We all agree that India has changed the
face of Silicon Valley; now the question is, how will the Valley change
India?
Not every one of us is endowed
with the talent and vision to shape and change the world. Some, however, are
trying to make a positive difference in this world. When Cyrus McCormick
introduced the reaper to Americans in 1831, he liberated farmers across the vast
land from the drudgery and the fatigue of harvesting wheat. Wheat production
soared in America. When the first Model T rolled out of Henry Ford’s factory in
1909, Ford had democratized the car in America.
In chasing their dreams, luminaries
such as McCormick and Ford introduced concepts that we now take for granted.
They taught the marketing savvy that America is now famous for. The concepts of
installment-buying, money-back guarantees, free trials and the assembly line
were shaped and practiced by these men. Such was their vision, their integrity,
their ambition, their courage and their tenacity that they dramatically altered
America — its landscape, its economy and, most of all, its business psyche.
In the past two decades, Silicon
Valley has been the stage for a revolution, much like the one that swept through
America in the early nineteenth century. The technological revolution has
changed forever the way the world works, learns and communicates. Although the
players on this stage are many, the standing ovation goes to a breed of bright,
hard-working immigrants who will go down in the history books of the
twenty-first century. They have risked it all, reaping big rewards in their
adoptive country. They are now whispering their mantra to a whole new generation
of potential entrepreneurs in the process of which, perhaps, just perhaps, their native country will
dominate the world scene in technology and innovation in the years that come.
A New
Orbit
“Another ten years of what we’re
doing right now will put us in a totally different orbit. This is undoubtedly the century for India!” says Kanwal
Rekhi, one of the earliest private venture capitalists in the Silicon Valley and
the president of The Indus Entrepreneurs (TIE), a non-profit organization
promoting entrepreneurship among South Asians in North America. Wealth creation
is infectious — harbingers of Valley culture, such as Rekhi, say that this is the way to steer India out of its
poverty and help her elect worthy leaders.
“In the late ’80s, the move to India
was triggered by cost. It’s not cost anymore, it’s the availability of high
talent,” comments Prabhu Goel, a veteran venture financier since 1992. “When it
was a cost issue, the level of technology transferred was very low; now that it
is a resource issue, the level of technology exchanged is very high!” he says.
Goel’s US-based Internet infrastructure company PolicyOne recently launched its
operations in India with an initial investment of Rs. 150 million. The engineers
in both the locations will develop software solutions such as Web servers,
firewalls and network management software. India is slated to be the hub of
PolicyOne’s activities, as it gets ready to target large internet-ready markets
like the USA, Europe and Japan for its product.
The Smell of
Money
“When you get off the plane at
Bangalore or Hyderabad, you can feel it in the air!” jokes Ashish Gupta, part of
the team that saw through Junglee’s roaring success in the summer of 1998. Gupta
is referring to the excitement offered by this new spirit that’s putting a
glimmer in the eyes of all technology professionals. It’s a glimmer of hope
alright – but that glitter of gold at the end of the rainbow is propelling an
unparalleled explosion of creativity that’s taking India by storm. Gupta speaks
for all the Valley’s Indian technocrats when he says that there is no end to
what you can accomplish in this climate in India. To Gupta, it makes perfect
sense to do the primary development of a product in India.
Gupta has funded three Indian companies: Daksh, based
in Delhi, provides low-cost e-services such as e-mail, real-time chat and other
value-added services. A forms portal,
based in Bombay, is another ambitious venture funded by Gupta that will aspire
to put out forms and back-end forms processing capabilities on the Web. A third
company that he is promoting, Reelback, is shrouded in mystery but it is coming
soon to a Web site near us. The old boy network – and many of these youngsters
are still shy of 30 – forges strong ties in entrepreneurship. Many of his
friends have left top universities and plum jobs in the US to live and launch
their dreams in their native soil — for that is where the opportunity is, more
than in the Silicon Valley.
The
Imaginator
“What Japan was to the twentieth
century in the electronic revolution, India will undoubtedly be to the
twenty-first century in the Internet revolution,” wagers Anand Rajaraman.
Rajaraman, who left Stanford to take a walk on the wild side to found Junglee,
is back at Stanford to complete his Ph.D. in computer science. He’s the wiser
and richer for it – but a whole two years older. Age catches up with whiz kids
too.
Academic endeavors aside, Rajaraman
has also funded some pet projects. His pet project is what he prefers to call an
“Imaginator”: an incubator/venture fund that he has started with Junglee
co-founders Venky Harinarayan and Ashish Gupta. Called Cambrian Labs, this
laboratory will provide seed funding to fledgling companies and nurture them
until they can spin them out as successful ventures.
