My Proficorn Way (Part 45)


While I have talked about me-time earlier, there is one aspect of what to do with me-time that needs greater attention – reflection. Reflection is about taking the time to think about the decisions you made, pondering about the meetings that happened, contemplating what you have read, or just deliberating on events that took place and how you reacted. It is about understanding your own actions and thought processes better.

Reflection needs to become an integral part of the day. It must become a daily discipline, a habit. We need that zone in which we clear out the present and go into deeper thought. It is not the same as meditating – which is about clearing one’s mind of all thoughts. Reflection is about letting the thoughts flow. It is about replaying one’s actions and understanding what one did right or wrong. It is about better understanding oneself.

Here is OpenLearn on reflective thinking: “At its core, ‘reflective thinking’ is the notion of awareness of one’s own knowledge, assumptions and past experiences. Your past learning and experience provide the context for your thoughts, and are therefore unique to you, but reflective thinking is a dynamic process that continues to develop and evolve as you learn and respond to new experiences, situations, events or information. In practical terms, this is the process where you interpret and evaluate your experiences, check that they make ‘sense’ to you, create meaning, justify actions and solve problems, and it helps with your future planning.”

Here is more from University of the People:

Reflection is looking back at an experience or a situation, and learning from it in order to improve for the next time around.

There are three main aspects of reflection:

  1. Being Self-Aware: Reflection starts with self-awareness, being in touch with yourself, your experiences, and what’s shaped your worldview.
  2. Constantly Improving: The next step of reflection is self-improvement. Once you’re aware of where your strengths and weaknesses are, you can know where to shift your focus.
  3. Empower Yourself: Reflection gives you power to take control and make the necessary changes in your life.

Reflective thinking means taking the bigger picture and understanding all of its consequences. It doesn’t mean that you’re just going to simply write down your future plans or what you’ve done in the past. It means truly trying to understand why you did what you did, and why that’s important. This often includes delving into your feelings, reactions, and emotions.

Reflection is an integral part of my daily routine. Early mornings are the best time for me. At times, if there is a gap during meetings during the day, I also use that to think back – especially after an important meeting. I write down my thoughts as they flow – they help me capture the moment. This can then be reflected on later.

Reflection is especially important when you make mistakes. Understanding what you did wrong is important and that will only come from quiet reflection. This is especially true when it comes to personal and family relationships.

A few months ago, I suddenly become very angry with my son after I saw his marks in one of his papers. I threw the paper back at him. He was shocked since I very rarely lose my temper. He started crying. My wife, Bhavana, intervened. I withdrew into a shell. As I reflected, I realised that something else was bothering me, and I expressed that anger on my son. I was wrong. I had hurt two people I loved most. It took me some time, but I then went up to both and apologised. I realised that I needed to become more aware of my own feelings and not mix up work and personal emotions. The brief period of reflection helped me resolve a situation quickly that would have caused much more damage had I let it linger on.

Create some space for daily reflection. It is the best way to become a little better each day.

Will be continued soon.

My Proficorn Way (Part 44)

Debt can Kill

I was talking to a friend recently and the discussion moved to entrepreneurs who had lost control of what seemed to be very successful businesses (or so it seemed from the outside). Jet Airways. Zee. Café Coffee Day. Future Group. And many others. If there was one common factor, it was that they all loaded on debt during the good times, over-extended themselves, and when the tide turned, they had no way to pay back the debt. Leverage can be a business killer.

This is not to say that all debt is bad. A business may need debt to augment working capital or fast-track expansion plans. The key is to ensure that the debt can be paid back even in the worst case scenario should things change. Under no circumstance should debt may be taken for unrelated expansion.

Many founders of companies in the public markets pledged their shares to borrow money to fund expansion. For various reasons, some have found themselves unable to pay back the borrowed funds. As a result, they ended up losing control of the companies they created and built over the better part of their lives.

