And Vijay Says…

Today is September 5th , and in India it is celebrated as “Teachers’ day” , in honor of Dr. S. Radhakrishnan who was the second President of India and probably the best comparative religion/philosophy scholar of his time .

My late grandfather, R. Easwara Pillai, was a history professor in University of Kerala. He was the first teacher I ever met – and till date he remains the best teacher in my mind . His ability to explain History , Politics and Economics in simple terms with lots of examples and stories was what kindled a life long interest for me in those subjects .

In Kindergarten ( At Kayankulam St.Mary’s ), my favorite teacher was Ms Kochurani . It amazes me that I remember her name but can’t remember her face any more. But I do remember her visiting our home every few weeks and bringing story books for me to read !

In elementary school (Chinmaya Vidyalaya ) , my favorite was Mrs Nirmala Mathrubhootam. She would take us out of the class room and make us gather around the big trees in the school yard and talk to us about nature , how trees get their food and how they help clean up the pollution.

In junior high (Christ Nagar), there were two stand out teachers . Both of them taught English – Mr Appukuttan Nair and Rev Fr Berthold CMI . The former took away my fear for the language and the latter taught me the nuances of “Spoken English” . I had no idea at that time how impactful those lessons would be in my future.

Pre-Degree ( Govt Arts College ) had some super star teachers – the two I remember the most are Prof Mohan Kumar who taught Organic Chemistry and Prof Jayaprakash who taught Physics. They had absolute mastery over their subjects and demanded excellence from their students .

Then came four years of Mechanical Engineering (T.K.M college) and the first time I really understood that the world has as many bad teachers as it had good teachers. For me there is no doubt who had the most impact on me – that was Prof Nasser who taught us Automobile Engineering . What put him in a class of his own was his passion for the subject – he loved cars and it showed in how he would explain the design principles .

And finally MBA ( IMK , Kerala ) which was probably the two years I enjoyed the most as a student. There were two professors that I gave “rock star” status right after their first lecture, and I can safely say that I have not seen anyone better in those subjects ever since . One was Dr Kevin who taught financial management and the other was Prof Kalyanaraman who taught Statistics . Even today I refer back to my old lecture notes from their classes to refresh the first principles. A close second to these two was the late Dr MNV Nair who was the dean of management studies , and his classes on strategy management were brilliant . He – and Dr Kevin – encouraged us to challenge them and I (and many others) did and learned from that experience . I remember him telling me after a debate on business law that he lost that ” You did well,young man . I am fiercely loyal to my own ideas – but only till someone proves me wrong” .

I have left off several great teachers in the list – but I am grateful to all of them . I will echo Dr. Radhakrishnan’s point of view as my parting note – “Teachers should be the best minds in the country”.

I think Uber board picked an amazing leader as the new CEO , despite all the leaks and drama and all around it . With adult supervision from the new boss and hiring experienced leaders to work for him in various functions , I think a lot of their current problems with culture , litigation , board politics, driver retention etc will get resolved .

Solving the current problems is unfortunately just table stakes really . The fundamental question in my mind is whether Uber has a sustainable business model . How long can they capture growth by subsidizing costs when we are talking in multiple billions ?

Clearly, they have made some mis-steps by trying to optimize for market share at all costs . So getting out of some international markets was a necessary step , and I expect more of the same for near future . Getting out of leasing also seems like a smart thing to do .

I am a firm believer that driverless cars will become a mainstream reality soon – between google , Tesla , uber and many others putting their might behind it – it’s only a matter of time . But that time is not in next couple of years . So for foreseeable future , they have to subsidize human drivers and figure out better ways to retain drivers . And then there will be a period where self driving cars and human driven cars will do-exist . And some time in far future – perhaps they can switch to mostly driverless cars ( assuming they have the legal and political backing to do so in the major markets ). Will investors agree to bleeding money for that long ?

Also – when they do mostly driverless cars, wouldn’t they just incur even more costs for owning ( or leasing ) and maintaining a big fleet ? And my guess is that insurance cost will be quite high for the in-between period where they need both human driven and self driving cars .

Not sure how to correctly extrapolate here – but my best guess is that for next decade it is not going to make profitable revenue with the “cheap taxi” business alone , while also capturing significant chunks of the global market.

While uber is getting out of some geographic markets, it’s definitely entering some adjacencies – like trucks and boats. But the business model is still the same – so all the problems with the economic model of taxis should apply to boats and trucks too .

First mover advantage is with uber – but there is always the significant risk of fast followers who can learn from Uber’s mistakes and avoid the heavy initial capital investments and expenses .

