Market Testing in Singapore

Here I am market testing my company's new product, the KTurn dynamo phone charger! Readers can you guess the setting in which I am testing this?

How to ride a Mongolian Horse

Inner Mongolia, Tibet, and Indonesia

So with the Nepal trek closed and an open summer ahead of me, I took up a very enticing invitation to travel in Tibet. But as long as we’d be in the hinterlands, we thought we might as well visit Inner Mongolia also.
First, I learned that if there was ever a battle for the most representation on tours between mainland Chinese and foreigners, the Chinese won long, long ago. I saw no other foreigners in Inner Mongolia, and on the plateau our foreigner group was outnumbered by Mainland tourists by at least 10-1.
The most famous land feature in Inner Mongolia are the grasslands, on which ride the famed Mongolian horses, whose masters reside in the equally famous roundhouses, eating giant servings of pure lamb meat. The visits to the Mongolian villages are a little touristy, with brief trots on horses, Karaoke lunches, and ongoing negotiations for goods and services. But when you can get away from these small negatives for a moment, and just look out over the expanse of land, and sit and watch the sunset, it’s really relaxing and pleasant. And the lamb was *delicious*, worth every jiao. But back to the horse-back rides: The Mongolian tour directors only let you ride very slowly, but I knew they can ride the horses much faster. How to get them to do that? To answer that question, I took a page from the Cargo Cultists of post-World War II. The Mongolians wear iconic, large brimmed cowboy-style hats, and I was watching some of them hit the horses on the rump to speed them up. (I happened to buy such a hat because I thought it looked cool). Adding a shred of creativity, I took my new hat off, and whapped my horse on the rump with it, and the beast TOOK OFF! I had never been so fast on a horse in my life, and when my initial surprise wore off, the speed was really enjoyable – the horses glide along more smoothly and comfortably at speed than they do in trot. As soon as my horse had gotten this impulse, my Mongolian minder shouted from his increasingly distant point “Drop the hat! Drop the hat!” no doubt hoping desperately that my stilted Chinese possessed the relevant vocabulary. I savored the experience for a few final, memorable seconds before I decided to be an obedient tourist and threw off the cowboy hat. I inferred, correctly that the hat is used in training so that the horses respond to it uniquely.
The grasslands turned out to be lacking in grass in favor of small shrubs. It turned out there were consequences of this which we learned through horseback riding. My horse was tripping every so often on apparently nothing.
“Me: My horse seems so tired . . . “
“Mongolian cowgirl: Didn’t you notice how skinny he is? The rain has been light the last year, the grass for him to eat so little”.
Turns out the horse was indeed scrawny, and I felt bad. I thought that in the US we solved these kinds of shortages with hay cultivation, markets, and transportation, but I’m not a farmer so what do I know . . . By contrast in the opposite corner of the country, the Tibetans definitely have hay figured out to feed their yaks . . .
Following a punctuating bubble bath party back in a Beijing Sanlitun nightspot we proceeded to the Tibetan plateau. If you ever gain the inclination to visit Tibet, please please take the pressure acclimatising train the 48 hour train in and don’t fly. The entire south-western third of China sits on a plateau. So we’re talking about a vast swath of planet Earth raised 4000 meters, or 13000 feet, above sea level. Turns out that the meter-feet conversion is important, because to an ear accustomed to customary units, the number 4000 sounds harmless enough. When the airplane sets down, the airport pharmacy (by the way, the airport has a pharmacy) chiefly sells oxygen bottles. And they are *very* necessary if you come into the country by airplane. Fatigue and headaches settle in quickly, and days later we’re making out way to 5000 Meters (16,500 feet) at Everest Base Camp. More than half of our troupe suffered altitude sickness at this altitude, and while the view of Mt. Everest was valuable, I suspect the sickest among us were unsure their malady-stricken stay at the camp was worth the photos.
We took the train back from Lhasa, and the rolling hills covered in (grassy) grasslands grazed by yaks was delightful. Our train passed through the highest train station in the world, a factoid which the train PA system dutifully recognized. The train sped straight through this notable station without stopping – I decided it was a tribute to the host country’s sense of face that they built this station – because there were no inhabitants, buildings, or crops to justify the station's existence.
Well with these travels completed, there really was only one more logical destination to pursue. Obviously I’m talking about Jakarta. Yes, with two weeks to kill, I had to go somewhere before my itinerary for a class business trek (observing and meeting with exotic tribal chieftains in Silicon Valley) kicked in. My thinking proceeded thusly: I had already visited or traveled through 70% of China’s provinces (which officially means its high time I saw as much of the US . . .). Therefore Jakarta, the rambunctious, unrestrained, burgeoning capital of Indonesia was the last backpacking itch I had to scratch. ( I'm saving Mt. Rushmore for later :) )
From an urban planning perspective, Jakarta is best compared to Los Angeles – a concrete jungle with little planning with respect to zoning and mall developments everywhere, while the megalopolis manages to avoid the street chaos of Mumbai or Delhi. I happened to show up at the opening of Ramadan (as the hedonistic revelers of the world do one big collective face-palm) which pretty much shut down recreational life in the city. That's okay - I always enjoy urban observation (I like to keep my eyes open to in any new city), experience a foreign lifestyle (I managed to observe Jakarta’s hip and beautiful while making friends with expat helicopter pilots in Social House - thanks to GN for the tip!). I skipped over to Bali in pursuit of kite-surfing. As I write I’m in Bali’s beach-chic Seminyak planning my itinerary to Lombok and the Gili islands where I hear the wind and facilities are appropriate for this.

