Crazy Guide to the Internet

I read an article about something interesting that I now can’t seem to find on the internet. The article was about a study conducted by some Indian doctors that indicated that wheat grass juice can reduce transfusion requirements in Thalassemia patients. A paper on the subject in Indian Pediatrics from 2004 is what I was able to google.

One of the (many) problems with modern day drug discovery system is that it is driven completely by a template that provides no incentives to discover naturally found active ingredients with therapeutic properties. Discovering new drugs is an expensive process requiring tens of millions as investment before the drug can be commercially exploited. Most drug candidates don’t make it. If you amortize the cost of these failed drugs over the few successful ones, the costs multiply rapidly. The entire edifice of the pharma industry rests upon the ability of companies to successfully exploit a successful drug through patent protected pharmaceuticals. The problem with naturally found active ingredients is that a patient can get the cure without buying the pill.

I believe that there are many, many cures to diseases as well as ways to stay healthy (nutraceuticals) that can be found in natural substances. Ayurveda is entirely based upon finding remedies in natural substances rather than man made molecules. Unfortunately, to take Ayurveda from what some might call ritualistic mumbo jumbo to authentic medicine requires investment – to isolate active ingredients, do pharmacological testing and clinical trials. How does one justify this investment if at the end of it, the remedies will still be available freely?

Tough problem to crack. Somebody needs to come up with a business model that allows them to justify the required investment. I don’t think this business model can emerge in the developed countries where the powerful pharma industry will snuff it out. But in a country like India, there is still hope.

I was pondering for a while on the topic to post.At last managed to get a topic for today.The post would focus on few ideas to test new ad and creative type on live environment.When you traffickers receive any new creative/ad format which you wanted to know how it would look on the live publisher, here are the ways you can carry out this test

• Live testing of campaigns MUST be executed in short time.Once the test ad is live, test what you needed, and turn it off instead running it for days(which is a huge mess)

• Always check for the preview and click through on the ad server before going to make live

• If you wanted to do a quick test, book huge inventory, set highest priority, and scheduled it for one day(simply traffic as exclusive/roadblock campaigns).So this test ad becomes live as soon as the Ad server pushes.Note very very importantly this type of test should be finished in short time, say 10 ~15 min after the ad server pushes.Else, it would results in unnecessary impressions delivery and also would compete with other premium advertisements running.So be utmost careful while executing this

• Another good practice is to target.By this you actually reduce the competition with actual live ads scheduled.Pick the less traffic page group of the publisher to target.Usually the publisher would have less ads scheduled, so the possibility of competing is less

• You can also geo-target .Idea is , you target the test ad to to your local(country/state/city)this way you narrow down and keep yourself out of competing with scheduled ads.Example if you are in india further drill down to city level say ” chennai/bangalore/mumbai” which is your target city

facebook announced today that it plans on opening up it’s platform architecture so that other social networking sites can use facebook applications…ha haa, bring it on OpenSocial!

Considering facebook has already hinted at transportable identities there is MUCH more here than meets the eye…this gets better every single day!

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Last week Thomas Weisel Partners announced that it is shutting down its small cap research offering, Discovery Research. The 8-K filing says

Thomas Weisel Partners Group, Inc. (“Registrant”) announced today that it would discontinue its Discovery Research coverage of U.S. equities. That coverage is being discontinued as a result of the recruitment of key Discovery Research personnel to BNP Paribas Securities (Asia) Limited, a BNP Paribas affiliate. Thomas Weisel Partners is pursuing its legal remedies in connection with these departures. Discovery Research, a subscription-based research product, was produced out of Thomas Weisel Partners’ office in Mumbai, India. Thomas Weisel Partners intends to continue to conduct other business and operations through its Mumbai, India office.

There are two different reasons why I find this news interesting.

One, if what TWP is alleging is true, (they have filed a lawsuit in San Francisco) this is perhaps one of the worst victims of uncontrollable attrition in India that I have come across. To have to close down a business because of the loss of key (and what apperas to be most) personnel, is bound to leave you bitter. Ergo, the lawsuit. BNP also made an announcement and it seems that the team will be covering Indian stocks unlike Discovery.

Attrition is a big problem for anyone employing white collar workers in India today. Most of it is due to the hypergrowth in some sectors like IT and Financial Services. But some of it is also because young people starting out in careers undervalue the importance of learning which comes from working with a good team and over a decent period of time. More on this some other day.

The other thing that is interesting about Discovery Research folding up is that it was doing small cap research on US stocks but in a different model. All the research activity - analysis, model building, channel checks, even management discussions - was being carried out from India, to keep costs down.

Small cap research is an interesting opportunity area. There is evidence that traditional sell-side as well as independent research coverage of small caps is on the decline. Commission flow to research isn’t what it used to be and its an easy decision for research shops to cut coverage on small caps to make both ends meet.

So what happened here? My guess is that Discovery’s traction in the market was middling to low. Otherwise, TWP would have done something either to retain the team or to rebuild it. Or maybe they just got tired of managing an itinerant workforce, to whom Discovery was just a short stop on the way to the next job. Regardless, small cap research remains a good opportunity for low cost, scalable solutions.

Most commentators put a high probability on the US going into a recession. What began with a problem of imprudent housing loans in the US has snow balled into a crisis for the Financial Services industry and an almost certain slowdown in consumer spending. How this impacts the Indian IT Services industry requires some analysis.

The last US recession in 2001-02 was triggered by the Tech meltdown. Most IT Services companies went into the recession with a couple of slow quarters. Budget cuts at large accounts ate into the fundamental growth in the industry for a couple of quarters. But very soon, the recession started working in favour of the industry as more companies, facing weak earnings, chose to jump on the offshore outsourcing bandwagon. Soon it was back to double digit quarter on quarter growth.

Is this time going to be the same? I think there are some differences between this recession and the last one which bear examination.

First, the industry in the eye of the storm this time is the Financial Services industry. Most Indian services companies get 30 to 40% of their revenue from the Financial Services industry. The Financials also went through a slowdown in 2001, but the current recession could be a lot worse as far as this industry is concerned.

Second, the numbers are much larger now. The size of the industry at around $20B is now four to five times as large as it was in the last recession. There is a distinct possibility that the contraction due to budget cuts in large accounts may eat away all the growth from new accounts and more. There is also the matter that growth from new accounts, at least in the US, may not be as strong since there are very few companies with large IT budgets who don’t already have offshore programs.

Third, the decline of the dollar makes offshore outsourcing a little less attractive. Sure, the labour arbitrage is still high enough, and this is probably going to hurt margins more than growth, but every bit counts when you are facing a slow down.

The only silver lining, I feel, is Europe. From whatever I hear, Europe is showing strong growth for everyone in the business. The inclination to outsource is higher than ever before. It is possible that Europe may escape a full-blown recession although it will see some impact to GDP growth on account of the US recession. And lastly, the Euro is strong and the arbitrage is very attractive.

How these effects balance out, I do not know. But there will be strong headwinds ahead, for sure.

[Update: Kris Gopalakrishnan, CEO of Infosys, speaking at a conference said that so far the impact of the US slowdown is muted. The story is here . That is good news, however, we should not assume that this is how it will pan out over the duration of the recession for other companies.]