Category: ProductNation

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India in 2030’s – Impact of India Stack

The year is 2030. India is a developed, happy democracy. With a population of over 1.5 billion, it has become a role model for other nations, both developed and developing, in putting public digital infrastructure to enable paperless, presence-less, frictionless transactions.

The new generation does not know what a government office looks like and has not encountered government bureaucracy. Instead, what they interact with is an omnipresent, government digital infrastructure that delivers services instantly — from anywhere with no paperwork, only with their consent and their privacy protected.

We describe the typical activities of life as it progresses from the view of two generations.

The story

Radha and Rahim live in a remote village in India and are expecting their first child. The government provides financial assistance to the pregnant mother, Radha, for a healthy diet. The financial assistance is transferred to the Aadhaar-linked bank a/c using the Unified Payment Interface (UPI) infrastructure. Radha can use the money and the UPI system to pay for nutrition in a cashless manner at any shop for supplies. Her pregnancy monitoring medical reports are delivered to her Digital Locker electronically. With her active consent. she can share these reports electronically with other doctors or agencies to assist her in the decision-making process during the pregnancy period. Further, Radha can, again with her active consent, share her anonymised pregnancy reports for data analytics, which will in turn promote the understanding of major medical trends in the neighbourhood, region, state and country.

Soon, Radha and Rahim are now blessed with a beautiful girl. They name her Rani.

When Rani is just about a month old, her parents get her an Aadhaar identity. Since the day Rani started understanding concepts like her name, her identity, etc, she also knew she has a unique identity number, called the Aadhaar number. Even before she could walk, Rani had a bank account. So as she grew up, Rani would provide her Aadhaar number as part of her identity at various interaction points. Be it getting a scholarship in school, her education progress reports, her medical reports, her insurance policies, her bank a/c details, and so on, all these documents are conveniently available in here Aadhaar-linked Digital Locker. Rani can conveniently access and share these documents with her active consent.

In Rani’s mind, there isn’t much difference between a bank a/c and an email account. While one holds and transacts with money, the other holds and transacts with emails. For Rani, her Digital Locker account is the only locker she understands, and this is where she can find and keep her documents safe. She never has to worry about maintaining physical documents or their photocopies as the Digital Locker is a hassle-free system.

Rani, Radha and Rahim visit the local medical centre periodically for routine check-ups and immunization. Their medical progress records get digitally stored in their respective Digital Locker accounts. If during the medical interaction, a new doctor wishes to refer to their historical medical record, the same is available to the doctor after s/he gets active consent from the patient.

Back in the days…

Rani once went to the ‘bank branch’ to open a new a/c. This field trip was part of a ‘museum tour’ for her class to understand how banks used to work in the past. When she stepped inside the branch, she was shocked to see old photographs showing how people would carry papers and files of their identity papers, stand in long queues at the counter and submit photocopies to have a bank account opened, in the past.

In this museum bank branch, she witnessed old cheque leaflets, passbooks and various forms which were used for withdrawing and depositing money in the bank being preserved in glass displays. This was all very strange for Rani because the only physical currency that she had ever seen was in a preserved format at her home. The visit sparked Rani’s curiosity. When she got home that evening, she asked her parents about how her generation’s life differed from theirs.

Rani’s question took Radha and Rahim on a nostalgia trip to the times before 2010, when they struggled to access basic services. They narrated the ordeal they faced, starting from establishing their identity at various government departments for any service delivery, the umpteen number of photocopies of their psuedo-identity papers such as ration card, voter id, etc, that they would need to submit. In addition, since Radha and Rahim were young and would move depending on where they found work, it would be hellish to establish their identity in different cities and towns in the same country. This was so because one state would not recognise an identity document issued by another state.

Life in 2030

Soon, Rani completes her education and is skilled enough to enter the workforce. She shares her credentials with independent agencies, which anonymize her identity and add the data provided by her to the national skill registry. Such a skill registry can assist the government and other agencies to plan for skill development of the nation. Rani shares her credentials from the Digital Locker with her active consent with a prospective employer. This appears seamless now but she recalls her parents’ struggle that in the pre-2010 times, there used to be an entire industry whose job it was to verify credentials submitted by candidates for prospective employers. This so-called industry was so big that scrupulous elements would run scams of procuring fake certificates to enable unqualified job seekers get jobs.

After working for a few years, Rani decides to become an entrepreneur. As an entrepreneur, Rani interacts with various customers and vendors. She uses the UPI framework for seamlessly receiving and making payments across the country instantaneously.

Rahim often jokes about the ease of payments in the current times, describing how difficult it was to send money to his parents in their village. Today, anyone can send money to someone else by simply knowing the person’s mobile or Aadhaar number at near-zero cost and almost instantaneously. But when he was young, he would be charged 5% of the amount to transfer money, and the transfer itself would take upto a week before the money reached his parents.

Rani gets married, she receives her marriage certificate from the government in her Aadhaar-linked Digital Locker electronically. Rani was able to share her marriage certificate electronically with various authorities and agencies to change her name on documents such as her driving license, bank account, passport, etc. This ensured a seamless and hassle-free name change.

With marriage came the onus of investing in life and non-life insurance policies. Being a digital native, Rani acquired these policies using the E-KYC process with UPI framework for payments. These policies were then issued by the insurance companies and directly resided in Rani’s Digital Locker. She can access these policies from any location and at any time. The best part is that she isn’t afraid of losing the paperwork — unlike her mother Radha, who now has a special affinity for the Digital Locker.

Radha had a particularly trying phase in 2005 when a cloud burst in Bombay led to a massive flood in the metropolis. Radha’s ground floor house went under water and she lost all her documents — her identity cards, education certificates, medical reports, insurance policies. She had to run from pillar to post at several agencies and government offices for an entire year after the floods just to obtain a copy of all the washed out documents.

Every time Rani recalls her mother’s tale of ordeal, she feels blessed to be born in the current time.

The safety of the digital locker makes her sleep peacefully without worrying about paper documents, and being able to share these conveniently with consent. The removal of the big payment processing hurdle has ensured that Rani focuses her energy on improving and expanding her business to serve the larger society. Macro data analytic trends helps her plan for what the society needs and be assured that her services will be required in the future.

