YouSaid · the spoken record

James Crabtree

lines on the record: 78
first: 2018-07-28
most recent: 2018-07-28
sittings or episodes: 1
sources: podcast

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“And so part of the reason why India doesn't have domestic giants, I mean, it has Ola, which is the Uber rival. It has Flipkart now bought by Walmart, which is the Amazon rival, and a bunch of other sort of consumer plays. But it doesn't have the platforms, although there is one called PTM, which may become a platform, which is an Alibaba-backed payment play. But it doesn't have those because it's got the American ones. And so if you've got Google and Facebook and Twitter, then why do you need your own indigenous version?”
2018-07-28 · Decoder with Nilay Patel · Recode Decode: 'The Billionaire Raj' author James Crabtree · IDENTIFIED FROM THE TRANSCRIPT
“India is now the largest market by users for every one of these tech giants. Twitter, WhatsApp, Facebook, Google, all of them have to do that.”
2018-07-28 · Decoder with Nilay Patel · Recode Decode: 'The Billionaire Raj' author James Crabtree · IDENTIFIED FROM THE TRANSCRIPT
“Correct. Well, that's also partly a good thing, right? That's because India and China have very different tech ecosystems. So you know this, but China's totally closed. And so part of the reason why China has these giant domestic tech operations is the government didn't let all the good American companies go in there or they totally hamstrung them. So the point they couldn't compete. So one of the reasons, I guess, why India doesn't have, it's only equivalent to this is it has Google, it has Facebook.”
2018-07-28 · Decoder with Nilay Patel · Recode Decode: 'The Billionaire Raj' author James Crabtree · IDENTIFIED FROM THE TRANSCRIPT
“There's no equivalence to Amazon there. I'm trying to think. There's smaller ones. Nobody in China you can name WeChat, the 10 Cent people, the Alibaba people. There's a bunch of very large Baidu big companies. And in India, there's fewer.”
2018-07-28 · Decoder with Nilay Patel · Recode Decode: 'The Billionaire Raj' author James Crabtree · IDENTIFIED FROM THE TRANSCRIPT
“People thought that would happen in India, it hasn't, and so they're very disappointed. But the reason that that hasn't happened is really quite explicable if you just look at where India is in its stage of development. Now, in the medium term, in the long term, it is going to happen in India. In fact, there's a case to be made that these big tech giants are going to be more influential in India than anywhere else because there isn't going to be a Walmart in India. There's not going to be a state. We're going to go straight from crummy little corner shops to everybody shopping online. It's just going to take quite a long time to get there. There's no equivalent.”
2018-07-28 · Decoder with Nilay Patel · Recode Decode: 'The Billionaire Raj' author James Crabtree · IDENTIFIED FROM THE TRANSCRIPT
“And so, all of these things just mean it's taken a lot longer to build these businesses and the size of the market in the short term is not really big enough to have justified all the investments. So basically it's a sort of classic example of investors not really doing their homework properly. They saw the Chinese example. China had real hockey stick growth from one year to the next, I don't know when it was growing middle class. Right, big middle class, great infrastructure, reasonably supportive regulation, boom. Suddenly China has more retail e-commerce customers than anywhere else in the world combined.”
2018-07-28 · Decoder with Nilay Patel · Recode Decode: 'The Billionaire Raj' author James Crabtree · IDENTIFIED FROM THE TRANSCRIPT
“It's a city of 25 million people. It's a little bit like Manhattan, if you think about it in your head, it's a peninsula tightly packed, very fast-moving and energetic. It's got banks and skyscrapers and whatnot, doesn't have, as with anywhere else in India, an address. So literally my address where I lived in our apartment was the name of our apartment building and it said next door to radio club, which was like the famous building a block away because there isn't an address system. So if you want to run, that's just one tiny example of a hundred things that these guys have to fix, which is how do you deliver something in the post when they're”
2018-07-28 · Decoder with Nilay Patel · Recode Decode: 'The Billionaire Raj' author James Crabtree · IDENTIFIED FROM THE TRANSCRIPT
“It's a technical term for a workaround. There's a guy in Washington who talks about DC as a cludgeocracy because you can never do anything the right way. You've always got to kind of sort of fix something that's broken. And so take an example. I used to live in Mumbai.”
