The Gladiators

When you enter ISB you will be put into study groups (the composition of which is decided by ISB). You and your study group (of 4 or 5 people) will stick together, like the Gladiators trying to fight off and survive whatever comes off out of the gate, in the first four terms. All your group assignments, presentations, write ups etc have to be submitted group wise. So it goes without saying that a good portion of your fortune at ISB in terms of grades is decided by your study group.

I must say that one of the best parts of my stay at ISB was my study group. Not because we four were the toppers of the batch or we scored highest in every assignment, but because we cried together and laughed together, we enjoyed and suffered and we did learn a lot from each other...

Here goes my blog in the honour of my study group - C11. A brief profile of the rockstars of this group

Kaustubh Verma: He can sing in 9 languages, can play the guitar (all learnt by himself) and he is one of the most "networked". He will be the first to invite others for a game of cricket/ tennis, he is the first to vote for a party, he is the first to take a short break in any assignment, he is active in most clubs - consulting, operations, energy, social life.....but if you really think he is a Poet (which is what he claims in his blog - http://www.kaustubhverma.blogspot.com/), you are badly mistaken. Whenever our group reaches a deadend in any assignment, we all look up to him and he will not disappoint us... This man from L & T is truly Lovable & Talented..

Sudhanshu Dutt: We call him Mr. President, for he leads the Real Estate club at ISB. He is one of the most organized persons i have ever seen. A health and fitness freak. A work machine. He never gets tired and its rumored that he can study non-stop for 100 hours. In ISB sometimes.. sorry most times, the amount of work involved is herculean. And many people just give up, but not Chugi (his nick name). Irrespective of how many assignments, how many pre reads or how many cases have to be read, our man is always prepared for everything. Dont know where he gets the time.. Its going to be easy for the real estate firms this year at ISB, they know where to look for...

Ashutosh Kumar: (http://www.ashutoshatisb.blogspot.com/) A banker. If i were to describe him in just one word, i would say "Determination". He is a truly self-made man. Hails from Bihar, studied physics but then joined a bank. Rose through the ranks, worked hard for GMAT and here he is now at ISB. If he has reached till here, i know nothing can stop him from his dreams. May be he will start his own bank someday...

Rangarajan Krishnan: Come on, you know me... i am not going to bore you..

Yesterday we finished our last group assignment for the core terms and went out together for dinner. My best wishes to these gladiators to come out in flying colours in the days to come...

Connecting the dots

Unplanned chance random events sometimes can have profound implications in our lives. Many a times, if we look back at our own lives, we will find that it is these chance events that leave a indelible mark on our lives. These chance events can guide us, warn us and put us back on our life's path.

History is abound with examples... Narayana Murthy might have never started Infosys, had he not had a chance encounter with a computer scientist on a breakfast table... Apple Computers might have never thought of GUIs, fonts and fancy stuff had Steve Jobs not learnt Calligraphy (totally unplanned though) during his college days. Today our finance prof was telling that he decided to take up finance seriously, only when his marketing prof asked him a question for which he did not know the answer.

To quote Steve Jobs.. "Its not always easy to connect these dots (random events) looking forward, but these dots will certainly form a brilliant design when we look back someday"

A million dollars or knighthood

A million dollars - No more cramming up crazy management theories, no more assignments, no more mind numbing case studies, no more tests, no more getting crushed between bird-brained subordinates and dinosaur-egoed bosses, no more alarm clocks, no more traffic signals, no more deadlines, no more appraisals, no more worries..... Just beaches, babes, bars and BMWs... Sounds too good to be true.

....but wait a minute. What sort of a life is this? Whats the one differentiating factor between you and an animal. Whats your motivation to live? What do you look forward to in your life? Whats the one thing you want to accomplish today? Is there one being in this world which would look upon you as a role model?.... this side of the coin looks terrible...

How about knighthood? This option seems to address all the downsides of the million dollar option. Kids look up to you as their role model. You automatically command respect wherever you go. You are consulted upon on all matters of importance and you have a meaningful life. But whats the use of knighthood if you don't have the means to enjoy your life or live comfortably? How about leading a life of a pauper knight? You command respect alright, but you don't have money to fill your own stomach. A knighthood sans money looks terribly miserable too..

Be it a million dollars or a knighthood, what matters is what would you do with it once you achieve it. Both are meaningless if not put to proper use.

What do I want? I want to be a knight with million dollars. But there is one difference though. I don't want either of these thrusted on me. I don't want to wake up one fine morning and realize that I am either a knight or a millionaire from that day on. I want to earn it. I am convinced that the journey towards achieving these would be as meaningful as the destination itself. I want to experience the immense sense of satisfaction and the feeling of a life well-lived, when I get there. I want to show others that it is not difficult to achieve...

