Tuesday, September 21, 2010

India-China civilizational interactions: Madhavi Thampi

From: Ghadar Jari Hai, Vol 4, No 1&2, Jan-June, 2010

Peepul ke Neeche—Conversations

History of India-China Interactions
In this conversation, Madhavi Thampi unravels the history of India-China interactions to Shivanand Kanavi
Shivanand Kanavi: What we would like to discuss with you today is the contact between the Indian civilization and the Chinese civilization. What did it lead to? What did they learn from each other? These are two great civilizations that are divided by the Himalayas, but I glanced through a very interesting paper where the author said China and India are united by the Himalayas. We have heard of some names such as Hiuen Tsang and Fa Hien. And we have heard of exchange of knowledge and of the technology of silk production, gun powder, so on and so forth. Can you give a perspective on the interaction of these two civilisations?

Madhavi Thampi: Perspectives on ancient India-China contacts have been dominated by the Buddhist interactions, from about the 1st century CE to about the 10th-11th centuries CE. This is not to say that there were no interactions based on Buddhism after that, but they were no longer the main content of Sino-Indian exchanges. China itself became a centre of Buddhism after that. Still, there is one school which has focused on the Buddhist relationship and tended to not see anything else.

But there is another approach which I think is more contemporary. This sees that the relationship was much more than that based on Buddhism alone. It ante-dated Buddhism and continued afterwards. It may not have been so culturally significant or uplifting but it is also important in order to establish that there was a continuity of the relations. The debate still goes on, about what really was the character of the India-China relationship in pre-modern times.

The first recorded evidence of contact is contained in a story, which has many variations: in the Han period in China, around the 1st century CE, the emperor sent an envoy to what they called the Western Region, in order to form an alliance against the nomadic people who were troubling the Han empire. They wanted to outflank them by going over to the west. When this envoy, Zhang Qian, got there he found some products from China. At that time there were no known trading relations between Bactria (now part of Afghanistan, Tajikistan, Uzbekistan, and, as a smaller part, Turkmenistan. The region was once host to religions like Zoroastrianism and Buddhism—Ed) and China. He recognized them as products of the Sichuan region of China. So he asked where they got these goods from and they said it came through India. So, this shows that there was a trade route from south western China into India through the North East, (from Sichuan to Yunnan region of China, Myanmar, Assam and into India).

This is a story that is recorded in Chinese histories. People have tried to document it in archaeological terms, but not very successfully. But it is still possible that there was this trade route as early as the 1st century B.C. The key point here is that probably relations began with trade.

On the other hand, in India we have references to China in the Arthashastra, and also in the Mahabharata to things like Cheena patta—silk. That is taken as evidence that special products of China were known in India. Similarly, the word cheeni quite likely originates in the fact that sugar making technology came from China. This is not really my area of expertise, but there are people who have documented these things very carefully.

Very soon, Buddhism became a major factor in Sino-Indian interaction. The connection was not just at the level of ideas; it was also linked to trade and the kind of products that were exchanged between China and India. In the later Han period, two monks were supposed to have come from India. This has also become a legend. There are many stories about how this happened. The most famous story is that the Han emperor had a dream of some deity in the western region and sent his envoys there. He brought back these two monks on white horses carrying a lot of Buddhist scriptures. He made a monastery for them which is known today as the ‘white horse monastery’. The Indian government today is rebuilding a white horse monastery in the city of Luoyang, the old Han capital of China.

SK: Many scholars refer a lot to Buddhist scriptures preserved in Tibetan language.

