Monday, January 13, 2014

Aam Aadmi Party: Branding, Communication & Inconsistency

AAP. There is no denying that the word itself gets people interested. There is so much content being produced and consumed about the Kejriwal team, that no blogger craving for a larger audience can afford to not write something about AAP. Having given a hint about the purpose of this blog, I would like to go ahead and make it clear that I am not anti AAP or anti Kejriwal. The promise of a transparent and corruption free government is bound to make every Indian excited, and I am no different. In fact, for the first time since I started taking interest in politics, I am finding myself with the luxury of choosing between two leaders who deserve to lead the country. This is exciting news. Because so far, India has always seen the problem of lack of choices rather than the problem of making a difficult choice.  

Equally satisfying is the fact that for the first time, my generation has started taking active interest in politics. We are no longer indifferent. We are debating on key issues. Issues like malnourishment in a state and the economic growth under a chief minister. We are talking about the transparency in a party and the merit of candidates. We want to hear the opinion of PM nominees on key issues before we cast our vote. For the first time we are monitoring the steps taken by a CM during the first two weeks at office. This I think is the biggest success of both NaMo and Kejriwal. These are the signs of a healthy democracy. 

Now let me mention a few areas which I find concerning. I will exclude all the issues which are already being discussed in the mainstream media. I will also avoid commenting on the policies which were announced post the results of Delhi assembly elections. 

1) Target Audience: Who is Aam Aadmi? 

The AAP team has repeatedly focussed on the fact that unlike other parties, they are here to serve the common man, the aam aadmi. But who is a aam aadmi? From the public statements of party leaders, it seems almost everyone is an aam aadmi. From riksha waala to doctor. From an IT engineer in Bangalore to a professor in Jaipur. AAP's definition of aam aadmi includes everyone whether BPL person or someone earning 2 lacs per month. 

This surely does not look like a niche to me. From my experience of talking to VCs and entrepreneurs, I can say one thing for sure: If you say that you will cater to a segment which is unserved to by your competitors and in the same breath you say that your target audience is 95% of all users, you will be kicked out of the meeting room within five minutes. 

Why does not the party simply say that it aims to serve all Indians equally instead of focussing on the word 'Aam Aadmi'. Isn't this misleading. 

Though I can understand Kejriwal's point that other parties are corrupt and criminals, I know for sure that they can go to any extend to get votes. I fail to understand Kejriwal's claim that these vote thirsty parties are intentionally ignoring 95% of the voters. Does not make sense. 

(On a lighter note, I find it strange that the Shobha Des and Mayawatis of the world have not called Kejriwal sexist yet. What about the Aam Aurat? Why is she excluded from the party name) 

2) Merit: What Are The Metrics?

As a transparent and democratic party, shouldn't there be more details regarding the metric for selecting its candidates? Unlike AAP, other parties have been in existence for years. There is supposedly a system in other parties where either family members of prominent leaders or businessmen with spare money to put into campaigning or party workers who over the years show there mettle in politics are given the ticket from specific constituencies.

Tata Tea - Neta ke job ka qualification

The metric made public has been that we will give ticket to honest people who want to serve the country. Both these parameters are not only subjective, but also have a ceiling. One can only be 100% honest, not more than that. I am sure that the party would claim that all its members are 100% honest. So how do you choose from so many honest people? 

Though you can personally talk to some shortlisted people and understand their past work, But with the loksabha nomination form available online, there are bound to be many applicants. How would AAP do the first screening? CGPA cutoff? GMAT score? Aptitude test? 

Aptitude test would be good start considering we would never want to have an honest yet foolish person leading our constituency or state or nation. 

3) Inclusion vs Autocracy

I love the AAP agenda of inclusion in politics. It sounds good that everyone will get a chance to represent his/her people. It also sounds good that all party decisions will be taken in a democratic way keeping the opinions of key people in mind. But somehow this promise contradicts what I see on the AAP membership form and on the loksabha nomination form.

Take this for example: 

Screen shot of clauses in the AAP membership form
Screen shot of clauses in the AAP membership form

What if I am an honest and patriotic citizen of India who wants to see his country grow, but I believe in some cause which conflicts with the Party objectives and want to continue working towards that cause? Am I not allowed to join AAP? 

