Political Suicide?

Demonitisation day #5.

Doubts about the thoughtfulness and preparation behind the move have been widely cited. The system is beginning to appear stretched. FirstPost and Mint present a fairly balanced view of the repercussions of demonitisation.

Given the logistical nightmare, and the 100 percent chance that this will result in sheer chaos, anarchy and anger his vote base (since traders will be the worst hit) why did Modi commit political suicide?

If the PM took such a risk, it shows his supreme confidence and a quid pro quo of deep trust between Modi and his electorate. He, as Swapan Dasgupta writes in his column for The Times of India, would have calculated that the electorate, though being made to go through utter inconvenience and hardship, will “appreciate forthrightness and loftiness of purpose.”

But he would be hurting. No matter how strong the conviction and unshakable the trust, Modi isn’t blind to the factors at play — the market slipping into a recession, daily lives suspended in a surreal act of faith and common man getting increasingly restive as the days tick by and the system near a total collapse. – Sreemoy Talukdar, FirstPost.

I don’t have any reason to doubt the sincerity behind the move. That much more reason to believe that Narendra Modi has turned out to be a special Prime Minister.

I know that I can’t completely gauge the problems people are facing from this move. An acquaintance had to default on his rent, footfalls at restaurants have fallen, and for sure those that rely on daily wages have been hit. Life continues to be orderly. I’m encouraged by the few conversations I had when standing in line at a bank on Sunday. I believe that the desire to stay the course is still present. Let’s just hope that we can reboot the system before this spirals out of our control.

Cashless India in a Single Day

8th November ended like any other day. I’d just gotten home from work. My father called me. Excitedly he told me that our PM, Narendra Modi had recalled 500 and 1,000 denomination notes. I responded that it’s probably a hoax and switched to youtube to check just in case. It was true. A number of my colleagues who I discussed this with echoed my initial disbelief on having first heard of demonetisation. Living through a full day after demonetisation has been that much more unreal.

I can’t imagine that an extreme step such as this would ever be taken. As my Dad explained, the last time this was done was in 1978 under similar circumstances. India needed this. Edelweiss Securities predicts that the crackdown will unearth 3 trillion rupees ($45 billion). Perhaps I believed our politicians didn’t have it in them. But Modi ji’s turned out to be a politician like no other. He’s allowed his determination to lead him into the unknown. If this move fails to deliver impact, it’ll hound him. If it works, at least temporarily black money will entirely cease to exist in India. Fake money will be invalidated. Indeed, the nexus between terrorism, corruption and tax-avoidance will receive a blow.

And that’s significant.

As the dust of today’s discussions, evaluations, analysis and experiences settle, it’s becoming clear that although this was a much-needed reset of our entire system, it just might be that the entire potential of what is possible was missed.

First, a little background. A little before tax-season the government announced an amnesty scheme under which tax defaulters could come clean for a penalty and avoid criminal prosecution. Although the scheme was widely availed, it came nowhere near the goals our PM had set. Perhaps he have felt that some thing more would have to be done. I’d resigned myself to “yet another unfulfilled campaign promise”. It would continue to be business as usual.

India (and Bharat) is a clear, desperate large-scale use-case to go-digital. In our cash-led economy, an INR 10 denomination note has an average lifespan of less than 10 months.

Our PM himself appreciates technology for the transparency and accountability that technology brings with itself. He’s also cited the parallel economy being a key driver of forces that are destroying us from within.

Since the early years of 2000 – 2012, digital entrepreneurs have been tracking the Internet in India. We’ve achieved big changes at a snail’s pace. First came broadband, then smartphones, mobile internet, finally e-commerce. This is over a 12+ year time period. If we think forward, will it take us another decade for us to go cashless?

And therefore skepticism. We need to be there desperately, but the inertia won’t allow. Just the other day I was asked by a potential hire, “Do you really believe you’ll sell digital payments to a group that believes in dealing in cash”? I’ve always had a ready answer, but it’s a tough argument to fight. Even now, my son’s private school conveyance hesitated to share his bank account details. We simply didn’t have the cash on hand to pay him.

