How Physics build the concept of Entrepreneurship: The inside story.


Entrepreneurship, as most of us believe is not a recent phenomena but has a vast history of ideas, inventions and intersections beginning from the early 19th Century world of physics. It all started with a thought when law of classical mechanics and thermodynamics had been already established through various experiments by the likes of Galileo, Newton, Boyle, Bernoulli, Cavendish, Franklin and Lagrange. Just when these ideas of fundamental science of motion flourished, better ideas came through. As the horizontal base of the pyramid was set, vertical growth was imperative and inevitable.

The one idea, which started the era of entrepreneurship, was the invention of electric battery by Alessandro Volta in 1800. This invention led to more discoveries by Ampere and Ohm who further demonstrated the parallel electric currents exerted forces on each other and relationship between voltage, current and resistance respectively, which is the basis of fundamental electrodynamics. Just when Thomas Young demonstrated the wave nature of light, understanding of principle of interference and superposition developed. It all made sense, when Michael Faraday built an electricity powered motor in 1821 and formed the basis of current through magnetism i.e electromagnetic induction. Ideas evolved then on the basis of other ideas. Isn’t that entrepreneurship already in true sense? An idea Faraday proposed regarding electromagnetic forces was rejected by the scientific community, which was later accepted by the rest of the world and still forms the development of electromechanical devices that ruled the 19th Century engineering.

Meanwhile, in the field of thermodynamics Joule and Mayer worked on the connection between heat and mechanical energy. This connection was important for the development of steam engines. Carnot captured these basic ideas to form the dynamics of idealized engines and these ideas hold to formulate the most important idea of First Law of Thermodynamics. This led to the second law of Thermodynamics and so on by Kelvin and Clausius. Just when Maxwell through his ideas carried forward the idea of electricity and magnetism, Hertz experimentally confirmed those theories and discovered the photoelectric effect, which led to the invention of radio and television. These ideas were then carried forward by Nikola Tesla and Jagdishchandra Bose to further develop the ecosystem with different ideas. This is how physics led to application based engineering in the time when technology was not mainstream.

If this culture wasn’t prevailing then, the emergence of the 19th Century’s finest entrepreneurs, Henry Ford and Thomas Edison wouldn’t have been possible. During late 1870’s, Henry Ford started working as a machinist in Detroit, USA dealing with portable steam engines while Edison formed his Edison Electric Light company patenting electric light bulbs. By then, Edison had already invented phonograph and telegraph, which changed the way world communicated. With his creation of the first ever industrial research Lab in Menlo Park, New Jersey, Edison then quoted “We will make electricity so cheap that only the rich will burn the candles”. And this still holds true in our time, where candles are expensive than electricity. Edison also invented the motion picture camera. Thank god, he did!

On the other hand, Henry Ford became an engineer at Edison Illuminating Company where he used to work on his personal automobile experiments and his creation of a self-propelled vehicle called Ford Quadricycle. He was then introduced to Edison through a group meeting, where Edison encouraged him to work on his second vehicle. Soon, after his completion of the second project, Ford left Edison’s company to start Detroit Automobile Company with capital from a baron, William Murphy. Ultimately, that company was dissolved and with the invention of 26 horsepower automobile, the backers formed Henry Ford Company with Ford as the chief engineer. The rest, as they say is history. The inventor-entrepreneur philosophy emerged in the beginning of the 20th Century, when a sizable number of physicists were forming companies in the tune to change the world.

As the culture progressed, with the world facing two disastrous wars, one in 1914-18 and the other in 1939-45, these gave the necessity to nations forming different aerial and ground-breaking technologies, primarily to use against each other. They say, necessity gives rise to inventions. And this necessity lead nations to develop what is going to be constructive and in lives of all in the near future. The Second World War held the genesis of the Silicon Valley entrepreneurship, when Americans entered WWII in 1941. This war was literally an electronic war, where nations were battling with each other with different bombing and radar based technologies. Each nation, primarily Germany and USA, built different types of radars, to block and pursue efficient communication with their bases regarding the movements of the opposite camp’s defense. This lead to the formation of Harvard Radio Research Lab in US to understand the signals intelligence and develop electronic warfare. This secret lab was headed by Dr. Fredrick Terman, who was the Dean of Department of Engineering at Stanford University.

