Anand: “Especially for Indians in India is that you have to understand that your career is your responsibility, not the company's responsibility. I get a lot of people who come and tell me, “I've worked in the company for 10 years, 15 years. The company should do this for me or the company should give me a career path. What is my career path?” It's not the company's problem, man. It's your problem. You have to define your career path and the company has to enable you and be transparent enough and share with you how you will get to that plan. But the responsibility of your career belongs to you and nobody else”.
Neelima: Hello, everyone. Welcome to another episode of ZeroToExit. This is Ankur and Neelima, your host. On today's episode, we are delighted to have with us Anand Deshpande, the founder and chairman of Persistent Systems, a global technology services company, headquartered and publicly listed in India. Anand founded the company nearly three decades ago and was instrumental in growing Persistent into the tech services giant that it is now. When Anand is not busy, helping growing persistently, he advises college kids, young entrepreneurs and corporations, and is also involved in nonprofit activities.
In today's show, We want to get Anand’s perspective on company building and India Inc - the challenges and the opportunities for young entrepreneurs who are building companies in India.
Hi, Anand! Welcome to the show.
Anand: Hi Neelima and Ankur, it's really a pleasure to be here. It's my pleasure. I'm quite excited to chat with you today. So I'm looking forward to it.
Neelima: Awesome. So I'll kickstart the part with one of the questions I was listening to in one of your interviews where you were referred to as an outlier. So two questions. Would you call yourself an outlier? And if so, in what ways have you deviated from norms in your life?
Anand: See, I would say early on when I started the business in 1990, The fact that I came back to India while most of my other friends stayed back in the US which was quite an outlier situation at that time.
And of course, running a small business from India has been tricky. It's not that many people who come into this. So in some sense, one can call me an outlier, but really.I have not been a crazy see in dumps of the strange things that I've done, I've pretty much followed a path and I hope we can share some of that with you today.
Ankur: Looking forward to it. Over the years you’ve led the growth of Persistent through both good times and bad times. Tell us about your journey or the last three decades.
SUPER INTERESTING JOURNEY OF ANAND DESHPANDE
Anand: (02:39)Interesting story. Yes. I have had a really good fortune of being part of the internet industry and from the very beginning, and not only that actually I've been part of the Indian IT services industry in that sense, which was a very-very tiny industry when I came back to India and over the last 30 years, I've had an amazing ringside view of this.
So I consider myself super fortunate in terms of being able to be at the right place at the right time. In some sense, the trick unfortunately, is that you don't know that when you are at that point. So this is something you realize later on, rather than when I was there. So regarding my going back to India. So here's the story actually, what happened? So in the late 80s, early 90s, there was a very interesting article that came out in the economic times around the time when I was, I just joined HP after my PhD from Indiana University. And I had moved to the Bay area. There was a very nice article in the economic times in India, which got circulated very widely in the soft dot culture on Indian news groups that were there at that time.
This sort of pre-internet age thing. And one of those articles just talked about something called the X+1 syndrome. And the idea there was that Indians in the US end up saying that when I finish my PhD, I will work for one year and then go back and when you get married and say, “No, no, no. I'm going to get work for one year after getting married and then go back. Then you have kids and less when it keeps going on. And that never ends for most Indians. They keep talking about going back even 10-15 years into being in the US. And this was quite common actually. And I could see that happening in the Bay area. I met so many people and it was there. So I had decided that I will not be stuck to this particular X+1 syndrome either.
I'm going. I'm gonna make one decision and move back. Or, decide not to move back and basically buy a board or something to say, I'm in third yet. And so I just decided that I'd take a chance of going back. And somehow things worked out in a sort of an interesting way. I got a job at HP and it was a good job. I was working in the HP labs out there and I never filed for my H1. So they've kind of put a little bit of a finality in my 18 months of practical training visa. I just sort of completed that and moved back. And while I was moving back, India was changing, I met one gentleman Mr. N. Vittal, who was the secretary of IT. And he had come to the Bay area around and there used to be an Association called SIPA, which was the “Silicon Valley Indian Professionals Association”. That is a precursor to that in some sense, And he spoke about how he wanted Indians to come back. And he was setting up a software technology park in Pune and that sort of was home for me by then.
And I decided to take that opportunity and take a chance of coming back to India and doing something from here.
Ankur: And then you started Persistent. Tell us how the startup scene was in India back then.
HISTORY: START-UP SCENARIO IN 90s IN INDIA
Anand: (05:42)So, actually the starting of Persistent in the early days was kind of, Pretty tough part in the early, early days. And the reason also has to do with the context. I want to share a few stories that you might find interesting for people who don't realize what the nineties was like or 89-90 when I came back.
So it's a question for you guys, since you guys grew up in India and you were in India in the early nineties, do you know who was the prime minister of India in October, 1990? Do you want to take a guess in?
Neelima: Narsimha Rao?
EMERGENCE OF SOFTWARE TECHNOLOGY PARKS
Anand: (6:18) No, actually neither of them, by the way, the prime minister at that time was Vishwanath Pratap Singh. Right. He was best known for the Mandal commission.I came back to India in October 1990, mid-October and within two weeks after I came back, the government changed and Chandra Shekhar became the Prime Minister. The Indian economic situation was so bad that he had to actually move a whole bunch of gold from India to London in December 1990 because we did not have money to borrow and we had to keep gold as collateral. And this is a true story because one of the guys who was on that plane eventually was on my board. So he could have rated this fact that this actually happened. So, it was a pretty tough time in India. To give you another context of how this whole thing was set up,
so prior to software export, the other big exporting industry was the gems and jewellery and diamonds related industries and SEEPZ was the modern for them. So if you've been to seeps, which is the Santa Cruz Electronic Export Processing Zone out there, get in and get out. It used to be huge, it could take like 20 minutes to get in and an hour to get out because they would scan everything and all kinds of stuff on here. So that was a model for export zones. So software and retail that secretary DOE said that we want to set up STPs i.e. Software Technology Parks in India, and they were following that kind of a model. You have to have a bonded red house. You have to come to one place.
