When Grandfather Wants To Be Godfather
Match Maker
Even so, Persistent can’t do everything; the company is still too small. This is where Persistent has come up with a brave approach. It now introduces smaller Indian start-ups to Fortune 500 companies, vouches for them and gets paid for it! For example, if the bigger company has to build a product from scratch, it might cost it $100. But a small company would do it for $30. Persistent gets $15 for its integration efforts, and the larger company still saves money.
“Big companies want to, but are hesitant to use start-ups that may disappear. So we introduce them, because we can vo¬uch for both, and provide the long-term support,” says Deshpande. Persistent has done that for Lipikaar, a start-up that makes multilingual software, often for social networking sites. Similarly, over the past six months, Deshpande has formed more than 25 partnerships between customers. Persistent often (but not always) gets paid in cash for its “integration” efforts.
What’s critical to the success of Persistent is its ability to hire the right sort of people because you need to sell right and assess risks accurately. Persistent is on the ball there. Since 2005, Deshpande has brought on board Srikanth Sundararajan, who has 20 years of international IT experience with Hewlett-Packard, HCL and Cognizant, as its chief operating officer; and Rajesh Ghonasgi, who has a background in finance and legal functions at Wipro, Deutsche Software and ICICI Venture Funds Management, as its chief financial officer. Hari Haran, who was hired to head US operations, has 22 years of experience scaling organisations such as Lucent Systems and Openwave Systems.
So Deshpande has a plan and he has the men. Can he hit the target? (In this case, $500 million turnover by 2013.)
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Image: Vikas Khot
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Deshpande's Persistence has been considered lacking in pace since the company has just earned $100 million in revenue in 19 years | |
Haque thinks so. “Yes, because he is a visionary, and he’s set the right culture. And not just him, but the entire team, especially the senior folks who have been in much bigger organisations. They can pull it off without any stretch.” Karnik thinks Deshpande has matured, calling it “a real change in his mindset”. Robertson thinks carefully. “Well, Anand will never put himself in a situation where he can’t deliver quality. So if he is doing this, it is because after all these years, he’s built the relationships to ameliorate that risk. He knows it can work.”
Nevertheless, the risk-reward model is a tough one to pull off. The model is most often used by risky start-ups. “They are interested in this model because they are cash strapped and haven’t done the market research,” says Haque. Competitors in the OPD market also say the model can never be the only revenue stream.
Keeping the intellectual property for products too will be a challenge for Persistent. For instance, Intuit, an American customer, says it is just not comfortable with Persistent keeping the IP.
Deshpande will get to his target without a doubt; the interesting question is when. He sums up what lies ahead for him under the new plan: “Previously, our business risks were zero. Now, you win some, you lose some. But everyone gains when the right kinds of deals happen.”
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