Business

Interview with Vinay Deshpande,Encore Software on the Simputer Journey

simputer-encore-softwareMaking a product and selling it in millions – such entreprenuership is never easy. Appreciation at having tried hard also doesn’t come easy. “India needs patience. You have to be prepared to wait for results,” says Vinay Deshpande of Encore Software, who along with professor Vijay Chandru of IISc, conceived of the simputer — a low-cost hand computer – in 2001 and then the low-cost mobile desktop, Mobilis. He talks to about the Simputer journey and challenges of innovation in India.

What’s the simputer story?

I remember people asking me for 5, 10, 15, 100 simputers when we first made it in 2003. The maximum we were ever asked for was 400. People are now asking for 20,000-40,000 pieces. Even 1,00,000 pieces. We’d had the product but not the numbers. That story is beginning for us now.

Why didn’t it really take off after you first made it?

It’s a complicated question. A product should have the right price and right volumes. Right volumes require right funding. If I want to sell the first 1,00,000 pieces, I need $10 million. Where do I get that from? Abroad, large companies invest in the first lot heavily — $10 million is nothing for them. It’s a chicken-or-egg problem: do you keep a low price hoping high volumes would cover the price or do you invest in high volumes in the first place? If so, where do I get the money from? You can’t have the right price with sales of 100, 200 or 500.

Why didn’t people come forward to buy it?

Because they didn’t and don’t trust their own technologies. Indians don’t have a record of valuing Indian technologies.

Why would that be?

Had a global company spent millions and produced the simputer, in all likelihood people would have bought it. The thinking is — how can a company spend less and make a good product? And how can an Indian company do that?

Other than `lack of trust’, what explains the simputer taking time to be known?

Though it was first off the block in its class in 2001, it got absolutely no marketing or advertising help. There was no finance to push the product too — venture capitalists (VCs) wouldn’t come forward. Moreover, the simputer was, I think, ahead of its time — understanding of how useful it is, affordable and yet efficient came only recently. This understanding wasn’t there back then.

Why weren’t venture capitalists keen?

They needed a guarantee. We couldn’t and can’t give that. It’s not in our hands. And in India, VCs are not willing to take risk.

But they should know success may not always come the first round.

They should have known, but they don’t. Fundamentally, our VCs don’t accept success that comes after failure. They don’t understand failure. It puts them off. If you understand reasons for failure, you also understand reasons for success. Had they been entrepreneurs, they’d understand this. The West is more sympathetic to failure. In fact, they value it.

What about banks?

The same story – they don’t want risk. Banks want collateral security for the loan you take. If you want Rs 10 crore, banks want Rs 20 crore collateral. Where do you bring that from? They want evidence you’ll pay back. Of course you have to pay back, but where can you give evidence when you haven’t sold anything yet?

So what’s missing in India?

Money and risk. We don’t have the mental and financial resolve to take on risk. But new entrepreneurs in IT services certainly took risks and that’s why IT is what it is in India today. But personally, I think we haven’t leveraged the skills of thousands of professionals to produce. We’re only selling services. Aversion to risk has to go if products have to make it big from India.

So what’s the challenge for the Indian innovator?

The movement from prototype models to full-scale commercial production, development to market — this requires marketing, volumes and finance. The support of these three are a must for products – but we don’t have this ecosystem for innovation in India.

What can we do?

Adopt a risk-taking attitude, stop playing safe, be a maverick, fall flat and fail, don’t lose trust just because there’s a failure. We lose, we all lose together, we win, we all win together — acceptance of this risk outlook alone can bring breakthroughs. We have to take chances.

But do we have ideas? Are we good at ideation?

We do and we are. We only need the ecosystem for that.

To get back to the simputer, what explains the new interest in it?

There has been demand in the micro-banking, micro-finance and field data collection, and e-governance sectors. Managers realized making financial calculations and storing them on the device was easy. Receipts could be issued on the spot. There was no leakage or pilferage in data. The device was offering finger printing, photography and smart card readers/writers all in one. Nobody could duplicate finger-prints and photographs. They realized a variety of options were on offer at very low cost.

Would you now call the simputer a success story?

I’d say we haven’t yet fully succeeded. If success is about making a product, we tasted success five years ago. If success is about numbers, that story is beginning now. But the simputer has certainly opened the world’s eyes. The `one laptop per child’ project was influenced by it; it highlighted the need for affordable devices and inspired the idea of the netbook. It’s affordability with limited functionality in doing a good job of a given set of things, and its potential to reach the bottom half of the pyramid has made it attractive.

What was the mood when Simputer came in 2003?

It was a product that was voted “the most significant innovation in computing technology in 2003” by `The New York Times’, ahead of even the Apple Mac and Windows XP launched in the same year. In the subsequent year, `Time’ magazine voted it as “one of 10 technologies to know on the planet”. It was the only device of its kind in the world with a fingerprinter sensor, camera and smart card reader/writer, WIFI, GSM, CDMA — all in one.

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