Chidanand Rajghatta wrote a book called “The Horse That Flew” during the dotcom days, and wrote a chapter on me titled “The Godfather”.
It captured the mood and the hype of the time. With his kind permission, you can read the chapter on me below:
Kanwal Rekhi’s resemblance to Marlon Brando, even after the great actor stacked up the pounds, is entirely imaginary. A balding pate and an expanding mid-riff they might both have, but beyond that there’s very little in common. Rekhi’s saturnine face has a glow that comes from success and happiness. His small eyes sparkle when he talks of life’s journey. His speech is not a guttural drawl but a staccato of stammered words colliding into incomplete sentences. His accent, despite three decades in America, is provincial even by the standards of modern urban India. He dresses casually most times in khaki slacks and half-sleeve shirts and there are no hired guns around him.
But it is in stature that he is the Godfather, as Fortune magazine referred to him in an issue on Indians in Silicon Valley. Like Mario Puzo’s fictional Don Corleone (played by Marlon Brando in the movie The Godfather), Kanwal Rekhi presides over the Indian entrepreneurial community in Silicon Valley like the Capo. As President of The Indus Entrepreneurs (TIE) in the late 1990s at the height of the tech boom, he piloted the outfit so skillfully that it became the toast of the Indian community and the envy of every other immigrant group of entrepreneurs in the US. Towards the end of 2000, there were more than a score of TIE chapters stretching from San Jose, site of the first TIE, to Trinidad and Tobago. A new one is opening almost every month. Members of the Indian diaspora from Fiji to Guyana are clamouring for a TIE chapter. Even at the height of tensions between India and Pakistan, entrepreneurs from Lahore and Karachi were pleading for a TIE chapter in their cities.
In the 1999-2000 period, dozens of newspapers, magazines and periodicals profiled Rekhi and TIE, as America recognised and celebrated the contribution of its newest immigrant group. The “Indian Mafia”, “New Jews” “Curry Brigade” were some of the sobriquets used to describe the Indians of Silicon Valley and their rapid growth through networking.
Rekhi enjoys the attention and hoopla but is concerned that people will accuse him of self-promotion and self-aggrandisement. In interviews, he often refers to the other people who helped launch and build TIE, including his good friend, Suhas Patil, the founder of Cirrus Logic, who was the first TIE president. During another meeting, he introduced me to Kailash Joshi, a former IBM executive who succeeded Rekhi as the third TIE president. Many former TIE associates hint darkly that Rekhi is a publicity hound, but they acknowledge he is a tireless worker. Besides, it was entirely an accident of history that the Internet boom began around the time Rekhi took over as TIE president and helped fuel Indian enterprise on an unprecedented scale. Sabeer Bhatia, Vinod Khosla and Vinod Dham may be the Indian superstars in Silicon Valley, but the man who gave shape and substance to the collective Indian enterprise and melded it into a force is Kanwal Rekhi.
To see Rekhi in action in his “Godfather” avatar — even after he stepped down as president — one has to drop by at the TIE office on Santa Clara’s Democracy Boulevard in the heart of Silicon Valley, a few minutes from where Intel puts its chips inside. Here, in a spare, ordinary, warehouse-like office block is where the paterfamilias of Indian entrepreneurs presides over the brood. Each Friday, Rekhi sits in TIE’s modest conference room and listens to entrepreneurs pitch their business plan. Some are newbies with just the germ of an idea looking for funding. Some are mid-level executives who have developed a plan for years and are now seeking to escape the corporate yoke. Men, women, boys, housewives, mothers, rebels, banias, conformists, Brahmins, South Indians, Pakistanis, all troop into Rekhi’s lair. He listens to them impassively, shooting searching questions about their business plan, revenue model, and profitability.
At the end of the presentation, he will quickly and decisively tell them if the idea will work or not, and if it will, how much and in what way he will help them. If the idea is good, he may seek a longer presentation with other interested parties called in to scrutinise IT. Sometimes he may help with the funding. At other times, it may be contacts or a referral.
It is not always the TIE office where entrepreneurial hopefuls meet Rekhi. They ambush him in restaurants and parking lots. They mob him at conferences, thrust business cards at him, and ask for a minute of his time. He is unfailingly courteous and usually gives them a couple of minutes for the initial pitch before calling them over to the TIE office. Sometimes, he can spot a good idea immediately and is careful to take a second look at the visiting card to make sure he will not forget the name on the card and the face that gave it to him (as he did with Exodus’ K.B. Chandrasekhar). Most times, the ideas are so hokey that they bounce OFF him no sooner they are mentioned. At other times, he fails to recognise a humdinger when it hits him between the eyes, as he did with Sabeer Bhatia’s Hotmail. Occasionally, it will require persistence and persuasion on part of the entrepreneur to get him to recognise an idea.
