Emergic: December 8, 2006 Archives

Mobile Payments in India

Venture Intelligence Blog has a post by Deepak Srinath:

There is no big m-payment success story anywhere in the world today, barring maybe Japan. Having said that, India probably has the best chance of producing an m-payment success story. Market factors for an alternative payment mechanism to cash are clearly evident – high mobile penetration even in tier-2 and 3 cities, relatively low credit card penetration (98% of transactions in India are cash and cheque), a relatively low internet user base and rising middle class consumption and disposable income.

The biggest challenge will remain consumer adoption. The market is large enough to support 3-4 m-payment solution providers with different solutions that cater to different consumer segments. Moreover, competition is essential to create consumer and merchant adoption on a mass scale. Several m-payment solutions are likely to emerge in the next few years in India, as the market evolves and lessons are learnt. From a VC investment perspective, a solution that effectively addresses the hygiene factor of m-payment and then goes that extra mile, and a management team that has strong networks with the banking community are certainly worth taking a closer look at.

I am an investor in mchek, one of the three mobile payments companies discussed.

Software | PermaLink | Comments (3)

The Economist talks about how small financial transactions are made in Africa by transfering mobile minutes. It is very cool - a market for prepaid airtime. The first thought I had when I read the article was - wow, I sure could use it to buy potatoes or pay my autorickshaw guy the next time I go to India.

Link:
http://www.economist.com/finance/displaystory.cfm?story_id=8089667

Posted by Sandeep

I was amazed to find that people carry a lot of cash in India. This makes it attractive to thieves, robbers, and pick-pockets. It jeopardizes personal safety. Mobile payments can be a good technology option. I envisage technology and a scheme like this. A separate pay button and a communication link are added to a mobile phone. A person takes a mobile phone to an ATM and charges it with cash. Small payments (say under Rupees 100) are made by pressing the pay button. Larger payments (say between Rupees 100 and 10,000) require a user ID and password to be entered on the mobile phone. For transactions over Rupees 100,000, the scheme connects the two parties (payer, and payee) as well as the bank (or financial institution) on line. The last is like a conference call and the transaction is between registered (traceable) parties. Parties in mobile transactions can access and verify their accounts both on the mobile and in the bank any time.
With such an arrangement, for example, a cashier can take Rupees 100,000 from a bank via his mobile phone to a project site and pay his workers their weekly wages. The recipients can take their money on their mobiles and go to their shops. We can go into details about what happens if a phone is lost and how does the government ensure that this does not turn out to be a hawala scheme, and so on.

Posted by Som Karamchetty, PHD

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Posted by googleguy

The New IBM

Barron's writes:

In its most recent quarter, software accounted for a fifth of IBM's revenue and, surprisingly, for the bulk of its earnings -- some 40%, up from 29% five years ago. Under Palmisano, IBM is reinventing itself again. It's shed its disk-drive and personal-computer businesses to focus on less volatile operations with fatter margins, and has boosted productivity by slashing costs and spreading facilities around the globe.

Welcome to the New Big Blue, the world's second-largest software company -- quite a change from the hardware giant that invented the disk drive 50 years ago and lived high on the mainframe, or the service outfit it successfully morphed into under Gerstner -- one whose revenues had stalled in recent years. "We have globally integrated the supply chain, software development, services delivery," says Palmisano. "I would say we're just two or three years into a multi-year journey, with ongoing productivity gains to be had. As a result of all this work, IBM today is much more focused than we were four years ago."

Management | PermaLink | Comments (1)

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Posted by John

Language Translation

Wired writes:

LANGUAGE TRANSLATION is a tricky problem, not only for a piece of software but also for the human mind. A single word in one language, for example, may map into three or more in another. Carbonell likes to cite bank, with its utterly divergent uses for the place you keep your money, the edge of a river, and what an airplane might do. Then there are the dramatic differences in grammar and structure across languages. Arabic, for example, uses very little punctuation compared with English; Chinese contains no conjugations or plurals. For human translators, these problems are most often resolved through context or personal experience. There's no rule that says "between a rock and a hard place" isn't literal. We just know.

