Democracy For Nepal

Sunday, August 03, 2014

Angel Investing

English: Diagram of the typical financing cycle for a startup company. (Photo credit: Wikipedia)

Angel investing is a beautiful thing. The person who put the first 100K into Google saw it become a billion and a half in eight years. You couldn’t win a lottery and see that kind of money. Peter Thiel put 500K into Facebook for 5% in its first Silicon Valley round and I believe second round overall and saw it become almost two billion dollars in six years, I think. Granted companies like Google and Facebook are rare.

Predictably there are fewer multi billion dollar companies than there are hundred million dollar companies. And there are far more companies that get bought in the tens of millions. A client of mine turned around and sold his app for a cool million. He had total ownership and so got all the money. That transaction was not covered by any of the tech blogs. There are far too many of those to hit the headlines.

A million might be small compared to a billion, but it is no small sum, objectively speaking. Considering a million could give 100K in annual return without getting used up, you could retire if you had a million dollars. I think it is very possible to live off of 100K a year.

Say you invested 50K in a company valued at a million for a five per cent stake, and the company had a 50 million dollar exit four years later, your 50K will have become 2500K, or two and a half million dollars. That would not be a bad return.

Post-IPO it is hard for a company to show wild growth like from inception to the IPO. Most VCs will cash out soon after an IPO for that reason. They know the wild growth is in the early stages.

Let me ask you a trick question. If you had 50K to invest, and you had the option to get 5% or 50% of a tech startup, which would you rather go for? Most people make the wrong choice and say they would like 50% of the company. Getting 5% is better. At 50% you will likely kill the hen that lays the golden egg. You will scare away round two investors. You will not leave much room for the company to be able to attract top talent. Chances are you will also have squeezed the founders of the company. Not being able to raise round two money, the company likely will die. And you will have lost your 50K. Because 50% of zero is? Zero.

A healthy tech startup is one that has plenty of equity for the founders of the company, for various rounds of investors, and for the entire team as it might build up over years.

IPOs are rare, but then it is a good thing that many other forms of exits are possible. Getting bought is a decent enough exit. Most tech startup founders dream about getting bought, and many do get bought.

It would be hard, probably impossible, to raise two million dollars for a tech startup in the New York City Nepali community. But a startup could possibly raise 100K or 200K. If the idea is great, and if the work with that initial seed fund is great, that startup could then go out into the larger market of professional investors and hope to raise two million dollars. A New York Nepali community that can not produce millionaire entrepreneur after millionaire entrepreneur is in no position to lecture the homeland Nepal on economic development issues. Practice before you preach.

Patel Brothers is likely the largest business in Jackson Heights. On an express train Jackson Heights is but 20 minutes from Times Square. As in, you are very much in the city when you are in Jackson Heights. And the place has a great selection of bars and restaurants. Jackson Heights is the only place in the city with garden apartment complexes. I think it would be possible for tech startups based out of Jackson Heights to surpass Patel Brothers - which is an old economy company - in a few swift years. Silicon Valley used to be apple orchards.

Angel investing is when you have the money - maybe 10K, maybe 20K, maybe 50K - but not the ideas, or the time, or the expertise to work on a tech startup. A lot of old economy professionals in the local Nepali community could afford to angel invest. Actually, I don’t think they can afford to not invest. You should harbor the fear of missing out.

The democracy movement is over. The Madhesi movement is over. Now for the next 20 years Nepal has no other business than rapid economic development. The local Nepali community will have to prove itself locally before it can hope for a significant involvement back home. Entrepreneurship is it, and tech entrepreneurship is the crown jewel.

Friday, August 01, 2014

Kanak Mani Dixit: Flawed On Federalism

king birendra.JPG (Photo credit: lieber_matthew)

Kanak Mani Dixit has come out swinging - not the first time - for what can aptly be called the King Birendra Fake Federalism in a Kantipur article a few days ago. Basically he is proposing about five North-South states for a federal Nepal. I wish to make the point that such a proposition is fundamentally flawed. It is akin to foisting King Gyanendra as the first president of Nepal. Good thing we did not go for that.

