I’m afraid of what you see
The lies you unearth,
And the truth unspoken
When you lay your eyes on me.
I’m afraid of what you find
The holes you burn,
And the layers of false pride
When you’re down two glasses of wine.
But I enjoy the (invisible) scrutiny
And I play for another chance
Yet no matter how much I try,
There’s no getting a second glance.
I like to write, but I’m not a great writer. I try when I can but here’s the thing – the more I try, the more I see how bad I am. I am in the phase of known incompetence.
Yet, over time I have understood why writing is so fundamental to what I do (I like to believe that I attempt to solve problems).
Jeff Atwood (@codinghorror) recently articulated why writing is fundamental to being a good coder. He quotes Joel Spolsky:
The difference between a tolerable programmer and a great programmer is not how many programming languages they know, and it’s not whether they prefer Python or Java. It’s whether they can communicate their ideas. By persuading other people, they get leverage. By writing clear comments and technical specs, they let other programmers understand their code, which means other programmers can use and work with their code instead of rewriting it. Absent this, their code is worthless.
You get the idea.
A recent post on Hacker News The Other Half of Your Job goes ”if you’ve done your work, you’ve only done half of your job”. Drawing from Tom Sachs, a contemporary artist, the blog post leads with “half of your job in this studio is doing your work, the other half of your job is communicating that it’s been done”.
I cannot even begin to frame this lack of communication awareness among the best people I’ve worked with, including CEOs of companies and programming prodigies. I’m afraid I am guilty of it myself.
Communication, not intellect, is what will take you from good to great (top 10% to top 0.1%).
Speaking (talking, listening) is a good way of producing ideas, but in my experience, writing is the best, most efficient form of consuming ideas (text books, articles, novels, heck…remember the blackboard?). Written form is just easier to share among large groups. Importantly, it allows the reader to consume at his or her own pace.
Yesterday, at Droidcon James Hugman (video) spoke about how words shape thoughts. He spoke about the thought to code gap and how it would be harder to write buggy code if your data structures and functions “didn’t fit the way you were thinking”.
IMO, thought to code gap exists because we don’t express what we want to do in plain language – and then get directed by the constraints of what’s simple to code and/or maintain. Prototyping bridges this gap to some extent, and multiple prototypes can close this gap manifold, but clarity of user experience expressed in plain language can be darn compelling.
And if you want participation from other team members or the community, you’d better document it.
If you haven’t heard of Scott Young, read how he completed MIT’s 33 courses of the CS curriculum in less than 1 year, now.
Point 3 in the Feynman Technique, in my view, is the core of the article. I can peel off layers of my understanding only by explaining it to myself in my own language. THAT is how I find gaps in my learning and then attempt to plug them.
Personally, I find myself skipping over the ‘obvious’ parts when I explain things to myself orally. Writing changes everything. It forces me focus on the point of the sentence, why it’s relevant and where it is leading – aspects I have found more useful in Physics than English Literature.
Getting Better at Writing
Sure, writing makes me a better engineer. But how do I know my writing is getting better?
It helps to know why you’re doing it and learning whether you’re accomplishing that task. But above all, the purpose of good writing is to lead to new ideas. Even if you restate known facts, writing something must open some door for you that was never there before.
Recently someone explained to me the supply and demand for capital in the startup world through an analogy in Indian IT companies’ recruitment trends.
For several years, the Indian IT services behemoths couldn’t find enough able bodies to fill their shops. While this gap between engineering graduates and employable candidates lasted, recruiting agencies made a killing from ‘training’ graduates, minting moolah from these companies.
Today, the situation has reversed. Recruitment at these companies has stalled and the recruiting agencies’ business model has turned on its head. If you find a recruiting agency looking like a scammy business school, making money from tuition, you’re seeing this reversal of demand play out.
Returning to the startup world. In the US there’s plenty of capital but the number of investable companies has sky-rocketed because it’s easier and cheaper to get one off the ground.
Back home, in India, there’s very limited capital but the cost of starting up is even less. So suddenly, scores of people are explaining to us why startups need to be ‘trained’ for prime time VC funding. Of course, no training comes free.
