At Ambit, we spend a lot of time reading articles that cover a wide gamut of topics, ranging from zeitgeist to futuristic, and encapsulate them in our weekly ‘Ten Interesting Things’ product. Some of the most fascinating topics covered this week are: Business (Keep running to stay in place; Restaurants on wheels), Environment (Mass extinctions are accelerating), Investment (Think like Warren Buffett), Technology (Race to build Indian social network) and Health (How athletes are dealing with stress amid lockdown).Here are the ten most interesting pieces that we read this week, ended July 10, 2020: 1) Keep running to stay in place!
[Source: Collaborative Fund
In a 1973 paper titled A New Evolutionary Law, Leigh Van Valen, a biologist, argued that “the probability of extinction of a taxon is effectively independent of its age.” He said that’s the case for two reasons: 1) Competition isn’t like a football game that ends with a winner who can then take a break. It never stops. A species that gains an advantage over a competitor instantly incentivizes the competitor to improve. 2) Some advantages create new disadvantages. Most species tend to get bigger over time because big things are strong. But being big also makes you slow, clumsy, and unable to hide. “The tendency for evolution to create larger species is counterbalanced by the tendency of extinction to kill off larger species,” one study wrote.
So, there are no permanent advantages. No one’s ever safe. No one can ever rest. You need to keep running to stay in place. This is how business and investing work, too. There are 32 million businesses in the United States. The Bureau of Labor Statistics tracks how many of them die each year, and how old they were at death. Dig through the numbers and one thing’s clear: there is no age at which business gets easy. Companies have a high failure rate in their first three to five years. Then the challenges plateau. Averaged across industries, a business in its 25th year has roughly the same probability of dying as it did in its 10th year.
What worked in the 60s, didn’t work in 90s, and what works today won’t work a few decades later. In order to stay competitive, you need to keep going. Innovate yourself. There is never a time when an investor can discover an investing strategy and be confident it will continue working indefinitely. The world changes, and competitors create their own little twist that exploits and snuffs out your niche. It’s the same with careers, job skills, relationships, and everything else. It’s hard to accept that you have to put in a ton of work just to stay in place, but that’s how it works. Keep running.2) Mass extinctions are accelerating, scientists report
[Source: NY Times
We nowadays frequently come across news saying that various species are becoming extinct. This is a serious issue as this is bound to affect us humans as well. We are racing faster and closer toward the point of collapse than scientists previously thought, according to research published in the Proceedings of the National Academy of Sciences. “We’re eroding the capabilities of the planet to maintain human life and life in general,” said Gerardo Ceballos, an ecologist at the National Autonomous University of Mexico and lead author of the new study.
To determine how many species are on the brink of extinction, Dr. Ceballos and co-authors Paul Ehrlich, a conservation biologist at Stanford University, and Peter Raven, an environmentalist at the Missouri Botanical Garden, turned to population data for 29,400 terrestrial vertebrate species compiled by the International Union for Conservation of Nature. Of those species, 515 (1.7%) are critically endangered, they found, with fewer than 1,000 individuals remaining. About half of these species comprise fewer than 250 individuals. The researchers also examined species with populations between 1,000 and 5,000. When the scientists added those 388 species to their original analysis, they found an 84% geographic overlap, largely in the tropics, with species in the critically endangered group.
As humans continue to encroach on nature and wildlife, Dr. Ceballos and his colleagues warn of a cascading series of impacts — including more frequent occurrences of new diseases and pandemics. The coronavirus that launched the pandemic originated in a wild animal, most scientists believe. “The vaccine for Covid-19 was natural habitat,” Dr. Ceballos said. “The pandemic is a great example of how badly we’ve treated nature.” To offset the most urgent wave of extinctions, he and his colleagues call for an immediate end to illegal wildlife trade. “All of us need to understand that what we do in the next five to 10 years will define the future of humanity,” Dr. Ceballos said. 3) When recalibrating income expectations, think like the Sage of Omaha
[Source: Financial Times
It has been a bad start to the year for all. And it has been the same for income investors. The economic shock from Covid-19 has proved deadly for dividends, with scores of companies reducing, deferring or cancelling their payouts to investors altogether. So, in such a situation, the author of this piece says that you need to listen to Warren Buffett. The Sage of Omaha dislikes dividends and is unequivocal that the best way to return value to shareholders is by reinvesting profits back into a business.
