Sunday, September 25, 2022

World of Wordle

 

Either those who live far away from Human civilization or those who have not been onto any social media platforms (which is a very rare phenomenon these days) have not heard of Wordle or its cousins. Every Whatsapp group is filled with colored squares in various orders. For those uninitiated, these are scores (attempts in which people guess the words). Wordle is a browser-based word guessing game that has taken all the nations by storm recently, gaining so much popularity that it was recently bought out by The New York Times Wordle is a daily word created by Josh Wardle, a Brooklyn-based software engineer. Every day, the people of the internet are greeted with a fresh word puzzle that can only be solved (or not) using a series of process-of-elimination clues. The popularity of the game has led to countless copycats appearing online. In Lewdle, fans must figure out a different swear word. Likewise, Lordle tasks users with figuring out a five-letter word that appears within the Lord of the Rings trilogy. The aim of Heardle is to identify a song as quickly as possible, Emotle is Wordle with emojis, Who Are Ya is a football-based quiz, and Framed is all about the movies. Elsewhere, Quordle is a hardcore variant of Wordle, where you'll need to identify four words instead of one, and Nerdle is a maths-based puzzle in which you must find an equation. On the face of it, it’s a good pastime for those who like words or those who would like to improve their vocabulary. So long as people play and do not bother others with your scores I am fine with that but I simply cannot comprehend the mindset. I know the gaming industry is big and thrives on competitive human spirit but what’s there to compete here. Anyways I am one of those two categories of people who hate Wordle against those who love it. The world is divided into these two kinds of people.  

But some psychologist has reasoned out people in my category: People who hate Wordle. They say that it is inevitable that some people will hate things that become popular. They note that social media heightens the feeling of being on an opposing side of something. They also say that we as humans are more prejudiced against people who aren’t in the same “group” as us, meaning that “people are also carving out a stronger affiliation to their group by attacking the popular group. While some hate it because they don’t want themselves to be in the ‘late adopter” category. The deep chasm that divides early adopters of a new technology/trend/application/product from late adopters will further alienate those who hate to be termed as late adopters. Psychologists say “ Wordle players (Wordlers) having conversations, sharing scores and joy, and that can annoy people who consider these things to be frivolous or believe intrinsically that we do not deserve any joy right now. How dare you laugh and share something that I cannot be part of?  They choose to refuse to be part of it because somehow, they consider it beneath them. Or it could be that this is the natural way to organize ourselves – in hierarchies – as we have always done, throughout history”  

Yes, World of Wordle works similarly to the current state of the World. Just as Wordle world is divided into the hierarchy of those who are pro and those who are against anything that constitutes an ideology. Polarization in the world has already affected many countries and continents. Severe polarization damages all institutions essential to democracy: Judiciary, Executive, legislation, Press, and Social media. It hampers dialogue. It creates demagogues. Perhaps most fundamentally, polarization shatters informal but crucial norms of tolerance and moderation—like conceding peacefully after an electoral defeat—that keep political competition within bounds. Polarization also reverberates throughout society as a whole, poisoning everyday interactions and relationships.  

Just as we tried to rationalize the causes and thought processes of Wordle haters and try to rationalize voyeurism, competitive spirit, and show off tendencies of those who are fans of Wordle, we need to find causes of Polarization in every society.  The first cause is Political Party Polarization. The adoption of more ideologically distinct positions by political parties can cause polarization among both elites and the electorate. Then there is Public Polarization: Religious, ethnic, and other cultural divides within the public have often influenced the emergence of polarization. Economic inequality can also motivate the polarization of the public. Each country has its own historical issues: ancient, medieval, colonial, and modern (say after the 18th Century). Thus we cannot generalize that the right wing is responsible for extreme positions while absolving the liberals and woke for their extreme positions. In India, we had plunderers and tyrannical rulers ruling us, who were replaced by British Colonists. The colonized past was followed by license raj governments with closed mindsets towards progress and a free economy, the opportunities until liberalization were very far and few. Only those with privileges had an access to all the welfare designed by the elites.  It changed after liberalization; there were more opportunities for many beyond those privileged classes. Privileged classes who controlled opinions had lost relevance. Social media was more democratic. The ecosystem of the privileged class was challenged. And the old empire had to find ways to challenge the challengers. And term polarization was itself used as a bugbear to challenge the outsiders who found the imagination of assertive India democratically. So it’s a peculiar situation in India that Rise of Polarization was used to Polarize us further. And this depiction was picked up by International Media to put assertive India in the wrong light.   

It's natural for people in civil society to have extreme opinions. Just as we the world haters accept our friends who love Wordle in a social media group bound by the cause for which the group was formed, we should accept those contrary opinions in the real world.  It's Very Simple! 

