Gurmeet Naroola wrote a book called The Entrepreneurial Connection: East Meets West in the Silicon Valley, and did a chapter on me. With permission from Gurmeet, you can read it below:
Kanwal Rekhi is Chairman of TiE (The Indus Entrepreneurs). He is a leading entrepreneur and angel investor, and is on a mission to build bridges with India.
Rekhi founded Excelan in 1982. When Excelan merged with Novell in 1989 he joined Novell’s board of directors and was later named executive vice president and CTO. Now retired, Rekhi serves on several public and private company boards. In 1986 he was named as “Entrepreneur of the Year” by the Arthur-Young Venture magazine.
He earned a B.Tech from IIT-Bombay and a master’s degree in electrical engineering from Michigan Tech.
Rekhi is a person of clear views who knows where he stands. He is a man with the heart of a lion and will go out of his way to offer help. He is known to be very fair and passionately devoted to cultivating entrepreneurs and helping them succeed. With this man, what you see is what you get. He speaks his mind without mincing words.
This interview was conducted over three sessions. The first, at the TiE head quarters in Silicon Valley, the second, while I dropped Rekhi at the San Francisco airport (He was on his way to meet the Indian Prime Minister) and the third over lunch at Togo’s (a popular sandwich shop in the Silicon Valley). We cover a lot of ground in these three interviews. Rekhi shares with us the story of Excelan, one of the first Indus companies to receive VC funding and make it big in America. He explains in detail the turnaround effort he orchestrated at Excelan, highlighting the drastic steps that were required to save it from going under. We then discus his involvement with The Indus Group and his passion for mentoring. We end with a closer look at the personal side of this passionate individual.
Today, you are one of the most successful Indians not only in the Silicon Valley but in the world as well. You went from being a successful entrepreneur to an even more successful investor and an icon in the Indian community. How did it all begin?
I like to believe this all began during my undergraduate years at IIT, Mumbai. IIT was for me the window to the world of science and technology. All of us had a hunger, a desire to do something, to become someone great. I was, like many others, swept up by a passion to come to the United States. I arrived in 1967 and received my master’s degree in electrical engineering in 1969. To pay for my education I had to wash dishes at a restaurant. To many this may seem like menial labor, but I drew hope from it. If I could earn that little and still live on it, I was already making a profit, even back then.
At the time you graduated, the Vietnam War had just ended, leading to a recession. Engineers were, I am assuming, not the most sought after professionals. Was that a difficult time?
Yes, it was not a great time to be an engineer. I was laid off three times but I knew I was going to succeed. I kept bouncing back and traveled all over the country before finally getting a job with Singer-Link in Sunnyvale. If you look at the history of Indians, those who came early on to the United States were very focused on succeeding. Becoming part of the society, being accepted and competing in order to move up was very important to us. The density of Indians was very low and we did not have much of a support structure. The early immigrants were very focused on success, but eventually most of us started to hit the glass ceiling. The immigrants from the Indus region were seen as techies, engineers, programmers and doctors. The technical track only took you so far. We discovered that we needed to inculcate a certain skill set, and change in order to grow. Several of us felt that we could not do it, that entrepreneurship was the only way available. Only a hand full of people were able to make it up all the way up the ladder – Rajat Gupta of Mckinsey, Dr. Netravali at Bell Labs, Krish Prabhu at Alcatel and a few others – but these were only a few.
You obviously broke through this glass ceiling. How did you go about it?
I attacked the issue head-on. You have to make sure that you become absolutely focused on performance and take action. You can’t ask for a break from anybody. You have to let your actions speak for you. You have to think “out-of the box” and take unconventional steps. I was the first to go to the Out-of-the-Box Thinking Kanwal Rekhi 90 VCs for money; I needed to do it like everyone else here. I felt that the society was fair and open and that we should not have an issue getting the funds. It was to be the first milestone.
John Barsh, a VC, once gave me sound advice. He said, “Just show me the revenue numbers.” When you start to execute you cannot make excuses; every step of the way you have to show the numbers. At the end of the day, performance translates into numbers.
How did you identify the market opportunity? Where did the idea come from?
Everyone thinks of the Internet age as a once-in-a-lifetime opportunity that is changing the world. Any time when there is a rapid change or discontinuous change it usually presents an opportunity. What that typically means is that something fundamental has happened and the previously established order, where average people had an advantage, ceases to exist. The technology has moved on, the present technology has become obsolete, the cost structure has changed and that’s when opportunities emerge very quickly.
