Private Equity acquisition, makes a difference?

Management has been singing Christmas Carols ever since our acquisition. Here are a few lines from them :)

1) Private Equity is good because it will allow us to do what we want to instead of what the market wants...

Well, I think otherwise..don't we all do what the market wants. If we do what "we" want to do, there will be no "we". I agree that there might be a few innovative ideas that we would like to pursue, but me knows that we are already pursuing such ideas in the company.

2) Valuation of over 30% is great!

Me thinks that this is the highest valuation you are setting onto yourself. Don't you have the confidence that you can grow much bigger and larger? Look at Facebook (totally different market)..they really like themselves and are almost shunning all attention from acquirers and maybe going towards an IPO which they think will earn them $8 billion dollars. Companies like Facebook, YouTube can be built in no time, but companies like Sabre are built with decades of perseverance. Acquisitions are important for small companies like YouTube, Facebook..Why Sabre?

3) Nothing will change after the acquisition.

Nothing can be funnier than that. When you are giving over the cudgels to somebody else, you think they will let you operate the way you want to? They would think very different from the bunch that thinks that a 30% hike in valuation is great! I am just waiting for a change in tune, direction and control.

4) Sabre will stay together as a unit.

Very difficult one. Me thinks that the monster Sabre is, it would be very difficult for someone to deep dive into it. Maybe, breaking it up into more manageable pieces would do the trick for them?

5) Offshoring, no changes?

Umm..depends on the new acquirers experience with offshore which I have no insight into. If they have had a good experience with the same, we have to get ready for some tumbling times and if their experiences have been bad, there will almost be no changes in direction.

Waiting for the end of first quarter 2007 for the final agreement and the changes that will follow :). Live life king size till then!

Good e'Valuation' ?

Just wanted to talk about the private equity acquisition of Sabre while it was still fresh in my mind..Management at the top is in high spirits (guess literally too :)) and has been saying that this acquisition is almost the best thing that Sabre could ask for. I almost see it as a loss of confidence in ourselves, loss of focus, vision in what we are and what we could be. Compare this..YouTube was recently acquired by Google for around $1.65 billion and Sabre's price was $4.5 billion, just around 2-3 times of what YouTube was bought at.

Agreed that video is the next biggest thing on internet and YouTube with it's sizeable userbase is a very valuable company to possess. I don't doubt it's valuation but have the notion that Sabre is worth much more than it thinks it is. Sabre is the biggest travel company in the world and has agreements with almost all airlines. It's presence in Europe and Asia is growing every day and it has made some very strategic acquisitions there. Assuming that the average spending on travel per person in this world is $20 (very reasonable estimate!), we are talking about a market that is more than 100 billion dollars and a growing one...Sabre perched at the top can do so much and gain so much which makes me feel that setting a goal of $4.5 billion is like aiming to be in the top 50% of your class...Maybe I am wrong, maybe my basic stats or wrong...don't know..all I can say is that my heart sings a different tune!

Privacy policy for Sabre

This monday morning when we arrived at work, things were a little different, actually very different.
We had voicemails from our CEO (each and every phone) and then there was a company wide call with almost no notice. Some of us knew what this was going to be about as there was a big splash in our morning newspapers, but for me, this was an absolute shocker. Sabre was being acquired by a couple of private equity firms namely Silverlake and TPG.

I didn't believe my eyes and ears when I heard this..especially the private equity part. Life the week before, month before, year before was just so normal that a change like this was not very evident. People had been specualting about Sabre being taken over by Amex etc, but even that was when it was in doldrums, the post 9/11 timeframe. We have been doing very well this year with travel demand in the US and the world peaking, so all of us were kind of under the impression that we were in stable equilibrium.