Conclusion

India Stack is the term given to a bunch of public digital utilities that have been created by the government since 2010. These include:

1) Aadhaar – a biometric-based, unique identity platform, with a facility to authenticate online

2) E-KYC – A service which empowers an Aadhaar-holder to share his/her Know-Your-Customer information electronically with active biometric consent

3) E-Sign – An online electronic signature service, facilitated via E-KYC to digitally sign a document

4) Digital Locker – A mechanism to issue government documents to Aadhaar-holders in electronic format for convenience of storing and sharing when required

5) Unified Payment Interface (UPI) – A payments architecture that enables universal electronic payments that are cashless and promote financial inclusion

In the pre-IndiaStack days, there was much friction in every transaction of routine business. Concepts like data analytics on anonymized records for prediction could not be envisaged. The extensive adoption of IndiaStack makes all these benefits a reality.

Shrikant Karwa

 

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India can’t afford the comforts technology provides. Here’s why

There’s a belief globally that we have a burgeoning middle class in India — and we’re following in the footsteps of China’s massive change from immense poverty to a stable middle class.

But that’s really not the case. There was a very interesting article onScrollsome time back explaining this.

According to the article, “China…saw its middle-income proportion go up from 3% in 2001 to 18% in 2011.” This growth in disposable income, coupled with technology, fueled growth in consumption, most probably with some visibility of profitability for businesses in the country.

In India this hasn’t happened.

“All those stories about India’s burgeoning middle-class have little to do with reality: India is, as it has always been, woefully poor.”

Instead, it seems that the major shift that’s happened is the really really poor are now just poor. And no where close to being determined middle class by any definition. The article does a good job of showing how middle class globally is defined.

Here are a couple of charts showing this move.

We don’t know how fast this low income bracket will start moving into middle income, but my guess is quite slowly. There is a lack of education, lack of opportunities, and lack of incentive for anyone in a position of power to do anything drastic about it. And even if we were motivated, these things take much more time in multi-party democracies like India vs countries like China.

If this is the reality, it’s going to be tougher and tougher for transactional business dealing with consumers (like ecommerce) that make money on delivery/logistics to grow in spite of this long term. Here’s why.

Today, the average take rate (the percentage of each transaction companies make to run their businesses) isn’t sufficient to cover costs related to the transaction. Yet, the take rate as a percentage of the cost of any one item is so high that it’s difficult to imagine most companies being able to increase it. On average companies charge a 10/15% take rate. How realistic is it that any consumer will be willing to pay 25/30/40% extra on top of the cost of an item? Probably not that realistic.

More woes

Photo credit: Lord Enfield

It gets worse. Logistics costs are going up. Believe it or not, ecommerce players have been lucky with overall delivery costs so far. They have spent on everything except their front line. And that’s showing. We’ve seen the repercussions of this at Flipkart already, and things are going to change really fast — starting with delivery staff salaries. So, even increasing take rates (as unrealistic as that sounds) will only help maintain present losses.

Seems like an impossible problem to crack, right? Well, it gets worse because scale doesn’t solve the problem. All these businesses need a substantial offline operational capability. As a result, they get little benefit from growing because they keep needing to add people, delivery centers and other logistics related costs.

And now, to top it off, they’ve been marketing to a middle class that is significantly smaller than was originally imagined. Most people can’t afford as much as online companies need them to — meaning the size of every transaction is only going to get smaller. And since take rates mostly work as a percentage, they’re going to reduce. In fact, it’s very possible that the take rate percentage itself will be under pressure to reduce. And all the while, customer expectations on quality service and delivery will remain the same.

So how do you make up the income? Ad revenue? How realistic is that ad spend in the country will go up any more than marginally anytime soon? How realistic is it that any ancillary revenue streams will make up enough of the short fall? Seems far fetched to me.

It’s actually really unfortunate. There are so many businesses that we truly need in India, but the majority of us can’t afford for them to be as efficient as they are today. How long will this gap in affordability and convenience be funded by private equity? My guess is — not long enough. (But as a consumers, I’m going to enjoy it while it lasts.)

From what I can tell, as bad as the margins are for these businesses, this is the best they will ever be. And that’s scary.

Guest Post by Sid Talwar, Partner at LightBox Ventures

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How IndiaStack can bridge country’s digital divide

IndiaStack can enable the government, the citizens and entrepreneurs to interact with each other through an open digital platform.

At a time when financial technology is changing the face of Indian banking, the government is looking to bridge the digital divide.

The biggest hurdle here is paper-based authentication and approvals. To bridge this gap iSpirt is working with various government agencies to develop IndiaStack.

What is IndiaStack?

IndiaStack is a paperless and cashless service delivery system being conceived by a digital think tank iSpirt. It can enable the government, the citizens and entrepreneurs to interact with each other through an open digital platform. It is the largest application programming interface that is being developed in order to enable 1.2 billion Indians to get access to goods and services digitally.

When was it started?

It was conceived by the government of India in 2012 when they realised, in order to help services reach the last mile of the Indian population, it needed private technology solutions to be built on the Aadhaar database. The project is being pedalled forward by Nandan Nilekani the ex-chief of Unique Identification Database Authority of India, who describes it as the “Whatsapp moment for Indian banking”.

Why is it essential?

The government has been striving for a less cash economy to prevent pilferages and last mile connectivity of financial services. While the Aadhaar database allows users to complete all KYC requirements, there is still a gap in getting approvals because of the need for a signature on paper.

IndiaStack will be able to bridge that gap through its digital lockers which will allow for digital signatures and seamless API (Application programming interface) integration for authentication through eKYC.

How will it be designed?

IndiaStack is conceived as a pyramidal structure based on the Aadhaar database as the base and unified payments interface (UPI) that is being developed by NPCI (National Payments Corporation of India) as the top. The two middle stacks comprise digital signatures and eKYC.

Nilekani has explained that with the help of digital signatures customers will not need to actually sign a paper document, instead it can digitally sign it by using a smartphone. eKYC will also enable the identity of the customer to be determined digitally as well.

How will it be beneficial?

The biggest benefits could be completely digital payments through the UPI infrastructure for a less cash economy. Also, loan approval through eKYC and digital signatures could be done faster in a paperless fashion. Both these steps can bring people without access to digital payments to come within the digital fold.

Republished from ETTech
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A 3-Stage Power Booster for Your SaaS Rocket

When a capsule is launched into space, the initial rocket gets it off the ground. However, that rocket can only get it so high. Eventually it runs out of fuel and the structure needs to drop off. At that time, a second rocket booster ignites and continues to propel the capsule into space.

