Tuesday, July 30, 2013

Peak-Oil 2020 just got itself a mega top-up & the globe can look forward to balmier climes :-)

One of those small diversions from my routine - below's the comment I posted on a Linkedin article "OilBoom 2.0 – An American Dream Updated" by Christof Rühl, Chief Economist at BP. 

I was essentially answering the questions (in italics) raised by Christof in the closing paragraph of his article...


My comment:
-------------------------------------
What triggered it?.... Accident? ....The North American resource base?.... Markets?

The trigger is a no-brainer really, the need for fuel independence & dominance (Markets?) in that order... in any order..........Accident? probably the technique of fracking was indeed one. Given the need & the refined technology to exploit the resource base, yet again we dreamed-in the improbably hypothetical terraforming into reality

What are the implications?

It sounds like;
  • Peak-Oil 2020 just got itself a mega top-up &
  • The globe can look forward to balmier climes :-)
And - will it happen elsewhere?

Considering the environmental precedents being set proactively by the USA, this trend of course will catch-up soon around the world, anti-fracking doomsayers notwithstanding.

Monday, July 22, 2013

The start-up investing winds, they are a-Changing OR are they?

In his latest, 'SuperLP' Chris Douvos  writes about the fears of an impending VC apocalypse....., okay to start with, in silicon valley primarily triggered by the capital deployment in start-ups far outpacing funds raised by venture capital firms, essentially affecting that someone else is gaming the system rather than VCs themselves..

Given they appear only once in a blue moon, I couldn't really let go a SuperLP article without a comment... here goes what I posted on his article 'Scents in the Air'

My comment
---------------------------------------------------------------------------------------------
Comments

Murali Apparaju

I am wondering if the issue with "capital raised by VC's increasingly falling short of capital invested into start-ups" is about true of all start-up hubs & not just Silicon-valley AND, that probably in general it’s true of all VC activity across the globe (tho' i do understand this data is of NVCA and for USA)

Out of the entities you mentioned, I see the following two as the key contributors to this skewed ratio;
1) CVC: The emerging aggression of CVCs whose enthusiasm to invest is in equal measure helped/ influenced by not having a limitation of capital to deploy AND by their necessity to shortening the product introduction cycle in face of an increasingly unproductive in-house innovation (think... a top-10 pharma major investing in start-up biotech with just one pre-clinical asset....)
2) Angel: The recent market regulatory changes indicate (JOBS et al) that the government is attempting to bring down the dependence of start-ups on the VC's - primarily by way of increasing the available angel base & encouraging HNWIs to risk their money a lot more freely than before.
Surely the above aspects do suggest why there's a scent of fear in the winds blowing through VC quarters.
I personally feel that these newer sources of capital need to establish their longevity & consistency before the start-ups can forget about serenading the VC for funds – particularly given that non-financial companies tend to be a lot more impatient with IRR cycle-times and HNWIs a lot more prone to gravitate towards less complex and shorter-term alternative investment options.
Essentially, IMHO what goes around comes around & VC as a source of start-up capital would remain a lot more relevant in the long-term

Friday, July 19, 2013

Coordinated rulings by SEBI & SEC - Winds of Market Regulatory Harmonization OR plain coincidence?

Viewed solely from the perspective of rationalizing regulatory framework to support creation & sustenance of new enterprise, a lot has indeed happened in the fortnight between 25th June and 10th July in India & USA.

While I’ll desist from repeating what many other bloggers, journalists & analysts have already written on, viz., the obvious v/s inferred derivations of the enactments & how they’d impact the start-up scene et al., my intention in putting together this piece is from my point of view to highlight certain clear similarities, interesting contrasts and some uncanny conjectures these two sets of reform throw up when seen together & what would this coincidence amount to.

