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In 2005, my colleague and I partnered with Refco which at the time was the largest commodities brokers in the world to launch a new product in India…what could go wrong? I landed into India on October 1, 2005 and on October 10 a press release was issued that the CEO was resigning because of “accounting irregularities”. Whenever you hear “accounting irregularities” you can safely assume the worst possible outcome, a week later Refco filed chapter 11 bankrupty. Listening to the reports over the past two weeks about the impending collapse of MF Global was like déjà vu for me, this is actually their second collapse.

The latest collapse is even more sinister then the first one. At least during the Refco collapse Phil Bennett took a loan to cover his proprietary trading (aka prop trading). However, it appears MF Global took customer segregated funds to shore up their losing prop trades on bonds which is hugh no-no. The reports are still filtering in as to what exactly happened and who knew what. However, this quote from a lawyer really ticked me off “To the best knowledge of management, there is no shortfall”. A very carefully worded statement which essentially says “don’t hold the management team accountable”.

When working with Refco during the transition to Man Financial (which eventually became MF Global) it was surreal. I just landed into India with plans to stay for 6 months while we got everything up and running. And within 10 days my dreams turned to despair. I had a great vantage point as I was sitting next to Vineet Bhatnagar, MD of Refco-Sify India, as everything was collapsing around the world for Refco. We would hear reports of what was happening via the newswire or rumors from the “New York guys” but during all this craziness Vineet was calm and cool throughout the entire ordeal. He gave interview after interview saying how the India operations were “ring-fenced” and things would be back to normal. Certain parts of the business came back to normalcy faster then others, it was a trust thing. I think the institutional guys understood their money was safe but many retail clients didn’t care what was being said.

In any event, our new fund was completely crushed…100% wanted their money back NOW. All the investors got their money back and said they would re-invest once the dust had settled. Sadly, some of India’s most prolific investors who were in the first fund did not return for the second fund which we started in March 2006 under the Man Financial banner.

Right now there are two types of people that exist at MF Global-Sify India, people that witnessed the first collapse and the “new guys.” Anyone who was there during the first collapse is a little concerned but have seen this movie before. The “new guy” is probably shitting in his pants. Having worked with the Indian management team there is no doubt they are top notch and everything continues to be above the board. There was a report in DNA Money newspaper that Vineet “had put in his papers”, I almost choked on my morning coffee when I read that. Not because “oh my god he is leaving” but rather “oh my god he would NEVER leave India”. Of course, people love sensational headlines and the MF Global collapse definately provides it.

Lexus LFA dashboard

During the late 90′s all the rage on the internet was with portals. The concept was simple, you select the type of information you wanted  - news sources you like, stock quotes for your holdings or local weather information. Then the portal would magically aggregate all the information in a single location.

If portal 1.0 was about external information (news, weather, etc..) then portal 2.0 is about your information. Portal 2.0 or what I’m calling The Personal Dashboard is the next step, where you can quickly glance at various parts of your life in a single location. Parts of your life would include friends (Facebook), work colleagues (LinkedIn), personal finance (Mint.com), health, cars, fashion, etc…

Social Dashboard
Since many websites are opening up their data stream via an easy to use API (application programming interface) the ability to create a centralized dashboard is not that far fetched. For the social piece of your dashboard you would have a mix of Facebook, LinkedIn and/or Twitter in your social news feed similar to how the individual streams look now, but it would be an aggregated summary. For the full blown feed you would have to go to the respective sites to get your daily dose of empty calories better known as social networking.

Personal Finance Dashboard
Yes, Mint.com does a lot of the financial data aggregation but two things: first it’s on their site, I want to see that data stream appear on my dashboard. More importantly I would like to weave Mint.com with all my other financial data streams. Suppose I have Google Wallet, I would want that to appear as well.  For me personal finance is broken down into 2 categories: short term (expense tracking) and long term (portfolio management). Since all my financial feeds are in one location, I would want to get real advice and/or offers based on how I spend on my short term or daily expenses.  If I constantly spend on cafe lattes at The Coffee Bean (which I do everyday in Nariman Point), it would be nice if they kick out an offer for 50% off on a new product they are introducing. Or if I suddenly stop visiting for 2 weeks, they kick out an offer for 20% off on my next visit. This would be completely automated without having to signup for some dumb-ass daily deal site (Hi Groupon!).

