Hello, again

I decided not to write these emails back in Dec, 2018. The idea was to focus on other things, which back then, I thought writing was a distraction from. It turned out 1) it was not and 2) I am not really good at those other things. So here we are. I will keep these lighter and shorter at the beginning and we will see where to go from here.

In any case I won’t ghost away this time. I will let you know when I will stop. Thanks for understanding.

Investing: I had travel plans for 2020. For those who know me personally, I was serious this time. I actually planned to travel a lot more. But then I could not. So I started doing things I thought will never do. You know things you always thought are just not for you. Among the top of my list was investing. And by that I mean investing in stocks, bonds and all that.

It turns out the field is not that boring after all. I still don’t think I can be an investor for the rest of my life. But it’s nice learning a few things in the process. I am still in early phases. Started with this book to get the basics right. And then read this because you know you should. If you are interested these are good places to start. If you are not, still read the Intelligent Investor. Lessons are invaluable. And they will help you in life regardless.

Also if you are into it already then we probably should talk. I can use some help especially in regards to finding a good broker based in Islamabad. You can also reply to introduce me to someone who is good at it. I will appreciate that.

Apple event: This had to be one of the most boring Apple events. Actually, a bit frustrating as well. Why they mentioned 5G like a gazillion times, I have no idea. It was supposed to be a footnote. Ben Thompson captured very well what I was thinking (paywalled). Here is the devastating bit:

So then why did Verizon get so much stage time, not just in the person of Vestberg, but also when it came to Apple’s announcement of pricing?

I am honestly struggling to come up with any explanation other than the possibility that Verizon paid Apple a whole bunch of money to be featured.”

The fact that this might actually be true is upsetting.

Happy for the new iPhones though. Actually more excited about them than I have ever been except for iPhone 4 and 5. I always believed that round edges which debuted in iPhone 6 were a design regression. Link

Gruber’s review of the tweeners is here.

TikTok ban and unban: The ban was because TikTok hosted “immortal content” and now they have agreed to censor that. Good luck defining what it means for content to be moral.

Surprisingly for me, and as Rest of World has noted, there was no backlash like it was for say YouTube. The world has changed so much for tech startups. And not for the better. Link

Worth a read: “Relentlessly prune bullshit, don’t wait to do things that matter, and savor the time you have. That’s what you do when life is short.” Link

I am moving to New York

Seemingly no one is noticing Apple events from a “show” perspective. I do like the products but it’s the theater and storytelling part that has always fascinated me. I wrote about my frustrations earlier. I am happy to oblige, though, that iPad/Mac event was amazing. It might be because unlike Sep event, we hardly knew anything specific about any of the products. But I am pretty sure that’s not all there was. To begin with, Tim Cook’s body language was completely different. He was responding to an enthusiastic New York crowd exceptionally well. “I am moving to New York”, there is no way you can write and practice this line in advance. It was spontaneous and showed the stage awareness Apple crew has been significantly lacking, or ignoring, recently.

The fun way he introduced Mac mini was just gold. It did help that following video was one of the best I have seen recently.

I was granted more than one wishes though. Phill Schiller didn’t come out on stage to tell us about any of the new hardware products — which has been the case ever since Steve left. To top that all the people filling in for him were fantastic. Laura introduced MacBook Air. And I thought she was amazing. Tom introducing Mac mini somehow toppled her. And Jon just nailed the iPad intro. All of them showed a personality that went well beyond the products they were talking about. Phil Schiller doing the background vocals for iPad video was nice too. It felt refreshing. In many ways, it reminded me of Scott Forstall. While Jony always talks about the products from a physical design journey perspective. It was Scott who used to talk about the product from a customer perspective. And I miss him for that. Phil Schiller filled in well though.

So what changed this time? Frankly, I don’t know. And there is no way to know this kind of stuff. Part of this has to do with the New York crowd. In many ways, they were the lead actors here. Part of it has to be the products themselves. MacBook Air, Mac mini and iPad are the underdog products in Apple lineup. And people love to cheer for the underdogs.

Perhaps the biggest reason I assume was the absence of iPhone. iPad and Mac remain a footnote from a financial perspective. So Apple seems to be more playful while talking about them. And a lot more pressured while talking about the iPhone. A missed iPad launch will probably not hurt that much. But a missed iPhone launch could devastate the company internally. None the less I really liked the event. If separating the event from the bigger one in September is what it takes for Apple to bring back their showmanship than I am happy to watch two in two months.

TiA and the Subscription Paradox; Careem/Uber War Cresting

TiA and the Subscription Paradox

Jon Russel at TechCrunch wrote a pretty damning article about Tech in Asia. Which Willis Wee has refuted here. I will encourage you to read both of them. While Willis’ response sets the record straight on most things. It does not answer the underlying business model questions Jon’s article brought up. For past couple of years, Tech in Asia has been experimenting with a lot. Which is fine in itself unless you don’t hurt your core product. I am afraid Tech in Asia has done that in the process. I wrote about them back in Nov last year. They were aiming to be Toutiao for Asia back then. From the article:

I get the ambition i.e. being Toutiao for Asia. But I have always been skeptical in the assumption that what has worked in China will work in any other country. Mostly because China is such a different market. Toutiao, like WeChat, is riding on censorship. And it’s great. They saw an opportunity and seized it. But such an opportunity simply does not exist outside of China. People have their social and Techmeme requirements being fulfilled by Facebook, Twitter and well, Techmeme. What you need is a reason for people to visit your website every day.

