Tuesday, November 28, 2017

Hopelessness in 'God's Own Country'

Being attacked by a arms wielding mob of 150 and running for cover just to stay alive, isn’t something one imagines in ones wildest dreams, least of all see in reality. But the events of 23rd Nov 17, have shaken me and my belief on the future of this nation.

The company that I work for is known to build and operate some of the finest wellness retreats in the country. A relatively young brand, we have won some rather prestigious awards for our art of delivering hospitality and for our wellness programs. We were smug at having created our third fine hotel, just 27 rooms, spread over 8-9 acres, kissing the Vembanad lake and were getting ready to welcome our first guest on the 5th Dec.

75 odd crores (approx USD12 million) of spend over 5 years made it a rather well appointed upmarket hotel of global standards. We have always been proud of our business practices such as highest paymasters by industry standards, highest no of training hours imparted per employee and treating our guests as if we would treat our families and parents. We thought we are formidable force if we generate employment for approx 500 people.

We heard that a few local bodies alleged an encroachment by our hotel to the extent of .0044 and .0050 sq mts at 2 spots (a notice to this effect is with us now) and to protest this encroachment a march is being carried out by the local DYFI arm. I quickly relied upon my calculator to convert this astronomically large number into sq feet and discovered that we had allegedly encroached 0.053 sq ft and 0.047 sq ft of land at 2 places. For the readers of this blog, and to put things in perspective this area is just a tad bit larger than the area a shirt button would occupy.  And without giving us a chance to explain or to respond the militant arm chose to punish us by vandalising our hotel and setting us back by 6 months and destroying property worth 10 Crores.

Properties can be rebuilt, Monies can be recovered but the soul of an entrepreneur, confidence of employees and confidence in the state once broken can never be recovered.

A state/nation where you can get away with anything (as I mentioned in another blog), have negligible chance to be punished for a crime, and where on a working day, hundreds of young people can be mobilized and dangerously motivated to destroy and plunder an asset that contributes to taxes, employment and brand of a state that alleges to be God’s own country – that country and state has no/little future.

Our dependence on services contributing approx. 60% of our GDP up from 30% in 1950 and agriculture at 17% - down from 55% in 1950 might sound great from an empirical perspective, but is an utterly dangerous statistic. Just 30% of our population is contributing to 60 percent of GDP. This implies that the balance 980 million or say a billion people are contributing to a mere 30% of GDP (approx. USD 736 billion).

Do you get what I am getting to…

A billion people are contributing to just 736 billion USD of GDP or exactly 2 USD per day. A slightly deeper analysis (pls don’t curse me for confusing you with numbers) reveals that if amongst these billion, approx. 200 million are still making their 2 ends meet somehow by contributing approx. USD 2000 per year, the last 800 million Indians are merely contributing 336 billion USD in GDP (420 USD per person per year)

Doesn’t that explain why our hotel was so brutally plundered and destroyed for allegedly encroaching a piece of land literally measuring the size of a shirt button? Without even giving us a chance to show the legal land records and valid permissions in our possession.

This is God’s own country.

Artificial intelligence is scary and may it be damned – for it is threatening to put more and more people out of jobs. If the world has to be saved, more people need to get into farms and more factories need to start bellowing smoke. A greater percentage of the global population needs to contribute significantly to the global GDP’s rather than it getting concentrated just within the services sector.

Or else be warned that ours wasn’t the last hotel or business that got temporarily destroyed by the zealots pretending to be GOD. This epidemic where mobs can be mobilized to cause plunder and destruction at the drop of a hat could be a national/global problem in a few years.

We have failed the dream of Nobel Laureate Rabindranath Tagore for his vision of this country penned in 1910 in the epic poem…

Where the mind is without fear and the head is held high
Where knowledge is free
Where the world has not been broken up into fragments
By narrow domestic walls
Where words come out from the depth of truth
Where tireless striving stretches its arms towards perfection
Where the clear stream of reason has not lost its way
Into the dreary desert sand of dead habit
Where the mind is led forward by thee
Into ever-widening thought and action
Into that heaven of freedom, my Father, let my country awake.

Niraamaya Kumarakom will rise like a phoenix soon and we will welcome our guests in a few weeks, but lets not allow the nation and the democracy to fail.

Monday, October 9, 2017

Recipe of being a First World Country! Fix these, Fix India!

1.
In the silicon valley of the east – Bangalore, I have been to Manipal Hospital atleast 5 times in September to visit my close friends or their family members suffering from dengue. It is surprising and rather interesting that everyone I know between Delhi and Bangalore, knows atleast 2 other people down with dengue. I didn’t know whether to feel amused or sorry when parents of my
cousin, suffering from dengue, visiting Bangalore to tend to him caught dengue themselves and they laughed it off saying the entire family had a 7 day holiday at the hospital.

But what a shame.

Shame on the nation and its citizens (who are an equal party in keeping their country dirty) that while we cannot stop the chest thumping in self-praise on our intellectual, economic and scientific advancements, a significant population is just figuring out their dengue and malaria.

Simple math throws some startling numbers. Every dengue patient ends up spending USD1500 for a treatment in addition to a loss of productivity of about 10 days. Readers of this piece who are good in math would be appalled by the broad numbers if they choose to calculate the national and the notional loss.

2.
I spend an hour each day each way to work and this 2 hr commute gets reduced to a mere 40 mins on a Saturday or Sunday (if I ever have to visit office) 8% of my life and 30% extra fuel (because of traffic inefficiency) gets wasted in negotiating issues of traffic. Imagine 8% of your precious time that could be spent on filial bliss is taken away by traffic jams.
Approximates figures according to data available online pegs India’s daily fuel consumption at 4.4 million barrels per day. If traffic makes it 30% inefficient (wasteful burn) , we waste approx. 1.3 mbpd or 206.68 million litres per day. Staggering number translating to approx. USD190 million per day. Or 69.35 billion USD per year.