On the portfolio management side, it would only present offers in two cases: the product saves me money or makes me money. If there is a better performing CD/FD it would alert me to it. If I can save on brokerage, then it would notify me…but only if I really trade a lot and it would specifically show me a cost comparison based on my accounts details. Consumers would love this, but of course established companies would hate this level of transparency. However, there are new players such as BankSimple.com who might be able to make a difference.

Health Dashboard
Personally, the area of health is what got me started to think about the Personal Dashboard concept. There is a growing trend around the idea of the quantified self –  capturing details such as heart rate, blood pressure and many more data points to learn about your health in real time.  Gary Wolf gave a TED talk about the topic. When you talk about big markets, the health care industry is one of the biggest at 16% of the US GDP and a large chunk going to hospital care. There has to be a better way for people to track their own health and make adjustments in real-time to improve their health. There are several devices available today that offer a glimpse into the future.

Fitbit is the size of a money clip and tracks physical activities, calories burned, steps taken, distance traveled and sleep patterns. At a $100 a pop, this should be mandatory for anyone with a BMI over 30. Another gadget is Basis which is like the Fitbit but also tracks your heart rate. Of course, Apple is also planning to gate crash this party with their products based recent patent filings.

Gadgets are one piece, the other is data aggregation and several companies such as Microsoft HealthVault and RunKeeper have started to support the above gadgets on their platform. Once again these are islands of data and should be part of an overall personal dashboard. These services should interact with each other and kick out real-time advice based on my physical condition or let me know if my sleep cycle for the one week period is normal for my age group, etc… Or I should be able to export my data to a PDF to show my doctor that I have indeed been sleeping 7 hours a day and working out every other day. By tracking certain metrics it lends itself for people to correct their behavior if they are serious about it.

Summary
I’ve touched on 3 areas but there can be many more depending on the lifestyle of the individual. Such as a car dashboard that tracks the vitals of the cars you own – mileage, fuel tank, tire pressure, etc…then it could send a reminder for when the next servicing is due. (Yes the irony, a dashboard of a dashboard!)

The Personal Dashboard might seem like an idealistic view of how our lives should be simplified, but I firmly believe it’s where things are moving to. Currently, all this data is housed in disconnected data stacks but eventually there will be a meta aggregator of all these bits of data we are creating on a minute by minute basis.

The above article was syndicated on VCCircle.com.

When I first heard about Aadhaar I figured it was just another Government of India project that would go nowhere. (For a quick refresher on Aadhaar I put together a quick 10 slide summary.) As the program is starting to gain traction, many people are starting to challenge the claims and veracity of the projects purpose.

One of them is Sucheta Dalal, who is a highly acclaimed journalist who broke the story on India’s largest insider trading scandal in 1992 involving Harshad Mehta (he was the first person in India to buy a Lexus LS400). I’ve actually had a chance to meet Sucheta and she is a straight shooter. I’ve commented in the past that I feel Aadhaar will help to ease corruption. On Twitter, Sucheta had a more direct question for me:

@mrjain  please enlighten me how a number allotted to you will curb corruption? I am all ears

One of the misconceptions about Aadhaar is that it will solve every problem that affects India, it won’t. The other misconception is that it will be 100% fool proof and rock solid from day one, it won’t.  Aadhaar is a technology startup that happens to be ventured backed by the Government of India. As with any startup or government program there will be teething and integration issues that will have to be dealt with in real-time.

My answer to Sucheta’s tweet is “yes, but probably not for Sucheta and me.” It would benefit people that suffer from the “poverty tax”, which is a large percentage of the Indian population. If you receive a pension, you might have to pay a “fee” to the clerk to speed up the transaction. Same issue with food, subsided kerosene, government jobs, etc…if you want something you have to pay a fee.  That fee hurts more if you earn less and hence it’s called the poverty tax or you can call it what it really is…corruption. With an Aadhaar number the government would directly deposit the money into your bank account. No middle man to slow down the transaction or take money from you to speed up the process of getting YOUR money.

Fear, uncertainty and doubt are the 3 things that critics raise when talking about Aadhaar. Fear of what the Indian government will do with the data. Uncertainty about how much money is being spent on the project. And lastly, doubt of whether the program can achieve anything impactful.

The other complaint I’ve heard from several people is they feel it’s just a large technology project to benefit system integrators like Infosys, Wipro and TCS. In particular, a friend of mine questioned why Aadhaar was so keen on using iris and fingerprint scanners to authenticate people. Was it because that would force new hardware sales for iris and fingerprint scanner vendors. Why not use voice verification via cell phones that are so readily available? Granted, there might be issues with voice pattern recognition but why not open it up to a college competition for the top technology schools (read IIT’s) to try and solve the problem.

Personally, I think that’s where the Aadhaar team has done a rather poor job of openly communicating and should really improve in that department. I still firmly believe Aadhaar is a step in the right direction and will eventually benefit a large percentage of the Indian population.

For all the talk about companies coming to an emerging market like India and setting up shop, no one has been more passive aggressive then the Volkswagen Group. VW is most famously known for its Beetle – one of the best selling cars of all time at over 21 million units. In a bid to move beyond the Beetle, VW in the 90′s started to acquire many brands and their complete portfolio is quite impressive: Audi, Bentley, Bugatti, Lamborghini, SEAT, Skoda and VW. The VW Group also owns 49.9% of Porsche and set to take 100% ownership in the near future. The linkage between VW and Porsche goes way back, VW was founded by Ferdinand Porsche. Then Ferdinand went on to start Porsche where his son created the iconic 911. Even today the bonds are strong, the Porsche Cayenne and VW Touareg share the same chassis (platform in car speak).

Long Term Commitment
Enough of the history lesson, back to VW’s big bet on India. VW’s foray into India started in 2001 when it launched the Skoda brand and started selling the Octavia. Around 2007, the VW Group also added Audi, Bentley and VW to their Indian product line. These cars were available by importing them individually, however servicing was always an issue since they didn’t have official dealers on the ground in India. In another sign that VW is here for the long haul it opened a massive manufacturing facility in Chakan (near Pune) in 2009 and spent USD $500 million in the process. Towards the end of 2011, VW will add the high-performance brand Lamborghini to the mix. They will most likely unveil the first Lamborghini showrooms when they ship the highly anticipated fire breathing 691hp Aventador to India.

Breakout Hit
In the 4 door mid-luxury segment, the market leader for years has been the Honda City. The break out hit for VW has been the Vento which was introduced in 2010 and already has beaten the Honda City as the number 1 selling car in that segment. The Vento’s success is a combination of Honda lagging and VW bringing the right product to the market, namely a diesel engine. With petrol prices only going up VW was right to tap into the Indian psyche of affordability. The Honda City has been around since 1998 and all the brand loyalty it built up went down the drain once the Vento was launched and petrol prices started to rise. Honda hit back in early June 2011 with price cuts by attributing it to “cost reduction efforts in the supply chain” which sounded like public relations speak then reality. But it didn’t matter, by then the damage was done and the Vento took the top spot.

Audi’s Rise
Around the world Audi has always been number 3 when compared to the more well known German brands of Mercedes and BMW. However, that is changing in India partly because Audi was able to capitalize on the new designs featuring the “LED eyelids” that are now copied by every other car company. In addition, the Japanese strategy of not bringing their luxury brands of Acura, Lexus and Infiniti to India was a missed opportunity that Audi used towards its advantage. Toyota which has been in India since 1997 has built a large distribution channel and could have easily used that existing network to seamlessly introduce the Lexus brand but failed to do so. Lastly, Audi got some great mileage with their feel good advertising campaign featuring cricketer Ravi Shastri. Ravi was shown sitting on an Audi 100 on the cricket field when India won the World Championship of Cricket in 1985 where he was selected as the man of the match (most valuable player). Obviously it was unplanned and Audi capitalized on the imagery.

Market Segmentation
Possibly the only issue with the VW Group’s arrival into India is their market segmentation for their brands. When Skoda first came to India, it’s reputation in the Western European countries was not very high and thought of as a sub-standard product. However, under the VW umbrella it slowly upgraded its perception and in India it’s often thought of as a premium brand. Many consumers gravitate towards the  Skoda Superb who want luxury but want to “fly under the radar” and not appear to flashy. With the arrival of Audi and VW the lines of market segmentation have started to blur. The Audi A4, Skoda Superb and VW Passat are all very similar and in fact share the same chassis. And therein lies the problem, if a consumer wants to spend Rs. 30 lakhs on a car which one – A4, Superb or Passat?