These training schools  (incubators, accelerators, a rose by any other name) basically perform the following functions:
1. Filtering from scores of founding teams
2. Absorbing the risk of super early stage
3. Preparing selected and subsequently successful teams for future VC fund raising
However, the quality of a school is often scored on the employment opportunities available to its graduates. The quality of an entrepreneurship school must be proportional to the number of future financings graduating startup teams secure. Let’s be honest, the failed ones get acqui-hired or sell for $1-3 million. This is failure when you’re in the company of the best founding teams of the most startup-friendly country in the world (sticking with the US for a second, get to why in a minute).
As of June 2011, YC had funded 316 companies, of which 26 had raised Series A (Src: Quora, Wikipedia). That’s a success rate of 8.2%, compared to 21 companies out of 208 (10%) as of Summer 2010 (Src: Paul Graham). So chances of success are roughly 1 in 10 at YC, about the same as (in fact trending lower than) the established industry norm. May be they’re picking especially scarily ambitious ideas, but they also have the best people working on them. Still, in the usual bell curve of things, YC is a decided outlier.
Where does that leave other such ‘schools’?
In the end, the quality of a school is as good as its incoming class, and the vast value of the class is in your fellow classmates, not so much in the teachers (mentors?). All of you outstandingly smart people know this from college.
So what’s to stop the best developers and founders from learning from each other? It helps to know and meet each other in person, feel the competitive pressure flowing between yourselves, but you definitely don’t need another school to go to.
Or do you?
 I can’t help but appreciate that these schools have occupied the space that the VCs once owned. These schools are essentially middle-men, fulfilling a need that the VCs have fallen short on. Yet, they make the VCs job easier, reducing the risk in Series A investments.
Apple will not produce a TV just because it can negotiate deals with content owners. That’s a position of weakness, and negotiating in weakness is not in Apple’s DNA. Its DNA is in building intuitive hardware that intelligently combines consumption and production of content. It just so happens that Apple decided a decade ago that just the way the books you read speak volumes about you, the medium is an indicator of the consumer’s style and sensibilities. This will provoke many, but I’ll say it anyway. Style is a powerful accompaniment, not the strategy.
If I were Apple, I’d want you to put your video content on an Apple device because it’s the best device for it i.e. the best combination of hardware + software. Many claim superiority in the latter. Few even come close in the former.
So, Apple must first build a device that everyone wants to watch video on. Apart from other reasons, its focus on limiting SKUs means that one will do far more on the device than watch video. Like play games and have live facetime with family and friends, apart from watch wide screen video in landscape mode. Each of these was on demo at WWDC yesterday.
Indeed, Apple today feels a lot like in 2001. It had a couple of proven products and people had no expressed need for a new music player. By 2005, it was hard to imagine a music device that wasn’t an iPod. That device in your pocket went from being a music player to a phone, because you carried it everywhere, if only for your music.
What will it mean to turn the iPod Touch/iPhone into an iTV halo device? The aspect ratio changed last night from 3:2 to 16:9, universal for HDTV. The iPad has always been on a 4:3 aspect ratio, the universal video format of the 20th century.
So, am I going to be downloading videos and movies, even illicit ones, to watch on one of these devices? That’s the behaviour change Apple’s looking for. My money is still on Apple.
In this post, I’m trying not to dive into the data about stats for credit cards vs. debit cards, etc.. This is public information. Instead, I’m trying to understand the whys of the business - this is also public information, but less so than data. (For those who’re interested, data from 2003 through Feb 2012 is easily accessible on the RBI website under Retail Electronic Payments (pdf))
A payments’ system can be broadly divided between
1. The backend payments infrastructure that manages transaction processing and risk assessment analysis
2. User Interface or Interaction flow technologies.
In India, retail payments can be classified along several lines. The most obvious way is to consider the transaction amount as our primary segment variable.
1. Transactions > Rs. 50K
Paradoxically, in India, a large chunk of home purchase and vehicle purchase down-payments are in made in cash. Other large payments in this range are typically business-to/from-consumer or business-to-business in character, and are made through corporate credit cards, Netbanking or, less commonly these days, through cheques.
