Ludo and 20-20 cricket have their share of similarities

From last two weeks or so , I have been hooked on the game of Ludo. Yeah , that game you find on the reverse side of Snakes and Ladders. This game never fails to excite me. Every roll of dice is a new hope. Every game is a different game. No one knows who is going to win till the very final moments of the game.

All people want is excitement. Excitement generated from unpredictable outcomes. Outcomes where we as humans have very little control on. Football is exciting to watch because we have no control over the moves and state of mind of the players. The 90 minute game is full of surprises. When an underdog like Croatia reaches the Football world finals, it is a surprise.

What people really don’t like? predictable outcomes. See cricket test matches. Even a 50 over , one day match is a drag. Hence to grab eyeballs , 20-20 platform makes much more sense. More action, more audience and more games in just 1/5th amount of time you spend watching a one-day match. Ohh and the immense unpredictability which comes with playing a 20 over match is just the icing on the cake!

So why everyone embraces this unpredictability? because all unpredictability has a strong connection with money. Gambling? unpredictability = Money. Stock markets and day trading? = Money. 20-20 match? unpredictability and hence more eye balls and more advertising moolahs.

It is much more easier to monetize unpredictability. The possibility that anything can happen keeps us all moving.

 

Value Conflicts

I always thought that good and bad values are relative concepts but I never came to a strong rationale or understanding of how to reason and explain the relativity between the two.

But yesterday after watching some documentaries on the Crusades, I could draw some inferences.The framework to understand value conflicts was not so complicated after all, and it largely depended on the era you lived on this planet and the type of society you lived in and most importantly, the type of people you are surrounded with.

Your peace , happiness and state of mind depends on how your values align to the mean of values of people around you. And if your values can peacefully co-exist along with other diverse set of values in the group of people at a workplace , a family or a society for that matter then you will lead a fulfilling and happier life.

But hear this, it doesn’t matter if you have values shunned by the present society or majority of people who live around you. It only means that you have to find a group or society where your values and beliefs can sustain. For instance, if dishonesty is one of your core values and if you are only surrounded by dishonest people, then there is hardly anything you can complain about.

A society for that matter cannot sustain with a very diverse set of values and beliefs. To grow and prosper everyone has to align with the beliefs and values which can co-exist in harmony. So if you notice, honesty, hardworking, compassion, respect, empathy, camaraderie, inclusivity  are the values which can co-exist. They are not good or bad values , they just collectively happen to build an environment conducive for peace to prevail and society to grow. These values signal sustainability and by that I mean any system which improves longevity and well being of an mankind is a system which everybody wants.

Religion has a played a major role in cultivating these values into billions of people. Long before religion , civilizations have also sustained and prospered with totally different set of values. There are many examples of barbaric tribes who have prospered through loot, brutality, dishonesty, destruction. Are these bad values? really not.Maybe, it was just a choice. Maybe the belief was if barbarism unites tribes for a greater cause so be it. If sharing women strengthened bonds between hunters, then it hold good for everyone. If chopping off a human head brought good monsoons and better yield then it was justified for the greater good.

A rapist, a thief and a murderer would also have a different set of values and beliefs. And if you put them together in a cell , they are sure to justify their deeds in their own way. But at the same time and to some degree they will also judge each other on basis of their own value and belief systems. But ,through the lense of morality and ethics all the three in some capacity are unwanted anomalies which need to be isolated for the good of the society. Maybe the prison staff would also isolate the three from each other in the cell simply because their individual values and beliefs starkly differ from each other and can create a ruckus at the drop of the hat.

 

Why Online Job Portals Are Not Effective

There are three elements necessary to run a successful online job platform. The first element  is freemium which is based on the many who use its basic  services for free. The next element is called premium which is based on the idea that some users will end up paying for differentiated features. We are going to discuss the third element in isolation , for now lets focus on the first two. Using the first two elements, job portals attempt to convert free users to paid users.To get paid users , the platform needs huge number of free users.No free users equals to no paid users.Just plain old logic.

But how you convince the free users to pay? Not a rocket science again. Tell the free users that if they pay for some premium services, their chances of getting ‘noticed’ by the recruiter increase 10 fold. Here, the catch word happens to be “chances” or ‘probability’. Note that there is no promise but a proposal which sounds like ‘ pay and increase your chances’. The second word is get ‘noticed’.It is easy to understand that getting noticed by a recruiter doesn’t  necessarily translate to getting a job. Paid users are still subjected to probabilities or luck.

