Reflections on Warren Buffet

This is a blog, about how my thoughts, were shaped on investing in stocks. A personal history, starting with my nascent ideas or rather lack of it, then the time I meet Warren Buffet( well, digitally ), and then how my thoughts were forever reshaped.

In the summer of 2006, I started to get my feet wet in the game of stock investments. It was not because, I had a passion for it, but because, people around me were doing that. I thought, it was really cool to give opinion on companies and their stocks, like others. In retrospect, this pseudo desire looks to be quite common across, and for the curious, a neuroscience field called mimetic desire explains this, through mirror neurons. 

Sorry for the digression. So, what next? As a true novice, there was no methodology followed. Investments were based on tips and stock recommendations from friends. And I always felt, the right time to buy stocks, was when the stocks are going up and sell when down. Next, became a pseudo intellectual, by watching  CNBC and NDTV Profit, following the ups and downs of the Sensex. And got carried away, every time, ET printed news articles, mentioning that investors were robbed of their money, due to crashes. Finally, I got excessively interested in graphs and candlestick ones became my favourite. How farther from the truth could I have been?

Somewhere, within a year, one of my friends, sowed the name of Warren Buffet in my head. Then I chanced to read an article on him and got completely bowled over. I am not sure, on how you feel when a thunderbolt strikes you, but I got that feel then. Next, soaked up all googly( ie available ) information and books about him, and finally his biography. And if this aftermath, was not enough, I came across Charlie Munger, his partner. His thoughts were even more electrifying than Warrens. You can imagine a helpless, shock ridden me, sitting with all these thoughts in rings around me. I had to unlearn all the pseudo learning that I had, and relearn the basics of investments again. This is what a convert might do, since I had to shift my religious beliefs on investments.

For the uninitiated, Warren Buffet is the second richest person. He has an investment philosophy, with a simple set of rules. But the combination of such rules, have given astoundingly complex results. His holding company, Berkshire Hathway, has more than 103 companies, under it, with just 13 people sitting in its headquarters, with a cash reserve of 40+ billion dollars. A highly decentralised organisation, with a centralised finance control.

So, what are those simple rules, that resonated in me so much? Margin of safety, focus, and moat of a company.

Two things were very interesting about these rules. One, that it was too simple to understand but difficult to implement. And the other, was the discipline of sticking to such rules over long periods of time, can lead to outstanding effects.

Margin of Safety

Margin of safety, a term I was used to, in Strength of Materials class in college and never in my dreams excepted this to be used here. A term in which if you do a google search now, you will end up in finance websites, instead of engineering ones. So, what does it mean here?

In Warren Buffet world's of finance, every stock, company, business, asset etc has an intrinsic value, the value its truly worth. So, if you are purchasing it to less than this value, then even in the worst case scenario, you are not going to lose your capital. For eg, if you are buying the shares of a company for less than its book value, then even when the company is liquidated, you are going to get your money back. And there are many a times, when the share prices of a good company, trades at less than this value. The astute investor, waits for such opportunities to buy these  shares, instead of buying during boom times, or when everyone knows that the company is doing well. Some also call this contrarian investing, but in my opinion, this is what investing should mean.

For example, around 1964, American Express took one of the worst hits in a scandal called Salad oil. Its subsidiary, vouched for salad oil in tankers, used as collateral for bank loans. Later, it was found that these tankers had water, with oil floating on top :) Promptly, American Express stock dropped 50% and many feared the bank would go bankrupt, which made it fall even further. But Warren Buffet's eyes saw a different viewpoint. He decided to make a huge investment in American Express after having lunch in a restaurant and seeing people around him still use their Amex card, oblivious to this scandal. Although the company made a very bad investment and did a poor job of due diligence it survived and thrived. Its main product, credit cards would always be needed. This is the simple insight that is required for smart investing. So, apart from  betting on the long term prospects of the company, you need to buy it when its prices are falling down. 

In summary, you need to buy that dollar for 80 cents. I leave the excited reader to dig more into finding intrinsic value of a company. But always, remember that, its not just the math and excel sheets that are important here, since everyone has one : But good judgements, in your ability to see the future through the present clutter. Well, for a trivia, Warren Buffet has never touched a calculator in his life, forget excel sheets.