Before getting there, below is a quick snap-shot of the regulatory changes (wherever possible, I used the official language of the regulator) that may be cross-referred down the line;

25 June 2013, when the SEBI (Securities & Exchange Board of India) board took, among others, the following three key decisions that impact the start-up investment scene;

      1.   Amendments to SEBI (Alternative Investment Funds)      Regulations, 2012 – thereby recognizing the angel          investors pools as category I venture capital funds

2.       Enabling Listing of Start-Ups and SMEs on Institutional Trading Platform (ITP) without having to make an IPO
3.       Acceptance of recommendations made by “Committee on Rationalization of Investment Routes and Monitoring of Foreign Portfolio Investments”

10 July 2013, when the SEC (US Securities & Exchange Commission) met to approve, among other things, adopting amendments to Rule 506 of Regulation D and Rule 144A under the Securities Act of 1933 to implement Section 201(a) of the JOBS (Jumpstart Our Business Startups) Act that essentially means enabling;

1.       Lifting the ban on general solicitation or general advertising for certain private securities offerings, thus improving the chance of a start-up raising requisite capital


Now coming back to the original story,

What is similar?

The Intent behind the reforms:  Enabling creation & sustenance of new enterprise within the respective countries

The primary approach of making funds available being by way of rationalizing  angel investment framework

Some level of similarity in enabling a regulator supported solicitation**;

o   Solicitation of investments by way of listing on ITP (Investor Trading Platforms) without having to make an IPO
o   Solicitation of investments by way of advertising on online & offline platforms after complying with filing of Form-D & submission of solicitation material with SEC et al

What is dissimilar?

While the intent is similar, it is interesting to note the subtle differences** of approach;

o   SEC comes across as more conservative in its approach of cautious provisions that simultaneously can OPEN-UP (owing to wider investment choices due to open solicitation) & CLAM-UP (some individual angels falling off the radar due to tightening the requirements of accrediting individual investors..) angel funding

o   SEBI on the other hand comes across as aggressive with its attempting sweeping changes to channelling & control of foreign investments while retaining FVCI as an independent investment class with benefits and simultaneously attempting to enhance access to domestic funds for the start-ups
**Just wondering, is this caution & aggression merely characteristics of a government that has just assumed power & one that is facing polls the coming year??

      While SEBI was at pains to formulate investor minimal requirements (min investment size, maximum angels in a particular scheme to be NMT 49 et al) – SEC seemed to have left the due-dil to the “issuer” by setting only some guidelines

      Finally, while the solicitation provisions are similar, the motivation/ rationale itself was pretty different with SEBI aiming to help improve exit-options of investors & SEC aiming to help raising of capital by the start-ups.

What are those uncanny conjectures?

Ponder this tango of “Accredited Investor” (SEC) ~ “Notified Investor” (SEBI);

-                  Portion of text from section 3.3ai of “Amendments to AIF Regulations” (SEBI):

Such investors shall also be required to have tangible net assets of at least Rs. 2 crore excluding the value of the investor's primary residence

                    Portion of text from text under Rule 506 of “New Rule Making” (SEC)

“An individual net worth or joint net worth with a spouse that exceeds $1 million at the time of the purchase, excluding the value (and any related indebtedness) of a primary residence

Contrasts apart, the similarities & conjectures make it appear like the market regulators in USA & India have been comparing notes, if not working in tandem, while formulating these acts, amendments – I wonder if this is some sort of market regulatory harmonization effort going on? – Surely not unlikely!

Food for thought!

Wednesday, July 17, 2013

There's some traction (in exits') for Indian VCs & that ain't bad!

Expectedly, there was some excitement & some skepticism over the recent acquisition of redBus by Ibibo. My comment on one such recent article "Is the redBus exit really good for the VC ecosystem inIndia?" on StartupCentral is as follows;

My comment:
---------------------------------------------------------------------------------------------
What you have said above sounds (to me) like;
If only the ‘sheer-return achieved on one exit’ by the VC is looked at in the broader context of ‘performance of the fund’ as such (disbursed funds?) rather than merely as a nX return on investment made into that particular company, only then will the overall picture emerge.
Now, just because you mentioned 200mio USD fund in your article, I wish to know if I can assume that one of the three VCs (or all three as an average) who disbursed funds of ~200Mio USD across past 7 years among multiple portfolio companies has hitherto managed only one attractive return of ~15-20X? (of RedBus) & this sheer return still doesn’t amount to being anything substantial to the LPs from whom the 200mio fund was raised?
If the answer is yes, I agree with you that for the Indian VC universe ‘Dilli abhi dhoor hain..’ (loosely translates as ~miles to go before resting on ones' laurels...)
Of course I’d also be cautiously optimistic when I say that if only the VCs that invested into RedBus used a similar good-sense & judgement while identifying, nurturing the other portfolio companies within this 200mio fund, then it is likely they’d still see some more good exists, including some from an IPO even.
Overall I guess there’s some traction & that aint bad. 

