Poor Economics
I’ve read a decent number of development books, like The Bottom Billion, The Elusive Quest for Growth, and probably 3-4 others. I just finished Poor Economics by Abhijit Banerjee and Esther Duflo. It was by far the most interesting, well-written, and, most notably, information packed development book I have read.
Banerjee and Duflo take us through stories of their travels and compile the results of endless research studies (some of their own but the vast majority conducted by others) to synthesize, explore, present, and ultimately argue for various viewpoints on education policy, corruption policy, health policy, economic policy, and a few others. The depth of analysis reminded me of a peer reviewed research paper but the style of writing and ease of understanding reminded me of Freakonomics.
Pick up this book to learn whether free, susidized, or fully priced bednets are higher utilized—and, how their order of introduction affects the utilization rate. Pick up this book to learn why some of the poorest use moneylenders that may charge a 4-5% interest rate per day rather than a microfinance organization that may charge 20% a month. Also pick up this book to learn why nurses don’t show up to work in certain parts of India, how corrupt policies have been good, bad, and everything in between, how witchcraft may be similar to yoga, and probably 100 other interesting stories, relevant topics, and insightful thoughts and tidbits.
It’s a must read if you are at all interested in the challenges of developing and underdeveloped countries.
Snapdeal & Bessemer
I’m thrilled to announce Bessemer’s investment in Snapdeal. We led the Series C in this innovative, rapidly growing company that is not merely a Groupon clone, but a company that is trying to change e-commerce in India through the best deals available. I was most impressed by the entrepreneurs behind the company – Kunal Bahl and Rohit Bansal – who are wildly creative, very ambitious, but also highly analytical. They have an ability to both be highly detail oriented yet able to see the larger picture. And equally as important, they are adamant about changing the business culture in India to be more philanthropic.
I, and the rest of the BVP India internet team (Rob Chandra & Abhijeet Muzumdar), can’t wait to help Kunal, Rohit, and the Snapdeal team build a business that we hope can revolutionize commerce online in India.
The Himalayan Water Irony
Clean water is tough to come by throughout the developing world. Sometimes bottled water isn’t even safe; the seals may have been tampered with and the water may not be any different than what comes out of the tap. Boiling water is the only fool proof way to ensure water clear of parasites, bacteria, and chemicals—and boiling water isn’t very convenient. The sheer number of diseases and microbial agents that make up waterborne diseases is staggering. In many European countries, beer is cheaper than water. The decrease in the amount of readily available clean water – and, thereby, the increase in amount of contaminated water – is a trend that makes me worry for the future stability of nations with exploding populations.
I found the following label on the Himalayan mineral water bottle—a TATA product—to be both facetious and foreboding.
I look back on life – it’s funny how things turn out.
You, the creator of beeping sirens and honking cars, yearn for the solitude of the mountains. You, a connoisseur of fast food, now gaze at water that took years to gather natural minerals as it trickled down from the Himalayas to within your reach. And I, some of the purest water in the world, stand here, trapped in a bottle. Come, enjoy the irony.
It’s an irony that will only become more pronounced as the beeping sirens increase and the trickling decreases.
The Real India
It’s impossible to escape the slums in India. The Bessemer office in Nariman Point overlooks slums. The apartment I’m staying at in Worli overlooks slums. Even Mukesh Ambani’s mansion overlooks slums.
But that’s a microcosm of the real India. The significant majority – in fact, the overwhelming majority – are not much better off.
Here’s a graph of the evolving demographics of India compiled from a number of data sets. “Poor” means a family earning less than 1 lakh rupees a year (a little over $2000). “Middle Class” means a family earning between 1 lakh rupees and 10 lakh rupees a year (between $2000 and $20000). Upper class is above 10 lakh rupees a year, or $20000+.
While the positive trend is the number of people going from “poor” to “middle class” by 2025, the sheer magnitude of people in the “poor” class is staggering, saddening, and maddening. That’s the real India. And as investors, I hope we remember to not only strive to do well for ourselves, but to do good with our capital for the real India and the real world.
