Sunday, December 11, 2016

Demonetisation of the 500 and 1000 rupee notes sucks

Note: I first posted this in Facebook some 5 or so days after the demonetisation was announced in India. I realised it was still in Draft form only when I wanted to publish my article on "An old man ...".

Demonetisation sucks! (a) If as reports suggest, only about 6% of illegal money is in cash in Indian rupee notes, it is a relatively small irritation to the cheaters; (b) the collateral damage to honest or relatively so citizens of a primarily cash based society is huge - at a personal level and macro level (lost gdp when productive time is used to stand in lines at banks); (c) the measures make a very tiny dent in "illegal money" because it will not "catch any big fish" - the big fish would have to be stupid to get caught because they risked 100% of their ill-gotten wealth to save 6% of it, far better to light cigars with the cash that is the 6% (or of course use the 13 ways in the attached article); (d) the best connected cheaters would have probably got insider information and "saved" their 500 and 1000 rupee notes in a number of ways - was there an uptick in stock and real estate transactions in the 2 or 3 months that this hare-brained scheme was being discussed and implemented? How about in the number of new bank accounts, or of the number of accounts that mysteriously suddenly had 2,50,000 rupees in them.
I must admit that I was excited when I first heard about it. Then when I got home and started thinking about it and reading the opinions of others I realised what a costly gimmick this was by the Indian Government. The sad part is that after the first day there seem to be many who do not think it is a gimmick and a fair share of them most likely think that the collateral damage is worth the trouble to get at that illegal money. What is even sadder is that whatever amount is not lost and goes into government coffers (via people suddenly paying years of taxes or levees with cash, or the confiscation of funds) is most likely going to get misappropriated or used very inefficiently!
Once again the common citizen is made to pay for the folly and greed of others.

Article from Huff Post
13 Ways In Which Indians Will Convert Their Black Money Into White Even After Demonetisation
As the poor struggle, black money owners are finding a variety of ways to save their wealth.
HUFFINGTONPOST.IN


Note to self - start blogging again!

An old man nearly made me cry today.

An old man nearly made me cry today.
That said, and before I go on, I would like to make it clear that the following is not about me – it is about him. Here is what happened.
About 6:15pm with the temperature dipping below 20C and darkness settling in I set out for a short walk with my dog, Fred. I was in a hurry, hoping that I could go back and see the last of the cricket action on Day 4 of the 4th test v England at the Wankhede (I like to watch only when India is winning).
When I had walked about 20 meters out of my compound, I saw a person slumped in a sitting position by a lamppost on the pavement across the road. Just then, he slowly stood up, shuffled to about a foot from the edge of the pavement, then without really caring as to what was happening stepped on to the road in front of an oncoming taxi that braked, swerved, missed him and carried on. The man froze. Given that this was on the bend (just outside the entrance to 25, Sha Wan Drive) I thought traffic coming up the hill may not see him in time when he was on my side of the road, so I rushed towards him (thinking he was suicidal) and shepherded him to my side of the road.
I tried to speak to him but could not understand him at all given I did not know his language. He also did not know any Cantonese so the few words that I know in that language were useless. He was dressed in two shirts and a pant and very poorly and wore bare sports shoes. He was calm but obviously exhausted and weak and I noticed that he looked me in the eye when I addressed him or when he tried to speak. I asked if he was Ok and he indicated that he was. I then waited and he entered 25 Sha Wan Drive and then again just stopped in the middle of the entrance road about 4 or 5 meters into the compound. I ran towards him still unsure if he was suicidal. Perhaps it was because it was a Sunday evening there was no one else on the road and this made me desperate because I really wanted to communicate with this man and ask him how I could help.
I escorted him to the corner of the entrance to 25 Sha Wan Drive and tried to ask him again. He put his two palms together and by the side of his head as he tilted it. I took that to mean that he wanted a place to sleep. So I tried to tell him that he could go into 23 Sha Wan Drive (where I live) and thinking I could show him a place in the underground car park where he could sleep at least for a few hours before the guards found him. He indicated “no”. I then showed him a tiny gate (it is near Block 1 of 23 SWD), opened it and stepped in to show him “the secret” entrance. He said “no”.
He also indicated, “thank you”.
That shook me to the core. Here was a guy, who was not drunk, clearly exhausted, possibly starving, but polite and courteous – and there I was, helpless in my ability to comfort him in some way, thinking my dog Fred had a better life than a human, and that I could walk to the comfort of my home in just a few steps while this man had nothing. This caused an angry rage in me and I had to fight back my tears of anger at the situation the old man was in.
I know this sounds like an extreme reaction on my part. Especially considering that I have lived in countries where I have seen extreme poverty and watched on television news the horrors inflicted on people. Perhaps it was anger that had welled up in me because of the injustices that I had seen. Perhaps it was because it was just me, the old man and Fred on the road and that made the situation very personal.
As he walked down the road towards 23 Sha Wan Drive, I waited a bit, then overtook him and went into 23 Sha Wan Drive and waited to see what the old man would do. He just ambled past the entrance and continued down the hill – or so I thought.
Angry now with myself for not doing more for him, I went up to the flat and (with my wife on a business trip and my helper off for the day I was alone) started looking for something that I could give the man. I grabbed a sweater, a jumper, and 3 energy bars and rushed back down with Fred. As I exited the building I saw a helper returning from a day off and asked if she had seen an old man in a white shirt. She said: “yes, he his walking up the hill”. I was sure that had to be wrong and asked again and she was sure and added: “he cannot be far”.
I ran out and sure enough, he was on the other side of the road, not 15 or 20 meters from where I first saw him. I went up to him and stopped him and there was instant recognition (leading me to believe that he had his memory working and was not lost). I offered him the clothes and he pinched his shirt (to indicate he had one) and said “no”!! I then offered him the 3 energy bars – and he took 1. ONE. In that instant I thought of the many that I know, who despite having so much, want more and are greedy or stingy and wondered at this exhausted man who gingerly took just one of the 3 energy bars.
I then reached across and put the other two energy bars into his shirt pocket. I asked him again to please take the sweater and the jumper and he politely refused but pinched his pants (this time the expression indicated he may need pants). Thinking that perhaps he needed a change of pants I indicated he should sit down, pointed to my building, and that I would go and return quickly with something while he waited. He again politely declined and indicated thanks by slightly cupping his right hand and pointing his palm at me while slowly moving it up and down a few times.
I looked around, saw the road was still empty and realised that I may not be able to help the man more. In hindsight I should perhaps have called the police.
If you asked me to pick him out of a line up of elderly Chinese men I would possibly not be able to do it. But I was able to recognise in him a polite and good man, who was dignified and not greedy. I only wish that when his end comes, it comes quickly and painlessly, and that his last memory before his breath leaves him is a happy one.

Tuesday, April 15, 2014

Spreading the message

A somewhat different post this time ..... perhaps a harbinger of things to come.

1) A quick update - I have returned to Hong Kong. Am not sure of next steps yet but have a few things that will keep me busy till June. Will try and blog now and then (many blog ideas that I have not converted into posts, and some new ones).

