Bollywood's Decline, Anxiety Cost, And More
5 interesting learnings from August
Hello there,
If you’re new here or missed the last few emails, you should know that we’ve had a cracker of a month, covering topics as diverse as:
The magic of placebo and the mysterious ways our minds work
3 civilizational heroes who should be household names in our country
If you missed any of them, go check them out. I’m quite confident you won’t fall asleep…unless you were bingeing till 6 AM. In that case, I’d be happy if you start drooling all over the keyboard.
Since this is the first Sunday of the month, we’re back again with 5 thought-provoking ideas in this monthly roundup.
Here we go:
Democratization of opportunity: An incredibly heartening trend is underway across the country. For the first time in our history, a majority of the promoters and executive directors of Nifty50 companies are neither foreign educated nor graduates from IITs/IIMs, but from ‘regular’ Indian colleges. This reflects the rise of a new breed of entrepreneurs and highlights that you no longer need to be a part of the hereditary elite (with political connections and an anglicized way of life) to make it to the big leagues. Emerging from years of socialism and then an episode of crony capitalism, we have now entered a new phase- where the country is way more networked, can bank on the India stack, and has created an equalization in the access to opportunities- paving the way for enterprising individuals from tier 2 and 3 cities who are making it big and bringing prosperity to significant swathes of the country. This is inspiring and reduces the importance of factors like going to the right college or speaking English with a proper accent on the prospects of making it big in the new economy.
The Indian boardroom- no longer dominated by people from elite colleges Mental Accounting Bias: This is an important cognitive bias to be aware of. Say you’ve made 2 investments of 100 Rs each. In scenario A, both of them earn a 6% return in one year. In scenario B, one of them earns a handsome 16% return while the other one remains the same and doesn’t gain anything. Which scenario would you prefer? Surprisingly, a lot of us prefer A- where both investments are in the green and are doing fine as against the other one where one of our investments turns out to be a total dud (like investing in a cousin’s dance bar startup idea) and doesn’t give any return. But do the math and you’ll see that Scenario B is clearly better- netting a gain of Rs 16 as against Rs 12 in the first case. So why do we make this error? Because emotions affect our investing decisions. The fact that you didn’t make anything in the dud investment triggers a sharp pang, triggering loss aversion, and reduces the joy of the other one that netted 16%. As a result, we prefer the option that feels better, rather than the one that IS better. Being aware of the mental accounting bias and taking an overall portfolio view (rather than evaluating individual investments to make decisions) is essential if you want to avoid financial ruin.
Anxiety Cost: Here’s an important idea to improve the art of getting shit done. Let’s say you are deciding the list of things you want to achieve in a day- like meditating for 15 minutes, watering the plants, or writing a 2 km long stinker to your junior. The more you delay doing the essential things you want to achieve, the more anxiety it creates about having to tick them off your list as the day progresses. This anxiety likely eats away at your ability to do even the other things you’re working on- and keeps rising as the day goes on and your un-ticked list seems ever more depressing. So the trick is to frontload your day with the most important things you don’t want to miss and finish them off first thing in the morning. It’s a simple way to skip the accumulation of anxiety and the hidden cost it imposes on you as you become increasingly less productive and more distraught with the ticking of the clock.
An Incredible Story: “In 1955, recent college graduate Morris Chang was offered two jobs: One at Ford for a salary of $479 a month, and one at electrical company Sylvania for $480 a month. Ford seemed like the better opportunity, but Chang asked the recruiters to match his Sylvania offer – a mere $1 a month more. Ford declined. So Chang took the job at Sylvania, where he learned about – and became an expert in – the growing field of transistors and microchips. Chang eventually founded Taiwan Semiconductor, which today is worth almost half a trillion dollars and produces 60% of the world’s chips.” One has to wonder what would have happened if Ford had accepted Chang’s counteroffer!
IPL vs. Bollywood: Ruchir Sharma analyses some interesting reasons behind the contrasting fortunes of the 2 entities that Indians have been most obsessed with. There are a bunch of tricks that IPL got right but Bollywood missed: democratization, localization, and re-invention. IPL gets its regional approach right by having streaming in multiple languages. Two, it focuses on nurturing talent from tier 2/3 cities while Bollywood continues its nepotistic tendencies, with an outdated management style that places power too firmly in the hands of the old elite. Third, IPL has adapted itself to changing attention spans, reducing match times to below 4 hours. Bollywood, on the other hand, hasn’t kept up with the times. Sticking to stale scripts, aging stars, and content targeted to Hindi-speaking audiences, it is failing to keep people engaged as film industries in the South continue to grow relentlessly.
That’s it for today, folks. But before you get up and delete this email forever, there are 2 things I want you to tell me:
Are there any interesting ideas you came across last month? If yes, I’d love to know them.
Do you enjoy these monthly round-ups? Or are the usual articles better for learning new things?
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