It must be a wretched feeling....

This is a theme I have been feeling for the last few days and I had to blog it more for personal record and in the middle of a working week, I must be mad to be doing this...

Have you ever thought what it must feel to be lonely? to not be able to say your thoughts out? the only sounding board available is self? I was watching this movie, 'stardust' and a part goes where the guy says who wants to be immortal, it must be lonely.. when the Kraken is found dead in Pirates of the Caribbean, it supposedly has a sad look in its eye, one of the characters says, it must be sad to one of your kind...Ice age 2 , the mammoth goes into a melancholic mood when he discovers he is probably the last of his kind....A friend came back from a Vippassanna (Spell right?) and was in total silence for 7 straight days, it isn't being lonely, but still for me communication is atleast a part of not being lonely....

When ever I keep thinking of entrepreneurship, this theme haunts me....the idea is your baby, you need to believe it to the hilt, you might be the only person to believe it first, convince a team who trust your vision and deliver and then go to the butchers of such dreams - the VCs/ the bankers/ consultants who will try to see the risk and caveat any upside....scared of the success that they might get right by accident...

It must feel lonely, it must be a wretched feeling.....one wise man told me when i was lot younger - prove yourself and your ideas to self, for you will spend a longtime proving it to others....right now I am others...I need to keep moving to the other side..

The problem of clutter....

In the corporate world, the cost of complexity and clutter is underestimated. It is captured in various cost lines, in various forms of inefficiencies that show up and the sub optimal decisions which are made...

Let me give you an example : one of my previous clients had manufacturing plants in nearly each state. The dynamics of the product were such and also the tax laws had necessitated that but then the contracts had a take or pay clause with contract manufacturers, so to avoid paying for products not taken, managers fear saying that you see, they would produce and then pay and transport the product half way across the country, when the closest plant was in the next town. And since you could not transport half a truck (the SKU had low volume) they would also transport a SKU which was in the made in the plant itself!!! The managerial bandwidth that went away in managing all this nonsense was so high, by the time we were trying to unravel it, no one knew why any of those activities were even happening.....so complexity had its costs and led to lack of clarity in thought process...

Why am I rambling? right now I am feeling the clutter killing my thought process...multiple streams of flux is killing my bandwidth and that leaves a lot to be desired in the end result...blogging is already suffering, i mostly snap and walk around dazed....need to declutter soon....results will follow...Its time to revisit fundamentals and ask hard questions from self....

THIS TOO SHALL PASS....

what an year it has been...it truly drove home the point the little prayer tries to make - give me the strength to change what I can and to accept what I cant...as one of my friends said : Macro eco is the luck factor you cant change in your life and if you are from the finance field, all I can say mates is the moral of that story we should remember all times - "THIS TOO SHALL PASS"

But to create a personal note, this year probably has driven home a lot of points in life, the highs of closing large deals, agony of things falling away, best laid plans coming to a naught, the insignificant feeling and the lack of control on lots of things but yes, as the year comes to a close, as I told a few people, for the first time, clarity has occurred in career life : Simple truth realized : acquire skill sets, make great friends, deleverage, build capital, enjoy the journey while moving closer to the ultimate goal of starting out by self....I dont have an idea, but the scare of being on own in the unknown without trappings of an organisation behind self is gone...yes the map is not the terrain but yeah hopeful this surrogate pain will show way...

Personally I always told myself : one day I shall create an organisation which will provide employment to 10000 people - 50000 lives touched - but starting small (driven home by the humility felt in this mayhem) I think I should try to change atleast 1 life : My favorite cause has been education and I have been regularly donating money, Come new year : let me see if I can do more...

When I was 25, the goals I set myself as Prof Ramc would call : ghosts to set at rest by 35 : Tick off basic assets accretion, Investible surplus of 1 cr, work for self, be a role model to atleast 1 person : all slightly superfluous goals but on way for 1, nowhere close to 2, clearing mental cobwebs for 3 and not started on 4...so 5.75 more years....looks like i stand a decent chance :)

and more easy events to tick over the next 18 months:
1. See the pyramids
2. Get involved in the community - will probably assist some school build some assets - a library maybe - I hopefully know enough people who will buy me books :)
3. Plant a tree - a small anecdote about this...when this thought came to my mind, my mind immediately did a ROTI - Return On Time Invested- i realized I had sold my soul to the banker in me - A tree is to me my version of being able to think about someone else other than me...being able to measure growth in cms/ inches in a year and not seconds/ days - my penance in patience
4. Get back to playing chess - a game which I stopped playing since it brings back very painful fond memories
5. Scan all the photos in my home : memories are too precious to be let to the mercy of the elements

So ask me how I did a year from now...

Till then, its just another BRN ( big round number!!) 2008, hope there is peace, joy and happiness all around..

observations from Europe

I did a whirlwind trip of Europe on work, screwup by Lufthansa meant I spent time in Paris, Munich, Brussels & Frankfurt instead of heading straight to Brussels, a place i have spent time in the past and have come to love. Brussels to me is the bangalore equivalent of Europe ( or should it be vice versa?) multi cultural, close to larger cities but with a distinct lovable personality of its own....

