leverage those strengths so you continue to have proprietary access to the data you need and become an integral part of that change.

The article is authored by our volunteer Arvind Krishnan, CEO & Founder – Swym Technologies.

Build On IndiaStack – Venture Pitch Competition

Announcing ‘Venture Pitch Competition: #BuildOnIndiaStack’

Dalberg and iSPIRT invite applications from early-stage ventures that are tech-
based solutions leveraging the India Stack platform at the core of their business
model to bring financial or transactional services to the underserved in India.
Pitch to some of the leading investors and thinkers in the Indian start-up ecosystem,
including the Bharat Innovations Fund, Omidyar Network and Unitus Seed Fund.
Winners will spend an hour of 'Think Time' – a mentorship session with
technology evangelist Nandan Nilekani.

Who are we looking for?

We are open to all innovations that use the India Stack to unlock new business
models or reach previously underserved new customer segments across sectors
such as financial services, education, healthcare and others. Some core focus areas
for the competition may include digital lending and supporting activities, such as
alternative credit scoring; sector specific affordable digital finance services such as
health insurance or education loans; sector specific digital services such as skilling
and certification, property registration agreements, patient-centric healthcare
management; and SaaS platforms “as a service” that support the development of
other India Stack based innovations such as Digi-locker or e-sign providers.


Who is eligible?
All applicants should:
1. Meet the 3-point criteria: tech enabled, leveraging India Stack Platform and
serving the underservedBe

2. Be a part of two (minimum) to four (maximum) members team including the
founder of the companyBe early stage start-ups that have received only seed (or limited angel)

3. Be early stage start-ups that have received only seed (or limited angel)
funding, if at all

What is in it for you?
The investor group, comprising of Bharat Innovations Fund, Omidyar Network and
Unitus Seed Fund, is a network of investors and operators, entrepreneurs and
technologists, designers and engineers, academicians and policy makers, with the
singular mission to solve some of India’s toughest problems.

Through this event you have an opportunity to receive:

-Exclusive focus on tech innovations that leverage the India Stack platform
and have the potential to address the underservedFlexible

-Flexible, insight driven, funding of up to Rs. 8 lakhs for early stage, innovative

-Strategic business support, through their specialists to support investees in
their strategy and growthA chance to be a part of the India Stack ecosystem through partnerships,

-A chance to be a part of the India Stack ecosystem through partnerships,
pilots, workshops, conferences and network building exercises

Visit www.buildonindiastack.in and send your pitch now.

On Organizations and Lessons from the Industrial Revolution

The Industrial Revolution was possible because organizations could be built and managed effectively. Today too, problem #1 in business is creating the organization in the right way.

changing landscape, in the 19th century (photo credit: thomasgenweb.com)

The first time I saw this chart below, a light bulb went off in my head.

It shows the world’s average GDP per capita over the past thousand years. It is basically represents an average human’s economic productivity over time. Note: this is on a log scale.

source: http://www.j-bradford-delong.net/TCEH/1998_Draft/World_GDP/Estimating_World_GDP.html

I mainly want to talk about the last couple of hundred years in this chart, but let’s get a couple of things out of the way upfront. Firstly, the GDP estimates go back a million years, but most of human history is rather uneventful from an economic perspective. Secondly, the dip around 1300 AD is due to the “Black Death” plague that killed nearly a third of the world’s population, most devastatingly in Europe.

After the plague, productivity recovered with the population, and started improving as we kept getting a little better at what we did. But what made the line shoot up so drastically in the 19th century?

The Industrial Revolution happened.

Firstly, technology.

There were newer, more sophisticated machines that made large scale manufacturing possible, and there was power available to run these machines.

The textile industry is everyone’s favorite example. Historically, production of cloth used to be largely a domestic enterprise and sometimes a cottage industry. Farmers’ wives would spin the cotton at home, and the men would then weave it into cloth. It would take four to eight spinners to supply one handloom weaver. Enter the Industrial Revolution: at the time the textile industry was inventing the Flying Shuttle and the Power Loom, the steam engine was also being invented. And very quickly, the two came together to enable large factories where steam-powered machines would do the work of hundreds of people.

Secondly, people formed organizations.

The most important part (in my mind) of the Industrial Revolution was the rise of the business organization and of management as a function.

While the initial spurts of technological advancement led to the creation of many businesses, they were still run by one or a few owners or partners trying to do everything, and that could not scale. You could draw an analogy with startups today, but it wouldn’t be accurate as we do have access to management tools. Back then, it just didn’t exist. The railroad companies spearheaded the science and practice of management, being one of the largest organizations and requiring large numbers of people across different aspects of the entire operation to act as one unit. They realized they could organize into departments and appoint managers who planned tasks and supervised the workers that carried out those tasks.

Organizations of an unprecedented size and scale could exist because of this, kicking off many self-fueling virtuous cycles, and not just enabling co-ordination across a large enterprise but also dramatically improving processes and workforce utilization. This is what made the right side of the chart possible.

While it seems like a blip in history, this took time: nearly two hundred years. It completely elevated what we as a species are capable of, but also came at a great societal cost (large scale unemployment and severe exploitation of those that were employed).

And it hasn’t ended: that line is only going up (and perhaps with different kinds of costs).

Now, based on all this, I’m going to posit:

Now, based on all this, I’m going to posit:

The key to all progress lies in creating scalable organizations.

Misallocating Entrepreneurship

There is an interesting example that elucidates this point. This article — India is a much more Entrepreneurial Society than the United States (and that’s a problem) — talks about the problems when a society cannot scale its organizations:

India is a much more entrepreneurial society than the United States. That may seem surprising since India is poor and we typically associate entrepreneurship with being rich but it’s clearly true. Only ~15% of Indians work for a firm compared to approximately 90% of US workers.

It digs into why it can be a problem.

Entrepreneurship in India isn’t a choice, it’s a requirement. Indian entrepreneurship is a consequence of India’s failed economy. The problem with developing countries is not that they lack entrepreneurs but that entrepreneurs cannot grow their firms large enough to become major employers.

Entrepreneurship, like other factors of production, can be misallocated. India has great entrepreneurs but their hard work, creativity, and risk taking is being wasted building tiny, stunted firms.

Entrepreneurship, like other factors of production, can be misallocated.

