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India's Original EdTech: The Untold NIIT Story | Rajendra S. Pawar (NIIT)
378 Plays2 years ago
"Thank God we didn't have the luxury of venture capital."
In an era where startups burn millions before seeing a single rupee of revenue, Rajendra S. Pawar, founder of NIIT, explains how the necessity of being profitable from the start forced a level of creativity and sustainability that has allowed NIIT to thrive for over four decades.
In this episode, your host Akshay Datt sits down with Rajendra S. Pawar, the co-founder and Chairman of NIIT Limited. An alumnus of IIT Delhi, Mr. Pawar is one of the foundational architects of India's IT education landscape. Over a 40-year journey, he scaled NIIT from a single idea into a global training powerhouse, at its peak operating over 2,000 learning centers across 40 countries. He pioneered the IT education franchising model in India in 1987 and successfully led the company to an IPO in 1993, cementing its place as an institution built to last.
Key Insights from the Conversation:
- The Problem-First Approach: NIIT was born not from a desire to be an entrepreneur, but from identifying a critical bottleneck in the Indian economy: a massive shortage of skilled people to operate computers.
- Partnerships over Franchising: Mr. Pawar details the strategic decision to scale using a "business partner" model, which maintained the entrepreneurial spirit and quality at the local level, a key differentiator from a standard franchising model.
- Customer-Led Evolution: NIIT’s expansion into corporate consulting and software development was a direct result of listening to its clients, who pulled the company into new ventures based on their evolving needs.
- The "Hospital & Medical College" Flywheel: For years, the software business (the "hospital") provided real-world experience that fed directly into the curriculum of the education business (the "medical college"), creating a powerful, self-reinforcing model of practical learning.
- The Art of the Pivot: The conversation provides a masterclass in strategic restructuring, detailing the logic behind demerging highly successful businesses to allow each entity to achieve sharper focus and greater agility.
Chapters:
(00:00) Introduction
(02:15) The Spark: How a Bottleneck at HCL Created NIIT
(08:40) The 'Positive Cash Flow' Startup: Building a Business in 1981
(17:10) Scaling India: Pioneering the Business Partner Model
(25:30) From Training Students to Consulting for India's Top CEOs
(38:05) The GNIIT Revolution: Integrating Education with Industry Internships
(46:55) Going Global, the IPO, & Building 'Software Factories'
(59:18) Deconstruction for Growth: The Logic of Demerging a Successful Business
(1:15:45) A Masterclass in Longevity: Keeping a Founding Team for 40+ Years
(1:28:10) The "Century of the Mind": The Future of Work & Lifelong Learning
Hashtags:
#FounderThesis #RajendraPawar #NIIT #AkshayDatt #StartupIndia #FounderStory #Entrepreneurship #BusinessStrategy #EdTech #Leadership #BuildingToLast #Bootstrapping #IPO #CorporateTraining #BusinessModels #SustainableGrowth
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Transcript
Introduction and Impact of NIIT
00:00:00
Speaker
My name is Rajendra Pawar. I'm the founder and chairman of NIIT Limited, which just completed 41 years.
00:00:20
Speaker
Anyone who came of the age in the 1990s would surely recall the dominance that NIIT had in the education system. If you were not lucky enough to get into a reputed engineering college but wanted to make a career in IT, then NIIT was the next best option for you.
00:00:36
Speaker
In a way, NIIT built India's IT powerhouse stature and is the giant on whose shoulders many of today's startups stand.
Rajendra Pawar's Journey and Early Career
00:00:44
Speaker
In this episode of the Founder Thesis Podcast, Rajendra Pawar, the co-founder and chairman of NIIT, talks with your host Akshay Dutt about his multi-decade journey of building NIIT as the OG edtech startup of India, taking it to a public listing and making NIIT into the truly global trading platform that it is today.
00:01:03
Speaker
This is a conversation packed with the kind of insights that take decades to learn and will help founders to build a truly long-term vision and focus on customers first. Stay tuned for the conversation and subscribe to the Founder Thesis Podcast and any audio streaming app to learn about creating organizations that are built to last.
00:01:29
Speaker
Well, we created NIT in 1981. That was as its characteristic called the closed economy, pre-liberalization, a whole decade before liberalization. So passing out from IIT Delhi, quite obviously, we didn't have the pre-placement talks or in-campus placement. I remember in my year, only two companies came.
00:01:51
Speaker
So the idea at that time was you finish your degree and then start looking for a job. This is what I did and joined L&T. So 72, I joined L&T that was soon from there to DCM as a management training, which was very useful. Those were sort of after very difficult to get into jobs. And then few years down the line, I joined HCL in 76. I joined HCL which was
00:02:13
Speaker
the entrepreneurial company for manufacturing computers that time, which had been set up by a senior of mine from DCM,
Founding of NIIT and Initial Challenges
00:02:20
Speaker
Shivnadar. But I joined a year after they set it up. So four years there. And then while at HCL, we had the luxury in those days as a young company to choose my title. And I said, OK, I'll be corporate planning manager. I wanted to see how planning gets done, how we integrate all the functions of management. Because as somebody starting up a regional operation, I saw so many misses pieces.
00:02:43
Speaker
And we had to work directly with the research group and we had to work with the marketing team. So I said, shouldn't we be a little more organized? Shouldn't our planning be a little more organized? So I chose to come into head office and set up the office of corporate planning, which actually involved right from thinking about the new product.
00:02:59
Speaker
talking to marketing, getting input, then talking to the research group, talking to the software teams, and therefore we created the first 16-bit microprocessor-based, disk-based computer in the country. So I had the opportunity to work in the center of all the functions that were going on.
00:03:16
Speaker
And while doing that, actually, I was reading extensively as I was looking at what's happening all over the world, traveling to conferences on computers. It used to be something called the National Computing Conference, NCC of the US. That used to be the big event well before whatever else happened. And so the opportunity of the world computerizing was very obvious. The pace of it was obvious. And particularly for India, which was still kind of a closed economy, the promise of computers making a big difference was huge.
00:03:45
Speaker
And sitting in the corporate planning function looking at the usual strengths, weaknesses, opportunities, and the formats of how do we plan, it was becoming very clear that while the demand for computers would be very high, the constraint would be the people who have to program, the people who have to drive computers, the people who have to use computers. And not only that, even the chairman of the board of companies had the question, what do I do with computers? So the gap of understanding what to do with computers
00:04:15
Speaker
And the absolute absence of skills, to me, was appearing as something which will constrain the growth of the company. And threats are opportunities in disguise. So these constraints are opportunities, challenges are opportunities in disguise. So that was the genesis, to say, well, if this is such a constraint to the growth of the IT industry,
00:04:34
Speaker
then shouldn't one do something about it? It can block the growth. I think that was the germ of the idea. And so we set it up. And we did rent, not a garage, but there was a small consulting firm, which also
Innovative Teaching Methods and Expansion
00:04:48
Speaker
was someone we knew. So we used a part of their office for a few months.
00:04:52
Speaker
before we rented a place in Delhi. So, initially, I had to find a partner and so my batchmate Vijay Tharani, IIT Delhi, who would join the Tata's, he had worked in NELCO with Mr. Ratan Tata briefly before he went to join Keltron, the Kerala State Electronic Corporation, which is into power management, power systems and distribution.
00:05:15
Speaker
power control. When I was in Bombay in HCL, he was running the Keltron operation for Western India. So we caught up after a few years, almost five years after passing out. And we used to just compare notes. And then I moved to Delhi in 79. And when I was thinking about this idea in 81, then I told him this is what I'm thinking about. So would you
00:05:37
Speaker
give up your job and come. He says, I don't know what you're talking about, but I'll come and we'll start something whatever. I had taken a look at the role of technology in learning, because it was very clear that if there aren't people in this field who will work on computers, they're not going to be teachers who can teach these people. I mean, the root is, where's the fountainhead? Where are the teachers who will train these people that they didn't exist? And those few who were there had been pulled away by the large computer companies, a handful of computer companies there.
00:06:05
Speaker
So the question really was, if you have to solve this problem at scale, we will have to lean on technology. As engineers, we were thinking about that. And I had had the exposure in these conferences to take a look at the role of video in learning. Video assisted instruction, as it was called. And I had experimented with that in 81 itself. So anyway, it's a long story of how we conceptualize the pedagogy. But basically, we launched in 82. Kapriya found December 81, 2nd December.
00:06:32
Speaker
And by then Vijay had to leave Keltron and join and we decided we set up the first operation and Bombay being the center of everything, all commercial activity. And Vijay was located in Bombay. I had moved to Delhi. And then the third important person to join us was a junior of ours from IIT who I didn't know but who was working in Keltron with Vijay, a junior, Mr. Rajendra Rajivarji, we call him.
00:06:59
Speaker
So Vijay motivated Raju to say, look, you'll probably have to now. And he was posted on a Keltron project. And so we got him to be in Bombay for some time. And the idea was that we would do Bombay and Delhi and Chennai as a third place. And so the idea was that he would move to that place whenever we set it up. Because in the course of 82, we started in Bombay, then Delhi, and then Chennai.
00:07:23
Speaker
How do you fund the three cities? Every city would need you to rent. Rent meant some upfront security deposit and all of that. This was all from savings. It wasn't big money that time. And then as I told you, some people starting to see if not ever also.
00:07:40
Speaker
funders, Arjun Malhotra, many of those people. It's a small funding, but the thing you have to remember is in education, it's a positive cash flow activity. See, if you have your kids in school, you have to pay the fee before. You can't say, I've studied for one year and I'll give the fee. So education is a positive money come before the expenses are incurred. And so that has been a very important
00:08:02
Speaker
Nowadays, people have to blow up millions of dollars before the first piece of revenue comes. We neither had the luxury. Thank God we didn't have the luxury because the necessity gets you to think about ideas. So negotiating the terms of everything and even when we started doing corporate business,
00:08:19
Speaker
telling companies to pay up front for training was not easy. So it didn't need too much, but we did have to take loans. We did have two early banks. Indian Overseas Bank was one of the early banks that their executive director had visited when we launched NIT.