So they set up these parks where you will do this software export business. So they set up three of these, one was set up in Pune, Bangalore. And then they wanted to do one in Gandhinagar as it was Gujarat cadre, but then it got moved to Bhubaneswar.
But the interesting thing was that the entire software technology park in Pune which was the first one set up in India was 8,000 square feet. And they give that space to 14 companies. We were not one of them. So they gave these spaces 300 square feet, 350 square feet, 200 square feet. So this is for doing software export from India. Okay. So, the total vision of what software export meant for India in 1990 was a very archaic concept, right? So they're giving you 350 square feet and saying you're doing soft credits, but from, and I did not get that place in my first round because we had not registered a company, all kinds of stuff, different people got in. And when I came back to India in October, December, November to start a software business. I really did not have a place in this STP because somebody, they had already given it to 14 other companies and there was only 8,000 square feet of total space. And you could not do software export from anywhere else in the city. You had to be in that park because that was a model they were following. So, it was pretty tough in that space.
And I'm going to share one more story with you from the early days. So this is from 91 and this is from March 1991. And what happened was that, so I did not have space in the park. And actually when I came back to India, I had two customers who were willing to give me work. So I had work with me, so to say, and probably a little later, but so I didn't have space to get started and we couldn't do anything until we had the space to get started. So what happened was it's kind of getting to a point where I didn't see a future of how to get a space, how to get that space in that park. So I wrote a letter to secretary DOE, which was N. Vittal and I will tell you the sequence of what happened. So I wrote to him on a Sunday, I wrote the letter and I sent it on Monday by speed post.
“GIVE HIM YOUR OFFICE SPACE”
He got it on Tuesday and Tuesday evening, I got a call from his office. You have written a letter. What is going on here? So, then the director of Software Technology Park, Pune got a call from the secretary on Wednesday. Saying, why don't you come to Delhi and figure this out? So now Pune-Delhi used to have three flights a week. Okay. So it's not every day like predicted, there are like 10, 15, 20 flights a day. Three days a day, we would have a flight from Delhi to Pune and back. So Wednesday he got a call and Thursday was the flight. So we went to Delhi on Thursday and he had a meeting with the secretary and the secretary told him that, you have 14 companies that you have, you're on 8,000 square feet.
Great. Off these 8,000 square feet and these 14 companies, how many are operating from that? And he said, None, Zero. At this moment, Nobody is operating from there. Then he says, all right, why don't you do this? Give him your office space. He’s kind of the best. So, give him your office space and you keep moving till the last one gets occupied. And that's how it happened. And then he called me back on Thursday to do what I've been told to do. Why don't you come Friday and collect the keys? So I got the keys on Friday and then Sunday was Gudi Padwa which is very important in the Marathi context. So, we said that's a good thing. Good things happen on a good day. So on Sunday, the 17th of March 1991, almost 30 years back we did a Satyanarayana Puja and got the office started. So that was March1991. And from then on Gudi Padwa has had an important significance for us because we've seen good things happen and we kind of forced them to happen.And so that's what's been the interesting story.
So the early days were very difficult in many different ways. There are lots of stories, telephone connections, the time it took to send files, the speed of the internet at that point, bank loans, it was very-very difficult.
Neelima: Can you tell us which companies were there? Those 13 companies? I can't even remember which other software companies at that time were there?
Anand: Oh, So I can name them, but I think it's best not to. Thermax had a software division. They had a space there. There was a company called DSRF, it was a company that did not exist anymore. There were a lot of small companies who had space there.
Neelima: Yeah, this does bring up one point though.Starting a software company in India has reasonably become easier now.
Neelima: Much-much easier to start here in the US.
EASY : INDIA ; EASIER : THE USA
Anand: (12:50)No-no absolutely we should talk about that. And life has become so much easier. There are lots of stories from those times because of the industry at that time, the whole concept of what software is and how you can export software without sending anything. And how you can do it over the internet was a very alien concept.
PERSISTENCE FOR PERSISTENT
For example, when we started out the business searches too. I applied to the Bank of India for a bank loan. And the loan that I had applied for was about 6 lakh rupees. And the branch manager told me that, “Oh, under normal conditions, I can always pass 6 lakh rupees, and it's not a big amount per se. But since this is software, it is a priority sector and it has to go to HQ, just Bombay.”
I spent seven months trying to get that loan and I needed that money. I didn't have that kind of money. Okay. So I couldn't have done this without the loan. And it was a very small amount if you think about it i.e. 6 lakh rupees, but I didn't have that money. Money at that time was not that easy to come by.
And I've had fairly meager resources in that sense, though, we were okay off meaning we were not poor but people who are not counting lakhs at that time. So that was the early days. So, the comment I want to make, which I have learned and observed is that businesses typically don't grow in a straight line,you would see that businesses go through these S-curves. So you do a few things early on, sort of the lower end of the S and you kind of have to struggle a bit to get to that point. Once you get a little bit of momentum, then you'll see growth coming in for a period of time, which is relatively predictable, or you can see that happening. But if you want to continue further, even after doing whatever you have done in that area, you tend to flatten out and then you have to find your next S and the next one and the next. So that's how businesses grow. So the first S-curve of our business, as I was alluding to, was these early days.
So infrastructure was the biggest challenge. And people did not believe that India and outsourcing can be done and software can be built. My background was mainly in the database, very processing type stuff. That is where my PhD was. And I started to tap mainly onto my database friends and people who were in the database companies as CTOs.
