Achieving the BJP's BHAG

I am just done with going through the BJP's IT vision document and this is what I could quickly see as big promises:-
*National ID card to merge all the other ID cards together.
*10mn Students to be given laptops for Rs. 10,000. All those who cannot afford it will be given interest-free loans for the same.
*Broadband internet in every town and village with unlimited upload and download at roughly Rs. 75 per month - the cost of cable TV.
*Mobile penetration to be taken to 1bn subscribers
*Take Internet users across nation to 1bn.
* All People below poverty line to be given smart phones.
* The entire country to be banked.
* Entire country to have basic health insurance and hospitalization to be cashless.
*Every school to be IT-enabled.

I am impressed. This is a great vision to have and I am happy that L.K. Advani (BJP) has had the courage to articulate this Big Hairy Audacious Goal at the risk of sounding like Don Quixote. I think that all political parties should be asked to immediately state their own IT vision and I hope that they will all come out with such BHAGs.

On my part, I would like to suggest to the BJP a few things as a CEO and one who would know the practical problems to implement the above vision. My suggestions rest on two big strategies + 1 comment :-
Suggetsions:
*Make Mobile and a 10-finger-Biometric national ID the key pillars of your strategy - the other parts of your vision will be easier to play out if you get the National ID and the Mobile penetration parts done.
*Leverage the power of retail distribution that the mobile operators, the banks, schools, hospitals and the corporate sector can provide you.
Comment: Set a BHAD - Big Hairy Audacious Deadline - 12 months to get 400mn Indians to get a national identity and 2 years to get 1bn Indians a mobile phone and a national ID.

Now how do you tactically get to meet this goal ?
*Take a really capable person and make him the head of the National ID project. My suggestion - Prof. Jhunjhunwala from IIT Madras.
*Give him 3 months to put together a frame work for the National ID and to invite open feedback through the WWW.
*Another 3 months to build the infrastructure for the same.
*Change perception - The NID is not a 'card' but an application that can be installed on any smart card.
*Take the mobile phone numbering systems of all operators, all their KYC details and nationalize them immediately. All mobile numbers and the databases, All KYC documents and scanned versions of supporting evidence will become property of the NID (National ID Dept.). This is anyhow needed to ensure number portability. Similarly take KYC and personal information lying with all banks licensed to operate in the country and give them a deadline of 3 months to convert them all to digital and 'submit' it to the NID Department in a prescribed format.
*Legislate that all SIM cards issued should support the download of a 'smart national ID card' and the same should be at no cost to the government.


Now for the easier stuff. You have a national ID framework, you have the base level of information through what is already in the telco and bank network - how do you ensure the final mile compliance - The stick policy, namely:--
*Make it mandatory for the telcos to ID all present mobile subscribers and make generation of a national ID mandatory (if you don't have one) before you can get a new connection. This is an easy task for the telco. Keep in mind that he already has all information apart from the fingerprint scan of his customer. Keep also in mind that the longest time when a mobile customer is not engaged with a telco touch point is 1 month - in the case of a post paid subscriber who pays his bill monthly. Most prepaid users (80% of the base) recharge their phones 2-3 times in a month. Give the telcos 3 months and after which if your NID is not linked to your phone numbe, it will switch off.
*Make all banks and stock brokers also conform to the National ID within 3 months. If you don't have the national ID linked to your bank account, you cannot take money out of your bank account. All new account holders to create ID before they can operate their bank account.
*Make all educational qualifications linked to the National ID.
*Make all hospital admissions and issuances of birth certificates linked to the national ID.
*Give companies a 3 month period to ensure that all their staff members have been IDed - either through the bank or the telecom channel and after that make it illegal to pay anyone who has not got an ID. All salaries to non-Identifiable people will be mandatorily deposited into a government account and can be claimed by the person only after he creates his national ID.
*Lastly, Do away with all other IDs- PAN, Election Card, Ration Card, Director's ID, Driving License, Passport etc. and migrate all systems to be only based on NID. That means you cannot pay your taxes or claim a tax refund if you don't have an NID, you cannot register land or sell land if you don't have a national ID, you cannot give a driving test if you don't have a national ID, you cannot vote in the gram panchayat elections if you don't have a national ID etc.