Rajaraman’s pet Indian portal is India
Infoline, whose objective is to be in indispensable source of information and
intelligence on Indian business. He has also invested in JumpStartup, a venture
fund headed by entrepreneur Kiran Nadkarni (formerly the managing director of
the $55-million Draper International fund). JumpStartup aims to give a jumpstart
to companies in India by providing comprehensive assistance to entrepreneurs in
launching their startups and by being a “one-stop site” for entrepreneurial
resources.
The Mind
Caravan
The Silk Route to China intrigued
travelers and traders for thousands of years. Wars were waged and deals were
struck en route this treacherous route to the land of the secret, royal fabric.
The new Mind Route being paved in the skies over the Pacific Ocean transports
wealthy merchants eager to trade their wisdom and expertise for new secrets from
the land that invented the zero. With every burgeoning portal, there is yet
another lush territory to be staked out.
“I’m interested only in investing in
companies that will allow India to dominate in the world scene,” says Ram
Shriram of Sherpalo Ventures in Palo Alto. Shriram, who earned his stripes at
Netscape and Junglee, has invested in an Indian portal launched in April. The
portal has several other strategic investors including Yogen Dalal of Mayfield
Ventures, John Sculley of Sculley Brothers, Pavan Nigam of Healtheon, Sanjay
Parthasarathy of Microsoft, Gunjan Sinha of eGain & Navin Chadda of BizTro.
Shriram is also betting on 24by7.com,
which is developing a highly scaleable online customer service center aimed at
large e-tailers who, he claims, can increase their margins in their core
business by outsourcing customer service at a much lower cost.
An Exodus to a
Young and Restless Land
After the success of Exodus
Communications, K. B. Chandrasekhar was scouting for opportunities to help
companies in India. A bold little Bangalore company, Aztec Software, then a mere
15 people strong, caught his attention with a product called JPacT. The product
is directed at data merchandisers who have traditionally used various
proprietary methods, including dial-up networks, CD-ROMs, or, often, paper
reports, to merchandise data from their huge repositories. Because much of this
process is manual, these companies have been compelled to do business primarily
with large customers who place bulk orders. By using the Internet, data
merchants can reach many more customers, increase revenue and reduce costs
significantly.
An Aztecian in Bangalore is the mirror
image of a Yahooligan in the Valley. Aztec’s foundry now serves clients like
Microsoft, IBM and Viador among other heavyweights. Aztec has grown at a
frenetic pace to 150 people, 30 of whom are based in Santa Clara. Its billboards
on the roads of Bangalore are attention-grabbers, like those of Amul, meant to
titillate and taunt technical minds. For example, “XML. Certainly not my T-shirt
size – Subbu Aztecian.” Or: “Referential Integrity is not something you
associate with politicians – Anand Srinivasan Aztecian.” Says Sam Nathan, its VP
of business development, “Aztec is out to hire nerds — and it makes no bones
about it.”
Chandrasekhar has hitched his wagon to
yet another rising star, one that promises to play a stellar role in the
wireless space. Unimobile is a free desktop tool that helps PC users send
instant messages to wireless phones in any of 55 countries, organize email and
access personalized Internet. “Most of the entrepreneurs at Unimobile are under
25. This company wanted to behave like a Silicon Valley company back in 1998!”
says Chandrasekhar. Unimobile, whose “About Us” page screams “The Young and the
Restless,” has moved its front-end market operation to the US and has amassed
international press coverage on being the tsunami of the wireless world.
Effecting
Change at a Grassroots Level
“There’s a sea change in the way
that NRIs are looking at India today,” observes Partha Sarathy, founder and CEO
of Aztec Software of Bangalore. Sarathy is thrilled with the synergism between
the Valley and India. When Sarathy started his company five years ago, friends
and advisors shook their heads in disapproval. They told him he was
hallucinating if he were trying to do high-end product development. “Stick to
body-shopping or low-end maintenance!” they warned.
Sarathy has since emerged,
unvanquished and victorious, from that pool of cynicism. He could not understand
why India sold raw materials to another country where they were transformed into
the perfect end product. The same held true for brainpower. “Why couldn’t India
make the product and deliver it to the global market?” he wondered. With Aztec’s
JPacT, Sarathy is helping India compete on the world stage. Thus far Indian
companies have either addressed consumers in India by means of portals or
restricted themselves to providing back-office services for US-based companies.
In the world of electronic commerce, physical boundaries cease to exist. “It
really shouldn’t matter where the products are from. Why should they not move up
the chain and serve the US or the global customer directly?” asks Rajaraman.
Infrastructure
Problems: A Ferrari Riding on a Bullock Cart?
There are critical issues at
stake in addressing globalization. The biggest hurdle is the infrastructure,
uninterrupted power supply being just one of the many bottlenecks as India
hurtles towards the finish line. Shriram believes that India should let
companies such as Lucent or Alcatel build the infrastructure for wireless and
data. He believes heavy governmental deregulation of the telecom industry is
vital for India to win the race for software supremacy.