Let me remind you that’s just the wastage due to inefficiency, bad roads and traffic jams.

India imports a major part of its fuel using precious foreign reserves and it’s a pity that 70 billion USD gets wasted due to poor infrastructure and quality of roads and bad traffic jams.

3.
In India you can almost get away with anything. Whether its Mallya who is basking in the sprawling mansion of Hertfordshire, or JP associates who have duped 32000 home buyers of their life savings or top 50 defaulters of Indian Banking system who collectively owe close to 80 billion USD to the banks. All this is really just the tip of the iceberg. The collective loot by top 500 politicians, businessmen and officials could be upwards of 500 billion USD. The result is that markets are short of cash. Genuine businessmen don’t get affordable loans. Existing businesses cant expand and if at all - they get sicker by taking on un-affordable debt. I hear that some businesses in India are paying upto 10% in processing fees of commercial debt (even for fully collateralised loans) to financial institutions. One would wonder whether there is another major scam brewing in the banking sector or banks are funding sub-prime loans for superior upfront processing fees.

And irony – with 8-12% of stressed loan book, the outgoing chairman of SBI is still being hailed as a having left a legacy. Whereas I clearly remember that in her incoming quarter (As Chairperson) the profits dropped by some staggering 80% and the banking fraternity hailed her as cleaner of skeletons left behind by the previous leadership.

An this is just one bank!!

Hypothesis:

The Acchhe Din rhetoric resonated far and wide in every citizen’s imagination. The demonetisation and GST decisions required balls of steel and a pristine intent. The jury and naysayers are still criticising PM Modi (rightly or wrongly – I wont opine here) but no Prime Minister has stirred the imagination of a nation as much as Modi has. But the bedrock of any nation lies in the health of its citizens, the quality of life that a country offers and the corruption that rots the country like a rogue virus that has no cure.

Bharat wont become swachh by AmitabhBachhan talking about it on prime time or politicians grabbing every photo-op a few times in a year by holding brooms in a localised area. Bharat will become swachh by putting the 70 billion dollars wasted each year – just due to poor roads and infrastructure and traffic jams - to good use.

Infrastructure requires cement and steel and our nation can produce all of it indigenously and thereby easily improving the quality of life of its citizens in every respect and also generating millions of jobs - dramatically.

Any road that erodes within 5 years of being metalled – its responsible PWD engineer, its contractor, and the sanctioning officer should be subject to harshest punishment – perhaps capital. Vietnam recently executed an officer on charges of corruption. I smiled when I read this news. With a law like this India’s population would be reduced to half.

Similarly the bankruptcy laws are being seen as a parachute to the defaulters who have siphoned and stashed hundreds of billions of dollars. And now are declaring bankruptcy and will still continue to live lavish lifestyles beyond what a commoner can fathom. Why are all the sanctioning officers from all banks under whose signatures the defaulting loans were sanctioned not being pulled up in retrospect. How are we different in our approach towards our bankers compared to Fuld of Lehman who retained his bonuses and was still giving lectures to the wall street elite 5 years after the demise of Lehman.

India has dramatic beauty and locations better than some of the best visited places in the world – but foreign tourist arrivals hasn’t grown beyond 9 million per annum in a country as vast as India in last 70 years. Just the city of Istanbul gets more foreign tourists annually, than all of India. Its all because of a dirty nation – both to the eyes and in its soul.

Much is left to be desired in the 70th year of our independence where on one hand we pride in having sent the cheapest rocket in first attempt to Mars and on the other we are just fighting a losing battle with the mosquitoes and spending a significant part of our lives in traffic jams and in ever increasing polluted and corrupt environment. And where most of the recent actions by the present leadership failed to demonstrate the intended results.


Manu also writes on huffpost
Twitter @manurishiguptha

Friday, August 25, 2017

Infosys Saga - Who is Omkar Goswami by the way!!

Mr. N R Narayana Murthy has been under some criticism for a while for having raised some questions that remain unanswered by the erstwhile CEO Vishal Sikka or the present Infosys Board, ‘Founders Go Away – leave the company alone’ has been a rhetoric that’s been echoing in the present board rooms of Infosys.

So when I read a scathing attack by Omkar Goswami in an open letter to Mr. Murthy – I wondered , By jove He must be one hell of a fellow to make such an advice and would have founded bigger better companies than Mr. Murthy. Well yes he has been on the board of many of them but I don’t think Omkar Goswami has to his credit an iota of what Mr. Murthy has achieved in his lifetime.

When I wrote about Sikka on 10th Jan 2017 in Huff post, I thought I had crossed a bit of a line in making some assumptions. But it’s a great feeling to be proved right, now and then, and that too in public domain.

Now back to Omkar Goswami

Google search threw up a Wikipediapage on Omkar Goswami and yes he is an economist by education, he might be a carrying a chip on his shoulder for being from Oxford, Masters in Economics, and of course a doctorate in philosophy by writing a dissertation on Jute economics which in today’s parlance is seemingly irrelevant on the face of it.

I dug deeper and the sum total of his life resume can be written as follows….
…A well educated economist, academician, and a columnist of repute with a doctorate on a defunct topic in today’s world.

Well I hadn’t ever heard of Omkar Goswami till 2 days ago but let me ask him a few questions since the season of open letters and editorials… (a’la Infosys) is in full spring.

