Move over Sabeer Bhatia, look who’s here

Today, Pruthi, a native of Ahmedabad, simply doesn’t have the time. In any case, buzzing lower Manhattan in a plane isn’t exactly the best way to get your kicks. ‘‘I have put all that aside for the moment,’’ confesses Pruthi, CEO of Niksun Inc, a tech company that specialises in computer security products. Like the rest of the tech world, his company was shaken by the twin cataclysms: the end of the dotcom bubble and the fall of the Twin Towers.

Today, Pruthi has recovered from putting his IPO on hold and seeing customers shrink to a trickle. He still has lots of money from the $30 million he raised during the dotcom boom, and customers are flooding in. ‘‘Sales are growing at over 50 per cent (CAGR), the demand surging after 9/11 settled down,’’ explains Pruthi. ‘‘We now have a number of customers asking us to develop technology in particular directions specifically to address their requirements.’’ That means Pruthi’s company must constantly strive to innovate, innovate, innovate.

Sweathouse coding and extravagant dreaming doesn’t have much place in these difficult days of dime-a-dozen engineers. For the desi techie, this is an era like no other. The tech and telecom markets are plagued with scandal, fallen idols and depressed demand. Innovating — and delivering quickly — for a demanding market seems to be the only way to really get ahead.

It may be a brutal time to be an entrepreneur, but as research by The Indian Express reveals, a second wave of Indian techies adapted to the new realities is garnering funding, grabbing public attention and — again — helping America glimpse the road ahead.

In the last six months, more than 25 firms started by Indian techies attracted a total of at least $500 million in funding from cautious venture capitalists (VCs), corporate investment and other private equity sources. That comes after Indian-American companies startups nearly doubled their share of the US VC pie for the year ending March 2002, says a survey released three months ago by the IndUS Business Journal published out of Waltham, Massachusetts.

Many of tomorrow’s possible stars are quietly at work. Others soar to public prominence, featuring in publications like Fortune and Red Herring. The key to their success: doing new things, cheaper and better.

‘‘Innovative technology, experience and perseverance,’’ says Rajeev Madhavan, are the qualities it takes to build a company during a downturn. Madhavan, CEO and founder of Magma Design Automation in Cupertino, California, has just been voted one of America’s top ten innovators for 2002 by Red Herring.

Madhavan, son of a retired customs officer from Kerala, came to the US in the early 1990s and made three attempts before he hit pay dirt. Magma is a rare startup that not only went public but has a market capitalisation of $ 400 million. It is today the fourth-largest company in the electronic design automation industry, supplying unique software tools to cost-conscious companies that design computer chips.

So grant this Karnataka Regional Engineering College (KREC) alumnus his indulgence: an S-series Mercedes. ‘‘Magma is delivering what the semiconductor industry needs (right now),’’ says Madhavan, father of two and an avid rose gardener. ‘‘A faster, more cost-effective methodology for getting high speed, complex chips to market.’’

The Worst of Times

IT doesn’t seem so long ago that Sabeer Bhatia epitomised technology’s infinite capacity to generate wealth. There were many others who had transcended the Indian techie’s image as software coolie. When the 1990s rolled in, the new ability to stand alone without native-born Americans as fronts made these Indians icons for a generation of timorous Silicon Valley desis. It all seemed to come together in the heady days at century’s end.

Today, the icons are worn. Bhatia still has some millions left, but you’re more likely to spot him in page three soirees than in the pages of Fortune. Bank balances have plunged dramatically. Gururaj ‘‘Desh’’ Deshpande of Sycamore Networks saw his net worth plunge in a year from $7.6 billion to merely $700 million in August. Likewise Pradeep Sindhu of Juniper ($ 2.5 billion to $800 million) and Sanjiv Sidhu of i2 ($9.8 billion to $1 billion). Worse, they were accused of cashing in whatever was left of their fortunes, leaving struggling employees and companies.

That’s why VCs say while the downturn hasn’t really changed funding criteria, it gives them time to do greater scrutiny and build more robust companies. ‘‘The most innovative startups continue to receive funding and will be in an even better position to capture market share,’’ says Ken Gullicksen, partner at Morgenthaler Ventures, which oversees $2 billion in investments, some in Indian-led companies. ‘‘We will look back several years from now and see that the current period produced some very important and successful companies.’’

