Iran, Pakistan ink the gas pipeline deal without India

Pakistan signed a deal for the supply of natural gas 750 million metric cubic units a day to 1 billion cubic units a day. This deal was worth 7.5 billion USD. Though I really don't know the pricing of the gas.

The pipeline that was to come to India was to be 2700 Kms and now they have settled at only 900 Kms. Had India joined the deal, despite Pakistan's assurance that it will try to safeguard the pipeline, India can never be sure of the safety of the two-thirds of the pipeline that is non-critical to Pakistan.

Earlier India had made a statement saying that the transit tariff demanded by Pakistan is very high. It was speculated that this tariff would mean that Pakistan would have a significantly shorter investment recovery time than India.

And with the recent oil field investments by ONGC in Venezuela and Russia, and gas field discovery by RIL, India does not feel so pressed for energy as it once was.

Facebook surpasses Google in the number of hits

Facebook had more number of hits than Google for the first time (in US) last week (ending March 13th 2010).This marks a huge shift in the internet usage pattern from the past.
Going by the usage, now connection seems to be more important than information.

Though Google owned sites, Youtube, Gmail and Picassa are widely visited, most of Google's revenues are from its sponsored search results.
Such usage changes could mean that companies looking for online advertisement might first look at Facebook than Google. Since Facebook allows one to join many special interest groups, the chances of landing a relevant ad is higher there. In the world of internet marketing, making the ad relevant is as important as anything else.
Though Gmail also has better targeted ads, based on your email content.

Be that as it may, the market leader has been displaced, and in the time to come, we can be sure of heightened war for the eyeballs.

Amazon allows Macmillan ebooks to be priced higher after Apple row

Just read this news, that Amazon will increase the prices offered for Macmillan books from USD 9.99 currently to 14.99 and 12.99.

This is significant because Amazon had long been a sort of monopoly in the ebook business ( With all due respect Sony - your Reader did not make a dent), and had the power to arm twist publishers. But with Apple getting into the foray with its iPad, Kindle (Amazon's ebook reader) expects some serious competition.

The publishing houses long believed they were not making enough profit through the ebook business. This emergance of competition will help them get better money for their products. Maybe things will improve for them from now on.

Banks deserting Mutual Funds?

Last fortnight of 2009 saw Indian banks pulling out as much as INR 104K crore from mutual funds - the largest in any fortnight.

It could be due to the fact that RBI had been urging banks to lend rather than park money in mutual fund investments. The central bank's advice is warranted because such activity adversely affects small sector industries and personal loans are undertaken by the banks.

But whether this change is for real or an eyewash remains to be seen. Banks could have taken such steps to improve their results for the quarter ending in dec. By investing this money in short term loans, banks can appear more compliant than they actually are.

Another reason for this act could be a fear of a W-shaped recession.

But I think that a major incentive to pull out could be their plans for the road ahead.
There have been news of SBI looking for some merchant acquisition joint ventures and Union bank looking for some acquisitions in Indonesia. Canara bank has been trying to acquire the state-run Dena bank. Country's biggest bank, SBI's Chairman has openly stated that to provide world class services, Indian banks will have to go on the consolidation route. This pile of money, freed up in the last few days can be an indicator to the big things these guys are planning.

Twitter buys Mixer labs

Just read that Twitter bought Mixer labs for an undisclosed amount. This company helped developers create products that cater to specific locations. These things help in delivering local ads to its residents. It will help both the customers in finding the right service/store, and the seller in finding its customers.

Looks like after so much talk of its potential, finally Twitter is taking concrete steps towards ad revenues.

Artificial markets are just that

First up, Asterix (and Obelix) turned fifty this week - and this line goes out to its creators for giving us such a wonderful hero to look up to. If its not known to the reader (or is not conspicuous by the name of the blog) I am a fan of Obelix. So I was re-reading their series and read this particular story "Obelix and Co."

