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The Rediff Business Special/V Gangadhar

'India has venture capitalists with no knowledge': angel investor Jagadeesh

If India's movie stars and cricket players think they still have a monopoly over public adulation and celebrityhood, they would be mistaken. Corporate India's New Economy stalwarts are emerging as the new heroes. Exodus Communications Inc's co-founder and strategic advisor, dollar billionaire and angel investor B V Jagadeesh is one such 'hero'.

Proof? April 25, 2000. Bombay. The IndUS Entrepreneurs or TiE's Bombay chapter organised a talk on the 'dot-com phenomenon' by Jagadeesh at Andheri, a northwestern Bombay suburb.

The venue teemed with hardboiled dot-com executives, who seem to dream of floating Net start-ups and making millions (of US dollars). The event was a sellout. The auditorium had no standing room.

As soon as the talk ended, Jagadeesh was mobbed by the dot-com crowd. They sought his autograph, wanted to be photographed with him, offered him their e-mail addresses or just shook his hand with a dazed look in their eyes. Snacks like sandwiches, samosas, gulab jamuns and bhel on offer outside the hall lay neglected!

In his presentation, Jagadeesh talked about his own company, the Indian dot-com scene, and blasted the Indian government for not opening up the telecom sector. Making an audio-visual presentation complete with slides et al, he illustrated his concept of starting a business and making it work. He made one thing clear: India is not in his list of priorities. The growth rate is sluggish and he would be focussing more in Europe and the US.

What did Jagadeesh see during the drive from the airport in northwest Bombay to the main city in south Bombay? Nearly 100 hoardings of dot-com companies! How many of them will survive, he wondered, particularly when most of them could not even deliver clear e-mail messages. "People here start (Net) companies, run them for six months and then sell them," he pointed out. That is no way to make a contribution to India's industrial progress.

"You have venture capitalists with no knowledge," lamented Jagadeesh. "They have a herd mentality and do not study investment techniques. The approach is blind, one smart guy puts some money in some venture and the rest of the herd follow suit." The newspapers are of full advertisements of companies making tall claims which they could not deliver. "They are not like Yahoo which progressed mainly through word of mouth."

Companies cannot be built merely on ideas, warned Jagadeesh. "Those with the right foundation, value system and value for their customers alone will survive. Be prepared for setbacks, learn from your mistakes, but do not repeat these mistakes."

Entreprenuership is not something which can be learnt in the classroom. It has to come from within. Exodus had faced bad days and almost closed down once. But it fought back, took risks and today employs nearly 2, 200 people. It has its share of millionaires among its staff. Among its 2,900 customers are giants like CBS, Yahoo, USA Today and US Trust. Each one of them had paid an annual fee of $ 220,000 for Exodus's services.

Unless, infrastructure in India opened up, no jobs could be created, warned Jagadeesh. He failed to understand a system where the more one uses telephone and other telecommunication facilities, the more one is asked to pay. It is exactly the opposite in the US. India is poised for tremendous growth in the Internet sector, but the government is putting hurdles everywhere. Internet users have to pay for the local telephone calls as well as the Internet provider. "This is not the way to nurture an industry," he pointed out.

A lively question-and-answer session followed the presentation. The questions were mainly focussed on the Indian dot-com scene.

An interview with B V Jagadeesh

B V Jagadeesh on Budget 2000

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