Quarter 11 - Week 7

There's a lot of buzz in the air, it's the last fest of the year... this is the time when the students kick their boots off, give their books some rest and take part in Unmaad, IIMB's very own cul-fest. There's a buzz all around, and even though some classes have both PGP and PGSEM students in it, they go half-empty as people are busy bunking for that one last time. In a few weeks, our time here will be done, now's the time for a final futile attempt to hold on to the feel of our college days. I can see a white light at the end of this road, and there's this huge empty white canvas there... the future looks bright, or is it blank? I don't know... I'm just taking the colours I've accumulated here, let's see what I might do... in just a few weeks time.

New Enterprise Financing

Aah, I've missed this feeling for a while now. It's also going to be the last time I feel this way. It's the sudden realization that the speed is picking up. If there's one thing that I've harped on about each quarter, it's the fact that what starts off at a snail's pace in most courses suddenly builds to a blistering pace, and you've just got to keep running and running and never stop. And so the same happens with NEF! Till last week, I could afford to think of doing the case work 'during the next week'. This week's pace and the schedule from next week has put a rest to any of those hopes. I now have to catch up with a whole bunch of practicals, I can already sense myself getting into an Excel-filled nightmare.

This week was about the concept of how different the viewpoints are - of the entrepreneur and the investor. Since the future is quite uncertain, both of them have conflicting views on the value of the firm. The entrepreneur paints the most optimistic picture and expects an exceedingly high value. The investor paints a pessimistic/cynical picture and suggests a much lower value, since he expects a larger share of the pie to come to him. We had quite a bit of elaboration on term sheets. You remember the control vs. economics argument I made the last time? Apparently the term sheet is an informal agreement that sets the rules of engagement for the investor and entrepreneur. Once this is agreed upon, the investors pours in his money, gets on the board and they all try to live happily till the period of investment matures. So the case on Avvai Electricals shows the different views that the investor and promoter have. The second session is about the aspect of 'Exit'. What the prof's trying to bring out here is the various aspects of how and when to exit, and what sort of controls the investors can set in place to ensure that the promoters don't go all maverick and try funny business.Towards the end the prof just went into a blitzkrieg mode, and was pelting funda after funda which I don't seem to remember now. Yet, looking at the slides will refresh my memory. All I remember thinking was 'This is heavy stuff! Revise again!!'

Reinvention through Entrepreneurial and Intrapreneurial Learning

It looks like we've fallen back to our wastrel days again... very few read the case, or the associated readings for anything this week. The prof has anyway set some low expectations, and he knows enough not to expect anything from students during fest-days, so he actually took some time to explain the theory and essence of the articles of reading, and tackled the cases. The first set of cases were about Arvind Eye Hospital in relevance to one of Peter Drucker's last articles - The Theory of Business. This essentially discusses the need for organizations and leaders to question what their purpose is, what their understanding of the environment is to ensure if they're still on the right track or if what they considered static has changed over a period of time. As an example, Kodak that was majorly into film photography didn't adapt fast enough, and is now on a fast decline. Many such cases of 'yesterday's behemoths and today's starving creatures' come to mind, and the usual thread that joins them all is 'Why were these guys blind to the changing scene? What caused the stagnation, when the world was passing them by?'.

The second session was about business models, business plans and knowing when to reinvent the business model. Almost an hour was spent by the prof going over some of the fundamental aspects of strategy and business models, and then he moves on to the actual discussion of the case. The cases were supposed to be on Tanishq's growth and NSK Software Technologies (damned if I know who they are, I should read the case!), and we tried mapping Tanishq's situation to the points we had jotted down about business models. Anyway, the prof wants us to go over the software case as he says it'll have a really good description of how to maintain a business model and all that.

Things are coming to an end, I can feel it. Pssst... only three weeks left.

Quarter 11 - Week 6

Coming back after a break seems to have caused a memory lapse when it came to classes. For some reason, there was very few actual readings for this week, so it was more like a two week vacation. Profs come in to class, see our vacant stares and go 'Good Lord, don't tell me we need to do a flashback to the events from a couple of weeks ago!'. It's a good thing they're able to do a 10-minute recap after which our vacant stares are more related to the high-frequency transmissions being broadcast rather than the connection/flow that we're supposed to be going through. In any case, it's time to buck up... the assignments and projects have begun to exert some pressure.

