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IIM Americas Newsletter a 501c(6) not-for-profit organization

Q3-Q4, 2016 Vol. 11 &12

IIM Lucknow

CONTENTS Editorial Message from the President Meet a Thought Leader Meet an Entrepreneur Nik’s Column Chapter Contacts Trivia

Nuts & Bolts Trivia Solution

editorial Hello fellow IIM alumni Greetings and Happy New Year!!

It gives us immense pleasure to bring to you the combined Q3 and Q4 eleventh newsletter of IIM Americas. The objective of this newsletter is to be a platform for everyone to interact with the IIM alumni based in the Americas.

Sonali Rathi-Pramanik

Sameer Mittal has retired from the editorial team and we thank him for his valuable contribution.

As part of our Meet a Thought Leader series Priyanka Saha, IIM Calcutta alum interviewed Prof. SP Kothari, Professor of Accounting and Finance, MIT Sloan School of Management. Our Meet an Entrepreneur series features Manu Kodiyan, Founder, Althea Health interviewed by Preethi Jayaraman, IIM Kozhikode alum.

Namrata Poddar PPP

Nik’s column features “Valleys of Hope & Despair”. If you know an IIM alum whom we should interview or a fun company that we should cover, please let us know.. We hope that you will enjoy this edition and welcome your feedback and suggestions.

Preethi Jayaram

Thanks and happy reading!!! IIM Americas Editorial Team

Priyanka Saha

Message from the President Hello fellow alumni, On behalf of the Board of IIM Americas, I wish you and your loved ones a very happy and prosperous 2017. As we look back fondly on the year gone by, and look forward to another exciting year, I am delighted to share with you our plan of action for 2017 which promises to be yet another an exciting year for us. Sameer Mittal, IIM Bangalore alum retired from the IIM Americas newsletter editorial team. We thank him for his hard work and dedication. We are delighted to welcome Preethi Jayaram, IIM Kozhikode alum and Priyanka Saha IIMC to the newsletter team. Looking ahead, our priorities and focus areas for 2017 are going to be as follows: • Expanding and solidifying our footprint on the Internet. Check out the following: • Our website IIM Americas (

• Our LinkedIn group ( &trk=my_groups-b-grp-v) • Our Facebook group ( icas/) • Our Facebook page ( • Our YouTube channel

( • Our twitter hashtag @iimamericas • Establishing chapter based WhatsApp groups

Ashima Jain (https://www.linke jain) President

Message from the President • Organizing professional and social events in various chapters all year round • Intensifying outreach to IIM alumni in the Americas • Please sign up on our LinkedIn and Facebook groups • Please “like” our Facebook page • Publishing quarterly newsletters • Please let our editorial team know if you would like to contribute articles to our newsletter or get involved in any other way

We have planned the following events in the first half of 2017: • Houston Chapter • Networking event, January 2017 • SF-Bay Area Chapter • Pinnacle 2017 – Conference on April 29, 2017 @ Googleplex in Mountain View, CA. The theme if Artificial Intelligence • Dallas Chapter • Networking event – February 4, 2017 • Professional event - May, 2017 • Atlanta Chapter • Networking event – May 2017 Stay tuned for announcements and information about our forthcoming initiatives! With best wishes On behalf of IIM Americas board Ashima Jain (President)

Ashima Jain (https://www.linke jain) President

MEET A THOUGHT LEADER 1. Please tell us about your career journey from BITS, Pilani, to IIMA to doing PhD from Iowa University and then to MIT. How did you decide to go into academia? My career journey is a series of big transformations that occurred through soul-searching and to a certain extent serendipitously!