Dear Omkar Goswami…….
  1. Have You managed a P&L ‘ever’ in Your life
  2. Have You ever founded a company
  3. Have you ever been regarded a father of any industry
  4. Have You ever held a responsibility where an ocean of investors have remained vested on your credibility
  5. Have you ever taken a decision that has created immense value for yourself or for any company and its shareholders
  6. Have You set a precedent of transparency and compliance, such as, quarterly reporting and guidance, far before it became a statutory norm for listed companies.
  7. Do you have any claim to fame of being beyond a consultant? (a consultant is popularly an analyst/advisor who has all the opinion and authority in the world without any direct responsibility)
  8. Does anyone know you or has respected you as an epitome of corporate governance in any circle whatsoever.   And Lastly.....
  9. Have You been listed as one of the 12 greatest in anything by anyone?


Mr. Omkar Goswami – if the answer to any of the above was Yes – I would have heard of you for sure.

And if the same questions were to be put to Mr. Murthy, the answer to each one would be a resounding Yes.

It surprises me that people who have the skin in the game and have founded companies and nurtured these for a major part of their life and have earned and commanded (through their deeds, hard work and thought leadership) respect and adulation are being questioned by people who have no skin in the game. Most of the present board members of Infosys are retired professionals / executives who are now playing an extended innings (I am sure) for some remuneration.

If the companies are to survive beyond a global average of 33-35 years, decision makers and opinionists must have a skin in the game. Else it takes just a few quarters of bad decision-making to bring down companies and takes decades to build back the same.

Mr. Murthy-, the world (India and beyond) has looked upto your values and have endeavoured to imbibe within itself, what you have preached and practiced all your life.
So what if you asked a few pertinent questions or a few documents of a deal to be made public or raised a doubt on the remuneration of someone who has little evidence of achievement in Your opinion.
You founded Infosys, It’s is in your right to do so and I am sure millions along-with me stand with you in your ideology and in spirit.

Tuesday, August 8, 2017

7 pounds at birth to 7 pounds at death - lessons in my Granny's death

Just recently as I was sifting thru the ashes of my grandmother trying to find the last few solid pieces of the bone (to be taken to Haridwar to be immersed in the Ganges – a hindu tradition), I reflected on the purpose of life, on the way human beings are judged and how life is really so short. When we are born we are about 7 pounds and the lifeless pieces of bone that get left behind in a small sac are also about 7 pounds.

Some gut feel encouraged me to visit her during the last week of her life and I spent a few precious hours with Biji (as we fondly addressed her). Her rhetoric hadn’t changed in years. Worrying about the unmarried, the unwell and the childless in the family. At 88 She had an elephants memory and a sharp mind. The welfare of her 6 brothers, 4 daughters, their kids, and about 100 souls on her direct radar seemed to be her sole responsibility that she felt God had bestowed on her.

The futility of her worries almost always irked all her grandchildren till we laughed and made fun and she would get annoyed. But what a towering personality she had. Everyone was scared of her out of respect and then one day she didn’t wake up. Passed away peacefully. And emotionally orphaned so many of us.

At the funeral I was overwhelmed to see over 350 people who travelled from significant distances for this 88 year old woman and that’s when I got a rather significant lesson of life.

In this short and insignificant life (on which I wrote a piece in my earlier blog) and on your last day on earth, no one will judge you for the car you have driven, or the size of the house you had built or the money you made in your life. For ‘some small time’ people will remember you for the love and affection that you left behind and the respect you garnered through your deeds.

Lesson
We fretter way too much about updating our career resumes and LinkedIn profiles. All of this is important as a small means to an end and in the 80 year runway that a human being has, - Yes do give importance to the career resume. But don’t leave the sight for a second of Your life resume.
The only thing that matters (as David Brook says) is the obituary/eulogy resume.
This 88 year old partially educated woman who had weathered the partition of India – lost her husband at 44, a son when he was 38, and always had a bare hand to mouth existence had an almost perfect eulogy resume – and that I figured out when I saw the moist eyes of some 350 odd people.

Does anyone remember Babur in 1526 and how the Mughal Empire was established. In years between 1526 and 1857 (merely 331 years) art, architecture, language, textile, shipbuilding and steel-making was so evolved that by 1750, India produced 25% of the world’s industrial output. No mean feat by any stretch of imagination. No one on this planet has been able to replicate Shahjahan’s Taj Mahal built in 1632 despite all the architectural advancements. Pertinent to note that Shahjahan died a prisoner – not able to fully appreciate his creation.

Bahadur Shah Zafar  the last Mughal died in 1862, a despondent, in Exile, a prisoner and with no control over the legacy of 4 centuries marking the end of one of the greatest Empires.

Lesson
You will be remembered if you create a Taj Mahal (symbolic). Else you are just wiling away time in a futile hope to leave a mark. Bill and Melinda Gates will be remembered for having eradicated so many diseases on a major part of this planet but God-No – not as much for Microsoft. Anyone who judges you on a so called QOQ or YOY and anyone who feels pressured by the same is a just an inconsequential organism in the spectrum of humanity and evolution.
Would anyone remember the stock price of Amazon or Apple, 50 years from now. The infinite powers of evolution would have made present innovations and technologies obsolete in less than 50 years and most of the companies and human beings alive today - would be dead.
It amuses me when I hear of jargon such as ‘wealth creation’ ‘competitive advantage’ ‘barriers to entry’ ‘sustainability’ etc etc. It’s all so shallow and meaningless.

Endeavor to do something remarkable that will last beyond a quarter or a year or 10 years. When collectively each one on this planet endeavours to create a symbolic Taj Mahal, many Taj Mahals will eventually come up.

