Saturday, July 9, 2011

WEMBA 36 - San Francisco: China Trek 2011

As Prof Percival would say “Chinaaaa…” This was one fantastic trip, a truly unique experience in the medley of new and old that makes up today’s China. In 10 days, we (21 students and 4 guests) visited 14 organizations in the areas of technology, government, media, energy and venture financing, discovered the cities of Beijing and Shanghai, saw a glimpse of 5000 years of history, and most importantly partied at least at a dozen clubs.
China’s demographic statistics are mind numbing. There are 200+ cities with over 1M people - contrast that with US-7 and Europe-35. There are over 700M cell phones subscribers satisfied primarily by one company – China Mobile and over 500M Internet users in the country. China leads the rest of the world in the amount of hydroelectric power production at an astounding 652 TWh and is the second largest consumer of primary energy in the world. The GDP is 5.8 Trillion USD a year and increasing at 9.7% per annum. It is no wonder that China is the third most visited country in the world with over 60M visitors per year and growing (that is the half the population of Japan).

June 25th, Saturday: Beijing (Arrival and Dinner)
With Michelle O (Marla), and her patented arm wave, on our side, we had ensured dignitary status for the trip – we knew we would not have to stand in queues or follow the line or anything close to conformance. Most of us arrived on Beijing on the 25th (10 of us were on the same plane – ask Harshit Scotsman for the details). The thunderstorms from the past week had cooled the city considerably.

The Beijing Airport has an impressive architecture – shaped like a dragon with a turtle holding it down to ensure planes would land safely! We were greeted at the airport by FangFang, our guide at Beijing who arranged a ride for us to the Novotel Peace Hotel – our place of residence for the next 4 days. LanLan had arranged a luxurious 40 course dinner – imperial style, at Wu Ju Tai Nei Fu Cai, one of the highlights of the trip. From the exotic to the delicate the dinner spread was simply amazing and lasted over 3 hours. FangFang had arranged a local tailor who was waiting for us back at the hotel; many of us ordered hand-stitched shirts and suits. We headed out clubbing for the night, as was the case on most nights. There was a special guest at the club scene – for details contact Stacy.

June 26th, Sunday: Beijing (Guided Tour)
After breakfast, we headed out on a guided tour of the city. FangFang was at once engaging, knowledgeable and helpful. Our first stop was the Tiananmen Square – the largest public square in the world.

Located in the heart of the city it is surrounded on one side by the Beijing museum, shopping on the second side, the major street on the third side and the entrance to the Forbidden City on the fourth. FangFang gave us a glimpse of the local history and highlighted the disconnect between the previous generation and the contemporary youth. The Mao memorial is right at the square and the queue was over 2 hours long. The 60-ton granite obelisk at the T-square honored the heroes who fought imperialism both within and outside.

Forbidden City was next and it was magnificent. Forbidden City or Gugong was so called because it was out of bounds for ordinary people for 500 years. Within the outer wall are over 800 structures, with a total of 9999 rooms, just one short of the perfection appropriate only to the gods. The wooden walls are elegantly decked with exquisite art and handwork – ranging from allegorical scenes to fierce dragons in multi-colors. The Hall of Supreme Harmony is the largest building in the Forbidden City and was the setting for Imperial Coronations and other royal events. There is an expanse within the Gate of Supreme Harmony that could accommodate the whole imperial court – over 100,000 people. The inner enclosure housed the imperial concubines, the Emperor’s bed chambers and the Imperial Garden. We spent about an hour and half just catching a glimpse of the Palace Museum and left amazed, awed and mostly hungry.

Next stop was Spicy Hut (I think...). The food was so hot and spicy, DiBarnaba (or Sueshni as he is now known) was soaked in sweat, but it was so tasty he could not stop. After lunch we leisure strolled the back alley shopping area and then an hour bus ride took us to the Great Wall.

Mutianyu is a short section of the 3000-mile Great wall restored to its original form with its imposing guard towers about 90KM north of the city. Set in rolling hills covered in green this time of the year, it is a spectacular and awe-inspiring sight. We took a gondola ride up to the wall and spent over an hour and a half scaling the wall, taking it all in and generally wondering the how, why and what of the Wall. We met General Tso selling beer on the wall – a refreshing quencher on hot summer day. A few photographs later we came down a narrow chute, riding on a small plastic trolley – quite an interesting thrill. Fortunately, there were no major casualties though Monica rear bumped Vidya coming down at what seemed to be 40 Miles/Hr. The ride back was quiet - most taking a small nap.

The last planned event was at Candy TV, a local Karaoke hangout. Leo had arranged for us to meet students from the reputed Peking University – over 20 students showed up. After cursory introductions, exchange of business cards and discussions around job opportunities, the so-called singing ensued. There is a video of Elango dancing to the tunes of Michael Jackson that is hilarious. We headed back to the hotel where some of us retired others went clubbing again. “I will rest in my grave”.

June 27th, Monday: Beijing (Company Visits, Bell event)

Deborah, Bo, Vidya, Susan and Lauren decided to explore the city and planned to visit local shops, the Temple of Heaven and other touristy stuff over the next couple of days. For the entire trip we often saw Lauren treated as a rock star and she picked up more Chinese than can be learned in 30 days with Rosetta Stone. She even got the accent down pat!
An early breakfast, liters of coffee and Aspirin for the needy prepared us for the company visits. It was probably the first time I had seen everyone come in suits and I hesitate to say this, but together we did look quite striking.

Tencent: Victoria Wu (Director of Business Development, Brent Irvin, Corporate Counsel)

  • Established 1998, $45B Mkt. Cap, listed in HSE 2004
  • Largest online user database. 500M internet users in China today, over 80% using Tencent.
  • 90% of users between the ages of 18-35 use Tencent, cultivated when they were young, now network externalities. Highest PCU (peak concurrent users)
  • 10K employees, average age of 27.5. Hiring –
  • Features: Provides a unified platform (Communication, information, entertainment, e-commerce), users stay because of integrated features. Superior in offering to any platform in US today in terms of raw features.
  • Only 4 major players (Tencent, Baidu, Alibaba, NetEase)
  • eCommerce Transaction value = $162.4B
  • Visit for a tour – has over 20 apps and more coming
  • 35% owned South African Company (Mesberger – other interesting investments, also DST)
  • Strategy: 4 things needed to win in the market place (Content, Knowledge of local culture, Continuous Innovation and User Retention)

Baidu: Kaiser Kuo (Director of International Communication)

  • Baidu, literal meaning is “hundreds of times”, represents a persistent search for the ideal. The name is derived from a Song dynasty poem written more than 800 years ago. The logo is shaped like the paw leaving footprints and thereby a trail.
  • Impressive building, aerial view like a search box
  • Own 83% of search in China, 17% by Google, the rest are cumulatively less than 1%. Over 1Billion queries every day.
  • Baidu succeeded because they really understand what the local people want, did not impose American product on Chinese customer, more successful page ranks, and followed the guidelines of the government.
  • Kaiser used the term – high tolerance for cognitive dissonance. Referred to the general opening up of China in some aspects while tightening in other aspects.What happened in Libya has potentially increased scrutiny.
  • The Government views stability to be more valuable than complete freedom. It would seem that the Chinese Government Is opposed to congregation of any form and that is at the heart of the Great Firewall of China. There are over 20 bodies local, state and government who impose rules and restrictions on what content is allowed – and in many cases there is some latitude in how companies work within those guidelines. If a slip up happens, it is the willingness of the company to do a retraction. The government wants to be assured that it has that power over the company.
  • Filtering can be done in two ways – do it yourself (steep learning curve, high costs, but some control over time) or outsource it back to the filtering agencies (lower cost, but no control). Baidu does it itself, Google outsources.
    Baidu calls its search history the database of intention. They use past searches to predict what may become hot and use that information to better serve queries.
    Another strategy is to develop actionable insight from mining people’s search – which they feel provides them with competitive advantage.
  • Built an open API platform that provides apps from within the search window (box computing)
  • Today has thousands of apps available straight from search box - most developed by others
  • Growth in foreign markets. Specifically targeting areas where the competition has no natural advantage. Google has won some languages but there are many where it is still open season.
  • Advertising still the primary form of revenue.
  • Hiring all the time.

