|
 IT
entrepreneur extraordinaire B V Jagdeesh (co-founder
and CTO of Exodus Communications) is tall, articulate,
with a deep voice that resonates across the living room
of his family home in Bangalore. His commanding presence
is enhanced by a sunny California smile. In town for
business and pleasure, rounds of celebrations and felicitations,
he personifies the boy next door who made it - and
how! We had heard of Indians excelling in the
Silicon Valley, but he caused a stir when he donated
a million dollars to the BMP (erstwhile BCC) schools.
Why? Spurred by a conviction that if he, a product of
the public school system, could make it, then there
were perhaps thousands of young kids he could reach
by revamping the school system. His vision? Creating
wealth and opportunity. His satisfaction? Making it
happen. Yes, we can barely keep up with the unbelievable
goodwill and money flowing back from the land of opportunity
- to his alma maters, to his community, to his roots.
We were privileged to meet this amazing achiever whose
technical brilliance and philanthropic extravagances
are legendary.
From Bagalur to Saratoga…the journey
Tell
us how it all began…
It was one of our dreams. We started with the intention
of building a company that has an impact on every business
in the world. So to an extent, actually we have achieved
the dream. Because Exodus being the central force
for the entire Internet, and being a part of the entire
Internet growth, all the companies and all the human beings
in the world, in some form or the other, have to come
to access the information from Exodus. Which I think
is a phenomenal achievement. And you know, we started
off as a software consultancy in 1994 called FOURESS,
and very soon we realized, in the middle of 1994, software
consulting is not a company that is going to take us to
the dream that we had when we started this company. So
some time late 1994, we got an opportunity to get into
this Internet business. We saw a niche, we saw a hole,
and we jumped into this Internet market.
Until 1995 end, we kind of self-funded and so that
was the toughest time of our life, because we had
mortgaged our house and our personal property to get credit
lines - to get loans from the banks and so on and so forth
so. We did all those things more as a passion to build
a business without really understanding the legal implications.
So, had we known at that time, that the legal implication
is that eventually the banks could take away our house
or our personal property, perhaps we would never have
signed. So in one way it actually worked out well, we
kind of blindly signed the papers to get the ball rolling.
You know, even though we went through lots of down times-
very rough times - sometimes we couldn't even make
the pay cheques for the employees - but we were very fortunate
that the first 20 employees were very loyal, very dedicated,
and that despite the fact that we did not even have a
stock option plan for anybody when they joined. So many
people had trust in us, despite the fact that we were
Indians. And when we opened up the stock options plan,
we made sure that all our employers were fully taken care
of. So, as a result, even a secretary who had joined us
in the early days is perhaps worth about two and
a half million dollars today! As founders, it
is not that we just want to keep the entire company to
ourselves. We made sure that it was well distributed.
We got our first funding in 1996 and Mr. Kanwal Rekhi
was extremely instrumental in recognizing this opportunity
and funding, which was kind of a life saviour for us.
Had he not done that, perhaps we would have closed down
or sold the company to somebody else.
At that time, what was the pitch
like - in today's jargon, the 5-minute elevator pitch?
At that time, we weren't really the sole Internet service
providers for business…that was the pitch.
We needed to be the key Internet service provider for
all the businesses in the world - that was our
dream, with lots of value added services based on
intellectual knowledge. At about that time, we got the
funding and we were in the business to provide complete
Internet services, which include Internet access, Internet
consulting, Internet co-locations. August-September of
1996 is when the shift started to happen, that
the opportunity actually existed in the web co-location
business rather than in the pure Internet services
business. The entire company essentially started to focus
on providing the web co-location and the Internet hosting
business.
Dedicated
server?
It is a dedicated server - customers can build their own
servers in a very secured environment - highly secured
environment. Lots of technology based solutions. This
was the killer application that the customer could pay
for. In fact, the interesting thing was when we
built the first Data Centre, it was only 2000 sq
ft of space! Of that, about 1000 sq ft was dedicated for
the Internet access business and the other 1000 sq ft
was dedicated for the Data centre. According to our expectation,
that should have been filled up by 1997 end, which is
like one and a half years after we built the Data Centre.
