India Needs Your Ideas ......Coming directly from Horses Mouth....

Perhaps no one else knows better than NR Narayana Murthy the thrills of building an enterprise. On the eve of Power of Ideas 2010, he spoke with Archana Rai about his entrepreneurial journey, hoping more Indians will join this league of ideas nation


HE is one of modern India’s most celebrated entrepreneurs, a person who dared to strike out on his own a full decade before economic reforms transformed the business landscape of the country. In 1981, when Nagavara Ramaraya Narayana Murthy persuaded a group of six engineers who worked with him at Punebased software firm Patni Communication Systems to quit their jobs and join him to build a software services export firm, he was selling an idea whose time was yet to come. But such is the power of ideas, it transformed Mr Murthy’s dream into what is today’s Infosys Technologies—the country’s second largest software services firm with an estimated market cap of $35 billion.


When ET approached him to mentor the second edition of The Power of Ideas programme, his excitement was palpable. “Entrepreneurship is the only instrument to make this a better country. I will encourage any initiative that encourages entrepreneurship,” he said. And why wouldn’t he. Afterall his three-decade long journey has had its share of ups and downs and Mr Murthy cherishes every moment of it.


When Mr Murthy started, the other partners were pretty young and in junior positions. Kris and Nandan had a year’s experience each. Dinesh and Shibulal had two years, Ashok had one years experience and only Raghavan was older than Mr Murthy, who had by then already launched an enterprise, closed it down and reentered the world of salaried work. So when the idea of Infosys took wing, Mr Murthy had a fair notion of what he was staking to follow a dream. “The unstated assumption was that if this new venture failed, the others on the team would take up a job. Whereas I was married, had a daughter, I was not even sure I would get a job if we failed. There was TCS. Wipro was not even there so there were concerns,” he says. But what clinched the decision was the support from his wife Sudha Murty. “My wife said let’s do this. Afterall, I am working,” says the IT veteran, as he looks back at the long career that has propelled him, and the company he co-founded, to a position of global eminence. This ability to evaluate risk appropriately has been a central feature of Mr Murthy’s career. In the late 1970s before he founded Infosys, he set up a company called Softronics in Pune that offered software services for the domestic market. “But very quickly I realised that the domestic market was not ready for software entrepreneurs, so within a matter of a year or so I closed down Softronics and joined Patni Communication,” he says, underscoring the need for entrepreneurs to be alert to changing dynamics.


“And later, at an appropriate time, when I realised that there was an opportunity to look at international markets I founded Infosys,” he adds. As economic liberalisation took India by storm in the early 1990s, Infosys would go onto become the poster child of a country newly emergent on the world economic stage. Murthy and his team of co-founders who first offered shares in their fledgling firm to the Indian public in 1993 would ride the wave of India’s software services boom in the following years leading up to the very successful listing of Infosys stock on the US NASDAQ exchange in 1998. The next year the company raked in $100 million in revenues and by year 2004, would go onto reach the milestone of $1 billion in revenues. Today the market value of the country’s second largest software services firm is estimated at $35 billion.


But it has been a hard and arduous climb from very modest beginnings. The eighties were a decade of toil for the team as the environment was very business unfriendly. It took 50 visits to Delhi and sometimes up to two or three years before they could get a license to import a computer, their first telephone connection came a year after they applied for it.


“We did not have any data communication facilities. We have even have faxed software code. Can you imagine that?” says Mr Murthy, describing the importance of perseverance in the early days of building an enterprise.


As their customers were overseas, the Infosys team would require ten days to get an approval from the Reserve Bank of India to travel abroad. The fledgling company also struggled to raise finances in the absence of a venture capital system and the outright refusal by commercial banks to fund a venture that offered no collateral security.


Even worse, for a business that relied entirely on the number of skilled engineers on the rolls, attracting talent was an uphill task. “We couldn’t hire consultants from outside of India and the mindset of most youngsters was to get a job in government or in a large private sector company, those were very difficult times.”


Around nine years after Infosys was set up, the founders felt they were going nowhere as the friction to business was extremely high. “We thought we would sell the business for some million dollars, but fortunately we all sat down, discussed & debated,” Mr Murthy reminisces. “We chose to run the full marathon and I am glad that we took that decision.”


NRN SPEAK

ON SHARING WEALTH
Right in the beginning, I took the view that I will have to distribute the equity in a much fairer manner among the seven of us. Later we decided we will have to give stock options to every employee, including the janitors.


ON DEALING WITH RISK
I have always said that ships are safest in the harbour, but they are not meant to be there. They have to go into the high seas, weather storms & reach the comfort of a safe destination. It is the same with entrepreneurs as well.


ON SACRIFICES
Whenever you take up an idea that transforms the world and brings a major difference to society and the market, it requires tremendous sacrifice. One has to accept that the sacrifices will be commensurate with the glory that you get.


ON INNOVATION
Professor Peter Drucker once said there are two important ingredients for success of an entrepreneur—innovation and marketing & sales. With innovation you can say that my idea does something that nobody else has done so far.