• Top Stories

It is often said that passion is the single biggest driver of entrepreneurship. Ajit Balakrishnan’s entrepreneurial journey is no exception. Just that this one was flagged off by a different kind of passion. It was the love of football that took the very enterprising Balakrishnan from his hometown, Kannur in Kerala, to the state capital Thiruvananthapuram and turned around his life forever in 1968.

“There was a football match in Thiruvananthapuram that I was keen to attend. Those were the days when the IIMs had just started in India. An uncle suggested that I take the entrance test. Coincidentally, the test was on the same day as the football match. So I agreed. That way I could take the trip, give the entrance exam in the morning and enjoy the match in the evening. It was the match that was most important for me. Till date, I have this dream of leading my own football team to victory in an international tournament,” says Ajit Balakrishnan, serial entrepreneur and Chairman, Founder and CEO, Rediff.com. Well, like on the football field, Balakrishnan has cleverly used strategy to make the right moves, spot opportunities and achieve his goals in the entrepreneurial space.

His first successful venture was ad agency Rediffusion (now known as Rediffusion—Dentsu, Young & Rubicam) that he co-founded with advertising stalwarts Diwan Arun Nanda and Mohammed Khan in 1973. “When I took the IIM entrance test, I had no idea how much that one move would change my life. I got through both IIM-Ahmedabad and IIM-Calcutta. Once again, my love for football influenced my choice. Kolkata was the football capital of eastern India while Ahmedabad was a place I had barely heard of. So Kolkata it was. At IIM-C, I learnt a whole new way of looking at the world. I was exposed to subjects like economic history, sociology and psychology for the first time in my life. Before that, I had pursued the science stream for graduation. Now, I began to understand concepts like social democracy and economic democracy,” says Balakrishnan.

His association with media was also seeded at his esteemed alma mater. Balakrishnan edited the student magazine on campus for two years, covering themes on the lines of ‘Is IIM an upper-class institution?’

His early exposure to communism in his hometown in Kerala (the state was the epicenter of communism in that decade) and the thoughts that took shape on the IIM campus eventually led him to coin Rediff journalism’s motto as ‘Journalism to protect the weak against the powerful.’

After graduating from IIM-C in 1971, Balakrishnan moved base to Mumbai in 1972 and joined MCM, an innovative ad agency. The creative and media space in the country was witnessing a wave of change at that point.

“Stardust had just entered the market as the first full-fledged Indian magazine. There were some of us who wanted to redefine advertising also. Bill Bernbach, the legendary founder of Doyle Dane Bernbach, was an inspiration for us. Till that point, advertising was treated as a branch of theater and the arts. It was spearheaded by a certain set of theater artists who would devote time to copy writing and ad creation. MCM worked differently. And when we stepped out to form Rediffusion, we lent a whole new angle to the industry as we came in from the business school side. Product managers from companies like Levers were happy to deal with us. We brought in a fresh set of analytical and account management skills and followed two rules to the T at Rediffusion, the first one being the creation of surprising content and the second one being hiring of young talent. Both worked in our favor and Rediffusion won all the Ad Club awards in the year that it was launched,” says Balakrishnan.

However, the entrepreneur is quick to point out that though entering the advertising industry is very easy, it is difficult to succeed in this space. “All you need to start an ad agency is a Mac and a dog. There are no entry barriers. But to stay put in the long run and redefine norms is not easy. We had excellent people like Kamlesh Pandey on board who kept the company on track,” he says. Rediffusion broke even in the first year itself and opened many branches in various cities across India in the years that followed. Today, it is one of the largest and most successful ad agencies in the country.

Balakrishnan moved out of Rediffusion in 1985 to pursue other interests. He put his money in a hardware company called PSI Data Systems and moved base to Bengaluru to serve as director of the company for the next decade till he came back to Mumbai in 1996 to launch Rediff.com. “This was the period when everyone was besotted with computers. New programming languages were being developed as the hardware revolution unfolded. Infosys was a small company next to us. We started out assembling UNIX boxes and went on to make all kinds of micro and dedicated computers. Between 1989 and 1991, the global political and economic landscape changed. The Soviet Union broke apart. Back home in India, Rajiv Gandhi was assassinated. The Indian rupee valued at Rs.8 per dollar fell to Rs.40 per dollar. As a result, all hardware businesses died as they involved imports of parts and payments in dollars. This is the time when software services emerged as a business for firms like Infosys and Wipro. Fortunately, I had sold my stake in PSI Data Systems and moved out before the business crashed,” says Balakrishnan.

It is this vision/foresight and the ability to feel the pulse of the market that has stood Balakrishnan in good stead over the years. After spotting the Rediff opportunity also, he waited for the right time to enter the market. “I had gone to Harvard Business School for an executive education program (the Owner/President Management Program). There, the case study of a U.S. company called Compuserve was presented to us. I was fascinated by the business model of this company. It was a pure information services firm and was operational before the Internet era so you had to dial into a mainframe and the information would be displayed on a huge black screen. I thought to myself that this sounds like an interesting business. After coming back, I discussed the idea with my PSI colleague Venky, who told me to hold on for a little while as the Internet was just arriving,” he says.