Monday, July 15, 2013

Professional Bias: The most damning kind of 'Modern Prejudice'?

Thanks to Mahzarin Banaji & Anthony Greenwald, authors of the recently published book "Blindspot: Hidden Biases of Good People", I now have a term to use when I crib about that intangible, all pervasive, frustrating, subtle but highly damaging prejudice one has to face in the corporate life.

Below is my comment* posted against the transcript of a rather surprisingly** unbiased interview of Banaji by Shankar Vedantam on NPR Code-switch
*one among the 214 highly engrossing comments as on today
**or may be not-so-surprising considering the topic is of 'bias' & avoiding that makes definite sense :-) & also because Shankar himself authored a book that establishes the existence of unconscious biases (The Hidden Brain: How our Unconscious Minds Elect Presidents, Control Markets, Wage Wars and Save Our Lives)
Let me admit upfront that the comment i made about the book in the penultimate paragraph below is hardly unbiased as 1) I haven't (still) read the book & 2) I was prejudiced by the choice of examples Banaji made.

My comment:
---------------------------------------------------------------------------------------------

Ouch! that hit a raw nerve…

Considering the many instances I encountered and still experiencing, it’s apparent to me that I unfortunately am on the wrong viz., receiving side of this bias - No wonder, I am not really able to smirk in tacit understanding of this form of subtle prejudice like Banaji & Greenwald can!

I probably faced this first as a kid transitioning from vernacular education to an 'English medium' school wherein I joined this phantom club of under-dog vern-pretenders. Even as I overcame this initial bias over a few precious school years, I have had an extended rendezvous with this intangible discrimination that followed me most places & most worryingly, into my career – an aspect to an extent demonstrated by the number of times I riled against ageism, rankism & even heightism on twitter in the past few years.

Hands-down, the title of the most damning kind of subtle prejudice goes to professional discrimination that manifests itself in multiple forms in multiple contexts right from Existence of highly exclusive informal academic/ alumni groups; Caste (in Indian context), region triggered favoritism to Inherent bias of domain-Gods prejudiced against wannabes that are trying to break-in into their sacred bastion – most of which I am experiencing right now with my own seemingly self-defeating penchant for periodical disruptive re-invention of self by making/ attempting a lateral career move with no pedigree, justification other than my own belief.

If it sounds like I’m demonizing these ‘quaint’ prejudices as if they were a bigger evil than the regular discrimination types like age, color, disability, gender, race, religion, sexual orientation etc., I have a reason for being so. Unlike these more visible & blatant discrimination wherein the discriminator most times cannot morally or at least legally justify the bias & hence the biased can seek refuge in the regulation & the brotherhood of communities that are similarly affected., the victim, if I may say that, of a subtle prejudice/ bias/ discrimination is without any recourse of fighting this anomaly & hence is perpetually screwed.

No one is above a little-bias in their lives - My own biases & how they impacted the under favored is something which now I’ll keep mulling on, so as to avoid. I however like to believe my fleeting prejudices never trampled on any career aspiration nor on real merit, but aware I am pretty much of any bias I have & when I do, it’s intentional. Given this, I’d argue most of these prejudices aren't unintentional but very consciously employed – while I haven’t read the book, the tone, tenor and the case-studies used by the authors make this book come across as a guide to these subtle perpetrators on “how not to feel guilty while favoring your own kind” – It’s a great service nonetheless by authors to highlight this aspect so very bravely.

The biases may be quaint, but the impact is real and it hurts real bad.

Wednesday, July 10, 2013

Static & Staticy

10th July 2013

When the search is of existential angst, trust the search engine to fill your bucket of woes.











Why really? 

Tuesday, July 9, 2013

My question, merely rephrased, is still open - IRR v/s Impact Investing: Do financial institutions necessarily go through this dilemma?

So I now can save some breath by saying 'Impact investing' whenever I have something to say about social impact of investments - that still doesn't mean I get the whole picture now! 