Grandmother operated her life in a binary manner. Pass/Fail, Good/Bad, Right/Wrong. It surprises me that everything in the present world is grey nowadays. He is good – but, he is right – but, we should do this – but, I agree with you but letme come back to you …….

Lesson
In this short life have the courage to stand by your values and convictions. Love and befriend humans and do it with all heart and unconditionally. Hate – and do it with grace and enough vengeance that only the fittest survive in the interest of humanity. People who compromise on principles and values die every single day in an already short life.

I will miss you Biji – you led a simple and graceful life and your death taught me the life resume I would want to build.

Manu also writes on Huffington Post
Twitter @manurishiguptha

Monday, June 5, 2017

The three blunders by Tim Cook at Apple

My sister thinks that I am almost primitive for not having switched to an Iphone and my reluctance to make this switch surprised her even more when she recently brought an IPhone 7 for all family members while visiting us from the US of A.

Till about a year back I was terribly happy with a Blackberry (BB) till most of the apps that provide daily convenience decided to stop providing BB support and life started becoming difficult. And I switched to android. As I mentioned in one of my posts that went viral, BB lost the plot when it failed to take a few significant decisions in its product lifecycle. Even while Apple is likely to be the first company ever to achieve a US$ 1Tr market cap, its fate might be similar to BB if it doesn’t change course.

It’s a given that till recently Apple used to make the most beautiful phones and laptops on the planet and yet a statistic that I came across pleasantly surprised me. Give or take, Apple has less than 20% market share of the smartphone industry and pockets 90% of the entire profits of the smartphones sold across the planet.

And that’s why the smartness and iconic status of Apple in every aspect makes it the most talked about brand in the world.

But

Product efficiency must be far better than the rest of the competition.
The only people that I have ever seen struggling with a repertoire of a battery packs and wires looking like nooses around the necks are users of Iphones. Its hard to imagine that Apple hasn’t been able to get its battery right. And on top of that they aren’t even apologetic about it. If someone was to have a long working day starting at 0500 and going thru midnight, there is no way in hell that Apple would last beyond noon. It’s a shame to see Apple Iphone users nervously struggling with chords and chargers. Apple must do something about its batteries or its in trouble.

Further to substantiate my belief I used a US$200 Chinese phone along-with an Iphone 7 for a fortnight and was pleasantly surprised with the Chinese brand for its interface, battery and response. 1/6th the cost and a far superior efficiency. Apple phones at approx. US$1000 a piece do not provide anything that a plethora of phones at 1/5th the cost provide smilingly and efficiently.

Position of supremacy can neither be taken for granted nor can it last forever.
A brand like Apple must consolidate its present position and try and capture a much larger market share. Customer is conscious and no brand in this ever connected and efficient world can charge a 4X premium for a small incremental beauty / efficiency of a product.

The saga of success that started in early 2000’s when the ipods took over the world must continue into a new product or invention. For how long can apple continue to modulate the same iphones in their shape and size and – isn’t this akin to old wine in new well packaged bottle every few quarters.

Product evolution in line with customer’s demand / desire.
Every other phone comes with a 2 sim slot that is really the most practical functionality to have for people who travel and are sometimes in need of alternate numbers. Apple has conveniently chosen to avoid providing this most desired functionality. If India and China with multiple GSM service providers at multiple radio frequencies, are to be Apple’s next serious countries of growth, Apple must start providing 2 sim phones sooner rather than later.

People generally prefer to keep work and personal numbers separate and a 2 sim fone at a starting point costs as little as US$40, its terribly surprising that Apple hasn’t thought of it as its top priority while brouhaha’ing’ about the India and China potential.

Greed is good but put a stop somewhere.
As Gordon Gekko says – Greed is good and Apple has brilliantly realised its greed to an extent that its cash reserves of US$250B are more than the GDP of many countries in the world, but all of it can quickly disappear if the most powerful engine of this growth feels short changed – and that engine is The Customer.

Microsoft strategically and conveniently allowed piracy of Windows in all second and third world countries for the longest period of time but captured a significant market share. The only sustainable ecosystem of programs and softwares across the planet is aligned to Windows. The world today is reluctant to switch off from Windows even if there are better and cheaper alternatives available. Apple seems to be losing this plot somehow.

Forget the profits and the success and the iconic status of Apple as a company – but with just 20%market share at 5-6 times the price of similar products, all it would take is a few quarters for this castle to come crashing down if the customer – who is king – realizes, what a ‘Charlie’ - Apple is making out of them.

Whatsapp wouldn’t have existed today if Blackberry had opened its BBMessenger as an open source free app just a few quarters before it actually did. This happened to Blackberry for its sluggishness in evolution – this could well happen to Apple.


Follow Manu on Twitter @manurishiguptha

Monday, May 22, 2017

The only one thing that matters in a Blissful Life

Lets start with a few numbers first to understand the significance of our existence on this planet. If life has been in existence for about 4 billion years, every 80 years there is a complete refresh of entire ‘human’ population and during these 80 years we are one among 7 billion, so by a simple calculation the significance of our existence in relation to life and humanity is about 1.142*10^(-17). Now all the serious mathematicians reading this – pls understand the sentiment and don’t start finding holes in the calculation.

If we don’t express this number in this scientific manner the simple representation is ZERO. Lets call it the state of ‘zeroness’

While each one of us gets his/her dose of philosophy wrt the conduct of life encompassing advice ranging from great health, selflessness, philanthropy, family time, wellbeing, wellness, simplicity, lessons on leadership, I have for the 40 years of my life and 25 years of fully conscious life strived to search for one thing that matters the most in life. That one catalyst that’s profoundly empowering.

