Weekend Trip - Coorg

This place significantly exceeded my expectations and hence it would not be fair not to share this. I am referring to a weekend trip to Coorg with family & friends a few months back. The goal was to just chill out completely and goal was met in time & budget :-)

The best part was a relatively unknown HomeStay where we stayed. It's called "Bee Hills" and is in the middle of no-where (read a large estate). It is a pucca "value of money" place - very scenic surroundings, decent food, excellent bon-fire place with a view of surrounding hills, excellent hosts, reasonably priced, no network :-) and much more. Even though I had been to Coorg once earlier and stayed at Orange County, it was no match to this trip. I can now see why Coorg is referred to as Scotland of India. We were there for 3 days and did not venture out of this place even once. The highlight of this trip was am amazing trek that we did. I will share some pictures & a video from the trek to give you a feel.

So, in case you want to plan a weekend get away from Bangalore, do give this place a serious thought ...

:PM

Acquisitions

Acquisitions are in vogue. They are happening across industries and in plenty. I work in the business software industry and it is interesting to note that one of the leading companies' core corporate strategy revolves around acquisitions. I, honestly, am not a big fan of the same. And it helps to know that majority of the acquisitions (especially in the software industry) have been disasters.

Acquisition decisions usually come out of the corporate strategy groups and I would really like to go through one such recommendation report someday to get more insight into the kind of analysis that goes into such a decision. I haven't been to a business school but I would like to list down 'Which One' and 'Which Not' to acquire based on my very limited knowledge of the software industry.

"Which One"

• Complement your offering - A software product company may acquire another smaller one that fills in functional gaps & holes. However the target company should be mature in what it offers (avoid a start-up unless you want access to IP), the revenue/operating margins etc. should be solid (avoid loss making companies) and if possible it should be operating on a compatible technology (integration can be a mess otherwise).
• Acquire Customer base - One may acquire a company just for the customer base. This can either be for gaining entry into a specific segment (say SMBs) or just to simply expand your existing customer base. You, however, may have a functionality overlap and it will help if the target company is not doing too well financially as it will be easier for you to convince acquired customers to upgrade(?) to your offering.
• Kill Noise - It may be worthwhile to buy small niche companies just to kill noise. This should be done only if the small company is struggling financially (revenue going down, trading at 52-week low, etc.). The noise that you want to kill may be in the form of repeated elongated sales cycles in that niche domain because of competition from this small company or negative campaign during sales cycles or an open IP infringement lawsuit from this smaller company or some such headache. Of course, this will make sense if you are a big multi-billion dollar company and the noise creating company is worth a few hundred million.
• Horizontal Expansion - An acquisition may also make sense if you are very profitable but spot a glass ceiling in the vertical(s) you are operating in. In order to ensure further growth in revenues/profits, you may want to use some of your idle cash productively by entering a new industry via an acquisition. Of course, the target company in this case should preferably be a mature and profitable one in the business it operates in. This buy vs make decision will be even better if your current products/services can also be sold to the customers in the new industry or vice versa.
• Eat into supply chain - Acquiring your upstream/downstream partner in the supply chain may sometimes make a lot of sense and you may be able to improve the operational efficiency and thus become more competitive.
• Access to IP - An acquisition may be made to gain access to IP/patents and build something promising and profitable on top of that. This will be better than wasting an opportunity or even paying royalty/settling lawsuits later on. It will be easier to do this if the IP lies with a very small company compared to you.
• Kill Competition - You may acquire a competitor to gain market share, increase your revenue/profits and strengthen your leadership position. However, this may be successful mainly in high growth or emerging industry. Acquiring a competitor, especially a medium/large one, in a mature industry can be a mess.

"Which Not"

• Technology Mismatch - Acquiring a company with an intention to complement/extend your current offering can be very dangerous if it operates on a different technology. It is likely to result in huge integration challenges and more often than not you will end up in a mess.
• Immature Products - Acquiring a company with flashy but immature niche products with limited or uncertain revenue stream is a gamble that one should avoid in my opinion, unless you have ton loads of cash that you don't care about. Buying a company based on promise is alright as long as there are at least a few customer success stories to its name.
• Buy Vs Make - Buying a small niche company, when it is not tough to produce that software or diversify your service offering into that vertical in-house, is not a smart move in my opinion. Acquisitions always come with redundancies, cultural differences & geographical challenges. Moreover, whatever you build in-house will always better integrate into your overall portfolio and brand.
• Revenue Gain - Buying a company operating in a related vertical just to beef up your revenue is a short term gain in my opinion and can cause damage in the long run. One should evaluate how easily the target company would integrate into your offering/brand in the medium to long term before going ahead.
• Expensive Acquisition - Acquiring a company by paying much more than its current market value is something that should be avoided. Sometimes, companies get sold out for much more than what they are worth either because there is more than one potential buyer in the game or because analysts claim a huge growth potential in that domain. An expensive acquisition should be done only if you are ultra sure about recovering your investment in some form.
• Kill Leading Competition - In a product oriented industry, acquiring a competitor to gain market share can be dangerous. This should be avoided especially if you need to pay a lot for this acquisition. Acquiring a medium to large sized competitor will either confuse your customers if you continue both offerings in parallel or will confuse you while trying to integrate or rationalize the offerings. Either way, it will be a big mess.

