Annus horribili largely

2008 comes to a close today. I spent the 1 st day of the year gone with my brother and his family and our parents in Detroit. We went around the table and did our usual "so whats the resolution for the year". And the usual answers around losing weight, eating more healthy, no resolutions, etc emanated from everyone. Now as I look back, I wish I had made one resolution and implemented it: To save more cash and put it inside a pillow for investing after Black September.

Let's see the downs of last year:
a) The global consumer whose income got eroded due to various factors
b) The global economy save China and India to some extent (not the Indian stock market)
c) Small investors who got hurt - I dont care for the large fund managers and investors- they missed out on one year's multi-million dollar bonus
d) The financial community who literally blew away a trillion dollars due to excessive risk taking and GREEEEEEED.
e) The incredible rise of oil price driven by speculators and not by China
f) CEOs of the auto companies flying in private jets to ask for a bailout
g) The blow to the unbridled capitalist form of economic systems
h) The Bombay attacks


Let's see the ups now:
a) The election of a pragmatic and thoughtful leader for the US and the "free world" - Is he the "chosen one"? - let's see if he can deliver
b) The decline of oil prices in the last two months
c) The shattering of the ways of the greed driven financial community
d) The increasing focus on saving the planet and on renewables
e) Krugman winning the Nobel prize for economics
f) The Beijing olympics and Phelps
g) Abhinav Bhindra for winning India's first solo gold
h) The signing of the US-Indian nuclear deal

What I will never forget - Watching Obama standing in Chicago on the evening of Nov 5, the bombs in Bombay, Li Ning running around the stadium in Beijing hoisted up by a crane over 100 ft from the ground, The Indian national anthem being played at the Olympics for the first time in over 28 years

The Bombay Attacks

Its been a while since the last posting. I have been busy with personal stuff, shopping, family etc. But I cant help thinking constantly about the attacks in Bombay. I did not want to post anything about it earlier. It was shocking. I am glad that the attacks got publicity. Maybe somebody will wake up and start asking some serious questions about the evil nexus of the militants and terrorists in the tribal areas of Pakistan, Afghanistan. By why only the attacks at the Taj and the Oberoi? only because foreigners were staying at the hotel. Nobody would have cared about it if it had been Maharashtra Athithi Sevak" hotel or some such thing! The entire episode raises a zillion questions:
a) What were our intelligence agencies doing? - Whatever criticisms we may have against the current US president, we have to admit that under his watch there have not been any attacks in the US since 9/11. He has protected the United States admirably. And he has done this with a zeal that has been supported by effective and if sometimes boorish, intel. But who cares about boorish behaviour - if security is good. The attacks on the Indian parliament in the 2002 should have galvanized our security systems and intelligence. If funds are a question- the Government should stop funding wasteful missions to the moon. Sure GOI can strut around with a puffed up chest - but how does that help in the safety of people?
b) What was the media doing telecasting everything from such close quarters? - it was a tamasha going on! Why were they allowed so close to the site? They were often getting in the way of the security forces. I have to admit - one of the interviews with the Black cat leader was a very sorry one - he said that thye were at a disadvantage because they did not know the layout of the Taj while the terrorists knew it well. Sure in the beginning - but why for over 8 hrs? couldnt they get the maps and the layouts from hotel staff? All in all the media coverage was not helpful or insightful.
c) It was embarassing to watch Ratan Tata say nothing could have prevented the attacks on the hotel. particularly aftre thye had been warned! This is not expected of a chairman - Yes they could have taken faster action - why was security so lax at the hotels?
d) What was the state government doing? - less than two years after the Bombay train blasts - terrorists are attacking the railway station! It was an embarrassing sight to watch the police running around later on with WW2 SMLE rifles!

There a number of other questions that need to answered - why dont the Police get better training and better equipment? spend money on the police and on upgrading defence and on intel. What was our coast guard doing? Why have no heads rolled so far? What can other cities do to learn and be prepared?