Bain Capital: (Gome Investor)

  • Capital investments and operational expertise provided together. Focus on EBITDA growth.
  • 60 employees, consulting and operations. Two teams (Portfolio and operations)
  • Consumers in China are different in 3 ways (Education, Price Sensitivity, Disparate needs). To succeed one needs to understand the local people and the local business customs.
  • If you are not here already then you are late. Not just a destination for sourcing but rather a real market for consumption.
  • Expertise in Retail, Industrial and TMT. Focus on due diligence during deal time becomes a capability and pays of during operations.
  • General Strategy at Gome:

    • Create KPI, measure, monitor, adapt.
    • Continuous focus on relative market share appreciation.
    • Used a strategy similar to Walmart in US for beating Best Buy in China. In addition, leveraged vendor financing for building large number of stores throughout the country. Best Buy just built 5 stores. Gome started later and had 70 stores in the first year. Had information on which stores succeed and why and used it to build better stores.
    • Focused on Supply chain and inventory management. Implemented a sophisticated ERP system (with SAP).

  • How does Bain exit: mostly by divesting. Leave behind a stronger company then when they acquired. Do not look for controlling interest – insist on board seats.
  • 3 ways to make money (Accessories, Warranty, Credit). Product Margins are always thin.

The business visits for the day concluded and we left discussing the day’s takeaways. It was obvious that China was thriving in this new age of change. There was a quiet confidence in the way our hosts all spoke about their past successes and their voice eagerly anticipated the next set of challenges. They were all young and hardworking, smart and savvy. They had figured out a way to beat Google, Facebook and BestBuy in China – not an easy feat. It would be too simplistic to assume that these companies enjoyed favorable conditions – the reality is that they figured out how to play the game before anyone else and had built Guanxi with all the key stake holders, including the government. They thrived because they realized an American product and business model will not directly translate to success in China and had adapted it just enough to create a competitive advantage.

Built right opposite the Bird’s nest and the Water cube, Pangu, China’s only 7-star hotel, was the location for the next event. Our evening affair was hosted by Wharton Executive Education and featured a talk by Prof. David Bell on success strategies for the Internet market. We had a chance to meet local Wharton Alumni at the event and after wine and hors d’oeuvres we headed back to the hotel. While some retired after the heavy day, there was some serious partying afterwards with most folks coming back only at sunrise. Instead of a short nap, Elango and Sueshni went on a run to T-square and got back just in time for the visits next day morning. Earl probably has the best stories – though Sanju was in prime form as usual (he can dance!).

June 28th, Tuesday: Company Visits
The evening’s festivities had taken a toll - the breakfast table had blood-shot eyes, dark circles, poor silverware handling and large doses of coffee/tea. The bus left promptly but we were a few people short – much to the chagrin of Papa Leo. There were 3 visits planned for the day.

China Huaneng Group (CHG, Dr Jiang and Dr Xu)
  • Dr Jiang( Assistant President, CHG) was a government appointee at CHG, the largest state-owned energy enterprise in China. He greeted us and gave us an overview on China’s Energy situation and the general outlook of CHG. Most famously he said that CHG was governed by 3 colors:
    • Red: Serving the society (centrally owned)
    • Green: Care for the environment and to develop clean technology
    • Blue: Embracing an open attitude and continuous learning

  • The most powerful country is the country with the most power.
  • Dr. Xu Shisen leads the research organization at CHG. He highlighted that the costs of setting up research in China is comparable to most other developed countries.
  • China’s power generation capacity reached 960 gigawatts at the end of 2010, including 700 gigawatts of thermal power capacity, 210 gigawatts of hydropower, 10.8 gigawatts of nuclear power and 31.07 gigawatts of wind power and is second only to US. By end of 2011, China is expected to be the number one power generator in the world.
  • Rate of annual production growth at nearly 10% includes 8.44% growth in Hydro, 8.3% in coal, 19.16% in Nuclear and 92.6% in Wind.
  • Average coal consumption rate at 335g/KWh is low by international standards.
  • Technology development in multiple parts:
    • Develop large scale generation units (soon to have a 1GWatt single unit)
    • Pollutant Control Technologies (FGD, PM removal, NOx Emission Control)
    • System Optimization and Energy Saving
    • Post Combustion Carbon Capture technology.
  • All plants equipped with detox capacity – in next 5 years all facilities will have NOx removal.
  • From 2006-2010, 6.7GW of old units replaced with more efficient and cleaner units.
  • Even within China, CHG leads the way at 3222g/kWh.
  • Huaneng HaiMen Power Plant will produce 1030MW at 292g/kWh – most efficient.
  • Recent worlds events (Beijing Olympics, Shanghai World Expo) accelerated CO2 Capture projects
  • China Government will impose the highest emission standards in the next few years
    • China -> 50mg/m3 of emission, USA -> 100mg/m3 of emission
  • Realistic expectations (by 2015, 25% will be from renewable sources)
  • Technology cooperation and IP sharing via license with Ember Clear and Duke Energy
  • Power Distribution and Power Generation in China are two different entities – opportunities exist to further enhance collaboration.
  • The Coal is in abundance but not geographically proximate to areas of consumption. Energy plants are primarily built close to the coast and transportation is inefficient. Gasification technologies are a viable alternative and are increasingly being deployed.
  • Global (Australia, Singapore, Philippines, Malaysia, Netherlands, Mexico, UK) and hiring

Innovation Works (Chris, Kai-Fu Lee)
  • Y-incubator and investor built by ex-Google China VP and ex-head of Microsoft China, Kai-Fu Lee who is revered in China as perhaps the most prominent technologist.
  • “The Chinese entrepreneurial environment is still in its formative stage, with significant barriers for the early-stage entrepreneur: the lack of management experience and coaching, the reluctance of venture capitalists to invest in companies in the formation stage, and the lack of networking and experience to pull a company together. These barriers all contribute to a dearth of high-tech start-ups in China. Innovation Works is matching entrepreneurs, engineers, ideas, and capital with a unique business model that improves success rates and speeds time-to-market.” – From their website.
  • 3 investment programs (seed financing, Y-combinator, Entrepreneur-In-Residence)
  • Things they look for:
    • Strong Background, entrepreneurial experience, some functional prototype
    • Does not look for controlling interest, divest at every round.
    • Experienced entrepreneurs tend to be more successful, reduce investor risk and require less hand-holding. Most companies find it hard to form teams – sales teams are especially hard.

  • In the last 18 months IW has created fair bit of value – USD$500M valuation
  • How to approach them: Use networking, develop an understanding of your customer base, ride on trends, have a complementary cofounder and use simple ideas.
  • The internet model is littered with good products with poor monetization. IW provides most help in this space.
  • Two success models:
    • Companies enjoying significant competitive advantage & technology barriers can enter and succeed on their own.
    • If only moderate advantage then use local team, run locally

Beijing Information Exchange
  • An integrated news and information trading platform still in its initial stages
  • Will provide features similar to Reuters and Bloomberg with particular emphasis in China
  • Information access is free, however subscription required to participate in trading.
  • Over 200 subscribers already and growing.
  • Business models still being defined.

End of day two further solidified in our minds that the new China was built to succeed.
There could not have been more contrast between CHG and IW. CHG was a high rise designed by an American architect that housed a state owned enterprise fairly rolling in money. We were hosted in a conference room with a 30 foot ceiling, a 25-seat rosewood table, comfy leather seats best spoiled by dignitaries, walls decked with marble and oak, and windows adorned with tinted glass. The tea served was exquisite, probably the best in China, and there were designated servers who attended to us. It was elegant, royal and seriously imposing. Innovation Works on the other hand was two floors of a non-descript building, random work spaces, clumsy and yet energetic and happening. The conference room where we sat in plastic chairs was marginally more than a make-do and at one time supposedly had bunker beds for the entrepreneurs. Yet both places had one thing in common – they both housed innovators and were powerful agents of the change sweeping China.
Dinner was at a Peking Duck restaurant, one of the oldest in Beijing. After dinner most people went for a massage and later we hung around at the lobby to toast Zander’s birthday. For a change, folks retired early around 2:00 am.

