I moved to Tahiti. Didn’t like it too much. It was too hot and everything had sand in it. Then tried out Hawaii for a few days, but I can’t surf to save my life and these tropical paradises are someone else’s vision of what the ideal temperature in paradise should be like. What is good for Tom Selleck and Lilo is not necessarily good for me.

Just came back home Monday to find that we had a multi-million dollar, opportunity of a life time, buyout offer that was snuck in while I wasn’t looking. But since my post retirement dream was a cross between Tahiti and Hawaii and since both of them are too hot for me to handle, I have decided to stick it out here. Atleast till they discover portable air-conditioning or till Hawaii is able to afford a glacier or two.

I am serious, the answer is No.

Once upon a time I used to think that given a chance most individual will rise up to your expectations. Needless to say this expectation got me into a lot of trouble. Still does. As recently as Monday afternoon!

But then despite a few unfortunate exceptions including the one on Monday, most individuals that I have had the pleasure of working with did rise to meet my expectations. Some have been generous to a fault, some understanding and some absolutely lovable with their support, their loyalty and their unquestionable faith in us.

Some are friends, some clients, some colleagues, some team members and some family.

But it’s the exceptions that really piss me off. I understand that as a rule, the only sane thing to do is to have no expectations at all. Atleast that is what we were supposed to pick up and learn in New York. But a lesson learnt a decade ago is hard to remember when you are blessed with friends who will go to the end of the world to help you out.

And we have been truly blessed. No doubt.

But every now and then the rare friend comes along who would break the mold in your mind, kick you when you are down, stomp all over your expectations and given the chance even piss on your grave.

And I have unfortunately run into three of these unique specimens these last 12 months. I have either grown too sensitive (possibly) or in my old age I am making questionable judgment about who is a friend (likely) or I am making friends too easily (maybe). Or maybe it’s just that hard times are a great time for you to find out who really is a friend.

As two colleagues at work reminded me recently you can’t let an exception drive your behavior. For every disappointment, there have been ten surprises. For every piss on your grave (POG) type there have been twenty who have offered a helping hand.

But I still can’t get over the disappointments and the POGs. I guess I get my day to wallow in self pity.

To the POGs in my life, thank you.

Without you, I would have never really appreciated the friends I do have.

Aneeka picks up interesting quotes to put beside the entrance of her room. Monday morning the board read “The only disability is a bad attitude.”

I wonder what it feels like to be the four year old behind my son’s eyes.

Aneeka and her approach have made a world of difference. We now have more eye contact, a much better attention span and he is the only one of our three children who can actually recognize words at the age of 4. He is spending a lot more time with books. Amin didn’t start reading well into KG-2 and Taha and Salwa share the same flash cards though she will be starting grade 1, this August.

My name is Taha; he will tell you if you ask him, with a bit of prompting. If he really likes you he may even spell it out. And yesterday he drew his first proper circle. And he wants Wheetos and water though for some odd reason that I still need to figure out, he calls them corn.

Pakistan Risk Review – Editorial for the second issue

As we wrapped up work on the second issue of Pakistan Risk Review, I sat down and took a few minutes to look back at my relationship with risk over the last decade. Just as this publication has evolved dramatically over the last 12 months, my personal opinions about risk have come a long way.

Belief in models

When I first read John C Hull definitive text on derivative pricing in 1995, the models in the book were nothing short of inspiring for anyone who has ever been moved by them. I had found something to build in Excel which was not a prototype, not a business plan, not a financial statement but the price of a financial security misunderstood by a large number of my peers. The figure on the white monitor screen was absolute and final, questioning it was blasphemy. Such graceful and elegant models couldn’t possibly be wrong.

Introduction to the generator and the many faces of Nassim Taleb

Even though as actuaries we had covered generator functions as part of the risk curriculum it took Mark Broadie at Columbia University to actually show us what a generator meant and how it could be implemented within a few strokes in Excel. A year before on an engagement at Goldman Sachs I had come across the great debate on models and the role of generators between Nassim Taleb and Philip Jorian and the Broadie course further reinforced what Nassim had emphasized. A model was only as good as its implementation and assumptions. In most cases it was an inaccurate approximation; in others it was completely wrong.