Below is my comment on a recent article on Forbes titled "Pierre Omidyar, Steve Case And Mike Milken On The BusinessCase For Impact Investing"

---------------------------
Comment:

Earlier in Jan 2013 I posted a poser on my blog titled "IRR v/s Social Impact: Do financial institutions necessarily go throughthis dilemma?"

Even as I am still unclear how social-impact can coexist with bang-for-the-buck at the macro level (~LPs), I see a definite hope in the approach being pursued by Omidyar Network, which made a great start just by terming itself as "a philanthropic investment firm' – The document “From the Field: Lessons Learned in Impact Investing” goes on to showcase how ON takes this moniker seriously – Bravo!!

From all I could see, ON is still an investment firm that’s funded (largely) by its philanthropic founders & there is no ‘raising of fund from LPs’ involved in this unlike most VC/ PE firms that dabble in similar volumes of investments/ portfolio.

That brings me back this intriguing question of how the likes of JPM measure their social impact? – I am sure I am missing something here.


Monday, July 8, 2013

I'm dumb with cool apps 'cos my phone ain't smart when I'm travelling overseas!

Ever heard an international traveler bitch about how cruel the data roaming tariffs can be - well, here i go...

My comment on a recent post on the HBR Group on LI;

Link to the LI discussion:










My comment:


Never heard of any till now……. checked them out & loved 'em all.

AirBNB: Sure sounds like something i'll try when i'm travelling and looking for an overnight accommodation next time.

Uber: I am guessing I may not need a chauffeured sedan anytime soon, but am sure excited by the opportunity it provides to make a rather grand exit from a sad rendezvous :-)

Hailo: Hello... this is something I could use when i'm in London or NYC next - my only issues are; a) When in the near future would the corporations of London & NY enable city wide Wifi?.... enabling data on my international roaming plan can be pretty killing. AND b) What if I don't actually know where to stand while 'Hailo'ing the cab? .... just kidding :-)

Getting serious, the bottom-line is that till the time WiFi is all prevailing and FREE in all cities (are you listening Google??..), an international traveler like me will not be able to use many of these cool apps for want of connectivity....

Plan B anyone?

Sunday, July 7, 2013

Understanding the consumer's perspective on the future of healthcare is the key to envisioning the future of pharma itself!

While there occurs a lot of ideation & speculation within the industry domain on the future of healthcare & an outlook on pharma variously from 2020 through to 2050, I always still felt there is a crying need for pharmaceutical industry to understand the consumer's perspective on what healthcare scenario should be like in future - This is critical considering the hitherto quintessential 'practitioner-dependent' healthcare consumer is changing rapidly & is looking at an 'iterative' role for himself rather than wanting to being 'prescribed' health literally & figuratively.

While not exactly an average consumer, the pharmaceutical professionals themselves represent a sample population of aware individual consumers whose opinion I believe will give me a much valuable insight into what an increasingly knowledgeable healthcare consumer is looking forward to with respect to health & wellness in 2025 & hence I have decided to reach out to them primarily, to start with & pick some brain.

Through the various forums I have access to, I have already sent out multiple requests to multitudes of individuals to spare a a few minutes of their precious time to fill in the HEALTH 2025 survey as a consumer. I of course will be greatly pleased to have an outlook from the 'non-pharma' aware consumers too & invite the same to provide their valuable input.

The outcome of my small effort looks promising with the total initial responses already reaching 100 across the globe even as I type this post - Not bad at all, considering the survey's been open for only 20 hours now. 

Very soon I will be back to share the results of the above survey & postulate, however minimal, on a few useful trends & indicators.

Wish me good luck folks!

Monday, July 1, 2013

Cipla Ventures - What's the real story Gen-3?

Greed for quality & comprehension makes one less effective & less productive.........
........... Stash away those cudgels people, this is NOT about pharmaceutical manufacturing, this IS about my realization after a month of sub-par blogging that resulted in my number of posts going low (just one article to be precise in June 2013!) and the number of views I get per a month hitting the nadir! - A promise to myself... will try to type out a few "casually turned out" articles every now n then, instead of generating it through my oft employed time-consuming approach of Mull-it-over-for-a-week-Type-it-on-Word-Edit-it-as-though-HBR-were-publishing-it-and-finally-Paste-it-on-the-blog....... Spontaneity ain't dead yet!

Now the REAL topic...

