Book Review #15 of 2021: How I almost blew it.

Incredible lessons from India most successful digital entrepreneurs by Sidharth Rao

A fascinating and must-read book for people who want to get a synopsis of start-ups of India.   The book details the struggles of some of the Indian start-ups and how they almost blew it.  One common theme in the success of all startups was the perseverance of founders and sheer dumb luck of raising capital at opportune times. While The Golden tap by Kashyap Deorah sticks to the Big boys, this book details many entrepreneurs the author was personally involved with. 

One of the reasons I picked up the book was Sanjeev Bhikchandani – the mentor and poster boy for the startup world shared a tweet on the book from Bookmyshow founder. One cannot agree more that the focus of startups should be to like cockroaches and only a few survived the dot-com bust and GFC. 

I have been lucky to have known Sanjeev Bhikchandani professionally.  As a media Analyst, his business was competing with the classifieds section of Indian print and I had to gauge the trends.  Also, because HT media and TOI group had businesses that compete with Infoegde.  Sanjeev Bikhchandani would never miss an ICIC securities conference probably because we were the IPO bankers. I had on multiple occasions the chance to listen to Sanjeev’s views in between breaks and lunch during conferences. Sanjeev loves to talk.  

During the Rahul Yadav – housing.com fiasco, I happened to quiz Sanjeev on what will happen to Rahul and how does he see the situation. While one would expect competitors to enjoy such developments. Sanjeev clearly had kind words to say of Rahul Yadav, how the guy is very competent technically and should be able to definitely start something new. Sanjeev was always focused on profitability and he narrates an interesting incident on how a VC would react saying that “ If you are making a profit then you have a vision problem “

Some interesting quotes:

Investors and business owners compare their relationships to marriage. I believe that their relationship is somewhere between a friendship, marriage, and business relationship.

Rediff.com was to India what Yahoo! Was to the silicon Valley in the nineties. Sadly, both blew up. 

If you want to succeed in China get close to the government, if you want to succeed in India – stay away from the government.

Deep Kalra – Makemytrip – I understood that online stock broking will ultimately belong to a financial institution.  So he chose online travel company.  Time for Deep to Meet Nitin Kamath – Zerodha.

Once you spot the opportunity, acting as fast as cheetah is the only right move. 

Book review #Twelve of 2021: Robert Iger – The ride of a Lifetime

Lessons in creative leadership from the CEO of Walt Disney company

The book reads like an autobiography of Robert Iger – one of the most successful CEOs in the world.  Robert Iger deserves a lot of respect given he has been successful in steering a company of the size and legacy of Disney. The Media sector has seen unprecedented disruption in terms of delivery of content and Disney has been able to successfully disrupt its own traditional distribution to pave way for Disney+ and be a valid alternative to Netflix, prime, etc.

The story of Robert’s rise is fascinating. While the success rate of acquisitions is generally poor, he was able to execute multiple high-ticket acquisitions like Pixar, Miramax, and Lucas films and the latest being 21st-century fox.  The book details the path Disney took and how he was able to execute and integrate multiple acquisitions.

Disney and Ronnie – A failed bet

Disney in India however, I think made a colossal mistake by investing in UTV of Ronnie Screwvala at astronomical valuations. While the acquisition of Hungama channel made sense, the acquisition of UTV was more of its own inability to build an Indian film studio. What Disney India did not realize was that Ronnie was a craftsman in creating new business and disposing of them at rich valuations based on potential despite low profitability.  Many Disney employees would openly share with me later, that everybody realizes UTV investment was a big mistake, but nobody talks about it. Ronnie Screwvala was a master at telling stories and would try multiple things to woo analysts for research coverage. This included fully paid trips to Japan for understanding video gaming. I am not sure anybody remembers the mobile gaming division of UTV.

Star India – Disney’s Best bet for India

The acquisition of 21st Century FOX, however, has given Disney a formidable position in India with Star India and Hotstar.  Also, Disney has been smart in recognizing the true value potential of STAR India and the talent at star India and elevated Uday Shankar to the role of president of Walt Disney Asia.  Uday Shankar’s journey has been that of the meteoric rise and off risk-taking which defined the way of Star India. Many seniors team at star India would regularly tell me that it’s a crime at star India to not fail/take risks.  

3 Key thoughts from Robert’s career:

  • Be relentless in pursuit of perfection. 
  • Take risks and fail rather than not fail at all. Fear of failure destroys creativity.
  • KNOW WHAT YOU DON’T KNOW.

Why you should not play tennis like Boris Becker and play poker like Andre Agassi

Deepak Dhayanithy in his book “Strategy Huddle” talks about a very interesting event to understand behavioral strategy .

This is about Andre Agassi telling the world how he had an important “tell” when he faced his great rival, Boris Becker.   The “tell” was that Boris tended to stick his tongue out, pointing towards the direction of where he was going to serve.  So, if Becker was serving at deuce and he was going to serve wide of the court, his tongue would point towards left and so on. Agassi picked up on this “tell” and won a significant majority of his matches against Becker.   Also, Agassi only used this “tell” selectively in big matches only.