Our CEO's call was a normal one where I thought he made a good attempt of holding his emotions/opinions under control. He had grown richer by a few million dollars you see :). People asked about benefits, options, changes in Q&A and the call ended. I asked my VP seated next to me if he had seen any signs of this coming and he replied in the affirmative. People on the top of the ladder can see a lot more than I can, but he pointed out to something very interesting. He said that our stock price had been rallying quite a bit and he saw that as an indicator. Very true! We were flat for around 2-3 years and suddenly we had seen it increase over the last one year, the increase was steeper in the last few months. I had actually attributed that to "increasing" travel demand and us signing new agreements, but given the fact that we were in an acquisition spree ourselves and the hint(I thought I sensed one:)) that our CEO had thrown in our previous quarterly call, I thinking the writing was there on the wall. It was just that I had not seen it..Maybe my mind was wandering elsewhere..

Corporate America is dynamic. Empires are built and un-built in days! I feel special to be in one such move, although I really don't know what this holds for me in the future. For now, business is as usual....Well, atleast I don't know the schemes going on @ the top.

Growing Orkut popularity

I have been on Orkut for the past 3-4 months and things have been very vibrant over there..Met friends whom I expected/didn't expect..At my age, one would feel you would see almost nobody, but weirdly enough I did see some from my very own circle out there! I started tracking the userbase. When I joined Orkut, it's size was around 28 million. I remember me waiting for Orkut to turn 30 (30 million) which IMHO took a long time (around a couple of months) but the surge from 30-35 million has almost been in no time! Curiosity got the better of me and I started investigating who was behind this thriving network (named after a Google employee Orkut) ...

It was interesting to see that Brazilians, Americans and Indians formed it's core, Brazil almost being the heart and soul with a whopping 66%. Indians came in third with a sizable 9% behind Americans who were at around 12%. Honestly, I don't think Americans really use Orkut that much..I searched for a few common American names and surnames and found that very few results turned up and of the few that turned up, very little activity and even if there was any activity I saw some Indians/Brazilians on their list ;)..Well, all this might have been a coincidence, but just cannot be ignored. Americans use other things like Facebook, MySpace which have a lot more going on in terms of activity like videos etc etc...But how and why did Orkut become a big hit with Brazilians and Indians?

My theory goes thus, ..the only common thing thread binding these people from both India and Brazil is that they are socially thirsty, maybe a little insecure and have a deep sense of belonging to a community. I am an Indian and I know the number of festivals, get-togethers we have far surpasses what I have seen in other countries. A sense of sharing and show-off is also a part of our culture :). Maybe orkut invitations were distributed equally amongst people from different nations, but Indians and Brazilians just grew it out of bounds virally!! Once you reach a critical mass, the whole process is self-sustaining, growing and feeding itself :). IMHO, India being the second most populous country with a vibrant "young generation" will soon come very near to Brazilian dominance on Orkut and probably even move a step ahead. Other social networking websites did not catch on with us probably because Orkut looks/looked a lot more "personal" and gave us the pride and exclusivity(not any longer) of distributing an orkut invitation that was not available freely online and maybe even the blue (our cricket jersey!) .. What do you think ?

Btw, search for Vijay Challa on Orkut and you will most definitely find me :D..wanna connect?

Video popularity

People are unleashing their creative potential...Videos seem to be the order of the day..I have personally seen a dramatic rise in adoption over the last few months, but today has been special...

I saw two videos over the web, from my inner circle! I have always had the impression that my friends (including me) were a bunch of "keep to your circle" set of people, but not after today. One video was a parody on "12 Angry Men" by my cousin and his friends and the other was a casual, cool home video shot by a close friend of mine. All this was after I read about how the Pepsi-Mentos commericial drew in 10 million visitors on the internet.

Video content is really catching on..Some are making videos..others like me are passively consuming them (Braze yourself!, maybe I will have a few of my own soon! ) :)..No wonder why companies like Google are pumping so much money into videos... User-generated content is big now and is a very big factor in the increased average time spent by a user on the internet. It is like the next generation TV. TiVo even announced a new service feature that allows home movies to be sent over the internet directly to television sets!

Btw, a small digression..couldn't hold myself from saying this. Alex Tew, the creator of the Million dollar homepage is going in for one more million now! Instead of selling each pixel for a dollar as he did earlier, he is going to sell the pixels for 2 dollars each and is giving away million dollars to a lucky user...Me thinks there are enough greedy people to make Alex richer by a million :)