Agony and Exodus: The immigrant enterprise
It was one such exchange that led to the founding of Exodus Communications, the web hosting gorilla that is the most famous of all of TIE’s pupils and protégés and has been named by the US government as one of its national infrastructure assets. In 1995, K.B. Chandrashekhar and B.V. Jagadeesh, two raw-edged immigrants from South India who had come to the US only around the turn of the 1990s, were desperately trying to keep afloat their modest venture that among other things hosted websites on the Internet. With little experience of Silicon Valley and zero contacts, their company was down to a week’s salary and headed for bankruptcy when “Chandra” came to a TIE meeting. He tried to corner Rekhi, but the Godfather was mobbed and he could barely get a word in edgewise. He finally managed to slip his card across to Rekhi. Two days later, Rekhi called him.
The Exodus saga is dealt with in greater detail in a later chapter. But when Rekhi first went to the Exodus office, the operation was crammed into a 10 by 10 room overflowing with people and computers. Rekhi liked the gauche South Indian boys. Like him, they too were “desi” in their manner with none of Silicon Valley’s slickness and sophistication. He recognised the company’s potential to tame the Wild, Wild West of the Internet. But he had problems with their business plan. It was too diffused and unmanageable. He wrote them a $ 200,000 check on the condition that they focus their scattered operation into growing fields like web hosting. He also introduced them to Ed Shea, a real estate developer and investor who put in some more money. Rekhi also brought in other TIE members like A.J. Patel and Suhas Patil. Exodus would never look back.
Rekhi’s involvement with Exodus did not stop with raising money and ensuring cash flow. He came on board of the company and took active interest in its running. He also advised Chandra to hire a speech therapist to work on his accent — although he still retains his own Punjabi INFLECTION —, learn how to give presentations, and how to interact with Americans he wanted to hire. “They are going to be the suppliers of bricks and shovels for the gold miners,” he predicted. They were. With the burgeoning of the Internet and the demand for hosting websites of the thousands of old and new businesses increasing rapidly, the company’s fortune shot through the roof. At one time, Exodus was a Nasdaq hottie with a market cap of $ 20 billion and even its current valuation of $ 8 billion amid a downturn is nothing to be sneezed at. By some estimates Rekhi has parlayed his $ 200,000 investment into $ 100 million.
Rekhi isn’t exactly Hrundi V. Bakshi, the klutzy Indian spoof in Peter Sellers’ riotous 1968 movie, The Party. But he’s not Mr. Smooth either, THOUGH he graduated from IIT, Bombay. To this day, despite decades in the US, he sounds like he can still lapse into the lingo of a shopkeeper from New Delhi’s Karol Bagh. That’s what endears him to most new immigrants. No airs. Unlike today’s regulation Silicon Valley schmoozers with their Stanford MBAs and superior manners, he is a slightly gauche, overweight big daddy. “I’m not polished. I don’t care to be,” he says with disarming candour. Once, when we went out for lunch to an Indian restaurant in Santa Clara, he thumped his table and hollered to a waiter, “Oye, zara paani laana (Hey, fetch me some water).” The scars of discrimination and struggle — and the glow of triumph over adversity — show on his rotund face.
When I last met him in the summer of 2000, he had just announced that he was stepping down as president of (TIE). In May that year, a TIE conference in San Jose’s Fairmont Hotel attracted a record two thousand participants with a keynote address by Jim Clark, formerly of Netscape, and then of Healtheon and Web MD. Every business publication in America and beyond had recorded the event. TIE folders bulged with clippings from the international media. “I have done my bit,” Rekhi said modestly. “Gigabit,” he might have added.
Coming to America: The Book of Jobs
Third of eight children in a Sikh family, Kanwal was a toddler when his family migrated to India from Rawalpindi amid the trauma of Partition. He came from a family of faujis. His grandfather served in the army and so did his father and two of his uncles. The elder Rekhi, a foot soldier, had just got his commission in the Indian Army when they had to flee as the SUB-continent sundered into India and Pakistan. The family crossed the swollen Sutlej to Ferozepur and meandered through Secunderabad, Poona, and Agra before settling down in Kanpur in 1955. It’s an experience Rekhi values a great deal. “Being uprooted often is good because insecurity is necessary for growth,” he maintains. “That’s why immigrants succeed in their adopted countries at a higher percentage than the natives.”
After schooling in various army cantonments, young Kanwal bid for a coveted IIT seat. His father apparently did not even know what IIT stood for at that time. He wanted Kanwal to take up a government job or become a chartered accountant. “Become an engineer and join the ranks of the unemployed?” the elder Rekhi roared, at a time when the IIT was less venerated than it is today. “He could not understand why anyone would want to study four years and risk having no job when government employment would ensure a lifetime of security and pension,” Kanwal recalls. Engineers, especially electrical engineers, were not in demand those days, despite Jawaharlal Nehru’s vision to build the temples of modern India.
