What’s an investment for?

Simpaisa has raised money. Don’t be surprised if this is the first you heard about them. I did too. From TechJuice:

Many online businesses have struggled to generate real revenue growth due to the lack of a simple, one click payment system that allows recurring payments. SimPaisa enables digital businesses to monetize their products better by allowing their customers to make online payments using their existing SIM card balance. SimPaisa is the only payment system in Pakistan to offer this service.

Due to the lack of trust in online credit card payments, SimPaisa allows users to enjoy the benefits of premium services without the necessary risks involved. For merchants, SimPaisa allows for applications to be monetized, tapping into the 140 million plus SIM subscriber market.

Any payment system is a two-sided marketplace. You need payer and payee. I don’t know if such a marketplace exists where people are willing to pay via their career billing for Internet services. Let alone it needs a payment system that’s more trustworthy than Visa. Also, most apps on Apps/Play store have no direct to consumer business model. They operate on free + ads or the app is just a companion to their service. It’s not a local problem. It’s a global one. And for Pakistan, I assume things could only be worst. Even if such a market exists I could not think of a worst way to pay than carrier billing. I am already finding ways to lessen my spendings with those guys.

For most Internet businesses, a case can always be made for figuring things out as you go. Facebook didn’t have a business model for almost three years. To compensate for that, however, you need some other metric or usage statistics. Apart, payment systems, I don’t know there is anything fancy about them. It’s not a product that can pull a market from both ends in itself. You only need a payment gateway when you are absolutely sure that you need to pay for something. You don’t actively look or use one just for the heck of it.

Perhaps, most importantly the idea is practically flawed. It’s hard enough if you have to deal with one big corp at a time, for a strategic advantage, let alone three. The nature of Simpaisa implies that as you grow your dependency on telcos will grow as well. There is no way you will ever be in a position of power while dealing with them in the lifespan of your business. And you are running into something they all have intentions to do themselves e.g. Easypaisa, MobiCash etc. Marc Andreessen has more to say about this here (h/t Waqas).

So yes, I don’t know what this investment means. The best part, however, is their website. It has two pages. The most important of them i.e. sign up page is broken. And the landing page has an image photoshopped to perfection. An Android screenshot on top of an iPhone body.

The End Game

I am becoming increasingly wary of investment news. We are living in an age where the Internet is given. And yet most startup CEO’s talk about it like they invented it just a couple of months ago. Words like “online” and “digital” have become scapegoats to hide their actual value proposition or the absence of it. Being on the Internet does not mean anything. It’s what you do and how that’s valuable to your customer is what matters.

Also, almost every startup you pick, it’s probable that a version of it has already dried and died in the past. That’s not necessarily a bad thing. What’s concerning is that the new entrants do not seem to be learning anything from it. They don’t have any new insights about the market that their previous fellows lacked because they were the first ones. Which begs the question of what makes them get into the game, to begin with. I suspect it has nothing to do with their product or the market opportunity. But rather it has everything to do with entrepreneurship being the new cool.

Of course, there are exceptions and I know few of them. But most startup founders are just happy to be part of Plan9 or NIC. Or best yet to get a term sheet. Getting to Plan9/NIC or securing an investment is not an end game in itself. It’s just a mean to get somewhere. No amount of mentoring or money is going to help if you don’t know what that somewhere is. And a plan to reach there. More often than not the latter two are found missing.