 

Sunday, September 18, 2022

Cycle of Recessions

 

Covid Scare since 20, Russia-Ukraine war, China supply chain issues, Inflation and tight monetary controls worldwide, and Political upheavals have created Recessionary warnings here in the US. Google and Meta CEOs have announced their forecasts. The uncertain global economic outlook has been top of mind," Sunder Pichai said in an internal memo and confirmed by a spokesperson. "Like all companies, we’re not immune to economic headwinds. To avoid any unpleasant surprises and above all to anticipate a sharp slowdown in the economy, Google will take preventive measures to control its own costs”. The internet giant will slow down hiring for the rest of the year in view of a potential recession. Meta will accentuate its cost reduction policy. The firm only plans to hire between 6,000 and 7,000 new engineers in 2022, against an initial project of 10,000 new recruits. Microsoft is also hedging against a slowdown in the economy by cutting back on the number of employees it hires. 

 

In this interconnected world, where does India stand? Some say India never had a recession till the Pandemic. But technically it’s the fifth recession.   India’s economy contracted 7.3 percent in 2020-21,   its worst recession since independence as lockdowns kept millions out of work. While manufacturing returned to growth, the services sector suffered a decline till very recently. As things look bleak in the US, we in India should also be prepared. Interestingly, the previous contractions in India's GDP had two common culprits -- weak monsoon and energy crisis. During 1957-58, India encountered its first drop in economic growth when a negative GDP growth of 1.2 percent was recorded. The reason behind it was a ballooning import bill, which swelled by more than 50 percent between 1955 and 1957. The FY66 recession was caused by severe drought and wars with China and Pakistan. In 1965-66, due to drought, food grain production fell 20 percent. Foreign food aid came to the rescue of the starving population and India received 70 lakh tonnes of food aid in fiscal 1965. The 1972-73 recession came on the back of an energy crisis as the Arab Petroleum Countries targeted nations supporting Israel during the ongoing war. In the 1979-80's oil shock led to the BoP crisis, and the cost of India's imports almost doubled from 1978 to 1982. During this time, India's exports also took a hit as they contracted by 8%, which led to a balance of payment crisis. After that, we saw no recession till the Pandemic but the IT/services industry was always linked to US/Global market trends which it has to take note of. 

 

 

When we are kids in the 80s, we saw the first US recession through our only window to the world news: The world this week by NDTV.  This recession ran for nine months, from July 1990 to March 1991. It was caused by the 1989 savings and loan crisis, higher interest rates, and Iraq's invasion of Kuwait. Then we opened up 91 and our economies got interlinked. The first major recession was in 2001   It was caused by a boom and subsequent bust in dot-com businesses. The Y2K scare had partially created the boom in 2000. Companies bought billions of dollars’ worth of new software because they were afraid the old systems weren't designed to transition from the 1900s to the 2000s. Many dot-com businesses were significantly overvalued and failed. The 9/11 attack worsened the recession. Then we saw a great Indian boom lasting till 2007 followed by the Great Recession lasted from December 2007 to June 2009. The subprime mortgage crisis triggered a global bank credit crisis in 2007. By 2008, the damage had spread to the general economy through the widespread use of derivatives. GDP in 2008 shrank in three quarters, including an 8.5% drop in Q4 in the US. The unemployment rate rose to 10% in October 2009. 

 

Now as the US heads towards recession, our generation of IT entrepreneurs is the third instance of tightening seatbelts as announced by leaders like Pichai and Zukerberg.  But riding on the emergence of new technologies, transformations will be on the rise and there will be room for innovations. Though the startup market is tight we will see existing companies innovate in order to survive.  Based on history, things will probably get worse before they stabilize. The Feds are trying to fight inflation by raising interest rates and as a side effect, it can trigger a recession. No one can predict a recession for sure, but the odds are pretty high. As individuals, we can fasten our seat belts. 

We should resist Drastic Changes: When things feel precarious or a recession actually happens, it’s natural to want to do something — liquidate your assets, hoard beans, buy random stocks you read about online everything in a panic.  A better way to channel that stress is to take stock of your spending. The only thing you can really control right now is your cash flow from day to day 

You may have to improvise:  It certainly helps to have an emergency fund to fall back on. 

Beware the get-rich-quick schemes: When people are nervous and desperate, they turn to the internet— where bizarre scams proliferate.  

Don’t be afraid to seize the moment: No one wants to profit off widespread misfortune and economic suffering. But if you’re one of the lucky ones who can afford it, investing your long-term savings in the market during a downturn can be extremely smart 

Remember that the economy will recover: When the economy goes down, it can seem as if our entire financial system is crumbling and we’ll be burning our worthless dollar bills to cook our food. And someday in the near future, it’s much more likely that things will bounce back. That’s because recessions are, unfortunately, a normal part of how our economy functions.  

