Sunday, September 29, 2024

HAL – Dream to fly. Why vision is so important!

I haven’t updated my blog in quite some time. As Benjamin Franklin wisely said, “Write only when something is worth reading.” Recently, I took my kids to the HAL Heritage Centre and Aerospace Museum. Although the star attraction—the flight simulator—was closed, the experience was a treasure trove of aviation history, rekindling my interest in the early evolution of aircraft in India. It inspired me enough to write about it!

Being a World War II enthusiast, I was surprised to see some of HAL's early endeavors in building a fighter jet in the 1960s with the help of Kurt Tank—one of the original pioneers of jet design in the 1930s. I suspect this blog will be a lengthy one. So, if you have an interest in aerospace history and India’s fluctuating role in it, stay on to read.

From envisioning an aircraft manufacturing facility in the mid-1940s to developing the first jet in Asia during the 1950s and 1960s, HAL lost its way for the next 50 years, only to recover slightly post-2010s. At a high level, the loss of vision that the founders once had, coupled with a profound sense of inferiority and an inability to focus on continuous innovation, is the main reason for its confused standing today. The story mirrors that of India: initial promise, followed by decades in the wilderness, and a reluctant rise after a deep slumber.

The Beginnings – Walchand and Wodeyar

Walchand Hirachand, one of India’s maverick industrialists, sought to create Hindustan Aircraft Limited in 1939 and was in search of funds. Incidentally, the young Maharaja of Mysore, Jayachamarajendra Wodeyar, had a chance mid-air meeting with William Douglas Pawley (an American businessman and aircraft enthusiast who was en route to China at the start of World War II). During their conversation, the Maharaja recognized the strategic long-term importance of having core industries and decided to help establish the aircraft manufacturing plant in his state.


Walchand’s creative genius combined with Wodeyar’s financial backing resulted in the formation of HAL. Their vision was clear: to develop an aircraft manufacturing facility indigenously.

India was short on technical skill sets, so they took measures to bring in foreign talent. Dr. Ghatage was the sole Indian aircraft designer responsible for HAL planes such as HT-2, Pushpak, Kiran, and Krishak. 

Despite the socialist mindset of the early Indian government—nationalization of HAL and indifference from government officials—the involvement of visionary founders, Hirachand and the Wodeyars, managed to attract Kurt Tank to lead aircraft-building efforts.

Who is Kurt Tank?

Kurt Tank was one of the original aircraft pioneers, designing the Focke Wulf range of airplanes in the 1930s. His Focke Wulf Condor was the first plane to make a transatlantic journey as a passenger jet. It is unclear how he came to India to design an aircraft. There is very little literature about who negotiated his entry into HAL. Was it the Wodeyars? Or Nehru? Did he express interest in developing an aircraft in a third-world country (highly unlikely)? We don’t know. Secondary sources usually credit the government with success and everyone else with failure. However, early photos from the founders' era until the 1960s show active involvement of the Wodeyars and Hirachand families, with minimal political involvement in HAL's activities.

Kurt Tank entered the landscape in the early 1950s. He had to not only design the original aircraft jet but also build a modern industrial complex capable of developing and building one. Unlike his Indian employers, Tank understood the entire process of designing, building, testing, refining, and mass-producing aircraft from his time at Focke Wulf. His Fw-200 Condor, a four-engine commercial transport for Lufthansa, first flew in 1937. When WWII began, the Condor was modified into a highly successful maritime patrol bomber. Tank was also responsible for the Ta-154 Moskito, a high-performance, twin-engine, multi-role combat aircraft built entirely of wood. Production of the Ta-154 was canceled when the factory that produced the special glue required for the wooden airframe was bombed, cutting off the supply.

Despite the rudimentary nature of HAL’s facilities, work on the Mach 2 fighter—designated HF-24 and named Marut—proceeded at a relatively brisk pace. A full-scale wooden glider version of the HF-24 began aerodynamic flight trials, towed into the air by a Douglas DC-3, on April 1, 1959. Assembly of the first prototype commenced in April 1960. It was flown for the first time on June 17, 1961, by Wing Cmdr. Suranjan Das. A little more than a week later, it was demonstrated for the Minister of Defense, V.K. Krishna Menon. A structural test airframe was completed in November, and a second flying prototype took to the air in October 1962.

The performance of the Marut, however, did not meet HAL’s ambitious promises. Its projected performance depended on the availability of the Rolls-Royce Bristol Orpheus BOr-12, a British-designed afterburning turbojet engine. The Marut was intended to be powered by two of these engines, each delivering 8,170 pounds of thrust. However, the British government canceled its financial support for the development of the Orpheus BOr-12, and the Indian government was not prepared to cover the costs, leading to the project's termination.

Consequently, the Marut was fitted with non-afterburning Orpheus 703s, the engines HAL was currently building under license for its Gnat lightweight fighters. The Orpheus 703 produced only 4,850 pounds of thrust—44 percent less than the engine for which the Marut had been designed. As a result, the Marut was underpowered and unable to fulfill its performance potential.

Missing Vision: Socialist Culture of Embracing Mediocrity and Low Self-Esteem

In the early 1960s, Rolls-Royce asked the Indian government to fund the development of the Orpheus BOr-12 turbojet engine—a total of $1 million. Our socialist government flatly refused to spend this amount and instead chose to purchase fully built foreign planes rather than developing one in-house.

