Tuesday, April 30, 2013

Smackdown


Dr. Jeffrey Sachs, a very influential/well-known professor from Columbia University, absolutely laid the smack-down on the American banking system. In case you have around 30 minutes to spare, do listen to this.

Examples:
  • Wall Street is full of “crooks,” and it never properly cleaned up its act after the financial crisis of 2007 and 2008.
  • What has been revealed, in my view, is prima facie criminal behavior
  • It’s financial fraud on a very large extent. There’s also a tremendous amount of insider trading — you can even watch when you are living in New York how that works.
  • We have a corrupt politics to the core, I am afraid to say, and . . . both parties are up to their neck in this. This has nothing to do with Democrats or Republicans.
  • They have no responsibility to pay taxes; they have no responsibility to their clients; they have no responsibility to people, to counterparties in transactions. They are tough, greedy, aggressive and feel absolutely out of control in a quite literal sense, and they have gamed the system to a remarkable extent.
Remarkable. Do give it a look.




Friday, April 26, 2013

Not again, not again...

But yeah, again.

More than 4 months now, and no posts here.

But as usual, I refuse to do the humane thing and let this die.


Sunday, December 16, 2012

Game of Phones (and content) (and hardware) (and search)

A great article by The Economist:  Another Game of Thrones

And it has this kickass image as well. Make sure you enlarge and enjoy!



Tuesday, November 20, 2012

The Derating of the MBA


This is being passed around MBA circles. Can't disagree with much of it. 

***************************************************************************************

The derating of the MBA

The MBA damages society in many different ways. The first of which is such misallocation of talent.

A cousin of mine, who is the Head of Risk at a leading Indian fund house, met a bright young graduate from Kolkata’s elite Presidency College a few years ago. This encounter took place in Mumbai and my cousin, already well established on the corporate ladder by then, advised the young man to pursue an MBA. The youngster replied that he had come to Mumbai to become a Music Composer and had no intention of pursuing an MBA. You, I and my cousin should now be thankful for the Presidency graduate’s determination – had this youngster become a corporate drone, we probably would have never heard about Pritam Chakraborty, my current favourite Music Composer.

As I go on to explain in this column, the MBA damages society in many different ways the first of which is such misallocation of talent – people who have deep talents in a variety of different spheres of life get sucked into the MBA because it represents what appears to be a relatively low risk route to a meal ticket in the corporate world. The damage that this apparently low risk meal ticket inflicts at a personal level was captured beautifully in the highest grossing Bollywood movie of all time, “Three Idiots” (although, I confess that the focus of that movie is more on IIT than on the MBA).

In my line of work, investment advice, and more generally, in investment management, the MBA is arguably even more damaging. My reading of the most successful investment managers is that they tend to be patient, level-headed, resilient individuals who have the fortitude to stand their ground in the face of waves of fear and greed that sweep through the market. The MBA represents the anti-thesis of this mindset – in the words of one of India’s most successful fund managers, “An MBA wrecks your mind…it instils in you all the wrong things about corporate life and does not teach you what you actually need to know about Finance, about Balance Sheets, about investing, about patience.”

Thirdly, the MBA is a bad investment for the majority of those who do it. Through entrance exams – CAT, GMAT, etc – the MBA filters the best brains of a generation into a classroom where Economics & Finance 101 is imparted in dressed up format with overheated business jargon for one or two years. Then everyone is packed into a pen, spruced up and readied for recruiters to come and choose. Now, let’s segment the kids in the pen into two lots to see how this game works.

The winners, i.e. the whizkids, the real superstars of the generation, would have got a job anyway regardless of whether they had spent two years in business school or otherwise; for them the two years is pure “opportunity cost”. These people had the aptitude to structure mergers, analyse investments, create marketing plans, etc – the MBA simply delayed their entry into the labour market and made them enter on terms specified by the recruiter.

The losers i.e. those without innate talent would have struggled in any case to enter the elite professions. The MBA is unlikely to change that – last I heard, the qualification is not known to increase intelligence. But by giving them hope of rising above their limitations, the MBA basically played a confidence trick on them, the same confidence trick that the advertisers of hair tonic or quacks peddling “get rich quick” schemes sell.

