Ponzi Scheme – Creating Greed Confidently

Can a motorbike with two wheels, touching the ground, stand on it without any external support given to it by side-stand or mid-stand or someone actually holding it?  No…right?  But still we see it zooming on the roads on the same two wheels…that too without any external support.  Initially, the rider has to face a few problems in gaining momentum through a proper mix of acceleration, handle control, gear settings and break application along with one important thing – Confidence.  However once he knows, how to set the motion of the bike, excitement begins and reaches to its next level.  Now why am I telling you all this?  He he he…Because the kind of investment scheme which you will go through, if you keep your reading momentum intact, will give you, the same thrill as you would speed up a motorbike.  

Let me tell you the first things first.  The methodology which you would be reading, is actually a fraudulent investment scheme.  Got your interest on this article?  He he he…now read further…

It will pay you abnormally short term high returns on your investment and hence would entice & allure new investors.  Don’t worry; the promoter of the scheme doesn’t have to do any kind of business with your investments to generate profits so as to pay alluring returns.  Now you would be thinking – how the hell, will he be giving us high returns then?  Well, the promoter will pay high returns to all his investors out of the money paid into the scheme by subsequent investors and not from profit.  Again, you will ask me – are you going nuts?  How will the scheme survive?  He he he…Well, the scheme is not set to survive but to die, after living it’s life only and only on cash inflows & outflows.  Till the time, investors maintain their cash-flow injection,  the scheme will boom on it’s own…

During inception, the promoter will have to infuse one thing in this scheme – CONFIDENCE.  It will deceive those people who have much more money but are layman in the field of investments and financial world.  Such people generally have a tendency to get amused by the jargons, which promoter uses in creating investment deception.  Of-course, initially the scheme will have a lesser number of investors, but when the existing ones get higher returns at the maturity of the short investment term, the number will start growing.  Obviously, the scheme will grow more through the words, spread by the initial investors who got higher returns.  Other investors will definitely grab such opportunities to participate in the scheme, leading to a cascade effect deriving from the promise of extraordinary returns which actually will be paid out of the investments of new entrants and not out of the profits which will not even be generated.  

Well, if you be the initial investor who got higher returns on your investments, won’t you re-invest in this scheme?  Yes, isn’t it?  And that’s where the promoter strikes his chords.  The promoter will set the re-investment deal with all his existing investors prior to the date of maturity, thereby sending them just statements of their gains and not the actual money because it has been re-invested in the scheme again.  He he he…The promoter will definitely try his best in minimizing the withdrawals too.  However, if few investors do wish to withdraw their money in accordance to the terms and conditions allowed, the requests will be processed promptly.  This is to generate an illusionary effect, where in other investors remain wrongly aware about the solvency status of the scheme/fund.  Other investors will still think that the scheme/fund can chunk out higher returns compared to other alternate investments available in the market. 

Now that’s how the scheme will boom.  Let me tell you, how its death is slated. 

Well, everything has a saturation limit.  There will be a time, when the number of investors pooling in their hard earned money will decrease.  Such a time can come, when cash inflows will be lesser than the cash outflows as the existing investors will not like to continue further with the scheme.  It will automatically generate liquidity crunch and hence the scheme will collapse. Also, if legal authorities intervene during the time of its boom and ask for details, the scheme can be exposed to its death due to the lack of submission of valid investment methodology by the promoter.  And believe me, it will still be a planned death as the promoter knows about it, well in advance, prior to setting it on a run. 

If these two does not happen and the promoter controls his greed factor, then he can vanish in vacuum with the available funds in his scheme thereby allowing it to die purposefully.  There would be two effects in such a situation – one the investors would panic, but will the promoter care?  And two, the promoter will give the world another rags to riches story of himself, thereby arising from anonymity to entering another anonymity.  He he he…

And believe me, this investment methodology is not a newer one.  In 1920, it made Charles Ponzi a millionaire who landed Boston with just $2.50 in cash and $1.00 million in hopes.  Within a very short period of time, he managed to boom his scheme which initially started redeeming international postage reply coupons at face value in United States as a form of arbitrage.  Gradually, he shifted to the above mentioned investment methodology asking more and more people to pool in money for a higher return and became a millionaire in just six months.  Promising 50% returns in just 45 days, he managed to boom up $15 million through 40,000 investors.  Amazing, isn’t it?

