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The Rediff Interview/ Dr Gururaj Deshpande

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The Rediff Interview/ Dr Gururaj Deshpande
‘There are lots of things money cannot buy’

His was the firm that Fortune magazine claimed would ‘change the nature of the Internet.’

The company, Sycamore Networks, has made waves on Wall Street in recent times, making Gururaj Deshpande a billionaire in the bargain.

Sycamore is involved in the business of intelligent optical networking solutions for carriers and service providers.

Dr Deshpande had made his point earlier when he sold Cascade Communications, a start-up company he had founded, for $ 3.7 billion in 1997. Later, Lucent Technologies bought it for $ 21billion.

In an interview with Sheela Bhatt, the man widely assumed to be the richest Indian in America discusses matters of identity, the power of money and what really enthuses him.

What is it like to be an immigrant?

I have stopped feeling like an immigrant. I am Me. I am focused. I feel things intensely. For me, this moment is important.

At this moment I am not missing Boston. Just now I am talking to you. That’s it. When I am vacationing in India I feel as comfortable here as I do in America. I’m living this particular moment. I get into the moment and things.

Things are not at all different for me. I am the same as I was when I left India as a student.

But there are millions of immigrants who feel uprooted. They go through a painful process of getting readjusted to an alien culture…

They are not engaged in a game they like. I am at home in America. I wash dishes, play with kids. I do normal things, like any American does. I don’t carry my office home. Life is normal there. When I go to India, I play the Indian game! I like it.

Then can you call yourself an American?

Yeah, I’m American, whatever you mean by that.

And what do you attribute America’s leading position to?

America has a tremendous ability to reinvent itself. Americans catch on the next best thing. Its achievements are due to this. Its treatment of immigrants has been as fair as any other country. America is very great as collective force. Systems work for the communities. It does dislocate some individuals, like it did the steel workers of Pittsburgh. Sometimes it gives individuals a hard time.

If there is a road accident, the system will immediately move in. The crash victims will be taken care of.

It’s possible that there may be no one to visit the victim in the hospital. The impact of IT revolution on the human mind isn’t yet clear. Wealth does buy you independence. But the emotional support system is not assured, like in India.


That’s the beauty of us, the immigrants. We enjoy best of both worlds. If you gauge both systems right, you are at an advantage. I can’t say the same about second generation Indians.

Does the thought of having so much money affect you in any way?

Money is just another tool. When you are young, you tend to think that money can buy anything. But it doesn’t. There are lots of things money cannot buy.

Time, other people’s love. Those billions are just a tool. It’s good only if you put it to good use. Some people think that because they have the money they can get away with anything. That’s not true.

I want almost nothing that my money can help me get. Actually, I don’t need much. My needs were met with before this money came.

Then what’s the kick in being the billionaire and not mere a millionaire?

It’s nice.

What else?

When I go to Sycamore in the morning and see my network growing and my people performing, that makes a difference. That’s what gives me a kick.

You said you feel at home in India too. Can’t you just stay back?

My kids might pull me away. They have been growing in America. Also, the professional opportunities there may lure me. It’s really bigger.

When you are competing in the Olympics, it’s different, and the street race is different. In the US, you have real, real hard competition. Compared to that, there is no competition in the Indian markets. One has to really fight hard to get market share in the US.

Does this money have an impact on your personal relationships?

Jayshree, my wife, is an accomplished personality. She is a graduate from IIT, Madras. She clearly sees her role. Money is power, but the question is, how are you going to use it?

Big money magnifies all the aspects of the personality. Now, if I misbehave, I can really damage things in a big way. Both of us are aware of this dimension of money.

My mother lives in Karnataka. It is hard for her to believe that Ravi (Dr Deshpande’s nickname), her son, has made it this big.

Gururaj Deshpande’s first entrepreneurial venture netted $26.95. The chairman of Sycamore Networks keeps a framed copy of the check as a reminder that finding his passion for building companies was the real payoff.

Deshpande rejected the idea of returning to his life as a professor and software engineer after his first failure. Instead — in the wake of financial ruin — Deshpande would light out in search of his next entrepreneurial adventure, emboldened by a taste of his true calling.