It’s worth noting that Rolls-Royce was building the engine based on needs from two countries—India (for Marut) and Egypt (for its fighter jet E-300). After Egypt faced significant setbacks during the 1967 war, they canceled their fighter jet program, leaving India as the sole customer.

What does $1 million translate to today? At a 6% inflation rate over 50 years (from the mid-1960s to the 2020s), it would be a 20X increase in value, equating to about $20 million. Considering the USD to INR drop from the 1960s to the 2020s (1 USD = 5 INR in the 1960s to 82 INR in the 2020s), it would still amount to approximately $150 million in today’s terms.

Losing Its Way Through the 1970s

Despite an underpowered engine, the Marut proved to be a highly maneuverable aircraft during the 1971 India-Pakistan war. No mid-air combat losses were reported during the conflict (out of the 145 aircraft in use).

Was it the lure of kickbacks that led to the closure of the Marut program? Or was it the inability of government bureaucrats to design products, which led to the eventual acquisition of Soviet MIG-21s in the late 1960s? Since then, India has spent tens of billions of dollars on jet purchases. I sometimes wonder where we went wrong.

Kurt Tank seems to have left HAL immediately after the closure of the Marut program in 1967. He offered to design the HF-73 in 1973, but the Indian government ignored him. Having grown accustomed to buying planes from the Soviet Union, our jet aircraft program appears to have been placed on the back burner.

It is a lesser-known fact that one of Kurt’s students at the Madras Institute of Technology was the missile man of India, A.P.J. Abdul Kalam. As they say, when you have great teachers, you are bound to produce great students.

The inability to think big seems to have led to a decline in HAL’s capacity to design any new fighter jet until the 1980s, when the LCA (Light Combat Aircraft) program emerged. Jaguars, Mirages, Sukhois, and Rafales have been the primary focus since then.

Continuous Innovation: Overcoming Setbacks and Laboring On

No product is perfect. Everything is a labor of love and requires continuous innovation. We seem to be unwilling to invest in building core technologies and designs. They need continuous focus, not a start-stop approach.

Will we change? Hopefully, yes. Building aircraft is a costly endeavor. However, not building one is an even costlier proposition in the long term.

Being dependent on the West for our fighter needs is a losing proposition. Building technologies from the ground up within India should be our focus. We lack visionaries like Walchand and the Wodeyars who started HAL. As long as we do not encourage capitalists like Walchand and support them in their ventures to dream big, we are bound to repeat stories like HAL.

Vision seems to be lacking. Somehow we seemed to have lost our ability to take risks. Innovate. Fail. Make it better. 

I just felt that we could do better. I hope we stay on course. HAL - continue to dream to fly!

P.S.: I need to disclose that I have held a large position in HAL since Covid. Of course, my views are biased. I am a SEBI registered Investment Advisor and I also run a SEBI registered PMS, Dwaith.

Ciao till next time...Harsha

Friday, December 01, 2023

Charlie Munger - A life, well lived

It is sad seeing one of your heroes pass away. One usually wishes that they sort of live on forever. If you have not heard of Charlie Munger, I suggest you stop reading and spend time reading about him. It will be time well spent.

A wonderful summary - Who is Charlie Munger?

Don't forget to listen to this long meandering speech when you get the time. It is a wonderful compilation of mental models in a speech Charlie gave in 1995 at Harvard.


Charlie just passed away a few weeks shy of 100th birthday. Well.. what a life, a life truly well lived. Reading about him, my son was asking me yesterday why he was only worth $2.6B while his partner at Berkshire, Buffett is worth many times more, $100B+? 

Well, it seems to me that he has given away a large chunk of his wealth over the years. From the days when he held over 2% of Berkshire Hathaway (which will make him slightly shy of $15B), he seems to have over time sold his shares to fund various philanthropic activities. Who cares if it is $1B, $10B or $100B....at the end of the day, it is what legacy you leave behind that matters. 

Since I do not have a whole lot of time, I have compiled a list of his writings from various books. Let him speak for himself here -

Charlie on Family, Finances and Savings

He wanted a large family. He eventually had 8 children.







Losing his first son. A nasty divorce. Picking the straws after he was 30. Never self-pitying. Play with the hand you are dealt, as best as you can.















Playing a game that fits your talents, he says.










First break in real estate. Interestingly, he constantly avoided that for much of his later life. Having great partners.










Some old takes on Buffett. Munger. Guerin (third partner who over-leveraged and was not in the league of Buffett and Munger post 1980's).. Take on their earlier partnerships. Why only partner with great people.


























Munger and his association with Buffett. How Buffett tells Munger to move into investments and start treating law as a hobby :-) 














Law as a hobby...









Initial days.



















Munger-Tolles Lawfirm. Wheeler-Munger Money management.























Leverage. Why we do not know about Guerin - it's very interesting.. 
He might have been as popular as Buffett-Munger if he had not leveraged and lost out.













Berkshire thoughts

Their first big buy - See's Candies.















Wesco Control.



Committing large capital to great ideas.








Delegation.







Bet sizing. Big Ideas.













Concentration.











Reading.





On opportunity cost. Having no master plan.








Crisis. Solomon - LTCM - Accounting - Finance. etc..

Leadership mistakes of Gutfreund.







Fed loses faith. 


LTCM post-Solomon. Intellect is not key for investing.





Options. 



Teaching Finance.



Incentives and biases.






