Failing

Caveat: This post will have a religious flavor. Moreover, the chronology of the events is true

Wednesday, 20th November 2013

I read this longform piece What It’s Like to Fail. Though one may not agree with the choices author made but it is an inspiring uplifting story about a man trying to survive and fight against the consequences of the bad decisions he had made. One paragraph particularly stood out:

What happens when you hit bottom? I can tell you one thing: you don’t bounce back. You crawl back, fighting every step of the way. It isn’t a straight arc back up either; there are dozens of setbacks every step of the way. And the place you land isn’t anywhere near where you were when you slipped off the cliff.

It is human nature but an Ivy League education makes you more conscious of where in the corporate ladder your classmates are. It is cliched but no one measures their quality of life in strength of their relationships with friends and family. The measure of a successful person is his wealth, which school one’s kids go to, what is the job description and employer name on one’s business card, where did we go to during summer holidays etc. And yes, we do admit everyday that we are amongst top 5% or top 10% of the world and non-deservingly more blessed than 5.5 billion people (assuming world population is 6 billion) but the circle we move in comprises of top 5% of the world and we always compare ourselves to them.

Post financial crisis of 2008, amongst the 150 or so graduates of my Ivy League class, only one or two updated their job descriptions on LinkedIn with a promotion or move up the career ladder. And comparing myself to them made me depressed as my career had come to a stand still. I carried on at my dead end job because there weren’t any better jobs in the market. What I knew from school grapevine but didn’t admit to myself was that reason many of my colleagues were not updating their profiles had been made redundant by the crisis. I talked to quite a few colleagues from my earlier jobs and with the exception of one or two, all are sticking to their jobs (with or without promotion) because their current jobs is providing them temporary job security which is a huge stress relief in these fluid times.

Thursday, 21st November 2013

I called up one of my closest friend. Both of us lamented our lucks. We took a break from career, went to business school and graduated a year before the credit crisis struck. While we were studying, it was still hey days and our colleagues climbed up the corporate ladder during this time. So when we joined the workforce, unlike earlier times wherein we were supposed to get a bigger and higher role as our CV was embellished with a top university education, we had to struggle very hard to get the position we left. Though I don’t think of it this way, but from a career growth perspective, the decision to go for a higher education at an elite university appears like a mistake to my friend. I look at it totally differently. It was one of my dreams to go for an education at an elite university and with grace of God I realized that dream. I look at the decision to go to the elite university like this as founder and CEO of Amazon Jeff Bezos had said:

“When you are in the thick of things, you can get confused by small stuff,” Bezos said a few years later. “I knew when I was eighty that I would never, for example, think about why I walked away from my 1994 Wall Street bonus right in the middle of the year at the worst possible time. That kind of thing just isn’t something you worry about when you’re eighty years old. At the same time, I knew that I might sincerely regret not having participated in this thing called the Internet that I thought was going to be a revolutionizing event. When I thought about it that way… it was incredibly easy to make the decision.”

For me the experience, the learning and achievement of sitting amongst the top finance leaders of the future and having studied, competed and held my own in academics with the best students of the world is a source of pride. I don’t know whether I will get to live to 80 and be able to derive same pride at that age but having realized one of my dreams is something to be truly thankful for.

I didn’t complain about my decision to go for an elite education but I did complain about how the career has come to a stop, prices for foodstuff, rent as well as kid’s tuition fees are rising etc and life isn’t exactly turning out to be how I thought it would. By life (I meant career).

Friday, 22nd November 2013

The Friday sermon at the mosque was about being thankful for what you have and comparing yourself to the ones below you and not comparing yourself for what you don’t have. Have heard such pep talk before. Then the Imam quoted following verses from the Quran. I don’t know about you but I have felt that whenever a verse is quoted from Quran, it just sinks directly into my heart and clears up a lot of things. May be it is faith. May be I am what you call a fundamentalist. Despite having read large number of books on worldly wisdom and sciences, I am still melted by Quranic verses. And the timing was perfect. It felt like that sermon was especially for me as I was feeling down.


