tag:blogger.com,1999:blog-306774662024-03-06T20:32:56.438-08:00Windia!This blog focuses on Industry, Leadership, Management, and Entrepreneurship in India. There are no news items in here. These are my opinions, views and analysis.Sujaihttp://www.blogger.com/profile/16539694685428659940noreply@blogger.comBlogger37125tag:blogger.com,1999:blog-30677466.post-89451376582217761152022-01-23T10:24:00.000-08:002022-01-23T10:24:10.758-08:00 So, what is Bitcoin? Is it like Gold, or a Currency, or a Stock? <span style="font-size: small;"><b><span style="font-family: "Cambria",serif;">IS BITCOIN LIKE GOLD?</span></b>
</span><p class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;"><span style="font-size: small;"><span style="font-family: "Cambria",serif;">I am told that bitcoin is like one of those
rare objects, like diamonds or gold, and therefore humans crave for it. <span> </span>Rarity, or limited supply, is what makes
humans covet them. <span> </span>Bitcoin is rare,
therefore humans covet it, is how they reason. </span></span></p><span style="font-size: small;">
</span><p class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;"><span style="font-size: small;"><span style="font-family: "Cambria",serif;">I personally do not think that is the
case.<span> </span>Take Astatine, which is one of the
rarest element on the planet Earth.<span> </span>It
is rare, and yet, humans have no craving for it.<span> </span>Or take Iridium, a rare metal, which is also permanent
like Gold, Diamond and Platinum, and yet, it is not a coveted metal. </span></span></p><span style="font-size: small;">
</span><p class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;"><span style="font-size: small;"><span style="font-family: "Cambria",serif;">I think humans like trinkets, baubles,
something intricate, beautiful, or shiny, or glittery, something they can wear,
something they can show to others, and amongst these intricate, shiny and
glittery objects, the rare ones turn out to be most coveted, and therefore
expensive.<span> </span>That's the reason why Art by
famous painters is expensive.<span> </span>They are
rare, but they are also considered beautiful.<span>
</span></span></span></p><span style="font-size: small;">
</span><p class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;"><span style="font-size: small;"><span style="font-family: "Cambria",serif;">Lot of people tend to think of Bitcoin as
Gold.<span> </span>That is not the case. </span></span></p><span style="font-size: small;">
</span><p class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;"><span style="font-size: small;"><span style="font-family: "Cambria",serif;">Bitcoin is more like Astatine or Iridium.<span> </span>It is rare, yes, but it is NOT a trinket, a
bauble, intricate, beautiful, shiny or glittery.<span> </span>Like how humans showcase glittery ones to
people, nobody showcases their Bitcoins.<span>
</span>It cannot be shown. The owner doesn't feel the same way, the way he
feels when he showcases his Kohinoor diamond, or Picasso painting, or vintage Ferrari.<span> </span></span></span></p><span style="font-size: small;">
</span><p class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;"><span style="font-size: small;"><span style="font-family: "Cambria",serif;">When shit hits the fan, Gold still has
value, because humans like to continue to possess it. Because it is shiny. <span> </span>Nobody cares for Astatine or Iridium, even
though it is rarest of rare.<span> </span>Nobody
wants to buy it. <span> </span>Same with Bitcoin. </span></span></p><span style="font-size: small;">
</span><p class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;"><span style="font-size: small;"><span style="font-family: "Cambria",serif;">Bitcoin has some fundamentals that are
wrong, concerning human nature. <span> </span>Humans
covet certain objects across generations, across cultures, almost giving it
universal appeal.<span> </span>Gold has withstood
that test of time, and remains coveted across generations, cultures, and
probably for a very long time into future.<span>
</span></span></span></p><span style="font-size: small;">
</span><p class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;"><span style="font-size: small;"><span style="font-family: "Cambria",serif;">However, there are some fads that remain
confined to certain times and certain regions, but very soon fall out of
fashion.<span> </span>Bitcoin is more like that
fad.<span> </span>It closely resembles the Dutch Tulip
Mania, but still falls short, because Tulips were at least beautiful to look
at.<span> </span>Bitcoin does not. </span></span></p><span style="font-size: small;">
</span><p class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;"><span style="font-size: small;"><span style="font-family: "Cambria",serif;">Bitcoin has nothing that makes it appealing
like Gold.<span> </span>It is not a bauble, a
trinket, intricate, or beautiful.<span> </span></span></span></p><span style="font-size: small;">
</span><p class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;"><span style="font-size: small;"><b><span style="font-family: "Cambria",serif;">Therefore, Bitcoin is nothing like Gold. </span></b></span></p><span style="font-size: small;">
</span><p class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;"><span style="font-size: small;"><b><span style="font-family: "Cambria",serif;">SO, IS BITCOIN A CURRENCY?</span></b></span></p><span style="font-size: small;">
</span><p class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;"><span style="font-size: small;"><span style="font-family: "Cambria",serif;">Yes, a currency may have no intrinsic
value.<span> </span>The paper currency has no value.<span> </span>However, it is a promissory note. <span> </span>Its credibility comes from the fact that a
sovereign nation has pledged that promise.<span>
</span>Therefore, when shit hits the fan, the hope, or the assumption, but most
importantly, the trust, is that this sovereign nation is going to take its
promise seriously and will give you something back in return for that currency
note.<span> </span></span></span></p><span style="font-size: small;">
</span><p class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;"><span style="font-size: small;"><span style="font-family: "Cambria",serif;">A sovereign nation could always do
something else to compensate its citizens.<span>
</span>It could give out land, it could dole out food, it could give gold, it
could convert their currency into future bonds.<span>
</span>It could provide future employment, future loans, or future
prospects.<span> </span>And that's why people trust
in a sovereign nation, and consequently, they trust the promissory note issued
by that sovereign nation. </span></span></p><span style="font-size: small;">
</span><p class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;"><span style="font-size: small;"><span style="font-family: "Cambria",serif;">That's why the more stable a sovereign
nation, the more valuable or trustworthy its currency is.<span> </span></span></span></p><span style="font-size: small;">
</span><p class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;"><span style="font-size: small;"><span style="font-family: "Cambria",serif;">The more likely a sovereign nation is going
to default, go bust, or renege, the less valuable or less trustworthy its
currency is. </span></span></p><span style="font-size: small;">
</span><p class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;"><span style="font-size: small;"><span style="font-family: "Cambria",serif;">US Dollar is coveted, not because of its
intrinsic value, but because of its credibility.<span> </span>US is seen by the people as a sovereign
nation that has stable future, a solid future, a permanency, stability, and
most importantly, the credibility, that it will not renege on its promise.<span> </span>Whether it is indeed the truth or not, is
debatable, but the perception is such, and therefore the US Dollar is coveted. </span></span></p><span style="font-size: small;">
</span><p class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;"><span style="font-size: small;"><span style="font-family: "Cambria",serif;">What happens to Bitcoin? <span> </span>Is it a promissory note? If so, who is going
to stand as guarantee? When shit hits the fan, and you want to cash in, which
bank do you run to? Who is going to honor the promise? Who do you hold
accountable? Who do you make pay for it something in kind, something else in
return? </span></span></p><span style="font-size: small;">
</span><p class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;"><span style="font-size: small;"><span style="font-family: "Cambria",serif;">When shits the fan, Bitcoin is going to
disappear like thin air. There is nobody standing behind the counter to give
something else back to you.<span> </span>No sovereign
nation.<span> </span>No bank. <span> </span>And that's why it is NOT a promissory note. </span></span></p><span style="font-size: small;">
</span><p class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;"><span style="font-size: small;"><b><span style="font-family: "Cambria",serif;">Therefore, Bitcoin is not a currency. </span></b></span></p><span style="font-size: small;">
</span><p class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;"><span style="font-size: small;"><b><span style="font-family: "Cambria",serif;">SO, IS BITCOIN A STOCK? </span></b></span></p><span style="font-size: small;">
</span><p class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;"><span style="font-size: small;"><span style="font-family: "Cambria",serif;">I see Bitcoin ONLY as a stock.<span> </span>Because people buy a stock hoping its stock
price goes up in future. </span></span></p><span style="font-size: small;">
</span><p class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;"><span style="font-size: small;"><span style="font-family: "Cambria",serif;">And in that regard, Bitcoin behaves
absolutely like a good stock.<span> </span>As long as
its price goes up, one likes to buy it. </span></span></p><span style="font-size: small;">
</span><p class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;"><span style="font-size: small;"><span style="font-family: "Cambria",serif;">But the essential problem is: Bitcoin
doesn't have anything intrinsic.<span> </span>It is
not a commodity, like aluminum or gold, which always have some intrinsic
value, and it is NOT a business which shows growth and has future
prospects.<span> </span>It is NOT a currency either. </span></span></p><span style="font-size: small;">
</span><p class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;"><span style="font-size: small;"><span style="font-family: "Cambria",serif;">So, what is it? And that's where it becomes
problematic. </span></span></p><span style="font-size: small;">
</span><p class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;"><span style="font-size: small;"><span style="font-family: "Cambria",serif;">Because it is completely thin air, Emperor's
New Clothes. </span></span></p><span style="font-size: small;">
</span><p class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;"><span style="font-size: small;"><span style="font-family: "Cambria",serif;">It is an artificial system created for rich
enthusiasts, like a game, where one could keep propping the stock price up, by
enrolling more and more people into buying thin air. <span> </span><span> </span>Some
MBA colleges play this game, where they are given artificial money to play
with.<span> </span>Bitcoin is something like that. <span> </span>A game for rich enthusiasts to play with.<span> </span></span></span></p><span style="font-size: small;">
</span><p class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;"><span style="font-size: small;"><span style="font-family: "Cambria",serif;">People who are committed into it or vested
into making a profit out of this game, keep propping it up, but otherwise, it
is just a game, of people buying thin air.<span>
</span>And like Tulip mania, which went bust, one day, the hype of Bitcoin is
just going to end, and it will just fall down, to become almost zero value. <span> </span>Tulip mania at least created organic trash,
which could be used as manure. <span> </span>In this
case, one just has to shut down the computers, and it’s all gone.</span></span></p><span style="font-size: small;">
</span><p class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;"><span style="font-size: small;"><span style="font-family: "Cambria",serif;">And after hundred years, like how we read
the Tulip mania, the future generations will read about Bitcoin mania, and they
will wonder how foolish our generation was.</span></span></p><span style="font-size: small;">
</span><p class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;"><span style="font-size: small;"><b><span style="font-family: "Cambria",serif;">PREDICTION</span></b></span></p><span style="font-size: small;"><span style="font-family: "Cambria",serif;"></span></span><p class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;"><span style="font-size: small;"><span style="font-family: "Cambria",serif;">
I have an ongoing bet with a friend. </span></span></p><span style="font-size: small;">
</span><p class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;"><span style="font-size: small;"><span style="font-family: "Cambria",serif;">I predict that Bitcoin will be less than $5
by 2030. </span></span></p><span style="font-size: small;">
</span><p class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;"><span style="font-size: small;"><span style="font-family: "Cambria",serif;">He predicts that Bitcoin will be nearly a
$1M by 2030. </span></span></p><span style="font-size: small;">
</span><p class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;"><span style="font-size: small;"><span style="font-family: "Cambria",serif;">If he wins, I have to buy him the most
sophisticated smartphone of that time. </span></span></p><span style="font-size: small;">
</span><p class="MsoNormal" style="margin-bottom: 0cm; text-align: justify;"><span style="font-size: small;"><span style="font-family: "Cambria",serif;">If I win, he as to buy me the most
sophisticated digital camera of that time.</span></span></p><span style="font-size: small;">
</span>Sujaihttp://www.blogger.com/profile/16539694685428659940noreply@blogger.com0tag:blogger.com,1999:blog-30677466.post-14417915909865711752012-09-19T12:17:00.000-07:002012-09-22T03:33:42.161-07:00India is not producing enough<div style="text-align: justify;">
<a href="https://docs.google.com/open?id=0B26-ADLHfVvUc3RrWUxGcE12Mm8"><span style="font-family: Arial,Helvetica,sans-serif;"><span style="font-size: small;"><span style="line-height: 150%;">Download PDF</span></span></span></a><br />
<br />
<span style="font-family: Arial,Helvetica,sans-serif;"><span style="font-size: small;"><span style="line-height: 150%;">Right now, Indian economy is going through a slump,
and in the last few months we have seen Indian currency taking a massive hit
reducing its value against dollar by nearly 20%. The growth projections for India's GDP have come down
from earlier eight-plus percentages to six-plus percentages – some analysts have
even predicted only a five-plus growth rate. Two months ago, petrol prices were hiked by
eight rupees in a single day, the highest increase in Indian history, and
already another hike is now announced. There could be an economic crisis ahead, but
we are quite optimistic that this phase will be over soon and that we will go
back to getting adjusted to the new and changed environment – that’s the Indian
attitude towards solving all the problems – <i>swalpa
adjust maadi </i>(adjust a little).</span></span></span><br />
<span style="font-family: Arial,Helvetica,sans-serif;"><br /></span>
<span style="font-family: Arial,Helvetica,sans-serif;"><span style="font-size: small;"><span style="line-height: 150%;">Some
analysts attribute this sudden worsening of
Indian economy to Euro crisis, while some others blame the
policy-paralysis of
UPA government. Many industry heads have been
clamoring for Finance Minister of India to bring reforms hoping such an
action
will somehow bring India back on the track.
And the UPA government has recently reacted to allow FDI into some of
the
sectors, which is being greeted enthusiastically by the industry body.
But the essential question remains - is the root cause for our flailing
economy the lack of reforms or is there something far more fundamental
that
needs to be corrected? If we take a look
at Indian economy from a macro level we will notice something grossly
wrong
with the big picture, with the way we are headed, with the way we do
things. There is something drastically wrong with our foundations.</span></span></span><br />
<span style="font-family: Arial,Helvetica,sans-serif;"><br /></span>
<span style="font-family: Arial,Helvetica,sans-serif;"><span style="font-size: small;"><span style="line-height: 150%;">Most
Indians are not involved in producing goods of
value. Instead, most of us are involved
in trading, buying and selling stuff without actually producing
anything. Since we are not producing enough as people, we are not
earning enough as a country.</span></span></span><br />
<a name='more'></a></div>
<br />
<div class="MsoNormal" style="line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: Arial,Helvetica,sans-serif;"><span style="font-size: small;"><span style="line-height: 150%;">No amount of fiscal or policy reforms will make us
produce more unless we take up the task of increasing our production,
consciously and deliberately. Leaving it
to the natural course of events will not take us in that direction. In fact, I see a reverse trend, where we are
complacently getting out of activities of production, running after what one investor
described as ‘low hanging fruits’ – an euphemism for ‘shortcut to immediate
but unsustainable financial gain’. </span></span></span></div>
<div class="MsoNormal" style="line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: Arial,Helvetica,sans-serif;"><br /></span></div>
<div class="MsoNormal" style="line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: Arial,Helvetica,sans-serif;"><span style="font-size: small;"><span style="line-height: 150%;">Each of the developed countries, like England, USA,
France, Japan, or Germany, have gone through periods of explosive
growth at certain point in their past, a phase of rapid industrialization, when
these nations transformed themselves from medieval economies to prosperous nations.
During those days, they produced goods
on an aggressive pace, consuming lots of raw materials, producing the result of suddenly
improving the overall quality of life for its people.</span></span></span></div>
<div class="MsoNormal" style="line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: Arial,Helvetica,sans-serif;"><br /></span></div>
<div class="MsoNormal" style="line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: Arial,Helvetica,sans-serif;"><span style="font-size: small;"><span style="line-height: 150%;">The important items produced and consumed by all
industrialized countries during their rapid growth phase is steel and
coal. </span></span></span></div>
<div class="MsoNormal" style="line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: Arial,Helvetica,sans-serif;"><span style="font-size: small;"><span style="line-height: 150%;"> </span></span></span><br />
<span style="font-family: Arial,Helvetica,sans-serif;"><span style="font-size: small;"><b><span style="line-height: 150%;">Steel</span></b></span></span></div>
<div class="MsoNormal" style="line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: Arial,Helvetica,sans-serif;"><br /></span></div>
<div class="MsoNormal" style="line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: Arial,Helvetica,sans-serif;"><span style="font-size: small;"><span style="line-height: 150%;">Production and consumption of steel are the key
factors for economic growth of Western Europe and America in the 19<sup>th</sup>
century. </span></span></span></div>
<div class="MsoNormal" style="line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: Arial,Helvetica,sans-serif;"><br /></span></div>
<div class="MsoNormal" style="line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: Arial,Helvetica,sans-serif;"><span style="font-size: small;"><span style="line-height: 150%;">There was a tremendous increase in the production of
raw material called pig iron. The growth
of pig iron output during 1840 and 1913 was ‘dramatic’. Britain increased it by ten times during this
time. Though USA and Germany started
late, they grew much faster, increasing the production by nearly hundred times
in just fifty years from 1870 to 1913.
During the same period, other countries, like France, Belgium,
Austria-Hungary, and Russia, grew in production by nearly six times. </span></span></span></div>
<div class="separator" style="clear: both; text-align: center;">
<span style="font-family: Arial,Helvetica,sans-serif;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgSdOa4N0cBZoJaS4el6h0ywBTH8bjFbsNBgZLyQyP8iMn_7b1Xxp-e5-cbt3OLn2uePuWYrHSJ1D-w4K3shwd3tCTSjCibC9fBjAZ-5AE-AvkBt46nbaN8FIwA7SzJOxdi1Oxo/s1600/1-PigIron-in19th-Century.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="251" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgSdOa4N0cBZoJaS4el6h0ywBTH8bjFbsNBgZLyQyP8iMn_7b1Xxp-e5-cbt3OLn2uePuWYrHSJ1D-w4K3shwd3tCTSjCibC9fBjAZ-5AE-AvkBt46nbaN8FIwA7SzJOxdi1Oxo/s400/1-PigIron-in19th-Century.png" width="400" /></a></span></div>
<div align="center" class="MsoNormal" style="line-height: 150%; margin-bottom: 0.0001pt; text-align: center;">
<span style="font-family: Arial,Helvetica,sans-serif;"><span style="font-size: small;">
</span></span></div>
<div class="MsoNormal" style="line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: Arial,Helvetica,sans-serif;"><span style="font-size: small;"><span style="line-height: 150%;">Between 1875 and 1920, American steel production grew
from 0.4 million tons to 60 million tons, increasing by nearly hundred
times, making USA the dominant world leader in steel. Germany was not far behind. Other countries like France and Belgium grew
by leaps and bounds. This ‘explosive’ growth was enabled by major technological
breakthroughs, but also assisted by other factors such as protective tariff,
continuous and rapid expansion of urban infrastructure, factories, railroads,
etc. </span></span></span></div>
<div class="MsoNormal" style="line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: Arial,Helvetica,sans-serif;"><br /></span></div>
<div class="MsoNormal" style="line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: Arial,Helvetica,sans-serif;"><span style="font-size: small;"><span style="line-height: 150%;">Most of these increases in production were accompanied
by a series of technological breakthroughs and innovations, in mining and in
refining. The countries realized the
importance of technological and engineering advantages which gave them lead over others. </span></span></span></div>
<div class="MsoNormal" style="line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: Arial,Helvetica,sans-serif;"><br /></span></div>
<div class="MsoNormal" style="line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: Arial,Helvetica,sans-serif;"><span style="font-size: small;"><span style="line-height: 150%;">It is an observed fact that ‘steel consumption increases
when economies are growing’. It is the
same for developing countries in modern times. Yearly growth of steel production in China has doubled from 13% in 1995 to 32%
in 2005. Today most of the global steel
is used in China which consumes 45.5%, in comparison to only 20.5% in 2001.</span></span></span></div>
<div class="MsoNormal" style="line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: Arial,Helvetica,sans-serif;"><br /></span></div>
<div class="MsoNormal" style="line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: Arial,Helvetica,sans-serif;"><span style="font-size: small;"><span style="line-height: 150%;">Indian
Minister for Steel, Beni Prasad Verma, informed Rajya Sabha that one of the
best indicators to measure development on infrastructure is per capita steel
consumption, and yet we are actually not moving in that direction. </span><span style="line-height: 150%;">India is not producing or consuming
enough steel (or coal) which formed the bulwark of Industrial Revolution. Though India took some right steps
after Independence, it stands defocussed now, its priorities unclear, running
after short term gains losing out on the big picture. </span></span></span></div>
<div class="MsoNormal" style="line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: Arial,Helvetica,sans-serif;"><br /></span></div>
<div class="MsoNormal" style="line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: Arial,Helvetica,sans-serif;"><span style="font-size: small;"><span style="line-height: 150%;">In
2010, India's per capita steel consumption was 52 kg while the world average was
203 kg. Present Indian consumes less per capita
steel than an American of 1800s. Countries like South Korea consume nearly twenty times
more than India. </span></span></span></div>
<div class="separator" style="clear: both; text-align: center;">
<span style="font-family: Arial,Helvetica,sans-serif;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiRzjE7DCYEVQDf-M09RTziQmEfwntHtKARuIcWZQ2Z7aZfcAVdYuO3tRDrC_2v3_XcvNdI7oU5_22VtXM4zDZSneWU_ZnuKofw3eDIcr23s5cO55OuPLDttH-TJ6FWdeUSFSkN/s1600/2-Steel-Per-Capita-Comparison.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="257" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiRzjE7DCYEVQDf-M09RTziQmEfwntHtKARuIcWZQ2Z7aZfcAVdYuO3tRDrC_2v3_XcvNdI7oU5_22VtXM4zDZSneWU_ZnuKofw3eDIcr23s5cO55OuPLDttH-TJ6FWdeUSFSkN/s400/2-Steel-Per-Capita-Comparison.png" width="400" /></a></span></div>
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<span style="font-family: Arial,Helvetica,sans-serif;"><br /></span></div>
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<span style="font-family: Arial,Helvetica,sans-serif;"><span style="font-size: small;">
</span></span></div>
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<span style="font-family: Arial,Helvetica,sans-serif;"><span style="font-size: small;"><span style="line-height: 150%;">Not
only this, India’s consumption is heavily lopsided in favor of urban
India. Per capita consumption of steel
in rural India is only 10Kg, five times less compared to urban India. </span></span></span></div>
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<span style="font-family: Arial,Helvetica,sans-serif;"><br /></span></div>
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<span style="font-family: Arial,Helvetica,sans-serif;"><span style="font-size: small;"><span style="line-height: 150%;">Though
it is anticipated that Indian steel consumption
will grow nearly double to more than 150 million tons by 2020 from the
current
70 million tons in 2011, India shows no signs of increasing its steel
production. In fact, the growth for 2020 was initially projected at 200
million tons
but later revised because of our poor initiatives and conditions. </span></span></span></div>
<div class="MsoNormal" style="line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: Arial,Helvetica,sans-serif;"><br /></span></div>
<div class="MsoNormal" style="line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: Arial,Helvetica,sans-serif;"><span style="font-size: small;"><span style="line-height: 150%;">While countries like South Korea and Taiwan are
increasing their steel consumption at a tremendous rate, India seems to show a
dip in its consumption because it is not investing as heavily into its
construction and other growth industries. Since India does not spend on
infrastructure it has no capacity to grow its economy.
</span></span></span></div>
<div class="MsoNormal" style="line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: Arial,Helvetica,sans-serif;"><br /></span></div>
<div class="MsoNormal" style="line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: Arial,Helvetica,sans-serif;"><span style="font-size: small;"><span style="line-height: 150%;">Though we are not produce and consume enough finished
steel we don’t lag in production of the raw material, iron ore. Production of iron ore in India is almost twice
that of the internal consumption. Of the
total iron ore production of 208 million tons in 2010, only 111 million tons
was consumed domestically, while 97 million tons was exported. Looks like Indians are far more interested in
selling its raw material to other countries than using it for domestic consumption or turning it into finished
steel. India imported 7.4 million tons of finished
steel, used for construction and finished goods like automobiles, while it
exported only 3.2 million tons in 2009. The recent scams in mining suggest
that our politicians are in cahoots with Indian industry robbing this nation of
its mineral wealth without creating any value for the country. </span></span></span></div>
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<span style="font-family: Arial,Helvetica,sans-serif;"><br /></span></div>
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<span style="font-family: Arial,Helvetica,sans-serif;"><span style="font-size: small;"><b><span style="line-height: 150%;">Coal</span></b></span></span></div>
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<span style="font-family: Arial,Helvetica,sans-serif;"><br /></span></div>
<div class="MsoNormal" style="line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: Arial,Helvetica,sans-serif;"><span style="font-size: small;"><span style="line-height: 150%;">Interestingly,
the steel production is dependent on consumption of coal. Around 70% of global steel production depends
directly on coal, where coking coal is converted to coke and then used in blast
furnace to smelt iron ore. The rest 30% of global steel is produced in furnaces
that use electricity, which is once again produced by coal-fired power
plants. Therefore, production of steel
and coal and intricately linked. </span></span></span></div>
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<span style="font-family: Arial,Helvetica,sans-serif;"><br /></span></div>
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<span style="font-family: Arial,Helvetica,sans-serif;"><span style="font-size: small;"><span style="line-height: 150%;">Even
though India has one of the largest reservoirs of coal on the planet, it is
still the fourth largest importer - importing 105 million tons in
2010. Coal remains a vital ingredient
because 70% of the power in India is generated by coal.</span></span></span><br />
<span style="font-family: Arial,Helvetica,sans-serif;"><br /></span>
<span style="font-family: Arial,Helvetica,sans-serif;"><span style="font-size: small;"><span style="line-height: 150%;">India
ranks 25 in the world in per capita consumption
of coal by industry and by rail transport while China ranks 1. The
growth rate for coal consumption for China follows a hockey stick while
for India it is a steady line, showing the different paths we
have taken.<span style="font-size: small;"> <span style="font-size: small;"><span style="line-height: 150%;">In 2010, China consumed nearly six times
more coal than India. Now in 2012, it is estimated
that China consumes half of the world’s coal which amounts to nearly 7 billion tons. </span></span></span></span></span></span></div>
<div class="separator" style="clear: both; text-align: center;">
<span style="font-family: Arial,Helvetica,sans-serif;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhuaz1GqevdSMstols24t-wRDuncWA4L9B9JC2iWFbP4rMkC2x_VDqOiEw6a3I13kHsla49QIIzFlUVmeRK79yERVgdaFwJHVGufr0tNHgKUDZOUxxcaCpApgeDzv98DPh5_d6D/s1600/3-India-China-Coal-Consumption.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="276" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhuaz1GqevdSMstols24t-wRDuncWA4L9B9JC2iWFbP4rMkC2x_VDqOiEw6a3I13kHsla49QIIzFlUVmeRK79yERVgdaFwJHVGufr0tNHgKUDZOUxxcaCpApgeDzv98DPh5_d6D/s400/3-India-China-Coal-Consumption.png" width="400" /></a></span></div>
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<span style="font-family: Arial,Helvetica,sans-serif;"><span style="font-size: small;"><span style="line-height: 150%;">India is floundering.
While it needs coal to increase its energy output and steel production,
it is not producing enough nor consuming enough. Instead it is embroiled in
scams and scandals giving away the natural reserves to private players who are
illegally siphoning off coal to be exported to other countries. I<span style="font-size: small;"><span style="line-height: 150%;">t is discovered that nearly 20 millions of tons of coal was exported out of the
country as raw material. Some reports indicate that 143 private companies
were allotted 83 coal blocks with over 17 billion tons of reserves.</span></span></span></span></span></div>
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<span style="font-family: Arial,Helvetica,sans-serif;"><br /></span></div>
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<span style="font-family: Arial,Helvetica,sans-serif;"><span style="font-size: small;"><b><span style="line-height: 150%;">Energy</span></b></span></span></div>
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<span style="font-family: Arial,Helvetica,sans-serif;"><br /></span></div>
<div class="MsoNormal" style="line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: Arial,Helvetica,sans-serif;"><span style="font-size: small;"><span style="line-height: 150%;">Most importantly, India does not produce enough energy
to sustain the growth of Indian industry - whether it is manufacturing,
research or services. Indian industry
continues to be concentrated in top ten cities of India because rest of India
does not get adequate power. Some towns
and villages in India get only six hours of power per day. We are one of most energy starved countries
on the planet. Per capita energy
consumption of India is 1/5<sup>th</sup> of the world average, consuming only 571
kWh, while a Norwegian <span style="font-size: small;"><span style="line-height: 150%;">consumes
23,500 kWh and an American consumes 13,000 KWh</span></span></span></span></span></div>
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<span style="font-family: Arial,Helvetica,sans-serif;"><br /></span></div>
<div class="MsoNormal" style="line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: Arial,Helvetica,sans-serif;"><span style="font-size: small;"><span style="line-height: 150%;">No wonder human development index (HDI) has direct correlation with
per capita energy consumption. </span></span></span></div>
<div class="separator" style="clear: both; text-align: center;">
<span style="font-family: Arial,Helvetica,sans-serif;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgXqLxl5NNi6D_ouNa9weGzA7iGgsmxSn2bjEj-W-pu_0RtxuJoY_5FjAe8EUT0pq6us9kQsAThyBzogfXUPDS0uuf_rNo3ToKgs74cxrSFYsM0JjF0USPVFjOngndjj8QuXnnf/s1600/4-Energy-Per-Capita-Consumption.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="243" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgXqLxl5NNi6D_ouNa9weGzA7iGgsmxSn2bjEj-W-pu_0RtxuJoY_5FjAe8EUT0pq6us9kQsAThyBzogfXUPDS0uuf_rNo3ToKgs74cxrSFYsM0JjF0USPVFjOngndjj8QuXnnf/s400/4-Energy-Per-Capita-Consumption.png" width="400" /></a></span></div>
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<span style="font-family: Arial,Helvetica,sans-serif;"><br /></span></div>
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<span style="font-family: Arial,Helvetica,sans-serif;"><span style="font-size: small;">
</span></span></div>
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<span style="font-family: Arial,Helvetica,sans-serif;"><span style="font-size: small;"><span style="line-height: 150%;">The power failure is a regular feature in India which
has only exacerbated now. Most Indian
villages see power outages for most part of the day. Industry in the cities depends on battery
backups and generators. Power generated from diesel generators costs Rs. 14 per unit while the
power from the installed plants costs only Rs. 4. A month ago, India went through a
major crisis where most of the Northern part of India was in darkness for few
days, with outages exceeding 20% of the installed
capacity. This is because of the fuel shortage to the
power plants. In June 2011, nearly 31
thermal power stations maintained 'critical' stock levels while 18 stations were at 'super
critical' levels, with only four days of fuel in stock. The problem is that the production of coal has
not increased to meet the increase in installed capacity. </span></span></span></div>
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<span style="font-family: Arial,Helvetica,sans-serif;"><br /></span></div>
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<span style="font-family: Arial,Helvetica,sans-serif;"><span style="font-size: small;"><span style="line-height: 150%;">Production of energy should have been the top
priority for India. Some of the policy
makers have suggested that India has to increase its energy production by
nearly ten times to meet its energy requirements. India can produce energy from coal, nuclear and
hydro. CO<sub>2</sub> emissions from
India are only 1.7 billion tons per year, which is one twentieth of the world
average at 30 billion tons/year.