End of an era

Yesterday JVC shipped out its last VHS player. What service the VCR/ VCP has provided to homes. I still remember when we would assemble in the community club in Calcutta to have a "video movie showing". The crowds would be thick enough to make you cramp for space, but the events were always fund. The movie prints were always scratchy, and we had to watch on a 29 inch TV from a distance of atleast 20 feet. and of course, they were always Rajnikanth, Kamalahasan or a new Bollywood film.
Then when we bought the first VCR, was I overjoyed! I think I recorded every movie that came on TV, every show I liked and taped over them sometime. We had to handle the tapes carefully - sometimes they got stuck inside. Then we figured how to clean the VCR head.

Should the auto industry be bailed out?

Emotions would suggest yes - but practically would it help? I think not in the way the government is suggesting. The bailout should be done through indirect methods to stimulate demand for automobiles and reduce the auto companies cost of carrying until the economy picks up. For example tax credits on all auto and auto component purchases could be part of the option. The Auto companies have very high costs per unit of production and capital infusion will not help - maybe a loan for working capital for 12 months could be thought of - but what happens should they not be able to improve cash flows? Which they cant if they dont cut costs . So here's what needs to be done in my opinion:
a) Provide working capital loans to all three based on a realistic projection for 12 months
b) Provide tax credits for the auto components industry
c) Force the big three to improve emission standards
d) Force them to move out of gas gazzling inefficient products over a staggered time line
e) Get the unions to the table and make them part of the discussions
f) Set up a structure to take out their pension liabilities over the next five years and take them off the balance sheet
g) Put a salary freeze on the companies for the next three years and reward only through bonuses based on agreed performance measures.

New WorldWatch Institute Report

I managed to read the salient features of the WW report. The document makes a number of interesting points worth noting:

a) It costs less to clean up the world than to pollute it.
According to the Stern report to the UK government the climate impact of the business as usual economic activity over the 21st century ranged from 5% (direct) of global GDP to 20% (indirect costs), while the cost of climate action is only 1%.

b) The loss in biodiversity over the last 50 years has been phenomenal with species extinction rates increasing by 50 to 500 times.
39 countries experienced a decline of 5% or more in wealth when bio diversity loss, resource depletion, carbon damage were taken into account.

c) Income distribution is considerbaly more skewed than before.
The UN development report indicated that the combined income of the world's 500 richest people was about the same as the world's 416 million poorest people.

And it also points out that building a low carbon economy is the central economic challenge of our age.

More later.

Building sustainability into business practices

How can organizations start developing competitive advantage? According to the work done by Jib Ellison and others at Blu Skye, make sustainability a key driver of competitive advantage. I think this is a really fantastic concept and one that is likely to gain more acceptance in the future.

Applying the sustainability lens will drive innovation in products and processes and make the world a better place. This will provide firms with new sources of value and at the risk of sounding trite - sustainable value. Much like a healthy IP regime drives innovation, focus on sustainability will drive innovation. Look at d-lite, the company started by a Stanford MBA that sells LED based lighting in India.

More later.

What Extraordinary Times - Obama is President

I cant fully describe what I feel - but the emotions were powerful. It was wonderful hearing President-Elect Barrack Obama speak and to watch the entire proceedings in Grant Park. He has run an excellent and disciplined campaign and it felt very good to see him elected. Over the last few months I have watched him interact and heard him speak many times, (always on TV admittedly). I have also read his Audacity of Hope (which is a bit rambling at times, but a very interesting read nonetheless). I have been impressed by him for so many reasons: he is thoughtful, he is unflappable, he is generous and most of all he comes across as very sincere, smart but humble. I felt that I was watching a statesman who could reach across and provide a degree of leadership that has so far been missing in this world. He has the ability to play the politics required to win without coming across as a sleazy politician.

My wife and I were very moved watching him tonight. And we are not even American citizens. But the impact of this historic occasion has not been lost on us. In some ways, Obama has revived a faith in leadership that I lost with Bill Clinton's antics. One thing that I have noticed about Obama - he never looks smug or have the politician's grin - his comments are always very made in a calm but firm manner.

I also thought Senator McCain gave a very gracious speech this evening. I felt that he was generous, firm and very sincere in his wishes. It was a very good speech and also reaffirmed what I have always felt - that Senator McCain is a good man and a very admirable human being, but not the right choice for leading this country. In fact I think Senator McCain would be very good as an advisor, who could stand by what he believed.