Or take this for example:

Screen shot of clauses in the AAP Loksabha nomination form

What if I sincerely believe that acquiring land for the greater good of the society is a necessary evil and do not not want to bring laws which can impact this process? Should I forget about joining AAP and instead join the corrupt parties? 

How is this democratic in any way. A bunch of you guys have defined the party ideology and now new people will be added to that bunch only if they agree to your ideology. How will the party have any meaningful internal debate in future if everyone in the party has exactly the same ideology. Are you not creating too much selection bias? Stuff your party with people who have all left of centre views? 

Screen shot of clauses in the AAP membership form

The one above too is debatable. What if someone who has been convicted of a crime, served his sentence and is now a changed man. Is he not allowed to participate in your 'Aam' movement. Even after serving his sentence, he has lost his democratic rights? 

4) AAP Supporters: What Is Your Stance? 

I wrote a blog post long back where I tried to give my analysis of NaMo as prime ministerial candidate. Soon the NaMo and Congress fan brigade started abusing it though I was being as neutral as possible. This is exactly what pisses the neutral people off who are trying to have a healthy debate. Are AAP fans doing the exact same thing now? 

Whenever anyone criticizes AAP, the fans would start giving example of other parties and how they are worse. That is meaningless. We have already agreed that there are problems with the existing political system and AAP gives us hope that they will be different from the existing players. So when someone says that AAP is doing politics of appeasement, I do not expect a counter argument that even others are doing it. 

Also, if AAP stands for aam aadmi and making them our representative, why are we rejoicing when CEOs of investment banks, editors from paid media, owners of companies are joining AAP? How are these people different? Every party has industrialists and journalists as its members. Does it mean anything? 

5) Means vs Ends

Kejriwal wanted to get the Lokpal bill passed. He also wanted to implement some other policies which he believed in. I will not start a debate about those policies, but I find it commendable that he seeks power to introduce his policies. It is a good stance. 

But the AAP team must understand that we support them because they seek power only to implement their policies. If it starts looking as if AAP is implementing certain policies, just to get in power, then the cycle is reversed. 

The clarity of means vs ends needs to remain intact. AAP is here to serve the nation, not to win elections.

Saturday, December 21, 2013

Want To Save The Indian Economy? Get Married

If you are of my age then you would probably empathize with me. Every time I login to Facebook, I see the wedding pictures of some or the other friend of mine. Though I had anticipated this scenario long back but I could have never anticipated the fury with which it would strike upon me. If you are not going through this phase, then brace yourself. Because sooner than later, those pics are coming. It is bound to happen. With 1.25 billion people and almost 50% of the population below the age of 29, the 'wedding pictures flood' is unavoidable. So sit tight, coz as they say, winter is coming. 

But it is not just about the wedding pictures. After a couple of weeks, people follow it up with the 'honeymoon pics' post. These posts are like 'click baiting'. I click on the pics, super excited, only to see a fully dressed couple with mountains/sea/highway/FatUncle in the background. Not much of a view if you ask me.  

Free Tip : Unless you are planning to post some indoor pics, do not imagine too many people getting interested in your honeymoon pics. 

Also, what is with people going on wildlife safaris and trying scuba diving on honeymoon. Din't they have an overdose of adventure recently. Do they forget that they just got married. And is watching tigers eat, in company of a guide and 20 other people, even considered romantic? 

The fact is, if you are having too much 'fun' on the beach or on the hills, then the trip is less likely to serve its true purpose. Get the priorities straight.    

Anyways, enough of introduction. This post isn't really about couples and wedding pictures. Its more about the economics of it. Recently, I read an article about online matrimony classifieds space. With players like and BharatMatrimony, it is poised to become a Rs. 1500 crore industry. This got me curious and I tried to read more about the Indian wedding industry. And this is my conclusion:    

If you think you should do something about the sorry state of Indian economy or want to help in the fight against poverty, then this is what you should do

Get Married Now. Make it Grand. Do it as often as you can. 

If, because of such behavior, your spouse kills you one fine day, you will die a martyr.