I am from a small town in India called Gulbarga, and it was my father who was keen that I get my engineering degree from BITS Pilani rather than a local engineering college. BITS Pilani was my first point of transformation, where I received an education from an institution founded by the Birlas with educational inspiration from MIT. BITS followed MIT’s teaching approach. By the end of my engineering education, however, I realized that I wanted to work in a management kind of role with a human touch more than pursue a purely technical career. I was very fortunate in securing a job for a couple of years with the DCM group, and there I learnt a profound lesson about the importance of Sales. I call it my Sales Mantra: “Sales is all about having an insight into what others want and bringing that product or service to them, not just pushing them to buy what you have with you.” I went through my second transformation at IIMA. There I was surrounded by many brilliant minds – students and faculty -- and this fueled my curiosity for higher education in the West. And then, I decided to join University of Iowa to pursue my PhD. This turned out to be my third transformational step of my career. After my PhD, I joined University of Rochester and during that time, I engaged in research in finance and accounting, wrote articles for The Economic Times and became the editor of Journal of Accounting and Economics. Then in 1999, MIT invited me to join them as the head of their accounting department. My journey at MIT has been nothing short of a dream come true experience. The people I met here are deeply passionate about making a difference in the world, which is very refreshing heartwarming and brings goosebumps to me sometimes. My career starting from BITS Pilani, which had a collaboration with MIT, to being a faculty at MIT is truly a humbling experience.

SP Kothari Gordon Y Billard Professor of Accounting and Finance, MIT Sloan School of Management

MEET A THOUGHT LEADER 2. What is your role at MIT and could you share some insights? My portfolio of activities is quite broad, in part, because an academic career bestows an opportunity to pursue one’s interests. In my case, research has always been one of the main pillars, then there is editing of the journal, teaching/mentoring students and administrative responsibilities. Until recently, for six years I served as a deputy dean of MIT’s Sloan School of Management. In that capacity, my duties included faculty development, the seven research centers at MIT Sloan, and to participate in the process that fine-tuned the pedagogical and research focus of the School to keep it current with satisfy demands of the business community. The faculty development role entailed making strategic investment decisions which often is difficult because it involves nurturing some areas and deemphasizing others due to evolving market conditions. However, this makes some faculty happy, while others not so happy. As the deputy dean, my focus was also on expanding MIT Sloan’s international presence. MIT always had a footprint across the globe, but I felt there was a need to grow it in line with the world’s increasing population and educational penetration. Finally, for the past several years, I have been the faculty director of the MIT - India program, which engages in a wide range of activities focused on India. We send 85 students for internship in various organizations in India, host several alumni events and focus on India-centric research and events such as the MIT - India conference. Outside of MIT responsibilities, I do a fair bit of consulting, which often leads me to serve as an expert witness in securities litigation matters. I work with a lot of attorneys and economic consulting firms on a wide range of topics of valuation, financial reporting, regulations, mergers and acquisitions, IPOs and corporate governance. I have been involved in some high-profile litigations, e.g., recently AIG shareholders sued the US Government and I was the expert witness opining that AIG shareholders were entitled to US$40 billion from the US Government.

SP Kothari Gordon Y Billard Professor of Accounting and Finance, MIT Sloan School of Management

MEET A THOUGHT LEADER 3. How was your experience working in the industry at Barclays Global Investors after the 2008 crisis and how was it different from academia? Sometime in late 2007, Barclays Global Investors (BGI) approached me to join them. The idea intrigued me and I left for San Francisco to join them as Global Head of Equity Research. At that time, BGI was the world’s largest asset management firm with a gigantic portfolio of assets worth around $2 trillion! Within this, they had an Active Equity Portfolio, which means picking stocks to beat the market, and this portfolio was worth a couple of hundred billion dollars. They had a team of about 50 PhDs based in San Francisco, London, and Sydney, and I led this team of researchers. In hindsight, the timing of my joining BGI in July 2008 was not ideal. The financial crisis had just begun to unfold around this time. Large banks like Washington Mutual and Lehman encountered severe financial problems and the entire US stock markets tanked. The active equity portfolio at BGI lost 20-30% of its value. For me, my stint at BGI was a great learning experience. It required being calm during those turbulent times rather than being triggerhappy and making too many changes in the portfolio. It was almost gut-wrenching to make some of the difficult decisions of staff downsizing that followed soon after the market crash. A year later, BlackRock acquired BGI and thus I witnessed the merger integration taking place. Thereafter, I returned to MIT in early 2010. The BGI experience certainly was very different from academia. While there were many smart, nice people at BGI, but in the end I felt BGI’s mission was somewhat narrowly focused compared to MIT. The mission of an asset manager is to beat the market and serve its clients whereas MIT strives to make a difference in the whole world through research and education. And, since I already had worked for the all-encompassing mission of MIT with a much broader portfolio of activities, the work at BGI seemed to get a little repetitious. Of course, this is no fault of BGI, but merely a consequence of me having been infected by MIT’s culture!

