37scscscd

turmoil At tAtA: tHE CoNtAGioN SPrEADS Price rs. 110. december 9, 2016

next billiondollar startups

luxury sPecial

analysis

india’s new notes

THE good lifE five years after he took charge of the family's vaccines business, adar poonawalla has not only emerged as a wealth creator but has also demonstrated a strong sense of giving back to society

www.forbesindia.com

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Business.

Minus the paperwork.

You live on the go, travelling light.

You want things now, not when the courier gets there.

You’re connected, 24/7, and you want your reading at your fingertips.

Welcome to the I NDIA

Tablet Edition

In Association With

editor’s note Time, exclusivity, privacy and comfort are also luxuries for the busy billionaire

The Luxe State of Mind

L

Best,

Sourav MajuMdar

Editor, Forbes India

sourav.majumdar@network18publishing.com @TheSouravM

8 | forbes india DEcEmBEr 9, 2016

uxury means different things to different people.

While most associate it with material acquisitions and expensive brands, for the busy billionaire luxury can also mean escaping the hustle and bustle of work or spending more time with the family—the less obvious interpretation of the word. In this annual Luxury Special issue, we decided to merge the material with the abstract by dividing ‘luxury’ into four buckets—time, privacy, exclusivity and comfort—and bring you certain elements of each.

On the more material definition, India is now on the cusp of becoming a serious luxury destination, with an array of the biggest global brands already present in the country or lining up plans to enter it. As a recent Deloitte report says, “Over the next year, growth in India will remain strong, although the country still has challenges to overcome before it becomes a major market for luxury brands.”

Now, if you want to put a face to the concept of a luxe life, few fit the bill better than the Poonawallas who run the successful vaccine company Serum Institute of India.

Adar, the 35-year-old son of Cyrus Poonawalla (who figures at number 10 on the 2016 Forbes India Rich List), is, however, going beyond mere wealth creation and living the good life to doing good and giving back to society through the Villoo Poonawalla Charitable Foundation, named after his late mother. So, even as he converts a Mercedes-Benz S Class into

a Batmobile lookalike for his son’s sixth birthday, Adar is also putting in time, energy and some serious money to clean up Pune city, where he lives, of garbage.

Moving away from luxury, what a newsy few weeks it has been of late. Even as events unfolded at Bombay House, the headquarters of the House of Tata where the boardroom battle between Cyrus Mistry and Tata Sons shows little signs of abating, Prime Minister Narendra Modi’s move of demonetising the existing Rs 500 and Rs 1,000 currency notes captured the imagination of the people and also threw many into a tizzy.

While most agree that it is a bold move to attack terror financing and the black economy, the gaps in execution and the consequent hardships faced by the common man have become topics of heated debate.

We track these developments through an update on the role of independent directors at the Tata group companies, even as Manish Sabharwal, chairman of TeamLease Services, and Ajit Ranade, chief economist at the Aditya Birla Group, weigh in with their views on demonetisation.

This issue also has the second annual Forbes listing of the Next Billion-dollar Startups, an exciting set of companies which are transforming their industries. And a familiar name, Girish Mathrubootham’s Freshdesk, which sells cloudbased customer support software, finds a place in this list.

LUXURY GOES OVER PAR ON THE GREENS.

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Contents

/ December 9, 2016

●

Volume 8 Issue 26

on the Cover 40 | A Fine BAlAnCe

Serum Institute of India CEO Adar Poonawalla has proved his mettle as a businessman by expanding the vaccine maker’s global footprint.

He is also shouldering the responsibility of his mother’s charitable dream and still finds the time to take his son for a spin on a ‘Batmobile’

Serum Institute of India CEO Adar Poonawalla loves speed and holidaying in France WE vAluE yOur FEEdbACk. Write to us at: forbes.india@ network18online.com letters may be edited for brevity. read us online at www.forbesindia.com On the cover & this page: Vikas Khot digital Imaging by: sushil mhatre

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Contents

UPFront

28

ColUMn the DeMonetiSAtion DeBAte 28 | the GreAt CUrrenCy SwAP

The demonetisation of high-value notes is, at best, a first step; we await bigger measures, writes Ajit Ranade

30 | FroM DeAlS to rUleS

Manish Sabharwal lists the upsides of the Centre’s move to withdraw Rs 500 and Rs 1,000 notes from circulation

AnAlySiS

32 | AMeriCA inC: StirrinG CAlM in A StorMy teACUP

US business leaders have been assuaging the fears of their employees, triggered by Donald Trump’s victory

FeAtUreS tUrMoil At tAtA

The rs 2,000 note was introduced after demonetising high-value notes

34

34 | inDePenDenCe StrUGGle

The exchange of fire at Tata Sons has spread to group companies and independent directors are in focus

37 | A qUeStion oF iDentity AnD GovernAnCe

Is the Tata-Mistry feud a role- or personality-based one?

FilA 2016

100 | reMeMBer the titAnS

Glimpses from the Forbes India Leadership Awards

44: AruN sANKAr / AFP / Getty ImAGes; 54: DhIrAj sINGh / bloomberG VIA Getty ImAGes

the BeSt thinGS Money CAn BUy

ratan Tata has been in the eye of the storm over the last few weeks

eXClUSivity

46 | the MASter oF CoMPliCAtionS

Juan Carlos Torres, chief of Vacheron Constantin, opens up on the challenges that traditional watchmakers face

48 | one niGht At the oPerA

The Metropolitan Opera celebrates 50 years at New York’s Lincoln Center even as an impatient young generation tunes into instant, free entertainment

52 | ‘SoCiAl MeDiA CAn ChAnGe the very nAtUre oF BrAnD loyAlty’

L Catterton Asia’s Narayan Ramachandran says the digital domain will impact how people relate to brands

58 | ‘SwiSS inDUStry MAkeS the BeSt wAtCheS’

Omega president Raynald Aeschlimann says the Swiss watch industry will make a comeback

59 | ‘we will never StoP SeeinG the BArGAininG SPirit oF inDiAnS’

Longines chief Walter von Känel has ambitious plans for the Indian market

12 | forbes india December 9, 2016

58

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December 9, 2016

Contents

58 | PleASUreS UnliMiteD

74

Sample these limited edition pieces that make the best available for a few

62 | the lAviSh holiDAy

Hotel rooms and villas that redefine luxury getaways

PrivACy

66 | wiSh FUlFilMent

Concierge services make all things possible for their clients

70 | PrivAte hAvenS

Tony neighbourhoods and their rich and famous residents

74 | iSle oF yoU

Thanda Island welcomed its first paying guests in August

84

For $10,000 a night, Thanda Island gives you privacy

tiMe

78 | in the thiCk oF thinGS

The best-located hotels for your next business trip

82 | tiMe-wArP MAChineS

Five truly fast, exotic cars that don’t skimp on luxury

CoMFort

86 | the CoMFort Zone

Hennessey venom GT accelerates from 0-300 kmph in 13.63 seconds

Comfortable car seats that you might want to sink into

94

90 | ServeD on A (MiD-Air) PlAtter There’s more to an in-flight meal than just the right ingredients

94 | the lonG StretCh

Travelling business class on some flights is as comfortable as lounging on your favourite sofa back home

96 | A ClASS APArt

Business class seats on Singapore Airlines’ new direct flights to San Francisco feel like a mini first-class suite

98 | For the ChAir PerSon

Ergonomically-designed chairs that ensure that sitting in office all day does not feel like work

EvA Air’s business-class seats offer real comfort

104

CroSS BorDer

104 | Free MArket PhilAnthroPy

GoFundMe is changing the way people give to causes big and small, but it’s not a charity

110 | the AlliGAtor wreStler AnD the CASino BoSS

Jim Allen has created unimaginable riches for Florida’s 4,100-person Seminole Tribe

reGUlArS

18 | letterS

GoFundMe CEO rob Solomon has built a highly profitable company

19 | leADerBoArD

117 | thoUGhtS

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14 | forbes india December 9, 2016

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16 | forbes india December 9, 2016

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letters to the editor

Readers Say Tata got it right

twitter.com/Forbes_India facebook.com/ForbesIndia linkedin.com/company/forbes-india www.google.com/+ForbesIndia

The correct approach

Refer to ‘Battle At Bombay House’ (Issue dated November 25, 2016). In the interest of the company and its shareholders, the removal of Cyrus Mistry from the post of chairman, Tata Sons, was the right decision. Mistry should have gracefully accepted the decision of the board. Ratan Tata is a man on a mission, with a track record of a broader view in business and personal life too.

He has business acumen. His credentials cannot be questioned. Had this decision not been taken now, the company would have suffered more losses from every angle, and the Tata group’s reputation would have suffered.

Mahesh Kumar, via email

Refer to ‘The Professional Life Of A CEO Is Getting Shorter’ (Issue dated November 25, 2016). Richard Rekhy, CEO, KPMG India, says it is about the survival of the fittest now, and that 3-5 years is the period for which somebody remains a CEO. It is the correct way for any organisation to grow.

Selwyn De Souza, on the web

Corrections & Clarifications Issue dated December 21, 2016 On page 82 — In ‘The 100 Richest Indians’, we incorrectly stated that Shyam and Hari Bhartia had 3 and 4 children, respectively. They each have two children. The error is regretted.

luxury special: the best things money can buy

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Must-Read Blogs How India can speed up indigenisation in defence manufacturing India is uniquely positioned to create a vibrant defence manufacturing ecosystem that can help us achieve self-reliance RPA fast forward— Procedural Automation to Intelligent Automation Organisations that can use technologies to amplify human potential will take bigger strides in their journey MRP—Micro retailer’s poison pill!

With our insistence on price rigidity, we are slowly forcing the friendly neighbourhood grocer into oblivion

18 | forbes india december 9, 2016

GST rates: India Inc eagerly awaits finer details The GST Council has successfully marked a crucial milestone towards the timely rollout of GST

Aperture

Note-worthy effort

A farmer from Uttar Pradesh successfully manages to collect the new Rs 2,000 note from a bank. In an effort to curb the black money menace, Prime Minister Narendra Modi on November 8 announced the demonetisation of Rs 500 and Rs 1,000 notes with immediate effect. The move has resulted in serpentine queues of people at banks and ATMs, and criticism of the government about the implementation of the plan

Anindito Mukherjee / BlooMBerg viA getty iMAges

LeaderBoard

21%

of the purchase plans for new business jets in the next decade will be finalised by 2017-end, according to Honeywell

LeaderBoard luxury on air

Business aviation has changed dramatically in terms of size, models, range and speed in the last 25 years

Winged Wonders

airCraFt modelS aVailable

Fleet Size 1991

2016

7,300

20,000

growth

174%

20

30

40

10 0

50 60

20

30

40 50

10 0

60

deliVerieS 1991

2016

265

660

FaSteSt CruiSe 1991

2016

0.84 mach

0.93 mach

$2.6 biLLiOn

$18 biLLiOn

Increase

(nautIcal mIles)

4,500

13,000

2.9x

growth

biggesT cabin diameTers 2016 1991 92 inches 102 inches

BIg caBIn

small caBIn

57%

22%

total

592%

8,600

longeSt range aVailable 1991 4,400 4,500 nm

2016

estimated aircraft deliveries by cabin size in the next decade

Value oF deliVerieS 2016

1991

OUTLOOK fOr privaTe jeT indUsTry (2016-2026)

150%

1991

2016 30+

1991 13 nUmber Of OperaTOrs

(speed)

growth

the global economic downturn of 2008 may have slowed down orders for private jets a tad but the industry is far from being on a wing and a prayer. And the future looks promising too: Multinational conglomerate Honeywell forecasts that the business aviation market (largely the private jet industry, which does not include the commercial aviation market) will see deliveries of up to 8,600 private planes, worth $255 billion, over the next decade. This is where the industry stands in 2016, compared to 1991.

mIDsIZe caBIn

21%

2016 abOve 7,500 nm

Source: Honeywell’s 25th Annual Global Business Aviation Outlook Compiled by Anshul Dhamija Infographics: Sameer Pawar

20 | forbes india december 9, 2016

$255 bln

vaLUe Of prOjecTed deLiveries

(Big and midsize cabin aircraft will account for 85% and 10% of this amount respectively)

What does a world with Watson look like?

Emma is five.

The same age as Watson.

Rs 30L

LeaderBoard

The loss per day at the toll-free Delhi Noida Direct Flyway, according to RK Bhargava, chairman, Noida Toll Bridge Company Ltd

FRee RiDe?

To Pay or Not to Pay Toll, That is the Question Pending SC order on Delhi-Noida flyway could set the tone for collection across the country

BuRhaaN KiNu / hiNDusTaN Times via GeTTy imaGes; Top: BuLLsTaR / shuTTeRsToCK

A citizens’ group claims the company running the stretch has made much more than the promised returns

collecting tolls on Indian roads has long been fraught with risks.

Protestors can, at short notice, disrupt traffic at toll booths, while eminent citizens, who are often lawmakers, refuse to pay at times. Then, there is the threat of litigation, which has resulted in at least one toll plaza, on the Delhi-Gurugram highway, being shut down in 2014.

In the last few weeks, the 9.5-kilometre Delhi Noida Direct (DND) Flyway, a major traffic artery connecting Delhi with Noida in Uttar Pradesh, has been the focal point of antitoll protestors. The dispute, which has wound itself up from the Allahabad High Court to the Supreme Court (SC), is now at a critical juncture and may end up rewriting how toll rights are awarded and administered.

The legal feud began in 2012, when the Federation of Noida Residents’ Welfare Association filed a public interest litigation in the Allahabad High Court.

Among the several reliefs that were sought was the scrapping of the toll on the DND Flyway. The federation alleged that the company running the expressway, the Noida Toll Bridge Company Limited (NTBCL), had already made much more than the 20 percent return that was guaranteed to it under the concession agreement, a point which NTBCL

In a month, the SC is expected to pass an order on the toll-collection rights on the route

22 | forbes india december 9 , 2016

disputes. The development is being closely monitored by industry watchers and road building companies, who noted that the cancellation of tollcollection rights could have a chilling effect on investments in the sector.

The key question here is: Are courts competent enough to decide what rate of return is acceptable for a road built by a private company? For the DND Flyway, the rate was agreed to by the Delhi and UP governments as well as the Asian Development Bank.

For now, the Supreme Court has suspended the collection of toll while the case is being heard.

“As there is a dispute on whether this amount has been recovered, we suggested to the court that the Comptroller and Auditor General assist the

Supreme Court in deciding whether the profitability has been achieved,” says Raj Kumar Bhargava, chairman of NTBCL. He points out that in 1999-2001, when the bridge was financed, interest rates were 16-17 percent and setting a rate of return of 20 percent was reasonable. “No one would have lent us the money otherwise,” says Bhargava. The loans were restructured in 2006-07 at 10-12 percent interest rates.

The residents’ federation alleges that the company does not maintain its books properly and can continue to collect toll indefinitely without ever admitting that it has garnered the returns.

A month from now, the SC is expected to pass an order on whether NTBCL can continue to collect the toll. If the court rules against it, Bhargava says NTBCL would probably have to be liquidated as the revenue from advertising rights doesn’t even cover maintenance expenses.

He says the company might even sue the Delhi and UP governments for compensation. But most importantly, a favourable outcome would embolden anti-toll agitators across the country.

- samaR sRivasTava

What can you do with Watson today?

You can spot trends. Create hits. Conserve energy. Fight crime.

Break records. Increase efficiency. Save money.

You can drive sales. Know customers better. Personalize medicine.

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You can open minds. Open opportunities. Open new markets.

Open new ideas.

Watson learns from us and extends our talents. Watson helps us do our jobs better. Watson augments our intelligence. So we can do more.

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Businesses, doctors, governments and educators are working with Watson, because Watson works with data and helps you find ideas.

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LeaderBoard Business LiBrary

Bestselling Business Books sifting through a million physical copies is a challenge in today’s publishing climate; doing so with a business book is even trickier. Yet 11 authors have managed it since 2004, when Nielsen began tracking book sales. Occupying the executive suite: Tom Rath’s StrengthsFinder 2.0, from 2007, which purports to help you discover hidden talents and put them to use.

Rath’s sales demolish even those of such well-known pop-econ-psych works as Blink and Freakonomics.

The oldest title still being plucked off shelves: The find-a-career classic What Color Is Your Parachute?, first published in 1970 and now in its 47th edition.

BY natalie roBehmed DereK, anTHOny, GWyneTH: sHuTTeresTOcK.cOm; cHieH: PaTricK James miLLeT

1. StrengthsFinder 2. Blink 2.0 Malcolm Gladwell Tom Rath 2.68 mLN 4.5 mLN 2005 2007

5. Freakonomics Steven D Levitt and Stephen J Dubner 2 mLN 2005

6. Who moved my Cheese?

Spencer Johnson 1.77 mLN 1998

3. Good to Great Jim Collins 2.3 mLN 2001

4. Rich Dad, Poor Dad Robert T Kiyosaki 2.2 mLN 1997

7. The Five Dysfunctions of a Team Patrick Lencioni 1.76 mLN 2002

8. The Total money makeover Dave Ramsey 1.74 mLN 2003

Klieg Lit celebrities are big business in the book industry, routinely securing boffo advances for their memoirs. Now there’s also a cottage industry of celeb publishers eager to cash in on the back end, too.

Some imprints have been small, such as actor Viggo Mortensen’s Perceval Press, which focuses on the arts and criticism. Others are more mainstream. One certain to do well: Oprah Winfrey’s as-yet-unnamed Flatiron Books imprint, which will publish her memoir in 2017.

DEREK JETER Jeter Publishing Simon & Schuster’s partnership with the former Yankee taps sports-related works.

A children’s offshoot includes a picture book and a fiction trilogy based on Jeter’s life.

Bestseller: Jeter Unfiltered (2014; 105,000 copies sold) Latest Release: Muhammad Ali Unfiltered (October 2016)

ANTHONY BOURDAIN Anthony Bourdain Books The country-hopping, exotic-grub-gobbling chef finds a few food and pop culture titles a year to publish through Ecco, a HarperCollins subsidiary.

Bestseller: L.A. Son (2013; 19,000 copies sold) Latest Release: They Call Me Supermensch (September 2016)

GWYNETH PALTROW Goop Press The actress-turnedlifestyle guru recently spun her popular blog, Goop, into a Grand Central Publishing imprint for style, food and beauty-advice books.

First Book: It’s All Easy (April 2016; 58,000 copies sold) Upcoming Release: Goop Clean Beauty (due out in December 2016)

Flight Booking Chieh Huang, co-founder and CEO of Boxed, shares what he reads at 30,000 feet

9. Now, Discover Your Strengths Marcus Buckingham and Donald O Clifton 1.3 mLN 2001

10. Getting Things 11. What Color Is Done Your Parachute?

David Allen Richard N Bolles 1.1 mLN and John E Nelson 2001 1 mLN 1970

12. The Big Short Michael Lewis 916,000 2010

13. Lean In Sheryl Sandberg 911,000 2013

14. Getting to Yes Roger Fisher and William Ury 741,000 1981

16. The Automatic millionaire David Bach 722,000 2003

15. The 21 Irrefutable Laws of Leadership John C Maxwell 723,000 1998

24 | forbes india december 9, 2016

in a good book, i look for people who have made a tonne of mistakes, so I can learn from them. One of the observations in The Founder’s Mentality [by Chris Zook and James Allen] is that founder-led companies, in general, perform better on the stock market. Before that, I read The Hard Thing About Hard Things [by Ben Horowitz, cofounder of VC firm Andreessen Horowitz]. He went through so much. He had two weeks of cash left and IPO’d as a last resort.

All domestic book-sales data goes back to 2004 and is sourced from Nielsen BookScan, which tracks 85% of the US print market.

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With IBM Watson, Quest Diagnostics is able to work with the community oncologists who provide 70% of US cancer care.

IBM and Quest are expanding nationwide access to a solution for physicians that helps them provide precision cancer treatments featuring genetic-sequencing services from Quest and cognitive analysis by Watson.

In Japan, SoftBank Robotics’ robot, Pepper, is pairing with Watson. Pepper uses customer and product information to better engage with and serve customers. This allows Mizuho Bank employees to handle higher value tasks. With Watson, Pepper has cognitive abilities and is helping to reinvent the face of banking.

Join us at IBM India Onward- Scaling Digital India on 9th December, 2016 and discover how the emergence of digital technologies is helping societies and businesses to innovate and address challenges at scale in a uniquely Indian way.

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#outthinktour2016

more productive Repairs will happen faster.

With 170,000 maintenance cases a year, Korean Air used Watson Explorer to search repair history, detect patterns in maintenance data and handle problems more efficiently. Working time was reduced by 90%.

more creative Dresses that can actually think.

How do you stand out in the $621 billion women’s-wear industry?

Working with Watson, fashion house Marchesa created the first cognitive dress. Watson analysed thousands of articles, scanned hundreds of images and turned millions of social feeds into the first Met Gala dress shaped by fans.

more engaging Kids won’t have copy-paste educations.

Children between ages two and five learn more, and more rapidly, than any other time in life.

Partnering with IBM Watson, Sesame Street is helping make the most of each child’s potential, developing education experiences that adapt to the way each child learns best.

20%

LeaderBoard IT quarTerly resulTs

Curse of the Comfort Zone

The numbers reflect why companies must go beyond outsourcing, and focus on digital and AI services

VIVek PrakasH / reuTers; ToP: NayPoNg / sHuTTersTock.com

The biggest share of revenue for Indian IT companies comes from outsourcing contracts to manage legacy systems, not innovation

wipro agreeing to spend half a billion dollars to acquire Indiana-based Appirio, an internet software provider for staff and customer management, is one of the clearest signs of what India’s thirdlargest software services provider is willing to do to get back in the game.

While Wipro has lagged peers for a fairly long time, Indian IT companies in general were expected to produce their worst second-quarter results in almost a decade. And the companies delivered, continuing a painful decline in revenue growth that has been several years in the making.

This is why complaining about the effect of Brexit, or the US presidential election,

and so on, is hogwash. Even today, large outsourcing contracts to manage legacy IT systems—not game-changing innovative services—account for more than three-quarters of the sector’s revenue.

There’s little change in geographical diversity too: America still accounts for more than half the revenues of top Indian IT companies; Western Europe is the next biggest market, with the UK taking the lion’s share.

Indian IT companies had begun to report increased traction on the “digital” front over the nine months or so leading up to the September quarter, with upwards of 15 percent of their revenues coming from contracts that were, typically, for building

26 | forbes india december 9, 2016

The estimated drop in recruitments at IT companies in India, according to Nasscom

internet-based solutions to automate business processes, or extract information from data to sharpen marketing focus.

However, in the September quarter (usually the fiscal’s strongest), cutbacks from clients have meant this revenue source has stalled. An anticipated acceleration in demand for digital services has failed to materialise, Wipro CEO Abidali Neemuchwala has said, after the company reported second-quarter results, and forecast it may not grow revenues at all in the current quarter.

The decline in their revenue growth suggests that Indian IT companies haven’t moved fast enough to anticipate clients’ needs. Infosys CEO Vishal Sikka has admitted that clients view the industry as “order takers” and not “problem finders”.

It is only now that these companies are trying to break down silos—by building AI-based solutions like Infosys’s Mana or Wipro’s Holmes—that have been led by entrenched, self-styled alpha-males who see little incentive in letting go of the status quo. That the Indian IT industry employs hundreds

Infosys CEO Vishal Sikka feels clients view the industry as “order takers” and not “problem finders”

of thousands of women, but dramatically fewer in the higher ranks is indicative of the industry’s rigid culture and resistance to change. Compare this to global innovation giants like Apple, whose Susan Prescott, vice president of product marketing, is an example of women in America’s tech leadership.

So, even if there were no Brexit or US elections, there would be something else. The outsourcing model is predicated on large US companies spending on rollouts of business management software, and contracting Indian companies to manage it. But today, the chief information officers at such firms may not even be consulted before they experiment with pay-as-you-go software.

Consider an example from the manufacturing industry, which is seeing dizzying changes. Productmaking is increasingly moving away from centralised processes. For instance, data collected via the Internet of Things from the location where a product will finally be used—say agri-implements in the asparagus farms of Lower Saxony in Germany—will decide how those implements are made, and the IT systems needed to handle the inputs and processes. It remains to be seen if Indian IT companies can reinvent themselves fast enough to be relevant amid such changes.

- HarIcHaNdaN arakalI

IBM Watson and Marchesa present the first cognitive dress.

Fashion house Marchesa worked with Watson to create something no one had ever seen before.

They applied Watson cognitive technology to help identify materials and colours. The unique dress debuted at the Met Gala, and throughout the night it changed colours in response to social posts from around the world.

