New resolutions, old habits

I know. I’m lazy. But I made myself a New Years resolution that I would write myself something really special. Which means I have ’til December, right? –Catherine O’Hara

Gyms are back to normal attendance. Your morning walk companions are the same and the rush has come down. Cigarette, alcohol and junk food sales are steadily returning to normalcy if not growing. What’s happening?

No, it is not remonitisation. It is because 18 days of January have passed. If you haven’t got the drift of my point, here is the fact – new year resolutions are falling apart. If your new year resolution is not progressing as you had planned, don’t worry. One by one, by the thousands and millions across the world, people are giving up on their new year resolutions and getting back to… well normalcy. More often than not for most people resolutions (new year or any other) fail. Why?

Simple. We are creatures of habit. We behave the way we do is because of what psychologists refer to as a Habit Loop – a neurological loop that governs any habit. In electricity a loop is a closed circuit. In a computer it is a sequence of instructions that repeats numerous times until an end condition is met. In us it is the patterns of behavior which we call habit.

A Habit Loop has three elements in it – a cue, a routine, and a reward. Let’s take the most favourite new year resolution to understand habit loop – dieting. Cue is hunger, routine is to eat to satiate hunger, and the reward is a happy tummy (or is it the mind?). If you want to diet and reduce weight it is not enough if you starve, undertake a crash diet or change the menu. Starving and crash diet are not recommended and the last gives you limited success. For success, you need to break the pattern of how you eat, when you eat and with whom you eat (true!).

Charles Dhuigg who wrote the wonderful book The Power Habit explains how he broke the habit of snacking at 3:30 pm every day in the office. He would go to the cafeteria buy a cookie and socialize with colleagues. He analysed his habit and realized that the reward was not the cookie, but the opportunity to socialize with friends. He simply set an alarm at 3:30 PM on his watch and walked up to colleague’s desk to chat for 10 minutes. Slowly with conscious effort, he weaned away the habit of snacking at 3:30 pm.

If you are someone who eats dinner while watching TV and is serious about dieting, try this. Eat your dinner standing with the TV switched off. Researchers have noted that one tends to eat more while the mind is busy – note the number of cookies you eat during a conference or a meeting. If it is TV with your favourite characters, sound & lights an extra helping will always be the norm (or the habit!). Also, if you need to eat less, have less food around. As the great behavior scientist Dan Ariely points out, if you need to eat less, make the plate the smaller!

Don’t challenge your will power and test it to check if you can resist chocolate when it is in the fridge. The result is clear and definite – failure. As our sages from the vedic times pointed out this body is the seat of pleasure. Our mind is the great accumulator of the pleasures that we experience. If you want your new year resolution to succeed, win over your mind. You are what you are because of your habits and what you want to or will be is because of habits. Analyse the cues, routines and the rewards of our current habits. Break them and change them. Viola! Your mind starts forming new habits. Easy isn’t it!

Need more help? Try the powerful WOOP strategy created by Oettingen, Pak, & Schnetter. W –wish, O- objective or a goal, O- obstacle recognition and P – plan to deal with your obstacle. You need to genuinely Wish to diet & reduce weight. Then have a realistic and measurable Objective/goal (inches or kgs) and know your Obstacles (which foods, which times and with whom you eat). Based on the above make a Plan to overcome the obstacle (don’t have such foods in the house, pack food from home, have a small plate, eat not in the sofa and eat alone if needed).

Finally, what’s there in January 1 that you need to start on that day? It’s just a date! Start any day you want but with a plan and act on it. Be your own judge and jury.

Happy New Year (Resolutions!)



PS: What’s my New Year resolution. Be happy!


Money Walks


The history of all previous societies has been the history of class struggles – Karl Marx


That is the size of the money laundering business in this world. No. Not created by thugs, mafias and their ilk. It is a world that has put together by well-educated lawyers, bankers and financers working in blue chip organizations with an elaborate code of ethics charter listed on their site and filed with regulatory authorities.

Post demonitisation, stories are being filed of Jan Dhan accounts being topped up with cash, post office officials changing the color of money from black to white, bankers helping people get new notes for old for a consideration and many more. If you believe that if it is an ingenuity that we Indians came up with in a few days to beat the demon in demonitisation, you are mistaken. It is a regular and vibrant business across the world. More sophisticated than the software in your iPhone.

