Friday, December 19, 2008

electronic solutions for corporate governance

A recent news in India where a leading IT company announced its plans of acquiring a money-losing real estate company owned by the promoter's family created waves of questions about corporate governance in India.

It is known that promoters/managers have been taking the rest of the shareholders for a ride during board decisions, most of the times by using the 'independent' board members.

Numerous times, the managers have been either not disclosing the full agenda before the board meeting, or manipulating the minutes of the board meeting as per their own requirements.

An electronic solution where all shareholders can access and vote for a board agenda before the board meeting in a secure way could be helpful to organizations.

A weighted average of shareholders' opinion once accessible to the board would put an onus on the board members to take more responsible decisions.

Sunday, November 30, 2008

Need for a drowsiness causing gas

A family friend works for the special cell of Police in India, involved in fighting with terrorists and underworld.

I talked to him about the Taj Hotel incident and asked him if they could have used some gas to make all people inside the hotel unconscious, thus making it much faster to catch the terrorists and rescue the hostages.

He conveyed that the police does not use any such gases; though there are chemical gases like Chloroform, Carbon monoxide, Methane which can make people unconscious, these gases can kill people with their overdose.

A gas which would instantly knock-down people by making them drowsy/unconscious, in a medically safe manner could be useful in such operations.

Tuesday, September 23, 2008

‘Free Put options’ - catalysts to Mortgage Mess

Despite constant efforts for the last one year, the FED is now forced to offer a $ 700 B plan to purchase the 'toxic-debt', a term for under-performing loans mostly mortgages in different forms. Also, the size of the prime mortgages defaulting now is higher than the sub-prime mortgages.

Analyzing the problem with a bottom-up approach, the underlying cause of the problem is what I call borrower’s 'free put option'. A homebuyer in America gets a ‘free put option’ when he takes a mortgage. He can walk away from the property leaving it to the bank, as the collateral is the property itself and nothing else. Most states will not allow the banks to go after the home buyer's other assets or future income.

Further, banks now are offering short-sale opportunities where even the credit-histories of home owners are not affected.

In the last decline of real estate market, in the early 90s, borrowers displayed patience thru the downturn and did not use these options, probably because their down-payment was higher at that time.

If the decline in home prices continues, more homeowners – even those who can afford to make payments - would like to use the option, thereby increasing the size of the 'toxic-debt', creating a vicious cycle.

Thursday, September 11, 2008

Key to a successful M-Commerce transaction

Besides the ability to carry your mobile phone across the countries like Visa, the process for an m-commerce transaction needs to be much easier than what it is currently.

Currently, you have to send a text message to a particular shortcode. For eg you send a text message/SMS with details of the merchant code and $ amount.

Thereafter a few more steps are required to confirm the transaction.

However, the process should be much easier for eg pointing your phone's camera (used as a reader) to the BarCode chart of the merchant, and pressing an authorization code and amount on the phone.

Or it could use the bluetooth capabilities of the phone to identify the merchant's bluetooth equipment connected to a wired network, and paying directly - rather than thru the text messages/SMS.

Sunday, September 7, 2008

Need for a single phone device

I still need the following phones at my home: a fixed internet phone from zingotel, a usb-drive based internet phone from magicjack which I carry with me when I travel, my cellular phone and an intercom phone for the building security and other residents to contact us.

I have not mentioned our landline and my family’s other cellular phones here.

Altogether, these are a lot of phones and sometimes we have to run around between the different rooms to reach these as we hear a ring.

A cordless / blue-tooth protocol and equipment to receive calls from all these to one phone device would probably be helpful.

Tuesday, September 2, 2008

Credit Card companies vs Mobile Commerce

Mobile Commerce has started picking up in Asia now, though still selectively. Here you are able to pay on vending machines and automated ticket counters by sending text messages from your cellphones. Your cellular phone companies act as the creditors / intermediaries between you and the vending companies.

This process of payment would become more popular once you are able to carry your mobile phone to other countries. As the telecom Industry worldwide consolidates, you would be able to use your mobile phones in different countries without changing a SIM card and seamlessly without needing your telecom company's help.

