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Seasoned Entrepreneur Looks Back
Sunday, October 1, 2000

Q: What inspired your move to Silicon Valley?

A: I moved here when I moved Patil Systems from Salt Lake City to Silicon Valley in 1984 — when I discovered venture capital was in the Valley. Even my company’s market was here. Indeed, it was true I was not able to obtain venture capital in Salt Lake City. Within three months of moving here, I was able to get venture capital. Venture capitalists like to invest in companies they can get into the car and drive to.

Q: How important was Patil Systems, your entrepreneurial venture, to your life and career?

A: It was all-important. I had chosen to quit my work as a professor — and that undertaken, you don’t do it halfheartedly.

Q: What were the immediate challenges when you moved to the Valley?

A: To quickly establish myself here with the help of my network of friends. I began that by tracking down all my students, and through them, more people. That was my first challenge. Second was to find a place to live. I rented a place for a year and a year later bought a house. Housing was not as difficult in 1984 as it is today.

Q: How did you find your business partner, Mike Hackworth?

A: Hackworth was running Signetics and had an interest in methodology of design. That is how we came to meet one another. I persuaded him to join me, [because] he had the business side of things and knew people. Being new to the Valley, it was valuable to me.

Q: Coming from a pure technology and academic background, did you find the business issues of running a company daunting?

A: Definitely, it was challenging. First thing I discovered was that the world of finance had its own terminology and it was all new to me. I had to learn these things in real-time and then there was customer interaction, deal-making, et cetera. I had to learn [all these] as I was building the company. My family has no business background. So I was doing my learning at the school of hard knocks.

Q: Was there somebody who helped?

A: I had mentor relationships with many Americans. In particular, there was my host family (the Ritvos) back in Boston. They were all very helpful in educating me. When I was a student at MIT, they kind of adopted me as a family member. Gene has done many things including business and taught me a lot … over the phone, because I would call him more than once a week [from Fremont].

Then there was Barry Hill, an executive senior VP at General Instrument corporation, a billion-dollar corporation then. He became a mentor, too.

Q: Would a budding entrepreneur in 2000 have to traverse the same terrain like you, and learn on the job?

A: Today, there is the TiE, where you meet people and networking goes on; people who have succeeded can be found easily [to speak with]. Thus, the learning on how to build a business can be more effectively done. Furthermore, today the venture community has seen that Indo-Americans have built companies and don’t have any concerns. Earlier, they would say, ‘You guys are great at technology — but can you build a company?’ Now there is no doubt.

Q: How do you think these doubts went away, and when?

A: The only way to do that was to actually start companies and succeed in building companies. Indo-Americans do a good job of it. A number of people here built very successful companies.

Q: Whom would you count among those that helped change perceptions?

A: When I was building my company, at the same time, Vinod [Khosla] was building Sun Microsystems, Kanwal Rekhi was building Excelan. Prior to that, we had Narender Kapany who built his company [Optics Technology]. In the 1980s, several of us started companies and that was the turning point.

Q: How do you explain the phenomenon of so many companies being started by Indians in the 1980s?

A: Well … you know, a lot of Indians came to the US in the 1960s. By the end of the ’70s they had established themselves, worked in companies for some length of time, and so were ready. Indians who came here were in some sense entrepreneurs, leaving the comfort of being with family and friends [in India]. It so happened that they were well educated too, both in India and here. So, they had the prerequisites. They also saw people starting companies. I saw Prof. Amar Bose start Bose speakers; and then Prof. David Evans in Salt Lake City started Evans and Sutherland. There were many examples in front of me. It was fantastic. It gives the inspiration. We just plunged ourselves. No less than them, we can do it too. That is how it got started. I believed I could do it...I am no less [able] than them. America is wonderful.

Q: Was there anything in India that prepared you for entrepreneurship?

