|
The guru of Silicon Valley, Kanwal Rekhi has
nurtured a whole generation of tech entrepreneurs. The legendary
venture capitalist reveals why he never mixes business with friendship
 |
| Kanwal Rekhi |
"A recession is the best time to start a
company." When you hear a quote like that, you wonder if the
person knows what he is talking about, as a host of technology companies
have either shut shop or are on the verge of shutting down business.
But then, Kanwal Rekhi has been through every
stage of the technology boom and bust cycle, and has always had
a "never say die" attitude. Rekhi incidentally was laid
off thrice during the initial stages of his career. But always managed
to land a job soon after. His experiences however made him understand
that he would not be dependent on a job forever. He started looking
at companies from a business point of view rather than a technical
point of view as he had done before. Even while heading a technical
team, Rekhi started studying the balance sheet of different organisations.
He soon migrated to a level where he could envisage the future of
a company by just looking at its balance sheet. By the time he was
30, Rekhi was bored with his job profile and started looking at
other opportunities.
At the same time, a small revolution was taking
place in Silicon Valley and a host of promising start-ups began
to emerge. Rekhi was inspired by the entrepreneurs and soon he along
with two colleagues resigned from their respective jobs, and started
their own company, Excelan. The idea was simple but the potential
was great. During this period, IBM PCs were just being introduced
and Rekhi knew that it was just a matter of time before the PCs
would start getting networked. The idea of a company offering networking
services was ahead of the times and soon networking became very
hot. For instance, TCP/IP, the protocol on which the Internet is
based, was commercialised by Excelan. The idea was great but no
one was willing to fund an Indian company.
Says Rekhi, "Everyone agreed that Indians
were great techies. But managerial capability was not a term you
associated with them, who then were more famous as tour operators
or as real estate agents." Left with no option, the founders
dug into their pockets and started funding their plans themselves.
Soon destiny smiled and Excelan bagged a couple of customers. Within
a short span of time, even VCs were attracted by the niche space
the company was in and started providing funding. Excelan continued
its upward growth and soon became the first company founded by Indians
which went public on Nasdaq. Thereafter Excelan merged with Novell
and Rekhi was appointed on the Board-the first time an Indian was
on the Board of an international company.
Excelan's success triggered a list of start-ups
whose head honchos were Indians. Gradually, this list grew and soon
the image of 'India' as a poverty-stricken country changed. From
being known as a land of snake charmers and elephants, India gradually
acquired the image of a knowledge superpower highly known for its
technological prowess.
His years with Excelan also showed a glimpse of
Rekhi's managerial abilities that would be more pronounced in the
future. One of the three founders, the then president of the company,
had no managerial capabilities. Soon the company got into trouble
and the VCs fired the president. The latter expected Rekhi to leave
the company with him, but Rekhi stayed on with the other founder.
Rekhi was given charge of the company and made interim president
till the VCs could get hold of a person who could lead the organisation.
The situation was grim. Costs of personnel were rising and the company
was spending more money than it was earning. Moreover, "software"
was not exactly hot then, and was only seen as a small value-add
to hardware.
Explains Rekhi, "Using simple mathematics,
I could see that the company would close down if we did not take
immediate steps. For instance, the number of engineers we had employed
was much more than was required by the company. The earlier president
could not take decisions in this matter and was hesitant in removing
non-performing engineers. I had to take a hard decision of removing
non-performers and replacing them with good people since if I did
not do so, the entire company would close down eventually."
Rekhi also took a decision of revising the pricing of the product
to around ten times the then current value. The decision was widely
criticised by many and was seen as moving against the market tide.
But Rekhi had the last laugh and the company became profitable within
a span of six months. After achieving the turnaround, Rekhi was
made the president of the company.
The stint at Excelan also taught him one vital
thing-never mix friendship with business. Says he, "You are
in trouble when you mix business with friendship because it clouds
your judgement. At the end of the day, you have to have the right
numbers. As the VCs always say, 'Forget the technology. Show me
the numbers.' It is the numbers that decide the future of any business
and your staying power. The rules have not changed even today."
After his success, Rekhi concentrated his attention
on scores of other fellow Indians who were in a position as he was
some years ago. With some twenty other Indian entrepreneurs, Rekhi
founded the Indus Entrepreneurs (TiE), an organisation which promotes
entrepreneurship among young people. The organisation not only helped
find entrepreneurs start-up capital but also practical guidance
at various stages. TiE has funded some exceptional companies like
Exodus Communications, Hotmail and Junglee.
After a host of achievements, Rekhi had nothing
else to prove and by the year 1994, he was thinking that he was
ready to retire as he had worked for close to 25 years nonstop.
In the same year, he had an opportunity to visit IIT Bombay. He
was disappointed with what he saw-the shabby badly maintained buildings.
He realised that he had a responsibility towards his alma mater.
Rekhi gave a $2 million grant to set up the Kanwal Rekhi School
of Information Technology (Kresit), which is emerging as a small
hotbed of technology start-ups in the IIT Bombay campus.
At the age of 57 years when most Indians start
thinking of retirement plans and pension schemes, Rekhi today plans
differently. He astounded many when he announced his decision of
joining Ensim Corporation, a company in the field of providing automated
Web management tools for the Web hosting industry. It is again a
perfect opportunity for Rekhi to show his turnaround skills as he
attempts to recharge the company on a new growth path in the current
economic scenario.
Rekhi says the current scenario is similar to
the days when he started his career. "It is never easy. Nothing
ever happens automatically. But I certainly believe that the best
time for an entrepreneur to start business is now. Getting funding
may be tough, but more resources are available at lesser prices
and competition is also less," says he. Call him by any name
you want-'Legendary investor', 'Silicon Sage' or just plain millionaire-Kanwal
Rekhi is one man with a never say die attitude. And in times like
these, you surely need more of his ilk.
|