Although Berkshire Hathaway has proved itself to be a cash generating machine over the years, it has almost never paid a dividend. The one exception was back in 1967 and Mr. Buffett often jokes that he must have been in the bathroom when the decision was made. Now is the time for income seekers to revisit the investment basics he has famously favoured — invest in quality businesses with good management and trust them to plough the profits they make back into the business and thus drive long-term capital growth.
The crisis means that companies have had to reset their overall investment priorities, not just their dividend policies, as they strive to rebuild businesses that will prosper in the post-Covid economy. So what should you consider as you re-evaluate your portfolio? 1) Recalibrate your income expectations to more sustainable levels as we adjust to the new reality. 2) Be more like Buffett: The dividend yield may have been a big factor when you picked the companies in your portfolio, but now is the time to go back to basics and look at the growth strategy. 3) Be realistic: A drop in income hurts, and if you don’t have cash reserves to fall back on then you may need to sell part of your capital. But if that capital has grown because the business has reinvested it prudently, then the net result will be the same.4) Five ways real estate will change forever
Real estate had been a kind of mental security for most Indians. Owning a house means being secured. But the current situation has created havoc everywhere. Given the already despondent situation within many segments of real estate, doomsday preppers are out in large numbers. While developers are being advised to reset home prices to spur demand, some hotels are seeking a change of land use to residential. Office space demand is suddenly shrinking and retail malls are seeing tenants cancelling leases or refusing to pay rent.
The good news for India is that the long-term housing demand trend remains secular due to a young population which continues to enter the workforce in large numbers. Over the last few years, there had been a gradual shift in mindset among first-time homebuyers who began to favour a rental home, challenging the established preference of Indians to buy homes. The pandemic is driving them back to the desire to own a home. With the constraint of having to stay near one’s place of work having vanished for some and reduced for many, there will be an increasing preference to move away from the polluted and congested parts of the city.
The commercial office sector was the most favoured segment for institutional investors and had reached a peak in terms of pricing prior to the pandemic. The impact on the sector is expected to be severe in view of the reduced space requirement by information technology companies due to increased adoption of the work-from-home model which is now becoming an integral part of their long-term strategy. The pandemic has also affected retail real estate segment. In the consumer housing segment, subdued sales, margin squeezes and high leverage was already plaguing the sector prior to the pandemic. Amid the crisis, corporate developers who have strong brand equity and institutional capital support will gain higher market share.5) Why business must strike a balance with AI and emotional intelligence
As usage of AI in our daily lives and businesses is increasing, many say that there needs to be a balance between AI and emotional intelligence. But, what is emotional intelligence? In the simplest form, it’s the ability to not just solve problems, but understand and connect with the reasons why those problems are occurring and how they impact other people. It’s the ability to care. While technology is getting smarter and more real-time, the need for high emotional intelligence in our use of technology is continuing to grow in its importance.
One of the biggest things to know today is that the “hard sell” is rarely appropriate. Even in the best of times, it can be off-putting. But in a time when so many people are stressed to the max, it’s essential to change your voice from salesperson to empathic and understanding friend. Being able to isolate varying stress levels or buyer signals and individualize them is the key to being able to target, personalize and deliver the right message to the right consumer. This is where the balance of emotional intelligence and AI is key.
With so many people working from home and finding a new balance in life, there is one thing your company needs to do: be available. While AI might tell you that X number of customers typically call on a certain day, at a certain time, regarding a certain topic, emotional intelligence will tell you to staff up for longer calls and shorter wait times. Customer service reps need to be prepped on the importance of emotional intelligence. This is the time when AI and analytics can offer tremendous insights and answers, but when relying on those things alone will force all of us to fall short in serving our customers’ needs.6) The race to build an Indian social network
The recent tussle between India and China has resulted in India banning 59 Chinese apps, which included TikTok, Helo, Vigo Video and Bigo Live, among others. Merely an hour after the announcement hourly installations spiked, with 300,000 to 400,000 people downloading the app every hour, according to Sumit Ghosh of Chingari, one of the several India-made apps vying to be a TikTok alternative. Within days, daily active users tripled on Roposo, another Indian short-video app.
