BUBBLES put the fun into financial history.- Interesting read

Should be a sobering read for investors who like to quote the P/E on an index to justify why the market should come down. And extending the thought, if the P/E (the CAPE as well) is such a poor indicator of where the market should be, do macro indicators and opinions stand any chance? Here's the article.....

BUBBLES put the fun into financial history. Who can resist stories about Dutch tulips that were worth more than country estates or the floating of an “undertaking of great advantage but no one to know what it is”?

Economists have long debated whether bubbles can be identified, or indeed stopped, before they can cause widespread damage, as the crisis of 2007-08 did. But spotting them is easier said than done: even tulipmania may have been caused by a quirk in the wording of contracts that meant speculators would, at worst, walk away with only a tiny loss.

For many investors, the more important question is whether it is possible to avoid being sucked into a bubble at the top, and suffering declines like the 80% drop experienced by the NASDAQ 100 index of technology stocks between March 2000 and August 2002. Two essays in a new book*, from the CFA Institute Research Foundation and the Cambridge Judge Business School, indicate just how difficult market timing can be.

The first, from William Goetzmann of Yale School of Management, looks at the history of 21 stockmarkets since 1900. Mr Goetzmann defines a bubble as a doubling in a market’s value, followed by a 50% fall. He found that a doubling in a single year occurred just 2% of the time (in 72 cases). On six occasions, the market also doubled over the next year, whereas a 50% fall in the subsequent year occurred on just three occasions; Argentina in 1976-77, Austria in 1923-24 and Poland in 1993-94. Even after a further five years, markets were more likely to double again than to fall by half.

There were many more occasions when markets doubled over three years; around 14% of the total. After such rises, the markets dropped by half in the following year on fewer than one in 20 occasions. The markets lost half their value over the next five years around one tenth of the time. But in a fifth of such episodes, the market doubled again. On this basis, a sharp rise in a market is more of a buy signal than a sell indicator. That helps explain why investors find it so difficult to get out at the peak.

You can argue whether Mr Goetzmann’s definition of a bubble is the right one. He looks at overall markets, rather than individual industries such as technology. GMO, a fund-management group, uses a different concept—namely, that a bubble occurs when the price of an asset rises by more than two standard deviations above its previous long-term trend.

Another approach is to look at fundamentals. Asset prices are supposed to reflect the current value of future cash flows. In theory, a doubling in a market could reflect a sudden improvement in the outlook for that asset class, and thus be entirely rational. One valuation approach, often referred to in this column, is the cyclically adjusted price-earnings ratio, or CAPE, which averages profits over ten years. Highs in the ratio coincided with market peaks like 1929 and 2000.

In another chapter of the book, Antti Ilmanen of AQR Capital Management looks at the CAPE ratio as a market-timing measure (see chart). At first sight, this seems very promising. Buying the American equity market when it was cheapest brought an annual real return of 13% over the ensuing decade; buying it when it was dearest earned a return of just 3.5%. (He inverted the ratio to get an earnings yield, but that does not affect the results.)

The problem, however, is that the full historical range of valuations is available only with hindsight. Investors in the 1930s did not know that they would be buying at the cheapest level the 20th century would see. And the ratio is of little use in the short term: the market looked overvalued on the CAPE measure for much of the 1990s, not just at the peak.

So Mr Ilmanen devises a simple approach to show whether investors using the range of CAPEs that would have been known at that point could have been used to time the markets since 1900. Over the full period this tactic mildly outperformed a “buy-and-hold” strategy, but all the outperformance occurred in the first half of the sample. It would have underperformed for the past 50 years.

This is not very encouraging. Neither a doubling of the market nor a historically high valuation are reliable sell signals. Of course, that shouldn’t be too surprising. If timing the market were easy, big swings in prices would not happen in the first place.

Haldiram races past MNCs & regional rivals like HUL's food division, Bikanervala with revenue of over Rs 4000 crs.

Desi halwai and snacks maker Haldiram’s revenues grew 13% to cross Rs 4,000 crore in FY16 shrugging increased scrutiny from food regulator amid the Maggi crisis. The Indian snack major is now twice the size of Hindustan Unilever's packaged food division or Nestle Maggi and larger than the India turnover of the two American fast food rivals Domino’s and McDonald’s put together. 

