Musings in my corporate life .....

Musings in my corporate life....
(This is a collection of anecdotes and incidents which happened in my corporate life and a few of them heard from my friends till now.) – November 2013

1.   There used to be interactions with a Financial Consultant who was obsessed and talked only about brands. He used to talk about Rolex, Rado, Swatch, Tag Heuer, etc. These were very expensive and ‘larger than life’ brands in watches.  When he came for discussions for raising funds, he would come in a Benz car, wear a Rolex or Rado watch, Mont Blanc or Calvin Klien or Prada spectacles, dresses bought in Dubai or London, shoes bought in Italy, perfume from France or Dubai and so on……!!. I used to wonder, what kind of fees he would charge his clients to earn for his Brands but later got to know that he was a successful businessman too..  (maybe to our luck) !!!. But his fees was much higher than any other consultant….

His obsession for brands was crazy to say the least. I got to know many brand names from him. Before we used to start business discussions, I used to open up with his pet topic on brands, and he used to go on a ‘trip of his own’. He used to mention on his watch collection with some costing more than Rs.5 million and kept in bank locker. He used to mention that these watches were hand-made and all the parts were made of gold, and had to be maintained very well by winding up the watch every day. Invariably, business discussions was lost…..!!!!

Once he talked about the price of the lenses which he used for the branded spectacle frames. He asked us about the price of the lenses (of spectacles) we bought. We told it was 2000 (I was actually talking about Rs.2000 !). Immediately, he went on a ‘trip’ mentioning that the lenses he used cost a minimum of Rs.100,000. When this incident was being discussed with the Boss, he gave a great idea…. “ You should have told that the price is 2000 dollars, since you had only told the number to him. Then he would have kept quiet”.

2.   We used to have “Aeroneeds concept.” When I was in consulting, we used to have clients who came without any appointment and sat with the partner and kept on talking everything under the sun except any business. These clients had a whale of time with them and wanted to kill it… However, in consulting, there were other clients, with prior appointments and waiting to meet the partners.

We had a device to have a way out. There used to be client named “Aeroneeds”. For whatever reason, this client was the ‘saviour’. When such ‘discussions’ about the worldly matters was happening, partner calls his secretary and mentions “bring the aeroneeds file”. The secretary understood the message. It meant that we need to disturb and the team member would go inside the partner’s room and says there is a client waiting in the conference or says that he is ready with the balance sheet and he can come and finalise it as the client has come for it. Immediately, the partner, using the disturbance as the excuse, cuts short the ‘worldly discussions’ and the client walks away. This concept was used very effectively and it really worked !!.

3.   My friend used to tell me about how guys from Private equity fund will come and advice the businessman/ promoter itself on how to do the business, give ideas on how to make profits and earn cash. My friend continued, “This guy will not even have a full grown mush... and he will advise on how you should do your business and the promoter needs to listen to him ....”. This more often happens in software start-ups, when the PE fund guy will come and give his “gyaan” to you after having invested.

4.   There are many financial consultants who just want to exploit and for which they create the problems which is not there at all in the first place. The problems could be trivial or bigger and they hear the problems of the business and then inform it to the banks/lenders and come back to clients to propose that they can provide solutions.

5.   One Chairman always had a way of calculating and understanding cash flows position and the ‘bigger picture’. He jokingly called it 'village accounting'.  You calculate for a project from various sources of information and data and analyse and arrive at your conclusions on financial issues. Then you prepare a detailed spreadsheet and present it to the Chairman. He hears you out.

Chairman takes a White sheet, pencil and starts putting a number, from the midst of the working. (You never understand which is this number used as the starting point !!). Then he asks and puts the numbers and 'Yo' arrives at the same conclusion which you had worked out.  He says that he understands his working with pencil and calls it 'village accounting'......

It was an experience you get awed at and then think, that they get these numbers right and see the ‘bigger picture’, that is why they are successful promoters and you are still with excel spread sheets and that is why we are good professionals and not promoters !!.

6.   Another chairman had a particular liking to a font and size of font... It was 'Arial' and font size '10'..... He was very particular about it and wanted all the reports to be in the desired font. He was able to tell if it is in the correct font and font size by just looking at the report. I started following it and in due course even ventured to ask him why. He just smiled and told he will tell later, but that day has not yet come !!.

Later on, I understood from my friend (who has knowledge of calligraphy), that ‘Arial’ is a font and the size ‘10’ are actually good and clear in visibility to the eye and also has clarity when printed…  

7.   I came across individuals who state that they are very close to the boss and the boss will listen to anything told by them... These were dangerous characters you need to be careful. I had the experience of interacting with these kind of people. These individuals take your correct inputs and put it across to the boss as their inputs. Even this is fine, but on the other hand, if you have given a wrong input or a wrong suggestion, they will tell the boss in such a way that you become a villain in the piece !!.

