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Lessons from 3 days in boot-camp

October 4, 2011

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Winding through hills wrapped in endless paddy fields, the coach occasionally perched precariously on the edges as it manoeuvred the steep single-lane gravel road leading towards boot-camp. The group of us were transported to Service Quality Centre (SQC) on the outskirts of Jakarta for what was to be a team-building and self-awareness camp. Encamped a midst rural villages, rice-fields and plantations, and far away from civilization, deprived of the comforts of communications and connectivity to the World (our cell-phones were retained), it was indeed a period of solitude and quiet meditation, interrupted frequently by laughter from the jokes that we shared.

Games and activities included such staple like Scavenger Hunt, Water Balloons, High Wall, Hiking, Acid River, Bomb Diffusion, Trust Fall, to name a few. All these activities had an element of teamwork and some incorporated the challenge of having to strategize. What was most interesting was that the activity may be quite simple, but clash of personalities and team dynamics made it much more of a challenge. Unfortunately, I had done almost all these activities during my scouting days, in school camps or in the army, so I simply played a pedestal role.

One of the highlights of the program was a personal evaluation based on the Belbin Team Roles Theory. It basically proposes that there are 9 roles that a person may take while being part of a team. Each of the behaviours is important in getting the team successfully from start to finish and having a diversified team was key to successful teamwork. After filling up a questionnaire we are assessed on our preferred team role. My top two roles were closely tied and were Resource Investigator (“Explores opportunities. Develops contacts.”) and Plant (“Highly creative and good at solving problems in unconventional ways”). It was spot on!

The 3 days in boot-camp was not time wasted, even though I’d done most of those activities before and could only stand around and offer a hand. I had time to reflect on teamwork and leadership styles and distil some thoughts based on observations of the teams I were in.

The Belbin Team Roles model is a good way to understand various team-players and the roles/skills that they can provide to the team. Knowing how to leverage on each person’s skills will greatly enhance the team’s productivity and effectiveness. Too many ‘leader’-type persons in a team will often lead to in-fighting as each person tries to wrestle for power. Let the ‘idea generator’ come up with possible solutions and then choose an approach can give the team options and clear direction. The ‘meticulous’ role has a part to play in ensuring the product/solution is correct. I do believe that if each person is self-aware, and understands his/her own strengths/weakness as a team-player, the team will function much better as conflicts can be minimized.

There was an activity where the entire group was posed with a challenge and worked on it furiously for a couple of hours. Some team-mates were criticized at the end of the session for sitting at the back and not contributing while the other team-mates were trying to solve the puzzle. This was an interesting scenario, because my observation was that there were already too many ‘cooks’ and too many ideas were floating around. More mouths would have meant more confusion. The group that took a step back to follow was not incorrect in doing so, although it might have given the impression of being disconnected and unsupportive of the efforts of the team.

Here’s the my main take-away from this trip:

There are people who are destructive team-players and those who are constructive. Destructive team-mates distract the team from the goal, reduce effectiveness and make the task more onerous. This can happen when they insist on a poor idea and refuse to give way, criticize without offering an improvement, or simply do not contribute by sitting out and not responding.
On the other hand, constructive team-players are always a welcome on a team. And they may not have to be very actively involved. Some perhaps are more accustomed to being in a behind-the-scenes role. Although they might be quietly sitting behind, but if asked to do something, they would step up and do it. These are supportive and constructive team-players that are also essential in a team. The real epiphany is that these team-players could be ones with any type of Belbin team-role, be it a natural whip-cracker, masterful coordinator or professional specialist. Anyone can take a step back and away from their typical roles and take on the role of Constructive team-player. It is a choice that comes with awareness of self and awareness of team-dynamics. This would kind of tie in with the long overstated “leadership does not have to happen at the front”. Good leaders know when to take a step back and follow. The real value is in being a follower who is constructive and is supportive of the actions of the team, and always being ready to offer help to team-mates.

Digital Magazines on the iPad

June 27, 2011

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Digital magazines have come of age since I first subscribed to Fortune on Amazon Kindle back in 2008. Back in those days, the content was simply text extracted from the print version and channelled through the digital reading device in boring black-and-white format. The arrival of Apple’s iPad, to borrow their phrase, “changes everything”.

