Tuesday, November 25, 2008

Movies and word-of-mouth: Slumdog Millionaire

Slumdog Millionaire's performance at the box office is worth tracking. Why? I would recommend sampling the product first. You are welcome to tell me what you think- after you see it. ;-)

My first hypothesis is that word-of-mouth would have a huge impact on the movie's box office returns.

Keeping absolute returns aside, my second hypothesis is that this movie would have a fatter tail vis-a-vis initial returns compared to a movie I have mentioned here:

Which products/ brands would have gained the most from an association with Slumdog Millionaire?

What do you think?

Saturday, November 22, 2008

Interesting Times and Investing in Large Cap Companies- Part 1

Is equity investing in large cap companies during uncertain times similar to venture capital investing if the 3 conditions below are true?
1> Your offer of capital makes you a large shareholder in the company.
E.g. Warren Buffet's investment in Goldman Sachs, with the terms he could bargain for.

2> The capital markets enter a period of volatility that begins to approach uncertainty that venture capital investors face in their investment decisions.
E.g. The VIX crossing 85 in October'08, in the context of applying the Black Scholes model to investing decisions.

3> The capital markets face a liquidity crisis/ credit crunch.

Talking points:
1> Are these three conditions enough?
2> Does the "maturity" of the company mean anything beyond the ability to effect change within the organization, and the time required to effect this change?
3> Is looking at this question purely from the financial investing term sheet perspective inherently flawed?

Now that you have been anchored to the 3 follow up questions above, here are a couple more:
1. Is there a category of distressed company investing that is similar to venture capital investing?
2. Irrespective of how you categorize your investments or investing style, would you consider ending up looking at term sheets as an indicator of the end-of-the-road for that particular investment?

What do you think?

Tuesday, October 21, 2008

Managing a crisis.

A couple of thoughts:

1> Parallel between managing a financial crisis and plain old project management.
As a crisis prevention (management?) measure, would a decision maker pump in money into "the system" to minimize the impact of a crisis as against spending as much money after the crisis has totally hammered the economy?

The context is the current administration's steps in dealing with the crisis as against the government initiating huge construction projects to keep the economy floating through the Depression period.

2> Credit and liquidity characterized as life saving therapy that could kill?
What do you think?

Thursday, September 25, 2008

Financial Crisis: Economists comment

If, like me, you would like to hear what seasoned economists think about the current financial crisis, below is an interesting site called The Economists' Voice:

Its a subscription site- however, the individual subscription fee does not cost an arm and a leg.

It was shortlisted for the best new journal here:

Many thanks to Lori Sullivan for sharing the site.

Wednesday, September 24, 2008

The Anatomy of a Financial Crisis/ Good Times, Bad Times

The first 5 points of the notes are at end of the novella below.
6> Characters below bear no resemblance... oh, go on and read it for yourself.

The Anatomy of a Financial Crisis, Or,
Good Times, Bad Times (With Apologies to Led Zep)

Minnie, Manny and Moe are bankers in GeeWizLand. They like to lend folks money so that folks can take fun vacations and create a global economy. The 3Ms have been doing this for ages, and they like to lend money to a certain set of people, like Paris Heelton and Britney Spurs, with the odd movie star like Ms. Jolee thrown in.

Funky Fred comes along and tells the 3 Ms that he will be happy to guarantee these vacation loans for a small fee. Given the uncertainty over Paris' Jail time and Britney's asylum ambitions, this sounds like a good idea to the 3 Ms. Funky Fred also decides the he could lend to the 3 Ms. Moe is totally on board with Funky Fred on this. Ms. Winepub showed up at Moe's very ornate door seeking money for a rehab vacation, and Funky Fred's loan would help Moe lend a helping hand to Ms. Winepub.

Times are good. The 3 Ms meet at the 3Ms Factory every Friday night to gorge on Cheesecake and are happy to invite Funky Fred to the party. On one of these evenings, Funky Fred comes up with another innovative, brilliant idea. He will not only allow ordinary folks to become shareholders in his company Fred Smarts, but he will also borrow. There are only 3 bankers in GeeWizLand. The 3 Ms. Funky Fred points out that the smart and funky thing about this borrowing is that he will pick and choose loans, label them 3 As and let Minnie, Manny and Moe choose to lend against the 3 As.

Minnie, Manny and Moe look at each other, and like the idea. After all, Funky Fred is the smart guy running Fred Smarts. He is guaranteeing their loans. He is also a lender and has some insight into the loans business. Minne is thinking she will get to lend against the 3 As in Moe's bag- she had been eyeing superstar Winepub's rehab vacation deal that Moe pulled off. So, they begin to hammer out the idea over more Cheesecake. Funky Fred totally connects with Minnie when he mentions that he thought Ms. Winepub was such a good bet, he lent her money for her second rehab vacation. With the cha-ching at the opening of Pink Floyd's Money ringing in their ears, Funky Fred and Moe exchange high fives. Manny being Manny, throws a plate of cheesecake up in the air, high fives a cute hanger on, and then tosses it over to Funky Fred. Finally, to close the deal, Funky Fred announces, "Folks, I think this is the beginning of a beautiful friendship".


Of course, the 3Ms are not supposed to be thinking about Funky Fred's uncle. Sam. Sam is the Warren Buffet of GeeWizLand. Fred has always been careful to tell them that Sam's a great guy and everything, but Sam and he have no business dealings, and that Sam minds his own business. Anyhow, the 3 Ms think it can't hurt to have Sam for an Uncle.

So, times are good. With all the fees Minnie, Manny Moe and Fred are making, the innovative Friday night cheesecake parties at the 3 Ms Factory are the toast of GeeWizLand.

