We all eat pizza all the time. In good times and also in the bad times. When she doesn’t want to cook or you don’t want to cook yourself.
Pizza Hut was found in Michigan in 1958 and Domino’s in Michigan in 1960.
They slowly gained customer base with regular innovations and efforts.
In 2010s Domino’s invested heavily in digital infrastructure and slowly overtook pizza hut in terms of revenues.
It invested in digital media for ordering and delivering it’s pizza. It used data gathered this way to its advantage. It gathered ideas from customer feedbacks. It made its digital data driven network.
It won the battle from pizza hut and little outlets.
But then came new startups.
Last mile meal delivery apps.
Ubereats. Zomato. Swiggy. Doordash.
They delivered all types of food that may be ordered daily; as compared to pizza which is eaten once in a while.
And whoosh there is a new battle at the hands.
Hence companies have to adapt continuosly to emerging rapid competition.
They should try to prepare vertically integrated digital data network that benefits from client’s data with time. And hope to become one of the two main competitors in a particular segment of business.
Inspiration – Everybody wants to rule the world by R Wang.
He researched on agricultural plants and animals. He wanted to find, effect of body size on metabolic rate of the organisms, a thing that was useful in cattle industry.
Cattle industry owners saw potential in his research, as he could predict how fat their cattle will grow and how much bounty they can get by serving them to carnivorous masses.
Working over this, he stumbled upon a pattern, which is called kleiber law.
He noticed that as organisms grow in size, they slow down.
A rat has faster beating heart; as compared to an elephant. A bull’s heart beats slower than a cat, when he munches his grass.
He applied his mathematics knowledge, to analyse it and he found that it follows, “negative quarter power scaling.”
That means something; that blasts mind of every guy, who didn’t like maths at the school.
But, we can only know that if we take mass of an organism and do its square root and do square root of result obtained again; we will get approximate idea of its metabolism. Metabolism is 3/4 th power of its mass.
That means we do sqaure root twice.
By these ratios, we can predict relative metabolism of two animal species.
For example, if we take a cow and a rat. Let’s assume if cow is x times heavier than it; then cow’s heart will beat x times slower than rat and it will live roughly x times longer.
Scientist Geoffrey west took it further, when he applied this law to non living things like cities, creativity and ideas.
It applied well to cities when we saw cable length, petrol stations, factories etc.
But when he applied it to Idea generation and innovation it was not applicable.
As size of cities increased, number of ideas generated increased exponentially.
That is why cities serve as centres of growth and innovation.
As different ideas collide; they generates new combinations.
Hence, although kleiber’s law can help in comparison of heart rates and life-span of different species, it doesn’t apply everywhere as a basic law of energy distribution in nature.
Let’s stop here. I don’t see too many fans of mathematics, who scroll on social media.
Inspiration – Where the good ideas come from Steven Johnson.
Babies don’t need to study economics. They don’t need to know about debt. They don’t need to calculate interest rates and returns on investment.
But their fathers need to know all this. They need to earn money and then grow it slowly to fight inflation and uncertainty.
Babies and children in turn need this knowledge for their daddy or mamma; who are in-charge of money, which babies will own one day.
Don’t you think they want a wiser dad or mom, so that they can get lot more more money, than a passive parent may provide.
So this blog is to understand basics about debt or loan.
Debt is a loan which is to be repaid in fixed time and is given on particular rate of interest ( extra money other than principal amount ).
It is a way to raise money for businesses.
It can be classified into various types like business loan, personal loan, housing loan, car loan etc.
It can be secured or unsecured. secured loans have attached asset like property, machinary or FD; equivalent to the amount of loan, which can be forfeited in case of inability to return the loan.
What are bonds?
Bonds are one type of debt instruments. They are used by businesses to raise money.
Bond is a standard piece of aggrement, that fixes term of the loan like interest rate and tenure.
Company has to pay interest irrespective of the revenues. Hence, for investors bonds are relatively safer option to invest their money. As fixed returns are guaranteed beforehand. But, as risk is reduced in these compared to shares, returns on investment in bonds is also lower.
Government also takes loan from people for building infrastructure and other works.
Bonds are issued by government. This type of loan is called sovereign debt. Govt gives assured retuns on these investments.
Various debt instruments.