The recent news of Cipla charting new course to achieve a $5 billion revenue in next ten years caught my attention & got me thinking.... Not because a 10 year objective as this is anything novel, but the simultaneous creation of a dedicated investing arm Cipla Ventures, towards this vision, is what interests me. 

Now again, what's so novel about corporate venture capital? its's been around for some time and the trend is bound to catch-on with whichever company that's sitting on surplus cash reserves jumping into the fray if not anything else, as someone said (Super LP??) for the blood & gore and the adrenalin rush that venture investing & enterprise incubation gives.


What interests me is.... 
........ the brief agenda of this arm of Cipla, as reported by Economic times, that says will "weigh the prospect of investing in companies from start-up hubs like Boston and London among other places, in areas such as biotechnology, medical devices and new chemical entity

What interests me is.... 
....... the expansive & prophetic way in which the new CEO Subhanu Saxena says "Out of the five or six bets I place, only two or three need to pay off"

What interests me is.... 
....... what is this "pay off" for which Cipla is ready to take "sensible risk", a novel term for a generic Indian company that has taken the traditionally low risk option of staying close to the home turf?

What interests me is.... 
...... what key takeaway Saxena is walking away with from Novartis & bringing to Cipla?

Let me be clear, I am not insinuating anything unethical here nor I am attaching ulterior motives to a darn-clear writing-on-the-wall business opportunity, all I am doing is trying to get to the heart of matter as to what will Cipla gain eventually through these investments..

Two theories that strike me right away are as follows;

i) TOOL FOR NEGOTIATION:  

The multiple niche stakes & thereby the 'possible' control on the licensing /sale of the pipeline candidates & technologies of the portfolio companies in the NCE, Biotechnology & Diagnostic space will potentially help Cipla negotiate/ barter generic deals with the big pharma companies whose drugs Cipla is/ will/ would aggressively pursue to market in the US & European markets

Will this fly...? despite the generous window of hit-miss offered by Saxena, this is an opportunity completely out in the ether & my guess is as good as Cipla's :-)

ii) EXIT PREPPING OF FOUNDER PROMOTERS: 

Before I am clobbered for suggesting India's most nationalistic  private pharmaceutical company would sell-out, let me remind that no one's above liquidity & no company is unattainable in this corporate game. Let's also remember that the new leadership of Cipla is, surprise, surprise.... of all places, from Novartis, the bête noire of Cipla in many a litigation?? - Let's also remember that the new leadership of Cipla in US & EU is Ex-Teva... the generic behemoth that can make big-ticket acquisitions every now and then (read: $6.5 billion Cephalon; $7.5 billion Barr et al..)

Will this fly...? Of course it'll - the lure is the access to a 1.24 billion strong Indian market.

Anymore theories? 

Friday, June 28, 2013

A start-up messed up at its foundation OUGHT TO be fixed!

The celebrated venture investment guru Peter Thiel postulated a law that says "a start-up messed up at its foundation cannot be fixed" - Bruce Booth attempted a commentary of this law in the context of Biotech ventures through his blog post titled 'Foundings Matter: Thiel’s Law Applied To Biotech' - While Bruce's application of Thiel's law is based on a tacit agreement of the postulation, I believe this can be argued differently, as indicated by some campus talk here...

Below is my comment against the article by Bruce Booth, wherein I agreed and disagreed with the author in two independent contexts....

My comment:
---------------------------------------------------------------------------------------------
It bugs me no end just how little the VC & PE literati out there ever attempts to explain all those lurid, smart theories in the context of biotech enterprises instead of solely building case-studies out of super-achieving IT start-ups that brought-in bags of cash to the VCs very early into its life cycle. This peculiar penchant among the authors for avoidance of anything called biotech enterprise I feel is owing to a general investor impatience for acknowledging the veracity of any investment that can’t be cashed out profitably within 3-5 years & thereby not showcased as a text-book case of intelligent investing. While otherwise is a decently thought-provoking & stimulating book, “Venture Capitalists at Work: How VCs identify and build billion dollar successes” by Tarang Shah is one such recent addition to my list of disappointing treatise.

Peter Thiel too probably isn’t greatly different after all, since a lot of the wisdom he’s been postulating is validated only within the narrow context of IT start-ups - Your effort Bruce, at ‘pharmifying’ the ‘Thiel’s law’ is thus a very welcome diversion.