I have never taken on debt in my entire business career. It was a principle my father had drilled into me when I began business – no loans, no debt, no leverage. Live within your means. From the early days of IndiaWorld through to my 23+ years at Netcore, I have always tried to ensure that we are profitable and have positive cashflows to ensure all payment obligations are met on time.

While some businesses need capital to begin and may need to take on debt, the objective must be to have the means to pay it back. All debt is not bad if one can ensure the future income streams will support the repayment – with a margin of safety.

Life has its uncertainties. Early in 2020, few of us would have expected the pandemic. No business would have thought that its revenues would go to zero for an extended period of time – as has happened with many companies. During these times, debt obligations become impossible to meet. It is thus all the more reason to exercise caution when taking on debt – do it if you have a margin of safety, else the debt could become a death trap.

Tomorrow: Part 45

My Proficorn Way (Part 43)

Margin of Safety

One of the first things you learn when learning how to drive a car is to maintain a safe distance from the car in front. In case the car brakes suddenly, you need that extra distance to make sure you do not rear-end the car in the front. Tailgating removes the ‘margin of safety’.

The same idea is applicable in personal life and business. When going for a meeting, I keep a margin of safety to ensure I am not late. When running a business, it is important to have the cushion of cash each month just in case some customer payments are delayed so you are not caught in a cashflow bind.

Margin of safety comes from the world of investing. Here is a brief from Investopedia:

Margin of safety is a principle of investing in which an investor only purchases securities when their market price is significantly below their intrinsic value. In other words, when the market price of a security is significantly below your estimation of its intrinsic value, the difference is the margin of safety. Because investors may set a margin of safety in accordance with their own risk preferences, buying securities when this difference is present allows an investment to be made with minimal downside risk.

Alternatively, in accounting, the margin of safety, or safety margin, refers to the difference between actual sales and break-even sales. Managers can utilize the margin of safety to know how much sales can decrease before the company or a project becomes unprofitable.

Here is more from Rule on Investing:

Warren Buffett said, “The three most important words in investing are margin of safety.” That means to buy stuff on sale. That means pay less than what it’s worth. That means to buy $10 dollar bills for $5 dollars. That’s the whole secret to great investing.

Buffett’s teacher Ben Graham, who wrote the Intelligent Investor, which is one of the best books on investing I’ve ever read said, “Buy stocks the way you buy groceries, not perfume.”

One of the keys to getting a great margin of safety is to understand that price and value is not the same thing.

Margin of safety is critical in the early stages of a business. I was talking to a person who was just starting a business and planning to raise some initial capital from family and friends. I asked him: how long before first revenues come in, and how much money will be needed till then? He had planned it perfectly. It was then I asked him: “What if things don’t go as per plan? What if it takes longer to develop the product and get first revenues? Where is your margin of safety?” My recommendation was to increase the runway by raising more money to keep a buffer in case things take longer.

Optimism is good, but keeping a margin of safety is better!

Tomorrow: Part 44

My Proficorn Way (Part 42)

Talk not Text

Recently, I got an internal escalation about an issue with one of our outsourcing partners. He was frustrated that my colleagues were not responding to his requests for clearing his pending payments. He had struggled for many months and every time he was given a false assurance, a run-around or both. Plenty of emails and WhatsApp messages were being exchanged. Matters finally reached a breakpoint. The partner had switched off the service that was being operated – in an effort to make us listen.

I did not have the full context of the problem, but knew it was serious because our customers were being impacted. I could join the gang of texters – send an angry WhatsApp message asking for the service to be restored. I realised I would be no different than the others, and that was not going to solve the problem. I decided to call and talk to the head of the outsourcing company.

As I listened to his side of the story, I realised that what he really wanted was to be heard. He promised to restart the services immediately. He sent me the full email trails exchanged over many months. It was not a pretty sight for me to see how some of my colleagues had acted. It had not been an easy call for me to make. I tend to stay away from such problems. But in this case, I realised I had to do it. And as I heard the head of the outsourcing company speak, I realised I had made the right decision to talk and not text. No text could have captured the emotions and pain that was being felt.