Along comes Boogie Howser, NPH. Brilliant guy. He wants to take a year long sabbatical- he wishes to go sailing around the world. He intends to use the money from his consulting gigs, playing doctor sans frontiers, mais avec un bateau, at his stopovers to pay the interest on the loan while he is away. Moe likes Boogie. Boogie's past record as GeeWizLand's superdoc is unbeatable. Moe thinks this loan is do-able and happily loans Boogie the money. Moe thinks Boogie is not just Type A, he is Type 3A and labels him as such (AAA). Same goes for the loan- now 3A (TM). Plus, times are good, aren't they?

Now, Boogie breaks a leg at a stopover in Timbucktu. He treats folks who cannot really pay much. He misses a payment, and then some. Ms. Winepub treats her rehab vacation like a vacation, her concerts bomb, and her second album completely bombs. Ms. Winepub is a gem of a person. She will repay her loan. Fred and the 3 Ms think she will too. She's a rockstar and a gem of a person. Really. However, for now she missed a payment and then some.

Moe realizes he is in trouble. Even if its only for now. First there was Boogie, a customer he had not dealt with previously, and now Ms. Winepub was tottering as well. All superstars, each one a gem of a person. Moe suddenly has no money to lend because he is not getting any money in. In fact, Moe may not be able to make his payments on the money he has borrowed.

Funky Fred and Moe have a quiet chat at their Cheesecake Party. Funky Fred realizes he is in trouble too, just like Moe. First there was Ms. Winepub. Now, he has to stand by his guaranty for Moe.

Funky Fred has no money. Not to lend. Not even to make payments to Minne and Manny who were counting on his funky 3 As. Minne and Manny haven't heard about Ms. Winepub's financial mess. They couldn't. To them, she had become one of the funky Type 3As- Not Just a Number, But a TLA (Trademark, Funky Fred). In any case, Minnie and Manny soon realize they are in trouble as well. Funky Fred can't pay them. Now, Minne and Manny can't lend. Maybe they wouldn't be able to make payments in the future either.

The 3 Ms realize that old methods like throwing cheesecake at each other to sort matters out would not work. True to their reputation, the 3 Ms will have to innovate yet again. Minnie, Manny and Moe now step out of their party and head over to Fred's Uncle's- Sam's- place.

Sleepy Sam is awakened by a 3 AM knock at his door and finds Minnie, Manny and Moe looking at him. Sam, a little drowsy, begins to think about why he should bother with the 3Ms. Really. Minnie, Manny and Moe dug their own grave. Then there was Funky Fred, who was always too smart for his own good. Who goes about calling himself Funky Fred? He is not sure if its the sleeping pills reacting with his face cream, but his mind plays a phantasmagoric reel of Young Sam punishing little Funky Fred for making too much money at his lemonade stand by spanking him and getting him to drop Funky from his name for the next school year. The reel ends abruptly with Funky Fred negotiating with the immortal line, "Funky by any other name... is still Funky".

What should Fred's uncle do? A simple "Get lost!" to the 3Ms should do the trick and he can deal with Fred (down with Funky! Now!) in the morning. However, it's not that simple, is it? There's a faint thought in his mind, barely registering thanks to the throbbing headache caused by The Friday Night Party People showing up at his doorstep in the middle of the night. Perhaps his businesses, and wealth are tied to the 3Ms fortunes.

Sam is huge. HUUGE. He has borrowings from the 3Ms. He also has borrowings from distant shores. The distant shores like GeeWizLand. Its a nice town of superstars that always have money. Now, unfortunately due to the Winepubs and the Howsers, the 3Ms don't have money. And the superstars don't have any money to spend because 3Ms aren't giving them any.

Oh and btw, somehow, folks outside GeeWizLand aren't buying Superstars anymore. The Superstars will find a way, but for now, they really have no money.

Sam's businesses, even stable businesses like EyeRuS (How much emptier can you pocket be today? Trademark EyeRuS), are now hurting because Superstars have no money.

Distant Shores (TM, The Distant Shores Syndicate) has a little camera behind a Curtain in Sam's House. It is watching Sam. What will Sam do? Can Distant Shores' members continue lending to Sam the same way they used to? Perhaps distant shores ("More Than That Syndicate") have no options either, just like Sam.

What does all of this mean? This looks like one big snake biting off its own tail! This may also look like something that GeeWizLand and distant shores may have to weather together. For how long? A year? A decade? A generation?

GeeWizLand knows little about distant shores. Those who do know about distant shores tend to go break a leg in Timbucktu. Distant shores think they know GeeWizLand and its Superstars, but that's an illusion as well. However, everyone has a sinking feeling that even if it is for a little bit- with faith in Superstars and everything- everyone is in it together.

What do you think?

Notes, the strange loop version:
1> This writing (Novella, as some readers have called it) is a slightly modified version of an extempore email sent out on July 12 to a MENSA message board to explain, in layman's terms, what was going on in the financial sector at that point of time.

2> This is an incredibly painful time for the financial services industry, the US economy and global economies. This article is just an abstraction. Its a starting point for readers to explore market structure and think analytically about decision making. If this encourages you to build complex models that tie in macroeconomics, consumer behavior and game theory, please drop me a line. We should talk.

3> A lot has happened since July 12. If you have read the story before-I will reemphasize that its not over yet. The article is structured so that you challenge every paragraph and analytically dig into the details. Your comments are welcome and critical.

4> Many thanks to Prof. Rosensweig for teaching.

5> I remember telling someone in a different context (the energy crisis) that if I could fix the problem tomorrow, I would do it. I really, really, really would like to. I can't. I can, however, do my best to learn. "We shall overcome!"

Wednesday, May 21, 2008

The Return of The Da Vinci Puzzle

Oh well, I was not inclined to publish the solution. However, as Spielberg said to Harrison Ford, or as Sly Stallone thought to himself, never say never.