2) Been wanting to share photographs of my mobile bill board.
Now you do see a few more of this type of truck in India but it still draws looks. I figured that I ought to use that to my advantage and put up some messages that are important to me.
The messages.
a) Equal rights and dignity to all. The core of the U.N. charter and something that I firmly believe will lead to a better world if taken on as a tenet.
b) Empower Entrepreneurs. This is central to my notion that there is a lot of unnecessary friction in the "system". Entrepreneurs should succeed or fail based on their abilities and not due to the "system".
c) Empower Women. (At least in India) we are missing out on the power of women. Not just in the human capital aspect. Also in the leverage factor - in that (at least in some socio-economic strata) when women are earning the chances that their children will have access to more education and nutritious food is higher than otherwise.
d) "Our soldiers died for us - respect them by being better citizens". There are no doubt folks in India who think I am overly critical of India. I try and explain that we should learn to take warranted criticism - and why it burns me up so much when I see wrong done (because I actually care!). In India, we are not allowed to fly the national flag from vehicles or wear flags etc. because the government believes that it would show disrespect to the many who have laid down their lives for the flag. Yet, we insult those dead in so many other ways.
e) Speaking of flags - designed ones that showed my Indian and Swiss heritage and put them up in a few places.

(Confession. I also had the truck modified a bit. It has a bit of a growl now with a modified exhaust, a power chip that makes driving in hills fun, and four extra shock absorbers to limit the roll on curves. Boys, as they say, will be boys.)




Stay well. Stay true.
Vishnu

Saturday, January 18, 2014

On making a pitch

I subscribe to a blog called Venkat's Expressions and came across his post on Pitching. While a good post, given that I have seen a few pitches and hold some views on them I thought I would add to his post (which is here http://carvk.com/2014/01/17/10-factors-for-a-perfect-pitch/).

Overall Venkat's list does indeed capture most of the key aspects of a Pitch. I would be surprised however if folks said all that in 3 minutes never mind in a 1 minute elevator pitch - or if folks could understand it if they did. ;)
You should choose elements from and/or tailor the list for 1 min, 3 min and 10 min pitches.
In my view, the list is missing three key elements - delivery, ability to handle questions, audience.

When I say delivery I mean how you are dressed, body language, enunciation etc. Some steps to take in this regard are first to practice in front of a mirror and then to pitch to friends. Practice does make perfect.
To handle questions well you need to dream up questions (ask people you think are not very smart to ask you questions) and find good answers to them (not-so-smart people should be able to understand them). Not saying investors or clients or potential partners are not smart - just that by working hard at it you will find good, simple, direct answers to important questions ("stupid" people sometimes ask the best questions!).
Audience - pitches are not just to investors but also to potential partners and customers. Tailor your pitch accordingly.

One of my shortest posts so far!

Been meaning to post a longer, more personal blog for a few weeks now. Working up the courage (it will show my vulnerabilities) to do so but will do it so long as I think it may help others in similar situations. That is the wonderful thing about doing things for pure reasons - you do not have the same "I must impress people" concerns, only, whether a message may be of use or not!

Stay well. Stay true.
Vishnu.

Tuesday, November 26, 2013

The talk I gave as part of Global Entrepreneurship Week (at IIIT-Hyderabad)

Was tasked with speaking about "the things a start-up founder should do" and to speak a bit about mentors and incubation.

Thought I would transcribe and post the hand-written notes of my "speaking points".

Preamble

a) Given that for reasons of brevity (this is going to be a long post anyway) I am not explaining or using the examples I used while speaking, there may be some loss in translation.
b) To set the stage, a significant part was in the form of questions, with prizes for correct answers being the sweets that I love and that I pick up at the Abbey in Piona, Italy.
c) The speaker before me, a board member of TiE Hyderabad, and a much-accomplished man had argued that Entrepreneurship was an art and a science. When I started I used that to make the point that I was going to disagree, that disagreeing had nothing to do with disrespect, and that the point to underline for entrepreneurs was that they had to get used to hearing different views and deciding for themselves.
d) Most of what I spoke about was based on my experience. The only thing that was not, was the part on Incubation.

Ok so lets get to the speaking points.

1) Will ask questions. Sweets for what I think is the right answer.

2) Will speak about universal skills - those that can be applied in any situation.

3) Why is it that a person who does not know theoretical physics cannot talk on theoretical physics to theoretical physicists but a non-entrepreneur can talk about entrepreneurship to entrepreneurs?
Answer: Its an art, not a science.
While I am not an entrepreneur it is true that I have been mentoring them for about a year and have done a fair bit of research on the subject so in a way I was not being entirely honest.
Also make point that entrepreneur (E) needs to be a bag of contradictions. Example have a massive ego while also not having one. Think big and think small.
(As an aside, the earlier speaker had said an E should not have an ego, but I stated that to execute on something that others do not believe can be done, or believe you cannot do, you do need a healthy ego.)

4) 3 statements. Question is who said them? Hint - if you have been watching TV in India you will recognise theme.
a) "Chase your dreams, but make sure you do not take short cuts."
b) "Path may be difficult but don't give up."
c) "Be a nice human being."
Sachin Tendulkar, a much-loved and accomplished Indian cricketer had stated the above in his farewell speech at the Wankhede stadium and had said that this was the advice his father had given him. I thought it particularly appropriate for entrepreneurs.

5) Which one of the 3 quotes is not necessarily good advice?
Answer: the second one. Speak about knowing when to quit and move on.

6) What do most E's need? Money
What do most mentors not have? Time
Time is money. As an E whether selling your product, pitching to investors etc. the Q you have to ask yourself and solve is: "How do I get the money out of that pocket into mine?"
Same approach for mentors. "How do I get them to give me their time?"

7) Situation = you are unfamiliar and scared of dogs (we have many of them "on the loose" in India). Who should adapt, you or the dog?Who should change their behaviour to suit the situation?
If you are clever you will realise that humans, yes it is true (!), are smarter than dogs. Yet we just stay scared and do not try to study dogs and understand what to do. We expect the dogs to change. Not us.
Kind of similar when dealing with investors and mentors. Not to compare them to dogs, the dog example is incidental. Point is it is incumbent on us to state our case so the investors and mentors understand it. The burden is not on them. It is on us.
Real case in point. A friend had (has) a product and lamented the fact that the investors just did not "get it" i.e. they could not see the uses (and resulting value) he could see. My point to him was to break it down into parts they could understand and call the rest as "future development" and introduce it and depending on their reaction, stop there. I told him that in my opinion most of us are driven by egos and have a hard time saying "I do not get it, please explain" and that an investor would more likely than not have the same frailty. Rather than try to understand they are likely to react by finding a reason why the idea will not succeed.  We therefore have to talk in their language. We adapt.

8) Be selective in choosing a mentor and even more selective in choosing an investor.

9) Do not accept mediocrity and more importantly do not accept that "it is the Indian way".
Question: Is your competition in the next 10kms, 100kms or 1000kms?
Answer: it is global. If you do not believe me, the next time you are stationary in traffic observe that an out-of-state economic migrant is selling you goods made in China. Some 20 years ago there were some 600 products on the so-called Reserve list. Today there are about 25. So your competition is global and you cannot compete globally by accepting mediocrity.

10) Social Capital (saw the below on the internet but did not note down source - apologies).
Question. Is a small business nothing but a small version of a big business?
Answer. No. A big business like Dow or J.P. Morgan is not a person. A small business is you. Your value systems and your biases.

11) Question. Which would you rate higher: Jugaad (Indian word that translates into improvisation) or Innovation?
Answer. Innovation. Jugaad is improvisation and has its place but is a band-aid (give example). Innovation is more long-lasting and better-value (give example).

