AnshuBlog

Windows 7 Year Gap and Why They Can't Catch Up

2009-11-01T17:57:00.000-08:00

Finally, Windows 7 is out and reviews are mixed but better than Vista - generally seen as vast improvement over Vista (which was accepted by Steve Ballmer as work in progress or worse). But this is not what this post is about. Even if Microsoft built products that were really good with killer features, it would still lag behind many competitors by up to 7 years.

The problem is Cloud Computing. If you look at some of the features Microsoft plans to release with Microsoft Outlook 2010 next year, they are pretty cool - conversations like GMail, search like Xobni, etc. Pretty awesome stuff. But when will users get to see this new product on their work and home computers - at least 3 or 4 years out. And so, if Microsoft recognized a killer feature like 'converstaions' in Gmail, and decided to add it to the product last year (2008), the product will be released in 2010 and by the time people replace their PCs and corporations adopt the latest as 'standard' - it will be 2013 to 2015 for many. Many of us are still running Windows XP 8 years after release (released 2001) even on new machines.

This is a huge problem for Microsoft. And why can't they break out of it? The one time selling model which collects all license fee upfront. Ideally, Microsoft would keep enhancing its products continuously offering new features (like cloud vendors of today do) enhancing the customer experience and keeping it fresh. But then no one would upgrade. So you are stuck 'creating demand' for your product upgrade by lagging behind. It works when you are the only game in town, and everyone else is bound by the same rules. Enter Cloud Computing.

Cool Outlook 2010 Search Feature: Too late to catch up with GMail?

Imagine if your existing Outlook started supporting faster search or conversations - wouldn't that change your perception of the products and the company?

So here is the conundrum for Microsoft - even if they respond to consumer demands and push out great features, they will still lag cloud computing vendors by 7 years. May be that's why they call it Window 7 - it has features that are frankly 7 years too late!

And this problem is not limited to Microsoft. Oracle and SAP face the same challenge from cloud vendors like Salesforce.com, Taleo, Omniture, SuccessFactors,etc. Fusion has been half-way done since 2006, and there are no signs of when customers will actually get to buy and implement - and then the users will finally see features like integrated search and analytics.

What do you think?

Update: Vinnie asks is Microsoft is winning the battle and losing the war, along similar lines.

Berkeley Haas >PLAY Conference, Digital Media, Diwali and Obama

2009-10-17T11:24:00.000-07:00

I know that's a mouthful of a title - but let me help connect the dots (or clouds).

I will be talking about Cloud Computing, educating the future CEOs about the distinction between water vapor (thanks to on-premise CEOs), vapor products (thanks traditional vendors), private clouds (thanks disharmony) and real cloud computing!

Its a great day outside. Its Diwali - a show of lights celebrating all that's good - but Obama can explain this better using digital media than I can using words.

So as I venture to engage in a discussion on Cloud Computing at the Digital Media Conference, I can't help but wonder how else - Cloud (Youtube) and Digital Media (Online Video) would Obama be able to reach a micro audience (okay a billion people but only 2% of the population in USA) without the two - Cloud & Digital Media.

Look forward to talking to a lot of young (and old) MBA students and others attending >PLAY.

http://www.playconference.org/panels.html#panel6

Write me your thoughts.

Cloud Computing is Difficult For CEOs To Understand

2009-10-11T22:04:00.000-07:00

Over the last week, there has been a resurgence in problems very intelligent people are having with the term 'Cloud Computing '. This problem is likely to worsen this week. So, what's going on ?

Upton Sinclair used to say- "It is difficult to get a man to understand something, when his salary depends upon his not understanding it!"

I think - "It is difficult to get an on-premise CEO to understand something, when his maintenance revenue depends upon his not understanding it!", call it the Cloud Computing Sinclair Corollary.

For the rest of us that don't have that problem, its rather easy - an application that works on the internet without requiring you to install lots of software or buy hardware.

If you need further help, here is a video (hat tip Vinnie):

Next time you hear a CEO explain how he's finding it difficult to differentiate between decades of on-premise software and hardware, and cloud computing - give him a hug. He just can't understand - the maintenance revenue prevents it.

India Investment & Enterpreneurship Event with Mayfield VC and Former Minister

2009-10-07T21:17:00.001-07:00

I wanted to extend an invitation to the blog readers and discount (code: INDIA for 50% off) to an interesting upcoming event for those looking to do business in India.

On October 12th, 2009, join key influencers, and opinion makers at "Advantage India." Explore Investment, Business, and Career opportunities in India. Discuss industry issues candidly, debate new ideas and trends, ask questions, and share opinions. Network with technology executives, venture capitalists, investors, and intellectuals.

An award-winning journalist, scholar, politician - Dr. Arun Shourie, Former Minister, Information Technology, Disinvestment and Communications, India;
India's (Former) Lead Banker who co-chaired a G20 Working Group - Dr Rakesh Mohan, Former Deputy Governor, Reserve Bank of India;
The Silicon Valley VC who has the Midas touch - Mr Navin Chaddha, Managing Director, Mayfield Fund;
One of the most influential investors in technology - Mr. M.R Rangaswami, Co-Founder, Sand Hill Group.
V.I.P. Guest: Mr. Jamshyd Godrej, Managing Director, Godrej & Boyce Mfg. Co. Ltd.

If you are interested in what's happening in India and how to do business there, I certainly recommend this panel discussion.

More information here. Location: PlugNPlay Tech Center, Sunnyvale (Monday Oct 12th at 6.30pm).

Go Check it Out

2009-09-16T14:17:00.000-07:00

Its so easy to build websites on Force.com Sites - and its free.

I usually don't post stuff related directly to my work but I am really excited about this capability and the easy to understand video our marketing team put together.

No More Foreign Engineers and Scientists in Healthcare

2009-09-05T21:52:00.001-07:00

This is a plea to President Obama and the Congress. Let us prevent foreign engineers and scientists from working at any healthcare related business - healthcare machine makers (X-Rays, CT-Scanners, etc.), software makers (diagnostics etc.), pharmaceutical reserearch and many others. After all, none of them are certified & regulated engineers and scientists - we can't trust their foreign degrees and the decision makers who hire them - these people could end up degrading our healthcare and hurting, even killing millions of us Americans.

After all, we don't let foreign doctors practice medicine on our people - that would just let our poor people get cheaper healthcare over Skype from a doctor in Phillipines or India for about $5 to $10. We need regulation and stricter standards that the union (AMA) and federal government decides - not to create an artificial scarcity of doctors and keep pays and costs sky high - but to protect us!

