When I had a battlefield promotion to become the CEO at Excelan from VP of engineering in 1985, I had to metamorphose as a person. I was a hardcore nerd, with a pocket protector and beard etc. I had to shave and put on white shirts and ties.
Bigger change was to become a marketer rather than engineer. I did that without missing a heart beat. I had Subhash Bal (Also ex IITB abd hostel seven but a year junior to me) as a director of marketing. He was more of a product marketing guy rather than a promotional guy. We had decided to sell to end users as our OEM strategy had fallen on its face as Sun Microsystem had beaten most of our OEMs in the marketplace.
We had to package our technology into working solutions, create documentation so the customers could use them out of the box and price it sensibly so customers could be supported, even if I had to fly out a technician out. All this had to be done in three months as cash was running out. I created a set of ads to create demand and launched them while we we worked on other things.
Everything came together like a charm. Product and documentation were ready as ads started to produce the leads. Our message resonated in the marketplace. I had increased the price almost 10 fold for the solution and it stuck.
Rest is, as they say, history. Kanwal as a marketing genius, who would have thunk it? Not any body who knew me.
vu” was my
impression of the Hanoi Summit. North Korean leaders simply cannot make real
steps towards denuc/earization. This is obvious if you
put your feet into Kim Jong-un
‘s shoes. Also they have many records
of turnit:zg around. In order to
read their minds, psychology and history are more important than following and
analyzing their words or than depending on theory books.
When the Hanoi Summit
broke up abruptly, the first thing came to my mind was deja vu. We have seen
such tum arounds many times. No, I am not saying it’s in the DNA of the Kim
family. North Korean leaders just don’t have other alternatives than to cling
to what they have.
When I am talking
to college students, I tell them that political theory books are not
your guidebooks. No politicians make their decisions by reading theory books.
It’s like no CEOs follow economic theory books. Theory books are there to
logically explain what has happened. It helps you organize your mind.
I also tell them not to rely too much on leaders’ speeches
or issued documents. Once upon a time there was a word “Kremlinology.” It was an effort to decipher the power
relationships among Soviet leaders. It
was done by analyzing
the changes in where these people were standing when they were observing
parades or by trying to read between the lines of speeches. North Korea is an
even more closed society than the Soviet Union. So it is rational to analyze
speeches and statements to understand the country. However, to depend too much on them may be misleading. Speeches
are often written to convey
what leaders want others to believe rather than to express their true thinking.
It’s psychology and
history you have to know in order to make predictions. Psychology does not mean
academic theories. It just means to put your feet into
someone else’s shoes.
Let us try it with Kim
Jong-un. Assume you have inherited an empire from your father where only you
and your family members are living a heavenly life. Most of the others are
nearly starving. What would be your objective? Of course, regime survival. To do
so, what is needed? What would you like to have in your hands?
Perhaps, two things.
First, military strength
which would cause fear among other countries. Nuclear bombs and missiles would be the ideal tools.
Or, would you believe in another country’s security assurances? Would you
abandon your ultimate weapons and place your and your country’s fate in others’
hands? You would of course think about what has happened to Colonel Muammer
Kaddafi of Libya.
Second, you would think
about a certain amount of national income to keep the country going and develop
the said military strength.
or Deng Xiao Ping are often referred
to as the leaders who have
changed their countries’ courses. So there are people who suggest that Kim
Jong-un may follow their steps. Make no mistake. Have Deng or Gorbachev
unilaterally abandoned their weapons
of mass destruction (WMD)? On the contrary, they have kept building up their WMD.
Deng was able to
introduce a type of market economy to China. So some ask can’t Kim do the same?
That is an argument that does not consider the circumstantial differences
between North Korea and China. If you open up your economy, you must anticipate a flood of information coming
in from the media and other sources.
Deng did not have to worry too
much about influx of information. That countries surrounding China were far smaller was a help. Once a competitor, Taiwan has now become a small
entity. Still he had to suppress people
during the Tiananmen
Square crisis when people developed too much awareness
or consciousness. Also Deng was able to deny his predecessors.
But can Kim endure
information coming in? Republic of Korea (ROK)’s GDP is more than 40 times larger than that of North Korea according to ROK. Can he deny his
father or grandfather who provided him with the only legitimacy he has for
being the leader? If he opens up the country, people will instantly know that they had been left behind from the rest of the
world and his grandfather and father had lied to them for over half a century. He just cannot do that.