12) Circle of Opportunity. Check out Gary Sinek's TED talk. Why, What, How. Always in that sequence whether you are building or selling your product/service.

13) Question. "I must know how to create an excellent business plan to be a successful entrepreneur." True or False?
False. while a tool that has its uses its link to performance is tenuous at best and to me unproven.
As an aside, it is a good means of evaluating the person who is presenting it. Have wild assumptions in there and you lose credibility instantly.

14) How do you get your first client(s) (in general, approach is product/service, market, and customer type dependent). As an aside, believe I got the first and sixth from some scholarly article, but do not remember which. Apologies to the author!
i) Be credible: before starting your firm (you are likely to sell to folks in your circle); during; and after (i.e. after-sales).
ii) know your offering well
iii) Solve a problem
iv) demonstrate value
v) Social capital - i.e. network, go to where your customers are either online or off.
vi) Find 'leverage customers" the type that will lead you to or influence more customers
vii) Give it for free - careful though .... only if it makes sense

15) INCUBATION
(Source for this section: “On the structure and internal mechanisms of business incubator: A comparative case study” Ali Ahmad. Note: I did a decent amount of research on the subject and found this paper to be particularly good.)

Incubation is primarily relational in nature.
3 key relationships Incubation Manager (IM), Client (C) and Third Party.
Quality of incubation is dependent on "incubation clicks".

Positive incubation clicks
- shared awareness of gaps in knowledge, competencies and resources
- mutual willingness to engage in incubation activities
- recognise that IM can fill gap
- capacity of IM to commit sufficient time to implementing a breadth of activities and achieve the level of intensity needed for impact

Negative incubation clicks
- client's (over) confidence in personal activities
- view that IM is incompetent
- uncertainty as to type of business problems to bring to IM's attention

Ground rules help
- subscribe to community spirit
- adhere to standards of housekeeping
- adhere to standards for conducting business affairs
- consider the incubation centre a true stakeholder (not just a shareholder agreement).

Thank you.

Stay well. Stay true.

Wednesday, May 8, 2013

How much would you pay to "valuate your idea"


Recently an email request touched a raw nerve, perhaps more than it should have. Reproduced here for you to form your own opinion is the email exchange in its entirety - save for the name and details of the sender.

Notes: 
a) in the discussion below it is taken for granted that "the idea" is a tangible idea that can be commercialized;
b) it should also be noted that I do have high regard for this person - am noting this as some may believe my responses to reflect otherwise;
c) a lakh is 100,000; a crore is 10 million or a 100 lakhs.

The seemingly innocuous request
"Hope you are doing good. From the last 1 year i have traveled a lot and have been to a lot of people with various hats at different levels ( I mean founders who made millions, successful Startup teams, listed to investor talks, met people who have great ideas, etc,.)
And recently i have met an interesting person and made me to think of this -> " How much an entrepreneur would like to spend money to valuate his idea(a Million Dollar idea of an Entrepreneur) from a Real Expert, an expert who has great experience in Building Business". I would love to listen to your opinion
Please answer thinking of your own scenario."

My opinionated response (he was asking for an opinion!)
I think that the question you asked is a wrong question. Presumably the question is deemed relevant because an entrepreneur does not know if the investor is valuing the company fairly. 

No one knows the future and no one can therefore come up with a correct value - except by complete chance and that too only time can tell!

The better question would be: "how much would you pay someone to help you understand the parameters that will determine the value of the company".

An even better question would be: "how much would you pay someone to help you understand the parameters that will determine the value of the company and give you advice on how best you can optimize those parameters".

That said, how much one can pay would be a percent of perceived value - in other words a business whose valuation range is in lakhs would be willing to get an "unbiased opinion" for much less than someone whose valuation range is in 100's of crores!!!

Best thing for an entrepreneur is to come up with his/her own valuation and valuation range under various scenarios (good/bad/ugly etc.) based on as good an understanding of the product, client, competition and resource availability as possible.

Once that is arrived at, the entrepreneur has to be honest with himself/herself as to their ability to execute plans and strategies under various scenarios and factor that self-assessment in to the valuation.

Remember also that it is an iterative process. Should an investor be interested in your idea and not be put off by unrealistic valuations, chances are that if they believe you have to factor in some issues you have not considered, they will allow you to "run your numbers" again.

Another attempt by the sender
Hi Vishnu Thanks for your analysis and time spent on this, what i really wanted is not to valuate the value of the company rather i asked if the Entrepreneur would like to spend money to valuate the idea and the scalability of his product in market. There is a need for every 1 to evaluate his/her idea before they jump into the market.

..... but I am not having any of it!

The answer remains the same. There is no value to the idea if the idea is not in the market. If it is in the market, it is commercialized. If it is commercialized it is a business.
Of course there are ideas that are valuable but poorly executed and then one can argue that the idea had a different valuation than the business.
Yes, in hindsight, but not at the time of the valuation.

Even if given for free (i.e. you give away the product) all that it means is the value was not got by the person who commercialized it!

Some comments that were not a part of the emails

1) Perhaps I should explain the last sentence. The person who emailed implied (in my opinion) that the value of an idea is distinct from the value of that idea as a viable business. I therefore brought in the zero revenue aspect.
Should a valuable product be given for free, there is obviously no revenue, only cost. The value would then need to be measured on a basis other than revenue - but the cost and risk parameters would still need to understood and evaluated should the idea be sustainable.

2) Am I being unfair? You judge.
I believe that if you outsourced the evaluation and then some things changed,  you would very likely need to go back to an external agency to help you figure out your own business. Far better for you to get help on "how to value" rather than to outsource the valuation. 

3) I am fully aware that at the ideation stage, risks are higher because the unknowns are higher, and that therefore the valuation range could be wide. That is also precisely why, the ability to sense and make sense of, the parameters that will impact the value of the idea as a business becomes important. Far better to understand that, than to not.

All this reminds me of a quote that was made by some famous investor (forget who) which goes something like this: "I never buy a stock on somebody else's recommendation because then I would have to call them to know when to sell it."

Don't do it if you do not understand it (as well as you can!).

Stay true.

Vishnu.



Tuesday, May 7, 2013

The color of the t-shirt

In a recent conversation I was told by the founder of a failing firm that the only difference between his firm and that of a major competitor was "the color of the t-shirt".

Did you wince? I did.

This post is to use that failing firm as an example to point out some pitfalls that should have been avoided - in business analysis, business models, and business modeling - in the hope that others can avoid similar pitfalls.

As you read this, you may think: "basic mistake"; "common sense" etc., and you would be right. That said, this post is not to shame but to inform, for sadly many young firms do not think things through. Many large firms also make some very basic and similar mistakes though often for different reasons (organizational silo's, ego, too many "yes men" etc.).

I also do not want to shame because I found the entrepreneur to be a likable person, who gamely pursued an idea that he thought was good and I believe that he has learnt a few lessons from his ventures (this was the second one that failed). He also called a spade a spade and closed the business down when he realized that the venture was not viable. It takes courage to admit when you are wrong. Also commendable was the comment he made about feeling bad for those employees that had stuck with him. The entrepreneur in question will not be named nor will the type of business be mentioned.

So back to the beginning ..... and let's call the entrepreneur in question "E".

E came across my blog and wrote in asking for the link to the position papers and followed that up with a request to meet. We also discovered that we had a firm/client relationship. The meeting was to discuss E's business.