In this story, Caesar send one of his economists to the Gaulish village to disrupt normal life there. This chap goes and buys Obelix's menhirs at exponentially rising prices and turns the village into a unit producing menhirs and hunting boars. The menhirs don't have an existing market so extensive marketing and brand building is used to create a market for them. But competition lowers the prices and trade unions force policy changes for even more entrants. The profits decline while menhirs are being bought at exorbitant prices. It causes a credit crunch at Caesar's.

Lessons to be learnt from the story -
1) Artificial Markets are Artificial. Only if you serve a genuine want of the customer, do you have a chance when the novelty of the product/idea goes out.
2) Relaying on predictions when the artificiality of the market is not recognised can be dangerous. Augmenting your inventory on rose-colored predictions which don't take into account competition and customer sentiments is as huge a folly as any one else.
3) If you don't have a niche, you wont survive. The competition will always catch up. the head start that you had might not be good enough in most cases - more so in the manufacturing sector than the services sector. The customer must be able to look at the product and say - hey, I want this brand. Not I want this product -any brand will do.

Fascinating how much one can notice when one is not looking!

Reader's digest files for bankruptcy

A sad news indeed.
I remember being a fan of RD as a kid. But it has succumbed, to the rise of internet, more than recession. Print media has been struck real bad by the free content on th enet.

And there is no looking back. I dont think there is anyway that people can be coaxed into reading, and paying for, something that they can read on the internet for free.

The younger generation, the ones who have seen computer from an early age, are often more comfortable reading off the screen than from a printed version. Add to that the ubiquitous nature of free content, you know that the print media is fighting a losing battle.
The only way print media can tide over to the profit side is by providing content on the net. Right now, most media houses have free content on the net.

But this is not sustainable - because it requires the same amount of effort to produce content for the net, as it does for printing. The first thing that media houses must realize s that popularity is not revenue. You might be the most popular news agency on the internet - but that does not give you anything. Sure, you can find some advertiser on the web - but arent there too many websites vying for the same set of advertisers? The law of diminishing returns sets in very soon in such a market.

The only way out for the media houses is to have a free and a premium section, where the free section drives the masses . And the premium section catering to specialized news requirements.

Random signals and parameterization

During my internship at IBM, I was working on a process of verification of hardware implementations by injecting signals into the design under test. Here the verification engineer has to be smart enough to guess the potential breakdown points of the hardware and inject those signals. To further test for robustness, random signals are injected. For another level of robustness, partialy random signals - biased towards the "guessed" potential breakdown points.

The whole idea when applied to life, seems to make so much sense that I was startled when I first thought about it. To test other persons' reaction, dont we drop hints suggesting things that we are not sure of the reaction from the other person?

This same thing, in a different setting sounds so much like a pre-product launch market survey. "Have a look at the need to be catered to(hardware) - Guess the ways which the market may respond in the way we want it to(guess the potential breakdown signals) - Give the market some products that hover around the previous guesses, see how the market reacts(Random signals biased towards the guessed potential breakdown points) - All this is done before the final product (chip) is launched into the market"

Fascinating, how concepts learnt in one sphere of life can be used in other spheres as well.

More popular are the ones more talked about

Just read this interesting article which says that people look for common grounds to talk rather than talking about the better things. This is in a way a reiteration of "Matthew Effect" (The rich get richer, the poor get poorer).

But this research being done in the social domain, could mean a lot about the way marketing is perceived. The gurus knew all along that it works, but to be proved that it does work is a different thing.

Understanding this concept can help a lot in marketing, especially on the web. If somehow one could get their product to be discussed on the "right" forums - it automatically starts generating traffic. If you pay a battery of people to discuss your product on twitter, and it features on the twitter search list, it is very likely that other people will start discussing it - as it will seem like the "IN" thing. Or if you can get your product discussed on slashdot or technorati, it is very likely that it will be discussed beyond that as well.