The Original Da Vinci Puzzle is here:
Sure beats calling it The Vulcan Mind Meld, doesn't it? Beats Einstein's Puzzle hands down? I suspect you will find clues in the puzzle once you see the solution.

Anyhow, I got some awesome, and some crazy, solutions. Below are two approaches I thought of. In the first one, we take liberties with the puzzle/ twist the puzzle rules a bit. In the second one, we incorporate optimization ideas to fit the rules of the game.

Approach 1:
1> Cut the sets of balls, so that each set of balls has a prime number numerator in a ratio that makes up its weight.

2> Identify the duplicate set of balls on weighing the balls once by using properties of prime numbers.

Approach 2:
1> There is no unique solution.

2> Avoid using the scale. Solve this on paper or write a program.

3> You would like to minimize the error in the solution. The error here is the possibilities of jars holding the duplicate set of balls. E.g. You could come up with a solution where you weigh set 1,2,3,4,5 and the weight indicates that the duplicate set could be 1,2 or 5,6. You could also come up with a set 3,4,5,6,7 where the duplicate set could be 3,4 or 5,6 or 8,9. You minimize error with the first solution, i.e. the first solution would be *more* correct.

4> As pointed out by a Mensan, you have to try out all the possibilities before you can identify the optimal solution set. Yep, welcome to the weary world of The Traveling Salesman. This is literally a "hard" problem.
Pick any solution string from the optimal set as your solution. At this point, if you haven't lost your cool already, you are welcome to also weigh this solution string on the scale. Once.

5> The same bright Mensan suggested a book for this kind of funky thinking:
Numerical Recipes in C: The Art of Scientific Computing
I don't have my copy of this book anymore. Its been a while since I was in engineering, however, I might borrow it if you have a copy.

6> Don't shoot me, I'm just the messenger for the crazy ideas running about in my attic. :-D

So, what do you think?

Tuesday, May 6, 2008

Good Product Management and Delegation?

What does it mean to delegate as a Good Product Manager?
I found myself at a site on "Good Product Management" that recommended delegation as an important tool. This led to some discussion on what it means for a product manager to delegate responsibilities. Some bloggers were of the opinion that delegation is irrelevant to a product manager- he should be focused on helping others get their job done within an integrated product management framework.

I don't think the two viewpoints are different. They are really only approaching the same idea from different perspectives. Let me explain.

The Dynamic View: Fire, Fire Everywhere!
Having been involved in a massive product turnaround, I can attest to the fact that you will find ample opportunity to get sucked into fires (a reference to "The Goal"). These fires are not just specific high visibility issues, but also cases involving process variance/ risk factors where you have leaders defined and contingency plans in place. This is a dynamic view in product management reality.

Should you step into each case? What's the best way to do so? Or should you let the defined leader find a way? Should you step back and spend your time drafting "Integrated Product Management" processes for each exception?

The Static View: We Have a Magic Bullet!
At the other end of the product management spectrum, you risk complacency (we are only getting started here) when you think you have the right "chess pieces" with the right processes in place, when you are in a dynamic business environment that will unflinchingly sneak problems past your Product Management framework. This is the static view in product management reality.

A product manager may thrive with a static perspective of his role thanks to serendipity.

Dynamic Solutions to Dynamic Environments
While being a facilitator is important, a product manager is likely to find himself working toward building levers and an ecosystem that improves outcomes.

This is essentially change management. Similar to the decision making of a good general manager, who realizes the limitations of the environment he operates in, a good product manager will wisely exercise judgement in taking up tasks- even choosing tactical tasks- toward change.

What do you think?

Sunday, May 4, 2008

Movies and Brands: Iron Man.

Iron Man made $100 Million over a weekend. i.e. about 3% of the US population has seen the movie across 2000 theaters.

While movie marketing/ branding/ merchandising is an interesting topic in itself, how many brands do you recall jumping onto the cobranding bandwagon?

Alternative Energy Investments: The BioFuels Story Continues.

There has been a lot of negative publicity on biofuels lately, given the context of high food prices. Here's an interesting story about second generation biofuels (energy from agriwaste) that would strengthen the hands of folks who would like a more realistic perspective on biofuels research:

The ruckus on Biofuels, from the Food vs. Fuel perspective, has been causing governments and institutions to rethink biofuels support:
1> http://uk.reuters.com/article/oilRpt/idUKN2232394520080422
2> http://thescotsman.scotsman.com/latestnews/-Brown-sounds-retreat-on.4009080.jp

My take on alternative fuels last year is here:

What do you think?

Turnarounds and Distressed Company Decision Making

I remember thinking about incentives during a restructuring course I took a couple of years ago:Consider a pre IPO company whose value has been falling, and it's liquidation value is now close to its debt value (we have all heard of a startup that burnt through its cash). The management has an option to make an investment that is 3x as risky as any they have considered so far.

Should the management optimize:
1. shareholder value?
2. company value?
3. creditor value?

At an interesting case study session recently- amidst turnaround professionals- an insight was that the legal "line in the sand" varies from state to state, besides varying from country to country.

What do you think?

Tuesday, April 29, 2008

Conference Panel: Healthcare in India

Before stepping into the panel, I had a pretty linear approach to the Indian healthcare business:
1> Regulatory frameworks -> IP, constraints.
2> Industry-> market structures, services, and maturity of symbiotic players.
3> Consumers and Markets-> segmentation.
4> Companies-> Revenues-> Products and Services; Costs -> Manufacturing, Distribution, Licensing.
5> Distribution models.

Listening to the panelists from Pfizer, a healthcare company (Apollo Hospitals), a generic drugs company (Dr. Reddys) and Carlyle, I began to focus on 2 takeaways:
1> Healthcare Framework and Policy Innovation: The parallel here is the effort in the Indian Financial Services sector to develop frameworks given the results in the US financials "market". Another parallel is the U.S. music and film industry.
2> Business Model Innovation: Focused on access to healthcare services and drugs. Access equates not just to distribution, but also to price points. The parallel here is the U.S. (global?) music industry.

