9 weeks away stands an MBA degree. Am I ready for re-entry into the real world?

Christ The Redeemer in Rio - We were there on a foggy day. Still looks cool!

9 weeks. Yes. Fortunately or unfortunately it is 9 weeks. As we head into Spring Break at Sloan it is impossible not to look ahead and wonder: “Wow, 9 more weeks”. My last semester at Sloan ends in the 2^nd week of May. Graduation is on June 4.

After almost $150K (ok, lesser than that for me), Merton model, Modigliani-Miller, Marginal Cost/Revenue, “building off that”, co-branding, term sheets, “enhancing” a CEO, Convertible Preferred Shares, Redeemable Preferred Shares, Memo to Jeff Immelt on how to get GE back on track, trying to sell batteries to Chinese bicycle manufacturers, Direct approach presentations, Ad Networks, East Coast Vs West Coast in Private Equity, Five Lenses, 7S Models, Cialdini, and many more. It feels strange to be leaving this Business School bubble.

Sooooooo where were we? Ah yes, last time I wrote in this space I was in Sao Paulo. In January! Feb has passed and March is almost over – and I’ve not written in a while. Some things don’t change I guess. I’ll try to summarize Jan/Feb/March now.

If what I write does not make sense, it’s because I am on a Bolt Bus from Boston to NYC and the lady sitting next to me is wolfing down a delish bacon sausage breakfast sandwich. It is 10 am on Sunday morning, I am hungry, and I have Jay Z yelling in my ear “Yeah…I am at Brooklyn. Now I am down at Tribeca, right next to DeNiro. But I will be hood forever. I am the new Sinatra….” (btw Jay Z’s Empire State of Mind is my new fav tune.).

January 2010 – Brazil and Argentina

Three things that I remember from this trip:

1. Live Football match in Buenos Aires: Absolutely recommend it if you are in BA. One of the best live sports experiences I’ve had (if not THE best). Fans went crazy the entire duration of the match. And the opposing team’s fans were guarded by gun wielding police for the entire time.

2. Weekend (or a week) in Floripa, Brazil: This is a beach island to the south of Brazil. About 40 Beautiful beaches – lots of them for surfing. Try the Brava and Mole beaches. And make sure to hang out at some of the beach bars. People stay there for a while and start dancing and singing for no reason. The Brazilians are one happy bunch (at least on the beaches). Oh also, the women here are in super shape. Apparently they prepare for the summer by dieting for the entire year.

3. Ipanema Beach in Rio, Brazil: We got lucky and ended up staying at a sweet spot in Rio. ½ block from Ipanema and 2 blocks from the Lagoon. So I went running in the morning by the Lagoon and chilled on the beach the rest of the day. The Ipanema beach area is simply the best. You can walk to any grocery store to buy whatever you like, or go to an expensive restaurant. Very relaxing.

February and March 2010 – Back in the US

Needless to say it was a rude adjustment when we got back to a wintry Boston on Feb 1. Although I was actually ready to be back (30 days away from home is a bit much, especially without a certain person not being with you, even if it’s in nice and hot weather).

WARNING: If you are averse to reading about typical Business School stuff, please stop reading from here on.

This semester I am in two really good classes:

-CEO perspectives

-Global Economic Challenges

In CEO perspectives we have a Fortune 50 CEO address us (some of us get to go to dinner with the CEO too) for 2h every week. We are free to ask him/her any questions.

It may not seem like a big deal but if I sit back and think about it is an incredible opportunity to be in the same room with the following CEOs:

Jeff Immelt (GE),

Jim Sinegal (Costco),

Dan Mudd (ex-Fannie Mae, now Fortress),

Strauss Zelnick (ex-20^th Century Fox, this dude became the head of Fox at age 32), Ray Elliott (Boston Scientific),

Nigel Travis (Dunkin Donuts, he introduced bacon-topped donuts to our class!).

We have about 5 more in the next few weeks including the

CEO of Sprint,

Boston Celtics,

Citrix,

NBC Universal,

Ford Motor Company,

and SAP.

No question is out of bounds. In general students ask expecting questions but some of my classmates asked very probing and insightful questions. Dan Mudd got asked real tough questions about why let things get out of control at Fannie Mae. Actually one of my classmates really pushed him – they got into a shouting match. For the most part Dan handled it well but it was clear that he was not super comfortable talking about it.