PS, for this posts' photos, I know the bulk of mainstream readers like to see food and cultural stuff, but until the day this blog becomes reader-supported, you get what I like to post, namely . . . Solar-powered GSM phone antennae at 4000 M altitude!



and a solar powered water boiler near Sugatse!! Can there *be* anything cooler??



Since that picture I was in immense pain from a splitting migraine stemming from the reflected sunshine off the cooker. That moment was the last time I smiled that day. :(

Karmic Repair in Nepal

Holy smokes I’m in Nepal. I had some funny preconceived notions on what I would see here. For example, I thought that Kathmandu would look a lot like Darjeeling (mountain town) on steroids. I write having completed one INSEAD period since my last post.
I’m in this country on a social entrepreneurship trek. You see, before the beginning of the period, we had a choice of the following courses: Building Business in China, Building Business in India, Social Entrepreneurship in Nepal, and Building Business in Brazil. The Brazil trek got canceled for insufficient enrollment, and the remaining BRIC country’s course, Drinking Vodka in Russia, was expunged for unknown reasons. These days the talk is about BRICi, where the little I is for Indonesia. I am aching to visit that little i’s Jakarta, preferably as part of a trek in the autumn P4. Drumming up interest from my fellow INSEAD students is proving tricky, many are looking for the next sandy beach to visit on weekends . . .
One nice thing about elective courses such as these treks is that students are effectively self-selecting into affinity groups. So for example, I meet the guy who has spent his career to date with the Red Cross in sub-Saharan Africa, or the Bain consultant who worked with Technoserve on cashew supply chain optimization, also in Africa.
On this trek, we visited villages where their agricultural output has increased multiple times over allowing them to transition from subsistence farming to market participation with their surpluses. I like the examples of development initiatives where the target’s earning input has increased, as opposed to just making their life a little easier under their current income regime. This usually involves facilitating markets access. In one initiative I was part of, we were enabling lighting in a productized package for low income villagers in India. Perhaps the lighting could increase their productivity, say at night, but it was really about making the customers’ lives easier without necessarily increasing their earning power. On the other hand, it gives villagers who don’t have the income potential to buy the product something to aspire to. Seeking increased utility and status is a powerful force in capitalism – recall ‘the pursuit of happiness’, a notion whose effect on the world isn’t to be underestimated.
But it’s hard to productize the act of facilitating market access. In the case of the above village where they learned how to cross high quality strains of oranges with large size strains, or teaching drip irrigation to maximize targeted water usage without wasting it on weeds, there’s not much you can monetize except for consulting time, which is a subjectively valued product even in the first world.
We also visited a group of social entrepreneurs – they were an inspiring lot with such diverse projects in operation including breweries, training initiatives,distributed biofuel power generation, and housing conversion to traditional architecture styles. We also visited an urban housing project for the homeless, a community drinking water diversion project, and an instance of OLPC (One Laptop Per Child) in action for Nepali schoolchildren. Now here’s where I’m going to push the INSEAD brand. Whereas a student delegation from your typical, run-of-the-mill social entrepreneurship-oriented business school (ahem, Stanford) would show up on site, see some villages, take some photos, and ruminate on the airplane back home, we INSEAD students said, “Screw that, we’re cutting the original observation schedule short, and make a presentation to all the entrepreneurs we met and show them how to get the entrepreneurial ecosystem right-side-up again.” We created a brand and illustrated a pathway to bring up Nepal’s tourism, agricultural export, and hydropower industries, all under one licenseable brand (kind of like the ‘CE’ label for product safety) designed to inspire commitment in Nepalis and confidence in foreigners on their supermarket store shelves. Remember when you come to Nepal as well as your local organic supermarket storeshelf and see brand “Jaya” posted all over the place, you saw it here
first! Although seeded by our finance guy and our Red Cross worker, cheers to the consultants in our group for pushing the presentation structure along, you’re a tribute to your profession.
After the week-long class was over, we took a flight to the Himalayas and back - $140 for an affirmative response to the question, “Oh you were in Nepal, did you see Mt. Everest?”. Yes, I did, and here are the blurry pictures to prove it.
Alas, the summer is finally here. Many students are in internships with banks and consultancies. Following my unsuccessful “cross the t’s, dot the I’s” banking applications, valiant multi-weekend-in-the-Singapore-library effort at VC internships, and a few artistic stabs at industry, I’m once again mobile and traveling in Asia, my conscience restful in the knowledge that I pulled out all the networking stops at my disposal for an internship in the region.
So on deck we have Delhi starting tomorrow morning where I’ll catch the remainder of the Building Business in India folks, followed by Inner Mongolia in China, and then the holy grail of travel adventures, Tibet. My trusty cell phone camera is taking requests on what to point and shoot it at. Email them or send me a message via comment.