Cook Island, Panama, St.Kitts, Cayman Islands, Bermuda, Switzerland, Jersey, Isle of Man, Ireland, Monaco, Mauritius etc are places that are coveted by the rich and famous. No, not for their great beaches, picturesque mountains, and lovely sunsets. They are the places where they hide their wealth. Not in cash, not in gold bars like in a pirate story but in shell companies and trusts that are so complicated in structure, probably even the owner does not really understand where his money is!

Reading one such structure of holding for a rich individual is no less than a Hitchcock plot. Fake (shell) companies are created in the investments are held from which payments are made on which loans are given for which insurance is paid while losses are booked on profits that are earned while the individual is a resident of 3 different countries but lives in a yacht so that no law can reach him. It is a sample of the ways of the rich, who infamously hide their wealth.

These men (and women) are not drug lords or criminals. They are well-respected entrepreneurs, champions of capitalism, politicians, movie stars etc. These and likes of those who are admired, followed and aspired by many trying to make it big in their world.

If you think that only the rich individuals who indulge in this tax tripping, think again. Corporates are not far behind. Where do you think 98% of Apple’s its profit is taxed? USA. No. It is somewhere in the middle of Atlantic Ocean! Such is the structure that Apple created with Ireland that Apple pays just 50 euros for every million euros profit it earns in Europe! To quote the European Commission, “the arrangements enabled Apple to funnel profit from two Irish subsidiaries to a “head office” with “no employees, no premises and no real activities”

Karl Marx propounded the Conflict Theory in which he stated that society is in a perpetual state of conflict due to competition for limited resources. The biggest resource is money. Thanks to these unscrupulous but intelligent professionals, haves escape tax and there is no money for to be shared with the have-nots.  Rich remain a minority that is shrinking while the poor grow in majority. To add insult to injury, these very rich get bailouts from governments, which surprisingly do not have money to fund healthcare or education for the needy! Read “A Good Book in Theory” by Alan Shears and James Cairns for entertaining version of the grim way conflict theory plays out in real life.

If you are struggling to get 10,000 from your account while someone is getting crores and are you are upset, note that it’s just not the banks, the entire system is rigged against you. Remember Trump said he avoided taxes in a smart way and he won as President! It is a system of the haves, by the haves, for the haves. There is a class conflict even among the rich. The foolish rich and the smart rich. If some rich are feeling the pinch of demonitisation as they are stuck with trunk loads of old cash, it is not their failure as they are the foolish rich. It is the failure of the sales men of those banks and legal firms who failed to reach them and sell their wares to hide their wealth.




PS: The above number is $21 trillion.



Money maketh the man


Money is like a sixth sense – and you can’t make use of the other five without it – William Somerset Maugham

Demonitisation. This one word captured our imagination, time and in some cases our sleep over the past few days. No, this not another blog about the merits and demerits of it. It is a look at the way we Indians have reacted to the whole activity.

As per Discrete Emotion Theory, all humans have a set of emotions, which are universal. Paul Ekman and his colleagues did a major cross-cultural study and arrived at the conclusion that all humans have these six emotions in them: anger, disgust, surprise, fear, happiness, and sadness.

If there was any one thing that could have brought out all these emotions in us, it had to be money. Let us look at how these emotions played out in the last few days as demonitisation unfolded.

Humour (surprise or happiness): If anyone had any doubt if we Indians have a sense of humour, the last one week sealed the argument. Memes, SMSes, videos, images and more turned up in social media within couple of hours of the news. Photoshopped images of Rs.500 & Rs.1000 notes being used a paper packages to toilet rolls appeared. If you cannot cry, laugh was the message. Perfect timing with great speed.

Conspiracy (disgust/anger): Social media is a perfect platform to spin a web of conspiracy theories. Best of them was this one. Reliance Jio is giving away from airtime and data until December 30 so that Mukesh Ambani can convert his black money into white, which will come back to him in January 2017. How? Beats me. Can anyone explain it to me? Here is another. Urjit Patel was working with Reliance (true) and he had a hand in all this to help Ambani (how?) Though he became Governor 2 months ago his signature is already there on the Rs.2,000 note which means everything was kept ready 6 months ago (mind you it was only the design) ignoring the fact that you can incorporate a signature in few minutes and print in a couple of days! Social media is free and unaccountable so you can get away with anything. Creativity in conspiracy!

