In 2007, the Indian market had several vacuums – the vacuum of Internet users, the vacuum of devices like laptops and smartphones, and the vacuum of infrastructure around delivery and payments. As investors, we could afford to make choices and use logic to predict markets. But entrepreneurs were like the Argonauts who had set sail in a foggy sea. They had to keep their faith alive every day to keep looking for the land that eluded them. They were not timing the market. They had to use every tailwind to move faster. When the “timing was right”, they would take off like a rocket and many people would mistake their persistence for luck.
In November 2006, a director in the corporate finance team of a Big Four accounting firm wanted us to meet a young entrepreneur called Vijay Shekhar Sharma. Vijay was operating a company called One97 out of an office space in Nehru Place, a business district in south Delhi. The banker and Vijay had a common friend from their engineering college days and this was more a favour than a typical assignment.
Vijay had given a minority ownership of One97 to a private investor to get started. He had been in the market for additional financing for a long time. Some shady operators gave him the runaround with a promise of debt but nothing had materialised. The clock was ticking and this delay was stretching his patience and deepening his desperation. Not until his friend connected him to this banker was Vijay aware of a rare animal called venture capital. The banker felt the environment had become conducive to venture financing. He got Vijay to start doing the rounds at various VC firms, including Helion.
Accompanied by the banker, Vijay came to meet us in our office. They drove up from Vijay’s rented flat in south Delhi in his Maruti 800. The first thing about Vijay that caught my attention, even before his first words registered in my brain, was his absolute self-assurance.
One97 had a grand vision of owning a network of servers across telecom networks. This network would feed paid content to millions of subscribers for a share of the revenue. So far so good.
Vijay’s ambition was to become a dominant player in the telecom market by not only owning content but also having the ability to deliver it. He spotted a gap – telecom companies were willing to share revenue with him as long as he undertook the cost of building this content delivery network. Owning and operating a network of servers required an upfront investment of millions of dollars. The servers were meant to be his weapons and would drive the next wave of content consumption on feature phones. Once installed in the network, these servers would act as gatekeepers for anyone who wanted to monetise their content. So Vijay was going to ram in all he could, in every telecom network, in every telecom company.
Vijay’s voice was high-pitched. Unlike pitches which ramble on to produce a soporific effect, Vijay’s incantations kept my brain on edge. Unlike the typical mould of savvy entrepreneurs who pitched to us, Vijay did not have an Ivy League or multinational corporation background. He was a small-town guy, like me. But the similarity ended there.
I had gone to a Jesuit school where the emphasis on speaking proper English had been drilled into my head. Vijay was speaking in a curious Hinglish. He punctuated every sentence with an “okay”. But damn, he had some energy. I could tell that sitting down was too passive for him. Given a chance, he would stand up and walk all over the room while explaining himself. His hands had a life of their own. As he moved them, the vision of Vijay Shekhar Sharma started getting painted in my head.
He had me in goosebumps during the course of this first meeting.
We followed up with a few more meetings to understand the business better. Vijay did not have a telecom background but as a vendor to them he had developed a strong sense of the commercialism required in this business. His business was a mix of the hard elements, negotiating deals with telecom giants, and the soft aspect of producing entertainment for consumers. Not surprisingly, the aspect he spoke about least was the content itself.
His approach to content was limited to what One97 could produce internally. As investors, it was apparent to us that Vijay’s focus was on scale and competitive barriers. If he had been passionate about sourcing the hottest content coming out of Bollywood, we would have been worried about his business sense. According to Vijay, he would work with content generation companies and not take the creative risk himself. He was here to own the distribution of content to telecom subscribers.
We visited Vijay’s office. It was located in the heart of Nehru Place, an area that hosted many trading businesses, and where business meant selling.
The fifth floor office brought some of the Nehru Place buzz to the inside. Across the length of the office walls were windows that looked upon the busy Ring Road. Traffic crawled below us.
Almost chaotic, every square inch of space had been assigned to driving revenue. You could see that people working here were not seasoned engineers, but executives building a company of the future. They were fixing problems of today and earning revenue for the day. There were no ping-pong tables and X-boxes to provide relief during long nights of coding. These guys were here to cut deals, run operations and sell.