Like a whole generation of IITians was to do later, Rekhi edged out to America soon after earning an engineering degree, baldly telling the consular officer in Bombay that he was going to the US to do his Masters and that he intended to return. He had secured admission at a little known school called Michigan Technological University in the Midwest boondocks only because, he says honestly, “it was cheap and I did not know any better.” (“MTU in Houghton…you know where it is?” Rekhi is said to provocatively ask reporters profiling him. Actually, some of the best schools in America are in the boonies.)
After finishing his Masters in 1968, Rekhi took a bus to Chicago. The city was roiling with student violence and unrest from the on-going Democratic National Convention as he scoured for odd jobs while looking to find steady work. He had $ 20 on him. A night’s stay at the YMCA cost $ 4 and a meal cost a dollar. He could last out four days. After two days, he was down to a tenner, when he walked into a restaurant with a “Help Wanted” outside, not knowing it was an invitation to do the dishes for $ 1.25 an hour. He signed up. By the end of the day, he had another tenner in his pocket and food in his stomach.
By the end of the year, Rekhi had heard from two prospective employers — IBM and a small New Jersey firm called EAI that made analog computers. Astonishingly, he opted for the latter, figuring that he would learn more in a close-knit firm than a large corporation. He was laid off within a year as the company lost key contracts. When he went back to IBM to ask for the job they had offered, he was rebuffed. They still had his papers on file but it showed he had rejected Big Blue with “insufficient cause.” He went into a depression for months before he found another job with computer-maker Systems Engineering Labs and relocated to Fort Lauderdale. Within a year he was laid off again. Next stop: mainframe maker RCA Systems, just up the coast in Palm Beach. Eight months later, he was beached again.
It might be hard for a class of 2000 to imagine, says Rekhi, but those were days when it was tough being an engineer. The prima donnas of that era were physicians from India. Engineers came cheap. Besides, the space programme and the war in Vietnam were winding down and jobs were hard to get. “It was not a great time to be an engineer,” he sighs. “There was an economic crisis and we had to go where the jobs were.”
It was those years, as much as his nomadic childhood, that shaped his outlook. The three lay-offs taught him that jobs could not be taken for granted in the US. Jobs were offered not because the companies or employees liked you, but because they needed you. Swearing never to get laid off again, he convinced his wife Ann, an American-born woman he met through a pen-pal service while she was working with the US Air Force in Florida, to move to California. Silicon Valley was then still known by its plebeian name of San Jose, but the first faint stirrings of technological renaissance could already be felt.
Rekhi’s first job in the Valley was with Singer-Link, a defence contractor that made flight simulators to train pilots. Those days, there was only a smattering of Indians in the area. There were no Bollywood movies and no Indian grocery stores. The Beatles were still at the top of the charts and Ravi Shankar had just become famous. Eating at an Indian restaurant involved a forty-mile drive to Pasand in Berkeley. Rekhi toiled for nine years, working his way up to “principal engineer,” earning a handsome $ 65,000. He was only thirty-four but he could see he had already reached a glass ceiling. Around him, other engineers were either going into the management ranks or spinning off into their own businesses.
Despite the talent everyone acknowledged, Rekhi could see he would never rise above a systems engineer. He recalls sounding out management jobs, but was always told what a brilliant engineer he was and how the company could not afford to lose him to managerial duties. Then he would see whites far less competent promoted over him. Determined to become more proficient and qualified, he began to learn software skills, though he was a hardware engineer. He took business courses to broaden his horizon. He constantly interviewed for jobs he knew he would not take just to find out whether he was marketable.
It was at one such interview that he encountered a question that would impress him deeply — and become a Silicon Valley mantra in the years to come: If you are so smart how come you have worked for Singer-Link for so long? Within days, he decided to quit and join Zilog, Inc., a semi-conductor outfit started by Federico Faggin, the engineer who co-invented the first popular microprocessor with Ted Hoff at Intel. The switch involved a 30 per cent pay-cut but Rekhi did not mind. He knew he had to move.
“The three jobs I was laid off from was the best thing that happened to me,” he says. Asked today who his mentors or idols were, Rekhi is sardonic, “No one. After being laid off three times, I trusted no one.”
An Excelan idea and a Novell experience
By this time (1980), the Indian population in the US had gone up to 350,000 and the Valley itself had several thousand Indians. Doctors and engineers were coming in droves, giving up on their promise to build “temples of modern India.” Zilog’s Networking and Advanced Systems Group was headed by Inder Mohan Singh, a Sikh engineer who had graduated from IIT Kharagpur and earned a doctorate in computer science from Yale. A Doon School alumnus, Singh had gone back to India after his Ph.D in 1977 and tried to start a minicomputer unit in Mohali with IBM’s Umang Gupta (who figures in later chapters). But they had faced problems with the venture and returned to the Valley soon after. Naveen Jain, an alumnus of BITS, Pilani, (not to be confused with Infospace’s founder Naveen Jain who is from Rourkee Engineering College) headed the software section at Zilog. Rekhi joined the hardware unit and began dabbling with networking products.
