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At Ambit, we spend a lot of time reading articles that cover a wide gamut of topics, including investment analysis, psychology, science, technology, philosophy, etc. We have been sharing our favourite reads with clients under our weekly ‘Ten Interesting Things’ product. Some of the most interesting topics covered in this week’s iteration are related to ‘Similarities between Sears and Amazon, ‘Power and brain damage’, and ‘China staring at a tipping point’.
Here are the ten most interesting pieces that we read this week, ended December 1, 2017. 1) The history of Sears predicts nearly everything Amazon is doing
[Source: The Atlantic
Hundred years ago, a retail giant that shipped millions of products by mail moved swiftly into the brick-and-mortar business, changing it forever. Is that happening again? In the last two years, Amazon opened 11 physical bookstores. This summer, it bought Whole Foods and its 400 grocery locations. There have been many such expansions. Why is Amazon looking more and more like an old-fashioned retailer? The company’s do-it-all corporate strategy adheres to a familiar playbook—that of Sears, Roebuck & Company. Sears might seem like a zombie today, but it’s easy to forget how transformative the company was exactly 100 years ago, when it, too, was capitalizing on a mail-to-consumer business to establish a physical retail presence. To understand Amazon—its evolution, its strategy, and perhaps its future—look to Sears.
Mail was an internet before the internet. After the Civil War, several new communications and transportations systems—the telegraph, rail, and parcel delivery—made it possible to shop at home and have items delivered to your door. Americans browsed catalogues on their couches for jewellery, food, and books. Merchants sent the parcels by rail. In this context, the history of Sears, Roebuck & Company is well known. Less storied is its magnificently successful transition from a mailing company to a brick-and-mortar giant. Like Amazon among its online-shopping rivals, Sears was not the country’s first mail-order retailer, but it became the largest of its kind. Like Amazon, it started with a single product category—watches, rather than books. And, like Amazon, the company grew to include a range of products, including guns, gramophones, cars, and even groceries.
After one of the most successful half-centuries in the U.S. corporate history, Sears did something really crazy. It opened a store. In the early 1920s, Sears found itself in an economy that was coming off a harsh post-World War recession. The company was also dealing with a more lasting challenge: the rise of chain stores. To guide their corporate makeover, the company tapped a retired World War I general named Robert Wood, who turned to the U.S. Census and Statistical Abstract of the United States as a fount of marketing wisdom. In federally tabulated figures, he saw the country moving from farm to city, and then from city to suburb. His plan: follow them with stores. The company’s brick-and-mortar transformation was astonishing. At the start of 1925, there were no Sears stores in the United States. By 1929, there were 300. Sears was not content to be a one-stop shop for durable goods. Like Amazon today, the company used its position to enter adjacent businesses. To supplement its huge auto-parts business, Sears started selling car insurance under the Allstate brand. Amazon’s seemingly eccentric decisions are centered on Sears’s old expertise: becoming an inextricable part of consumers’ lives.
The growth of both companies was the result of a focus on operations efficiency, low prices, and a keen eye on the future of American demographics. So how might Sears’s experience predict Amazon’s future? First, Sears showed that physical retail doesn’t necessarily cannibalize the mailing business. So far, Amazon’s online sales have actually grown in regions where it has a physical store presence. Second, it’s important to remember that, although Sears eventually became a dominant physical retailer, the transition was bumpy. Sears initially assumed that its blue-collar customers would appreciate a no-frills shopping experience. But it eventually beautified its stores to lure the whole family. The spartan design of Amazon’s bookstores already has its detractors, and the company may learn that even a logistics behemoth needs an interior decorator. Third, Amazon may find, like Sears, that size can be both an advantage and a bull’s-eye. Sears evolved to become a microcosm of the American economy, with its corporate operations spanning retailing, manufacturing, marketing, and transportation. Amazon is already on this very road.
Growing inequality in the U.S. may offer new challenges to building a truly national retailer. But once again, Sears offers a lesson. The company thrived as long as it used U.S. demographics as a guide—following Americans to the suburbs of the South and West, and selling parts for their favourite new toy, the automobile. Amazon, too, will thrive as long as it uses American demographics as a roadmap and takes advantage of new personal technology, like mobile phones for shopping and AI assistants for the home. In the last six months, Amazon has spent $13 billion to buy Whole Foods and its upscale urban locations. At the same time, it has offered discounts for low-income shoppers to become Prime subscribers. Perhaps Sears’s descendant can become an everything store for everyone.2) Power causes brain damage
[Source: The Atlantic
If power were a prescription drug, it would come with a long list of known side effects. Intoxication, corruption and even brain damage. When various lawmakers lit into John Stumpf at a congressional hearing last fall, each seemed to find a fresh way to flay the now-former CEO of Wells Fargo for failing to stop some 5,000 employees from setting up phony accounts for customers. But it was Stumpf’s performance that stood out. Here was a man who had risen to the top of the world’s most valuable bank, yet he seemed utterly unable to read a room. Although he apologized, he didn’t appear chastened or remorseful. Nor did he seem defiant or smug or even insincere. He looked disoriented, like a jet-lagged space traveller just arrived from Planet Stumpf, where deference to him is a natural law and 5,000 a commendably small number.
What was going through Stumpf’s head? New research suggests that the better question may be: What wasn’t going through it? The historian Henry Adams was being metaphorical, not medical, when he described power as “a sort of tumor that ends by killing the victim’s sympathies.” But that’s not far from where Dacher Keltner, a psychology professor at UC Berkeley, ended up after years of lab and field experiments. Subjects under the influence of power, he found in studies spanning two decades, acted as if they had suffered a traumatic brain injury—becoming more impulsive, less risk-aware, and, crucially, less adept at seeing things from other people’s point of view. Sukhvinder Obhi, a neuroscientist at McMaster University, in Ontario, recently described something similar. Unlike Keltner, who studies behaviours, Obhi studies brains. And when he put the heads of the powerful and the not-so-powerful under a transcranial-magnetic-stimulation machine, he found that power, in fact, impairs a specific neural process, “mirroring,” that may be a cornerstone of empathy. Which gives a neurological basis to what Keltner has termed the “power paradox”: Once we have power, we lose some of the capacities we needed to gain it in the first place.
That loss in capacity has been demonstrated in various creative ways. A 2006 study asked participants to draw the letter E on their forehead for others to view—a task that requires seeing yourself from an observer’s vantage point. Those feeling powerful were three times more likely to draw the E the right way to themselves—and backwards to everyone else (which calls to mind George W. Bush, who memorably held up the American flag backwards at the 2008 Olympics). Other experiments have shown that powerful people do worse at identifying what someone in a picture is feeling, or guessing how a colleague might interpret a remark. The fact that people tend to mimic the expressions and body language of their superiors can aggravate this problem: subordinates provide few reliable cues to the powerful. But more important, Keltner says, is the fact that the powerful stop mimicking others. Laughing when others laugh or tensing when others tense does more than ingratiate. It helps trigger the same feelings those others are experiencing and provides a window into where they are coming from. Powerful people “stop simulating the experience of others,” Keltner says, which leads to what he calls an “empathy deficit.”
Less able to make out people’s individuating traits, leaders rely more heavily on stereotype. And the less they’re able to see, other research suggests, the more they rely on a personal “vision” for navigation. Is there nothing to be done? No and yes. It’s difficult to stop power’s tendency to affect your brain. What’s easier—from time to time, at least—is to stop feeling powerful. Insofar as it affects the way we think, power, is not a post or a position but a mental state. Recount a time you did not feel powerful, his experiments suggest, and your brain can commune with reality.3) Asset managers braced for hefty investment research bill
[Source: Financial Times
Asset managers, banks and brokers are locked in fierce negotiations over the cost of investment research ahead of the introduction of the far-reaching Mifid II rules in just over six weeks. The rules will force asset managers to split out the cost of research, which is used by portfolio managers to help make investment decisions, from the cost of buying and selling securities. According to a survey of 365 individuals from 330 asset managers and other investors across Europe who were involved in using, producing or procuring investment research, the median cost of equity research is expected to be 10 basis points, or 0.1 per cent, of assets under management a year. The figure is far more than the estimated 1bp research cost some asset managers, including Man Group and Jupiter, have suggested in recent months.
Jamie Carter, chairman of New City Initiative, a group of independent asset managers, said the numbers suggested by CFA members tallied with what he expected, but there are concerns among some fund houses about how research costs would hurt profit margins. “The costs have been coming down; brokers have been refining prices. There is now more sensible pricing,” he said. “[But] research is still a high cost. The lower your assets under management, the more difficult it is [for the fund house].” Earlier this year, Oliver Wyman, the consultancy, predicted the additional costs imposed by the Mifid II regulations could lead investment managers to cut spending on research by about $1.5bn. That figure could rise to as much as $3bn in the event of a price war, the company suggested. The survey by the CFA Institute found that half of those polled suggested equity costs would range from 5bp to 20bp. Respondents expected to spend much less on fixed income, alternative and quant research.
