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10 years of the Dotcom bust

Ten years ago this month, the dotcom bust began, burning trillions of dollars and millions of dreams. BT asks two entrepreneurs who were there for the lessons they learnt.

T.V. Mahalingam and Kushan Mitra         Print Edition: March 21, 2010

The Survivor
Alok Kejriwal, Co-founder & CEO, Games2win

To me, if there was something that epitomised the headiness of the dotcom days, it was Sula Tuesday. Restaurateur Rajiv Samant had started this club for tech entrepreneurs to get together. They would get together on the first Tuesday of each month. Venture capitalists and start-up promoters rubbed shoulders, and wine flowed.

To have a dotcom in your visiting card was a status symbol. Marketing departments of conservative companies were desperate to add a slide in their presentations which said: "Hey, we are doing the dotcom thing, too." The job market went crazy. Director-level candidates began to ask for 50 per cent hikes or a 5 per cent stake in the company to come aboard. A lot of good mid-career professionals lost their way.

Most dotcoms were splurging to get visibility. Some took out full front page ads. Others had painted Mumbai's local buses with their logos. In my second Board meeting, in March 2000, a Director on my Board asked me why I was not spending to get more visibility. "Why are you not booking hoardings? You are acting conservatively like a Marwari. We did not fund you to put the money in an FD," I was told. A vote was proposed to determine if I was competent enough to run the company. Luckily, there were more people who believed I was good enough to do so. A few months later, after the bust, the same Director thanked me for staying on.

From being the most sought-after guys, dotcom entrepreneurs suddenly became the bad guys. As for the VCs, they just fell off. Between late 1999 and February 2000, I was meeting a VC a day. After the bust, between June and August, I met just one VC in 90 days. At one point, we had cash to last us just a month. So, we would turn off the lights at office meetings. It was then that we realised that we were running after the wrong people. I stopped meeting VCs and journalists. In the next 100 days, I met 400 clients and asked them for advances for work we were doing for them.

In the end, what saved me was my conservative, Marwari approach. I keep telling people here, don't sign a cheque till you sign on an invoice. That's what keeps you afloat in tough times.

As told to T.V. Mahalingam

"I Failed and I Learned"

Rohit Anand, 39
TODAY: Managing Director of his second start-up, Value Edge.
2000: Founder of smartbahu.com.

In the world of entrepreneurs, there is a "small world" syndrome. One of Rohit Anand's teachers, while he pursued his first MBA from IMT Ghaziabad, was Sanjeev Bikhchandani, CEO, Info Edge. When Anand graduated from IMT in the mid-1990s, he had two offers—one from Bikhchandani and another from Ranbaxy. Unsure of whether he wanted to join a start-up, he chose Ranbaxy.

But the lure of a start-up got the better of him and, after a few years at Ranbaxy, Anand set up smartbahu.com in late 1999. "The Internet was booming and I designed the site as a sort of business-to-consumer portal, targeting young housewives. The idea was to get eyeballs and we got eyeballs. In fact, we were doing quite well on that front," Anand admits, "but we were just burning through money, we had a cash-loss situation month on month. We never had enough funding, and by 2001, I had to leave."

Anand admits that he has thought of the failure several times over the past decade, but he did not dwell on it for too long. Instead, he applied to do a second management degree from famous French business school INSEAD. "After I finished my degree and went to apply for jobs, I discovered that many people did not look at my business failure as a bad thing. In fact, the person who hired me at Amgen thought it gave me more determination to succeed."

After six years in Europe working for Amgen and Sanofi-aventis, Anand came back to India in 2007 with American biotechnology firm Biogen Idec. And he learnt, "I got a worldclass education and I got international exposure. Could I do what I am doing today without learning all this? I doubt it."

In 2009, an "older, wiser" Anand, now with some grey hair on his head and enough of a fiscal cushion, set up his second start-up. Not a dotcom this time, but an outsourced research firm, in an area who knows well — pharmaceuticals and biotechnology. "I founded Value Edge Research Services to provide lower-cost, but high quality research to pharmaceutical companies," he says. "This is an area I know well through years of experience, and my earlier experiences with a start-up taught me the importance of money.

While we don't have funding today, because I don't feel it is the right time, we are cash-flow positive and business is doing well." They say to be a phoenix that can rise from the ashes, you have to burn first. Anand may have been singed before, but things have never looked better.

Kushan Mitra

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