Just like Marchesa, start your cognitive journey with us. Let our core technological expertise and rich ecosystems power digital transformation for you.

When everything thinks, you can outthink.

Witness disruption up front.

#outthinktour2016 Nov- Dec ‘16 Mumbai | New Delhi | Bengaluru

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THE dEmonETisaTion dEbaTE bY inViTaTion

The GreaT CurrenCy Swap The recent demonetisation has destroyed Rs 2-3 lakh crore of black money.

But we await the logical continuation against the menace

By Ajit RAnAde

samEEr Pawar

T

he 14th edition of the World Bank’s Doing Business report— commonly referred to as ease of doing business (EODB)—ranks India at 130 out of 190 countries.

The country’s rank has moved up by just one notch since last year and, to that extent, it is disappointing.

Prime Minister (PM) Narendra Modi had announced an ambitious target to take India to the top 50 by 2018.

EODB is also integral to the prime minister’s Make in India initiative.

The EODB ranking is based on ten well-defined metrics, and India fares poorly on four of them: Starting a business, getting construction permits, resolving insolvency and enforcement of contracts. The latter two are getting addressed through a new insolvency and bankruptcy code and judicial reforms, respectively.

The first two require the cutting of the proverbial red tape and the unnecessary burden of bureaucracy.

The hidden and silent word in this context is ‘corruption’. The prime minister and his party rode to victory on a powerful anti-corruption plank. The outcome of corruption is black money and ill-gotten wealth. Black money is created not only by tax evaders or government officials through the abuse of their discretionary powers, but also more ominously through illegal activities such as terror financing and drugs.

So, an attack on black money was to be expected, as part of a multipronged, anti-corruption strategy.

28 | forbes india December 9, 2016

What the nation was unprepared for, was not just a ‘surgical strike’, but a pressing of the nuclear button. The PM’s announcement—to demonetise high-value currency notes of Rs 500 and Rs 1,000 denominations on November 8—meant that 86 percent of the nation’s currency would cease to be legal tender instantly and was an astounding, unprecedented, audacious and politically risky move.

The banned currency is to be replaced by new notes all over the country’s branches and ATMs, a Herculean logistical challenge. Technically, this is not demonetisation since those high value notes are not being permanently taken out of circulation. They are being replaced by new notes, thus making this a giant currency swap.

The question is, what is the impact on black money and corruption? The problem of black money has two aspects—its stock and the flow. The stock refers to accumulated illegal, or unaccounted, wealth that rarely sits in the form of paper money. More than

90 percent of it would be converted to benami land, gold and ornaments or foreign bank account holdings. The flow, however, depends on high-value notes. Most ordinary folk, even with India’s excessive cash dependence, never have to deal with a Rs 1,000 note for their daily transactions.

Thus, it is a store of value, and the preferred mode for tax evaders, terror financiers and drug dealers.

Removing high-value notes from circulation can considerably crimp these activities, and has been advocated by many, including Kenneth Rogoff, former IMF chief economist and professor of economics at Harvard University.

But India’s currency swap has not only not discontinued highvalue notes, but in fact introduced a higher denomination, the Rs 2,000 note. So what purpose did the currency swap serve?

It certainly neutralised counterfeit currency, whose menace was rising. It also means that if about 25 percent of the old notes are never turned in, then that value is permanently destroyed, nuked. That is an estimated Rs 3.5 lakh crore. Not all of this is illgotten wealth. India’s large informal economy operates mostly in cash.

It supports typically lower income households and entrepreneurs, and the rural economy. Those households not connected with formal banking tend to store their wealth in paper form. More significantly, the informal economy also sustains on informal finance, through moneylenders, chit funds and hundis. That is likely to

The government’s determination to go after illegitimate wealth, if sustained, can renew citizens’ trust in governance institutions extra liquidity to tackle temporary shortages, or to be better prepared for contingencies like sudden capital flight and rupee depreciation.

The prime minister promised an equally big bang announcement in the coming months. To make a big impact on the stock (as against flow) of black money, the next obvious target is benami land holdings and unaccounted holdings of gold and jewellery. By using a clear triangulation of digital land records, Aadhaar-based bank accounts and high value transactions data, it will be possible to make a

the bottlenecks and delay in replacing old notes will have a deflationary impact on the economy

dent on at least a fraction of the problem. The very threat or promise of action will also deter future attempts to convert black money flow into benami land holdings.

This is a big bang announcement that can have a serious impact on corruption. However, the future creation of black money has to be curtailed by discontinuing high-value notes permanently. It is hoped that one part of this big announcement will involve slowly withdrawing the Rs 2,000 and Rs 1,000 notes.

Finally, one must note that India is in a sweet spot and opportunistic moment as we are seeing an exponential increase in digital wallets, online payments, financial inclusion through the Jan-Dhan Yojana, online banking and so on. There is clearly a move towards a less cash economy if not a cashless economy. That has inherent features on putting a crimp on black money transactions because the digital trail makes it impossible for people to evade or elude taxes.

In summary, this is a giant currency swap as a first step, a shock-and-awe treatment which destroyed perhaps Rs 2-3 lakh crore of black money stock with a possible adverse impact in the short run. But we await the bigger steps of going after benami land holdings and other forms of ill-gotten wealth apart from discontinuing higher denomination notes. These steps have to be seen as a logical continuation of several efforts that the government has taken in the last two years.

The government’s determination to go after illegitimate wealth and corruption with unthinkable audacity, if sustained, can renew the citizens’ trust in governance institutions.

The proof would be not only an improvement in the EODB rank but also in Transparency International’s global ranking on corruption.

(Ajit Ranade is the chief economist at Aditya Birla Group. Views are personal) December 9, 2016 forbes india | 29

JiTEndra PrakasH / rEUTErs

take a hit in this currency swap.

So, in the short run, to the extent that replacement of old notes is getting delayed (due to bottlenecks in distribution and printing), it will have a deflationary impact on the economy. Consumption spending, especially from rural and informal sectors, will dip.

The short-to-medium-term positives are as follows. Bank branches are now flush with deposits.

Indeed even the Jan-Dhan Yojana zero-balance accounts showed a surge of 300 percent, raising some eyebrows and prompting an inquiry. The huge deposit growth will lower lending rates, possibly creating conditions for a rate cut by the Reserve Bank of India (RBI). Another impact is via the balance sheet of the RBI. Since cash in circulation represents the liabilities of the RBI, to the extent that about 25 percent is permanently extinguished, it represents a net gain.

However, this will not immediately translate into any fiscal gain. Rather it will give RBI more room for injecting

THE dEmonETisaTion dEbaTE bY inViTaTion

FROM DEALS TO RULES The most crucial and long-term impact of the move to demonetise high-value notes will come in the form of a re-legitimisation of the rule of law

samEEr Pawar

S

ince the 1970s, India has been stuck in a lowlevel equilibrium with large transmission losses between how the law is written, interpreted, practiced and enforced.

This ‘sense of humour’ about the rule of law has been dissolving since economic reforms began in 1991, but suffered its biggest blow on November 8 this year with the central government’s move to demonetise high-value currency notes (Rs 500 and Rs 1,000) and the consequent requirement that such notes be deposited in banks or exchanged for new ones.

Of course, demonetisation is only one of the many steps that are needed to end black money, but it is an important step that has at least five upsides vis-à-vis productivity and wages, cost of real estate and money, terrorism and crime, corruption and rule of law.

Former chief economist at IMF and professor of economics at Harvard University Kenneth Rogoff’s book The Curse of Cash is clear that high-value paper currency is responsible for many of today’s intractable problems.

He believes that moving to a society in which cash is used less frequently, and mainly for small transactions, will have a positive impact on corruption by public officials, terrorism financing, the drug trade, tax evasion, human trafficking, informal employment, money laundering and extortion.

Rogoff believes that physical cash is still the most preferred for criminal activities because of its anonymity, portability, liquidity, and near30 | forbes india December 9, 2016

By Manish saBharwal

universal acceptance. Since 80 percent of physical cash is in $100 notes in the US, and since a million dollars in $100 bills weigh just 10 kg and can fit into a shopping bag, he says getting rid of the denomination will make it harder to count, verify, handle and store large amounts. According to Rogoff, physical cash is used far more for illegal activities than for legal ones and he advocates a “less-cash” society, although not a cashless one.

His works have important implications for a country like India, so let’s look at five upsides of the recent demonetisation move:

Productivity and Wages

India’s problem is not jobs but wages; anybody who wants a job has one, but not the wages he or she wants or needs. The war on black money has big positive implications for India’s formal jobs because 100 percent of net job creation in the last two decades has happened in small, low-productivity enterprises; of India’s 6.3 crore enterprises, 2.4 crore do not have an office or address, only 85 lakh have any form of tax

registration, only 11 lakh pay the mandatory provident fund, and only 18,000 companies have a paid-up capital of more than Rs 10 crore.

If you rank manufacturing companies by size, firms at the 90th percentile and 10th percentile have a difference in productivity of 22 times. Productivity comes from the access to talent and credit that comes from formalisation. Over the next decade, I anticipate that the number of enterprises in India will decline by over 50 percent, ending the selfemployment that is self-exploitation, and low-productivity informal firms that operate in cash. The US economy is more than seven times the size of India’s, yet enterprises there number only a third of that in India as informal enterprises find it hard to exist and exploit workers.

Price of Real Estate and Money

India has long mispriced land and money. Analysts like Saurabh Mukherjea of Ambit Capital suggest a huge decrease in the price of both; he believes India’s low rental yield of 2 percent reflects our black economy because globally, rental yields and borrowing rates are similar. He estimates that rental yields will double as the price of residential real estate halves. This is important for labour migration. At a recent job fair, a job seeker told me: “Give me Rs 4,000 in Gwalior, Rs 6,000 in Gurugram, Rs 9,000 in Delhi and Rs 18,000 in Mumbai; my bags are packed, so tell me where you want me to go.”

This purchasing power parity

in india, anybody who wants a job has one, but not the wages that he or she wants or needs

model reflects a massive divergence between real and nominal wages and is an outcome of mispricing real estate in big cities. The coming cratering of real estate will be wonderful for labour migration, low-rental and low-cost housing. This mispricing extends to money; we have among the highest nominal and real interest rates in a world that is awash with capital and has $13 trillion of government debt trading at negative interest rates.

Saurabh also estimates the shift from black to white savings (banks received over Rs 3 lakh crore in deposits in the first seven days of demonetisation) could reduce our interest rates by 350 basis points (one basis point is one hundredth of a percentage point). Ending the mispricing of real estate and money is wonderful for entrepreneurship, global competitiveness and job creation.

Terrorism and Crime

For somebody born and brought up in Kashmir, like me, it has long been obvious that a huge amount of terrorism is financed from across the border and Pakistan is a huge source of counterfeit notes. It is also clear that a huge amount of the drug trade, extortion, kidnapping and other forms of crime are conducted, lubricated and amplified by physical

currency. The Financial Action Task Force—an inter-governmental organisation that develops policies to combat money laundering—in an October 2015 report titled ‘Money Laundering through the Physical Transportation of Cash’, estimated the amount of physical cash involved in crime to be hundreds of billions of dollars globally. Demonetisation greatly disrupts the financial supply chain of criminals and terrorists.

Corruption

Besides the informal sector, the biggest source of black money is corruption. It is important to acknowledge that the demonetisation of high-value notes does nothing to cut the roots of future corruption; that needs a re-imagination of the state, with lower ‘regulatory cholesterol’; a new citizens’ interface (paperless, ‘presence-less’, and cashless), lower discretion, massive improvements in the ease of doing business, better urban infrastructure and much else.

Demonetisation will force political parties to think creatively about financing and create the grassroots and retail funding machinery that, political scientists suggest, creates more accountability and political participation than wholesale financing by interest groups.

(Manish Sabharwal is chairman, TeamLease Services) December 9, 2016 forbes india | 31

saJJad HUssain / aFP / GETTY imaGEs

Rule of Law

The most long-term and highest impact of the demonetisation comes in re-legitimising the rule of law.

Black money is the biggest enabler of mutilating law enforcement and this decision simultaneously influences the supply and demand of discretion.

A society that is based on rules is richer than one based on deals, but that is possible only if you dry the swamp. The biggest impact of this action is changing the norms of what is expected, accepted and acceptable.

A society’s norms and values—what philosophers call unacknowledged legislation—are much more powerful than legislation and there is nothing cultural about black money. We don’t have to be Western to be modern.

Ending black money is not a bulb that goes on suddenly, but a gentle sunrise; this needs a number of statistically independent and genetically diverse tries.

De-notification builds on new legislations—Black Money Act, revamp of the tax treaty with Mauritius, Benami Transactions (Prohibition) Bill, GST, TDS/PAN requirements, etc—and financial inclusion (Jan Dhan, Aadhaar, direct benefit transfer, mobile banking, Universal Payment Interface, Bharat Bill Payment System, new bank licences, etc). Future possibilities include a cap on cash payments, tax on cash payments, reregistration of properties, applying big algorithms to consumption and savings data and much else.

Mahatma Gandhi once said that the gap between what we know and what we do could solve our problems. After decades of rhetoric, decisive action on black money, however painful, bridges the gap Gandhi talked about.

And, as a lawyer, he would have been delighted with the end of India’s sense of humour around the rule of law.

analysis after the vote

America Inc: Stirring Calm in a Stormy Teacup In an environment of socio-political uncertainty, US business leaders are reassuring anxious employees through messages of empathy and solidarity

By ABhilAshA khAitAn

“T

olerance is for cowards. Being tolerant requires nothing from you but to be quiet and to not make waves, holding tightly to your views and judgments, without being challenged. Do not tolerate each other. Work hard, move into uncomfortable territory, and understand each other.” In an email to his team in October, AT&T CEO Randall Stephenson had addressed the uncomfortable issue of racial tension, which has heightened over the last couple of years in several pockets of America, taking cognisance of #BlackLivesMatter, a movement started in 2013 after police shootings of unarmed African-American men.

This wasn’t about just jumping on a Twitter trend.

Stephenson is one of several business leaders to go beyond the traditional messages of profitability, revenue targets and mergers & acquisitions in group addresses in recent times.

Top-down social messaging in an uncertain climate is becoming a norm to reassure anxious employees who are anticipating negative changes in their socio-cultural environment.

Nowhere is this more apparent than in the US, which while grappling with racial strife, now copes with a divided political climate.

In the few days since the Republican candidate, Donald Trump, was voted the next president of the 32 | forbes india December 9, 2016

country, several heads of companies have shown little reticence in acknowledging employee fear and insecurity triggered by the campaign rhetoric of America’s president-elect.

The other factor, of course, is that these are all global companies, catering to diverse markets, with employees—particular in the tech verticals—from varying backgrounds.

Beyond humaneness, there is also commerce to be considered. Little wonder that empathy was the running theme, in the days after.

The CEO of eBay, which has over 50 percent Asians in its tech functions, while around 40 percent of the overall staff is non-white, sent a group email, emphasising the company’s position as pro-diversity.

“While we are a technology leader, our platform is centered around people—buyers, sellers and our employees… we will continue to advocate principles and policies that support the needs of the global eBay

Top-down social messaging in an uncertain climate is becoming a norm to reassure anxious employees who are anticipating negative changes

community, and I will continue to speak publicly about inclusion, trade and the positive role that technology can play in peoples’ lives around the world,” Devin Wenig wrote.

He made it clear that he wasn’t taking a political position but, at the same time, said, “…it’s clear to me that as a global technology leader, what we say and what we do matter. eBay was founded by an immigrant to the US. Pierre [Omidyar] built our business on the belief that people are basically good, and this enduring heritage is one of the reasons I’m proud to lead this company.”

Apple CEO Tim Cook too broadcast an all-hands memo to Apple employees in the US, saying, “While there is discussion today about uncertainties ahead, you can be confident that Apple’s North Star hasn’t changed. Our products connect people everywhere, and they provide the tools for our customers to do great things to improve their lives and the world at large.”

Trump has had a choppy relationship with Apple during the pre-election months, at one point even suggesting the company should stop manufacturing in China.

But Cook was undeterred in his message. “Our company is open to all,” he wrote, “and we celebrate the diversity of our team here in the United States and around the world—regardless of what they look like, where they come from, how

Dan KitwooD / Getty imaGes

newspaper front pages across the world reacted to Donald trump’s win in the Us presidential election with a mix of wit and horror

they worship or who they love.”

It wasn’t just the tech majors sounding out positive notes to their people.

PepsiCo CEO Indra Nooyi did not hide her dismay at the election outcome, even asking for a “box of tissues” when responding to a question on how she felt about Hillary Clinton losing. “I had to answer a lot of questions from my daughters, from our employees... The question that they are asking, especially those who are not white… ‘are we safe’, the women were asking… ‘are we safe’, the LGBT people are asking...,” she said at the New York Times Dealbook Conference on the day after the verdict. “The first thing we have to do is assure everyone living in the United States that they are safe. Nothing has changed as a result of this election.”

Addressing similar concerns, Starbucks CEO Howard Schultz, an avowed Trump critic, asked his employees to “offer everyone in our stores and communities a place of inclusion and optimism”.

Regardless of their personal political stances, business leaders are striving for a positive note—perhaps, more of acceptance—while attempting to restore calm among those who anticipate the worst. Some are going the extra distance to wave the friendly flag, such as Amazon CEO and Washington Post owner Jeff Bezos who tweeted a mild congratulatory message to Trump, moving to a side the harsh criticisms of both his brands by the president-elect.

IBM’s CEO Ginni Rometty went one step further, outlining the ways in which her company could help Trump

achieve his plans for the country.

There is no right way to deal with an unprecedented political situation. In their own ways, these CEOs are attempting to smoothen the road ahead—and it is a fouryear-long road. It is also one paved with rough-edged stones.

After all, fresh off the triumph, Trump has already reiterated his intention of sending home millions of immigrants and, yes, he has not forgotten the wall either.

In that context, sceptics may question the value of these CEOs’ words, even dismiss them as meaningless and hollow. But when empathy is transparently expressed and with little fear of consequence— exercising the much-vaunted freedom of speech upheld in democracies—it tends to transcend tokenism.

December 9, 2016 forbes india | 33

turmoil at tata special report

Independence Struggle The role of independent directors comes into sharp focus as the Tata-Mistry spat spills over to group firms

i

t is shaping up into a fight to the finish. Cyrus Pallonji Mistry, the 48-year-old former chairman of Tata Sons, appears to be ready to take his battle against Ratan Tata, 78, and Tata Sons, from where he was ousted unceremoniously on October 24, to its logical conclusion.

Mistry, whose family owns an 18.4 percent stake in Tata Sons, is undaunted even in the face of the

34 | forbes india December 9, 2016

By Sourav MajuMdar with aveek datta and SaMar SrivaStava

value erosion which Tata group companies have been facing ever since the bruising face-off began.

“Cyrus believes what is happening is catharsis. If there is value erosion in the process, he is willing to take the hit because his family’s fortunes aren’t solely dependent on the holding in Tata Sons,” says a source close to Mistry.

While the initial exchange of fire

between the two sides was restricted to the group level and to Tata Sons, it has now spread to group companies, with the focus sharply on the role— read independence—of independent directors including Ratan Tata’s old friend-turned-foe and Bombay Dyeing patriarch Nusli Neville Wadia.

On November 15, a bizarre drama played out at the board meeting of Tata Global Beverages Limited

(TGBL), where the company’s second quarter results signed by Mistry were released to the exchanges at 6.02 pm and another statement replacing him as chairman reached the exchanges at 6.12 pm. Mistry was replaced by Tata loyalist Harish Bhat, who also has been given an important role in the group (including that of custodian of the Tata brand) in a recent round of restructuring following Mistry’s ouster as Tata Sons chairman.

Mistry reacted swiftly, saying the manner in which TGBL replaced him was “nothing but a repeat of the illegality that the board of directors of Tata Sons did on October 24”. He claimed there was nothing on the agenda about replacement of the chairman, just as there was nothing on the Tata Sons board agenda. Tata Sons sources have, however, said there was

nothing illegal about it since seven of 10 TGBL directors present voted in favour of removing Mistry. Max Group founder Analjit Singh, an independent director on the TGBL board who voted in favour of Mistry, told CNBCTV18 that what was happening was “uncharacteristic of the Tata Group”.

The TGBL episode underscores the deep divide among group operating

The exchange of fire has spread to group companies, with focus on independent directors

companies with independent directors of Indian Hotels Company (IHCL), Tata Chemicals and Tata Motors issuing statements supporting Mistry’s leadership. On the other hand, Mistry was replaced as chairman of Tata Consultancy Services (TCS), the group’s cash cow, virtually overnight, and Tata veteran Ishaat Hussain was installed in his place. The Tata Steel board has stayed silent thus far.

Tata Sons, where Tata Trusts (headed by Ratan Tata as chairman) hold 66 percent, is not taking this divide and the role of independent directors lightly. In a nine-page statement justifying its stand on the Mistry issue, Tata Sons has indicated that Mistry was using the independent directors to garner support in his battle with Tata Sons. “Having been replaced as the chairman of Tata December 9, 2016

forbes india | 35

from left: sHailesH aNDraDe/ reuters; arijit seN / HiNDustaN times via Getty imaGes

Bumpy ride ahead: ratan tata (left), and Cyrus Mistry

sameer pawar

turmoil at tata

special report

Sons, where the majority of the board and the major shareholders had expressed lack of confidence, Mr Mistry is trying to gain control of IHCL with the support of the independent directors of the board,” the statement of November 10 says.

Mistry invoked the stature of those serving as independent directors of the operating companies, among them Deepak Parekh, Keki Dadiseth, Nadir Godrej, Nasser Munjee and Nusli Wadia (see chart), and pointed out that many of them were appointed before he took over as Tata Sons chairman in December 2012. Significantly, sources in Tata Sons had also used a similar argument extolling the stature of the independent directors of Tata Sons, among them Venu Srinivasan (who has since been appointed a trustee of the Sir Dorabji Tata Trust) and Ajay Piramal, to justify Mistry’s ouster.

Besides, Tata Sons has also issued a subsequent statement saying: “In light of the developments since November 4 [the day the IHCL directors backed Mistry], Tata Sons reiterates that it is crucially important for boards, including independent directors, to consider that their views and positions ensure that the future of Tata companies is protected taking into consideration the interests of all stakeholders.”

Opinion is divided on the role of the independent directors in this face-off. Some analysts and Tatawatchers feel independent directors must use their own discretion at such a sensitive juncture rather than vote in line with the principal shareholder. Says corporate lawyer HP Ranina: “Independent directors must act independently. This is also reiterated in the Companies Act of 2013. Just because the principal shareholder has lost confidence in Mistry, it cannot be grounds for independent directors to follow the same line.” He points to Section 166 (3) of the Act which says “a director shall exercise his duties with due and reasonable care, skill 36 | forbes india December 9, 2016

dramatis personae Independent directors of Tata firms

Tata Steel

Tata Global Beverages

Subodh Bhargava

Darius Pandole

OP Bhatt

V Leeladhar

Andrew M Robb

Mallika Srinivasan

Jacobus Schraven

Analjit Singh

Mallika Srinivasan

Ranjana Kumar

Nusli Wadia

Ireena Vittal

Tata Motors

Indian Hotels Shapoor Mistry

Nusli Wadia

Keki Dadiseth

RA Mashelkar

Deepak Parekh

Nasser Munjee

Nadir Godrej

Subodh Bhargava

Ireena Vittal

VK Jairath

Vibha Paul Rishi

Falguni Nayar

Gautam Banerjee

Tata Power HS Vachha

Tata Chemicals

Nawshir Mirza

Nusli Wadia

Deepak Satwalekar

Nasser Munjee

Piyush G Mankad

YSP Thorat

Ashok Basu

Vibha Paul Rishi

Tata Consulatncy Services A Mehta V Thyagarajan PA Vandrevala VKelkar OP Bhatt R Sommer CM Christensen

and diligence and shall exercise independent judgement”. He says the role of independent directors on the boards of Tata Sons and its operating companies needs to be examined in this perspective. However, Section 166 (2) says: “A director of a company shall act in good faith in order to

promote the objects of the company for the benefit of its members as a whole, and in the best interests of the company, its employees, the shareholders, the community and for the protection of the environment.”

JN Gupta, a former executive director of the Securities and Exchange Board of India who runs proxy advisory firm Stakeholders Empowerment Services (SES), differs with Ranina: “Opposition cannot be seen as the only measure of independence. A divided board causes tremendous erosion for shareholder wealth and can lead to potential disaster.” In a report on the imbroglio, SES says it “finds that somewhere, in the anxiety to project and prove the independent mind, IDs [independent directors] have forgotten about stakeholders’ interest.

