Bhanu Harish Gurram

When the iPad was first launched, Steve Jobs put up a big screen with the price - $999.

But after his presentation, the actual price was set at $499.

And people were enthralled by this revelation. They felt like they saved $500!

But how is this even possible, especially when nobody even knew about the iPad?

Well, this is because of a psychological bias called the Anchoring Effect.

In simple terms, it means that our decisions are heavily based on the first piece of information we receive - regardless of whether that information is accurate or not.

Consider this - You walk into McDonald’s and you can get a small coke for ₹79 or a large coke for ₹99. For a measly 20 rupees, you can get almost twice as much coke!

Having anchored that a small coke is worth ₹79, the large coke suddenly seems like an awesome deal, doesn’t it? It doesn’t matter that in reality both are overpriced.

Similarly, companies with subscription models like Netflix, place both their premium subscription plan & the standard one on the same page. This gives customers an impression that the latter is a bargain in comparison, making it more likely for them to subscribe.

But the most popular anchor of all (& the one everyone has fallen for at least once) - is the “99” price tag.

Don’t you feel that 199 sounds better than 200? Since our brain reads from left to right, the first digit of the price resonates with us and acts as an anchor to create an illusion of getting something in the lower number series.

As you can see, the Anchoring Effect is probably the most pervasive biases of all - almost every business leverages it in some way.

And if you’re wondering how to avoid it - perhaps try and set an anchor of your own!

Follow Finshots for more content like this!

Here's a Finshots Infographic breaking down state-wise contribution to the country's GDP.

Subscribe @ https://bit.ly/3eplHVA

#indianeconomy #india #economy

Adani Enterprises Ltd (AEL) announced its plans to raise a massive ₹20,000 crores in equity capital — the largest FPO in Indian stock market history!

But what’s an FPO? And why is Adani dabbling in equity capital all of a sudden?

Well, before we get there, we need some context. Adani Group has a lot of debt. A lot!!!

In the past five years, the overall debt has soared from ₹1 lakh crore to ₹2.2 lakh crores. And the group plans to pump another ₹12 lakh crores ($150 billion!) into its myriad businesses over the next decade.

But the thing is — if the group is perpetually financed by debt …. the interest burden can get out of hand pretty quickly.

So Adani needs to raise money that it doesn’t have to ‘return’ through avenues where they don’t have to pay interest. In other words — they need to raise equity capital!!! And that’s exactly what the group has been up to.

The company intends to raise a massive ₹20,000 crores in equity capital — through something called an FPO or a Follow-on Public Offer. It’s like an IPO but for companies that are already listed. You issue new shares to people and institutions at a discount price and you funnel them into various businesses. Businesses that include Adani Airports, Adani Mining, Adani Solar, Adani Data Networks, Adani Water, and Adani Roads.

But why go the FPO route now?

Well, it could be that Adani group now intends to quell all rumours about stock price manipulation. For instance, while the price of many Adani companies has soared over the past decade, people have contended that the low float (low shareholding among outside investors) may have had a role to play in all this. But if the public shareholding does rise, they could beat this allegation.

Also, in an FPO, there isn’t any compulsion for promoters to invest their own money. So, Adani can raise equity money without shelling their own capital.

So yeah, Adani could soon be starting its great fundraising plan. And I want to know what you guys make of this.

Follow Finshots for more insightful content. Get access to our 3-min daily newsletter in the comments👇🏻

Six months ago, Rupen wanted to make a podcast out of Finshots articles. But I dismissed the idea since we are already working on many things (Finshots, Markets, YouTube videos, Insurance (joinditto.in). For a 13 member team, we already had lots of work in our hands.

But Rupen persisted. He kept bugging me every few days that he wants to try podcasts! And we finally agreed. Within a few weeks, we are already in the top charts on Spotify and Apple podcasts in India.

And today, we crossed 1 million listens on our podcast!! Our listeners have spent over 5 million minutes on our podcasts!!

Thanks a ton for supporting us.

Also, if you haven't listened to our podcast yet, do give it a shot- https://anchor.fm/finshots

Which financial instruments does India invest in? Here's a unique infographic on how much wealth Indians hold in each financial instrument. By Finshots | Ditto Insurance.

Disclaimer- This infographic is exclusive of physical assets like gold, real estate, etc.

Team Finshots & Ditto Insurance just hit 100 employees!

It wasn’t easy to build this amazing team. Here are a few lessons we learned in 3 years of taking these startups from 0 to 100 employees.

1. Hire people only when you need them:

For a year at Finshots, we were just a 10-member team and doing just fine. We didn't hire more people, simply because we didn't have the need then.

Don’t underestimate the power of tiny teams, Whatsapp manages over 900M users with a small team of 50 engineers.

2. Hire attitude, not skills:

For our advisory team at Ditto, we’ve hired people from all kinds of backgrounds (airlines, teaching, lawyers, etc) simply based on their attitude & enthusiasm. And though it takes more time to train them as compared to hiring someone from the insurance industry, it pays off in the longer run. After all- You can only train people’s skills, not their attitudes.

3. Do your due diligence:

There’ve been times we’ve ended up making wrong hires in a rush to scale and regretting it in the future. Hiring the wrong people for your company means wasted resources and training. Spending that little extra time researching their background could make all the difference.

And hey, we're planning to take this team to over 200 employees by next year. Join us in simplifying insurance for the masses- link in comments.

Last week, LIC became part of the top ten insurance businesses globally by brand value.

By Ditto by Finshots

The biggest business groups in India🙌🏻

Follow Finshots for more insightful content. (Subscribe to join the 500k readers’ community. Link in comments👇🏻)

Excited to be part of the LinkedIn Top Voices 2021 Next Gen list.

Thanks to all the readers and well-wishers who made this possible and special thanks to our Ditto by Finshots (Joinditto.in) Team.