Digital magazines on the iPad are not only colorful but also interactive. I was first impressed by Car and Driver’s digital magazine that had in-built videos of cars speeding down the track next to a textual review of the car. A picture may paint a thousand words, but in this case, a video with roaring engines and screeching tires, simply blows away the mind. Next on the impressive-list are picture slideshows of the car, its interiors and other details that a reader could swoon over. Another feature was a linked section to a forum where readers could instantly discuss with other readers the article they were reading. These features of the digital magazine is possibly the best way to give the reader an immersive experience, and is something that traditional print magazines cannot achieve alone. Additionally, advertisements in magazines are more sophisticated and provides readers with a direct link to the product and advertiser – a simple click through on the advertisement takes an interested reader from the digital magazine to the website of the advertiser. Like an e-book, a digital magazine is downloaded to the device’s library and can be carried everywhere. I recently spent an entire 5 hour flight poring through my library of various magazines without feeling bored or fatigued. As an early adopter of the iPad, I’ve since ditched the Kindle as a digital reading device in favor of the iPad’s large and bright touch-screen. The swiping motion to flip pages and pinching to enlarge pictures and text are so intuitive and human that it makes reading on the iPad a pleasure. The daily commuter on public buses or trains will know the frustrations of trying to flip through a large-sized newspaper or magazine without slicing the person sitting next to you with paper-cuts. The only worry one has with a digital magazine on the iPad is the curious eyes of that person trying to sneak a peek of the glorious center-fold models (car!) in your hands.

There are literally hundreds of magazines available on the iPad, some of which are delivered through the publications’ dedicated application, but most of which are through a 3^rd party that converts the print version to digital format. Magazines and periodicals like Economist and Car & Driver have developed apps that are free to download and charge for subscription or the flexibility of purchasing single-issues. These custom apps are the ones that provide the greatest readability and interactivity as compared to direct print conversions, which is almost like reading a PDF. Zinio is a popular 3^rd party digital content provider and they offer an increasingly diverse and rich collection of magazines from all around the world.

In reviewing digital magazines, I must also acknowledge that there are several free options to access digital content, first and foremost being the Internet and the websites of content providers such as CNN, Reuters, CNBC, Bloomberg, Fast Company, etc. There is still heavy contention between the pay-for-content model (Wall Street Journal, The Times) and the give-it-for-free model, the former’s stand being that readers will be able to discern the higher quality as well as gain access to the insights from exclusive editorials and commentaries. To each his own, and this just means that readers have access to a multitude of sources.

I’m constantly finding new digital magazines to add to my burgeoning library. It helps that these digital subscriptions are cheaper than print, are with me when I travel and these digital magazines do not crease nor suffer from wear-and-tear. My library of digital magazines and digital newspapers include: The Economist, Wall Street Journal, SME Magazine (Singapore), 新世纪, Car and Driver, Esquire, GQ, Men’s Health and Golf Digest.

Social capital and the electronic rolodex

January 27, 2011

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I once worked for an elderly gentleman who had two massive rolodexes on his desk. They were not the modern flip-chart types but metal boxes that resembled filing cabinets. Being a veteran in the banking industry, he had built an extensive network that was physically represented in those two rolodexes. There were easily more than 1000 contacts typed, written, or scribbled on those sheets of papers packed tighter than sardines in a can. The two half-a-century old rolodexes looked more like trophies sitting on his desk than ordinary stationery. And he was proud of them. Each morning he would scroll through them and randomly pick up some names who he would call to chat in the day. Watching that was a live lesson of old-style social networking. He was not only catching up with his contacts – he was also actively seeking deal opportunities!

In the earliest days of business school orientations, we were taught to capitalize on our social capital and to reach out through our ‘weak links’. Social capital refers to our networks of friends, family, and friends-of-friends. Our networks are a valuable resource that is unique to each individual and can be helpful in simple matters like getting advise on food, to serious issues like getting a new job or even finding a spouse. In the course of our everyday lives, we would likely interact only with a small portion of our networks, with people like family and colleagues at work. ‘Weak links’ refers to connections within one’s networks that are not actively maintained. These are people who we interact with not more than ten times a year. We were told that most job-seekers found work through their ‘weak links’ and not from friends whom they see more often. It is therefore important to keep one’s networks alive and refresh some weak links from time to time.