Hence for neither category does the MBA really deliver long term cashflow uplift – what it does is use the success of the winners to suck in the next generation of losers. I appreciate that there will be a small minority of people for whom the MBA was a life changing experience and allowed them to switch to a more lucrative profession but, unless these people were oblivious to basic Finance and Economics, that “switch” is unlikely to have come from the content of the MBA.

The good news is that India seems to have wised up to the adverse effects of the MBA. In 2008, 2.76 lakh unfortunates registered for the CAT. After steadily falling for three years, in 2012 the figure has perked up a touch to 2.10 lakh. My high school statistics tells me that this is a CAGR of negative 7%. If this trend continues for another 10 years then only half the number of bright young Indians (around 1 lakh youngsters) will be subjected to the competitive drudgery of CAT. The possibility that within the next decade, less than 100,000 Indians will sit for CAT every year is a very happy thought; that is the sort of change I would like to believe in.

BY SAURABH MUKHERJEA, HEAD OF EQUITIES, AMBIT CAPITAL

(Saurabh Mukherjea is the Head of Equities at Ambit Capital. The views expressed here are his own and not Ambit Capital’s. The author confesses that he does not have an MBA).

Thursday, October 25, 2012

Monday, September 10, 2012

Brilliantly Ballsy

This article is an absolute blast: http://skift.com/2012/09/05/ryanair-boss-michael-oleary-gives-best-quotes-in-the-industry/

Michael O'Leary might just have become my new favourite CEO. He's the CEO of Ryanair, a low-cost Irish airline. His approach to customer satisfaction is: "I'll get you there. For everything else, you pay me." I find it hard to disagree.

Some of his best quotes, taken directly from the above link:


On passengers who forget to print their boarding pass: “We think [they] should pay 60 euros for being so stupid.”
Ryanair CEO Michael O’Leary poses with a friend. Photo by Forbes/Newcred.
On refunds: “You’re not getting a refund so **** off. We don’t want to hear your sob stories. What part of ‘no refund’ don’t you understand?”
On customer service: “People say the customer is always right, but you know what – they’re not. Sometimes they are wrong and they need to be told so.”
On overweight passengers: “Nobody wants to sit beside a really fat ****** on board. We have been frankly astonished at the number of customers who don’t only want to tax fat people but torture them.”
On beginning a press conference to announce the annual results: “I’m here with Howard Miller and Michael Cawley, our two deputy chief executives. But they’re presently making love in the gentleman’s toilets, such is their excitement at today’s results.”
On apologies: “Are we going to say sorry for our lack of customer service? Absolutely not.”
On Ryanair’s image: “One of the weaknesses of the company now is it is a bit cheap and cheerful and overly nasty, and that reflects my personality.”
On Guardian readers: “The chattering bloody classes, or what I call the liberal Guardian readers, they’re all buying SUVs to drive around London. I smile at these loons who drive their SUVs down to Sainsbury’s and buy kiwi fruit from New Zealand. They’re flown in from New Zealand for Christ sakes. They’re the equivalent of environmental nuclear bombs!”
On environmentalists: “We want to annoy the ******* whenever we can. The best thing you can do with environmentalists is shoot them. These headbangers want to make air travel the preserve of the rich. They are luddites marching us back to the 18th century. If preserving the environment means stopping poor people flying so the rich can fly, then screw it.”
On protesters: “The Swampies of this world are climbing up trees to protest about airlines and airports. They should all get a job and get a ******* life.”
On consultants: “I believe hiring consultants is an abdication by management of their responsibilities. If the consultant is so good at managing change, then why not hire him to run the company and do it himself? Every idiot who gets fired in the industry shows up as a consultant somewhere. I would shoot any consultant who came through my door.”
On turbulence: “If drink sales are falling off we get the pilots to engineer a bit of turbulence. That usually spikes up the drink sales.”
On corporate life: “The meek may inherit the earth, but they will not have it for long.”
On travel agents: “Screw the travel agents. Take the ******* out and shoot them. They are a waste of bloody time. What have they done for passengers over the years?”
On ordering aircraft from Boeing: “The message to Boeing today is: ‘You keep building them, we’ll keep buying them’, and together both of us will kick the crap out of Airbus in Europe. We love Boeing. **** the French.”
On not ordering more aircraft from Boeing: “Boeing had their chance. Eventually you lose interest, dealing with a bunch of idiots who can’t make a decision. They are a bunch of numpties out in Seattle.”
On transatlantic flights: “Ryanair will never fly the Atlantic route because one cannot get there in a Boeing 737, unless one has a very strong tail wind or passengers who can swim the last hour of the flight.”
On the airline industry: “There’s a lot of big egos in this industry. Most chief executives got into this business because they want to travel for a living. Not me, I want to work.”
On European expansion: “Germans will crawl *******-naked over broken glass to get low fares.”
On Ryanair in the 1990s: “Ryanair will never make money. It will always lose money. It’s an airline. Forget it.”
On Ryanair in the 2000s: “We expect our profits to grow by 20 to 25 per cent. That’s not just good, that’s practically obscene in an industry in which few people make money. This isn’t an airline, it’s a drug baron’s business.”
On charging passengers to use the loo: “One thing we have looked at is maybe putting a coin slot on the toilet door so that people might actually have to spend a pound to spend a penny in the future. If someone wanted to pay £5 to go to the toilet I would carry them myself. I would wipe their bums for a fiver.”
On upright seating: “I’d love to operate aircraft where we take out the back ten rows and put in hand rails. We’d say if you want to stand, it’s five euros. People say ‘Oh but the people standing may get killed if there’s a crash’. Well, with respect, the people sitting down might get killed as well”
On the in-flight experience: “Anyone who thinks Ryanair flights are some sort of bastion of sanctity where you can contemplate your navel is wrong. We already bombard you with as many in-flight announcements and trolleys as we can. Anyone who looks like sleeping, we wake them up to sell them things.”
On low fares: “I don’t see why in 10 years’ time you wouldn’t fly people for free. Why don’t airports pay us for delivering the passengers to their shops?”
If you can’t find a low fare on Ryanair: “You’re a moron.”
On publicity: “I don’t mind dressing up in something stupid or pulling gormless faces if it helps. Frankly, I don’t give a rat’s arse about my personal dignity.”
With Ryanair’s marketing manager, Sinead Finn, addressing an all-male press conference when she said: “I’ve got nine men in front of me. I don’t know where to start”: “They’re hardly all men. One of them is from the Guardian.”
At an over-hyped press conference: “I’m a bit disturbed – the rumour went round we would announce my resignation and the share price rose three per cent.”
On Ryanair passengers: “Do we carry rich people on our flights? Yes, I flew on one this morning and I’m very rich.”
On BAA: “BAA want to spend £4 billion on an airport which should cost £100 million. £3.9 billion is for tree planting, new roadways and Norman Foster’s Noddy railway so they can mortgage away the future of low-cost airlines. This plan is for the birds. BAA are a glorified shopping mall.”