So Kim dynasty leaders
have just been buying time.
During this time they have been
developing WM D.
They had and have no other alternatives. This is the psychology lesson.
Some analysts have been taking North
Korean officials’ words too literally. Let me show some examples:
-North Korea has been longing to change the cease-fire agreement to an
-North Korea would
like to conclude
Peace Treaty with
the US in order to get security assurance from the US,
-North Korea would like to unite the
Korean Peninsula under its regime.
Yes these words have been
said many times. But if you were Kim, do
you really care whether a piece of paper’s title is cease-fire or end-of-war?
Do you rely on US security assurances? If you set aside psychological analysis, you may place too
much importance on these words expressed intentionally to misguide you.
While buying time, the North has been engaging in negotiations. Why? Because they were able to fetch some concrete results through such negotiations. What they got were, at times, food, oil, or delisting from terrorist supporting countries. Once they almost got a nuclear reactor.
In return, North Korea
offered to behave
themselves. They offered
concessions such as halting
of nuclear experiments to get aid or to get sanctions
relaxed. This, positively, was called a “step by
Negatively, it was called “salami tactics” of
The biggest problem was
that their commitments have never been honored. One spectacular example was the
Six Party Talks’ 2005 Agreement. Let us look at the excerpts. This was an
Assistant Secretary level meeting.
The DPRK committed to
abandoning all nuclear weapons and existing
nuclear programs and returning, at an early date, to the Treaty on the Non-Proliferation ofNuclear Weapons and to IAEAsafeguards.
The United States
affirmed that it has no nuclear weapons on the Korean Peninsula and has no
intention to attack or invade the DPRK with nuclear or conventional weapons.
The ROK reaffirmed its commitment not to receive
or deploy nuclear weapons in accordance with the
1992 Joint Declaration of the Denuclearization of the Korean Peninsula, while
affirming that there exist no nuclear weapons within its territory.1
Then the next year, 2006,
North Korea implemented their first nuclear test. Subsequently, they have
conducted five additional nuclear tests. This is the history lesson.
Then, is there no possibility of complete
No, I am not saying that.
Didn’t we see how eager the North was to see sanctions lifted? Here lies the
key to understanding the situation. The 2016 and 2017 sanctions prohibited all
North Korean coal exports and about one half of their total oil and oil
products import. UN Security Council sanctions need all permanent members’
agreement. That means China and Russia must join. These very strong sanctions
were possible only because
the North conducted
three nuclear tests and more than 30 missile
launches against the warning of Security Council in 2016 and 2017. Faced with
the strong reaction of international public opinion, the two countries had to
acquiesce to unprecedentedly strong sanctions. These have been hurting the North Korean
economy. They had engaged very actively in transferring cargo between
ships on the sea, or lightering, to bypass
the sanctions. This is stated
in successive UN reports including
the one issued this February. So, in short,
sanctions have been effective. The North is eager
to see the sanctions lifted. Also, they are after funding.
President Donald Trump once said that he would negotiate but those who extend economic cooperation should be ROK and Japan. We have already experienced such a plan when an agreed
framework was established.
In the KEDO project
which the US negotiated with North Korea, ROK and Japan were due to be the financial
contributors. Japan accepted the deal. Japan again will be ready to
offer financial support as it has done to ROK in 1965. But Japan will do so
only in accordance with the Pyongyang declaration between then Prime Minister
Junichiro Koizumi and Kim Jong-ii.
Following are excerpts.
Both sides determined that, pursuant to the spirit
and basic principles laid out in this Declaration, they would make every possible
effort for an early
normalization of the relations, and decided that they would resume the Japan
DPRK normalization talks in October 2002.
Both sides expressed
their strong determination that they would sincerely tackle outstanding
problems between Japan and the DPRK based upon their mutual trust in the course
of achieving the normalization .
The Japanese side
regards, in a spirit of humility, the facts of history that Japan caused
tremendous damage and suffering to the people of Korea through its colonial
rule in the past, and expressed deep remorse and heartfelt apology.
