Persistent Systems founder and chairman Anand Deshpande, a newly minted Indian billionaire says being in the ultra-rich has changed nothing other than the number of people now saying that they know him.
He also finds the status wafer thin -- one dip in share prices can bring his worth to $900 million from $ 1 billion.
Would he have become a billionaire sooner if he was based in India's tech billionaire hub Bengaluru rather than Pune? "Pune is a much better place to live and survive in than Bengaluru", he says without missing a beat.
Deshpande, the 59-year-old founder of IT firm Persistent Systems wears many hats: entrepreneur, chairman, mentor and founding member of policy think tank iSPIRT.
Deshpande, who holds a Computer Science and Engineering degree from IIT Kharagpur, and an MS and Ph.D in Computer Science from Indiana University, founded Persistent Systems in 1990, prior to which he worked in Hewlett Packard Laboratories Palo Alto.
In an interview with Moneycontrol, Deshpande talks about being a billionaire, what keeps him motivated, and why he thinks programming life instead of programming computers, is going to be the future.
Tell us how life has changed for you after being named a billionaire.
Nothing has changed for me. Though, I have found that I have a lot of people who say that they know me now. I have been getting lots of messages, and emails from people telling me how they have met me in different parts and how, how I should befriend them. But nothing particularly has changed for me with respect to what I do on a day-to-day basis, and I don't expect that to change either. When we are growing up, we always see billionaires in the Forbes or other such lists. It has always been like, ‘Oh wow, that is such a daunting number’ and one never imagines one is going to be there, right. Just to be in that list is a very humbling and sort of strange, surreal experience in that sense. I wasn't planning to be a billionaire or be on the billionaire list even. And again I do understand that stock market prices go up and down and I'm still so much on that wafer thin number that one dip would take me to $900 million instead of the $1 billion. So it's one of those weird things, not that it makes a difference, having touched that mark once at least is something I had never imagined. But it feels good to be part of the list.
What does wealth mean to you?
There are two parts to how I see this. I see myself as a trustee of my shares in Persistent right now. There is a company to run, and it needs the shares that I own to support the business and the firm. I have a CEO and team that runs the business. As someone who owns 29.5 percent of the company, I'm a trustee for the shares and holding them for the betterment of the company. And the reality is, and I've seen this happen in other businesses as well, if we don't have people like me who hold on to a certain position for the company, then the company is very vulnerable to a whole bunch of different things. So at this moment, at least I see my role as a trustee of the ownership of the shares that I own. I'm the trustee of those shares and I don't see myself necessarily as the owner of them at this moment. At this moment, at least, I have no intention of doing anything with them. Of course, this is a big amount of wealth in some sense, but one gets paid handsomely as part of my job. I also get a very healthy amount of dividend income. I am well off even without these billion dollars of shares that you can see that I'm holding as a trustee. And on my wealth part, for the last several years, we've had this conversation at home with the kids and others. So we have allocated a certain amount that we believe needs to be legacy, anything else, I am looking at in terms of philanthropy, and also in terms of furthering the overall ecosystem in that sense. I've been working very closely on a bunch of non-profits and other areas.
So, skin in the game?
So when the company has to make certain decisions, you need stable support for the management to run their business. You don't want ownership-related issues in the company, because that is very detrimental to the management and to the employees. You saw this with Mindtree for example, when all these people were going after takeovers and all that. So if you don't have a stable ownership in the company, then management will become vulnerable. Over the years I have held on to a certain number of shares and today they are worth a billion dollars. I am not looking to say I'm going to cash the billion dollars and do something else with it. Because I see myself as the part of the company and I need a company to do well. I need to hold my shares and be supportive of the management rather than pull off my things and it gets distributed amongst a bunch of different shareholders. That was what I was referring to.
You started the company in 1990, and you have seen a lot of highs and lows like Y2K in 2000, global financial crisis in 2008 and now the pandemic. In one of your presentations back in 2009, you have mentioned how SaaS will become more mainstream in the coming years and have shared why companies have to upgrade fast if they have to survive. Can you share some of your learnings, and how you see the future of technology?
If you look at what it says, you will find that today's reality matches quite a bit to what was said at that time and it's kind of hard to say that this was in 2009. So yes, being a part of the community, and having talked to all the customers who are really defining technology, I get a chance to see what's happening in the world. So let me give you a little story. This one is in 2011, when Marc Andreessen made this comment that software is eating the world. This is part of digital transformation. If you look ahead now for the next five to 10 years, machine learning and user experience will be a big part of where I think the world is headed.