Renewable energy, though desirable is not viable to generate power to
the entire country. In most countries it does not contribute more than 2% of
the energy production. To get enough power using solar panels one has to cover one fourth of
barren and uncultivable land in India. </span></span></span></div>
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<span style="font-family: Arial,Helvetica,sans-serif;"><br /></span></div>
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<span style="font-family: Arial,Helvetica,sans-serif;"><span style="font-size: small;"><span style="line-height: 150%;">Not only is India lagging in producing growth enablers
like steel, coal and energy, which helped countries in West Europe and North America to
become the dominant players on the world scene, it does not participate in
other high-tech industries which have helped nations like South Korea, Taiwan
and Japan to grow rapidly to become developed nations. </span></span></span></div>
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<span style="font-family: Arial,Helvetica,sans-serif;"><br /></span></div>
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<span style="font-family: Arial,Helvetica,sans-serif;"><span style="font-size: small;"><b><span style="line-height: 150%;">Manufacturing</span></b></span></span></div>
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<span style="font-family: Arial,Helvetica,sans-serif;"><br /></span></div>
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<span style="font-family: Arial,Helvetica,sans-serif;"><span style="font-size: small;"><span style="line-height: 150%;">Manufacturing continues to be dominated by the
developed countries. And those countries
who aspire to become developed nations increasing their manufacturing
output. Also, there is a correlation
between country’s manufacturing output and its total GDP. As a general rule, a country tries to increase
its manufacturing output to increase its GDP.
USA continues to be the world’s largest manufacturer since World War II
producing nearly 20% of the world’s manufacturing goods, and is still 45% larger than
fast-growing China. India’s
manufacturing output is about 1/6<sup>th</sup> of China. Some of the key manufacturing items are
machinery and equipment, industrial supplies, non-auto consumer goods, motor
vehicles, and aircrafts. </span></span></span></div>
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<span style="font-family: Arial,Helvetica,sans-serif;"><span style="font-size: small;">
</span></span></div>
<div class="separator" style="clear: both; text-align: center;">
<span style="font-family: Arial,Helvetica,sans-serif;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg-BR2Ws_4JlwUB4qDeB5tmYOV_HYb2qME_MwfInuOqv2ThEjjThOEZCZYZaggakq1DlI46CWOJmEmKrwL230_PQxJEDFIy-QBto6MuhCzuOilQSgO7IzwD_113UcaT9NXdqgbC/s1600/5-Manufacturing-Output.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="263" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg-BR2Ws_4JlwUB4qDeB5tmYOV_HYb2qME_MwfInuOqv2ThEjjThOEZCZYZaggakq1DlI46CWOJmEmKrwL230_PQxJEDFIy-QBto6MuhCzuOilQSgO7IzwD_113UcaT9NXdqgbC/s400/5-Manufacturing-Output.png" width="400" /></a></span></div>
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<span style="font-family: Arial,Helvetica,sans-serif;"><br /></span></div>
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<span style="font-family: Arial,Helvetica,sans-serif;"><span style="font-size: small;"><span style="line-height: 150%;">One important figure used for performance of a
developing country is the contribution of manufacturing output as a share of
country’s GDP. Industrializing
countries see an increase in the contribution from manufacturing. </span></span></span></div>
<div class="separator" style="clear: both; text-align: center;">
<span style="font-family: Arial,Helvetica,sans-serif;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi0A8rtdpoZje9nmkyvVS6R0Wfq16r7bdj9W4tBHEG6_haq8nt1nCg17S8NBs2xKDkyNcfk5pDkVdDs7cvwX3Uzbt2jIbr8rIruu-L64e3Mwh6Pb9-LnjT1QkLBl2MvH8JwnwvO/s1600/6-Manufacturing-Share-GDP.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="220" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi0A8rtdpoZje9nmkyvVS6R0Wfq16r7bdj9W4tBHEG6_haq8nt1nCg17S8NBs2xKDkyNcfk5pDkVdDs7cvwX3Uzbt2jIbr8rIruu-L64e3Mwh6Pb9-LnjT1QkLBl2MvH8JwnwvO/s320/6-Manufacturing-Share-GDP.png" width="320" /></a></span></div>
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<span style="font-family: Arial,Helvetica,sans-serif;"><br /></span></div>
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<span style="font-family: Arial,Helvetica,sans-serif;"><span style="font-size: small;">
</span></span></div>
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<span style="font-family: Arial,Helvetica,sans-serif;"><span style="font-size: small;"><span style="line-height: 150%;">Currently, most
developed countries earn from manufacturing and high-end services, while its
dependence on agriculture is negligible. </span></span></span></div>
<div class="separator" style="clear: both; text-align: center;">
<span style="font-family: Arial,Helvetica,sans-serif;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhHQAD4e0ylHplWXBP5BteXij20k9tWpHITfwxkKK5RTbS09s2cICppLvg-K3hzEukKIC0fD8tp668tDtKFzfl3en6kQNa_jPnGhyVAiiTf0T7EyPPdTKaQP5rFNHA7_QW5FswY/s1600/7-Agriculture-Share-GDP.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="240" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhHQAD4e0ylHplWXBP5BteXij20k9tWpHITfwxkKK5RTbS09s2cICppLvg-K3hzEukKIC0fD8tp668tDtKFzfl3en6kQNa_jPnGhyVAiiTf0T7EyPPdTKaQP5rFNHA7_QW5FswY/s400/7-Agriculture-Share-GDP.png" width="400" /></a></span></div>
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<span style="font-family: Arial,Helvetica,sans-serif;"><span style="font-size: small;"><span style="line-height: 150%;"> </span></span></span></div>
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<span style="font-family: Arial,Helvetica,sans-serif;"><span style="font-size: small;">
</span></span></div>
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<span style="font-family: Arial,Helvetica,sans-serif;"><span style="font-size: small;"><span style="line-height: 150%;">India continues
to depend heavily on agriculture which forms 25% of its GDP while employing 56%
of its population. In most developed
countries and other developing countries, there is a migration of its workforce
from agriculture to manufacturing and high-end services. We see that most of the developed countries
have significantly low number of people employed in agriculture. Unless India steps up its manufacturing game such
movement out of agriculture will not be possible and therefore the income
earning capacity of bulk of the population will continue to be very low. </span></span></span></div>
<div class="MsoNormal" style="line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: Arial,Helvetica,sans-serif;"><br /></span></div>
<div class="MsoNormal" style="line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: Arial,Helvetica,sans-serif;"><span style="font-size: small;"><span style="line-height: 150%;">The transition
from a developing to developed countries also involves emphasis on high-tech
manufacturing, like electronics, which increases the income per employee quite
considerably. </span></span></span></div>
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<span style="font-family: Arial,Helvetica,sans-serif;"><br /></span></div>
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<span style="font-family: Arial,Helvetica,sans-serif;"><span style="font-size: small;"><b><span style="line-height: 150%;">Electronics</span></b></span></span></div>
<div class="MsoNormal" style="line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: Arial,Helvetica,sans-serif;"><br /></span></div>
<div class="MsoNormal" style="line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: Arial,Helvetica,sans-serif;"><span style="font-size: small;"><span style="line-height: 150%;">Electronics
manufacturing industry transformed the nations like Japan, South Korea, Taiwan,
and helped nations like Malaysia, Indonesia and Philippines to break the
shackles of poverty to become industrialized nations. The global electronics industry is at $1.8 trillion making it
one of the largest and fastest growing industries in the
world. While India consumes $125 billion
worth of electronic goods annually, which is estimated to reach $400 billion by 2020, its current
exports stand at a meager $4 billion. <span style="font-size: small;"><span style="line-height: 150%;">India’s share in the
global electronic hardware manufacturing is only 0.7%.</span></span></span></span></span></div>
<div class="separator" style="clear: both; text-align: center;">
<span style="font-family: Arial,Helvetica,sans-serif;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgaJ9-I1BhrQ9ecO1TxTh-T1UdXY3KDgWA5KmIL4mo1BXpAxFDEZ46Tv80jr0kDnJJiZUIdfbTHaGnU0FOPwSJnvAwbqqADGxCVJ1wlp9FUqRyVbxPmHNR6r8IsmZjhDV4MsK16/s1600/8-Electronics-Global-Market-Share.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="240" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgaJ9-I1BhrQ9ecO1TxTh-T1UdXY3KDgWA5KmIL4mo1BXpAxFDEZ46Tv80jr0kDnJJiZUIdfbTHaGnU0FOPwSJnvAwbqqADGxCVJ1wlp9FUqRyVbxPmHNR6r8IsmZjhDV4MsK16/s400/8-Electronics-Global-Market-Share.png" width="400" /></a></span></div>
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<span style="font-family: Arial,Helvetica,sans-serif;"><br /></span></div>
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</span></span></div>
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<span style="font-family: Arial,Helvetica,sans-serif;"><span style="font-size: small;"><span style="line-height: 150%;">High-tech
manufacturing like electronics industry contributes significantly to most of the developed
countries’ GDP. In India it is 1.7% and
for countries like South Korea it is 15.1%.</span></span></span></div>
<div class="separator" style="clear: both; text-align: center;">
<span style="font-family: Arial,Helvetica,sans-serif;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiCmZo750vyuoVU0qFbyZ4CzSQQ21w0h9lphTui-4jacO4dQYi_Uvjz0q0z8XRPeXkJXXTK7ka1cWdzjbc-3Pm1oQXND29-hn5XcQlZk-f7I-WXaAWZxTehN_QRXFIE_bowRj0b/s1600/9-Electronics-Share-GDP.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="240" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiCmZo750vyuoVU0qFbyZ4CzSQQ21w0h9lphTui-4jacO4dQYi_Uvjz0q0z8XRPeXkJXXTK7ka1cWdzjbc-3Pm1oQXND29-hn5XcQlZk-f7I-WXaAWZxTehN_QRXFIE_bowRj0b/s400/9-Electronics-Share-GDP.png" width="400" /></a></span></div>
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<span style="font-family: Arial,Helvetica,sans-serif;"><br /></span></div>
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<span style="font-family: Arial,Helvetica,sans-serif;"><span style="font-size: small;">
</span></span></div>
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<span style="font-family: Arial,Helvetica,sans-serif;"><span style="font-size: small;"><span style="line-height: 150%;">Focus on
manufacturing and high-tech manufacturing is extremely important for India to
increase its overall GDP, its per capita income, and most importantly to create
jobs for lower middle and lower classes of India, thereby increasing the
average earning capacity of the common man. </span></span></span></div>
<div class="MsoNormal" style="line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: Arial,Helvetica,sans-serif;"><br /></span></div>
<div class="MsoNormal" style="line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: Arial,Helvetica,sans-serif;"><span style="font-size: small;"><span style="line-height: 150%;">Though the high-end
services industry earns more income per person compared to manufacturing industry, it is still inaccessible to
most Indians coming from lower classes with ordinary education. </span></span></span></div>
<div class="MsoNormal" style="line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: Arial,Helvetica,sans-serif;"><span style="font-size: small;"><span style="line-height: 150%;"> </span></span></span></div>
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<span style="font-family: Arial,Helvetica,sans-serif;"><span style="font-size: small;"><b><span style="line-height: 150%;">A note on IT-ITES Industry</span></b></span></span></div>
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<span style="font-family: Arial,Helvetica,sans-serif;"><br /></span></div>
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<span style="font-family: Arial,Helvetica,sans-serif;"><span style="font-size: small;"><span style="line-height: 150%;">The much touted
Indian IT industry employs primarily the English educated, mostly upper middle
class Indians completely bypassing the lower classes. Currently the Indian IT industry earns $70
billion in exports and $30 billion in domestic market employing nearly 2.8 million
engineers. Of this IT-ITES earns $50 billion (excluding
BPO and Hardware industry). Each year India
is able to add approximately 250,000 jobs into IT-ITES, BPO and hardware
industry. Since the revenues in this sector are a function
of number of employees, Indian IT industry cannot grow more than $10 billion
per year. Therefore, its contribution
towards India’s GDP will eventually start decreasing from the current 7%. Already India leads the pack grabbing 58% of
the global sourcing market share, and hence it will be harder to increase its market share any
further. In near future we may even see other
countries eating into India’s market share.
Also, any effort to increase the number of graduates by increasing the
number of colleges leads to creation of less qualified graduates as already
witnessed in the last ten years, thereby not contributing to increase in
revenues.</span></span></span></div>
<div class="MsoNormal" style="line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: Arial,Helvetica,sans-serif;"><br /></span></div>
<div class="MsoNormal" style="line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: Arial,Helvetica,sans-serif;"><span style="font-size: small;"><span style="line-height: 150%;">Though the Indian
IT industry employs the cream of Indian graduates, an average employee in this
industry continues to earn far less compared to someone in US. An average employee at three companies in US,
Apple, Cisco and Microsoft earns nearly 25 times more than that of an average
employee at top three India IT companies, TCS, Infosys, and Wipro. </span></span></span></div>
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<span style="font-family: Arial,Helvetica,sans-serif;"><span style="font-size: small;">
</span></span></div>
<div class="separator" style="clear: both; text-align: center;">
<span style="font-family: Arial,Helvetica,sans-serif;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjA2kIv4xVdzjX2xq-BkcGS8PQTlDBPSUmfVBpadv4pU8jeYTl8TpRqUmJ0xL6As0aw1c1KBqySQmkpLa3K1bjbXDb2COjrwAFq59yTNRn0KQ9unGQynALTh5MleyU2PXzoqdaX/s1600/10-IT-ITES-Employee-US-India.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="202" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjA2kIv4xVdzjX2xq-BkcGS8PQTlDBPSUmfVBpadv4pU8jeYTl8TpRqUmJ0xL6As0aw1c1KBqySQmkpLa3K1bjbXDb2COjrwAFq59yTNRn0KQ9unGQynALTh5MleyU2PXzoqdaX/s400/10-IT-ITES-Employee-US-India.png" width="400" /></a></span></div>
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<span style="font-family: Arial,Helvetica,sans-serif;"><br /></span></div>
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<span style="font-family: Arial,Helvetica,sans-serif;"><span style="font-size: small;"><span style="line-height: 150%;">Not only does its
employee earn lot less than his counterpart in the developed world, the Indian
IT-ITES industry does not create a sustainable ecosystem. For example, a company like Boeing conducts
business with thousands of engineering companies which depend on it for their
survival. Most technology companies in
US conduct business with many smaller companies - sourcing components,
products and technology from them. They
also tend to invest and acquire affiliated companies. In India, the only companies this IT-ITES
industry tends to spawn are catering, security, cab services, etc. </span></span></span></div>
<div class="MsoNormal" style="line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: Arial,Helvetica,sans-serif;"><span style="font-size: small;"><span style="line-height: 150%;">Our fascination
with this industry is mainly because of its attractiveness to Indian upper
middle class which sends it kids to engineering colleges and then into Indian
software services industry. Otherwise,
Indian IT industry can never be the main source for generation of employment for
most of Indian middle and lower classes. </span></span></span></div>
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<span style="font-family: Arial,Helvetica,sans-serif;"><br /></span></div>
<div class="MsoNormal" style="line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: Arial,Helvetica,sans-serif;"><span style="font-size: small;"><b><span style="line-height: 150%;">Policy-paralysis or short-sightedness?</span></b></span></span></div>
<div class="MsoNormal" style="line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: Arial,Helvetica,sans-serif;"><br /></span></div>
<div class="MsoNormal" style="line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: Arial,Helvetica,sans-serif;"><span style="font-size: small;"><span style="line-height: 150%;">The
general
malaise is not just the paralysis of policy as described by Indian
media. It is far deeper and far serious. The problem is that Indians
are not thinking
big, not thinking long-term. The problem
is myopia, accompanied by greed. </span></span></span></div>
<div class="MsoNormal" style="line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: Arial,Helvetica,sans-serif;"><br /></span></div>
<div class="MsoNormal" style="line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: Arial,Helvetica,sans-serif;"><span style="font-size: small;"><span style="line-height: 150%;">One look at city
planning, its sanitary system, and its road construction reflects this
short-sightedness. The sewage system
cannot sustain a single rain, and the roads need to be repaired every three
months. New townships are constructed
with narrow roads that block all the traffic.
A big mall exits right onto a traffic junction; and a bus stop is situated
right on the ramp that enters the freeway.
First a highway is built to connect the city to the airport which takes
few years, and then within a year it is completely broken up make another
elevated roadway. High rise apartments
open into narrow streets. There are no
parks, no recreational facilities or sports complexes. There are no playgrounds for children to
play. </span></span></span></div>
<div class="MsoNormal" style="line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: Arial,Helvetica,sans-serif;"><br /></span></div>
<div class="MsoNormal" style="line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: Arial,Helvetica,sans-serif;"><span style="font-size: small;"><span style="line-height: 150%;">India releases a
National Telecom Policy which includes an ambitious plan to promote domestic
industry, but telecom companies are plagued with bureaucracies of archaic laws
from a Telegraph Act that ails from 1885.
Indian Manufacturing Policy and
Indian Semiconductor Policy are fraught with lacunae, missing the important
pieces of puzzle to form a complete picture. </span></span></span></div>
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<span style="font-family: Arial,Helvetica,sans-serif;"><br /></span></div>
<div class="MsoNormal" style="line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: Arial,Helvetica,sans-serif;"><span style="font-size: small;"><span style="line-height: 150%;">Short-sightedness
is everywhere- either it is city building or policy formulation. </span></span></span></div>
<div class="MsoNormal" style="line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: Arial,Helvetica,sans-serif;"><br /></span></div>
<div class="MsoNormal" style="line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: Arial,Helvetica,sans-serif;"><span style="font-size: small;"><span style="line-height: 150%;">India is not
connecting its villages and towns with wide roads; it is not building railway
tracks for high speed trains. No
factories can be set up in villages because there is no power, no
water and no connectivity. Cities
are besieged with variety of problems making them unsustainable for overall growth. India economy has nowhere to go but
flounder. </span></span></span></div>
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<span style="font-family: Arial,Helvetica,sans-serif;"><br /></span></div>
<div class="MsoNormal" style="line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: Arial,Helvetica,sans-serif;"><span style="font-size: small;"><b><span style="line-height: 150%;">Indian private industry</span></b></span></span></div>
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<span style="font-family: Arial,Helvetica,sans-serif;"><br /></span></div>
<div class="MsoNormal" style="line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: Arial,Helvetica,sans-serif;"><span style="font-size: small;"><span style="line-height: 150%;">You would assume
that such short-sightedness is confined only to the Indian administrators,
bureaucrats and politicians. You would
somehow believe that the Indian private industry is immune from it. But in reality even the Indian entrepreneurs and private
investors are not thinking big or long-term. The malaise to think small, think short-term
and be greedy pervades the Indian entrepreneur ecosystem as well.</span></span></span></div>
<div class="MsoNormal" style="line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: Arial,Helvetica,sans-serif;"><br /></span></div>
<div class="MsoNormal" style="line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: Arial,Helvetica,sans-serif;"><span style="font-size: small;"><span style="line-height: 150%;">Just take a look
at the startups that have been invested in the last ten years. Most of them happen to be online trading
companies which do not produce anything.
These startups are taking up the easy task of just buying and selling
already produced goods instead of creating new ones. They sell movie tickets online, bus tickets
online, and even sports apparel online.
Instead of creating companies that make affordable diapers for Indian babies
or sanitary napkins for Indians girls, they create companies that sell imported
diapers online. A new diaper company in
India would not only decrease the cost of diapers for the consumers, but they could
be customized for Indian conditions – the way Indian families raise kids and
those suitable for Indian weather conditions.
Not only that, such a company would create an ecosystem that would
employ hundreds of workers and help twenty odd companies to depend on it,
thereby creating a larger ecosystem. </span></span></span></div>
<div class="MsoNormal" style="line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: Arial,Helvetica,sans-serif;"><br /></span></div>
<div class="MsoNormal" style="line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: Arial,Helvetica,sans-serif;"><span style="font-size: small;"><span style="line-height: 150%;">There’s a quote
from the movie <i>Wall Street</i> that is
relevant here<i>. </i>A father who works in
an aircraft industry advices his stock broker son:</span></span></span></div>
<div class="MsoNormal" style="line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: Arial,Helvetica,sans-serif;"><br /></span></div>
<div class="MsoNormal" style="line-height: 150%; margin-bottom: 0.0001pt; text-align: justify; text-indent: 36pt;">
<span style="font-family: Arial,Helvetica,sans-serif;"><span style="font-size: small;"><i><span style="line-height: 150%;">Create, instead of living off the
buying and selling of others.</span></i></span></span></div>
<div class="MsoNormal" style="line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: Arial,Helvetica,sans-serif;"><br /></span></div>
<div class="MsoNormal" style="line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: Arial,Helvetica,sans-serif;"><span style="font-size: small;"><span style="line-height: 150%;">Indian
entrepreneurs and Indian investors are consistently failing to back big
ideas. They are sticking to clichéd, run
of the mill, hackneyed, tried and tested recipes to create and promote those companies
which are not risk takers, and those which don’t have long term vision. </span></span></span></div>
<div class="MsoNormal" style="line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: Arial,Helvetica,sans-serif;"><br /></span></div>
<div class="MsoNormal" style="line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: Arial,Helvetica,sans-serif;"><span style="font-size: small;"><b><span style="line-height: 150%;">A story from 1800s</span></b></span></span></div>
<div class="MsoNormal" style="line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: Arial,Helvetica,sans-serif;"><br /></span></div>
<div class="MsoNormal" style="line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: Arial,Helvetica,sans-serif;"><span style="font-size: small;"><span style="line-height: 150%;">Here
is a nice
story from 1800s. After initial successes
of telegraphy, one entrepreneur based in New York, Cyrus Field, took up
the idea
of laying a submarine cable across Atlantic Ocean to connect North
America and
England. Such a venture had no precedent
and it was fraught with many risks. Yet,
there were people who invested 350,000 pounds in such a venture. A 2500
mile cable was ordered. They used warships to lay the cable from both
sides so that it could be connected in the middle. However, 400 miles
off the coast, the cable
snapped and fell to the seabed. </span></span></span></div>
<div class="MsoNormal" style="line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: Arial,Helvetica,sans-serif;"><br /></span></div>
<div class="MsoNormal" style="line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: Arial,Helvetica,sans-serif;"><span style="font-size: small;"><span style="line-height: 150%;">Cyrus Field did
not give up. He tried again. This time the cable was connected in the
middle of Atlantic but very soon the cable parted. Described as a businessman with ‘vision in
abundance’, Field went back to the board to raise more money for the next
attempt. This time at last, the Atlantic
telegraph cable was laid. On 16 August
1856, Queen Victoria sent the first transatlantic message to the American
President James Buchanan. Her
ninety-eight word message took sixteen hours to tap out using Samuel Morse’s newly developed
code. </span></span></span></div>
<div class="MsoNormal" style="line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: Arial,Helvetica,sans-serif;"><br /></span></div>
<div class="MsoNormal" style="line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: Arial,Helvetica,sans-serif;"><span style="font-size: small;"><span style="line-height: 150%;">But within four
weeks, the messages began to fade and soon the line went silent. </span></span></span></div>
<div class="MsoNormal" style="line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: Arial,Helvetica,sans-serif;"><br /></span></div>
<div class="MsoNormal" style="line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: Arial,Helvetica,sans-serif;"><span style="font-size: small;"><span style="line-height: 150%;">Nine
years later,
in 1865, Cyrus Field and his Atlantic Telegraph Company found new
investors for
yet another attempt. Armed with better
cable and a ship that can carry the entire length, they set out again.
After laying 1200 miles, the cable snapped. But they were not
deterred. Cyrus Field and his directors saw this as a
‘setback not a failure’. More money was
raised for another attempt with improved cable.</span></span></span></div>
<div class="MsoNormal" style="line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: Arial,Helvetica,sans-serif;"><br /></span></div>
<div class="MsoNormal" style="line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: Arial,Helvetica,sans-serif;"><span style="font-size: small;"><span style="line-height: 150%;">This time the
transatlantic cable was laid successfully.
<i>The Times</i> described the heroes
as ‘the benefactors of their race’.
Queen knighted them, including one of the directors, William Thomson,
who later became famous Lord Kelvin. US
Congress gave Cyrus Field a gold medal, and English newspapers called him Lord
Cable. The transatlantic cable
revolutionized the business of news and market, and went onto change the world.</span></span></span></div>
<div class="MsoNormal" style="line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: Arial,Helvetica,sans-serif;"><br /></span></div>
<div class="MsoNormal" style="line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: Arial,Helvetica,sans-serif;"><span style="font-size: small;"><span style="line-height: 150%;">I describe this
story because I don’t see such a story ever happening in India. Such risks and perseverance would not be
taken up either by Indian entrepreneurs or Indian investors. </span></span></span></div>
<div class="MsoNormal" style="line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: Arial,Helvetica,sans-serif;"><br /></span></div>
<div class="MsoNormal" style="line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: Arial,Helvetica,sans-serif;"><span style="font-size: small;"><span style="line-height: 150%;">But
then history
is made of such ventures. Economies have
grown because of such engineering breakthroughs and efforts led by
entrepreneurs and investors who ventured into unknown and unchartered
territories. </span></span></span></div>
<div class="MsoNormal" style="line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: Arial,Helvetica,sans-serif;"><br /></span></div>
<div class="MsoNormal" style="line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: Arial,Helvetica,sans-serif;"><span style="font-size: small;"><b><span style="line-height: 150%;">Problem</span></b></span></span></div>
<div class="MsoNormal" style="line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: Arial,Helvetica,sans-serif;"><br /></span></div>
<div class="MsoNormal" style="line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: Arial,Helvetica,sans-serif;"><span style="font-size: small;"><span style="line-height: 150%;">India lacks
vision. It is not able to think
big. It is not able to take risks. And that I see as a far more fundamental
problem as to why our economy does not increase the quality of life of our
people. </span></span></span></div>
<div class="MsoNormal" style="line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: Arial,Helvetica,sans-serif;"><br /></span></div>
<div class="MsoNormal" style="line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: Arial,Helvetica,sans-serif;"><span style="font-size: small;"><span style="line-height: 150%;">India is not
investing in high tech manufacturing like electronics, semiconductors or
telecommunications. It is not investing
in toy making industry, or plastics, or cooking utensils or kitchenware or
furniture. It is not producing
agriculture or construction equipment. It is
not producing advanced surgical or medical equipment. </span></span></span></div>
<div class="MsoNormal" style="line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: Arial,Helvetica,sans-serif;"><br /></span></div>
<div class="MsoNormal" style="line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: Arial,Helvetica,sans-serif;"><span style="font-size: small;"><span style="line-height: 150%;">There is no
passion for engineering; there is no pride in building better and beautiful
things. There is no joy in creating
something wonderful. There is no glory
in perseverance; there is no reward for hard work. India is a story of short cuts and quick
money. </span></span></span></div>
<div class="MsoNormal" style="line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: Arial,Helvetica,sans-serif;"><br /></span></div>
<div class="MsoNormal" style="line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: Arial,Helvetica,sans-serif;"><span style="font-size: small;"><span style="line-height: 150%;">India has
consistently failed to make better cities, promote better technology, and
pursue great ideas. While some countries
build long bridges, big dams and fast trains, India continues to flounder. While some countries build enterprises that
produce technology, valuable goods and machinery, India builds companies that
trade goods produced by others. </span></span></span></div>
<div class="MsoNormal" style="line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: Arial,Helvetica,sans-serif;"><br /></span></div>
<div class="MsoNormal" style="line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: Arial,Helvetica,sans-serif;"><span style="font-size: small;"><span style="line-height: 150%;">India has the
potential to become a major economic force, but what it needs is the right
attitude. </span></span></span></div>
<div class="MsoNormal" style="line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: Arial,Helvetica,sans-serif;"><br /></span></div>
<div class="MsoNormal" style="line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: Arial,Helvetica,sans-serif;"><span style="font-size: small;"><b><span style="line-height: 150%;">Way forward</span></b></span></span></div>
<div class="MsoNormal" style="line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: Arial,Helvetica,sans-serif;"><br /></span></div>
<div class="MsoNormal" style="line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: Arial,Helvetica,sans-serif;"><span style="font-size: small;"><span style="line-height: 150%;">India cannot skip these fundamental steps. India has to go back to the
basics and get it right. It has no other option. It has to witness its Industrial Revolution,
it has to see its Eisenhower’s freeways, it has to see its modern city building
with underground sanitation and metro transport. It has to go through the phase of
manufacturing basic goods and then the luxury goods. </span></span></span></div>
<div class="MsoNormal" style="line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: Arial,Helvetica,sans-serif;"><br /></span></div>
<div class="MsoNormal" style="line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: Arial,Helvetica,sans-serif;"><span style="font-size: small;"><span style="line-height: 150%;">India has to
create a generation of Indians who aspire to build beautiful things. It has to inculcate a spirit of celebrating
excellence instead of wallowing in mediocrity.
It has to produce engineers who dream to become engineers instead of
just aspiring to become the bean counters.
India has to build and construct.
