Posts by: Sohin Shah

Father’s Day: Try and fail, but don’t fail to try

For every child, his father is a role model, friend and accomplice, and it has been no different with me. My father, my mother and my brother have been the most influential individuals in my life. They nourished my identity by reasoning and supporting every decision I made, no matter how impulsive it seemed. While I love my mother more than any other individual in this world, this article is a tribute to the man who raised my brother and me with a vision, in his words, “Nishaan chook maaf che, pun neechu nishaan maaf nathi”, which translates to Try and fail, but don’t you fail to try!

Butterfly Effect In Entrepreneurship

Butterfly Effect, part of Chaos Theory, states that an event as small as a butterfly flapping its wings can cause a typhoon. This is what evolution is all about. The smallest of actions may set into motion a series of events that share a very deep connection and power to self-organize, thus resulting in unprecedented outcomes. What was once small grows into something big. Today’s business environment is based on a similar structure. Virtually everything is interconnected and interlinked.

Valuation Of Pre-Revenue Startups

Valuation is an art and a science that uses a combination of analytical techniques, methodologies and common sense to determine the fair market value of an opportunity. However, when it comes to valuing pre-revenue startups, it is more of an art than science. Pre-revenue companies have no financial records that can be reasoned. Financial projections are the result of assumptions built on assumptions.

The valuation of a pre-revenue company is guided by a combination of:

Accounting For Impact Of Taxes And Inflation On Investments

Inflation is a tax without legislation- Milton Friedman

The combined effects of income taxes and inflation can bite away a substantial portion of your pre-tax nominal returns from investments. Income from investments can only increase an investor’s wealth to the extent that the nominal returns from exceed inflation rate plus the product of pre-tax return on investment and tax rate.

A nominal return of 10% may seem attractive. However, at a tax rate of 30% and with inflation going strong at 6%, the real return is only 1%. Here is the math for it:

US Dollar, Gold and the Current Deficit

There was a time when countries around the world used gold as the primary means of exchange. It all changed post-WWII when in an effort to free up international trade and fund reconstruction, the Bretton Woods System came into being. Under the new system, the US dollar replaced gold as a universally accepted medium of exchange. As a result, the US dollar was deemed the global reserve currency which made sense since the dollar was as stable as gold.

The nations had to fix their currencies against the US dollar. Furthermore, the price of gold was also listed in US dollars, $35 per ounce at that time. This gave countries the option of exchanging their own currencies for US dollars. Due to this system, virtually every currency in the world was backed by gold.

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