Healthcare Policy Framework Innovation
1> The "Access" Case for Policy Frameworks:
Amit Patel from Dr. Reddy's made an interesting point that bringing down price points in drugs, patented or otherwise, may bring about increases in revenues, due to increases in volumes of users. He carefully avoided talking about elasticity, but he was effectively driving at segmentation and managing the segments.

How is this thought process relevant in the Indian Healthcare context? Unlike in the U.S.- given the context of healthcare insurance in the US- the price of a drug effectively forms an access barrier to those who need it. Healthcare in India invariably involves a large out of pocket expense component.

These access issues roll up into a need for policy frameworks that develop multiple markets and multiple market entities that collaborate to serve unmet demand.

2> The IP Case for Healthcare Frameworks:
Again, the panelist from Dr.Reddy's pointed out that a patent regime is an outcome of a particular economic environment and necessity. The U.S. music industry is coming to grips with markets evolution driven by technology. Do the U.S. music and film industries need to rethink how they look at IP and its enforcement? Would they have to take another look in the future?

3> Policy Roadmaps:
How about applying an idea, similar to product roadmaps for agile development, that I suggested here:

Business Model Innovation
On distribution, the value chain, and operations, I find parallels between the music industry and the healthcare industry. Supply needs to innovate to stoke Demand.

More about this as I add to this blog.

Sunday, April 6, 2008

Music Industry, Technology, IP and Piracy: Is there anything in common? Really?

Multiplicity of Approaches.

News articles on the music industry below, indicate a mutiplicity of approaches (could it be serendipity?) being followed by firms to deal with flagging "old media" revenues:
1> http://www.nytimes.com/2008/04/04/technology/04myspace.html?_r=1&ei=5087&em=&en=7e63eb66cebb344e&ex=1207454400&pagewanted=print&oref=slogin
2> http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/04/06/cncarphone106.xml&CMP=ILC-mostviewedbox
3> http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/04/06/ccemi106.xml

The article, and my own experience in Technology Intellectual Property (IP), got me thinking again about the music industry's woes.

My contention is that any firm considering developing IP in emerging markets must think of the markets as hypercompetitive, where they compete with their own shadows. This might dovetail with the experience of some Venture Capital firms in Asia and Africa.

Allocate resources toward making money.

As some one who has created IP, in technology, in an emerging market, my generic stand (and I know this is likely to spark controversy) in that context is that protecting IP is subservient to growth- marketshare, ramping up revenues quickly, etc. Marketing muscle- either the company's own distribution strength, or the company's ability to create a network of stakeholders in its success- is critical towards finding a defensible niche where the company can build customer relationships/ stick. Allocate resources toward making money, instead of fighting a losing battle.

So What? How does this apply?

While the developed economy context is not the same, the first two articles seem to be a sign of parts of the value chain seeking to control the supply chain.
The third article seems to indicate a deepening of a pragmatic approach in the industry. An approach that focuses on developing models for making money off an economic reality, as opposed to fighting an (apparently) losing battle. For project management, I tend to advocate a multiplicity of approaches toward a more robust critical path. However, there are times when a multiplicity of approaches only serves to muddy waters.

Over the past few years, I have faced some flak for flatly advocating the pragmatic approach. What do you think?

Conference Panel: Asset Allocation and Changing Times, the Limited Partner Perspective

I decided to check with a Limited Partner (LP) on the questions on deal size and frequency that I had thought about at this conference:

Of course, the context was different, but my take was that the issues encountered were the same. The LP smiled and said they had a great CFO. Going back to the Gary Loveman post below, you can't argue with talent:

A General Partner (GP) at another panel said that an LP had mentioned that a lesser return in the depressed economic environment would still validate their investment/ asset allocation. It would be interesting to get insights into the aggregated decisions made by GPs across PE firms and the outcomes down the line.

The Usual Disclaimer: This is purely a knowledge sharing resource and I have been careful to protect panelist interests. Ethically, context is everything, and I will gladly retract anything that affects the parties mentioned. Call this my mini OpenCourseWare, if you will, where Open signifies life experiences.

Conference Panel: Portfolio Value Creation by Improving Business

Gary Loveman, Harrah's Entertainment, was asked about how he would act if slowing economic conditions impact business despite his assertion that economic conditions would not really impact his business.

He said he had the leeway to adjust his planned capital spending (approx. $4BN) to meet debt commitments.

It was interesting to note that he would rather kill/ delay Capex than sell assets to meet commitments.

I did a quick mental check of this insight against his assessment that growth in the industry came from M&A for assets, and that the WACC was currently pretty high within the firm. It fit.

Later, I asked a panel of General Partners (GPs) how frequently, in their substantial experience of dealmaking and investing, did the GPs have such contingency planning (operations risk management, really) conversations with the portfolio company senior management? Did such conversations impact the outcomes of their investments?

The response, as I am beginning to expect from superb panelists, provided insights into GP operations.

On a tangent, a panelist was of the opinion that folks like Gary Loveman operate at a different level. As the one who raised the question, I was inclined to agree. What an insight into talent- all from a simple question put to a CEO!

The Usual Disclaimer: This is purely a knowledge sharing resource and I have been careful to protect panelist interests. Ethically, context is everything, and I will gladly retract anything that affects the parties mentioned. Call this my mini OpenCourseWare, if you will, where Open signifies life experiences.

Monday, March 24, 2008

I am not selling the product...

...just the message:

Notes on first impressions of the ad seen on CNBC during Lunch:
1> The background score by Gustavo Santaolalla has parallels with Indian music.
2> Its a 90 second spot. The rationale? Apparently, time is the only true luxury.
3> This is an interesting brand initiative- and is the first Louis Vuitton TV ad ever.