In the world of startups, getting your company into orbit usually takes a few power boosters to get there. Your initial boost may get you off the ground, but it’s not enough to get into space. Even if you are at a later stage, if you don’t have the right final rocket, you can still crash to the ground before you reach orbit.

iSPIRT offers several activities to help SaaS founders and companies right when they need it. Each of these sessions acts like a multiple-stage power booster to give your company the lift exactly when you need it.

Most SaaS companies need these three rocket boosters to achieve orbit:

  • Stage 1: Product Tear Down
  • Stage 2: Getting to $100K MRR (i.e. approx $1M ARR )
  • Stage 3: Hyper Growth – Firing all cylinders

In the product tear down session, founders get critical feedback. This is not for the weak hearted.😜

Stage 1: Product Tear Down

In this session, we help validate

  1. The core problem you are addressing
  2. Your differentiated solution to that problem
  3. How customers might discover you
  4. The consistency of your website and overall offering (audience, problem, position, price, credibility, etc.)
  5. Freemium vs free trial, simplicity to signup, signup friction
  6. The ‘shortest path to WOW’ that is appropriate for your product

The product tear down session is run by Shekhar Kirani, Venture Partner from Accel Partners, Suresh Sambandam, CEO of KiSSFLOW, and Bharath Balasubramanian, UX Architect from FreshDesk.

Here’s a bit about each of these sessions. While the principles will apply to any business, it applies much more aptly to SaaS software companies

Stage 2: Getting to $100K MRR

Your Stage 1 rocket should be enough to get you off the ground and achieve a good height with your initial set of customers. Now you have a working hypothesis that puts you in pursuit of the right product-market fit.

Your Stage 2 session kicks in when you’ve found the product-market fit to systematically grow the business. For companies at this stage, we moderate Playbook Roundtable sessions. This slide deck should give you a broad idea of what we discuss with the playbook participants.

Stage 3: Hyper Growth – Firing All Cylinders

Companies that have crossed $1M ARR are selected to attend this session. A typical SaaS company doesn’t have enough resources to pursue a lot of initiatives. Often there is a big disconnect between what founders want to pursue in S&M viz-a-viz what they should focus on to get to the first $1M as quick as possible. Therefore, Stage 2 centers around a focused set of must-do initiatives, rather than spray-and-pray on many initiatives. You might notice that many topics in Sales & Marketing are missing or discouraged in the slide deck. That is by design.

Stage 3 is extremely important because even though you’ve cleared thousands of miles, you still aren’t in orbit yet and need the final power booster to get there. For Stage 3, we bring you none other than the SaaS Superstar, Girish, Founder & CEO of FreshDesk, to share how to take your $1M SaaS company into a $5m enterprise.

If your SaaS startup is sitting on the ground or about to make a nose dive, don’t miss out in getting these booster shots to launch yourself into a grand orbit.

Oh, we also do a big gala event called SaaSx once in 6 months in Chennai, where we bring together all the SaaS founders in one place. The last three editions (SaaSx1, SaaSx2, and SaaSx3) have been blockbuster hits. And if you are in Bangalore, you can join the big crowd attending the SaaSx sessions on ‘SaaSy Bus’.

If you are a member of a SaaS founding team, you should definitely join the SaaS Insider Group and be up to date with SaaS news in the country and across the globe. Last but not the least, Avinash Raghava, Fellow at iSPIRT is the common thread among all these orchestrated activities for SaaS from iSPIRT. He is passionate about helping SaaS founders and none of this would be possible without him.

P.S. iSPIRT harnessed the collective knowledge of SaaS founders into a structured document called the Jump Start Guide for Desk Marketing and Selling. Check this out without fail.

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The power of a question

A few days ago, while I was discussing a rather critical business solution with one of my colleagues, I noticed that there was a strange circularity to our conversation. I kept trying to convince him of the importance of deploying such a solution,but I seemed to fail at eliciting a sense of urgency or enthusiasm from him, even though he did not disagree with me.

It might have been slight vexation on my part when I decided to break the impasse with the question, “So, what’s stopping us from doing this?”

It was then that I discovered that he had concerns about how to go about the task while I was focusing the conversation on why the job mattered.

The communication fog was lifted. We had identified the roadblock.

We often assume that the best way to communicate anything — an idea, a challenge, a solution — is to perfect the art of explaining it to the listener to provide clarity.

However, we tend to overlook the possibility that the questions we are trying to answer are sometimes not the ones that exist in the others’ minds. This could render our efforts at providing clarity, completely irrelevant.

What might be another effective way to communicate, then?

Perhaps, asking questions?

Knowing the answers will help you in school. Knowing how to question will get you through life– Journalist and speaker Warren Berger — ‘A more beautiful Question.’

It turns out that I am not alone in my quest for questions.

A few months ago, the practice of brainstorming gained a fraught reputation, when technology pioneer and author of the book, “How To Fly A Horse”, Kevin Ashton kicked up a storm with his blog post provocatively titled “Why You Shouldn’t Bother Having Brainstorming Meetings”.

Brainstorming, of course, is a highly popular practice; as he noted, it’s the “go-to approach” for all types of organizations. A typical brainstorming session gathers groups of people to focus on collecting original, creative ideas on a set topic. But this apparently benign approach, Ashton goes on to argue, actually gives rise to ideas that are anything but original. That’s because the focus is on churning out answers.

But what if brainstorms were designed to generate questions, not just ideas for answers? It’s an approach that’s garnering support among many advocates around the world.

The latest champion of this approach is Matthew E. May, author of the book, “Winning the Brain Game”. His book describes a question-generation process called “frame-storming,” which uses questions to help in framing the challenge at hand. Several people have found it to be more efficient than traditional brainstorming in sparking fresh thinking in some situations.

What if we use questions as a method to drive home the thought behind an idea, to help the listener generate answers, instead of to generate questions?

Guiding people into answers through relevant questions surrounding a topic may seem counter-intuitive. It is more natural to try and get people to see the answers when we have them worked out. However, this question-based approach can lead to greater clarity than the usual method of having them ask questions for improved clarity.

It also helps to remember that a question triggers our brains to start serving up answers, almost on autopilot. The answers almost always reinforce the assumptions behind the questions.