It's all optional

I wanted very much to be able to say I was in finals and so couldn't post this week, but then all of a sudden, finals just finished this morning, taking away my alibi, and providing you this post.
On Friday I said good-bye to the consternatingly cold weather of Fontainebleau, and a fresh hello to the local liveliness that is Singapore.
Today we will talk about Financial Options, yet we won't talk about how poorly I did on the recent Finance Exam :). I found options fascinating because a) they help you evaluate and negotiate for the kind of stock options package you offer or are offered during the creation of a new company (especially in my Silicon Valley home turf) but more importantly for b) their real life applications outside of finance.
What is an option? Most clearly but least precisely, an option is a contract giving its owner the ability, but not the obligation (thus the "option") to buy a stock at a future time, where the stock's value at the future time is unknown (even though the stock's value is widely known at the time of purchase). If such a contract could be bought and sold, (informal markets can spring up around even the most restrictive of options contracts) you can imagine it would be tough to assign a fair price to it. So we spent a lot of effort learning how to value options contracts. But I suspect that only a few readers of this blog would actually care how such a contract is valued. Suffice to say that the more that an option contract's underlying stock value fluctuates, the more valuable the option.

Instead, I suspect that many readers do care about the value of projects they undertake. Look at going school to learn a new skill with uncertain longterm payoff, or traveling to a new locale to look for otherwise unknowable opportunities, or starting a new business with uncertain outlook. Are these activities worthwhile endeavours? Well it turns out that each of these activities is a form of real option, only mildly distinct from a stock option. Because of the high upside in being able to replicate and scale an otherwise small but value-producing project, and the low downside being the sunk cost of exploring the basecase of the opportunity, then these kinds of explorations in aggregate become very worthwhile.

I have to wonder then whether, over many eons, we've evolved the risk appetite required to explore options - i.e. in exploration of new food sources. However, while I would argue that such risk appetite is a superior trait for populations, it may be of net negative value for any particular individual singled out of a population. Because, while a roaring success may benefit that individual as well as the population around him, say, if (s)he found a new food source and also could control its public distribution for his/her benefit, it could also turn out that the exploration fails, and the individual perishes from exposure to whatever risky environment in which he placed himself in the first place. So, extrapolated over many generations of natural selection, this successively repeated scenario would breed individuals into risky-options-seeking automatons, who don't necessarily do so on the net likelihood of their own benefit. In a large population of such risky-options-seekers, some would inevitably succeed, improving the lot of the population, but those that failed would be crossed off the natural selection list, even though the same traits were being exercised in survivors and non-survivors alike.

