I was fortunate to have Nikunj as my hostel mate and senior at IIT.
The quest is for achieving a higher purpose. And that really defines the ethos of the most powerful alumni group in the planet in terms of purchasing power. Let me share a story:
I used to work in Express Towers in Bombay and one of my bosses preferred to hold internal meetings at the Belvedere Club in Oberoi. Every time we stepped out of the gate to cross the road, my Boss would give a beggar Rs 20 (never less or more).
Each meeting typically involved a millionaire. A recognisable face. Some govt issue. Legal problem. Tax problem. Family dispute. Bank default. Falling share price. And so on.
The common factor across meetings was that his liabilities were far greater than the liquid assets. Essentially negative net worth in reality – even in highly positive net worth companies. These were familiar faces. One saw them in Business India. My Boss owned Business India.
On the way back, the beggar would still be there. Smiling. He had no money. No assets. No liabilities. The Rs 20 received had made his net worth positive.
I wondered. Who was richer ? The millionaire we just had caviar and coffee with. Or this beggar. The mathematics of it seemed to imply the latter. And mathematics is not an opinion. Arithmetic is never wrong.
I mentioned this to Kumar once whilst we were waiting for his guest to join us. His private jet had to circle over us because like today, Bombay airport had only one runway. And this was peak time. His office called the Oberoi concierge desk to update us on his flights landing. This was 1987. There were no mobile phones. He was a hour away.
I shared my dilemma with Kumar and my understanding of the mathematics. And the rather strange conclusion – that the beggar outside was actually richer than our expected guest whose private jet was circling over us.
Kumar rubbished my conclusion.
And suggested I add to my qualification as my IIT degree was eminently unsuited to the real world computations.
He explained that net worth was a theoretical concept. Balance sheets are an accountants opinion based on the nonsense fed to him by his client. Receivables may never come in. Payables like bank loans may also be avoidable or get converted into equity. Equity itself was mostly vapourware. Most companies in India were equity free – built on public funds.
What mattered were just three things – technology and your moat around your castle, your market share in the industry and your purchasing power. In the reverse order of importance. The beggar had no purchasing power even if his net worth was positive. The guest had huge purchasing power because of which we were rescheduling our meetings to accommodate his delay.
That was the day I understood that purchasing power is all that matters. Something I have explained to all my iit friends.
They all run large funds. It is someone else’s money but it is their purchasing power.