Naturally, at this point how the question is formulated assumes paramount significance. A question could spark random divergence from the actual problem by introducing more assumptions, or could become a harbinger for radical solutions or ideas by shattering existing assumptions. Either way, the design of a question definitely begs a lot of attention.

For ages, questions have been at the heart of innovations in science, philosophy, medicine — why not extend the power of the question as a tool for sharpening and deepening communication?

About the Author

Shivku is usually found cracking PJs in the office and disrupting people from doing their job. A self-proclaimed foodie, he is the best person to get the local food scene advice from, irrespective of where you aretravelling to. This blog originally appeared on Medium.

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An Alternate View Of The Future

Just over 12 years ago, I sat on the sofa outside my office in Infosys, and explained to Tom Friedman about how the playing field was getting levelled through technology. This inspired him to write ‘The World is Flat,’ an international bestseller that sold millions of copies and captured the zeitgeist of the era.

It was an era where technology and political change brought everyone closer. The Dissolution of the Soviet Union in Dec, 1995 was presaged by the fall of the Berlin Wall on the 9th of Nov, 1989. And, the Berlin Wall incident was set in motion by the invasion of the communist Grenada in Oct, 1983. Grenada’s regime change marked the beginning of the end of the Soviet empire. The design of the containerized ‘box’ laid the foundation for global trade in goods and the massive investment in telecommunication capacity and undersea cables as part of the ’dotcom’ boom and bust, laid the foundation for global trade in services.

In this context, last Friday’s Brexit is a momentous development. It marks the turning point in the Wests’ 35 years of globalization. It is truly a ‘Grenada’ moment, but in the opposite direction.

Over the next few years, the West will slowly turn back on immigration, outsourcing and economic integration. This will have major consequences for everybody in the world. India will have to focus on its own domestic market and not on exports.  Automation and Chinese overcapacity will hit manufacturing, and growth will come in services. Employment and entrepreneurship will happen through platforms that aggregate – farmers, retailers, truckers and vendors. This will result in the formalization of the economy in a big way, as finally the benefit of being in the system thanks to affordable and reliable credit will be higher than staying out. India has the potential of many years of high growth as millions of Indians join the organized society. India Stack will be a key enabler for this to happen!

We have been thinking a lot about this scenario at iSPIRT. This presentation (pasted below) captures our view of such a future. Hope you enjoy it!

You can also catch my talk on the future of India in the age of technological disruption at Think Next 2016 in Bangalore (video pasted below the presentation here).

 

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Vijay Mallya’s Domino Effect: The Real-World Consequences of Late Payments

vijay mallya

(Originally posted here)

Vijay Mallya, the Chairman of United Breweries, exited the country on March 2nd 2016 – defaulting on loans worth Rs.9000 crores to 17 banks. The media storm which subsequently rained down upon the Mallya name would befit the crime, if it wasn’t painting an incomplete picture.

 

Given the frenzy and the weight of the government apparatchiks brought down to bear on the Mallya brand, it wouldn’t be remiss for the layperson to assume that Vijay Mallya is the heftiest loan defaulter of all time. At roughly $1.5 billion worth of money owed, his figures would make Donald Trump proud.

 

Yet, as verified by papers released by the RBI, Kingfisher Airlines was Top 5 at best. Indeed, if Newslaundry’s independent verification is to be trusted, Mallya was at best Top 10 on the list of India’s largest defaulters.

 

So, Why Should I Care?

We can practically hear you screaming this question. You’re sick of hearing about Mallya, and how one big corporateur didn’t pay an ungodly sum of money to another bunch of fat banks.

 

But, as Hummingbill has been trying to educate you, the damage done by late payments never ends there.

 

Take the example of one Manmohan Singh, a crop farmer in Uttar Pradesh. In December 2015, when he arrived at the Nand branch of the Bank of Baroda to operate his two accounts (total balance: Rs.5200) and pay his monthly crop loan installment, his accounts had been frozen as per the directions of the Mumbai Head Office – because he was listed as a “guarantor” to a loan to one Vijay Mallya.

 

This farmer, whose wife was undergoing treatment for a brain tumor, had to sell his crops at a fraction of their value for cash, while the bank sorted out this “technical error”. He eventually had to pay 12% interest on late payment to the crop loan, also taking on board the mark against his credit history for no fault of his own.

 

Sounds like a freak isolated incident, doesn’t it? Well, it was freaky, but by no means was it the only one.

 

Enter Subhash R Gupta and Subhash Ramdulare Gupta, both of Mumbai – one a security guard living in a Slum Redevelopment Authority building in Vile Parle, the other a vegetable hawker near Khar station. Both these men were identified as “guarantors” to Vijay Mallya, and had their meager assets and FDs frozen until further notice by the Bank of Baroda.

 

Now, how could this happen? As it turns out, these three men were mis-identified as Manmohan Singh Kapur and Subhash R. Gupte, both Directors on the board of the defunct Kingfisher Airlines. And, as FirstPost’s investigation concluded, this wasn’t a simple “technical error affecting a single man” as the nation’s headlines had been screaming, but an abject lack of even the most basic fact checks.

 

But This Isn’t A Late Payment Fallout

And that’s where we disagree. It is by discounting financial, administrative and other real-world impacts of late payments such as these that we, as entrepreneurs, have escalated the late payment culture in India to its current catastrophic levels.

 

I mean, 98% of businesses in India trade on credit, and 97% of them were paid late by clients in 2015.

 

A report by IFC estimated that the debt gap in Indian businesses is roughly Rs.2.93 trillion. With 1 in every 2 B2B invoices paid late in India, do you really believe that there haven’t been a myriad of negative impacts on the economy and life of the country?

 

The case of these three men just happened to be the most visible fallout in the media from the Vijay Mallya case. Yet, the impact of financial mismanagement which led to KFA’s downfall hardly stops with them.

 

As the CEO of a mid-sized business, which frequently provides services to the aviation and hospitality industry, confided in us on the condition of anonymity – the folding of Kingfisher Airlines took with it several tens of lakhs worth of overdue Accounts Receivables.

 

KFA being one of his largest clients, with a staggering payment accrual for services already rendered, it took his business a long time to recover and return to a partially stable footing.

 

As Business Standard also notes, the end of Kingfisher Airlines left a string of “creditors, suppliers and employees with unpaid dues.”

 

Over 50% of Indian B2B SMBs state that they are paid late by clients because of liquidity issues, and over 50% of unrecoverable B2B receivables occur because of clients going bankrupt. So how many bankrupt and unpaid companies do you think an entity as large as Kingfisher Airlines left in its wake, and among the web of its own supply chain?

 

But one of the most heart-wrenching effects of Mallya’s personal little chain reaction on the Indian business industry was depicted in this letterpublished in the Economic Times by former KFA employees. It portrayed the pain of his former KFA workforce and suppliers watching Mallya party on yachts and receive business accolades from Indian and foreign institutions alike, all the while maintaining that he didn’t have money to pay them.

 

And now, they have to silently sit and watch as this man takes on the role of a maligned businessman, thanks to the gross inefficiencies of the system which attempted to bring him to heel.

 

But Nothing Can Be Done Against Big Clients Like Vijay Mallya

Exactly. And therein lies the fundamental imbalance in the Indian business environment. Despite our constant efforts to educate visitors and readers of best payment practices to protect your business from late payments, a large client who willfully defaults suffers no consequences.

 

As Doing Business found out, pushing for contractually owed payments would cost a supplier 3 years in court and over 40% of the claim value, which is ridiculously ineffective as a protection measure.

 

Moreover, the unspoken rules of business in the supply chain also prevents unpaid suppliers from publicly ratting out their non-paying clients, or else they fear losing future business with other prospective companies who like to play fast and loose with payment terms.

 

Which is why we at Hummingbill have launched a Change.org petition to address this state of affairs. Simply put, we need every suffering business on our side. Join the fight.

 

In the meanwhile, if your organization suffers from overdue accounts receivables, try Hummingbill. All core features free, and experience our premium features during the 14 day free trial.

change.org late payment petition hummingbill campaign accounts receivables overdue non payment clients court case finance minister prime minister india business b2b smb
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1 Critical Analytics Mistake

Why some well funded/big companies miss business targets?

Companies tend to focus 80% of their analytics effort on analysing “Historic Indicators” versus identifying “Leading Indicators” to grow business.

This is biggest mistake I see wrt how some companies leverage Analytics.

3 Examples of how Analytics Numbers should be used:

  1. Spot Contrarian Points: Usually, consumer businesses experience low sales in January after Christmas in December. But I experienced a scenario where January revenue was more than that in December. February sales were even better than January. This defied all historic trends. Analytics diligence gave us some surprising leading indicators that helped grow business.
  2. Customer Buying Trend: To help increase sales, instead of focusing on just why last quarter revenue growth is below expectations, identify leading trends on what customers are likely to buy and how industry cyclicals may impact buying behaviour in future quarters.
  3. Product Innovation: Extrapolate and derive key leading indicators that dictate how your product or service should evolve for sustenance and growth. Kodak missed the digital indicator, Blackberry misread smartphone/Android leading signs and Google missed the Social indicator.

Bottomline: 80% focus on leading analytical indicators and 20% on historic ones… instead of the other way round will substantially increase your chances of meeting business targets.

Guest blog post by Palash Jain, Investor at inFeedo, 

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Why We Started A Change.org Petition Fighting India’s Late Payment Culture

 

(Our petition against India’s late payment culture can be found here)

The Late Payment Problem

We’re going to keep this short. Now that 97% of Indian SMBs were reportedly paid late in 2015, the late payment culture in our business environment has gotten out of hand.

Today, India officially carries the longest average payment delays in the Asia Pacific for B2B SMB invoices, 51% of which are always paid late.

The system currently in place is flawed, and heavily skewed in favor of the largest buyers on the market. The judicial system is over-burdened. It consequently delivers justice far too late to save businesses whose money is trapped in clients’ accounts.

What’s more is that the entire idea of justice by law in business is a debunked protection. Smaller businesses almost never take non-paying clients to court because they fear losing out on future contracts. They would rather suffer through the impact of being paid 90 to 120 days late, while their salaries go unpaid or they miss out on larger opportunities to thrive.

This isn’t guesswork either. Not only has this been verified to us in our hundreds of interactions with Indian CFOs and CEOs, but a commission established to study the impact of the EU directive against late payment found that 60% of European small businesses never even consider a legal battle as an option because they don’t want to spoil working relationships.

And why would hard-working Indian businesses, which prefer compromising to build strong working relationships with clients, be any different?

Our Motivation

As supporters of the business reforms espoused by our esteemed Prime Minister, Shri Narendra Modi, we believe that unorthodox action begets change. And yet, the late payment protections for businesses in India have stagnated in the same state for the last twenty years.

The last committee set up in 2014-15 to study further updates required on the MSMED Act – which provides these legal protections to SMBs – did not even consider the necessity for better options. This was despite the comprehensive database of studies measuring the horrendous effects of late payments on the Indian business environment.

Instead, they directly skipped over the issue of late payment protections, and jumped to the question of “How can we provide more access to loans for these companies?” And all we ask is, why? While access to credit is vital for businesses in any growth economy, late payment is the root of significant troubles in the world. It causes bankruptcy and unemployment, and increases barriers to survival in the business world. It also has a significant impact on inflation since businesses up and down the supply chain mark up prices to survive late payments from their clients.

As a single factor, trade credit is indispensable because it allows companies to keep running operations even during temporary working capital shortfalls. But when it extends to the point where clients refuse to pay their suppliers intentionally, as was the case with 38% of Indian SMBs paid late last year, it needs to be addressed.

A late payment culture which forces sellers and suppliers to simply accept it as an unaddressable pain is the equivalent of a cancerous tumor. It creates chaos, and no one can entirely predict which sections of the body it will hit next if left unchecked.

And this tumor isn’t very difficult to target either. Rather that It’s grown this large from a lack of trying than a lack of successful solutions. While we sit and attempt to convince you of the horrific effects of this problem, the UK government has now passed legislation mandating all large companies to release the details of their payment practices twice a year.

This means that SMBs and startups dealing with larger companies will now be able to check beforehand what the average payment term for their prospective client actually is even before signing them on.

Singlehandedly, this increased visibility has become the best prospective protection against large businesses which exploit their financial influence on their supply chain. Now, with the reputation of their leadership on the line, larger companies have lesser incentive to hoard cash while not paying suppliers.

Even though this may not be immediately possible in India’s current business and political environment, our motivation is to bring about similar unorthodox solutions to protect the average Indian business.

What We Want

What we want is simple – for you to sign the petition, and support us by sharing it among your professional and personal circles. This is no longer a problem which affects business alone, but is also a big contributor to why life in India is getting significantly more expensive year on year.

