Alone

Very alone. Sitting. Waiting. Wishing.

The Key To Success -

This key is a small one but opens all doors provided you turn it the right way. Just one word - PASSION.

What are you passionate about?

Why I think Facebook isn't worth US$100,000,000,000 (Part I)

I don't see any reason why Facebook should be worth 100 billion USD. Yes, it has brought people closer and in the words of Time magazine "mapped human relations", but in the big bad world of business, it's an investor's nightmare. How does fb make money? Through ads. How much of the area on the screen can fb monetize? Very little compared to Google that can practically monetize every square inch. For fb to increase revenues, it needs more advertising - which will only happen if users keep increasing - which seems less likely as the membership is already around a billion users - which means fb needs to increase what I call the utilization factor per user.

How can fb increase utilization factor per user? Through more 3rd party apps and services using the existing platform.

Now, when fb started making financial results public, the first one - just days before the IPO - showing doubling costs startled smart investors who fell short of calling the whole thing a sham perpetrated by investment banks. It's not difficult to see how VCs and hedge funds who bought fb stock in pre-IPO stages reaped the mother of all windfalls once fb started trading. Once they dumped their stock and got out of the position, the stock tanked and has been ambling along ever since. At this time, the market cap pf fb is around US$70,000,000,000 (around 30% lower than the IPO valuation) and a P/E of a whopping 104!

Also, it is paying obscene amounts of money for acquisitions of companies making no money - case in point being Instagram. Another thing, what is the underlying need fb serves? None. It thrives on people spending time on it entertaining themselves. Which inherently means that it's a means of entertainment. And things that entertain today or rather entertainment platforms today (to be more accurate) may not remain amusing for a long time.

Now, Google and Facebook both make money using targeted ads. However, users are happier seeing targeted ads on Google than Facebook, simply because Google is meant to search and find stuff, whatever it may be. Fb is not meant for finding stuff, it is meant for social interaction and sharing photos, music, articles, or whatever. Seeing ads is a distraction! Do you really want some guy to come and try to sell you something when you are talking to an old friend or a cute girl you just met?

Google offers the right advertising at the right time whereas Facebook offers the right advertising at the wrong time!

More rants to follow when I think up something.....

Random reading in full swing!

I've been reading a lot lately and trying to indulge the smallest part of my body, i.e., my brain, in the least laborious task. So curling up in my bed with a book in hand is the closest I can get to being 'ruthlessly' lazy. So the 3 books I have read so far are:
(1) The Quants - A run of the mill book about the mathematical wizardry of hedge funds and the impact of the financial crisis on their money machine. The book fell ridiculously short on explaning what really caused the crisis and was high on rhetoric and muted glorification of the so called 'quants'.

(2) Ayn Rand and the World She Made - Brilliant book!!! Left me shaken and completely disillusioned about the lady and her philosophy. Really made me look at the entire concept of individuality from a different perspective and made me realise the limitations of her philosophy. Ayn Rand is losing her charm now, atleast for me!

(3) The Big Short - Brilliant book!!! Love Michael Lewis' style of writing. Extremely entertaining and very very educative regarding the financial crisis. But recommended only if you have a background of this stuff already.

Besides that, got a call from the TAS office regarding my feedback from the Director's round. Disappointed with the fact that I fell short on a personality trait even I never realized in all these years; according to the panel, I tend to argue with confidence even when I don't have factually correct information and don't back down. Clearly attributable to my debating background!!! Can't believe that something I did for a 'living', eventually got me down!

Might go to London for an onsite in September! 'Yay!' to that.

Attended a fab lecture by Dr. Raghuram G. Rajan at IISc and fell into an inferiority complex after seeing Mr. Nilekani, Mr. Narayanamurthy, Mr. Ramachandra Guha, Capt. G.R. Gopinath and Mr. Jerry Rao, all under one roof! And yes, I have the dubious distinction of being the only guy who attended that lecture in a pair of shorts!!!