But then Nassim over the years also showed how you exploited the same imperfect models as a trader, a teacher, a writer, and a cynic. This imperfection is embedded within our markets and systems and as you mature as a professional, rather than ignoring it or distrusting it, you learn to play with it.

Brush with capital and the business side

The Alchemy story marked the beginning of walking the line between traders, risk managers and Board of Directors. Once you added capital and Basel II to the mix, there was no going back to academic defenses. Clients, Boards and Auditors asked tough questions and opinions leading to economic decisions with real impact that you couldn’t qualify or disclaim. To survive it was necessary to extract an opinion from ambiguity and uncertainty.

Despite all the qualifications, you still had to help the business side understand the impact and magnitude of the bets they made. And the easiest way to communicate and quantify that was to translate that impact into capital requirements.

Implementing concepts

All of this was still a long way off from the discipline required to convert our understanding of risk into practical, failsafe processes that shift into the right gears as risk profiles transition across economic cycles. More importantly the imperfection of models also raised questions about opinions, decisions and the usefulness of numbers publications similar to PRR presented. Was it better to have qualified analysis or no analysis at all? Would you rather travel blind or with an outline of a map that suddenly degenerates into a grossly inaccurate caricature if the risk landscape changes? Did it help that you knew that this degeneration was possible? Why was it that the risk function worked worked better with some banks compared to others? Was it a failure of models or a failure of processes? In a world used to absolute, black and white answers, you had to educate customers on shades of grey.

The end state

It took a decade, possibly more of being exposed to risk, of losing scarce capital, of reading everything Nassim Taleb wrote, of teaching customers and students about the absence of absolutes in our field and walking the fine line between opinions, educated guesses, missteps and wild shots in the dark to get where I am today as a risk professional. When it comes to risk the right position is neither as a believer, nor as a cynic; or an agnostic or a zealot for that matter.

It is somewhere in between.

Ammi’s is in Liaqat on account of emergency knee surgery and Fawzia is staying over with her tonight. It’s only when mothers, wives and sisters are away that we realize how strongly they hold a house together and how helpless us lesser mortals are without them.

What do Frank Sinatra, John F. Kennedy, Ants (the movie), Sesame Street, Taha, Jehan and the rest of us ordinary mortals have in common?

Next time your found, with your chin on the ground
There a lot to be learned, so look around

Just what makes that little old ant
Think he’ll move that rubber tree plant
Anyone knows an ant, can’t
Move a rubber tree plant

But he’s got high hopes, he’s got high hopes
He’s got high apple pie, in the sky hopes

So any time your gettin’ low
’stead of lettin’ go
Just remember that ant
Oops there goes another rubber tree plant

When troubles call, and your back’s to the wall
There a lot to be learned, that wall could fall

Once there was a silly old ram
Thought he’d punch a hole in a dam
No one could make that ram, scram
He kept buttin’ that dam

‘Cause he had high hopes, he had high hopes
He had high apple pie, in the sky hopes

So any time your feelin’ bad
’stead of feelin’ sad
Just remember that ram
Oops there goes a billion kilowatt dam

All problems just a toy balloon
They’ll be bursted soon
They’re just bound to go pop
Oops there goes another problem kerplop

(Lyrics by J. Van Heusen/S. Cahn)

When the time came for us to graduate things had started to get exciting. GUI tools were getting more impressive. Borland was getting the whacking of a life time at the hands of Microsoft in everything other than development environments and was returning the favor in IDE’s (Integrated Development Environments). The era of Word Star and Word perfect was coming to an end but Lotus 123 still reigned supreme. PC servers and desktops were getting faster; local area networks were getting common. Technology solutions for automating routine, dreary and mechanical tasks were quite widespread in small and midsized businesses. However the most powerful desktop machine, the Intel 386, was still reserved for giving dictation to a typist in the office of the CEO, the MD and the head honcho.

IBM’s AS/400 was the rage in the industry and you couldn’t escape from that platform if you went industrial. The standard career path for most computer scientists was a few years in consulting/software house mode, followed by a few more in industrial mode, followed by an escape to warmer pastures in the Middle East or colder pastures further out west. If you switched to retirement mode, you took over as the head of technology at a respectable MNC with your three annual bonus salaries, your provident fund, your company car and your health insurance.