Once again we have a situation where form has won over substance.”

The battle at the House of Tata is now set to intensify and shift to the extraordinary general meetings called

by Tata Sons to oust Mistry from the boards of various operating companies like IHCL, Tata Motors, Tata Chemicals, TCS and Tata Steel. This apart, Tata Sons also wants Wadia removed from boards of the companies where he sits. Sir Dorabji Tata Trust member VR Mehta, in an interview to CNBC-TV18, has alleged that Wadia “orchestrated” support for Mistry.

The outcome of the EGMs will also depend on which way Life Insurance Corporation (LIC), a major institutional shareholder in several Tata firms, votes. It is not without reason that both Ratan Tata and Cyrus Mistry are making the rounds of the corridors of power in New Delhi to present their sides of the story to the government.

“The key to future events lies with the institutions,” says the SES report. “The future will tell whom LIC has insured.”

For ongoing coverage, log on to www.forbesindia.com

turmoil at tata by invitation

A Question of Identity and Governance Airing unresolved differences in public is typical of a family business set-up. It is important to determine whether the Tata-Mistry feud is a role- or personality-based feud

businesses in general is that it is essential for a company to have a clear Kartha identity, which must be in harmony with Karma (in this case, all the businesses of the Tata group) and Kriya (governance).

The governance framework of a family business differs drastically from that of a non-family business.

In my view, Tatas adopted a twodimensional governance design—a family business governance model for Tata Trusts and Tata Sons, and a nonfamily business governance model between Tata Sons and the operating companies. This dual governance framework has the potential to create confusion across the boards and professionals, due to ambiguity in the mixed identity of the institution.

In a family business set-up, when a single family member is managing the business, it is a good

idea to appoint that family member as chairman of the holding board as well as of operating companies in order to exercise control and authority. In a non-family business set-up, having the same member as chairman of the holding company as well as the operating companies is not the ideal scenario, as this does not provide for checks and balances and objective performance review.

Periodical review forms an essential pillar of the family business governance system. It is imperative to have a review architecture in place to periodically evaluate the business performance, board functioning, performance of the chairman and independent directors. In a robust family business governance framework, the working family member is accountable to the non-working family shareholders and is periodically subjected to a rigorous review process. If this process was in place, the overnight fallout of Cyrus Mistry would most likely not have happened.

A strong governance framework must have a written contingency succession plan in place to fill in the interim gap in an emergency.

If the Tata Sons’ board had such a plan in place, it would not have necessitated a situation where Ratan Tata had to take over the responsibility as interim chairman.

December 9, 2016

forbes india | 37

Sameer Pawar

n

obody expected it— surely not the Indian public. The abrupt ouster of Cyrus Mistry as chairman of Tata Sons in October this year has dominated media and societal discussions, leaving the public perplexed regarding the DNA of the institution which determines its identity.

The concept of identity, according to Indian scriptures, rests in triputi: Kartha (who I am), Karma (what I do), and these two, in turn, determine Kriya (how I do). These three aspects must be in sync to produce optimum results.

The Tata group started out as a family business and, with the professionalisation of the business over the years, possibly wanted to acquire the identity of a professionally-managed non-family business. However, the appointment of Mistry, an extended family member and shareholder, as chairman of the holding company as well as operating companies is indicative of adopting the family business governance model where the powers are vested in one individual. In contrast, the manner in which Mistry, the “family chairman”, was fired is typical of a professionally managed nonfamily business. Therefore, the perceived identity is ambiguous.

The learning here for family

By TaTwamasi DixiT

turmoil at tata

by invitation

Sachin KadveKar / FotocorP

Had a good governance framework been in place and a rigorous review done periodically, the overnight fallout between Ratan Tata and Cyrus mistry would not have happened

In a family business set-up, where more than one family member is involved, it is always a good idea to have a pilot and co-pilot model. The two may complement each other’s roles depending on the situation.

It would have been ideal if the chairman of Tata Trusts, Ratan Tata, and the chairman of Tata Sons, Cyrus Mistry, had adopted this model when they decided to co-work. Further, Tata Trusts should have ensured adherence of reserved items by Tata Sons, and the latter should have ensured the same by the operating companies as per good governance practice.

Had the relationship between Tata Trusts and Tata Sons been managed appropriately, and the powers of the trustees vis-àvis Tata Sons and the operating companies been well-defined with the reserved items under their purview, an incident of such nature might not have happened.

38 | forbes india December 9, 2016

Family feuds are typical of any family business. Unresolved differences become conflicts.

Unmanaged conflicts result in incompatibility. Incompatibility, when unmanaged, leads to separation.

Airing unresolved differences in public is typical of a family business set-up. It is important to classify whether the Tata-Mistry feud is role or personality based.

It is also not clear whether it is a

A good governance framework must have a written contingency succession plan in place to fill in the interim gap in an emergency

family business conflict, corporate conflict or a power struggle.

While identifying a successor, apart from competence, it is of utmost importance to ensure that the values, vision and mission of the incumbent are compatible with the family business ethos. It is not clear if the Tata-Mistry case was a result of personal or cultural incompatibility. The Asian family business world is governed by hierarchy. Whether Mistry accepted the hierarchy of Tata Trusts and Tata Sons remains unknown.

The role of independent directors is crucial at this juncture as they have to truly practice objectivity and not be swayed by personal associations and taking sides, bearing in mind that, in such circumstances, they are the true custodians of the stakeholders.

It may also be a good idea for all the independent directors of the Tata group companies to come together under an informal forum to act with one voice across the boards.

It will be interesting to see how the Tata-Mistry dispute pans out in the future. Is it going to create value for the stakeholders or erode it? Will this saga continue or is a rapprochement possible?

While the use of mediation in family-owned businesses is not new, it does appear that this option is not well-known nor leveraged as often as it could be. If there are persistent differences between two family members or between a family member and a professional, a facilitator must intervene to resolve the issue before resorting to legal aid.

An intervention can help align the triputi—Kartha (identity), Karma (business), and Kriya (governance) —to arrive at an amicable solution to the imbroglio in order to protect the interest of the stakeholders and carry forward the illustrious Tata legacy.

Tatwamasi Dixit is a family business advisor and coach, and co-author of the book Indian Family business mantras.

Website: www.fabricadvisory.com

The Real Value of Luxury for those who truly understand its worth, luxury is hardly about

the price tag—it is about the value it brings to their lives; value that can only be experienced. ¶ In our 2016 Luxury Special issue, we curate experiences, services and products that will bring specific value to the busy lives of the rich, famous and successful. These values—time, privacy, exclusivity, and comfort—are some of the most coveted, simply because they are some of the most elusive. ¶ Hence, the fastest car can have its brag value (and be a looker), but it also saves you time while transporting you in the lap of luxury; the most remote resort can provide the most breathtaking view, but it also helps keep the paparazzi guessing; the limited edition watch is worth writing that cheque for simply because there will be just a handful of people on earth with that exact same piece on their wrists; and that long-haul flight will feel a little more satisfying not only because of the deal you just finalised, but also because you are snuggling in the best seats in the business. ¶ That time, that privacy, that exclusivity and that comfort: Those will be the best things money can buy.

The best things money can buy

Cover Story Adar Poonawalla shoulders the responsibility of his family’s vaccine business, takes forward his mother’s charitable dream and, yet, manages to find time to create a Batmobile for his son By n MAdhAvAn

Y

ou get a glimpse of the good life even before you enter the Poonawallas’ Pune home. The architecture of the house, named Adar Abad, is distinctly European. Six large columns support the elevated front lobby which has striking orange Italian marble flooring.

On one side of the lobby stands a 40-year-old single engine Cessna aircraft.

On the other side is ‘Lil’ Cyrus’s Stable’ which houses a Shetland pony (a breed of horses that are short but sturdy).

Inside, the living room is large with a high ceiling and a dome that allows sunlight to flood in. What immediately catches your eye are the frescoes in the ceiling; they are inspired by one of the great masters of Italian Renaissance, Michelangelo, and his work at the Sistine Chapel, the official residence of the Pope in Vatican City. Ming vases, riding trophies and other figurines dominate the room and paintings by 40 | forbes india December 9, 2016

A Fine BAlAnc

Serum Institute of India CEO Adar Poonawalla's luxurious abode in Pune is adorned with rare paintings and boasts of stunning architecture

photographs: Vikas khot

ce December 9, 2016

forbes india | 41

The best things money can buy

Cover Story Vincent van Gogh (Water Mill at Opwetten), Renoir (who celebrated the feminine), AJ Munnings (of horses, what else) and Marc Chagall (from his work on flower vases) populate the walls.

A bright spot on one of the walls draws your attention—a closer look reveals that the shine is provided by 20 silver plates with Pablo Picasso’s paintings imprinted on them. “This is my favourite,” says Adar Poonawalla, the 35-year-old CEO of Serum Institute of India, the world’s largest maker of vaccines (in terms of dosage). “Imprinted are some classics, including Visage Larvae, Centaure,

Visage de femme, Un Poison and Le Dormeur.”

Adar has just joined us, having walked down one of the two spiral staircases that connect the living room to the upper floors. The living room can accommodate two big chandeliers and dwarf a large piano. “We bought the chandeliers over the years from maharajas who were stretched for cash,” says Adar, the only son of Cyrus Poonawalla, the founder of the vaccine maker, who is ranked number 10 on the 2016 Forbes India Rich List with a wealth of $8.6 billion. “Tom Ford, Huntsman and Brioni are my favourite brands when it comes to what I wear,”

says Adar, nattily dressed in a Savile Row suit, a Dolce & Gabbana shirt and a Tom Ford tie, as he settles down for a chat with Forbes India.

We have, by then, walked across to the sizeable dining room sparkling with silver cutlery.

As we converse, it becomes clear that Adar has not only imbibed his father’s business acumen—Serum Institute’s revenues, he says, have grown at a compounded annual growth rate of 32 percent and profits by 30.5 percent since he took over as CEO in 2011—and taste for the fine things in life, but he has also done one better by exercising social responsibility with the Adar

Poonawalla Clean City Movement in Pune, as well as other initiatives in the areas of drinking water and sanitation.

Being the only child to wealthy parents did not translate into an easy childhood for Adar. “I am not a mollycoddled child,” he says. He was sent to a boarding school, St Edmund’s School, Canterbury, in England, when he was nine. “In spite of him being my only son, I threw him into the deep end. That has shaped him well as a person and as an entrepreneur,” says his father, the 75-yearold Poonawalla who set up Serum Institute 50 years ago. “Today, he can Though Adar still enjoys material things, the rate at which he buys them has slowed down significantly

42 | forbes india December 9, 2016

stand on his own feet and face challenges with an independent mindset.” And Adar has proved this more than once.

The Businessman

Adar joined Serum Institute in 2001, fresh out of college, after graduating in business management from University of Westminster, England. He was just 20 then. “I had no official designation. My job was to just shadow my father, observe and learn.

He wanted it that way,” explains Adar who, unlike many billionaire kids, does not have a postgraduate degree from a fancy college.

“My father feared that I

from India. The domestic market was difficult as the governments (both state and central) were not investing enough in vaccines and getting payments from government agencies was a time-consuming process. To circumvent this situation, Adar decided to expand their business geographically. He got his products validated globally and began supplying to the World Health Organization (WHO) and other aid agencies across many needy countries. Today, Serum Institute supplies vaccines to 145 countries and almost 80 percent of the company’s revenues

achieved it despite plenty of scepticism from people around him, including his father. “Polio will be eradicated very soon. What is the point in developing an oral version of it now, my father asked,” recalls Adar. “I went against the grain and rejigged the manufacturing facility to produce it.” Today, the vaccine generates as much as $70 million in revenue for Serum Institute. “It is a big hit and delivers 10 percent of our annual profits,” says Adar. Serum Institute has also launched vaccines for bladder cancer and influenza.

In 2012, Adar led Serum Institute to its first overseas

"The smile i see on The faces of beneficiaries is a loT more saTisfying Than buying cars." would get distracted, get used to the nice life abroad and not return to India at all. This has happened in many second-generation business families. So he asked me to come back after graduation.”

Adar has no regrets.

After all, it gave him the opportunity to learn the business hands-on. “No classroom can give you the sort of exposure that you get by dealing with failure and success. All the theories in the world won’t help,” he says.

In 2005-06, Adar joined the company’s board of directors as executive director. At that time, Serum Institute was supplying vaccines to about 35 countries apart

come from outside India.

This success established Adar’s management skills and credibility within the organisation and outside.

He was made the CEO in 2011 and his father took a step back from day-to-day operations.

Adar has since broadened Serum Institute’s scope of business further. Traditionally, the closely-held unlisted company has been strong in the DPT (diphtheria, pertussis and tetanus) and MMR (measles and mumps) families of vaccines. Adar began to take the company into newer segments. The launch of the oral polio vaccine in 2013, for instance, was his other big success and he

acquisition when it took over The Netherlandsbased Bilthoven Biologicals for Rs 550 crore. The deal not only gave Serum Institute the technology to produce injectible polio vaccines (which it launched soon after) but also a manufacturing base that acted as a strategic beachhead for Europe and the US. According to Serum Institute, 65 percent of the children in the world receive at least one vaccine produced by it.

The significance of this data point gets magnified when one considers that the vaccines it sells are at a far lower price than its competitors such as GSK, Pfizer, Sanofi-Aventis and

LG Life Sciences. “All our vaccines are at half the price sold by big players.

Our philosophy is that prevention is better than cure at affordable prices,” says Adar. “Poor countries cannot afford the vaccines but they have the right to health.”

Adar is also building a very strong product pipeline. In 2017, Serum Institute will launch rotavaccine, or rotavirus vaccine, which prevents diarrhoea among babies and small children. This will be followed by TDaP (adult tetanus, diphtheria and pertussis), dengue, HPV (prevents cervical cancer) and pneumococcal (prevents pneumonia) vaccines. While these will go a long way in reducing large-scale mortality among babies, children and women, it is critical for Serum Institute’s future profitability as well. “The vaccine industry works with a herd mentality.

If a company launches a particular vaccine, all others follow suit. So you have good profits for four to five years after which products from competition flood in and revenues/ profits disappear,” he explains. “I need products to come in by 2017-18 or else my growth will suffer.”

Serum Institute is investing Rs 2,000 crore over the next three years to increase production capacity (from 1 billion dosages now to 1.5 billion by 2020). “We have ploughed back almost 80 percent of our profits into the business to build our quality,

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The best things money can buy

Cover Story technology and capacity,” says Adar. The new facility will also help Serum Institute foray into the US market. “We have always dreamt of entering the US market. Real revenue lies there as the vaccines are sold at prices which are 15 times that of India,” he says.

“But it costs $60 million to launch a product in the US and Europe.” However, the company feels that it now has the financial clout and the required infrastructure to enter those markets.

Adar’s vision and leadership is acknowledged by his business associates.

“Serum Institute is an important partner for us,” says Harish Iyer, senior advisor, Scientific Programme, Bill & Melinda Gates Foundation. The two organisations have been working together to fight debilitating diseases around the world. “When I was CEO of Shantha Biotechnics [a vaccine maker] between 2011 and 2015, I always admired Serum Institute for its technical capability, solid understanding of the issues involved and product development capabilities,” Iyer adds.

Serum Institute developed a meningitis vaccine in collaboration with Bill & Melinda Gates Foundation and this, according to Iyer, helped control the disease in Africa. “Adar understands the world of public health and what type of products work. He believes in his people and has the right talent around him,” says Iyer. “A lot of responsibility rests on his shoulder and he

Adar, seen here with father Cyrus, apprises PM Narendra Modi of the Adar Poonawalla Clean City Movement

is forced to take challenging decisions often.”

He seems to be dealing with his responsibilities to his father’s satisfaction.

“It is a pleasure to see my boy shaping up,” says Poonawalla senior. “Adar is working very hard compared to most of his peers. He is ready to learn from his mistakes, which is a very important quality to develop.”

Adar, on his part, thanks his father for giving him full freedom. “I was just 30 when I became the CEO. The freedom he gave allowed me to blossom and grow. Only when you are completely unleashed, can you reach your full potential,” he says.

Adar has also been aided by his father’s tutelage, through which he has learnt some valuable lessons in management.

“He had an eye for detail

44 | forbes india December 9, 2016

and I have imbibed it from him. Knowing everything that happens in the company is the key,” he says. Ask him if that is not micro-management, and he responds promptly: “Lots of people criticise us for micro-managing. But if you look at history, many companies have suffered because the promoters have taken their eyes off the business. We do not let grass grow under our feet.”

He wants Serum Institute’s revenue to touch Rs 10,000 crore by 2020 from around Rs 4,200 crore now. “We may be the largest manufacturers of vaccines in terms of dosage but in terms of revenues, ours are a tenth of our next competitor Sanofi,” Adar says. Also, more acquisitions could happen. “I can leverage as much as a billion dollars on my balance sheet. I am

also willing to dilute my stake in case the acquiring company is very strategic in terms of technology, capacity, market share and products,” he adds.

What he is dead against is an IPO. “I do not want to lose independence and start reporting results quarter after quarter. Our decisions will never be the same then,” he says.

afTer hours

His plans seem to be falling in place, allowing Adar a moment or two of calm. Those moments, he says, he uses well: Either holidaying by chartering a yacht and sailing in the south of France, or renting a villa in Italy or France and spending time there. “I have been there [to those parts] some 50 times so far,” he says. His Gulfstream G550 aircraft is his transportation of choice.

“With a 13-hour range, it can take me to anywhere in the world with a single halt,” he says. The plane can also come in handy when he craves continental food and in case he wants to fly in Michelin star chefs to cook for his friends and him.

He loves movies too and catches up on them in his private theatre. “Gladiator is my all-time favourite.”

His other passion is speed. Tucked away in the basement of his house are three simulators: There is a Boeing 737 flight simulator apart from Formula 1 and fighter jet simulators.

And, in his garage, he has a 20-plus strong fleet of cars. This includes the choicest of vehicles: RollsRoyce, Ferrari, Bentley, Lamborghini, Chevy Corvette and Hummer (electric vehicle).

“I take them out over the weekends mostly late in the

night. Only then can I drive them,” he says.

A collector of watches, especially tourbillons, his stash includes Vacheron Constantin, Audemars Piguet and Roger Dubuis.

However, he points out, “I haven’t worn a watch for the last two years.”

What has also changed: “I still enjoy material things but the rate at which I buy them has slowed down significantly.”

This is a change that Adar began to feel when he turned 30. His mother Villoo Poonawalla passed away in 2010 and it was only after her death that he learnt about the charity work she was discreetly engaged in. That triggered an interest in him for doing good for others. “The smile I see on the faces of beneficiaries is a lot more satisfying than buying cars,” he says. He set up the Villoo

Poonawalla Charitable Foundation in 2013 in the memory of his mother and pledged Rs 100 crore of his personal money to initiatives involving clean city, water management and sanitation. His wife Natasha helps him in this endeavour.

It was in January this year that he started the Clean City Movement to rid Pune of garbage. “I am proud to be an Indian but when foreigners see filth on the streets, my pride gets damaged,” he says. In fact, not only did he put in the money, he also chose to execute the project himself.

In this, he was inspired by Bill Gates with whom he has worked closely and who he sees as his mentor.

“He spends a good amount of his personal time for doing good and it helps.

It is an inspiration,” says Adar, who was included in Forbes Asia’s Heroes of

December 9, 2016

forbes india | 45

Vikas khot (BatMoBiLE)

The Mercedes-Benz S-Class that Adar got modified to look like a Batmobile for his son Cyrus's 6th birthday

Philanthropy 2016 for his Pune initiative.

The Clean City project now has 111 sophisticated vehicles, many of which are imported from Europe to clear the garbage. Over 150 people are employed.

“Our mission is to cover the entire city by 2017,” says Krishnan Komandur, CEO, Adar Poonawalla Clean City Movement. Prime Minister Narendra Modi, during a recent visit to Pune, met Adar to apprise himself of the initiative.

The Poonawalla foundation is also building toilets in Mumbai and Pune, as well as setting up water treatment plants to supply clean drinking water. “I plan to give 10 million litres of water per day and this will benefit 12 million households,” he says. “I like to live by the philosophy: Live well and help others live well.”

The most critical part of his good life, though, is the time with his children: Cyrus, 7, and Darius, who turns one in December. In fact, his gift for Cyrus’s 6th birthday surprised not only his son but the city of Pune.

Adar had modified a Mercedes-Benz S-Class— this was done in China and took six months to accomplish—to look like a Batmobile and took his son out for a spin on his birthday. The social media in Pune was agog with curiosity about the mysterious vehicle before its identity was revealed.

“My son loved it and if you ask me, it is the most precious possession I have today.”

The best things money can buy

Exclusivity

The MasTer of CoMpliCaTions

strong values and the art of watchmaking continue to propel swiss watchmaker Vacheron Constantin 260 years after it was set up By n Madhavan

F

ounded in 1755, Vacheron Constantin is the world’s oldest watchmaker (in continuous operation). It introduced the first ever complication in a watch (any function other than display of time) way back in 1770 and is today acknowledged as the master of complications. Its unique timepiece ‘57260’ with 57 complications is testimony to that. Its cheapest watch in India is priced in excess of Rs 10 lakh while models like Traditionnelle in platinum cost Rs 5.5 crore. Vacheron’s CEO Juan Carlos Torres, who was in India recently to launch its Overseas Collection, spoke to Forbes India about the longevity of the brand and the challenges that traditional watchmakers like Vacheron face. Edited excerpts:

to the real values of the brand. Strong values create great brands. For 260 years, we have been creating, building and exporting watches. The transfer of watchmaking knowledge has never snapped in the last 260 years. The Vacheron brand has five strong corporate values—passion, following tradition, creativity, openness to the world, and respect. When you have such strong deep values, nothing can happen to the brand. Also, Vacheron is the only brand offering the right balance between technique and design. Both are always at the same level. You can have the most important technical watch, but [it could be] ugly. You can have a nicely designed watch which is not technically strong.

It is always important to combine these two things.

Q Vacheron recently celebrated its 260th anniversary. What is the secret of your longevity?

Q Where does the brand stand in the global pecking order?

The secret is in the hands of the watchmakers. I think the success is coming from their work and dedication

Vacheron is part of the big four Swiss watchmakers [Patek Philippe, Breguet and Audemars Piguet being the other three]. We were

46 | forbes india December 9, 2016

the oldest watchmaker in the world and held the number one [spot] for more than a century.

Q For your 260th anniversary, you came out with a watch that is considered to be the most complicated in the world. Tell us about it.

This watch is a milestone as it extended the frontiers of watchmaking. We simply called it 57260 as it has 57 complications and was made for the 260th anniversary. Eight years ago, I met a customer in New York who wanted a watch with a whole lot of complications. I told him that it will take time.

The customer said he would wait. He waited for eight years and together we created the most complicated watch in the world. It is a unique watch. This watch has two calendars—Gregorian and Hebrew. Creating a Hebrew calendar was a big challenge as it is not linked to real numbers. Other complications include chronograph, moon phase, astronomical calendar, perpetual calendar, alarm,

split seconds, minute repeater and dual time.

Before this, the most complicated watch [Patek Philippe’s Calibre 89] had just 33 complications. We proved with this piece that Vacheron continues to be the master of complications.

Q Today, watches are not just timepieces.

They are expected to offer a lot more than just show the time.

How does a traditional watchmaker like you adapt to this change?

We have adapted our technique of watchmaking over the last 260 years when it comes to new systems, new ways of producing a watch and use of new materials. But the way we do the product is relatively the same. The only real innovation in the history of watchmaking so far is quartz. The rest is evolution and adaptation.

Nothing has changed. How each wheel inside a watch calculates the time and the energy is actually the same.

Q What about the more recent developments like the connected watches? Some Swiss watchmakers such as Breitling and TAG Heuer have launched such watches.

If you want to be a part of the big four Swiss watchmakers, you have to have a certain philosophy.

TAG Heuer and Breitling are industrial products.

We produce less than 25,000 pieces a year. Those companies produce over

Vacheron CEO Juan Carlos Torres says strong values create great brands

a million pieces a year.

They are totally different.

Connected watches are electronics and not really watchmaking.

Connected watches may kill a few brands, but not well-established traditional brands.

Vacheron is a respected

brand with a history of watchmaking technique. It is not a technology brand.

Technique is a skill and tradition that is passed on over centuries while technology can be bought.

Q Are complications still the biggest attraction

for watch buyers? What are the new trends in complications?

Yes, for sure.