India Internet & Mobile
I spent the past week in New York City at Bessemer’s All Hands meetings. On Wednesday and Thursday, it was just the India team, of which I am also a part.
Tomorrow, I fly to Mumbai. I’ll be in India for two months leading the development of our India internet and mobile investment practice. India has 81 million internet users, a number that is predicted to triple by 2015, and has the fourth largest internet population in the world. India also has over 800 million mobile phone subscribers, meaning that more people have access to a mobile phone than a flushing toilet.
BVP will continue to invest in sectors in which we’ve had considerable success in India–infrastructure, cleantech, financial services, etc–but we’re also going to going to ramp up our efforts on the web and mobile front. We’re going to tap into some of the US internet expertise from our investments in Yelp, LinkedIn, Quidsi, Skype, and Cornerstone to give entrepreneurs a wealth of resources to help them grow their companies.
Let me know if you hear of some exciting internet or mobile entrepreneurs in India who are in the process of, or want to build great businesses. We can’t wait to help.
Thank You, Stanford
As I submitted my last final exam of my Stanford career, I took a moment to reflect on my time at Stanford.
I came in with a view, a voice, and a dream. I’m leaving with a view, a voice, and a dream. The difference is the magnitude, depth, sophistication, and (hopefully) unbounded potential of that view, voice and dream.
While I learned a fair bit from the classroom, my Stanford experience was made outside the classroom. The stories, the perspectives, and the nuances in people’s lives. The way people analyze, persuade, and persist. The reasons people do things, the reasons people don’t, and the reasons people want to. I’ve come out not with a knowledge of the solutions, but with a knowledge of the problems and challenges that we as a society face—and a better understanding for many of their reasons.
But perhaps the most important thing I learned—or, should I say, experienced—was not what to think. I learned how to think. I learned how to learn.
Thank you, Stanford, for one of the most profound experiences of my life.
Notes from Thomas Friedman: A View from Tahrir Square & Energy Policy
Thomas Friedman delivered an eloquent and insightful address on both energy policy and the uprisings in the Middle East. He happened to be in Cairo nine days before the uprisings in Tahrir Square and witnessed what he called “the most fascinating story he has covered in 20 years”. Here are some of my most interesting takeaways from his talk:
The Middle East Revolutions
- The tiger (i.e. the spririt, the demands, and desires for freedom by those in the Middle East) has been let out of its cage. The tiger is going to spread and the tiger is not going back into its cage.
- The people who led the revolution—and the broader social class—are smart, but disorganized. The most important element will be whether they can rise out of the chaos into a cohesive, middle, centrist party.
- Before, the Middle East was wholesale with countries having to only come to peace with leaders. Now, it’s retail, with countries (most notably Israel) having to come to terms with 80,000,000 Egyptians.
- Our lives are digital, but politics is still analog. It’s still in your face. The Egyptian riots may have been spawned by Twitter and Facebook, but they were effective because a million people stood in Tahrir Square. Blogging can be like launching a mortar…into outer space!
Energy Policy
- The two most brutal and uncontrollable forces on the planet are Mother Nature and the market. By ignoring the deficit and budget as well as by ignoring energy policy, we are tempting fate.
- Higher food prices lead to higher instability which leads to higher oil prices. This leads to higher food prices, which leads to higher instability, which leads to higher oil prices. And on and on and on. What if this could be higher prices lead to higher standards which leads to more investment in innovation?
- Before 9/11, the gasoline prices were at $1.69. Now, they are around $4.69. We could have leveled a tax on gasoline then and used the revenue to invest in R&D, or we could give Middle East dictators a 150% raise. The price uncertainty also drives away investors who have trouble investing when prices are low.
TEDxTeen Talk is Live
I’m so grateful to have been given the opportunity to share a message at TEDxTeen. My talk on overcoming innovator’s myopia just went live.
“Is it about solving the problems right in front of you? What if instead of picking up all the crap in the world, you could fly over it? How can we do this? Let’s find out.” – Touré, the TEDxTeen host.
Hope you enjoy!
