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General Thinking

Apple Maps – Australian Fiasco

So now the police have set about putting up warning about various mapping product. At least the Australian police seem to have cartographic experts who are qualified to put out warnings about cartographic products!

So a few weeks back I was driving from a place called Raichur (North Karnataka) to Bangalore. Yes its a place not too many people have heard about just like Mildura. I was using Google Maps for directions and somewhere along the way this wonderful app located me somewhere in the middle of Czech Republic. Obviously I was a little concerned when the map showed me off by a few thousand miles. To add to the misery, there not a soul in sight for kilometers and I had to continue driving hoping that the direction in which I was headed was correct. I was in Czech Republic for about 40 Kilometers after which it put me back in India.

Fortunately, I did not approach the police about the incident and also I do not believe that the Indian cops are very keenly interested in cartographic issues.

So, What is the point? Well, clearly nobody is perfect. The problem with Apple is that there are just too successful. They have the highest profits in the mobile industry. The company is therefore under a great deal of scrutiny. Also, the millions of blogs that follow the company need fodder to write about and hence they hang onto any obscure report that may materialise.

I would like to know how many of the blogs the Australian Apple Maps incident have actually spoken to the officer involved!

The blogging community need to leave Apple alone. They have made a mistake and have admitted to it. They are not crowdsourcing data, which means that their product development is on a different slope as compared to Google. Let them do what they believe is right and then time will let us know if the approach was right or not.

Till then, just let them be.

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General Thinking

Conservation

So, there is a lot of talk about how we are leading lives which are unsustainable in the long run. Societies have needs that are unsustainable, population growth is unsustainable, consumption growth is unsustainable and on and on…

But think about it, is the entire capitalist economy not about growth? And if this economy has to thrive and survive and deliver consistent growth, how is that going to come about, and manage to co-exist with the concept of sustainability?

 

TED_Tristram_Stuart_The_global_foo.mp4 Watch on Posterous

 

If you watch the TED talk that is posted above, you would note that in developed nations food production has now peaked to 4 times the average requirement. This means that the ease with which food is now being made available ensures the demand for more. 

Businesses by definition need growth and in order to grow they make product or services that people would want. Most often these are products or services that would make lives easier! This is the root cause of the problem of sustainability.

I had a moment of epiphany today, when I was forced to take bath in cold water due to the lack of electricity and noticed, how much less water I used! The odd temperature of water made it uncomfortable for me hence I used less of it.

Now, in my experience the moment you make things harder for people, the better they become at conserving!

Let us say, you supply only cold water during winters in the pipes. Well, I do not foresee many taking those long showers. Water Conservation!

For that matter, if bread was not supplied in the supermarket and one was forced to bake the bread themselves, I do not suppose that the ending pieces of the loaf that most throw away would ever be thrown away. Food Conservation!

Let us say that the furniture business model involved building the furniture by yourself. A model that is the grandfather of Ikea, which involved some sawing and shaving the wood to put the end product together; the demand for wooden furniture is sure to plummet. Timber Conservation!

The underlying idea being that in order to conserve something, you need to make it harder for people to acquire and use the same. Businesses would never want to do this; it is sure to cause their value to disappear, if such practices are adopted. Over the centuries, man in his constant pursuit to make lives easier has simplified consumption. This consumption now threatens to cause the problems in the future, simply due to its unsustainability.

We need to start thinking about the kind of growth that should be avoided. Unfortunately, currently we are replete with only this kind of growth.

How many businesses would be willing to sacrifice growth to ensure sustainability?

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General Thinking

Leave Mark Alone…

At the time that the Facebook IPO was put up and the company was put up for sale, everybody knew that Mark Zuckerberg was going to lead the company and that he was going to retain the majority voting rights. He had unequivocally announced that nothing was going to change at Facebook. Then why the hue and cry??

Facebook was a company that had little revenue to support its valuation. The company was to be listed at 100X. Or in layman’s terms 100 times the earnings that the company generating. Now, in the investment world for a fairly mature firm 10X to 15X is considered fair valuation given decent prospects in the coming years. For a high growth company, which happens to be the case with smaller firms due to the base effect, a higher multiple of 30X to even 150X in certain cases are considered.

Facebook will be a decade old, in another couple of years. A seventh of the world population is on it and another sixth (china) is banned from logging onto it. Such a firm by no means can be considered a growth firm. The first five years can be considered growth stage, this company was well and truly beyond that.