None of the mess-ups you listed right from ‘un-reproducible science’ to ‘inappropriate capitalization’ can be contested as inconsequential in any which way & together these six make a great check-list for the entrepreneur on how not to go wrong initially & for a full-fledged due diligence by the VC either at the initial funding or an informal, abbreviated review prior to subsequent funding rounds. I however am struggling a little bit to accept that the DNA can’t ever be repaired once messed up – isn't disruptive innovation, which inherently amounts to re-coding the DNA of the enterprise /or enterprise's innovation/ business model, an accepted strategy now?

In the June 2013 issue of HBR, Rita Gunther McGrath (Author of “The End of Competitive Advantage”) talks on how the current day enterprise scenario is all about moving away from the conventional ‘Sustainable competitive advantage’ model and instead moving towards “Transient competitive advantage’ – Biotechs' that operate within an ever evolving, dynamic clinical scenario I believe can’t really base their strategy on sustainable competitive advantage & have to necessarily adapt, quickly & efficiently to the transient competitive advantage model & this may necessitate periodic re-coding of the enterprise DNA - What I quote here is what pretty much you and others said earlier regarding the need of emergence of ‘lean-start-ups’.

So instead of trying overtly to ensure all loose ends are tied-up upfront (…including the phantom scenarios!) & showcase a supposedly fine-tuned enterprise DNA to the VCs, the start-up would do good to expand the scope of the business plan to incorporate a well thought through set of situation-appropriate pivots & an alternate disruptive innovation model or two.

My two Rappen*


*on a business trip in Switzerland at the time of posting this article


Friday, May 24, 2013

Shouldn't all pharmaceutical professionals too take the Hippocratic Oath?


The news about the generic drug maker Ranbaxy Labs pleading guilty to felony charges related to drug safety and its acceptance of $500 million in civil and criminal fines created an unprecedented buzz in the world-wide web. The most incisive piece by far appears to be “the epic inside story of long-term criminal fraud at Ranbaxy.....” By Katherine Eban on CNN Money.

No horror story is complete without its share of seedy alleys, murky dealings & closed cup-boards that contain multitudes of hidden skeletons - this too has. Even as all the digging is indeed required towards a total expose’, the associated spill/ shoot-out of emotional rhetoric is threatening to harm the still-early but the strong trend of genericization of global medicare.

Can we raise above the rhetoric of branded drugs v/s generic drugs; first-world v/s third-world & address the core issue of why medical frauds happen & what can be done to plug these? 

My Comment on the above article:
---------------------------------------------------------------------------------
A very compelling narrative & an alarmingly scary proposition…. 

I fully agree with the majority opinion here that the consequences of a fraud this big should be equally big for the company in question. But again, I also endorse the opinion of a few others like Sam Werbalowsky, 
Dan Miller et al who have pointed out that Ranbaxy isn't a standalone case in the shameful history of pharmaceutical frauds & that the focus should be on ethical business of all Pharma & not just the generic players as Ranbaxy – It is important to underscore this particular aspect at this juncture since the tone & tenor of this otherwise brilliant piece makes it prone to being construed as a platform for demonizing the generic medicine vis-a-vis' branded drugs. 

A quick look at the list of infamy here & here establishes that the common thread running through all is the disturbing trend of the best-of-the-organizations taking a call of preferring earnings over ethics at critical decision points. Another common aspect among all is the seeming complicity of a vast number of employees at all levels of the organization to misrepresenting a fact or manipulating an outcome. This shows that the problem is not just at the top decision making levels but is endemic at all levels of hierarchy & there’s this shocking apathy all through to what amounts to ethical behavior of an average worker/ employee in a pharmaceutical organization.



Given the complete insulation of an average pharmaceutical employee to the consumer-end of the spectrum & hence insulation from the consequences of any wrong-doing, I'm a little sceptical as to what will motivate these people to be vigilantes of public health & safety at their work place, pardon my cheekiness here, whether or not that involves whistle-blower benefits – THIS apparent lack of ownership of public health & safety in pharmaceutical manufacturing world is what I believe is the real core problem.