Advising a Potential Thiel 20 Under 20 Fellow
The past few days have been full of debate around the Thiel 20 Under 20 fellowship, which encourages 20 students to stop out of school and build the next great tech and science companies, and the broader debate about education, and especially entrepreneurial education, in the USA. It started with the TechCrunch piece on Peter Thiel’s view that the real bubble is in education. Then Vivek Wadwa replied with Friends Don’t Let Friends Take Education Advice from Thiel. Then, Dale Stephens, a Thiel finalist himself, replied with his own defense.
As someone who considers 3 of those who received the fellowship as close friends (and, maybe, family!) I’ve been asked directly for advice on whether to accept it. While I don’t know the right answer for each person, I want to make sure I’m helping them think about the right questions to ask themselves and others so they can ultimately decide on their own.
Here are some of the criteria, perspectives, and questions I’ve been thinking about:
- What are you (planning on) majoring in?
If the answer is something fuzzy (i.e. non-technical), then it can probably be learned in other settings, in which case the most important parts of the educational experience are likely the connections, experiences, late-night chats, etc. If the answer is something technical (likely computer science, EE, ME, or environmental engineering), those skills are tougher to learn on their own, but can be done.
- How much schooling is necessary to achieve what you want to get out of it?
Is it one year? Two years? If you are two years in, and you went to the school for connections, experiences, network, etc., is the marginal benefit of another year at the same school greater or less than Peter Thiel’s network? The answer is pretty obvious here.
- If your field is something much more technical and capital intensive, how will you manage that?
Where will you get the capital? Will they help you? Is the Thiel network just as strong in cleantech (if applicable) as consumer internet?
- If you’re sitting in your class at Stanford as a junior having turned down the Thiel Fellowship, will you be kicking yourself?
Yeah, while on Facebook.
- Will this opportunity come again?
Maybe, but probably not for you.
- What’s the upside in the Thiel case?
The Forbes 400 and a real contribution to society.
- What’s the downside in the Thiel case?
Going back to school to finish 1-2 years likely when your current school friends have already all graduated.
- What is the expected value of the fellowship?
An unbelievable experience that cannot be replicated. Peter Thiel is not one to let something like this, which has been hyped and criticized so much in the popular press, fail.
My Takeaway: I’m clearly bullish on the fellowship and think it is a no-brainer for my internet friends. But I do wonder what sorts of guidance will be provided to those who have more technical ideas that may not be as conducive to rapid failure & pivoting during a 2 year stint and would require more capital and technical expertise.
What other criteria would you add if you had to advise the fellowship winners?
Learning from the Past
I wish I had studied more history. Not necessarily as a degree at Stanford, but had devoured all solid books I could find on the history of development, economics, business, and finance. The World Is Flat times 100. After a meeting yesterday, I’m going to make this a point going forward.
I met with my undergraduate advisor, Michael Boskin, former Chairman of the Council of Economic Advisors under President Bush Sr. I was mesmerized by his ability to connect what was happening today with the past five recessions and across countries, including their differences and similarities. Then, within a matter of minutes, he was able to talk about the shifting of the Democratic and Republican parties over the last 50 years, after which he told the story of the development and creation of the phonograph, and why it was such a revolutionary technology compared to its counterparts. Super comprehensive and all in 15 minutes.
I am always blown away by his intelligence and wisdom. His intelligence is undeniably derived from a combination of his academic work, his experiences, and his interactions. But I would argue that his wisdom is brought about through a meticulous study of history. Not just from a theoretical perspective, but from a careful analysis of the choices, actions, and then subsequent ramifications policymakers, CEOs, and economists made/did/had in various situations.
He has made it a point to understand not just what decisions were made, but why certain decisions were made and the tradeoffs between them. In his ability to understand the past, he has the results of a warchest of experiments already tabulated when a similar situation arises in the present. His analysis of history is remarkably practical. It’s probably why he sits on the board of three of the most powerful companies in the world: ExxonMobil, Vodafone, and Oracle.
I wish history education in America’s schools could take a page out of the way Dr. Boskin has learned it.
Innovations & Inspirations 