TeleSoft's Gupta: Venture Capital's Tough Times

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What's your assessment of the status of information tech innovation? Are startups targeting technologies that could yield dramatic improvements in productivity or quality of life?

Yes, entrepreneurs continue to work on great ideas that could dramatically improve productivity or overall quality of life for society. One of the largest opportunities for IT, networking, and communications technologies is the smart grid for the utilities, which needs to be developed and deployed. The power networks of the world are dinosaurs and archaic, largely from the second quarter of the last century. Architecturally, current power networks are largely broadcast networks, which in the future will be peer-to-peer networks where each node can be a point of production or consumption or both. This is a huge opportunity for innovation at every level from the end points through the network core.

If you could reshape the startup culture, what would you do?

When capital is cheap and plentiful for startups, and there are sufficient profitable exits as over the last two decades, the cost structures of startups have slowly but surely ratcheted up. Many startups may not have a culture where people are working for the equity upside. In addition, cash costs for most services to startups have also edged up significantly, like legal fees, accounting fees, recruiting fees, compliance with new regulations like [the Sarbanes-Oxley Act], salary levels, etc. As a result, I spend a lot of time coaching CEOs and management teams to go back to the basics of a low-cost culture and an equity-upside-oriented culture.

What role could information technology have in economic development in poor countries?

IT and technology will have a dramatic impact in the economic development of poor countries. For example, wireless phones are fast penetrating the poorest countries where landline telephony historically had very low penetration. There is a direct correlation between communications infrastructure and economic development. Wireless platforms like [Research In Motion's (RIMM] BlackBerry, [Apple's (AAPL)] iPhone, and others will keep getting smarter and more capable, with next-generation applications from the very small to the very large, from business applications to consumer applications. With the right leadership, poor countries can leapfrog the developed world and deploy the latest technologies, which will make a huge difference in their economic development. For example, in parts of India, poor coastal fishermen bringing in their fresh catch use their wireless cell phones to check which buyers will give them the best prices and have removed one tier in the distribution channel.

In 2001, you started the Arjun Gupta Community Foundation. What's your goal for the foundation?

The goal of the foundation is to support projects in education, medical research, the arts, and other community projects. In 1980, I came to the U.S. as an exchange student with very little money and a lot of dreams. This country has given me unparalleled opportunities for my education, work, and outdoor pursuits. As a result, I feel privileged to now give back to the system. To date, the foundation has helped support about 90 projects in the U.S., India, and Africa. We started small and will grow over time.

What accomplishment of the foundation are you proudest of?

I believe there is a need for great leadership worldwide to help lead us through the extraordinary challenges of the environment, poverty, health care, and how to handle the expected growth in the planet's population from 6 billion to 9 billion people by 2050. Therefore, I am proudest of supporting various leadership programs which I believe will sow the right seeds among young leaders who will blossom into great leaders in the future.

Hamm is a senior writer for BusinessWeek in New York and author of the Globespotting blog.

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