Machine translation is even trickier, and Carbonell's "interesting errors" line is a good encapsulation of its history. Perhaps no technological endeavor has been more defined by its failures than the attempts over the last 60 years to use computers to convert one language into another. "It's one of the earliest computer science problems to be attacked, and it has proven to be the one that's most difficult," says Nizar Habash, a research scientist at the Center for Computational Learning Systems at Columbia University.

Emerging Technologies | PermaLink | Comments (1)

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Posted by Devid

Mobile UGC in China

China Web2.0 Review has a nice overview.

Emerging Markets | PermaLink | Comments (0)

Content Businesses

Scott Karp writes:

Can anyone think of a content business — meaning a company that produces original content — that has scaled dramatically in recent years? I can’t. Look at the businesses that have scaled — Google, MySpace, YouTube — all platforms for content, but not producers of content. Compare those to original content businesses like Weblogs, Inc., Gawker, TechCrunch, Paid Content — they are successful at their scale, but that scale is still tiny compared to the scale of the aggregation businesses. Even portals like AOL and Yahoo are much more aggregators of content than original producers of content.
...
The result of unbundling, disaggregation, the loss of pipe control (to use Andy Kessler’s construct) — i.e. the inability to force people to consume content they don’t want — is that content businesses don’t scale anymore.

Software | PermaLink | Comments (0)

TECH TALK: Ventures and Capital: Start.Exchange

One of the ideas that I have mulling over to resolve the impasse between the early-stage capital needs for a business and the difficulty that there is in raising that capital is to create some sort of stock exchange where entrepreneurs can list their companies right at the start. They can publish an outline of the business plan and provide details of their capital needs. Then, individuals seeking to invest can make their own decision. (I have not looked at the regulatory implications of doing this in India – but am sure there is a way to make such a thing possible.)

I think one of the most important untapped opportunities amongst the potential investor community are the million or so Indians who are working in software or other technology companies. Many have done well financially on account of a combination of salary growth and stock options. After taking care of basic needs in life (house, car, children's education and the like), they still have surplus capital available. They can be a good source of capital for the new entrepreneurs. For one, they understand the technology space and can thus also provide valuable insights. Second, even if they do not want to leave to start a venture themselves, this sort of an investment gives them the opportunity to get a flavour of the world of startups and live a 'second life.'

The challenge lies in matching the two groups, and at the same time providing liquidity to the investment made. This is where a stock exchange comes in. Market caps of the companies listed here will be in tens of lakhs to a few crore rupees. What is needed is the equivalent of a market maker who can match buyers and sellers. BSE and NSE listings will always be limited to large companies with profits. We need something on a much smaller scale – where investors are clear of the risks. In fact, an investor should only put money into companies if he is okay with losing that capital. That is the worst case scenario and one must be prepared for it.

For an entrepreneur, this stock exchange helps to raise capital quickly and on-demand from investors who genuinely believe in the business (and the team). It will create for a deeper relationship with a set of people on the outside who can also be champions and advocates for the company's solutions. If this idea works, then this will lead to a surge in entrepreneurs willing to create new ventures – which is exactly what will spark innovation and the creation of more locally-relevant solutions in India.

Related Entries: [All]
TECH TALK: Ventures and Capital: Learnings [December 7, 2006]
TECH TALK: Ventures and Capital: Me as Investor [December 6, 2006]
TECH TALK: Ventures and Capital: Me as Entrepreneur [December 5, 2006]
TECH TALK: Ventures and Capital: Money Challenge [December 4, 2006]

Tech Talk | PermaLink | Comments (6)

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Good idea. One has to figure out ways around the govt. regulations and other compliance issues. If only small pre-revenue startups can raise money, there can be a bolder move into entreprenuership.
PS. Can you remove the offensive comment above, pl.

Posted by Jay Pullur

Great Idea. If this will let private limited companies also participate in some way, it will be good. But then what will be the return for the investor?

