A pesar de eso, la gente se siente optimista, de buen humor, afortunada
y hasta rica: “Aqui en Delhi somos ricos tenemos de todo, pobreza hay en
Kerala”..no quiero imaginar como sera Kerala.

El desempleo es alto, casi o mas que en Argentina, sobre todo entre los
jovenes.

La sensacion de inseguridad es constante, pero despues de estar dos
dias, me parece que es nada mas que eso una sensacion.

Esa inseguridad “virtual” se manifiesta porque al caminar por las
calles, parece uno que esta en un lugar caotico, abandonado y olvidado
por Dios, resulta constante el cargoseo de gente pidiendo limosna, pero
peor que esto son los que ofrecen cosas o servicios, para tener una idea
de como es, me resulta la misma sensacion que producen en Argentina
cuando se acercan en un semaforo los que quieren limpiarte el
parabrisas, solo que aqui uno esta caminando y a cada paso alguien se
aproxima.
A diferencia de otras capitales, lo que note es la poca cantidad de
turistas que hay, no creo que sea porque no haya, en terminos absolutos
debe haber sin dudas, pero el problema es en terminos relativos, hay
tantos Indios que un turista siempre parece destacarse.

Por otro lado pude preguntarle a varios taxistas, si tenian miedo de
andar durante la noche y pararse en algun semaforo, ya que en Argentina
eso era muy peligroso, pero me dijeron que no, que ese tipo de crimenes
no existe en India ahora, en una epoca podia ser pero no ahora.

Igual aconsejaban no salir de noche, porque los turistas son presas
facilmente de carteristas y arrebatadores.

Mucha gente al nombrarle Argentina, me hablaban de futbol y me
preguntaban por Maradona, lo cual es raro porque a los Indios no les
gusta el futbol, solo les gusta el hockey y fanaticos del cricket, este
ultimo un deporte rarisimo donde los partidos suelen durar varios dias.
De la visita de nuestra Presidente hace un mes, no tenian ni idea.

Por lo menos dos personas, me dijeron que parecia que al menos uno de
mis padres es Indio, lo cual creo que en cierta medida me ayudo para
evitar un poco el asedio, si solo tuviera la vestimenta de adecuada para
pasar desapercibido (pantalon sport, mocasines y camisa manga larga) sin
dudas hubiera podido pasear mucho mas tranquilo.

La comida es absolutamente picante, hasta el yogurt, el te y el pan
resultan serlo, despues de un par de intentos pude descubrir cuales
eran los platos que se podian comer sin problemas.

El trafico es caotico, los semaforos practicamente no existe, todo el
mundo maneja en zig zag y contramano, tocando constantemente bocina.
Hasta los camiones tienen un mensaje atras que dice:”Por favor toque
bocina”, le pregunte a uno si era un chiste eso, pero me dijo que no,
que era para avisarles por cual lugar los va a pasar uno.

A la pelicula Slumdog Millonario, directamente la aborrecen, dicen que
es un invento de los ingleses que muestran a una India que no es asi y
que los han hecho quedar muy mal en todo el mundo.
Que les gustan las comedias musicales, con pasos cuidadosamente
coreografeados entre un grupo de mujeres por un lado y hombres por el
otro “a-la” Palito Ortega de la decada del ’60, es verdad, en la tv todo
el tiempo en varios canales simultaneamente estan pasando alguna.

El aeropuerto es nuevo, pero sorpresivamente chico para la poblacion de
India y Nueva Delhi (tiene 20MM habitantes), estimo que no sera mas
grande que el de ezeiza.

El tema de seguridad en el aeropuerto es asfixiante, al aeropuerto
directamente no se puede ingresar sin un ticket de reserva, no hubo
menos de 5 controles en distintos momentos hasta subir al avion, luego
de cada control ponian un sello en un papel, sin el sello del control
anterior, no se podia avanzar al siguiente y si te faltaba algun sello
al llegar al siguiente control debias volver a empezar todos los
controles como en el juego de la oca.

El ba#o del aeropuerto era llamativo, porque a pesar de ser moderno y
moderadamente limpio, solo tenia agujeros, sin inodoros, ni mijitorios.

Hablando de necesidades, es usual encontrarse en una esquina a alguien
haciendo sus necesidades o paran los autos y se bajan para hacerla (solo
vi del tipo 1, pero unos turistas me comentaron que cerca del hotel
habian visto del tipo 2 y que ademas lo utilizaban de insumo para un
negocio paralelo: se lo tiraban a los zapatos de turistas desprevenidos
y despues le cobraban por limpiarselos).