What do you think?

Conference Panel: Investing in India- The Maturation Process, whats next?

The amazing panel, drawing from PE, management consulting and IB firms emphasized that they are taking a long term view of the Indian market and are doing well thought out due diligence on deals to make the best decisions for the funds. Deals have been quite competitive and negotiated.

This approach raises a line of thought regarding the non-core (?) activities of a PE fund. Why am I calling them non-core? Well, most folks would say that the only core activity for GPs is to find good investments and fund them, the rest can go for a toss. Performance is the cornerstone of success. The "official" lore is that the high performing GPs do not really have to bother much about non-core activities.

This query on capital deployment and how much GPs think about it is still worth considering as it seems to be closely tied with fund raising. The response to the query by the GPs can be that they do not really care about capital deployment as they tap into their funds on an deal by deal basis. However, I am inclined to think the GPs have a sense of what the LPs are thinking of when LPs make investments in the PE funds. Sounds like business development, doesn't it?

Anyhow, non-core or otherwise, lets dig into some aspects of the PE business. How do the GPs:
1> Handle uneven deal flow?
2> Manage different relative risk levels across deals?
3> Manage different rates of returns on their deals?
4> Set LP expectations on deal flow and deal sizes, across business environments, while still keeping LPs on board?

What do you think?

From the LP point of view, How do LPs:
1> Manage cash (e.g. lack of predictability in drawdowns)?
2> Allocate capital, from the asset allocation policy and portfolio management point of view, between drawdowns, and for drawdowns?

What do you think?

The Usual Disclaimer: This is purely a knowledge sharing resource and I have been careful to protect panelist interests. Ethically, context is everything, and I will gladly retract anything that affects the parties mentioned. Call this my mini OpenCourseWare, if you will, where Open signifies life experiences.

Conference Panel: Selling to the Indian Consumer

Amazing insights from consumer electronics and retail consulting. A consumer electronics company was focusing on the top 30 cities, despite indicates that the rural market had as much disposable income as the urban market. This raised a couple of questions from me during the panel.

What kind of innovations in distribution do we see in India in the next 5 years?

What do you think?

Can the Consumer Electronics companies contribute to more active usage of the cellphone screen? This query had an interesting response and an unexpected fact component- India uses only about a third of the spectrum that the US currently uses.

Does the Indian cellphone consumer need an industry association comprising of consumer electronics companies, software companies, infrastructure companies and investors to encourage more active usage of the cellphone screen?

What do you think?

The Usual Disclaimer: This is purely a knowledge sharing resource. Ethically, context is everything, and I will gladly retract anything that affects the parties mentioned. Call this my mini OpenCourseWare, if you will, where Open signifies life experiences.

Keynote address: Vinod Dham, NEA- Indo-US Ventures

The amazing keynote by Vinod Dham has parallels with a keynote (different conference) by Alan Patricof, Managing Director, Greycroft, with respect to his experience in Venture Capital in Africa. Vinod was bullish about opportunities in India.

His talk raise a query. What is the difference in managing a $200 MM fund in Silicon Valley vs. a $200 MM fund in India?

On the dealmaking end:
1> Do you do more deals?
2> Do you invest in companies that are more late stage?
3> Do you invest in companies that can bring in and ramp up revenue pretty quickly?

From personal experience, Indian startups are able to keep costs pretty low.

On the investing end, what kind of support do you need to provide to startup leadership?

The Indian technology clusters- Mumbai, Delhi, Bangalore, Hyderabad, Chennai- are not as mature as the Silicon Valley cluster.

What do you think?

The Usual Disclaimer: This is purely a knowledge sharing resource. Ethically, context is everything, and I will gladly retract anything that affects the parties mentioned. Call this my mini OpenCourseWare, if you will, where Open signifies life experiences.

Conference Panel and Keynote: Managing Local vs Global

Ravi Venkatesan, Chairman, Microsoft India, talked about how the Indian market and how its challenges were different from those in the US.

How does the local leadership deal with a global company's priorities while "tending" to the local market? Does the company's DNA allow for a global/ local market trade-off based on the type of market (socio-politico-economic environment)?

What do you think?

The Usual Disclaimer: This is purely a knowledge sharing resource. Ethically, context is everything, and I will gladly retract anything that affects the parties mentioned. Call this my mini OpenCourseWare, if you will, where Open signifies life experiences.

Conference Panel: Infrastructure in India

Commenting on the delays in getting infrastructure projects off the ground toward creating a project pipeline, G.V.Sanjay Reddy, Vice Chairman, GVK Industries Ltd., pointed out that it is more important to get decisions made in getting infrastructure projects off the ground as opposed to developing detailed policy frameworks. That's the 30,000 foot eyeview of the problems in execution.

This, coming from an India company, seems to make sense. The India company has expertise in managing vested interests throughout the project lifecycle and a greater appetite for management risks.

Could there also be a realization that once Indian firms develop core capabilities and differentiate, a network of firms/ contractors/ sub-contractors model would become feasible?

Another thought that I would have like to pose to the policymakers is the consideration they give to developing policy roadmaps.

What do you think?

The Usual Disclaimer: This is purely a knowledge sharing resource. Ethically, context is everything, and I will gladly retract anything that affects the parties mentioned. Call this my mini OpenCourseWare, if you will, where Open signifies life experiences.

Conference Panel: Media & Entertainment in India

TATA Sky setup a nationwide support structure in India, flat. It is growing at a pace that is set to drive the company to leadership in satellite TV subscriber base.

How does a company manage operational decisionmaking, organization structure, core competencies, vendor relationships, training, and breakeven in such a context?

What do you think?