8.   In early part of my career when I was carrying out internal audits for the group companies, I was named by one of the directors as 'GIA' - symbolic of “Group Internal Auditor”.   I used to give reports which the boss accepted the contents but did not act on it..... The director used to joke that I am doing a ‘samurai’ fight in a room, all alone, swashing swords and no one is there willing  to fight against you….!! Then I realised that one should have ‘grey hair’ for bosses to listen to you. Later on in life, I found that some Bosses will never listen….!!! 

9.   In software start-ups, the scene was only discussions and meetings throughout the day. Full of strategies session and thinking what to do... The boss and other brilliant guys used to write in different colours on the White board and the more you write on the White board, the more strategies and symbolic of more brilliance. Any guy writing in all the “VIBGYOR” colours was thought to be the most brilliant person !!!.

But later on in life, when you look back, you realise, that everybody writing on the white board forgot to realise that the plan for executing these strategies were not given importance....
Even today, you come across bankers, consultants, who write in many colours on the white board explaining strategies and are thought to be brilliant….!

10.   There was a Boss who said he does not believe in sending mails to the next desk. He used to say, “Take the phone and speak to the concerned person. Most of the issues can be resolved by just talking”. His favourite remark, “What is this forwarding activity..... Then you are just saying that you are only a post box....” I realised, he is right to a large extent...

11.   You come across Bosses, who just stick to their reasoning. On share valuation or issue price topics, you explain the valuation of the company is so and so, but you invariably have Bosses who start by writing the number of shares and ask us to tell the price per share. You explain and tell them that valuation is a result of two factors, viz. price per share and the other is the no. of shares, they don't accept. You find it difficult to convince these things. Learning from experience, you just go through the flow along with your boss and then, will arrive at the same figure which you would have mentioned as the valuation number upfront.

12.   Team member came with a different and unusual theory. People and that too bosses with names starting with letter "S" have a knack of delegating almost all the work to their team or to next level managers. I found this theory to be true when I applied it to the bosses in my corporate life....

13.   When I was in consulting, in 1996-1999 time, there was a craze for getting ECB loans as if they will come free and fast. No way. You realise that later. Even when you as a consultant to your client informs that these guys who say they will get ECB is all false, no client listens. I have gone through such cases.

The unfolding of events were –

-       First one local guy comes and says he represents another consultant group in Delhi. Then he gives a checklist of things to do to get the ECB. He says that he will do all these things and wants an upfront fees. It could range anywhere between 10 lakhs to 25 lakhs. Mind you, this was in mid-1990’s. You negotiate and upfront is settled at 15 lakhs and the client pays this consultant.

-       Then after many calls, this guy has two gentlemen land up from Delhi. Who are they?? They will tell you that they represent a fund in UK. And the client spends on their stay at “only 5 star hotels”.

-       Then these two India representatives are taken to the plant, treated royally and then they say it is a very good proposal and they can get the ECB definitely. The promoter feels he has done something great.

-       Time pass, months pass and then after many phone calls, these Delhi representatives escape from the scene.

-       Promoters lose interest because almost one year time is lost. Then they come to reality that these are fake...... only the ‘upfront fees is lost…

Moral of the story – I have come across many consultants who take upfront fees and end up not completing the assignment. They only work for their “upfront fees” and not success fees !!.

14.   The impact of film heroes on individuals were highest during the period of 1980's. I had friends who changed their hair style during my college days during 1984-87 and tried to resemble Kamal haasan’s hair style (as seen in movies of early 1980’s) as closely as possible.

During my consulting, I had a client who had a hair style which resembled Amitabh Bachan (remember his hair style with hair covering part of the ears!). This client grew up in Bombay and obviously was influenced by Amitabh of the late 1970's to early 1980's. Later in my career, have come across two other friends who had a dressing style which resembled Chiranjeevi, the Telugu superstar of the 1980's.

15.   During my stint at a software start-up, on my first visit to USA in 2001, I had interactions in our US office with a guy heading sales. He was an Indian, a Chennaite, settled in USA and with a different thought process.

Amongst his various analysis, the one which stuck with me were - (1) he used to say -" if only America had a problem with the neighbour like India has with Pakistan..., America would have long back found a way of putting a fence along the entire stretch of the border so that nobody can infiltrate...

Another analysis was – He would vociferously say "this George Bush talking of saving and conserving funds to ensure the US economy has growth is all false story. USA never thought that way. USA always grew because of brilliant ideas coming through and great inventions being done which made it lead the world, and not by conserving and thinking of savings and ending up thinking small...."
Possibly this was true..... Think of Rockefeller, Apple, Microsoft, IBM, Intel, GE, Boeing, Wal-Mart etc

16.   During consulting, we had a client who was a software start-up which was promoted by seven professionals. The introduction to each was given this way - he is Mr. X... IIT, Madras, IIM, Ahmedabad and worked in this MNC.... Then this is Mr. Y... IIT, Bombay, IIM, Calcutta, and worked in this large Indian corporate... And so on..... All VC funds had very high hopes on such pedigree.... Maybe right. Of course these institutions are great and produced the brightest brains in India.... But whether they will succeed in any business, only time will tell. But those days, such promoters wanted higher valuations just for putting up such teams together. No earnings, no proven track record of the business model..... But only excel projections.......and a great PPT to back it up....