The Stanford director, due to the pressure from the government and the culture shift, encouraged students to turn to entrepreneurship and start their own companies. The students included William Hewlett and David Packard, who went on to start HP Computers. Since then scientific research and development in the universities across US begun to flourish and became the precursor to the beginning of 20th Century entrepreneurship. The idea of open-source mentality among the physicists led to the widening developments in science and technology entrepreneurship. After the WWII, Terman’s strategy included the setup of Electronic Research Laboratory (ERL) to promote basic and unclassified research in building radars, power-tubes and jammers. Soon after the setup of Applied Electronics Laboratory (AEL) and the merge of both ERL and AEL became Systems Engineering Laboratory (SRL) at Stanford. It was then, different microwave and systems companies emerged in Silicon Valley to produce equipments for the US defense. And that was the mark of beginning of the Silicon Valley entrepreneurship.

After the independence in 1947, India was at the forefront of social and political havoc, but the ideology among Indian entrepreneurs despite that did not change and they invested in their own independent nation for a better future. One of those entrepreneurs was Vikram Sarabhai, who after studying natural sciences at Cambridge returned to India to set up a research institution, Physical Research Laboratory (PRL) in Ahmedabad. He was the founder of Indian Space Research Organization (ISRO) and pursued the government of India to start a space research program, when Russia just launched Sputnik into the space. Moreover, he was also one of the founding members of one of the premier institutes in India, Indian Institute of Management (IIM), Ahmedabad. He was a physicist turned entrepreneur. And India is highly indebted to him for what his vision has given to the country. The idea of Entrepreneurship by then had already established by the pioneers G.D Birla and J.R.D Tata. A new wave of entrepreneurship emerged in India as a consequence of the existing business tradition and culture.

As different electronics companies emerged in the Silicon Valley in the mid 1950s, William Shockley, who was the director of anti-submarine warfare operations group at Columbia in 1942-43 and Solid State Physics group leader, co-invented the first point contact transistor with help with Bell Labs. He was then jointly awarded Nobel Prize in Physics in 1956. By then, Shockley has already founded Shockley semiconductor in 1955, which was the first semiconductor company in California. The traitorous eight which included Gordon Moore, Robert Noyce and Sheldon Roberts who were the youngest employees at the firm demanded to replace Shockley from the management team and eventually left Shockley semiconductor to start Fairchild Semiconductor. Eventually, Moore and Noyce left Fairchild to start Integrated Electronics (Intel) and others started Advanced Micro Devices (AMD). Though Shockley maybe a bad manager, but he was a great researcher and someone who laid the foundation of chip companies, which dominated the industry for the next 20 years. The 65 chip companies which were founded came from the first and second generation teams at Shockley Semiconductor. Some entrepreneurs have the tendency to make other entrepreneurs through knowledge transfer and freedom to work on their projects. Knowingly or unknowingly, he made a lot of entrepreneurs under his own belt. In true sense, Shockley was the father of the Silicon Valley, the valley that revolutionized the world of electronics.

Gordon Moore, who was a chemist and physicist and Robert Noyce, who was a physicist and co-inventor of integrated circuits, started Intel after leaving Fairchild Semiconductor with capital investment from Arthur Rock. With Intel breaking the barrier, the world changed with the inbound of microprocessors and micro controllers, the most important components of CPU used in the computers. And we all know what happened after that! (The device on which you are reading this post).

Physicists have been old hands at entrepreneurship. Today, more physicists than ever are involved in different startups all over the world either as founders or employees. Startups are inventing different physics based innovations and products, since Patenting and Intellectual Property law in US are adopted in the culture and has become popular among the early stage startups. One of the Entrepreneur who is considered as the next generation Steve Jobs, is Elon Musk. Elon has studied physics as his second bachelors degree from University of Pennsylvania and is the founder of SpaceX, who’s one of the mission is to find life at Mars by 2020, and is best known as the co-founder of online payment giant, PayPal and electric vehicles manufacturer, Tesla Motors. The interests he developed over rocket technologies and clean technologies were due to his aptitude and love for physics, and he credits the subject for all what he is today.