Career choices. Starting early, fooling yourself.







First Million.


Taking difficult jobs.












Fooling yourself.









Philanthropy and Ben Franklin.


A modern-day Ben Franklin.








Take a bow. What a man. What a life well lived. This blog is more a note to myself than anyone else. 

Ciao till next time...Harsha


Friday, August 11, 2023

Year two out of corporate job - An update

I had written about leaving my corporate job and how I was doing a year ago. Too many things have happened since then and I'm excited every day. A former colleague was asking what is my year two update. I had brushed it aside that now I am not having time to write.

I noticed that this year has been super busy and my blog has gone un-updated. Either I was too busy to write or I did not feel the urge to pen down anything. I have to at least make one customary update so I continue my blog for the 19th year with at least one blog post. Likely, I will make this a short post... not one of those meandering blogs I've penned down before. Time is in short supply.

So, with that, here goes my story. For those who are new, here's my blog post of last year - Financial Independence: A year after leaving a corporate job

A one-sentence summary is - I've gotten more busy than when I was working at Enphase. I've become a reluctant entrepreneur and gotten involved in a few companies. 

My activities

First, an update on Dwaith. As I had written previously, one of my main reasons for charting out was to create a company (Dwaith), get a portfolio management service (PMS) license, and actively manage money.

I've realized that I cannot fight SEBI and bureaucracy. The best way to navigate is by becoming entrenched in the system. Dwaith has become a full-fledged SEBI-registered Investment Advisory service. I've actively refused clients so I can focus on giving quality returns to the ones I have until I can convert this operation into a PMS (or an AIF Cat 2/3). The PMS/AIF is just around the corner at the end of the year.

I am very thankful for some of my ex-colleagues who became my first customers. The returns have been phenomenal, but - more importantly, I get to interact with them on a regular basis which is even better. A lot more people have started approaching me now through word of mouth. 

Secondly, I've got two great partners in the two businesses I'm closely involved in - Ramesh @ Zepco and Rajesh @ Power One. One is a startup and the other is a well-established company that is poised to take off. Both companies play in excellent fields with large opportunities set ahead of them. 

We have a clear strategy and goalposts ahead at both these companies which is keeping me busy. From a five-day work week - I've suddenly got into a six-day workweek mode. I am not complaining.

That apart, I continue to meet quite a few new people and companies. I've realized that when people come to know that they can bank on you and will not take them for a ride, quite a few quality people approach you for an association. I've got a lot of good luck and help from people, so helping others is a way of paying forward. 


Innovation and Entrepreneurship 


Most importantly, I've realized India is poised for growth this decade. Nobody; not even ourselves can stop the growth. Young people with immense talent and potential are looking at creating new companies and sometimes, I wonder how people fresh out of college have the guts and gumption to start companies. I've become a reluctant entrepreneur by chance (I'm first to admit, it was not planned), and more importantly, I'm seeing young people around me being a lot more innovative and risk-taking. 

Energy, power electronics, manufacturing, motors, and associated industries are poised for enormous growth. These are the areas where I am focusing on. I cannot comment on others. I think we in India will slightly tweak the China growth model to make it our own. Our opportunity set is even bigger than China's. 

I was in China a few months back. I was completely taken aback at the kind of response a show like SNEC had. I was used to visiting Intersolar, REI, All Energy, etc in various countries before - but the sheer number of people attending the show in Shanghai blew my mind. Somewhere down the line, a hockey stick-type growth curve is waiting to unfold in countries like ours.

India is just getting started. Five years out, it would be interesting to see how things pan out. 

I am super excited about the things I'm involved in. I think in some of the cases, we are charting out a new destiny. Here's a quote to sign off that I keep on my desk -

As your desire is, so is your will
As your will is, so is your deed
As your deed is, so is your destiny
Your deepest desire is your destiny

- Brihadaranyaka Upanishad

Ciao till next time...Harsha

Thursday, December 22, 2022

Vijayanagara: Built To Last

This is a blog post that has been a long time in making. Not because I did not have enough material. Unfortunately, I need a hard push and plenty of time on hand to write something. As I'm stuck at home now due to a gout flare-up, what better time to write than now!

I've been very fascinated by history, not just Indian, but anything that I can get my hands on. Reading biographies and history books is like second nature and my wife feels that I continue to buy books just to taunt her, as many are unread.

I had planned to take my family to visit Hampi - both as a religious retreat and also as a learning tour to teach kids a little more about the kingdom of Vijayanagara, its art, and architecture. I continue to get their taunts that the West is where all great things are made, and I continue to shrug a little at that. At least to give a historical grounding - I thought this was the right trip to make at the right time. Great things can be built/created/made anywhere in the world.

Also, the timing was right as summer was off and it's a good time of the year to visit the arid regions (called "Bayaluseeme" in Kannada, the local language) of Hospet, the large town adjoining the ruined city of Hampi. The visit was made in September, already 3 months back!

This is likely to be a long blog post. But, I'll try to stitch the various pieces together. Interestingly, there are works of wonder that still exists from the Vijayanagara days. There are still remnants of their contribution that we still use every day. At least, I eat it every day. 

Historical background (Medieval South India):

The ruins of Hampi, though beautiful, are reminders of the last great local Indian empire. There have been quite a few empires before them that were more powerful and more spread out. Like the Cholas, Pandyas, Cheras, Chalukyas, Gangas, and Gajapatis (most of these kingdoms were local kingdoms that were not yet conquered by the Turks/Sultanates). 