The company has three distinct areas of operations with Haldiram Snacks and Ethnic Foods with that clocked Rs 2,136 crore from the northern region, Nagpur based Haldiram Foods International that caters to western and southern markets with annual sales of Rs 1,613 crore and a much smaller company, Haldiram Bhujiawala, for the eastern market with revenues of Rs 298 crore in FY16, according to data from Tofler, a company research platform. 

These figures, when combined with other regional snacking firms, conclusively demonstrates one thing — in fast food or munchies, despite the profusion of MNC brands with high cool quotient, good Indian palate prefers local savouries. 

“We have increased our reach and developed products in-house that ensure quality control. We also understand Indian palate well and that comes handy while launching new products,” says 43 year-old Kamal Agarwal, fourth generation member of the founding family. 

The brand, that experts feel, could have more than Rs 5,000 crore in retail sales, has survived through disputes and break-ups in the original Agarwal family that started with a small shop in Bikaner in 1937. 

Haldiram’s is the biggest brand of those launched by Agarwals and the second largest Indian food brand after Parle. While restaurants and casual dining was the beginning, packaged products now make up 80% of revenues. Haldiram’s is by far the market leader in traditional snacks market and bigger than five of its regional rivals — Balaji Wafers, Prataap Snacks, Bikanervala, Bikaji Foods and DFM Foods — combined. 

“Food is culture in the country and Indian food should do well. But consumers are experimenting with food and it is under scrutiny. Companies would have to adapt and stay relevant especially for millennials,” said Devendra Chawla, Future Group president that has recently launched traditional aloo bhujia in peri peri, wasabi and schezwan flavours. 

The snacks market is still dominated by western snacks such as potato chips and finger sticks controlled primarily by Pepsi Frito Lays and ITC Foods. Even these companies are gradually entering into Haldiram’s turf. For instance, Pepsico’s Kurkure has 16 variants of Indian namkeen while Paper Boat will soon enter the category. 

Indian Pharma, One look and the wallet refuses to open up !

(Prices are as on 19th feb 2017)

The Next Financial Crisis Might Be in Your Driveway

With late payments on the rise, a dealership upsell begins to look dangerous.

Lured by low interest rates, low gas prices, and a crop of seductive vehicles that are faster, smarter, and more efficient than ever before, American drivers are increasingly riding in style. Don’t be fooled by the curb appeal, though—those swanky machines are heavily leveraged. 

The country’s auto debt hit a record in the fourth quarter of 2016, according to the Federal Reserve Bank of New York, when a rush of year-end car shopping pushed vehicle loans to a dubious peak of $1.16 trillion. The combination of new car smell and new credit woes stretches from Subarus in Maine to Teslas in San Francisco.


It’s an alarming number, big enough to incite talk of a bubble. In fact, the pile of debt would cover the cost of 43.4 million Ford F-150 pickups, one for every eight or so people in the country.

Another way to look at: Every licensed driver in the U.S., on average, owes about $6,100 in car payments.

But the market for cars is a lot different than that for houses. For one, vehicles are a much more fluid asset—they are far easier to repossess and resell. What’s more, car payments tend to be cheaper than mortgages and people tend to use their vehicles a lot, so when it comes time to prioritize bills, the auto loan typically takes precedent over other things.



Indeed, delinquencies on vehicle loans, though rising, are still lower than late payments on student loan debt and credit card balances. So preppers getting ready for global economic collapse shouldn’t panic about car payments just yet.

But they should worry—just like executives at the big automakers. Barring a few finance startups, the manufacturers are the ones loaning money to the riskiest buyers. They have more incentive to push a sale and, unlike a bank, make money on both the loan and the product, if all works out right.

Recently, carmakers have been focused on moving SUVs and trucks, which tend to carry higher profit margins than vanilla sedans and cost a little more as well. Lowering credit standards a bit and stretching repayment windows up to six or seven years has helped drive business to record levels, with 17.55 million vehicle sales in all last year.

In the past two years, U.S. drivers with credit scores of less than 620 borrowed $244 billion to buy cars, a tally not matched since 2006 and 2007 when the same strata of buyers rolled off with $254 billion in auto loans. 