We had a similar change when the PCs came about in the late 70’s. The fundamental change that the PC made was that it brought the power of the computer to the masses very cheaply. The early PC, even though underpowered, was still very good. For a couple of thousand dollars you could get the CPU, memory and HD. This allowed the notion of personal productivity. Most of us who grew up with mainframe super-computers saw this as a transition, a revolution. The whole world was turned upside down. The mainframes were designed to be cheaper when they were bigger. When you needed more compute power you bought a bigger and bigger machine. There used to be a well-established IBM formula “twice the power at 40% more money”. So, instead of buying two computers you bought twice the CPU. The PC turned this whole way of thinking upside down. If you needed twice the power, you bought two computers. You started small and very flexibly increased the compute power by adding more PCs. This was a fundamental change and we saw the opportunity: These things would have to be tied together into a network. The industry was going through a transition. The PC was being positioned as a stand-alone desktop personal productivity tool. We saw this as a starting point rather than an end point – that the productivity tools would have to tie together and that they would have to tie back into the mini computers and mainframes, and networking would be a very big deal.
Excelan’s idea was to network these computers together and to the other machines. In fact, when the PC was announced, Inder, Navin Jain, and I were already playing around with the idea of designing networks for these PCs.
How did the three of you meet? What did each of you bring to the table? How did you function as a team?
All three of us were equal partners. After working for Singer-Link for nine years, from’71 to’ 80, I ended up going to work for Zilog, where I met up with Inder Mohan Singh and Navin. I was the logic design/system design expert; Inder was a mainframe computer expert and Navin was in charge of the software world.
So now you had a good team, a great idea; what was next?
When Ethernet was announced as a standard, the idea of networking the computers together became an opportunity. Ethernet was straightforward, a standard backed by Intel, Xerox, and Digital; this ensured that the standard was well thought through and was designed to be very broad and open. Intel said that they would design the network chips and targeted an introduction time of two to three years.
I had grown up with the transistors, SSI chips, MSI * LSI chips, and was able to design quickly without having the chips available – a very complex function. For the new engineers, if the µP wasn’t available, if serial I/O was not available – they could not design it. I realized that I could design very complex systems without the chip.
With this expertise in designing chips very rapidly, the team felt that we could design the network chips to go with Ethernet in weeks rather than years and that it would be simple. One day I just sat down and started to sketch the Ethernet design on paper and in a couple of weeks came up with a design that would fit on the board easily. Intel had done some board-level design, but their solution consisted of two large boards and was awkward. We came up with a single board design that was half the size and at the same time a lot more original and powerful. The issue was now whether or not the paper design would work.
I was confident that it would work and this became the basis of Excelan. We could design the board level adapters for all types of buses- multibus, geo bus, Unibus, IBM PC bus- and before the chips were available; that became the basis of Excelan. We became more of a board company and were able to do intelligent boards very rapidly, so we were almost instant hits. If chips became available then others would be able to do it too. We had to get out Out-of-the-Box Thinking Kanwal Rekhi 92 there and establish ourselves early. So Excelan got ahead of their competition and became leaders in high performance networking boards for various machines. Excelan had a solution that could connect the Minicomputers, Vaxes, Micro Vaxes, PDPs, to the PCs and to all sorts of Unix machines. So the boards solution was considered to be the early magic.
Your betting on the TCP/IP as a protocol appears to be a key component of Excelan’s success. Again, this was contrary to conventional wisdom. Why did you take this bet?
Yes, backing the TCP/IP as a protocol was another win. Intel and Xerox per- formed the hardware standardization with the Ethernet but they all adopted different software standards. Digital adopted DECnet, Xerox came up with Xeroxnet, Intel adopted OSI protocols. All three solutions were different and incompatible with each other. None of these solutions made sense, as the machines could not talk to each other. Most people bet on the Xeroxnet, but we bet on TCP/IP as it had already been proved, on the slow networks, to work with all the machines. The department of defense (DoD) and most uni- versities had adopted TCP/IP as part of the Defense Advanced Research Project Administration net (DARPA). DARPA net was the original Internet and had used TCP/IP.
