Biggest deal, biggest dreamer
Frodo: “I wish the ring had never come to me. I wish none of this had happened.” Gandalf: “So do all who live to see such times, but that is not for them to decide. All we have to decide is what to do with the time that is given to us.” — From the movie, Lord of the Rings
This dialogue, stored in the mobile phone of Rajesh Jain, 43, the man who struck India’s biggest Internet deal ever, is fair indication of his state of mind — grateful for good fortune but struck by disillusionment and imbued with new desire to answer the next big question, find the next big thing.
His question: “Why is India poor and what can we do to make it prosperous by 2040?” His next big thing: India 2.0, the recreation of no less than a nation.
To understand the journey of Rajesh Jain, 43, you must persuade him to talk about something he hates discussing, the day his life changed.
On November 30, 1999, this calm, humble engineer from the elite Indian Institute of Technology (IIT) Bombay sold a clutch of websites, Indiaworld, for $115 million (then roughly Rs. 499 crore), $15 million more than tech giant Infosys made that year.
With his wife, a chartered accountant, Jain lived in a crumbling 900 sq ft south Mumbai apartment and at 6 am every day updated their clutch of websites. It was a time when the Internet seemed to signify endless possibilities for a country trying to leap many eras in one.
Indiaworld’s buyer was Satyam Infoway, one of the many companies floated by B Ramalinga Raju, 55, the jailed founder of the Satyam group and perpetrator of India’s biggest corporate fraud. Satyam Infoway is now a telecom-service provider owned by an Indian-American, Raju Vegesna.
The stories of Jain, Indiaworld and other entrepreneurs who survived the dotcom crash are fair indicators of how a nation that boasts of being a global powerhouse has failed to capitalise on the biggest technology of them all.
Indiaworld no longer exists, though it was created (in 1995) a week before Yahoo, the Internet search giant valued today at $22 billion. And if Yahoo is big, the latest upstart, Facebook, launched from a Harvard dorm seven years ago, was valued this month at $50 billion. Its founder, a freckled nerd called Marc Zuckerberg, 26, is the world’s youngest billionaire, generating a business by persuading 550 million people to take their social lives online.
Where is India’s Marc Zuckerberg? Where are the great Indian ideas?
“It’s all been a big disappointment,” says Jain, summing up the years since his deal.
In February 2001, India had 5 million Internet users. The best estimates say there are no more than 70 million today. Of these only about 10 million are linked to broadband, the high-speed connections needed for audio, video and other modern uses of the Internet. India’s yardstick, China, has 10 times as many broadband users.
As for advertising, the online revenue mainstay, no more than 3% of India’s Rs. 25,000 crore goes to the Internet. It gets worse. Two-thirds of the 3% is cornered by Yahoo and Google, the crumbs left for the brave few still trying to make a living online.
“Monetisation continues to be a challenge,” says Pravin Gandhi, 65, a veteran entrepreneur and angel investor. “Indians need physical contact, we are just not good with adoption of technology, particularly the Internet, and trust today is anyway at a premium.”
Yet Gandhi, like so many others, invested in a number of young people and their ideas a decade ago. Why? “All of us had left our brains in the toilet,” says Gandhi. “We got carried away by excel-sheet presentations.”
Gandhi says India just isn’t ready for “fancy, esoteric stuff”, such as Facebook. He could be right. Many online business are me-too ideas (job and travel sites), and many startups appear to be more about meeting needs in a broken system than transformational ideas.
One of Gandhi’s investments, Redbus.in, was founded by blue-chip engineers from Texas Instruments, IBM and Honeywell. It works because India’s ticketing systems don’t — and only about 10% of their revenues come from the Net; the rest through call centres and physical distribution.
The net still draws ideas, generates passion, attracts investments and nurturing advice from survivors (see stories below) and sees profitable exits by investors; but nothing like the Rs. 4,000 crore that flowed in during 2000 (and mostly flowed right out).
“There are successes, but for a country this size, it’s nothing,” says Gandhi, who now terms his business “social service in some sense”. He adds: “It’s definitely a labour of love.”
Jain knows the feeling. Since he left IIT in 1988, he says candidly, he’s made profits only for three years. With his windfall, he has invested in 11 tech-enabled companies, in fields as diverse as rural services, healthcare and solar energy. “I’m not afraid of failure,” says Jain. “Only one thing has succeeded big-time in my life.”
Jain is founder and managing director of Netcore Solutions Pvt Ltd, which offers mobile data services and messaging and security solutions. For more than a year, the company’s been profitable, it has 200 employees, and with a full-time CEO in place, it doesn’t take much of his time.
Jain says the biggest problem with the Internet in India is the lack of content that draws you to a site every day, like Facebook, like Twitter.
So, Jain is ready for his biggest Internet gamble: A politically right-of-centre site that will use Facebook and Twitter across a variety of devices, feature strong opinion-laced stories (like the Drudge Report or Huffington Post), float ideas and get people from middle-class India to create a politically aware community, passionate about education, technology and change. He believes it can ride what he sees as the Net’s biggest opportunity, a “direct-to-consumer mobile value-added service”. Indeed, many entrepreneurs see India’s 700 million mobile connections and forthcoming 3G and 4G telecom services as the great, new hope.
Jain blogs every day about his vision for India (at emergic.org), but one foreseeable problem for his project is that he has taken political sides by becoming the national convenor of the “Friends of BJP”. He believes you have to pick one party and change it. “You cannot create a ‘Friends of India’,” can you?” he asks.