So when it comes to the value of risky-options on the individual basis, I would argue that the jury's still out, and that economic conservatism may be the individual's value maximizing choice after all . . .

Coming up, look for discussion of the Singapore MBA student lifestyle.

Feeling the Timbuk2 Love . . .

In our Processes and Operations Management class, we study the mathematics that allows some businesses to operate, and causes others to fail (I use the words ‘allow’ and ‘cause’ carefully). Our most recent study was the company Timbuk2. Timbuk2 is the yellow-swirly branded maker of messenger bags founded and headquartered in the City and County of San Francisco. Not all of their bags are made in the city anymore, but a respectable number of them are, and certainly the highest margins are earned there on a per-bag basis.

Timbuk2 is justifiably special to me. I purchased (or rather, my father purchased for me) my first Timbuk2 bag in 1998, priced at $70. It took me through the end of high school and throughout my undergrad years commuting to class on rollerblade. The laptop-messenger pictured is the third bag I’ve owned. It has seen me through all weather conditions in more than ten developing and developed countries. The company continuously fixes design faults and adds appropriate features as the model matures.
(I think it’s notable that the original messenger bag remains offered today for precisely $70, considering all of the things that affect price change over time, including but not limited to manufacturing cost, inflation, consumer demand, and the company’s preference to maintain consumer’s psychological price anchors.)

Earlier after first arriving on campus for the MBA program, no one ever had reason to give my red-and-grey shoulder bag a second look other than that it appeared a bit odd – why not a leather satchel? Now people stop me in the hallway and ask, “Hey, is that a Timbuk2 bag? We just studied that company in our operations class.”

It is definitely a point of pride that we can (or that at least someone can) still make things in San Francisco. The trick is customization. Many companies manufacture uniform, low cost products in China and ship them over a long lead time over water to the US. Apple can contract to manufacture uniform high price, high margin products, and fly them to the US. Dell and other laptop manufacturers can, only after extreme capital equipment expenditures, contract to manufacture customized high price, high margin products to be flown to the US. If you’re a small concern operating locally, you’d better manufacture customized products and capture as much of a consumer’s willingness to pay for the customization as possible. That’s what Timbuk2 does for a significant segment of its products. The rest follows the first China (and Philippines, it turns out) outsourcing model of long lead manufacturing and sea freight.

The company was covered in our operations class for two reasons. First, for the customization (and associated value-add) capability from its website, and second, from a manufacturing process called “bump back” which for its novelty is something I’m still trying to nail down. And as I’m studying for finals, I have to become pretty familiar with this operation.

Entrepreneurship

It’s rare that I read news that actually has a near term affect on my life and those around me. I think we are bombarded with a lot of noise for the sake of infotainment. When I read a newspaper under a time constraint, I challenge myself on how much I can ignore, instead of seeing how many morsels of happenings I can suck from the headlines. So I derive some kind of mildly schadenfreudian pleasure from (non-catastrophic) news events that actually affect me and people around me.

Case in point. Recently a volcano blew in bankrupted Iceland. (My finance professor relayed a quip from their Brit lenders, “We asked for cash, they sent us ash”). Who knew that volcanic ash clouds could down airliners? Anyways, it has caused transportation chaos throughout Europe. To exacerbate things, the French rail network in the vicinity of Paris went on strike. That left only the Eurostar (Chunnel) line (remember two posts ago?) operating. People around me were definitely affected. A friend missed a UK interview, the CEO of the company that designs Ferraris could not fly in, and half the class missed a long-planned sports trip to Barcelona. But there's no reason why the volcano has to stop erupting anytime soon, so my flight to Singapore in early May is in jeopardy.

On with the week’s post. Entrepreneurship – A five-syllable buzzword if ever there was one. It captures imaginations, it instils fear. For some it represents dreams to be fulfilled, and for others I suppose it ranks with having root canal at the local dentist. I wanted to talk about INSEAD with respect to entrepreneurship. Distinct from departments such as Marketing and Strategy, which I think are all critical for entrepreneurial endeavours, INSEAD offers these courses specifically for Entrepreneurship on the Singapore campus.

