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Ten interesting things we read this week

Some of the most interesting topics covered in this week's iteration are related to 'Improving India's mobile service', 'Parallels between GM and Tesla', and 'Why are undertakers worried even in the burgeoning death industry'

Published: Apr 21, 2018 06:50:15 AM IST
Updated: Apr 27, 2018 02:09:41 PM IST

Ten interesting things we read this weekImage: Shutterstock

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 favorite 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 ‘Improving India’s mobile service’, ‘Parallels between GM and Tesla’, and ‘Why are undertakers worried even in the burgeoning death industry’.

Here are the ten most interesting pieces that we read this week, ended April 20, 2018. 

1)    Lazy fund managers lead to lousy returns [Source: Financial Times]
Much has been said and written about the poor returns achieved by many active fund managers for their clients. Some critics focus on high expense ratios, but the author, Tom Brown’s experiences over the past 30 years as a director of seven quoted British companies suggests there is a deeper problem. He says that most of the fund managers he has encountered lacked in-depth knowledge of his companies, which ranged from companies in the FTSE 250 to an AIM-quoted group, because they simply did not exert themselves. Rather than conduct rigorous due diligence before investing, they seldom left their offices. Instead they relied on weak and frequently partisan analysis provided by brokers’ analysts, or on a 45-minute sales pitch by the investee company’s chief executive and finance director.

Tom couldn’t recall even one fund manager asking to visit his operations or meet more executives before investing. They therefore became shareholders in companies that they barely understood. Once invested, few fund managers put in much effort to get to know the companies better. Although most companies welcome visits by fund managers, most of them are unwilling to leave London — unless it sounds like fun. He says that most investors limit their contact to the “horse-and-pony” shows that companies offer with their results, but some do not bother even with these. Such sessions are much more productive if the fund manager has a reasonable understanding of the business, but since most do not, it encourages management teams to put on a great show. Instead of challenging executives on the key issues, he found fund managers typically concentrated parrot-fashion on rubrics like “increase margins”, “cut costs”, or “improve cash flow”.

According to him, most are awful at appraising management’s quality — they tend to work backwards from short-term earnings per share, or even worse from the share price — and their interventions to demand or to block management change are often hopelessly misguided. He recalls an incident at one FTSE 250 business wherein a recession had increased cash inflow because it needed less working capital. Tom was asked to meet two fund managers who had a proposal. Instead of recognising that the situation was temporary, they wanted Tom to repackage the company’s debt and sell it to investors, backed by what they thought was healthy long-term cash flow. These were managers of two very well-known retail funds and each had invested several million pounds (of other people’s money) in the business.

In recessions, fund managers often demand “decisive action”, such as firing irreplaceable skilled people and selling underperforming subsidiaries. Removing a lossmaker immediately increases reported profit, but over time it can cause great reductions in value. When the 2008 financial crisis hit Spain particularly hard, a support services company of which Tom was a director was pressed to sell or even liquidate its market-leading business there — luckily the company resisted and it made an excellent recovery.

The root cause of actively managed funds’ underperformance according to Tom is the very short-term focus of most fund managers. Rather than getting to know the company, they push for rapid hikes in the share price. They tend not to support investment but instead want short-term profits that facilitate increased dividends and share buybacks. Why this approach falls flat is exemplified by S&P data which shows that 75 per cent of actively managed UK equity funds underperformed over the past 10 years.

2)    The rise of informational economy threatens traditional companies [Source: Financial Times]
Jeff Bezos has become the world’s richest man, with a fortune of about $125bn, because the Amazon founder was among the first to understand the new rules of data capitalism. The reason why he grasped those rules quicker than most is because he wrote most of them himself. His letters to the company’s shareholders, published every year since Amazon went public in 1997, are the best explanation for how to thrive in the digital economy. A short summary of those letters - obsess about customers, invest for the long term, exploit your network of customers to grow further, and focus on delivering the best customer experience and the lowest price via an online platform.

At Amazon, Mr Bezos has made that vision work spectacularly well in practice. A new book from Viktor Mayer-Schönberger and Thomas Range suggests how it might work in theory, too. In Reinventing Capitalism in the Age of Big Data, the authors make two provocative, interrelated arguments. First, they contend that data have largely superseded price as the most effective signaling mechanism in the economy. Second, data-rich markets will increasingly render the traditional company obsolete, with massive consequences for our economies and workforces. For centuries, price has worked as a miraculous market mechanism, connecting buyers and sellers, consumers and producers. Some $100tn of transactions take place around the world each year guided by the “invisible hand” of the market. The intriguing possibility of today, though, is whether data-rich platforms have, in some areas, invented a better ordering mechanism that can structure information and reduce ignorance. They can now match buyers and sellers taking into account multiple preferences, such as personal taste, timing and convenience, rather than just price.

