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...
Wednesday, September 26, 2007
Tuesday, September 25, 2007
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"
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"
Sunday, September 23, 2007
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Tuesday, September 18, 2007
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.
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.
Friday, September 14, 2007
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.
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.
Wednesday, September 12, 2007
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...
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...
Wednesday, September 5, 2007
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
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
Tuesday, September 4, 2007
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..
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..
Wednesday, August 29, 2007
Should I or should I not?
One of the favorite questions of many prospective applicants to ISB is “My GMAT score is ____ (around 600), should I apply to ISB with this score?” And the most popular reply for this question is “ISB evaluates the application as an overall package and GMAT score is only one of the ingredients, hence you can apply to ISB”. Nine out of ten people you meet will give the above answer.
I beg to differ on this issue. Actually the way this question is framed is itself self-defeating. When you ask this question to someone you are mentally not prepared to take ‘no’ for an answer and the person who answers this question has no incentive to give you a honest reply (at the risk of not offending you) and hence the obvious choice is, why not take a chance and apply?
My own perspective on this issue is that you and you alone can answer this question honestly. Nobody else. While thinking about this question, please do consider the following aspects:
1. ISB is a very academically demanding course. In a short span of about 50 weeks you would be taking around 32 courses, 60 exams, 200 assignments, amidst attending on an average about 50-60 guest lectures, taking up some independent studies, experiential learning projects, planning an entrepreneurial venture, consulting assignments, b-plan and b-school competitions, professional club activities, networking, placement preparations and attending atleast about 50 parties.
2. ISB follows a relative grading system. Hence your own grade in a course depends on the person who scores best. In a typical ISB batch you will always find student experts in every field. There will always be economics majors, finance experts, quant jockeys, IT veterans, and some people for whom statistics is a hobby (I really find this one very hard to digest). My own batch represents people from over 25 sectors. In a world of relative grading remember that you are competing against these best brains for your own grades.
In the light of the above two points it should be quite evident that ISB is not for the weak hearted. To get into ISB is only a means of achieving something else in life. It is not an end in itself.
Hence to survive in this competitive environment, notwithstanding your other achievements, academic excellence is crucial. It is hence very important for you to ask the question “Is my GMAT score a real reflection of my academic performance?” It may sometime happen that your GMAT score doesn’t truly reflect your abilities. In these cases where you believe that your potential is far higher and that your low GMAT score is only an aberration, either retake the GMAT or please go ahead and apply to ISB by all means. But if you believe that your low score is fairly reflective of your academic performance (be honest), refrain from applying to ISB blindly (notwithstanding what others might say). Concentrate first on fixing this issue and then apply to ISB. Otherwise you might end up giving up more than what you can ever hope to recoup.
P.S: The views expressed here are purely personal. I am sure even amongst the current/ past ISB students, there would be a 1000 other differing views. So be it. That’s what makes life interesting.
I beg to differ on this issue. Actually the way this question is framed is itself self-defeating. When you ask this question to someone you are mentally not prepared to take ‘no’ for an answer and the person who answers this question has no incentive to give you a honest reply (at the risk of not offending you) and hence the obvious choice is, why not take a chance and apply?
My own perspective on this issue is that you and you alone can answer this question honestly. Nobody else. While thinking about this question, please do consider the following aspects:
1. ISB is a very academically demanding course. In a short span of about 50 weeks you would be taking around 32 courses, 60 exams, 200 assignments, amidst attending on an average about 50-60 guest lectures, taking up some independent studies, experiential learning projects, planning an entrepreneurial venture, consulting assignments, b-plan and b-school competitions, professional club activities, networking, placement preparations and attending atleast about 50 parties.
2. ISB follows a relative grading system. Hence your own grade in a course depends on the person who scores best. In a typical ISB batch you will always find student experts in every field. There will always be economics majors, finance experts, quant jockeys, IT veterans, and some people for whom statistics is a hobby (I really find this one very hard to digest). My own batch represents people from over 25 sectors. In a world of relative grading remember that you are competing against these best brains for your own grades.
In the light of the above two points it should be quite evident that ISB is not for the weak hearted. To get into ISB is only a means of achieving something else in life. It is not an end in itself.
