Two tollgates of life

Your journey on the road is blocked. You have to pay a toll to proceed. It doesn't matter you are an occasional traveler or someone who crosses it several times a day, you have to cough up the price before your way is unblocked. Few tolls are inexpensive but some are heavy on wallet. 

Similarly, there are two tollgates we cross everyday in life - they are your Manager at your work (assuming you are a office goer) and your wife (assuming you have one) at home. And the tolls are emotional in nature - both inexpensive and expensive energy draw downs.

Both manager and your wife know you well.  They have a clear understanding of what jobs you do well and what you mess up. They monitor you and assess you on a continuous basis. They have legal,  emotional and moral control over you. If both of them want you to put in a better place, you would become a successful person but they won't let it happen. Your success and happiness should include them and forget it if it ignores them. If you become successful without they being part of it, you would outgrow them and they would lose their control over you. So in the best interest of keeping things as they are, they extract emotional toll from you on a regular basis. Someday if you feel successful for some reason and feel happy and light, it will be sooner either your manager or your wife will ensure your feet come back to earth and hit reality.

Your career can't proceed beyond your manager and your happiness at home depends on your wife's mood. Certainly you don't want to lose the job or run home yourself so you compromise, respect the speedbreaker before the toll and fall in line. Life continues to roll as a circle.

If you are smart, there wouldn't be a blog post like this in your life but you would have learnt how to manage these tolls and practiced taking good breaks in between tolls so that you are sufficiently charged with life energy before you hit the toll again. I do read books, go for walks, laugh with friends and anticipate to pay tolls so they become bearable.

If totally unbearable, may be it's time to find another job or if you're financially independent, you can become your own manager. At home, find ways to keep your wife busy,  make sure she has higher problems than managing you. Also convey that your importance is equal in the family. She would get it and may not violate the line of tolerance.

How big are your tolls and how do you manage to pay them?

Book Review: How Google Works by Eric Schmidt and Jonathan Rosenberg

 For sure, Google is not a regular company. They build tech products but earn their revenue from advertising. And the money is ploughed back to build new products which in the beginning look like a crazy idea which is impossible to implement. But then you start seeing it becoming a reality. This is how search engine to google maps got built and the new product line seems to be never ending.

Definitely they have an unconventional thinking process and execution. Their work culture, the kind of people they hire, the way they make their decisions, their communication strategy, innovation process, ways to monetise their products all are different. How about learning that from those who run the company? Then this is the book for you. Eric Schmidt served as CEO and Jonathan Rosenberg who was VP of product development, both seasoned professionals, came as outsiders when the company was in formative stage and the took it to the scale it has reached now tell how all of it happened through this book.

Founders of the company had set the stage for the culture and the hiring process. These two authors got assimilated, internalized it and then scaled it. The process of it, pitfalls, what worked well and what didn’t, what were their learning’s on the path are discussed in this book in detail.

Very interesting and different ways to approach to do the business makes Google a top ranked company and the system they have built ensures it continues to do so for a foreseeable future.

Book review: Zero to one by Peter Thiel

 This book is about start ups. And zero to one is used as adjective for creating something new from scratch and not incremental changes to existing things. Author of this book Peter Thiel was the founder of PayPal, he built a successful product, scaled it and sold it at a higher valuation. How he could do this and what principles worked for him ( and would work for everyone else) is recorded in this book. The team he had built for PayPal now is known as ‘PayPal Mafia’ and went on further to build successful companies like LinkedIn.

If you are fascinated with how to commercialise an idea, build a team, build a product and scale it to become profitable and a monopoly in its segment, you must read this book. Author not only built PayPal but now as an investor, he is completely immersed into startup world, so his ideas are market tested. There are multiple videos available on the web where this author discusses similar topics. But at the end you can’t avoid appreciating this author and ultimately buy this book and read cover to cover.

I felt I should have read this earlier which would have helped me improve my judgment on my investments and fare better. But it is never late and he has made me realise I cannot ignore the startup world and how they work and if possible participate in their growth story when time comes.

Investment framework

 The recent fall in stock market due to corona virus shock (and it's recovery thereafter) gave me an opportunity to build a portfolio. And it seems to be working well as it has produced handsome returns and is giving me confidence to earn my financial independence through my investments. As my strike rate or success rate in picking the right stock at right price and also deciding when to exit seems to be high,  I thought of documenting my investment framework in an one pager. Here it is. I believe in life long learning and making corrections on the go but at this interval this is the process I follow. This is not an investment advice but for the purpose of documenting my investment milestones and also to aid discussion with like minded.

Let me take through the steps.

1. First create a four blocker. With one axis on Risk being High & Low and another axis on Reward being High & Low.

2. Understand that risk has a price. See if it is already priced into book value or not. Similarly look for what can be sustainable Return on Equity. Then place the stocks on one of these four blocks.

Now let us see what we can avoid.  

a. Low Risk and Low Reward: For the stocks falling in this zone, it would not make sense to invest as returns would be equivalent to fixed deposits or bonds. Most commodity or PSU industry would fall here.

b. High Risk and Low Reward: The companies or sectors which are in a long term downtrend (sunset industry) would be here. Many of the oil & gas sector companies are in the risk of phasing out in the coming decades as industry is shifting towards clean energy which is becoming price competitive too.

c. High Risk and High Reward: Though stocks in this zone might continue to make money, why take higher risks? If you have already owned these stocks at a lower price, may be you will let them run. But this is not a fresh entry zone.

That leaves us only one zone to invest.

d. Low Risk and High Reward: Since markets are efficient in the long run, any stock falling in this zone is an opportunity as long it stays there and as the markets discover them and they would get pricier. Or your anticipation of business transformation does not work out right, you need exit quickly to stop your losses. 

Remember that this is not a one time exercise, you need to reassess when there is a bigger price movement and after every quarterly result and if there are any major announcements or developments in-between.