Saturday, November 15, 2008

Story Board for monetized 'Tele Social Networks'

Story Board for monetized 'Tele Social Network'

If you look carefully, you would find that the Telecom Networks are best positioned to move into social networking space. While social network allows people with common interests to interact in a forum, the tele-social network is the next step when those interactions become real time.

So, what is a tele-social network? It is bringing the concepts of social networking to our handset.

Imaging this - VilaTel is a leading mobile telco in India. Every VilaTel customer obviously makes on-net and off-net calls to friends, family and colleagues. With all the creativity in the marketing departments of VilaTel, there would be umpteen offers for VilaTel scubscribers to have their friends and family on the same network to reduce costs and benefit from Closed-User-Groups. (CUG for instance is a primitive form of tele-social network. )

Suppose, VilaTel offers every subscriber the facility to maintain his/her phone book as part of their subscription accounts - via the VilaTel Portal, it suddenly has access to information about who - interacts with who within the network. This is possible through a CRM and a BI engine, which together reveal a heat map of each subscriber in relation to other on-net subscribers analyzing the bills (or realtime) on the time (and money) spent on calls with those subscribers.

Effectively, VilaTel generates heat pockets or 'subscribers' who are very 'active' on the network.

These 'active subscribers' can then be classified based on their preferences. These preferences can be managed via their accounts on the VilaTel portal - such as joining or leaving a community. This is like VilaTel owning an Orkut or a similar social networking site.

This classification, as done in traditional social networks, can then be merged with the real time nature of telecom.

Commercializing the concept is easy. Just offer an 'active' subscriber based on the heat map, some free content pertaining to his 'preferences' (... news about an alien planet - if I belong to the 'alien club' community for example!) - and it is bound to spread into the network of the 'active subscriber' - generating revenue.

Over and above that, users in communities with special privileges (paid subscriptions to communities) may be able to post to the community forum from the handset - and all priviledged users get the post as an SMS. Imagine what this may be able to do for sales persons who gather leads from the net!

All in all, telcos - are best positioned to buy a few social networking sites and/or start some of their own. With creative marketing and value added service of bringing the social network to the phone, it should surely find takers from within their subscription base.

Sunday, July 06, 2008

IT - The bulwark against economic downturns - an opportunity again.

A wise man once said, that in the middle of every difficulty, lies an opportunity - and there cannot be a better start to the analysis presented here - than this famous statement from the wise man.

The recent economic downturn exhibits once again that we haven't tamed the economic cycle yet. And it wouldn't be egregious to say, that we possibly wouldn't be able to tame this big cat for decades to come. Economic cycles exhibit the expansion and contraction of economic activity - which in turn is a complex function of parameters such as consumer spending, interest rates, inflation and a multitude of other parameters, along with the assumption that we humans are rational beings who act based on the information available to them. While we have been successful; partially though, in taming the economic cycles, the critical component of that success lies in making information available, for the rational beings to take judicious decisions. It is well known fact, that we have avoided severe downturns over the last decade - primarily due to improvements in Information Technology, which deliver the right information at the right place and time, to allow judicious decisions to be taken.

To give you a background, most of the recessions over the last fifty years have originated from the manufacturing sector. The reason is simple - Manufacturing industry has a value-chain, from the raw material producer to the end consumer. The raw material producer, supplies to the manufactures, who in turn supplies to the wholesaler and then the retailer, from where we customers buy products. At each stage in the chain, they have to keep some inventory of stock to cater to the variation in the demand. In early days, due to poor speed of information flow (about the inventory of the end retailer) the level of inventory maintained at each stage was relatively very high. Therefore, when a recession triggered in the - the retailer was the first to know about it - but it was very late in the cycle, that the raw material producer and the manufacturer learn't about it. This meant - huge overstock of finished goods and big-time lay-offs.

Over the past decade - with tremendous improvements in Information Technology - all members of the value-chain are able to keep a tab on the end consumption and therefore have managed to relatively reduce their inventory/stock. As a result, if the consumption goes down, they can immediately scale down production , and since they do not have huge overstock of finished goods - there are fewer layoffs.

While most of the industries have taken a huge leap in technological terms, it has allowed Fed's across the world - better quality of information and thus better decisions. Wouldn't be an exaggeration to say that Information Technology has been our bulwark against severe recessions.