Being Toutiao for Asia means that you are aiming for being a news aggregator. And that’s one way of bringing people to your website and possibly on daily basis. I was skeptical but at least it made sense in theory. As individual tech hubs inside Asia get bigger, it’s hard to cover all of them thoroughly. Aggregation allows you to be on the pulse of everything and retain your original “TiA” brand proposition. But only six months later i.e. Mar 2018 the company pivoted again. And this time the focus is on subscriptions and quality journalism. Which, in many respects is the exact opposite of being an aggregator. Willis while answering Jon’s comments of subscription being overly priced:

We believe we are priced fairly because we are a niche publication providing the most comprehensive coverage of the Asian tech ecosystem. We cover news ignored by the big publications that benefit our audience. Nonetheless, we will listen to our readers and make adjustments to provide the best value.

I for one completely back the pricing here. To cover tech scene in Asia in a way that people pay for will require an army of writers spanning in each country. And not just writers but really good ones. Furthermore, each individual story will cost more than usual since it’s meant to be deep. People are not going to pay you if you are writing what everyone else is writing. There is no way you can cover these costs by pricing aggressively. To answer Jon’s question, yes the journalistic operations are at the level of FT or Wall Street if not bigger. The question that remains, however, is can Willis and his team do this?

I am not questioning the talent or willingness of the team. But rather the product-market fit of what they are trying to do. The market is too big for a subscription model to work. Even country wide publications are going to suffer in the long run let alone an entire continent. The reason it’s working for NYT, FT etc is that they already had the people and operational scale in place because of their print media business. And most online publications, successful in subscriptions, have a narrow and targeted market. Being niche allows you to be focused and, perhaps more importantly, it significantly reduces the operational costs. In that regard, the once so apt brand name is Tech in Asia’s biggest Achilles heel.

Careem/Uber War Cresting

Both Careem and Uber have been in news for two different reasons. Careem acquired a bus shuttle service. And Uber hinted that it might be launching self-driving cars in Pakistan. I am clubbing them here because the underlying motivations are the same. Both want to own the transportation lifecycle of their customer. And perhaps, more importantly, both companies are eager to show a bigger crest for the rumored merger talks. Which what I believe are halted because of the indecision on who rolls out and who stays.

At an absolute level, I would like Uber to stay because Careem is increasingly becoming indistinguishable from deceit. At least the brand name part of it. More on that here. I do, however, think the merger won’t be a good news. For the most part, both companies are keeping each other at toes and it’s resulting in better overall service. The old school economics theory of “competition is good for customers” is playing out well here.

As for as, self-driving cars are concerned, I don’t think they are going to happen anytime soon. We don’t exactly know what technology looks like let alone a functioning product. I do tend to agree to Uber though, Pakistan is a good country to experiment in. For one transportation here is a mess. And I am not talking about Lahore or Karachi. If you go out of main cities you get to know what real transportation challenges more than 50% of the population is facing. The fallible road infrastructure makes it hard for most drivers to go out of the main cities without hurting their own vehicle. Flying cars can definitely do better. If nothing else our prime minister can use one.

Why Apple Events are Getting Boring

There has been a lot of talk about bits and atoms at Apple events lately. To a point where the storytelling is getting a hit. And it’s making me wonder since when Apple became known for its manufacturing prowess? I understand A12 bionic is for user benefits. But those benefits are clear only in hindsight. Apple is not focusing on those. It’s focusing on the chip itself. Apple devices have always been better. Even earlier Macs who got hammered in the market by Windows laptops were in many ways better standalone products. And yet that’s not what Apple was about. Or at least Steve Jobs didn’t envision it to be. Hence the first thing he did was not to introduce a new product on his return. He focused on a marketing campaign.

Think Different wasn’t about selling a product. It was a way to look at the world. And was intended for Apple more than anybody else. I am not sure if Apple is still using the same storytelling lens to communicate to itself and the world. To be clear, I get the pressure of the world’s most valued company. You have to keep the business running. And Apple events are the marque places to sell the products. But does it has to be that boring? The hallmark of today’s Apple events is their new better and faster chips. And the all so powerful camera systems. And not necessarily the story of a bunch of humans on a hero’s journey.

The irony is that Apple has already well-established brand around being the best. When you already have the trust you don’t hammer on why you are the best. Customers already believe in you. Yes, you need to reinforce that trust. But the way to do that is to tell stories customers can relate to. Stories about the intangibles and subtle aspects of the relationship. This becomes even more important as you get bigger and better. Apple used to be good at it. They are losing it now despite the fact that they are building the right products. But increasingly those products are being better explained by John Gruber, Ben Thompson or Marco Arment etc. And not necessarily by Apple itself.

With that said, I wasn’t sure of my own argument at first. The question I wanted to answer was: Is it me missing Steve or is there something wrong with Apple events now a day? If it’s the latter, which I was pretty sure of internally, then how to explain it. So I went on a tirade of watching Steve’s old presentations. I intentionally excluded presentations unveiling original iPod, iPhone or iPad because of the nature of unveils themselves. And I am not going to critique the Apple Watch presentation either because we know original Apple Watch was a botched product let alone the story behind its unveil. Though Ben Thompson still managed to tell a better story for the same botched product.

So here we go. Below are the three main reasons I think Apple events are getting boring.

