Gururaj ' Desh ' Deshpande

Engineer, Billionaire and

Founder of Sycamore Networks Inc.

From Financial Flop to Billionaire
by Kenneth Chan

Gururaj Deshpande's first entrepreneurial venture netted $26.95. The chairman of Sycamore Networks keeps a framed copy of the check as a reminder that finding his passion for building companies was the real payoff.

Deshpande rejected the idea of returning to his life as a professor and software engineer after his first failure. Instead in the wake of financial ruin Deshpande would light out in search of his next entrepreneurial adventure, emboldened by a taste of his true calling.

Gururaj "Desh" Deshpande
Chairman of Sycamore Networks
Born: Nov. 30, 1950 in Dharwar, India
Two sons
Stock Symbol: SCMR

Companies Started:

1987 Coral Networks
1990 Cascade Communications
1998 Sycamore Networks
BS Electrical Engineering IIT Madras, India
ME Electrical Engineering University of New Brunswick, Canada
PhD Data Comunications Queens University, Canada, where he was voted best professor

If it's something you really believe in, he asserts, "you don't really [have] look for anybody else to approve of that conviction. ... You're going to make it happen."

And he did. Six months later, Deshpande launched into his next endeavor. Cascade Communications, as the company was called, would be a gamble at manufacturing Internet equipment. His doubters were many, reinforced in their pessimism by an industry dominated by Cisco Systems.

Desphande stayed the course, always keeping true to his vision. Conviction is central to the serial entrepreneur's success, he maintains, because "everybody that you talk to is only going to try to discredit you. They're going to try to tell you that it's probably not something that is going to work."

In 1997, Cascade was sold to Ascend Communications for $3.7 billion. By that time 72 percent of all Internet traffic was coursing through Cascade's products.

Success or failure, it was the doing he loved. So he did it again. "You always have to do, at least in order of magnitude, more and different than what you've done in the past," explains Deshpande.

Sycamore was founded a year after Cascade in anticipation of the optical-networks boom. In a little over two years, Deshpande built the company up to a market valuation of over $23 billion.

With his second multibillion-dollar company, Deshpande has succeeded in making himself one of the richest men in the world. His net worth tops $4 billion. All thanks to an earlier experience worth just $26.95.

Tune into PBS' Nightly Business Report Thursday to see Donald Van de Mark's interview with Gururaj Deshpande. Prime Movers airs every Thursday on the Nightly Business Report. Check your local listing for times.


Gururaj "Desh" Deshpande
Global NRI - July '2000

On October 22, 1999 history of a wonderful kind was made. A highly regarded but newly started small company with less than 200 employees was to be listed on the New York Stock Exchange. It had made an initial public offering of 7.5 million shares for $38 a share. During that trading day the company's share shot up to $250 before closing at $ 185. At that price the company Sycamore Networks was valued at $ 18 billion and its chairman and largest shareholder with 21% of the holding, Gururaj "Desh" Deshpande, became the richest Indian in the world with a personal wealth of $ 3.7 billion.

That made him an instant celebrity and an icon for the new class of Indians that were making their mark in high technology areas around the world. But for the professionals and colleagues who knew him Desh Deshpande's spectacular success came as no surprise. "Desh has a history of success. If he had begun a start-up in baking mud pies, people would still have wanted a part of it," says Christine Heckart, a technology consultant. In an article titled "Destined for Greatness" published a month before Sycamore Networks went public, the highly regarded Red Herring magazine said of Desh that he had "built an entrepreneurial resume that borders on the spectacular."

What they were referring to was his success with the second start-up, Cascade, a broad band switchmaker whose switches were so successful that 70 per cent of all internet traffic was routed through them at one time. Cascade was started in 1990 as a two man hole-in-the-wall operation with just $ 125,000 in seed money. By the time Gururaj Deshpande sold the company in 1997 for $ 3.7 billion Cascade had grown into a 900 employee giant. Not too much later the buyers Ascend Communications sold Cascade for $ 21 billion to Lucent Technologies.

Comparing the two Desh says, "Cascade was a rocket ship but Sycamore has far exceeded my expectations so far by being innovative not only on the technical side but on the business side as well." He also states,"I like building large organisations. Cascade was a good size but I want Sycamore to be much more than that."

What has set Desh apart is his vision which enables him to see the future needs of key technologies. Cascade was one of the first to see that networks would expand beyond the office network into something so universally connected as the internet. The switches Cascade made would have been only a side business in the IT industry had internet not exploded. Similarly in Sycamore Desh's vision is that "The networked economy is going to be real and contribute fundamentally to the economy".

The key feature of the Sycamore technology is that it allows fibre optic networks to offer much greater bandwidth than earlier possible at lower cost.With the explosion of the internet and need for broadband access to the internet the demand for bandwidth is expected to grow 20 times in the four years between 1998 and 2002. Says Deshpande of his vision,"I started with a simple concept. Bandwidth will be the most important commodity in the next 25 years. The vision was to change the economics of bandwidth. The rest of it is detail."

Fortune magazine called Sycamore one of the 12 "coolest companies"of 1999. Further it went on to say that what Sycamore was doing would "do nothing less than change the nature of the internet".

All indications are that Sycamore will turn out to be one of the great success stories of the first decade of the 21st century. But not all of Deshpande's ventures turned out well. In his first start-up in 1988, Corel Networks, Desh walked out since he did not agree with the path on which his partner wanted to take the company. Without any severance pay or saving and just after wife Jayshee had left her job to look after the two small children, he recalls wryly, "I don't know how I had the nerve to do it."

A graduate from IIT, Madras, 48-year-old Desh's life story is in many ways that of the many brilliant Indians who left the country to make a fortune outside. After his degree from IIT in 1972 he went to Canada where he acquired a doctorate in data communications. Then he started teaching in Queens University. In 1980 he gave up teaching to join Codex Corporation, a subsidiary of Motorola and later moved from Canada to Boston because he thought there were better opportunities there. Corel Networks started in 1988 but Desh left in 1990 and returned to India briefly to consider starting a business there. He returned to launch his second start-up Cascade. The rest, as they say, is history.

For a man so immensely successful, Despande remains modest with a disarming sense of humour and ability to win people over. A journalist who interviewed him at length said, "Deshpande was the first multi-billionaire I met; he also turned out to be one of the nicest businessmen I have met." Others are equally impressed. Says Paul Ferri, a venture capitalist who invested in Cascade, "Desh is very good about not letting his ego get in the way." Dinesh Patel, a US based entrepreneur who has known him for several years, says of Desh, "He is one of the most self effacing people in the business."

Gururaj's vision extends beyond the mere technical innovation. In a recent interview he spoke at length about his vision for India. One of the striking things was he took a very positive view of the Indian diaspora, or what used to be called the 'brain drain" not too ago.

He said, "I think India has has finally come out of being sort of very secluded. It has opened up a lot more. And people within India for the first time in its history are moving outside the country. People have migrated to Australia, United States, UK which is something that has happened only in the last fifty years. Now, Indians have become more aware of the world. So far, they have never had an opportunity to participate in the global economy, which is something they are beginning to do now. This has had an indirect effect on the country creating a new benchmark and a new vision."

It is a vision that people of Indian origin from around the globe are beginning to share. The Indian diaspora began since the Indian economy unable to offer its brightest sons a suitable avenue to show their talents.. And now the prodigals have begun to build the networks and renew the creative links at home. Of the many whohave ventured forth, one of the brightest has been Gururaj "Desh"Deshpande, a pioneer who has shown that with vision and guts it is still possible to play a straight game and win.