India has to lay emphasis on engineering, create more structures and
products, invest in research and technology. It has to stop running after low hanging
fruits and instead plants trees and forests that produce more, which give itself
sustainable advantage in increasing its earning and thereby increase the
quality of life of its people substantially. </span></span></span></div>
Sujaihttp://www.blogger.com/profile/16539694685428659940noreply@blogger.com4tag:blogger.com,1999:blog-30677466.post-49007585032991321032010-07-14T07:35:00.001-07:002011-01-09T21:41:26.154-08:00Engineering 101<div class="MsoNormal" style="font-family: Arial,Helvetica,sans-serif; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><span style="font-size: small;">When I joined B.Tech in Electronics and Communications nearly two decades ago, I was told that whatever I learn in the college will be of little use to me in my life because we will not be using any of the stuff taught in the program. I took that advice quite seriously. Instantly I convinced myself that it didn’t really matter if I did not pay any attention to the classes. I just had to pass and somehow make it through the 4 years. The campus itself had enough reputation that it will carry me through in my life, so why waste time in studying something which is of no use to me in the long run? </span></div><div class="MsoNormal" style="font-family: Arial,Helvetica,sans-serif; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><span style="font-size: small;"><br />
</span></div><div class="MsoNormal" style="font-family: Arial,Helvetica,sans-serif; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><span style="font-size: small;">The graduating seniors who had passed out came back a year later to visit us and reaffirmed the same opinion, that not much of what I learn in my B.Tech will be of any use in ‘real’ life. Because the ‘real’ life is so different that I would end up doing something quite different. It was true. Most of my seniors who graduated from the college ended up in MS programs in USA but had already switched to Computer Science, while few others got into IIMs thereby leaving nearly 95% of our subjects behind, and some others got into jobs at Hindustan Lever, Infosys, HCL, etc, securing jobs in marketing or software for health, insurance, banking, never having to bother with B. Tech subjects ever again. </span></div><div class="MsoNormal" style="font-family: Arial,Helvetica,sans-serif; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><span style="font-size: small;"><br />
</span></div><div class="MsoNormal" style="font-family: Arial,Helvetica,sans-serif; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><span style="font-size: small;">I guess I was always a 'big' picture person even as a student. My 'big' thinking suggested that the scores and marks in the B.Tech subjects will not affect my life at all. I decided not to study more than what was required to pass the exams. Why unnecessarily waste time on something that is irrelevant in ‘real’ life? Instead, I spent time on other things which seemed to make sense- like painting, art, debating, and of course, making friends and falling in love. Since I believed these other things will remain with me for the rest of my life, it made sense to invest in them. </span></div><div class="MsoNormal" style="font-family: Arial,Helvetica,sans-serif; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><span style="font-size: small;"><a name='more'></a><br />
</span></div><div class="MsoNormal" style="font-family: Arial,Helvetica,sans-serif; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><span style="font-size: small;">An engineer uncle told his graduating engineer nephew that he will not use more than 5% of what he studied. That’s what we have been told and that’s what we believed. After nearly 16 years since my graduation, I have a completely different story to tell. I hope this reaches out to some of the passionate engineers in the colleges of India. I am a part of a technology product company in wireless space and this is our story. </span></div><div class="MsoNormal" style="font-family: Arial,Helvetica,sans-serif; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><span style="font-size: small;"><br />
</span></div><div class="MsoNormal" style="font-family: Arial,Helvetica,sans-serif; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><span style="font-size: small;">During my first year in engineering, we had a course in English. I skipped most of the classes, and for the exams I spent only 2 hours of studying, enough to pass. We all reasoned, ‘we are engineers, so why do we need to learn this language?’ Today, I write many articles, prepare brochures, and write letters and reports to customers and investors. I write business plans and analysis on various topics in the industry. And I need to be correct, concise and lucid. I speak in public on a regular basis. There is so much importance to language in my daily work that nearly 50% of my job is communication. If I had known this I would have paid more attention to those English classes 20 years ago. </span></div><div class="MsoNormal" style="font-family: Arial,Helvetica,sans-serif; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><span style="font-size: small;"><br />
</span></div><div class="MsoNormal" style="font-family: Arial,Helvetica,sans-serif; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><span style="font-size: small;">Then we had Chemistry. Since I wasn’t a chemical engineer I told myself this is another subject of waste. Today, we paint our wireless units with the right kind of paint taking into account the temperatures it has to withstand. We deal with various kinds of materials and choose the best ones that withstand rains and overcome the problems of rust. We experiment with materials that have right amount of conductivity, electrical resistance and other chemical properties. </span></div><div class="MsoNormal" style="font-family: Arial,Helvetica,sans-serif; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><span style="font-size: small;"><br />
</span></div><div class="MsoNormal" style="font-family: Arial,Helvetica,sans-serif; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><span style="font-size: small;">Then we had a course in Physics. I was passionate about physics so I learnt a lot. But I always bemoaned that an engineer may not actually use it ever. Fortunately for me, now we deal with convection, conduction, radiation, and other shock and vibration characteristics while designing our wireless units which work in extreme weathers as outdoor units. We spent nearly 24 months on engineering a product that could cool itself and during this exercise we went back again and again to our basics in physics. </span></div><div class="MsoNormal" style="font-family: Arial,Helvetica,sans-serif; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><span style="font-size: small;"><br />
</span></div><div class="MsoNormal" style="font-family: Arial,Helvetica,sans-serif; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><span style="font-size: small;">Then we had Mathematics. Today we use Fourier Transforms, Arithmetic and Geometric Series, and many other mathematical tools in our development of algorithms. Few days ago we used techniques to convert Cartesian to Polar Coordinates to use them in our algorithms. To do this we had to open the Engineering Mathematics text book taught in our first and second year. </span></div><div class="MsoNormal" style="font-family: Arial,Helvetica,sans-serif; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><span style="font-size: small;"><br />
</span></div><div class="MsoNormal" style="font-family: Arial,Helvetica,sans-serif; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><span style="font-size: small;">One of the most neglected subjects was Accounting, called Economics. We hated it, ridiculed it, and completely dismissed it. 'We are engineers, not accountants', we told ourselves. I wish I paid little more attention – because now I continuously fail to grapple with balance sheets and profit & loss accounts though it is my mandate to understand them to take decisions. We also had Engineering Drawing. Thankfully I liked it, and now it comes again and again to aid us in making designs of our products, making CAD/CAM drawings for manufacturing them, and making 3D drawings for visualizing the product before fabricating them. </span></div><div class="MsoNormal" style="font-family: Arial,Helvetica,sans-serif; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><span style="font-size: small;"><br />
</span></div><div class="MsoNormal" style="font-family: Arial,Helvetica,sans-serif; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><span style="font-size: small;">Then we had Workshop in our first/second year. There we worked with lathe machines, cutting mechanical tools, and also casting and molding where we actually dirtied our hands. For most of us, it didn’t make sense back then. We complained, 'why should electronics engineers go through workshop?' Today, we spend time and money in making casts for our enclosures and have to take a decision on sand cast, gravity cast or pressure die cast, and conduct great deal of research to mill, grind, and cut the exact design for our heat sinks that dissipate heat for many days and nights. Hopefully in a year we will have our own workshop. I look forward to that day with excitement. </span></div><div class="MsoNormal" style="font-family: Arial,Helvetica,sans-serif; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><span style="font-size: small;"><br />
</span></div><div class="MsoNormal" style="font-family: Arial,Helvetica,sans-serif; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><span style="font-size: small;">We program our software using linked lists that we learnt in the courses on programming language and data structures. Our embedded software uses microprocessor programs in Assembly and C. We design electronic circuits, both Analog and Digital. We have a soldering iron and oscilloscopes that we use daily. Our baseband software uses Digital Signal Processing, and we continuously work on the internals of Data Networks. We use all topics of Digital Communications. We use antennas and its technologies to decide on the antenna propagation techniques and antenna patterns. </span></div><div class="MsoNormal" style="font-family: Arial,Helvetica,sans-serif; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><span style="font-size: small;"><br />
</span><br />
<span style="font-size: small;">I realize that I am currently using more than 90% of what I learnt in my B. Tech, on a regular basis. I didn’t know this would happen. If I had known, I would have treated by B. Tech little differently. There is beauty in building things and seeing them work. There is satisfaction in engineering products and solutions that find a place in this ‘real’ world. There is no other joy for an engineer than being able to use the length and breadth of entire gamut of engineering. while trying to build a working product I wouldn’t trade this job for any other. May be we are not as rich, maybe we are not as successful, but we are all proud engineers. While most other engineers may say that they don’t use 90% of what they learnt, we can actually claim that we use more than 90% of what we learnt. </span></div><div class="MsoNormal" style="font-family: Arial,Helvetica,sans-serif; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><span style="font-size: small;"><br />
</span></div><div class="MsoNormal" style="font-family: Arial,Helvetica,sans-serif; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><span style="font-size: small;">I want the young engineers in India to know that what they learn can be used in their lives. Instead of looking for the highest paying non-engineering job, they have a choice to look for a real engineering job. Hope we have more technology companies in India, and hope we create a generation of engineers who can actually claim they make use of what they learnt in their B.Tech. Hope they build airplanes and design ships. Hope they make cell phones and electronic gadgets. Hope they make computer games and robots. Hope they go through fun of what it means to be an engineer. Hope they will not be satisfied with just the title, but become real engineers building things. </span></div>Sujaihttp://www.blogger.com/profile/16539694685428659940noreply@blogger.com9tag:blogger.com,1999:blog-30677466.post-89661025815740115382010-03-23T04:48:00.000-07:002011-01-09T21:42:45.585-08:00Future of wireless in India<div style="font-family: Arial,Helvetica,sans-serif;"><span style="font-size: small;"><b><span style="color: black; line-height: 150%;"><o:p></o:p></span></b></span></div><div class="MsoNormal" style="font-family: Arial,Helvetica,sans-serif; line-height: 150%; margin: 0in 0in 0.0001pt; text-align: justify;"><span style="color: black; font-size: small; line-height: 150%;">India’s Mobile Revolution is still underway baffling even the most optimistic pundits who did not anticipate such unprecedented growth. According to TRAI, India has more than 500 Million mobile subscribers now. That number could be inflated because many old pre-paid connections may not be valid. Even if we believe the number is 350 Million, it is still a very big market and it is growing strong adding 10-15 Million subscribers per month – bigger than entire mobile subscribers of some European countries.</span><br />
<br />
<span style="color: black; font-size: small; line-height: 150%;">India has delayed its 3G UMTS spectrum auctioning for many years now. The question that I pose is whether India should even consider 3G UMTS or should we skip it altogether to move to FD-LTE?<b><o:p></o:p></b></span></div><div class="MsoNormal" style="font-family: Arial,Helvetica,sans-serif; line-height: 150%; margin: 0in 0in 0.0001pt; text-align: justify;"><span style="font-size: small;"><br />
</span></div><div class="MsoNormal" style="font-family: Arial,Helvetica,sans-serif; line-height: 150%; margin: 0in 0in 0.0001pt; text-align: justify;"><span style="font-size: small;"><b><span style="color: black; line-height: 150%;">UMTS or LTE<o:p></o:p></span></b></span></div><div class="MsoNormal" style="font-family: Arial,Helvetica,sans-serif; line-height: 150%; margin: 0in 0in 0.0001pt; text-align: justify;"><span style="font-size: small;"><br />
</span></div><div class="MsoNormal" style="font-family: Arial,Helvetica,sans-serif; line-height: 150%; margin: 0in 0in 0.0001pt; text-align: justify;"><span style="color: black; font-size: small; line-height: 150%;">I recommend that India should hold off 3G UMTS spectrum auctioning for another year, completely skip 3G UMTS and instead embrace FD-LTE. <o:p></o:p></span></div><div class="MsoNormal" style="font-family: Arial,Helvetica,sans-serif; line-height: 150%; margin: 0in 0in 0.0001pt; text-align: justify;"><span style="font-size: small;"><a name='more'></a><br />
</span></div><div class="MsoNormal" style="font-family: Arial,Helvetica,sans-serif; line-height: 150%; margin: 0in 0in 0.0001pt; text-align: justify;"><span style="color: black; font-size: small; line-height: 150%;">From prior experiences in deploying GSM networks, Indians think that old technology is always cheaper and better. It is not always the case. For example, a 20 GB memory in 1980 cost nearly USD 1 Million and was weighing 2000 Kg, whereas in 2010, it is costs USD 100 and weighs only 0.5 grams. In such cases, no matter what you do, the old technology can never beat the new technology even with very high volumes. <o:p></o:p></span></div><div class="separator" style="clear: both; font-family: Arial,Helvetica,sans-serif; text-align: center;"><span style="font-size: small;"><a href="http://cheatedbylife.com/wp-content/uploads/2010/03/cheatedbylifedotcom.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="173" src="http://cheatedbylife.com/wp-content/uploads/2010/03/cheatedbylifedotcom.jpg" width="320" /></a></span></div><div class="MsoNormal" style="font-family: Arial,Helvetica,sans-serif; line-height: 150%; margin: 0in 0in 0.0001pt; text-align: justify;"><span style="font-size: small;"><br />
</span></div><div align="center" class="MsoNormal" style="font-family: Arial,Helvetica,sans-serif; line-height: 150%; margin: 0in 0in 0.0001pt; text-align: center;"><span style="color: black; font-size: small; line-height: 150%;"><o:p></o:p></span></div><div class="MsoNormal" style="font-family: Arial,Helvetica,sans-serif; line-height: 150%; margin: 0in 0in 0.0001pt; text-align: justify;"><span style="color: black; font-size: small; line-height: 150%;">We need to realize that in some cases, new technologies tend to be cheaper, advanced, efficient and reliable. In this case, the older technology of 3G UMTS equipment is expensive, power hungry, bulky, less advanced and inefficient compared to newer and advanced FD-LTE equipment. <o:p></o:p></span></div><div class="MsoNormal" style="font-family: Arial,Helvetica,sans-serif; line-height: 150%; margin: 0in 0in 0.0001pt; text-align: justify;"><span style="font-size: small;"><br />
</span></div><div class="MsoNormal" style="font-family: Arial,Helvetica,sans-serif; line-height: 150%; margin: 0in 0in 0.0001pt; text-align: justify;"><span style="color: black; font-size: small; line-height: 150%;"> 3G UMTS is based on WCDMA technology which is now able to give only up to 16 QAM (4 bits per symbol) where as FD-LTE based on OFDMA already delivers 64 QAM (6 bits per symbol) and soon will deliver 256 QAM (8 bits per symbol). That means OFDMA clearly delivers more bits/Hz of spectrum. Not only that, most modulations schemes lose bits in error correction schemes. And here also OFDMA beats WCDMA. OFDMA based technologies incorporate other advanced techniques like MIMO, Smart Antenna, sub-channelization, etc, which increase the efficiency of these modulation in delivering high throughputs compared to WCDMA. Clearly WCDMA is less advanced and less efficient compared to OFDMA technologies. <o:p></o:p></span></div><div class="MsoNormal" style="font-family: Arial,Helvetica,sans-serif; line-height: 150%; margin: 0in 0in 0.0001pt; text-align: justify;"><span style="font-size: small;"><br />
</span></div><div class="MsoNormal" style="font-family: Arial,Helvetica,sans-serif; line-height: 150%; margin: 0in 0in 0.0001pt; text-align: justify;"><span style="color: black; font-size: small; line-height: 150%;">Moreover, WCDMA involves chip-rate processing where every symbol will have to be multiplied by a large number, as large as 3,840,000 chips, requiring huge processing hardware, make the equipment and handsets power hungry that means your battery drains faster, makes them bulkier, and expensive. Also, the base Stations for current WCDMA sites use up to 6000 W of power, whereas one can build FD-LTE base stations that use 500 W or less. In many emerging countries this 10X advantage in power consumption makes a huge difference because most cell sites take up huge cost in a/c housing, generators, battery backup, power management systems, etc. <o:p></o:p></span></div><div class="MsoNormal" style="font-family: Arial,Helvetica,sans-serif; line-height: 150%; margin: 0in 0in 0.0001pt; text-align: justify;"><span style="font-size: small;"><br />
</span></div><div class="MsoNormal" style="font-family: Arial,Helvetica,sans-serif; line-height: 150%; margin: 0in 0in 0.0001pt; text-align: justify;"><span style="color: black; font-size: small; line-height: 150%;">Indians should understand that older technology is not always better. India has to seriously look at advantages of FD-LTE and adopt it completely skipping 3G UMTS. With this move and other incentives discussed below, India can also spawn a local ecosystem of companies that can launch global telecom equipment companies. It can use this opportunity to create Huawei and ZTE of India. <o:p></o:p></span></div><div class="MsoNormal" style="font-family: Arial,Helvetica,sans-serif; line-height: 150%; margin: 0in 0in 0.0001pt; text-align: justify;"><span style="font-size: small;"><br />
</span></div><div class="MsoNormal" style="font-family: Arial,Helvetica,sans-serif; line-height: 150%; margin: 0in 0in 0.0001pt; text-align: justify;"><span style="font-size: small;"><b><span style="color: black; line-height: 150%;">Separate BWA from 3G<o:p></o:p></span></b></span></div><div class="MsoNormal" style="font-family: Arial,Helvetica,sans-serif; line-height: 150%; margin: 0in 0in 0.0001pt; text-align: justify;"><span style="font-size: small;"><br />
</span></div><div class="MsoNormal" style="font-family: Arial,Helvetica,sans-serif; line-height: 150%; margin: 0in 0in 0.0001pt; text-align: justify;"><span style="color: black; font-size: small; line-height: 150%;">While India is rapidly adding mobile subscribers, it has lagged behind in broadband penetration, mostly because it was still a wired deployment. With advent of wireless access, the current 6.25 Million broadband subscriber base can go up to 30 to 40 Million in the next 4 years bringing in the Broadband Revolution in India. Currently, the broadband penetration in India has been floundering because of lack of comprehensive and independent policy on Broadband Wireless Access (BWA) spectrum. <o:p></o:p></span></div><div class="MsoNormal" style="font-family: Arial,Helvetica,sans-serif; line-height: 150%; margin: 0in 0in 0.0001pt; text-align: justify;"><span style="font-size: small;"><br />
</span></div><div class="MsoNormal" style="font-family: Arial,Helvetica,sans-serif; line-height: 150%; margin: 0in 0in 0.0001pt; text-align: justify;"><span style="color: black; font-size: small; line-height: 150%;">I strongly recommend BWA spectrum policy should be separated from 3G UMTS spectrum policy, and the BWA spectrum should be auctioned independently. In addition, India should clear up and allocate at least another 250 MHz of spectrum between 5.1-5.8 GHz range from the current 50 MHz and mark it as unlicensed. This will spawn many entrepreneurs, many tier-2, tier-3, and tier-4 ISPs who will start giving broadband to homes, offices and enterprises without going through spectrum purchases. This will result in unprecedented broadband activity in India. <o:p></o:p></span></div><div class="MsoNormal" style="font-family: Arial,Helvetica,sans-serif; line-height: 150%; margin: 0in 0in 0.0001pt; text-align: justify;"><span style="font-size: small;"><br />
</span></div><div class="MsoNormal" style="font-family: Arial,Helvetica,sans-serif; line-height: 150%; margin: 0in 0in 0.0001pt; text-align: justify;"><span style="color: black; font-size: small; line-height: 150%;">Currently, the 3.3-3.4 GHz spectrum is given to Indian operators on a trial basis. Unless India spells its strategy clear it does not allow operators to take big bets because they do not know if the spectrum will be taken away from them anytime. Meanwhile, India should add another 100 MHz from 3.4 – 3.5 GHz for BWA. <o:p></o:p></span></div><div class="MsoNormal" style="font-family: Arial,Helvetica,sans-serif; line-height: 150%; margin: 0in 0in 0.0001pt; text-align: justify;"><span style="font-size: small;"><br />
</span></div><div class="MsoNormal" style="font-family: Arial,Helvetica,sans-serif; line-height: 150%; margin: 0in 0in 0.0001pt; text-align: justify;"><span style="color: black; font-size: small; line-height: 150%;">With additional 80 MHz spectrum in 2.3-2.5 GHz earmarked for BWA, India will have three ranges of spectrum, in 2.x, 3.x, and 5.x ranges making it possible for tier-1 to tier-4 ISPs to play various roles, some targeting urban market, some rural market, some enterprise market, some residential market. This will immediately add 30 to 40 Million subscribers in the next 4 years, resulting in USD 5 to 6 Billion equipment installation. <o:p></o:p></span></div><div class="MsoNormal" style="font-family: Arial,Helvetica,sans-serif; line-height: 150%; margin: 0in 0in 0.0001pt; text-align: justify;"><span style="font-size: small;"><br />
</span></div><div class="MsoNormal" style="font-family: Arial,Helvetica,sans-serif; line-height: 150%; margin: 0in 0in 0.0001pt; text-align: justify;"><span style="font-size: small;"><b><span style="color: black; line-height: 150%;">China like incentives to local companies<o:p></o:p></span></b></span></div><div class="MsoNormal" style="font-family: Arial,Helvetica,sans-serif; line-height: 150%; margin: 0in 0in 0.0001pt; text-align: justify;"><span style="font-size: small;"><br />
</span></div><div class="MsoNormal" style="font-family: Arial,Helvetica,sans-serif; line-height: 150%; margin: 0in 0in 0.0001pt; text-align: justify;"><span style="color: black; font-size: small; line-height: 150%;">India should give incentives to local companies to play a dominant role in the domestic market. Otherwise, the bulk of telecom equipment revenue is now going out of India. The total telecom equipment market is USD 24.7 Billion in 2008-09 growing 20% from the previous year. Most of this market is captured by foreign companies. For example, cellular wireless infrastructure comprising 30% of the total telecom equipment market is taken up by international giants. <o:p></o:p></span></div><div class="MsoNormal" style="font-family: Arial,Helvetica,sans-serif; line-height: 150%; margin: 0in 0in 0.0001pt; text-align: justify;"><span style="font-size: small;"><br />
</span></div><div class="MsoNormal" style="font-family: Arial,Helvetica,sans-serif; line-height: 150%; margin: 0in 0in 0.0001pt; text-align: justify;"><span style="color: black; font-size: small; line-height: 150%;">Imagine if domestic telecom equipment industry increases its share even by 20% of this total telecom equipment market. That adds nearly USD 5 Billion market immediately. And yet, there is no incentive to Indian companies to do that. The only quota system we had was reserved for ITI, which sold Alcatel-Lucent equipment depriving Indian companies further. Such flawed systems combined with low-risk capital investors have not enabled Indian telecom companies. <o:p></o:p></span></div><div class="MsoNormal" style="font-family: Arial,Helvetica,sans-serif; line-height: 150%; margin: 0in 0in 0.0001pt; text-align: justify;"><span style="font-size: small;"><br />
</span></div><div class="MsoNormal" style="font-family: Arial,Helvetica,sans-serif; line-height: 150%; margin: 0in 0in 0.0001pt; text-align: justify;"><span style="font-size: small;"><b><span style="color: black; line-height: 150%;">India should not neglect active infrastructure <o:p></o:p></span></b></span></div><div class="MsoNormal" style="font-family: Arial,Helvetica,sans-serif; line-height: 150%; margin: 0in 0in 0.0001pt; text-align: justify;"><span style="font-size: small;"><br />
</span></div><div class="MsoNormal" style="font-family: Arial,Helvetica,sans-serif; line-height: 150%; margin: 0in 0in 0.0001pt; text-align: justify;"><span style="color: black; font-size: small; line-height: 150%;">Most Indian analysts and industry experts tend to believe that mobile handset market is more attractive compared to active infrastructure because of the volumes. However, the actual numbers tell a different story. Carrier Equipment comprised a whopping 64% of the total Telecom equipment market in 2008-09 while the Mobile Handset comprised only 23%. Not only that, the share of Carrier Equipment has been steadily increasing from 56% in 2006-07, 60% in 2007-08, to 64% in 2008-09, whereas the share of Mobile handsets is decreasing, from 31% in 2006-07, 26% in 2007-08, to 23% in 2008-09.<o:p></o:p></span></div><div class="MsoNormal" style="font-family: Arial,Helvetica,sans-serif; line-height: 150%; margin: 0in 0in 0.0001pt; text-align: justify;"><span style="font-size: small;"><br />
</span></div><div class="MsoNormal" style="font-family: Arial,Helvetica,sans-serif; line-height: 150%; margin: 0in 0in 0.0001pt; text-align: justify;"><span style="color: black; font-size: small; line-height: 150%;">Most telecom companies in India continue to concentrate on passive and paraphernalia infrastructure which is only 5% of the total telecom equipment. Apart from exceptions like Tejas Networks raking in some portion of optical network equipment, we don’t see many Indians companies playing a role in active infrastructure. Companies like Huawei, ZTE, Nokia Siemens, Ericsson, etc, take up bulk of the revenues coming from this market where no Indian company has any presence. <o:p></o:p></span></div><div class="MsoNormal" style="font-family: Arial,Helvetica,sans-serif; line-height: 150%; margin: 0in 0in 0.0001pt; text-align: justify;"><span style="font-size: small;"><br />
</span></div><div class="MsoNormal" style="font-family: Arial,Helvetica,sans-serif; line-height: 150%; margin: 0in 0in 0.0001pt; text-align: justify;"><span style="color: black; font-size: small; line-height: 150%;">Even if we think that the telecom market in India grows at a nominal 15% per year, the opportunity over the next 5 years is USD 200 Billion. How much of it is going to come to India? Unless we do something drastic and dramatic, bulk of it will taken up by foreign companies. <o:p></o:p></span></div><div class="MsoNormal" style="font-family: Arial,Helvetica,sans-serif; line-height: 150%; margin: 0in 0in 0.0001pt; text-align: justify;"><span style="font-size: small;"><br />
</span></div><div class="MsoNormal" style="font-family: Arial,Helvetica,sans-serif; line-height: 150%; margin: 0in 0in 0.0001pt; text-align: justify;"><span style="color: black; font-size: small; line-height: 150%;">I strongly recommend that India should provide incentives, subsidies, quotas and loans to domestic companies focusing on active telecom infrastructure. In absence of investments from private equity firms, Indian government should set up fund to invest in domestic telecom equipment companies so that they take on this challenge to capture substantial market share in India.<o:p></o:p></span></div><div class="MsoNormal" style="font-family: Arial,Helvetica,sans-serif; line-height: 150%; margin: 0in 0in 0.0001pt; text-align: justify;"><span style="font-size: small;"><br />
</span></div><div class="MsoNormal" style="font-family: Arial,Helvetica,sans-serif; line-height: 150%; margin: 0in 0in 0.0001pt; text-align: justify;"><span style="color: black; font-size: small; line-height: 150%;">Once these telecom companies succeed in Indian domestic market, they can play a dominant role in the world markets, like Huawei is doing right now. They will also cater to Indian defense communication equipment which in itself is a very big market. </span><br />
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<div class="MsoNormal" style="font-family: Arial,Helvetica,sans-serif; line-height: 150%; margin: 0in 0in 0.0001pt; text-align: justify;"><span style="font-size: small;"><b><span style="color: black; line-height: 150%;">Terms Explained:<o:p></o:p></span></b></span></div><div class="MsoNormal" style="font-family: Arial,Helvetica,sans-serif; line-height: 150%; margin: 0in 0in 0.0001pt; text-align: justify;"><br />
</div><div class="MsoNormal" style="font-family: Arial,Helvetica,sans-serif; line-height: 150%; margin: 0in 0in 0.0001pt; text-align: left;"><span style="font-size: small;"><span style="color: black; line-height: 150%;"><b>TRAI</b> – Telecom Regulatory Authority India<o:p></o:p></span></span></div><div class="MsoNormal" style="font-family: Arial,Helvetica,sans-serif; line-height: 150%; margin: 0in 0in 0.0001pt; text-align: left;"><span style="font-size: small;"><span style="color: black; line-height: 150%;"><b>3G UMTS</b> – 3rd Generation Universal Mobile Telecommunication System, an extension to 2G GSM family (GSM->GPRS->EDGE->UMTS)<o:p></o:p></span></span></div><div class="MsoNormal" style="font-family: Arial,Helvetica,sans-serif; line-height: 150%; margin: 0in 0in 0.0001pt; text-align: left;"><span style="font-size: small;"><span style="color: black; line-height: 150%;"><b>LTE</b> – 4th Generation (?) Long Term Evolution, further extension of GSM family (GSM->GPRS->EDGE->UMTS->HSPA->LTE)<o:p></o:p></span></span></div><div class="MsoNormal" style="font-family: Arial,Helvetica,sans-serif; line-height: 150%; margin: 0in 0in 0.0001pt; text-align: left;"><span style="font-size: small;"><span style="color: black; line-height: 150%;"><b>WCDMA</b> – Wideband Code Division Multiple Access (underlying modulation technique used in 3G UMTS and CDMA 2000)<o:p></o:p></span></span></div><div class="MsoNormal" style="font-family: Arial,Helvetica,sans-serif; line-height: 150%; margin: 0in 0in 0.0001pt; text-align: left;"><span style="font-size: small;"><span style="color: black; line-height: 150%;"><b>OFDMA</b> – Orthogonal Frequency Division Multiple Access (underlying modulation technique used in LTE and Mobile WiMAX)<o:p></o:p></span></span></div><div class="MsoNormal" style="line-height: 150%; margin: 0in 0in 0.0001pt; text-align: left;"><span style="color: black; font-size: 11pt; line-height: 150%;"><span style="font-size: small;"><span style="font-family: Arial,Helvetica,sans-serif;"><b>QAM</b> – Quadrature Amplitude Modulation, higher the modulation scheme, more throughput.</span></span><o:p></o:p></span></div> <span style="color: black; font-size: small; line-height: 150%;"><br />
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</span></div>Sujaihttp://www.blogger.com/profile/16539694685428659940noreply@blogger.com0tag:blogger.com,1999:blog-30677466.post-48536404338429170352009-11-17T04:14:00.000-08:002011-01-09T21:47:50.046-08:00India or China?<div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><span style="font-size: 100%;"><span style="line-height: 150%;">There are scores of articles in every major newspaper and every major magazine comparing India with China on various economic progress indicators. There are even books written about Tiger of India pitted against Dragon of China. To those who base their opinions on such reports, articles and books, it looks as though India is posing a strong completion to China, when in fact every measurable economic indicator suggests that China is clearly leading India on all fronts. Moreover the gap between these two countries is only widening with each passing year. And yet, many Indian commentators continue to complacently believe that India has some edge somewhere when in fact none exists. </span></span></div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><br />
</div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><span style="font-size: 100%;"><span style="line-height: 150%;">The tone of these reports and analysis comparing India with China suggest that India is actually inching towards China. That is not the case. In reality China is leaving India behind by a bigger margin every year. It is becoming tougher and tougher for India to catch up. In the last few years, Chinese have built the biggest dam on the planet, built the longest bridges, built the fastest cities, built their own planes, submarines, ships, magnetic trains, and even the highest railways while India continued to lay another layer of asphalt on its decrepit roads after each rainfall. <o:p></o:p></span></span></div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><span style="font-size: 100%;"><span style="line-height: 150%;"><o:p> </o:p></span></span></div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><span style="font-size: 100%;"><span style="line-height: 150%;">India is not even showing a promise of catching up. None of its policies suggest this. None of its initiatives give a glimmer of hope. Even the Indian industry is not thinking big. It is still content to play a small game.</span></span></div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><br />
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</div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><span style="font-size: 100%;"><span style="line-height: 150%;"> <o:p></o:p></span></span></div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><span style="font-size: 100%;"><span style="line-height: 150%;"><o:p> </o:p></span></span></div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><span style="font-size: 100%;"><span style="line-height: 150%;">Indian commentators continue to tell us that all this China-leading-India comments are based in myth, because Indians have English which Chinese don’t have. Is English really India’s edge? Only when India looks at itself as servicing the West using its BPOs then yes, English gives India the edge. However, if the competitor is bent on actually creating its own technology product industry to take on the West, does English still matter? When was the last time a Japanese car company could not sell its cars because the makers were not good at English? When was the last time someone in Europe balked at buying a Sony Walkman because its makers couldn’t speak English? When it comes to China, how come their lack of good English not stop Huawei from becoming world #2 in telecom equipment? How come it did not stop Lenovo, Haier and ZTE from becoming leading global brands? Just to give a perspective to Indian readers – 2 telecom equipment companies of China, Huawei and ZTE put together made USD 30 Billion in 2008 while the entire IT-ITES industry of India put together made USD 58 Billion in 2008-09. </span></span></div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><br />
</div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><span style="font-size: 100%;"><span style="line-height: 150%;"><o:p></o:p></span></span></div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><span style="font-size: 100%;"><span style="line-height: 150%;"><o:p> </o:p></span></span></div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><span style="font-size: 100%;"><span style="line-height: 150%;">China is changing the rules of the games. It is taking on the West where the West has dominated so far, bringing the fight closer to the technology leaders, while India has conveniently told itself that it will not even play this game. </span></span></div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><br />