I'm also a big believer in crypto, NFT and DeFi. I think this is going to be transformational. I've been studying this very carefully for the last 6-8 months now. I have spent a lot of time in these rabbit holes and I think the whole decentralized finance and tokens is going to transform the world is how I see and I am very bullish on that. The other tech area that I'm tracking, which I really believe India should do more is biology, and mostly synthetic biology. In the last 8-10 years, the biology revolution that has happened in the US can be compared to the IT revolution that has happened in the last 30 years. I see that we are at the beginning of the next 30 years of some amazing discoveries to find solutions to all kinds of things in Vedic and sort of next gen biology. And I believe we are doing enough in India on this topic, but I have been reading quite a bit on this.
But there is also a lot of haziness in India currently, the regulations are not clear. So how do you think the government, Reserve Bank of India, or the regulators should look at this compared to other countries?
I certainly believe that stable coins and government supported crypto-based currency is going to be another big area. I think the government needs to think a little bit about that. But more importantly, DeFi and other tokens, its uses, that have little to do with the currency part of crypto, are also quite fascinating. I believe that small businesses, small business loans, direct benefit transfer schemes, student loans, student tokens, there's a whole bunch of very creative schemes that the government can implement on the basis of this technology. But I think we don't know enough about it and people are not spending enough time building the site. Part of the reason why the regulators’ are lost is because they're not familiar with exactly what to do I think. And a lot has happened in the last eight months, meaning many of these things that I'm referring to are all very, very, very new.
So if you were to start a company now, what would you start with?
For the next 25 to 30 years, in terms of building I would go after biology. I would go after genetics, genomics, synthetic biology and new materials, new science in that area but definitely not to do programming. I think programming life instead of programming computers is going to be the future. And I think there are a lot of exciting things happening in that area.
Why not crypto or other new businesses that have come up in recent times?
Personally, persistence is an important trait. So I think biology is going to last for the next 100 years and this change is going to last for a very long time. If I'm looking at a five year business plan, I would look at DeFi and crypto but it's crowded, easy, fluffy and it's all kinds of things. In five to seven years, it will look very different. Government regulation and all kinds of things are going to happen. So if I'm running a startup or a new company, I wouldn't go too aggressively.
The pandemic has altered the discourse at a time people were talking about how the IT industry has reached maturity. But now we have companies talking about double digit growth again. So do you think this is another Y2K moment?
I wouldn't call it a Y2K moment, which is a narrow gate key term. I think there's a lot of fresh work going on at this moment. So I don't see this as a Y2K moment. But I do see this as a hockey stick moment where you're starting to see a gradient change in terms of the deployment of technology in the businesses, and the benefits that people are starting to see by deploying this technology. And some of it during COVID became beta completely. If you don't have it, you're done. It forced people to relook at some of these things and that has accelerated the industry. But I think they are two different parts – markets and the rate of business growth, and they should not be mixed.
For the longest time IT companies had said growth was getting delinked from headcount and there is going to be more automation. But if you look at the hiring number this year, there is war for talent. So do you think it will continue to be people-centric?
Yes, I think it will continue to remain people-centric. But I think the key to understand is, what is the leverage per person that you're going to get. I strongly believe that automation and higher levels of abstraction are improving the effectiveness and productivity of people, including programmers and companies. From 2010 or 2013, if you look at the number of people and time that would have been required for the same amount of work, you can do it a lot faster and quicker with fewer people. So programmer productivity has certainly gone up over the last 10 years. And I think in the next 10 years, it will continue to grow. So the leverage will depend. But of course, you know, at the end of it, it is a people business.
I think it's worth noting if revenue per employee is going up or not. That is where you will see the benefit. One of the business model challenges that many companies have in India is that people have traditionally been billing on dollars per hour dollars per month. And they are able to switch to a more outcome based model, you will see better revenues. I'm talking about the industry, at large and not any specific comment on specific companies.
What we are seeing now is huge inflation in salaries, where hikes are going as high as 100-200 percent, and companies are willing to pay for it due to talent crunch. How sustainable is this and how do you see the market evolving?
Thankfully, since I've moved off my role as CEO, I don't have to worry about it and I don't have to deal with it. But it's a tricky problem. I think we have a combination of things happening. One of course is that musical chairs are going and the same people are moving around. So even if the company were to hire 10-15 percent extra people, instead of getting them from the fresh talent pool and training, people are going after each other. So there is a little bit of a rotation happening. I think in the next couple of quarters that rotation should settle down. Once that happens, you will see real growth in terms of people and training.
Do you think you would have become a billionaire faster if Persistent was located in, say in Bengaluru?
No, let me be honest with you. The local support that we have gotten here from friends, family and people who have come to be part of the business, the kinds of hiring we are able to do in Pune, it is a much better place to live and to survive in than Bangalore.
What was the watershed kind of moment for you through your years in Persistent Systems?
