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[Topics under debate]: GOOD GOVERNANCE
___Help make this manifesto better, or accept it, and propagate it!___
Vidya has written this interesting article. I'm very happy for CCS and
hope Parth can make a real difference with 7 million dollars.


Date: 24 May. 99

Masters Of The Web 
Vidya Viswanathan 

THE scene: Menlo Park, Silicon Valley. It's a late April evening. The
freeways are lined bumper to bumper with cars, as the after-office crowd
hurries home. But at Gaylord, an upmarket Indian restaurant in the city,
something else is afoot. One by one, some of the big names in the valley
drive in, in their Lexuses and BMWs, and head straight for a table set
for 20 people. This is a gathering of some of the brightest, richest and
most influential Indians anywhere on the face of the earth. Over there,
near the right-hand corner, is Vinod Dham, father of the Pentium chip
and now the CEO of Silicon Spice, one of the most closely-watched
start-ups in the valley today. With his back to the entrance is Shailesh
Mehta, CEO & president of the $15 billion Providian Financial and the
man who is using technology to re-order consumer finance. Then there is
Kanwal Rekhi, one of the first Indians to become a big name in the
valley and who now invests his millions in new ventures; Prabhu Goel, a
"serial entrepreneur" who has started three hi-tech companies so far and
is on the board of five other companies as a private investor.... The
agenda for today's dinner meeting organised by The Indus Entrepreneurs
(TiE), a networking society that brings together thousands of highly
influential Indians across the US: to start a political movement in
India which fosters entrepreneurship and wealth creation.

Don't be surprised if they pull it off -- if this group of Indians has
proved anything, it is that anything is possible.

Over the last few years, with nothing but the power of their intellect
and the sheer determination to win, they have got to the top of the
global technology totem pole and can today drive change in the most
important part of the global economy -- the Internet. In Silicon Valley,
the ground zero for high technology, 40% of all start-ups have an Indian
founder -- a figure that BusinessWeek quoted in its issue in December
last year.

Many of the hi-tech stocks listed on Nasdaq today represent companies
that belong to Indians: K.B. Chandrasekhar's $200 million Exodus
Communications whose fibre optic network carries 30% of all Internet
content traffic and whose servers host such popular websites as Yahoo,
Hotmail and Amazon; Prakash Agarwal's $240 million NeoMagic whose laptop
graphics card has a 50% marketshare; Ajay Shah's $750 million Smart
Modular Technologies which makes memory modules and cards and has
manufacturing facilities in four countries; Suhas Patil's $628 million
Cirrus Logic which makes chips; Narendra Gupta's $120 million Integrated
Systems which makes software for home appliances; his wife Vinita
Gupta's $66 million Digital Link which makes network equipment, and all
this just for starters.

"They call us the Indian Internet mafia," quips Purna Pareek, another
"serial entrepreneur" who sold his Java-based applications server
company Apptivity for $30 million last year. The epithet is
well-deserved. Like the overseas Chinese, the quarter-million Indians in
Silicon Valley, the richest community in the area, support and invest in
one another's ventures and are keen networkers. Chandrasekhar, for
example, is an investor in NexPrise, a valley company started by Ram
Sriram, a former engineering researcher at a Lockheed Martin think-tank.
He has also put his money in CyberBills, an Internet service firm
started by Murali Chirala who earlier worked with Netscape founder Jim
Clarke's Healtheon.

Chandrasekhar is more the rule than the exception. As Indians reap the
rewards of their hi-tech entrepreneurship, they are also turning into
private investors -- 'angels' in Valleyspeak -- in promising new
ventures. It is not uncommon to come across wealthy Indians like Rekhi
who say they have major investments in 10-15 companies. The
well-rounded, rumple-chinned Rekhi, who has watched the action from
close quarters, says that in the US "the economy is reverting to what is
natural" -- dominated by individualistic cobblers, carpenters and
ironsmiths rather than globocorporations like IBM and General Motors.
What matters for success today is an idea, rather than material
resources, and that's why the Indians are scoring. "We are not adept at
mechanics. We are thinkers and mathematicians," says Rekhi.

Correction. They are also dreamers who overwhelm you with their vision.
Ask Chandrasekhar what his vision for Exodus is and he says, without
batting an eyelid: "We want to be the Internet." Spend half an hour with
Sabeer Bhatia, the 30-year-old founder of Hotmail who sold out to
Microsoft for $400 million last year and is now setting up a new
company, and he will convince you that his new software is about to "do
to e-commerce what Hotmail did to e-mail". Ask Vinod Dham what he is up
to with his new company, Silicon Spice, and he replies: "We will do for
telecom what Intel did for PCs."