2018-07-28 · Decoder with Nilay Patel · Recode Decode: 'The Billionaire Raj' author James Crabtree · IDENTIFIED FROM THE TRANSCRIPT
“I think figure is about 10 million people earn more than 20,000 dollars a year. It's tiny. And so you can't build these mass businesses on top of that. Add on to that. India still, its infrastructure is pretty hopeless. It's getting better. But you need cold chain logistics. You need just-in-time delivery. All of the things that give Amazon its edge require really good infrastructure. So Amazon's in India at the moment, it's one of its most important developing markets. It's investing $5 billion. Walmart just spent $16 billion to buy Flipkart, which is the biggest unicorn in India. Valuation has been declining a bit, but I think it's about $12 billion now. It was maybe $20 billion at its height. But the innovation that often occurs in the Indian economy is, in a sense, workarounds. It's a kind of cludge style of innovation.”
2018-07-28 · Decoder with Nilay Patel · Recode Decode: 'The Billionaire Raj' author James Crabtree · IDENTIFIED FROM THE TRANSCRIPT
“Is actually some fairly simple things, which is that even though India has Bangalore and Hyderabad, it has this sort of amazing tech culture and it has people like Setya Dela who are these icons, it's still a very poor country. And so if you want to build a B2C retail business, a sort of Amazon-style business, then you need rich middle class consumers. And India doesn't have that many of them. I mean, the size of the Indian middle class is super tiny, much, much smaller than you would imagine”
2018-07-28 · Decoder with Nilay Patel · Recode Decode: 'The Billionaire Raj' author James Crabtree · IDENTIFIED FROM THE TRANSCRIPT
“More chief executives, but particularly immigrant started companies. Indians start much more than the Chinese or the Taiwanese, which are the next groups down. All around the world, Indians are successful. You know, there's huge entrepreneurial dynamism. What I think people have got wrong about the Indian tech economy and why it is perceived to be a relative failure.”
2018-07-28 · Decoder with Nilay Patel · Recode Decode: 'The Billionaire Raj' author James Crabtree · IDENTIFIED FROM THE TRANSCRIPT
“I mean, India has a fantastic entrepreneurial culture, even the people who are corrupt are entrepreneurial, right? The scams are extraordinarily inventive. There's huge energy in sort of Indian business culture. Look at Indian diasporas all around the world. So here in Silicon Valley.”
2018-07-28 · Decoder with Nilay Patel · Recode Decode: 'The Billionaire Raj' author James Crabtree · IDENTIFIED FROM THE TRANSCRIPT
“Know, so take a step back. What's your image of India in your head? It's an image of inequality. People know about the caste system. They know about extreme poverty. There's a lot of other inequality in India. You know, the south is richer than the north, the cities are richer than the villages. But it's almost because we all think that India is a very unequal place, we haven't noticed how spectacularly more unequal it has become over the last 10 or 15 years.”
2018-07-28 · Decoder with Nilay Patel · Recode Decode: 'The Billionaire Raj' author James Crabtree · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, maybe. Yeah, exactly. As I was walking around this morning a little bit like that. But there's all sorts of problems that come with that. There's pretty good research from the IMF that very unequal countries are less stable. It's less easy to introduce economic reforms. You know, yada, yada, yada. There's all sorts of problems which come from very, very extreme inequality. Some inequality is okay. The successful developing economies of East Asia, they weren't Sweden. They had lots of rich people, but they were a bit more equal than India was. They were a bit better at making sure the rich paid their taxes, a bit better at making sure the sort of lower middle classes and working classes had good health care and education. Yeah, that's right. We're able to move them more efficiently from farms where most of them worked into factories and then onwards up the value chain. So India has a problem with extreme inequality. And it's almost...”
2018-07-28 · Decoder with Nilay Patel · Recode Decode: 'The Billionaire Raj' author James Crabtree · IDENTIFIED FROM THE TRANSCRIPT
“Well, the implications of that is it's not a great place to be. So, India is already probably the most unequal large economy in the world, comparable to Brazil and South Africa, and it's at a much earlier stage of its development. And so if it continues on this path, it will become almost unprecedentedly unequal country. And there's all sorts of problems.”
