The 'Indian Mafia' muscles onto the Web
By Vanessa Richardson [email protected], December 14, 1999
Redherring.com
© Copyright 1999 Red Herring Communications
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Vikas Bhushan, a 33-year-old doctor, had a business idea: to Webcast medical
school lectures and classes worldwide on the Internet. However, he and his
three other physician cofounders weren't sure if a medical degree would be
enough to get them started. Then Mr. Bhushan joined the Los Angeles chapter
of The IndUS Entrepreneurs (TIE) www.tie.org; six months later,
Medschool.com was officially established. "From networking with people at
the monthly meetings, I got inspiration -- instead of developing a small
publishing company, we aimed higher, for a Web site. When you are talking
face-to-face with people who sold their companies for $400 million, it
shifts your perspective on how high to aim," Mr. Bhushan says. Mr. Bhushan,
Medschool.com's CEO, still belongs to TIE, attends the monthly meetings held
at the Sheraton Hotel in Cerritos, and plans to pitch his site to
influential VCs who attend TIE's annual conference in May. He's following in
the footsteps of other Indian entrepreneurs who have founded successful
companies -- such as Hotmail, Cybermedia, Junglee (which have all been
acquired for millions), and Exodus Communications (Nasdaq: EXDS) -- with the
help of TIE. "We members joke about how we belong to the Indian Mafia," Mr.
Bhushan says.
CHARTERING A REVOLUTION
TIE now has more than a thousand members nationwide, many of whom have
played a powerful role in shaping today's technology. According to an
official at the University of California at Berkeley, nearly 9 percent of
the 4,000-plus high-tech companies started in Silicon Valley since 1995 were
Indian-led; many of those were funded with help from TIE. Its 200 senior, or
"charter," members, including Vinod Khosla of Kleiner Perkins Caufield &
Byers, Sycamore Networks (Nasdaq: SCMR) CEO Desh Deshpande, and Exodus
Communications cofounder K.B. Chandrasekhar, have personally invested more
than $100 million in young companies and paved the way for $400 million in
venture capital investments. The close-knit group was founded seven years
ago by 20 of Silicon Valley's top Indian-born entrepreneurs who had been
invited back to their home country to talk about their successes. None of
the group members knew each other before the trip, but according to Kanwal
Rekhi, president of the Silicon Valley chapter, "we saw how we could put
that to positive use by becoming mentors for younger people so they would
not have to fight as hard as we did." The name IndUS was chosen to signify
that its members are from both India and the United States. From Silicon
Valley, TIE has spread nationwide with seven chapters in Boston, New York,
Dallas, Atlanta, Chicago, Los Angeles, and Washington, D.C. Seattle and
Vancouver will get theirs in February and TIE has also spread overseas to
London and three cities in India.
TIE is open to anyone with roots or interest in the Indus region (India,
Pakistan, Bangladesh, Nepal, and Sri Lanka and more recently also including
the wider region of Southeast Asia). The charter members -- entrepreneurs,
corporate execs, and senior professionals who've made it big -- are welcomed
by invitation only and pay $1,000 in annual dues and commit time to mentor
general members. Charter members take their mentoring seriously. Mr.
Deshpande, for example, holds an "open house" at his Boston residence for
three hours every Sunday to advise any up-and-comers who wish to attend. In
many cases, TIE meetings may be the only place where Hindus and Muslims from
the Indus region interact socially. Because of culture clashes in that part
of the world, politics, religion, and cultural activities are forbidden.
"We're absolutely focused on entrepreneurs, wealth creation, and economics,"
says Mr. Rekhi.
POSH SETTINGS, PROMINENT SPEAKERS
In the Silicon Valley chapter, monthly meetings draw between 150 to 300
members -- 80 percent of them are first-generation immigrants and 20 percent
are second-generation -- who mingle and listen to success stories. "Most
not-for-profits don't spend money on their meeting places, but we hold ours
in nice, classy settings," says Mr. Deshpande. Medschool.com's Mr. Bhushan
says the locations are ideal for meeting charter members. "Since meetings
are in a social setting, these prominent CEOs become more accessible and
easier to walk up to and introduce yourself."
Conferences are also in high demand. More than 1,000 entrepreneurs went to
the latest event, held in San Jose in May, to learn startup fundamentals and
hear speeches from Yahoo (Nasdaq: YHOO) CEO Tim Koogle and CNet (Nasdaq:
CNET) CEO Halsey Minor. Mr. Rekhi says that young Indian entrepreneurs in
the U.S. have it pretty good. As "Godfather" of TIE, Mr. Rekhi, a Pakistani
who was educated both in India and the U.S., founded networking company
Excelan, took it public, and sold it to Novell (Nasdaq: NOVL) for $200
million in 1989 before "retiring" from Novell's board in 1995 to oversee TIE
full-time. "In the 1970s, they never promoted Indians to be managers. In the
'80s, some were moving into sales, marketing, and finance. Today, it's a
non-issue -- Indians are in senior management at Sun, Microsoft, Cisco."
It's even easier when it comes to venture capital, Mr. Rekhi adds. Ten years
ago, it was not as easy to raise funding for Indian-led startups. "Now, when
an Indian (approaches a potential investor) with a business plan, they go to
the top of the heap, even over whites. Since they started as engineers and
programmers, they shine in the technology world because of their math and
science knowledge," he says. Although he says TIE is not about funding,
mentors do invest in their protégés. Mr. Rekhi has invested in more than 20
startups since 1994, earning him $100 million. "I've made more money since I
left Novell than I made in my own company. This is a very, very lucrative
nonprofit activity." TIE members who want in on the action, take note: Mr.
Rekhi says he meets with an average of five or six startups a week. However,
the next Silicon Valley TIE meeting -- Tuesday evening, December 14 at the
Santa Clara Marriott -- is sold out.