Chennai: After selling his seven-year-old company to Cognizant Technology Solutions for $135 million (Rs530.5 crore) in an all-cash deal, Jaswinder “Jassi” Chadha, founder and chief executive officer of marketRx Inc., says that cash in hand is great for the family’s financial security. In an email interview with Mint, he speaks of marketRx’s formation and its work in the initial years. An alumnus of Indian Institute of Technology, Delhi, Chadha, who now heads Cognizant’s analytics business, says Indian companies need to move away from labour-intensive to higher-value services to explore opportunities in business analytics. Edited excerpts:
Tell us about the gensis of marketRx. Whose idea was it?
MarketRx was started by Navi Chadha, Phil Brennan and myself in 2000. The vision was to leverage analytics and software to enable pharma customers make better sales and marketing decisions. Phil and I had a background in analytics and had worked in marketing analytics field in life science industry at other consulting companies. Navi had a strong background in software development.
When you started in 2000, how many people were there? How did you convince people to join the venture?
We had nine employees in 2000, including the three founders. Two were former colleagues of mine, two were my friends and two were hired from the market. All the initial employees were given founder stock. Friends and colleagues joined marketRx because they believed in my leadership and had seen me rise very rapidly at my previous company, US-based Health Product Research. The two people who joined marketRx in 2000 had PhDs and were looking to do more interesting work in the field of analytics that was typically done in universities or other companies.
How did you manage your finances in the initial years?
When we started, we had enough capital to last about 18 months without revenues. The former CEO of my previous company was the first to invest in the new venture. The remaining capital came from my friends who believed in me. All the founders took either no salary or a reduced salary in the first year. All bonuses were paid in stock. All our vendors, including lawyers and accountants, were paid in stock.
Why did you choose market analytics as the space in which you would operate, and life sciences as a focus area?
My educational background is in operations research and software. After finishing my doctoral studies, I was hired by a marketing analytics consulting company that provided services to the pharmaceutical industry. While working at this company, I realized that a better solution to many sales and marketing business problems could be found by using more advanced analytics and that a lot of processes and knowledge can be automated through software.
The first two years of marketRx coincided with the dot-com bust and the rapid decline of valuation in the IT space. Did this affect you in any way?
In 2000-2001, even though the bubble had burst, there was plenty of venture money available. The challenge was that everyone wanted to invest in a “billion-dollar” idea. We were fortunate that we were able to raise all the capital we needed from angel investors including CEOs of large pharmaceutical companies and investment banks. The life sciences industry was not affected by the dot-com bust.
Now that you have sold your stake in marketRx and have substantial cash in hand, what are your plans? Are you looking at supporting start-ups?
Having cash in hand is great for my family’s financial security. From whatever I have seen so far, Cognizant is a $2 billion start-up. I still feel that I am going to be an entrepreneur at Cognizant. I am going to continue growing marketRx and focus on building business analytics in other industry verticals. I am a charter member of TiE (The Indus Entrepreneurs), the largest organization in the world focused on promoting entrepreneurship. I will continue to support and provide mentorship to aspiring entrepreneurs.
Why did you decide to sell out to Cognizant? Your company had revenues of $40 million and the top 20 pharmaceutical companies as clients; you could have easily raised money from PE firms or venture funds if you wanted to.
MarketRx had the bluest of the blue chip investors including Sequoia Capital and angel investors that included CEOs of large pharmaceutical companies, investment banks and private equity firms. We were already profitable and didn’t need capital for business expansion. We saw tremendous opportunity to combine our analytics and software capability with IT Services and BPO. In Cognizant, we found a company could provide us scale, rapid growth and was still very entrepreneurial.
There have been various estimates of the marketing potential of analytics. From your market understanding, what’s the market potential? If providing for entire spectrum of industries is difficult, can you please shed some light of its potential in life sciences space?
Pharmaceutical industry spends over $50 billion on sales and marketing. We estimate that the market for providing data, analytics, related software and business processes to plan and manage this spend by the industry could easily be over $5 billion.
How much do you think India can tap into? Does India have the resources (relevant manpower) required for this?
India has a lot of potential in providing the manpower to run the business processes leveraging analytics and technology. However, companies in India will need to move away from only labour-intensive services and leverage technology to automate mundane processes and provide higher end value to customers.
In three to five years’ time frame, where do you see the analytics division of Cognizant, which you now head, in terms of area of operations, manpower and revenue?
In five years, I see Cognizant becoming one of the largest providers of analytics services and related software and business processes to the world’s largest companies.