In fact this love for likeliness is seen in at the school and college level : A popular guy/girl is talked more about, and he/she gets more popular. If a group of 5 people start saying out loud that a certain dress is cool, the whole school gradually comes to accept the same as cool. So it can be used in adolescent marketing too. FMCG markets typically have a huge chunk of the demand coming from teens and just-left-teens . To be able to project the product as cool, they need to be able to make an impression at school, colleges, FaceBook, MySpace - and in all likelyhood, it will catch up.

Functionality is NOT the king!

I was thinking, what makes a product a hands down market leader and an also-ran. One thing I realised was that functionality is not the only criteria. If it were the same, FriendFeed would be much bigger than Twitter. Or for that matter, LinkedIn wouldn't be the market leader either. Or Google might have been oust by one of the many search engines that came up after it.
Same is true for mobile phones too. If functionality was the only criteria, the lot of "prettier" phones would have been replaced by the more "functional" ones. iPhone might just have gone extinct if it were only to be compared on functionalities with the blackberries. I had read somewhere that SAP proudly stated that they never show the product during the selling stage. Reason - because "nobody ever got sacked for buying SAP " !

The race for functionality is never ending. You could go on adding features to your product. It will never reach the marketing stage in this way. Functionality is not the main thing and the marketing people know it too! The product has to be only "good enough" on functionality. The rest is about the acceptability, portability and the perception. "If the whole industry uses SAP, then it must be good enough". "All my friends use Twitter, I don't want to use something else."

If it is all about functionality then it is an argument about diminishing returns, marginal differences and small variations. And often this is not nearly enough to win a client, cause a revolution, or shift opinions.


Frankly, as long as our needs (present, and foreseeable in the near future) are met, do we really care what more is on offer? After this point, perception takes over. If something is viewed as the "poor man's cow", it will not be bought by someone who wants to project a rich image. If google is the in-thing, why would someone use AOL?

The next thing is the change. The trouble of moving from one product to another. People love familiarity. Getting people to switch without showing them the huge advantages is not going to work. That's the reason that analysts claim that despite Wolfram Alpha's great features, it might not be able to overtake google. For the cost and disruptions would be too huge given the present slight edge in functionality.

The next big thing on the net

Someone directed me to a link to the new project by Wolfram people called Wolfram Alpha saying that it was the next big thing on the net. My initial reaction to the claim was - "Ah, yet another big claimer!"

But 5 minutes into the site, and I was taken over by it. This project seeks to integrate all knowledge into one. You can put in any query and it gives you the "right" results. Much unlike Google, which directs you to further sites that might or might not (though they generally do) contain relevant information - Alpha gives you numbers and statistics about anything that can be represented by numbers. Like you could key in GDP of South Africa - And know all that you wanted to know in terms of numbers. Likewise if you key in "GE" in the stocks section, you could see how the trend for GE stocks has been for the last 1 week, 1 month, 1 year and 5 years! besides it shows you its market capitalization and the beta. If you search for AIDS deaths, then you get statistics for deaths across the world.

This thing could indeed become the next big thing in the net!

PS- The afore mentioned friend was Abhishek Gandhi, fondly(?) known as Tool here at IITM. He claims his connect to the first family of the country, but we are all too used to people who fake surnames to gather mileage !

The top 10 reasons due to which Sun failed

Sun Microsystems - once upon a time a $200 billion company and the owners of Java was bought out by Oracle for $7.4 billion a few days back.

Dan Baigent, was a senior director at Sun microsystems when the company got acquired. He started out to write the top ten reasons why Sun failed. Unfortunately he could write only 3. The company cracked down on it and took the posts off. However, the good (?) google is here to help us.
It has stored a cache of those pages.

The top 10 reasons why Sun failed to leverage its market potential. (Only #10, 9 and 8 are there, Dan never got to write more than that.)

The #10 Reason that Sun is Setting: We failed to understand the x86 Market - "We approached the market in the only way we knew how - as an extension of our high-end, low-volume, high-value approach to network computing. And not just in terms of product features and capabilities, but in terms of sales, partnerships, channel programs and supply chain management."

