Private Secondary Market - The Other Side

The biggest criticism that mars Private Secondary Market is that all the activities, all the transactions happen under immense Information Asymmetry and hence these are inefficient markets. The trading takes place in a somewhat opaque market accessible to only a relatively privileged class of investors. The market makers do try to provide as much information as they have access to and are permitted to but at the end of the day what they are doing is simply increasing the velocity of transactions made under poor judgment. So there is a question mark on the reliability on the valuation in these markets:

• Efficient Market Hypothesis says that market prices fully reflect all the available information. Can we say that in secondary marketplace, there is a high level of information asymmetry and hence the stock prices in this market do not reflect a fair value? 
• The volume of transactions in these markets is too small compared the same in a public listing and any valuations derived out of these small number of transactions can be misleading.

Many private companies attract new talent by giving the equities as one of the incentives but restrain their employees to trade in the private marketplace. This makes sense as the employees will have far more knowledge of the company performance and can lead to insider trading. There is no clarity on whether insider information is allowed in the trading of private stocks. But these markets in a way encourage the employees to leave the company as the share restrictions are not binding once the employee is no more in company’s payroll and they can cash out while the company is still growing. Certain companies like Zynga try to tackle this issue by having designated trading windows during which its employees can sell their stocks. But even when employees or founders are allowed to offload their stocks, a lower equity stake might result in a lower effort from them towards the company’s success.

With the rise of these marketplaces for raising capital, the private companies are remaining private for a longer period. Most of the current players like SecondMarket and SharesPost also act as placement agent providing advisory services to the investors. These markets are slowly becoming a strong viable alternative to public offering and hence are proving to be one of the many factors for a steady decline in the number of IPOs listed in U.S. The result is that NYSE Euronext is now ready for a foreign acquisition with NASDAQ OMX group trying to avert it by offering to take over the NYSE.

The market is too young and vibrant to blame on the pertinent gaps. There is little doubt that they are indeed helping in capital generation for early growth start-ups and generating liquidity for illiquid assets. They need to ensure that more data, analytics and research reports are accessible to the market participants to introduce more transparency, increase the number of transactions and improve the fair value of these transactions. One question remains as to how average investors can be part of successful start-ups growth story before these companies go through a public exit or become too matured to have similar growths?

Private Secondary Market - The Utility

Private Secondary Market has been gaining prominence due to the eye-popping valuations of a number of social media companies in such markets where accredited investors (requirement by SEC for exempted transactions as defined under Regulation D of the Securities Act of 1933 to ensure that the participants are sophisticated with ability to bear the economic loss in case any in the investments made and they abide by the resale restrictions as placed by the company whose stock is being traded) generally trade on private companies. This Marketplace allows privately negotiated sales transactions to trade illiquid, restricted securities and facilitate alternative investments like private company stock, collateralized debt obligations, bankruptcy claims and auction rate securities. The investors are promoted to capture the illiquid premium and hold on their stakes for longer period knowing that their assets are not largely co-related with the public market. Eminent players providing such platforms are: Gate Technologies, SecondMarket, Xpert Financial and SharesPost. Through these markets, the small cap early stage start-ups are now getting access to funds without getting involved into the arduous legal process and costly financial disclosure required under the Sarbanes-Oxley Act. Since the trading occurs without any declared financial information of the traded stock, this marketplace attracts investors with a higher risk tolerance such as an archetypal startup investor. LinkedIn is one of the first social media companies to have come out of the secondary marketplace and graduate to full-fledged IPO stardom.

With the advent of this marketplace, investors no longer need to wait for a company’s public listing and private companies get the option to create their own customized liquidity program. The platform currently does not support shorting, margin, derivatives or manipulation and hence seems to be more untarnished. Investors here are actually more interested in flourishing the emerging private companies and make them capable of generating optimal investment returns. With the likelihood of a higher valuation, an increase in brand awareness and a greater ability to attract additional capital, there has been a surge in the number of U.S. based companies participating in the secondary marketplace. 

As per SEC rule, if a private company exceeds 500 shareholders, then it has to register all its equity securities with SEC and start disclosing its financials which is what Facebook might have to follow soon as it has passed this limit. But recently, a new legislation to revise the 1964 Securities Acts Amendments has been introduced which include raising the private company’s shareholder’s count from 500 to 1000 and exempting accredited investors and company employees from this count. Such a change will certainly give a thumbs-up to the marketplace for private shares by enlarging the potential investors’ pool in a company. This will tempt companies to remain private a bit longer using the liquidity derived from the secondary marketplace and enable them to emerge stronger for an eventual public exit. Thus instead of prematurely going public and risking their stocks in the hands of shorters , traders and manipulators, the companies can more effectively control their liquidity and shareholder base using this marketplace.

Actual Independence - Part I

No one noticed it in the school except his poor uneducated house servant who took him there for the Independence Day celebrations. There was a mistake in the order of tricolors in the Indian Flag hoisted - 'Hara neeche hona chaiye' - His servant pointed to the school staffs. It was soon corrected. That was the first Independence day he could remember. He felt it then.

---

He don't remember what class he was studying in - perhaps the first standard, from his house being one of the tallest building in the town (courtesy the big joint family he was part of), he could easily see the fire near the railway station. Majority of the shops there belonged to Muslims. Then he heard that his uncle's best friend's(a Hindu) shop also got burnt in that fire. The next day early morning he got ready for school. But his uncle announced no child in the house will go to school that day. No one from the house went for work. The unannounced holiday had started.Since all the males were at home, special food was cooked. But perhaps no one ate. They were busy in terrace collecting whatever they can - hundreds of bricks , chilli powder , cemented slabs, preparing for onslaught if any. People lined in their terrace seeing the loots made across the road. The Hindus broke the locks of all the tailors' shops nearby , just because they were Muslims and burnt the clothes they were working on , not thinking twice that those same clothes actually belonged to mostly Hindus.