I started by asking E a few questions about his business and began listing out thoughts and ideas as E filled me in on his business (I already knew the product offering as a client) model i.e. purchase products on demand from low cost suppliers and charge clients typical retail rates. The product would also be delivered for free.

After this introduction but before exploring cost and revenue aspects I pointed out to E that essentially he was taking on what other businesses avoided i.e. "the last mile". As one can imagine, it is possible to build scale efficiencies before the last mile via distribution hubs, inventory management and so on. The last mile however is by definition distributed and costly to serve. An analogy would be that the process before the last mile is "mass production", while the last mile is a "custom" product. Businesses that have to be engaged in the last mile typically do so by having the customers pay for it and/or outsourcing the last mile delivery.

Given that E was taking on the last mile, he had scaling issues unless he found alternatives. Therefore the hope was that he was at least making money on the value chain before the last mile.

It turns out he was not. He had only one supplier who would not discount the goods purchased, and had (albeit small) working capital costs to boot because there could be a day or two between when E paid the supplier and when he collected from his clients.

At this point in the conversation I already had a sinking feeling. I pressed ahead with some cost and revenue aspects hoping to hear of cost efficiencies and pricing based on value. At a minimum, the hope was that the difference between the low cost supplier and typical retail price would allow for a sufficient net margin.

The opposite happened to be true. E had played the "lower cost to you" rather than the "value to you" card. He started off by offering a 20% discount on the delivered product thinking that it would be an investment (the difference between the discount supplier and "typical retail" being much less than 20% E was clearly buying customers) and build his customer book. It did build his customer book but it also hurt him badly when customers took up the offer en masse and overwhelmed the fledgling system he had resulting in his inability to deliver products to some customers; and it hurt him because clients now used him to simply get the discount, and left as soon as the discount stopped i.e. the customers were loyal to the discount, not to the firm.

My point here is that that thinking should have occurred before the business was launched. It took me about 15 minutes to get to the crux of it and by experience, E had learned his lesson. The point here is that one should model their businesses before they start it. Had E modelled his costs, and noted that he had no wiggle room on the supplier side, and that he had transportation and operating costs he would have come up with a simple revenue less costs equation that would have given him a clear picture as to the viability of the business model.

It would also have led him down the path of exploring whether he could price on value to start with. Having gauged the competition, and there was one large competitor that was getting investor funds and competing on price to customer, E concluded that the only way to compete with the larger competitor was on lower price to the customer i.e. to do exactly what the larger competitor was doing. As an aside, apparently this competitor has stated that it was losing money too but hoped to turn things around.

Again, had E modelled that aspect (i.e. low price) it would only have confirmed to him that he should not be entering into that business in the first place - unless of course he used a different approach/strategy, and had viable means of getting market share or extracting more value from the very start.

Yet, when I asked E what the difference was between him and his competitor he said that it was pretty much "the color of the t-shirt". It was actually a lot more. Some examples: they had a brand of sorts; they had some scale efficiencies in comparison; they give clients the option to pay before receiving the product (reduces working capital).

The writing was on the wall for E. He shared some of his numbers with me and then confided that he had already decided to shut down and had only wanted to convince himself that he had not left any viable avenue open (he owed that much to himself and his loyal employees in his opinion).

My suggestion to him was to either re-launch using a value strategy and building in (higher value) bespoke services while outsourcing delivery; or to shut down. Given that he felt he had explored some of the bespoke services I mentioned as examples, and his belief that customers would not pay for value as soon as the first cheaper competitor arrived on the scene, he really did have only one option.

Shut down.

I am now, because the service was so useful, a client of the competition.

A sad story because it could have been avoided. Sadder still because it is not the only such story.

Here is to hoping that entrepreneurs will take the time to think some of the basics through, and use realistic assumptions and different scenarios to do so.

Stay well. Stay true.

Vishnu.














Thursday, May 2, 2013

Are you a socialist?

As noted in an earlier post I hosted a dinner to try and see if a group of entrepreneurs could come up with a straw man strategy to encourage entrepreneurs and entrepreneurship.

As a moderator/facilitator, I first framed the issues and the need to "connect the dots". During the course of the discussion (which I could have moderated better), I was guilty of making comments about what I believed in, i.e. the need to enable what I call the broad middle. In doing so I said such things as: "does anyone know what happened to people who came 5th to 10th in business plan or venture competitions?"; "nobody really cares about the middle, everyone is looking for the next big winner"; "we need to start a movement" and so on.

At the end of the evening, minutes before he left, one of the people asked me: "are you a socialist?". Taken aback (due apologies to socialists - so much of a bad rap in so many things has to do with poor execution, inability to evolve, the-other-way-is-wrong thinking etc.), I replied: "I am a capitalist. But it is strange you ask that because when I was a young MBA student, a friend asked me what I would do with a 100 million USD, and on hearing my reply said" "oh, so you are a socialist!"" (Note: History has shown that I had neither the luck nor the skill to be worth a 100 million USD!!). There was no time to discuss the point further as the person left.

After he left, I asked another invitee, for whom I have great respect, and who is familiar with my objectives and way of thinking, if he had heard the question and if he thought I was a socialist. This friend told me that there was nothing that even smelt of socialism about me and that there is often quite a bit wrong with labels anyway.

I reckon I am about socialist as Bill Gates or any other philanthropist who has made his/her money (except that in my case the funds are very limited and I deny myself many luxuries to do what I am doing). That you reach a point in your life when you have the luxury of stepping off of the job treadmill and doing something for society (whether society asks for it or not!!) does not necessarily make one a socialist.

I am not egoistic enough to believe that readers have any interest in knowing whether I am a socialist or not, or what my reasons may or may not be.

The point I did want to make is that what the question (possibly) implied was wrong. I got the impression that one implication of the question was that you cannot be a capitalist if you are trying to get an advantage for the "average" entrepreneur (i.e. the "best should win" theory). Another possible implication was that you cannot be capitalist if you do some good for the possible benefit of others without any benefit to yourself.

For one, I have long held with deep distrust anyone who is so sure that they can pick a (business/investment) winner. However expensive their suits and whatever their pedigree. On the other hand, I do believe that there are some who are far better able than others to make a winner given the same playing field.

One reason I want to help the "broad middle" (the "average" entrepreneur) is primarily because I feel that many of them are there (at least in this country) in the middle because of the environment. If that environment was more supportive, they would then be competing on a more level field and then the best business should win.

A second reason is that I do believe that not every entrepreneur has to become a  big player. Its OK to be "average" - so long as they are socially responsible and run their businesses efficiently and well, the economy cannot be worse off. They just do not need the hassles that currently come with the territory, and neither does the economy!

A third reason is that there are many Venture Capitalists (VC) and Angel Investors (AI) chasing the next firm that is going to be a runaway winner. Should the "broad middle" be more successful, they would only widen the investment pipeline for the VC's and AI's (and possibly even make feasible a small business exchange that would give VC's etc better exits and so on - see the dots do connect!)

Stay well, stay true.
Vishnu.

Wednesday, May 1, 2013

Useful actions .... worth emulating by other similar groups/organizations

Back in Mid-March this year at the Hyderabad Entrepreneurship Society (HES) meeting, a number of entrepreneurs expressed their need for functional knowledge and labor resources.

In response two things occurred. Both commendable. Here is what happened and some of my thoughts.

1) Vivek Anand, a busy entrepreneur who puts in the extra hours as organizer of the HES Meetup Group because he believes in Entrepreneurship, came up with the idea of an internship drive.

