Wise move, winning team

Compelled by a common vision, five friends quit their jobs to launch an IT firm. Five years on, the Rs 4 crore Pennywise is offering cost-effective tech services.

Rajshree Kukreti        Print Edition: October 16, 2008

IDEA SEARCH: Sometimes, all it takes to be a successful entrepreneur is a novel idea. For Anand Morzaria, it was the idea to be an entrepreneur that nudged him towards success. In fact, this intense desire actuated him and his four friends to quit their well-paying jobs, move into a cramped two-bedroom flat and empty their pockets to start an enterprise in 2003. “We just wanted to cut loose from the mainstream and do things our way,” says Morzaria.

Not that his moorings hinted at this streak of autonomy. Belonging to a traditional, middle-class Gujarati business family, where the focus on education and career was supreme, Morzaria toed the line. Much like his two older siblings, he excelled in studies and opted for an integrated course in finance at BITS Pilani. Perhaps it was here that independent thought took root. “There were several in my peer group who shared my vision, but we wanted the experience of the corporate world before starting our own venture,” he says. To this end, Morzaria joined JP Morgan Chase in 2001 through campus placement.

In 2002, the vision still intact, he began to contact his friends to partner him in an undecided venture. The four who agreed were Pavan Pochu, Anshuman Dimri, Venkat Ram Polana and Ananth Vyas, all of whom decided to set up an IT company. Compelled by their common dream, all five quit their jobs and assembled in Hyderabad in June 2003, where, they believed, the infrastructure and atmosphere were conducive for the business they had in mind. The plan was to start building tech products and later diversify to software services.

Anand Morzaria
Anand Morzaria, 30

Education: M.Sc (Tech) Finance, BITS, Pilani

Previous work experience: JP Morgan Chase

Last salary: Rs 6 lakh per annum

Time spent as an employee: 2 years

Age at starting business: 25 years

No of years as an entrepreneur: 5 years

Initial investment: Rs 2 lakh

Source of funding: Pooling in of resources by the five partners

Company’s name: Pennywise Solutions

Turnover: Rs 4 crore (2007-8)

No. of employees: 100

WONDER YEARS: To start with, the five friends, all between 23 and 25 years, rented two apartments, setting up an office in one and a home in the other. Morzaria , through his contacts, had managed a tie-up with a US company for creating an Internet solution product. Each person’s role had been specified to create a focused synergy. So Morzaria worked on building the company’s profile and marketing. Vyas managed finance, HR and liaison with authorities, while Pochu, Dimri and Polana developed the application. “It was a good start. We were provided funds worth Rs 1 lakh a month,” he says.

But the euphoria lasted five months, as the US company ran into troubles and the funds dried up. “We had no money even to pay rent,” says Morzaria. By December, their morale was low. “Our efforts seemed to have gone to waste, but giving up was never an option,” he says. Morzaria tapped his contacts again and roped in a UK-based client in January 2004, for whom they had to create an online remixing music program. The client was impressed and referred them to three more clients.

The team had entered a niche domain by accident. To build on it, they started diversifying their application platform. “By June 2004, we were equipped to provide multiple technology products,” he says. Even though they incurred a loss in the first year, they had built goodwill and expertise. One satisfied client led to another. While scouting for business, Morzaria found that there was another segment waiting to be tapped. “Smaller companies and start-ups need a wide range of services, but bigger firms are out of their reach. They need economical and reliable solutions,” he adds. The team readily took on this task too.

CHALLENGES: Besides getting regular business, finding good staff was also a challenge. “The employees who are in sync with your vision benefit the firm. So we focused on both aptitude and attitude while hiring,” says Morzaria. They were lucky to find Arup Dutta, who is now an integral member of the team. “Though he is not a founder, he has been with us since 2004 and is instrumental in directing the tech initiatives,” he adds. In October 2004, they were ready to move to a bigger office as they had hired 23 people. While the team just managed to make the ends meet, they ensured that the employees were treated well. The key was to be penny wise. The biggest investments were in technology: software licences, computers, servers, high bandwidth. As for the infrastructure, they simply hired or leased.

Like all start-ups, they also learnt to adapt to several irritants: working style of government bodies, regulatory requirements, legal work, non-paying clients, banks reluctant to offer loans, and mounting frustration about not earning enough. “But focus, ability and support from our families helped us overcome the setbacks,” he says.

Tips for starting an IT company

• The team is the most important building block. So focus on people who share the same dream and passion.

• Don’t be rigid about your idea. Innovate and adapt to the market needs.

• Be penny wise. Foolish spending on decor and extra employees doesn’t always help.

• Choose your city of business wisely. Base it on the cost of living, infrastructure and the available talent pool.

GROWTH MODE: The turning point came in mid-2004, when they succeeded in cracking an Internet search technology project for a US client. “This particular technology was not too highly developed, but we took up the challenge and convinced the client,” he says. The project was an important revenue earner and they closed the year with a turnover of Rs 80 lakh.

With 17-20 clients in 2005, the team was in a comfortable position and momentum for growth began to build. As their services expanded, Morzaria introduced new marketing initiatives. From customising IT requirements to dedicating teams exclusively to offshore clients, they ensured all the needs of every client were met. “All start-ups should treat their customers as a priority,” he says.

Building on a strong client base, they ventured into fresh territories. In 2006, they launched tolmolbol.com, a Website that offers a local search service across 100 cities. They are also planning to develop their own products. “Today, we offer the widest gamut of tech services which are cost-effective,” says Morzaria. These include customised application development and maintenance, customer relationship management, portal and Web development, among others.

Servicing an average of 40 clients a day and with over 100 employees, Pennywise recorded a turnover of Rs 4 crore this year. “If we had continued with our jobs, we would have been richer, but now we have created an asset. Besides, the joy and learning that comes from building it can’t be quantified,” he says.

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