It’s quite some time since I read Steve Job’s “Thoughts on Music”, and much more time to understand the possible implications of the same. Some of the questions lingering in my mind are:

• Is online sharing of music (or any media files) a copyright violation?
• Why is that music companies themselves sell unprotected CDs (without DRM), thereby allowing pirated copies to be made?
• However, at the same time, they do not miss a chance to sue any company involved in distributing the music online?
• Do all the ‘dot coms’ of the world who allow you to play music online (streaming) or downloading have obtained the rights from the music companies?
• Why is that music companies are asking Microsoft and Apple to DRM protect their songs sold on iTunes or Zune, thereby reducing interoperability – but at the same time do not enforce a song ripped on a “Sony” CD be played only on a “Sony” music system and allow it to be played on music systems developed by Samsung or Philips or even all PCs? Imagine a world, where I have to purchase one music system for every different CD label..!!!
• If I am allowed to copy and play any song on an Apple iPod, what purpose does DRM protected songs on iTunes online music library serve?
• If I purchase a genuine CD from a music store – I can make innumerable copies of the same on any number of PCs (whether I or my friends or friends’ friends own). So is it a copyright violation, and can I be sued by BMG, Universal, or backhome T-Series, HMV etc.?
• Or for that matter, if I make copies of the song purchased from a genuine legal channel on my Creative Zen Nano player, my music system, my laptop, my backup hard-disk, my mobile phone – then am I doing some offence?
• What if my music-player allows me to record songs being broadcasted on FM radio, and I record the same?
• How is that YouTube (and the likes) allow users to upload any content and not get challenged in the court of law? Just by saying that its “user-generated” and asking the user to click on a check-box saying “You are responsible for any content that you upload” absolve “YouTube’s?
• If YouTube can be held guilty by providing a medium for sharing music, shouldn’t Xerox be held responsible for developing photo-copier machines to make innumerable copies of printed books, or for that matter can we held Microsoft responsible for providing ‘Ctrl-C’, ‘Ctrl-V’ feature, or can we hold HP, Samsung, LG etc. to develop CD-writers ?
• If Mr. Jobs himself thinks that only 3% of the songs stored on iPods are genuine purchased from iTunes store – so is his company responsible for encouraging piracy?
• Not long ago, Napsters, Kaza, Torrents were sued millions of dollars for PTP music sharing – so how come in the Web 2.0 era the so-called “user-generated” content has escaped the radar?

Can anyone with some knowledge of intricacies of the vagaries of copyright and music piracy enlighten me by providing the answers to the above?

I was planning to purchase an Apple iPod few days back, and did google to find out the price in different countries. (The price list is below). I don’t know why there’s such a wide disparity in the cost ranging from $144 to $327 for a standard product across countries… and that too in a globalized economy. Is it because of the excise duty, or some pricing strategy adopted by Apple? No doubt… that we prefer to get our electronic gadgets from countries like US/Canada/Japan. Is the Ministry of Trade and commerce oblivious of this fact? And I can just imagine the amount of sales tax that could have been generated within India, had it been priced at par with US/Canada etc.?

 I don’t have any statistics on the number and amount of electronic items purchased by Indians in overseas and brought through ‘Green Channel’, but it must run in millions of $$ every year (assuming every returning Indian brings electronic gadgets worth $500 purchased overseas). Can the government, or the product company itself do something in this matter? I am pretty sure, the sales of iPod in India would go up dramatically if its priced at par with US/Canada, generating more monetary transactions domestically (and if I include the spiral effect of money in motion, increase it by other 10 times or so), and ofcourse more revenue for the govt. as direct & indirect taxes.  And not only this, we might even attract tourists from neighboring countries and be a ‘hub for electronic items’ – as Singapore is currently, and Dubai used to be few years back..!!!

 

The price of iPod is just an indicative of price differential of electronic items across countries.