BUSINESS WITH MICROSOFT
And there were lots of database companies at that time. This was mostly when object databases were starting to happen and that was the new stuff. And I spent a lot of time calling them and you got some business and it's a small business. So we were quite okay. The turning point in our business came in from a project that we did for Microsoft, actually. So this was in 1992. So, it's a long time back and we were one of the early ones that Microsoft may have outsourced at that point. And this project was what we did for them- pre NT. So, Windows NT had not launched at that point. And they had windows, and there was a Fortran compiler that they wanted to ship and they needed graphics libraries to migrate from 16-bit to 32-bit DOS extender. This is a kind of a different world. Actually, people who haven't seen it should not get into this 640k memory and all kinds of issues. Anyway, So we got this project from them just through serendipity. They actually would have not survived. I had not gotten this project. So the way it happened was. We were working with a couple of customers and they were both not going that great. They were both startups. Actually. One of them was a company called Data Parallel Systems. So this was a company in Indiana. And I had a colleague who had worked there. So a friend from grad school who was working there, he had started that company and we were doing a query processor for a simulation(16:16) machine.
And then I had another project from a company called O2 Technologies which is a French Object based company. So, we were not sure how much business we would get from them and what it would look like. So, I was quite desperate and I happened to write to a friend who was, again, a grad school student with me. And he kind of said, Hey, here's some project at Microsoft that if you write to this guy, maybe so I had to call him up and convince him. And he agreed. And it was a fairly small project. If you look at it in the whole context of things that was a 3 to 4 month project and a small amount of money.
But what it actually did for me was unbelievable. So one is: I felt confident that we will make it. That was a big moment for us. Second, if I could get work from Microsoft, I felt that other people might be willing to do something like that. It gave me the confidence that a 10 person company in India can write to somebody at Microsoft.
And if you have the right place and right time again, you could get work from a big company and you don't have to. So, you know, in small companies you always worry that why would a big company give you work? Right. And so that's a good question to ask, but sometimes if you ask you might catch it. So that is really the key to that, it was a good learning experience for me. And it gave me super confidence to go after companies, without really thinking about how big they are versus what we are by trying to say that if
“I'm doing something that is very unique and special that they need, they will buy it”.
I mean, it's not just size that they are looking at. And that was a huge thing for us for all through the 30 years of our existence. And this is something that I tell all small businesses that, you should not, if you have something that is very focused and clear and something that could be useful to someone, you should not hesitate in getting it to the right hands.
Ankur: You've been able to lead Persistent growth over the last three decades through good times and bad times. And in this time, only a fraction of the companies in S and P have survived. What do you attribute your success to over the years?
THE BUSINESSPERSON ATTRIBUTES TO HIS SUCCESS
Anand: (18:54) So yeah, I think it's a good question that you ask. And it is true that it is pretty hard for small companies or companies at large to survive. Over an extended period of time. And it is quite tough, but that's part of the reason that happens is that, you as I mentioned, please go through these S-curves and you hit into an S-curve where you find that at the top of the S-curve we want to, you're doing the same kinds of things you just can't grow anymore.
And at that point you tend to decline. One of the keys to find from the first S to the second, second to third, you have to keep moving and evolving yourselves that includes changing your business model, changing their teams, changing how you work, the processes and your outcome. That is pretty hard for companies, especially as they are evolving in the market as it is changing very rapidly.
So, you know it is a fairly hostile environment. If you look at your startups and companies, this is true in India, But it's also true in the US and the life of companies is getting shorter and shorter. I think the reason why we have survived of course, is the fact that we have avoided, as we went along, we don't continue to do the same thing. And one of the biggest things is that teams have evolved.We've been able to get more people into the business and some of those kinds of things have been really critical for the success of the business.
And that is what kind of hits some of the businesses as you would observe. And that is part of the reason why you have to keep doing different things as you go.
Neelima: I'm going back to still a little bit of early days, getting those first 10 employees and believing in your vision to work on those two projects. How difficult was it because people were going to the US and not coming back as we talked about?
A PERFECT EXAMPLE FOR: “EVERY CLOUD HAS A SILVER LINING”
Anand: (20:10)Yeah, so it was hard and in different ways, but yes, it was always, it is always difficult to bring the members into your team. And that's always a tricky one. So in my early days, what happened was I had written to a side of it, about a half of friends of mine in the US who had agreed to come back and see most of them didn't come. Two of them had come. And they just kind of would not take it after a year or two. And he left the first two projects that I did, I did have five guys with me from school and in college and all that. They were there with me nearly for the first year, but they just couldn't see the future and they kind of moved on. Then we hired locally and we started hiring a lot of fresh graduates at that point. And then basically started working with them.
Ankur: Yeah. One of the questions I had was, I have worked and built products from ground up and there's about three to four years of your own individual S-curves that you hit, where you hit a plateau. Where you have to find your mojo, the thing again, to start innovating. How do you do it year over year, over year? Is it a function of hiring young talent so that you can keep innovating who are pushing you to then innovate? How do you not get bored of doing the same thing?
THE S-CURVE : HOW WILL YOUR START-UP GO THROUGH THE SETBACKS?
Anand: (21:11)See, thankfully for me in my 30 years, I've always had something new, to do work in terms of the challenges that the environment has provided me or the market's changing. So that has kept me going personally in some sense. And also everyone is a little different in their own style as well, but for the company to survive you really need to bring in new blood every time and you need to think differently every time.
And during these transitions, from one orbit to the second orbit or second orbit to third or whatever, you will find that you need different kinds of people at every change at that point. And that is very traumatic, that is both a good and bad thing in the life of a company. And those transitions are often very hard for founders as well. I just read an article recently, which says:
“People grow linearly, but companies grow exponentially and that difference can make it a problem for people”.
Ankur: Yeah, very well said. Speaking of the first and second orbit I had a question for you. So, we were reading one of your stories or one of your articles, and it mentioned that you've seen in your journey a lot of companies, especially in India, sort of get stuck in what you call first orbit, which is about, that 1500 kind of sweet spot and then never do a breakthrough.
TIPS FOR BEATING THE S-CURVE
Keep Moving And Evolving
Addition of New Blood
My Company Becomes Our Company
Go from Future to the Present
A TRANSITION : FIRST ORBIT TO SECOND ORBIT
Anand: (22:26) 1500 is a very big number. No, it's not that big. It’s all about small businesses. Right. They tend to max out when their founder maxes. typically 10 to 12 million dollars, and this is not India. This is a fairly well-known university phenomena. What happens is that when you start your first orbit company, when you start a new company and you're starting out, you are driven by a product, a mission, and you do whatever the customers tell you and you keep evolving and all of that stuff.
And you get to a point where that whole chaotic environment, that is what makes a startup is not conducive for a structured well-defined process induced company in some sense. And that transition from first orbit to the second orbit can be very traumatic for the founders.
And that is really what we've been working on. As I mentioned to you earlier, we have this program that we run, which is for a second orbit. How do you take a business from the first orbit to the second orbit? Now, this transition is important from the founder's point of view because the first orbit, it's pretty much a founder driven company. And then you get into a situation where you have to think about what it means to be our company and all of those kinds of things. And that sort of transition is not that easy for many founders and many founders choose not to make that transition because they feel that, “Oh, the life and second orbit would not be the same.” I personally prefer to be a first orbit company in some sense.
Neelima: You also had the same transition in Persistent, then you told us a story about-No, my company to our company. How aware does the founder need to be to understand that the transition needs to happen? And is this the place where mentors come in?
Anand: Yeah, it's true that most of the time, people may not realize that this is happening to them and they might find out that the transition is very hard. In my case, what happened was I still remember this would have been in the late mid 96-97 timeframe. We had about 70 people in our company at that time. And we were doing very well. Actually, each one of us was writing code in which we were sort of bringing in a little bit of business each and I was ringing business. And then I was writing code in the evenings and pretty much all day, we were all coders. And we loved the fact that everyone was busy doing things.
And we were trying to plan the future. Sort of it came down to saying that, if you do more of the same kind of work, it would be so much more work for us. We wouldn't be able to handle it. And one of the guys on the team said, Hey, you're thinking for yourself, right? You were saying, all of this stuff has a problem growing the business as a problem for you, but what is it in it for me and for us here? So the 70 of us, we want to do things as well. So why do you look at all? Why are you constraining the company because of your own personal constraints? But I got to be thinking very hard and said, Hey, that's correct. Where am I in the company to decide? Is it my company or is it our company? And that transition took me almost a year.
To me personally, it was very hard for me to make that transition because what happened is when we started to look at this assistant as our company, it was very clear that I should stop writing code and do mostly sales. And this was important for the following reason that, not that I was a pretty bad coder, but there were better equally good coders available in the company. And there weren't that many sellers in the company, and it sort of came down to me making a decision that if I'm part of the company and I am at the end of it and an employee of the company first I should do what is right for the company rather than doing right for me. And that difference of saying that this is our company. So we should all do what is right for our company rather than doing something, which is good for me, meaning constraining the company for my own personal whatever, it's not what I think to do. And that kind of changed my thinking quite a bit, and that really helped the company scale significantly.
If I had not had that transition myself, we would not have grown. And that transition sort of got me to the next stage of my transition in the last 18 months as well, where I sort of got to this stage of saying that, what do I want to do in the next 30 years of my-
I've done Persistent for 30 years, what's my next 30 years look like. And at that point I realized that, for me being there for the company, it was not the best thing for me to remain CEO any longer. So, those are all decisions where you want to decide for the company rather than for yourself. And once you decide that this is our company, the founders need to take a view that they have to do what is right for the company first rather than thinking about themselves.
Neelima: I know you have this very interesting theory about visualizing the final milestone and walking back and working on your constraints around that Are there any one or two things that you can tell our audience to keep in mind when you're visualizing that end result and how do you walk back to your current state?
KEEP THIS IN MIND WHILE VISUALIZING END RESULTS
Anand: (27:17)Yeah. So this is part of our workshops that I do with another friend and colleague, the gentleman called Ashok Korwar showcase used to be a professor at IIM from 1991 to 2001. And he has been working at Persistent as a coach and a business advisor for the last 10-12 years. I get along well with him and we created this workshop on which you called second orbit.
So the problem is that when you are at the top of your ESCO, And you're trying to extrapolate growth over the next few years, you are using assumptions that are appropriate for the first S and they may not hold when you look ahead. So, what happens and what I see is this and many planning processes and all that people constrain themselves because they are using assumptions and constraints that are appropriate for the first orbit.
When you move to the second orbit, your constraints are going to be different. Your assumptions are different. So you shouldn't want to take your old assumptions into the new assumptions. So what we tell people is let's say you're doing a $20 million business, then what you want to do is to define what a $200 million business might look like, define in the sense, visualize what it is a $200 million business.
When you look at a business that is 10X your size, you are likely to break your assumptions that you have made for your first tenants i.e. 20 million. So what might work for 20 is not going to work at 200. So when you say, okay, I do $200 million business, what does it look like? Or we need to be more international or we need to think about different kinds of markets or can we really handle lots of small customers or, when will we find the people to do it?
Can you do it all in one location? All these questions come up. Because now you're visualizing something that is 200 million and not 20 million, because otherwise what happens is when you do look 20 to 25, 25 to 30, you keep stretching the envelope up to a point and you have reached a point where there's so much chaos in the organization that you cannot grow it any further.
So you have to look at fresh things. So, that is the reason why you look at something and it's. 10X or something much bigger. And you visualize that you build a model on it. It has multiple benefits in addition to sort of looking at what the constraints are and where are you holding? What is holding you back?
