Archive for the ‘microfinance’ Category

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The market needs a self-correcting mechanism

Wednesday, October 15th, 2008

Update: This is a cross post, a slightly longer version is posted on Wokai’s blog (a microfinance startup). Head over to check it out here. Thanks Leslie!

There’s an interesting Op-Ed on the NY Times titled “The Rise of the Machines“. As a technologist, I passionately believed in the power of technology to change the world. However, the power can likewise be abused. Well, in today’s market .. it’s more about greed catching up with men, not necessarily power being consciously used for malicious intent. From the post,

“BEWARE of geeks bearing formulas.” So saith Warren Buffett, the Wizard of Omaha. Words to bear in mind as we bail out banks and buy up mortgages and tweak interest rates and nothing, nothing seems to make any difference on Wall Street or Main Street. Years ago, Mr. Buffett called derivatives “weapons of financial mass destruction”

This entire economic mess, impacting the world .. all from some math formulas. Father of microfinance, Muhammad Yunus talks in this short insightful video:

He says that the market needs to find its own self-correcting mechanism. The more speculative you get, the more you set aside for a “rainy day” fund. A government bailout is akin to running to mommy and daddy for help. And the mechanism needs to be designed right now, right when we need it the most, right when we’re feeling the pain the most.

Because when times are good, we’re not going to be convinced that we’re going to need that rainy day fund. Microfinance, is about empowering people to lift themselves out of poverty. It’s not a free handout.

Awesome advice.

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Posted in changing the world, microfinance, wokai | Comments

Mobile data adoption on the rise

Saturday, July 26th, 2008

Some mobile data trends (numbers + commentary):

  • Total mobile data revenues for 2007: US$157 Bil
  • Total mobile data revenues for Q1 2008: >US$49 Bil, 42.7% y-o-y increase. Of this, non-SMS data made up approx US$17.46 Bil (35.6% of total data revenues)
  • Mobile data revenues is now almost 20% of mobile operator total revenues
  • 40% of world’s data revenues come from APAC (>US$20 Bil in Q1 2008)
  • Fastest growing is EMEA, which despite only representing 2% of world’s data revenues, is growing at 91.7% y-o-y to US$927 Mil. This acceleration is aided by the 321% y-o-y increase of HSPA subscribers
  • Operator that generated highest non-voice revenues this quarter is Japan’s NTT DoCoMo (US$3.6 Bil), overtaking China Mobile (US$3.5 Bil)
  • As a % of overall revenue, Filipino mobile operator Smart Communication is the world’s market leader, and the only carrier to depend on non-voice revenues for > 50% of its income *I wonder how much of this is attributed to microfinance and mobile payments i n that region, hmm ..

And as always, I’d like to extrapolate some meaning from raw numbers, so let’s go.

Obviously, the trend clearly indicates that your cell phone is becoming more of a general purpose computing device (like your desktop PC, as opposed to a single-purpose device that makes phone calls only), with more rich features that PCs don’t have (e.g. GPS and accelerometer), and it’s all hooked up to the wonderful internet.

Action items: First, we have to get out of the habit of thinking of cell phones as desktops, because the use-cases are completely different; treating them as such is the clearest way to die. Second, with mobile devices becoming more powerful (computationally, Moore’s law), having more storage (cost of storage trending down, Moore’s law), internet connectivity improving (coverage, speed, cost, again, Moore’s law), and throw on top of that added new hardware features (GPS, accelerometer, etc) .. this sounds to me like having richer and more powerful tools in a technologist’s problem solving warchest — so bring on the problems, bring on the opportunity.

I chuckle as I write this because this reminds me of what Stanford University’s president John Hennessy once mentioned in an interview, about his prediction of what would happen in mobile technology down the road:

  1. Information at any where, at any time, on any device
  2. A user experience that works well, independent of what that information is: Be it a Google map, stock listing, web site, email, etc. Making that convenient and natural, and seamless
  3. Imagine walking in a brick and mortar store and wanting to buy a product. I want to look up my phone and do a price comparison on the product and know what people are saying about it. I want to do that in 5 seconds. Today, I have to open a browser, visit a review site, search, etc. (too much work)

The iPhone is clearly one of the pioneers in making that happen, especially with the iPhone app store. I have previously commented on why I think the iPhone app store is very much Apple’s competitive advantage, and as much as I root for Google’s Android, it remains to be seen how the Android incarnations would address the iPhone platform threat.