Summary
Overall, the timing of VW’s entry into India couldn’t have been more perfect as other competitors have been busy with their own problems. The American automotive giants are dealing with their domestic demand issues. The Japanese automakers are taking a very slow approach to India when it comes to their luxury brands – Acura, Lexus and Infiniti.  Lastly, the German automakers Mercedes and BMW have been battling for the top spot for number of cars sold in India. BMW took the crown with over 6,200 cars sold in 2010, which is a very small piece of the overall Indian car market. Since the VW Group has many brands and able to target a much wider audience it will most likely lead overall sales in the years to come.

The above article was syndicated on VCCircle.com.

Mark Mobuis

Since 2005, India has been the destination of choice for institutional money mangers to invest their clients money. As a refresher, India was one of the 4 countries mentioned in the now famous 2003 report from Goldman Sachs titled “Dreaming with BRICs: The Path to 2050.”  The acronym BRIC stands for Brazil, Russia, India and China. It’s a report that many managers used as their investment thesis for entering the 4 countries mentioned and led one of the authors Roopa Purushothaman to land a gig with the largest retailer in India – The Future Group.

I’m all for research reports and believe it serves a purpose for investors that might not have a clue about certain markets and/or companies that are operate in those markets. These country reports are all very similar, they are super positive about the growth of a country and how big these markets are. However, what is really annoying is when foreign analysts, fund managers or super investors fly to India and tell Indians how their markets operate. It’s what I call “white on brown” – white guys telling brown people about their own markets.

Mark Mobius is the most recent fund manager to fall into this category. I have a lot of respect for Mark Mobius who is the emerging markets rockstar with Franklin Templeton where he oversees $50 billion in assets for them. In fact I got a chance to hear him speak in Bombay in October 2007 and was quite impressed. Recently in an interview with the Times of India he talked about his investment philosophy in India and was asked about corruption in India, he had the following view on corruption:

Corruption is rife everywhere in the world. It’s only when it really impacts the process of a business in a big way, you’ve got a problem. But that’s not the case here.

I read that quote and had to re-read it to see if he was talking about India or some other country. Mark, If you can’t speak the truth then don’t say anything but don’t insult my intelligence. Currently, India is embroiled in the largest corruption case involving one of the darling sectors for institutional fund managers – the telecom industry.

Ex-telecom minister A. Raja, industrialist Anil Ambani and heaven forbid Ratan Tata are being brought in for government questioning on how telecom licenses for the 2G mobile spectrum were allocated. If Ratan Tata who runs the Tata Group which is the largest business house in India and viewed as the most honest and above corruption is being questioned, it shows how wide the net of corruption is and it absolutely affects the process of a business in a big way. From what telecom insiders are saying the corruption is only going to get deeper and affect more individuals and companies.

Mark is correct, corruption is everywhere even in the US but happens at such a high level it doesn’t directly affect the average US citizen.  In India corruption starts at home, want to get a phone connection? want to get a gas connection? You better be ready to slip some cash to these service providers to get service or “your file” might get lost. Some say that’s not corruption but just paying for a speedier “value added service” but don’t fool yourself, the entire value chain is corrupt. I don’t fully blame Mark for his myopic view on corruption because when he visits a country like India, the red carpet is rolled out for him.  Government officials want his stamp of approval, companies want him to invest in their companies and the press wants something to print. Mark doesn’t have to really get his hands dirty when he comes to India, he gets to view everything through a rose colored lens and everything delivered on a silver platter.

Any fund manager that says corruption is not a major issue I offer you a challenge. Buy a flat in Thane and commute for 6 months to South Bombay for work.  Let’s see how you deal with the following:

• Getting your flat registered without paying a bribe
• Landline MTNL phone connection
• Gas cylinder or piped connection
• Power cuts (corrupt power grid)
• Water shortages
• Commuting by car (road infrastructure badly maintained)
• Commuting by local trains? Don’t even try it.

Staying at the Taj is not a proxy for how the majority of Indians live, work, play and learn (yes, that’s an old Cisco marketing campaign slogan).

NOTE: If you are interested in downloading the BRICs report “Dreaming with BRICs: The Path to 2050″ you can download it here.

The above article was syndicated on Huffington Post.