Both sides shared the
recognition that, providing economic co operation after the normalization by
the Japanese side to the DPRK side, including grant aids, long-term loans with low interest rates and such assistances as
humanitarian assistance through international organizations, over
a period of time deemed
appropriate by both sides, and providing other loans and credits by such financial
institutions as the Japan Bank for International Co-operation with a view to
supporting private economic activities, would be consistent with the spirit of
this Declaration, and decided that they would
discuss the specific scales and contents of the economic
co-operation in the normalization talks.2
In short, it should be in
such an order as first tackling outstanding issues, followed by normalization and only then extending economic
cooperation. Here, outstanding issues include nuclear, missile and abduction issues. Until
these issues are solved, Japanese people will never allow their government to
go ahead with economic cooperation.
If their economy is really cornered, North Korea is expected to tum around and seek cooperation with ROK and Japan. It is sincerely hoped that the day will come sooner than later. But neither Japan nor the US is in a rush. The situation brought about after the Singapore Summit is not bad for our side. Kim had to commit not to launch missiles and not to proceed with nuclear experiments. The sanctions are intact. Some analysts always over-evaluate the North Korea’s diplomatic skills but in reality they are more cornered than before. They themselves know about this.
Many argue that in order
to proceed with denuclearization, a relationship of trust relations should be
constructed first between the North and the United States. This argument plays into the hands of North Korea and forgets
that the US is negotiating
on behalf of the international community. North Korea has repeatedly conducted
nuclear testing and missile launches against the warnings of the UN Security
Council. These are by no means one-on-one negotiations. It is
the international community as a whole opposing such actions of North Korea.
Lastly, a word on the recent
move of North Korea to restart activities at their missile launch site of Ton Chang-ri or
their blaming Secretary Mike Pompeo and National Security Advisor
John Bolton. This again is deja vu. The North wants the US to ask for the next round of meetings. They
don’t want to put themselves in the “demandeur” position. So they are
sending messages not to put them aside. The officials have to say that it was
not their responsibility that the Hanoi Summit had no agreements. At the same
time, they know that if they blamed President Trump that would definitely be
the end. So they are focusing only on officials from Mr. Pompeo to Mr. Bolton.
What a classic technique!
The best thing that happened in Hanoi was that the two sides did not agree on the next summit date. Now, there is plenty of time for detailed official level negotiations.
No rush. Let us go steady and slowly. More haste, less speed.
Statement of the Fourth Round of the Six-Party Talks Beijing, September 19,
2005 U.S. Department of State Archive https://2001-2009.state.gov/r/pa/prs/ps/2005/53490.htm
Ichiro Fujisaki joined the Ministry
of Foreign Affairs in 1969, and went on to serve as Deputy Director General for
Asian Affairs, Political Minister at the Embassy of Japan in Washington, DC, Director General
for North American Affairs, Deputy Foreign
Minister, and Ambassador to the UN and WTO in Geneva.
He served as Ambassador to the United States from 2008 until 2012. He is
President of Nakasone Peace Institute and President of the America-Japan
The Indians Of Silicon Valley The hidden geniuses of the tech revolution are Indian engineers–here’s how one bucked stereotypes, got rich, and has become godfather to a generation of immigrant entrepreneurs.
By Melanie WarnerMay 15, 2000
(FORTUNE Magazine) – Kanwal Rekhi’s got these big eyes that flicker when he talks. His shoulders are rounded and his large, thick frame shows marks of age. But when he speaks, his face, large and jowly, emits youthful energy. His speech is rapid and subdued, perhaps racing to keep up with his mind. Rekhi often leaps into new thoughts and words before he’s finished the last ones, which can make him hard to understand. This effect is compounded by a slight accent, an artifact of Rekhi’s having spent most of his first 18 years in Kanpur, India. Between the speech and the physique, he has more than a passing resemblance to Vito Corleone, the Mafia don played unforgettably by Marlon Brando in The Godfather. Which is rather fitting because Rekhi, 54, is the unofficial but quite undisputed godfather of Silicon Valley’s Indian mafia.
Not that it’s really a mafia, though some people call it that for fun. Rekhi, who sold his company, Excelan, to Novell in 1989 for $210 million (which was, at the time, believe it or not, a lot of money), doesn’t strike the slick pose Brando assumed as Don Corleone. Rekhi’s gray hair is always slightly disheveled, and befitting his background as an engineer, he comes off as disarmingly rumpled. Last year, Rekhi wore a tie exactly six times. For all but a few occasions, he dresses new-economy casual–khakis and a cotton shirt that’s likely to say something on it like EXODUS.COM and to have been a freebie from a company he’s funded.
