The guru of Silicon Valley, Kanwal Rekhi has nurtured a whole generation of tech entrepreneurs. In an exclusive interview with expressitpeople.com, the legendary venture capitalist reveals to Srikanth RP why he never mixes business with friendship“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 chan-ged. 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.
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