2. Transactions between Rs. 2K and Rs. 50K
This segment is ideal for credit cards or Netbanking transfers e.g. travel purchase, pre-festival aspirational shopping.
3. Transactions < Rs. 2K
This is the most fascinating consumer segment to me because it is the most common, and is largely opaque because cash is the most prominent medium even among the well-off.
There are other interesting nuggets in this segment. For example, McDonalds does not accept anything but cash anywhere in the world (definitely not in India). The processing time per transaction would kill their fulfillment optimizations.
Even more interesting is the < Rs. 200 segment. On most occasions, for these payments you cannot use anything but cash.
Let’s briefly dive into the available range of payment instruments available for these segments.
1. Credit Cards
A credit card is primarily a lending device. But why would one need a lending device that charges 36% interest? Because for amounts as small as Rs. 15,000 (say for a washing machine), no one will stand in line with a loan application, especially when it can be paid off in the next month or so.
So, why have Credit Cards not taken off in India? Actually, allow me to rephrase. Which credit card portfolio in India makes money and why?
Short Answer: HDFC credit card portfolio is probably the only one among the top private cc providers that makes money.
There are two ways of doing this business:
a. Grow volumes i.e. grow beyond your book. The problem is that there is no unified identification system and penalty-enforcing measures are scarce. To prevent default, one must second guess the customer’s intentions. In spite of the wide portfolio, if only 20% of your customers default, you’re probably just breaking even on your book, but who wants to run a breakeven business?
b. Keep risk low (“stay within your book”). Here, the bank issues credit cards with a lien against other assets it has direct recourse to e.g. salary or savings account, etc. HDFC errs on the side of conservative banking. As the Economist points out this week, “Standard Chartered, for instance, offers cheaper loans to customers who have multiple accounts with the bank, largely because it thinks the extra information allows it to assess risk more accurately.”
2. Debit Cards
A debit card directly exposes your account to the merchant. An extra zero can reduce your bank balance by your monthly salary. Perhaps not directly relevant to this, but important to note, is that 270 million debit cards account for Rs. 45K Cr worth of transactions, where as 16 million credit cards account for Rs. 79K Cr worth of transactions. There are several reasons why this happens, but it’s worth keeping in mind that anyone who has a credit card most likely also has a debit card; the reverse is not true by a long way.
3. Mobile Payments
Mobile payment apps today fix a problem that does not exist. They try to convert a segment where credit cards work perfectly. Everyone has a credit card and almost every merchant these apps have signed up, also have card processing POS terminals. The problem they appear to solve is limited to remote purchasing when you’re not on the computer.
4. Prepaid Cards
Prepaid cards make sense when there is an overarching need to own the card e.g. Metro, Road Tolls. One cannot live without such a card, and typically transport is such a need. More recently, so many mobile recharge options have emerged that you’d believe they’re the new metro cards.
5. Cash is King.
Cash with public is about Rs. 10L Cr. India’s GDP is about Rs. 87L Cr.
There are several other instruments, including Netbanking, IMPS, Airtel Money, etc. Each of these deserve their own specific post, so I’ll save them for another time.
Finally, The Business Case
A financial product only makes sense when the customer acquisition cost is less the customer’s lifetime value at scale. Of course, the company must also have the resources (cash and confidence) to invest in customer acquisition until it gets to such scale.
Acquisition costs are high in India for 2 reasons:
1. KYC norms
Almost every industry person I speak with gives three reasons why payment companies are unable to innovate or build a business: 1. RBI 2. RBI 3. RBI
Well, guess what’s an even bigger perceived threat than hawala? Funding for terror activities. And we’ve not to even begun to dig deeper into gambling/betting.
Without a unified identification infrastructure, there is no way to track a person down. So each customer’s information is verified, then double verified, and then triple verified. Ironically, lack of technology and data has created an impenetrable verification system in India. Whether the UID will become the standard for such identification remains to be seen. Anyway, all these documentation and process guidelines and subsequent filtering builds a cost into customer acquisition.