Today, entrepreneurship is popular among scientists and young PHDs and more people from physics background are starting disruptive technology based startups. Though starting a technology company is a complex operation and takes time to reach the break-even, the success is the idea where solid businesses endure over time, generate steady employment, develop intellectual property and conduct a mix of R&D for game-changing commercial results. To all what we see and experience today is the result of works and theories by thousands of scientists over last two centuries and the ones who implemented those works in building the future. Theories connected with realism of behavior, materials, systems and devices, and technologies erupted like the volcano. The horizontal base of physics and nature of sciences has been creating the way for our vertical future. And Entrepreneurs are the ones adapting it.

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Must read blogs on economics


I read these few blogs in the recent years, as an urge to read about global economy and its shenanigans. Some of these blogs discusses the best commentaries on the global policies, workforce theories, corporate moves, industry tracks, social numbers, sectoral analysis, financial misfits and the linkage between all of them. Do subscribe these blogs to your RSS feed and keep yourself updated for your daily dose of economic times.

1. Project Syndicate: http://www.project-syndicate.org/

2. Freakonomics: http://www.freakonomics.com/blog/

3. Paul Krugman’s Blog: http://krugman.blogs.nytimes.com/

4. Brad De Long’s Blog: http://delong.typepad.com/

5. Economix: http://economix.blogs.nytimes.com/

6. WSJ: http://blogs.wsj.com/economics/

Will keep updating the post if I come across interesting blogs.

 

The new wave of Emerging Markets- 1.0


English: Map of Emerging Markets

English: Map of Emerging Markets (Photo credit: Wikipedia)

On a friend’s suggestion, I have started reading this book the recent economic bestseller ‘Breakout Nations’ by Ruchir Sharma, who is the head of Emerging Market Equities and Global Macro at Morgan Stanley. It is one of the must reads for any who is interested in knowing how the emerging market economies run and insights on different sociological, demographical, political and industrial parameters required to judge the nation’s growth curve, or like he mentions a nation which can standout in the future of economic parade, the growth survivor Breakout Nation.

As we know, BRICS are more or less the most overhyped term used in the Emerging Market perspectives for businesses and nations. With the dominant force of the US in the world economy diminishing after the 2008 financial crises, there is an optimistic wave among investors and companies to reach out or expand or invest into these economies of the future who are turning out to be major players in the world market.

China: With China fueling over a double-digit growth over few years and dependent on exports, it runs on a constant urge to grow and become the world’s next superpower. Though, its communist political party which has been in power since a long time and has carried a legacy of their ‘its glorious to be rich’ leader Deng Xioping, it still has to keep up with the upcoming investment trends and demographical misfits which they are likely to face after 2014 read [the number of young people joining the workforce is going decrease over the next decade] and the businesses have overshot their manufacturing capacities in terms of labor and capital. The businesses in China run over exports and cheap labor, that might turn against them in the coming decade. With the center Beijing becoming a political powerhouse, the real estate market is on a high and has become unaffordable to the middle class chinese family. The first condition of girls in China for their marriage partners is that the latter should own a house. Though the per capita income is on rise, almost around $4000 and inflation at around 5.5 %, the future of the Chinese economy is not going to be based on the type of government in the center but on the kind of leadership that takes China forward. Owing to the popularity of chinese proverbs, one which their leader in Communist Party of China, Deng Xioping quoted ‘No matter if it is a white cat or a black cat; as long as it can catch mice, it is a good cat’. They have been good cats in the last three decades, surviving as a cat is going to be important for them in the coming overturns and times.