The problem is that a lot of those drivers have a record of not handling their finances particularly well. Car companies—and their captive finance units—make about half of all car loans these days, but they underwrite three-quarters of the ones going to subprime vehicle buyers. As delinquencies rise, these are the first companies that will feel them. Indeed, the Fed says recent delinquencies are inordinately hitting car makers, while bank and credit unions have actually seen an improvement in late payment data.

In other words, every time a dealer upsells someone into swanky SUV, they have more in common with the buyer than one might think: both may be paying for it later.

Half of Indian IT workforce may become irrelevant in 3 years: McKinsey

Indian IT services players may have to re-skill significant chunks of their workforce to drive the digital technology transformation. 

Global advisory firm McKinsey & Company says in a report, which was presented at the Nasscom India Leadership Forum on Friday, nearly half of the workforce in the IT services firms will be “irrelevant” over the next 3-4 years. 

The report has suggested that IT services providers must turn around their businesses in five major ways such as explosion of new service lines and solutions, investment to build new capabilities, coexistence of digital transformation and traditional services, acquisitions and re-skilling employees with emerging technologies. 

McKinsey India Managing Director Noshir Kaka says the bigger challenge ahead for the industry will be to retrain 50-60 per cent of the workforce as there will be a significant shift in technologies.  The industry employs 3.9 million people and the majority of them have to be retrained.

Industry players such as TCS and Infosys have said they will look at re-skilling and leveraging the experienced workforce at the same time to drive the digital transformation. 

The $150 billion IT services industry is passing through an uncertain time as the growth in digital technologies like cloud-based services is not yet adequate to offset the decline in the traditional technology business. Many industry players believe the change in technology service demand is happening at a “much faster” pace. 

“One part of digital is about the technology. But the other part of digital is about the context and the environment, and other things like leveraging the experience of the people who know the industry. The kind of skills we are looking for today are different, it is important to learn some of the new technologies and re-skilling is important. It is a combination of things,” said Pravin Rao, chief operating officer, Infosys. 

“A lot of the workforce is re-skillable. I am not very pessimistic, but there a challenge,” said Srinivas Kandula, Country Head, India, Capgemini. 

Rao said Infosys had already taken initiatives to train its employees in digital technologies and had started platforms like Zero Distance to drive innovation. 

“The talent gap is largely overemphasised and I do not think we should worry about it. The engineering skills, the analytical skills and the talent we have is world-class and recognised, and every single employee is performing in a highly competitive environment,” said N Ganapathy Subramaniam, President, TCS Financial Solutions. 

Subramaniam said the talent in India was capable enough to transform with the change and they need to be re-skilled

Bubbles are rarer than you think.

And very hard to recognize until it is too late

BUBBLES put the fun into financial history. Who can resist stories about Dutch tulips that were worth more than country estates or the floating of an “undertaking of great advantage but no one to know what it is”?

Economists have long debated whether bubbles can be identified, or indeed stopped, before they can cause widespread damage, as the crisis of 2007-08 did. But spotting them is easier said than done: even tulipmania may have been caused by a quirk in the wording of contracts that meant speculators would, at worst, walk away with only a tiny loss.

For many investors, the more important question is whether it is possible to avoid being sucked into a bubble at the top, and suffering declines like the 80% drop experienced by the NASDAQ 100 index of technology stocks between March 2000 and August 2002. Two essays in a new book*, from the CFA Institute Research Foundation and the Cambridge Judge Business School, indicate just how difficult market timing can be.

The first, from William Goetzmann of Yale School of Management, looks at the history of 21 stockmarkets since 1900. Mr Goetzmann defines a bubble as a doubling in a market’s value, followed by a 50% fall. He found that a doubling in a single year occurred just 2% of the time (in 72 cases). On six occasions, the market also doubled over the next year, whereas a 50% fall in the subsequent year occurred on just three occasions; Argentina in 1976-77, Austria in 1923-24 and Poland in 1993-94. Even after a further five years, markets were more likely to double again than to fall by half.

There were many more occasions when markets doubled over three years; around 14% of the total. After such rises, the markets dropped by half in the following year on fewer than one in 20 occasions. The markets lost half their value over the next five years around one tenth of the time. But in a fifth of such episodes, the market doubled again. On this basis, a sharp rise in a market is more of a buy signal than a sell indicator. That helps explain why investors find it so difficult to get out at the peak.