Significantly, though, all players must pay the cost of KYC norms. If RBI loosens the reigns, it will affect everyone equally and we’ll be at a different level playing field. But it’s more or less level today as well.
2. Economic Costs
When you’re a monopoly (e.g. the city metro, RTO, etc), people will come to you, on one foot, if you’d like. You’ll likely need to employ security to stop people from coming to you.
Acquisition costs for a credit card customer is Rs. 750 (before filtering). If the acceptance rate is 20%, the on-board customer acquisition cost is Rs. 3,750. In spite of that, most of these cards are in “never used, never paid” state.
In this spectrum of Rs. 0 to Rs. 3,750, each new financial product must find it’s ideal spot. Unfortunately, most payments product companies have shutdown because the customer acquisition costs kill them before they can scale.
So, a new payments instrument in India needs (1) Clear understanding of different segments and (2) Wise cherry picking of addressable segments.
This piece of advice felt so true, I wanted to quote and reiterate it:
Important life lessons for anyone working in a growing organization and dealing with scaling challenges:
Rule #1: Never solve a people problem with a process solution. Just man up and solve the people problem.
Rule #2: Never solve any problem with process if it can be solved with tools. It’s practically impossible to overinvest in tools.
Adding process should always be a last resort. It’s generally the easiest thing to do (confronting people issues and building tools are hard!), but the cumulative weight of compounding process is what turns lean fast-moving small companies into big bureaucratic large companies.
By Jocelyn Goldfein
The VCs will be the first to admit that their industry must shrink, and this in fact is already happening. Yet, no one will admit to how severe the problems are, or even what these might be.
The Kauffman Foundation Report ”We have met the Enemy” offers insights into what has been known to be the economic power of VC funds with respect to their LPs (institutional investors like pension funds, university endowment funds, etc). Yet, it says nothing new apart from concluding that VC investments must be brought under metrics-driven supervision.
Will get to the LP perspective in just a bit, but before that, and more importantly, an entrepreneur’s perspective:
Seed and early stage investing, which has risen from 39% to 49% of total VC dollars invested from 2007 to 2011, is mired in a few major issues:
Still, it would appear from the Foundation’s report that a VC fund is a very lucrative business. Except (or perhaps because) it suffers from two major problems:
1. Only 16 funds out of 94 delivered a PME of at least 1.5, and only 20 funds out of 94 exceeded a PME of 1.3. Of the funds with PMEs greater than 1.5, 10 of 16 (nearly two-thirds) were launched prior to 1995.
Very few GPs do well. If LPs can take away any lesson, it’s to limit their VC allocation to top-performing GPs. Such scarcity of returns creates tremendous bargaining power among performing fund managers without any urgent need for further innovation in the industry.
2. It is not clear exactly what specific skill creates out-sized returns. Is it the ability to identify great people or is it the ability to identify great markets, or perhaps the combined ability to identify great people in large markets – each is sufficiently vague and unverifiable for at least a decade.
Turns out, as this decade progresses, many VCs have moved from professional risk-taking and investing to professional fundraising. Under the existing 2 and 20 structure, many institutional investors pay GPs well to build funds, not build companies, claims the report.
What must change?
Of course, none of this is predictive. It’s prescriptive at best, and just bad prose at worst. Still, I am hoping someone will crack it for India, and I hope it’s you.
Daily Runs (day, distance, time)
Day 1: 4.68 km, 30 mins. (treadmill)
Day 2: 4.68 km. 30 mins. (treadmill)
Day 3: 4.78 km, 30:33 mins. (treadmill)
Day 4: 3.82 km, 25 mins. (treadmill) 11-10, 9-11 #squash
Day 5: 4.62 km, 30 mins. (treadmill)
Day 6: 2.33 Km, 15 mins (treadmill)
Day 7: 3.86 km, 25 mins (treadmill) 7-10, 10-7 #squash
I had originally planned to record running/exercise stats for a month. Most likely, I’ll still do it, just not on Twitter. For one, it felt too static and repetitive by the fifth day. The basic data elements were not changing much, so it begged the question of what was really being measured, at least to a person not aware of the goal or the premise of the experiment. Secondly, Twitter is not a great recording tool. I published these for a specific purpose. It appears this purpose has been accomplished.