Focus

In a college lecture given to business students, his advice was the following : You are going to get a punch card, which has only 20 businesses in it. Every time, you make a decision, they take a punch, and when the 20 are gone, you are all done. Now this is the tricky part, you are allowed only these 20 punches in your lifetime to make. You are not going to get another card.

Now, this changes the ball game completely. People are used to so much of trail and error. In this age, where we can buy and sell stocks at the click of a button, its easy to get into the loop of hearing to recommendations, buying, waiting for some time, getting impatient and selling it - Just because its all so easy. While your good old friend, may have had the best of intentions when he gave you the stock tip, he didn't know that much about the company either. He bought it after getting a hot stock tip from someone who heard on ProfitTime. And ProfitTime, had an analyst, who upgraded this to "strong buy" and the analyst would not be knowing much more than what your friend knew. But all that is required, is for you to do your homework and take time to really know a company. Then you don't need confirmation from your peers, or immediately from the stock market for it.

Fine, back to the punch card theory. So, what do we learn from the punch card theory? Two things.

One, when we have constraints erected on us, then this forces us to think more deeply. A trail and error game or lets check if it works methods are easy, and leads to lot of action and adrenaline flowing. But we should not confuse, constant action with productivity. Long periods of inactivity, followed by sporadic action, can be more effective than frequent action.

This theory struck me so much, because even in the world of programming, which is closer to my home ground, this theory holds good. Had a related anecdote in the world of programming to tell here. Though this is not necessarily true, the core message is same. In a programming contest, Donald Knuth, the author of the multi volume, The Art of Computer Programming, won it, by writing the fastest running algorithm. This was done on the worst system with remote batch called Wilbur system. And was asked, "How could you possibly do this? ". And he answered, "When I learned to program, you were lucky if you got five minutes with the machine a day. If you wanted to get the program going, it just had to be written right. So people just learned to program like it was carving stone. You sort of have to sidle up to it. That's how I learned to program." In today's programming world, where computing power is so cheap, just because trail and error is so easy, people think debugging is fun. But actually what this means, is that, well thought out designs have gone missing. Clarity of thought, just using pencil and paper, cannot be substituted by technology.

The second thing, is why only 20? What this means is that in your lifetime, we are not going to get that many great ideas. So, this really means saying no to the 1000s of mediocre ideas that come our way. Again a related quote that comes to my mind is from Steve Jobs on focus :

"People think focus means saying yes to the thing you've got to focus on. But that's not what it means at all. It means saying no to the hundred other good ideas that there are. You have to pick carefully. I'm actually as proud of the things we haven't done as the things I have done. Innovation is saying no to 1,000 things.”

Well, at one point in 2001, there was lot of pressure on Apple, to make a palm pilot, since that was the fad of the day, But if they had done it, we would never have got an iPhone.

So, in summary, the punched card theory is a powerful concept, a concept which needs to be taught in schools and learnt very early in life, instead of reading about it, through this blog.

Moat of a Company

So, we know the rules of investing now and we need to find, on which companies to bet on, since we now have only 20 chances ! Enter the third rule and one for which I have a deep personal interest : the ability to identify the moat of a company, the qualities of a good business and separating the signal from the noise.

Let me first start with a question, name the top three innovative companies? Answers can be easy, ranging from Apple, Amazon, Google etc. But if I change the question and ask you, from this list, identify the companies, that will hold on for the next two decades? Now, you start to think a lot. The  Microsoft of last decade is going down, the DEC, Data General of the minicomputer fame are museum pieces and their history's are archived now. And Apple will become Orange tomorrow.

So, how many of these companies do you think can survive the next decade, or even the next hundred years? How many of these companies, can survive the innovators dilemma, where technological obsolescence and a complete business environment change, grounds such innovative companies back to dust? A Shell study, mentions that the lifetime of a Fortune 500 company is only 40 years. So which means, companies live and die like us and there is a constant churn here. By any chance, if you are working in the fourth decade of your company, be more careful. 

And on the other hand, you have companies like Coke, which have survived a hundred years. It also has the record of the only company with an unchanged product, for the last hundred years. You would hardly call this innovation by today's standards. A few other similar companies are sampled here : these are the likes of Gillette, Wrigleys, Nike and Procter and Gamble. So, what have they got, that others do not have ? An enduring moat, that protects them from competition and technological obsolescence. No two guys from a garage are going to uproot them. Or even if I give you a billion dollars ( not that I have ), you are not going to make a dint in them.