Nationalism (happiness): From hailing Modi as a messiah, to predicting death knell of the super-rich to visualizing a great nation, nationalists went overboard. Yes, it will (hopefully) have an impact on the way we do business, use cash etc. but to tout it as a panacea for all the ills in India is stretching the argument too far.

Help, support, and compassion (fear): Fear of loss set in the hearts of those with stacked notes but a wave of compassion arose in the hearts of many for the ones without the mean who will get affected the most. They put their best efforts to suggest ways and means to help these affected. From advising us not to palm off our old notes to unsuspecting petty vendors to asking us not to jump to unfound rumors and news, they have done a great done. Thanks.

Greed (disgust): It is the feeling that one started having for the haves. How to convert black to white is now the biggest trending search item on Google from India! Rich have paid out hundreds of crores of property tax, utility bills etc. in the last few days. Which means they had they had the means to pay, but did not. Why? For what purpose did they stack up that money? It is clear that the rich have not been paying for the public services and get what they want without paying for them! So it is the middle-class that’s has been holding the Indian economy up. God save the Indian middle-class!

We had a chance to see every shade of human emotion in full display in just a few days all thanks to 2 numbers written on a piece of paper. What then is our true worth?



Opinion polls – question the answers


Did you stop beating your wife?

Tick any one:  Yes          No

He lost the opinion polls, he lost the exit polls, he lost the debates (as per polls), he had lost among educated men & men (as per polls)…but Trump won as the 45th President of America. A country obsessed with data, analytics, supercomputing machines, technically advanced nation with home to greatest brains in social psychology and educated millions could not get the mood of its people right. Why?

Brexit, US Presidential polls or Indian state elections, psephologists are in a bad corner. Time after time, the result is rank opposite of the ‘predicted’ result. Psephology (it comes from the Greek psephos meaning pebbles, which the Greek used as ballots) is a well-developed science. Based on very sound principles, mathematical calculations drawn from the branch of statistics, it is anything but chicanery. Like psephology, psephologists are also honest and skilled people. Even fishes are doing better than they in predicting the winner! Where do they go wrong then?

Poll prediction prepared through the good old survey mechanism. Ask a set of questions to statistically selected samples of populace and extrapolate the same to the world at large. There is no problem with the polls, statistical methodology or with the answers. The problem, I believe, is with the questions. Consider the below questions:

1)Do you like to vote for Democrats or Republicans? 2) Do you like to vote for Hillary or Donald Trump.

On the face of it, both mean the same. Hillary = Democrat, Trump =Republican, right. Wrong. The problem with these questions has origin in a philosophical thought that is 300 years and captured in three Latin words.

Cogito ergo sum. “I think therefore I’m”, said Rene Descartes and it shaped our objective thinking and questioning for the past 300 years. We are and do what we think, don’t we? No. Not true.

In 1994, a neuroscience professor Antonio Domasio offered the opposite view. We are and do because how we feel. Emotions and biological underpinnings influence our decision making more than our analytical skills. “I like, so I do” is the new norm. Simply put, we are not rational but irrational creatures. Coming back to the American elections, the voters liked Trump (for what he promised and because he was not a traditional politician) to Hillary who they believed was a continuation of the past in a new gender. Question is if Trump had run on a Democrat ticket would he have still won? Was Democrat vs Republican a factor or it helped that Trump the person was detached from the Republican aura (as it is many Republican’s disowned him)?

Thanks to this breakthrough thought from Domasio, organisations are now taking a re-look at marketing research in its current form. In customer surveys people tell what the expected answer is but do what they want when spending their money on purchases. One of the most rejected product in marketing research is one of the greatest blockbusters ever – Sony Walkman.

Why are customers or we as individuals unable to tell what we want? The reason is simple: we know more than we can tell, or do we do not what we want, or how we want. If asked to describe what features you want in a phone that do not exist currently, you will either go overboard or just go dumb. When the phone with the ‘right’ features comes to the market you will grab it saying, “It is something I’ve always been looking for!”