Startup Bootcamp
New Business Ventures
Entrepreneurial Leadership
Entrepreneurial Field Studies
Building Business in China
Building Businesses in India
Social Entrepreneurship and Innovation
Brazil & Emerging Markets
Explorations in Social Entrepreneurship
Business Planning Workshop
Effective Fundraising for Entrepreneurs
Realising Entrepreneurial Potential
Private Equity (read, 'Venture Capital')
Entrepreneurship in Action

It’s actually impossible to take them all due to schedule conflicts. Even given the largest set of courses that don’t conflict with each other, I doubt that even the most entrepreneurially minded students would take them all take of them. After all, there’s other interesting courses like Business to Business Marketing, Strategy for Product and Service Development, and Economics and Management in Developing Countries.

I took the Startup Bootcamp weekend course already. This was a fantastic retreat, comprising fast paced business plan writing, cash flow formulating, and pitching competition. Thirty of us arrived to the offsite Friday evening, had an idea brainstorm, and formed into groups (companies). The next day, we clarified the ideas, fleshed out the business model, rigorously defined how cash is transferred from customers to ourselves, and after running cash flows in Excel, determined the net value of the company. Sunday we prepared our pitches to Venture Capitalists (VCs) - short and sweet, perhaps thirty seconds per person. Of course the preparation took much longer than this. As a model, the instructor brought in the former CEO of NASDAQ Europe. This added in the appropriate level of stress and sweat.

Some people may pursue the ideas coming out of this event, most probably will not. The point is that we all came away with a rigorous early stage execution formula applicable to any endeavour we will set out to accomplish in the future. I am most grateful to our instructors and entrepreneurs in their own right, Paul Keweine-Hite and Peter Sage for their offering their time. Photographed is the practice pitching session.

When I applied to INSEAD the first time, one of my biggest fears was that there wouldn't be other entrepreneurs or support for entrepreneurs on arriving here. After deferring to pursue my business, reapplying, and finally entering, I'm rather pleased with the enterprising aspirations of many of the folks I've met and what's on offer, although the final verdict for the courses won't come until after I've taken them.

"IT Rep!"

One responsibility I've undertaken at INSEAD is to become IT Rep for my section. It certainly takes up a lot of my scarce, scarce time, so let me illustrate:

Each class intake of 500 students is divided into about 7 sections of around 70-75 students. Fontainebleau campus has 4 such sections. At the beginning of the curriculum, the sections' students elect representatives - Academic reps to interact with the professors, Career reps to interact with Career services and keep students apprised of upcoming recruiting events, Social reps to organize parties, and an IT rep to spearhead mitigating IT and facilities issues the students face. I'll preface the following by repeating the classic IT person's lament, that when systems are working, little credit is given, but when things go wrong, much credit is taken.

Many components come together to give a school its reputation. From the point of view of its students, INSEAD's greatest strength is its faculty, who are truly superior. There are long term faculty, and temporary visiting professors. Both are exceedingly strong. INSEAD's next strength is it's career services. Career services work efficiently and tirelessly to get consultancies, banks, and industry to come onto campus for recruiting. The largest and top-tier consulting firms maintain consultant-caliber staff exclusively for recruitment from *this* school. (What is a consultant? You're forgiven if you're as unfamiliar as I was before the beginning of term, but you'd be better served by your own research into this than my explanation). Then, after school culture, the remaining component that drives a school’s student experience, and by extension it’s reputation, is the quality of its facilities and IT (Information Technology) systems. These include all of the PC’s on campus, the campus local area network, the campus connection to the outside world, PC virus security, e-mail services, and about 20 other items all of which, like parts of an automobile, require regular attention and maintenance.

Unfortunately, it is at this point that the school falls far short of the mark – printers fail, the network goes down, email (e.g. from recruiters) stops receiving after filling an unbelievably low 100MB quota, and much, much, more.

