INDIA- a land of limitless potential-Gururaj Deshpande

On a lazy, rainy Sunday afternoon in Bangalore, the only thing that would have prompted me to move out was a unique opportunity: To meet the person who, in the heady days of the dotcom revolution, became one of the richest persons of Indian origin in the world.

His net worth, at its peak exceeding $4 billion (Rs18,800 crore now), may have whit tled down but his entrepreneurial zeal and his pas sion for technology have not ebbed. Like many Indians living abroad who prefer an acro nym, US-based Guru raj Deshpande likes to be called Desh. Though his primary expertise is in IT and telecom, he is a serial entrepreneur, mentor to several profit and non-profit ventures, and a philanthropist.

With his neatly combed silver-grey hair, the clean-shaven Deshpande looks much younger than 60. Given that he is on one of his fleeting visits to India, our rendezvous on a Sunday is not surprising.

Neither is the venue--the rotunda drawing room at his brother-in-law N.R. Narayana Murthy's house (Murthy's wife Sudha and Deshpande's wife Jayashree are sisters).
There is this apocryphal story of how Deshpande used to be introduced as Murthy's brother-in-law in India, and vice versa in the US.

Born in Hubli, in Karnataka, Deshpande graduated in electrical engineering from the Indian Institute of Technology, Madras, and went to Canada to do his master's and PhD. He used to be an academic before a fellow professor got him into the world of business.

Unlike Murthy, who has focused on Infosys Technologies Ltd since its start in 1981, Deshpande has started and taken public three multi-billiondollar companies.

In October, A123 Systems, of which he is the chairman, had a spectacular debut on Nasdaq, raising $438 million and trading at a 50% premium on the offer price on the day of listing. A123 develops and manufactures advanced lithium ion batteries and battery systems.

Today, Deshpande says he divides his time equally between each of his not-forprofit initiatives and his six businesses-- Sandstone Capital, Sycamore Networks, A123 Systems, HiveFire, Tejas Networks and Airvana Inc. He is the chairman of the first five and an investor in the last.

His non-profit initiatives include an innovation centre at the Massachusetts Institute of Technology (MIT), an alumni network at IIT Madras--he is on the institute's board as well--The Indus Entrepreneurs, the Public Health Foundation of India, Social Entrepreneurship Sandbox (an organization that helps NGOs incubate ideas) and Akshaya Patra, a meal programme for impoverished school children.

Deshpande says things have changed--India today offers more opportunities for entrepreneurship than the US.

He counters my scepticism: "Look at the scale and variety of challenges which need to be addressed in the Indian market.
They are mind-boggling. While cutting-edge technology might still get done in the US, the Indian environment is conducive to entrepreneurs, if you can identify market opportunities and address them."

He adds that unlike the late 1970s and 1980s, entrepreneurs in India now have access to angel investors, venture capital firms and mentors.

When he moved from academia in 1981, initial hiccups in entrepreneurship preceded the eventual successes. He worked for Codex Corporation, a manufacturer of modems. While Codex profited handsomely from Deshpande's technological expertise, he realized what his strengths were. He co-founded Coral Networks, a router developer, in 1987.

But product delays and disagreements with his financial partner forced him to quit Coral. He returned to India briefly, but decided to go back.
With most of his money gone, there were times when the family had to go without health insurance, a dangerous situation in a country where medical services are expensive.

Did he ever contemplate quitting? "It's never easy. Those tough times taught me a lot. The key to being a successful entrepreneur is the ability to tolerate pain, face challenges, have the humility to correct oneself midway, if required, and self-belief."

It was this innate confidence which made Deshpande start Cascade Communications six months later, in 1990. From a one-man show, he built it into a $500 million company before Ascend Communications acquired it for $3.7 billion in 1997. By then, about 72% of all Internet traffic was passing through Cascade products.
Ascend itself was eventually acquired by Lucent for $24 billion, mainly because of its Cascade portfolio.

Deshpande started Sycamore Networks next. In October 1999, when Sycamore debuted on the bourses, it had a market cap of $18 billion. His 21% shareholding in the company made him one of the richest persons in the world.