As managers, leaders and entrepreneurs, we are always going to be faced with issues – either internal or external. In today’s digital world, email and WhatsApp have increasingly replaced the directness of face-to-face conversations. The digital world is pithy and informal. The physical world means looking someone in the eye and feeling what they are going through. We tend to avoid the latter, without realising the bluntness of a text message can someone do more harm than good.

When faced with a difficult situation, consider calling and speaking to the other person. You will surprise them and that will go a long way in resolving the issue. Many times, what holds us back is our own ego. If we can set that aside and speak with humility, we will find that the hardest of interpersonal problems can be resolved to our satisfaction. Next time you are faced with a tricky situation, instead of replying with a text, try talking.

Tomorrow: Part 43

My Proficorn Way (Part 41)

The Monkey Problem

Someone once told me a story that I have related to many others. Every person who walks into your cabin walks in with a monkey on their back. (The “monkey” is a problem that they have.) Their goal is to get the monkey off their back and leave it in your cabin – that is, make their problem your problem. Your goal is to make sure that when they leave the cabin the monkey goes with them! Else, you are going to be in a room full of monkeys which will make it impossible for you to get anything done.

It is a story that holds true. In most meetings, others are looking to pass off their problems. You have to ensure that they keep the ownership of the problem else before long you will be doing everyone else’s agenda rather than yours. You can discuss, guide, suggest but under no circumstances should you be taking up the ownership of the problem.

I learnt this the hard way in my early days as an entrepreneur. I would think that if someone had a problem, as the business owner I had to take up responsibility and solve the problem. Before long, my days would be just solved in addressing every new issue that came up. It became impossible to focus on the things that I needed to do and which no one else can do. I then started pushing back – much to the chagrin of the others who were so used to passing on their problems to me.

It was many years later that I heard the ‘monkey’ story, and realised it so well captured my early days – I was living in a room full of monkeys. As I look around, I see many people stuck solving problems they should not never have accepted in the first place. It is not about saying No to every problem – if there is something core to the business, only the entrepreneur can solve it. But there will never be time to address the real challenges in a room full of monkeys.

So, remember this whenever someone walks in with a monkey on their back – as they leave the room, make sure the monkey leaves with them!

Tomorrow: Part 42

My Proficorn Way (Part 40)

Ego as the Enemy

I was meeting with a senior person from a large company. I had spent a lot of time preparing for that meeting. Half-way through, the person I was meeting called an abrupt end to the meeting. I was taken aback – I was just two-thirds of my way through the presentation thinking I had much more time. I could have protested then, but I decided not to. I wrapped it up and came out. I was very angry then – How could someone do this to me? Did they not have respect for my time? I felt a rage building up within me.

I then decided to put my ego aside, and think with a calmer mind about the meeting. I had the good fortune to get the time I did. And during that time, the discussion that happened had actually opened up new lines of thinking for the solution I was pitching. I spent more time replaying the meeting, and realised that there were many positives from the interaction. In my initial fury about the curtailment of the meeting, I had almost lost sight of the gains.

Ego is a killer, a disease. We have to learn to set it aside. Anything that hurts us is not an insult that we have to take personally, and therefore respond with equal ferocity. By controlling one’s ego, it becomes possible to spot opportunities and openings that may not have been previously visible. Ego is like a fog that hampers our vision.

By not throwing one’s weight or title around, there is so much more that can be learnt. As an entrepreneur, one should be ready to meet anyone in the organisation to pitch the product to. And every meeting will have some learning. In the past few months, I have done 80+ meetings with marketing and digital heads to pitch my idea of Velvet Rope Marketing. I told my sales team to set up meetings with whomever was willing to listen – without worrying about designation. I go into each meeting with humility – as a student keen to learn about the world of marketing as seen by the people I am meeting. This has helped me refine my ideas through the months, and open up many new angles (linkages to referral marketing and loyalty programmes) which otherwise would have been closed.