MT: That could be, and it could also be a different kind of Buddhism. From the 1st to 4th century CE, the main problem was of translation. Appropriate techniques had not been developed. It was not just that the two cultures and value systems were different, as you know, the whole script is different. The Chinese script is ideographic so you cannot just spell out things and leave it like that. Even more difficult than the script was dealing with an entirely different set of concepts. The indigenous Chinese philosophical and ethical concepts were a far cry from Indian philosophical concepts. If the idea itself did not exist in China, how do you find the matching word to translate it? After the first two monks, more and more started to come from India. The one to crack the translation technique was Kumarajiva, a monk. He was not actually an Indian; he came from Kucha, one of the oasis states from the region of Chinese Central Asia known today as Xinjiang. The fact is that Buddhism did not really go to China directly from India. It came through intermediary states. Each of these oases was a little principality or state that thrived mainly on trade, on what came to be known as the silk route. Thus, Buddhism spread especially from Kashmir, which was a big centre of Buddhism, into Central Asia. From there it went on into China. Of course there were monks who went straight from India to China also.

SK: Were these monks representing any royalty or state?

MT: From the Chinese side you often had pilgrims being sent by the ruler. Hiuen Tsang himself went without the permission of the Tang emperor, which was a risky thing to do. However, he was pardoned for this lapse after he came back to China! From the Indian side they mainly came on their own, probably with the encouragement of their own sect. Generally when these Indian monks came, they were well received by the Chinese rulers and were set up in monasteries, given a place and support for translations etc. Kumarajiva’s translations were supposed to have filled a whole room!

Buddhism came into China during the period of the unified empire. However, after the fall of the Han dynasty, there were a series of nomadic incursions into north China. China broke up into different states, and a kind of north-south divide came into being in China. The northern principalities were much more of a mix, a hybrid of the Chinese and nomadic cultures, while the culture in the south was more like the original Chinese. Still Buddhism continued to flourish in this period on both sides. This is considered the period when it is said to have really spread among all strata of the population.

SK: What attracted Chinese to Buddhism, when they already had Taoism and Confucianism?

MT: Definitely the principal philosophical system was Confucianism, but it was associated with the unified, imperial state from the Han period. It was a doctrine that prioritised service to the emperor and to the state. The collapse of the Han empire, roughly contemporaneous with the fall of the Roman Empire in Europe, was a traumatic development that naturally affected the credibility of Confucianism itself.

SK: Can we say that Confucianism was more of a social and ethical philosophy than spiritual?

MT: Exactly, it had very little to do with spirituality. For example there is this famous passage in the Analects of Confucius when a disciple asked him about his views on God and he said that he didn’t know anything about it! So, the whole question of the afterlife and God, while not denied outright, was hardly addressed. In a period of great political anarchy and chaos and a lot of violence, when there were a series of repeated raids and incursions from outside China, it was hard to adhere to a philosophy which said that one’s primary objective should be to develop the quality of being a good official. Whom are you going to serve? It was in this period that issues of suffering and of the meaning of life and death, which Buddhism addressed, would have preoccupied people’s minds more. In the south, Buddhism addressed many of the spiritual questions of people who had been dislocated and uprooted in the great waves of migration to the south that followed the nomadic incursions into the north. In the north, where the rulers were fully or semi nomadic, they were particularly receptive to Buddhism because it was a foreign religion. In China, the bodhisattva concept particularly was very attractive, because it stood for the one who postpones his own salvation for the sake of saving the people. So, you have Indian bodhisattvas getting transposed into the Chinese system changing their names and forms. For instance the bodhisattva Avalokiteśvara took the form of a woman, a goddess in China called Guan Yin (representing compassion, mercy).

Generally speaking, the way Chinese have practiced their religion, it has never been exclusive. They can follow different belief systems at the same time, that’s not a problem for them.

At this time the Tantric form of Buddhism developed in Tibet. It didn’t spread much in China. China also developed its own schools of Buddhism, one is very well known, and it is called Chan, from the Sanskrit word Dhyana, meditation, which in Japan is known as Zen.

Here I want to mention something that the Chinese did, which is very much part of the Chinese genius. At different times different things were attributed to the Buddha. Some of them were almost contradictory with each other. This was quite confusing to the Chinese. So, one of their sects, Tian Tai, systematized and categorized the teachings of Buddha according to certain periods in his life and certain stages in his enlightenment. Once they had done this, they were able to accept the variations.

SK: Did the early teachings of Buddha have more of an influence on the Chinese rather than the later Madhyamika schools?