Targeting Student Segments and Expanding Reach
00:08:33
Speaker
It was in the Computer Society of India, Madras, Mr. Sony. He came and at that time we had launched NIT as an idea whose time as a cup. That was our presentation.
00:08:43
Speaker
OK, so he met us at the end of it. He said, I'm an executive director. We're looking at new things, and you people are doing something interesting. So then with some assistance of people who are in the finance function, we went and met him. So they stuck their neck out. They said, this is a project that needs to be supported. Small amounts of money. And in a few lakhs, it wasn't in a few crores. And then somewhat later, with ICIC, I have Mr. Kamath. It was one of the first loans he was involved with.
00:09:12
Speaker
And that relationship holds to this day. I mean, we'll talk about that even when we did the joint friendship with ICICI bank to do the financial training in 2006, 25 years later. So tell me about the products you launched and what kind of pricing you had, how you were selling it, what kind of response you got in terms of how much revenue you were able to make and all. So when we launched the first programs in
00:09:35
Speaker
Bombay Nariman point in early 82 we launched two courses and one was on the basic language it was called entry level basic and we called that a short term course because that was I think four weeks long.
00:09:52
Speaker
and they were aimed largely at students. So we had to keep our time windows. It was two hours a day slot and we had slot throughout the course of the day. We didn't know which one would be popular, but we knew that post-college, post-classes and before classes would be popular.
00:10:07
Speaker
That was a four-week course. And then we had long-term course, as we called it, which was 12 weeks at that time. It was long-term for us. And then we were teaching people Koval language. So the need was for compute programming languages. That was the need. But in building up the idea of these products, we were quite clear that not just programming, it has to be the foundations of data, the foundations of the programming logic. And as I mentioned, we started using videotaped instruction.
00:10:37
Speaker
material from the US. There were basically two companies who competed intensely at that time. And one of them was called Advanced Systems Incorporated ASI. They had outstanding content on video. And so we looked at, they had a huge library of videos. And they used to actually rent it to companies in the US. So we made an arrangement with them. Interestingly, the arrangement happened because when I was in HCL looking to solve this problem, I had looked at this material.
00:11:05
Speaker
Because in the same area where the HCL office was in Nehru place, there was a little one-man company set up by the ex-EDP manager, now it's called CIOs, of ICICI, Mr. Thumsing. And after retirement, he was very interested. He was a rapid reader. He'd got an agency for a few things, one of which was these video tapes. But he didn't know how to go about. So I'd seen this when I was trying to look at how to deal with the problem.
00:11:32
Speaker
So we started this company with an acquisition. We bought a little company. And the little company basically meant some distribution rights. But more than that, he had stocked some of these programs. So then, starting this video instruction, which I'd started doing early 81 and 80, actually, out of curiosity, became clear that there was a huge repertoire of stuff.
00:11:53
Speaker
So putting together a series of modules to construct that four-week program and then a 12-week program. And we also realized quite early on that the accent would be a problem for our students. So we realized that it's not going to be enough to put a video. And so we learned quite this even before we were testing. We did some testing. We learned that people have many questions. And so we said, OK, some pertain to, OK, I didn't understand that. Or what did he say? Something like that as well.
00:12:21
Speaker
So we decided that we would build material to support. So we built very good manuals. We called them student guides. And then we would have a coordinator guide. By the way, we never use the word teacher or faculty in our history.
00:12:37
Speaker
We were not in the education or teaching business. We were in the learning business. There's a very, very important difference, as we learned at that time, and we've been trying to say that in the teaching business, you focus on the teacher. In the learning business, you focus on the learner, and that were different things. So even the literature on the subject had started talking about learner-centered, you know, the science of the subject, the science of pedagogy.
00:13:02
Speaker
And so it was learner-centered, objective-driven learning, what nowadays is called outcome-based. At the end of this module, you should be able to write 10 lines or something in one hour with so many defects, less than so. So it was measurable outcomes.
00:13:18
Speaker
But the learners entered. So we had the video instruction. We had a coordinator. And we had a learner. So there was a coordinator guide book. There was a student guide book. And there was a video. But soon we discovered that video was not enough. And those days, the overhead projector had just arrived on the scene.
00:13:35
Speaker
OK, looks archaic right now, but today at that time with those plastic foils. So our classroom had the video. It had an overhead projector and a screen. It had a whiteboard. It had students with their student guides, as we call them. And we had a coordinator with the coordinator guide.
00:13:52
Speaker
And so we defined the pedagogy, that you first have to see the video, then you have some exercises in the student guide, then the coordinator will post some questions, then you work as a team, and then you go to the computer room. So for us, hands-on was key. This is what we started off with a four-week and 12-week course. Soon, people trickled in, and we had a batch of students, and we had restricted the batch to 24. There were more than that, because that, I think, was commonsensical, that large class, large class,
00:14:20
Speaker
But how did you spread the word? How did those 24 students come in? No, we put in an ad. We put in an ad. We put in an ad. Yeah, we put in an ad. And when we did the tests, we did a small ad. By the way, those were the days of full-page ads. We could afford. Even we could afford a full-page ad. But of course, that was a big investment. And we figured that students are early thing was that, well, students who have done a degree and they're waiting for a job, which was true for the IT guys that time.
00:14:49
Speaker
around a little before that. It was a situation. No campus placement. Nowadays, people go six months early and so on. So the ad which we put the message was quite a simple one. It said, if you have a college degree and no job, this ad can change your life. That's the ad. Now, two years later, we actually had to do a huge correction, but I'll come to that later. But this was the proposition. So I think just the sheer size of the ad, we used very creative people to do our advertising.
00:15:15
Speaker
So people came but I think what worked was the whole setting of our place, the intense focus on learners and I will talk about the people dimension of everything because we were the largest recruiters of MBAs in the early 80s. We just wanted the best talent and so we had this bright young MBAs from the IMs and focused on this whole new method of learning which is exciting to everybody.
00:15:41
Speaker
And we built a very strong capability to, I don't want to say research, but to do development and testing and new ideas and new methods. And for us, understanding the process of learning was not technology, it was science. And so how to design instruction that works. So many things we learned. We'll see if they come up for discussion later.
00:16:03
Speaker
So what happened is that the word started spreading. The ads were quite responsible for things. And quite quickly in Bombay, we figured that people did want to learn the subject. There was curiosity. But more than that, the learning method was so different from what they were used to.
00:16:20
Speaker
And they had very young people teaching them. And people very keen to help people learn, I would say. They were obsessed about seeing the outcomes. And so it started, I think it started picking up by word of false. There was no internet then. But many of these were college-going students. Even though we said, if you have no job, you have college-going students. And then more came. And then we started seeing people coming from companies.
00:16:44
Speaker
So someone came, and then their EDP manager came and said, I have more people to train. So they also sent a few people. So I think people saw the value of it quite quickly. They found the environment of other eagerly eager people trying to learn. The cohort there were young, bright people. And we used to do an aptitude test from day one. We were quite rigorous. We'd spent a lot of time. So we were looking for aptitude. We looked at how they had done in school. But our thing was, because by then, I had learned in HCL also,
00:17:12
Speaker
An aptitude for programming has nothing to do with maths and physics and chemistry, first of all. And it took us a few years to prove to the world that you didn't have to be mathematics to be a brilliant programmer. But we proved it with ample evidence. It doesn't matter whether you're a boy or a girl. It didn't matter what subject you had started, if you had the aptitude.
Building Partnerships and Ensuring Quality
00:17:29
Speaker
So we had invested a lot of time to figure out how to assess aptitude. We looked at all kinds of tests from all over the world to see how to judge aptitude.
00:17:36
Speaker
And then we also realized that those who were doing a short-term course, many of them said, now we want a long-term course, but not everybody said. So that shaped our thinking, that we have to be careful that there should be multiple exits. That shaped our product thinking over a period of time. When we had long-term programs, we said, OK, sign up for a semester if you want. So then we had the whole highway model of enter anywhere exits at different points, multiple entry, multiple exits. So all these were based on the immediate customer feedback.
00:18:04
Speaker
When did corporate training get set up? In the 80s only? Yeah, it was all in the 80s. In fact, it was quite rapid. We were working 18 hours a day, so it was like three shifts. But each one doing three shifts. So it was exciting time. Give me a summary of what all you achieved in the 80s. So a lot happened. So we started these three centers and we opened Calcutta, then we opened Bangalore, then we opened Pune.
00:18:28
Speaker
And quite early in the business, we realized that we were on to something very important because there was a demand for it. And of course, we realized we'll have to scale. So in addition to doing much more development of our own because the video tapes were helpful, but they had constraints. So by then we started building content. We realized it will have to build a lot of content.
00:18:49
Speaker
And then we hired again a few PhDs from my IIT Delhi, my alma mater. We started interacting with thought leaders on the subject in the US and Europe. So MIT had a Center for Information Systems Research and Oxford University had Oxford Institute of Management. So these people were experimenting with what to do with information systems and information. It wasn't as much technology.
00:19:11
Speaker
And we were immediately realizing that among these segments that were opening up for us, we said, you have a college degree and no job is where we started. And soon it became people who were studying in college as well. And soon it became people who were working. And soon it became the chairman of companies who said, look, my company wants to do something.
00:19:32
Speaker
So we started looking at these segments to deal with. And this segment opened up quite rapidly. I think within the first two years, we had done a program for the Indian oil chairman and his executive directors. And he just said, come back from abroad. He said, everybody's using computers. You guys are doing something. Tell us. So we had an informal chat. And then much later, we designed a program, a two-day program for senior management.
00:19:57
Speaker
But in terms of evolution of segments, to your question, in two years later, we came to a very important conclusion. We said, a college guy who has no job, is he the smartest guy? Shouldn't we be looking for smart people in college? We go upstream. And one of the very bright youngsters joined us from my Calcutta.