Yes, we need the same kind of regulation for engineers and scientists. We need some computer science union like IEEE to be able to regulate who writes the website for a Google Health or Microsoft Healthvault.

Only by having regulation, can we help our scientists and engineers in healthcare make respectable salaries ($300K and higher) rather than the globally competitive market rates. (Learn more about how AMA helps do the same for doctors here.)

This madness must stop, now!

(For those challenged in art of humor, this is a sarcastic post to comment on how we have created an inflated cost structure and restricted supply by letting a union decide who can diagnose my flu.)

Facebook and Twitter - What Are the Killer Apps All About?

2009-07-19T22:43:00.000-07:00

Facebook - the future of social networking. Twitter - the future of future of social networking, and of media. You know the story of how these are changing everything from how teenagers communciate, tweeners look for and are denied jobs to how those on Social Security are turning to Social Neetworking.

We know the commonly discussed reasons why Facebook and Twitter rock:

Strong Connections: Stay in touch with people frequently. Know when they change jobs, or even just change at night to go to bed. Unlike email where people can drift away after a while of no direct contact - in the world of Facebook and Twitter, unliess you explicitly de-friend someone, its forever. More than marriage.
Loose Connections: Look Ma, no strings. Have your connections and ignore them too. Unlike email, you have no obligation to answer my updates or tweets. Live and let live but watch.
Asynchrnonous: Unlike IM and chat rooms, where we all have to be there together to chat - in Twitter and Facebook - its like a chatroom except you don't have to be connected simultaneously. Geeks call it async communication.
Synchronous & Real-time: I am sure you are noticing a trend here - the benefits of Facebook & Twitter emanate from both properties and their corresponding anti-properties. Stephen Hawking will shoot me now. But, Twitter & Facebook do update my status page in (almost) real-time as you tweet or update your Facebook.
Mobile: Its on mobile. iPhones. 'nuf said.
Discovery: Discover friends. Friends of friends. Strangers with funny pictures. Creeps. You get the idea.

But I think many, if not all, of these attributes are also true of your email & im (short for instant messaging). After all, by using a combination of email and im - I can write to you in a disruptive manner requiring real-time response or can write to you in a non-desruptive manner. Mailing lists, chat rooms, blogs all round out the other many modes of communication. Then, what makes Facebook and Twitter special?

What is it about Facebook and Twitter?

I suggest that the key reason Facebook (and to a lesser extent Twitter) are so popular is because of the following:

No Spam: Since only selected friends who I have accepted as part of my network (or have chosen to follow on Twitter) can invade my inbox (or Wall) - your Facebook and Twitter feeds don't include the following- Nigerian Uncle leaving a Million Dollars, Male Enhancement Magic Pills, Canadian Drugs, and Hot Nannies. This functionality can also be achieved in email if you actively maintain a white list (a list of people that you always accept email from) and send all email not from the white list to trash. Essentially, Facebook, LinkedIn and Twitter help us create Gated Communities.
But its Coming: This was true so far. But as with all new modes, eventually man (and monkey) figure out a way to use the machines for un-intended purposes. A Canadian man was recently fined over $800 Million for compromising Facebook users' accounts and then using them to spam. Twitter search will slowly become worse as more fake online identities get created and watching #IranElection as the news developed made me realize that spam is here on Twitter.

So while Faceboook and its ilk have many features and functions that keep us logged in for hours- its the 'gated community' feel that provides an escape from the spam hell that my Yahoo! mail and other email accounts of yore have become; that I value the most.

What do you think? Leave a comment here or follow me and talk to me at http://www.twitter.com/anshublog

Enterprise Software Gotcha

2009-07-18T16:49:00.000-07:00

Seth Godin, one of my favorite reads, recently had a nice little post about how product marketing tries to trick people into believing that their products are more than they seem - bigger, cheaper,stronger, healhier and so on. Rather than working with what value the product can actually deliver the marketing folk get carried away and like to claim more than what they can deliver.

He points out the example of an item on sale that looks bigger than it is - and then adds:

"There are lots of things you can do to make the sale. They often are precisely the opposite of what you should do to generate word of mouth. I know, you can't have word of mouth unless you have a sale, but a sale that leads to pain is hardly worth it.

My rule of thumb is this: every person you turn away because your product or service isn't right for them turns into three great customers down the road. Every bad sale costs you five."

Enterprise Software industry suffers from the same disease. Traditional vendors who are only in it for the initial sale will often tout features that are half-baked, or try to blur the line between products (WebShpere & Fusion do this well) so that the customer has almost no idea what is in a particular product versus a feature in one of the products of the family.

With SaaS, its easier - you get what you see. Most customers start out with mini deployments or trials actually experiencing the product before they make much larger commitments.

I don't know about you but I want to be able to see how big the bowl is before I try to make a cake in it. Mmm.. Cake.

Strategy: On Death of Newspapers and Impending Dealth of Airlines

2009-04-23T18:18:00.000-07:00

I don't think too many airline CEO's read my blog. I do know a few tech CEO's that do read it. Let's pretend to be an airline CEO - I want you to answer this question:

What business are you in? Flights or Meetings?

Just as newspapers thought they were in the business of gathering news and printing news papers; the music industry CEO's thought they were in the business of vinyl records, tapes or CDs; many airlines appear to think they are in the business of ensuring flights are running on time, tickets are sold and customers pay extra for baggage (monetization). I think they are wrong.

Serving Customers with 50 year old technology - the flying machine (Image)

Cisco Telepresence is to airlines what Google Search was to newspapers and classfieds. And airlines have a choice - they can rethink their mission and realize that what customers are looking for is not flights or tickets or baggage fees but meeting business counterparts face to face, connect with family and go on vacations. The visionary airline CEO would then try to see how Telepresence would impact this market. And then take steps to re-imagine their business.

Here are things I would do if I were the CEO of Mythical Air:

Embrace Telepresence as another mechanism for people to meet and declare that we would help customers with this.
Create "Mythical Air" Telepresence Lounges - in major cities and smaller towns. These lounges will include Cisco Telepresence.
Mythical Air Lounges in airports will also include Cisco Telepresence - while this may threaten our 'flights' business but in reality our customers would be happy - if they are late, they can connect via telepresence. Even when the flights are on time, they can leverage time in the lounges doing business - and learning how useful this system is. So, next time they are likely to buy Mythical Air Telepresence trips rather than Airline trips.
Tie up with major hotel chains to partner and run Mythical Lounges inside hotels. Now our customers can run global meetings by meeting regionally in hotels.
Work with Expedia, Orbitz and others to list Mythical Telepresence among the 'flight options' in results. So, when a customer types in Sacramento to London - the results include flight from Sacramento to San Francisco and 'telepresence flight' from San Francisco to London (and offer a hotel in San Francisco).