But our culture is becoming more individualistic, in all aspects of society. In business, everyone wants to be the entrepreneur, and is looking for “non-entrepreneurs” to recruit to their cause. And it has never been easier to start a company — limited liability and easy access to capital, distribution and technology have made sure of that.

Perhaps the optimal size of the firm will change in response to these forces, but I don’t see evidence of that yet — quite the opposite, if anything. Perhaps this chart above will sober up for a bit, or perhaps technology (general AI?) will render people irrelevant in the scheme of things. Until then, building high-functioning, scalable organizations that fit into the cultural mood will have to be the foremost problem company-builders need to solve.

(Huge thanks to Michael Dearing for showing me this chart for the first time, and opening up the first principles of management for me. I highly recommend his General Management course.)

Diversity with Collaboration Unlocks Innovation and Drives Business Growth

“Diversity is an intellect multiplier, especially when the diverse groups can collaborate well” – Mark Sareff

This year the International Women’s day was a different experience for me, no panels stating gender diversity facts most people are painfully aware of. Instead I had the proud privilege of being invited to do a fireside chat and explore new dimensions of diversity and its impact on innovation and business growth.

We are familiar with dimensions of diversity we are born with — gender, age, race etc. but less familiar with the dimensions we acquire in our lifetime — culture, life experiences, domains worked in, education background etc. These interesting dimensions set your thinking patterns, beliefs and problem-solving approaches.

Diversity is an intellect multiplier but, only when diverse groups can collaborate. We need a common language that helps diverse groups come together and collaborate. We need an inclusive environment that fosters diverse perspectives without judgment… here’s where design thinking comes in!

Design thinking in its application celebrates diversity, when done well allows you to go broad try many, diverse approaches before narrowing down to one solution. It can also change how people work together for the better, introducing a deeper level of collaboration, appreciation of diversity and creativity.

Sharing a few key tools to help you create an inclusive environment that fosters diverse perspectives and hence innovative solutions:

1.   Don’t brainstorm; think Independently, together While we are not against brainstorming, we believe brainstorming can lead to HiPPO decisions (Highest Paid Person’s Opinion) and can exclude out-of-the-box thinking because the facilitator or the group naturally judges all ideas being generated. Instead have everyone think independently and write down their ideas individually and review every single idea. Similar ideas get grouped together, no idea gets left behind or judged right away. Instead we build on existing ideas to make them more diverse and disruptive. It is a powerful process that celebrates diversity and creates an inclusive environment for disruptive ideas to form and persist.

2.   Narrow ideas using clear criteria – The 2×2 tool is a narrowing tool, allows you to choose ideas that the team will filter down to. The team identifies 2 key criteria to narrow ideas (ideally, customer benefits) that would make massive impact on the business. Ideas are then plotted against those dimensions relative to the benefits it brings to the organization versus making Caesar-like decisions. Again allowing diverse teams and ideas to collaborate well hence leading to innovation and business growth.

3.   Facilitating large group dialogues – The World Café is a structured tool intended to facilitate collaboration, initially in small groups and then linking ideas within a larger group to access the collaborative and collective wisdom in the group. Each person interprets the world differently, based on his/her perception. Sharing the viewpoints of others is essential for understanding alternatives and adapting strategies to deal with environments. Environments that recognize the contribution of all will foster a strong commitment to achieve common goals.

Diversity offers different experiences and novel perspectives, leading to better decision making and problem solving. It opens up new conversations pushing the boundaries on unrestrained thinking which enables breakthrough innovations.

At Pensaar, one of the things we celebrate is the differences we all bring to the table. Each of us comes with unique experiences having worked in varied industries and lived very different lives. It allows us to recognize each other’s strengths and learn from each other while also being sympathetic to each other’s weaknesses. Our different experiences and perspectives help us foster innovation to beat and not just meet the needs of our increasingly diverse customer base.

So much has already been written about this amazing topic, go here to read more:

·   To Make Diversity Work You Need Design Thinking

·   HBR’s How Diversity Can Drive Innovation

·   10 Companies Around the World That Are Embracing Diversity in a BIG Way

·   Why diversity matters


What the U.S. can learn from India’s move toward a cashless society

Looking from Silicon Valley upon the progress that India has made in building a digital infrastructure, I am in awe.  The U.S. tech industry fancies itself as the global leader in innovation, yet India has leapt far ahead of it.  Silicon Valley’s tech investors hype complex technologies such as Bitcoin and blockchain.  But India, with simple and practical innovations and massive grunt work, has built a digital infrastructure that will soon process billions more transactions than these do.

India is about to skip two generations of financial technologies and build something as monumental as China’s Great Wall and America’s interstate highways.

Though few people in the West know of Aadhar, it has been the largest and most successful I.T. project in the world.  There was widespread skepticism that a billion people could be provided with a verifiable digital identity, yet it has occurred, in a short six years.  Hundreds of millions of people who were doomed to live in the shadows of the informal economy can now participate as equals in the global economy.  Thanks to Jan Dhan Yojana, they also have bank accounts; these already haveRs. 69000 crores in deposits.

The reason investors are pouring billions of dollars into technologies such as Bitcoin is that they provide a secure way of linking a person to and recording a transaction.  But Bitcoin requires massive, wasteful, computing resources to do what is called mining: transactions’ mathematical verification.  And this complex computing infrastructure needs constantly improvement as it hits transaction limits.

The simple design of India’s digital payments infrastructure, Unified Payments Interface (UPI), allows banks to transfer money directly to each other based on an Aadhar number or mobile-phone number plus pin.  Yes, this doesn’t have the anonymity of Bitcoin, but I would argue that anonymity is mainly for money laundering and tax evasion—which need to be eliminated.  There is almost no overhead in UPI, and transactions happen within seconds rather than the 10 minutes that Bitcoin takes.

In the U.S., we pay an indirect tax of 2–3% on consumer transactions because of the use of credit cards.  Companies such as Visa, Mastercard, and American Express don’t even manage the money or provide banking services; all they do is to act as an intermediary between banks.  The merchant has the responsibility of verifying the identity of a customer.  With UPI, India doesn’t need credit cards or middlemen, it can build the next generation of finance.