When people call Silicon Valley’s Indian population a mafia, they mean that the immigrants who live in the Bay Area and work in high tech–roughly 200,000, according to siliconindia magazine–have formed an amazing web. Indians invest in one another’s companies, sit on one another’s boards, and hire each other in key jobs. Many live in close proximity and hang out together. The network might be only mildly interesting if so many of the Valley’s Indian immigrants hadn’t become phenomenally wealthy and successful in the past ten years. People don’t necessarily think of it this way, but Bay Area Indian immigrants represent America’s most successful immigrant group. Collectively, they’ve created companies that account for $235 billion of market value. If you add up just the net worth of the people mentioned in this story, for instance, you’ll get more than $8 billion.
It’s safe to say that without Indian immigrants the Valley wouldn’t be what it is today. Indian engineers have been coming to the U.S. in increasing numbers since the early 1970s; almost half the H-1B visas given by the State Department go to Indian engineers (H-1Bs are granted to foreigners who have specialized skills or are, oddly enough, fashion models). High-tech companies need people desperately–U.S. engineering schools simply don’t produce enough graduates to fill the specialized jobs the high-tech industry creates. According to the Information Technology Association of America, a trade group in Arlington, Va., more than 800,000 infotech jobs will go begging this year. And the engineers U.S. schools do produce typically aren’t as talented as those from India. Many Indian immigrants have graduated from schools that make Harvard and MIT seem easy to get into. The six Indian Institutes of Technology, created in the 1940s by Prime Minister Jawaharlal Nehru to educate engineers for public-works projects, produce some of the world’s smartest techies. Last year about 3% of the students who applied to IIT got in, while 11% to 18% were accepted at Ivy League schools.
Rekhi went to IIT Bombay and is personally worth more than $500 million. As head of The Indus Entrepreneurs, or TiE, the Valley’s large, influential Indian networking group, he’s at the center of a whole lot of wealth creation. Since he left his job as chief technology officer of Novell in 1995, Rekhi has poured millions of his own dollars into more than 45 startups founded by Indians, many of them IIT grads. But this sort of angel investing is not really what Rekhi considers his true calling. If you ask what he does, he’ll tell you he mentors entrepreneurs. That means, among other things, that every week he spends one or two days meeting with other Indians who want to talk about the companies they’ve started. (Rekhi says someone doesn’t have to be Indian to get a meeting with him, but most people he sees are.)
From 10 A.M. to 3 P.M., usually on Thursday or Friday, Rekhi sits in a small conference room in TiE’s charmless offices in an office park in Santa Clara and listens to pitches from three or four entrepreneurs. The scene unfolds a bit like the sequence in The Godfather in which Corleone entertains a stream of requests on his daughter’s wedding day. If an entrepreneur is lucky, he or she might leave TiE with the names of a few people to call from Rekhi’s long list of contacts. If he is really, really lucky, he might get some combination of Rekhi’s money, his commitment to join the board, and his promise to take an active role.
Because of time constraints, Rekhi does this with only a few companies at a time. Those he’s actively involved in now–Ensim, Instantis, 123SignUp, and Paramark–were all founded by Indians who attended IIT. Rekhi gave several hundred thousand dollars to each, but lately he’s been saying he’s not going to do that anymore; he realized last fall that he had so many investments, from both his own bets and those of the half-dozen large Valley venture capital firms he’s invested in, that he’d become more a business than a person. Although he’s made more money by funding entrepreneurs than he did by creating a company and selling it to Novell, Rekhi insists he doesn’t care about earning more. He’d rather help entrepreneurs for free. “I’ve got more money than anybody should. More than I can spend in ten lifetimes,” he says.
At a recent TiE networking event at the Santa Clara Marriott, Rekhi was doing what he calls “making myself available.” It was a Sunday afternoon and 400 people packed a large conference room to schmooze, compare notes, and, if they wished, get up on stage and make a two-minute pitch for themselves or their companies. Rekhi stood in the back of the room talking to people who opted to take their story straight to him. For about an hour an eager congregation surrounded him. Some he gave advice to on the spot. Others he told to call the TiE office and set up a meeting with him. Others he told he couldn’t help at all. When he’d finally worked his way through the crowd, he’d collected 20 business cards. “There are too many. I can’t keep up,” he said, shuffling through them.