From the same terrace , he looked down and recognized the rickshawalah who used to daily take him to school along with other children of the locality. The rickshawalah was visiting each house and taking orders for bomb perhaps and was much sought after mainly for the self-protection as there were rumours floating around that Muslims are forming groups and attacking the hindus areas.Suddenly, there was a loud sound, he could see the firings around the nearby Gurudwara. The house doors were closed and everyone was at terrace, ready to attack from above. At that instant, a loud noise came from back - 'Ya Ali'. Everyone turned back in horror. One of his uncles brought a loudspeaker from behind and played a prank which ofcourse no one liked. But later it became fun - there was a bit of competition amongst the children of all the households in the locality regarding which house can shout the slogans most loudly. And the sky was filled with lines like 'Jai Shri Ram' , 'Har har Mahadev' and 'Jai Maa Kali , Tetarpur(one of the popular muslim areas in the town) Khali'. One of his cousins shouted - 'Yaa Ali, tod dushman ki nali' but was immediately reprimanded by the elders in the house. Not much changed in next few days. The schools remained closed. Curfews were put. The independence was lost and shamed.

One day,  he could see one aeroplane flying and people waving their hands to it - it was the Prime Minister Mr.Rajiv Gandhi visiting the place.Whenever curfew was relaxed, there used to be festive kind of environment, people lining up to stock their daily necessities.The mornings started with newspaper discussions in the space just outside the house with big guns from the locality participating in the discussions. And if there was any siren type sound coming, they used to scatter immediately perhaps fearing of the shoot at sight orders during the curfew. All lights and televisions used to be off during the night so that Muslim attackers,  if they come think,  that no one lives in the house.The female members were not allowed to pick any telephone calls. It was decided after receiving a couple of 'Please save us, they are killing everyone, please send the police' calls - desperate attempts from people who just happened to pick any number from the telephone directory for help during their time of trouble. It was common to hear of dead bodies being found in wells.

One morning newspaper headlines were widely discussed. He got curious and the first news item he ever remember reading was  -  Lalu Yadav had got Advani arrested and brought his rath yatra to a halt. Soon Diwali came but it wasn't celebrated because crackers were perhaps banned. Schools remained closed and promotions to next class were made on the basis of half yearly exams' results. Once the things got normal , one particular day was celebrated as the Diwali day in the locality. His family tailor , a Muslim, again stitched his new clothes. He felt independent again.

Is Efficient Market Hypothesis Valid?

Do markets actually self-correct themselves? Agreed that when the prices don't reflect the best available public and private information , those having the best available information take advantage(basically transacts or trades) of it until that advantage is gone (which is when the same information is available to everyone - efficient market). Should we invest in an efficient market at all? Or better try to get hold of that golden asymmetry? Which is why we depend on financial intermediaries , those brokers , bankers and fund managers, because they have better 'insights'. Don't the technical and fundamental analysis give that extra edge of information?

So, doesn't the information asymmetry drive the financial markets? One argument can be that it is the individual's expectation which drive the financial market - X expects the prices to rise and hence a buy while Y expects the prices to fall and hence sell to X. But don't these contrasting expectations get built by the same asymmetry of information?

Those brokers , bankers and fund managers do have better insights and we are in a way right to delegate our investment decisions to these experts. But this delegation somehow creates a sort of agency problem. They become our agents and obviously have better information than us finally leading the moral dilemma. So the bottom line is - it is the information asymmetry which drives the financial markets and time to time put these same markets into trouble?

Don't the point made by efficient market hypothesis (EMH) that price of any traded asset reflects all known information about the asset , puts us in an illusion that "all is well"? And that regulators are indeed wrong to close their eyes and not interfere in the markets? EMH is in a way contributing to the development of a financial crisis by holding the regulators from raising the red flag.

The Wall Street Casino

Are the banks in U.S still not "too big to fail"? Ask anyone on the Wall Street and none will accept the bubble in making. They keep on showing there is enough of money chasing investment opportunities particularly those risky ones but no money for job creation in this land of opportunities . Groupon's first mover advantage wont last long but still valued in excess of $25 Billion. Very soon their stock certificates out of the impending IPO will be used as wallpaper in the purchaser's drawing room. Its now a decade since S&P has been delivering zero returns. US is bankrupt but rejoicing at the gay legalization.

From manufacturing to finance to speculation - Welcome to the new world order where few make money like bandits and every market crash is followed by latest rounds of head-scratching and pleas for reforms to start it all over again. Finding new ways to legally and directly or indirectly steal money from the public - is that what they are supposed to do in their cushy suits? A silicon valley techie thinks out of the box and transcend the old ways of doing the same things while a Wall Street wizard also thinks out of the box understanding that playing within the old rules of uncertain profits and slowly accruing returns will no more quench their ever carving thirst. And came the move from the stocks , valuations and investments to the psyche , fear of losing out,  herd mentality, salesmanship, flaws within the old rules and greed disrupting ethical standards and exploiting the loopholes. 

A hacker finds flaws in people's security systems to get privileged control while these guys at Wall Street find flaws in public nerve to mint their excesses. In both the cases, the revelations can be embarrassing to those exploited and hence almost gets unreported and untraced even though sharing the exploit would be helpful for various others to avoid the same in the future.

From the great depression to the great recession and still going strong. The casino is on , sanctioned by the government and funded by the poor taxpayers. More like a legalized mafia , very much like Las Vegas.  When will it stop?

Getting out of Facebook Fatigue

We have a saying in India - "Nayi nayi Dulhan sabhi ko achi lagti he" (Everyone like the new bride). Can the same be said about Facebook now when the number of FB users in U.S has gone down for second straight months? No doubt that Facebook brought us closer to our friends , made the web world a small place to hang around but also brought the need of managing our online image and hence the need to self-censor. Plus those frequent irritating updates on your newsfeed from one or two individuals in your list making you think if you really want to know about all their activities until you want to sleep with them.

There is no doubt that facebook growth at some point of time will moderate given the fact that it depends on the internet penetration of any given country. The law of diminishing factor will start playing its part. So it should not lose sleep over the stagnating number of users but rather focus on how much average time its users are spending on Facebook, how much it can engage its users. If this user time is decreasing or stagnating , then it should certainly be wake up call as it will directly impact its advertising revenue. It is still a smaller player than Google as far as the ads revenue are concerned but certain to go through the adoption curve which perhaps would tilt the revenue share the other way.