That – in my hypothesis is ‘fearlessness’.

I am no Guru or saint or any philosopher. I am just a simple executive who works hard and tries to make two ends meet and make a difference to my small insignificant ecosystem on a daily basis but have come to conclude that fearlessness is THE most empowering  trait of life. A lot of gurus tell us about meditation, breathing, yoga, karma – but have you ever reflected that, that too is to fight the fear of something such as bad health, fear of failure, fear of something or the other. Every advice, every direction is to counter a fear. Become fearful and then take the medicine to counter it.

Why don’t we only work towards becoming fearless and this one thing, one trait, one goal is simply the solution to everything if one keeps the above mentioned math of inconsequentiality/zeroness in mind.

I believe life has 3 facets – Work, Family and External Ecosystem. Come to think of it our life revolves around just these facets. The biggest question is how do we empower ourselves to rise in fearlessness rather than die everyday in some form of fear. 

Lets address each one separately:

Work

In the backdrop of what’s happening in the IT industry and the expected downsizing, I write about work first, as this takes the largest timeshare of our life. At approx. 11 hrs a day this is 45% of our time.
As I walk into office each day I am excited and am keen to achieve more than what the system expects. Ability to deliver more than what people expect and become an outlier in each small way/deliverable is amazing. But what if you aren’t able achieve the best or aren’t able to demonstrate expected performance inspite of doing your best. The worst that can happen is loss of job. And really that’s all. When we give more importance to the employment rather than the result that we are paid to achieve we become fearful.

No job will last forever, No Annual Operating plan/budget will be achieved perpetually and not every month or quarter will be that of the expected growth. It didn’t happen with Microsoft, Google, Apple and Amazon and it wont happen in your company. So just chill and simply do your best.

No boss will be perpetually happy with you. But if you do the best that you humanly can in your job then God will orchestrate your success. And this belief is empowering. But if you lie, shun ownership and steal or indulge in corruption you will always live in a state of fear. In this above-mentioned state of zeroness what is it that you are trying to achieve or prove. You cant achieve anything or prove anything that will last forever. But if you do the best that you can you feel empowered and empowered human beings achieve extraordinary results.

Corruption debilitates and good character empowers. Corruption isn’t only hardcore financial corruption. Corruption is wrong/diluted intent. Intent has a smell, intent has a feel and its clearly visible. And if your intent is honourable then stop being fearless.

Human beings with great intent are guided by that invisible hand. Momentary failures are stepping stones to success. If your intent is good then don’t fear failure because failure is sometimes orchestrated for you by God to push you to a higher better state.

Your acknowledgement of your state of zeroness should empower you to carry that proverbial resignation letter in your pocket but don’t die everyday in the fear of being fired. That’s the worst that can happen and in the cycle of life its  meaningless. No one can fire you except your own self. And when this fear of being fired is out of the window you feel empowered and as said above - empowered human being achieve extraordinary results.

Family

For a major part of our life we ignore and take our families for granted only to make them secure for a rainy day and slog our life out because of some fear of an unknown chilly winter.

And we live in fear.

When we live life by the principle of different strokes for different folks life gets complicated. If we try and lead a life and treat our families as we would like to be treated life becomes less-complicated.

Agree or not we are constantly trying to prove a point. A point by buying/striving for a bigger better house / car / exotic holidays / clothes / gadgets. Nothing lasts a lifetime. Everything depreciates and eventually vanishes. But if – we lead a simple life where material things stop bothering us and we just strive for all necessary comforts without a pressure to demonstrate or win a race – you become fearless.

You become fearless when you lead a minimalistic life and there is little to lose. When there is nothing to lose you respect the relationships more than the material things of life. You find better joy in eating at home with family and laughing with them rather than suffering in the pressure of eating in a Michelin star restaurant, that you reach after negotiating in traffic and investing time on travel and then worrying about spending too much. How often have you celebrated a simple meal with the entire family and a good wine and just enjoyed each others company without proving anything to anyone and felt empowered because your need isn’t the need to spend and feel pressured but your need is the need to feel empowered in the joy of togetherness.

Wife, parents and children is all there is to a family. If you treat your parents as you would like to be treated when old, if you treat your wife as you would like your sister to be treated life cannot be simpler. Uncomplicated lives empower you. Complicated lives make you fearful.

When you gracefully accept life and the cards that it deals for you, You feel empowered. You are fearful when you cheat and when you lie and strive to acquire things that aren’t destined for you. We make much lesser effort to work on our immediate relationships but invest a far greater time catching up with inconsequential acquaintances – why – to further our social circle. And no one in the social circle matters except the immediate family.

Its surprising that divorce rates and instances of spouses cheating on each other are at a historic (evolution to date) high. And this is because we are striving for something that doesn’t belong to us or is meant for us. And that creeps in fear. Fearlessness is when you can look in each others eyes and smile with the greatest degree of confidence without even the need of saying – I Love You.

Live within your means, eat like a pauper and live like a king, don’t buy/spend to prove something but only spend on what you need and You and Your family will feel empowered and fearless forever.
  
External Ecosystem

This comprises of your friends and relatives. I have realised that there are only going to be 4-6 truly reliable people in this realm. And your true friends aren’t ever going to judge you by your possessions or by your lifestyle. Whether you live in a 500 sq ft house or 50000 sq ft house their behaviour and blessings for you will remain the same. The trick in life is to quickly identify these handful of people and ignore (get rid of) the rest.