Federalism and Tarai-Madhes

The Madhesi people have been historically disadvantaged, both through economic marginalisation and their exclusion from national identity, which developed historically as hill-centric. Even as the Madhesi people have succeeded in demanding their place on the table as equal citizens following the Madhes Aandolan of early 2007, we are creating conditions where they will lose access to the resources of the hills, to which they have a right as citizens. ..... The argument of the ‘Madhesbadi’ leaders is that only separate provinces can extricate Madhesis from Kathmandu’s (upper caste) hill domination. One or two Tarai-based provinces would allow Madhesis to run their own affairs while wielding more influence on the national stage. ........ This argument is certainly worth pondering but research shows that the closer you go to the Indian border, southward from the East-West Highway, the weaker the local economy and the poorer the people. The prosperity seems to flow all the way south only when there are arteries leading to the Indian border, as in Biratnagar, Bhairahawa and Birganj. This does seem to indicate a need for hill-plain integration, especially at a time when north-south highways are finally connecting formerly neglected areas of the Tarai. ..... With the largest volume and density of poverty in the country to be found in Madhesi-inhabited areas, it is vital that federalism holds out the promise of both political and economic emancipation to Madhesis. .... The matter is also complicated by the refusal of all Tharu and plains Muslims to accept the ‘Madhesi’ identity, and by the presence of a large population of the Pahadiya in the plains. ....... While there is agriculture in the Tarai, a large human resources base and great possibilities for industrialisation and processing, these alone will not deliver sufficiently improved livelihoods for the massive number of the Tarai poor. We must ensure that the promised bounty of the hills and mountains—through agro-forestry, herbs, tourism, hydropower, service industries, stored water for irrigation, entrepot trade (vis-à-vis China/Tibet), etc—is available to the people of the plains as a right. ...... some Kathmandu politicians may be harbouring visions of achieving the per capita wealth of Bhutan, which has mountains but almost no Tarai. ...... A prosperous Tarai is good for the plains people of Nepal and will also provide an economic boost to the highly populated and marginalised border regions of Bihar and Uttar Pradesh.

Federalism Does Not Break Up The Country

The opposite is true. Federalism strengthens national identity and unity. Hitherto marginalized people - in Nepal's case 80% of the population - feel a sense of belonging.

The Central Government Does Not Go Away

The MPs from the two Madhesh states will still assemble in Kathmandu. They will still become Prime Ministers and ministers. They will still vote for and against issues that impact the entire country. All major highways will be under the jurisdiction of the central government. All big (and by big I mean anything bigger than 10 MW) hydro projects will still - or should - come under the jurisdiction of the central government. People from the Terai will have equal claim to the money the central government might make from the big hydro projects.

The Kanak Mani Dixit mindset fits my definition of Bahunbad. It is just fine for someone to be born a Bahun, but Bahunbad is an evil ideology, a worldview, that puts everyone else down. In this article Kanak Mani Dixit comes across as downright patronizing. The tone of the article is disrespectful. It is as if he is saying to the Madhesis, you don't know what's best for you, let me tell you what's best for you.

The big Bahun conspiracy right now is to make sure no ministries are eliminated or downsized, that the Nepal Police stays the way it is right now, that the Nepal Army remains intact in its current form. Dividing Nepal into five North-South states would do precisely that.

It is known that in a federal setup policing is a state function, not a central government function. When you create two states in the Terai, you basically are going to have to create new police forces in those states that will be primarily Madhesi. And people like Kanak Mani Dixit detest that idea.

Little has changed since the Madhesi Movement of 2007, primarily because the rulers in Kathmandu sign agreements with agitating Madhesis that they don't then adhere to.

Creating two states in the Terai is going to speed up the blacktopping of the Hulaki Rajmarga, the Postal Highway, and that highway is going to form the backbone of the Terai's economic transformation. Madhesis attaining equality in Nepal kills the false nationalism that is based on an irrational distrust and hatred of India. That will finally bring forth Nepal-India cooperation in the hydro sector, and that is what will finally eliminate poverty in Nepal.

