Monday, August 17, 2015

Why no Google in India

A Bit of History

On May 1, 1489, Columbus presented his plans to find a western sea route to Queen Isabella, who referred them to a committee. They pronounced the idea impractical, and advised the monarchs not to support the proposed venture.
The monarchs however, keen to expand the Spanish empire and to assure a better market position in trading, lent support to his plans. Leaving the royal treasurer to shift funds among various royal accounts on behalf of the enterprise. 
Columbus would gain immensely from the success of the venture, he'd be "Admiral of the Seas" and would receive a portion of all profits. The chances though were slim.

It is popularly believed that a bunch of capitalists, entrepreneurs and brilliant fellows created what we call as the Silicon Valley, the seat of much technological innovation in recent decades.

However, the roots of Silicon valley go down much further and owe much to the steady consistent spending by the US department of defense and the US government through it's various strategic and national initiatives.

The Bay Area had long been a major site of United States Navy research and technology. In 1909, Charles Herrold started the first radio station in the United States with regularly scheduled programming in San Jose. Later that year, Stanford University graduate Cyril Elwell purchased the U.S. patents for Poulsen arc radio transmission technology and founded the Federal Telegraph Corporation (FTC) in Palo Alto. Over the next decade, the FTC created the world's first global radio communication system, and signed a contract with the Navy in 1912.

In 1933, Air Base Sunnyvale, California, was commissioned by the United States Government for use as a Naval Air Station (NAS) to house the airship USS Macon in Hangar One. The station was renamed NAS Moffett Field, and between 1933 and 1947, U.S. Navy blimps were based there.[12] A number of technology firms had set up shop in the area around Moffett Field to serve the Navy. When the Navy gave up its airship ambitions and moved most of its west coast operations to San Diego, the National Advisory Committee for Aeronautics (NACA, forerunner of NASA) took over portions of Moffett Field for aeronautics research. Many of the original companies stayed, while new ones moved in. The immediate area was soon filled with aerospace firms, such as Lockheed.

The Bay Area was an early center of ham radio with about 10% of the operators in the United States. William Eitel, Jack McCullough, and Charles Litton, who together pioneered vacuum tube manufacturing in the Bay Area, were hobbyists with training in technology gained locally who participated in development of shortwave radio by the ham radio hobby. High frequency, and especially, Very high frequency, VHF, transmission in the 10 meter band, required higher quality power tubes than were manufactured by the consortium of RCA, Western Electric, General Electric, Westinghouse which controlled vacuum tube manufacture. Litton, founder of Litton Industries, pioneered manufacturing techniques which resulted in award of wartime contracts to manufacture transmitting tubes for radar to Eitel-McCullough, a San Bruno firm, which manufactured power-grid tubes for radio amateurs and aircraft radio equipment.[13]

While using money from NASA, the US Air Force, and ARPA, Doug Engelbart invented the mouse and hypertext-based collaboration tools in the mid-1960s and 1970s.

Most of these initiatives had a high degree of uncertainties in terms of costs, chances of success and lengthy gestation periods,  things that needed an appetite for risk, and resources much larger than private enterprise could muster.

Monarchies and governments can undertake much riskier and uncertain projects, having at their disposal a larger repository of resources. Especially when there is no immediate threat to their survival. They certainly must do so for strategic longer term reasons.

The strategic and intentional investment made by the US government helped establish the foundations of what is today's Silicon Valley and the reason for much technological domination of the US.

The State of Things

Unlike the government run initiatives in India that have generally yielded poor results, the US government chose to involve private enterprise in projects of strategic importance. With assured support and a chance of bigger rewards for success (more lucrative contracts in the future) the private enterprise bloomed. (As was the case with Columbus, with the monarchy supporting his venture). And with it bloomed the Silicon Valley.

Government's purchase of the technology in India is riddled with confusing conditions and requirements. It's a cobweb of rules that stifles enterprise and initiatives. Years of investments in government run research labs have resulted in little.

In his 2006 speech to the Nasscom, Dr. A.P.J. Abdul Kalam (then the president of India) talked of several initiatives that the government and the industry could jointly pursue, towards an audacious plan of more than tripling the projected revenue for 2010. He outlined what he called the World Knowledge Platform as a means to doing this. There were of course no takers either in the industry or the government for such distractions. The government of the day was firmly focused on income redistribution and had little time for anything else. The industry was cranking ahead gaining robust revenue growth year on year. Everyone was busy with the issue immediately ahead of them. Lest someone else eat their lunch. Also perhaps the industry was skeptical that such an initiative would actually take-off the ground.

The industry I think is less at fault. Governments can take longer term perspectives and provide the necessary support for such initiatives. India's space program e.g. that has come for much praise recently, has been an investment so long in returning any gains that most private enterprises would not dream of a future that far out. A government by it's very longevity and vast resources at it's command, is well positioned to support such investments. The industry though may be faulted for not responding to Dr. Kalam's call for suggestions on his ideas. Maybe if the industry had responded it would have triggered some initiative in the government.

And a Possible Way Out

Nevertheless, we're in 2015 now. The government of the day aspires to see companies like Google and Apple created here in India. It will be well advised to lead the initiatives, as all governments and monarchies with foresight have done through history.

But to do this, it must cut through the cobweb of government rules that kill such enterprise. Now that's not just a hard thing to do, but will probably take long.  While precious energy to start things up could lie waste. The way to do it would be to initiate special missions and projects outside the cobweb of government rules, with the private enterprises. The AADHAAR project is an example of such an initiative. So also the transformation of the system of issuing Pass Ports.

Private enterprise can deliver where government run initiatives fail for lack of a reward system and adequate freedom. The government can be both the an investor and a customer. Investing in the development and then purchasing the technology on maturation.

The other advantage of doing it outside the bounds of a government institution is so that enterprise can pursue the commercialisation of the technology outside of the government markets.

But can Narendra Modi's government take up such strategic investments with the Private sector without being accused of supporting crony capitalism? Maybe such projects are best done in secrecy. Maybe by creating special purpose vehicles/missions that are not bound by government rules but subject to CAG audits. Or maybe by allowing for 20% of the IT budgets of government establishments to be spent on innovations / transformation projects that should be run by local SMEs with proven track records.

That should release a lot of Seed Funding/Venture Fund for tech development. While providing ready customers (the government) for successful ventures. And with a steady source of revenue these enterprises could propel themselves towards a larger commercialisation of their project. Maybe end up becoming some future Google or Apple.

The social, economic and strategic payoffs for the country could be immense.

[I hope to write more about this as and when I can find the time and desire to do so. Would be happy to hear from you what you think about it.]

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