Next, we want the government to approve another sitting committee which will accept input and feedback from the private sector for meaningful practical solutions rather than laws which look good on paper.

Instead of adding more courts alone, which will be overwhelmed just as soon by India’s burgeoning case burdens, we are pushing for the establishment of a first line of defense. We want for policy to allow for out-of-court protections which can be enforced in straightforward non-payment cases, thus clearing the line in courts for more complicated business disputes.

To this end, as some of the most prolific activists pushing for more awareness of the phenomenon of late payment in India, Hummingbill intends to release a policy white-paper for the Indian government as well in the coming month.

Keep an eye on this space for more updates on this exciting journey. Now that we can depend on your support, click here to read and sign the petition.

But, before you leave, what policy recommendations would you put forth from experience, which could help fight the late payment culture in India? Leave your answers in the comments section below.

change.org

 

 

 

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Building Ecosystems, Not Just Products

When you analyze successful consumer and small business products, they succeed as a part of eco-systems and not just stand-alone products.

Consumers and small businesses don’t buy products, the engage in an ecosystem. Facebook is an ecosystem. It is a network of users, groups, businesses and advertisers. Email is an ecosystem, smartphones are an ecosystem, even computers are an ecosystem.

This is a very important question for people who are building technology products. What ecosystem do you belong to?

An ecosystem is a closed group of users or apps with a large number of connections. Once you identify your ecosystem, it is easy to find if your app has a demand. It is also easy to promote your app in an ecosystem, and crossing the chasm from early adopters to mature users is much easier.

Photo: Abhishek Singh

But this only works if you are not looking to be a dominant player in an ecosystem. For example, if you want to make a Facebook app and not a new Facebook.

If you are working on a product that will be the dominating part of an ecosystem, then you have to build your ecosystem. For example if you are planning to disrupt the ecosystem of a popular accounting application like Tally, you have to build a new ecosystem that has all the elements of the Tally ecosystem.

This is worth saying again, you have to build an ecosystem and not just a product.

It is easy to see why Tally is so popular. Accountants know it already. There are training institutes all over the country that teach Tally. There is a ready pool of people you can hire who already know Tally. It has a wide number of “partners” that can help you setup and configure Tally and there are a wide number of plugins available for Tally.

So if a new business has to select an accounting system in India, it is most likely Tally. For the United States, its probably Quickbooks and so on.

So how do you build your own ecosystem?

First, its important to identify the problem you are trying to solve. An ecosystem has at least an order-of-magnitude higher scope than just a product. Second, its extremely hard, time-consuming and resource intensive.

An ecosystem has so many parts that it is crazy to understand just the scope of it.

  1. The Product itself: With the features, user interface, technology stack etc.
  2. Ways to use the product: installers, cloud, virtual machines, docker, vagrant.
  3. Users: Potential users, trial users, paid users, free users, young users, old users, business owners, managers, system administrators.
  4. Contributors: Translators, enthusiasts, evangelists, helpers.
  5. Developers: Core team, bug reporters, third party developers, customization specialists etc.
  6. Service Providers: Consultants, developers, trainers, testers.
  7. Training resources: Videos, manuals, forum, articles.
  8. Developer Tools: Collaboration, continuous integration, platforms, libraries, documentation, videos etc.
  9. Promotion Tools: Website, blogs, case studies, social media accounts, advertising, PR.
  10. New user on-boarding: Domain specific features, defaults, setup.
  11. Localization: Translations, accounting, statutory rules, service regulation.
  12. Roadmap: Feature requests, technology shifts, strategy.
  13. Maintenance tools: Monitoring, releases, upgrades, deployment.
  14. Communication: Support, Email, Forum, Chat.
  15. Events: Demos, meet-ups, conferences, talks.

When you start thinking about all these factors, it is almost impossible to think and come up with a plan. You have chunk each factor one at a time and try and make some progress. This may seem hard, but there is no other way of doing it.

Core Values

I think to build an ecosystem, you must have a deep motivation on why your ecosystem is better than the existing one and why various stakeholders will switch from their ecosystem to yours.

Merely a better product will not do. Dvorak is a better keyboard layout than QWERTY, but the costs of unlearning QWERTY to Dvorak are very high, hence users and manufacturers are all locked in to the QWERTY ecosystem. The product and or ecosystem has to offer a lot more for users to switch and they must be complete.

Dvorak Keyboard Layout (photo: TypeMatrix)

Products are hard enough. If you are clear on your core values and stick to them, and have loads of patience, only then you should attempt to build ecosystems. Otherwise, its better to work within another ecosystem.

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Who said that the customer is a king?

Lesson one in succeeding at customer management: don’t treat them all alike.

Whosoever said that the customer is a king, didn’t tell us which customer! And until you know which customer deserves your very best, you’re not likely to have a very effective customer management strategy. In this post, I want to share a framework which will allow you to understand how to holistically look at your customers and then decide where to start with managing your customers better.

But why is this even important? Well, it is. The competitive pressure that most of the organizations face today has compelled them to find ways to identify customers who deserve to be king and then treat them like one! There is a strong rationale to do so: most of the organizations report that less than 1/3rd of their customer base drives more than 2/3rd of their revenues. This number varies depending upon industries; for instance, a telecom operator may report less variation in per customer revenue contribution than a B2B software development company. This variation simply depends upon the upside potential of customer engagement. Remember, huge variations in a company’s customer engagement dynamics present attractive opportunities for (niche) competitors. Therefore, companies with higher upside customer potential need to have their ‘royal strategy’ ready soon before their king departs to rule elsewhere.

Now, there are two challenges: A) how to identify king customers B) how to design a royal treatment. Though there are numerous ways one can approach this issue, the framework I propose simultaneously takes into consideration the acquisition strategy and CRM strategy of an organization. The argument is, “if a company is not attracting the high potential customers (kings) in first place, no matter what CRM strategy (royal treatment) it pursues, it will never succeed”.

Housekeeping notes:

1) Acquisition decisions reflect in the profile of target customers, acquisition channel, and messaging / advertising strategy. The success of these decisions will reflect in the type of customers you attract. Before putting customer segments to either right customer or wrong customer type, take some time to identify any common patterns / characteristics / predictors of your most desirable customers.

