Sunday, December 27, 2009

Is Entrepreneurship a Cultural trait?

A friend of mine sent this New York Times article a few days back.
The article discussed the lack of entrepreneurship (it took me two minutes to type that) culture in India. It discusses the lack of venture funds and angel investors.
It starts out by saying:
Innovation is hard to measure, but academics who study it say India has the potential to create trend-setting products but is not yet doing so. Indians are granted about half as many American patents for inventions as people and firms in Israel and China. The country’s corporate and government spending on research and development significantly lags behind that of other nations. And venture capitalists finance far fewer companies here than they do elsewhere.

More later:
Mr. Raghavan and others say India is held back by a financial system that is reluctant to invest in unproven ideas, an education system that emphasizes rote learning over problem solving, and a culture that looks down on failure and unconventional career choices.

I found the article informative. But the friend who spoke to me about it seemed to focus on the last line above - the cultural angle. In fact, I think most people who read that article would find the cultural angle more easier to understand than the financial or educational.
Most of the people who talk about innovation in public also seem to prefer trying to influence this "cultural" factor. There are conferences and seminars focussed exclusively on innovation and the need for inspiration for innovators.
Unsurprisingly, this coincides with a slew of management books about innovation in the corporation.
The narrative seems to run as follows: India has a culture that looks down on investing in new products. Failure is not an option. Therefore Indians do not start companies that create new products. To change this, we have to motivate Indian future entrepreneurs with a lot of seminars and conferences which charge a minimum of Rs.1000 only.
I am completely prepared to believe that entrepreneurship is low in India and that India is not a source of many patents. What I do NOT trust is that there is a cultural angle to it.That is, I believe that there are perfectly rational economic reasons for Indians not to get involved in creating products - I don't think you have to bring culture into the mix.
I also believe (cynical bastard that I am) that the only reason culture is touted as a prime factor is this: that is the only way a lot of people can easily make money, offering to change the culture. If we were to go after the root causes, we may be required to fight the battle on the political, policy making front. That is truly in public interest and there is not a lot of money to make in that direction.

The Cult of the Entrepreneur

I think entrepreneurship is being elevated as something equivalent to superstardom by management gurus. To start a company, and to create a product - the decision is usually made based on evaluating marginal benefits, not based on good intentions.
Let me take the case of the software industry:
(By the way, The Indian Patent Act does not apply to software! That is, you cannot patent a software algorithm in India. Software is protected by copyright - not by Patent Law in India. )
If you start a software company in India, you have two choices - start a company that creates an innovative product (remember, you cannot patent software innovations in India); or perform coding services for American, Japanese or European clients. Which option would you choose?
Purely going by marginal benefits, I would prefer a services company unless I am rich already. This is because with no outside investment, getting a software services company up and running is easy in India. Not only that, if I had just a couple of clients, I can break even pretty fast. The market for software services is high and has stayed high for the past fifteen years. Even under a bad recession, the market has been able to accomodate thousands of small companies.
Now, you may ask me, why would I do this? There are a thousand small and medium services companies - wouldn't I rather start a product company that I feel passionate about?
But people run businesses not just out of nobility. They run businesses because they want to make a lot of money as fast as possible. I know that we are all supposed to believe in passion, innovation and all that - but has anyone considered the true state of the Indian economy?

1. Our healthcare costs are skyrocketing
2. IT workers have no government mandated pension
3. There is no real social security net - unemployment benefits are abysmal and difficult to secure.
4. The public education system is bad and private education costs are soaring.
5. It is not easy to go into bankruptcy and come out of it.

Let me highlight the final point - the European Corporate Governance Institute had a paper out (pdf can be downloaded here)on Bankruptcy law and Entrepreneurship in 2008. The authors, John Armour and Douglas Cumming found a link between countries that support a "fresh start" through personal bankruptcy laws and entrepreneurship. The USA, for example, enables such a fresh start through Chapter 11 bankruptcy. Countries that allow such fresh starts have significantly more entrepreneurial activity.
What is the status of Indian law on this? The Indian Insolvency laws are dated. But more than anything, going to the a court managed bankruptcy in India will drain all your energy and time away.

Unlike Western countries, a person living in India cannot depend on government if he gets sick, for his children's education or for his retirement. Meanwhile it is obvious that all our costs are increasing exponentially. Would I be trying to make as much money as possible or would I be passionate about a product that may never work? The answer is clear.
So, my question is why don't all the innovation gurus turn their attention to a better bankruptcy law that actually works? Why don't they focus on a social security net? Why don't they focus on pension schemes?
Well, there is no money in such fights. You will likely lose over and over fighting policy changes.
Therefore, we are all back to wondering what the devil is in the Indian culture preventing risk taking. We are back to organizing seminars and conferences on innovation.