Now coming to the third element. The portals need some recruiters who pay for the service. If there are no free users , no database of job seekers then there is no real value proposition for recruiters. Note that recruiters do not differentiate between paid users and free users as long as they have access to the database. Why would they? it would be foolish to assume that people who pay are better than those who do not.There is no concept of freemium for the recruiters though, all recruiters have to pay for the access to the database.

Here is some bad news. The portal is designed in a way that the free users will be always at a disadvantage. The portal wants to tell the free user that, “hey look , it won’t help you to be a freeloader , why not pay and see the magic”. But have you thought what is the probability of screening one from thousands of other resumes? . For the paid users, the service gets only marginally better. To get that into perspective, imagine this hypothetical situation- What if every free user converts into a paid user? the differentiated benefits simply cease to zero . The portal is not acting in the favor of a paid user either, as a matter of fact, every additional premium user incrementally reduces the chances of existing premium users.

So here is how the model unfolds for the various stakeholders:

Portal: Wins

Recruiter: Wins

Users: Are always at a disadvantage. The system is designed for a free user to fail. Their odds of getting noticed are reduced to lower single digits.While paid users can keep their fingers crossed and test their probabilities. Some more food for thought to conclude: why would a recruiter limit herself to the paying segment of users? to maximize the chances of selecting the best, wouldn’t she go for screening the whole database and make the process democratic.

Who Will Win in the Sharing Economy?

It had taken me a while to spot my Uber cab. “ Location pey aao” doesn’t work so well at the airport. Then the driver tells me to wait at pick-up point D. No sign of him for the next few minutes.Just when I thought he might have canceled the ride , I spot the white Nissan Micra. A 20 something bearded man confirms my name and begins to drive. He tells me “ I was afraid you would cancel the ride , we have to wait for hours at the airport to get the bookings”.

My quest to understand the sharing economy leads to the following conversation:

Me: So how much did you make today?

Srinivasulu (the driver): Not much sir, I used to make twice as much last year. Today I didn’t even touch 1500. Took a loan for this car and even thought of buying one more during the boom years (2015-16). Now my revenue has dried up, I am getting fewer rides. With 25000k I have to cater to a family of 5. I used to earn 4000 per day last year and then take a day off or two for my personal work and rest.

Me: Do you know Uber and Ola are going through deep losses ? They don’t have funds to keep you happy. Neither I get the discounts I used to enjoy last year.

Srini: Don’t know sir, this is not turning out to be a sustainable proposition for me.

Me : When I inquired at the airport taxi booth, they asked a flat fee of 1200. You are taking me to my destination for 600. Lucky me.

Srini: Government protects their interest and regulates them. Uber and Ola work for their own business objectives.

Me: Look, there is also an oversupply. There are more Uber and Ola drivers on the road now. They compete for getting rides .Also maybe fares don’t surge so often now because of oversupply of drivers. Surge pricing is a good incentive for you guys.

Srini: True, Uber and Ola duped us *expletive* . They shouldn’t have allowed so many drivers to come on-board. And now there are autos and bikes too competing with us. I heard they will launch a fleet of electric cars and employ full time drivers for 25000k. Who doesn’t want a stable cash flow? I am sure all the unemployed youth will jump at the opportunity.

Me: Uber and Ola will be happy as long as they earn for every transaction which happens on their platform. Their ultimate goal is to add maximum number of taxi’s , bikes and auto’s so that more and more people take rides. There is an Ola bus service too.

Srini: The bus service will kill us.

Then we talked about shortest route to my destination . Then Srini got a call from home and he said he will be late. He played some music on low volume. The Micra cruised at 80 kmph cutting the cool November air.

I am sure the story of Srini extends to many such drivers who signed-up for taxi aggregators . Those were the times when we often read news headings like “Uber driver making 1 lac per month”. Investor frenzy lead to heavy discounting. I found Uber convenient , discounts encouraged me to take more rides. Uber became a habit. I started telling friends why owning a car is a bad idea. I embraced the sharing economy. During the boom years the investment on car like Micra may have reached break-even within 6 months.