The November 2013 elections were not an anti-federalism mandate any more than Kamal Thapa doing well was a pro-monarchy wave. This was an anti-incumbency wave against the Madhesis and the Maoists. The NC and the UML will also face that anti-incumbency wave when the next national elections are held. Neither the NC nor the UML faced the people saying they were for North-South states.

Thursday, July 31, 2014

मधेसी पार्टी एकीकरण: पार्टी अध्यक्छ के लिए चुनाव हो

Description unavailable (Photo credit: lecercle)

छे महिने के प्रयासोके बाद भी अभी तक मधेसी पार्टीयोकी एकीकरण नहीं हुई है। पार्टी अध्यक्छ कौन बनेगा इस बात को लेकर एकीकरणकी गाड़ी किंचर में फँस गई है, ऐसे सन्देश आ रहे हैं। हृदयेश त्रिपाठी और राजेन्द्र महतो कह रहे हैं कि हम तो साधारण सदस्य बन्ने को तैयार है, हमें दोष मत दो। महंथ ठाकुर और उपेन्द्र यादव की ओर उंगली दिखा रहे हैं।

पार्टी अध्यक्छ तो सिर्फ पार्टी कन्वेंशन चुन सकती है। 10-20 मधेसी नेता के मानने से भला कब कौन पार्टी अध्यक्छ बनने लगा? एक मधेश एक प्रदेश तो गई। बन्दर रोटी खा गया। एक मधेश एक प्रदेश पच्चीस मधेसी पार्टी का नारा मेल नहीं खाता।

अब एक मधेस दो प्रदेश एक मधेसी पार्टी के नारे पर आइए।

MJF(D) 2,66,276
MJF, N 2,12,733
TMLP 1,80,435
SP 1,33,521
NMSP 79,264
Terai Madhesh Sadbhavana Party 64,299
Tharuhat Terai Party Nepal 62,889
Dalit Janajati Party 47,696
Nepali Janata Dal 33,186
MJF(R) 32,004
Federal Sadbhavana Party 26,463
Madhesh Samta Party Nepal 23,960
Federal Democratic National Front (Tharuhat) 21,519
Tharuhat Tarai Party Nepal 13,811

सिर्फ तीन पार्टीयोको एक करना है ऐसी बात नहीं है। मैं तो १४ पार्टीयोको गिन रहा हुँ। उन सबको एक करना है। अगर ठाकुर और यादव दोनों को अध्यक्छ बनना है तो बहुत अच्छी बात है। एकीकृत पार्टी का कन्वेंशन हो और उसमें दोनों उम्मेदवारी दे। उस होड़बाजी में दोनों कमसे कम जमके मेम्बरशिप ड्राइव तो करवाएंगे। उससे पार्टीको फायदा होगी।

Sunday, July 27, 2014

Silicon

Larry Ellison on stage. (Photo credit: Wikipedia)

The number one destination for tech startups on the planet today is San Francisco. No, it is not Silicon Valley which continues to be home to the top tech companies in the world like Google, Apple and Facebook. Why did the center of gravity shift? Because the engineers wanted the city lifestyle. Most engineers who work for companies like Google in Silicon Valley tend to live in San Francisco.

Guess which city really has the city lifestyle? New York.

Boston used to be number two after Silicon Valley. Not any more. New York City has wrested that number two spot. Although Boston continues to be strong. Austin and Seattle are also strong spots.

But the Silicon Valley ecosystem is to be envied. One generation of successful entrepreneurs invest their money and wisdom into the next generation of entrepreneurs. That cycle goes on. You have to have several generations of successful companies to end up with the ecosystem that Silicon Valley has.

London and Berlin are also coming along. Bangalore in India has a decently rich density of developers. Chile has experimented with replicating the Silicon Valley thing. Israel has a vibrant tech ecosystem.

Geography matters less and less. India’s answer to Amazon - Flipkart - just raised a billion dollars. They are not in the Valley, or even in the US.

In New York City the primary tech action is in the Flatiron District. There is also a pocket in Dumbo. But Long Island City also has potential, I think. When Cornell establishes its tech campus on Roosevelt Island (New York City’s own “Stanford”) LIC will be a major attraction. Rent is substantially cheaper just because you crossed the river.

Culture is supreme. Silicon Valley’s strongest point might be that failure is celebrated there. Risk taking is probably the top quality in an entrepreneur. Failing is an essential part of the process. If you did not fail, that means you did not try, you did not take the plunge.

The big venture capitalists in the Valley raise their big money in New York City because this is where the pension funds and the like are.

FourSquare, one of the most celebrated tech startup stories to come out of NYC, has an office in San Francisco because they can’t afford not to hire some of the talented developers there who don’t want to live anywhere else. On the other hand, by now Google has a major presence in New York City. They just so happen to own the largest building in the city. It is because Google makes its money from ads. And guess where Madison Avenue is! But it is beyond that. Google has a major engineering presence in the city, as does Facebook, as does Twitter.

Silicon Valley is an attitude, it is a culture. It is about moonshots, as Larry Page might put it.

I routinely go to numerous tech events in the city. If someone makes the mistake of showing up in a suit, he immediately gets labeled a “suit.” I think there is something to be said of casual clothing, but you can not capture the essence of Silicon Valley in jeans or in a hoodie. Larry Ellison, probably the most colorful character to emerge in the Valley, has been wearing suits forever, that is his way of giving the finger to those who wear the casual stuff like they were uniform. You wear what you are comfortable wearing. That could be jeans and a turtleneck, the Steve Jobs way, or a suit as worn by his best friend Larry Ellison.

Software is eating the world, Marc Andreessen, the father of the Netscape browser that launched the web era, famously said in a Wall Street Journal article. There is so much still left to do that I expect the feast to go on for decades and longer. That is my way of saying one Silicon Valley is not enough, if it ever was. My answer to the famous question if Silicon Valley can be replicated is, yes it can be replicated. New York City is as good a place as any to build a tech startup.

Angel investing is a major aspect of a successful tech ecosystem. You seek some basic funding from friends and family. You need a basic prototype to be able to take a stab from the professional angel investors. And then there is crowdfunding. I see that as a majorly positive trend.

I think doing well as an entrepreneur in the New York City environment is a necessary precondition to being able to contribute to Nepal’s economic revolution. Brain drain is a pre-Internet, pre-globalization term. Today the work is so much more interlinked that you can be many places and contribute many places. There are global solutions to many local problems in Nepal.

Sunday, July 20, 2014

The Pinterest Story

English: Red Pinterest logo (Photo credit: Wikipedia)

Pinterest came out of nowhere to overtake Twitter at a record speed. It became the fastest growing website in history. And to think it was founded by a non techie, that it was rejected by pretty much every venture capitalist in Silicon Valley, that it had a slow start, that its earliest users were in Iowa (Iowa?), that it is what it is today.

Silbermann got a job in Washington DC as a consultant. He was basically putting together spreadsheets. His girlfriend tired of his talking about wanting to do a tech startup. Finally she said, either we move to Silicon Valley, and you do it, or you stop talking about it. I will support you, she said. So they moved. Not only she gave the big nudge, but also the big idea. The image centered website was her idea. The pinboard was her idea.

But it was no easy take off. Silbermann claimed he had the WiFi password to pretty much every cafe in the Valley. He had approached every known VC around there. It was tough. Today Pinterest feels so obvious. It has the feeling of having hit the bull’s eye.

Early on the company was using an apartment because it could not afford office space. At one point Silbermann tried to sell off the company at what would today be considered a weirdly low price. But he failed to sell.

After launch, he reached out to every friend he had in the Valley hoping they would become avid users, but noone seemed to “get it.” He had to make do with his early users in Iowa. For nine months the user base was really, really low. He personally wrote to his first 5,000 users.

But those using the site were really, really engaged. That deep engagement was a good sign. Also, although the user base early on was small, it seemed to double every month. That is why there was a spike after nine months.

After Pinterest had already established itself as a successful company, Silbermann said if he were to now apply to work at the company, he probably would not be hired. That was a modest thing to say. But maybe not. Maybe he had a point. Hire people smarter than you is a mantra many successful tech entrepreneurs seem to follow.