Hence to survive in this competitive environment, notwithstanding your other achievements, academic excellence is crucial. It is hence very important for you to ask the question “Is my GMAT score a real reflection of my academic performance?” It may sometime happen that your GMAT score doesn’t truly reflect your abilities. In these cases where you believe that your potential is far higher and that your low GMAT score is only an aberration, either retake the GMAT or please go ahead and apply to ISB by all means. But if you believe that your low score is fairly reflective of your academic performance (be honest), refrain from applying to ISB blindly (notwithstanding what others might say). Concentrate first on fixing this issue and then apply to ISB. Otherwise you might end up giving up more than what you can ever hope to recoup.
P.S: The views expressed here are purely personal. I am sure even amongst the current/ past ISB students, there would be a 1000 other differing views. So be it. That’s what makes life interesting.
Saturday, August 25, 2007
Sinister Subsidies
I attended an excellent presentation on WTO conducted by Mr. Shishir Priyadarshi, former officer of the IAS and presently a Director in WTO. He presented us some very interesting perspectives.
For all the hype about India being over protectionist in the WTO negotiations, consider the following facts:
For all the hype about India being over protectionist in the WTO negotiations, consider the following facts:
India's agriculture subsidies averages about 4% of the value of the agriculture goods produced. The comparable percentages for US, EC and Japan ranges about 80%.
US provided agriculture subsidies worth $ 22 Bn last year. 90% of this amount went to 10% of the farmers in US (Because subsidies are given based on the land holdings. Hence, obviously these subsidies reached the richest of the US farmers. It should be noted here that rich farmers in US are a powerful lobby and they contributed about $ 11.5 million during last election towards campaign contributions).
In UK the largest recipient of the agriculture subsidies is THE QUEEN
In Switzerland, a farmer gets an average $ 1600 per year for every cow he owns. (Incidentally, this is more than the per capita income of two thirds of the nations in the world)
In Norway, farmers get subsidies for the hedges they maintain in the rural areas (Optical soothing)
The import tariffs for rice is Japan is more than 1000%.
In Rajnikanth style.... the rich get richer and the poor get poorer...
Friday, August 24, 2007
Ithaka
Today, our entrepreneurship professor ended his class by citing this poem. Its a poem about a man who sets upon a long journey towards his island home - Ithaka.
In a subtler sense each of us are on our journeys to find our own homes (treasures) - wealth, fame, happiness, position, power.. The point is to realize that we get rich not by arriving at Ithaka, but by undertaking the journey to reach Ithaka..
Am reproducing a few lines of this poem below..
"Keep Ithaka always in your mind. Arriving there is what you're destined for. But don't hurry the journey at all. Better if it lasts for years, so you're old by the time you reach the island, wealthy with all you've gained on the way, not expecting Ithaka to make you rich.
Ithaka gave you the marvelous journey. Without her you wouldn't have set out. She has nothing left to give you now.
And if you find her poor, Ithaka won't have fooled you. Wise as you will have become, so full of experience, you'll have understood by then what these Ithakas mean. "
You can read the full poem at
"http://homepage.newschool.edu/~wrightd/cavafy-ithaka.html"
In a subtler sense each of us are on our journeys to find our own homes (treasures) - wealth, fame, happiness, position, power.. The point is to realize that we get rich not by arriving at Ithaka, but by undertaking the journey to reach Ithaka..
Am reproducing a few lines of this poem below..
"Keep Ithaka always in your mind. Arriving there is what you're destined for. But don't hurry the journey at all. Better if it lasts for years, so you're old by the time you reach the island, wealthy with all you've gained on the way, not expecting Ithaka to make you rich.
Ithaka gave you the marvelous journey. Without her you wouldn't have set out. She has nothing left to give you now.
And if you find her poor, Ithaka won't have fooled you. Wise as you will have become, so full of experience, you'll have understood by then what these Ithakas mean. "
You can read the full poem at
"http://homepage.newschool.edu/~wrightd/cavafy-ithaka.html"
Monday, August 20, 2007
Chasing the horizon
As a part of the Independence day celebrations we had an event titled "Bandhan" at ISB. This event basically brought together many children from various NGOs in Hyderabad to ISB. Most of these children are specially-abled. During the first part of the event we (the students) had organized various fun events for these children to make them feel special. The second part of the event was these children's turn.
One event which deeply touched me was a dance program by a group of 6 boys. They were dancing to the beats of a popular fast tune and It was exceptional. The coordination was supreme. Though it was a group dance, within that limited time frame of about five minutes, each of the boys had a specific time slot to showcase their individual talent as well, when they danced solo.