A: I was born in Jamshedpur, and grew up keenly aware that about 55 years before I was born, that place was nothing but a jungle. Jamshedji Tata started this steel factory … and when I was born, it was a thriving town. As children, we were all very aware and looked up to [Tata] and knew that things could be built from scratch. The notion that anything can be built was with me since childhood.

Also, I was sufficiently interested in business that I took management as a minor subject when doing my Ph.D. at MIT. I discovered there is so much to learn, though I didn’t know then if I was actually going to start a company.

Q: Talking about India, you briefly entertained the idea of going back to work or do business in India. What happened?

A: I never moved back to India. I made a serious effort to go back in 1973-74. I was fairly well established here, on the faculty of MIT. In places I went to, I discovered there were friends from school, but there was a feeling that I had gone to America, had a good time, and now was coming back to take up jobs that they themselves aspired to. They didn’t really want me to come. This was at the grassroots level.

In companies, much more emphasis was on copying what was in America: computers, computer architecture. I concluded that the timing was not right. I decided to stay here. Now things have changed, rules and regulations have changed, attitudes have changed. It was not so in the mid-1970s when I tried.

Q: What is the kind of change you perceive in India?

A: Today, entrepreneurs are very vibrant in India. People aspire to do things, young people see the possibility of building companies, they hear of success stories. For a long time, there was talent but no venture capital or the knowledge to build companies. Now the VCs have gone there and people can hope to succeed.

I have a subsidiary in India. I do not have any investments in startups. I have participated in venture funds (that invest in Indian startups). In the future, I can see myself being directly involved.

Q: How would you compare entrepreneurs in India and Indian entrepreneurs in the US?

A: They are the same people, the same talent. What happens when someone comes here and lives here for some time is … just by their normal interaction and experience working in a startup, people become very knowledgeable on how it is done. As far as capabilities are concerned, entrepreneurs have shown that it can be done in India. It has been done; some spectacular successes include Narayana Murthy did it there. There are scores of examples. Younger people get inspired and learn how to start and build companies.

Q: There is a perception that it is the first-generation Indians that have succeeded most. What is your expectation from the second-generation Indian entrepreneurs?

A: I think they would be more successful than we have been. Their work is just starting. I have no doubt whatsoever they will do well. They have very good preparation in terms of college education, and they are well assimilated by growing up in America. I fully expect them to be very successful as entrepreneurs.

Q: How soon do you think we can see a second generation of Khoslas, Patils and Rekhis?

A: It is happening as we speak.

Q: In your vast experience of being a mentor, have you been associated directly with any second-generation entrepreneur?

A: Most at TiE have been first-generation, only now are the second-generation entrepreneurs here. But I know they are there. They are very active.

Q: Going back to the circumstances in India, sweeping policy changes are transforming the tech scene. How do you foresee progress on this front?

A: In a series of actions culminating last spring, a number of changes in venture funding laws were made. Capital has been in short supply in India. Once you make that available, anybody who doesn’t even have family funding can start a company, not just in IT.

Q: What kind of role do you see for Indian entrepreneurs in Silicon Valley?

A: The biggest thing we have done at this point of time is made people of India believers — that they can also do it. We are no different than those that chose to stay behind. We have done it in foreign countries, in tough market conditions. It all begins with hope and aspiration and people in India are being inspired by our successes.

In the next stage, inspiration needs to be supported by risk taking on the part of venture capitalists. This will give rise to a lot of companies being started. My hope is that those that have already succeeded become mentors, give back to society by mentoring other entrepreneurs. People who I have mentored are already doing this, both in the US and India. That is important and is required to help the next generation. I expect it to happen in India in a very big way. I expect an economic revolution. A hundred years ago, people in India embarked on a political freedom movement; today there is need for economic freedom. Freedom fighters of this movement will be entrepreneurs, by creating wealth for themselves and everyone who works with them, they will raise standards of living.

Q: Speaking of wealth, how has it changed the lives of Indians?