Most notable quote from these peeps so far in class:

Immelt: “Yeah you go home every night beaten up, tired, listening to complaints, and wondering why you want this job. But then you get up the next morning and look at yourself in the mirror and go “You are the man!”

Immelt (classmate asks him, what does he think about this Leno and Conan): "Look, I respect them both. At the end of the day, the TV business is small. CBS (top TV station) makes $400M a year. Margins are low. I can make that much by selling 2 aircraft engines and at a high margin! I dont worry too much about TV"

In Global Economic Challenges we have a professor who was in the George W Bush White House. She is a very good teacher. We learnt how to look at warning signs for financial and currency crises from a macro-economic point of view. We analyzed some of the euro area countries that are in trouble (yes, that includes you Greece). Will the euro survive. And just how credible is this Brazil and India taking over the world thing.

Bottom line from this class: we are in for a hard time in the US in the next 5-10 years. Slow growth, inflation, and high taxes are unavoidable. (we looked at hard numbers for this and I can’t imagine how this will not happen). Brazil, India, and China will experience a phenomenal growth period (unless something crazy happens). China is expected to take over the leadership in GDP by 2020 (on a PPP basis). India is not going to be far behind.

All signs point to focusing on emerging markets (BRIC or what are now called the Frontier bloc) for investing, business ideas, or natural resources. Let’s see how this turns out.

Until next time: laters.

Ola from Sao Paulo - The World never ceases to surprise you!

View of Sao Paulo from our Hotel Rooftop


Those of you who know me probably are aware that I think that I am one of those who has traveled the world and know most of what there is to know about it. Well, this is one of those situations when I am made aware how little I know about it.

My team and I arrived in Sao Paulo, Brazil on January 3 for a 3 week consulting project as part of our course work at Business school. We finished our first week here and whoa it has been a whirlwind week full of surprises, shock, moments of awe, and helplessness (is this a word?).

- Sao Paulo and its confines house 27 M people. Yes, you read it correctly : 27 Million people. Making Sao Paulo the world's largest urban dwelling in the world. And here I was thinking Sao Paulo is Rio's poor cousin with about 1000 people.

- The infrastructure in Sao Paulo is nothing short of awesome. Wide and organized highways, paved streets with clear signs, tons of bridges and tunnels. etc. Why am I harping on this? Well, let me tell you why. The World likes to compare Brazil to India and China and if what I've seen so far in Sao Paulo is any indication Brazil is about 20-30 years ahead of India in terms of infrastructure.

-The demographic of people here is so diverse that we (as people of Indian origin) can pass off as Brazilians. There are a lot of native Brazilians who have the skin tone as us. No wonder we have everyone come upto us and speak in rapid Portuguese - and we have to be lame and say "sorry we dont speak Portuguese". Decades of cross-breeding has led to a diverse mix of races here. No doubt about it.

-Lifestyle of people (again from a week of observation) is crazy. We hit up bars near our hotel on Wed and Thu and they were packed at all times in the evening. We went to an Irish pub to watch Florida Vs Alabama on Thu nite and the bar was packed with young Sao Paulans. Of the 200-300 people there there about 5-10 watchin the game. People walk into restaurants at 11 pm to start dinner and hang out till 1 am. Not sure when they have time to sleep and work!

-Food has been very good. I would not call it great yet but people tell me we still have not gone to the better places. Grilled beef ('Grelhados picanha') and Grilled Pintada (Pintada is this Brazilian fish only available here) have so far been my favorites. Chopp is a Brazilian beverage that looks and tastes like beer but only lighter with lower alcohol content - tasty!

-Our project has been super intense. We are working hard (to my surprise). We are working with the largest publishing firm in Brazil. Our project goal is to help them better monetize their online advertising revenue. They print and manage online about 50 magazines in Brazil (including Playboy!). They would like to improve their online advertizing revenue. We are talking to competitors, partners, and anyone that we think is relavent. Our final presentation will be to the CEO and President of the publishing house - so we better do a good job!

-I realized how much I would have hated my life if I recruited for management consulting and accepted a job in traditional managament consulting. We are living that life now. Housed in a conference room all day our team of four is constantly bouncing ideas of each other, interviewing people (sometimes asking the same questions), and in general trying to learn a $5 B illion business in 3 weeks. Tiring and energy sapping!

