 IT entrepreneur extraordinaire B V Jagdeesh
(co-founder and CTO of Exodus Communications) is tall, articulate,
with a deep voice that resonates across the living room of his family
home in Bangalore. His commanding presence is enhanced by a sunny
California smile and he personifies the boy next door who made it
- and how! We had heard of Indians excelling in the
Silicon Valley, but he caused a stir when he donated a million dollars
to Bangalore public schools. Why? Spurred by a conviction that if
he, a product of the public school system, could make it, then there
were perhaps thousands of young kids he could reach by revamping the
school system. His vision? Creating wealth and opportunity. His satisfaction?
Making it happen. We were privileged to meet this amazing achiever
whose technical brilliance and philanthropic extravagances are legendary.
From Bagalur to Saratoga…the journey
Tell us how it all began…
It was one of our dreams. We started with the intention of building
a company that has an impact on every business in the world. So to
an extent, actually we have achieved the dream. Because Exodus
being the central force for the entire Internet, and being a part
of the entire Internet growth, all the companies and all the human
beings in the world, in some form or the other, have to come to access
the information from Exodus. Which I think is a phenomenal achievement.
And you know, we started off as a software consultancy in 1994 called
FOURESS, and very soon we realized, in the middle of 1994,
software consulting is not a company that is going to take us to the
dream that we had when we started this company. So some time late
1994, we got an opportunity to get into this Internet business. We
saw a niche, we saw a hole, and we jumped into this Internet market.
Until 1995 end, we kind of self-funded and so that was the toughest
time of our life, because we had mortgaged our house and our personal
property to get credit lines - to get loans from the banks and so
on and so forth so. We did all those things more as a passion to build
a business without really understanding the legal implications. So,
had we known at that time, that the legal implication is that eventually
the banks could take away our house or our personal property, perhaps
we would never have signed. So in one way it actually worked out well,
we kind of blindly signed the papers to get the ball rolling.
You know, even though we went through lots of down times- very
rough times - sometimes we couldn't even make the pay cheques
for the employees - but we were very fortunate that the first 20 employees
were very loyal, very dedicated, and that despite the fact that we
did not even have a stock option plan for anybody when they joined.
So many people had trust in us, despite the fact that we were Indians.
And when we opened up the stock options plan, we made sure that all
our employers were fully taken care of. So, as a result, even a secretary
who had joined us in the early days is perhaps worth about two
and a half million dollars today! As founders, it is not that
we just want to keep the entire company to ourselves. We made sure
that it was well distributed. We got our first funding in 1996 and
Mr. Kanwal Rekhi was extremely instrumental in recognizing
this opportunity and funding, which was kind of a life saviour for
us. Had he not done that, perhaps we would have closed down or sold
the company to somebody else.
At that time, what was the pitch like - in today's jargon, the
5-minute elevator pitch?
At that time, we weren't really the sole Internet service providers
for business…that was the pitch.
We needed to be the key Internet service provider for all the businesses
in the world - that was our dream, with lots of value added
services based on intellectual knowledge. At about that time, we got
the funding and we were in the business to provide complete Internet
services, which include Internet access, Internet consulting, Internet
co-locations. August-September of 1996 is when the shift started
to happen, that the opportunity actually existed in the web co-location
business rather than in the pure Internet services business. The
entire company essentially started to focus on providing the web co-location
and the Internet hosting business.
Dedicated server?
It is a dedicated server - customers can build their own servers in
a very secured environment - highly secured environment. Lots of technology
based solutions. This was the killer application that the customer
could pay for. In fact, the interesting thing was when we
built the first Data Centre, it was only 2000 sq ft of space!
Of that, about 1000 sq ft was dedicated for the Internet access business
and the other 1000 sq ft was dedicated for the Data centre. According
to our expectation, that should have been filled up by 1997 end, which
is like one and a half years after we built the Data Centre. But it
so happened, it got filled up in less than two months. The demand
was so huge, we moved all the employees out and we built the remaining
13,000 sq ft also as Data Centre. From then on, (smiles
broadly), money started pouring in - investors wanted
to invest more and more in to the company and we never looked
back after that.
We opened up one more Data Centre in New York. So that was '97 April.