2) CRM decisions broadly cover product selection, buying experience, incentives, personalization, and post-sales support. You succeed if your customers find your overall value proposition exciting on an ongoing basis! Before putting your customer in different buckets of value proposition, consider a combination of quantitative / qualitative factors which show how invested a customer is in this relationship. E.g.: Avg. Order Value, Number of Orders, Recency, Net Promoter Score (NPS), etc.

3) CLV (Customer Lifetime Value) is the sum total of expected profits from a customer. Companies should try to find CLV of each customer or small (but serviceable) customer segments, rather than identifying all the customers with one CLV.

4) King Customer is the one who has demonstrated either the potential (requisite characteristics) or the actual behavior (spend + mutual fit) to be your most desirable customer.

Segmenting an organization’s customers strictly across a 2X2 framework may not be that easy or even necessary. But if you look at a range of options on the spectrum of wrong customer to right customer or low value proposition to high value proposition, you’d be able to identify the levers you need to start playing with.

Key take away for a winning customer management strategy: you definitely want more of your customers in the top-right segment. These are the customers you have always wanted to attract, and now, all that you need to do is to keep these people constantly engaged with high value proposition.

I will even argue that an organization should look beyond Pareto’s Principle of 80-20. Why not have 80% of such customers who contribute the most to your revenue? I don’t think there is a reason for us to cap our kings at just 20%… Let everyone be a king, let it be an ultimate democracy!

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Customer Purchasing Insights For eCommerce Software

SoftwareSuggest is an online software discovery & recommendation platform. We provide free consultation on software and help SMEs select the right software for their organization. As a part of our business, we collect customer requirements, which when analysed can serve the industry with deep insights. Our learning for the eCommerce industry are presented in this report.

Below mentioned are the major takeaways:

  • There has been a hike in the number of organisations opting for online eCommerce solutions for their business. According to our findings a whopping 80% of the total are first time users.
  • A good number of e-commerce software buyers are located in Delhi, Maharashtra and Karnataka region.
  • We discovered that organizations prefer buying SaaS based over installation based software. The data suggest 69% prefer SaaS based.
  • The spread and depth of functionalities of software is the most prominent factor influencing the purchase decision of the software buyers.

Let us have a look at the fascinating figures that we discovered.

1.Industries turning up to use eCommerce software

industries using ecommerce software

We found that 35% of the software requirement was from apparel industry and next position is occupied by food and grocery item business (i.e. 20%). Rest is shared by miscellaneous industry like electronics, footwear, etc.

2. From which state maximum requirement was generated?

According to our observation, maximum eCommerce software buyers are from Northern region with Delhi (16%) being the kingpin in the list. Next place is shared by Maharashtra (12%) and Karnataka (13%). It can be a good decision for eCommerce companies to invest their resources in these region.
state wise lead distribution

3. What do the users prefer- SaaS based vs Installation based?

There has been a drastic shift in the number of users who prefer using SaaS based software when compared to server based software. It has been found from our data that 70% users prefer SaaS based or online software over the server based software.

User preference- SaaS based v/s Server based

4. What all features a buyer looks for in eCommerce software?

Nowadays, software buyers look for the product which can help them facilitate their customers in smarter way. With the advancement in technology, they look for sundry features which are stated as follows:4

5. What is the preferred budget in which buyers purchase the software?

For SaaS based, it has been found that on an average 50% of software buyers look for an ecommerce software between ₹1000 to ₹3000 per month. Around 18% buyers are willing to spend ₹3000 to ₹7000 per month. Only 7% can spend above ₹10000.

budget criteria for SaaS based sofwtare

For server or installation based, it has been discovered that 80% of software buyers prefer buying in the budget range of ₹50,000 – ₹1,00,000. Around 10% prefer buying in ₹100000- ₹150000. Remaining can afford up to ₹150000 and above.

budget criteria for server based software

6. New users v/s Existing users

new user v/s existing users

Around 20% of the software buyers are the existing users who reach us due to following reasons:

  • They are not satisfied with the services provided by their software providers
  • Their software does not have the latest features and they want to upgrade their software

In regards with the changing market conditions, there has been a hike in the number of retailers opting for online stores for their business. We discovered that around 80% of the software buyers bought software for the first time.

7. What is an average number of products showcased by merchants using eCommerce software?

average number of products showcased by ecommerce merchants

The data which has been collected by our team revealed that 17% of merchants prefer showcasing around 100-200 products on their website. And 21% of merchants prefer showcasing between 200-1000 products. Only 8% showcase above 1500 products which is quite less.

8. Time taken to decide on ecommerce solution

Our findings suggest that for a large percentage of software buyers, it takes around 3 to 5 weeks to decide on a solution.

time to find ecommerce solution

9. Number of demos before buying a software

We found that maximum software buyers usually take around 3-4 demos to decide on a solution.

no. of demos before buying

10. Factors influencing purchase decision

A software buyer looks for multiple features before purchasing any software.The depth and spread of functionality of the software is one of major factors. Have a glimpse at the other factors.

factors influencing purchase decision

The report has been generated from the data being collected by SoftwareSuggest team.

You can give your valuable thoughts about the report in the comment section below.

Also, find the list of eCommerce software solution with software demo, comparison chart, and many other values to help yourself select the right software.

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Lipstick on a pig

It’s to the credit of policymakers that they have steadfastly refused to kiss this pig called ‘software patents’, despite it being dressed up in the lipstick of ‘innovation’.

Lipstick on a pig” is a popular Americanism for making superficial or cosmetic changes that disguise the true nature of a product. The pig in question is the regime of software patents being advocated by some multinational corporations (MNCs) and their highly paid lawyers, while the lipstick is the much abused term—“innovation”.

Ever since the Indian Patent Office (IPO) issued the revised Computer Related Inventions Guidelines, a host of MNCs has been busy trying to lobby the Indian government to overturn these guidelines. At stake is India’s future in the digital age.

Patents are a state-granted monopoly on an invention, for a limited period of time. Those who have been granted these monopolies then get the right to prevent others from using the ideas and methods they have patented. Software developers, and researchers who study innovation, contend that the US, which has the most permissive patenting system in the world, made a huge mistake by bringing software under the ambit of patentability.

James Bessen and Michael Meurer, two Boston University professors, found that almost 38% of all patent litigation in the US is around software. In their book,Patent Failure: How Judges, Bureaucrats, and Lawyers Put Innovators at Risk, the authors explain how software falls within the realm of abstract ideas, and that it is impossible to draw boundaries around abstract ideas.