At times, people get confused and start valuing a web company on the basis of the extent to which it engage its users.For example , Angry Bird - the game is inherently very engaging and the player gets so immersed in it that he/she gives little notice to the ads ; so it still proves to be a bad business. Now take Google, they increased the value of their Adwords by creating several non-immersive pages around google.com that makes us sitting on its sites for far more time than say when Google started. The adwords remained the same , the ads quality is more or less the same, even the way they try to get noticed is same but still we are seeing more of them with more opportunities to click on them. And then they introduced the win-win adsense and started syndicating the ads to billions and now with Android , they have captured the mobiles space. 

So here is the lesson for Facebook - Invent multitude of products and features as done by Google. But they have not done it yet. Facebook.com needs be more than a place where we can share some updates, chat a bit, tag friends, upload some photos, and do a bit of gaming - not one where we come only to refresh ourselves , sort of entertain ourselves unlike Google where we go for our needs - searching , gmailing , sharing docs et all.

Grade Inflation : Life Beyond 100%?

We met this U.S lady during our recent Sri Lanka trip. She had been travelling around many countries including the likes of India, Indonesia, Thailand et all since last 7 months or so. Believe me she was not on any vacation sort of. She left her 2 years old coshy job in Hollywood and then an offer from Versace to chase the things she is passionate about. She don't pay for her flight tickets but rather manage it from the airmiles she gained during her sales stint on her job.Touring around these countries was as she said her way of 'educating herself'. She stayed in India for around two and half months , got trained in Yoga(a certified one) and want to become a part-time Yoga trainer. Her ultimate aim is to work in yachts and become an 'international resource'. And her talks reflected the amount of knowledge she has gained of the countries she has visited. I never heard of Delhi Belly until Aamir Khan picked this 2 words for his upcoming movie but she knew it well with her dose of you tube clips.

Can we Indians afford to do the same? Even when we have world's all wealth? A break from the work and/or studies? Remember those application forms from your dream company asking for any gap in studies/jobs? And if it exceeds 6 months except when you have dropped preparing for IITs, you will end up being a non-serious candidate. You lose the edge over one having a 'continuity' with no gaps. The recruiter (read the society) wants you to be occupied - even when the job you are doing sucks you and kills you every moment, even when that engineering and doctorate degree makes your life more confused and more meaningless. Keep running else someone else will move ahead. Keep running else someone else will defeat you. 

This fear of losing has perhaps defeated our generation from core. Grades and percentages has become the hallmark of our existence in this society. Just pick anyone just anyone from any corner of the world , lock him/her in a room with those bundle of book to mug and he/she will finally vomit it in any exams - there is no rocket science in it, there is nothing great about it but still it is what count here - how fast , how good and how efficiently you can do it- this is the race we are entangled in. And still we are running and we will even after the 100% cutoff is here.But for what? We don't know. Perhaps to make your nearby uncles and aunties happy, perhaps to keep their mouth shut.

Why do we need to listen them? Why can't we have a life beyond grades? Why can't we educate ourselves the way we want? Why can't we learn the things we are passionate about?

Manipal Jinx

This is the place where patients from all over India come in hoards everyday to get the best in class treatment at Kasturba Medical Hospital. The Pharma market in Manipal is very large with an average monthly sale of around Rs 2.5 crores which is what prompted us to study the sales pattern of the medicines in this land of doctors, engineering , medical & MBA students. We could get hold of 2009 medicine sales data from the popular medical store here to carry out a secondary research of a sort and here are few of the findings :

• Amongst the drug manufacturers , Cipla shows a significantly higher sales. Perhaps a collusion with the local drug stores.
• There is a high sale of Varaday used for treatment from HIV 1 infection.The maximum sold drugs being: Antibiotics, HIV Drugs and Insulin.
• The sales of Anti Depressant is highest in the month of November, December and July. These are the months in which students here have their examinations.
• The top over the counter drug is iPill tab.
• The medicine sales is not dependent on the discount offered on it.
• Sales of Immunoglobulin drugs increases in winter season. It is protein enhancer and it shows that people tend to work out more in the winter season.
• There was a co-relation found between the high sales during the month of December and January of the protein supplements and the medicines treating Plasma Volume Expansion caused due to the intense strenuous exercise. Yes, the guys seem to try to look best before the forthcoming valentine day

Expected this? Does it alarm a ring as to why parents hesitate to send their children to Manipal? Do you still have doubt over this? Read the full report here. This is the image the students passing out from here at some point or the other struggle to break.

To be honest, there is much more than Love, Sex and Dhoka here. The engineers, doctors and MBA grads from here will vouch for the quality of education imparted here. And many of them have done and are doing exceptionally well in their fields. You get what you are promised. Not like those other prominent colleges - say one in top 10 claims a WiFi campus but still takes monthly charges from their students who opt to use this widely advertised service; From Microsoft to Google to Oracle to Samsung , you name any big shot company and it visits the MIT campus. Ask any MBA guy or a CAT aspirant , where lies the most disciplined and rigorous B-School in India?

And yes yes, you need to get your general knowledge fixed if you still think that Manipal lies somewhere in distant north-east corner of India. As a recruiter sitting in any of the big cities in India, if you still claim it's 'far' then check how much time to and from the airport you spent in a Bangalore or a Mumbai or a Delhi where you would prefer a visit anytime anyday stuck in heavy traffic (like it?)- you will take less of the time from the Mangalore Airport with a scenic view to die for. And the railway station is Udupi - Yes the same land of Krishna Temple where your parents would want to drop by anytime you can plan for them. And the same place for whose food you pay a premium to eat in your comfortable cushy zone (Did i say noisy, polluted?). Come here and see the new gen free India whose part you always want to become but cannot as it's not available anywhere else.

Angry Bird T-Shirt

:)

1 moment. 2 hearts. few words. Lost 4ever.

"Its so hot here" - said the Boy. The girl understood this time around and moved away.

Forever.

---

"Wherever i am whatever i do , the center of my thoughts revolve around you."

Years later

"Wherever you are whatever you do , may the center of the world's happiness revolve around you."