I had a first hand experience of the value of social capital which prompted me to write this and advocate social capital and social networking. In the midst of business school, when we were all desperately searching for an internship, a friend of mine who knew I was searching, referred me to the job at a boutique advisory firm in NYC, and I had the best internship experience of my life. My friend knew my background in technology would be helpful in a technology deal that they were advising on and got his boss to take me in. And he sold me so well that I did not even have to go through gruelling technical interviews! In fact, I was also able to spend some time in Silicon Valley interning at a niche-consulting firm because I happened to hear a classmate talk about her upcoming internship there and then I asked her to refer me to her supervisor for a short stint. It is such incidents that makes one thankful for friends and especially friends who care about your welfare. Of course, they will not be able to help if they did not know of your needs. My friend would not have introduced me to the old man with his rolodexes, if he did not know that I was looking for an internship. So it is also important to ocassionally ping one’s network, or to reach out and tell people.

Which brings me to the point of this note – social networking tools are a great way to manage and grow one’s social capital. Facebook and LinkedIn are the electronic rolodexes of the 21st century, and the two social networking platforms that I use most often.

LinkedIn is touted to be for the professional setting as it has its roots in connecting professionals such as executives, bankers, lawyers, entrepreneurs, etc. LinkedIn encourages members to post details that one can typically find in a resume and has a feature of having someone give you a testimony of the experience of working with you. This is an incredibly powerful feature for those seeking background information on potential hires.

Facebook connects people in a more casual setting. With roots in the dormitories of Harvard, it appeals to youth and emphasizes a lot on interactivity, fun and games. However, it wasn’t long before everyone, even old grandparents, got onto Facebook in order to ‘friend’ their grandchildren in order to see pictures that were being shared on their grandchildrens’ Facebook profile pages.

These social networking sites are a fantastic way to manage one’s networks and communicate quickly with friends and family. One can either do an online chat or post a message to the other person to keep in touch. By cutting the hurdles of cost and time, these sites facilitate the nurturing and growth of one’s social capital.

An excellent feature of Facebook is the ‘status update’ which allows one to post a short one-liner that gets collected in a live-feed that appears to one’s social network. Each person on Facebook gets these messages from their friends, thus keeping each other informed of one’s activities (or boring complains). I once broadcasted a message asking if anyone had been to Suzhou Industrial Park as I wanted to hear an on-the-ground voice about the place and within the hour I was introduced by a friend to someone who works there. Such was the power of this new-age electronic rolodex. I could reach out to the ‘weak links’ much faster. In the old days, if I really wanted to get that information, I might have to tediously exhaust the names in a rolodex. Now, a simple ping on Facebook allows me to tap on my social capital. Of course, this also requires that contacts in one’s network is plugged in to the extensive flow of information on Facebook. Instead of a ‘push’ model where one has to intentionally make the call to tell a friend some piece of information, it becomes a ‘push/pull’ model where I’m pushing info to my profile page and you can access that info at your leisure.

Yes, I sometimes spend time looking at my friends’ profile pages to find out if they are doing anything interesting or that might spark new ideas. In addition to constantly reading breaking news from CNBC and Bloomberg that are pushed to my iPhone, I’m also frequently skimming through Facebook’s live-feed. On the one hand, technology has set us free and helped us be more connected to each other, but on the other hand, we are bound by it to read the flood of updates, some of which are inane and a complete waste of time. If only we could filter those to lessen the noise in our social spheres!

Happy FB-ing

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I once worked for an elderly gentleman who had two massive rolodexes on his desk. Being a veteran in the banking industry, he had built an extensive network that was physically represented in those two rolodexes. There was easily more than 1000 contacts typed, written, or scribbled on those sheets of papers packed tighter than sardines in a can. The two half-a-century old rolodexes looked more like trophies sitting on his desk than ordinary stationery. And he was proud of them.

Talent management and development

January 23, 2011

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Having just completed the first week of orientations and HR ‘brain-washing’, I’ve gained new thoughts on the less talked-about aspect of organizational matters – talent management and development. Coincidentally, as I was thinking about this topic this week, Mr Lee Yi Shyan, Minister of State for Trade and Industry and Manpower gave a speech at the 24th Singapore 1000, Singapore SME 1000 and International 100 awards ceremony that stressed the importance of talent management for local companies. “Our firms will grow provided they muster enough quality talents and integrate them well as they expand”.