That would be a time when many more vendors would start accepting mobile commerce based payment systems.

Also, upcoming technologies like Vanu would make telecom transmission being done thru the software in your handsets. Eventually, it would lead to changing telecom companies a matter of downloading an exe file, rather than changing a SIM card or changing the handset (from GSM to CDMA network).

Sunday, August 31, 2008

Greening of Home Cooling

When you ask for water in a United States restaurant, they serve it chilled, usually with ice. However, in Asia and some places in Europe, they ask you if you want the water at room temperature or cold.

Similarly, the cooling temperature at which people set their air-conditioners also changes from Individual to Individual. I like to keep it at 29 C, whereas some of my friends like it at 20-24 C.

This conveys the requirements for convenience change from person to person.

In India, people have been using earthen pots, like the picture I am attaching here for cooling water. It works on the principle of water evaporating from the pores of the earthen pot utilizing latent heat and making the remaining water cooler. In fact the higher is the outside temperature, the lower is the temperature of water in the earthen pot. My family prefers to use drinking water from an earthen pot, rather than from the refrigerator, as the temperature is much cooler than the tap water but warmer than the refrigerator water.

The electricity which is used in traditional air-conditioning systems is 3 to 4 times higher than the electricity being used by desert coolers or evaporative coolers.

These evaporative air cooling systems work on the basis of air being forced thru wet evaporative pads. Due to the latent heat being utilized for partial evaporation of water in the pads, it makes the air passing thru the water-soaked pads very cool. However, the humidity of the water goes up in the process and therefore these systems can be used only in relatively dry places and weather.

Wiki explains the process well at

In order to reduce the humidity, 2 stage air-cooling systems have been recommended. Frankly speaking though I have seen many single stage air-cooler systems, I am yet to come across any installation of a 2 stage air-cooler system. Here the air being forced thru water-soaked pads, is first pre-cooled thru a heat exchanger thus reducing the moisture carrying capacity of the air.

However, these 2 stage air-cooler systems still produce air with 50-70% humidity.

While thinking about how to make an efficient condensing process/reducing the moisture-holding capacity of air while still keeping the electricity requirements low, I came across the idea of a a marriage of the water-cooling earthen pot systems with the 2 stage air-cooling systems.

Essentially, the heat-exchanger system could utilize the cool water from a Large earthen material Tank in the first stage of the 2 stage air cooling systems.

I do not think that this design would be acceptable to all people in advanced western countries, but there are chances of it becoming popular to most cost conscious people of the developing world.

Tuesday, August 5, 2008

Registered email service

Nearly 30 years after PCs started becoming popular, paper still rules the corporate world.
With ‘green’ becoming popular and fashionable, something could be done to reduce the paper work.

Some organizations/people print agreement documents, sign, then scan and send it as an email attachment. The receiver also goes thru the same process.

IT guidelines from some government organizations and world bank require biometric authentication for document approval from officers.

Due to people leaving the organizations and their email accounts getting deleted, an exchange of email between organizations is still not considered good enough, though it has been approved legally in most countries.

A cayman islands company is coming up with a registered email service but it did not appear to be a complete solution.

A third-party service providing a secure place to save the electronic documents exchanged between organizations would be useful in reducing the paperwork between them.

It could be done with the a simple protocol:

- All organizations agree to a common box for cc of emails eg:

- All internal employees’ emails and their managers’ emails are arranged in a hierarchy. An automated process forwards emails received on ccbox with a copy to a particular employee to that employee’s manager.

- Company A’s officer sends an email to Company B’s officer with a copy to the registered email service provider eg:

- The creates a unique mail # for the mail and forwards the mail with the unique mail # to the sender, receiver and the and

- The automated process running on ccbox email id in each company forwards that email to the employee’s managers.

The registered mail service would make money firstly by putting banner ads at the bottom of these emails, and secondly by charging cash in case any company wants a copy of the email to be presented in a legal dispute from the registered email service company.

