Building a Innovation-driven “Product” Company in India

Sanjay NayakCo-founder, MD & CEO

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About Tejas Networks• India’s largest innovation-driven, telecom product company

– Founded in 2000; Headquartered in Bangalore– Optical networking: enabling Broadband & Wireless backhaul– Over 750 employees (> 450 in R&D)- offices in 7 countries

• #1 Optical networking equipment in India; Top-10 globally– Cumulative revenues of US$500 Mn in last 3 years– Over 200,000 systems deployed in over 60 countries– OEM for multiple global equipment vendors from US, Europe and Japan

Product of the Year 2010

Product Innovation

Award 2010CSIR Technology Award

from Prime Minister

Award for R&D & Innovation

Technology Fast -50 India

Fast-500 Asia

Emerging Company of

the Year

Award for Excellence in R&D 2© Tejas Networks Ltd.

• Shifting market-power– “Emerging markets” are driving growth- represent “Bottom-of-pyramid” – Advanced markets, though large, are not growing as fast

• High-tech business model needs to evolve for emerging markets– Old way

• Latest technology for advanced markets, where customers pay premium• Once commoditized, the same technology offered to emerging markets

– New way• Emerging market have different needs • A lot of innovation is needed for affordable, yet high-quality products

• Opportunity for India– Countries like India/China can lead in “constraint-driven” innovation– Innovation leverage: 4X more R&D for the same cost– Large domestic market- ideal “sandbox”

• Large market for electronic products- over $100 Bn per annum• Success can be replicated to other markets

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Constraint-driven Innovation: Opportunity for India

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Example: Indian Telecom market• Fastest growing market in the world

– Grown from 20 Mn mobile subscribers to 700 Mn subs in 10 years– Pent-up demand due to low broadband penetration: < 10 Mn subs

• Lowest cost telecom services in the world– Lowest usage charges (< 1 c/minute)– ARPUs are less than US $2 per month

• Telecom operators have built scalable, profitable businesses– Business model innovation: Managed capacity & Managed services– Going global- replicating the “India model” in Africa and other countries

• Innovation opportunities for telecom equipment vendors– Provide cost-effective, high quality equipment– Harsh operating conditions- unreliable grid power, higher fiber cuts

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India- a success in ICT “services”• India employs over 2,30,000 professionals in ICT services

– Indian univs produces 300,000 engineers annually– Exports US$60 Bn pa- forms 25% of India’s annual exports

• Every major global ICT company has R&D center in India– Intel, Microsoft, Google, Cisco, HP, IBM, TI, Samsung, Nokia..

• People of Indian origin have attained global success in ICT– Key founders in >15% of Silicon Valley start-ups– Over 25% of employees in Microsoft, Cisco, IBM

….yet, there are very few ICT products startups from India

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Why only a few Innovation-driven Indian companies?• Cultural issues

• Safe, low-risk culture prevalent amongst high-tech workers

• Entrepreneurial challenges– Services mindset: low up-front investment, boot-strap model– Lack of success stories- no global brands in ICT products– Lack of early stage funding

• Business challenges– Customers want best technology, high quality and low prices– Customers prefer “safe” options- competing against global

players, who have a brand power– Lack of “branding” of Indian product companies– No/minimal government policy support for system companies

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• India has the critical ingredients- which are “force multipliers”– Abundant talent- technical as well managerial (+ expat Indians)– Sustainable R&D and Innovation leverage: 4X R&D for same costs – Large domestic market– Access to venture capital and public markets

Building globally competitive Indian Products

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Create Products

through R&D

Successful commercialization

in India

Get global scale for sustained

success

Entrepreneurial journey at Tejas

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Building the team;Developing the

products

Success with customers

in India

Winning International business and

scaling-up

• A grand vision, with well-defined “success-stones”• Building the team with a “can-do”, positive attitude• Listening to customer• Used Innovation (vs invention) to create differentiators• Use of latest in programmable logic devices and processor, to

turn hardware problem into software

• Initial target Indian market- latest technology, highest quality, lowest prices

• Unique processes to shorten time-to-market• Raising funds at the “right” time

• Created a viable OEM business model- focus on R&D; Leverage global OEMs for market access

• Gaining economies of scale• Establishing the brand globally

Summary

• India is a great place to build global product companies• We have the 3Ms for success: Manpower, Market & Money• Every problem/challenge is an opportunity• Passion, Commitment & a Strong team are the key

ingredients for success

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Thank You