 Welcome to another edition of Islamabad today. I'm your host, Hamza Refa Lozad. Today we're going to be speaking about the startup culture in developing countries. When we talk about the developing world, it's a developing world, which is extremely dynamic and fast-paced and you do have a youth world as well. And young entrepreneurs often encounter challenges to their ability to try and make sure that they can make a meaningful impact as far as the globalized market is concerned. What are the challenges and impediments that is exactly what we're going to be examining today? I have with me co-founder of Braemers, Mr. Bada Pushnu. Mr. Bada Pushnu, thank you so much for joining us. Thank you so much, Hamza, for inviting me. Alright, so tell us about the startup culture in Pakistan. I'm pretty sure that many American viewers will actually want to know what it's all about. And what is Braemers all about? Sure. Thank you so much. So, structure in Pakistan is very, very different technically speaking from any developed economy, especially the US. And you know, we have a very different set of local challenges which need to be solved, which are very different than generally globalized challenges. And some of the fundamental challenges in the ecosystem are actually lack of presence of venture capitalists. They are handful of investors locally who are now national investors as well. There are US companies now investing in Pakistan as well. But earlier, just a couple of years back, there were no foreign investors. They were traditional business investors, but not venture capitalists investors for startup ecosystem. And even the local ecosystem was still very nascent. So, even if any startup or a founder has a good idea, scaling is or her idea, it's not an easy task even today in Pakistan. But our fundamental set of challenges are very different than the US or any other. For example, let me give you, by the way, I think one reason everyone would want to know why even Pakistan is important on this landscape. The reason Pakistan is important is because we are one of the largest country by population. There's a huge population of people, about 20 million people are and they're almost 50% are below poverty line who need social economic improvement. And they impact the larger globe in many different ways. We are geopolitically based in a very sensitive location, which most of us would understand. But we have very different challenges. For example, one star challenge we have is that we are not a banked economy. Less than 20% of the population is banked. So a 2% of the people still haven't ever seen a bank account, even a mobile wallet. So that's a big challenge. Until people and the economy is documented or banked, there is nothing documented. Hence, we have a very cash based informal economy. Hence, you can't make any policies, you won't have any data, which is significant. And that's a kind of a vicious circle we need to get out of. We have is majority of the people do not pay direct taxes. And the stock figure here is that less than 1.5% people pay their taxes as a direct tax. So the government has to impose a lot of indirect taxes, which eventually impact the whole of the operation where and which means that the poor are burdened as well in addition to the ones who can afford it. Then we have other challenges like we were just talking earlier about the connectivity issues, power shortages and power. When if we have the enough power production, we do not have very reliable distribution systems. So basic utilities, fundamentals, healthcare, education, access to education, access to healthcare, access to finance, access to markets, infrastructure, there are tons of things where from an average person's point of view, these are the problems from an entrepreneur's or a founder's perspective, these are challenges that can be solved. So people who are who have that vision, they're trying to solve one small step at a time, they're trying to pick one small problem and then trying to address it and solve it. So some of the key areas where startups have really explored Pakistan, the first one was mobility, where right sharing companies like Kareem, Uber, all of them came in Uber came in, of course, as an established company, Kareem started as a startup and kicked off the rest of the industry. But their back office was mostly Pakistan and one of the founders is Pakistan. So hence, you can partially say it was kind of, there was some element of fun is it on in that stock, correct. So that was it. But then there were companies like ear lift, which really came to the news because they just before COVID, they started right sharing from a public transport perspective. But during COVID, they had to immediately pivot and they completely pivoted to a new vertical which was retail. So they wanted to then fix the grocery or the quick commerce part. And they did well, but eventually, because of some of internal issues, they and some of the unit economics issues, they eventually immediately abandoned the business. Although they're from a very consumers perspective, they were they were really doing well, and this quality of service and they didn't really know what we're doing well. So sorry for a long answer, but Pakistan started ecosystem, 10 has a lot of opportunity in itself. We need more founders. We need more founders who are solving local problems. We need more founders who are creating products for the larger world. We need more investors from abroad, of course, who have experience in venture capital who can explore this a large market population wise and area wise as well. We need more local traditional industrial investors to think more like a venture capital and start the venture arms. Some of them have already done that. So we have some local industry conglomerates who have now started their venture arms and they're investing in local startups. We need a lot more early stage investors, which means we need more very small ticket size investors give the first kick to a reasonable idea and test the market quickly as a proof of concept. We need more mentors. We need more government initiatives. The most important thing we need if you were to ask me are the right government policies. We need incentives for startups in terms of tax benefits. We need more support. We need more curriculum in our graduating classes around entrepreneurship. We need to encourage people to create more jobs for us. The mindset needs to be changed even at the education higher education level as well. So but the landscape overall, just to give you a figure in