MT: By and large the later form of Buddhism, Mahayana Buddhism, had a greater influence on China than the Hinayana. After the reunification of China in the later 6th century CE, the Tang period (7th to 10th centuries) is considered the high watermark of Buddhism in China. Despite Confucianism making a comeback, the Tang rulers were also patrons of Buddhism. This again shows the eclectic nature of the Chinese tradition. In this period, the Buddhist sangha became very strong. The only time you could talk of real persecution of Buddhism in China was in this period. But it was not like the Inquisition in Europe where it was an ideological persecution. In China, the emperors would either close down the monasteries or reduce their size in order to reduce their power. Though the Tang emperors favored Buddhism as a religion, they did not like anything that challenged the power of their state. They always wanted the right to control some of the appointments in the sangha. They would sometimes leave them alone. But they never gave up that right to control.

Many of the Chinese pilgrims spent a lot of time in India and went back. The Chinese came, collected the materials, learnt the doctrines and went back to China. But the Indian monks who went to China rarely came back. They mostly stayed there doing translation and teaching. So, the aim of both was basically the same, to take the doctrine there. They went by sea or by the land route through mountains and deserts. However, the sea route was no less dangerous. Generally speaking, sea routes became dominant after about 8th-9th century CE

We have two excellent scholarly works on Sino-Indian interactions in the pre-modern period. One is by a Chinese scholar, Liu Xinru; she had studied Sino-Indian exchanges in the 1st to the 7th or 8th centuries CE, which is really the Buddhist phase. She showed how the trade in this period was very much linked with the products required for use in the practice of religion. The other work by an Indian scholar, Tansen Sen picks up from where Liu Xinru leaves off. He has shown that Sino-Indian relations didn’t decline with the decline of Buddhism in India, but continued vigorously even after on the basis of trade, especially from 11th-12th century onwards. Relations based on Buddhism did not die out. In fact, monks and pilgrims continued to go back and forth, but the doctrinal inputs from India were no longer vital to Chinese Buddhism.

This kind of work is really important to establish what continued and what did not continue in Sino-Indian relations. Otherwise, there has been this pervasive view that because Buddhism declined in India, relations with China declined; and then next thing one jumps to the 20th century, and what happened in between is just left out!

SK: I saw a reference that in Tipu Sultan’s time that there was an emissary from China, which led to the establishment of sericulture in Mysore.

MT: New research is showing the importance of trade in this period. We know that in the nineteenth century, painters and artists from China also were present in the court of Mysore and other princely states.

SK: The so called xenophobia of the Chinese, is there some truth to it?

MT: I think this xenophobia is an invention of the Westerners. China has been very much open to other societies and cultures, even while they always had a high sense of self worth. They never thought of themselves as inferior and they were not xenophobic either. It has been seen that they were open to Buddhism coming from India. Of course, few cultures around them could be compared to the Chinese civilization. The only thing comparable was the Indian civilization, and where they could learn something from it, they did so. Only a very secure civilization can be like that. At the same time the Chinese have their own terms and words for people who are non-Chinese, who don’t have the same culture as them. The western way of translating all those terms is the single word – barbarian. But actually it means someone who is not culturally like them. They didn’t have just one term for foreigners in China, they had several, depending on where they came from. As for India, they had much more respectful terms. Once Buddhism went there, India became the Heavenly Kingdom in the West for them.

The way we look at China today is unfortunately colored by 19th and 20th century western historiography.

SK: Tell us something about technological exchanges between the two countries

MT: Apart from possible transmission of things like sugar-making and sericulture in the ancient period, the Song period in China (10th to 13th century) saw several great inventions: printing, the compass, gunpowder, etc. We don’t know exactly if they were transmitted to India, but we know that there was a great increase of Chinese navigation in the waters of South East Asia and the Indian Ocean for some centuries after that. There were flourishing sea ports on the southern and south eastern coasts, some of which had whole colonies of foreign traders. The port of Quanzhou in the 14th century had a colony of Indians living there. Archaeological remains of Saivite temples with Tamil inscriptions have been found there. The Chola rulers had relations with Song China. So the Chinese had some knowledge of places in India, and there are detailed accounts by them about Malabar, Kanchivaram and such places.

