The Secrets of Success
October 1 2005 by Kim Girard
When Indu Navar, chief executive of Serus, needed an angel investor for her software startup in 2001, she turned to the most obvious place to find it: her own community. She met Ronjon Nag, a handwriting recognition software pioneer at a wireless technology event hosted by The IndUS Entrepreneurs, a nonprofit networking group. Nag promised her $100,000 after she landed her first customer. “You don’t even know me,” Navar recalls telling Nag. Not a problem for Nag, who knew Navar by reputation as one of Silicon Valley’s most promising young women engineers. “You remind me of myself at your age,” he said.
Navar and her investors, who now include Gateway Design Automation founder Prabhu Goel, Diamondhead Ventures co-founder Raman Khanna and Wind River Systems Vice Chairman Naren Gupta, have more than their ethnicity in common. All are involved with the The IndUS Entrepreneurs, or TiE. Since its founding in 1992, Santa Clara, Calif.-based TiE has created one of the most powerful networks in Silicon Valley, arguably in the entire global technology industry. Its senior members helped to fund or found companies like Brocade Communications, Exodus Communications, Juniper Networks, Cerent and Hotmail.
The daughter of a Bangalore entrepreneur, Navar knows how lucky she is to be able to have the TiE network. “It’s so intense,” she says. “There’s always this connection you find (with members). It’s not just about business. You connect back to your childhood, your mother, your grandmother, Bangalore, what streets we lived on.” Earlier generations of Indian engineers who flocked to Silicon Valley during the 1970s and 1980s might have had similar connections, but they did not enjoy Navar’s funding options or her network of successful tech elders.
With membership open to anyone with roots or business interests in India, Bangladesh, Nepal and Sri Lanka, TiE now spans nine countries, from its California hub to nearly 42 global chapters. TiE even ignored historical rivalries by moving into India’s arch political enemy, Pakistan. But aside from the U.S., India is where most of the group’s efforts have been focused and those efforts have helped spur India’s overall technological emergence. “Over the last six or seven years, India’s economy has skyrocketed and TiE and India are feeding off of each other,” says Umesh Ramakrishnan, co-founder of executive search firm Christian & Timbers, who speaks at TiE events. “We’ve not even begun to see the results of what these folks have begun to put in place over these past several years.”
Today, TiE events are a parade of the Who’s Who among CEOs and VCs of Silicon Valley, from founding Sun Microsystems CEO and Kleiner Perkins venture partner Vinod Khosla to former McKinsey CEO Rajat Gupta to former Hotmail founder Sabeer Bhatia, who sold his company to Microsoft in 1998 for $400 million. “TiE is the best kept secret,” says Bhatia, who in April launched a new startup, Bangalore-based collaboration software startup InstaColl. Others jokingly call TiE the Indian Mafia, the invisible hand behind at least 300 startup companies at any given moment.
TiE’s network includes more than 10,000 global members. At its core are 1,200 senior “charter” members, brought into TiE’s inner circle by invitation only. Of that senior group, 122 are company founders, chairmen, presidents or CEOs. The rest are executives or partners at various firms. Add a troop of 500 volunteers like Bhatia who are not only increasingly investing in or starting companies in India, but speaking publicly to inspire more Indian entrepreneurs and the TiE network becomes even more powerful. “I travel the world over (to speak on behalf of TiE),” says Bhatia, who recently returned from Australia’s TiE chapter. “But I do it on my own dime for me. It’s to motivate young entrepreneurs.”
While TiE’s Silicon Valley chapter is the organization’s hub, spreading the TiE gospel is the charge of its chapters. About every other day a TiE event is held around the globe from Pittsburgh to Melbourne, Australia. Discussions range from the basics of entrepreneurship to outsourcing opportunities to investing in real estate in India. In the U.S. outside of the Valley, Boston and Austin, both college towns, are the busiest TiE chapters.
Gururaj “Desh” Deshpande, co-founder and chairman of Sycamore Networks who started TiE’s Boston chapter in 1998, says it took a few years for the group to gel, largely because they had to figure out how to convince potential charter members that it was worth $1,500 to get some free cups of coffee and attend networking dinners. “We gave that up and said, €˜For $1,500, you get to help others’,” he says. The philanthropic pitch seemed to work. Boston’s chapter grew to 100 charter members, a third who are very active. About 750 members, like most TiE members, pay $100 to join. “People seem to find value in sharing experiences,” Deshpande says, adding that interacting with the next generation has been invaluable for him. “At universities every year you get a new crop, whereas companies age together,” he says. “It’s important to keep in touch with new ideas and new blood.”
Let 1,000 Entrepreneurs Bloom
Sitting in a circle at TiE’s headquarters recently, a group of TiE’s past presidents banter enthusiastically about the new generation, many of whom are choosing to stay in India, where entrepreneurship is exploding, instead of hopping on the first plane to Sunnyvale. To the right, there’s Sridhar Iyengar, a former KPMG partner who directed the firm’s operations in India. Iyengar says he sees more than 100 hopeful entrepreneurs a year. Out of that 100, he’ll actively mentor 5 or 10 and commit many hours of his time to a couple. He’s invested in a dozen companies right now, though he doesn’t sit on any boards. Next to Iyengar is Kanwal Rekhi, who sold his computer networking company Excelan in 1989 for $200 million to Novell before becoming its first Indian CTO. Since 1995, Rekhi, an outspoken critic of discrimination against Indian entrepreneurs in the 1980s, has seed-funded 53 companies, including a $1 million investment in Exodus that was worth $130 million by 2000.