The #9 Reason that Sun is Setting: Messing with the Java Brand - "numerous attempts by well-meaning marketing folks at Sun to try exploit the value of the Java brand itself and how that ultimately reduced the very value they tried to exploit. To some degree, this is as much about the lack of value in the Sun brand (at least outside our loyal customer base) as it is about Java" ".... and the changing of our stock symbol to JAVA . (It) was a sad attempt to make Sun's stock more recognizable on Wall Street, as if that's what we created the Java brand for."

The #8 Reason that Sun is Setting: Fumbling Jini - "The real problem was that the engineers had built this technology using the latest Java platform...When launched, Jini could not run in anything smaller than a device with 64MB of memory and a Pentium-class processor.... Meanwhile, Marketing and PR were off describing uses of the technology that were all about small devices (cameras, printers, cell phones, etc.) that were completely unable to run RMI, nonetheless the Jini on which it was built. Jini should have been first-and-foremost about distributed computing. ... worse still, we left the door so wide open on distributed computing that Microsoft and others were able to walk through it."

Probably Sun does not believe in learning from mistakes or worse, thinks that letting the mistakes out in the open could mean lower respect for the brand image. The only way that is possible is when while knowing your mistakes, you still go on commiting them.

The naivety of the Indian energy policy makers

I just read this news on India proposing a new gas pipeline from Turkmenistan. The country is gas-rich and theoretically has a great potential to abate our energy crisis.

All of the less-informed, low-intellect, mortal, aam-aadmi know that you can NOT trust an Islamic militant country to protect our lifeline. But out dear 'IAS-babus' seem to know better.

I assume that their rational is that economic powers will keep the pipeline safe. But if they could not secure their pipeline to Russia, a fortnight back - I don't see how they can guarantee the safety of this project. Turkmenistan is riddled with foreign policy troubles - being bullied by both US and Russia while it tries to stand up to Russia with US aid. And the fact that it shares a large part of its border and culture with Afghanistan does not sound too well for the prospects of the pipeline. Any pipeline that goes through Afghanistan & Pakistan and comes to India just doesn't feel safe enough.

The incumbent energy policy makers probably were weighing only the economic benefits from the project when they decided to pursue it. But the fact remains that many decisions involve other considerations - especially those taken by extremists, value schadenfreude very highly. And to give them access to something that could staunch our economy seems particularly foolish -if not diabolical.

And aside from the militant threat, we would rather not be the proverbial grass (When two elephants fight, its the grass that gets trampled - African proverb) in the fight between Russia and US over the dominance in the region. US has been trying hard to cut into the soviet dominance in the central Asian region, and Russia is not willing to let go of its strategic buffer. And the fact that we have been "friends" with both of these countries while still managing to keep the other around means that we could be "reprimanded" slightly by either. Though I strongly believe that they would not want to curtail India - We are a big source of income for both the countries. But why give them an opportunity?

Business Scalability in the Manufactoring sector

As promised earlier, here's my post on how to shape your business for scaling up, if you are in the manufacturing domain.
Most of the articles that I have read talk about up scaling the business in the web or the software domain. None really talked about applying the same principles to achieve scalability in business in the manufacturing domain.

I strongly believe that the principles of business scalability transcend the boundaries of the business domain. When we say that we need to structure the business model for scalability, we need a revenue model that is self perpetuating. One first needs to find out who the customer is. The next thing to figure out (and this is the most important thing) is to figure out what is it that will further your product's demand. And create your revenue model based on these answers.

Now lets focus on the manufacturing industry, If lets say it is a electrical machines manufacturer - that specialises in precision control. The company would probably then want to create a assembly line type product chain. So that each product sold in the market would create demand for more similar products. (If you want to have a more detailed/customised revenue model, you will have to pay me)

Logic of a "free" customer

For the past few days, I have been thinking about how much is a 'free' customer worth.
For example, All the social networking sites like Facebook, Orkut, MySpace offer free logins for anyone. Similar is the case for eBay.