Imagine if,

Newspapers had co-opted internet search and publishing
Music industry had co-opted internet delivery

Let's see if any airlines re-define their mission statements and co-opt this innovation. Or do they all end up fighting this trend and each other for the shrinking market. Blue ocean or red ocean?

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McKinsey Report Misses The Mark on Cloud Computing

2009-04-17T00:03:00.001-07:00

Couple of McKinsey guys have kicked up a micro storm in the Cloud Computing world with a presentation that claims that moving your data center into the cloud is not advantageous for IT. I am quite confident that others at McKinsey would differ - perhaps those presenting at another conference that is not catering to a server-hugging data center audience.

As TechCrunch summarizes - 'The report paints cloud computing as over-hyped and maintains that cloud computing services like Amazon Web Services (AWS) overcharge large companies for a service the companies could do better on their own. The study also says that while cloud computing is optimal for small and medium-sized businesses, large companies will spend less if using traditional data centers. Virtualization is the optimal way to go, says McKinsey, and by implementing virtualization in-house, corporations can reduce costs when factoring in depreciation and tax write-offs. Virtualization, which McKinsey says can boost server utilization to 18% from 10%, lets you treat one machine like many, by carving the servers into many virtual engines, so that software can maximize power from one machine and add scalability. Not only is this cost-effective for companies, but cloud computing takes advantage of virtualization.'

I believe that this report misses the whole point when it comes to Cloud Computing.

What McKinsey duo did was assume CIOs take the same exact crap software and run it on exact same excessive number of nodes provisioned for the full month at peak capacity numbers - and move that to the Cloud. That's just wrong!

This is even worse than ASP model where at least the vendors provide 'managed services' and even then it was a big failure. The real value of cloud computing kicks in when you leverage a full application platform (such as Force.com) to either buy applications written to take advantage of a multi-tenant platform or write your applications on this new stack.

Why McKinsey Report is Flawed?

There are some key things that the McKinsey duo ignored:

1. Elasticity vs Provisioning for Peak Load: They assumed that if you buy 50 servers internally, you would rent 50 servers in the cloud for the full 30 days a month. In reality, the rent by the hour approach means you could be renting an equivalent of 1/2 to 1/10th the amount.
2. Elasticity for Unmet Peak Load: How does a CIO provide a 50 node cluster for one small group in the company that wants to analyze last 17 years of demographic data? By saying "No, we can't do that. It will cost $7 million." With an external platform, he can say yes, and pay for 50 nodes for 3 hours.

These two apply for Cloud infrastructure providers like Amazon Web Services. There are additional economies of scale that kick in when you look at multi-tenant application platforms such as Force.com. With a multi-tenant platform, you are now talking about having a highly optimized environment where multiple customers are leveraging the same set of servers (and cost of maintenance, upgrades, security, etc.). The McKinsey duo does make a distinction between Cloud infrastructure and Cloud services but omits any mention of the advantages of moving the applications to Cloud Service platforms (in their jargon).

Credit Where Credit is Due
As a blogger, it is my duty to throw gasoline on a burning fire and not rain on the cloud parade! Pardon my puns. But to their credit, the McKinsey duo (which I assume does not reflect opinions of all of McKinsey) does make some points that I agree with.

First, the private cloud is not a magical solution to your data center challenges. They suggest - Rather than create unrealizable expectations for “internal clouds,” CIOs should focus now on the immediate benefits of virtualizing server storage, network operations, and other critical building blocks.

Second, virtualization is a powerful tool for making your existing applications in the data center use fewer resources.

Third, public clouds are providing business benefits to SMEs. I concur. But I believe and large organizations like Cisco, Dell, GE, etc. that have been cited for using SaaS applications are proof in my view negate the notion that cloud computing is somehow not enterprise ready. A look at the customer list of vendors like Google, Salesforce.com, Taleo, Workday etc. can prove otherwise.

My Enterprise Irregular friends and other bloggers have already pitched in with their opinions.

Deal Architect's Vinnie writes - I would normally ignore yet another “overview” of clouds, but being McKinsey it will get read by executives and several of their generalizations about “not being cost effective for large enterprises” are just plain misleading.

Appirio's Balakrishnan maps out the Cloud with infrastructure, platform and applications as three different tiers with their own pros and cons. He also questions McKinsey report's primary topic - moving existing apps to the cloud, and concludes with - We have seen the benefits of cloud platforms first-hand at over 150 customers, including companies like Avago, Genentech, Japan Post, Qualcomm, Starbucks and Dolby. Once customers experience the benefits of cloud platforms - quantifiable savings, rapid time to value and innovation that drives the business, they seldom want to go back. This is why 90%+ of customers plan to increase their spending on cloud platforms. In these economic times, there is no greater vote of confidence for cloud platforms than that!

Nick Carr is much more postiive on the report but even he finds that the report entirely ignored SaaS applications - 'The cloud also, of course, provides a way to tap into powerful software-as-a-service applications that can provide substantial savings, not only in equipment and labor but in licensing and maintenance fees, over the cost of installing an in-house application. (The McKinsey analysis ignores those opportunities.)'

I expect the blogosphere to continue this discussion and I hope the discussion will include the missing pieces from the report - benefits of Cloud Platforms and Cloud Applications - and not just focus on infrastructure Clouds.

Update: Google has an excellent post on this titled 'Official Google Enterprise Blog: What we talk about when we talk about cloud computing'.

Take Twitter and FriendFeed to Go with Feedly Mini

2009-02-11T00:37:00.000-08:00

Feedly today announced its launching Feedly Mini - a floating toolbar that shows up at the bottom of your web browser as you visit a website - and lets you engage in conversations via FriendFeed and Twitter. For those who don't know what Feedly is - it combines the best of RSS Reader, a magazine-like interface (think Newsweek home page) and makes it come alive in the context of conversations via email, Twitter and Friendfeed.

Let's take an example - reading the New York Times editorial page. While the New York Times has a comments section - those comments are from people that I don't know and have no background on. Before Feedly Mini, I would have to post this on my Twitter page or FriendFeed to start a conversation with my friends - and do so manually. But with Feedly Mini, as shown below, a small non-intrusive toolbar floats up at the bottom of the page and in less than few clicks - I can discuss the bailout with my friends.

What does the Feedly Mini do?

One killer feature (shown below) is the ability to Tweet a blog post or web page directly from that page with less than 2 clicks. I simply click on the floating toolbar and add my comments and it shows up in my Twitter stream. Easy.