You can argue whether Mr Goetzmann’s definition of a bubble is the right one. He looks at overall markets, rather than individual industries such as technology. GMO, a fund-management group, uses a different concept—namely, that a bubble occurs when the price of an asset rises by more than two standard deviations above its previous long-term trend.

Another approach is to look at fundamentals. Asset prices are supposed to reflect the current value of future cash flows. In theory, a doubling in a market could reflect a sudden improvement in the outlook for that asset class, and thus be entirely rational. One valuation approach, often referred to in this column, is the cyclically adjusted price-earnings ratio, or CAPE, which averages profits over ten years. Highs in the ratio coincided with market peaks like 1929 and 2000.

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In another chapter of the book, Antti Ilmanen of AQR Capital Management looks at the CAPE ratio as a market-timing measure (see chart). At first sight, this seems very promising. Buying the American equity market when it was cheapest brought an annual real return of 13% over the ensuing decade; buying it when it was dearest earned a return of just 3.5%. (He inverted the ratio to get an earnings yield, but that does not affect the results.)

The problem, however, is that the full historical range of valuations is available only with hindsight. Investors in the 1930s did not know that they would be buying at the cheapest level the 20th century would see. And the ratio is of little use in the short term: the market looked overvalued on the CAPE measure for much of the 1990s, not just at the peak.

So Mr Ilmanen devises a simple approach to show whether investors using the range of CAPEs that would have been known at that point could have been used to time the markets since 1900. Over the full period this tactic mildly outperformed a “buy-and-hold” strategy, but all the outperformance occurred in the first half of the sample. It would have underperformed for the past 50 years.

This is not very encouraging. Neither a doubling of the market nor a historically high valuation are reliable sell signals. Of course, that shouldn’t be too surprising. If timing the market were easy, big swings in prices would not happen in the first place.

Why Big Oil Is Unprepared for the Coming Energy War

Recently, I gave a presentation on the future of energy to an audience of about 250 oil and gas professionals. Halfway through, I asked the carbon crowd to, “Raise your hand if you have driven an electric vehicle.”

It took me less than five seconds to squint and visually sift out the elevated hands.

Five adventuresome people, or about 2 percent of the audience, acknowledged that they had taken a ride on a lithium horse.

“Isn’t that a bit disconcerting?” I asked. “By now all of you in the room should be aware that new-age electric vehicles represent the first meaningful threat to your monopoly in powering the transportation market.”

I went on to ask, “Don’t you think you should at least go to a Tesla, Nissan or BMW dealership and test drive the looming adversary?”

Silence.

I wasn’t surprised by the results of my straw poll. Hear-nothing, see-nothing attitudes are common within entrenched industries that have long forgotten how to fight for market share.

Over 150 years ago, early oil companies sold “rock oil” for kerosene lanterns, duking it out in the market to light homes and factories. The incumbent competitors were coal-gas, whale oil and candle companies. It was a full-on market share battle between lighting systems. And by the 20th century, all of them were losing out to Edison’s incandescent bulb (powered by coal-fired electricity).

By the numbers, lighting lanterns was a small market compared to what was emerging: Turning gears and wheels with internal combustion engines. That mega-market kick started in 1908 with Ford’s Model T; since then it’s been an invincible business for the oil industry.

In trying to explain the low results of my audience poll, I wondered about the long-term effects of five or six generations of petroleum workers cycling into, and retiring from a century-long, monopolistic transportation paradigm. Had that evolution softened the industry’s competitive edge?

Whatever the reasons, it’s hard to excuse such competitive apathy, but my dissertation wasn’t finished.

The funny thing is that I went on to tell the audience that I ask the same type of question to people in the business of renewable energy and electric vehicles. For example, to executives sporting green stripes I ask, “When was the last time you visited a modern oilfield, taking stock of the new automated drilling and completion technologies?”

Predictably, I’ve only met one person in the business of clean-tech who has bothered to get serious intel on the competition they are trying to displace. It seems this group must have a gene that makes them think that their business is going to be a proverbial “slam dunk,” that they will be able to decarbonize the world with no commercial resistance. It’s a dangerous mindset, given that consumption numbers show that rapid demise of fossil fuels is not much more than academic conjecture at this point.