Let us accept it. We humans are predictably irrational. We do not know what we like, why we like what we like and why we do what we do. To study such irrational behaviour in such a vitiated, high stakes atmosphere makes the Psephologists job even tougher. Psephologists ask rational questions, people give rational answers and end up behaving irrationally (as per the pollsters). Add prejudice and subjectivity, the whole prediction game goes for a toss.

Want some real world proof? Just track the recommendations of any stock market expert for a period of 6 months. For the fun, track and follow them without investing. For profits, do the opposite of what they say. Dam their disclaimers!



PS: To the question at the top answer Yes or No you are gone. Yes, you were beating your wife, so your past was bad. No, you are still beating, so your present is bad!


QNahi – money or respect


No warning on earth can save people determined to grow suddenly rich – Lord Overstone

He calculated the movement of stars and heavenly bodies. He wrote a seminal book on Physics, which forever changed the way we lived. His thoughts became laws taught even today. He fell prey to greed and lost all his life savings.

You must have guessed his name by now. He is Sir Isaac Newton. In early 1700’s he invested in South Sea Company in England. South Sea Company obtained monopoly to trade in South Seas in exchange for assuming England’s war debt. Newton sold his shares for a handsome profit and watched with perturbation the prices of the shares climb further. He reinvested all his life savings only to watch them evaporate as South Sea Company bankrupted. He famously said afterwards, “I can calculate the movement of stars, but not the madness of men.”

QNet is a similar investment scheme that caught not the imagination but madness of men and women. It is a multilevel marketing scheme selling ‘products’ that are never heard, bought, or used. QNet strategy was to get more people into your network to invest in. The promised profits are humongous to say the least. Internet is full of stories on the ways members are recruited (read trapped) into the scheme. Every organization has to sell something. At QNet you don’t need to sell anything; just trap your friends and relatives and live off them. Ingenious! Until the cookie crumbled and the likes of Michael Ferreira are facing the music. QNet is the not first, definitely not the last to trap us with quick rich schemes. Which bring us to the question, what is it that makes us so gullible and fall into these traps?

Greed. The insatiable desire to get more with less effort. Let us take QNet itself. To find, trap, and extract money from friends and relatives is not easy. Actually, it is more difficult than your normal work. However, we believe it is easy money.  Before embarking on these quick rich schemes, can we work out the following equation? Hard earned money + respect > or < ill-gotten money. It boils down to value of respect, as the other two components are quantitative (money).

Respect is the only thing you truly earn while on earth that is real and lasting. That too respect that you earn for your honesty, ability and good nature. Not that respect which comes from use of power or bought with favors. How much value you assign for true respect is the measure of your value system.

Many of the QNet members trapped in the scheme are innocent but the inherent desire (a sin) to grow rich quicker and easily did them in. Many to extract themselves from the debts resorted to conning others into the scheme setting in a viral conning network. They valued their monetary loss higher than respect and took to conning. Why some decent folks took to conning?

Loss. Human mind cannot accept loss. Just close your eyes and try to recall the moments when you made unexpected profits. Few memories. Now try to recall unexpected losses. Right from 10 rupees the autowallah has fleeced you, to the investments that have gone wrong, memories come flooding in. Because we attribute profit to our abilities and loss to fate, deception by others etc. We conveniently forget that our profit has been someone’s loss (or less profit). To cover for this monetary loss some take to conning themselves forgetting that you can earn money back now or later but not respect.

Daniel Kahneman, the Nobel Laureate in Economics, gave the formula for success. Success = talent + luck. Great success = talent + a lot of luck. Talent is what you are born with. Hard work is what you can do. Luck is what you cannot manage. Use your talent and work hard. If you are lucky, you are successful. If you are very lucky, you will be very successful. If luck is not on your side, your hard work, and talent give you the most lasting thing on earth. Respect.

Go for it!





Do, die or cheat


Honesty is the best policy. When there is money in it – Mark Twain

Last week saw two marquee financial giants ending up with the label ‘unfair’.  Mastercard is in the dock over card charges that it had added on to unsuspecting shoppers. Wells-Fargo, the big bank has taken a real beating in valuation and reputation for palming of products and services its customers did not ask for. I wish to leave details to the to the gurus to dissect and comment upon, it is time to reflect upon the issue of ‘corporate governance’ and why the best in the business fall flat on this critical aspect.