The astrologers preparing predictions for mobile users sat next to network engineers. Under one roof, on one floor, about seventy-five people were delivering the daily fix of horoscopes, sports scores, jokes and movie songs. Anything audio or text, anything that you could listen to or read, was being produced.
To get a 360-degree view of the criss-crossing functional and organisational lines running through the company, we met members of Vijay’s core team. This was a start-up team that rallied around its leader. Vijay’s energy was clearly spent signing up telecom companies. He was nothing if not driven. To support the bold vision, the operating plan was broken down carrier by carrier and some clear short-term goals were identified. Vijay would have given an arm and a leg to sign up MTNL, the government-owned carrier. Focus on one big win at a time. This was a fantastic revelation – Vijay was focused on tangible achievements.
To cross-check Vijay’s plan, we spoke to seasoned executives in large telecom companies, some of whom were One97’s customers. The response was by and large in favour of One97. Not owning their network was not uncommon for telcos, but these companies were massive. Their gargantuan sizes could consume several One97s before breakfast. The commercial departments of these telecom companies are notorious for breaking vendors down one rupee at a time. And in 2006, of course, no one anticipated the smartphone tsunami. Content-rich smartphones would make One97’s business redundant as consumers would slowly stop purchasing content from the operators.
In all our interactions, Vijay’s raw energy would cloud the nuances of an investor conversation. We still struggled to distill his passionate pitches and assess his ability to build a scalable organisation, hire talent from the telecom world and build a predictable business. After much internal debate, we decided to call Vijay in to present to Helion’s team.
This usually meant that we were reaching the end of our diligence and were ready to make up our mind. Our debate revolved around the challenges of building a valuable business with customers who were programmed to reduce costs and had armies of people to beat down rates. We took comfort in the installations that Vijay had already done and a business model that was off the ground.
Besides myself, only one of my partners had met Vijay previously. I didn’t know what to expect from the presentation. Would his impassioned delivery cause confusion or convey the business value? Would we be able to come to a consensus or would we struggle for more inputs?
Vijay and the banker sputtered up again from Delhi in the blue Maruti 800.
Our temporary office in the business centre had a large U-shaped table. I had prepared my partners to expect an unconventional founder. Vijay was in the centre pit and he chose to pace around the open space. With both hands waving and his trademark soprano voice, he commanded our full attention. Pausing only to catch his breath, Vijay came across as a force of nature.
In addition to his punctuations of “okay”, he would provide a translation in Hindi of whatever he had just said. The banker was gambling on this display to floor a room full of investors. Vijay was able to balance out the unknown with his display of confidence and hunger to succeed. Within an hour, this thirty- two-year-old from Aligarh had not only floored a room full of VCs, but also generated some fondness for his classic David- versus-Goliath persona.
In the discussion that followed, our partnership was unanimous in considering One97 as a worthwhile play on the growth of content consumption by the fast-growing Indian telecom subscriber base. And in Vijay, we saw the promise of a new generation of entrepreneurs who were breaking the traditional mould. They didn’t come with a background in the space they wanted to disrupt. They didn’t come from posh schools or carry MBA degrees. They spoke “Indian” and knew what it took to build Indian companies with desi sensibilities.
I put in a call to the banker and realised he had been trying to reach me as well. Vijay had presented at another VC firm and done an equally impressive job. We realised the other firm was ahead of us – they had already offered a term sheet and locked Vijay in, preventing him from talking to other investors. This was standard practice; we would have done the same. Life was not fair and great entrepreneurs didn’t stay unclaimed for long. We had come to recognise the need to find a balance between an entrepreneur’s understanding of an opportunity and our own. We also realised that all entrepreneurs were not articulate, but their ability to express their passion was not compromised by language, words or slick presentation material.
As it turned out, it would take Vijay one more attempt at company building to make us regret our miss even more. One97 had its share of challenges and headwinds. But then, nobody could have foreseen what Apple was planning to launch in the year of this discussion. The first-generation 4 GB iPhone came out exactly a year after our last meeting with Vijay, and the world was never the same again.
Excerpted with permission from The Moonshot Game: Adventures of an Indian Venture Capitalist, Rahul Chandra, Penguin Random House India.
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