Land Rover Defender: In praise of an icon at an end

"Airbags, low emissions, all seats facing forward and pedestrians’ rights do not fit easily into the Land Rover ethos. They are blamed for delivering the coup de grâce."

Bemoans an article in The World in 2015 by the Economist regarding the Land Rover Defender here.  Having had the privilege to have driven one into a rice paddy filled with water at the age of 12 and then having driven it out, washing it down at a friend's "tube well", my uncle the owner none the wiser of anything happening, I can attest to the Defender's abilities.  It is sad to hear that this icon will be concluding its life shortly.  The picture reproduced from the the magazine here speaks volumes!  Given of course you know who the driver is.

Land Rover Defender, RIP!

Oil production: US v Saudi Arabia?

An excellent talk by Dr. Vinod Khosla demystified and threw away expert forecasts on oil pricing in his keynote at TIECON 2011, see here on YouTube at time index 7:30.

With that in mind below is a forecast of oil production as presented in The World in 2015 by the Economist.  What do you think?

See other interesting "eye-catching statistical landmarks" in the complete article here.  Note that the article claims:

"The way people think about the world will undergo a radical change in 2015, as assumptions that have held steady for years are overturned."

India and education - the conundrum continues

I wrote about the poor quality of graduates available for hire in India in 2010 here.  Having had personal experience to validate the above, while the only globally top tier Indian academic strength I have worked with have been the India Institute of Technologies and perhaps couple more technology and scientific institutes at most.  Four years on from my blog in 2010, the academic capitalism in India continues to further dilute the already poor pool of capable Indian educated candidates for hire.  See my blog on what I term as academic capitalism here.

The World in 2015 by the Economist's laments:

"If your five-year-old starts school in India in 2015 she will be ready to enrol at university in 2028. That is also the year when India’s population should pass 1.45 billion and become the world’s largest. By then, will there be enough high-quality graduates to ensure the country’s prosperity? No chance—unless a rotten education system is fixed first."

For a country with aspirations for the future, the prospects given current numbers are bleak for sustained economic growth.  The US's economic growth's backbone has been its universities that have defined what scientific research and development, and its engineering applications through education can create.  20th Century is full of these examples.  More poignant is the inflow of talent from across the globe to reinforce this trend.

"Varun Aggarwal of Aspiring Minds, a company that surveys student capabilities, estimates that if university exams were run properly, 70% of students would fail. Of 700,000 engineering graduates in India each year, he reckons only 3% are employable without many months of post-recruitment training. Only 15% of computer-engineering graduates could complete a basic task set in one assessment, he says. Language and other “soft” skills are often poor."

Is India starting to follow the education's commercialization trends I spoke about here what I termed as copy and paste knowledge creation?

As my good friend Dr. Farrokh Mistree emphasizes and I agree, generally speaking of higher education, so does the article conclude for India:

"But still there is no serious funding for research. Only when that is in place will an Indian university make it into a global top 200. Not in 2015, but with luck before 2028."

Next decade and low interest rates

United States' Federal Reserve wields a significant influence on capital and its availability across the globe.  Leverage has been a necessary part of economic growth for companies and nations.  What does the future look like in which monetary policies are able to drive economic growth, and what are the unintended consequences?

The Economist's The World in 2015 has a few interesting thoughts based on the following premise:

"… over time long-term interest rates are highly correlated to long-term growth (see chart), and growth looks likely to be much lower in the coming decade than in the recent past."

I believe calling the chart below "highly" correlated is a going too far.  If it were highly correlated, then the prediction of economic downturns would have been significantly easier and that is not the case.

The big question is why would the above statement be true?  Here are a few viable comments from the article I agree with:

"… the world has a glut of savings and a dearth of investment, and it is the job of interest rates to bring the two into balance. Before the crisis the oversupply of savings could be traced to emerging markets, in particular China. Domestic savings in emerging markets rose from 24% of GDP in the 1990s to above 33% by 2008—and stayed there. That is more than enough to meet the (steep) investment needs of those countries, so they ploughed the excess into rich-country bond markets, pushing down interest rates. China’s current-account surplus has since shrunk, but the euro zone, bludgeoned by austerity, tight credit and weak investment in Germany, has taken its place: its current-account surplus in 2015 will exceed China’s. The global savings glut will put a lid on interest rates."