You knew you could transfer files between various machines using TCP/IP and I sensed that if you took the TCP /IP protocols which are proven on the DARPA net and Ethernet, which is a very solid standard, and put them together you would have an instant solution. People could do things instantly rather than wait for chips and standards.
This turned out to be a good insight, because people were beginning to buy PCs and they wanted to run their CAD programs and VAXES. Excelan was able to let PCs do virtual terminal sessions, file transfers back and forth, and were able to offer their customers rapid solutions.
You were one of the first Indians to go to VCs for funding. What made you take this step?
Yes, I was one of the first Indian entrepreneurs to go the VC route. My thinking was: If we are going to succeed here then we have to be like the other people here. We have to be ready to compete. If we have to compete for the customers down the road we have to compete for the money now. If we are not able to compete for the money now, what makes us think we will succeed later? You have to sell yourselves to the VC, then to the employees, and then to the customers.
Excelan had opened its doors in April 1982. We had put up our own cash and no one received salaries for six to seven months. The first hardware design was already in the hands of customers and we already had our first purchase order. The board was beginning to work well and customers were beginning to show interest. The dream of networking was also a believable dream by that time. We had already differentiated ourselves with the board,. so we felt confident to approach the VCs for the money. John Barsh, who funded us, looked at us and told us bluntly, “You guys don’t have much bargaining power, do you?” When we said no, he said, “I’ll make you one offer and that’s it” He gave us two million dollars for half the company. This was a very fair and generous offer at the time.
1983 was a disastrous year for Excelan. What happened?
Excelan was in trouble. We were not making our numbers and the VCs were not happy. We committed the common mistake of “over promise and under deliver” We were projecting way ahead of reality. When the numbers were falling we were hiding rather than addressing the issues with a correction plan. We began to blame others. We were actually doing well in absolute numbers but you are compared against the numbers you project and promise. The strategy should be “under promise and over deliver”, not the other way around. We were projecting way beyond reality.
For example, we received VC funding in 1982 and promised 5 million in annual revenues. In 1983, neither the product nor the team was ready. It was not possible to bring in 5 million dollars for the year. It would take Excelan six months to develop the product and at least six or more months to deliver. Excelan earned only half a million dollars in revenue that year.
Excelan was obviously in serious trouble. You were asked to take the leader- ship on an interim basis to steer the company in the right direction. How did you go about the turnaround?
Drastic times required drastic measures. The company was not focused. They wanted to adopt all standards. The team was split in many directions. The same thing was happening with the protocol side. I stepped in and immediately dropped every project that was not related to the boards and TCP/IP protocol, the prime revenue generators. One must establish realistic goals and be on top of the game plan every step of the way. I cut the work force by one third. With fewer resources but a very focused approach you can actually do more. From a hardware perspective, the focus was on boards and all the software people worked on the TCP/IP solution. We had good boards but software was an issue. It’s very hard to sell boards without soft- ware, so I attacked the issue by hiring outside expertise to develop TCP/IP software for the boards. Within two to three months we came up with a working solution.
I took the risk and bet the company. I shifted the focus to serving the cus- tomers who needed the solution right away. I knew this opportunity existed for the next couple of years. The solution worked and the customer need was immediate. If the customer has a headache he doesn’t want to wait for aspi- rin. He wants it immediately. Excelan was able to provide the painkiller immediately.
As time progressed it became clear that eventually the Excelan solution was going to win. We had maintained the lead by keeping focused. Excelan was the only game in town that could connect the PC’s to the Unix machines, minicomputers and mainframes. It was a high performance solution. By late 1985, purchase orders were pouring in. Customers were buying; growth was exponential. In 1984 revenues were 5 million dollars with losses totaling 3 million. By the end of 1985, revenues went up to 10.1 million and Excelan saw profitability of $100,000 for the first time. By 1986, we had 22 million in revenue and 2.5 million in profit.
Yet another first was the sale of software over the phone. What was the mar- keting strategy behind such an approach?
We placed advertisements in all the trade publications. Excelan could not afford a sales force; we relied heavily on trade magazine advertisements and sold over the phone with a money-back guarantee. With a limited sales force of 3 to 4 employees, where a typical organization had over 15, this was the only way to reach the customer. No corporation had sold high-end expen- sive solutions over the phone before. With limited money resources this was the only way to market. We were the first ones to sell a complex piece of software and hardware over the phone. The quality of the products had to be good to support such a policy.