But it so happened, it got filled up in less than two
months. The demand was so huge, we moved all the employees
out and we built the remaining 13,000 sq ft also as Data
Centre. From then on, (smiles broadly),
money started pouring in - investors wanted
to invest more and more in to the company and we
never looked back after that.
We opened up one more Data Centre in New York. So that
was '97 April. And then after that we opened up three
more. One in Seattle - one in Los Angeles - and one in
Washington DC. We had five Data Centres by the time we
went public in March of 1998. Our revenues were 12.5 million
dollars. At the time, when we were going IPO, we brought
Ellen Hancock to become the president of our company.
Because the company was growing at an enormous pace -
you know, we had lots of issues related to customer's
services - so we found Ellen Hancock, who came with lots
of experience and contacts, which was very helpful for
the company. So she came on board just around the time
when the company was going public.
After six months, she became the CEO and Chandrashekar
remained the chairman until last month. He stepped down
as the Chairman. I have been the Chief Technical Officer,
but even I am minimizing my work at Exodus. That's because
I am getting more involved in the entrepreneurial activities
and more so in India as a matter of fact.... helping build
companies. So I have invested in four companies so far
in India. I'm very actively involved in all the four of
them. Also, we are initiating an educational project in
Bangalore and in the Indian School of Business,
Hyderabad as well. So I thought my time could be a
lot more beneficial if I could spend it more meaningfully
than just building one company. Currently the company
is in a cruise-mode (makes a smooth driving
gesture). We have hired a lot of good people. The company
can move forward, you know, even without people like us.
What
is the social impact of the computers and Internet?
The social impact is to truly
eliminate, number one - the communication gap,
and number two - distances. So because of that,
people here know more about what is going on on the other
side of the world. People there know more about what is
going on in this side of the world… And that is eliminating
the knowledge gap that existed before…
In response to questions about developing software
companies/products in India for the local market in
local languages, and its difficulties:
Why should it happen in America and why can't it happen
here? If there is an opportunity, if there is a way of
doing it, then entrepreneurs should look at it from a
different perspective. Don't expect large corporations
to do it; don't expect the government to do it. Did the
government invent PCs? No they didn't! They
are just buying PCs. Government didn't see the importance
of having a PC. Now that they see the importance of having
a PC, they are implementing it. So an entrepreneur should
see the importance of the local languages, you know, support
it, and then push from that angle. There is a risk - of
course there is a risk, but an entrepreneur cannot think
like a big company… see, everybody is trying to build
the same products and the same services as America is
doing. I think we should slightly move away - look
at the needs of our people and our products and develop
the products for that.
What can India do to improve
its position globally?
(Sighs). So many things! India has to essentially open
up very, very quickly. Essentially, telecommunications.
We have this tendency to think that telecommunication
is a luxury. That mentality must go away.
If we have to talk between the two of us in whatever media,
whatever form - this is not a luxury - it is a necessity.
So that's why I keep saying, the reason why it is a luxury
in India is because the telecommunication authority actually
charges you one rate for a certain amount of calls. And
if you exceed that number of calls, they are going to
charge you more, which is totally against [logic] in a
developing country.
When you have abundant supply - what happens is that
as the volume of the usage increases, the cost drops.
They want you to use more - so that they can build high
volume fibre links, which will bring the cost down. In
India we do not think that way. We don't think from the
angle that this is an absolute necessity today. But
because the infrastructure is so bad, because we penalize
the users - one for paying for the form and one for ISP
services - so people have to think 10 times before using
the Internet. So it is not that 'Hey I will just go
on and use it for unlimited duration of time', I have
to think10 times - 'How much money, how much bill I
will end up paying at the end of the month'.