By 1981, Zilog was in decline and beginning to lose people. The Indian trio toyed with the idea of starting a company that would build devices to connect desktop computers to local networks. In those days, the computers had a variety of protocols that connected them, each with a different standard. (This was long before the days of the Internet; computers were mostly stand-alone machines and connecting them posed a lot of technical problems because there were very few uniform standards). The Indians thought they could make adapter cards that fit into the back of the computers and develop software that allowed the computers to talk to each other more easily. Boldly, they quit and took the plunge.
It wasn’t easy. Despite Inder Mohan’s contacts, Kanwal’s expertise, and Naveen’s dash, it took them several months to raise capital. They had bootstrapped it to the extent of $ 100,000, — Rekhi mortaged his house and Singh borrowed from his family — but they needed some solid funding to ramp up. They were rejected by dozens of venture capitalists, usually with the same spiel: The company lacked the right manager. Rekhi says it wasn’t hard to decipher the hidden message. “It meant that we didn’t have a white guy in the group,” he recollects. “They knew Indians could design but they were not sure if Indians could sell and market. They did not want to take the risk.” In despair, Singh even called Vinod Khosla, who had just then kickstarted Sun Microsystems. But Khosla’s leads, though helpful, did not get them the lolly they needed.
John Bosch of Bay Partners finally broke the mold. “He looked at us and said maybe it is time to fund an Indian,” Rekhi recalls with a grin. Bay Partners would eventually fund a raft of Indian-led companies including Exodus, Jamcracker, and Informatica. But back in the early 1980s, the very idea of funding immigrant entrepreneurs was novel and risky. America was simply not ready for an Indian or Asian CEO — as Rekhi himself readily concedes. So while Bosch took the gamble, he factored the risk into the valuation. Excelan came in at the lower end of the market, a fact Rekhi records without sentiment or rancour. Singh meantime had lined up Ven Tech Partners, a Chinese VC in New Jersey. Ware and Friedenrich, another Silicon Valley firm, too pitched in. By early 1982, around the time Sun Microsystem was rising, Excelan finally took off with almost $ 2 million in VC funding. Singh became the CEO because, Rekhi says, “he was the smoothest and most articulate of the three.” Rekhi himself had a speech impediment.
Excelan had barely settled into a rhythm when things began to sour among the Indian partners. Rekhi and Singh fell out rapidly because, according to Rekhi, “he wasn’t used to doing things, only giving orders.” Singh says he had disagreements with the VCs and “there were questions about personal ambition,” a thinly-veiled jibe at Rekhi. Within the company, Singh earned a reputation of a brilliant but unfocused leader. He was full of smart ideas but never carried any project to fruition. Rekhi and the others had a code phrase for his enthusiasm. YAFO — Yet Another Fabulous Opportunity. Except, the F did not stand for Fabulous. Despite what everyone acknowledged were excellent products, the company did only half a million dollars in revenue when it was expected to bring in $ 3 million. The second year was no different: $ 5 million against the projected $ 12 million.
The Excelan board finally replaced Singh amid bitter squabbling in the mid-1980s. Rekhi was made the interim CEO, while Singh teamed up with Vinod Bharadwaj, who headed Excelan’s engineering department, to start another company called Kalpana (which ultimately sold to Cisco). It is a subject both men are touchy about even now, some fifteen years later, but Rekhi was honest enough to concede that the difference in their background and upbringing contributed to the rift. “Whatever the case, the fact is Excelan was, in its time, an Ethernet pioneer,” Singh recalled. Ethernet is a generic term for COMPUTERS WHICH ARE NETWORKED THROUGH A CARD.
Excelan was down to its last million or so and bleeding at $ 200,000 a month when Rekhi took over as acting president. The VC’s asked him to sit tight and cut their losses while they looked for a new president. But the earthy Punjabi was not one to sit quietly. He tried hard to grow into the role, going to a speech therapy class to iron out the stammer, shaving off his beard, and ordering a new wardrobe. He scrapped several vague plans and concentrated on getting the team to make products relating to Ethernet and TCP/IP that networked computers. The US Department of Defence had pioneered the two technologies to work with every computer and Rekhi reckoned — correctly as it turned out — that it would not let it go waste.
Excelan’s fortune began looking up — it grossed $ 10 million in revenue and a small profit in its third year and a $ 3 million profit on $ 22 million revenue in its fourth year. But the very next year, just before it was to go public, financiers of the company sought to replace Rekhi with a more “glamorous” chief executive. Ironically, Rekhi had just been named entrepreneur of the year by Venture magazine. Rekhi’s replacement was a retired Hewlett-Packard executive named Richard Moore. “I didn’t look the part,” Rekhi recalls with just a trace of rancour. “It was explained to me that by hiring Dick, they were preserving my investment.”