1. Apple’s increasing reliance on videos to launch new products. Videos are ok if you haven’t seen the product and downright boring if you have – which has been the case for the past couple of years. More importantly, they do nothing to connect the human on stage with the product he/she is talking about. Let alone connecting the audience in attendance or at home with the product. They make the audience do that part themselves. And before they are done with it Tim Cook comes back up again expecting a gasping reaction. Which quite frankly isn’t there. The cheers are mostly either because the video was nicely done or a product looked so sexy. There is no anticipation of what the person on stage is about to say or do next.

2. Apple turning blindsides on audience’s knowledge of the event. As an example, iPhone images got leaked this year. And yet Apple didn’t bother to tweak its presentation to acknowledge the fact. It felt like they are living in a different universe. While I get that’s part of the allure to not talk about what everyone else is talking about. But not even acknowledging it disconnects you from the audience. Remember Steve Jobs saying “stop me if you have already seen this” while introducing iPhone 4. That one sentence of acknowledgment made the audience realize that there is a human on stage just like them. More importantly, it made them pay more attention to what he has to say next. You have to address the elephant in the room if you want the focus to be on something else.

3. Apple disowning their old products in fear of making their new ones look bad. Old paving the way for new is the name of the game. But when you don’t appreciate or acknowledge what you told us last year, we are less likely to believe what you are telling us now. It’s a simple case of being honest. I am not saying old products need to be resold again at an event promised to show us something new. But you have to take the user journey while introducing the new. And a user’s journey starts with what they already have. When you don’t tell the vulnerable part of how you reached a new product from the previous one the new product, or the not so new, often comes as an insult to the customer’s intelligence. Again, you don’t have to go on a tirade explaining every little decision you made during the course of one year. But you have to find a way to communicate the fallible yet human side of the products.

Bonus: Zero surprise element. It’s hard to surprise people when they already know what you have or expecting you to have. Apple presenting iPhone X as “one more thing” last year is a good example. iPhone X was everything but a surprise. Everyone knew it’s coming. The magic behind “one more thing” wasn’t a grandiose product. It’s the element of surprise. This becomes even more important when your marque products are already leaked. I would have loved to see a live demo of ECG in action as one more thing this year. Or taking a picture from new iPhones on stage – the sort of which Gruber did for his review.

Speaking of Gruber, he wrote an excellent review of the new iPhones. It’s 10x better than what Apple had to say about them. It feels honest. In his review, he explained in detail why both iPhone Xs and Xs Max have remarkably better cameras compared to iPhone X. This is a story that we didn’t get from the Apple event. But we should have. Gruber actually defended Apple by saying that the reason they didn’t show side by side pictures from both the old and new iPhones was they didn’t want the otherwise excellent camera system of iPhone X to look bad. Well, that’s exactly the part necessary to tell a good story. You have to be vulnerable.

The reveal of iPhone 4 gives us hints on how Apple used to do this stuff. First, as I quoted above Steve was quick to admit that there have been leaked photos of what he was about to show you. And then followed it up with “believe me you haven’t seen it”. And that felt true because you might have seen the product you don’t know the story he was about to tell you. At 4:01 min mark he explains the publicly criticized (from leaked images) antenna lines. Fast forward it to 9:20 min mark and you see him making a comparison of iPhone 4 and 3GS’s screens. iPhone 4 was the first iPhone with Retina display. The difference between the two screens was miles and yet it didn’t prohibit him from showing that on stage. And somehow it didn’t make 3GS look any less of an iPhone. Add to that, iPhone 4 demo actually failed. And he turned it into the most exciting part of the entire event.

You can say not everyone is Steve Jobs who can turn a failed demo into a show. And that’s true. But it’s no excuse to not be vulnerable and human on stage. The real magic behind Steve’s presentations was he used to show a lot of vulnerability. He used to mock himself and the very product he was about to unveil just to build that connection. He wasn’t afraid because he was convicted of the product itself. Phil Schiller and Tim Cook, on the other hand, are presumably lacking the same level of conviction. I have never seen anyone from Apple raising his voice so much as Tim Cook did this year just to make his point. And that more than anything else is a warning sign.

Good thing for Apple is that their products are far better than anything else in the market. More importantly, though Apple might not be telling it, they do tell a story. It used to be that Apple had the perfect story around its products. And for next week or so I will avoid reading anything else. I feared press will say something that could possibly dent the perfect story in my head. I would go on finding ways to protect that image. It’s completely opposite now. Apple’s articulation of their products is falling short. It’s stomped and fixed on What with zero explanation of Why. As result, their events are leaving me lost and confused. Either I have to force myself into buying a product to feel it. Or wait for John Gruber to tell me about it.

How Internet came to Pakistan; Apple’s troubles in India

In case you missed it, I was on Internet History Podcast last week discussing how the Internet came to Pakistan. The interview is more of a personal journey than an exact sequence of events. And it came out a lot better than I expected. I was nervous going into it because 1) it was my first podcast recording and 2) Brian is one of my favorite podcasters of all time. I have listened to every episode of both Internet History Podcast and Techmeme Ride Home. I don’t know if I can say the same about any other. And I am definitely looking forward to his book. While anybody could have done these podcasts and I would have heard them because of the topics. I am not sure I would have stuck for that long.

I learned that interviewing is an art form. You can prepare all you want but at the end, it’s more about what the other person can get out of you. Brian is certainly good at it. You can listen to the podcast on iTunes, Overcast or YouTube. I sound better if you listen at 1.5x.