If the above represents thoughts on emerging economies driven capital movement, here is perspective on developed markets:

"A slower-growing economy needs fewer stores, factories and offices, depresses the return on capital and thus leads to lower investment. Slower-growing productivity holds back incomes and discourages consumer borrowing."

And so going against conventional wisdom upon which many an investors have been hedging their bets, the Economist states their claim:

"… the end of the Fed’s monetary morphine will not spell the end of low interest rates."

Read the complete article here.  I am looking forward to seeing how things play out in 2016 and further out.

Silicon Valley in 2015 and onwards: A new technology decade on its way

I have been working with Silicon Valley for the past 20 years off and on.  I have been living here for the past year, running a research and innovation center.

For the first decade of this millennia, I noticed a trend which was well articulated by Dr. Gordon Moore that "… corporate R&D is moving away from the kind of fundamental research that wins Nobel Prizes and toward a narrow focus on business goals."  See my blog on the topic here.

I start this year with the hope and I see it as well in the past couple of years that things are making a shift in Silicon Valley from Dr. Moore's concern.  In The World in 2015 from the Economist, my favorite columnist Mr. Adrian Wooldridge, writes:

"In 2015 the buzz (and the money that goes with it) will shift from social media to intelligent devices. … The most successful companies will focus on connecting the virtual and physical worlds. … The year’s buzzword will be “wearables”: for example, medical gadgets that keep a constant watch on your blood pressure, glucose level and food intake, and tell you if trouble is on the way."

Remembering the days of craze about social media in the first half of 2000s, and software doing more than automation in the 1990s, and personal computer like devices in the 1980s, the craze already has established the buzz word IOT (Internet of Things).  Makes me smile as I have never heard such an amorphous term in technology before, perhaps IOT will trump the word innovation in the coming years!  I digress.

What is absolutely thrilling and exciting for me is:

"The rise of intelligent devices will allow the Valley to rediscover its roots as an engineering centre. This Valley was briefly sidelined by the social-networking revolution. But engineers are returning to reclaim their own. Tesla is making cars in Palo Alto. BMW, Mercedes, Samsung, Nissan and General Electric have all established research and design laboratories. Medical-device companies are flocking in."

The types of business that are emerging interestingly all have one specific aspect in common, or essential to their success, data and its analysis for value extraction.  A different technology decade is beginning in the valley.

"Intelligent devices will provide the Valley with a new-found seriousness. Social-media companies essentially dealt with virtual candy-floss: nice to have but, for the most part, hardly essential. The new generation of entrepreneurs will deal in devices that can save lives. Truly, all that is airy will become solid."

Read the complete article here.

Forecast for Energy in 2015

Reproducing the Energy outlook from The World in 2015 by the Economist below.  This will be one I will follow closely to see if reality will match the Economist's predictions.

Interesting to note below is how China continues to focus on nuclear.

"As the global economy ticks up in 2015, overall energy consumption will climb by about 3%, outpacing crude-oil demand, which will creep up by 2%, to 94m barrels a day. After years of splurging, most Western super-majors are aiming for better returns on smaller investments—though Chevron will outspend its far bigger rival, Exxon Mobil, investing $40bn. Big Oil’s success will depend partly on riding the boom in oil caught in American shale rock. Thanks to that, global supplies look very comfortable and the average annual oil price will fall, geopolitical ructions notwithstanding.

A parallel shale-gas “revolution” will spawn a batch of American plants for exporting liquefied natural gas (LNG): the first, Sabine Pass in Louisiana, should start up in 2015. Import terminals in Poland and Lithuania will also begin operations as eastern Europe seeks to slip the yoke of Russian supply.

Strong Asian demand, above all, will help gas producers, as dirty coal loses share to somewhat cleaner gas. China’s attempts to tap its own, vast shale-gas reserves will be hampered by geological barriers and technological shortcomings; the country will speed up in pursuit of a 2015 production target of 6.5bn cubic metres—though to just a fraction of American levels. Given its energy-supply shortfall, Chinese reactor-building will proceed: its first “third generation” AP1000 nuclear plant could clear safety checks by late 2015. Controversially, Japan’s own reactors are also set to start returning to life.

