Arjun Malhotra Curated
Indian entrepreneur, industrialist, and philant...
CURATED BY :
So, there was a restriction on importing computers, but not chips?
Were 8-bit microprocessors available at that time (1975)?
What about the imported devices? Were these Shut out?
What was the demand for those calculators? Who were the customers?
Were you in marketing and sales? Was that your responsibility? Were you responsible for defining how to differentiate the product?
On which year these electronic calculator was launch? Were these the basic four-function calculator or were these the complex math calculators?
You had already applied (for Standford) and had been accepted?
Why did you choose them (DMC - Delhi Cloth & General Mills Company Ltd.)? They weren't doing electronics. Right?
Did you find anything particularly fascinating or interesting at your institute? Did you get into computers? What were the topics that drew your interest at that time?
Were there particular professors or other people at the institute (IIT) that were significant influencers for you going forward?
So, you had an option to select IIT of your own choice?
After graduating from Doon School what was your next intention?
Did you develop any interest for a certain subject (Science)?
Was there any debate for sending you and your sister off to school and the parents gone, out of the country?
How was your experience at Doon School?
What was your age when you went to Dean school?
When did you leave Calcutta to go to Dean School?
Your mother was a doctor. So what about your siblings?
You grew up in a very highly educated - education oriented family?
What about your parents? What were they doing?
What type of scientist was your grandfather?
How was your early life?
Are you headstrong?
It depends on who you ask. I think I am fairly open to views. My wife says the name fits you exactly. Yes, I guess I am stubborn. Normally when I think of a view I try and stick with it, I am open to a discussion, I do change, I may not change very often but I do change my mind if some one has got a point that is more valid than what I think my argument about a particular point is. Headstrong is actually according to my wife a polite word. She uses the word stubborn but I really do not think I am it.
What advice would you give to entrepreneurs who are starting their journey in India because this is a different India from the India you grew up in?
You know a couple of things. One is I think, you know- when you start a company I think you got to be passionate, I think you got to do something that will change the world or some such thing. If you are starting the company to make money I do not think it is going to make money in the first place so I definitely would not ask you to start a company to make money. You start a company to change the world and you know money would be a by product or wealth would be a by product that will happen- if you can change the world. Second thing I would say is go out and recruit; you obviously need a team; you are not going to be able to do this alone. So go out and try and recruit people who are smarter than you. That is easier said than done but go out and look for those people and if you think there is no one smarter than you then, please do not start a company because there are people smarter than you and you are going to face a big problem when they go out and beat you at your own game in the market. So go find those people who are smarter than you, work with them and listen to them. See- there is no use recruiting smart people if you have all the answers because they will get up and leave, pretty soon. So if you are recruiting smart people listen to them and then try and decide what you want to do. And the other thing is- you have to decide what set of principles you want to live with when you go through life whether you start a company or you do anything else and I think it is up to you to decide how you want to live your life. I always tell people that try and be a person, try and be the kind of person where you like yourself. Ok because it makes your life much easier, it helps you take the decisions in that life much easier, it just makes you predictable in some ways to a lot of people and when people work with you the thing they want is predictability. They want to know how you react to a particular thing. Not that one day you say yes and one day you say no to the same thing. Then they look for moods and decide when they should approach you in what mood and say what at what time. Which you do not want, you want them to be upfront with you and you want to be upfront with them. So I think as long as you do that, you have a good idea. Something that you have a passion about, find a good team, people who are smarter than you know try and do what you think is right. Do not regret it later that I wish I had thought about it earlier before I did this. I think you would be able to. Today the opportunities exist and it is a competitive world out there in India but the opportunity absolutely exists, time to go out and do it.
Who was your mentor, who inspired you when you were in school and when you were at HCL and today do you mentor, do you mentor young entrepreneurs?