I feel very lucky to have been watching these historic events.

Green is going to become more important

With oil prices hovering around $70 a barrel, some may think that the focus on green may go away. At least that's what the stock market thinks. Solar stocks are down and tracking with oil price. But here's why it makes sense to invest in green and renewable energy - for all the reasons we already know - energy security, greenhouse gas emissions and oil prices (stll well above the $30 a barrel we knew a few years ago). But in addition, there is one more reason - because green and renewabel energy will create new jobs, jobs and roles that do not exist and also create wealth at the bottom of the pyramid. Over the next five years, green tech is going to help pull the world through. And governments need to recognize that. Look at Europe's green tech industry-more and more jobs are being created everyday in that sector. Asia needs more green tech - India does for sure.

Should they change the accounting rules?

The financial turmoil has brought a lot of attention on the accounting rules and how derivatives, specifically the now famous credit default swaps , are accounted for and how they shoudl be accounted for etc. Trust the primary culprits i.e. the banks who lent money indiscriminately to home owners who couldnt afford it to now come back and say they want to have some of the rules changed to suit them - changing to mark to market will allow these guys to improve their balance sheet and get back to lending - it will be a sleight of the hand - they are looking for ways to cover their tracks - I am not against mark to market in principle, but the timing of these changes is just not right. There is another issue with mark-to-market - guidelines around how to value them and frequency of valuation will need to be drawn up and be acceptable to all.

Yes - it is necessary to be in line with international accounting standards, but the the timing is not great and any changes should not be self serving. Changes to the accounting rules around teh definition of assets and to include sophisticated new products is critical and necessary.

The US is still the most reliable economy in the world.

That's what the exchange rates are telling us - the US $ is strengthening while the other currencies are weakening. This means that the rest of the world still has faith in the US economy.

Now today there was a piece of news that housing sales were up for September by 2.7%. Thursday we will see more data. But I think the this increase is going to be temporary. Banks are still not lending, consumer demand is going down - credit is difficult to get in these tough times and the bailout package is likely to be inadequate.

But US treasury bills are still risk free - the bills are backed by the government and the US government is not likley to go bankrupt. And hence investors dont mind buying them. Wondrous how the greenback is still strong even though the economy is showing signs of major weakness.

Wish you all a very Happy Deepavali

Today is the Indian festival of lights, symbolizing the victory of good over evil, of light over darkness. Today is one day when everyone in the the country tries to be happy, generous and with family and friends. The country is alit with small lamps or "deeps", (every doorstep and window has one), people burst firecrackers and make walking on the street an impossible activity. The air is full of gaiety and cheer. Let there also be more peace and love.

"Waste Not Want Not"

That was written on the drums strategically kept on the corridors of the high school I attended in Calcutta. The Don Bosco School at Park Circus is and continues to be one of the finest in Calcutta if not in the country. I was there from grade 4 to to grade 12. I hated it then because of the academic workload (not that I studied much) but now when I think back on my experiences there, I remember the school very fondly. I do remember the missionaries there were dedicated to teaching and the development of the boys. And the teaching was well rounded with adequate opportunities for academic and extra-curricular activities, along with trying to instill a sense of social committment among the students.

One of the small ways in which they did was by setting up these drums on stands. The drums were green in color and the words "Waste Not Want Not" were written in white paint across the drums. The words were self explanatory, and often students would bring stuff from home to deposit inside the drums. There were also some morons who would throw food leftovers inside the drums. I dont recall ever having contributed to the drum either way, but I remember think that this was a nice thing to do.

I got thinking about this recently because of the amount of food that was being wasted in my household. Everyday we have some leftovers which never gets used up even after a few days in the refrigerator. And then the food gets rotten and thrown away. Let's imagine that we waste about 50 grams of all food every day. That's not a lot - less that half a tea cup. Now let's imagine about 50 million family equivalents in the US cook every day and waste that much food every day (a very likely scenario). This amounts to 2500 million grams of food every day being wasted. Or about 2.5 million Kgs of food being wasted every day. Or about 913 million kgs of food every year. With an approximate of 250kgs of food being consumed by residents of the western hemsiphere, this means we can feed another 3.2 million people in the West every year. Or about 5.1 million people in the developing world. And if the whole world wasted less food, we can probably feed 142 MILLION PEOPLE AROUND the World every day!

