Predicting Business Cycles

Back in August 2006, I had written a post on Dot Com Bust 2.0, sadly rediff BLOGS has a bad way of storing posts (week-wise instead of it being individual posts) passed away into oblivion.

Revisiting that post was an interesting exercise, an excerpt –

Do we see history repeating itself? A sudden surge in this Dot Com 2.0 demand, people are already teeming in to cash-in on this new opportunity. Do I start off a firm of my own and try to do the same. Is this risk / venture enough to sustain me through the impending bust? During my induction at TechMahindra, there was a fellow from the top management who was wizened enough to predict that the next bust is going to come in the year 2009. We laughed it off back then, I am not laughing now. Maybe, the dot com bust might relapse, and why not? Fortunately, IT in India is not just about web development anymore. We will pass through this. But will my dream of starting off on my own do the same?

Full marks and respect for that top executive.

A VC who nurtures entrepreneurs

Just read this on the Wall Street journal, that there is a venture fund by the name of Pacific Lake Partners who actively seek out young entrepreneurs, give them enough money to scout around for the right organization to takeover. Then help them acquire that organization for a healthy return.

You can read the rest of the article here. An excerpt –

Pacific Lake will provide between $300,000 and $500,000 to entrepreneurs to cover living and travel expenses for two years while they search for a business opportunity – generally an established business with revenue between $10 million and $30 million. There’s no sector focus; it all depends on the opportunity the entrepreneur finds.

It feels good to know that there is a venture fund who values someone who can not only boot strap an organization but take on an already running organization and turn it around. This is the stuff of what legends are made up of. All of the awe-inspiring case studies that we used read in our b-schools have suddenly come real. I wonder if any VC or angel investor follows a similar policy in India. As a developing economy, we need increasing number of such folks.

Why we pay taxes

A discussion with a friend about salary structures resulted in this post –

  1. I am damn scared of an IT raid
  2. Paying corrupt officials the salary and perks that they dont deserve
  3. Paying for infrastructural developments that dont help anyone
  4. Reducing the deficits of the nation
  5. If I do it, then everyone else could also do it

Despite all this cynicism, I still pay my dues … and I think that gives me a moral authority to demand the same from my fellow Indians.

All it takes is an idea.

Made in China

During brunch today with a good friend, we were discussing about the sad tale of his failing computer. The fact that every computer part that he was purchasing was a cheap replacement part from China, without being aware of the authenticity of spare part was rattling his nerves. This includes from the motherboard to the power cord. How they manage it to produce it at such a low cost was a puzzle to him. Rightly so, imagine buying a power cord from China at Rs. 20.00, this includes the manufacturing cost, the shipping and the distribution cost.

Imagine the power wielded in such numbers, a country which can change global markets due to the sheer power of its manufacturing. Economies evolve, some do this gradually and some jump the gun. India was an agrarian economy … come the 20th century, and we are a service-based economy. We jumped the gun of becoming a manufacturing economy. Boon or bane?

Bane I say. Without the right set of manufacturing infrastructure, our service economy is an overhyped case of derived demand. A nation depending on the global markets to survive its burgeoning service industry. Almost all the infrastructure for this service comes from outside. What happens when the economy which is providing the manufactured goods suddenly decides to evolve further and move into service industry? They suddenly become more poised to take on stronger service economies simply because they can deliver end-to-end value.

People have been saying it all the time, that the Chinese are better at technology, they are hard workers, intelligent even. The only advantage that we had was previous engagements and our ability to speak english. Languages can be learnt, learning can be multiplied. Sooner or later, the Great Indian Outsourcing Dream will come to an end and turn into Comrade Mao’s Technology Farms. Service has to be differentiated upon quality and not cost. Wake up India!!

Software Piracy

There was an incident when I was working in a particular start-up. The company was not used to buying original software licenses for any of its users. One business manager decided to go and register his pirated software. Within a week, the CXOs in this start-up recieve a nicely worded legal notice from you-know-who (Billu bhaiyya and his cronies). The notice said, that the CXOs are liable to go to jail and a penalty of some 3-4 lakhs!! Within days, a software audit was done, and a no. of software licenses were bought. We decided to keep on purchasing licenses till we were completely licensed. It took some months, but it was done!!

75% of the corporates in the country are using pirated software right now. The other 25% are not because either they have taken an ethical stand on this issue, or their clients have taken that stand for them, or they are people who have been caught and are now aware. It’s just a problem of awareness, and of seeing value in buying proprietary licenses. So why not have a hybrid model, where the software firm launches a software for minimal or free of cost, and gives all the killer features for that price. Would that work? Or are Indians just used to getting stuff for free??

Do you really need that?

That is the question you should be asking yourself whenever you are about to buy something.

If you are not clear then, check out this site. The content is presented by Anne Leonard, who manages to deliver the message so clearly and logically; it’s a shame that we did not notice it earlier. We Indians are copying the western culture to the hilt, so much so that we are trying to adopt the same practices at work, at home, at how we treat things, becoming more of consumers and less of contributors.

Half of the stuff that we buy, do we really need that? A new phone, a brand new gaming desktop (I was thinking of getting this one), a flat screen tv, a dishwasher, an A/C, the list goes on. And once we buy that, we dont stop … we keep on buying newer versions of that. Our perceived obsolescence drives us to trash our already existing goods for the sake of the newer and better. Such a waste.

Please go through the site – storyofstuff.com. And try to make a difference.

Legalizing Corruption

On my way home from work, I was having this conversation with a colleague. He made an interesting point, the change in our thinking if we were to legalize corruption. The concept is simple – Declare your black money, pay a nominal amount to the government and you get to keep it for yourself.

I am not thinking through this completely here, but would require your help as well. But here are some points which came to my mind –

  • The IT department has to be more thorough and catch all defaulters; that’s a tough task but that is the only way the corrupt people will be encouraged to come forward with their black money
  • People will be encouraged to be corrupt, since there is a legitimate way to declare that income!!
  • Government gets an inner cut on each bribe it’s official takes!! A kind of a plough back system!!

What do you think?

Addendum –

Seems this is a crazy hair brained idea as any. Read the comments to know more!!