Fund managers are of the view that the market has not really established what research is worth yet. Maybe in a year or two’s time, the market will settle down and price more accurately. The CFA study also found that although the introduction of the rules is just weeks away, a fifth of asset managers are yet to decide whether or not to cover the cost of research from their own profit and loss account or pass it on to investors. Smaller asset managers are more likely to be undecided, according to the CFA, suggesting they were less able than big asset managers to take the profit hit that absorbing research will entail.4) China’s growth miracle has run out of steam
[Source: Financial Times
China’s 19th Communist Party congress ended last month with an indication that Xi Jinping’s new administration plans to rein in debt by abandoning the country’s long-term economic targets and allowing gross domestic product growth to fall. Typically, analysts assume that changes in reported GDP reflect movements in living standards and productive capacity. In China, however, this is not the case. Local governments are expected to boost spending by whatever amount is needed to meet the country’s targets, whether or not it is productive. GDP growth is not the same as economic growth. Consider two factories that cost the same to build and operate. If the first factory produces useful goods, and the second produces unwanted ones that pile up as inventory, only the first boosts the underlying economy. Both factories, however, will increase GDP in exactly the same way.
Most economies, however, have two mechanisms that force GDP data to conform to underlying economic performance. First, hard budget constraints, which set spending limits, drive companies that systematically waste investment out of business before they can substantially distort the economy. Second, there is a market-pricing factor in GDP accounting that when bad debts caused by wasted investment are written down, the value-added component of GDP and the overall level of reported growth are reduced. In China, however, neither mechanism works. Bad debt is not written down and the government is not subject to hard budget constraints. It is the government sector that is mainly responsible for the investment misallocation that characterizes so much recent Chinese growth.
The implications are obvious, even if most economists have been surprisingly reluctant to acknowledge them. Anyone who believes there has been a significant amount of wasted investment in China must accept that reported GDP growth overstates the real increase in wealth by the failure to recognise the associated bad debt. Were it correctly written down, by some estimates GDP growth would fall below 3%. Historical precedents suggest the potential magnitude of this overstatement. Japan’s economy in the 1980s, for example, had distortions that resemble those of China today. Although not nearly as extreme, Japan too suffered from a very low consumption share of GDP and an overreliance on investment that, by the 1980s, had veered into substantial misallocation. In the early 1990s, Japan’s reported GDP comprised 17% of the overall global total. But once credit growth stabilised, Japan’s share of global GDP began to plummet, and has since fallen by nearly 60%. The same happened to the former USSR. It grew so quickly after the second world war that by the late-1960s it comprised 14% of global GDP, similar to China today, and was widely expected to overtake the US. But two decades later, its share of global GDP had fallen by more than 70%.
These cases may appear shocking, but, like China today, 1980s Japan and 1960s Russia lacked the mechanisms to account for wasted investment in reported GDP. At their peaks, growth for each country was seriously overstated by the failure to write down the waste, and understated once debt levels stabilised. The implications are clear. China’s growth miracle has already run out of steam. It is only by allowing debt to surge that the country is able to meet its GDP targets. This may be why President Xi has been eager to stress more meaningful goals, such as increasing household income.
5) Free money: The surprising effect of a basic income supplied by government
Skooter McCoy was 20 years old when his wife, Michelle, gave birth to their first child, a son named Spencer. It was 1996, and McCoy was living in the tiny town of Cherokee, North Carolina, attending Western Carolina University on a football scholarship. Between fatherhood, football practice, and classes, though, he couldn’t squeeze in much part-time work. Michelle had taken an entry-level job as a teacher’s aide at a local childcare center right out of high school, but her salary wasn’t enough to support the three of them. Then the casino money came. Just months before Spencer was born, the Eastern Band of Cherokee Indians opened a casino near McCoy’s home, and promised every one of its roughly 15,000 tribal members—among them Skooter and Michelle—an equal cut of the profits. The first payouts came to $595 each—a nice little bonus, McCoy says, just for being. “That was the first time we ever took a vacation,” McCoy remembers. “We went to Myrtle Beach.” The checks covered the family’s car payments and other bills. “It was huge,” McCoy says. Two decades later, McCoy still sets aside some of the money the tribe gives out twice a year to take his children—three of them, now—on vacation. The casino money made it possible for him to support his young family, but the money his children will receive is potentially life-altering on a different scale.