Apple’s troubles in India

From ET Tech:

Apple could be staring at its toughest year in India in recent times, given the sharp fall in shipments in the first half of 2018, as the effects of the company’s change in strategy to chase profitability rather than growth by cutting discounts and distribution channels comes into play, say analysts.

The Cupertino-based smartphone maker recorded a sharp 55% fall in the April-June quarter on-year and a 30% drop sequentially, on the back of an equally bad January-March quarter, where shipments fell 22% on-year and 46% sequentially, as per estimates from Singapore-based Canalys.

Apple sold 1.8M iPhones in India in 2015, 2.8M in 2016 and 3.2M in 2017. As you can see these are not inspiring numbers. But they were growing. 2018 is worse because the company has only been able to sell 850K iPhones as of now. There can’t be any other explanation than it’s a market problem. Despite the fact that India is a huge market there aren’t many people who can afford an iPhone X. But what about the iPhone 8, 7 and especially 6—which is being locally manufactured in India?

What you need to understand about markets like India and Pakistan is that smartphone is more a status symbol than a utility. While SE and iPhone 6 might work in the US because of pure utility reasons. They are not going to work in India because people really want to talk and brag about what they own. It’s far more easy to brag about iPhone X than its predecessors. And if you can’t afford one then a top of the line Samsung J or Prime series is a better brag than a three-year-old iPhone. It does not matter if the three-year-old iPhone is still a better phone overall.

The closest market, where Apple had a success, is China. The major difference between China and India, however, is the size of the middle-class segment. There are a lot more people who can actually afford an iPhone X in China than they are in India. I don’t think opening a retail store in India is going to solve any of the problems. The allure of the iPhone is still there. It’s a matter of affordability. There are no easy answers here, even for Apple, considering the fact that Apple is not going to make a low budget iPhone.

Why PTI’s Tech Manifesto is a great news

I was hardly 10 years old when my father and I started to discuss (read argue) politics and cricket, two things constituting most of dinner table discussions in our country. My father was a strong PPP and Benazir loyalist. And he believed Imran Khan to be the greatest cricketer who ever lived. I, on the other hand, always supported PML-N because Nawaz Sharif, I thought, was kind of cute. And there was never a doubt in my mind that Wasim Akram is a far better player.

My father used to say that my preferences will change when I am 30. He never lived to see his prediction come true. But yes now I believe Benazir was perhaps the greatest political leader of our country. Not because of any specific accomplishment of her. But because of who she was and what she represented. And I strongly believe now if there ever is an all-time World XI of cricket, Imran Khan has to be the captain of that team. Else the selection process is flawed. As a political leader, however, I never completely wrapped my head around him. First, I thought he is too good and straightforward for our system. Now, for the most part, I don’t recognize him. That has been a troubling thought for past couple of months because of looming general elections.

I only voted once in my life and that’s in 2013. It was an emotional decision. I loved Imran Khan for his past and didn’t care about anything else. That needed to change this time. Opening myself for a discussion to vote for someone else was deeply upsetting. In hindsight, however, it’s illuminating. Although I ended up choosing PTI again the reasons are totally different. My choice has nothing to do with Imran Khan as a person. And has everything to do with PTI’s manifesto especially tech manifesto. PPP, a party I desperately wanted to vote for mainly because of my slightly tilted left alignment, has done the worst job. PML-N did better but still, their manifesto is all over the place. There isn’t a single coherent theme which makes it hard to hold them accountable for anything.

If this seems like another Facebook post where all of us are justifying our political affiliations now a day. Then yes it was meant to be. But not because of the reason you might think to believe. As mentioned earlier I actively supported PML-N while my father was an active PPP supporter. From an early age, I believed it to be a personal decision and that everyone should make their own. However, it was important to set the context right for this article. The praise for PTI below is not because I am voting for the party and trying to advocate that here. But because I honestly believe that their team has done a wonderful job in articulating the problems of the tech sector and how they are planning to solve them.

If anything I want to advocate a rational decision making. You don’t have to agree with me. But read the manifestos of each party and then decide which side you are on. It’s high time for us to leave behind identity politics and our sentimental affiliations with celebrity individuals. Let’s get to the topic.

The Knowledge Economy Vision

What makes an iPhone an iPhone is not the individual bits and pieces but rather the whole package. I can count at least ten smartphones on my hand that has a better processor, have more memory or a first to adopt a certain new technology. But not one of them is actually a better phone than an iPhone. At least not in terms of adoption and ease of use—metrics that actually matter. Similarly, if you go by the regular media coverage there isn’t much difference between the tech manifestos of each party (Asra still managed to articulate the differences here). Same easy of tax regulations and making it a pillar in GDP etc. What differentiates PTI from the rest is that they are much more cohesive. And I was pleasantly surprised to see that they started with a vision.

Transform Pakistan into a knowledge economy making IT the top contributor to Pakistan’s exports and job creation.

For once you have to appreciate the use of the right words here. To me, this seems like another way of saying that software is eating the world. And we need to get on the boat. You might think I am reading too much into it. But I am not. The point is reiterated throughout the manifesto. From the executive summary (emphasis mine):

The IT/ITeS industry provides the best Return on Investment (ROI) for investment that will stay relevant for foreseeable future. While agriculture and traditional industries will become more automated requiring less human resource to deliver more productivity, IT industry can keep on providing high-end jobs for the future. Hence IT/ITeS holds a central position in economic policies of PTI government.