Lessons from failure

Below is the text of an e-mail I wrote to my brother-in-law after I got dinged by TAS:

Hi Jiju,

I'm sorry I couldn't talk much yesterday over the phone. You were the first person I called after I came to know the result. Now that I am back to square one, I need to figure out everything once again. Honestly, TAS was my dream job, it was an opportunity I had been waiting for. While I am very disappointed after missing it by a whisker, I have taken away a lot from this failure. Maybe my success would not have taught me as much as this failure. While I will not dwell over my interview round and what went wrong, during my spare time, I have realized a lot of things about life and these 3 months of deep focus have given me a new perspective in life. I can safely say that I am much more mature than I was earlier. If I look back at the whole thing, I realize that this was the first true failure of my life. I never wanted something so bad and worked so hard to achieve it, all this while surprising myself with my own abilities. My mind still wanders in Bombay House and I am thinking of the days when I would have got the opportunity to meet Mr. Tata (I appeared for TAS partly because I wanted to shake hands with him). I had always dreamed of going there once at least and meet the titans of Indian industry. I'm sorry I couldn't measure up to what they wanted. Maybe it was my verbosity that sealed my fate.While I will take a little while to get over the feeling of disappointment, I have the following to share with you as the lessons I have learned:

1) It takes a lifetime to achieve something of significance. While Steve Jobs and Marc Zuckerberg might have achieved extraordinary success very early, these people come from different environments and have probably spent all their lives chasing one thing. Even if I look at someone like your boss, the guy put his entire life into pursuing his dreams!

2) When I was strolling in Bombay House reading the names of the distinguished people on the nameplates, I realized the importance of hard work. To be honest with you, I never realized what hard work meant until I found something that I could put my heart into. I hated engineering to the core. I hate nagging and forcibly doing something I don't care about. I want my own space and freedom to do what I want. For a long time all this has been denied to me. I thought that maybe TAS will give me that opportunity. I have now realized that even I have the capacity for extraordinary amount of hard work. I may not be inherently brilliant like these IIT toppers, but I can work hard to be like any of them.

3) My real passion is business. You won't believe this, but I have spent my time in college doing projects in nanotechnology and high precision engineering and none of them interested me forever. I have learned more by knowing what I don't want in life than vice-versa. To prepare for my interview, I went through at least 200 magazines that I have accumulated over the years and I don't miss even a single issue of any of the top biz mags in the market. That is partly the reason why I knew what to do when I got the case study in my hands. I have read books on PE, i-banking and the works in my spare time for the past 2 years, just to understand how all of this works and I will continue to do so. I haven't slept properly for the past 3 months and all my waking hours (sometimes even in my dreams!!!), all that went through my mind was TAS. I thought that this will be my redemption and I will finally live a normal life, do what I really like and work with a bunch of smart and experienced people. None of this materialized.

4) I have leaned to accept failure. Maybe it's important for us to fail more than succeed. To tell you the truth, while I was going though the TAS process, I had this feeling in my mind that this may not materialize simply because it means unprecedented success at such an early age and what have I done all my life to deserve this??? I have never tasted failure, how can I taste so much success??? Maybe it was god's way of making sure that I become a mature individual first and a manager afterward. I have never slogged my ass off for my acads, it was more of a torture for me, I spent most of my time time in college attending international debate tournaments 'coz I love it. I realized that even hard work doesn't guarantee success. Now, I am ready to try again, more than that, I am ready to fail again. Whatever opportunity I will pursue next, I will put double the effort I put into my TAS prep. And if I fail again, I'll work thrice as hard to pursue the next opportunity. I don't mind stretching myself to the limits now 'coz I have realized that I am as capable as any other guy.

5) It's not about money. It's never ever about money. It's about passion and the willingness to go beyond the realm of the ordinary. TAS does pay 20 lacs a year, but even if it was 6 lacs, I would still work for it simply for the exposure I will get. Thanks to my Baniya genes, I always had that narrow approach to look at any career from a monetary perspective. I now realize that money is always a by-product of what you do, what matters is the work you do, that is the reason why I don't care about going to London.

6) I have always wanted to pursue brilliance. For me, it is not about money, it is not about position or power or anything. When I look back at my life, I realize that I always wanted to be counted as someone brilliant, someone who defines the field he chooses to enter. I now realize that it takes an entire lifetime of hard work and dedication to accomplish this and I am ready to do this, I just need direction.

7) I am not afraid of competition anymore, but I am trying to be realistic. Now u'll say write CAT!!!! I stay away from CAT because of 2 reasons:a) All my IIM friends have brilliant acads, mine are very average.b) What will I do at an IIM??? My friend at IIMB tells me about the level of competition inside the IIM for even the job you want! And needless to say, the top jobs are taken away by these IIT guys. You will know better as u have been there, done that.

8) In the long term, I do wish to be an entrepreneur. I guess if I had got through TAS, I would have been charmed into the comfort of the TATA group and the prestige that comes with it. This would have made it even more harder for me in the future to go and do my own thing. Maybe this is God's way of making sure I don't give in to such temptations easily by making sure that I fail innumerable times before finally succeeding.