Lets us analyse their commonalities in more detail. 

Foremost, they have simple products. Who can't understand or have not used their products? 

Next, such products satisfy a basic human need. And they have to be purchased again and again. This means, that their market is never going to vanish. People have to drink, shave and clean themselves and their clothes, change their sanitary pads, whether we live in 1910s or in 2090. This guarantees a close to future proof market. You cant obsolete such things by technology, nor are they so attractive for startups to attack.

Sure, they differentiate like hell. Through their branding, marketing and packaging, these companies have associated their products with quality, right from the word go. When they started, all their founders had the vision to build a great company, which can stand the test of time. For eg: In the case of Nike, they would never advertise their shoes, or even benefits of their shoes. All their ads, show great sport persons, like Michael Jordan, Tiger Woods, Federer, Sachin, Dhoni etc. With this, they create a tremendous amount of association in us, that Nike means great quality, which even the top sport persons wear. In fact, now, all their ads, just contain their tick mark(swoosh) sign with their “Just Do It” tag. And Coke, does massive advertisements, associating their brand with happiness.

Which means, over the years of such exposure, we have subconsciously built in associations or perceptions on such brands and our mind share on them is already altered. And its through this, they get their market share and not the other way around.

Due to the above characteristics, they have the third weapon : Which is the ability to increase prices but still their demand does not drop. This is possibly the  most important weapon in the battlefield of capitalism. Your business should be inflation resistant and price insensitive to the maximum possible extent. Many good to great companies, fall prey to price wars, or lose their ability to come out of troubles, since they have to pray after increasing their prices. 

And finally, such products have a global market. Again, their market size is directly proportional to the addressable population. In fact, they do not need a redesign for every market they want to capture. Whether in US or India, the Coke taste is the same. The chewing gums are same. Since, these products are closely related to habit forming products, there are very little changes required or innovation required to churn in more revenues, in new markets. Interestingly, when Coke tweaked with the taste of Coke, to something called New Coke in the 1980s, there was a customer backlash and they had to move back to their original taste. Such are the habits of people.

Now, lets look at a few examples on how these characteristics come into play, in real life.

In one of Warren Buffets company, See's candies, a chocolate company in California, every year for 19 years, the prices of candy was raised on Dec 26 and everyone kept buying candy. The candies had an emotional attraction to people, who used it for gifting to their near and dear. In another Warren Buffet owned company's which made linens, every ten years, when the prices were raised even by a fraction, the linens were thrown back. Why? Because the end customers did not care about the linen used in their suits. For eg,  Nobody cares what kind of rubber linings goes into a car. Have you ever gone into a car dealership to buy a Toyota and said “I’d like a Toyota with rubber linings that came from the company RubberMania" ?

Now, lets take the case of the "Intel Inside" advertisements, that we are frequently exposed to. Intel, being a technology company, has survived so far and this tag line contributes a lot to that. If PC buyers, did not bother what kind of CPU runs inside, then would an Intel have survived today? Do you know any other brand of the other parts of your PC, be it the memory, buses, hard disks etc? The CPU is an obscure component inside the PC, which the layman can't even identify correctly on the mother board, let alone understand how it works. But still his decision is based, on whether its an Intel processor or not. He thinks twice, if you say it has an AMD inside, though he can't make out the difference between the two.

Or if you go in to a shop and say “I want to buy a Gillette razor" and the guy says “I’ve got an unmarked shaving blade that’s 20 percent cheaper,”, what will you buy? I bet you would walk across the street, to buy the Gillette razor.

So in summary, a combination of simple products, close to habit forming patterns, with a powerful branding and packaging exercise, almost implies that, such companies tend to dominate their market place. For example in India, there is no worthy second competitor to Gillette. And this ensures, that they can keep rising prices far easier than other companies, which have to compete in a perfectly competitive world.