SP Kothari Gordon Y Billard Professor of Accounting and Finance, MIT Sloan School of Management

MEET A THOUGHT LEADER 4. What are your thoughts on why 2008 happened? The seeds of the financial crisis were sown because of the well-intentioned policy changes brought about to revive the US and global economy after the 2000 dot-com crash and the 9-11 terrorist attacks. The policy changes were designed to lower the interest rate, lower taxes, make the dollar cheap, and create an easy credit environment. Collectively, these policies, and easy credit, in particular led to an unprecedented boom in the construction industry, which in turn generated a ripple effect in the entire economy – higher employment in construction and ancillary industries, greater demand for goods and services, and an increase in housing prices that leads to greater consumption in the economy. This strategy seemed to work like a charm for a few years until people realized that ultimately those who borrowed to buy homes will have to eventually repay the loans. The height of easy credit in those times was that loans were available even to those with no income, no job or no asset (NINJA loans). When this music stopped, many realized they couldn’t repay those loans. In the meantime, the interest rates rose considerably with the expectation of a growing economy. This made interest payment a challenge to many and homeowners began to default on their mortgages. This naturally led to the housing bubble crash and the excess housing demand evaporated into thin air. The economy went into a tailspin when construction fell, followed by the reverse ripple effect of the contraction in the housing industry. So, in hindsight, it seems more like the postponement of the 1999 - 2000 recession to 2008, perhaps made worse by the economic policies, even though these policies were well intentioned. Banks are often demonized when discussing the 2008 financial crisis. Recall that easy credit was really the government’s policy. Banks took advantage of this and made an enormous amount of bad mortgage loans. For example, banks such as Washington Mutual and Countrywide granted loans to people who were not financially creditworthy. They didn’t care about lending to less creditworthy borrowers because they turned around

SP Kothari Gordon Y Billard Professor of Accounting and Finance, MIT Sloan School of Management

MEET A THOUGHT LEADER and sold the mortgages to Fannie Mae and Freddie Mac, who as quasi-governmental agencies were fulfilling the easycredit mandate by buying the mortgages without asking any questions. It’s unfortunate that we have not learned a lesson from the financial crisis. In the US, we now see a similar phenomenon repeating itself, but this time around it is student loans that are defaulting like a house of cards. Easy credit is a tool politicians love to use to disburse large amounts of money to the economically disadvantaged in the hope of accelerating economic growth. But, more often than not, it does nothing more than kicking the can down the road. 5. What are your thoughts about the raising of Fed interest rate in December 2016? Do you see the US ushering in another era of higher interest rates and loosening of the economy all over again? It is quite a different economic reality that we currently face. The US Federal debt is about 20 trillion dollars, of which about $10 trillion was accumulated in the past eight years. Low interest rates enabled the previous administration to service this debt without blowing a big hole in the annual budget. However, raising rates now will take a big bite out of the government’s revenue. Last year, the aggregate interest payment was about $220 billion, which is not too onerous when compared to total revenues of about $4 trillion. However, if interest rates were to rise by 2%, the incremental interest payment would be about $400 billion, which would be quite conspicuous. The government will have to think twice about managing this outflow, i.e., some other budgetary expenditure will have to be reduced or more debt may need to be added as a result of a bigger deficit. So, I am not sure that having higher interest rates is a luxury that the government can afford at this stage. The new administration is in a difficult position. Moreover, as it is, currently the deficit spending is substantial and therefore federal debt continues to increase. Unless we experience high economic growth, it will be a troublesome spot to be in for the administration.