La gente es generosa y honesta, en muchos templos,al mediodia ofrecen
cosas para comer, para que cualquiera vaya y se sirva (inclusive un
turista), un moto-taxi que puede costar $0.25 para un trayecto de 5 a 8
minutos, al dejarle una propina de $0.10, me la devolvio pensando que me
habia equivocado porque no era el precio pactado al subir
.
En general los Indios estan mas que bien predispuestos para ayudar en
cualquier consulta que uno pueda tener, tan bien predispuesta que las
primeras veces sospechaba que al final de tanta ayuda iba a venir el
mangazo y para mi sorpresa nunca vino.

La falta de luz parece ser un problema comun en la India, en las dos
noches que estuve hubo apagones de unos 30 o 45 minutos, que fue lo que
tardaron los generadores del hotel en encenderse.

Es admirable la aceptacion y tolerancia religiosa que tiene el pueblo
Indio, ya que conviven varias religiones (Hinduismo, Sikh, Musulman,
catolica, budismo) y a primera instancia no pude ver que exista algun
tipo de segregacion (por lo menos evidente), es usual ver un grupo de 2
o 3 personas juntas, donde cada uno es de una religion diferente, ademas
pude comprobarlo mirando la television donde en las comedias familiares,
muestran familias y amigos que son de distintas religiones, es como si
tacitamente supieran que independientemente de las formas que tome y en
las cantidades en que se manifieste: Dios es 1, se llame como se llame.

There are papers that argues that a little bit of envy is kind of good from an economics perspective, it is one of the causes of economic progress, from an individual standpoint, if you would like to purchase something, probably you will try to work harder (unless you are planning to rob a bank, which I hope not) to earn the money to purchase a new car, a bigger house or TV and it is easier to see it works on a country basis, where a certain country would like to catch up with a more developed one.

I think that most of the time envy is neither good for the community and above all the individual, it is just make people unhappy, Charlie Munger says that of the 7 sins, envy is singly the worst, because you actually never obtain any benefit from it and even it makes you feel worse, think about lust or gluttony for example, you can extract some kind of pleasure from them, but from envy?..none.

Envy or keeping up the Joneses syndrome is like watching a parade, everything seems OK when everybody is more or less at the same high, but when someone step in his tiptoes everybody has to do and at the end they are like at the beginning but now in pain.

How you can avoid the syndrome?, it is not easy, but one solution that I found is to have an internal scorecard instead of external one, that simple works, you will definitevly be much happier without suffering envy, not only because you will be happy with yourself, but because you can actually really enjoy when other people succeed and that is priceless and something that many people would like to feel, but trust me, very few can.

Without envy our world will be better

The Creative Destruction that J. Schumpeter told us about, it is at full speed during these days, perhaps the most surprising for me, not because it was a surprise, but because it suddenly attack, like a Hurricane Cat 5 is the Newspapers debacle; just two years ago, the Newspaper industry was a really good business to be in, specially if you are the larger one in the city.

It was a boring business that hardly has changed during the last 150 years and you have to take into account that the adjective: “boring” when it is used in a business context is really a good thing, specially if you are a shareholder…give me a boring business to invest for 10 years and I can guarantee you that I will be rich.

We have known that the Internet was a formidable competitor for the Newspaper Industry, but we have known that since 1995, when I first started reading some news in the rudimentary web (Nestcape anyone?) at that time, but what caught me by surprise it was that how quickly and sudden happened, newspapers started closing everywhere and even the most important ones are having really a bad time.

I still love to go to a cafe and read a real newspaper while sipping an expresso, but that’s it, when I am at home, I prefer to read it in my PC during my breakfast, because I can quickly read not one, but 4 or 5 newspaper and even read the news that other people are reading and I can email it to someone who I think would enjoy it…with the paper copy all that it is almost impossible (I am not counting on the mess that it will be to read 5 newspapers and all the trees that would have been killed for that).

All kind of industries has been affected, destroyed and reshaped by the internet, that is not new and hardly a surprise.

There is a sad side about all this (aside from the job lost, my hope here it is that at least it is a zero sum game) and it is that probably the kind of products or services that we are going to get will not be as good as the ones that we used to, they will be cheaper for sure and perhaps it will reach a higher audience, but the quality of the product will not be as good.

For example, if the NY Times, Washington Post or WSJ close its door, I really doubt that we will find a good alternative to its stories, I do not believe that a blogger or a tiny part-time staffed news website can run stories like this glory newspapers have done in the past.

