The last time N.R. Narayana Murthy took money from Sudha Murty in 1981, he founded Infosys Technologies and grew Rs10,000 to a $5.1 billion (around Rs22,742 crore) company. So it’s not difficult to understand why everyone’s talking about the Rs604.3 crore he raised with his wife’s help recently.
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But if Murthy’s experiencing any performance anxiety about replicating that urban legend in his new adventure, Catamaran Ventures, it doesn’t show. When we meet at Infosys headquarters in Bangalore’s Electronics City, he’s dressed in a Larry King blue shirt, belt buckled exactly like my father (i.e. several inches higher than GQ recommends). His geek read, mathematician David Bodanis’ E=mc², lies on the table in front of him and though he gives me more time than I’ve asked for, he calmly lobs my volley of requests for any specific numbers (“data points” in his lingo).
Though Murthy’s big secret was unveiled only last November after the Infosys chairman and Sudha Murty sold a chunk of their shares worth Rs174.3 crore and Rs430 crore, respectively, he had been planning this move for one and a half years, or around the same time he met 28-year-old Arjun Ramegowda Narayan, an MIT graduate whose family migrated to Bangalore 200 years ago to sell flowers outside the Lalbagh Botanical Garden. “Ideas are stored at the back of your mind but they become concrete when you come across people who can give them shape,” says Murthy.
Second life: (from top) Arjun Ramegowda Narayan first met Murthy when he gave a speech at MIT in the early 2000s. Akshay Mahajan / Mint; Akshata (seen here with mother Sudha Murty) has already followed in her parents’ footsteps and turned entrepreneur. India Today; Murthy is cutting back on his other commitments to focus on the venture capital fund. Akshay Mahajan / Mint
The couple and Arjun make up the board of directors of Catamaran, a venture capital fund that will support innovative entrepreneurs in their attempt to create scalable, globally competitive businesses within India. Catamaran will be a proprietary fund because Sudha Murty told her husband that it would be best to experiment with their own money rather than risk anyone else’s in a business they didn’t yet fully understand. In the first couple of years, the fund will also seek to manage risk by investing alongside more experienced venture capitalists.
Together with their son Rohan Murty and daughter Akshata Murty, the Murthys hold nearly a 5% stake in Infosys. “If I took money from others and did not succeed it’s not a very pleasant experience,” says Murthy, who’s hoping that his children will eventually want to participate in his new venture. At this point, Rohan, who is completing his PhD at Harvard, seems a more likely candidate than Akshata, who has just turned entrepreneur herself, though Murthy says nothing has yet been decided.
Funding smart entrepreneurs who want to leave their mark on Indian society seems a logical next step for Murthy, who is due to retire from Infosys on 20 August 2011, when he turns 65. In the past three decades, he has consistently advocated the creation of jobs as the quickest way of eradicating poverty.
Besides, by now experiential wisdom has shown Murthy that he is unsuited for public office. In 1999, then prime minister Atal Bihari Vajpayee offered him an opportunity to be a minister but Murthy was having too much fun with Infosys. In 2004, Manmohan Singh invited him to be chairman of the Investment Commission but Murthy was “not certain that India was ready to deliver on the promises that it makes to international investors”. Subsequently, Ratan Tata accepted that job. More recently, his name did the rounds for president of India and ambassador to the US but the plain-speaking Murthy who, among other things, believes that English is the language of the modern Indian workplace, is hardly a favourite among the feudal politicians in his state, and the jobs eventually went to Pratibha Patil and Ronen Sen, respectively.
Now, Murthy is clear that public office is not a good fit. “I’m used to an orderly way of life. I’m used to a disciplined set of people. I’m used to delivering on promise. I’m used to working with civilized people. Unfortunately in public life in India these are not the attributes that you see,” he says.
Values and genes
Murthy’s new 2,800 sq. ft office—he’s built a floor over what is currently his home office, just a few blocks from his home—in the predominantly Kannadiga neighbourhood of Jayanagar, cradled by rain trees and gulmohars, is ready for business. The fund’s first investment was in SKS Microfinance.
In the coming months, he plans to cut back on his other commitments—Murthy is on the board of several companies and a favourite on the university lecture circuit—and spend as much time as he can in his new office. He’s already resigned from the boards of NDTV and Unilever and plans to split the 8-10 days of the month he is in town between Infosys and Catamaran.
When Murthy was CEO of Infosys you could set your clock to the time he arrived in office: 6.20am. Now, though he gets to work by 8.30am, he still wakes up at 5am, makes his own coffee, talks to Akshata and Rohan every day, checks his mail, bathes with half a bucket of water and, occasionally, listens to Western classical music as he gets ready. “These days I’m trying to listen to all kinds of music. By having a larger portfolio, I become richer,” he says.
Akshata, who lives in Los Angeles but was in Bangalore recently, has quit her job and turned entrepreneur. Her plan is to take traditional Indian crafts and “transpose their essence” on contemporary silhouettes. “Seeing the difference my parents have made through entrepreneurship has been a huge motivation. It’s not a gene you inherit but a mindset,” she says.
The idea of working with local master-craftsmen to launch a contemporary clothing line came when the family received thank you gifts from women in Orissa, including a pair of beautiful silver filigree earrings. Akshata decided she would apply the IT model to retail and source knowledge and value from India. Her first collection will be ready later this year and will be sold in the US, UK and possibly India.
“Sometimes, it’s tough. This morning I was wondering why I’m even doing this. But whether it’s a good time or a bad time, dad’s advice is always the same: Be disciplined, be ethical, be motivated and give it your best. These values will certainly be put to test along the way,” she says.
The numbers game
For father and daughter, it’s an exciting time to be an entrepreneur; today’s India is dramatically different from three decades ago, when Murthy and his six colleagues struggled to make their new company profitable. “In the 1980s India was so business-unfriendly, so stifling. There were many deterrents to succeeding in business, and our aspirations were very low. Our aspirations grew only after liberalization,” says Murthy. “In today’s India there is much more confidence, hope and higher aspirations.”
My research on Murthy has told me he never does anything without thinking long term but when I ask him, he’s reluctant to put any numbers to his new venture. He knows exactly where he wants to be in five years. He knows how many entrepreneurs he’s likely to mentor, how many job opportunities they are likely to create, how much more money he will need to invest in Catamaran and what his return on investment is likely to be. “It is better that our performance speaks than our desire,” he says, agreeing that he has done the math on all these parameters.
Arjun says working with Murthy means you do lots of number crunching. In the past months his job has included meeting entrepreneurs, supervising the building of the office and preparing detailed budgets for everything. “I can even tell you what my budget for this meal is,” he jokes, gesturing at the plate of falafel and glasses of iced tea we’re sipping.
India’s most ethical entrepreneur is also known to be India’s most nit-picky entrepreneur, a man who swears by the details. “One of the challenges of working with Mr Murthy is that you do everything from the ground up, including selecting tiles, getting a plan sanctioned, understanding the bye-laws, sitting with the architect. I guess these are non-traditional activities for a financial investor,” says Arjun.
Mostly, adds Arjun, decisions are taken after debate. “It could be anything. This weekend we had a debate about the chairs in the office. We’ve had debates about the shape of the logo, and plenty of debates around the structure and strategy of the fund. With regards to the investments we’ve made, we’ve had preliminary, middle and conclusive debates,” he says. “We do a lot of work before we invest.”
Even though Murthy’s belief in young people is documented, many industry analysts are surprised at his choice of fund manager. “I’m 29 and still older than half the country,” says Arjun, who’s used to deflecting questions about his age.
But when you meet him, it’s easy to see why Murthy picked him for the job. Arjun, who was introduced to Murthy by Rohan, has deep links with Bangalore and many roads in the city are named after people his family has known—Nanjappa, of Bangalore’s Nanjappa Circle, was the man who got his mother into kindergarten; former chief minister and Union railways minister Kengal Hanumanthaiah of the Bangalore road (who ensured our trains ran on time) was his grandfather’s friend. Arjun also has a keen desire to do something relevant in India, perhaps because his family tree has a sprinkling of ministers and a mayor or because he watched his father struggle through the 1980s and most of the 1990s as a farmer in Doddaballapur, on the outskirts of the city. “It was so hard to make money as a farmer. You spend so much time and energy and you don’t make any money. For the longest time the whole family relied on Rs600-700 a month.”
Plus, like Murthy, he’s a certified geek (he writes a children’s column for Deccan Herald on assorted subjects such as astronomy and units of time) and swears by Indian ingenuity. He believes jugaad (improvisation) is an “extraordinary creative force that when combined with scalable organization and a high-quality team can provide solutions that work for India.”
Everyone’s favourite mentor
Entrepreneurs are already flooding Murthy with their ideas and proposals. After all, it’s not every day that you get a chance to be funded and mentored by your favourite guru. “His personal story has motivated many people to entrepreneurship. Specific statements that he has made—and he’s very consistent in what he says—have reflected themselves into people’s ideas of what it means to run a professional, scalable business, what it means to manage people,” says Arjun who’s currently fielding all kinds of requests, including those that would probably be more suited to philanthropic outfits such as, say, the Sudha Murty-run Infosys Foundation. “That’s not what Catamaran is about,” shrugs Arjun.
He says the chemistry between entrepreneurs and Murthy is likely to work best if they’re legal and ethical (of course); if they are entrepreneurs with passion/commitment; if they have made sacrifices to realize that passion; and if they have the ability to be data driven about their passion.
Murthy says that over the years, the most interesting ideas he’s encountered have to do with microfinance, creating jobs for rural India and developing information systems that result in a more effective way of doing things. That’s probably why the fund’s first investment was in SKS Microfinance, a company that will soon become the earliest in its industry to go for an initial public offering.
K.P. Balaraj, managing director of Sequoia Capital India, the country’s largest venture capital fund, and the one that convinced Catamaran to co-invest in SKS, says that given Murthy’s profile and track record, his entry is a “huge positive” to the business. It will encourage more professionals to work together, he says.
Balaraj believes that Murthy’s interest in early stage entrepreneurs will contribute to filling a huge shortage of funding for smart young people who are just starting out. “He’s taking a different approach—he’s saying, let me support venture creation, it has a social cause.” As Arjun puts it: “No matter how much money I make out of this venture it’s not going to matter to Mr Murthy. It’s about strengthening the ecosystem.”
Even if you’re an entrepreneur who didn’t make the cut, you can console yourself with the fact that Narayana Murthy’s working hard to improve the way people with innovative, workable ideas are funded in this country. He could even succeed, once again, in replicating another Silicon Valley model, one where former entrepreneurs run innumerable successful venture capital funds. After all, he is the most successful Indian entrepreneur ever to turn venture capitalist.
And one thing is sure: Things are bound to get better for smart, passionate entrepreneurs. There are enough data points to back me on this.