---

"You know what , mere cheeks pink ho gaye  :)...teri wajah se...aaj itni garmi thi ..aur tera wala stole is very warm tht's why"

The chick talk , instead of sending to her chick friend , she mailed to one wrong guy by mistake.The guy became her Mr.Right while the existing one faded in his darkness.

---

"Bahut khaya, peit bhar gaya" She said apparently putting her hand on her stomach. "Achha? Sahi mein? dhikaao" he asked and in mischief started pretending to approach his hand towards her. She sensed it, uttered her typical "(d)hattt" and took a couple of steps back

and got hit by the truck.

---

PS: The post title is inspired from Facebook Wall status of my friend Subhashis.

The Dheela Characterization

"Huh , its so hot here" - says the Girl. "Ya , you are here na that's why" - responds the Guy. The girl smiles and sighs away. The Guy gets closer. "Hey, what are you doing?" asks she worried by his advances. "MBA" - comes the instant reply. The girl smiles again , a laugh indeed.

A non-dheela guy would have perhaps switched on the AC to cool the 'heat' and got intimidated to not to proceed further once the girl spilled the "what are you doing?" question. And end up being touted as Dumbo, fattoo , not with the times- purane zamane ka and all such sort of things.

Salman being the dheel character he is , still could not get one Aishwarya or a Katrina. Do girls like to have a sling with a dheela character but finally settle with a non-dheela character. "Hum woh nahi he" claimed she on farewell day after 'spending' the full college years with him.

Many arrive as committed (few engaged too) , but gets extra-hooked inside the campus. 'Yahan bhi hona chaiye' syndrome?. After the college , the company perhaps too. 'Wahan bhi?' :)  Until they marry their non-dheela version of the other gene. Cool he woh if you don't know !

----

X worked for 2 hours during weekend but made sure to call and mail his boss on some pretext or other every time he worked overtime. He gets a promotion in next cycle. Y works for 12 hours every weekend but genuinely try not to bother his boss during this time. He hears 'so early today?' from his boss when he starts leaving to see his ailing mother in hospital.

If both X and Y are in a knowledge based industry (say IT), in long term its Y which will make a bigger mark. The more hours you spent , the more you will learn(assuming you have the ability to do so) which will differentiate you. The X high will vanish soon. So is the dheela character a short term phenomena?

----

There was this B-School with its so called very 'successful' more than 100% placements report making headlines in Pagalguy but i can still see their placement team scheduling interviews for their unplaced students in the market. The college inadvertently ranks amongst top 10 B-Schools in India.

Then there are slew of B-Schools which can go to any extent to win the fiercely fought placement war. Many organize/conduct so called 'Best Summer Project of the Year' contest. Get the project reports from the participating students from other competitive colleges thereby getting the details of the companies which they can pouch for themselves.

----

Interview a few highly talented individuals on the pretext of a lucrative job opening , give them the complex problem during the selection rounds and once done by the candidates , reject them on some pretext - Few start-ups found out this very novel way of getting the complex work done which their workforce wasn't able to do !

A few others hire interns and then send them to their competitors as prospective customers or other avatars to get the inside info. 'Tum jhoot nahi bol sakte?' questions the guide in surprise.

----

You are doomed if you start liking the ethics classes and give a slightest hint of it to your batch. And if you are in that always-studying mode least interested on the college excitement, either you are a bookworm or a behenji.

"Woh topper he, woh parhai karega and won't do any committee work" - said a 'popular' dheela character and everyone agreed. 

"Chi , kese batchmates mile hein" - one dheela taunted on the guy trying to curb ragging if any on campus. The President with him smiled.

Twitter T-Shirt Went Wrong

Don't have any idea who this girl is. The Twitter API seems to have gone wrong or a manual error while sorting out the profile pic for printing? Better to go for a replacement :(

PS: Don't crib about the image quality offered by a 3-year old dilapidated iPhone.

The First Day

The Beginning of the Social Media Stock Bubble?

Win this Exclusive Facebook T-Shirt

We are giving it away for free. There is absolutely no string attached.

Just participate in the poll below by guessing the price of this T-Shirt in Indian Rupees. The closest matching quote will be the winner. Lucky draw will be used for the matching closest quotes, if any, to pick the winning entry.

The Latest One

:)

PS: Don't crib about the image quality offered by a 3-year old dilapidated iPhone.

Will Facebook Kill Micropayment Sites?

Simple it is - You post a link or write a note and people liking it on Facebook. Now extend this simple use case - You get credit points from Facebook for each like on your wall and similarly credit points deducted for each like you make on other's wall. After the netting process, you are left with a lumpsum credit say at the end of a month which you can convert for a real purchase online or say a coupon. Will this be the next level of social interactions? One Click Monetization of our social life on the web? The number of 'likes' will decrease perhaps on the fear of we losing out our points but will the inhibitions and quandary be still there while supporting a cause strong enough for an adrenaline rush within.

The case of Flattr

I remember signing for Amazon , putting my credit card details and then carry on with whatever i want to purchase. Unlike the other online buying sites (say Makemytrip.com or irctc.in) , i need not give my card details after the first purchase; they pick the predefined address and card details. Now think of a restaurant with no price list. Its totally left to the discretion of the customers as to how much they want to pay - basically extending the tipping etiquette to a full swing. Now what if it happens for the loads of online contents - articles,  blog posts, videos et all. This is what Flattr tries to do - providing a quick one-click easy way of paying to online contents. 

The image shows what put them to popularity chart. After Visa, MasterCard and Paypal closed their channels, Flattr was one of the few remaining medium through which people could donate to wikileaks. You just need to create an account and start embedding within their blog the flattr button like the one below.

Anyone else having the flattr account can use this button to like and pay/donate.Flattr makes revenue by cutting 10% of the money made by the content provider as their fee.

Cultural Catch: In simple words, voluntary payments are still like the tip we pay in restaurants, an etiquette that has survived years to become a collective habit amongst the masses.But do micropayments site such as this one have this time to catch. By the time they will do, a Facebook or a Google is sure to catch on this trend.