When I shared this with my wife, we both almost jumped. Now my wife and I have a rule that we will cook a bit less than we need every day - We hope that with this, we wont let food get wasted, and hopefully will save some energy.

Why I like National Public Radio

Because the hosts are not shrill, they are very well informed, curious, balanced to the point of being polite, respectful and know how to facilitate a discussion without being rude. And the topics they pick to discuss are ecletic - from the merits of building a suicide barrier on the Golden Gate Bridge to politics, to the art of writing novels and the short story, the human genome project and the level of the water table in California. The hosts are very well informed and explore different dimensions of an issue in a very even keeled manner.

I wish the other channels both on radio and TV were like that. CNN, MSNBC, Fox - all of the channels are shrill, noisy and annoying - Wolf Blitzer runs the "Situation Room" on CNN - Wolf is a good host but to call the discussions he has the "Situation Room" is frankly hyperbole of the extreme and annoying at times. And Fox News is rabid. I have stopped watching it. And the number of ads between progams is such a pain. We have stopped watching most TV these days.

Will it be like the great depression?

I wasnt there and hence I cant say from experience. But data and current conditions suggets that No but we are in for tough times. A little commented on note is the impact of the financial crisis on the real economy. Where is the real economy right now? What is happening to real demand and real supply? The truth of the matter is that real demand is slowing down. Retail sales are slowing down. Housing investmenst are slowing. Demand for IT investments from the financial sector has been dramatically cut. VC funding is going to slow down. We can expect actual demand to be far lesser than potential demand. And actual supply will follow suit. The economy is likely to contract for the next 15 months.

Why will this be not like the great depression?
a) The economy is far more diverse than it was in 1929 – hence sources of demand are not concentrated in manufacturing
b) The Fed and the Treasury are moving very rapidly to shore up the financial system – liquidity continues to be available albeit in smaller quantity. The recapitalization of banks is going to help alleviate the liquidity problem.
c) The Chinese continue to buy US Treasury bills
d) A large portion of US corporate income comes from overseas – hence the ability of US Corporates to carry out investments, while diminished, has not been entirely stopped
e) The housing market was artificially inflated – this brings houses to their true value (whatever that may be!) and hence more people will be able to afford houses in the medium run future
However there is more that needs to be done. This is the time for some Keynesian economics - the government will need to increase public spending on items such as infrastructure to motivate more investment and create jobs. Richer people will need to pay higher taxes. And the government cant afford to wage another war.

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Sean Astin (Samwise Gamgee) 's book "There and Back Again" is an interesting read. I just read it today very quickly. Its a very refreshingly honest book and gives an interesting insider view on how the LOR trilogy was made. The book rambles on a bit with some general philosophical streams of consciousness. But some of the vignettes are poignant and interesting at times. People will either like it or will probaly feel sorry for Astin.

State Bank of America?

Not yet. And probably unlikely in the forseeable future. But the recapitalization of banks seems to be the right move. Will the banks pay dividends? And what happens in the case of capital gains by the government? Will it pay income tax to the IRS? Trivial but pertinent in some ways. $250 billion is not chump change.

How do we know we will not see anybody else fail? And what time frame do we give banks to fix their incentive systems, one of the root causes of this problem. And where deos this leave the VaR formulae and calculations? I wonder? During my work with IBBM, the banks in Malaysia said credit risk has been beaten to death, particularly the foreign ones. Guess who is having the last laugh?

Glad Krugman won

I have been a big fan of Krugman ever since he predicted the fall of the Asian tigers and wrote about how inefficient IT usage was in the 90s. The man is sharp, thoughtful and more often right than wrong.

Now we we have to see if Romer will win. Then I can say I had lunch with a Nobel Laureate!

Are we really rational?

Yesterday morning I walked around Chestnut street off the Marina looking for a barber. My locks had grown unwieldy refused to remain in place. Like all true Indians I had tried applying coconut oil, but of course I now ended up looking like "gangu teli" instead of the brown James Dean I had always envisioned myself to be! My wife refused to put up with my smelly mop and pushed me off to get my head shorn.



