The Googleplex: A melting pot of creativity

Recently in San Jose, California

“What's next from Google? It's hard to say. We don't talk much about what lies ahead, because we believe one of our chief competitive advantages is surprise.”

A quick search of the Internet giant on the Web throws up that ‘mission statement'. A visit to the campus, dubbed ‘Googleplex,' revealed how the company manages to retain that element of surprise in all that they do.

As we entered the headquarters of Google in Mountain View, California, our attention was drawn to a space ship hanging from the ceiling - it is a multi-million dollar prize up for grabs, for a bright idea whose time is yet to come.

Robotic vehicle

The $30-million Google X Prize, to be given to a team from anywhere in the world which designs a robotic vehicle, which can land on the Moon and traverse 500 metres on the terrain and send back images to the Earth. Also known as the Paul Allen project, the deadline for participants to grab the prize is December 31, 2012. As we walked around the Googleplex, several objects caught our eye.

The objects are placed in no particular order but perhaps only intended to stimulate creativity among the employees. We noticed old server clusters, a piano, a Google logo on the wall, a Graffiti or creativity board (‘Geeks without frontiers'), featuring thousands of doodles and drawings by employees. A compact booth, at the entrance, allows the visitor to explore Planet Earth – by navigating through high resolution pictures from Google Earth, Google maps and similar applications.

The term ‘Googleplex' is a reference to googolplex, which is 10 to the power of 10 to the power of 100 or the numeral one followed by a googol of zeroes.

A team of nearly 60 journalists, from across the globe, was invited to tour the campus. Once inside, however, we were asked not to click pictures. This prompted one journalist to remark, “Google takes pictures of everything under the Sun, including our homes and here we are asked not to click photos.”

Discussion rooms

As we walked through the hallways, we observed rooms marked ‘Tech Talks,' where brainstorming sessions take place.

Google, we learnt, strongly believes in flexible work timings. The only thing that matters is timely completion of tasks. The company gives importance to social and recreational activities and has set up ‘play areas' within the campus. Employees can choose from a well-equipped gym, indoor games, dance lessons, video games, piano, pool tables, table tennis and so on.

Employees flock to these play areas throughout the day. There are also snack rooms stocked with soft drinks and food items, and a souvenir shop.

We saw quite a few Indians among the Google staff members, and discovered a tiny hub for Indian food (‘Namaste') in the cafeteria area, which serves American, Chinese and other types of cuisine too.

Close to the gourmet's spot, is ‘Charlie's', the melting pot of ideas for Google staff, especially on Friday afternoons. The meeting point has been named after Mr Charlie Ayers, Google's first and most popular head chef.

This spot even attracts Google founders, Mr Larry Page and Mr Sergey Brin, who gather here to make announcements or listen to new ideas.

The spokesperson later informed us that the present campus buildings were once the offices of Silicon Graphics, the famous computing solutions company.

New campus

The Internet search giant will soon move to a new address in Silicon Valley with a one million sq.ft campus at the NASA Research Park at Ames.

With a young and resourceful employee base, tonnes of cash and high valuation, Google looks all set to achieve greater heights.

Is the nation in a coma?

A few days ago I was in a panel discussion on mergers and acquisitions in Frankfurt, Germany, organised by Euroforum and The Handelsblatt, one of the most prestigious newspapers in German-speaking Europe.

The other panellists were senior officials of two of the largest carmakers and two top insurance companies — all German multinationals operating in India.

The panel discussion was moderated by a professor from the esteemed European Business School. The hall had an audience that exceeded a hundred well-known European CEOs. I was the only Indian.

After the panel discussion, the floor was open for questions. That was when my “moment of truth” turned into an hour of shame, embarrassment — when the participants fired questions and made remarks on their experiences with the evil of corruption in India.

The awkwardness and humiliation I went through reminded of The Moment of Truth, the popular Anglo-American game. The more questions I answered truthfully, the more the questions get tougher. Tougher here means more embarrassing.

European disquiet

Questions ranged from “Is your nation in a coma?”, the corruption in judiciary, the possible impeachment of a judge, the 2G scam and to the money parked illegally in tax havens.

It is a fact that the problem of corruption in India has assumed enormous and embarrassing proportions in recent years, although it has been with us for decades. The questions and the debate that followed in the panel discussion was indicative of the European disquiet. At the end of the Q&A session, I surmised Europeans perceive India to be at one of those junctures where tripping over the precipice cannot be ruled out.

Let me substantiate this further with what the European media has to say in recent days.

