WhatsApp Payments Followup, Uber to Sell Southeast Asia Unit to Grab

WhatsApps Payments Follow-Up

There was another angle to Paytm Vs WhatsApp debacle that I missed in my article last week. And that’s why NPCI allowed WhatsApp to launch, albeit limited beta, when certain UPI specifications were missing. Vijay Shekhar was quite adamant that he never got such a deal. That he had to comply with every little detail of UPI before launching for any user let alone 1M beta testers. He then went on to call Facebook manipulative and evil. And to put words in his mouth the modern day East India company. While a sprinkle of patriotism is nice the fact remains the Internet knows no boundaries. Unless you are of course China. And I am not sure India is willing to go that route. The country gained a lot from their Silicon Valley diaspora.

Part of Paytm’s success even has a lot to do with outside investments from Softbank and Alibaba. To Indian government’s credit, they refused to allow WhatsApp operate as a full fledge payment company. From ET Tech:

Last year, the messaging app, the largest in India, tried to partner with a private bank in the country to develop a digital wallet app to facilitate payments on its platform. That was when it ran into a reluctant Reserve Bank of India. The regulator was not ready to allow a foreign entity to enter India’s digital payments space, according to multiple stakeholders ET spoke with to piece together the story behind WhatsApp payments.

The fact that they are not operating as a wallet protects them from any legalities. This does not, however, explain why NPCI allowed them to launch without following full UPI specs. More importantly to create a walled garden of payments (iPhone only) when previously no one was allowed to do so. One reason could be the 270M user base. By courtesy of being the most dominant chat app in the country, WhatsApp has the ability to introduce UPI to a lot more people than any previous entrant had. Everyone else had to build their audiences from scratch. This is a typical example of demand controlling the supply. Only, in this case, it’s a regulator who controls the supply. Perhaps more importantly, a regulator willing to go lengths to make India a cashless society. You can’t say they had the wrong intentions.

With that said Vijay Shekhar’s outburst is good for the long haul. Though it might not have stopped WhatsApp from rolling out the beta version the way they wanted to. It will put significant pressures on them and NPCI moving forward.

Uber to Sell Southeast Asia Unit to Grab

From CNBC:

Uber is preparing to sell its Southeast Asia business to Singapore’s Grab in exchange for a sizable stake in the company, according to two sources with knowledge of the matter.

No deal has been reached yet, and the timing of any such deal is uncertain.

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.

Below remarks from Dara (Uber CEO) while talking to Goldman Sachs Technology and Internet Conference the week before suggest this is clearly part of the strategy. And not another bump on the road. From the same CNBC piece:

I think the team ran through an inventory of where we competed, and if we compete on let’s say even on a dollar-for-dollar basis against the local player, paying the same amount to drivers, collecting the same amount from riders, in general where we are now is, if both players are kind of spending equally we tend to win share. We’ve got a better brand, we’ve got better technology, better network, etc. Whatever it is, we tend to win share. There’s certain markets, China and Russia, where that wasn’t true. And if your only competitive advantage, or the only reason you can be in a market is because you can spend money, that’s not exactly a reasonable proposition.

Inspiring confidence on eCommerce, Dawn interviews Khalid Bajwa

Money is a powerful incentive. And the fact that it’s not attached to this newsletter is what making it suffer. I need to work hard on that.

Onto the update.

Inspiring confidence on eCommerce

From Pro Pakistani:

What e-commerce can provide is so much more than just a sale through a website – it can be the chance to educate those about the power of the internet, to aim to be a major contributor to the economy at large, and to truly change a person’s life.

It was through that pleasant experience that Sehat decided to hold a football match in the region, this time through their own arrangements, taking place in Late July 2017. A football match was held between the Imran Khan Foundation and the Langlands School and College at the Chitral Polo Ground in the center of the city.

I agree eCommerce is definitely more than just a sale on the website. But I don’t understand how a sporting activity can help in educating that. A football match is a great idea to increase your mindshare in a growing market. But for people in Chitral eCommerce simply does not exist let alone growing. What people of Chitral, or any other rural areas of Pakistan, need is confidence that online shopping is just as good if not better than a visit to a local market. And the only way you do that is to actually make them go through the process. And when they are in it make sure it’s smooth. Even better, let it exceed their expectations. Frankly, that’s not what’s happening.