Complications are the selling point. But in watchmaking there are set traditions. If you change them, the collectors don’t like it. It is always

minute repeater with tourbillon and chronograph with perpetual calendar.

You cannot make chronograph with minute repeater. You can change size and design, but the relationship between complications remains the same.

December 9, 2016

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vikas khot

"in WATcHmAkinG THere Are SeT TrAdiTionS. iF you cHAnGe THem, THe collecTorS don’T like iT."

The best things money can buy

Exclusivity

One night at the Opera how do you get an impatient young generation to listen to five hours of Wagner?

Let us count the ways, says the Metropolitan Opera as it celebrates 50 years at the Lincoln Center in new York By aBhiLasha Khaitan

Dario acosta / Metropolitan opera

T

he opera isn’t a typical Indian cultural experience.

Consider that Opera House in Mumbai has long been associated with jewellers and traders, and branded the ‘neighbourhood to avoid’ during idol immersion days. The colonial landmark, after which the area was named, was a forgotten relic until a few weeks ago, when the beautifully restored Royal Opera House opened

to the public after over two decades of silence, with the Mumbai-born British soprano Patricia Rozario bewitching the audience with her voice.

But my invitation to the Metropolitan (Met) Opera predated that resurrection, and it was with mixed feelings that I sat down for my first opera on September 26 this year.

It was a grand event. The Metropolitan Opera, one of the world’s great music institutions, was celebrating

48 | forbes india December 9, 2016

50 years of music and theatre at its Lincoln Center location. This was the opening act of the season, and as the guest of a major sponsor, Rolex, I had a plum seat in the house.

I was filled with anticipation—but also trepidation. It was a fivehour-long Wagner opera, Tristan und Isolde. Baptism by fire, I was told by a friend. But even though I was befuddled by the length, it was impossible not to be mesmerised by

the power of the singing (particularly of Isolde’s, as essayed by acclaimed soprano Nina Stemme) and the soaring if dizzy-making multi-level set that took the audience through diverse locations, moods and geographies.

At the same time, the challenges of nurturing opera as an art form were apparent even to my amateur eyes. As Peter Gelb, the general manager of the Metropolitan Opera in New York City, puts

Peter Gelb, general manager of the Metropolitan Opera in New York City, will never compromise on artistic independence

it, “The shifting sands of culture are such that everything is thought about in terms of shorter programming. The big cultural phenomenon in recent years has been binge-watching TV. [Although] somebody sitting in front of the TV and watching 7 hours of programming: Maybe that’s our potential audience!”

Having helmed the artistic staff at the Met for 11 years now, Gelb, 63, knows how difficult it is to

cater to a generation used to entertainment that is not only instant but free.

An average Met Opera ticket is priced at $150 (over Rs 10,000), but cost isn’t the only impediment.

Much harder is the job of getting people to go to the ticket counter: “First we have to get them to buy a ticket,” says Gelb, who wants productions from the repertory to focus on the storytelling. “If you want to attract new audiences, the story-telling should be clear.

It is dangerous to present opera which needs a guidebook to explain it. You wouldn’t expect it to work in cinema.” Gelb is also bringing in new directors, including those from Broadway, to add a “new theatricality to the Met”.

Gelb knows that to stay relevant, risk-taking is inevitable, and he seems ready to embrace change.

“The challenge for the Met

merging of different art forms—the visual and performance aspects of it.

We are constantly trying to create work that will be stimulating, and more successful in terms of selling tickets.”

The other challenge, of course, is the high cost of putting on those spectacles.

Enter the philanthropists.

Get by with a little help from friends

The timing was unfortunate. The Met opera starter was rivalled by another spectacle, a political pow-wow between the two American presidential candidates at Washington University in St Louis, on the same evening. But come opening night, the loyalists showed up in their regalia on the red-carpeted foyer of the building.

Some of them were

And, in America, donors are critical to the survival of the arts. “Wealthy patrons get a tax benefit, and that is why there is a huge tradition in the US of charitable donations, whether to the Met, to hospitals, to universities,” says Gelb. In Europe, opera houses primarily draw their funding from government support while in the US, “the government, (local, city, federal combined), gives a total of less than half of 1 percent of our operating budget”.

A few select companies donate too, he adds. “Rolex, for instance, has long had a profile of supporting the arts and individual artists.

They have a monopoly of leading opera companies in the world: La Scala, Royal Opera, Paris Opera, Covent Garden. I think we are the newest addition to Rolex’s portfolio of opera houses,” he laughs. And since

"what makes opera so extraordinary is the merGinG of art forms—the visual and performance aspects of it." and for opera companies in Europe is that we are facing a transitioning audience.

We have older audiences who are more traditional, and we have others who are more adventurous.” To boot, it is an art form that isn’t part of the mainstream cultural environment.

“There is no safe course,” he says. “I, as the head of the Met and its producer, think about the audience, so we have to take calculated risks. What makes opera so extraordinary is the

patrons, who provide the fuel for this machinery.

Half of the Met’s $300 million budget is accounted for by donations that come in all sizes—millions from the wealthy patrons who sit on the board to $10 gifts from opera buffs.

The economics of the Met have always been fragile, explains Gelb.

“Much of our fortune relies on the overall economy, because our donors are able to support us depending on their own fortunes.”

Rolex participates in the economic structure of opera companies on both sides of the Atlantic, “it puts them in a very enlightened place”.

Arnaud Boetsch, director of communication and image at Rolex SA, says: “Rolex has been a patron of the arts for over four decades, supporting programmes, activities and institutions since the 1970s when revered soprano Dame Kiri Te Kanawa became its first

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Exclusivity

Jonathan tichler / Metropolitan opera.

The opening night of the Metropolitan Opera's 2016-17 season saw the 3,800-strong theatre filled to the brim

cultural Testimonee. These partnerships are inspired by our shared appreciation for excellence, passion and performance and reflect Rolex’s commitment to support music and opera as an art form.”

But while the patrons have a seat at the table, the Met has artistic independence, emphasises Gelb. “When I came to the Met, I made it clear that artistic decisions had to be made by the artistic staff, headed by me. Even though we rely so much on private sponsorship, they do not tell us what to produce. If the board and sponsors don’t like what I do, they can fire me, but they don’t tell us what to do.” It helps that the right kind of sponsor is drawn to the Met. “In a way, it’s a natural selection

process,” he points out.

“Mass consumer brands are not so interested.”

The funding challenge is also being met by embracing the digital.

Metropolitan Opera Live on HD brings the Lincoln Center to audiences across the world. “As many as 10-11 time zones at a time,” Gelb says. Live streaming of the performances began in 2006 as a marketing tool, but today it has become a significant source of revenue. “We have monetised this form of media.” They do around 10 live HD programmes a year, screened at movie theatres. These ticket sales contribute a net of $18 million to the bottomline.

Gelb isn’t worried about losing ticket-buyers to live streaming. In fact, he

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says, “Thanks to our digital transmissions and radio broadcasts, the Met has the largest audience in the world of any opera house.”

The bigger concern is the generally dispassionate approach to the arts. “In the world today, education of the arts is really missing.

This has been the situation for more than several decades. We have to do what the government does not do. Up until the 1960s and the 1970s, education of the arts in public schools in the US was much more.

[For] composers graduating from Julliard, their first job was often teaching in the public schools,” he says.

“The emphasis in funding of schools is orientated towards tech, business and making money. As a result, arts and society suffer. We

are actively engaged in bringing people to opera houses.”

A couple of days before the opening night, our group was given a behindthe-scenes tour of the opera house. A bow-tied volunteer in his late 60s was our guide. “Unfortunately, this is an abridged version,” he told us. “Just an hour. We’ll have to rush through.” For him, and scores like him, every picture, prop, and awning is imbued with significance. History was his to share, and omitting any sliver was visibly disappointing to him. His passion was catching. As was Gelb’s. And of the patrons who showed up to fill up the 3,800-strong theatre.

(The writer travelled to New York at the invitation of Rolex.)

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‘Social media can change the very nature of brand loyalty’ Narayan Ramachandran of l catterton asia says consumers are getting more sophisticated and value brands with originality

by Paramita chatterjee

D

espite the increasing number of super rich in India, the country’s luxury market is still nascent and developing.

Currently, there are several global brands that are looking to enter India but many of them feature in the prestige and masstige categories, rather than being pure luxury brands.

However, India is once again attractive as an investment destination and “we are on the hunt”, says Narayan Ramachandran, 54, managing director (India) at L Catterton Asia, a consumer-focussed PE firm formed in 2016 through the partnership of Catterton, LVMH and Groupe Arnault. Excerpts from an interview with Forbes India.

Q How do you view the luxury market in

the country and the opportunities within the sector, given that income levels have gone up significantly over the past five to six years?

There are about 250,000 millionaires in India and this group is growing at about 25 percent a year. [Consultancy firm] Wealth-X predicts we will have about 900,000 millionaires by 2023.

Despite this, the true luxury market in India is still nascent and developing gradually.

This is true for most luxury segments—fashion, accessories, handbags, luggage, cosmetics, finedining and even high-end consumer services like spas and travel. It is true that aggregate income has gone up, but that has just lifted India from a lower middle-income country to a middle middle-income country. Our experience in

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Japan, China and [South] Korea suggests that the speed of luxury market penetration increases dramatically only after a country has reached upper middle-income status of say $5,000 to $7,000 per capita. As India becomes prosperous, one should expect some similarity in the growth of luxury brands as it has happened elsewhere. However, the past may not be a prologue, and this is for two reasons: One, the buying philosophy of Millennials may turn out to be quite different from earlier generations and, second, the power of social media threatens to change the very nature of brand consciousness and loyalty.

Q It’s been a while since L Capital Asia—as L Catterton Asia was earlier called—has invested in India.

After Genesis Luxury,

Fabindia and PVR, there has been a pause. What are the reasons behind it and what is your strategy going forward?

We invest in each of our target countries in Asia based on the attractiveness

SELVAPRAKASH LAKSHMANAN foR foRbES INdIA

of the country, the specific investment at a point in time and the time horizon of the investment. We are not obligated to invest in any country or make any investment if it is not attractive to us. In India,

we invested in all the three companies that you mentioned from the first fund, which had a corpus of about $640 million that was raised in 2009-10. Our second fund [of around $1 billion] was raised in

2013-14 and we saw limited opportunity in India at that time, particularly relative to other markets like China, Singapore and [South] Korea. Now that we have exited from two of our portfolio companies—

Fabindia and PVR—we are scouting for some new opportunities. India is once again attractive and we are on the hunt. Also, the big momentum in retail in recent years has been in ecommerce. Experience

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Exclusivity from the US and China has taught us that eventually things will settle down, and retail and ecommerce will merge into, what is now fashionably being referred to as, ‘omni-channels’.

With retail firms once again viewing brick-andmortar and online as channels, rather than as fundamentally different businesses, we can get back to business in India.

Q Are more global brands looking to enter India at a time when the European market is undergoing a slowdown?

What are the challenges plaguing them?

Global brands are indeed looking to enter India. I would say the approach

developed, and where they exist, rental costs are high compared with global and regional standards, particularly given the level of sales that are generated.

This is a broader issue, tied intrinsically to the high cost of real estate in India, as well as the time, money and effort it can take to get any large project going in the country.

Q How would you compare the luxury market in India with the rest of the world? Are there any comparisons with China?

While luxury sales worldwide are under pressure, sales to Asian consumers have been strong over the years.

Q Why did L Capital think of going for a merger with private equity fund Catterton?

Through the merger, that happened earlier this year, L Catterton Asia will become the largest global consumerfocussed investment firm, with six distinct and complementary fund strategies focusing on consumer buyout and growth investments across North America, Europe, Asia and Latin America, in addition to prime commercial real estate globally. Now, L Capital Asia in its new avatar as L Catterton Asia will focus on aspirational lifestyle brands for the Asian consumer.

and they value brands with originality in design, creativity, functionality, relevance and storyline.

In that respect, the retail channel—be it online or offline—may not be as important.

Q What is your view on private equity investments in the luxury space? What is the kind of returns you expect from your portfolio companies?

In Asia, we invest in aspirational brands. In different countries this means different things.

In [South] Korea, for instance, it could mean a fast-growing, near-luxury cosmetic brand like Clio.

In Australia, it could

"In tHE PREStIGE And LuxuRy SEGmEntS, tHE FALSE dICHotomy bEtWEEn E-tAILInG And REtAILInG WILL Go AWAy. bRAndS WILL mAttER And tHEy WILL REACH ConSumERS tHRouGH botH CHAnnELS." to entry is generally thoughtful and deliberate.

Overall, I would say prestige and masstige brands are doing this more than pure luxury brands.

One of the brands in our portfolio, Pepe Jeans, for instance, has built a very successful business in India. Brands like Ikea are taking their time, but planning their entry meticulously. One needs to plan and be methodical because there is an overall concern about the development of modern retail infrastructure in India. There are simply not enough quality malls developed or being

Consumption power is still growing in Asia, both in terms of the number of middle-class as well as the number of millionaires.

In the long term, India is attractive for consumer goods across the spectrum.

Approximately 3 percent of households in China are affluent, and this will rise to about 7 percent in 2020. India will take roughly another 10 years— say in 2030—for affluent households to account for 7 percent of overall households. So, stylistically speaking, India is 10 years behind China in its luxury market. But, as I said, the past may not be a prologue.

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Q Several e-tailers have come up in the last few years to tap the luxury segment.

What is your take on this burgeoning sector when it comes to the sale of luxury products?

In the prestige and luxury segments, the false dichotomy between e-tailing and retailing will go away. Brands will matter and they will reach consumers through both channels. The digital domain will impact how people perceive, shop and relate to brands both online and offline. Today, consumers are getting more and more sophisticated

mean an iconic brand like bootmaker RM Williams.

In India it could mean a prestige brand that stays true to its provenance and brand promise like Fabindia. These brands are on long-term journeys that will lift them from being small domestic brands to brands with potentially very large footprints.

Private equity can partner with brands like these not just once but many times in their journey. We often joke that PVR has done rather well since our exit.

But that means we have done our job of helping set up the company for a long and successful future.

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‘SwiSS induStry makeS the beSt watcheS’ Raynald Aeschlimann, president of Omega since June, has worked with the leading global luxury watchmaker for 20 years. he opens up to Forbes india about helming a top brand

by Salil Panchal

Q At Baselworld 2016, we saw some new watches from Omega, such as the Seamaster Planet Ocean models, Speedmaster CK2998 and the Moonphase Chronograph Master Chronometer. What was the underlying theme of these collections?

For Omega, Baselworld 2016 was about introducing more models with Master Chronometer certification.

This high standard of precision and performance is something that we have committed ourselves to.

It helps us establish trust and confidence. With a new generation of buyers coming through, this is extremely important.

Q Stephen Urquhart had an illustrious tenure as president. What do you propose to bring in or change at Omega?

Raynald Aeschlimann, president of Omega, is confident that the demand for Swiss watches will rise again

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It’s always important for a brand to remain true to its DNA. So I don’t foresee making any major changes.

However, one of my challenges is connecting with a new generation of buyers. Those in the 20-40 age group are the future of our business, so we have to adapt our marketing, product and sales around their needs and wants.

Things like social media and ecommerce are now very much a part of consumers’ lives.

Q Exports for Swiss manufacturers have been sluggish of late.

Will demand for luxury watches improve?

It will improve. There is a lot of uncertainty in the world regarding politics, economies and social stability. That affects the

entire luxury market, not just watches. I’m confident that things will balance out again. I don’t think the love of mechanical watches will stop. Omega remains an aspirational product, so the motivation to buy is already there. The Swiss industry still makes the

best watches, so when the markets are calmer, demand will rise again.

Q How do you propose to increase Omega’s presence in India?

India remains an important market for Omega. We are renovating a major

boutique in Delhi and meeting with some close clients to promote our new Globemaster collection. We plan to extend our boutique reach across India. There are plans to open a new boutique in Hyderabad and I hope we can continue with even more in 2017.

‘we will never StOP Seeing the bargaining SPirit OF indianS’ Walter von Känel, president of longines since 1988, steered the company through the 2008 financial crisis. he says he has ambitious plans for the indian market

We are now the fourth largest Swiss watch brand in the industry, selling close to 6,000 pieces a day. But one must not look purely at numbers. One cannot compare a Patek Phillipe, for example, with a Longines. Fundamentally, we need not change anything in our products, for they work for the customers.

Q Why did Longines go back to its heritage collection at Baselworld?

Longines has had a long history and deep connect with equestrian for over a century. It was, thus, important for the brand to dedicate a collection towards this. In 2015, we expanded our ladies’ equestrian collection and, in 2016, we focussed on our historical collection (the RailRoad, Heritage

1918 and Equestrian Pocket Watch Jockey 1878).

Q How important is India to Longines?

What plans does it have for the country?

We have a good team in India. The working conditions and demand are also improving. But it still has a regime of high taxes.

On the other side, India is a market which one cannot ignore. One thing we will never stop seeing is the bargaining spirit of Indians; this is a reality that luxury watchmakers have to live with. We have a strong presence in India, but hope that we can open more monolithic stores there.

[Longines, which entered India in 2002, has 90 points of sale, including nine boutiques]. India already has a strong retail overseas community (non-resident Indians), with a large percentage of them being watch buyers. I had made

Forbes Conrad

Q How has 2016 been for Longines?

Walter von Känel, president of Longines, is driven by the growth story

a statement once that I will not quit until India beats China in the luxury watch market… but China is far ahead at this stage.

Q You have had a long stint at Longines. What keeps you going?

To achieve growth. Every morning, I get up to try and do more. This job of mine has an advantage, you can travel the world, see newer markets and meet new buyers… I was fascinated

by Russia and China. The interest in military history is in my blood [Walter von Känel had served in the Swiss Army as an officer in the infantry]… and yet when I come back home, I am so happy to be a Swiss.

In difficult times, the company needs a captain who is critical. The macroeconomic conditions in 2008 were tough, but Swiss watch companies have pulled through that.

—SP

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Pleasures unlimited special editions simply make the best available for a few. Here, we sample some such pieces By salil PancHal

Watches

/ Raymond Weil Maestro Beatles On its 40th anniversary this year, Raymond Weil launched a watch to honour the legendary English rock band. The names of 13 Beatles albums—Please Please Me and Let It Be among others—are written around the bespoke dial.

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The logo of the Beatles’ 1965 album Help! is found at the 4 o’ clock mark. The watch features a mechanical movement in a 39.5 mm stainless steel case and comes cased in a box with the legendary Beatles drum image on top.

/ Chopard Superfast Chrono Porsche 919 Black Edition

Piaget Altiplano In 2016, the Swiss watchmaker launched the Piaget Altiplano (high plane in Spanish) 38 mm 900D, marketed as the world’s thinnest manually-wound mechanical watch (5.6 mm), with the case, crown and dial set with diamonds.

It is meant for those interested in high-jewellery watches and is the newer version of Piaget’s 3.65 mm thick Altiplano 900P introduced in 2013. The 18K white-gold case comes with an extra bezel structure which is set with baguettecut diamonds, while the rest of the case sides are set with round-cut diamonds.

This special high-jewellery edition retails at around 153,000 euros.

/ Mikimoto flora necklace & earring set This is part of a new collection which comes from the legendary Mikimoto company, whose founder Mikimoto Kōkichi, a Japanese entrepreneur, is credited with creating the first cultured pearl in 1893. This set features 17.5x15 mm Baroque Golden South Sea Cultured Pearls on the necklace and 15 mm Baroque Golden South Sea Cultured Pearls on the earrings with 112.3 karat diamonds, set in 18K white gold. Price is available on request.

/ Tiffany Starfish Trio Cuff Part of Tiffany’s famed Blue Book collection (an annual showcase of Tiffany’s most artistic pieces), this 2016 piece comprises coloured gemstones (spessartites) and diamonds, which

form a perfect trinity with an 18K white gold cuff. All three starfish are designed to mirror the movement of the marine animal and curve around the wrist to provide a unique fit. Price is available on request.

/ Jimmy Choo clutch What started as an accessory in the celebrity world is now an essential.

The clutch featured here is part of Jimmy Choo’s 20th Anniversary Memento Capsule collection that pays tribute to the brand’s red carpet legacy. This special edition metallic clutch is built with a gold-tone brass frame and marked with Swarovski crystals—each applied by hand—and topped with cascading 3D flowers. This clutch retails at around Rs 652,000 (approximately $9,700).

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Chopard: MarC Gysin

Chopard, the official time partner for Porsche Motorsport at the World Endurance Championship since 2014, has come out with a 2016 edition of the 24 Hours of Le Mans, the world’s oldest sportscar race. Several elements of high-speed racing are embedded in the 45 mm wide sporty watch; the chronograph hands, chrono pusher and 919 icon in the 9 o’clock sub dial are all bright red and mirror the Porsche 919 hybrid car. With a black rubber strap and a similar DLC (diamond-like carbon) titanium buckle, this watch, limited to 100 pieces, retails in excess of $14,300 and is sold exclusively at Chopard boutiques only.

high jeWellery, clutch

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Pen

▲

/ Montblanc Writers Edition William Shakespeare limited edition Tolstoy). The octagonal design of the multicoloured fountain pen is inspired by the Globe Theatre, the London playhouse associated with Shakespeare.

Montblanc honours the famed English poet and playwright with this pen (others in the edition include Franz Kafka, George Bernard Shaw, Jules Verne and Leo

There is also a clip ring which could relate to the golden earring which Shakespeare wore in his famous portrait. This edition, created in 2016, is

limited to 1,597 pieces, relating to the year when one of his most famous plays, Romeo and Juliet, was first published. It retails at around £2,800.

Fragrances

/ Zegna Incense Gold

/ Les Parfums Louis Vuitton This brand was part of a missing puzzle for the fashion house, which was one of the very few with almost no fragrance to write home about. The last time Louis Vuitton launched a perfume was 70 years ago. This year, the brand has launched seven fragrances, each based on different flowers.

Louis Vuitton’s in-house perfumer is CavallierBelletrud, who is noted for well-known perfumes such as L’Eau d’Issey and Dior Addict in earlier years.

The perfumes come in 100 ml ($240) and 200 ml ($350) bottles. The limited edition has a miniature set of all the seven bottles (of 10 ml each).

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From the world of Ermenegildo Zegna, the Italian fashion house, comes a new fragrance where incense combines with the freshness of citrus.

Italian cypress and lemon combine in the fragrance, along with white flowers, jasmine sambac absolute,

cypriol, sandalwood and lotus flower. This fragrance is also available along with two other fragrances (Amber and Musk) in the Essenze Gold collection.

The price for a 125 ml bottle for any of the fragrances is Rs 21,000 (approximately $310).

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The Lavish hoLiday

These hotel rooms and villas redefine the concept of luxury getaways

By Monica BaThija

The Penthouse Suite at Cala di Volpe, Sardinia | Price: 33,000 euros a night This charming suite occupies an entire turret of the hotel. Spread over around 250 square metres, it offers three bedrooms, three bathrooms with Jacuzzi, two living rooms, a terrace dining area with a table for eight, as well as a gorgeous 250 sq m rooftop terrace that, needless to say, has mesmerising views of the azure coastline. A private fitness area and

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solarium, a private steam room and a private wine cellar are some of the other amenities at the suite.

Not to mention, a huge private swimming pool and gazebo. The suite is decorated in the classic romantic Sardinian style with beamed ceilings and terracotta-tiled floors and is decked out in traditional handcrafted furnishings and local artwork.

â–˛ / The Mark Penthouse at new York | Price: $75,000 a night At more than 12,000 square feet, including a 2,500 sq ft terrace, The Mark Penthouse at The Mark is the largest hotel penthouse suite in the US. Set over the top two floors of the hotel, it has five bedrooms, six bathrooms, two powder rooms and two wet bars. The dining room seats 24 and the living room boasts a 26 ft high ceiling, a fireplace and an adjacent wet bar, so

The Mark,

it can be converted into a full-sized ‘Grand Ballroom’.

Designed by the French interior designer Jacques Grange, the lavishly adorned penthouse is more like a majestic residence with ornate furniture and has breathtaking views of Central Park and the city, best taken in from the stunning private rooftop terrace that has separate outdoor dining and entertaining areas.

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Exclusivity / The royal Penthouse Suite at Hotel President wilson, GeneVa Price: over $75,000 a night (exact price on request) This one is 1,680 sq m of pure luxury, spread across the entire eighth floor of the hotel. It has 12 bedrooms with marble bathrooms (which have bath products by Hermès) and a private terrace with stunning views of Lake Geneva and Mont Blanc.