Moore pulled off a successful IPO with Rekhi doing the road shows. But the HP veteran did not stay long, giving up his post after a failed partnership with Microsoft. In 1988, Rekhi again stepped up to the plate, this time as a full-fledged CEO. Around this time, Novell was the biggest networking firm in the country. Rekhi angled for Excelan’s merger with the company but was rebuffed by Novell CEO Ray Noorda. But within months, as Excelan products began to earn rave reviews and market share, Noorda came back. Rekhi’s asking price: $ 200 million (a lot of money in the Eighties). An overnight cause celebre — and not just in the Indian community at that — Rekhi was made Chief Technical Officer and given a seat on the Novell board.
Some four years down the line, with Novell booming, Noorda decided to retire. Once again, Rekhi expected to be made CEO by virtue of his performance and his experience. But he was passed over again, this time in favour of Robert Frankenberg, another HP veteran. Rekhi was hurt, but he says he rationalised it intellectually. “The issue was whether Wall Street investors were ready for an Indian CEO. It wasn’t just because I was an Indian. Women, Jews, Blacks… all had the same problem,” he says. At that time, Novell was already a billion-dollar company. There was no minority CEO at any such large company. Besides, Novell was an extremely conservative firm. It originated in Utah, home of the Mormons in the heartland of America. Twice bitten, Rekhi finally accepted the facts of life. In 1994, he took a three-month sick leave to have a polyp removed and to take his family on vacation to the South of France. He knew the Novell story was ending.
In years to come, hundreds of Indians would benefit from what he had gone through.
Rekhi’s multiple professional setbacks were compounded by his “sleep apnea” — a respiratory-disorder induced disease that prevents deep sleep but causes spontaneous short naps during the day (former Prime Minister Deve Gowda may have suffered from this ailment undiagnosed). The story goes that during his IIT days, Rekhi often drifted off to sleep in classes. Friends thought he was a real party animal who must have had had a night out on the tiles. But when professors ambushed him with wake-up questions, Rekhi would reply swiftly and correctly. “God gives you ways to overcome your disabilities with gifts in other faculties,” he explained in one interview.
His experiences with Excelan and Novell fired Rekhi’s determination to show that Indians could run companies. After a brief stint with new CEO Frankenberg on his return from France, he finally quit Novell in early 1995 and took his wife and two kids on a vacation to India. It was a rejuvenating trip for Rekhi, a virtual rediscovery of India. For more than a decade, he had been alienated from India. In fact, he was almost hostile towards his motherland. In 1984, under the directions from the then Prime Minister Indira Gandhi, the Indian Army had stormed the Golden Temple, the Sikh holy shrine, to flush out militants. Sikhs saw the attack as a desecration of their temple and reacted violently. Mrs Gandhi was assassinated by two of her Sikh bodyguards, causing a backlash against the general Sikh population. The Rekhis’ house in Kanpur was firebombed. Two of Rekhi’s brothers, who were in the Indian Army (unlike him, they wore turbans at that time) came under scrutiny when many Sikh troops mutinied. It was one of Independent India’s most traumatic chapters and it shook the family. Rekhi decided to move his entire family to the US. For a whole decade after that episode, he seethed in anger against Mrs Gandhi and her son Rajiv Gandhi, who succeeded her, blaming them for damaging India’s secular fabric.
Rekhi finally began going back to India after the assassination of Rajiv Gandhi. A succession of weak coalition governments ruled India briefly. But where others saw instability, Rekhi saw hope. Power, he felt, was actually flowing down to the people unlike during the reign of the centrifugal Congress Party. When he visited India again in 1994 with Ann and the kids, there was a freshness about the Indian economy and polity he had not seen before. Buffeted by a balance of payments crisis in 1991, the Congress government of Narasimha Rao had initiated wide-ranging economic reforms. Well-heeled — and healed — by then, he returned to his Los Gatos home with oodles of time and money. He had tied up the many loose ends of his life and was ready for a different kind of TIE.
Diaspora Denizens: India to IndUS
The story of the formation of TIE has been flogged so much that it has taken on a life of its own. Broadly, here is what happened. In early 1992, Kailash Joshi, then a top-tier IBM executive, was visiting India to negotiate the return of Big Blue some fifteen years after it had been sent packing from the country. During a meeting with the then Electronics Secretary N. Vittal, Joshi invited him to visit Silicon Valley to meet the emerging new Indian entrepreneurs, many of whom had quit large US companies and were bootstrapping their own ventures with great success. Vittal agreed, and in November that year, in the course of a visit to the East Coast, he arranged to fly to the Bay Area to meet a dozen Indian entrepreneurs who Joshi had rallied together for lunch at the San Jose Mariott.
