Sanjeev Aggarwal

Although Daksh is a part of IBM now, it has always stayed close to my heart. I was born in 1960 near Jalandhar, and my father was in the judiciary. I was the youngest of four siblings and studied engineering and MBA from Punjab University. Between my engineering and MBA degrees, I started a company in 1981 in the area of computer training.

We were early movers in what would later turn into a large industry. Computer training was very aspirational but my father wanted me to take up a saner career, which was to do my MBA and take up a job. There was a lot of resistance and I had to finally shut the company within a year of starting it.

After my MBA, I worked in various Indian companies for about 10 years. My first stint was as a management trainee at DCM. I also spent considerable time at Thermax where I was spearheading the company’s efforts to set up a computer division in the country. That gave me an idea that I have a knack for starting things, that I have developed cross-functional abilities and project-oriented mentality where I wanted to create something new.

Making a move to Digital Equipment Corporation (DEC) when it was the second best computer manufacturer in the world, I was greatly influenced by the workings of Som Mittal, who headed DEC those days. The way he energized the organization, focused on customers and employees was a great eye-opener on how a business is built and run.

Internet 1.0
By the year 2000, I had made up my mind to turn an entrepreneur. In 1999, the internet craze was beginning; my brother-in-law Ashish Gupta sold his company Junglee to Amazon.com. These were the first crop of internet companies and, for me, an unlikely source of inspiration to quit my job and do what I always wanted to do. It was very inspirational for me as to how a person 10 years younger than me could think of an idea, convert it into a company and sell it to Amazon and make ripples. I started to talk to Ashish about doing something and he introduced me to Pawan Vaish, who would later become my co-founder. The three of us went through various ideas like starting a children’s portal, a search firm, amongst others.

The internet was, however, beginning to take off and consumers on the internet were having a very challenged experienced. They would go to an internet retailer and while there would be a technology storefront, there was no means to get them assistance with their queries. We were stunned by statistics which claimed two-thirds of customer interaction on the internet were getting abandoned. We thought we could be a solution to this problem by leveraging India’s intellectual capital.

On the other hand, GE had moved some of its business processes to India as a captive unit. While offshoring had been established, outsourced offshoring hadn’t been ascertained. We thought we had an answer to this.

I had about Rs.5 lakh at that time but venture capital was beginning to happen in India and companies like Rediff were raising capital in India. It seemed distant and hard but we were hoping that money would be available to fund our venture. All the three things that we hoped for were soon validated.

Based on our idea, we three raised Rs.9 crore of which a large chunk came from Ashish, who plugged in as an angel investor and started Daksh in January 2000. Pawan’s father had a large building which he was willing to rent out to us, but we did not have the resources to rent the entire place. We took a room in the building but whenever a prospective client came, we would make it seem as if the entire building belonged to us and our company.

After hundreds of cold calls in the Silicon Valley, our first contract came from Bigstep.com and then I called on Bill Price, the first global vice president of customer service for Amazon.com.

Getting created twice
Stephen Covey says that everything is created twice, first in the mind and then in reality. When we were doing our business plan, we said we must have Amazon, eBay and Yahoo! as our customers. Bigstep.com was a stepping stone for us and once we went to Price at Amazon, who was very entrepreneurial himself, the rest was history.

Customer service in the U.S. at that time was a very insular function and they had very little experience in global exposure. Amazon had not even outsourced customer servicing to a U.S. company because they thought it was a core competency which they needed to handle. Over a six month process they interacted with us and we were asked to submit the RFP.

We won the project in June 2000 primarily because Amazon wanted someone to take a fresh look at the aspect and we were the only new company in the process.

Most business for Amazon happens in the fourth quarter, around the holiday season of Christmas, when they get a lot of customer queries and Amazon had given us some volume to handle in that phase.

All of a sudden they found that demand was higher than anticipated and they needed 50 percent more customer service capacity than they wanted Daksh to handle. We had a couple of hundred people working and we needed to raise capacity by another 150 people in a short notice of about 30 days.

We were not contractually bound to do this but we went ahead and this built our relationship with Amazon that we helped them in their time of need. We delivered a very good season with good customer scores and good turnaround time.

This was a big shot in the arm and all of a sudden Amazon was a customer that Daksh could provide reference of. This created Daksh with first year revenues of Rs.9 crore and a profitable business.

Scaling up
In the year 2001, a telecom major approached Daksh and asked us to scale from its headcount of 200 by adding another 1,000 and meeting all its metrics within six months to win a contract. We had to scale very quickly and at the same time, deliver results. This was the time when I learnt certain key lessons of scaling up. We broke the company into three parts. While the new business was broken into two: e-mail and voice, the existing business of Amazon was kept in a different business unit. We succeeded and our revenues jumped the next fiscal from Rs.9 crore to Rs.81 crore.

During the same time, Daksh needed more investment and we got Citigroup to invest Rs.9 crore. Once this project was sorted out, Daksh started looking towards North America and Europe and started talking to clients like Citi and HP who went on to become customers. By the third year, Daksh clocked revenues of Rs.135 crore and was a runaway success. Globalization kicked in and a center was opened in the Philippines and another round of investment was raised from General Atlantic Partner.

Tipping point
We were at a stage where we had to make a choice between going public or selling the company. We were contemplating a public issue when IBM came calling. IBM was watching the game very closely and realized that it was an industry in the making. They had developed consulting capability though PwC, technology capability through their own legacy and now needed processing that they could bundle and present it as business transformation. Daksh was sold to IBM in 2004 and I continued to lead the company till 2006.

New innings
Somewhere around 2005, I started asking myself what I should do next. I had three choices: to start another company and become a serial entrepreneur, but did not have any ideas to go with. The second was to continue to build the IBM entity and take on larger responsibilities at IBM, which was not very attractive to me. When I was interacting with venture capitalists to raise money, I was intrigued by their profession. Given my experience, I thought I could help entrepreneurs think through in building a scalable company over a period of time.

I got in touch with my brother-in-law, who was contemplating returning to India and was already an angel investor. We roped in two colleagues and created Helion Ventures in July 2006. MakemyTrip is a good example of our first investment and we continue to be invested in it. We raised another fund in 2008 and at the same time broadened our investment horizon. Today, we have 36 companies that we have invested in across six-seven sectors and some more room to invest from our second round.

A mistake
In the course of this article, it was nice to be reminded of my Daksh days after a long period. One mistake I did in life was I read the market wrong when I sold Daksh. My view was that consulting, technology and outsourcing would come together and customers would migrate to business transformation versus only business process. Therefore, it made a lot of sense to sell to someone like IBM.

That was a wrong call because even till date, there are customers who buy an integrated capability of business transformation but there are equal number of customers who buy the business process outsourcing.

We could have been a much more valuable company if we had stayed on building the company because, even today, penetration of offshore BPO is still a very small percentage of overall market opportunity.

We sold the company ahead of its time though we could have stayed independent and gone public.

Sanjeev Aggarwal is Senior Managing Director of Helion Venture Partners.