For most people who are looking to take the entrepreneurial plunge, one of the greatest inhibitions is the loss of security that a job provides. Even in my case, it was not how I had planned things initially. I grew up in a middle class Kannada Madhava Brahman family, and the most critical learning that I imbibed from my family and environment was the uncompromising focus on education and respect; a learning that I have retained throughout my life.
My journey into entrepreneurship started out very differently, and a couple of defining moments come to mind. The first defining moment was a meeting with a famous American computer scientist when I was a graduate in Control Theory at IIT. He talked to me at length on the future of computer science; and his conviction and subject knowledge were so profound that I was hooked to the field for life. The second defining moment happened during my trip to Europe. It happened in the Sofia Express, in which I was travelling on my way to India. My co-passengers were a girl and a boy. I started a discussion with the young girl in French, who talked about the perils of life in an iron curtain country. To our astonishment, a few policemen came and arrested both of us, which, I believe, was because the young man had complained that we were perhaps criticising Bulgaria’s Communist government. They confiscated my belongings and dragged me along the platform into a small 8×8 foot room with a cold stone floor and a hole in a corner as a toilet. I was made to stay there without food and water for 72 hours. Even after I was taken out, I was taken to Istanbul on a departing freight train, again without food and water, before finally being released; because I was “from a friendly country called India”, as per one of the guards. During the entire journey to Istanbul, I seriously rethought my views on communism. Over the coming years, I became more and more convinced that rather than communism, it was capitalism – and in essence the entrepreneurial spirit – that was the best way for countries like India to get rid of poverty. You can say that Infosys, in essence, was an experiment for me in entrepreneurship.
My first venture was Softronics, which only lasted for a year and a half (after which I joined Patni). I realised a few key lessons. Firstly, when you become an entrepreneur, the market has to be ready for your idea. The Indian market was certainly not ready, which is why with Infosys, I decided that we will explore the global market. Secondly, I learnt that it is important to have a team that has a common and enduring value system and the strengths of team members must be complementary and mutually exclusive. Again, these lessons came in handy when I set up Infosys. The idea of starting another software company started brewing in my mind when I was working as a lead engineer in Patni Computer Systems. I wanted to, as my upbringing had taught me, build a company that would earn the highest level of respect.
I maintain that there is nothing wrong with a youngster who is aspiring to make a lot of money as long as it is via legal and ethical means. You cannot become a saint at 20 and you shouldn’t. What is important is for you to realise that by seeking respect from every stakeholder, you will actually become richer in wealth. That is the trick that we all have to follow. That is why, right in 1981 when we started the business, I said that we must seek resect from everyone – right from customers to investors to vendor partners to employees to government to the society at large. If we sought that kind of respect, we would not short change anyone. We would adopt the finest principles of corporate governance, be fair to our colleagues, not violate any law of the land, pay our taxes properly and create goodwill with the society. We went ahead with the thought process that if we follow these tenets, revenues, profits and market capitalisation will automatically come. We said that we will separate management from ownership of shareholding and also laid down a fundamental principle that none of our family members will take up a non-merit based role in the company. So there is nothing wrong with youngsters seeking a path to get richer; all I am saying is that there are multiple paths to get richer. And one of the paths that Infosys has found to be effective is to seek respect.
The people I chose to partner me in this venture were chosen because they had similar value systems. They were part of my team at Patni. Since equity, fairness, respect, value systems, et al were paramount to my mind, I took an unprecedented decision of making them equal stakeholders in the business. I have not come across any entrepreneur who picked up people with 1-1.5 years experience and gave them 15% equity. I have not seen any other case in the history of global business. Why did I do it? I did it because I believed in equity, encouraging youngsters and having good values. Even at the national level, I do strongly believe that these values will make India a better place.
When we started Infosys in 1981, India was a very different place as compared to what it is today. First of all, there was huge friction to business in the 1980s. For example, it was very difficult to get a bank loan. When we wanted to import our first computer, we went to multinational banks seeking finance – Citibank, Bank of America… where my nephew and my friends worked. They said, “We don’t give money to you guys. We only give money to very rich people.” These were the MNC banks. The Indian banks were also sceptical. Finally, we got funded by the state financial institutions. Secondly, in those days, infrastructure was very poor. It would take us two-three years to get a telephone connection. Thirdly, there were no data communication facilities in those days. Fourthly, travelling outside India required approvals from the RBI as we did not have current account convertibility. Today, it is all about competing in the marketplace based on innovation and based on how market-worthy you really are. Therefore, there is a lot of difference between the 1980s and today, and for the better.
The initial years were indeed very difficult due to these external realities, and any entrepreneur in general had to be prepared to face every possible hardship. While we started Infosys on borrowed capital of Rs.10,000 (from my wife), we realised that the money wouldn’t last very long. We made too many sacrifices on our lifestyles. We worked on a deal with one of our prospective customers that would give us working capital for a few months. Six of my colleagues went to the US to develop software, because it would take 2-3 years to import a computer at that time. Meanwhile, I went about getting permissions from the RBI. I convinced our clients to send us money on the 28th or 29th of every month, and then I used to take 50% of it from RBI. Only then was I able to send my US colleagues their maintenance allowance.
Also, when you are an entrepreneur, you cannot shy away from the responsibility of being a leader. A leader of a team is like a father of a family, and he has to be a rock solid and decisive person. Concepts like authoritarian or cooperative forms of leadership, and questions on which of them works best, are theoretical to my mind. In practice, if you want the best ideas to come to the table, then I think that you have to be open minded. It is the responsibility of the leader to decide which idea we are embracing or in which direction we are going. And that decision making and leading the troops is the responsibility of the leader.
When the chips are down, as they will be at many points in an entrepreneur’s journey, it is important to keep your head up and keep your team motivated. The key pre-requisite to achieve that is the right vision. As long as the vision of the organisation is noble and larger than life, and you passionately believe in it, keeping your people on track isn’t too difficult. We said right in the beginning that we want to build an organisation that is the most respected company in India that delivers best in breed, end-to-end business solutions and employing the best in class professionals. Respect was very important. That was above all for us, an aspirational and larger than life vision. With that kind of vision, people work hard, they want to keep customers satisfied, investors satisfied, et al. The trick is to think of a vision that is larger than life.