So I decided to shop around a bit - being a true brown Indian I needed a bargain - no walking into the first salon i saw - and I am glad I did not. For the first one I saw said "$40 for scissors and razor cut". Like hair was cut with something also, apart from scissors? I would rather spend $40 on a nice bottle of wine or a few mugs of beer or some delicious food or better some books - but for getting my hair cut by a half man - no way!!! $40 for 15 mins of work - that's $160 an hour - close to a fresh associate's billing rate in a medium size law or consulting firm. Do people care so much about getting their mane organized? And yet people will pay. We all know Wily Billy got a $400 hair cut while in office! Good for the economy - any exchange of this sort causes GDP to increase!

I ended up paying $ 15 eventually. My Indian thirst for a bargain was quenched somewhat, but I could not get the lady on the other side to give me a discount. All that i had learnt in negotation class about BATNA and MESOs was of no use. I was reminded of comedian Russell Peters's joke about Indians and Chinese - The Indians always want a bargain - and the Chinese will never give you a bargain!

But is paying $40 of $400 for a haircut rational behaviour in a true economic sense? Why would a human pay 10 times more for a service, where the end effects are the same? My hair at the end of a $15 hair cut looks exactly the same as at the end of a $40 haircut as the end of $400 haircut. So what's rational here? Nothing - except that some misperceived sense of satisfaction that causes people to be willing to pay more even though the outcomes are the same at the end of the experience.

All this made me think of another experience where I believe awe are truly not rational - tipping. The tips that people leave are not driven by the nature of the service itself or the quality of the service in most cases - but by the value of the bill of the primary service offered. So if we drank the exactly same orange juice at a restaurant that charges $5 for a glass versus anotherthat charges $3 for a glass - we would end up paying a higher tip in the former instance. Even though there' no difference in the quality of service or the orange juice in itself. So which is rational behavour - to value the same service differently depending on different environs or to value it constantly based on the nature of the service?

The West will drive the economy out of recession.

Why must the bailout plan be passed? Because if not, then banks will be saddled with non performing assets and will not be able to lend. If they are not able to lend, then how will businesses fund their activities? How will they meet working capital needs? How will they pay their suppliers? It will take them a long while, many, many years possibly, for most affected banks to generate the capital required for them to become profitable again.

But a few questions still need to be addressed. What will the Treasury do with this assets? How will they sell the assets? What will make these assets profitable enough for these to be sold off? When will that happen? How will those profits be transferred to the tax payers? How will this bailout plan help banks and the economy specifically i.e. will banks be able to get back to business as usual? What is business as usual?

What does all this mean for the future?
Asset values will take time to recover. The housing market will rebound in two years. People in the US will continue to live off cedit and borrowings. While the Dow will not reach 14,000 yet, it will cross 13,000 by the end of 2009. Banks will grow slowly. Their loan portfolios will be more carefully managed. Compensation of executives in the financial markets will be linked more closely to performance, with a larger portion coming through variable pay. Overall economic growth will be slow.

But the position of the US as the hotbed of innovation around the world will not change. VCs and entrepreneurs still see opportunities in this country. The west will continue to drive growth. The country's universities are thriving with innovators, entrepreneurs and visionaries. As long as these young people remain foolish and brave, America will be rebounding very soon.

A strategic inflection point in the Financial markets.

So as the politicians grill Ben Bernanke and Hank Paulson about the bailout out plan, you cant help wondering what could we have done earlier that could have prevented this from happening? Could banks have better risk management systems? Should they all have signed on Basel 2? Should they have fixed their incentive systems earlier? What happened to their Risk Management systems? What were all the consultants doing?