June 29th, Wednesday, Beijing (and off to Shanghai)
There were two visits planned for the day. The first was a meeting with Northern Light Ventures, established by an ex-Whartonite with an entrepreneurial background who had sold a technology company to Juniper. It was followed by a visit to the Foreign Affair Office of the Zhongguancun Science Park. Some folks decided to use the day instead to do more sight-seeing and shopping as it was our last day in Beijing.
Badaling Pass is the most visited section of the Great Wall and is only 70 KM North West of Beijing. Unlike Mutianyu, this section of the pass was more touristy, with souvenir shops and restaurants lining the access road. The Wall was a short walk up from the drop off point and was the lowest point in that section. The views were amazing and with the slight fog, it resembled scenes from old-style Chinese flicks. The construction was obviously different at Badaling– most strikingly, the shelters were built inside the Wall at the former, while it was on the Wall at the latter, the patterns, bricks and steps were all different and Badaling distinctly had night lighting.

Michael Lee had suggested that we visit Summer Palace and we decided to follow up on it. The 700 acres recreation area had 25000+ visitors on that day and yet we did not feel the crowd. The landscaped park with a large boating lake, pavilions, temples, theatres, bridges and fountains are a welcome escape from the bustling city of Beijing. The palace was built in 1880 for Empress Cixi (or Dragon Lady).
We all congregated at the Pearl Market in Beijing for shopping and then headed to the train station to catch our train to Shanghai. The train ride was a party that went on all night. Suffice to say that it included music, dancing, intoxication, finger-food, cards, gossip and more. There is a whole lot of stuff in the middle of China – we passed through populated cities and what looked like Ghost Towns, arriving in Shanghai comfortably but less than rested.

June 30th, Thursday, Shanghai
Shanghai city is a true metropolis, inspired by western cities yet distinctly local. Vicky, our local guide, ensured that we reached our hotel (Howard Johnson) safely despite the revelry en route. We only had an hour to freshen up as we had an aggressive schedule for the day.

Coca Cola China – Thiery Roques (CFO)
  • Nearly 1.7B servings of Coke products a day in China and continuously growing
  • Vol = Population x Incidence x Times x Average Consumption. Goal = Increase all four.
  • Consumption primarily in developed cities, distribution partners focusing on efficiency
    • Cofco and Swire are primary partners in China
  • Traditional business model: They own the IP and leverage bottlers and distributors to make the product accessible at all locations.
  • Expanded portfolio of products (has introduced new products primarily targeting the Chinese market that has received initial success)
  • Increase brand loyalty through events and marketing
  • E.g.: Mongolia: only 2.5 M people, but huge per capita consumption results in high profits.
  • Continue to enjoy high margins – are systemically developing brand loyalty
  • KOlab is their innovation lab where they focus on creating the right products and enabling partners to distribute the product effectively.
  • Coke directly employs 15,000 and indirectly supports the jobs of another 400,000 suppliers, wholesalers and retailers. Coke has helped ensure better quality control along the supply chain and increased the refinement of the beverage industry as a whole.

China Business News – Qin Shuo, Chief Editor
  • Inspired by world news agencies and provides the same level of sophisticated news delivery in China.
  • Provides coverage in international business, finance, industries, services and tourism. – Michael Jiang, VP of Product
  • Chinese version of Yelp + Groupon, been around for 7+ years, 40M monthly unique visitors
  • Customers come to dianping to seek information, stay loyal because of coupons
  • Provides reviews by food item, ranks and rates restaurants and other services (KTV, salons, hotels)
  • Provides coupons in the form of a flyer that can be downloaded or printed or web-shared on social networking platforms – to cater to the Chinese model
  • Provides a unique service – a text message with 70 characters that includes restaurant, favorite dishes location etc.
  • Chinese users prefer to click than search
  • A sales intensive process today as the sales team also needs to provide consulting service
  • It takes almost 6 months of sales to be successful in any city – needs to reach critical mass
  • Revenue Streams (coupon + group buy transaction revenue)
  • Have a check-in feature – yet to monetize as is the case across other platforms
  • Looking at strategies to reduce workforce requirement
  • Largest PoI database – do not consider PoI to have sustainable revenue, provides hidden benefits. Location based services have become very popular.
  • Incentivizes with virtual currency

The Coke visit was really an eye opener – here was a multi-national that had successfully adapted in the Chinese market unlike other bigwigs. The Coke experience introduced to us the CPG mindset in China – their marketing, partnerships and most interestingly the Bar made it a very special visit. We created a custom cocktail using an advanced user interaction system at the bar – one of the many innovations that Coke provides its customers. One of the most interesting insights was that of the Little Emperor. China’s one-child program and the rapid economy growth has created an entire generation of young kids and adults who have 6 people (parents and grandparents) catering to their whims and spoiling them with goodies that previously may have been out of reach. Hats off to Tania for pulling off the visit. At CBN, almost everybody took a photo in front of the TV camera as a newscaster though Suncheth was perfect as the sports anchor. had a good operational model and had figured out a successful monetization strategy.
Dinner was at the Crystal Jade Restaurant, a Shanghai-nese style restaurant with good food and great company. Charles had joined us for the evening and it was great to catch up with him. Eric and Lan had ensured that there was enough food and drinks for all of us and then some. Later most of us went to Xin Tian Di, a local hangout with breath-taking views of the Shanghai city-line and the Huangpu River. The Bund area is full of restaurants, clubs and people and was happening. The night ended late, we were famished and some of us retired to our quarters. For others it was massages and clubbing as usual.

July 1st, Friday, Shanghai
We had 4 company visits planned for the day - a quick breakfast, some tea and we were on our way to the one thing that Lebron and Kobe share.

Nike – Laurent Payre(Running), Andrew Wong(Inline Stores), Aaron Cain(Athletic Training)
  • The average number of sneakers for an 18 year old in America = 6. The average in China is 1.
  • The targeted age is slightly older, 20 as opposed to 14. Primarily due to affordability.
  • 6 geographies worldwide, 7 categories. China itself is a geography today. Global strategy adapted locally. Future is digital. Basketball is the most influential – Kobe is the big name.
  • Chinese youth are highly individualistic and the market is fairly sophisticated requiring investment in R&D and not just marketing. In China, Of China, For China.
  • Chinese youth carry more practical values and are fairly status conscious.
  • In the last few years there is heightened fashion consciousness with people accessorizing and personalizing their outward appearance. Acceleration of consumer evolution.
  • Knockoffs in general are not a major issue since often that is not the catered market. The real competition are local shoe companies that tend to spend more in marketing and are inflating the cost of acquiring ambassadors. Often throwing money at athletes is not the answer. Nike differentiates itself as a partner in the quest for athlete success. (Sports medicine, training, physiological and psychological assistance)
  • There are over 7000 Nike stores in China. Often times people walk in and ask “what is the most expensive stuff you got?” People want access to the Nike brand.
  • National TV advertising in China is expensive – takes away margins.
  • Hong Kong today is no longer the style leader for China.
  • Nike and the Government have shared objectives: They both want athletes to perform better. For the Government it is about pride.
  • The “Never give up” and the 1288 campaigns really won over the hearts of the Chinese.
  • Their mission: Inspire 1 Billion athletes, Get people moving!!

Shanghai United Assets and Equity Exchange (Wu Hongbing)
  • Today here are 60 Assets and Equity exchanges in China – will be collapsed to 3-4 in the next 10 years. Only 4 trade internationally – Shanghai and Beijing participate in international trade and are premier markets for local trade.
  • The exchange provides a platform for trading stock rights (equity), asset rights, creditors rights and intellectual rights for state owned enterprises.
  • The Equity market is the largest with over 60% share of trade at UAE
  • UAE also has the largest trading volume at 250B out of the 600B for all China. Over 10K trades a year.
  • Property rights trading platform for transactions between state-owned local and foreign assets. Services platform for M&A activity between private and public assets.
  • Financing services for small and medium enterprises – funding from pre-revenue to growth stage. VC’s and Angel investors participate in this market.
  • Private investors may be allowed to exit in secondary markets.
  • Also provides a platform for the trade of energy, environment, technology, cultural property, agricultural products. In the future will be the platform for carbon trading.
  • Asset mix is changing with more and more private trading
  • 50% of trade is from public to private – roughly privatization at 300B a year, 15% annualized growth.
  • Trading floor is competitive. 85% of trades get competitive offers & over 20% has more than 2 bids.
  • No derivatives or license trading at the moment.
  • The real job is to ensure that there are investors – not to be an I-banking institution.
  • Revenue through transaction fees.

