I could have done it differently

I feel that there are three things I could say that I could have done differently.

 One is I feel that it took me a while to understand the value of really senior and experienced management. I should have focused on getting more senior and experienced management to be a part of the company a bit early on.

Two it took me rather long to learn – and I am still learning! – how important sales and marketing in a business. I feel I didn’t really fully internalize that sales is the lifeblood of any company. You don’t sell anything, you don’t have a business! Today I do truly put a much greater emphasis on sales and marketing than before.

Three I would have considered mergers and acquisitions much sooner. I wrongly felt that our culture would be diluted if we went for growth through an M&A process. I therefore avoided doing that for at least 10 years. It is only in the last five years that I fully appreciate what an important role M&A can play in the growth of a company.

 

We've never had a rich uncle

TEOCO is a software company that focuses on building solutions for telecommunications carriers worldwide. We provide solutions in the areas of network cost management, network routing management, things like fault management systems, performance management systems, business analytics, and so on.

When you’re trying to provide these very complex solutions to carriers worldwide, and our clients are some of the largest carriers in this world, it’s a challenge to compete with companies that are extremely well funded.
 
TEOCO has always built on the profit generated from within. So we’ve had to compete against companies that were funded by venture capital; that had a lot of money to burn. And we’ve never had a rich uncle. We’ve always had to build our company from the ground up to make sure that everything we do can be supported by the revenue and profits that we generate.

That’s been a challenge which I believe we have successfully overcome, because today TEOCO’s revenues exceed $100 million annually and we’re highly profitable. But it’s not something that’s come easy, and it’s not something that’s happened without a lot of pain and grit.

 

In particular I remember the dot-com bubble, when everybody was hiring people, paying people all kinds of exorbitant salaries, and we still had the responsibility of running a profitable business.
 

In those days the company was still in its infancy, in the first five years of its life cycle. It was pretty tough to compete in an environment when nobody else was trying to live by the same set of constraints that you were. But I feel that the fact that we stuck to our guts and said that we’ll only grow as fast as profits would allow us to, actually enabled us to have a very strong platform, a very strong foundation, and succeed when many others around us crumbled.

 

 

This interview excerpt first appeared in India America Today.

The importance of courage

One of the qualities that I feel really has helped me is courage. I feel that when you try to build a business on a set of values and principles, often you’re put in a position where you’re asked to compromise those values and principles.

And while courage is a very very important success criteria in business, in the context of a principled entrepreneur, it becomes even more important. And it’s very very important that a person trying to build a business on a set of values and principles have the courage to stand by them and to walk away from any profits and gains that would come by sacrificing those same values and principles.

We define our core purpose as a company “to advance the practice of principled entrepreneurship.” What that means is that if we get to any success by compromising our values and principles, we feel defeated. And that’s something that everybody in the organization has come to understand and respect. As such, we have created a culture where people understand that being honorable is even more important than being successful.

This interview excerpt first appeared in India America Today.

 

Create a path

In business it doesn’t matter who is right; we really need to worry about what is right. Most conflicts happen at the workplace because we are worrying about ‘who’, not ‘what’.

Imagine a situation where Alex and Bill are discussing how to architect a new piece of software. Somewhere in the conversation, Alex tells Bill: Let me tell you why I am right and you are wrong. How likely is it that Bill will still listen to Alex’s arguments and change his mind? I would say: not very likely. None of us respond well to such an approach.

 Now suppose Alex instead tells Bill:  I truly respect you and your point of view … but tell me what am I failing to see here? It is now far more likely that Bill will listen, and the conversation will shift focus more on what is right, not who.

 

We must acknowledge differences, and be careful when we frame our conversations. We want a situation where Alex coherently explains his point of view… and Bill reacts positively and offers counter-arguments, Bill now is more warmly accepting of Alex’s arguments … and the dialogue ends amicably with either Alex or Bill snapping his fingers to say: got it!

This exercise only works if both Alex and Bill choose to be genuinely sincere. If Alex is only pretending to be conciliatory, Bill will quickly see through his act and harden his posture. You can only win this game if you play it fair and right.

Don’t ever cheat

Can an entrepreneur be principled? Can he be principled if he faces crippling financial pressure? Can he honor commitments? Can he keep the faith?

Being principled need not be just a pipe dream. Good guys don’t have to finish last. We set up TEOCO to prove that you don’t have to be an asshole to succeed in business; you can succeed without selling your soul to the devil.

Soon after we acquired Vero Systems we realized that Vero had sold a product to a customer that was not quite finished. It was embarrassing, but we made no attempt to hide this fact. In my very first meeting with the customer’s representative I truthfully told him: “I’m sorry, but we are in no position to deliver the product that we promised.” I even offered to pay back the customer everything that they had paid Vero.

We’ve been playing this game at TEOCO for over 15 years now – and winning. We run our business with integrity and honesty.

Of course there’s a price to pay: you can sometimes lose lucrative deals. But our chosen path is to be principled, and we are happy to walk away. As my friend Myron will tell you, it’s never been TEOCO’s way to do what is expedient or to look for loopholes.

Happily, there is a heart-warming upside: we also win a lot of deals because people like to do business with other honorable people. William Communications once told me that they liked working with TEOCO because we shared similar values – and, many years later, Cox Communications too echoed the same sentiment.

In fact, a bright young student once surprised me with his outrageous hypothesis: he told me "TEOCO is gaining a strategic advantage by being honorable" and asked how we would react if other entrepreneurs "copied" our winning model. I replied that we would be delighted because it would prove that TEOCO's model of principled entrepreneurship works -- and nothing could please me more!

When I didn’t walk away

Some blogs ago, while talking about Solomon's Law, I had said that "in order to get what you want, you have to be willing to walk away from it."

I have almost always been a loyal practitioner of Solomon's Law. But there was one instance when I did not walk away.

This was in my early years in America, I had a great desire to buy a really good sofa set. I saw many sofa sets, but couldn’t fall in love with any one … and the ones I liked were way too expensive.

I finally spotted a sofa set at a Krause’s Sofa Factory sale that I liked. And I couldn’t believe my eyes when I saw the price tag too … it was very affordable!

I spent a few minutes gazing affectionately at the sofa set. Do I buy it, or do I not? I enjoyed the delicious whirl of emotions as I tried to make up my mind; this was almost as much fun as sitting on the sofa!

I called the salesman to reconfirm that the price tag was right … and that’s when he went “Oh, my God!” When I asked the salesman if there was a problem, he told me: “This price tag is wrong; this sofa set costs much more. If you walk out of my shop without buying the set, the tag will change. But if you decide to buy it I’ll be obliged to sell it to you at the lower price."

I got greedy and quickly paid for the sofa set. They were indeed very good sofas and I used them for many years. But I must confess that I never enjoyed owning the sofas since I always felt that I was pressured into buying them in the first place.

Not a quid pro quo

When you give, the ‘why’ is important. You must give because the act of giving gives you joy; it should not be a part of a quid pro quo deal. Giving must not have an ulterior motive – it’s not about taking Johnny to the movies because he mowed your lawn.

I remember the time back in 1981 when I was applying for admission to US universities. Every application had to be accompanied by a $20 fee. I didn’t have that kind of money in India, and, even if I did, we didn’t have easy access to US Dollars. My college senior, Prasad Nanisetty, already in USA, paid the fee on my behalf.

I didn’t even try to repay my seniors when I had earned enough dollars myself; that would have both offended and hurt them. Instead, I looked for every possible opportunity to pay the application fee of my junior students when they needed the money … and I’d like to believe that, when their time came, my juniors too continued this tradition. To me this is an example of the gift that keeps on giving.