To give a summarized view (that is my view) of medieval to pre-modern non-Turkish Indian history, the last great time period where Indians really had a big technological edge was during the times of the Cholas. Post 11th - 12th centuries, there was a gradual inward-looking mentality (preservation more than expansion) that developed. Northern India was firmly under the control of the Turks. Knowledge makes people explorers, whereas the destruction of knowledge makes people inward-looking. 

Some of the greatest learning centers in the world during the medieval times were: Nalanda (present-day Bihar which operated as an institute of higher education from 400 AD to 1200 AD), Vikramshila (again, present-day Bihar which was built as a secondary school to give some competition to Nalanda from 800 AD to 1200 AD) and prior to that, Takshashila (present-day Punjab of Pakistan from 1000 BC to 400 AD). Many of the great inventors, linguists, educators, poets, and medical experts traveled to these institutes to learn. 

It is no coincidence that higher education institutions moved from Takhsashila to Nalanda sometime during 400 AD when the white hun (pre-Islamic invaders) onslaught had started. The education mechanism during those times likely involved reading books/parchment papers/medical treatises, etc by becoming a resident student for multiple years at these universities. Chinese scholars spent multiple decades copying some of the texts, translating them into Chinese to take back to their cities, so they can build similar learning centers. It is only through their stories, that we come to know about the details of these places. Oriental scholarship, therefore, was very confined to very few centers. 

The destruction of these universities takes back learning by many decades or even hundreds of years. The learnings of Greeks and Romans were lost to the world until around the 1300s/1400s when they started becoming more popular with universities in Britain, France, Germany, and more importantly Italy teaching students.

Until the Gutenberg printing press was invented in 1440, the way you mass-published books was by sitting painstakingly to copy entire texts by hand. The task usually extended to multiple decades if you wanted to copy whole treatises. It's kind of funny that many of the older Sanskrit hymns, and lessons are very expressive with very few words (many are even written as summary poems - so they can be learned faster). It was like the Twitter of the old :-)

Anyway, I am digressing. So, let's get back to a summarized background story. One clear indication of power centers is knowing how religions spread, and their origins. Four of the top ten religions today in the world have origins in India - Hinduism, Jainism, Buddhism, and Sikhism. 

The destruction of Nalanda and Vikramshila by the Khalji's in 1200 AD was like the passing of the baton, so to speak. The new centers of learning - the Universities of Oxford/Cambridge/Bologna came to be founded around the 11th - 12th centuries. Just as we Indians were turning inward-looking, spurred by new universities and the printing press (which magically reduced the time-to-market of books), the west started galloping ahead. 

Printed books vastly improved the knowledge consciousness of the Europeans and ushered in the era of Renaissance in the mid-1400s/1500s. The old learnings of Greeks and Romans were becoming more popular with books being translated and published in local European languages.

It's also a magical reminder that humankind can do wonderful things and forget many of the wonderful things it has done if there is no proper teaching (or passing-on) mechanism. 

Sir Isaac Newton, the famous English scientist, once said, “If I have seen further, it is by standing on the shoulders of giants.” Of course, Newton wasn’t literally standing on the shoulders of giants. Newton was explaining that his ideas didn’t come from him alone. He relied on the ideas of those who came before him. When Newton used the word giant, he meant people who were giants in the scientific community. 

The problem in medieval India was, that it had lost wholesale the works of all the previous giants when the universities of Nalanda and Vikramshila burned down. Supposedly, it is said, it took over 3 months to burn those vast libraries down. 

It's kind of interesting to imagine the possibilities of having some of these really old institutions like Nalanda/Vikramshila to survive, right? Who knows what they had in store.

So, after the Cholas - who were the last great Eastern ship-builders exploring the Indian Ocean, the Indian nation-state was basically getting insulated. Preservation became more important than growth. Even to this date - most elderly people talk about not losing (instead of growing). Gold, today is the most preferred form of investment for most Indians - because it is ingrained in the psyche that anyone can steal, even the government.

Anyway, medieval India was still a pretty rich place to be. The exports had always been more than imports for India until the late 18th century. Industrialization basically tilted the scale so to speak. The advent of oil tilted the export-import balance even more so. 

Before the technology age, labor arbitrage was the principal arbitrage known to man. Now, in today's world - it is (1) labor, (2) capital, and (3) knowledge (or technology), in ascending order of hierarchy. 

Since labor arbitrage was well known to the Indian kings - they employed that to their advantage with great building works. They had basically lost the technological advantage they previously held for many centuries which had prevented people from conquering their lands and ruling them much before. 

The slowly winding down pre-modern kingdoms of India were now becoming the students from being the teachers of before. Though they had a significant export surplus, they were learning the art of war from the early gun-powder empires (Ottoman Turks, Safavid Persians, and Delhi Sultanates) and the use of fast cavalry and arquebus/muskets from Europeans.

One such kingdom that learned fast was Vijayanagara. This kingdom was built on the ruins of three main kingdoms which had succumbed to the Delhi Sultanate's onslaughts - Hoysalas, Kakatiyas, and the Pandyas. It is a shame that even today a well-written book about the genesis and demise of these pre-modern empires does not exist. 

Vijayanagara Empire:



The "Karnata" kingdom (today called "Vijayanagara Empire" due to the ruins of their famous capital city, Vijayanagara) was started in 1300s by two generals - Hakka and Bukka Raya of Kakatiya kings who were captured, converted to Islam, and sent to rule present-day Hampi/Anegundi. Their kingdom stood rock solid for 300 odd years (actually close to 500 years if you consider their splinter weaker kings post 1600s); in comparison, British empire in India spanned little over 200 years.

A learned sage Vidyaranya reconverted the brothers to Hinduism and laid the foundation stone for the new empire. Their successors were capable individuals who quickly reclaimed most of the territories that were lost to the Sultanates of the north. The wily South Indians were always able to snub the Delhi Sultanates for over three centuries (until Vijayanagara fell apart: that's a long story for another day).

They came to rule over all of today's South India (states of Karnataka, Goa, Kerala, Tamil Nadu, Andhra, Telangana, and parts of Orissa and Maharashtra). Their cultural and trade influences often extended to Srilanka, Malaysia, the Philippines, and Thailand. Much of the East Asian Hindu influence is either from this period (Bali, etc) or from the previous Chola periods. 

The Vijayanagara kings were great patrons of arts, culture, agri-sciences, and other pursuits that helped their subjects. Unfortunately, the last major scientific pursuits of Indians were all done before 1200 AD. Post destruction of Nalanda, it is rare to see an Indian scientific/medical achievement. It is not possible to note what they had done scientifically. Most work, if any is long gone.

However, the actual engineering works built during those times were still excellent. Indians of the 14th and 15th centuries were probably the best civil engineers, architects, hydraulic engineers, and metal workers of their time.

Cultural Renaissance:

Just like there was a European Rennaissance that was mainly started in the field of art and culture which then translated to scientific re-awakening, there was one that happened during the Vijayanagara times. Same time period - late 14th century, early 15th century.



The best-known art forms - Carnatic art & music, Dasa Sahitya, Nritya, and Naatya (dance forms) were created during those times. They were basically the heady times when new ideas seemed to have taken root - just like they did in Europe.

Also, the ports of Musiri (present-day Cochin) and Karwar-Goa (Present day Goa) became very significant after the capture of Constantinople in 1453. Reason - the land route for trade, called the silk road was now closed (or at least became impractical due to the huge trade tariffs imposed by the Turks). 

The problem was, that renaissance thinking just got cut in the early 16th century with the fall of the Vijayanagara empire. It is one of the "ifs" we will never know.. Could the same renaissance thinking not have propelled India to similar heights as Europe? 

The inherent stability just disappeared, I believe. "PEACE" is the ultimate lesson of all the oriental religions - Hinduism, Buddhism, Jaininsm, Sikhism (even though it was formed out of war) and influenced religions (borrowed heavily from Buddhism) - Confusionism, Taoism and Zenism.

Peace and stability are the bed rocks of progress, scientific mind set and growth mindedness. It leads to innovation. Instability leads to chaos, confusion, stupidity, status games, one upmanship and more importantly to intolerance. India has been a land of tolerance for its inbred stability of minds. The cultural heritage is one of peace with nature, that's how 1000s of years of progress was built upon. 

Some remnants of that thought still remains in our lizard brains. Hopefully, that leads us to reawaken and grow again after a thousand years of decline and decay. 

Anyway, I'm again digressing. Back to the medieval South India. 

Trade and Conflict:

There were principally few players in the trade game of the early 1400s. Persians, South Indians, and Chinese. During this time, all of Persia had basically become Islamic in nature. 

The last of the Parsis (old Zoroastrian followers - merchants and traders had moved into Indian coasts - around Maharashtra and Gujarat around this time). Some of the most iconic companies in India today are founded by this select group of Parsis - Tatas, Wadias, Pallonjis, etc.. What a mistake to throw them away Middle East??

Anyway, the sea trade was now open in Persia in mid 1400s to early 1500s. It was soon monopolized by Arabic traders and pushed out local South Indian settlements which seemed to have been there for hundreds of years (if not for more than a millennia). The East sea routes were still open, and none seemed to have a monopoly.

With one leg of sea trade - Persia/Egypt to India (Musiri/Goa) under Arabic domination - Europeans were now forced to pay punitive taxes. They were the affected party! The India-to-China sea trade had no new players. But, essentially, it became a game of punishing taxes for Europeans to trade with India. 

Essentially, the Indian states (read: Vijayanagara) on one side had nothing to lose. Instead of getting taxes from South Indian traders and Arab traders, now they were getting taxes from Arabs alone (who had now a monopoly on the Persian coasts with Arabic government support). They were anyway used to a trade surplus and except for the sulking Indian traders, they did not have to pacify other citizens much. 

Just imagine if the Vijayanagara kings of those times were able to think centuries ahead. They could have just demanded that traders be allowed to trade with no favoritism on the Persian coast side!

Just imagine in the present day, where American superiority is being challenged by wily Chinese who are buying up all the rare earth mines Lithium, Permanent magnets, etc. 50 years from now, American kids will learn that they gave up their superiority for simple reason that Chinese created a monopoly on all key renewable material supply and increased prices on them 10x! Phew...

Anyway, these things did not happen in 1500s, Indian Vijayanagara kings never really thought along those lines. The Portuguese discovery of India with a new sea route happened. Vasco da Gama reaches India in 1498. Well within 50 years of the Arab conquest of Constantinople.

Out of the two key ports - Musiri and Goa, one of the ports -- Goa was conquered by Adil Shah of Bijapur (from Vijayanagara kings in the late 1470s). The other was under the command of Zamorin of Kerala who was a vassal state of Vijayanagara.

It seems that the kings of Vijayanagara, though good at administration, decent at war-making, and patron of arts; were not so great at strategic long-term thinking. "Strategy" in the very long time horizon is the no. 1 weapon. Long-term games can only be played by very few people. Very very few. 

The Zenith - 1509 to 1529:

Krishnadeva Raya (the greatest king of Vijayanagara) came to power in 1509. He was probably the last great Hindu king of India. He is still revered across South India. He was the principal reason Hampi grew to the size it did (and the remains that we still see today are of monuments he had commissioned to be built). He was a great administrator and a brilliant tactical commander. 

He won back territory his grandfather had lost to both the Bijapur Sultanates of the North and Gajapati's of the East. 

Some of the tact with which he won the wars are worth studying. He basically created a learning culture. He used Portuguese help during the siege of the Raichur fort to defeat the Bijapur sultan to claim back lost territory. He was mystified by the long range of muskets the Portuguese had, and asked his engineers to copy that as he had excellent ironworkers. His mini-war industry started making better muskets during that time which was critical in his war efforts.

But, before all of his victories, he actually helped the Portuguese conquer the port of Goa from Adil Shah of Bijapur. His key advisor, Thimmarasu had supposedly told him to control the ports of his empire (and wisely so). He seemed to have ignored him.

He could have as well conquered it himself. He is said to have given the manpower and materials needed for the conquest. What did he get in return - horses! At exorbitant rates. He did not care about rates, or so it seems to me. 

With that one foothold, it eventually paved the way for European entry into India. It's unlikely that he could have prevented their dominance altogether, as the technical capabilities and scientific-mindedness of Europeans had surpassed Indians at that time.

However, it does seem that the cultural awakening and renaissance thinking of Indians was also getting started at that time. Immediately after their downfall - the same pattern of inward thinking re-dominated for many centuries.

A strong sustained rule of Vijayanagara might have enabled a different history for India! Who knows, if this might have happened. These are alternate histories that one can only ponder upon.

It is sad, that right after his death, the same renaissance thinking (where he developed firearms, gunpowder, etc) did not sustain, and his kingdom was overrun by Bijapur Sultanates in 1565 (35 years after his passing away).

What's their lasting impact? What did they build, that stands even today?

After his famous victories against the Bijapur Sultanates and Gajapatis of Orissa, he commissioned many engineering works: temples, buildings, waterways, canals, and man-made tanks for irrigation.

Water is of prime importance when it comes to agriculture. He seemed to have taken that to heart.

Exactly 500 years back - he constructed some of the best-in-class canals of those times - "Raya kaluve", "Basava kaluve", "hiriya kaluve" and "Thurthu kaluve". A manmade tank "Kamalapura tank", the largest holding tank still stands.




During my visit of one week, I was able to gather from locals, as to who built these canals. There were two principal architects of the canals: 1) Arya Krishna Bhatta and 2) Garalugante Tippa. We'll not get their names from God-Google.

For absolutely 500 years, they have been the main waterways of the region. A semi-arid region of Karnataka and Andhra Pradesh/Telangana, today has the highest production of Rice/Acre. All are irrigated by these canals. 

In the 1960s the Government of India built high-level canals (HLC) and low-level canals (LLC) on river Tungabhadra. This irrigation network irrigates 6.5L Acres of land in two states of India.

The main variant of rice consumed by all South Indians is "sona masoori". It is known for its unique texture and flavor. A major portion of this rice variety is native to the lands irrigated by these canals. 

The great temples of Hampi, though in ruins, are great to look at. Some of the stone carvings are works of great artists of those times and remind us that our forefathers had the capability to build wonderful, beautiful works of high caliber.

The canals though, seem to be built to last. For giving us these oftentimes forgotten waterworks, we should thank the kings of Vijayanagara! 

Ciao till next time...Harsha

Monday, September 12, 2022

Quality People - Who You Spend Time With Matters

It's been a rather busy month. I was feeling that I had time on hand before, but things have just come in on my lap that requires focused work. In spite of trying to update my blog at least once every two weeks - I've not been successful. Mainly because, I've rarely spent time at the office, travel has taken my time - all work-related.

So, this brings me to something fundamentally important. Who do you spend your time with? This is "the most important thing" that determines what you think, do, or feel. 

Improving the quality of people you deal with daily - automatically raises your bar. It's an interesting quality I've observed now. If you set a high enough bar - you'll deal with less noise, but the interactions that happen will add much more value.

Anyway, it's important to spend a lot of time - reading and thinking. Having time on hand to think is necessary. Moving away from a "corporate job" immediately afforded me this luxury. However, I found a lacuna, as my interactions with high-quality people reduced. In a corporate job - you automatically come across both high-quality and low-quality people. 

It's difficult to cut out all the crap, but you do have a portion of interactions that make you feel that you've learned something, added a new skill, or in general, developed a connection with someone who has a refreshing point of view. This network - that uplifts your spirits is very valuable. The high-quality social interaction makes you slightly wiser.



