We are all pretty stressed now, aren't we? We don't know how long will this COVID-19 caused lock down will last. Even when the lock down is lifted, surely the economy will go under recession. It will take sometime to speed up to normal level of consumption. Sitting where I am now, everything looks bleak. And the uncertainty is the real bummer! We don't know if this would last for  3 months or 1 year.

But if you look from a more objective long term perspective, the world operates in cycles. Period of booming growths have seeds for recession in them, and period of recessions have seeds of coming growth.

For example, in boom time, the economy is doing good and banks start lending more leniently thinking that good times would continue. This leads to increasing NPAs and when the music stops, the house falls down like a pack of card.

On the other hand, periods of recessions, makes the financial systems lean. Bloat is reduced, businesses become more efficient. Extra employees are laid off. Businesses become more capital efficient and hence, show increased growth few years down the line and voila, economic growth returns!

So, if you think carefully - Booms are not entirely bad nor busts are entirely bad. It is like the Yin Yang figure above. One is intertwined with other. Also, if you observe carefully - the Yang has a sliver of Yin in it, and vice versa.

This is a pattern which is not specific to economies, but is consistent across many human systems. Amish Tripathi famously talks about masculine and feminine way of life. If you check his Siva triology, he clearly distinguishes between two types of govt.

The “masculine" way hinges around a strong leader who assumes all  responsibility for society. There is clear direction and purpose for  society as a whole.

The “feminine" way is a loose democracy, with the leaders asking  their followers for solutions, or letting them go by their own  decisions. Questioning, debates, arguments and analysis form the basis  of governance decisions, and creativity—however unconventional—is  encouraged

And there is no right or wrong way. Both these elements need to be in balance for the society to function properly. But it seldom happens. At any one point of time, one element is dominant. When masculine element is dominant, the creativity in society reduces. Discipline increases. But soon discipline leads to militarism - which people find excessive and somebody revolts to bring back the feminine elements. More participative and accomodating democracy.

I guess, then the only question is - why don't we keep these two elements in balance? Why is it that one element takes over and we realise that we had moved too far when things go out of hand? Why don't banks controls NPAs in boom time.

Well, the only answer I can think of is that humans are short term thinkers. When going gets good we fil to recognise, that things will not always be good and indulge in excesses. Similarly, when things get bad, we loose hope that things will get good again and we over react. Since, this pattern repeats in almost all complex systems involving humans - I would argue that this is a feature of human beings which interact in the system, rather than the specific systems in question.

Ray Dalio explains how economic cycles work in this beautiful video. You must give it a watch. As you can see economy also moves in a cycle. How the Economic Machine works by Ray Dalio

I attended a webinar today organized by Ashish from NextBigWhat. It was attended by Lalit from Mobisy and Sameer from Linger. It was a candid discussion with both founders talking about their experiences and how they have survived nuclear winters ( not the literal ones 😜 but winters in business activity & funding)

Here are some of my jottings:

1. Don't think of yourself as a startup. Think of yourself as a business. A "dhandha" business. And the first objective of any business is to survive. You can do anything, have any impact, only if you survive.
2. You have to create value. Value for which somebody is willing to pay you. Customer paying you hard money is the best indicator of you having generated value for him. Focus on that.
3. If you are an early stage startup, and trying to figure out if you are making anything of value - start charging money. Freemium is not a good strategy for early stages as you are just delaying the moment of truth - when he shows you the greenback 💵
4. In good times you tend to bloat. So period of harships, though undesirable, are good to become lean. As a business, you should always try to be lean. This applies even if you are an early stage startup business or a 1000 people company.
5. VC money is a fertiliser. As a founder you have to be aware what kind of plant are you? Are you a grass 🌿, slow growing tree 🌲 or a fast growing tree 🌳. VC money is only helpful if you are a fast growing tree. As VCs have a time frame for which they invest and they would come asking for the timber once you are due. So, be self aware. What kind of business are you building? What type of business suits you (as a founder) and the market you are targeting?
6. Taking VC money is like buying a ticket to the bus ride. Once you have bought the ticket, you need to finish the ride 🚌 You need to take the business to a logical conclusion in the VC fund time fram ( ~6-8 years) You either become big, bet acquired or bring in bigger investors to gives exit to the early stage VC. Or you shut down.
7. Founders and VCs operate at a very different timelines. Any VC has a fixed time period in which they need to return the fund (~6-8 yrs). They need to invest, see growth in the startup and exit in this time period. Founders potentially would like to run their company for their lifetime. It's easy for them to think in decades.
8. The risk profile of VCs is very different than the founders. They have a portfolio of companies and they need 1-2 companies to become a blockbuster to return the fund. So they want you to go big or go home. But founders have a portfolio of  1
9. With the compulsory lockdown in many places currently, customers are more amenable to video calls. They are finding that video calls are more productive as there are less transition costs. Sales people are also booking 2X meetings, at least for Lalit's business. His belief that people will realise the value of video meetings and it will become more important even post-lockdown.
10. Now is a good time to build teams. There is lot of talent available in the market now and you could potentially have some very good people join your team - which would be not available in better times.

