Belief in the idea and faith in the team motivated Madan Padaki, Murlidhar S and Mohan Kannegal to risk their all in MeritTrac.
1. DEVELOPING THE IDEA
The roller-coaster growth that accompanied MeritTrac, a skill-assessment company, could beat any thriller. The developments that led to the company’s boom, bust and boom were so fascinating that business management school INSEAD, Singapore, has compiled it as a case study on entrepreneurship.
It all started when Bangalore-based Madan Padaki visited his home town during the dotcom boom in May 2000. “Entrepreneurship was in the air. Every good idea had the backing of a venture capitalist (VC). It was all so heady,” says Padaki, who was in the midst of setting up BFL Software’s office in Japan.
His friends, who had set up a software development company, had rejected an offer to create a software to evaluate potential programmers. But Padaki realised the opportunity in the idea. “Companies had to maintain large questionnaire banks to test new employees. My 15-day leave turned into a brainstorming session,” he says.
The idea was to set up a one-stop skill-assessment centre that would provide information technology (IT) companies with an end-to-end solution in testing the skills of new employees.
Friends and family offered support. Padaki involved his brother-in-law, Murlidhar S, a national sales manager with Birla 3M and Mohan Kannegal, a batchmate from SPJIMR, who was employed with Citicorp Overseas Software. In June, Padaki was back and met the head of human resource (HR) at Wipro for a validation of the idea. “The response was very positive and we were ecstatic,” says Padaki.
|MADAN PADAKI, 34||MOHAN KANNEGAL, 34||MURLIDHAR S, 38|
Last annual salary
$75,000 + perks
Rs 6 lakh
Rs 10 lakh
Age at starting business
Years as entrepreneur
Sources of fund
|Rs 25,000 per co-founder|
|MeritTrac, a skill assessment company|
|Rs 20 crore (2006-07)|
No. of employees
2. GETTING STARTED
The beginning wasn’t auspicious. Padaki had to resign as his office refused to give him a sabbatical. The other two decided to stay put with their jobs. “I realised the enormity of my action a day later. Here I was with no funding, no client and no job to fall back upon,” he says. To survive, he plunged headlong into scouting for a customer.
There were more hardships to follow for the new entrepreneurs. VCs rejected their business idea, as it was not based on a rupee-dollar model. “We were targeting Indian IT companies and not the US ones,” says Kannegal. They hit pay dirt with Wipro, which was planning a recruitment drive. Since HR was not his forte, Padaki tied up with Vijay and Roopa Padaki of P&P Group, experts in organisational development.
The group became MeritTrac’s knowledge partners. The trio realised that in order to fortify their business, they needed the endorsement of experts. To create an advisory board, they approached V Natarajan, an author of books on assessments, Pankaj Jalote, a professor at IIT, Delhi, and columnist Mukul Sharma. However, VCs still kept rejecting their proposals and by August 2000, the dotcom bubble had burst.