Thursday, 30 April, 2009

Come, steal the vote!

We, the chattering class, are more obsessed with voting than babies are with their navels. Somehow, the act of voting will change everything. Today's Lead India ad in The Times of India reflects this: 
' have felt hopelessly outnumbered by another political phenomenon. 
The Great Indian Vote Bank. 
This time however, things have quietly changed. Here's how. 
Sure, every major political party nurtures its own committed vote bank based on case, religion, language and region. 
But since each of them has one, this also makes all of them equal once again. 
So what all parties badly need, and fear most, is that the vote that could go either way and tilt the balance. The swing vote. Which is yours. 
Because the vote banks may make the numbers but the swing votes decide the majority. In 2004 for instance, the winning margins in Mumbai were as low as 10,000 odd votes.'

The election is decided by the political equivalent of a toss. Come, flip the coin!

Or, worse, vote as the deciding middle-class vote bank, with power totally disproportionate to population (thus denying the majority [the stupid poor in their sin-dripping vote banks] their way?). Do in the poll booth what those tiny parties do in parliament. That you do it without taking a bribe, and that your vote bank is defined by income rather than by creed, caste or language, make all the difference.  

Brilliant! Award-winning! 

By the way, in 2004, the seat was decided by a margin of around 10,000 votes in two of Bombay's six constituencies, North-Central and South. In South-Central, the margin was over 20,000; in North-West and North, they were nearly 50,000; and in North-East, it was nearly a lakh. 

PS: Strange, the chattering class gets so idealistic when it comes to voting and so 'realistic' when it comes to paying income tax!

Wednesday, 29 April, 2009

Why viral hasn’t killed everything yet

Viral Marketing is upon us. Which means TV, radio and print should be dead. Because viral is free. HLL, P&G, Coke and LG should feel very unwell as well, because their market dominance depends a great deal on their deep media buying pockets.

Neither of the catastrophes have come to pass, yet, though they may be nearby.

Then again they may not. Why? Because the numbers don’t paint too rosy a picture.

A primary criterion for the success of viral – or for that matter, any form of marketing – would be its power to ‘infect’ a sufficient number of buyers in a reasonable time. Not forwarders alone, but buyers.

Let’s do a little thought experiment to understand where we’re heading. Lets say you need to sell 1,000 widgets. You have a conversion of 0.1%: You have to tell a thousand guys to sell a widget. Which means to sell a thousand, you need to ‘infect’ a million.

Ok, you start by sending out an email or SMS to 1,000 fellows. They’re your core, who’ll infect the 1st circle; who, in turn, will infect the 2nd circle, and so on.   

What’s the multiplier, that is, how much larger than is the n+1th round than the nth round? Let’s say the multiplier is some random number between 1 and 2.

So how many rounds do you need to ‘infect’ your million?

I repeated the experiment 80 times. The average (no of rounds) came out 17.02 (excluding the starting blast; st dev = 2.16). That’s a lot of rounds, a lot of time, very little control, and plenty of risk, isn’t it? (Here is the math:

Oh, we can try this with larger multipliers. Doubtlessly, someone’s already done that. But what matters is what we get in the real world, where everyone’s already unleashed their viruses, and everyone’s trying to get a life.

Thursday, 23 April, 2009

The elusive retail investor

“In India, only 5% of the investors in the stock market are retail investors; the rest are institutional investors.” Our stock market may be miniscule and immature by American standards, but the figure of 5% sounds extremely suspicious. Yet it is bandied universally.

Can it be that only 5% of the trades are made by retail investors, and 95% by the institutions.

An article on retail investors in USA in 1987 (Riding The Wild Bull
by Koepp, Fowler & Reingold, Time, Jul 27) says, “While individuals control nearly two-thirds of all stocks, or about $2 trillion worth, institutional investors turn over the remaining third at such a rapid pace that they account for 80% of all stock transactions.”