If one sets out to change India to stop having to rely on cash, until last night this felt a little like an impossible task. I only know now that I felt like this. I’m simultaneously embarrassed and impressed on the boldness and on how our PM’s decision has turned out.

So just maybe, I need not have to wait a decade for this change. Let’s take a fresh look at what was possible.

We’ve just spent an entire day where 500 and 1,000 notes are not legal tender. Throughout the nation Banks and ATM’s were shut. There was some chaos as people scrambled, but systems haven’t entirely failed or stopped. If you’re a daily wage earner and if you were paid in 500’s on Tuesday, you’d have a difficult time. In the coming days there will be more pressure on the system to change those 500’s into new 500’s or 100 denomination notes. On Thursday 11th, ATM’s will be back online, but if you don’t have a bank account, you won’t have access to more than INR 4,000 in the new currency right away. For sure that won’t cover the month’s rent and groceries.

Over the last 2 years, we’ve introduced Aadhaar – a biometric based system capable of identifying citizens, we’ve linked the Aadhaar system to bank accounts, and have recently introduced Unified Payment Interface, a simple account-to-account cash transaction system suitable for smartphones. If we’d made it possible to pay with UPI almost everywhere, there wouldn’t be as much pressure on the system for availability of 100’s and smaller denomination notes. Even in a hybrid system those who need cash to bridge expenses could have had them on priority while the others must pay digitally. Universal acceptance is key.

Let’s look at some of the counter-arguments I’ve got. Not everyone has a bank account, but they may have instances where they’d have to pay large sums (school fees comes to mind).

On the acceptance front, skepticism has prevented retailers and common utility providers from adopting digital. That could have been eliminated.

But just this one day, I believe that we could have prepared ourselves to digitise and made a leap. Even if it is only my limited view-point, on this one day we all accepted to be inconvenienced for the greater good. A nation that can be organised to give up their money and recognise the larger picture, they’re certainly ready to let go of their other fears. This opportunity, this reset might not arise again.

We’re getting quicker at transforming our ageing private / public systems and protocols. Reliance Jio’s doing it in telecom (they’re India’s only 100% VoLTE operator), railway tickets, our cooking gas subsidy system and many other examples come to mind. This pace of change is exciting.

There’s no doubt in my mind that 8 November is historic and a big leap forward. It has strengthened my faith in our version of democracy and in our leader. It’ll strengthen the common man by merging the parallel economy and forcing cash out into the open. It has encouraged me to think about what’s possible, what our future ought to look like and what we’ll need to do in order to get there. Thank you Honourable Prime Minister Narendra Modi for growing our picture by that much. Thank you for surprising me.

India’s Digital Payments Freeway

In the process of building a movie tickets platform, the BookEazy team stumbled upon a revelation of card-less digital payments. We weren’t the only ones to come upon this discovery. And yet, its taken eight years for the digital payments freeway to become a potential reality. I believe that this is an important, polarizing discussion as it offers the ability to permanently close the larger digital divide in India.

Card-less Movie Tickets Online, April 2006 to 2009.

When working on getting BookEazy live we framed the problem of movie tickets in simple terms. We wanted both students and knowledge workers to be able to book their movie tickets via mobile SMS without using plastic. This was before net-banking had become possible and only a small portion of the urban population were card-enabled. An offline method, Cash on delivery was on the horizon and multiplexes had begun offering home delivery of movie tickets to movie-goers.

BookEazy cofounder and CEO offered a solution. Inspired by how we rent movies and Inox’s cashless “reserve a movie ticket by SMS and show up 40 mins before to collect them”, she suggested – why not take that idea to the next level? We then designed a cashless system which allowed movie-goers to reserve movie tickets against a security deposit and show up at the theatre to collect their tickets any time before the show.

We built over several assertions, selling ~1CR of movie tickets in Pune. Some turned out to be true, while others turned out to be false.

  • We got the mobile-only use case bang on right and ported the system to work not only with desktops, but with SMS transactions and mobile browsers. But we were too early for smartphones and native apps.
  • Urban debit and credit card penetration has grown significantly since then. I can imagine more than 60% of a site’s transactions are card based (with a 3 to 1 factor in favor of debit cards to credit cards).
  • We were on target for the “impulse buy” use case. By eliminating the card altogether from the workflow, our movie-goers booked more often than box office average in a year.
  • We weren’t able to onboard Students as well as we did with Knowledge Workers who valued convenience over price [1].