And [remember] when your Lord proclaimed, ‘If you are grateful, I will surely increase you [in favor]; but if you deny, indeed, My punishment is severe.’ ” [Ibrahim:7]

Yet we are all human and sometimes feel that God is unnecessarily punishing us or testing us. And the Imam then quoted the following verse

What would Allah do with your punishment if you are grateful and believe? And ever is Allah Appreciative and Knowing. [Nisa:147]

This reminded me of the verse that my father used to quote:

And do not wish for that by which Allah has made some of you exceed others. For men is a share of what they have earned, and for women is a share of what they have earned. And ask Allah of his bounty. Indeed Allah is ever, of all things, Knowing.

The crux of above verse being that never compare yourself or ask the Lord for what he has given others. Just keep asking Him for his bounty. He may and will bless you with a different sort of bounty.

So yes, I am in a dead end career for now. And yes, the price of goods and services are rising whereas my income is not rising proportionately at all. And yes by the standards I use to measure my life (read career), I am failing but I have achieved a lot in life, realized a lot of my dreams and more for which I am thankful to Lord and seek His mercy and graciousness to bless me with more bounty from his unlimited sources.

Sunday, 24nd November 2013

A friend shares this as his status update on Facebook:

Volume 1, Book 3, Number 73: Narrated ‘Abdullah bin Mas’ud: The Prophet said, “Do not wish to be like anyone except in two cases. (The first is) A person, whom Allah has given wealth and he spends it righteously; (the second is) the one whom Allah has given wisdom (the Holy Qur’an) and he acts according to it and teaches it to others.” (Fateh-al-Bari page 177 Vol. 1)

My earlier related posts:

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Bahria Town : Sucker born every minute

So the premium on Bahria Town registration slip of Rs.15,000 has reached Rs.195,000 in less than two months if all the SMSs and emails are to be believed. That is a 1,300% return in less than two months. For a “piece of slip” which has nothing behind it (the slip entitles you to nothing) yet people are falling over one another to buy it, it boggles the mind.

Yes Yes I know it is Bahria Town and Malik Riaz has developed good projects in Lahore and Islamabad but still it does not make sense. Let me give you an example. Lets say your closest friend   your brother who you trust asks you to buy a piece of slip for Rs.100,000. Discussion will move like this:

You: “what does the piece of slip entitles me to?”

You brother: “Nothing. It is just an invitation to apply for booking.”

You: “Ok. Is the booking guaranteed?”.

Your brother “No.”

You: “Rs.100,000 for a piece of paper? Isn’t that exhorbitant. Acha chalo..where is the land that I will book if I am lucky? Is it inside Karachi like Naya Nazimabad, is it in suburbs somewhere near Gulshan-e-Maymar or is it mid-way to Hyderabad near DHA City”.

Your brother: “I have no idea”.

You: “What is the size of the plot or its final price?”

Your brother: “I have no clue”

You: “When do you expect the booking to happen?”

Your brother: “I am not sure”

You: “So you are asking me to pay Rs.100,000 for a piece of paper which does not guarantee me a plot which you have no idea where it is located or what size it is or what is its price?”

Your brother: “Yes”

You:”Why?”

Your brother: “Because it is Bahria Town”

You know how stupid the brother sounds. It is exactly what is happening. Reminds me of Tulip Mania as recounted by Charles Mackay

According to Mackay, the growing popularity of tulips in the early 17th century caught the attention of the entire nation; “the population, even to its lowest dregs, embarked in the tulip trade”.[6] By 1635, a sale of 40 bulbs for 100,000 florins (also known as Dutch guilders) was recorded. By way of comparison, a ton of butter cost around 100 florins, a skilled laborer might earn 150 florins a year, and “eight fat swine” cost 240 florins.[6] (According to the International Institute of Social History, one florin had the purchasing power of €10.28 in 2002.[33])

By 1636 tulips were traded on the exchanges of numerous Dutch towns and cities. This encouraged trading in tulips by all members of society; Mackay recounted people selling or trading their other possessions in order to speculate in the tulip market, such as an offer of 12 acres (49,000 m2) of land for one of two existing Semper Augustus bulbs, or a single bulb of the Viceroy that was purchased for a basket of goods (shown at right) worth 2,500 florins.

You might come back with the argument that there is really something behind it. People are willing to pay Rs.195,000 for the “piece of slip.” And this brings us to Greater fool theory:

The greater fool theory describes a situation where the price of an object is not being driven by intrinsic values, but by expectations that irrational bidders for limited assets or commodities, will set the price. A price can be justified by a rational buyer under the belief that another party is willing to pay an even higher price. Or one may rationally have the expectation that the item can be resold to a “greater fool” later.