Apart from enjoying the obvious benefits of having multiple life partners, a 'serial' groom or bride does a big favor to the country. Well we all know how important is the rotation of capital for any economy. The faster money changes hands, the better it is. But also, its important to understand that weddings probably have the highest multiplier when compared to other government/private spendings. The amount of activity induced by every rupee spent on a wedding is staggering. Let me tell you why.  

Let's see some simple facts first. 

Indian wedding industry is worth $25.5 billion (Almost INR 158062 Crore). This is more than the GDP of Afghanistan and 20 times of the Indian cloud computing industry.

  • No. of Indian marriages in a year: Approx 1,00,00,000
  • Gold and diamond jewellery market worth: Rs 60,000 crore
  • Apparel market (wedding) worth: Rs 10,000 crore
  • Durable goods market worth: Rs 30,000 crore
  • Hotel and other wedding related market worth: Rs 5,000 crore 
  • Pandal and venue decoration market: Worth Rs 10,000 crore
  • Wedding invitation card market : Worth Rs 10,000 crore 
  • Bridal Mehendi market in India: Worth Rs 5000 crore

And guess what, this this is just the tip of the iceberg. These figures only indicate the amount of money spent by the families of groom and bride. But we all know how much preparation guests do before attending a wedding. 

An invitation to a wedding invokes more trouble than a summons to a police court. - William Feather 

Remember the cute girl who swept you off your feet at your cousins wedding? Well that kind of cuteness does not come for free. There is a lot of preparation that goes into it. Everyone tries to look their best. Money spent on looking good in someone else's wedding is an investment they say. (I tried this at my brother's wedding. No ROI yet)

Add to it the boost to tourism which wedding related travel provides. Apart from pilgrimages, no single category boosts tourism more than weddings. Travel agents make a killing and traveling by bus or train becomes an adventure sport. 

Then there is the gifting market. Largely due to the concept of giving return gift to close relatives. Though its going out of trend fast, it still beats valentines day and other such festivals hands down.

And we've got a toaster and everything. So there is no reason for the wedding. - Karl Pilkington  

But the numbers only tell you half of the story. The fascinating thing about a wedding is the number of people involved in the event and the number of lives it touches. 

If we try to create a list of all people involved, it will take forever. The 'tent house waala', florist, eunuchs, match makers, wedding venues, event manager, DJ, caterer, bus operator, car rental guy, IRCTC, everyone who makes money on railway stations, beauty saloons, clothing stores, accessories stores, fragrances stores, pandits, printing press, mithai waala, Ghodi Waala, band baaja, dhol, dance trainer, stage decorator, electrician, gardner, camera man, hotels. 
The list can go on and on.

And this is exactly what makes weddings so special. This is what gives it a huge multiplier. The fact that the money goes to so many different people. The fact that many industries rely fully on the wedding season. The fact that the industry is recession proof. The fact that the nature of the wedding season is cyclic yet not uncertain. 

So go ahead, celebrate consumerism, raise a toast to the 'big fat Indian wedding' and keep it coming.  

Thursday, July 4, 2013

Why Family Owned Businesses Are More Sustainable Than We Think

Few weeks back I read a book by Devdutt Pattanaik where he touches the debate between family owned businesses and the, now more acceptable, professionally run businesses where we do not necessarily have an owner but instead a CEO who can be fired by the board anytime. This led me to write the below post and explain why the former style creates more sustainable businesses than we think.

Imagine a CEO of a large organization and what he personally must thrive for. I am not talking about the founder and CEO of the company but a man who has climbed his corporate ladder and then reached the position after years of turmoil and job switching. He knows that that his son/daughter is not going to inherit the position from him. He also knows that he might not remain the CEO of the organization forever. So clearly, his incentives to create a long lasting and ever-growing organization have somewhat reduced. He is less likely to take decisions which will prove valuable only 25 years from now. Instead his first objective would be to prove to his board members and share holders that he can help the company achieve a better growth rate than his predecessor.