Entrepreneurs must set ego aside. In fact, this is true even after one is successful. There is much we do not know about the world. If we go in without ego in meetings, we are more likely to meet more people and learn more things. Over time, by connecting the dots from all those meetings, a new image will appear – enriching our own mental models.

Will be continued soon.

My Proficorn Way (Part 39)

Worst Case Scenario

Entrepreneurs are optimists by nature. Data shows that new businesses have a more than 99.99% chance of failure. Yet, entrepreneurs feel they have a better than even chance of success. In fact, that optimism is one of the hallmarks of an entrepreneur. The low success rates of new ventures is why I also believe that an entrepreneur goes to work each day working to reduce the risks of failure.

It’s one thing to think about future success. But what many entrepreneurs fail to take into account is what could happen in the event of failure. This “worst case scenario” thinking is very crucial and needs to be done before starting up. What is the personal impact you are willing to bear – financially and otherwise? How long are you willing to give the venture before you call it quits? What are the things that can go wrong – because many of them will?

I was speaking to a friend recently and he said he had lined up 9 months of capital and was starting up. His product would be ready in 4 months and it would give him 5 months to get the early testing and initial revenues. I told him, “This is the best case scenario. Have you thought of the worst case scenario? What if your product development takes time? What if market feedback takes longer? You need to double the runway you have from 9 to 18 months. In effect, you need more capital to reduce the risk of failure.”

When I started IndiaWorld in 1995 after multiple failures, I asked myself the same worst case scenario question. My answer then was – I would lose the remaining of my savings and perhaps some family money, and perhaps two years of my time. At that time, I wasn’t thinking much about the upside. All I had to do was to make a decision whether I could accept the worst case situation. And from then onwards, every effort was towards ensuring that I never reached that outcome.

Thinking through the worst case scenario prepares one mentally so that one is not surprised when things do not go according to plan. As optimists, entrepreneurs tend to think everything will go according to plan. But what if it doesn’t? That is why entrepreneurs think of what can happen if things do not go according to plan.

Tomorrow: Part 40

My Proficorn Way (Part 38)

The Moat

To succeed big in business, one way is by constructing a moat. This concept was popularised by Warren Buffett:

What we’re trying to do is we’re trying to find a business with a wide and long-lasting moat around it, surround — protecting a terrific economic castle with an honest lord in charge of the castle.

What we’re trying to find is a business that, for one reason or another — it can be because it’s the low-cost producer in some area, it can be because it has a natural franchise because of surface capabilities, it could be because of its position in the consumers’ mind, it can be because of a technological advantage, or any kind of reason at all, that it has this moat around it.

But we are trying to figure out what is keeping — why is that castle still standing? And what’s going to keep it standing or cause it not to be standing five, 10, 20 years from now. What are the key factors? And how permanent are they? How much do they depend on the genius of the lord in the castle?

Another way to think about the moat is to ask the question: “What is your 10X advantage?” What makes you so much better that a challenger will find it very hard to switch your customers. For many tech businesses today, network effects become the moat that helps them create a dominant position that becomes hard for a competitor to penetrate.

During my IndiaWorld days of 1997-99, the popularity of the portals became a moat that helped us grow. People came in for one of their interests and stayed on to find others. Samachar with its single page news aggregation became the magnet. Interestingly, everyone else tried to build their own editorial teams. The aggregation of the most important news on a single page became Samachar’s differentiator and the word spread virally for it to become the default ‘home page’ for many Indians globally. Habits once formed become hard to break – which turned out to be good for us.

Today, in Netcore, one of the moats we have created with our email business is ensuring better deliverability of emails. This leads to more opens, clicks and transactions. Email deliverability becomes a moat that is hard for challengers to cross.

So, one of the first questions for entrepreneurs to think about is about how to construct the moat. That is the foundation for future success.

