“Give Yourself a Chance”: Kanwal Rekhi

This is Kamla Bhatt. We bring you part-2 of our conversation with Kanwal Rekhi, a well-known investor, entrepreneur and a mentor based in Silicon Valley.

Kamla: How do you know which horse? I am thinking of Exodus. Way back in the 1990s when they started and they were looking for money and when you were going to visit them ...you know the story of how they put up the racks and servers and everything? So what prompted you to go with Exodus? Here were 3 people who were just starting out?

Kanwal: Yes like I said before you have to learn to develop your own filters. You have to become as much a judge of a person as of a business plan. So it takes several steps and I tell that you have to dance several times before you start to get excited about a person. I talked to Exodus people maybe half a dozen times and they had a sense of urgency in respect to their need for money, because they had to meet some payrolls and pay some bills. But even then I took several weekends before I wrote up the check. It took me 2-3 weeks instead of 2-3 months. There was something about the determination of BV (Jagadeesh) and Chandrasekhar and together it really appealed to me. BV was a quiet, deep thinker and Chandrasekhar was a bubbly sales person. The language they were speaking about, (this is at the dawn of the internet) and a large number of people becoming consumers of internet after paying $10 to get internet will draw the businesses to sell to them on the internet and those businesses will need a lot more than simple wire and they will need lots of help. So there is an opportunity here, so it was an intellectually sound concept. And once it starts to appeal to me then I start to add value myself. The 3 of us very quickly went through the process of how to sharpen our focus down to what needs to be done. The original business plan was very large and complex. We simplified it down to just building data centers, which was a lot more easily understood and executed and that is where we made most contribution.

Kamla: What have been some of your failures?

Kanwal: In this business there are both failures and success. It is a very risky business with 98-99% odds of a situation failing. The best returns are about of 20% that means 80-90% of your investments should fail. In my case, my record is very, very good. I have done roughly about 18-19 successes out of 53 and that approaches close about 40%. I still have 2-3 companies left to draw...I think I have 3 companies left to draw. That makes it 22 companies out of 53 and that is over 40% and it is a pretty good record. But I have 31 companies, which have failed.

Kamla: Which are the ones that failed, that surprised you?