 1. Brazil $327.71

2. India $222.27

3. Sweden $213.03

4. Denmark $208.25

5. Belgium $205.81

6. France $205.80

7. Finland $205.80

8. Ireland $205.79

9. UK $195.04

10. Austria $192.86

11. Netherlands $192.86

12. Spain $192.86

13. Italy $192.86

14. Germany $192.46

15. China $179.84

16. South Korea $176.17

17. Switzerland $175.59

18. New Zealand $172.53

19. Australia $172.36

20. Taiwan $164.88

21. Singapore $161.25

22. Mexico $154.46

23. U.S. $149.00

24. Japan $147.63

25. Hong Kong $147.35

26. Canada $144.20

 (Price courtesy: EasyBourse )

Few days back I met these guys: Brad Galle and Anil Dharni, both MBA students from MIT Sloan to discuss their AnswerU venture…! The guy Brad is a big shot, he is also the CEO of Aptegrity and Square Earth Inc. Just do a Google on his name or on his companies. I came to know about Anil through my PM in Cognizant who apparently was his classmate in Punjab Engg. College.

These two guys were in India to strategize and give more concrete shape to their venture. We couldn’t strike the chord to make things happen, as I had other commitments and they are also in touch with Amit Rajan (Uzanto), Ashish (Tekriti), IIT D and IIT Powai incubation centers, Persistence Software (in Pune) and a couple of more guys. It’s a possibility that these guys might find the necessary setup in these places, and set the ball rolling immediately, which is not the case with me, as I would need some time to do the setup, and make it operational. Either way, but it was a great experience, as I could figure out their key concerns, which would be same for any startup:

1. Who is your partner: In the early stage, you are confused on how to go about managing the operations – for Anil and Brad it is – should we outsource it to established organizations ( like Persistence), work in partnership with established startups (Uzanto and Teckriti) or start from ground 0 (with guys like me).

1. If you chose first option: pure outsourcing,
i. PROS: You get the technical expertise, team office, everything upfront
ii. CONS: you loose control of the technical aspects, and anyway you need your own marketing setup (in their case, getting user community from educational insti’s in India). A established software services company won’t do this – as marketing your solution or product is not their business. They would develop a software solution for you, and that’s the end of it, how to take it to the market, whether its success or failure is not their concern.
2. If you chose second option: partnership with established startups
i. PROS & CONS similar to those of pure outsourcing, plus the cost of lost equity ownership
3. Third option: start from ground zero by setting up your own office:

i. PROS: you have lots of control in technical and operational aspects, its your team, and your company

ii. CONS: ramp-up time, and the newbie like me don’t have information of legal and tax implications and would need to hire a consultant to sort out these things

2. IP protection:
1. You have a business idea, how do you ensure someone else doesn’t copy it
2. You have developed technical IP (very-very critical for product companies) – someone leaving the company doesn’t take away your code base
3. Employee hiring and retention:
1. You don’t have the brand name so why will someone join you – even if he joins you.. what will he say to his social circle – “I am working in XYZ and not Infosys or Microsoft”
2. You need talented and bright guys in the beginning – but you can’t afford them
3. What will motivate the team – high salary – how much? if you give stocks in the company, and what if he just walks off after 2 months? Will stock option with maturity of 4-5 years work?
4. Office Setup:
1. What’s the cost of setting up the office
2. What’s the sitting capacity you shud go for? You cannot just keep on changing your location every quarter as the team size grows, and you can’t maintain teams across segregated locations, unless they are working on completely unrelated things

There would be countless other such questions. Sometimes it is very critical to ask the right question, even before seeking an answer.

Seems that I have been out of scene for quite sometime – the “2.0″ buzz had caught on faster than I envisioned. I just knew about Web 2.0 and Mobile 2.0. But recently chanced upon something like “Business 2.0″. If we didn’t had “Business 1.0″, then what the heck is this “Business 2.0“? So here it goes -

Actually it is business magazine published by CNN (http://money.cnn.com/magazines/business2), which caters to latest happenings and developments in business… It talks about so called “next-generation” business ideas, startups, disruptive technologies – which were not there a few years back or more aptly in the “Business 1.0″ era. Wow, now that is something which you call the “2.0 mania”, which is gripping the world faster than the “Dynomania” (manical addiction to dynosaurs related goodies after Steven Spielberg’s Jurassic Park).

