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Saturday, May 27, 2006

How to build a million dollar business in less than 90 days

On March 5th , with less than 25 thousand rupees in my bank account, I boarded a plane to Bombay with a personal cheque written for an amount of 14 lakhs, as a sign up fee.

I signed on an agreement and called couple of my partners to let them know that I signed on that agreement.

I came back and prepared a business plan.

The plan basically is about investing in my project and getting a net return of 33% for the first three years.

I called couple of my friends and told them about this plan.

Both of them came forward with 20 Lakhs each.

I deposited 15 lakhs in my account for the sign up cheques to be cleared. I invested 20 Lakhs in Real Estate and spent that the rest 5 lakhs on clothes, laptops and in setting up of a new office.

The cost of the project initially was one crore. By then, 40% of it was funded. I needed to look for the rest of 60%.

Then I met couple of biggies in the town. One of them wanted 40% of the project.

That will be 80 lakhs. I told him. He said yes.

The other guy wanted to invest 50 lakhs and apportion his share at the end of the project.
Meanwhile another guy came forward with 20 lakhs.

I called Bombay dudes and told them to make the project bigger and much better.
I want it to be better than anything anyone has ever seen in Hyderabad. I told them.
We will. They told me.
(Meanwhile, the real estate investment I made blossomed into 30 lakhs. I took an exit and made a 10 lakh cash profit. )

The cost of the project got escalated to 2 crores. I put 10 lakhs. With that 10 lakhs the project got totally funded and my company still owns 100% of the project and is eligible for 60% of the total profits. (Don’t ask me, how is it possible. If you have the right story to tell, it is possible).

Just hype it. I told one of my partners.

We made couple of popular night appearances in the circles that mattered.
A dozen people queued to be a part of the project. (Includes a movie star and son of a famous industrialist).

Deny entry. I told my partners. Shield me from access. I told my office.
I changed my mobile phone number.

Hype got hyper.

Summon the original shareholders. I told my partners.

In that meeting, I dropped the bomb. You wont be part of this project. Your money will technically be a loan for my company. However, because of this huge heart that I have, I am letting you guys tell around that this project is yours too.

Those dudes went into a coma for a week. They recovered. Ok, whatever, just let us be part of this. They said.

Heck no, I said. I hate my heart. Its so large and its so generous. I want you to be a part of this project.

I gave them back more than what I initially planned for and more than they ever expected. Not just that. I gave them a blue print to recover their investment and double it in the first two years itself. Not just that, I gave them responsibilities and titles. Not just that, I gave them the brand itself. It is yours. Fuck it. I told them.

Now we are a happy team looking forward to the launch.

Last week me and my partner (who is financial managementally challenged) were drinking.

I hope this project clicks and we make profits someday. He said.
Sucker. What is your investment so far?

What is the cost of the project?
2 crores.

How much of it do you own?
Fucking shit. 67 Lakhs.
What is your share in profits?
What is the worst case scenario in projected profits in the next three years.
Fucking shit. Its 3 crores.
For how much do you think we can sell this project after three years?
Hmm. 2 Crores?
So whats your profit?
60 + 67. 1.27 crores.
But that’s not how you value a business.

Warren Buffet way: (The most orthodox and non aggressive way).

The profit you are offering me should be more than, the bank interest rate + projected inflation, after tax.
Average bank interest rate 13.5%
Inflation 7%
That means Buffet is willing to invest 100 bucks if I promise him that my net margin will be 20%.

Question: Lets say, for 100 bucks, you get one share of my project. How much Mr. Buffet, would you be willing to pay, if I told you that my net margin is 40%.

Answer: 200 bucks.

So partner, what is the total projected profit of this project including the exit sale?
5 crores.
Now, How much would Mr Buffet pay to own a business that would fetch him a profit of 5 crores in three years or 1.6 crores a year. Add Brand Equity to it. Add good will to it. Add preoperative expenses to it.
Partners jaw dropped. (Using several different analysis, it can be valued anywhere between 6 crores to 8 crores (1.6 * 5)).

Now, can we safely go ahead and say, we have just built a million dollar business? And we are just talking about one project. Remember I signed on two agreements. Not just one. And remember I made them sign on exclusivity. Then I whispered in his ear, what I want to do with project 2.

Pleahhhhhhse, let me be your partner forever.

Go, first fetch me some ice cubes. My brandy got warm.

Tuesday, May 23, 2006

Just In

Chain of Command

I am not a huge fan of politics or reading investigative journalism.
Bah, I dont why, I thought I should read this book. Its a good one. I read
chapter one. I think I am not going to read the rest. I am saving it as a
gift for someone.

The art of seduction

The morality of this book can be debated. I loved the author's previous book
48 Laws of power. Some of those laws are a part of my work ethics now.

125 bucks is not a bad investment in knowing the art of seduction. One chapter
brought huge smile on my face.

Part One
The Seductive Character
The Charmer Page 38

"They (Charmers) understand your spirit, feel your pain, adapt to your moods.
In the presence of a Charmer you feel better about yourself. Charmers do not argue or fight, complain or pester. What could be more seductive?"

Thursday, May 04, 2006

What Did Massa Smiley Say?

The Heat.
The Heat.

Gasp. Gasp.
Massa. Massa.

Heat. Gasp.
Heat. Gasp.

