Glamour vs Substance

In 2009, when I had just joined a private equity fund, we were invited to the Oberoi hotel in Mumbai for a fancy presentation by a healthcare technology company (I am deliberately not naming it).

The company tried to charm the investor community with its presentation and glamour. It puffed up its revenue by ‘selling’ its equipment in large quantities but the cash collection was very poor.

Underneath all the glamour, they did not have substance. They were just importing health equipment from China and reselling it – they had zero technology or innovation.

However, their glamorous presentation did influence some investors and the share price went up.

So clearly, substance is not everything – or is it?

Today, their share price is less than 1% of its value at that time. Anybody who invested would have lost 99% of their capital.

In the short-term show and glamour works. But in the long term, reality catches up. And when it does, it does so mercilessly. Always, no exceptions.

– Rajan

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