New Enterprise Financing

The prof quickly wraps up the Kakofonix case, and moves on to Marconi. Marconi's a lot simpler than all the other cases thus far. It talks of how founders expect to raise capital through multiple rounds from investors, and what percentage of share they're willing to part with. Once all of this is calculated, and when we see how dilution works out in advanced rounds, we begin to add some realism. It's like one of the investors asks a question after pondering for a while... 'But, what if we don't get our promised return. What if the valuation actually drops?'. Uh oh, go the other investors, we should think of that. A little huddle and argument later, they proudly come around and say that 'All right, if the price of the share goes down, then we get to have an anti-dilution clause, thereby protecting the final value that accrues to us'. So all of a sudden, the entrepreneur who's expecting to hold 55% of the company (as an example), ends up with just 6% (again, an example)... because to ensure that investors can exit at their target value, SOMEBODY has to give up share and it can't be other investors. Anyway, in this case, the terms also suggest that the valuation can go anywhere between 60% and 140% of the expected value, and that the founders dont want to go under 26% share, and investors don't want to get under 50%. So we look at all the extremes, to see how it pans out and what could be the ultimate value that all shareholders receive. We also looked at a view of approaching funding, and how entrepreneurs have a fundamental issue to figure out - do they want to create value or do they want to control the firm. Economics vs. control, the prof calls it, so we look at that aspect and see how anti-dilution, preference shares, call/put options, drag along/tag along options play a part in this whole shenanigan. Awesome stuff!

Reinvention through Entrepreneurial and Intrapreneurial Learning

The prof now moves away from the ownership and intrapreneurship module, and tries to help us get more onto the plane of self-knowledge and mastery. First off, he asks us to describe what we proudly hold dear as Indian, stuff we don't find elsewhere. So people give out stuff like charity, friendliness, tolerance etc. etc. lots of nice thingies that we think we're proud of. We're then made to sit through an hour long video that describes the predicament of farmers in rural India, we have a lot more people out there than in urban India, and we get a glimpse of how bad their situation is. We see example after example of what prompts people to commit suicide, and at the end of the session, we really wonder if we are of any use. Sitting in our own comfortable cocoons, we shut our eyes from everything bad. It's sad when we think that India's more known for its generosity, when we are shown evidence after evidence to the contrary. Shows just how little we know about what's happening here.

If that wasn't hard enough, the next session was a guest lecturer who speaks of how old age is a slowly approaching iceberg. The speaker talks of the increase in the number of separation cases of old folks from the family, the emergence of old age homes, and the intolerance shown by today's busy youth to their parents. We hear of examples where the elderly are 'forced' into grandparent-hood, just because the parents dont have time. And when the kids grow up, these very folk who helped settle them, the grandparents, are treated as useless pieces of furniture around the house... just obstacles that come in the way.

This week definitely shook me, with so many problems all around us, I count myself very fortunate that my issues are not as dire. I have the choice and freedom to attend classes at one of India's most prestigious institutions, to spend my time anyway I want, to talk to whoever I want to... how many others can claim the same? And yet, what am I doing with all these privileges...

Quarter 11 - Week 5.5

I never thought I'd see another week 5.5 again, brings back such memories! So if you happen to visit the past, you'd know that due to a mixup, some of our classes were delayed by a week. This week was supposed to be the return of balance to our peaceful world. So anyway, we had only one subject with back-to-back sessions, and it was definitely a session worth coming in on a Sunday for.

Reinvention through Entrepreneurial and Intrapreneurial Learning

We had three cases for the day, and a heck of a load of readings. However, we focused on just one of them, the prof's own journey as an entrepreneur. I remember the feelings and thoughts that I had while reading the case, it never occurred to me that entrepreneurship could have so many potholes along the road. Yes, I knew of problems due to capabilities, bad timing in markets, inability to raise funds, and all that... but it never occurred to me that well known people could be problems themselves. The prof showed us one side of the industry, one only spoken of in Bollywood movies where there's a hero against a bunch of villians... the only difference being that here, in real life, heroes can lose.