</div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><span style="font-size: 100%;"><span style="line-height: 150%;"><o:p></o:p></span></span></div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><span style="font-size: 100%;"><span style="line-height: 150%;"><o:p> </o:p></span></span></div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><span style="font-size: 100%;"><span style="line-height: 150%;">Indians are in self-denial. They foolishly believe everything Thomas Friedman tells them, and they are happy serving their European and American masters setting up BPOs, KPOs, LPOs, software services, helping them do their things in a cheap and cost-effective way, while Chinese are poised to take on these European and American masters head on. It’s as though the Chinese have completely overthrown their colonial inferiority complex. </span></span></div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><br />
</div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><span style="font-size: 100%;"><span style="line-height: 150%;"><o:p></o:p></span></span></div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><span style="font-size: 100%;"><span style="line-height: 150%;"><o:p> </o:p></span></span></div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><span style="font-size: 100%;"><span style="line-height: 150%;">For many years now, Indians gloated over the characterization that India is good at software services while China is good at manufacturing. This was a convenient characterization that only Indians believed because the books were written in English which only Indians could understand. Chinese blissfully unaware of what Friedman said were not constrained by this characterization and hence clearly violated all hierarchies.</span></span></div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><br />
</div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><span style="font-size: 100%;"><span style="line-height: 150%;"><o:p></o:p></span></span></div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><span style="font-size: 100%;"><span style="line-height: 150%;"><o:p> </o:p></span></span></div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><span style="font-size: 100%;"><span style="line-height: 150%;">Indians limited themselves to serving the West. When they looked in the mirror, they said, “I am an Indian. I am good at services. I should just stick to it”. That India is only good at software services became a cultural phenomenon with every major industry bigwig repeating it on various forums. Even Indian government fell into this trap where all incentives and subsidies were geared only to promote the software services companies. Go to a hardware park in India and compare it with a software park in India, you will recognize the step-motherly treatment meted out to the hardware companies. </span></span></div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><br />
</div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><span style="font-size: 100%;"><span style="line-height: 150%;"><o:p></o:p></span></span></div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><span style="font-size: 100%;"><span style="line-height: 150%;"><o:p> </o:p></span></span></div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><span style="font-size: 100%;"><span style="line-height: 150%;">India made no attempts at taking on China in manufacturing. Nor did they attempt to take on the West to go up the value chain to actually deliver technology and products. The Flat World theories told them that they can just concentrate on what they were good at, that is Software Services, KPOs, BPOs and LPOs, giving up on manufacturing forever thereby handing over the race on a silver platter to China, and giving up on technology products thereby continuing to serve the West.</span></span></div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><br />
</div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><span style="font-size: 100%;"><span style="line-height: 150%;"> <o:p></o:p></span></span></div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><span style="font-size: 100%;"><span style="line-height: 150%;"><o:p> </o:p></span></span></div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><span style="font-size: 100%;"><span style="line-height: 150%;">China not only won the race in manufacturing and consolidated its position, it is now entering the technology product space, the domain held closely by the European, American and Japanese technology leaders. What more, it has started to beat these leaders at their own game. Huawei has recently won the contract to supply 3G equipment in Norway, the bastion of Scandinavian giants, Nokia and Ericsson. While India made feeble attempts with C-DOT and ITI who are not even able to sell into BSNL, China has launched not one but two major telecom companies – Huawei and ZTE, that not only sells within their countries, they sell to BSNL also.</span></span></div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><br />
</div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><span style="font-size: 100%;"><span style="line-height: 150%;"><o:p></o:p></span></span></div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><span style="font-size: 100%;"><span style="line-height: 150%;"><o:p> </o:p></span></span></div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><span style="line-height: 150%;">CK Prahlad in his closing comments at Nasscom Summit of February 2009 advised that Indian companies should foster more startups because they are the ones which bring vibrancy to the economy. His advice comes late, and even when it comes, it falls on deaf ears.</span></div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><br />
</div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><span style="line-height: 150%;"><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><span style="font-size: 100%;"><span style="line-height: 150%;">Infosys, TCS and Wipro, the giants of Indian software services which the Thomas Friedman lauds, did not do much to sponsor or promote startups in India (barring few exceptions).</span></span></div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><br />
</div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><span style="font-size: 100%;"><span style="line-height: 150%;"> </span><o:p></o:p></span></div></span></div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><span style="font-size: 100%;"><span style="line-height: 150%;"><o:p> </o:p></span></span></div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><span style="font-size: 100%;"><span style="line-height: 150%;">Meanwhile, China has launched extensive nationwide program to promote entrepreneurship in China. I was told that even a district head, equivalent to Indian District Collector, could invest up to half a million US dollars to a company that sets up shop in his district. Writing about China, a </span></span><span style="font-size: 100%;"><a href="http://www.zeenews.com/news579545.html"><span style="line-height: 150%;">report</span></a></span><span style="font-size: 100%;"><span style="line-height: 150%;"> says:<o:p></o:p></span></span></div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><span style="font-size: 100%;"><span style="line-height: 150%;"><o:p> </o:p></span></span></div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin: 0in 0in 0.0001pt 0.5in; text-align: justify;"><span style="font-size: 100%;"><i><span style="line-height: 150%;">An analysis of documenting the tremendous growth of the Chinese entrepreneurial and cultural initiatives since the demise of Communist leader Mao Zedong reveals that this accounts for the Chinese economy’s double digit growth in the last couple of decades. [1]<o:p></o:p></span></i></span></div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><span style="font-size: 100%;"><span style="line-height: 150%;"><br />
It is clear to some countries that startups are essential for the growth in economy. Not so, thinks India. India has never believed in startups. They don’t think they add up to anything. The government is obsessed with giants because they look at them as employment provider – therefore the bigger the employer the better it is. Not a single major initiative has been taken in the last few years to promote startups in India. While the government boasts of loans to SMEs, when startups actually approach the banks, they feign ignorance of any such initiative.</span></span></div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><br />
</div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><span style="font-size: 100%;"><span style="line-height: 150%;"> <o:p></o:p></span></span></div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><span style="font-size: 100%;"><span style="line-height: 150%;"><o:p> </o:p></span></span></div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><span style="font-size: 100%;"><span style="line-height: 150%;">All initiatives and decision making bodies in India are headed by people who have been good at software services and therefore there is not a single policy that actually aids home grown brands, products and technologies. STPI still thinks that software is exported only as floppy, ftp or a CD. If you put that software in telecom equipment, a mobile handset, or a DVD player, then it does not recognize it as software and hence are not given the incentives. If Apple existed in India, there is no category for recognizing it. The prevailing mood is clear - you serve a foreign master you get the incentives; you try to become a master you don’t get any incentives.</span></span></div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><br />
</div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><span style="font-size: 100%;"><span style="line-height: 150%;"> <o:p></o:p></span></span></div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><span style="font-size: 100%;"><span style="line-height: 150%;"><o:p> </o:p></span></span></div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><span style="font-size: 100%;"><span style="line-height: 150%;">Also, there are not many places a startup can raise funds in India. That’s why most startups continue to be family-owned or family-backed. First generation entrepreneurs find it impossible to raise money. The number of VC firms in India is limited. Most government funds are small and therefore their mandate does not allow them to fund big ideas, while the miniscule few bigger size funds do not fund loss-making companies – which completely rules out startups. </span></span></div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><br />
</div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><span style="font-size: 100%;"><span style="line-height: 150%;"><o:p></o:p></span></span></div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><span style="font-size: 100%;"><i><span style="line-height: 150%;"><o:p> </o:p></span></i></span></div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><span style="font-size: 100%;"><span style="line-height: 150%;">China, on the other hand, is actively promoting startups through various forums and incentives. Though it is a communist country it hosts millions of entrepreneurs and VC firms which is aiding its economy. <o:p></o:p></span></span></div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin: 0in 0in 0.0001pt 0.5in; text-align: justify;"><span style="font-size: 100%;"><i><span style="line-height: 150%;"><o:p> </o:p></span></i></span></div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin: 0in 0in 0.0001pt 0.5in; text-align: justify;"><span style="font-size: 100%;"><i><span style="line-height: 150%;">China currently has over 200 million entrepreneurs and it houses 200 venture capital firms. The country accounts for 24.6% of the total entrepreneurship activities across the world, far ahead of Indian at 13.9% and the US at 14%, according to a survey by Global Entrepreneurship Monitor. <o:p></o:p></span></i></span></div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin: 0in 0in 0.0001pt 0.5in; text-align: justify;"><span style="font-size: 100%;"><i><span style="line-height: 150%;"><o:p> </o:p></span></i></span></div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin: 0in 0in 0.0001pt 0.5in; text-align: justify;"><span style="font-size: 100%;"><i><span style="line-height: 150%;">About 116 Chinese companies are listed on NASDAQ, as against 2568 US firms, Israel’s 63, and a handful from India, says the study. [1] </span></i></span></div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin: 0in 0in 0.0001pt 0.5in; text-align: justify;"><br />
</div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin: 0in 0in 0.0001pt 0.5in; text-align: justify;"><span style="font-size: 100%;"><i><span style="line-height: 150%;"><o:p></o:p></span></i></span></div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><span style="font-size: 100%;"><span style="line-height: 150%;"><o:p> </o:p></span></span></div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><span style="font-size: 100%;"><span style="line-height: 150%;">China is even popularizing entrepreneurship as a cultural attitude with various initiatives including TV programs. <o:p></o:p></span></span></div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><span style="font-size: 100%;"><span style="line-height: 150%;"><o:p> </o:p></span></span></div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin: 0in 0in 0.0001pt 0.5in; text-align: justify;"><span style="font-size: 100%;"><i><span style="line-height: 150%;">…a Chinese reality TV show “Win in China” has received applications for entrepreneurial ventures from over 1,20,000 aspirants. Of these, 108 were chosen for prize money and working capital of $5 Million. [1]</span></i></span></div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin: 0in 0in 0.0001pt 0.5in; text-align: justify;"><br />
</div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin: 0in 0in 0.0001pt 0.5in; text-align: justify;"><span style="font-size: 100%;"><i><span style="line-height: 150%;"> <o:p></o:p></span></i></span></div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><span style="font-size: 100%;"><span style="line-height: 150%;"><o:p> </o:p></span></span></div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><span style="font-size: 100%;"><span style="line-height: 150%;">Indians don’t know what to do. They don’t know if they are socialist or capitalist. The reality is that they are clueless – they are neither capitalist nor socialist. China is both socialist and capitalist playing these two cards really well. The only floating hope for Indians has been their mastery of English. And the following observation should submerge that hope as well. <o:p></o:p></span></span></div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><span style="font-size: 100%;"><span style="line-height: 150%;"><o:p> </o:p></span></span></div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin: 0in 0in 0.0001pt 0.5in; text-align: justify;"><span style="font-size: 100%;"><i><span style="line-height: 150%;">To give competition to India and other cost-effective English speaking countries like the Philippines, millions of Chinese students are learning English systematically. “China will become the largest English speaking geography in the world by the end of this year”, Compton added. [1] <o:p></o:p></span></i></span></div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><span style="font-size: 100%;"><span style="line-height: 150%;"><o:p> </o:p></span></span></div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><span style="font-size: 100%;"><span style="line-height: 150%;">[1]: China is an entrepreneurship juggernaut, Times of India, 17 November 2009.<o:p></o:p></span></span></div><span style="font-family: arial; font-size: 100%; line-height: 150%;"><o:p></o:p></span>Sujaihttp://www.blogger.com/profile/16539694685428659940noreply@blogger.com14tag:blogger.com,1999:blog-30677466.post-69189133385615561412008-10-23T23:44:00.000-07:002011-01-09T21:48:55.924-08:00Bangalore- Startup City<div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">For many months now some of us have believed that Bangalore is the most favored place for startups. Of course, we didn’t have any data to back it. When Vijay Anand of Proto.in, a good friend who spends most of his energies in promoting startup ecosystem in India contested that Bangalore may not the best destination for startups, I had a different opinion on it. </div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><br />
</div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><o:p> </o:p></div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">Some of us who have started out in Bangalore have a bias for Bangalore and that may have clouded our assumption that Bangalore is more suited for startups. Then, may be not! We now have some data coming from the recent <a href="http://www.livemint.com/2008/10/24000418/Startups-faceoff-comes-alive.html" style="color: #cc0000;">TATA NEN exercise</a>.</div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><br />
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<div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><o:p> </o:p></div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">Before I venture further, let me clarify my position on this competition. I am a strong supporter of many startup events that happen in this country. I do my best to participate in them and promote them where necessary. </div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><br />
</div><div class="MsoNormal" face="arial" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><o:p> </o:p></div><div class="MsoNormal" face="arial" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">However, we have decided not to participate in this TATA NEN competition. There are few reasons for that. I believe the competition has some weaknesses. Here I list them. </div><div class="MsoNormal" face="arial" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><br />
</div><div class="MsoNormal" face="arial" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">#1. Not every startup got the same start in the competition. If the startups are chosen by voting, how can some candidates be fielded earlier and some later? It’s like fielding few candidates in a poll early on, and after people start voting, you add few more candidates later on. It just doesn’t make sense to do that. Someone at TATA NEN got the whole thing wrong.</div><div class="MsoNormal" face="arial" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><br />
</div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">#2. Polling a startup? How does that work? Startups are virtually unknown. Nobody other than the employees and few friends and family know about a startup. Only consumer focused startups tend to draw larger audiences while high-tech startups catering to enterprises may be completely unknown. So how can someone vote for a startup they don’t know about? It’s not the same as voting for HCL or Satyam- almost every engineer knows about them and hence voting can make sense. How does voting apply to virtually unknown startups? That’s when you start doubting the whole rationale of this exercise.</div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><br />
</div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"> </div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><o:p> </o:p></div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">But TATA NEN exercise has given us some insights and observations. For the first time, it has pooled so many startups onto one forum.</div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><br />
</div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><o:p> </o:p></div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">1. Bangalore is number #1 startup city with 25% of the nominated startups. That’s 1 out of every 4 in the country – thus establishing our belief as a fact that Bangalore continues to be the most favored destination for startups.</div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><br />
</div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"> </div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">2. Most common form of initial funding is personal savings. More than 70% of the companies start that way. Friends and family comprise 17%. VC funded companies comprise only 2%. Angel investments comprise only 4%. </div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><br />
</div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">3. About 42% of the entrepreneurs are in their 30s, 76% come from first-generation family backgrounds, and about 17% of them have studied abroad.</div>Sujaihttp://www.blogger.com/profile/16539694685428659940noreply@blogger.com3tag:blogger.com,1999:blog-30677466.post-20401116119263465022008-10-22T01:32:00.000-07:002011-01-09T21:49:55.827-08:00How can startups get right engineers?<div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">Few initiatives like Pluggd.in, Proto.in, Headstart.in, NEN, are doing a wonderful job in educating engineering institutions in India to get exposed to the startups of India. They are taking initiatives to bring startups to the campuses so that interested students can be recruited by them. </div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><br />
</div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><o:p> </o:p></div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">While talking to one of the very energetic campaigners at NEN, I started giving my opinion on how and what they should be doing. I am penning down the points from that talk. </div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><br />
</div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><o:p> </o:p></div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">Startups are too busy and are not in a position to go to a campus for recruiting candidates. First, they don’t have time and they don’t have people who can spend a day on recruitments. Second, they don’t have money to travel to the campuses if they are in far off cities. Third, they will never get the kind of guys they want at the salary they are willing to give. </div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><br />
</div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><o:p> </o:p></div><div class="MsoNormal" face="arial" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">Instead, as a startup, I would like to receive a document which lists all the master’s and PhD students in an institute that has a small picture of the candidate, their contact details, and a 10 line biography, highlighting their project, their interest, area, and other technical and performance information. I can then choose the candidates that are of interest to me, call them up or send them an e-mail. NEN can also create a separate list of those candidates showing interest in working for a startup so that I don’t have to bother spending time telling the candidate what it takes to work in a startup. </div><div class="MsoNormal" face="arial" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><br />
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<div class="MsoNormal" face="arial" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><o:p> </o:p></div><div class="MsoNormal" face="arial" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">I feel a sense of loss when an extremely talented and passionate engineer who wants to work on certain DSP design eventually takes up a job at a financial number crunching software company only because he did not get the right kind of job. Also, it is a huge loss to companies like us since after two years of working at that financial company his expertise in DSP design is of no interest to me. </div><div class="MsoNormal" face="arial" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><br />
</div><div class="MsoNormal" face="arial" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><o:p> </o:p></div><div class="MsoNormal" face="arial" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">Also, I believe that all engineering students, especially the masters and PhDs should have a LinkedIn profile which should be given in contact information. The LinkedIn profile should contain all the course details along with details of the project or thesis. That way, I can get to know the details before I decide to call him. </div><div class="MsoNormal" face="arial" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><br />
</div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><o:p> </o:p></div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">Some groups like Pluggd.in, Proto,in, Headstart.in, NEN are trying to solve the well-known problem facing the startup industry. Campus recruitments do not favor startups. Companies which take up candidates in hordes, like Infosys, TCS, get the preference to hire the candidates early on. So does the MNCs which pay really lots of money. Many students do not find the job of his choice. There may be some engineers who are keen on working on a particular domain rather than with a recognized brand. Such candidates may lose out since the startup may not show at the campus recruitments. </div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><br />
</div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"> </div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><o:p> </o:p></div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">If a very talented RF engineer who has done master thesis in making better and efficient power amplifiers takes up a job at an insurance software company only because he has not found the right match, it’s a pity.</div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><br />
</div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><o:p> </o:p></div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">I look forwarding to seeing a web portal. At any point of time, I would like to look at a database of Masters and PhD students in India working in the fields of Electronics and Communications engineering and know what they are working on. If I find a candidate working on a nice project, I would like to contact him and see his interest in working with us. Such a portal can be used by startups and technology giants to list some problem statements that can be used by institutes to create projects that are more relevant to the mainstream businesses. Some of these projects can be funded by the industry as well.</div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><br />
</div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><o:p> </o:p></div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">I have hundreds of problems that I would like get them solved, in embedded systems, in RF engineering, in thermal engineering, wireless communications, etc. I would like to post those problems on a website. T he interested students can contact the companies like us and get the detailed problem description from us. Over a period of time, this interaction will influence the colleges to fine tune their projects to the needs of the industry. The industry can then hire the guys who are already working on relevant domain. </div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><br />
</div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><o:p> </o:p></div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">I look forward to seeing such a database of Master and PhD students, the details of their projects, and in the long run, I would like to see a portal which can contain the list of all such students working on those projects, including the problem statements from the industry.</div>Sujaihttp://www.blogger.com/profile/16539694685428659940noreply@blogger.com3tag:blogger.com,1999:blog-30677466.post-44097392386611091202008-10-15T21:19:00.000-07:002011-01-09T21:50:52.429-08:00Crisis or Opportunity?<div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">The Wall Street as we know it doesn’t exist. This could be the onset of worst financial crisis in the last fifty years. The alarms are being sounded. It’s going to be gloomy ahead. ‘Brace yourself for the worst storm ever’. ‘It’s going to be another Great Depression’, and so on. Indians would love to believe it is going to affect them exactly the way it is affecting Americans. Flat world, isn’t it? We have believed in that myth far too long not to believe it now. </div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><br />
</div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"> </div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><o:p> </o:p></div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">The news pours in from every quarter. It’s impossible to get away from it – every newspaper, every magazine, and every news report suggests the same. There will an economic slowdown. There will be layoffs. Startups need to conserve cash. Already cautious VCs of India <a href="http://www.livemint.com/2008/10/13221359/Venture-capital-cos-may-focus.html" style="color: #cc0000;">become more cautious</a> now.</div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><br />
</div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"> </div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><o:p> </o:p></div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">I am supposed to be gloomy too. I am supposed to make negative statements too. I am supposed to say that, ‘Yeah! It’s going to be hard; it’s going to be tough; it’s going to be bleak!’</div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><o:p> </o:p></div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">Yet, I don’t say that. I am a startup, remember. I am already in the deepest shit-hole possible. I am used to surviving in a very hostile environment. I conserve cash like nobody else’s business. I starve and yet put on a smile. I am used to it. (It’s been four years like that. I better be used to it.) </div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><o:p> </o:p></div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">Unlike the pundits out there, I am not pessimistic.</div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><br />
</div><a name='more'></a><br />
<div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"> </div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><o:p> </o:p></div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">Yes, it is a crisis. But I think it is also an opportunity in the long run; especially, if you are a technology startup aiming big sitting right here in India. Most of my competitors are based in US and Europe. The current crisis is going to hit those companies really hard who usually take lot of funds to bring a product to the market. Many of them will be cautious and conservative and therefore will shelve some of the plans on hand. The more ambitious and riskier they are, greater the likelihood of shelving them. Being a garage startup in India, we have a DNA to work on extremely low budget, spending cash very conservatively. I believe that it is an opportunity for many Indian companies who have started on this model to take on the challenge and launch products onto the world market. </div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><br />
</div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><o:p> </o:p></div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">Those high-spending startups may have to be cautious, because most probably they have been spending too much money unnecessarily. Whereas, we will continue to be aggressive and bold! At any day, we know that we will take only about 1/20 to 1/50 of funds what a typical heavily-invested company would take to launch new products. With some of the competitors folding and some being cautious, it’s definitely an opportunity. </div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><br />
</div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><o:p> </o:p></div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">Startups in India- think real. Go back to basics. Think of the real stuff for which people will pay real money. There are few basic things for which people actually pay money, like shoes, medicine, energy, TV, mobile phone, computer, broadband, communications, travel, marriage, etc. Make sure your company can make revenues, instead of creating just a perceived value. I would be cautious working on a service or a product that has a perceived value but no tangible value to the customer.</div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><br />
</div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"> </div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><o:p> </o:p></div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">Ask yourself, will you pay for this service? And if you consider yourself a geek and an early adopter, ask your friend, mom and another fellow engineer if he would pay for this service? Get real, as real as you can be. For a moment, forget you can create value based on perception and hype. Don’t assume too many things to happen in the ecosystem. If your business model suggests that you will reap lots of money when there are lots of WiFi phones around in India to create ad hoc networks, you are assuming too many things.</div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><br />
</div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><o:p> </o:p></div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">If you are an investor, it’s actually the right time for you take that big bet. If you were afraid of those gorillas eating your startup’s market, this is time for you to take that bet. If you were afraid, how can this small startup in India make it big on the world market, here’s the time. While the gorillas are being cautious, you should run like a gazelle and get to that post. </div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><br />
</div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><o:p> </o:p></div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">Get your head out of those power point presentations and excel sheets. Take a tour of the companies that you want to invest in. Meet the team members; see the passion in their eyes. How long will you evaluate a startup based on titles and degrees of the team members? I would like to see my potential investors showing interest by coming to my office and see what we are doing instead of evaluating us just by the market projections based on a Gartner report. For all that matters, throw that market report into the nearest trashcan.</div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><br />
</div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><o:p> </o:p></div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">Tejas Networks, based in Bangalore, a technology product company focusing on optical networking equipment, got started in 2000, right in the middle of dot com burst. When they got started, there were nearly 200 startups in North America and Europe in the same space. While nearly 95% of them eventually folded, Tejas stood ground and eventually became a market leader in India, and is now poised to take on world markets.</div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><br />
</div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"> </div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><o:p> </o:p></div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">The crisis in the global market was an opportunity for an Indian company. Here’s another opportunity for all of us. It knocks only once in a while.</div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><br />