That's it. I would be surprised if we implement the above and are not able to ID the entire country within 3 years. If we do do this, it will mean India has built a solid foundation on which to catch up with the rest of the world.

Disclaimer: My views above may sound far fetched. I feel they are practical and we need to move with speed as a country.

Things that keep me thinking in these times

* How to identify where the low hanging fruit are so that cash for expansion can be generated from operations.
* How to grow the overall market as opposed to just taking market share away from others with entrenched relationships.
* How to improve the way we measure productivity so we can monitor and improve it.
* How to bring in a certain 'organizational rhythm' so that everyone wakes up every morning fairly in control of his life and knowing what he is expected to do.
* What areas to prioritize and how to be nice when postponing certain opportunities.
* How to ensure that all staff members see the big picture and don't feel the daily revenue pain that I definitely feel. I feel they can focus more on their job with better results if they do this.
* How to pick the few things that are really urgent and to put everything else on the back burner so that they can be fixed in serial order.
* How to identify the people hiding under their tables and to let them know nicely that I am watching and don't consider it the right thing for leaders to do.

Another week goes by. . .

--originally wrote this post last saturday. Haven't had the time to finish it through the week. Just did so----

So it's the end of another long and stressful week and I've enjoyed my much needed Sunday break. I'm sitting here before I go to bed and wondering about a topic to blog about.

India's business press is filled with news about Subhiksha - one of the largest retail chains in India going through a severe liquidity crisis. I personally feel the chain is probably going to be shut down with the investors (ICICI Venture and Premji Invest) being forced to learn the hard lesson that equity values can be negative.

I'll try and summarize what went wrong:- Subhiksha was trying to become the largest retailer in India. It felt that the best way to do so was to open up 1000+ stores on a national basis, purchase in bulk from suppliers and sell at a discount to the end customer making money on the volume. Unfortunately for Subhiksha and their shareholders, it seems like the management team miscalculated a few things:-
* The time it would take each store to break even and hence the budget they needed to set aside to fund operating expenses till that time.
* The complexity of managing product availability and quality at their stores given the diverse purchasing habits and needs of the different parts of India.
* The change in the fund raising environment making it very difficult to continue to sustain even the minimum cost structure given that most of the company's equity had already been used up in capex for setting up the new stores leaving no money to fund either operations (till break even) or the purchase cycle.

Sadly, while it is easy for a lot of us to stand by and criticize, fact of the matter is that these miscalculations are common to quite a few entrepreneurs. Subhiksha's story is a reminder to get back to the basics:-
1. What are the reasons outside of cost why people would want to patronize your business? Are you offering them convenience? products that are not available elsewhere? Quality?
2. How are you positively impacting all parties? Do they have a vested interest in seeing you succeed? In Subhiksha's case this really goes towards their relations with suppliers - Is it a case that dealing with Subhiksha was more efficient or hassle free for the FMCG companies or was it just the same as dealing with the local grocer but with order sizes larger and profit margins thinner?
3. Is the product the best there is? How are you measuring success? Was Subhiksha going head onVs. a Food Bazaar or a More / Spencers/ Hypercity? Was it measuring by talking to the Colgates and Cadbury's of the world if their stores in the same locality as the other stores were performing better in sales numbers? If no, then why? If you don't fix the product then effectively what you are doing is multiplying mistakes 1000 times when you start replicating the format elsewhere. Is it not better to perfect the format first before going national.


Sadly, these are common mistakes that all entrepreneurs are bound to make. I guess I should count myself as lucky to notice the failures of others and try and avoid making the same mistakes.