Earlier, the strategy had been to market through the OEM. Excelan had hoped that the OEMs would sell for them but this strategy failed. All OEMs were themselves startups and were focusing on their own issues. The OEMs themselves did not have any significant presence in the market. So I switched gears from OEM to direct sale to the customers.
You now had the company moving in the right direction. What was next?
The next thing we did was come up with a three month plan to box every- thing into an end-user product including the board, transceivers, the soft- ware and cables. When the customer called he would be sent a complete solution. We focused on integrating customer needs. We made sure that the box would contain everything the customer would need, right down to the screws needed to mount the cables. I pulled Duane from the technical group and made him the marketing guy. Duane and I wrote the trouble shooting flowcharts for the customer service group. When the phone rang, the cus- tomer service agent knew exactly what needed to be done. I put smart engi- neers on the technical marketing group, again utilizing an unconventional approach. This ability to tackle the problem from a system perspective and the hands-on approach to convert customer needs into reality was what got us the customers and their long-term confidence.
Your product pricing strategy to increase the price of software was soon to become an industry norm. What was the reasoning behind this?
It was common sense! Earlier, the software had been priced very low at $70 per copy, while the boards were way up near the $1,000 figure. Naturally, software was not very reliable and not very good. Customers were always complaining, service and support phones were busy. I simply did the math. The revenue generated by the sale of the software was not enough to main- tain the design, testing and support of the software. There was something drastically wrong; something did not make sense here. It was quite obvious that to do the right job profitably, we would have to price the software at ten times the price, at $700 a copy. Everybody in the company thought I was crazy. The sales and marketing folks threw their hands in the air in disbelief. It did not make business sense, but I took the bet. There was nothing to lose, as it was clear that the VC would not provide additional funds at that time. Drastic action had to be taken quickly.
The customers initially questioned the tenfold increase. As luck would have it, most of the customers were new. The software quality, along with customer service, improved tremendously with the additional revenue. This ultimately led to customer satisfaction and turned the lose-lose situation into a win-win situation. The entire industry then adopted this model, pricing the software products at higher levels because it made good business sense.
What’s your advice to the entrepreneur regarding the turnaround effort?
An entrepreneur has to be able to think financially. He has to be able do the math of his business. I was making calculations on what the pricing had to be and how many calls and refunds the system could tolerate… this is all financial thinking. One has to know the underlying cost structure right down to the bones. The product needs to be priced right. Anybody who prices products based on the pricing of the competition is in trouble. You have to know your cost structure. I do not like anybody utilizing the low cost strategy. Low cost strategy is a sure way to end up out of business. You have to do value pricing. You must deliver value to the customer– “the best bang for the buck.”
I recall my father saying, “Mehnga roye eak bar – Sasta roye bar baar”. That has stuck in my head. That means if you raise the price, the customer will be upset with you initially but if the stuff works and the service is good he will be happy with you. On the other hand, if you sell your product cheap and it doesn’t work, your service is poor, and you don’t have the margin to give him the quality he needs, everybody loses.
Business is math, financial thinking and marketing.
By 1986, you had taken all these bold, “out-of-the-box” steps and the com- pany had made a fantastic comeback. Yet when it came time for the IPO, another CEO was brought in. Why not you? Was this an example of the “glass ceiling”?
The VCs wanted to bring in an external CEO as they felt I might not be able to sell the show on the road. It was explained to me that by hiring an external CEO they were preserving my investment. I had gained a lot of confidence in leading but was still learning the ropes, so I agreed with them. Interest- ingly, in the same year I was named “Entrepreneur of the year” by the Arthur-Young/Venture magazine.
The new CEO was a very sharp guy but a very safe player. They rise through the ranks in the corporate world and always have a boss directing their efforts. They are not independent thinkers. Most of these guys by and large become very, very safe players. He announced that he expected a slowdown very rapidly and cut back on hiring and advertising. Sure enough, a slow- down came very quickly. The foot had been removed from the gas and instead placed on the brakes. I predicted the opposite and convinced the board. Fortunately, Excelan began rehiring and advertising again and, sure enough, the foot was back on the gas pedal.
When was the IPO?
It was in 1987. The IPO was at $12, and it went up to $18. It then went down to $7 during the stock market crash in the’87/’88 timeframe.
When were you brought back in to take the lead?