So if there is a mania gripping the world, then enterpreneurs and with them the VCs would never be behind. Though I didn’t spend much time on the Business 2.0 magazine, but liked the concept, and some of the articles: “20 Startup companies to start now” – some ideas propounded by the leading VCs, “101 dumbest moments in business” and some others.

On a side note – if you are into blogging, you might like spending your precious bandwidth and otherwise worthless time on http://blogs.business2.com/beta like the way I am doing…!!

Every now and then, the Indian stock market behaves in a way which makes me reconsider what I learnt in my finance classes. It behaves in ways quite contrary or radically different from what your finance professors will teach you. However, if you try to bring it out in a discussion, the justification will be – “Finance theories works well in efficient market, no information assymetry, lending rate is same as borrowing rate, and anyone can encash on any existing aribtrage” . I call these as “hypothetical conditions”, because I haven’t been able to find a market which is governed by these rules.

Efficient market hypothesis goes for a toss. A theory suggests that the current stock price factors in all future developments. So what drives the market more – emotions, hidden information or complex mathematical equations? I read the transcripts of Ramesh Damani’s chat on rediff and his statements on Godfrey Philips.

He sounded bullish on the stock; the market opens on Monday Nov. 27 with Godfrey Philips trading at 1050 and closes on Friday at 1450..!! An upswing of 40% in a week….!! I will let the picture do the talking…. (stock quotes from yahoo finance)

 

Notice the price movements of the stock on 5 trading sessions Monday 27^th to Dec 1^st. The horizontal bars indicate the stock hitting the upper circuit within few minutes of market opening. Till now I considered Mr. Damani the Buffet of Indian Stock market, but now I am rating him as the George Soros of the Dalal Street. He could visualize something which most (rather none baring a few) could see. Does this graph indicate that the price of a stock is the discounted future earnings? Or is it actually the proof of the efficient market hypotheses, concluding that a stock can’t remain undervalued for long – the arbitrage opportunities will bring the price to its correct value? But then, what’s the correct value of Godfrey Philips – 1050 or 1450?

Mr. Greenspan coined this phrase to indicate the irrationality of investors in the overvalued stock market. I find this phrase more apt in our day-to-day purchases that we make rather than the stock market.

Recently, went to a Fabmal (for the uninformed, it is a retail chain where you can find everything ‘ethnic-Indian’. Patrons of this store say goods out there are hand-crafted). I was browsing the store with no intent to purchase anything in particular. I chanced upon a colorful candle – liked its packing, and scanned its price – and to my utter surprise – it was valued at Rs 95…!!! Its not that its too expensive for a software professional (or rather any middleclass Indian urban), but the fact that Rs. 95 for something whose raw material cost wouldn’t be more than Rs. 1 or 2, manufacturing and packing cost another couple of bucks.. i.e. total cost of 5 bucks at the max. I went to the to store manager (I assume he was the Store manager, as he was more elegantly (read lavishly) dressed than others) and asked its price – here’s the conversation that follows:

Store Manager (looked at the tag and said): Its written here, Rs. 95 only sir. We have tagged the price of all the items in the store for the convenience of our valued customers like you”.

Wow.. what a nice and courteous statement…!!

Me: “I have read the price tag, but I thought it was a typo error.”
Store Manager: (just smiles): “You have a nice sense of humour”

Me: “Thanks for the compliment, but I was thinking is it rightly priced? Its manufacturing cost wouldn’t be more than 5 bucks, add to it your overheads, but still its nowhere close to 95. Are you doing justice to the customer or are you passing out the cost to the labour who made it?”

Hearing this conversation, couple of “valued customers” started staring at me, as if I have done some crime by asking the price rational in a swanky store in a shopping mall. Manager noticing the displeasure in the eyes of his “valued customers” takes me to a side and the conversation follows:

Manager (justifying the price): We have to factor in the cost of the sales, marketing, store rentals, and still make some profit.
Me: I understand that, but do you think it costs 75-80 bucks for all this? I appreciate your packaging of the material, your store ambience, courteous employees – even if you factor in all this, I can’t understand the rational for a premium of over 1700%.