Indian Context

So, what's in it for me personally? Well, with these models, I applied a few nifty tricks while investing. In the Indian context, I could identify a pool of companies, which are worth investing long term. The usual suspects are Gillette( also part of P&G ), Procter and Gamble( which sells only Vicks and Whisper in this company ) are for sure worth investing at the right price. Especially, if you had bought them during the 2008 recessions, they are more than triple now. Then there are the pressure cooker companies, the likes of TTK Prestige and Hawkins, which are the branded rice cookers used throughout India. It is a must in every household, and no one is going to change their habit of eating rice to corn in a hurry.

But my biggest catch was Glaxo Consumer Health Care during the 2008 recession, when these FMCGs companies, were priced very low. In India, this company's flagship products are Horlicks, Boost and Crocin. Currently, with a sales turnover of, 3000 crores plus, net profit margin of 14 percent, and a ROCE of close to 50 percent, it was a steal in 2008, just due to the recession rounds, and not anything to do with the health of this company. Horlicks and Boost are being packaged as nutrient drinks for kids, and they have really captured the mind share of mothers in this segment. Their prices have been on the upward march all along, but mothers are surely not going to compromise on their kids nutritional drinks, just because they cost a little more. They might starve, but always provide the best for their kids. Simple insight, isn't it?

Now, tell me, can such companies, with their brands and solving basic human needs, go out of business, in the next 50 years ?

Then, I could capitalise on the rare moments : when for example, there were rumours in 2008, that ICICI bank had run out of cash and its stock price ran down the cliff. That reminded me of the American Express Salad oil scandal !

So, if you have really managed to come so far,  can you ever be the same again?

References

1. http://www.baskinfinancial.com/main/the-salad-oil-scandal-american-express-warren-buffet-and-why-you-should-buy-manulife/

2. Warren buffet lectures

http://www.tilsonfunds.com/BuffettNotreDame.pdf

3. Rumors Spark Run On Indian Bank

http://www.forbes.com/2008/09/30/banking-india-icici-biz-wall-cz_mb_0930icici.html

4. Life span of a company

http://www.businessweek.com/chapter/degeus.htm

Incentive Caused Misbehaviour

Imagine this : You need to hire a person, to do things for us, on our behalf. We do this time and again, because we either don't have the skill set or time to do it on our own.

So, what do you do to get the best output? You immediately start scrounging for the best set of carrots and sticks to be used. Simple enough. In academic parlance, this is called principle of reinforcement, operant conditioning etc. And a mountain of work was done on this, by the psychologist, B.F.Skinner. He even invented the Skinner box, and made many a rat suffer, with electric shocks as punishment.

To the rats relief, Skinner finally concluded that rats and human beings change behaviour when presented with rewards and punishments. But the secondary effects, were missed out during these experiments. 

When extended to human beings, our behavioural algorithms turn clever. We start to game the system to maximise our rewards and minimise punishment. And then post rationalise that its morally correct, even when such behaviour is wrong. This in effect, is "incentive caused bias/misbehaviour", an improper behaviour caused due to incentives, but which according to us, is still right.

First, let us study a few examples of seemingly good natured incentives, but with deleterious consequences.

In a product company, that I knew, the developers and testers were rated based on the number of bugs fixed and opened. So, people with highest number of bugs opened/fixed were giving higher ratings. This incentivised, the QA folks to keep opening all sorts of bugs, trivial, extremely rare, reopen reported ones etc. The developers were more than happy to fix such ones and increase their bug fix level as well. This vicious cycle continued, till that unit was closed.

Typically, when you incentivise developers to ship a product in time, you end up with more bugs. When you insist on lesser number of bugs, then you ship too late(5). Similarly, if HR is incentivised on increasing the number of recruits per quarter, the quality of the recruits drastically drops.

So, this in effect brings out the non triviality of designing carrots and sticks. And in incentive program's, what is measurable is not always meaningful. 

Now, that we had a glimpse into this bias, let us explore around, and try to explain much of human behaviour through this lens.

Why do real estate brokers show us first the bad houses, before they show the good ones?

Why do mutual fund managers, fund houses, stock brokers always make money, while the customers lose?(3)

Why do celebrities, pose for vests, briefs, toothpastes,  and any other thing under the sun, which they themselves will not use?