If data does indeed supersede price as more efficient economic information capsules, then that will threaten many traditional companies. In essence, companies exist because they can co-ordinate some human action more efficiently than decentralized markets. They act as legal entities, raise capital, bundle risks, and separate management of assets from ownership. But the authors argue that the rise of data-rich “superstar” firms, such as Google, Apple, Alibaba and Samsung, will suck the life out of many traditional companies. Those that know how to exploit the informational advantages of data will flourish; the rest will die.

This increasing concentration of market power will have social and economic impacts that will need to be carefully managed. It may also act as poison to innovation and competition. Innovation will increasingly result from feeding data into machine learning systems to understand consumers’ needs. That will make it all the more difficult for disruptive start-ups to succeed.  “So long as innovation was based on human ingenuity, then a small start-up with a smart idea could dislodge a powerful incumbent,” they said. “But in the future those companies that have the data are going to be more and more innovative. A small start-up cannot hope to compete.”

The authors believe governments should levy data “taxes” on the superstar companies, allowing challengers to access some of their informational assets to stimulate competition. This is similar to German car insurance market, where the bigger players are forced to share data with smaller competitors.

3)    Improving India’s mobile phone service [Source: Livemint]
Brooking India fellow Rahul Tongia in this piece talks about India’s notoriously bad cellular connectivity, especially in terms of quality—call drops, for instance. Sure, prices are about the lowest in the world, and the overall footprint is reasonable, but even urban areas, especially Delhi, have worse than average quality. According to him, a simple “solution” would be to build more cell towers. This is technologically easy, but (1) it’s expensive; and (2) zoning would remain a challenge—getting permissions to put up cell towers is a tricky affair. Instead, he asks why not offload much of the traffic to “femtocells”—tiny, licence-free (and sometimes individual-user) “cell towers” installed by end consumers?

According to him, contrary to popular belief, we suffer poor connectivity not because existing towers are too far away (their reach is many kilometres)—but usually because they are overloaded. In a (say) kilometre radius, one may have hundreds of people whose signal is strong enough to connect, but the spectrum cannot handle that many simultaneous users owing to congestion. The rising requirement for data (especially for video) needs far greater bandwidth than for voice calls. The only solution, short of enhancing our spectrum allocations or significant technology upgrades, is to make smaller but many more cells. But this would lead to economic and zoning problems. ‘Femtocells’ however provide a solution. Being ultra-low power, these can be owned and installed by the end consumer, like a home Wi-Fi router. The analogy to a home router goes beyond size or rough cost as femtocells use the end user’s broadband or internet connection to back-haul traffic to the rest of the system. If you have a broadband connection, you could plug the ethernet cable into the femtocell and automatically use this for your cellphone instead of the overloaded neighbourhood cell tower.

The telecom company could offload traffic to the femtocell and the consumer would get better connectivity, especially in overloaded or hard-to-reach areas: a win-win situation. Consumers might pay for the femtocell, but, in return, they could save minutes on their mobile plan, or get other rebates from the telecom carrier. The femtocell could be configured for one user as well as a restricted set of users. Similarly, telecom companies should explore Voice over Wi-fi (VoWifi). In the same way that data traffic can use broadband instead of 3G/4G cellular, voice calls could directly use any available Wi-Fi signal with similar back-haul over broadband. Many advanced phones have VoWiFi built in (or it’s a software update away), but the carriers need to enable such features—none in India do, while all four major US carriers do. He notes that this is superior to WhatsApp or Skype calls, which use third-party apps. VoWiFi is direct and seamless and uses regular phone numbers, just like iMessage in an iPhone uses data for messaging parallelly with carrier texts/SMSes, based on what is available.

As to why we don’t have femtocells, he says that buying the required hardware is only half the challenge. Both femtocells and VoWiFi need carrier coordination and configuration to work, else your phone won’t know which solution to use. Carriers must enable such change, and the good news is these need not reduce revenue since they can bundle this with their calling plans. Femtocells also require regulatory approval so that they are licence- and restriction-free (from an end user’s perspective). According to Mr. Tongia, the actual power level is so low that it’s comparable to home Wi-Fi routers, or even less, and shouldn’t need zoning and city/municipality permissions.