As the dance came to a close, we heard an announcement on the stage that these boys who just performed are actually visually challenged. I just could not believe this when i heard it. There were a thousand questions which arose in my mind... How could someone coach them? How could these people visualize something they have never seen and implement it with perfection? How could they achieve that coordination? What could these people have achieved had they been gifted with a sight like ours?
I do not know the answers... i may never know. But John Milton's quote clearly flashed in front of my eyes "The mind can make a heaven out of hell or a hell out of heaven".
All limitations are perceived horizons. The secret is that the mind is limitless, and that we truly have no limits except those that we have accepted as real. David Cameron puts it nicely when he says "It is all just a horizon, and no matter how much you chase the horizon, you will never fall off the end of the earth. So chase it!"
One event which deeply touched me was a dance program by a group of 6 boys. They were dancing to the beats of a popular fast tune and It was exceptional. The coordination was supreme. Though it was a group dance, within that limited time frame of about five minutes, each of the boys had a specific time slot to showcase their individual talent as well, when they danced solo.
As the dance came to a close, we heard an announcement on the stage that these boys who just performed are actually visually challenged. I just could not believe this when i heard it. There were a thousand questions which arose in my mind... How could someone coach them? How could these people visualize something they have never seen and implement it with perfection? How could they achieve that coordination? What could these people have achieved had they been gifted with a sight like ours?
I do not know the answers... i may never know. But John Milton's quote clearly flashed in front of my eyes "The mind can make a heaven out of hell or a hell out of heaven".
All limitations are perceived horizons. The secret is that the mind is limitless, and that we truly have no limits except those that we have accepted as real. David Cameron puts it nicely when he says "It is all just a horizon, and no matter how much you chase the horizon, you will never fall off the end of the earth. So chase it!"
Tuesday, August 14, 2007
Class Participation
Almost every ISB student writes about this phenomenon in his blog. Its now my turn.
As part of the ISB grading system, student participation in class discussions carries marks and affects the final grade. The weightage varies from subject to subject. This system has been kept in place to ensure that the students come adequately prepared for class and also benefit from the views and experience of peers in the class. However, what actually translates is quite different. People in their enthusiasm to score some CP points make all sorts of comments. I have thus classified people into the following nine categories.
1. Commonsensical Point: This league of extraordinary gentlemen camouflage mere commonsensical points into brilliant works of art. They tend to take even rhetorical questions very seriously and carefully enlist their response
2. CraP: This group's only aim is to make sure that their voice is heard in the class. It is not of much relevance to them to think, if it makes sense..
3. CoPied: Brilliant imitators. Borrow ideas from others, but not words. Shrewd listeners who will be quick to borrow an idea, para phrase/ re-phrase/ cut/ edit/ add but essentially maintain the chastity of the soul and give out the same point..
4. Continuous Pain: Intellectual masturbaters. Their sole aim is display their knowledge. The problem is, they dont bother if it is relevant in the current context.
5. Crossed Past: They dont have any genuine point, nor can they display their knowledge (or the lack of it), but still they have a tremendous desire to participate in the class. So they end up asking questions which the professor has just answered. They however try to mask their intentions by keeping a seriously concentrated face which reads "genuine doubt". Fall not into this trap, for less than 10% of this group is genuinely interested in hearing the answer to the question, for the rest "asking the question" is an end in itself..
6. Chronically Pointless: They dont mind taking a ridiculous stance, questioning fundamental concepts or even making up impossible hypothetical situations, as long as it promises some "airtime" in the class
7. Calling Professor: They miss their chances to grab the professor's attention to make their point. So, when their impatience reaches a peak and they become desperate to make their presence felt, they call out the professor and camouflage their comments as questions/ doubts
8. Curtain Puller: Take a peek at the next slide and base your question/ comment on them and try to pass them off as intelligent remarks
9. Class Participant: It is this small but sensible proportion of the population that actually understands the true spirit of CP and genuinely tries to contribute towards the learning and development of the entire class...
As part of the ISB grading system, student participation in class discussions carries marks and affects the final grade. The weightage varies from subject to subject. This system has been kept in place to ensure that the students come adequately prepared for class and also benefit from the views and experience of peers in the class. However, what actually translates is quite different. People in their enthusiasm to score some CP points make all sorts of comments. I have thus classified people into the following nine categories.