You might be asking that in the world of investments, every methodology becomes a jargon.  So what is the jargon for this scheme?  Well Charles Ponzi was the first one in United States to use this scheme for his own benefits.  Now that’s something which comes as official information to me.  The entire methodology mentioned above is known as a Ponzi Scheme, especially in and around Wall-Street…

If you are not inclined towards history, you would definitely curse me for telling you such an old scheme that emerged in 1920.  The world has drastically changed since then and so you will not believe in its existence anymore.  Correct?  Let me tell you a universal axiom – History repeats itself…so did Ponzi Scheme.  Dona Branca, popularly known as “People’s Banker” in Portugal used it between 1970 and 1984.  

Where-as, Reed Slatkin, used the same scheme, since 1986 till 2000 to raise $593 million.  

Again if you might be cursing me for introducing you to the years passed by - several years ago, let me bring you Bernard Madoff who used the same scheme to create the biggest fraud that this world has ever experienced – valued over $50 BILLION. 

He was finally arrested on December 11, 2008.  Now be happy as it is the latest fact associated with Ponzi Scheme, which is even lesser than a month old.  Hopefully, my next blog will be based on the Madoff story…till then allow me to get busy again in analyzing facts and figures of Mr. Madoff…

It would definitely be worth mentioning that if your CONFIDENCE IN CREATING GREED has grown enough, then I can extend my blog with your story too...he he he

Dull...No-more

My existing laptop has many stories to tell; only if you have those ears to listen…but how many stories could be created in its lifetime.  There is a saturation point for everything.  Meaning, my laptop does not have any new stories to cook up and I already got bored of listening to its existing ones ever since I bought it, (close to) past two years ago.  Specially, that scary failure of its DVD writer...and those infectious virus attack which are eating up all my files & folders despite of having valid antivirus protection.  So these days I am planning to replace my laptop with a new one.  Well, you should know I am not at all sentimental with my belongings, so I don’t really have any qualms in their replacements for a better deal…he he he

So my last weekend was spent in exploring the market for a better deal.  Now market research is something which most of the time fights with my impulsive purchasing habit…and strangely looses the fight…he he he.  Anyways, while entering an electronic shop, I strangely asked the attendant, “This one is supposed to be an electronic shop right?  I am looking for laptops.”  I asked that question because I saw few paintings on the wall of the shop which appeared to be some creative wall hangings.  The attendant smiled and pointed his fingers towards those wall hangings.  To my surprise, those wall hangings were branded with a Dell logo.  And when I checked it closely, those appeared to be the most creative blend of art, painting, fashion and technology.   And I was like…SURPRIZED…

You all know I have this strange habit of going deep into the reasoning of anything which surprises me a lot.  So I started my research with Dell Laboratories and their marketing strategy.  After going through several websites, magazines and newspapers, I learnt that the man behind this effort is Ed Boyd, one of Dell’s most unusual hires in recent years.  He is an industrial designer who worked earlier with Nike for designing their shoes and sunglasses.  The 43 year young Boyd is trying to make design an integral part of Dell, the personal computer maker long known for cranking out boring gray boxes which were perfect enemies of eye catching creativity. 

Dell is charging an extra premium of $75.00 from it’s customers for attractive designs which would even become customized in future.  This is on top of the basic $699.00 price tag for the company’s budget line portables.  Presently the designs are from Nigerian painter Joseph Amedokpo, South African graphic artist Siobhan Gunning and Canadian designer Bruce Mau.  I wonder, whether Indian artists have gone hibernating these days…he he he…The options for customizing the overall appearance of your future Dell laptops will go far beyond mixing scores of colors, patterns and textures with personalized photographs too.  In the world of computers, Boyd is using his successful Nike approach of letting people design their own sneakers.  He he he…

With the global economy heading towards slowdown and recession thereby forcing consumers to cut down their expenses, it will be a difficult situation to charge any sort of premium for cool designs.  Especially for companies like Dell that don’t have an established reputation for design.  But Boyd is hell bent on taking risks even during the turbulent times of market failure.  May be, that’s why I have started keeping one of my eyes on him to check how insanely creative he can be to generate those additional cash flows from the market, thereby reviving stodgy image of it’s company’s product.   Last year he hired an obscure graffiti artist named Mike Ming to create images for Dell products, a move that worried some of Dell’s straight laced staff.  He also signed off on an undersized keyboard for Dell’s first mini notebook PC, a decision companies founders clearly disagreed with.  However, the sales figures for these limited edition Dell products designed by Ming exceeded the consumer expectations and hence forced Michael Dell to give a green signal to Boyd for continuing his innovation stories. 