2018-07-28 · Decoder with Nilay Patel · Recode Decode: 'The Billionaire Raj' author James Crabtree · IDENTIFIED FROM THE TRANSCRIPT
“one hundred nineteen one hundred twenty, together there were four hundred fifty billion dollars that more than any country outside of the US and China and compared even to China at a comparable stage of its development, so China liberalized about 10 years earlier, so it's sort of 10, 20 years ahead. But if you take India and China and their economies were about the same size, then India has 10 times as many billionaires as China did then. So it's creating wealth at the very, very top at a huge rate, but the rest of the country is falling relatively behind. So the middle class, the middle 40% has seen their share of national income decline quite a lot, while the top 1% and the top 0.001% have shot off ahead.”
2018-07-28 · Decoder with Nilay Patel · Recode Decode: 'The Billionaire Raj' author James Crabtree · IDENTIFIED FROM THE TRANSCRIPT
“I mean, what's happened in India is that the billionaires have not been created in the tech sector, and that's a bad thing. I mean, in the sense India could do with a lot more tech billionaires than it has because generally they're, broadly speaking, creating value and doing good things. The billionaires that have been created are typically in these slightly more dubious sectors that are close to the government. And the number of them is stunning. So as I say, middle of the 1990s, there were two of them, between them. They had about $3 billion. Now we have...”
2018-07-28 · Decoder with Nilay Patel · Recode Decode: 'The Billionaire Raj' author James Crabtree · IDENTIFIED FROM THE TRANSCRIPT
“I mean, that's sort of a good and bad thing. They built some reasonable infrastructure, but in the end, what happened was they got a bit too greedy. There were these big corruption scandals, and there was a huge public backlash that happened at the end of the 2000s. And India's only really just recovering from that backlash because there's been public scandals. And the Prime Minister, current Prime Minister, Narendra Modi, won an overwhelming election in 2014 on an anti-corruption platform and a kind of promise to clean things up.”
2018-07-28 · Decoder with Nilay Patel · Recode Decode: 'The Billionaire Raj' author James Crabtree · IDENTIFIED FROM THE TRANSCRIPT
“Well, so this is to moving back outside of the tech world. So you're thinking here, I mean, the subtitle of my book is called The Billionaire Raj, India's New Gilded Age. And so the image you should have in your head is really of a Gilded Age tycoon in America. So these are Kind of robber barren tycoons they run conglomerate businesses, they're doing things like building steel mills or building toll roads, ports.”
2018-07-28 · Decoder with Nilay Patel · Recode Decode: 'The Billionaire Raj' author James Crabtree · IDENTIFIED FROM THE TRANSCRIPT
“Tiger Global, these sorts of investors that sort of crossed, they all got very excited about India and thought, okay, India is going to be the next China. And we've all got tons of money. We just made an absolute packet on the Alibaba flotation. So actually, it's silly season. And so it was one of the earlier examples of what you see now with SoftBank in general, which is just sort of money being sprayed around everywhere. And so when I was there in 2012, 13, 14, probably 13, 14, this was the height of this. Lots and lots of very aggressive investment by foreign VC funds. They had a sense that India was going to be the next China. It hasn't quite worked out like that. But in the medium to long term, India clearly is going to be a hugely important tech economy. I mean, it's a vast economy. It's got 1.3 billion potential consumers. The story of India tech is just that it's going to take quite a bit.”
2018-07-28 · Decoder with Nilay Patel · Recode Decode: 'The Billionaire Raj' author James Crabtree · IDENTIFIED FROM THE TRANSCRIPT
“You have big, you've got plenty of unicorns, but you've also got people providing tech services for people all around the world. And so that remains the case. I mean, I suppose two things happen. One, the tech side of the economy sort of got eclipsed by the side of the economy, which is in my book, which is the sort of slightly darker, dirtier side of the economy. Then you have a more recent story, which I think is sort of interesting from your point of view, which is after the Chinese tech boom, particularly after the Alibaba flotation, a lot of investors, both here in Silicon Valley, but also people like Softbank, the hedge funds in Hong Kong”
2018-07-28 · Decoder with Nilay Patel · Recode Decode: 'The Billionaire Raj' author James Crabtree · IDENTIFIED FROM THE TRANSCRIPT
“I mean, I suppose I understand what you say about China. China has had an enormous boom in consumer tax rate. It's sort of miles ahead. But India remains... An enormously strong tech economy. If you go down to Bangalore or Hyderabad, then you have.”