To be fair this is not just a criticism on Sehat. At least they did something with good intentions. Most online stores seem careless about how their customers feel once a transaction is over. I bought something on Black Friday from one of those self-proclaimed best and biggest online stores. And it was a horrible experience. Since I wasn’t taking my foot off their tales their CEO called. He explained what has happened in a true gentleman way. But when I probed him why his email communication lacks the same level of empathy he has shown on the phone. His reply shocked me. Apparently, he gets 500 emails per day so does not have time for empathy. I forgot to ask if this, too many emails, is why their customer service is so bad.

Maybe I should just be happy that I finally got my order after like two months. But what irks me is that I have seen this guy mentoring young startups. And he definitely would have lectured them on how important the customer is.

Dawn interviews Khalid Bajwa

The interview is more about Khalid Bajwa than Patari. But it’s good. Often the personality of a founder predicates the culture of the company. And that’s certainly true here. This last bit is really fascinating though.

In his opinion, music has become almost exclusive to the corporate domain, where musicians are told what to play by MBAs who know nothing about it. We must give creative freedom to musicians, even if we sometimes disagree with what they come up with. We have to trust their judgment because they know the craft. Sometimes they will create something that is not commercial, but that is the only way we can make magic happen.

That’s probably what has happened to every form of fine arts in Pakistan.

Book List

I read a shit load of books last year. Well, actually they aren’t many but a lot compared to what I was reading in years before. Here is the complete list.

Paytm (India) adds messaging

I have been planning to write about India’s tech ecosystem for some time. The delta of knowledge it required overwhelmed me more often than not. Not only the ecosystem is far bigger than ours. Also, unlike Silicon Valley, I don’t know much about it. So even if on weekends when I managed to squeeze some time, I quickly gave up because I couldn’t figure where to begin. The answer, however, came from an unexpected place.

This is not the first time I heard praise for an Indian startup though. But I have a personal history with Paytm. Seeing what it has become gave me chills. Plus, it made a lot of sense as a follow up to my article on SimSim.

Back in 2013, I pitched Paytm for Pakistan to Plan9. Obviously, I didn’t make it. And I didn’t pursue it myself too. The idea of an app for mobile top-ups was intriguing back then—if nothing else. And it was the result of my own personal frustrations rather than a Paytm inspiration. I actually didn’t know Paytm existed until a few days later.

My family and I used a combination of 2-3 different telecom operators and a couple of them were not on-board with SCB’s online banking. Also, it was a value-added service back then. Telecom operators used to brag about it i.e. you can do mobile top-ups using this bank and that. So not only there was no bank offering top-ups for all operators, they were not planning to do either because they were seeking partnerships (read easy money) in a typical incumbent fashion.

I was more than sure I wasn’t the only facing this problem. So having a mobile app that can solve this all made a lot of sense. Not so surprisingly I wasn’t alone. Vijay Shekhar was three years ahead of me. Paytm, for the most part, was still a top-up service in 2013. It was tiny compared to the behemoth it has become now. On that end, I cringe what a lost opportunity Easypaisa has been. I vouched for it to be a separate company more than once. Here was a product way ahead of the competition and one that had the MVP built in. And yet they kept it tied to their own service for God knows what.

Today like Sriram said, Paytm is everywhere. From cucumber to Gold, you can buy anything and everything without carrying cash or leaving your couch. It also got little help from the government last year when it started demonetizing 500 and 1000 banknotes. And while banks and telecom operators in India have caught up but not before Paytm captured a large portion of the market. And now it’s on a head-on competition with them by offering services previously reserved to banks.

Paytm Inbox is just like their banking service, a fend off strategy to keep WhatsApp Business at bay. I won’t be surprised if WhatsApp gets a tough time here. Albeit all the Facebook money, they still have to work upwards. Paytm, on the other hand, will be pushing from the top.

Cheetay raises money

What’s a good sign you have reached your product market fit? Your customers will be talking more about you than yourself. I rarely see Cheetay in the news but I do read people talking about them. Some good, some bad. But they do. And these people are not your typical tech guys like me who feel obliged to comment on everything happening in the ecosystem. They are the actual customers who take Cheetay for its face value and that’s a delivery service.