(By the way, I believe that people who create products also use the same marginal benefits analysis. They are not guided by nobility or pure passion either. They may see a niche market opening or a way to get funding. My point is that we can discuss innovation and entrepreneurship purely as economic decisions, without bringing in cultural angles.)

Those of you who find this article interesting may also read more about its background here.

Tuesday, December 15, 2009

James Bond talks to Taxi Driver

In most American Action movies involving foreign countries you have these well-dressed military men and politicians pondering life and death decisions. Meanwhile a surveillance plane is tracking a terrorist 10000 miles away. Sometimes this plane even picks up the terrorist's conversations. The all-upright military men place the decisions on their civilian leaders. And then the drama goes on.
There have been so many movies showing the dramatic reach and power of American (and British) intelligence organizations and military in very subtle ways. In the movie "The Bourne Supremacy", CIA tracks (from their headquarters in the USA), the movements of Jason Bourne in a train station in London. At one point, they ROTATE the camera in the London train station FROM VIRGINIA.
There is an immense sophistication projected by these movies that, to an extent, you are subconciously awed by Western power. You forget that these movies have a propaganda element.
Bob Woodward, in his book on the Iraq war and the Bush administration describes a scene: Donald Rumsfeld, Defense Secretary at that time, is meeting the Saudi Prince along with Dick Cheney. The Prince is concerned about the fallout of the proposed invasion. Rumsfeld shows a map of Iraq with army positions and sweeps his arm across. "All of these will be gone" says Rumsfeld.
Seven years later these guys are still fighting an insurgency in Iraq.
The propaganda of American movies is not just directed at foreigners - it also misleads the American people; it makes them believe that their army is full of upright men who do not torture (see Abu Ghraib, Guantanamo Bay, Rendition) and who do not engage in criminal acts (see the Haditha rape).
Which brings us to the Taxi Driver of Baghdad.

James Bond and the Taxi Driver
One of the key elements of the Weapons of Mass Destruction (WMD) canard perpetrated by Bush and Blair was the "45 minute to deploy" story. Sometime during 2002-2003, during the run up to the invasion of Iraq, Tony Blair released a dossier to public which claimed that Saddam Huseein could release WMD within 45 minutes.
Remember that Saddam Hussein had no WMD, but where did this 45 minute claim come from?
A British investigation shows that the claim came from a Taxi driver in Baghdad.
Here is what happened (you can find details here):
MI6 was asked to find some dirt on Saddam and WMD. They put some pressure on an Iraqi official. That guy said that a Taxi driver had overheard a conversation between two Saddam officials in which they discussed the 45-minute-to-deploy nugget.
That is, the claim that Blair showed in his public dossier came from a third hand hearsay through a taxi driver!
The Iraq war has killed at least a hundred thousand people - the war was based on a claim of WMD that could be operationalised in 45 minutes. Yet Blair got into this war FULLY KNOWING that his sources were taxi drivers.
Isn't this criminal?

What does this illustrate for democracy? It means that people in power in the USA and UK could get away with murder. All that a democracy has to do is provide good local services - as long as that is done, the leaders of those countries can "Manufacture Consent" for any of their pet wars.
But, more importantly, none of this has shaken the American or British public from their absolute belief in their politicians or their military or their intelligence services. The people who voted Bush out now have Obama escalating the war in Afghanistan. There are a few powerful people clamouring for a new war with Iran.

Smart Bombs
Just as many American people believe in the noble intentions of their leaders in dropping bombs on foreigners, they also believe in specific concepts that helps them deal with this.
For example, the idea that you can target bombs so effectively with their missiles that they will kill only the evil guy and not the innocents in the surrounding street or city.
This idea of smart bombs is not new - American media was talking about smart bombs in World War II! Whenever a new war comes up, their media starts talking about how accurate their bombs are - they did it during the Vietnam war, during the first Gulf war and the Iraq invasion.
During the Iraq invasion, some of these smart bombs actually missed the entire country of Iraq and fell on Jordan.
But, you see, you do not need real smart bombs - you just need to bring that up as an abstract concept. That is enough for civilians to approve of any aerial war. This time, this current debate is going on about the drone strikes in Pakistan. And people are talking about smart bombs again.
America uses her bombs so freely that all that you have to say, to be known as Serious Foreign Policy Expert is "Targeted Military Srikes". If you just say military strikes, then you come across as a warmonger. Instead, just say "targeted military strikes". It makes the experts sound intelligent and eases the fears in American minds about getting civilians killed.

So, the next time you see, in an American movie, a bunch of honorable men in military unfiorms discussing Very Important War Decisions, remember that there is probably a taxi driver who is helping them out.

Thursday, December 03, 2009

My son and my music

I have already said here, that I am going to make sure my son becomes a singer. I decided to take his training myself and the below is the result.
He seems to show a keen interest in getting away from me when I sing, but I think that is because of the bad acoustics.

He also laughs at weird words. Here is the video: