Why Capitalism still rules!!

After the great recession of 2008-2009, everybody was asking if at all capitalism was the best way. People were up in arms against big oil companies, banks which they said were more interest in their well-being than concerned about the good of the society. And, they began to question the very system on which our whole society is based.

Though, capitalism is fundamentally based on concept that "greed is good", whereas other systems mainly socialism is based on "sharing". Though, sound of greed doesn't sound good, but one has to accept its one of the very basic human emotion like love, fear etc. "Greed" inculcates in us to get everything "better" and to do that we have to work harder, and if everyone works harder, the whole economy propels ahead.

Similarly, if everyone was paid the same amount irrespective of how much effort they put into something, then productivity will go down, and eventually the whole economy will bear the brunt. What incentive would there be for a person to put in more efforts.

Again, capitalism is the only system which is most tested, and if we look at the current demographics of the world, the riches countries are capitalist. You can get an idea how good the system is by looking at Korean peninsula, one country i.e. South Korea is among top 10 in GDP in world and other, North Korea cannot survive without foreign aid.

Capitalism, as a system, only fails in the areas where basic rules of economics (law of demand & supply) cannot be applied like healthcare and banking, and its where our system has let us down.


Though, it can always help from people like Bill Gates and Warren Buffet.i.e. earn how much you can in your life, but its not yours to keep and pass it on to the society.

Groupon & Beyond

So, its clear that Groupon isn't going to go with Google, who made a historic  $6 billion offer, which would have been highest ever spent by Google on acquistion till date upping the DoubleClick which they acquired (officially) back in 2008 for $3.1 billion. 

This is interesting in more ways than one. Its one of the few companies to come out in recent times which have had a dramatic influence, and its expected revenues are in a range anywhere between $800 million to $2 billion. To put in context, $2 billion is the expected revenues of Facebook for year 2010 and considering its just two year old, its quite an achievment. 

When Google (supposedly) offered $6 billion for it, everyone had an opinion, some saying it might be overvalued due to bubble, or that it isn't sustainable in long run or that it has a surprisingly large employee force which could hinder its growth. And, other side saying that how much would Google have to pay if it doesn't pay for it now if some compititor bought it (read facebook). But, make no mistake Google has been very shrewd with its acquisition and has made really good use of that stratergy (AdSense, Voice, Android, all came through acquisitions one time or the other) and has not yet anything like ebay-Skype at its hands So, Google wasn't (may be)acting foolish courting an idea which was making waves but no potential. 

But, Andrew Mason has supposedly rejected the supposed acquisition offer by google. That makes clear few things clear, for once, its not in the market for acquisition. If Mr Mason wanted to book his profits he could have sold it to Google, and no other company is going for it (or we could have heard of them as well) and yes there aren't many companies in the market who can pay that kind of price. 

Groupon, obviously have a very interesting future, they have made clear that want to become Amazon/eBay of web 2.0. Congratulations, Mr Andrew Mason you are going to make history one way or the other. 

We, the people

Yesterday, while  driving back from work I was listening to a podcast from Wall Street Journal, in which they were discussing a new survey results, claiming that managers over-rate their skills in managing their employees (which they also said has always been the case). They argued that this was human behavior in which they always overestimate their own abilities. 

This reminded me of a recent training which I had on accountability in my company, in which employees were grouped in 4 and were asked to rate their organization (i.e. company and their concerned department) on certain measures, and then they were asked to rate themselves as individuals on the same measures. Well, the results came out weren’t unexpected but were altogether amusing. Each individual rated themselves on a higher scale than they rated the organization on same measures. If, we group all the people in the group together, overall score in the individual category would be higher than what was in the organization category. If extrapolate the results and measure the cumulative score of each individual throughout the company, I bet individual’s would outscore the organization. So, help me understand that if the organization is made up of all the individuals why isn’t it on par with them.

May be its true the individual’s just overrate their own abilities.

Cisco Umi and 4Ps

Within last month or so, I read about newly launched gadget/service by Cisco called Umi. Its supposed to be a great piece of hardware with HD video calling right from your tv to any person on google talk or skype, with great sound with some (sarcastic) great technology which reduces the background noise while talking.

But, then came the price, its costing you $599 (OMG), but before you go away you also have to shell out $25 per month for this service. In the era of FaceTime  skype and all the other other (somewhat free goodies) Cisco is coming up with such an outrageous pricing plan. That reminds me of business class I took way back in my undergrad which talked about very basic 4P's of which one is Price. Someone please tell me how is Umi going to rock the marketplace with such a plan. This again reminds me of a netbook which Nokia brought to market for $600, and every one knows how big a success it was.I know Cisco you have been success with Flip video cameras but please note that it ain't enterprise market, and trust me consumers are very sensitive to prices (untill the products don't have that apple logo).