My inspiration really- when I was a kid and growing up was my grandfather. And when you go to college it has to be some one in your professors, I think professor Sanyal I mentioned, the late professor J. Das, who were the two professors in my department when I graduated and then there were some of the younger professors with whom you interacted and with whom you actually became friends more than mentors and some of whom I keep in touch with even today. Professor Edmond Farooqui is an example of a person like that. What I try to do today is yes I do infact you know fortunately for me my role in HCL to large- to a large extent was also mentoring because we took a lot of young people. No one wanted to join the IT industry because their parents felt that no they should go and join Larsen & Toubro or they should go and join some of the more traditional industries that were definitely going to give them a salary and safe job, as it was called in those days. IT was considered high risk, do not know what this is, it is completely new; do not know if it will be there tomorrow. So really in some ways the people who joined IT were the risk takers and a lot of them came in knowing nothing about it and we really did not have the option of recruiting at least for a lot of our non development technical functions. We did not have the option of recruiting only electronics people so we got chemical engineers, we got naval architects, we got aeronautical engineers, we got different kinds of engineers who we had to train and mentor on the computers. So you know if you look at Manoj Chug, who heads EMC in India - EMC in Asia now; Manoj is a chemical engineer from IIT Kharagpur. We recruited him straight out of campus so we have a whole lot of people and when you end up you are not just their manager or their boss you are also their mentor when you have to tell them about an industry and how it is growing. Actually I tell my wife, I always find a very funny role because I did not know where the industry is going. I was learning on the job too but yet you have a whole lot of people who look at you for the answers and so you have to act like you know all the answers whereas, you may not even have the answers and so to some extent I mentor them today or- not really mentor them but they come in and brainstorm about a lot of stuff and take advice and you know, it is fun.
So when did- you started SPIC-MACAY because you wanted to do something about culture, spreading culture among youth. You are doing something very different with the youth today; your focus was all on education. You are part of the Indian business school in Hyderabad, you are a board member of IIT Alumni and at IIT, Kharagpur have helped establish the Sanyal College of Telecommunications. So you are doing a whole bunch of things. Why this focus on education?
In some ways I am who I am because of my education but I think a large part of it is my educational background. Both at Doon and at IIT Kharagpur and I really think that there must be lots of kids like me who come out of a middle class families or may be lower middle class families who are unable to- who dream but are unable to go anywhere close to their dreams because they just do not have the means to do it and they just do not have the ability to do it because they are not educated. I see that in so many people I employ. A lot of them are really sharp people. They have got a lot of basic intelligence. They just did not have the opportunity to get educated. When everyone is 21, they want to change the world as I did you know, when I came out and then suddenly one day you are 40 and you realize you have done very little to make any changes. You talked about it and did that really mean something to you. So I took two decisions at that time. I said that a certain amount of the wealth that I have generated, I will plough it back into education in some form and try and set up institutes that would have- a name. Let me use that term and really I am very proud of the India school of business. I of course had a really small role to play there. But in less than 10 years after it was formed, it is already in the FT list of top 20 MBA schools in the world which is amazing. Kharagpur is of course Alma Mater so I am involved there. Prof. G. S. Sanyal was probably my mentor, teacher and head of the department when I was at Kharagpur. Actually the other thing I decided which is far more important, in some ways and does not get any visibilities which it should not is the fact that I cannot make a difference, I cannot change the world but let me try and change the world that is around me. So anyone who works for me at home, my driver’s kids, my cook’s kids, I try and educate them. I try and give them the kind of education that I would give my kids and really that is a commitment I make to those kids, provided they want to get educated and it seems to be working out really well because just one kid in the family will change the whole family, will take them out from poverty or lower middle class to middle class and I think if I can change the people around me by doing that I think in some ways I have changed my world. Which is really what I look at today, I have given up the idea of changing the whole world.
I want to switch to a slightly different question. This is looking back at your journey as an entrepreneur that started in the 1970s in India when Mrs. Gandhi was the Prime Minister. It was a time of emergency when lot of the civil liberties were suspended and today when you look back there is Dr. Manmohan Singh, the economy has been liberalized, lots of new policies have been introduced to help entrepreneurs. What do you think is different about being an entrepreneur then and being an entrep...
