Arya Bhattacherjee was lucky early on in his career. After studying at the University of Illinois, he went to work for Intel. He was then hired away by a semiconductor startup in Silicon Valley in 1983. As luck would have it, that startup was Cypress Semiconductor, and Bhattacherjee was brought on by famous founder and CEO T.J. Rogers, as one of the company’s first engineers.
It was a fortunate break both professionally and financially, and five years at Cypress gave him a solid “slush fund” in the bank, as well as the seeds of a dream to build his own company. “Working with T.J. was extremely inspiring because I could look up at him and say, ‘That’s my milestone,’” he says.
Bhattacherjee had formed a fast friendship with another engineer, Tushar Dave, who was working at VLSI (now part of Phillips). Both sensed the emerging opportunity to work with technology in India. “In Silicon Valley we spent our lives trying not to be Indian, because we thought it was a handicap,” Bhattacherjee says. He wanted to turn being Indian to his advantage.
The Indian Telephone Company was India’s largest semiconductor consumer at the time, and it wanted to have a fab and associated design centers set up on Indian soil. Bhattacherjee and Dave seized the opportunity to execute the $100 million project. Their newly formed U.S.- and India-based company, Arcus, would get 25 percent capacity in the new fab.
The two men set up VLSI design centers inside universities and companies across India, evangelizing the VLSI design culture. Soon they were selling enough VLSI products in India that the sales commissions alone were funding their company.
Things were taking off. Arcus started doing chip designs in India, and 25 percent of the fab project had been completed. Then the devaluation in India began. But more importantly, says Bhattacherjee, there was a conflict between India’s Department of Electronics and Department of Telecommunications. “They couldn’t figure out who should do the fab. It became a political thing, which dragged on.” The project fell through.
It was Bhattacherjee’s introduction to the challenges of business in India. Seeing their company and two years of hard work on the brink of collapse, he and Dave had what he jokingly calls a “come to Krishna meeting.” They had built impressive careers in Silicon Valley and didn’t want to throw it all away on this pioneering project. It was decided that Dave would stay in the U.S. to focus Arcus on a product line, and Bhattacherjee would go back to India permanently to build a design center, hire the best engineers and get some cash flow going.
“The upside of the decision was that I went to India and uprooted myself from Silicon Valley,” he says. “It was a wonderful way of introducing my family to my roots, and I got a chance to really work with India.”
But the business challenges were daunting. “We were the first company to give out stock options. There were government problems with giving out stock, so I invented shadow stock options.” He gets passionate as he talks about it. “I spent more time figuring how to save the company from power failure. I remember I spent nights on how to build a ground for the building, because the buildings were not properly grounded. Training people, hiring people . . . I felt I was doing social work. And at the same time chips were coming out.”
Soon, Arcus had 50 silicon products that were completely created in India. Lucent, Sony, Fujitsu, Phillips and others signed on as customers. Business boomed, with Arcus selling both intellectual property and silicon. “It is possible to do it there,” says Bhattacherjee, banging on the table for emphasis. But things didn’t turn out quite as he had hoped. Suddenly the Indian Department of Telecom became embroiled in scandals, and orders that had been booked were suddenly put on hold. Arcus again found itself in a cash crunch.
Dave spun off a new company, Armedia, which focused on the multimedia market. The company received venture capital and was acquired by Broadcom in 1999. Bhattacherjee took Arcus’ telecom-focused business and began to grow it organically. He ran into Avanti CEO Gerald Hsu, who wanted to work with Arcus to develop a telecom product company. At that time, says Bhattacherjee, he had technology for SONET that was ahead of solutions from PMC Sierra and TranSwitch.
Hsu offered him a deal he couldn’t refuse: He would be paid $3.5 million up front, then given equity in a new joint company. So Arcus started turning down orders to focus on its SONET business.
But Hsu and Avanti got into damaging litigation with Cadence and had to pull out of the deal half way through. “I walked out of that, and I was in financial stress because I owed him $3.5 million,” says Bhattacherjee. “And he had the company in a bind because he didn’t honor the entire deal.” For a third time, Arcus seemed cheated out of realizing its potential for growth.
Bhattacherjee had kept in touch with T.J. Rogers, and he approached him with his dilemma. In late 1999, Cypress bought both the Indian and U.S. company for a modest $20 million.
Though it was a good deal for Bhattacherjee, he was crestfallen. “We were sitting on something which was very pioneering,” he says. But what upset him the most was having to leave India and abandon that dream. He sold his house in Bangalore, and sadly remembers selling his Mercedes Benz, which he had struggled so hard to get in India.
After a year of working out his disappointment, he became involved once again in the world of technology entrepreneurship. He recently closed a venture fund called Continuum Ventures that has used the U.S. government’s SBIC program to raise $100 million of a total $150-million fund.
Although he’s back in the rat race, Bhattacherjee hasn’t left India completely behind. As a side project he is producing Bengali films for the art film market, targeted at the Cannes and Venice film festivals. He is working with top Bengali directors, such as Buddhadev Dasgupta, who won the 2000 Best Director award at the Venice film festival for his film Uttara.
Bhattacherjee has already produced three films, and is even involved in a venture to own movie theaters in Calcutta. But he’s doing these things more out of passion than out of a desire to make money. “I like working on India-U.S. things,” he admits. “Strictly going out and making money is fun, but it’s not really fun.” It may be that he gave up something by trying his hand at developing cutting-edge business in India. But it’s also clear that Bhattacherjee sees the experience as the most rewarding in his life.
Some successful expat Indians, well versed in the lightning-fast innovation of Silicon Valley, point to India as a low value IT services provider, plagued by lingering bureaucratic baggage. “That’s the economics,” says Bhattacherjee. “A lot of intellectual property is coming out of India, but if you are lower on the food chain I can buy your intellectual property and tell you I’m going to pay you a service. You want the $100 so bad that you’ll give up the intellectual property because you don’t have the strength of an economy to convert that IP into a business.”
Despite these challenges, Bhattacherjee is confident that a bright future awaits for India. Some rising business star in America, like he was more than a decade ago, will hopefully take the risk, get on an Air India flight and become a part of it.
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