The [technology] game now is not played by me but more professional players. The idea was to not hang on to something when the world has changed.

Don’t become an entrepreneur with the security net of taking up a job if it does not work. You will never be successful then — this is Venu Raman Kumar’s nugget of advice to young entrepreneurs. “It’s baptism by fire,” he says.

Kumar should know, having left the stable precincts of the Indian Revenue Service to jump into the deep-end of being an entrepreneur. “You’ve got to put every thing you’ve got,” he says, tracing back to when it all started, when he was 34 years old. Besides, he says, the credit goes to his wife. “She was working, so we wouldn’t go hungry,” he adds, in a lighter vein.

Raman and his wife were part of the IRS batch of 1984. And while she continued in the service, Raman proceeded to Yale University to pursue an MBA in 1988. Ten years later, he started CBay Systems, a healthcare business process outsourcing company, with $100,000, in Annapolis, Maryland, and Bangalore.

He got together “a bunch of professionals,” raised venture capital and private funding, he says, adding that medical transcription was the only business coming out of the US in those days. Soon enough, the company clocked revenues of $700,000, he recalls. In 2000-01, the company raised private capital from Godrej, which was its vendor. Revenues grew to $60 million in 2007. “It was all organic growth in the clinical documentation space,” he says, and the company now had about 5,000 people, across Hyderabad, Bangalore, Chennai and Mumbai.

In 2007, the company went in for an AIM listing in London to raise $25 million towards acquiring healthcare companies.

When Lehman died

Raman brought in SAC Private Equity group to fund the acquisition of $400-million MedQuist, a company seven times larger. CBay acquired the 70 per cent stake that Royal Philips of the Netherlands held in MedQuist, for $280 million.

It was a transaction that involved Bear Stearns, Goldman Sachs and Lehman Brothers. The deal closed in August, just before Lehman “died” in September 2008, Raman says, harking back to the time when the global economic downturn brought some of the biggest names in the financial world to their knees.

CBay then acquired Spheris Inc (a Warburg Pincus-invested company) and emerged the largest player in clinical documentation and transcription services. The number of employees was now 10,000, largely in India.

In 2011, Cbay listed on Nasdaq as MedQuist Holdings Ltd. Kumar stepped down as chief executive but continued as Vice-Chairman and board member.

MedQuist then acquired Pittsburgh-based MModal, a leading voice recognition and natural language analytics company and changed its name to MModal in February. And in August, MModal was sold to One Equity Partners, JP Morgan’s private equity arm, for $1.1 billion (over Rs 5,000 crore) and taken private.

So why did he sell? In technology, the product lifecycle is short, he responds. And though he managed to get 10 years out of his business, the product lifecycle has changed today to about two or three years. “The game now is not played by me but more professional players. The idea was to not hang on to something when the world has changed.”

This transaction was over in August, and Raman jokes that he speaks freely now with the one-month gag order on him also having lapsed.

Money to invest

At 51, Raman now wears various hats. Sitting on a kitty of Rs 1,000 crore, he is looking to put his money where his mouth is. With an “operating platform” of Rs 100 crore, the lookout is for good ventures to grow.

He is looking at control, to be part of the board and management to help grow the business, he explains. In non-control transactions, he looks for promoters who are confident of their growth prospects.

In July, Raman invested Rs 22 crore in security firm Zicom, through his India investment vehicle, Aeries. Zicom is also a fire-safety company in West Asia and has a 20 per cent market share in that market, he says. Raman is looking to support Zicom’s growth, from being a hardware company to a safety services provider.

next stop

Technology being his mainstay, he says, voice is passé; the next stop is data. So ventures he would look to invest in include technology, consumer and Internet-oriented initiatives. Advising new kids on the block, he says, you need to make sure you manage your finances well. You always need to have “adequate money,” he quips, which is why he undertakes “optimal funding,” to keep the entrepreneur comfortable and hungry!

Freshly minted entrepreneurs need to have the rigour of research, besides knowing how to get their revenues and break-even in the quickest possible time, he says.

Sitting on cash, where does Raman see himself going from here? The plan is to develop a platform of companies and to put to test the assumption of building another company in scale, to be a leader in its segment, to take a start-up to a mature level, he says, with no let-up in his enthusiasm.

Cardinal mistake

But after going through all the pain to grow a business, didn’t he feel the pangs of separation on selling his business? That’s the cardinal mistake people make, he responds. An entrepreneur needs to decide whether he wants to run a small company or make it a world-scale company. If you have ambitions of scale you need to take a call, keeping an eye on the next level of technologies, he says.

At Yahoo!, the old guys have gone and new ones come in, “that’s the nature of the beast,” he says. Google transformed itself in its lifecycle, and Facebook will eventually morph into something else, he adds.

“You need to separate yourself from the company you run,” he says, adding, people are not able to exit their companies, as their lifestyle is related to it.

Please send feedback, comments or suggestions to emergingentrepreneurs@thehindu.co.in

(This article was published on November 18, 2012)
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