In real estate the greater fool theory can drive investment under the expectation that prices will rise, or force need-based-buyers to out bid irrational or ill-informed buyers. A need-basis can be for basic housing or for organizations fulfilling exigent commercial interests.

The question that it raises is that Malik Riaz is no philanthropist. If there is so much demand for real estate in Karachi, why not increase the price of the plot and pocket the profit. But he is smart. He is allowing ordinary people to become stake holders in his mischievous schemes so that when he does something illegal or wrong, ordinary people who have made profit this “piece of slip” business will defend him in court of public opinion “uss nay aam aadmi ko munafa kamanay ka moqa dia” not realizing that this profit is a fluke, a gamble in its truest form. It is not even halal (because in Islam when you trade, the item being traded needs to be clearly identified) but lets not bring religion here.

I just got an email from a friend explaining Bahria Town tactics. So I will copy and paste it below:

It is very difficult to say anything about Bahria Town Karachi upcoming projects
1. Bahria Town Icon – Pakistan’s Tallest Building Plan (62 Storey Building)
2. Bahria Town Tower – 24 Storey Building at final stage of completion
3. Bahria Town Karachi – Master Planned Community (Villas and Plots)

We do not have any information regarding rate, payment plan and possession date. For Bahria Town Karachi, (as per Bahria Town track record) there is no idea of location of this project. It is obvious that it would be planned out of city area. As Karachi is a very big city and commuting to city area is not safe so it may not attract the investors in the start.

I understand Bahria Town itself is not clear so it is asking for registration first. It is kind of feeler to understand the demand as well as to collect huge funds.

About 8 years ago Bahria Town Pvt. Ltd. started same strategy when it sold 85,000 HOME PLUS cards and charged Rs.6,000/= or US$100 with a commitment that the card holders will be receiving the application forms of upcoming projects at their door steps. It was January 2005 when Home Plus cards project was launched. Do you have any idea when was upcoming project launched? After 16 months, on March 22, 2006, Bahria Town started sending application forms of its Awami Villas Project to Home Plus Card Holders.

If we consider the track record and strategy of Bahria Town, the actual launch of Karachi projects would be after a year or so. This registration scheme will also help BT to understand the trend of investors in Karachi and the demand for these projects. This demand would be the main factor in deciding the pricing of project and payment plan.

Karachi is a business hub of Pakistan. Bahria Town can not afford to ignore its market and investors. Contrary to that, Karachi also needs these kinds of safe, secure living and business atmosphere which Bahria has planned to provide. As mentioned above, Bahria Town would take around a year or so to present some actual project plan. It will, in the meantime, play with the funds received from registration. I hope that Bahria Town will flourish in Karachi but it should be considered a long term investment.

Earlier I had calculated that Malik Riaz will be making around Rs. 600 Million from the interest on the cash he has received. But if he takes two years to announce the actual project, the actual income would be in the range of Rs.1.5 Billion. I know it is not a big amount for Malik Riaz but it is free income.

So all those waiting for some clarity on the project. Sit tight and wait. They are saying that premium on the “piece of slip” will increase to Rs.2.5Million.

My recommendation:

  • If you are looking for some quick high risk-high return money making opportunity, I suggest you buy a slip and flip it quickly to the next sucker. Don’t hold on to it for ever.
  • If you have multiple slips, sell one and get your principal and profit out. Then you can continue to hold on to other slips for any further gain or the property
  • If you are looking to buy some real estate, my suggestion is to wait till the project is announced and people get allotment letters. A lot of people will want to sell the property and exit when the project is announced. You might have to pay a premium for a file but at least you will know what are you buying

Profit before Pakistanis: A case of mangoes, potatoes and bottled water

Last year I visited Madina Munawwarah and stayed at a five star hotel which had a bed and breakfast deal. They had a large breakfast buffet in the morning comprising of Arabic, Oriental, etc breakfast options. To cut the long story short, they also a had a fruit table where all kinds of sliced fruit were available in ready to eat format. I was amazed at their watermelon pieces. They must have cut around 50 to 100 watermelons to fill the various trays on multiple tables. The surprising part of it that there was not a single bad water melon. All the watermelons were red-dark pink and sweet. Whenever we go to a shop to buy water melons we have to check for sweet and red ones and occasionally we end up with unripe or non-sweet water melons. But in that hotel all the water melons pieces were ripe and sweet and red. Why can’t we get such delicious water melons every time?