The Song empire was defeated by the Mongols. For a land based people, the Mongols were very open to maritime trade. But the high watermark of China’s venture into the Indian Ocean was in the early 15th century. The Ming ruler at that time launched several huge maritime expeditions which went all the way from the Chinese coast into the South East Asian waters, through the Malacca Straits, touching various ports along the Indian peninsula and going right across the Indian Ocean as far as East Africa. These were the expeditions commanded by Admiral Zheng He. Each ship – and there were dozens on each voyage – carried 2000-3000 men and weaponry, and the tonnage exceeded anything floating on the sea at that time. Historians are still debating about the purpose. It wasn’t really necessary to send expeditions like that for trade alone. And there were at least 5 major expeditions between 1405 and 1433. There are Chinese records of this expedition and what they saw, including the economy, government and culture of the places they visited. Of course, it is from their own perspective, but these are surprisingly detailed accounts.

In the pre-modern period, I would say this was one of the last major dramatic encounters between China and India.

SK: Where did they touch India?

MT: The whole peninsular region, including the Malabar Coast and the east coast, as well as Sri Lanka.

SK: I wonder if they had any other contact with Kerala. Around the same time some extraordinary mathematical treatises were written in Kerala, and these relate to calculus related to navigation. This is actually calculus which was developed in India and is now being called the Kerala School of Mathematics. This precedes Newton by 200 years. They have also now found navigational instruments linked to this. Whether the Chinese knew about it we don’t know. But they say Vasco Da Gama was lost and in Madagascar he found an Indian, (they just called him a dark man), who then guided him to the coast of Kerala.

MT: They may have learnt from each other. It may not have been from just one expedition, but they did have contacts.

SK: It is interesting that the European expeditions were state funded, even stock market funded, because they were looking for things they didn’t have. However, China is said to have claimed at one point that they had nothing they wanted from Europe or elsewhere. So unless it is purely for exploratory reasons, or for purely vain or egoistic reasons on the part of the ruler, why would they send such huge expeditions?

MT: The jury is still out on this. People go on discussing this – what was really the motive. But we do know that the whole venture suddenly stopped. The later Ming rulers started to follow a policy of seclusion. About this also, we don’t know why exactly. Various reasons are given –financial or other reasons. That was the last major effort of the Chinese to come out of their own part of the world and be adventurous in maritime terms, but trade still continued. The goods came in Chinese ships thereafter only up to South East Asia and were exchanged there, in places like Malacca and other points.

Meanwhile there is a completely different aspect of Sino-Indian interactions, with Indian merchants who went into the region of western China and Central Asia. There was a small yet very widespread Indian merchant diaspora which in the Mughal period went as far as Iran, Russia, Chinese Turkistan, Afghanistan, etc. Thus, when you talk of China-India relations in the later period, you can’t talk of only the sea contacts . For centuries, Indian merchants, traders and money-lenders were going there – mainly from Punjab, Sind and Kashmir. There were several routes. There was also trade with Tibet from Kashmir. Places like Leh were points at which goods were exchanged, also Yarkand in Chinese Turkestan (today’s Xinjiang) was one place where Indian traders went with their goods. Basically there is no point of discontinuity, no point at which they stopped contact.

SK: Which also means that they didn’t see each other as threats?

MT: I don’t think that they ever viewed each other as a threat. Remember, for much of the time after the 10th century, there were various states in India and not only one big empire.

SK: What did they call India? West Asians called it Hindustan or the land East of the Sindhu (Indus).

MT: Actually in the earlier Buddhist period they gave names like ‘Heavenly Land to the West’, ‘Heavenly Bamboo’, or the ‘western region’. This word ‘Yindu’, which is the current name in Chinese for India, was given during the Tang period, may be because of the Arabs calling it Indu. Chinese accounts in the 19th century about India are very vague. They start knowing about places called Bombay or Madras, but you can see that initially they don’t know exactly where it is. There are even references to the “five Indias”!