The bounce in the footsteps of the purveyors of new energy is justifiable. Today’s solar panels, for example, generate electrons at about half of the cost of five years ago. Gains in battery technologies – energy density, power density and cost reduction – are even more impressive. Growth rates have been exponential, without much resistance to-date.

Yet, as a color commentator of change, I also know that over the course of the same five years the breakeven cost of an oil well in places like Texas has been cut in half and it’s “rig productivity” has increased by nearly ten-fold. And it’s not just about more horsepower and better drill bits. Big data, optimization, Internet-of-things and machine learning are rejuvenating a hitherto fossilized industry. Business school profs call this competitive response, “raising the barriers to entry.” Experts are consistent in their views: there is much more innovation to come from upstream oil fields all the way to downstream engines.

I think by now we all know the Henry Ford story and how the “horseless carriage” was relegated to museums. But let’s be intellectually honest: The old nag in the stable had about as much chance to compete against a Model T as a slide rule could against a digital calculator. Or a paper map against a GPS chip; or a phone booth against an iPhone. In all these cases, the new product steamrolled over a weak incumbent.

The oil industry and its downstream peers are largely in broad denial about existential competitive threats. But it’s a mistake to believe that the commercial utility of today’s petroleum systems are as competitively weak as a slide rule or a tired-out horse pulling wooden wheels. Business leaders championing new energy systems need to remove their own dark blinders of denial; trillions of dollars of petroleum infrastructure and the peripheral interests of combustion-based mobility are not going to relinquish their markets without fighting back with their own innovation. In fact, they have just begun.

This is one of the most dramatic moments I’ve experienced in my 35-year career studying all energy systems. The technological change is breath-taking; the investment potential is staggering; and on top of it all, the business psychology is intriguing.

“Get to know your competition,” I suggested to my audience. “This is going to be one of the most exciting business duels in history; two giant energy systems will be competing for the hearts and wheels of the people.

by Peter Tertzakian

India's Consumer Internet Start-ups - Still making huge losses

Papa, what did I do wrong?- by anish behara

The year is 2035 and jobs are very difficult to come by. My daughter, now of an employable age with a Masters degree, yet unemployed, sitting at home, asked me:

Papa, what did I do wrong?

My throat runs dry and I sink my head in to my palms and tell her, you didn't do wrong dear, I did.

My heart is pounding and I stammer as I tell her, that most of the fifty year old today, in their, thirties were busy creating delivery start-ups & last mile on-demand service apps/companies and most of them failed.

She then asked me a question obvious to her :

Why did you all invest your careers in valuation instead of companies creating value?

I hung my head in shame as I shrugged my shoulders. I tucked her in bed and sat besides her, wondering how many parents like me would have had this sinking feeling as I feel now and no one to blame but themselves.

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Chapter 1. The Year Was 2016

I have this belief - Everything that is gradual is sustainable. It is what I learned from nature. It is what I saw in my life and things around me. Fly-by-night shops/services, certification instead of degrees and many things in the similar patterns are all temporary, because it is all a quick fix and not sustainable. Also, anything growing rapidly makes me skeptical, because it's against the law of nature.

In Feb of this year I penned down my thoughts on the start-up ecosystem, the indifferent culture, the speculation, the glory and horror of it all and most importantly why is this happening. Titled 2016: A year of start-downs. Click here to see. 

Point is - This is a 'House of Cards' and like the dotcom burst this too will fall in line. There is a natural order to things and since the start of this year we have seen four imminent fall outs:

1. Start ups have pulled down their shutters or been acquired (click for news 1, 2, 3)
2. Doing away with anything and everything to control cash burn. They have employed techniques from withdrawing coupons, free home delivery services to calling it quits on campus placements (click for news 1, 2, 3)
3. Speculation leading to investors refraining from funding (click for news 1, 2, 3)
4. Doing mass layoff (click for news 1, 2, 3)

The house of cards came crumbling down with Tiny Owl fiasco and sooner than the market expected, investment firms, started re-looking at valuations and giving a more realistic number. Flipkart went from a $15 Billion to $9 Billion over night. That in my opinion also is a highly inflated number too. 

PepperTap closed down humbly , the co-founder shared his story with the world and what went wrong ,Rocket Internet has clearly failed and lost respect too. The most recent news on Flipkart laying off got emotions high. Many other start ups are in the line of fire, to be executed by sudden death, when the trickling funds go dry.