Fortunately for the gathering (as it turned out), Vittal’s flight was delayed. The desi pioneers of the Valley, who seldom met otherwise, began talking about their experiences. Among the group were Rekhi, Cirrus Logic founder-CEO Suhas Patil, Odyssey Enterprises’ A.J. Patel, Gateway Design Automation’s Prabhu Goel, and a dozen Indian-American businessmen in various stages of entrepreneurial adventure. They began swapping notes about their experiences. “We had all been focusing on our own careers and had rarely spoken to each other,” recalls Rekhi. “We had been trying to be mainstream Americans, but whether you want it or not, you are viewed as ethnic.”
Rekhi in fact was marginal in the group at that time. The prime mover then — besides Joshi, who had initiated the meeting — was an excitable Indian-African named A.J.Patel, who had fled from Idi Amin’s Uganda first to India and then to the US. As an Indian uprooted because of his ethnicity, Patel knew the pain of displacement and alienation in a foreign society. Besides, he was also a victim of poor counsel and advice. When his family left Uganda to return to India, the young Patel had little guidance about where and what he should study, leading him to do a B.Com when his natural skills should have taken him to an engineering school. When he came to the US in 1978, he slaved as a book-keeper at a paper packaging company called Paper Materials for a decade before he could take over the firm and turn it into Odyssey Enterprises, a thriving $ 35 million business now. “I could certainly have done with some mentoring,” he told the motley crew of Indian businessmen who heard him with rapt attention. Others related their own stories.
As they each spoke, it was evident that all of them had gone through trying start-up experiences and had wished for support and sustenance. Despite their growing numbers, Indians in the Valley were still insular in those days. The Chinese, the other major immigrant group, had already begun to form a network. Dozens of Chinese start-ups were being funded by old money from Taiwan and Hong Kong. The Indians had no such network. Young Indians working in large corporations like IBM, Intel, HP, Microsoft, and Oracle with all the right ideas, technology, knowledge, and energy were wasting away simply because of lack of financing and mentoring.
Gradually, as they compared notes, they realised that several of them had made their fortunes. Some like Kanwal Rekhi and Suhas Patil were leading semi-retired lives. Patel suggested they meet again in a month and consider forming an organisation to help young entrepreneurs. The others nodded. Patel, who had another appointment, left without meeting Vittal. A month later, he says, he called Joshi to ask about the meeting they had planned. Joshi had thought it was one of the typical “let’s meet again” goodbyes. But he hadn’t reckoned with Patel’s tenacity. “When you have had a drunken soldier put a gun to your head at four in the morning and throw you out of your house, you take life a little more seriously,” says Patel, recalling his expulsion from Idi Amin’s Uganda.
So at Patel’s insistence the group met again informally on 22 December 1992. Of the thirty entrepreneurs invited, seventeen turned up. In addition to Patel, Joshi, Patil and Rekhi, the group included successful early entrepreneurs like Prabhu Goel, Ray Vradhula, Narpat Bhandari, Bipin Shah, and Roy Prasad. It was an amazingly eclectic and ethnically diverse group. There were Punjabis, Gujaratis, Christians, Kannadigas, Andhraites, Sikhs, Maharashtrians, Hindus. They were not only Indians from different parts of India, but they were also diasporic. While Patel had come from East Africa (as do a host of TIE-Indians such as Microsoft’s Vijay Vashee, Smart Modular’s Lata Krishnan and Ajay Shah), Bipin Shah was from Myanmar. Rekhi considered himself a refugee from Pakistan. So they decided to call the group The International Entrepreneurs. Their agenda was to network, help each other with contacts, and mentor young members who would join the organisation. They would meet every month.
By the spring of 1993, it had become clear that they had hit upon a great idea. Scores of Indians were now enrolling as members. There had never been an Indian networking organisation and it was evident that TIE was filling a vacuum, a long felt need. By fall that year, the original members began considering giving form and shape to a formal organisation. They asked Suhas Patil, then CEO of Cirrus Logic and one of the earliest Indian high-tech entrepreneurs, to take charge as the first president and made Kanwal Rekhi the director. Sam Satya, an upcoming entrepreneur, suggested changing the name to The IndUS Entrepreneurs, to reflect not only its civilisational heritage, but also its Indo-American moorings.
When TIE organised its first annual “Entrepreneur’s Seminar-Workshop” in March 1994 at its now familiar digs at the Marriott Hotel in downtown San Jose, it was a sell-out. Some five hundred entrepreneurs turned up for the jamboree. Nearly two hundred enthusiasts had to be turned away. The first workshop featured Suhas Patil, presenting a venture study case (involving his own company Cirrus Logic) and chairing a session on legal and intellectual property. Patel spoke about “Overcoming Setbacks and Hardships,” appropriately enough for a man who had been expelled from Uganda at gunpoint. Kailash Joshi led the session on “Team Building and Crisis Management,” an ideal subject for someone who navigated the return of IBM to India.