Osama's Death reminded me of Freedom at Oracle

Let me start with the below line from my earlier post Infosys Loaded with its 3.0 Version - Part II

"I am not a regular television viewer (more due to living out of home since last 12 years) but i do consider myself just lucky enough to catch the historic ones - from IC 814 hijack to 911 to Obama's election to Egypt crisis to almost all the general elections in India post the famous riots at Bhagalpur. "

and extend it further. 

I am not a regular television viewer because i never had one during the last 12 years of my life plus the almost ubiquitous internet accessibility ensured that there was no need of it. But now after landing up in Bangalore in a 'furnished' accommodation with fixed monthly bucks to pay for it and with a television right in front of me, i subconsciously seem to be trying to make up for it. To the extent that its always on. Yes the first thing i tend do in morning is check my mobile and switch on the tv. The same happened on the Monday morning (on 2nd of May, 2011 to be precise). Having a usual incomplete sleep (just check when the angry bird blog was posted, the clueless act of grouping the objects on Prezi was the culprit ), i hurriedly left my place around 8:30 in the morning.

I reached office around 9:45, though the official hours start at 8. Now if you are an MBA graduate that too a fresh one that too from TAPMI (yes , time is still the religion there; you can be late for your date and still make up for it but not to a lecture there) and when your manager inadvertently (read always) arrives before you perhaps to check on your just-got-late excuse, it should be a crime. I will make up staying late, thought me but again if you are part of the Indian IT setup , that should be a norm. Nevertheless, i squeezed though my desk and started pretending to work perhaps like most other folks.With a printer behind and people gushing in there for their share of this facility , it was difficult to open my morning dose of Linkedin (yes that's the only social/professional networking site which the sensors allow here), The Social Canvas Daily (thanks paper.li for making access to the twitter-se-posted links so easy and that too without logging into twitter) and other sites to which i have almost got addicted to. Only around 11:30ish, i was able to browse through Time of India headline and headline it was - President Obama confirms death of Al-Qaida leader Osama bin Laden.

That was it. Series of googling and series of write-ups on how it all transpired - let them note if they want to - the rebel inside me declared. You can browse through n number of pages but catching it live on the box has its own element , if only there could be one around. The dear Oracle cafeteria was being missed. That Lehmann Brother collapse, the Mumbai 26/11 attack and the Tendulkar's century with India winning in Chennai a month after, the Satyam scam and the stock market crashing - i had watched them all in those cafeteria's TVs. And it was not me, a whole lot of their employees did - the good part was no one minded those so called loss of productive hours or questioned it in any way. Trust was the key (and still it is i am sure) at Oracle. Loved the freedom being provided. There was no concept of swipe-in and swipe-out for logging your attendance to office. You can come and go to office anytime. There is no dress code attached. No blocking of the social network sites. No one checking your bag while you leave the office.

Yes, when you have whole bunch of talented people , the best of IT land, you should consider them to be matured enough to prove their worth and give back the returns on the salaries they receive. And who don't want to be a liberal soul. The age cohort of Indian workforce says it all:

Generation Bharat (Born between 1960-1975) characterized by

• Collectism and conformity
• Strong family values
• Do not question authority
• Believe that higher education is the only way to success
• Deep-seated economic insecurity
• Lack of optimism
• Cynicism and lack of empowerment

Generation India (Born between 1975-1990)

• Characterized by high confidence
• Capacity to process information very fast
• Urge to develop a career fast
• Tendency to expect to be given high responsibilities immediately
• Individualism
• Impatient
• Bold
• Tendency to overestimate themselves (arrogance of ignorance)
• Tendency to expect employer to adapt to them
• Roaming in cynicism-optimism paradigm
• Living in duality

General Globalized India (Born after 1990)

• Characterized by awareness of the world
• Environment conscious
• High technology literate
• Multitasking ability
• Urge to grow up fast
• Disrespect for elders and authority
• Lack of proper role models and references
• High self-confidence
• Optimist by nature
• Sees plurality as a way of life

A U.S company seems to have understood this Indian cohort better than its Indian counterparts.

Angry Birds - Online & Offline Time Killer

Just tried my hands on Prezi. Check out how Angry Bird , the gesture-based simple game, has caught up with the current gaming wave , its monetization model , future and the challenges ahead.

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Infosys Loaded with its 3.0 Version - Part II

I am not a regular television viewer (more due to living out of home since last 12 years) but i do consider myself just lucky enough to catch the historic ones - from IC 814 hijack to 911 to Egypt crisis to Obama's election to almost all the general elections in India post the famous riots at Bhagalpur. But never saw a live corporate broadcast such as the Infosys' one yesterday. They have their own way of doing things. Everything scripted to picture perfect? Living up-to the transparent organization they are much touted as. 

Despite all the hoopla, the janitor example by Mr.KV Kamath was the most touching. It seems the first ICICI ATM was installed in the same Infosys campus from where the new leadership announcement was being made yesterday. One day Mr.Narayana Murthy asked one janitor standing in line of the ATM regarding what he thinks about the ATM. The janitor responded that he loves this machine because if he would have gone in the bank , the teller/cashier would give extra treatment/respect to the babus in the line , but the machine here treats everyone equally. This reflects the 'technology as a leveler' effect which the modern India is experiencing. This leveling on par behavior is being what is aimed when we speak about automating the NREGA process or the e-Choupal initiative by ITC or the introduction of UID - just reduce the manual touch points and get rid of the hierarchical society estranging  our India.

So here comes the first similarity between Mr.KV Kamath and Mr.Narayana Murthy - Both had brought social levelers in their own way/field. One by creating millions of employment/jobs (and honoring them all even in downturn) and the other by revolutionizing the banking sector in this country - both through technology usage and adoption. The other similarity comes from the nature of fields they come from - both IT business and financial industry have lots of similarity- ever changing and evolving fast with their own share of (cyclical) downs. Both these leaders are difficult shoes to fill in their respective spaces and now when one is putting on his feet on the other's, the movie should be worth watching.