9) The worse thing I can do to myself right now is to get dejected and give up. I know that the days ahead are not easy and my managers will make my life hell because they know I can't go anywhere now.

10) The IT industry work experience is not valued anywhere abroad, so all my dreams of INSEAD and HBS just go down the drain forever.I hope I din bore you with my mail. There is no one to guide me and hence I feel that I can share this with you. There are no mentors here in TCS. My supervisor thinks that Moscow is in New York!!! This is the level of dumbness we have here and the same supervisor threatened to screw my ratings so that I don get though TAS if I din follow her wishes. My greatest fear is that I will end up living a mediocre life, I don want this to happen.Could you please let me know if it is possible for you to speak to me to help me figure out what I should do next?

Regards,

Siddharth.

Life, Death and Resurrection

Hi guys! I hope my invisible readers have been doing good in the past few that I wasn't around blogging and sharing my ill-informed views with the rest of the cognoscenti. Well, to be honest, the past 4 months have been the most grilling months of my life and I was too scared to blog anything as I was too focussed on something I wanted to achieve. To summarize my activities in the past 4 months, I will use a very objective approach and quickly update the reader through bullet points. So, here goes:

(1) 10th March, 2010 - Wrote GMAT. Score: 720/800, AWA 5.5/6

(2) 11th March, 2010 - Registered for the TATA Administrative Services In-House Selections 2010. My dream job so to speak!!! (Yes yes yes, I have dream job(s) too!!!)

(3) 21st March, 2010 - Clear the initial cut-off ( a measly 650) and download the 10 page long form with 5 essays and the kind of details even my dad won't know!

(4) 24th March, 2010 - After numerous copies, the final copy of the form goes to the HR for forwarding to the TAS office in Mumbai.

(5) 12th April, 2010 - Get shortlisted among 216 candidates out of 782 applicants. Time to get nervous about the Chairman's GD and Case Study rounds.

(6) 19th April, 2010 - A brilliantly conducted workshop on TAS gets me completely hooked. Met the head of TAS, Mr. Rahul Krishna at The Gateway Hotel in Bangalore.

(7) 23rd April, 2010 - Case Study given out to the participants. The next 2 weeks leading upto 11th May, 2010 are the most tense moments of my life. If I had that kind of focus in school, I could have made it to freakin IIT!!!

(8) 11th May, 2010 - The day arrives without a bang. After 2 weeks of mental torture, I finish my ppt at 4 in the morning, don't get any sleep (usual practise for me before any exam) and down one can of Red Bull before leaving for the hotel.

Get past the GD round after a few initial hiccups. Too nervous before the case-study, almost cracked-up under the pressure. Frantic calls to dad and my friend from IIMB, get some assurance on my preparation and manage to stay cool.

Enter the meeting room for my case study presentation, the next 20 minutes are 'the performance of a lifetime'! Make it to the Director's Round in Mumbai!!! Among the top 29 candidates out of 782 applicants this year! Yippppppppeeeeeeeeeee..................!!!!!

(9) 8th June, 2010 - The D-Day arriveth. Director's Round in Bombay House, the HQs of the TATA Group. Don't sleep the previous night. Catch a morning flight to Bombay wearing a stuffy suit. Reach Bombay House at 2 in the afternoon amidst sweltering heat.

Bombay House is a time warp!!!

Wait till 8 in the evening for my turn to get interviewed. Interview panel consists of Mr. Satish Pradhan, HR Head of the TATA Group and Mr. R. Mukundan, MD of TATA Chemicals!!!

Screw up the interview. Ended up having a debate on geo-politics. Totally dead by the time I come out. Take a cab to my sister's place in Khar and have a nice dinner conversation with my brother-in-law. He got dinged by TAS in 1997 at IIMA! But that's history and he is at the top today!

(10) 9th June, 2010 - REJECTED.

The Chinese Endgame - Part I

Hi! I am back to blogging after a small period of writer's block and to begin, I am going to do something that an amateur blogger should never do; I am going to make a predicition!!! That too about China, and I will tell you why I believe my prediction will be true eventually. Being a regular reader of two of the top selling business newpapers in the country, I am exposed almost daily to hundreds of words written about everything Chinese, from government policy to manufacturing, from censorship to currency manipulation. I find that there is an equal number of subscribers in either camps - those who buy the Chinese growth story and those who don't - while unanimously agreeing over its aggressive foreign policy.

