Student Loans Endemic

First things first: In the past few years, no other image has brought me as much joy and mental peace as this one:

~~~Closure notice of my student loan account~~~

Ever since my graduation in June 2016, closing the student loan has been - you can say - my singular focus in life! While the loan payments were quite manageable for our household budget, just looking at the sheer size of the debt in 2016 used to nauseate me. 

Leverage

For those who have undergone any form of finance or business courses, leverage is usually one of the first topics that they learn about. In investing terms, leverage basically refers to the act of seeking higher profits by investing borrowed money (source). The courses then go into the detail of adjusting your extra returns with the cost of capital (interest) and the tax benefits you get on the interest paid. Net-net, on paper, it is a brilliant idea to leverage to grow rapidly - IF you have a consistent cash flow. Mind that IF in bold, underlined font. 

Leveraging, or taking out a student loan, for international higher studies course is indeed an interesting option, but considering the current economic conditions, increasing protectionism and volatility in general makes it the second most risky investment you can make in the recent times. First, of course, is investing in crypto-currency! Well, don't even get me started on crypto! 

Recently, I read some of the most beautiful words written about leverage (source)

Body size in biology is like leverage in investing: It accentuates the gains but amplifies the losses. It works well for a while and then backfires spectacularly at the point where the benefits are nice but the losses are lethal

Optionality

Along with increasing the risk, I believe, any form of regular, mandatory payment decreases your optionality. Especially in case of student loans, as your repayment term begins, you are forced to find a paying job, or let go of any start-up ideas that you were pursuing. While one may or may not exercise any optionality, it is always at the back of your head to be in a stable, secure life with cash flows exceeding loan repayments at the bare minimum. 

Having said that...

And, after closing down on the juggernaut sized loans, I can now say that this leveraged trade was one of mybest trades with quite high ROI. Not only I have changed my industry and geography (of the 3 famed traits that define your job: geography/industry/function), but it gave me incredible opportunity to settle down in the city of Paris! AND, that puts us in close proximity of almost the whole of Europe for mini-sojourns! 

In a nut-shell...

What I am trying to say is leverage is risky! If everything works out - awesome! But in most of the cases, it is taken on by students, in disproportionate amount vs. their own assets, and with no clear visibility on future cash flows. Compound that with volatile geopolitical and protectionist environment of today, it is not a figment of my imagination that student loan debt will be the next burst bubble, similar to that of 2008.

Hello from the other side

June 10, 2016

End of the formal education. A lifelong quest for knowledge continues.

Bonus links: Every year, HEC Paris releases a fun video at the end of the graduation ceremony. This year's video was HEC Creed! Have a look! Though, 2014 graduation day video is my favorite - HEC in the world of TV shows! 

End of the MBA Program

Update: As it turns out, I was not able to complete this post in one sitting. Hence, there is a mix of past, present and future tense in this post. 

... and just like that, it's over! It is hard to believe that this is my last week at HEC Paris. After 16 very short months, I will attend the last class of my MBA program this Wednesday.

Saying Goodbye! 

The reality of the situation hit me this Sunday when I put up an advertisement to sell the small possessions I bought for my home of 16 months - 143, Expansiel - on our campus Facebook page. It feels that 4 Sept 2014 was just yesterday, when I created a video of my empty room, to send back home showing my family a glimpse of my new life. Time flies, really! 

As I sit here and think about the time gone by, I must say that the past 16 months have been a humbling experience for me. An international, top-tier school does that to you. From being a top performer for years to realizing that every other person in the class has an unparalleled knowledge and breadth of experience took me just 4 weeks. And I believe, this early realization helped me grow both personally and professionally in a short period of time.

While an inherent benefit of an MBA is a large, global network that helps you mutually grow in the future; I will more than treasure the bunch with whom I was able to develop lifelong bonds.

As of finishing this post on 22nd December, I have had my last MBA class, went on a sojourn to Amsterdam, and finally returned back to my home in New Delhi! For the next month, I will be  found in front of my X-Box, when I am not hopping across the country for short trips!