The Indian Mafia: To Tie for…
From the very beginning, TIE’s declared intent was to be a professional, non-political, non-partisan organisation. But its Indian core was never in dispute. More than ninety per cent of its members are Indian. So is its basic ethos. In the early days, demand for mentors outstripped supply by 5 to 1. Patil and Rekhi, the most high profile among TIE founders, would each meet with a dozen young companies weekly.
By the turn of the century, TIE had over two hundred charter members — an invitation-only position for which they pay $1,000 in annual dues — who had invested millions of dollars in start-ups (not always Indian-led) and generated billions of dollars in wealth. Its roster of success included Exodus Communications, Cybermedia, Junglee, and RightWorks. Each success begot others. TIE icons included such celebrated entrepreneurs as Boston’s Desh Deshpande and Dallas’ Sanjiv Sidhu and high-level executives like McKinsey’s Rajat Gupta. Early generation TIE proteges like Exodus’ K.B.Chandrasekhar and Junglee’s Rakesh Mathur quickly absorbed the same ethic that had helped them launch. TIE chapters stretched from Austin to London to Bangalore with a new one being added almost every month. When the deposed prime minister of Fiji Mahendra Choudhury came to the US to lobby for his cause, he approached TIE to start a chapter in Suva, the island’s capital.
But the epicentre of this remarkable enterprise remained San Jose. At the downtown Marriott, the chefs learnt to crank up palak paneer and masala dosa for TIE bashes. TIE’s annual conferences — TIECON — became epic affairs, with hundreds of bright-eyed entrepreneurial minnows mobbing successful gurus for counsel and contacts, not to speak of getting them to open the proverbial checkbook. TIE members ranged from big shot entrepreneurs to venture capitalists to distinguished teachers at Stanford, Berkeley, Harvard and Wharton. The stand-out aspect of TIE meetings was that it broke all hierarchies. Even greenhorn entrepreneurial aspirants could buttonhole the luminaries for a few minutes and pitch their idea. One could stand eyeball-to-eyeball with a Vinod Khosla or a Desh Deshpande and ask them what exactly they had done with Sun or Cascade and what they would do with your idea. They would look you in the eye, listen to you, dispense wisdom, and gladly hand out their business card and take yours. If your idea was good, you would meet again. “There was nothing quite like it in the Valley for Indians at that time,” says Vani Kola, then an aspiring entrepreneur whose relentless pursuit of TIE guru Prabhu Goel resulted in backing for RightWorks, an e-business solution company that would later sell to b-to-b conglomerate Internet Capital Group (ICGE) for more than $ 500 million in stock in early 2000. Silicon Valley has dozens of successful entrepreneurs who will credit their rise to TIE.
As the TIE legend spread it soon became the toast of the Indian community and the envy of every other immigrant group — including the Chinese and the Israelis — in the Valley. Even the Americans, for whom networking and schmoozing comes far more naturally, had never seen anything like this. The American business press milked the story dry.
Heavyweight American CEOs and pioneers dropped by or readily accepted TIE invitations to address the Indian laity. Oracle’s Larry Ellison, Yahoo’s Tim Koogle and Netscape’s Marc Andreeson were some of TIE’s early keynote speakers. The group’s annual conference drew marquee sponsors like Credit Suisse First Boston, Deloitte&Touche, Morgan Stanley Dean Witter, and Goldman Sachs. “Pretty much the first week I was in the business, I learned about TIE,” Robert Coneybeer, a partner at venture capital powerhouse New Enterprise Associates, told Industry Standard. “Almost every one of the companies in our portfolio has some sort of a TIE connection. And about half of the CEOs are active in TIE.”
Of course, TIE members were not always or entirely altruistic in their endeavours. Often, mentors learnt as much as the “mentees.” In the initial days, mentors, who called themselves angel investors, invested in their proteges to give them confidence and attract other venture capitalists. “Otherwise, venture capitalists would ask: ‘If you think this is so good, how come you’re not putting in money?’” says Patil. But soon, especially at the height of the Internet boom, such investments became lucrative (and sometimes reckless, some would argue). TIE, one Silicon Valley hawk deduced, is one third mentoring, one-third money, and one-third worship. Rekhi says he has made far more money from his angel investments than from the sale of Excelan to Novell, and has had fun doing it. There were also stories of chicanery and subterfuge, intrigue and embitterment. Cybermedia, a company making anti-virus software that was once a TIE darling, floundered and collapsed to a fraction of its billion dollar value and was sold for a tenth of that price to Network Associates after it was hauled up for book keeping blunders. Ambit Design Systems, a firm that made software tools to design chips, was the turf for another bitter battle among TIE gurus. There were many other unsavoury TIE spats.