-Our host at the firm has been great so far. In general the people we've met so far for work are all young and smart entrepreneurs who realized huge potential for the internet in Brazil before the rest of the world. 3 of them in their mid-30s are visiting professors at the best universities in Brazil because of this. I am surprised at how visionary and passionate they are.

-Language. whoa. It's been a while since I've been at a location where I have no freakin' clue what people are saying. Seriously. Portuguese is not an easy language. We have had to resort to writing everything down and pointing to it or in general to pointing to things at restaurants, cabbies, and stores. Helpless feeling. Although we are picking up the language slowly.

-Planning on hitting a beach near Sao Paulo tomm (Sunday).

-Rooting for the Bengals today (hate the Jets!).

hope everyone is doing well.

later

2010 - How is it going to be?

I am going to keep the excuses to a minimum - it's been a super busy semester at school and it kept me from blogging. On the other hand I have an account on Twitter now (@maheshkonduru) and tweet regularly.

So a lot has been going on in this world since the last time I wrote something in this space. You all know all about that. What I am saying is that I am feeling too lazy to write a summary of the last 5 months.

Instead let me Wish you all a Happy 2010! Hope things turn out the way you want.

One final update before I sign off. I (with a team of 4) am off to Brazil and Argentina for 4 weeks starting on Jan 2. We will be on a consulting project as part of a course at school. The first 3 weeks will be at our client's site in Sao Paolo and the last week will be spent in Rio and Buenos Aires. I am hoping to be able to blog regularly once in Brazil.

Until then Enjoy your New Year's Eve!

later

Thin line between Visionary and Crooks?

so i just noticed that i've not written anything in this space in more than 2 months. That is quite a while huh. The summer has been busy - internship left no time to come home and collect my thoughts to write anything meaningful. Not that everything I write is meaningful. I did not want to come home and write after a day of work.

anyway, I just finished reading a book "The Smartest Guys in the Room" - the Enron story. It is a HUGE book, 470 pages but very densely packed words. Took me 4h of reading everyday for 7 days to finish it. Recommend reading it. Very well researched and written - for someone who went through a semester of accounting, economics, and finance courses recently it was easy to follow.

Here is my take on the guys who ran Enron: Visionaries who got greedy. Let me explain.

Why Visionaries?
Let me tell you why. Ken Lay and Jeff Skilling envisioned quite a few scenarios atleast 5-10 years ahead of time. Lay envisioned (PhD in Econ) de-regulation in the natural gas and electricity (power) sector way ahead of his time. Of course he lobbied hard to get them through but there is something to be said for envisioning it. There might be hard arguments against free market capitalism, esp with what went on in the last 2 years, but in a society where there is enough supply, de-regulation makes a lot of sense.

Jeff Skilling to his credit envisioned that consumer like you and me would order movies at home via their broadband line and be able to play, stop, and rewind etc. Pay per view at home basically. This was in 1999. Voila you are doing it now - albeit it is via the cable line. Same difference.

Both strongly believed in free market capitalism (if the book is to be believed).

Why were they crooks?
Let me tell you. I am not sure I need to say more than what has already been written. They got carried away. Skilling wanted to be able to trade and hedge everything: broadband capacity, water, metals, weather whatever he could. That's just being megalomaniacal. There are limits to everything - key is to realize when.

Biggest problem of it all: Lay and Skilling were slaves to Stock Prices. Nothing wrong with it on surface. You would hope that your CEO/COO is keen on seeing the Stock Price being high - as long as they are making sure your business units are generating REAL revenues and REAL profits. Pushing your units to perform at their best efficiency is good. Unfortunately, Skilling and his CFO Fastow decided to generating ACCOUNTING revenues and ACCOUNTING profits. And they were obsessed with the meeting Wall Street expectations - so much so they took whatever path to reach those numbers.

The biggest surprise to me was:
How many people were involved and got carried away in the wave despite there being signs all along that something was fishy. The people who duped investors and their employers ranged from premier investment banks (Citi, JP Morgan, Chase Manhattan, Merrill Lynch), analysts at premier investment firms (Goldman, CreditSuisse, Prudential), of course accouting firms (Arthure Anderson shut down - 60 yrs of illustrious history down the drain), and tens of top level executives.