Re-Tweet From Feedly

The other feature that I really like is the ability to see what people are saying on FriendFeed about the blog post you are reading (or a newspaper webpage - like a New York Times Editorial page) and to be able to join the conversation directly in-context (see below).

Join FriendFeed Conversation from Feedly Mini

Summary
As the web goes from a publish subscribe (one-to-many) model to a conversational (many-to-many) style, tools like Feedly Mini will increasingly be important. Just as most of us no longer log into our computers or iPhones without turning Yahoo! or Google instant messaging on, the browsing of the internet will no longer be a lonely experience. You get to participate in a conversation in-context and with people that you are friends with. Of course, the term friend is loosely defined here. Very loosely. But that's a topic for a future post.

Try Feedly Mini out, and let me know what you think. And remember, comments are to bloggers what flowers are to women!

Update: Robert Scoble writes about Feedly Mini - New Feedly combines Google Reader, friendfeed, Twitter in great way for social network addicts.

Update 2: A commenter told me to forget about Twitter and focus on my day job. Here is a post on how Dell sold $1 Million worth of equipment via Twitter.

Multi-tenancy is Better for You - the Customer

2009-01-31T16:41:00.000-08:00

Lately, the topic of multi-tenancy and single tenancy has again come up for discussion. A leading on-premise vendor recently argued in favor of single tenancy by saying: "The bad thing with multitenancy is when it goes down, you guys write about it on the front page. I don't want to be on the front page for anything bad."

Let me explain what this means for the customer versus the vendor by using an analogy.

Airplanes carry a lot of people. When they go down or even have a small scare, they make front page news. This, over the years, has made aircraft manufacturers like Boeing and airlines that run them prioritize safety and trust over every other bell and whistle feature.

Motorcycles are different. One goes down, a person dies. But it doesn't make frontpage news.

So what's safer? Which mode of transport is actually safer for you?

(Hint:Airplanes are one of the safest means of transport while motorcycles are the least safe - even though airplanes make headlines.)

Trust First

Multi-tenant software businesses work very hard to keep the systems up and running, to keep them safe, to earn and retain the trust of their customers - prioritizing it over bells and whistles. It took Google all of less than an hour to recover from the badware problem - because many of its customers were simultaneously impacted - and fixing one customer's problem meant fixing it for everyone. Imagine, a similar problem in your favorite OS, and how many days of patching and fixing it would take to deliver the fix.

Single-tenant software is good for the vendor. Your instance goes down, you and only you are impacted - even if its down for hours or days. The vendor can resolve the issue at the earliest or at leisure - with no risk to its own business either way! Your fortunes are tied to only yours - not the vendor's and not of others.

As Dirty Harry would say: Do you feel lucky? Well do ya punk?

Barry Diller is Right - Stop Laying Off People

2009-01-31T15:56:00.000-08:00

Barry Diller speaking at the Reuters Media Summit opined that companies with healthy revenues and profits should not add to the economic misery by laying off people at exactly the wrong time - when its hard to find other jobs.

There is a certain perversity to the recent layoffs. In good times, smart companies like Google and Microsoft like to hoard talent - living up to the classic "Let's get the right people on the bus and we can then figure out where to go" theme. And it has served them well, mostly. Most graduates of my engineering college that I knew ended up at Microsoft and Oracle in early to mid 90s and this decade every one seems to have landed at the Googleplex (except the really really smart ones ;) ).

The current economic crisis has adversely affected every industry - even the one's that have little to do with mortgages, credit default swaps, or derivatives. But it seems like its the season to cull the ranks, stop questionable projects and trim the fat. While every business deserves the right to manage its workforce, it does seem rather cynical to be trimming fat that many businesses have been carrying for years. The question is not why but why now?

As Barry Diller points out:

The idea of a company that’s earning money, not losing money, that’s not, let’s say ‘industrially endangered,’ to have just cutbacks so they can earn another $12 million or $20 million or $40 million in a year where no one’s counting is really a horrible act when you think about it on every level. First of all, it’s certainly not necessary. It’s doing it at the worst time. It’s throwing people out to a larger, what is inevitably a larger unemployment heap for frankly no good reason.

Are businesses laying off people because they don't have to justify the lay offs? Is it because sacrificing 3% of your work force is the equivalent of modern day sacrifice to please the Gods (on Wall Street)? Is it because what you as an executive are supposed to do?

My question is - what exactly do these companies stand for?

This question goes to core of long-term viability and building great companies. When I think of Google, I know it stands for 'organizing the world's information and making it easily available'. When I think of Apple, I know it stands for products that work and are appealing to the end-user. When I think of Dell, I think of getting value for my money and good quality products without unnecessary frills. The failure of Yahoo!, me thinks is that it has failed to find a mission for itself - and is in a me too race with Google. This is what the new CEO Bartz must fix first. Coming back to question of mass layoffs, its time businesses tried in good faith to find a way to keep as many people gainfully employed as possible.

So while the executives at most companies are asking one hard question: how many people can I lay off without adversely impacting my prospects? Let me suggest a few others:

What does our company stand for?
Does my product deliver real value so that customers will buy even in dire times? If not, why not?
How many board members and executives are delivering 10 or 100x what my average sales engineer is delivering? If not, why is he still here?
If I cut the salary of my top 10% earners by 20%, how many fewer people can I fire? How many more can I hire?
How do I take advantage of the current sale on talent? Buy low sell high?
Can I tweak my compensation package to reflect what's more dear today (cash) and what's less valuable (stock)?

What do you think?

(All opinions expressed here are personal. Read full disclaimer on my blog website.)

Satyam CEO Exposes Faux Capitalism

2009-01-07T09:38:00.000-08:00

Fascinating. Incriminating. Disappointing.

Satyam's CEO has written a mea culpa letter to the regulatory authorities indicating a fraud of epic proportions that included inflated cash balance, fake earnings and more. He said, the scheme reached "simply unmanageable proportions" and he was left in a position "like riding a tiger, not knowing how to get off without being eaten." CNBC referred to it as the "Indian Enron" on air today.

The Tiger Got Away
by zeeshan Nasir (creative commons)

This will cast a long shadow on not just Indian IT companies but on all Indian companies, and perhaps other emerging market companies in general.