Carriers of revolution

DON'T underestimate the power of any of those statements. These are men
who have delivered on their promises so far and do not speak lightly.
Take Chandrasekhar, for example. When this Madras Institute of
Technology graduate and former Wipro employee arrived in the US in 1990
to set up an office for Indian software company Rolta, nobody would have
imagined that nine years later he would create one of the world's
largest data-carrying networks. The story began in 1992 when he set up a
software firm in the US called Fouress. A year later, he met his future
business partner, networking wizard B.V. Jagdeesh who then was on a
$100,000 salary. Remembers Chandrasekhar: "He looked at my 99 sq ft
office and said: 'You develop software from here?' But then he saw our
software and couldn't believe it. We were hooked to Bangalore and things
were flowing from there. He agreed to work with me."

The big break came in 1994. In Chandrasekhar's own words: "We were on to
something big. The Internet was just coming along. We figured that this
would be the first ubiquitous network and we decided that our mission
would be that all e-commerce requests or content would be on our
network. We would be the Internet." Translating that vision into reality
involved setting up huge data centres to host the world's biggest
websites and then creating high-speed fibre-optic networks around the US
to carry the traffic. In 1995, Exodus needed funds to create this
backbone, and approached TiE to help find an angel. Kanwal Rekhi called
up three months later to say that he wanted to come over. "In just 15
minutes, he decided that he would support us," says Chandrasekhar. "But
he told us we had a long way to go."

The rest is history. Exodus went public in 1998 and was one of the most
successful IPOs that year. The stock, which began trading at $15 in
March 1998, is now trading at $92 after a two for one stock split in
April. That shouldn't surprise anyone: Exodus' revenues have been
growing by 40% every quarter for the last 10 quarters. By end-1999,
Exodus plans to take the number of data centres from nine to 21 across
the globe. That could make the company a global telecom player. But you
would hardly guess that if you happened to spend a day at his office: he
always finds time to meet someone who just drops by. Here's one reason:
he has just hired a CEO, Ellen Hancock, former chief technology officer
of Apple. She was an executive vice-president at IBM earlier and is even
now a director at Colgate-Palmolive. "The trick is to recruit better
than yourself," says Chandrasekhar, adding: "I have to run to keep pace
with her... Ellen has worked with all the big names."

Chips of the future

WHEN Chandrasekhar builds his networks, the chips that go into them
could come from Vinod Dham's Silicon Spice. "We will revolutionise
telecom," says this tall, soft-spoken man who is considered the father
of the Pentium chip. Already, he has tied up $25 million for the
start-up and hired about 90 engineers. To understand what Silicon Spice
intends to do, remember how Intel changed the entire computer industry.
Silicon Spice's new product, says Dham, "will be a system on a chip". In
other words, a piece of silicon with a built-in operating system and
applications so that it will be able to carry data, voice and video. If
the gambit works, the new chips could become the de facto standard in
all telecom equipment and Silicon Spice one of the hottest names in the
valley. Dham is not an excitable kind of person. Yet you can feel the
power of ideas as you listen. "The PC is now finished," he says. "What
we now need is a low-cost way of connecting to the Internet." Dham
believes that the Net is going to change the way we live. "The Internet
is sneakily getting into your life. All routine things are now going to
be done on the Net." His vision for the future, he says, is that telecom
should be like water, free and available on tap.

       If Dham's ambition is to create the ultimate chip that will fuel
       two-in-one telecom-Internet revolution, 45-year-old Prakash
       Agarwal wants to make chips that will bring richer multi-media
       experience to a mobile Internet user. His company, NeoMagic, has
       found a way to do that: integrate memory and logic in a single
       chip. That makes the chips faster, more powerful and less battery
       consuming. Already, all major laptops are using NeoMagic's chips
for multi-media graphics, giving the six-year-old company a marketshare
of 50%, a turnover of $240 million and a market capitalisation of $600

Agarwal's is no sudden success story. He came to the US when he was just
18 to study at the University of Chicago. He then worked with GE Space
Systems and was one of the earliest Indians to come to the valley, in
1981. He was then employee No. 9 at Cirrus Logic, a chip company founded
by Suhas Patil in 1984. "The air you breathe here makes you want to do
something," says Agarwal. So in 1993, he quit Cirrus Logic to start
NeoMagic. "The new paradigm is computing anytime, anyplace," he says,
explaining his vision.