I don’t remember the last time someone from the government so aptly put why tech matters so much. Agriculture and traditional industries are low yields especially in regards to human effort. So they can benefit a lot from automation. Tech industry, on the other hand, has the best yields as of now. More human ingenuity is required because much of the economic value from tech is driven by trying something new and different. The same is not true for agriculture and traditional industries where processes are relatively streamlined. A good analogy to understand this is to look at how companies are run. If you want to maintain what you already have, you tend to protect the bottom line. But if you want to grow you must focus on the top line.

Now, what’s about having a vision statement? Anyone can write one. Yup, but the statement will become meaningless if you don’t follow it up. PTI’s tech manifesto starts with a vision and everything that follows actually traces back to it. If nothing else it serves two purposes. One it simplifies things for PTI itself. They are clear from the get-go on what to do and what not to do. Second, it’s something that you can agree or disagree to. Going through other parties’ manifestos makes you feel alienated. Everything seems good on the surface. But you don’t feel agreeing or disagreeing to anything. That’s because you don’t understand what it means for you as an investor, entrepreneur, IT professional or freelancer. Everything is too generic.

Tech hubs around the world are echoing this for a long time now. More software enabled industries are central to a country’s growth. I think PTI is agreeing to it. I am not saying other parties especially PML-N don’t. But they never stated this so explicitly. This short distance of translating a dream (in your head) into a vision (on paper) is critical in the sense that it turns the focus from “what” to “how”. When you haven’t stated the “what” part. You can’t really be expected to state the “how”. The end result is half-hearted attempts we are accustomed to expect from governments.

The how part does, however, has a lot of vagueness in it. But that’s expected. Even inside a startup, it’s hard to nail down the exact steps in advance. But startups are nimble in a way governments can’t be. Yes. The good part here again is that PTI seems to be aware of the (emphasize mine again).

Under leadership of PM of Pakistan, an office of Knowledge Economy Authority (KECA) with cross-sectional powers across the government departments will be established as a statutory authority. The authority will be headed by CIO, who will provide the expert leadership and will be from private sector. This is to ensure that the authority works with a more agile mindset compared to existing government bureaucracy.


Two things become clear as you read the document. 1) Syed Ahmad and his team are PTI supporters but not necessarily PML-N haters and 2) they have learned a lot from the previous government’s mistakes. The document actually begins with something aptly titled as “The Digital Dream and Bitter Reality”. There is a fair bit of critique on the previous government. But it’s good. One it’s not an attack on any one person but rather on what’s missing behind those seemingly good initiatives. Second and this might be personal, issues highlighted are ones that I often talk about while writing about startups. Some notable excerpts from this section:

In absence of sponsorship and direction from highest
 level, each department at federal and
provincial level created its own digital
strategy competing with each other to
have maximum share of resources, 
budgets and control. These departments including NADRA, PRAL, MoIT, PITB amongst others also competed with the IT industry whereas leading governments around the world (Singapore, India etc.) have worked in close partnership with the IT industry to help them develop capabilities and eventually compete at global level.

Instead of creating holistic and long-term strategy to solve the core issues facing the IT industry the government departments focused on redundant projects with limited and short-term impact such as startup incubators and internships/short-training programs.

These two paragraphs summarize two core strategies that align perfectly with the vision stated above. One, every little initiative by the government should trace back to the vision. No more department level ad-hoc projects. Second, the role of the government is to be an enabler. Owning every initiative won’t help the tech sector. It’s the private sector that needs to shine up. Governments should provide an environment where the private sector can run places like startup incubators and VC funds. It should have no business in running these places. And that makes a lot of sense. If incubators/VC firms need to be successful they need to have a business model and not just another altruism stint. And if something has a business model then it should not be part of the government because of conflict of interest.


In absence of job opportunities in formal sector, an oversized number of workforce joined freelancing platforms facing its own set of problems. Startups have also been exposed to very difficult business environment in Pakistan in which generating revenues or sustainability has been impossible beyond incubation stage.

I don’t think you need to be a PTI supporter to say yes to any of them both. Freelancers are not treated like office going employees. Not even by the banks which is stupid because freelancers can bring more business than an average 9-5 employee. And a challenge most startups face is the hostile business environment. This is especially true when you had to compete/deal with big corps like telecom or banking sector. Even more so if you are currently not sitting in some government-backed incubator e.g. Plan9 or NICs. Which ties back nicely to the aforementioned point.

The third and final core theme prevalent in the document is of public-private partnership. Instead of either backing few particular private sector companies or directly competing with all of them, the public sector should be the first customer of private businesses. From the document:

In absence of adequate market access, government could support IT industry as the largest buyer of IT services hence building capacity and experience necessary to compete globally. Instead of supporting the industry, government departments competed against the industry to execute most of the e- government projects themselves. This resulted in weakening of the delivery capabilities of local technology firms on global stage. This is evident from the fact that there is not a single largescale IT firm in Pakistan with 5000+ employees compared to India and Philippines which have hundreds of them.

I especially liked this excerpt below:

This will allow experimentation on trying to create new business models in PPP [public-private partnerships]. e.g. How Metro bus stations could partner with bike-sharing startup to increase adoption and provide critical mass. Or Islamabad Police could incubate video analytics startups to identify potential crimes. These provide essential real-life data to train expert resources and help solve local problems.