700 Billion dollars is not a small amount. It is more than the GDP of half of the nations in the low income nations group. For this kind of a crisis to happen, multiple things went wrong. Here's what i believe went wrong:

a) Saying that the banks had weak risk management and monitoring systems is an understatement - but the fault is they were suffering from hubris - I remember during my project with the banks in Malaysia how the foreign banks there were always acting as if they were superior to the local banks in risk management.
b) Excessive focus on growth - the banks were looking for more retail growth in a very competitive market - this led to the "sub-prime" crisis which was the root of the entire problem.
c) The propensity of American's to live well beyond their means - I haved lived in many countries and no where have I seen people living off credit like Americans do. Debt is good is the slogan here!
d) A society in which greed is rewarded and often celebrated - this is a very contentious point in some people's view - I believe in a capitalist society - but the invisible hand has been absent in the US economic society - and that's because the visible hand hand has been absent in some sense
e) Excessive compensation programs that are not tied to risk taking and neither do they punish poor judgement. CEOs of financial companies get rewarded well and rightly so - because they are encouraged to take tough decisions, but they do get punished for poor decision making or destroying value. Risk based compensation needs to be built into the compensation architecture
f) Sophisticated derivatives and exchangeable products that were not backed by real assets - but only some computer based models that created money out of paper - and the real economy is now paying for it!


Does this mean that American banks will lose their efficiency and power? I actually believe this system is now getting purged and going through an inflection point - the market and the products are going to get more sophisticated as is regulation and oversight - the current structure with its incumbent players is not going to exist as we know - but I believe 10 years from now, even more money is going to be at risk than before.

Could thsi have been avoided - maybe is the best answer we can give on hindsight? Can this be avoided in the future? Maybe in this form yes - but not entirely. Why - the same reason why people fight new wars each time.

Wow - What a Ride!!

Its been sometime since I graduated now! So mant things have happened! Obama gets the ticket, Apple introduces new iPod, the Indian nuclear deal gets approved, violence worsens in Afgahnistan, I start on a job search, Merril Lynch, Lehman, 700 billion $ being asked - these are very interesting times! The last two months have been a tremendous learning experience. The American love for debate and discussion is fascinating.

Anway, I will be back with a longer post soon.

Strategy and Competitive Advantage

There have been so many books and articles about strategy and what gives companies competitive advantage. As I look back at business history, I struggle to identify many examples of companies that have maintained their dominant position in their chosen industry over an unbroken period of time. There are only a few examples: Microsoft in the operating system segment of the software industry, NTT in Japan, Best Buy in the electronics retail sector, and Walmart in the general retail sector come to mind.

I am sure there may be a few more. But the point I am making is this: The quest for sustainable competitive advantage is really an ephemeral one unless it is thought through in the context or paradigm of existing and emergent competitive environment. Simply put there really is no time immutable driver of Competitive Advantage unless it is developed in the context of the actions of competitors and the dynamic evolution of the industry.

The starting point of this discussion then actually is "What is strategy"? Strategy was described elegantly by Jack Welch as doing what it takes to beat your competition. Without competition, strategy becomes meaningless. When there is perfect competition, strategy becomes less relevant as no individual firm can gain advantage unless the firm redefines the industry to which it belongs. In an industry structure where the firm is a monopoly, the focus of strategy is likely to be on preservation of the firm's monopoly position. Not enough firms however include in their strategy an element of forward thinking that looks at the the factors that gave them the monopoly position and what would happen if those were to change. These include market and non market forces. The automobile industry in India is a great example. Hindustan Motors with its stable of Oxford Morris type Amabssador fleet had 80% of the market share until the Indian government decided to enter into a JV with Suzuki to produce affordable cars. Since the liberalization, Hindustan Motors has struggled to survive with its markest share today less than 10%.

Can strategy be long term? Sure it can be. And long term here is in the five to 10 year time frame. But in order to develop a strategy that long term, firms must have a strategy is embedded in a shorter time frame. In order to do so firms need to think about their competitive advantage. And here I have developed a definition of competitive advantage that is not found in most books on strategy.

Competitive advantage is that which allows a firm to do one or more of the following over its own internal time frame and still make above normal economic profits within that industry:
a) Sell more of its products/services relative to competitors at similar prices
b) Sell its products at a higher price relative to competitors

If a firm cannot do either a) or b) above, it really does not have any competitive advantage over its competitors. A key elements to remember here is the notion of the time frame or the paradigm. What is a competitive advantage today may become irrelevant tomorrow. Case in point would be Sony. Sony's competitive advantage in the consumer electronics industry stemmed from its ability to "minitiaturize" its products. Sure Sony still has this "capability" but the capability is not relevant any more. Anybody can miniaturize now. Companies more often get caught in their own success and dont see the traffic on the side lanes. They only see their own lane.