Boyd’s design staff has now grown to 120 people scattered from Austin to Miami to Singapore.  There are dozens of PhD’s in his group accompanying Engineering, Computer Science and cognitive psychology experts.  They all follow only one mantra – “Design isn’t just cosmetic.”  He he he…Goodjob Mr. Boyd. 

Although, these cool looking laptops might be a hit in the market and can be very visible in the MBA campuses and cafes, I would still go with those executive looks which actually gel with my personality.  I really don’t know if it would be the studio edition of Dell or some other brand, but I am really convinced by the innovative strategies Dell and Mr. Boyd has chalked out for the company’s image makeover.  Surely, it is Dull no more…he he he…try pronouncing Dull with an E effect in between...he he he…it is Dell from now on…

Dressed To Thrill...

I still remember, during one of those networking breaks at Proto.in (an event only for entrepreneurs, a month ago), few business plan contestants were preparing themselves for their presentations. One of them was presenting an idea called Lipikaar...which had something to do with all the Indian Lipi's (text's). He was dressed in an executive formals. A light blue shirt under a navy blue suite. Now I don't really remember the colour of his tie, but yes he was wearing it. Well, I generally like those people who mean business atleast during the time of business. So I gazed him, liked him and moved on to see what other contestants are doing.

To my surprize, Mr. Mahesh Murthy, who amused me a day earlier through his speech on "Brand Recognition" and "Product Positioning" came and sat just next to me. What a pleasant surprize to be seated with a guy who heads Passion Fund and Pinstorm, two leading venture capital companies established by him. Suddenly, he is greeted by two people, those who were about to present the Lipikaars. It seemed, that Mahesh and those people were not strangers. And then Mahesh asked that lady, "I saw Santosh, where is he? And why is he so well dressed?, I want an explanation. I don't expect of him to do these kinds of foolish acts...hey Santosh, come here...what the hell? Why these suite boot? Why a tie...?" Santosh was literally embarrassed and he slowly explained something to Mahesh in his ears and both of them were back to business. But what is this? Why am I feeling concious? Hey, even I am wearing formals, although without a tie, but yes formals are formals. And soon the next presentation on "Pic Porta", an online picture based website began, during which Mahesh received a call and he went outside the auditorium. Hoooooooo...I was feeling puzzled, surprized, amused, shocked...but then released too...as Mahesh left that place...he he he

Today, while I switched on my laptop, I saw Mahesh Murthy online on Gmail. We are already networking each other through Orkut. So I felt like chatting with him. I pinged him and then our discussion over business and entrepreneurship started...through gmail chat. I asked him casually, as to why he was scolding Santosh on his attire during the business plan contest. He explained me..."Only Entrepreneurs have the liberty to wear casuals during business time...formals are worn by employees, whereas casuals are worn by confident people, those who beleive themselves and have passion to live life according to their own terms and conditions...Formals are nothing but prisionwares, whereas casuals represent our choice" I respected his way of thinking, as to me, it appeared to be original. Although, I am not aloof from these kinds of theories, as many people including Shivani, Satyam, Bhaskar and others questioned me about my choice of attire...but then if a person of such a stature (Mahesh) says something which you really do not beleive in, you would atleast give him an ear for his original thoughts.

Yesterday was Rakshabandhan. And while tying Raakhi on my wrist, "Moni" presented me a pair of Jeans and a T-shirt. She said, "Bhaiyya, you look young in casuals and it's been ages that I have seen you wearing them...you don't even purchase them anymore, so thought to revive you slightly...Although it is not your regular Levis, but a Lee Cooper and a Bare, try them for their difference" My Mom supported her. And I was speechless...even my family members want me to look young and trendy...he he he...

How can I forget the words of Mr. Henry D'Souza, former Country Director of Xchanging India. During a casual interaction with him on a circket playground, Mr D'Souza praised my attire, thereby saying..."The first rule of being a professional is to look professional...and I am happy that you present yourself professionally...I really like your choice of ties very much...however my dear, this is a playground". he he he...I realized that I was in my executive formals even on a cricket playground.

And when I was in Malvern, Philadelphia, even Debra Detwieler, Sr. Vice President of Wachovia Wealth Management Services, praised my attire thrice during my two month stay. For that matter, she is the best dressed female on earth, I have ever encountered in my life. Just look her, and her attire would force you to respect her...

Hooooooooooooooooooooooooooooooooooooooooooooooo...I AM CONFUSED NOW...what the hell...? What to wear? Why to wear? When to wear? Too many things and too many logics...Mahesh is a confident entrepreneur and has his own voice. Moni and Mom are my life...Henry is adorable. Debra is respectable. And all of them have different idealogies about dressing...what is mine?

