July 24, 2013

The $300 House Project - Creating Affordable Living for the poor

Hi Guys,

How many people have criticized the presence of slums inside the metro cities? How many people have wanted those areas to go away of the city? But, how many of us have considered a real solution for those people? We have Slum Clearance Boards. But, have these boards done something useful across the years? Either they plan for poor quality homes or unfeasible plans and the slums have stayed across the years. There is a huge bunch of people who do not have any shelter to stay too.

A few people in USA started to dream on the possibility of a low cost house for these type of people and their dreams have come true to a large extent. Christian Sarkar, a marketing consultant in USA started the concept. His idea was based out of the people in Haiti, who do not have proper shelters to live. He approached Vijay Govindarajan, who is a professor at Tuck School of Business. Together they started the $300 House Project.

‘90 percent of the world’s designers spend all their time working on solutions to the problems of the richest 10 percent of the world’s customers’ – Paul Polak

Christian Sarkar explaining the concept in TEDxGateway Mumbai 2012 partnered by Franklin Templeton Investments. To see the video in Youtube, visit http://www.youtube.com/watch?v=haMM-hiG6k4

The aim was to build a house with basic facilities that can provide the poor people a safe place to live in. They announced a contest and received exactly 300 entries. Together they built a community. A community that was committed to the development of the society. A community that wanted other Human beings to safe. Together they developed prototypes in different places. As Christian Sarkar describes, they might not have built a house for $300 (currently they have houses built for as low as $800), but they have created the energy, passion and platform for others to work.

This project is being pilot tested in Haiti and certain parts of India. In India a team from Mahindra and Mahindra has built the cheapest home and they have built communities in Bihar for flood affected people and in Pondicherry for Tsunami affected people. What an effective way to create innovation? They call it as Reverse Innovation. When more and more people come in with better inputs, the cost will go down. The possibility of a self-sustainable house for the poor could become reality.

For companies, it’s a great way to go forward with the Corporate Social Responsibility (CSR) as Christian Sarkar says. Being a student of MBA, CSR is a topic that is discussed in classrooms quite often. Whenever the topic of CSR comes, many of my classmates come up with questions like how can a company really concentrate on something like CSR. We have to give 2% of profit and that’s it. As the people from M&M have shown, it’s more than that. When the society has given so much to you, you need to put in your physical efforts and not just money.

‘Companies that are not good corporate citizens – those that… allow the environment and the community to suffer- are really criminals in the today’s world’ - Ratan Tata

One of my friends was saying that the Government should actively participate in the project. The slum clearance boards are finding it difficult to find solution and these type of efforts can be so efficient. It’s difficult to figure out why the Government is not taking any efforts to contribute to these type of initiatives.

Looking across the various videos regarding $300 project in Youtube, you are really impressed. There is a huge bunch of team working selflessly for the project. As Christian Sarkar concludes, you are much better than many people in the world. Help those people those you are below you.

Happy Reading!!!

P.S: This Post is written for ‘The IdeaCaravan’ contest conducted by Franklin Templeton in association with Indiblogger.

July 15, 2013

The Big Short - Michael Lewis - Book Review

Hi Guys,

‘The most difficult subjects can be explained to the most slow- witted man if he has not formed any idea of them already; but the simplest thing cannot be made clear to the most intelligent man if he is firmly persuaded that he knows already, without a shadow of doubt, what is laid before him.’
-Leo Tolstoy

Michael Lewis starts the book ‘The Big Short’ with the above quotes. The author traces a few people who had good knowledge on the Financial sector of USA and predicted the collapse of US Financial sector. The book is more of a compilation of different stories over the time frame of 2005-2008. The author conveys the story of how these people understood that the financial sector is too unstable and they can make big money out of it.

The book starts with the quote to depict the fact that many big players and intelligent investors failed to realize the risk of collapse. They were too happy with the money they were making and thought the business could sustain.