Employees are always a key asset of a company, and for companies that compete in a space where there is little differentiation in products (hint: commerical banks), a highly motivated workforce can be a competitive advantage. It seems like Singapore, as a country, is in similar shoes to a company that sells highly commodified products. Singapore doesn’t have the minerals and resources to attract FDI, and what we have is human capital. We rely on human talent to differentiate ourselves from the other countries in the region. We also rely on the workforce to attract the MNCs to partake in the growth of Singapore.

Talent management and development (TMD) is a tricky process that does not end with the induction of the employee into the company after the interview. Besides having to train the employee for the job, there is a need to imbibe the company culture, which presumably should be easier if the candidate was already short-listed because there was some fit in personality with the company’s culture. Even then, it may take some time for the employee to determine if the organization is the right place to be for a long-term career, while the organization assesses if the employee has the potential for more. It is a continuous process that both parties are involved in without being explicit about it with each other. In an organization with a well developed TMD process, employees are better informed of their performance and career progression plans and this helps in raising employee motivation and satisfaction. Being able to communicate with one’s manager and HR dept within a good framework can make those discussions easier and more structured.

One recurring theme that I’ve heard throughout the week was how clueless HR can be with regards to the views and needs of ‘Gen-Ys’ (those born after 1980), which then makes it hard to hire and retain employees of that age group. I think this is a generic issue that applies to companies globally as well as to a country like Singapore. Today’s young workforce is highly educated, mobile, and mercenary. They are keen to go where-ever excites them, or gives them the most opportunities. For companies that had a strategy of promoting from within and retaining these individuals, it can be quite a challenge to have to adapt to the changing dynamics of the younger workforce. Some people may think that the new Gen-Y’s mindset is unreliable, for they may choose to switch to another job just because it pays $200 more per month. Yet, I think this is may be a result, or a corollary, of the changing employment landscape. Gone are the days of the iron ricebowl, where one gets employment for life, till retirement and then get a huge pension from the organization that one is loyal too all his life. Organizations are treating employees as resources too, and some will easily reduce headcount in order to improve their bottom-lines. Having the independence and not relying too much on the organization to look after one’s career is an evolutionary path for the Gen-Y.

Even though the expectations of employees are changing, companies continue to have the need to hire, nurture and promote talent. This is important because the skills and knowledge that the employee gains through service with the company becomes more valuable to the company as the experience grows. They add to the collective ‘human capital’ of an organization. A lot of resource is invested in each individual. These resources include funds for training, as well as opportunities to work on assignments through which one gains skills and experiences. Having trained a person only to lose him/her to a competitor can be a huge dent on the human capital of an organization. General Electric Co. has long been known as the ‘training academy’ because a lot of companies hire management level individuals away from GE. They have a very structured training program and their management methods have been known to be the ‘best-practice’, which makes their employees very attractive.

Talent management for local corporates and SMEs
Growth is always the main concern of our local corporates and SMEs. Besides hiring from the MNCs to complement their workforce, having a good talent management program can enhance the effectiveness of other business functions and contribute to the growth of the organization. A company that has expansionary plans will always need people to staff up key positions, be it leading a new project or setting up a new branch overseas. An experienced employee rotated to other functions of the organization can likely deliver more results and at the same time continue to promote the company values and culture. Hiring someone new from outside has the downside that there is a disconnect between the new development and the rest of the organization. The general feeling is that most small organizations in Singapore are not too big on managing and developing their employees. As a result, local SMEs face increased overhead and inefficiency in their efforts to grow because they spend more time on hiring, training, and waiting for new employees to be able to contribute.

How can an organization attract and retain the Gen-Ys who are going to be the future generation of leaders?
I believe that compensation is, and will continue to be, the main attraction for a generation that is ‘mercenaric’. Paying as well as competitors is a minimum requirement. The absolute amount may not only be important because it feeds the materialistic needs of the younger generation, but also because it has an effect on ‘self-worth’, or how a person views himself/herself with regards to peers. The older generation might be happy to be drawing a regular salary, and going home to family and children, but not so for the younger generation who have to meet up with friends, who invariably talk about work and pay.
An organization that keeps up with the times, for example, embracing social-neworking, flexible work-hours, flexible work-place, will have more allure with Gen-Ys, as well as customers who can then interact with the company in the new media channel of social networks.
At the same time, there is perhaps no hurry for HR to be too hung up on retaining the younger workforce. Like young birds flying out of the roost for the first time, they have the freedom to explore and venture, and when they have seen more of the lay-of-the-land, they will choose a place to settle and develop that longer career plan. Hence it is important to not overlook the hiring of mid-career level individuals who have a clearer idea of where they want to go.