E-Payments Develop, 2009 to 2012.

The years that followed, were relatively quiet years for payments, overseeing the development of card gateway infrastructure and other channels such as cash on delivery, net banking. Since 2012, Flipkart and other ecommerce sites drove the development of the e-payments infrastructure. Oxigen and One97’s PayTM were two outlying payments services that continued onwards through this time.

The other key building blocks that solidified during this time are inexpensive smartphones and ubiquitous saturation of mobile internet. As we’ll see further – these will have a significant say in the development of our digital payments freeway.

Wallet Services, 2012 to 2015.

For comfort I’ve always stayed with prepaid mobile cards. Recharging them with my local kirane-walla (local Grocery store) hasn’t always been convenient and so began the search for an online solution. My earliest prepaid recharges with PayTM culminated from the frustration of trying to recharge directly with the operators website (AirTel, TATA DOCOMO, Idea). Initially, PayTM recharges were restricted to the desktop with a credit card. Subsequently, PayTM launched their Wallet service and app for iOS and Android.

The original insight for a Wallet service comes from prepaid users ‘lending’ each other minutes [2] of talk-time (or credits, if you will). Which also explains why the growth of M-PESA a mobile wallet service in Kenya was led by a telecom operator and not a bank.

It makes sense for PayTM to have mobile recharge as a captive service [4]. Even if there appears to be a contradiction between the Wallet service target demographic (prepaid customers) and the channel favored (smartphones). Students are perhaps a unique target demographic where both attributes happily co-exist. Explained another way, students are both – heavy users of smartphones as well as prepaid services.

On the flip side, at least one source directly cites unfavorable regulation as to the reason why Wallet services haven’t developed in India [2]. Fast forward to today and we’ve got a plethora of Wallet service providers here in India led by first-generation wallet services, banks and others with a desire to bank the unbanked and the underbanked [3].

The creation of a nationwide digital payments freeway has implications for e-commerce and others. For instance, students now can now be included under digital payment channels making it possible for them to be a higher margin demographic and offer a greater lifetime value. On a longer timeline, Wallet services can potentially digitize common small-value cash transactions and simply unite the larger India.

[1] Product plans must pursue a target demographic with a desire to make it possible to replicate their success.

[2] Mobile Banking: Financial Services Meet the Electronic Wallet, Knowledge @ Wharton and Ernst and Young.

[3] HDFCICICI Bank launch digital banking services.

[4] What is the Growth Strategy of PayTM?

The Transformational Gear

There’s some thing strange about waking up at 5am every day. It’s an hour where you’re truly alone. A daily opportunity to not speak and allow the routine turbulence of thoughts to clear out.

A long time ago, I started waking up at 5am out of necessity. I was in the Pacific timezone and I’d recently signed up on a project that required interaction with a team back in New Delhi, India. Due to time zone differences, I’d wake up early work on the project and then go on to my day job at 9am. I did this for about three months. The morning project would go on to become bookeazy.com, a venture that changed my life forever.

Back then, it was easy getting up early. I was single and was absolutely electrified by the idea of creating a service that would go on to change how movie-goers would buy movie tickets.

Now I get up early in the morning because I believe it’s a great way to work on things that have the promise to be transformational. If you don’t have a side project, you get to choose if you want to work on your health, wealth or anything else that you have in mind. I like to think of this as the ‘abnormal gear’, a mode that you can rely on to break out of routine quickly.

It’s also an opportunity to plan and prepare. I find my world to have many activities that beg for time with the promise of no return. Spotting them isn’t easy if you don’t plan. It’s easier to decide what you want from your day and then spotting distractions and side-stepping them is easy.

It’s difficult, but trust me on this one – 5am is where you have a say in what change begins and sticks.


The Teleporter

Thought experiments rely on the idea of immersion to allow you to explore conceptual frontiers. I’ve stumbled upon one such experiment in Sam Harris’ book Waking Up that helps to ascertain important ideas around our notion of the past self. While the experiment is useful to review the impermanence of that notion, its also incredibly valuable to ask associated questions around why we choose who we are.