Saturday, July 12, 2008

Finance work aggregation portal

I met Khanan Grauer, promoter of financial portal during a guest speaking event in New York in May.

Despite so many financial portals in the market, he is trying something unique - though still at an early stage.

His pitch:
"Benjamin Graham, the father of value investing took five years to identify the talent and offer a job to Warren Buffet - the next greatest value investor. Most investment professionals are hired on wall street in less than 5 hours.
Fingad will aggregate the work of people doing investment to find top talent in the marketplace"

Besides aggregation and collaboration among his users for financial strategies, he will be working on providing tools on his portal which the financial Industry insiders use for analysis.

With so many scandals and bubbles bursting on wall street, there should be some new demand to utilize this website.

Domino's of Indian Food

I came across a unique and stylish Food Pack in Ahmedabad, India. It is delivered by a popular local restaurant chain. The Food Pack is in Domino's style Cardboard box. It is a pack of 2 Paratha breads, Rice, 3 Side dishes, One lentil, dessert (warm Gulab Jamun) and pickles packed nicely in a silver foil.

There was also a plastic spoon and some after-food 'mukhwas'.

The Food was very tasty and remained warm nearly 2 hours after it was packed.

The food was delivered within 30 minutes after I called the restaurant. The price was extremely reasonable (less than $2 per box).

This pack solved the major issue of finding quality Indian food, in right quantity, prepared and packed in a hygenic way, supported by a known brand, delivered to your doorstep in 30 minutes and another alternative to Pizza on Friday nights.

The concept looks very attractive - with right execution and management - it could be used for the making of a Domino's of Indian Cuisine.

PE or VC: What's in the name ?

Before working at a venture capital company, I tried for years to figure out how to quickly determine if something is a venture capital investment or a private equity investment.

Some suggested that private equity is a super-umbrella term that is called venture capital when the investment is at an early stage. However, some companies have operated for 6-10 years before they come for venture funding.

Others conveyed that Venture capital is the original term which became popular after the 2nd world war and private equity is the term coined in the 80’s after famous people like Henry Kravis invested in bigger companies.

Determining by size of the company also gets tricky, as revenue of $2 million might be considered small in a developed country but large in a developing country.

The size of the investment doesn’t work either if you base it on country. An investment of $10 million in a US based company would be considered a venture investment, but might be considered a private equity investment in the developing world.

Some professionals strictly define private equity as an LBO activity. But in developing countries like India, there is almost no LBO activity due to banking regulations, and yet billions of dollars are invested in large corporations by private equity players as equity or convertible debt. This sure looks like private equity investment, but does not fall under the LBO or MBO category.

There is also a conventional wisdom that says if a company is not yet successful but the promoter is very confident, it is a venture capital investment. Vice-versa, If a company is successful but the promoter is not that confident and wants to cash out or exit with restructuring or LBO, it is for sure a private equity investment.

Though there may be some truth in that, it’s not quite scientific enough and does not cover all investment scenarios.

So here’s my own litmus test: if a company has no additional debt (bank-debt) carrying capacity due to its current financial state, an investment in it should be considered a venture capital investment. Otherwise, it should be considered a private equity investment. This should work for companies of all size, stage and in any country.

Thursday, July 10, 2008

Is Reducing Principal a good principle ?

Ben Bernanke announced on 5th of May in New York ( that in order to reduce the number of foreclosures, he would encourage banks to reduce the principal amount from the under-performing mortgages or which are behind payments.

In a way this was already happening in two ways:

Hedge Funds are buying under-performing notes from banks at 40-50 cents on a dollar. They then negotiate with the homeowners and reduce their principal if they start making payments on time.

Also, Banks are allowing homeowners to do short-sale of their properties. In this case, a homeowner who is falling behind in his mortgage payments is allowed to sell his property at a very low price, with the bank agreeing not to go after the balance amount of the mortgage.

With the Fed also stepping in and with so many options to take advantage, it seems that homeowners who are falling behind their payments have not only a secure financial future, but a bright financial future.

The brightest among them are those who maxed out their home equity lines buying cars and other capital goods.