While tidbits like tax exempts are important (PTI has them put in the doc too) they become irrelevant pretty soon. What’s the use of tax exemption if you don’t have an environment where a startup can compete fairly without cajoling the stakeholders of the tech ecosystem? At a very basic level, this is what PTI is promising with their manifesto i.e. a level playing field. That’s pretty exciting if you ask me.

Tech is not the hard part, Adoption is

A recent report suggested that 56M people are using 3G/4G in Pakistan. While that’s a great news in itself. The usage is mostly for entertainment purposes. Internet as a mean of utility and value creation is still limited. That’s a challenge for a startup whose business model is predicated on the Internet. One way the government could help is to force the adoption. While it will be painful in the beginning (e.g. India’s demonetization of notes in 2016) it paves the way for future innovation. Aiming to transform Pakistan into a Knowledge economy is a step in the right direction (there is a mention of paying pensions via mobile wallets if you are curious).

In more ways then one, it’s also a departure from what we have always been told i.e. we are an agriculture economy. Obviously, we are not because our agriculture is going nowhere as well. But it was a mindset hold. A kind of mental prison in Kanye West’s words. Do we need to get better at agriculture? Sure. Should our textile and sports goods industries need to be incentivized for more production? Yes. But they can’t grow any further unless they are enabled and incentivized to operate in the Internet economy. I can’t even imagine thinking about how many small businesses can flourish if the government can solve the fundamental challenge of meaningful Internet adoption in the country.

It will be easier said than done though. At a fundamental level, this is a question of changing mindsets. And it’s there where I think having a vision and enforcement from the top across industries is important. An ad-hoc project to automate one particular department might be good work on the surface. And it might even help that department too. But it won’t change people’s habits in general. It will always be an exception to the rule of keeping things as they are. Unless these people meet with their friends and they talk about the same thing happening at their place. That’s how people adopt new things.

Patari Messes Up, again; Uber-Careem Deal

Patari Messes Up, again:

By now you might already be aware of Patari debacle. I wrote when this whole saga began:

What Patari has is nothing substantial as of now. At least not in financial terms. What it had was the trust. A belief that it’s doing something amazing. And in the process is helping revive the music industry of Pakistan. Nothing hurt that trust more than reports from last week. You lost your community’s sentiments. And in a way that’s all you had. With that said I don’t think all is lost. Kudos to the board and the rest of the team for stepping in quickly. As you probably know Bajwa is out. And Ahmer Naqvi is now the interim CEO. They did the right thing. But a lot more needs to be done. Those twitter jokes will be weird for now. And it will be a hard time for the team to change and instill new spirit into the company’s culture.

The team ended up doing more. Just not what I hoped they will. I have more to say about this. And the article, depending on the schedule, might already be on TechJuice. Speaking of TechJuice, I wrote about Popinjay (yes I realize it’s a bit late but it’s worth checking out) and on the selection processes of our incubation centers. I hope you are liking the diversification in writing. It’s proving fruitful to me at least. Do let me know.

Uber-Careem Deal

From Bloomberg (via TechJuice):

Uber Technologies Inc. and Careem Networks FZ are in preliminary talks to combine their Middle Eastern ride-hailing services, hoping to resolve a costly rivalry as Uber prepares for a public offering next year, according to three people familiar with the matter.

I wrote on Uber exiting Southeast Asia in favor of Grab back in March. From the article:

This is an interesting development but not a surprising one. Uber is at a point where they need to prove their worth. Not just as a company well run but also with numbers to push for an impending IPO. The company is no longer the default choice especially in countries outside the US. It’s Didi in China, Yandex in Russia, Careem in Pakistan and Middle-east, Grab in Southeast Asia and Ola in India. Even in US Lyft has gained significant market share away from them in 2017. So a deal to the tunes of Didi and Yandex makes perfect sense. I won’t be surprised if a similar deal comes up for Careem and Ola in near future.

My prediction went well, I believe. In April, Uber was in serious talks with Ola to merge in India. And now a discussion is in place with Careem. But these deals, unlike the previous ones, are not so simple. I wrote about Uber-Ola deal back then:

Let’s start with China. Uber was competing against two companies which later merged into one. While that’s not so bad. The fact that both merging companies were local and Chinese government wanted the resulting entity to win is. It was going to be an uphill battle with no end in sight. The equity shares Uber managed to squeeze in was actually a win for the company. In Russia and Southeast Asia, while markets were relatively open from a regulatory perspective, the number of local competitors were too many. Especially in Southeast Asia where the situation was further complicated by the fact that Uber was competing against local players in each country. Plus a player who was competing in all markets much like Uber itself i.e. Grab.

The situation in India is different. There is only one competitor i.e. Ola. India is not like China. And despite the fact that Ola has a bigger share of the market, Uber’s share is actually substantial. The numbers are often convoluted but it’s most likely that Uber had 30-35% and Ola has 40-45%. The difference is trivial especially considering that Uber operates in 30 cities and Ola in 110. Plus, unlike Southeast Asia, India is one country. A country with 1.3B people no less. The market is just too big for Uber to give up anytime soon. Especially considering how well positioned they are.

Sorry for the long excerpts. But things that were true for Ola are actually true for Careem as well. Careem has one advantage over Ola though. And that’s like Grab it’s dominant in multiple markets. But unlike Grab, the individual markets are much bigger. Pakistan, Middle-east, and KSA are much bigger than say Singapore or Philippines. Indonesia has a larger population size but the population is scattered across smaller islands and hence needs more capital investment. It’s natural for Uber to resist the exit strategy. While they need to show the strong numbers for IPO constraining themselves too much into US and EU can be dangerous in the long run. Uber by far is the largest transportation as a service company in the world. And it would like to retain that position.

