Modest beginings

I have always been interested in the history of business and draw a lot of inspiration from the great entrepreneurs of our times. What they have achieved is truely great, but how they started is even more amazing. John Rockefeller started his career as an apprentice bookkeeper in Cleveland, OH and created Standard Oil from scratch. At one point he accounted for 10% of America's wealth! Andrew Carnegie, son of a hand loom weaver, came to America when he was 11 years old and started working in a cotton factory. He "owned" the steel industry at one point and helped propel America to the forefront of the industrial revolution. We have more recent success stories like Michael Dell, Larry Ellison, Bill Gates, Warren Buffet etc. What is it about America that makes people dream big? There is something awesome about this country that other nations should try to emulate. Honestly, I don't know the answer. I come from a family of farmers from India and my father was the first one to break the convention by joining the armed forces. I don't know from where I mustered the courage to start a software company right out of b-school? I met some truely amazing people when I first came to America and can attribute some of the inspiration to those folks. Yes, I have been lucky in this aspect. But there is something about this country that brings out the best in people. One of them is this sense of empowerment and equality. There is this unfliching faith in the future, that it will be great if you work hard.

Sounds like a 4th of July type of post :-) Never intended it to be that. But hey, its the right time of the year to salute the American spirit. I will end this post by lobbying for keeping the inheritence tax (there is so much talk about it nowadays.) Nothing is more imporant than aspiring to have a level playing ground. I couldn't find a more appropraite quote than this one by Warren Buffet - "Repealing the estate tax would be equivalent to choosing the 2020 Olympic team by picking the eldest sons of the gold-medal winners in the 2000 Olympics."

Shift in Economic Power?

The latest edition of the World Wealth Report was released today. It has some interesting information about the high net worth individuals (HNWI) - there 8.7 million millionaires with a total net worth of $33 trillion. India has a total of 83,000 millionaires (with financial assets greater than $1 million.) I thought there were a lot more.

I found the the GDP growth rates quite interesting. We can clearly see the shift in economic power - France (Real GDP $2 trillion), United Kingdom (Real GDP $2.2 trillion) and Italy ($1.7 trillion) have aging populations and a declining GDP growth rates. Compare them to India ($1 trillion) and China ($2.2 trillion.)

In America Work Is Less Identified with Employment?

A freind pointed me to an interesting essay by Paul Graham. Got me thinking. Having done a startup myself, I completly agree with Paul. The concept of "employement" and "job" is deeply embeded in the psyche of some people in places like India and it is difficult to change. We see this pattern in some parts of the US as well.

Here is part of the essay:

In America Work Is Less Identified with Employment.
The problem in more traditional places like Europe and Japan goes deeper than the employment laws. More dangerous is the attitude they reflect: that an employee is a kind of servant, whom the employer has a duty to protect. It used to be that way in America too. In 1970 you were still supposed to get a job with a big company, for whom ideally you'd work your whole career. In return the company would take care of you: they'd try not to fire you, cover your medical expenses, and support you in old age.

Gradually employment has been shedding such paternalistic overtones and becoming simply an economic exchange. But the importance of the new model is not just that it makes it easier for startups to grow. More important, I think, is that it it makes it easier for people to start startups.

Even in the US most kids graduating from college still think they're supposed to get jobs, as if you couldn't be productive without being someone's employee. But the less you identify work with employment, the easier it becomes to start a startup. When you see your career as a series of different types of work, instead of a lifetime's service to a single employer, there's less risk in starting your own company, because you're only replacing one segment instead of discarding the whole thing.

The old ideas are so powerful that even the most successful startup founders have had to struggle against them. A year after the founding of Apple, Steve Wozniak still hadn't quit HP. He still planned to work there for life. And when Jobs found someone to give Apple serious venture funding, on the condition that Woz quit, he initially refused, arguing that he'd designed both the Apple I and the Apple II while working at HP, and there was no reason he couldn't continue.

