Archive for November, 2008

Envy us – that’s all they can do

November 30, 2008

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So, the siege of the Taj had ended. Big relief. Oh, really?  What’s up next? 

 

Happy endings are stories that haven’t finished yet. A few brave cops had risked their lives, some have lost it too – as usual.  Now the political blame game will begin. Bitching the intelligence network, Center blaming the State and vice versa. With passage of time, intensity dies down and it’s no longer news.  Until the terrorists strike somewhere else and manage to hog the limelight. I refrain from sending out my heart or condolences or even sympathizing with those that fell to terrorist bullets. They are the lucky ones in that they escaped the after grief.  Watching it on TV and not being able to fight those bastards made me feel like a eunuch.  Is it an overwhelming sense of idealism preceding experience? Will cynicism follow?  I’ll figure that out later.  No problem can withstand the assault of sustained thinking.  So right now let me rest with the comfort of opinion without the grumpiness of thought.  

 

I see a much stronger India – democratically, economically and socially – emerging from the trauma.  Let our hideous neighbors burn with envy. When they are not busy printing counterfeit currency or slipping  terrorists into India, that’s all they know to do…

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Survive

November 21, 2008

 You can’t run away from trouble.  There ain’t no place that far.  This is something that I keep reminding myself as I pass over each day, more so now.  Would life be exciting without that dynamic?  The most ecstatic moment is when you leave a pain behind and are just scarred.  There is something beautiful about all scars of whatever nature.  A scar means the hurt is over, the wound is closed and healed, done with.  Happiness is beneficial for the body but it is grief that develops the powers of the mind. 

 

Misery loves company and so I look around. There is a DVD library in our neighborhood that’s logging huge custom. “It’s all about how can I cut back,” said a new sign up. “What else can I possibly do to provide entertainment for my family?”

I look up the newspapers and there was John Chambers, CEO, Cisco Systems squealing – “IT’S the worst thing I’ve ever done in my life,”  he admits, after announcing big job cuts last month. “We went from over 65 miles an hour down to flat or negative growth in what, two months? I don’t know many companies in the world that could do that.”  I wonder what citigroup CEO Vikram Pandit would say. Lehman brothers CEO Dick Fuld is spared of the trouble.  It just caved in. Who will take the lectern next? Rick Wagoner, Allan Mullaly, Bob Nardelli….Gee, I am losing count.

Miracle, suddenly means this earthly life. It no longer means flying in the air or walking on water. Life is thickly sown with thorns, and I know no other remedy than to pass quickly through them.  The longer we dwell on our misfortunes, the greater is their power to harm us.   One might do well to remember the darkest hour has only sixty minutes.  Oh, really?  It’s almost eleven months since lights went off the deal street.  What the fuck….  Go do what it takes to survive!

 

Bashing (capex) myths

November 20, 2008

Just got out of a client engagement in logistics vertical.  Had to bash up a lot of myths the founders were living with that brutally shaved off 20% of their Cap-Ex budget (pricked some vendor egos in the process!).  Now that I am 3 years into the business, there is lot less guilt after puncturing egos.  Gotten so much used to it now.  After all, reality often is daunting and folks recognize it eventually.  That’s where I get the guts to blog about it.  Future clients will know I mean business and nothing but business. I could share some of my observations here.

 

1. Value your capital – There’s bad news on liquidity. But it’s a fact. The world has 5 + billion of us now and there is not enough capital to go around.  Buy just what you need and stretch the buck. 

 

2. No spray paint, duct tape innovation – Use the recession to bring about low cost, radical innovation than the incremental ones.  When even the leaders in your industry screech to a halt, you’ve got to close in and catch up.  Be up to speed.  Learn how to drive straight with little gas.  Nobody has the luxury of losing way that yields a detour.

 

3. Don’t buy to build, just fill a gap – Look for functionality gaps in the products offered by the established big vendors (bulk cargo handlers here).  Make out a simple, straight forward solution at an affordable price that fixes 70% of the client problem, if not all of it.  In lean times, people stretch the buck and make do.  That’s the stuff the big vendors fear.  (It’s also likely that they will soon come around to buy you out!  So now you know what to build 🙂

 

4. Buy the core ecosystem – Remember this when you go shopping for solutions. Big vendors often standardize their product and buy customized applications from partner ecosystems and add it in.  Worse, they charge a premium for that hybrid. Recently a bird from Oracle tried to push her ERP cookie cutter Accounting and HR application to my client minus their core industry (logistics) application.  Being a capex item, I got called into the negotiations (I got them the series A and B investor!). Upon asking why would they not provide the core, the bird pointed to their partner ecosystem.  Now why would I buy the cookie cutter from her and then go integrate my core app with it, incurring further cost of system integration? I would rather do it other way round and ask the core system vendor to give us the bells and whistles. The bird said their customer list is so diverse that it is difficult to build separate vertical for such a disparate set.  I had a look at the cost, sat down with her to piece it out.  She knew she had lost us.