The sad reality is that this company is not alone. I suspect worse frauds by other Indian companies in the "Tier-2" category. Even Tier 1 companies like Reliance, DLF and Unitech appear to have used tricks to inflate assets. By way of example, a lot of companies in India bought land in villages (at very low prices) and as real estate value went up, they showed value of "land banks" as assets on their books. Reliance, the largest Indian company, earlier last year had an IPO for Reliance Power - a company with virtually no assets but plans to build several power plants. The Reliance Power IPO was a classic dot-com era style offering - there was very little there except a shell company with ambitions.

Expect to see more of this from India, and perhaps other places.

Glass Half Full

But all is not lost. On the positive side:

This makes companies like Infosys and Wipro even more valuable. They are truly well managed and ethical compaines. For years, Wipro and Infosys have had to live with potholes and hostility from local governments because they refused to bribe local politicians.
India has a process and regulatory system that while not perfect, still exists. I don't expect similar companies in China to do a mea culpa. It will be interesting to see how Indian regulatory bodies deal with this.

Finally, it was my fear of bubbles and inflated balance sheets that made me write this post on Indian Bubble - my most popular post ever. The myth of a billion consumers waiting to buy condos and mobile phones can be laid to rest for now. India is a huge economy for many opportunities but it has not repealed the laws of gravity - everything that goes up too fast must come down.

What would Warren Buffett do?

All these scandals from Enron to Madoff to Satyam are making us investors feel like we live in Alice's Wonderland where its hard to trust anything.

So, what would Buffett do? One can only learn from his writings and interviews. It seems like his method of relying on people and signing multi-billion dollar deals based on relationships, family history, etc. is a far more trustworthy system than relying on a gaggle of for-profit, near-term oriented auditors, advisors and all.

And from an investor perspective - the misalignment between shareholders and management keeps getting wider. I have often said that I prefer founder-owned and run companies because I trust them to do what's best for the long-term interest of the business. With Raju and Satyam, I have to question that assertion - it seems owner-manager-founder can also sink ships - although as he claims (and yet to be proven) he made little money from this as he hasn't sold his stake - in his letter he claims he has not sold any Satyam stock over several years.

A Few Rhetorical Questions:

How do I know which companies to invest in given that managers and board members are for-hire and short-term oriented?
How do I assess risk when everyone seems to be willing to lie for a fee?
Am I better off with owning a Subway franchise (a common theme amongst first-generation immigrants) than investing in public companies? Are we going back to days of tangible ownership of assets?
Final Question: Are shares no different than CDOs in that they are no longer promises that can be fairly evaluated, valued or trusted? If we can't trust shares, is our modern economy built on CDO-like bubble?

What do you think? I am curious.

All views expressed here are personal opinions. As with all my posts, please read my disclaimer at the bottom of the page.

Predictions for 2009

2008-12-31T19:50:00.001-08:00

The season for predicting the future is upon us. Except its become extremely hard to predict the future after what happened this year: the financial system nearly collapsed, an African-American with Hussein as his middle name became the President, the Iraq war became a fringe issue, Alaskan geography and bridges became the center of editorials written by foreign press, China had great success with Olympics but still got hurt by the American consumer and finally, the house prices in New York and San Francisco came down.

This may scare away some but some of us are going to still take a swing at it. Here are some of the predictions that I have read and found interesting: Jeff Nolan, Appirio, Coda, GigaOm.

Seven Predictions for 2009

1. Oil will not go back to $100
Despite dire predictions of increasing demand from emerging global giants (China & India among others) and oil supply peaking, this myth will be nearly impossible to recreate in 2009. Airlines and SUV manufacturers can breathe easy.

2. Personalization Gets Widely Adopted
I am currently reading the book by CK Prahlad (New Age of Innovation) and it advocates a move towards a reality where businesses are targeting and selling to one customer at a time - in fact, 'co-creating' value with one customer at a time. Together with interesting case studies by another great book on related topic - Groundswell (by Charlene Li) - it seems likely that businesses will look to personalize and offer solutions rather than mass products and that this trend will go beyond technology to what are traditionally known as manufacturing, retail, banking etc. but in the new world order are all businesses offering personalized services/solutions to the individual business or consumer. In order to do this effectively, businesses will need to change their mindset and use information technology platforms that enable agility. Clould Computing platforms like Force.com can play a key role here - look at how Starbucks is co-creating value with its customers by running Starbucks Ideas and so is Dell with Dell Ideastorm.

3. Obama disappoints
Its bound to happen and we might as well accept it - Obama will disappoint his most ardent supporters especially the ones on the left. But this is a good thing in my opinion - George W Bush made his supporters proud and look where we landed.

4. Social Networking becomes (just) a feature
Social networking has rapidly become mainstream. While this is good for the consumers - in that they can expect a social experience on their favorite online property be it Google or Yahoo! - it does pose a challenge to stand-alone social networking companies that will increasingly have to offer more than just ability to connect to keep customers happy while they continue to struggle with revenue models. Its quite likely that leading search, email, IM and homepage providers will continue to drive social networking features into their products. The leaders in social networking (Facebook and LinkedIn) have a window of opportunity but if they fail to grow revenues, they may end up in the arms of the giants rather than as the next Google on their own right.

5. Madoff level online fraud
The major banks and online brokers have done a commendable job over the years of beefing up security but its still too lax. These entities still have not moved to state of the art multi-factor authentication or use pre-approvals for major transactions. I don't understand why its possible for me to transfer $50K from my online brokerage without them requiring me to verify my request by at least one other means (like SMS or Phone). The technology exists. Can you imagine the damage if 10s of thousands of us lost $100,000 overnight? As far as predictions go, I hope and pray that this does not come true but wanted to raise it since the ramifications of a major online bank or brokerage being compromised on a grandscale would be really bad (like the Madoff scandal) and further erode confidence in our institutions.

6. Airlines start treating customers fairly
Okay, so this is a complete joke. They will continue to use every excuse in the book to raise fares and fees while lowering the levels of service. This is one industry that is somehow set up (due to incentives? economics?) to compete on price and rarely if ever delight customers.

On that note, I recently was in Las Vegas and prepaid for my room via Luxor's online website for booking rooms. I get there and they add a $5 per night charge for "telephone service". Stop and think about it - they want to charge $150 per month for basic telephony service that I don't want to use. I protested since I have a cell phone and don't care for their phone and did not plan to use it. It was a non-negotiable fee and they refused to waive it. What really outraged me was that if they want to charge me $5 (or more) and its compulsory, why can't they simply add that to the room rate when I booked the room especially when I used their own website. Outrageous! I guess they are learning from their friends in the skies charging all kinds of funny fees.