Recently I went to a bank looking for a safe deposit locker. Branch staff informed me that they have lockers to rent out, but…they wanted me to buy an insurance policy from their branch. Having seen this from a close quarter (I worked in an insurance company), I played along and asked for the details. Branch staff recommended a high cost, high- risk insurance policy (ULIP) which did not take into account my age or needs. Why?

Targets. It is the pressure to deliver the numbers – do, die or cheat. When it comes to survival (failure not accepted), objective of sales staff is only one – find a sucker. More skilled you are at the game higher are the rewards. Growth, bonuses, increments follow along with the ultimate carrot – international trip for the top performers. There is a linearity at play in this moral degradation. Better the destination, bigger the rip-off. European destination will lower the scruples of sales team more than a trip to good old Bangkok!

Toshiba, the Japanese technology giant, had targets (called Challenges) which had to be met one way or the other. Challenges were tough to say the least. Quarterly sales targets that were double that of last quarter were rolled-out few days before the close of the quarter. To survive, the way out was simple – cook up the numbers. Which they did, until the truth unraveled last year revealing $1.2 billion of overstated profits.

Two years before that at another Japanese firm Olympus, the same story played out. Pressure to deliver outstanding performance while the business prospects were bad tempted the honchos at these companies to opt for fraud than accept failure. As its one time President said, “When the main business is struggling, we need to earn through zaitech (financial engineering)”

Profit, sales growth, market leadership…these words echo soundly in boardroom of every corporate. And rightly so. After all, capitalism is about creating value for the risk taker, triumph of human endeavor and stock markets correlate numbers with abilities. Until the truth unravels.

One of the key tenets of capitalism is ‘failure’. Bankruptcy laws and asset reconstruction facilities help companies tied over difficult times. Many corporations rose like Phoenix from bankruptcy. That is until greed triumphs over reason. In most firms, seeds of greed at sown at the top. The way the king is, so are the kings men. Corporate governance and fair practices codes are mere eyewash and publicity stunts until they become work rules. Who writes the rules and what are they?

Work rules boil down to employee reward system. “Only top performers are recognized and rewarded” is the message that gets around, will result in the attendant behavior. What is top performance? Only numbers? Take the case of my branch manager. If he had advised me not to take an insurance policy, as it is not in my interest, would it count as top performance or non-performance? In a corporate hospital, a doctor who does not prescribe needless antibiotic and expensive tests will be a top doctor or a liability? Answer to these and questions such as these will clean up capitalism and customer will benefit.

Do not get me wrong. Targets are essential for organisations to thrive and grow. Targets need to emerge out of the goals that the organization needs to set out to serve and should not end up being heartless numbers. Morality, not profit, should be the goal of the organization and its honchos.

Who will tie the morality bell around the capitalist cat?



Priceless or less price


“A cynic is a man who knows the price of everything, and the value of nothing” – Oscar Wilde

Reliance Jio’s datagiri has captured the imagination of everyone. Impressed by its free voice and cheap data consumers are thronging to Reliance outlets to get their share of the new freebie in town. As is the norm, no one cared to read the fine print – there are quite a few of them – to get on to the free (for 3 months) and cheap network.

Contrast this with the anticipated launch of Apple’s last flagship phone – iPhone7. Long queues of people standing all night outside Apple stores to buy the latest iPhone is not uncommon. Apple’s phones are atrociously expensive. Cost of each one is equal to per capita income of millions of people across the world.

Here is the surprise. In a space of few days people are queuing up to buy the cheapest and the also the most expensive mobile phone solutions in the world! It is not common for Indians to buy the latest iPhone at a premium in the grey market. But the same Indians are salivating at the prospect of cheap data plans from Jio! Price is a great weapon in the armor of marketing men and it is plays with the psychology of consumers. Who does it work?

Sale! Sale! Sale! Whoever didn’t get caught out by these words splashed across billboards and media ads? We are happy with a 50% that we got in the sale (what do these outlets do rest of the days?!). It gives us a psychological high that we have used our intelligence and saved money on a purchase. Did we use our intelligence or justified our conscience of buying stuff we may not really need? Just think.