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Business publications in Singapore

January 22, 2011

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I’ve been inspired to do a quick writeup on business publications in Singapore because my favorite local business magazine Pulses met an untimely demise in December 2010 after a good run of about 3 years. I’ve been an avid follower since it was launched in 2007 but then I took a 2 years hiatus when I was in the US. It helped that the publication had a tie up with Spinelli to offer a free Original Spin with the purchase of the monthly magazine. There are numerous other business publications in Singapore, but Pulses stood out as being informative yet easy to understand for people with little background, and comprehensive in terms of coverage, with artilces in global and local economies, industries, general business practices, company highlights, CEO interviews, career guide, stock markets, investments, technical analysis, books and even local wine and dine.

Here’s a summary of the business publications in Singapore:

Pulses (end of publication)
reviewed as above

The Edge Singapore
This is probably the best source of information on corporate and market activity in Singapore. It is a weekly tabloid so the news is very current. There is very in-depth coverage of local industries and companies and they often highlight less than prominent corporates or SMEs. The articles can be quite dense at times but will serve those with good background knowledge well. It also covers many aspects of interest to the reader in the corporate world, with topics such as personal wealth management, management at work, and personal indulgence. While the publication does produce many original articles of its own in each issue, there are some articles that are sourced from feeds like Reuters, Bloomberg and The Business Times. This is my g0-to read each week for a summary of the week’s news. I also enjoy the very detailed interviews that they usually do with prominent persons of industries and companies.
$3.80 every Friday

The Business Times
The staple of the corporate world in Singapore is this daily publication from SPH. A must-read for up to day news of happenings around the world and in Singapore. In addition to market-moving news, BT also includes major news that can be good fodder for elevator conversation. The commentaries are a good read, and a section on insider activity and stock recommendations can be informative summary for those who do not spend their time pouring over detailed analysis by the research firms.
$1.00 daily

SME and Entrepreneurship magazine
I picked up this magazine by chance recently and have been suitably impressed by the richness of content and breadth of coverage. Unlike other magazines who typically use large images and charts to cover up their lack of content, SME and Entrepreneurship has longer articles that offer more detail (something along the lines of The Economist). Even though it has “SME” in its title, the content is relevant to anyone doing business in Singapore and everyone in its ecosystem.
$5.00 monthly

SME magazine
This magazine is tailored more to the executive suite of local SMEs and offers informative articles covering all aspects of business functions such as HR, finance, strategy, marketing, sales and operations. It also has a good review of happenings in the local SME scene. This magazine is published every 2 months. One of its aims is to be a form of peer inspiration, and for budding entrepreneurs to hear about what others are doing, which I think is a niche quite well fulfilled.
$6.00 every 2 months

Singapore Business Review
This monthly magazine is the always the thinnest of the lot and offers very little news if one already follows the Business Times daily.
$5.50 monthly

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Assessment Center Interviews

January 12, 2011

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Interviews are never easy. Even landing one is half-the-battle won. I’ve had countless interviews through the years – for internships, full time jobs, business school and even one for volunteer work. I’ve always enjoyed them, particularly behavioral types, and less so the “how do you do an LBO” type for I-banking. The most memorable was a phone interview on the morning after my wedding dinner, a technical one no less, and which is of little wonder I did not get a follow up.

And then I had my first assessment center (AC) interview. I was exhilarated, yet apprehensive. This was a new ball-game. They didn’t prepare us for this type of interview at business school, or so I thought. At Cornell, we rehearsed case-cracking, ‘why me’ questions, and PARs (problem action results), and this AC was going to be different. Of course I scoured the Net for whatever I could find to help. All that reading was good info on what to expect but no substitute for actually being through one, where many dimensions of personal performance is examined simultaneously. To summise, there were negotiations, analysis, presentations, high-pressure situations and managerial scenarios. I thoroughly enjoyed the assessment center and all the anxiety disappeared when I imagined myself as being a day on the job, albeit a very busy one. All that activity, collaboration and problem-solving actually got me enthused. Lucky for me, the AC allowed me to showcase some of the softer skills and personal traits not obvious on my resume. Through my scouting days, military service, school and working days, I’ve learnt and honed many traits that are identified by John Maxwell for success in the workplace (“The 360° Leader”, wiki bio). In retrospect, business school had indeed helped prepare me. The numerous group projects and social functions were training grounds for the professionalism and communication style expected. Applying a framework to the marketing case-study and presenting it clearly was also refined at b-school. At the end of the day, I got the job, but every one of my fellow interviewees was distinguished.