Economic logic

This term we have a paper on Government, Business and Society. The professor who taught us this course, Mr. Mudit Kapoor presented us some of the most compelling economic arguments we have ever encountered. And this course is clearly is one of my favourites at ISB.

Some of the counter intuitive economic logic I came across in this course are:

1. Government subsidies incentivizes farmer suicides.
2. Private sector benefits maximum from regulation.
3. A bribe could actually help in better economic allocation
4. Markets can be used for creating cleaner environments
5. Being righteous may be good for the individual, but in some cases the society is worse off


Some other interesting stuff which came along our way...

CEOs:

1. Stock prices on an average have historically increased, when a CEO dies
2. There is some empirical evidence which suggests that CEOs are actually being compensated for luck and nothing else.

Rules of Economics:

1. Every economist has an equivalent opposite economist
2. And both are wrong

Useful advice - Never ask an economist for a solution:

Some economists in US were asked to study the impact of making seat belts compulsory, on accidents. They came out with their findings that making seat belts compulsory would actually increase the number of accidents, as people would start driving more recklessly. So, when these economists were asked to come out with a solution to counter this problem, their suggestion was

"Put a dagger on the steering wheel"

Thats our section (in traditional attires)

Life under a normal curve

If there is one thing that you are going to hate in ISB it is the Normal curve. ISB follows a relative grading system and uses a "bell curve" grading system, wherein the grades are assigned according to the frequency distribution known as the Normal distribution. While it does benefits a few, its victims easily outnumber the beneficiaries.

Why should grades be normative? When scores are referenced to the performance of group member, there will always be students who have lower scores than this, even if the individual student scores are themselves quite high when evaluated against specific performance criteria or standards. Conversely, if all students perform poorly relative to a larger population, even the highest graded students may be failing to meet standards.

More fundamentally, this whole process is based on a deep misunderstanding of statistics. Many measurements can be approximated by the normal distribution, not the other way around. A class’s marks are not an imperfect observation of what should be the normal distribution. The marks are what they are. The normal distribution might or might not approximate that. If it does not, mathematically transforming the grades to match it is meaningless. Instructors should grade papers according to their intrinsic merit and give out whatever grades result even if the distribution results in a lot of A's or F's. On tests, an instructor should know, before looking at the results, what score will be required for each grade and what grade this paper deserves. How can the performance of one student go down just because the someone else has also performed well? Why should good grades be a commodity in short supply?

I have no grudges against using the normal distribution where it is appropriate (e.g., in estimating confidence intervals from random samples). To make this correct usage clear, it might be wise to revert to the original phrase used to describe the normal curve - "Normal curve of error." This would make it clear that the normal bell curve is "normal" only if we are dealing with random errors. Social life, grading, IQ, attitudes etc. however, are not a lottery, and there is no reason to expect these variables to be normally distributed.

I hope the law of averages will catch up and today's victims (Me) will benefit someday from the same stupid concept.

The Emperor’s clothes – Part II

All of us would have at sometime heard the fairy tale – “The Emperor’s New Clothes”, the story of a little boy puncturing the pretensions of the emperor's court. We now have a sequel – The Subprime

Here is how the whole thing had worked –

Scene 1: Home loan borrowers with less than stellar credit were approved for a mortgage. The emperor (lenders) obviously wanted to get the monkey off his back and so invited the wise men – The investment agencies.

Scene 2: The rating agencies knew that the emperor was indeed naked. But may be they were willing to pull of an impressive story, for a fee. All of a sudden the risky consumer loans were reconstituted into something seemingly no more risky than a government Treasury bond and highest ratings were being issued. Of course like the wise men in the original fairy tale they too claimed that those who do not see these investments as safe were either stupid or not fit for their position.

Scene 3: Enter the investment banks. (I bet they knew clearly that the emperor was indeed naked). But why miss an investment opportunity, if the whole world is ready to believe that the emperor’s clothes’ are indeed magnificent, based on the claims of the wise men? Result – dress up these pigs into princess and sell them to the suitors.