How do we get fooled with discounts? Just look at these two image below:


Product is the same (Philips), vendor is the same (Amazon), final sale price is the same (Rs.2,890). You will most probably fall for the offer in the right side image. Why? Look at the discount percentage – 9% vs 17%. We all like more discount don’t we? How can the discount be higher in one than the other when the final price is the same? Just look at the MRP. On the left it is Rs.3,190 and the on the right it is Rs.3,490. MRP has been increased to give a higher discount! We are greedy (mistaken to be smart) and grab the higher discount ignoring the fact which is the MRP. That’s the psychology of pricing at work!

A lady who had a souvenirs shop in a tourist place before going on a short vacation, instructed her staff to reduce the price of some of the items as they were not selling fast enough. When she returned all these items were sold out! Surprised she checked and found that the staff mistook her instructions and increased the price of the souvenirs. Customers (tourists) mistook the higher price products to be of better quality and purchased them! Another example of psychological power of pricing.

A famous marketing guru shared his observation in a Chinese factory that makes shirts for different brands. On a table were stacks of shirts made in the factory. He observed one employee stitch a premium brand label to one stack while another employee stitched a bargain brand label to another stack of shirts! Price is linked to the brand and not the product. Bata got famous through its product pricing. Starbucks keeps raising its price while the coffee beans prices are falling! A cheap Rolls Royce would lose its charm immediately while a pricey mobile from a bargain brand is viewed with suspicion. When you use a product, you state its price and your status!

There are laws (like MRTP in India) that protect competition from predatory pricing. However law is weak when it comes to tackling supernormal profits pricing practices. Pharma companies are among the guiltiest in the lot. Martin Sherkli of Turing Pharmaceuticals raised the price of a life-saving drug price from $13.50 to $750 as he felt obliged to give profits to his stake holders. Recent controversy over Epipen from Mylan Pharma also falls in the same category.

Information asymmetry (what the seller knows but the buyer does not know) is what causes dissatisfaction in consumers and provides the manufacturer the pricing power. When buying don’t look the price but the value of the product in our life. As always we need to exercise caution while buying. If we need it, we should buy provided we can afford it. Period. Price is an exchange of money against goods but it should not be an exchange of our intelligence for a product we may not need.

Caveat Emptor – buyer be beware!





Deals and dreams


Sometimes your best investments are the ones you don’t make – Donald Trump

True to the sign of the times a mobile company rang the final bell on a company that once dominated the desktop. Verizon Wireless has closed a deal to buy Yahoo’s internet business for an all cash $4.8 billion bringing an end to an era in tech history. Yahoo, once the poster boy of the tech world, the opening para in the digital history of the world, is now reduced to being a footnote in the same history. What a fall!

Two Stanford engineering students went to Yahoo in 1998 to sell at 41 million their small company which wanted to send the visitors to its site to other sites and earn money. Yahoo again walked away angrily at the price quoted by that same small company which now grow big at $5 billion. That small company was named Google! In February 2008, Microsoft offered to buy Yahoo for $44 billion, a price Yahoo felt it was too small to sell itself at. Eight years is a long time in today’s world.

It is a season of mergers and acquisitions. Yahoo’s deal comes after the great grand acquisition of LinkedIn by Microsoft for $26 billion. Two marquee companies which led the tech revolution have now been gobbled up. The question everyone asking as is always done is, will these mergers and acquisitions work? History of M&A is littered with more disasters than winners. A look at some of the M&A’s will help set the right perspective before we examine few win and most fail.

Worldwide some of the most successful M&A’s are: Disney & Pixar, Sirius and XM Radio, Exxon and Mobile. Bad ones that top the list are Benz and Chrysler, Mattel and The Learning Company and Sears & Kmart. Really, really bad one’s are Quacker & Snapple, Sprint and Nextel, AOL & Time Warner. You can read more details about these M&A’s here

Closer home we have had our share of good, bad and ugly mergers providing rich fodder for management theory and strategy. Cases like Hindalco-Novelis, Tata-Jaguar, Mahindra & Mahindra- SCHONEWEISS were a source of pride as Indian companies bought over western companies. Back to the question why M&A’s fail?

On the face of it one company buying another to become big seems easy but isn’t. According to Harvard Business Review, between 70 to 90% of all M&A’s fail. Here are few reasons culled out from various studies:

Hubris: Quaker bought Gatorade and made it a success. Buoyed by the success, Quaker went and bought Snapple without complete study. Result a financial disaster and body blow to Quaker. Each M&A is different.

