Do believe the hype

Well, was browsing through this typical Tom Friedman column titled 'Do believe the hype' - IMHO the column is rather shallow high on anecdotes and low on evidence - when I chanced upon this beautiful example of hands-on innovation aiding our rural masses in meaningful ways. I've always been a hard proponent of the mobile revolution changing business, possibilities and ecosystems and this just comes as more sweet vindication (or selective memory, whichever way you see it).

Do Believe the Hype (By THOMAS L. FRIEDMAN in NYT)

Here’s an example of why I ask these questions. It’s a typical Indian start-up I visited in a garage in South Delhi, EKO India Financial Services. Its founders, Abhishek Sinha and his brother Abhinav, began with a small insight — that low-wage Indian migrant workers flocking to Delhi from poorer states like Bihar had no place to put their savings and no secure way to send money home to their families. India has relatively few bank branches for a country its size, so many migrants stuff money in their mattresses or send cash home through traditional “hawala,” or hand-to-hand networks.
The brothers had an idea. In every Indian neighborhood or village there’s usually a mom-and-pop kiosk that sells drinks, cigarettes, candy and a few groceries. Why not turn each one into a virtual bank? So they created a software program whereby a migrant worker in Delhi using his cellphone, and proof of identity, could open a bank account registered on his cellphone text system. Mom-and-pop shopkeepers would act as the friendly neighborhood local banker and do the same.
Then the worker in New Delhi could give a kiosk owner in his slum 1,000 rupees (about $20), the shopkeeper would record it on his phone and text receipt of the deposit to the system’s mother bank, the State Bank of India. Then the worker’s wife back in Bihar could just go to the mom-and-pop kiosk in her village, also tied into the system, and make a withdrawal using her cellphone. The shopkeeper there would give her the 1,000 rupees sent by her husband. Each shopkeeper would earn a small fee from each transaction. Besides money transfers, workers could also use the system to bank their savings.
Since opening 18 months ago, their virtual bank now has 180,000 users doing more than 7,000 transactions a day through 500 “branches” — mom-and-pop kiosks — in Delhi and 200 more in Bihar and Jharkhand, the hometowns of many maids and migrants. EKO gets a tiny commission from the Bank of India for each transaction and two months ago started to turn a small profit.

Wow. Eh? They broke even. Awesome. May hajaar more such flowers and stories bloom, some led by ISB grads, I hope. So, what was the investment that went in? Where did the idea come from? Who are these young geeks out to change India and thereby the world?

Abhishek, who was inspired by a similar program in Brazil, said the kiosk owners “are already trusted people in each community” and are already in the habit of extending credit to their poor customers: “So we said, ‘Why not leverage them?’ We are the agents of the bank, and these retailers are our subagents.” The cheapest cellphone today has enough computing power to become a digital “mattress” and digital bank for the poor.

The whole system is being run out of a little house and garage with a dozen employees, a bunch of laptops, servers and the Internet. The core idea, says Abhishek, is “to close the last mile — the gap where government services end and the consumer begins.” There is a huge business in bridging that last mile for millions of poor Indians — who, without it, can’t get proper health care, education or insurance.

Wow. By now, my admiration for this duo is sky high already. Think of what an incorruptible biometric identification universal ID like the UID can do in this milieu? Thin of the ecosystem for business it can create and spawn.....wow only.

What is striking about the small EKO team is that it includes graduates from India’s most prestigious institutes of technology who were working in America but decided to come home for the action, while the chief operating officer — Matteo Chiampo — is an Italian technologist who left a good job in Boston to work here “where the excitement is,” he said.

 Aha. Welcome home, Signor. Lest we forget America was made great also by a large swarm of skilled immigrants from all over the world - from German aerospace pioneers to desi silicon valley stars. India, traditionally has been this open land where ideas and immigrants from all over the world could come and mix and create and bedazzle. We lost that mojo somewhere in the past 1000 years but thanks to beginning made on 15 Aug 1947, we're well on our way to regain our traditional influence and place in the world, Heaven willing of course.

India today is this unusual combination of a country with millions of people making $2 and $3 a day, but with a growing economy, an increasing amount of cheap connectivity and a rising number of skilled technologists looking to make their fortune by inventing low-cost solutions to every problem you can imagine. In the next decade, I predict, we will see some really disruptive business models coming out of here — to a neighborhood near you. If you thought the rate of change was fast thanks to the garage innovators of Silicon Valley, wait until the garages of Delhi, Mumbai and Bangalore get fully up to speed. I sure hope we’re ready.

 OK. This is classic Friedman. Feel-good and all but better not to get carried away prematurely only. Actions speak louder than words and let the deeds of our entrepreneurs speak in making our country a better place for all its citizens to live in, while doing better than breaking even themselves.

Oh, might as well. On the same note is this splendid piece from Business standard by Arvind Singhal. Recommended read again and a better researched article than Friedman's.

The next five years (in the Indian Economy)

I believe it was some European CXO on a Des visit who remarked "A day in India is like a week in Europe." Yup, I guess.

India’s GDP in 2005 was about $785 billion, which has increased to almost $1,400 billion in 2010 and should cross $2,000 billion by 2015, implying that Indian economy would have added almost one India of 2005 to its size in the next five years. This spectacular growth, on a relatively high base of almost $1.4 trillion, translates into unprecedented opportunities and greater challenges than what India has faced in the past. Let us look at 2005 and then try to crystal ball 2015 for a few consumption categories.

Wow, eh? Jai ho, indeed.

In 2005, our domestic market for four-wheelers was just about 1.1 million vehicles. It will cross 2 million in 2010 and touch 4 million by 2015 (including as many as 110,000 in the luxury and premium segments). There were less than 100,000 users of smart-phones in 2005, about 25 million in 2010, and perhaps as many as 225 million in 2015. From a user base of about 8 million laptop users in 2010, there could be as many as 50 million by 2015. There were less than 25 million Internet users in 2005, increasing to about 75 million in 2010, and projected to grow to more than 250 million by 2015. From less than 250 multiplex screens in 2005, to about 800 in 2010, the count could cross 2,000 by 2015. Similar increases in multiples ranging from 2x-10x could happen across many consumer product categories.

..... Since the market opportunity is likely to grow in multiples of the current size, most businesses should rework their strategies and rewrite their business plans rather than just continue with incremental additions to their current plans.

But, as is often the case with Yindia, the challenges rise just as fast as the opportunities....only.

It is, however, more important to also give a hard look at the challenges that Indians and Indian businesses will encounter in the coming years. The first and more critical is the physical infrastructure. Doubling of number of cars and two-wheelers on the roads will need a corresponding increase not only in the road network but also in parking spaces, auto repair workshops and fuel vending stations. Adding of almost $400 billion in additional private consumption by 2015 will require a mind-boggling increment of nearly 1.5 billion square feet of retail space alone (or about 6,000 shopping malls of 250,000 square feet each). E-waste from the installed base of hundreds of millions of electrical and digital devices will run into tens of millions of tonnes, requiring enhancement of waste-management capacity by almost 10 times of what exists today. Steady increase in urbanisation will imply an additional demand for almost 20 million urban dwellings in cities where the infrastructure is already creaking to its limits. Strain on social infrastructure, be it education (primary, secondary, higher, and vocational) or health care (primary, secondary, and tertiary) or clean drinking water or sanitation will further increase manifold, rather just in simple double-digit percentages.

And so on and on. The next decade is crucial folk.s Make or break is it. We have to, and I mean have to, make the big push and enter the club of solid middle-income countries by 2020. There is no way in hell or highwater that we can afford to miss this bus, as we have done so often in the past.

Jai ho and Jai Bharat.