Manager (Irritated by now): (The word ‘Sir’ goes down the drain) If you find it expensive, then leave it here. There are ‘kirana’ stores down the street, where you can get candles for 10-15 bucks, purchase it from there.

The “valued customer” is no more valuable..!!

My critics would argue, the store owners have to pay for the retail space, which itself is very high. I think – this is “Irrational Exuberance” – pay high salaries to professionals, raise the rental cost, raise the cost of goods in the name of exclusivity & branding, lower the interest rate, and give out personal loans and credit cards…!!!

After all this, ofcourse I was in no mood to talk further, or purchase anything, so promptly left the store. This was the first incident where I tried to implement “Jago Grahak” campaign.

On the way-back I was wondering:

• How much money I spend on the so-called ‘exclusivity’ (and mind you – goods purchased from a Fabmal/Archies/Westside etc. is no more an exclusive item in urban India – you find them in every house)
• How much money I spend in the name of branding (A coke with a manufacturing cost of around 20p is priced at Rs. 10 in stores and at Rs. 50 in multiplexes, a branded cotton shirt is priced at Rs. 2000, while the cost of cotton and tailoring won’t be more than 200)

And contrast all this with -

• How much money I save by bargaining for a couple of bucks with a rickshaw walla or a street-side vegetable seller.
• How much money I save by cribbing about the state of affairs, when a beggar asks for a penny
• How much money I save by not contributing anything to the upliftment of a needy.

The irony is – I am writting this post on a Dell Latitude laptop (Rs. 85,000), wearing Woodland shoes (Rs. 2100), a Lewis jeans (Rs. 1900), a Timex watch (Rs. 2500), a John Miller shirt (Rs. 1100), after having a lunch at Pizzahut, listening to music on a Creative Zen Nano ($100), with a Samsung mobile (Rs. 7000) in my pocket….!!!

This is what a typical Indian Urban Male is… spend thousands on branded goods, and never give away a penny to a needy.

Am I not “Penny wise – Pound foolish”?

Read “Five Point Someone” by Chetan Bhagat yesterday – got so much engrossed in it that finished the book in one sitting – only to wake up with drowsy eyes today morning. It’s an excellent book – something which you can relate with especially if you have been to any engineering college in India. I guess the life would be as gruesome or may be worse in medical colleges (remember Class by Erich Segal?). It took me to my IT-BHU days. Though I was no where near being a 5-pointer but not too far either J

There were the maggus (the way we loved to call them as, and some of them really felt proud of being called one) who crammed all day, and all night, made all notes, and score “Nine Point Something”. However, at the same time there were few (rather one) who could be found loitering on Assi ghats, play cricket, and always half intoxicated with previous nights “neat” and scored perfect 10. There was one character, for whom any exam meant studying “Resnik and Halliday” and then one who used to get Xerox of all notes for few lesser mortals like us whose scores in certain subjects remained in binary digits on a scale of 20…!

The book reminded me of everything that we used to do in the campus…. The episode of breaking into HOD’s daughter room and being chased reminded me of how we “a gang of loafers” circled a BHU nurse (or may be a medical student) who was going alone at 12 in the night. Imagine the plight of a girl in a dreaded place like BHU, being encircled by a gang of some 7-8 guys on a lonely street in night. It felt exhilarating at that moment to scare a girl… but the next moment…. We saw two lights of a jeep (BHU Security) and that scared the shit out of us…. We paddled the bicycle at a pace that wud have put Lance Armstrong to shame..!!!

The day 1 episode in corridor took me to my days….. the only difference was that the coke bottle was replaced with lighted candles..!!!! No no don’t worry .. controls your reins… these are just meant to scare the “fattachas”

There’s hell lot of stories and incidents to share… everyday in those 4 glorious years had its own share of incidents. May be I need a separate tag for those incidents

 

Its a fact – if you want to work in Google, better start an internet venture, get acquired by Google, pocket in few millions (billions if you are very lucky) and be the product manager/head of your division in Google…!!! Nothing in your life will change, except your email address, visiting card, and ofcourse your bank balance. Contrast this with, days and weeks of interviews, presentations, and god knows what all, to become a programmer in Google..!!!!