SHSTI (Shanghai Technology Investment)
  • Funded by government in 1982 to promote commercialization of tech breakthrough in China as a replacement for previously existing grants programs. The fund is tasked to make equity investments to sponsor commercial breakthroughs. Government does not set investment strategy.
  • Key events
    • 1992 first batch of VCs
    • 1993 first fund with 5 state owned banks to attract capital from private sector
    • 1998 second batch
    • 2002 first company in Hong Kong exchange
    • 2004 first Joint Venture
  • Multiple Functions
    • Banking venture investment
    • Equity (At all stages of the Company)
    • Incubation
    • Investment and value added service
    • Combining investments from all subsidiaries
    • National strategic alignment
  • Today manage 14 funds with over a 100 investments, Average IRR of 10%. Over 90 employees: advisory and professional (57 seed, 20 early, 23 strategic). 50 companies have had equity trade sale, 30 public listed, 40 companies on the way
  • Capital market is hot with majority Private Equity investment
    • Target key companies in specific industry
    • Overseas collaboration, capital and expertise
    • Acquisition up and down the value chain
  • Initiative and funding used to be from government. Now fund is encouraging participation and that is converting this from a Government-lead to market-driven investment organization.
  • Criteria for investment
    • Technology ideally proprietary or substitutes for inefficient existing technology
    • Team composition.
    • How big is market?
  • Two reasons to fail:
    • Academicians with not enough business exposure leads to low success rate
    • Management team can't handle change or growth
  • Failure rate is only 5%. Failure is defined as bankruptcy, poor products or no growth
  • To incorporate a company it takes a month, to declare bankruptcy takes a year.
  • Clean-technology, financial, service and consumer are primary areas of focus.
  • Willing to invest in Asia, Europe and America
  • Strategy: Spend time up front to set up good companies, Help companies grow bigger, Invest up and down value chain, Leverage government relationship. Very hands on in operations.
  • Hiring: Care about 5 years work experience. Education not so critical.

AdChina (Phillip Kuai, General Manager, Mobile Ad Platform)
  • Established 2007, fastest growing Internet startup in China.
  • 450 people, Integrated advertising platform, 45% sales people, 4 cities
  • Primary objective is to connect demand and supply of Online and Mobile Advertising
  • Provide platform for demand side advertisers

    • Manage ad campaigns
    • Create categories for targeting
    • Pay influential opinion leaders
    • Plant viral communication
  • Publishers are suppliers
    • Worked with over 1000 advertisers on 3000 campaigns
    • Information is really what is driving the internet
    • Coverage at an individual website not enough
    • By working with different publishers AdChina has wider reach
    • Avoids overlap, helps advertising be more targeted. 400 publishers
    • China online advertising is time based so frequency capping is new
  • Advertisers want security so pay for time, instead of frequency
  • Objective is to reach sufficient people to create impact on revenue
  • Mobile grew rapidly. Very big share of people’s time. Android is the biggest
  • Features
    • Tracking code in the posting tracks user behavior and helps reach the right people
    • Allows Content to follow Behavior
    • Allows Location based targeting
    • Re-targeting people who clicked on ad but didn't buy
    • Mobile Device targeting, Keyword, System Device, operating system, Time-based targeting
  • Publishers like CPM though CPC is better (Brand advertising vs Banner ad)
  • People are bored on the mobile (Name and cell phone number known on the app – send text link ad)
  • Privacy: Looser definition of privacy laws in China
  • MicroBlog platform for partnership and distribution of advertisement for WOM
  • Limited Optimization help – not providing metrics or customization help.
  • Provide segmentation and targeting through surveys
  • Limited TV spots so people are spending advertising budget on the Internet
  • Move away from sites to apps trend is consistent
  • Self service is not as relevant in China, relationship based (Quanxi)
  • Pricing pressure is not as much. Sales turnover is a concern. Bundling products helps.
  • Copycat environment, so need to run very fast to have advantage. Need to integrate across all social media platforms
  • User behavior on Internet is different from mobile. People are more mobile. Ads are more entertaining than waiting for a bus! Webpage is crowded, Mobile is less cluttered and ads draw more attention.
  • Opinion: Admob won't work in China
    • People don't pay for ads, pricing is not relevant
    • Rev share model does not exist
    • Any reliance in self service is a tough sell
    • Discount is not sustainable, since margins are thin

What a busy day! The Nike experience was probably the most stimulating; here was a company that makes money inspiring people. The advertisements and vignettes were very compelling and so was the Nike/Liu Xiang story. There were videos of how students in China have compulsory Physical Education and how it is a barrier to getting admissions in good schools/colleges which was funny and touchy at the same time. Nike formulated a strategy to address this need by introducing a training program for students to learn running and to enjoy sport instead of considering it a chore. Tina shared with us her story of getting her first pair of running shoes, improving her speed to make it to the school of her choice and how much she coveted the same- it got pretty darn emotional in the room. Later we went to a Nike store – and all got 40% discount on everything in the store, always great marketing. Tina was also the designated translator at SHSTI and UAE and she did a great job! AdChina was our last visit and it was apparent that we were eager to be done.

The next 36-hours included momentous partying (Kuperman taught us how to dance and sleep at the same time, and Nathan has some rad bar skills), shopping like it was going out of style, food and bargaining as a competitive sport (you want Eunsoo and Cheng on your team anytime you are negotiating), and generally hanging out till it was almost a crime. The only sober moments were a short visit to the Jade Buddha temple and the world famous Chinese acrobatic show. Most folks started heading out, but for some the party continued to Hong Kong.

Our hosts (Leo, Tina, Lan, Eric) really made this an unforgettable experience. While for most of us this was a first trip, it certainly won’t be the last for any of us! 

Some Key Takeaways
  • China continues to be a premier sourcing destination for manufacturing, though technology talent and services are increasingly being sought for by multi-nationals and locals alike.
  • The Little Emperor phenomenon and the high individualism in today’s youth is making China an ideal location for luxury goods and premier services accelerating the consumer evolution.
  • There is a high degree of adaption required for foreign goods and services to be successful in China for two reasons. Local customs and culture and Government/Society imposed rules and regulations.
  • Knowledge of local language is essential to succeed in China
  • Digital and mobile are very important to succeed in China. People spend enormous time on mobile/Internet and China being a vast country, this provides a mechanism to rapidly make products and services available to the whole geography.
  • Consumption patterns are not uniform across the country- the South East coast is much more developed then the interior and the west inlands.
  • Funding for new ventures in plenty, though bulk of it is late stage funding by VCs and PEs and Government sponsored funds. There are opportunities to invest in the seed stage.
  • The general privatization of the country and the large amounts of transfer of wealth between the public and private sector maybe creating opportunities for investors to turn around and make profit.
  • Operational prudence and strategy are highly sought for in China across businesses and investment arms.
  • China is making a big push for energy self-reliance which opens up many opportunities in the areas of efficiency, pollution control, energy saving, and other clean technologies. Coal will continue to be a major provider of energy but there are opportunities in renewables.
  • Our batch is extremely well connected in China!
  • Urban China is happening and a lot of fun!

Friday, April 22, 2011

Crossroads ...

Growing up in a small town in South India, traveling by train was the affordable and preferred means of long distance travel. Since the town itself only had trains to a few larger cities, one typically had to take a train to one of the larger cities that was a hub and then transfer over to another that took one to the desired destination. It was an interesting experience traveling with people planning to go North, West and East on the same train, all waiting to reach the hub. On getting there, people took breaks, stretched out, exchanged contact information with newly formed friends and moved on to the next train.

The first year at Wharton felt a lot like that. We came into class 36 with several destinations in mind – investment banking, consulting, marketing, entrepreneurship – and traveled this journey together to the end of year one; getting to know a bit more about other destinations that you may not travel to on this journey, listening to the excited voices of other passengers talk about the exciting vistas they plan to travel to and wonder if your destination sounded too ordinary in the face of that.

Having reached the crossroads now, it is time to pick one’s destination. And catch the right train. Some of the passengers who came with you so far will follow you through to your electives, new learning teams will be formed and new seating preferences sealed. But all that's for another day. Now's the time to rejoice over the journey behind us, for the year that whizzed past in a crazy stream of hyperstimulated consciousness. What better way to do that than a class toast to seal the deal?

We had corporate finance finals as well as marketing strategy finals to close the term. We had an exciting farewell to SABRE as the winners were announced to an Oscar-like suspense-filled crowd. The winners won the adulation and cheers of the cognoscenti that knew what it took to win the crown. The losers trash-talked each other in jest about how badly they performed. It was a fun exercise that will definitely be missed. Relief was writ large on every face on Saturday, as a grueling Term 3 came to an end. Congratulations to all class 36ers for staying the course and fighting it out to the end - its an amazing achievement that I'm sure all our predecessors would be proud of as well!