I decided to find out an answer to this question...So I kept all my dresses in my almiraah...and thought to choose the one without thinking of any logic...

I shaved, had a nice shower...came to my room where the almiraah was located and closed my eyes. It took me near about 20 minutes, to arrive at Zero Mind, a meditation stage free from logics, thoughts, obstacles and worldly pleasures. I opened my eyes and glazed at all my dresses...Chose the one which I (read it again...it is "I") wanted to wear...It was my choice...and in next ten minutes, I was in my Flourshiem, (brown leather shoes complementing my brown leather belt)...comfortably swifted in a light yellow Zodiac (shirt) along with chocolate brown Blackberrys (two peice suite). On the top of it, the knot of my Code (tie) was slightly European styled.

On my request, my Mom asked me..."Who are you?"...and I replied..."BOND...SHAKEN, NOT STIRRED" he he he

While rejecting a tempting job offer from Bank Of America...I was asked, "What type of Banking do you specialize in?"...I slightly pushed the knot of my Code upward and replied..."HOSTILE TAKEOVERS"...he he he... Can we do that wearing casuals? The answer is...NO...he he he...

I don't know anything about cricket and other games...but in those Executive Formals, I feel..."I am mentally gamed for BUSINESS."

Get ready for some serious...MURDERS & ACQUISITIONS.

Bond

My First Appearance In A Business Magazine...

I never knew that I would get an invitation to attend a Business Plan contest, although I missed filing my nomination by just few days. However, Proto.in guys were courteous enough to invite me for their Entrepreneurial StartUp event as an audience. Entrepreneurship, being completly spread in my soul, would be my way of life, five years down the line. That's what I feel as of now...so I have to equip myself with all those arms and ammunitions required to play the mental game of business, whenever I would indulge myself into it. With an attempt to be in the good books of leading venture capitalists, angel investors and budding & established entrepreneurs, I manage to take time out of my regular work and do stuffs that makes me closer to them. Must tell you all, that today I have at-least 9 country heads of various MNC's, 15 budding entrepreneurs, 26 established entrepreneurs, close to 10 Venture Capitalists and 2 of India's top most business coloumnist and bloggers in my network. My connections with those who are from ISB's, IIM's and other business schools accross the globe are not yet included in the above list, just to keep the ground realities intact.

So with an intent to increase the size of my business networking list, I thought to take some time from my regular schedules and invest it, in attending this event which was scheduled at IIT Delhi, on 17th and 18th of July.

The moment I entered the auditorium, I saw an elderly figure addressing the entire group of close to 400 budding and established entrepreneurs, invited from all parts of our country. I quickly recognized him, as Mr. Kiran Karnik...former President of NASSCOM. During the QnA session, I asked him about the poor governmental help in promoting business in our country. Although I was not so very convinced by his answer, I respected him to atleast backing the governmental measures that NASSCOM supported during his days...That was the first time when the group actually felt my presence.

When Kiruba Shankar addressed the group about blogging, I never knew him. However, after going through his rich portfolio of being a regular colomnist of Business Standard magazine & The Asian Age daily, his affiliations with Wikipedia's co-founders and being India's number one business cum tech blogger, I was truely impressed by his simplistic persona. During networking breaks, he motivated me to be a thought leader while expressing ourself through blogs.

While listening to Mahesh Murthy, a VC from Pinstorm and Passion Fund, I learnt that there are lots and lots of opportunities around us, the only hurdle in identifying them is our lack of awareness. Interacting with a person, who himself visited 40 countries on this planet, played key roles in establishing MTV and Star TV in India, working for various international brands by being a college drop out was just immortal. I am glad he remembered me later, while accepting my friendship request on orkut.

During a special session on brand management, a couple was constantly murmering behind me. I was very irritated by them. I started staring them every now and then, thereby giving them a nonverbal message..."These silly people, they would never leave their Indianism". During the break, I was flipping through a business magazine called DARE (July 2008 issue), exclusively dedicated to entrepreneurship. While turning few pages I got stuck on a photograph, as I felt that I saw the person in the photograph somewhere. Suddenly, something striked me and I turned back to see the couple sitting behind me. The person in the photograph, was the one who was murmuring behind me...he he he...he introduced himself as Leonard Fernandes, co-founder of Cinnamontel, a print on demand service company. Wow...in the next few minutes we exchanged our business cards and talked about our respective domains.