But in the end what TIE did at a very fundamental level was restore respect and recognition for the Indian mind even among other Indians, not to speak of Americans. Historically, Indians were seen as a deeply divided people and typically segregated themselves by regional and linguistic differences. “But in Silicon Valley, it seems that the Indian identity has become more powerful than these regional distinctions,” wrote Berkeley’s AnnaLee Saxenian. Even more, TIE engendered a pan-Indian identity, involving not just the diasporic Indians, but also other sub-continentals like Pakistanis and Bangladeshis, though their numbers were small. “Religion and politics divide, business unites,” Patil would say.
In time, TIE’s pan-Indian identity and its strictly non-political endeavours would irk some nationalistic Indians. Although TIE never disowned its India-centric nature, its move in the autumn of 2000 to consider opening chapters in Pakistan earned the disapproval of the Indian government. TIE ignored the government’s subtle messages to desist from the move. “We support TIE’s pan-Indian nature and the move to include Pakistan. We are just opposed to the timing,” one government official told me. At that time, New Delhi was hell bent on isolating Pakistan internationally. But TIE could care less. “Our charter is non-political and non-factional,” says Kailash Joshi. “We do not function under the dictates of the government.” Rekhi himself is a former refugee from Pakistan who harboured no ill-will towards the people who displaced him. “America teaches you to forgive,” he says.
Rediscovery of India: Crossing Rekhi
Over an Indian buffet lunch, I asked Rekhi why and how Indians, who many consider to be among the most divided and sectarian people back home, hang together in the US and give so much to each other. I expected him to say that distance from here brought the Indians closer together. But he preferred to give greater credit to the US and American society. “There is a strong tradition here of public service once you have made it. You have to pay back… to the church, to the school, college… It’s a social contract,” he said. What Indians are doing right now is behaving like Americans.
Despite the hard knocks he took as an early immigrant, Rekhi is lavish in his praise of American society. In fact, he surprised me by saying that “there is very little racism on the West Coast, and it is virtually unheard of in Silicon Valley.” But what about his experience with Excelan and Novell, I reminded him. Well, that was in the 1980s, and Novell was more a mid-western company, he countered. Besides, it was not so much a racism problem as an investor problem. Investors felt more secure with a white honcho at the helm. To this day, many Indian-founded companies — including Exodus, Juniper, Brocade and Sycamore — have white CEOs. But that does not mean Indians were looked down upon, he added. In fact, there was now a reverse racism. “Earlier, they saw us as snake charmers and magicians. Now they think all Indians are doctors, engineers, or teachers,” he says.
Rekhi is now such a prominent Silicon Valley do-gooder that he is wooed and courted by the Valley’s power elite. His keen eye and sure touch is the envy of VCs. He is profiled routinely in newspapers and magazines across the world. Forbes Asap named him one of America’s top angel investors “Kanwal’s got a good nose,” Yogen Dalal, an Indian-born venture capitalist told the magazine. “When someone tells me Kanwal’s in on a deal, I take a look.”
Rekhi says of the twenty or so companies he has funded and mentored since 1994, five have paid off handsomely and five are on the verge of paying off. Some, like Nirvana, which designed tools for website developments, and Intellimatch, an Internet employment service started by his brother in the face of his scepticism, turned out to be lemons. He also missed out on some great opportunities, including Sabeer Bhatia’s Hotmail, because he could not see how the model would turn in profits. But he has never lost sleep over any of it. “You win some and you lose some,” he says.
Often, in our conversations, he would say how absurdly inflated the stock market was. He was unsparing even about the Valley’s Indian stars like Juniper, insisting that it was overvalued and would never make the kind of money it was expected to. Towards the end of 2000, he was vindicated when the market deflated tech stocks with even the vaunted Juniper losing half its value.
After spending two days watching Rekhi in action, there was one characteristic in him that struck me. He was incredibly blunt, but forgiving. He would say harsh things about someone, but at the same time try to rationalise it. I asked him about Sabeer Bhatia and his estrangement with TIE after the desi godfathers had turned down funding for Hotmail. He shrugged. “He will come back. Once he is married and has a couple of children, he will come back,” he said. He told me how Umang Gupta of Keynote Systems, who for many years had forsaken TIE, had called him recently to say on his own accord that he wanted to be more active.
In fact, Rekhi is convinced that there will be a mass movement of Indians in America to give back to India. At the heart of TIE, he explained to me, is a group of middle class people who have struggled and who want to give back. Look at us, he said, there is none among us who came here rich. And now we have more than we need. He constantly exhorts people to give back to society — whether in India or in America — saying it is “social investment, not charity.” Some hear him, many don’t. One Valley Indian dismissed him as a “Mahatma-come-lately” with an eye on the headlines. Regardless, Kanwal Rekhi’s quotidian struggle in jobless America, his entrepreneurial spunk and courage in the face of corporate skullduggery and residual racism, and his pioneering role in pushing the boundaries of immigrant enterprise, make him the frontiersman of the Indian adventure in Digital America.