Rather than talk about it, he did some ground work, got some 150 interns to send their resumes and posted a date and time when HES members could come and interview the candidates. Another member kindly made his office space available (on Saturday and Sunday!) as a venue to conduct the interviews - free of cost!

The disappointing aspect was that very few entrepreneurs took the opportunity to interview the candidates. On Saturday, when I attended, there were 5 potential employers and about 50 candidates. The charitable view is that all the other 900+ members were busy and/or had all their manpower needs met. The less charitable view, and one that I hold, is that the charitable view accounts for only some of the members, while the rest simply did not bother. You can take a horse  to the trough but you cannot make it drink. Another argument for low attendance by Entrepreneurs could be that the approach taken was "build it and they will come" i.e. demand push as opposed to supply pull where Entrepreneurs state what they need and candidates are selected on that basis.

Here is why I would have thought that entrepreneurs would support the Internship Drive.  Entrepreneurs complain about the lack of resources and of having to compete with bigger, more established businesses. Picking a bright youngster as an intern would allow them to try and get that intern - if found to be good - to join them as an employee.

The interns seemed to sense the opportunity better than those entrepreneurs who did not attend. I got the sense that quite a few may not have been able to get better placements so were willing to try with smaller firms. That said there were also some who thought that the experience would hold them in good stead as they themselves were toying with the idea of becoming entrepreneurs; and there were others who clearly believed that they would be able to make a meaningful contribution. The latter may not even know what happens to quite a few interns at larger firms - they typically spend most of their time at the copy machine! (Oh I know there are exceptions ...)

As to the pool of interns, at first I thought that I had noticed a flaw - most of the interns were "techies". The event was not restricted to techies though there was a bias in that some of the colleges approached were engineering colleges. Then it occurred to me that an entrepreneur is unlikely to have much time to train an intern and would want someone with specific skills to do meaningful work. While limiting in one aspect, the positive implication is that the "techie" intern is likely to get meaningful experience. Was this what had motivated the "techies" to apply? If so, they were smart to do so.

On the other hand, it would also be useful to think how we can get more students from humanities and other fields to get useful internships with entrepreneurs. The problem needs more thinking (and some of us have agreed to meet on this) but my initial thought is that the solution lies in connecting two dots (educational institutions and entrepreneurs) better.

One other point. In the first hour, about 5 interns turned up. All male. Vivek got up, looked out, then sat down and said: "sad to see that its male dominated. Would have been encouraging to see some women try as well.". About 15 minutes later the intern flood gates opened and some 40 to 50 turned up almost at once, with women outnumbering men 2 to 1! ;)

2) Manoj Surya, an HES member who started a new Meetup group called StartUp Talks, sent out a request for a "financial expert". Just one day later he had a confirmed speaker, Nikhil Beheti, himself a Chartered Accountant and entrepreneur.

The event is to be held on May 04 and I do hope the speaker is good, the topic relevant and the audience both sizable and engaged. It will encourage more such information sessions. As of today, 24 people (excluding the speaker) have signed up. The Start Up Group has some 84 members.

My thoughts.

It will be interesting to see how the venue suits such a presentation and the format of the talk.
I had also requested that such information as could be shared before the presentation be shared so that the folks attending could do their homework and spend more time at the meeting discussing aspects that cannot just be read up. A recipe for example, can read and acted on, as can a grocery list. That type of content does not need a presentation.
It would I think have been good to have had entrepreneurs specify certain aspects they wanted to focus on so that the speaker could address that.

Stay well. Stay true.

Vishnu.



Thursday, April 25, 2013

Dinner for ten

On April 13, 23 year-old Manoj Surya (heartening to see youths trying to get the entrepreneurship needle moving) held a MeetUp event in Hyderabad to talk about a Startup Fest to be held in Hyderabad i.e. to get some ideas and views on what such a Festival should be.

The venue was again in the open space, partially shaded by a tree, near the back gate of LaMakaan in Hyderabad. Possibly due to my disruptive questions (How do you define a start-up?) we got into an hour long discussion on what a Startup Fest ought to be (finale of a series of events? providing what to whom? and so on and so forth). Manoj then asserted himself - at which point I finally got the message: the Startup Fest was to be a big event along the lines of those conducted elsewhere, that will highlight and promote entrepreneurship - as opposed to an event that would celebrate the growth of entrepreneurship based on "building block" events.

I could see the sense in that - so long as some key actors in the system got together and made a good story about "why Hyderabad" or if an intellectually interesting but fun and engaging event was held to simply bring entrepreneurs together in the hope that network nodes directed traffic to the right endpoints. I cannot see a huge let-a-thousand-of-us-pitch-our-(often half-baked)-story-to-investors-in-the-hope-that-one-bites event being successful. Why on earth would  one want to broadcast a (often easily duplicated) potentially profitable idea to the masses? Would it not be easier to construct case studies whereby fake companies (each company at a different stage of evolution from concept to post revenue) had relevant issues that were discussed and solved with the help of experts? You still get to hear pertinent information without "opening your kimono".

In any event, I told the group that a Startup Festival (oops, believe the hip version is "Fest" - showing my age) had its place but that I would get a small group together that would discuss complementary (to the Startup Fest) events that would be sustainable and come back to the larger group with a "straw man" proposal for them to consider. So far so good.

On April 18th, some 10 of us met at my place for dinner and drinks to come up with the "straw man". After 5 hours of discussion, and a strong desire (by at least some in the group) to act as opposed to talk, the group decided (I was playing host and facilitator/moderator as I wanted the entrepreneur's - budding or otherwise - to claim ownership) that we should have a domain specific (I.T.,  given most in the group were techies) event. Beyond that there was no consensus except that it would help if one could pitch their ideas to experts and get good feedback. I suggested that rather than re-create the wheel I would check to see if some organizations were providing such events (truth be told, there is always some organization providing some version of the type of event needed), found that there are, and they were, and wrote to the group on April 19th with my findings and asked them to come up with a list of events that were not already being covered.

To date, one member of the group came back with more examples of start up services and a list of incubators and a presentation on Entrepreneurship in India.
This same person also developed a draft version of a presentation on Entrepreneurship in Hyderabad (i.e. a statement of some views on what is needed).

 MY TAKE (S)

My view (shared with the group) is that there is something for everyone somewhere out there. It may not be delivered locally or the quality may be poor, but much exists out there.

It is also my view that all the entrepreneurship services out there, regardless of quality are but expressions of attempts to satisfy perceived needs. There are of course those needs that are not yet perceived, poorly perceived, or daunting to undertake, but just making a list of every entrepreneurial service currently provided would at least highlight  the better perceived needs of entrepreneurs and would be a good starting point in considering how they may be linked to leverage their benefit (incubators and colleges for example).


The keys are in my opinion, that:
1) we need to get the meta-issues (behavior and attitude) into the mix as opposed to just functional (marketing, logistics) or product issues. 
2) we need to connect the dots be it actors or be it factors - for example can you get the best of various entrepreneur service providers together in one location, or bring them in a coherent way, but singly or in smaller groups to (in this example) IT folks in Hyderabad.

I believe that once the group gets to that point they will be better able to:
a) figure out what events to conduct
b) how those events should made available (how/what/when/to whom etc.).


I do hope the group succeeds. Their success will only help with my larger objective which is to "move the needle significantly" on Entrepreneurship.