Now lets see who the share holders and board members are. Like the CEO, the board members too have a limited tenure. This would mean than it is in the interest of everybody sitting in the board room to prioritize on creating value in the next 10 years rather than in the next 25. The CEO wants to get a larger bonus by improving the bottom line and so do the rest of the employees. Even the investors, be it retail or institutional, want their money to grow as fast as possible. As an investor you don't want the company to shrink today so that it can grow 25 years from now. You would rather exit now and reinvest later. This way even the investors put pressure on the board to show year-on-year growth and fast improvement in bottomline. So for the CEO and the employees, it becomes a must to relentlessly thrive for growth which is better than last year and so on. 

Structure Of Family Owned Businesses

What this leads to is the scary avoidance of steps towards creating sustainable businesses. Power companies would not worry about running out of coal 100 years from now. Mining companies would not worry about protecting the community around their mines. The tough decisions which an owner will take in his company to ensure he passes something valuable to his grand son would never be taken. 

This loss to the ecosystem does not get into the accounting books of any company and does not necessarily affect their valuations. Though we do see organizations giving equity to top management and running the ESOP programs, it somehow does not force you to take those tough decisions. It is probably time that we discuss and rethink the whole structure and come up with a better structure.   

Thursday, June 13, 2013

Why I Want Narendra Modi To Win and Why It Has Nothing To Do With The Man Himself

There are thousands of articles floating in the media about the Gujurat CM and about his PMO ambitions. Such atmosphere of debate about our PM candidate itself is an achievement for India and promises of a much more informed voting population than ever before.

In this article I am not going to act like a NaMo fan boy nor am I going to be super secular and talk about him being a mass murderer. I will try to explain why the 2014 election is not just about Modi or Rahuls of the world, why the results will have a long lasting impact with much more at stake than party politics. 

There is more to it than just UPA vs NDA

Lets concentrate for a second on the things stressed upon by the NaMo campaigns. He has turned no stone unturned to inform us about the improvements he has done in Gujurat. There are efficient Public relations companies monitoring each and every post on social media. Millions is spent on managing FB pages and generating content for all forms of media. Gujurati societies around the world are lobbying hard to get him some international acceptance to flaunt back home. Consulting firms are sweating day and night to create a perfect manifesto and great video presentations for him. To back all this up he has the fact and figures supporting him. There is no doubt in anyone's mind that the development in Gujarat  has been nothing short of exemplary. 

In such a scenario, if NaMo becomes the PM and rules for a long time, his strategy will start to become considered as a success mantra. Politicians around the country will try to replicate his strategy. Chief Ministers in all states will drive growths in their states to help their cause of becoming national leaders. MPs an MLAs will try to make their constituencies excel in order to gain attention of party leaders and media. The Kejriwals of the country will get encouragement and a hope that growth coupled with publicity in the most lethal combination in Indian politics. We will move towards a country where elections are fought based on development agenda and not false promises of upliftment of Dalits. And with this change in the mindset we will see, maybe, the next election fought between Modi and another leader who is as pro-development as he is secular. We will get a PM candidate who has the track record and the vision to lead a country and still is acceptable to the minorities as well. 

And in a scenario where NaMo loses, try imagining what will go into the minds of his fellow politicians. To them it won't be the defeat of a mass murderer, to them it will be a defeat of an ideology of growth. They will think of a man who did not give free electricity to the farmers and instead tried to give them an economic environment where they will be able to afford electricity. They will think of a man who instead of giving reservations for females, gave them the schools and safety where they would themselves excel and get into the work force. They would think about a man who tried giving more cotton mills and dairies for employment instead of starting NREGA. They would think of man who was more concerned about his image in the public than his image in the party. And they will think of a man who lost the elections badly. They will get reassured that Raja Bhaiya can get them election victories not Ex Mckinsey employees. They will be reassured that distributing liquor gets votes not some fancy presentation by an international ad agency. They will get reassurance that development does not sell in India. 

For the next 15 years we will never again see elections fought on development agenda. No politician would dare to touch it again. We will again have the same manifestos, same reservations, same state of mismanagement which we have started to loathe. You me or the country can not afford that to happen. Inspite of all the shortcomings that he has, Inspite of him not being the perfect man to be in PMO, India can not afford to let Modi loose. 

