The Dot-Boom that never will, and innovations that say otherwise

I meant to write about this a few months ago.

For a few years now everyone from local startups to the government have been trumpeting the hopes of a dot-com revolution starting in Pakistan. Most of the time it is considered a simple cause-effect relationship between lower bandwidth rates and dot-com success.

I always advocate local startups to think global — be the next YouTube or Ebay or Yahoo. There are some operational hiccups in doing that but those can easily be overcome by connecting to a business-support network in the US, such as ex-pats.

But will a dot-com effort creating local solutions see success? In a word: no. In a few words: not with traditional solutions.

In fact, I would likely label what can happen in Pakistan as a Dot-Puff.

Read the rest of the post for reasons.

What makes for a conducive dot-com culture?

I will list down the (obvious) elements of a successful dot-com culture, then analyse them in Pakistan.

• Near ubiquitous access to high-speed local internet.
• A comprehensive mapping infrastructure.
• A reliable banking infrastructure.
• Consumer Acceptance of a virtual connected community.

Now lets take a look at these.

Near Ubiquitous Access

So what is the demographics of consumer internet users in Pakistan? Out of the 2.5M odd users (out of an estimated 7.26M urban households in PK) how many can actually browse websites such as Ebay and YouTube seamlessly?

Well, according to the last statistics, it was 22,000. That’s 22,000 broadband users in Pakistan, most of whom would be companies. Add to this 2-3000 GPRS users in the country, and that becomes your estimated market size.

Cheapers bandwidth is only half of a solution. In demographics, most of these users are companies, startups, entrepreneurs or net-cafes. Most of the rest are either torrent-fans, or people active in social networks such as IRC or Orkut to transcend house-hold boundaries.

What does it take for someone to successfully keep track of Ebay Auctions? Can someone who just walks into a cyber-cafe or spends 8 hours / day at work near a PC successfully track a 20 hour auction? How many net-cafe visitors or startups would want to track auctions to buy or sell used fur coats?

Comprehensive Mapping Infrastructure

Looking at how the connected culture has exploded in the US, the use of maps has become as much of a basic commodity there as drinking coffee.

As I wrote earlier, the consumer mapping infrastructure available to Pakistan is 3-meter accurate (Google Earth). This is being used by Trakker but is not detailed enough to build a consumer solution. Compare Google Earth’s ISB map with New Delhi’s or Malaysia’s.

Consumer solutions require 1-meter accurate maps which can also map out sidewalks and the smallest of roads.

Viable mapping products also require some order in the way street maps are laid out, so that your database size and maintenance costs are low. Algorithms can guess that house #21 is followed by house #22.

In comparison, a relative once had to go into a housing colony in lahore to pick up a friend, and he took three hours of driving in one housing colony to realize that house#21 was just after house#72. This type of layout would take a long time to put into a GIS database.

Because of this, I think consumer GIS maps should be created using some innovative technique as the eCity project in China show (rather than wait for 1-meter maps to be released by the govt).

Roads are just the first step — you want semantic information of consumer interest in order to have them use that frequently.

Even before that, you need people to want to travel often, and get lost often enough, to want to care about maps at all. If you can spend 3 months in a city and know it inside out then the maps would not become ubiquitous.

Reliable Banking Infrastructure

Also somewhat obvious, the success of dot-com business relies on successful online transactions. We are many years out yet into making this a reality.

First, there is consumer trust, or rather the lack of it. The consumers are right though.

Second, the fact that my ATM machine goes out of order 90% of the time does not help to build that trust. This is ironic since ATM networks have a 99.99999% (7 nines) uptime requirement.

Third, there is trust banks put into consumers, or the lack of it. You can get a credit card, but have to first call the bank to make an online transaction — in fact your card will be blocked until you request to use it? There goes your impulsive dot-com shopping.

Fourth, the State Bank reiterated that it will reserve all rights to approve e-transactions across the country. As far as I understand, no one else can get approval to offer e-transaction services.

What are the innovations to get past these issues? You have companies attempting to create mobile-to-mobile transaction services, there is Ammana attempting to be a local PayPal. There are also opportunities and ideas for Carrierss to offer Cash-on-delivery (CoD) services.

Most Innovative are the people who are understanding local-market dynamics. Beliscity, BazaarWalla, and other handful of startups already offer delivery-to-home and cash-on-delivery. No Credit Cards, and no banks. Just pay in cash when you get the goods.

Consumer Acceptance

Here is where we all fall down, and this is perhaps the one point every dot-com entrprenuers fails to understand.

The driving force behind the success of internet businesses has been casual use by everyday people.

I call these people Joes (from the ‘average… ‘ fame). Ebay, YouTube, MySpace, Orkut, Google Groups, Google Earth, Wikipedia have not been successful because of effectively targetting a specific market. They have effectively targetted products built for Joes.

No dot-com company can be successful unless it is used consistently and properly. By that I mean moving beyong the IRC or Orkut types and being used by people who actually benefit from the online service.

No dot-com company will be succesful until Joes use it. We need more homemakers, youth, parents, professionals, even grandfathers to use websites to actually benefit them, not simply as an information resource.

Ofcourse, newer generatiosn will be quicker to adopt a connected culture, especially when the ‘modern’ (lack of another word) people have ‘modern’ kids — that family will be more likely to adopt a dot-com product. However, that is a good 15 years away.

This is the one point most dot-com startups miss.

We forget the fact that most of the demographcis we want for the dot-com to be successful does not care to learn how to use MS Windows.

We forget that this is first an ergonomics and user-experience problem. Most people (including myself sometimes) do not care to know how or why they should use a mouse and keyboard, and why they need to ‘point-and-click’ on ‘links’ in order to ‘browse forward’.

In business terms, For Consumer ROI, the value provided by the product must be greater than (1) The total pain experienced by the person without the product and (2) the total pain experienced in adopting and learning how to use the product.

Point#2 above is a very high cost for Pakistan, and most dot-com startups do nothing to increase their own value accordingly.

Solutions?

I dont just want to rant in a post. I think a simple set of guidelines can help align the product design better. Call them the guidelines for being a part of the Dot-Puff.

These guidelines come out of our consulting practice.

• Understand local market dynamics. Pakistanis often like to do things in a funny way, but there is actually more wisdom there that you might give credit for. Pakistanis have a clear sense of what type of ergonomics, user experience, and behaviors will be most efficient, and it would be wise to study it analytically before creating the dot-puff.
• Make Meaning. I quote this from a presentation, but it is very important. The value you create must be immediately relevant. Think beyond websites — think of the web as a platform to instantly bring together the right people, for the right cause, to create the right value.
• Innovate. Management innovation can break through any complication. Hesitate to innovate on technology, hesitate to innovate on tried-and-proven revenue models. But please go wild when it comes to operations and product positioning. Reduce your costs ; Exponentially Expand your userbase.

If you spend the time to understand Pakistani people, you will notice that people still put a lot of trust in Banks. You will be able to come up with a payment solution built around banks that is accepted immediately by people.

If you have consumer orientation, you will be able to find create value, and then figure out what technology is needed to create the product.

Please, I implore you, do not dive into the product first as Dawn’s ePaper and countless others are doing in PK.