Every challenge is also an opportunity. It all depends on what you make of it.

What is fear?

It is the evolutionary response built into our brain when we are about to do something new or we are in a new situation. It makes you evaluate carefully the pros and cons of doing something, carefully scan your environment to understand if there are anythings which could be life threatening.

This was at least the evolutionary origin of this feeling. When men was resting in a cave at night, "fear" of getting eaten by carnivorous animals would prevent him from getting out of the cave and risking himself.

But as society evolved, and got more safer - at least from a danger to our life perspective, this feeling didn't just go away.  Many situations where we now feel fear, our life is not at stake - but we still feel it. It may be fear of doing something new, something which we have not done before. It doesn't necessarily kill us - but may hamper our chances in life. It may be triggered by the anticipation of facing rejection from the girl you love. Or from loss in social esteem in front of your colleagues or friends.

And if you consider groups of people as units, fear takes a new turn of its own. Societies can start fearing punishment by govt. Or what we are facing now, a deadly virus. The whole human civilization is fearing it ( though in this case, it is actually case of life and death).

But apart from situation like now, when there is real  danger of losing life, I think "fear" situation more than we need it. There are many experiments which prove that humans are loss averse. We fear a new situation more than we should. We are more happy in status quo.

Why are we so? May be the way evolution has chosen our genes, those early humans who played more conservatively were able to survive more and hence pass their gene. People who were more adventurous - died early.

I was reading about product positioning today and found this amazing book by April Dunford.

Some of my notes from the book:

• Often, you're too close to your product to realize that the market doesn't think about it the way you do.
• Strategy is about making choices, tradeoffs are about deliberately choosing to be different.
• Even a world class product, poorly positioned, can fail.
• If your prospects can't figure out what you do - quickly - they will invent a position for you, one that potentially hides your key strength or misrepresents your value.
• We generally fail to deliberately choose a context as we feel that the context for our product is obvious. It may not be so obvious in the minds of the prospect.

There's also a great video by Basecamp's Ryan Singer on positioning your product. His key message is to position the product based on the situation of the customer which makes him or her buy the product. Talk on Positioning by Ryan Singer of BaseCamp Here's  a quick summary of his key message: What's your product positioning story? Would love to hear.

Today I wanted to spin up a Kubernetes cluster on my Azure cloud. To my surprise, I was not able to allocate virtual machines (VMs) for the cluster. I thought that there was something wrong with my subscription, and hence reached out to customer support. The reply I got was very interesting. There was nothing wrong with my subscription or account. It was just that I was using free Azure credits for my account and Azure was just not allowing free credit users to create VMs.

And what was the reason?

You can read the response above. But in summary the top priority for compute resources will be given to:

1. First responders, health and emergency management services
2. Critical government infrastructure
3. Ensuring remote workers stay up and running with core functionality of Teams

I am not sure how much extra compute resources would the first 2 categories take, but the third one was very interesting.

Microsoft Teams was seeing so much spike in usage that they have to cut down VMs for free credit users. Just imagine for a minute, the compute facility which we have been used to thinking to be abundantly available is now rationed - because people are spending too much time chatting & on video calls.

This made me think, what if the world moves to 100% remote. Do we have enough compute infra to support this transition? As people spend more time online, they will be doing more video calls, sharing more videos, exchanging more memes and the data load will increase exponentially. Do we have enough compute resources with all cloud players like AWS, GCP, Azure, etc. combined  to bear this burden?

If you think about it, simulating reality is not trivial. As a recent episode of Westworld shows, Maeve was able to hack the simulation by overloading it. Scene from Episode 3, Westworld Season 3 Greg Egan deals with the idea of simulated reality extensively in his book Permutation City. One of the core question which Permutation City asks is this:

Is there a difference between a computer simulation of a person and a "real" person?

