celestri.org

I understand why people want to share their thoughts, status updates, pictures and everything else in between on Facebook. What I fail to understand is the idea of sharing your financial data via services like Blippy, Mint.com or Wesabe. The current security architecture seems so ripe for abuse and hacking it’s not funny. Blippy allows you to connect your credit card purchases to a social stream that ultimately can be piped into your Facebook newsfeed. Blippy had a security snafu back in April 2010 that revealed a handful of credit card numbers but the implications are that something bigger could be looming.

Wesabe just recently shutdown after burning through USD 5 million in VC money (Union Square Ventures backed). Even Wesabe thinks internet security is a big concern, below is what they have to say about security in their farewell letter:

…because Wesabe stores such highly sensitive data, continuing to operate the service with shoestring operations and security staff is not acceptable, and we do not want to continue accepting new accounts if we cannot guarantee the security level we believe our service requires.

The idea of aggregating all your financial data to some online website seems risky to me.  At least in the US if there is a hack attack you can take the company to court and sue for damages.  In India, good luck…imagine 26 years later the Union Carbide case is still going on and that case involves over 25,000 dead people.

Some people don’t care about securing their online financial data and that is fine…I do care. If we look at Mint.com which is a great service that I would never use, they should have an option where I can retain all my data locally. Then if I want Mint.com to analyze the data I can send it to them encrypted. Once they send me the results/advice via email they delete all my financial data from their servers all within minutes.

I think we are still in the early days of online data security and people have a carefree attitude about it. It will take one major security catastrophe to shake people and make them realize the security implications of “over-sharing” their financial data.

Motilal Oswal (MO) one of the larger stockbrokers in India is launching its first structured product the MOSt Shares M50, which is an actively managed exchange traded fund (ETF). ETFs as an investment vehicle are pretty old school in the US where over USD 600 billion are tucked into them.

In India, ETFs are relatively unknown and most of the ETFs have been passive index funds tracking the Sensex or Nifty. Benchmark has been the 800 lb gorilla in the Indian ETF space with their Nifty BeES which tracks the Nifty index. The MOSt Shares M50 is one of the first actively managed ETFs in India. Which means that a fund manager, Rajnish Rastogi, is actively managing the money and can tweak the investment model in real time. According to Rastogi’s LinkedIn profile he “developed the first (worldwide) fundamentally enhanced index and obtained regulatory approval to manage an Exchange Traded Fund (ETF) that tracks it.” If you are looking for more details about the ETF you can visit their site and download the mind numbing PDFs.

For me what is interesting is seeing the ETF space grow in India. ETFs typically have a lower cost (known as expense ratio in the biz) and can be traded via your local stockbroker. When people ask for investing advice, I give them my 3 stage process:

1. Absolute beginner – get an ETF or mutual fund that tracks the index (Benchmark Nifty BeES is an example)
2. Intermediate – broadly invest in ETFs or mutual funds (for example: Reliance Growth Fund or MOSt Shares M50)
3. Expert or gambler – invest directly into the stock market by picking the stocks yourself

I will be tracking the MOSt Shares M50 to see how it outperforms against the Nifty. According to them, they will pick the same stocks in the Nifty 50 index but “remix” the index. Would I recommend this product? Potentially, but I need to see how the ETF stacks up against the index and more importantly does the ETF have enough daily trading liquidity.

For more information on how ETFs got started checkout Wikipedia.

While the US is currently dealing with the largest oil spill in history courtesy of BP. The Union Carbide (UC) disaster from 1984 is truly an Indian story.  The accident took place in 1984 and estimates run as high as 25,000 people have died because of the gas leak and thousands more injured.

So why am I talking about something that took place 26 years ago? Because the Indian court system last week found 8 people guilty of “death by negligence”….26 years later.

Parts of the media want Warren Anderson, past CEO and Chairman of UC, to be extradited to India to face charges. I’m thinking why not focus on the people in India that are alive and that might be able to shed some light on what really happened.  This happened in 1984, almost 7 years before the Indian economic reforms began.  A company like UC could not exist back then without a boat load of people getting compensated…follow the money trail.

I’m really surprised no one is talking about Keshub Mahindra, past CEO and Chairman of UC India. He was one of the 8 people found guilty. I’m assuming no one is mentioning him because he is the Chairman of Mahindra and Mahindra a very large industrial group.

The media seems fixated on targeting people that can’t hurt them in the future. If they target Keshub Mahindra you can bet they won’t be getting any advertising dollars from Mahindra Motors, Reva, Kotak Mahindra, etc…truly Indian.

I just came across a must read article for anyone interested in creating new markets. The article is about De Beers and how they used marketing to help create new markets for their diamonds. The article is even more intriguing when you realize it was written in 1982. Since then, the diamond markets have grown by leaps and bounds. De Beers is no longer the monopoly it once was, but that’s not the point.

The point is, very early on De Beers worked to create the “need” for diamonds. Almost every week there is some founder of a startup talking about creating a new market for your product. De Beers is the ultimate in making this happen…compressed carbon into cash.

Several interesting facts from the article:

- The slogan “A Diamond is Forever” was chosen because they wanted people to think of diamonds as family heirlooms and kept in safes as opposed to being sold on the open market

- In just 14 years, De Beers erased a 1,500 year tradition in Japan with the introduction of the diamond engagement ring

- The “Eternity Rings” campaign came about when Russians mines were producing smaller diamonds that were not high quality. So they took 20 of these diamonds and set them into a ring and called it the “Eternity Ring” – brilliant

I’m still waiting to hear from the team that created the “Two month salary” campaign for De Beers…they have some explaining to do.

A little under 6 years ago I started to write a blog mainly to have a “voice.”  In the past 6 years I have met many people because of the blog, brushed up my writing skills, got some hate mail and overall it’s been a great experience. However, over the past 6 months I’ve been getting a bit bored with the topics I have been covering (anytime I start to write about cars, you know it’s a slow news day). I’m not putting the blog to rest but going to write maybe once or twice a month as opposed to a blog post every week.

Instead, I will be focusing on finally getting a real “voice” with audio. Today, I’m launching a podcast with a co-host that covers business and technology from our perspective of being on the ground in India. It’s called “The DotMatrix Show” – connecting the dot…of biz and tech in India.

The co-host is Sahil Parikh who has similar views and passions but also many times we agree to disagree on stuff as well. You can subscribe via iTunes or visit our website to check it out.

Over the past several months I’ve been trying to crystalize my thoughts over the current rage of social media. It all came together when I saw the following quote (via Lifehacker):

Don’t Mistake Activity for Achievement

- John Wooden, legendary basketball coach

Lately, I’ve noticed many people asking me if I’ve joined their Facebook Page or followed them on Twitter.  Social media is another marketing medium for a product/service. With no upfront cost people are creating Facebook Pages and using Twitter, for the first month they are posting and updating on a daily basis…then most likely it dies.

First, you have to decide if social media is really going to help you.  If you are selling industrial products probably not. Just like I would not advise someone to blow money on a print/tv campaign if they are trying to sell an email marketing service such as Constant Contact or MailChimp…know your target audience.

Actually, it goes further back is your product/service awesome.  If you believe it’s awesome that’s the first step…you have to be fully engaged and eat, sleep and breath it.  Without a great product or need, social media will just help you publicize what a pathetic product/service you have.

Sahil sums it up – Content is still king. (his blog)

If you were to ask me 6 months ago about social media consultants (SMC), I would have said pour yourself a tall glass of STFU and go sit quietly in the corner.  But, SMC’s are like an advertising firm who can help you generate ideas and implement them…but can’t commit to success. I’m sure Porsche does not go to their advertising agency and say we want to implement the new Porsche Panamera campaign and you have to guarantee 1,000 units are sold…not going to happen.

It brings me back to the original point of the quote, people that are spending time tweaking their social media strategy should really be focusing on how they the can improve their existing product/serice. Just because you are updating your fan page or tweeting about some article on TechCrunch ain’t gonna cut it.

The SEC strikes again as it issues a Wells notice to Goldman Sachs (GS) for selling CDO’s that were allegedly created to fail. A major hedge fund (Paulson & Co.) was on the short side of the trades and apparently he selected what securities would go into the CDO. I’m just calling it “shady shit.”

A couple of points. First, I’m sure other investment banks did the same thing and it’s not just a “Goldman thing.” Second, GS will pay a fine and sweep it under the rug. Coincidently, talk of financial reforms are doing the rounds on Capital Hill, some say the timing of the Wells notice and government financial reforms was coordinated. Might be.

Personally, I think 2 things would make a difference and a lasting impression.  First, instead of targeting specific instruments such as derivatives, a macro view might be a better approach. It would be similar to someone committing a crime with a knife will get XYZ punishment, or if you committed the crime with a gun then its something else.  When really you should be targeting the crime itself.  Since, Wall Street is really driven by money I think that’s where they should start.  Instead of basing a fine on the profit someone made, it should be based on the value of the security. In the Goldman case they should not target the USD 30 million or so that GS made. Instead, they should base the fine on the initial value or ending value of the security (whichever is higher) – USD 1 billion. That changes the dynamics of the risk management team, then everyone is watching everyones back and some dumb ass VP won’t be misrepresenting a USD 1 billion transaction.

Secondly, the Glass-Steagall Act has to come back.  It originally stated that commercial banks and investment banks were seperate.  In 1999 that act was repealed and the effects of that are pretty obvious – it was like putting Wall Street on a cocaine, alcohol and steroid fueled binge. In addition, they should take it a step further, you cannot trade on behalf of the company (aka prop books). Prop books would have to be spun-off and their P&L managed individually. If anybody thinks that front running does not occur is fooling themselves. Talk of a Chinese Wall is pure garbage, it’s more like Swiss Cheese.

In summary, fines based on the initial or ending value of the security (whichever is higher), bring back the Glass-Steagall Act and ALL prop books have to be standalone units.

What is the national carrier of India – Air India. Compared to other carriers around the world Rs. 17,000 CR (USD 3.5 billion) in debt is not so bad but when you realize their fleet size is small it starts to add up.

Air India recently announced 4 new member to their Board of Directors, most notable is Anand Mahindra who runs Mahindra and Mahindra. In addition, over the past 4 months there have been numerous articles printed about how Air India is going to move forward and change – bullsh@$#.  I think Air India is too unionized and stuck in the government worker mentality. It needs to streamline their organization but no one has the political will to do that. I would love to know how many of the seats are given to political people and their families…again another line item that no one wants to touch.

The merger of Indian Airlines and Air India was another disaster in the making. Indian Airlines handled all the domestic flights while Air-India was the international arm. Many say the merger was done to hide the loses of Indian Airlines and bury them into the books of the newly merged entity which is officially called The National Aviation Company of India (NACIL).

So what needs to get done?  The first step is to start privatizing the carrier just like Lufthansa (article on Lufthansa privatization) and British Airways (BA article) did. This would force the carrier to shed some employees and start to be more competitive. But, I’m sure NACIL will hire a consultant like McKinsey or Accenture and then put the blame of the decisions on the consulting company – business as usual for Air India.

P.S. The 32,000 feet in the blog title does not refer to the cruising altitude but the number of employees – 16,000

Should you plan your business with a 25+ slide deck and 30 page business plan or just get out there and start?

Part of me thinks you should plan your business strategy but more then not I tell people just do it and get started. There is no way in hell you can predict what is going to happen in 6 months much less talk about customer acquisition numbers in month 26 of your start-up.

My advice to start-ups has always been the same, spend a couple days and create a 10 slide pitch deck.  Even if you are not looking for funding the process allows you to simplify and clarify what your goals are.  After that fun exercise get back to work and focus on executing and creating the product or service.  The first version of the product/service will not be perfect and that is okay.  Get it out to your intended audience and wait for the feedback. If there is no feedback, then it’s back to the drawing board.

By know you are wondering what is with the image in the upper left corner of this post. It’s the icon for a Mac Twitter client called Tweetie. Tweetie was created by Loren Brichter, who claims he was never a programmer when he created Tweetie.  Recently, Tweetie was bought by Twitter and Loren will now be working for the mobile platform team at Twitter.  Loren is a great example of someone who got out there and did something. He left Apple and ended up creating Tweetie because all the Twitter clients at the time were not that great. It’s safe to say he didn’t create a 30 page business plan. You can watch the full 30 minute presentation he gave at Stanford talking about Tweetie - iTunes link.

Excellent quote from John Morgridge, former CEO of Cisco Systems. I heard the following quote from him during one of my trips to San Jose where he was speaking.

Business plans are like peeing down your leg, it gives you a warm feeling but it doesn’t do anything for you.

Update: Many people have emailed me for a template of the 10 slides.  Download a great presentation that talks about how to pitch and also the 10 slide template.

This is not about some journey from the midwest of the US to the middle of India. This builds on my post a couple weeks ago about understanding your target market.

I grew up about 100 miles south of Indianapolis (Indy) and looking back on it, Indy is a test market dream. Indy is a good proxy for getting a cross-section of the average US consumer and costs are low. I remember visiting Indy as a kid and wondering why did they need 5-6 electronics stores (HH Gregg, Circuit City, etc…), then I read that Indy was ground-zero for the battle of big-box formats in the 80′s.

India has a similar city – Indore.  It’s right smack in the middle of the country. I’ve visited Indore many times through the years and the more I visit, the more I see similarities with Indy. In both cities, people tend to be more conservative but willing to experiment with new products/services.

For most business the Tier 1 metros – Bombay, Delhi, Bangalore, Kolkatta and Chennai are good enough.  But, if a company is looking for size and scale they will have to look beyond Tier 1 metros.  And that’s where Indore comes into play, if your product/service gains traction in Indore I’m pretty confident you can reach across India.