The instant and non-repudiable proof of identity that Aadhaar’s know your customer technology, e-KYC, provides, gives India a big advantage. Most people in the U.S. have drivers licenses and social security numbers. But these are not verifiable with biometrics or mobile numbers, so complex verification technologies need to be built into every financial system.  Indian entrepreneurs building applications don’t need to worry about all this.

Going beyond money, India Stack provides a digital locker through which to store and share personal data such as addresses, medical records, and employment records.  With this, the government is providing a public service that is the digital equivalent of roads and electricity.  I don’t know of any other country that has anything comparable; India will soon have the digital equivalent of super-highways.

There are all sorts of benefits.  For example, the opening of a mobile-phone account is a lengthy process everywhere, because telecom carriers must verify the user’s identity and credit history.  With India Stack, all it requires is a thumbprint or retina scan and permission to share digital documents.  The typical villager presently has no chance of getting a small-business loan, because he or she does not have a credit history or verifiable credentials.  With India Stack, he or she can share digital copies of bank statements and utility-bill payments, and life-insurance policies and loans can receive instantaneous approval.

Nandan Nilekeni is right when he says that these advances “represent the biggest advance globally in public digital infrastructure since the Internet and GPS”.  In an email to me, he predicted that they will “lead to a leapfrogging on many fronts, including a digital financial platform for a billion people which does not require cards, POS machines or ATMs but will be entirely driven by what is in your hand—your finger and your phone”.

Prime Minister Modi has taken a lot of fire for demonetization.  This is understandable, given the hardships and the disruption to the economy that it created.  But it was a bold move and one that will produce tremendous long-term benefit—because it will accelerate the push to digital currency.  India has the opportunity to enter an age of transparency and be at the forefront of digital technologies.

Nobel Prize–winning economist Joseph Stiglitz said in Davos that the U.S. should follow Modi’s lead in phasing out currency and moving toward a digital economy, because it would have “benefits that outweigh the cost”.  Speaking of the inequity and corruption that is becoming an issue in the U.S. and all over the world, he said “I believe very strongly that countries like the United States could and should move to a digital currency so that you would have the ability to trace this kind of corruption”.

Yes, India is ahead and America can learn from it.

Guest post by Prof. Vivek Wadhwa, Distinguished Fellow, Carnegie Mellon University Engineering at Silicon Valley. Former entrepreneur. Syndicated columnist for Washington Post.

The six key pillars of software that enables Innovation-led growth

Ever wondered if a Software could help business chart the next growth curve?.

The marketplace is changing and the competition is catching up. Organisations need a new concept to break out to create the next growth curve and they depend on functions like Strategy, NPD ( New product development ), R&D Teams internally. Some of these organizations also use external consulting firms, crowdsource, outsource, merge, acquire and do many things more.

In order to bring in rigor and predictability, organisations need sound processes, but the paradox in Innovation-led growth, unlike other variants, is the need to have the right balance between creative freedom and execution discipline. Most organisations are designed for execution discipline while some are designed to be creative. But, today’s organisations need both in the right mix to win in the long run.

We need to manage Innovation-led growth like any other process and to institutionalize this, a structured approach which would balance creative freedom and execution discipline would be more effective.

Well, can a Software help with this?

If yes, what should be the pillars of such an Innovation-led growth Software?

Business would need 6 Es to Innovate.

Organisation needs to draw the creativity and drive to make things happen.Often the best source for innovation is the team within the business. A great leader turns them into entrepreneurs who are hungrily looking for new opportunities. The key is empowerment. An Innovation-led growth software should empower teams to achieve their goals through their own ideas and efforts.

The leader sets the destination, but the team chooses the route to get there.

Enable employees to adopt an “entrepreneurial mindset” to showcase their ideas and ideals. Allowing them to propel innovation and show initiative is the key to a successful workplace revival and an opportunity to re-energize individual and organic organisational growth.
Innovation and workplace transformation represent two-sides of the same coin.
An Innovation-led growth software should help business in tossing the coin instead of taking sides.

Effectiveness isn’t just a property of the idea but, more importantly, a property of the execution, and that’s where an Innovation-led growth software comes in. It should help business with it right from the word go & ensure effectiveness on all sides by having an innate ability to look at your problem from multiple viewpoints thereby ensuring a holistic overview.

The most important part of any business idea is to maintain traction, and that requires engagement: the kind which can grab the right audience. An Innovation-led growth software should help business create a meaningful engagement with and within the audience, be it internal or external. Software should help organizations get perspectives from people who matter and thereby helping it to improve its offerings.

Evaluating Innovation-led growth initiatives is something that very few organizations have understood. Most of them use the traditional criterion which works against the constructive collaboration that is required. Software should have a new set of evaluation tools that supports such a collaboration and help business in making the decision.

Efficiency is the result of all the other Es coherently and cohesively coming together to function in a synchronous manner. Software should have proven techniques that shall improve the efficiency of generating new business concepts at a faster rate and continuously.

There are few companies, which have few of the above 6 Es.Not any single company possess all 6 Es at the right proportion for the right yield. Experts who are proficient in the field of innovation vouch that iEnabler Software has these 6 pillars at right proportion for companies embarking their Growth journey. For your reference (www.ienabler.co)

Guest Post by Sridhar D.P, iEnabler

Disruptive Blue Oceans and India to the world!

In this article, we brief on what the architect of disruptive innovation Clayton Christensen explained in his seminal work called disruptive theory. This contains the edited excerpts of ‘What is disruptive innovation’ article published in Harvard Business Review. We also considered the tools, frameworks and concepts from Blue Ocean Strategy developed by W. Chan Kim and Renee Mauborgne, as we feel that the Indian companies adopt the essence of both the Disruptive Innovation and Blue Ocean Strategy ideas.

Clayton clarifies Disruption is a process where by a smaller company with fewer resources is able to successfully challenge established incumbent businesses. Specifically, as incumbents focus on improving their product and services for the most demanding customers, new entrants prove disruptive by successfully targeting those overlooked segments and by delivering more suitable functionality frequently at lower price. And any product or service to be considered as disruptive innovation must actually fit into the two important criteria below.

