Book Review - Simply Fly

I just finished reading the book 'Simply fly' by Captain G.R. Gopinath and was fascinated by his ventures. From a Captain to a farmer to an airways owner (strikes a note similar to the movie Gladiator), the book does not bore once.

Early Days

Capt Gopinath was born in a remote village of Karnataka called Gorur. He saw early success in his career when he aced the Sainik school examination. Post Sainik school, he sat for UPSC and joined the NDA. He took part in the 1971 Bangladesh war as an intelligent officer initially and later got into the centre of action as a gun position officer (GPO). During a climbing expedition, he injured his arm severely and that got him thinking about his future career in the army. He felt that he no longer had the urge to strive in the armed forces instead he wanted to start new ventures elsewhere. His 10 year stint in defense taught him discipline, endurance and also flying (which would be the major driving factor later).

Farming and Politics

Capt Gopinath took a part of his family's land for farming. It was here that he innovated the most. He took the 'road not taken' and introduced some traditional and some unconventional methods of farming. While farmers added more and more chemicals (which is harmful to the topsoil) to keep the termites out of the farm, Capt Gopinath left aside the debris around the coconut tree as mulch. The termites ate the mulch and left the tree alone. He was also awarded the Rolex Laureate award for his eco-friendly ways of farming especially silk worm farming.

Along with farming Capt Gopinath started new ventures in the form of Motor cycle franchise (from Enfield) and maintenance shops. He also started an Udipi restaurant and also got down into agricultural consultancy which was hugely successful. Capt Gopinath also dabbled with politics as he contested for the state assembly elections in the support of BJP. Though, he failed in winning a seat he was exulted at his sheer determination in carrying out the task.

Deccan Aviation

I was enticed by the sheer no. of businesses that Capt Gopinath had got into. His strength lied in identifying a business opportunity and his ability to take risk. At this point of time, he further surprised me when he wanted to start Deccan aviation. The business opportunity that he saw was logical and simple. While developed and emerging countries had more than 100 helicopters, India had 10 (defense not considered). The need was always there. All that was required was starting the business (Why did not other people see it?). The toughest phase of starting the helicopter business (and maybe the reason for lack of start ups in our country) was getting through the bureaucratic tape (With the booming economy and many reforms it is much easier today). It took Capt Gopinath 2 years to get through the tape and an angel investor to get started (It is hard to believe that he got through without giving any bribes). Once the business kicked off there was no looking back. It was huge success as demand erupted in the form of tourism, medical rescues, marriages, aerial filming and photography.

Deccan Aviation (Helicopter)

Air Deccan

The LCC (Low cost carrier) was a familiar concept to the developed world. Ryan Airlines was a leading LCC airline in Europe and South-West Airlines in US. Capt Gopinath wanted to bring in a similar concept to India especially to connect Tier II and Tier III cities. The major difference between Deccan Aviation and Air Deccan was that Air Deccan was conducive to the political environment. It was seen as a political benefit. So getting through the tape was much simpler. LCC differs from other high cost airlines due to three factors - Inclusiveness, Innovativeness and Efficiency. They are -

1. High seat occupancy (varied ticket prices from Re 1 for early birds)

2. More flights per day (6-7 flights for each aero plane)

3. Cost cutting (no-frills) and point to point flying.

After the success of Air Deccan (It had 22% of overall air plane market), Capt Gopinath sold a majority stake to Kingfisher. I was disappointed at Capt Gopinath's decision. Capt Gopinath throughout the end pages accepted that he and Vijay Mallya had different philosophies and could not work together. But, he ended up selling Deccan to Vijay Mallya justifying the profit he got for his investors (Rs 155 for Rs 125 market price on the share). The other bidder was Reliance and even that would have been a bad investment as it would lead to blood bath (like in the Telecom). Instead he should have stuck with the company for a longer duration as business is all about long term investment and gain.

Market Share

Post merger, Deccan has been renamed many a time (Air Deccan -> Simplifly Deccan -> Kingfisher Red) but the impact was subdued. Deccan had about 22% market share in 2007, but after merger it has fallen and today Kingfisher (both Kingfisher and Kingfisher Red) has 21% market share. Deccan and Capt Gopinath would always be remembered for bring in the LCC model and changing the market dynamics, it created a new demand among the middle-income Indians. Like a true entrepreneur, Capt Gopinath has started one more venture, i.e. Deccan Cargo. I wish him all the success.

The book has many more fascinating stories and insights. It also has some wonderful quotations by renowned people. I loved the poem by Rudyard Kipling. The book is worth a read.