Gururaj “Desh” Deshpande
Chairman of Sycamore Networks
Born: Nov. 30, 1950 in Dharwar, India
Two sons
Stock Symbol: SCMR
Companies Started:
1987 — Coral Networks
1990 — Cascade Communications
1998 — Sycamore Networks
BS Electrical Engineering — IIT Madras, India
ME Electrical Engineering — University of New Brunswick, Canada
PhD Data Comunications — Queens University, Canada, where he was voted best professor

If it’s something you really believe in, he asserts, “you don’t really [have] look for anybody else to approve of that conviction. … You’re going to make it happen.”

And he did. Six months later, Deshpande launched into his next endeavor. Cascade Communications, as the company was called, would be a gamble at manufacturing Internet equipment. His doubters were many, reinforced in their pessimism by an industry dominated by Cisco Systems.

Desphande stayed the course, always keeping true to his vision. Conviction is central to the serial entrepreneur’s success, he maintains, because “everybody that you talk to is only going to try to discredit you. They’re going to try to tell you that it’s probably not something that is going to work.”

In 1997, Cascade was sold to Ascend Communications for $3.7 billion. By that time 72 percent of all Internet traffic was coursing through Cascade’s products.

Success or failure, it was the doing he loved. So he did it again. “You always have to do, at least in order of magnitude, more and different than what you’ve done in the past,” explains Deshpande.

Sycamore was founded a year after Cascade in anticipation of the optical-networks boom. In a little over two years, Deshpande built the company up to a market valuation of over $23 billion.

With his second multibillion-dollar company, Deshpande has succeeded in making himself one of the richest men in the world. His net worth tops $4 billion. All thanks to an earlier experience worth just $26.95.

Tune into PBS’ Nightly Business Report Thursday to see Donald Van de Mark’s interview with Gururaj Deshpande. Prime Movers airs every Thursday on the Nightly Business Report. Check your local listing for times.

‘IT will empower people like never before’
The 21st century is considered to be the Golden Age of Telecom for India. The telecommunications industry is, perhaps, growing, but not as expected by the industry. Many corporations are not showing enough willingness to invest in emerging technologies in India, while several networking companies in the US have halted development due to the slump in the sector. Part of what’s making this downturn so severe is that other markets, such as Europe, are experiencing similar problems.
Gururaj ‘Desh’ Deshpande, co-founder and chairman, Sycamore Networks, Inc, is an influential technology enterpreneur whose companies and ideas often reshape entire industries. Deshpande became the world’s richest Indian with a net worth of an estimated $3.7 billion when Sycamore had a blockbuster deput on NASDAQ a few years ago. Sycamore’s success and Deshpande’s vision of a new optical-based worldwide network made him a technology visionary of the new economy. Sycamore has been affected by the slowdown in the industry, but it has managed to keep cash-burn at an absolute minimum, and exited its fiscal year 2002 with more than $one billion in cash. Though it halted development on stand-alone transport systems, it is increasing investment in the R&D related to its switching portfolio by approximately 20 percent.

The 52-year-old technology entrepreneur shares his vision on the industry trends in the tough times and emerging technologies for the future markets. Excerpts from an interview with T Radhakrishna:

This is the age of telecom. But what is stopping corporations from using telecom more effectively despite the huge investments in network infrastructure and Internet-based applications? When, and how, do you see the Golden Age of Telecom coming in India?
One of the things, we’re seeing everywhere, here in the US included, is that people don’t change behaviour as rapidly as we sometimes would like. To use the US as an example, we had a few years of considerable growth in the demand for bandwidth, and many telecom companies simply extrapolated from those numbers and assumed bandwidth demand would be nearly limitless. Now there is considerable overcapacity built into the networks, and there just aren’t the applications or enough of a fundamental change in behaviour to fill up those pipes. India is probably going through something similar – telecom companies are investing in networks, but the corporate and consumer end-users may not be ready for the technology. However, the change in behaviour will happen eventually.

In the next few years, the growth is going to come from reaching a broader cross-section of the world. In fact, half of the world’s population has not made a phone call yet. I believe we’re going to see more technology corporations – telecom included – focusing on (and profiting from) some of the world’s poorer and more rural citizens such as those in parts of India. Some of this is already happening.

For example, a recent Harvard Business Review report used the example of wives of fishermen on the Indian coast learning to use the Internet to help their husbands locate the best fishing grounds. Bringing technologies like the Internet to developing regions of the world not only benefits the citizens of those areas (which make up the vast majority of the world’s population), but can also be profitable for the companies. So, we’ll begin to see technology used in these parts of the world in ways that were never even thought of before.

What are some new technologies and applications for the enterprise and home that you are excited about?