He also discusses the required minor policy or regulatory tweaks. First, broadband providers should not deem such usage as violating their terms of service. Second, telecom rules should allow such interfacing of telephony with IP (internet protocol)—at present, voice-over IP (VoIP) is disallowed in India. According to Mr Tongia, banning VoIP was a commercial choice, given that voice companies paid hefty licences for their services. But he says femtocells deserve an exception since they’re reusing already licensed spectrum, as should VoWiFi, because it doesn’t bypass the licence-holding telephony carriers.

4)    How social media can reveal overlooked drug reactions [Source:]
This article shows how social media can play an important role in analyzing patients’ interactions online to improve the available treatments. It illustrates the case of Allison Ruddick, for whom after the initial diagnosis of cancer, it wasn't clear if the cancer had metastasized. To search for answers she went to social media. Under the hashtags #colorectalcancer and #nevertooyoung on Facebook, Twitter and Instagram, other patients were sharing a fuller picture of their experience with cancer treatments. Later she found even more advice on specialized message boards. Patients posted everything from the details of their surgeries to the ice packs they liked best as they recovered. "These weren't things that my doctor could tell me, and as much as I appreciate their expertise, it's also really limited by the fact that they've never really experienced any of this themselves," Allison said.

Then there’s the case of a patient who came to Stanford University dermatologist Bernice Kwong's office with an unusual complaint. "I've noticed that when I work out, I just get really hot," he told Kwong. "I don't sweat anymore, and I used to sweat so much." He was taking a drug called Tarceva, or erlotinib, that's used against lung cancer. At first, Kwong thought the problem might be hormonal. But, she was alarmed when two more of her patients reported the same thing. But she hadn't seen any reports before of a lack of sweating, hypohidrosis, as a side effect for Tarceva. Given her sample size of three patients was small, she turned to online forums where people discussed their treatments and side effects. In fact, hundreds of thousands of people participate in support groups and communities she'd looked at on the website Inspire. She partnered with the site with the idea that its trove of patient reports could connect more dots between hypohidrosis and Tarceva.

Inspire's focused groups are filled with patients' experiences with diseases and treatment, so analyzing posts required less filtering than Facebook or Twitter data would, said Nigam Shah, a Stanford University bioinformatics specialist who collaborated with Kwong. Kwong, Shah and their colleagues used a deep learning algorithm to process the phrases surrounding reports of symptoms, basically finding contextual clues to identify the different ways patients referred to side effects. In 8 million posts on Inspire from a 10-year period, 4,909 users mentioned Tarceva, or erlotinib generically. Although clinical reports don't link the drug and hypohidrosis, 23 patients wrote about the medicine and loss of sweating in the same post — a statistically significant connection, Kwong said. The research group's findings were published in JAMA Oncology in March.

From numbers alone, it's no surprise that clinical trials for drugs don't pick up every side effect. The US FDA first approved Tarceva in 2004 on the basis of a trial that enrolled 731 patients, 488 of whom received the drug. Uncommon effects might not show up in a group that size. On Inspire's message boards, more than 10 times as many patients reported using Tarceva, so it's reasonable to imagine that online posts could include reports of rarer side effects. And while drug trials do collect data on side effects, their overriding goal is to find out whether or not a drug works, said Dr. Aaron Kesselheim, a professor of medicine at Harvard University. "After a drug is approved, it is absolutely essential to continue to observe, follow and study the drug rigorously as it's used in a larger population to try to really get a handle on the safety of the drug," he said.

In terms of extending studies to mine even bigger networks, like Twitter or Facebook, for potential side effects, Kesselheim points to issues of representation and privacy. As with any analysis, a deep learning model like the one Shah used on the Inspire message boards can only make conclusions about the information it sees. There's also the issue of privacy — patients' health records are protected by the Health Insurance Portability and Accountability Act of 1996, whereas public data online aren't, Kesselheim said. For Stanford researcher Shah though, this wasn't an issue. Inspire's privacy statement tells patients their posts may be used for research if they're not private.