Ricult Raises Money; SoftBank Invests in PolicyBazaar

Ricult Raises Money

Ricult, a marketplace for farmers and crops buyers, has raised money from Bill and Melinda Gates Foundation among others. From AgFunder News (via TechJuice):

Ricult, which just raised $1.85 million in seed funding and is backed by the Bill & Melinda Gates Foundation, aims to do just that with a digital platform emulating the services these middlemen provide but transparently and at reasonable rates.

After harvest, Ricult aims to connect farmers directly with end buyers at processing mills, giving them clear transparency on the end pricing. Javaid says Ricult marks up the cost of the inputs for three times lower than farmers were paying before, and on the other end charges the processing mills for access to these farmers. The buyers are happy to pay this fee as Ricult provides them data in return that they wouldn’t usually get, such as yield forecasts or which inputs were used as well as traceability, according to Javaid.

I am a bit oversimplifying when I say that they are a marketplace like Uber. The startup actually wants to help farmers in the whole process of crops production to selling. But while that’s commendable, at the end of the day the startup itself is going to make money if it has buyers on the other side. And that’s where my contention lies with it. While farmers are obviously the right place to start because they are vulnerable of the two, I don’t see data about forecasts and traceability to be good enough motivators for buyers to get on board. Especially in a country like Pakistan where mill operators are kind of a mafia in themselves.

But there are a few things that make me optimistic about the venture. For one, the team is not young fresh university graduates. They are actually experienced business people with possibly valuable connections in the industry. Second, while there are always going to be bad actors in any industry that does not mean there are no good ones. And that’s where their social mission of helping farmers is going to come in handy. And I think it’s pretty smart move on their part to not describe themselves as Uber for X although their business model is pretty much the same. On the contrary, the startup pins the social aspect of their business as a second bottom line.

It’s the last point which I believe got Bill and Melinda interested in them.

SoftBank Invests in PolicyBazaar

From TechCrunch:

India’s PolicyBazaar, which runs a digital insurance business of the same name and a lending marketplace called PaisaBazaar.com, is the latest company to join SoftBank’s $100 billion Vision Fund after it announced a new funding round of over $200 million.

The deal was led by the Vision Fund with participation from existing investors including InfoEdge, the company behind jobs platform Naukri.com. The startup’s other investors count Softbank, Temasek, Tiger Global and True North, but an announcement from PolicyBazaar didn’t specifically mention if any of those names took place in this latest round.

The news is making rounds on Twitter mainly because of SoftBank. And not so much for PolicyBazaar. Flipkart exit was a hard one for SoftBank. Though the returns were good it hampered SoftBank’s longterm ambition in the country. The juggernaut, in particular, its vision fund, is betting on a utopian future where AI is pervasive. And sees itself as the glue that connects different parts of the future by investing in companies from all sectors of life. And from all important tech hubs of the world. This The-Ken piece (paywall) highlights SoftBank’s vision for India. And provides a useful framework to understand their investment in PolicyBazaar.

To achieve this goal, SoftBank needs to invest in and own a part of the most important “frontier technology” companies in the world, in areas such as robotics, AI, autonomous transport, space tech and Internet of Things (IoT), but it would also include the companies that would serve as the data-feeders for these high-tech firms. Which explains why the Vision Fund wants a piece of companies in e-commerce, food, work, medicine, transport and payments, companies that are seeking to bring new tech to old industries or are entirely disrupting and taking the place of the old guard. The major companies in these sectors will have access to massive amounts of data that will serve as the training harness for the downstream high-tech firms in AI and robotics.

Do read the whole piece if you are a subscriber. I recommend subscribing if you are not.

Why OLX’s Investment in FCG Spells Trouble for PakWheels

Olx group is investing $89M in Frontier Car Group (FCG), the parent company behind CarFirst. From TechJuice:

OLX Group announced $89 million global investment in the series C funding round of online car marketplace, Frontier Car Group, the parent company of CarFirst. Headquartered in Berlin, the startup is currently operating in six countries.

A joint press conference took place yesterday where OLX announced this investment in the parent company of Pakistan’s first online used car selling platform — CarFirst. This record investment aims to deliver the most comprehensive experience to auto buyers and sellers in the country.

FCG has operations in at least five other markets so not all of the money is going into CarFirst—a significant portion will though. But before we discuss CarFirst I would like to mention how smart this move from OLX is. Facebook and Google are accumulating most of the online ad revenues leaving very little on the edges. Although you can still run a decent business purely on ads, opportunities for long-term growth are always going to be limited. As soon as you start to get meatier you are going to hit the gravity center. And that means colliding with either Facebook or Google.

The antidote is to stay away from the gravity centre as much as possible. And that often means building a differentiated product. Or in this particular case investing in one. The investment makes more sense if you consider the fact that OLX was already in ad business. Which means 1) they were not in the best position to build a vertical integrated product themselves and 2) a company like CarFirst can benefit a lot from their audience. More exciting part of the news, however, is what CarFirst is trying to build. I wrote about the company in passing, when it launched while writing about PakWheels last year. From the article:

Kudos for trying something different but there are more questions than answers here. First, it’s not clear who the strategic partners are and how they are incentivized to stay with CarFirst. Second, this requires a lot of capital and even if you have enough to start things off it’s questionable how long you can sustain it. Cars are expensive. Also, I don’t understand why you want to limit yourself to your partners when you have already done the heavy lifting i.e. buying the car outright. And perhaps most importantly I am yet to understand the business model.