There’s also a Steinway grand piano, a Brunswick 1930 billiard table, a collection of ancient books, art pieces and a private fitness room. That’s not all. A personal assistant, a chef and a butler available 24/7 mean that all requests will be taken care of promptly. But what sets this place apart is the tight security it offers: The suite has everything from bulletproof windows, emergency alarm buttons, a reinforced safe and a private lift.

amanyara Villa at amanyara, TurkS and CaiCoS | Price: depending on the season,

The royal Villa at Grand resort Lagonissi, aTHenS | Price: on request

the rate varies from $24,500-36,000 a night plus taxes The villas at the Amanyara Resort in the Turks and Caicos Islands epitomise the spirit of the Caribbean with their blend of indoor and outdoor living. The signature six-bedroom Beach Residence, spread over 14,450 sq ft, offers an experience that is luxurious and private. The villa has

three bedrooms under one roof (the remaining are free-standing pavilions) as well as a living and dining pavilion, an outdoor dining sala, an office and a private pilates studio. Ponds and gardens to lounge in, a chef and housekeeper on call, and ocean and beach views are the other highlights.

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The Royal Villa comprises two master bedrooms, each with a fireplace, oversized marble bathrooms with their own steam baths, heated floors, remotecontrolled mattresses and curtains, a fully-equipped gym, a private massage area with a massage table and a business corner. That’s, of course, not all. This

secluded villa set in a lush private peninsula with a sublime view of the Aegean Sea also has two, yes two, swimming pools—one indoors and one outdoors.

The villa also has a fullyequipped kitchen, BBQ facilities, a private path leading to the beach and a butler’s room with its own entrance.

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Privacy

Wish fulfilment

Concierge services, the modern-day genies, tick all the right boxes for their uber-hni clients, making everything possible from the extreme to the impossible. And over the last decade, the offerings have only become more exclusive

LEON NEAL / AFP / GEtty ImAGEs

By shruti VenkAtesh & AngAd singh thAkur

A wax statue of Daniel Craig, who played James Bond in Skyfall.

A concierge services provider once turned their client into Bond and used hotels that were used in his movies

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C

onsider this.

You want to propose to your girlfriend and you want it to be a rather private affair. But you are also looking for a grand gesture. How about on the Sydney Harbour Bridge?

Too public? Or shutting it to the world for a while as you create a memory worth cherishing?

It’s what Quintessentially Lifestyle, a UK-based concierge company founded in 2000, recently did for a client.

While concierge services have been around for a while, making life easy for time-strapped individuals, taking care of everything from walking their dogs to picking up their dry cleaning and making arrangements for travellers all over the world, whether it be last-minute restaurant reservations or access to clubs, parties and special events, it is such bespoke experiences that they have come to epitomise with their elite memberships.

And from arranging a romantic dinner on an iceberg to rides on the back of MotoGP bikes, they don’t just organise what someone wants but also anticipate their needs or suggest experiences they’d never have thought of.

Take the instance of a woman who wanted The Bluefish, a USbased concierge service, to organise something special for her husband’s birthday. “He was a senior executive at one of these social media companies,” says Steve Sims, founder

of The Bluefish. She had mentioned he liked golf and the firm came up with a plan. “They were in America, so we were thinking of flying them to Scotland or Portugal.” But during the course of their conversation, Sims learnt that the husband’s passion for golf was fuelled by his love for James Bond.

Sims then decided to do away with the original plan and suggested a new one. “We transformed him into James Bond for a week,” he recalls. And it wasn’t mere role play. An entire story board was put in place, where they flew from London to Monaco to Russia, and used hotels that had been used in Bond movies. There were sports cars, speed boats, jets, shooting practice and they even had ‘spies’ walk up to him and say–‘You’re back, Mr Bond’!

Not everyone would want to be Bond, but his penchant for privacy is shared by high net worth individuals and celebrities alike. It’s no surprise then that along with exclusive, custom-made experiences, concierge services also promise confidentiality.

From designing itineraries to offbeat places to reducing the chances of recognition and even booking the entire property, concierge services can go as far as it takes.

“As a policy, we never share details of trips with any individual or organisation,” says Dimple Singh, executive director, Luxe India, a concierge service based in India. For instance, he says, “A famous

Dimple Singh, executive director, Luxe India, once organised a trip for a Spanish footballer with complete secrecy

Spanish footballer and his parents were travelling to India and as per protocol, their identity was kept confidential. No one, except a handful of people who were managing their trip, ever came to know of their visit to India.”

While passport details have to be shared with the hotel for security reasons, the concierge services ensure that these are shared only with the hotel’s general manager, with an assurance that very limited people will have access to the information. Sims of The Bluefish says it is not unusual for them to “ghost” a client. “This means everything is booked and planned using a fake name.

From hotels to restaurants, we often have fun making up names, like using an exgirlfriend’s or our mum’s/ dad’s name,” he says.

Concierge services are able to manage all this because of the relationships they build—not just with clients but also with those who provide the services.

“This entire business is about relationships… with the client, and with the

vendor,” says Sims.

“All clients are invited to speak with a lifestyle manager to ascertain their exact needs and requirements,” says Arman Motiwalla, CEO of One Concierge, a global concierge services provider.

“Our lifestyle managers understand the client’s likes, dislikes, preferences, goals and needs, and help curate a plan that centres around their requirements,” he says. “If a client is interested in art, we inform them of new gallery openings; if someone is interested in opera, we tell them about future performances and secure the best tickets; if someone is an avid restaurant-goer, we keep them updated on new openings and get them access to the best tables,” adds Emyr Thomas, founder of London-based luxury and travel concierge service Bon Vivant.

It is this intense vetting of clients that helps preempt what the consumer might want.

The Bluefish also conducts phone or Skype interviews with people interested in

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mArk AdAms

Privacy becoming their clients to ensure it’s the right fit.

Their client base, says Sims, is currently just over 2,500 worldwide because they prefer to do a lot more for a fewer number of people.

“In the early 2000s, the concierge market was dominated by large players, but towards the end of the decade, the industry became far more focussed on smaller companies that took on fewer clients and emphasised on providing personal, tailored services,” adds Bon Vivant’s Thomas.

Motiwalla of One Concierge believes that vendor relationships and tie-ups are an intense process too. “Over the last eight years, our business development department has been responsible for setting up thousands of relationships with various partners around the world ranging from restaurants and hotels to fashion houses, celebrities, entertainment conglomerates and more.

To continue to offer this experience, our team constantly needs to curate and establish new relationships,” he says.

The expertise comes at a price. Most companies have different levels of memberships, from the basic to the elite.

Quintessentially, for instance, has three tiers that include a Dedicated Membership (Rs 3 lakh per annum), a Bespoke Elite Membership (Rs 10 lakh per annum), and a Global Elite Membership, which is available by invitation only. The Bluefish admits

The Bluefish founder Steve Sims says it's not unusual to 'ghost' a client

a member after they’re deemed fit for entry, at a cost of $5,000 (about Rs 340,000). One Concierge, meanwhile, offers several on-demand offerings that don’t require the user to be a member. But its top offering is the Aurae lifetime membership, which includes an Aurae couture jeweller-crafted 14K solid Gold MasterCard. The service includes everything from dedicated account managers to brand and image management services for its members. The price of admission: $25,000 (about Rs 17 lakh) onwards.

N

aturally, when it comes to the world of bespoke luxury services, borders are increasingly irrelevant.

“I used to think that each marketplace was different.

But I have realised that far from it, the clientele wants to have a reliable source

68 | forbes india December 9, 2016

to be able to know who they can trust, where they can go and what they can do. [It] doesn’t make any difference whether you are in Japan, London or in the middle of India,” says Sims.

India’s luxury industry is estimated to be worth $18.34 billion in 2016, according to an Assocham (The Associated Chambers of Commerce and Industry of India) study released this year. And the demand for exclusive concierge services is the same as in any part of the world.

“The nature and type of requests placed are very much at par with global counterparts,” says Kanika Gogna, directormarketing, PR, and brand alliances-Quintessentially India. Members in India, however, are discerning individuals who may be more demanding and seek instant gratification, and inherently want “value for

money” more than their global counterparts, she adds.

While primary requests for Quintessentially pertain to categories like practical aid, access, dining, travel, sourcing of unique items in India and globally, over the last two years, Gogna says, there has been more emphasis towards seeking ‘experiences’. These can sometimes be shockingly extravagant: Bon Vivant’s Thomas was once asked by a woman to arrange for her to go to the opera with Prince Albert of Monaco. But they also include relatively demure travel requests such as witnessing Aurora Borealis (or the Northern Lights) in Norway, observing gorilla wildlife in Uganda, cherry blossom in Japan, or visiting the Black Forest in Germany.

A

s the client evolves, concierge services, too, continue to evolve on the basis of their needs. And though newer technologies like virtual reality might be used to allow guests to walk through a hotel or an experience, look around and immerse themselves into what a place looks like, says Sims, they will continue to remain relevant, because it will always be about “less technology, more communication”.

“We offer personal, tailored services to each client based on our own experience and from talking directly to the client,” says Thomas.

“That’s something you can’t do with technology.”

The best things money can buy

Privacy

Private havens the rich and famous seek more privacy than others. in these tony neighbourhoods of the country’s biggest cities, they have taken shelter behind high-walled bungalows, and in high-rise apartments Compiled by anshul dhamija & Paramita Chatterjee

MUMBAI

MUMBAI

Neighbourhood Bandra

Neighbourhood Worli

Price Per sq Feet

Price Per sq Feet

rs 30,000 to rs 60,000

rs 35,000 to rs 1 lakh

Famous Neighbours

mumBaI SHaH rukH kHan (actor)

Famous Neighbours

SaLman kHan (actor)

ajay PIramaL (Piramal Group)

aamIr kHan

uDay kotak

(actor)

(kotak mahindra Bank)

HEmEnDra kotHarI (DSP merrill Lynch)

HarSH marIWaLa (marico)

DelhI / NCR

DelhI / NCR

Neighbourhood Golf Course road, Gurugram

Neighbourhood Chanakyapuri, new Delhi

Price Per sq Feet

Price Per sq Feet

rs 13,000 to rs 26,000 Famous Neighbours

kP SInGH (DLF)

aDItya GHoSH

(InterGlobe aviation)

70 | forbes india December 9, 2016

DELHI

rs 65,000 to rs 75,000 Famous Neighbours

karan SInGH

(member of Parliament)

InDu jaIn

(Bennett, Coleman & Co. Ltd)

BeNgAlURU

BeNgAlURU

BeNgAlURU

Neighbourhood Sadashivnagar

Neighbourhood koramangala

Neighbourhood Indiranagar

Price Per sq Feet

Price Per sq Feet

Price Per sq Feet

rs 25,000 to rs 35,000

rs 25,000 to rs 35,000

rs 18,000 to rs 25,000

Famous Neighbours

Famous resideNt

Famous Neighbours

vG SIDDHartHa (Coffee Day Enterprises)

raHuL DravID (Cricketer, said to be moving into the locality)

BEnGaLuru

rajESH mEHta (rajesh Exports)

nanDan nILEkanI

krIS GoPaLakrISHnan

BInny BanSaL

Dr DEvI SHEtty

rajEEv CHanDraSEkHar

(Cardiac surgeon)

(member of Parliament, entrepreneur)

(Former chairman of uIDaI)

DIvya SPanDana

(actress-turned-politician)

Sm krISHna (Former chief minister of karnataka)

(Flipkart)

CheNNAI

(Infosys co-founder)

vEnkatESH PraSaD (Former cricketer)

CheNNAI

Neighbourhood Boat Club road

Neighbourhood Poes Garden

Price Per sq Feet

Price Per sq Feet

rs 24,000 to rs 25,000

rs 24,000 to rs 25,000

(older properties);

(older properties);

rs 37,000 to rs 43,000

rs 37,000 to rs 43,000

(newer properties)

(newer properties)

Famous Neighbours

Famous Neighbours

n SrInIvaSan

jayaLaLItHaa rajInIkantH (Chief minister, (actor)

(India Cements)

tamil nadu)

CHEnnaI

kaLanItHI maran (Sun tv network)

vEnu SrInIvaSan (tvS motor Company)

InDIra nooyI (PepsiCo)

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The best things money can buy

Privacy KolKAtA

KolKAtA

Neighbourhood alipore

Neighbourhood Ballygunge

Price Per sq Feet

Price Per sq Feet

rs 13,000 to rs 25,000

rs 15,000 to rs 20,000

Famous Neighbours

Famous resideNt

SanjIv GoEnka

HarSHavarDHan nEotIa

(rP-Sanjiv Goenka Group)

(ambuja neotia Group)

ko L k ata

maHEnDra jaLan (keventer Group)

PUNe

PUNe

Neighbourhood koregaon Park

Neighbourhood kalyani nagar

Price Per sq Feet

Price Per sq Feet

rs 13,000 to rs 17,000

rs 9,000 to rs 16,000

Famous Neighbours

Famous resideNt

PunE

nauSHaD ForBES (Forbes marshall)

(kalyani Group)

Zavaray PoonaWaLLa (Stud farm owner)

PaLLonjI S mIStry

(Shapoorji Pallonji Group)

72 | forbes india December 9, 2016

BaBa kaLyanI

Source: JLL INDIA

The best things money can buy

Privacy

Isle of You

for $10,000 a night, guests can rent Thanda Island off the coast of Tanzania and live in complete luxury—and absolute privacy

By Ann ABel

74 | forbes india December 9, 2016

I

t was Ernest Hemingway who lured Dan Olofsson to Africa. “I read all his books,” says the Swedish technology entrepreneur who heads the consultancy Sigma, and they lodged in his imagination.

So when he and his wife, Christin, decided in the early 2000s to build a winter home someplace warmer than their native Scandinavia, they considered the Caribbean, but eventually set their sights farther south.

“There’s fantastic wildlife and nature in South Africa,” says Olofsson, 65.

Their plans grew to include a guest lodge at what is now the wellregarded Thanda Safari Private Game Reserve. which opened in 2004.

(Thanda is Zulu for love.)

Soon after, the Olofssons set out to acquire a private island counterpart to their safari lodge and settled on one in the Shungi Mbili Island Marine Reserve in southern Tanzania. After years of negotiation and sustainability-minded construction, it was rechristened Thanda Island and welcomed its first paying guests in August.

The property, which has five bedrooms and rents in its entirety for $10,000 a night (for up to ten people), is roughly 20 acres ringed by coral reefs in protected waters that teem with sea life, including whale sharks, dolphins and five species of turtles.

The closest inhabited land is Mafia Island, home to more spectacular marine

life, trustworthy dive centres and traditional villages. Thanda Island’s hospitality director, Antigone Meda, likens it to Zanzibar 30 years ago—and while Zanzibar now has 200-room hotels, Mafia has about 200 rooms. (Thanda guests who don’t helicopter in from Dar es Salaam fly to Mafia, where Thanda staff ferry them over in a sleek mahogany boat.)

The Olofssons envisioned the island as a private paradise where they could escape with their three children and eight grandchildren. But the Tanzanian government wouldn’t let them buy it unless it would contribute to tourism and protect marine wildlife. The couple complied but remained committed to building a private family home. And here they were inspired by another 20th-century American icon.

“We were at the Kennedy compound in Hyannis Port around July 4 three or four years ago,” Olofsson recalls. “Looking around, we liked the New England style. Our South African property is more Zulu style. Here we wanted something different, and we decided on New England.” The resulting house on Thanda, with its white wainscoting, peaked rooflines and pastel palette, mixes the American and the Scandinavian, with a few African flourishes.

The design is intentionally hard to classify. Olofsson invested millions—“Less than 10,” he clarifies, though

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The best things money can buy

Privacy

Water world: The exotic rim-flow pool on Thanda Island was designed by owner Dan Olofsson, who has a degree in engineering

he is unsure of the exact amount—to build something that exists in very few places in the world. That’s in addition to the island itself, with its perfect white sand and clear turquoise waters just feet away from the house.

The Olofssons were very hands-on with the villa and two freestanding beach bandas (open-air bungalows, which allow the island to accommodate groups of up to 28 people), with Christin designing the interiors and Dan, a civil engineer by training, collaborating with the architects. He was also the visionary behind the villa’s most striking feature, a glass rim-flow swimming pool that gleams with blue mosaic tiles and rises up from the deck to form a luminous cube. “This pool was quite exciting to design,” he says. “I felt like I was just out of university,

even though that was 40 years ago.”

The food is far better than might be expected in such a remote location.

The staff will harvest some of the oysters on demand and serve them with champagne. While importing luxury foods and wine comes with a carbon footprint, the island was designed to be selfsufficient. It’s constructed with sustainable materials, and there’s a field of solar panels and a desalinisation plant. The house and all its infrastructure were also built in such a way that would allow them to be taken apart and leave no trace on the island.

That eco-consciousness is important to Olofsson.

Thanda is working in partnership with the Tanzania Marine Parks department and a leading NGO, Sea Sense, on research and conservation

76 | forbes india December 9, 2016

projects involving sea turtles, whale sharks and coral reefs. It’s a continuation of the commitment Olofsson, the biggest Swedish philanthropist in Africa (and plenty generous at home), made when he established the Thanda Foundation in South Africa in 2005. Among other achievements, its Star for Life arm has put 110,000 children through HIV-prevention education programmes. “We are at a point where we’re able to give back to society, and I think when you’re there, you have to do it,” he says.

While Thanda has made a point of hiring most of its staff from Mafia Island and is working to improve education there, marine conservation is the main focus. Not that guests would suspect that much of the wildlife is on the endangered species list.

There are frequent turtle and dolphin sightings on the boat ride from Mafia, and it’s not uncommon for guests to find themselves swimming among half a dozen whale sharks, the biggest fish in the sea.

That, it turns out, is Thanda Island’s greatest luxury: The access to such an ecosystem—and a solicitous staff to make it easier to commune with it.

And if it’s a rainy day, there’s still plenty to enjoy—Thanda Island is home to what was the largest Hemingway collection in Sweden, now sitting on shelves spanning 20 feet in a clean, well-lit place.

▼

Hideout Havens Hilltop EstatE, laucala island, Fiji Price: $45,000 a night + taxes (requires minimum 3 or 7-night stay depending on season) Spanning 21 sq km, Laucala is one of three small islands in Fiji. The island resort has 25 luxurious villas, but the Hilltop Estate is the jewel in the crown.

Located up in the green hills, it is billed as a ‘resort within a resort’ with panoramic views of the archipelago, 11,000 sq mt of bedroom space and other private quarters, two guest residences, a private swimming pool, and a private cook, chauffeur and nanny. For outdoor activities, guests can choose from among a golf course, hiking trails, and diving or horse riding facilities.

But it’s not enough to just be able to afford this ultimate destination—you have to fill out an application, and wait for an invitation from the property owner, co-founder of Red Bull, Dietrick Mateschitz, to spend your holiday there.

ownEr’s Villa, cHEVal Blanc randHEli, MaldiVEs

Price: On request If living in ‘a resort in a resort’ is not private enough, there is the Owner’s Villa at the Cheval Blanc Randheli in Maldives—a villa sprawled across its own dedicated island, accessible by a private berth and jetty. It has four bedrooms, its own spa, a 25-metre swimming pool, and the beaches and gardens are all private. The main house has three reception rooms where you could lounge about, play the piano or have cocktails at the bar. The villa has its own private website that you need to request login details for. So, needless to say, the whole affair is private. by

monica bathija

The best things money can buy

Time

In the thIck of thIngs

A pick of the world’s best-located (and bestequipped) hotels for your next business trip

By JAsodhArA BAnerJee

Putting up at a hotel that is at the heart of all the action saves you precious time while rushing between meetings, lunches, or deal-making cocktail dos. even better if it keeps your mind free of niggles, like a freshly-laundered set of clothes or reliable Wifi connections.

78 | forbes india December 9, 2016

The landmarK mandarin orienTal, hong Kong  It is the smallest of the three Mandarin Oriental properties in Hong Kong, but its rooms and suites are the city’s largest.  The hotel is located in the heart of the city’s Central Business District, and has the best shopping and

business locales, night life and entertainment options within a few minutes’ walk.  It is also a stone’s throw from the Airport Express station, which links it to the Hong Kong International Airport, business convention centres, and the

Central MTR station.  Rooms come with large working desks, and high-speed wired and wireless internet where you can plug in up to four devices, including an interactive entertainment system.

 For those in the habit (or need) of working late, there’s a personal pantry, and a Nespresso coffee machine.  And when you are done with work, there’s a Ploh goose-down bed waiting for you.

/ The langham Place, new YorK  In New York hotels, the view from your window can be the dealmaker. And few things look better than the Empire State Building. The Langham Place’s enviable location on Fifth Avenue ensures this, and that you are a 15-minute walk away from Times Square, Rockefeller Center and Grand Central Terminal.  Rooms are spacious, considering it’s Manhattan.

Suites come with separate sitting areas—so you don’t have to have meetings on your bed—a full kitchen (fitted with Miele appliances), and free WiFi.  Suites also have inroom washing and drying facilities; you could also get some pressed for free on the day you arrive.  If you must rush around in the neighbourhood for your meetings, you have the hotel’s chauffeured Jaguar XJL at your service.  And to wrap up your day, soak yourself in the deep bathtub, while watching the in-mirror telly or the cityscape from one of the expansive windows.

▲

/ The Peninsula, hong Kong

 The Grand Dame of the Far East, as it calls itself, is the oldest hotel in Hong Kong. So prepare for loads of old-world charm. (More on location.)  If you want to make it real quick from the airport to the hotel, hop on to The Peninsula’s helicopter service that will take you there in 10 minutes flat.

Or, if style, and not time, is your priority, opt for a Rolls-Royce from the hotel’s fleet instead.  Wake up to bedside and desk tablets that are interactive and fully customisable in 11 languages; punch in your

preferences on the touchscreen panel on the walls to control in-room facilities.

Available VOIP means you can make long-distance calls for free (and check if your team is goofing off in your absence).  Make yourself a steaming cup of tea or coffee at the in-room facility, or swig a drink from the minibar after a hard day’s work. All this while you watch free HD movies.  If this isn’t enough, check yourself in to any of the 14 private treatment rooms at the spa, all with spectacular views of the Victoria Harbour.

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The best things money can buy

Time ▼

/ esTablishmenT hoTel, sYdneY

 Located in the heart of Sydney’s Central Business District, it is a short stroll from the Opera House, the Harbour Bridge and Circular Quay, and is housed in a building that was originally a warehouse.

But don’t let the façade fool you.  If you like to start your day with a quiet breakfast, head to the Establishment Garden—a pocket of peace amid the CBD’s bustle— with its atrium-style glass

roof, and columns dating back to the building’s origin in the 1890s.  If you are a foodie, this one’s for you: The hotel houses three of the city’s best restaurants—take your pick from fresh sushi at

Sushi E, modern Australian cuisine at Est, or Cantonese food at Mr Wong—three bars and a nightclub.  And if you must return to your room, there are iPads, free WiFi and a Bose surround sound system.

/ claridges, london  At Claridges at Mayfair, you can experience the best that London has to offer, be it art galleries, luxury shopping or fine dining. Bond Street, with its designer stores, Oxford Street with its bustle, Burlington Arcade with its luxury quotient, and Piccadilly are just a short walk away. And if quietude is what you seek, head to Green Park or Hyde Park.  Suites come with separate 80 | forbes india December 9, 2016

sitting areas for dining and meetings, and with a personal butler for your every whim.  The hotel’s famed afternoon tea can be turned into a business meeting like no other: Pick from a selection of over 20 kinds of all-natural tea, served with finger sandwiches, scones and pastries.  If you don’t feel like heading to your room at the end of the day, go to the Map Room for the day’s developments, read and relax.

The best things money can buy

Time

Time-warp

Courtesy: overdrive

if time is of the essence—and not the number on your cheque—knowing which vehicle can transport you at incredible speeds is essential. here’s a list of not just the truly fast, but also the truly exotic and exclusive cars that don’t skimp on luxury. and the best part? They look gorgeous even while parked

82 | forbes india December 9, 2016

machines The shortest distance between two points is not always a straight line. sometimes, it’s the fastest set of wheels By pradeB Biswas

Hennessey Venom GT This is one car that will end up scaring the speed demon inside you. It will be an understatement to say it was built for speed; the Hennessey Venom GT will shatter and redevelop your sense of speed. Sample this: It accelerates from 0-300 kmph in 13.63 seconds and attained a true top speed of 435.31 kmph on the shuttle landing runway at the Kennedy Space Center in 2014.

It is able to attain such incredible velocities in such ridiculously short spans of time courtesy a 7-litre V8 twin turbocharged engine that delivers 1,261 PS of power and 1,565 Nm of torque.