Anyway, some learnings from the recordings to-date:
Mukund yesterday pointed to the schizophrenia in the Indian startup ecosystem and his diagnosis is fairly simple. Is this not a symptom (vs. the problem), I asked him. He said he didn’t think so. I must politely disagree.
The difference between what you say and what you do is the difference between thought and action - the difference between clarity of thought and the friction in action (assuming you say what you think is true).
A famous story that I often tell is about searching for a key.
Someone saw Nasrudin searching for something on the ground. “What have you lost, Mulla?” he asked. “My key,” said the Mulla. So they both went down on their knees and looked for it. After a time the other man asked, “Where exactly did you drop it?” “In my own house.” “Then why are you looking here?” “There is more light here than inside my house.”
- Idries Shah (1924 -96), citing Mulla Nasrudin (thirteenth century CE)
Some recognize their internal inconsistencies, others do not.
But eventually, you do what you can, not what you say.
It had begun with a flippant idea of attempting to climb the highest mountain of each continent. While suggesting this to my classmate, Whitney, I’d imagined Kilimanjaro to be an easy first attempt and had told her as much. It turned out that Whitney took me seriously.
About a year ago, she began planning an all-girls trek up Kilimanjaro. When I left on 19th February for Tanzania, I had not even looked up its Wikipedia page. I had purchased equipment suggested by the tour company the previous week: hiking boots, gloves, camelback back-pack, puffy jacket and countless layers. In my naiveté, I had also pushed myself to buy a high-end sleeping bag, marked with a limit of 11 deg Celcius. I had looked at the -22 deg Celcius sleeping bag specification and smirked at the typo. Ignorance, on this occasion, was not going to be bliss.
As we set out at noon on Day 1, the rain forests at 1830m above sea level appeared like a piece of cake. After leech-infested rain forests in India, this was going to be a breeze and it was. Mild rain notwithstanding, the first day was relatively uneventful.
Our first camp was on a mildly sloping rock face, so sleep was not easy on tarp-covered ground at 10 deg Celcius. The few hole-in-the-ground toilets were sickening and venturing out of the tent at 2am was decidedly the least pleasant part of the day.
Day 2 was a clear day and the Uhuru peak stood beautiful and shining against a deep blue sky. We began comfortably around 8:45am and set out to cover a short hike to Shira Hut. After a late lunch, we walked a short 2-hours of the next day’s hike to acclimatize, going “Pole, Pole” (slowly, slowly) all the while. Sleep was better that night, but stepping out in the pitch dark freezing night for the loo was still a bitch.
Day 3 was the hardest day for me (apart from summit day); walking downward for hours in mild hail and slippery snowy rocky terrain hurt my knees as my heart skipped a beat with every nervous step. It could not get much worse than this, I imagined.
Climbing the vertical face of the Barranco Wall did not turn out to be much of a cliffhanger on Day 4. The rocks provided easy holds, I rarely looked down and a short spell of dry weather helped keep things cheerful. But in what was now becoming routine, the afternoon dissolved into yet another painful tale of rain and hail. We climbed down freezing waterfalls and skipped tentatively over wet rocks, often on all fours. My gloves quickly grew soaking wet and I shivered uncontrollably for the rest of the day. Still, it didn’t feel as bad as the previous day because everything underneath was still dry, and I still had backups for the final ascent later that night.
By this time, though, my appetite had reduced to tolerating nothing more than insipid soup. Anxiety about altitude sickness was rising faster than my mind could rationalize. Kelly, who had been remarkably strong and balanced, was throwing up and I was scared of losing all sense of physical and mental strength if I fell prey to nausea. I didn’t know then, but fear was already controlling every small decision.
Waking up at 11pm the same day sounded harsh but we managed ok. The excitement and nervousness of the summit hike was subdued but it still hung in the air to touch and feel.