Scene 4: It took a little boy to say that the emperor is indeed naked to actually wake up the world from its blissful slumber. Skeletons are being unearthed by the hour - allegations of predatory lending, misrepresentation and omissions related to the valuation of the loans and the profits from selling or servicing them, suitability of investments, breach of contract related to loan servicing, fraudulent conveyance issues, collusions with rating agencies…

It might be of interest to note that one of the wise men in our drama – Moody’s earned about $3 billion from rating structured deals from 2002 through 2006, and this area accounted for 44% of its 2006 revenues. Since the subprime fallout S&P has downgraded more than $ 12 Billion worth of these bonds and Moody’s has followed suit with downgrading more than $ 5 billion.

In one of the recent conference calls which this rating agency had with a hedge fund, the MD of the fund had a question:


I'd like to understand why you're making this move today and why you didn't do this many, many months ago."

It's a good question," responded the analyst.


"You need to have a better answer," said the MD.

EOGO

This is the new mantra at ISB. Most of us in the current batch, have volunteered to be part of the Admissions Task Force Committee. As a part of this group we undertake activities such as interacting with prospective candidates, resolving queries, providing guidance, mentoring etc..

This year ISB has invited each of us to encourage atleast one brilliant student with leadership potential, to apply to ISB. After having identified this candidate, we could then refer them (along with our comments) to the admissions committee. Simply put this policy is called "Each One Get One" or EOGO...

Am still looking around for exercising my right...

Windfall weeds

One of my colleagues circulated a very interesting entrepreneurial story, which illustrates the power of Internet and the new opportunities it has opened for all of us.

Here is an entrepreneur who did not have any earth shattering idea. Nor did she have money. But she has created a successful venture of her own. Here goes the story...

Linda Katz sells tumbleweeds on the Web.The lowly tumbleweed is a nuisance to most inhabitants of Western Kansas. The Russian thistle bushes are everywhere. They clog drainage ditches, pile up against fence rows, and have even been known to cause traffic accidents.

"It all started as a joke,"says Katz. She asked her son to build her a family Web page so she could communicate with friends and give it the tongue-in-cheek name Prairie Tumbleweed Farm. Never mind that she didn't even live on a farm, but in a subdivision. Nevermind that you can't cultivate tumbleweed, which spreads its seed as it tumbles in the wind. For authenticity's sake, Katz added a price list ($35 for a big weed, $25 for a midsize one, $20 for the small economy model). And she guaranteed that each tumbleweed was "Y2K compliant" and quality-tested to tumble in even the gentlest of breezes.

Remember, Katz wasn't looking for business, but it found her all the same, thanks to the power of Web search engines. Orders started to pour in from all the places where people love Hollywood Westerns: Alaska, Austria, Britain, Hong Kong, India. Japanese customers proved so eager that she has added a section to her Web site in Japanese. Movie and TV production companies in Britain, Finland, and the U.S. have ordered tumbleweed for props, too, including a $1,000 order for the children's show Barney & Friends. A scientist from New Mexico wanted tumbleweed for research purposes. Many of Katz's newfound customers use tumbleweed to decorate their homes, even in lieu of the traditional Christmas tree.

During Katz's first two months on the Web, the site logged 2,000 visitors. By mid-January, the number had grown to more than 56,000. Katz says she's making about 30 tumbleweed sales a week, which suggests revenues of about $40,000 a year.

That may not sound like much, but neither are her costs. She fills orders by grazing Kansas fence lines for tumbleweed and buys her mailing boxes in bulk lots. For labor, Katz uses her five nieces and nephews (aged 11 to 19) to help collect the stuff, and she gives them a share of the profits.

So why are u waiting? Go find something to sell on the net...

P.S: For the curious souls who wish to check if this is actually true... check out http://www.prairietumbleweedfarm.com

Term 4

The last of our core terms has started yesterday. This term promises to be completely action packed.

This term is one week shorter than our usual terms. Additionally we have a host of interesting activities scheduled to take place during the term. There is a session conducted by McKinsey on Structured Problem Solving. Many international names are expected to come to campus during this term and address the student body. I just came back from a session conducted by Credit Suisse (This was scheduled at 7 AM, because that's the only time they can catch the batch as a whole.... Around 125 students attended). Citibank will also be interviewing candidates for their scholarship program this term. We have the flagship event of the Real Estate club too in this term. It brings together some top academia and professionals to deliberate on the topic "Indian Real Estate Scenario".

This apart we have a lot of club activities planned for during the term. Investment banking workshops, CV preparation sessions, case preparation sessions and a crash course on options and futures. We also need to get started on our interview preparations in case we are targeting any of the international names which might be visiting the campus late October. To top it all I am doing an ELP (Experiential Learning Program) for a private equity firm and undertaking an independent study on the IPO markets.

Today is September 4th and our end term exams commences on October 4th. Exactly a month away. And yes..... we have to study too..