Coping with the recession

I was just going through my blog and looking at my last post on the recession. While I feel I did manage to say what I felt was gonna happen with the economy, I must admit I myself did not feel it would be as bad as I feel it will be now. I did not realize the number of people who had leveraged themselves on the way up and only now do I get some sense of the chaos as they de-leverage or re-leverage. Anyhow, thought I would write about how I am trying to get my companies to cope with the recession. I don't know if these are the right strategies or whether we need to do things a bit differently. If you have any suggestions, please let me know:-

1. We're trying to get everyone to focus on personal productivity. That means all people staying more focused on work, working smarter and using better IT tools and managing schedules and meetings more effectively.

2. Doing more with less. We're trying to of course cut flab wherever we can but more importantly redirect senior resources from slightly more futuristic projects to areas which are very critical and need the involvement of senior managers. So for instance, our Business Development team is aiding the sales team, the revenue team is working with the Back office and I'm personally doing business development and product management.

3. We're engaging more with our customers at a strategic level. The good thing about the recession is that most of our clients and partners seem to have some time to meet in a relaxed manner. I'm trying to meet as many of them as possible to understand what their top priorities are in these times and how we can look at modifying our offering (if required) to help them to meet their new 'recession time' goals.

4. We're pushing hard on new offerings while not growing the technology team. To a certain extent this is a dilemma. On one hand, we feel that no new competitors will come up and so we are not running against the clock and on the other hand, we want to launch quick and when there is not much noise around. Our technology team here has been really good. They're a bunch of good developers who are highly motivated and committed to the cause. We're lucky to have built such a team.

and lastly, though I wish we were doing more of this

5. We're trying to keep the team together and get them to celebrate the cheaper things in life. I want to do a lot more of this but I think we've made a beginning in a small way this month.

Do let me know if you have some more suggestions on how to cope. We're trying our best as this doesn't seem to be going away anytime soon.

New Year, New Resolutions

Sorry everyone for not really posting much. Myself and Hemisha took a small diving break to coincide with our anniversary and then have been spending quality time in Mangalore with parents, brother and large number of relatives. It's been tiring as this is the wedding season in Mangalore and we've been out every day eating out and dancing, socializing non-stop. I've hardly had some rest to think.

Well it's a New Year and this year I want to make some easy resolutions which I have some shot of keeping:-
1. To become a nicer gentler person overall esp. in my interactions with family.
2. To improve my pathetic fitness.
3. To spend more time working during the week and do absolutely no official work on the weekends.
4. Go out more - both on the official front with meetings and on the social side.

Let's see how it goes!!

Amazing - Satyam Saga Post 2

Amazing stuff I've been reading. It seems the 8.6% stake that the Raju family owned in Satyam was already pledged to banks - They had borrowed cash against the same already and had used the proceeds to invest in Maytas Properties and Maytas Infrastructure. So the plan seems to have been to use all of Satyam's money to buy the shares they owned in Maytas and then return money to the banks to free up their shares. In effect, using money lying in a company they managed but owned very little of to exit their investments before the markets further deteriorated. Is it only me or does this whole confusing rigmarole seem almost criminal?

Poetic justice that their desperate actions caused the stock to plummet and meant their value did not cover the loans that banks had advanced to them earlier causing them to ask them for further collateral. They not being able to provide the same, banks went ahead and sold stock to recover as much as they could, further depressing the stock. It seems they could end up losing their entire shareholding in the company. Poetic justice indeed!!

What were these guys thinking?

So Satyam computers decides to spend 1.3bn USD of its cash and take on 300mn USD in debt to buy Maytas Infrastructure and Maytas properties - two companies owned by its founders. The founders btw own 9% of Satyam ONLY. The resolution is passed unanimously by the board and then communicated to the stock exchanges. Shareholders go ballistic and the stock tanks by 54% - The company has to call of the deal fearing god knows how many lawsuits.

