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I’m not different from any other human being,” says Raju Vegesna, CEO and Managing Director, Sify Technologies Limited. However, one can debate that. In a world full of money and power-hungry people, it’s quite unusual to find people chasing knowledge, not just by securing recognized, reputed qualifications, but propelled by a desire to learn and know more, to dig deep into the crux of the things. The dictionary defines such people as autodidacts, and Raju Vegesna can safely be called one.

Early life

Hailing from a small village in a coastal district of Andhra Pradesh, Vegesna comes from an agricultural family that owned 10 acres of land, and the cultivation of paddy put bread and butter on the table. Despite being decently well-off, he chose to work on the farm with other farmers as he empathized with their difficulties. “I’ve always maintained that one shouldn’t take anything for granted,” he says. Luckily for him, his family helped him secure basic education up to Xth standard, after which he went to a bigger town, 14 miles from home, for higher studies. Pretty much at this time Vegesna was engulfed by a determination to get a degree in electronics. His curiosity with the subject had, in many instances, led him to open television sets only because he wanted to understand how broadcast medium worked. Perhaps one could say that these were initial signs of the years to come. Post graduation from Bengaluru University with his much-dreamed about degree in electronics, Vegesna tread the obvious path, and headed off to the United States to pursue a Master’s Degree in computer engineering at Wayne State University, Detroit, with a scholarship. “The Indian education system at that time, and even today, is not very relevant to work we do,” he mentions.

Life in the U.S.

Once in the U.S., there was no looking back. A superior education system and technological advancement gave Vegesna the opportunity to learn things about computers he wouldn’t have learnt if in India. “I was like a kid in a candy shop,” he laughs. Not ready to sit still, he took on teaching assistance while pursuing his masters. “Teaching in the U.S. cleans up your fundamentals, especially as you can’t teach theoretically; they will kill you in class,” he exclaims. Simultaneously, Vegesna managed the college laboratory and given that he had full access as the computer engineering graduate he was back then, he used it to his full advantage, spending nights experimenting on main frames.

Another thing that piqued his curiosity was microprocessors, taught by a Korean professor, also an employee of General Motors. “While everyone focused on how to use it I wanted to know how to design it,” notes Vegesna. This led him to attend a conference where he met Roger Ross from Motorola, who sent him textbooks on microprocessors after learning about his interest in the same. “When I told him I needed to learn more, he connected me to the best principal engineer of microprocessors at Motorola,” he remembers.

Vegesna, who needed to write a thesis on microprocessors, was now a privy to Motorola’s patents and used these to create a software simulation of the Motorola 68000. At this point, Vegesna was graduating and approached them for a job. India in the 80s didn’t have much opportunity, and so he showed them his thesis.

Impressed by his outstanding work, Motorola invited him for an interview in Austin with top management; six hours later Vegesna had an offer letter in hand. “They asked me if I was willing to move to Austin; I said I moved 10,000 miles from India to the U.S., do I care if it’s California or Austin?” he quips. For the next five years Vegesna designed microprocessors at Motorola, wrote the microcode for the 68030 and specifications for the 68040. “Later, I understood the reason for getting the job so quickly. All the big guys told the head of the microprocessor division that if he didn’t hire me, in all probability I would be hired by a Japanese competitor and take their knowhow with me,” he laughs. Interestingly, Apple’s first laptop used his microprocessor. “I felt it was my brain in every laptop,” he exclaims.

Beginning of entrepreneurial years

Vegesna’s mentor at Motorola, Roger Ross, known for his ability to spot talent, was looking to start up on his own and invited Vegesna to be a part of his venture, Ross Technology. “I joined as CTO, focusing on technical aspects of the business,” he mentions. He was integral to the development of the first-generation HyperSparc, which Sun Microsystems Inc chose as the CPU heart of its first multiprocessing computer. Despite being a technical guy, Vegesna worked with an Indian mindset and wondered why he was just designing and not selling. His boss, luckily for him, gave him a free hand to market during the day and design at night. “Having a good mentor and a strict boss in your early days is very important to instill good habits as it sets you on the right track,” he emphasizes. The two went on to build a Rs.900 crore-Rs.1,350 crore company which was finally bought out by their investors. “I made my first million at this point,” he says.

Being young and restless, with an ambition to become CEO, Vegesna decided it was time to start his own venture and moved to California for the same. He founded ServerWorks in 1994 to create a server environment, taking a generic volume part and make it a bigger server platform. At that time, Intel was making microprocessors and had just come up with the Pentium, making desktops. Microsoft was making its operating system.

“I thought why not take this commodity, high volume chips and create a server environment,” explains Vegesna. In seven years, the firm clocked in over Rs.1,350 crore revenues, and was very profitable, competition being Intel. ServerWorks went on to become the world leader in computer chipsets, commanding a 90 percent market share in the x86 server chipset market. “By that time the internet boom had come in and my chips were used by 90 percent of internet servers; if you logged on you were touching my chips,” states Vegesna.

In 2001, ServerWorks was acquired by Broadcom Corporation for $1.8 billion. “Till today, we are the biggest acquisition they ever made,” claims Vegesna. During his tenure post-acquisition, he funded the firm with Rs.1,575 crore in cash and generated Rs.4,50,000 crore revenue. Vegesna left this to start up his second venture, Server Engines in 2004, with a vision to combine network and storage within servers. Last year, it merged with Emulex Corporation. Vegesna now serves as the Chief Strategy Officer on the board.