Information technology will continue to empower the consumer like never before – in ways that people have not even yet considered. When you look at what information technology has done to the US retail market alone in the past four years, it is astounding. Technology will continue to make our lives easier, more enjoyable, and open up more opportunities for business, entertainment, wealth creation, etc. At work, we’ll see even more ways the network will continue to play a key role. The network will play an increasingly large role as people discover ways to improve efficiencies and productivity at work. At home, we’re going to see more bandwidth capacity, and it doesn’t matter if it’s Fiber-to-the-Home or DSL or wireless or something else. For new things to happen, the underlying network infrastructure and related products must have some intelligence and be flexible.

One area I am also very excited about is using innovative technology to target the market for the less fortunate and raise living standards and improve lives across the world – what I commonly refer to as ‘technology for the masses’.

Service providers keep rolling out and backing new products and technologies to make enterprises rely on them more and to make networks faster and more robust. What should a CIO think about when choosing a service provider these days?

Companies like Sycamore sell equipment to service providers that help them create more flexible, efficient networks, providing these service providers with competitive differentiation, lower cost base for delivering services, and improved operational efficiencies. The same benefits can be passed on to enterprise customers that leverage these service providers. It is important to look at a service provider that is well equipped to support today’s service requirements, and is also positioned to scale in service depth and reach as a business grows. Some basic qualities to look for in a service provider include:
· A focus on service velocity for new and existing customers
· A focus on a flexible, scalable network architecture that will facilitate future growth
· Commitment to profitable operations for long-term viability
· Perseverance to continue with technology innovation in spite of tough macro-business conditions .

You have been watching the Indian telecom scene developing very fast. Are you comfortable with the dominant technology choices that are emerging, whether on the part of service providers or large users of telecom? What implications will they have, especially in terms of the growth of optical networks in India?

Part of what makes the Indian telecom scene so interesting is that it’s less mature than markets like the US. While telecom companies here have billions of dollars of installed networks and equipment, much of India does not. In some cases, this can be an advantage, because telecom service providers in India can build their networks with the latest technology, without worrying about phasing out expensive and outdated legacy equipment.

As Chairman of Tejas Networks in Bangalore, I have the advantage of seeing first-hand how these world-leading technologists will roll out telecommunications networks throughout India in the next few years. It will be a pleasure to watch the Tejas team bring some very innovative and practical products to the market for use in India itself. To date, India has done an excellent job of creating a service business for the high technology industry – but one that serves markets outside of India. Moving forward, India will build products and services specifically to serve the Indian high technology industry, and then reach out to the larger global market.

How well do you think has Sycamore weathered the slowdown?

There is no doubt Sycamore has been affected by the slowdown in the telecommunications industry, but we have the management, people, resources, and products to emerge from the downturn as one of the long-term market winners. One area where we, and everyone else, ran into difficulties was the unexpected – rather unexpectedly soon – troubles faced by the emerging carriers. These emerging carriers were significant contributors to Sycamore’s revenue stream and served as important early-adopters and proof points for Sycamore’s technology. With these customers facing financial difficulties of their own, we’re now focusing on the well-funded incumbent carriers, evidenced by customers such as Vodafone, NTT Communications, and BellSouth.

What areas will Sycamore focus on in the future markets?

We will remain focused on optical switching which is clearly a technology segment that will provide Sycamore and our customers a foundation for future growth. Optical switching and our software intelligence is what we consider to be our greatest technology assets. Together, these two enable our customers to drive down network costs, while simplifying operations and creating the infrastructure to support the introduction of new services. By redirecting our transport technology and core optical talent to the development of next generation switching systems with integrated transport functionality, we believe we will emerge from this market downturn with a unique product portfolio that will place us in a strong and highly competitive position.

We also plan to continue to explore relationships with strategic partners in several areas – ranging from technology interoperability to the type of business relationships we announced with Siemens.

How do you keep a company motivated in the face of recession?

I believe you have to look at this as if it were a game, and you have to keep in mind that the game has only just started. The competition might be tough, and things may not always go exactly the way we wish, but the game is still fun and challenging. We entered the game to win, and that hasn’t changed.

You have seen ups and downs in the industry. How do you feel?

The technology industry is based on innovation and risk. In tough times like these, one has to be more creative and innovative and the game gets even more interesting. I thrive on playing the game. Others will judge whether I am winning or losing.

Written by Bhushan Kulkarni

January 15, 2007 at 12:06 pm

Posted in Management

Tagged with ,

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