While I think that many of the folks at dinner at my place were quite smart, I would venture to state that I would be most surprised to actually see a "connected" cohesive plan emerge.

My pessimism is based on the fact that despite likening (for more than a year now) the various parts of what I call the Complex Adaptive System (CAS) - a phrase that means ecosystem but conveys much more meaning I feel - to be discs spinning on their own, without any cogs that will turn them into gears and cause the entire system to move for the benefit of the whole, there have been no takers to help me put "cogs on the discs".

Perhaps I need to work on my "pitch" and/or find the right people. I will keep plugging away for now and hope that the discs (actors and factors in the CAS) will get cogs, become gears, and that the gears will start meshing.

Stay true, Vishnu.


Friday, March 29, 2013

Hyderabad Entrepreneurship Society

Apologies for being away from this blog for so long. A few valid reasons and many excuses. Truth be told every so often I feel like giving up if not on Entrepreneurship then on the country (my wife works in Hong Kong and I moved here to try and give something back to society by trying to enable entrepreneurship - being alone and unrewarded can be trying). But then again just as I think it is time to move out, I see examples that humble me and make me want to continue. Examples of raw courage by people one would not expect it from and who have everything to lose, examples of high intelligence from quarters you would never normally expect, examples of self-made entrepreneurs who have battled the odds and won, and examples of people drawn by a common objective who are brought together and who then try to resolve their problems.

A specific example of the last type is the Hyderabad Entrepreneurs Society whose meeting I attended on March 16th. They met at a place called LaMakaan. The space they had booked was not free after all so one person found some paper, wrote "HES Meeting" on it, got a foot long twig and pierced the paper through a leaf on a tree. There, we had a signboard, and space to meet under the tree! Some 50 to 60 entrepreneurs, hoping-to-be-entrepreneurs, people who just wanted to "check it out" and people who wanted to help. Every one of the entrepreneurs there were squarely in my target category of the "broad middle". That vast but hapless group who are ignored and whose way is strewn with obstacles and hurdles that seem to only get higher.

I had asked Vivek Anand (the organizer) if I may get a chance to speak and he allowed me to do so after most had introduced themselves briefly. I spoke about my project - why I wanted to do it, and how it was a movement. I also spoke about why it was needed and the importance of responsible and quality businesses (the competition is not in the next 100 meters or even 100 kilometers - but global). I also made some other points but this post is more about HES.

After I spoke a person got up and spoke about the 10 important rules of entrepreneurship. All of them common sense but uncommonly good common sense. The floor then opened up and I was astonished at what I saw.

Here was a group of people (unfortunately just two women) who wanted to succeed for various reasons in various products in various segments who one by one got up, said what they wanted BUT ALSO WHAT THEY COULD OFFER in terms of helping their fellow entrepreneurs!! They needed a hand, but were saying "if I can, I will give you a hand up". Brilliant.

Time and again - about 15 to 20 - I have been told by people to whom I spoke of my idea that my idea would not succeed because it required collaboration and that would not happen ('not in India"). I refused to believe that and now I was seeing with my own eyes that people were saying they would work together and for each other.  A great thing to see.

In no particular order I have reproduced a partial list of their wants and needs. They all go to the very points I have been making in meetings and in my papers.

- we need a support group
- we wanted to see how many crazy people there were (had to do with the notion also, of failure)
- we are here to interact (and learn/share) with others
- to gain knowledge, to learn how to do things
- to help other start-ups with funding
- looking for people to join them (as partners/employers)
- looking for "fresh" minds to join them (i.e. wanted a specific type of person who took the initiative and knew what it may be like to work for a start up).
- to share knowledge
- to find a solution together to solve office space issues
- to find a solution together to solve resource (primarily human) issues

Vivek spoke about an initiative that involved affiliates - which if I have understood it right is specifically something I wrote about in one of my position papers. It had to do with connecting people who had offerings in the various parts of the value chain and helping each other out. Even if fees were involved, and assuming that the underlying notion is that service/product offerings in the affiliate chain ought to be "market competitive" one can see how such a chain would actually help nascent entrepreneurs.

I offered to help these entrepreneurs to the extent I can (in terms of sharing what knowledge I have) for the next 6 months (since I do not know if I can commit beyond that) and asked only for the following: that they allow me to write up their cases for the benefit of others; that they help me think about my objectives if possible; and that they, if and when they are in a position to do so, give a helping hand to someone who needs it.

I have already met 4 of them (3 firms) one on one and have meetings with 3 more lined up. I was invited for a "clean tech huddle" (very similar to my "connect the dots" idea which I will post about if I have not already done so. Unfortunately I could not make that "huddle" but it was to have been over dinner and for people in a similar space to meet and discuss what they could do and to learn from each other.

Will write about them and their issues and the type of help they need in later posts.

Overall, it was like getting fuel into a system that was running low on fuel. I hope it encourages those of you involved in entrepreneurship to re-double your efforts.

Stay well. Stay true.
Vishnu


Wednesday, July 11, 2012

Latvia, Ukraine

I noticed that of the dozen countries or so from where this blog has registered hits, Latvia and Ukraine are represented.

Labdien (?) and Pryvit (?) to those of you from those two countries.

On the chance that there may be some use of the ideas in this blog in those countries, and also the chance that those readers read this post, I would like to note that I will be visiting Switzerland from July 19 to Aug 03 and in your time zone. Apart from July 19 and Aug 01 and 03, I would be happy to discuss this in person if you believe it will be of use. Just to meet and exchange ideas and understand different view points so long as the intention is to enable entrepreneurship would be for me, a satisfying experience.

I should hasten to add that my linguistic skills are limited to English and 3 Indian languages.

Let me know by leaving a message on the blog with your personal details and we can then get in touch. Time may permit only one or the other (Latvia or Ukraine) but I am open to meeting in the middle in say Slovakia! That way each of us has a 12 hour drive, thoughtful discussions with perhaps a meal (and if available in Slovenia perhaps some Bauska or Balzams or Horilka), and then we drive back. 


With my best wishes, Vishnu.





Monday, May 21, 2012

I "met" a remarkable man today ......

I have been casting the net in the (internet) to see what I pull up .... a mix of nutrition and detritus but mainly nutrition because I have cast the net mainly in promising places.

One such is a video on Richard Feynman's last journey. It is about 5 minutes short of an hour but, to me, so very worth it. The link should you be interested, and I hope you are is: http://www.youtube.com/watch?v=Mn4_40hAAr0&feature=related

Each one of us will get a different message from the video for we are shaped by our perceptions. But also watch if you can find an hour and 17 minutes the 1979 lecture he gave at the Univ of Auckland. This is the link http://www.youtube.com/watch?v=xdZMXWmlp9g&feature=related

I just absolutely love the way the man thinks, and the way he treats others, and the honesty he portrays.

One particular chord that struck more than others was when (in the Univ of Auckland lecture video) he says that he tries to find an explanation or a reason for something - but is not biased by thinking what the expected outcome should be. He talks of removing from his mind "I like" or "I do not like". That has to be among the hardest things to do when trying to solve a problem.

In reading what I am about to write please do not assume that I am even contemplating equating myself to the man. I am only stating why that particular chord struck.

When I was at Dow Chemical, I was unpopular for many reasons - but one was my unrelenting focus on in finding out the real answer to a problem given to me. Why for example was the business analysis of the plant in Indonesia so glowing for the future but every historic report so dismal.

