“My dad who hails from Salem (Tamil Nadu), was a first generation entrepreneur and a self-made man. He dropped out of the school in the third standard, since my grandfather who had a large family couldn’t afford to pay for his education.”
Despite many odds stacked against him, his father persevered in taking charge of his life. Nagarajan recounts the days of uncertainty: “He went to an evening school to learn languages and became a businessman…but not without failures. He was a pauper at least three times in his life but he never gave up at any time. He was very optimistic and passionate.”
Today his father is a successful businessman, who has tried his hand at different businesses such as furniture, textiles and industrial gases. Quite obviously, his father’s influence has rubbed off deeply on him.
Nagarajan’s father, however, forbade him from getting into business early in life, since it would mean access to easy money. “He wanted to get me educated after which I could do anything,” says Nagarajan.
Choosing his life’s calling came easy. “I fell in love with computers after doing a short course. It was love at first byte,” he quips. Despite getting good marks, he did not want to take up engineering and his parents stood by his decision.
Nagarajan moved to Chennai to do his Bachelor’s degree in Statistics at the Loyala College and then followed it up with an MCA from PSG College of Technology in Coimbatore in 1988.
At the end of his course, he accepted an offer to join TCS in Chennai. His father gave him some sound advice that kept him in good stead. “Every time you get into this (office) building, you should consider this as your business. Don’t think you work for someone else. Only then will you put your heart and soul in it.”
It was here that he met PV Kannan, a chartered accountant and his future partner. Both hailed from similar backgrounds and it was the beginning of a strong bond.
Nagarajan worked at TCS for five years in the area of systems software and spent some time working in London. In London, he was part of a team that developed CRM solution for Churchill Insurance in the UK. This afforded him to the corporate world and also a global perspective on what was happening in the IT world.
In 1993, he left TCS to join a consulting company called Comsys based in Austin, USA. Kannan also did the same. Both of them would joke about starting a company after leaving TCS. But little did they know that they would be close to realizing this.
In late 1994, when both got their US Green Cards, they decided to start something on their own. Some of the options included opening a consultancy or a body shopping company. They eventually settled on the idea of developing software products-which in their reckoning-was a high reward, high risk business.
Toil, struggle and failure
Their venture, christened Business Evolution, was based in Princeton, New Jersey and started off doing group collaboration products that allowed for chatting and interaction with enterprises. The first two years proved a painful trudge and “an utter failure”. “The product was way ahead of its time. We managed to sell it to a friend who was very polite about buying it,” admits Nagarajan.
In the second year of its operations, Business Evolution developed a Lotus Notes training tool. The product was based on an interesting and innovative concept where in users could learn Lotus Notes by unraveling a murder mystery. It proved to be a big hit with Lucent.
However, the absence of proper marketing led to the product’s undoing. Kannan and Nagarajan did not market it or sell it to another company. “We thought we could latch on to the Lotus brand name and hold on to the royalties on the product, copyright and let Lotus do the selling. It was a terrible mistake because while Lotus was a good technology company, it was not a good marketing company.”
This sounded the death knell for the product.
Until then, the duo funded the company from their personal savings but found it hard to sustain. Fortunately, their families were fully supportive through all the initiatives and hardships.
“We faced a lot of difficult times. While our friends and colleagues drove new BMWs or moved in to a new house, we were still living in a rented, dingy cramped apartments driving second hand cars.”
Things look up
By 1997, with the emergence of the Internet, BE worked on a new chat product. This time around, the product hit pay dirt. BE signed on big names like NASA and the Department of Defence.
More orders followed. Symantec used the product to interact between tech support and back-end developers. Now it wanted BE to tailor the product and put it up on the web so that customers could chat directly with the developers. BE tweaked the product to suit Symantec’s specs and called it @once. It proved to be a hit! The license was initially sold for $500 a piece. By 1999, Version 3 of the product commanded a princely $5,00,000 apiece. This Ecrm application had multiple channels, self-help, email, instant messaging and Voice over Internet Protocol.
By 1999, the Internet economy was picking up steam, but Nagarajan and Kannan regretted being at the wrong place. The college town of Princeton, New Jersey on the East Coast was a far cry from the dynamic and thriving environs of Silicon Valley. Their competitors received second round funding at a time when they were just approaching VCs.
“Getting funding was easier on the West Coast. For us, it was like being in Nagpur and trying to get funding for an IT company.”
In August 1999, Business Evolution received funding from Nassau Funding. But the competitive landscape was proving too tough for the East Coast company.
“By September, our large competitor Kana Communications and eGain went public. The market was too small for too many players.”
Nagarajan and Kannan did some serious thinking and decided that the business would be difficult to sustainable in the long haul. The company hardly made profits and anything earned was ploughed back into the company. At the time, BE had 75 people and around $4-5 million in revenue.
Striking it rich
A competitor Kana Communications made an offer to buy out the company. To fend off the prospective buyer and sound cocky, they quoted an exorbitant price: $145 million to be precise. Kana relented and the duo became millionaires.
Both were 35 at the time and retirement was not an option. After helping out with the integration of the companies, Nagarajan and his partner quit.
It was again time to head to the drawing board to chalk out future plans. At the time, the IT market in the US was short of a million people with companies scrounging at the bottom of the pot to find talent. They thought of doing the work in India to leverage on the cost arbitrage and also the intellectual capital available in India.
They both visited India in February 2000 and selected Bangalore as the base since Karnataka was a progressive state. Thus 24/7customer started operations in April 2000. It was incorporated in the US with the Indian office acting as a subsidiary of the US Corporation.
Nagarajan relocated to India to oversee operations while Kannan helmed the front-end.
Initially, the company started off with 20 people doing email management for Alta Vista. Today the company undertakes business process outsourcing and call center services for clients spread across verticals like financial services, technology, telecom, media, e-commerce and retail.
Over the last two years, the company has expanded its presence to countries like Philippines and Guatemala for language capabilities. Nagarajan believes that while making acquisitions may be easier, growing the company organically is better for the long haul.
“Putting together companies would help immediately increasing revenues. But what about the bottom line and the company culture?”
The company’s 2005 revenues stood at $70 million and Nagarajan has a lot more plans on the anvil in the coming year.
Clearly, Nagarajan’s father must be proud of his son who is carrying forward his entrepreneurial legacy.
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