In 1988 the CEO exited, due to personal issues. I think by then I had proven my mettle repeatedly and was totally ready to take on the CEO position offi- cially. We finished the year with $66 million in revenue. Profits were at $5 to $6 million. The things we had done in the years 1985 and 1986 were finally paying off in 1988 & 1989.”
Excelan merged with Novell in 1989. What made you consider Novell over companies like Microsoft?
Excelan had by now become a key networking player and Microsoft and Novell had both shown interest in a merger/acquisition. We were the TCP/IP experts and with us it had emerged as the leading networking technology. The Novell offer was better; there was better chemistry between us. They were very easy to work with. The dream and common vision that Ray Noorda (Chairman & CEO of Novell) and I had of becoming a networking giant was very clear. With Microsoft you would just be one of the players. Networking would have been incidental. With Novell, networking was mainstream. It turned out to be a nice merger. Merger is all attitude. It is how you transmit the attitude. Of course you should do it because it will be ben- eficial and there should be no doubts. Honesty and openness, of course, are a given.
You were with Novell until 1994 and became president of TiE in 1995. How did you get interested in TiE and why?
When I left Novell in 1994 I was very tired emotionally and physically; I was burned out. I went through surgery for sleep apnea and it changed my whole life! I felt like a new person; I had so much extra energy. Once I recovered I had no fixed agenda and just started to come to the TiE office; I had no other place to go. My wife was tired of me moping around at home. I realized that I had not got my hands dirty for a while and I needed to get back. TiE offered this to me and thus I started my affair with the TiE group.
How did your decision to become an angel investor come about?
While I was at TiE people began to drop in and ask for help. I started look- ing at peoples’ business plans and provided guidance to the budding entre- preneurs. I think the word spread very rapidly that you could bounce ideas off this guy who had already done it. I had become a market business guy with experience in hardware, software, and networking.
I would ask the basic key questions: Who is your customer? Why would they buy from you? How would you make money? Who is the competition? How does it fit into the scheme of things? I started to focus on the heart of the business. Mentorship at TiE became my new life. I never focused on the investment; investments just happened. It was not an intentional or planned activity.
It is said that you have a “good nose”. If you are in on the deal, people take a look at it. How do you recognize great ideas and convert them into home runs?
I am not enamored with the idea of investing. I look at the person and ask myself, “Is he able to think robustly and intellectually engage me?” I have trouble with people who are very sure of themselves to the point that they are not able to see beyond the lines. I like people who are smart enough to know what they don’t know. At the same time I don’t like the people whose ideas are so weak that you have to spoon-feed them. You don’t want a person who is overconfident and makes up answers as he goes along. You can see through all this very quickly. You want people who have high levels of energy and intellect, people who are very, very focused. I have trouble with anyone who undersells the competition. I look for the entrepreneur who is able to think out-of-the box, someone who is able to learn very quickly and adopt new ideas and thoughts, take challenges head-on and does not get offended easily. I have invested in a variety of businesses ranging from EDA to software to service. All the companies I fund are mainly dependent on the team and the people. That is the underlying thread.
Forbes magazine recently called you “The sage to Silicon Valley’s affluent Indian community”. How do you mentor?
I began to redefine myself as a person. I did not need the money anymore. The mentorship felt good and was satisfying. It was a win-win activity. You don’t only do it for others; you do it for yourself as well. You begin to believe that you can mentor smart people. If you are able to produce results, this mentoring process turns into a relationship very quickly. I become part of the team. The teams always felt that I was extremely tough on them. I never gave them a chance to become lazy thinkers; I challenged them. I never was an easy investor. Once you start getting engaged, you always want to protect your name and reputation. You get involved enough to provide guidance intelligently. I am a hard taskmaster and am constantly keeping them on track by asking tough questions. I focus on 3 to 4 companies at a time. My involvement ranges from a daily basis, especially at the beginning stages, to monthly meetings.
Take Exodus for example. Chandrashekar, the founder, is a very nice guy – very sharp, intellectually honest and adaptable. In the initial stages, Exodus had been defined as an ISP/VSP. He could not differentiate himself. I chal- lenged his business ideas and he was not able to defend them. After a few sessions of brainstorming we honed in on another opportunity with no one else on the horizon. We weren’t sure how big the opportunity was, so we sat down and did some analysis and realized that the market was potentially huge. Chandrashekar was quickly able to adopt this change in direction. One thing I like about him is that once he understood the change he was able to execute it with great precision and pace. Once he was convinced, he would execute flawlessly. We filled up the data center in six weeks. We had thought initially that it would take up to six months. Instantly we knew we had some- thing that everybody wanted.