Tomorrow: Part 39

My Proficorn Way (Part 37)

Latticework of Mental Models

I came across the word “latticework” many years ago when a friend recommended an eponymous book by Robert Hagstrom about investing. (The book was later republished with a new title: “Investing: The Last Liberal Art.”) The book provides an overview of the major mental models in various disciplines — physics, biology, sociology, psychology, philosophy, literature and maths, and how all of these apply to decision making.

Writes Hagstrom:

The process of building and using a latticework of mental models is an innovative approach to thinking, and one that can be intimidating to many, to the point of mental paralysis. Fortunately there is a road map to the process that is easy to understand.

[According to] John H. Holland, a professor in two fields at the University of Michigan—psychology, and engineering and computer science, …innovative thinking requires us to master two important steps. First, we must understand the basic disciplines from which we are going to draw knowledge; second, we need to be aware of the use and benefit of metaphors.

…The ability to link mental models together and then benefit from the connections assumes that you have a basic understanding of each model in the latticework…Holland argues, metaphors are much more than merely a colorful form of speech, even more than representations of thoughts. They can also help us translate ideas into models. And that, he says, represents the basis of innovative thinking. In the same way that a metaphor helps communicate one concept by comparing it to another concept that is widely understood, using a simple model to describe one idea can help us grasp the complexities of a similar idea. In both cases we are using one concept (the source) to better understand another (the target). Used this way, metaphors not only express existing ideas, they stimulate new ones.

Entrepreneurs need a latticework of mental models to solve the problems they are likely to be confronted with. The best ideas often come at the intersection of two or more disciplines. Therefore, understanding the core ideas from different disciplines sets the right foundation for the thinking necessary for questioning the status quo and breaking through obstacles.

One of the regrets I have in life is that my early education did not include enough of the liberal arts. It is what I emphasise now to young people I meet – especially those with an engineering background. An early start can lay a deeper foundation for decision making. It is never too late to begin. Explore the most important ideas in different disciplines and create your own latticework of mental models to become a better entrepreneur.

Tomorrow: Part 38

My Proficorn Way (Part 36)

Entrepreneurship vs Investing

All entrepreneurs do not necessarily make good investors – be it in public markets or private companies. I am one of those – I like the world of entrepreneurship. But over the years I have realised I am not a good investor. There is a big difference between the two.

Entrepreneurship is all about doing it yourself – taking an idea to reality, making it happen. At each stage of the journey, there are challenges to be overcome and risks to be reduced. Each day has a thrill in itself – the breakthrough meeting, the new feature idea, the customer feedback that just makes your day. Each day brings its unexpected joys – with of course the down moments. It is like a game of ‘Snakes and Ladders’ being played daily. There will always be more downs than ups. But the ups take you much higher than the descent of the downs.

As an entrepreneur, you are also very much in control. You decide your own future as you make many micro decisions. At the end, it is you who is responsible for success or failure. It is this responsibility that you have to live with as you seek to make something better in the world around.

Investing is very different. When investing in private companies as an angel or early-stage investor, you have to relinquish the running of the company to the entrepreneur. This realisation that one is not an entrepreneur is not easy – you cannot be giving advice constantly. The entrepreneur is on the front lines and seeing things differently from you. You are not the driver, but the passenger. You may guide with a compass, but the map is with the entrepreneur.

Investing in public markets is about understanding which companies to bet on the future with limited information – and then once the choices are made, to wait patiently and think long-term. It is not about daily activity that is the soul of the life of an entrepreneur.

In both the cases of private and public investing, the control and steering wheel lie elsewhere. One has to get comfortable with that.

Investing is not my forte. I like the thrill of building from scratch and exploring new domains. I tried my hand at both private and public investing, and did not like it. There are many entrepreneurs who have become very successful investors – and I admire them. The transition is not an easy one. For me, it is always going to the world of entrepreneurship – with all its risks, thrills and rewards.

Tomorrow: Part 37