Given that India has over 250 MM cellphone screens, versus upto 50 MM in PC screens, how do service providers support the growth of applications and products for the cellphone screens? Does a Microsoft-Facebook dealmaking approach work in an Indian context?

What do you think?

1> India seems to have a lack of startup oriented risk-taking despite a large pool of enterpreneurs.
2> The Indian market does not have mature "competitive" technology clusters and mature financial players that support various stages of a company's lifecycle in a cluster.
3> Leaders from Microsoft India, pointed to a lack of expertise in business models.

This lack of business model innovation may be impeding a ramping up of local application/ product based activity. Would a Microsoft-Facebook type deal-making model- as a means for service providers to support cellphone market development- work in India?

What do you think?

The Usual Disclaimer: This is purely a knowledge sharing resource. Ethically, context is everything, and I will gladly retract anything that affects the parties mentioned. Call this my mini OpenCourseWare, if you will, where Open signifies life experiences.

Conference Panel: Trends in Private Equity and Venture Capital Sectors in India

Given a trio of PE, VC and IB players in India, the panel met high expectations. Some facets talked about:
1. Debt market in India
2. Constraints in structuring transactions
3. Regulatory environment and red tape
4. Nature of targets (family driven enterprises), time horizons and deal flow networks

Given these factors, I wondered how the firms managed risks- not just financial risks. I queried the panel about their experience with a deal that did not meet experience.

What do you think?

The VC investor, who had significant experience in investing in India provided an interesting insight, that emphasized the efficiencies that the PE/ VC firms can find across funds and investments/ deals.

The response also threw light on the "transaction costs" that mutual fund like SPAC aggregators would face that would make them replicas of publicly traded PE firms.

The panel echoed some of the points made by Alan Patricof, Managing Director, Greycroft, at a conference keynote, with respect to his experience in Venture Capital in Africa.

The Usual Disclaimer: This is purely a knowledge sharing resource. Ethically, context is everything, and I will gladly retract anything that affects the parties mentioned. Call this my mini OpenCourseWare, if you will, where Open signifies life experiences.

Conference Panel: Fundraising Darwinism- Evolution of PE fundraising

Bruce Rosenblum, Managing Director, The Carlyle Group, tore into the re-emergence of SPACs (Special Purpose Acquisition Companies) in the context of Private and Public PE companies. He pointed to two advantages PE firms would have over SPACs: diversification and GP incentives.

Given that there are many similarities between VC and PE fundraising, I was inclined to think that there was more to the comparison that what met the eye.
1> Was the PE firm structure an advantage?
2> Were the PE networks an advantage?
3> Were the PE firms able to gain efficiencies across investments that would not be possible in a different setting?

I queried Bruce for a comparison between Public PE firms and hypothetical mutual fund like SPAC aggregators (something I came up with to gain a better insight into his perspective). He had an interesting response.

What do you think?

Also, Francesco Guerrera, Financial Times, highlighted the paradox of PE firms going public. Bruce talked about KKR rasing $5 BN in public equity through Euronext at Amsterdam.

How do you think PE firms would deal with the q-on-q public market pressures?

The Usual Disclaimer: This is purely a knowledge sharing resource. Ethically, context is everything, and I will gladly retract anything that affects the parties mentioned. Call this my mini OpenCourseWare, if you will, where Open signifies life experiences.

Tuesday, March 18, 2008

The Da Vinci Puzzle: With apologies to Leonardo Da Vinci and Dan Brown

Ladies and Gentlemen,

Admit it! You loved the book! Now, fasten your seatbelts! The Da Vinci Puzzle is here!

Before we dive into the puzzle, I'll confess:
1> I am not a fan of puzzles.
2> I am more a physics guy than a math guy.

Without going into the gory details, I find that puzzle solving is usually about picking a solution that fits. The one with the most puzzle solutions in the bag, and the optimal algorithm to access those solutions, is usually the first one to crack the problem.

However, being around bright folks interested in puzzles got me going, although only for a brief period of time. Consequently, here's my stab at constructing a puzzle.

The original puzzle is as follows:
I have ten bottles, and there are ten balls in each bottle.
Nine of the ten bottles have balls that all weigh the same.
One of the ten bottles has balls that each weigh 20% more than each of the balls in the other nine bottles.
You have a scale, which is very accurate, but you can only use it ONE TIME (you have to weigh the balls all at once, not one at a time).
How can you tell which bottle is the one that has balls that are 20% more in weight?

Now, when you figure this out, here's the next construct. I call it The Da Vinci Puzzle (pun alert!):
Extending the puzzle above (that may be your clue), what if there are 2 bottles with balls that are each heavier by 20%?
Can you tell which two bottles weigh more?

I believe there is a feasible solution.
I also know a bright guy who believes there isn't.
What do you think?

I buy a beer to the first few who take a stand on the feasibility of the puzzle and can prove it.

Also, I will not be publishing the solution- the assumption is that word-of-mouth will carry the puzzle and its solution to the seekers/ faithful/ die hard/ hardcore/ whatever the latest buzzword is.
To add to its word-of-mouth appeal, and without giving away the answer to the puzzle, I will add that you can answer the Da Vinci Puzzle in one word. Could that one word either be "feasible" or be "infeasible"? You tell me.

P.S. Why is this post so long? Its got heavily veiled red herrings and clues to distract you from solving the Da Vinci Puzzle.

P.P.S. Why am I calling this the Da Vinci Puzzle? What's the pun? Have you heard of Einstein's Puzzle?

P.P.P.S. The balls could well be nanoparticles. Also, Son of Da Vinci Puzzle Coming Soon!! Thank you, Robyn, for the questions!

The Thought Provoking Case of The Consumer Electronics Company

This case focuses highlighting, in sharp relief, how strategy and analytics, as tools to lay the groundwork for all that follows, can help in execution. For the tool savvy, I expect lightbulbs for strategy and analytics to flash every time we trigger a tripwire within the case.