It wasn’t always this way. Indians didn’t network with one another when Rekhi and seven other midcareer Indian entrepreneurs started TiE in 1992. Going even further back, Rekhi remembers a time when hardly any Indians were starting companies. In 1982, when he founded Excelan with Subhash Bal and Inder Singh, friends he’d made while working briefly at a startup, most of the Indians he knew were working as techies at big companies. The trio’s plan to run Excelan, which made gear for local area networks, was unusual because Indians were widely regarded as great techies but inadequate managers. So when three Indians who lacked a white guy went to raise money from VCs, they faced lots of slammed doors. Recalls Rekhi: “We’d always hear that the company didn’t have a ‘businessman,’ that there wasn’t anyone with a marketing background or selling expertise. That’s what they’d say. But the real issue was, Will customers buy from an Indian? Indians were seen as damn good backroom operations people, but are they good in the front room, running the show and selling to customers?” This helps explain why, despite the wealth and success of Indian entrepreneurs, there are still few Indian CEOs running high-tech companies. In many instances, VCs investing in an Indian-founded company have brought in a non-Indian CEO, relegating the founder to a technical role. In other cases, large companies have acquired Indian startups for their technology or their techies. Try to name half a dozen big high-tech companies with an Indian CEO; ten bucks says you can’t.
Rekhi and his partners did end up raising the money to fund Excelan, but Rekhi never got a full chance to prove himself as a boss. Now lots of small companies he has invested in are headed by Indian CEOs intent on remaining chief through an IPO and beyond. Like the dad who never made the cut for the varsity team, Rekhi delights in seeing members of a new generation of immigrants become superstars.
When he and his partners started Excelan, they decided that Singh should be the boss because he was the smoothest and most articulate. Despite his quick mind and knack for strategy, Rekhi lacked polish. He’d worked for 11 years at big companies, like mainframe-maker RCA Systems and government contractor Signal Link, but had never risen above systems engineer. Rekhi remembers asking about management jobs, then seeing people he considered less competent be promoted over him. “They’d say, ‘You’re a brilliant technologist, so we can’t afford to lose you.’ And they’d promote this other guy who didn’t know as much,” says Rekhi.
He got to serve as Excelan’s interim CEO after Singh didn’t work out. Though his term was brief, Rekhi worked hard to grow into the role. He shaved his beard and bought lots of suits and white shirts. On the advice of several directors, he underwent speech therapy for a stammer that had dogged him since childhood. To better understand the selling process, he moved his cubicle from engineering to the marketing department and often tagged along on customer calls with Excelan’s sales guys. Rekhi liked being boss and thought he was good at it. But when the time came for Excelan to go public, the board decided it needed someone who would play to Wall Street; it hired Dick Moore, a 25-year Hewlett-Packard veteran. Rekhi stayed as EVP and board chairman, and most employees still thought of him as the boss. Moore did pull off a successful IPO but couldn’t adapt to startup culture. Within a year he was gone. Again Rekhi stepped into the top spot until Novell acquired the company in 1989.
Looking back, John Dougery, an Excelan investor and director, admits that the board probably should have let Rekhi stay as CEO in the first place. “Back then, Indians weren’t perceived as winning CEOs. We didn’t know if people would trust them as managers,” says Dougery.
By the time Rekhi got to Novell, he knew a lot about business and felt he was qualified to run a large public company. In the early 1990s, CEO Ray Noorda was on his way out, and Rekhi, who was CTO, made it known that he wanted the top job. The board considered him briefly, only to opt for Bob Frankenburg, another man from HP. Rekhi had watched Noorda make what he considered dumb decisions–spending more than $1.2 billion to buy the PC software packages DR/DOS and WordPerfect. (“They were dead applications,” says Rekhi.) Now he watched as Novell’s stock sank and the company floundered under Frankenburg. By 1995 he had decided to quit. He took a vacation of several months with his wife and two kids, then packed up his boxes at Novell and carted them to his home in Los Gatos, Calif. For the first time in his life, he had nothing to do.