SP Kothari Gordon Y Billard Professor of Accounting and Finance, MIT Sloan School of Management

MEET A THOUGHT LEADER 6. What are your thoughts on the growth story of India with Modi? India’s challenges are of a different nature. It’s a country with 1.3 billion people and very low per capita income, but high rate of economic growth. Development can come about if the growth rate further accelerates – not an easy challenge to overcome unless you are prepared to make sweeping changes. In my opinion, India needs to be much more decentralized. “The government of the people, for the people, by the people” - this description of a democracy is less true when you have a high degree of centralization. And, I think that Modi’s emphasis on good governance at times comes across as if he favors controlling and overseeing many of the things. I have no doubt that he has pure intentions, with an amazing aspiration and vision, but still for 130 crore people to be run from one place cannot be good. That said, decentralization also requires law enforcement to be far more effective than what India has currently. There are other important challenges to tackle such as primary education, basic services and infrastructure. The resources to bring about this change can come partly through Foreign Direct Investment, which depends on strong law enforcement and a welcoming regulatory environment. Bottom line, Mr. Modi has to make changes on multiple fronts and communicate the rationale behind the changes – does this sound like selling, a point I made early on in this interview! 7. US and India both had a momentous day on 8th Nov 2016. What are your thoughts on the road ahead for India and the US in the next 2-5 years? On November 8th, the US elected Trump. The Trump administration has its hands full! First and foremost, there is a real need for a change that would accelerate economic growth. And the dimensions that the Trump administration is working on include: a less regulated economy, greater emphasis on manufacturing and services being domestic as opposed to being outsourced, and favorable changes in the amount and terms of foreign trade. It remains to be seen how these policies get crafted and, more importantly, whether they are implemented with a sense of balance, i.e., if you turn

SP Kothari Gordon Y Billard Professor of Accounting and Finance, MIT Sloan School of Management

MEET A THOUGHT LEADER the dial too much and assume a very inward looking stance, it would be detrimental to the US economy. But, a little bit of tilting towards the internal economy may not be such a bad idea. This is what I am hoping for. Fingers crossed. On November 8th, India demonetized high denomination currencies.

It is not a surprise that the immediate impact of demonetization was to be negative. There was some pain during the transition period as the government rebalanced the money flow into the system. But, the question we need to ask is whether in terms of economic efficiency, is there a benefit of money now being in the hands of the government as taxes and revenues as opposed to private individuals as “black” money? More importantly, in real terms, it remains to be seen how demonetization and transactions in “white” money make it easier to do business in India, especially for the foreign entities. In comparison to the ease of doing any business or entrepreneurship in the US, the Indian business scenario is still fraught with a lot of impediments, including stifling regulations and a lot of people to please. Fundamental changes that would make India more business friendly cannot happen just through Modi’s own personal network of people; this requires the institutions to be transformed into more agile, adaptable, and business-friendly organizations. At many levels, there is need for a complete overhaul of institutions to make them more accessible and investorfriendly. As a few examples of the changes, India could tap into the professionals with experience, but residing outside of India. India could adopt and adapt the body of US regulations coupled with a concerted effort to improve law enforcement. India could overhaul the corporate securities law; make the market for corporate control, i.e., M & A activity, friendly to acquirers, and streamline the IPO process to make it listing friendly. To improve law enforcement, both the quantity and quality of judges has to improve and by quality I mean their training in economic analysis to judge complex commercial disputes. Finally, there is an urgent need for a genuine expression of interest to connect the Indian diaspora all over the

SP Kothari Gordon Y Billard Professor of Accounting and Finance, MIT Sloan School of Management

MEET A THOUGHT LEADER world back to the India growth story. It is faint as a trickle now and India needs to make it more interesting and welcoming to garner increased participation of her sons and daughters living outside of India. 8. You are actively involved in multiple activities: speaker engagements, academic duties, consulting projects, and research/editing and so much more. How do you manage it all? I enjoy working and having my fingers in many pies at one time. In addition to working long hours, an important part of getting things done is the ability and willingness to delegate and yet not lose sight of the underlying goal. Delegation necessarily requires you to be at peace with a sense of loss of control. Making quick decisions is also a key factor in one’s productivity. I am quite fortunate that I am not distracted with multi-tasking. As I get older I realize that I might have become more efficient with experience. That said, team work and surrounding yourself with incredibly talented individuals are helpful in achieving success. 9. What is your biggest inspiration? I have been very fortunate in knowing and being around a large number of extraordinarily accomplished people in my life. Just by being around them has been a source of inspiration. Notable among the luminaries I have been associated with are my PhD advisor, faculty and students I met at Rochester and MIT, in the private sector and some Nobel Laureates too! It has been a remarkably humbling journey because these are individuals who are smart and also hardworking, and it is not so much a sense of competitiveness but rather inspiration that I have constantly drawn from interacting with them. 10. What is your favorite memory from IIMA as a student? I remember vividly the class participation in the early days and the passion with which we debated issues. Then, there were the cultural events in which we vigorously participated. The entire experience was a mix of being intimidated by the enormous talent that we surrounded ourselves with, be it faculty or be it students, and at the same time they were all so friendly. We were quite infamous for being pranksters, but at the same time we worked very hard and tried to