Related post:

Wednesday, May 1, 2013

Destiny, Big Bang and Why There Isn't Much You Can Do About Your Life

Destiny is a tricky topic and often a boring one too. There are those who believe that all our lives are pre-written and then there are those who think we create our destiny by our skills and hard work. I am not going to get into a debate over this, nor am I going to impose my beliefs on you. I do come from an extremely religious family and happen to be a firm believer of destiny. But in this post I am not going to discuss about the things which I learnt from my grandparents not would I discuss our ancient scriptures. I would stick to the things we learnt in school. I will stick to the laws of motions and the chemical reactions we memorized during our JEE preparation days. I would somehow try to make sense of the things all of us learnt in school and college. Being among the "below average" performers during my college days there might be some loopholes in the below line of thinking and I would really appreciate a healthy debate. (Don't be too harsh on me as I am the only one who has the access to delete other's comments on this blog)

So let me begin with telling you why I think a bunch of smart guys with a few Param computers can predict future. Well we know that whatever we do, whether its moving our hand, picking up a book, watching television, or just sitting is governed by the instructions our respective body parts get from our brain (Spine in case of involuntary actions). The instructions are electric signal which are passed through our neurons. The electric currents are produced in the brain cells as a result of specific chemical reactions. So basically these chemical reactions govern each of our actions. Since a 'thought' too is just and an electric current, even what we think while sitting idle is decided by the chemical reactions in our brain. Similarly the actions of others too are governed by the chemical reactions in their brains. Now to go further, these chemical reactions are governed by the collision of atoms and molecules in our brain. The collision and motion depends on the trajectory and velocity of these particles and also on the external forces applied due to other atoms and molecules. Now if I know the position and velocity of each atom as of now (provided Mr. Heisenberg focuses on my intent and does not play spoil sport), and also know the strength of different field forces applied, then I can predict there velocities and positions five minutes from now. Which means I can predict what someone would think and do after five minutes. This way, by considering the situation as of now and by doing some out of the world calculations, I can successfully predict the future. But the real fun is not in knowing what lies ahead, the real fun is in going backward in time.

Big Bang and Destiny

Based on the above, I can assume that the fact that you are reading this blog could have been predicted 5 minutes ago. And if I take my calculations even further then this could have been predicted even years ago. Infact as long as were are talking in terms of forces and trajectories, we can say that what is happening today could have been predicted at the time of big bang when all the matter around us was put into motion. Looking at the position and velocities of object just after the big bang, someone could have predicted the scene and events of today. Now this scares me. The fact that what I will do or even think about doing was already decided many many centuries ago is a scary thought. What it essentially means is that we have no control on our lives or even our thoughts. It means that it was decided centuries ago that this idea would come to my mind and then I would write about it. The fact that you will be reading this too was decided at the time of big bang itself.

So, the life we are living today is just a movie which was shot long time back. Its just that we are watching it now. The only thing you can do now is to either keep trying to change the movie which was shot long back or grab your popcorn and enjoy the show.

PS: Whether you decide to watch your life as a spectator or not too was decided long back. So don't bother yourself too much with the idea.

Friday, July 6, 2012

Why I Still Use Facebook

Every now and then I hear about how awesome Google's search algorithm is and how it uses infinite parameters to give the most relevant search results. Well to be honest, Google's search results never fail to astonish me, considering the mammoth task of filtering the enormous data available on the web.

On a different note I get to hear about how social networking and in-turn Facebook may soon loose its charm as people have finally learned to resist the temptation of peeping into other's life and that guys are no longer interested in knowing which movie did the hot girl in the other group watch this weekend.

But when you think about it you will realize that "We don't use social networking sites for networking anymore" And the most common use is not to know about other people. Just see the number of jokes, trolls, news articles and review you read while scrolling down your FB home page. We are using FB to filter content. And this is what makes me believe that the Facebook phenomenon may last longer then we expect it to.