Why do dealers always push their high margin products, even though it does not satisfy our needs? Early in the history of Xerox, founder Joe Wilson, couldn’t understand how their better, new machine was selling so poorly in relation to their older and inferior machine. He found out later that the commission arrangement with the salesmen gave a tremendous incentive to the inferior machine.(1)

Why do PC manufactures not sell non Microsoft operating systems? Microsoft increases the price, and gives part of the increased margin as a rebate to dealers(2)Well, so does an Intel incentivising their dealer channels.

Why do many doctors, prescribe specific drug brands, prescribe more tests than required and affiliate themselves to certain diagnostic centres? (4)

Why cardiologists refuse surgeries, for high risk patients? (8)

Why do kids cram so much of information, just before an exam, without any understanding? When their real incentive is not in the pleasure of finding things out, we have lost many a young Feynman.

Why Sony never came up with an iPod? Sony had multiple business units as silos, each incentivised on increasing their revenues and protecting their fiefdom. In 2009, they finally released two different portable players, each from a separate unit. And their third music business division, refused to share the music content, with these portable players. They did not come together, in what is  in the best interest of the user, but each did what is individually correct for them. Think Apple now.(7)

And finally, why you should never ask a barber, whether you need a haircut, more so if you are bald.

"Tell me what your incentives are, and I will tell you how you behave" - Warren Buffet

So, how do we fix this? There is a short and a long answer.

The short answer is we should stick to our moral obligations. "Do unto others, as you would have them do to you". So, don't sell anything, which you yourself will not buy. Easier to write about, but difficult to follow.

The longer answer, is understand your goals correctly, design your incentives in alignment with this and build in anti gaming features.

In the 1860s, the British Government contracted with the ship captains to transport prisoners to Australia. The survival rate of prisoners was only 40 percent, during transportation. Despite many appeals, by humanitarian groups, nothing changed. Till an economist, Edwin Chadwick, recommended a different incentive scheme. Instead of paying the captains, a fee for every prisoner entering the ship, the fee was changed to every prisoner who walked out into Australia. The survival rate increased to 98 percent.(6)

Similarly, Mayo Clinic, started paying salaries to doctors, instead of a cut in the clinic's revenue. This way, the doctors role would be to focus on what is good for the patient, rather than how to increase revenue. It also solved the unnecessary tests being prescribed issue, bringing down the medical costs.

In the same vein, the retail staff of Apple retail stores are not incentivised on up selling, cross selling  or commissions. They are just paid to help the customers choose the right product.

And finally, let us see how a cash register is an anti gaming feature. In 1889, Sam Patterson, running a couple of retail stores, lost 6000$/year due to dishonest clerks. On buying a cash register, his stores immediately went to profitability, with the same set of clerks. His tallying and accounting problem got solved. Smart, that he was, he went into the cash register business, and that is the birth of National Cash Register(NCR).

So, the next time you are about to rationalise your behaviour, because of your incentives, its time to remember this article again.

References

1. Psychology of human misjudgement talk by Charlie Munger

2. Jean-Louis Gassée on why PC manufacturers don't sell non MS products ( http://lists.essential.org/info-policy-notes/msg00005.html )

3. Where Are the Customers' Yachts: or A Good Hard Look at Wall Street (Wiley Investment Classics)

4. The Cost Conundrum - What a Texas town can teach us about healthcare

http://www.newyorker.com/reporting/2009/06/01/090601fa_fact_gawande

5. Marc Andersson on The Psychology of Entrepreneurial Misjudgement

6. For more on this example, see Robert B. Ekelund, Jr., and Richard Ault, Intermediate Microeconomics: Theory and Applications (Lexington, Mass.: D.C. Heath and Company, 1995), pp. 21–22.

7. Why Sony missed the iPod?

http://www.mediapost.com/publications/article/99726/#axzz2ZVyXLOpd

8. When Doctors slam the door

http://www.nytimes.com/2003/03/16/magazine/when-doctor-s-slam-the-door.html?pagewanted=all&src=pm

My Reflections on Steve Jobs

There are already a ton of articles, interviews, videos and books on Steve Jobs. And I don't intend to add to that clutter. This blog is purely personal and will focus on only what I liked the best about him - break rules and conventions, when it matters.

But before I get into that, a few things about, when I got to know about him or Apple. Before 2010, I had heard a few mentions about Apple and Steve Jobs. At that point, I was blissfully unaware of an iPod or that an iPhone existed. No, No, I am an earthling only, but such was my naïveté and innocence. 