When I was at J.P.Morgan I was removed from a project because I specifically stated that I would report my findings - this on a call where a "senior" who went on to become one of the youngest SVP's was telling me that my work was good, but needed to support his conclusions more (never mind that his conclusions were based on thin air). Another "senior" actually had me do work outside of my job description (up to 70% of what I did for about 4 years was outside the job description). What was the work? Well the product folks would make Case A for something and the sales force Case B. This senior would tell me, we need an unbiased opinion on "what it really is" and knew that I would deliver.

A person I worked for in another organization actually told me that he used to make two sets of presentations with completely different recommendations and presented one that at the last minute he felt, better represented the views of the executive he was presenting to. Needless to say, this person is actually considered an expert!!!
What was more shocking was that this person actually thought he was being very clever. What a shame that an organization pays someone so much to be so deceitful - though often the "organization" or system has to be blamed, for it encourages such behavior.

Biased as it may seem, I have always held that honesty in assessing something to the best of your ability is what is so very key. Do not kid yourself or look only for the explainable. It will probably not do much good, it will prevent you from a a truer understanding, and it is not much fun - if your quest is for what is really happening.

In a world where EQ has somehow become how to be fake and get what you want, in a world where we are driven by ambition for all the wrong reasons (there are many right ones), in a world of scarce resources, I believe that when tasked with evaluating something we should do so without a bias for anything other than the truth.

I hope to have the courage to test myself again in this aspect as I go about trying to figure out how to enable entrepreneurship - or another related problem. The courage comes from the fact that you never do know if the attempt at discovery will result in failure. Honestly done, your effort though a failure in terms of one result will probably result in success on another front - key is to learn from your failures. To remember them and to connect the dots.

Stay well. Stay true.

Vishnu.

Thursday, April 26, 2012

Innovation and growth of a company

On March 31st I delivered a key note "speech" at the Hyderabad Management Association. Finally got around to adding some notes to the Powerpoint presentation.

Here is the link to the document.
https://docs.google.com/open?id=0B4f-_OBQVCe_WkhZc1M4NmcteGs

Look forward to your views.

With my best wishes, Vishnu.

Monday, April 9, 2012

Entrepreneurship Catalyst

Have updated my profile to reflect my current status - changed my employer. Went from being employed by ISB's Wadhwani Center for Entrepreneurship Development to being employed by Entrepreneurship in India!! Will miss ISB. Reckon ISB has done so very well in the 10 years it has existed. My hope is that those who follow and those who are there, realize that they owe it to themselves and to those who helped get ISB to where it is, to bend their back to make ISB stronger and better.
I really enjoyed my interaction with the ISB Class of 2012. Got to know nearly a quarter of the students and those I knew were good humans and intelligent to boot. I hope to stay in touch with many of them.

Having left, the main difference is (a) that I will not be drawing a salary; and (b) that I will be spending my own money to enable entrepreneurship in this country. Of course I am scared and wonder if I will succeed, but I'll be damned if I do not give it a good shot. I now have the liberty to at least try.

Am travelling most of April but hope to pursue my interests relentlessly once I get back. "Miles to go before I sleep".

Here is to hoping that I will find some 30 humans who have a passion for enabling entrepreneurship in India and who will let me work with them to first create a practical agenda for doing so and then help me execute. At a later stage we are likely to need funding, but I first want to get to the point where people will WANT to fund the agenda.

Good luck in all you do. Stay alert, pause, think, then execute relentlessly.

Vishnu.

Monday, March 26, 2012

An Agenda for Enabling Entrepreneurship or "Vishnu's Mission"

I have just created a link to the Google Docs folder in which I have put my recent work.
https://docs.google.com/open?id=0B4f-_OBQVCe_VEtNRTN6ODBSZ21PSHBtcm1BS1lZUQ
(Hope this works - am new at it and will learn as I go along).

Some are short and quick documents (apologies for the formatting of the PPT file - will fix its GDocs appearance when I know how) some are long. Suggest you read the shorter ones first.

I am convinced that with a few (or many!) good minds we can come up with a practical, intelligent, innovative strategy and execution plan to enable entrepreneurship. I have a few ideas on the strategy already, but I will keep my mind and ears open and work together with others so that a better result is ensured and more feel ownership and help execute. I am not egoistic enough to believe that an effort such as this can be thought through by just one person. The vehicle that will drive the agenda and execution is likely to be a bit of a mix. A hybrid model that is neither an institution nor a loose collaboration and that will hopefully have the best elements of both. But I am getting ahead of myself.

On a personal note, I have recently resigned from the center I work at (need to be there till May 06) as I felt that the kind of stuff I have written is my mission in life and I must pursue it. If I succeed I can help positively impact 10's and 100's of thousands. Would rather know I have failed than not knowing. Of course I intend to reduce the odds of failing :)
There is the possibility that I may continue my association with ISB in another role but which allows me to follow this mission I am committed to. Will keep you posted.

I would like the ideas in the documents to be as "open-source" as possible. Either we collaborate to make it better, or the more able person takes the idea (s) forward. Of paramount importance to me is that the right work is done and the end result is beneficial to many.

If you are interested in helping, please do let me know. I have a list of some 160+ people that I think could be really helpful. I need to expand this list and sign up at least 30 who will buy into the concept, and help propagate it.

For now though, feel free to use the material here as you see fit. I have coined some new terms ("Wikify Entrepreneurship in India"; and "Incubation Capital") and designed two diagrams (one on actos and factors and the other on the financing of entrepreneurship and entrepreneurs) that I believe could be the first of their kind. Feel free to go ahead and use them and build on them to make positive impact. If you share the developments with me and others, even better, for then we can connect dots better and make the impact even more meaningful.

Here is to hoping the work is useful and the collaborators many!

Vishnu.

Monday, November 14, 2011

Defense offsets in India


In a recent conversation I was introduced to Defense offsets in India when I met a person who was organizing a conference on the subject. Within 15 minutes I made a suggestion based on a number of reasons that I - who knew nothing about defense offsets - believed were wrong with Defense Offsets and needed to be fixed.

Defense Offsets require all firms bidding for Indian Defense contracts to either source a certain percentage (30%) of the product from manufacturers in India and/or set aside a certain amount of money to make a investment of not more than 26% share of an Indian firm. The expected Defense Offset through 2020 is considered to be up to USD 30 billion!

Broadly speaking my view was that with its Defense Procurement policy, the government is back to its “Be Indian, Buy Indian” stance albeit with the major difference that they are trying to encourage private enterprise. Their fundamental notion itself can be questioned since we all know where the “be Indian / Buy Indian” stance took us. I should also add that the planned conference is to discuss how the policy can be improved.

Opinions I shared (questions I asked) within minutes of hearing about Defense Offsets (and one I did not) were as follows.
1)      What I did not say, but feel, is that in stipulating the offset, there is a good chance that the contracts will be priced somewhere between a 100 and a 130 rupees. Rather than question the practice, my interest is to see if the practice can be made more palatable to all sides. Opinions I did state were as follows (there may be mechanisms built into the Defense process that address the concerns – I do not know).
2)      Stipulating certain sectors narrows the choice. Further, within those sectors there may only be limited opportunities that are attractive.
3)      Those limited investment targets are likely to know their position and use it to their advantage given the acquirer’s choices are limited.
4)      It is not inconceivable that target firms may also try to influence the selection process to increase the chances of receiving equity funding.
5)      It is possible that the Defense Department makes a choice of supplier because they agree with that particular bidder’s  investment choice.
6)      The government is using its buyer power to force FDI to occur – and does not get any benefit (other than hopefully the best product their money can buy!). The benefit goes directly to the private enterprise. A good thing with the above caveat that only select sectors get the benefit.
7)      The bidding firms presumably do not have the wherewithal to evaluate all opportunities in all sectors.


