New Enterprise Financing
This week, we continue a little with the Capital Market Myopia paper. The funda for this, as I've mentioned last week, is that people go about investing in stuff that is actually good, but because there's so many people investing and they've got their blinkers on, the sector gets filled with money - which is not so good. Innovation and money tend to bring out the worst in each other... you need to starve one to make max use of the other. Anyway, our prof's trying to approach it from a different angle. We were discussing if there were some early signs that we came across, that should have pointed out to the investor that it's not the right time to do that particular investment. And so we pore over the GDP data for those years, the returns that the companies tended to have, and relevant data about the population (such as unemployment rate) to identify the possible signals that investors had. One thing the prof said stood out in my mind... sometimes people see other people investing in something, then you tend to wonder if the rest of the world has gone mad OR are you not seeing what they're seeing. That's a dangerous place to be in, says the prof, and it inadvertently leads you to making the same mistake they did.
The second session had us discussing the case of Vegetron, and how they came up with estimates for cash flows, and a balance sheet for the next five years of that startup. I didn't really catch much, because the professor's voice was being drowned out by my snoring (I'm not entirely sure if the snoring was in my head, or out there for real). The prof did say that you need to love numbers, I understand now why he said that. But yea, he says that we need to give this a manual run after class to really get the funda across. Maybe once I do that, I'll be better poised to understand the nuances.
Reinvention through Entrepreneurial and Intrapreneurial Learning
We had this guest speaker who looks like he's a simple person from one of India's many villages. He comes in, introduces himself, and then spends two sessions just yelling at us and making us feel worthless. That's it. Funny thing is the whole class was hanging on to his every word. He talks of how the IT wave ruined our country's progress, and how we avoided hardware development which is difficult but far more profitable to us in the long run (both socially and financially), in order to make a quick buck out of software which is far easier but has had us do the equivalent of slaving over work that no sensible person would do. The only reason we do it is because they're paying us for it, and we dont bother finding a more efficient way to do it. The concept of time vs. money comes out very clearly when you look at why we do what we do, and why the clients do what they do.
He talks to us about how India has so many problems, and how if we apply 1/10 of our mind, we can bring a great deal of happiness to many of India's underprivileged folk. He shows us examples of guys who travel to tribal village in various parts of India, or inside volcanos in Indonesia just to bring clean drinking water or electricity to the people who live around the region. He gives us more examples of how students who fail to pass out from some of India's colleges are groomed and now paid a hell of a lot more than India's finest Ivy League scholars by some of India's top corporates, after they're trained at simple institutes started by some visionary men. He talks of how we can make a difference, but just because of our colonial heritage and our middle class mindset, we hold ourselves back.
He challenges us to break away from the rut and do something useful with our lives. He stops short of asking us to drop out of the Indian Institute of Management, just pausing to say that we're just here to get yet another certificate, or sticker of authenticity using which we anyway go back and do dull jobs. He expresses his anger and disgust for the IITs and IIMs saying how they've ruined the country when they could do so.. much.. more. Instead of encouraging and developing visionaries out of the capable minds that come to them, they just convert those minds into more expensive cattle. The fault doesn't always lie with the institute, the students still have that middle class mind, but it's the institute's job to help students break those shackles.
The class stays silent for most of the two sessions, either pondering how right he is, or how wrong he is. Time will tell if anyone takes his talk to heart and really does something. God knows we're capable, and there's plenty of opportunity out there. We don't need to be in the IIM to know this, or help do something about it, but now that we're here... do we have the courage to make use of what we know for the benefit of others and not just ourselves? Or are we still going to be a better breed of cattle?
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