00:20:17
Speaker
he used to work with me as product manager, we say. And he was very instrumental in getting us to rethink that let's not look at the college kid who doesn't have a job. Let's look for the smart college kid who's still in college and has enough time and has the intellect to absorb some more and is curious. So we started at that time, what we called the dual qualification scheme, that while you are in college, you do have programs.
00:20:41
Speaker
Now that was a game changer because suddenly we had to then start going into colleges. So there the ad wouldn't work. College kids don't read newspapers even then. Then we started going into the colleges and doing many different kinds of events. So we would, for example, we would just say, OK, we're going to give a talk and we'll give a quiz and whoever tops gets a free course. Now kids love to compete. I mean that we've known as children.
00:21:04
Speaker
So they would all come and compete for who's first, who's second, who's third and most of them came to do the course but some were doing it for the heck of it. So within colleges also this whole thing of computers was getting hot because colleges didn't have computers and they were beginning to see that computers are coming and it's being talked off and so this attachment to institutions
00:21:23
Speaker
of higher learning which then became even institutional decade later with schools as well but that became a very important change for us that was one. Second is the interest started coming from smaller terms and then we realized that we either have to now and this is all in the 80s I'm talking about the 80s so first thing was quick response to newer segments recognition of the different segments preparation of
00:21:46
Speaker
products for these, which are very distinct. And then the fact that computer time was a real problem. So we realized we had to maximize that. And then this whole need emerging from many locations, even young, some people coming and saying, we want to start an IT here and so on.
00:22:02
Speaker
So this last point was very important for us because we were very clear that in the service industry, between the customer and the key decision maker, between the customer and the key decision maker, you can't have too much of a gap. For example, if your favorite restaurant, if you go to the owner comes and checks up, how's stuff going? He can take the decision which makes a difference in services.
00:22:23
Speaker
So, Habib, the haircutter, when people say, Habib, nobody else. Even when he built his franchise, the problem was he couldn't be in so many places. So, we realized that if we started building layers of management between us and the guy who runs the center, we'll lose it all. So, we said, how do we retain the entrepreneurship at the point of contact?
00:22:46
Speaker
And that is how the idea of creating business partners was. We never use the word franchisee because that's in literature as an adversarial relationship. The whole idea of partnership I was telling you earlier as well was important. So we said we want business partners who will do this like we are doing it in the big cities. So if Vijay was based in Bombay and I was in Delhi and Rajendra was in and then these young bright young MBAs were in different places.
00:23:14
Speaker
We said that there's a limit to how many centers we will be able to run without having an entrepreneurship element. So we started this idea of setting up centers in partnership with like-minded people. And this is also the time when we were realizing that we had to rewrite a lot of the content. We can't depend on it because India was interesting at that time. Our new computer companies were working with microprocessors at the same time as Bill Gates was.
00:23:38
Speaker
not the mainframe companies. So India was quite ahead at that time. So we said that if we have to set up centers, first of all, we want to maintain the standard. So we knew that your NIT should stand for something and be consistent wherever you do it. It was very important, very clear to us.
00:23:55
Speaker
And second is that we need someone who we can trust at that place and someone who will deliver to the quality. So even within our own expansion, we realized that processes had to be good. It's not a machine. We are in the services business. You can get a good machine, put good raw material, the same stuff comes out. But in the services, it's very different. So we said, now, OK, what kind of people do we need? And how do we make sure they will do the right thing? So we got on the ISO process even before we thought of this national standards.
00:24:25
Speaker
But the process, documenting your process to the last level of detail and training people and measuring and all of that. So the processes are falling into place. And as engineers, we had accustomed that control engineering. So then we said, fine. So we can put processes together. But we said, fine. We'll also design the layout of the place.
00:24:46
Speaker
Any center should have the same look and feel. And so the color scheme and the kind of furniture and the kind of equipment. So we said the bill of materials is very clear. The drawing layouts are clear. But of course, it'll be different places. So each office that we went to, we found different office. But we had the same architect helping us to figure out the same central team looking at that. Then came the question of what kind of people.
00:25:08
Speaker
should be fine. And we made again a very important decision. We said all the big cities have youngsters coming from small towns, looking for jobs. And so the guy belongs to Merat, he's got a family, bungalow, he's got everything, and Eri comes and lives on a little shimpengist or barsati in Delhi, as we call it.
00:25:26
Speaker
So we said, these guys are bright. They've gone through education. They come to big companies, which are in big places. So among them, and so there are no systems. There are no processes. There are no standards. They're not shooting from the hip. And we said, among them, we have to find people who want to try something of their own.
00:25:43
Speaker
And that thinking was very useful. We picked nine people in the first year, 86, 87, and hand-picked and did extensive work in those cities to make sure that they have to take ownership for that city, ownership to get the right students and their responsibility to run the program. By that time, we were doing a six-month program as well. So the products were coming out and responding to needs. We were trying to structure them into, OK, this is our three-month program.
00:26:13
Speaker
another three months model become a six-month program. And as we came to the end of the year, we had got a one-year program. So we also had to start thinking about how to structure these products to make them meaningful. And so when we got the first set of business partners, he also quite quickly realized a couple of things which came in very handy. We said, how do we make sure this guy doesn't compromise on quality? So it struck us that if these guys are bright people who've
00:26:38
Speaker
worked in big cities and can go back to their home. Their parents would be happy. They'll be happier. But they won't get that job. But maybe they have a niche to do something of their own. But they don't have the risk-taking capacity to do it on their own. So this we started thinking is an ideal person for us. But then we also found an interesting thing. We said, because there's a huge demand at that time when we went to a city and then 100 people would apply or not 100, but they said 20 or 30. Then we would get them to do a study. We give them a little format to study. Is there a demand?
00:27:05
Speaker
So we trained 15 people or 20 people in the city. Then we narrowed down to five or six. Then we gave them a business information brochure, one, which was just, OK, how many schools, how many colleges, how many people, blah, blah, blah. And then we looked at those people, heard them out, and then took three or four or five. We said, look, promising.
00:27:24
Speaker
Now let's look at the family background, look at their ability to invest, because they'll have to now invest. So your question about investment, we were looking for people in our, in our mold, and therefore they should have the ability to invest in their center. And then we said that give them the business information brochure number two, BIP2.
00:27:41
Speaker
which was very big, so detailed. It gave them a lot of the stuff of what we were doing. So in fact, we were giving a lot of our know-how away. But we said, we didn't think of it then. And then we had to choose one out of the two or three finalists. And I can recall that for many years, it used to be a real problem for us because there were two or three very good choices. They were so emotionally involved by then. And we said, we can only give it to one. And by that time, then we said, OK, one criterion which is important is that look for a person from a family which has a reputation in their small town.
00:28:09
Speaker
That's our best check for quality. The father will not let the son cut corners. This was very important for us. And it's not a surprise that many of them got then recognized in their cities and states as people who contributed to digital literacy, to job creation. And all of them, I can say, the early phase, at least the first five, six years of partnership, went on to do exceedingly well in life. Children studied wherever they want, went abroad, do whatever.
00:28:35
Speaker
And in fact, that posed for us a problem much later of succession of these partners. And I'll come to that later, some way, or the plus, some ways, the minus. But so this partnership for us was key. I was making that point. And we had realized that, in fact, when we started, we had to make this student guide and coordinator guide. We needed to get them printed. And so in our team, the third person, Rajendra, and then there was a fourth person who joined us later, a couple of years later.
00:29:00
Speaker
So Rajendra is the perfectionist of the Lord. So his task was to make sure that this stuff is to the last level of detail. And so making the booklet, making the folder, making sure it's zero defect and perfect. In fact, even now, I met somebody recently who says I still have the folder. I started with that in 1986 or 1987. I still have it. It sits in my desk.
00:29:23
Speaker
So anyway, so we had to then find a printer. So we went to the big printers in Delhi and they were not too excited about this bunch of guys coming. They wanted to print the Bible. They wanted to bring big things, 10,000 copies. They would have some minimum order quantity.
00:29:39
Speaker
Yeah, we found someone behind South Extension, maybe a 10 by 15 shop of three brothers who were starting a printing business, who now are, by the way, North India's biggest printers. They remained with us. When we went to ISO, Roger told them, you'll be ISO, otherwise you won't work with you. So we forced them to keep moving up. And I think they followed processes. They followed the sensitivity to quality. And so when I'm talking of partnerships, every one of our vendors, I never differentiated
00:30:07
Speaker
between the respect you pay to a customer and the respect to pay to a vendor, which is, I think, a very common weakness. The customer, please come in. It's a surprise. Just sit outside. That, to me, was not a human thing to do. I think in 1984 or 1985, we were the biggest recruiters of MBS from IAM Calcutta. Nineteen people majored in systems that year.
00:30:26
Speaker
Professor Ramo used to be the director then. We hired 18 of them. I am a calculus assistant. But then we had got into working for large companies, and they said, now come and help. So these large companies, public sector in the beginning and then many others, they said, you've taught us for two days. Now help us plan out. So we got into consulting practice.
00:30:46
Speaker
And the fourth person in our team, Arvind Thakur, was IIT Kharagpur, 75. He joined us in our second or third year. But I call him a founder. He's in that sense. By the way, another first in our industry. The same set of people who started us still intact. Can't find another company with that.
00:31:02
Speaker
And I get to the same issue of relationships and partnerships. So Arvind was the only one among four of us who had written the line of program. Because after he was doing his studies, he went to a industrial engineering entity and then joined BHEL. He was a programmer in BHEL. Then soon after he joined us. So he, in fact, eventually became the CEO of a software business. He set up the software business. But he was working with the CEOs, and they would say, why don't you help us do an information system plan?
00:31:29
Speaker
And so the guy who had sent one young employee to go and do a course at the NIT Center and saw this guy doing stuff, he said, some more have to come. And then he told his boss that looked lit. And then the boss, some of the guys at the top said, OK, people at that time, the CEOs of companies are going and working with their partners in the US and Europe and saying, bloody hell, they are far ahead. We have to do something on computers.