At first Rekhi went into a funk. “When you become successful, you become incompetent as a person, because all the little things are done for you by others. I didn’t even know how to make airline reservations or who to call to get a PC in my home,” he says. To ease the boredom and quit bugging his wife, he started hanging around TiE. Though Rekhi had helped found the organization, he hadn’t been active. In fact, he says that until 1995 he had little connection to the Indian community. His wife, Ann, is American (they met in Florida while he worked at a computer company and she served in the U.S. Air Force), and at least half their friends are American. Indian food is rarely served at home; Rekhi listens to Indian music only when driving alone. “I was as de-Indianized as anybody,” he says. But as he hung around TiE, something started to happen. People heard that the former CTO of Novell was there and began showing up to talk. Eventually Rekhi was advising as many as eight to ten entrepreneurs a day.
On a recent morning, Rekhi is scheduled to meet with Jay Karmarkar, a Ph.D. who was in the same class at IIT. Karmarkar arrives promptly at 10 A.M. and sits opposite Rekhi in TiE’s conference room. Karmarkar has spent the past decade running a small government contracting firm that does things like algorithm development, and looks the part. His glasses are one or two sizes too big, and his handshake transfers nervous energy that suggests meetings like this are a new undertaking. Karmarkar is here to see Rekhi because he has an idea for a network computer that will run on a stripped-down Unix operating system and be compatible with Linux applications. After chitchat about the genesis of his startup, Karmarkar launches into his business plan, which he’s laid out neatly on sheets of paper on the table. “What we want to do is an Internet terminal that we’ll sell for really cheap, probably $200. It’ll be light and efficient because we’re taking out all the bloated applications of the PC.”
Karmarkar barely gets to page three when Rekhi interrupts. “Stop right there. Everyone who’s tried to build a Web PC hasn’t succeeded. Larry Ellison’s lost millions on that,” says Rekhi, leaning forward, elbows on the table.
“Yes, but we’ve got a whole new idea for the operating system,” Karmarkar says, shuffling his papers in search of the slide that will respond to Rekhi’s objection. Rekhi doesn’t let him get to the slide. “I can get a $500 PC right now; how can you make it cheaper?”
“We’re going to build a stripped-down version of Linux…” Rekhi interrupts again. “The reason PCs are successful is because you have all these applications and software inside them. If you take all that stuff out of the PC, you end up having basically a TV. You take out all the value.”
Ten minutes later, Karmarkar is slumped in his chair, listening to Rekhi tell him how he’ll have to convince armies of developers to design applications for his operating system. “People will look at you, this new guy, and think, ‘Why should I trust him?’ How can you convince them you’re reliable?”
Karmarkar nods and says, “You have a point there.”
One reason Rekhi is so sought after by entrepreneurs is that he’s brutally honest. He can listen to someone and, within ten or 15 minutes, understand exactly what he is trying to do and offer unrestrained feedback. Unlike many VCs, who like to string along entrepreneurs in case they later have a change of heart about funding them, Rekhi calls everything as he sees it. “Totally lost” is his assessment of Karmarkar when I ask about the meeting several days later. Rekhi didn’t use those exact words with Karmarkar, but when Karmarkar requested that Rekhi refer him to some investors, Rekhi replied point-blank, “I wouldn’t send you to anybody until you figure out your plan. I have to feel good about someone when I refer them. Or else people call me up and say, ‘Why did you send me that one?'” When I catch up with Karmarkar a few weeks later, he says he’s never taken “that many bullets in ten minutes,” but that a lot of what Rekhi said was right and that he’s thinking about how to revise his pitch.
Most entrepreneurs Rekhi sees are savvier than Karmarkar, but many still orbit in a techie bubble. They load their presentations with details of exactly how their technology works. They use words like “pipelining” without explaining what they mean. They drone on after people have tuned out. Since most Indian immigrants come from a technical background, many find the social nuances of business daunting. “All these companies could have benefited from an hour with me,” Rekhi declares, as we head out of one of TiE’s monthly angel-investor meetings at the Silicon Valley Capital Club in San Jose. Five entrepreneurs have just presented their startups to a room of about 70 angel investors and not one gave a clear, compelling pitch. “That second one, I still can’t understand what they were doing,” says Rekhi.