Many see it as the toughest period for Infosys with the top management changes, founding members moving forward , their Global Delivery Model under test more than ever before and declining revenues amidst the transition. But forget that they started in the most unfriendly of the environment for doing business with limited resources and have now created an extraordinary setup of infrastructure and leadership.And the knack of Mr.Kamath to identify the next change/opportunity/trend will just add to it. The bigger challenge is motivating the team again after the recent media bashings holds the key for them

Where they lack is perhaps a little more aggression ; remember the Axon deal where they decline to re-bid on top of HCL's quote? They have done so many things first - listing on Nasdaq, consulting through GDM, center in China but in their quest of taking planned and thoughtful risk, they seem to be losing out. Perhaps the "'In data we believe and God we trust' philosophy needs a little tweaking. The declining gap with other Indian IT companies such as TCS is just a myth. One theory says that the gap is more because of they considering in their financial report the expiry of tax exemptions from the STP(Software Technology Park) scheme of the government of India leading to an increase in their effective tax rate which the other companies are yet to figure out like the government and NASSCOM itself. One point which media seems to be not pointing as of now is the dual leadership conundrum - At one point (merely 3 months ago) we saw Wipro breaking away from this model and now Infosys embracing it further by retaining the co-chairman space.

Perhaps a mix of continuity and fresh perspective was the call.

Click here for Part I

Infosys Loaded with its 3.0 Version - Part I

There used to be 'swayamvars' orchestrated by the Kings in India for their daughters to choose the men of their life-and-choice and the men had to coo the bride with their immaculate abilities. Then there are parts of India where still the women-to-be gets literally abducted and forced into the marriage. And till few years ago, i used to hear the Bihar's Shotgun Weddings where the reverse used to happen - yes, the guy being kidnapped by the family for their beloved daughter. None of these happened for N R Narayana Murthy's 30 year old "daughter-like" Infosys.

Swayamvar in current ever-growing modern India sound too much of modernity. The only one i can remember is when first foreign coach of Indian Cricket team was being finalized and Greg Chappel was chosen. The rest is history as we all know. Infosys fared not-so-good in the last two quarters but have never reached to a stage where it can be abducted (read acquired). Its fundamentals are still strong as the pundits say. And doing anything like kidnapping is just out of the world and our thought for an institution of immense ethical standards. Is 'Lure' the apt word to say? Convincing Mr. KV Kamath to bring it back to glory?

Rather , the handover has been a perfect script as of now. A perfect marriage of past with present. Will it survive? Only time will tell. We still need to see how the Tatas fare in their leadership transition. Perhaps they will pick lesson from this rather-so-perfect 'vidaayi'.

Commodity Trap of Indian Telecom

You are due to be charged rental of Rs.30 for CALLERTUNE on 21-Mar-11. RC with 31 to extend validity for 31 days. To deactivate, SMS CAN CT to 144(TollFree). 

The deactivation message to 144 kept on failing and sometime later came this message from Vodafone:

Rs.30 has been deducted towards caller tune rental. 

As per the Indian Government Directive, Airtel was insisting on identification documents which one Mr.Y did submit but Airtel never updated their records. After 2 months , the number was temporarily disconnected without any prior notice. The frustrated users end up tweeting as we see in the image above.

It's no more a secret that the cost of talking in India has been tending to be zero and the Indian Telecom market is becoming more and more competitive with each day. Areas such as customer service seem to be getting left behind in the race to survive and exceed in the highly competitive environment. With MNP (Multiple Number Portability)  across the same circle in full swing now, it is yet to be seen how much of improvements it has brought into telecom service provider offerings. All players , i repeat All of them actually went into a strategy of price war rather than differentiating themselves on their offerings and services. Low price without seamless network connectivity and with service issues will never get a favor from the subscribers.

The service providers have created a sort of commodity trap for themselves. With continued reduction in prices and lowest ARPU(Average Revenue Per User) in India, they just didn't had any bandwidth to invest to the extent required on the service front. Add to it the huge payments they are making for the 3G Licences. So everyone is trying to play volume game and attain a high base of subscriber to make up for the low ARPU but it is at the same time straining their systems and services. Hence those invariable billing and network issues.

Little do they realize that it is just a matter of time when they wont be able to reduce the price further and the customer centric approach will be the winning differentiating factor thereon.

How Al Jazeera makes Money

I would say if you want to understand world politics , you should better watch Al Jazeera English (AJE) version. Etymologically,the two words mean "the island" and surely at some points,it proves to be surrounded with the Muslim world's euphemism of the western power. I have a cable connection full of South Indian channels and not a single international news channel and hence my appetite for international news is forced to find solace with its live stream. For good perhaps. Atleast qualitatively , its on par with any BBC or CNN coverage. 

To be fair, it is equipped with some very brave reporters. During the Gaza war in 2008, it was the only channel with reporters on both sides of the conflict. It was the only international news channel to cover the violent out-lash of government on the protesters in Myanmar with under-covered reporters using the spy cameras. They were the only one to cover the gulf-oil-spills.The ordinary Arabs would have never seen an Israeli official without it. With its Cairo office closed, journalists beaten and arrested , tapes and cameras confiscated , it ensured a live  broadcast from the Tahrir 'Liberation' Square throughout the 18 days of Egyptian protests.

True , it has a past which makes it appear biased against western world (but are the western press neutral? Don't they show the news from American perspectives?) with controversial connections. It is still referred as CNN and BBC of the Arab world. Those in U.S should watch it first before forming a perception from third-party unknowns. Plus , it is owned (and subsidized) by Qatar government which as a nation shares a friendly relation with U.S , is much more liberal compared with other middle-east countries except Dubai and has Exxon Mobile as its largest foreign investor !

Business Model

The value proposition is simple : it broadcasts as-it-is uncensored (that's what makes it credible and trust worthy) news , political talk shows and documentaries about current and controversial happenings with an objective dual-sided view.It was initially funded with a 5-year loan totaling to $150 million from the Emir of Qatar who still continues to subsidize it. Most of the money comes from licencing exclusive footages (not to say , they have many !). It sells documentaries, rents its equipment to other broadcasters. Little dependence on advertisements - the Saudis unhappy with Al Jazeera's coverage of their Kingdom have given implicit message to the businesses in the Arab nations that they will be forbidden from doing business in Saudi Arabia if and when they advertise on Al Jazeera. And hence its drive to expand across the globe trying to catch as many eye-balls as possible and once that's done , it presumes the advertisers will follow on their own. It also has launched its sports channels for which it gets paid subscription revenue. It also have a advertising revenue-sharing agreement with Google for their YouTube Channel (Yes if you are in U.S , in all probability that's what you need to rely on to watch AJE). 