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The best things money can buy

Time BraBus 850 6.0 BiTurBo Coupè Brabus is a German aftermarket highend tuning company that specialises in Mercedes-Benz vehicles.

The Brabus 850 6.0 Biturbo Coupè utilises the Mercedes-Benz

S63 Coupè as a base but owing to some hardcore mechanical modifications, it delivers blistering quick performance. Its engine makes 849 PS and 1,419 Nm of torque which is a

/ LamBorGHini aVenTador sV Coupè Like all Lamborghini cars, this one too gets an aggressive styling. However, what sets it apart is that it gains speed in a brutal and violent manner. The 0-100 kmph run is completed in 2.8 seconds, while the 0-200 kmph run takes only 8.6 seconds.

Lamborghini says that the Aventador SV Coupè will sprint to 300 kmph in 24 seconds.

The 6.5-litre V12 engine makes 750 PS and 690 Nm of torque and sends the power to all four wheels. It can attain a top speed of 350 kmph. Just pray that this raging bull doesn’t end up meeting a real one on our highway.

84 | forbes india December 9, 2016

lot more than what the standard S63 Coupè makes. This Brabus creation can sprint to 200 kmph in 9.4 seconds and attain a top speed of 350 kmph. The cabin offers an array of luxury

features that will probably take days to list out. The design offers a nice blend of aggression and elegance but sadly no one will be able to notice considering the speeds it is capable of.

/ Ferrari 488 GTB It is one of the fastest Ferraris on sale. The 488 GTB is powered by a 4-litre turbocharged V8 engine that makes 670 PS and 760 Nm of torque. It propels the car from standstill to 100 kmph in 3 seconds, and to 200 kmph in an impressive 8.3 seconds; its top speed

is 330 kmph. Ferrari says that it utilised its decades of motorsport experience to develop the GTB. And the numbers prove that they have managed to deliver authentic race track levels of performance in a road-legal car that looks absolutely stunning.

/ 9FF GTurBo If a Porsche GT3 RS is too mainstream for you and doesn’t meet your definition of fast, then German tuner 9ff can help.

Based on the GT3 RS, the 9ff GTurbo retains the 3.9-litre engine, which gets some serious modifications to push out 1,199 PS of power and 1,150 Nm of torque. Exploiting the power on a clean stretch of smooth tarmac will get you to 300 kmph in 12.4 seconds, and a top speed of 395 kmph. 9ff will also carry out exterior and interior modifications as per your request. Now, that’s like having a personalised fast car unlike any other.

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The best things money can buy

Comfort

The comforT zone

The most comfortable car seats that you might want to sink into

By PradeB Biswas

if comfort is what you look for, and not the price tag, these are the wheels you should be considering. These select vehicles are built for those who not just have fine tastes, but also deserve the most comfortable ride home after a hard day’s work, or a never-ending flight. so kick back, and relax.

Courtesy: overdrive

▲

/ Range RoveR Sv autobiogRaphy LWb

The Range Rover SV Autobiography proves that an SUV with high ground clearance and four-wheel drive can offer a level of opulence on a par with the most luxurious limousines. LWB stands for Long Wheel Base, which primarily means you get a longer cabin with more space to pack in several more goodies.

The rear seats can

recline by up to 17 degrees, and you get a collapsible calf support extension. The 10.2-inch screens in the rear, a chiller compartment in the centre console, and LED mood lighting will ensure you remain comfortable, irrespective of the surface the Range Rover treads on. The centre armrest hides an electrically operated table with in-built cup holders

86 | forbes india December 9, 2016

and a USB port. The entire cabin gets a generous dose of the highest grade of leather, wood and metal.

You also have the ‘deep twist pile mohair carpet mats’, as if those sink-in deep seats weren’t enough.

And then there are tons of other features that you’d rather leave to your driver to figure out while you simply cross countries, lounging in the rear!

/ RoLLS-Royce phantom extended WheeLbaSe When it comes to automobile comfort, few do it better than Rolls-Royce.

This British marque is the benchmark establishment in automotive luxury, blending handmade craftsmanship with ultraluxurious materials and manufacturing techniques.

Sixty pairs of skilled hands

build a single Rolls-Royce Phantom over seven days; the work includes five coats of paint, and a five-hour hand polish.

To ensure the ultimate in comfort, the car’s impeccably soft leather upholstery is sourced from cattle reared on farms in temperate regions so that

the hide does not dry out.

Bulls are preferred over cows as their hides are not stretched by calving, and the cattle are reared on open farms without barbed wire fences that might damage the leather. It all sounds a bit much, but what you then get in a RollsRoyce is unblemished and

soft leather upholstery that you’d want to sink into.

Almost every RollsRoyce car that drives out of the factory at Goodwood, West Sussex, is unique thanks to the level of customisation the company offers. So, go right ahead, and demand those diamonds on the dashboard.

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The best things money can buy

Comfort / meRcedeS-maybach S-cLaSS puLLman The Mercedes-Maybach S-Class Pullman has, literally, stretched the boundaries of automotive comfort and luxury. It offers an extraordinary blend of craftsmanship and space inside a luxury limousine. The cabin of the S-Class Pullman is opulent enough to make even the most discerning billionaire look up and take notice. It’s not just the generous layers of highgrade leather and wood, but its timelessness that is so attractive. You aren’t simply buying a car, you are investing in a car.

The driver and the passenger cabin areas are separated by an electrically operated partition that can be changed from transparent to opaque at the touch of a button. The roof liner in the passenger cabin gets three analogue

instruments that show the outside temperature, time and vehicle speed. Do you really need more?

You have a choice of two- or four-seat layouts. In the latter, two passengers are seated in the direction of travel while the other occupants are seated on fold-down seats. The forward facing seats can be reclined by 43.5 degrees and no other car comes close to the S-Class Pullman in terms of legroom offered. The rear seats get calf support, which offers length and angle adjustments, while the head restraints get extra cushioning. The seats will massage you, warm or cool you, and even provide sufficient bracing to prevent your precious Chablis from spilling over.

The OuTlier: hOnda GOldwinG

Usually, one equates splendid seat comfort only with luxury cars and SUVs. However, there is one motorcycle that is renowned globally for keeping riders comfortable.

What makes the Honda Goldwing desirable is that it is one of the best luxury touring motorcycles money can buy. The engine delivers power in a smooth manner, while the seats

are as large as chairs. Both the rider and the pillion get backrests that wrap around them. The large fairing and electrically adjustable windscreen ensure good wind protection.

It gets five-way adjustable heated grips, adjustable and heated seats, foot warming system, 150 litres of luggage capacity and a six-speaker 80 watt surround sound system with USB connectivity.

There’s also cruise control, an electric reverse system and an integrated airbag.

This is indeed a chariot on two wheels.

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/ audi R8 v10 pLuS

Usually, supercars are not perceived to be practical or comfortable to drive around daily. That’s precisely what sets the Audi R8 V10 Plus apart. It isn’t as extremely

tuned as its peers, which means that the suspension and seats have been set up in the interest of delivering usable performance. Make no mistake, for it is a fast

/ bentLey bentayga

car; it sprints to 100 kmph in 3.6 seconds and crosses 200 kmph in around 11 seconds. The suspension does a commendable job at soaking up road imperfections and the R8 V10 Plus has a reasonable ground clearance by supercar standards.

Its cabin isn’t built for plushness compared to other luxury cars. This is a place where function overpowers form. However, it still gets enough funk and oomph to set the right mood. You want a

fast car, you want a dramatic car, you want action— this cabin is just the place to be.

And then there are the seats. The bucket seats done up in Nappa leather hold and grip and cushion you unlike anything else on earth. This is a sportscar’s most intimate envelop, yet it’s not stiff and uncomfortable. And they have a sterling appreciation of luxury as well, decked as they are in either Nappa fine grain leather or Alcantara, your choice.

The Bentayga is the first SUV to roll out of the British marque’s stables.

It proves that keeping up with the changing times and needs of consumers doesn’t mean deviating from what Bentley does best: Providing ridiculous levels of opulence in some of the best driving cars in the world. As Bentley likes to claim, the Bentayga has been “conceived and crafted to open up a realm of luxury and performance previously unattainable in this sector”.

The Bentayga is not your ordinary SUV; it performs just as well outdoors as it does within urban areas.

As a luxury automobile manufacturer, Bentley is known to deliver majestic levels of luxury and the Bentayga is no different.

From ventilated seats with massage function to dual sun visors to high grade leather and wood trims, the cabin clearly has it all. Wine coolers are also offered as an option and, just like a king’s throne, one can

simply sit back and watch the world go by while enjoying a drink. The perfect ergonomics won’t give you a chance to experience any discomfort.

Audiophiles can opt for the Naim for Bentley audio system, which gets 18 speakers and an output of 1,950 watts. The boot holds a bench that slides out allowing people to sit comfortably while the bootlid is open. There’s also a button that lowers the air suspension to ensure people can get off easily. If that does not easily sway you, then you could also opt for the exclusive bespoke lunch box with its china and silver ware or the Breitling Mulliner Tourbillon, which sits on the dashboard and is the world’s most expensive in-car clock. Let’s just say that the price of that clock is just a wee bit more than the base Bentayga itself.

How time has changed for automotive comfort and luxury!

December 9, 2016

forbes india | 89

The best things money can buy

Comfort

Served on a (mid-air) platter Serving gourmet food in-flight takes much more than just the right ingredients

By JaSodhara BanerJee

I

n 2009, advertising executive Oliver Beale shot to global fame after his letter to Richard Branson, owner of Virgin Airlines, complaining about the airline’s food went viral.

The 29-year-old executive hilariously described the food he was served on a Mumbai-Frankfurt flight, writing, “What is this?

Why have I been given it? What have I done to deserve this? And, which one is the starter, which one is the dessert?”

Along with photographs of the food that was served, the letter goes on to say, “You don’t get to a position like yours, Richard, with anything less than a generous sprinkling of observational power; so I know you would have spotted the tomato next to the two yellow shafts of sponge on the left. Yes, it’s next to the sponge shaft without the green paste.

That’s got to be the clue hasn’t it? No sane person would serve dessert with a tomato, would he? Well answer this Richard, what sort of an animal would serve a dessert with peas in it?”

The letter attained such

notoriety that not only was Branson “laughing his head off” at it, but he also called up Beale and the two “had a good laugh together”.

It also inspired theatre and film actor Rajit Kapoor to enact a skit (staged at Prithvi Theatre, Mumbai in 2013) where he recites an open letter to the owner of an airline about the miserable food that he was served on a flight (accompanied by large photographs of the said miserable samples).

That airline food rarely leaves passengers hungry for more is universally accepted. Nothing tastes quite right: What should be tasty is bland, what should be juicy is dry, what should be moist is crumbly.

Even tea and coffee are not spared. But it would be too convenient to simply blame the chef.

Cruising at 35,000 feet above sea level comes with its side effects. Namely, a pressurised cabin that dulls taste buds, white noise that adds to this dulling, cool and dry ambient air that not only dries our nose (and even causes it to bleed) but also hampers our sense of smell. The same ambient conditions cause food to

90 | forbes india December 9, 2016

rapidly go cold, dry up, or even crumble, while reheating might make things worse.

There are also factors such as flight timings (how good would food taste if we are sleep deprived, bonetired and cranky?) and flight durations (long hours of storage does no good to most cooked dishes), and the issue of mismatch between a flier’s preference and familiarity with the food served on a particular flight. For instance, “the two yellow shafts of sponge” that Beale writes of in his letter could look like two slices of dhokla to someone familiar with Indian food. To cater to the preferences of different fliers, airlines need to have enough food options, without going overboard on quantity because there is always a space crunch and weight limit that has to be considered while operating a flight kitchen.

So, now that we know what can go wrong, how do some airlines still manage to serve gourmet food in their business class and first class sections?

The first step is to collaborate with some of the best chefs in the

The Shahi Thali, first designed by Sanjeev Kapoor as part of Singapore Airlines’ first class dining, has since been replicated by other airlines

world. For instance, the international culinary panel of Singapore Airlines, one of the highest-rated airlines for in-flight dining, includes Sanjeev Kapoor, one of India’s best known culinary experts, along with Italy’s Carlo Cracco, owner of restaurant Ristorante Cracco that has two Michelin stars, Japan’s Yoshihiro Murata, a kaiseki master, whose restaurant has been awarded seven Michelin stars (the highest in Japan), and Suzanne Goin, chef and owner of three award-winning

restaurants in the US. Qatar Airways, whose in-flight dining experience is also rated as one of the best, has a partnership with Nobu Matsuhisa, famous for his Nobu and Matsuhisa restaurants.

“We have a team of in-house chefs who work closely with our catering providers around the world and our cabin crew to provide exceptional dining as part of our multiple award-winning business class service,” says Rossen Dimitrov, senior vice president, customer

experience, Qatar Airways.

“Our team of experts takes into account the flavours, textures, aromas, taste and presentation of the dishes to ensure they create a memorable dining experience.”

“It is really no rocket science,” says Kapoor.

“There are known factors, [such as cabin temperature, pressure and humidity levels] that you work around.” For instance, he says, you know that the food on the menu will first be cooked, then frozen and then reheated in-flight.

are reheated. For instance, leafy greens like spinach won’t retain their bright green colour, prawns might get chewy and deep-fried food like potato chips will not remain crisp.

Similarly, the food will need to be seasoned more than usual in order to heighten flavours and aromas, which will compensate for the 30 percent reduction in taste sensations. “But you also need to take into account that you are serving different kinds of flavours in an enclosed space,” adds Kapoor, which means you would not, ideally, want the cabin to overwhelmingly smell of any particular food item.

Menus are also designed keeping in mind flight routers and timings.

“Singapore Airlines had conducted a research some years ago, in the Indian cities from which it operates, to find out what fliers prefer to eat. We learnt that when people are going away from their homes— “So, gravies on a holiday are good as or business they inherently trip—they prefer have moisture more elaborate that prevents meals that are the food from reminiscent of drying up,” he restaurant food,” adds. “Indian says Kapoor. food is lucky “However, when that way.”

Chef Sanjeev Kapoor they are returning Food items home from their trip, they that change form with prefer home-style cooking.” freezing and reheating, or With this piece of those that need very high information, Kapoor had temperatures to reheat, designed the Shahi Thali cannot be used. A lot of that was part of Singapore ingredients tend to become Airlines’ first class dining dry, rubbery, limp or on Indian routes, which change colour when they December 9, 2016

forbes india | 91

The best things money can buy

Comfort

There is always a space crunch and weight limit to consider while designing a flight menu

has since been replicated by other airlines. “We even had to research the clay pot in which the curd was served so that it does not add significantly to the total weight of the dish,” he says.

Training catering and cabin crew members in plating and presentation is equally important. “Photographs of each dish are given to staff members so that they know exactly how the food should look and how it is to be served,” Kapoor tells Forbes India. It also needs to be kept in mind that there are limitations when it comes to the use of cutlery and space, both while serving and eating.

“We also learnt [from the research] that people are not averse to having a mix of different cuisines on

their trays,” he says. “For instance, you could have chicken cooked in Andhra style, along with kofta in gravy, which is North Indian.” Fliers are also open to experimenting with desserts, and are happy to go beyond the standard gulab jamun.

“Singapore Airlines ensures that local delicacies are offered on board not only for the travellers’ comfort of having homestyle food but also for beginning their experience to the destination, from the time they board,” says David Lim, general manager, India, Singapore Airlines. Consequently, Ming Jia Zhen Zhuan will be served on Chinese routes, Shahi Thali on Indian routes and Kyo-

92 | forbes india December 9, 2016

Kaiseki (available in first class and suites) and Hanakoireki (in business class) on Japanese routes.

But the menu that has thus been designed needs to pass the taste test. “We test all our chefs’ creations under pressure, literally,” says Lim. “We bring their dishes into a simulated pressurised cabin, and spend hours there, sampling and adjusting the flavours, so our food can taste its best at 35,000 feet.”

Customer feedback is a crucial channel of information on works such as in-flight dining.

However, often, it is not ‘feedback’ but booking requests that help airlines know what their guests want to eat. Passengers, especially on long-haul

flights, often fill in their dietary preferences while booking their flights, feeding in more information than simply ‘vegetarian’ or ‘nonvegetarian’. “This makes it easier for airlines to decide on the dishes they plan to serve on a specific flight,” says Kapoor.

Flight routes and timings also decide what meal (breakfast, lunch or dinner) or snack is being served in-flight. For instance, as Dimitrov says, “The range of dishes on our menu is also selected to meet the needs of our passengers who may be travelling through multiple time zones, so that they may choose from a variety of options, from formal dining to light bites or snack options.”

Kapoor, for instance, who had just boarded a morning flight from Mumbai to Abu Dhabi while speaking on the phone for this article, picked up his menu only to find that it was for lunch.

“I actually want some breakfast,” he says. “For a 10 am flight, we have to be at the airport by 8 am, which means I have to leave home by 7 am.

Yes, I could possibly eat something at the airport lounge, but everybody may not have that option.”

The fact that airlines often end up serving food according to their own functioning rather than what the flier would want to eat, is something that needs to change. “I guess it is still an evolving process,” he sighs.

The best things money can buy

Comfort

The long sTreTch

Business class flight seats that ensure your long-distance flight is as comfortable as your favourite sofa back home

By Jasodhara BanerJee

94 | forbes india December 9, 2016

Japan airlines (Jal)  All seats in the JAL Sky Suite have direct access to the aisle, which means greater privacy and minimal disturbance for all fliers.  The seats also come with the largest (in its class) TV screens (23 inches), and noise cancelling headphones from Sony.  There is ample space for everything—your magazines, reading glasses,

cabin luggage, meal trays and, of course, your legs!  Choose from Japanese or Western cuisine for your meals (or select a special Donburi menu which combines food from each European country), and simply tap on the touchpanel control to order à la carte at any time you fancy.

The business class also has its own full-service bar.

/ eVa air overnight kits (which are designed by German luggage manufacturers Rimowa); noise-cancelling headphones that are ergonomically designed, and which come with a convenient ‘mute’ function that lets you keep your headphones on while having a chat with someone; retractable armrests; a shoe cabinet and space to hang up your jacket.

When your flight begins with a glass of champagne, the rest of it promises to be equally good. EVA Air’s Royal Laurel Class of business class seats offer privacy and space in equal measure, combined with great in-flight food and service. However, it is the little thoughtful touches that make the difference: Harnn luxury products in the restrooms and in your

/ etihad  When you fly business class in Etihad’s A380, you can even have mid-air meetings (which might, of course, not make you the most popular boss!). The Lobby, located on the upper deck of the aircraft, can seat up to six people and is fitted with connectivity ports.

Post meeting, to score some brownie points with your team, you could relax and watch a live game on the widescreen TV.  Also available on the A380s, and the 787 Dreamliners, are Business Studios, which not only give you more space, but also more privacy. Seats have been upholstered by Poltrona Frau and come with a privacy screen, a meal table, a separate work table and storage space.  Every seat comes with Wi-Fi ports, touch-screen televisions and noisecancelling headphones, along with toiletries designed specially by luxury brand Scaramouche + Fandango.

▲

/ Qatar airways

 Qatar Airways’ association with chef Nobuyuki 'Nobu' Matsuhisa—renowned for The Matsuhisa Restaurants and the Nobu Restaurants— means you are going to be treated to some of the best food in the world. And an on-demand à la carte menu means you can ask for anything, any time from appetizers and main courses that include mezze platters and salads, Iranian grilled meats or roasted salmon.

Accompanying them is an extensive wine list.  In-flight entertainment takes on a new mode

through a dual-screen interface which gives you the option of watching a film on your personal screen, while you play a game on your hand-held device.  Wi-Fi services, charging facilities for your laptops and mobile phones, and a spacious working area lets you stay connected with your team and keep working on your flight.  If you’d rather get some rest, then slip into your pajamas, and make good use of the bag full of Giorgio Armani toiletries.

December 9, 2016

forbes india | 95

The best things money can buy

Comfort

A clAss ApArt

singapore Airlines’ new aircraft ensure shorter, roomier flights for business-class passengers

By Anshul DhAmijA

F

lying to San Francisco just got more comfortable.

Thanks to Singapore Airlines’ new, non-stop Singapore-San Francisco flight, which not just takes a few hours less than its earlier flights, but also deploys the spanking new Airbus A350-900 aircraft, that makes for a more relaxing journey.

Earlier, Singapore Airlines (SIA) had a twicedaily service with one flight operating via Hong Kong and the other via Seoul.

These two-stop options meant passengers flying from India preferred West Asian or European carriers, that offer a one-stop connection (through Dubai, Abu Dhabi or Frankfurt), or Air India, which has a daily 14.5-hour New Delhi-San Francisco flight.

With SIA’s new direct flight to San Francisco, travel time between India’s tech capital Bengaluru and Silicon Valley via Singapore has reduced by three to five hours, to 22.15 hours.

What makes this flight more comfortable than the usual is the advanced technology and the superior

operating efficiency of the A350-900 aircraft, which comes with higher ceilings, larger windows, an extrawide body, and lighting and cabin pressure designed to reduce jet lag. (Even while flying at 40,000 feet above sea level, the cabin pressure is maintained at about 6,000 feet above mean sea level, instead of the usual

96 | forbes india December 9, 2016

7,000 feet.) Increased fuel efficiency of the A350s means airlines such as SIA have the potential to open up even more ultra long-haul routes such as Singapore to Los Angeles and New York, which are expected to begin in 2018. “[With a] stylish combination of enhanced seat comfort, intuitive

space, convenience and leading-edge innovation, the Singapore Airlines’ business class detracts from the norm,” is how David Lim, general manager India, Singapore Airlines, describes the latest offering from SIA. The new business class seats measure 28 inches in width (and 60 inches in

Measuring up When compared to the business class of Qatar Airways, SIA’s offering falls short on one front: The business class in Qatar Airways’ A350 aircraft has a recreational bar area, which is a nice getaway space to chat with fellow passengers over drinks. (This, however, also means Qatar Airways has 36 business-class seats, compared with SIA’s 42.)

Qatar Airways also provides Giorgio Armani amenity kits to businessclass passengers, flying from Doha to Boston in the A350, whereas SIA provides Salvatore Ferragamo amenity kits only to its first-class passengers.

pitch), which, the airline claims, is “almost 50 percent wider than most products in this class”. A quick check on seatguru. com shows that Emirates, Qatar Airways and Etihad Airways have business class seats that measure between 20 and 22 inches in width.

Developed along with Singapore-based design

firm James Park Associates, which has also designed SIA’s award-winning first class suites, these seats are arranged in a 1-2-1 configuration, which means every passenger gets direct access to the aisle.

While the seats convert into 78-inch flat beds, they also have additional seating positions, such as the Lazy

Z and Sundeck. At the foot of each seat is an ottoman.

The seats, handcrafted from Scottish leather, come with a cushioned headboard when fully flat, along with linen, duvet and pillows. Once tucked in, it feels as if you are in a mini first-class suite, albeit without a door.

Passengers seated in the two middle aisle seats can experience the same level of privacy as passengers at window seats thanks to the partition (that can be pulled out) between the two middle aisle seats.

The seats feel more spacious and clutter-free because of the adequate storage space all around: There is a car-like glove compartment (internally lit when open, making it easier to rummage through even without the overhead light) for your watch, jewellery, mobile phones and passport; on one side of the seat there is space to store your other gadgets, such as laptop or tablet; at the foot of your seat is further space to accommodate a small bag (and your footwear), while overhead is yet another storage space for your cabin baggage.

In-flight entertainment gets bigger and better with an 18-inch screen that can be operated by a touch-

screen handset near the seat’s armrest. So, adjust your seating position to Sundeck (a personal preference), which lets you stretch your legs or fold them, slip on the noisecancelling headphones (they block out the ambient engine noise completely), and settle down with your favourite movie.

And, of course, there is an exhaustive à la carte dining menu to choose from. The service is of highquality with the stewards and air-hostesses always ready to serve, whatever be the hour. When you are ready to nap, slip on the complimentary eyeshades and socks for a snooze. To freshen up, the toilets are well-stocked with hand creams, face mist, and body mist from luxury fragrance brand Miller Harris. And when you are ready to step on the ground once again, just check yourself in the small mirror fixed next to the entertainment screen so that you are putting your best face forward.

After all, when you are paying Rs 1.77 lakh for a one-way ticket from Bengaluru to San Francisco, you deserve to look your best when you get off.

(The writer travelled to San Francisco at the invitation of Singapore Airlines)

December 9, 2016

forbes india | 97

The best things money can buy

Comfort

For the chair person sitting at the desk all day need not feel like it, thanks to the science of ergonomics By shruti Venkatesh & angad singh thakur

Freedom Headrest, from Humanscale Price: $1,279 onwards “The problem with many ergonomically designed office chairs is that they have all these knobs and levers,” says Niels Diffrient, creator of the Freedom Chair, in an interview to The New York Times in 2003.