Its been 6 long years since I spent my last stint in Europe, so some changes I noticed...

1. There are beggars on the streets : I stomped around Europe last time and none of the main cities seemed to have them, some in Paris, but that was also very rare. This time, it was in your face, people at corners, reminded me of what a foreigner might face in India, women with kids, kids chasing you and youngsters with no apparent reason to be begging....what changed? Was astonished and my local contacts, they blame it on the new nations in EU, the slowdown and illegal migration but yes they too seem to notice the change

2. Understanding the demographic dividend - a lot of research reports talk of the youth and the push that will give India as a nation. Any public place in India will have screaming kids and across age groups, then you see youngsters on the verge of marriage and you know this engine is going strong for a few decades atleast....I roamed around in the streets of Brussels and the large other airports and only place I saw kids was Terminal C of Frankfurt and you guessed it right , thats where planes to India were departing from. Else, the concern of a greying economy, the strong social safety system and its future working, its impact on business, the world view that will emanate from Europe will be very interesting to watch

3. Investment in infrastructure : a constant thing you will hear from foreigners is the construction which seemed to be going on in China and India.... but what surprised me was the amount of construction I saw in Brussels, ofcourse, neighbourhoods looked vacant, the airport terminal too big for the number of passengers but the constant spending on upgradation, not general maintenance mind you, is so huge, I came back even more convinced we India need to do more. Our public planning systems are letting us down and our politicians doing us a disservice in planning public spending. The private sector is also not too behind, take the Bangalore Metro as a example, I have lost count of when they shut down half of MG road in Bangalore and Navayuga is taking all the time in world to even build the basic pillars....the full fledged metro is far away....no accountability is killing all of us....

4. Spoilt by Taj : I have in the past spent a lot of time at Taj palace, Mansingh road, Delhi and trust me they have spoilt me. I stayed at the Airport Sheraton in Brussels and while I have no complaints, the small touches by Taj, the personal warmth simply make every stay that much more comfortable. I am sure if they can get it right, the hospitality industry from India can rule the world.

5. The growing irritation about Muslims : The one thing I thought very highly of Europe was the sense of fairplay and their ability to recognise another culture and work with it. To a level, I think Europe is ahead in terms of such refinement but this time, the number of people who spoke to me of growing disenchantment with the local muslim populace was surprising...as one person said, I am ready to accept their practices, but are they ready to accept me? I used to think the ghettoisation of muslim communities was a very India specific phenomena due to our peculiar vote bank politics, but seems its a larger issue... I am not sure of the causality, but the clash of civilizations seems a larger issue and on the ground far widespread...

6. Queue control : a minor issue, I was standing in the queue at Brussels and when someone tried to barge in the lady manning the counter just stood up and asked the person to join the queue....that simple act increased the sanctity of the queue, in India the person at the counter somehow doesnt think its his job to manage this part of the equation and leads to situations. We Indians due to our scarcity mentality have a disrepute for being able to stand in a queue but I think the other part of the equation is also required.

Bottomline, I had my doubts about India slowing down and all the fear mongering in the media about our economic prospects, but I came back more convinced that India, if we help ourselves, politicians willing, bureaucracy moving its wide bum (I would be happy if the last 2 dont add anything as long as they dont screw up) we will move forward....

Death of a tradition?

Typically a language is not a standalone entity. It coexists with a culture, a way of life and comes bundled with folk tales, proverbs, folk songs, literature, slang, mythology. There is also the script, the grammar, pronunciation which are the building blocks of a language but I am not going to talk about them here. I am more concerned with the first few things I referred to. Ofcourse there do exist languages which might not have all the elements, but I am concerned about every single one of them

Supposedly we have 6912 active languages today ( Source: Ethnologue) and more on the verge of extinction every day. So everytime a language is lost we lose each of the elements I named. There are scholars and researchers about loss of languages and their preservation and efforts are on, but I feel every stone in the foundation is important…. Ok that was a long preface to what I wanted to say

I have friends from Bengal and the joy that arrives (and the sluggishness if I may say so) in their lives with the arrival of Puja is to be seen to be believed. Navratri or Dasara is a celebrated widely in India and the pandal culture of Bengal, the dandiya culture of Gujarat, the ram lila in parts of North India are all distinct forms of celebrating the same sentiment - victory of good over evil and worshipping the feminine form of 'shakti' ( although I am itching to deviate here and talk of how this is derided by certain cultures as 'pagan" I Desist). Karnataka has a very distinct form of celebrating Dasara - days of pooja - I remember Saraswati pooja, where my books got all the attention, to Ayudh Pooja, the day when we as kids got together and cleaned the vehicles and worshipped every form of tool , to vijay dashami a simple pooja to seek blessings - a part that never was practiced in my own home but have seen is the "Doll arrangement". It is a unique form of depicting mythology, themes from the texts and anything considered worthwhile….. As a kid although I have seen such arrangements I never appreciated it.