See you guys on the other side! Have a Merry Christmas and a Happy New Year!

Internship Diaries

As a friend jokingly said the other day – you should call this part of life partially employed!

Jokes apart, after spending eight months rigorously studying courses from various disciplines of management, I am currently on a short sabbatical from the academic life. End of April marked the beginning of my 4-month internship at the Paris-based office of a reputed multi-national organization. I will be working here as a full-time intern till the end of August, and then go back to the university to complete my specialization phase from September to December. 

MBA program at HEC gives you the unique option of either doing 8 elective courses (and then a month and a half long internship), or doing a 4 month internship (technically it is called fieldwork) after the completion of fundamental phase. Although, I thoroughly enjoyed most of the courses taught in the fundamental phase of the MBA, but from the bottom of my heart I was craving to go back to the office life, projects, deadlines, jam packed outlook calendars since the first month in Jouy. Hence, I made my decision to go for option 2 – the longer internship (fieldwork!)

As a large chunk of visitors of this blog arrive from various GMAT forums; hence, I thought I should detail out some of the challenges and best practices prospective candidates should be better prepared for, regarding internship/job search, before they dip their toes into the MBA life. The experiences may vary based on the type and geography of the company you apply to; however, the pointers below are an average of experiences a job seeker would face / is facing.

The Challenges 

It is not a hidden fact that most of the European states are currently facing tumultuous economic conditions. In comparison with the students from past intakes, finding an internship or a full-time position this year seems to have been especially tricky. Some of the most common roadblocks I personally witnessed during my internship search were:

• Work permit - This usually is one of the initial filters and is a limiting factor unless you are applying to a large conglomerate. Due to various cumbersome steps and costs involved, companies seem to prefer candidates who already have the authority to work in the country under consideration
• Local language - If you are looking for a client facing role, such as in consulting, knowledge of the local language of the office you are applying for is an absolute must
• Length of the internship - A lot of Europe based offices expect an intern to stay with them upwards of 6 months, which can be a limiting factor as a lot of b-schools do not provide this large a gap during the MBA
• This one is a negotiable issue basis what value you can add in the time you have, and if you can stretch the period by working part-time for a while

The Best Practices

I knowingly didn't call this part of the blog post as 'the solutions.' Job/internship search is never a one size fits all game. The challenges may be common, but the solutions are unique to every individual. However, one needs to be very aware of the importance of the following:

• Network, Network, and Network - There is no need to highlight the importance of networking in today's world; especially, in the world where we all seek to move post-MBA
• Solid research about the companies and the profiles - Contrary to what some people suggest, I recommend that one should apply to only a handful of companies, and not spray and pray! 
• Apply only where you really want to go or to a company which does what you really want to do
• Work on your pitch - Make your pitch, not a 30 second elevator pitch, but a concise summary of who you are, what have you done, and what is it that you bring on the table for the job/project under consideration

But don't forget...

… there is always a component of luck in every good or not-so-good thing that happens in your life. I am a firm believer of ‘whatever happens; happens for a reason’ camp. So, fingers crossed and wish you luck for the search! 

London Eye

Serious stuff aside, April and May have been really good to satiate my wanderlust! I had a two week long trip to India, two trips to London and one trip to Amsterdam! And of course, visited some new places in Paris. Over the next few days, I will write about those trips as well. Keep watching this space! For select pictures of my European sojourns head over to my Instagram page.

Till then, as they say in French, à bientôt !

There are no superheroes

But then there are no tasks that a cross-functional team, with proper coordination and a good leader, can’t successfully execute. 

As a part of the MBA program at HEC, we have to participate in a two-day off-campus leadership seminar at St Cyr military academy. It is a well-known fact that the military is unparalleled in its processes and logistics. However, before embarking on the 2 day sojourn at St Cyr, it was a question in everyone’s mind regarding if it was going to be a commando training or a lecture on leadership skills at the academy. It was none. 