 

Life is a lot easy if you drill everything deep.  Never settle for what looks easy or what shows up first.  Badger everything and everybody down. The times are so bad and if they act up, just let go off them.  Be merciless.  When they recover their sanity, they’ll come back.  And if they don’t, you’ll soon be staring at their obituary (bankruptcy). 

 

[Just called the client up to check if everything works alright before signing off this post.  Amen, all’s well 😉 ]

 

Cucumber standard, anyone?

November 15, 2008

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De-leveraging may be a fashionable word now (but nobody bothered when global markets were riding the leverage propelled liquidity wave).  One of the solutions folks put forth now is to return to gold standard as a way out of the economic mess. Remember why gold standard gave way to dollar standard?  Gold was way too rigid, it was scarce and its production process was complex.  There was not enough metal to go around.  Printing paper was easier.  America had all the gold after the War and Europe was in tatters.  That made it easy for U.S.Dollar to become global currency.

 

Anyways it’s amazing how they chose gold as the substance to be valuable in our world.  Isn’t it just sludge that comes out of the mud?  Mud sludge, if you will. Humanity decided to base all of its wealth and prosperity on mud sludge.  Imagine they had picked something else like flowers or something, how different would things be. It’s funny to think gold is valuable just because some people in ancient times decided that the sludge they found in the ground should be called valuable. After all, it wouldn’t be valuable at all if the ancient people felt it ain’t worth the sweat and let it just be mud sludge.  Why couldn’t they have picked something better, like honey or something. Why did they have to pick something that is so rare and capable of getting extinct? Were they trying to make life tough for future generations so they’d always have to go around digging? What if one day there is none left in the ground? Would we all starve? Or could we just decide that the ancients were wrong and we could then pick something better to represent the wealth of the world. If we did, we wouldn’t pick something stupidly rare like truffles in the ground, we could pick something easier to mine or grow. Like cucumbers. Now wouldn’t that be something?

 

“Get me Hank Paulson please, will ya?”

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“The goal is to go out of business”

November 11, 2008

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Startup founders that despair over their ventures going nowhere after several rounds of funding it seems can take a leaf out of activist disease foundations.  These are foundations that operate with speed and urgency and a business model completely unlike the traditional foundation model, where funds that get raised often become the ends instead of the means.

 

Of all this valiant initiatives, the outcome has been disparagingly insignificant.  To cite an obvious hurdle, it takes years to discover what is to be discovered.  That explains why disruptive innovations that most startup founders go after still elude them. They set a goal and then wend their way into it; something that is not as it should be, going by the experience of these enormously funded foundations.

 

The “spray and pray” model will have to be replaced by more targeted model. What could be that? Lay down a goal and find a team that can get past it.  Why can’t VCs be ideators?  Would it not save them the wasteful exercise of screening?  One look at these foundations reveal that self-interest is a great starting point – in that some celebrity or her close relative suffers from a disease – if not the raison detre. Michael J Fox, Actor and Chairman, Parkinson’s Disease foundation says “the goal is to go out of business”. The foundations don’t want to exist forever, they would love to move on, go out of business as soon as the cure is found.  The startups can certainly stay in business, but the fierce commitment in pursuit of the goal can certainly be loaned from the foundations.

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Letting live

November 6, 2008

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In downturns, it is extraordinary how quickly people rediscover business virtues that appeared to have been forgotten in the good times. Today the cry is “preserve cash”. Cut unnecessary entertaining. End business class travel and five-star accommodation. Get out of the taxi and back on the bus.

The usual cycle of responses to a huge shock or upset – denial, anger, bargaining, depression and finally acceptance – is of limited use. Cut straight to acceptance, and then action. But what kind?

I suggest my clients to explore the realm of other possibilities than just twiddle and despair.  Commit to R&D seriously so that you have new products when sentiment reverses. With asset prices so low, it’s time to go shopping for acquisitions so long as there are significant synergies – as far as possible deal structures should facilitate cash neutral transactions (not necessarily stock swaps since it would mean diluting stakes at low valuations) with earnout milestones.  Of course, I use other aces up my sleeves like technology swaps for stake, project specific commitments, mezzanine arrangements etc. that involve deeper dives into subtle nuances of a transaction.

But I always advise them to remember the acquired virtues of austerity and carry them into better times for business as and when it comes.  But experience tells me they won’t.   

Why? That’s how they let people like me get a life 😉

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