These unconditional cash disbursements go by different names among the members of the tribe. But a certain kind of Silicon Valley idealist might call it something else: a universal basic income. The idea is not exactly new—Thomas Paine proposed a form of basic income back in 1797—but in this country, aside from Social Security and Medicare, most government payouts are based on individual need rather than simply citizenship. The Eastern Band of Cherokee isn’t the only group whose members get unconditional cash: The Alaska Permanent Fund has been giving $1,000 to $2,000 a year to its citizens for decades, and other Native American tribes have also divided up casino revenues. But the Cherokee example is among the most researched and three decades of longitudinal research backs up McCoy’s anecdotal evidence that the money has had profound positive effects. As the richest people in America fixate on how to give money to the poorest, the Cherokee program is a case study of whether a basic income is in fact a practical proposal for alleviating economic inequality or just another oversimplified, undercooked Silicon Valley fix to one of the most intractable problems our society faces.
During his 11 years as a high school football coach, and now working at the Boys’ Club, Skooter McCoy has seen just about every way that the casino money can be wasted. He remembers two football players who, after graduation, flew from Asheville to Key West and then road tripped their way back up the coast, stopping in beach town after beach town, and burning through tens of thousands of dollars of their newfound wealth. The money hasn’t exempted the community from the drug epidemic that has swept through so much of Appalachia, either. In fact, according to McCoy, when the checks come out twice a year, there seems to be an uptick in overdoses. “There are times when some people say members don’t even get a check, because they’re indebted to a dealer,” McCoy says. “When they get their check, they hand it right over.” As with any program, there are infinite opportunities for abuse and bad decision-making. But over time, the tribe has made tweaks to try to prevent recklessness. The tribal council recently passed legislation, for instance, that staggers the minor’s fund payouts. Now the tribe will give members $25,000 when they turn 18, $25,000 when they turn 21, and the rest when they’re 25.
The true impact of the money on the tribe may not really be known until Spencer’s generation, the first born after the casino opened, is grown up. For the techies backing basic income as a remedy to the slow-moving national crisis that is economic inequality, that may prove a tedious wait. Still, if anything is to be learned from the Cherokee experiment, it’s this: To imagine that a basic income, or something like it, would suddenly satisfy the disillusioned, out-of-work, Rust Belt worker is as wrongheaded as imagining it would do no good at all, or drive people to stop working. There is a third possibility: that an infusion of cash into struggling households would lift up the youth in those households in all the subtle but still meaningful ways, until finally, when they come of age, they are better prepared for the brave new world of work, whether the robots are coming or not.6) Could climate change affect people’s personalities?
People's personalities may be shaped by the temperatures of the places in which they grew up, a new study suggests. This could mean that as climate change influences temperatures around the globe, shifts in personality may follow. The idea that someone's personality may be affected by where that person lives is not new. Previous research has suggested that many aspects of human personality vary from one geographical region to another. But the causes of these personality differences have remained unclear. One potential explanation is temperature. Temperature differences might shape personality by influencing people's habits. For instance, temperature might have an impact on whether people like exploring their surroundings, interacting with others, trying new activities or engaging in collective outdoor work, such as farming.
But instead of simply looking at whether people grew up in hot or cold climates, the researchers took a more nuanced approach, looking at whether people grew up in milder climates, where temperatures are closer to about 71 degrees Fahrenheit (22 degrees Celsius), or if they lived in places with more extreme temperatures. The scientists analysed data from more than 5,500 people from 59 Chinese cities and data from about 1.66 million people from about 12,500 ZIP codes in the United States. They examined data from personality questionnaires as well as the average temperatures of places where those people grew up. The scientists discovered that the people who grew up in climates with milder temperatures were generally more agreeable, conscientious, emotionally stable, extroverted and open to new experiences. These findings held true for people in both countries, despite gender, age and average income.