1. Commonsensical Point: This league of extraordinary gentlemen camouflage mere commonsensical points into brilliant works of art. They tend to take even rhetorical questions very seriously and carefully enlist their response
2. CraP: This group's only aim is to make sure that their voice is heard in the class. It is not of much relevance to them to think, if it makes sense..
3. CoPied: Brilliant imitators. Borrow ideas from others, but not words. Shrewd listeners who will be quick to borrow an idea, para phrase/ re-phrase/ cut/ edit/ add but essentially maintain the chastity of the soul and give out the same point..
4. Continuous Pain: Intellectual masturbaters. Their sole aim is display their knowledge. The problem is, they dont bother if it is relevant in the current context.
5. Crossed Past: They dont have any genuine point, nor can they display their knowledge (or the lack of it), but still they have a tremendous desire to participate in the class. So they end up asking questions which the professor has just answered. They however try to mask their intentions by keeping a seriously concentrated face which reads "genuine doubt". Fall not into this trap, for less than 10% of this group is genuinely interested in hearing the answer to the question, for the rest "asking the question" is an end in itself..
6. Chronically Pointless: They dont mind taking a ridiculous stance, questioning fundamental concepts or even making up impossible hypothetical situations, as long as it promises some "airtime" in the class
7. Calling Professor: They miss their chances to grab the professor's attention to make their point. So, when their impatience reaches a peak and they become desperate to make their presence felt, they call out the professor and camouflage their comments as questions/ doubts
8. Curtain Puller: Take a peek at the next slide and base your question/ comment on them and try to pass them off as intelligent remarks
9. Class Participant: It is this small but sensible proportion of the population that actually understands the true spirit of CP and genuinely tries to contribute towards the learning and development of the entire class...
Saturday, August 11, 2007
The boy who lived
This is one of the greatest business phenomenon of our times. For those "muggles" who still couldn't make meaning of the title, i am talking about Harry Potter. Consider the numbers... More than 325 million copies of the first 6 books of this series is sold world over. The seventh installment, which was released last month in more than 93 countries, sold 11 million copies within the first 24 hours of its release.The books have been translated in about 65 languages and is distributed in 200 countries. The five movies released till date have grossed more than $ 4 billion.
I read a nice article which summarized the reasons for the grand success of this series. The article traces five basic reasons for its success - 1. Its not just a children's story, it crosses several boundaries and appeals to the interests of numerous categories of people. 2. JK Rowling's exceptional writing 3. It has chosen a subject which is universally alluring 4. It brings to life all our fantasies, everything we always wanted to be, but never can be.. 5. Its social relevance..
JK Rowling's present networth is estimated to be more than $ 1 billion. Not bad for someone who was unemployed and living on State benefits, when she completed her first book.
What fascinates me the most is the way it all started. Rowling says "It all began on a train ride in which the whole idea just dropped in my head. Harry, as a character, came fully formed as did the idea for the entire plot".
I call this a gift of god...
I read a nice article which summarized the reasons for the grand success of this series. The article traces five basic reasons for its success - 1. Its not just a children's story, it crosses several boundaries and appeals to the interests of numerous categories of people. 2. JK Rowling's exceptional writing 3. It has chosen a subject which is universally alluring 4. It brings to life all our fantasies, everything we always wanted to be, but never can be.. 5. Its social relevance..
JK Rowling's present networth is estimated to be more than $ 1 billion. Not bad for someone who was unemployed and living on State benefits, when she completed her first book.
What fascinates me the most is the way it all started. Rowling says "It all began on a train ride in which the whole idea just dropped in my head. Harry, as a character, came fully formed as did the idea for the entire plot".
I call this a gift of god...
Tuesday, August 7, 2007
Ultra Super Hyper Salesmen
I have many times thought about "What constitutes an effective sales call?". And the answer is pretty obvious.. "The Sales".. If a sales call cannot be converted into sales then it is useless. Now comes the more difficult part. In a world where time is increasingly becoming more precious, and where people are willing to shell out large sums of money (Eg..fast food, home deliveries, Internet banking, air travel etc..) to maximize their Return On Time Invested (ROTI, as one of my previous bosses used to say), the effectiveness of a sales call cannot be overemphasized.