The real skill here is in identifying all the tripwires you can trigger in a structured manner. i.e. Analytics backed solutions you can generate, and then rank them by impact.

Your inputs are welcome- have fun!

The usual case/ problem solving approach is top down:
Strategy-> Marketing-> Sales-> After Sales-> Customer Support
Here’s a case that will help you think recursively through this process!
The approach to this post is: Case -> (followed by) Key 1: Points to Discuss-> Key 2: Structure.

Note: This case is a Work in Progress. The keys will be published separately.

Case 1
The Thought Provoking Case of The Consumer Electronics Company

You have a $450 CyberSleek AB1 camera from The Consumer Electronics Company- their first CyberSleek, released in 2002. It has served you well over the years. You moved recently and lost the little USB cord that connects the camera to your laptop.

You search for the cord at the website in vain, and finally call The Consumer Electronics Company's support number to request a USB cord for your camera. Over a 45+ minute call, the customer support person creates your profile on the The Consumer Electronics Company website, keeps you on hold while searching for the correct USB cord, and finally gets you free shipping for the $20 cord as per the promotion run at that point of time.

Unfortunately, when you receive the package, you find that you were shipped the wrong make of the USB cord.

Thinking that customer support may not have the right tools to help you, you look to give the website another try. You go back to the site, struggle for over and hour and finally find your cord this time by eliminating, as an option, the one you were mistakenly sent. You order the new cord and have to pay shipping charges this time around for a total of $30 in charges.

You call back to claim a refund because customer service shipped the wrong cord to you, and are asked to ship the first cord back, at your own expense, to claim a refund. You have already been charged for the new cord you bought from the website. Requesting customer support to check these details does not help your case.

Shipping the first cord back, where you pay the $20 charges for the customer service mistake, does not make sense to you. You have spent enough time on this task already. The cord is useless with you anyway. Finally you relent. You request that atleast the shipping charges be borne by The Consumer Electronics Company. If you thought that should be easy- the customer support person will now have to contact another department to ensure you don't pay shipping charges.

You receive a standardized email about this conversation with customer support which miscategorizes the request and are requested to call another number.

When you call the next number, you have to explain the situation from scratch. You are now beginning to get frustrated. You want to talk to a supervisor regarding the quality of support you have received. You are put on hold and the call drops.

You call back the next day, and explain the process from scratch. You are finally advised that The Consumer Electronics Company will pay the charges for shipping back the incorrect cord sent to you. You demand to speak with someone who can take some action to alleviate the misery of going through this process. You believe you should also be refunded the shipping charges for the cord you bought yourself, because, it was, after all, customer support’s fault that you lost out on the promotion.

You are transferred to customer relations, where you explain the situation from scratch. Again. You mention that any customer who goes through this process will talk, even blog about it, and create a lot of negative publicity for the firm. Customer relations responds that they can do nothing more that pay the shipping charges for receiving the incorrect cord.

You are transferred back to customer support, where someone commiserates. You mention that you want action not commiseration. The whole process so far does not make sense from your point of view. Customer support agrees.

You go to FedEx and ship the cord incorrectly sent to you. Shipping is free. You receive the new cord for $30. $20 is credited to your account in a few days.

You are left wondering that you are a consumer of a $450 product and The Consumer Electronics Company put you through a lot of hassle for a $20 accessory.

The process seems un-American and un-East Asian to you. What are the things you would like this company do, in its own interest?


Sunday, March 2, 2008

Blast from the past: Other TATA products? A.k.a. And you thought Indian IT was getting hammered?

I had been reading articles about how Indian IT is getting hammered, so I had to send this one out. Its a blast from the past for me.

This note would be useful to folks interested in product management for the B2B space, as well as useful to folks tracking emerging markets, the banking sector, the business process consulting segment in IT consulting, and finally the IT sector as a whole.

This is about trends in Universal Banking, the corresponding impact on Financial Services Technology products and also about a little bit of nostalgia.

Yours truly was involved in product development and management of important components (core banking and trade) of the portfolio of products below. You could probably find an IDC report about how it all started, though this insider would disagree with some details in it. :-)

TCS BaNCS Recognized as #2 Universal Banking Solution in the 2007 IBS Sales League Table:
1> http://www.forbes.com/prnewswire/feeds/prnewswire/2008/02/29/prnewswire200802290830PR_NEWS_USPR_____LAF007.html
2> http://www.foxbusiness.com/markets/industries/technology/article/tcs-bancs-recognized-2-universal-banking-solution-2007-ibs-sales-league-table_501179_12.html
3> http://www.techweb.com/showPressRelease.jhtml?articleID=X678164

TCS BaNCS Core Banking ranked China's No. 1 Core Banking Solution in 2006:
1> http://www.myguides.com/guide/news/2007/Jul/31/TCS_B%CE%B1NCS_Core_Banking_ranked_China%E2%80%99s_No._1_Core_Banking_Solution_in_2006_by_Independent_Research_firm.html

Now, I would like to find that IDC report on how it all started. Any pointers?

Sunday, January 13, 2008

TATA Nano: Product Launch Part III.

There are folks (Thomas Friedman) who have urged/ would like to urge growing economies to innovate away from a system which lacks a solid mass transport system. Innovation requires creating an environment that would support it:
The game theorist in me expects- in a worst case scenario- a global energy innovation race, where countries devote energies into finding alternate globs of black gold/ alternate energy sources. Outcomes of any such race are often not certain. There is also a possibility that some growing economies (don't forget Africa) may not be in the position to constructively participate, contribute and gain from this race.

We might also develop feasible alternative energy solutions early enough to preempt most of the environmental, economic and social crises. I hope we do.