It's possible that mild temperatures can influence personality by encouraging social interactions and supporting a wider range of activities, the researchers said. Note that these new findings do not suggest that climate was the sole factor that shaped a person's destiny. For instance, the study found that despite living in climates that are similarly harsh, people in certain Chinese regions differ, personality-wise, from people living in northern states in the U.S., suggesting that other factors aside from temperature play a role. For example, in China, where people are relatively poor compared with those living in the United States, those "who live in the harsher climates of Heilongjiang, Xinjiang and Shandong have a more collectivist personality than their compatriots living in the more temperate climates of Sichuan, Guangdong and Fujian," Van de Vliert said. In contrast, in the United States, those who live in the harsher climates of North and South Dakota, Montana and Minnesota have a more individualist personality than their compatriots in the more temperate climates of Hawaii, Louisiana, California and Florida.7) GE losing its industrial crown shows nothing lasts forever
[Source: Financial Times
GE was the world’s largest company by market value in the 1990s, and it is the only ever-present member of the Dow Jones Industrial Average. During the 1990s, under the much-lauded leadership of Jack Welch, it became a darling of investors and management gurus everywhere. It built up GE Capital to become a huge player in finance and even controlled NBC, one of the big US television networks. And it still manufactured seemingly everything, from light bulbs to jet engines. The last year has seen the stock plummet and the exit of Jeff Immelt, Mr Welch’s carefully picked successor. NBC and the financial services arm are long gone. This week, the new CEO announced GE would be cutting its dividend, for the second time since the crisis, and exiting more businesses, including even lighting. GE is still worth $150bn in the eyes of the market, and has a huge array of very powerful businesses. The story is far from over. However, it is worth noting how much value GE had already destroyed.
If one was to look at which companies had contributed most and least to the S&P 500 for this century (since December 31, 1999, when stocks were near a historic top), Apple has added the most value. The company responsible for losing the most market value, in terms of fallen market cap, was GE. Remarkably it beat disaster stories such as Lucent, Nortel Networks, WorldCom or AIG for this dubious honour. GE’s brilliance in the 1990s had hinged on being in some of the right industries at the right time, with what in hindsight looks like short-termism. There are some more lessons from the analysis. First, valuation matters. GE was overpriced in 1999, as investors decided it was worth paying for the privilege of having Mr Welch allocate capital for them. Even more strikingly, the US company to destroy the fourth most value so far this century is Cisco. On its face, this is amazing. The internet was in its infancy in 1999, and Cisco has provided the routers to enable its growth. But it was absurdly overpriced back then, priced at close to 200 times earnings. You can spot the great trend of the future, and pick a company that will be one of the winners from it, but you can still lose a lot of money if you pay too much for it.
Second, even if I started by saying that nothing lasts forever, it does look as though something does: nicotine addiction. Altria is third on the list of companies creating most value. It has added even more market value than that phenomenon of our times, Amazon. A similar exercise for the UK and Japan, revealed that the companies to have added the most market cap this century were British-American Tobacco and Japan Tobacco. Even with increased regulations, with vast swaths of public space being barred to smokers by law across the western world, and cigarette advertising is now virtually nonexistent, Big Tobacco has piled on the billions for its investors.
Finally, we learn that commodity price cycles can be your friend. Oil was cheap in 1999 and so were energy stocks. Thus, ExxonMobil and Chevron are second and sixth on the list in the US, while Shell is sixth for the UK. Oil seems, like tobacco, to be almost a constant. It may fluctuate in price but it never goes Norway’s sovereign wealth fund announced this week that it was cutting back its investments in fossil fuels. It was doing it to reduce the country’s overall dependence on oil, which has been the source of the fund’s vast wealth, rather than to pursue any climate change goal. But it chimed with the growing movement to exclude carbon and fossil fuels from portfolios. Climate change is dominating hearts and minds, even if it remains politically contentious in the US. Oil prices have risen of late, and yet the price of energy stocks has not risen with them. Usually there is a strong correlation. Meanwhile, clean energy stocks continue to outperform. Is this the time when fossil fuels at last move into a permanent decline? Probably not. Nothing lasts forever and oil will run out some time, but we have learnt over the past decade that higher prices have a way of eking out more supply, as from shale. 8) Where do new words come from?
Every year about thousand new words are added to the Oxford English dictionary. Where do they come from and how do they make it in the everyday lives? With over hundred and seventy thousand words currently in use in the English language, it might seem we already have plenty. Yet as the world changes, new ideas and inventions spring forth and science progresses, our existing words leave gaps in what we want to express and we fill those gaps in several ingenious practical and occasionally peculiar ways. One way is to absorb a word from another language. English has borrowed so many words over its history that nearly half of its vocabulary comes directly from other languages.