Having said that, we are in the middle of a severe downturn! Well, so now - how is that possible? In every recession, there is an industry which triggers the fall- not always, but mostly. In the days-gone-by it was the manufacturing industry. But with deployments of ERPs across the globe; good on them, they aren't the culprits this time on. From the articles world-over - there is significant analysis which proves that poor financial management in banking (read- bad credit checks) and housing led to this current downturn.

Is it not time, then, for better application of Information Technology in Housing and Banking?

Like the wise man said - in every difficulty lies an opportunity. And the wise man was Einstein.

Wednesday, December 26, 2007

Carbon Trading: Ineffective Contraption

Okay, this will sound strange, but carbon trading in its current form, is an ineffective way of dealing with Carbon emissions. Before we dig into this much debated subject, read this, "The Kyoto Protocol of 1997 by which all countries are required to reduce their greenhouse gas emissions by 5% --from 1990 levels-- in the next ten years, ie 2012—or pay a price to those that do". True to its word, the protocol aims at disincentivising carbon emissions. It penalizes the producer of carbon, as he now needs to purchase the carbon credits from others who have saved on carbon emission.

For those saving carbon credits by maintaining and growing forests, it is dream come true, since they now get paid to do so. However, here is the catch. The actual (Real) carbon emissions saved depends upon how the money receieved from the traded carbon, get used! If they use it for activities, which generate more carbon, the equation falls back to square one!

Say for example, X Corp produces 100 tonnes of excess carbon, which it needs to buy out, in terms of carbon credits. Via a carbon exchange, it purchases 100 tonnes worth carbon credits from say, Powerguda village in India which maintains & grows nearby forests. By this transaction, it appears that 100 tons of carbon was created at one place, and 100 tons of it absorbed/ saved at one end, thus the equation is balanced and no net excess carbon gets generated.

However, look at this: if the village recieved $ 20 per ton, i.e. $2000, it would be important to see how it spends this money? If it spends the money for a local power plant to light up the village or to buy a vehicle, it will invariably add some or more carbon, back to the atmosphere.

Thus it is not necessary, that carbon trading of 100 tons of carbon will eliminate exactly 100 tons of excess carbon from the atmosphere. It could be 100-20=80, 100-50=50, 100-100=0 or 100-120= (-20) tons of carbon in the atmosphere, depending how the revenue from carbon trading is spent! In India, a developing nation, my take it that 80% of that revenue will go into developmental activities, which may not necessarily be carbon efficient.



Monday, September 17, 2007

It "pays" to wait : Save more, book the house later !

Wait n Watch . July 07. India.

The signs of precipitation in the real estate cloud are already appearing. Compounded by the rising property rates, firming cement & steel rates and RBI pushing up the interest rates by a 1%, the precipitation is bound to occur.

I wouldn't be surprised to see many more flats/homes on sale, than there is a fresh supply in the pipeline. In fact, in places like Pune and Bangalore, many properties have been lapped up by speculators, and it is these very speculators, that our Hon. FM and the RBI are all set to weed out. An increase in the rate by 1% would lead to an EMI hike of ~Rs 15 per lac for a 20 year loan and given the series of rate hikes in the last year, the EMI of many speculators and genuine owners have risen by as much as 30%. Well ,the bad news is, that the Elections are at least 2 years away and with the inflation numbers touching new highs in each report, we can expect another rate hike during the next monitory policy announcements. And that, my dear friends, would be like the last straw that broke the camel's back.

My take on the Real estate market is:

- Stay out on the fringe for a while, don't rush if you want to book, coz the rates are not moving up for another 3 months.

- More speculators, unwilling to bear the extra interest load or unwilling to risk a no growth period, would like to exit the market at modest gains, selling properties which may be under construction, i.e of which the possession has not been taken.

- Many a Properties of which delivery was scheduled for late 07 may get pushed to early 08.

Ultimately, Pune represents the case of lost opportunity for the retail home owners. Its been a fantastic place for the builders over the last few years. They have lapped up the land at cheap rates and are practically hoarding the same. The supply of developed land (properties) is tightly controlled and thus the northward movement in the property rates is evident. But thanks to the monetary control, the builders wont have it their way; at least not for the next few months!


Saturday, May 06, 2006

There is 'Wind' in this sail.