Chingari’s Ghosh said he wants to reach 100 million users in three months, which is the same target that Shivank Agarwal, founder of Mitron, another short-video app, has set for himself. For comparison, it took ByteDance 200 days to develop Duyin (TikTok’s Chinese variant) and about a year to reach 100 million users. For now, even investors want to get a piece of the action. Mitron raised ₹2 crore in a seed round from Tadanki and 3One4 Capital. Tadanki said the deal was one of the fastest in his career. Chingari, on the other hand, is raising funds too and plans to go for a Series A round of investment, skipping the seed round altogether.
With the funding spree these apps are getting, they all plan to hire engineers and build bigger teams. Chingari is a 20-person operation right now, whereas Mitron has only 10 people. ShareChat and Roposo, both of which have big investors behind them, have over 300 and 200 employees, respectively. However, whether the budding Indian apps will be able to quickly rustle up an innovative pool of talent is an open question. Convergence Catalyst’s Jayanth Kolla said India definitely has tech talent but it doesn’t have talent available at scale. “You can build a kick-ass 50-member company, not a 5,000-member company (in India)," he said.7) Our Ghost-Kitchen Future
[Source: The New Yorker
Delivery-only kitchens, or as they call it, ghost kitchens seem to be the future model that can disrupt the restaurant industry. The author of this piece came across a food trailer which served food from various brands. The trailer, along with a few others in San Francisco, is operated by Reef Technology, a startup based in Miami. According to marketing materials, Reef creates “thriving hubs for the on-demand economy” by “reimagining the common parking lot.” By bringing in utilities like electricity, gas, and water, and setting up “proprietary containers,” the company hopes to turn parking lots into reconfigurable community hubs.
The ghost kitchen is an increasingly crowded space. In addition to Reef, there are Zuul and Kitchen United in the United States, Deliveroo in London and Paris, and Panda Selected in China. CloudKitchens, the new venture run by Travis Kalanick’s City Storage Systems, buys real estate, brings in kitchen facilities, and leases them to chefs and small-business owners, most of whom do not have other brick-and-mortar spaces. Like Reef, many of the brands operated by CloudKitchens and the like are “virtual.” The branding and food are real, but the restaurants do not exist elsewhere in the physical world.
For restaurants that have already established themselves in the physical world, ghost kitchens can be a way to adapt to shifting trends. Frjtz, a San Francisco restaurant beloved for its Belgian-style fries, closed its brick-and-mortar location in the Mission in 2019, after nearly twenty years in business, and now operates—delivery only—via CloudKitchens. Due to the coronavirus pandemic, a version of the long-term future that Reef anticipates, of diminished automobile usage and hyper-locality, has unexpectedly materialized.8) The rights and wrongs of management books on social issues
[Source: The Economist
Executives are always told that they need to look beyond the balance sheets. They should be aware of their company’s environmental impact, of how well they treat their employees and suppliers, and whether their workforce is sufficiently diverse in terms of gender and ethnicity. During the lockdown, the author of this piece worked his way through four weighty tomes by managers who argue that companies have a broader purpose than simply making a profit. The books were “Trailblazer” by Marc Benioff, “Green Swans” by John Elkington, “Restoring the Soul of Business” by Rishad Tobaccowala and “Share” by Chris Yates and Linda Jingfang Cai.
The idea behind “Green Swans” is to focus on changes in the economy that will lead to environmental breakthroughs but his message is lost in a miasma of mixed metaphors. In the space of two pages he writes about “10x thinking”, “an exponential mindset” and the “Chrysalis economy”, while warning that the world is both heading into “some sort of historic u-bend” and backed into “the mother of all corners”. Quite how a corner can have a mother, the author fails to explain. Marc Benioff’s book is a personal history of how he built his software giant, while donating 1% of its services, profit and employees’ time to help non-profit organisations and charities. The book provides some useful lessons for chief executives who might assume their company is free from bias.
