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Wednesday, Jan 07, 2004

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The next step

Bharat Kumar

With the IT industry having weathered the storm and now looking up, you would expect software industry managers to stick to their guns. But not these three entrepreneurs who saw sense in changing companies, or even changing course.

Ganesh N. Mandalam

IT'S that time of the year again. A time to look back at the year past and ... No... that's too clichéd. We did look back, but we didn't want to merely recap events already reported. So, here's something different. When we took stock of the year past, we came across three different events that seemed to signal a trend — three resignations of senior folk from small companies. Resignations that sounded normal enough at the time of announcement. But put together, they make for interesting reading.

eWorld met with these three people, who were entrepreneurs or senior members of management teams at small software companies, and who have recently gone on to pursue other career opportunities in the industry. We were intrigued. This was 2003. The IT industry was coming back from a slump and having weathered the storm, you would want to stick to your course. Why change now? We got interesting answers from Ganesh Mandalam, S. Premkumar and Nagaraj Prasadh.Here, we chronicle not only why they left for greener pastures but also what egged them on in their earlier initiative. They also record their first lessons in the realm of entrepreneurship.

Ganesh N. Mandalam, formerly CEO of 3rd Agenda, is now CEO of Xerago Marketing Services.

Mandalam is an ad industry professional who found the lure of the World Wide Web irresistible. His first stint as entrepreneur was with 3rd Agenda, an e-business firm he floated in 1997. Later, SSI Ltd took a majority stake in 3rd Agenda. In early 2003, Mandalam and SSI parted ways.

This was interesting since Mandalam knew that 3rd Agenda was doing well, that it had a market to address and that it was doing so. So why did his business transform into a new avatar as Xerago Marketing Services? On his earlier partnership with SSI, all that Mandalam would say is, "After acquisition by SSI Limited, the majority shareholding was with the strategic investors. The decision to continue, or not continue as 3rd Agenda was not mine to make."

Why did Mandalam see an opportunity on the Internet in the first place? He says, "Well before 1997, it was clear that the Internet was here to stay and would change life completely. There was an opportunity to help businesses use the Internet."

Interestingly, Mandalam conducted no studies or research before he took the plunge. Coming from an advertising background at that time, he says there was little difference between what he had always been doing, and doing this business. "It was nothing but brand building using an emerging media. So, we did not engage in any significant introspection, or research before we jumped in."

Now, fresh entrepreneurs tend to take things very personally. So, rules on salaries and pay hikes are sometimes harsher for themselves than they are on employees. How was it with him? Says Mandalam, "In the early days, we did manage with a lesser salary, but significant compromises had to happen only in the last couple of years." He doesn't elaborate further. According to him, "But, with Xerago, right from the beginning, we have managed to set up an organisation with a greater degree of stability. God willing, with the lift given by 3rd Agenda, many of the mistakes of the past will not happen."

What are those new resolutions that Mandalam found missing earlier? "An increased focus on bottomline. Greater pressure on results. More ruthlessness in working towards goals. Attempt to find that balance amongst customer, financial, process and employee fronts, to achieve organisation goals. In essence, the focus would be on results, not reasons, he says.

What would Mandalam not do now, that he did earlier? "I would have thought twice about sharing equity and consequently ownership, in the way that we did earlier." Financial discipline is another area he would have held tight reins on, he says.

S. Prem Kumar

S. Prem Kumar is now chief marketing officer with DSL Software Ltd, a joint venture between Deutsche Bank and HCL Technologies. He recently quit FugenIT, which he founded. Kumar's first job was with the HCL group. Before setting up FugenIT, a software company focused on providing palm-top based solutions to Indian companies, he headed HCL Frontline, the channel and retail sales arm of HCL Infosystems.

The reason he gives for going back to parent HCL is as simple as it is forceful: "The corporate partner in FugenIT, (an arm of) TVS-Electronics wanted to take my stake in the company. The deal was amicable. But that would still mean that I had to become an employee again. If I were to become an employee, I might as well work with my mentor Shiv Nadar."