In a popular prime-time television discussion in Germany, the panellist, a member of the German Parliament quoting a blog said: “If all the scams of the last five years are added up, they are likely to rival and exceed the British colonial loot of India of about a trillion dollars.”

Banana Republic

One German business daily which wrote an editorial on India said: “India is becoming a Banana Republic instead of being an economic superpower. To get the cut motion designated out, assurances are made to political allays. Special treatment is promised at the expense of the people. So, Ms Mayawati who is Chief Minister of the most densely inhabited state, is calmed when an intelligence agency probe is scrapped. The multi-million dollars fodder scam by another former chief minister wielding enormous power is put in cold storage. Prime Minister Manmohan Singh chairs over this kind of unparalleled loot.”

An article in a French newspaper titled “Playing the Game, Indian Style” wrote: “Investigations into the shadowy financial deals of the Indian cricket league have revealed a web of transactions across tax havens like Switzerland, the Virgin Islands, Mauritius and Cyprus.” In the same article, the name of one Hassan Ali of Pune is mentioned as operating with his wife a one-billion-dollar illegal Swiss account with “sanction of the Indian regime”.

A third story narrated in the damaging article is that of the former chief minister of Jharkhand, Madhu Koda, who was reported to have funds in various tax havens that were partly used to buy mines in Liberia. “Unfortunately, the Indian public do not know the status of that enquiry,” the article concluded.

“In the nastiest business scam in Indian records (Satyam) the government adroitly covered up the political aspects of the swindle — predominantly involving real estate,” wrote an Austrian newspaper. “If the Indian Prime Minister knows nothing about these scandals, he is ignorant of ground realities and does not deserve to be Prime Minister. If he does, is he a collaborator in crime?”

The Telegraph of the UK reported the 2G scam saying: “Naturally, India's elephantine legal system will ensure culpability, is delayed.”

Blinded by wealth

This seems true. In the European mind, caricature of a typical Indian encompasses qualities of falsification, telling lies, being fraudulent, dishonest, corrupt, arrogant, boastful, speaking loudly and bothering others in public places or, while travelling, swindling when the slightest of opportunity arises and spreading rumours about others. The list is truly incessant.

My father, who is 81 years old, is utterly frustrated, shocked and disgruntled with whatever is happening and said in a recent discussion that our country's motto should truly be Asatyameva Jayete.

Europeans believe that Indian leaders in politics and business are so blissfully blinded by the new, sometimes ill-gotten, wealth and deceit that they are living in defiance, insolence and denial to comprehend that the day will come, sooner than later, when the have-nots would hit the streets.

In a way, it seems to have already started with the monstrous and grotesque acts of the Maoists. And, when that rot occurs, not one political turncoat will escape being lynched.

The drumbeats for these rebellions are going to get louder and louder as our leaders refuse to listen to the voices of the people. Eventually, it will lead to a revolution that will spill to streets across the whole of India, I fear.

Perhaps we are the architects of our own misfortune. It is our sab chalta hai (everything goes) attitude that has allowed people to mislead us with impunity. No wonder Aesop said. “We hang the petty thieves and appoint the great ones to high office.”

(The author Mohan Murti is former Europe Director, CII, and lives in Cologne, Germany.

SEEKING LESS SCRUTINY,HEDGE FUNDS FLOCK TO ASIA

New EU rules could make it harder to offer non-EU funds to EU investors.Assets of Asia funds are seen rising 70% over the next two years,outpacing the 50% growth in global assets

AS REGULATORS in developed markets step up oversight of hedge funds,these free pools of capital are increasingly set to make their home in Singapore and Hong Kong.
That will accelerate the flow of talent and foreign funds into Asias top two financial centres,at a time when asset managers are already eyeing the regions rising wealth and strong economic growth.
Assets of Asia (ex-Japan ) funds are seen rising 70% over the next two years,outpacing the 50% growth in global assets,according to industry estimates.Asia,and Singapore in particular,could definitely benefit from the stupid regulatory environment in Europe, said Lionel Martellini,director of Frances EDHEC Risk and Asset Management Research Centre.
Scrutiny of hedge funds has heightened in Europe as politicians in Germany and France blamed the industry for causing the financial crisis though the crisis was caused more by regulated banks in the United States,Martellini said.
The G20 nations want greater supervision of hedge funds,with the European Union debating more contentious rules that could make it harder to offer non-EU funds to European investors.London has objected to the proposed EU rules.
Tim Rainsford,managing director Asia-Pacific at hedge fund manager Man Investments,which manages $39 billion globally,said the increasing focus on emerging markets was also playing a key role in encouraging hedge funds to move to Asia.
He said hedge funds are seeking exposure to Asia,encouraged by the developments in China as a global engine of growth as well as the growing importance of Asian currencies to global trade.
Hedge funds with Asia ex-Japan mandates had assets of $105 billion at end-2009,or about 7% of global hedge fund assets of around $1.5 trillion,Singapore-based consultancy Eurekahedge estimates.By end-2012,that will rise to at least $182 billion,as global hedge fund assets grow to $2.25 trillion.A Deutsche Bank survey of the hedge fund industry in March showed 45% of investors wanted to raise allocations to Asia (ex-Japan ) funds,compared with 18% in 2009.