Sify growth story

The year 2006 was a turning point in Vegesna’s entrepreneurial journey. Sify technologies, founded in 1998 by R. Ramaraj, started initially by Satyam Computers, approached the Silicon Valley entrepreneur to invest in the company. Vegesna’s U.S.-based investment firm Infinity Capital acquired Sify for about roughly Rs.450 crore. “My acquisition of Sify gave me an entry to Indian market,” he says. “Indian talent has not been successful in creating a product, it’s largely service oriented with no software/hardware product competing at a global level,” he points. As a hardware guy, the entrepreneur wanted to take Sify to another level.

Phase 1 at Sify: When it started as an internet portal, it was the first internet company to be listed in the NASDAQ in 1999. Sify back then was consumer-based; 40-50 percent revenue came from consumers and cyber cafes, 40 percent from enterprise and 5 percent from international approximately.

Sify 2.0
Vegesna shifted focus from consumer business to enterprise and international, primarily because the consumer market in India then was still a challenge and there weren’t enough volumes. “To get to the consumer is not just about connectivity, you need a device and content that is relevant to people. Unless these three can come together, consumer business will be a challenge,” he explains.

India’s internet penetration was still below 10 percent and the market was not fully stabilized. So, he started investing in data centers, five in total. “As an investor I saw India’s GDP continuously growing and knew IT would play a big role in corporate, consumer or individual capacity,” notes Vegesna. Sify’s network in the last two-three years has grown three times reaching many towns and cities across India. “We are still riding a bicycle instead of a car on the IT side. I want to make the people of India more productive using IT,” he says. Sify’s enterprise business has grown well and today 80 percent of the company’s revenue comes from this segment.

Sify 3.0
Vegesna has a blueprint for the next three years. Simply, Sify 3.0 has a two-pronged strategy: Shift focus from infrastructure to services and become more global-centric instead of India-centric. “Sify has excellent talent and processes. We don’t need to just focus on western countries, but developing countries too,” he notes. India, he feels, is a good vehicle to develop products for developing nations because of our cost structure.

“Designing at low costs and going to a higher price market is easy and we plan to take these products to a global level,” he states. Sify has offices in Dubai, the U.K, two in the U.S. and soon in Singapore, giving it worldwide access.

Consumer business

Sify has been a pioneer of cyber cafes in India and has close to 2,000 cafes till date, mix of franchise and connectivity-based. However, the entrepreneur is now looking at shifting focus back to consumer business and this model too is changing on the back of some aggressive plans, looking to grab as many cyber cafés as possible. All cafes will now be able to take advantage of Sify mylife, its consumer cloud services.

“India has low credit card penetration and I’m not in a business of everything; so I’m building the consumer business proportionately in line with what the internet penetration can take advantage of,” explains Vegesna.

Also, he feels that while Sify’s broadband is known to be slow, it is still servicing big portion of market.
“We are now taking an approach through wireless technology and cable operators to improve our broadband,” he says. The entrepreneur is eagerly waiting to see how 3G will change the way internet is consumed as well as how content is relevant to people.

“The advent of iPads, mobiles and other technology will give us a flavor of new consumer business, and we are waiting to see how to target the market,” he points out. “I don’t want to count when the pie is small,” he says.
The firm is looking to provide IT services on the cloud to about half dozen industries such as healthcare, education, auto. Going forward, it will also be accessible on mobile.
vegesna’s contribution to Sify. Sify’s growth story so far can be attributed to Vegesna’s style of management. While most corporate management thinks from a corporate standpoint, the Silicon Valley entrepreneur looked at his role of entrepreneurship. “I focused on creating new products/services that were out of the box; and since I have access to some technologies living in the U.S., I wanted to bring these to India,” he says. During these five years, Vegesna has restructured the organization, bringing in more accountability to processes and clarity of individual roles. “Now we are looking at creating the next level and the market for us has changed too,” he adds. “I need to have an organization which is at services level, my customer interface now has to be at the service level.”

Sify is also looking to hire more people from the industry and induct them through its training process. It currently has a global workforce of about 3,000 people. Recently in 2010, Vegesna pumped in another Rs.450 crore in investment through a group of investors affiliated with Sify’s promoter group, including entities affiliated with to him and his brother Ananda Raju Vegesna, Executive Director. “My ambition for Sify is that it be recognized as a world brand of creativity,” says Vegesna.

Reasons for success

Hailing from a middle-class background sans any excess wealth, Vegesna attributes his passion and hard work as the reasons for success. “Every morning I see there are 10 opportunities waiting to be tapped,” he states.
The entrepreneur believes that while one can create a big environment of venture capitalists, it is futile until there are people to take advantage of the same. “Getting money in India is not a problem, you need people with a stomach that’s hungry and passionate,” he reiterates.

The Indian mindset, he feels, needs to change and entrepreneurs shouldn’t think building a venture is merely a get-rich-quick scheme. Failure is still seen negatively in India, unlike the west, and the passion to accept failure is also lacking, he feels. “In the U.S., the VC success ratio is 1:40, but that’s not the case in India,” he notes.

Commenting on the high rate of startup failure in India, Vegesna says, “All VCs I’ve met in the Bay area and who’ve come here are tired of dealing with India; they say they lost their money,” claims Vegesna.

His advice to aspiring entrepreneurs is: Be like a kid who falls, gets up and goes on. “We need that atmosphere in India,” he signs off.

©Entrepreneur June 2011

Tags:
Andhra Pradesh, business, entrepreneur, general motors, raju vegesna, Sify, silicon, Silicon Valley, U.S.