The Right Combo?

The Indian cricket team management has been struggling to arrive at a strategy in terms of the number of bowlers to be included in the playing eleven.

For me it is very simple, we should always go with 7 batsmen (including our rockstar wicketkeeper). In Tendulkar, Yuvraj & Ganguly we definitely have the skill and experience to share at least 10 overs. For God's sake, Tendulkar has more than a 100 wickets in one dayers! I am sure if he had been bowling regularly, he would have had more than 250 to his credit today :-) Ganguly is a pain in the **** with his slow medium deliveries and Yuvraj has proved to be an effective slow bowler more than once. I would go with 4 regular bowlers even if it is a belter of a pitch.

Agreed that once in a while there will be situations where part-timers (read Yuvraj) will get hit for 5 sixes in an over, but we will also have an extra No. 7 batsman (read Robin) in the team to see us through ...

Bangalore Real Estate - Hot or Not?

It's been long and I am back with an interesting topic - real estate situation in Bangalore. We have had a BIG BOOM in this sector and prices have at least doubled in all major cities in India over the last 2-3 years. At least in Bangalore, this has been a topic of dicussion in almost every (guy) get-togther apart from discussing the extra-ordinary hikes some of the software professionals have got in recent times.

Well, just like on Sensex, there are different opinions on whether this boom is here to last and when will the slide down begin. I happen to have an opinion as well :-) It is obviously very tough to predict anything in a sector such as this even for so-called experts who are tracking everything from the global economy, earnings & spending trends, SEZ plans across cities, infrastructure projects, consumer confidence and so on. Let me state that what I am about to write is worth nothing ... it is just an opinion of a person who is not even tracking anything relevant :-)

In my opinion, the real estate in Bangalore, though a little expensive, is actually a better buy for an investor than one in cities like Mumbai & Delhi. My opinion is based on 2 facts -

• P/E Ratio
• Demographics

Let me elaborate on these two points now -

P/E Ratio:

For those who don't know P/E refers to the Price to Earnings Ratio and is very commonly used in the stock market to pick the right stocks. For real estate sector, price is the buy price of a property and earnings in the annual income that you can potentially get out of the same. A low P/E ratio in most cases indicates a potential good buy and a high P/E ratio indicates an expensive property.

About a year year back, Bangalore, by this parameter, was an excellent buy. You could buy an excellent 2BHK apartment for 30 lakhs and you could expect a monthly rent of around 10K which amounts to a P/E of only 25. The situation today is a little different and a little more expensive. An excellent 2BHK would cost you around 45 lakhs and a 3BHK around 65 lakhs (service tax & VAT have added to the cost as well) but the rents you would expect remain the same - around 10K and 15K for a 2BHK and a 3BHK respectively. This amounts to a P/E of around 35 which is high but again not too bad, if you manage to find a tenant within a few months. But, this definitely indicates there is no room for prices to grow in the near term.

Let us compare this to Delhi/Gurgaon/Noida where a very good 2BHK partment will cost around 45 lakhs but the rent that you would get will be around 7K making it a P/E of over 50. That is sure shot expensive and clearly indicates that there is not enough demand to justify such a high price.

To summarize, Bangalore is definitely a little expensive today. I don't see the demand diminishing in near future (I will explain why in my next point) and hence if the prices remain where they are or actually slide a little bit, you will get a handsome return on your investment. If you plan to buy one to sell again in a year or two, this is not a good time to buy. I do not see prices rising significantly in the near future but I definitely do not see a major slide from the current levels as well.

Demogrpahics:

The average consumer in the real estate sector in Bangalore is an IT professional who has high disposable income and is most likely not even married. He is today sharing an apartment with a couple of his friends and is almost sure to either move into a separate apartment of his own or on rent in 1-3 years after getting married (unless ofcourse Bangalore traffic drives him away to Chennai or Hyderabad). Banks are willing to approve his loan and he is definitely capable of re-paying the same in 15-20 years.

This is the reason why I do not see the demand going down significantly in near future. Ofcourse, the Indian IT industry cannot grow (in terms of number of employees) at the rate it currently is and once the current population grows a little old, this demand is bound to come down but that is at least a good 5 years from now in my opinion, if not later.