And then after that we opened up three more. One in Seattle - one
in Los Angeles - and one in Washington DC. We had five Data Centres
by the time we went public in March of 1998. Our revenues were 12.5
million dollars. At the time, when we were going IPO, we brought Ellen
Hancock to become the president of our company. Because the company
was growing at an enormous pace - you know, we had lots of issues
related to customer's services - so we found Ellen Hancock, who came
with lots of experience and contacts, which was very helpful for the
company. So she came on board just around the time when the company
was going public.
After six months, she became the CEO and Chandrashekar remained
the chairman until last month. He stepped down as the Chairman. I
have been the Chief Technical Officer, but even I am minimizing my
work at Exodus. That's because I am getting more involved in the entrepreneurial
activities and more so in India as a matter of fact.... helping build
companies. So I have invested in four companies so far in India. I'm
very actively involved in all the four of them. Also, we are initiating
an educational project in Bangalore and in the Indian School
of Business, Hyderabad as well. So I thought my time could be
a lot more beneficial if I could spend it more meaningfully than just
building one company. Currently the company is in a cruise-mode
(makes a smooth driving gesture). We have hired a lot of good
people. The company can move forward, you know, even without people
like us.
What are the steps you have taken to ensure that the funds (1 million
dollars) pledged to revamp the 133 Bangalore Mahanagara Palike schools
will reach the target population?
What we have done is, we have not given money to the government. The
Government did not receive even a penny. Instead what we have done
is, we have set up a very high-powered committee which includes my
brother, BV Kumar, AH Ram Rao, who himself is an educationalist.
He writes lots of books that are widely used in schools and colleges;
and Prof Dr. Radhakrishna, who is the Principal of Sheshadripuram
College; and Dr. H Narasimaiah. These people we have identified,
and certain partners who could essentially help us to bring quality
education. And we are completely driving this program ourselves.
The Corporation is helping us identify the schools - identify the
leaders in the schools and see that they co-operate with us during
our plan of implementation... Currently our goal is to train the teachers,
to give them modern tool kits to understand the subject matter that
they are going to go back and teach their students. So they can train
their students in a more graphical representation. We are working
with an organization called Schoolnet, which specializes in
building content that are a lot more meaningful and a lot more self-learning.
Schoolnet will train these teachers and by then they will have
computers launched in each and every one of these schools.
This is the Phase One of our project.
What is the social impact of the computers and Internet?
The social impact
is to truly eliminate, number one - the communication gap,
and number two - distances. So because of that, people here
know more about what is going on on the other side of the world. People
there know more about what is going on in this side of the world…
And that is eliminating the knowledge gap that existed before…
In response to questions about developing software
companies/products in India for the local market in local languages,
and its difficulties:
Why should it happen in America and why can't it happen here? If there
is an opportunity, if there is a way of doing it, then entrepreneurs
should look at it from a different perspective. Don't
expect large corporations to do it; don't expect the government to
do it. Did the government invent PCs? No they didn't!
They are just buying PCs. Government didn't see the importance of
having a PC. Now that they see the importance of having a PC, they
are implementing it. So an entrepreneur should see the importance
of the local languages, you know, support it, and then push from that
angle. There is a risk - of course there is a risk, but an entrepreneur
cannot think like a big company… see, everybody is trying to build
the same products and the same services as America is doing. I think
we should slightly move away - look at the needs of our people
and our products and develop the products for that.
What can India do to improve its position globally?
 (Sighs). So many things! India has to essentially
open up very, very quickly. Essentially, telecommunications.
We have this tendency to think that telecommunication is a luxury.
That mentality must go away. If we have to talk between
the two of us in whatever media, whatever form - this is not a luxury
- it is a necessity. So that's why I keep saying, the
reason why it is a luxury in India is because the telecommunication
authority actually charges you one rate for a certain amount of calls.
And if you exceed that number of calls, they are going to charge you
more, which is totally against [logic] in a developing country.
When you have abundant supply - what happens is that as the volume
of the usage increases, the cost drops. They want you to use more
- so that they can build high volume fibre links, which will bring
the cost down. In India we do not think that way. We don't think from
the angle that this is an absolute necessity today. But because the
infrastructure is so bad, because we penalize the users - one for
paying for the form and one for ISP services - so people have to think
10 times before using the Internet. So it is not that 'Hey I will
just go on and use it for unlimited duration of time', I have
to think10 times - 'How much money, how much bill I will end up
paying at the end of the month'.