With mobile carriers having trouble increasing revenues from voice, you betcha they are thinking of every single way to make money from mobile data. I have also previously written a rant about iPhone/AT&T’s data pricing strategy (there’s nothing wrong with the strategy per se, I’m just a price-sensitive geek at heart).

Now’s a good time to be a mobile app developer .. there’s money already being pledged for the BlackBerry platform (US$150 Mil) , Google Android platform (US$10 Mil), and the iPhone platform (US$100 Mil). I can see mobile carriers snapping up these mobile app startups to further bolster their mobile data revenues. Technology IPOs are almost non-existent today, much to a Silicon Valley VC’s annoyance, so exits via acquisition to a mobile operator would make sense for mobile app startups.

I’m passionate about innovation and problem solving with tech, and I can’t wait to see more new applications in mobile given these trends. The question I try to ask myself given these stats above are, “what else is possible today that wasn’t yesterday?” Think it about it.

If I were to wish for anything, I should not wish for wealth and power, but for the passionate sense of the potential, for the eye which, ever young and ardent, sees the possible. Pleasure disappoints, possibility never. And what wine is so sparkling, what so fragrant, what so intoxicating, as possibility!
–Søren Kierkegaard

To go off on a slight tangent, it’s interesting to note that a Filipino mobile operator is the world’s market leader in depending on non-voice revenues. I wonder how much mobile payments contribute to their revenue stream, and how much of that is related to microfinance. If anything, I think that could be a classic BoP example because it would illustrate another example to bust the myth that corporations cannot make a significant and sustainable profit in selling to the poor.

If I was all the other mobile carriers looking to make more $ from mobile data, I’d be watching this Filipino carrier, Smart Communications closely to glean some lessons.

Click here for the full story of the stats above from cellular-news, and regional breakdown of revenues.

And I’ll end this blog post with vivid taste of possibilities for mobile — a very cool Android project in the making called Enkin. Do check it out!

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Posted in geeky, ideas, innovation, microfinance, mobile, problem-opportunity, regular reads, stanford, technology | Comments

Technology and Changing the World: Trends roundup – March 29, 2008

Saturday, March 29th, 2008

This post consists of my “value-added” thoughts on David Kirkpatrick’s article on Fortune here.

Since I love all things technology and passionately believe that it wields the power to change the world, these numbers are just plain interesting to me. I’ve overlayed on the data some general technology trends on Web 2.0 startups, venture capital, microfinance and poverty, all cleverly slapped into one big fat blog post. Why? Because they’re all inter-connected, and I haven’t written anything all this week (been so darn busy lately!) Off we go.

Indonesia:
- 1 in 100 owns a PC
- 1 in 1,000 has broadband Internet
- 63 million cell phone subscribers, representing 27% of the population (of 234 million)
- Annual cell phone subscription growth rate: 36%

India:
- 166 million cell phone users
- Last year’s cell phone subscription growth rate was 84.5%

Switzerland:
- The Swiss have 85.1 PCs per 100 persons, beating the United States at 80.3 PCs per 100 persons

Global PC penetration is 12.9 for every 100 people. Room for growth? You bet. Many of PC owners are obviously in well developed countries, and not poor countries with lots of people. OLPC‘s efforts to reach the billions at the BoP will move the needle here, if they succeed. Not forgetting the “middle” market, more of those who are neither rich nor poor will also buy computers and get on the internet. (Better start loading up on some PC stocks!) But wait, am I sure that the middle-class is not going to get poorer and not buy computers? Well the stats from Hans Rosling’s TED talk show that the overall trend here is that the world is slowly digging itself out of poverty, and I take comfort in that. Actually, read on below as I describe another trend that supports that.

Now, for some cell phone stats:

United States:
- 77.4 subscribers per 100 people
- Everywhere in Europe (except Turkey) exceeds penetration in US. Italy is at a whopping 135.1 cellphone subscribers per 100 persons.
- Hong Kong beats the US in penetration too, at 135.3

The global average is 41.6 per 100 people.

