Why VCs aren’t investing in Pakistani companies
While there are a couple of exceptions to the implication in the headline, WebLo and Scrybe for instance, it does appear to be generally true. Pakistani companies are not attracting venture attention in general. Sure, you may have a few founders comfortable with the Bay Area scene making their case effectively and pulling money in. But that would not be due to the VC industry’s interest in Pakistan, or the identification of this country as strategic to their plans. Why is this so? A horrendously written article in the Business Recorder claims that it is because of 1) a lack of innovation and 2) an absence of the “hard work” ethic.
The Business Recorder article is essentially based on what seem to be interviews with some Pakistanis and a couple of europeans working in VC firms, both in the Bay and in Europe. One of the Pakistanis interviewed asserts that the reason why Pakistan is not attracting VC interest is because ideas coming out of the country are not really innovative and folks in the tech industry don’t really abide by the work ethic that places like Silicon Valley take for granted.
Those who are familiar with the industry in Pakistan probably have a lot more to say about the lack of a “hard work” ethic. Do we really have a culture of hard work similar to what exists in Silicon Valley? We’ve all heard of, read about or seen, depending on our exposure, companies like Netscape, where developers would routinely sleep under their cubes and practically live at the office for days in order to get a release out the door, on time. Calling this phenomenon “hard work” is really to miss the essence of it. This is not just about putting in long hours. It is about tying yourself up emotionally with the product you’re working on. While you’re working on it, it becomes an extension of your very being. And that drives the desire to perfect it, to make sure it is the best out there, that it comes out the gates at a a dead gallop the moment the referee pulls the trigger. It’s more than hard work. The hard work is merely one manifestation of the level of dedication and commitment exhibited towards the project. It’s about being true to your work, and being 100% invested in it, mind, soul and body.
How often do we see this amongst the employees or leaders in our local tech companies? I really do mean this as a genuine question. Not as one of those rhetorical questions that get answered by the author right after he’s asked them! So I’ll fight the urge to spill the beans on my own opinion.
The thing about this emotional investment phenomena is that it is viral. We’ve got to be able to point at a couple of companies in Pakistan where this is happening and is yielding excellence – in terms of product quality, innovation and/or commercial success. Due to the supply problems in the labour pool we’ve identified earlier, it’s just hard to see how you motivate a workforce that’s getting 30-50% year-over-year salary increases without having to demonstrate the emotional investment that builds great companies.
It can’t just be about the money! How do we get people to care? Your thoughts?
Teams/persons cannot be motivated by increasing their salaries or benefits. Although it is also necessary, but to me, its “How much you LOVE what you are doing”. When we adopt the investing motivation or loving our products… it not only boost up our morals but also help us groom professionally. Ultimately this makes our country as legend in the International Market.
This is not just for IT industry rather applies to every field of life. We need to leave this “Ad-hock” nature as a nation and should love whatever we do.
Nice analysis, the problem is when the main focus of engineers coming out of college becomes how soon can i become rich the whole cause of attaching your self with some thing which you can pride later vanishes.
With software industry growing and available talent becoming less and less the candidates can jump around and get staggering salaries why wait around a single company when you can jump salaries at this pace
Qazi, I agree with you. To be brutally honest, the definition of “rich” is very limited and specific in this case… for the lower middle class, which contributes the bulk of Programmers/IT employees to our industry, it means a 10 marla house, a car and enough to spend conspicuously so that social status is seen to be increasing.
With an income of Rs. 1 lac per month, and say 5-8 lacs saved up, you can expect to finance the above.
One cannot fault a young woman or man for wanting this for their family. The unfortunate part is that optimizing a career towards this goal very rapidly, wanting rapid salary upgrades and indulging in job hopping earns you the reputation of a mercenary – and not without reason. It also changes a young graduate’s world view to one which is incompatible with entrepreneurship or truly great product development. It results in mediocrity in the real work at hand, politics in the workplace, an “us vs. them” mentality and a jaded view of the future; “This is all going to end soon enough, might as well grab at it with both hands”.
It’s not that making money is a bad thing. But making it in this way, with such a mercenary attitude, is bad for the industry. 50 developers might be achieving the financial goals stated above, at the expense of a company that could have grown to provide thousands of jobs had true energy and soul been poured into its products…
[...] about that here Be Loyal to people, not to companies and a portion of techlahore’s blog post Why VCs aren’t investing in Pakistani companies where there is a suggestion that there should be an emotional attachment to the product. Part of [...]