The irony is they are in a competitive market. On that end, I found remarks from Ahmed Khan on their latest funding round quite assuring. From TechJuice:

… amongst the clutter it is imperative to be recognised not only for providing quality and timely delivery services but also to fulfil the promises you make to your customers by delivering their orders through efficient riders (delivery staff) who are meticulously trained to facilitate and satisfy the customer.

The fact that they have stayed small and focused on food in Lahore is smart too.

Logistics is an unsexy business. Most people won’t talk about the timely delivery passionately. But they are sure to let you know in a profound way if something goes wrong. But it’s also a lucrative one if done right. One of the impediments to eCommerce in Pakistan is the last mile problem. The fact that you don’t have a physical store can backfire because your window to perfect the experience is small. From the article:

Checking products in a well-decorated store is different from checking them on your couch with possible kids screaming at your back and the looming uncomfortable decision of giving your money away.

There is a solution to this, however. And that’s significantly improving the user experience at last mile. But this might require getting into the logistics yourself and making sure your customer is happy and satisfied before you leave the door.

What if there is a company that specializes in nailing down the last mile? A company that understands the Internet. A company which has grown up much like yours. And a company that’s more of a trusted partner than a vendor to be managed.

Veon Messaging App

It’s easy to judge Veon by comparing it with WeChat. The comparison, however, is flawed in the sense that WeChat didn’t become what it is today all at once. WeChat was a simple messaging app much like WhatsApp. Many things contributed to its success (having a vision is definitely one of them). But it also enjoyed the unfair advantage of being in China where almost every other messaging app was blocked. All platforms need a killer first product. Messaging for Chinese users was that product for WeChat.

On that end, I think Veon had the right mindset. They needed a product, a basic one, that people would like to use. They just happened to come with something that’s seven years too late. And considering that I know a little bit of just how corporate innovation works, that’s not a surprise to me. Hence, the best analysis was this comment on Pro Pakistani:

Screen Shot 2017-10-16 at 12.25.33 PM

Nash did a good analysis of what it could have been in a Facebook post (a worthy candidate for ProBlogs). I don’t agree with him because of the precise reason I stated above. What alarmed me though was one of Veon’s employee making the case of “do not compare it with WhatsApp”. His comments contradict what they managed to build in the first place.

If you don’t know where you are going, any road will get you there.—Lewis Carroll

What ProBlogs could be?

Guest blogging works because there are incentives on both sides. The writer gets the exposure and an opportunity to get in touch with people she considers her target audience. The publisher gets the content without having to go through the process of writing another story. This two-way incentive structure forces both the writer and publisher to do their best work. You eliminate this structure and you will potentially get a lot more content that serves nobody. This is what Tech in Asia did and it’s exactly what Pro Pakistani is doing with ProBlogs.

I am not totally against it. Common Good is a thing apparently but I have found it to be a myth more than reality. At least in the realm of tech businesses. What’s more perplexing for me is the motivation behind it. From the announcement by Talal:

Over the past few months, the amount of requests we’ve gotten from passionate readers who want to contribute have been overwhelming. To provide our readers with a platform where their opinions, on any topic, can be heard, we’re happy to introduce ProBlogs.

High demand for contributions? What a wonderful thing to have. Here is what could have happened.

1. Pro Pakistani to figure out topics they don’t normally cover but there is high demand for? Cricket is one. Politics? Big yeah too. Alternatively, you could have just asked for submissions and take cues from the supply.

2. Pro Pakistani announces that they are making it more formal to reach out to their audience. These are the topics we are open to right now. Every piece will go through some basic editing. The tone of the article will be preserved.

4. Once the post is up, Pro Pakistani will keep up with the writer by providing her the analytics and feedback from the editorial team.

5. Writers who don’t have access to big media companies and feel like they have a voice are particularly encouraged.

6. If a writer starts to get enough traction, Pro Pakistani will help her build her own blog and an audience for herself. When a writer wants to do that is up to her. Pro Pakistani will take 20% cut.

And onwards.

Travly folds

Can’t say I am sad for Travly. I am not even mildly shocked. What happened was inevitable. The startup never had a business model. And when they finally had, they were competing against Uber and Careem. Like all things Travly though, it’s not what happened. It’s how it happened is causing a stir inside me. TechJuice has a nice scoop which I would encourage you to read. But this little nugget from their investor is defining.

Travly’s co-founders are bright young boys but due to lack of experience and maturity, the startup couldn’t execute and meet its own setup conservative projections.

