Saturday, September 23, 2017

Experimenting with Indexes - JUNIORBEES

Between May & August of 2016, I sold 28 different scrips from my portfolio and exchanged all of them for 1 ETF - JUNIORBEES that tracks the Junior Nifty index.

The 28 scrips contained all kind of shares from penny stocks like GTLINFRA, STERLINBIO, LITL, UNITECH to pretty good blue chips like RELIANCE, BALMERLAWRIE & HDFCBANK and precious metals like AXISGOLD & KOTAKGOLD. At the time of selling, the booked profit ranged from losses of 60% to profit of 194%. i.e the range of what I sold was actually quite diverse. Amounts held in portfolio ranged from a few hundred rupees per scrip to one scrip being more than a lakh rupees in holding,

Last week, I sold all my JUNIORBEES position. One reason was that it was hitting an all time high. The second was that my holding period exceeded one year, switching me to long term capital gains bracket.

Of course, it is no surprise that I made a profit, the markets in India were on a bull run. But what is interesting is to compare what would have happened if I kept my original portfolio and not switched to JUNIORBEES. So here is the comparison of the original holdings vs JUNIORBEES:


Potential Profit %
if kept in in Underlying
Actual Profit %
after switch to JUNIORBEES
BOM:500256-21.91%48.41%
NSE:3IINFOTECH-27.00%32.31%
NSE:ALBK14.37%47.50%
NSE:AMBUJACEM12.54%47.50%
NSE:AXISGOLD-9.80%39.40%
NSE:BAJAJHIND-22.53%52.22%
NSE:BALMLAWRIE-66.70%28.62%
NSE:CPSEETF26.42%39.40%
NSE:CROMPGREAV162.76%31.34%
NSE:CROMPTON30.32%33.06%
NSE:EDUCOMP-44.33%36.91%
NSE:GTLINFRA241.43%48.41%
NSE:HDFCBANK52.59%36.91%
NSE:HOTELEELA15.97%33.06%
NSE:IOB-19.68%39.40%
NSE:ITC8.05%35.66%
NSE:JAYSREETEA12.03%48.41%
NSE:KOTAKGOLD-4.95%39.50%
NSE:LITL-83.88%48.41%
NSE:MCLEODRUSS-14.73%48.41%
NSE:MONSANTO2.26%32.31%
NSE:NIITTECH4.62%47.38%
NSE:ONGC-21.71%52.22%
NSE:RELIANCE-16.29%47.42%
NSE:SBIN47.41%50.61%
NSE:SBT45.39%50.61%
NSE:STERLINBIO-12.29%48.41%
NSE:UNITECH74.99%48.41%
NSE:VIPIND107.46%48.41%
Grand Total12.30%38.63%

The table lists the differences strictly on price, any fees and brokerage paid for the switch has not been deducted. Intra-day changes might also place a minor variation in the comparisons as the the actual sale price of the LHS is based on the price I actually sold at while the potential is based on closing price on the day I sold JUNIORBEES. The RHS is strictly based on the actual prices I traded on. The variations and brokerage put together should not factor for more than 2%, IMHO, hence not being material for this calculation.

Clearly JUNIORBEES has trumped.

Thursday, March 02, 2017

How I became Vocanic CEO

After six and a half years at Vocanic, I recently left. This was one of the hardest decisions I had to take.  There is a lot to write about my tenure at Vocanic, but I am trying to focus this post on the past 18 months or so which had more noteworthy stories, I believe. There are 3 parts to this topic - Becoming Vocanic CEO, the decision to leave Vocanic, and the decision to join Quantcast. In this post I am only focussing on the first.

Vocanic was acquired by WPP in December, 2013 and we were placed into the GroupM group along with 5 other agencies - Mediacom, Mindshare, Maxus, MEC and Xaxis. The four shareholders who sold the company (in order of their shareholding) were Ian McKee, Liam McCance, Stephen Thirgood and myself. I were granted some company shares as part of a Stock Option grant. Shortly after the acquisition, I was promoted to CTO position.

GroupM bought Vocanic because we were a Social Media agency with proprietary technology, which they believed was a differentiating factor. We believed ourselves to be a Consulting firm with execution capabilities in both Social Media and Tech. Either way you look at it, Vocanic was broadly two businesses - an agency business offering Social Media management and affiliated services; and a Tech business offering product and applications offerings. Most of our client facing team understood that the two were joint at the hip and we could offer services that truly was differentiated in the market. 

However, as it happens with an acquisition, management changes followed in the following months. By July 2015, Stephen had exited and Liam was in the process of exiting the company. Both were affected by the big-company syndrome as well as nurtured an itch to pursue other interests. When the management was being restructured, I had offered to take up COO role covering all aspects of the business except Strategy and Client Facing. However, Ian believed that someone from within GroupM was necessary to tide over the relationship issues we were having with the group and agencies - logic that I agreed and subscribed to.

So Ian recruited Rebecca Ashby as our COO and Rebecca set up structuring the company for future. While the efforts of that exercise were broadly in the right direction, I came out not spotting the next challenge I wanted to take on. Tech assignments in that roadmap looked, at best, incremental.

At this time, I spoke to Ian about leaving, but Ian was genuinely convinced that working in a bigger group and making this a win-win for both us and GroupM was an important and unfinished business. He convinced me to stay, which I did.

In the coming months I busied myself with a couple of projects and didn't think too much about leaving. However, by year end 2015, there were significant differences in the direction Ian and Rebecca wanted to take and the two weren't seeing eye to eye. I personally respected both approaches, but the strife wasn't setting the right environment and the team was often split on whose direction to follow.



Over the year end break, I decided to talk to Ian about leaving again. However, coming into office on first working day of 2016, I learnt that Ian and Rebecca had agreed that things weren't working out and Rebecca was leaving. I did not want to leave Ian with another departure but decided to postpone it for a few weeks to see how I could help out in transition. Ian and I spoke about the COO replacement plan and while Ian was generally willing to give me more responsibility, but the formal decision wasn't made.

In about 10 weeks time, GroupM decided, in turn, somewhat shockingly, that Ian wasn't working out as the CEO and asked him to leave. His departure was sudden and without a succession plan in place.

Again, this left yet another vacuum - this time a much bigger one. Within a few months, we had gone from a management team of 4 (Ian, Liam, Rebecca and me) to only one. In the past 5-6 quarters, there had been multiple rounds of change in management and key staff in every market. The only function that had been relatively stable had been tech team. 

At this point, GroupM management made it clear that no decision on the next CEO had been made and anyone in the management team was free to apply. I was happy to apply. Firstly because I was, and am, a firm believer in the Vocanic brand and the offerings it could bring to the market; Secondly because I had been close to Ian and had the best perspective of what was needed to take things forward; Thirdly, at a personal level, it would have given me an opportunity to take on a new challenge at just the opportune moment I was wondering about next steps; and Last but not the least, I knew that there was a mutual comfort between me and the key stakeholders both in GroupM and in Vocanic. Hence I put up my hand.

I got no preferential treatment during the selection process - I was made aware that there were other candidates and the choice was going to be based on merit, not on association; I made it through the first round. Next I had to make a presentation on the strategy of Vocanic going forward. 

I had little intention on a business-as-usual approach, but rather one where we would focus on our strengths and cut out the offerings where we had no differentiation. Incidentally, the template of the presentation I had to submit clearly made me feel that GroupM was looking for a similar approach - they prompted that our competitors were CRM companies (Lithium and Salesforce were specifically mentioned) and how I would tackle them. I thought this was a good sign - looked like we might be thinking alike. So I submitted and later presented my plan.


So, after about 8-9 weeks of selection process, I was appointed to be CEO of Vocanic.

to be continued..

Friday, December 09, 2016

Demonetisation: Initial admirer to now skeptic

It has been a month since the Indian Government announce demonetisation. Over time I have emoted at extremes about this move - starting with immediate elation, defending the move among skeptics, to now being a critic of the move. This post is an attempt at documenting some of the thoughts.

Let's start by discussing the Government's motives. Among analyses, here seems to the list of benefits:

  1. Elimination of black money w.r.t:
    1. Untaxed wealth
    2. Reducing corruption
    3. Crime uses
  2. Getting a special dividend of about 2 Lakh Crore that could be used by Government to fund public initiatives
  3. Eliminating the cash in the hands of political opponents
  4. Defending the currency against counterfeiting by terrorists
Depending on whether you are a supporter or critic of the move, you may believe in one or a combination of the above factors to be the real reason behind the move. Personally, I feel it is a combination of 1 & 3 with 2 being a bonus. Modi has spoken about eliminating unaccounted wealth since the election campaign, and if that can be done together with eliminating the opponent's ability to compete, why not do both in the same shot? Getting a special dividend from RBI to pay for public initiatives is icing on the cake. 

Leaving aside the real motive, for us to truly support the move, we must believe that 1 & 2 has a key role in Government's true intentions. Let's assume that and move on.

Let's move then to the effects. While at one extreme, there is extreme shortage of cash in some segments, specially the rural ones, many segments of the economy has adjusted by using cashless transactions. Given India's natural size, and its generally inventive citizenry, their ability to react and adapt shouldn't come as a surprise to anyone. 

Without belittling the consequences to the poor and rural populace who are perhaps worst hit by the move, we need to consider the long time positive effect on the economy - would that long term benefits outweigh the immediate pain and suffering of the masses? 

My initial reaction to that was a resounding YES. Here is what I thought:
  • Some of those with unaccounted wealth will lose it altogether. Good riddance.
  • Those who hoarded that wealth in realty would ideally convert the entire value at market rate, pay a higher capital gains, but end up benefitting the economy overall by eliminating cash in realty transactions.
  • The move will instil a fear of establishment among the common trader in India and force them to think of moving towards better accounting of transactions and avoid a repeat of the uncertainty they went through this time around.
  • It will move the country towards a cashless society, which in itself reduces the scope for a lot of the evils that cash brings on its own. (India has substantially higher use of cash as a share of GDP than any other big economy, including the US, whose biggest export could be arguably USD currency)
However, with time, I want to go back on almost every single argument. Here are my rebuttals:

  • No one seems to have lost unaccounted wealth. Most of them held very little in cash, and those who did manage to launder it back. Sure, some of it will be lost, but not enough to either benefit the government in terms of taxes or to act as a punitive effect.
  • From what I hear, the realty argument was only in my head. No one else believes it. Everyone, even those involved in realty in a big way, are just waiting for enough cash to come back in circulation to go back to old ways. If those involved in realty think otherwise, then my singular arguments, however sensible it is, won't make much of a difference.
  • On fear of establishment, it might still work, but the general response is either one of admiration (by those who had nothing to lose) and anger (by those who were affected by it) - no one seems to have taken any moral lessons. 
  • On moving to cashless society, the reality at ground is absolutely counter. I am going to spend rest of the article talking about this.
India is not ready for a cashless society. We are very far from it, so far that it looks comical that we even attempted to move to one in 2016 without the fundamentals in place, if of course we believe that was one of the intentions.

Here are the broader reasons:
  • How would vast majority of the illiterate population interact with this cashless society? Who is thinking of them?
  • The cashless society is for the banked. Everyone else is left out. And Jan Dhan accounts are not yet a passport to participating into a true cashless society, at least not in 2016.
  • The process of KYC and setting up an account and coming up with a reason to do ReKYC every now and then, is just painful.
    KYC is such a overwhelming function that banks have permanent counters for KYC, something I don't recall in 1990s when I observed banking as a son of a banker, or something I don't see in Singapore at all. (Every single year, one financial institution or the other I deal with blocks my account and asks me to KYC and my details haven't changed one bit in the past decade or more.)
  • Indian credit cards need an PIN to function. Other country's cards don't need. What's the result? We will have tourists not being able to use cards that they can use everywhere else in the world - not progress in the right direction.
  • Public institutions, like Metro, Museums, Canteens etc still don't have facilities to accept cards. Given the push, wouldn't it be natural that at least public institutions deals with its retail customers they way Government wants its private businesses to deal with retail customers?
  • As much as people may believe in Modi, why would anyone want to volunteer to pay higher taxes to a system that hasn't proven itself to be very efficient in allocation of tax rupees over the years? How are we bridging that trust gap?
  • Lastly, Indian trade is conducted with the assumptions of the benefits of cash. i.e if there is a shop that can operate at 20% margin on cash with minimal tax outgo, they would need to charge roughly 12.5% on the goods to maintain the profitability (2.5% on merchant fees on the transactions and 10% as added revenue so that after paying for taxes, the trader gets to keep the same 20%) - I don't think the economy is ready for that step up. 
Put together, even if we were to believe that Government had the right intentions, we are nowhere close to having a smooth cashless society going, and we may be at least 5 years away from one. And 5 years is too long a transition period for a developing economy.

Tuesday, November 15, 2016

पाहिमाम जानकीवल्लभ (paahimaam jaanakeevallabha) in Sanskrit


[Original at http://www.karnatik.com/c3341.shtml]

पाहिमाम जानकीवल्लभ
रागं : शंकराभरणं
29 धीर  शंकराभरणं  मेल
Aa: S R2 G3 M1 P D2 N3 S
Av: S N3 D2 P M1 G3 R2 S

तालं : तिश्र एका
Composer: मुत्तुस्वामी दीक्षितर
Language: संस्कृत

पाहिमाम जानकीवल्लभ श्री हरे भारत ईशा प्रिया नन्द मूर्ते ।
देहि मे सम्पदं दीन चिंता मने  देवदेवोत्तम नंद कीर्ते ॥