See, it's usually many of them and not usually one because one moment takes me to the next point. You do certain things, you see that watershed moment, some things happen, you see growth, and then you tend to flatten out. And then you have to do something different to get to the next one, and the next. So we are now pretty much on our fourth or fifth S curve in essence over the last 30 years. But the first break that I got was our first projects that we got from Microsoft in 1992. I would say that was very important for the company. We would not have survived if we had not gotten those projects. But more importantly, we would not have thrived if I had not gotten that project. As a small 10 person company, we were able to get as small but a very significant customer in Microsoft and they have remained our customer ever since. It was very instrumental in convincing other people, ‘Hey if people like Microsoft can work with us, why can't you?’ So, that was I would say like the earliest one of those moments where you know, we saw that difference in terms of what we could differentiate us and over the last 30 years, we have always believed in being differentiated because unless you are differentiated, you will not succeed. There are lots of companies like us and every customer has a choice to go to many of them including companies in Bangalore. But we have to convince them that they should come to us because we are the best in our game. So that particular sort of focus we have kept throughout the business all through. And that has been fundamental. There is a very nice quote by Coolidge, which, again, was mentioned by Ray Kroc, from McDonald's about how persistence is important. It's quite interesting, but it is really true.
You are also one of the founding members of policy think tank iSPIRT. Do you believe we are also at a tipping point when it comes to product development in India?
I think we have seen good growth in the product space. And if you look at some of the new reports about India has become the hub for SaaS software, I think you can see the difference that these small steps made over the last several years. I feel pretty good about the fact that I have had a chance to play a role in the tech community. Looking ahead, a couple of things that I'm thinking about where I think we need to do more is around data. So I have one project I'm working on, which is called the India Cancer Genome Atlas. So I'm trying to work with cancer specialists, and we're starting with breast cancer right now, about how we can collect large amounts of data about Indian patients so that we can find cures for Indian diseases, which are different from everyone else, and things like that. There are software and products, but I think the future of tech is going to happen around data. And we need to take a very systematic approach to how data should be collected, managed and procured. Data is a very important piece that I think we should be thinking about in the future.
Have the technological advancements made entrepreneurship easier than what it was 30 years ago? Do you think this is a good time to be an entrepreneur and what would be your advice to them?
See, it's a very individual thing. It is always hard and it will always be hard. But it'll always be easy as well. So it's one of those things that you can't really say that this is the bad time to do this. If you really think about when, when I started Persistent, if you really realize what the world was at that time, this kind of idea was crazy at that time. It was a stupid idea in some sense, but you can never know all these things at that point, right. So every time is different and you have to be conducive or aware of the context in which you're going to start a business today. If I'm starting a new business today, I would not do a business that Persistent did 30 years ago. It doesn't make sense anymore. But today with the kinds of machine learning technology, the stuff that's going to happen, and as I said, biology, if I were to start from where I'm studying, if I were to go again, I will do a biology-based business. And I see so many interesting problems to solve. Take DeFi for example. So there is no good time or bad time for entrepreneurs. Entrepreneurship is self-driven. Individuals who drive it, they make businesses happen, and they are cognizant of the context in which they are operating, and they make things happen.
We have 25 million people at every age in India below 35 years. If all these guys need to have jobs they need to sort of be entrepreneurs. I believe we are heading to a world of self-employment and gig economy, and everyone needs to be an entrepreneur. And you have no choice. And so it is a good time to be an entrepreneur.
Are there any entrepreneurs you found very inspirational or whom you have turned to for advice? You know, when you have had moments of doubt, you said, persistence is the most important quality. You have sort of been at it for 30 years. In moments of self-doubt, or moments when you need it, who do you reach out to?
You know, I have talked about this many times, entrepreneurs need mentors. I have nurtured very deliberately over the last 30 years, a group of almost 15-20 mentors, who I go to, for different kinds of things, because I know their strengths, and I know what I'm looking for, and I will go meet them. And I do this very systematically, and quite deliberately. I have a large number of people who have helped me go through this journey. When you have a bad day, or you're not sure I, I know I can pick up the phone and call them and they have been super supportive.
You founded Persistent over 30 years ago in 1990. Now, you're now 59. What keeps you motivated? How long do you see yourself as the chairman?
At the moment, I am part of the ownership. I'm not part of the management of the company. Now when I look at my next 30 years, I want to see how to make an impact where I can create thousands of entrepreneurs and different kinds of impact around the country. I've already started working on some of them. I mentioned the cancer project, I have this other nonprofit that I've been working on called deAsra Foundation. There are a whole bunch of things going on because I'm not dealing with the day to day activities at Persistent. We have a very strong management team doing a fabulous job of what they are doing. I can spend time doing other things like how to make an impact, how we make life better for people in our country. I think in the next 8-10 years, I think I should be able to see some results of the work I'm doing right now.