i have been a looong time reader of Ben's blog and have always been inspired by his thoughts and actions.....he has a new video interview on his blog about his experiences and his startup trouble...pretty informative...

all wannabe entrepreneurs and running business people need to view this....

All the best Ben

Barbarians at the gates?

Seems US now are worried anout Pakistan's Nuclear weapons...you gotta make out the ramifications of this worry on your own.....

Also Happy Diwali....

The personal loan Euphoria and Credit quality

Banks in India have always be touting about their dramatic growth in disbursement and planned growth in future....Having been in the industry for two years...I know a bit about the quality of credit checks done by these guys and the overall quality of the Loans portfolio generated by these droids....

I might say the credit quality is pathetic...there is no financial analysis done and money is thrown at cheap interest rates for every Tom Dick and harry who wants it.....The guy disbursing the loan doesnt even know what an IRR is ...and what credit quality is ........

Historically, their confidence of lending this money stemmed from their ability to hire "Recovery Agents" (ok they are goons)...to recover money from their customers.....They sometimes even followed abusive practices as evident from recent court cases

After recent Judicial interventions( a formal way of writing...the court Kicked ICICI's ass by slashing 50 Lacs Fine for hiring goons) the banks are now finding it tough to maintain their recovery effeciency without the help of the "Recovery Agents". :)

As per a recent announcement

ICICI Bank the country's second-largest bank, has stopped lending to borrowers from the sub-prime segment----The statement by a senior GM in the consumer Loans business reads like this

"We have become conservative. Consumers without any credit history will now find it difficult to get loans. We had written to the Reserve Bank of Indiathat we want to exit the small-ticket personal loans business (loans up to Rs 30,000). We have closed down a little over 100 outlets (used to sell loans to small borrowers)," he said."

So I guess the party time is over (or is it Euphoria)...and banks are going to stick back to fundamental concepts such as Credit Quality and Cash Flow...and Interest Service Coverage while dibursing loans....

Facebook ---Monetizing?

Seems like Facebook is planning to monetize its user base as per an article in Business week....The article points at how facebook is gonna play with the privacy of people to park ads in their pages that my appeal more to users based on their profile.....friends profiles etc....

Although it seems to be a good business concept at the face of it...the trick lies in how facebook would transfer itself from a "Hang out cool thingy " to an "Advertisement churning machine" without hurting user sentiments.......

All the best facebook...

Facebook= Skype...Valuations....who cares.....

Guess it has been long since I made a decent post....

But overall I have been burning the midnight oil for the past month (Ok..I went to my home town and had a gala time with my folks).....

Coming back on track....

"Valuation is more of an Art than Science"....But the problem with valuation is .....once done wrongly it tends to pinch everybody ranging from the Ivory tower...to the workshop.....the last internet bubble provided enough evidence of this scenario....And I guess oldtimes are back

Recent events in the US seems to provide good indications of significant lapses made by big time company while making "strategic" acquisitions...a typical case in point is the much touted " Skype Acquisition" by E-Bay.. Ebay recently announced that company is writing -off more than $ 1.0 Billion of goodwill value due to impairment (Just like that...one moment it is there in the balance sheet and the next moment it is not) of assets ...In laymans word ...they committed a blunder by losing more than $1.0 Billion on a business model which they didnt understand ( I still maintain that skype has a good business model...it is just a good company in wrong hands)...

Close to the heels of this announcement by Ebay.....Microsoft recently took an equity stake in facebook

It's official: Microsoft will take a $240 million equity stake in Facebook during its next round of financing, valuing the company at a whopping $15 billion.

Great....Kudos Microsoft there you go ...Beat the Google guys in their own game....

Euphoria over.. now let us analyse this deal

Last year Yahoo came close to acquiring Facebook for $ 1.0 Billion when compared to the current $15.0 Billion valuation by Microsoft ( why does Yahoo always underquote)....I find the leap from $1.0 Billion to $15.0 Billion quite insane...and I do not know where the fundamentals of valuation got lost in this whole proces. It makes you feel that it is more like shooting arrows in the dark than seriously analysing cashflows...



The company plans to make its money through advertising ...donno how much though....As an article in tech crunch points out the valuation and numbers doesnt match well.....

So would Facebook be another Skype for E-Bay ....Besides I guess Microsoft should be wise enough to get back value for what it pays....the only question is how!!!!!!