His response to the problem was a chair that minimised the use of knobs and levers, and was flexible enough to adapt to the user. It was, in a word, intuitive; this means the chair moves along with your body, without you having to pull or push levers and buttons. Its latest variants have armrests that move up and down in tandem, and a headrest that moves with the user, even as they recline.

Aeron, from Herman Miller Price: $780

▲ / Gesture, Price: $900

from Steelcase

US-based office furniture maker Steelcase undertook a global posture study before creating Gesture. It observed the postural behaviour of 2,000 people in 11 countries across various positions and patterns of usage before coming up with this chair.

Gesture is designed keeping in mind the seamless way in which people use

98 | forbes india December 9, 2016

technology. It adapts to changes in a person’s posture with the use of different devices. The armrests swivel outward and allow for a range of seating positions, the back provides lumbar support even while reclining, and the seat has soft edges, just in case you feel like sitting sideways.

Prior to making Aeron in 1994, its designers Bill Stumpf and Don Chadwick spoke to people who spent a lot of time in their chairs, mostly older people in retirement centres, to know what more they would want their chair to do.

Aeron is considered to be a revolution in ergonomics: It distributes weight evenly, provides better aeration (ventilation), eliminates heat build-up, and supports the natural ways in which the body moves. The Museum of Modern Art included it in its permanent collection even before the first piece was sold.

▼ / Fern, from Price: On request

Haworth

A focus on ‘sitting instead of seating’ is the defining characteristic of Fern, according to its maker Haworth. The chair has been designed to suit a diverse working population, and promises to respond to every movement of its users. Unlike most chairs, the suspension architecture of Fern is located in the

centre, thereby making the edges of the chair soft.

The centred structure also adjusts differently to every user and provides complete support to their upper-, middle- and lower back areas. That, coupled with a flexible seat, is Fern’s attempt to ensure that discomfort does not come in the way of work.

/ Oxford, from Republic of Fritz Hansen

▲

Price: $2,160 onwards The original Oxford chair was designed by Danish architect and designer Arne Jacobsen for professors at St Catherine’s College at the University of Oxford in 1963. The ‘revitalised’ variants attempt to take away some of the stodginess that would be associated with a ‘professor’s chair’.

“We decided to revitalise the iconic Oxford chair in order to give it a more

contemporary look and thus, renewed relevance,” says Christian Andresen, head of design, Republic of Fritz Hansen. The iconic elongated high-back of the chair is now optional; the Premium variant comes with a thicker layer of foam and is available in a variety of colours. One can, however, always choose to go back to the basics with the Classic variant in monochrome black.

December 9, 2016

forbes india | 99

F o r b e s I n d I a L e a d e r s h I p awa r d s 2 0 1 6

remember the titans

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forbes IndIa photo team

orporate India’s most iconic and respected leaders gathered at Trident, Nariman Point, on November 8 for the sixth edition of the Forbes India Leadership Awards (FILA) that celebrates excellence, innovation and transformational leadership in the country. The event feted CEOs, entrepreneurs and business leaders across nine categories and was a platform for industry stalwarts to share insights. The evening was replete with stimulating discussions that included intense, Oxfordstyle debates as well as lecture sessions on topics ranging from the current NPA mess to corporate governance and the workplace of the future. In the end, they all agreed on the most crucial takeaway: When the going gets tough, just keep things simple and look ahead.

The winners: (seated left to right) Maruti Suzuki’s Kenichi Ayukawa, Ramesh Iyer of Mahindra Finance, Lupin’s Nilesh and Vinita Gupta, Cipla’s YK Hamied, Sutirtha Bhattacharya of Coal India, Aravind Eye Care’s P Namperumalsamy; (standing) Pranav and Shaunak Amin of Alembic Pharmaceuticals

100 | forbes india december 9, 2016

The sixth edition of the annual awards celebrates leaders with grit and fortitude

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1. Zia Mody, founder and senior partner, AZB & Partners, gives away the Outstanding Startup award to Paytm founder Vijay Shekhar Sharma (extreme right) as former Sebi chief M Damodaran (second from left) and Nipun Mahajan of Fiat India look on 2. Ayukawa (right) receives the Best CEO-MNC award from TeamLease founder and chairman Manish Sabharwal (centre) and McKinsey India MD Noshir Kaka

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3. Vinita and Nilesh Gupta (second and third from left) receive the Entrepreneur for the Year award from Marico chairman Harsh Mariwala, seen here with Godrej group chairman Adi Godrej and Forbes India editor Sourav Majumdar 4. Maruti Suzuki chairman RC Bhargava (centre) hands over the Best CEO-Public Sector award to Coal India’s Sutirtha Bhattacharya (right) 5. Lifetime Achievement awardee YK Hamied (second from left) receives the award from Majumdar 6. Hamied and Godrej strike a pose 7. Rohan Murty, a Harvard fellow and son of Infosys co-founder NR Narayana Murthy, gives a talk on how software will reinvent the workplace 8. The cover of the special issue on the 2016 Forbes India Leadership Awards being unveiled on stage 9. Hamied and Mody catch up outside the boardroom 10. Damodaran and Sanjay Nayar (right), CEO of KKR India, share a laugh 11. Paytm’s Sharma exchanges notes with Harsh Goenka (right), chairman of RPG Enterprises 12. Latha Venkatesh, executive editor at CNBC TV18, hosts a fireside chat with Hamied and the Guptas 13. V Vaidyanathan (right), executive chairman of Capital First, with Jalaj Dani, president international at Asian Paints 14. Zarin Daruwala, CEO, Standard Chartered Bank India, is engrossed during the event 15. Alembic’s Chirayu Amin (second from right) introduces sons Pranav and Shaunak to Hamied 16. Motilal Oswal joint MD Raamdeo Agrawal speaks on India as a trillion dollar opportunity

Leadership Lounge Partner

Hospitality Partner

Knowledge Partner

For more updates on the Forbes India Leadership Awards visit: http://forbesindia.com/leadershipawards

december 9, 2016

forbes india | 103

cross borDEr nExt billion-Dollar startups

Free Market Philanthropy GoFundMe is changing the way people give money to causes big and small, but it is not a charity or a foundation. It’s a highly profitable company with a brilliantly simple business model

By SuSan adamS

Eric MillEttE For ForbEs

L

ate in 2012 Eliza O’Neill, a lively, talkative threeyear-old growing up in Columbia, South Carolina, started stumbling over her words.

“Something was just not right,” recalls her father, Glenn, then a procurement manager for a data-storage company.

A series of tests brought devastating news. Eliza had Sanfilippo syndrome, a rare and incurable disease that would erase her ability to speak, destroy her motor function and kill her before she reached adulthood.

Desperate, Glenn and his wife, Cara, a pediatrician, discovered that a hospital researcher was working on an experimental gene therapy that had shown promising results in mice. But the trial needed funding.

The O’Neills quickly set up a tax-

104 | forbes india december 9 , 2016

exempt foundation and, at no cost, posted a fundraising appeal on a three-year-old crowdfunding site called GoFundMe. Anyone moved to contribute could click a big rectangular ‘Donate Now’ button and share the good deed on social media.

The O’Neills’ funding goal was $1 million. Three years later, spurred by a three-minute video about Eliza that has been viewed on Facebook and YouTube nearly one million times, 37,000 donors around the world have given the O’Neills’ foundation more than $2 million via GoFundMe. This May Eliza became the first child to receive the experimental therapy, and her parents are hopeful her condition will improve. “It’s a miracle that this happened,” Glenn says.

It has also been very good for

GoFundme CEO Rob Solomon: “We’ll soon be the largest giving organisation in the world, larger than the Gates Foundation.”

cross borDEr

goFunDME

GoFundMe, which takes a 5 percent cut of the money raised on the site.

For hosting the O’Neills’ appeal, it has reaped more than $100,000.

GoFundMe is not a philanthropy; it is an increasingly valuable for-profit business prominent on Forbes’s 2016 list of next billion-dollar startups.

After achieving a reported valuation of $600 million in a July 2015 venture capital deal, it hit a growth spurt. In its first five years before the deal it channelled $1 billion in donations.

Then it took just nine months to hit the second billion and only seven months to move a third billion in donations. For 2016 GoFundMe is projecting revenue of $100 million and an operating profit margin of more than 20 percent. GoFundMe is more than twice the size of the world’s next-largest crowdfunding site, Kickstarter, which focuses on artistic projects and new products.

Like GoFundMe, Kickstarter takes 5 percent of the money it raises, though it doesn’t collect if campaigns don’t reach their goals. GoFundMe collects no matter what. It also imposes a 2.9 percent credit card processing fee plus 30 cents per donation.

GoFundMe’s brass are unapologetic capitalists who see the profit motive as perfectly aligning with the company’s objective: Getting more people to give more money more efficiently to a vast array of “personal causes”. Because GoFundMe’s profits directly correlate with how much money it can persuade others to give away, the business is highly incentivised to increase the total amount people donate to others.

The one million fundraisers pumping away on the site run the gamut from the Cure Sanfilippo Foundation to disaster relief for victims of the August Baton Rouge floods (6,400 GoFundMe campaigns have raised $11.2 million) to a couple who want help paying for their Prague honeymoon.

“Nobody’s been able to really harness the power of the people to raise funds,” says CEO Rob Solomon, 49, a UC Berkeley grad who grew up 106 | forbes india december 9 , 2016

in Manhattan and Miami while his activist mother protested anti-gayrights proponent Anita Bryant. “A for-profit in this space will perform better than a non-profit. You need a modern internet company to do that.”

GoFundMe already channels more than twice as much as the Red Cross, which collected contributions of $604 million last year. The 135-yearold charity, where 90 percent of spending goes to programmes, has only praise for GoFundMe’s winning formula. “If GoFundMe can make money and do good deeds at the same time,” says Neal Litvack, the organisation’s chief marketing officer, “that’s probably a good thing.”

A

t GoFundMe’s headquarters in Redwood City, California, 60 staffers in jeans and sneakers spend their days the way many other Silicon Valley startup workers do, tapping away at workstations spread out in a 9,000-square-foot, open-plan office inside a gleaming glass-and-steel building set back from a leafy street.

Meetings happen in conference rooms named for successful campaigns like Saving Eliza and Ibra’s Chair, which raised $33,000 for a Kenyan-born high school student with cerebral palsy who needed an electric wheelchair.

Solomon, who has no office and works instead at a standing desk next to a window, says the developers and designers are devoted to “optimising for conversion”. That includes refining the website’s user interface to make it more likely to drive donations.

Those who start campaigns can share them across multiple social media platforms with a few clicks. A mobile app lets campaign organisers create videos from photos on their phones, and the company is working on a tool that will enable live video streaming.

GoFundMe has big expansion plans. It opened a Dublin office in July to service Ireland and the UK It’s up and running in Canada and Australia and hopes to open in several European countries Solomon isn’t

next billion-dollar startups For Forbes’s second annual list of next billiondollar startups, we’ve found 25 companies that are transforming their industries and showing tangible results. they’ve already attracted tens, and in some cases hundreds, of millions in investment capital while in the midst of explosive growth. With the help of trueBridge capital Partners, we asked venture firms to share their best picks, reviewed companies’ business plans and scrutinised revenue numbers and competitive challenges. (For more about our methodology go to Forbes.com.)

BitSight technologieS Stephen Boyer, Nagarjuna Venna equity raised: $95 million estimated 2016 revenue: $30 million Key investors: Globespan Capital Partners, Menlo Ventures, GGV Capital What it does: Evaluates and rates companies’ security risks checKr Daniel Yanisse, Jonathan Perichon equity raised: $50 million estimated 2016 revenue: $150 million Key investors: Accel, Y Combinator What it does: Provides expedited background checks for new hires claSSPaSS Payal Kadakia, Mary Biggins, Sanjiv Sanghavi equity raised: $84 million estimated 2016 revenue: $180 million Key investors: Google Ventures, General Catalyst Partners, Thrive Capital What it does: Helps members book fitness classes at boutique studios

Boxed Chieh Huang, Jared Yaman, Christopher Cheung, William Fong equity raised: $133 million estimated 2016 revenue: More than $100 million Key investors: DST Global, GGV Capital What it does: Offers bulk-size packages of consumer goods à la Costco, but customers order via app or online and have them delivered directly. “I was basically trying to solve a problem that I myself have,” says Chieh Huang, 35, Boxed’s co-founder and CEO. “I grew up in the burbs and every other weekend would go to Price Club. And then I was in the city and didn’t have a car anymore. Am I just supposed to get ripped off?” Huang—a serial entrepreneur who sold his previous startup, the gaming company Astro Ape, to Zynga—and his co-founders didn’t make much of a splash when they started Boxed in his suburban New Jersey garage in 2013.

But the New York City company has grown rapidly, with customers in urban, suburban and rural areas across the country, increasing revenues from $8 million two years ago to more than $100 million this year. Huang says, “Consumer packaged goods are one of the biggest drivers of the economy, and are only 1.5 percent online. How crazy is that?”

collective health Ali Diab, Rajaie Batniji

ready to name. Annual donations will hit between $5 billion and $7 billion by 2020, he predicts.

The vast majority of GoFundMe’s campaigns drive themselves with little input from the staff. As a result, the company operates with remarkable efficiency, maintaining a head count of just 165 (there’s a 69-person customer-service team in San Diego that returns email queries within five minutes). On average, each employee produces $606,000 in revenue. (In 2015 each of Amazon’s 230,000 employees produced $464,000.)

A handful of competitors are challenging GoFundMe with a revenue model they think will be more appealing to donors. Instead of charging a fee, they have a “tip jar”,

The vast majority of GoFundMe’s campaigns get little input from the staff where they ask donors to give extra to cover the sites’ costs. Five-year-old YouCaring, in San Francisco, logged just under $300 million in donations over the past two years, according to its president, Dan Saper, who says 80 percent of donors add an average 6 percent tip. In 2014 Indiegogo, a San Francisco-based crowdfunder that focuses on entrepreneurs, introduced a no-fee site now called Generosity, which channeled an estimated $30 million to personal causes last year while asking donors for a tip of up to 15 percent. Another site, Detroitbased CrowdRise, charges 5 percent to 6.8 percent but asks donors to contribute extra to cover costs.

Mostly a site for charities like Unicef, it runs celebrity-led fundraisers and serves as a platform for people who collect contributions for non-profits

when they participate in events like the New York City Marathon.

It took a while for GoFundMe to find its formula. Its San Diego-based co-founders, Brad Damphousse, 34, and Andy Ballester, 35, are first-time entrepreneurs who joined forces in 2008 to launch a self-funded website called Createafund, where people could post personal fundraising drives and promote them through social media. At the time, PayPal didn’t have the capacity to divide payments among multiple parties, which meant the partners couldn’t extract a perdonation fee. During their lean first year Damphousse and Ballester tried to persuade charities to use the site on a subscription basis and built market share by offering the service free. In 2009 they got a break when PayPal made it possible to split transactions; the resulting revenue stream enabled them to continue growing organically without outside financing. In 2010 they rebranded the site as GoFundMe. Then, in late 2014, John Locke, a 32-year-old partner at the Palo Alto venture firm Accel, was invited through Facebook to donate to a GoFundMe campaign for a scholarship fund named for a friend’s brother who had died serving in Iraq.

Locke was intrigued, but it took him more than four months to persuade Damphousse and Ballester to meet with him. As negotiations progressed, Locke ran a survey of 300 people, asking them which site they’d use if they wanted to raise funds for a personal cause. Ninety-five percent named GoFundMe. “The business had gotten further along than Brad and Andy ever thought possible,” says Locke. The founders agreed to step aside and sell a majority stake.

Damphousse and Ballester sit on GoFundMe’s board but stopped talking to the media after the Wall Street Journal ran a story saying they were “reaping a fortune” on the transaction. The Journal didn’t mention a sum, but the reported $600 million valuation meant the founders

equity raised: $150 million estimated 2016 revenue: $15 million Key investors: Founders Fund, Google Ventures What it does: Sells health insurance software to companies

FreShdeSK Girish Mathrubootham

equity raised: $95 million estimated 2016 revenue: $65 million Key investors: Accel, Tiger Global Management, Google Capital What it does: Sells cloud-based customer-support software

Fuze Steve Kokinos, Derek Yoo

equity raised: $200 million estimated 2016 revenue1: More than $150 million Key investors: Bessemer Venture Partners, TCV, Summit Partners What it does: Consolidates various types of enterprise communications (including voice, video and messaging) in the cloud

gigSter Roger Dickey, Debo Olaosebikan

equity raised: $12.5 million estimated 2016 revenue: $30 million Key investors: Andreessen Horowitz, Y Combinator What it does: Connects companies with freelance software developers, designers and project managers

goFundMe Brad Damphousse, Andy Ballester equity raised: At least $300 million estimated 2016 revenue: $100 million Key investors: Accel, Greylock Partners, TCV What it does: Runs a crowdfunding website for personal causes (see page 130)

hoteltonight Sam Shank equity raised: $81 million estimated 2016 revenue: $60 million Key investors: Coatue, Battery Ventures, US Venture Partners What it does: Offers last-minute bookings through a mobile app

doPPler laBS Noah Kraft, Fritz Lanman equity raised: $50 million estimated 2017 revenue2: $100 million Key investors: Acequia Capital, The Chernin Group, Wildcat Capital Management What it does: Makes a miniature computer for your ears that it hopes will become as ubiquitous as the iPhone. The new device, called Here One, which Doppler is preselling for $299, allows wearers to get information (running commentary during a baseball game, for example), adjust noise (for sleep or to hear better) and generally augment aural reality.

“We want to put a computer in every ear,” says Kraft, Doppler’s 29-year-old CEO. “It is the most organic place to put a piece of technology.”

The company was born when Kraft, who has a background in film and music, met Lanman, 35, a well-known tech investor with interests in Square and Pinterest, and they started talking about making bionic ears that would both enhance sound and look cool. To test the market, San Francisco-based Doppler started with a simple earplug, called DUBS (retail price: $25), that reduced volume while preserving the quality of the sound. The company immediately sold 300,000 units.

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got at least $300 million before taxes.

Solomon says they “didn’t want people to know about the money.”

As part of the deal Locke and Accel, early investors in Facebook, brought in TCV, early backers of Netflix, as well as Greylock Partners, also an early investor in Facebook.

Together the VCs picked Solomon, then a venture partner at Accel, to run GoFundMe. He had been a manager at Yahoo during its growth years before turning around SideStep, an early travel search engine that sold to Kayak. Then at Groupon he managed the daily-deal site’s expansion from 100 employees to 7,000. He says he decided to leave Groupon before the company’s management troubles made headlines and its stock tanked.

At Accel, he says, he was in no hurry to run another company but couldn’t pass up the opportunity presented

by GoFundMe. “I was just blown away by what was happening,” he says. “I couldn’t believe the number of campaigns and the sheer numbers of people on the platform.”

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s soon as the deal closed, Solomon moved the company’s headquarters to Silicon Valley so he could recruit talent. President and chief product officer David Hahn, 36, who’d spent nine years at LinkedIn before joining Greylock, was one of the first hires. Solomon also recruited chief technology officer Ujjwal Singh, 43, from Google, and landed Dan Pfeiffer, 40, straight from the White House, where he had served for six years as a senior communications advisor to President Obama. Pfeiffer turned down multiple offers from other companies to head up communications at GoFundMe, he says, because of “the real alignment of building a business and making an impact on the world.”

At times that impact can seem random. In September, for example, Tony Brown of Austell, Georgia, raised $2,046 to pay for a friend to 108 | forbes india december 9 , 2016

compete in the Chattanooga Ironman competition; Emily Dunagan, an 18-year-old entrepreneur, raised $6,670 to buy a convection oven and a freezer for her bakery; and Tara Ritter collected more than $5,000 to pay for stomach surgery for her dog, Mavis, who had eaten a pile of rocks. (In an appreciative update, Ritter wrote, “People are SO freaking generous.”)

GoFundMe’s biggest category is medical expenses, which accounted for $400 million of the $1.5 billion raised in the past year. Only a small fraction of GoFundMe donations, those that go to foundations like Cure Sanfilippo, have 501(c)3 status and are tax deductible. The average GoFundMe campaign raises only $1,000, and a new one posts every 18 seconds.

It’s Pfeiffer’s job to filter through the flood of campaigns and pick the ones to amplify. He and his team of seven pitch feel-good GoFundMe stories daily to national and local media and promote them on social channels. In September the team pushed ‘Fidencio, the Paleta Man’, a Chicago campaign started by Joel Cervantes, a Good Samaritan who felt sorry for an 89-year-old named Fidencio Sanchez, who had returned to work selling popsicles, or paletas, from a pushcart after his daughter died. The story was covered by hundreds of news outlets, including the Chicago Tribune and ABC News, which featured a widely shared photo of Sanchez stooped over his cart. Within weeks Paleta Man had raised more than $384,000.

How do GoFundMe’s donors know that campaigns like Paleta Man are real and not a fraud staged by a couple of actors with props and a camera?

Danny Gordon, 37, a Stanford law grad and former marine who heads up GoFundMe’s 20-person trust and safety department, says only 0.1 percent of fraudulent campaigns succeed. To police campaigns, GoFundMe, together with its payment processor, WePay (GoFundMe left

inviSion Clark Valberg, Ben Nadel equity raised: $135 million estimated 2016 revenue: $40 million Key investors: FirstMark Capital, Tiger Global, Accel, Iconiq Capital What it does: Makes collaborative-prototyping software for website and app developers oPendoor Eric Wu, Keith Rabois,

JD Ross, Ian Wong equity raised: $110 million estimated 2016 revenue: More than $50 million Key investors: Access Industries, GGV Capital, Khosla Ventures What it does: Provides a new way of buying and selling homes

oWlet BaBy care Kurt Workman, Jordan

Monroe, Zack Bomsta, Jacob Colvin equity raised: $15 million estimated 2016 revenue: $20 million Key investors: Azimuth Ventures, Eclipse, ff Venture Capital, Eniac Ventures What it does: Makes smart baby-health monitors

Procore technologieS Tooey Courtemanche equity raised: $129 million estimated 2016 revenue: $55 million Key investors: Bessemer Venture Partners, Iconiq Capital What it does: Offers cloud-based construction management software ruBicon gloBal Nate Morris

equity raised: $96 million estimated 2016 revenue: More than $300 million Key investors: Goldman Sachs, Wellington Management What it does: Connects waste haulers and customers using a cloud-based platform

ruBriK Bipul Sinha, Arvind Jain, Soham

Mazumdar, Arvind Nithrakashyap equity raised: $112 million estimated 2016 revenue: $50 million Key investors: Greylock Partners, Lightspeed Venture Partners What it does: Provides cloud data-management software

guardant health Helmy Eltoukhy, AmirAli

Talasaz equity raised: $200 million estimated 2016 revenue: $30 million Key investors: Khosla Ventures, Lightspeed Venture Partners, OrbiMed Advisors What it does: Offers a simple blood test to cancer patients who want to avoid the pain and risk of invasive tumour biopsies. The company’s “liquid biopsy”, on the market since 2014, makes use of DNA fragments from cancerous tumours that are present in a patient’s blood. The test monitors the progression of the disease and detects gene mutations that suggest which drugs should be used in treatment. Though dozens of other companies are offering similar tests, CEO and co-founder Eltoukhy, 37, says that Guardant dominates the field with a 95 percent market share. Based in Redwood City, California, it has a head count of 190 and growing.

Guardant’s test has a $5,800 list price but negotiates with patients’ insurance plans. To date, he says, Guardant has sold 30,000 tests.

ServiceMax David Yarnold, Athani Krishna,

PayPal in 2011), verifies the identities and bank information of campaign recipients. In the thousands of cases where organisers raise money on behalf of other people, GoFundMe releases funds only when it’s certain the money will go to the intended recipients or to organisers with close personal connections to them.

Gordon adds that social media is a powerful check, since donors can comb through organisers’ Facebook postings, which reveal whether organisers and recipients are who they say they are. In October GoFundMe added another layer of protection for donors. If a donor uncovers evidence of misuse or deception, GoFundMe will refund up to $1,000, and if the organiser

The site won’t host campaigns that promote hate, terrorism or intolerance fails to give funds to the campaign beneficiary, GoFundMe will donate up to $25,000 to the right person.