What surprises me is the names on the Satyam board

• B. Ramalinga Raju
  
  
• B. Rama Raju
  
  
• Ram Mynampati
  
  
• Dr. (Mrs.) Mangalam Srinivasan
  
  
• Dr. Krishna G. Palepu
  
  
• Vinod K. Dham
  
  
• Dr. Mendu Rammohan Rao
  
  
• T. R. Prasad
  
  
• Prof. V. S. Raju

The links point to their profiles. What were these people thinking? I am sure that they have decades of experience and know their respobsibilities. Or is sitting on a board just about making a quick buck and getting the company to pay for your stay in expensive hotels? Shameful to say the least. I wouldn't be surprised if shareholders decide to replace a significant number of board members and maybe the three executive directors too. They anyhow seem to be more interested in constructing bridges and apartments in India instead of spending their time and energy delivering software to customers in the U.S of A.

The daily routine

Saturdays and Sundays are my relaxed days. For the past month, I've been on a tough schedule that I love. It's made me feel much better. Here is what it looks like:-

5:30a.m. - Alarm goes off. Try to wake up
5:55a.m. - Watch U.S. markets closing reports on CNBC, check google finance, email on blackberry, Paytronic sales and new merchant sign up reports.
6:10a.m. - Head to the gym
6:20-7:45a.m. - Gym - primarily the treadmill (preparing for the mumbai marathon) and some light weights
8:00-8:15a.m. - Do some laps in the pool
8:40a.m. - Back home
8:40-9:20a.m. - Breakfast, Read the papers (The Mint in detail, Glance through the ToI), Get ready for work
9:30a.m. - Get to office (benefits of living next to work)
7:45p.m. - 10:30p.m. - Social time - The general routine is to have dinner at home and spend some time with Hemisha and watch some TV though we regularly also go out for dinner or a movie (the PVRs at Oberoi mall or Juhu are our usual destinations.)
10:30p.m. - Bed time (unless I have conf. calls with the U.S. when this gets extended to about 11:30p.m.)

Saturdays and Sundays I have a much more relaxed schedule. I don't go to the gym or Pool and try and leave work a bit earlier (6:30ish). Try to use this time to catch up on reading, meet up with friends and other start-up people and also for other personal stuff. I like having a routine. Have had once since the beginning when I became an entrepreneur. I like it as it brings some predictability into my otherwise very unpredictable life.

The terrorism post

So I'm late. Virtually every blogger who had something to say has said it. I'm done with dinner and thought of writing a new blog post. Asked Hemisha for her suggestions on a topic to post on and she said "Aren't you going to write anything about the terror attacks? " For those who have not heard, on 26-11-2008 Mumbai, the city I live in, was attacked. You can read more about it here.

I'm gonna try and share a few of my views. I do have some perspective as I do feel I have seen terrorism at close quarters post 9-11.

Firstly a preface:- Our government needs to realize that warfare has changed. When I was a kid my parents used to subscribe to the India Today magazine which was posted to us overseas. I remember seeing images regularly which basically had two columns - India and Pakistan with the number of Fighter Jets, Tanks, Missiles, soldiers etc. that each one had stacked up graphically against the other. Warfare used to mean out bombing, out tanking or out numbering the other side in battle. The states realized this on 9-11-2001 and we should have taken a cue but seeing that we haven't we should take one now. Fighting terror requires very different people, processes and technology. It does not matter if we have a large highly trained millitary, lots of jets or the nuclear bomb. Winning this war will mean realizing that we are fighting a very different kind of enemy and so rejigging our entire millitary and defense to think along these lines. Here are a few of my pointers:-

1. We need to change our metrics for whether we have won or lost a battle. Our battle is not won if we kill the terrorists. Our battle is won if we are able to unearth their plans and capture them, thwart their plans. This is far less glamorous and will not be as appreciated by the masses but this is what we must consider as a win and this is what we must celebrate. The objective of the other side is not to come to Mumbai and conquer our territory, declare it as a part of Pakistan. It is to cause damage to property, innocent lives and to the social environment in our country. The terrorists seem to clearly understand their objectives and goals - Can we say the same about our government and millitary?