The whole mindset of the fact that telecommunication is
no longer a luxury - it is an essential thing for
every common man - will lead to many more entrepreneurs
opening up our companies. And these venture capitalists
coming in from all countries outside of India, who are
investing lot of money into these companies - they all
need to flourish. Once they flourish, they will end up
creating lots of jobs, especially in the service economy.
So hundreds and thousands of tier-one types of jobs are
going to be created and we will have millions of other
jobs created to support the tier-one. So we have to think
from that angle, it has to be a long-term design.
Some argue that due to too
much emphasis on IT, the other sectors are being neglected.
See where the job opportunities are - where the country
has the potential to grow? Where is the world moving?
Where is the market opportunity? So IT is playing a major
role in making that happen. If that can create millions
of jobs, directly and indirectly, then why not emphasize
on it? We have found a niche just like, you know, in a
product company. When you produce a product the only way
you sell that product is if you find a niche in the market.
It has to be very unique. If every other company is doing
it and I am also doing the same thing, then how do you
market it? How do you position it? Where as, if you basically
have found a niche, then you know how to position that
and people are willing to pay millions for that. As
far as India is concerned that's where the emphasis is
- that's what the world wants. The world
wants India to help in the IT industry.
While India is doing very
well in IT, 80 to 90% of the revenue is coming from
IT related services, not IT related products.
But you see India has to start somewhere (earnestly).
What is happening now is that until recently, there was
no concept of investment that was coming into this country.
So how do all these services start? The petty money people
save in their banks. If you look at Infosys -
Narayana Murthy borrowed Rs. 15,000 from his wife
to start the company. Right? The same story applies across
the world to each and every one of the software services.
However, the whole dimension is shifting right now.
There is a lot of venture capitalist activity going on
right now. So if you want to get into the product or product
services - somebody has to fund you. Right now a
shift is happening from the traditional software services
into product services. In fact, one of the companies
that I have funded in Bangalore is producing an
e-mail device primarily designed for the Indian consumer,
which is going to cost around Rs 5000 and on a monthly
service of Rs 50. Anybody can send and receive
e-mail in a very cost effective manner. Those who cannot
afford to pay Rs 40,000 to buy a PC can pay Rs 5000 and
participate in this Internet revolution....The
version that we are working on actually doesn't
even need a TV. It has its own screen. The later
versions we will introduce, instead of that screen we
can have a TV as a screen. If the TV were used now, you'd
still have to use the regular ISP, which is going to cost
Rs 200 per month.
In America, recently, there
was a report about the "Indian Internet Mafia" in the
Silicon Valley. Comment.
Ha ha ha... Started in a nice way! Essentially, you know,
what happened was just like the mafia in New York, who
are known for all kinds of underground activities. Now
Indians have done extremely well - especially in the last
four or five years. So many Indians have come to prominence.
At the end of the day what matters is creation of
wealth. Whether you are an Indian or Chinese or who ever
it is. If you have wealth people will come to
you - people want to look at you. Whether it is politicians,
whether it is venture capitalists, whether it is financers,
whether it is other businessmen. So now everybody says,
" Hey! These guys are not like where they need help all
the time. These guys can do it independently." Right?
Previously Americans used to think that "Indians" means
- they need help. But now, with all these companies being
so successful, people are realizing that these guys can
do it on their own. There are so many of us who have proved
that we don't need help. And with the financial
muscle that we have today, you can pretty much do anything.
Why are Indians excelling
in the IT field?
Indians are very natural in the IT field because we are
very good at mathematics and communication. An Indian
invented the number system. Imagine if the number system
didn't exist, we would still be writing those 'Vs'? Just
think if we were to write million dollars (laughs) in
Roman, how many Vs and Xs we are going to write! So because
of the natural emphasis that as parents, people provide
to their children towards mathematics, they have the natural
aptitude. After all, IT is nothing but a logical way of
thinking… we got to demonstrate - we
got to prove that we could do very well in the
IT field. We can be the leaders in the world market. |
5:09:53 PM 