5)    China moves its factories back to countryside [Source: Financial Times]
After decades of urbanisation and rural neglect, China’s Communist party is seeking to revitalise the countryside, where wages and standards of living have stagnated compared with those of big cities. The shift is embodied in rural Henan’s Hua county, where the first “satellite factories”- garment factories relocated wholesale from wealthier coastal regions, were rebuilt in rural villages with funding from poverty alleviation initiatives. “We draw a circle on a map and, if there are enough villagers to employ here, we build a factory,” says Shao Deming, manager of Jintai Garment, based in the affluent coastal province of Zhejiang. Mr Shao began operating small textile factories in Henan’s Hua county in 2015, making jackets for Chinese outerwear brand Bosideng. He now has 17, employing 2,600 workers. The county pays for the buildings while Jintai pays for the equipment and workers, saving about Rmb1.5m ($235,000) per factory opening, according to Mr Shao.

President Xi Jinping has made rural revitalisation a priority for his second term, indicating he would push ahead despite a lack of success by his predecessors dating back to Hu Jintao. Every year China’s State Council devotes its first official policy document to agriculture. This year it laid out a strategy — and expanded party control — over rural economic development. The signaling from the party’s upper echelons suggests there will be more programmes such as Henan’s satellite factories to lure young workers back home. Numerous counties in the western region of Xinjiang and Shandong province have replicated Henan’s model, building small factories making garments that require low-skilled workers and can be easily shipped from anywhere.

The relocations make economic sense. The days of cheap manufacturing on China’s eastern coast, where wages have rocketed, are over. In Hua county, workers earn an average Rmb2,000 a month for seven-hour shifts in a five-day week, lower than the average migrant worker salary of Rmb3,410 in Guangdong province, according to China’s national statistics bureau. For villagers in a region where job opportunities are scarce, the work provides a stable, if not luxurious, income source close to home. Food security also is a driving factor behind rural revitalisation. China still largely depends on small-plot farming because of Communist land policies that hamper large-scale agribusiness. But individual plots are often left fallow by people seeking higher wages in cities. That has put China dangerously close to dipping below its self-ascribed “red line”, the minimum level of arable land needed to feed itself.

Hua county is no exception. It has remained a big producer of sorghum, used for feeding livestock and as a stabiliser in processed foods. The satellite factories dotting Hua county design their shifts so people still have time to plant crops each day before or after work. However, bringing workers back to villages can mean that labour issues come with them. In the first two months of 2018, Henan experienced the highest number of strikes in mainland China. China also runs the risk of subsidising exporters as it provides capital investment into rural areas. It was penalised in 2015 by the World Trade Organization for giving tax breaks to exporters in seven sectors, including textiles.

6)    To understand the future of Tesla, look to the history of GM [Source: HBR]
By the middle of the 20th century, Alfred P. Sloan had become the most famous businessman in the world. Known as the inventor of the modern corporation, Sloan was president of General Motors from 1923 to 1956 when the U.S. automotive industry grew to become one of the drivers of the U.S. economy. Today, there’s the Alfred P. Sloan Foundation, the Sloan School of Management at MIT, the Sloan program at Stanford, and the Sloan/Kettering Memorial Cancer Center in New York. Sloan’s book “My Years with General Motors”, written half a century ago, is still a readable business classic. But, Sloan wasn’t the founder of GM. Sloan was president of a small company that made ball bearings, which GM acquired in 1918. When Sloan became president of General Motors in 1923, it was already a $700 million company (about $10.2 billion in sales in today’s dollars).

The founder of GM was William (Billy) Durant. At the turn of the 20th century, Durant was one of the largest makers of horse-drawn carriages, building 150,000 a year. But in 1904, after his first time seeing a car in Flint, Michigan, he was one of the first to see that the future was going to be in a radically new form of transportation powered by internal combustion engines. He bought a struggling automobile startup called Buick. Durant was a great promoter and visionary, and by 1909 he had turned Buick into the best-selling car in the United States. Searching for a business model in a new industry, and with the prescient vision that a car company should offer multiple brands, that year he bought three other small car companies — Cadillac, Oldsmobile, and Pontiac — and merged them with Buick, renaming the combined company General Motors. He also believed that to succeed the company needed to be vertically integrated and bought up 29 parts manufacturers and suppliers.

While Durant was a great entrepreneur, the integration of the companies and suppliers was difficult. Durant was fired twice; once by his bankers due to $20 billion debt and then later again by his board (the DuPont family). The reason for being fired was Durant’s one-man show which was damaging the company. Then, Alfred Sloan became the president of GM and ran it for the next three decades. Durant tried building his third car company, Durant Motors, but got wiped out in the Depression in 1929. The company closed in 1931.