When our class came out in December 1992 we had a number of decent options. Six of us ended up at IBM, Pakistan. I escaped within four days.

Other than IBM, you could do Systems, Infotech or Infosys (a sub dedicated to building software for Citibank in Karachi), AKU ISD, brokerage houses investing in technology, Ora-tech systems (the ORACLE reseller in Karachi), chartered accountant shops, network deployment setups, Crescent Software, FAST Foundation, FAST ICS, Ultimate solutions (the first FAST origin startup in Karachi that we were aware of), Wavetech (the Altimash Kamal rupee printing press) or heading out to IBA or LUMS to grab a quick MBA. Of the 30 graduating students in end December, about 20 had offers and had been placed by end February. The rest knew what they wanted to do.

My most memorable event during my first year of service: The gentleman who ran the software exports group for my employer and did a fair amount of work in that area took a stand and said that GUI (Graphical User Interface) development still had a decade to go before it would have a future or a place in Pakistan. Till then monochrome (think black backgrounds with green characters), DOS and character based front ends were our best bet.

1994 and 1995 were both great years. Somewhere in that period PSEB came into being and PASHA took form in the minds of its founders. Aizaz Hussain at Systems, Omer Morshed at SHMA, Mansor at Infosys, Shabbir at Nobel Computer Services and Rodney Rahman at KPMG did two interesting things. The first was the foundation of PASHA, the second was an informal consortium put together by the last three under the name of PakSoft. The triggering event for all of this was the Pakistan stall at Comdex 94 in Las Vegas which was quickly followed by Pakistan’s participation at CeBit 95 in Germany.

I think most technology companies in Pakistan were doing, pitching or trying to pitch for work abroad. Newer arrivals like Techlogix and Cressoft with strong links in the US were focusing primarily on the US market. However the two events clarified the software exports opportunity in the mind of Pakistani participants and it helped that Indian companies, right next doors, had started getting serious attention in international press.

And a year after the “GUI development has 10 years to go” stand, GUI development had arrived in Pakistan.

1991 is the year when the world changed for me forever. At the beginning of my fourth term at FAST ICS my father went out and bought me an Intel 286 DTK computer. He borrowed 30,000 rupees from two elders in my extended family. For us as a household, it was an unthinkable amount and an enormous investment in addition to my tuition at FAST ICS as well as the burden of my actuarial exams.

To put that amount in context, a year later when he upgraded our car from a two decade old Hillman to a more recent decade and a half old Toyota Corona, the entire transaction set him back by forty five thousand rupees. Fifteen thousand more and we had a car that carried our family of six around everywhere and made it possible for my father to drive to work and back every day. My thirty grand slim line desktop that cost exactly 66% of the above mentioned asset just sat on my desktop and only looked pretty.

I am not sure how he or I justified this act of selfishness but that is what fathers do. And on the same selfish note that is one of the many reasons why we love them.

Armed with my DTK, that August I enrolled myself for five courses. Operating systems (OS), Digital computer logic (DCL), Theory of Automata, Computing II and I think Data structures. Operating Systems was being taught by a recently returned practitioner who worked full time at Unilever offices at Avari Towers and snuck away in the evening to teach the course on OS at FAST ICS. Salman Qureshi’ class started at about 4 pm and ended late in the evening. It was complimented by an equally exciting class on the design of digital circuits; not basic electronics but the AND, NAND, OR and XOR gates stuff.

Between Ali Naqvi (DCL) and Salman thirty second year students suddenly crossed the threshold from being bored-what-am-I-doing-here over grown teenagers to shit-this-stuff-is-really-cool state of nirvana. I still remember my night of enlightenment when after being up for three nights, I was able to load my boot sequence on my simulated simple instructor computer and run my very first program on my very first operating system that I had just finished writing with the help of two of my other project partners.

And we were not the first to cross that path. In 1991 we were the sixth batch to come into the program and undergo the transformation that comes only when you write, debug and test your own operating system, your first compiler, your first digital computer logic circuit and your very first network.