You know who were the first ones to have the courage to ask the tough questions: two guys who ran Hedge Funds. Of course these funds were always short and that is their main goal - to spot fishy firms. But there is something to be said for Short Sellers able to spot bad firms.

One final tidbit: Enron had a great Project Finance division. They were to me some of the pioneers in this space.

I recommend reading the book if you have lotsa time to spare.

I am now onto "Blue Ocean Strategy". Promised myself to read 2 books before school starts.

More later.

hope summer was great for all of you.

Why oh why, Manny?

DISCLAIMER: My intention in writing this post is not to point fingers at anyone or defend Manny Ramirez. This is simply an amateur exercise in understanding some numbers in baseball. All raw numbers were obtained from ESPN.com, which in turn got the data from the Elias Sports Bureau. The average and stdev number calculations and time periods chosen are mine.

So here are some numbers, try to digest them for a few minutes.

Oh yeah, OBP = On Base % + Slugging %. For those who don’t know what On Base % is, it is the number of times a batter is on base via a hit or walk (as a % of the number of attempts of course). And Slugging % is the total number of bases a batter gets every time he gets on base.

So OBP is a good indicator of power and batting average.

I only considered years in which the player played for more than 120 games in a season.

Oh yeah, the numbers

Mark McGwire:
1987-92, Avg HR=36, Stdev HR=9, Avg OBP = 861
1995-99, Avg HR=57, Stdev HR=11, Avg OBP = 1116

Barry Bonds:
1987-95, Avg HR = 31, Stdev HR=8, Avg OBP = 961
1996-2004, Avg HR = 46, Stdev HR = 11, Avg OBP = 1194

Sammy Sosa
1990-95, Avg HR = 24, Stdev HR = 11, Avg OBP = 757
1996-2003, Avg HR = 51, Stdev HR = 12, Avg OBP = 976

A Rod
1996-2000, Avg HR = 37, Stdev HR = 8, Avg OBP = 956
2001-07, Avg HR = 47, Stdev HR = 9, Avg OBP = 990.3

Manny Ramirez
1995-00, Avg HR = 36, Stdev = 8, Avg OBP = 1022
2001-07, Avg HR = 36, Stdev = 8, Avg OBP = 1008

The two periods that I chose are specific to each player.
-For McGwire, the first period was his first 5 years in the league whereas the next period is when the supposed ‘steriods’ era began.
-Same as above for Bonds
-Same as above for Sosa
-For A-Rod the first period were his years in Seattle while the next period includes his stay in TX and NYY
-For Manny, the first period is the time in CLE followed by BOS

So what do you peeps think? Keep in mind that historically the prime years for a baseball player, for both power and average are supposed to be from age 26-32. Beyond that age, power numbers have declined for almost everyone all the way back from the 1900s (even for the Babe).

I can write and speculate about every player here but I will not. Let me write a couple of lines about each player that I used numbers for:

McGwire:
He came into the league with a lot of power. And his HR average jumped up 21 per year between the two periods while his OBP increased by almost 200 points (this is a HUGE increase by the way). Now that is a HUGE leap in both numbers. What was responsible for it, who knows.

Bonds:
His increases are not as dramatic as Big Mac’s but they did increase. For all the drama around him, BB hit more than 50 HR only ONCE in his career. Of course, managers probably did not want to pitch to him in the 2000 years, which probably affected his numbers. But keep in mind BB was 34 yrs old in 1998. That’s quite a significant increase in power after that age.

Sosa:
His numbers show the most dramatic increase in the two periods that I calculated. Keep in mind; Sammy’s official age in 1996 was 30. It is quite possible that he finally figured it out at age 30 how to be an elite baseball player. But he kept at that pace until age 37. Draw your own conclusions.

A Rod:
For all the scorn that he has been subject to, his numbers do not change as dramatically as the above peeps in this list. He has admitted to taking steroids when he got to TX (2001-03) when his HR average jumped to 52 ish something. That’s a 15 per year jump from his Seattle years. His OPS increased but not my much if you take into account his Yankee years.