One other thing that it does for the businesses that everyone feels now. Oh, we need to grow and we need to be at a $200 million business. So, a lot of the decisions that you have to make cultural alignment, positioning, getting their team to be thinking in one direction, sort of happens very nicely because now you are thinking we are going to be at $200 million, not at 25 million dollar, but that attitude really helps in getting everyone to think about being a bigger business than the one they are and doing that at a relatively larger size is very important. And that's one of the exercises that we do quite a bit, which we call this visualization to realize basically three issues that we run into when you order from the first orbit to the second orbit, one is relating to positioning.
So what happens in a small business is you are running a $20 million business. The reality is that the world only wants to buy from leaders. So, how do you be a leader at a $20 million business? I mean, you're not a huge company. You are a smaller business. So, the key is to define the market where you can be a leader and the trick is to figure it out.
If you are a $20 million business aspiring to be, let's say 50 or 100, you want to play in a market that is no bigger than $500 million, because then at 20% market share, you still have a play. No, this is very hard for a small company in Sangli or Pune and even under these spaces, we want to do ID services. So yeah, it's a trillion dollar market. We are going to get 2%. It doesn't work like that. Right.
So you have to basically define, okay, this is my specialization. This is where I'm going to go. But that's why we spend a lot of time helping people. So one of the biggest challenges for growth as one is positioning. The second thing is steam. When you are in the first orbit, everyone, the founder gets this mentality of people working for the founder. And that is a bunch of founders, but everyone works for them. They have not hired as many peers as they need to get to the next level. So how do you get peers to join your business? When it's already running a business, it's much easier to get two founders to join. When you have nothing to start with, but now you're already a $20 million business. You need two other people who are going to be your peers to join your business. It's already running. It's a pretty hard thing to do. And that, that is one of the biggest challenges that companies have to scale. And the third thing is that, how do you set processes, boards, mentorships, those kinds of things.
So when we spend a full day trying to explain to people how to do this, and we have had good success, I've done this about 30 to 40 times. And we have touched about 500 to 600 companies in that zone. Well, I don't track them actively. I do get back to them. It's from people who come back and say that we attended this workshop and we found it to be valuable. So,to that extent, it’s good.
Ankur: Yeah, it's very fascinating. If the follow up question I had on this subject was, there are, I guess, a couple of paths to get to that 10X revenue 20 to 200. One is sort of, double down on what you're doing i.e. add fuel to the fire. The second one is: start another fire. Right, like in your analogy, start another S-curve.
So, let's say one, one way to get to that type of revenue number is to start other businesses or other product lines . How do you trade off starting and investing in something completely new, taking away resources and funding from the existing businesses that are growing at 20% year over year. How do you balance the two?
“FUEL UP THE FIRE” STRATEGY
Anand: No. So that is a different question, but that is important. But what I'm referring to when you move from the first orbit to the second orbit is not just about products. It is about the team, the processes, the methodology of how you work together. How do you build teams? Who do you hire, what kind of processes do you need to have? Do you need a marketing team? Do you need a sales team? You need a real salesman and you need to put people in different offices. So what happens in the first orbit is that the scope of that team is restricted to the founder and the people who see him in his room and the people who's working closely with them or who have grown with them from the very beginning.
But now you want to take it to the next level and you have to change some of these things. So going back to…. So that's a little different, or a little broader than just saying that, It is about one product to many products. That's a different discussion. Now the question is, should you start one, grow the fire and fuel the fire?
Of course you should fuel the fire, but to fuel that fire, you might need to make sure that while you're going to take a small fire and make it bigger, you better have the fire extinguisher and all of the other paraphernalia to ensure that if it goes out of control, you have ways to control it.
When you are building your own fire in your kitchen. Okay. It's fine. But now you're going to make a commercial one, you need to have safety, the requirements that you need to have, you need to have enough people to make sure that that fire has the fuel to keep burning. And so there's a lot of paraphernalia that is needed to keep that fire growing. And it can be done by just saying, okay, I haven't been running this small fire. We have five people and a small fire. We are good for it. Now let's go make it a huge fire. So, you would burn yourself in that fire. So you have to plan your processes. You have to have the team, you have to have a clear understanding that, even if you want a fire to be bigger, are you going to just grow this one? Are you going to create another one? Just a little bit away and then to merge or however you might want to think about it? So, challenges that companies have is not about the methodology, it's about the founder's attitude to thinking about, have a plan to this enough. And do I have the right people on my team or willing to think like this?
Otherwise everyone will say, “No, no, it's too big.” I'm running away. You are left with a huge fire. You don't know what to do with it. And that's what might kill you in the process. Understand that when you have now reached a point where you have current fire is running fine, but it will not grow if you don't do something different.
Neelima: Does this also apply to managing careers? I know you're advising plenty of young and mid-career professionals. And in our discussions you had said the forties is the time when a lot of people plateau. What advice would you have for people who are just starting in their career or are in their mid to late stage careers and are aspiring for the top office?
HOW TO MANAGE A CAREER?
Anand: (35:37) Yes. As a side note, I've been doing this for 30 years, I get to meet a lot of people and I see a lot of people I find are lucky in that sense. The mid-careers . It is sort of, in my opinion, the time when early in your career, individuals believe that they can do anything. I'm going to eventually be the CEO of the company that's not going to happen. And that can basically make people very frustrated i.e. I have worked for 25 years. I don't see it. So, that got me thinking really hard on saying that no, what would it take for people to plan their careers so that they know where they are and they can make a real decision about where they need to go. And the other thing that I find is a lot of people come and say, Oh, follow your passion. Yeah it’s okay for a 25 year old to follow your passion, but if you’re 45 year old, and you have an aspiration to be a corner office and you are passionate to play golf that’s not gonna get you to your corner office. So, you have to be a little realistic about your passion, business. In terms of how they should manage their career. And it's a plan that you have to put together and you have to review it every so often. So for the first 10 years I tell people about their career...So let me phrase this in the following way.