In 1991 the presence of an environment where you walked in as a hyper active teenager and in less than three years walked out as an individual who could hold his own at a programming competition anywhere in the world, in a third world country that was struggling with a democratic experiment gone wrong with its commercial center on fire, was nothing short of a miracle. BCCI FAST Foundation and Aga Hassan Abedi made it possible. Many others followed but they are the ones that we owe our first debt of gratitude.

In 1986 FAST triggered the sequence that led to the availability of just over a thousand computer science graduates two decades later. You cannot build an industry without resources. Irrespective of whether you work with cutting edge pure development or boring accounting backends, for a technology firm to survive and grow it needs easily available, affordable, trained fresh geeky blood. Even though the initial output at FAST was limited to 30 students per year, the success of the FAST experiment soon seeded similar experiments in Lahore, Islamabad, Peshawar and Karachi.

When it comes to combining objective writing with scathing sarcasm no one comes close to my honorary friend, Sepoy, at Chapati Mystery (actually we have never met and have exchanged all of two emails over the last 24 months). But the gent in questions writes such lovely prose and says exactly the things that I was always wanted to say, only better.

All of you losers out there crying about the anticipated invasion of Taliban and worried about NYT oped pieces, please read Sepoy’s latest here.

I love you dude (in a very non talibanish, one desi to another desi sense).

Every now and then someone comes along and questions how far we have come as an industry or what have we achieved as a group over the last two decades. I have been thinking about doing this post for a while but a recent exchange on CIO Pakistan reinforced the urge. Here goes.

Early impressions, late eighties

I guess I was and am luckier than most kids of school going age since I had immediate family running one of the few Apple distribution and repair centers in Karachi. This break with chance made me come across my first Apple computer in 1984-1985. The setting was a chess game that I lost but that one exposure to computer gaming as a thirteen year old was enough to hook me for life. I quickly found another more accessible cousin who had enrolled himself in the very first batch of computer science students at BCCI FAST ICS and leached onto him like a parasite. From chess we moved on to summer Olympics and word processing and the hook sank deeper.

I was devoted to becoming an actuary so computer science wasn’t even on my radar. Friends and cousins in the same age brackets didn’t really think about the field. And there weren’t that many choices at the bachelor’s level. The engineering schools in Karachi ran computer engineering (not software) curriculums in tandem with electrical engineering but student troubles at NED as well as UET Lahore led to 4 year degree programs extending to 7 or more years depending on the political temperatures. Once you had wrapped up your first degree you could get an M.Sc. from Karachi University or an MBA in MIS from IBA. For those who had more time and were waiting for their results and admissions to come through it was also possible to do a short course in computer science through IBA and Karachi University. In 1985-86 that was as cutting edge as computer science could get in Karachi.

On the employment front the picture was even more interesting. You could apply at AKU ISD which was the place to be for a CS graduate throughout the 90’s. Even though they worked off MAGIC, a second generation hospital management system, with second generation tools, the processes in place and the talent they had hired led to one of the smartest CS teams in town. You could stay back and teach at FAST ICS and most FAST gold medalist opted to do that while they waited for their GRE, GMAT and PhD application results to come through. If you were interested in development you could go the Oracle way (which was the INFORMIX way in Lahore), the RPG, the COBOL or the FORTRAN way. On the lower side of the social scale you could also do CLIPPER and FOXPRO.

The only products and domain you actually ended up working with were Accounting backends, inventory management, enterprise resource planning and financial reporting. The places where you could get this work were chartered accountant shops, masquerading as technology consulting groups. To put it mildly it quickly got schizophrenic when a culture used to book keeping and record keeping collided with the free thinking, power to the people, all hail technology types.

To be fair there were exactly two, maybe three exceptions to the above classification. Systems Ltd, Systems Research and a handful of unconventional technology nomads who managed to create an oasis here in Karachi.

If three years of working with algorithms at school left you allergic to programming, you could always join the sales desk at IBM, NCR or Unisys. And then there were the plush, keenly contested, retirement gigs as head of technology at a multi-national organization.

So as a pure computer science graduate starting in the late 80’s the grand total of true development opportunities in Karachi could be counted on the figures of a single hand. If you were willing to work with DB based tools and the accounting focused domains of backend systems you could extend your opportunities to the fingers on the other hand. And that was it.