The attention span of customers is becoming increasingly shorter. Which means the time available for you to convince your client and make a sale is increasingly becoming small. It is hence very very important to deliver your best in each second that you spend with your client. People who are best at this are called Ultra-Super-Hyper Salesmen (A term i have coined :-)
I know of at least one group of people who are best at this - The beggars who stand in traffic signals. Imagine their plight. Their maximum window of opportunity is about 45-60 seconds. They have to cater to multiple clients within this time frame. No office, no air conditioning, no mobile, no handouts to help them in their sale, not even a chair to sit and many times an empty stomach too...
But they cannot afford to take no for an answer, because for them no sale means no food. They try to understand their customer's psychology and use every weapon in their armour to convert each of their interaction into a sale. Within the first few seconds they assess what sort of a customer you are, and then they come out specific techniques to cater to each of these types. And with my limited experience, i must say that their conversion ratios are at least more than 75%, if not higher. A pretty impressive feat, given the constraints...
I salute these Ultra-Super-Hyper Salesmen and hope to learn some transferable techniques...
P.S: This analysis is purely from a sales process point of view. I request readers to take it in the same spirit and not bring social issues into the picture.
The attention span of customers is becoming increasingly shorter. Which means the time available for you to convince your client and make a sale is increasingly becoming small. It is hence very very important to deliver your best in each second that you spend with your client. People who are best at this are called Ultra-Super-Hyper Salesmen (A term i have coined :-)
I know of at least one group of people who are best at this - The beggars who stand in traffic signals. Imagine their plight. Their maximum window of opportunity is about 45-60 seconds. They have to cater to multiple clients within this time frame. No office, no air conditioning, no mobile, no handouts to help them in their sale, not even a chair to sit and many times an empty stomach too...
But they cannot afford to take no for an answer, because for them no sale means no food. They try to understand their customer's psychology and use every weapon in their armour to convert each of their interaction into a sale. Within the first few seconds they assess what sort of a customer you are, and then they come out specific techniques to cater to each of these types. And with my limited experience, i must say that their conversion ratios are at least more than 75%, if not higher. A pretty impressive feat, given the constraints...
I salute these Ultra-Super-Hyper Salesmen and hope to learn some transferable techniques...
P.S: This analysis is purely from a sales process point of view. I request readers to take it in the same spirit and not bring social issues into the picture.
Saturday, August 4, 2007
Pursuit of leadership
Today, one of our professors gave a very interesting definition of business leadership... It goes as follows: "All business leadership is about chasing perpetually changing perpetually vanishing arbitrage opportunities".. I liked this definition of business leadership because this brings many other things to perspective.
First of all this connotes that business leadership is a journey and not a destination. To be on the top of the ladder requires one to continually seek newer and emerging opportunities. To understand emerging trends and opportunities, while it is necessary to have a bird's eye view of the entire landscape, it is not sufficient. You should also have your feet on the ground to feel the pulse of the market. Possessing only one of these attributes may lead us to either taking a myopic view of opportunities or in just missing out the details.
Secondly, every opportunity vanishes or runs out of steam some day. We necessarily don't need to take a very long term view of opportunities to profit from them. Every opportunity needs to be evaluated as an investment and this means weighing cost vs. benefit. We should be indifferent while weighing short and long term opportunities, if the ratios of cost versus benefit are the same.
Some people may not necessarily subscribe to this view of placing short term opportunities on an equal footing with long term opportunities. Fair enough. But what is long term? Remember what Keynes said "In the long run we are all dead"...
First of all this connotes that business leadership is a journey and not a destination. To be on the top of the ladder requires one to continually seek newer and emerging opportunities. To understand emerging trends and opportunities, while it is necessary to have a bird's eye view of the entire landscape, it is not sufficient. You should also have your feet on the ground to feel the pulse of the market. Possessing only one of these attributes may lead us to either taking a myopic view of opportunities or in just missing out the details.
Secondly, every opportunity vanishes or runs out of steam some day. We necessarily don't need to take a very long term view of opportunities to profit from them. Every opportunity needs to be evaluated as an investment and this means weighing cost vs. benefit. We should be indifferent while weighing short and long term opportunities, if the ratios of cost versus benefit are the same.
Some people may not necessarily subscribe to this view of placing short term opportunities on an equal footing with long term opportunities. Fair enough. But what is long term? Remember what Keynes said "In the long run we are all dead"...