Posted by Susan Sharma

There is a strong need for “stock market” of the type Rajesh Jain is talking about. I suggest that one take a look at the modality of the Penny Stock (http://en.wikipedia.org/wiki/Penny_stock). For sometime, I was thinking of what I called an Idea Factory. People who come up with ideas need a place to grow them into concepts and ultimately some of them will grow up to be flourishing companies. Entrepreneurs and technologists can register penny stock companies and accept ideas with reasonable chance of technical and financial success. Penny stocks can be issued over the Internet with minimal administrative and financial burden. The person who generated the idea and/or a support group (university, or an incubator) can work on moving the idea to the next phases. Friends and family can invest in these companies and be assured of the feasibility of the technology and a return if there is success. By instituting standard accounting procedures over the Internet, accountability with minimum burden on developers is assured. Investors can buy penny stock in companies based on the expected return or for the love of the cause, which the idea supports. Once proof-of-principle is demonstrated, angel capital, venture capital, incubators can come in to move the idea to the next stage.
In the Nineteen sixties, while I was at Kharagpur, many technicians would come to me to discuss their ideas but there was no financial support. I hope the groups of people Rajesh Jain is talking about will provide nourishment for such ideas and concepts. Today, Indians can do it. India will benefit enormously.

Posted by Som Karamchetty, PHD

This is interesting. Each entrepreneur grappling with startup blues would love to have an exchange like this.

It might seem possible to match entrepreneur and micro-investor community. But the toughest part would be to emulate the dynamics of stock EXCHANGE.

If we take this direction in India, the logical first step would be to have a NASDAQ equivalent. This will allow us to establish a market for technology and a valuation system for knowledge based entities. I have found people struggling to understand valuation of technology companies that are already listed on NSE/BSE. Just have a look at some of the emerging companies in embedded and communication systems and you would see how little discussion on their innovation activities is
available as a part of the normal market analysis. We do have analysts categorizing companies into different industry verticals, but the technology stocks need a far different analytical criteria. To summarize this, we would require first the evangelists and analysts who could place the technology evaluation framework.

When startup companies have a stock exchange, lets call it the EMERGEX, its dynamics would be quite different than that of the traditional exchanges including NASDAQ. Startup companies operate
in a closed business environment and many of their business activities are not very public. This is understandable due to significnat amount of uncertainities in the initial stages and
limitation on the managerial abilities of the start up teams to handle disclosures. Isn't this true for most of the startups, whether technology or non-technology based, where focusing on core is
more important for the entrepreneur than participating with ones business idea in public
forums. It would be interesting to see, how many startups would like tobe listed in the EMERGEX,
beyond the early stage funding. Further, the milestones reached in the early stages of such companies provide quantum jumps in terms of the valuation of the company than incremental growth. This will lead to a higher level of volatility in the traded stocks (in the EMERGEX), that might be difficult to guess at the moment, but certianly, interesting to workout a solution.

Posted by Shridhar Lolla

This is interesting. Each entrepreneur grappling with startup blues would love to have an exchange like this.

It might seem possible to match entrepreneur and micro-investor community. But the toughest part would be to emulate the dynamics of stock EXCHANGE.

If we take this direction in India, the logical first step would be to have a NASDAQ equivalent. This will allow us to establish a market for technology and a valuation system for knowledge based entities. I have found people struggling to understand valuation of technology companies that are already listed on NSE/BSE. Just have a look at some of the emerging companies in embedded and communication systems and you would see how little discussion on their innovation activities is
available as a part of the normal market analysis. We do have analysts categorizing companies into different industry verticals, but the technology stocks need a far different analytical criteria. To summarize this, we would require first the evangelists and analysts who could place the technology evaluation framework.

When startup companies have a stock exchange, lets call it the EMERGEX, its dynamics would be quite different than that of the traditional exchanges including NASDAQ. Startup companies operate
in a closed business environment and many of their business activities are not very public. This is understandable due to significnat amount of uncertainities in the initial stages and
limitation on the managerial abilities of the start up teams to handle disclosures. Isn't this true for most of the startups, whether technology or non-technology based, where focusing on core is
more important for the entrepreneur than participating with ones business idea in public
forums. It would be interesting to see, how many startups would like tobe listed in the EMERGEX,
beyond the early stage funding. Further, the milestones reached in the early stages of such companies provide quantum jumps in terms of the valuation of the company than incremental growth. This will lead to a higher level of volatility in the traded stocks (in the EMERGEX), that might be difficult to guess at the moment, but certianly, interesting to workout a solution.

Posted by Shridhar Lolla