We are not the customers of Uber, Srini is. He signed-up with them to get good leads so he could utilize the Micra to the fullest and provide for his family. But seems like Uber just signed-up too many Srini’s and there is not enough business for all. But is there anyone who will mitigate the risk drivers like Srini take ? Who is going to protect Srini’s investments and his future cash-flows?

We get a little hint here why Uber is mired in controversies pertaining to labor laws across the world and why governments hate Uber. The sharing economy is a win-win for Uber (explains the colossal valuation).

Nevertheless , the the beauty of a free market is that it will regulate itself. Srini’s who find the Uber proposition unsustainable would quit and add value in some other part of the economy. And then there will be fewer Srini’s and less supply and more surges. And then fewer customers and probably more discounts. Phew*

Value of Bitcoin lies in the eyes of the beholder

“You have to really stretch your imagination to infer what the intrinsic value of bitcoin is. I haven’t been able to do it.” Alan Greenspan, former chairman of the Federal Reserve.

Last year , I had a long conversation with a friend who wanted to invest in Bitcoin. The outcome of the discussion was uncomplicated. Since we did not understand the concept, we simply tagged it as stupid while appreciating the good old equity market which worked on some underlying logic. We were obviously wrong about the immediate future of Bitcoin. We could have made 8x on the capital by the end of 2017 or 4x as I write this article.

I still do not understand the concept or the mania.But during my quest to understand Bitcoin, I have arrived at the following realization : Bitcoin is a beautiful concept when studied in isolation from the block chain technology it employs to function.Nevertheless, here is my one sentence attempt to describe a block chain ; Group of computers across the world using enormous power (think global warming) to solve some puzzles to maintain the integrity of a ledger.

I thus stripped down Bitcoin from the technology it used and the prefix “crypto” it was known by. Now Bitcoin was simply a currency of some planet , let’s name that planet as Bitland. The citizens of Bitland used Bitcoins to buy groceries, arms , drugs ,massage services, space travel tickets etc. There were only a limited number of Bitcoins, 21 million to be exact. But since it was a digital currency, a single Bitcoin could be broken down to 8 decimal places. Unlike other planets where currencies were printed and demonetized at the whim of the governments and regulatory bodies, Bitcoins were mined by the citizens of Bitland as per their own demand. As a result Bitcoin was self regulated.

In Bitland, Bitcoin was only a commodity . It had no intrinsic value of its own unlike gold or platinum. It was an utility which provided a seamless way for trade to happen in a cashless economy. Meanwhile the citizens of other planets in the galaxy were fascinated by Bitcoin when they learnt about how they were mined and the tremendous potential they had in terms of utility.

It was not long before wise people from planet Earth realized that if there are only a finite number of Bitcoins to be mined , then as a commodity, its value should always increase. It is simply the supply demand rule. Earthlings were known for trading in gold, salt and even currencies. Unlike bitcoins, there was a value for every currency used on planet Earth. A currency of a particular nation appreciated or depreciated depending on various economic factors and supply-demand parameters. Earthlings approached the Bitlanders to setup an exchange where Bitcoins could be bought and sold. A deal was struck and Bitcoin was assigned a value in the open market. Factually nobody knew how the value was determined. But everyone agreed that value of Bitcoin has to go nowhere but up.

As years passed, Bitlanders went on with their routine of doing their business while Earthlings were only euphoric about the prices. Trading intensified, more people on earth began to invest in Bitcoins.Soon there were Bitcoin millionaires. But little did the Earthlings know about the fact that there were millions of likes of Bitcoin in the making .There was Ethereum from planet Ether and then Zcash and Monero from used by the beings of planet Nobo. A camera company on planet Earth went on to form its own currency for photographers.(read Kodakcoin) Suddenly Bitcoin was not the only alien currency to be traded on the planet. For several years Earthlings remained confused about the real value of Bitcoin. But the currency continued to make news because of its irrational appreciation and depreciation.

Epilogue:

In 2022 , Bitcoin ceased to exist. That’s because Bitland was obliterated by a neutron beam from planet X. The intent was not clear but was assumed that Bitland was destroyed to generate demand for other currencies. The value of Bitcoin remained undetermined. It was deduced that value of Bitcoin superseded its utility.