Later on, I realised that great individuals cannot equal a successful team in business.

17.           Memorable Quotes...
SWOT - sheer waste of time
HTML - how to make losses
Village accounting – way bosses look at numbers and get to conclusions
Business is art of managing and solving problems....
One who has the GOLD makes the 'golden' rule...

The art of making money is not taught by anybody.... You need to find out on your own.....!!!   How true….

One friend used to say, “If ever I was India’s Finance Minister, I would re-introduce ‘Estate Duty’ back.” (Estate duty was earlier in force and later abolished. This friend’s logic was why should second generation of the Indian Promoters enjoy the entire inheritance (without paying any cost) of their parents who have created wealth…!!!). 

18.   I had met a Doctor who spoke about stress levels in corporate life....She reasoned out, “a promoter wants to achieve the impossible and asks the finance guys to get it for him. You finance guys, go after and try to do the impossible and only end up in higher stress levels and abusing the body, leading to many medical issues arising out of stress....” What an analysis coming from a doctor, but the statement is absolutely true....

This Doctor also used to say, “We Doctors are the only individuals who without realising it, follow the concepts of “Bhagavad Gita”. When we treat patients, we diagnose and give medicines but we also say that the “Lord” above has to grace the patient for cure”. She went on to say that like in Bhagavad Gita, we do our duty and leave the result to the God. Think of this statement, curiously, it is a fact. Great reasoning.

19.   During 1998-2000, there was a 'dot com' boom across the globe. Remember amazon, yahoo, indya.com and many more....Many ‘dot com’ companies were having valuations which moved only north !!!!. Looking back, you realise that they were having valuations which were astronomical, irrational and crazy. As they say, ‘hindsight is the best sight’.

But those days, nobody wanted to even think..... During that period, doing valuations was a big activity. And when you did valuations for these ‘dot com’ or software companies, the promoters immediately were feeling as if they had that amount of cash with them and were rich to the extent of the valuation.......!!!!! Nobody wanted to see through that valuations were very subjective and just a number and not cash earned or on hand !!.

I remember doing valuations for dot com companies based on the 'number of eye balls!!!'. You look back today and you can only laugh at it. As if all such eye balls visiting your web site resulted in revenues and generate cash for you....!!.

20.   One of my friends heading a PE fund, used to comment that 'cash is king' and any business generating cash was actually a winner.... He used to say, that most of us forget this simple fact or wish to forget or act as if we do not realise the same..... All these valuations and talk of creating assets were immaterial when you realise that if the business is not generating cash, either it is a low growth business or not a fit case for PE investment. “Cash is king” is an absolute truth….

21.   We have consultants who come and talk as if the Chairman and Directors of Banks are their childhood friends (played gully cricket together??!!!). They comment after hearing about the deal, and say "this deal is done. X bank will 'cut' a single cheque for your company for Rs.200 crores....". And many promoters fall for it, knowing fully well that there is no easy money and there is no free lunch in this bad corporate world.

But how the consultant talks is the best part of it. It will be so convincing and he will give names of the Bank’s bosses at the drop of a hat……!!  Now having so many 'grey' hair, I feel amused hearing such statements. Why the bank cannot cut two cheques!!!!!  You only cut your thumb listening to such consultants... !!!!!

22.   When Facebook came out with its IPO in May 2012, I did some number crunching, more out of curiosity. Below is the table of the comparative numbers done in 2012…… This below analysis was done at projected IPO valuation level of USD 85 Billion. In reality, the IPO was done at valuation level of USD 90 Billion !!.

Comparative analysis:

                                                                                                                                All figures in Billion USD

Company/ Particulars	Intel	Microsoft	Google	Apple	Reliance	Ford	Walmart	Facebook
Revenues	43.62	69.94	37.90	108.25	40.74	128.94	421.85	3.8
Net Profit	11.46	23.15	9.73	25.92	4.9	6.56	16.39	1.0
Market Cap.	134.8	250.8	188.85	425.34	54.20	46.86	212.95	85
Market Cap./Net Profit	11.7	10.8	19.4	16.4	11.0	7.1	12.9	85.0
Market Cap./Revenues	3	4	5	4	1.3	0.4	0.50	22

o   Is there something basically wrong in this analysis of FACEBOOK !!!! ?????

o   Are we missing something ??????

o   P/E Multiple of 85 !!!!!!!

WHY THIS KOLAVERI    DI ………??????????

-     Venkatesh

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Disclaimer: The incidents narrated above are adaptation of events, either experienced by me or told to me. They do not represent the actual events. The characters in these incidents are only a reflection of individuals whom I have interacted in my corporate life or heard from others and any resemblance to any individual is purely coincidental.