Last but not the least, if you are in Bangalore and plan to buy a house to live in, don't care for what experts say and just go for it as the prices will always rise in the long run and the earnings in this case is anyways always zero :-) It is not very easy to time the market and today is always gonna be worse than yesterday ...

:PM

A few good books ..

In one of my earlier posts titled "The Master Keys", I had listed some of the things one should definitely do. I had also mentioned that the irony is that I myself don't engage in all the "recommended" activities. One of such activities is "Reading good stuff".

Frankly, I never had the time; probably because I never had the interest or the patience :-) Well, I have changed to some extent and for the last year or so, I have managed to read quite a few books. The good part is that I have enjoyed reading most of them. So, for those of you who are still struggling to start, you can do it too. Without wasintg any further time or real estate on this html page, let me list down some of the books that I would definitely recommend to you all -

• The World Is Flat - This one from Thomas L Friedman is a must read for folks into IT. It was good to read someone talk about the importance of China and India in the overall global economy. Some of the real world examples on the world flateners especially WalMart & UPS were too cool.
• Wings Of Fire - I like books that are less than 300 pages because I still don't have patience to go through a really long book (I really struggled to complete the one on top). This one is an autobiography of APJ Abdul Kalam penned down by Arun Tiwari. It was interesting in parts and inspirational over all. If I have to take back something from this book, it would be the fact that inspite of his modest background and a lot of failures early on in his career, Abdul Kalam really went on to achieve great heights.
• The Greatness Guide - This one and a few others by Robin Sharma like the Leadership Wisdom are excellent ones. I still haven't read the Monk Who Sold His Ferrari, but I was totally impressed with whatever I read so far. I liked this book because it is not too verbose and is very neatly organized into 101 chapters, some of which are absolutely "must-read".
• Freakonomics - This one from Levitt and Dubner is again an excellent one. Just about 200 pages and a lot of data related to some of the real world problems and perceptions. It is more of a human behaviour & perception book rather than an economics one so don't get scared away by the title. Some of the data & analysis presented in this book is just too good.
• Beginning Algorithms - This one by James Ross & Simon Harris has to be one of the best written books related to computer science in my opinion (disclaimer: all I have read so far is some text books during my under grad and grad school and some books on programming languages). Agreed the focus on JUnit tests is a little too much and not useful for many of us, but the way it explains the data structures & related algorithms makes it a must-read for every software programmer. And by the way, the example code is in Java.

If you happen to read this post and in turn want to recommend some books to me, please do that. Bye for now and happy reading ..

:PM

More Cricket? Redirecting ...

Since cricket is a my favourite sport and the world cup is on, I realized that it may be worthwhile to start a new blog dedicated to the cricket world cup.

Here is the link to my world cup dairy: http://kriketworldcup.blogspot.com

Cheers
:PM

Forecast Change ...

I first had the title of this post as "Change in Predictions .." but having worked in a supply chain company for quite a while, I changed it to "Forecast Change ..". I know that was unnecessary information and hence let me jump straightaway into the cricket field.

This post is an addendum to my earlier one .. with Akhtar, Asif & Razzak ruled out, I am forced to downgrade my ratings on Pakistan. All three are match winners .. and I especially rate Razzak very high. Instead of Pakistan now, I feel Kiwis would be there in the semi-finals alongwith India, WI & Sri Lanka. Kiwis must surely be on a high after amazing chases against Australians and their middle order, especially, seems to be rock solid now. As for the finals, it wil be Apna India Vs WI/NZ.

Before switching back to work, I will take your permission to make a change to my playing eleven as well. I'll play Munaf instead of Pathan and bring Pathan in as an all-rounder only if Sehwag fails in the first 2 games. This is considering Pathan did not do so well in the last domestic game he played ..

Thats it for now .. have a good day! Will be back with something different next time ..

:PM

Cricket World Cup ..

I am back after a real long gap and this time with views on one of my interest areas - Cricket. The world cup is starting in a month's time and I personally feel this will be one of the most exciting editions simply because almost all the test playing nations have very good teams and it is practically impossible to put your money on any one team. It will surely be one heck of a tournament and I can't wait for it to get started ..