CRITICAL MASS

Singapore,which has not escaped the global pressure to regulate derivatives and hedge funds,recently proposed regulations to licence bigger hedge funds and force smaller funds to maintain a minimum capital base.
These rules are set to increase costs,especially for startups,but will not halt the the wave of new funds heading to Asia.New York-based Fortress Investment is planning to return to the region through a Singapore office.Soros Fund Management is eyeing Hong Kong for its Asia office and London-based Algebris Investments plans to operate an Asia office from Singapore.UK-based hedge fund firm Prana Capital is setting up an office in Singapore and its founder,Peregrine Cust,will relocate to the city-state.
The regulatory arbitrage that Singapore has will be reduced to a certain extent when it moves to the licensing regime which is a bit more stringent, said Lian Chuan Yeoh,an attorney with Allen & Overy in Singapore

ASIA JOURNEY



Tighter regulation in West pushing hedge funds to Asia



Singapore rules not considered onerous for funds vs EU



Asia (ex-Jap ) hedge assets seen up 70% to $182 billio in 2 yrs



Many Asia funds employ long/short equities strategies



Credit and macro strategies less successful in Asia



EU panel to vote on hedge fund law

BRUSSELS: A European Parliament committee may approve a proposal on Monday night to force hedge funds outside the EU to agree to transparency standards in exchange for a so-called passport to market to investors in the 27-nation bloc.EU finance ministers are scheduled to vote tomorrow in Brussels on a version of the rules that would require funds to register separately in each country.Both proposals have been opposed by the US and the UK.

South Asia Emerges Stronger

South Asia is emerging as the most promising and energetic region in the
global economy. Expansion of domestic economies, growing depth of
financial markets, rising opportunities for incomes and investments, greater
pursuit of peace and stability are the major factors that drive the current pace
of growth in South Asia.

Stronger Economic Growth
The economic growth rate in South Asia, which was lagging behind the
average for developing Asia two years ago, reversed the trend with the
former now showing sizeably higher growth. Seven out of eight countries
(Bangladesh, Bhutan, Maldives, Nepal, Pakistan, Srilanka, Afghanistan and
India) constituting the South Asia region have growth rates over six percent a
year, making it one of the dynamic regions in the world. According to Global
Economic Prospects of the World Bank, real GDP growth in South Asia that
was at 5.7 percent in 2009 is poised to reach 6.9 percent in 2010 and 7.4
percent in 2011. South Asia’s economic growth in 2011 is expected to be
five percentage points higher than that of the world average and nearly two
percentage points more than developing countries.

South Asia also came out strongly in terms of pursuing aspects of domestic
macroeconomic stability and external strength. It has displayed better Gross
Domestic Product Growth than the developing Asia region as shown below.

Growing Financial Sector

The financial systems in various countries of the South Asia region are
progressing at a rapid pace. Except Afghanistan, which is recouping from the
long years of strife and instability, the size of the financial system in other
countries is equal to the size of the domestic economy or even more, like in
India where it is several times higher. All the countries of the region have
experienced significant surge in market capitalization as also value of share
trading in stock markets. Rapid developments have taken place or are taking
place in regard to development of other exchange-traded asset markets such
as currencies, commodities and bonds.

An important aspect of the financial sector growth in South Asia has been its
positive and strong contribution to the economic output. According to World
Bank estimates, 78.5 percent of the change in the growth rate of potential
output during 2003-10 as compared to 1995-2003 was contributed by
deepening of the financial markets.

Future Prospects

In the last two decades, the exchange industry in South Asia experienced
rapid growth and diversity, emerging as one of the strong and significant
and reaching to the top league in terms of business carried out in equities
derivatives, commodities futures, and currency derivatives. South Asia also
is home for a large number of intermediaries and financial institutions.
South Asian Federation of Exchanges (SAFE) has a large role to play in terms
of harnessing cross-border cooperation to further the regional business
interests.

