The Connected World & Market Valuation

30 Jul

Anand Mahindra, the CEO of the $16.6 Billion Mahindra Group tweeted on the fateful day when Facebook announced the buyout of WhatsApp for $22 Billion, an astounding amount by any valuation standard. Mr. Mahindra said in his tweet, “Every CEO’s trying to figure out What’s Up when FB pays $19Bn for WhatsApp. It redefines the meaning of, & method of, value creation…”

Over the past few weeks Microsoft surprised everyone by acquiring LinkedIn for over $26 Billion, a whopping amount by any imagination. Just a couple of days before this post was written, it became official that Yahoo was acquired by Verizon for just $4.8 Billion in cash, a paltry sum considering what Microsoft had offered to buy the company for in 2008 (over $50 Billion). At one point Yahoo was believed to be valued at around $125 Billion.

This got me thinking.

There are several theories around how the market valuates a company. However, they are just that – theories.

Here are my Two cents. Something that I’ve noticed is that the market tends to value a company based on its ability to “connect people”, so to speak. This could be in the social sphere or out in the marketplace. Companies like Amazon, Facebook, Google, WhatsApp, Instagram and even Alibaba have a very high social influence and are valued at several hundred Billions of Dollars (Yes, with a B), when combined. While these companies are indeed financially sound and are enjoying record profits, I feel that their valuation has little to do with their underlying financials or future prospects and more to do with their quotient to “connect people”.

This theory seems to have been further validated by the surge in stock prices of Nintendo after the release of the highly popular gaming app – Pokémon Go. The game leverages latest technology (VR, Location Services etc.) to bring people together and provide a platform for them to connect with each other.

Does this mean that “connecting people” (once an iconic slogan for an iconic company – Nokia) would become the only mantra for service or even product companies in order to gain high market valuation? Not necessarily. Sound financials, a viable business model and future growth opportunities cannot be disregarded.

Let’s take an example of an IT company. Technology today has been commoditized. All players within the market have it. Therefore, technological prowess, while important, doesn’t necessarily give you a major edge or influence market sentiment.  To drive growth, in addition to the standard financial and corporate measures that are critical in their own way, IT companies would need to focus even more on their products / services and drive their messaging to highlight the people connectivity aspect (within the organization or communities).

By highlighting that they are as much a part of social networking, the social fabric of communities, organizations and “people connectivity” as a Google or Facebook, companies could be in a better position to influence market sentiment.

Go on! Call me an Idiot….

09 Jan

Oh No! The Aliens have arrived”, “What a big show-off!”How can you wear that stuff in the Indian summer?” Oh, look. We have a new Super-hero!”None of this can prevent you from dying in a crash”  “Bloody Biker brat”

Above are just some of the statements and expressions I am used to hearing as I don my Biking gear each time I take the Ceeber (read CBR) out for a spin and for commute.

I have an elaborate set of Biking gear that I am proud of. When fully geared up, I resemble a special-forces operative ready to take on the bad guys. Since I prefer to use my Bike most of the time instead of the Cars, I tend to be geared up almost every time. The duration of the ride doesn’t matter to me. I could be going for short ride but the risk of crashing isn’t necessarily minimized.

A couple of weeks earlier I had been to a fast food joint on one of my binge days after a solo ride. The gang hadn’t planned anything and it was a lazy Saturday. No sooner had I walked in that a bunch of guys, already seated there noticed me geared up from neck to toe. One of them muttered something in which the words ‘show off’ were obvious. I was sure that they were ranting about my gear and at me for wearing it. At first I had the urge to walk up to them and exchange a few words but I restrained myself, clenched my fist and decided to mind my own business.

Having placed the order, I took the corner seat and waited there.  Minutes later, a bunch of American tourists arrived. Staring a bit hard at first, a couple of them murmured a few words amongst themselves. I just smiled and shook my head assuming it was another negative jab at my gear. Minutes ticked by and dinner had been packed. While I was paying the Bill, one of the tourists walked up to me and asked with a smile, “Oye, you riding Motorcycles?” “Yes!” I answered resoundingly. He gave me a High 5 and asked me to join them. Apparently, this dude worked at Alpinestars, USA (a company which makes Biking gear and sports goods) and was a Biker himself. He was on vacation in India. Most of the folks from the group were in fact Bikers. We got involved in an engaging discussion about biking in general and the use of gear. These people were loud.

Before I knew, it was half an hour since I started talking to this bunch of crazy Bikers but it was so much fun that I had no plans of leaving in a hurry.  A little while later, I was invited to join them for a couple of Beers. I didn’t say no.

– Tarun Nair

“Just agree with me or remain in the wrong”

29 Jan

A colleague came up to me the other day. He had devised a devilish plan and needed my support to endorse it.  I would later learn that my endorsement was needed for a far sinister plan, one which would eclipse all others and make them seem like Vinicola’s Port Wine in front of French Pinot Noir.

On another note why is it that the people that don’t know what the duck (word masked with rhyming alternative) they are talking about always have the most to say? From my perspective, one needs a brain to have a thought.

I digress.

Coming back to the point, a friend of ours was in a relationship and was planning to get his beau something really nice for Valentine’s Day. He was as confused as how Venkatesh Prasad would be at the WACA in Perth. Eager to make the right moves in a budding relationship, he approached his friends to suggest the perfect gift for his girl. After some deliberation he thought of buying a Digital Photo Frame.

Don’t ask why.

This colleague of mine was probably his best friend and suggested that he reconsider his decision of buying a Digital Photo Frame. He opined that this gift would be as useless as a Comb for a Bald man or a Mic for Manmohan Singh. He was so confident that this was a crappy gift that he dared him to buy it. The consequence of not listening to him could be grave. The colleague even warned him of telling his girlfriend about the gift even before he bought it. The reason – She would hate such a gift and it would probably harm their relationship. Clearly, he was in the developmental stages of maturity and probably should have been carrying a Board on his chest which said “Bear with me! I’m under construction

A Digital Photo Frame might not appear like a great choice but the friend would know better and it really should be left to this friend to decide what’s best. Somehow this colleague had got lies and Gorilla Glue mixed up and his story fell apart. When we met during a Tea break, he recounted his horror of receiving a similar gift from his ex-girlfriend a while ago (1969?), which caused a lot of pain and anguish. So much so that he initiated a campaign against gifting of Digital Photo Frames. The friend, however, was showing no signs of letting up and was dead set on getting what he wanted. Fearing that this friend would buy the Photo Frame anyway, the colleague decided to raise the stakes and issued a veiled threat. What ensued was no less than the botched up “Mahabharat” play sequence from the classic Hindi comedy movie – “Jaane Bhi Do Yaaron”. Standing at the sidelines, I had the ringside view of the comedy show, as it unfurled. I ended up asking myself – “Yeh sab kya ho raha hai bhai?

However, it was no fun. Trust me.

True to his word, or should we say, ‘threat’ – our colleague spills the beans. Resultantly, words were spoken; actions were taken but just short of Blood being spilt. The friend was forced to buy a set of her favorite Books instead. Our colleague got what “he” wanted. The friend was distastefully forced to change “his” choice and in all this no one bothered to ask the girl how she felt about being given Books instead of a Digital Photo Frame.

I continued to stand by and watch things happen until now. I finally mustered the courage to write this post. I feel so proud.

Domain – Decorus

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