A: Silicon Valley has been a wonderful place to be. The lives of Indians in the US have changed; broadly they have been able to acquire wealth, whether they started companies or not. Entrepreneurs that started companies and became successful are seriously engaged in giving back, through TiE and also directly to India and America by creating universities, assisting existing IITs. All this would not have been possible if we were not successful.

Q: Bringing your knowledge to the industry, how have you viewed the rise and fall of dot-coms?

A: In a business, if you don’t make money, you don’t control your destiny. It’s simple. In the early stages of the Internet, what was going on is best described as land grab. Companies not only got valued more, but also there was a willingness on the part of financiers to fund companies without requiring profitability. That can only last so long. Because so much money was available, many companies could be built faster but ultimately companies have to earn money. Companies can’t just go on. The environment has indeed changed.

Q: Were you associated with any pure dot-com?

A: No, not a pure dot-com.

Q: Did you avoid it by design?

A: The thing is: the pure dot-coms had plenty of support from VCs — they required a lot of money. Even when I was helping some entrepreneurs, there was no way for me to engage in what the VCs were doing. Everybody else was spending a lot of money and unless you also spend like that, you can’t do it. Dot-coms spent enormous amount of money in marketing, advertising, and so on. I was just not comfortable with it. Instead I supported businesses that were designed to make money.

Q: So what are some of the startups you funded?

A: RightWorks, founded by Vani Kola, has reached a mature stage. I am no longer on that board. I am very proud of what Vani did there. It’s on its way. More recently, I am involved with Navin.com. The real long name for it is Navin Communications, and it not a real dot-com. It’s a global voice messaging system using the Internet. You don’t need a computer to send or receive voice mail.

Cradle is a semiconductor company, and I am on its board. And another which does back-end IT for real estate transactions, I am seriously engaged with. At any one time, I engage with no more than four or five companies. Tufan is my incubator company, and there is Tufan Infotech in India, corresponding facilities to incubate and nurture companies in India.

Q: People say you are flooded with business plans. A publication even suggested you seek business plans in the form of 20-minute videos.

A: No, that’s not true. Typically, people grab me at TiE meetings and other places, and I ask them to send e-mail summaries. The difficulty is in arranging meetings. I have difficulty in coping with the volume. I don’t do a good job of it.

I am not like a VC. My motivation in giving time to entrepreneurs is to listen to them and give feedback, and hope there is benefit. I can do this better in areas that I understand, have insights on. I can then be a good sounding board. I could do this better. It is a chaotic process, but I try to do it as best as I can.

Q: So what are the secrets to spotting the right business plan and the right set of entrepreneurs?

A: There are two components of trying to make an assessment of the entrepreneurial team or a business plan. Besides the right characteristics, one has to nurture and mentor the entrepreneurs so that their odds of success improve. It takes both to succeed. One alone will not do. If all you do is give money and walk away, it helps. But it doesn’t increase their odds of succeeding. Someone like me can bring both. It is this combination of the two that has proved very powerful.

I am used to the notion of guru-chela, and this is very applicable in the way Indian culture has it. Younger professional apprentices learn from master craftsmen. Silicon Valley is a wonderful place for this. Many, many organizations support entrepreneurs.

Q: What are the qualities you look for in young entrepreneurs?

A: I would like to see that the person is intellectually honest, [because] it is easy to fool oneself; capacity to learn fast because no matter what business plan you come up with, as you engage in business you have to change and adjust very fast. Startups grow very fast and this demands faster learning. Tenacity is very important, too. It basically allows you to intensely work and not take no for an answer. One has also to distinguish between being dogged and being tenacious. This is where intellectual honesty comes in. Ultimately, as you apply yourself, you are also checking your own thinking, and not fooling yourself.

These are some qualities I look for. The team approach is also important. Let me put together the best of team, and succeed as a team; when you succeed, everybody makes out well, you are not doing anybody any favors. The nature of entrepreneurship we are talking about here is not like starting a shop — it is about leveraging capital, resources and transitions in the marketplace; and in determining whether you attack a large enough market. This has very different requirements.

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