India: With a population of more than a billion, is a country to reckon with. A country with a majority of population, below 30 years of age, is deemed to be one of the hottest markets in the world for any company, which thinks 'profit & growth'. A huge educated workforce earning a good living, with the one of the top priorities being a self-owned house, it is not surprising that the country is witnessing the rapid growth in real estate. Other contribution to this sector comes from commercial spaces being developed for this new force, which demands better life style and is ready to pay for it. But even with these developments in the pipeline, wouldnt it be a little unnerving to know that the capital's electricity grid is on the brink of collapse. And this is not just the case with Delhi, it is a matter of concern for most of the states in the country. There is a shortfall which is going to exist and rather grow, as the demand growth far outstrips the growth in supply. So what does this translate to for an individual like me, who is planning to invest into a 2 bedroom flat in the capital? A house but no guarantee of power or water. One may suggest using a genset, but the economics of the genset are of no match when compared to the power of 'wind'. See for yourself, how individuals like you and me can gain from this idea, if implemented.

The logic is simple: I may not, as an individual retail investor, be able to purchase a share which costs Rs. 10,000, but may be 10 retail investors like me can get together in a mutual fund and purchase one share by investing 1000 each.

Similarly, even when I know that investment in wind energy is a lucrative option, it is far beyond my means to invest a couple of crores in setting up a wind mill. So why dont we have a mutual fund, which invests only in wind farms! The following are the economics and the associated benefits:

A 1 MW windmill typically cost somewhere between 4-5 Crores. No I am not asking you, for 4-5 crores, what I am, is just 1 Lac rupees. Assuming that 500 individuals invest a lac each to form a corpus of 5 crores which is then invested into windfarms. They have essentially secured their electricity needs for 20 years, which is the normal lifetime of a windmill !


S.No Investment Element Upfront Investment (INR)
1 Wind Research 5,00,000
2 Land Acquisition 10,00,000
3 Turbine Cost 40,000,000
4 Installation Cost 1,500,000
5 Sub-station Cost 20,00,000

Grand Total Rs. 41,500,000

Contribution by 500 individuals, of Rs. 83,000 each.

* The costs are assumed close to acutals.

This corpus invested in a windfarm can be expected to produce 1 MW of power as given below:

S.No Particular Value Units
1 Rated Power 1000 KW
2 Year hours (Total time per year)
8760 Hours
3 Wind Factor 65%
4 Avg output of rated power in % 66%
5 Time operated Year Hours 3758.04

7 Total Energy Generated / Year 3758040 KWH

9 Total Power Generated / Month 313170 KWH

11 Average Number of Households Supplied with Power 696

The assumptions are:

1. Site gives 60-70% wind factor
2. Site gives 60-70% wind time
3. Average Energy consumption per household ~ 400-500 KWH

So how much power is this investment producing and whats the net benefit to me ?

Take a look at these numbers:

S.No Particulars Amount Units
1 Units Produced / Year 3758040 KWH
2 Average Price Per Unit 2.75 INR
3 Value of Power produced /year 10334610 INR
4 Maintainance 830000 INR

6 Net Profit(pre tax & depreciation)
9504610 INR
7 Net Profit Per Member (pre-tax & depreciation)
19009.22 INR

Although Tax implications have not been considered, these pre-tax & pre-deprecitation, numbers look exciting indeed. And add to this, the benefit of depreciation which is almost 80% on the investment, which turns the fund towards a net loss, but saves tax. This way the fund is under net loss for around 4-5 years, but is producing cash profit of almost Rs. 19000 per member every year. In 4-5 years, the initial capital is recoevered and for the next 15 years, the mill produces energy for all to consume, while returning energy worth, close to Rs. 15000 every year on the investment.

Sounds nice, doesnt it ? So when can we see a mutual fund like this in the market? Any takers for this idea ?

Kaushal Vyas

Disclaimer: The ideas expressed in the article are solely of the author, and not of the organization the author is emplyed by. The numbers presented above are also based on certain assumptions, leading to certain inaccuracies in the count. The purpose of this article is only to toy with the idea of a mutual fund for retail investors, which invests only in wind energy, thereby securing the energy needs of such investors over the future. The article does not, in any ways, aim to demonstrate ways in which certain government policies can be exploited to the benefit of investors, niether is the author associated with any mutual fund organization or wind energy equipment manufacturer)

Thursday, November 18, 2004

Non-violent Counter Terrorism : A Possible Solution

On 1st of May, five ABB workers on contract to Exxon Mobil's chemical joint venture in Yanbu were killed outside the plant. On May 29th, gunmen attacked a residential compound in khobar, Saudi Arabia and as if this wasnt enough, On June 18th a Lockheed Martin Employee gets beheaded by al Qaeda terrorists. For Saudi Arabia, I can recall only one word which accurately describes the situation, and surprisingly it comes from a book called, "only the paranoids survive" by Andy Grove. The word is 'inflexion point'. In fact, the ever increasing presence of Armed Forces amidst civilians is not going to be a transient affair. The rubicon has been crossed and a strategic change must happen. Moreover, Saudi Arabia is not alone, there are several countries hit by this nuisance; America, UK, Israel and India to name a few.