For example on eBay, all buyers are free registrants . Only the sellers pay - and that too when they get a product to sell. This gives rise to an interesting situation - without 'free' buyers, there are no sellers - and without the sellers the revenue model fails.

Similar is the case with Orkut - without the free users, there are no ads, and hence no money. But its slightly complicated here as Orkut is owned by Google. so there might be opportunity costs involved. like for example, when someone clicks on ads by google from a third party site, google must be paying something to that site as well (as it does in adsense). So when Google values its Orkut users, it will also factor in these savings.

Facebook epitomizes this type of revenue model - it allows advertisers to select their target group very effectively. Allowing them to streamline their ad via features such as
* Location
* Age
* Sex

* Keywords
* Education
* Workplace

* Relationship Status
* Relationship Interests
* Languages



But exactly how useful are these customers? there might be some customers who never click on any ads. Or for that matter, sell products on eBay. So these people never make money for the company. On second thoughts, these might still generate some revenue for eBay - by increasing the selling price through competitive bidding.


This thought cropped up in my head while listening to a presentation on the revenue models followed by browsers. Since then I have not been able to stop thinking about it. So HAD to publish it. Anyone who has some idea on this, please do comment/ contact me. I wish to learn more about this fascinating concept.

MicroFinance - The double bottom Line

MFIs(Micro Finance Institutions) are businesses, they exist to make money; as do any other business.
One can not charity on borrowed/dreamt-up money. Or as the recent banking goof-ups(?) have told us, One cant enjoy luxury on dreamt-up money.

But for now, we are talking about MFIs, which take pride (and rightly so) in doing a social good - by lending loans to fulfill dreams, ambitions, needs.

So its only natural that they have two bottom lines, one that talks about the financial status and other, about the social.

This also in turn tells about the company's average loan balance as a % of per capital GDP of the society of operation. Essentially it talks about the the average lending as a % of average earning capacity of the locality.

A double bottom line undoubtedly helps MFIs attract soft lending and investments from socially responsible investors However,having a double bottom line also means that MFIs may also undertake less profitable activities if it fits the social good framework. After all, if it reflects positively on the bottom line, it is a good investment. These efforts can lead to a higher cost structure for the business, although in some cases, this may also be rewarded with higher yields.

PS- I was reading through the ways in which a valuation of MFI is conducted, and this seemed so different from the single minded bottom-line corporate culture that I had an insurmountable urge to write about it.

Scalability of business

Just read Anurag Srivastava's note (on facebook) dealing with scalability of business and life in general.

He writes
" .... what keeps one going is not the regular earnings that you get from the business which in a typical year is predictable - but possibility that there can be a time when all things will go right and will payoff exponentially. Every one who gets into business does it with that hope - that if all things go right - there will be a windfall ..."

I am not very sure about the comment about the "typical year" claim - all of us have seen how the markets crashed within a very short time. We are talking about black swans here. He seems to look only for the positive abnormalities but (probably because he is a die-hard optimist) prefers to overlook the tough times.

Though the expectation part is very valid - no one wants to do something that will remain mediocre all along. Its only the faint hope of greatness that drives the men.

Further he adds
"... where the business scales up purely on creation of a design or an idea that gets replicated easily and you get paid for every unit that gets produced by anyone through a license. So the Chinese might have factories which make the Nike shoes and scale up production as per what Nike wants and make incremental profits - Nike has to design and market those shoes to make exponential profits without too much extra investment on capital or humans. Ideas and intellectual property is scalable , bodies are not. Running a hotel is not scalable but the format/franchises are ..."

Here he makes a very interesting point. All of us knew it somewhere at the back of our heads but it still is a revelation when one first gets to see it articulated. Its the idea that can bring a turn around. In my opinion, the distinguishing feature of a scalable business is the fact that an additional unit is not accompanied with diminishing returns.