Banking - Foreign Banks vs. Indian Banks

I had a discussion about banking with my dad, DGM at State Bank of Hyderabad. During the discussion I asked him ' What is the major difference between Indian Banks and Foreign Banks operating in India?'. He replied that he could find two major differences -

1. The method of raising funds to mobilize. While Indian banks depend heavily on Deposits(80%) the foreign banks depend a little less on Deposits (50%). This helps them in getting the business done with lesser branches.
2. Foreign Banks had 33% of income from other income sources while Indian banks had less than 20% from other income. The below table shows the segmentation. This depicts that foreign banks earn a lot more income from advisory services.

My Two Cents on Best Picture Awards

The Academy Awards are scheduled to unravel on the night of 7th March 2010 (US Time). In the last 65 years(1944-2008), only 5 movies were nominated for the 'Best Picture' category. But, on February 2nd 2010 the tradition was broken and 10 movies were nominated in order to recognize more brilliant films that otherwise are squeezed out of the race. The ten movies have a cumulative box office collection of $4.3 Billion out of which 'Avatar' amassed a massive $2.5 Billion making it the biggest box-office movie ever. Though Box office collections show that 'Avatar' is a clear winner it may not be that simple in reality. 'Avatar' is recognized heavily for its digital technology than the picture itself.

The table below shows the Genre, Director, Rating and Earnings

The table below shows the IMDB user poll results for the Oscar best picture nominees

The above IMDB voting system is highly erroneous as many haven't watched all the ten movies (I am sure that the mean would lie between 3 to 5 movies with a 95% confidence interval). After my term exams in Feb, I had ample time and I watched all the ten movies. Hence, I write this blog to share my two cents.

'The Blind Side' and 'An Education'

Both these pictures are based on autobiographical memoirs. 'The Blind Side' is about the life of an American Football Star, Michael Oher, who finds his new Christian school very demanding. When Leigh Anne returns to her home from thanksgiving school function she finds Michael (called 'Big Mike') walking to Gym, shivering in the freezing cold. She pities his situation and offers him a place for the night. The rest of the story is how the relation between Michael Oher and Leigh Anne's family change their lives for the better. 'An Education' is about a schoolgirl 'Jenny' whose monotonous life changes into an enthralling experience when she meets a charming older man, David. Only in the end she realizes that David is married and she is one of the silly school girls who are taken advantage by rich older men. 'The Blind Side' has the best collections for a football movie while 'An Education' has a strong audience backing. The major positive for 'The Blind Side' is the action by Sandra Bullock (My choice for the Best Actress Oscar). Though these movies are classical they fall short for the Oscar as they are just simple feel good movies. My two cents: NO

'Up in the Air' and 'A Serious Man'

Financial Meltdown leads to Recession which in-turn leads to Unemployment that leads to pink slips and nervous breakdowns but for Ryan. Ryan and his company welcome such downturns as their job is to fire people for their clients i.e. the employees of their clients. Ryan has this unique concept called the 'empty back pack' . People should devour their relations and materialistic needs and adapt for change. 'A Serious Man' is a Jewish biblical story retold in the modern era. Larry Gopnik is in a fix. His wife wants him to file a divorce, his student's dad wants to sue him for accepting a bribe, his department committee is receiving defamatory letters about his tenure and so on. 'A Serious Man' falls short in the comical part. But, both the movies become intolerable to sit through. My two cents : NO

'District 9', 'Precious : Based on the novel Push' and 'Up'

District 9 runs on similar lines to Avatar, the difference being the Aliens visit our planet in this case. The rest of the story is about the inhumane humanity with which the humans treat the aliens. 'District 9' falls short in the fact that unlike Avatar it isn't convincing. Precious is about a stout black lady who is raped by her own dad. The story is well told and makes us pity Precious. The sheer racism of this movie might not get it an Oscar. 'Up' on other hand has nothing special when compared to Wall-E and other films. And Animated movies never won an Oscar. My Two cents : NO

'Inglourious Basterds'

Inglourious Basterds is a fictitious Jewish revenge against the dictatorship of Hitler. The entire family of a teenager Shosanna, who is allowed to escape, is killed by SS Colonel Landa. Lt. Aldo recruits eight Jewish-American soldiers (known as 'Inglourious Basterds') whose job is to kill the Nazis and create a fear in the hearts of the German. The rest of the movie is about how the Inglourious Basterds and Shosanna work independently to kill the Nazi's and end up successfully assassinating Hitler. Though, the movie is well taken it lacks moral depth and shows a magical vengeance against the Nazis. My Two cents: NO

This leaves us with -

'Avatar' and 'Hurt Locker'

Hmm… that leaves with just two movies as contenders for the Oscar. But, choosing between these movies is extremely difficult. While Avatar has the highest collection, Hurt Locker has swept the BAFTA awards. Avatar is a spectacular display of digital effects that left the audience in awe. Humans are after Pandora's natural resources for an element called Unobtanium and in the process they destroy the native Pandora tribe, Navi. Jake Sully is the only resort left for saving the Navi. William James on the other hand is busy defusing bombs in in Hurt Locker. James has replaced Sergeant Thomson who was killed by a remote detonated IED in Iraq. The movie is intent and thrilling especially in the scenes where James defuses bombs. 'Hurt Locker' is the best movie by far in capturing the situation in Iraq. It builds suspense and grips our attention till the end.