There were a few investors (Peter Thiel and company) who invested early into the company. Since Facebook was in no hurry to list, all the other VC firms that had not invested into Facebook early enough thought; ah, shucks, we should have invested there… So they did invest at whatever valuation was demanded by the team as facebook, with the last investment round of funding coming from Goldman Sachs at as abominable valuation (50 Billion USD). Now, in order for these latecomers to justify their investment, they needed to further inflate the valuation. Hence at the time of the IPO we landed up with a $100 Billion dollar valuation.

Every soul that invested at that valuation was foolish. There was no way that the company could have ever supported such a valuation. It was designed to fail. 

The stock is taking a drubbing not because of the way Mark is leading the firm, it was designed to take a drubbing.

Stop blaming him, blame the investment bankers who sold the IPO.

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General Thinking

Apple – Samsung Trial

All the mobile manufacturers are not going to remain knotted-up in arbitrations and trials forever. They will eventually reach a settlement. This fact was known even before the verdict that came out last week. This was the precise reason for which Judge Koh had mocked the lawyers of both the firms for wasting the courts time, during the arbitration stage.

The only real change that comes about due to the verdict is the negotiating power. The reason the CEOs of Apple and Samsung could not reach an agreement earlier, when the court asked them to seek a solution outside of court, was because of neither knew where the negotiating power really lay.

If you look at it from the perspective of game theory, the two sides were not reaching a state of equilibrium due to the lack of clarity over the worst case outcome.

That has been cleared out by this verdict, for the purpose of both sides. If Samsung is facing up to trouble today, Apple knows what trouble could head its way another day.

I predict that settlements will come thick and fast over the next 3 years or so and a new system for sharing patents like the FRAND will emerge. Then they will eventually fight over that as well. But that is for later. This one was just about creating the negotiating platform.

 

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General Thinking

Olympic Graveyards

I often wonder why countries/cities decide to host the olympics…

More importantly why do cities that are extremely well know decide to host the olympics?

The rationale happens to be that the hosting of the Olympics will provide economic stimulus and spur growth for the region where it is being hosted. Well, that may be true if one of two conditions are met:

1. The games are conducted in a city that is not very well known across the world. In such a scenario there is an intense focus created on the city, which did not exist earlier before the games.The names of Olympic cities are generally repeatedly talked about in press and news and get very well internalised in the minds of people all over the world. It can be expected that since the city was not known well earlier, like in the case of Beijing, the investment and new infrastructure will be used by tourism and the roll-on business generated in the future.

2. The other case where the Olympics can be held is if the city is using its existing infrastructure to host the games. In the case of an established city like London or Paris, an event is not going to generate any further mileage in terms of tourism. These are very well known cities and international tourists are not going to suddenly want to flood the city because an event was held. To the contrary generating new infrastructure adds a huge burden to the city and additional business that dont find use after the games. Athens is a shining example of what happens when a well known city splurges on an event that is not going to bring additional tourist flow in the future.

In my opinion London too will have an Olympic graveyard, now that the games are over.

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General Thinking

Frenemies

I wonder how frenemies live?

I am an entrepreneur and I have several business relationships. With the people that I work with, I either get along or I do not get along. There has never ever been a case of getting along while not getting along. What baffles me is when I see companies like Apple and Google doing precisely that. On the one hand they go about filing cases against each other in every court available on planet earth, while on the other hand they tend to develop applications together, buy patents as a consortium and so on.

How does somebody be at war and peace at the same time? How do you not get to a position of resolving one issue while being able to forge partnerships on another? How do you decide? It just baffles me.

I would imagine before every decision, these companies would engage in several complex calculation using game theory in order to arrive at what to do!

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General Thinking

Indian International Policy and Corruption

This was a thought that just entered my mind the other day. When India got independence there seemed to be a very strong alliance between India and USSR. If I were to think of the only one thing that India and USSR had similar amounts of, it was corruption. The communist government had converted the USSR into a terribly corrupt system where everything had to be bought by money because nothing was legally permitted. In India it was perhaps only the politicians who were corrupt. Today as India changes its International policies to better accommodate US in the grand scheme of things, I wonder if the Corruption Power Parity that was sky high once has evened out? Is US political system becoming as corrupt as India?