A good example of a company that does a) well now is HP - it sells more PCs and notebooks than its competitors do. In the internet world while traffic is not a sufficient condition, it is a necessary condition for success. Google gets more traffic than Yahoo. Its ability to monetize this traffic is greater than Yahoo's. It is a great exemplar of a).

BMW is a grood example of b). Rolls Royce is not, nor is Jaguar. Why not? Neither of them make economic profits, leave alone above normal profits. Thus high pricing alone is not indicative of having a competitive advantage - making above normal economic profits is.

The question for strategists then is, what gives a company the ability to do a) or b)? The ability to do a) or b) is referred to as competitive advantage and is embedded in the capabilities of the organization. The capabilities of an organization are the configuration of its processes, its people, its culture, its technology and knowledge that allow it to do either a) or b) or both.

What's Happiness?

Yesterday I attended a session organized by the Aurora Forum on Happiness. It featured Pico Iyer and Robert Thurman. They were both very eloquent, particularly Pico Iyer. Thurman clearly is a man of great wit and and even greater mind, but the mind was beginning to wander and sometimes he would ramble on.



The focus of the discussion was Happiness and, in the context of the interests of these two men, as defined by the Dalai Lama. But I was intrigued. Even though I had been a student of business history, I had always wondered what true happiness was. The Ashtavakra Samhitas which were exposed to me by the rev Swami Viradananda in the Chicago Vedanta society were my first to some of the deep thought in vedic literature.

I am convinced that True Happiness can never be found. It can only be felt. It is experienced when we dont seek it actively. Being a karma yogi is the first step towards experiencing happiness. A karma Yogi ois one who does his or her duty without being attached to the fruits of their labour. This removes the expectation of reward. True happiness is what we call truth or GOD. The rest is joy, fleeting moments of which give us a sensation of contentment.

However in the modern world is hapiness possible? Where is progress without expectation of reward? The progress is a reward no doubt, but being unattached is the key. The attachment leads to a perception of real progress, in the real world and in a physical sense. But the same attachment leads to lack of control of the baser emotions.

Bhakti Yoga also brings happiness they say. But Bhakti yoga unless in the Meera bai or Goswami Tulsidas tradition can lead to misbegotten behaviour.

However does comfort lead to happiness or lead us away from it? Should humans aspire to comfort and peace of mind or a state of happiness that is really only for the yogis?

What matters - money or institution building?

Today's Formation of New Ventures featured a case on Sabeer Bhatia and Hotmail. The case was interesting as was the discussion in class. Steve Jurvetson was there and his observations were quite helpful. But reading the case made me wonder more about Sabeer - Did he miss a great chance to become a truly great entrepreneur? Was he focused on making quick (and well deserved I would add) money and thereby forgo an opportunity to build a wonderful and sustainable company for some time? Or did he have no choice in selling out to Microsoft because of their legendary intimidation tactics?

The discussion in non markets about lobbying was also interesting. I wonder how this can be applied to incease the H1B quota?

Only three months to go - I am so lucky to be here

They warned me. Time would fly by fast. I knew it also. But I had no clue it would be so fast. It only seems yesterday that we moved here half the way around the world. The Stanford campus beckoned, beautiful and shimmering in the warm California sun, with palm trees swaying in a gentle breeze and palm drive making the entry to the campus feel like a country club. It was a dream come true for me. To go to a top university in the world for an academic underachiever like me had always been a wishful thought.

These last 7 months have been fabulous. The classes were generally great. The GSB atmosphere is so fabulous but even more is the atmosphere in the University. There is such a can do spirit here. The real entrepreneurial spirit is outside of the GSB - not in the GSB. Sure there is lots of it in the GSB but the engineers and the scientists seem to be the ones thinking up the ideas.

I am so glad that I came here. My perspectives on the world, the people in the world and generally everybody has refined and in some cases changed so much. I never thought of anything entrepreneurial. Now at least I can dare. Not because of Stanford. But because of the people I met at Stanford.