While there may be much creative reasoning & some complex solutions to the above core problem, I’d like to keep it simple & say that the reason is a lack of any formal sensitization of a pharmaceutical industry worker prior to or during his/ her employment on her/ his own accountability to public health & safety in general & the solution I hence propose is to instil this accountability in all pharmaceutical employees by way of a Hippocratic Oath that unfortunately is currently merely confined to medical practitioners & decreasingly so.


Food for thought.

Ref: my earlier post at:

Thursday, May 23, 2013

Nobody’s saying no to India’ – phew, that’s a relief...


The survey of a few global LPs by VCCircle that was intended to understand 'what a LP wants from Indian PE managers" but actually feels like "why a global LP wouldn't want to put his best bucks in Indian PE" threw up some expected & some strange surmises, but nevertheless makes an interesting read –

The link to the article is below & below that is a repro' of my own comment on the article;


My comment:

---------------------------------

Interesting surmises!

What makes the takeaways less validated however is the lack of disclosure or at least a categorization of the LPs surveyed**. This gap I felt more acutely for a few like the question # 9 the response pictorial of which indicates that 50% of LPs surveyed will put money in PE/ VCs that're focused on investing in growth-stage enterprises – this averaged-out response doesn't allow one to assess if this is the response of each LP sub-set falls within this range or if some LP sub-sets deviate from the mean significantly.

I also felt a lot of the questions were overtly leading & that could skew the responses in favor of the inherent bias/ prejudice in the question (for e.g. 10 & 11..)

And yeah, the sliver-lining… It warmed my cockles that LPs have acknowledged of the promise of Healthcare Industry in India & the candid confession that ‘no body’s saying no to India’ – phew, that’s a relief.

**I realize it’s possible this can be done still from the data available OR it has already been done… only I couldn’t see it in the downloaded report.  

Tuesday, May 14, 2013

Economists often ignore politics says Donald Marron! - wish we all could...


That's what I thought I'm becoming when I dared comment on a blog dedicated to Economics!!.... and, on an article dwelling on how economists don't seem to be factoring-in how 'policy decisions might change the future balance of political power' at that!!! - 

Well, here's the link to the article & below's my comment on the same...


My comment;
--------------


  1. Of course they should pay attention to politics… 
    The legacy of a theorem & assumption based scenario-building clubbed with the current trend of considering only the mathematical & econometric models as having scientific/ academic rigor I feel made economists predominantly quants… with very less patience and sensitivity towards the uncertainties that can be explained only qualitatively and never numerically……
    Guess some of the lost ART needs to put back in the SCIENCE of Economics :-)

Tuesday, May 7, 2013

Will the Indian Mobile makers pay a price for the judicial ambiguity (& their own..) on 'Essential Patents' & FRAND terms?

In his characteristic & incisive style, 'Spicy IP' Prashant Reddy unravels for debate, the ongoing litigation between Ericsson & Micromax Informatics Ltd. after Ericsson sued Micromax (and Mercury Electronics Ltd.) a few months ago for allegedly infringing 8 of its telecom patents for a range of wireless technologies, including 3G, AMR and Edge - read the artcile here @ http://spicyipindia.blogspot.in/2013/05/the-ericsson-micromax-patent-litigation.html 

Looking at the haste in which the Delhi High Court granted an ex-parte interim injunction against Micromax, I cannot but agree with the writer's initial assessment that Indian regulatory apparatus & companies are not geared up for fighting complex & strategic IP litigations.

I however don't share Prashant's (rather gloomy) view that "it is unlikely they (Indian companies) will take the extra-effort to counter-attack Ericsson in a bid to pre-empt future action by other patentees" - like i said earlier in a article of mine, commerce & the promise of it is a good enough reason for any company to learn the ropes of the trade. It also should be understood that, even if it makes immense sense, someone like Micromax may not really be able to go all proactive since they aren't exactly the Apple OR Samsung & their margins, I would expect, will be minimal.

The need is however crystal clear - It's about time Indian regulators, judiciary & indian tech-companies that have to mostly deal with dangerous dampeners like royalty-stacking et al take a crash course in what they need to expect & how they could make strategic litigation a part of their daily lexicon.

below is my comment posted on the above article on Spicy IP;




vishrasayan said...
Excellent insight Prashant!