The company was incorporated on December 24, 1995, and Rediff.com went live in 1996. “We were among the first ones to host a web server in Asia. We got ourselves a VSNL connection to start with. At that point, there were only 8,000 Internet users in India. But we knew where this movement was going. When I checked the log books after a month of going live, I was surprised to see close to a million hits on the portal. NRIs from North America, Australia and New Zealand were logging in to update themselves about happenings in India. There was no looking back after that,” says Balakrishnan.

Nanda, Balakrishnan’s co-founder at Rediffusion, became his co-investor for the new venture and the two pooled an amount of Rs.1 crore to launch Rediff.com. The company’s revenues stood at Rs.114.43 crore in 2009. As of September 30, 2010, it had a cash balance of Rs.192.6 crore. In the initial years, the firm focused on building websites for other businesses and individuals as it was a pioneer in the web space. The other source of revenue was through sales of banner ads. “There was no concept of VC then. Draper International saw our booth in a trade show and persuaded me for six months to let them invest in the company. That way Draper stepped in as our first VC partner,” says Balakrishnan.

Intel Capital, the global investment arm of Intel Corp, entered the Indian market in 1998. Rediff was among the first few Indian companies Intel bought a stake in and exited successfully too. “Balakrishnan is a visionary. It would not be wrong to say that he is the father of the Internet in India. His portal was among the first few Indian websites to go live and he saw the potential of the web long before the Indian masses woke up to it. Rediff is a rare example of a company building only a web presence and succeeding without any brick and mortar operations to fall back on,” says Arvind Sodhani, Executive Vice-President, Intel Corporation and President, Intel Capital.

There are many more firsts to the Rediff story. The company became the first Indian portal to list on Nasdaq in 2000. It had filed with the U.S. Securities and Exchange Commission in January 2000 for an ADR offering. The Foreign Investment Promotion Board had approved a proposal by Rediff to raise Rs.333 crore through ADRs or American Depositary Receipts. Through June 2000 listing, the portal raised Rs.248.4 crore by selling 4.6 million (46 lakh) shares at a price of Rs.540 per share through Goldman Sachs, Credit Suisse First Boston and Robert Fleming.

“In 1999, the idea of the Nasdaq listing was suggested to me. I thought it was crazy. Later, as experts convinced me, we went ahead with the proceedings in 2000. The period before the IPO was maddening. I made some 100 presentations in a span of 10 days flying between Hong Kong, Frankfurt, Hamburg, Edinburgh, London and finally San Francisco. We had never thought of a Nasdaq listing when we founded Rediff,” says Balakrishnan.

The success of Rediff’s IPO set an example for other Indian portals to adopt the public route to raise funds.

Though it started as a news and information services provider, today Rediff.com has emerged as a one-stop destination for the various needs of Internet users. It offers everything from online shopping to free e-mail to entertainment, matrimonial and social networking facilities.

The latest addition to the portal has been that of Rediff PlayGully which claims to integrate internationally popular games with social networking for its users. In October 2010, the company forayed into the mobile space with the launch of Rediffmail NG, a mobile e-mail app that facilitates seamless transition between the PC and a mobile phone.

“The contemporary professional is always on the move. His attention span is divided usually between the PC and a handheld device which, in most cases, is a mobile phone. The mandate we gave the development team for Rediffmail NG was that it should offer security, speed and ease of use for mobile e-mail access,” says Balakrishnan.

Dwelling for a moment on the crux of entrepreneurship, he says that a true entrepreneur goes to non-users with his offering and converts them into users.

“In the late ’60s, Karsanbhai Patel saw common people washing clothes on stones using sodium bicarbonate. He devised Nirma washing powder for that large base of detergent non-users and not to switch preferences of consumers already using high-end detergent powder. We want to do something similar with Rediffmail NG,” he says.

The e-mail app claims to work across all mobile phone platforms including Symbian, Android and Java and across handsets too. Balakrishnan’s fascination with technology and mobility doesn’t end with work. At any point in time, the busy CEO of Rediff has e-copies of 175 books between his Kindle and i-pad. “I love reading and have just finished Jonathan Livingston Seagull by Richard Bach. I started reading it on a flight and could not put the book down till I finished it early next morning,” he says.

Balakrishnan is an avid blogger and enjoys traveling, yoga and football. He sits on the government committee reviewing the Indian IT Act and also serves as chairman of the Board of Governors of IIM Calcutta. Clearly, he is a man not afraid to take risks and think ahead. And if there is one thing he feels every entrepreneur should hold on to, it is the conviction in his/her idea. “Whether you make money or not is secondary, your idea should lead to disruptive innovation,” he concludes.

Next: Vubites India – Adding Value to Ads ->>>

Tags:
advertising, Ajit Balakrishnan, Dentsu, disruptive innovation, internet, Rediff.com, Rediffusion, Vubites India, Young & Rubicam