The statement shows something was not going right between the team and investors. Statement from Shahmir in the same article shows the angst from his side too. It’s one thing to have these differences. It’s totally different to show them in public. Investors need to realize that they are in VC business. And that implies huge risks. Besides 200K is not that much of an amount anyway.

Shahmir should have been careful while sharing his feelings. It’s ok to share differences but only within a wider context. And not because you need to respond to an investor’s statement which clearly seems like the case here.

Introducing Arkito And Government Regulating Ridesharing

For past year and a half, this newsletter didn’t have a website. That changes today. All the articles/updates from the beginning of this year are now available on a new website. And yes, I have changed the name.

The format of the newsletter did change earlier this year. I started to focus on writing more in depth about one story than to give a recap of 3-4. Plus, sometimes I went off the road to write about topics not necessarily related to Pakistan’s tech ecosystem but I thought you might enjoy. And I always hoped that I should be writing more than once in a week. The combination of these three reasons resulted in the name change. As for as the name goes, it’s a made up word from two Latin words meaning “well articulated”.

I would love your feedback on the design of the website.

One housekeeping for you i.e. this is the last email from “imran@pakstartupweekly.com”. Please add “hey.imranhaider@gmail.com” to your contact list to make sure you continue to receive these. Normally, MailChimp emails from “@gmail.com” don’t deliver properly. I will experiment for a few weeks and might create a G-Suite account if needed. Apart from that, nothing changes for you. You don’t have to visit the website if you enjoy email more.

Government Regulating Ridesharing Apps

From TechJuice:

Local cab drivers from the twin cities protested against the extremely low rates that Careem, Uber and other services provided, making it very difficult for them to keep up. In lieu of this, ITA Secretary Jawad Muzaffar said that they will be issuing a rate list to these ride-hailing services which they would have to follow strictly.

Rate-list, seriously? There is not one metered cab in the entire country regulated by the government. This is worse than they sitting in their chairs all day and doing nothing. Don’t get me wrong. I am all in for government regulations. I strongly believe it’s important for a functioning society. But the best way is to create a sandbox where companies can operate and win on innovation. Rather than to get in the way.

On a personal level, these taxi drivers have tortured me throughout my life. The situation was especially worse in Islamabad. They are rude at best and looters at worst. I am so happy, I no longer have to deal with them.

Coding in the age of Machine Learning

Industrial Revolution automated labor work. Information Revolution automated the mental work. Machine Learning Revolution will automate the automation itself. —Pedro Domingos

The magic of computers has always been in their programmability. You write a set of instructions and use them again and again to perform certain tasks. Inputs utilized are data and algorithms or programs (a program is just an algorithm written in a specific programming language). And the output is the desired result. This works great until you realize that you can’t distill everything into a set of instructions. For example, you can’t teach a computer to cook in a particular way. A computer does not understand a recipe because a recipe is not a set of instructions. A recipe cannot be a set of instructions because a computer has no idea what a spoon is. It will also not be able to determine what sugar is exactly. Humans know these specifics because of our observation and experience, but a computer does not have either of these capacities. Driving a car is another example. You can’t code the entire process of driving because it is a learned behavior we acquire through observation and repetition. We learn how to avoid dangers on the road by studying a manual and also through hands-on practice.

As an alternative example, computers excel at face recognition and this is something you can’t code. In a world, without machine learning, you would have to write a program for every uploaded photo for billions of people. This proves to be an immensely challenging task, because not only is every face fundamentally different, but so is every occurrence of that face. What machine learning does is to it take data (lots of photos) and the desired result (show that this is “John” and this is “Mary”) and it then creates an algorithm on its own. And then it starts applying that algorithm to all the photos. Since the algorithm is computer written, it actually modifies this on the fly whenever there is a mistake in face detection. The result is an algorithm that improves as data increases. This is unlike traditional programming where more data means less effectiveness of the original algorithm.

Two things are of note here. First, machine learning is dependent on data, large sets of data. Less data means less effectiveness of the underlying algorithm. Second, the automation process for automating a program means that initially, hundreds of lines of code can easily become millions of lines of code in no time. This is such a massive complexity killer. A million lines of code might be a programmer’s life’s work. But for a machine learning algorithm, it’s only a matter of hours, if not minutes provided you have enough data.