Somebody who graduates from college typically is in the early twenties, they want to work a 40 years of paid career. And then they're going to work beyond that, doing other things, because typically organizations will not pay you beyond that. So that's the reality of how careers have to be managed. So, for the first 10 years of your career, I recommend to people that they should focus on learning and networking. And the reason you want to do this in your first 10 years is because once you learn how to learn and you learn how to network.
Then your ability to do that, the rest of your life is so much better. It's much harder to learn when you are in your mid-forties. If you haven't learned networking in your first 10 years, you'll have it very difficult to start networking when you get older. So you have to do some of these things early and when you are learning, it doesn't matter exactly what you learn during these days.
Today, you're going to do many different things. So if you want to go and trek the Himalayas for one year, when you are 25, Fine do it. It doesn't hurt you that much. You would have still learned something. It cannot be applied somewhere else. So first 10 years, your focus should be mainly on learning and networking
In your second 10 years. Now, I suggest to people, by the time you have completed 20 years of experience in a job, you should be able to say what you're good at. And not only should you say what you're good at, the world should say what you are good at. So, when you come to me and say that no, I have 20 years of work experience in working in this company, that company, that company that's pretty useless. Actually. You need to tell me what has that 20 years of experience done to you? So who are you now because of your 20 years? So, now you are at the early forties, early forties stage. You should already be an expert at something. You should be really good at something that you have done regularly. You say I'm really good at technical stuff, marketing, whatever it is, but there is no place for people who are generally okay at many things, but not good at anything.
And I say this to people that when I'm hiring someone senior in the company typically we are looking at 3 kinds of skills:
FUNDAMENTALS TO HIRE SOMEONE IN AN ORGANIZATION
First is tech sort of domain capabilities, which is our deep domain technology expertise, the second skill we are looking for is somebody who can sell, always important. Anybody who can sell it. Third skills we are looking at as someone who can project manage, keep trains running on time and all that. Now, when you're looking for someone in the mid forties or sort of in the third stage of their career, you're not looking for someone who is.Well, I can do some of this. I can do some of that. Do you want to go, or what is it that you are really good at? Show me one of these things, at least you should be really great at it, should be a really good salesman, or you should be really good at managing people, or you're really good at, and not only should you say, the world should say.
SKILLS REQUIREMENTS TO HIRE SOMEONE IN AN ORGANIZATION
Technical aspect: Expertise in domain capabilities
Selling a product is utmost important. Therefore, find someone who can sell.
Good project management skills
So, that is part of personal branding. And how do you create your own personal brand? So, by the time you're at the end of your 20 year career, you already have an established personal brand and identity. So, you are not dependent on the fact that you have worked for so many years. Those many years of work experience have given you some place to be, and you have a purge to set upon. That you can sit on, right? So that is important to achieve. By the time you completed 20 years. Now, 20 to 30, this is a key thing. You already pushed at a certain place. You have to define where you want to be in your early fifties because the corner offices today go to people in their late forties-early fifties.
If you look at CEO announcements and you'll find that most of the people who get CEO announcements are in their early fifties, you don't see too many people at 60 being. That happens in the army where you have that particular, you have to be 58 before you become a General.
Neelima: (40:36)our POTUS
Anand: Yeah, but that's a different path, this is corporate. But yeah you are right. You have to sort of define where your corner offices are. So now the question is from 40 to 50, let's say 40 or whatever you have, in my opinion, no more than three steps to get to that point. And the reason is that how does somebody pick a CEO? So, if I'm trying to find somebody as a CEO at Persistent, for example, how would I hire someone?
The three ways it's going to happen. Right. I might go find somebody who's already number two in the company and who has been groomed for that job. You take that job. So that's the first, most obvious option. The second option is that someone who is already a CEO in a, maybe a smaller company and joining our assistant does an upgrade.
And the third one may be somebody who was running a business unit already and in a larger company, but the scope of his business that he runs, even though it is not CEO's, is much bigger than what he runs. So you find that, okay, fine. This is a good place. Now if you want to be there at 52, at 48, you need to be one minus before that.
3 BASIC STEPS TO HIRE A CEO
Find somebody who's already number two in the company and who has been groomed for that job.
Find someone who is already a CEO in a, maybe a smaller company and joining our assistant does an upgrade.
Find somebody who was running a business unit already and in a larger company, but the scope of his business that he runs, even though it is not CEO's, is much bigger than what he runs.
And that's why you have only three steps to get to that. So, that's really what I tell people. So the question is at early forties, you better be in a situation where you have some of your own expertise, what your strengths are, and then you can evaluate from that point, how far are you from the corner office?
And at this time you need to readjust your corner office. Maybe you're not going to be CEO ever, because it's going to take your 10 steps to get to that point. You only have three. So maybe you should define that my corner office as just a CTO or my corner office or my corner office to be CEO, but in a smaller company or whatever it is. And at the end of it, happiness as a function of managing expectations. If you get what you expect, you are happy. So part of being there is to define something that brings you close to where you need to be, rather than trying to have an aspiration that's completely misaligned with your, where you are in reality. So, this is a good, good time to make that kind of discussion.
Ankur: Are there like other hacks to get to that corner office? And I asked this question, is that especially people who come from India or subcontinent, you talked about the expertise phase, the second phase. Only if I can learn for a few more years about this thing, I'll get to that next step. And then they learn and the technology has moved on. Okay. Well, I kind of learned this other technology and these other things, and they keep on chasing this learning thing. And then you've got these other people who continue to rise in the organization.
Are there other aspects, other subtle aspects that one has to be conscious that like, self-promotion, self-marketing, being in the right good books of, the CEO, the things that are obvious, but often people ignore in the quest and thirst for just constantly learning, but then there are other people, right besides them who are just kind of zooming past them. Anything else stood out for you in terms of, you know?