The next morning I read up about defense offsets. What struck me forcefully is that many of the negatives I had raised turn out to be the very points being made against the program. How is it that a person with average intelligence can so quickly see so many negatives and the people who run the program cannot?

While the solution I proposed did not appear to have been suggested earlier (cannot be sure since my internet search was just for a couple of hours) it does seem to address the concerns raised by others. This is not to say that the suggestion is palatable – just different to the ones that essentially call for a lifting or broadening of the range of FDI (foreign direct investment) equity ownership. Some concerns I had raised have tried to be mitigated by the Defense Dept broadening the scope of offsets (increases the investment choice) to include internal security and civil aerospace and training.

It also appears to me that there a whole range of interests arrayed for and against – a lot of vested interests that stand to gain from policies being maintained and those on the other side.

Insofar as the increased efficiency of the related value chain, attempts have been made: a few clusters already exist; there are groups whose stated interest is to foster innovation and commercialization of technology etc.; and there are think tanks set up (at least one of) whose major interests is to look at issues related to Defense Finance and Defense Budgeting.

In my limited search I could find no mention of studies or suggestions regarding the improved financing of the firms in the above noted value chain. 

Part of my goals once I have a better grasp and better network is to apply my mind to such work. The basic notion here is to use a pool of capital that is hidden in plain sight and to leverage capital for greater effect. The two areas we ought to study and find solutions in are: the financial efficiency of the Defense procurement value chain and the creation of a pool of investment capital sourced from Defense Offsets but investible in any type of industry that FDI is currently allowed in. It would be split into a defined number of smaller pools and each would be managed by experienced investors and cover specific groups of industries. 

Advantages of I can think of (of creating an investment pool) are as follows.
1)      If bidders had a specific target investment in mind they could still pursue that – all that would have done is outsource the due diligence
2)      It opens up the opportunity to all sectors and leverages the available capital in the sense that the funds are now more likely to be directed to the best opportunities.
3)      The bidders do not have the hassle of negotiating the stake, accounting for it, managing the relationship etc. They could simply state the sector they want to be invested in or leave it open.
4)      In return for their role in sourcing capital for the funds they can charge say half a percent (USD 150 MM over 8 years) and use the proceeds to encourage technology commercialization, R&D etc. (though not through the same stodgy mechanisms/vehicles that have proven they do not work).

Needless to say framing the intermediary role and appointment criteria will be key. 

I look forward to your views and suggestions.

With my best wishes, Vishnu.

Sunday, November 13, 2011

Driving Enterprise Growth Part 3

I have received more private comments on the notion that changing road use behavior can lead to changed attitudes that translate to better behavior in general and better work place behavior. Behavior, I feel, is necessary if we want to make quality products and provide world class service. Behavior, I think, that is necessary for us to have pride in our handiwork and a belief that we can make our future bright. The past, however glorious, (this is not heritage I am talking of, which is also important - but rather a finger pointed at our habit of extolling past achievements that we do not truly value but only speak of) is past. We can no longer depend on that. We must make our future.

A key thread in those comments I received is that; for good behavior there must be an expectation and a threat. This is logical since as a friend pointed out, the same person that for example, drives badly behaves better in the work place. Reason is that he/she is expected to and knows that there will be consequences of considerable magnitude.
Whilst this is correct, it cannot explain the poor work attitude that is commonplace (think not only of the starched shirt that relies on sycophancy to get ahead; but also of the carpenter who leaves a mess because cleaning up is not his job; and everything in between). In most firms it should be possible to reinforce and flood peoples minds with what is expected. This seems to work better if the leadership practices what it preaches. Also, as pointed out by a person that handles training in the work place, changed behavior lasts longer if it is properly introduced and reinforced early in the career.


So should the argument be turned on its head - reinforce better practices at work and expect them to become better road users? Perhaps, and I would like to hear your views.

For one, the solutions that can address better road use are deeper (should address more than what a company addresses). Two, they can be broader (in terms of range of people impacted - unemployed and employed). Three, they are more universal (they are transferable across job and "extra-curricular" functions and processes).


As an aside, this seems to work well even before a career starts. Get school kids to pick up rubbish as a mandatory course requirement and they are unlikely to throw their rubbish around. This experiment was tried in a small way at the University of Hyderabad and seems to work. One solution therefore is a mandatory course on good use of roads that is taught in every grade from kindergarten to the end of school with the course covering every aspect of road use - from behavior specifics to attitude to the environment and most importantly why each aspect is so important and it should include practical work as well.

This in turn raises a new argument. Should we simply focus most of the effort on school children and those that have not been able to go to school but are at the age where they use roads? Perhaps.

There is yet another argument. This has to do with my view that people in cities behave more badly than people in villages because in a city (or any crowded environment) one has to compete for resources (from bus seats to movie tickets to pavements and jobs). So if we were to provide more resources would the behavior change. For example, if we had more and better busses and roads?

An academic suggested that the problem may be because we are a collectivistic society. If I understood him right, we are expected to be responsible for not just ourselves but our families, servants etc. This could make us more aggressive in our behavior especially when it comes to "being first" for resources - be those resources movie tickets or blood banks!

For this theory, while one cannot ask people to not look after the people they are responsible for, over time we could make it easier for people to not HAVE to look after all those people. If they WANT to, fine.

My learning from the above is what I had suspected at first. There is no one solution. We should identify as many reasons / arguments as possible and then craft solutions for each. They need not be coordinated but they must be wide and sustained. Flood and flood repeatedly. There must however be only one objective: of getting us to naturally take pride in what we do and how we do it.

Look forward to your ideas. Am glad more folks are reading this and would be most appreciative if you got the message out and the comments in.

My best wishes to all, Vishnu.

Thursday, November 3, 2011

Driving Enterprise Growth Part 2

Wonder if Sunil's point (see message from him to the Part 1 post) was the same as (similar to) the one made by Gurcharan Das in his book India Unbound. I qiote from the bottom of page 312.

"The answer (to the question as to why there is no appetite for education reform in India) may well lie in the liberal fallacy - that is, the naive assumption that reasoning will prevail over interests."

Mr. Das goes on to point out that the opposite often happens and that the road to power is through satisfying interests.

If so, I definitely do not disagree. This point is actually at the very heart of my suggestion. That the value of behaviour modification via better road sense is to our economy and employability (if there is such a word). It is meant to address the interests of employers and employees.

My sister in Canada who seems to hesitate about posting her views on the internet, realized this when she suggested that I go to a couple of large Corporates and get them interested in the idea.

Let us all build the argument and the methods.

Look forward to your opinions and views.

Vishnu.

Testimony of Kauffman Foundation Senior Scholar before the U.S. Subcommittee on Technology and Innovation



While this has to do with the U.S., and while Entrepreneurship has been growing in India, the solutions presented by Brian Lindsey would not be out of place in India. India has in my opinion, benefited from a latency (pent up demand for entrepreneurship caused by regulation) that has encouraged entrepreneurs despite obstacles thrown at them. If this latency is viewed as sufficiency of reform, that would be complacency and lead to a situation that the U.S. is in now.

Vishnu.