1. Bonds which we have discussed above.
2. Debentures – It is a debt instrument that is not secured by collaterals and generally has tenure longer than 10 years. Hence it is given to creditworthy organizations.
3. Corporate deposits –
It is company version of fixed deposit. It is for fixed duration and has fixed interest rate. It is provided by banks and non banking financial institutions.
4. Fixed deposit ( FD) – It is favourite thing of Indian masses. It preserves money with very low returns.
5. Public provident fund ( PPF) –
It provides for reasonable returns and tax and saving benefits. It has limit of 1.5 lakhs. Lately it’s returns have also been curtailed.
6. National savings certificate ( NSC) –
These are issued by government of India as small savings instruments. It is provided by India post.
7. Debt mutual funds –
These are mutual funds that invest primarily in bonds. Hence they have lower returns as compared to shares but are safer.
Main aim of all these is capital protection.
Capital gains is secondary.
As you age, it is better to invest more in bonds and debt instruments.
As you near your retirement or big expanse, you can take out money from equity and park it into a debt instrument for capital protection.
Inspiration – many personal finance books.
Few things about home loan.
It is given by bank or non banking financial company.
Down payment is initial payment for the home. It is generally 20% of the home value.
Before construction you have to give pre EMI. In first year 99% loan is disbursed.
After registration of the property remaining 10% is disbursed and registration documents lie with bank as collateral.
After, registration EMI starts.
Tenure is time period in which loan is to be repaid.
EMi is decided based on rate of interest and tenure.
There are other charges like processing fee, notarization, conversion charges etc.
Overdraft facility –
It is a way to reduce tenure and EMI of your loan.
Bank creates a savings account linked to your home loan account. It is called overdraft account.
Any additional amount of money in this account; over and above your EMI is taken as pre payment towards the loan. This reduces loan principal and hence reduces EMI.
Added advantage is that you can withdraw money from this account anytime.
For example; if you took 25 lakh loan with overdraft account. And you added 5 lakhs to this account. Interest rate of your loan will be calculated on 25-5 = 20 lakhs in place of 25 lakhs. Hence you get reduced EMI.
Why is it so.
Because interest rate of such loan is higher by 0.25-5% as compared to routine loan.
But inspite of this it is a useful way to save money.
You will be happy that you know it.
Inspiration – Mistakes in personal finance, that I have made.
A lot of things are infinite. They continue. Waiting for their end, leads to early obituaries. Eyes dry out, before comprehending corners of these things.
There is no end to a few things. There is no permanent winner or looser. Only finite moments of disturbances followed by a continuous flow of the time. Flow; that is continuous.
Life is such a thing. A little part of infinite flow of time. It ends and no body notices after sometime. Then new biomass loaded with consciousness, wriggles on earth and this flow continues unabated.
Life is part of an infinite stream that continues; come what may. Life ends but game of the life continues. Till last living cell is destroyed, it will continue and even after that; there is always a chance of resurrection of biology.
So why do we want finite durations?
Why we want business quarters?
Why we want annual reports?
We know business continues till owners live , so why is focus on the short term? Long term things should have long term strategy.
So, for a brand to last for decades; we need infinite mindset.
Infinite mindset means – That business is an infinite game; that is to be played with long-term targets in vision.
For example, USA thought Vietnam war was a finite game but after loss of life and big fortune; they realised that it was an infinite game, if they continued to play it.
Microsoft wanted to defeat Apple, which was a finite game mindset. Apple focused on satisfying the customer and recently on the privacy of customers. Hence Apple was clearly playing infinite game right from the start.
Lego wants game to continue. Hence it has been around for so long.
Even if Apple knew that iPhone will kill the ipod, they went ahead with it.
Similarly gym to gain fitness is an infinite game. If you stop following diet and excercise schedule after few months, you endup regaining all the weight you shed with so much effort.
So take life as an infinite game.
Qurters, annual revenues, flowcharts- all are artificial constructs to keep shirt term goals in perspective, but too much focus on them may jeopardize long term prospects of the business.
Infinite game is positive and inclusive.
It needs reselience and it has a just cause.
It avoids too much focus on the short term results, as long as long term progress is positive.
Hence next time you see an CEO too much submerged in three monthly results, assume that he has got a finite mindset.
Talent is a peculiar thing. It is so abundant sometimes; that you see it everywhere. It is more accurate description of social media personas, we encounter daily.