Gordon also enforces GoFundMe’s terms of service. The site won’t host campaigns that promote hate, terrorism or intolerance relating to 10 criteria, including race and gender identity. But those criteria can be difficult to interpret. Last year a campaign set up by staffers at TheBlaze, a news site started by conservative media personality Glenn Beck, raised more than $840,000 for the owners of an Indiana pizza place who temporarily shut down their business after being criticised for telling a local TV station they would not cater a gay wedding.

“At the end of the day we’re a neutral platform,” Gordon says. More broadly, he says,

“GoFundMe allows us to be agents of change in our own communities; it democratises empathy.”

Indeed, many GoFundMe campaign organisers are ordinary people who get to mount effective fundraising drives without the help of an established charity. One Sunday morning in January before she’d had her coffee, Marseille Allen, 37, a probation officer and Wellesley College alum who lives in Flint, Michigan, where the water had been poisoned by lead, spent fewer than 10 minutes setting up a GoFundMe page so she could buy and distribute bottled water. She included a cellphone shot of a Flint fire hydrant spewing brown water, and within 36 hours she’d raised more than $1,000.

Though Pfeiffer’s crew didn’t promote Allen’s campaign, it gained traction. CNNMoney covered it, and Allen was interviewed by a local TV news show. In late February a fellow Wellesley alum, Hillary Clinton, posted on Facebook about it. In April Allen wrote an op-ed in the Detroit Free Press, imploring people not to forget Flint. Ultimately, she raised more than $50,000 to hand out bottled water, filters and baby wipes.

Shortly after she set up her campaign, Allen asked GoFundMe to waive its 5 percent fee. “I said, ‘This is about giving people water,’ ” she recalls. The fee was non-negotiable, but GoFundMe ran a contest to award $10,000 to the most successful Flint GoFundMe drive, a generous gesture and one that also drove more Flint campaigns and more revenue to GoFundMe. Allen won the contest and donated the $10,000 to a local non-profit, Shelter of Flint.

Why wouldn’t GoFundMe waive Allen’s fee? “We provide a platform that receives more traffic than any other fundraising platform in the universe,” says Solomon.

“It’s all about how much these campaigns yield for the campaign donors.” Not to mention how much they yield for GoFundMe.

Hari Subramanian equity raised: $204 million estimated 2016 revenue: $60 million Key investors: Meritech Capital Partners, Premji Invest What it does: Sells cloud-based service management software for field-service workers

SiSenSe Eldad Farkash, Aviad Harell, Guy Boyangu, Adi Azaria equity raised: $94 million estimated 2016 revenue: $50 million Key investors: Bessemer Venture Partners, DFJ Growth What it does: Sells business intelligence and analytics software

SuMo logic Christian Beedgen, Kumar Saurabh equity raised: $160 million estimated 2016 revenue1: More than $50 million Key investors: Greylock Partners, DFJ Growth, IVP What it does: Helps companies analyse digital data in real time talKdeSK Tiago Paiva equity raised: $24 million estimated 2016 revenue: $30 million Key investors: 500 Startups, DFJ, Salesforce Ventures, Storm Ventures What it does: Makes cloud-based call-centre software tenaBle Ron Gula, Jack Huffard, Renaud Deraison equity raised: $280 million estimated 2016 revenue: $125 million Key investors: Accel, Insight Venture Partners What it does: Makes network-security software for businesses

yaPStone Tom Villante, Matt Golis

equity raised: $50 million estimated 2016 revenue: $235 million Key investors: Accel, Meritech Capital Partners What it does: Handles online payments for vacation homes and multifamily apartment rentals

Scott Crouch

MarK43 Scott Crouch, Matthew Polega, Florian Mayr

equity raised: $41 million estimated 2017 revenue2: More than $15 million Key investors: General Catalyst Partners, Spark Capital What it does: Helps police departments run more efficiently and effectively with software and data analytics. While a student at Harvard, Crouch started Mark43 with a few college buddies. The New York-based company’s software helps cops enter arrest and incident reports faster and gives them critical information about whether a suspect is likely to be armed and dangerous. While it’s not easy getting police departments to change, Mark43 signed up the Washington, DC, metropolitan police department last year and more recently added those in Camden, New Jersey, and Jersey City, New Jersey. In June, Mark43 won a bid over more established competitors to supply five departments in Los Angeles County. Crouch, 25 and a member of the 2015 class of the Forbes 30 Under 30, says, “We are seeing a turning point where departments are so unhappy about what they’ve got.”

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Seminole Gaming chief executive James Allen outside the Seminole Hard Rock Hotel & Casino in Hollywood, Florida.

He’s as serious as a heart attack about building the Seminoles’ fortune

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The Alligator Wrestler and the Casino Boss How the Seminole Tribe of Florida went from being a band of outcasts living in the Everglades to the multibillionaire owners of an iconic global brand

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im Allen has been up since 3 am leaving voice mails for himself at the office and is now weaving through the flashing slot machines and blackjack tables on the floor of the Seminole Hard Rock Hotel & Casino in Hollywood, Florida. With a reporter in tow, he is recounting how a Native American tribe managed to beat out 72 bidders, including private equity giants and multinational hospitality companies, to acquire the rock ’n’ roll restaurant, hotel and casino company a decade ago under his direction. “At first the tribe thought maybe I had lost my mind and gone crazy,” Allen says.

Crazy like a fox. The hardcharging 56-year-old has helped create unimaginable riches for the 4,100-person Seminole Tribe of Florida as chairman of Hard Rock International and chief executive of the tribe’s gambling

operations. What’s immediately clear when you meet Allen is that he’s unapologetically hands-on. Walking through the hotel, one employee points out a large black octopus chair in the lobby bar and jokes he can’t believe Jim wanted that there. Allen shrugs this off and brags that he’s behind every design detail down to the “admit one” tickets on each new roll of toilet paper in the rooms. He explains that his late arrival that morning was due to a spot check of the men’s bathroom, after which he was asked to look into an employee squabble that took him out to the parking lot.

“I’m serious as a heart attack,” says Allen, who’s actually had two heart attacks and bypass surgery in the past three years and still routinely pulls 16-hour days. “Some people talk about it, some people make excuses, some people get it done. I prefer the latter category.” december 9 , 2016

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Though he doesn’t have a drop of Seminole blood in his veins, Allen may well be the single best champion of indigenous peoples since Franklin Delano Roosevelt enacted the Indian Reorganization Act in 1934, which sought to conserve and develop tribal lands and culture. But unlike social programmes mandated by the federal government, Allen’s improvements are purely the result of the pursuit of profit. At the behest of the Seminoles he presides over an expanding, privately owned global business that spans 71 countries and owns 168 Hard Rock cafes, 23 hotels and 11 casinos. Including franchisee sales, system-wide revenue is slightly more than $5 billion. Another 25 Hard Rock hotels are in the pipeline—from Dallas to Dubai to Shenzhen—and the company just acquired the rights to the flagship Hard Rock Las Vegas.

In November New Jersey voters will decide whether Allen can build a Hard Rock Casino with 4,000 slot machines, 2,000 table games and a giant guitar out front adjacent to MetLife Stadium in the Meadowlands just a few miles from Manhattan.

And though the Seminoles are guarded about the information they share with outsiders, it’s clear that their rapid expansion in the hospitality and gambling industry under Allen’s stewardship has created a money machine that generates operating profits estimated at $1.5 billion per year.

That’s enabled the tribe to send revenue-sharing cheques to the state of Florida amounting to more than $1 billion over the past five years.

And for the Seminole people?

Today every man, woman and child in the tribe receives biweekly dividend payments totalling about $128,000 a year. Indeed, by the time a Seminole child today turns 18, she is already a multimillionaire, thanks to tribal trusts that prevent children or their parents from touching the funds until adulthood.

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Country singer, alligator wrestler and on-again, off-again chief of the Seminole Tribe of Florida Jim Billie is widely considered to be the father of Indian gambling

Seminoles’ hospitality and gambling businesses would put the tribe’s net worth at about $12 billion, including some 81,000 pieces of pop music memorabilia—stuff like Michael Jackson’s red leather jacket from the ‘Beat It’ video and John Lennon’s handwritten lyrics to ‘Imagine’— valued at more than $100 million.

Tribe member Tina Osceola, 49, remembers a time when selling tribal souvenirs to tourists sustained many of its members but now credits gambling riches with paying for her undergraduate and graduate school education. “Allen never stops,” she says, “and, frankly, I don’t want someone who stops.”

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hief executive Jim Allen is the man who made millionaires out of the entire Seminole Tribe of Florida, but the tribe’s longtime, controversial, alligator-wrestling chief, James Billie, deserves even more credit for sparking the entire $33 billion Indian gambling industry to begin with.

It’s just after lunchtime, and Billie ambles into the air-conditioned lobby of the gleaming, four-storey Seminole Tribe headquarters built on an old pig farm in Hollywood, greeting people with a fist bump. In just a few weeks Billie, 72, will be ousted as chief of the tribe for the second time in four decades. But for

he says. “Maybe it will be my political demise, I don’t know,” says Billie, who, as chief, has had at his disposal discretionary funds estimated to be in the tens of millions annually. It’s a prescient statement. At the end of September tribal members filed a recall petition, vaguely citing various issues with Billie’s policies and procedures. The four other leaders in the tribal council unanimously voted to remove Billie from office.

It isn’t the first time Chairman Billie has been ousted. He led the tribe from 1979 to 2001 before being voted out amid sexual harassment allegations (the charges were later dropped) and charges of financial malfeasance. (Billie later said his removal was due to bad blood over his increased scrutiny of council member spending.) Then, after a decade in exile, he was elected chief again in 2011 and reelected in 2015. Billie vows to run again, in the next election.

He is, after all, a genuine folk hero. Born a “half-breed” in 1944 on

someone handed him a stack of papers describing something called high-stakes bingo. It claimed that through gambling the tribe could make $3 million in six months. “That was a lot of money back then, so I thought maybe we should try it,” he explains. To finance the venture, he borrowed funds from an associate of the organised-crime figure Meyer Lansky, according to a Pennsylvania Crime Commission report in 1992.

Soon crowds of locals and snowbirds were flocking to the Seminole Tribe’s 1,200-seat Hollywood bingo hall. Gambling was illegal in Florida, and the county sheriff promptly threatened to shutter Billie’s budding operation. Instead of backing down, he defiantly led his tribe to court and won a landmark case in 1981, asserting the sovereign status of Indian nations in such matters. Congress gave its stamp of approval to tribal casinos with the Indian Gaming Regulatory Act of 1988. Today 234 Native American

“Some people talk about it, some make excuses, some get it done. I prefer the latter,” Allen says now it’s a warm day in August, and he’s just arrived from his home on the nearby Brighton Reservation on one of the tribe’s red, yellow and white helicopters. Clad in a short-sleeve polo, Under Armour sweatpants and his favourite penny loafers, he stops to visit with the members of the tribe in his office before settling in at the head of the table in a dimly lit, windowless conference room.

When his phone rings (the ringtone is the ding-ding-ding of a slot-machine jackpot), he ignores it and says it’s someone calling to ask for a $30,000 loan. That’s why he no longer visits people on the Seminoles’ six Florida reservations. All they want is money,

a chimpanzee farm in Dania Beach, Florida, where tourists would pay to gawk at both the apes and the Indians, Billie tells of how he was taken from his mother as an infant to be drowned in the canal, only to be rescued by a tribal matriarch. After his mother died, when he was nine, Billie learned to wrestle alligators for tourist tips.

In his early 20s he enlisted in the US Army and served two combat tours of Vietnam. He eventually became a touring country singer with such hits as ‘Big Alligator’, which is laced with lyrics in his native Miccosukee tongue.

Billie’s Rambo-with-a-heart reputation helped him get elected chief in 1979. On his first day in office

tribes are hauling in $33 billion a year from gambling, according to the Indian Gaming Industry Report, and they all have James Billie to thank.

Billie rarely drinks and doesn’t gamble, but he’s passionate about flying planes and helicopters and has a reputation as a womaniser with a penchant for telling off-colour jokes. His life philosophy mirrors his approach to business: It’s easier to ask forgiveness than to beg for permission.

For example, in 1980, a mass Seminole grave was discovered in Tampa, right where the city had planned to put a parking lot. Billie worked out a deal to swap his tribe’s sacred burial grounds for an alternative location december 9 , 2016

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not far from Interstate 4, where he promised to rebury his ancestors’ remains. Little did the Tampa officials know that Billie would also turn the site into another gambling hall.

The Seminole Hard Rock Hotel & Casino Tampa now accounts for 40 percent of the Seminoles’ $2.2 billion in annual gambling revenues.

During his reign as Seminole chief Billie enjoyed considerable riches, including a 47-foot yacht and the use of a small fleet of helicopters and planes, one of which was a jet once owned by Philippine dictator Ferdinand Marcos. As hundreds of millions of dollars flowed through the tribe over the last four decades, tribe members and their employees have been accused of everything from tax fraud and money laundering to being connected to organised crime.

During one court proceeding in 2002 a tribal council member admitted that he personally spent $57 million over three-and-a-half years. “I bought [Lexuses] for everybody,” he said.

Billie himself has also been a target of law enforcement, including the FBI, but nothing has ever stuck, and Billie has never been criminally indicted. Luck has played a role. In the early 1980s he shot, skinned and ate an endangered Florida panther (whose flavour he jokingly likens to a mix of manatee and bald eagle) near his home on the Big Cypress Reservation. But after a game warden mishandled evidence, the jury became deadlocked and Billie walked.

The tribe’s connection to Hard Rock began in 2000 when a Baltimore real estate developer, the Cordish Cos, presented Billie with several licensing options for the two gargantuan hotels

tribal trinkets Thanks to Hard Rock, the Seminoles have amassed some 81,000 pieces of pop music memorabilia worth north of $100 million. Below are some of their standouts.

Ringo Starr’s drum kit from the 1960s, now in nYC’s Hard Rock in times Square

Michael Jackson’s leather jacket from the ‘Beat it’ music video

and casinos Cordish was building for the tribe in Tampa and Hollywood.

It was down to a choice between Jimmy Buffett’s Margaritaville and the Hard Rock Cafe. Billie chose the latter because, he says, Buffett once dissed him during a chance airport meeting. “I waved to him, and he didn’t wave back,” says Billie, who walks with a cane after a stroke but still brims with the machismo that led him to lose his right ring finger while wrestling an alligator at age 55.

But just around the time the Seminoles were breaking ground on their new Hard Rock properties in Hollywood and Tampa, Billie was forced out amid tribal turmoil.

Billie spent the next decade building traditional thatch-roofed chickee huts and helping to raise his two young children, whom he had with his third wife, Maria, never dreaming that his Hard Rock deal would bear

“I bought Lexuses for everybody,” said one tribal council member who admitted that he personally spent $57 million over three-and-a-half years 114 | forbes india december 9 , 2016

such fruit. “Back then I thought Hard Rock was gonna be good, not great,” he says. But then again, he had only just begun to deal with casino manager extraordinaire Jim Allen.

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ne glance at James Francis Allen in his tieless blue suit and his slicked-back grey hair and you know he was born to be a bigtime casino boss. He is the product of a working-class family from Atlantic City, New Jersey. When he was 13, he persuaded the pizzeria owner at the end of his street to give him a job even though he wasn’t hiring. The owner took a liking to him and enlisted him to wash his Mercedes-Benz every day—a job Allen took so seriously that he meticulously applied mink oil to the leather interior and spent an hour polishing each wheel on Saturdays. He then got a job as a cook at Bally’s Park Place casino to help out his financially struggling family. When Allen’s dad died from cancer in 1979, he recalls, bill collectors phoned the house so often that friends and family were advised to let the phone ring twice, hang up and call again if they wanted someone to answer. “I was committed 100 percent at the youngest of ages to say that will never be me,” Allen says.

elvis Presley’s gold piano, bought for $610,000 and destined for tampa

Madonna’s bustier from her Blonde ambition tour, at the Boston Hard Rock

Allen never accomplished much in terms of formal schooling, but he worked harder than anyone else. At Bally’s he was promoted to cook and drew management’s attention when he helped figure out how to use a kitchen cost-management software that proved difficult to master. After he was promoted to the office job of menu analyst, the executive chef demanded that he return to the kitchen. Allen managed to do both jobs, earning double-time pay.

In 1985 he moved down the boardwalk to Hilton as a purchasing manager. Donald Trump took over the property after Hilton was denied a gaming license, and Donald’s then-wife, Ivana, deeply impressed

by Allen, personally urged him to stay with the company. Over the course of eight years, until 1993, Allen held various management positions in the Trump organisation and eventually helped oversee the operations of Trump’s three Atlantic City casinos. From there Allen went on to open and manage casinos in New Orleans for Hemmeter Enterprises, and for South African real estate magnate Sol Kerzner he opened Mohegan Sun in Connecticut and Atlantis in the Bahamas.

Jimi Hendrix’s Gibson flying V guitar

Lady Gaga’s vinyl dress and headpiece will be on display at a Hard Rock in Shenzhen

Beyoncé’s crown from the ‘Haunted’ music video

Allen was hired by the Seminoles in 2001. Under his direction, the beautiful new $400 million properties in Hollywood and Tampa opened in 2004. There was one big problem, though. Under the Indian Gaming Regulatory Act, the casinos couldn’t have blackjack, baccarat, slot machines or any other lucrative ‘Class III’ games until they got permission from the state.

Bingo, which is considered Class II because players are pitted against each other rather than the house, was already well established on the Seminole reservations in Florida, but then-governor Jeb Bush had no interest in allowing full-on gambling in his state. It would take years, and involve fending off a challenge from Senator Marco Rubio, before the tribe would come to an agreement with the state allowing Class III gambling. So in 2003 Allen boldly circumvented regulations by persuading several gambling manufacturers to create a brand-new type of slot machine that had the look and feel of sophisticated Las Vegas-style Class III slot machines but were actually using the same math as a legally permissible Class II machine. In other words, under the hood these were bingo drawings.

Connected by a central server, players would be competing for prizes against other players at Seminole casinos rather than playing against the house. Most players, even seasoned ones, would be none the wiser.

“This was monumental,” says Brad Buchanan, who spent 13 years with the tribe as its chief financial officer before retiring last year.

“Jim will drill and drill and drill until he hits the concrete, and when the drill bit breaks he will replace it with another and keep going.”

Thanks to Allen’s genius, the two casinos were soon among the most profitable in the country. By 2006 the tribe had become the single biggest Hard Rock licensee and was forking over $21.5 million a year in licensing fees to its British parent company, Rank. From Allen’s vantage point, Rank was taking advantage of the Seminoles. The deals were structured for hotels, not casinos. “If you think of a busy hotel, it’s doing $10 million or $15 million a year,” Allen says. “A busy casino does $20 million to $70 million a month.”

In late 2006 he persuaded the tribe to pay $965 million to buy Hard Rock International from Rank, financed with $500 million in debt. december 9 , 2016

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CROSS BORDER

SEminOlE GaminG

“When we looked at the brand and how much we had riding on it,” Buchanan says, “we wanted to make sure it ended up in the right hands.”

T

here is nothing rock ’n’ roll about Hard Rock’s operations under Allen.

Almost immediately he attacked the cafes’ menus, nixing subpar ingredients like frozen burger patties.

Undercover employees known as “mystery diners” were dispatched to maintain quality control. “I don’t want to say anything bad about Rank, but they were operating for quarterly profits,” says Gary Epstein, a lawyer who worked on the acquisition.

While the cafes still account for most of Hard Rock’s $665 million in revenue, Allen struggles with the fickleness of the casual dining business, and the company is saddled

and, frankly, so are the margins.”

Casinos are also high on Allen’s priority list, but they are harder to pull off quickly because of politics.

In 2013, for instance, voters in Massachusetts rejected his proposal for an $800 million hotel, casino and entertainment complex, and in 2015 Wisconsin governor Scott Walker rejected a plan to build a similar complex in partnership with the Menominee Tribe. The fate of the Meadowlands Hard Rock Casino will be put before New Jersey voters in November.

Hard Rock sometimes takes a sliver of equity in its hotel and casino deals, such as its 16 percent stake in the Meadowlands venture, but like other iconic brands it mostly relies on partnerships and other people’s money for rapid global expansion.

Hard Rock International represents

Tribe member dividends have risen to $128,000 per year, plus access to free higher education and health care with a tourist trap image. In the first half of 2016 same-store sales at the cafes fell 1.9 percent in North America and 5.4 percent in Europe.

Allen’s big push is into hotels. He has opened 16 properties; another 25 are in the works, and he sees room for at least 50 more in short order.

Each is more audacious than the last: A sprawling beach-front hotel in Cancun, a 101-storey skyscraper in Dubai, and a 372-room hotel in Berlin overlooking Checkpoint Charlie.

That’s not even counting the 100 hotels under a different brand name that he is planning to open in China.

“It’s not that we’re abandoning cafes, we’re just expanding our horizons,” Allen says. “When you look at the revenue you can generate in the hospitality sector, the numbers are just so much greater 116 | forbes india december 9 , 2016

the tribe’s biggest effort to diversify away from its seven Florida casinos.

Unfortunately, the tribe’s exclusive right to blackjack, baccarat and other casino table games, where the player bets against the house, technically expired in Florida in 2015, and the tribe is suing the state in federal court over its failure to negotiate a renewal.

Allen, who calls during his lunch break after four hours of testimony in Tallahassee, is already focussed on his next project: Hard Rocks west of the Mississippi. “This is the first time in 30 years the brand is 100 percent controlled by one company,” says Allen, who drives a royal-blue Maserati and lives in a $10 million waterfront mansion in Fort Lauderdale with his yogainstructor wife. For his efforts, Allen earns an undisclosed salary and

bonus from the Seminoles’ casino business and has a small equity stake in Hard Rock International estimated to be worth about $75 million.

In the 15 years since Allen arrived, Seminole tribe members’ annual dividends have risen from about $30,000 a year to an estimated $128,000, plus access to free private school and college tuition, universal health care and elder care. All are offered employment with the tribal government, and the reservations are dotted with oversize houses and late-model cars. The unceasing flow of wealth has not been without its downsides, however: Drug and alcohol abuse remains a problem, and a low percentage of adults have a college education. Fewer young people are interested in traditional tribal crafts or events like the Miss Seminole pageant or alligator wrestling. And since anyone with 25 percent Seminole heritage can qualify for a dividend, the tribe faced a rash of “dividend babies” until about four years ago, when Chief Billie halted payments to those under 18.

It’s becoming even more vital that the Seminoles learn to manage and live with their riches, as the amount of cash flowing into tribal coffers will likely increase.

Today not a penny of members’ dividends comes from Hard Rock International, which is worth an estimated $1.6 billion. Almost all of the tribe’s $525 million in annual dividends flows from the Seminoles’ seven Florida casinos, which are worth an estimated $10.4 billion. Allen says he has set up Hard Rock not only for growth but also for an eventual IPO, should the tribe desire it.

Allen’s employment contract expires in 2018, but even with the unpredictability of Seminole politics, his renewal seems a certainty. “The business has really taken off since my arrival,” he says. “Whenever I do leave, I want them to be able to say that was one white guy that was honest.”

The best things money can buy

(Thoughts)

On CurrenCy It’s amazing: The moment you show cash, everyone knows your language.

—aravind adiga

One of the most fascinating things about bitcoin is that it entrances financial conspiracy theorists, clear-eyed pragmatists and die-hard sceptics alike.

—naThaniel popper

The people of Nebraska are for free silver and I am for free silver. I will look up the arguments later.

The US government has a technology called a printing press... that allows it to produce as many US dollars as it wishes at essentially no cost.

—William

—Ben Bernanke

Jennings Bryan

Using bitcoin is an effete act of rebellion, like wearing a hoodie or getting a tattoo that’s well-covered by your work clothes.

—W Ben hunT Gold conjures up a mist about a man, more destructive of all his old senses and lulling to his feelings than the fumes of charcoal.

—charles dickens Underpinning the value of gold is that if all else fails, you can use it to make pretty things.

Paper is poverty.

It is only the ghost of money, and not money itself.

—Brad delong —Thomas Jefferson The meek shall inherit the earth, The people recognise themselves in but not the mineral rights. their commodities.

—J paul geTTy

—herBerT marcuse

FINAL THOUGHT

If the price of gold keeps climbing, maybe we ought to think about selling our pile of this sterile stuff.

—Malcolm Forbes

december 9 , 2016

FOrbes INdIA | 117

adIga: davId Levenson / getty Images; PoPPer: steve JennIngs / getty Images; Bernanke: kevIn Lamarque / reuters; dIckens, Jefferson: getty Images; J. getty: davId farreLL / getty Images

Until the day breaks and the shadows flee, I will go to the mountain of myrrh and to the hill of frankincense.

—song of solomon 4:6

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