Mr. Murthy, thank you very much. It's a pleasure to be here. On behalf of myself and on behalf of Chate, we are honored to have you accept the Chate Patrick J. McHugh Award for Lifetime Achievement from India. I have personally known you for many years during my Wipro days, Infosys days, and this is in some sense me meeting my mentor and my role model after a long time. So thank you for spending the time with us.
Well, thank you for your kind words, Sud. Before I say anything else, I must thank you, thank Chate Investments, thank the entire team, and of course the jury for selecting me for this Lifetime Achievement Award named after an extraordinary anchor investor like Patrick J. McHugh. I'm very, very grateful. As I said earlier to you, in the remaining years of my life, I will try to work hard and hopefully smart to live up to your expectations.
Very nice of you to say that. So, Murthy, we're going to talk about a few things. Since I come now from the entrepreneurial world, what made you start Infosys? I mean, at that time, the entrepreneur word was not something common. So what was the motivation to start Infosys?
Well, you know, I came from a pretty well-educated family. My grandfather was a graduate in 1879. My uncles, my father, they were all well-qualified. So we were not used to any risk-taking. There were no discussions on any entrepreneurial ambitions that my parents wanted me to pursue or any other sibling to pursue. However, those days we were brought up under the staple diet of Nehruvian socialism. Nehru built in some sense a strong foundation for modern India in terms of atomic energy, in terms of Bhakra Nangal, in terms of steel plants, in terms of All India Institute of Medical Sciences, and first IITs, and first, the second, and third IITs. Definitely, so all these things happened under his leadership. So we were all in some sense highly influenced by Pandit Nehru, and consequently, we were all left of center. I was working at IIM Ahmedabad as the chief systems programmer, and I got an opportunity to go and join a company in France in the early 70s. And when I went to France, my whole edifice of socialism and communism just broke down. I was under the impression that the only way a poor country like India can bring prosperity is through socialism and communism. But when I went to France, which had accepted capitalism, I saw there was a lot of prosperity. Roads were clean, there was an excellent metro system, the trains ran on time, there was a lot of disposable income, lots of good shops, people going to higher education in a larger percentage than in India, etc., etc. On every dimension that I saw, France was far, far, far ahead of India. That's when I became confused. I said, what is wrong in my assumption? I have been a socialist and a communist sympathizer. I was not a card-carrying communist, but a communist sympathizer till today. Now I find that in capitalism, all that we were dreaming of happening probably 50 or 100 or 200 years later was already happening there. So therefore, I started attending public lectures on various isms, on capitalism, socialism, communism, etc., etc., at Sorbonne. And I met some of the leaders of these isms. In fact, I met Georges Marchais, who was then the leader of the French Communist Party, and I had a long discussion with him. Somehow, I found that the leaders of socialism and communism didn't convince me how their isms could bring prosperity to a country like India. On the other hand, the leaders of capitalism convinced me. And that's when I decided that I'll go back to my country and if possible, I will conduct an experiment in entrepreneurship under the aegis of capitalism and see if capitalism can indeed solve some of the problems of India.
Interesting. And I presume, I know you're very fluent in French. I saw you with the French Consulate General people at one time, and I was surprised that you spoke in French. And then the whole audience, including myself, was like, okay, what's going on? How do you know French? Now I know how you know French.
Well, you know, I mean, that's a great language, and I enjoyed learning it. And I have, even today, before you came, I was listening to a French song.
Excellent. Now, starting a company needs money. There were no VCs like us at that time. How did you get your seed capital?