Meanwhile class 37 is ramping up to make its history.  We're all meeting with different subsets of them and responding to their questions and concerns and helping them make the right decision about which MBA program to join in case they are undecided. Good luck to all of you as you start your journey! I look forward to a few of you stepping up to share your thoughts on this blog.

The Bard said "If it were done when 'tis done, then 'twere well It were done quickly". But alas one can only wish for speed and there are always consequences to the choices one makes to apportion time between life's commitments. Henceforth, you would be hearing less from me on this blog for a while, and I look forward to hearing the voices of other members of class 36 that will lend more color, excitement and perspective to this blog.

It has been a wonderful year, and thank you all for sharing the journey!

Welcome Class 37!

I just wanted to say a huge WELCOME to Class 37. We got to meet some of your during your visits and hope that we meet the rest of you soon.

You're in for a whirlwind adventure of pushing yourself and the concept of time management beyond what you knew before. Prepare to be surrounded by brilliant people (seriously humbling) just as excited about your future as you are.

It's a special time, that first term, enjoy it and welcome to the family.

Thursday, April 7, 2011

Heartbreak hill ...

The end was almost in sight .. that's when the Heartbreak Hill showed up last weekend. Having survived that, we are getting ready for the final stretch towards the finish line next weekend!

Last session can be described in a succession of V's - V for victory, V for Veeraraghavan, V for vagaries V for Viagra, and V for VC.

Veeraraghavan - last weekend was OPIM finals.  It was definitely a challenging exercise, so it remains to be seen what the outcome is for the class. Last session was also interesting from the point of view of the class discussion in Patti's class on Viagra vs. Cialis. As she said in class, this is not a topic on which you can research market share on Google - for obvious reasons :). After the class got done with the usual set of jokes around this, we had a good discussion around how Cialis was able to position itself in a market that already had a clear leader. We followed that up with a second session around Dove and the campaign around real beauty and its repercussions. The classes seem interesting so far, but in terms of preparing for the finals, the materials seem quite haphazard and all over the place, so it will be interesting to see how we can bring all of it together in our minds in a week in time for the exam.

Victory - after a long wait of 28 years, India finally brought home the cricket world cup, beating Sri Lanka at the Wankhede Stadium last weekend. All the Indians in our class have waited for this moment for decades, from the time we were kids that watched Kapil Dev and his team win this in 1983. Sadly though, after all this wait, we had to be stuck taking our OPIM finals while the game ended. We made up for that by watching the replays after the exam, during lunch break. Many others in class were intrigued by all the excitement that this generated and were trying to follow what was happening as well. All in all, definitely the highlight of the session, if not the year, for me.

Vagaries - this was also a session where the fire alarm on campus went off, right before the OPIM final, as people were trickling in for the test, following their time-tested rituals before taking an exam. It was fascinating to see how the crowd dynamics evolved as folks were asked to vacate the building and wait outside in a plaza behind campus. Imagine race-day when you are at the start line, doing your stretches, obligatory porta-potty visits, checking your gel packs, and getting your mind ready for the start of the race. If they had announced that the race would be postponed even by an hour, that would throw your plans off quite significantly. It was something similar last Saturday as well, as folks didn't have time to eat breakfast, or print their last minute cheat-sheet printouts. Instead we suddenly had this free-time on a morning outside campus to just chill and kid around about the test and the cricket finals - was quite interesting to observe the interactions from a distance and see how different people responded to a change in schedule on a day where they were probably not used to that happening.

VC - We had Anu Nigam from the Sand Hill Angels come talk to us about what venture capitalists and angel investors look for when they look at startup pitches. Had quite a few interesting nuggets to learn from. I must also add a shout-out to my classmate Sanju here for bringing so many interesting speakers to talk to us. We also had the CEO of Equilar come talk to us about executive compensations.

As the class 37 students are making up their minds between Wharton and other options, many of us met with or spoke with them as well, to help them through the process. I met with four of the candidates that I had spoken with for lunch to celebrate their admission into the program and answer any questions they might have. The admissions reception is scheduled for this Saturday on campus, so I hope all the folks who got admitted attend it and make the right choice ;). If you have any questions to help you with your decision making, feel free to reach out to us any time.

Lot more to write about the CFA GIRC competition at Omaha, but I shall reserve that for another post. We're on our way back to the Bay area from the event and our flight out of Phoenix should be boarding any time, so that's it for now folks! Good luck to everyone on next week's finals!

Sunday, March 27, 2011

Once a runner ...

[In keeping with the running theme about running, today's title is inspired by one of my favorite books on running - "Once a Runner".]

The highlight of the past session was the talk by the SVP and CIO of the SF Giants, Bill Schlough who's also a Wharton alum. Despite being the busiest session in the year so far, the talk was well attended and appreciated. Friday night gave a chance for classmates to mingle with the families of the rest of the class at a dinner at Thirsty Bear Restaurant. As expected, nothing can dampen the spirits (both the spiritual and bacchanalian kind) of Whartonites. Sleepless nights spent partying or working on assignments (or both) followed by full days of lectures and cases whizzed past and before one knew it, the three-day weekend was over.

This weekend was an occasion to get to know Senthil from OPIM 632 better. I haven’t heard anyone mention Silvia Plath and William Feller in the same breath – he does seem to have an interesting breath of taste in books. A quick summary of sustainability and carbon footprint considerations in the supply chain was fascinating as well – brought out several facts that I had not heard of before. The other interesting class related event of course was the MKTG 621 final – was interesting to take a closed book, no-cheat-sheet test after a long time. The class itself was one of my favorites so far in the program and it will be missed. We got exposed to marketing strategy discussions with Prof. Patti Williams through the Medicines and Aqualisa case - was interesting to learn formally what we were trying to wing our way through in SABRE so far. Many of us stayed up late on one of the nights, debating over cost of capital, corporate capital structures, asset, debt and equity betas and a whole bunch of other things as the night progressed, for the Teletech case in Finance.

This term underscored more than anything else my feeling of being a participant in a race that I probably qualified for by mistake, like the other academic sojourns of mine where I've felt equally out of place in the midst of a sea of talent. I have friends that recounted the experience of running the Western States 100 to me, and at some level the WEMBA program itself can be abstracted to that race. Only those that have the endurance and will to qualify for it would even consider applying. Once you’re in the race, your vitals are checked at every aid-station to ensure that you have what it takes to reach the next one. 

It’s been an honor so far to witness the races run by my fellow classmates, even as I huff and puff along from one aid-station to the next, willing one leg in front of the next. The effortless cadence of the elite runners to whom this is just another race to be done perfectly, the flair and gregariousness of the social runners, cheering on the slower ones and chitchatting with the aid-station staff, the methodical approach of the personal-record hunters as they watch their time and vitals at every step, the tired visages of the few having a bad day as they trudge towards their next stop, unsure whether to call it a day and race another day or not. As the year almost draws to a close, it’s been amazing to look back and see the hills and valleys we’ve conquered so far in our quest for that elusive belt buckle that the finishers get to keep.

The nostalgia stems also from hearing back from applicants who I had interacted with during the admissions process – their happiness at getting in brought back pleasant memories from last year, and my exchanges with my own mentors who helped me through the process –Miri (class 34), Ashish (class 31), Laura (class 31) and Venk (class 27). Congratulations to all the newly minted members to the WEMBA family and wish you all the very best! 

To continue with the running analogy in this context, the Anbessa song comes to mind – we’ve done our part keeping the WEMBA flag flying high in the first year, and now it’s your turn to get into your stride and power ahead of us.

Monday, March 21, 2011

Term 1-3 speed-round update from Joanne

Okay. It's been awhile, I know. Sorry for the blog-silence (and thanks to Anand for carrying the blogging torch!). We're rounding out our first year (completion of Term 3) and I'll give you the quick update from my side.