6. Telepresence is The Killer App of 2009
Yes, telepresence. The ingredients are here: displays (and televisions) are getting cheaper, networks are already dealing with increasing video content, and the software/hardware to bring it all together is here. Cisco is clearly a leader here today but I expect others - both that have announced products like HP & Polycom - and those with lower profiles so far (Microsoft, Nokia) to join in.

7. GreenTech Bubble Bursts, Seeks Bailout and Subsidies
With the price of gas staying low and consumers cutting back on spending (and therefore fewer Hybrids will be bought for status), it will put enormous pressure on some of the green technology companies. Also, the tens of billions of dollars our government seems ready to pump into the dying three automakers will make it an attractive target for lobbyists for the green technology companies to seek their "fair" share. In the end, we the taxpayers, will end up subsidizing both sides of this battle. This reminds me of what Vinod Khosla, the genius investor, has been saying throughout this current boom - the only viable green technology is one that can compete at a price point of coal powered energy in India/China (the Chindia Test). As before, he was right and those VCs that followed him blindly and overinvested will look back on the year of $100 oil with longing.

While I shared a few ideas that have caught my attention, there are several more trends worth watching from personalized medicine to the "Better Place" experiment. I will keep an eye out for these trends and keep writing about them.

Finally, I want to thank each one of you for reading my blog. Time and attention are the ultimate currency in today's world and I am delighted you spend a tiny fraction of your fortune in talking with me. Thanks!

Heart-warming Story

2008-12-06T11:01:00.000-08:00

The San Jose Mercury News has a heart warming story on Foundation For Excellence (FFE) - a silicon valley based charity that helps bright kids in India that can't afford education stay in school, go to college and achieve success.

The best part is that the gift of education transforms not just a single student but their entire family's future. For example -

Growing up in the coastal city of Chennai, Rajee Nair said she and her sister always earned very high marks in school, and each received scholarships from the foundation.
Now the 29-year-old engineer lives in Fremont, where she works as a consultant for Infosys Technologies. She has been able to support the higher education of two younger sisters back in India and even buy her parents a home.
"Their lives are now taken care of,'' she said.

I personally know Rajee - and she is such a positive, bright light in the lives of many. And now she is helping the cause in turn.

So this Holiday Season, please consider making a contribution (click here to donate now).

Happy Holidays! Merry Christmas!

Crowdsourcing the Terror Response to Mumbai

2008-11-27T10:13:00.001-08:00

The disheartening events in Mumbai have saddened me. Most people, whether they align with India on substantiative issues, would agree that terror is not an acceptable route to meeting one's objectives. While this mayhem went on and I tried to keep track, the most upto-date information came from neither CNN nor New York Times - two of my favorite news sources - but from crowdsourcing.

(Twitter.com keyword search #mumbai)

Twitter provided and is providing streaming first-hand accounts, information on which news networks (NDTV.com) are providing best coverage, information on death and destruction, call for blood to help victims at specific hospitals. Its, literally, been a lifesaver.

Crowdsourced list of dead/injured on Google Docs

Going one step further, there is crowdsourced list of dead & injured created on Google Docs - again a list compiled from various sources, Wikipedia style.

Changing Role of Media

The role of media must evolve from point-to-point journalism where one reporter reports, to making sense of several distributed sources, validating them after-the-fact, editorializing the content and providing a centralized "dashboard" that combines information from these various sources.

Finally, as Om Malik said on his blog - "The shock is so extreme that I am incapable of anger." Hope the season of peace and happiness brings no further violence.

Guest Post: Handling a Referral in a Job Search

2008-11-18T22:38:00.000-08:00

With the economy headed south and tech feeling the pressure, many of you may soon be looking for a job. The best path is through a referral from a former colleague or friend. That's how I landed my current role at salesforce.com (which is hiring developers and others in San Francisco). Another way to help yourself is to work with a professional coach who can help guide your search - just like any other consultant, you have to find a good one for it to be of value. I recently talked about what recruiters need to do when cold calling. Here is a guest post by Dilip Saraf, a career coach, who comes highly recommended - on his experience with referrals.

Handling a Referral in a Job Search
(by Dilip Saraf, 7 Keys)

As a career coach I have well-placed clients who are in executive positions at prominent companies in the Silicon Valley and elsewhere. I also have an extensive network on LinkedIn carefully cultivated over the years, which is my stock-in-trade. So, when a client is looking for an opportunity at a company where I have some inside connection(s) I am always happy to introduce them to each other and let them take it from there.

The other day, an up-and-coming executive client was interested in getting into a growing company that has made a big name in the Valley and that had an open position that he was very interested in. I also had a senior executive at this company who has been my client and who was willing to help him navigate through the “entrance gate.” So, after I made the email introduction to them, I was hoping that the right things would transpire.

Well, they did not!

Without looking up the senior executive’s background, my client, who was in transition, sent him a short email asking him to look up both his LinkedIn Profile and the job that was open (of several) at his company, hoping to get a favorable response through this action. I was, of course, not aware of this and was quite surprised—and annoyed—when the senior executive suggested to me that my other client needed to be coached on how to handle such requests gracefully.

That got me thinking: How many times prospecting clients blow their introductions because they do not follow the most well-understood introduction etiquette, and not even know that they blew it; big time!

This etiquette requires that the person seeking a favor look up the contact and assess the tone in which he must handle the request, and all subsequent communication. Showing proper respect and consideration, the supplicant must show enough care so that they ingratiate themselves with the contact to help them get what they are seeking, making them feel good for having done a beneficial deed. This is the social lubricant that keeps the moving parts moving without squeaks. Doing so reflects well on the person who made the initial introduction in the first place, too!

In this specific instance, my client in transition should have been graceful in his initial contact and should have shown adequate respect for the inside contact to get what he wanted. Such opportunities are often a gateway into your personality and in how you handle matters that deal with building and sustaining important relationships. Consistent with this behavior was that the client whom I introduced did not even send me note of thanks for making this introduction! That is the last time I am going to introduce him to anyone else, unless he takes the coaching I gave him after this incident to heart!

So, those engaged in businesses that rely on introductions to other people to pursue their cause, please be mindful that, often, it is you that are making it easy for others to reject you!

(To contact Dilip for his services you can write to him via his site or shoot me an email and I will be happy to refer.)

5 Ways This Economy is Great for You

2008-10-15T16:03:00.000-07:00

The stock market is in a free fall. Housing is depreciating in value. Commodities demand is coming down and prices are crashing. There is a liquidity crunch and no one can get a loan. Government is taking stakes in private banks. So is this all bad? Gloom and doom?