Kumar says that his earlier experience with HCL helped sow the desire for entrepreneurship. But isn't it popular industry lore that HCL culture encouraged each division in the group to work as separate profit centre — in essence, allowed entrepreneurs to flourish within?

Sure, agrees Kumar. But, he says, "I was selling computers. For a good length of time, it was certainly challenging and motivating. But beyond a point, you can't continue to be creative, selling hardware."

That's when the idea of developing and selling software for palm-top devices bloomed. TVS Electronics was interested in investing. Kumar accepted the offer. According to him, "We spent much of 2000 researching what opportunities existed, 2001 developing the product and 2003 marketing it." He says that the base work has been done and now is the time to go all out marketing the product.

Why did Kumar choose the handheld software space? He says, "I am a pure marketing person. I understand the need for digitised access to corporate databases from the location I choose. Sales personnel play an important role facing the customer in, say, pharmaceutical and insurance companies." For Kumar, it was clearly an opportunity staring in the face.

If that is the case, why did he leave at such an opportune time? After all, in intermittent meetings with the media, Kumar had always reported satisfactory progress at FugenIT. According to Kumar, "We had reached a stage where, I felt, the company needed further infusion of funds so that we could grow to the next substantial level. But there was a difference of opinion on that front." It came down to one of the partners buying out the other. Kumar says, "I could not buy out my partner. So, the reverse happened."

What did he learn here that was new to him? "I learnt that a team of dedicated professionals could make a world of difference to the promoter." In FugenIT's case, the team was the reason the company grew fast, he feels. Its customers included brand names such as HLL and Marico. Kumar says, "Even now, the strength of the team, particularly the software development team, lies in its staying together." In other words, a team, instead of each member with special skills, is a new marketable commodity.

Wasn't Kumar tempted to start all over again with a new company of his own? "Running something on your own takes a lot of effort. Effort that could be used in your core competence. At the time I left FugenIT, I was undecided and wanted some time off. When Shiv Nadar came to know I was in the job market, he dismissed my idea of a sabbatical... and, here I am."

What would Kumar do now, if he were to go over this entrepreneurship bit again, that he did not do at FugenIT? "I would set expectations right. Be it the promoter or the investing partner, each should be clear as to the company's goals within certain deadlines. And, it would be good to have a plan of action frozen and agreed upon earlier, depending upon those goals being achieved."

R. N. Nagaraj Prasadh

In his second stint at Polaris Software Labs, R. N. Nagaraj Prasadh is now involved with the sales force automation solutions targeted at the insurance industry. Prasadh and Kumar have a lot in common. Both have gone back to their earlier employers. Both, as entrepreneurs, have focused on the sales field automation and worked on software for handheld devices. And interestingly, Prasadh too has the same outlook on being employed: "If I were to be an employee without the full freedom to handle product development and marketing, that came with being part of the management team, then I'd rather work with Polaris, my earlier employer."

Prasadh was part of the management team at Solutions Centre Pvt Ltd that develops software for handheld devices. While Kumar looked at consumer goods companies as his big market, Prasadh considered insurance companies and the railways as part of his domain.

According to Prasadh, "The intellectual property at Solutions Centre is being taken over by ICICI Infotech." That was when Prasadh thought it would be a good time to look out.At Solutions Centre, were there salary cuts that the entrepreneurs took on themselves? He says, "There were no salary cuts. But if I went on a tour, I would not claim bills till something worked out. So we had that kind of commitment."

Did he not attempt another shy at entrepreneurship? No. Prasadh says, "Being an entrepreneur has its share of difficulty. You tend to be also responsible for administrative stuff that takes your time and focus away from your job. You'd rather do the job that gives you the most satisfaction, all the time." Before joining his uncle who holds substantial stake in Solutions Centre, Prasadh was with Polaris in Thailand, making the most of his marketing skills.

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