To watch: Sea change. Shipping hasn’t attracted nearly the attention motor vehicles have from proponents of pollution abatement. No longer. From January 1st 2015, sulphur standards affecting ships along European and North American coastlines will tighten considerably. Maritime companies will demand less high-sulphur fuel oil and more gas oil. Eventually, vessels burning LNG could become popular."

Romanticising entrepreneurs?

The Economist's Schumpeter states:

"… the reality [for an entrepreneur] can be as romantic as chewing glass."

Schumpeter's article referenced here highlights the simple fact that a true entrepreneur, the absolute risk taker with his or her time and money, is not understood and misunderstood by almost all of those who are not.

"Over half of American startups are gone within five years. Most of the survivors barely stumble along. Shikhar Ghosh of Harvard Business School (HBS) found that three-quarters of startups backed by venture capital—the crème de la crème—failed to return the capital invested in them, let alone generate a positive return. In 2000 Barton Hamilton of Washington University in St Louis compared the income distributions of American employees and entrepreneurs, and concluded that the latter earned 35% less over a ten-year period than those in paid jobs."

I lived in North Carolina for five years, and had the opportunity to be the president of The Indus Entrepreneurs - Carolinas chapter.  One of its founders was Mr. Vivek Wadhwa:

"Vivek Wadhwa, an entrepreneur turned academic, had a heart attack when he had just turned 45, after taking one company public and reviving another."

I as an entrepreneur am biased towards experiential learnings rather than acamedia teaching one to be an entrepreneur.  Though now having gone through 2002 and 2008 economic melt downs as an entrepreneur and recovered successfully, I simply choose to walk away from the pundits and so called experts on entrepreneurism.

You are born an entrepreneur or not.  See further proof in my blog "Its in the genes" here.

Read the complete article here.

Mobile money - a developing countries' business model

From The Economist:

"Kenya leads the world in mobile money, with more active accounts than adults in its population. The total value of transactions made by mobile phone in 2013 was around $24 billion, more than half the country’s GDP. The leading mobile payment system in Kenya, M-PESA, was launched in 2007. A year later it expanded to Tanzania. While uptake there has not been as strong, the total transaction value is close to that of Kenya. As mobile phones have become more widely available, mobile payment transfers have helped reach the “unbanked”. In at least eight countries, including Congo and Zimbabwe, more people have registered mobile-money accounts than traditional bank accounts."

Worth revisiting: Jobs for new grads in oil and gas

I have received numerous calls and requests for employment in the past two months from new college engineering graduates and recent hires in oil and gas who have been laid off.

Its worth revisiting that things have not improved and continue to get worse in the jobs for new graduates of engineering disciplines focused on oil and gas.  The article "Is There Money to Be Made in Oil? New Grads Don't Think So" in Bloomberg here from January of 2015 still holds true as  towards the end of this year 2016 more layoffs are coming from the oil companies and oil and gas service providers.

Unfortunately, college graduates who are not able to pivot into sector independency and learn to learn the reapplication of their education and capabilities, will find it a hard life from now on.  The education that will remain premium and become more so as this century progresses will be in mathematics and computer science.

The impact of oil price drop in regions heavy on energy commodities based economies like Alberta is severe:

"Colleen Bangs, manager of career services at the University of Calgary, says only about a third of the 659 engineering students at the school have found placements for their year-long internships as companies cut back on campus recruitment.

"Something I've noticed, particularly in this last semester, is that there's a bit of an impending feeling of doom,'' said Bangs."

Read the article "Engineering Graduates Wait Up To 1 Year To Find Work" from April 2016 in The Huffington Post here.

I graduated as a Nuclear Engineer from Georgia Tech.  It is an industry that is perhaps the most heavily regulated amongst its peers.  I interned in the sector for a quarter and never reentered it.  I have looked at coming trends and redesigned my future and successfully delivered on it a few times.  My advice to those who have not been able to find jobs is to remember that fulfilling work is better than no work and work you love is even better.  Yet, to be the best of the best in a continuously changing world requires a tenacity and will to succeed that the college graduates have not had to deal with before.  It is due to the global talent availability and technologies march to commoditize what most colleges teach today.

The graduates can blame the colleges or the economy or etc. yet it is dependent on them to cause the change in their lives.  Action yields results not reactions in this case.