Term 1 I studied a lot, maybe close to 25-30 hours per week. The content was interesting, yes, but also there was a part of me that wanted to prove that I'm smart enough to be there. I guess everyone (well, me at least) thought just maybe I was the admissions mistake. I wanted to "keep up" in regards to test scores, etc. What I gave up was time with my husband and friends. I found that there is such a thing as too much studying. Still managed to squeeze in my first triathlon (yay!), which was a super fun activity to do with my husband and cousins.
Term 2 Cut back significantly on the studying, down to about 10 hours a week or so. In hindsight, this was an overcorrection from the first term. Grades went down (which is okay) but maybe flirted with disaster a bit. On the bright side I was able to spend more time with Tim (husband) and Fuzz (dog). Still managed to stay out of the lowest 10% (number of "LT"s are tracked by the school) but probably just barely. I'm sure my poor showing in statistics will come back to haunt me in electives. Alas, my mother's statistics-gift (her Masters) was not transferred to me.
Term 3 (mid-way through) brought more interesting professors (in a good way) and butt-loads of classes. I've ramped up the studying again somewhere between where I was Term 1 and 2. Classes, which started in Term 1 as full-term classes, are now half term (most of them) that overlap at an alarming rate. They still remain interesting and engaging (operations/supply chain optimization, marketing, finance) and I find myself furiously scribbling notes for my startup (you know, business principles I never knew I was supposed to do when starting a venture - oops, better late than never).
Because I thought I was hot-stuff, I also allowed myself to get drafted into the Global Consulting Practicum course this term (yes, all those words have been selected carefully). GCP partners a Wharton team with a team from an international business school, in our case Instituto de Empreza in Madrid, to create a US market entry strategy. I'll have to reflect/write more on it when it's done. So far, it's had it's ups and downs. Adding this to the workload has definitely taught me my limits.

Life/Career Update!
Well, thanks to everyone for listening to my rants last year about entrepreneurship and my corporate job. :) With the blog-radio silence, trust me, I saved you from months of my agonizing over whether or not to leave my job and pursue the startup full time. Ultimately, it was the wise words of our backyard landscaper that led me stop the on-the-fence BS which was causing my suffering, and just make a decision already. So I did. 
On January 6th, I said farewell to my gray cubicle and hello to full-time startup life. 
I. absolutely. love. my. career. now. (yes, all the periods are necessary)
Things I love about it: creativity, variety in work, and the feeling that I'm building something fantastic. I realize that I belong in this world and am enjoying every minute of it. 

Wharton has been a huge supporter of our startup - from the professors, to my fellow classmates, and the awesome staff. Coming from a non-business background, the benefits from learning all the business fundamentals has helped me tremendously and I'm truly grateful for all the amazing things in my life.

Monday, March 14, 2011

Discovering limits ...

A lot of data that get sent across the web gets sent using a protocol called TCP. How does one send data as efficiently as possible across a channel whose capacity one doesn't know? TCP does this by increasing the window size of data sent for every acknowledgement it receives for receipt of data. It does this until it starts to see packets lost, at which point it throttles down to the bandwidth that it just observed and tries to maintain that data rate for transmission, fluctuating around that mean value using the same mechanism.

What's the place for a networking lesson on a Wharton blog, you ask? The Wharton Executive MBA program topped rankings yet again recently. One of the reasons of this other than the usual that you hear, is how the program manages to extend your capacity for work, slowly but surely. It doesn't sound like a lot of fun while you are in the middle of it facing time crunches, but looking back at some of the busier sessions, it has been amazing to see the amount of work that got done between sessions with minimal time and additional commitments.

Which brings me to the TCP analogy. This session promises to be one where most of the class will hit our capacity ceiling. And as if they knew it, the load for the session after the one this weekend seems to be lighter too, as if to give us a breather. In the upcoming session, we have Bell's MKTG 621 final, in MKTG 622 we have a Medicines case assignment due to be submitted, SABRE decisions due, and an Aqualisa case due to be read for discussion. In OPIM 632 we have an assignment due, and three (yes you read that right) cases to be read for in class discussion. In FNCE 601 we have a Teletech case on cost of capital and hurdle rates due, and in WHCP 614 there is a lot of reading that needs to get reflected into a five-minute presentation on communicating change.

Now one thing I know for sure - this too shall pass. But during the time that it hasn't, it has been a scramble trying to identify all the different things that need to get done, and re-prioritizing them based on urgency or learning team conference call coordination. Last session itself was an exercise in juggling tasks and this one promises to do one better on that.

What else happened last session? Two of my classmates, along with two from class 35 represented Wharton at the Hult Case Challenge and just missed getting selected to the next round. We're proud of you anyway, Chris and Brian! Five of us represented Wharton at the CFA Institute Global Investment Research Challenge Western Regional Finals (that's a mouthful!) last weekend, and won. We now move on to Omaha to represent Wharton at the Americas finals. A big shout-out to Arif and Tao, the two classmates that were instrumental in making this happen!

As an earlier post alluded to, a few of us 36ers, a couple of Harvard alums, Prof. Smetters and Dr. Harvey Rubin from the Penn School of Medicine started a nonprofit recently called Energize the Chain to eradicate vaccine preventable diseases in the developing world through an innovative use of cell phone towers for off-grid power for vaccine storage. We have submitted grant proposals to Gates Foundation as well as USAID. The reason it gets a mention on my blog today is that one of our team members, Alice,  at Harvey Mudd, got one-on-one time with Mr. Gates himself to present the idea and hear his feedback - way to go Alice! We are hoping that exciting things come out of this project and hope to launch a project in India and/or Kenya soon. Couple of our team members are in Kenya right now attending a GSMA conference to learn more.

Stay tuned for how this three-day marathon session pans out. I expect sleepless nights, caffeine-filled days and a lot of fun!

Saturday, February 26, 2011

Be careful what you wish for ...

A facebook post by Michael, my classmate, inspired the title for this week's post. As the saying goes, you should be careful what you wish for, for you might get it. All of us that got into Wharton were made aware of how busy Term 3 could get, and yet it feels like we weren't prepared enough for it. As a hectic fortnight whizzed past before the previous session and we're midway through another one, it seems nostalgic to remember the time from a year ago when this was a distant possibility. Don't get me wrong. I love what I'm learning this term. Its a confluence of work, school and personal schedules that makes this term hard for me, whereas for some others its taking on GCP over and above Term 3 schedule that makes it harder.

Last session whizzed past tamely given all the excitement leading into it. Many of us were up late doing (or re-doing) the Webvan case for David Bell's class, and then doing (and re-doing) the discounted cash flows for the finance case. Sabre period 1 decisions had been submitted and we had different teams trash talking each other in good spirits.  I believe that one of the milestones that went relatively unnoticed is that the Webvan case was probably the last assignment that we get to do together as the original learning teams put together when we joined. I'm sure everyone one in my class has something to say about how awesome their team is as well as about how badly their team sucked on other attributes. I actually went back and read what I wrote in my Wharton admission essays about learning teams and what skills I bring to the table. It helps to have that thought out well and observe yourself as you interact with your learning teams and see how true your assessment of your skills were. This is a classic case of a constrained optimization problem where each team member has to optimize their time distribution over individual assignments where they are graded individually and team assignments where the team gets the same grade and everyone pitches in towards the work. People's perception of how good/bad their learning team members are, is often linked to where along this continuum those members chose their optimal distributions.

As we form newer teams to cooperate on projects like SABRE and GCP, its refreshing to work closely with other classmates and see the differences and similarities in their modes of operation. At the same time, terms like this where everyone is so busy highlights those in the class who make it worth the while to spend time at Wharton. There are several of these, but I shall just pick one to illustrate, while leaving his name out since he might prefer it that way. Not only does he take leadership in most of his learning team assignments, he always goes out of his way to help classmates with difficult concepts. His attention to detail is as good as his ability to make a jazzy presentation of the material he wishes to present. With a busy career and a busy personal life, its just incredible to see how he manages his time and manages to stay on top of so many things - definitely it has been a great learning experience for me. This post (like others by me) is influenced by what limited set of observations I get to make of my class, but I'm certain that there are several stars like this in my class, which makes school fun and inspirational.

Speaking of inspirational, as part of homework for these two weeks, we were required to record a 3 minute video as part of our Management Communication class based on the iPremier case where we needed to role play and convince the executive team at iPremier on what future course of action to take. Given that most of us did not prepare for it in time to use the recording resources back in school, it was interesting to watch the hodge-podge of video qualities, backgrounds, presentation templates and approaches from different classmates for this assignment. We were required to "create" a chart to aid us with our explanation, and this required that we invent some data and plot it the way we wanted to, to make our case. I didn't realize that inventing data to plot it in Excel to fit what I had in mind was so much harder than it sounded. Recording without an audience and pretending that there was one in front was not easy either. I've always had a hard time rehearsing for any presentations that I make, and sure enough that came back to hurt me this time as well. Its been interesting to read the materials for this class and learn formally how to be a better speaker.