TIPS TO GET ONE’S CORNER OFFICE
Anand: (43:32) You're right, actually, but see, the way I cover this is that, in your early 10 years, first 10 years, you should learn how to network. By networking. I look at networking as a much broader thing. I think, to some extent, networking is all about trying to know the right people, having the right mentors, having a way to have a network of friends and people where you can discuss some of these things and you have a way to get ahead. So, the networking part is very important and spending a lot of time thinking about what exactly that means. And when we do these workshops again, I spend a lot of time trying to explain to people how networking needs to be done and how it is important.
And to some extent, that gives you the organizational awareness and sort of the sounding board for you to realize where you are in, where you want to be, and that sort of having the right mentors. And this is your responsibility. One of the very important things, especially for Indians in India, is that you have to understand that your career is your responsibility, not the company's responsibility. I get a lot of people who come and tell me, or I've worked in the company for 10 years, 15 years. company should do this for me. Company should give me a career path. What is my career path? It's not the company's problem, man. It's your problem. You have to define your career path and the company has to enable you or be transparent enough and share with you how you will get to that plan. But the responsibility of your career belongs to you and nobody else.
And that's something that people tend to miss out on in India quite a bit, because we are used to following the guy in front of you and just keep following them. Right. That's the idea. Everybody is going to this college, I will also go there. Everybody's doing engineering, I will also do engineering. Everybody joined the first job that you've got. You just go join everybody's quitting, so I’ll quit. We just follow the herd. So that you need to, you have to take responsibility and that's very important. And, unless you do that, you will not succeed.
Neelima: One question on networking. You can do consciously, but it builds up over time one and there is a lot of serendipity that comes in, right. Because if you try too hard, it is very-very obvious. So any tips there on how to network well, over time?
HOW TO NETWORK EFFECTIVELY WELL OVER TIME?
Anand: (45:43) Yeah. So two things I would give people to think about. One is that a lot of networking or people you remember are those who are people who you do, useless things, right? There is one thought experiment I asked a lot of people to do, and you should try this out. Who are your best friends today? People you hung out with, from college and all that. It's not that topper in the class or that one particular billion kid who was something, it's not those guys. It's those people with whom you've done totally whatever you hung out, had chai (tea) or had coffee or had parties or whatever else. So, the point is that these kinds of things are things that are more likely to carry you along is something that you should think about.
The other question I asked, and these are all, you can figure it out for yourself. What are your best friends? Why are they your best friends? When did they become your friends? Why do you remember some people, not some other people? So those are questions. If you ask yourselves, you will get your own answers.
So this particular question I've tried asking, so you meet a lot of people every day. Why do you remember some people and not some other people? So why are some people more memorable than the others? Why do you remember some, not the other? So that's a good enough question to ask yourself. Why do I remember him and why not someone else? What did he do? In LinkedIn, my network that I can still remember. And if that's what he did, maybe I should do something similar. So those are the ideas that you should look at. And I think a lot of this has to do with, of course, if you are too loud, then people will cut you off. So that is a little certainty needed in this, and it takes, it takes a while, then there's other networks as well. So, once someone they can introduce you. So it's a mutual network thing, and everyone likes to tell other people and introduce each other and all of those things.
Ankur: Yeah. Great advice. Thank you for the details on this Anand, I know you've been super generous with your time. We've got a couple of questions for you still left on the pod? The big one that we had was about the startup scene in India. So obviously the startup landscape looks really different today than it did, like even five years ago.
You have companies like Paytm and BYJU’S and OYO and a whole bunch of unicorns now. , as a matter of fact, India with 21 is ranked fourth, right behind the UK in terms of number of unicorns. Why do you think that is? What's changed over the last few years? Obviously one is like, obviously there's a lot of liquidity. But are you seeing any fundamental tectonic shift that's leading to so many unicorns?
WHAT HAD LED TO SO MANY UNICORNS IN INDIAN MARKET?
Anand: (48:21) Yes. So that is, let me sort of separate these out into two different markets. So, one is India as a market has become a very attractive market. This is not the case, 25-30 years back. So, when we started with Persistent as software, nobody would have bought in India, nobody built databases as optimized as us. So there was a very different world at that time. Today, what has happened is that, with bank accounts with everyone, the fact that you have millions of phones and network, internet connectivity, and everything else that has happened.
And the whole ethos of younger people in the country has made it possible for what they call the 750 million people in India who have recently been empowered with the internet, bank accounts and a whole bunch of other things has really created a market that is completely underserved by international products and products that are at large available.
The top 15% of India would buy something that is English, and it's pretty much common. But if you look at movies, entertainment, the middle group, that 750 million, it's a very large population. That has become a very attractive market for a lot of these companies. If you look at education by juveniles, they're not just catering to the top 10, 15%. They are actually going after the next 750 million people i.e. OYO and all of them. So, that's really created that market availability has made it possible for products that can reach a broader base now have a very large following. So that has really been one thing.
See you need role models and if you have people who are able to do that and, more and more of these things happen more and more people follow doing them, younger people are willing to take a chance today. And I think it's the right time for them to do as well as to take a chance, work with startups, work with early stage companies, and that has been helping companies.
And there's a lot of buzz right now in India, everybody from the prime minister down and stuff and work startups. And So it's going all over the place. So yeah, it's pretty exciting at the moment to be in India for a startup or to start a startup.
Ankur: What are some of the challenges that still remain, that's coming in its way to become the next Silicon Valley, beat Bangalore, Pune or India in general. What are some of the challenges or opportunities?
Anand: (50:41) So, the startups are definitely happening in India. But the ecosystem I think is still a distance away from being what it is in the Bay area or in the Silicon Valley. So, it just takes some time before people start to see enough people who know how to run these and how to be successful. There are lots of me product models(51:04) and things in the market at the moment and the deep tech startups that are very few in India.