Yes, its bad. But here are some ways this crisis can actually benefit you if you fall in certain groups:

Asset Poor Income Rich: If you have college loans, don't own a home and happen to have a job in a stable industry - this may be good for you. Let me explain - let's say you make $100K a year but you have $50K saved up (say that's your net asset worth). Compare yourself with a rich neighbor who has $3 Million saved up in equities and home value with a $50K job. You are much better off now because you can buy the home and equities that the asset rich are now willing to sell at lower prices.
Cheaper Homes for Renters: House values falling by 30% or more will now let you own a home (once the liquidity returns) at a lower price. And the long-term rates have not gone up as much as the house prices have gone down, so you are better off.
Americans: The crisis is global. And while we had a huge bubble, the institutions here are (surprise, surprise) stronger than in emerging markets. So, Dollar is gaining value. And those fancy new airport terminals (Beijing, Bangalore, New Delhi) may now have to be paid for by someone. What this means is that your dollars will have greater purchasing capacity.
Value Creating Jobs: If you have a cousin or brother-in-law that was magically making millions by working at a hedge fund while you worked hard to find cure for cancer or fix bugs in software that keeps email working - you will no longer have to live with the absurdity of him or her offering to "help you" with your investments so you can finally afford a Hybrid! (See Jeff Nolan's remarkable story about value here.)
Economists: Krugman got a Nobel Prize. Taleb got validated (in my humble opinion). Roubini is a whiz kid. Buffett is proven smart for not trading in insane instruments. Gross of PIMCO was right again. When you are advocating the position that people's millions are not real, that they will have to return to normal times, that people with poor credit can't own homes, that Wall St can't continue to increase its share of GDP indefinitely, that intrinsic value and risk management matters - nobody wants to listen to you during the good times. Now, we will all listen to them. Till, we find the next big one!

What do you think?

Krugman's Nobel Winning Theory and Software Industry

2008-10-14T00:11:00.000-07:00

Paul Krugman won the Nobel in Economics today. Before you jump, I know its not a real Nobel prize. I have enjoyed his writings on New York Times along with other favorite economists like the one's behind Cafe Hayek - who funnily enough or sadly enough denounced Krugman's award today. In any case, how does this relate to software?

As it turns out, Krugman's award was a recognition for the "New Trade Theory". You can read a good explanation at Marginal Revolution.

Very simply put: unlike older models that tried to explain trade based only on comparative advantages - so if Australia has more copper ore reserves, it may produce more kitchen fittings made from copper, the New Trade Theory introduced the idea of economies of scale into the trade models - so rather than just natural comparative advantages increasing returns from scale and network effects - could result in advantage.

In other words, if you got big enough - that itself is an edge!

NEW TRADE THEORY AND SOFTWARE OUTSOURCING TO INDIA

Leaders of software companies have repeatedly said - we are opening offices and hiring in India and China - not because its cheaper but that's the only place where we can find engineers.

With salaries rising in India every year (over 25% by many estimates), the differential is coming down. In other words, the comparative advantage derived from lower salaries, lower costs etc. is getting diminished every year. And yet, companies continue to flock to India. (I am using India as an example since I am most familiar with it but you can apply the model to other countries where scale is true).

I have often posed this question to my friends over last year or so: If you wanted to hire 5 software developers, where would you do that? And answers range from US (for we still have one of the best, if not the best), Ukraine, Russia, Israel, India to Ireland. The reasons for their particular pick range from existing economic ties, existing social ties, cost advantages, ability to find domain experts in particular fields - in other words, what may be called comparative advantages.

But then I ask the following: If you wanted to hire 5,000 software developers, where would you do that? And the answers are rather limited. If you wanted to get that many in a short period of time - you probably can only do that in India today. (Don't believe me - look for software companies with more than 5,000 developers in other countries hired over less than 5 years).

I didn't have a name for this - and thanks to Krugman's Nobel, perhaps now I do - I think its economies of scale and network effects kicking in. The New Trade Theory!

And India got there by a fortunate series of accidents - lack of employment opportunities outside of software for so-called elite engineers (due to regulation till mid-'90s), sudden spike in demand due to Y2K (same question - where else would you find 5,000 engineers? Or 100,000?), lower costs for nearly 15 years, excellent education for the select few that could obtain it and the Indian diaspora in US and other countries that had become successful in their new homelands. And external factors like cheap connectivity after the dot com bust (dark fiber). Due to a confluence of these factors, Indian software industry for outsourced services and development has achieved scale. And even as comparative advantages diminish, its likely to do very well.

So what shall I call it - (Anshu's) New Trade Theory of Software Outsourcing.

Here are questions for other industries and perhaps even companies:

Will the scale and network effects also play out for China in manufacturing, for example? (Or not?)
Will leading SaaS companies that have achieved scale be able to benefit from a similar effect?
If you are not yet at scale - what should you do and not do? Compete where comparative advantage (features) trump scale (network effects)?

From - You can't make this up department

2008-10-07T14:52:00.000-07:00

I don't re-post news stories on my blog because you can always read them elsewhere but this one is just a killer. And, it will make you feel good on a dog day on the Wall St.

CNET reports:

In an elaborate robbery scheme that's one part The Thomas Crowne Affair and one part Pineapple Express, a crook robbed an armored truck outside a Bank of America branch in Monroe, Wash., by hiring decoys through Craigslist to deter authorities.
It gets better: He then escaped in a creek headed for the Skykomish River in an inner tube, and the cops are still looking for him. "A great amount of money" was taken, Monroe police said, but did not provide a dollar value.

It appears to have unfolded this way, according to a Seattle-based NBC affiliate: around 11:00 a.m. PDT on Tuesday, the robber, wearing a yellow vest, safety goggles, a blue shirt, and a respirator mask went over to a guard who was overseeing the unloading of cash to the bank from the truck. He sprayed the guard with pepper spray, grabbed his bag of money, and fled the scene.

But here's the hilarious twist. The robber had previously put out a Craigslist ad for road maintenance workers, promising wages of $28.50 per hour. Recruits were asked to wait near the Bank of America right around the time of the robbery--wearing yellow vests, safety goggles, a respirator mask, and preferably a blue shirt. At least a dozen of them showed up after responding to the Craigslist ad.

"I came across the ad that was for a prevailing wage job for $28.50 an hour," one of the unwitting decoys, named Mike, said to the NBC station. As it turns out, they were simply placed there to confuse cops who were looking for a guy wearing a virtually identical outfit.

I say let him keep the money. He earned it - at least he earned it more than CEO's of Lehman, AIG and WaMu Countrywide did.