With acceptability of self boasting as a new normal trend, we see people floating their talents on social media.
Talent has multiplied many folds. With no judge or critic, people produce things ( posts), using their talents and push it down the throats of other similarly talented people, in exchange of ever elusive likes and shares.
It’s like apes scratching each other. If Socrates or epictetus somehow visited instagram pages prevelent in present times, they would be bewildered to see infinite sea of talented people on the planet earth.
They might like to take a wordpress SEO tutorial, for their teachings to beat average blogger followership.
That was the idiotic babble at the start of the article.
Now let’s see few basic concepts, that help in keeping talented person afloat.
1. Practice till your subconscious accepts the skill and you could make an omlette, while doing that work.
2. Find a mentor. Yes that one person who dies lesser number of mistakes as compared to his younger self. And who wants you to be a success.
3. Get inspiration. If not enough steal ideas. But give credit to the original creator.
4. Learn both hard skills like plumbing and softskills like boardskating, writing etc.
5. Don’t try to label yourself as child prodigy, as most of them fail as they grow into the adulthood.
6. Learn from mistake. Don’t burn the toast each time. Also don’t burn the toaster.
7. Increase difficulty level during practice time. On field things will appear easier, if you have done more difficult things.
8. To learn a new move, exaggerate it like the helicopter shot of mahander Singh Dhoni.
9. Take notes and also remember to read them before throwing them into the trash.
10. Practice immediately after the performance. That is the time when muscles are hot and motivation engine is running.
11. Visualise your performance or better watch your performance video.
12. Keep you big hairy audacious goals secret from the world.
Cal Newport wrote a book with title “So good that they cannot ignore you.”
As it is always with any self help book; there was very less new to describe. Afterall all the self-help works on well known and old few principles; which have been around for centuries.
Hence, you cannot create a new concept. So he did what was possible and he refuted a well established advice blurted by every self help guru that “You should follow your passion.”
That’s why he got attention of people who have always assumed that it is always right to follow your passion, even if final destination is not clear.
Newport argues that it can be a bad advice or even dangerous one. Let’s examine his reasons so that we may find something useful in this antitheory.
There are two types of people- ( Actually there are many types but we need to focus on these fellows here) –
1. Passion mindset– People who think that we should chase passion to be happy. World has to give us something. It owes something for our greatness.
2. Craftsman mindset – Be good at something and give something valuable to world and you will feel happiness.
How actually you can follow this path of,” loving what you do”.
It is like an Indian arranged marriage in which your parents choose your partner and you fall in increasing love as your marriage life proceeds.
Few things one can do according to Newport are as under
1. Develop a skill that is rare and valuable – It is your career capital.
2. And then negotiate with world to take control of how much you do and how you do. But keep in mind that skills you posses must be easily cashable and people should be ready to pay for it.
3. Do deliberate practice to improve yourself. Know that it will take time. But be So good they can’t ignore you. Look for next minor improvements ( adjacent possible) that you can add to your skill set.
4. You need to differentiate between –
Job – pays bills.
Career – Progressive improvement in your skills and earnings
Calling – Things that have impact on World.
5. Don’t go out full throttle at once. Start small. Play small bets to learn what works.
6. You need to market your skills. Make it a purple cow as coined by SethGodin.
A purple cow is an attention catching peculiar thing amongst heap of similar looking stuff. People identify it easily and remark on it. It is not one of those routine things.
A parantha ( Indian stuffed bread) shop is a Gray cow but a shop that offers biggest parantha in city is a purple cow.
7. Do right work. It is more important than finding the right work.
My observations –
Nothing is new. Everything has already been said in some other self help book. It is true about all new self help books.
10 k rule is from Malcolm Gladwell.
Adjacent possible from Steven Johnson book, Where good ideas come from.
You must have good skills and must be patient and improve slowly as life passes, are well known axioms.
What author has done is refuted the notion of following your passion with few new stories about people we don’t know and analysing stories of people we know like Steve Jobs with a new perspective.
But there is no rule that is good for everyone.
If we follow Cal Newport world would be a little less pleasant and perfectionist; where every step will require tight scrutiny about risk benefit.
Humans are not built like that. They need to express their stupidity, eccentricities, peculiarities, leaps of faith and senseless dreams.
We need both.passion of traditional self help tweakers.