I’ve conducted interviews on the phone and in-person, spending much time asking probing questions and yet still be left clueless about how a candidate would actually turn out if I was tasked on the same team as him/her. I’m convinced that the AC is a much better recruitment tool than a 2-dimensional Q&A interview. One can better observe whether a candidate has managerial instincts, interpersonal skills, teamwork, leadership and other traits. It allows the company to identify the candidate with the better fit and more realistically shows the candidate in the operational environment. Of course some of that can still be rehearsed, but throw in a few curveballs and most people would be thrown off-balance. The AC cannot be conducted for all levels of recruitment because it is resource intensive and likely costly. As such, it is ideal for mid-level recruitment where getting people who would work well in the culture and be an enabler in the organization means more than how fast they can churn out an Excel model.

The interview proper:
Read on if you want to learn more about them.

The Assessment Center was a full day interview that is carried out at a local hotel in a series of rooms. The fun really actually began when I arrived and was invited for breakfast along with several other candidates. Like me, they were all grad students with prior work experience. This was the ‘break the ice session’ which was to set us up for the first session – a group task that involved a scenario in which we had to deliver an action plan within the hour. The real assessment, however, was not the end product, but how we interacted with one another, the interplay of group dynamics and our personal styles. The team was very professional and we got through the task without ending in fist-fights. Next up was an individual case study on marketing, with a presentation and grilling Q&A. It is important to articulate a good case for one’s analysis and decisions. Just as important was how one responses to the questions which were meant to put one on the grill. A thorough 1-on-1 interview followed, with the typical behaviorial and experience questions. Finally, there was an individual role-playing session where I had to counsel a non-performing employee, employing all the tact and charm possible to elicit the true reason for the poor performance, and set about a remedial course of action.

Feel free to drop me a note if you want to know more about surviving the day.

Now, if only I can get on the next season of “The Apprentice”.

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The case for bricks (and motar)

December 10, 2010

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Apple has overtaken Microsoft as the largest technology company by market capitalization, amounting to 293 billion compared to MSFT’s 231 billion (Google is at a distant 189 billion).

As a software behemoth from the eighties, Microsoft gained dominance through its Windows operating systems and Office suite of productivity applications, which were all within the realm of software. Their position continued unchallenged for more than twenty years, and even though Apple was a serious competitor with both the Mac desktops and Apple OS, Microsoft was never really challenged until now.

With the emergence of the Internet in the late nineties, several online only outfits such as Google, Amazon, Yahoo and lately Facebook have claimed a huge stake of capital. Back in the early 2000′s, there was a popular notion that ‘brick and motar’ companies like your neighborhood bookstore were going the way of the dinosaur as online alternatives became the only form of commerce. Now ten years later, it seems as if ‘bricks’ are back in business.

Before Apple launched the iPhone, which was in January 2007, APPL’s share price was about $85 that January. In the 4 years since then, the share has rocketed to about $320 today (10 Dec 2010). Now this is an incredibly lucrative piece of ‘brick’! (or maybe more like a piece of tile since Motorola was the first to produce phones that looked like bricks and Apple’s iPhone is way too slick to be degraded like that). While other technology companies are churning away at codes and software products, Apple has developed a piece of hardware that is highly coveted by the generations of past, present and future. Apple is also a software player with their Mac OS and iTunes, but a single piece of hardware like the iPhone has truly integrated their product lines and provided huge synergies. Revenues stream in not only from each iPhone sold but also from Apple’s cut of sales of iPhone Applications on App Store, music, TV shows and movies from iTunes and books from iBooks. By providing a desirable platform and conduit through which it takes a cut of every content that passes through, Apple has found the golden goose in the form of a ‘brick’. Google tried too late to mimic this strategy by creating first the Android mobile OS and then the Nexus phone, but their only success was Android OS, which, like their search engine service, is still being provided for free to other handset manufacturers like Samsung and HTC. The Nexus phone continues to languish and Android does not generate revenues nor provide any synergies besides providing a marketing platform for other free Google services. On the other hand, with each iteration of the iPhone and additions like the iPad, Apple has gone from strength to strength by producing both hardware and software, the hardware being at the heart of the revenue generating machine.