India: As India’s great hope trick continues to pervade over the minds in the west, it is anticipated to grow in building conscience over its complexity of the Coalition government, State politics, diverse Stock markets (0ver 5000 listed companies in all types of sectors from Energy to Automobile to Pharmacy) and Sadhus of the himalayas. Coming from the crony past of License Raj, a red tape-driven bureaucracy in which licenses were given to only who could manufacture goods but also determining at how much and at what price, to the liberal economy from 1991, it has come a long way in reforms and policies mostly in favor of the nation’s capitalists. As Ruchir Sharma describes India as a high context society that believes deeply in tradition, history, favoring the in-group and hence more vulnerable to corruption. The country has deepened its roots in the world economy and has got a seat in the center-stage of developmental economics. Though the per capita income is around $1400, owing largely to its 1.2 Billion population, the country has witnessed a growth boom between 2003 and 2007, nearly 9% per year. With a large savings environment inherited from its ancestors and a large workforce, the domestic consumption in India is growing every year on year basis. Though, environment of doing business in India is largely dependent on your political connections, there is a lot of divestment from the large companies now ‘outward facing’ who are in-turn expanding their businesses to other emerging markets. Investment by Indian businesses has declined from over 17% of GDP in 2008 to 13% now and overseas operations now accounts to more than 10% of overall corporate profits compared with 2% five years ago. This leads to a spike in inflation. With inflation is around 7-7.5 % and the growth rate in GDP is around 5%, the Indian crony capitalism is at its peak leading to various scams in the past 5 years. With more number of Entrepreneurs and young people joining the workforce, the reforms of the government will help small businesses measure its true value. The Congress led UPA government has disappointed in its second term, but the bucks are on the mighty of the west in the upcoming 2014 elections. Democracy can always overturn and is sociologically unpredictable. As E.M Forster remarked about India, But nothing in India is identifiable, the mere asking of the question causes it to disappear or to merge in something else. If we are able to identify our core roots, we can be an economically sound nation in decades to come, if not a superpower. Definitely, a chance to become a breakout nation.

Will write about Brazil, Russia and other emerging markets in the coming posts.

Connection- Between the lines.


Ok, so these days I have been reading extensively about a lot of topics together, and I somewhere made out that everything is so interdependent to each other and made sense. Be it technology, economics, science, politics, psychology and design.Mahatma Gandhi has rightly said ” Interdependence is and ought to be as much the ideal of man as self-sufficiency. Man is a social being”. Everything has a gist, and we see it as we are.

Technology Design Co-relation: Technology has always been revolutionized over design, read Apple. Today’s technology is not only serving the purpose but also expatiating the trends in the industry be it grids, networks, tablets, smart-phones, web applications and various different products including social media and clean-technology giving it a design edge to the rescue. Customers are half convinced over a good design, which is becoming a widening trend. Innovation is a part of design and an idea solving a purpose, making it more efficient. In India, we call it “Jugaad”. That’s how we design our lives, if not technology.

This is a chart showing the interconnected, in...

This is a chart showing the interconnected, interdependent nature of modern society that can be used to illustrate Structural Functionalism. (Photo credit: Wikipedia)

 

 Science- Politics Co-relation: Where Science is trying to change the world, people are becoming much more politically inclined in expanding its scope. One such example, is of Patents. Where Institutions and Individuals are trying to develop products over a little modification and selling it in the market. There is a lot of plagiarism in research of various different sectors and areas. Nuclear weapons are another example, where we see a constructive as well as a destructive use in this advancement of science. This is affecting the world as a whole, and nation in parts. Different political institutions and governments are involving themselves in the research of several fields with the core motive of how that will make them stronger in different spheres. Be it Space Research or Particle Research, everyone is trying to capture and make a mark in different dimensions. Well, to some extent it makes sense as its beneficial for the masses in the long run, but there are always repercussions. 

 Economics- Psychology Co-relation:   As the world is struggling to keep its economies upright, there is a lot of dependence of the sentiments of the nation as a whole in determining the economic prosperity of the nation. Be it the worth of the money when the prices rise (Inflation), the consumer behavior in the Supply Demand ratios or the person’s income compared to the total nation’s income (GDP). All these behaviors are subjected to different psychological aspects in each individual of the country, not just the earnings in businesses, governments and corporations. Economics has always been sentimental in its approach and not statistical. The stock markets drive on organizational behavior, and emotional trends. Serving a society and earning wealth are two different sides of the same coin. One can happen at a time, and are directional to each other. 

How this world is so diverse and co-related? Some random musings after a late night idiosyncrasies. But, I am always inspired in between the lines and worlds.