00:31:50
Speaker
So that demand was a latent demand. At that time, we used to go around to the big cities and do what we called as an equivalent of fireside chat, call in 10 or 15 CEOs and have an evening chat with coffee to late afternoon drinks in the evening. And we had a brief session called top management imperatives for computerization. Based on all the studies done all over the world of how management has to get involved or doesn't get involved,
00:32:14
Speaker
So we'd give them an evening one-hour session and many of them would say, look, I think I need it for my whole team. And then we designed that as a two-day program morning till evening. And I would say that even the CEOs of the largest companies at that time sat in and they were accustomed to coming for an hour and starting the seminar and going away. And many stories don't have time, but Dr. Hirani was head of Tata Steel and his head of HR told him that, look, we have to do this program many
00:32:40
Speaker
many companies are doing it you get your board we're going for mass scale computerization
00:32:45
Speaker
So they said, well, he'll sit for an hour. He won't sit more. But he sat through. Both days and first day and night, he said, please come and chat with me. And some people, I think, what you guys are making? Saying, making sense. Because we have to do masculine computerization. We have the labor issues. So they were surfacing issues. I would say we were responding. So we said, fine. This two-day we will do. And then many of them said, fine. It's very easy for you to come and tell us, teach us. Now why didn't you hand-hold us? And Arvind Thakur then took the responsibility to build a methodology for consulting.
00:33:13
Speaker
which is where we studied information systems planning as it was being taught in the best institutions in the world. And we would invite people to do lecture circuits and learn from them. And so we built a methodology called critical information system planning, which would help companies and boards put a three to five year IS plan with budgets, target structure, there has to be a CIO, there has to be a department.
00:33:34
Speaker
So this was all happening in the 80s, second half of the 80s. So we started consulting before we did software development. And so now, at this time, it was still integrated. There were people who were doing the instruction. They were coordinators of the learning process. They were also consulting. And these are a lot of these very bright young people coming out of IAMs with their textbooks about what's the latest literature.
00:33:54
Speaker
sitting with this chairman of Indian oil and reading the book on the sign, he says, you know, it was taking knowledge to practice. And I have to say, our customers were really, really supportive and fond of our significance. We told them, look, this is new. And they said, right, we know it's new, but we trust you guys. And I think that has stayed with us through. I mean, last year, for example, last two years, in our international business where we deal with Fortune 100 companies, we had 100% customer attention. All of our, you know,
00:34:22
Speaker
the Unilevers and the Rolls Royces, all of them. So I guess it comes back to the question of the people, equation and the trust and partnership. You said that video, you wanted to replace the video instruction for that. What did you replace it with?
00:34:38
Speaker
So in 1984, along with IIT Delhi, which is my alma mater, and with the panel which had the who's who of computer science those days, Dr. Seshagiri being one of the early youngsters at that time, but elders also, people who had been head of DRDO.
00:34:54
Speaker
We held a conference called Computers in Education and Training. We did that in IIT. We were pushing for the use of computers in learning at that time. The very first conference of that anywhere happened in 1984 in the US, which I attended. I attended all of them, presented papers.
00:35:13
Speaker
So we had these very, very bright people, as I told you, that many of them are I am types, large measure, pushing the foundations and knowledge. We had a brilliant guy, two billion people who came from IIT Delhi, PhDs. Dr. Sugatam, it's all got a dead price recently.
00:35:28
Speaker
who also did the hole-in-the-wall experiment in 1999 to show that what if you have no teachers.
Expanding Digital Literacy through Partnerships
00:35:33
Speaker
That research we did called hole-in-the-wall because outside a software facility was a slum and he pretty much made a hole, stuck a computer with very good touch sensitive screen and mapped it in the lab to see if you have uninitiated kids who were not even going to school.
00:35:46
Speaker
How do they learn? The theory is that we built on what we learned before. But if you have groups of activism is the term that you construct. But collaborative constructivism is what we coined by saying that if you give a bunch of kids, uninitiated kids, a device which has a touch sensitive screen and is connected to content like the internet, then they will find a way to learn. They will co-teach. So that was a hole in the wall experiment, which then became very globally very important.
00:36:12
Speaker
And right now, we have a foundation, an IT foundation, that already runs a thousand of these kiosks in the rural parts of India as CSR activity. Because there the question we were asking is, the only reason we found in the 80s, we found a way to find teachers and coordinators of the learning process.
00:36:29
Speaker
Then when the scaling started to happen, end 80s, 90s, when the finally went... How many centers did you have in 90s? 40 countries, 2000. No, by the end of the 90s, 40 countries, 2000 learning centers, which then shrank in the next decade because of colleges teaching in school, teaching it, and people didn't have to spend years learning a programming language. All things happen.
00:36:51
Speaker
But in the scaling up, we were posing newer questions. So the R&D center, which we had, I had joined the board of IITD around that time, my alma mater. So we were trying to get the industry academia linkage thing happening. So I really nudged our board at IIT Delhi to get some startups in the campus.
00:37:10
Speaker
So we built a new building called Synergy. That's the name I gave it. And we said, a couple of floors have to be startups. So we took a floor to set up the NIT R&D Center. We moved it from Nehru place. And later on, by the way, when the university was formed, that was a gift from NIT Limited. The whole research team went to that not-for-profit.
00:37:27
Speaker
So Dr. Mitra and co were always pushing the limit. So by then we were saying, OK, we are now finding a way to get coordinators to the learning process. But what if you don't even have a teacher? So the digital divide question was posed to us actually a little later, late 90s.
00:37:44
Speaker
which then got us to create a line of business which was working in a public-private partnership, one of the first and very successful ones with state governments. We would do a build-operate transfer project for schools and we started the project in 1999, did it for 10 years, where at peak we were in 26,000 government schools in most states in the country and we would sign a contract
00:38:08
Speaker
to run and we would say, in your government village school, give us a room. We will put the phone line. We put, you know, hundreds or thousands of phone lines in places which didn't have phones. We got a generator because some place is very hot. We had to have an air conditioner. We did the civil work of the room. The doors and windows are broken. We got the furniture. We put in a stuck coordinator. We gave them ghost materials. We built ghost materials in multiple languages. And that was actually a digital divide thing. 11 billion people, children were trained.
00:38:34
Speaker
in that decade as a public-private partnership thing. So we said okay now this we are doing but simultaneously what about children who are outside school and that led to the whole in the world research which basically said that if you give connected devices along with some structure and
00:38:50
Speaker
content and with easy to use screens and let a young group of children self-organize. Sugata was proving that the people didn't have to come to the NIT classroom. He was telling us, you guys will be out of business. And we said, keep pushing. We have to obsolete ourselves. So there was a continuous improvement. So for example, in 1990, I remember, the biggest challenge used to be computer time.
00:39:12
Speaker
So we introduced something called unlimited computer type. So in New Delhi, in Karnad place, we had entered a huge place which had about 150 computers. We called it a computer drone, like a cyclodrome. And we did that in Chennai, we did Bangalore, in Calcutta. We couldn't do it in Bombay because you can't get that space. We did something else in Bombay.
00:39:32
Speaker
So the computer drone was a place where every student was entitled to unlimited time. So from your learning centers all over Delhi, you took time. But when you wanted another 10 hours and you want to work in the night, 24 by 7, this is working. So we broke this myth of limited computer time. And in Bombay, we had to do something else. So we did something called carry PC. There was some person who was trying to make a portable computer low cost.
00:39:53
Speaker
And so in Bombay, we announced that if you join this course, you carry a PC home. And we encountered a credibility problem. People said, come on. People don't have computers, you agree with me? So it took time to convince people. They said, you mean I can take it home? I said, yeah, take it
International Ventures and IPO
00:40:09
Speaker
home.
00:40:09
Speaker
because you want unlimited computer time. So it ran for a few years. So I think all these, as you can see, are responses to problems, but listening very actively. And I think when people say you have a vision, I think you don't need a vision. Well, you need a vision. Vision the madness, basically.
00:40:25
Speaker
But you need to be very aware of the problems on the ground. So our business partners were entrepreneurs. When did you go international? This was in the 90s? So 1991, when we were 10 years old precisely, and a year before we listed, we had work coming to us in India from the US on computer-based training, on the use of computers and learning.
00:40:48
Speaker
So there's an entity in the US which had figured out this small outfit which was using, now it's using the laser disk as well. It's on the cutting edge of using new technology, computer-based training and then beyond. The random access disk came into picture. We've tested all of them. We built many software technologies at platforms and so on, what people are now talking about all the time.
00:41:08
Speaker
So learning management systems and so on are built early on. So we had a customer, and that customer was IBM. So they said, we want to do CBT, but do you have to come and do it here? So we went to Atlanta for that reason, because that center for education, customer education, was in Atlanta. That's why we set up the office in Atlanta. And that still is our US headquarters. Now, of course, Atlanta is seen as a good place to go to. But at that time, it was a nice, cool place.
00:41:33
Speaker
So IBM became the first customer to build computer-based training because IBM was, for quite a while, the biggest trainer in the world. They were training the whole world. So they had zillions of courses all taught in the classroom. And they wanted to then convert them to CVT. That was one of our big contracts. So it was outsourcing of a very interesting type, that we would have our people sit in the 5-day classroom, video shoot it, make a lot of notes, ship their stuff back to our instructional software entity, who would then converge into computer-based training and send it back.
00:42:02
Speaker
It started like that. But then the software business actually came out of, for us, Singapore office. We set up an office. And the interesting thing was the consulting work we had done in the 80s was extremely useful in the Far East, which had open economies. People were importing all the computers they wanted to buy, but they didn't know what to do with them. India had been starved of computers in the 80s. But we had done all this information system planning because our customers wanted to. We found great use of that in Indonesia at that time. It was a big market for us in Malaysia, Singapore.