As we hit home stretch for next session, the finance midterm looms ahead. Before that, we have our SABRE Period 1 decisions due tomorrow. Teams that did well need to remember to keep their eyes on the ball, and the teams that didn't .. well, need to get their act together and reverse their fortunes. The CFA GIRC team had our report for the Western regional finals due last week and the presentation happens in a few days time, so its been crazy scheduling that in the middle of other deliverables for school. It was a great learning experience about the semiconductor industry, performing public comparable valuation, DCF analysis etc. to the extent one could given the time constraints. Another illustration of the importance of being careful in what one wishes for, and being prepared to handle the consequences of realizing that wish.

Wednesday, February 16, 2011

Missing the forest for the trees...

This has been the longest lag so far between a session and an update about it. And rightfully so. This is probably the busiest two weeks in the program so far, without a single exam at the end of it.

Last session was over even before it began. We had our marketing case reports due for the elBulli case. In addition to coming up with interesting business ideas for Adria to ponder over, creative classmates such as my learning team buddy and superstar Arif used Adobe After Effects to create ads for a new restaurant that Adria could start in Barcelona. The fact that the ad was excellent could be summarized by the response from one classmate who thought that we had just downloaded that ad from the elBulli website! Thanks to our classmate Leo, we had two really engaging and inspiring speakers last session, the CEO of EmberClear and a parter from KPCB. Albert, the CEO of EmberClear, was amazingly articulate about the business case behind gasification of coal as the next incremental technology innovation in energy that will drive billions of dollars of business. He recommended that all of us look at incremental changes rather than totally radical ideas such as "cleantech".

Did I mention that we also had our first final for the Term? OPIM got done with a crisp, two-hour final exam from Christian. We also had our first session of MKTG 622, which is the marketing management strategy class. Patti Williams will be spending the next few sessions with us as we rattle our SABREs and learn the material by building a company. All the Wharton MBAs are divided into several worlds of 6 companies each. Each company is a team of 5 people and sells two brands of a particular product in its own world. Given a lot of market reserarch, production planning, sales, distribution, forecasting and other data, each team has to decide what its best strategy for growth is. The game is played over 6 periods of decision making where one uses a software called SABRE to fight it out. May the best team win!

Coming back to why these two weeks are hard. We had the first set of SABRE decisions due a few days ago. There are two cases due in David Bell's marketing management class and one due in the finance class. For the communications class we are supposed to read a case and record a video presenting a defense to the media about the situation presented. We are supposed to do this as teams of two, critiquing each others work, which is due for recording this weekend as well. Oh and did I mention that those of us that are participating in the GIRC investment research challenge have our reports due this weekend? And GCP folks have their Devil's Advocate round coming up soon as well. Those of us with busy jobs or kids at home can also bid goodbye to sleep for these two weeks. Would this explain the record turnout for our weekly lunch meeting in South Bay today where 10 of us showed up to commiserate over each others' predicaments.

In the middle of all this, it is easy to get bogged down in the details of the case materials presented. Be it SABRE, or the Webvan case in marketing or the New Heritage Doll case in Finance, there is much more data that what someone could potentially use in their analysis. In fact without getting some perspective from the conjoint study data and perceptual maps in SABRE, one can get lost navigating all the other pieces of information there. As part of the Webvan case, Prof. Bell uploaded a few of his interesting research papers for reference. For the engineer in me, it was fascinating to see how Bayesian spatiotemporal models and discrete time hazard models were being used to analyze how an online retailer such as Netgrocer could have increased their customer base. Again, lots of data, lots of math, but a few key intuitions that guide the analysis.

So term 3, at its midpoint, seems to be about sifting through the muddy waters of detail to arrive at key insights. About not missing the forest for the trees. For data obsessed engineers such as myself, it seems to be about seeing data as a means to an end, not an end in itself. At a more philosophical level, it is about seeing where the trees of coursework and homework fit within the larger, more beautiful forest of life filled with the cheer of near and dear ones, Valentine's Days, chasing toddlers and smiling newborns.

Saturday, January 29, 2011

The Batmobile and race cars

It took a few days after a marathon 4-day session last week to sit down and post a summary of events. So here it goes.

We had a full-day corporate valuation training on Wednesday attended by a good number of class 36 and a few class 35 folks. Classmates who are looking at investment banking internships were quite happy with the session that would help them with their interviews. Continuing with the Impact Investing speaker series, we had a speaker over lunch to talk to us about different ways of looking at metrics for analyzing social impact from a market perspective. The Brazil committee met to discuss more about how to plan the visit, and solicit wider participation. The Wharton Business Plan Competition Phase II deadline was yesterday, so teams that wanted to meet face-to-face and discuss their submissions met and spoke about it. Folks neck-deep in their GCP work had separate meetings with their teams, chipping away at their tasks, one hour at a time. Few of us that are participating in the Global Investment Research Challenge had a quick pow-wow with our mentor Prof. Percival to get his advice on how we should proceed. We had two speakers come and talk to us about networking and how to go about doing it successfully. We had another speaker talk to us about charisma and how to make a good first impression.

Then of course there were the lectures - the reason why we were there in the first place. Percival gave us an extended session on discounted cash flows, with enough theater and script mixed in so we will remember what we were taught through all the drama. We had a couple of really interesting marketing classes where Bell and our TA Eric discussed Unilever's entry into the north-eastern Brazil market with a new low-cost detergent. Christian spoke to us about call arrival process modeling and how to estimate wait times and service times in a multi-server Poisson arrival model. We also started discussions on the Toyota Production System with a really cool French video about Citroen and their adoption of TPS.

We also had a flurry of applicants show up and attend sessions. This is the final stretch now, so I hope everyone has submitted their applications, or are close to doing so. It has been a busy month for me as well on this front. I have interacted with about 11 applicants so far, reviewing essays where asked to, responding to questions and in general providing them the same level of approachability and guidance that class 34 gave me when I visited Wharton last year and asked for help. So many of them are strong applicants and I hope they all make it in - class 37 promises to be one amazing class already!

Last weekend was also the deadline for my classmates to send in their applications for the Wharton Non-Profit Board Leadership Program. We had several classmates submit their applications already and are in the process of reviewing them. It was amazing to read about a completely different part of their lives that we seldom get to see in school and see how that motivated them to volunteer their time to help others. We hope to find the right set of nonprofits to match them with that can utilize their skills and interests the most, and from whom they can learn and benefit the most as well. We have a one day training program for all applicants planned for mid-Feb. Stay tuned for updates in the coming weeks!

As I read these essays from classmates, the essays of the new applicants to WEMBA and interact with my classmates looking into internships and career transitions, I cannot but help think about the Batmobile and race cars. Race cars are built to win - on race tracks. Every piece of their being is fine-tuned for that one act, to extract the last ounce of performance from them under challenging circumstances. The Batmobile on the other hand - a pure work of genius. Driving fast is only one of the things it can do. If you saw it parked outside your local supermarket while someone did grocery shopping, you might notice it because it looks different. But if it didn't, one would never know the things it was capable of.

Corporate life, to a great extent, seems to be similar. Through our undergraduate and graduate years, we are trained to excel at one specialized area. We get into jobs in that area of specialization, and before we know it, we're being fine tuned to excel at that one thing inside the corporation. Within a few years, we are all race cars ready to win races for our companies in that one area of specialization. But what if there were a few Batmobiles in there, that appear the same as race cars, but in terms of potential were vastly different? Where in the corporate world are there Batmobile detectors that beep when those exceptional employees walk past them and indicate to the management - behold! This is someone that you need to cherish and whose work scope needs to be expanded wider. In other words, how does a Batmobile - so used to its daily routine of winning races that it finds it as interesting as grocery shopping - signal to the outside world that it has potential that they cannot see? What in our corporate HR structure is made to detect these signals? One can learn about Hackman and skill variety and job design, but how does this get integrated into corporate business unit structures and career growth paths? How does one taken a specialist out of their "competency trap" and redeploy them into something else where they are untested but claim potential, or interest, or both?