Product tracking: TATA Nano Part Hahaha Duh

I recommend you read part I of this post here:

Some publications that talked about the TATA Nano since I last posted on it:
1> http://www.time.com/time/magazine/article/0,9171,1702264,00.html

2> http://wheels.blogs.nytimes.com/2008/01/10/tata-nano-the-worlds-cheapest-car/?hp

3> http://news.independent.co.uk/business/analysis_and_features/article3331789.ece

I usually avoid talking about reaction to news, and I wanted to cover the car rental market and the used car market in India. However, the reaction to the TATA Nano provides irresistible grist for the mill. So here goes.

My friend V. (who I respect a lot for staying true to our computer science roots, unlike me who sold out to the management brigade), made some interesting points about the TATA Nano:
1. A cheap car does not mean you have the roads and infrastructure to drive it on.
2. Fuel is super expensive. According to his calculations, driving 20 miles/ 30 KM/ day would cost about a third of the car's price in a year.
3. The launch of the car will lead to increased pollution, traffic congestion, and fuel prices.

These are all great points, and I would start looking at them in the reverse order.

On point 3: Why is TATA Nano being singled out and slapped with these objections? Some more drivers (TATA would certainly hope that a lot of drivers) would join the global brotherhood of high-falutin' gas guzzlers to enjoy the priviledge of driving, and some would say, enjoy the right of getting from Point A to Point B. Only, the procession of Newbies in their shiny new Nanos would be doing it at 50 MPG.

Perhaps the though of achieving 50 MPG so easily is giving the hybrid hippies (before the greens come after me, I know someone who claimed she was a hippie for owning a Prius)- who've probably pawned off their Jordan XX3s to go green- sleepless nights.

However, I do accept the reality that driving conditions would change, for a start, in India. That family of 4 that would make you suddenly brake by appearing in front of you out of nowhere? They would now suddenly appear in front of you out of nowhere in a TATA Nano. Only, given the Nano's limitations, it would not be so sudden anymore. So congratulations, you, driving that more expensive car, will now find more reason to exercise the horn.

As an added benefit, you will feel happier that you don't have to worry about that family of 4, riding a scooter with the baby hanging loose by the sari's "dupatta" at the back ,while you drive.

Now, coming to point 2: fuel being super expensive. Would you trade in your more expensive car for the Nano? I hope you make the smart move and dump the Fords, Suzukis and the Hondas of the world, given that high gas prices are only going to get higher. Oil is $100/ barrel and some are betting it will reach $200/ barrel by end of 2008. A couple of lakhs in rupees/ a few grand in dollars saved in upfront car cost will fuel your current lifestyle for a few years.

Let's expand that to TCO (Total Cost of Ownership). Someone joked that in a couple of years, the engine might have to be replaced by bullocks. Well, more power to bullocks then! In a few years, even used cars would be too difficult to fix in the owners' backyards. That should be fodder for thought right there.

As for point 1, infrastructure: Look at how crazy traffic is in Bombay. The price of the car is really not going to be the key driver in terms of reaching an equilibrium on the Quantity of cars on Bombay streets (until we hit a tipping point, of course, and given Bombayites bottomless ability to endure, the tipping point will take some time coming, I assure you). The city that contributes over a quarter of the country's taxes has horrid infrastructure. Pointing to the quantity of cars on Bombay is really a misdirection for a lack of planning and infrastructure.

Before I wrap up, I would like to quote an incredibly funny take on this by my friend Sameer Gaunekar. This has Bombay and Bollywood references, and if you have seen "Thank you for smoking", the parallel is the senator trying to remove references to smoking in old movies:

Remember the motorbikes with the side carriers; with the advent of Nanos they surely will disappear, so if Ram Gopal Varma or even if the Sippy’s ever had to direct a re-make of Sholay then the “Yeh Dosti” song would be shot in a Nano instead of a motorbike with a side carrier….

End quote.

Borrowing Bono's phrase, Sameer's brilliant. :-)

Wrapping up: The reaction to this car from some quarters seems to be similar to the reaction to Negroponte's One Laptop per Child. The issues raised are those we have been grappling with since the first oil crisis in the 1970s, an will continue to work to resolve.

If this car makes people put money where their mouth is (instead of their foot), and do something about transport- decent public transport/ improved roads/ alternative energy sources/ whatever - then its more than served its purpose of being the "People's car". :-) What this "Freedom of Movement" does to India and its economy down the line is something I would like to see.

What do you think, my friend?

Thursday, January 10, 2008

Product tracking: TATA Nano.

Here we go!:

And more, if you can't get enough:

1. Would the family of 4 riding the motorcycle/ scooter switch to the TATA Nano?
2. Would those able to afford cars 3x the TATA Nano pricepoint switch to the car?
3. Would this car develop the market further than where it stands right now?

Over a decade ago, I found myself (by chance) sitting across an Ex MD of IFCI in the Rajdhani train. During our conversation, he mentioned that Pepsi had signed the document to enter India in his office. The talk then flowed to the struggle MNCs faced in India, and how their market estimation as well as consumer behavior analysis had been off target.

One reason for MNCs struggling in India, he pointed out, was that the Indian consumer was conservative and did not really believe in disposable products. i.e. consumers would evaluate alternatives and go for the cheapest option after factoring in TCO (Total Cost of Ownership). Consumers would pick products that lasted long, and could be fixed quickly by the local handyman, over jazzy products without as much ROI (return on investment).

A lot has changed since then- and that includes Pepsi becoming "the choice of the new generation". India's youth could be called the "liberalization youth"/ "satellite channel youth". As we learn more about the product, about the people buying (as well as not buying) this product, we are likely to find a huge indicator of India today; also specifically, an indicator of TATA Motors as a business, and of India's consumers.

Of course, I have not even touched upon the next step- going global.

What do you think?

P.S. The Part Hahaha Duh (a.k.a. Part II of this post on reaction to the car) is here: