Winning the Lottery

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Written on Monday, March 16, 2009 by Rompoto

The Upcoming Indian Elections made me think about how I’ve won the lottery. Not in the sense of this election actually, but in how lucky I am to be born at this time. The fact is that I’m incredibly lucky to be born into a country that has been and probably (I say probably) will always enjoy long stretches of peace. I imagine that this current generation is the luckiest generation of Indians to come along in the last 150 - 200 years.

Being born in this era means you've enjoyed virtually no major wars and the country is both independent and tolerant (for the most part). While a lot of people look at the situation and say - there's communal violence, there are bad roads, bad politicians, bad infrastructure, corruption and deceit and the list goes on and on, you cannot ignore the rewards of this society

When I look at myself, I feel lucky to be born here. I've been privileged to get the very best education here. More importantly, I've been lucky enough to live in a time of relative peace and have been able to pursue my own interests. India at this time continues to be the world’s second fastest growing economy. I've been born at a time when the country has been moving up the global ladder, has reaped the benefits of opening up the economy to the world and will continue to enjoy strong domestic consumption. Having my upbringing almost entirely in Pune has allowed me to witness the rapid growth of the economy. Where once you had only maruti 800's you now don’t give a second look to Audi’s and BMW's running amok around the city. In effect I’ve luckily been at the right place to witness how a growing economy can rapidly lift the standard of living of its citizens.

India, despite its problems, allows people here to achieve riches and create value and contribute without the fear of retribution. It still is secular and more than anything continues to allow anyone who achieves greatness in their fields to achieve recognition, regardless of colour or religion. That IS the good news

Slumdog Millionaire is not a spectacular film to Indians. While it is no doubt a fantastic film, Indians are used to seeing everything it portrays. The film correctly displays to opposite side of the effects of uneven capitalism. That's the bad news. The system as it currently stands is akin to loaded dice. If you're born here, into a decent middle class family, have a decent education and work relatively hard, it actually very hard for you to end up poor in the current scenario. India's growth will carry all those "lucky" enough to have won the ovarian lottery to greater riches and a relatively stable, (economically speaking) life. (Unless of course, there’s a world war or a massive war with Pakistan). But, and this is a big but, if you're NOT born on the right side of the fence, you have to overcome massive odds to enjoy the benefits. In most cases, you will continue to stay in an economically disadvantaged position. The classic case of the rich getting richer and the poor getting poorer will remain.

The luck that we have had in being born into the right situation is what must be acknowledged by this generation. Whether you now live in America, Australia, Britain or anywhere else, you must acknowledge that you have been lucky enough to get the opportunity to use your god-given talents to contribute and basically follow your dreams to fulfill your destiny, whatever that might be. You have a duty to the country you live in because it gives you the opportunity to be rich. We cannot escape the responsibility that privilege has given us. You cannot say that as a believer in free markets that you don’t have to worry about anything else other than your own self interest. Society has given you all the tools to enjoy yourself and you must return that favour.

Consider this situation - A man has been working in a shoe mill for 40 years of his life. He works hard and does his job diligently. Unfortunately the Chinese have jus reduced the cost of production by 90%. His company has no option but to relocate all the plants abroad. IN this situation he has no transferrable skills. He's not going to learn java and xml and change careers. Society must, in some form provide a safety net. If all this "creative destruction" (i.e. the fittest, most innovative companies winning and the others going bankrupt) benefits society, then its side effects - the displacement of workers and the associated stress- must be picked by society as well. Society must pick up the tab, if it’s going to receive the benefits.

It's not just the government that must do that, but rather individuals. If you acknowledge that you've won the lottery then you must do what you can to benefit the ones who didn’t win.

That’s creative capitalism. It's like a volcano. Those at the top who enjoy the explosion of profits and money must use it to enhance the ones who don’t get the benefit.

By all means, play to win. Follow your passion and turn it into millions if you can Make as much money as you can but remember to give it away so that you can close the gap between the haves and have not's

Remember,

"The Man who dies rich, dies disgraced." - Andrew Carnegie.

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Houdini's great vanishing act

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Written on Tuesday, January 13, 2009 by Rompoto


It's ironic that satyam, which means truth in Sanskrit, is the scene of what is one of India’s biggest corporate scandals. While there have been many scandals before, these pale in comparison with that of satyam's.

Emerging market risks include a whole list of factors but fraud on a scale such as this is beyond these "normal”, actually expected risks. India's problem was that the private sector was smart, dynamic and most importantly honest. The government was the problem. Now we have another one. The magnitude and duration of the fraud is both stunning and deeply disturbing. 

Infosys has an impeccably honest and straightforward leadership but so did satyam it seemed. The shock comes from not only the scale of the fraud (close to 7000 Cr) but from the fact that it comes out of the industry which put India on the global business map. The IT industry, while being criticized for doing back office and BPO work, has no doubt brought prosperity and opportunity to an emerging, ambitious young generation of Indians.

The fact that the industry touted it's adherence to global standards, be it in terms of governance or facilities provided to employees makes it worse. That image is now tarnished.

While I agree that it does not represent the majority of the industry (satyam's employees are hard working, honest people), the fact remains that a lot of people had to be complicit in the fraud for it to have gone on so long and been at this scale.


A few questions,

1. What was PWC doing exactly?

There is absolutely no way that they could not have known. This is further borne out by the fact that after the botched attempt to buy maytas, Merrill lynch, which was asked to look at merger opportunities cut ties with satyam after just ten days citing "irregularities in accounting". They took ten days to find out what PWC didn’t find in 7 years?

2. How can no one else inside the company know?

I can understand that some independent directors may not have known. They may not verify the balance sheet statements simply because I don't think anyone does that but raju couldn’t have these figures on hand unless someone accounted for him. It means there are many more from top management who would know. There's no way that 7000 crores can be fabricated without someone knowing.

3. Was the margin really 3 percent?

This is really difficult to believe. What's easier to believe is that he used the profit to either a) pay down existing debt which he owed to his personal creditors or b) Use it to fund other purchases like land, or some such personal reasons. It's impossible to have such low margins in the IT industry. It may happen in the future but as business is now, there’s no way it can happen. What it means is that they money that was earned by the hard work and late nights of employees was sucked dry by raju.

4. Which banks are now in on this scandal?

The scandal will spread. NO doubt about it. The money is kept in banks. If there is no money, as raju claims, the banks should know it. This isn’t a small amount. The fact is that there definitely is some cover-up at the banks themselves. Even if forged statements were shown and the banks didn’t know this, wouldn't they have seen the quarterly statements and realized it was a big lie.

The bad news

Before we say anything about the image of the IT industry being tarnished and India Inc suffering a global PR nightmare, let's focus on those affected most - the employees of satyam. Working for an IT company I can testify that most people work pretty hard and are honest in their dealings. When you work hard and you see the company expanding at a good rate and maintaining margins, you do feel proud. They will feel duped. They’re hard worked has paid off. They have impressed customers and improved service. The customers have paid the money they deserved BUT their leader has sucked it dry. They've filled the bank and raju, along with his conspirators have drained it. That must really hurt.

The worse news.

Job cuts are imminent. It's difficult for the company to burn cash now at the rate they were before because they have no money in the bank. Innocent, hard working employees will face the brunt of the impact. Even senior managers who've spent more than a decade with the company will find that they have worked and worked and have been duped. I hope that there are no job cuts but it’s difficult to imagine such a scenario.

The crazy part.

Satyam won a corporate governance award a few months ago. Wonder what that stands for now.It seems unlikely that the awards panel looks into the authenticity of the company’s statements because that's not their job, it's the auditor's. In any case, what we've come to see is that awards may mean something, but it isn’t much. Performance in the market and the bottom line is quite clearly, THE bottom line.

The good news.

I have noticed on many message boards that satyam's employees are defiant and ready. It’s incredible to see a satyamite say - “We will script the biggest comeback in Indian business history". They realize that they're company is honest, just not the leaders. Can the turnaround happen? Probably. The company makes money. It's not a loss making business. Once the dust settles and the company starts smaller it can still come back. The short term need for cash and more importantly a strong vision is the main concern. A merger may also be an option but it looks unlikely.

Where do we go from here?

First things first. Find out what happened. No matter how long it takes. Make a big public spectacle of it. Let it ring loud and clear that there are massive consequences for trying to defraud the system. There have to be changes made to how authenticity of accounts and balance sheets are maintained. I admit this is pretty difficult, Business, no matter what anyone tells you, still runs on trust. We bill our customer by the hour. But the customer doesn’t verify whether every resource that billed on a particular day came to work or not. They can't. It's impossible. They have to trust us. We have to regard it as sacred and never attempt to breach that trust.