</div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"> </div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;"><o:p> </o:p></div><div class="MsoNormal" style="font-family: arial; line-height: 150%; margin-bottom: 0.0001pt; text-align: justify;">It’s time for Indians companies to think big. Let’s make Ciscos, Apples and Nokias out of this place. Let us be brave and let us not be daunted. Let’s not chicken out. Let’s use this as the biggest opportunity that has landed at our feet. Let’s embark on this challenge. Let’s not shy away from taking the bets. Use the startup DNA to your advantage, use this time to launch the technology and products onto the world market. Let’s do it! </div>Sujaihttp://www.blogger.com/profile/16539694685428659940noreply@blogger.com5tag:blogger.com,1999:blog-30677466.post-41626652025329415742008-07-22T11:09:00.001-07:002008-07-22T11:12:53.227-07:00Assembly Line manufacturing from Ford<p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: 150%;"><span style="font-family: "Arial","sans-serif";"><o:p> </o:p>I took these notes down while watching a show on History Channel. <o:p></o:p></span></p> <p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: 150%;"><span style="font-family: "Arial","sans-serif";"><o:p> </o:p></span></p> <p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: 150%;"><span style="font-family: "Arial","sans-serif";">Henry Ford created the concept of assembly line manufacturing.<span style=""> </span>The original components arrived onto a single line platform to make a complete car at the end of the line.<span style=""> </span>This was a revolutionary way of manufacturing introduced to increase productivity on an unprecedented scale. However, the monotonous nature of the job took a toll on the workers. Henry Ford compensated for it by increasing the wages, setting a standard for America giving $5 an hour and introducing 8 hours a day.<span style=""> </span>Eventually, the workers at his factory were richer than average Americans where they could actually afford the cars they assembled.<span style=""> </span>Here are some highlights:<o:p></o:p></span></p> <ul><li><span style="font-family: "Arial","sans-serif";">One car was produced every 10 seconds.<o:p></o:p></span></li></ul> <ul><li><span style="font-family: "Arial","sans-serif";">It took only 4 days to assemble a car from raw materials to the finished product.<o:p></o:p></span></li></ul> <ul><li><span style="font-family: "Arial","sans-serif";">Henry Ford became the first “self made” billionaire of the mankind.<o:p></o:p></span></li></ul> <ul><li><span style="font-family: "Arial","sans-serif";">Most other industries quickly adopted his assembly line manufacturing.<o:p></o:p></span></li></ul> <ul><li><span style="font-family: "Arial","sans-serif";">During his time, USA produced 40% of manufactured output in the world.<o:p></o:p></span></li></ul> <ul><li><span style="font-family: "Arial","sans-serif";">During WWII, the 32 million car American industry shifted to making war equipment.<o:p></o:p></span></li></ul> <ul><li><span style="font-family: "Arial","sans-serif";">The assembly line production allowed women and African-Americans to enter jobs spurring hate crimes.<o:p></o:p></span></li></ul> <ul><li><span style="font-family: "Arial","sans-serif";">During WWII, USA produced 90,000 bombers, quarter million tanks and jeeps- faster and cheaper than any other country in the world. <o:p></o:p></span></li></ul> <ul><li><span style="font-family: "Arial","sans-serif";">At the end of WWII, USA productivity was 8 times that of Japan.<o:p></o:p></span></li></ul> <ul><li><span style="font-family: "Arial","sans-serif";">However, Ford’s assembly line manufacturing had some deficiencies. Switching from Model T to Model A required one-quarter billion US dollars. Meanwhile, GM was able to make changes faster because they had smaller assembly lines.<o:p></o:p></span></li></ul> <p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: 150%;"><span style="font-family: "Arial","sans-serif";"><o:p> </o:p></span></p> <p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: 150%;"><b style=""><span style="font-family: "Arial","sans-serif";">Assembly Line work takes a toll at Ford<o:p></o:p></span></b></p> <ul><li><span style="font-family: "Arial","sans-serif";">There was emphasis on Quantity over Quality.<o:p></o:p></span></li></ul> <ul><li><span style="font-family: "Arial","sans-serif";">Extreme fatigue for Workers.<o:p></o:p></span></li></ul> <ul><li><span style="font-family: "Arial","sans-serif";">Mechanization went too far, human element was missing.<o:p></o:p></span></li></ul> <ul><li><span style="font-family: "Arial","sans-serif";">Toyota introduced lean production. Eventually, Japan made more cars than USA.<o:p></o:p></span></li></ul> <p class="MsoListParagraph" style="margin-bottom: 0.0001pt; text-align: justify; line-height: 150%;"><span style="font-family: "Arial","sans-serif";"><o:p> </o:p></span></p> <p class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify; line-height: 150%;"><b style=""><span style="font-family: "Arial","sans-serif";">Embraced by Toyota<o:p></o:p></span></b></p> <ul><li><span style="font-family: "Arial","sans-serif";">1950, EG Toyota spent 3 months at Rouge Complex (Detroit).<span style=""> </span>Henry Ford shared his assembly line technique with everyone. At that time, Toyota was doing 1000 cars a month. Ford was making 1000 cars a day.<o:p></o:p></span></li></ul> <ul><li><span style="font-family: "Arial","sans-serif";">Toyota created lean manufacturing allowing workers to define their job giving scope for creativity.<span style=""> </span>Every worker became an inspector.<span style=""> </span>Productivity actually increased. <o:p></o:p></span></li></ul> <ul><li><span style="font-family: "Arial","sans-serif";">Toyota expected its workers to be motivated, skilled and innovative – they developed their unique style called Kai Zan.<o:p></o:p></span></li></ul>Sujaihttp://www.blogger.com/profile/16539694685428659940noreply@blogger.com1tag:blogger.com,1999:blog-30677466.post-5850625950749619592008-04-04T03:36:00.000-07:002008-05-21T04:03:28.586-07:00Notions in India on Startups<p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" >There is a prevailing notion in Indian startups that the minute you get heavily invested by a VC, you are successful.<span style=""> </span>The fact that some VC has deemed your business worthy of investing is a good enough reason to feel that you are successful as a business.<span style=""> </span><o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" >Now, that you are invested, you feel a bit special.<span style=""> </span>Since you are no longer scouting for money like other entrepreneurs you think you are now a serious company.<span style=""> </span>That feeling is good enough to put a stop to all that hanging around with other pauper entrepreneurs. <span style=""> </span>That also means putting a stop to attending the Barcamps, MoMo, Headstart events, etc. <o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" >I attended a NASSCOM event on products and innovations. In one of the panels showcasing successful product startups, they also invited social networking and other dotcoms.<span style=""> </span>I was sitting there wondering – what is the common element in all these startups?<span style=""> </span>Some of them were not innovative and some were not even making products.<span style=""> </span>Why are they considered successful? The only thing that was common was that they all got funding recently by some big name VC in the order of few millions.<o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" >The fact that you got invested is a good enough reason to believe you are already successful.<span style=""> </span>Even the VCs, the media and observers will believe that.<o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><b style=""><span style=";font-family:Arial;font-size:10;" >So what happens once you get invested?<o:p></o:p></span></b></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" >There is another prevailing notion that once you get invested, somehow all your financial problems are solved.<span style=""> </span>The new startups which get heavily invested start looking for a swanky office with nice carpets, interiors, woodwork, cabins and cubes.<span style=""> </span>They go back to getting cushy salaries with luxurious perks.<span style=""> </span>Overnight, you are no longer a poor boy.<span style=""> </span>In fact, it’s like getting married to the only daughter of the Sultan of Brunei.<span style=""> </span>You travel luxury class, stay at five star hotels, get into all kinds of forums, wear suits, and rub shoulders with biggies.<span style=""> </span>You can now go about thinking about that new apartment, that new swanky car, and that investment into real estate that you have kept on hold when starting the startup. <span style=""> </span>Now you go to work as if it’s a regular job, filling excel sheets, project plans, as you did before the startup.<span style=""> </span>The hunger is already gone and now it’s replaced by satiety, too soon too fast.<o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" >I see a dangerous trend in Indian startups.<span style=""> </span>I am not comfortable with it. <o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" >Startups in </span><st1:country-region><st1:place><span style=";font-family:Arial;font-size:10;" >India</span></st1:place></st1:country-region><span style=";font-family:Arial;font-size:10;" > see their first round of heavy investment as a major achievement in itself.<span style=""> </span>They see it as an end in itself.<span style=""> </span>They see it as a major milestone after which all problems are solved.<span style=""> </span>This particular single-focus goal is detrimental to its long term prospects as a business.<span style=""> </span>Usually the startups go through a process of exhaustion and starvation and the thought of a gush of money is a welcoming prospect, so much so that, their entire focus is now shifted to raising that money instead of concentrating on other business goals. Once that investment is made, you back to your old style of working. <o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" >I know of few companies in </span><st1:city><st1:place><span style=";font-family:Arial;font-size:10;" >Bangalore</span></st1:place></st1:city><span style=";font-family:Arial;font-size:10;" > which are setting very bad examples.<span style=""> </span>These companies have ‘successfully’ raised many rounds of funding and yet, there is no product release or source of income.<span style=""> </span>Most of the time is spent in partying and celebrating little achievements which have no consequence in business. <o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" >In a city of very few successful product making companies, to have a few bad apples will have negative effect on prospects of future investments.<span style=""> </span>Unlike </span><st1:place><span style=";font-family:Arial;font-size:10;" >Silicon Valley</span></st1:place><span style=";font-family:Arial;font-size:10;" > which spawns thousands of startups which are VC backed, </span><st1:country-region><st1:place><span style=";font-family:Arial;font-size:10;" >India</span></st1:place></st1:country-region><span style=";font-family:Arial;font-size:10;" > produces very few. And if out of those very few we start seeing bad examples that sets a negative outlook on future prospects for Indian product startups. <o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" >Some VCs who witness these trends, instead of correcting them, are actually casting a blind eye, and are believing themselves into a delusion that everything is going alright, when in fact it is not.<span style=""> </span>They cover up the inadequacies of their startups and keep promoting them in all forums and events as if they are best companies on the planet. The first round VCs think their startup is successful if it is in a position to raise the second round.<span style=""> </span>And second round investors in turn believe it is a successful company if it raises the third round, and so on.<span style=""> </span>Nobody is bothering to check if these companies are actually creating value as a business, in terms of market share, revenues and profit margins. <o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" >This trend of blowing up the VC money may work well in </span><st1:place><span style=";font-family:Arial;font-size:10;" >Silicon Valley</span></st1:place><span style=";font-family:Arial;font-size:10;" > where there are thousands of companies being started every year, and few bad apples will not make a big difference.<span style=""> </span>In </span><st1:country-region><st1:place><span style=";font-family:Arial;font-size:10;" >India</span></st1:place></st1:country-region><span style=";font-family:Arial;font-size:10;" >, where there is dearth of startups and where a paltry number of companies get invested, this trend does not bode well. <o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" >A startup should have the same hunger even after they raise their round of heavy investment.<span style=""> </span>That hunger should keep them going after pursuing the markets, getting the cash into the company.<span style=""> </span>They should not squander the money. Instead they should continue to use the art of managing the cash flow wisely as they did prior to their investments.<span style=""> </span>They should not let go of this innate strength all in one episode. <o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" >Indian startups need to set successful examples of using </span><st1:country-region><st1:place><span style=";font-family:Arial;font-size:10;" >India</span></st1:place></st1:country-region><span style=";font-family:Arial;font-size:10;" > as a cost-effective way to launch global brands of high quality products.<span style=""> </span></span><span style=";font-family:Arial;font-size:10;" ><o:p></o:p></span></p>Sujaihttp://www.blogger.com/profile/16539694685428659940noreply@blogger.com4tag:blogger.com,1999:blog-30677466.post-17638515386354015722008-01-21T13:35:00.000-08:002008-01-21T13:38:07.240-08:00What is your primary objective as a startup?<p class="MsoNormal" style="text-align: justify;"><span style="font-size: 10pt; font-family: Arial;">In my conversations with many entrepreneurs during the events at <a href="http://www.proto.in/proto2008/">Proto.in</a> and <a href="http://headstart.in/">Headstart.in</a>, I have observed few things that I want to discuss here.<o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style="font-size: 10pt; font-family: Arial;"><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><b><span style="font-size: 10pt; font-family: Arial;">Should startups get disappointed if they do not get invested?</span></b></p> <p class="MsoNormal" style="text-align: justify;"><span style="font-size: 10pt; font-family: Arial;"><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style="font-size: 10pt; font-family: Arial;">One top name investment banker once told me, ‘you are not an exception (referring to our state of not getting funded by a VC). Instead, you are the norm’.<span style=""> </span>He added, ‘</span><st1:place><span style="font-size: 10pt; font-family: Arial;">Silicon Valley</span></st1:place><span style="font-size: 10pt; font-family: Arial;"> (and few other areas, such as </span><st1:city><st1:place><span style="font-size: 10pt; font-family: Arial;">Boston</span></st1:place></st1:City><span style="font-size: 10pt; font-family: Arial;">) is in fact an exception.<span style=""> </span>Most of the business in the world, </span><st1:country-region><st1:place><span style="font-size: 10pt; font-family: Arial;">Vietnam</span></st1:place></st1:country-region><span style="font-size: 10pt; font-family: Arial;">, </span><st1:country-region><st1:place><span style="font-size: 10pt; font-family: Arial;">Brazil</span></st1:place></st1:country-region><span style="font-size: 10pt; font-family: Arial;">, </span><st1:country-region><st1:place><span style="font-size: 10pt; font-family: Arial;">Russia</span></st1:place></st1:country-region><span style="font-size: 10pt; font-family: Arial;">, etc, start this way.’<o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style="font-size: 10pt; font-family: Arial;"><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style="font-size: 10pt; font-family: Arial;">I keep telling myself that ‘nobody will come to your aid. You are on your own.<span style=""> </span>If there is no ecosystem, then create one. Don’t complain.’<o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style="font-size: 10pt; font-family: Arial;"><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style="font-size: 10pt; font-family: Arial;">There’s nothing romantic about running a startup.<span style=""> </span>It is filled with many hard choices, misgivings, struggles, which you may or may not like.<span style=""> </span>But as long as you are enjoying what you are doing, keep doing it. <o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style="font-size: 10pt; font-family: Arial;"><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style="font-size: 10pt; font-family: Arial;">While you are out there, struggling with the realities that are somehow so different from what people write about entrepreneurship and startups, please ask yourself the following questions.<o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style="font-size: 10pt; font-family: Arial;"><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><b><span style="font-size: 10pt; font-family: Arial;">As a founder, what is the number one objective for you right now?<o:p></o:p></span></b></p> <p class="MsoNormal" style="text-align: justify;"><span style="font-size: 10pt; font-family: Arial;"><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style="font-size: 10pt; font-family: Arial;">1. Is it making the product and proving the technology?<o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style="font-size: 10pt; font-family: Arial;">2. Is it making the revenues to somehow survive?<o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style="font-size: 10pt; font-family: Arial;">3. Is it making your startup attractive to get funding by a VC?<o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style="font-size: 10pt; font-family: Arial;">4. Is it making a company that has a viable business?<o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style="font-size: 10pt; font-family: Arial;"><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style="font-size: 10pt; font-family: Arial;">I ask these questions because there is a danger that you may get caught up in the day-to-day struggle to miss out on the big picture. <o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style="font-size: 10pt; font-family: Arial;"><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style="font-size: 10pt; font-family: Arial;">These are my learnings as a startup IN INDIA.<span style=""> </span>I stress on ‘in </span><st1:country-region><st1:place><span style="font-size: 10pt; font-family: Arial;">India</span></st1:place></st1:country-region><span style="font-size: 10pt; font-family: Arial;">’, because we are NOT </span><st1:place><span style="font-size: 10pt; font-family: Arial;">Silicon Valley</span></st1:place><span style="font-size: 10pt; font-family: Arial;">.<span style=""> </span>And no matter what people, analysts or the media says, we are not one, and we are not going to become one right away (but the hope remains).<span style=""> </span><o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style="font-size: 10pt; font-family: Arial;"><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><b><span style="font-size: 10pt; font-family: Arial;">1. Is it making the product and proving the technology?<o:p></o:p></span></b></p> <p class="MsoNormal" style="text-align: justify;"><span style="font-size: 10pt; font-family: Arial;"><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style="font-size: 10pt; font-family: Arial;">There is a chance that you may start believing that making the product (that you set out to build) is the ultimate objective.<span style=""> </span>You start thinking, all you have to do is make this product, and everything else will fall in place.<span style=""> </span><o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style="font-size: 10pt; font-family: Arial;"><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><b><span style="font-size: 10pt; font-family: Arial;">Not always.<o:p></o:p></span></b></p> <p class="MsoNormal" style="text-align: justify;"><span style="font-size: 10pt; font-family: Arial;"><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style="font-size: 10pt; font-family: Arial;">What if the product you set out to build takes five years, and by then the market is gone? What if the product you make costs you $2000 to make, but the customer is ready to pay only $200 to buy it? What if the technology that you think is so hot, is not something the world wants?<o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style="font-size: 10pt; font-family: Arial;"><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style="font-size: 10pt; font-family: Arial;">I see a great danger when you make this option – ‘making the product and proving the technology’ the primary objective.<span style=""> </span>When you hit crossroads, you will not know what to do. <span style=""> </span>[I agree that this is ONE OF the major objectives but it SHOULD NOT be the primary objective.] <o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style="font-size: 10pt; font-family: Arial;"><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style="font-size: 10pt; font-family: Arial;">As a startup, one of the essential and inherent strengths is your flexibility.<span style=""> </span>You are flexible to change your business plan at any time, and that too quite quickly without incurring major losses.<span style=""> </span>This flexibility should not be confused with shifting focus.<span style=""> </span>With changing market situations, customer interactions, and other events that happen in the world, you should mould your business plan, and if needed abandon the original plan to quickly embrace another one while being consistent with the original intent. <o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style="font-size: 10pt; font-family: Arial;"><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style="font-size: 10pt; font-family: Arial;">Example, if your dream is to connect everyone on the planet with internet and phone connectivity, you may give up one technology to embrace another one, abandon one model of selling to embrace another, without diluting the original vision.<o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style="font-size: 10pt; font-family: Arial;"><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><b><span style="font-size: 10pt; font-family: Arial;">2. Is it making the revenues to somehow survive?<o:p></o:p></span></b></p> <p class="MsoNormal" style="text-align: justify;"><span style="font-size: 10pt; font-family: Arial;"><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style="font-size: 10pt; font-family: Arial;">It’s very easy to make revenues. Think about it.<span style=""> </span>You can become a <i>coolie</i> in a train station and earn money.<span style=""> </span>It’s so easy to make money, if you are willing to work.<span style=""> </span>You have to ask yourself, ‘is that how you want to make money in this startup?’<o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style="font-size: 10pt; font-family: Arial;"><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><b><span style="font-size: 10pt; font-family: Arial;">Not really.<o:p></o:p></span></b></p> <p class="MsoNormal" style="text-align: justify;"><span style="font-size: 10pt; font-family: Arial;"><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style="font-size: 10pt; font-family: Arial;">If all you want is to make revenues, there are many quicker and easier ways.<span style=""> </span>While going through the journey, you will go through many patches that are quite grueling, taxing you with many problems, financial and emotional.<span style=""> </span>Many new avenues may come up which promise you quicker and easier money.<span style=""> </span>Would you take up those new opportunities to get those much-needed revenues? Would you do it just because someone is paying you to do something else (which is not your original intent)?<o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style="font-size: 10pt; font-family: Arial;"><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style="font-size: 10pt; font-family: Arial;">You have to be clear on what you set out to do.<span style=""> </span>That will help you in making decisions when alternative avenues arise. Some people think that you should do anything to make money – because you are in the ‘business of business’.<span style=""> </span>I strongly differ with such views.<span style=""> </span>What will take you far on the long and torturous path of entrepreneurship is your commitment to the original lofty goals that you set out on.<span style=""> </span>Few others may have a different opinion on this – but I strongly believe that you should carry through your convictions before settling down on anything alternative.<span style=""> </span>That way, your team will stick with you; some of those angel investors and VCs who have been watching you will come forward; that way your potential customers who are waiting for your product will have more confidence in you to trial your product. <o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style="font-size: 10pt; font-family: Arial;"><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style="font-size: 10pt; font-family: Arial;">[I am talking about perseverance, not stubbornness.<span style=""> </span>Will write on that in future]<o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style="font-size: 10pt; font-family: Arial;"><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><b><span style="font-size: 10pt; font-family: Arial;">3. Is it making your startup attractive to get funding by a VC?<o:p></o:p></span></b></p> <p class="MsoNormal" style="text-align: justify;"><span style="font-size: 10pt; font-family: Arial;"><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style="font-size: 10pt; font-family: Arial;">Would you run after certain milestones just to please a potential VC to get a funding?<span style=""> </span>Would you get on board an executive who in your opinion adds no value to your company but would please a potential investor?<span style=""> </span>Would you run after markets that you do not find suitable for your company just to please potential investors? <o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style="font-size: 10pt; font-family: Arial;"><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><b><span style="font-size: 10pt; font-family: Arial;">Not really.<o:p></o:p></span></b></p> <p class="MsoNormal" style="text-align: justify;"><span style="font-size: 10pt; font-family: Arial;"><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style="font-size: 10pt; font-family: Arial;">This is the worst objective to have. You should achieve milestones for other important reasons than just to please a potential investor or VC.<span style=""> </span>While you continue on your journey, you need to create value for the company, and for that you start achieving certain milestones.<span style=""> </span>Those milestones are vital for you, your team and your company.<span style=""> </span>They should not be specially designed to suit the likes and dislikes of your potential VCs or investors.<span style=""> </span>They may have told you that they would invest in you if you achieve certain milestones.<span style=""> </span>But what if you put all your energies in that direction only to find they no long show interest in your company?<span style=""> </span>Is that milestone really on the path of your intended journey or was it introduced just to please a potential VC?<o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style="font-size: 10pt; font-family: Arial;"><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style="font-size: 10pt; font-family: Arial;">Your investor is a shareholder who will walk with you in your journey. He is a companion – sometimes a painful one – which is good because he will guide you to go in the direction that makes sense to all of you.<span style=""> </span>However, his investment is not your goal or your destination.<span style=""> </span><o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style="font-size: 10pt; font-family: Arial;"><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style="font-size: 10pt; font-family: Arial;">You go with an investor and take his money when you reach an agreement on how you want to take this company forward.<span style=""> </span>If you don’t agree, then you part ways as gentlemen do and still keep in touch.<span style=""> </span>But you should be clear on what you want to achieve as a company and business before you start saying, ‘Yes’ to everything a potential investor wants. <o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style="font-size: 10pt; font-family: Arial;"><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style="font-size: 10pt; font-family: Arial;">[But once you are married to each other, you are both stakeholders in the company and hence you confer with your investors on what strategy you want to embrace.<span style=""> </span>And once decided, whether you like it or not, you stick to it.]<o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style="font-size: 10pt; font-family: Arial;"><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><b><span style="font-size: 10pt; font-family: Arial;">4. Is it making a company that has a viable business?<o:p></o:p></span></b></p> <p class="MsoNormal" style="text-align: justify;"><span style="font-size: 10pt; font-family: Arial;"><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style="font-size: 10pt; font-family: Arial;">While your vision is something grander and loftier, such as positively influencing every person on the planet, you should strive to create a full-fledged organization that makes a viable business.<span style=""> </span>This must be your primary objective during the startup stage.<span style=""> </span>As long as you know where you are going, and why you are going, and keep checking if you are going in the right direction, you will most probably make the right decisions. <o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style="font-size: 10pt; font-family: Arial;"><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style="font-size: 10pt; font-family: Arial;">You should try to create a viable business organization- it’s like a flotilla of aircraft carrier and surrounding warships, with planes, helicopters, etc, which makes it a self-contained armed force on the move.<span style=""> </span>It has a mission and a goal- that are quite often loftier and bigger than any individual or single person’s dream or ambition.<span style=""> </span>That mission and vision has to be permeated to all of your team members so everyone knows why we are going through these rough seas for months and years with no land in sight.<span style=""> </span><span style=""> </span><o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style="font-size: 10pt; font-family: Arial;"><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style="font-size: 10pt; font-family: Arial;">You need to put energies to hold the team together as a close-knit organization, keep the dream live, giving the team its much-needed small milestones to celebrate, adding value continuously to make yourself attractive for investments that come as fuel, courting customers and working closely with them to generate much-needed revenues, slowly growing making long strides in short periods, but at all times, trying to create that full-fledged company that is creating a viable business with a potential to scale and take on bigger markets, all the while keeping your eyes fixed on that vision to positively influence every person on the planet.<o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style="font-size: 10pt; font-family: Arial;"><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style="font-size: 10pt; font-family: Arial;">As long as you are clear in your priorities, you will take the right decisions when you hit crossroads, unflinchingly, without any trace of doubt.<o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style="font-size: 10pt; font-family: Arial;"><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style="font-size: 10pt; font-family: Arial;"><o:p></o:p></span></p>Sujaihttp://www.blogger.com/profile/16539694685428659940noreply@blogger.com1tag:blogger.com,1999:blog-30677466.post-49523476230117534702008-01-21T12:49:00.000-08:002008-01-21T13:12:27.099-08:00Observations<p class="MsoNormal"><b><span style=";font-family:Arial;font-size:10;" >Changing landscape<o:p></o:p></span></b></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" >I am observing a major change happening in the last two years.<span style=""> </span>I see that more and more people are getting onto the bandwagon of entrepreneurship, especially the young and first-generation entrepreneurs, and I see this as a good sign.<span style=""> </span><o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" >Is it because I have started to notice them or is it really the phenomenon sweeping across the nation [of course, confined to few cities only]?<span style=""> </span>MoMo, Barcamp, Proto.in and Headstart.in, all started in the last two years.<span style=""> </span>These events have created a forum and platform for many young techies to meet and exchange ideas, and in some cases, collaborate.<span style=""> </span>The new entrepreneurs are getting to know the realities.<span style=""> </span>They are getting to know the hardships, and yet the passion amongst them is only increasing.<span style=""> </span>The number of startups is proliferating in </span><st1:country-region><st1:place><span style=";font-family:Arial;font-size:10;" >India</span></st1:place></st1:country-region><span style=";font-family:Arial;font-size:10;" >.<span style=""> </span>The quality of the ideas is improving.<span style=""> </span>There is a stronger sense of commitments from the teams, and many Indians are leaving their secure jobs, which is a good sign.<span style=""> </span>[I do believe that we need many more.<span style=""> </span>This is not enough.] <o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" >Even NASSCOM, the official spokesman of services industry in </span><st1:country-region><st1:place><span style=";font-family:Arial;font-size:10;" >India</span></st1:place></st1:country-region><span style=";font-family:Arial;font-size:10;" >, is lending its hand to promote product startups, with dedicated funds on the way. <o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></p> <p class="MsoNormal"><b><span style=";font-family:Arial;font-size:10;" >Missing Angels<o:p></o:p></span></b></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" >What is missing is the angel investors and their ability to take risks. I don’t believe the existing network of angels in </span><st1:country-region><st1:place><span style=";font-family:Arial;font-size:10;" >India</span></st1:place></st1:country-region><span style=";font-family:Arial;font-size:10;" > is effective. They have to do it differently, with different set of rules that are more applicable to Indian context. Many startups need angel investment – because they do not qualify for VC investments in the seed stage.<span style=""> </span>And most VCs are still not equipped to handle seed and early stage.<span style=""> </span>They will continue to invest in growth stage.<span style=""> </span><o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" >The founders should go back to their families and friends and pitch to them to get the initial capital.<span style=""> </span>What they need is a little guidance on how to structure a deal with such friends and family investors.<span style=""> </span>When there is nobody to invest, what do you do?<span style=""> Investing Other People Money (OPM) is not an option. </span>You put all your money first. And then you go to those people who trust you and they happen to be friends and family.<span style=""> </span>Pitch to them, and take investments, build your product, get that initial traction, and then may be, may be, you will get invested by those who do not know you, otherwise, go to the revenue stage working closely with some confidant customers.<span style=""> </span>You can’t keep hoping that institutional investors would invest in you.<span style=""> </span>There is a good probability they won’t.<o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></p> <p class="MsoNormal"><b><span style=";font-family:Arial;font-size:10;" >Government could do something<o:p></o:p></span></b></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" >My only wish to the government of </span><st1:country-region><st1:place><span style=";font-family:Arial;font-size:10;" >India</span></st1:place></st1:country-region><span style=";font-family:Arial;font-size:10;" > is – please make roads wider please.<span style=""> </span>These cities are choking us.<span style=""> </span>I don’t want to see ex-entrepreneurs who have made it big leave these cities forever. They form an extremely important element of the ecosystem.<o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" ><o:p></o:p></span></p>Sujaihttp://www.blogger.com/profile/16539694685428659940noreply@blogger.com0tag:blogger.com,1999:blog-30677466.post-70491912092743801542008-01-21T12:33:00.000-08:002008-01-21T12:47:05.862-08:00Proto.in and Headstart.in<p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" >I was at <a href="http://www.proto.in/proto2008/">Proto.in</a> (in Chennai) on Friday.<span style=""> </span>Vijay Anand asked me to speak on the topic “Startups: The Worst Case Scenario”.<span style=""> </span>He wanted me to tell the entrepreneurs how ‘unromantic’ a journey of a startup can be.<span style=""> </span>I had to address some of those myths and induce some dose of reality to wanna-be entrepreneurs.<span style=""> </span>I realized that there were many entrepreneurs in the audience who had gone through the same journey and have the same experiences and observations about entrepreneurship as I did.<span style=""> </span>I guess, what I am being asked to do is – ‘be the bad guy, spill the guts!’<o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" >I had to rush back to </span><st1:city><st1:place><span style=";font-family:Arial;font-size:10;" >Bangalore</span></st1:place></st1:city><span style=";font-family:Arial;font-size:10;" > that night because we showcased our product next day at <a href="http://headstart.in/">HeadStart.in</a> (</span><st1:city><st1:place><span style=";font-family:Arial;font-size:10;" >Bangalore</span></st1:place></st1:city><span style=";font-family:Arial;font-size:10;" >). Being a strong proponent of developing the ecosystem here in </span><st1:city><st1:place><span style=";font-family:Arial;font-size:10;" >Bangalore</span></st1:place></st1:city><span style=";font-family:Arial;font-size:10;" >, I couldn’t miss this event.<span style=""> </span><o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" >Vijay Anand and his Proto.in has already attracted lot of attention in entrepreneurial world with a strong focus on </span><st1:country-region><st1:place><span style=";font-family:Arial;font-size:10;" >India</span></st1:place></st1:country-region><span style=";font-family:Arial;font-size:10;" >.