Dear Recruiter

2008-10-03T15:50:00.000-07:00

Dear Recruiter,

I know you have a stressful job and it feels like a sales gig where the more number of people you cold call, the better your chances of success and social engineering are. But here are a few tips before you call my phone or that of my reader friends:

Search My Name on LinkedIn and Google: Yes, that may seem obvious but many people have called me without the slightest inkling of what I really have been upto. I no longer run XML Web Services Integration teams or design XSLT engines. I no longer manage teams of developers. I no longer work for the big database company.
See the Date on that Resume: If you got hold of my resume from 5 years ago, chances are - its dated. That's why God (or was it Al Gore) invented the internets. Use it. I switched jobs after spending 9+ years at my previous company - and so what makes you think I will be interested 10 months into my new & much more exciting role?
Don't ask me for Help if you work for my Competitor: I love to help recruiters - and they have helped me in the past but I just don't feel comfortable referring the brightest people to my competition. So all SaaS Platform and CRM companies are out. If you want a referral for a storage or virtualization company, I will help you.
Ask me what I want: It may not seem obvious but it may be a good idea to ask me if you can help me. I am more likely to help you if I feel that you are at least trying to reciprocate. (Hints: My brother is looking for a job as a BI Consultant in US to migrate from Australia using the special visa for Aussies. I have a few other friends looking for marketing and PM jobs.)

If you do some of these things, you are much more likely to get my attention and help. Otherwise, I have 17 meetings to run to...

Thought Experiments in Understanding Fusion and Cloud Computing

2008-09-28T13:15:00.000-07:00

I have been struggling with what Fusion is now with all the announcements coming out of OpenWorld - and so are the likes of Gartner. Then I saw Larry Ellison's not so optimistic view on Cloud Computing and the profitability of the industry.

So, I replaced each "cloud computing" reference with "Fusion". See if this Fusion thing makes sense to you now:

"The interesting thing about Fusion is that we've redefined Fusion to include everything that we already do. I can't think of anything that isn't Fusion with all of these announcements. The computer industry is the only industry that is more fashion-driven than women's fashion. Maybe I'm an idiot, but I have no idea what anyone is talking about. What is it? It's complete gibberish. It's insane. When is this idiocy going to stop?"
"We'll make Fusion announcements. I'm not going to fight this thing. But I don't understand what we would do differently in the light of Fusion other than change the wording of some of our ads. That's my view."

Here is the original (from Wall Street Journal):

“The interesting thing about cloud computing is that we’ve redefined cloud computing to include everything that we already do. I can’t think of anything that isn’t cloud computing with all of these announcements. The computer industry is the only industry that is more fashion-driven than women’s fashion. Maybe I’m an idiot, but I have no idea what anyone is talking about. What is it? It’s complete gibberish. It’s insane. When is this idiocy going to stop?

“We’ll make cloud computing announcements. I’m not going to fight this thing. But I don’t understand what we would do differently in the light of cloud computing other than change the wording of some of our ads. That’s my view.”

I know cloud computing is real - I can click on a few URLs to start using it today:

Comments welcome.

BTW, Oracle Fusion Middleware has done amazingly well as a business and is very real. If it were a standalone company, it would be rivaling likes of VMware. However, Fusion goes beyond that - and that's where I am not clear.

(To those that don't appreciate humor, please read my disclaimer. These are my personal views etc.)

Wisdom of Not

2008-09-21T12:16:00.000-07:00

Who do you think is a genius?

Not Flying: A man who escapes a plane crash alive (Crash Survivor is a Hero proclaims newspaper) or the guy who cuts down on air travel by using video conferencing because he knows that the best way to lower your odds of dieing in a plane crash or car accident is to fly and drive less? And its good for the environment.
Not Buying: The man who gets a great deal on a property after its down 20% or the woman who decides to not buy a home but rent in stead in Las Vegas? The company (Bank of America) that buys Countrywide or the hundreds others that walked away?
Not Kissing: Wall Street or Warren Buffett? The genius of Warren Buffett is perhaps not so much in what toads he kisses but in the toads he chooses to walk away from. In 1992, Warren said in one of his famous annual letters:
In the past, I've observed that many acquisition-hungry managers were apparently mesmerized by their childhood reading of the story about the frog-kissing princess. Remembering her success, they pay dearly for the right to kiss corporate toads, expecting wondrous transfigurations. Initially, disappointing results only deepen their desire to round up new toads. ("Fanaticism," said Santyana, "consists of redoubling your effort when you've forgotten your aim.") Ultimately, even the most optimistic manager must face reality. Standing knee-deep in unresponsive toads, he then announces an enormous "restructuring" charge. In this corporate equivalent of a Head Start program, the CEO receives the education but the stockholders pay the tuition.
Not Graduating: Chasing after yet another degree that will get you a dream job or walking away from the rat race? Bill Gates chose to walk away from a Harvard degree, Steve Ballmer from a Stanford MBA and Michael Dell from University of Texas at Austin.

Sometimes not doing something is a sign of deeper wisdom than the heroic genius of doing, saving, buying, kissing, graduating, chasing.

Don't just do something, sit there. There is even a book on that. And on giving up.

The Year of Black Swans

2008-09-14T20:48:00.001-07:00

Here are the black swans of 2008 that very few could imagine a few years ago. And Taleb is proven right, and so is Warren Buffett.

All these banks were living the life of optimized returns - rather than trying to model for preventing a catastrophe, a black swan. They would have done well to have followed Taleb's teachings.

In some ways, Warren Buffett had been warning us customers, investors and regulators that some stories are just too true to be true. Even as Warren's firm wrote "risky" insurance policies, it turns out that the risk that you can see is usually the good risk - it can be managed. Disasters and catastrophes happen when you least expect them.

In fact, Warren recently said, - "We found out that Wall Street has been kind of a nudist beach."Adding a financial crisis revealed which players had been "swimming naked" when the tide goes out.

While this drama unfolds here in the US, the ripples will be felt globally. To my friends in India that continue to buy $500K apartments in a country of less than $5K per capita (annual) income - let me say once again - money does not grow on trees. Not forever, at least.

I don't give out investment advice but here is what I can share - if you don't keep cash for the rainy day, learn from Lehman and others - in times of real need, cash is useful. Also, try to optmize your portfolio for high returns but make sure a disastrous year or a sector does not wipe you out. You can do this by diversifying across asset classes - cash, real estate, stocks, international exposure, etc. An easy way is to put a sigfnificant chunk in diversified (low cost) index funds from the likes of Vanguard.

Update: Taleb has a new essay up on Edge.org (hat tip)with commentary relevant to this crisis and your future. (Alert - it can get fairly intricate so its not for the light-hearted reader.)