Sometimes this is simply because the thing the word describes was borrowed itself. Rome and France were legal and religious concepts like altar and jury to medieval England, while trade brought trade crops and cuisine like Arabic coffee, Italian spaghetti and Indian curry. But sometimes another language has just the right word for a complex idea or emotions like “Naivete”, “Machismo” or “Schadenfrende”. Scientists also use classical languages to name new concepts. “Clone” for example was derived from the ancient Greek word for twig to describe creating a new plant from a piece of the old.
Another popular way to fill a vocabulary gap is by combining existing words that each conveys part of the new concepts. This can be done by combining two whole words into a compact word like “Airport” or “Starfish” or by clipping and blending parts of words together like spork, brunch or internet. And unlike borrowings from other languages, these can often be understood the first time you hear them. Sometimes a new word isn’t new at all. Obsolete words gain new life by adopting new meaning. Villain originally meant a peasant farmer but in a twist of aristocratic snobbery it came to mean someone not bound by the knightly code of chivalry and therefore a bad person. A geek went from being a carnival performer to any strange person to a specific type of awkward genius. And other times, words come to mean their opposite through irony, metaphor or misuse like when sick or wicked are used to describe something literally amazing. But if words can be formed in all these ways, why do some become mainstream while others fall out of use or never catch on in the first place?
Sometimes the answer is simple as when scientists or companies give an official name to a new discovery or technology. And some countries have language academies to make the decisions. But for the most part official sources like dictionaries only document current usage. New words don’t originate from above but from the ordinary people spreading words that hit the right combination of useful and catchy. Take the word meme coined in 1970s by socio-biologist Richard Dawkins from ancient Greek for imitation. He used it to describe how ideas and symbols propagate through a culture like genes through a population. With the advent of the internet the process became directly observable in how jokes and images were popularized at lightning speed. And soon the word came to refer to a certain kind of image; so meme not only describe how words become a part of language, the word is a meme itself. And there is a word for this phenomenon of words that describe themselves, “Autological”.9) Why plastic is no longer fantastic
Carlos Ferrando, a Spanish engineer-turned-entrepreneur runs a Spain-based design company, Closca. He has designed a stylish glass water bottle with a stretchy silicone strap and magnetic-closure mechanism that means it can be attached to almost anything, from a bike to a bag to a pushchair handle. The product comes with an app that tells people where they can fill their bottles with water for free. Ferrando’s aim is to persuade people to stop buying water in plastic bottles, thus saving consumers money — and reducing the plastic waste piling up in our oceans. “Bottled water is now a $100bn business, and 81% of the bottles are not recycled. It’s a complete waste — water is only 1.5% of the price of the bottle!” Ferrando says. Indeed, environmentalists estimate that by 2050 there will be more plastic in our oceans than fish — and that’s mainly down to such bottles.
Ferrando’s story is fascinating since it seems like a bellwether of our times, a symbol of millennial culture. For one thing, it shows how the cultural concept of cachet is changing. Three decades ago, conspicuous consumption — of handbags, shoes, cars etc — conferred social status. Indeed, the closing decades of the 20th century were a time when it seemed that anything could be turned into a commodity. Hence, the fact that water became a consumer item, sold in plastic bottles, instead of just emerging (for free) from a tap. Today, though, conspicuous extravagance no longer seems cool - or not, at least, for millennials. Recycling is fashionable. So is real bicycling. Plastic water bottles are so ubiquitous that they do not command status; instead, what many millennials and teenagers prefer to post on social media are “real” (refillable) bottles or even retro Thermos bottles.
The way these products come to market is also fascinating. If an engineer-turned-entrepreneur had wanted to fund a smart invention a few decades ago, he or she would have either raised a bank loan, begged for money from friends, or (during the 2002-2007 credit boom) maxed out on a credit card. Entrepreneurs are still using the last two options. But some (lucky) ventures are also tapping into the ever-swelling pot of money that is being earmarked in the asset management world for “corporate social responsibility” (CSR) investments. Indeed, the idea of investing in CSR-friendly start-ups is becoming so popular that even the Vatican is now getting on board.