00:42:31
Speaker
Singapore, in fact, in the Prime Minister's office, we had done projects at that time in the early 90s, which are cutting edge. So there we were actually doing information system planning and information system management, drawing up an IT plan, not body shopping. We never went into the process of body shopping because, well, it just happened. Bright young MBAs were chosen to stay in India and so had we. Four of us variety grads who preferred never to go abroad. And so these youngsters here
00:42:58
Speaker
So the Singapore operation opened our eyes to the need to help companies put their solutions together because the US and Europe had eyes experience. We had equipment which landed up with little experience. India had no equipment but we had to grow from ground up. So when we went to the US, we were doing instructional software, educational software before we started doing other things. In Singapore, we were putting together solutions. In fact, in Bank Bali, which was one of the biggest banks, the whole network was set up by us.
00:43:25
Speaker
So we gathered a lot of experience of putting solutions together, and then we took that to the US and Europe. And that built our software business. So the software business, which was a consulting practice in the 80s, 90s onward was the boom time. But we, unlike big software companies, were doing Y2K and large mainframe software. We weren't at the cutting edge. We couldn't be teaching old stuff. We were teaching new stuff. So all our projects were on newer technologies, on relational databases, on Unix operating system. So I remember that one of the first projects we did was for Sun Microsystems.
00:43:55
Speaker
which was a worldwide sales incentive system to be run on distributed networks. And we did that project for them, which Scott McNady was personally supervising to see how do we do a distributed system. So we're doing interesting projects, and that created the software business, which grew. Tell me about the IPO. You were a fairly young company when you did IPO. What kind of revenue were you doing when you did IPO?
00:44:22
Speaker
I'll have to get the figure, but maybe about 20 or 30 or 40 crores, something like that, sub 100 crores. And we, I think, raised 18 crores. That was, I remember, 10 rupees share with the 40 rupee premium. It was oversubscribed. It went very well. And so 18 crores is what we raised.
00:44:38
Speaker
And many companies I've seen raise money when the markets are right. Somehow we felt that that was not the right thing to do. We felt you raise the money when you need it. Now I have to think twice about it because there are times when you can get money easily and time when you can't, but you should have a plan for it. So we used that money at that time to set up our, as we call them, the software factories. We pushed the idea of offshoring because we were not into businesses, into body shopping, which was a big thing in the eighties and nineties also.
00:45:06
Speaker
So because we were India centered, India based, the software facilities were here. So I think as a percentage of our offshore body shopping was minuscule because that was not the model we were built on. Good, bad is not an important issue. And we were working on new technologies because we had the education, business, which was predicated on knowing the future. People want to learn new things, which is still valid. Of course, they do come up pretty much ahead of anybody else on any topic.
00:45:32
Speaker
So that time, the idea was then to set up software centers. And we also figured that even in the metros, we had to set up more centers. We set up what we called as automated learning centers, which is where working professionals could come. And we had most advanced technologies, laser disc technology, all content, everything. And we've done many, many things with technology and learned that we were always ahead of time.
00:45:57
Speaker
and learn that technology alone never does a solution, which is what people are discovering now after this COVID time. You know, I should send you an article I wrote quite early on when COVID started, when people were going bonkers about online learning. And so I had written an article, I'll send it to you. It was called, I think, online learning. Board students, exhausted teachers. Okay. And people kind of laughed it off, but over a period of time, I think it became very obvious because we had been at it from 81, you have to remember. And yet we were doing the mistake of the, in 19,
00:46:28
Speaker
In 1996, we had announced the first virtual university called NetVarsity. But it didn't do well because Net was too slow. So while we offered it to a student, it was way ahead of its time. Yeah. So 2013, we launched what we called as the Cloud Campus. So this curiosity, we just keep testing the ground, got us to test very many things before time. And therefore, some didn't fly, many didn't fly. And I actually brought TB. We were giving free instruction long time back. And we found that no one wants it if you give it free.
00:46:57
Speaker
So we also bought a company whose we still have the URL which we will use called training.com. We own that URL because I think we knew early on that and now we know that the native digital natives will learn a little more but even they only 5% thumb rule and they say now look back and say only 5% of all learners are motivated enough that they will sit under the lamp in the book and learn.
00:47:19
Speaker
All the remaining ones need a teacher and a test and a beating and a mother and a stick. We need a huge support system. We need a huge support system. And India is even more over-caring. The mother will give a milk, a glass of milk. The father will come and see no comics going on.
00:47:38
Speaker
So we have a very intrusive structure to assist a learner to learn. So when you remove that, not learn. And yet I know that the cohort, in any cohort, the 5% of the brightest who need not be the highest marks scorers are self-learners. They always were. They even today are. But for the rest of us, we need a blended model. And so these tests which we were doing, pushing ourselves ahead of time and continue to do this data is helpful because it
00:48:06
Speaker
Set helps us set the right boundaries. So the IPO was essentially to set up the software consulting and rather expand it to like the consulting. So yeah, software factories. No, no, by then, then consulting had become a small part of the big thing. What is the difference between the consulting business and software factories? Like software factories where you're actually writing code for clients.
00:48:27
Speaker
You're writing code, you're testing stuff, you're populating databases. So it has a reasonable amount of process-sizable work. Consulting is you're asking you questions. So of course, all practices have to be led by consulting led. So as I said, when we were listening to our customers, we were doing consulting without calling it that.
00:48:46
Speaker
bright, curious people talking to customers and trying to see what does he want to do next. And that has pushed us to keep ahead of time all the time because we continue to have bright people. So we saw on the people side, I'll just talk for the first two decades. Then we go. The eight years that we were populating our organization with really brilliant young people. Nineties, when we started the GNIT program, which was the product, if ever there was a product or not, everybody wanted to do GNIT. That was a flagship three years you do with college.
00:49:14
Speaker
Well, it was like this. So I told you, we said college degree and no job was two years. Then we said dual qualification. You're bright enough in college. And we said, if you have three years to do college and you do six months or one year concurrently, then when you go for a job interview, you're better equipped. Then when we did the GNIT, that was actually
00:49:35
Speaker
We had the good fortune that two very bright people, post-retirement, one was Professor Mitra, who retired as director of BITS Pilani, and the second was Professor Jimmy Isaac, J.R. Isaac, Y.T. Bombay, who had set up the computer center there, one of India's brightest computer scientists. They retired, and they said, we want to spend some time with you. At 10 years, we had from 90 till 2001 to 3, we had these two people.
00:49:57
Speaker
guiding us one on information science and one on education administration. And I haven't seen a smarter education administration person, I can say, worldwide, than C.R. Mitra, which will shift our thinking. So he visited us to say that he had seen what we were doing, and he had some thoughts of what we should do. So he helped us conceptualize the journey for the next 10 years.
00:50:19
Speaker
And so the GNIT was born out of that work, which the team did, which basically meant that a college-going student has at least three years in BA, BSc, and so on, later on four years in engineering.
Strategic Acquisitions and Pedagogical Enhancements
00:50:31
Speaker
During that time, we should give them enough computer input, concurrent to their studies. And the moment they finish their three years, we should put them in a company for internship for one year. We will have to arrange that. So the task of signing up hundreds and then later thousands of companies to be partners for that.
00:50:46
Speaker
And we pretty much bullied them into saying, you have to give them this much salary in internship. And that was fixed as the amount full fee the student has paid us. So at the end of four years, the student has done his three years in college, got a degree, done one year with us as internship and four semesters. And then we gave it a title. We couldn't give a degree as a for-profit.
00:51:04
Speaker
So it stood for graduate of NIT, but we couldn't call it GNIT. And so that person didn't have to go for a job because those companies didn't internship. Nine times out of ten, they hired them. So our desire to fulfill the basic obligation for a learner that they come and get a job. And now, of course, it is to get an upgrade or to get the next job. So the outcome of our activity consistently has said, even the university, which is a young university, 13 years only,
00:51:31
Speaker
Every year, every student before convocation has a job, including the couple. Because that's the commitment. So by the end of the 90s, you said you had 2000 centers, 40 countries. What percentage of your revenue was training? What percentage was from software? Because you also had the software factories running. And did you do acquisitions during the 90s also? Or did it start in the 2000s?
00:51:56
Speaker
No, we started from the 90s, I would say. And I did say we started with an acquisition, a little one. Yes, yes, yes, yes, true. But we did in the 90s. So the US office, which we set up, I said, I told you, we sent two bright guys. One was an 82 batch MBA from IM. The first batch that you should catch. And the other one was an 84 batch from IM Calcutta.
00:52:19
Speaker
So the first one went to the U.S. to set up the U.S. office, the second one went to Singapore to set up Far East office. And the U.S., we started doing projects in newer technologies and came across some very interesting small companies which were doing creative work. And so in the, I think it was perhaps in the 90s itself that we started second half.
00:52:40
Speaker
we started saying, how do we learn about what these guys are doing? So we started the process of taking a small equity in some of these companies. Because some of these people are doing work which is interesting to corporate customers. So we saw it also as a way to tag along with them or take them along to solve a problem.
00:52:57
Speaker
So the edge investing, we called it at the edge, invested the edge and give us a sharp edge. So we did some of those investments. And we then also started looking at toward the end of the decade. In fact, early part of the decade, we saw that. So for example, post.com, which is the same situation as today, or was like 2008 as well.
00:53:20
Speaker
We saw some very, very good assets were getting into difficulty. And some of the very good acquisitions we did were in that period. Some very good acquisitions. Tell me about some of them. Let me talk about a very interesting one we did in 2003, which was not the biggest, but it was a very interesting one. So this is a company called Cognitive Arts.
00:53:43
Speaker
Now, cognitive arts was set up by a guy called Professor Roger Shank, who was at Yale. And he had done his work. It's very interesting. His work, just to take 15 seconds, was premised on an insight that learning takes place when there's a failed expectation. You can relate with that, OK?