Monday, July 30, 2007
The 'dabba' market
The grey market or the “dabba” market, as it is popularly called is fascinating. As a company announces its IPO (book-building) dates, players in the grey market try to put a price on the shares of the company. They try to speculate market response, size of the issue and fix a premium on the shares.
This market is interesting for many reasons. It’s illegal – plain and simple. However, speculators and investors have been doing it for a long time. The grey market premiums themselves are quoted in almost every financial daily and broking firms, worth their salt. Many times these markets also decide the fate of listing gains.
There are many other interesting facets to this market... How do these dabba operators ensure actual delivery right under the nose of the regulator? Many time unscrupulous promoters use this market to fool gullible investors.. And sometimes this market is also used to infuse liquidity into the secondary market...
If you come across any article or news which is related to this, please let me know... i am undertaking some academic stuff on this...
This market is interesting for many reasons. It’s illegal – plain and simple. However, speculators and investors have been doing it for a long time. The grey market premiums themselves are quoted in almost every financial daily and broking firms, worth their salt. Many times these markets also decide the fate of listing gains.
There are many other interesting facets to this market... How do these dabba operators ensure actual delivery right under the nose of the regulator? Many time unscrupulous promoters use this market to fool gullible investors.. And sometimes this market is also used to infuse liquidity into the secondary market...
If you come across any article or news which is related to this, please let me know... i am undertaking some academic stuff on this...
Sunday, July 29, 2007
The black swan strategy
I recently read a few articles on this subject and found it extremely interesting..
Nassim Nicholas Taleb has built his career based on the theory of unexpected rare events. Taleb calls himself a "skeptical empiricist", and believes that people generally overestimate the value of rational explanations of past data, and underestimate the prevalence of unexplainable randomness in that data. Simply put, he says that "No amount of observations of white swans can allow the inference that all swans are white, but the observation of a single black swan is sufficient to refute that conclusion."
His company Empirica follows a particular investment strategy - It trades options, i.e it deals not in stocks and bonds but with bets on stocks and bonds. It takes very small bets from people on an unlikely event. For example, if a stock has lets say never dropped below 10% in a particular month, it takes a bet from you for a very small amount (lets say 1 cent) that the stock will indeed drop by 10% or more in this month. You don't mind this bet, because this event has never happened in the past. However, the company buys millions of such options from various people. If as expected the event doesn't happen then the company loses. But remember, its loses are pre-determined and small. However, if indeed the event does happen, the company rakes in millions of dollars.
Empirica makes its money when there is an exceptional day in the market. Something new or different happens and the unexpected unfolds. Under such circumstances, which were probably all but impossible to predict, Empirica will be able to exercise its options and reap a healthy profit. Huge gains will make up for the numerous days of small loses.
Venture Capitalists use this at all times. They invest in tons of “white swans,” lose a little bit all the time on those investments, and be poised for the singular “black swan” whose returns swamp all of those losses.
Nassim Nicholas Taleb has built his career based on the theory of unexpected rare events. Taleb calls himself a "skeptical empiricist", and believes that people generally overestimate the value of rational explanations of past data, and underestimate the prevalence of unexplainable randomness in that data. Simply put, he says that "No amount of observations of white swans can allow the inference that all swans are white, but the observation of a single black swan is sufficient to refute that conclusion."
His company Empirica follows a particular investment strategy - It trades options, i.e it deals not in stocks and bonds but with bets on stocks and bonds. It takes very small bets from people on an unlikely event. For example, if a stock has lets say never dropped below 10% in a particular month, it takes a bet from you for a very small amount (lets say 1 cent) that the stock will indeed drop by 10% or more in this month. You don't mind this bet, because this event has never happened in the past. However, the company buys millions of such options from various people. If as expected the event doesn't happen then the company loses. But remember, its loses are pre-determined and small. However, if indeed the event does happen, the company rakes in millions of dollars.
Empirica makes its money when there is an exceptional day in the market. Something new or different happens and the unexpected unfolds. Under such circumstances, which were probably all but impossible to predict, Empirica will be able to exercise its options and reap a healthy profit. Huge gains will make up for the numerous days of small loses.
Venture Capitalists use this at all times. They invest in tons of “white swans,” lose a little bit all the time on those investments, and be poised for the singular “black swan” whose returns swamp all of those losses.
Friday, July 27, 2007
In search of mediocrity
In a world where perfection is expected and excellence is tolerated, this search for mediocrity may seem quite counter intuitive..