<span style=""> </span>Proto.in intends to become one of the catalysts in promoting the much-missed ecosystem in </span><st1:country-region><st1:place><span style=";font-family:Arial;font-size:10;" >India</span></st1:place></st1:country-region><span style=";font-family:Arial;font-size:10;" > and Vijay is doing a tremendous job. <span style=""> </span><o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" >While the first three events were held in Chennai, Vijay wants to move this event around to other cities in </span><st1:country-region><st1:place><span style=";font-family:Arial;font-size:10;" >India</span></st1:place></st1:country-region><span style=";font-family:Arial;font-size:10;" > and even explore the neighboring countries around </span><st1:country-region><st1:place><span style=";font-family:Arial;font-size:10;" >India</span></st1:place></st1:country-region><span style=";font-family:Arial;font-size:10;" >.<span style=""> </span></span><st1:city><st1:place><span style=";font-family:Arial;font-size:10;" >Bangalore</span></st1:place></st1:city><span style=";font-family:Arial;font-size:10;" >, which according to me, is one of the best places for a technology startup with well-developed ecosystem (only in comparison to other cities of </span><st1:country-region><st1:place><span style=";font-family:Arial;font-size:10;" >India</span></st1:place></st1:country-region><span style=";font-family:Arial;font-size:10;" >) just could not sit idle.<span style=""> </span>It had to spring its own event.<span style=""> </span>And I believe the more the merrier.<span style=""> </span>We have a long way to go before we can say ‘We have too many such events’. <o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" >HeadStart.in, which is organized by volunteers of </span><st1:city><st1:place><span style=";font-family:Arial;font-size:10;" >Bangalore</span></st1:place></st1:city><span style=";font-family:Arial;font-size:10;" > (which is the hallmark of </span><st1:city><st1:place><span style=";font-family:Arial;font-size:10;" >Bangalore</span></st1:place></st1:city><span style=";font-family:Arial;font-size:10;" >), spearheaded by Kallol, Aditya, Keshav, Arpit, et al has held its first session (along with an ACM event) at IISc, </span><st1:city><st1:place><span style=";font-family:Arial;font-size:10;" >Bangalore</span></st1:place></st1:city><span style=";font-family:Arial;font-size:10;" >. <o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" >There are some finer differences between the two events, and I am quite sure they serve their purposes. <o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" >The things I liked about Proto.in.<span style=""> </span>The demos have become a serious affair drawing great attention.<span style=""> </span>Also, the fact that nobody knows who got selected to demo makes it an interesting exercise. I like the short presentations they have. Vijay keeps the ecosystem together.<span style=""> </span>He does not forget the old participants and he engages them and contributes to keep building the ecosystem.<span style=""> </span><o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" >The best thing about HeadStart.in is that it was held in </span><st1:city><st1:place><span style=";font-family:Arial;font-size:10;" >Bangalore</span></st1:place></st1:city><span style=";font-family:Arial;font-size:10;" >.<span style=""> </span>It was high time.<span style=""> </span>With such a great ecosystem, it had to happen sometime. I don’t think any city in </span><st1:country-region><st1:place><span style=";font-family:Arial;font-size:10;" >India</span></st1:place></st1:country-region><span style=";font-family:Arial;font-size:10;" > can beat </span><st1:city><st1:place><span style=";font-family:Arial;font-size:10;" >Bangalore</span></st1:place></st1:city><span style=";font-family:Arial;font-size:10;" > in terms of quality of its participants, panelists, etc.<span style=""> </span>Though this event coincided with other major events, Headstart.in still drew the bigwigs of the industry. The panelists were experienced and are veterans of the industry. The atmosphere was electric as ever.<span style=""> </span>The VC networking session in the evening was excellent. That’s what entrepreneurs want.<span style=""> </span>Organizers ensured the media met those who demonstrated their products.<o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" >It was unfortunate that both events took place on the same dates. I wish it had happened differently.<span style=""> </span>But I realize that the organizers of both events had their constraints, on when they can organize, and they could not change their dates.<span style=""> </span>I look forward to next set of events where they do not coincide and where we will have much closer interactions and sharing of notes between the organizers.<o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" ><o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" ><o:p></o:p></span></p>Sujaihttp://www.blogger.com/profile/16539694685428659940noreply@blogger.com1tag:blogger.com,1999:blog-30677466.post-55106043405400805342007-12-04T22:23:00.000-08:002007-12-04T22:24:09.495-08:00Low Risk Low Gain India<p class="MsoNormal" style="text-align: justify;"><span style="font-size: 10pt; font-family: Arial;">According to a recent report [1], though the investments into </span><st1:country-region><st1:place><span style="font-size: 10pt; font-family: Arial;">India</span></st1:place></st1:country-region><span style="font-size: 10pt; font-family: Arial;"> have increased substantially, a little of it actually reaches the early stage companies. <o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style="font-size: 10pt; font-family: Arial;"><o:p> </o:p></span></p> <p class="MsoBodyTextIndent2" style="margin-left: 36pt; text-align: justify;"><i><span style="font-size: 10pt; font-family: Arial; color: black;">0ver 90% of the money is invested in late-stage initiatives by mature firms. Even the remainder mostly finances new firms replicating proven business ideas. As a result, very few innovative startups are funded. This will have a negative ripple effect on the quality of late stage opportunities in later years. <o:p></o:p></span></i></p> <p class="MsoNormal" style="text-align: justify;"><span style="font-size: 10pt; font-family: Arial;"><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style="font-size: 10pt; font-family: Arial;">While US, </span><st1:country-region><st1:place><span style="font-size: 10pt; font-family: Arial;">UK</span></st1:place></st1:country-region><span style="font-size: 10pt; font-family: Arial;"> and </span><st1:country-region><st1:place><span style="font-size: 10pt; font-family: Arial;">Israel</span></st1:place></st1:country-region><span style="font-size: 10pt; font-family: Arial;"> spend nearly 30% of their investments into seed and early stage (29% in US, 39% in </span><st1:country-region><st1:place><span style="font-size: 10pt; font-family: Arial;">UK</span></st1:place></st1:country-region><span style="font-size: 10pt; font-family: Arial;"> and 32% in </span><st1:country-region><st1:place><span style="font-size: 10pt; font-family: Arial;">Israel</span></st1:place></st1:country-region><span style="font-size: 10pt; font-family: Arial;">), </span><st1:country-region><st1:place><span style="font-size: 10pt; font-family: Arial;">India</span></st1:place></st1:country-region><span style="font-size: 10pt; font-family: Arial;"> spends only 6.9%.<span style=""> </span></span><st1:country-region><st1:place><span style="font-size: 10pt; font-family: Arial;">China</span></st1:place></st1:country-region><span style="font-size: 10pt; font-family: Arial;"> is better - it spends 12.5% of its investments in seed and early stage companies.<o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style="font-size: 10pt; font-family: Arial;"><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style="font-size: 10pt; font-family: Arial;">References:<o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style="font-size: 10pt; font-family: Arial;">1. Accessing Early-Stage Risk Capital in India, <span style="color: black;">Rafiq Dossani, Stanford University, Asawari Desai, TiE Inc, Shorenstein, APARC, Standford, and TiE.<o:p></o:p></span></span></p>Sujaihttp://www.blogger.com/profile/16539694685428659940noreply@blogger.com1tag:blogger.com,1999:blog-30677466.post-12294546478671565012007-11-26T05:51:00.001-08:002007-11-26T22:33:32.719-08:00Ground realities from a technology product company in India<p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" >You may be one of those believers who think creating technology product companies in </span><st1:country-region><st1:place><span style=";font-family:Arial;font-size:10;" >India</span></st1:place></st1:country-region><span style=";font-family:Arial;font-size:10;" > is the way to go.<span style=""> </span>You may believe its time for making such companies in </span><st1:country-region><st1:place><span style=";font-family:Arial;font-size:10;" >India</span></st1:place></st1:country-region><span style=";font-family:Arial;font-size:10;" >.<span style=""> </span>You may believe that </span><st1:country-region><st1:place><span style=";font-family:Arial;font-size:10;" >India</span></st1:place></st1:country-region><span style=";font-family:Arial;font-size:10;" > has satisfied the minimum set of criterion to launch such companies.<span style=""> </span>Yet, you face many obstacles; you have to put up with many disappointments, and brush off many discouragements to realize it.<span style=""> </span>As a technology product company you have to take many bets.<span style=""> </span>And they happen to be big bets if you are chasing bigger dreams.<span style=""> </span><o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" >As an entrepreneur of a technology-product company, you start out thinking one day you will translate your idea into reality.<span style=""> </span>You believe you will create something that will have huge market for itself because of certain attributes you bring in to that idea.<span style=""> </span>You start out thinking that someday you will create enough value, enough traction with customers, and will be poised to take on bigger markets.<span style=""> </span>In that journey you will include the role of VCs because at some point of time you need the necessary monies to scale up to make a significant difference.<span style=""> </span>You hope that someday the VCs will see this potential in your company to invest in your company.<span style=""> </span>You hope that they may want to share the risks with you.<span style=""> </span>You believe that if you achieve those important milestones and show them what you believed in was indeed true they will come to invest in you.<o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" >Here’s the reality. If you think they will invest in you when you productize your idea and make prototypes which actually work, then you are wrong.<span style=""> </span>If you think they will invest in you when you get some partners to sign up and use your technology and product, then you are wrong. If you think they will invest in you when you get some customers to actually deploy your units in the market, then you are wrong. You need to stop deluding yourself.<span style=""> </span>If you think they will invest in you when you show a huge interest in your product from your customers, and the only thing you need is money to translate those orders into a multi-million dollar business, then you are wrong.<span style=""> </span>Stop hallucinating.<span style=""> </span>They won’t invest in you.<o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" >Here I write some of the things acting against us right now (and to an extent, acting against many technology product companies in </span><st1:country-region><st1:place><span style=";font-family:Arial;font-size:10;" >India</span></st1:place></st1:country-region><span style=";font-family:Arial;font-size:10;" >).<o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><b><span style=";font-family:Arial;font-size:10;" >We are young and also first-generation entrepreneurs<o:p></o:p></span></b></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" >We are not ex-entrepreneurs who have already done it; we are not the grey-haired veterans with big titles either.<span style=""> </span>We don’t think our age counts for our experience. <span style=""> </span>We believe our actual experiences of having gone through the grit and grind of making a product in this unfriendly atmosphere counts for it.<span style=""> </span>Our experience of forming alliances and partnerships with various bigwigs, to actually pull it off, counts for it.<span style=""> </span>Our experience of knowing the customers’ needs, and then fulfilling them in the price points that is attractive to them counts for it.<span style=""> </span>Our experience of holding a team of 20+ for over three years paying each 1/3 of salary counts for it.<span style=""> </span>But for some reason that has no value.<span style=""> </span>Did I also add that we don’t have degrees from IITs and IIMs?<o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><b><span style=";font-family:Arial;font-size:10;" >We are ‘actually’ a technology product company<o:p></o:p></span></b></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" >Many people just want to be called ‘technology’ companies but they are not.<span style=""> </span>Even VCs know that.<span style=""> </span>But everyone just pretends.<span style=""> </span>Since everybody wants to be associated with that word, and it adds glamour, they just throw in that word.<span style=""> </span>Many people just want to be called a ‘product’ company but they are not.<span style=""> </span>Many VCs who speak incessantly on how they are going to promote and fund technology product companies end up investing in online travel portals, marriage sites, networking sites, and hotels.<span style=""> </span>According to us, marriage sites and hotels are NOT ‘technology product’ companies. <o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><b><span style=";font-family:Arial;font-size:10;" >We are a three-year old company<o:p></o:p></span></b></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" >We have survived as a startup in </span><st1:country-region><st1:place><span style=";font-family:Arial;font-size:10;" >India</span></st1:place></st1:country-region><span style=";font-family:Arial;font-size:10;" > for over three years now, on our own.<span style=""> </span>We have developed a product, launched it, deployed it, and we are now selling it, on our own.<span style=""> </span>We have held together team of 20+ team for these three years, on our own.<span style=""> </span>We make revenues on which we run all our operations.<span style=""> </span>You would expect that such things will be seen as our strengths.<span style=""> </span>The reality is quite different.<span style=""> </span>Exactly those things are seen as our weaknesses.<span style=""> </span>VCs ask, ‘How come you are not invested for over three years now?’ strongly suggesting, ‘Definitely, there is something wrong with you guys’. <o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><b><span style=";font-family:Arial;font-size:10;" >Indian VCs firms are not VCs<o:p></o:p></span></b></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" >VCs are characterized by the bets they take. Most VC firms, even those from </span><st1:place><span style=";font-family:Arial;font-size:10;" >Silicon Valley</span></st1:place><span style=";font-family:Arial;font-size:10;" > who set up offices here, become completely risk-averse when in </span><st1:country-region><st1:place><span style=";font-family:Arial;font-size:10;" >India</span></st1:place></st1:country-region><span style=";font-family:Arial;font-size:10;" >.<span style=""> </span>They are not chasing startups but are funding growth-stage companies.<span style=""> </span>They are not chasing technology product companies, but they are funding the run-of-the-mill, already-tried, clichéd ideas borrowed from </span><st1:place><span style=";font-family:Arial;font-size:10;" >Silicon Valley</span></st1:place><span style=";font-family:Arial;font-size:10;" > adapted to </span><st1:country-region><st1:place><span style=";font-family:Arial;font-size:10;" >India</span></st1:place></st1:country-region><span style=";font-family:Arial;font-size:10;" >. Once, during a discussion in Ba</span><st1:personname><span style=";font-family:Arial;font-size:10;" >rc</span></st1:personname><span style=";font-family:Arial;font-size:10;" >amp in </span><st1:city><st1:place><span style=";font-family:Arial;font-size:10;" >Bangalore</span></st1:place></st1:city><span style=";font-family:Arial;font-size:10;" >, a lady asked, ‘what does it take to make product-based companies in </span><st1:country-region><st1:place><span style=";font-family:Arial;font-size:10;" >India</span></st1:place></st1:country-region><span style=";font-family:Arial;font-size:10;" >?’ I answered, ‘Balls!’<span style=""> </span>And if someone were to ask me, ‘what does it take to invest in technology-product-companies in </span><st1:country-region><st1:place><span style=";font-family:Arial;font-size:10;" >India</span></st1:place></st1:country-region><span style=";font-family:Arial;font-size:10;" >?’ I would respond, ‘Balls!’<span style=""> </span>Most VC firms in </span><st1:country-region><st1:place><span style=";font-family:Arial;font-size:10;" >India</span></st1:place></st1:country-region><span style=";font-family:Arial;font-size:10;" > can be categorized as Private-equity players and not Venture capital funds.<o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><b><span style=";font-family:Arial;font-size:10;" >Indian VCs do not look at our business<o:p></o:p></span></b></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" >We are not Mobile VAS, we are not Mobile gaming, we are not </span><st1:place><span style=";font-family:Arial;font-size:10;" >Mobile</span></st1:place><span style=";font-family:Arial;font-size:10;" > sea</span><st1:personname><span style=";font-family:Arial;font-size:10;" >rc</span></st1:personname><span style=";font-family:Arial;font-size:10;" >h, we are not </span><st1:place><span style=";font-family:Arial;font-size:10;" >Mobile</span></st1:place><span style=";font-family:Arial;font-size:10;" > payment.<span style=""> </span>We are a wireless infrastructure company which promises to provide broadband internet to millions.<span style=""> </span>It’s a long haul.<span style=""> </span>It is risky.<span style=""> </span>It has many unknowns.<span style=""> </span>And we don’t generate revenue quickly.<span style=""> </span>Unfortunately, most VC partners in </span><st1:country-region><st1:place><span style=";font-family:Arial;font-size:10;" >India</span></st1:place></st1:country-region><span style=";font-family:Arial;font-size:10;" > do not come from technology product domain or anywhere close.<span style=""> </span>Those who do are not in </span><st1:country-region><st1:place><span style=";font-family:Arial;font-size:10;" >India</span></st1:place></st1:country-region><span style=";font-family:Arial;font-size:10;" >.<span style=""> </span>When you talk to VC firms in US, they ask you to talk to partners or other VC firms in </span><st1:country-region><st1:place><span style=";font-family:Arial;font-size:10;" >India</span></st1:place></st1:country-region><span style=";font-family:Arial;font-size:10;" >.<span style=""> </span>So, it’s back to the square one. <o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" >When even a novice with a fresh high school degree can foresee revenues from the day one from a services company, it doesn’t make sense to invest in a company that takes three years to make the first buck.<span style=""> </span>When it is far lucrative and safer to invest in real estate and hotels in </span><st1:country-region><st1:place><span style=";font-family:Arial;font-size:10;" >India</span></st1:place></st1:country-region><span style=";font-family:Arial;font-size:10;" >, it just doesn’t make sense to invest in a technology-product company. <span style=""> </span>That’s the reality.<o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><b><span style=";font-family:Arial;font-size:10;" >VCs find Indian entrepreneurs clueless<o:p></o:p></span></b></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" >Many VCs find Indian entrepreneurs clueless. There’s great deal of truth to it.<span style=""> </span><o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" >But I also find many VCs in </span><st1:country-region><st1:place><span style=";font-family:Arial;font-size:10;" >India</span></st1:place></st1:country-region><span style=";font-family:Arial;font-size:10;" > equally clueless.<span style=""> </span>VCs think Indian entrepreneurs have no idea where the market is going.<span style=""> </span>They believe that Indian entrepreneurs need ‘hand-holding, mentoring, coaching’, and they come up with funny ways to promote this idea.<span style=""> </span>Soon the Indian entrepreneurs start finding more people who want to coach them than people who want to sign checks. <o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" >Once I was asked to list the top three things I needed, I said, ‘Money, Money, Money’.<span style=""> </span>Yes, that’s the truth.<span style=""> </span>When I don’t have money even to survive, all these talks about ‘mentoring and coaching’ sound completely ridiculous. <o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" >VCs don’t build businesses. It’s entrepreneurs who do. A top-name VC partner based in </span><st1:place><span style=";font-family:Arial;font-size:10;" >Silicon Valley</span></st1:place><span style=";font-family:Arial;font-size:10;" > once told me – ‘After achieving success as an entrepreneur I started to believe I cracked the formula to success.<span style=""> </span>Then, I tried the next venture to realize that I didn’t have a clue.<span style=""> </span>Suddenly, a young guy comes up with a ridiculous idea and next thing you know it is a huge success.<span style=""> </span>That humbles you down’. <o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><b><span style=";font-family:Arial;font-size:10;" >A note on entrepreneurship in India<o:p></o:p></span></b></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" >The state of entrepreneurship in </span><st1:country-region><st1:place><span style=";font-family:Arial;font-size:10;" >India</span></st1:place></st1:country-region><span style=";font-family:Arial;font-size:10;" > is quite different.<span style=""> </span>In </span><st1:country-region><st1:place><span style=";font-family:Arial;font-size:10;" >India</span></st1:place></st1:country-region><span style=";font-family:Arial;font-size:10;" > it was always done by businessmen who already had some money and access to capital.<span style=""> </span>And those few first generation entrepreneurs who actually succeeded, they did so in services model where there is always a hope for revenues from day one. <o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" >In </span><st1:place><span style=";font-family:Arial;font-size:10;" >Silicon Valley</span></st1:place><span style=";font-family:Arial;font-size:10;" >, the VCs already had examples to look for.<span style=""> </span>They had the experiences of failed and successful companies to guide them.<span style=""> </span>They had many veterans and ex-entrepreneurs from technology companies joining them to bring in the experience.<span style=""> </span>Most Indian VC firms have people who are successful in services business or dotcoms.<span style=""> </span>Nobody comes out of technology product making or anything remotely close to it.<o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" >I find the test of Indian entrepreneurship more grueling and the experiences quite valuable.<span style=""> </span>We are the people working on the ground for three years now, meeting the customers, meeting folks who are shaping the market right at the forefront.<span style=""> </span>We learn from the market and know the pulse.<span style=""> </span>We are taking bets on the upcoming technology, making innovations to suit the price points of our customers, evolving our business plans when necessary to suit changing markets.<span style=""> </span>And each of our decisions impacts the fate of our business – always on the brink of demise.<span style=""> </span>When you survive for three years, you have already ingrained much strength that comes handy in the long run.<span style=""> </span>There is an inherent strength that will go long way - that needs to be recognized.<o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><b><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></b></p> <p class="MsoNormal" style="text-align: justify;"><b><span style=";font-family:Arial;font-size:10;" >Purpose of this article<o:p></o:p></span></b></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" >We are not complaining. We don’t believe VCs should invest in us just because we believe we should be invested. <span style=""> </span>We don’t have such expectations.<span style=""> </span>We don’t think we lost out just because VCs have not invested in us as yet.<span style=""> </span>I think the struggle gets a little longer, that’s all.<span style=""> </span>We know we will do it, either way- with or without VC money.<o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" >It is just that I see too many reports, too many blogs, too many articles written about the extremely optimistic side of funding scene in </span><st1:country-region><st1:place><span style=";font-family:Arial;font-size:10;" >India</span></st1:place></st1:country-region><span style=";font-family:Arial;font-size:10;" >. They are mostly rosy, effusive, and mind-bogglingly unrealistic. <span style=""> </span>Such hype allows for people to form false opinions and have unnecessary expectations. I wanted to present the real side of the story here, right from the frontline.<span style=""> </span><o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" >Just look at the recent VC investments in </span><st1:country-region><st1:place><span style=";font-family:Arial;font-size:10;" >India</span></st1:place></st1:country-region><span style=";font-family:Arial;font-size:10;" >.<span style=""> </span>Nobody is actually investing in any technology product companies.<span style=""> </span>Just look at each VC firm and see what their investments are.<span style=""> </span>And if you are smart enough, you will see through chaff to realize that a company listed in technology space is just another me-too dotcom company that has used lot of jargon to cover up their ordinariness. <o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" >Reading these reports on funding scene in India is like reading reports about how India’s economy is booming, how its Sensex is rising, how India’s infrastructure is being funded, and so on.<span style=""> </span>The reality is very different for most of us living in </span><st1:country-region><st1:place><span style=";font-family:Arial;font-size:10;" >India</span></st1:place></st1:country-region><span style=";font-family:Arial;font-size:10;" >.<span style=""> </span>We continue to live in the same crowded streets, with the filth dumped next to our homes. We continue to drive in the same traffic where traveling 5 km takes more than an hour.<span style=""> </span>Nothing has changed for us down here.<span style=""> </span>All these reports do not mean much unless those funds eventually come down to make our lives a little better decongesting that traffic and cleaning up our streets.<o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" ><br />Similarly, nothing has changed for us on the ‘investment-into-product-companies’ front either.<span style=""> </span>All these reports of so much investments coming into India, so many VCs opening their shops in India, so many funds being allocated for investments in technology space, etc, do not mean anything. In reality, none of it has trickled down to us. Our life continues to be the same. Our struggle continues to be the same.<span style=""> </span><o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" >We are on our own.<span style=""> </span><o:p></o:p></span></p>Sujaihttp://www.blogger.com/profile/16539694685428659940noreply@blogger.com23tag:blogger.com,1999:blog-30677466.post-30263569386795621282007-10-19T04:11:00.000-07:002007-10-19T04:12:01.587-07:00Would Indian technology product companies succeed?<p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" >It is not a tried and tested model, but I believe that Indian technology product companies would succeed on a great scale (only if pursued beyond a threshold).<span style=""> </span>There are very few examples, and I am just waiting for some of these companies to do good so that analysts and authors start writing stories about Indian technology product making companies on why it makes sense to invest in such companies in </span><st1:country-region><st1:place><span style=";font-family:Arial;font-size:10;" >India</span></st1:place></st1:country-region><span style=";font-family:Arial;font-size:10;" >. <o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" >We have already proven ourselves to be really efficient when it comes to IT-services businesses. <o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" >Arun Sarin, CEO of Vodafone, <a style="color: rgb(204, 0, 0);" href="http://economictimes.indiatimes.com/News/News_By_Industry/How_they_do_business_in_India/articleshow/2461700.cms">believes there is lot to learn from India</a>.<span style=""> </span>He is telling his managers, ‘go get me the secret of their low-cost business model.’<span style=""> </span>He does not think that this low-cost is just because of low labor costs in </span><st1:country-region><st1:place><span style=";font-family:Arial;font-size:10;" >India</span></st1:place></st1:country-region><span style=";font-family:Arial;font-size:10;" >.<span style=""> </span>He believes it contributes to only one-third.<span style=""> </span>‘Two-thirds is just How They Do Business,’ Arun Sarin says. Comparing the mobile business model of </span><st1:place><span style=";font-family:Arial;font-size:10;" >Europe</span></st1:place><span style=";font-family:Arial;font-size:10;" > with </span><st1:country-region><st1:place><span style=";font-family:Arial;font-size:10;" >India</span></st1:place></st1:country-region><span style=";font-family:Arial;font-size:10;" >, one finds the Indian telecom companies to be ‘lean, mean and hugely cheaper, both in pricing and cost’. <o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" >Now, can I extrapolate this to technology product making companies as well?<span style=""> </span>To be fair, I shouldn’t.<span style=""> </span>How can one just extend the trends of a services business to some other industry? <o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" >As I said earlier, it is not a proven model as yet.<span style=""> </span>But I am looking at few examples. Tejas Networks of Bangalore is one such example.<span style=""> </span>Though it would not necessarily come into the category of ‘lean, mean’ but it is definitely cheaper, both in pricing and cost.<span style=""> </span>It has started in a typical </span><st1:place><span style=";font-family:Arial;font-size:10;" >Silicon Valley</span></st1:place><span style=";font-family:Arial;font-size:10;" > model – funded by a big name Angel Investor who brought in many institutional VC firms based in US, founded by techies who translated a brilliant idea into a robust business model.<span style=""> </span>Tejas should be going for IPO soon.<span style=""> </span>If it is a huge success, it will benefit many other tech startups in </span><st1:country-region><st1:place><span style=";font-family:Arial;font-size:10;" >India</span></st1:place></st1:country-region><span style=";font-family:Arial;font-size:10;" >.<span style=""> </span><o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" >I work for a startup which started on a little different model - a ‘garage startup’ model where the founders put in all their savings and wealth, and even wealth of family and friends, and roped in some angel investors to make a product.<span style=""> </span>The company is now making revenues and has its products deployed in markets in </span><st1:place><span style=";font-family:Arial;font-size:10;" >Europe</span></st1:place><span style=";font-family:Arial;font-size:10;" >.<span style=""> </span>The cost and pricing is not low just because of low-labor cost, but is inherently low because of innovative methods embraced during the development activity itself.<span style=""> </span>Working on a shoestring budget, the engineers were pushed into embracing low cost options in all phases of development.<span style=""> </span>Innovation need not come only out of super rich and heavily funded labs of IBM.<span style=""> </span>It can come out of a tech startup founded on dusty road in </span><st1:city><st1:place><span style=";font-family:Arial;font-size:10;" >Bangalore</span></st1:place></st1:city><span style=";font-family:Arial;font-size:10;" > which works on extremely low cash flow because of dire necessity.<span style=""> </span>As they said long ago, necessity is the mother of invention.<span style=""> </span>They were right.<span style=""> </span>The products from this company while being of high quality are just one-quarter of the lowest product in the market and this low-price is not artificial – it applies even for low volumes and with high margins. <o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" >I have a belief that such technology startups can be made out of </span><st1:country-region><st1:place><span style=";font-family:Arial;font-size:10;" >India</span></st1:place></st1:country-region><span style=";font-family:Arial;font-size:10;" > and few years from now, it will be a tested and proven model.<span style=""> </span>But for that to happen, one has to go through the grit and grind of ‘surviving and succeeding’ in </span><st1:country-region><st1:place><span style=";font-family:Arial;font-size:10;" >India</span></st1:place></st1:country-region><span style=";font-family:Arial;font-size:10;" >, which can turn out to be a ‘test by fire’ itself.<span style=""> </span>When one survives and succeeds this test, they can succeed anywhere.<span style=""> </span>I am just waiting for that new revolution to happen. <o:p></o:p></span></p>Sujaihttp://www.blogger.com/profile/16539694685428659940noreply@blogger.com2tag:blogger.com,1999:blog-30677466.post-86340804263627839182007-04-18T06:53:00.001-07:002007-04-18T08:05:43.368-07:00Why do we have so many jobs in Bangalore?<p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" >I want to provide a different perspective to this topic. I touched upon it earlier at ‘<a href="http://windia.blogspot.com/2007/01/how-many-people-report-into-you.html">How many people report into you?</a>’ Here, I want to linger on a little longer. <o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" >Software-services companies and MNC offshore units inherently introduce inefficiencies that are supposedly alleviated by increasing the headcount, which while benefiting the group does the damage of killing the individual.<span style=""> </span>What do I mean by this? Let me explain.<o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" >A division or group in a software-services company makes more money when it has more number of people in it.<span style=""> </span>Therefore, the division head, the project manager, and the project leader will all collude to ensure that headcount keeps increasing.<span style=""> </span>This attitude is set in early on and at every stage.<span style=""> </span>Those who resist will either have to conform eventually (so that they can succeed) or they will be weeded out.<span style=""> </span>Over a period of time, what you have is set of successful individuals who have mastered the art of inflating the number of resources to do a project.<span style=""> </span>Say, a manager X says he needs 8 people to do a certain job, while another manager Y says he needs 12 people to the same job.<span style=""> </span>Invariably, the manager Y is selected for the job.<span style=""> </span>Give this process few years- what you have is a set of managers who are all set to outdo the other in inflating the numbers.<span style=""> </span>Only those who inflate the numbers with panache and flair succeed. <o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" >Now, what happens at the vendor who is outsourcing to these software-services companies? There is a competition within the vendor company too, between different outsourcing managers, to outsource more.<span style=""> </span>Say, there are two outsourcing managers (OMs) outsourcing to two different companies.<span style=""> </span>There are two factors that come into play here.<span style=""> </span>First, the </span><st1:place><span style=";font-family:Arial;font-size:10;" >OM</span></st1:place><span style=";font-family:Arial;font-size:10;" > who outsources more work will prove that he has saved more for the company, setting a trend to outsource even more.<span style=""> </span>This outsourcing comes at a price though.<span style=""> </span>There is a homegrown antipathy towards such outsourcing since each job outsourced means one less job for the local guy.<span style=""> </span>But the senior management looks at it from a cost-saving perspective and goes ahead to reward the guy who saves more (who would eventually become the senior management). More outsourcing means more headcount at the software-services company.<span style=""> </span>Second, the </span><st1:place><span style=";font-family:Arial;font-size:10;" >OM</span></st1:place><span style=";font-family:Arial;font-size:10;" > becomes the champion of the software-services company. He develops a giver-relationship with the company he outsources to.<span style=""> </span>Being the outsourcing manager, he is treated like a king at the software-services company.<span style=""> </span>He is the messiah, the giver and friend, all combined.<span style=""> </span>The software-services company people look upon him to increase their share of revenues from the vendor.