00:54:01
Speaker
You take a road every year, you turn right every year, and one day there's a repair work going on. Now you learn that you can't go this way. There was an expectation to go this way. So I'm oversimplifying. But everything is like that. You do things in a certain way, something goes wrong. Why we say mistakes are an obstacle and so on. So when there's a failed expectation, that is one. So we said, OK, we have to now design instruction. We will get people to fail. OK?
00:54:21
Speaker
But then he went a step ahead to say, OK, now people are making mistakes all the time. The purpose of learning is to go to zero mistakes. So the management aspect of his work was to go study mistakes in large organizations, in repetitive jobs, and put a cost to each mistake, and see how many million they make in a year, and then list them down in descending order of where's the money getting lost, and attack that problem. So this they had got as a know-how when they came into Northwestern University and set up. University got them to set up the Institute for Learning Sciences.
00:54:50
Speaker
And Roger Schenke and his team were working on that, and then the boom was happening in the 90s. So they got some investment. They created a company called Cognitive Arts. So Cognitive Arts was doing work for the biggest on this, what was called the critical mistakes analysis methodology. So imagine the number of cashiers in a Walmart, for example, zillions of them, all of them make mistakes, or the guys who stock things in shelves.
00:55:14
Speaker
So, repetitive jobs of a large scale, finding the mistakes, then simulating those mistakes in instruction and getting people to draw lessons. So, cognitive arts started becoming a great success and then they got some investors. Then dot com happened, then people started cutting their budgets and then this company came up.
00:55:32
Speaker
for acquisition, so we bought it. And the designs, many of the early original PhDs, a team came along with them, with the team. And that's our design studio, which is based even now in Chicago. Instructional design, part of the team is there, part of course, a big team in India as well. Very big team in India. In there, we probably have one of the biggest content facilities under one roof anywhere in the world. So that's the design, Vindrog of consulting, the pedagogical design.
00:55:56
Speaker
And so that was a very interesting company because then we started using that across the system and led us to build a proposition which we call as managed training services. So we cannot manage the training service in a company because we're coming with the business logic. So if you go to a CEO of any large company and say, how much did your company spend on training? You wouldn't know. If you ask him, what do you get out of it? He says, well, I'm not sure. So what the software business was doing for software outsourcing, we said we should root for learning.
00:56:26
Speaker
So the learning process outsourcing was the idea. And then we said, why don't we go to them and say, look, you can't even measure what you're spending and you don't even know what you're getting. And we've been working on outcomes for forever and ever. And we are curious people to figure out what the problem is. So now we have multi, multi-million dollar contracts in that corporate part of the business for the Fortune 100. And jump to 2022 acquisitions. We've done a very interesting acquisition called St. Charles Consulting.
00:56:54
Speaker
So, the author understands when it had to break up, if you remember, when all the problems happened in 2008. So, that time, like many other companies, they had this central training facility in a place called St. Charles, which was doing all their internal training.
00:57:12
Speaker
So when all that breakup happened, the person who was running it bought over that activity. And they've been running that as a very, very top-end strategic training thing with a large network of on small network of full-time employees, a large network of trainers. We have bought that now. So they would train on soft skills? No, no, also on strategy, but they have a methodology. And they have a good understanding on how the Fortune 100 companies think about building capability and building talent.
00:57:42
Speaker
So I'm just saying that jumping to the next stage, but coming to the last acquisition we did for St. Charles. But so cognitive art became very important for getting a good idea of the science and the management of delivering learning to corporates and build a line of business for us, which we call managed training services, which has made us one of the top three players in pure play training in the world now. But the bigger one
00:58:05
Speaker
one we did was a company called Element K, which was in Rochester. And I'm just trying to see. That was in 2006, Cognitive Arts of 2003. Now, this was a big company. They were actually $80 million of revenue. It was huge for us at that time. And what was your revenue at that time when you were acquiring them? I think by then, we were doing with them, we were doing 160 million. So it was half our size. It was very big. Together, we became 250 million at that time.
00:58:33
Speaker
So this was a very big thing for us. And interestingly, we exited this many years later to another company at a very good profit. Because it gave us a huge library of content and a huge access into the market. Then we moved the content development to India. And then another company, which is very big in digital content, who was a customer of us for training, they bought that entity. Because we didn't want to do packaged content development. We wanted to customize it more and more.
00:59:02
Speaker
So that was a very big one. So there are many acquisitions. 2016 was a very interesting one in India, a very bright young team in Bangalore called Perceptron. They were doing a pedagogy for teaching advanced technical skills to people very rapidly. And so we call it Stack Root, full stack learning. So Stack Root today delivers the best impact on learning for complex skills to bright young people.
00:59:31
Speaker
It's a whole methodology. And that's what we're using to offer Indian, large Indian customers. We'll take it to the US as well. So that's another thing which is collaborative constructivism, different. Bright young people broken into group, given problems with mentors, very little classroom. They're making. It's a maker model. Then recently, two years ago, we bought a company called Regata, which is an equity high, and a small team in the US, which is working in AR, VR.
00:59:53
Speaker
Then we got a company called Eagle, which is US again, 2018. They were very focused on doing some kind of training for the pharmaceutical industry. So they do rollouts. When they have a new method or a new regulation or something, they have to roll it out across the organization. So they had very strong capability of rollout in a regulated sector. We saw that as a core kind of capability.
01:00:14
Speaker
So that got us also a very quick entry into the farmer sectors in the managed training services business. So then in 2008, we had bought an India small company called Evolve. They were teaching English language in India. Then actually last four years, I talked about 2020, we did Jakarta.
01:00:31
Speaker
2021, we did a very interesting company in India, which was a good-sized company. And we bought them for about 80 crores, called RPS. So they are working in a very focused manner on what are called the GCC, the Global Competency Centers. Large international companies who have the development centers in India. I think all the large companies have huge development centers in India, in Bangalore, in Hyderabad.
01:00:55
Speaker
And so RPS has been focused on doing their internal training. So that was a segment we were not doing too much. We were doing for the big IT companies of India. We were doing global companies. But this whole GCC community, they have very good capability in that. But the range of products we have, the extent of science we have, technology we have. So coming together of this is 2020.
01:01:17
Speaker
2021. And 2022, we did another small Indian company, which they have very good immersive content. Their methodologies do good immersive content. And so we've done a small investor, not a full acquisition. So you can see that we are very careful about, and I think very nuanced about what we want for what. And then I told you about St. Charles, which is a full acquisition.
01:01:42
Speaker
So the acquisitions, entries and exits have happened over a period of time to fit into the strategy of what we're trying to work on. Tell me something, why did you change your strategy to focus more on B2B? So in 2000, you had, I think you told me about 2000 centers across 40 countries. So then, you know, why the pivot to focus more on B2B from here? And in 2000, training was contributing to how much of
01:02:08
Speaker
revenue like was it more than 50% between software factories, consulting and training. By then they were probably coming to equal levels. Learning was probably a little more but both good size equal profitability. So we did not pivot to be to be first of all.
01:02:24
Speaker
So the consumer part of the learning business, which is where individuals had to pay for themselves, is a developing country model. In the US, the company would pay for the employees, number one. Number two, building a brand in a developed country is a damn sight expensive process. So when we went to an Indonesia or one of the African countries or Middle Eastern countries, it was much easier to take our brand, to take our business model of franchise or business partners
01:02:53
Speaker
We did try to be fair. We did try in the US to do that and discovered that the marketing costs were just prohibitive. And we wanted to remain within the reach of people and their personal budgets. On the other hand, we didn't pivot to B2B. What I have to say is that when we started the India business, it was a consumer activity. And gradually, we got pulled into working for companies. And so therefore, that became a business where we were then reaching out to companies and doing training programs for them.
01:03:21
Speaker
When we went global, when we went to the US, we were doing first for IBM and then we actually at peak within about a decade we were working for 39 out of 50 computer companies doing content for them in the US. And then soon many of those companies said you're doing IT content, can you do other content but on the computer.
01:03:41
Speaker
Earlier, it was IT as content and IT as form, both the form and content. Then it became IT as form, but non-IT as content. That happened in the 90s as well. And then when the cognitive arts and all happened, then we realized we had a methodology, we had a set of customers, we had very good references. So the US-Europe business, working with Fortune 100, was growing very well. Our few experiments, we even tried actually in Hong Kong, we tried to grow
01:04:09
Speaker
That was the second center. The first one we did in Nepal when we went outside in 1995. Nepal ran like India. It was a grand success. Hong Kong, we discovered the cost of marketing was too high. We had to remodel. So we discovered that the B2C, B2B, whatever you want to call it, that getting to consumers is a very expensive proposition in markets where the costs of marketing are huge. And also where companies pay for that. There's an entitlement mentality.
01:04:32
Speaker
So today we don't use that word in India because in India we work for, if you do work for a bank, so we have trained thousands of people for ICICI Access Bank. That's a combined thing. There we make a proposition to the marketplace. So we will say, okay, ICICI is going to hire so many people. If you're interested, you have to do this course because if you find you suitable for the course, you'll get an appointment later.
01:04:54
Speaker
So now, is it B2B, B2C? Those are artificial constraints. So it's all what the real need is. So therefore, though both have been growing and we are just responding to market needs as they come, rather than decide, say, today you want to have a market interview, over-specify to get a little narrow place and keep spending money to crack it, within quotes. In our case, we think that an evolutionary model, but we were fortunate, as I said, to start early, there's always a beginner's advantage.
01:05:22
Speaker
But today, we have started and then rolled down many businesses. We exited software, which is a highly profitable business, because our main thrust was always education. But it was a very profitable business. And till a certain point, they were reinforcing each other. Consulting was about the marriage of both. We saw ourselves in the knowledge business always. And so we emerged the companies in 2004. The idea was that two different businesses have different characteristics. Shareholders have different demands.
01:05:51
Speaker
And then we thought that we would say only 2019. Finally, we could get the exit and that's go forward, which is a very successful business. And they use that name for a year after we exited the business. The software factories you set up in the 90s essentially got de-versed in 2004 as an IT technology. Yes. It was then consulting practice, but also mostly it was software development, mostly offshore. That was our interest. Okay. We pushed the software factory idea quite a bit in the early 90s.