By far Rekhi’s most successful mentoring achievement is K.B. Chandrasekhar. Chandra, as he’s known, isn’t the wealthiest Indian in the Valley–that distinction goes to Vinod Khosla, a co-founder of Sun Microsystems and partner at Kleiner Perkins–but as founder of Exodus Communications, Chandra’s the best-known Indian Internet entrepreneur. He pioneered server farms, those Internet data centers that house and maintain other people’s Web servers. Now Exodus is a $242 million-a-year company that employs 2,000 people. But when Rekhi met Chandra in 1995, he was running Exodus out of a small office in Sunnyvale that was overheating because of all the servers stacked on tables. He was almost out of money and, if he wasn’t able to raise more, would probably be returning to India with his wife and three kids. Rekhi became his savior.
They met at a TiE event. Chandra remembers the encounter better than Rekhi because Chandra was one of about three dozen people who came up to Rekhi that night. For some reason, Rekhi wrote on the back of Chandra’s business card “call this guy”; he can’t recall why, but he figures he must have been struck by Chandra’s energy. When Rekhi called two months later, Chandra told him, “I need $200,000 for payroll and I want to talk to you today.” Chandra had gone to the TiE event desperate. He and co-founder B.V. Jagadeesh had been funding Exodus from money they’d made developing software for large companies, but that wasn’t going to last. Chandra didn’t know any VCs or other people with money. He’d been in the U.S. just five years and, unlike most Indians in the Valley, hadn’t gone to an American grad school or an IIT–Chandra’s engineering degree is from the lesser-known Madras University. “My networks were pretty thin,” he says.
Rekhi liked Chandra’s ability to tell his story. He pegged the guy as a natural entrepreneur driven to see his ideas come to life no matter what the odds. But Exodus was an unfocused mess. Chandra was working on too many ideas. Says Rekhi: “He thought he could fund one business from the other, but I told him that almost never works.” Rekhi gave Chandra the $200,000 he wanted, but told him he needed to focus on one thing and suggested it be hosting other people’s Websites. Rekhi agreed to join the board and rounded up other investors, who together gave Exodus a first round of $3.2 million. Some of the investors were TiE members and others friends of Rekhi’s, like construction executive Ed Shay and venture capitalist John Dougery, who have since invested in almost every one of Rekhi’s deals. Helping Chandra proved Rekhi’s best investment decision ever. The $1 million he eventually put into Exodus for an initial 2% stake is now worth $130 million.
Chandra says he’d like to emulate Rekhi and mentor other entrepreneurs. But for the moment he’s trying to build a company he thinks will be bigger than Exodus. JamCracker, Chandra’s second startup, provides an online portal where IT managers can access and manage all the software their companies need. Rekhi is an investor and a director, but this time it’s not because Chandra needed money. Far from it. After turning away numerous funding offers earlier this year, Chandra raised his first chunk of capital at a rather stunning $80 million valuation. The price was too steep for Rekhi, so, as a thank-you for Exodus, Chandra sold him some of his own shares at a lower price. “I always ensure Kanwal gets a good deal. He’s my guru and my mentor,” says Chandra.
That sort of thing happens a lot in the Indian network. Take serial entrepreneur Naren Bakshi. When he presented Versata, his first startup, at TiE’s annual conference in 1995, he was really pining for the $800,000 Rekhi and 12 other TiE members eventually gave him. For his second startup, Xpede, a financial services company, and his third, a dot-com called BuildYourDreamHome, Baskhi, 56, had VCs lining up. He still cut Rekhi and other TiE members in on the deals. He told Xpede’s VCs that $1 million of the $10 million first round had to come from these angels.
As in all good networks, reciprocity keeps the wheels turning. Nimish Mehta, CEO of Impresse, which runs a Web service for corporate printing needs, was among the TiE members who invested that $800,000 in Versata. An investor in JamCracker, he’s also friends with Chandra. So when Impresse was raising capital, Chandra got to do something virtually every investor in the Valley would kill to do–he invested alongside Kleiner Perkins and Benchmark. Rekhi, because he’s the godfather and everyone wants him to invest, also got in on the deal. As did Satish Gupta, CEO of Cradle Technologies, a chip company. Why him? Impresse CEO Mehta, who left a job as senior vice president at Oracle, is one of four Indian angel investors in Cradle.