For of-the-moment innovations there is the of-the-moment option. A few weeks ago, Ferrando posted details about his water-bottle venture on Kickstarter, appealing for people to donate $30,000 of seed money, and promising to give a bottle to anyone who provides more than $39 of “donations”. If he gets the funds, the company will produce bottles in grey and white; if $60,000 is raised, a multicoloured one will be made. This cannot be accurately described as equity finance, since none of the donors has a stake. Nor is it debt. Instead, it is almost a pre-sale of prod-cuts — in a manner that tests demand in advance, and creates a potential crowd of enthusiasts. Either way, this old-fashioned community funding with a digital twist is supporting a growing array of projects ranging from films to ventures to card games, videos, watches and so on.10) A day in the life of a corpse burner
Gagan Chaudhary belongs to the Dom community, a low-caste community of corpse-burners in Varanasi. He works at Manikarnika ghat, the largest and most important open-cremation site on the banks of the Ganga. “When I was 13 years old, I began drinking,” Chaudhary says in Hindi. “It was the only way I wouldn’t faint from the smell of melting flesh.” The 27-year-old has seen death in every form. “I’ve seen bodies cut up and stitched back to a whole. I’ve seen headless corpses; I’ve seen bodies covered with scars. And I’ve burnt them all,” he says. As a child, Chaudhary recalls working at the ghats, swallowing sooty black smoke while hunger swelled his stomach. “I have been working since the age of 8, right after my father began drinking more and working less. He still burns bodies, but when we were young, my elder brother began working at the cremation ground with him, and soon I was brought on board to follow the family tradition. My father is an alcoholic, and he would spend all his money on drinking. So the burden of earning for the family came on to my brother and me.”
In Varanasi, the profession of cremating bodies is carried forward through the law of inheritance. The Doms, the lowest rung of the social ladder, were given the task centuries ago, and they came to be known as “untouchables”. Traditionally, only the men of the community work, the women are relegated to the confines of their homes. Chaudhary, who is unmarried, works relentlessly, burning six-seven bodies a day. He earns about Rs150 for each. But the task of burning is arduous. Each body takes about 4-5 hours. Chaudhary works for close to 18 hours a day, usually in loose trousers, with a scarf wrapped around his face to protect himself from the heat of the flames. He often removes his flimsy slippers for better traction when he has to run from one pyre to another, when he is handling more than one corpse. If you are a corpse-burner in India, your time is not your own. And in Varanasi, it can be a round-the-clock job. “We work for maaliks (richer Doms within the community) who hire us as labourers,” he says. The maaliks interact directly with the families, with payment depending on the amount of wood used, anything from Rs6,000-7,000 to Rs10,000-12,000. Labourer Doms only get a fraction of this money. “Sometimes they even gift a cow,” adds Chaudhary.
Chaudhary’s friend Ganpati sifts through the ash that is swept into the river from the cremation ground, to scrounge for remnants of gold and silver jewellery. “I skim for jewellery which families have left on the dead out of respect. But we don’t care; we have to be heartless in these matters. We are poor and this is god’s way of helping us. It doesn’t matter how long I am in the river—1 hour, 2 hours, 4 hours or 6 hours—no matter what the weather is, whether it is raining or it’s terribly cold, I work because it’s better than wading through fire.”
Alcohol and marijuana are a few ways the men cope. Chaudhary speaks quickly: “Drugs and alcohol are available in plenty. I got addicted because it dulled my senses and allowed me to work among decomposing corpses.” Drugs kept him awake, high-strung, and, therefore, efficient. “There were times when the sight of a body paralysed me. But I was forced to work, I had no choice, and ganja (marijuana) helped. I’ve seen bodies where the skin has been ripped apart; I’ve seen bodies with tongues hanging out and blood flowing from orifices. All this while growing up—and you wonder why I smoke up?” he laughs.
Manikarnika ghat, believed to be a gateway to heaven by devout Hindus, is hell on earth for Doms like Chaudhary and Ganpati. Yet the young men appear to be proud of their identity. “This is a kind of work which has no respect. Many will abuse you; they’ll spit on you. It is extremely debilitating, because they’ll make you think that you’re good for nothing. For the longest time, I believed them. I thought I was useless. But without us, who will get rid of the bodies?” asks Chaudhary. He adds “Every time I felt disappointed, I had to calm down and tell myself, ‘I am the one giving mukti to everyone—I am the one liberating Hindus from the cycle of rebirth by cremating them in these holy grounds. There are still some people who call me achhut (untouchable) even today, but when they die, you know, they will come to this very cremation ground,” he says, “where I will beat their bodies four-five times with my bamboo stick. I will break their skulls during kapalakriya. In their death, they will come to me and I will have my revenge.”