  1. Low-end footholds
  2. New market footholds

Low-end footholds

Value-InnovationLow-end footholds exist; when an established or large organization focuses only on the prime customers or most profitable customers and overlook their needs and fail to fulfil the needs of the least profitable or low-end customers. New entrants seize the white space by servicing to these low-end segments with ‘good enough’ product. The performances of the new entrants are ever improving when compared to those established incumbents. However, the quality of their offerings increases over the period of time. New entrants create unprecedented value to the customers by adopting Value Innovation. Value Innovation is created in the region where a company’s actions favourably affect both its cost structure and its value proposition to buyers.


Cost savings are made by eliminating and reducing the factors industry competes on and buyer value is lifted by raising and creating the elements industry has never offered. Kim and Mauborgne call it ‘4 Action Framework’ in their book titled ‘Blue Ocean Strategy, 2005.’

3nethra capturing Low-end segments through Value Innovation in India.

3nethra, eye pre-screening device, a product of Forus Healthcare, has made a significant impact in the eye care industry, in private clinics as well as in large eye hospitals. A significant contribution of 3nethra to eye care is the fast screening made possible by this device. Quick, yet accurate, screening translates into shorter waiting periods for patients. In a domino effect, quick screening also means that the eye doctor can devote more time to patients that need immediate attention. The simplicity of usage of 3nethra results in minimal training to operate the device. While, most eye pre screening devices cost between Rs 18 and 20 lakh, 3nethra costs just about Rs 5 lakh. 3nethra is also being used in community healthcare services and CSR initiatives. Forus, has conducted over 100 eye check-up camps all over India and screened over 2,50,000 people so far. Additionally, 3nethra can be installed in kiosks in places with high footfalls like airports, railway stations and even malls, where one can walk in and get fast, affordable and accurate screening for common eye diseases for their entire family.

new value curve

New market footholds

In new-market footholds, disruptors get into the uncontested market place and make the competition irrelevant. They find ways to convert non-customers to customer. In Blue Ocean Strategy, Kim and Mauborgne delineate as ‘the three tiers of non customers’ who can be transformed into customers.

First Tier: ‘Soon to be’ noncustomers who are on the edge of your market. They minimally use current market offerings to get by as they search for something better. Upon finding better alternative they will jump ship.

Second Tier: ‘Refusing’ noncustomers who consciously choose against your market because they find the offerings unacceptable or beyond their means.

Third Tier: ‘Unexplored’ noncustomers who are in markets distant from yours. They are the ones who have not been targeted or thought as potential customers by any existing incumbents.

Harboring these noncustomers is an ocean of untapped demand waiting to be released.

Paytm transforming noncustomers to customers

marketDigital wallet and mobile commerce marketplace Paytm is creating huge market by enabling more than 80,000 merchants to do the transactions on its platform. Paytm is an Indian e-commerce shopping website launched in 2010, owned by One97 Communications which initially focused on Mobile and DTH Recharging. The company is headquartered in Noida, India. It gradually provided recharging and bill payment of various portals including electricity bills, gas bills, as well as telephone bills. Paytm entered India’s e-commerce market in 2014, providing facilities and products similar to businesses such as Flipkart, Amazon.com, Snapdeal. In 2015, it added booking bus travel. In July 2015, it included industrial supplies such as power tools, safety and security equipment, test & measurement apparatuses, machines, lab supplies, abrasives etc on its platform. Paytm states that the initiative will help SMEs get in touch with different suppliers for different needs. Currently, it claims to have crossed over 100 million users in the country in a very short span. It also declares that more than 75 million transactions are made through their platform. In 2014, the company launched Paytm Wallet, India’s largest mobile payment service platform with over 40 million wallets. The service became the preferred mode of payment across leading consumer internet companies such as Uber, BookMyShow, MakeMyTrip and many more.


  1. What is disruptive innovation by Clayton Christensen, http://hbr.org/2015/12/what-is-disruptive-innovation
  2. Book titled Blue Ocean Strategy, 2005, by W Chan Kim and Renee Mauborgne
  3. Forushealth.com, http://forushealth.com/forus/Implementation.html

Paytm, https://en.wikipedia.org/wiki/Paytm

This writeup is complied and created by R Ragavendra Prasath; volunteer for iSPIRT.


Disruptive Innovation and Blue Ocean strategy are two distinctive thinking by itself and broad as it is deep. Adopted these thinking together for learning and understanding purposes only.

How “born globals” dance with gorillas to punch above their weight

For over a decade now I have been studying “born globals” i.e. new ventures that internationalize rapidly, and in particular how these firms leverage relationships with large multinationals to facilitate this process. My studies on this topic span China, India, UK and USA.

I recently published a book targeted at other academics, based on this research, titled Born Globals, Networks and the Large Multinational Enterprise, which was released during the Academy of International Business conference in Bangalore.

The insights for entrepreneurs from this research include the following:

Be proactive in recognizing the opportunity to harness globalization. More than at any point in history, multinationals are genuinely interested to engage with start-ups. It wasn’t always like this. When I started my research in 2002 I could barely find any multinational with a structured partnering program targeted at young companies at home or abroad. This changed over the next few years as multinationals recognized that they could not be self-sufficient in generating novel ideas, and that start-ups were great at doing this. Today many multinationals offer a range of start-up engagement mechanisms from mass partner programs to selective incubators.

Be discerning in order to leverage the right opportunity. Just because an opportunity exists does not mean that it is guaranteed to work out. Entrepreneurs have to be discerning in how they engage with multinationals. In one sense, discernment in this context entails figuring out which partner is most appropriate to its strategic intent. Another facet is ensuring that its interests are protected, which may call for clever cooptation of local allies (e.g. mentors from respected incubators or VC firms). Yet another aspect of this is learning as much about the partner as possible to have a realistic understanding of what is and isn’t likely to be feasible.

Be reflective to learn from, and become better at dancing with, gorillas. Gorillas i.e. large multinationals can be an effective source of new business opportunities and revenues – but typically there are limits to how helpful they can be in this way. In the long term, new ventures will accrue important benefits if they adopt a learning mindset and seek to learn new capabilities through observation of, and joint activity with, large multinationals. Also, partnering with multinationals is a skill, and ventures can become better at this over time – if they consciously make the effort to reflect on their partnering experiences and talk to mentors periodically.