01:06:20
Speaker
So in the late 90s, we had made a software division, we call it NIT technologies, A division of. And 2004, we demerged it, listed it. They became two listed companies, but NIT held down to 25%, which it exited. So the passion and the love for learning and education has kept us where it is, which is why we have a foundation which has trained 6 million people since 2004, and a university which is formed in 2009. Those are not for profits. There's much more passion.
01:06:47
Speaker
to do the learning agenda for different communities. So for us, these words, B2C, today if you have to enter the business, you have to be far clearer because people are experimenting with will I get customers or not with big bunny. Our approach always was that you have to taste the ground and look for adjacencies and then keep exiting and entering depending on what the needs are. So towards the word sustainability has been important and that's something we can talk about.
01:07:13
Speaker
Most of your diversifications were as a result of listening to customers based on which you started. Tell me about NIS. What led to the birth of NIS? And why did you eventually shut that? So NIS was basically, again, we were looking at diversification in the 90s itself. And we thought that the concrete skill, which this country disrespects, but it will need as liberalization happens, is professional selling because the whole idea of salesman.
01:07:42
Speaker
was something which was antithetical. So we said we should professionalize this because that's how it is all over the world. We would see professional salesmen who retire as professional salesmen. They have big houses. They have everything else. They love to do that. And this idea was so we said, let's get into it. But then late 90s became such a busy time for IT itself. And that was largely we found that there were companies which were very interested for us to do stuff.
01:08:06
Speaker
So we talked about that. And then we found that there was one customer who was our biggest customer, that was Reliance. And so we had a person who had joined us to set up this business, and we thought that he should get an exit. And so then we had a chat, a very good chat, with big people.
01:08:24
Speaker
He was very interested. So we exited that because the whole team then, because they were expanding that time like crazy, like they are. And so we exited that business because we felt that that's not something we should get our attention with this booming of IT. So that exit was done because we had a good home for that place and something which would give them growth. And our people there were happy to get that situation.
01:08:45
Speaker
You could make a plan about achieving certain either capability or market access, and then you would possibly make some sort of a calculation that, okay, instead of spending a year or two on building this in-house, I'm okay to spend $10 million to acquire this company. What is the way in which that calculation happens, that how much you're willing to spend to acquire that capability instead of building it organically? Well, see, building new methods and practices takes many years.
01:09:13
Speaker
So very often it's not a complicated calculation of 10 years will take so long. We used to do those mathematics earlier, then we realized that if someone has a distinct competence, which we are missing, it has to be a reasonable deal. It is not this tech kind of valuation, which are unrealistic. We haven't gone into any of those, by the way, and neither do we intend. Now, post the challenge that they have, things will be reasonable and we obviously look at them more seriously.
01:09:38
Speaker
Because that's a different engine. The economics is never an issue. It's just perception of opportunity. We've never done based on that. So we've seen what do people have and how does it fit in?
Economic Rationale and Business Evolution
01:09:48
Speaker
Does it give a leverage internally? Then we build a whole logic of saying, okay, what's the rationale? How will we convince our investment committee and our board that this is what we spend?
01:09:58
Speaker
in acquisition and this is what it only gave on its own and then we look at what else can be leveraged that's on top of it. So the economics is done more around if we do this investment what does it do to our capability which gets translated into revenue and profitability.
01:10:13
Speaker
And NIT technology is NIS. So NIS, we had started that business in the early 90s. And then it was a very interesting business. I think it's still something we should do at some point. Because our recognition was that sales is not a respected role.
01:10:31
Speaker
people getting bags. But we knew that as India, as the markets mature, professional selling will be in demand. So we started that. It was doing well. But then late toward the end of the 90s, early part of the decade, next decade, we were so busy with technology. And we had one customer who was such an overridingly large customer that there was a decision that it may make sense for us to divest that and put our energies.
01:10:58
Speaker
So, it was much less to do with values and funding. It was reasonably good return, but the bigger issue was that we are getting more focus on technology with all new technology areas and therefore this would be something which someone else can do justice to.
01:11:14
Speaker
And at Tech, of course, as I recall, when I told you about the history, we started training, then we started consulting, and then got us into software business. And we prided ourselves on having this model of which is called the hospital and medical college model, which is the practice.
01:11:30
Speaker
the doctors practice and the bright ones do research and create new knowledge and you teach people the practical way as you've seen doctors and interns going around. It's a very integrated model of learning. So for us, that was a very important contribution the first two decades. All the people doing software, also doing training. Then we make divisions over a period of time. Then it gets a little separated, but this is a common development facility.
01:11:53
Speaker
So the work is being done in the field for clients and that actually gets translated into cases and knowledge and so on.
Structural Changes and Strategic Adaptations
01:12:00
Speaker
And when we listed that time, the 90s was a great time, everything was going well, financials were running similarly. But there were a set of our investors who were more focused and interested in education. They were typically the more long-term pension funds and stuff.
01:12:15
Speaker
And then there were those who were looking at softwares, high growth, risk compressing area. And so they were keen to see that they understood part of the business. And this is very focused on businesses. And so we started giving them separate breakouts, financial numbers. And then towards the end of the 90s, both companies had become a certain size. And there was then a discussion that now should be. And they're big enough. Both have their own capabilities across the board. And therefore, should we not look at, first of all, two different listed companies.
01:12:42
Speaker
But when we went for listing, 2003 or 2004, I think markets were not really right, but we had decided to move ahead. And so what we did is we demerged the software division and listed that while NIT held on to 25%. So they became two listed companies with two boards, but common promoters, and both ran quite well.
01:13:02
Speaker
independently and then we thought that it was time to now for us to focus on education which needed that time much more funding and growth and then markets were not very right at that time. 2008 again we were ready but markets were not right and then 2012 and finally after starting a search in 2019 we found a good equation to make sure that we had a team, the whole team went along there.
01:13:25
Speaker
And as I mentioned, they're doing exceptionally well as Goforge. And so, therefore, NIT Limited, in a sense, stays with the business that it started with. Okay. Interesting. So, coming to the topic of people, NIT currently has about three and a half thousand kind of a headcount. I want to understand how does one organize
01:13:46
Speaker
and build such a large people organization. And I'm sure it would have evolved over the years in terms of how you organize it. And are there functional divisions, or are there like SBU strategic business units, and each business unit has all the functions within it? And I wouldn't understand that a little bit more. So let me say, in 42 years, we've tried every model there is in the book, every model. So we started as a modelistic entity. In fact, I remember presenting a paper somewhere 20 years ago.
01:14:16
Speaker
So I call it EDE. That is, everybody does everything. That's the first way. And then from there, you organize into functional areas. First thing that happens, you've got marketing, you've got sales, you've got delivery, you've got everything. And then when the complexity starts growing, complexity, not in a negative way, one is newer markets.
01:14:34
Speaker
So you order a geographical distribution. And then there's a complexity in terms of product lines, as I said, even software and education for us. So then we went, in fact, through a strategic business with divisional structure, that you have this business, that business, that business has some functions, which are its own staff function, but maybe finance is common. But you have a controller in each. So you give a little more independence to each line of business and the head of the business to run the P&L.
01:14:58
Speaker
Then you realize that you're becoming bigger. There are too many overheads. So you go into a matrix structure. So matrix is basically when all of HR, all of all the staff function, then you may have a geography matrix. And we say US is one geography. So you may have geographies and businesses. So matrix structure actually is what many companies went through at one point. But matrix is very difficult to manage because there's too much of contention to deal with.
01:15:25
Speaker
So just an example to understand the matrix structure. For example, an HR manager would have one reporting to a CHRO and another reporting to a business head where he's the HR manager for. That would be a matrix structure.
01:15:40
Speaker
As an example, what do you have a geography? Geography is all profit leaders for lines of business. And then the lines of business, and there's someone sitting here responsible for a product across geographies. So many companies still do that very well. Many European companies do that well. But the thing is that has huge amount of complexity. So for high growth companies, for high growth companies, it gets in the way of growth. For companies growing at 3% to 4% per year, real growth, very, very large companies sometimes that can work well.
01:16:07
Speaker
But even their companies have changed after too much. My view is when you have a structure for too long, some habits of the structure, bad habits accumulate, then some chief executive consensus is not working well. Now let me just make it divisional again or make me different companies again. So here again, I would say that structure follows strategy, not the other way around. Structure follows strategy. So if your strategy is that you are going to have geographical expansion,
01:16:36
Speaker
If you're saying next five or 10 years, that's our game. So then we also, when we started 91, we said first we called it exports. Then we say, no, no, no. Now we have to do internationalization. That means you have, instead of you have guys flying to and fro, you have a US office, a Singapore office, and you're going international. And then our measures used to be that, OK, now in this country, let's get a local chief executive. What percentage of people are local? That's an internationalization strategy.
01:17:04
Speaker
And then from there, you go into globalization. It's not that there's a center, and then geographies. So if you're R&D center somewhere, production somewhere, your sales is distributed, then you are a global organization. So these phases as well, and different companies call it differently. But for us, we went through exports, and then administration, and then globalization. Is there a formal way to do strategy at a large organization like NIT? I can understand for a small organization, it's the founder thinking,
01:17:34
Speaker
and brainstorming with a few close associates. But how does it happen? No, no, no, no. That's not necessary. For example, we've always believed in deep and wide engagement of the planning process, even from the earlier days. So we'll get the top 10 people together, think of an approach. Those 10 go back to their locations, or geographies, or regions. And then they deploy it all the way down. This is what we're thinking of. We want your views. Then the aggregation is bottom up. That has been our approach.