100 years later Elon Musk would see that the future of transportation was no longer in internal combustion engines and build the next great automobile company. Yet, as Durant’s story typifies, one of the challenges for visionary founders is that they often have a hard time staying focused on the present when the company needs to transition into relentless execution. Just as Durant had multiple interests, Musk is not only Tesla’s CEO and product architect, overseeing all product development, engineering, and design. At SpaceX (his rocket company) he’s CEO and lead designer overseeing the development and manufacturing of advanced rockets and spacecraft. He’s also the founder at Boring Company (the tunneling company) and cofounder and chair of OpenAI.

Even Musk has only 24 hours in a day and seven days in a week. Tesla now has a pipeline of newly announced products, a new Roadster (a sportscar), a semi-truck, and a hinted crossover called the Model Y. All of them will require execution at scale, not just vision. Unlike Durant, Musk has engineered his extended tenure, and this year he got his shareholders to give him a new $2.6 billion compensation plan if he can grow the company’s market cap in $50 billion increments to $650 billion. The board said that it believes that the Award will continue to incentivize and motivate Elon to lead Tesla over the long-term, particularly in light of his other business interests. Yet as Tesla struggles in the transition from a visionary pioneer to reliable producer of cars in high volume, one wonders if that $2.6 billion would be better spent finding Tesla’s Alfred P. Sloan.

7)    A shed the size of a town; what Britain’s giant distribution center tells us about modern life
[Source: The Guardian]
When you shop online, something, somewhere moves. The item is shifted off its shelf by human or robot and on to a chain of delivery mechanisms that takes it to your door. That item, and millions others like it, plus the machinery that handles them, needs space. The more we shop online, the more such space is needed. And with it comes the need for bigger boxes – or storage spaces. Interestingly, these boxes are of such importance that some are classed as “nationally significant infrastructure projects”, which means that national government rather than local authorities give them planning permission. Their scale challenges the conventions of town and country planning, pushing their designers and creators to find more convincing ways to respond. Imagine the space that is used to store and display a product in a traditional shop, and then imagine great dollops of it sucked from almost every high street and supermarket in the land to a centralised facility. Add it to the long-established need for physical shops to warehouse their goods.

Given these requirements, what you end up with is something like Dirft – the Daventry International Rail Freight Terminal – near Rugby, or the Magna Parks in Milton Keynes and Lutterworth: town-sized agglomerations, containing thousands of workers, made up of very big sheds. They are called distribution centres, which differ from what used to be called warehouses in the degree to which the buildings are integrated into logistical networks of trucks, trains, the internet and subsidiary distribution points. Dirft and the Magna Parks are what is called the “golden triangle”, a land of sheds, roads and marketing gerunds laid over the fields and towns of old England. In some accounts the triangle’s points are Leicester, Coventry and Milton Keynes and in others its sides are the M1, M6 and M42 motorways, but in either case it describes an area from where 85% of the population of Great Britain can be reached in four and a half hours, which is the maximum time an HGV driver can travel without taking a break.

The Dirft development’s origins lie in the mid-90s, when a freight rail connection was established, via Felixstowe docks and the then new Channel tunnel, into something called the Trans-European Transport Network. As the area had already been designated, in 1978, as a “motorway orientated growth point” the addition of the railport made it exceptionally fertile ground for the bumper crops of big sheds that then started to blossom there. There are now more than 6m sq ft of building with another 7.7m on the way. But, in a country where land is as constrained as in Britain, where it is a struggle to find space for other such essentials as new housing, the growth of big sheds is particularly hard to accommodate. If it is a fast-moving business, wherein a building 10 times the volume of St Paul’s Cathedral might go up in six months, it might take a decade to assemble a site out of former farmland, and win planning permission for it.

Simple as they may look, distribution centres are sophisticated structures. The machinery that moves stuff around is constantly evolving. Their playing field-sized floors have to be exceptionally level, as small unevenness could cause the high fork-lift trucks they use to lean unacceptably at the top. Years of competition have made their structure as spare and economical as can be. It is tempting to say that these buildings make the internet visible, except that their visibility is strictly limited. Sometimes they get into the news when reporters, posing as warehouse workers, bring news of working conditions inside. Some users and owners are dismissive of press inquiries to a degree unusual in big, public relations-conscious companies. Tesco refused a request to see inside their Dirft base, which was possibly not surprising, but also to answer simple questions, such as: what are its dimensions? Ultimately, their scale and growth are a consequence of the fact that all that physicality and volume that the virtual world displaces has to go somewhere.