For example, if a property developer is planning to build a skyscraper on a piece of land, he can do a title search and find out the boundaries to the east, west, north and south of that piece of land. A clear title enables the developer to invest money with peace of mind. However, software being an abstract field, even law-abiding software developers cannot do a conclusive patent search in the areas they are working on, which increases the risk of software development in countries that allow software patents.

The US patent system has come to such a pass that even a respected inventor like Andy Grove of Intel was compelled to say, “The patent product brings financial derivatives to mind. Derivatives have a complex relationship with an underlying asset. While there’s nothing wrong with them in principle, their unfettered use has damaged the financial services industry and possibly the entire economy.” This was right after the financial crisis in 2008 that was caused by housing derivatives.

How did the US patent system go so wrong that one of its most venerated inventors became its harshest critics? In their book, Innovation and Its Discontents: How Our Broken Patent System is Endangering Innovation and Progress, and What to Do About It, two Harvard University professors Adam B. Jaffe and Josh Lerner explain how the 1980s were a time of great concern about US “competitiveness”, as well as a general movement to shrink government and make it more efficient. The government responded to these concerns by making the United States Patent and Trademark Office (USPTO) run more like a business, so that its processes would become easier for inventors. The effect was that patent seekers turned into “clients” and not applicants at USPTO. The authors add that USPTO (much like IPO) has been chronically strained for resources, with patent examiners often having just a dozen hours to assess a patent application.

As a result, the number of patents granted in the US has reached 326,000 in 2015, up from 66,170 in 1980. The flood of poor quality patents in the US has led to a surge in lawsuits, and the rise of patent trolls—organizations that make nothing, and whose sole business is to acquire patents and use them to extract royalty payments from unsuspecting users.

Under the Patent Cooperation Treaty, if India allows software patents, it will have to give priority to the existing patents that have been filed in other countries. Bessen and Meurer estimate that there are around 4,000 patents on e-commerce and around 11,000 patents on online shopping in the US. If these patents are granted in India, MNCs will have the right to exclude Indian companies from using their claimed inventions. This will slow down the pace of innovation, and nip India’s growing software product ecosystem in the bud.

It is to the credit of Indian policymakers that they have steadfastly refused to kiss this pig called “software patents”, despite it being dressed up in the lipstick of “innovation”. This gives Indian software developers the freedom to innovate without worrying about patent lawsuits.

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Tech Startup Awards launched by the Duke and Duchess of Cambridge

Their Royal Highnesses The Duke and Duchess of Cambridge launched the Tech Rocketship Awards 2016-17, held in Mumbai.

With the intent to identify and support some of India’s best and brightest start-ups, the initiative will assist them to scale globally.

techieThe Tech Rocketship Awards – an initiative by UK Trade and Investment (UKTI) in India – provides top Indian startups with expert business advice and support from leading professional services companies in the UK. This year the competition gets bigger and better: the ten most promising start-ups from the competition will win a week-long business trip to the UK; where they will get access to venture capitalists, experienced industry leaders and entrepreneurs that can help and guide them to set a firm business footing in the UK.

Kumar Iyer, British Deputy High Commissioner Mumbai and Director General of UK Trade and Investment in India said:

“We are delighted to have The Duke and Duchess of Cambridge launch the Tech Rocketship Awards today. We’re looking for the next batch of leading Indian entrepreneurs that will probably change the world through their technology. Some of the young entrepreneurs Their Royal Highnesses met today already have some truly amazing innovations.”

Four innovative and young entrepreneurs showcased their products to a panel of business leaders and iconic figures in the entrepreneurial world – Anand Mahindra; T.V. Mohandas Pai, of Aarin Capital; Saurabh Srivastava of the Indian Angel Network and young entrepreneur Shradha Sharma of YourStory a leading tech media platform.

Mr. Anand Mahindra said: “The UK is a hotbed of technology and we need to deploy that know-how in India. The Tech Rocketship Awards is exactly the platform that can give young Indian entrepreneurs access to the UK’s prowess in this sphere. Mahindra group drives various initiatives to encourage innovation and entrepreneurship both within and outside Mahindra and we are creating a start-up ecosystem that allows it to leverage its strengths and create value for entrepreneurs. I am looking forward to judging the entries for the competition this year”.

Applications are open to entrepreneurs under 40 in India who have been operating a company created from the year 2000 onwards. One winner will be selected from each of five categories – Cleantech, EdTech, Fintech, Medtech and smart manufacturing – and a further five winners will be selected in the ‘Judges Awards’ section, from any sector. The winners will be announced at the UK-India Technology Summit in New Delhi, in November 2016.

The UK provides an excellent platform for Indian companies to grow their businesses overseas, with world leading financial and professional services and a burgeoning technology sector.

Further information

  • Tech Rocketships website
  • GREAT for Collaboration: Launched by Prime Ministers Modi and Cameron, the campaign celebrates and drives trade and investment partnerships between India and the UK, and showcase the great things the UK and India can do together. The two PMs and ten of the countries’ most senior business leaders appeared on a video to launch the campaign.
  • UK Trade and Investment (UKTI) is the government department that helps UK-based companies succeed in the global economy and offers professional, authoritative and personalised assistance to help companies in India locate and expand in the UK.
    • the UK has been a popular destination for Indian investments for over 100 years.
    • with low tax and a talented workforce, Britain is one of the easiest places to grow your business.
    • it takes only 13 days to set up a business in the UK, compared with the world average of 35 days.
    • the UK is ranked 6th globally for Ease of Doing Business. According to World Bank’s report (Oct 2015), the UK has become an easier place to do business in the past year after reforms to red tape and corporate tax
    • in 2014-15, the UK won a record number of inward investment projects and maintains position as top investment destination in Europe.
    • India emerged as Britain’s third biggest job creator in 2014 as the country saw a 65% increase in foreign direct investments (FDI) from India. In 2014-2015 Indian investments in 122 FDI projects created 7,730 new jobs and safeguarded 1,620 jobs in the UK. (Source UKTI)
    • the total number of people in the UK employed by Indian companies has increased by 10%: from 1,00,000 in 2014 to nearly 1,10,000. (Grant Thornton)
    • ICT, advanced engineering and life sciences are among key sectors for investment from India.
    • the UK offers the lowest corporation tax rate in G20, and is a gateway to Europe and the world