Today, NeoMagic develops chips for laptops, tomorrow it could be doing
the same for camcorders. Agarwal thinks there are three categories of
appliances where his chips will find use: Playback (hand-held devices
starting from laptops downwards which can surf the Net for multi-media),
Capture (digital cameras and camcorders) and Storage (digital video
discs). Will Agarwal tie up all those markets for NeoMagic, or won't he?
Consultants Ernst & Young think so. They named him the hi-tech
"entrepreneur of the year" for 1998 in Northern California, alias
Silicon Valley.

Meanwhile, Bipin Shah, the CEO of Invox Technology, is already selling a
new chip that could change the way digital voice recording is done.
Today, when a speech sample is stored, it is converted from analogue to
digital and then again from digital to analogue when it is played back.
But this distorts the speech to some extent. Invox has now come up with
a 'flash memory' technique which allows voice to be stored in precise
analogue form. Apart from avoiding distortion, this also makes it
possible to store more voice in the same space much faster. Already,
Motorola, Hyundai and Haitai have started using the chip in their
cellphones. And Invox has filed for 40 patents and got 20.

So is Bipin Shah all tied up in this new venture with no time for
anything else? Not by a long shot. Shah is also an angel investor with
investments in half-a-dozen companies and he usually meets up with them
after work, mostly at night.

The Software Czars

BUT the most attention-grabbing Net effort could come from the Indian
poster boy of the Net, Sabeer Bhatia. He is all keyed up about his new
venture which he says he will never sell. "It is for the long run and
I'll take it public eventually," he says. But what exactly will the new
venture do? "By the end of this year, that is, in the October to
November timeframe, I will give the world a splash. We will give the
world another great service like Hotmail which will change the face of
e-commerce," he promises. According to Bhatia, the war in e-commerce is
yet to begin, for only 25% of potential customers use e-commerce today.
This, he says, is because e-commerce is not very well organised, it is
not easy to find what one wants on the web and not everything is
available. The new service, he says, is what will get e-commerce going.
Already, Bhatia has hired eight engineers. But he will not be passing
the hat around for funds: "I will bankroll it myself," says the man who
probably pocketed $100 million when he sold Hotmail to Microsoft for
$400 million. But why did he leave Microsoft? "I was not calling the
shots. It is a 25,000-man company and is run that way. I had a strong
urge to get back to a start-up," is the reply.

"Here I am," is a phrase that Ram Sriram, CEO of NexPrise, could also
use. Some 20 years ago, this Guindy Engineering College graduate was
working for a start-up in Houston. Today, he markets a software that
allows engineering teams around the globe to build products together.
"The idea is to build a virtual corporation across the world," he says,
adding: "The software will be able to hold computer automated design
(CAD) models, animations, video camera captures and transmit all this
blazingly fast between participants in a project." All this will ensure
that within 10 minutes, a new entrant in a project becomes part of a
project team. In under a day, he could get all the information for the
whole project (which could be a Boeing plane) and also be able to
navigate through it.

Sriram learnt to dream big in Lockheed Martin's laboratory in Palo Alto
which he joined in 1989. "We were doing the coolest of cool things. We
were doing things then that Netscape is not doing now," says Ram. But
Lockheed was not aggressive about commercialising its inventions. So in
1997, when Defence Advanced Research Projects Agency (Darpa), the US
defence research agency which conceived the Internet, made an offer to
Ram to direct a programme to create "agile infrastructure for
manufacturing systems", he decided to take the plunge. Three others from
Lockheed Martin and many others from Oracle and Netscape joined Sriram.
Darpa initially funded the venture, but Nexprise subsequently raised
funds from other investors and now has $14 million to play around with,
and 45 people to realise its dream.

Just as there are no limits to the business possibilities of application
software in the Internet economy, there is no real count of Indian
entrepreneurs trying to mark out a niche for themselves here. Take Ashok
Narasimhan, former CEO of Wipro, for example. He has got $50 million to
back his new venture, Prio, from heavyweights like Microsoft, Intel,
American Express and William Melton, the founder of Cybercash. The idea:
offer discount promotions on the Internet for both electronic and real
stores. Its advantage will be its ability to offer the discount at the
right place when someone is looking for a product. Over time, Prio
expects to have a large database of customer behaviour and store by
store purchase data.

You may or may not come across a Prio discount programme, but it is a
good bet that if e-business picks up in the country you will come across
a software programme called configurator made by Selectica -- a company
set up Raj Jaswa, an entrepreneur, and Sanjay Mittal, a researcher at
the legendary Xerox Palo Alto research centre -- to make Net buying
easier. Remember how, in the early eighties, General Motors started a
grandiose project called Saturn to deliver customised cars where each
customer could configure his own car? To do that, it had to set up a
dedicated network and outlets where customers could visually configure
the cars on expensive workstations. Today BMW does it more
inexpensively. The software is on its website and you can put together
your dream car from your own sitting room. And BMW uses Selectica's
software. So does 3com, HP, Fujitsu, Allied Signal....