It's in the genes

In 2000, I took various rather intensive profiling tests to better understand myself.  Being a nuclear engineer, I wanted to understand Sammy a bit more "nuclearly"!

One of the tests was done with Johnson O'Conner Research Foundation.  The outcome for me was that people are not good or bad at things, they are simply born with particular genetic makeup, elevating or demoting the ability to excel at specific activities.

When I read Malcolm Gladwell's "Outliers", I found the fallacy in analytics of causation is correlation repeatedly showcased in the book, though an enjoyable read none the less.

Recent research "Practice Does Not Make Perfect: No Causal Effect of Music Practice on Music Ability" by Dr. Miriam Mosing of Karolinska Institute in Sweden, and Dr. Guy Madison of Umeå University published in Psychological Science provides a bit of demystification of the adage that significant practice always leads to success in a particular activity.  The abstract states:

"The relative importance of nature and nurture for various forms of expertise has been intensely debated. Music proficiency is viewed as a general model for expertise, and associations between deliberate practice and music proficiency have been interpreted as supporting the prevailing idea that long-term deliberate practice inevitably results in increased music ability. Here, we examined the associations (rs = .18-.36) between music practice and music ability (rhythm, melody, and pitch discrimination) in 10,500 Swedish twins. We found that music practice was substantially heritable (40%-70%). Associations between music practice and music ability were predominantly genetic, and, contrary to the causal hypothesis, nonshared environmental influences did not contribute. There was no difference in ability within monozygotic twin pairs differing in their amount of practice, so that when genetic predisposition was controlled for, more practice was no longer associated with better music skills. These findings suggest that music practice may not causally influence music ability and that genetic variation among individuals affects both ability and inclination to practice."

The paper can be read at Research Gate.  For those without access to Research Gate can have a look at the Economist, which covered the paper and states:

"That is not to say practice has no value. Playing an instrument and singing are physical skills, and do take a long time to master. But, though the experiment could not measure this directly, it is a fair bet that only those with high musical ability in the first place can ever hope to master these skills—and Dr. Mosing has shown that musical ability has a big genetic component."

Read the complete article here.

This does not only hold true for music, I believe it is true for various human activities that leverage our senses to using our brains for mathematics and physics.

At a Global 100 company, I tried to institute a small amount of testing to help allocate individuals to the work they excelled at naturally. This would alleviate poor performance, create a happier work force, and productivity would see unimaginable gains. Let's just say, we are far away from the day when 100% of our work force is doing what they are good at.  Question is, are there people who do not excel at anything?  And if so, what would one do if such discoveries were made?

Mobility driven consumer banking disruption

Necessity is the mother of invention!  Perhaps such "necessity" is more obvious in Kenya?  Following is old news but worth revisiting to remember that emergent consumer focused trends and capturing their value is more and more an emerging markets forte.

"SWAHILI continues to creep into the language of global finance. M-PESA, a thriving money-transfer system run by Safaricom, a Kenyan mobile-phone operator, and named after the word for “cash”, has already entered the lexicon. Having persuaded millions of Kenyans to send cash through an SMS network, … . 

Safaricom has nearly as many subscribers as Kenya has adults—19m people from a population of 43m. Almost 15m of them use M-PESA for everything from paying electricity bills to school fees, thanks to a simple text-based menu that is accessible on even the most basic mobile phone. The firm, which is 40%-owned by Vodafone, makes its money through transaction fees when customers withdraw or transfer cash at a network of more than 40,000 M-PESA agents throughout the country."

Read the complete article at the Economist here.

Real estate: Conundrum of property rights and economic growth

I have recently been working on understanding real estate investments, mostly commercial.  It is rather fascinating that I only come to one conclusion; real estate investments over a period of time, in a particular growing region will form a bubble, collapse, and start again.  And that the minority incumbents in a free market system do not come out as winners either.

To validate some of my learning, here is a good analysis on real estate from the Economist:

"There is a strong correlation between economic growth and secure property rights for foreign and elite investors. But when Ms Lawson-Remer looked for a relationship between property security for minority groups and economic growth, she could find none. Nor was there any correlation between property security and a country’s ranking on the UN Development Programme’s Human Development Index. Securing the property rights of minorities seems to have no clear consequences for economic growth."

Read the complete article here.