Pataa nahi kaise kaise jokes ho jaate hai real life me...he he he

The first day was generally filled with speeches, informative sessions covering business aspects of entrepreneurship. My vibrant participation was well marked and felt by the organizors of the event. So for the second day, they asked me to be one of the second league of 10 judges to evaluate the performance of the participants. The first league of judges comprized of various business heads and coporate honchos...Accordingly, they called me to board the front seat, as I was sitting in one of the back seats, habitually. They clicked few photographs and promised me that they will make them available to me...which I didn't get till now...he he he

Today, at home, when I was going through the August 2008 issue of "DARE", I was thrilled to see a person in a photograph present in an article that covered the entire event. Must tell you, this was the second time, when a photograph in DARE caught my attention. Oh my God ! I can't beleive this...IT WAS ME...featuring in that last photograph, showing the second league of judges. (see Page # 88).

I always dream of being on the cover pages of leading business magazines. May be this is just the beginning...of all my dreams, which eventually would turn into realities. There are many milestones to come accross...I know the going will be tough enough in reaching the Coverpage from page # 88...but I am game for it...let's wait and watch...till then just think on the below mentioned line...

Pataa nahi kaise kaise jokes ho jaate hai real life me...he he he

Fostering Innovation

Innovation is one word which is really buzzing around these days in the corporate corridors of India, especially with the companies moving into the super league.

Wacky ideas are getting cooked in product, technology, marketing, services and business strategy departments to provoke 'Out Of The Box Thinking'. As somebody pointed out, "Successful Innovation is not about ideas or inventions - it's about people. Rising to the challenge, more and more companies are coming up with strategies to instill a culture of innovation and competitiveness among employees.

There is no fixed approach to driving innovation - for some companies, it is about creating an open atmosphere at work so that the environment can produce a Eureka moment. For others, it could be through promoting diversity. Some companies invest in trainings, so that employees abandon linear thinking and break out of associative barriers. Another trend - which most of the companies, involving modern work like designing, IT and BPO's are following is the appointment of CIO...Chief Investment Officers...

Here are some ways that companies go about making innovation a religion among their workforce -

CREATING A CULTURE OF CHANGE – Although companies derive their own Change Advocacy model to be followed, organizations like GE and Motorola follow the Change Acceleration Process (CAP). CAP compliments Technical Strategy with Cultural Tools to achieve the Change Initiative. It follows six simple methods to manage the cultural side of any change – creating a shared need, shaping a vision, mobilizing commitment, making change last and then monitoring progress. First three among these gives enough scope to practice innovation...

RELENTLESS QUESTIONING - Encouraging employees to ask questions often simulates innovation. Many companies today have 'Out Of The Box' idea boxes in the office where employees can drop their suggestions and ideas. Some even have question boxes to encourage a culture of asking questions. At Airtel, experiments were done with 'Appreciative inquiry', an organizational development tool that is used to foster change as well as create more of what's working and what's not...

SETTING STRETCH TARGETS - Taking a lead from Jack Welch's famous stretch targets at GE, many companies today believe in setting goals that are outrageous and look well-nigh impossible. Either way, it is a win-win situation as stretch targets always energize people. As Welch himself, famously said, "We have found that by reaching for what appears to be the impossible, we often actually do the impossible: and even when we don't quite make it, we inevitably wind up doing much better that we would have done."

FUN AT WORKPLACE - A joyful environment promotes the spirit of innovation. Innovation can not happen in an environment that is not associated with fun. Recognizing this, most companies today invest in a fun filled workplace where people volunteer to do certain assignments because it is enjoyable. However, majority of the employees have a tendency to wrongly interpret 'Fun at Workplace'. As a result of which, they end up playing Dumb Charades, Watching Movie at PVRs by bunking work hours and arranging debates on non work related topics. These things might be good for enjoyment, but they certainly don't contribute towards process streamlining or improvement strategies that might affect the bottom-lines of the organization. These activities might not affect the cost to the company; however, they have huge impact when we analyze the opportunity cost, (the next best alternative) to boost improvement through fun...

MAKING ROOM FOR FAILURE - Although I am not so very optimistic and sympathetic towards failures, I do believe that there is no room for success without initial failures. When new ideas come forth, not all will succeed. Rather, rejected ideas allow room for experimentation. Often failure to implement an idea may force an employee to quit the workplace and start off an entrepreneurial venture based on that same idea...

Ultimately, it is about giving the right inputs. Successful ideas only burst forth when companies manage to create conditions that are conducive to innovation. It's therefore necessary to have an open culture, encourage questioning, break down associative barriers, challenge assumptions and provoke non-linear thinking for growth...