<span style=""> </span>He in turn likes the attention he receives and takes it upon himself to do better to earn their respects and obeisance. Also, their success is his success. <span style=""> </span>He becomes their savior and protector, and in turn helps himself.<span style=""> </span>There is a bond that is established between the </span><st1:place><span style=";font-family:Arial;font-size:10;" >OM</span></st1:place><span style=";font-family:Arial;font-size:10;" > and software-services manager which in turn helps in increasing the headcount at the software-services company.<o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" >As a result, you will end up with divisions of 400 people to service a vendor in US/Europe when the same work can actually be done by 100. <o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" >Now, let me also look at MNC offshore units in </span><st1:city><st1:place><span style=";font-family:Arial;font-size:10;" >Bangalore</span></st1:place></st1:city><span style=";font-family:Arial;font-size:10;" >.<span style=""> </span>Though they are an integral unit of the parent R&D, these offshore units are usually given the step-daughter treatment.<span style=""> </span>The best work is not given to these offshore units – only the non-critical portions and other support, maintenance portions are assigned to these units.<span style=""> </span>(Only few MNC have actually started to treat their Indian counterparts as mainstream R&D centers).<span style=""> </span>The decision power is not shared either – the heads at these offshore units are mostly paper tigers, with great titles but little influence.<span style=""> </span>Those who work at MNCs share a sense of frustration for not being able to get the best work and for not being able to influence. <span style=""> </span>That leaves most of them to inherit and borrow the practices of other software-services companies of </span><st1:country-region><st1:place><span style=";font-family:Arial;font-size:10;" >India</span></st1:place></st1:country-region><span style=";font-family:Arial;font-size:10;" > where they worked before- the usual routine of political maneuvering and one-upmanship.<span style=""> </span>This one-upmanship usually involves having more people ‘under you’.<span style=""> </span>The more people report into you the more powerful you are. <o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" >Added to this, the influence or the contribution of a group, including its IP, is measured by the headcount rather than the actual value it produces.<span style=""> </span>So, in effect, a group of 3 producing a superior IP is valued lower than a group of 20 producing an inferior IP.<span style=""> </span>Therefore, you are not rewarding those who produce a superior IP with less number of people, but instead, you introduce a mechanism to reward the mediocrity.<span style=""> </span>The head of offshore unit, bereft of any key decision making power on the overall strategy and business of the MNC, cannot show progress either in terms of revenues nor profits.<span style=""> </span>In absence of these parameters, he resorts to showing progress in increase of headcount. <span style=""> </span>Hence, the tendency to learn and perpetuate the art of inflating the numbers!<span style=""> </span><o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" >[Please note that the inflation of numbers in these offshore MNCs is not as high as in software-services companies since there are more checks and balances.]<o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" >I refer to such inflating-the-headcount practices as ‘mediocrity-breeding’ mechanisms. These practices do not award the star performers.<span style=""> </span>They do not allow good performers to feel proud of their achievements.<span style=""> </span>Star performers get disenchanted. They tend to award those who deliberately and smartly inflate the headcount requirements which actually increase inefficiencies. These practices tend to become virtues in both software services companies and MNC offshore units.<span style=""> </span>Such environment does not take care of two fundamental things an organization should do- challenge the employee, and take care of the employee.<span style=""> </span>Higher salary turns out to be the only incentive, which can always be used by a competing company to lure any engineer.<span style=""> </span>This also leads to unprecedented levels of attrition.<span style=""> </span>Solution to every lagging project or bad quality product or inefficient program seem to be addition of more people, as if, adding more people is suddenly going to alleviate the situation.<span style=""> </span>Most often, such addition compounds the problem it is trying to solve. However, a suggestion to increase the headcount is more acceptable than a realistic toning down of the size.<span style=""> </span><o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" >Over a period of time, you have </span><st1:city><st1:place><span style=";font-family:Arial;font-size:10;" >Bangalore</span></st1:place></st1:city><span style=";font-family:Arial;font-size:10;" >, with hundreds of thousands of jobs, which benefits the group as a whole but has already killed the individual spirit. <o:p></o:p></span></p>Sujaihttp://www.blogger.com/profile/16539694685428659940noreply@blogger.com5tag:blogger.com,1999:blog-30677466.post-88698211248979619372007-04-14T02:59:00.000-07:002007-04-14T03:07:27.751-07:00On Tax Holidays<p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" >Most of our IT software-services companies enjoy tax holidays.<span style=""> </span>While this has been a good incentive that encouraged many such companies to proliferate in India, I think its time to take relook at this.<span style=""> </span>Why should certain big companies, which have gone public, have a brand name, and are making colossal profits, be enjoying this tax holiday?<span style=""> </span>Yes, I understand why it came into existence in the first place.<span style=""> </span>We were not on a level-playing field, we needed support, encouragement to compete with global giants.<span style=""> </span>But some of these tier-1 software-services companies have achieved the status of being able to compete with these global giants.<span style=""> </span>Do they still need these tax holidays?<o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" >I propose that once a certain IT company reaches a revenue-mark, say $1B, combined with certain net profit-mark, say 20%, it should start paying taxes.<span style=""> </span>Come to think of it, the government could use these funds in innovative ways.<span style=""> </span>It could use some of these funds to create more technology oriented and product-oriented companies, like giving loans at cheaper rates, or investing in those companies on part-loan, part-equity model, creating zones and lab setups for such tech startups, or reimbursing money for patenting, or decreaing employee taxes to tech-startup in the first three years before it start making revenues, etc. <o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" >Hmm… we need bold, aggressive and innovative methods to go that next stage! <o:p></o:p></span></p>Sujaihttp://www.blogger.com/profile/16539694685428659940noreply@blogger.com0tag:blogger.com,1999:blog-30677466.post-48163856122176728452007-04-14T02:51:00.001-07:002007-04-14T02:51:48.165-07:00Infosys Results<p class="MsoNormal" style="text-align: justify;"><span style="font-size: 10pt; font-family: Arial;">Infosys has announced its results. It made approximately $3.2B last year with 72,000 employees.<span style=""> </span>That amounts to approximately $44,000 per employee.<span style=""> </span>That’s an improvement from the previous year where it made approximately $40,000 per employee.<span style=""> </span>It plans to add approximately 25,000 people this year alone.<span style=""> </span>Assuming a steady increase in the revenue per employee at the current rate of 10% per year, and assuming a steady increase of 25,000 employees per year, Infosys will be making $8.3 B for 2010-11 employing 170,000 people.<o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style="font-size: 10pt; font-family: Arial;"><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style="font-size: 10pt; font-family: Arial;">Total output of IT-ITES will be approximately $90B by 2010 (I am being optimistic compared to NASSCOM’s projections), where Infosys will be contributing 10% of it. <o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style="font-size: 10pt; font-family: Arial;"><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style="font-size: 10pt; font-family: Arial;">While this trend is encouraging, it is not good enough.<span style=""> </span>I keep saying this-<span style=""> </span>we need to look at better and efficient ways to bring in money into this country.<span style=""> </span>Those companies need not be confined to electronics, computer or IT related.<span style=""> </span>One could look at other companies that are based in technology and research.<span style=""> </span>For example, Biogen Idec, a US based healthcare company which makes discoveries in therapies make $2.4 B with 3,300 employees. That’s approximately $700,000 per person.<span style=""> </span><o:p></o:p></span></p>Sujaihttp://www.blogger.com/profile/16539694685428659940noreply@blogger.com3tag:blogger.com,1999:blog-30677466.post-53986349987027994822007-04-11T23:18:00.000-07:002009-01-02T20:07:09.020-08:00Drivers for penetration of broadband in India<p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" ><a style="color: rgb(204, 0, 0);" href="http://windia.blogspot.com/2007/04/this-is-explanation-of-presentation-i.html">As I discussed in the previous topic</a>, the drivers for penetration of broadband in </span><st1:country-region><st1:place><span style=";font-family:Arial;font-size:10;" >India</span></st1:place></st1:country-region><span style=";font-family:Arial;font-size:10;" > will be-<o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" ># Decreasing cost per line<br /># Decreasing operating expense<br /># Decreasing cost of PC (or similar device)<br /># Social attitudes and habits embracing broadband facilities<br /># More Indian content<o:p></o:p></span></p> <p class="MsoNormal"><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><b><span style=";font-family:Arial;font-size:10;" >Decreasing cost per line<o:p></o:p></span></b></p> <p class="MsoNormal" style="text-align: justify;"><b><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></b></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" >The cost per line right now runs between Rs. 7,000 and Rs. 10,000 for DSL services.<span style=""> </span>However, it will be much higher for WiMAX in 2007, and comparable in 2009.<span style=""> </span>Till 2009 the major customers for broadband from WiMAX will be enterprises and SOHOs.<span style=""> </span>The residential broadband users will not contribute much to the incomes during this time.<span style=""> </span>However, the revenues from enterprises and SOHOs are substantial and are a market worth pursuing; hence we will see some deployments.<span style=""> </span>Residential broadband services will start turning out to be lucrative only in 2010 when the existing network can easily be used for increasing the capacities to cater to homes. That’s when there will be huge change in the deployment models by the operators who will vie for the residential customers.<span style=""> </span>Each operator announcing a better deal than the other will push down the prices and also increases the subscriber base. <o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" >The decrease in cost per line will come from two factors- decrease in the cost of equipment and from the inherent advantage of wireless when adding new lines.<span style=""> </span>The base stations which cost $3000-$5000 now will start costing $600-$1000 by end of 2009.<span style=""> </span>The CPE (Customer Premise Equipment) which costs $200-$400 now will start costing $60-$80 by end of 2009.<span style=""> </span>The cost of a wireless network is high in the first stage of deployment, because of factors like taking up space for tower, erecting the tower, cabling, housing, and connecting the tower to the network, installing base stations, etc.<span style=""> </span>However, once those costs are recovered from enterprise services, adding new subscriber will come at a minimal cost.<span style=""> </span>In comparison to a wireline network where each additional subscriber may cost more or less the same, in wireless network, each additional subscriber will be minimally higher. <o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><b><span style=";font-family:Arial;font-size:10;" >Decreasing operating expense <o:p></o:p></span></b></p> <p class="MsoNormal" style="text-align: justify;"><b><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></b></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" >Look at who is going to provide the bulk of broadband services in </span><st1:country-region><st1:place><span style=";font-family:Arial;font-size:10;" >India</span></st1:place></st1:country-region><span style=";font-family:Arial;font-size:10;" >.<span style=""> </span>They are all major operators who already have cellular and landline networks.<span style=""> </span>While laying out the WiMAX networks, those operators will combine the operations with the existing operating premises thus incurring marginal increase in costs while deploying and managing wireless broadband services.<span style=""> </span><o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" >We will see more and more infrastructure sharing between various operators which was completely absent till now.<span style=""> </span>Especially, in rural networks, this infrastructure sharing will turn out to be mere common sense.<span style=""> </span>The operators who own the spectrum will resell the spectrum to other smaller players who will mushroom in various parts of </span><st1:country-region><st1:place><span style=";font-family:Arial;font-size:10;" >India</span></st1:place></st1:country-region><span style=";font-family:Arial;font-size:10;" > to cater to non-metros.<span style=""> </span>The towns and villages may not be very attractive to some operators right away and they may like to sell this franchise or sell these frequencies to smaller WISPs and operators.<span style=""> </span>Also, the coming of Virtual Network Operators will add to competition. <o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><b><span style=";font-family:Arial;font-size:10;" >Decreasing cost of PC (or similar device)<o:p></o:p></span></b></p> <p class="MsoNormal" style="text-align: justify;"><b><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></b></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" >PC (or a device similar to that) is already becoming cheaper. With projects like one laptop per person, and other initiatives, the cost of PC is going to be less than Rs. 5000 by 2009.<span style=""> </span>Other concepts like Novatium, if they tend to be aggressive can also make a marginal impact on the penetration of broadband.<span style=""> </span>Companies like Intel and Microsoft (or will it be Linux?) will need to come up with exclusive strategy for catering to this revolution (and I am sure they will). <o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><b><span style=";font-family:Arial;font-size:10;" >Social attitudes and habits embracing broadband facilities<o:p></o:p></span></b></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" >Every school in </span><st1:country-region><st1:place><span style=";font-family:Arial;font-size:10;" >India</span></st1:place></st1:country-region><span style=";font-family:Arial;font-size:10;" > is going to have a PC and also an internet connection.<span style=""> </span>Those kids who never knew PCs will now be used to using them at these schools.<span style=""> </span>These kids in turn will make way for their families owning a PC and therefore a internet connection.<span style=""> </span>All government employees are now moving towards using PCs and broadband connectivity.<span style=""> </span>Those people who have never known PC or a broadband connectivity are now moving towards embracing these technologies.<span style=""> </span>No family wants to be left behind when it come to his/her finishing up his/her homework using Internet at home. Some of these social changes and habits will increase the penetration of broadband. <o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><b><span style=";font-family:Arial;font-size:10;" >More Indian content<o:p></o:p></span></b></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" >What will further fuel the penetration is the content which is more relevant to the masses of </span><st1:country-region><st1:place><span style=";font-family:Arial;font-size:10;" >India</span></st1:place></st1:country-region><span style=";font-family:Arial;font-size:10;" >.<span style=""> </span>Subscribers would like to see more content tailored to their needs and desires.<span style=""> </span>More Indian language content, more applications suitable to Indian social context will come up in the next few years which will in turn contribute to increasing broadband penetration.</span></p><p class="MsoNormal" style="text-align: justify; font-family: arial; font-weight: bold;">Updates:</p><p class="MsoNormal" style="text-align: justify;font-family:arial;">[12 Apr 2007]<span style="font-weight: bold;"> </span><a style="color: rgb(204, 0, 0);" href="http://www.thehindubusinessline.com/ew/2007/04/02/stories/2007040200100300.htm">Manoj Kohli, President and CEO, Bharti Airtel,</a> has this to say:</p><p style="font-family: arial;">"All I can say is that by 2010 the market is estimated to have 400-500 million subscribers. </p><p style="font-family: arial;"> We are looking at a market share of at least 25 per cent, i.e. 125 million subscribers. We have stepped up our Broadband penetration plans and will continue to lead the wireless market share with our passion to deliver the best to our customers."</p><p style="font-family: arial;">[12 Apr 2007] In a bid to catch them young, Bharat Sanchar Nigam Ltd (BSNL) is rolling out its <a style="color: rgb(204, 0, 0);" href="http://www.blonnet.com/2007/04/10/stories/2007041003220700.htm">broadband services to one lakh schools</a> across the country by December 2008, as part of a project being embarked upon by the Ministry of Human Resource Development.</p><p style="font-family: arial;">[03 Jan 2009] <a href="http://www.hindu.com/2009/01/03/stories/2009010360441300.htm">BSNL, Novatium launch low cost PCs</a>.<br /></p><p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" ><o:p></o:p></span></p> <span style=";font-family:Arial;font-size:10;" > </span>Sujaihttp://www.blogger.com/profile/16539694685428659940noreply@blogger.com2tag:blogger.com,1999:blog-30677466.post-30313841163030472432007-04-09T03:12:00.000-07:002009-01-02T19:56:27.888-08:00Broadband Revolution in India<p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" >[This is based on the presentation I made </span><span style=";font-family:Arial;font-size:10;" >in <a href="http://barcampbangalore.org/wiki/Main_Page"><span style="color: rgb(204, 0, 0);">Barcamp Bangalore 3</span></a>, </span><st1:date month="3" day="31" year="2007"><span style=";font-family:Arial;font-size:10;" >March 31<sup>st</sup> 2007</span></st1:date><span style=";font-family:Arial;font-size:10;" >]<o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><b><span style=";font-family:Arial;font-size:10;" >Mobile revolution</span></b><span style=";font-family:Arial;font-size:10;" ><o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" >We have seen the Mobile Revolution in </span><st1:country-region><st1:place><span style=";font-family:Arial;font-size:10;" >India</span></st1:place></st1:country-region><span style=";font-family:Arial;font-size:10;" >. It is still happening. There are enough indicators to suggest that </span><st1:place><span style=";font-family:Arial;font-size:10;" >Mobile</span></st1:place><span style=";font-family:Arial;font-size:10;" > penetration will exceed 400 million subscribers in </span><st1:country-region><st1:place><span style=";font-family:Arial;font-size:10;" >India</span></st1:place></st1:country-region><span style=";font-family:Arial;font-size:10;" > in the next few years. Let’s pause and go back a few years, say 2001. Could any analyst predict that we would have 200 million subscribers by end of 2006? Could anybody in the industry predict that we would be adding more than 5 million subscribers a month? <o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" >The growth of mobile penetration is mind-boggling and is quite dramatic. It came about because of some of the factors listed below. Note that it is always easy to look back and analyze why it happened. That’s what I am doing here. <o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" >Key Factors for this explosion<o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" >* Late start<br />* Cheaper equipment</span></p><p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" >* Pent up Demand</span></p><p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" >* Innovative and Bold Deployment Strategies<br />* Population<o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" >First, </span><st1:country-region><st1:place><span style=";font-family:Arial;font-size:10;" >India</span></st1:place></st1:country-region><span style=";font-family:Arial;font-size:10;" > embraced cellular when 2G systems were already deployed in most parts of the world. Having completely skipped 1G because of late start, </span><st1:country-region><st1:place><span style=";font-family:Arial;font-size:10;" >India</span></st1:place></st1:country-region><span style=";font-family:Arial;font-size:10;" > went straight to the superior 2G systems. Most of the lessons learnt by the European deployments could be transferred to </span><st1:country-region><st1:place><span style=";font-family:Arial;font-size:10;" >India</span></st1:place></st1:country-region><span style=";font-family:Arial;font-size:10;" >. Second, </span><st1:country-region><st1:place><span style=";font-family:Arial;font-size:10;" >India</span></st1:place></st1:country-region><span style=";font-family:Arial;font-size:10;" > embraced GSM nearly eight years after it was taken up in </span><st1:place><span style=";font-family:Arial;font-size:10;" >Europe</span></st1:place><span style=";font-family:Arial;font-size:10;" >. Most of the equipment had already become very cheap by then. This allowed for mass deployment in the country. Third, there was huge pent up demand for basic connectivity which was not served by fixed-line telephony. Fourth, </span><st1:country-region><st1:place><span style=";font-family:Arial;font-size:10;" >India</span></st1:place></st1:country-region><span style=";font-family:Arial;font-size:10;" > embraced certain bold strategies- like that of Airtel which has outsourced complete network deployment to Ericsson and management of networks to IBM; it has introduced pre-paid subscription like no other country. However, a note of caution here- they were quite stupid not to have implemented sharing of tower infrastructure right from day one. They seem to have woken up quite late on this. Fourth, with a billion people anything you do seems to pick up volumes. All these factors put together has resulted in mind-boggling and dramatic mobile penetration in </span><st1:country-region><st1:place><span style=";font-family:Arial;font-size:10;" >India</span></st1:place></st1:country-region><span style=";font-family:Arial;font-size:10;" >. <o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><b><span style=";font-family:Arial;font-size:10;" >State of </span></b><st1:state><st1:place><b><span style=";font-family:Arial;font-size:10;" >Broadband</span></b></st1:place></st1:state><b><span style=";font-family:Arial;font-size:10;" > in </span></b><st1:country-region><st1:place><b><span style=";font-family:Arial;font-size:10;" >India</span></b></st1:place></st1:country-region><span style=";font-family:Arial;font-size:10;" ><o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" >Take a look at current broadband penetration in </span><st1:country-region><st1:place><span style=";font-family:Arial;font-size:10;" >India</span></st1:place></st1:country-region><span style=";font-family:Arial;font-size:10;" >? It’s a mere 2.5 million subscribers (or less). That’s less than 0.25%. Most indicators of technology penetrations, such as telephone, PC, mobile, broadband, have a direct correlation with increase in the GDP and per capita of a nation. However, </span><st1:country-region><st1:place><span style=";font-family:Arial;font-size:10;" >India</span></st1:place></st1:country-region><span style=";font-family:Arial;font-size:10;" >’s broadband penetration seems to be extremely low. Is it that we are going to skip broadband the way we skip 1G and the industrial revolution?<o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" >The penetration of broadband will increase in the next few years and will catch like a wildfire when suddenly the cost of adoption and network deployment and maintenance will turn out to be extremely low compared to the kind of market demand it has. <o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" >The drivers will be-<o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" ># Decreasing cost per line<br /># Decreasing operating expense<br /># Decreasing cost of PC (or similar device)<br /># Social attitudes and habits embracing broadband facilities<br /># More Indian content<o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><b><span style=";font-family:Arial;font-size:10;" >Broadband Revolution in </span></b><st1:country-region><st1:place><b><span style=";font-family:Arial;font-size:10;" >India</span></b></st1:place></st1:country-region><span style=";font-family:Arial;font-size:10;" ><o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" >In effect, I believe that there is a very big room for growth of broadband penetration in </span><st1:country-region><st1:place><span style=";font-family:Arial;font-size:10;" >India</span></st1:place></st1:country-region><span style=";font-family:Arial;font-size:10;" >. With the decreasing cost of PCs to under Rs. 10,000 and then to under Rs. 5,000 soon, and with increasing in content for Indian masses, the broadband penetration will be going through a revolution, and I call it the <span style="font-weight: bold;">Broadband Revolution</span> in India. The cost per line will dramatically reduce from the current Rs. 7000-10,000 per line to around Rs. 1,500-2,500 per line by 2010. <o:p></o:p></span></p> <a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgDh6ynZ8uBQuWZYcdITO0121ITLRjZH61PXzgAHCVMvdtnmaXGB_AOdAvYPoglUDke6s3KHTGiaR1YV2Vrs0ycQtOSf05dq6sWiuHe085AkTEXuVH4B7P6gkoIMDtp5vc5-V7B/s1600-h/Broadband_in_India.jpg"><img style="margin: 0px auto 10px; display: block; text-align: center; cursor: pointer; width: 320px; height: 264px;" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgDh6ynZ8uBQuWZYcdITO0121ITLRjZH61PXzgAHCVMvdtnmaXGB_AOdAvYPoglUDke6s3KHTGiaR1YV2Vrs0ycQtOSf05dq6sWiuHe085AkTEXuVH4B7P6gkoIMDtp5vc5-V7B/s320/Broadband_in_India.jpg" alt="" id="BLOGGER_PHOTO_ID_5286910701364308978" border="0" /></a><p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" >The pieces of puzzle are falling into place. With advent of wireless broadband (such as WiMAX and WiFi), with decreasing costs of PC, we will see the penetration grow slow and suddenly, when the price points have achieved that critical milestone, it will take a dramatic upswing and go on an exponential path for the next few years. In my estimation, by end of 2011, Indian will have more than 35 million broadband subscribers and by end of 2013, we will have nearly 1 million subscribers. <o:p></o:p></span></p><span style=";font-family:Arial;font-size:10;" ><o:p></o:p></span><br /><p class="MsoNormal" style="text-align: justify;"><b><span style=";font-family:Arial;font-size:10;" >My question to all of us</span></b><span style=";font-family:Arial;font-size:10;" ><o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" >Indian telecom operators are smarter than the rest of us. They usually wake up quite early to realize the potentials of Indian markets. They will definitely get themselves geared up for this oncoming Broadband Revolution. However, will the Indian entrepreneurs, Indian telecom vendors, Indian VCs, Indian startups wake up to this? When Indian Mobile Revolution happened, it was foreign telecom vendors which benefited. They supplied the radio access network equipments, and they supplied the core network equipment. They also supplied the mobile handsets and PDAs. Indian telecom operators had no choice but buy equipment from these foreign players. <o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" >Operators like BSNL, Airtel and Reliance throw open tenders worth billions of dollars, and most of these monies are taken up by foreign companies. Almost no domestic company seems to wake up to capture some of this market share. We could give ourselves an excuse that Indian ecosystem was not conducive to create such suppliers in </span><st1:country-region><st1:place><span style=";font-family:Arial;font-size:10;" >India</span></st1:place></st1:country-region><span style=";font-family:Arial;font-size:10;" >. That we didn’t’ really anticipate or predict the oncoming Mobile Revolution to benefit from it. Will we give ourselves the same excuse for missing Broadband Revolution, or will we do something about it? <o:p></o:p></span></p><p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" > <o:p></o:p></span></p>Sujaihttp://www.blogger.com/profile/16539694685428659940noreply@blogger.com2tag:blogger.com,1999:blog-30677466.post-1019012485111311462007-04-06T02:49:00.000-07:002007-07-11T12:14:13.483-07:00Happy Jobs<p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" >What is a happy job? A Clickjobs.com ad on TV goes this way:<o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></p> <p class="MsoNormal" style="margin-left: 36pt; text-align: justify;"><i><span style=";font-family:Arial;font-size:10;" >“Mr. Happy Kumar is SO happy with his job that he can’t see millions of opportunities around him.<span style=""> </span>Don’t make the same mistake.<span style=""> </span>Clickjobs.com”<o:p></o:p></span></i></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" >In this ad, Mr. Happy Kumar is smiling throughout the ad, he is not tantalized by offers like a big car, big pay check or a big position, and therefore this ad concludes he is making a mistake. <o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" >Then there’s another ad from Timesjobs on TV which goes this way:<o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></p> <p class="MsoNormal" style="margin-left: 36pt; text-align: justify;"><i><span style=";font-family:Arial;font-size:10;" >“Salary is making you feel smaller? For better paying jobs, log on to timesjobs.com”<o:p></o:p></span></i></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" >Is there anything wrong with these ads?<span style=""> </span>Or is it just me who find them wrong?<o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" >What is a happy job?<span style=""> </span>Most of us, who have spent long enough time in the industry, would agree that a happy job is the one which keeps you challenged and which turns out to be rewarding.<span style=""> </span>We all keep looking for a happy job. If Mr. Happy Kumar is happy with his job, there must be a reason why he is happy.<span style=""> </span>If he is not ready to look at another opportunity, and is smiling all the way to his work and is also happy at work, the job must be quite a good one.<span style=""> </span>Why is it a ‘mistake’ that he is not looking elsewhere? <o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" >I would have understood if the ad was a little different.<span style=""> </span>If it was Mr. Sad Kumar who is not happy with his job, and is NOT looking at millions of opportunities, then it would have made sense. <o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" >Most of the present generation engineers are turning out to be clueless about what they want.<span style=""> </span>Except for some smart ones, most engineers consider a high paying job as the best job.<span style=""> </span>There is already a big problem with the Indian young engineers, they hop jobs like anything. They are ready to take up a new job even for a paltry increase in the salary.<span style=""> </span>Some of them are not just concerned what kind of work as long it is a high-paying job.<span style=""> </span>Some ‘smart ones’ stay at each job for six months and then hop to another. They keep doing this to keep on increasing their salaries.<span style=""> </span>Added to this is job hopping attitude is their appetite for investments into real estate and automobiles which tend to keep their hunger for increase in salaries ever higher. <o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" >Such ads are adding to fuel to the fire.<span style=""> </span>Or are they targeting the right customers? <o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" >Is salary the only criteria for choosing another job?<span style=""> </span>Should lower salary make you feel small? Only the guys at timesjobs.com seem to understand the real pulse of the young engineers. <o:p></o:p></span></p>Sujaihttp://www.blogger.com/profile/16539694685428659940noreply@blogger.com5tag:blogger.com,1999:blog-30677466.post-42845719961049348112007-04-03T06:04:00.000-07:002007-07-11T12:13:39.570-07:00Barcamp Bangalore 3: My observations<p class="MsoNormal" style="text-align: justify;"><a name="OLE_LINK1"><span style=";font-family:Arial;font-size:10;" >I was at </span></a><a href="http://barcampbangalore.org/wiki/Main_Page"><span style=""><span style=";font-family:Arial;font-size:10;" >Barcamp Bangalore 3</span></span><span style=""></span></a><span style=""><span style=";font-family:Arial;font-size:10;" > held at IIM-B during March 31<sup>st</sup> and April 1<sup>st</sup> (2007).<span style=""> </span>One can clearly see the interest growing from the first event then to the second and now to the third.<span style=""> </span>The turnout has been doubling every event and on Saturday there were 320 participants. <o:p></o:p></span></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=""><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=""><span style=";font-family:Arial;font-size:10;" >There was an interesting topic later in the evening on Saturday, delivered by Savita Kini. She asked ‘Are we ready to move from IT services to product making companies?’<span style=""> </span>And of course, this is a topic of my interest. <span style=""> </span>Soon, it turned into a small debate with different kinds of views being aired. <o:p></o:p></span></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=""><b><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></b></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=""><span style=";font-family:Arial;font-size:10;" >I want to talk about some of my observations from this debate.<span style=""> </span>First, I want to compliment Thomas Friedman, Nandan Nilekani, and all those analysts, writers and industry experts who have created a good myth surrounding our IT industry.<span style=""> </span>They have done an excellent job.<span style=""> </span>Because, there were some quite experienced industry folks in that debate who vouched that when work is outsourced to Indian IT companies or when MNCs set up offshore units in </span></span><st1:country-region><st1:place><span style=""><span style=";font-family:Arial;font-size:10;" >India</span></span></st1:place></st1:country-region><span style=""><span style=";font-family:Arial;font-size:10;" >, the wealth created by those units actually stays in </span></span><st1:country-region><st1:place><span style=""><span style=";font-family:Arial;font-size:10;" >India</span></span></st1:place></st1:country-region><span style=""><span style=";font-family:Arial;font-size:10;" >.<span style=""> </span><o:p></o:p></span></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=""><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=""><span style=";font-family:Arial;font-size:10;" >I want to dispel this myth here.<span style=""> </span><o:p></o:p></span></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=""><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=""><b><span style=";font-family:Arial;font-size:10;" >How do offshore MNCs and IT services companies create wealth?<o:p></o:p></span></b></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=""><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=""><span style=";font-family:Arial;font-size:10;" >When a IT services company such as TCS gets a job from company ABC, it pulls up N number of engineers, and what TCS gets in revenues is N times a certain fixed amount per year.<span style=""> </span>Therefore calculating the revenues of any IT industry thus becomes very easy.<span style=""> </span>The average $ per person is usually known – and it hovers between $30,000 and $40,000 (for top IT services companies).<span style=""> </span>So, if Infosys has 60,000 employees, then its revenues should be $1.8 to $2.4 Billion.<span style=""> </span>The same rule applies to almost every company.<span style=""> </span>A good services company with 3000 people would be making approximately $90 Million.<span style=""> </span>No additional revenues come from the actual sale of the product.<span style=""> </span>Say, the product is sold 10 times or a 100,000 times, the TCS would still only get its revenues from the number of employees it contributes to servicing that product.<span style=""> </span>None of the profits from actual sale of the products ever reach the Indian shores.