Isnt it surprising that small groups can harrass a giant monolithic structure such as the Government, with paltry resources! Where has all the power of this monolith gone? Why can't a country as strong as America, get rid of this nuisance? Would a direct hit on the suspected terrorist bases in their homelands really help? The answer is No. No amount of direct pressure and force will work. To exemplify this point, lets look at Iraq. The US Forces moved in swiftly accross the deserts but were held back by guerilla warfare in the towns and cities of Iraq. And now, almost six months after fall of Saddam, there is only pseudo-normalcy in the region and strikes against the US Forces in Iraq still continue. Loretta Napoleoni, the author of the book 'Modern Jihad - Tracing the Dollars behind the Terror Networks' points out in her gripping research work that this isnt the first time we are facing such situation. It is only becasue of the renewed interest and conviction of the authorities to investigate, that such issues are filling the page-9 of newspapers around the world. Her research shows that counter terrorism began as early as post second world war when Britain and United States were busy containing Soviet expansion in Eastern Europe, France was engaged in a vicious war in Indo-China, where they financed the formation of 'Maquis - men from minorities and hill tribesmen organised in groups of 3000' to fight back the guerrillas using the same terror tactics like public executions and guerilla warfare. This was one of the most effective strategic responses against such an enemy. The next elucidating example, is Afghanistan, where the US government, abetted the formation of mujahideens againts the Russian Army and helped them with ammunitions and finances. Today we are facing the same threat, but there are certain differences. One, the ability of terror groups to share information and collaborate, has been greatly increased by the decreasing asymmetry of information given the internet and other newer forms of instant communication. If you think this is facny, then you are wrong. Remember the Beslan Massacre of September 2004, and sure you would recall the name of 'Shamil Basayev'- the Chechen Guerrilla Leader. The excerpt from the TIME magazine dated 25th OCT 2004, from the article ' Russia's Most Wanted' - "...Besayevs former neighbours comrades-in-arms and friends say he hides during the day in the thick impenetrable forests that carpet the mountains. At night he descends into one of the regions many tiny villages where he recharges the Batteries for his Computers and Satellite Phones...". Second, there is no single state (or Rogue State) which can be taken out like a thorn, which would solve this problem. The terror groups have spread accross all countries and the black economy they govern is estimated to be as big as Five percent of the Worlds GDP. Under such circumstances, the conventional logic which holds that, the peace loving governments of the world must pledge their co-operation ( at G-7s and G-8s of this world) against the threat of terrorism wouldnt work. Those at the helm of it all, would go to war again and the result will be not much different from the bleak picture in Iraq today. In long term this solution is not feasible, instead it simply buys more time for the governments and secures their vote banks too. At the end of it all, the tax-payer neither gets his moneys worth, nor the peace that he pines for.

But, there are no direct or straight answers to this problem, yet there is one solution which stands a genre apart. Consider the situation in Kashmir, a battle-torn state, annexed to India in 1951, to which Pakistan pledges support in their apparent struggle for a sovereign state. It is an omnescient fact that under the veil of a silent and simple islamic country, Pakistan has sponsored terrorist activitities in Kashmir, and the deep links between the Mujahideens and the state's secret service, ISI, have been discussed at depth in the book 'Modern Jihad'. The ISI also runs like an independent body, almost like a Business house, however despicable their business actvity be. Each kashmiri Militant is paid an monthly salary of Rs 2000 or $40, Rs 3500 ($70) or more to an Afghani Militant and Rs 50,000 ($1000) for special planned attacks against Indian Army. A Fidayeen Attack will fetch the militant as much as Rs 1,00,000 or more ($2000). Imagine that ISI is a business house, which employs its only resource which is the militia, at a monthly salary mentioned above. They are trained like servicemen and then infiltrated into the battle ground. Has one ever thought of the consequences of shortage in the supply of required manpower to run this business!!!
If the cost of man-power employed by ISI rises then the whole business model would become unviable. But for this supply pipe to dry-up, it would take some serious conviction and time. If ISI brings most of its new recruits from Northern Afghanistan and Pakistan occupied Kashmir, then that is the place (supply source) upon which we must concentrate. Now, consider the following scenario :

Step 1 - India provides humanitarian aid and invest in buiding infrastructure for 'education and healthcare' in these very areas through a Special Purpose Vehicle, which conceals the real identity of its Financer. It could also be through a group of NGOs.