Days at the academy start at 0500 hours and continue till the evening – packed with exercises and simulated scenarios that army faces on a regular basis. Albeit, some activities required physical strength, the focus was on fostering clarity in thoughts, communication and execution, and in-turn leadership. Based on the speed of execution, each group had an opportunity to do 10-15 tasks. The activities included saving a snake-bite victim from another side of the lake, to finding an injured colleague in the wild and aid air rescue by taking the victim to a safe flat land area. Obviously, no one was bit by a snake, and the injured friend was a cloth filled dummy saved by an imaginary helicopter, but the rest of the activity was done in near real scenarios. 

The tasks were similar to nothing that we have done in our professional lives, and the team had members of which most of them hadn't worked together extensively in the past. As a result, we were unsuccessful in executing first 2 time-bound high-stress tasks. From the third activity onward, our mentor, the representative from the army, appointed one leader and suggested some ways and methodologies for a better team performance even on tasks on which no team member has any experience, whatsoever. We saw an exponential improvement in team performance with each additional task, as the next leader utilized the best practices and learned from the mistakes of the previous leaders. 

For each task, we had to follow the concept of ‘leaving no man/woman behind.’ Implying, the task is not complete if a prodigy from your team walks on the rope and reaches the other side, you can use such a talent to your advantage, but the task is only complete when the whole team crosses the said water body in allocated time. The second best thing about these tasks was the debrief session post the task. It was the best learning experience, where your peers provide you feedback, as well as, you also introspect that if we start from scratch, what can be done differently. 

My team building a 'X bridge' to cross a small river

To be a good leader, you need to be able to think swiftly, motivate intrinsically and delegate appropriately. Secondly, for problems of unknown nature, sometimes the leader needs to step out from the execution zone, and focus on adapting/making decisions and guiding his specialized teams.

There's a simple formula for success as a leader. Know the tasks you can delegate, find the right person, delegate the tasks to him / her, move upwards towards more challenging tasks, repeat. Once you master this formula, you will see yourself, your team and your organisation climbing the ladder of success.

Certainly, as our senior batch mentioned, St Cyr. is one of the most memorable events of this MBA journey. It journey not only provides a great outlet to practically apply concepts learned behind the classroom doors, but also helps in trying out some adventure activities which you will most probably never come across in the day-to-day life.

Littlefield Simulation

If you were to ask me about the best aspect of academics at HEC, without batting an eye, my response would be experiential learning. Let me elaborate a bit on that: Right from the beginning of core 1, every few weeks, we take part in a simulation game. The simulations are competitive in nature, and allow you to practically utilize the concepts learnt in the class. You can also improvise on the theoritical strategies to achieve what we call in financial terms an 'alpha' to emerge as the winner. 

We have had several such short games till now, but my top three are Negosim, OPEC game, and the latest addition to the list - Littlefield Simulation. Littlefield was a part of our Operations Management course. 

Littlefield Simulation

(Click here to read the complete description of Littlefield. The following two paragraphs provide a Tl;Dr version)

The simulation is about managing a virtual factory with multiple workstations and a defined process flow. In terms of control variables, you can change the number of machines at each workstation, order of processing on certain stations and inventory levels. One thing which you can not control is the demand. In our version of the game, the demand followed a constant mean with sudden fluctuations on either side of the mean. I have heard that some versions of the game have increasing or decreasing mean demand as well. 

What made the game really interesting was that you could see the net cash position of each team, as a point function, and had to optimize your factory to achieve maximum cash-at-hand at the end of the simulation. It was an interesting experience to witness that starting from the same position, how various companies could take entirely different paths, just on the basis of a handful of management decisions. Additionally, even if two companies make the exact same set of decisions, the swiftness in making those decisions could create a large gap in the intrinsic value of the companies.

Image Credit: http://littlefield.responsive.net/demo/littlefield.html

I will not spill more beans about this game, as to satiate the true nerd inside you, it is mandatory to play this game first hand. If you guys know of any similar operations related simulations, do drop a note in the comments! 

In other news, it is exam time at HEC! The second term (also referred to as Core 2) is about to end in a couple of weeks! Implying that I am already done with 50% of my MBA! Time really flies at b-schools!