Thus partnering with multinationals involves considerable skill and effort – but the payoff can be considerable for new ventures if they can pull it off. Such start-ups harness globalization to punch above their weight. It’s a worthy goal for ventures with high aspirations in terms of innovation and internationalization

“Dancing with gorillas” – what is it?

Dancing with gorillas refers to start-ups partnering with large companies, in particular multinational corporations. I have been studying how these very different types of companies engage with each other in both the West (especially the US and UK) and East (especially China and India) for about a decade now. At the early stages of my research, I once asked the late Professor C K Prahalad what he thought about the scope for start-ups to engage with large multinationals, and his immediate response was: “Many of these small companies have no choice but to learn to dance with big gorillas”. I immediately latched on to that phrase!

Source: An interview with Dr Shameen Prashantham available here

India Innovation Session with Jeff Immelt, CEO, GE


Every sector has a long period of evolutionary change that is only occasionally interrupted by a short (5-10 year) period of intense non-linear change. Global corporates like GE are able to position themselves to successfully embrace the evolutionary change. However, to leverage the period of non-linear change, a new kind of partnering model is needed.

Keeping in mind this theme, iSPIRT, India’s software product think tank, spent an hour with Jeff Immelt, CEO of General Electric, and his team, to discuss the implications of such non-linear change to GE and the larger global ecosystem. To drive home the point, six inspiring startups showcased their respective cutting-edge innovations that are helping drive change in their individual sectors. Their stories are captured, in brief, below.

Team IndusTeamIndus

Infrastructure for NextGen Apps

Team Indus, a highly qualified group of ex-ISRO scientists and systems engineers, spoke to GE of two moonshots they are attempting. Literally. The first is landing a privately funded spacecraft on the moon by 2017. As part of this mission, they India’s only entry, and top 3 of 16 global teams, in the Google Lunar XPrize Competition.

The second is a derivative of the first, where they aim to put up a high-altitude long-endurance platform to deliver payload to stratospheric orbits. In laymen’s terms, they are enabling wide-area connectivity for terrestrial applications, essentially disrupting satellites as they’ve been known and used. And at the current pace of progress, they are on track to be the leader in Asia by 2021.

Nimble WirelessNimble

Cold Chain Monitoring

Nimble Wireless’ pioneering IoT solution is built on top of the future of pervasive connectivity that TeamIndus is working towards. Their platform helps enterprises connect, control and manage their business critical assets to enable greater efficiencies and savings. A great use case is in helping leading food/cold chain companies ensure food safety and reduce wastage, especially important in a country that has 33% malnourished children but wastes nearly a third of its dairy products. Here, Nimble deploys real time temperature monitoring and alert management systems to help ensure food safety, eliminate wastages and attain visible RoI for food and logistics companies.


V2X: Connecting Vehicles to Everything

Moving beyond the world of cold chain to the world of automobiles is Savari’s technology that connects vehicles to everything – each other, smartphones and road infrastructure. There is a battle ensuing between Silicon Valley’s revolutionary approach in favor of self-driving cars and the auto industry’s evolutionary approach in favor of connected cars. Savari’s patented middleware software is enabling the auto industry to realize the gradual, incremental change they believe is the way forward in connecting vehicles. Their technology is pushing forward safety, fuel savings and automation and ensuring auto companies don’t become ‘the Foxconn of Apple’.

Julia ComputingJulia

An Open Platform for Brilliant Machines

The consistent theme emerging is that machines are all going to be connected in not too distant a future. All well and good, but there’s a small problem. Today the programming language for machines (iron) is different from that of the cloud (silicon), where software and analytics reside. That means large time and cost investments are needed in translating algorithms between the languages to connect the machines.

Which is where Julia, an open-source language being built out of MIT, fits in. Their solution, a language with a strong mathematical foundation, serves as a common language for machines and the cloud, so the same engineers can write analytics that run on sensors and scale to the cloud. The language has visible use cases across machines (air collision avoidance algorithms, 3D printing) and cloud applications (predictive analytics, pricing algorithms), enabling immense savings in time and complexity. The industrial world until now only had proprietary platforms to choose from but now Julia provides an alternative that is open and neutral, where firms can retain strategic control of their products.


Open-source supply chain

Continuing with the theme of improved efficiency is Logistimo, an open-source supply chain software enabling manufacturers, distributors and after-sales partners to better reach and serve frontier markets.  There are unique challenges of implementing such systems in low-resource settings of rural India, where nearly 70% of Indians live. But Logistimo’s nuanced methodologies to manage this low-resource context is what has helped reduce infant mortality, electrify villages, and improve the overall quality of life for citizens of the hinterland.

India StackiSPIRT

Impact on Service Delivery

Tying this all together was the final session about a pioneering initiative, the first of its kind globally, being spearheaded in India towards a cashless, paperless and presence-less service delivery. The India Stack ties together the Identity Layer (Adhaar), a Paperless Layer (eSign, eKYC), a frictionless Payments Layer, a Transaction Layer (GSTn) and finally a privacy/data-sharing Consent Layer to revolutionize the Indian landscape in not too distant a future.


Lots going on, lots more to come. And this is just the beginning of the excitement for India and the non-linear change that the startup ecosystem is enabling.

InMobi’s Miip May Be More Important to India than Pichai

The emergence of an IP and technology-based leader from India will have a bigger long-term impact than a few Indians heading major global corporations

Isn’t it strange that we were obsessed with happenings at Google while the really momentous news of the coming of age of a serious desi challenger got lost in the noise?

Sundar Pichai and Google

News of Sundar Pichai’s ascension to the Google throne hogged media headlines for almost a week.

While I could understand the excitement instigated by the front page of Dainik Bhaskar in a young tier-2 and tier-3 city audience for whom a compensation of Rs 300+ crore would seem out of this world (however misleading that figure is since Pichai’s actual compensation in his new role is not known, and conversion from dollars to rupees doesn’t make sense anyway), the hoopla in the metro-based English language press was surely misplaced.

After all, what’s surprising? Indians including Ajay Banga (MasterCard), Victor Menezes (Citibank), Indra Nooyi (PepsiCo) and Anshu Jain (Deutsche Bank) have been CEOs of global corporations. And it’s now more than 20 years since Rajat Gupta became the CEO of the world’s bluest blue management consulting firm—McKinsey!