Verdict (probability of winning the best picture)

Avatar : 40%

Hurt Locker : 60%

*Note: It is difficult to criticize these movies convincingly as they have all been critically acclaimed. In the end Avatar and Hurt Locker become the choice because they shine in all the departments.

The Tipping Point- How Little Things Can Make A Big Difference

(Book Review - For My Marketing Course)
 

Introduction:

‘The Tipping Point’ by Malcolm Gladwell was first published in the year 2000. ‘The Tipping Point’ is a biography of an idea. Tipping point is a moment of the critical mass, the threshold and the boiling point. Surpassing this threshold point creates vast changes. Gladwell explains this moment shift with the examples of tremendous increase in sales of Hush Puppies shoes in 1994-1995, sudden fall of crime rate after 1990 in New York City and spreading of HIV virus.

The Three Rules of Epidemics:

Gladwell uses all of these examples to illustrate what he defines as the three principles of social epidemics: the law of the few, the stickiness factor, and the power of context. The Hush puppies is an example of the law of the few where one of the exceptional people with a large social connection found about this trend and spread the message across. He uses ‘Winston tip cigarettes’ to explain the stickiness factor, a message that you can’t get it off your head. And finally a crime scene to explain power of context that shows people are sensitive to their environment.

The Law of the Few:

The ‘Law of the Few’ has many commonalities with the 80/20 principle. 80/20 signifies that 80% of the influence is created by 20% of the people. If we look at the pyramid of influence the law of the few is about the trend-setters and early adopters influencing a greater mass.

The first kind of people the author describes is called Connectors. Connectors have a huge social influence due to their larger social circles. Influence of these connectors is illustrated by citing Milgram’s experiments in small world problem. Milgram’s experiment shows that all the people in this world are separated by just six degrees of separation. In today’s context, Connectors play an important role in deciding the fate of social networking sites.

The second type of people is Mavens. Mavens are the early adopters. They have a huge knowledge of the Market place. These people are kind of opinion leaders for us in our day to day life. We take the advice of Mavens before any purchase. And final type is the ‘Salesman’, a person who can persuade you with his negotiation skills. Gladwell explains this with the example of Tom Gau who sells financial services and Peter Jennings.

The Stickiness Factor:

Stickiness Factor means creating a message that keeps playing in your mind. Gladwell explains the stickiness factor with the Sesame street example. Though, television was perceived as a low-involvement product for teaching; Sesame used their creative teaching methods and made television sticky for the children. Blue’s Clue is another quoted example in the book for the stickiness factor.

Stickiness factor plays a major role in direct marketing for the job is make the consumer to remember your advertisement out of the other hundred other advertisements. Gladwell cities Lester Wunderman who was successful in creating the stickiness factor in his direct marketing program through the use of ‘secret of Gold Box’ campaign.

The Power of Context (Part One):

Gladwell's third principal is the power of context, the notion that epidemics are sensitive to the context, or the time and place, in which they occur. Power of context is equally important as the other two principles as shown in the Goetz case. Goetz case shows the encounter of four young black youths with criminal records by an angry subway rider in 1984 when the crime rate was high. Today such incidents wouldn’t happen due to the change in context. To explain the power of context Gladwell points to something called the Broken Windows theory. If a window is broken and left unrepaired, people walking by will conclude that no one cares and no one is in charge.

The Power of Context (Part Two):

This chapter deals with the cognitive philosophy called channel capacity, which refers to the amount of space in our brain for certain kind of information. The most interesting limits in the channel capacity is the social channel capacity, the number of people with whom we can have a genuine social relationship. This number is pegged at 150 for the humans based on historical studies. ‘The rule of 150’ suggests that size is another contextual factor. The size of functional fighting units in army should be 150 or less beyond which people do not familiarize with each other. Does it still hold in the social networking world? We have to wait and watch.

Case Study – Rumours, Sneakers and Translation:

The case study is about the rise and fall of Airwalk shoes. Though, the brand initially targeted the skateboarding subculture of Southern California they wanted national brand name recognition. They hired an advertising agency and succeeded by understanding the variables that influence the public’s perception of coolness. Their avatars of coolness, such as Tibetan Buddhism, Pachuco gang culture positioned their shoes as cool footwear. But, when Airwalk cut their product line into single line of shoes and decreased their product breadth it lead to their decline.