Culture: Daimler was a German company which was “conservative, efficient and safer”and Chrysler was “daring, diverse and creating”. If there is an example of culture effecting coming together of two companies this is it. The culture gap between these companies was wider, deeper and tumultuous than the Atlantic. It is something no P&L or analytic chart can map or worse predict.

Paid too much: Microsoft walked out of the proposed deal with Yahoo in 2008 when asked to pay beyond $46 billion it offered. Yahoo once walked out of deal to buy Google at $5 billion . One company on different sides of the table and both turned out to be ruinous for Yahoo. What is the right price? Your guess is as good as anyone else.

Due diligence: Hewlett-Packard acquired British software maker Autonomy for $11 billion in 2011 and ended up taking a charge of $8 billion on its balance sheet a year later. Reason, HP discovered false accounting details, fudged numbers and much more financial malfeasance on part of Autonomy ‘after’ the acquisition. Simply put, bad due diligence by HP. Closer home Diageo and United Spirits (Vijay Mallya’s company) and Global Trust Bank and UTI Bank (now Axis) merger are examples of failed due diligence.

Customers: Many pharmaceutical companies committed the mistake of making the acquisitions work rather than focusing on acquiring customers. Dissatisfied customers are easy prey for competitors.

Mergers and acquisitions are not bad and many companies have grown inorganically thanks to buying out talent and ideas. Facebook today is an amalgamation of Instagram, Whatsapp and many more small entities which added value to its core offering. Google’s big channel is YouTube which is an acquisition.

What makes an M&A a success? The search for the right formula is on and may never be found. Deal making is much a science as it is an art.






Games we play


You can discover more about a person in an hour of play than in a year of conversation- Plato

Pokemon Go, the new augmented reality game that has captured the imagination of millions across the countries where it was launched. It is a game that has added billions to the value of Ninetendo, the makers of the game. Created by John Hanke of Ninatic Labs an ex-Googler who had earlier created Google Earth, it asks the players to step out of their homes to catch Pokemons’s using Google maps functionalities.

It is a craze like no other. Reports of people trespassing into neighbours’ homes to catch pokemons to people crashing into each other walking on the streets with their heads bent down to track the location of their pokemons on their maps to a man who crashed his car driving while playing the game are abound. Mind you these are adults!

In half a decade mobile games have grown to be a big, very big industry. An overview of mobile gaming industry drawn from various research reports gives the right perspective. There are approximately 1 billion mobile gamers in the world. The industry is worth $12billion dollars. True facts: Clash of Clans earns $1.2 million every day, Candy Crush $1million a day and Kim Kardashian (yes!) about $750,000 a day! What is it that drives us to get addicted to mobile games?

As people we have a very important need – happiness. For many happiness is equal to success and social recognition. Mobile games fulfil both the needs. You win in a game, you are happy which makes the brain release the happiness hormone dopamine. Brain remembers the equation; happiness =playing. After sometime dopamine release reduces and to increase the same you play more. And then you are addicted with attendant consequences of not playing – withdrawal, nausea, mood swings and much more! There is a lot more than technology in the design of mobile games.

How does the mobile game industry work? A company creates the game puts on Apple store or Google PlayStore or even a direct link though the first two options are preferred. To generate traction after launch, mobile companies use mercenary companies who will artificially inflate downloads of the game for a price.  The game (!) is to get into the top ranks of Apple App Store and Google Playstore. According mobile analytics consultancy Distimo, if an app is in the top 100 and gets featured, it will jump 42 places on Android market and 15 places on the iPhone App Store.  Top 25% of apps in iPhone store generated 15% of all revenue. This translates into big numbers in business terms.

Once up there the challenge is to build stickiness and virality. Almost all games are free to download and play. The challenge of the game sellers is to migrate the free players to paying ones. The paying gamers form just 0.15% of the total players. There are some who pay thousands to get ahead in the game! Industry has a name for them – whales! For example, you are stuck in CandyCrush and need to move to the next level, you can buy on the store steps to make it easier to clear the level. The other challenge is to keep the free players continued to be interested in game hoping that he/she will upgrade to a paying member. It is done by social proofing the player. You can update your level in social media, say Facebook and hope to get wowed but will get booed if you are at a lower level than your friends. How to be on par or even ahead of your friends circle? Buy those extra moves to help you get ahead and boast to your friends! Psychology marries commerce perfectly on the mobile!

