What Do HotMail, Exodus, and Junglee Have in Common?|
How a South Asian networking group became a prodigious high-tech talent incubator
For years, Vishwas Godbole's mother in Bombay wouldn't call him. The 150 rupees, or $4, for a three-minute call to San Jose exceeded her monthly rent. She refused to saddle him with collect-call bills, either. Eighteen months ago, Godbole had a revelation. If his mother could leave voice-mail messages at a Bombay number for transmission via the Net to a San Jose voice-mail box, he could hear her voice for a pittance.
As executive vice-president of engineering for Hybrid Networks Inc., Godbole knew the technology. Millions of separated Indian families promised a huge market. He once ran a home business, but he knew he'd need help launching his big idea. He turned to The IndUS Entrepreneurs (TiE), a networking group he belonged to in Silicon Valley. A few phone calls later, Suhas Patil, founder and chairman emeritus of chip designer Cirrus Logic, was watching Godbole's prototype software at his home lab. Patil became a major investor and chairman of the board. He took Godbole to India to meet the CEO of a top Internet service provider, a critical contact.
Launched on July 4, 1999, NavinMail already links Indians in the U.S., Australia, and Vancouver, Canada, with 11 Indian cities. For $10 per month, billed to the emigre party, separated families can leave 75 messages of up to 90 seconds. Next in line: Toronto, London, Singapore, and the Persian Gulf. Godbole is eyeing other immigrant communities -- Mexicans, notably.
As for his mother, says Godbole: "Now we are communicating so much -- sometimes overcommunicating."
This might never have happened if an Indian official hadn't missed his plane to San Jose seven years ago. The Indian government had invited 20 of Silicon Valley's top Indian-born entrepreneurs to meet the Secretary of Electronics. When he didn't show, the entrepreneurs fell to talking. "We had all been focusing on our own careers and had never met each other," recalls Kanwal Rekhi, founder of networking company Excelan Inc. and former chief technology officer at Novell Inc. "We had been trying to be mainstream Americans, but whether you want it or not, you are viewed as ethnic. We saw we could put that to positive use by becoming mentors for younger people so they would not have to fight as hard as we did."
TiE, which now has about 1,000 members, often gets a parenthetical mention in high-tech success stories. Yet its record as a picker of high-tech racehorses deserves more attention and is a testimony to the powerful role of South Asians in the Silicon Valley story. Nearly 9% of the 4,063 high-tech companies started in Silicon Valley between 1995 and 1998 were Indian-led. In comparison, Indians started only 4% of the 2,264 companies created between 1985 and 1989, according to AnnaLee Saxenian, professor of regional development at the University of California at Berkeley, who has studied immigrant entrepreneurs in Silicon Valley for the Public Policy Institute of California. (www.ppic.org/publications/reports.html).
TiE has had a hand in Exodus Communications, HotMail, CyberMedia, Junglee, Vision Software, Ambit Design, and Apptivity. Its 200 senior, or "charter," members alone have invested at least $100 million personally in young companies, paving the way for another $400 million in venture investment.
TiE is open to anyone with roots or interest in the Indus region, which includes India, Pakistan, Bangladesh, Nepal, and Sri Lanka. About 200 entrepreneurs, corporate executives, and senior professionals are charter members, or mentors -- an invitation-only position for which they pay $1,000 in annual dues. They include Rajat Gupta, a managing partner with McKinsey; Desh Deshpande, founder of Cascade Communications; A.J. Patel, CEO of Odyssey Enterprises; and K.B. Chandrasekhar, founder of Exodus Communications. Regular members sign up online or at meetings and pay $100 in annual dues. About 10% are not from the subcontinent.
The organization filled such an immediate need for would-be entrepreneurs that its first annual conference drew 500. Engineers who came to the U.S. in the 1960s and '70s from India's world-class technical universities were topping out at U.S. companies. Their employers didn't see them as managers or CEOs. Frustrated, some struck out on their own, only to meet the same prejudice from venture capitalists. Rekhi's backers told him flatly to get someone else to run Excelan: "They were afraid the company wouldn't be able to hire people if an Indian was CEO," he recalls. The outsider flopped, and Rekhi took over, eventually selling Excelan to Novell in 1989 for $200 million.
At monthly TiE meetings in Silicon Valley, 150 to 300 members -- about 80% of them first-generation immigrants and 20% second-generation -- mingle and listen to success stories. That's where Sabeer Bhatia, the founder of HotMail, met his mentor, Farouk Arjani, who introduced him to his first venture-capital contacts. The gatherings "inspired me to see people who, like myself, had come from a different country and done exceptionally well. Meeting them in person reminded me that at the end of the day, they were human," Bhatia recalls.
TiE isn't just inspirational. More than 1,000 entrepreneurs learn startup fundamentals at annual conferences. Patil and Rekhi each meet with five or six young companies weekly. "The demand for mentors outstrips the supply 5 to 1," says Rekhi. Desh Deshpande, founder of Cascade Communications, who heads TiE's Boston branch, spends three hours each Sunday night advising up-and-comers.
Mentors invest in their proteges. "Otherwise, venture-capital people ask: 'If you think this is so good, how come you're not putting in money?'" explains Patil. Charity it's not. Rekhi says he has made $100 million from his angel investments. Bhatia, like other TiE beneficiaries, has now advised and invested in eight other Indian-led companies.
TiE's give-and-take fosters new cultural ties among South Asians. "Indians historically are deeply divided and typically segregate themselves by regional and linguistic differences...But in Silicon Valley, it seems that the Indian identity has become more powerful than these regional distinctions," writes Berkeley's Saxenian. Patil, who's Indian, has become close friends with Safi Qureshey, founder of AST Research Inc., a Pakistani. "Businesses unite. Religion and politics divide," Patil says.
From Silicon Valley, TiE has spread to Boston, New York, Atlanta, Los Angeles, Dallas, and Washington, D.C. London and Vancouver are next. Now TiE is going to India, setting up chapters in Bombay, New Delhi, and Bangalore. The Indian government has invited TiE members to help break through the country's antiquated bureaucracies and enterprise-stifling laws. Says Rekhi: "If you can bring the spirit of entrepreneurship to India, it can uplift India out of poverty." That's a transcendent goal for a business networking group.
By Meg Lundstrom in New York