Great article!
VCs need two things a) good idea b) people insane enough make it happen.
The problem is that all of our talent is working for easy cash, not for love or passion. In our culture, developing love for your work is bad. Because then you will be exploited by your employer.
Great products are developed out of love, not in return of X k rupees. Workers do not attract VCs, insane passion to create something beautiful does.
I may be wrong but I think that you can not expect emotional attachment, motivation and dedication from company employees (read laborers) unless they have a stake in the company’s success, either through profit sharing or stocks, or some other such means.
If someone coming from a middle-class background is getting an above-market rate salary with bi-annual increments, he/she would not want to finish a one-week task in 3 days. On the contrary, he would give a 2 week estimate for a one week project, thereby gaining some free time for himself.
We can not have a Silicon Valley culture in Lahore as our business models are entirely different.
Our tech workers are coding away to develop the IP for international businesses, without any kind of ownership, and hence, no vested interest in thinking beyond the next task at hand or taking their work home with them. Your employees will solve the problems assigned to them, but they will rarely put in much effort beyond that. They don’t need to.
Also, to develop ‘love’ for your product, first you need to have a product – I think that at least more than 50% tech firms in Pakistan are services based. You can’t develop love for serving a certain client.
I think you have answered your own question when you say:
“it’s just hard to see how you motivate a workforce that’s getting 30-50% year-over-year salary increases without having to demonstrate the emotional investment that builds great companies.”
From an average employee’s perspective, if they are getting the above, WHY would they want to demonstrate the emotional investment that builds great companies? They know its not going to be their company, so what’s in it for them?
Give them 1% of the company though, and they’ll know that a possible 1 billion dollar company evaluation in two years would mean 10 million dollars for them, allowing them to buy that 10 marla house and the car, with some spare cash to take a vacation, and I am confident that you’ll start seeing the emotional investment and all-nighters that are missing from our tech scene, even if the chances of success are 5%.
So, besides a couple of anomalies, how many firms in Lahore are ’sharing their company’ with their employees? Free pizza doesn’t count.
Sohaib: you have some very nice points there, but even with companies offering them vested shares this is not happening (and i am not basing this on assumptions) you offer some one a share in a startup they come back and say we want money right now we don’t know if you will be around in few months. Even for mature companies (and some do give shares and stock options) employees always say give us good increment and we don’t need shares. And surprisingly this attitude is coming from professionals who entered market in last 2~3 years if you are lucky enough to find some one above that experience level you will experience much more understanding and stability and they might even be ready to shave off their salaries for a small portion of company.
Completely agree with you, Qazi. Anyone that has experience hiring and retaining employees at tech companies in Pakistan has experienced what you are referring to.
Basically, there is a “world is ending” fear which then drives a grabby sort of attitude. I’ve heard many folks talk about how the going is good now, but it will soon go to hell like it did post-millennium-bug and so you’ve got to get as much cold hard cash as possible.
The other thing I’ll point out is that giving shares to employees can be a management nightmare given corporate structures in Pk. It requires disclosures that not all startups can make or are comfortable making. It can trigger intervention and unwelcome involvement on the part of former employees – rather than being a vehicle to reward people, it can become a pain to deal with.
Qazi, when I mentioned stocks/profit sharing, I had people from my generation (grads from the early 90s, with a decade or so of experience) in mind.
For this “IT generation” what you say is probably true, we don’t have an IPO culture here as such anyway so…
I personally believe that the ‘give us good salaries’ part has to do with what middle/lower class tech grads of this generation have seen while growing up. Their parents/uncles had ’stable government jobs with good pension plans’, they saw their parents grow old and retire from a single post after 30 years, so many of them probably don’t think beyond that. They want their lives charted out in advance and are afraid someone will move their cheese.
I had to hire a couple of people last month for a client, and interviewed 10 people with 3ish years of experience.
When I mentioned that it’s a new venture with exciting growth prospects if (when) it goes live and does well, I did not see the excitement that I was expecting. On the other hand, almost all of them had questions about the company stability and job security (besides their salaries and increments).
Interestingly though, the guy we ended up hiring was technically the best among the group AND was more interested in the venture than the increments.
Perhaps the next generation will be more daring and passionate about it all than their fathers.
umm… and techlahore, can you somehow add a ’subscribe to comments’ functionality here, is really needed
I’ll certainly look into it. If it’s possible to do on wordpress, it shall be done.
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