When he began working in the IT industry, hardware was regarded as the most important product; software was given away to help sell the box. Now, of course, it's the other way round. This potential in software is what Saurabh Srivastava was among the first to spot in the IT industry. It is this ability to foresee the future that has helped him straddle the software sector.
Saurabh Srivastava, 63
|Education: B.Tech, IIT Kanpur; post graduation, Harvard University|
|Business: IIS Infotech (merged with three other companies to form Xansa)|
|Initial investment: Rs 2-3 lakh|
|Age at starting business: 43 years|
|Source of funding: Personal savings|
|Co-founder: Nasscom, Indian Angel Network, Infinity Venture Capital, TiE|
Now a full-time mentor, 63-year-old Srivastava started his first venture IIS Infotech in 1989. Nearly a decade later, he merged it with three other Britsh IT firms to form Xansa and led its India operations till 2006. Besides, Srivastava has also co-founded the Indian Angel Network and is the Delhi president of The Indus Entrepreneurs (TiE). The mindset that helped propel such organisations is the same that made him co-found Nasscom, the National Association of Software Services Companies, as far back as 1988. "There was a huge potential, but the environment in which we were operating was poor. Policies needed to be changed and we thought it would be hard to change them unless we had an industry body," explains Srivastava.
It's the same instinct that led Srivastava to become one of the three founding general partners of Infinity - along with Silicon Valley biggie Kanwal Rekhi, with whom he started TiE's Delhi chapter and with whom he collaborates closely in Inventus Capital - to help fund and guide other young entrepreneurs. Srivastava put in the seed money of Rs 50 lakh in Infinity, which went on to raise Rs 150 crore and helped finance companies such as IndiaBulls, Avendus and Indiagames. "Rather than being a captain, I realised I enjoyed being a coach and using my skills, experience and faculties to guide other entrepreneurs," reasons Srivastava.
The first company Srivastava mentored was Scicom Technologies in 2000, which was a challenge because the dotcom bubble had burst. "My first advice to them was not to sack their employees but look at other areas to cut costs," he says. Since new customers would be difficult to find, Srivastava asked Scicom to strengthen its relationships with old clients and sign long-term contracts.
A company that he takes great pride in having advised is Avendus, an investment bank focusing on niche areas. "Its team consisted of four smart entrepreneurs, but its online business model wasn't working well," says Srivastava. His advice to them was to go offline. He also helped widen Avendus's network by getting the team in touch with the right people. "Most entrepreneurs haven't run a company before, so they falter. The smart ones know when and what to listen to," he points out.
Srivastava began his working life with hardware major IBM in the US after getting a post-graduate degree from Harvard University. From 1975 onwards, he worked for the firm in India because he preferred to be "a big fish in a small pond rather than a small fish in a big pond", and stayed on when the "Big Blue" left the country. It was when he began working for Chennai-based A.V. Thomas Software Research that he realised the potential of software. He went on to work for Thermax, and later, Tata Unisys, to head their software operations.
It was in 1989 that he decided to spread his entrepreneurial wings. His journey is a lesson in savvy reverse engineering. Realising that most software firms dealt with US companies, he decided to concentrate on the UK and chose a niche area—off-shore product development. He got a sales and marketing team in place in the UK and acquired office space in an up-market location in Delhi, so "it wouldn't give away the fact that we had no money".
Srivastava-speak on venture capital
|The team: An A-class team will work out a B-class idea, but a B-class team will mess up an A-class idea.|
|The goods: Define your product or service, whether it fills a real need or is just an idea. It is important to know your customer and your market potential.|
|The competition: You must consider if you are doing something different, or simply doing something differently.|
Getting its first client, a housing society in the UK, was a hard code to crack. "Out of the 10 slides we used for presentation, eight were usually on selling the country, the ninth was on convincing clients that we had a software industry and only in the tenth did we talk about what our company could do," reminisces Srivastava.
However, IIS Infotech did not have a single computer because it couldn't afford one. Instead, Srivastava promised to deliver the product over telephone. The client was sceptical, so Srivastava got an official from the Department of Telecom to persuade them. Though the project required at least 30 people, Team IIS numbered 15, so he had his prospective employees promise the clients that they would join if IIS got the contract. "I did everything in reverse. I first got a contract, then hired employees, then created a company and then got government permission," he says.
However, this was the extent of his sleight of hand. He made sure that he produced quality work by hiring the best people at competitive salaries. He also learned to turn his weaknesses into strengths. For instance, when a client offered to send a computer on loan, Srivastava had to decline as there wasn't enough space in the office. Instead, he offered to use leased lines to work on the computers abroad. "However, we didn't even have enough money to pay for the telephone lines upfront. So we simply faxed the bills to them and they cleared the amount. The clients were impressed with the transparency of the process," says Srivastava. When he couldn't afford to wait for months to get a payment, he offered clients a discount if they paid at the beginning of the project.
These strategies helped IIS rank in the top 15 IT companies in India within five years. Soon, Srivastava acquired other companies in India, Singapore and the US, and in 1998, with Xansa, he went global. "I had begun to realise that I had more fun in strategising rather than running the day-to-day business," he says.
He has come a long way from his first brush with managing - he was part of the team responsible for producing a newspaper at his alma mater, IIT Kanpur. "In the first year that we ran the paper, we made a loss. Then we realised that the backbone of funding a newspaper was not subscription, but ads," he says.
If the media lost a potential star in Srivastava, the IT industry gained: he was a part of the first batch of software pioneers in India, and for these people to make it as entrepreneurs was tough. "There was no money and it was tough convincing the overseas clients that we could deliver," says Srivastava.
He agrees that most people have an employee mentality and believes it's important to get into the employer mode. Evaluate how valuable you are to the company and compete with your own boss, he says. For entrepreneurs in a downturn, Srivastava says the downside is the credit freeze. However, the upside is that there's a better chance of getting good people for less money.
Does this mentor plan to retire anytime soon? "No way," he replies emphatically, "There's still so much to do." Next on his agenda is "a world-class university in India". Since Srivastava is hard-wired to success, he's more than likely to incubate this one to fruition.