One of our professors made us think on the merit of this advice. Many many individuals and companies are making millions by following this strategy of chasing medocrity and not excellence. How could this be done...
The new mantra for very many PE firms now is Invest-Turnaround-Harvest. They don't look for excellent companies for investing, instead they look out for poorly managed companies and use basic management principles and common sense to turnaround these companies to average performing companies and sell them at a much higher valuation.
Take the case of some individuals. A new breed of high performing operating executives are being hired as turnaround experts. These guys are not liquidation managers, they instead repair and build back poorly managed companies. Michael Capellas, who has made serial job hopping a career, is a case in point.
As head of Compaq Computer, Capellas led a turnaround and a sale to Hewlett-Packard before leaving the company in 2002. Capellas then took over MCI while the company was in bankruptcy and eventually sold it to Verizon. He has collected large paychecks along with way and is estimated to have taken home a total of more than $57 million in change-in-control payouts from Compaq, Hewlett-Packard and MCI. He was an adviser for Silver Lake Partners, a buyout firm that specializes in technology and from there on he moved as head of Serena Software, one of Silver Lake's portfolio companies. Now, Capellas is taking over as chief of First Data Corp., the payment-processing giant acquired by the private equity firm KKR in April for $25.6 billion. This will be his fourth technology company in eight years. With an ownership stake in First Data, he could take home millions more.
Convinced? If not, let time heal you..
One of our professors made us think on the merit of this advice. Many many individuals and companies are making millions by following this strategy of chasing medocrity and not excellence. How could this be done...
The new mantra for very many PE firms now is Invest-Turnaround-Harvest. They don't look for excellent companies for investing, instead they look out for poorly managed companies and use basic management principles and common sense to turnaround these companies to average performing companies and sell them at a much higher valuation.
Take the case of some individuals. A new breed of high performing operating executives are being hired as turnaround experts. These guys are not liquidation managers, they instead repair and build back poorly managed companies. Michael Capellas, who has made serial job hopping a career, is a case in point.
As head of Compaq Computer, Capellas led a turnaround and a sale to Hewlett-Packard before leaving the company in 2002. Capellas then took over MCI while the company was in bankruptcy and eventually sold it to Verizon. He has collected large paychecks along with way and is estimated to have taken home a total of more than $57 million in change-in-control payouts from Compaq, Hewlett-Packard and MCI. He was an adviser for Silver Lake Partners, a buyout firm that specializes in technology and from there on he moved as head of Serena Software, one of Silver Lake's portfolio companies. Now, Capellas is taking over as chief of First Data Corp., the payment-processing giant acquired by the private equity firm KKR in April for $25.6 billion. This will be his fourth technology company in eight years. With an ownership stake in First Data, he could take home millions more.
Convinced? If not, let time heal you..
Tuesday, July 24, 2007
Pumpkins and mice
With the bulls raging at Dalal Street and Sensex within a kissing distance from the giddy height of 16000, i want to reproduce one of the classic gems from Warren Buffet...
Buffet says that "The line separating investment and speculation, which is never bright and clear, becomes blurred still further when most market participants have recently enjoyed triumphs. Nothing sedates rationality like large doses of effortless money."
After a heady experience of that kind, normally sensible people drift into behavior akin to that of Cinderella at the ball. These sensible investors know the cost of overstaying the festivities -- that is, continuing to speculate in companies that have gigantic valuations relative to the cash they are likely to generate in the future -- will eventually bring on pumpkins and mice.
But they nevertheless hate to miss a single minute of what is one helluva party. Therefore, the giddy participants all plan to leave just seconds before midnight. There's a problem, though: They are dancing in a room in which the clocks have no hands...
Buffet says that "The line separating investment and speculation, which is never bright and clear, becomes blurred still further when most market participants have recently enjoyed triumphs. Nothing sedates rationality like large doses of effortless money."
After a heady experience of that kind, normally sensible people drift into behavior akin to that of Cinderella at the ball. These sensible investors know the cost of overstaying the festivities -- that is, continuing to speculate in companies that have gigantic valuations relative to the cash they are likely to generate in the future -- will eventually bring on pumpkins and mice.
But they nevertheless hate to miss a single minute of what is one helluva party. Therefore, the giddy participants all plan to leave just seconds before midnight. There's a problem, though: They are dancing in a room in which the clocks have no hands...
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