A little hope.

Warren buffett says - 'it's only when the tide goes out that you see who's been swimming naked'. Well the global financial crisis has taken its toll. Wall Street has been exposed for what it is and now companies that cashed in when the going was good, now face the consequences of all their bets going bad at the same time. A perfect storm if you will.

What we're now seeing is a cleansing of the global business digestive system. A detoxification. Capitalism has brought benefits, but like the saying goes - "anything worth working hard for is worth stealing". People will steal. Eventually though the tide reverses.

In the end, the tortoise does beat the rabbit. SAFE and steady wins the race. 

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And so they failed Capitalism

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Written on Wednesday, October 29, 2008 by Rompoto


The recent financial turmoil that has caught the world's attention has brought with it a big debate about the death of capitalism. With the U.S and U.K taking major equity stakes in a majority of banks many have questioned whether this signals the end of laissez-faire capitalism. The reluctance of Henry paulson and George Bush to nationalise the banks was because they believed in the idea of "free markets" as it were. It is generally accepted that the government cannot regulate markets any better than the market participants (acting in their own self interest). Alan Greenspan, who is a big believer in free markets (having spent time with Ayn Rand) admitted that he had misjudged the potentially disastrous situation that would occur if the markets were left unregulated.


While I've read Ayn rand's books and certainly subscribe to part of her philosophy, i feel that the no holds barred laissez faire capitalism that she has supported would never really work.Working in your own self interest may certainly be the best thing for everybody but it leaves out one thing. Integrity. Self interest is totally skewed when integrity is taken out of it. When you're self interest is to make money no matter how much somebody else may lose then its not in everybody's self interest. It's also known by another word.Greed. Unfortunately that's what became of wall street at the end of 2007.

If i put a revolver containing only one bullet to your head and say ," If you pull the trigger I'll give you a million dollars" would you do it? While 80% of the time you'll get 1 million dollars you know that when you get it wrong, you'll get a funeral. Unfortunately it's not that easy in the real world. When a bank is leveraged 30 to 1, its pretty easy to see the bullet in the chamber but there are many reasons that could be given as to  why this may be your lucky day. The biggest one being record company profits, which is what the banks were making. It's pretty hard to argue against record corporate profits. But eventually they got the silver bullet.

One more reason i believe that markets without regulation wouldn't work is perception. Greed is not the only reason for the fiasco. Usually humans first perceive a problem , then decide best course and then finally take action. I believe that there definitely is now a problem of perception. You may not act in your own "best" interests because you may not be able to perceive the risks. Most of the industry couldn't perceive the risk and so we chartered into incredibly risky waters. We couldn't see the storm so we couldn't take action. Credit default swaps(CDS) are supposed to insure you against the risk of default by a company. INSURE. Sound's safe doesnt it?Unfortunately it isn't. You may not be able to perceive the risk that comes with a $62 trillion UNSUPERVISED market. Too many counterparties chasing the same thing. Sometimes we need to be protected from ourselves and i suppose that's what we'll see now.

So does it mean the end of capitalism as in the old days? Yes. But risk tasking is a requisite for progress.Just because countries go to war does not mean democracy has failed. In the financial markets, getting 7% return instead of 6% is not worth it if getting that 7% could also mean biting the bullet.I suspect we haven't seen the end of it but a much more risk averse culture will rise from these ashes and capitalism will continue to create fantastic progress. That is, if we don't manage to break the banks in the process. 

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Growth in adversity and Angels in disguise

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Written on Friday, August 08, 2008 by Rompoto


It's hard to change. Yeah i know there are lots and lots of books you could read that tell you how to change. But it takes an adverse circumstance to make you change. In my case it was both adverse and blissful, or to put it more succinctly, adverse and blissful by turns. And,Oh yeah, God does bless you. When i talk about blessings, i talk about people. They come into your life and change it forever. They love you so much they force you to change. They'll scream and shout and love so loud only because they're fully invested. I realize that now. 


I realize i need someone to tell me where i'm missing out. We all need someone who loves unconditionally but doesn't mince words when giving suggestions. We all need that someone special. Over the course of the last year have learned about so many of my shortcomings. People can be who they are forever, but they don't realize that they're missing out.They don't realize that they need that someone to force them to grow and live life in a higher plane. I've needed that for so long and now there is someone who helps me with that.

Over the last one year, I've learned that there is an alternative way to view things, and that this way can bring more happiness. I've learned that yeah, people do differ and that maybe i can learn from someone special. I've learned that there always is a way to do things if you're interested enough. I've learned that compassion is a requisite of a good character. I've learned that "logic" is not always the best way. Logic is sometimes convenient. "Illogical" sometimes means a more happiness. I've learned that going out of your way to do things IS the way to do things.I've seen how happy it makes someone, and how happy it makes me to make a difference, even if it's for a second. 

When it comes to solving a math problem, the straight way is the right way. When it comes to life's problems, that way is convenient but it does not get you the most happiness.There is a better, more satisfying way to do things.It takes someone special to show you this. I've been blessed to have been in heated arguments that finally left me realizing that i was not all i thought i was cracked up to be. That there are flaws. That i need to fix them. It takes someone who really cares about you to make that effort. I believe now more than ever that an easy life is not the way. That in an life's exam we need to get 85. I've been shown that we have to expect it. There is no other way. 

So i want to dedicate this to that special person in my life who's shown me this.Forced me to change and bettered me. Dedicated to Someone special

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Brilliant!

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Written on Sunday, August 03, 2008 by Rompoto


It's been so long since i wrote a proper post. A lot has happened since then. I've given a major exam and done well in it. Given myself a chance for something good.There have been few things to write about over the past few months but recently i watched a movie which made me want to write again.

First a disclaimer. I love Batman. I always have and i always will. Throughout it's 80 year history it has been one superb comic book franchise. Ever since I've read it as a kid I've loved it. Though i haven't really read all the episodes i hope that someday I'll cover them all. When i first watched memento i really loved it. When i came to know that the director of memento, Christopher Nolan would helm the effort to reboot the batman franchise i was thrilled. I saw Batman Begins and i was truly satisfied. It was dark and realistic and focused solely on the basics that make the batman comic series so gritty and enjoyable. I've waited 3 years for the dark knight to release and have followed the brilliant viral marketing campaign since it came out. So when i read the reviews for the movie my expectations became sky high.Overwhelmingly positive reviews have fuelled my expectations. And then i saw it.

It is brilliant. I don't want to go into a state of hyperbole but the movie really is awesome. Having taken care of the origins of batman, Nolan dives straight into the plot from the start. The movie is relentless in that there's way too much going on the figure it all out in one sitting. The actions scenes are great with you really feeling it's intensity. The plot is good and the pacing is spot on. Even at two and a half hours long you feel like they've actually left something out just to fit the movie into that much time. Christian Bale is the definitive batman. He plays it with an intensity that the caped crusader has not had before.

The movie undoubtedly belongs to one man. The Joker. The iconic clown prince of crime could not have got a better on screen portrayal than the one the late heath ledger has given him. He's scary, insane and brilliant.The movie starts with batman getting the upper hand over criminals but from the second the joker shows up you really feel like things are out of control. For the first time in a long time I've felt like the villain could win. That even he loses he gonna cause so much damage going down that the hero never wins. The joker is incredibly dark but not brooding. With some incredible lines. "Wanna see a magic trick?" , he really forces you to pay attention. The performance is riveting.
Harvey Dent's character is the emotional meat of the story. The joker doesn't give an emotional arc to the film. Harvey dent and his tragic story arc tie together the emotional backbone of the movie.

The end is awesome. Almost all the batman comics end with the hero in a worse place than when he started. The movie stays true to that.
All in all, its an unforgettable movie.

Don't worry about a thing my friend.
Why so serious?
Let's put a smile on that face :)

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Viva La Vida

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Written on Saturday, June 21, 2008 by Rompoto


Personally i like this album, quite a bit. Coldplay, while changing their signature style, have maintained some of the stadium rock that has made them famous, and enjoyable to listen to.

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Champions Of europe!!!!

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Written on Saturday, June 21, 2008 by Rompoto

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Written on Monday, April 14, 2008 by Rompoto


There are times when you do someone wrong and you make it worse. Recently i did something in that vein to a person i profoundly respect.As a rule i never really blog about incidents in my personal life i feel this event on my part was big enough to warrant me to discard that rule. Something happened which was in my control and yet i let it happen and for that i apologise. Something i did hurt someone when it should never have happened. So today i want to say that i've changed because of it. And i wanna say that i'll never do that mistake again. So i'm sorry.

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