I think the big early stage investments are not as common. The unicorns are those where the market is large. So they are going after a bigger market. Many of these tech companies are still early in the game. I think it'll take a few years. So I think we'll get to a point where more and more people would be willing to take big tech bets and that's not quite happening yet, but I think we'll get there. See, the thing is that in India, at least at this moment, there's a lot of energy amongst the young people and people who want to try different things. And a lot of people who are trying things out, our depth of doing sort of the senior tech layer of people who have invested 30 years or currently as being, expert at some technical area of okay 5G and some other crazy things in the corners.That community of people in India is solely missing.
So, we don't have as many people who are sort of my age, who are deep techies at the moment, and they have not jumped into the startup world in a big way. So a lot of the guys who are doing startups are the younger ones and they are good at some of these things. So that's sort of the difference where you look at say the kinds of companies that you've worked in. Those tend to be more Silicon Valley oriented because they have senior tech people who have deep understanding and that community of people is still missing in India. And that's one of my missions as well, to try to see how to keep people remain techies, or be involved in the deep technology side of things.
Neelima: Ankur and I, we worked in B2B Enterprise Security Space now for years. And we still see that if you have to start enterprise security or any kind of enterprise business, the first set of customers or adopters are still in the US. Do you see that changing anytime soon?
Anand: (52:57) Yeah, I think it is starting to change today. So, the big banks in India and other people in India are starting to buy products in India. And we are deploying some pretty innovative solutions in tech. And I think in a big way is starting to happen. So now companies are starting to happen that have seen scale locally in India, and they'd be able to contribute.
But see that the challenge in India has always been the fact that manager roles tend to pay better. People prefer to be managers first and not really deep decades. So, any chance that a person gets to sort of, become a manager, they dump, they kind of run away from their deep coding or whatever I said is needed. So, the best people ended up being managers. And I guess that is part of the problem why we don't see that many people focused on deep technology in that sense.
Neelima: Last question of the pod, and we've learned so much, we know you're involved in a lot of foundations and nonprofit initiatives, that especially one where you're helping small businesses. Can you talk a little bit about that and what was the thought process around giving back?
INSIGHTS ON deAsra FOUNDATION
Anand: (54:07) Yeah. As everyone goes through this thing and I reached my fifties and I sort of figured that I should be thinking about what next, what do I do poster time? And then what do I do and how do I start to contribute? And then I started looking at some of the kind of work that other people have done such as Bill Gates or Michael Dell and all these guys have their own foundation. So, I set up my own foundation. It's called deAsra foundation. So ‘de’ is for Deshpande and these four ‘Asra’ are the initials of the family members. So it is deasra.in for Indians. And the idea was let's pick one problem. That is big enough that it lasts several years, 10, 15, 20 years to work on.
So, being aware, I think jobs are a big issue in India. We have twenty-five million people at every age in India. And you do create 15 to 18 million jobs every year. And these jobs are not going to happen through large companies and governments. Most of these jobs in India are going to come from very small businesses.
There were 10 people and a corner food counters, and duties were on services and urban segments. That's the biggest, fastest job growing industry or that’s where jobs are happening. And we sort of came to the conclusion that if you want to do something meaningful, we need to make sure that the sort of job creators happen at scale rather than just a job seeker. So, how do we create jobs? And then when we studied the business models of very small sort of tailors and why they should have to figure out how to run their business, they were all very similar. So can we template these out, based on every small sort of business to not have to figure out everything from scratch, but use what is already there.
So we set up a bunch of things to make that happen. And, that's been a focus. Our focus is work on the really small 2 to 10 employee type businesses. There's like say five lacs or say 1 crore in terms of revenues, And these are the food counters, dance classes, anybody who wants to start a business. So we have everything that a small business needs end to end preset and predefined. We had them get bank loans. How do you get your marketing set up? How do you hire people? How do you go online? All of those things we have made that happen. I've been doing this for about six years now, and we have crossed 110 thousand to 220 thousand businesses that have benefited or have come to our platform. We're growing quite well now and would be starting to sort of, we are doing a new focus on women entrepreneurship right now in partnership with a bunch of people. So that's the next big thing that I'm working on on this?
Neelima: For our listeners' benefit, if they want to reach out. Is there a website?
Anand: (56:55) Yeah. So that is a website it's https://www.deasra.in/ . And they should be able to find information about what we are trying to do and how we want to go about it. So this is one problem I'm really passionate about in the sense that we need people in India, the startup stuff has always been very sexy. It always talks nicely about the one million, one crore, five crores, 1 million, 10 million, all those kinds of things. Everyone can be self-employed and that's sort of where we are headed. Gig economy is going to happen and all of those kinds of things. So it's, I think it’s important that every small person who wants to run a photography thing or anything of that kind, they should not be struggling to do that.
We need to encourage and help them to be successful. And it's a few things that they do, right. They'll be doing quite well for themselves. There's enough happening in India that people at that stage can make a decent amount of money from these kinds of businesses. We want to make sure that they don't fail. And that's what we have been working on. I'm quite open to suggestions, ideas, and we have built a 40 people team working on these and then the sky's the limit. There is no shortage of things to do in this market.
Neelima: Absolutely. For the workshops that you mentioned, if there are people who want to reach out, what is the best way to get there?
Anand: Well, just write to me. I don't have a very structured platform to do any of these things. Usually Saturdays are what I do for these kinds of things. But happy to help wherever, however it happens.
Ankur: Awesome.Yeah. That just about wraps up this episode of ZeroToExit , Anand. It's been a pleasure to have you on the pod. We learned a lot in this process and I'm sure our listeners are going to learn a lot about the startup scene, growing careers, how to live a fulfilling life, so it's been super informative. You've been super generous with your time. We appreciate that and hope to have you soon on the podcast.
Anand: Hey, thanks a lot Ankur and Neelima, it's been a pleasure chatting with you and thanks for inviting me. I really look forward to chatting with you more in the future.