PS- More on business scalability in the manufacturing sector here.

Source of motivation

Watched "Slum dog Millionaire" last night. and have not stopped thinking about it.
A wonderful movie - none of the actors overshadowed a 10/10 script. And the best part about the movie - the guy never forgets his childhood love, and tries to get her time and again: despite all odds. All this while there was not once that they professed love towards each other. Like the instance when he had to fight his elder brother to try to elope with the girl. And the girl willing to sacrifice for the sake of the boy.

The story got me thinking, what motivated the protagonist to do all that he did. For that matter, what drives a person to attempt world defying feats? what makes a man try things that none else would imagine doing? Assuming everyone to be rational, a person will venture into such a thing only if he/she finds the potential rewards to be greater than the value of the effort required. The only way this could happen with a consistent valuation is that he/she sees a potential that others don't. It requires a vision to be able to spot an opportunity when its not evident. Also it needs courage to try out new things, may be the fact that they trust themselves when they do so makes them successful. Ancient Chinese script, Tao Te Ching says - Love gives the ability to be brave. In this context, its the love for the winning that gives them the ability to attempt things unprecedented.

Lets look at various motivational techniques people use:
For a few people, its easier to stay focused if they have something to look for, like Clearing IIT-JEE, Clearing CAT, designing a novel pump, building a world class organization.

But if a persons' aspirations, dreams are limited to falling into the arms of some other person: I don't see how that can drive him/her. Probably I am ignorant of the ways love works.


As I am pretty sure, you must have observed: The journey towards the goal is often more fun filled than the destination itself. That is what drove the founders of now world leading companies - continual improvement. Once establishing the organisation was complete, they could have gone to cool off their heels. But they did not - they toiled hard, to improve, even if by just a tiny bit. That's what made them great.

Its the determination and perseverance that gave them a reason to work. And when a quantifiable goal is cut-out, motivation comes naturally.

But is the challenging work, the only motivating factor for us? Apparently no. As documented so well in numerous Bollywood scripts and romantic novels, "LOVE" triumphs all when it comes to motivating the protagonists. Apart from that, (I risk being politically incorrect when I write this, but what the hell !), money that one makes while working is also a huge (de)motivating influence.
Probably its to do with personal priorities. Different people are driven by different things and its the valuation of the work-love-money mix against one's own standards is what determines the motivation level.

PS - While writing the "Different people are driven by different things..", I could not help recalling the lovely Obelix from the Asterix series who cared for nothing more than a sumptuous meal of wild boars. Well now You know why I named this blog "Foodological".

Ways of market endorsement

Every time you buy something, you endorse the way the company does its business.

When we buy a product or service from a particular company, we are promoting the company, its policies, its business model, its work culture - everything. As long as a company is doing good, (by good I mean achieving its target sales and revenue) it wont feel the need to drastically change its model. Ultimately, its the signals from the market that the company responds to.

Of course its products will follow its own life cycle, question marks will turn into stars, if proper sales push is effected. The cash cows will remain so until competition forces pushes it to the dogs status.

As long as there is high growth in a particular segment and the company is having a high market share, the company will never change its policies. Let's say, if the company is heavy on environment pollution, but its products do not find any difficulty in the market, it wont bother much about self regulating the pollution. But once customers start drifting away from the company, then the company will need to change its stance. It will try to bring in regulation and more efficiency, so that its products can regain lost ground.

Likewise,let's say a chip manufacturer brings in faster chips but with poor power dissipation. That is, the comp would get heated up easily.If people are willing to live with the higher heat, the company will continue trying to produce faster chips without caring much about the heat dissipation systems. But once the customers find the heat too annoying or the increased speed not worth bearing with the heat or an alternative product that generates lesser heat, the company will feel the impact (Or if their market research people are savvy enough, and see it coming) and they will devote more effort towards reducing the heat.

Markets are the deciding factor for all business decisions.As long as it keeps the markets happy , the company is doing good.