I am less skeptical now than I was a year ago. For one those $89M solve the second problem I sighted. Second, they have matured in their positioning and are not relying on their “strategic partners” narrative as much. That’s probably because they are more sure about what they are doing now than they were a year ago. The business model question is also clear to me now. Although there is no information on their website on what they do with the cars they buy. But it’s clear that provided the operational scale, which seems like they have or going to have sooner, they can buy a used car, fix/renovate it and sell it at a higher price.

It’s an audacious business model with a very high-risk profile. But the upside is equally big. I concluded my article on PakWheels:

So how you compete with PakWheels? You don’t. I mean you can but you will fail if you start from the obvious i.e. a car listing website. You can however if you start with things that are not obvious. Like studying a typical PakWheels’ user. Finding the pain points they have? And figuring out a couple of problems they face while using PakWheels. Every horizontal business model creates an opportunity for a vertical one and vice versa. The way to compete with PakWheels is thus by targeting a niche and owning that particular mindset. Not by creating another listing website.

Two types of people visit PakWheels. People who need to buy a car and people who need to sell one. The vulnerable of the two is the seller. Any buyer has a lot of options to chose from. The seller, however, is stuck with whatever she has. It was always going to be hard for CarFirst to convince buyers to go through them. Because, well why should they? They have lots of other options to shop around. Money is liquid in a way that a car is not. It’s only right that CarFirst is targeting the seller. And provided you create enough happy seller stories, buyers are going to flock in too. At some point in time shopping gets exhaustive.

The very idea behind PakWheels’ existence is predicated on the fragmentation of the market. There was no reliable way to sell your used car online. While PakWheels connects buyers with sellers, the business model relies on for both parties to keep looking. And not necessarily on getting a car sold. Or finding the perfect car. PakWheels was easing out your search. CarFirst is solving your entire problem. The latter is always more lucrative provided you get it right.

Fabricare is not Uber for Laundry, and that’s a good thing

From Pro Pakistani:

FabriCare, an app which aims to revolutionize the laundry industry to make it more convenient, affordable and efficient, has raised $100,000 in a seed investment round against a 16% equity stake.

The investment was shared among all three judges of the show, Idea Croron Ka.

Their pitch from the show suggests that they are Uber for laundry. I don’t think they are. Describing a typical lifecycle of their customer Fahad, the CEO, said (paraphrased): when a customer needs laundry she can request it via their app. Someone from Fabricare picks up the clothes, gets them cleaned and ironed and returns them back within 24 hours. This is not an Uber model. Uber does not cover the last mile itself. They let the drivers do that. For Fabricare to be Uber for laundry, the laundrymen, which Fahad referred to as partners, will have to pick the laundry themselves.

While this might seem trivial, it’s an important difference.

Uber, or any company calling themselves Uber for X, is a two-sided marketplace. They connect drivers with riders. They own the customer relationship but not necessarily the parties involved on either side of the relationship. They let the market forces i.e. their rating system govern the business. As an extension, their business model is to take a cut on the transaction. The major chunk of the transaction still goes to the driver. Fabricare, on the other hand, is owning the supply side. They are not exposing their “partners” to the customers. Which means they are a service provider and not necessarily a two-sided marketplace.

Both, providing a service and being a two-sided marketplace, have pluses and minuses. But you have to know where you are to exploit the inherent advantages. As an example, both Uber and Lyft have been trying to make subscription model work. The problem is subscription means a guaranteed availability of the service, something that requires a one-one relationship between the customer and service provider. A two-sided marketplace like Uber thrives on breaking that relationship let alone enabling it. A customer using Uber does not have a one-one relationship with one particular driver.

If I call Uber, drop it and then immediately call again the chances are I am going to get two different drivers. While that’s fine when I am traveling on my own schedule. It’s not ideal for my bound needs e.g. school pick and drop for my kid. For one, I, as a customer, would be freaking out on the prospect of having to deal with a new driver on daily basis. Second, the incentives don’t match up for the individual driver. Why would she go to pick a customer who has already paid a fixed amount of the trip, the incurring cost of which is unknown? This is especially true in peak hours. The same peak hours when the guaranteed service inherited in the subscription model is required the most.

On the other hand, a rental car service provider, by virtue of owning the supply side, can offer a subscription service with ease. They can easily allocate a driver to pick and drop someone from location A to B on daily basis. The customer would be happy too because she knows what to expect? Fabricare is more of a rental car service than Uber. While that’s not sexy it’s by no means any less of a business model. Maybe they can just call themselves Stripe for laundry or something.

Joke aside, it’s important to understand these intricate details of your business. The number one problem with laundry is that it requires a certain level of trust and care. You want your clothes to be treated in a certain way. And you don’t want to tell this to every new person that comes at your door. Second, laundry is a recurring predictable task. The Job-to-be-Done here is less about the task itself but rather in the satisfaction that it will be taken care of. Both are perfectly suited for a subscription service. Fabricare is getting the first part right. But conflating themselves with Uber is resulting in them having a blind spot about the second. And that’s limiting their actual potential.