the last few years, Pakistani startups have raised formally they have raised about anywhere between 800 million to a billion dollars overall, which is very, very small globally speaking. But from a Pakistani perspective, that's a reasonable amount of money they have raised. And I think there's a huge opportunity some of them are doing well. I think they need to now grow further. Some of them are in health tech, ed tech, which are very important basic fundamental spaces. And I think there's a huge opportunity for new investors to come in and support other initiatives as well. Overall, in the larger, if you look at the larger tech industry from Pakistan, last year Pakistan's tech industry exports were around 2.6 billion dollars. We believe so this is the official documented figure from the student of Pakistan. We believe Pakistani companies are earning three to five X more than that. But not all of those all of that income is coming back into the country. So about 2.6 billion. And, and, and we believe that can be grown again significantly in multiples, if the right policies are in place by the federal government. But, but just to give you the context, those exports are now the second highest exports of the textiles in Pakistan's economy. And they employed about 300 to 500,000 employees right now. And we have about the same number of freelancers working as well. We're working for international platforms. The reason I may usually use that a lot of hungers actually come from their this background. They have some kind of a tech background, or they're doing freelancing, but they come up with an idea they learn larger base. And then they start developing their product, digital product, which is the easiest to do. And then the scale up. But there are some great initiatives which have helped the ecosystem largely as well. So from there's an there was an initiative by Ignite, which is under ministry of IT, where they have the incubation sink. So now Pakistan has about good eight to 10 incubators in different cities across Pakistan. So you have proper formal startup incubators, then there are private sector accelerators and initiatives where they are helping them as well. And there's a big move to bring entrepreneurial curriculum at the graduation and undergraduate level as well. So, so that's where we are right now in that's just fascinating and just clearly show that there's a lot of potential as far as a startup culture within Pakistan is concerned. I mean, you gave figures 2.6 billion is a pretty impressive amount in general. And we look at, you know, the economic quagmires of Pakistan is actually been facing the fact that the startup culture is actually producing something is considerable. Now tell us a little bit about Braemers as well. Sure. So Braemers was one way earlier than the startup ecosystem. So so we VST friends and the name Braemers comes from brother Amir Zeeshan. We we were in the market, we were personally engaged with different organization security after graduation. But then we all we three we three thought that we should have as well. So this is going back to getting back to 2006, by six, and we established a company and we wanted we started actually from a servicing perspective. We were doing online freelancing initially very, very briefly. And we were servicing few international clients. And then we started servicing no quick lines. We were one of the first digital marketing agencies in Pakistan, which was Google certified earlier in the day. And then as soon as Facebook came in, we were also Facebook certified as well. So we used to work with both of these principles very, very closely. And over a period of time, we realized that servicing is very human resource dependent, very talent dependent in terms of if you want to scale, the more you want to scale in terms of servicing, the more resources you require. So we also eventually do products. So we have a couple of products. One is called Fishery F I S H R Y dot com Fishery dot com. It is an e-commerce platform for the emerging markets, especially focusing on early stage entrepreneurs, small businesses and and retailers who want to set up their own were focused on their own brand development. So we enable these brands and SMEs to set up their own stores online. Very quickly and easily. So the more important is easy, because we realized that these small businesses do not have dedicated IT or technology resources. So they need an easy to use platform, which has pre integrated payments, logistics, everything. So we do that. So we powered about over 100 plus local merchants in Pakistan, we are now looking into expanding that we believe we have done the proof of concept and the product market. But you know, I want to scale it to other emerging markets and the larger global landscape as well. Another product we have, which is more related to your larger ecosystem from news publishing perspective, and and and that is publisher, you be in a SHRR not ERR dot com. So it's a content management system for news media companies. So we power a few dozen news media companies, the newspapers, their websites and their mobile apps. So it's a text that which enables newspapers to publish that content, rich content, text, video, everything. Because we again realize that most of these news organizations, their core business is news and content creation and content aggregation. So they need cutting edge technology. And that's what we provide them so that these websites do not go down when they get a breaking news or a high traffic content. And we help them then monetize that content as well. So we're getting to servicing, but we're also we also have product makers. So that's what largely very much is absolutely. I mean, if you take a look at news agencies all across the world, I think going digital is the way to go these days. And when you talk about going digital, it's also important to target that segment of the population, which is considered to be the youth bulge, especially in the developing world, who are less concerned about, you know, sitting in front of the television and more concerned about making sure that they could, you know, just read a quick two minute report from an app or from, you know, from YouTube for that matter. So I think the fact that you're actually facilitating this is quite an achievement. Now, by the way, when we talk about, you know, I just want to come up with this, you know, this preconceived notion that is actually shared by many Western analysts will believe that serious impediments do exist for startups in countries such as