The wealth-creation potential of this network is huge. So naturally it was only a matter of time before the Valley’s money establishment discovered it. The same VC firms that used to look warily at Indians starting companies now trip over themselves trying to get Indian deals in the door. Scott Sandell, a partner at New Enterprise Associates, asks the Indians he’s already funded to send their entrepreneurial friends over to NEA. Of the 15 companies Sandell has funded at NEA, four were founded by Indians.
What VCs have realized is that Indians are not only some of the best entrepreneurs they’ve ever met, but they’re also wired into one of the Valley’s most precious resources–technical talent. Companies with Indian founders, especially ones who’ve gone to IIT, can often hire teams of developers faster than the average company. This can be a huge advantage in the Internet race to get up and running ahead of the other guy. Munjal Shah, a first-generation Indian American, says he’s had no problem hiring top-flight engineers for his company, Andale, which provides services to people who sell lots of stuff on auction sites. Shah met his two chief engineers, both IIT grads, through one of his angel investors, all seven of whom went to IIT. Shah thinks the connections enabled Andale to move much faster than it would have otherwise. “Our time to team was lower,” he says.
One recent day, as I walked through TiE’s offices with Rekhi, he showed me the brochure for the group’s upcoming annual conference. The first few years TiE held a conference, nobody of note wanted to come and speak. “This year we had people calling us,” Rekhi said with great pride. Jim Clark and Sycamore Network’s Gururaj Deshpande are the keynotes; McKinsey CEO Rajit Gupta is also speaking. Flipping open the brochure, Rekhi pointed out a long list of conference sponsors–Goldman Sachs, Morgan Stanley, Kleiner Perkins, KPMG, Internet Capital Group, and so on. The conference quickly sold out; 1,500 people signed up.
Such accomplishments attest to Rekhi’s success in developing the Indian network. “Some of my friends joke that we don’t need TiE anymore,” he says, which is why Rekhi has begun to turn to a place he thinks needs a lot of attention–India. “I call it the economic freedom movement,” he says. “Information technology is restoring India’s confidence. The change is amazing.” Among Rekhi’s India projects is a campaign to raise private money for IIT, which, despite its wealthy graduates, is still funded by $100 million a year from the Indian government. He kicked off the campaign by giving $5 million to his alma mater, IIT Bombay. Each time he visits India, which is frequently these days, Rekhi meets with Prime Minister Atal Behari Vajpayee or cabinet members to discuss economic reform. Rekhi wants the government to foster U.S.-style venture capital, so that India will become a haven for startups and not just a place to farm out cheap software development. In the face of India’s one billion people and notoriously sclerotic and corrupt bureaucracy, these would seem ambitious goals. But Rekhi is undaunted. “I have the time and the financial resources,” he says. “I want to transform India.” Don Corleone, it seems, is starting to act a little like Gandhi.
2002 was the watershed year for me. I was a spent man emotionally, physically and financially, at the end of 2001. I weighed 275+ lbs, lost most of my wealth to dotcom bust and had serious self doubts. My self image of a confident, smart man who mentors people was shattered because I did not foresee the intensity of dotcom bust.
During a visit to Kuala Lumpur for TiE Malaysia launch, I had trouble keeping up with my schedule. I woke one morning and stared at a man in the mirror I did not like. I saw a man who was morbidly obese who had a family history of strokes. I saw a man who was outright stupid, it could not have been me as I was smart and people came to me for advice. This dissonance got better of me. I cut my trip short and flew back to California. I dropped everything I was doing and decided to retool myself in to my self image. I went on a doctor supervised crash diet, signed on with Barbara Blackburn (http://www.fitedge.net/) to get in shape.
My brother in law Mark Holt signed on with me to help me get fit.
I got in to hiking and biking like there was no tomorrow.
A year of workouts with Barbara (cardio, pumping iron, flexibility training), hiking all the hills around the valley and bicycling every trail in the greater bay area restored my health. I lost almost 75 pounds.
I emerged at the end 2002 as a restored man. It has been 13 years. I have stayed with Barbara all this time, have kept with my hiking and biking. I can do 10 mile hike in the hills and ride my bike 40 mile. I am fitter and stronger person at 70 years of age than I was at 50! I felt good enough as a person to launch a new carrier as a venture capitalist.
I partnered with John Dougery Jr. and Samir Kumar (in Bangalore) to launch Inventus Capital Partners as a US/India fund. We are now thinking of raising our third fund!!
That is me atop Mt. Tamalpais, the highest peak in the Bay Area.