People who judge you by your car / home / holidays / liquor that you serve are just pests (assimilatory) in your ecosystem. Keeping up with the Joneses is the most fear inducing and debilitating exercise. You feel empowered when you live within your means and give away to someone in need. Giving away brings joy and brings a sense of satisfaction. There is no need to talk about poverty eradication and global inequality in Davos. Just try and behave well with your maid, driver, security guards and try and make some difference to their life. It will empower you.

If you fund the deficit of these people who bring in the daily comfort to your life, its far more joyful than the momentary satisfaction that you get by spending a similar amount of money on an expensive meal that could be equal to your driver’s monthly salary. And when you make an effort to tune your thoughts in this direction you become fearless for there is nothing to lose but only to gain.

Live a comfortable life but spend on what you need and not what you want and you will live fearlessly for the rest of your life.

And lastly human beings are but a figment of their thoughts and character. As Thatcher said, Good thoughts lead to good words, Good words become good deeds, Good deeds become good habits and good habits become great character and character is everything.


Isnt it??

Manu also writes for Huffington Post

Monday, January 30, 2017

The imminent crash of the Indian housing market and why buying a house is a stupidity


Two incidents moved me recently...

Firstly:
Just as I was about to tee off at the Milpitas Golf course this September I heard a ‘fore’ and was fascinated to see a fellow golfer tee off from the backyard of his home. I thought what a life/luxury.

I realized that this 7200 yarder golf course is inhabited by a mere 50 families and Zillow (the app that correctly dispenses info on real estate prices) indicated the price of each bungalow between approx. 1.1 – 1.3 million USD (approx. IRs 7.5 Cr)

One cannot ignore that US of A was built on the premise that the infrastructure (rail, road, bridges etc) are the bedrock of economic activity and the growth of any nation. And USA has by far the best infrastructure in the world.

Secondly:
The chief accountant of one of the top three builders in Bangalore visited me looking for a job and shared that the builder hadn’t sold more than 3 apartments amongst its entire national inventory in the last 4 months.

After my 4 week sojourn in the US, when I returned back to India, still in a state of daze, it took me a whopping  2.5 hrs to travel a distance of 30 kms from the airport to home and along the way in a traffic jam, I saw a larger than life hoarding of an apartment built by a top Indian builder offering a 4 bed apartment “starting at ‘only’ 6.5 crores” about a million USD.

This indicates and is reflective of a demographic – that there are a large number of people in Bangalore for whom a starting price of only a million USD for an apartment would be seemingly attractive. And ‘only’ is supposed to significantly enhance the value proposition of the apartment that’s built right next to a crematorium and on an illegally reclaimed land on a gutter that emanates more methane than a human body can tolerance or human mind can fathom.

Well this is a reality of this country that’s falling apart due to officer builder nexus/mafia, due to tier one and tier two cities choking to death because of rampant construction.

What a sham and ignorance on the part of a builder and the gullible home buyer respectively.

The lack of town planning and inherently corrupt city councils have made most of the cities un-habitable in India. God forbid if ever (once in a life) one has to transport an aged parent or a well-wisher to hospital, he/she will certainly be sacrificed along the way because an ambulance has no way/infrastructure to beat the traffic jams.

So that raises a question – what really is the right price of real estate and why that apartment in the eyes of that builder can be ‘only’ a million USD.

Every asset has an intrinsic value – the cost of replacement or the cost of building the asset is the intrinsic value. Add to it the profit of the seller/maker and that leads to the discovery of the fair market price.

For way too long (almost since the beginning of 2001) real estate prices have seen only one direction and that’s the way up. I have a few acquaintances in Gurgaon and Delhi and Chandigarh who gave up their jobs in order to deal in real estate. They have been found buying an asset in the morning and selling the same in 2 days at a neat profit. It was almost like the tulip mania when the Dutch thought that the world is going to run out of tulips.

India’s Black market economy helped. It is allegedly believed that the top 6 politicians in India have a combined net worth in benami property and assets that is equal or more than top 50 richest people in the Forbes list. For way too long corruption has siphoned off the nation’s and tax payers wealth to fill the coffers of people in the position of authority and an inherent lack of robust tax and tracking system has allowed a parallel black economy to mushroom and fuelled a bubble in almost all asset classes but above all in real estate.

The general cost of construction per sq feet (at standards that are followed in india) is about IRs 2000. Builders have a funny inexplicable formula of super built up. They sell part of all public areas to the buyer and add that to the area of the flat. Most say that the mark up in the area sold is only 25-27 %. That implies that if one is buying a 2000 sq ft apartment, he is likely to get 1600 sq ft of carpet area. Well if this is the norm and is legalised, its good too. But the truth is far from reality

My mother like all mothers on the planet wants to see her son own a house. The proverbial ‘one’s own roof over the head’ in times of a future distress. So a few years back I did start looking for a house but instinctively bought a laser area calculator (digital planimeter) to find the floor area of the house being sold. I used to carry the same during each visit to an apartment. Surprisingly most builders who claim to have a 25% attributed to super built up actually have 40% mark up in area. So a big fraud there.

House is an emotional investment round the globe and no one carries a planimeter when selecting a potential purchase. And the brokers have a knack of playing with ones emotion by painting the picture of a perfect home and actually talking about the location of the temple, the balcony , the virgin sun rays in the morning and generally making a customer believe that the said asset is being eyed by 7 other prospective buyers. And human beings are emotional gullible fools generally governed by cognitive biases.

Besides the 15% defraudment (unavoidable premium that one pays for other persons fraud) one has to pay for parking and floor uprise, etc etc. Talking of Bangalore in particular, a typical third grade apartment in a smelly location ends up costing about 20000 (300 USD) per sq ft of carpet area – and by the way you don’t own the piece of that land.

