Udaipur, in Rajasthan, is the quintessential Indian small town: a close-knitted society, bustling markets, roadside food stalls.
Growing up in a traditional Marwari joint family with the business of textiles and plastic shoes, my world was all within a 10-km radius in Udaipur.
There are four landmarks which used to be most frequented by me and that is where I learnt early lessons of finance and investing.
This is the commercial heart of the city. It is the hub of trading and retailing of agricultural, textile, handloom products and of money lending (or as we know it as P2P lending). I used to hang out there at our textile shop. Meeting people from all walks of life set the stage for me to understand human behaviour. That’s where I learnt the true nature of trade-offs. With higher risk came higher returns. And yet, everyone perceived this equation differently. Some would inherently seek out risk, and some would abhor it. I realised early on that finance is less about numbers and more about emotions.
Over the years, the quaint narrow lanes became traffic nightmares, and buyers moved on to shopping at malls. Most of the shop owners thought this was a fad, and stayed put. Eventually, many of them had to shut shop.
Lesson 1: Change is the only constant. As an investor, agility and dispassionate decision-making is the key.
Can you imagine a life without cricket? The Railway Training Ground (RTG) was that place where we would have some of the most passionately fought wars, also called matches. Interestingly, we were warned by folks to not go beyond the RTG as there were jungles beyond that.
Towards the late 80s, I remember many local brokers coming to our shop to talk about buying land beyond the RTG. Every once in a while we ended up going to the construction site nearby to fetch the ball. The opportunity was playing out right in front of our eyes. And yet, my family never considered investing. Today, we look back at it as a missed opportunity.
Lesson 2: Sometimes the investment opportunities we look for are right in front of our eyes.
No weekend was complete without a visit to the two lakes that defined Udaipur. Built hundreds of years ago to store water, these two lakes were central to the social life of the city. The roadside stalls there served up some of the best food I’ve ever had.
Little did we realise, that the introduction of private airlines & the consequent increase in tourism in the 90s would change the fortunes of this favourite picnic spot. While we always had some of the finest hotels in the country, the introduction of new air routes changed the landscape of the area with the opening up of new hotels around the lakes. This taught me an important lesson in investing.
Lesson 3: Always look out for the second and third order effects of change.
HZL was and still is, the largest company operating out of the city. Most of my friends’ parents worked at HZL. Hanging out at their homes, I realised one universal truth: almost every employee was very unhappy. It always amused me that despite being the largest producer of zinc in the country, it always struggled to make profits.
Soon with tremendous fanfare, and massive protests, HZL was privatized. Almost everyone we knew there opted for the voluntary retirement scheme. New management came in, and very soon, we started hearing about more jobs and happier employees. Thereafter, it felt that the fortunes of the company changed. It is this that brought home to me the importance of high-quality management in selecting investments.
Lesson 4: You’re always investing in the people, before you’re investing in the business.
Coming from a small town, I always had self-doubt about how I could go on to advising some of the wealthiest families in India. After all, they have seen and experienced much more than I had. Going back to my roots helped me believe in myself and carry forward the lessons I learnt in my professional life.
Author: Vaibhav Porwal (Co-founder — dezerv.)
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