If you think about a bit, you will notice that for example the telecommunications that replaced the legacy ones, at a much cheaper rate it is true, but the quality is not the same (think about Skype vs. legacy ATT), or think about the Movies or DVDs, the quality and experience that you can have in a Movie Theater or at your home watching a DVD, is 100′s better that the one you can get downloading a movie or watching a stream and it is will be even worse because the Studios soon will not longer spend millions of dollars producing movies (they will just spend in a very few number of movies where they can get sure that they will be able to earn back their investment (plus a profit) thanks to merchandising for example, that means that the only big movies that are going to bemade are the ones for kids and may be teens)

What we have right now, it is a massive market or audience, not just because the Net is everywhere, but because now it is much more cheaper to get those services that everyone can have it, but the quality is not as good as it is used to be. It is like saying that your friends in Facebook are as good as the ones that you already have outside Facebook.

It is not new to say that the internet is changing some rules or that the media, telecommunications, etc industries . have been affected and their business plans have changed forever and if they do not adapt, probably they are going to be extinct like dinosaurs.

The newspaper and the movie theaters for example are heading the way of the dinosaurs, the telcos, were really lucky, because at the same time that the internet flourish and it put them in danger, they started a new line of business: mobile, but they will be much more smaller than they used to be.

Nothing new here, but like when Granma made you eat your carrots before the ice-cream, now it is time for the dessert and these are the industries from where I think we are going to hear some trouble soon, I do not mean a temporary set back due to the current recession, which we, as investors, do not care if it is temporary, we should care about the permanent ones:

Car Dealerships : the way that we used to purchase car in the near future will not need them.
Cable TV : I shall confess that I thought that they were in better position to compete against the telcos, but I realized that they are not.
Magazines
B&M electronic stores (i.e: Best Buy)
Bookshops (i.e BN)
Calling cards (i.e: IDT, some investments from LUK)
CDN providers (i.e: Akamai), providers are not longer going to give its content or eyeballs for free)
PC providers: (i.e Dell) with virtualization, people are going to need less powerful PCs.
Software stores (i.e. Gamestop)
and counting…

Sorry guys, this one is in Spanish and it is about soccer

Los resultados de la ultima fecha de eliminatoria me han
hecho preocupar un poco en referencia a la clasificacion de Argentina para
Sudafrica 2010.

Esta preocupacion sobre lo que todavia falta y que me ha
dejado en vela durante un par de noches desde aquel resultado en Chile pasando
por la catastrofe en Bolivia, me hizo recordar una formula que utilice durante
buena parte de mi adolescencia para pronosticar los mundiales (1986, 1990 y
1994) y eliminatorias.

Durante ese periodo testee y refine la formula varias veces,
finalmente quedando una que me presento resultados bastante satisfactorios, si
bien obviamente nunca pude pronosticar con exito el 100% de los partidos, ni
mucho menos, sirvio para pronosticar exitosamente mas de un 58% de los mismos,
lo cual para un juego, como es el futbol no esta nada mal (si pudiera replicar
ese porcentaje de exito en algun juego del casino, seria facil hacerse millonario).

Para quienes esten interesados, sobre conocer los atributos
de la formula, puedo decirles que tiene en cuenta entre otras cosas: la
historia de los enfrentamientos entre los equipos (dandole mas peso a los
ultimos jugados), el momento actual de cada uno de los equipos, Localia
(incluyendo factores como la altura y el clima), jugadores desequilibrantes
(ej: Messi, Kaka y en su epoca: Ortega en su epoca, Maradona, Van Basten,
etc.), capacidad del DT e inclusive porque esto es un juego, incorpora un porcentaje
de imponderables, todo esto confluye en un calculo probalistico en el que los
resultados se calculan, para los que estan familiarizados, como una especie de
formula de Black–Scholes que se utiliza para calcular el valor de las opciones.

En su momento hacia los calculos programando en basic
durante semanas en mi querida computadora TK-85, los que luego traslade a la
Commodore 64, este ultimo fin de semana los hice en un rato utilizando una
planilla de MSExcel.

En definitiva basta de cosas que no le interesan a nadie y
vayamos a los resultados.

El modelo predice que al final de la eliminatoria estas
seran las posiciones y puntajes:

Paraguay 35 pts.

Brasil 32 pts.

Chile 29 pts.

Argentina 28 pts.

Uruguay 25 pts.

Colombia 23 pts.

Ecuador 21 pts.

Venezuela 18 pts.

Bolivia 18 pts.

Peru 14 pts.