I was about mid 20s during the emergency and we were really all flower children. We came out during wood stock and stuff so you know so anyone touching civil liberty was a big problem. But let me tell that from a operating point of view the whole- there was so much fear in the country that they would get locked up for 6 months and no one would know where they were etc., etc., that all the processes- the railways, all the companies ran efficiently. Also you know, we still talk about corruption in India and I think it is one of our biggest problems in India. Corruption was pretty much eliminated because people were too scared that some one would sneak on them and they would be behind bars without anyone doing due diligence or full check or whatever and so really business ran in a transparent fashion and I mention it as being important because in those days government and public sector that means government funded organizations were 80 plus or 90% of your market in terms of where you could sell. Private sector was only 10 or 20%, it was very small. Right! Seeing back to today, I think that has reversed. Government now is somewhat I do not even have to worry about them, they are insignificant- they are a significant buyer by themselves but if I do not need to talk to them I don’t even have to worry about it. Private sector-so to say the private sector has become a large large market and I can survive there. I think the other big difference is, today when you come out with an idea or a product or a service, there are at least 3 to 10 guys who are there around the same time. It is very rare that you would be given a free run for 3 months or 6 months to be able to put something together. I think at that time the market was not that crowded. There were 4 or 5 competitors. In fact the good news for us is there were mainly big houses there weren’t entrepreneurs and so they thought in a completely different phase. There was a difference in the phase in which they were and the phase in which we were. So to some extent we were lucky. We did not really have the intense competition that an entrepreneur would have today. Obviously we had competition; we had a couple of companies that came up. Wipro was one that came up when I was in HCL. That gave us some trouble in the market but they were not too many of them. Today you have got thousands of people, hundreds of people that come up, look at the PC business. You have got local assemblers, you have got everyone starting a PC, some are localized to a city, some are localized to a state and so for a national brand, it tends to be multiple strategies that you have to follow you know- in different parts of the country. And of course the market is much larger! I mean we used to sell a thousand PCs, we used to feel we have done a great job and now you we are talking about 3 million. So it is a completely different scale too.
So one of the challenges for you to grow, I would suspect would be human capital because if these cash cows from the financial companies is being opened up and you are getting some of the work outsourced or given to you, you now have to find the right people with the right expertise. Is human capital one of the constraints that you are going to face moving forward?
Yes, human capital has always been an issue. I mean you never get as many good people as you want to get all the time. But I think-again let me tell you what is happening in India. It is because of the decisions slow down in the US and because of the fact that people have these huge recruiting plans, a lot of campus recruiting this year has either been deferred or people have written back to people they have recruited saying they are withdrawing the appointment letter or they are deferring it indefinitely. So all of a sudden if I look at a campus fresher level, I am able to pick up any number of people I want and from our normal 100 people that we pick up every year-a 150 people, we are actually looking at- we have already taken a 100 plus this year, we are looking at adding 500 more in the next 4 or 5 months. In a way you are right, we expected the ramp up to be a lot slower than we thought we would be able to do but again because of the circumstances in the market we are able to ramp up a lot quicker and really go back to our prospects and our customers and say I can do it a lot quicker than I originally mentioned because of this.
You have mentioned the buzzword of the year, capital markets and financial markets. When we think of financial markets in the US today we think about the sub prime crisis, the mortgage crisis and how the financial market is melting. What impact do you think this is going to have on your business and do you think you have put all your eggs in one basket once again?
I think, I feel very good about our strategy, I feel very good about what we are doing, I think what has happened is, as they always say there is an opportunity in someone’s problems. I think what has happened at Wall Street, forget the reasons, I am not going into that, is a fact that they have to now reduce cost and they are very aggressively going after reducing cost. How do you reduce cost in an industry where you also have to be state of the art in technology all the time? So, the only way you want to reduce the cost in technology development is if you send more work to lower cost areas and offshore outsourcing or off shoring is one of the ways of doing it. So we are finding a major thrust with a lot of people in sending work offshore from areas that they never used to look at sending work earlier. Now, why were these so called sacred cows- they are probably no longer sacred, but why they are not longer sacred? I think the reason is they were sacred because they needed domain knowledge, some domain expertise and really it is difficult to find that domain knowledge or expertise outside a few financial centers like London, Tokyo, etc., etc.,. So what we are seeing is that because we seem to be the only company that has that domain expertise at least in India locally not just in US or Tokyo or London where we also have it. A lot of companies are coming to us that had not come to us earlier or would not talk to us earlier because they had their own vendors, etc., etc., and saying hey! Can you help us do this? So business is actually starting to boom for us, so in a way we are scaling very differently right now than what we had planned to scale earlier and really a lot of it has been driven, some of it will be inorganic but a lot of it is likely to be organic based on what we see in the market today.
What are your future plans for TechSpan?
We expect to end 2000 calendar with $76 million and end 2001 with $133 million. We are also planning to come out with our IPO on the NASDAQ soon. We also expect to continue in the business of e-servicing.
What do you see happening in the India IT industry in the next two years?