Not to worry: there is a rumble deep
in the bowels of the Indian government. Many a dynamic entrepreneur of the
Silicon Valley is engaging with the Indian government, India’s Finance Ministry,
the Securities and Exchange Board of India (SEBI) and the Reserve Bank of India
(RBI). “NRIs are finally seeking to build the country. Until the Internet
boom, most of them looked at India as a home they had left behind 15 years ago.
They would get away rather than engage with it!” remarks Sarathy.
The India Economic Initiative, created
and funded by a clique of successful entrepreneurs including K.B. Chandrasekhar,
Sabeer Bhatia and Kanwal Rekhi in collaboration with Stanford University, is
seeking to disseminate the gospel to the Indian bureaucracy. Chandrasekhar calls
this an effort to create “pockets of excellence” in India. IT Secretaries of
Department of Information Technology were flown in from several states in India
for two-week sessions at Stanford. In addition, sixty companies in the Valley
threw their doors open to initiate the Indian bureaucrats into its culture. This
crash course on how to “create a Silicon Valley environment in your state” was
an effort at influencing at the bureaucratic level.
The influx of money and technical
expertise from grateful, successful alumni has had an enormous impact on
educational institutions in India in the last two years. Rekhi and his team have
established five chapters of TiE in India to foster wealth creation through
informed entrepreneurship: in Mumbai, Chennai, Bangalore, Hyderabad and Delhi.
Fundamental changes are taking place
at the financial level as well. In February of this year, following a proposal
by Chandrasekhar and a group of other entrepreneurs, SEBI announced that the
appraisal and funding by venture capital firms will henceforth be eligibility
criteria for approval of initial public offers by companies. Companies that do
not have the required track record can now float an IPO provided they have been
appraised and funded by venture funds. Previously, a company had to be appraised
by a bank or a financial institution to become publicly traded. By approving the
Chandrasekhar committee recommendations, SEBI has permitted flexibility in
investment and exit, facilitating mobilization of global and domestic resources
through hassle free entry for foreign venture capital.
“There is a push now to change the lot
of the Indian at multiple levels, thanks to the doggedness of today’s
technocrats,” comments Sarathy. They have indeed accomplished more in a much
shorter time frame than the NRIs of yesteryears such as Lord Swaraj Paul, one of
London’s most successful Asian businessmen. “For a person sitting in London, it
is impossible to do something in India because there are far too many problems
there,” he quipped, in a May 1998 interview with the Times of India. Quite in contrast to
Lord Paul, many of the Valley’s entrepreneurs have shown that it is entirely
possible to work passionately to effect a grassroots transformation in a
developing nation.
Sir, but
You’re no Knight
“Sir?” “Madam?” Neither are words
you hear anymore in the casual cubicles of the high-technology parks of
Bangalore and Hyderabad. Gone are the days when hierarchy affected your modus
operandi. Yet another cultural aftershock rocks the Indian IT industry every
day, and Valley entrepreneurs are delighted with their business dealings with
Indian professionals.
The entrepreneurs are unanimous in
their praise for the technical and cerebral prowess of their Indian
counterparts: “They are a brilliant lot and they get high marks on their
professionalism.” They see a dramatic change in the informal way in which people
communicate, the aggressive dedication which is defining new, extended working
hours, their awareness of financial markets and, most of all, their
customer-centric product building. “Customer satisfaction was not something
companies worried about until after the release of their product,” says
Junglee’s Gupta. “There has been a major shift in their point of view and they
factor it in first even before building the product.”
With the ever-increasing demand for
programmers and the generous stock options offered by companies in India and in
the US, there is a lot of pressure to switch jobs. Goel worries about the
fickleness of some Indian professionals – both in India and the US — who jump
ship fecklessly for a “better offer.” According to Goel, some of these engineers
do not care enough about the future. Shriram believes that India could fail in
its mission if that trend continues.
“If you pay well and have a sharing
mentality, I don’t see why a company will lose people,” states Chandrasekhar. He
quotes Aztec Software as an example of an Internet company that has a very high
level of retention. To what extent the new companies can act “globally” will
play a big role in how successful India is going to be in the next few
years.
What will the closer ties between the
Silicon Valley and India bring? The entrepreneurs from both places indeed share
a vision. They dream of the day when an Internet kiosk is as standard as an
STD/ISD booth painted in bold yellow. They look forward to the day when a farmer
in a remote village in India can sell his goods to another farmer many miles
away using the Internet. They want to see the day when the barriers of distance,
language and money cease to exist — even to a humble villager selling nariyal pani in a coconut grove far from
the dot-coms of Bangalore.
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