Philosopher Derek Prafit in his book, Reasons and Persons relates the idea of a teleportation machine. When our subject steps into the machine he is ‘teleported’ across to Mars as follows. First, a replica is built that’s identical atom by atom at the destination machine on Mars. Second, on confirming the success of the replica, the original is destroyed. If this machine exists and you’re friends urge you to try the machine, what thoughts go through your mind then?

This isn’t a new idea. You’ll recognize this experiment to be the same as the question behind the Ship of Theseus. Philosopher-film maker Nolan’s explored the same idea in his movie ‘The Prestige’. In the book I’m reading, the experiment is used to illustrate how our perception of daily life (ordinary survival) can get outdated a lot quicker than anticipated.

We sleep, we wake up. We make assumptions about who we are. If you re-read this blog post a few months later, our idea that we’re really the same reader is no longer the same. That’s undeniable. So why this idea of a permanent self? Why continuity? Why would you hold on to an idea on Mars which is nothing like Earth?

Perhaps continuity is indeed important for us to function. I imagine that it’d be crazy to rebuild every assumption from the very beginning. I’d be forgiven for thinking that this burden is only a privilege for the innovator*.

And yet, this process of allowing context-altering teleportation is necessary. Even in an average world, this is still true when we face life-altering situations such as the loss of a job, or any crisis that demands teleportation. We call for presence of mind so that we can begin to search for a solution. Its simply perception of the exceptional nature of crisis that attempts to separate continuity from the mindset at that time.

Its precisely that same shift that drives excellence.

Holding Contradicting Thoughts

Contradictory thoughts appear to be cul-de-sacs, promising nothing of value. Counter-intuitively, the introduction of doubt is a key ingredient in evolving outcomes that are beyond simply predictable. Design thinkers are often encouraged to shift or overturn values in order to explore new outcomes*.

This weekend’s Startup Leadership class involved a discussion with Manoj Kothari of Onio Design. He touched upon this important point and highlighted how the mind is a natural synthesizer. Being with contradictory thought allows for the resolution of conflict with time. Time here could be anything from a single night’s sleep, a couple of days or more.

The key is recognizing the cessation of the background, mental ping-pong process on hitting a contradictory thought. At that point, motivation to investigate the thread further, to place your thoughts in a constructive framework, or to seek out additional stimulant is on the low end.

Take the intuitive definition of the word “problem”. It can vary dramatically depending on the specific outlook, or attitude at that given point of time.

In recent customer trials for a product I’m working on, I interviewed parents of students from local private schools that employ English as a medium of instruction. Interviews with two parents of overachievers nudged me towards a discovery. Before the interviews, it never occurred to me that overachievers might have a problem. My predominant thoughts stayed with the visual of class laggards struggling to keep up.

It turns out overachievers do have problems as well and might be more inclined to address them.

My interviews culminated in the following problem statement around second-language acquisition, a well-researched problem:

We acquire our first language by learning from our environment. During that time we’re literally exposed to over a million new words thanks to our parents and caretakers. Acquiring a second language is left to schools that can at best provide an abstract learning environment. For instance, learning to speak the word “water”, or “mother” wouldn’t be valuable if there wasn’t a recognizable, real reward attached. Overachievers who hunger for this same environment are bound to discover richer rewards through participation in debate and other social events in that second language.

* Creativity in Design Thinking, Charles Burnette PhD:

Good designers typically seek satisfaction beyond that required by stakeholders in the problematic situation being addressed. By applying values or criteria not usually applied to a situation or experience, designers may find an unanticipated outcome. By shifting values, even contradicting those they might normally apply in a situation, designers can sometimes arrive at totally unanticipated and creative outcomes. Being highly independent in their judgment creative designers are not usually responsive to group standards and control; they often suspend or override judgment in their search for originality.

The Role of Intelligence

A friend once described his version of intelligence to me as the ability to discriminate that which is improbable from the rest. This definition isn’t a precise dictionary definition, but it’ll serve the purpose of this discussion.

Imagine the future intelligently. Imagine improbable outcomes that question the future of status quo. Then in that case, failure is a failure of imagination – assuming the ability to execute to be equally available to all.