The Rediff Interview/Sabeer Bhatia, Hotmail founder

The Rediff Interview/Sabeer Bhatia, Hotmail founder

What India's IT biggies are not doing

Sunil Jain | March 14, 2006

Sabeer Bhatia's on a roll. After a year or two of thinking he'd arrived once he'd sold Hotmail to Microsoft, and getting bored of the holidaying (in the south of France, in India. . .) and the fine life, and a project that didn't take off, he's back in the thick of things.

He's just launched a new toolbar that, evangelically, he tries to convince you is the best thing since, well, Hotmail; bombed e-commerce venture Aarzoo's going to be relaunched as a travel portal, but driven extensively by SMS and his Telixo venture that he hopes is also near takeoff, and he's thinking, as we savour some subtle bass, of launching a new peer-to-peer email service, writes Business Standard

Bhatia's a few minutes late since finding Ploof, one of the finest seafood restaurants in Delhi isn't easy, tucked away as it is in the soon-to-be-fashionable Lodhi Colony market (now that the Manish Aroras and A&Ts are setting up shop here).

He's floored by its high ceilings and old-world ambience. After a few moments of being polite and going along with what I recommend (red snapper and lobster), he decides he doesn't want lobster since it is very high in cholesterol, Bhatia rapidscans the menu and we order fillet of sea-bass and a Kerala fish curry, with some Mediterranean vegetables as a starter.

What's so special about this toolbar, I ask, in part as the news reports about it are sketchy and in part to get a conversation going once Bhatia's unsuccessfully asked the restaurant staff to get the construction workers next door to stop banging around for an hour.

His composure intact, Bhatia explains just how different his blogger-kit on the toolbar is from, say, Blogspot.

There are, it appears, 27.2 million blogs in the world as we speak, of which Bhatia reckons, rightly, at least 26.9 million don't have any readers. What he's doing is to give users a better chance to have their works read. By creating a parallel page of sorts, you get to blog about a particular page you've just visited.

So, on a Sony handicam site, you can blog what you think about the handicam, and Sony cannot edit you out since it has no control over the toolbar -- naturally, any one going to the handicam site will want to know what user reactions are and, hey presto, you're being read now!

There are other interesting functions to the toolbar, but what I want to know is how the KPIT Cummins software engineers who've developed this compare with, say, the US engineers who helped develop Aarzoo.

They're top-class and a lot cheaper, Bhatia begins with the standard spiel, but quickly gets down to, as anyone whose lived so long in the US would, what's wrong, and why. The biggest issue he faced was the attitude -- "Tell us what you want done and we'll do it."

He had to get them to be creative, to think on their own, add the bells and whistles -- and tell them that the next time he was addressed as "sir," they'd get fired. Part of it has to do with schooling, he reckons, and part to do with a society that's so structured.

When he'd gone to Caltech, Bhatia recalls, he'd just submitted his paper after reading up the four books prescribed for that particular course in philosophy, and he got a "D," his first ever "D".

Why, he asked, since he'd read all the books and dutifully cited them in abundance -- "that's the Indian way," he explains to me. I've read them, too, is what his Caltech professor told him, what have you done to add to that body of knowledge?

That, Bhatia says, is the big difference between Indian and US education. But, a few months of re-orientation and, he says, his Indian developers are on a par with those in the US.

The next subject of his ire are Indian software biggies such as TCS, Infosys, Wipro, the lot. Here he is putting in tens of millions of dollars of his own money to develop, in India, a product in the consumer space, and they're doing nothing but what he says is just labour arbitrage.

What about i-flex from Citibank and finacle from Infosys, I ask?

They've all emerged from the work the companies have been doing for clients, and what are they worth, Bhatia scoffs, and before I answer, $300 million is the answer he ventures, talking of i-flex's revenues instead of market cap.

"If we're successful, the toolbar has the potential of being a 10-, 20-, 30-billion dollar company," he says, by way of contrast.

He's not finished yet. "Companies like TCS are sitting on piles of cash, but they're not investing it in R&D, in products that will have no revenue stream for three to four years. . ."

Rounding errors. The kind of money he's investing, Bhatia says, is what India's software biggies will lose in rounding errors, but they're not investing -- and that's why they have no product in the consumer space that should be giving nightmares to companies like Microsoft and Oracle and even Google. His is the first product in the consumer space that's developed in India.

Part of the problem, he admits, has to do with big companies, but you have people like Steve Jobs who've proved big firms can innovate as well. When Jobs came back, he recalls, Michael Dell's advice was that he liquidate the firm and hand back the cash to investors -- at that time Apple had $6 billion in cash and $4 billion market cap. Well, Jobs created an MP3 player when there were already 50 in the market, and Apple's market cap is today bigger than Dell's!

But even US VCs in India are constantly looking for revenue models, I say, so that automatically limits innovation.

"They're Indians living in America, not Americans," is the reply, "and they're looking to make a quick buck . . . one VC has invested in a public limited company! I don't have a revenue model today, but the best piece of real estate is a toolbar and I'm aiming to own that -- the revenue just has to follow."

I ask Bhatia to demonstrate how his Telixo (telecom extreme organiser) works. Bhatia pulls out his ordinary Nokia phone, puts in his US chip and decides to find his friend Ajay Madhok's number. So, he SMSes .con (as in contact) Ajay Madhok and within 10 seconds, he's got an SMS with the number.

He does the same -- .not (as in note) Passport, and the passport details are with us! The idea, he says, is to be able to get any data that's on your Outlook to the phone without having to buy a fancy phone. Spice Telecom is already offering this service.

I end by trying to get him to talk about his personal life -- he's run the full marathon twice and is an outdoors person, but it's more the Aishwarya Rai story I'm interested in. "No, I'm not married yet . . . I will at some point, but such (business) opportunities don't come all the time," he says, anticipating where I'm going. I back off.