And finally Manny:
I was surprised by the no change in averages – atleast for the years that I picked here. During his CLE years his HR numbers went from 22, 26 in 1994, and 1995 to 45 in 1996. Two caveats here, he played only in 91 games in 1994 and 137 in 1995. And he was officially 23 years old in 1995. Think about that, 23! His highest HR years were 45 (1998), 44 (1999), 43 (2004), and 45 (2005). He was 33 yrs old in 2005. His OBP numbers are remarkably consistent through out his career.

So WTF is going on then? Who knows? My speculation: in 2007 Manny had 20 HR with a OBP of 887 – both the lowest numbers since 1994 when he was a rookie. He was officially 35 that year. This was his last contract year in BOS and they were hesitating to give him a new contract (justifiably). Then his HR numbers came back to 37 in 2008 (split between BOS and LAD) and OPS back to his career average.

After 2008 LA dragged his contract talks for a long time. Is it perceivable that he took something after 2007 and/or in 2008? Or is it that he was always on something right from the beginning in 1994? Who knows.

What seems more plausible to me is that he probably panicked at the end of 2007 and/or when get got traded to LAD and took something the first time. And with his new contract in 2008 he went back on the substance. I find that more believable.

Of course that does not justify anything. I am not sure why athletes try to defy nature and ingest these things. Ok I know why ($$$$ and vanity) but why do they have to risk so much. Well, do these substances improve your abilities as a baseball player is another discussion altogether.

What I know is this, I loved Manny Ramirez hit a baseball from 1995-2008. I would religiously watch his at bats whenever I could in that period. It was pure joy knowing that this dude would do something remarkable every time he came to bat. I loved watching him in Cleveland and I have to admit I switched my baseball allegiance to Boston when they signed him. And last year, I would take peeks at the scoreboard whenever the Dodgers played if only to check his stats. I rooted for him.

When his suspension news was first released, I was at a competition, helping judge it when one of the judges (a Yankee fan) announced it gleefully to the world. I was in denial for 2 weeks and to this day I have not read any articles on him since the suspension was announced. I know a lot of mainstream are not objective about him (especially here in Boston) so who cares what they think. I’ve accepted the fact that he cheated. I only hope what he did in 1995-2007 was legit. Not sure how I would feel if that turned out otherwise.

Until, I am going to be positive about this. Manny, hope you learnt your lesson. Don’t freakin’ cheat nature, please!

Taking Stock of this MBA Thingy - End of Year 1 Review

I know, I know, there are numerous topics to write a post about today but I am conveniently avoiding all that. Instead I am writing a summary, if you will, after the completion of the first year of my MBA program.

To make it simple I decided to list Pros Vs Cons of the MBA program – mind you this is after Year 1 of the 2-year program. And I am leaving out personal stuff (obviously).

Mind you this is not a judgment of the program I am currently at or of my decision, just a reflection piece. Not endorsing or criticizing anything.

To borrow a phrase from the latest edition of The Economist, What is there is to say after weeks of scoffing food and swilling booze?

So without further ado, here we go:

CONS
- $76,569 in debt – for tuition and living expenses (thank you CitiAssist and Fed Loans)

- Opportunity $ cost of not being at work (I computed the $ amount before school but will leave that out here)

- One year of not being at work and learning new skills, making new connections, and career growth in the old path. (my old employer has survived rather well in this atmosphere – only 1 person has been laid off if the past 9 months. This is a big deal considering that they are a tier II supplier to the automotive industry)

- Some loss of financial stability (you know saving up to buy a place, more savings etc)

- Lost opportunity to keep abreast of latest technology in the chemicals and automotive industry (I strongly believe that the upcoming decades are going to be shaped by advances in transportation and material technology)

- Lost chances to be part of multiple US patents. Just as I was leaving my firm decided to reverse its policy and file for multiple patents on a host of work that has been done in the past decade. I would have been part of that if I stayed.

- A good balance between professional and social life. School is reasonably good but when you are working you mostly (in my case) left work at work. After 6 pm it was my own time.

- Terrible eating, exercising, and drinking habits. I’ve gained a disgusting amount of weight since starting school (yuck!).

- Loss of sleep. While this is not too serious it still takes a toll on the body if not taken care of.

