I was in the twelfth standard (junior college). Even as I was preparing for the IIT entrance examination, my father insisted that I apply to the best universities abroad. His viewpoint was that there should be no compromise in getting the best education, and if I did not get into IIT, it would at least give me options to consider. As it turns out, I did get admission into both IIT and Carnegie-Mellon. I chose IIT because I get the discipline of my choice (Electrical Engineering) and the location of my choice (Mumbai). As I think about this, I realise that what my father did was to create an option for me for a decision that would be critical in shaping my career.
Many years later, as I looked for a partner for IndiaWorld, this same lesson of creating options hit home again. I had a choice between selling to Sify, and doing a joint venture with an international company in the Internet business, with the possibility of listing the JV on Nasdaq at a future point of time. The availability options helped me (and my investment bankers) negotiate from a position of strength, and get the best possible valuation for IndiaWorld. If there is just one company with whom we are talking, there would have little question of significant discussion on the terms. We would have ended up accepting what they put on the table. But because there was a choice that we had, we could do much better. It is something I tell other entrepreneurs also always have options available when it comes to raising capital, else there is no point discussing since you only have to decide if you want to take the offer that is there on the table or not.
In fact, we ended up in the situation where we could consider various offers for IndiaWorld because of some choices we had made right at the beginning. Portals were what we wanted to do, but we also had to ensure that we created revenues to ensure that we lived through long enough till the portals future took off. So, we started developing websites for various organisations in India, even as we created a suite of portals for Indians on the Internet abroad and in India. The websites ensured a steady revenue flow which kept us profitable, and allowed us to wait till the best offer came along. Since we were not losing money and had no external investors, we could take our time in making the decision there was no pressure on meeting payroll at the end of the month which would force us into decisions which may not have been the smartest ones. Creating options is about ensuring that we can manage both the short-term and the long-term.
Tomorrow: Personal Examples (continued)
TECH TALK Creating Options+T