No successful product companies, no international exposure, no cutting edge, bleeding edge, or edges’ edge software.

All of that came later. Unfortunately in the late 80’s if you were an excited computer science graduate looking for exciting technology oriented workplaces, to be in Karachi was just as bad as being on Mars. Or working for IBM (this one is for you Adnan). Or both.

(To be continued…)

Jehan arm twisted me again to teach the dreamers course I teach at SP Jain, Dubai, in Karachi and Lahore.

I had spoken about running something similar back home a few months ago and she had been on my case to do this sooner than later. So this weekend, I will be running a two day crash course on entrepreneurship on the PASHA platform. Details on Jehan’s blog.

See you at the course on Saturday.

One of the joys of having an office in Karachi is Adnan Haider’s company when he drops in town to get away from all that is Dubai. In the few days that it takes for him to quickly get Dubai-sick as well as Karachi-sick (not necessarily in that order) I am normally able to twist his arm and extract favors that are difficult to come by. And then there are my trips to Dubai where I am able to ensnare the always trusting Adnan in judging budding students and their exciting business plans.

On his last trip I gave him a copy of the soon to be released Pakistan Risk Review and asked him to write a review before the publication hit our circulation list. And then over the next ten days I became the master of outrageous guilt trips.

Adnan finally caved in and wrote the nicest and the only review that we have received so far. Thank you Adnan! It is a joy being your evil mentor. You would do any Sith Lord proud.

Donald Sexton’s International Marketing class was scheduled for Thursday evening, an hour before happy hour at Columbia. In 12 sessions spread over twelve weeks Don planned on teaching us everything we ever needed to know about building global brands. Each class would start and end with Don’s personal collection of the best advertising done in the last three decades. In between amongst theories, practical exercises and street smart thinking we would get to dissect what we had seen earlier.

Don taught me everything I know today about branding. To him a brand was about connecting the wiring in our customers mind when they saw what represented our products, logos and images. When you saw Pepsi, you were meant to think Coke is evil; when you read the Journal you knew that FT was clueless. But you had to be careful with this wiring. You couldn’t aim for more than two or three attributes and you needed to determine upfront if they would be functional (speed for fast cars, flatbeds for business class travel) or psychological (lifestyle, image and perception for Mont Blanc and DeBeers, peace of mind for Fedex). The wiring and attributes were determined by your target segment and to really hit it off with them you needed to understand what defined them, drove them, controlled them and moved them.

Don didn’t just stop at segmentation or wiring. He then went on to build upon that foundation and showed us how to manage frequency of exposure, how to capture mind and heart share and how to structure businesses around the brands you were building. It was Don’s course that led to the business plan that later became Avicena.

By the time Don was done with us, we had all turned into advertising critics. Over the last decade I acquired a nasty habit of dissecting and classifying an add as soon as I saw it. It was Don’s gift to all of his students.

Which is the reason why I think Engro Foods got taken for a royal ride with the Omore Icecream campaign. I think they should not just fire the agency who did the campaign but also sack the brand manager for the product. Running a visually offensive power point presentation on HBO with a nice jingle but no branding elements at all just goes to show that the group behind branding at Engro Foods has no idea how to go about building one or has too much money to care about how it is spent.

It is not that the branding strategy for their other key products has been above par. The benchmark in this country when it comes to advertising is set so low that if you even put a small part of your brain to work you can outshine the competition. The Zong product may suck but the quality of their media output is certainly generations ahead from lesser mortals running the same function at Ufone, Mobilink and Telenor.

My kingdom for more halfway decent advertising campaigns from this country that can pass the Sexton critical perimeter!

Warning: Technical Marketing Plug read at your own risk…

In a response to question about what exactly would someone do with Pakistan Risk Review other than using it as an expensive paper weight, this post was drafted. I possibly need to write a book to explain the terminology, if you are not a risk professional; but no issues, feel free to ask and I will try my best to answer.

Some people just don’t know how to keep out of news (good news that is). Babar at Telecompk bags the scoop once more on Umar Saif picking up the MIT Technovator award for 2008, which is the most recent in the long list of news worthy Umar Saif breakthroughs.