SP Kothari Gordon Y Billard Professor of Accounting and Finance, MIT Sloan School of Management

MEET A THOUGHT LEADER excel in a competitive and co-operative fashion. My memories are more like a movie rather than discrete snapshots, which I very fondly recall and cherish as I reflect on my years at IIMA. Should there be an opportunity to be young again, I would love to repeat the experience! 11. What is your advice for other IIM alumni planning for a career transition from the industry back to school to pursue higher education? It is very natural for interests to evolve after IIM, and we should embrace the changing interests without being too afraid of those changes. But, I would also like to be pragmatic about it. In addition, there is an element of serendipity. So the advice I offer to the youngsters I mentor at MIT is “Ask yourself what is the career canvas you are painting on? And how big is that canvas?” And this decision is shaped by your aptitude, your ambition, your willingness to work hard and your willingness to compete. Making a decision requires a lot of self-reflection. I hope I nudge them into that direction. 12. Any thoughts on "Building a Successful Career" you would like to share with the IIM community. The first and most obvious, is hard work. Second, surround yourself with smarter people. This is easy to say, but always remember that it is a two-way street. Apply the sales mantra here. Just as you are interested in being connected with smarter people, you have to ask why should they talk to you. And, that will challenge you to think about how you would improve yourself so that you would become a great colleague. From a career standpoint, thinking about how you can continuously develop your human capital and your personal growth is the key point here, otherwise those smarter people won’t engage with you at a professional level. So, career success is basically a mixture of hard work and an intelligent pursuit of personal development.

(The views expressed herein are those of Prof. Kothari and do not necessarily reflect the views of IIM Americas or its Board of Directors. IIM Americas, as a matter of policy, disclaims responsibility for any publication or statement herein.)

SP Kothari Gordon Y Billard Professor of Accounting and Finance, MIT Sloan School of Management

MEET AN Entrepreneur Take us through your life journey, from your IIT IIM and early start-up days to Althea Health currently. I worked with Nilekani at Infosys’ early banking projects when it only had a couple of hundred employees. Around that time, as techies, US was the place to be. Every often, we'd have someone knocking on our doors with an offer to move to the US. After resisting it for a while, I took it. As I worked in a couple of start-ups as one of the first employees, I realized I really enjoyed such work. While all start-ups have similar values and culture, each start up has its own flavor. Despite great ideas, investments and valuation, few see the light of day while many hit the dust. Cake Financial was the last start-up I worked for. Despite a lot of promise Cake did not quite make it, but I learned immensely from my work there. Around this time I had been having some personal health issues for a few years; though not life threatening, very frustrating. So I decided to step away from the start-up world for a little while to focus more on my family and my health. I took up a more stable role with Golden Gate University as the Acting CIO. While at Golden Gate, the experience with my own health and subsequent health events in my family paved the way for my interest in digital health. What was your motivation for Althea Health? How was it born? A few years ago, my niece was diagnosed with Cystic Fibrosis. This was my first interaction with a Rare disease (RD). I did quite a bit of research and talked to people in all walks of healthcare. This research led me to believe that the RD community was highly under served, yet held great potential. Most organizations in the highly regulated healthcare /pharma industries are incapable of leveraging the

Manu Kodiyan Founder, Althea Health

MEET AN ENTREPRENEUR perfect storm of technology and legislative changes currently taking place. There is great potential for this ignored market if you step outside the rigid boxes the industry has placed itself in.