Now, of course, simulation is a much harder task than the video calls which we are concerned with currently, but I think this corona virus behavior will fundamentally changed humanity to be more comfortable with videos and digital interactions. This will significantly increase the demand on our current cloud compute resources.

How ready are we for this looming reality?

Update (3/4/2020) : This blog clarifies a lot of things. Also, AWS is able to handle the increased load much better than Azure. https://interconnected.blog/covid-19-stress-tests-cloud-azure-aws/

While a big portion of our life is governed by money, it's surprising how little we know about how it really works? A huge chunk of our life is spent either trying to earn more of it or spend it in the most virtuous fashion, yet we hardly ever question what money is.

If you have to take away one thing from this note, take away this. Money is not something real, it is what we believe it to be. It is a collective hallucination — a story we tell each other in which we agree  to take something with no inherent physical value and hold it sacred.

The dominant form of money or currency we are familiar with is "fiat money". According to Wikipedia, Fiat money is a currency without intrinsic value that has been established as money, often by government regulation. This form of money has gained popularity with the rise of nation states. Money today is controlled by the governments which rule these nation states.

Indian Rupees is a fiat currency, dollar is a fiat currency. They get value because the govt. of a sovereign state says that they will value the note of paper which we carry in our wallets. So, in a way fiat money gets its value from the armies which protect this nation states.

Though this idea of nation states' govt controlling money is a few centuries old. In fact, the idea of nation states is only ~250 years old. Before nation states, money could be issues by anyone. There were many non-govt forms of money. In USA in 1800s, many individual banks issued their notes. In medieval ages, Medici which was a powerful family in Italy used to issue their own money.

The fundamental dilemma of the current situation is this. The money which you have earned through your hard earned labour, its value is not universal. Since it is controlled by a third-party, their incentives control its value.

Govts or Central banks can easily print more money to finance its deficit - and the value of money you have in your bank loses its value. If you think deeply about it, its bizarre. You have given the right to someone else to control the value of your earnings. Why should you pay the price if the govt. whom you have entrusted with maintaining the supply of money is not prudent? Why should your earning get devalued?

Now, don't get me wrong. There are some functions which a central bank serves like maintaining the liquidity, ensuring there is no bank run, etc. But, giving the control of printing money takes too much away from you - from the fruits it gives.

A funny example of how critical the power of printing and controlling money is the case of Federal reserve system of the USA. If you watch this documentary, and its a great one, you will realise that the money issued in USA is infact not even controlled by the US govt. It is controlled by a cartel of private banks which has instituted this system - Federal Reserve System which controls the flow of dollar in the world.

Now, given how crucial is dollar in the world economy (how dollar became so important is another interesting story for another day) - this is too much power in the hands of a cartel of bank.

The question I have is this: This is 21st century. We have made many advances since the 18th century when the current system of money was born. How can this be made better?

There are things like cryptocurrency which have been tried. But, I don't think we have found an answer yet.

Should it be controlled by govts.? Should it be based on immutable blockchains? Or should we go back to the idea of non-nation state currencies? What should money look like in the 21st century - I think, this is a question which is still unsolved.

If you believe that your life is made of the choices you make, then the choices you make gain a paramount importance. Now in this framework, life is pretty simple. At each stage, you evaluate the choices you have - and choose one. If there is no choice, then you pretty much can't do anything - so there is nothing to feel bad about.

Though there are a few nuances here is:

1. Are you evaluating ALL the choices you have? Many a times we severely limit the choices we consider by considering how difficult they would be or how improbable. However difficult or improbable, they are still a choice.
2. If you make a choice, and it doesn't work out - can you do something to achieve the same goal? The funny thing is that, many times the choices are time dependent - and you can't redo the same choice. You can't rewind the proverbial clock. And that brings the idea of regret.

You have made you choice which you can't undo, and now you petty yourself. Mostly what I have seen is that most material choices - like those about career, money, success, etc. can be made again.

e.g. If you made a choice of become a trader, even though at heart you always liked Physics more, you always have a choice to start doing Physics if you realise that money doesn't excite you. It may be a difficult choice, but you do have a choice nevertheless.

Though in certain matters it doesn't work. If you wanted to propose a girl when you are young, you can't do that when she is 40 and married with two kids. You can't rewind the clock. And, this is what leads to regret.