I have reached the conclusion that the entire Chinese strategy is of challenging the might of the US as the sole super power post Cold War era!!! Now, you would say that I deserve to be booed away for stating the obvious. Before you boo me away I would like you to take a look at the deeper meaning of the statement - which is about China's strategy to create a dominating and self-contained economic black-hole which sucks everything the rest of the world has, while spewing out very little. Though outsourced manufacturing to the Chinese makes them spew out a lot more currently to the Western world, this will gradually reduce though not entirely as consumption increases in China over the years.

To elaborate my point of view, I would like to highlight how China is pursuing a strategy of self-containment at both the economic and political levels and why comparatively, India seems to get left behind in this race. At the economic level, there are 2 things: facts and arguments.

Facts:

1) The Chinese have an underdeveloped banking system which is completely blocked out from world view due to regulatory opacity in China.

2) They have a whopping inventory of US Dollars which they can utilise wherever they want.

3) Chinese manufacturers remain the biggest suppliers to the Western world.

4) Artifical devaluation on Yuan leads to a small competitive advantage for the Chinese firms against their Asian counterparts which leads to manufacturing job transfers to China and not India.

5) The availability of reliable financial information regarding companies is almost zilch.

6) The Chinese are investing heavily in the acquisition of natural resource assets all over the world.

Arguments:

1) The Chinese want a secure future, one that is not marred by the shortage of raw materials to feed the industry of the most populous country in the world as well as the population whose energy needs will only go up as development takes place. To this effect, the Chinese government is aggressively acquiring assets all over the world, often working with corrupt and dictatorial regimes such as Angola to secure oil assets for the future. The Chinese government owned sovereign wealth fund is actively making investments in the resources sector as a part of this strategy, a point that has been raised in the US Senate as well about China's increasing economic intervention in resource rich countries.

2) The Chinese government for many years has purused aggressive and forward looking policies to give a boost to the manufacturing sector. While hugely successful due to outsourcing of manufacturing activities by US firms, they have acquired something that a lot of people ignore at times, which is capability. While Nike, Adidas, Apple and almost every known American brand is renowned for it's product quality, remember that all of this comes from China. This in turn has taught the Chinese how to manufacture high quality products at low cost. This capability itself is a stepping stone to innovation that will be a decisive factor in the crowning of the new superpower many years later. Hence, the Chinese economy will be fed by high quality, low-cost products that will be made in China and hence, foreign firms will find it very difficult to get a toehold in the Chinese market. Just sit back for a while and think why long known American MNCs have been so successful??? Simply because they went to those markets where their superior products were needed or where a market for such products did not exist at all because no domestic firm produced them. The US corporations also benefitted from an aggressive US foreign policy that used political muscle to invade the markets of smaller countries (a point I will higlight later about China as well). Thus, the Chinese economy will become self-sustained due to strong domestic consumption and the surplus goods will either be exported to the West or dumped in the neighbouring weak Asian countries.

3) To oppose the above argument, sceptics would say that the opacity of the Chinese economy often hides the fact that the banking sector in China has for long been saddled with bad loans that were given to sick government owned companies and that involved a lot of political maneuvering. Sooner or later the loans should take their toll on the banking system, choking it to the extent of a collapse that would impact the rest of the economy. I say that while this may be true, the Chinese are not fools! The CCP might be pursuing an agenda of growth at all costs, but it does understand the impact of a bad financial system on the overall health of the economy and that is why it is making investments in infastructre and taking a capitalistic point of view towards enterprise to foster entrepreneurship and in turn, high profitability of private firms which will find it easier to pay back debts if they make profits.

4) The Chinese foreign policy helps in drafting free trade agreements with smaller Asian counterparts that heavily favour the Chinese while edging out India. This gives China the advantage of dictating the rules of trade in the region and none of the smaller nations are able to oppose the Chinese dominance.

5) Whatever the Chinese may be doing with the manipulation of it's currency, one thing is clear, the CCP is very efficient when it comes to policy implementation and single minded pursuit of growth. One needs to understand that growth is never a win-win situation for all sections of the society, certain structures need to be demolished to build new ones and somewhere someone always feels cheated no matter how much inclusivity is taken into account.

The above facts and arguments in my opinion may not give a real picture of the situation in China, but what they accomplish is that they clearly illustrate how China is trying to create an economy that is open to foreign investment, yet slowly closing in so that it sucks the best the rest of the world has to offer while giving back little in terms of superior economic value as it progresses.

My next post will talk about how China is pursuing its policy of self containment using its political arm-twisting at the global level.