There will be lot of businesses happening through the Net. People will start selling and buying through the Net. The e-service industry will become more organised and will bring in more wealth to the country. The IT industry will become more dynamic and more business models will develop. But then there are also certain things that will not happen in India. For instance, exchange of products such as crude oil, tobacco, etc. The same way that the government now buys off all oil and tobacco and then sells it, a system will develop by which it can be done through the Net. However, in India it will take a longer time to achieve this level because of the red-tapism involved in the country. There are too many government regulations.
With dime-a-dozen dot-coms cropping up in India, how long will it take for the market to settle?
I think the market is already settling down. For instance, the venture capitalist funding is already getting more rational. Every dot-com is not being funded or the VC puts the brakes on them after the first phase of funding. It is not that just big dot-coms will survive -- there will be lot of mergers and consolidation. But the smaller ones will also survive through niche marketing -- they will cater to a smaller group of customers and stay in the business. For instance, it is not that only Tatas and Birlas are running businesses in India. There are other smaller companies, too -- in fact, tiny companies too. It will be the same in the dot-com arena, too.
How long will it take for Indian companies to adapt to change?
I really can't say how long it will take, but as long as they change quickly the better for them. In the United States, it takes about six months for a company to change to a new technology. In India it takes about a year or two - if it is a tech-savvy company.
How different is the Indian market from the US?
The difference is in the approach towards technology. In the US, cost does not matter as long the work gets done in time. People adapt to new technologies and requirements very quickly, but in India adaptation takes longer. Here technology companies are still very commercial in nature, whereas in the US it is the techno-commercial people who deal with technology. In the US, time is the most important factor. People there are willing to accept a not-so-perfect product as long as it reaches them in time. Here, people still spend a lot of time attaining perfection and in this process they lose out on business. In a sense, traditional strengths as the ones India has tend to turn into weaknesses.
Do you mean to say that India's self-proclaimed IT revolution is more hype than reality?
No. I don't intend that. We, however, misjudged the pace at which IT would revolutionise life in India. People here have not been able to adapt to technology as fast as the government or for that matter the industry expected them to. In India, parents enrol their children in computer courses because they fear that otherwise they will not be 'relevant' in this world. It is not because they themselves have adapted to new technologies. The government and the industry expected the community to adapt to Internet and computers and at a particular rate but that did not happen, which is why the business-to-consumer businesses in India is not picking up all that well. This, nonetheless, is not true of business-to-business: here the acceleration has been better and this is the area where India's IT industry will gain momentum in the future. In India technology is still not a strategic weapon for corporates. It still considered as tool to reduce manual labour. The infrastructure has not been laid out as yet, which is why IT is yet to touch the rural and semi-urban areas. The challenge now is to complete the technology cycle as fast as possible. If we don't move faster, the more cycles will we have to complete.
Indian IT minister Pramod Mahajan after his visit to China has claimed that Chinese IT companies are keen to set up shop in India - both software and hardware. Is there really much for India to gain from Chinese technology?
I don't think so. India cannot learn much from China -- our software and hardware engineers are some of the best in the world. What we could probably learn from the Chinese is how to spread IT rapidly so that it reaches the common man. We have not done all that well on this front. China has beaten us at the pace of adapting to new technology.
Why is it that Indian companies are still only 'providers' of solutions. Why don't we ever come up with any products?
Well, I think India will stay in the service market for a long time to come. There is nothing wrong with that. Developing your own product requires a different approach which is not there in India. There is a need to change the prevailing mindset for that. For instance, most of the companies in India, even sometimes technology companies, run pirated software. There are no guilt pangs on this account. The problem in India is that Indian IT companies are all marketing driven-and not product development-driven, which is why we are more service-oriented. There are some entrepreneurs who are making their own products, but they have not been very successful.
What prompted you to get into the business of e-servicing?
In the IT industry, time is the most important factor. Companies worldwide realise that the 'time-to-market' is the critical success factor, more than cost. People are willing to pay more money if you can service them in time. First, we must understand what e-servicing really means. We play the role of incubators for new concepts, ideas and technologies, for companies we like to call e-babes. Thus, we provide solutions for emerging dot-coms or other technology companies. We work mostly for companies in the United States. These firms turn to Indian companies such as ours to provide them with solutions. They do not really care where you operate from so long as the solution reaches them in time. The growth rate in e-servicing is over 100 per cent per annum, compared to the 25 per cent growth rate in traditional business. Which is why we have entered this niche area.