The recent demonetisation has taken the wind out of the sails of this ponzi scheme and the forthcoming RERA (Real Estate Regulation Act) is likely to bring some discipline but how will the builders make their infinite profits and make a charlie out of the gullible customer? They wont be able to………..

And that will start the big correction in the real estate market.

Today the monthly instalment over 20 years (if you own a house) is generally 3.5 times the present monthly rental of the same house. So if someone typically buys ones home between 35-40 years of age, he/she is likely to pay 3.5 times the probable rent of that same place in ones EMIs (equated monthly instalment). Can you imagine paying 3-4 times your monthly rent for the next 20 years of your life just to gloat in the feeling of owning the house – AND THEN BEING STUCK WITH IT.

The only certainty in life is the uncertainty around it. Imagine being retrenched in a downsizing exercise, or having to change your job. A house at present Indian valuations is likely to make you nervous not confident.

Imagine being unreasonably bollocked by your boss and that irresistible feeling once every few years to tell him to goto hell. But not being able to, because the payment of EMI is just round the corner.

Imagine that one desire to live one’s life fearlessly and meaningfully at one’s own terms and conditions is being quashed by the burden of one’s EMI.

The logic behind the ‘round the corner’ housing market crash is simple. Too much of easy money has flowed into this asset class and the present prices aren’t sustainable. Either the rentals have to double from the present levels (which they can’t because that’s a function of demand and supply) or the real estate prices have to correct by atleast 50% from the present levels.

Sadly, I believe my mom will never see a proverbial roof over her son’s head in the near future.

Manu also writes on Huffington Post

Sunday, January 8, 2017

What Infosys’s Vishal Sikka’s tenure teaches us about ‘ Strategy ’

Recently Wipro’s Azim Premji and Infosys’s Vishal Sikka made joint statements about the stresses and tough times that lie ahead in the Indian IT sector and how the global factors have caused immense uncertainty – I agreed, for its been 2 years that I have been - through this blog, making a case that greed, unsound economic decisions and self-fulfilling political pursuits by nations and central banks have pushed the world to a brink of dangerous unanticipated consequences and that the present prices of ‘pretty much’ all asset classes are unsustainable.

But this piece is about strategy. I read this word so often that I am now almost sick of it. Speak to an over enthused student at a business school – he wants to excel in strategy and make a career out of it, speak to a new CEO – he would talk of a 10 year strategy and vision and make the incumbent employees feel scummish for their lack of strategy and vision, speak to a consultant (highly paid youngster at probably the big four with all authority and no responsibility) and he would regurgitate so much on strategy through his 100 page presentation that the customer would really start cursing the historical past, when the consultant wasn’t on board.

Well strategy is fashionable, it sounds great – but in reality its bullshit. As Peter Drucker says Culture eats strategy for breakfast everyday

200 years ago when nations orchestrated wars to take over other nations and land masses across the oceans, strategy made sense. A strategy once made could remain relevant for 50 years as letters and information could be sent/received over sea/horses at most twice a year. Officers of invading nations had orders to execute a decision and the same could be reviewed only after a few years. Results to judge successes or failures was possible – at best – over a decade.

Today all it takes is a tweet by Trump to make the price of fortune 100 company crash or a claim by wikileaks to make Hillary lose a winning US presidential election or a unfounded misinformation that encourages a nation to invade another and create a world havoc that is likely to have a century long ramification.

Disclaimer : Now I don’t know who Vishal Sikka is or what he stands for or what he brings to the table and I have nothing against him. He is just a case in point because I remember him as a non-promoter Indian to get the highest salary in India, to get an annual compensation of about 6 mill USD besides all the stock options. But I read 3 newspapers everyday to have a fairly good memory and to form an opinion.

When Sikka joined Infosys somewhere in June 2014 as the first non-promoter CEO, he was the next big thing in India. He talked of strategy and he talked of vision and the world took notice. The stock price of Infosys soared and he became the poster boy. At the time of his joining, the annual revenues of Infosys were about 6.9 billion USD and he talked of a six year 2020 vision of 20 billion in revenues. ie a approx. 2 billion increase in revenues each year. And he maybe got more bonus. Many of the rockstar executives who built Infosys over last 2 decades, allegedly quit out of frustration.

This reminds me of the despicable Jack Welch who made a fortune for himself but made the most ruthless organisation by firing 5-10% of workforce every year. As Simon Sinek says, companies that sacrifice their people for numbers rather than numbers for people aren’t built to last.

So as time progressed Sikka’s rhetoric of his vision became louder and the performance became quiter at about 7.9 billion USD in FY 2016 but he still maintained the gusto of his rhetoric.

The last Q3 FY17 results of Infosys are due on Jan 13th 2017 (oops that’s a Friday) and Sikka already warns of tough times ahead and by the way all of it is the fault of BREXIT and Trump.

And going by the HY (half year) run rate of FY17 Infosys will achieve about 9.5 billion USD in annual sales. With three years to go for 2020 – a 3 billion USD per annum increase.

Whats the point:

Its not Sikka’s fault. He has no role to play. The multitude of global factors and externalities are so diverse that any CEO or alleged strategist who talks of a 10 year or a 5 year strategy is only fooling himself or the board.

Its good to have a general aspiration (call it vision) for next 5-10 years. But having a 5/10 year strategy and a promise can help you get a bonus but all that matters is the next few quarters.

Companies are wasting too much time on vision and strategy not realising that merely a tweet, a simple geo-political externality or an event on which no one has a control can change the dynamics of our aspirations and strategy overnight.

