Coasean notes

I’m well over two and a half years into my current job, easily making this my longest unbroken spell of employment ever. This is a random set of pertinent observations, more a set of notes to myself rather than for any reader, regarding how the job has been playing out.

  • The Nature of The Firm is real. For nine years, as a consultant, I enjoyed market pricing (adjusting for illiquidity and and other distortions) for all the work that I did, but also suffered from the transaction costs that Coase writes about in his famous paper.

    This meant that unless the work was reasonably well defined, or of a certain minimum size, I wouldn’t take it up – the transaction costs involved in doing the deal would far outweigh any benefits that my counterparty and I would achieve from the deal. This meant I added less value than I could have to my clients

  • “Going deep” has its benefits. If I look at some of the work that I’ve done in the last few months here, and compared that to my work in my first year here, there is an absolutely marked difference. The difference is the two years of compounded extreme domain knowledge (about the company and its business).

    From that perspective, consulting can sometimes suffer from a limitation of domain knowledge

  • Countering the above point is that I’ve “been internalised” after two plus years here. The things that excited me at the time I joined don’t excite me any more. There are times when I get what I think are interesting insights, and then just don’t bother about showing them to anyone, based on the historical reaction to such insights.

    A fresh consultant, on the other hand, would share more, and would thus get more done

  • The biggest advantage of being “in house” is the data – I have access to pretty much ALL data in the company, and if I don’t have access to something, there is a good chance that the data doesn’t exist. This means I’m able to craft better hypotheses and do better analysis, compared to the time when I relied on clients to share specific datasets with me (pretty much nobody opened up full live access to their database to me)
  • In a way I also miss the novelty of being a consultant – because you work with a company for a short period of time, you are bringing in new ideas and insights in that period of time, and people pay you attention for it. As an in-house employee, you become a part of the furniture. And a lot of the time, it is a good thing if nobody notices you
  • Lack of friction in terms of taking up work means average quality of work can suffer. If you are very particular about the kind of work you want to do, it’s good if you can be a consultant – the friction means it’s easier to say no there.
  • As a consultant, by definition, I was a “hybrid worker”, working by myself for long periods of time and then visiting the client for meetings and discussions. That had worked out brilliantly well for me.

    However, I realise “that hybrid” is different from “this hybrid” (the job), since here people have access to my calendar and are able to schedule meetings even at times when I’m not in office. Rather, since my company has a multiple-headquarter setup, I even prefer to take meetings with colleagues not in Bangalore on days when I’m at home.

  • The biggest difference between monogamy (one employer) and polyamory (two or more “clients”) is that in the latter, no one owns your time. Because they know that they are “one of several” (even if at some point in time they are “one of one” it doesn’t matter, since that’s a special case), they can’t take your time for granted. And that gives you immensely more control over your time.

    This was possibly the hardest part for me getting back to a full time job – the lack of control over my time since I had now sold ALL of it to one company.

  • The flip side of this is that, at least for someone like me, not having to keep selling myself constantly is a brilliant feeling. Though, there is some amount of “within the company selling” that has to happen from time to time.
  • Apart from control over my time, the thing I miss the most about my consulting life are the “semi work meetings” – these are meetings with prospective clients, people who can lead you to prospective clients, old clients, etc. Where there is a tinge of work to the meeting, but you also catch up on several other things.

    Now that I’m in a job, and one that is entirely internal facing, there is no concept of “pseudo work meetings”. It is either proper work meetings (or “water cooler conversations”) with colleagues, or proper socialisation with others. That means I’m meeting far fewer people on average, nowadays

  • I admit that having become a sort of a “company man“, I’ve started taking myself more seriously than I would like to. Of late I’ve started making a conscious effort to dial this back a little bit, and I think it’s already making me happier.
  • Oh, and game theory rocks. Not a day goes by without me thinking about “saama daana bhEda danDa

I can go on and on and on, but I think this is enough for now. If I have more, I’ll write another post.

Generalists and specialists

So you have generalists and specialists. Generalists are fundamentally smart people who can do a variety of things. They take a look at a problem, take some time to understand the basics, and then go about solving it. They get bored easily, and move from problem to problem. Generally, they don’t dig deep but are well equipped enough to solve most problems.