You have said that your personal goal has shifted from making investments to TiE. Is this your payback to society? Tell us about the concept of TiE. What are its goals and focus?
Nowadays, I feel investments tie me down. You have to invest both money and time, and to spend time you must understand the market, the customers, their positioning. These days I find that extremely cumbersome; as a result I am now investing to a lesser extent.
The concept of TiE is centered around the Indus region. TiE was started with the express desire to bring together entrepreneurs from the subcontinent. We don’t distinguish between people from Sri Lanka, Bangladesh, Pakistan or India; there is no reason to. We do not allow any issue, other than econom- ics, to enter into our domain. Here you have to co-prosper. There is no reli- gion in TiE. The focus is on how to create success for the individual, the family, the environment and the country. In fact one of TiE’s first leaders, Safi Quereshey, is from Pakistan.
One of TiE’s main goals is to be a mentor to startup companies. TiE is not about venture capital funding; it is about angel investing. The focus here is to identify a good idea that has not attracted any money and then fund it, with money coming from the members. The environment is traditional in the sense that it follows a Gurukul of sorts, where the gurus transfer knowledge on business plans, management strategies and survival kits to new TiE mem- bers. It’s about transmitting, top-down, the accumulated wisdom of doing business and succeeding at it; it is to help the new entrepreneurs reach their goals faster and better.
Part of the thinking at TiE is that you first create the wealth for yourself through entrepreneurship. Having done that, you then focus on becoming a social entrepreneur. You start creating an impact around you which is beyond your home or community, drawing a larger and larger circle. The U.S. has been built by entrepreneurs. When JP Morgan retired, he built 3000 libraries in the country. Why did he do that? He did that because he wanted to plough back into the system and have an impact and influence. TiE’s goal is to get high achievers engaged in this process not only in the Bay Area but nation wide, worldwide. The idea is for these people to give back to the system. This is not charity; it is something people should do as responsible members of the community. It, of course, is also an investment opportunity which is both mentally and intellectually satisfying. It is a win-win situation that produces results.
How does TiE function? What, in your mind, are its biggest achievements?
We hold a forum once a month where people gather. A speaker is invited. That itself has an enormous value. The other value is, of course, the opportunity to network. We foster social values as well; successful entrepreneurs can also be successful social entrepreneurs. The ability to take ideas and convert them into home runs is all done by indi- viduals. The investments happen at these forums. Investment is not a TiE activity. It is one of the results of networking, which is a TiE activity. At the end of the day, the entrepreneurs are encouraged and inspired; they seek out mentors and investors. This becomes a focal point.They way each chapter starts is by gathering information about the people who may become involved in that chapter. We form a charter group that meets several times to discuss the logistics involved. We then set up a launch meeting and invite well- known entrepreneurs to participate. Through these meetings we attract membership.
Several chapters are being launched not only in the U.S. but in Europe and in India as well. We want to build an organization of successful, like-minded people and use it to showcase our method of working together. Indians, by and large, are focused on individual family rather than the community.
The notion of Indian technology firms being featured on NASDAQ arose out of TiE. We are having a major impact and have been able to break several mindsets. For example, we have proven that Indians are as just as good busi- ness people as they are technologists. It has changed the question from whether Indians can succeed to how many Indians have done so. A majority of business plans submitted to VCs in the Valley are now from Indians. What’s more, a significant number of projects funded today are headed by Indians. TiE can take the lion’s share of credit for this.
You are also very passionate about “think tanks”. Tell us about this concept.
Think tanks are very close to my heart. One of my passions is to start a think tank organization in India to make free enterprise an on-going and viable concept. The concept behind think tanks is two-fold, part research and part economic propaganda. In India there are all sorts of rules and regulations limiting the freedom of the people. There is a backdrop of socialism that we must fight. We need to show the people in India the best practices in other parts of the world and then benchmark against these practices. We should use the media to go to the people and say, “This is your country. You should determine the direction of this country intelligently.” We have to educate the masses and sow the seeds of entrepreneurship. Today the rich are rich because they took the peoples’ share of the wealth, so we need to tax the rich. 2% of the Indian population pays taxes and 98% does not. How can you build a modern economy with such a scenario? Are 98% of the people inca- pable of paying taxes? We need to make the public very economically savvy through the newspapers, TV and magazines. In a democracy, at the end of the day, people have to know what they want. We need to spread this mes- sage.