These are cyclical and we should believe in ourselves. Though not have seen past recessions in India, as entrepreneurs who started in Y2K days we have come a long way.  

 

 

Sunday, September 11, 2022

Unicorns in Business

 

India Startup stories are creating a sensation. They motivate many toward entrepreneurship. 14 Indian companies turned into unicorns — companies valued over a billion dollars — between January and June 1, 2022.  The government is trying to create a new startup culture. Government agencies have been directed to reach out to entrepreneurs whose startup initiatives may not have taken off because of inadequate support or resources. Department of Science and Technology would take up a mentorship role to promote startups in Tier-2, and 3 cities in areas such as eCommerce, Fintech, Edtech, and biotech. 50% of the country’s startups have emerged from Tier-2, 3 cities, where opportunities and resources are comparatively less. Tier! Cites are abuzz with Startup Glamour. Equity-meets-live-action theater of Shark Tank has added to the startup mania. Maybe few wannabe entrepreneurs are motivated to chase billion-dollar valuation in the Facebook movie The Social Network   

But there is a note of caution, though entrepreneurs should strive to be the next unicorn their focus should be on sales and they should strive to make their businesses viable rather than strive for valuations based on projections. Their businesses should generate revenues than just depend on investments to sustain their businesses. Historically successful companies would grow products [internally] -- until startups became trendy. But not all products are born within a startup. In the real world,  the majority of entrepreneurs and founders generally are the business owners first, and entrepreneurs second. They founded their companies not based on who they could reach out to and how much they could raise, but rather by investing their own time and money into creating something that generated revenue by selling things that customers needed. There is a misguided notion that a fundraising cycle, especially one done at the inception of the company, is a no-cost way to fuel growth. It's certainly much quicker and cheaper than forming a team and building a product and selling into an established market. But raising money isn't free. You need to spend money to raise money. And more importantly, the startups with the best chance of raising money are the ones that don't necessarily need that money to be sustainable or even successful.  

If someone has an idea and access to talent/infrastructure, one should not focus on seeking investment.  Instead, put that energy into a sales deck. Go out and pitch the new product to existing and potential customers or early adopters or whoever might actually want the product you're already building. Maybe those customers will fund the idea into reality. Maybe one can sell to a few MVPs and get revenue on the books immediately. It will also help get a better understanding of how to make the new product investable and worthy of building a new company around. The more entrepreneurs think about business as a business and less like a baby unicorn, the better chance their business has of being successful. It doesn't matter if that business starts in an existing firm, a dorm room, or in a well-known incubator. All that matters is how many customers need your product and how much they'll pay for it.    

Apart from being sales-oriented, entrepreneurs also need to analyze the latest trends to be realistic about valuations that will now be driven by sustainability rather than being bullish based on projections. In 2021, American VC-backed companies raised $329.9 billion. On top of this, early-stage VC activity surpassed $80 billion for the first time, and annual exit values soared to more than $774 billion. This huge influx of funds led to skyrocketing startup valuations in 2021. However, as the end of the Covid-19 pandemic appears to be on the horizon, entrepreneurs and investors alike are wondering what the future holds. Can these sky-high valuations last? Is this investment frenzy sustainable, or should we brace for a crash? US Federal Government’s goal is to moderate inflation and unemployment by controlling the money supply. It doesn't directly support venture capital specifically, but changes made by the Federal Reserve have a ripple effect. US Federal Reserve provided nearly $5.8 trillion in financial support to the American economy. The government infused the economy with cash. Consequently, many funds and other bondholders received enormous amounts of cash, which they invested elsewhere. Most of this money went to the stock market, some to real estate, but a significant portion of this windfall was received by VCs and thus resulted in high valuations  

Feds have already started reducing its balance sheet, which has some worried.  The current levels of investment are unsustainable since the money supply is no longer increasing, so there will be a slowdown in VC deals. However, the total amount of money already committed and available is still high. The future will likely show a flattening of valuations growth at earlier stages. In later-stage startups, valuation will fluctuate in sync with stock market changes. Good startups will continue to be in high demand and enjoy higher valuations, while less successful ones may have a hard time raising the next investment, which may lead to flat or down rounds. The Good startups are ones that can sell and be sustainable. A few valuations might dip, but now the money is allocated which means there's no sudden crash to worry about.  

Markets these days are interlinked. There will be a similar trend in India as in the US. A combination of macroeconomic factors, including falling tech valuations, tech crackdown in China, the Russia-Ukraine war, supply-chain issues, etc., have reduced capital flow globally, bringing a sense of rationality to valuations. Now, the focus has shifted back to the fundamentals of the business, where metrics such as unit economics and profitability are back in vogue. It is not that these were not there in the past, but given the latitude of capital, these were pushed to the background. So as an entrepreneur you need to be in the business of doing the business and not just aim to be a Unicorn based on absurd evaluations the market had promised. 