01:18:03
Speaker
So what that does is it gets many more people to buy into the idea. So we used to have what we used to call at one time the blue sky vision exercise, which would be maybe the top 50 people coming together for three days to Delhi. And then everybody's doing their, you know, the product managers, the product line, everybody's dreaming their dreams. And the regional guys are dreaming their own dreams. We also want this. And then you have this blue sky vision, then you aggregate it into something and say, okay, now,
01:18:28
Speaker
If this is the overall picture, now we want you to go and go test your ideas and see what your people have to say. And then the budget would become coming bottom up on what they can do with such a plan. And then we seal it into a three-year direction or one-year plan. But there are very many methods. Strategy is a broad question.
01:18:45
Speaker
And strategy also isn't that the lowest man determines strategy. Strategy ultimately is a set of choices. But everyone should be involved in creating options and choices so they have a say in the decision. And that's why you have a financial city sometime. It will be raised fund, it will go public. You have a technology strategy, it will be buyout, it will be invent. So then there are these subsections within that.
01:19:05
Speaker
What is the NIT method? What model do you use currently? As I said, our rhythm is that around October, we'll start a perspective planning workshop where the business leaders present to the board their views and what's happening and what's competition doing and what are the opportunities. And increasingly, a board has become a board that challenges the executives, okay, why this? Why not that?
01:19:31
Speaker
Then sometime we'll take the board to an offsite. So this last year, the board went to an international customer meeting in the US and came back very enlightened about what's happening because then we worked with the Fortune 100. So then they will start posing questions. So the board challenges these groups. Then they have to go back, modify, go back to the next level, walk through the plan.
01:19:52
Speaker
come back again for the second round, which will happen for us end of this month. And so that's revisiting the perspective plan, focus and then putting some looking at the golden aspiration and then challenging if they're good enough or this looks unrealistic. So there's a moderation and a challenging process by the board. And then that guideline is used to make the budget in the next month. So that by end of February, early March, the plan for next year is set and broken into quarters and so on and so forth.
01:20:16
Speaker
So, and yet every board meeting we do, if some board member says this is happening, whatever we're doing about it, or some large thing happens in the markets. So for the last couple of quarters, it's about saying, okay, if there's such a funding winter, it's an opportune time to look at some good assets, their tech space.
01:20:36
Speaker
But we've been looking because ever since we've divested, we've been looking for acid. So this now gives a flavor. So things are more dynamic. The old long term horizons are not the thing of the moment. I mean, one is we are looking beyond three years. And now within that, we have to start looking at how will this risk emerge? What will happen in China? What will happen in the US? What will happen? What will Brexit mean? Those questions come into conversation to inform the process so that everybody's realistic.
Board Challenges and Company Culture
01:21:01
Speaker
At what stage should a startup think about building a strong board? How early should they start thinking about it? Conceptually, before you start the company. Conceptually, you need some good sounding, they call sounding boards. But you better not venture in completely hip shooting on a white stallion out of the blue. That's not my style. Many people do that. But it's good to have wise counsel. So people not like you, people who don't think like you, people who challenge you.
01:21:27
Speaker
Idea is challenging. They'll say, have you looked at this? Have you looked at that? But this happened there, that happened there. Something you should have asked yourself, you want to make sure you're not missing. So a sounding board is desirable in any case. In the current format, the guy who invests becomes a board member and sometimes is good and sometimes not so good. Particularly when people who are funding you have short horizons.
01:21:46
Speaker
then your alignment is to build a company. So you have to see that there's enough people in the board or in the team who share the long term vision with you rather than short term vision because this question comes up very often. And therefore people who have a view, people who are knowledgeable, people who can be teaching, then of course now you do need your board will have to have strong people on finance who share the finance committee can't just be anybody.
01:22:08
Speaker
There is a choice. So you don't put committees early on. You have a board, but individuals who have expertise in various areas. And some of them may be friends who have known you and who know your strengths and weaknesses. And you're not to praise you all the time. You get them on the board or bump jumps from college. That's never useful. But people who have some capability which your team needs to be challenged on and get superior knowledge.
01:22:31
Speaker
And then you need a very efficient set of board members who will keep you honest. Because my view on corporate governance is that any decision you take, this whole ideal of a widow who has one share in your company, what will it do to her? So not that there's a written thing, but that's the sensitivity, the minority shareholder. But that becomes more important when you go for listing. That's a big, big difference when you go for listing and go into that question about IPO.
01:22:58
Speaker
But initially, you make a sounding board for the first few years. I mean, in our time, we had more time. Now people are quite busy to get funding and they're quite busy to do listing. So the time is getting compressed. So in the early phase, sounding board, then a good
01:23:14
Speaker
a board of people who can challenge you. And obviously, those who fund will be there, but you should take people. If you have technology, then someone who's really smarter than your senior most people or has a vision of technology is very important. If you're going to be consumer market, then someone who understands that better than you guys do. So you see your deficiency, basically. And then when you're going towards listing, then there are many stipulations. The independence is a very important. You can't get on board with those people who have been with you all along.
01:23:41
Speaker
they're already aligned to your ideas and they may have missing links. So then getting independent directors actually is a knack and non-executive independent directors because you have your executive directors and then there are many ratios assigned to how many you can have and of this and how many you can have independent and so on. So then the choice really is that you want corporate governance to be a very important thing.
01:24:01
Speaker
You want risk assessment to be very important. Because if you look at the very large companies, the big thing is risk. Because even an opportunity is a risk. You have to take a risk view. What should we be doing if you create something that's a risk? So risk assessment. And risk management is also becoming statutory things. So then your thing is much more about the board not being the people who conceive products and drive businesses. The board is once again a board that challenges management. You have to devolve the power. So the board has to look at the talent.
01:24:31
Speaker
So it's a very important role of the board. There's a committee for that. Nomination is a good decision committee that looks at this. And then you have an audit committee, and then you have internal audit. You have many functions which are helping the board to challenge management for its new ideas and helping the board to keep an eye that everything is going well. So that becomes a much more evolved and well-documented set of districts.
01:24:53
Speaker
The impositions of Sabia and so on actually help people to decide what kind of people they should have. But by then, in our time, we listed 10 years only. Many companies were that time doing much later, but now people try to do it even quicker. What are the benefits and disadvantages of listing? What has been your experience as running a listed company?
01:25:14
Speaker
So I think what the going public pluses are, of course, you raise funds, most important. You raise funds and the original founders get an opportunity to divest something. So they generate some wealth. They want to make the house. They want to buy a car. They want to do whatever, the hard-earned money.
01:25:30
Speaker
And then now, of course, after ESOPs came, which was much after we started, it also becomes a method to compensate at a wider level. So there's more sharing of wealth. And you also get written about quite a bit, which keeps the markets informed about, to keep customers informed about you.
01:25:47
Speaker
And I tend to feel, you know, if you're a good company with good practices, then no one will talk of those practices unless you're listed. So there's a plus for that as well. But fundraising, keys fundraising, I guess people go to the market to distribute the holding and to raise more funds.
01:26:01
Speaker
And there's reporting, if you call it a downside. But I think if you take reporting appropriately, sometimes you feel there's a bit something there a bit too much. But there's no perfection in these things. But I think doing it through a structure gives a board a responsibility to make sure that your actions are not violating the principles underlying the requirements of governance. And it keeps you in good shape, I think.
01:26:26
Speaker
So my last question to you, how do you drive culture down to the lowest level of the organization? So the simple answer is one person at a time. First of all, let be clear. Each person is unique. Are you focused around each individual or not? So if we have said from day one that people's growth is our growth.
01:26:47
Speaker
then you're clearly focused on, okay, if you can get each person to grow, then growth will happen. That's our belief, which means that you are investing in them. So we have many, many kind of truisms or rules of policy, but one of them is promote the person before he's ready. He or she is ready because then they will aspire and they will work harder and they have a lot to prove and they're making some mistakes and learning in the process. It also holds people because people know that everybody's getting a step up.
01:27:12
Speaker
or that we invest. There was a period of time when we were counting the number of days of training per person that we were giving across the company. So investing, we had something called the School for Employee Education and Development called SEED, very appropriately. Everybody had to go every year for X number of days. But that's a mechanism to engage. What do you engage them on? So you obviously have to state things you think are okay and not okay, and you do it through your value statements.
01:27:39
Speaker
Then you also want to be able to tell people what we are up against and what we want to do. So we ritualized a thing which we call the annual day. We did it in our eighth year. And every year we do it. Earlier it was just three cities and five cities and many cities and then zones and last few years was virtual, not half as much fun. But those annual day, ritual is an important day when we get in distributed manner, everybody, to spend the day with leaders talking about what they plan to do, what they did.
01:28:07
Speaker
And it's not as much financial numbers because those are visible not to everybody quarterly. But we set out to do this. This is what we've done. This has worked well. And a lot of time is for recognition of people. Very large number, about five to six to seven percent of people every year get some kind of recognition and some accumulate and we have an excellence award.
01:28:24
Speaker
Third time you get it, we call you an accelerator. And then if you get it a couple of more times, you become unstoppable. So there's a whole thing and people aspire for all kinds of things. And it's a recognition among peers. Very important. Qualities are identified, amplified, and talked about as being examples. But what I found is that culture, while all of this happens,
01:28:45
Speaker
you know if you stated your culture on a piece of paper as values and mission and beliefs the one thing that works is how you are tested when you have a violation okay and it's amazing how quickly everybody gets to know this okay someone didn't treat someone well and we don't make a public issue of gaining people or whatever but
01:29:03
Speaker
We take it very seriously. And so people know that such things are not allowed. Fortunately, not too many, but such things are not allowed. Or upholding something broke our back. We say, okay, we had to do it. We did it. And it's all done with integrity because bright people know what's real and not real. So whenever there's any violation of any aspect of the culture, it's how management behaves, how swiftly they behave. That actually codifies and hard codes the culture.
01:29:30
Speaker
And that brings us to the end of this conversation. I want to ask you for a favor now. Did you like listening to this show? I'd love to hear your feedback about it. Do you have your own startup ideas? I'd love to hear them. Do you have questions for any of the guests that you heard about in this show? I'd love to get your questions and pass them on to the guests. Write to me at ad at the podium dot in. That's ad at t h e p o d i u m dot in.