Saying "no" to things:

I started saying no to a few things in my life. I've written about this many times before and it never ceases to amuse me. Here are a few:

1) Saying no to opportunities that do not excite me, motivate me, or improve me. Saying no to something purely for money - when time is more valuable

2) Saying no to pure networking events. Business card swapping events. I had no business card until recently. Had to print some for consulting work (will write about this sometime, it's an interesting story)

3) Saying no to negativity or gossip

4) Saying no to over-working (it's an act of diminishing returns). To meetings. Do something, instead of nothing sort of work

5) Saying no to ass licking. People pleasing

The sad part is, by doing that I cut out 80-90% of my interactions socially. This dramatically reduced my ability to learn from good people. 

Saying "yes" when all reasons to say "no" are not present:

I had to rediscover social networks. Build dramatically new networks which will bring me "value" and "learning" in areas I planned to focus on.

The funny thing is, you do get some high-quality people, and high-quality ideas; though rarely, and then; the cycle of learning increases back again. 

I am in that phase currently. Some of these are purely lucky breaks - being in the right place at the right time, with the right skill sets. But, who cares how they come in. 

Suddenly, I'm involved in two separate companies now which are both interesting - one, an old-world company and another, which I'm starting. More importantly, the quality of people involved in both these companies is excellent. 

This is apart from my PMS venture which has taken a pause until I find the right partner there.

The partner search is still "on" for PMS, but I've got enough on hand to learn and grow in the meantime. If you happen to read my blog accidentally, I am super interested if you are or know someone who might be the right partner to start an exciting PMS house. Just email me to start a conversation.

Ciao till next time...Harsha

Tuesday, August 02, 2022

Financial Independence: A year after leaving a corporate job

I had noted to write something about this a year after I leave my corporate job. That time is now. Exactly a year ago was the last time I got a paycheck.

I wanted to pen down some thoughts on what I would feel after a year out. I told myself that I'll sit down and write an account. Let me try to organize and draft this into a blog post. It may help some of the readers. 

I know the concept of FIRE - Financial Independence and Retire Early. I've loved to read some blog posts from authors like Sam. Early retirement is not something that motivated me to leave Enphase (my previous company). But, financial independence was something important to me. 



I loved what I did at Enphase; well for 90% of the time :-). There are always some frustrations. But, the happy times were far more than the frustrating times. 

Creating business plans and putting them in action, owning a product (and I always felt I owned the most important product in the company - the microinverter), building a great team, and working with engineering & sales folks to tinker on ideas is a dream come true job. On top of that, in 2017, when I joined, the company was in some trouble and it was so much fun traveling to customers, differentiating our products from competitors, and winning back market share! And, growing business! Making it profitable.

OK. I am deviating from what I wanted to write. I know. Let me get back to my story. I've always been passionate about Enphase. But, this blog is not about Enphase. Let me tell you my short story here. 

The back story...

Early in my corporate career, I thought I should be financially independent by the time I'm 40. Seeing my father invest and tinker in stocks, I was hooked on the investing bug since my school days. 

I had built a portfolio even before my first job (though I realize, it was usually based on momentum). Analyzing companies, and reading their annual report, and quarterly earnings was not new to me. We used to get physical copies of annual reports at home (during the 90s) and I ended up reading them.

My first paycheck in 2004 was for Rs. 9200, and I bought 200 shares of NTPC with that. I took a loan of Rs. 2000 from my father, as the IPO was at Rs. 56/share. 

Anyway, doing an MBA sort of muddled my concept of stock picking. It seemed market models, CAPM, etc. were used as proxies for business. I had hoped to get into a finance job but that got quickly squashed as NITIE was not known for finance. 

Somehow, passion rarely dies. Investing bug got me to find teachers, and do quite a bit of self-study. I've written about that here

In 2015-16, I tried to get into fund management when I was in the US. An interaction with one of the partners of Sequoia Fund, Roelof Botha, gave me some ideas. I also realized, that, I'm a misfit in an early-stage VC. My experience as a semiconductor guy was not of much use. But, my interactions gave me the idea of writing my own personal annual investing letters - so that one day - I can create my own investment fund. 

So, ever since 2016 - I started writing about how I have performed, in investing my personal assets in the form of an annual letter. I shared my investing letters with a bunch of people who I felt could be my partners a few years down the lane. 

During Christmas vacation at year-ends, I spent time reviewing and calculating my annual CAGR and writing a thesis on my investments for the year. I loved writing them. I kept at it till 2021.

Anyway in the meantime - around 2018 - I felt that monetarily - I was doing fine and I could call myself financially independent.

My definition of financial independence was - getting more dividends from my investments than my paycheck. Usually, dividends also grow - so, inflation usually gets taken care of.

I simply felt that it was right for me to come back to India post-2018. There was a strong urge to do something in my country. I felt there would be a level of comfort and a zone of fulfillment here in India - even like building a team or creating an India-based product, etc. was something I looked forward to. 

Luckily, my wife was fine with that, and the kids were young enough. Within a year, I gave up my green card (not the best decision financially as I see now) and settled back.

Anyway, by 2021, having spent 3 years here in India, and, feeling that my task at Enphase was now one of safekeeping, rather than growing - the urge to really get into full-time investment was biting me. 

At the same time, a mentor (who goes unnamed, actually more than one) stepped forward to help me. He offered to set up an investment vehicle in the US and invest. My annual letters from the past 5 years were at last helpful. Having good-meaning, well-wishers and mentors have been a blessing in my career. Someone, who is ahead of you in terms of life stage can act as a wonderful sounding board from time to time. 