Well, you know, first of all, the idea that I embraced for founding Infosys was a services company. You know, my first company, Softronics, was a failure. It focused on the domestic market. There was hardly any domestic market. I quickly realized it. My wife is the one who said, 'Look, do you want to go down this path for too long?' And I quickly closed the company. And then I became the general manager of Patni Computer Systems Limited, the software division. And you were in Pune at that time? No, I was in Pune when I did the Softronics experiment. Later on, I went to Bombay and I joined Patni Computer Systems Limited. I was a general manager, and I learned a lot. And I realized that if India focused on the export market in services, India would succeed. Because first of all, in the US, thanks to the explosion of super mini computers, I knew there was going to be a huge demand for software development. You know, there were super mini computers like DEC VAX 8000, VAX 11/750, VAX 11/780, Prime 750, or something like that. All these mini computers ushered in computing, commercial computing facilities in smaller and medium companies as well as in departmental computing of larger companies. That's the demand side. But how did you raise capital to start a company? No, what I did was that I did work out with the first customer with whom we had worked earlier, saying that, look, here I invited five younger people or junior people to work with me, and they came. And then I told this company in New York that, look, we need a certain advance for, you know, a small advance. And we got that advance. But more importantly, we got the equity of just 10,000 rupees at that time. A couple of my younger colleagues couldn't put in the money that was required, so my wife gave the entire money, and later on we returned it to everybody. And that's how we started with an equity of 10,000 rupees. But we had an advance from the customer sufficient for one month. And I worked out a very good, watertight contract where the customer had to pay for the month within 10 days of the completion, because RBI was very strict those days. So that's how we managed. And then, you know, we have always been frugal. Sure. I mean, I don't know if I ever told you this, till I retired, even today when I go to Narita, I don't take a car. I take a bus from Narita Airport to the hotel in the city. Till I retired, I always took the bus from JFK Airport to Manhattan. So we were quite used to austerity. And therefore, it was not such a... I took 10% of my salary when I founded Infosys, and I gave 20% more to all my younger colleagues, Nandan, Chris, you know, everybody. So they were happy, and I was quite happy because money has never been a big issue in my case. So therefore, it was not that difficult.
Oh, interesting. So Infosys started to grow. I do remember you were the first company in India to go public as the IT services company in 1993, February. And with the... well, Bali, Wipro Bali, and of course Nilekani, right? And so scaling happened. Now, today's entrepreneurs are moving to dominant positions in the market space in India, which is becoming easier. But many of them are now moving outside the country, and they're into products. Most entrepreneurs are into products, software products, SaaS products, and even consumer products like, you know, Lenskart and FirstCry. SaaS products like Freshworks and, you know, Uniphore, etc. What were the two top challenges which you faced, and what would you advise to entrepreneurs of today when they want to expand globally? The two things which they must do well.
Our challenges were different from the challenges of today. Those days, the banks didn't recognize software as worthy of any loan, any debt. That was a big issue. Not even for working capital. Okay, forget about... So you always self-funded in some sense. Yeah, yeah. Second, the licensing those days took about two to three years, about 50 visits to Delhi, all of that. Fortunately, that licensing was abolished as part of 1991 economic reforms. Third, there was no current account convertibility till 1991. What that meant was if I wanted to travel abroad, I had to apply to RBI, wait for 15 days, and then if that officer is kind to me, I may get an approval to travel. But all that doesn't exist today. Oh, those were the big challenges for us. Because we had the talent, we had the smartness, the customer was convinced about our capability. So the market existed, the talent existed. These are the two most important requirements for success of any entrepreneur. First, the market must be there. Second, talent must be there with an idea that has a differentiated business value to the consumers or the customers compared to any other competing product or company. Yeah, yeah. Or company, whatever, service, whatever. Highly differentiated, not incrementally differentiated product or service is essential for, definitely in India also and outside the country, for a new company to succeed. Yeah. Overall, I think differentiated business value is the name of the game. But you have to conduct an inexpensive market survey whether there is disposable income in the country amongst a sufficient size of the market to buy your product. Sure. Otherwise, the entrepreneur won't succeed.
So how was there... two questions. One is, Infosys became absolutely the role model for governance in the country. Yeah. And how would you advise entrepreneurs to emulate you, and how did you benefit from governance?