Our lives are learning algorithms. We learn something and that learning becomes part of our life algorithm. Using that learning algorithm trajectory we build a greater knowledge platform. Often, the more knowledge we gain, the better our life algorithm becomes.
Historically we have taught skills to computers in a “do this and do that” format. And what they learn is effective, however, as soon as they performed the task, they forget about it. For example, if you ask a computer to add 2+2, you will have to code the algorithm. And no matter how many times it performed that task, the fact that 2+2=4 never got added to its algorithm. Because it never had one of its own. Machine learning enables that. Since the algorithm is now devised by the computer itself, it only needs to perform 2+2=4 once. After that, it becomes part of its knowledge base.

It’s clear that role of a computer programmer is going to change dramatically because of machine learning. A useful way to understand that change will be farmer and manufacturer analogy. From The Master Algorithm:

The power of machine learning is perhaps best explained by a low-tech analogy: farming. In an industrial society, goods are made in factories, which means that engineers have to figure out exactly how to assemble them from their parts, how to make those parts, and so on—all the way to raw materials. It’s a lot of work. Computers are the most complex goods ever invented and designing them, the factories that make them, and the programs that run on them is a ton of work. But there’s another, much older way in which we can get some of the things we need: by letting nature make them. In farming, we plant the seeds, make sure they have enough water and nutrients, and reap the grown crops. Why can’t technology be more like this? It can, and that’s the promise of machine learning. Learning algorithms are the seeds, data is the soil, and the learned programs are the grown plants. The machine-learning expert is like a farmer, sowing the seeds, irrigating and fertilizing the soil, and keeping an eye on the health of the crop but otherwise staying out of the way.

I originally wrote this for Modev blog.

Boring Careem and SimSim Mobile Wallet Launch

Boring Careem

I had a bad week traveling via Careem. My rides got canceled multiple times, captains behaved rudely and I was charged for canceling the ride while it was the captain who refused to come. And yet I don’t have anything negative to say about the company. They are on a ride. From #HerJourney to monthly packages to the launch of a ride insurance. Everything is pointing towards things going well and up. The product feels being evolved for the right reasons.

But perhaps most important thing they are doing is over communicating. Every time I book a ride, I get multiple app updates, SMS and emails. It’s tiring and boring to see the same message multiple times. But in a society where corporate trust is nonexisting, over positive communication helps build exactly that. And it works as a heal to the occasional, often unavoidable, bad experiences. Finding it very hard to locate Uber now a day.

SimSim Mobile Wallet Launch

The i2i insight is my recent favorite newsletter. It’s really well done every time. From their recent issue on Fintech in Pakistan:

Last week, Pakistan’s financial technology (fintech) space made a great stride forward with the launch of the SimSim digital wallet. This digital wallet is exciting news because (1) It received regulatory approval from the State Bank of Pakistan and (2) It was the result of a unique partnership between FINCA Microfinance Bank Limited and FINJA Pvt. Limited. Translation = It was the first time a bank and a fintech company partnered together in Pakistan to design a digital financial product.

If we looked at these numbers on their own, it might seem that the odds as well as our cultural realities are stacked against the success of digital financial solutions in the country. But i2i’s recent research into the e-commerce ecosystem would suggest otherwise. In our conversations with CEOs/Founders of leading e-commerce platforms, many noted that while typically 90% of transactions remain Cash on Delivery during Black Friday deals, when prepaid payments are incentivised, the numbers get flipped on their heads. This suggests that the problem isn’t trust or a cultural preference for cash, but instead it’s a question of incentives.

I particularly loved the last line. Businesses are always a game of incentives. While you maybe right in your changing the world first moto, that has to come via the better incentives route. Otherwise, you will end up exhausting yourself too early too often. On the flipside though, part of the problem with Fintech is also the regulatory requirements. From the same newsletter again:

The Pakistan government can learn from the Singaporean government’s strategy.  The Monetary Authority of Singapore (MAS), the state’s regulatory body, abstains from regulating fintech startups until they become a significant rival to the country’s financial system. The vision behind this is clear – the country does not want to impede innovation through tight and often constricting regulations. I am not arguing that this is the exact approach that should be used, but rather that there is a lot of space in between that can be explored to ensure that there is enough room for continued experimentation resulting in better and more adaptive solutions.

Sorry for the long excerpts but the newsletter conveys the point very well. Do read the whole thing here.