Indians are smart, ambitious and can communicate well. Once they have studied at a top US university and worked there for a while, they fit well into American corporate life, capable of discussing football and technology, and being politically correct. Most importantly, they can be quite conformist and refrain from rocking the boat. Clearly a good choice if you are a culturally diverse company like Google.

And, mind you, this may not really be the throne anyway as Larry Page and Sergey Brin are just one degree of separation away.

I have nothing against Pichai who appears to be a perfectly competent technical manager with the right credentials. But for me there were more interesting and promising events happening recently that didn’t get the attention they deserve.

What We Should Have Focused On…

For years now, we have bemoaned the absence of a Google-like company from India. Yes, we have had successful tech enterprises from India but these have been in the difficult-to-relate-to business-to-business (B2B) IT services space. The real big news of the last few weeks is that we now see some green shoots pointing to the emergence of an IP and technology-based leader from India.

On August 5, in a virtuoso performance that had a clear Steve Jobs touch to it, the CEO of InMobi, Naveen Tewari, introduced his company’s new advertising platform, Miip, to a gathering of who’s who in the technology world at Bangalore.

For the technological cognoscenti, InMobi is not a new company. It calls itself the “world’s largest independent mobile advertising platform”. Funded by Softbank, Kleiner Perkins Caufield and Byers and Sherpalo to the tune of $220 million, InMobi reportedly served 2.2 trillion advertisement requests in 2014. Its revenues are not in the public domain though some reports suggest that they could be as high as $500 million.

So, What Is Miip and Why Is It Significant?

Firstly, mobile advertising is huge and growing rapidly. With the shift of the internet to the mobile, most dramatically underlined by some Indian e-commerce giants’ decision to be “mobile-only”, the clear trend is for advertising on mobile.

Secondly, the whole promise of internet-based advertising (and now mobile-based advertising) is better targeting and customization. But this promise has to a large extent been belied. I am repeatedly amused by the fact that after I have purchased a ticket from, say, Indore to Delhi, I see online advertisements offering me low-priced Indore-Delhi tickets. These are completely wasted on me.

And, as InMobi keeps reminding us, many users see advertising as a distraction and an intrusion rather than something they find useful or enjoy.

Most extant internet or mobile-based advertising is intent-driven. You search for something you want to buy by entering it in a dialog box, and the search engine helps you by displaying related advertisements in addition to the search results. Once you have done such a search, related advertisements keep popping up even though the purchase may have been completed or you no longer have the requirement.

Such advertising makes limited use of analytics and doesn’t prompt you to check on other things you may be interested in. The range of products or services offered is also very narrow even though we know that there are hundreds if not thousands of companies that may be offering other products or services that may be of interest.

InMobi’s Miip is a mobile-based discovery platform that not only uses advanced analytics to overcome this problem, but also features a cute mascot that enters into a dialogue with the user to make suggestions and elicit user feedback. Along the way, the user can consult her friends before making a purchase choice using social media. All of this is done with high-quality visual content that exploits the superior graphics of today’s smartphone screens. Together, these enable an enjoyable and comprehensive shopping experience.

What’s significant in this case is that the company is already a strong player in the mobile advertising space, having entered at the right time about seven years ago. This gives it the muscle and the connections to capitalize on a big bet like Miip .

I particularly liked the launch of Miip in San Francisco, Bangalore and Beijing in quick succession, as these could very well represent loci of technological advancement and economic growth for the next decade. Unlike the earlier generation of Indian companies that shunned collaboration, it was good to see InMobi sharing space with important partners like Paytm and Walmart at the launch event itself.

I have only one regret about InMobi: I wish it wasn’t into push-based advertising that will promote even more consumerism.

India as a Product Nation

India’s success in services came from our ability to write high-quality software at low cost, without the need to make large irreversible upfront investments in technology or products. Companies like InMobi represent a new frontier where we are taking large bets and investing in platforms and new technologies.

This article is not only about InMobi, but about this new generation of companies that’s changing the way we do business. If sustained, this trend could help India become a Product Nation. In the long run, that would have much more impact than a few Indians heading major global corporations.

Reblogged from FoundingFuel

Making the Future

What we see in theMaker addiction, is that a relatively small amount of people can have a big impact. You don’t necessarily need the world’s largest company behind you. – Dale Dougherty- Founder, Make Magazine

4 years ago, I walked out of the elevator onto the 4th floor of NYU’s TISCH building, home to the Interactive Telecommunications program that brought together some of the most diverse bunch of brilliant misfits from around the world to learn, teach, collaborate and make. The arriving Masters candidates, were an eclectic bunch, which included engineers, designers, lawyers, journalists, artists, architects, a masseur, filmmakers, dancers, fashion buyer, and a former drag queen. I was an actress and TV host, who didn’t know a soldering iron from a glue gun, and who, like many in my incoming class, had never written a line of code in her life. Yet, only a month later, I would strip down an old computer for spare parts to make my own galvanic skin resistor from scratch, and program video outputs to visualize the incoming data. My first wearable prototype –the mood gauge, had involved experimenting with different materials, soldering, electronics, programming, designing, user experience and video, all of which I’d known nothing of when I stepped off the elevator that first day of school. When my first device ‘talked’, I was hooked. The Maker addiction had begun.

The maker era, enabled by the Internet, DIY 3D printing, low cost chips/boards, open-source prototyping platforms like the Arduino, shifting business models and payment options have erased barriers to creation and expression and leveled the playing field. Today, if you want to express an idea, you can choose whether you want to employ sensors or film, an android app, performance or interactive sculpture. The Maker movement is sometimes perceived to be synonymous with geek culture, robotics and gadgets. And there is truth to this. Engineers, with their deep knowledge and a love of taking things apart are no doubt the movement’s most ardent mascots. However, making is more than just about the technology. It is about a cross pollination of ideas, the merging of the boundaries between disciplines and philosophies. At it’s core, the maker ideology is about moving from being a mere consumer to participating, influencing and changing the world you interact with- be it objects, people or experiences. It is also about pushing boundaries and experimenting for the sheer fun of it. And to achieve this, we need a variety of backgrounds and perspectives all playing with each other. Making/tinkering encompasses a dazzling variety of creations- including DIY quadcopters controlled by brainwaves, cloned fig trees, bamboo bicycles, environment-reactive clothing, 3D bio-printed organs. It touches every area of our lives and encompasses many different fields- arts and crafts, engineering, urban planning, architecture, theatre, film, storytelling, psychology, education, gastronomy, relationships, health & medicine.