 

Monday, September 5, 2022

Imperfect Perfection

 

We see an imperfect world all around us.  We have seen senseless shootings. There is an unending war. We have seen prices rise and economies heading toward recession. We are not fully out of the pandemic. Droughts, floods, and storms warn us of the grim realities of climate change. India losing a test match that it should have won. We see pain all around us and yet we yearn for perfection in our daily lives. We strive to create a perfect world around us. We tend to show the world through our social media how we are living a perfect world. Everyone tries to be perfect. But there are downsides to being a perfectionist. 

What is perfectionism? It is a self-oriented, irrational desire to be perfect while perceiving excessive expectations from others as well as placing unrealistic standards on others. What’s the downside? Researchers say that seeking perfection can create paralysis that hurts productivity.  You delay doing difficult tasks being scared of doing the second-best thing.   That insecurity undermines your confidence. Another downside of perfectionism is that it’s much harder to delegate. You think that no one can do tasks as best as you can do.  You can’t build a team if you can’t delegate. That impedes the growth 

In reality, there is enough of evidence that the world isn’t changed by people doing perfect work at all. In fact, the world is driven by people doing their best to improve or create things against incredible odds and failing in uncountable ways along the journey as Edison had said.  Darwin has said that evolution was driving this pattern for millions of years before we even arrived on this planet. Nature doesn’t know or celebrate ‘perfect.’ It is always a work in progress. Cells are changing and dying even before the organism is fully grown. In the wilderness, there are zero perfect trees, plants, or animals just like us. 

In this imperfect world what advice can you render to a teenager or a young adult? 

First, we need to know ourselves.  We aren’t born with a well-formed ability to step outside ourselves and look at ourselves objectively. We naturally spend our lives stuck in our own heads unable to separate the criticisms we hear in our heads from our true selves.   We can treat ourselves with the same grace and care we as would a good friend.  Journal writing, reading, and talking to well-meaning friends are also good tools. 

Then we need to celebrate ourselves always. We don’t need to wait on perfection or massive life milestones to celebrate ourselves. We need to celebrate everything. Every day we should give ourselves a huge hug and tell how wonderful a job we are doing in our life. This creates a space for that inner self-criticism. 

We need to practice imperfection- If you’re bent toward ‘perfect,’ sometimes it’s wonderful to practice imperfect. We can allocate a time window and force ourselves to get something out in the world that we know in advance won’t be perfect. Another exercise that can be helpful is to do something imperfect intentionally to celebrate imperfection and the space it creates. 

We need to take note of your grading of others. While developing close friendships, leading people, and becoming a parent we hold grace for other people. Surprisingly in each role above, we tend to be more understanding to other people than ourselves, especially as a parent. As a parent, you see your kid utterly and perfectly complete just as you are. Watching the way we accept our kids, and beginning gingerly to apply that kind of acceptance and care to ourselves we can change our lives.  This will help you feel comfortable about yourself in the state of imperfection. 

So are there any alternatives to perfectionism? Scientists have suggested selective perfectionism, choosing when a task is worth any effort that’s above and beyond and when it’s not. The biggest obstacle for the perfectionist is letting good enough be good enough.  A perfectionist doesn’t even know what it means to not be perfect. They don’t know what good enough is. It’s an all-or-nothing way of evaluating things. Work is amazing or a disaster. Scientists say this binary thought process has to give way to selective perfectionism. 

To get past the pursuit of perfection and find a balance, scientists suggest using a technique called “Max, Mod, and Min.” Before you start a task, write out the maximum you could do for that task, the minimum you could do, and the moderate–a happy medium of the two. This allows you to break binary thinking. You can find options to right-size an approach for any task or circumstance. Defining three levels of performance for a task builds edges that help you move forward. 

Scientists have added an example of this approach:  if you have to write a report, define the max, the min, and the mod results. For the max, you could write a report that covers all angles, includes a variety of sources, the latest research, the history of the subject, and more. This might take a lot of time. To take a min approach, you could use the information you have, frame it into a template, and call it done. This level would take the least amount of time and effort. Finally, taking the mod approach would involve adding one or two elements above the minimum. Same thing you can do while delegating the tasks. You don’t want an employee to deliver a 15-page PowerPoint when you wanted a memo. When you give someone an assignment, talk about the levels of performance, and choose the right fit. 

To conclude, stop trying so damn hard to be invincible and perfect, and just be yourself. The more you can bring your entire self to everything you do the better you’ll feel and the better you’ll be. You’ll not only eliminate emotionally draining anxiety but also forge more genuine connections with others, opening yourself up to support when you need it.