Vinayak Joglekar was employed as an EDP (Electronic Data Processing) manager at Alfa Laval in the eighties, when he caught the entrepreneurial bug. Being a risk-averse manager from IIM Cal, he applied his first lean principle, by not quitting his job, but hiring an employee at Rs. 500 per month, to find out if people were ready to pay for Data. After a thousand rupees worth of salary, he realized that they were. So he dived into the entrepreneurial jungle in 1983 – with his first company – Informex – to sell information – to whoever wanted it!
Informex found that low hanging fruit at that time was in giving companies information about prospective employees. Informex was probably the first Placement agency in Pune. The company started off by charging Rs. 5 per address supplied, supplemented it by charging people Rs. 15 to regiser. Still not making ends meet, they tried increasing candidate fees to Rs. 25. Faced a lot of resistance – and decided to charge a higher amount from the company. The next revenue model was to charge 25% of the first month’s salary – which again saw the company making losses – and finally over the years settled down to the 8.33% of CTC – that has been the norm now for decades. A very interesting insight into how revenue models stabilize over time!
But I think, we are putting the cart before the horse. Because we need to realize that Informex was not just a placement agency – thanks to Vinayak’s EDP background – it was a computerized placement agency. Vinayak was quite emotionally attached to the micro-computer that Alfa Laval had – and he decided that the USP for Informex was that all information was computerized. So he contacted the sellers – PSI Data – and found that it cost an astronomical sum of Rs. 150,000 in those times. Having not more than 10% of that in his pocket, he approached IDBI head office in Mumbai for financing this purchase. They did – and he was in business!
With computers being assets which were so highly prized (or should we say priced) – there was a good market for renting them. So that became Informex’ second revenue stream – renting them out for a 100 bucks an hour. People would come and work late nights on the machine. Vinayak’s previous employer – Alfa laval – pitched in with a data entry contract to Informex – and thanks to all of these – the IDBI loan got repaid!
Having a computer available, meant that Vinayak could also indulge in his hobby of coding. PSI – the computer company that sold him the machine – knew of this. They started sending him assignments from other companies that had purchased their machines. So this led to an additional cash flow channel.
In the meantime, the HR business continued – being handled by Vinayak’s wife. Amongst that business’ dubious claim to fame – is to have turned back NRN Murthy of Infy as a client. When NRN first came to meet Vinayak, the shirt was half tucked in, there was chalk powder on his hands – he resembled a school teacher much more than an IT entrepreneur. The Infy office in Pune was NRN’s house – where the company name was printed using alphabet stickers which came gratis with VIP suitcases. Alas, Vinayak in his wisdom, decided that placing people with Infy may cause him trouble later!
In the nineties, his placement company started receiving requests from US based companies for people to work on projects in the US. This was what was the first phase of India’s IT exports – body shopping. There was a requirement of Java professionals – and a shortage at that time. Vinayak, the opportunity spotter as always, took a month to pick up Java skills – and started training people to acquire Sun certification. Quite a few of his trainees landed up in the US within a few months of doing his course. This was circa 1999 – and the requirement was for mostly Y2K projects.
Unfortunately for Vinayak, by the time Y2K+1 came, most of his trainees were back in India – as projects dried up totally. Vinayak invited them to ‘free’-lance with him (pun – he did not pay them any salary) and decided to use his bench to get working on developing cross enterprise performance management dashboard. Realising that this was a blockbuster project – requiring good capital – he started doing rounds of VCs. Each VC would ask him about whether his product could support the latest fad – buzz. And every time Vinayak would say off course – and then rush back to incorporate that into his software. In hindsight, one of his biggest mistakes. The project, as a result, was quite patchy – and even though he did get funded for half a million dollars – it was not enough.
But remember our old friend – Opportunity. It knocked again, and as always Vinayak kept his doors open. The VCs gave up on his product – but told him – why don’t you work on the products that our other portfolio companies are working on. Through his career Vinayak’s linkages with his IIT Bombay alumni seem to have helped him much more than his friends from IIM Calcutta. Synerzip’s first potential customer had come visiting from the US, and had wanted to drop into its office to chat up with the team. The problem then was that there was no office – and no team. Vinayak managed to convince his bum-chums from IIT Bombay – Gireendra Kasmalkar, who heads SQS India today, was one of them – to enact the roles of the team. An office was ‘sourced’ from a neighbour who was a builder with a semi-finished building which had a furnished office. Rehearsals were held at a restaurant for the team – and voila, the customer went away impressed enough to give Synerzip its first client! Today, it has grown to a 400 strong team – focused on just product development. It counts companies like Google as its customers – having developed Quick Office for Google.
The only asset that an IT company has is people. A culture of trust has been something that has differentiated Synerzip. There are no attendance and leave norms at the company. That has led to a happy non-politicised atmosphere – which has led to very low attrition rates (about 8%). Happy people means happy customers. Happy customers mean more references. In fact Synerzip’s simple measure of quality is – are our customers referenceable. They try to do whatever is humanly (I thought humanely would fit better over here J) possible to ensure that customers say good things about the company.
And what does the future hold for Vinayak? With a gleam in his eye – he looks at the likes of Zomato – which have proven that Indian ‘products’ can succeed globally. However he is clear – it will not be under the Synerzip auspices. He is clear – you cannot have services and products under the same umbrella. The DNA just does not match! Vinayak’s DNA has lean all over it. He now talks of ‘lean’ investments. Most VCs invest in business plans. Reality is that most business plans work only with version 2 and version 3. However an entrepreneur who has sold a story to a VC – and received funding for it – cannot go back to them – and confess that the story is not working. Vinayak’s vision is to have investors who can work with entrepreneurs who are ready to learn from mistakes. The idea is to spend small sums on validating hypotheses. What we are trying to do is to test not just the presence of customer pain points, but whether they hurt enough. If a customer pays, build, if not write off.