He pointed out a few areas where he made mistakes, and mentioned what all should have been done differently. He also gave us a live example of what happens when you connect too emotionally with your business or idea. He argued that being entrepreneurs, we should have the strength to call it quits when things appear to smell bad. Sticking onto it just because of your emotions is akin to riding a tiger, the longer you're on it, the harder it is to get off. At one point turning back is no longer an option, and you just hope for the minutest of probabilities of goodness to come through.

In its own way, it reminded me of STDM from last quarter. The concept of throwing good money after bad, and the concept of Prospect Theory (When you're looking at things in the losses frame, you tend to take a larger risk than you would have otherwise). The prof then talks about how low things got, and he mentioned what it took for him to get back on his feet and stop feeling the after effects from the misery of the fall. He's not the first prof to claim this, and there have been other profs who try to stress this across to us in as non-fanatical a way as they can... there is a higher force at work. Irrespective of the faith from which you come, our prof stresses that at the end of the day, they all say the same thing. He mentions how important it will be for you to constantly keep an ear out for a sign from the understated, the subconscious, the 'spirit' or 'elements', call it what you will.

At the end of the class, it's not like the athiests suddenly got converted to believers... but I'll definitely say that those who believe had one more encouraging voice that helped settle their muddy waters just that little bit more. The prof mentions that the whole of the second half of their course is going to try and cover resilience, in the face of obstacles, which he thinks is going to be very valuable to those who want to take the unbeaten road. I, for one, look forward to it.

Quarter 11 - Week 5

You know you're getting old when you think that updating posts can happen even two-three days after you're actually supposed to. Talk about a 50% delay in timelines! This would NEVER happen in the IT industry.. or atleast it wouldn't be estimated for, despite what reality keeps suggesting. The good news is that the stats engine suggests that people actually read the blog in these last two days - there are people looking at the interview process from waaay back in the day, one of my first few posts in fact. That's the zero-th year students, or should I say potential candidates.. then there's another set of people looking at what's happening in Quarter 3, apparently a bunch of first-years who just can't stand the suspense of the weeks to come. Still, oldies always feel good that atleast someone wants to hear their war stories... so no complaints from my side.

New Enterprise Financing

The prof takes his time... we're supposed to be doing two cases this week, but the prof intends to ensure that we get the fundas right. He takes us through examples of how different rounds of financing happens, taking the example of Cartographics Online. He goes on to explain the meaning of the terms pre-money and post-money valuation. Apparently, early stage investors are this full-on secretive types. They don't like that free-market, efficient-market theory in all its finery, but prefer to keep information close to their chests... just like entrepreneurs. Sure, the entrepreneur runs around saying 'I do this, I do that, my idea is this and that' but try asking him 'HOW' he does it. VCs apparently do a similar thing. They don't want to talk about how much money they spent to get what share of the company, so if a company is valued at 1,000,000 dollars, and a VC is willing to invest only a 100,000, then he gets 10% of the company. Imagine him going out and saying that to other VCs, the replies can vary... the worst case scenarios are 'Chee, you put only 100,000?' or 'Chee, you got only 10%?' or 'Chee, the company's only 1,000,000 dollars?'. To save everyone any downside, they say 'ok, you know what, if I don't give you my 100,000 then technically you'll hold a value of 900,000 dollars'. So we'll all go and say that we invested in a company with a pre-money valuation of 900,000. For some reason, hiding the exact info seems to work for this industry, so I'll leave it at that. The kicker comes when the prof tries to show us how the company in question, Cartographics Online, should worry about its assumptions when predicting the future to VCs. He says that it's important to do a sensitivity analysis to find out that even if you were to go a little wrong, how much will it actually impact your final share of the pie. There's also a little talk of how the pie shares get diluted when newer rounds of investment happens, and some magic formulae that explain this. The way the prof puts it, you're surprised that this is post-grad level stuff. Then again, he's keeping the problem simple (which still in any case can't hide the simplicity of the funda here).