I had no illusions that it would be easy to persuade people to look at an old problem from a unique and new perspective. However, this created a moral obligation for me to do something with the knowledge I had. And the more I interacted with the RD community, the stronger I believed in the idea that eventually became Althea Health. Help us understand the Healthcare industry, particularly Rare diseases. Only 5% of the 7000 known Rare diseases have FDA approved drugs. 30 million people in the US have rare diseases and the number adds up to 350 million across the world. In essence, the RD community, if you add family, is about 1.5 Bn in number. Worldwide, the RD drug market is a $100 Bn market. The average cost of a rare drug is $111,820 per year (2014 figure) . While availability and accessibility of a RD drug is a challenge, affordability is another obstacle. What does Althea Health stand for? Where is it headed in the near future? In rare diseases with small populations, it is imperative that pharma companies and patient groups collaborate closely. However, concerns about FDA and privacy regulations on part of pharma and lack of technology tools on part of patient groups stymies efficient collaboration. Althea Health acts as a platform between pharma companies and rare disease communities. We provide pharma companies a buffer from regulatory concerns and we transform RD patient communities into valuable pharma partners at all stages of drug development and marketing.

Manu Kodiyan Founder, Althea Health

MEET AN ENTREPRENEUR Do you think the Heath care industry can be disrupted? Where do you see Althea Health's contribution in the disruption? With the power of Technology and changes in legislation, the dynamics of the Health care industry are shifting. Risk-averse pharma companies have historically been able to address the drug needs of only 5% of the 7000 rare diseases. On the other hand, RD community groups with a much larger riskappetite and clearer focus on patient impact are capable of driving a lot of the initial research. We provide tools that enable self funding of the initial stages of research via crowd funding and grant funding. We also enable collaboration with academic institutions and graduate students across the world. Finally, we enable collaboration across similar patient communities. In totality, this will reduce the risk for other players to step in, even if traditional pharma players don’t, so that more rare diseases can have approved drugs. As your core belief, you've emphasized the strength of the community. What is the power of crowd sourcing you've seen through the platform? Community groups have an enormous ability to impact change - both as support systems for patient groups and as sources of research funding. A community of 500 individuals in today’s world can easily raise quarter million USD in a year. This is enough to kick off some basic research at a university lab. Could you elaborate on one such partnership Althea Health has enabled? In an on-going partnership with CysticLife, a Cystic Fibrosis (CF) community, Althea Health provides a platform to conduct research and collaborate with

Manu Kodiyan Founder, Althea Health

MEET AN ENTREPRENEUR Mayo Clinic to study the positive effects of vigorous exercise on CF patients. This idea was one of several ideas put forward by the community itself and then voted as the most significant by the community and an advisory board of CF experts. CF patients require a treatment 3-4 times a day in which they are connected to a machine that clears their lungs of mucous. Unfortunately this also means a dependency with the machine and a lack of mobility. The Mayo Clinic study will allow patients to substitute one of the treatments each day with proper exercise reducing their need to be latched to a machine all day. As exercise does not have the same earning potential as a drug, traditional companies do not have the incentive to push such research. However, an empowered community can push its own priority even if nobody else has a financial incentive. Do you have any words of advice for new entrepreneurs or professionals thinking of taking the plunge? The risks are high, but so are the rewards. Personally I feel that I haven’t worked on anything more meaningful in my life. I would suggest choosing something that is not just about money but also something you believe in. Every entrepreneurial venture is a much longer game than one anticipates. Often you feel like you’ve caught the tiger by its tail. It's important to stick through those moments and with a strong sense of purpose, the ride becomes more enjoyable. (The views expressed herein are those of Mr. Kodivan and do not necessarily reflect the views of IIM Americas or its Board of Directors. IIM Americas, as a matter of policy, disclaims responsibility for any publication or statement herein.)