Andra Agassi talking about the Tell

Game theory Optimal Vs Exploitative

Well, today the poker world is increasingly debating between GTO vs Exploitative play.  What Agassi was doing was exploitative play and he used it optimally to ensure Boris Becker did not adjust his game accordingly and not allowing him the Game theory optimal play.  While, Boris Becker picked up poker after Tennis and was a celebrity Pro at PokerStars, given he had to declare bankruptcy, he was not likely good at it.  And given Agassi’s observational skills, I am pretty sure he could have been a great poker player.

The book “Strategy huddle” is a goldmine of many such incidents from the world of sports.  For a football fan, the book is a must read, given the number of examples of game changing strategies in the world of football listed in the books.  The book covers 27 different sports phenomena across 9 chapters and with each chapter themed on a strategic management topic.

Book Review #Ten of 2021: Hard thing about Hard things

A book by Ben Horowitz. I heard it is so popular among Venture capitalists, that they refuse to fund a startup until the founders have read this book. 

When a book has praise from Mark Zuckerberg, Larry Page, Dick Costolo, and Peter Thiel on its back cover, one is guaranteed he is reading a good book.  No wonder this book was recommended to me by 2 CEOs of startups who have successfully raised money.  The book stands out from other books as it tries to answer some critical challenges common for startup founders and how to navigate them. Hiring and firing and promoting talent are some of the most important challenges for a startup and there are no easy answers. The book’s appeal to me was limited as its core audience is a Startup CEO.  Nevertheless, I found some apt ideas to evaluate listed companies and CEOS. 

Companies not meeting guidance:

Nobody cares about why u missed guidance. So, stop kidding. They are no good excuses. Also, guidance mgmt. is a slippery slope. It is very common for companies to justify the low growth/margins this year owing to lumpy last quarter or one-off.  The question is did they disclose last quarter there was a one-off or it was lumpy?

Learnings for across companies:

Employee Pay:  In many companies, the best way to get a raise is to generate an offer from another company and then threaten to quit. This I witnessed is a very common practice among equity analysts and the team felt cheated when few people were able to get raises just because they got counteroffers.

Guidance miss- Nobody cares: Companies either meet guidance or miss guidance.  Companies come out with elaborate press releases to explain reasons for missing.  Frankly, nobody cares. Either get better at forecasting or stop forecasting.

Quality beats quantity:  Almost all managers will try to enforce a quantitative way of evaluating employees. For equity analysts, some of the quantitative measures are the number of calls done to clients, number of reports written, etc.  I have seen gross ways of people gaming the system. Analysts would record calls done to the fund manager even if the FM did not take the call or hang up the phone as he was not keen. Every insignificant event is converted into a report as a stock/ sector update. Thankfully, our organization soon understood how the system was gamed and discontinued it.

A good book recommends or gives ideas of other good books. Some recos:
  • Yertle the Turtle by Dr. Seuss
  • Only the paranoid survive – Andy grove
  • Good to Great – Jim Collins
  • High output management – Andy grove
  • Jeff Bezos 3-page letter to shareholder in 1997 outlining the company’s story. Attached

Quotes from the book ( For CEO’s / Founders) :

 What would you do if capital was free?  Is a dangerous question to ask an entrepreneur.   It’s kind of asking a fat person.  “what would you do if ice-cream had the exact same as broccoli?

The best option among a particularly ugly set of options.

If a warrior keeps death in mind at all times and lives us though each day might be his last, he will conduct himself properly in all his actions. 

On company missing guidance: they were not lying to investors, but rather, they were lying to themselves.

We take care of the people, the products and the profits – in that order.

Being a good company is an end in itself.

Great CEOs are basically people “Who didn’t quit”.

Most people define leadership the same way as Supreme court justice defined” pornography “I know it when I see it.

Book Review #NINE of 2021: Extraordinary Delusions and the Madness of Crowds

An Investment classic published in 1852.

People like crowds. The bigger the crowd, the more people show up. Small crowd, hardly anybody shows up. -Gallagher

With Gamestop, Tesla, and Bitcoin being the most talked-about investment idea in the last few months.  I decided to get back to the first principles of understanding and knowing manias. The book chronicles 3 manias in the world of investing namely Mississippi mania, the south sea bubble, and Tulipomania.  The book scores high on detail but low on storytelling and I would recommend people read up about these manias on Google or Wikipedia.

The Manias often were started with a novel idea, followed up with fancy stories, and then leading to mad frenzy among the crowds.  The most common result of all manias is enriching a few and losses for the uninformed gullible crowd.  Personally, I believe, more than understanding the nature of mania, the events give us a deep understanding of the markets and investor behavior.  

It is a very common saying in India that a bull market is not peaked until the local paanwala does not start offering you investing advice.  Well, all I can say is I get a similar feeling about Bitcoin as people with no knowledge are questioning my reasons for missing out on this opportunity.  I have a golden rule in investing; I don’t invest in something I don’t understand. This was a lesson learned very early in my career when I invested in pharma stocks.

Recently, Lot of people at 15000 Nifty have started giving me unsolicited tips in stocks. While, I still remember I got worried about the 2008 markets way early in 2006, and stocks moved up much higher before the 2008 crisis.  I am not saying we are in a bubble situation, but there is of course a mad frenzy in a lot of areas. 

Please don’t convince me to invest in PSU stocks, ever.  I would die a pauper rather than invest in PSUs.

Link to my blog of 2006 November – Markets: Dizzying Heights.