The Chinese tradition of writing about foreign peoples was like this. After someone wrote something -- like this official in the Song period who compiled a work based on the accounts of foreign traders in Quanzhou -- that account gets repeated in subsequent works many times, till another person comes along who has some original material, like those who went on the great Ming expeditions. This becomes a new set of data, and then that version would get repeated again and again. In the 19th century they found that they had to find out again about India. With the arrival of the British in China and the trade in opium from India, again they wanted to know about India, mainly coming out of wanting to know what the British were up to. They updated their information about India in this period largely from Western accounts.

So, the point is that the image of India in China is not one. The image of India keeps changing.

SK: How did European colonialism in Asia affect this?

MT: There was a substantial change in the relationship. India got caught up in the trade of Britain and European countries with China, which was driven by the ever increasing demand for tea. Britain started looking unsuccessfully for things it could sell China in exchange for tea. Then they realized that whereas there was not much that they could sell directly to China, India had items the Chinese wanted.

First they realised that there was a market for raw cotton from India in China. Thus the cotton trade took off in a big way. Then, when the cotton trade started to stagnate in the 2nd decade of the 19th century, the British took to pushing opium in a big way.

SK: I thought the growth of cotton in India started only after the American civil war.

MT: It was much earlier. Indian textiles were a big commodity in the intra-Asian trade in the early period. But from the late 18th century raw cotton from India going directly to China became the mainstay of that trade. Then opium starts to figure in a big way. Opium was exported to China for a long time, but it did not become a big item till about 1820s. Earlier it was imported mainly for medicinal purposes and in small quantities. There were only say 2000 chests imported into China a year. But from the 1820s it becomes more than 20,000 and then later, 40,000 chests. Unlike cotton, opium is a self expanding commodity because the more you get addicted the more you need it. The import as well as the sale and production of opium were banned in China. So, the British East India Company would grow the opium in India, and it would be sold under license to private traders who would smuggle it to China. BEIC having a monopoly over the trade with China at Canton didn’t want to be caught carrying the opium. This way both made profits. That was Patna opium grown in the Bengal Presidency. Then they started selling Malwa opium, whose outlet was Bombay, which was cheaper than Patna opium. So the sales went up in a big way. Unlike Patna opium it was not grown under BEIC licence, but was grown in the interior regions and brought to Bombay by private British and Indian traders. By the 1830’s the opium imports started to affect the whole society in China. At one point about 80 to 90% of their armed forces and their bureaucracy was addicted. From having a favourable balance of trade with Britain, China started to pay massive quantities of silver to pay for the opum. That affected the currency rate, taxation procedures, and so on.

The British went to war in 1839 when the Chinese finally tried to enforce the ban on the opium trade. The Chinese were defeated and that begins the whole era of uneven treaties and repeated humiliation of China that lasted for more than 100 years. So India became in instrument for British economic and political domination of China. Indian soldiers and policemen were also used by the British and Europeans for nearly one century in China.

SK: That phase of conflict between Britain and China in which Indians also played a role as opium traders and soldiers, is that what started creating a negative image of India as a tool of British imperialism among the Chinese?

MT: Exactly, plus the Chinese were well aware of what had happened to India at the hands of the British. They knew that Indians had lost their independence and been conquered.

SK: Did they follow the Ghadar of 1857?

MT: They knew what was going on. In fact the term they had for countries like India means a lost or ruined country. Very often this was expressed as: “we don’t want to become like India, Turkey or Poland”. These were considered negative models. At the same time I have also seen references that the Chinese were sensitive to the fact that Indians were being forced to do all this. There is an account left by a Chinese official who traveled in India in 1870’s. He traveled to Calcutta, Shimla, and Western India. About the Indians he commented that they were conquered and dominated by foreigners, but that no one here seemed to think it was a terrible thing. “What a pity, what a shame!” he lamented