- Spending habits worsen. With reasonably good income I was very mindful of what I spent my $ on when I was working (at least the last 3-4 years!). At school with exactly zero income I’ve had an irritating habit of splurging: cabs, booze, eating out, without thinking about it twice. (why this is I have no reasonable explanation. Maybe subconsciously I am thinking this degree will get me rich!! Yeah right)

- Wish we had more of the good classroom teachers. Learning could be much more exciting and quick.

- And finally I have done a terrible job of keeping in touch/socializing with family and close friends outside school. This is bothersome. I promise to work on this more this upcoming year.

PROS
- A risk free opp to try something that I really like. I am fascinated by Finance and technology is in my pedigree (educational). A chance to marry both and see if a career in that is exciting has been presented to me - and guess what it is risk free! Try it in the summer and see how I feel. What more can you ask?

- Ability to develop “the big picture”. So this is tough to explain. I feel like I’ve become much better at understanding business enterprises at a macro level in the past year. Some of it is from academics, some from discussions with classmates, and some from personal reading/watching habits.

- Valuable fundamental understanding of how things work in the investment banking, asset management, sales and trading, private equity, venture capital, corporate finance, and consulting professions. Some may get this without b school but for me this was critical in choosing what to pursue. Again, a combination of academics and conversations with faculty and classmates greatly helped.

- Invaluable opportunity to learn how to manage people in a relatively risk-free environment. I was part of organizational teams for numerous conferences and learnt tremendously on how to manage egos, coax and cajole, and generally get things done. This can also be achieved outside B school but probably at a higher cost.

- Ability to think quickly and act faster than ever before (I am still learning). You should see the way I work my email Inbox now. For someone like me who would postpone replying to emails unless it was absolutely crucial this is great. Now, I am constantly in real time. This, to my pleasant surprise (duh!) increases productivity. There is no choice in B school but be in real time – there is so much happening and you don’t have to lag or be left behind.

- Chance to listen to thought leaders in person and debate with them. I am not going to list people’s names here but suffice to say it has been a great opportunity to be face to face and learn. I wish I did more this past year; one of my goals is to do that more in the upcoming year.

- Brand association. Everyone tells you how being a good school really helps when you get admitted. Guess what, IT IS TRUE. People think that just because I am at Sloan I am automatically smart. This never gets old. I ran into a Private Equity type the other day at my internship and he goes “MIT huh? Can you teach me this? I am sure you can explain it in your sleep.” This is obviously not just for vanity but opens up doors and careers that otherwise may not have been possible.

- Learning every day (or every day other day, whatever, you get the idea). Be it in class, or at school-organized competitions, while swilling PBR with classmates, at networking events, at forums you name it. There is so much to learn.

- Getting access to people you would only dream about. CEOs of real great firms, Govt people, highly placed executives, and famous thought leaders. While this may not be a tangible personal benefit it still helps to talk and gain insights from some of them. The way I look at it, if I can pick up one thing from each person that is pretty good.

- Relationship building. You are probably noticing that most of the pros (or all of them) and intangible and non-numbers types. What can I say? I now firmly believe that intangibles, which include relationship building, is one of the most important pillars to career building. Be it alumni or classmates or teachers this is a nice time period to let them know who you are, how you think, and whether you are dependable in class groups, projects, and club positions. 5 to 10 years down the line, if you need help or advice they are there – no question.

That is all I could think of right now. It is interesting that I list $$ amounts in the CONS and then go on to NOT list any $$ amounts in the PROS. Why you ask? Well, it is too early to gauge how this will improve my $$ potential. Ask me in 25 years!

Tokyo, Thailand, and a Wedding!

So, to celebrate the end of the first year of my MBA program, I decided to spend 10 days in Thailand. I am writing this post from Bangkok (1:30 am here). Why Thailand? Well, let me tell you why Thailand. One of our classmates is getting married in Bangkok (the wedding was tonite) so a bunch of my classmates planned to combine that with some pleasure.

We got here 2 days ago - via a brutal 14h flight from Boston to DC to Tokyo to Bangkok. Spent a few hours in Tokyo and loved it. Am going to go back there at some point.

anyway, I will write more about this when I get back to Boston. It's been an interesting trip so far. Going to a kick boxing match tomm nite, then off to a beach in South Thailand (Ko Phi Phi) for 3 days. Ahh, vacation! Much needed.

hope y'all are having fun.

later