Step 2 - Over the Period the new generation grows into a well educated populace who look for economic opportunities to earn their living rather than fighting to death for a paltry Rs 2000 a month.

Step 3 - Ten years later, the Special Purpose Vehicle invests into the Country's Industries and Services bringing about fresh opportunities for this new generation of educated populace who prefer simpler jobs to fight.

Step 4 - As a result of this developmental activity, the lowest strata of the economy rises and expects more out of life and consequently the number of youngsters opting to join terror camps drop and the Cost per new Recruit rises as more Demand chases lesser Supply.

Thus by investing in the development of Infrastructure through veiled entities and later into Industries and Services, will simply make the business of Terrorism an unviable proposition for the proliferators to continue. Such a strategic step taken today, could save a million lives twenty years from now. This scenario seems more convincing to us than fighting a proxy-with-proxy. The solution is visible, but do the governements have the vision or courage to take such a bold step is the question.
Kaushal Vyas

Saturday, October 23, 2004

The Global Undercurrent

Globalization; a continuous process not a destination, has had a lasting effect on the economies throughout the world. For some it meant prosperity and for others it created issues of national importance. But like any other word, this too is open to several interpretations, and the developed world draws satisfaction by limiting the meaning of 'globalization' to movement of kapital, but not Labor; the two essential resource components of any economy. But what they probably lack, is prudence. Considering that remunerations to labor are essentially governed by the standard of living in any economy, a similar task carried out in two different economies will carry different costs. Now when technology makes it possible for the owners of business to transfer jobs beyond the geographical limitations of a country, the jobs would most certainly fly out to those countries where the costs are low. The gradient of development favors the developing economies. The income earned by the way of off-shored jobs increases the consumption levels in the developing economies, as the marginal propensity to consume is high in such countries with minimal living standards. Such a participation of emerging economies in global trade also helps in stabilizing it. This implies that off-shoring jobs gives clear benefits to the servicing country. Now considering the physical movement of manpower, it is clear that there are obvious advantages for both the developing nations and the importing country. This is because when they earn, they still spend a part of their incomes on living, which goes back into the same economy. Moreover, the savings of this labor are also circulated in the economy, and essentially the cost of employing this labor turns out to be the going rate of interest of the economy, which in case of a developed economy is very low. All this leads to two distinct sets of benefits and drawbacks. But surmising the changes in Information and Communication technology, the above arguments appear trivial. This is because; we human beings have defined physical boundaries within which the business was supposed to be carried out. Now with signs of these demarcations diminishing and a whole new world without boundaries; the World Wide Web, getting created, the old rules of business no longer apply. The development of Information and communication technology will enable businesses to meet and discuss issues online without having to meet in person. Technologies like online video-conferencing and next generation IT tools for businesses will have a strong impact on location of offices and travel. Such facilities; being made available at ever reducing prices, warrant against building offices in key business centers where the price of property is atrocious Yes it is true that even today the owners of these concerns shall continue to look for ways to reduce costs, some radically while others in a piecemeal manner. At the end, when it is cost-effective to transport information than to transport human beings then why not offshore. With such convincing reasons favoring off shoring jobs to developing nations, physical movement of manpower lacks lustre. But this is the view shared by the beneficiaries of off shoring. From a developed nation's perspective, it is a complete antithesis, and they would always recommend bring in people than exporting jobs. Therefore, having evaluated the two options and taking into consideration that majority of these developed nations are capitalist societies, that off-shoring may soon take an upper hand over short term welfare of the economy.

A life of 'an' experience.

Enterprenuership comes before any formal education. It is innate.
I come from North Gujarat region of India and I have seen villagers who, for that matter wouldnt even have had a chance to see what a primary school looks like, leave alone graduate schools. But even then, they often, from time to time, come up with great yet simple solutions to complex problems. And throughout India, people from this part of the country are considered great businessmen who have a knack for spotting business opportunities. For these "kanthiyawaris" or "marwadis" as they are often reffered to, rains are scanty and there is not much forage to feed their cattle up in North Gujarat. But it is exactly these circumstances which force them into thinking diffrent and as time passes by they become great Resource managers and innovative thinkers. For them, Innovation and Optimal resource management is about "survival". Now if someone can see the very reason for their enterpreneurial successes. Its about Confidence and Willingness ( in their case its compulsion and not willingess !)