Manu Kodiyan Founder, Althea Health

Valleys of Hope and Despair There are two valleys in today’s America. The Valley of Hope is sunlit, vibrant and prosperous. The Valley of Despair, on the other hand, is fogged up, gloomy and flailing. The metaphorical Valley of Hope does have a major physical counterpart: The Silicon Valley. The Valley of Despair is diffuse and diverse, running through large swaths of American Midwest, the South, and indeed the hinterlands most regions, when we step away from the thriving metro cities. The Valley of Despair thus is truly metaphorical, symbolizing the multiple losses that afflict sections of America: loss of good manufacturing jobs, loss of hard-earned savings and pensions, loss of community vitality in major deindustrialized cities and thousands of small towns, and more.

Most of us as well as people in our networks, blessed with the privileged education of IIMs or similar top institutions, identify with the Valley of Hope, with Silicon Valley or similar vibrant settings of New York metro area, northern and western parts of Chicagoland, Atlanta, Seattle, Boston, Austin, and the like. Even if we happen to be in or near locations that can be identified with the Valley of Despair, our daily lives generally do not intersect with those who feel that they are trapped in a quagmire of despair. The narrative I have sketched out of course resonates with the 2016 U.S. presidential campaign, and one candidate rose rapidly to the top because of the ability to arouse the passions of millions in the Valley of Despair. But the point of this column is not to analyze the presidential campaign. Elections notwithstanding, a pressing challenge in America is to confront the malaise in the Valley of Despair. This dismal valley is not going to disappear in the aftermath of the election.


Nik Dholakia


In the clash of these valleys, hot button issues such as outsourcing of jobs, closure of factories and immigration provide fodder for major election period headlines. Let me turn to an aspect of these two valleys that does not make headlines in terms of election campaign rhetoric. It is the issue of entrepreneurship. For those identifying with the Valley of Hope, and especially those living in or looking at the Silicon Valley, the glass of entrepreneurial activity is not only full but brimming: entrepreneurship seems to be rampantly and virally efflorescent. We all know the smart guys (and a few rare gals) who have founded companies that are racing to be the next unicorns. The overall reality of entrepreneurship, sadly, is totally at odds with the rosy view prevalent in the Valley of Hope. Derek Thompson, senior editor at The Atlantic, has been examining the issue of entrepreneurship in America in a doggedly persistent fashion for over two years, and ringing alarm bells. In an October 2016 column in The Atlantic, Derek Thompson wrote: Entrepreneurship, as measured by the rate of newbusiness formation, has declined in each decade since the 1970s, and adults under 35‌ are on track to be the least entrepreneurial generation on record‌ This decline in dynamism has coincided with the rise of extraordinarily large and profitable firms that look discomfortingly like the monopolies

Nik Dholakia

and oligopolies of the 19th century… In almost every sector of the economy – including manufacturing, construction, retail and the entire service sector – the big companies are getting bigger… markets are now more concentrated and less competitive than at any point since the Gilded Age. So, why is it that we – and I mean the class of privileged professionals in America – do not see this decline in entrepreneurship but instead see the explosive growth in sexy apps, cool gadgets, chic fashion boutiques, aromatic coffee shops and mouthwatering fusion-cuisine food trucks? This is because what we see is of course real; but we do not venture into blighted zones, and – even more significantly – we are not particularly cognizant of the shuttered shops and units in the strip malls, Main Streets and industrial parks. Let me illustrate with a personal observation. I had a visitor from Europe, a collaborator on joint projects, spending a week with me. One morning we decided to go for lunch at a local bar, in beautiful coastal Rhode Island, a little before noon. The bar setup inside is fulloval rectangle, with the bartender and taps and supplies in the middle and barstools all around. There were only about six people at various locations in the bar. These were the regulars, drinking mostly Buds or Bud Lights, from bottles. We, the two professionals, sat on raised tables, away from the bar. A few more locals walked in and sat at barstools. More Bud Lights, perhaps a couple of Coors. The bartender, a nice young woman, walked over to take our order. We, the urbane non-locals (even though I am technically a ‘local’ with over three decades in this town; yet, clearly out of place in this bar) asked her about beers on tap and picked a relatively exotic microbrew on tap. The bar had a large floor on the side, for dancing, and a small stage. On some evenings in the past, perhaps even now, there are local musicians and dancing. But the signs were that this bar, with its aging and