Sycamore has struggled since, and lost $35 million in the latest quarter. "The landscape changed," Deshpande says.
"Markets changed. But Sycamore is still strong compared to some of its peers. It still has (close to) a billion dollars in cash. I am confident it will do well."

Since the late 1990s, he has been investing in companies which either address the Indian market or have a large role to play in the country. One such, Tejas Networks, involved in optical networking, has emerged as a strong player in its segment.

Deshpande, who is the chairman of Tejas, becomes animated when he talks about the firm's potential--it has raised $75 million in venture funding so far.
"After petro imports, telecom equipment is another area where India imports a lot. With more than 500 million telco subscribers, the market potential in India is huge. But there are few Indian telecom equipment manufacturing companies. While Tejas is doing its bit, there is potential for several more ventures like Tejas."

I ask him whether we will see big telecom companies such as China's Huawei or ZTE emerge from India. "Within the last 10 years, from around a $1 billion in sales, Huawei and ZTE today would have combined sales of $30 billion. While this is impressive, those companies get tacit backing from the Chinese government. In the long run, companies that get market validation and not necessarily government support are likely to thrive better. India (the government) could do more to encourage telecom manufacturing."

With his international experience, does he have any advice for his brother-in-law, who is launching Catamaran (the venture capital fund Murthy is starting with a Rs630 crore corpus, mainly contributed by his wife Sudha)? "We talk to each other on a regular basis but not on investments. I am sure he has his own ideas. For now, I am not looking at co-investing," he says, smiling.

He spends a lot of time on the Deshpande Centre for Innovation at MIT, to which he contributed $20 million. "The quality of some ideas there is incredible.
They have the potential to impact society in a fundamental way and I am excited by it."

The Akshaya Patra is another cause close to his heart. He has contributed his own money and raises funds for the foundation.
Deshpande recalls a recent event in Haiti in which "Bill (Clinton) was amazed at the scale of Akshaya Patra. We feed a million children a day (in India) and it is increasing". The Clinton Foundation feeds around 70,000 children in Haiti.

Deshpande, who is also mentoring his son Pawan at his start-up HiveFire adds: "I want entrepreneurs to dream big.
India today is full of opportunities. The potential and possibilities are limitless."

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venkatesha.b@livemint.com
On a lazy, rainy Sunday afternoon in Bangalore, the only thing that would have prompted me to move out was a unique opportunity: To meet the person who, in the heady days of the dotcom revolution, became one of the richest persons of Indian origin in the world.
His net worth, at its peak exceeding $4 billion (Rs18,800 crore now), may have whit tled down but his entrepreneurial zeal and his pas sion for technology have not ebbed. Like many Indians living abroad who prefer an acro nym, US-based Guru raj Deshpande likes to be called Desh. Though his primary expertise is in IT and telecom, he is a serial entrepreneur, mentor to several profit and non-profit ventures, and a philanthropist.

With his neatly combed silver-grey hair, the clean-shaven Deshpande looks much younger than 60. Given that he is on one of his fleeting visits to India, our rendezvous on a Sunday is not surprising.

Neither is the venue--the rotunda drawing room at his brother-in-law N.R. Narayana Murthy's house (Murthy's wife Sudha and Deshpande's wife Jayashree are sisters).
There is this apocryphal story of how Deshpande used to be introduced as Murthy's brother-in-law in India, and vice versa in the US.

Born in Hubli, in Karnataka, Deshpande graduated in electrical engineering from the Indian Institute of Technology, Madras, and went to Canada to do his master's and PhD. He used to be an academic before a fellow professor got him into the world of business.

Unlike Murthy, who has focused on Infosys Technologies Ltd since its start in 1981, Deshpande has started and taken public three multi-billiondollar companies.

In October, A123 Systems, of which he is the chairman, had a spectacular debut on Nasdaq, raising $438 million and trading at a 50% premium on the offer price on the day of listing. A123 develops and manufactures advanced lithium ion batteries and battery systems.

Today, Deshpande says he divides his time equally between each of his not-forprofit initiatives and his six businesses-- Sandstone Capital, Sycamore Networks, A123 Systems, HiveFire, Tejas Networks and Airvana Inc. He is the chairman of the first five and an investor in the last.