2. We need to realize that fighting terror is an expensive defensive battle. It is akin to protecting your farm from a flying pest. While for the pest it takes hardly any resources to come in and cause havoc, protecting the farm from such pests means making investments many orders of magnitude larger. We as a democracy will need to realize that significant money will need to be dedicated to protecting our security. Our government will have to keep defense spending as it is and create an equal (if not larger) budget dedicated to 'Homeland security'. To give you a quick comparison - The States has a homeland security budget of about 60bn and a defense budget of about 550bn. India's defense budget is about 25bn USD. We will have to set aside at least 3-4bn USD on a yearly basis towards homeland security.

3. Technology is a key weapon against terror. This is because fighting terror is about two primary areas - watching out for suspicious activity (surveillance and monitoring) and deep diving once you get a clue to be able to follow the trace (sort of being able to follow a trace even though it is very faint. We need our cities to be covered in surveillance cameras, all indians to be fingerprinted and given smart card and biometric IDs, all bank transactions to be tracked, voice calls on all telecom networks to be logged for 6-9 months and then speed analyzed, trace chemicals to be detected through traces in the air etc. We will need to invest in technology and people with a technological bent of mind to be able to implement these in the department of homeland security.

4. Problems we will face will be non-trivial. India is a country which generates large volumes of data. Imagine the complexity with trying to archive all voice calls for even a year. Then imagine the problem if you are trying to analyze these calls by having humans listen to them (physically impossible as they will be listening to real time conversations in real time. This requires software that can analyze calls much faster than real time = probably 40-50 times faster!!) . I suspect we will need to invest heavily in research into these problems and to finding solutions that can then quickly be implemented by the government. Government owning research will be highly inefficient. My suggestion would be to fund labs at some of the IITs and give 40-50mn USD to 2-3 funds whose charter would be to fund companies that they think are developing relevant technologies for the government.

5. It will be difficult to do everything ourselves. We will need to buy software and tools from overseas vendors who have working solutions to similar problems being faced by their governments. To do this, we need to have a procurement process that is reasonably open and transparent. We will also have to be mature and not cry foul everytime we see a company has been awarded a multi-million dollar contract.

and Lastly,
6. We need to prepare as a nation for Emergencies. All kids need to be taught how to swim, climb down from the 3rd floor balcony, how to administer first aid, how to put out fires, how to stay calm etc. If they don't clear the basic course in 'survival skills and emergency procedures' they should not be able to get past 6th grade. All buildings need to have fire drills, evacuation procedures and emergency exits. We need to have an ambulance system that is designed for the chaos that is India and our roads. Most importantly we need to train our people that in situations of war, they need to sit indoors, remain calm and not expect to be kept posted about everything. We should be content with listening to hourly government bulletins and to not having any other reporting in moments of war.

So having said this much, I must end here. It's been interesting writing this and I might be motivated in the future to write some more!!

Honey, the economy is shrinking!!

So I'm back in India after my trip to dubai and have been continuously asked by multiple people while I was in dubai and over the last two days as me and Hemisha have been visiting people for Diwali about the state of the economy and how I think things will play out. I've tried to spend some time thinking my own thoughts about the same and figuring out how the economy will play out and how it will affect my life and business. So here are some of my thoughts about what is happening at the moment.

We are entering a time of uncertainty and fear. Smart companies and smart families will err on the side of caution. Their own earning potential and financial situation may have not deteriorated but being stingy has never hurt anyone and so they will try and curb discretionary spending and reduce unnecessary overheads.