One thing I recognized early on starting the MBA program was that the many and disparate IT problems the campus faced were organizational in nature, not technical. For example, follow this train of thought: “Why is email down? Because they haven’t upgraded to a new mail server version. Why not? Because there are IT contractor issues. Why? Because they don’t have enough budget to properly incentivize the contractor or hire a superior one. Why not get quality in-house IT specialists? Because if you inadvertently hire the wrong ones in-house, they are too expensive to fire because of severance pay laws here in France. Why hasn’t someone figured whatever issues, stopgaps, drivers, and incentives exist or are necessary to make the organization robust? Because management, at some level, is not yet up to task.

I actually sought the challenge of figuring out what process distills human and human-created issues into tangible real-world physical effects. Looking from this point of view, you begin to understand that airplanes don’t fly because of differences in air pressure across a wing, they fly because Boeing/Airbus and the airlines will them to fly with no tolerance for failure.

To become a ‘rep’ , one runs for the position in an informal election. So I ran unopposed, for the rep position because I knew there were problems that needed to be solved, and I figured I was as reasonable a choice as the next person to solve them, and do a favor for my class in the process. My campaign platform noted all the problems we face and getting responsiveness from the IT department + facilities. There were three other IT reps, and they made clear early on that they didn’t share the same level of enthusiasm as I did for “getting things done”.

But over time, the class perceived my role as being Mr. Fix-It, instead of the role I intended: someone to take complaint surveys and push for organization change while learning more about how people and organizations work in the process. While I found the undesired fix-it view disheartening, it also pushed me to find the people throughout INSEAD responsible for how things work around here. Now I can solve most major things that go wrong in a technology-enabled classroom with a phone call or polite text message in French, and the relationships I have with the staff give me a peek into what isn’t working on an organizational level. By contrast, I’ve heard that the other reps experience great frustration because they didn’t know where to start when a problem struck and the pressure from the class built to do something about it – one rep even quit because he couldn’t handle the pressure.

It was about halfway through the first 10-week period of school that the senior class’s rep got on board my campaign and we managed to identify exactly who in the IT department it was we were supposed to meet with in order to start getting things done. Org chart? No way; doesn’t exist even if people weren’t too fearful of their jobs to give us one. What about tips from previous years’ reps? Well although these kinds of efforts have been taken up before, there’s very little continuity from intake to intake in the one-year MBA. Along with so many student clubs, like industry and affinity clubs, on campus, everything gets built from scratch every 6-months to a year. This phenomenon which in part represents the efficiency of the INSEAD curriculum, also represents a lack of continuity, deteriorating the effectiveness of the clubs (and the reps) – the contacts they make, and the cultures they create. For efforts expecting only long-term results, you have to pursue them knowing you and those around you won’t get to benefit from them since they’ll graduate in less than a year. Instead you operate on the knowledge that you’re helping the next class, and that has to be enough even though you know the next class will never tangibly realize what you did to make their experience better, or be able to thank you for it. In turn, we know that we are benefiting from earlier classes of students in perhaps intangible ways.

Eventually we managed to get weekly meetings in place that people actually attend. And after all of our haranguing, the IT Department is starting to “get it”. We’re seeing some specific improvements we’ve pushed for, like replacing lots of the printers with new ones, making some Windows7 support software available, and more excessively mundane issues that 1) drive people nuts when they encounter them and 2) don’t need mentioning here for their sheer obscurity. I have another meeting with the Dean of the school coming up. And after newer updates to my section and new surveys I’ve taken from them on their complaints, now I have enough political capital to get org charts and start asking about incentive schemes without feeling like I’m trodding on sensitive territory.

We at INSEAD like to compare ourselves among the top and penultimate tiers of American business schools. These include (not exclusively) Harvard, Columbia, Wharton, Stanford, Sloan, and Kellogg, Fuqua, Haas. If we expect to truly hold our own, IT+facilities absolutely have to be improved.

More than any student on this campus I am acutely aware of IT systems near term future. In light of that, to future MBA's intending to spend time on the Fontainebleau campus, I have to make the following recommendations: 1) Bring and rely on your own laptop - for example, an Asus mediabook is ideal – reliable, very portable + good size screen, long battery life. 2) Foot the bill for a Blackberry, it provides a lot of communications robustness independent of INSEAD systems. You'll be on a contract with Orange that you can, with some trouble, get out of if/when you switch campuses.

Having covered IT more than anyone should ever have been interested, look for discussion of Entrepreneurship next post, and Social life in a following one.