Engineer , and
1st., Domestic dotcom Billionaire
To Rajesh Jain, a 32-year-old engineer from the Indian Institute of Technology (IIT), Mumbai, goes the honour of being the first domestic dotcom billionaire.
On June 14 this year, when champagne bottles popped in the plush offices of Rediff Communications at Mahim in central Mumbai, the jubilation was understandable. Rediff had, with its American depositary shares (ADS) issue, become the first Indian dotcom to be listed on the Nasdaq.
The listing also meant that the new worth of Rediff's chairman Ajit Balakrishnan soared to stratospheric heights. Going by the exchange rate then, with his 26.51 per cent stake in Rediff, Balakrishnan's net worth upon the ADS listing at $12 was an astounding Rs 324.05 crore. Within two days, that rose to Rs 745.98 crore, when the ADS zoomed to $27.63. Today, with the receipt at $8.75, his dotcom wealth is down to Rs 241.53 crore.
Add to this his 9 per cent holding in the Bangalore-based PSI Data Systems (valued at Rs 48 crore, up from Rs 28 crore a year ago), and 30 per cent in Rediffusion Advertising (valued at Rs 54 crore; insiders claim the book value of a rediffusion share is around Rs 12,000) and Balakrishnan's total wealth from his assorted businesses alone is roughly Rs 399.04 crore - as of July 31, 2000.
An Indian Institute of Management (IIM), Calcutta, alumni, the 52-year-old Balakrishnan has been a serial enterpreneur. Considered to be a visionary, he set up Rediffusion Advertising with friend Diwan Arun Nanda. The first Indian ad agency to hire management graduates, it shot into the limelight by handling the Congress (I) campaign for Rajiv Gandhi in the 1980s.
If Balakrishnan is a billionaire, so is his long-standing partner Nanda. The latter, who was earlier a product manager at Hindustan Lever, holds a stake similar to Balakrishnan's in both the agency and the dotcom. His net worth at the end of July? Rs 351.04 crore.
Long before this windfall, the first dotcom billionaire was a 32-year-old engineer from the Indian Indsitute of Technology (IIT), Mumbai.
November 23, 1999, was a red letter day for Rajesh Jain, who sold his seven-year-old Internet venture, India World.com, to Satyam Infoway. With a stunning price tag of Rs 499 crore, it was the sale of Jain's life. It also redefined valuations in the dotcom business.
"The real dotcom boom began with the sale of IndiaWorld," says a venture capitalist. It set the ball rolling for every Tom, Dick and Harry to pursue online aspirations. Lending credibility to their dreams was Jain's story.
Jain and his family had bet their last penny on IndiaWorld and competition was fast catching up. His office in Mumbai's downtown business district was run down. Hard of cash, Jain once confessed that his peon updated the cricket scores on his Khel.com. Dotcom folklore has it that Jain, almost in penury, approached merchant bank DSP Merrill Lynch to bail him out. It is said that his expectations were a modest Rs 5 crore to Rs 10 crore, and he is still coming to terms with the final booty.
Today, this homegrown Internet hero is a cult figure for youngsters. For instance, the promoter of harinder.com proudly tells everybody that he has exchanged three e-mails with Jain.
Now look at Jain's saviour Satyam Infoway, or Sify.com as it is now known, which was listed on the Nasdaq on October 19 last year. Two days before the IndiaWorld deal, the net worth of Sify promoter, Ramalinga Raju, was Rs 3,365 crore. The promoters have a 56 per cent stake in Sify. A week later, it touched Rs 5,852 crore. Of this, Sify accounts for Rs 3,200 crore.
That's something that Raju, 44, must not have dreamt about, An MBA in economics from Ohio State University in the US, Raju began his career with Dhananjaya Hotels in Hyderabad as managing director. He attributes his rise to education which exposed him to software. Rooted in a business family -- his grandfather bought sugar mills and his father pioneered commercial grape cultivation in Hyderabad, he says, "In association with them, all of us - including my three brothers- developed an inclination for business."
Raju had much to celebrate in 1992 when Satyam computer public issue was oversubscribed 17 times. Three years later, he set up Satyam Infoway for tapping the lucrative corporate data and Internet services market. In 1999, Sify became the first Internet company in India to be listed on the Nasdaq.
But it hasn't always been smooth sailing for Raju. He had to part ways with two of his close aides - D V S Raju in 1993 and Srini Raju.
The company allotted shares to Srinivasa Raju in lieu of his holding in Satyam Enterprises Solutions which was merged with Satyam Computer at a swap ratio of 1:1 in April 1999. This came just six months after Srini Raju increased his stake in Satyam Enterprises from 3.23 per cent to 19 per cent at par value. This raised questions about the management's intentions.
In a way, both these dotcom billionaires have suceded largely due to their first mover advantage. Striking out in the mid-1990s, Rediff and Sify had enough time to fine-tune and consolidate operations. They already had a brand before the rest of the crowd came in.
All this has not made much of a difference to their lifestyle. That's because they were established entities much before the dotcom craze. They continue to travel in their Mercedes-Benzes. The only difference to life after dotcom is their increasingly busy schedule which would qualify them for awards on frequent-flier schemes.
But for all their wealth, the future is uncertain. Their revenue models, especially e-commerce, need to generate substantial revenues. Already big US properties with deep pockets such as Yahoo!, Lycos and MSN have set up shop and Amazon is making noises about doing so.
They all have established properties scattered across the globe. "Sify and Rediff have only transplanted a foreign model and are learning on the job. In this business, there is not much time to learn," says a venture capitalist. Then there is the issue of finance. With the accent on profits, dotcom funding is becoming tougher by the day. And with persistent market volatility, going public is not a way out.
Even Rediff had to postpone its ADS issue and is still mum on the domestic IPO. The market situation is so tight that venture capitalists claim that Balakrishnan has confessed that without Rediff's $75 million ADS, the going would have been tough. Clearly, life for dotcom billionaires is no cakewalk. All of them have created wealth.