Dancing with elephants

Vipin Kumar

WHEN Suresh Rajpal quit Hewlett-Packard (HP) India as its President in 1999 after 29 years of service to start his own venture, no one frowned. After all, those were the days of hyper-active entrepreneurship. Then his start-up, eCapital, got merged with Leading Edge in January 2000 to form Trigyn Technologies Ltd. But then, out of the blue, Rajpal quit Trigyn. He has now started another venture, Tecnova Information Systems, along with an ''old friend.'' In a no-holds-barred chat with eWorld, Rajpal discloses why he quit Trigyn and what his plans for the new company are. Excerpts from the interview:

Your reasons for leaving HP and subsequently Trigyn?

I left HP after 29 years because I was doing the same job for 11 years. Even if you are the head, 11 years of doing the same job is boring. Then Chase Capital Partners came around and asked me to start e-Capital Solutions. It sounded exciting and I left HP on January 15, 1999.

We went along for a year. Meanwhile, Chase Capital had also invested in Leading Edge, which was listed on the Bombay Stock Exchange (BSE). After about 12-13 years, Leading Edge was growing at a stupendous rate of six per cent annually when the market was growing at 60 per cent! Chase suggested the merger of the two companies and asked me to run the combined entity. The reason was twofold: one was, they (Leading edge) were public on BSE; so within a year, my employees saw some value in their stock options. The second was that they were very strong in the US with 70 people in New Jersey. eCapital was operating in Germany and the UK but had only two-people offices in California and New York. They had a production line in Mumbai, we in Bangalore, plus I was covering Delhi. It seemed a pretty interesting fit geographically.

Then what happened?

There were three owners of that company (Leading Edge). Since I was heading the new company, Trigyn, as its CEO, these three people were to report to me. In Trigyn, Chase owned 32 per cent, the three owners of Leading Edge collectively owned 24 per cent and the employees had 18 per cent as ESOPs. The balance was with the Public and the FIIs. In this scenario, the three owners of Leading Edge had three seats on the Board. Chase had one, and I didn't get on to the Board for one year.

Now as the CEO I was to report to the Board. But as part of the organisational structure, the same three people were working for me! When three guys work for me and when I work back for them, it can never work. When people walk around and say ''it is my company and I will do whatever I want to,'' I can't really run it.

I went around for a year, fighting internal battles and politics. Four CEOs were running the company and then I decided you need only one CEO to run a company and I chose to leave.

But then what happened to your equity in the company?

In eCapital, I, along with other employees, had 30 per cent stake through the employee stock option. Chase had 70 per cent stake. Out of the 30 per cent, eight per cent was mine and I bought two per cent more. That two per cent has become one per cent now (in the combined company).

How difficult was it for you to quit the company that you founded?

It was more difficult for the employees. It took me three-four months to decide that I will be better off starting something else. Emotionally it has an impact because you have kicked it off from zero. But then you realise that life is about board control and things like that. Now I am very careful that I have the Board control.

Was it folly on your part to give 70 per cent stake to Chase and not retain majority shares in eCapital?

See, I never started the company. Chase came around and asked me to start a company. It was more exciting than doing the same job for 11 years. Our goal was to build a team, earn the revenues and take it to Nasdaq. I didn't think about the downside risks. But in hindsight....there is a saying that if you choose to dance with an elephant, you can only stop when the elephant wants to stop. I learnt that I could stop only when Chase wanted to stop.

What is the genesis of your new company? And how did you ensure that you are not going to dance with an elephant this time?

I was going to start a software company. Abhey Yograj, the owner of Tecnova (a consultancy company which facilitated entry of MNCs into India), was an old friend of mine. After years, we ran into each other at a restaurant. He was also planning to start a software company at that time. Tecnova had brought about 75 companies into India for eight-nine years. These companies wanted to outsource some software from here. There was a strategic advantage to tie up with Tecnova because they have contact at the CEO, CFO, CIO level. We found that out of the 21 companies we talked to, 18 have not been outsourcing software from India and were getting the work done from Anderson Consulting etc.

We are equal partners now. And shareholding will be equal between the largest shareholders. We have some angel investors now and our head in Europe also holds a substantial stake. We have invested $1 million, need to raise $4 million more. We will go for venture capital funding later but we will make sure that we have control of the company.

What is the focus area of your new venture? Could you share with us your targets and strategies to achieve them?

We have only six people now. In the first year, our target is to have 196 people and a revenue of $6 million. We hope to have a turnover of $25 million in the second year and $50 million for the third year. We will also have 950 people in three years.

We are now bidding on 44 different projects with 14 customers with a value of $6.75 million. We are hopeful that we will be able to close atleast $3.3 million in the next 45 days.

We have a focussed-de-focussed strategy. We are targeting 100 customers who have a combined revenue of close to $300 billion. You know that most MNCs spend 2-3 per cent of revenues on IT annually. Let's take it as two per cent. Out of this, half per cent goes to outsourcing software. Here I am chasing half a per cent of 300 billion, ie, about a $1.5-billion market. But I am defocussed on areas such as IT-enabled service, which our clients are demanding.

My focus areas are e-biz, ERP and mobile wireless. We will outsource everything outside our core competency. I will have partners in India and abroad for this. We will get work done from them and supply to our customers. Over the longer term, we might ask some of these companies, who are tied up with us, to merge with us before our IPO.

You are also planning to market Indian software products...

I have discovered that there are about 100 software products in India. Those who developed this don't know how to market these products overseas or have the money to do it. So I want to be the one-stop shop for my 100 customers, offering a plethora of software and IT products from India. I will do either value-added reseller arrangement or I will take a product, incorporate it into my total solution and re-sell it. My value add is to leverage the small guys and provide a market access to them.

vipin@thehindu.co.in

Pic.: Mr suresh Rajpal.

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