FEBRUARY 7, 2000 VOL. 155 NO. 5
The shy, bespectacled Jain boldly set up IndiaWorld the same year with money he had saved from two years working in the U.S. It was a modest start-up, proof positive of how diminutive the barriers to Internet entry can be. "I wrote my business plan on Post-it notes," he jokes. The IndiaWorld site was built almost entirely using public domain software, such as the free Linux platform, and it was maintained on widely available Apache servers. "In our entire five years, we have bought only three software packages: Windows, Office and Photoshop," he boasts. To cut costs, Jain wouldn't return long distance calls when he thought the other side might call back. And he avoided taking calls through his expensive mobile phone service.
The first two years were spent convincing advertisers that an online company had genuine potential. "In a small business, there is no such thing as a small mistake," he says. "We always knew our first mistake could well be our last one." With its healthy online traffic, IndiaWorld has evolved into one of the most extensive general sites for information about India, though its profit last year was an imperceptible $5,800. But a buzz had developed, and Jain was courted by "angel" investors, foreign venture capitalists and banks eager to lend. In the end, he went with the Hyderabad-based Satyam Infoway, deciding he had "maximum comfort levels" dealing with an Indian buyer.
Satyam Infoway is one of the largest Internet service providers in India, which doesn't allow competition from such global giants as America Online. "We already have a substantial audience in India," says chief executive R. Ramaraj, "and with IndiaWorld we have acquired an India-interest audience globally." Satyam Infoway now claims 30 million page views a month, and its share price has doubled since the IndiaWorld purchase. The deal also helped kick off an Internet frenzy among Indian entrepreneurs and financiers, especially in Bombay, Bangalore and Hyderabad, fanned by the central government's recent commitment to develop India's information technology sector. Dotcoms are sprouting across the country, spurred also by the entry of big international investment funds. Some Indian-born Silicon Valley programmers and engineers are finally coming home to put their skills to use. Says Vijay Angadi, the Bangalore-based managing director of U.S. venture capital fund ICF Ventures: "There is a significant change in mentality among people in the last few weeks. It's as if the creative juices have been suddenly unleashed."
That ferment will undoubtedly produce more buyouts and bonanzas like Jain's. There is, however, a potential downside to selling your e-baby for a bucket of cash. Sabeer Bhatia, a Silicon Valley engineer, started Hotmail in 1995 with the inspired notion of offering free e-mail to the world. So successful was Hotmail that Bhatia sold it to Microsoft two years ago for $400 million. Perhaps he was rash: one analyst recently valued Hotmail at more than $6 billion. But Jain says he has no regrets about his sell-out: he's planning to put his money in the bank--and still penuriously avoids his cell phone.
Reported by Saritha Rai/Bangalore
First, Create the Hot Start-up
Then Pray for The Angel
Next, Call in The Venture Capitalist
Cozy Up with The Incubator
Now You Are Ready for The Listing
Or, You Can Just Sell Out
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