Why can’t something like that happen here? In fact, I’d suppose the chances are higher, given our data illiteracy (mistaking 5% of transactions for 5% of investors) and our penchant for playing with other peoples’ money.  Has anyone actually counted, assuming all transactions can be traced?

Why geniuses must retire at 40

For the same reason as heroines must retire at 25 or so. Their luck runs out.

You get signed up because you are someone’s daughter, or because you’re pretty, or because you’ve had a nose job.

9 chances out of 10, your first film flops. But if you succeed, you sign up five more. 9 chances out of 10, your second film – if there is one – makes money. But that doesn’t matter because you are already booked for five films, three of which may get made.

Now, what are the chances that none of the five will have a positive return on investment? Small.

Besides, your producers’ PR are working overtime. Indeed, even something as trifle as your appearance in someone’s birthday party is reported.

Anyway, you get the sequence: Hit Flop Flop Flop Average Flop Hit FFFFAAHHF. Somewhere you get a good run, when you make your nest egg, but mostly it’s bad.

When it starts going FFFFFF for too long, you have no option but to fly. The fundamentals have given away.

I suppose its the same with geniuses, except (a) they can stay afloat longer – score so-so – by simply mimicking others. And one big hit is often enough to see you through much of your career. All the same, you can’t tempt luck too much. You must retire at 40 or, more likely than not, you’ll be retired at 41.

Monday, 20 April, 2009

At the border, the truth

Indian Hindus believe that while their coreligionists were expelled from the newly formed Pakistan, along with the Sikhs, Muslims did not meet the same fate in India. History shows that if five million came to India, six million went from here. Westerners keep writing that Partition created Pakistan for Muslims and India for Hindus, when facts show that India has the world’s second largest Muslim population. All this muddles perceptions and boils blood.

Now, from what little I have read, Partition seemed to have cleared India of most of its Muslim middleclass. Similarly, middleclass Hindus and Sikhs came to India from Pakistan. Many already had some family here.

In the latter case, though, the middleclass were accompanied by many poor as well. They had next to nothing; they came with nothing.

But wasn’t there a corresponding migration of poor Muslims too, or were most of them too far from the new Pakistani borders, in the erstwhile United Provinces and Bihar, to make the journey? How did the population of provinces near the new borders chance, on the Indian side? Didn’t Muslims, irrespective of economic status, leave there?

Is there any book with data on the migration, surely the greatest in human history? Stories and histories tell part of the story, but there must be more to it.

Walmart and Gazowhat

Free market preachers never tire of giving examples of Soviet retail giants and government distribution agencies which constricted choice, eliminated competition, destroyed efficiency, destroyed the Soviet system and won USA the Cold War.

Perhaps, but I don’t remember reading any populariser laying the same blame of recent crashes at the door of giant MNCs like Walmart, P&G and GM.

These are not government bodies, obviously, but they are surely gigantic. Why should they not invite all the ills of planning and obesity to visit the economies they operate in?

For what competition can realistically exist in a land where Walmart decides, say, that all men should wear the same shirt, stitched in the same cut and and at the same cost in Bangladesh and Guatemala.

One can argue that Walmart, in spite of its size, is not a monopoly. It must compete with This-mart and That-mart. But do we really believe that a system where mammoth sellers club each other in bloody price wars can offer real choice to buyers? If P&G has brand A does Lever have any choice but to offer its cousin, A1 – never mind the billions spent in ads to differentiate them?

Now, lack of (real) choice (i.e., discernibly different benefits) should mean that buyers have no clear preferences and loyalty, and, consequently, no reason to pay any premium to anyone.

In other words, irregular and, at best, wafer thin profits throughout any given industry. If profits exist, they’d probably be in the coffers of niche brands, which have minimal roles in the the giant Western economies.

Imagine linked treadmills all around, the entire mass (mess) going nowhere. 

Doubtlessly such a view is simplistic and illiterate. Is it wrong too?