Now to the social effects of mobile gaming. A big and devastating one. Mobile gamers, both children and adults, are suffering from attention deficit issues, carpal tunnel syndrome (your wrists that ache from using mobile too much), Texting Thumb and many other digital diseases which we didn’t know even a decade ago. Our anatomy, nor our brain has been gamed to play these games!

Playing in the sand, running to catch insects and butterflies, cricket match fights…can digital world ever replace this world of ours? If it does, it is our mistake. Keep the mobile phone away to play real games which helps you make friends and also makes you better humans.



A quarter that’s half full


India is the greatest functional anarchy in the world – John Kenneth Galbraith in 1960’s

It was a summer solstice like never before. 25 years ago on June 21, 1991 India changed forever. By force or by chance. P.V.Narasimha Rao was sworn in as India’s Prime Minister exactly a month after the brutal assassination of Rajiv Gandhi. He unleashed a swathe of economic reforms which changed the face of India forever. The sleeping tiger was stirred to action.

As we complete 25 years of liberalised India, it is time to take stock. My good friend Kartikeya Kompella has edited a book containing views of the stalwarts of India who saw, participated, precipitated or furthered the liberalisation process. Very well compiled book (What’s Changed, available on Amazon India at 1991 prices!) that gives you more than a glimpse of what’s changed or didn’t in the last 25 years and it’s a must read for all. Bollywood, brands, media, women, philanthropy, education and more has been covered. One miss, I felt. Markets, money and real economics. Kartik is not money minded and hence is excused!

When India got freedom, we were unsure what path to take to build an equitable India. Make money and then distribute or distribute while we make the money. Nehruvian socialism as an idea was torn between the riches of the west and the socialist Soviet bloc. Choosing the middle path, we aimed for mixed economy. Straddling two paths we ended up nowhere. Mixed economy ended up with being a mixed-up economy. Crony capitalists and mafia dons ruled while jholawalas either wrote long articles which no one read or sat in dharnas which no one noticed or even worse ended up being naxal sympathisers.

The 1967 Hazari Committee report is an eye opener. It laid bare details of the shenanigans and strategies applied by industrial houses to play the license raj. The licenses were taken not to build and create a new India but to block others from growing big. The strategy was simple. Apply and take a license to set up an industry but sit tight on it with no action. It prevented others from getting a license thus killing entrepreneurship. “I will not grow, I will not allow you to grow” was the strategy of big corporates. Corruption was rampant and the masses got stuck in the morass as the few pocketed the licenses. Public sector undertakings became the biggest source of industrialisation and also employment with concomitant inefficiencies and bureaucracy.

Crisis is the mother of reforms. In 1991, such was the magnitude of crisis in India that 40 tons of gold was pledged with Bank of England and 20 tons was pledged with Union Bank of Switzerland to get $2.2billion dollars of loan to mitigate the crisis. A plane was charted to carry the gold bars accompanied by finance ministry officials! From the crisis emerged the reforms and Manmohanomics under the stewardship of Chanakya Prime Minister.

After 25 years of reforms have we achieved economic freedom? Harshad Mehta, Ketan Parekh and many more such swindlers gave pain to countless Indians who wanted a share of the new liberalised India. Banking is out of reach of many and money lenders rule the roost in many places leading to tragedies. Mutual funds and life insurance firms did not cover themselves with glory. Far from educating or selling these instruments many big firms converted them into quick rich schemes. Life insurance agents sold their soul and indulged in mis-selling for that alluring foreign trip. Social security in terms of financial security is distant dream for many Indians. True freedom comes when an individual is economically free. Not rich but free.

In these 25 years the world has given up on communism as an economic idea and then gave up on capitalism based on the tragic scenario in the past decade. Western model of capitalism has come into question with the 2008 financial crisis. Joseph Schumpeter’s prediction that socialism will emerge from the decomposition of capitalist society may come true. The emerging economic order is an interesting to watch.

India’s next 25 years are more critical as we have the youngest population in the world. Reforms will make them or they will make reforms. History is in the future and is going to be made by our children.