Lo cual significa que nos clasificamos!!!.

Ademas de esto, que como dije anteriormente no es ciencia
cierta (tiene historicamente un 58% de probabilidad de acierto), asi que puede
cambiar, hay algunos datos que creo que son interesantes que arroja el modelo:

A) Argentina necesita entre 9 y 10 puntos adicionales para clasificarse mas o menos tranquila, es
decir de los 6 partidos que quedan necesita ganar dos seguro (los de Colombia y
Peru de local aparecen como los mas accesibles) y despues ganar 3 o 4 puntos mas
ya sea con triunfo, no hay ningun partido
facil (puede ser Brazil de local?) o sino 3 empates (Brazil,Ecuador y
Paraguay). Si la proxima no le ganamos a Colombia estamos bastante mal.

B) Creo que es crucial llegar al ultimo partido con Uruguay
ya clasificados, pues en este partido tenemos un 70% de probabilidades de
perder puntos y Uruguay va a estar muy necesitado de los puntos, asi que puede
pasar cualquier cosa.

c) En las eliminatorias es importante dejar la pasion afuera
(esa que te lleva a desear que siempre Brazil pierda y quizas hinchar por
Uruguay a veces) y empezar a alentar con la cabeza, en este caso el modelo
arroja que a los argentinos les conviene que: Paraguay y Brazil siempre ganen
cuando no jueguen con Argentina, obviamente y que Colombia, Ecuador y en menor
medida Uruguay siempre pierdan y que cuando jueguen entre ellos siempre
empaten.

En definitiva, hoy que es 13 de Abril de 2009, aqui estan
las predicciones, hacia fin de a#o espero festejar porque mi pronostico se haya
cumplido (no porque se cumplio, sino porque nos clasificamos!).

Si alguno se pregunta si la formula puede aplicarse al
torneo local, les confirmo que NO (su exito es menor al 50%, lo cual indica que
tendriamos mas posibilidad de acertar tirando una moneda para determinar los
resultados que aplicando la formula),
hay varios factores que no son tan determinantes a nivel local que si lo son a
nivel selecciones (ej: Localia, historia,etc.).

If you would like to see my previous posts, please visit my blogger webpage.

Commodity

The Voice Business is a tough business to be in with razor-thin margins who keeps decreasing, even when everybody says that they cannot go lower, it is like the paradox of the race between the Tortoise and Achilles, they will never reach zero but they will never stop decreasing either.

The reason for this is because the basic voice service is an easy to replicate business and there is not product differentiation among the different players, I am sorry to hurt your feelings here, but for a regular customer there is no way in knowing the difference between a call made using the Skype Out service and one using your state-of-the-art worldwide network.

This no differentiation or moat, as some investors would prefer to call it, around the voice business is what makes it make a dangerous commodity business.

There is nothing dangerous or bad in a commodity business per se, the ones that are dangerous are the ones that combine a commodity product plus massive capital expenditures, like the airline or textile business for example.

Sadly the voice business is one of them; actually you can apply the same old joke about the airline business to the voice business: To make a small fortune in the voice business, you only need to start with a large one.

Capital expenditures are for example the software upgrade or the new NGN equipment that you need to acquire next year; these are really the ones who are killing your ROI. You need to purchase them, because your competition is going to, otherwise they will drive you out of business because they will a lower cost structure.

Maintaining the reputation

There are many ways in swimming smoothly the treacherous waters of a commodity business, and the best lifesaver is to create a moat around your product; this can be done in many different ways like for example:

Offering a Superior Product: I have never had a issue to call to a Argentine mobile number using Skype Out service, but I had several ones using the regular phone service that AT&T is offering me, so at least for this particular product (voice termination service in Argentina Mobile) Skype has a moat, the problem with this kind of moat is that it is not very wide, AT&T can easily correct its routing problem and catch up with Skype, but while it’s not doing so, the moat is there and  I will be happy to pay 1 or 2 pennies more for the Skype’s than AT&T’s Service.

Intellectual Protection: This is an excellent moat if you can get out with it, the problem is that in the voice business there is not much patents who can protect your product (it is one of the reasons because it is a commodity), but there are some cases, for example: Net2Phone has some patents in VoIP and it is trying to protect it business filling infringements against Skype and Verizon has done so against Vonage.

Improving Efficiency: If you can provide the service at a lower cost than your competitors thanks to economies of scale, minimum overhead, unique employees, proprietary routing software and/or innovative processes, you have an edge ahead your competition in enjoying decent returns while improving your chances to survive in this cutthroat business. This explains most of the early success of Dell in its market, but now it is in trouble because its competition has replicated (hence eliminated) this key strengths.