Growth is expected to pick up in most of South Asian economies in 2010 with
India leading the group with a good economic performance. Sri Lanka is
expected to see an uptick of 6.0%,boosted by stronger investor confidence.
Improved domestic economic fundamentals would allow Pakistan to attain
higher growth of 3.0%.Bangladesh and Nepal are also projected to turn out
a better performance.

Buffett makes good bets, bad bets

Warren Buffett may be the world's most famous investor, but even he doesn't get everything right.

Berkshire Hathaway Inc (BRKa.N) (BRKb.N), the insurance company Buffett has run since 1965, owns roughly 80 companies and invests in dozens of stocks.

It is sometimes said that even the best investors might get only six out of every 10 bets right. So while shareholders who have stuck with Buffett, 79, for the very long haul have been amply rewarded, the ride has not always been smooth.

The following are a handful of Berkshire's investments over the years -- the good, the bad and the unknown.

THE GOOD

* In 1976, Berkshire began accumulating an equity stake in auto insurer Geico Corp, 24 years after selling an earlier stake for $15,259. It finished buying Geico in 1996. The acquisition brought aboard Tony Nicely, who still runs Geico and whose leadership Buffett has lavishly praised, and Lou Simpson, whom Buffett has said could replace him as Berkshire's chief investment officer but for the fact that he, too, is in his 70s. Geico has roughly tripled its U.S. auto insurance market share to 8.1 percent since Berkshire bought the entire company. The insurer generated about 12 percent of Berkshire's revenue in 2009.

* In 1989, Berkshire bought $600 million of preferred stock in Gillette Co, the razor blade maker that had been hurt by the introduction of disposable razors. In 2005, Gillette was acquired by Procter & Gamble Co (PG.N). Although it sold some Procter & Gamble shares in late 2009 to fund other investments, Berkshire at year end still held a 2.9 percent stake worth $5.04 billion, and for which it had paid just $533 million. While Buffett in his 1995 shareholder letter called Gillette "our best holding," he also said he made his "biggest mistake" by opting to buy preferred stock rather than common stock.

* Berkshire owns 200 million Coca-Cola Co (KO.N) shares, an 8.6 percent stake it had amassed by 1994. The stake was worth $11.4 billion at year end. Berkshire paid $1.3 billion for it.

THE BAD

* In 1993, Berkshire bought Dexter Shoe for $433 million in stock. Eight years later, it folded the struggling company into another business. In his 2007 shareholder letter, Buffett called Dexter Shoe "the worst deal that I've made."

* In 2008, Buffett amassed a large stake in oil company ConocoPhillips (COP.N), not expecting oil prices to fall by about three-fourths from their record high. Berkshire spent $7.01 billion on Conoco shares, but has been reducing its stake. "The terrible timing of my purchase has cost Berkshire several billion dollars," Buffett said last year.

THE UNKNOWN

* Buffett has entered into derivatives contracts, most of which are essentially bets on the long-term direction of stocks and junk bonds. He has said these contracts differ from other derivatives that are "financial weapons of mass destruction" in part because of the billions of dollars of premiums he collects upfront from counterparties, and because Berkshire generally does not need to post collateral.

Berkshire has four major types of contracts:

-- Berkshire has equity index "put" options tied to where the Standard & Poor's 500, Britain's FTSE 100, Europe's Euro Stoxx 50 and Japan's Nikkei 225 trade between June 2018 and January 2028. At year end, Berkshire had a $7.31 billion paper liability on these contracts and said it could in theory owe $37.99 billion if the indexes all went to zero.

-- Berkshire has contracts tied to credit losses in higher-risk "junk" bonds, which at year end were on average expected to mature in two years. At year end, Berkshire had a $781 million paper liability on the contracts and said it could in theory owe up to $5.53 billion.

-- Berkshire wrote credit default swaps on various companies, mostly investment-grade. At year's end, Berkshire had no liability on these contracts.

-- Berkshire entered into tax-exempt bond insurance contracts structured as derivatives. At year end, Berkshire had an $853 million liability and $16.04 billion of potential losses. The bonds are largely secured by states' taxing and borrowing power.

* In September 2008, at the height of the financial crisis, Berkshire acquired $5 billion of Goldman Sachs Group Inc (GS.N) preferred shares that throw off a 10 percent dividend, plus warrants to buy an equivalent amount of common stock. The warrants carry a strike price of $115. Goldman shares closed Tuesday at $153.04, and those warrants are well in the money.