<span style=""> </span>The revenues (and the profits) from the sale of actual products go those countries where these companies are housed.<span style=""> </span>(To US in case of Intel and Microsoft, or </span></span><st1:country-region><st1:place><span style=""><span style=";font-family:Arial;font-size:10;" >Finland</span></span></st1:place></st1:country-region><span style=""><span style=";font-family:Arial;font-size:10;" > in case of Nokia). <o:p></o:p></span></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=""><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=""><span style=";font-family:Arial;font-size:10;" >When a typical MNC puts its offshore unit here in </span></span><st1:country-region><st1:place><span style=""><span style=";font-family:Arial;font-size:10;" >India</span></span></st1:place></st1:country-region><span style=""><span style=";font-family:Arial;font-size:10;" >, the only motive is to cut down the costs.<span style=""> </span>While going for offshoring, they decide on the non-critical work and send it to its offshore unit in </span></span><st1:country-region><st1:place><span style=""><span style=";font-family:Arial;font-size:10;" >India</span></span></st1:place></st1:country-region><span style=""><span style=";font-family:Arial;font-size:10;" >.<span style=""> </span>If an engineer in US costs $120,000 to the company, his typical cost is less than $40,000 in </span></span><st1:country-region><st1:place><span style=""><span style=";font-family:Arial;font-size:10;" >India</span></span></st1:place></st1:country-region><span style=""><span style=";font-family:Arial;font-size:10;" >. <span style=""> </span>Hence the cost advantage!<span style=""> </span>However, no revenue that comes out of the products developed or services rendered by these offshore units actually come back to </span></span><st1:country-region><st1:place><span style=""><span style=";font-family:Arial;font-size:10;" >India</span></span></st1:place></st1:country-region><span style=""><span style=";font-family:Arial;font-size:10;" >. If ever they do, they only come back in increasing the headcount of its offshore units.<span style=""> </span>When Nokia sets up a unit in </span></span><st1:country-region><st1:place><span style=""><span style=";font-family:Arial;font-size:10;" >India</span></span></st1:place></st1:country-region><span style=""><span style=";font-family:Arial;font-size:10;" >, the Indian unit will not generate revenues because of the units sold, but only because of the money pumped in to staff the engineers. <o:p></o:p></span></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=""><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=""><span style=";font-family:Arial;font-size:10;" >To think or believe that we are creating the wealth the same way those product making companies are creating is a myth that needs to be shattered. <o:p></o:p></span></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=""><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=""><span style=";font-family:Arial;font-size:10;" >In the colonial times, Indian babus were used by British to act as middle managers to the British bosses.<span style=""> </span>The British, by paying a good salary to Indian babus, above that of the slaves or the natives, were able to keep these Indian babus happy, while they continued to reap the benefits of the toil of the workers.<span style=""> </span>That’s why Indians were taken to </span></span><st1:place><span style=""><span style=";font-family:Arial;font-size:10;" >West Indies</span></span></st1:place><span style=""><span style=";font-family:Arial;font-size:10;" >, </span></span><st1:place><span style=""><span style=";font-family:Arial;font-size:10;" >East Indies</span></span></st1:place><span style=""><span style=";font-family:Arial;font-size:10;" >, </span></span><st1:place><span style=""><span style=";font-family:Arial;font-size:10;" >Africa</span></span></st1:place><span style=""><span style=";font-family:Arial;font-size:10;" >, </span></span><st1:country-region><st1:place><span style=""><span style=";font-family:Arial;font-size:10;" >Fiji</span></span></st1:place></st1:country-region><span style=""><span style=";font-family:Arial;font-size:10;" >, etc.<span style=""> </span>The Indian elite babus who quickly learned English, Mathematics and other desired skills became extremely good middlemen (managers) who served British to help them continue their dominance over other populations.<span style=""> </span><o:p></o:p></span></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=""><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=""><span style=";font-family:Arial;font-size:10;" >Second, a lady asked if NOW is the right time to start product-making companies, especially since Savita listed so many challenges on her discussion board. <span style=""> </span><o:p></o:p></span></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=""><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=""><b><span style=";font-family:Arial;font-size:10;" >Shouldn’t we wait for the opportune time before we start product-making companies in </span></b></span><st1:country-region><st1:place><span style=""><b><span style=";font-family:Arial;font-size:10;" >India</span></b></span></st1:place></st1:country-region><span style=""><b><span style=";font-family:Arial;font-size:10;" >?<o:p></o:p></span></b></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=""><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=""><span style=";font-family:Arial;font-size:10;" >Frankly, I believe that any kind of analysis should be left to consultants, advisors, bankers and VCs.<span style=""> </span>Entrepreneurs should just stick to DOING it.<span style=""> </span>There’s no opportune time for doing anything, not even for war.<span style=""> </span>By the time we in </span></span><st1:country-region><st1:place><span style=""><span style=";font-family:Arial;font-size:10;" >India</span></span></st1:place></st1:country-region><span style=""><span style=";font-family:Arial;font-size:10;" > actually solve all the challenges that Savita listed (which included like Education, Discipline, Mindset, etc), it will take an eternity.<span style=""> </span>We don’t sit down solving the barriers and then go about doing it.<span style=""> </span>We just do it and in the process hope the barriers go down.<span style=""> </span>We are already late according to me (and Savita and few others). <span style=""> </span>While Indians celebrate the fact that we are going to be the services hub the way </span></span><st1:country-region><st1:place><span style=""><span style=";font-family:Arial;font-size:10;" >China</span></span></st1:place></st1:country-region><span style=""><span style=";font-family:Arial;font-size:10;" > is now the manufacturing, thereby implicitly shrugging off the responsibility to foster other industries, </span></span><st1:country-region><st1:place><span style=""><span style=";font-family:Arial;font-size:10;" >China</span></span></st1:place></st1:country-region><span style=""><span style=";font-family:Arial;font-size:10;" > is already transforming itself into a global product making player.<span style=""> </span>Haier, Lenovo, ZTE, Huawei, etc, have already arrived and many more are in the making.<span style=""> </span><o:p></o:p></span></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=""><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=""><span style=";font-family:Arial;font-size:10;" >According to one observer there is no market for products in </span></span><st1:country-region><st1:place><span style=""><span style=";font-family:Arial;font-size:10;" >India</span></span></st1:place></st1:country-region><span style=""><span style=";font-family:Arial;font-size:10;" >.<span style=""> </span>Some of us had to cite some examples to wake him up to reality.<span style=""> </span>That </span></span><st1:country-region><st1:place><span style=""><span style=";font-family:Arial;font-size:10;" >India</span></span></st1:place></st1:country-region><span style=""><span style=";font-family:Arial;font-size:10;" > adds 5 million subscribers in </span></span><st1:country-region><st1:place><span style=""><span style=";font-family:Arial;font-size:10;" >India</span></span></st1:place></st1:country-region><span style=""><span style=";font-family:Arial;font-size:10;" > per month.<span style=""> </span>We need to look at some more examples.<span style=""> </span>That </span></span><st1:country-region><st1:place><span style=""><span style=";font-family:Arial;font-size:10;" >India</span></span></st1:place></st1:country-region><span style=""><span style=";font-family:Arial;font-size:10;" > is adding thousands of cars per month.<span style=""> </span>That </span></span><st1:country-region><st1:place><span style=""><span style=";font-family:Arial;font-size:10;" >India</span></span></st1:place></st1:country-region><span style=""><span style=";font-family:Arial;font-size:10;" > consumes food, clothes, electronics, etc, with great appetite. Isn’t it surprising to assume we do not have the necessary market when ever top brand of the world is making inroads into </span></span><st1:country-region><st1:place><span style=""><span style=";font-family:Arial;font-size:10;" >India</span></span></st1:place></st1:country-region><span style=""><span style=";font-family:Arial;font-size:10;" > to sell Indians goods and products?<o:p></o:p></span></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=""><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=""><span style=";font-family:Arial;font-size:10;" >According to some people participating in the debate, </span></span><st1:country-region><st1:place><span style=""><span style=";font-family:Arial;font-size:10;" >India</span></span></st1:place></st1:country-region><span style=""><span style=";font-family:Arial;font-size:10;" > does not have brands like Nokia and Microsoft, and hence cannot enter the global arena.<span style=""> </span>The question is do we really need brands to enter the products-market? Does the brand come first and then the product or the product first and then the brand? While we Indians keep debating if there is a market or not, ZTE (</span></span><st1:country-region><st1:place><span style=""><span style=";font-family:Arial;font-size:10;" >China</span></span></st1:place></st1:country-region><span style=""><span style=";font-family:Arial;font-size:10;" >) is entering </span></span><st1:country-region><st1:place><span style=""><span style=";font-family:Arial;font-size:10;" >India</span></span></st1:place></st1:country-region><span style=""><span style=";font-family:Arial;font-size:10;" > with its own low-cost mobile handset and making inroads into </span></span><st1:country-region><st1:place><span style=""><span style=";font-family:Arial;font-size:10;" >India</span></span></st1:place></st1:country-region><span style=""><span style=";font-family:Arial;font-size:10;" >. <o:p></o:p></span></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=""><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=""><span style=";font-family:Arial;font-size:10;" >Third, when I said that one of the Indians attitudes is not going all the way, which I call last-meter problem, someone suggested it was the same with Microsoft. <span style=""> </span><o:p></o:p></span></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=""><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=""><b><span style=";font-family:Arial;font-size:10;" >What is the last-meter problem of </span></b></span><st1:country-region><st1:place><span style=""><b><span style=";font-family:Arial;font-size:10;" >India</span></b></span></st1:place></st1:country-region><span style=""><b><span style=";font-family:Arial;font-size:10;" >?<o:p></o:p></span></b></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=""><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=""><span style=";font-family:Arial;font-size:10;" >Look at an Indian road, the last-meter is usually left unpaved, and this seems to cause lot of damage to the road. That last meter produces all the dust, and is also the culprit during the rainy season.<span style=""> </span>The erosion will eat into the paved road itself and very soon we need repairs.<span style=""> </span>This seems to be the perpetual state of affairs in </span></span><st1:country-region><st1:place><span style=""><span style=";font-family:Arial;font-size:10;" >India-</span></span></st1:place></st1:country-region><span style=""><span style=";font-family:Arial;font-size:10;" > start- incomplete- repair.<span style=""> </span>Not finishing up the job to its absolute completion is something like a disease that is all pervading.<span style=""> </span>Half done, incomplete and shoddy jobs are seen everywhere.<span style=""> </span>I call this the last-meter problem.<span style=""> </span>We don’t go all the way; we seem to run out of gas during that last meter.<span style=""> </span><o:p></o:p></span></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=""><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=""><span style=";font-family:Arial;font-size:10;" >However, to say that this is the same with Microsoft is far-fetched. Agreed, most engineers seem to detest Microsoft for their monopoly.<span style=""> </span>But, we have to admit that their products are definitely superior (to a layman user) in comparison to anything out there in the market.<span style=""> </span>While an engineer may marvel at the open source and other competing products, Microsoft, by pursuing the common layman as its user has made excellent contribution to penetration of PC and hence Internet, and hence to dissemination of knowledge to every corner of the planet.<span style=""> </span>For an idealist or an expert engineer, Microsoft may seem to be flawed or not perfect, but to an ordinary user its closest to getting the simplest software to deal with an otherwise complicated PC.<span style=""> </span>The last-meter problem of </span></span><st1:country-region><st1:place><span style=""><span style=";font-family:Arial;font-size:10;" >India</span></span></st1:place></st1:country-region><span style=""><span style=";font-family:Arial;font-size:10;" > is not analogous to imperfect Microsoft products.<span style=""> </span><o:p></o:p></span></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=""><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=""><span style=";font-family:Arial;font-size:10;" >Overall, this barcamp was great.<span style=""> </span>I got to meet some interesting people and its always fun talking about some of the topics that interest us the most.<o:p></o:p></span></span></p>Sujaihttp://www.blogger.com/profile/16539694685428659940noreply@blogger.com3tag:blogger.com,1999:blog-30677466.post-60421164716017930892007-02-27T23:54:00.001-08:002007-02-28T21:18:17.099-08:00Why we don’t have product-making companies?<p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" >I have already written an article called, ‘<a style="color: rgb(204, 0, 0);" href="http://windia.blogspot.com/2007/02/why-product-making-companies.html">Why Product-making companies?</a>’ Before I start writing on what we need to do, I would like to talk about some of the most important reasons that curtail us from spawning product-making companies.<span style=""> </span>Some of them are obvious- history, post-independent economic policies, our social structure, etc.<span style=""> </span>But I don’t like to list 10+ different reasons for each problem.<span style=""> </span>I like to concentrate on 2-3 top reasons.<span style=""> </span>Here, I list what I think is the top reason why we don’t have product-making technology companies.<o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><b><span style=";font-family:Arial;font-size:10;" >Our obsession with stars and brands<o:p></o:p></span></b></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" >I agree stars are important. It’s the obsession with those stars where I see the problem.<span style=""> </span>We (as Indians) are obsessed with stars and brands.<span style=""> </span>We don’t need to look deep to realize this about us.<span style=""> </span>Our Cinema (unabashedly called ‘Bollywood’) and Cricket has many examples.<span style=""> </span>The whole focus is on one or two individuals while the rest are completely unknown.<span style=""> </span>It applies to our technology space as well.<span style=""> </span>IITs are a brand.<span style=""> </span>Therefore, anything to do with technology in </span><st1:country-region><st1:place><span style=";font-family:Arial;font-size:10;" >India</span></st1:place></st1:country-region><span style=";font-family:Arial;font-size:10;" > is referred to IITs while hundreds of universities and other institutes get no mention at all.<span style=""> </span>If an IITian starts a <i>paan</i> shop, the heading goes, “The IITian left his cushy job to start a <i>paan</i> shop right across the street…” If they start some dumb political party, the article reads, “The IITians instead of going to US have sacrificed their careers to start a political party to better </span><st1:country-region><st1:place><span style=";font-family:Arial;font-size:10;" >India</span></st1:place></st1:country-region><span style=";font-family:Arial;font-size:10;" >…”<span style=""> </span>A mere contraption of no significance from IITian gets the attention of starving media.<span style=""> </span>This media is more interested in writing ‘This IITian has done…” than writing what he has actually done.<span style=""> </span>The media is only feeding into our own obsessions.<span style=""> </span>They reflect our sentiments- that of ordinary people, the families, and the societies. <o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" >The same is true of our software-services companies.<span style=""> </span>Why we did not look at other important industries is because these services companies were hogging the limelight for more than 20 years now. In fact, they are hogging the complete light while the rest of the industry is languishing in the dark.<span style=""> </span></span><st1:city><st1:place><span style=";font-family:Arial;font-size:10;" >Bangalore</span></st1:place></st1:city><span style=";font-family:Arial;font-size:10;" >, which is supposedly the ‘Silicon Valley of India’ (which I don’t agree at all), has lavish office spaces (look at Infosys and ITPL) which almost resemble a developed world.<span style=""> </span>These are the same office spaces which have been glorified by the likes of Thomas Friedman (who has added more fuel to the celebration of our mediocrity).<span style=""> </span>On the other hand, the same </span><st1:city><st1:place><span style=";font-family:Arial;font-size:10;" >Bangalore</span></st1:place></st1:city><span style=";font-family:Arial;font-size:10;" > provides extremely worse conditions to the industrial sectors where hardware and manufacturing houses are located.<span style=""> </span>I have visited some of these manufacturing places- they don’t have roads, they are connected by muddy paths which have huge cracks in the middle, they don’t have water or electricity and this place looks like a remote </span><st1:place><st1:placetype><span style=";font-family:Arial;font-size:10;" >village</span></st1:placetype><span style=";font-family:Arial;font-size:10;" > of </span><st1:placename><span style=";font-family:Arial;font-size:10;" >India</span></st1:placename></st1:place><span style=";font-family:Arial;font-size:10;" > in the 16<sup>th</sup> century.<span style=""> </span>The attention of whole of media, political administration, elite, institutions, investors, has been directed towards software-services companies while other industries do not get basic amenities.<span style=""> </span>Software-services companies get lands at very low price; they get tax-holidays, exporting and importing is easy for them. Meanwhile, the manufacturing and other industry of </span><st1:country-region><st1:place><span style=";font-family:Arial;font-size:10;" >India</span></st1:place></st1:country-region><span style=";font-family:Arial;font-size:10;" > is putting with policies of old economy. Here is what I have to say to these software-services companies:<o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" >‘Thank you, you have done a good job of re-branding </span><st1:country-region><st1:place><span style=";font-family:Arial;font-size:10;" >India</span></st1:place></st1:country-region><span style=";font-family:Arial;font-size:10;" >. You have changed our image from being a land of snake charmers to the land of software programmers’.<span style=""> </span>But my thanks stops right there.<span style=""> </span>‘You are also the culprit of taking away complete attention from other important industry.<span style=""> </span>You rob us of passion of the young minds to make them Xerox machines.<span style=""> </span>Your growth is welcome, but its avarice and appetite is overwhelming. We are not able to proceed to the next step.<span style=""> </span>Our fear is we will get stuck right here’.<span style=""> </span>There are examples galore where many countries got stuck to a label and that actually turned out to be their doom.<span style=""> </span>South American countries which rode the wave of globalization have now realized that they got ‘stuck’ at being providers of raw material to the Western world.<span style=""> </span>East Asian countries like </span><st1:country-region><st1:place><span style=";font-family:Arial;font-size:10;" >Malaysia</span></st1:place></st1:country-region><span style=";font-family:Arial;font-size:10;" >, </span><st1:country-region><st1:place><span style=";font-family:Arial;font-size:10;" >Thailand</span></st1:place></st1:country-region><span style=";font-family:Arial;font-size:10;" >, </span><st1:country-region><st1:place><span style=";font-family:Arial;font-size:10;" >Philippines</span></st1:place></st1:country-region><span style=";font-family:Arial;font-size:10;" >, etc, are faced with similar situation, where the competition from </span><st1:country-region><st1:place><span style=";font-family:Arial;font-size:10;" >Taiwan</span></st1:place></st1:country-region><span style=";font-family:Arial;font-size:10;" > and </span><st1:country-region><st1:place><span style=";font-family:Arial;font-size:10;" >China</span></st1:place></st1:country-region><span style=";font-family:Arial;font-size:10;" > has robbed them of their advantage of being the manufacturing houses.<span style=""> </span>There is danger in being slotted that way. ‘We don’t want to be slotted that way.’ <o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" >What our media, the analysts, the writers, etc, did in their over-enthusiasm and over-excitement is a great damage to </span><st1:country-region><st1:place><span style=";font-family:Arial;font-size:10;" >India</span></st1:place></st1:country-region><span style=";font-family:Arial;font-size:10;" >.<span style=""> </span>They said, ‘Since we completely skipped industrial revolution, there was no need to go back to that.’<span style=""> </span>They insisted on continuing with services industry and professed it was good enough for </span><st1:country-region><st1:place><span style=";font-family:Arial;font-size:10;" >India</span></st1:place></st1:country-region><span style=";font-family:Arial;font-size:10;" >.<span style=""> </span>They cited some examples (which are actually very rare) of product-making companies (like IBM) moving to take up services, and justified their jobs and their companies.<span style=""> </span>The media lapped it up, furthered this notion, and made it a ground rule for </span><st1:country-region><st1:place><span style=";font-family:Arial;font-size:10;" >India</span></st1:place></st1:country-region><span style=";font-family:Arial;font-size:10;" >.<span style=""> </span>Their message was: ‘If West has products and technology, </span><st1:country-region><st1:place><span style=";font-family:Arial;font-size:10;" >China</span></st1:place></st1:country-region><span style=";font-family:Arial;font-size:10;" > has manufacturing, we in </span><st1:country-region><st1:place><span style=";font-family:Arial;font-size:10;" >India</span></st1:place></st1:country-region><span style=";font-family:Arial;font-size:10;" > have services!’ The VCs furthered it, the investors furthered it, the entrepreneurs furthered it, and even the government joined hands.<span style=""> </span>Thomas Friedman made millions selling the same idea back to </span><st1:country-region><st1:place><span style=";font-family:Arial;font-size:10;" >India</span></st1:place></st1:country-region><span style=";font-family:Arial;font-size:10;" > while making sure he and his country <a style="color: rgb(204, 0, 0);" href="http://windia.blogspot.com/2006/08/is-world-flat.html">continued to dominate the technology</a> markets. <o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" >Young minds of </span><st1:country-region><st1:place><span style=";font-family:Arial;font-size:10;" >India</span></st1:place></st1:country-region><span style=";font-family:Arial;font-size:10;" >, even those with passion and enthusiasm to create and innovate, get bogged down by the pressures- created by us- the media, the elite writers, the parents, the teachers.<span style=""> </span>They end up taking up a career at Infosys and Wipro just because of its brand.<span style=""> </span>Seven years of working there, he is not good for a product making company anymore.<span style=""> </span>He is already institutionalized. <span style=""> </span>Only few make it out of that vicious cycle only to face even bigger issues that confront them. <o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" >As a step one, we need ground breaking examples.<span style=""> </span>To unshackle ourselves of this casteist mentality where in we accept our position in the hierarchy of technology businesses, where we get slotted into one type of industry by the virtue of what our ancestors did.<span style=""> </span>These examples have to be the tough ones.<span style=""> </span>They have to ride their boat against the strong tide.<span style=""> </span>But they have to do it.<span style=""> </span>I see some companies around me taking up this struggle, it’s a long way to go, but I also see that once one case gets successful, suddenly there will be new articles written and soon </span><st1:country-region><st1:place><span style=";font-family:Arial;font-size:10;" >India</span></st1:place></st1:country-region><span style=";font-family:Arial;font-size:10;" > will be seen differently.<span style=""> </span><o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" ><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style=";font-family:Arial;font-size:10;" >The industry (even those involved in software-services) needs to consciously promote product-making companies.<span style=""> </span>Is there a vested interest? Yes, there is. <span style=""> </span>No nation, no industry, no man can make loads of money for himself while the rest around him are paupers.<span style=""> </span>It just doesn’t work.<span style=""> </span>Such disparities are not sustainable.<span style=""> </span>One has to create an ecosystem.<span style=""> </span>Those in the ecosystem need to be making loads of money.<span style=""> </span>That money has to translate to the societies and communities that we live in.<span style=""> </span>That’s when we can go the next higher level of making more monies.<span style=""> </span>A society which has very few stars while the rest are all paupers is not a sustainable system.<span style=""> </span>Even the software services companies will benefit if there is technology product making company ecosystem in </span><st1:country-region><st1:place><span style=";font-family:Arial;font-size:10;" >India</span></st1:place></st1:country-region><span style=";font-family:Arial;font-size:10;" >.<span style=""> </span>Where would I want to outsource my work when we become a successful product making company? To other Indian software services companies, of course!<o:p></o:p></span></p>Sujaihttp://www.blogger.com/profile/16539694685428659940noreply@blogger.com3tag:blogger.com,1999:blog-30677466.post-80212143720075377312007-02-05T10:28:00.000-08:002010-07-14T07:52:46.892-07:00Why Product-making companies?<div class="MsoNormal" style="font-family: Arial,Helvetica,sans-serif; text-align: justify;"><span style="font-size: small;">I insist on high tech product making companies for <st1:country-region><st1:place>India</st1:place></st1:country-region>. No matter what we do with our IT-ITES sector, we will not scale dramatically to be able to become an economic power.</span><span style="font-size: small;"> The GDP of India in 2005 is $720B of which the IT-ITES sector contributes less than 3.2% (it has improved in 2006 to approximately 4.5%).</span><span style="font-size: small;"> According to report from Goldman Sachs, Indian PPP measure of GDP will exceed that of US in 2038 and will be at approximately $23 trillion.</span></div><div class="MsoNormal" style="font-family: Arial,Helvetica,sans-serif; text-align: justify;"><span style="font-size: small;"> </span><span style="font-size: small;"> <o:p></o:p></span></div><div class="MsoNormal" style="font-family: Arial,Helvetica,sans-serif; text-align: justify;"><span style="font-size: small;"><o:p></o:p>How do we get there from here? Do we just sit back and hope our current IT-ITES sector, which is primarily driven by services, will deliver us there or do we really take this as a dream and try to make it real or may be even make it sooner? </span></div><div class="MsoNormal" style="font-family: Arial,Helvetica,sans-serif; text-align: justify;"><br />
</div><div class="MsoNormal" style="font-family: Arial,Helvetica,sans-serif; text-align: justify;"><span style="font-size: small;">Only a technology-product making company can add the right kind of money into <st1:country-region><st1:place>India</st1:place></st1:country-region> at a faster and quicker pace using smaller manpower.</span><span style="font-size: small;"> Just look at some of the statistics here (mostly from 2005):<o:p></o:p></span></div><ul style="font-family: Arial,Helvetica,sans-serif;"><li><span dir="ltr" style="font-size: small;">Total output of Indian software industry for 2005 is $22.6 B (and for 2006 it is slated at $40B or little more).<br />
</span></li>
<li><span dir="ltr" style="font-size: small;">The number of people directly employed by Indian IT-ITES sector is 1.3 million.</span></li>
<li><span style="font-size: small;"><st1:country-region><st1:place>India</st1:place></st1:country-region> is currently producing approximately 180,000 engineers for IT-ITES sector.</span></li>
<li><span dir="ltr" style="font-size: small;">The rate of increase in output of employees is currently at 5.5% increase from previous year.</span></li>
<li><span dir="ltr" style="font-size: small;">Assuming a steady increase for the next five years, the output in year 2010 would be approximately 220,000. <o:p></o:p></span></li>
</ul><div class="MsoNormal" style="font-family: Arial,Helvetica,sans-serif; margin-left: 18pt; text-align: justify; text-indent: -18pt;"><span dir="ltr" style="font-size: small;"><a href="http://www.nasscom.in/upload/5216/Indian_IT_Industry_Factsheet_2006.pdf">According to NASSCOM</a>, </span><span style="font-size: small;"><st1:country-region><st1:place>India</st1:place></st1:country-region> is poised to make $70 B in 2009 with a workforce of 2.2 million. This projection assumes that each employee with earn approximately $32,000 in 2009 while it is approximately $22,000 in 2005.</span><span style="font-size: small;"> <o:p></o:p></span></div><div class="MsoNormal" style="font-family: Arial,Helvetica,sans-serif; text-align: justify;"><span style="font-size: small;"><o:p></o:p>Now look at this for comparison:<o:p></o:p></span></div><ul style="font-family: Arial,Helvetica,sans-serif;"><li><span dir="ltr" style="font-size: small;">Microsoft currently makes $40 B with 60,000 employees while Nokia makes $40 B with 40,000 employees. (each employee approximately makes $600,000 to $1M).</span></li>
<li><span dir="ltr" style="font-size: small;"><a href="http://www.hoovers.com/">These two companies</a> alone with a work force of 100,000 (in 2005) make more than the projected output for </span><span style="font-size: small;"><st1:country-region><st1:place>India</st1:place></st1:country-region> in 2009 (with 2.2 million workforce).<o:p></o:p></span></li>
</ul><div class="MsoNormal" style="font-family: Arial,Helvetica,sans-serif; text-align: justify;"><span style="font-size: small;">No matter what we do, contribution of IT-ITES will be marginal in contribution towards Indian GDP unless something dramatic happens.</span><span style="font-size: small;"> And that can happen only with more technology-product making companies. </span></div><div class="MsoNormal" style="font-family: Arial,Helvetica,sans-serif; text-align: justify;"><span style="font-size: small;"> </span><span style="font-size: small;"> <o:p></o:p></span></div><div class="MsoNormal" style="font-family: Arial,Helvetica,sans-serif; text-align: justify;"><span style="font-size: small;"><o:p></o:p><b>Case of technology-product making companies</b></span></div><div class="MsoNormal" style="font-family: Arial,Helvetica,sans-serif; text-align: justify;"><br />
</div><div class="MsoNormal" style="font-family: Arial,Helvetica,sans-serif; text-align: justify;"><span style="font-size: small;"><b><o:p></o:p></b></span></div><div class="MsoNormal" style="font-family: Arial,Helvetica,sans-serif; text-align: justify;"><span style="font-size: small;">How do you think most developed countries have been able to remain competitive? <a href="http://www.nsf.gov/">According to NSF</a> (National Science <st1:place><st1:city>Foundation</st1:city>, <st1:country-region>USA</st1:country-region></st1:place>), <b>“High-technology industries are driving economic growth around the world”.</b> According to the Global Insight World Industry Service database, “the global market for high-technology goods is growing at a faster rate than for other manufactured goods”. </span></div><div class="MsoNormal" style="font-family: Arial,Helvetica,sans-serif; text-align: justify;"><span style="font-size: small;"> </span><span style="font-size: small;"> <o:p></o:p></span></div><div class="MsoNormal" style="font-family: Arial,Helvetica,sans-serif; text-align: justify;"><span style="font-size: small;">“Even during the recent, slow-growth, ‘post-bubble’ period (2000–03), high-technology industry continued to lead global growth at about four times the rate of all other manufacturing industries.”<o:p></o:p></span></div><div class="MsoNormal" style="font-family: Arial,Helvetica,sans-serif; text-align: justify;"><span style="font-size: small;">According to NRC, Hamburg Institute for Economic Research, and Kiel Institute for World Economics 1996, “High-technology industries are R&D intensive; R&D leads to innovation, and firms that innovate tend to gain market share, create new product markets, and use resources more productively. These industries tend to develop high value-added products, tend to export more, and, on average, pay higher salaries than other manufacturing industries. Moreover, industrial R&D performed by high-technology industries benefits other commercial sectors by developing new products, machinery, and processes that increase productivity and expand business activity.”</span></div><div class="MsoNormal" style="font-family: Arial,Helvetica,sans-serif; text-align: justify;"><br />
</div><div class="MsoNormal" style="font-family: Arial,Helvetica,sans-serif; text-align: justify;"><span style="font-size: small;"><o:p></o:p></span></div><div class="MsoNormal" style="font-family: Arial,Helvetica,sans-serif; text-align: justify;"><span style="font-size: small;"><b>What is the output of high-technology sector in each of these countries?<o:p></o:p></b></span></div><ul style="font-family: Arial,Helvetica,sans-serif;"><li><span dir="ltr" style="font-size: small;">In </span><span style="font-size: small;"><st1:country-region><st1:place>India</st1:place></st1:country-region>, high-technology sector accounted for 2.0% in 1980, 3.7% in 1990, 4.8% in 2000, and <b>4.8% in 2003</b>.</span></li>
<li><span dir="ltr" style="font-size: small;">In US, for 1980s it was 11% of total domestic production, in 1990s it was 13.5%, in 2000, it was 27%. <b> </b>In 2003, it is estimated at <b>34.2%.</b></span></li>
<li><span dir="ltr" style="font-size: small;">In </span><span style="font-size: small;"><st1:country-region><st1:place>Japan</st1:place></st1:country-region>, it was 17% of total Japanese domestic production in 2000. </span><span style="font-size: small;"> In 2003, it is estimated at <b>15.7%.</b></span></li>
<li><span dir="ltr" style="font-size: small;">In EU, it increases from 9.5% in 1980 to 11% in 1990 to 13.2% in 2000. In 2003, it is estimated at <b>13.4%.</b></span></li>
<li><span dir="ltr" style="font-size: small;">Countries like </span><span style="font-size: small;"><st1:country-region><st1:place>Taiwan</st1:place></st1:country-region> (28.5% in 2003), <st1:country-region><st1:place>Ireland</st1:place></st1:country-region> (more than 50% in 2003) and <st1:country-region><st1:place>China</st1:place></st1:country-region> (19% in 2003) fare much better than <st1:country-region><st1:place>India</st1:place></st1:country-region>.<o:p></o:p></span></li>
</ul><div class="MsoNormal" style="font-family: Arial,Helvetica,sans-serif; text-align: justify;"><span style="font-size: small;">The case is strong for technology-product making companies.</span><span style="font-size: small;"> So, what are we going to do about it?</span> </div><div class="MsoNormal" style="font-family: Arial,Helvetica,sans-serif; text-align: justify;"><span style="font-size: small;">[To be Continued]<br />
<o:p></o:p></span> </div>Sujaihttp://www.blogger.com/profile/16539694685428659940noreply@blogger.com7