But that's not enough, they still are not making profit , not withstanding the fact that the numerous middle-east crisis they leverage on is a costly coverage. When Vodafone was struggling its way out in Europe and elsewhere , it found solace and made millions in Indian market. AJE already has got the permissions to broadcast herein India. But the news broadcast industry here is highly crowded and hyper-competitive. Plus will AJE's "Journalism with No Frontier" policy work here given the fact that many of the private news channel here are owned by politicians and implicit lobbying on news item is as prevalent as it can be? Will they chase the profits as desperately as the deregulated media houses here are doing ? They were able to unite the Arab world viewers who are even now so fractured politically , socio-economically and historically. Will they be able to repeat the same here? 

The Financial Crisis : Greed Accumulation

Its not a news that Investment Banks created those complex financial products/securities backed by the mortgage based products.They became underwriters and placement agents for these products and gained not only from the success of these securities but also from their failure (making profit from the same products which caused loss for their clients - they reversed their transactions and started selling the same products to their clients which they bought once they saw decline of the mortgage market coming up). What caused this  increasing level of risk appetite and conflict of interest (greed?) in the Wall Street?

Before 1994, U.S banking industry was more of a fragmented , localized and decentralized cluster which prevented an undue collation of financial power and provided adequate risk spread in the financial system. With authorization of inter-state banking in 1994, it became more easier to open bank branches throughout the nation. The repeal of Glass-Steagal Act in 1999 enabling the normal banks , securities firms, investment banks and insurance companies to operate as a single merged entity. And hence the rise of too-big-to-fail financial institutes. 

They started producing new instruments with no prior performance history making it difficult to analyze and predict the associated risk. In 2002, the US treasury reduced the capital reserve requirements for securitized mortgages depending on the credit ratings of the securities which created incentive for the credit rating agencies to portray an optimistic risk assessment of the mortgage pools and hence the created opportunities for banks to reduce their capital asset ratio. Thus , mortgaged backed securities started gaining in demand which promoted more and more lending promoting lenders to issue mortgage to high risk subprime borrowers as well. The higher the loan amount was , the higher was the commission for the mortgage broker, the higher was its initial profit and price in the secondary market for the lender and the higher was the source of revenue stream for the wall street firms.

Since the lenders were able to securitize almost all of their loans, credit ratings took a back seat and the volume and speed of lending plus securitization became the key. As the risk of non-payment was finally being passed to third party, the lenders lost the interest in loan eligibility and determining whether the sold load would ever be repaid. These volume of loans got defaulted and paved the way for tough times.

Let's Get Rid of it

This is the chance to utilize the network effects which we learnt during our MBA classes in the best possible way. If the suppressed souls in an Egypt and a Libya can do it , why can't we in this much lauded democratic nation do?  Tsunami of corruption was always here , lets not further allow it to wash away our well being , lets not allow it further to eat away our growth saga , lets not our future generations suffer from it. Better late than never , this is the time to seal your name in the history books. Lets get rid of this bunch of ants surrounding our hard earned sugar cubes. 

Are you Consumerized?

If you are a recent MBA grad in India , you must be enjoying the current very-soon-to-be-over-post-college-pre-job period? Eagerly waiting for that first day on job?And for that office laptop? What if it turns out to be one black, heavy, bulky and ugly box? Will you still use it? Atleast in Office? (assuming you won't be able to flaunt it the way you used to flaunt your now-soon-to-be-ex (laptop? Ofcourse not? Oh those happy days!)).

Most of the time , you will use your office laptop as your own property (read - for your own personal work/surf/entertainment). In reality , you no more will get just any ugly box; even your employer understands you want it your way. The time has come when you , the end user , can influence the devices/tools/machines to be used and not your company. So if you are comfortable with an OpenOffice , noone will force you to open your docs in MS-Word. Isn't it?

Now what should a Toshiba or a Dell or an HP or an Apple Team should build - That sleek one (Sony Viao even has a size zero one!), the designer colored one , having high-end graphics card for you to play around(games of course) and a webcam to make those necessary skype calls (assumption applied: the now-soon-to-be-ex theory failing) OR/AND those bulky powerful one for enterprise usage(yes they are customized to have higher processing power, speed, memory, configuration and what not). At Dell, the same development team takes care of both small business & consumer. Many vendors are offering enterprise products with look-and-feel of consumer products. The number of SMBs buying PCs from retail or online outlets is increasing with an overall decrease in the purchase from dealer market.

So what's happening?

The line between consumer and enterprise technology/product demand is slowly getting blurred. The new gen Enterprise 2.0 workforce is hard-wired for specific technology/product/features/facility and the companies that overlook it can face a loss of competitive advantage in the labor market. Would you like to work in a company which don't allow the Facebook access to its employees? Social media/Networking  has improved our personal lives, why not use it to improve our corporate lives as well?

The toy is becoming tool? or its the other way around (does your child prefer an internet connection to a licence to an outdoor game?)

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(PS: I still love my college laptop. Not because of the Toshiba label it carries but more because it has all the tools in the world installed , all the bookmarks , those read later, those add-ins which can make me the most successful and most efficient human being on any day at any place.)

5 C's of Community : iStockphoto

Framework Source: The 5th C of Community, Social Commerce by Brian Solis

Recommendations

• Continue with the Micropayment model
• Have variable fees depending on the photo’s popularity
• Extend to other Targeted offering(As they know the users in the communities and their interests) such as digital media , photographic accessories
• Hire similar people passionate about photography and communities.

HubSpot:Inbound Marketing and Web 2.0

This case analysis was done and subsequent slides were prepared as part of E-Business course during our MBA days :) . The issues raised in the case prompted us to go the usual marketing ways of segmentation , targeting and positioning ; little did we realized that with the advent of Web 2.0 and social media , the marketing rules are changing !