However, under the impact of the anti-colonial struggle here and the anti-imperialist movement in China, sympathy for each other becomes more evident. The Hindustani Ghadar Party started working actively in China, and had a lot influence among the Punjabi soldiers and people in those areas. A very interesting phase in relations between Indians and Chinese began. Around 1925-27 there was a huge tide of revolutionary nationalist upsurge in China, which directly threatened British and other imperialist interests in China. Indian security forces were used to shoot down Chinese, but because of the active mobilisation done by the Ghadar Party and others, you began to have cases when Indian soldiers and policemen – sometimes whole battalions – refused to fire on Chinese. In one case in Canton one detachment of Indian policemen deserted and landed in front of the governor of the province and said they wanted to join the Chinese side. The governor was at first a little suspicious -- after all, these were the same people who were on the other side. When they saw his hesitation, they said forthrightly – “look, we have burnt our boats. There is no going back for us, so you either take us, or you kill us”. So he recruited them and paid them more than what they were getting under the British!

During World War II, the Indian National Army had a major contingent in China and had a dominant influence in the Indian community there. That turned out to be unfortunate for India-China relations, because China was occupied by Japan, which was helping Subhash Chandra Bose. Indians were not at all against China and even Subhash Chandra Bose never condoned Japan’s occupation of China. But he had his own dealings. So, when the war ended, all those in the INA were considered collaborators, and there was no sympathy for Indians, even though they were in a bad state at the end of the war. Most Indians in China were uprooted and repatriated, almost forcibly, at that time.

SK: A final question -- was Tibet historically a part of China as is claimed by them?

MT: The Chinese did not directly administer Tibet and other outlying regions, in the same way that they ruled the rest of China. Under the last imperial dynasty, they had a kind of alliance or loose administration under a Chinese Resident, and the Tibetans were more or less autonomous. My view is that you cannot look at history and say categorically whether Tibet is a part of China or not part of China. Depending on how strongly you feel about it, there is a case on both sides. You cannot say that just because China sent expeditions to Lhasa to assert the rule of the emperor, that Tibet is part of China. But Chinese give this as the reason. The Tibetans continued to follow their own Dalai Lama and other lamas. However, these lamas were recognized by the Chinese emperors.

When the Revolution of 1911 broke out in China, ending the Chinese empire, many outlying regions and even provinces of China proper declared their independence. So did Tibet. Britain at this time supported the Tibetan claim to independence. While the Tibetans may have wanted their freedom, Britain was playing a geopolitical game, trying to detach it from China which was weak.

In the Shimla convention in 1912-13. Britain called a meeting of the Tibetan representative and the Chinese delegate in Calcutta and their own delegate, to settle the border, not between India and China, but between ‘inner Tibet’ and ‘outer Tibet’. This is what was known as the McMahon Line. From what accounts I have seen, the Chinese envoy in India was put under tremendous pressure, they practically confined him to a room, and he initialed an agreement. But when this came before the national assembly in China, they refused to ratify it. Under international law it doesn’t have validity if it is not ratified by the sovereign body of a country. But the British went ahead and said look, the Tibetans and we agree, so it doesn’t matter if China doesn’t recognize it.

(Dr Madhavi Thampi, is a scholar in Chinese history and teaches in the Department of East Asian Studies of Delhi University. Besides many research papers she has authored books like, India and China in the colonial world, Indians in China (1800-1949), and China in the making of Bombay )

Wednesday, July 14, 2010

Venture Capital; Arjun Gupta

Business India, Oct 1-14, 2001,

A peak in the Valley

In the gloom and doom of the economic downturn, is Arjun Gupta another Vinod Khosla in the making?
Shivanand Kanavi

Brief Bio
Born: 1960
1977-80: BA Economics St Stephens College, Delhi
1980-82: BS 1982-84 MS Computer Science, Washington State University, Pullman
1984-87: System Soft Ware Engineer at Tektronix
1987-89: MBA Stanford University
1989-93: McKinsey & Co
1993-94: Kleiner Perkins
1994-97: The Chatterjee Group
1997-present: Founded Telesoft Partners


Arjun Gupta is a climber. He’s climbed with three major Himalayan expeditions to Thalaysagar, Arjuna and Trishul, all peaks above 20,000 feet, when he was hardly 18. Today at 41, he is climbing some new peaks in a place as far removed from the Himalayas as you can get — Silicon Valley.