Google Spreadsheets

Its awesome! I love it. Am I ready to make the prediction that MS's $10 Billion Office suite is in big trouble? YES. ABSOLUTELY. I don't know how Google will monetize this tool, Writely or any other productivity tool. But this sure is a great offensive play. I would love to have a baisc offline editing tool to augment the online version. I am glad that we finally have an alternative to Office. Its very liberating. Microsoft has to start worrying. I don't know why MS is so slow to react to anything nowadays. Maybe its their size. Maybe they are not hungry anymore. But they sure are in trouble.

Healthcare reform

It is always fun to listen to different perspectives. A colleague at work has some very interesting take on economics and the role of government. He calls himself a "classic liberal" and believes that the role of government should be reduced to the minimum. The guy is very smart. And you do listen and respect opinions of smart people. Got me thinking. I agree with him that the government almost always creates a mess - look at social security, healthcare, foreign policy etc. We can all agree that these things need some heavy duty fixing.

Anyway, we were discussing the role govt should play in healthcare (if any.) In an ideal world, the market should dictate the supply and demand for such services. But we do not live in an ideal world. The supply of doctors is controlled by a strong lobby in Washington. This powerful lobby makes it so difficult for newcomers that we will never have enough doctors. And these guys continue to make 7-digit salaries. We all know what the evil HMO's do to the cost of healthcare. What is the common person supposed to do? How can the normal Joe maintain his trust in the system that is heavily controlled by special interests? All you guys who believe in market equilibrium should take a step back and think about the reasons why "market equilibrium" maybe difficult to achieve and may cause a lot of social tension. We all want a stable and prosperous society that encourages entrepreneurship and rewards hard work. At the same time we have to make sure that people are not left behind. Social and economic tensions cannot be good for a free market economy.

I will end this post by saying that we should avoid letting our personal economic conditions dictate our thoughts. At one point Milton Friedman was a big believer in Keynesian economics.

Economic Inequality

A friend, who is an ardent capitalist, and I got into a discussion about the role of government, education and economic disparity. This discussion prompted me to do some research in this area and the results were startling. First I looked at the Gini coefficient, arguably a good measure of inequality. Higher coefficient means more inequality. India, Canada and even Bangladesh have more equality than the US! Take look at the map and you can draw your own conclusions.

United States, the world’s richest country, has 271 Billionaires and 35 million people below poverty line (defined as annual family income less than $13,000). Top 1% of the population (owns 40% of the total wealth) has more wealth than bottom 95% combined. I am big believer in capitalism and laissez-faire economy, but it gets tough to argue that we are better off following this socio-economic paradigm. And please take note of the graph peak - 1929.

I am not smart enough to argue difficult public policy decisions, but how can US, the richest nation in the world, keep justifying not providing universal health care to its citizens. We are talking about 35 million people below poverty line and close to 20% of the population without health insurance. What good is freedom without welfare and social justice.

Tale of two visionaries

There are some people who come up with amazing concepts, change the industry landscape and never get any credit. We always talk about the likes of Henry Ford, Bill Gates, and Steve Jobs but I have not heard people talk about contributions of Preston Tucker and Adam Osborne - two amazing guys. Both were ahead of their time but a few strategic mistakes cost them dearly. Well, it is always easy to look back and analyze what went wrong but that's beside the point.

Tucker ran into a very powerful "Detroit Big-3" lobby and in hindsight should have managed government relations better. The automobile he designed, "Tucker Torpedo", was way ahead of its time in terms of elegance and safety features. "Tucker: The Man and His Dream" is a movie made on Tucker's life and is a must see if you are interested in history of business.

I don't remember where I first read about Adam Osborne but his story prompted me to write this post. An amazing visionary who arguably changed the computing world by creating a mass market for portable computers. He led a very interesting life - started his career as a chemical engineer and then got into computers. After Osborne Computers went bust he started another company to create software for the masses. A patent case caused this company to go under as well, but this probably was the first attempt to create software for people like you and me. Osborne, in 1984, thought that India will become an engineering powerhouse. Amazing foresight!!

If we look at the two industries now we can appreciate these two visionaries even more. Auto industry tries so hard to make automobiles safer and more elegant. Tucker thought this was the way to go way back in 1946. And I don't need to discuss the market for software/hardware for the masses.