Oh wise Massa.
Oh wise Massa.
Help me.

Splash. Dive.
Whateva wise Massa Says.
Whateve wise Massa Says.

Massa Smiley Rocks.
Massa Smiley Rocks.

Tuesday, May 02, 2006

Swapna's tears

The engineer was abducted and killed by Talibans.

If you are living in India, there is lot of other stuff thats happening too.
  • Lots of Hindus got Killed in kashmir (the big media is trying to be politically correct and mentioning the killings as 'minorities got killed'.). The killed were not Christian missionaries. So, there is no fun in that news.
  • Pramod Mahajan, clearly one of the greatest strategists of modern politics is dying. Bah, no fun there too. BJP is not the ruling party.
  • Darna Zaroori Hai got released. Hmmm.. interesting.
  • Some dude in a movie titled Gangster, Kissed a slut on the screen. Hmmm..interesting.
Well, we cant disagree with the newspapers. They know the news better than us.
They know what sells. They know what doesnt. So do the politicians.

Yeah, coming back to the engineer. We have an engineer here, from the Indian
middle class, who went to work in Afghanistan (dumb choice) to earn more
for his loving wife and kids. Cool. We got a flash last week that Surya was abducted
by Talibans.

Now, thats news. Talibans sell. Thats for the media.

So , media went big on that story. A telugu news channel TV9 somehow managed
to sneak into Surya's house in Hyderabad and started relaying (live, ofcourse)
Surya's wife and his clan watching TV9 live and weeping.

The women of Andhra love watching other women crying. I am sorry to say
this, but thats how it is. So they flipped their favouring soaps (filled with sorrow
filled crying weeping chicks) to watch Surya's wife.

Apart from the Taliban aspect, there is also the suspense angle to this story.
Surya's wife by thumping her chest live, already stole the show. Now the suspense
is, will Surya live? Now, you can see the newsroom anchors of TV9 rubbing their
hands in glee.

If you are a politician, you cant miss an oppurtunity like this. You have a story
that won the sympathy of women folk and interest of the state. So the CM
promised everything he can do to bring back our engineer. CM blamed Taliban.
CM blamed Pakistan thats still hosting Taliban. CM blamed the previous ruling
party. CM said, he will die to protect his people.

TV9 hit a jackpot. They have a story that won people's interest. Now they have
a government thats pretty much helpless when it comes to protecting its citizens.
News channels love blaming government. Thats their muscle. Thats their power.
When there is chance, they will flex it. (I guess, I dont even have to mention the
SMS circus.)

Finally the inevitable (sorry to say this, but thats the reality) happened. You cant
mess with the Indian middle class. They own the media. Both central and state
governments went crazy.

The CM of Andhra Pradesh personally visited Surya's (weeping) family live (ofcourse
on TV9). Both central and state governments announced lots of exgratia.
The state government announced Five Lakhs and a promise to provide a
government job to the deceased wife.

I dont understand this.
1) What is the merit of Suryanarayan to win Five Lakhs of Government's money?
2) What is the merit of Suryanarayan's wife to secure a government job?

Sympathy? Or is it because of the popularity of the story?
Clearly the popularity of the story. The governement is already at the receiving end
by not able to bring back its citizen. It needs to cover up.
Strangely, during these times, media supports those cover ups. TV9 demanded
more ex-gratia for the family.

Correct me if I am wrong. WHY SHOULD the government PAY? If the government
should pay, BASED ON WHAT CRITERIA ex-gratias should be declared? If the
government should pay, it should then pay the innocent Kashmiris too who got killed
by militants. Who is paying THEM? If no is paying them, is it because they are
less popular story?

It would have been just another story. But wait, TV9 is on a roll. On the day the dead
body arrived, an innocent looking young woman by name Swapna surfaced and claimed
a share of the announced ex-gratia. Swapna surfaced and how! She apparently is the
'second wife' of Surya.

The women folk of andhra jumped in delight. This is getting better than their regular
soaps. Airtel jumped in delight. Media jumped in delight. Swapna went live too.
She went live and stole the entire show. So much so that the first wife attempted
a suicide.

It just cant get better than this for TV9. Swapna has this strange innocent beautiful
look on her face. When she talks she moves her eyebrows in such way that the whole
Andhra fell for her. (That includes me). Her demands are straight forward and honest.

1) I have a child. I am not asking for anything. Nothing. I want a share of the ex-gratia
for my child.
2) I want to be recognized as the 'second wife' of Surya. I dont need no money.

Quiet obviously, first wife's camp refused. Swapna's camp went on a dharna.
Police lathi charged. Media condemned police. Police condemned media and the
second camp. Second camp condemned first camp and police and government
and talibans and government and government.

If you ask me, Swapna has no one but to condemn herself. Technically there is nothing
called 'second wife'. It is basically illegal. The 'second wife' or her 'children' have no
legal rights or no legal claims to anything. Ideally thats how it should be.

But the problem is we have this innocent, beautiful young illegal widow who
is pouring her tears out for justice. Technically there is no justice. But no one in
their right mind can come out and say that. Not the media. Definitely not the

We are humans and this is India, where heart is placed above process and systems.
So lets enjoy this show. Let the media milk money. Let politicians claim fame.

Peace, love and someone else' tears.