Suhas Patil, who sits in the middle of the group, is the soft-spoken grandfather of this organization. Patil, who was TiE’s first president, founded semiconductor maker Cirrus Logic as Patil Systems in 1981 and is considered a Silicon Valley icon for revolutionizing the way computer chips are made. Aside from his board seat at Cirrus, Patil sits on two boards today, both which typify the new startup, splitting their work force between Silicon Valley and India: Mountain View-based software maker Digite, which develops its products in Mumbai, India, and Sunnyvale-based Cradle Technologies, which makes semiconductors for multimedia applications and develops products in Pune, India.
Like all TiE presidents, Raj Jaswa, who co-founded Selectica, a software maker that boasted one of the hottest IPOs of 2000, spent a year shadowing the outgoing TiE president to learn the ropes. Jaswa, who is TiE’s current leader, works with a $1.5 million annual budget spent largely on conference planning and running the office. He meets with about 15 young entrepreneurs a month. These mentoring sessions are offered to all 1,500 TiE members. Whether you want help refining a business idea, help with career planning or advice on how to grow your company, Jaswa says, “You get an hour face-to-face a year.”
Aside from providing mentors, TiE hosts entrepreneurship classes, a bargain at $25 per session. These classes teach young engineers how to build business plans, get incorporated, raise money and build a team. “It’s a mini MBA done in a very Silicon Valley style,” says Jaswa, whose Silicon Valley chapter hosts 20 to 25 of these sessions per year. “The difference (between TiE and an MBA) is not only do you get pointers about business but you make contacts. The Rolodex is more important than what you know.”
Hotmail’s Bhatia benefited from TiE’s Rolodex in 1995, when he was introduced to Farouk Arjani, a limited partner at venture capital firm Sequoia. “I said, €˜I have an idea for a company. Is it OK if I send you a business plan?’” Bhatia says. Arjani gave him his home number and served as a sounding board for the 27-year-old engineer, helping him fine tune his business plan and find venture funding.
While TiE is there to tap its Rolodex for members, the group, as a nonprofit, never invests in any company directly. Charter members who believe in an entrepreneur invest personally.
Despite all the money that TiE members invest (by some estimates, it’s been over $100 million since TiE was founded), Seshan Rammohan, executive director of TiE’s Silicon Valley chapter, insists that for TiE charter members, the organization is about more than wealth creation. “There’s a spirit-a true giving spirit that is more than dollars and cents,” he says. “It’s the Boy Scouts applied to business. It’s almost evangelical without being religious.”
For an entrepreneur, seed money might not be the only thing that matters but without it, you’re dead. And TiE’s connections go deep. In 2002, the Silicon Valley Bank, a top bank tapped by technology startups seeking credit, signed on as TiE’s first global sponsor. Venture capital firms, including Kleiner Perkins Caufield & Byers, New Enterprise Associates, Mohr Davidow Ventures and Bay Partners, are among TiE’s corporate sponsors. If a TiE charter member likes an entrepreneur’s idea, he can run it by a venture capitalist. “VCs want access to the (TiE) charter members for deal flow and recruitment, getting a business plan validated, getting a reference on someone or finding executive talent,” says Vish Mishra, a founding TiE member and partner at Clearstone Venture Partners, which has done 11 deals that he calls “TiE-enabled.”
Like many organizations, TiE had humble beginnings. When current president Kailish Joshi arrived in Silicon Valley in 1992, he hosted a lunch for 40 Indian friends, many who had faced the grueling and often fruitless battle of getting venture funding. Though they spoke English, were armed with Ph.D.s and had worked at companies like IBM and Intel, they had few references when they met with Sand Hill Road VCs, who preferred investing in safe, albeit white, CEOs. In 1983, when Patil left his lab at the University of Utah for Silicon Valley, he said he made the rounds trying to get venture capital for his startup. Growing a beard to make him look older didn’t bring much success until Patil found a mentor in Fred Nazem, who ran his own venture capital firm. Jaswa and his partners were rejected by six VCs, mortgaged their homes and “borrowed from our mothers and brothers-in-law” to get the $600,000 they needed to bootstrap Selectica.
At first, the fledgling TiE held dinners at the San Jose Hilton. From there, it took off. When TiE booked the Fairmont in San Jose in May 1994 for its first TiECon event, Suhas Patil expected 150 people. An unexpected 500 people crowded in. “The Fairmont was a defining moment,” says Iyengar. But it wasn’t until TiE’s name popped up alongside the IPOs of the Internet boom that members realized they had a continuing movement on their hands. By 1998, there were 788 Silicon Valley high-tech companies led by Indians, according to Dun & Bradstreet.
Today, TiE wants to include more people of non-IndUS backgrounds. Some 6 percent of all charter members aren’t Indian and the number is growing. In June, Chris Byrne, former president of the Churchill Club, became a charter member.
So as TiE moves into the mainstream, perhaps it has a thing or two to each all American entrepreneurs about how to bootstrap themselves to success-help one another, invest in good ideas, mentor young talent and network, network, network.