Market capitalizations of selected tech industry giants:

Apple – 293 Billion
Microsoft -231 B
Google – 189 B
Oracle -147 B
Intel – 122 B
Facebook – about 50 B (estimated at 1/4 of GOOG)

(data as of 10 Dec 2010)

Chinese IPOs on NYSE

December 9, 2010

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It would seem like the dot.com bubble is descending on us again after a decade. The 2 Chinese IPOs that went for listing on NYSE today skyrocketed on opening, with one ending more than 100% above their initial price. The two companies are youku.com and dangdang.com.

How well do investors in the US know these 2 companies, especially when they are from China, where regulatory and accounting standards are different and numbers cannot be verified? For one, Youku has not even been profitable in the 3 years prior. Once again we are going back to the era where eye-balls and page impressions were worth as much, maybe even more, than actual profit dollars.

What I found most amusing was how the hosts on CNBC glorified these companies. Or maybe it was not their intention to do, but the publicity stunts of those companies who gave them these sound-bytes. Youku.com was called the “Youtube of China” and Dang Dang termed the “Amazon of China”. These two phrases gave these companies more clout and familiarity with US investors. And who would not be excited by a Youtube or Amazon, especially if they are tapping on the Chinese market, the world’s most populous market?

While I am not familiar with Dang Dang, I have been on Youku.com to watch Chinese TV-dramas and movies. They have excellent connection speeds and a very broad range of content, which is excellent service for the many students and individuals who were looking for free entertainment online. However, I have often wondered if these were legally posted. In those early days (about 4 years ago), it probably did not matter that these videos were posted without permission of the owners. After all, it might be difficult for enforcement. We do not see entire movies on Youtube precisely because these were copyrighted and there is strict regulation in the US on distribution of these works. When I checked the site for this article, I found that they now have American movies! So are we to next see a Chinese company that duplicates DVDs (piracy?) seek funds from American investors?

The business model of Youku is similar to Youtube – they rely on advertisements on the clips for revenue, but it makes one wonder whether this is really sustainable, given that they are still in the red. One thing going for Youku is that Youtube is still banned in China, so it has a greater chance to monopolize that niche. I once read that Google acknowledges that Youtube was not worth its 1.65 billion acquisition. I wonder if investors will feel the same way about Youku in the coming months.

Youku ended 161.25% above it’s offer price to end at $33.44 on 8 Dec 2010
Dang Dang ended 86.94% above to end at $29.91

To read more about these IPOs, follow on to CNBC here

Creative alternative investments

December 9, 2010

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There is growing popularity in an area of alternative investment, if one can even call it that, which is the funding of divorce proceedings, or “divorce funding”. The idea is straightforward. Find someone who is going through a divorce and who is too poor to pay for protracted legal fees to get a good settlement, and “invest” in them by supplying them with the necessary funds. When the case is settled, the investors get a cut of the settlement.

Divorce funding is quite simply another form in which capital can be raised, invested and grown, much like the capital markets of the world where companies go to borrow funds for their expansion or acquisition plans. And it is not only in divorce cases that are seeing this funding phenomena, there are various funds focused on all types of litigations. Capitalism, at it’s best, can find it’s way into various vehicles. Venture Capital (VC), Private equity (PE), Angel investing are but some ways in which funds are channeled to startup/private companies in return for some stake in the future payouts. In these ‘traditional’ scenarios, funds are backing a technology, or a group of people and their ideas. Like divorce funding, there are potentially many other avenues where capital would be put to use for a sizeable return in a non-traditional manner. For example, funds could be used to invest in people.

