“TIPS”

Like most obvious answers, “tips”, never really struck me as obvious either. The question, though, was put to me by a friend who lives in Southeast Asia.
Tips
Donations are tough. Whether you’re a billionaire philanthropist seeking a legacy or a common citizen looking to help those in need, giving is often the easy part. It’s the disbursal that’s hard.   How do you target your help to those you want to give to? How do you make sure the recipients get it as fast as possible? How do you ensure your help reaches the recipients in a form they can quickly put to use? How do you cut middlemen and wastage out of the process?   These are complex problems. Ones that can even be called “wicked problems*”, in systems thinking parlance.   The answer lay in my spam folder. It was a promotional email from Swiggy, the well-funded unicorn that is India’s largest food delivery company.
Bear with me. I know many of you despise tips. Perhaps because you think it’s a convenient route for employers or platforms to get customers to bear the onus of paying a decent wage to their employees. Or because you don’t like how tipping is wrapped with social etiquette to guilt-trip you. Or because you don’t like to expend any emotional or mental effort calculating how much to tip after a meal. 
I get it. But times like these are good for rethinking our default mental models. 
So, let’s look at tipping again. Especially the digital variety. 
Swiggy is late to add the feature. Its arch-rival Zomato launched it in 2018 (it has also, admirably, gone further with an institutionalised effort called “Feeding India”).  In Malaysia, Grab launched tipping in April last year, first for its driver partners, and then for delivery partners, too. Uber, with its American origins, has offered tipping since 2017. (Here’s an insightful Wired piece analysing tipping trends across 40 million rides).   Remember our wicked problems? How about these answers?   Tipping targets your micro-philanthropy at those working hard to bring you food or any other service. In many cases, that money reaches recipients within 24 hours! Instead of middlemen or well-meaning aid organisations deciding that biscuit packets or instant noodles are what recipients need, your help reaches them in the most fungible form: money. Oh, and in most cases, the recipients receive 100% of what you sent. Beat that in any philanthropic setting!   Natural disasters and crises make people realise this faster. These tweets are from last year’s terrible monsoon deluge in Mumbai.   https://twitter.com/VenuSpeak/status/1146089110437650432   https://twitter.com/VidhyaAppu/status/1145578318185373697   So perhaps, tip more? Over to Olina for the next section.
Community, for good or bad   The Indian Council of Medical Research (ICMR), India’s apex biomedical regulator, has put up a scrappy PDF on its website each day for the past few weeks now. It carried ominous information on how many Indians had been tested for Covid-19 and how many had been found positive.    That stopped abruptly on Friday, 27 March. Chaos ensued for much of Saturday as the lack of information only added to the panic.   ICMR hadn’t stopped collecting that data. They simply cut off public access to it. Instead, it became a statistic provider to the Ministry of Health and Family Welfare (MoHFW), which in turn, would release the numbers twice a day.   So every day, I tune in between 3:30PM and 4:30PM to listen to health officials give the most convoluted answers to the simplest of questions.    For instance, why is only 30% of India’s testing capacity being utilised, when the number of cases has gone up by 302 in just one day?   “It’s likely that the government doesn’t want to test more. If they test more, the numbers are bound to increase,” said the owner of a private lab.    It’s a wicked problem* for the government to solve—test less and keep the numbers low. Or test more and admit that indeed, India might have slipped into the dreaded “Stage 3” of the outbreak.   Stage 3—or community transmission—is  potentially the worst outcome for India at this point. Not only are we severely short on personal protective equipment (PPE) for healthcare workers (never mind the wider population) and ventilators, the nationwide lockdown has made the movement of medical goods a nightmare.   In fact, government officials are even scared of saying the word “community”. The pressers have re-branded India’s stage as one of “local” transmission.   Rukmini S, a data journalist from Chennai, actually takes this question head-on: “Does all hell break loose once there is community transmission?”   Short answer: yes   But as she argues, in a 5-minute minicast called The Moving Curve, accepting that we might be closer to this dreaded Stage 3, or even in it, could help us strategise better. More hospitals. More targeted testing. More stockpiling of PPE and medical resources. More training.   And a more open and direct channel with citizens stating clearly that it’s going to get a lot worse before it gets better.   For that though, the government must lose its fear of the word “community”.    Back again to Rohin.
Secondary Effects   Financial Times had a story about how many corporate funds are eagerly desperately trying to find buyers for their stakes in large VC-funded unicorns.