Pakistan. How much is this true? And how much of this is the palace? So yes, absolutely. There are innumerable impediments for startups in countries like Pakistan. And I'll tell you one fundamental reason for that if you were to pick one. Yeah, and that one is that most of these countries were colonized colonized at some point in time. And that period was generally the industrial era period. So most of our regulations inherited regulations, policies, everything is more from an industrial era perspective, modified a bit to the current age, but they're certainly not knowledge economy based and startups are mostly knowledge economy ecosystem players. So we need to improve at times certain regulations, but we certainly need to completely repad certain regulations. And so those policy level challenges are the first impediment. So I'll give you an example. Defining whether a startup is a product or a service or a good or a service from a taxation perspective, or a tech company is something that needs to be done. So in Pakistani regulation, it is still not very clearly defined. Similarly, you also need to facilitate that because it's because of colonial error laws. Of course, that's inherited from that perspective. But now it's been years and decades that we need to understand that we need to change that part. So someone at the local level leads to the challenges that startups are mostly digitally native founders, whereas the policy makers are digital immigrants. So that's really need to understand how yeah, so they need to really understand how YouTube works, how content monetization works, how online communities work, what is peer to peer networks, and all of B2B B2C and how all of this works and how democratized content creation is. So unless the policy makers really understand and have native to it, I think bringing about change is not easy. So so that's that but that's not the only reason I'm just sharing. Similarly, I'll give you an example. Yeah, but you might have noticed that Pakistan startups raised this 802 billion million to a billion dollars in the last few years. Before that, you never heard about Pakistani startups raising reasonable amount of funding. And the only reason was that the center bank, which is the statement of Pakistan changed a few regulations during this period. And this was during the previous particular era and in the G30, those few regulations, and those what needed to define that there can be a holding company abroad, and they can be an operating company in Pakistan. This is generally technically known as Oracle and then once there are few other regulations, one of those things legally, then startups can raise funding in the old co abroad and then bring required cash to Pakistan or the operating company. And that's how investors are also kind of protected and the startups also start getting their funding. But this framework was not allowed in the Pakistani regulation earlier. So I saw my next question when we talk about bureaucracy in general. I mean, the bureaucracy must have been resistant to this entire idea why they're bypassing us, why they're bypassing red tapeism, why they're bypassing all these regulations that we put in. One of the reasons why investors get scared of actually coming to countries like Pakistan is because of it. Absolutely. But there are few gyms and champions in the bureaucracy. So if you find the right champion, he or she will take you a long way. So we'll give you an example. It's a box and droplets first in almost policy in 2019, late 2019. Since then, under that policy, and I was part of that kind of larger team, which which kind of profit that part. So it was a public private partnership, which which really went well with Ministry of Commerce and the larger private sector. And that policy, we had action items against. And those items just started executing with all the relevant policy ecosystem players. So from the central bank to the tax authorities to everyone. Some of them were very responsible and some weren't and still aren't. But those who are responsible, I'll give you two quick examples. Definitely. So we work with the Central Bank of Pakistan, State Bank of Pakistan. And we actually help change and create two new regulations. One was called small packet micro exports. So for example, if a woman want to know or in or an artisan, create something small, maybe a designer clothing, or maybe a shoe or anything, maybe a wooden tray or any handicraft, and he or she wants to sell it abroad for a few hundred dollars. That that shipment was never considered export, although it is actually commercial price reduction. And it should be considered an export. Only a full container load sent abroad via ship or by air was considered export. And you need to fill a proper documented e form to consider to make that shipment considered an export. So we worked with the central bank and we kind of created a simpler, easier version or small entrepreneurs and artists so that they can send their shipments abroad, even small businesses. And that can be still considered export. So from a few thousand exporters, we believe we will now have a few hundred thousand exporters in the next few years, just because anyone who can create something can now ship. And then the regulation we got worked out with the central bank was the B2B2C use case, the business to business to consumer use case. So right now exports was all about B2B. You want companies sending products to another company abroad. But in this case, the B2B2C use case was when Pakistan got listed on Amazon market rates. Right, right. So when when you are selling something on Amazon, you are actually not selling anything to Amazon directly, but you are shipping it to Amazon. But then Amazon sells it to the consumers. So the projection is from Pakistani business to Amazon warehouse B2B. And then Amazon actually helping you send it to the consumers. That's the B2C part. So until the C part, B2C part is completed, the projection is not complete. And our regulation did not recognize that fact. So we actually worked with the central bank to solve that. And just to give you a high level number, our estimate is that around $300 million of new export or documented export has happened under these two new regulations in the last years. And this is only because the public and the private sector worked together very, very closely under the e-commerce policy. So there was a National e-commerce council formed, and some of us worked together day and night. But there were champions in the bureaucracy who helped us navigate that kind