What will happen because of this slowdown in smart families spending? It's like 10 families stuck on an island with a million dollars in cash to trade between themselves. If each of them just spends 100,000 USD across the year, the GDP is just 1,000,000 USD while if they were to spend it twice (once from the money they earn from trading with others), then the GDP is 2,000,000 and thrice then 3,000,000 USD. Basically spending money helps the economy to grow without the government having to insert more money into the system. As people reduce or defer their spending we will see the economy shrinking.

You will see corporates earning lesser money as a function of time - e.g. Fewer people will go to watch movies and fewer people will spend money on that new pair of diamond earrings. What does this mean ? Companies will be forced to shrink also i.e. they will be forced to 'right size' themselves to keep in mind the new reality. They can do this in two ways - by reducing variable costs and secondly by controlling supply and distribution i.e. by going slow on rollout of new projects that may cannibalize their existing outlets - Think Shoppers stop having only one outlet to service the whole of Bombay from 1991 - 2000.

This forced contraction of some of the largest consumer oriented businesses will mean a multiplier effect on the sentiment of people at large. Many people will be out of jobs and many companies who were dependent on a large number of 'cookie cutter' projects will see their business plans go from looking like a hockey stick to one looking like a jump from a cliff. Sad but unfortunately true.

My view is this shrinkage of spending and the economy will mean we will see very bleak times over the next 3-4 years. Reason being that people have built the foundations of empires on the premise that consumption is there (which it was 3 months ago) and very few have the money to build out the entire building. Money being like water will chase the best returns it can get and in todays environment finding the best return is a bit chaotic so most owners of capital will adopt a wait and watch or else 'take it or leave it' attitude. Smart entrepreneurs will focus on sales and growing businesses organically but that means that we will not see heady days and wild spending for 2-3 years ahead.

I would love to belv. that the economy will recover sooner but I doubt it. For it to recover, it will need the discovery of a new disruptive business model - think software exports, Call centers etc. so that capital can flood into that sector and salaries can go through the roof, confidence in the economy improves and droves of people start spending money together again. If there is such a disruption we will see the economy improve in a 3-4 year time frame else we should be prepared for this to take longer. It will improve but it will take longer because over that period of time, significant number of people who should have been buying on a yearly basis have deferred their decision until it is no longer possible and so when sentiment improves they all look at purchasing together and because of businesses having contracted investment in capacity has not been made and so individual businesses will see high revenues per unit (per McDonalds outlet) etc. thus making the case for rolling out a larger number of outlets more compelling.

I personally feel this correction is a good thing. My generation is fortunate to have seen this and thus to learn a few things:-
1. Equity is a risky investment and Debt always supersedes equity. Very few people realize this when they invest in the equity markets but businesses can have negative net worth. You can't see a negative figure on CNBC and you can't buy any stock for negative money but equity can go to negative and when that happens companies are bankrupt and debt superseding equity means the debt holders now own the company with the equity holders getting NOTHING. Hence, I think it's important for most people to use leverage carefully and to ensure that they have complete confidence that the managements of companies they are backing are putting money into projects that absolutely must be done and are borrowing money from reliable sources at fair terms.

2. Never trust others when it comes to investments. Unfortunately anyone with an MBA can create an obvious systemic incentive. Which means that all investment advisers had a vested interest in selling you products as they were getting a commission on the same. Your bank manager has a target to meet and hence was talking to you about ULIPs or trying to get you to book FDs. My view is that most investment advisory firms will go bankrupt. They have just eroded all trust among their clientele and they will never be able to recover. Funnily, most of their employees seem to have been belving their own spiel and I expect most of them will now realize that all the commissions that they made selling ULIPs are now down to 10% of their value. We've learnt that the old tactic works best - compare apples to apples and then play 2-3 providers and take the cheapest product. Never get into any situation where you are not comparing apples to apples.

3. We seem to be continuously reminded that we need to manage things that are within our control - time and our resources effectively. These are the two things that we control and relying on anything or anyone external to help us with time management or providing us additional resources is just putting our achievement of goals at risk.