Asia’s biggest companies are selling down their stakes in the region’s most promising tech start-ups, including Indonesia’s Gojek and China’s Didi Chuxing, as they refocus their resources to weather the coronavirus crisis. 
The venture capital arm of one large Asian company has approached secondary market investors about selling a slice of Gojek worth between $50m to $100m, two people with direct knowledge of the offer said. 
Mitsubishi, Rakuten, Samsung and Tencent are all investors in Gojek, along with several other corporate venture capital funds. The start-up is Indonesia’s most valuable, providing a range of services including ride-hailing, food delivery and financial services. Gojek declined to comment.    Financial Times
Not so long ago, the secondary market was a seller’s market. FOMO-driven investors were desperate to get their hands on the stock of fast-growing tech startups. (Some founders even bought out their own VCs for billions of dollars.) The secondary market was a way for investors to get startup shares at a discount to its future-round valuation.
But it is now a buyer’s market. Buyers who have all the time in the world. Expect secondary prices to tumble, leaving investors scrambling to avoid selling their stakes at a discount to past-round valuations
Most ESOPs are suddenly going to be worthless as a carrot to attract talent. Just like employers, employees too will value and treasure cash.
I’ll leave you in Praveen’s capable hands for the final legs of today’s newsletter.
The BCG resistance?   Ever since Covid-19 began wreaking havoc across the world, one question has puzzled most observers:   Why is Covid-19 more deadly in high-income, ‘advanced’ countries and less lethal in developing countries?    There are many theories. Underreporting due to little testing. Weather. Herd immunity. Quality of healthcare. Take your pick. The question remains though: What’s common to less-lethal countries as compared to more-lethal ones?   There’s one possible answer.    A national BCG vaccine program. At least that’s what a paper published by the New York Institute of Technology seems to indicate.   Countries without universal policies on childhood BCG vaccination—which protects against tuberculosis—like Italy, the Netherlands, and the USA, are more severely affected by Covid-19 than countries with universal and long-standing BCG policies. And universal BCG policies are more likely in low-income countries, where tuberculosis remains fairly prevalent. 
Higher death rates were presented in countries that never implemented a universal BCG vaccination policy
If this is true (and that’s a big if because this paper isn’t peer-reviewed and we all know that correlation is not causation), this is probably the most powerful example of a second-order and third-order effect in history. Think about it. Mandate your entire population to get vaccinated to protect themselves against a ‘third-world’ disease. Inadvertently protect your country against the effects of a global pandemic that brings the rest of the world to its knees decades later.    It’s poetic. I hope it’s true. 
The Butterfly effect of Axis Bank   Axis Bank flapped its wings yesterday.    It caused a hurricane across the world.    Wait. Let’s recap.    Back in 2017, private equity major Bain Capital led a consortium that invested $1.8 billion (~Rs 11,500 crore) in Axis Bank, the biggest such deal since 1991, at the time of the liberalisation.    Now, Bain Capital raised a chunk of this money—nearly a third—from JP Morgan, Citi and Nomura. By using Axis Bank’s shares as collateral. This isn’t unusual, companies often pledge shares as collateral for a loan, with the understanding that the shares have an underlying value. All parties agree that if the share price drops precipitously, below an agreed value, then the party taking the loan would be obliged to offer something more as collateral.    This rarely happens, but when it does, it’s called a margin call.    And it’s…messy.    India’s stock market is in freefall, thanks to the global uncertainty around Covid-19. And Axis Bank’s position as a private bank that did not get a bailout is precarious. Combine this with a general scarcity of credit, liquidity, and trust in the Indian banking system, and Axis Bank’s stock has understandably plummeted. In just a month, it fell by as much as 60%, dipped below the agreed value and triggered a margin call.    And Bain Capital’s lenders came calling.    The problem is that this puts Bain Capital in a delicate situation because they don’t really have cash lying around. Who does? And Bain’s lenders see this as an opportunity to get access to Bain’s crown jewels—its other portfolio companies.    Expect more such power grabs as Covid-19 continues to wreck the world’s financial markets.
* Wicked Problems  
Wicked (or complex) problems are characteristically bigger and poorly defined
Source
Books and odd ends   I’m grateful to all the readers who emailed me after yesterday’s newsletter with links to sites where I could read or borrow “Why wages don’t fall during a recession”.
I, for one, did not know that the Internet Archive allows you to borrow close to a dozen books free of cost, for up to two weeks. Here’s a link to borrow the book. In times like these, we all need a distraction.

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