By chance, when I heard about the iPad introduction in 2010, it stuck a chord in me. Such was a device, that I wanted for a long time, a personal always on Reader. Slowly, my google searches on Steve Jobs and Apple grew, till I sucked everything online and in books about them. I have read about many business turnarounds, but Apple from 1997 to now, is the most fascinating, from close to bankruptcy to 130billion dollars+ cash reserves.

Break rules

Well, when I refer to rules here, they refer to best practices, safe and time tested procedures, guidelines, conventions etc. which develops in every field over long periods of time.  And not to principles like ethics, breaking law, breaking into your neighbours house etc. So, please don't read me wrongly, and blame me later.

Typically, most of us grow up with this list of dos and donts and prefer always the beaten path. These rules works on us so subconsciously that, we think we are different, when we are not. This practice becomes more acute, when we enter schools or graduate and becomes a disease for people with higher degrees. If you ever happen to be an expert in your field, then this is a chronic problem for you. Please contact your nearest doctor immediately.

That is why, breaking rules is easy for people with no degrees. Bless the souls, who don't pass out from colleges. Whether, they become thought leaders or not, they do not have any thought barriers.

Will just pick a few examples for illustration.

Well, after his return, Apple was losing cash. So, what will you do?  Cutting costs, trimming product lines are normal. This was done by cutting products from 20 to 4. But he did one more thing, which knocked me off. 

Apple released an ad, 'Think Different' and spent heavily on it. This ad was not even about Apple products or could earn revenue in any way. This ad, which echoed Apple's core value of innovation, was released for all who supported Apple through its thick and thin, their loyal fan base and employees. Why on earth would someone do that? Which business book or rule will talk about this?

This was to reassure all its stakeholders, mainly its loyal customer fan base, that Apple was back to its innovation mode. This was when, Apple was months away from bankruptcy. This actually bought Apple more time, till they came out with new products.

Next, in 2000, when the entire world was going online, they came out with their retail stores and hired Ron Jonson from Gap for this. The retail stores, was a way to control the last mile customer experience of purchase, support, advice etc. This was when Apple was a  failing computer company, with zero experience in retail. This was, when top retail companies, like Gateway were on their way down, Dell was getting everything online and when all jargon was about core competence.

Moreover, the retail stores had expensive materials,  their location was in high foot movement areas ( again expensive ), hardly 4 products to show off at that time, with retail staff incentivised on customer experience, rather than sales. Cutting costs out of bankruptcy is one thing, but innovating out of bankruptcy is a different ball game. 

I was equally surprised to know that Steve Jobs was replying to all sorts of customer issues and even calling up customers and talking to them. This was not a CEO's job. They are supposed to be 30000 feet thinkers, tinkering with the vision and mission statements of a company. This showed an amazing amount of passion for the products, which other CEOs talk about, but do not mean it. This made his inbox overflow with customer complaints, that Apple started using these as data points for their internal use(1). An excerpt below,

"Yeah," Jobs said. "I just wanted to apologize for your incredibly long wait. It's really nobody's fault. It's just one of those things."

"Yeah, I understand."

Then Jobs explained that he expedited the repair. "I also wanted to thank you for your support of Apple," Jobs said. "I see how much equipment you own. It really makes my day to see someone who enjoys our products so much and who supports us in the good times and bad"

And he really understood desire. How to kindle people's emotions, create a fan following, create blogs and news around every Apple move and make people wait in queues to buy a mobile phone. Apple's cult of secrecy about product launches, creates a so called Streisand effect. The less they talk, the more they are written about. Why do people give Apple free marketing space? When others pay for it, but don't get noticed.

And finally, he really understood, what is effective communication. Till a few years back, I was always under the impression, that having a great product is sufficient. The world will notice it. How naive, I was. It needs communication as a bridge to connect it to the real world. People have better things to do, until you make them notice it. 

When I refer to communication, here, I refer it in a border sense. It is not just about the presentations, demos, advertisements etc. But every consumer touch point. The product's every  point of interaction with the customer has to communicate its core. Be it the hardware, software, its packaging, its documentation, the products ecosystem, the presentations and demos in product launches, the customer ordering experience, customer support experience, all come together, to give the user an engaging experience. If the communication does not create an excited user, the dollars can go missing. I am not sure, if any other company, goes to such levels of vertical integration to get this right, when on the other hand, focusing on core competence, is the flavour of the day.