8)    IMF raps politicians’ obsession with manufacturing jobs [Source: Financial Times]
There is nothing special about manufacturing jobs, the IMF said in a recent hard-hitting response to politicians and economists who worry that without a strong industrial sector, economies will perform worse and inequalities will rise. Manufacturing does not play a unique role in productivity growth in advanced economies, is not a necessary stage in development for emerging economies and does little to protect any country from a rising gap between good and bad jobs, the fund found. Its research directly contradicts world leaders such as Donald Trump, who has put a “made in America” agenda at the heart of US economic policy and announced a series of trade barriers specifically to protect US manufacturing against the perception of unfair competition. With growth rates tending to slow and inequality rising in countries that moved furthest away from manufacturing, the fund acknowledged that there were superficial reasons to mourn such trends, but said the arguments did not stand up to more detailed scrutiny.

In advanced countries such as the US and EU, manufacturing has enjoyed rapid productivity growth in recent decades, but this rise was mostly the result of weaker industrial sectors moving to other locations rather than outperformance of the parts of industry that stayed. Labour intensive manufacturing moved to countries, predominantly in Asia, with low wages, allowing high tech parts of the sector to become more important, flattering the sector’s performance. Across the world, the share of manufacturing jobs and total manufacturing output remained constant over the past 50 years, suggesting industry was not a model of efficiency improvements.

When the IMF looked at manufacturing and service sector industries in more detail, it found there was “a sizeable overlap between labour productivity growth among the service and the manufacturing subsectors, with some service industries exhibiting productivity growth rates as high as the top-performing manufacturing industries”. Postal services and telecommunications, financial intermediation, and wholesale and retail trades which accounted globally for half of total employment in market services ranked in the top third of sectors for labour productivity growth.

In total, the IMF found that the shift in advanced economies from manufacturing to services had a “quantitatively negligible” effect on overall economic performance. In emerging economies, shifts in jobs types have been positive for productivity growth since 2000, “a period when labour has shifted from low-productivity agriculture to manufacturing in some cases, and to market services more prominently,” according to the research. The fund also had a reassuring message for poor countries worried about skipping the usual transition from agriculture to manufacturing to services as economic development progresses. “Skipping a traditional industrialisation phase need not be a drag on economy-wide productivity growth for developing,” it said.

The fund found that although industrial jobs tended to pay more for high, medium and lower skilled workers and there was a little less inequality in pay in the manufacturing sector, these facts could not explain the trends of widening income inequality over the past generation. Almost all the rise in inequality came from changes within the industrial and service sectors rather than from movements in jobs from one to the other, it found. “The key drivers behind greater pay inequality over time seem to be the dislocation of middle-skilled workers through technology and trade — and the resultant downward pressure on wages for medium- and low-skill jobs — rather than shifts in the relative size of employment between industry and services,” the report said.

9)    Why undertakers are worried even in burgeoning death industry [Source: The Economist]
America’s 2.7mn-odd deaths a year underpin an industry worth $16bn in 2017. The industry encompasses 19,000 funeral homes and over 120,000 employees. In France, the sector is worth an estimated €2.5bn ($3.1bn). The German market was worth €1.5bn in 2014 and employed nearly 27,000 people, a sixth of them undertakers. In Britain the industry, estimated to be worth around £2bn ($2.8bn), employs over 20,000 people, a fifth of them undertakers. In the coming decades, as baby-boomers hit old age, the annual death rate will climb from 8.3 per 1,000 people today to 10.2 by 2050 in America, from 10.6 to 13.7 in Italy and from 9.1 to 12.8 in Spain. Spotting the steady rise in clientele, money managers—from risk-seeking venture capitalists to boring old pension funds—have been getting into the death business. In North America the modern undertaker’s job is increasingly one of event-planning, said Sherri Tovell, an undertaker in Windsor, Canada. Among the requirements at her recent funerals have been a tiki hut, margaritas, karaoke and pizza delivery. Some people want to hire an officiant to lead a “life celebration”, others to shoot ashes into the skies with fireworks. Old-fashioned undertakers are hard put to find their place in such antics.