Nik Dholakia

. dwindling local clientele, was on the decline. Other local bars and restaurants – there are several in this lovely seaside fishing-village-cum-touristy area – are expanding, attracting younger clientele, tourists, and professionals. They are more yuppified in their menus and décor. This bar also has opened a more a yuppiemenu sporting evening dinner restaurant, on its upper level, where the sea view is more expansive and the entrance is via a separate staircase, obviating the need to go through the plain-looking local bar. The bar downstairs is a candidate for a future failing business. American entrepreneurship, if viewed only through the app-economy and Starbucks, provides a lopsided partial view that blinds us to the large areas of declining and failing enterprises, the “middle”, the heartland, the commonweal that has defined Americanism for over two centuries.

Sure, change is happening, and it is good. But an economy and society, where one needs a master’s degree to become a successful entrepreneur, is definitely leaving about 40-50% of the population behind, in various stages of resignation or desperation. The problem is not lack of education – of course, more education is always good – but the issue that Derek Thompson raised in the last part of the quote above: “big companies are getting bigger… markets are now more concentrated and less competitive than at any point since the Gilded Age.”


Nik Dholakia

Fifty old, local bars and eateries disappear to make way for one Applebee’s, often requiring 15-30 minutes of driving for many patrons of the now-gone establishments. Seventy old-time diners and hole-inthe-wall coffee shops disappear and, if the demographic locational models run from Seattle are magnanimous enough to flash a green light, one new Starbucks will open up. In the New Gilded Age that we are entering, there are no equivalents of app-creation opportunities in the deserted strip malls, vacant old business parks or industrial estates. Hundreds of old enterprises die, and new ones do not replace them. The occasional appearances of PF Chang’s or Peet’s or Buffalo Wild Wings or Kinko’s do not constitute a solution to the decline of America’s entrepreneurship. So, for the smart bunch reading this newsletter, I would like to throw out the challenge of finding ways to reverse the trend of rapidly declining heartland enterprises in America. Of course, the fundamental change required may not come from new apps or software, but from a whole-scale restructuring of the political-economic system.

______________ Nikhilesh Dholakia (IIMA PGP-1971 alum) has taught at IIMA, IIMC, University of Rhode Island, and KelloggNorthwestern, among other places. He reflects on contemporary economy and culture. (The views expressed herein are those of Mr. Dholakia and do not necessarily reflect the views of IIM Americas or its Board of Directors. IIM Americas, as a matter of policy, disclaims responsibility for any publication or statement herein.)


Nik Dholakia

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trivia Across 1. The new Chairman of Tata Sons appointed in 2017 Down 1. Tatas sacked him in a shocking move as the group Chairman in 2016 2. In 2017 this former mobile handset giant finally launched an android phone after a long hiatus 3. This move by Indian PM Narendra Modi dominated Indian news and took the fizz out of Donald Trump's presidential win. In Hindi it is being called 'Notebandi‘ 4. The former chief of this oil company is being touted as the next U.S. Secretary of State 5. Popular women's apparel brand that has closed down all its stores beginning Jan 2017, especially disappointing working women 6. Highest grossing Bollywood movie of all time 7. Donald Trump supposedly reached a deal with this company to keep its jobs in America that it was planning to move outside the country. Popular brand of air conditioners. 8. Popular name for the ACA, that might be repealed by the Trump government

Nuts & bolts Opportunity for Sponsorships Thank you all for the continued support towards your IIM alma mater and the energized participation in alumni activities and events. As we are all aware, IIM Americas is a non-profit organization, and sponsorship is a key source of sustenance towards meeting our objectives. Obtaining sponsorship for ongoing activities and/or specific events is a continuous journey and your help in every way is much appreciated. If you have contacts or leads and would like to help in obtaining sponsorship, please reach out to Jayant Swamy, IIM Americas Board Member ( who is championing this effort. Stay tuned to to learn about more events.


Trivia solution Across 1. Natarajan Chandrasekaran Down 1. Cyrus Mistry 2. Nokia 3. Demonetisation 4. Exxon 5. The Limited 6. Dangal 7. Carrier 8. Obamacare

Iim americas newsletter q3 q4 2016 final (1)  
Iim americas newsletter q3 q4 2016 final (1)