 

India- A Re-emerging Economy


As history remarks, from 0 AD to 1700 AD, India was the richest of all the economies in the world. By 1700, there was 32% of the wealth of the world, was in India. Then, came the era of colonization when different countries from the west started looting India with their trading prospects which ultimately led India to be a poor country (as westerners still think we are), but I am going to cite few examples as to how India is not an emerging economy, but a re-emerging economy. We were never poor.

At the time of Independence, the GDP of India was close to 4.2% and by 1973, during the state of Emergency declared by our then Prime Minister Indira Gandhi, India’s GDP was the lowest of around 3%. But, after that there was no looking back. Today, the world reckons and eyes the emerging markets which is adding more than 50% to the Global GDP Calculations and India is one of them. That means, the developed economies has realized the potential of these emerging markets, which has led to globalization. Rich in tradition and societal culture, India is not just an emerging economy but a well-balanced socio-economic hybrid.

In 1991, as India opened its gates to the world, the post era of liberalization has given India Inc., an upper curvature in all the graphs. There are strengths, which cannot be unnoticed and itself being researched and published by a lot of westerners and Indians themselves, but more or less suppressed to the world. This is what I call an Indian Edge. 

There are few points which gives rise to this Indian Edge.

1. India, has always been a country of savings before liberalization and even after liberalization, the Gross Domestic Savings (GDS) accounts to around 30-32% despite western impact on India. Moreover, this GDS is utilized for capital formation which accounts parallel to the same amount of percentage growth. That means, a normal Indian still saves and create capital for himself/herself.

2. The domestic demand of India has always been more and despite of its global outreach, Indians consume a lot locally. That means, we are becoming globally local and locally global simultaneously.

3. India has low government and household debts then most of the developed economies in the world. That means, we are not that much in debt than most of the European countries like Italy, Spain, Germany etc and Britain having the highest debt.

4. India, is the second most entrepreneurial nation in the world, with the highest number of youth (aged 25 – 35), we have presently the highest number of startups in the world. Mexico being the first, marginally ahead by 1%. The number of Entrepreneurs in India, is around 18% from the world.

5. The Service sector in India accounts to 66%, which means a lot of Industries today are driven by different service sectors, which means there is an increasing demand-supply ratio in India, which will make us the most economically sustained nation in the future.

6. With people investing a lot in Gold (which is taken as consumption by global economists), even a small middle-class family has invested in gold, which has seen a tremendous and consistent rise in the last 30 years. And India is far more ahead than any other country in the world. Most of the gold reserves in US is under federal reserves, but in India, 75% of the total gold utilization is among the normal household.

7. The remittances to India from Indians all around the world is more than 50%. That means, there are a lot of Indians staying abroad who has a need to send their money to their loved ones in India or just for capital formation with sole intention of living their second innings in their home nation. This adds to the economic growth of India.

These are just few points, which describes India as a re-emerging economy. With ‘Jugaad’ i.e the Indian way of doing things out-of-the-box, Indians have more skills of doing the same thing in different ways. This adds to the Indian edge. With a lot more social parameters, which Indians are indebted to, India is not just a land of cows anymore. Well, every nation has its pros and cons. While every world is chasing its realms, India is never going to be ignored in the process. And the world will stop running behind GDP and Inflation but Human Development Index and Gross National Happiness, which India has to focus on. Then we will see India like in 1700.

Money can’t buy you happiness, or can it?

The Entrepreneurial India


Entrepreneurship is an intuition game. 

India is a blessing in disguise for its youth (below 35) in the population of 1.2 Billion. It’s not only creating a generation of those young entrepreneurs but also creating a rampant behavior in expanding the workforce from the current 435 million. These entrepreneurs are not just adding to the employment statistics in India but also exploring into different sectors like Social entrepreneurship, Rural management, Supply Chain, Logistics, Consultancy , Product based services, Web-based services, ICTs, Social media, Green Energy and much more. The concept of Entrepreneurship is reciprocating and collaborative over innovation. Its storming like a wave in the thunder.