Facebook As a Content Filter
Imagine that you are trying to predict what kind of articles I would enjoy reading. You might look at the my reading history and predict that I am only interested in topic xyz. But this approach will fail to predict that I might be immensely interested in an article on movies which somehow also talks about my college but in no way is related to xyz. So the best approach towards solving this problem would be to see what my friends, the people I have consciously subscribed to, are reading or sharing on the web.
I am confident about clicking on a link I see on my FB page because I know that it was read, approved and shared by someone I already know and has something in common with me. Add to that the fact that I can also see how many of my other friends like the same content. This ensures that the content I see is filtered by a group of people who are most likely to think in a way I do. I am in no way suggesting that everything we see on FB is interesting or relevant. But without discrediting the search algorithm, I think that as of now filtering by my friends is still the best way to filter the enormous amount of content on the web.
Hence instead of reading a whole newspaper end to end, I just prefer to login to my FB account and read what is most shared.

PS: You might want to like and share this blog in the interest of your friends who are relying on you to get them the best content from all over the web.

Sunday, April 8, 2012

Cafeteria Lessons: Sodexo Coupons

Few months back we saw most of the retail giants in the country refusing to accept Sodexo coupons against the items purchased from their stores. This got a lot of media attention and led to some hot debates on the need of such coupon services. I won't  waste too much time repeating whatever has been already published on various websites and would rather like to share my personal opinions about this line of business. But for those who got out of hibernation today, I have included the information available in the public domain as well.

1) Rule governing the issuance of food coupons

The rule says that food perks provided by an employer to its employees will be exempted from tax. This perks can be given in the form of free food on company premises during working hours or through food coupons redeemable only at food joints. The maximum amount (in form of coupons) which will be exempted from tax is Rs 50 per meal. This means the maximum denomination of such coupons can be 50 Rs. It also means that if you work 22 days a month, the amount of coupons you are eligible for in a month is 50*2*22 i.e. 2200 ( Assuming two meals per day). 

2)  Benefits to the company

Companies started offering food coupons to their employees to make their pay packages more attractive. Since the coupons are tax free, companies nation wide promoted this as additional income to their employees. From being a 'good to have' differentiator, food coupons soon became a must have component as all companies started offering coupons to their employees. Employers do not gain or loose much in actual terms other than the administrative hassle involved.

3)Benefits to the employee

2200 of tax free component means a potential saving of 660 Rs if the employee is in 30% tax bracket. The fact that until recently most grocery stores were accepting Sodexo coupons for every purchase and not just food items meant that this was pure extra cash to the employees.

4) Benefits/Losses to retail stores

Now here is the big twist. Retail stores have to share 3-5 % of revenue received through Sodexo coupons with Sodexo. Which means, for every 100 Rs you pay to a retailer with your Sodexo coupons, retailer can claim 95 to 97 Rs from Sodexo depending on the mutual agreement.

Sodexo Money Cycle: Courtesy Kiran Dhanwada

Also, the retailer gets his money only after 20 to 30 days which is a clear loss of one month's credit. 
Now the big question is why do retailers agree to such harsh arrangement. Initially, a few retailers thought of accepting Sodexo coupons as a great idea to drive sales. Since employees all over were looking for places to use their coupons at, accepting Sodexo was a huge advantage for retailers. But gradually as every other store started to accept Sodexo coupons, the advantage is gone. Infact, now any retail store which refuses to accept Sodexo while others are still doing so stands the chance of loosing a good volume of business. 

5) Benefits to Sodexo

  • 3-5% commission
  • 30 days of interest free capital
  • Every Sodexo coupon comes with an expiry date. There is complex procedure to renew the coupons when you fail to use them before expiry date but this option is seldom utilized. So practically speaking, expired Sodexo coupons means a 100% gain for Sodexo.

 Government's stand

One can wonder why would govt allow someone to print currency alternates. Govt argument is that since Sodexo coupons come with an expiry date, they can not be considered as currency. Further they can be used only for buying food items. (We all know this is not true). Taxman further argues that its important that it is ensured that the tax exempted money is actually spent on food and hence the need of Sodexo cards. What I fail to understand is that as long as you know that an individual is spending 2200 Rs on food per month, how does it matter exactly which money is he using. Why can't the govt just increase the standard deduction by 2200 if tax exemption for food is what they want. It is fairly acceptable to assume that any one who has enough income to be taxable, spends at least 2200 Rs on food for his family. Further, when govt can give an exemption of 800 Rs for transportations without checking if its actually spent on transportation why can't they do the same for food. Now this is where I see Sodexo's expenditure - Lobbying cost for such policies.