May you rest in peace Bitlanders. You only wanted to make your world a fair and better place to live.

Warren Buffet Mania Needs a Break

Carl Icahn is worth $16 billion. Carl Studied at the Princeton University, married twice and has three kids.Some of you who might have heard about Carl Icahn may have a hint or two as to why I am opening an article titled Warren Buffet with introduction of Carl. For those who couldn’t connect, Carl is an American Businessman and also an investor.

Couple of minutes before I started writing this blog, I googled “greatest investors” and I was not really surprised to see around 50 plus suggestions given by Google. I was sure these were successful gentlemen with their unique investing philosophies and wondered how come I was not aware about 90% of such luminaries(also wondered why there was no woman in the list). And again not to my surprise the list began with our quintessential maestro ; Warren Buffet.

As I write this, Warren Buffet is worth $84 billion. He has given $30 billion to charity. He lives a modest life in a small town and drives his own car. He has married once. You might have even shelved his book for the day you might think of investing and follow his footsteps. He believes in Value Investing and doesn’t buy stocks with the intention of selling them. Buffet likes to play the ukulele at investor meetings and enjoys Bridge with Bill Gates.

I can write 20 pages on Buffet or perhaps a small book.The volume of space which Buffet occupies in minds of aspiring investors is not only mesmerizing but at the same time very disturbing and dangerous. And we really cant blame Buffet for the phenomenon he is. The poor guy is just being himself.

I will explain the “disturbing and dangerous” part later, but before that I will try to put down a causality for such skewed top of the mind awareness about Warren Buffet with contrast to his contemporary counterparts.

Buffets wisdom is omnipresent: You might find a friend yapping about it or a half page Mutual Fund advertisements suggesting you to think far . Buffet’s ideology also serves as a free marketing content for the following businesses.

  1. The multi-billion dollar publishing business: I believe there are more than 10000 books out there selling millions of copies of Buffet’s wisdom at $2.99 dollars a piece. These books promise to give you more than what Buffet knows about himself. Anyone can take a shot at writing an investment book by referring to 10 existing books and vast amount of data available online. There is no doubt that Buffet’s wisdom in books lays the foundation for a $100 million dollar Industry on Investment strategies.
  2. Financial services Industry :Mutual funds yap about Buffet’ way in their marketing communications. The idea is to convince people not to fiddle with their investment once they commit. A stable and growing asset size wins even more investors.
  3. Investment Guru’s (Investment Education Industry) : Buffet is a 87 year old god fearing man and an ideal who drives his own car. Discounting his love for coke (drink) it is easy to make him a role model rather than a 34 year old successful hedge fund manager who is an atheist and drives a Mustang.

Here is an exception and a trivia :It will be very tough to find a brokerage firm living by the Buffet philosophy because they simply want more transactions to happen. The more you buy and sell, the more they earn on brokerage fee.

The above factors make it impossible for other great investors like Carl Icahn and James Altucher to have a strong top of the mind impact on aspiring investors. But publishers are thriving on the content which Buffet inadvertently provides them. The quantum of Buffet’s wisdom floating around far exceeds and supersedes research on other good investment ideas. There is no incentive to study Icahn because his ideologies will be difficult to market or pull crowd.

Why it is Dangerous and Disturbing?

Stock markets work on information disparity. For a trade to happen the buyer and the seller needs to have different set of information , motives, beliefs and understanding of the market. Stock markets cant feed on one holy book. Imagine a hypothetical situation: if everyone holds on to their stocks forever (Buffets core philosophy), there won’t be any trade happening.Furthermore, it is too much of a risk for an individual to follow a single philosophy of holding an asset forever.

Buffet is an oddity. Buffet has evolved in different time and different place under starkly different circumstances. Replicating Buffet’s success is impossible. Buffet can hold on to his stocks till eternity and still earn billions through stable dividends. If Buffet writes his own book on investing , I am sure he wont even follow it. Buffet’s recent love for Tech Stocks like Apple proves that. Buffet Shunned tech stocks before he invested in Apple.Likewise, Buffet shunned airline stocks but changed his mind last year. But his evolved wisdom has not been factored into the publishing and marketing content which floats around us.