of, I would say, a long doctoral, which we really was needed. But so if there's a will, there's a way. So if the right people in bureaucracy accept the fact and agree to the fact that digital is, and if they're open to change and bringing about change, I think we can change Pakistan's economic landscape very, very quickly in a positive way. Alright, absolutely. So I've also consulted with Google Facebook and Twitter as the first person on ground from Pakistan. That's quite an achievement. Now tell me about that experience and how has that really benefited you? Because the idea that you just, you know, actually showcased to me, it's almost as if it also has a lot to do if I'm not wrong with your experiences with Twitter, Google and Facebook. Absolutely. It was just, I would say a mind-boggling experience, a real global exposure, I would say. So I think it all started with Google. So back in 2005, a friend of mine shared an email with me where Google was looking for a country representative in Pakistan. And I believe by the time I got to know about it, it was a few months already that it was floating on different forums, which meant that almost every computer science student back then would have applied for Google. But I also tried my luck. So although I am an economics graduate, I did apply for that. And interestingly the next day I got a callback that you are, you have a scheduled interview. Anyway, went through a series of interviews for almost a year. And then in August, 2006, I got admitted into Google. And but that completely changed my landscape, my exposure, my vision, my view on how the world works and what is an opportunity largely. And the reason I'm saying this is because Google didn't even know what to do with us. So we were part of the larger scouts. And the reason they hired us was that they wanted to see those countries where Google is popular, but Google does not have an office as to what is in that in those countries, what is happening by Google is popular. And back then, if I'm not wrong, if you remember, there was a Google social network called awkward. Yeah, so we was free to be able to buy that. So it was it was basically a Turkish social media organization. Yeah, correct. Absolutely. It was actually a Turkish engineer at Google who created that. So it was on a stream. So so they saw traction in those products and they wanted to see what Pakistan was and remember this was a post 9 11 time. So Pakistan was didn't have very good PR back then. But eventually I got chocolate shared. My idea was to connect dots between Google and Pakistan, anything between Google and Pakistan, wherever we could work together. So so that gave me a lot of opportunity. I helped the Google Maps team launch maps and so now you have these maps based startups like the creams and the Uber and the food delivery like food pandas and anything which is very geolocation sensitive product or an app is working on Google Maps. Yeah, absolutely. So that's so that's launched Google Chrome in Pakistan. We launched Android and Pakistan. We did tons of new things. We did a lot of Google front of Google front of nose initiatives in Pakistan. We did funding actually of a lot of startups early stage startups back then. So those kind of things. So that was very broad, white and deep as well at times. And that gave me a lot of exploring. Then I spent about good nine years by the way at Google. And then moved on and the day I left Google, I wanted to go back to my company pretty much. But then a friend at Google, who had left a little bit earlier was at Twitter and he called me that we have to now work for us for a year. So join Twitter for a while. And then I moved on to Facebook. So all three roles were very different, very interesting, gave me opened a lot of doors and eyes for me in how things happen. So yeah, that was a great, I would say dream come true. Even today, I think there are a lot of Pakistanis at Google, but very few were really relevant to the Pakistan market. So I had that opportunity to open up those doors back in the day. So about because we're running short on time, very briefly, it just tell me, you know, for young entrepreneurs, there's a high degree of, you know, anticipation that their startups could actually fail across the world. And you know, Pakistan development world is not really an exception to that case. Only a minority of them actually make it through. So why do you think that's the case? And what advice would you give to them? And you have to keep it very great, which is a bit of a challenge. Yeah, absolutely. So, you know, there's several reasons, of course, tons of reasons, it would be a poor product or anything. But some of the research does show that the number one reason is that these startups actually run out of cash. They do not manage their finances properly at initial early days. They think it's easy. They do not have the right finance and accounting people or concern with them. And hence they run out of cash very, very quickly. They burn that and technically mostly waste of them. So that's one reason I believe the other reason is that they do not do proper consumer research. And they believe that whatever they are perceiving about the product or service is acceptable in the market, whereas it's not. It's maybe the demand may not be big enough. So that's another reason. And there could be other but mostly it is around the business model, which is not properly tested and tried. So these are some of the, I would say, basic flawed business model issues, which I could create this challenge. So these are very fundamental issues. There's another one. It's not the right team. So maybe in three MBS trying to do a tech, tech people trying to do a marketing startup. So that's not the right connect. You need to really normal the space. Correct. I hope that was short and sweet. Now it was very short and sweet. And I think the advice is something that many young entrepreneurs should actually take hold, because a lot of them are into the startup culture. It looks very attractive. They're sick and tired of the bureaucracies. And you know, the lethargy that is actually so the associated with government policy. So I think this advice is something that they should definitely take home and try and implement. Go founder of Braver's, Mr. Brother Pushnu. Thank you so much for joining me on the show. Thank you so much. I'm so for him. That's all that we have from Islamabad today on Think Tech of Hawaii. You can follow us on our social media pages. You provide us with your feedback. Until next time, take care.