If private markets are fine with all this and Uber just chooses to remain privately held for a very long time – none of this might be an issue . But going to public markets without proving out their business model seems like mission impossible . Even in private market, my suspicion is that they cannot sustain the $69B valuation given all the economic issues . And a loss in valuation might start a round of talent attrition which might make it really hard to execute on whatever roadmap the new CEO puts in place .

So all things considered – I think the main challenge for the new Uber CEO might not be the things in the news now . They are all no doubt important problems to solve , and unless he solves them first – there might not even be a chance to change the business model . But the true fight in my mind is to figure out how to run this business as a sustainable enterprise , while preserving as much of the valuation as possible .

Given the size of the short term and long term challenges for uber – I hope the CEO, the board and the staff of Uber have the stamina to do a few marathons back to back !

Just as I was about to hit the sack yesterday night , I got the news that Vishal has submitted his resignation and moved to a executive vice chairman role . I was not surprised – for at least the last year, I felt it was just a when question, not an if question .

The story of Vishal’s tenure at Infosys and his exit yesterday follows the plot of the average Indian “flood of tears, and well dressed rich people” TV serial . It goes like this in general …

Groom’s parents finds a beautiful and highly educated bride for their son and parades her around friends and family . Then at some point, the in-laws get buyer’s remorse ( jealousy of bride being smarter than their own kids and immediate family is the usual story line ) and starts a routine of mental torture . The dutiful young bride tries to make it work despite the hostile environment for a long time, due to her kindness of heart and respect for tradition – but finally with the support of friends and mentors , says “screw it, I am divorcing the guy”. And even at the divorce court , the teary eyed guy says “But I still love you” while he signs the court paperwork . He might even break into a long monologue about how his parents didn’t do the right thing , but he wishes his now ex-wife well ! The newly free young woman also does her monologue on how hard she tried to make it all work , but realized the abuse was too much and life is too short to stay at it . And throughout the story you keep seeing crying children who are torn apart .

There is a very cruel joke about the “in-laws – bride” story – which goes “I don’t care if my brother dies in the process , All I want is to see my sister-in-law’s tears” .

Well – it was quite the drama, to say the least . I applaud Vishal for hanging in there all this time and putting a brave front to the external world even when the founders did everything they could to undermine his position .

Infosys is an iconic company . When people of my generation came out of college , we wanted to join one amongst TCS, Wipro or Infosys . Apart from Vishal and many other ex-SAP colleague, I have several friends who work there and who care deeply about the company .So it is painful for me to watch this , even though I am not directly affected by it .

Culture change is a hard task for anyone – and there are more failures than successes when it comes to large scale transformations . It was a brilliant experiment to bring in a software veteran to turn around a services company . Some experiments succeed and some fail – this one failed rather miserably and there are probably many reasons for it . But it should not be forgotten that it’s easy to fail and really hard to succeed , and by adding distractions – the founders and the media certainly didn’t increase the odds of success .

In hind sight , there are perhaps things Vishal could have done better on a few aspects .

1. Instead of hiring most of his old team from SAP labs , perhaps he could have targeted top tier consulting companies to find leadership talent . That would have been a harder sell for sure than convincing loyal friends . Most of the SAP talent left he hired left any way – and several of legacy Infosys leaders also left .

2. The whole $20B target was a bad idea as it was unrealistic . It just proved to be a distraction for the company than a motivation . I don’t blame him for setting a high goal for his team internally – doing so externally seemed misguided . Why didn’t the board counsel him on that ?

3. Innovators dilemma proved to be real . Like Vishal – I also think the future of the consulting business is where the distinction between products and Servcies blur . So he invested and ring fenced innovation on products . But in the overall picture – that was a tiny portion of the company and the larger legacy business just didn’t transform quickly . It also didn’t help that the product business didn’t take off at rocket speed – and had multiple leaders quit in a short period.

But then hind sight is always 20/20. If anything we should applaud Vishal for his bold vision of future of the company and the industry . And he has always been a big proponent of customer focus .

It’s a good lesson for the rest of the industry is understanding the challenges of culture changes . Every large company has its “antibodies” that will attack anything new – for good and bad reasons . Having demonstrated this in public , I wonder if Infosys can now attract top caliber candidates for its leadership ranks any more . My best guess – not that what I think matters – is that they will make an internal candidate the full time CEO , and base that person out of their HQ in Bangalore . That could be one of the younger founders too I guess .

As for Vishal – I really hope he and Vandana take a long vacation , catch-up on sleep and so on . They deserve a break away from all the stress . When he comes back , I think the best option for the world will be to have Vishal as a VC and professor .

Good luck, V !