An interesting, and I would say "effective" framework to make decisions is what some people have referred as "Regret Minimization" framework. Make those choices which you think you will have minimum regrets, if it doesn't work out. Jeff Bezos is famously known to use this framework.  Sounds like one of the better frameworks to make decisions to me!

Working from home is the norm now. I have been working from home since the last 12 days now. Of course, it has it pros. No traffic to conquer in the morning & night. More focused work. But it brings with it its own perils.

One of them is Snacking!

You are at home. You are focusing on work. Isn't it good to take a few breaks in between? It helps you get your focus back. And then you see boxes of cookies or some namkeen lying around - and unmindful you pick some of it. Before you realise, you would have had few such servings. In a week, I was some 2kg above my average weight.

Something needed to be done. I had heard about intermittent fast and seemed interesting enough to try. Also, it reduces the need for the misses to cook food, which is getting more and more arduous in this time of extended lockdown.

Basically, you have food only few hours in a day and fast in the rest. It could be 16-8 (fast for 16 hrs and eat for 8 hrs) or 14-10 or any other split which suits you. Here's a good blog describing this. Currently, I am doing 16-8. Eating only from 12 noon to 8pm with two meals and one light snack in the evening. I have lost 0.7 kg in last 3 days. Will keep you posted how it goes.

It's day 3 of Coronavirus lockdown and things are not getting any better. Yet.

The US has become the country with largest number of Coronavirus cases (~85K) surpassing China and Italy. Given the enormous impact US has on the world economy, I shudder to think what impact this will have on it.

India has slowed down its exponential growth in cases a bit, but it is still growing pretty fast. Or may be its just because of the extremely low number of tests we are doing. Who knows?

Today I was checking the corona cases in different countries and was wondering why doesn't Russia figure somewhere in the top. That's when I stumbled upon this piece. The headline read:

Coronavirus deals blow to Putin's plans to stay in power until 2036​

When I read the article, I found that Putin was planning to make some fundamental changes in the constitution which would give him power till 2036. Yes you read it right!

16 years of unchallenged rule.

Can politicians really do such things? Pass a law which keeps you president for 16 more years, when you have already served 4 terms as president?

Turns out they can. His proposal was already passed by the parliament and the constitutional court, and was pending a vote by people, which is now postponed due to coronavirus.

Apparently Putin runs a "managed democracy". It means that:

power flows from one man: The president has no serious political competition, his friends and allies control the commanding heights of the economy and Putin is the ultimate arbiter of disputes between elites

I was wondering how the Russian people must be feeling. And why are they not fighting back?

But then I recalled that our situation in India is not much different. Before this virus hit us, there were protests in street opposing the absurd CAA-NRC acts.

Are we going down the same path as Russia? Would a time come when our politicians will seek a 16 yr term extension - and "we the people" will not have the vigor to oppose it?

Day 2 of lock down in India, and thankfully things haven't become a lot worse here. We have still not hit the 1000 mark in number of COVID-19 cases. Though situation in the US and Spain has become a lot worse, which is terrifying.

Today I was reading this post by hedge fund manager Ray Dalio. He talks about how he reads history to understand what the world is going through. Since his job is based on having a more accurate model of the world, of course it makes sense for him to do so.

But doesn't it more or less apply to all of us? Especially those who are running their own ventures. We are always trying to predict what the world is gonna be 1-2 years down the line and build product for that future. Ray Dalio says that the best way to learn what is going to happen in future is to try to find similar patterns in the past. History never repeats, but it rhymes. The details are different but the broader patterns are similar.

So, if you are struggling with a challenging business problem or struggling to understand how to position your product in a competitive space - study history. How has this been done in the past. Surely it will give you some guidelines or frameworks to think about it.

As Dalio says, there are many things which we may be experiencing first time in our lives. But they are not happening for the first time in the world. Don't be an ant and react to what is happening. Take a seat back, try to study if something similar happened in the past - and try to form a model on how the future may pan out.

But this is not a one time thing. Don't assume that the first model you build will be perfect. You need to keep updating the model if there are any surprises. But having a model is a good point to start with.

PS: Dalio has some amazing resources at his two sites: https://www.principles.com/ and https://economicprinciples.org/. He also publishes detailed reports about his studies. Like this. If you are trying to better understand the world and predict the future - I am sure you will like these.