One way to do all this is through Information Technology and we want to provide this through think tank sessions (TTS). These will be privately funded and will give feedback through the media to educate the people. So next time there is an election people will ask: What is your program to create more jobs here? You have promised free education; how are you going to pay for it? The model of TTS gets fed back into India to improve the intel- lectual wealth of the country. It is time to provide factual data through the available media
You have achieved a lot in this lifetime and you continue to give so much back to the society. Have you had any mentors along the way?
The one person I look up to is Mahatma Gandhi. He was an innovator, a thinker. He was a man who did his thinking out-of-the box. He was able to bring everybody together for the cause. He was sharply focused on one great single cause: the freedom of India.
What do you think is the key to the success of Silicon Valley? What do you think is coming next?
My personal sense is that somehow the sun, the moon and the stars have lined up in the Silicon Valley and it has become a fountain of wisdom, a source of inspiration. I think the electronic renaissance will last another half century. It is the Grandfather Theory. The grandfather comes up with a new idea and works hard to develop it. He is the innovator, the doer. The son, though used to a good life, remains aware of how it came about and works hard to sustain it. But the grandson simply assumes this to be his birthright. He has no idea how it happened or what is necessary to sustain it. As a result he unthinkingly destroys it. Now the process must begin all over again. In the Valley, we are going through this cycle and I think we are currently in the “son” phase.
Can you compare and contrast the differences in the macroeconomic envi- ronment between India and the U.S. and its impact on entrepreneurship?
The environment is very progressive in the U.S.; there is a constant desire to improve. In India this is not the case. The civil society movement basically says that the society’s strengths come from its citizens and not from the gov- ernment. We need to strengthen those institutions in India that are civil in nature and not political; churches, for example, and universities, private organizations, charitable institutions. These are the institutions that focus on day-to-day life. Societies that don’t have a strong civil infrastructure have been unable to build strong foundations. A civil society movement is at the heart of America’s infrastructure.
But with liberalization, power in India is being disseminated very rapidly. People are now beginning to take charge and we are seeing a change in the right direction. We need to ride this change and put people, rather than the government, in the driver’s seat.
U.S. democracy is based on the simple saying: “You can fool all of the peo- ple some of the time, some of the people all of the time, but you can’t fool all of the people all of the time”. Indians are now beginning to follow this phi- losophy. Democracy is functioning and power is moving away from the gov- ernment and back to the people.
Our defense as well as everything else depends on how much money we have, depends on a strong and stable economy. To compete in the world, to become a member of the United Nations, all depends on a strong econ- omy. The only way to get there is through a free market and entrepreneur- ship.My general sense is that India, with the right amount of help and a slight push in the right direction, can become a superpower. We need to challenge the peo- ple. We have the faith, we have the velocity, we are on the right path. We have the talent, the training, the democracy. We have the legal system and the civil system. The only issue now is to focus on the economic reformation. Economics is at the top of the Agenda.
Looking back, what would you say is the primary reason for your success?
I became an entrepreneur by totally thinking out-of-the box, not focusing on design alone. I focused on how to deliver a value, how to price it right and how to make sure the customers come in. I had to become a true general manger overnight. I did extremely well in 1984. 1985 was the height of my personal growth. One thing that was key was the realization that you stag- nate when you get into your comfort zone or niche. It is only when you are out of your comfort zone that you grow. I have seen this over and over again. Every time I am outside my comfort zone I begin to think more effectively, really use my brain.
What’s next? What are your goals for the future?
Hopefully, I will amount to something some day. At this stage, I have accomplished more than I ever thought possible. It has been an unbelievable journey so far.
What are your hobbies?
I play lawn tennis fairly frequently. I read a lot. I am very much of a history and economics buff. I am a semi-expert on British-Indian history and the history of the U.S. civil war. I also very much enjoy traveling to various places.
On a personal front, how are you bringing up the kids?
My kids know that the number one thing in their life is education; number two is health, which keeps you strong, and number three is family. And that’s it.