Then there’s the problem of cremation. In religious countries, burial is still the norm; Ireland buries 82% of its dead, Italy 77%. But over half of Americans are cremated, up from less than 4% in 1960, and this is expected to rise to 79% by 2035. In Boston, a Chinese delegation stocked up on free “Bereave-mints” but mainly came to learn about cremation, which rose in China from 33% in 1995 to 50% by 2012. In Japan, where the practice is seen as purification for the next life, it is nearly universal. An increasing number, including David Bowie, who died in 2016, was probably the best-known, are taking the direct-cremation route. In America a third of cremations are now direct. Cremation, direct or otherwise, is not the only rival to old-fashioned burial. A study in 2015 found that over 60% of Americans in their 40s and older would consider a “green” burial, with no embalming and a biodegradable casket, if any. Five years before the proportion was just over 40%.

Americans each year bury 70,000 cubic metres of hardwood, mostly bought at a hefty mark-up from undertakers—enough to build 2,000 single-family houses. They use 1.6m tonnes of reinforced concrete for vaults. Britain now has over 270 green cemeteries, and 9% of funerals are now green, according to SunLife, an insurer. Mr. Olson, a trained music teacher, bought a funeral business in Wisconsin, converted one of its two chapels into a dining hall and became the NFDA’s go-to guy for green funerals. Rather than just accommodating themselves to what their customers want, some undertakers are actually promoting change. Engineers have for decades searched for a socially acceptable alternative to burying or burning. Some crematoriums in North America now offer alkaline hydrolysis, often marketed as “green”, “water”, or “flameless” cremation. Another way to make money out of cremations is to do more with the ashes. Ascension, a British startup, releases them at “the edge of space”—after a 30km balloon ascent—and offers a video of the process.

There’s the competition due to online technological advancements too. Reviews of undertakers on Google or sites such as Yelp are becoming more common. In America Funeralocity lets people compare prices. Dignity is in dispute with Beyond, a British comparison site, which last year claimed it was charging customers far more than the market rate. More and more mourners want to live-stream funerals: many venues in Britain enable such virtual attendance. Tribute and funeral videos, often online, are ever more popular and FuneralOne in Michigan sells software that helps create thousands a year. At the Boston shindig a young man dressed in rock-star black gestures towards a drone that his team flies around the country to film backdrops for these “Personalised Life Tributes”.

10)    The world’s emptiest airport is a red flag
The 2004 Tsunami devastation swept away 2,80,000 people across 14 countries and the human toll was accompanied by destruction of infrastructure on a scale rarely inflicted by a natural disaster. But, the unprecedented scale of the tsunami devastation also provided an opportunity to redirect development. Normally, it might take decades for an insignificant section of a developing country like Hambantota, Sri Lanka to recover, but Hambantota’s infrastructure was rebuilt with astonishing speed. Today, a multi-lane highway connects Hambantota to Sri Lanka’s capital, Colombo, in the island’s west. A major commercial port, the second in the country, opened in 2010, while the nearby Mattala Rajapaksa International Airport, also the country’s second, began operating in 2013. There is an international cricket stadium, a convention center, botanical gardens, and a new administration hub. In mostly rural Sri Lanka, Hambantota’s public facilities are rare flashes of state-of-the-art, top-of-the-line urban development.

But Hambatota’s breakneck buildout is an example of a high-risk model of urbanization being executed in developing countries, with sometimes disastrous consequences. The model is an outgrowth of China’s One Belt One Road initiative, a trillion-dollar plan to build cities and infrastructure — from highways to airports to hospitals — in countries around the world. In 2017, the Sri Lankan government was forced to come up with a way to pull itself out of spiralling debt brought on by its foreign-built megaprojects. Economically, Sri Lanka is growing, but it has also been sinking deeper into debt and must repay a record $12.6 billion this year, in part because Hambantota’s gigantic port has been sitting virtually unused, as has the international airport down the road. Both were built with Chinese money. Sri Lanka ultimately signed over control of the port to China, which had financed the $1.5 billion project with loans.

The promise of jobs was one of Rajapaksa’s big selling points — in a region with high unemployment, it was initially well-received by his constituents. But the port was built by two Chinese companies who brought in their own workers and few locals have been employed now that it is operational.

- Saurabh Mukherjea is CEO, and Prashant Mittal is Strategist, at Ambit Capital. Views expressed are personal.

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