Classification Vs Clustering

I invariably get confused between the two. More because of the Classication of living beings, animals , insects, human beings etc we have been taught in our primary science/biology classes. Clustering , i have been always seeing from the marketing perspective of segmentation. Does both implies grouping in one form or the other? Absolutely not.

Say we have a population given, when we find similar groups within this population, we basically divide the population into clusters. The similarity is on basis of few characteristics/parameters say age , disease which help us to determine whether one is young, middle-aged or old. Before the start of the clustering process , we dont know which characteristics will be deterministic helping us to find the DIFFERENT SIMILAR GROUPS. There might be few outliers left which will not have any aligning characteristics to any such group.

Classification already have the grouping done. We just need to determine the group in which one particular element of the population will fall into. We start with a training set of data which already have groups mentioned. Depending on this dataset, we find out the pattern or the group/class function which will help us determine given a new population , which class the members of this population will lie.

The below figure stands apt for classification problems. We just need to decide whether a given book will fall into the algorithms box or science box or philosophy one. We categorize the books into known classes. These classes/groups and the number of them is already known (Supervised learning).

While clustering , we simply have all the books at our disposal and depending on their contents we identify what are the various groups/class of books in the library depending on which we label the box in the rack. The number of groups/classes is unknown when we start (Unsupervised learning).

The other example can be news item - whether a piece of article falls into the Economy news or Marketing News or Technological news category et all. This is classification. Finding all the categories under which news item will fall is clustering. Deciding whether a mail is a spam or not is classification while grouping the mails into different labels one of which can be a spam label is clustering. 

So is clustering always done before classification?

Would I Go on a Date with You?

Now this is an interesting usage of Analytics : Data-based deep insights , observations and facilitation on the dating world. What if you answer the few questions in the chart above and get to know if we are the right match or not?What if you have a similar map of yours and we able to match our compatibility?  Want to know the best questions to ask on your first date - those easy to bring upfront , those not so personal and obvious ones (few of those on the lower right quadrant below) yet handy enough to know what you both really care about?

Want to know your date's political , social or religious inclination in more subtle acceptable way. OkCupid ,  does it all for you.

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How it works

It encourage you to ask a series of rather interesting questions and generates a match percentage (they have applied a patent for their algorithm) depending on below inputs:

• The answer
• The expected answer from one's partner for the same question
• The degree of importance one gives to the question asked, weightage given in bracket
• Irrelevant(0)
• Little important(1)
• Somewhat important(10)
• Very important(50)
• Mandatory(250)

• Whether one's answers can be made public or not 

Suppose there are two questions with following responses(the green and blue color denotes the match) :

	Importance Weightage/Answer/Expected Answer
A	10/1/1	50/1/3
B	1/1/2	250/1/1
	Q1.	Q2.

For B:

Total Point Available from 2 questions=∑Importance given by A= 10+50=60

Answer to Q1 only matched, so points gained=10

A’s Satisfaction level from B=Points gained by B/Available Points to B=10/60=16.67%

For A:

Total Point Available from 2 questions=∑Importance given by B= 1+250=251

Answer to Q2 only matched, so points gained=250

B’s Satisfaction level from A=Points gained by A/Available Points to A=250/251=99.6%

Match Percentage=sqrt(16.67%*99.6%)=40.74%

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In the quest of getting more and more matches , one ends up answering as many questions as possible (there are tons of them) and hence gets generated the map of one's expected matching criteria along with the valuable insights. The response to whether one's answers can be made public or not gives the ability to segregate the question database into less private and more private as depicted in the second figure above.

Do you have a Second Life?

An INSEAD Campus , a running economy of its own with its own currency (Linden Dollars) , a Currency Exchange and GDP, a free market where you can buy or sell virtual goods and services,entertainment, a profitable real estate biz (you can buy and sell virtual lands and make a profit in Linden Dollars and finally get it converted to REAL ACTUAL non-virtual US Dollar : 1 US$ = around 260 L$) , Festivals and Celebrations, boyfriends/girlfriends or escorts for hiring , Banks , ATMs and shopping centres et all - Second Life from Linden Lab has it all.

More than 60 Fortune 500 companies have established their presence here. Coke has set up its vending machines and selling millions of cans of virtual drinks (just think why these virtual drinks are being bought !). Corporates are using it for business meetings, education/training and simulations. Having no need to buy food to survive, several residents here are making real-life money from SL businesses making it a commercial hub.

Your involvement just depends on how deep in the virtual world you want to get into. And remember it's not another so called Massively Multiplayer Online Role Playing "Game" wherein you face some challenge and try to overcome it. One common aspect is that you are here to enjoy just like any other game. Still , if you are a fan of a Quake, Doom, Halo, World of Warcraft or Age of Empire, your chances of adopting the SL is higher. You being a resident have a perceptual immersive experience with entirely new set of capabilities(eg: you can fly) in this virtual Linden World. Create, design and offer products and services limited by your own imaginations. Slowly , it is turning out to be the online media for the firms to do pilot testing for new products , experiment , sell and promote their brands.

How Linden Lab makes money 

• Advertisements from Second Life viewer/console and Marketplace where goods and services can be bought and sold for the virtual world.
• Gets commissions for items sold in the marketplace.
• Currency Exchange: Transaction cost is charged when users buy or sell L$ with each other.
• Land Rentals make up around 80% of the revenue. The users can buy or purchase public or private piece of virtual land for a monthly fee.
• Premium Accounts : These are tiered subscriptions which gives user a certain amount of land.

But as we know, our online behavior can be very different from our real life one and so there is still a question mark over how successful any consumer/market research activity will be on this platform.Plus,there is no government rule but still you cannot behave or cause harm to the experience of others as there are establised measures placed to tackle such behaviour. The fact that the richest 10% of the users control around 90% of the money in this economy makes it less appealing to competitive users.

The transition from early adopters to followers is still a long way ahead. But still , a thriving economy Second Life has become, it will indeed be interesting to watch how it will evolve and facilitate the next level of innovation by breaking the geographical barrier at least virtually. And don't get surprised the next time you hear of a Sony Island where they have a virtual headquarter with a window office !