The immediate repercussions : It is now all sinking in and we all will think twice before joining a company that is either a start-up or running its business purely on the back up of funding.

The students of IIMs who never got the placements they deserved, must be angry and then upset, but I believe it is those students who will also be better prepared for the future. They'd be more sensitive and more invested in the value of companies and not the valuation of it (once bitten).

As for the staff that has been laid off, they must be fanatically looking for a new job for all those mortgages they took for a better life must be due. But the real price at stake is even higher.

The future that could have been, the possibility.

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Chapter 2. The Law Of Unintended Consequences 

I believe your future is a derivative of your past and a function of your today. 

The difficult future we ought to prepare ourselves for, is not ours but of our kids. They will face the brunt of all that is happening today. 

We all (millennial generation), since a decade now have been relentless chasing a dream of retiring by 40, becoming rich overnight, working for ourselves, moving our goalpost each time, trying our hands at any idea that can get us there.

The fallacy of this is - we are not creating products or services to make quality of life better. We are creating companies to become millionaires and that is a fundamental flaw. Like all things which aren't in a natural order, this too will fail.

Come to think of it, Flipkart’s valuation places it ahead of listed giants such as Indian Oil Corp. Ltd, Tata Motors Ltd and Mahindra and Mahindra Ltd.

Snapdeal’s valuation exceeds that of Yes Bank Ltd, Titan Co. Ltd, Vedanta Ltd and Tata Steel Ltd. 

The companies that toiled day and night, did things by the book, created sustainable jobs, made life better, touched its consumers, passed on the baton to generations are now way behind in valuation against fundamentally a delivery company couple of years old; its just beyond me.

The law of unintended consequences is at play and it cumulatively governs everything from a small decision we make as individuals to the entire economic behavior. 

The jobs we have today are because of the activities and movements that took place a decade or two earlier. What we sow today will show its results in the future to come. And someone had to say this - ''It might not be as pleasant if we keep going after this relentless pursuit of riches and hence, creating companies out of the next possible idea we fancy.''

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Chapter 3. The richest people I ever met

Were also one of the most humble I ever met. This story is important to share, bear with me. (I know this post is getting long, like all my other post and the monkey in my head is up to his funny business by this time, damn!)

The other day I was in the park with my daughter. On the other side of the park was a gentleman with her daughter looking towards me.

Confusing him for someone else I knew from the day earlier, I kicked my football towards him and he passed it back to me. On coming closer I apologized to him for confusing him for someone else. My daughter and his' started playing with one another and I learned that they are just 2 months apart. Both of us as fathers started exchanging notes on our daughters and their eating time theatrics. He also shared a video of her daughter just learning how to speak and stuff. Both our wives also arrived by then, got busy talking to each other and walked away.

In our further conversation, he asked me:

''Where do you live?''

I said - ''Across the lane through the park.''

I questioned too - ''Where do you live?''

He pointed to the house facing the park. (And my jaw dropped!)

It is the best and the biggest house in our neighborhood with ALL the dream cars parked outside. 

Little did I expect him to be such an open, humble and grounded person. We spoke of a number of topics, mainly around his business and my job though. We exchanged many views and most on how companies now don't think long-term at all. It has all become a short term bet.

I inquired from him, if he has any stake/investment in any start up. To which he responded - ''No, and never will!''

In his words "do they even know how many zeros are there in a billion? They all are investors and valuators themselves, I stay away from it"

This gentleman (aged 32 years) told me he dealt in the manufacturing of pharma drugs. Further, he surprised me by telling me that his wife is the daughter of Mr. Juneja, the Mankind Pharma owner (a 4000 Cr company, founded in 1995). This one of a kind real experience left me humbled.

Over the years, they created value, created around 12000 direct jobs and about three times that in, in-direct jobs, created products and services that actually made a difference. As I waved him good bye, I felt respect for him and his family. This family in a span of 20 years have created so much employment. Sustainable employment.

The respect was for two things. He created value and yet is grounded. I caught myself in that moment and realized; there are very few like him and many unlike him caught up in the start-up culture.

A culture that might be responsible for fewer jobs in the market in 20 years from now.

What are the millions and billions being invested in?