Case-Study – Suicide, Smoking and the search for unsticky cigarette:

This case draws a relationship between the suicides among adolescent males in Micronesia and the teen cigarette smokers in the United States. Both trends were predicated upon two main factors. First, teenagers imitate others and try on new behaviours and attitudes during adolescence. Second, it is the Mavens who engage in early cigarette smoking or suicide and as they are like opinion leaders other emulate them.

Conclusion:

The author summarizes the preceding seven chapters. He believes that the difficulty and volatility of the Tipping world can also generate a large measure of hopefulness. By manipulating the size of groups, tinkering with presentations we can dramatically improve the receptivity and stickiness factor respectively. Gladwell concludes ‘With the slightest push in just the right place the world can be tipped’.

Social Networking Sites Analysis

(Co-authored with Pujitha Kalluri. This article is just a section of the paper presented at NIT Warangal Cura)

Through the ages, 1976 – 2009 social networking sites had seen many trends. The older versions like BBS, CompuServe are almost extinct and sites started in 2003-2004 like Facebook, Myspace are now the major networking sites. The user base too has seen a tremendous increase from a few thousand users to more than 1 Billion users today. Looking at the network traffic and reach of the websites will help us in identifying the changes in trends. The five major networking sites today are Facebook, MySpace, Habbo, Orkut and Qzone with each of them boasting more than 100 million active users. But Habbo and Qzone have no presence in India. Instead of Habbo and Qzone we can consider Twitter and LinkedIn who have a base of 50-75 million users and have a major presence in India. These five sites Facebook, Myspace, Orkut, Twitter and LinkedIn put together boast of 700 million user accounts. If we look at the trends of these five sites they have been vastly different. These trends can be observed using network traffic, daily reach and time on site.

Daily Reach:

Daily Reach means percent of Internet Users visiting that particular site. If we look at the 2008-2009 graphs for daily reach we see significant changes in just the two years. Facebook has shown the greatest increase from 8% reach in the beginning of 2008 to 30% reach in December 2009. Twitter on the other hand has grown from zilch to 5% daily reach. Orkut fell in the first few months of the year to almost 1% reach but then rose steadily to 2%. Myspace had a steady fall from 7% to 4% reach. LinkedIn saw a steady increase to 2% reach from less than 0.5% in the beginning of 2008.

Fig 2: Daily Reach (2008-2009)

Fig 3: Daily Reach (excluding Facebook)

Time spent on site:

The time spent on site is helpful in analysis the attractiveness of the social networking site. Facebook has seen an increase from 22 minutes in Jan 2008 to around 35 minutes in December 2009. Orkut has seen a drastic fall from 45 minutes to less than 5 minutes showing that the users are less interested in spending time on the site. Twitter, Myspace and LinkedIn are more or less stable without much change in time spent.

Fig 4: Time spent (2008-2009)

Network Traffic:

Network Traffic is the most important factor to consider a site’s success. Traffic can be generated by attracting more users to the website and keeping them engaged. Traffic Rank is calculated using the average of Daily Reach and Page-views of the site. Facebook has gone up the charts to Rank 2 only next to Google. It overtook YouTube and Yahoo in its journey. Orkut fell from 10^th position to 60^th position in Network Traffic. Twitter has seen the most significant increase among all the sites from 3000^th rank to 14^th rank. MySpace saw a fall in ranks though at a much lesser scale than orkut. LinkedIn rose from 200^th rank to 50^th rank.

Fig 5: Traffic Rank (2008-2009)

Analysis of Network Traffic:

Even though the data analysis is for just a two year period the change in trends is clear from the above parameters showing the transient nature of networking sites. While Facebook and Twitter had grown in network traffic, Orkut and MySpace fell. Orkut not only lost the reach but its existing users are also spending lesser time on the website compared to 2008. Myspace has lost reach but its existing users are spending the same time they had spent two years ago on the site. LinkedIn a site started in 2004 has grown steadily across the years the variations have been stable rather than spiked. But, the above analysis does not show why people have switched networking sites? What causes people to switch?

The internet says that micro-blogging has become a craze due to the increase in mobile phones. Twitter and Facebook provide a simple interface for micro-blogging when compared to other sites. Facebook also has many applications support services like Mafia wars, Farmville and so on that attracts many users. People also feel that Facebook provides more privacy and security features than orkut, orkut has controversies like ‘I hate India’ communities. Orkut has been banned in many countries like Iran and UAE. Orkut was also vulnerable to many virus attacks. Psychologists also feel that the name ‘Facebook’ has got a lot to do in attracting visitors.