Now I would just use this space to list down my playing eleven for India and also the strategy that the Indian team should adopt. My eleven (in the batting order) would be -

1. Robin Uthappa
2. Saurav Ganguly
3. Rahul Dravid
4. Sachin Tendulkar
5. Yuvraj Singh
6. Virender Sehwag
7. Mahindra Singh Dhoni
8. Irfan Pathan
9. Ajit Agarkar
10. Zaheer Khan
11. Anil Kumble

Coming to the strategy, here are a few points -

• Knowing the Carrebean pitches, I would have Tendulkar, Sehwag & Yuvraj bowl at least 15 overs between them, thus eliminating the need for a specialist 5th bowler in the playing eleven.
• Unless Kumble gets injured or really loses his touch, I would always play him ahead of Bhajji. And I will never play them both in a game.
• I would open my bowling attack with Irfan & Zaheer since it is tough to swing the white ball after 10 overs or so. It may not be a bad idea to have Agarkar open as well instead of Zaheer. Now Zaheer is my No. 1 bowler but he can deliver even if he doesn't oepn teh attack.
• Munaf & Sreesanth are very good too and can be brought in if others flop.
• In case Uthappa fails in more than one game, have Sehwag open the innings and play an additional bowler in this case.
• Have Agarkar, Zaheer & Tendulkar bowl in the slog overs (avoid Pathan & Sreesanth at any cost).

Now coming to predictions, I feel WI, Sri Lanka, Pakistan and India will make it to the semis and either India or Pakistan will lift the Cup !!

Thats it for now .. signing off ..

:PM

The "Master Keys" !!

Here I am, writing again, came back sooner than I expected.

Based on whatever little I have read & experienced, I would like to jot down 7 points that, in my opinion, are key to happiness. I call them the "master keys" -

• Be positive and optimistic. It is quite easy to blame anything & everything. Instead, look for positives in everything and you shall be happier.
• Work like there is no tomorrow. Take every assignment as a challenge. It is easy to say that your job is monotonous & boring but say that only after you have mastered every aspect of what you do and there is no one better than you out there. Someone rightly said "Attitude is a small thing that makes a big difference".
• Play harder. Take time out whenver you can. Have tons of fun and your definition of fun can be anything - going out for a movie, going out to shop, trekking, swimming, reading books, playing cricket, dancing, hanging out with friends .. anything! Make sure you plan a vacation with your family/friends at least once every six months. Don't ever miss out on fun!
• Exercise regularly. It is very important especially these days when stress levels are high and we hardly get any physical activity. You will feel fitter, stronger, healthier and energetic. You could hit a gym or play tennis every morning or go for a swim on evenings .. choose whatever suits you but please be regular! Apart from physical activity, I'd also recommend mental exercise .. the easiest would be to grab the morning newspaper and spend 10 minutes with a sudoko or a kakuro puzzle .. with time you will be good at it and you will feel good!
• Read good stuff. Rightly said, knowledge is power. Read whatever interests you .. it could be technical literature or autobiographies of great personalities or religious books or some international bestsellers. Remember, knowledge is a treasure that nobody can steal!
• Listen to music. As they say, it is food for the soul. And listen to whatever interests you .. ghazals, sufi, soft rock, hip-hop, latest bollywood offerings or even the golden oldies from Rafi, Kishore, Mukesh or Lata.
• Try to be good to others. Help the needy whenever you can, be polite to others and always smile :-)

The irony of this blog is that I personally don't follow all of this .. but as I am getting older I do sincerely plan to follow all of this and more ...

:PM

My "First blog"!

This is my first blog and I promise to keep it short (and for me promises are not meant to be broken!!)

I will start with an observation of mine that Internet is back bigtime. After the painful dotcom bust, there was a lull for quite a few years. Someone has rightly said "Everything has a cycle". And expectedly last couple of years, we have witnessed a lot of action and as a result, a lot of innovative and exciting ideas in the internet and the related technologies - Open source, Wikipedia, AdSense/AdWords, Blogging, Internet telephony (Skype/Gtalk), Internet Video (YouTube/Google video), Orkut, Google Earth .. to name a few!

Google has definitely been one of the major (innovative yet profitable) players on the internet and, in my opinion, has reinforced the fact that if you have a cool product or a service, you can make a difference. The company must be an inspiration for many a folks who do want to make a difference through their own cool ideas. And in my humble opinion, a "cool" offering is the one that has:

• simplicity - is simple & intutive yet effective and hence attracts new users easily
• speed - is faster than the existing applications .. because most of us are short on time & patience
• speciality - is unique in someway and has something that others do not offer

There are a plenty of areas yet to be explored and there is a huge opportunity for people who wish to make an impact. All that is required (I am sure everyone knows it already) is to have an "idea" and then implement that keeping the 3Ss (mentioned above) in mind.

Internet blogs are one of many "cool" concepts to have captured the attention of worldwide users .. and I too decided to get hooked !! My agenda is simple - to publish my thoughts on various topics and once in a while share stuff that will be useful (hopefully) for at least someone out there!

I will park my pen here .. and hopefully come back with something interesting ...

:PM