Across the book, you come to know how the whole fiasco was created with the help of detailed explanations. Banks lent their money to people who were insecure. The 2001 crisis led to lower interest rates and this made interests low. The investors were looking for better returns. The subprime mortgages were converted into Credit Debt Obligations (CDOs) and they were rated. These CDOs were bought by investors and the risk was passed on. The final risk was bore by either the investment banks or insurers. The hosuing rates increased and hence banks started chasing people to buy more houses. In 2006-2007, when the interest rates were increased the people who got loans started to default. Slowly, the crisis started.

The book traces the stories of some traders or hedge fund managers like Steve Eisman, Greg Lippmann, Michael Burry and others who predicted the collapse around 2005 and gathered funds to invest against the CDOs (or short the CDOs). The book goes on to say how these people were being treated when nothing happened as the investors were angry. After the crisis happened and the people got the money, no one cared to thank them. They were forgotten.  No one recognized them.

One of the most captivating pieces of the book is the role of Rating Agencies in the crisis. The Rating Agencies worked along with the banks to make the CDOs that were not even worth BBB ratings as AAA ratings. The author says how the whole rating system is flawed and how it helped these people making money. For instance if a person with low income applied and he hadn’t taken a loan before he was given a higher rating despite the fact that there is no clear picture.

He also identifies a flaw in the whole system. The whole investment banking industry works on the Rating provided. So, the rating agencies must be the one with higher status. But, in reality people prefer to work for investment banks. Investment bankers get more packages and the rating of the bonds is considered as a boring job. The author says it must be the other way round.

In the end, the author says how the big names escaped with Government funding and how none of them got affected. The common man was affected, but who cared.

Though I knew the basics of the crisis, this book was a big revelation to me. All the big names that were behind the scenes escaped without action. Even today these firms are rated very highly and are chased after by MBAs.

Most importantly, if someone comes and say you complex terms in Economics and say this is the reason for what is happening, don’t believe blindly. Mostly, it can be explained in plain English terms.

This is must read book If you are interested in Finance or Economics.

Happy Reading!!!

July 7, 2013

'I will be there in 5 Minutes'

Hi Guys,

How many times have you heard the dialogue in the title? Probably a lot many times. What has been the outcome? I’m definite it would have been a long wait most of the times. If it is the opposite, I would say you are lucky.

A few days back, there was a status message in Facebook from one of my professors. He had visited Paris and one of his former students said he would meet him in 8 minutes and he was there exactly in 8 minutes. He attributed this to the proper traffic system they have. In India, even if we have proper systems, I doubt whether people would turn in the time they promise.

Often on Facebook, you would have received this message when you are chatting with your friend – ‘BRB (Be right Back) in 5 minutes’. And a lot of times, I have waited eternally and the friend would never appear back.

A few years back, one of my cousins had noted the different time frames, his driver would say. This is how it went. If he says he is very nearby, it would take two minutes. If he says he is nearby, it would take 5 minutes. If he says he will be there in 2 minutes, it would take at least 5 minutes and if he says he would be there in 5 minutes, it would take a minimum of 20 minutes.

These days, you get the phone numbers of Auto Drivers and call them whenever you need. Sometimes, the result could be frustrating. The auto driver might be busy with another ride, but in order to not miss this ride, he would say an approximate time. And most of the times, he would say he is nearby and we would never know where he is. It becomes a big trouble when you want to go out immediately.

Being on time or sticking to time has been a big problem with most of the people in our country. As one of my professors says it, being on time is nothing but respecting the other person. It is the basic courtesy you can show to the person.

Most of the times, I don’t mind waiting for a longer period, but be true about the time. Don’t make the other person guessing things like whether he would turn up, how long I would have to wait more and such other things. Informing the right time would clear things.

I try to be that way and it has not been difficult. And trust me, being on time is not the toughest job on earth. It requires a certain amount of planning and execution.

Hope the people who read this stick to their promised time.

Happy Reading!!!