As he works towards his grand, new dream, entrepreneurs still seek out Jain. He’s not very enthusiastic because he notices the dotcom ideal lives: Attract investors, get high valuations and exit. “I tell them, don’t worry about the exit. You have to run your business for the rest of your life,” says Jain. “Every day has to be a Monday morning.”
… and what I did with $1 million
Roshan D’Silva, 32
Going back to basics
In 2000, fresh out of IIT-Bombay, D’Silva, then 22, and hostel mate Sandeep “Sandy” Srivastava, then 21, persuaded an unnamed venture capitalist to give them $600,000 to launch a business around a computer programme they wrote.
They hired 40 employees, a suburban Mumbai flat as an office, and as CEO and Chief Technology Officer, were the youngest employees of the company they founded, Myzus Infotech.
They travelled to Europe and the Far East hawking their programme, which allowed telecom companies to deliver various data easier to customers.
D’Silva, had “a particular distaste” for dotcoms. He said then: “We will only do things that are global, involving a great deal of technology, and we will not do frivolous stuff.”
So how un-frivolous is his new venture, HomeStaysDOS.com, marketing vacation homes across India? It is, well, a dotcom, and a free service.
D’Silva is sheepish. “Yes,” he admits, “I did say I won’t do a pure dotcom.”
He explains why he left his company last year. “We underestimated,” says D’Silva, “what it takes in sheer resources and talent to build a global business of scale.” “Sandy” left Myzus in 2008 and now works with Microsoft in Hyderabad and Seattle. D’Silva still owns a third of Myzus, run now by a private equity firm called Odyssey.
“I wanted to do different stuff, take bigger risks,” says D’Silva. “That’s not possible with external shareholders.”
HomeStays is something of a comfort zone. D’Silva’s parents run a coffee plantation three hours out of Bangalore. He says his tech prowess will be reused. “I don’t do towels,” he says, “so how can I make the experience of (finding and evaluating) home-stays better?”
Older and wiser, D’Silva has modified his dreams of global tech domination. “My ambition is still to do exciting things,” he says, “but also have good friends and ensure everyone makes money.”
Vishal Gondal, 34
God of small things
For someone who boasts of so many personal associations with his creator — his card says “God in chief”; his blog is titled “I am God” — Gondal is given to much self-deprecation.
“At the end of 2002, we were almost bankrupt,” says the heavyset, jovial Gondal. “We had blown our million away in all kinds of stupid things.” A new Honda car. A new office in the tony Mumbai suburb of Bandra, “just to be cool”.
One of his investors had written off his company (Indiagames.com). Another fund manager said, “Inka kuch nahin hone wala (There is no hope for them).” There was no plan B to the grandiose dotcom era plan to sell lavishly illustrated games online.
That’s when they bet on mobile and one of their investors bailed them out with Rs. 50 lakh.
“Then we did another stupid thing,” says Gondal, now ensconced in an 11th floor office in the new Mumbai, overlooking a still creek and vast mangroves. “We spent nearly $70,000 making a Spiderman game; that turned around the business.”
Adobe, Cisco and a Chinese company called Tom Online acquired stakes of Rs. 100 crore and by 2004, says Gondal, Indiagames had a million dollars in revenues. Since then, he’s learned to ride the troughs and crests of Internet waves. Indiagames has more than half the online games market in India; Gondal has 10 times more employees than the 40 he did in 2001.
Gondal sees the coming of powerful new mobile technologies, 3G and 4G, opening up new opportunities in small towns and beyond. Gondal’s mind is buzzing as he morphs into an investor himself. One idea that he’s testing: use microfinance to persuade village shop owners to buy i-Pads and let villagers play games for as little as Rs. 2. Says God, (Games on demand, if you’re wondering): “It’s another of our stupid ideas.”
Alok Kejriwal, 42
Seceding from India
India is too small to bother about. Internet mein India mein kuch nahin hota (nothing happens on the Net in India).”
These are bitter words for someone who left his father’s profitable hosiery business and saw himself on the threshold of a new era after getting a million dollars in 1999 and starting a 21-man office in China.
It’s not that Alok Kejriwal lost money. He lost his business.
After the bust, Kejriwal — who began with a website called contests2win — branched out into mobile value-added services, co-founding a company called Mobile2win (started in 2001 in China; brought to India in 2003). It handled the first “Indian Idol” voting platform.
In 2006, Kejriwal needed more investment. His original investors (Siemen Mobile, Munich, and Softbank Ventures, China) talked to new investors (Norwest Venture Partners). They agreed to bring in more money.
The condition: Kejriwal had to leave.
“I got blood pressure,” says Kejriwal. “They gave me Rs. 12 crore, but here I was losing a company potentially worth billions, at the doorstep of a mobile explosion.”
About 24 months later, mobile2win was given to a Chandigarh company in a non-cash deal. Mobile2win China was turned around by a Chinese CEO brought in by Softbank and Siemens and sold for undisclosed millions to the US’s Walt Disney productions.
Today, Kejriwal keeps contests2win alive (“for nostalgia, it’s lived its life”), runs an interactive advertising agency and — in keeping with his disdain for India — with $ 5 million in funding started games2win, an online games company, in China.
His ambitions are now to “create and sell” intellectual property and be an angel investor himself.
“I think I am the real angel,” says Kejriwal. “Knowledge is the gold standard. Money is what the dumb guys give you.”