The Hardware Champs...

TELECOM networks, chips, software applications... one by one, Indians
are taking pole positions in all the crucial sectors that together form
the heart of the Internet economy. One of those important sectors is
hardware for the Internet pipes that carry 'gigabytes' and 'terabytes'
of information. And surprise, surprise, Indians are already leaving
their mark here. Look at Pradip Shankar, who came to the valley to join
Sun Microsystems in 1989. Eight years later, he quit Sun to found
Netboost, which now supplies 'intelligent' cards that go into the

telecom network equipment that companies like Cisco and Ascend make.

If Shankar is looking for Indian role models in the hardware business,
there are many. Take Infosys chairman N.R. Narayanamurthy's
brother-in-law Ravi 'Desh' Deshpande, for example. He sold his company
Cascade Communications which made network equipment to Ascend for $3.7
billion. He has now started another company called Sycamore Networks,
which makes network 'routers' that can handle 'gigabytes' of data. Or
take Hemant Kanakia, who sold his company Torrent Network Technologies
to telecom giant Ericsson for $450 million (see Freeze Frame, page 8).

But if one were to pick one Indian who personifies the spirit of Silicon
Valley in both workstyle and technical wizardry, it is Prakash Bhalerao,
a Ph.D. from the Massachusetts Institute of Technology who in 1971
designed one of Digital Equipment's first chips. Today he has
investments in 30 companies and is the CEO of four. How does he find the
time? Well, he has rented a 15,000 sq ft office and houses all four
there. He has a peculiar way of defining his job. Many in the valley
have the same idea. The difference is in the speed of execution. Also,
every good engineer has an average of four job offers. So he has to keep
them in the office for 20 hours and keep them happy, too. Sometimes that
even means hiring a laundry and cleaning service to clean up his
engineers' digs. Moreover, who knows where one of them could end up two
years down the line?

Brains in the valley, hearts in india

They are taking over Silicon Valley, but their heartstrings remain
firmly tied to India. They think about their country and go to great
lengths to do something about it. Some of them fund Indian students in
US universities and others, new start-ups by Indians.

"The Independence movement was spearheaded by the likes of Gandhi and
Nehru, all Indians who came back from overseas. It is our turn now to
liberate India," says Vinod Dham, the 'father' of the Pentium chip and
CEO of Silicon Spice. Kanwal Rekhi, the grand old man of the valley
Indians, takes that even farther: "We are a first rate people who live
in a third rate country; this has to change. If people with money like
us with money don't move into politics, people who want to make money
will dominate".

What has brought all these people together is a networking society
called The Indus Entrepreneurs (TiE). The idea was sparked off by a
chance discussion in 1992 when some of them were waiting at Santa Clara
airport to meet the then telecom secretary N. Vittal. Soon after,
entrepreneurs A.J. Patel, Nrupat Bhandari, Ray Vrudhula, Sam Satya,
Kailash Joshi, Roy Prasad and Bipin Shah met at The Marriott in Santa
Clara and TiE was formed. Today, TiE's valley chapter has 100 invitees
and 1,000 regular members, who are all entrepreneurs. It has four other
chapters as well -- Atlantic, Mid-West and Southern California. In 1998,
the group's meeting in New Delhi was attended by over 100 entrepreneurs.
TiE has pledged $7 million (Rs 22 crore) already for the Delhi-based
Center for Civil Society, which they hope will be "a conduit for

They contribute as individuals as well. Venkatesh Shukla, CEO of
WebByPhone, runs the "Foundation for Excellence", which has funded 900
students in India in three years. Prabhu Goel and Kanwal Rekhi have
pledged to fund 15,000 students. "We have no paucity of funds," says
Shukla. They are also bringing technology back. Prakash Aggarwal's
NeoMagic has, for "emotional rather than rational reasons", set up shop
in Kanpur. Ashok Narasimhan's Prio and Vinod Dham's Silicon Chips get
software from Bangalore, while Murali Chirala's Cyberbills sources it
from Hyderabad. Prabhu Goel's Gateway Design designed chips at Noida
near Delhi till it sold out. K.B. Chandrashekar has funded two start-ups
in Bangalore -- Aztec Software and Gray Cell. Chandrasekhar was in India
in early May and spent three days with Aztec. "I want to be involved in
creating at least six or seven world class entrepreneurs out of India"
he says.

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