In the form of ripples and breakers, the second wave is gently rolling towards tomorrow’s shores. Almost all the technologies they work with are in some way connected with the next iteration of the Internet. Some call it Internet II. Or the Evernet. It is the coming together of telecommunications, the Web and wireless, of phone, computer and handheld, into, eventually, one globe-girdling, ubiquitous network. As the Evernet evolves, desi techies are finding obscure niches everywhere — kerning, polishing and tweaking its myriad cogs and wheels.

‘‘The telecom industry was not created during the dotcom boom and is not going away because of the bust,’’ says Jagdeep Singh, 34, a founder of Infinera Networks of Sunnyvale, California. ‘‘It (telecommunications) has been around for over a hundred years and will clearly be with us for the next hundred.’’

Singh, the son of an Indian bureaucrat, closed his first round of funding in the spring of 2001, as the bottom was falling out of the tech boom. That didn’t faze the confidence of his investors in the young serial entrepreneur, and he closed his second round in the fall, just before 9/11 changed the world. Today Infinera (it is setting up a development centre in Bangalore) has $86 million in its kitty as it develops a radical new chip that controls the flow of light beams, instead of electronic signals like conventional chips. The development prompted Red Herring to ask, ‘‘Is this the new Intel?’’ For beleaguered telecom companies, the world’s first integrated photonic chip — if Singh succeeds in taking it to market — could mean vastly cheaper and more efficient networks.

The new breed of desis talk less about fortunes, IPOs and first-mover advantages. Of course they must dream — but they must also deliver. And so they hold forth instead on market-share projections, patented technologies and building something that lasts. ‘‘Unlike before, we have to face the challenge of productisation, marketing and sales much before (the product’s) time,’’ rues Niksun’s Pruthi.

Amit Singh, 29, did just that. Two years ago, he was a graduate student at Stanford. As he used computer programmes to sift through millions of gene sequences to identify useful ones, Singh realised he could do the same with Internet data. After all they both used code, DNA’s was molecular, data’s was

binary.

Last month, Peribit Networks of Santa Clara, California, the company Amit founded with elder brother Balra, made the first sales of a VCR-size gizmo that identifies and eliminates useless or repetitious data. It cuts bandwidth usage (space on telecom lines) by half to 80 per cent on profit-stressed corporate networks. Telecom bankruptcies have keep bandwidth prices high. ‘‘The IT business is full of stories about salesmen promising the moon and delivering only rocks,’’ said Fortune magazine as it named Singh’s company as one of its cool companies for 2002. ‘‘But Peribit may be one of the few outfits that really delivers.’’ Singh, an IIT Powai alum, likes to look at the big picture. ‘‘There will be hiccups, there will be periods when people overdream,’’ he says, ‘‘But the ideal of communication will eventually be fulfilled.’’

The Best of Times

THE roadmap chalked out for the tech world and its markets looks like this: hard times will continue through 2003 before an upturn begins the crawl out of what pundits call the trough of disillusionment. This is a good time to look ahead. Bright engineers and real estate are plentiful.

‘‘This is the best time to start a company,’’ says Sanjay Dhawan, 38, CEO and founder of Inkra Networks, after just closing his $ 30.1 million third round of funding in August. Total raised: $ 66.6 million. ‘‘There are very few new companies starting up and the bigger companies are not really innovating.’’ Dhawan is a KREC Kurukshetra alumnus who zips around in a BMW 740 iL around his base in Fremont, California.

‘‘We have been wooed by real-estate owners with great deals that were unheard of just nine months ago,’’ says Parag Mehta, 40, ex-IIT (Powai) and a Phd in polymer chemistry. Mehta co-founded Aprilis Inc, which has raised $ 17 million in funding in the last 18 months. Mehta struck on the idea of using holograms to store the humongous amounts of data he knows the world will generate.

A little known fact is that Internet usage in 2002 will be double that of 2001. The world will quietly continue to get more connected. As it does, the greater will be the need to share data, driving bandwidth and storage demands. That in turn will generate more data.

Only nimble, talented techies can cope with this seemingly unending spiral. They don’t necessarily have to be young though — just aware of what they must do. Ashok Jain seems to know this. CEO of Teraburst Networks of Sunnyvale, California, he raised more than $ 50 million during 2001. To help networks straddle both past and future technologies, Teraburst makes switches that give older electronic networks optical qualities, the attributes of light.

Jain, a successful serial entrepreneur, is older than most of the new wave and spends a lot of time following his son Adi’s quarterback skills in school. So, after years of living through — and surviving well — an era of monumental change, is he ready to wind down? Wrong question. Jain says firmly, ‘‘Actually, I’m just getting started.’’