On delivery companies of other products, aggregators of online menus, on-demand plumbers, on-demand cabs, home delivery of groceries, and so on and so forth. 

Seriously! Have we really come down to just creating companies monetizing on convenience?

The other two people I know (33 & 35 years old), one that made an app in the category of logistics, and the other on better IVR experience. Both received funding and the first thing they did is buy themselves a Beamer and the other one, a Jag and a few other bucket list items. I asked them - 'Is this it?'They replied - 'No, the charm is to know when to exit and how to take it from thereon.' I wasn't left with any respect for those two.

Will all these start up companies outlive their creators? Will their companies be sustainable? Will these companies create their own value? (Most don't care, it is all about the money and the exit plan!)

• None of them are making profits, why is that OK?
• They get funding on the basis of value of goods sold - XXX billion! Well, if you are making losses per transaction on every transaction, why is that OK?
• They believe they have an XXX million base of customers and hence they are a fundamentally strong company. Really!, what ever happened to the: Tiny Owl clientele? To all the PEPPERTAPpers? To all the LOCALBANYAites? To all the AUTORAJAs? To EASYMEALers? And so many others gone overnight! why is that OK?

All this effort and time, all the hard work, all the dreams and the butterfly effect of the jobs they created, all gone! 

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Chapter 4. The Lies We Want To Believe In

It's good to be ambitious and progress. But, let us get real about it. Let us create things that will be of fundamental value. It starts with being brutally honest to ourselves, cause the lies we tell ourselves are the biggest lies of all:

1. Overnight success & riches. No such thing! It is not a natural order of things. There are laws of how things work and how they are governed. We only see the best shots in porn; we don't see the menial work and preparation gone into it, the tedious activities around it.In the same way media floats around and celebrates the best of many, like Mr. Bansal in edits. Only success stories and the glory is shown to us, not the bad, the gruelling backstage of all that, the failures, the ones that never made/make it.Sachin Tendulkar isn't an overnight success. Beethoven wasn't an overnight success. Jay Z isn't an overnight success. Apple wasn't an overnight success.Mahindra wasn't overnight success. Tesla isn't an overnight success.The new ad from Under Armour tells us just that. The protagonist Micheal Phelp's life was and is all about hardship, success, dope charges and his comeback, all of which took all his life efforts. All the entrepreneurs have worked hard, no doubt.But if it was hard enough, the start up ecosystem wouldn't have come down to this.
2. The Underdog. We start believing in this story when someone we know represents this underdog story. Trust me, it is all bullshit. That 'someone' was preparing and working his way up, it is only now that you all noticed him. Believe in the underdog story but with the humility that comes attached with it, telling us:We have to try harder.We should accept gradual growth. We are responsible to the people who work with us to give our dreams wings and being sensitive to them.
3. The Status of a Co-Founder. This is a common designation now on LinkedIn and desired by many, BUT what does it amount to? If we are suddenly doing mass layoffs, shutting business, getting devalued, killing dreams of people dependent on you, are you really worthy of being called a co-founder?
4. Its OK to fail, lets give it a try. I have failed in my own business venture and of most things, it was emotionally devastating, it controlled me and as time went by it gave me a lot of clarity and I realized what all I did wrong. I gave my 3 employees 6 months salary and a heads up, one had then just got blessed with a son, their life didn't change, they got new jobs and they will join me back when I restart. Its cause of what I did, it was right to do. I will redo the entire business and this time around I will go all in again as before and keep at it, till I have found success at it. Cause its not OK to fail. Like Al Pacino said in his movie, Any Given Sunday "I'll tell you this, in any fight it's the guy whose willing to die whose gonna win that inch. And I know, if I'm gonna have any life anymore it's because I'm still willing to fight and die for that inch, because that's what living is, the six inches in front of your face".Don't go in thinking its OK if you fail, you will then. If you fail, repeat, until its not OK.

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That day in the park, meeting him, I realized, its all about RESPECT. Money is secondary, my father keeps telling me this all the time, it didn't hit me, until that day.

Its not ok if start-up fails, its not ok if there is a mass lay-off, things need to be accountable. Their is a price for all to pay. Lets get out of this mindset. 

Our kids will have more opportunities in 2035, if we HENCE invest in value and not valuation. We owe it to them, to us