On breaking up BAA: “A break-up of BAA would be the greatest thing that has happened to British aviation since the founding of Ryanair. Then airline customers would not be forced to endure the black hole of Calcutta that is Heathrow or the unnecessary, overpriced palace being planned at Stansted.”
On how to settle differences with Dublin Airport: “With Semtex. Preferably during a board meeting.”
On new routes: “Sometimes there is not even a road to the airports we fly to. It is immaterial.”
On expansion: “We would like to base more aircraft here in Belfast and are working with the City Airport to get the runway extended. Let’s get the planning permission through and let’s ignore the mewling and puking from local residents which is a load of nonsense. If you don’t like living beside an airport, sell the house and move.”
On flying to Cornwall: “Newquay is the surf and dope capital of Britain. There’s next to frig-all way of getting to Cornwall unless you fly. It’s a ******* impossible nine-day hike. Closing that airport would be a disaster for surfer dudes, but also to loads of wealthy types who use us to commute up and down. I tell you, we’ll have a bloody dogfight with the RAF. Watch out for those 737s on your wing, flyboys!”
On pilot’s wages: “People ask how we can have such low fares. I tell them our pilots work for nothing.”
On his popularity: “I don’t give a ***** if no-one likes me. I am not a cloud bunny, I am not an aerosexual. I don’t like aeroplanes. I never wanted to be a pilot like those other platoons of goons who populate the airline industry.”
On his bride arriving 35 minutes late for their wedding: “She’s coming here with Aer Lingus.”
On paternity leave: “We have paternity leave but it’s a bloody joke. It is bull**** legislation. You need a couple of days off because you’ve had a baby, but this nonsensical rubbish that you’re entitled to days off for the first six years of a baby’s life. Go and get a bloody job – get a life.”
On wealth: “I buy everything low-cost. I buy cheap shirts. I buy cheap shoes. It’s a philosophy. I’m just cheap.”
On Ireland: “The airline industry is full of bull*******, liars and drunks and we excel at all three in Ireland.”
On retirement: “It would be very difficult for me to don a tie and go on to committees. Could you imagine me getting a knighthood? Puke. The weakness of British Airways is that everyone is looking for a knighthood. I plan to go on and on, like Chairman Mao.”
On free speech: “I upset a lot of people because I tell them what I think. I’m disrespectful towards what is perceived to be authority. Like, I think the Prime Minister of Ireland is a gob*****.”
On politics: “I think the most influential person in Europe in the last 20 to 30 years has been Margaret Thatcher, who has left a lasting legacy that has driven us towards lower taxes and greater efficiency. Without her we’d all be living in some French bloody unemployed republic.”
On the European Commission: “They are ******* Kim Il-Jungs (sic) in the Commission. You cannot have civil servants trying to design rules that make everything a level playing field. That’s called North ******* Korea, and everybody is starving there. The EU are pursuing some form of communist ******* Valhalla.”
On EU Commissioner Neelie Kroes’s approval of an Alitalia/Air One merger: “She”ll be rolling over like a poodle having her tummy tickled and rubber-stamping the thing.”
On how to keep employees motivated and happy: “Fear.”
On British Airways: “BA have got waterfalls in their head office. The first thing I’d do if I were in charge of BA is turn off the waterfalls. The only time we have waterfalls in the Ryanair office is when the toilet leaks.”
On the British Airways/Iberia merger: “It reminds me of two drunks leaning on each other.”
On Ryanair’s pilots: “If this is such a Siberian salt mine and I am such an ogre, then why are they still working for the airline? If any of our fellas aren’t happy with the current arrangement then they’re free to go elsewhere. Godspeed to them.”
On Aer Lingus’s pilots: “Overpaid, underworked peacocks”
On employees: “MBA students come out with: “My staff is my most important asset.” Bull****. Staff is usually your biggest cost. We all employ some lazy ******* who needs a kick up the backside, but no one can bring themselves to admit it.”
On cost-cutting: “We use our own biros and I tell the staff not to buy them, just pick them up from hotels, legal offices, wherever. That’s what I do. Recently I did an interview and I was sitting there with a hotel pen I’d nicked from somewhere. I was asked why and I said: ‘We at Ryanair have a policy of stealing hotel pens. We won’t pay for Bic biros as part of our obsession with low costs.”
On Sir Stelios Haji-Ioannou, founder of easyJet: “Those of us who sell the lowest fares just get on with it, and those who do not, write whingeing letters to newspapers.”
On intelligence: “easyJet are not the brightest sandwiches in the picnic basket.”
On Southwest Airlines: “We went to look at Southwest Airlines in the US. It was like the road to Damascus. This was the way to make Ryanair work. I met with Herb Kelleher. I passed out about midnight, and when I woke up again at about 3am Kelleher was still there, the *******, pouring himself another bourbon. I thought I’d pick his brains and come away with the Holy Grail. The next day I couldn’t remember a thing.”
On Alitalia: “I would not want it if it were given to me as a present.”
To the boss of regional airline Aer Arann: “**** off back to Connemara where you come from!”
On offering advice to other airlines’ bosses: “They can **** off and do their own work”
On air marshals: “Air marshals are a complete waste of time. I can’t think of anything that would reduce security more than having a guy on board with a gun.”
On a bomb scare in Scotland: “The police force were outstanding in their field. But all they did was stand in their field. They kept passengers on board while they played with a suspect package for two and three quarter hours. Extraordinary.”
On closing Ryanair’s check-in desks: “This isn’t the end of civilization as we know it.”