2018-07-28 · Decoder with Nilay Patel · Recode Decode: 'The Billionaire Raj' author James Crabtree · IDENTIFIED FROM THE TRANSCRIPT
“Land could be for building skyscrapers in the city, could be land for building a steel plant in the countryside. And in a sense, the politicians and the business people would collude, and then they'd sort of split the difference and keep some of the profit for themselves. And so that was why India had, India's always had a lot of corruption, retail corruption. You bribe to a politician, bribe to a policeman or to get a marriage license. But in the mid 2000s, that retail corruption sort of went wholesale. And that created a lot of wealth, but it also created a whole range of corruption scandals from which India has only really just recovering.”
2018-07-28 · Decoder with Nilay Patel · Recode Decode: 'The Billionaire Raj' author James Crabtree · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, so rent seeking is an economic term, but basically it means, let's call it crony capitalism. So crony capitalism means collusion between the political and business elite. So let's say go back to the mid-1990s, you are probably Nandan Nilakani, is the most famous IT software billionaire. He's the guy who came up with the phrase, the world is flat for Thomas Friedman. Thomas Friedman was sitting in his office in Bangalore, and Nilakani sort of used that phrase to describe globalization. He made his money pretty honestly. He found a way of taking Indian tech workers and exporting to the world, earned billions of dollars in revenue, and therefore became a very rich man. Totally fine, nothing wrong with that. In the mid-2000s, what happened much more often was that basically these businessmen started colluding with politicians to get hold of things that only the politicians could provide. Now, that might be a 2G telecom license. There was a big scam. It might be a mining license.”
2018-07-28 · Decoder with Nilay Patel · Recode Decode: 'The Billionaire Raj' author James Crabtree · IDENTIFIED FROM THE TRANSCRIPT
“So go back to the mid 1990s. India started to open up its economy after 40 years of socialism. So it got independence from the Brits, you can tell I'm a Brit in 1947, began to liberalize in them in 1990s. Initially, you had a few billionaires who were created, and many of them were tech billionaires. So that was sort of the first decade in the 90s. You had people who were doing IT outsourcing in particular. Yeah, Wipro, InfoSys, TCF. They made a lot of money. And generally, they were a very good thing and still remain that way. They're admired figures, people like them. It was in the mid-2000s, which in the rest of the world was the time of the great moderation, growth going crazy, China entering the world economy. And so India re-globalized. And when that happened, you had a second wave of billionaire wealth creation that happened in a much more dubious way. So lots of corruption scandals, what the economists call rent-seeking. And so that is really the heart of the book.”
2018-07-28 · Decoder with Nilay Patel · Recode Decode: 'The Billionaire Raj' author James Crabtree · IDENTIFIED FROM THE TRANSCRIPT
“No, I mean, I covered everything, so I covered all of corporate India, so banking, finance, I covered tech, the startup scene, all sorts of things. But in a sense, lording over it physically and metaphorically were the super rich, the billionaire class. Right. And while I was there, their numbers were expanding a dozen a year.”
2018-07-28 · Decoder with Nilay Patel · Recode Decode: 'The Billionaire Raj' author James Crabtree · IDENTIFIED FROM THE TRANSCRIPT
“It is nice pink newspaper. And so while I was there, I mean, a lot of foreign correspondents end up writing books about India because it's a fascinating place, but not many of them do it in Mumbai. And so I was covering banking and finance. And so I was in the city that all of these guys who are making all the money and having their ridiculous big houses at the time that this was happening. And so I became fascinated by how they made their money and what the effect of it was.”
2018-07-28 · Decoder with Nilay Patel · Recode Decode: 'The Billionaire Raj' author James Crabtree · IDENTIFIED FROM THE TRANSCRIPT
“I lived in India I moved to India in 2011 and I lived there for five years in Mumbai, the financial capital. I'm a journalist like you by background. I used to work for the Financial Times and various other magazines.”
2018-07-28 · Decoder with Nilay Patel · Recode Decode: 'The Billionaire Raj' author James Crabtree · IDENTIFIED FROM THE TRANSCRIPT