This reminded me of an earlier event. Around 2004, a colleague of mine who used to work in the same bank branch as I did in Karachi was traveling to his home town Mirpurkhas. It was mango season and as Mirpurkhas lied in mango country, I asked him to buy me some delicious mangoes from Mirpurkhas. When he came back, he was empty handed. I asked him why didn’t he bring mangoes for me. He said the quality available there was not good. I told him that it is not possible that the good quality mangoes didn’t grow in Sind. He said that I misunderstood him. It is not that good mangoes don’t grow in Mirpurkhas rather good mangoes are not sold in Mirpurkhas. They are packed and sent to Karachi for consumption and export as they get higher prices. It is a tragedy that the people where the fruit is grown are not able to buy it because people in far away places like Karachi or abroad are willing to pay a much higher price for it.

Around 2008, a friend in Karachi was advising on merger between makers of Lays chips and Kolson snacks. He was sitting in one of the meetings between the two companies and discussion of potatoes came up wherein the Kolson guy told the Lays people that you don’t leave any potatoes for us. At this, the Lays people just laughed. When the meeting was over, my friend asked the Kolson team what is this about potatoes.

Kolson team told him that Lays has reached an arrangement with major potato farmers in Pakistan that they will get the first pick of all potatoes grown in the country. Once the company fulfills its quota or has rejected the produce, then the farmers can sell the potatoes in the market. So in a sense, the Pakistani nation buys and consumes that potatoes that have been rejected by Lays. Our best potatoes are used to make chips.

Nestle has also been involved in such practices. From the petition page Nestlé: Stop draining Pakistan dry!

Nestlé’s aggressive water grab is already descending like a plague on parts of Pakistan. In the small village of Bhati Dilwan, villagers have watched their water table sink hundreds of feet since Nestlé moved in. Children are getting sick from the foul-smelling sludge they’re forced to choke down.

I remember there was time in late 1980s that we used to drink water right out of kitchen sink. Now the media campaign with respect to bad quality of water in our water pipelines and disease associated with it get so much coverage that every one is forced to buy expensive water (something which is supposed to be cheap and readily accessible). From the study funded by Swiss Coalition of Development Organisations, Swissaid, Catholic Lenten Fund, Bread for all, Helvetas Caritas, Interchurch Aid “Drinking Water Crisis in Pakistan and the Issue of Bottled Water: The Case of Nestlé’s ‘Pure Life’” (ironically Nestle is a swiss company):

The aggressive market strategies of Nestlé went astray when “awareness seminars” about bad water conditions turned out to be counterproductive. Nestlé asked its Lahore ad agency, Interflow Communications Ltd., to organize public information events about water hygiene issues. Participating officials of health and water agencies announced that tests had determined that urban water was unsafe for drinking and even existing bottled water was unhealthy. Nestlé discontinued the seminars immediately after it was reproached for unethical marketing practices. For instance, a representative from the Lahore Water Supply Company alleged that Nestlé was “misleading the people to make money”. Regardless of the discussion and temporary fall back from Nestlé, it became clear that bad news was also good news, and Nestlé gained public attention as a safe option for bottled water. In the end, Nestlé successfully stepped into the market andfilled a need, but turned water from a danger into a luxury.

Furthermore

After five years of operation, Nestlé faced its first opposition when it announced that it would build a second production plant in Karachi. On October 25, 2003, the Shaheed Zulfiqar Ali Bhutto Institute of Science and Technology sent a writ petition to the Sindh High Court (Karachi), saying that the 20 acres leased out to Nestlé were carved out of the 300 acres of land allotted to it previously. The lawsuit has been joined by Sindh Institute of Urology & Transplantation, Aga Khan Hospital and Medical College Foundation, Sindh Madressahtul Islam, Newport Institute of Communication & Economics, Sir Syed University of Engineering & Technology, Shaukat Khanum Memorial Cancer Hospital & Research Centre, and Ziauddin Medical University — all land allottees in the said area. The property is located in an area spread over 15,500 acres, given to 30 different parties, believed to be designated for various educational and health purposes, and declared “Education City Karachi”. Nestlé bought the property for a price of PKR 500’000, double the price paid by the other parties, with the intention to invest USD 10 million and extract 306 million litres of water annually, for the sale of 228 million litres of bottled water. Ironically, the plant was not planned to meet the needs of the people of Karachi or the South of Pakistan, but for US forces at Afghanistan’s Kandahar Air Base.

