“You can check-out any time you like, but you can never leave!” If you grew up listening to the 70s rock, chances are that you would have immediately replayed the guitar solo in your head, performed by Don Felder and Joe Walsh (on their Fender Strat and ’59 Les Paul Starburst). Eagles released Hotel California in 1976 and it went on to sell 32 million copies worldwide and was ranked as one of the greatest albums of all times and also won a Grammy.

This is the story we know. What isn’t discussed as widely is how this song broke a large number of the then established rules. One, the song was more than six minutes long (commercial songs, then and even now, are not longer than three and a half minutes). Two, it stopped in the middle and restarted (contrary to generally accepted norm that energy is supposed to build up at all times). Three, it had a minute and half of guitar solo (never done before). And lastly, the song has very unusual chromatic chord progression and sudden shift from minor key in the verse to a dominant major key in the chorus (a shenanigan that would invite censure from music theory teachers even today).

A show about nothing: When the first Seinfeld script was submitted, executives didn’t know what to do with it. NBC executive Warren Littlefield said, “it didn’t sound like anything else on TV. There was no historical precedent.” The author of the initial report on the Seinfeld pilot felt it bordered somewhere between ‘weak’ and ‘moderate’. Test audiences’ reaction to the pilot was that it lacked the community feeling of Cheers, family dynamics of The Cosby Show and relatability of ALF.

We all know how Seinfeld, often described as ‘a show about nothing’, went on to run for nine seasons and 180 episodes (for equal number of years from 1989 to 1998). It features among the best television shows of all times in publications such as Entertainment Weekly, Rolling Stone and TV Guide.

Original entrepreneurs: Like rock bands and television series, there are a lot of ‘non-conformists’ in the corporate world as well who have changed the way business has been done traditionally. And, a few such businesses are part of Buoyant Capital’s fund. But today we want to talk about Symphony Limited (Symphony).  Over the previous decade, Symphony’s share price has compounded 15x, a return of 31% CAGR, truly a superlative number.

Unlike most companies in the white goods segment, Symphony has not built multiple factories, nor does it have a finger in every pie of the sector. A single-product company, it devotes its energy and resources to what it does best—making air coolers. Its asset-light model has enabled the company to generate average RoE of close to 50% over the previous decade, and it has even paid out over 60% of cash generated from operations via dividends (including distribution tax).

Symphony owes its genesis to the company’s promoter Mr. Achal Bakeri finding existing products an ‘eyesore’. As he comes from a family of real estate developers and having faced the problem of collections, Mr. Bakeri has ensured that Symphony is cautious in extending credit; its working capital has been less than 24 days on average for the past five years.

What’s commendable is that Symphony was willing to learn from its mistakes. The company had started diversifying into other products (geysers, washing machines, among others) around 1995. Unfortunately, it underestimated the competition in these categories, which pushed the company into bankruptcy in 2003. Symphony emerged out of bankruptcy in 2009 with a clearer focus and an improved resolve that has catapulted it to the top position in the air cooler market. Now, it has deepened penetration in the domestic market and also made multiple acquisitions in international markets abiding by the same ethos—huge respect for capital, asset-light model and sticking to what it does best.

There are numerous examples of how history has been created by believers—studio executives have passed on hits ranging from Star Wars to E.T. to Pulp Fiction and publishers have rejected The Chronicles of Narnia, The Diary of Anne Frank, Gone With The Wind, Lord of the Rings and even Harry Potter. We often wonder how songs that broke all the rules went on to become chart busters and shows about nothing ruled TV for a large part of 1990s. To us, it largely boils down to people: (a) not afraid to think differently; and (b) willing to take the risk everything for what they believe in.

In the case of Hotel California, Don Henley—Eagles’ lead singer and drummer (by the way, it’s incredibility difficult to play drums and sing)—told the record company, “to release it as it is, or not at all.” In the case of Seinfeld, it was Rick Ludwin who made it happen and in the case of Symphony it was Mr. Bakeri willing to walk on a different path.

Disclaimers
Information in this letter is not intended to be, nor should it be construed as investment, tax or legal advice, or an offer to sell, or a solicitation of any offer to make investments with Buoyant Capital. Prospective investors should rely solely on Disclosure Document filed with SEBI. Any description involving investment examples, statistical analysis or investment strategies are provided for illustration purposes only – and will not apply in all situations and may be changed at the discretion of principal officer. Certain information has been provided and/or based on third-party sources and although believed to be reliable, has not been independently verified; the investment managers make no express warranty as to its completeness or accuracy, nor can it accept responsibility for errors appearing herein.