Boards must realise and encourage the following:
  1. Growth is important – and imperative. Don’t put so much pressure on CEOs that they are forced to make specious commitments.
  2. Preserve cash – When a Brexit or a trump hits you – no one knows. Cash is king and cash is the one that will help you survive in tough times.
  3. Leveraging created on the assumption of ‘future growth of present revenue run rates’ (sounds almost as exotic as CDO’s of 2007 isnt it) is a sure shot recipe of disaster.
  4. The Baniya style of business has stood a test of time over 200 years, till Goldman arrived on the scene and changed the rules of the game. Live within your means and borrow what you can pay from present income – not future income.
  5. Every decision maker must have a skin in the game. Convert decision making executive’s present bonus and compensation into future equity if you want the organisations to survive.
  6. Conservatism isn’t a bane, it’s a virtue. For fools are full of confidence and wise are always in a state of doubt.
  7. Every present expense must pay for itself – strategic decisions taken in present for future issues without having a control on future are likely to be disastrous and not reflective of a sense of ownership or good leadership.
  8. Stop expecting month on month or quarter on quarter. Allow your CEO’s to work in peace and keep a quiet watchful eye. Fire them if you don’t like them but don’t create noise and disturb them every single day.
  9. In an ever connected highly efficient world make a 3/6 month strategy – if at all. Anything more than that is gas.
  10. Keep a watchful eye on people talking of 300 years of vision and balance sheet (surprisingly same people couldn't retain their CEO for more than one). Anyone reading this will probably be dead in less than 40 years and anyone talking of 300 years probably has no plan at all.
And lastly for GOD’s sake – stop talking about strategy and start working on culture.

Manu also writes in Huffington Post

Monday, December 26, 2016

The Savers Dilemma

During a recent trip to the US, I happened to meet many young executives from the Silicon Valley, doing relatively well and perhaps in the 95 percentile of income group but all fed up with lack of options to generate alpha on their idle cash lying in their savings / checking accounts. And that too in one of the most advanced and efficient consumption driven economies on the planet.

One relatively accomplished executive (we’ll call him John) in one of the top social networking company had an even stranger story. In 2009 (at the peak of the depression), John invested a million dollars with a top hedge fund with a non-guaranteed promise of indicative returns upwards of 15% CAGR on a premise that the bounce back from those levels was likely to be phenomenal in all asset classes and returns could even be higher than indicated.

Impressive isn’t it! I would have sold my wife’s jewellery to invest – for where else would one get that kinda return.

My curiosity got the better of me and I couldn’t help but probe. To my surprise John recently withdrew and got back USD 1,126,493 after 8 years, a CAGR of 1.5% with a detailed explanation from the fund manager as to how well his money worked for him in the hands of the fund and why the investors should feel happy in the times that were tough (2009-2016)

And by the way John was smug - for his sense of achievement was emanating from the fact that his checking account would have yielded just a fraction of this return. So John really did well by his own accord. And top of that the fund sent them a special shopping voucher (unexpectedly) worth USD 2000 for shopping on Amazon.

I did some research on US asset classes and was rather surprised at my findings.

Dow Jones moved from 7000 to 20000 in March 2009 thru Dec 2016
So if John had simply (read dumbly) invested in an index fund then his 1 million USD would have been 2.85 million USD

If John had bought gold his investment would have peaked to about 2.5 mil USD in 2011-12 but would have still been about 1.8 mill USD today

And of John had bought Apple stock for that amount, his money would be worth approx. 9 mill USD today besides earning about 17 dividend payouts in the same period

And lastly if rise of oil prices had impressed John, his money would have remained almost the same in 9 years

John and thousands like him would have definitely paid for his fund’s billions in bonuses.

Oh - I so hope that my best friend John doesn’t read this piece because the comfort of smugness on an issue is a virtue that once acquired must not be lost or destructed.

The point is simple :

Lack of financial knowledge is hurting the potential growth rate of capital that is being used by fund managers.

The greed for a superior return without a guarantee of capital protection just puts gullible investors at huge risks and there is no redemption from these ill-informed investment decisions.

And John isn’t alone – except for less than half percent of top wealthy people on the planet, very few are able to generate an alpha on their savings that beats inflation and grows capital.
If the annual rate of inflation is about 2% historically, the savings must generate a min yield of 2% for the value of the money to remain same or real return on investment to remain 0.

An average or above average executive is just too busy in the daily rigmarole of life, wife, kids, performance appraisals, corporate slavery to make any real sense of what to do with spare cash.

But the success of stocks like apple or gold are outlier events that occur thrice or 4 times in a 100 year spectrum. Only the people who have deep understanding of economics or trends can generate alpha or even protect capital.

Thomas Pikkety, in his award winning research and book has beautifully summarised that capital over a long period of time gets accumulated in the hands of few and the common man continues to suffer (relative income inequality)

If capital is deployed in non-sexy instruments and stocks of companies with sound management and fundamentals, and portfolios are diversified to include a variety of asset classes and the inherent greed can be curtailed to be satisfied with ordinary real returns on capital, all investors will definitely and most likely grow their capital at a far better rate than anticipated.

Mutual funds from trusted fund houses, that have low expense ratios and the ones that are tried and tested with historical success of more than 7 years should be bought rather than being carried away by the glamor of irrational returns.

Investing is simple as Buffet says Be greedy when all are fearful and be fearful when all are greedy. And if Buffet’s to be proven right, a Global Financial Armageddon is round the corner but then – that would be the time to be greedy – Isn’t it?

The next blog
Why it’s a stupidity to ever invest in a house


Manu also writes on Huffington Post
 
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