So, if you have got very inspired by now and looking for the next rule to break, just hold on a bit.

The other side of the untold story is that Apple is actually a disciplined company, following a set of rules and processes during product development, be it Apple new product process plan, or the rules of the road plan. And though they proclaim that customers do not know what they want, once a product is released, they take their feedback very seriously, in further iterations.

Now, the twist, is not just on breaking rules, but on knowing which rules are worth breaking.

“In the beginner’s mind there are many possibilities, but in the expert’s there are few” 

― Shunryu Suzuki, Zen Mind, Beginner's Mind

References

1. http://edition.cnn.com/2011/11/22/tech/innovation/jobs-excerpt-customer-service

First Blog

Hi,

This is my first blog post. In this, I will introduce myself and why I started blogging.

So, first Who Am I?

Well, my name is Ashwin, working in Bangalore, but born and brought up in Chennai.

I have over 13 years of work experience in data communication and networking domain. Interestingly, my work experience has zero relationship with both my bachelors and masters degrees. 

Entered IITM to study chemical engineering, but had no initial affinity towards it. During this time, there were many subjects that I liked, but nothing so much, that I could bank my life on. So, my interests traced a complete brownian motion during this time. And finally my ionic bonding with this field broke by end of graduation. 

I lucked out and in my first job, landed up in a domain that interested me a lot and have been there ever since.

Why Am I Writing this Blog?

Over the course of time, I became deeply interested in multiple diverse areas, like value investing, finance, physics, maths, advertising, marketing, business, learning, psychology, statistics, probability and more. Have read many books in these areas and am an unabashed fan of the giants in these fields, like Warren Buffet, Charlie Munger, Feynman, Claude Shannon, Oglivy, Dijkstra, Alan Kay, Steve Jobs and more.

But over a long stretch of time, realised that my brain works like a DRAM. It keeps forgetting all that I learnt and the insights that I got very fast. Until I keep constantly refreshing it, it never stays in my conscious memory. So this blog, is going to be a placeholder for refreshing my memory. This is one of the starting points for writing this blog.

Next, I thought if I get into the habit of writing, it forces my mind to organise my thoughts, convey the insights in a succinct form and would help me in getting more disciplined. Currently, I have 100s of notes splattered across, laptop, mails and my iPad. And now, I am neither able to recollect or make sense of my notes in a cohesive manner. So, I hope now, you can really understand my pain and appreciate this reason also.

Paraphrasing Feynman, 'What I cannot write, I cannot understand' 

I not only wanted to write about what I learnt so far, but also about the mistakes that I make or I discover others making. Rephrasing Isaac Newton's quote, shouldn't we after all stand on the shoulder of giant mistakes to see further? Why do the same mistake again, when a fresh one can be done?

Also, I wanted a collection yard, where all such data can be organised and stored. This way, over time, if I can look back at these notes, I can possibly understand more about myself. And once this happens, I will rewrite the top section on 'Who Am I' again. But it's quite possible that even now, google knows more about me on this! On a side note in 10 years time, I am expecting that google searches on 'Who Am I' will be a regular spiritual feature.

So much for my philosophical underpinnings !

Well, if you have come so far thinking that this guy has  all selfish reasons and I am wasting my time on this, Do not Despair! Have saved the best for the last. Till this time, I have been a parasite on information be it from the Internet, or from books. So with this blog, I have decided to be a producer, in my own little way and contribute to this ocean of knowledge. 

How will I contribute?

One of the main things that I find abundant on the net and in books are data, unpolished, unfurnished information. The things missing are insights, which is the underlying theory that connects disparate sources of data.

And the other thing that I realised, is there is information lacking about failures and mistakes that people have done. There is too much of glorification of success and history is always written by the winners, causing a huge sampling bias.

So, this blog will focus on two things, insights in different fields and areas and the mistakes that people make, hopefully less of mine, and more of others.

If you are still confused, don't blame me for it. There are many others with average IQ, who also shared this feedback. So, if you want to change your mind, you can do so now. 

”Either write something worth reading or do something worth writing,” - Benjamin Franklin

I preferred the easier one.

Thanks for your time.