Why are coupons popular internationally

Lets say the officials of a nation decide to run a program for the homeless people in which the govt would bear the cost of food for all such people. Since the govt wants to actually create income for these people and not just give tax exemption, they might want to give away the income in form of coupons. Coupons would ensure that the people actually spend that additional income on nutritious food rather that buying cheap food and spending left over money on drugs or liquor. In such cases I do see a limited sense in this system. But coupons could be of great use when trying to deal with optional expenditures like education or books (unlike unavoidable expenditure like food).

There is much more which can be discussed about this topic. But I will include that in my subsequent posts.

Sunday, March 4, 2012

A Case In Favour Of Dowry System

Like any other sunday morning, I was browsing lazily through the numerous Facebook posts to see if there are any new wardrobe malfunctions or Poonam Pandey stunts. I somehow stumbled upon this short film on dowry cases in India (The uploader was smart enough to put a pretty face as thumbnail). It was just like hundreds other such films, giving facts about no of deaths and comparing stats state wise. This made me wonder about the origin of the system and how it got so popular in the first place. I am not going to emphasize on the need of fighting the dowry war here. On the contrary, I would try to justify the dowry system and its need in the Indian society. This is my personal opinion, so feel free to disagree.

Dowry: Better inheritance laws needed?

Why dowry system is perfectly fine?

As per Indian law as well as the societal agreement, the son(s) is entitled to inherit all the wealth and property from his parents. Since the daughter is generally married and living with her in-laws at the time of demise of her parents, she gets no share in the inheritance. This means a daughter has no clear advantage of having a rich dad. This according to me is gender bias. After all if parents are supposed to love their daughter and son equally, why cant they decide to share their life's earning equally with them. Now if I am talking about an era much before the popularity of written 'will' documents and legal contracts etc, the best way for parents to do this is to give to their daughter whatever they feel is her right at the time of her marriage. So dowry is just a way to divide parents wealth between the offsprings. The system looks perfectly fine to me and infact necessary to avoid gender discrimination in something as sensitive as inheritance.

So where did it all go wrong?

Since the bride's parents are the best people to decide on the entitlements, the system works absolutely fine till they decide how much they want to give away as dowry. Somewhere in time this arrangement must have got corrupted and the groom's family started interfering in deciding the amount of cash that should change hands. This created all the evil which we associate with the dowry system today.

Changing the inheritance law: Is it the solution? 

Well frankly, I havn't thought about it. There is so much content already available on this topic in the public domain that I dint feel the need to. I am just trying to argue that our traditions are not so dumb and evil as what media has started portraying. We certainly have a problem at our hands and I am in no way trying to deny it. But keeping an open mind while dealing with such issues will certainly help our cause.

Disclaimer: The author is male and has no sister to worry about sharing his inheritance with. His personal greed and eternal poverty may or may not lead to a conflict of interest.

Friday, February 24, 2012

Why You Can Rarely Find A Decent Second Hand Bike?

I have been planning to buy a motor bike ever since I moved out of college. I started shortlisting some of the models 2 months back keeping in mind that the bonuses season was fast approaching. The excitement was all there and everything was in place except, of course, the required moolah. The day finally came, lightning struck, and I was left wondering whether I can afford a bike or not. This led me to start considering  the option of buying a used bike. I spent my last one week looking for a decent bike which would provide some good value for money. But naaah..nothing seemed to click. This reminded me of a great explanation which an economist George Akerlof published in 1970. Let me try to explain that you in this post.

Imperfect Info Playing Spoilsport??