Specialists, as the name suggests, dig deep into a particular problem. They are the kings of all they survey within their domain, and know every little trick in the book. However, they are usually unaware of the world outside of their wells, and suffer from the hammer-nail problem (to a man with a hammer, everything looks like a nail). They are also deeply insecure – for if their area of specialization gets invaded by generalists, they are likely to lose their livelihood. So, they are incentivized to build walls, and make it harder for generalists to invade. Generalists don’t have any such problem. Given their nature, if one fort gets invaded, they can soon go ransack another.

The world is dominated by specialists, and they continue to build walls around themselves. Artificial barriers to entry get created (such as “experience requirements”). While this keeps their domains safe, it leads to an increase in transaction costs and overall decrease in efficiency.

Take accounting as an example. In principle, it is not a particularly hard practice. What makes it particularly hard for aspiring accountants is the way you go about becoming an accountant. You need to pass an exam, set by the association of accountants, and then intern under an already qualified accountant (who pays you less than minimum wage) and pass another exam (again set by the association of accountants) in order to practice accounting. The exam and internship are rigorous enough that you need to devote two or more years of your life (full time) in trying to get your charter. All for a profession that is fundamentally fairly intuitive. So that the specialists’ turf is protected (of course the accountants have every incentive to keep the requirements to the charter prohibitively tough – for more chartered accountants would mean more competition and hence less margins).

Another example is in math papers. They are so formula and jargon ridden that it is prohibitively difficult for anyone who is not a full-time mathematician to make much sense of them. While some of the rigour may actually be justified, most of it is for the sake of preserving the mathematicians’ turf. The same applies in general to all peer-reviewed paper publication journals and conferences.

Social scientists are afraid of economists. Financial traders (from a commerce background) are afraid of engineers. In business schools, “marketing students” are afraid of “finance students” (more on this in another post). Their only defence is raising barriers, forming cliques and spewing jargon.




Two of the four full-time jobs that I’ve done have been “offshored”. They’ve both involved working for the Bangalore office of American firms, with both jobs having been described as being “front end” and “high quality”, while in both cases it became clear in the course of time that it was anything but front end, and the quality of work depended on what the masters in the First World chose to throw at us.

In between these two jobs, I had done a “local” job, at an India-focused hedge fund based in India, which for the most part I quite liked until certain differences cropped up and grew. While doing that job, and while searching for a job while looking to exit it, one thing I was clear about was that I would never want to do an offhshored job again. Unfortunately, there came along an offer that I couldn’t resist, and so I ended up having not one but two experiences in offshored jobs.

Firstly (this was a bigger problem in the second job), I’m a morning person. I like to be in at work early in the morning, say at eight. And I like to be back home by the time the sun in down. In fact, for some reason I can’t fathom, I can’t work efficiently after the sun is down – irrespective of when I start, my productivity starts dipping quickly from 5 pm onwards. Huge problem. People say you can take calls from home and all that but that blurs the line between work and life, and ruins the latter. You are forced to stay in office even if you don’t have anything to do. Waste of time.

Then, there is the patronizing attitude of the “onshore” office. In both my offshored jobs, it turned out that an overwhelmingly large portion of the Bangalore offices actually consisted of employees who were there because even the stated reason for their existence in the firms was labour cost arbitrage. It was simple offshoring of not-particularly-skilled work to a cheaper location. I don’t know if this was a reason, but a lot of people in the “main” offices of both firms considered Bangalore to be a “back office”. And irrespective of the work people here had done, or their credentials, or record, there was always the possibility that the person in the foreign office assumed that the person in the Bangalore office existed solely because of labour cost arbitrage.

And then you would have visits by people from the onshore office. Every visitor who was marginally senior would be honoured by being asked to give a speech (without any particular topic) to the Bangalore office. In the first offshored company I worked for, people would actually be herded by the security guard to attend such speeches. The latter company was big enough to not force people to attend these talks, but these talks would be telecast big-brother style from television sets strategically placed all over the floors.

And these onshore office people would talk, quite patronisingly, about how Bangalore was great, and the people here were great, and they were doing great work. Very few of them would add actual value  by means of their lectures (some did, I must mention, talk concrete stuff). Organizing this lecture was a way for the senior “leaders” in the Bangalore office (most of whom had been transplanted from the firms’ onshore offices) to etch their names in the good books of the visitors, we reasoned.