It appears as though the displaced-vanguards of the mobile technology such as Motorola, Ericsson have re-strategized their revenue generation to monetizing their patents rather than depending on competitive selling :-)

I also see your point about the Indian regulatory, judicial apparatus & the companies themselves prepping way too less on litigations and that's bothersome – this lack of comprehension also resonates with the lack of precise articulation I wrote about some-time ago on my blog… hopefully this will change.

I do agree the potential for royalty-stacking in mobile technology makes it much complex and hence the need for a middle-path, but healthcare too comes with its own complexity of access to latest innovation - I have read your earlier post on compulsory licensing – it appears to me there’s a dichotomy in your justification of premium for innovation (patents) in healthcare and not applying the same yard-stick for the mobile technology…?










Monday, May 6, 2013

Dear HBR, defend your research!

In the May 2013 issue of HBR that has a ‘spotlight on entrepreneurship’, Adi Ignatius observes in the very first paragraph of his editorial that the “IPO market has been soft for years” & on a closing note hoped for ‘a steadier flow of IPOs’ as the economy is on the path to recovery.

This angst I thought pretty much reinforces the dominant LP complaint of an ‘absent IPO market in venture backed firms’ these days. Given this, I expected the articles to focus on elucidating about scalability of an early enterprise to the entrepreneurs – which I realized wasn’t the case after reading through the same.

Each of the four articles & the one interview instead seemed standalone in content & interestingly anti-VC in tone & tenor – not sure why. Since an elaborate hypothesis on these already elaborate academic articles didn’t appeal to me, I felt capturing the essence of each article in a single line would make it crisper - but given the duality of the message in the articles/ interview, I decided that the take-away messages should be in two sets, one for the entrepreneur & one for VC.

Here goes;

FOR THE ENTREPRENEUR

Go the Lean-way or Fade away1
Seek out the client, not just an investor2
To err is VC – YOU, be the driver3
Marry the VC if you must, just make sure the pre-nup is not one-sided!4
If you are good, a Top VC will find you / If a Top VC funds you, you must be good!5

FOR THE VC

Lean is in – Junk the flab (read: 5yr business plan et al.)1
Failing early is a virtue, at times, most times2
Focus on great returns, not on large fees – Stay relevant3
VCs are good but dated – Brace up for the Gen-Y entrepreneur4
If you aren’t a top-quartile VC, tough luck!, great deals don’t happen to you5
Article reference:
Click link to access the article, (I pay for my Kindle edition tho’..)
1.        Article “Why the Lean Start-Up Changes Everything” by Steve Blank
2.        Article “What Entrepreneurs Get Wrong” by Vincent Onyemah, Martha Rivera Pesquera, and Abdul Ali
3.        Article “Six Myths About Venture Capitalists” by Diane Mulcahy
4.        Article “How to Negotiate with VCs” by Deepak Malhotra
5.        “In Search of the Next Big Thing, Interview of Marc Andreessen

Most of the above messages have been around for some time now, only this comes across as a tacit academic endorsement of the market grapevine - If I forget scalability for a moment, my summarized takeaway from the above is;

Whether or not there’s something basically and drastically wrong with the current VC model, the emerging new trends in the start-up strategies make it pertinent that the early investors, in particular the VCs, should evolve in tandem – This is important not only for sustaining the radically different new-gen start-ups but also for the sustenance of the VC domain itself.

I always liked the way the professors are called out to defend their research in “Idea Watch” section of HBR, So do I now say; 

Dear HBR, defend your research? 

Game on…


After thought:

Ponder the following exchange between Adi Ignatius (Editor HBR) and Mark Andreessen (Venture Capitalist) - ref: In Search of the Next Big Thing
Adi:    You’ve developed a strong philanthropic focus. Is the next generation of investors thinking about social investment?
Marc:   No. [Laughs.]
Adi:    So much for my hopes for the next generation.
Marc:   Many younger entrepreneurs have a social mission or a philanthropic agenda. They start early. Investors, not so much.
Considering this is towards the end of the conversation, I thought Marc was pretty dismissive about another aspect that investors both big and small HAVE to eventually look at "Corporate Social responsibility" of financial organizations. I pondered on this in my earlier article titled "IRR v/s Social Impact: Do financial institutions necessarily go through this dilemma?" - No answers tho'.