Before I set off for business school, I was searching for a student loan to cover school fees and the idea of a “dax fund” came to mind. This is true. I solicited the investment from several acquaintances but they were not too sure that this “investment” would produce a good return. And I had not had the good sense to provide them with a prospectus and valuation report! In truth, this form of “education funding” would probably not make much sense because the investment horizon is very long, and it can be very difficult to “valuate” a person. However, consider that this investment helps to improve the live of a person and one can see how this can be a worthy investment, no matter if the returns to the investor is meager. The intangible benefit to the ‘investee’ is potentially large because it can be life-changing. Instead of donating money to a school to build a new wing or for new research, could one not put the money in a few deserving students? Of course, unless the investor has tons of goodwill to spare, i don’t think any sensible business person will commit to this. As for me, I would seriously consider doing this if I do have the capital to spare.

NY Times article about divorce funding:

http://www.nytimes.com/2010/12/05/business/05divorce.html

Investing in Mongolia?

December 8, 2010

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Wild horses galloping on grassland expanding into the horizon. Nomads herding cattle as they head towards their ‘gers’ (round Mongolian tents). That’s the image that most people will have of Mongolia where Genghis Khan once ruled and conquered lands as far west as Turkey. This is the real Mongolia, the independent country. There is an Inner Mongolia, which is part of China. Mongolia is truly a beautiful country of majestic landscapes and rich culture. After graduation, I had the privilege of working in Mongolia and it was an eye-opening experience for a city-dweller accustomed to the luxury of hot water, Macdonalds and Starbucks.

As Mongolia continues to open it’s economy to global investments, it’s rate of growth has accelerated in recent years as capital from developed nations seek out ever risky and high-return opportunities. “Emerging markets” were used to categorize the BRICs (Brazil, Russia, India, China) but that is so early millenium. Mongolia, sitting with another obscure country – Kazakhstan, is in a newly defined category of “frontier markets”. These are countries that have low market capitalization and liquidity but have potential for high growth over the long-term. Of course, in the near term, a lot of investment is required in order to exploit those opportunities. Mongolia for one is supposedly a diamond in the rough. Land-locked by Russia to the north and China to the south, the country has vast amounts of land and underneath the soil lies huge deposits of natural resources, minerals, and coal. The potential for discovery, extraction and export of these resources is huge and a few global mining companies have already started making in-roads into the remote mountains and distant lands such as the Gobi desert. The buzz in the expat community when I was there was that the mining industry was set to explode, which meant that miners, engineers, personnel, i.e. the whole ecosystem for the mining community would be descending on Mongolia – mainly in Ulaanbaatar, the capital. Real estate prices were skyrocketing as developers raced to build accomodations for these people. Imagine being in the middle of nowhere and having to pay $3000 USD rental per month for an apartment about 100 sq meters. Surprisingly, Ulaanbaatar is quite modern with numerous restaurants serving international cuisines from American burgers and shakes to Singaporean Bak Kut Teh and Mexican burritos.

There was tremendous hype on the ground and overseas, and hype it was. That’s my personal opinion, having lived there for awhile and experienced on the ground what the place, the systems and the people are like. I was involved with bringing investors into the country and showing them the various investment opportunities in real-estate, mining, and capital markets and I personally was not convinced that Mongolia offers a great investment opportunity. There was too much risk from unstable political system to government regulations which could change overnight, wrecking any well-established plans. Like any other country coming to terms with its new-found popularity and its treasure troves of untapped resource deposits, there is a lot of governmental control and hoarding and only those who have connections to the upper echelons of the administration would be able to have a piece of the investment opportunity. Regulations and accounting policies are in a constant state of flux and often cannot be relied upon for accountability and comparability. Infrastructure is a major concern as the city appears to be buckling under the stress of a population that is expanding in tandem with capital inflows. People are coming in from everywhere around the world and also from the country-side. Young Mongolians are giving up their nomadic lifestyles for the comforts of the modern world. While new condominiums, commercial buildings and global luxury brand retail stores continue to sprout in the tiny city, nothing seems to be done to the roads and horrendous traffic conditions. The small two-lane main roads connecting most parts of the city will no longer be able to support the affluent population accustomed to travelling by cars, trucks and SUVs. I hope more will be done to improve these conditions, but there currently appears to be no proper plans to space out the developments or make way for transportation, as everyone continues to scramble for the scarce land that is still available for the next condominium. In short, there are many inhibitors in the near term and even the promise of the availability of rich resources and potential requires even closer scrutiny as current reports may be more hype than substance.

Caveat emptor!

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Investing in Mongolia?

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