Pinterest by now is the stuff of legend. Its success is a reward to out of the box thinking. But you also have to note, Silbermann did not invent the pinboard. He simply took it to the web. All old industries similarly are waiting virtualization. Looked at that way, it feels like recycling, rather than a bolt of genius. But the success is there for all to see.

I am a Third World Guy. A million dollars is a lot of money to me, but a billion is more. Pinterest hit billions in valuation right before my eyes. For that matter, I met the two FourSquare founders before they had raised any money. FourSquare has also approached a billion dollars in valuation. It feels to me like it happened right before my eyes. I met another early stage team a few years ago that sold for $29 million last year. It feels like it happened fast.

The web is the wild, wild west today. Software will keep eating the world, to echo the Netscape founder. There are enormous inefficiencies everywhere you look around. There is so much work to do.

Pinterest also made a major blind spot spotting in that the site was an early success among women. There was something about the image focus, and pinboarding that a lot of women seemed to have found really appealing.

I have to admit, I have still not learned to use Pinterest. I mean, I have had an account for a while. But it is more like a flag holder. I have still not figured out how to make Pinterest part of my daily life, like Twitter is. I guess it takes some practice. Maybe there are blog posts out there I need to read on how to make the best use of Pinterest.

Some women have called Pinterest their Google. It is how they find stuff on the web. Pinterest has been sending more traffic to a ton of websites than Facebook. It is a search engine to a lot of people, apparently. That is as good as it gets on the web.

Did you google it? Did you pin it? Both those questions are grammatically correct.

Thursday, July 17, 2014

What Is Madheshvad Or Madhesism?

English: A sketch of Mr. Amitab Bachchan (Photo credit: Wikipedia)

English: Amitabh Bachchan photographed by Studio Harcourt Paris Français : Amitabh Bachchan photographié par Studio Harcourt Paris Harcourt Paris (Photo credit: Wikipedia)

CK Lal, I have long maintained, is a world class columnist. I was just reading a thought provoking article by him in Madheshvani. He is talking about Madheshvad. Does it even exist? What is it? He starts by relaying a story of Upendra Yadav claiming at a public function that it does not exist.

Upendra Yadav was established in Nepali politics through the first Madhesi Kranti. For him to deny the existence of Madheshvad is odd. Or plain ignorant.

What is the Madhesh? It is the land gifted by the British to the then Nepali rulers. Otherwise the current Madhesh would have been part of India.

Who are the Madhesis? The Madhesis are the Indian origin people living in the Madhesh. It is a cultural, and not a geographical term. Because, by now, almost 40% of the Teraiwasis are Pahadi. Pahadi is also a cultural term. That includes those who speak Nepali as their first language. That also denotes the Janajatis from the Hills who are now settled in the Terai. The Madhesis speak Maithili (my first language), Bhojpuri, Awadhi (Amitabh Bachchan's first language), Tharu, Urdu, Hindi, Marwadi and so on. The Tharus are very much Madhesi in terms of similarities in language, culture, traditions, and political marginalization. As are the Muslims in the Terai. They are Madhesi.

What is Madheshvad? Madhesvad is the name of the political struggle that hopes to give proportionate representation to the Madhesis in the Nepali state structure. Once that goal is achieved, Madhesvad will linger on as a cultural term. It will mean enriching the Madhesi cultures. Lakhs of Madhesis have been denied citizenship cards. Making sure they get those cards is the most important goal of Madheshvad. The second most important goal is federalism. No to North-South states. Yes to East-West states. No to adding Kailali, Kanchanpur, Jhapa and Morang to the hill states. Yes to keeping all Terai districts in the Terai states. Yes to eliminating some national level ministries. Yes to downsizing the Nepal Army, which is basically a Pahadi Army. Yes to reservations for Madhesis. Yes to Madhesi police forces in the Madhesi states.

So, yes, Madhesvad does exist. That Upendra Yadav says it doesn't shows he was just surfing the wave in 2007. He did not create it.

But Madheshvad is also to do with economic development. Actually, I'd like to argue Madheshvad as an ideology is primarily to do with development. The Hulaki Rajmarg is the backbone of the Madheshvad. Taking the per capita income among Madhesis to global levels is the most important, and the ultimate goal of Madheshvad.