The whole mindset of the fact that telecommunication is no longer
a luxury - it is an essential thing for every common man -
will lead to many more entrepreneurs opening up our companies. And
these venture capitalists coming in from all countries outside of
India, who are investing lot of money into these companies - they
all need to flourish. Once they flourish, they will end up creating
lots of jobs, especially in the service economy. So hundreds and thousands
of tier-one types of jobs are going to be created and we will have
millions of other jobs created to support the tier-one. So we have
to think from that angle, it has to be a long-term design.
Some argue that due to too much emphasis on IT, the other sectors
are being neglected.
See where the job opportunities are - where the country has the
potential to grow? Where is the world moving? Where is the market
opportunity? So IT is playing a major role in making that happen.
If that can create millions of jobs, directly and indirectly, then
why not emphasize on it? We have found a niche just like, you know,
in a product company. When you produce a product the only way you
sell that product is if you find a niche in the market. It has to
be very unique. If every other company is doing it and I am also
doing the same thing, then how do you market it? How do you position
it? Where as, if you basically have found a niche, then you know
how to position that and people are willing to pay millions for
that.
As far as India is concerned that's where the emphasis is
- that's what the world wants. The world wants India
to help in the IT industry.
While India is doing very well in IT, 80 to 90% of the revenue is
coming from IT related services, not IT related products.
But you see India has to start somewhere (earnestly). What is happening
now is that until recently, there was no concept of investment that
was coming into this country. So how do all these services start?
The petty money people save in their banks. If you look at Infosys
- Narayana Murthy borrowed Rs. 15,000 from his wife to start
the company. Right? The same story applies across the world to each
and every one of the software services. However, the whole dimension
is shifting right now. There is a lot of venture capitalist activity
going on right now. So if you want to get into the product or product
services - somebody has to fund you. Right now a shift is happening
from the traditional software services into product services. In fact,
one of the companies that I have funded in Bangalore is producing
an e-mail device primarily designed for the Indian consumer, which
is going to cost around Rs 5000 and on a monthly service of Rs 50.
Anybody can send and receive e-mail in a very cost effective manner.
Those who cannot afford to pay Rs 40,000 to buy a PC can pay Rs 5000
and participate in this Internet revolution....The version
that we are working on actually doesn't even need a TV. It
has its own screen. The later versions we will introduce, instead
of that screen we can have a TV as a screen. If the TV were used now,
you'd still have to use the regular ISP, which is going to cost Rs
200 per month.
In America, recently, there was a report about the "Indian Internet
Mafia" in the Silicon Valley.
Comment.
Ha ha ha... Started in a nice way! Essentially, you know, what happened
was just like the mafia in New York, who are known for all kinds of
underground activities. Now Indians have done extremely well - especially
in the last four or five years. So many Indians have come to prominence.
At the end of the day what matters is creation of wealth. Whether
you are an Indian or Chinese or who ever it is. If you have wealth
people will come to you - people want to look at you. Whether it is
politicians, whether it is venture capitalists, whether it is financers,
whether it is other businessmen. So now everybody says, " Hey!
These guys are not like where they need help all the time. These guys
can do it independently." Right? Previously Americans used to
think that "Indians" means - they need help. But now, with all these
companies being so successful, people are realizing that these guys
can do it on their own. There are so many of us who have proved that
we don't need help. And with the financial muscle that we have
today, you can pretty much do anything.
Why are Indians excelling in the IT field?
Indians are very natural in the IT field because we are very good
at mathematics and communication. An Indian invented the number system.
Imagine if the number system didn't exist, we would still be writing
those 'Vs'? Just think if we were to write million dollars (laughs)
in Roman, how many Vs and Xs we are going to write! So because of
the natural emphasis that as parents, people provide to their children
towards mathematics, they have the natural aptitude. After all, IT
is nothing but a logical way of thinking… we got to demonstrate
- we got to prove that we could do very well in the IT field.
We can be the leaders in the world market.
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- Mitra Das and Shivaram R
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