I had six layers on but was still not confident that they’d be enough. That, of course, was going to be the least of my problems.
Only an hour into the final 7-hour hike, my brain was beginning to shut down. Unseeing and uncaring, I was simply setting one foot after another. I hadn’t eaten much for dinner and my body resources were quickly drying up.
About 2 hours into it, the snow was coming down hard. It was in my eyes and nose, and all over my face. My glasses were covered with a thin film of ice and I could barely see an arm’s length ahead of me. I was crying and the heat of the tears was burning my eyes.
At the next loo & water rest, I sat distant from everyone else so they wouldn’t see me weeping. The guides, though, were quick to notice. At one point there were four guides around me trying to help with water and protein bars as well as finding a cap in my backpack and cleaning out the ice from my glasses. By now, the other girls had pulled out their ski-goggles. I had never skied in my life, and bringing ski-goggles had not even occurred to me.
Somehow, though, help from another human is a wonder that can battle demons of fear when everything in the mind and body has dried up. It can help you find that last drop of hope, cling to that last straw of belief, and turn you into little stone-headed monster. That’s what happened to me.
The light from my headlamp was failing but I walked in the light of the guide ahead of me. I slipped precipitously time and again, but I just dug my toes in harder. I was climbing with my feet, hands and mind.
At one point, Whitney stopped the guides to say that it was too dangerous to continue and that we should turn back. Whitney is a born climber and has done parts of the Annapoorna circuit in Nepal. She usually knows what she’s talking about.
“Let’s keep going. We’ve come this far”, I said, even as fear broke into my veins again. If Whitney thought this was dangerous, we were in trouble. Dawn was still an hour away and the winds were blowing stronger than I could resist, possibly 40-50mph. After about 25 steps I froze. My muscles wouldn’t move. My breath wouldn’t break. I was dead tired.
Tricia, right behind me, was made of stronger stuff. “We can’t just stand here. We have to keep moving!” she screamed. That feeling of being responsible for someone else, of being part of what one calls a team, could not have been more subliminal. I continued moving up, part of me vaguely imagining myself slipping and falling and rolling off the mountain.
About 30 steps from Stella Point, I stopped again, unable to move. Every cell of my body wanted to die rather than move forward. “We’re almost there! Just a little bit more!” was the distant cry, I don’t remember now from whom. The first rays of dawn were breaking through.
It took about 25 minutes to cover 30 steps. When we finally got to Stella Point, the blizzard was raging was at 60mph. The guide showed us to a rock to take shelter while someone shot the obligatory pictures. I was already beginning to lose sense of my thumb. I moved it idiotically and felt like I was moving a stump. I had to get out of there, but at one level I didn’t care.
Still, the part of me that did care screamed at the guide, “Wilson! I can’t see! My glasses, my glasses!” I was probably crying again, I don’t remember. He pinned me to his arm and we began the most surreal descent of my life. The snow that had threated to come lose was now soft and yielding to our weight as we glided down. My lips were dry, my breath was short, and my head was cloudy. But in Wilson’s arms I felt safe, child-like and joyful, as if on a giant slide in kindergarten.
When we were safely out of deep snow, he let me find my way down. Inside, I was crying out of gratitude. I told him that I’d never forget him. He smiled and hugged me.
I did eventually look up the Kilimanjaro Wikipedia page. Only 30% of trekkers make it to Uhuru peak. Some estimate that more people die on Kilimanjaro than on Everest, although far fewer people attempt Everest.
At some level, all of us girls believed that Kili was not technical, that it is one long hard walk that might just get really cold at times. In hindsight, our mistake was not in underestimating the mountain, but in overestimating ourselves. Acute Mountain Sickness is unreasonably high on Kili because people believe they can simply walk it up, faster than they actually can. Altitude sickness can take you down anytime and pills will be little help.
The fourth most prominent peak in the world, Kilimanjaro (5,895m above sea level), taught me one more lesson. Do your homework, especially when things appear easy. Save your bravado for the adventure.
Dedicated to Raymond and Wilson, our inimitable guides.
Image courtesy: Stig Nygaard on Flickr