I had created an entity in 2018 through which I invested and always felt I could get a SEBI license sometime and scale that up. So, these were my thoughts as I parted ways with Enphase last year. It also helps to be open and tell exactly what you are going to do, to people in the organization. Clarity of thought is important. If you are real, usually people on the other side of the table are real too. 

So, with the good wishes of the management team at Enphase, I charted out. That was exactly a year ago.

So, what's happened in the past year?

It's a mixed year. Nothing crazy good or bad. Things move slow when regulators are involved.

As, soon as I left, I applied for a SEBI PMS license. I always felt it would be great to build something in investment management. 

After all, in my mind - I had an 8+ year track record (since 2013 audited) of investing with an annual rate of return of 37.1%. I had made money myself, having been financially independent for a few years already. Though, luck is a huge component in investing, I felt an element of skill was present in the numbers. Numbers don't lie - over long periods.

Setting up an entity in the US, an investment partnership is easy. Unless you have $150M of assets under management, SEC (Securities Exchange Commission) does not have too many conditions. It is an entrepreneurial culture. The US loves people starting out new companies in any field! 

That, unfortunately, is not the case here in India.

The way you look at anyone is usually with an amount of suspicion in India. The regulators seem to be set in their ways. There might be very legitimate reasons for the same, but over-regulating kills entrepreneurship. 

After multiple clarifications, SEBI rejected my PMS application a few months back. I did not officially get a reason for the rejection. 

Official requests for an explanation went about with no answer. Letters went unanswered. Unofficially, I was told that my personal track record of experience in investing is not considered "experience". My company checked all other boxes for the PMS, I was sounded out.

I am looking at various alternatives as of today. Partnering with someone, hiring an experienced individual who "checks the box" for SEBI, etc.

So, if you know anyone in this area who could potentially help, or partner with me - feel free to reach me through my blog/email/comments/tweet. 

A smart lawyer friend was telling me that I'm an idiot to start anything here. Just relocate to Singapore or Dubai and start-up there. Just route in money as an FPI! I am not ready to give up on India yet - it is better to fight the system to make it a little better than before, instead of moving. Playing long-term games is a kind of passion. I will need to stay at it for longer, a year is too short to decide. So, that's that.

Apart from the frustration of "not going anywhere" on the PMS front, life has been great. 

On the home front, it is indeed enjoyable to see kids do well. They are getting enough attention from me as they are growing up, and they love it. My wife is not frustrated that I have late night calls or early morning calls. That is definitely a big plus in the past year. I feel that I am the sharpest I have been in over a decade. At last, I am hitting the gym daily. Trekking, cycling, and, meeting younger people. 

I am trying to help some start-ups. That is fun. I have been consulting on a few topics - in solar and semiconductor. I might actually end up starting something in either of the two fields. I am discussing this with a few experienced friends. There is so much potential. It would be so much fun.

Talent is plenty in India. Channeling them in the right direction can do wonders. The West (the US and Western Europe) is basically stagnating. Any growth, on a massive scale, I believe, has to come from emerging markets. 

But, then again - ease of doing business is more of a marketing ploy in India. The actual issues, seem to be a hindrance - license, regulation, taxation, approvals, etc. 

Our nation seems to be in the clutches of controlling everything. I may pick an area where the regulators are not really knowledgeable enough to regulate. 

If you, as a reader are working on something interesting, I look forward to collaborating. Especially in green hydrogen, semiconductor, solar, or cleantech.

For one thing, in the past year, I've never really missed the paycheck. 

I always felt that our addiction to paycheck and sugar is legendary. A lot of time would be required for de-addiction! That was my main worry.

Maybe, I overthought that problem for far too long. Yes, dividend checks are infrequent. But, apart from that being a slight irritant, I've not felt a pinch at all.

I guess each one of us has a different set of problems. A different set of goals.

Now, someone was asking me if I missed my job. 

Definitely. I always felt great - building something, working on a project, working towards growth. Even preventing a problem, making mistakes, and correcting, was nice. I was passionate about making a difference.

Also, in general, interacting with a set of high-quality people is always fun.

I am still building my network in the field of investing - especially since I am basically unknown. Building a high quality network in a new field takes time.

Literally, I've been super secretive in this field. Fame has no meaning in investing. Being right over the long term is all that matters.

I also feel that people in the field of investment management are too theoretical. Most are really smart, but have little practical knowledge of building and running a business or a product. Not their fault, but they are in the financial field for far too long and sometimes, cannot differentiate between qualitative and quantitative matters. 

Analyzing a business is not just "excel modeling" - sometimes, cycles cannot be really modeled. It is understanding the key aspects that can affect the future. How management can build their vision while making the company stronger (financially stronger, building durable, enduring competitive advantages) over a period of time is very important. 

You cannot drive forward looking at the rearview mirror. You have to understand the range of possibilities (and probabilities) in the future.

Sadly, running a business, creating a product - building competitive advantages around it, differentiating it, and working with customers, do not count as experience to SEBI. And, that is my frustration today on the PMS front. 

Anyway, I am happy that I am trying. The next 20 years will define if charting out on my own was better or not. I am deeply thinking about the future. 

"I think the best way to prepare for the future 20 years is to find something you love to do, to have a shot at being one of the best people in the world at it. Build an independent brand around it, with your name". - Naval.

Anyway, this too shall pass. 

Ciao till next time...Harsha