All interesting questions ... and as many of us navigate the paths of career transitions, something to ponder about as we think about starting our own enterprises. Where would a Batmobile fit within your organization were you to build one?

Saturday, January 8, 2011


After three weeks of rest and recovery, Term 3 started for me this weekend. Many of my classmates took the Global Modular Courses offered locally as well as overseas in India and other countries. I heard from a few of them that the marketing class in India, as well as the product development class out here in San Francisco were quite interesting. Some of us had other commitments during the break and hence could not sign up for these – there is always next December to catch up.

Friday started early for some of us that are participating in the Global Investment Research Challenge – we met on campus early before classes to strategize and divide up work for the fun ride ahead dissecting a firm’s financials. After two terms, the starting of a term feels like meeting long-lost friends after a while – was awesome to meet everyone again and get back into the cauldron that is the WEMBA program. This session we started with Terwiesch for OPIM, Percival for Corp. Finance, and several instructors led by Carl Maugeri on Management Communication. In two OPIM sessions we play-worked on two production lines – first a small assignment approving/rejecting mortgage applications as a line of 5 people, and then as a longer assignment bidding for contracts to build a circuit board that beeps and blinks based on how quickly a line of 5 employees can churn these out. Competitive juices were out in full flow as teams practiced how quickly they could insert the different components and move the product down the line to reach the tester at the end and be validated to be defect-free. Based on activity times we had to make bids on how low our selling price could be. The winning team in my section made 31 of these in 10 minutes with zero defects – hello, China, here they come!

The revelation to me for this term so far has been Prof. Percival. Not in my wildest dreams had I imagined that analyzing and contrasting the financials of FedEx and UPS over the past two decades would be presented as interestingly as a suspense thriller. The man should definitely go into theater. It was just fabulous sitting back and soaking it in – seeing how the numbers were just one piece in a larger context in which they were set. The focus of the course is value creation – and from the session we had, it looks like it is not just about the value creation happening in firms, but also within our minds about rethinking the rights and wrongs of earnings management and other shady but legal accounting practices. I’m sure I will spend more space on this course in the coming weeks, so will postpone further analysis. The Management Communication class promises to be engaging as well. It was great fun to be broken up into teams of seven and have an opportunity to address the team on a topic provided to us and speak for 3 minutes about it. We were videotaped and are to get a detailed analysis of how we did and recommendations for improvement during a 30-minute one-on-one meeting next session.

As if all this action wasn’t sufficient, we had two lunchtime speakers come talk to us about their work – one on impact investing and the other on issues that companies face as they go global. This was also the first session in the MBA program so far that one of the sections had a class as late as 7.15-9.15 pm.

Some classmates came with their significant others, some with their kids. It was great to see everyone relaxed after a good break and after having spent time with their families. It is difficult to get enough time during the term to do justice to all the relationships in our lives. It reminds me of stuff learnt during undergrad actually, if you will humor me – the Nyquist-Shannon sampling theorem. It states that if you sample a process often enough, you will be able to reconstruct it fully without any loss of quality even though you did not get to witness the entire process. Life during the MBA program seems like an experiment at disproving this. In the recent past theories, like compressive sampling have actually extended this further to say that for sparse signals (that have very little information in them over long durations) one can actually time the sampling at appropriate times, less frequently than the Nyquist rate, and still reconstruct with full fidelity. But unfortunately, not everything in life is a sparse signal. Catching up with friends during breaks might suffice based on how well one knows them, but time not spent with kids is memories that cannot be reconstructed with any other samples from life. One can only try to sample more frequently during breaks and see if one gets back any signal from times that one did not witness.

Timing seems to be a culprit in corporate behavior as well. As we are learning in the finance class, the artificial segmenting caused in a company’s life through splitting earnings reports into quarters causes the firms to move numbers across the divide to achieve their earnings estimates and manipulate public perception of performance. Clearly a 3-month sampling period seems to be insufficient to gauge how well a firm is doing. It will be interesting to see if the FASB comes up with stricter regulations around these earnings management tricks. OPIM opened our eyes to a different sort of timing – within production lines. For maximal performance of a team, the members need to work in lock-step, or achieve “line balance” as we were told. The takt time needs to be regular. It was also interesting to hear a professor use variance in VO2Max between students as an example for variance between people, just like variance in productivity. Terwiesch's got to be a long-distance runner.

In life, timing is everything. For those of you that are applying to the program, this is something to keep in mind. As you work on your essays and schedule your interviews, think about why you are doing an MBA, as well as why you are doing it now.

Friday, January 7, 2011

Global Consulting Practicum - SoyPro in Israel

For those who have not heard about GCP, here is the official home page. And below is my unofficial story...
What people have told me about GCP:
One of the most valuable experiences at Wharton, but it is a LOT of work, really a LOT. Think three times before signing up for it, think ten times before signing up for it during the first year. Since term three is the busiest term, adding GCP to it does not really help.
What I thought when I heard what people said:
No problem, it is only one term’s hard work. Of course I can handle it during term 3. Let me do it during the first year so that I can focus more on my career second year …
Well, the reality is: GCP spans two terms (not one!). During term two, we have to start building a team, writing up project application, bidding for projects, worrying about whether we will get a project, and finally, working on the engagement proposal before flying to Israel after Christmas. AND we are doing all these while preparing for three final exams for term two… Every week, we have a team meeting with the Israel student team, a team meeting with our project faculty (PF) and TA, and an internal team meeting; every three weeks, we report our progress to GCP office; of course, every day, we are searching for data for an unfamiliar industry, building the work plan and dealing with travel logistics to Israel. Wow, I really did not sign up for so much work before term three even started!
You do not think I am writing this to convince everyone not to do GCP, right? Of course not! Even though the work came much earlier and was a lot more than I predicated, every piece of work is accompanied with ten times more fun. Did I mention that I love Israel?

The Israel SoyPro project was not our team’s first pick, but I have to say that I felt really lucky that we did not get our first pick! Now, I realized that GCP is not about the nature of the project, it is about the people and the consulting process. I am not deeply passionate about soy beans but later I found myself laughing with our teammates, each holding an Edamame (immature soybeans in the pod) in hand taking a picture in a Japanese restaurant in Israel. All I have to say is that accept any project you get, surprises will come during your journey, especially from the people you are about to meet and the country you are about to experience.

Winter might not be a good time to travel to Europe or Asia, but winter is great in Israel. It was in the 70-80’s when I floated in the Dead Sea and soaked myself in the mud. The beaches in the Dead Sea or Tele Aviv are just amazing: blue in color and quiet with healing power. Masada and Jerusalem are about the culture and history of this amazing country. Even though I am not religious, it was just fun to listen to the ancient stories, walking the old city and taking pictures of art, food and architecture. I had the best hummus, kebab and falafel in the world, the best. The coffee, wine, fine dining, and sleepless energy made Israel a lively city. Wow, food is really just yummy: lamb spareribs, chicken pate, gnocchi, bread, pomegranate juice and dessert. Of course, it also gifted me with several lbs in weight – it certainly did not help to watch “eat, love, pray” on the way to Israel. I constantly asked myself: when did I start to feel guilty of enjoying life (aka food)?

A lot of work. I arrived two days early for sightseeing knowing that once work starts, there will be no time for break. We worked from 9am to 10/11pm every day. But of course after work, we ate together, took a taxi to hotel and fell right to sleep. Exciting discussions happen every day – it is so much more existing to argue in person than on the phone-, but we are making rapid decisions. Many stakeholders gave us many feedbacks towards different directions, but we have 100% liberty to decide whether to incorporate their feedbacks. We are perfectionist when it comes to work. The biggest satisfaction is when the client said “I am very positively impressed by your proposal” with a big smile. It was only the first victory, but it meant so much to all of us.

I cannot remember how many times our Israeli team members or our Wharton team members told me during the week in Israel: “I feel so lucky that I am on this team (and not on the other team ).” We first met on the phone every week for more than a month and we became friends; we then spent a whole week together under one roof and we became best friends. We are also very lucky to have no-nonsense project faculties (PF). Our PFs taught us so much about consulting in real life and shared so much of their personal experiences with us that we really felt connected with them.

The road ahead:
While we still have 4 months’ work in front of us and I might change my perception about GCP during the tough journey, I felt confident that I will be back to Israel one day to visit my dear friends there.

- Pardon any typos or grammar errors. Jetlag is my excuse. :)