Then there was the actual work. Turn-around time for any questions that you would ask the head office was really high, unless of course you adapted and did night shifts (which I’m incapable of). In the earlier offshored firm, there would be times when I would do nothing for two or three days altogether because the guy in the onshore office hadn’t replied! Colossal waste of billable time! Also, if your boss sat abroad, there would be that much less direction in whatever you did. In my second offshored job, there were maybe two occasions when I was on two-hour phone calls with my boss (in the onshore office), where he patiently explained to me how certain things worked and how they should be done. Those were excellent sessions, and made me feel really good. But only two of them over a two year-plus period? Apart from which, most one-to-one interaction with the boss was with respect to “global” stuff. Yeah a local boss can get on your nerves by creeping behind your back every half hour, but at least you get work done there, and can learn from the boss!

Then there is training. Because of the cost-arbitrage concept on which most offshored employees are hired, the quality of training programs in the offshore offices are abysmal. During my second offshored stint, I happened to attend one training program in Hong Kong, in common with people from onshore offices in the rest of Asia. None of the numerous training programs that I attended in the Bangalore office attained even a tenth of the quality of that program in Hong Kong. The nature of employees in Bangalore meant all programs had to start at an extremely basic level, so there was little value added.

I can go on, there is a lot more. But I’ll stop here, and let you tell me about your stories of working in an offshored environment. And I certainly won’t make the same mistake third time round – of working for an offshored entity.


So next Saturday Shivamma, my aunt’s full-time maid, is going all the way back to her village near Challakere (Chitradurga district, Karnataka; six hours away from Bangalore) just to cast her vote in the Gram Panchayat (village council) elections.

My aunt can’t let go of her for more than a day but Shivamma’s relatives are really insistent that she exercises her franchise. They say that her visit to the village would be worth it even if she won’t be able to spend much time there apart from casting her vote!

Shows how much every single vote matters when the number of voters is low!

Hospital Issues

There is one thing that I haven’t managed to understand about Indian hospitals – it is the dependence on patients’ attendants. Every patient is required to have an attendant next to him/her all the time. In case the attendant is going out, he/she has  to literally take permission from the nurses. Full time, it is the attendant’s job to monitor the patient and alert hte doctors/nurses in case something goes wrong. And the main job of the attendant is to bring medicines.

Yeah, you heard that right. Most hospitals here have attached pharmacies, and the usual practice is for the doctor/nurse to scribble down a prescription which the attendant has to fulfil from the hospital’s own pharmacy. I find this practice weird and ridiculous, and wonder why the hospital cannot short-circuit the attendant’s role and then finally bill the medicines to the patient along with the rest of the bill.

Over the last couple of weeks when my mother has been in ho0spital, I’ve found myself being woken up at all times – including 1 am and 5am to go get stuff from the pharmacy. Sometimes it’s been as trivial as a syringe. Usually it’s a much longer list. Such a long list that given the crowd at the pharmacy, it’s impossible to check if the pharmacist has given you everything he’s billed you for. And in the wee hours of Tuesday morning when there was an emergency and my mother had to be shifted to intensive care, the first thing the people there did was to give me an extra-long list of stuff to get from the pharmacy. This was at 3am.

I wonder why this practice came about, and why it still exists. Is it to facilitate easy transfer pricing for the hospital? Is it t give some sort of transparency to the patient about the medicines being given to him? If the latter, can’t the patient just sign on the prescription authorizing the hospital to procure the stuff from the pharmacy? And given the monopoly power that the hospital’s pharmacy has, service is usually slow and inefficient, thus leading to long queues. And in such scenarios, it’s not easy to actually check if you’ve received everything you’ve paid for. And on top of this, you have the hospital giving multiple prescriptions for the same non-consumable thing, maybe just hoping you don’t notice.

And then there is this thing about the attendants. Thankfully we have enough extended family here in Bangalore that it isn’t hard to find volunteers to do vigil at  the hospital when I’m away at work or other things. But what if we were in a place with no relatives around? Or if the patient were living alone in the particular city? How would the hospital handle this? Would they make the patient himself run around to get medicines?

Whenever I think about these things I tend to get extremely pissed off. The hospital has been otherwise good. The nursing staff are all very nice and never crib. The hospital is maintained extremely well and is clean in most places. There are enough duty doctors at all times. And then they expect an attendant to be with the patient. And the expect the attendant to run around all the time to fetch stuff from the hospital’s own pharmacy.