“Technology is a means to an end; the end is people” – Red Burns, Founder, ITP, NYU

The industrial revolution concentrated the means and power of production in the hands of a few. Even the entertainment and news industry was a one-way street, with a clear delineation between producers and consumers. There was no way of “talking back” or dissenting on a scale that had any sort of impact. The internet and the subsequent democratization of tools and access changed that. Today, a lone individual with a You Tube channel can command more viewers than a major news channel. As an example, PewDiePie’s, a Swedish gamer’s You Tube channel has 32 million subscribers and more than 2 billion views. All he needed for that was a video camera and a subject he was passionate about. The rise of cheap 3D printers means many more people can create physical objects designed by them quickly and cheaply. The most exciting aspect about the maker culture is that it endows the maker with personal power. Where once, we grumbled about the lack of government initiative in solving certain problems, today, we have the means of creating our own solutions.

This is where makerspaces and Maker Faire comes in. Around the world, maker culture has emerged, founded on the ideas of collaboration and learning to learn. Innovation is a happy byproduct of this culture. From the Bay Area to Bogota, Istanbul to Nairobi, maker cultures are blossoming, driven by a spirit of collaboration and learning to learn. In India, Bangalore, Mumbai, Delhi, Ahmedabad and Kolkata have their own makerspaces, driven by a global sensibility, but also grounded in locally relevant approaches. One of these spaces, Bangalore’s Workbench Projects, operating out of an inspiring space in the Halasuru metro station, has been at the forefront of some exciting maker initiatives, one of which is the Bengaluru Mini Maker Faire, which it is hosting in collaboration with Nasscom.

Maker Faire describes itself as “the greatest show and tell on earth”. People from all walks of life come to show what they’ve made and to learn from each other. The open, playful nature of these events are deeply conducive to cross-collaborative projects and innovation.

“The Walls between art and engineering exist only in our minds” – Theo Jansen, Dutch artist, creator of kinetic sculptures.

“Maker Faire is primarily designed to be forward-looking, showcasing makers who are exploring new forms and new technologies. But it’s not just for the novel in technical fields; Maker Faire features innovation and experimentation across the spectrum of science, engineering, art, performance and craft” – Maker Faire website

The First Maker Faire was held in 2006 at San Mateo and attracted 20,000 people. Today, Maker Faires are held all over the world, with 151 events taking place in 2015 alone. Aware of the global shifts towards a maker driven economy, and eager to maintain their innovative edge, bigger corporations are now increasingly part of the Maker Faires. Companies like General Electric, Autodesk sponsor and, as in the case of Motorola, even collaborate with hardware startups like Makerbot.

The Bangalore Mini Maker Faire aims to be a community based learning event celebrating the Indian maker culture, with it’s unique perspectives, aesthetics and challenges. Be it robotics, games, gastronomical innovation, sustainability, textiles, apps or video, the Mini Maker Faire is a chance to climb aboard the Indian maker bandwagon and be a part of a global movement, one that Kevin Kelley has dubbed the “Third Industrial Revolution”.

If previous industrial movements were about creating silos and competition, the maker movement emphasizes and engenders collaboration. A fashion designer collaborates with an engineer to create a responsive dress, a homemaker and a 12 year old biology enthusiast work on bio-fabrication projects, the local police team up with security specialists, designers and android developers to create apps and devices for a safer city. The possibilities are endless.

If you’re a maker or think you might like to try your hand at being one, apply to participate before the 15th of September by sending an email to info(at)workbenchpojects.com

If you would like to support the maker community as a volunteer, sponsor (be it individual/ organization) feel free to email to info(at)workbenchprojects.com.

The Bengaluru Mini Maker Faire will take place on the 15th of October 2015 at the Taj Vivanta, Yeshwantpur.

Guest Post by Suvarchala Narayanan

Getting The Funding Piece Right

Creative inventors with creative ideas need creative capital

“As a first-gen entrepreneur and professional by training, I have become contemptuous of the local investor community—it uses a cookie cutter approach with very limited imagination. They would rather blow their cash on an app (without proof of concept) than on a good service model that has growth potential. We pretend in India to be like the Silicon Valley guys, but we don’t really have the b****s!”

This was the explosive start to a mail I received recently from an obviously frustrated entrepreneur. The irony is apparent. As Govind (not his real name) struggles to raise a few crores to scale up his business, thousands of crores have been pouring into e-commerce and asset-light technology-driven businesses patterned on an Uber or an Airbnb. While it is possible that some of these new models will become big in India, the fact is that many of the individual companies funded will crash as each model is likely to witness only two or three big winners.

Govind is not alone. Other types of new ventures are facing similar problems. A recent article in Mint points out that dozens of innovation-driven tech start-ups are struggling to raise money to take their businesses to the next level.

The Funding Challenge

Over the years, at the aggregate level, there has been a substantial increase in the funds available to Indian businesses from private equity and venture capital. Today, large international funds have an Indian presence. Though there are frequent murmurs about the vagaries of the Indian taxation system, billions of dollars of venture capital/private equity investment have been pouring into India.

But I wonder whether these are the only type of investors we should be seeking. The classical venture capital model is predicated on seven-eight of every 10 investments tanking, one-two having some moderate success, but huge returns on one in 10 investments that make up for the poor returns on the others. Recent reports speak about blurring of lines between private equity (which typically comes in at a later stage) and venture capital as everyone wants to be at the party.

Govind ended his mail with:

“I think investors must look at roping in domain experts (beyond their own borders) so that they develop in-depth understanding of these sectors. I think the challenge in India is that the people facilitating investments are not themselves entrepreneurs (or led by entrepreneurs) in many instances—so they are risk averse (a bean counter mindset) and exhibit a herd mentality (apps are the new sunshine).”

How do we catalyze such investments by domain experts? Here the role of seed capital for new funds comes in. Israel’s famous Yozma model which brought into that country highly accomplished tech investors with substantial operating experience has been around as a role model for a couple of decades. It’s good to see that we have finally realized the value of Yozma.