Reinvention through Entrepreneurial and Intrapreneurial Learning

Right, so you remember the rant from last week? The way the prof went all ballistic when we didn't read? This week we were supposed to watch some videos, and everybody thought the videos would be shown in class. The prof comes in, asks did you watch the videos, hears about what happened... just shrugs his shoulders and tells us 'Even after knowing everything I do, I still lost my temper the other day. I went back and asked why that happened? I was obivously angry, and one thing you should know is that anger is what you feel when you dont accept that things happen that you cannot control, and therefore you should have no expectations in such scenarios. And I realized that you people reading is beyond my control, and therefore I should set no expectations. This course is for you guys to understand the important facets of life, and if you want to treat it lightly, feel free... I don't gain anything anyway.'

After some time, he does point out with a gleam in his eye that this doesn't mean we get to shirk off readings through the rest of the course. He does have some control over us, our grades and all, so that still allows him to exercise some expectation. Anyway, nice guy that he is, he sent out some links for us to check out later. With a firm announcement that we should watch it, as they were videos that would be of great meaning to us - videos on Happiness, hardship, self-esteem, love, anger etc.

The next session had us discussing three specific Jataka tales, stories of leadership and the prof gets us to discuss what we thought were the salient points that we could take from each of the stories. The whole point was not to treat the stories like gospel, but just to absorb what lessons we could take from it. The stories were the 'Apannaka Jataka', 'Makhadeva Jataka' and the 'Mahakapi Jataka'. Good stuff, nice takeaways, and definitely a reminder to re-read the Jataka and Panchatantra tales. God knows what I missed as a kid, which I might realize as an adult.

Takes a while before I realize that five weeks are up... and there are only another five to go.

Quarter 11 - Week 4

For the first time in three years, New Years was not ruined. Yes, I understand that education is a very important of life, but in my perspective so is the concept of starting afresh, after a night of frivolity! And the events should never meet... NOBODY, atleast no sane person, likes to spend New Year's in college, no matter how insightful the day's classes are. And so, for the first time in my life at PGSEM, New Years was spared. And I spent it the way any normal person would... sleeping.

New Enterprise Financing

Man, we were still on that damn Vegetron case. I thought we'd done and dusted it, but apparently not. Luckily though, we actually finished it halfway into the first session and then we moved on to Adjusted Present Value, where we describe the effects of the various sources of funding on the enterprise. We did quite a bit of glancing over the different types of funds and the math of it all. The Corp Fin textbook actually describes the entire funda quite well. Finally, we're ready to tackle the case of Cartographics Online next week.

Reinvention through Entrepreneurial and Intrapreneurial Learning

So we were supposed to read a couple of intrapreneurship cases for the day. And apparently there were a few cases from a couple of weeks back which the prof wanted us to go through. He kindly sent a reminder on the day before classes, so that we'd be prepared. The day of the class, he walks in with full enthu, gets us warmed up and starts discussing the case. After around fifteen minutes, he makes a reference to one of the cases and goes.. "Do you see it?" with all the expectation in his eyes. 10 seconds of pindrop silence. And he asks "Didn't you read?"... 10 seconds of pindrop silence. So he ignores that, and goes to the next point. Within a couple of minutes, he asks "Get the connection?", and when the same thing happens, there's this incredulous look on his face. "Has none of you done the readings for today? Those of you who did, raise your hands!". Surprisingly, for a class consisting of PGSEM and PGP, five-six feeble hands go up, out of over seventy. For the first time during my PGSEM journey, I heard a prof admonish the hell out of us. This guy was furious! Doesn't raise his voice beyond an acceptable limit, but his anger is evident. He explains how REIL is not a subject where you can just sit there, you get to take a lot away from each story he brings forward, provided you read the case. Each reading, each case is picked after strong deliberation on whether it brings out a key value, and if we don't read it... it's as good as doing nothing. He continues the class, every once in a while sighing when we don't get it, shakes his head and moves on. Towards the end of the session, he calmly tells us not to bother coming the next day if we don't read the cases for it. He ends by saying that if we continue not to read, he'll just sit back and make us do presentations in each session while he grades them. It's not something anyone of us wants...

The next session obviously has a marked difference. Everyone's commenting, bringing out points and the prof's keeping up with the pace by jotting them down and adding some refinements of his own. I know that most of us consider this elective to hold some deep content, and I'm keeping my fingers crossed for us to keep up with his requirements if we're to unearth it.