But, the best of the books is Mr. Tobaccowala’s. “Employees who find work meaningful are highly productive, agile and committed,” he writes, adding that talented workers are in a more powerful bargaining position in the current economy. The book is clearly written and full of sensible and practical suggestions. They include assessing all meetings to eliminate those that waste time and suggesting that all employees spend 20% of each month trying to enhance their skills. Both Mr. Tobaccowala and Mr. Benioff reflect on how companies can pursue both broader social goals and the desire to grow. 9) Why you feel at home in a crisis
[Source: Farnam Street
The author of this blog explains how disasters bring people closer and people can end up experiencing the best mental health and relationships with others in such situations. When World War II began to unfold in 1939, the British government feared the worst. With major cities like London and Manchester facing aerial bombardment from the German air force, leaders were sure societal breakdown was imminent. Robert M. Titmuss writes in Problems of Social Policy that “social distress, disorganization, and loss of morale” were expected. Experts predicted 600,000 deaths and 1.2 million injuries from the bombings. Despite all this, the anticipated social and psychological breakdown never happened. The death toll was also much lower than predicted, in part due to stringent adherence to safety instructions.
Disasters force us to band together and often strip away our differences. The effects of World War II on the British people were far from unique. When normality breaks down, we experience the sort of conditions we evolved to handle. Our early ancestors lived with a great deal of pain and suffering. The harsh environments they faced necessitated collaboration and sharing. Groups of people who could work together were most likely to survive. Because of this, evolution selected for altruism. In Tribe: On Homecoming and Belonging, Sebastian Junger argues that modern society robs us of the solidarity we need to thrive. Unfortunately, he writes, “The beauty and the tragedy of the modern world is that it eliminates many situations that require people to demonstrate commitment to the collective good.”
The lessons we can learn from Tribe are: 1) In the face of disaster, we should not expect the worst from other people: Many people will look out for themselves at the expense of others. But on the whole, history has shown that the breakdown of order people expect is rare. Instead, we find new ways to continue and to cope. 2) We can achieve a great deal by organizing on the community level when disaster strikes: When normal life is impossible, being able to volunteer help is an important means of retaining a sense of control, even if it imposes additional demands. 3) We should not forget what we learn about the importance of banding together: It is possible for disasters to spark meaningful changes in the way we live. We should continue to emphasize community and prioritize stronger relationships. 10) Tackling the distress syndrome: How athletes are dealing with stress amid lockdown
[Source: Hindustan Times
The current pandemic has been stressful for most of the athletes, especially those who were supposed to participate in the upcoming Olympics. Uncertainty is gnawing at top athletes. Teenage shooting stars Manu Bhaker and Saurabh Chaudhary, for example, would have been primed for success at the Tokyo Olympics, but now must return to the drawing board after it was put off. Seasoned campaigners like India’s No.1 hockey goalkeeper PR Sreejesh, 31, have to work extra hard to keep their Olympic dreams alive.
Sports psychologists admit it is a huge test for Indian athletes. Depression and anxiety is not alien to professional sport at the global level, but is rarely discussed in India. That makes suggesting a remedy difficult for experts, who need sports stars to first shed their reticence and open up. “In India, not enough attention is given to mental well-being,” says Noida-based Nanaki J Chadha, among a growing band of sports psychologists in India.
Coaches aren’t exempt, fretting over how to draw up fresh training plans. “They also definitely need help because they’re not working as much as usual.” The talented youth too face the agony uncertainty and boredom brings. “A junior international pistol shooter is missing training as she doesn’t have her weapon and can’t do dry training. She is upset time is passing and she sits idle at home,” says Mumbai sports psychologist Amruta Karkhanis. Gayatri Vartak, former international badminton player and sports psychologist at Samiksha Sports Private Ltd, Pune, urges athletes to be patient. “They need to go easy on themselves and their goals because they don’t know when things will return to normal.