Today, the youth in India is much more likely to take a risk of getting into a start-up rather than working for a 9 to 6 job. It not just involves risk but also patience and self-realization to understand the dynamics of the particular market before tapping into it. The world has become more entrepreneurial friendly place like never before with globalization’s raising curve and its different sectoral, regional and national perspectives as mentioned by Thomas L Friedmann, in his book The World is Flat. Its more in the sense of satisfaction in working towards something and accomplishing the task no matter how big or small difference it make, but  definitely striking an efficient change in the society. As remarked by Subroto Bagchi from MindTree in The High Performance Entrepreneur, “ that sense of accomplishment is next only to having and raising your baby”.  Moreover, the government and big companies are more subjective to the sense of entrepreneurship and are rationally developing solutions that can facilitate the consumer experience with a much more diverging and intriguing approach. These entrepreneurs have made India more open to ideas and have motivated young people in the process of constructive nation building.

There are top-ranked management institutes in the nation like IIMs and IITs, which are more focusing on entrepreneurship and product development skills. Organizations like TiE (The Indus Entrepreneurs), NEN, CIIE ( Center for Incubation for Innovation and Entrepreneurship) at IIM-A etc are fostering the idea of entrepreneurship and empowering the youth through their network and mentorship. Not just this, there are online websites like Dare, Pluggd, Yourstory.in and many more which are engaging the entrepreneurs online with their latest research and news.

With more youngsters joining their family owned business, there is a glut in idea of entrepreneurship in their core propositional competency. Post which, the India in 2025, will be number one leader in the emerging markets, as we are always known as culture in diversity, now with a multitude of entrepreneurial insights and approaches. More done than said, India is becoming highly entrepreneurial in diversified sectors, and will soon has its differentiation from the approach in the west. And this India will see itself barring away from the clutches of poverty and unemployment, and heading towards a more sustainable society.

As we all know, it’s all about staying hungry, foolish and starting it up. 

Indianess and Game.


Game theory has always been a zero sum game which determined that the profit of one will always be on the expense of others, which introduced by John Van Nuemann and Oskar Morgenstern until John Nash discovered the Nash Equilibria for the non-zero win-win situations and won a Nobel after quite a psychological stint in his life in 1994.

India, a cultural heritage has always been stodgy for economists and philosophers and they their own perception towards the abstract spectrum from its happenings and times. Nothing can match the susceptibility of the nation’s randomness and sovereignty. Psychology of an Indian has always been an outlook of its own kind, not really the demographics of the nation affecting it. Indians are known for their unruly social behavior and their unintentional verve. When it comes to making choice, we can be selfish as well as collaborative at the same time. Read the theory of Prisoner’s dilemma. We say that population, illiteracy, poverty and corruption are the  issues defining why we Indians are the way we are. But actually, it’s not the demographics that matters in our behavior but a social upbringing does. There are people spitting on the roads, throwing junk, breaking the queue, giving a bribe (most of them taking it), breaking the signals, urinating on the road sides and what not. Who is to blame? The system or the self? Often, we come across real-life situations where we end up being privately smart and publicly dumb. We celebrate festivals of colors and crackers and leave the roads and grounds defiled from their plastic wastes and chemical colors. Indians and Indianess goes along together irrespective of the caste, creed or position. We all belong to the same field of paddy crops. Then, we blame the system and its governance for its behavior, being publicly dumb. Social behavior is not something we just show it on Facebook, but how we actually implement it in our day-to-day lives. This is where Indianess differs from the Global social behavior. And we talk about globalization. That makes us self-contradictory.

Rationalism is a child’s play and when Indianess paints the canvas, the theory of game comes to being. We, Indians being superficially rational, be it in professional lives or the way we think, which still makes us the third world country because of this mass behavior. Only, when we try to change, others will. It’s like a movement with no incentives and holistic growth, which will be marginal for the self. As we know, we are heedless without incentives. And we blame the government, which itself runs like a tip-toed bulls. We have to create our own incentives for the satisfaction and not for the temptation. And then the Nash equilibrium is favorable for non-cooperative and win-win situations in particular circumstances stating that one can benefit, making others benefit too. Then the Indianess will make its hay shine in the field.

Few examples of game theory are Chess, Stone-Paper-Scissors and the art of tit for tat.

Adopted from the book Games Indians Play by V. Raghunathan and inferred by me.

Let not the game decide us, but our own behavior.