एही काकुस्थ कोदण्डहस्त ।
ईप्सितार्थ प्रद ह्लादचित्त ॥

Monday, October 31, 2016

How not to be a Salesperson

At Vocanic, we often deal with vendors we use for access to products or data. One such vendor's contract was up for renewal in the past few weeks. If there is an example on how to come across as an arrogant, cocky salesperson, here is a great example. (In the interest of protecting the company's privacy, key details have been obfuscated)




Hi XXXXX,
Hope you're well!
Apologies that I did not catch this sooner, but our contract has expired. If you're interested in continuing access, please let me know so that I can have a new Order sent out.
Our pricing has changed a bit, so it'd be [Higher Price] and include XXXXXX and the reliability features.
Thanks,
Salesperson

Hi Salesperson,
FYI, XXXXX has since left Vocanic and I’ve taken over his duties. I’m surprised to find out that the ABCD contract has expired. Does this means that the service will be cut off soon? We have a lot of platforms that are relying on the data and having it cut off would be disastrous for us.
How do I go about renewing the contract? And regarding the price, is there any room for negotiation? We’re unaware of this increase, and we have on our part signed retainers with our clients without provisioning for this increase.
Hope to hear from you soon. Thanks. 

To prevent an interruption, we'll need to sign an Order Form and attached amendment to the MSA. I've already discounted this solution as much as possible, as our pricing has had some significant changes. What configuration [words edited] are you currently using?
Best,Salesperson

(In a few days time, since the person involved didn't respond):


Hi,
We'll have to disable the streams unless we can sign a new Order Form. Shall I send through Adobe Echosign?
Best,
Salesperson

Hi Salesperson, unfortunately I got ur email a little too late as I'm on a flight out now. Can I reach you at another time?

Sure, but we need to sign the Order, as finance would like to deactivate the account since we're out of contract.
Can I send this through for e-signature?
Best,
Salesperson 

Hi Salesperson,
Can we extend the service until mid-October? Because of the price increase, we're considering other options to acquire [XXXXX]. To be fair, we highlighted the price difference in mid August (being charged for less than a month) and no one from [Your team] gave a reasonable explanation nor an indication that there would be a price increase should we continue.We're currently caught in the quandary of having to absorb the sudden price difference and with no option to recover from our clients as they have all signed an annual retainer which only ends next year.Please let me know the cost for the extension. We are unable to commit to a 12 month contract right now.

Unfortunately, that price is based on a discount for a 12-month agreement, so it'd change if you only wanted a 2-month agreement, and also wouldn't lock in anything for longer than that term. Can you offer some additional insight into what it'd take so long to sign the agreement this year?
The email requesting the number of rules you're using was addressed to you 5 days ago.

Hi Salesperson,Could you give me the 2 month agreement pricing please?
Regarding why it will take so long, we have policies in place where contracts above a specific amount are required to have at least 2 comparable quotes, among other documents. Getting those quotes and everything in order is not something that can be done within a day.
I saw your email requesting the rules, and apologies for missing that. FYI, we are currently using [xx] rules, which you already know, and it’s way below [your tier] limit.


It'll be 30% more which ends up being [Higher Price]. Please let me know how you'd like to proceed and I can send through the agreement for e-signature.
As long as we can sign by the end of this month (Friday), with an effective date of the first of this month (Sept. 1), we can leave access on.

Hi team,
Hope all is well and thank you for turning around those agreements before the end of last week. Can you let me know if you plan to transition to the longer term at [Lower price], to continue the short term rate at a premium, or if you're transitioning away from [our service]?Many thanks,Salesperson

Hi Salesperson,
We haven’t decided. We are also evaluating client contracts and renewals – at the end, we might decide not to use [your service].
May I know the reason for asking the questions – is there a negotiation/pricing option that you are exploring?
At this point, I was genuinely hoping there would be a serious engagement with us. But that was just misplaced hope.


The Order you signed allows for termination with 30-days written notice to avoid auto-renewal. You opted for the option that offers service through the end of this month, which means termination notice is due if you'll be cancelling.
I'll go ahead and put in the cancellation now, and we can revisit in 2 weeks.
-Salesperson
So the contract was sent our. On our end, it was disappointing to deal with this vendor who raised prices without explanation, put in little effort to discuss or negotiate with us, and was rather willing to put a gun to our head than any other approach. So, we were looking for alternatives, which we found. The alternative wasn't cheaper - but they gave us a shorter contract, which was a huge help for us to reduce risk, and they gave us additional add ons. There were gracious enough to get on multiple calls to see how we could migrate over and even followed up pro-actively on it. Guess what, we switched to them.


Hello everyone,
Will you need ongoing access beyond October 31?
Thanks,Salesperson

Hi Salesperson,
No.
Thanks.
I wish this salesperson learnt a little bit of humility and empathy - this contract could have been easily salvaged. 

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