But an aspiring investor should take the overdose of Buffet’s wisdom with a handful of salt.Investing cant be rule based. Investment principles cant be built on the foundation of universal and popular ideas. Having said that, it would be still wise to borrow a page or two from Buffet’s book but borrowing the whole book wont be so wise, simply because it is not written by Buffet.

Star Wars: Why it sucks and yet wins hearts

The last Jedi was the eight installment of the Star Wars franchisee which grossed $1.3 billion at the box office. To put that into perspective, Bollywood makes only around $2 billion per year. Yes, that’s like putting all the Bahubali’s , Sultan’s and Dangal’s together and still falling short by half a billion dollars. Now its perfectly fine if you haven’t seen any of the Star Wars movie . Many find the never ending saga overwhelming and farcical. Until recently I had kept myself consciously ignorant about the buzz around Star Wars. And the reason was simple: I did not have the patience to go through the saga and the will to comprehend the characters that looked like fur balls (Chewbacca) and weapons which resemble tube-lights.

But when I learnt about the phenomenal success of The Last Jedi, I finally gathered the will to watch Star Wars (episode IV, 1977). Then I binged watched Episode V (1980) and then episode VI (1983). I felt like I was hit by a brick of mediocrity. George Lucas had transported the melodrama and violence which usually happens on earth to a distant galaxy. The movie lacked sophistication. The plots were wafer thin. You could see aliens made out of cheap plastic playing saxophones to the tune of Jazz. There was no concept of gravity and physics. And the fights were poorly directed and unreal. At first I decided to discount some aspects owing to the period in which the movies were produced and the availability of technology at that time. But the first part (Episode IV) scored 93% on rotten tomatoes. How bad it can be, so I had to pick a bad review which describes it all , as a reviewer describes it:

But Star Wars was not science-fiction, not satire. It was black-suited villains versus the goodies in space. It was battle after battle, aerial dogfight after dogfight, even a spoken “This is it, chaps.” It was stupid humanity carrying on as violently as usual. The creature I liked most in the film was not human. He was Chewbacca, the Wookie, who was a very competent co-pilot of a fighter craft. His hairy face, said to he apelike, resembled an Australian terrier.

There are some awesome space movies produced at the time which not only had the cutting edge effects and interesting plots but were also far more scientific than their contemporaries . For instance, 2001 a space Odyssey (1968) by Stanley Kubrick and Aliens(1979) by Ridley Scott have the effects which standout even today. There are probably half a dozen more space themed productions which are much more critically acclaimed than the Star Wars series. Star Wars simply sucks when it comes to movie making. But in hindsight, no one could create the quantum of fandom which the series offers. Then what makes Star Wars a massive success that it is?

  1. It is easy to repeat mediocrity than excellence.

Has Lucas made great movies , probably no but quite evidently he has built a great franchisee ; sum of the whole is greater than the individual parts. Lucas offers nuggets of mediocrity sprinkled across four decades. Most movie makers want to create a master piece out of one production, some do it and most don’t but all attempt for it all their lives. But most of those who are able to create a masterpiece are not able to repeat it.And greatness of Lucas is that he built one unifying idea over a period of four decades and monetized it all his career. One more example is Friends, a sitcom. Was it the greatest show , not really. There are 40 more shows on the IMDB list which people have rated as better than Friends. But the creators of Friends have consistently delivered the concept for a decade which makes it the most talked about TV show with the largest fan-base and also happens to be a commercial success.

2. Simplicity wins in the long run

Lucas created a universe in deep space where the fundamental challenges of mankind remained to be mundane. The characters struggled with all banal stuff of good vs evil, relations, grief , and love. But overall, the Star Wars series offers a concept that humans have already established themselves in space and are living with harmony amongst the aliens who happen to be adept at playing saxophones. As a consequence, the fans must have found it easy to connect to the story. In contrast , most of the space themed movies that deal with higher existential questions and offer little hope against the hostile environments and overwhelming aliens. Lucas thus offered simple yet grand imagination of life in a distant galaxy.

To conclude, the bottom-line is people connect to mediocrity and simplicity more than they connect to excellence. We have to accept the fact that mankind will praise excellence but excellence remains elusive to many and is difficult to sustain. Mediocrity prevails and there is nothing wrong with it as long as it is endured to a point where it becomes way bigger than one time excellence.