Lets assume that I am willing to buy a bike for anything less than, say, 70 Rs. This means I value the bike no more than 70 Rs. To strike a deal, I need to find some one who owns that bike and considers its value as less than 70. The whole procedure sounds good since I think there would be plenty of guys who would be willing to sell their bike for for say, 45 Rs. For the sake of simplicity let me assume that all bikes are of the same brand and make. Also, let me assume that either a bike is well maintained and worth 70 Rs to the buyer, Or it is ill maintained and worth zero Rs to the buyer. I am taking extreme figures just to make things less complicated and am sure this would not affect the conclusion. Now here is the twist. Whether the bike is worth 70 Rs is some thing that I would know only when I have used it for a considerable amount of time. If I assume that half of all bikes are ill maintained, then I have just 1/2 probability of getting a decent bike if selected at random. If I behave rationally, I would be willing to pay 70/2 i.e. 35 Rs for a bike since the chances of it being worth 70 are 50%. The seller of the bike on the contrary already knows whether the bike is well maintained or not. Since he values his well maintained bike at 45 Rs he would never be willing to sell it for 35. Hence I will not have any decent bikes for offer. The only offers I will get will be from sellers who already know that their bikes are worth nothing. This would again reduce the probability of getting a good bike to much less than 50% and I would be forced to bid for even lesser that 35. This will go on and hence I would never be able to find a decent second hand bike for the amount of money I am willing to pay.
This phenomenon arises because of imperfect information or rather imperfect distribution of information. The seller knows far more than what I know and this will eventually lead to the vanishing of whole market altogether. Imperfect information is again the cause of problems in insurance industry and high premiums that we have to pay for health insurance. In the later case its the buyer of health insurance who has relatively more information than the seller.
The only solution that exists in such cases is to reduce the gap of information between a buyer and seller by educating the one with less information. We do have some companies doing this in India who check used cars/bikes throughly and then explain to the buyer the true value of the used automobile. These companies come in the form of preowned car companies like Mahindra First Choice and will play an important role in keeping the used cars/bikes market alive. But as of now, my search for a good bike is still on.

Wednesday, February 15, 2012

Amazon's Junglee Safari

Amazon recently launched its price comparision venture in India, a company which it had bought 14 years ago for $250 million. You can not directly buy anything from the site but rather are redirected to the third party vendors who do the billing and delivery. Junglee will aggregate products from different websites such as Homeshop18, Univercell, Hidesign, Gitanjali, The Bombay store, Fabindia, Bata, Dabur, Reebok and ofcource

Here are some myth busters

1) Amazon thinks that this is the best strategy to enter India

All over the internet I am reading discussions over why this model is innovative and awesome. The fact is that they dont have any other choice. Restrictions on FDI in retail in India mean that Amazon can not have an very soon. This leaves them with no choice but to enter the market as an aggregator. There is some substance though in this move too. Junglee will give Amazon some important insights about Indian buyer's mentality and a loyal customer base which it can exploit once the Govt. approves FDI in retail.
Secondly, This will dilute the e-commerce market substantially. In retail industry its extremely important to not let your competitors gain the advantage of scale. Junglee would help a lot of small players to get a bigger pie of the market and hence will make the major players like loose some of their market share. This would mean that when Amazon enters india there wont be a handful of e-commerce giants with enough economies of scale to counter the financial muscle of Amazon. 

2) Amazon overvalued a company which no one knew in India and ended up paying $250 million for a domain name

I would have loved it if this was true. Would have made a funny story. But Amazon paid this much amount not for the existing customer base of Junglee but for the technology it developed to manage and compare enormous amount of data from many sources. This was later also used to evolve the Amazon market place. (Though marketplace found its nemesis in ebay and never really fared well)

3) Flipkart is screwed now

Yes its true that if you pick a random book on Flipkart and check its price on Junglee you will in most probability find the book much cheaper on Junglee. But the products are provided by third party websites which existed even before the launch of Junglee and Flipkart grew inspite of them. Its also true that Junglee will give these small websites the visibility and scale to compete with Flipkart but the fact that Flipkart serves 30,000 customers daily, providing highest level of satisfaction, can not be ignored. The strength of Flipkart is its excellent delivery system, convenient payment options and consistent service level. The small vendors, if they fail to show similar strengths( they have failed miserably until now), would not be able to compete on price points for long. The equation in terms of its strengths is still unchanged for Flipkart.