A couple of weeks back i uploaded few of my personal files at Writely.com. Didn’t check the account for few days, and recently saw Google Spreadsheets in the top 50 coolest website published by Time. Out of curiousity I just clicked on the link.. and behold, i found my files uploaded at Writely.com in the google spreadsheet…!!! You got it right, Google acquired Writely and called itself Goolge Spreadsheets, and became the top 50 coolest websties. And that’s the power of marketing muscle. I wonder if Writely on its own would ever have figured in any of the Time listings.
So get your act together, and startdoing something on internet space (or Web2.0 as commonly referred to as in the Geek’s world) …. your chances of getting a job in Google and few millions is higher than being selected through a formal job interview process at Google.

Market crossed 12K again today after going ‘fana’ in May-June 2006. It had lost more than 3000 points around that time.
I found it to be a nice opportunity to enter into Futures Market, as I felt there wasn’t anything fundamentally wrong with the indices – so bought Nifty September futures at around 3000, hoping the market will regain its lost positions, and in fact the market really did – NSE today had crossed 3500, giving me a gain of 50,000 bucks on an investment of 35,000 within 2-3 months. Not a bad investment afterall.
So what went wrong? Nothing except that I went on a vacation to Mussourie, in July and the market lost few points on that eventful day – and it triggered margin calls on my holdings…!!! I was scaling the mountain peaks and market was going down. During that time, ICICI squared off my position as I didn’t respond to margin calls.

A single day of carelessness of not tracking the positions on a daily basis – a lost opportunity of 50,000 bucks

Moral of the story: If you are invested in derivatives market – track your holdings daily, without fail.

Onam is around the corner (5th September, this year) – no I am not a Mallu or for that matter remotely close to any state in South India. But what i like most about the festival other than the usual rangoli, harvest pooja, traditional dance and all is the boat race. (Can’t pronounce or spell the way it is called). This post is not about Onam (there are many more learned people to talk about it), but about how I compare the traditional boat race with organizational behaviour of a big company.

How fast can a team of 100 rowers row a boat? Choices – as fast as the fastest rower, as slow as the slowest rower, or just the average. Don’t know eactly, but probably it would be as fast as the average rower. So if I pick a random 10 rowers from the ‘large boat’ and put them in a small boat (which would be around 1/10th the size of the larger boat) and ask these guys to race against the bigger boat – which boat will win?

Statistically these 10 rowers selected at random can row the boat at the same average speed as the larger boat. So the race should end in a draw.

But wait there lies a catch – there is very high likelyhood that a slow rower (or underperformer) can be noticed in a small boat than in a much larger boat – so just to avoid getting noticed, he is more likely to perform better. Further, a fast rower in a big boat knows that his efforts alone cannot drastically improve the speed of the boat, which is rowed by 99 other men. However, he can see a perceptible improvement in the speed of a smaller boat if he performs to his full potential. So my feeling is the smaller boat is likely to win the race.

Isn’t the same with big companies – how fast can big companies grow – around the same average rate as the industry at a broader level. So a smaller company formed with a group of people selected at random (not just the super-heroes of bigger companies) can grow at a much faster rate.

This thought has some even more deeper connotations – So if I have to start a company, shouldn’t I start with a team of average performers from bigger comapanies? But offlate, I observe, most of the startups try to recruit a few highly talented guys – the justification being, a startup can’t afford any mediocre performers, becasue of the high burn rate. (Race towards Event horizon as Jim Clarke founder of Netscape puts it). The startups are ready to pay exhorbitantly high salary to recruit the bright guys (you need to pay much more to compensate for ‘frills’, ‘brand name’ etc. that bigger firms can offer) – so isn’t the burn rate (or cash drain) higher? The only caveat being – a startup should probably go for ‘out-performers’ only if they are developing something ’state-of -the-art’ and requires people with high intellect, ready to slog for any length of time. Or if you are going to launch a new product, and time not money is your constraint.

I have no experience in working for a startup – so the thoughts are just my conjectures. I invite readers who started their firms or have experience working in startups to share their views and enlighten me.