Specialization: you can find a niche where you have an advantage above all other carriers and explode it, for example if you can get a better termination cost because your friendship with a dictator of a country where the telecommunications business is still a monopoly and that country has a very interesting combination of high price and incoming traffic you are in an good position (if you are a Dictator of a country with the described attributes, please stop reading and give me a call)

Another kind of specialization, with much better karma, is to  just focus in a particular Region  or country where you have already a network at sunk cost and you can provide the voice service  as a marginal business or enjoy a combination of simple effects, which can be easily replicated alone but they are kind of difficult to do it all at once, like some network capacity at sunk cost,  hard to fully-manage numbering plan in a  high demand destination who allow  you  to have a better cost than anyone else. In this last case think about countries like: Mexico or Brazil.

Outsourcing: finally we reached our central topic, outsourcing it is like knowing that you cannot do anything to improve the commodity part of your business, so you walk away of it and keep just the part of the business where you can create value (aka earn a good profit) and concentrate all your resources there, for example in marketing, sales, R&D, design, customer service, all the things that can make a final product that can be perceived by the customer as superior. As an example think about Starbucks and McDonald’s coffee.

Somebody may think that it is kind of dangerous to outsource the production of your core product, because  you are not outsourcing a side service, like the office  cleaning, but actually it is something very common in other industries, for example: Nike, Gap, Apple, BlackBerry, they design and  market their products but the actual production of the shirt, PC or phone is done somewhere in the South East probably by the same company who also does the production for Ralph Lauren, NB, HP or Motorola.

Neither we see anything new or strange about outsourcing the international voice termination service, actually the Mobile Operators have been doing so for years, almost 100% of them outsource their international termination to its parent company, who usually it is a Fixed Operator and an old time incumbent, think for example in AT&T Wireless and AT&T, T-Mobile and Deustche Telekom, Movistar and Telefonica, Orange and France Telecom, TIM and Telecom Italia,E-Plus / SimYo and KPN or even the MVNO who outsource completely its voice business like Euskaltel Mobile in Spain or Virgin Mobile in USA.

The real new tendency that we are seeing, it is that now the incumbent operators are the ones outsourcing the voice business to a third provider, for example:  first E-Plus /SimYo outsourced to KPN and now KPN has outsourced its international voice business to iBasis, the same happened with TDC.

The traffic that Tele2 has just announced that it is going to outsource to Deustche Telekom is part of a cost restructuration that Tele2 has been doing during the last 2 years and it can be better understood as a case of specialization where Tele2 has its strengths than a 100% outsourcing as it was the case with KPN; Tele2 and TDC kept for themselves some Regions where they have a key advantage.

Conclusion

The voice business is a commodity and the problem with this kind of business it’s that it becomes a race to the bottom, the operator with the lowest price is the one who wins, but at the end nobody really wins.

There are several ways to avoid, or at least slow, this  “death race” as we have seen above and the one that definitively will avoid it, if you can create some value in the part that you keep: it is the outsourcing.

Warren Buffett says that when a management with a reputation for brilliance tackles a business with a reputation for bad economics, it is usually the reputation of the business that remains intact, so in this case when the management decides to outsource the voice business it is because they would like to maintain its good reputation.

Probably a complete outsourcing is not the best answer, I believe that the solution could be found in a simple, complexity never works, combination of all the alternatives for example a voice swap agreement can greatly improve your margins if it is done right.

A complete outsourcing has some risk, first there is a risk that your provider will have the incentive to cheat you in the quality that they are offering you and you will not have control about it, just the complains of your customers will flag the problem, believe me this incentive exist and it will exist not matter what they can promise you, like in the story of the scorpion, it is in the carrier genes to use, at least just a little, a cheaper route.

Second and  more important it is the stability of your provider, we have seen that there have been two waves of outsourcing, the reason for the  second wave is  because the first outsourcing providers found out that it is a tough business, so who can guarantee you that this 2nd generation outsourcing providers can improve the reputation of the voice business, economies of scale are a big deal in the beginning but when you reach some critical mass the improvement in the cost structure due to size does not improve much.

The really important thing that I hope we can learn from here it is that we are not in an easy business, actually we are in a really bad one, so you should do something outsource, specialize, reduce overhead or all together, but please do not just sit, suck your thumb , have wishful thinking and believe that the next NGN equipment or new fiber optic that you’re going to install is going to improve your margins because it is not.

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