The plaintiffs argued that Nestlé’s industrial ambitions defeated the very purpose of the area. Nestlé argued that the property was allotted after approval of the provincial cabinet and the department of industries. Furthermore, Nestlé claimed at the end of the dispute that the area was never declared for a single, non-industrial purpose, and the company presented various public officials to promote this position. The plaintiffs, however, could prove that the area was dedicated to education and health services since 1999, and the Sindh High Court (Karachi) held that water extraction by the proposed bottling plant would “diminish water deposits in the aquifers rapidly and shall adversely affect the plaintiffs’ right to use the underground water according to their genuine needs ”. The case is still open, regarding the plant and the investment, since Nestlé continues to legally challenge the decision of the Sindh High Court (Karachi). Nevertheless, one has to keep Nestlé’s self – commitment in mind, namely that it “consult[s] with local communities on water issues”, which was obviously not the case in Karachi.

The losers in this game are the poor

Insufficient water quality mostly affects the poor, who have little power to change policies and priorities and who cannot afford alternatives, such as bottled water, filtering and boiling. The Government of Pakistan officially admitted that “richer households are substantially more likely to have water piped to a tap in the household”. Furthermore, the Government of Pakistan acknowledged that the engagement of corporations, which extract groundwater and sell it as bottled water, might be one of the factors working against water quality improvement because it has reduced the political pressure for improvement by this part of society whose voices are valued and heard.

In conclusion,

Even Nestlé confessed before it started to produce ‘Pure Life’ that “the fact that everybody can’t afford ‘Pure Life’ is unfortunate, but does that mean we shouldn’t sell it at all?”. From this perspective, it is reasonable that Nestlé focused its marketing on urban centres, railway and bus stations and highway stops. To conclude, one has to say that Nestlé ‘Pure Life’ in Pakistan is not an affordable alternative for the great portion of the population without access to safe drinking water. Rather the introduction of bottled water in Pakistan is an attempt to initiate the bottled water culture, where water is a status symbol and a way of life for the rich.

So whether you grow potatoes or mangoes or sitting on water reserves, if you are poor, you will not be able to enjoy these fruits of nature.

Coming back to watermelon story, it was like the five star hotels have made a deal with watermelon growers to sell them the best watermelons and once the hotels have bought as per their requirement, then the farmers can sell the remaining watermelons in the market.

  • Further reading:

If you are interested in reading more about scandalous bottled water campaigns, please read this Mother Jones expose about Fiji water: Spin the Bottle. (It is worth reading in the full)

Obama sips it. Paris Hilton loves it. Mary J. Blige won’t sing without it. How did a plastic water bottle, imported from a military dictatorship thousands of miles away, become the epitome of cool?

Nowhere in Fiji Water’s glossy marketing materials will you find reference to the typhoid outbreaks that plague Fijians because of the island’s faulty water supplies; the corporate entities that Fiji Water has—despite the owners’ talk of financial transparency—set up in tax havens like the Cayman Islands and Luxembourg; or the fact that its signature bottle is made from Chinese plastic in a diesel-fueled plant and hauled thousands of miles to its ecoconscious consumers. And, of course, you won’t find mention of the military junta for which Fiji Water is a major source of global recognition and legitimacy.

During the 2000 coup, a small posse of villagers wielding spearguns and dynamite seized on the chaos to take over the bottling plant and threaten to burn it down. “The land is sacred and central to our continued existence and identity,” a village spokesman told the Fiji Times, adding that “no Fijian should live off the breadcrumbs of past colonial injustices.” Two years later, the company created the Vatukaloko Trust Fund, a charity targeting several villages surrounding its plant. It won’t say how much it has given to the trust, but court proceedings indicate that it has agreed to donate .15 percent of its Fijian operation’s net revenues; a company official testified that the total was about $100,000 in 2007. (For perspective, the trade journal Brandweek put Fiji Water’s marketing budget at $10 million in 2008; it recently dropped $250,000 to become a founding partner of the new Salt Lake City soccer stadium.)