In its quest for growth and employment, the current government has actively embraced a pro-start-up stance. One of its initiatives is the recently announced India Aspiration Fund (IAF) built on the Yozma concept. IAF is conceptualized as a “fund of funds” and will invest in venture capital firms, not directly in enterprises. I am hoping that the government will ensure that its 2,000 crores is well-distributed across investments in different sectors and business models.

But even the IAF will not be able to meet the needs of all types of firms. I often come across business ideas that have moderate risks with moderate returns that don’t fit the profile a typical venture capitalist is looking for. Unfortunately, these firms lack the assets that could be offered as collateral security. Our already risk-averse banks are now focused on addressing a huge problem of non-performing assets (NPAs), so it’s unlikely that they would be very enthused to fund such businesses anytime soon.

From Creative Confidence to Investment Confidence

Much has been written and debated about the recent criticism by Infosys founder NR Narayana Murthy that India has not been the source of major inventions in the decades since independence. While there has been a tendency to blame our scientists and engineers or the government, I would lay some of the blame on our financial system as well. Creative inventors with creative ideas need creative capital!

Herd behaviour or what organization theorists would call isomorphism is not uncommon as a risk mitigation strategy. But, as a student of strategy, I would back distinctiveness any day. Doing whatever everyone else is doing can’t create a distinctive competitive advantage and that is true for investment firms as well.

In our work on building innovation capabilities, we emphasize the importance of building creative confidence. This is not a term we coined, in fact it comes from the Kelley brothers of the iconic design firm, Ideo. Creative confidence has a special resonance in India where over a couple of hundred years we lost our faith in our own creative abilities. But successful innovation requires not only the creative confidence of the inventor but the confidence of the investor to back new ideas.

What kind of an investor is likely to have that confidence? Probably one who has the experience of doing it himself. As Govind wrote in his mail, an investor with a primarily financial background is unlikely to have the confidence to back a radically new idea.

And, finally, some Bigger Questions

Sometimes, I wonder whether there is a fallacy in basic economic theory. For, Economics tells us that in an efficient market, investments will go into the most productive applications. But, is driving consumerism or bringing more taxis onto India’s already jam-packed roads the best use of money?

In the adoption of technology or new business models, India tends to imitate the West with a lag. But, given that our needs are so different, does that really make sense?

Not so long ago, there was a lot of interest in innovation at the bottom of the pyramid, and so-called frugal innovation. These were seen as critical to solving the myriad social problems that India faces. But now these have been displaced, at least from media glare, by the stratospheric valuations of online food or grocery stores. It would be a mistake to lose sight of the importance of these innovations and we need to find ways of continuing to support and nurture enterprises built around them.

In many cases, these enterprises are social enterprises with positive societal externalities. The National Innovation Council under the previous government had a plan to create an India Inclusive Innovation Fund to support such enterprises. I hope this idea is not lost in the noise and excitement that we are seeing today.

Reblogged from FoundingFuel

India Inc’s Innovators Are Setting The Stage For The Ecosystem

Steve Jobs, the late co-founder of Apple Inc and one of the greatest innovator from the tech world, believed that innovation was the only way to win, and by no means did he just see innovation in making things more complex. An advocate of simplicity, he also reiterated, “Simple can be harder than complex; you have to work hard to get your thinking clean to make it simple.” That’s why we, at GHV, believe “Innovation is not just doing something new. Sometimes it means pushing the existing more powerfully and elegantly.”

Innovation or doing things differently is something that has set the momentum of the “startup scene” in India. It is because of thinking differently, the “old wine in a new bottle” syndrome that has revamped and fuelled the success of top startups in the country today. Innovation is all about bringing something new and exciting to the customer. Given the cutthroat competition in the market today, innovative products and ideas are the key to differentiating yourself from others in the race.

Successful businesses often anticipate future trends and develop an idea, product or service that allows them to meet this future demand rapidly and effectively. It is not just about fulfilling the pain points of the consumers, but also being able to preempt the future needs of the consumers before they even feel them. In essence, predicting and fulfilling a future void and working on its solution in the present, staying ahead of the curve. Innovation can help you stay ahead of your competition as markets, technologies or trends shift, thereby giving you a definite edge.

This year, India has slipped 10 places in the Global Innovation Index to a disappointing 76th position. Imagine what we can accomplish as a nation if more people were to focus on innovation. We can easily transition to become a nation of job creators than job seekers.

Renowned global brands like 3M, GE, Lego, Nestlé, Pepsi and Starbucks are all from different industries, but have been constantly innovating their products. These companies have successfully created and supported an internal innovation capability that drives new products into the marketplace year after year with remarkable success. In fact, the very reason behind their success is that they made innovation a critical capability within their organisations. These companies recognised innovation as a key driver for success by enhancing the value that the business was delivering to customers.

With Indians like Nikesh Arora and Sundar Pichai, leading the heavy weight ‘innovating’ companies like SoftBank and Google, we are looking at a complete change in the way India and Indians are perceived globally; whether it is Indra Nooyi, Satya Nadella, Ajay Banga or Shantanu Narayen.

Innovation helps large companies survive challenges. According to Clayton Christensen, disruptive innovation is the key to future success in business. For companies to become market leaders and retain that position, they have no choice but to innovate and disrupt an existing technology or market by recognising opportunities.

For example, Patym had revolutionised mobile commerce in India. Earlier, people were wary of storing their debit or credit card information online. The company created a secure digital wallet where a user can put in a small amount without threat of online and credit card fraud. The payment solutions provider uses an RBI approved semi-closed wallet that is being used everywhere, right from Domino’s Pizza to Zivame to Uber. The company now has over 80 Mn mobile wallets and more than 15 million orders per month.

Innovation is that one thing that all successful businesses worldwide have in common. Innovation is a part of their culture… it’s in their DNA.

To foster a spirit of innovation in today’s youth, iSPIRT is hosting InnoFest, a daylong event focused on kick starting the next wave of innovation in the country. The event to be held at Indian Institute of Science, Bangalore on 22ndAugust 2015, will offer young innovators a platform to present their ideas and interact with like-minded people from across the country. The daylong fest is meant to celebrate innovation and bring forward ideas that can become game changers for the nation.

Guest Post by Vikram Upadhyaya