His non-profit initiatives include an innovation centre at the Massachusetts Institute of Technology (MIT), an alumni network at IIT Madras--he is on the institute's board as well--The Indus Entrepreneurs, the Public Health Foundation of India, Social Entrepreneurship Sandbox (an organization that helps NGOs incubate ideas) and Akshaya Patra, a meal programme for impoverished school children.

Deshpande says things have changed--India today offers more opportunities for entrepreneurship than the US.

He counters my scepticism: "Look at the scale and variety of challenges which need to be addressed in the Indian market.
They are mind-boggling. While cutting-edge technology might still get done in the US, the Indian environment is conducive to entrepreneurs, if you can identify market opportunities and address them."

He adds that unlike the late 1970s and 1980s, entrepreneurs in India now have access to angel investors, venture capital firms and mentors.

When he moved from academia in 1981, initial hiccups in entrepreneurship preceded the eventual successes. He worked for Codex Corporation, a manufacturer of modems. While Codex profited handsomely from Deshpande's technological expertise, he realized what his strengths were. He co-founded Coral Networks, a router developer, in 1987.

But product delays and disagreements with his financial partner forced him to quit Coral. He returned to India briefly, but decided to go back.
With most of his money gone, there were times when the family had to go without health insurance, a dangerous situation in a country where medical services are expensive.

Did he ever contemplate quitting? "It's never easy. Those tough times taught me a lot. The key to being a successful entrepreneur is the ability to tolerate pain, face challenges, have the humility to correct oneself midway, if required, and self-belief."

It was this innate confidence which made Deshpande start Cascade Communications six months later, in 1990. From a one-man show, he built it into a $500 million company before Ascend Communications acquired it for $3.7 billion in 1997. By then, about 72% of all Internet traffic was passing through Cascade products.
Ascend itself was eventually acquired by Lucent for $24 billion, mainly because of its Cascade portfolio.

Deshpande started Sycamore Networks next. In October 1999, when Sycamore debuted on the bourses, it had a market cap of $18 billion. His 21% shareholding in the company made him one of the richest persons in the world.

Sycamore has struggled since, and lost $35 million in the latest quarter. "The landscape changed," Deshpande says.
"Markets changed. But Sycamore is still strong compared to some of its peers. It still has (close to) a billion dollars in cash. I am confident it will do well."

Since the late 1990s, he has been investing in companies which either address the Indian market or have a large role to play in the country. One such, Tejas Networks, involved in optical networking, has emerged as a strong player in its segment.

Deshpande, who is the chairman of Tejas, becomes animated when he talks about the firm's potential--it has raised $75 million in venture funding so far.
"After petro imports, telecom equipment is another area where India imports a lot. With more than 500 million telco subscribers, the market potential in India is huge. But there are few Indian telecom equipment manufacturing companies. While Tejas is doing its bit, there is potential for several more ventures like Tejas."

I ask him whether we will see big telecom companies such as China's Huawei or ZTE emerge from India. "Within the last 10 years, from around a $1 billion in sales, Huawei and ZTE today would have combined sales of $30 billion. While this is impressive, those companies get tacit backing from the Chinese government. In the long run, companies that get market validation and not necessarily government support are likely to thrive better. India (the government) could do more to encourage telecom manufacturing."

With his international experience, does he have any advice for his brother-in-law, who is launching Catamaran (the venture capital fund Murthy is starting with a Rs630 crore corpus, mainly contributed by his wife Sudha)? "We talk to each other on a regular basis but not on investments. I am sure he has his own ideas. For now, I am not looking at co-investing," he says, smiling.

He spends a lot of time on the Deshpande Centre for Innovation at MIT, to which he contributed $20 million. "The quality of some ideas there is incredible.
They have the potential to impact society in a fundamental way and I am excited by it."

The Akshaya Patra is another cause close to his heart. He has contributed his own money and raises funds for the foundation.
Deshpande recalls a recent event in Haiti in which "Bill (Clinton) was amazed at the scale of Akshaya Patra. We feed a million children a day (in India) and it is increasing". The Clinton Foundation feeds around 70,000 children in Haiti.

Deshpande, who is also mentoring his son Pawan at his start-up HiveFire adds: "I want entrepreneurs to dream big.
India today is full of opportunities. The potential and possibilities are limitless."

source: Livemint