This time, I kept thinking, it’s a part of our tradition as Kannadigas (maybe a sweeping generalization, not sure if the practice is so prevalent in North Karnataka or in other Dravidian states) but I don’t see the sensitivity to this dying aspect of a festival. Also I kept wondering how and why is it that we don’t have such things on a grand scale in the form of pandals like we celebrate Ganesh festival or why didn’t it evolve into the Pandal culture of Bengal - Giving it a public form might bring back this practice of our culture which served a interesting purpose of being educational while fun.

As an aside, the practice of "doll arrangement" is associated with some wonderful songs in Kannada movies, so if it doesn’t revive very soon, those movie clips will be the only record of this bit of culture….hope it doesn’t come to that

Chit funds - basics

I did a post once -of-p2p.html and keep getting queries about chit funds... so here goes a post which captures the basics of chit funds. (Disclaimer : I claim to be no expert in this and is purely based on my participation in them a few years ago)

A chit fund is a purely Indian invention of accessing money. To that extent I have in the past compared it to peer-to-peer lending. A few people come together, pool a fixed sum of money for a fixed period regularly and every month based on the need, the money is taken by a member. Lets work with an example : Chit A is for 12 months of 1000 each, so the pool available is 12000 (a small technicality, if there are 24 people in the group then 2 chits will be available that month and so on). So all people pay the money to either a designated person or to the chit fund or operator, and then people who require that money bid for it. So if I were to say bid for Rs 1000, then I will get 12000-1000. I now keep paying my 1000 monthly. What happens to the 1000 I paid? - usually a small portion of it goes to the chit fund/operator as charges. The rest are divided amongst the group in either of 2 forms - as a cash payout or as a deduction from the next payment due. Also there is a variation where there is something called a double chit, which is essentially all the bid amount is collected and is available to the group to bid, so that the time period for which you pay the chit is reduced.

What determines the bid amount - multiple factors but most basic is the cost of carry and the demand for money from amongst the group of members. So the bid amounts are usually higher in the initial stages and keep falling, in large chits mostly towards the end bidding does not happen and base bids are fixed. Also most chit have a reserve price and a minimum tick. The demand and supply works differently - if a group consists of mostly businessmen who are looking at short term funding the rates tend to be higher compared to group of housewives - basic concept of benchmark rates and the return that people can get on the money that they took out of the chit. People ask me why shouldnt they just go start a recurring deposit in a bank - both inculcate the same regular saving habit. Simple answer - power of compounding and higher return. Typically if the group you belong to is of people who bid higher then the return on your investment is high and a RD pays you interest in the end, a chit fund is immediate.

But the fundamental laws of finance - risk and return correlation run true here - higher bids mean people are desperate for that cash, which in turn means strained finances (not an issue if it is a temporary cash flow problem) but if it is long term - one runs the risk of default. Also the other problem is of chit fund operators absconding with the money. so the due diligence that you should carry out is check on the operator first and then your group members before you start. Dont bid unless you need the money and have a good use in mind which will pay you more than what you paid them.

The industry is now regulated, so check if the chit is registered and then step into it. Stick to the biggies, there might be safety in numbers. Avoid mom-pop setup unless you trust those guys with your kids.

so it serves them right?

A lot of my friends speak to me about the current market mayhem and the feeling they seem to have is it is wrong for tax payers money to be used to bail out the excesses of a few 'rich spoilt bankers - let them fry in hell'. yes I am one of that creed of bankers, those arrogant self professed 'masters of universe' as Thomas Wolfe put it.... but hear me out...

what did these bankers do which has brought the great market to its knees? a simple concept called leveraging....using 26 bn dollars as in the case of Lehman to create a balance sheet of ~400 Bn...thats the beauty of the system and this is not the forum to explain what was happening...

Just that, remember when these same bankers were driving up prices of that corner plot (directly by investing or indirectly by giving money to that builder to build his land bank) we didnt hear too many cribs from people who flipped that apartment they bought during construction for a 50% return in 12 months....or when these banks needed backend support on research and spawned a few 100 of KPO's in India creating jobs or giving those great IT companies large amount of business....remember financial services probably has the largest trickle down effect after pure manufacturing in terms of ancillary jobs created.... so lots of wealth was created...

and where did this wealth come from : the main investors in all this were supposed to be hedge funds and sophisticated investors who knew what they were getting into (different point that I dont think anyone knew what the heck was happening) and ofcourse those pension funds - again with well paid fund managers...so hopefully some wealth got shifted in this process..... a lot of it got destroyed but was it all created by this swell of financial engineering....

so dust to dust is what has happened....and as it is said great fortunes are made in the ruins of financial markets and realized in bull runs....so keep investing.... dont listen to the experts on TV, do your research or else just buy an index fund...and while you are it, spare a thought to all those people who lost jobs, lost pots of money....a fool and his money part ways, but it still hurts to be a fool...

and yes, when we were back in school, Lehman, Bear, Merrill were the ones we dreamt about....great institutions having been through 100+ years seen the great depression, the meltdown, the dot com crash....gone...RIP