Cellphone usage growth in fast growing markets last year*:
- Peru: 57%
- Vietnam: 114%
- Pakistan: 170%
- Ukraine: 185%

*numbers might be fuzzy, but they show a general trend

What’s also important to note about this upward trend in adoption is that mobile phones were the crucial piece that first enabled the poor in Bangladesh to get out of poverty (see section on Village Phone). Women built business models around it and turned it into a source of income. These days, mobile phones are also playing another role in microfinance: enabling the transfer of money and information over, well, mobile phones! In poor countries, a brick-and-mortar bank branches with ATMs are hard to come by (ditto for computers and broadband), so mobile phones are serving this unmet need, facilitating microfinance and thus helping reduce poverty.

Other interesting stats:
- 1.3 billion of global population connected to the Internet, compound annual growth of 20.3% for past 8 years.
- Internet ad spending of $40 billion is only 6.6% of global total of $605 billion and is growing at 33%. (Ha, I should double down on this little company while I can!)

Data from 2008 Global Internet Snapshot compiled by Imran Khan, senior analyst at JP Morgan. (hmm, can anyone get me access to that full report?)

That’s why medium and big tech companies can weather the unfavorable US economy trend by going abroad. Fruit trees in your backyard not yielding? Then go after the greener pastures outside of your backyard too. It’s called diversifying. That’s the other thing I love about software is that it’s not a physical object–a computer scientist can create value with merely a laptop (and some coffee!) The cost of making that first software copy is the most expensive, then every other subsequent copy ad infinitum is basically free. This is just the nature of information economics, and has obviously served Microsoft very well. Actually, tiny tech startups can do this too — by leveraging the distribution power of this thing they call the internets.
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Posted in business, changing the world, entrepreneurship, microfinance, mobile, passion, poverty, regular reads, startup, technology, things to ponder about | Comments

The missing middle: SME

Saturday, March 22nd, 2008

Food for thought: In rich countries, SME‘s (small and medium enterprises) represent more than 50% of the country’s GDP and 2/3 of the jobs in private sector. This engine for growth that sits between microenterprises and large corporations is clearly missing, a hamper on a poor country’s effort to bail itself out of poverty.

Google’s success is also because they had access to finance and well developed capital markets. SME’s in poor countries lack access to both. Google strives to bring these opportunities available to silicon valley entrepreneurs and take them global. A global silicon valley, imagine that! Silicon valleys that span nations, uniting the world :)

Opportunities are difficult to come by when you just simply don’t have them. It’s like looking for a job when you have no experience, having all your prospective employers say, “show me some experience.” Likewise, this is a catch-22. I have to say, I know this first hand … and I absolutely value opportunity, never taking it for granted. The one thing worse than wasting money is wasting human potential.

This short video clip says it all. The stories are typical. An entrepreneur goes to the local bank, wanting a loan to open a school and educate children. Banks say, “show me 2-3 years of your cash-flow.”

Cash flow?!?!!!
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Posted in changing the world, microfinance, poverty, wokai | Comments

Poverty myths busted by Grameenphone

Saturday, January 12th, 2008

Myth: Government needs to provide economically viable services
What Grameenphone proved: Private companies can provide them

Myth: Government needs to subsidize private companies
What Grameenphone proved: Private companies can help government with taxes

Myth: Poor people are recipients
What Grameenphone proved: The poor are a resource

Myth: The poor are uneducated and can’t do much
What Grameenphone proved: They are eager learners and capable survivors

Myth: Poor countries need aid
What Grameenphone proved: Businesses raise GNP far more than aid

From the a slide at Iqbal Quadir’s TED talk.

Coincidentally, Courtney from Wokai has just posted her thoughts on this CNN article about mobile money transfers taking off in Kenya–where not everyone has a bank account or even a home address. I believe the saying that creativity can’t flourish without constraints is true. In well off countries like the United States, *everyone* has a bank account and home address, so it’s quite natural to see why the average normal person would care much about being able to conduct banking sans a bank account or home address.

Mobile/cellular technology is a great example. What cell phone users are offered here in the US make us look we’re still living in the stone age–when compared to oh say, Japan.

Sometimes having good things in life can be a burden, in the sense that they might block you from seeing other opportunities. Ever felt that way?
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Posted in changing the world, microfinance, mobile, poverty, things to ponder about, wokai | Comments

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