Does a valley have peaks? It sounds like an oxymoron from a school grammar book. For with the gut wrenching dip in the tech business, there are, amazingly, a few bright spots and smiling faces left. Gupta is one. While many of his ilk have seen large parts of their portfolios vapourise, he’s laughing all the way to the bank, alongwith his partners in the Venture Capital firm, Telesoft Partners. He has successfully made deals worth almost $1.5 billion in the past few months, when there was a bloodbath in the markets, even before the terrorist attacks.

The broadband chip start-up Vxtel was sold in February 2001 to Intel for $550 million (all cash). Another chipmaker, Catamaran, was sold to Infineon – a semiconductor spin-off from Siemens – for $250 million in May 2001. Lara Networks was sold to Cypress Semiconductors in June 2001 for $225 million and Versatile, another chip startup, was sold to another chipmaker, Vitesse Semiconductors, for $267 million a week later. In August, Kyamata, an optical solutions firm, was acquired by Alcatel Optronics for $117 million. All this frenzied deal-making adds up to a cool $1.5 billion. Telesoft partners funded all these companies. Also, Vxtel, Lara, Catamaran and Versatile happen to have Indian founders.

Gupta grew up in Delhi and studied economics at St Stephens. He did not want to be an engineer or a doctor – the traditional career paths for bright teenagers in India. But the events that followed have made him believe in karma. After landing in Washington on a student exchange programme, he ended up doing BS in Computer Science in ’82 from Washington State University at Pullman and an MS in ’84. He then signed up for a PhD at the same University. As part of his MS, Gupta was converting peripherals into network resources. At the PhD level he took up the problem of Utopia that is load sharing—use whichever machine is available on the network. However, his doctoral ambitions were short-circuited by an offer at Tectronix, famous for their oscilloscopes.

“I got an opportunity to implement my thesis on their new digital Oscilloscope. Tectronix was ahead of the game from HP, they grew up to $1.5 billion and then went flat, but HP became a $ 40 billion company.

Tectronix did not take the risks. Silicon Graphics came to them to sell the idea of graphical workstations for $25 million, but they were not interested,” recalls Arjun of his engineering experience.

But Arjun was too much of an entrepreneur-techie. “I was a software engineer at Tectronix. We created a company called Computer Based Instruments, funded by Tectronix. But right after commercialisation they decided that the opportunity was too large to be left to “inexperienced hands” and brought it back into the parent company,” says Arjun. But the disappointment at Tectronix did not deter Arjun. He thought he should get a good grounding in business and hence armed himself with an MBA. He joined Stanford in 1987 and spent a summer at Morgan Stanley, in New York.

Investment banking did not excite Arjun. “It was interesting, but there were hardly half-a-dozen concepts in debt and equity and everything else was a permutation and a combination. It became repetitive,” he recalls. So, after his MBA, he joined McKinsey & Co. They started a new programme to enter the Silicon Valley. But the basic problem was their approach, which was that of a generalist. As a McKinsey consultant, one could do pharmaceuticals today, automobiles tomorrow and so on. Which is fine in mature industries where you apply basic business principles, but in a sector like technology, which is changing at a fantastic rate, it did not make sense. During those four years, Arjun worked full time for two years at Apple Computers and two years at Pactel, a wireless company. Qualcomm’s Irvin Jacob was then hanging around trying to convince Pactel that CDMA is the way to go, and Arjun wrote the first justification for Pactel to fund CDMA.

It did and Qualcomm took off.

Today, some people in the industry are saying that Arjun is another Vinod Khosla in the making. But Arjun himself suddenly turns reverential when you mention Khosla’s name: “Any comparison to Vinod is a total mischaracterisation. He is a giant with a mega firm (Kleiner Perkins). We are merely neophytes that are passionate about helping build great companies. At TeleSoft, I have certainly tried to apply the best practices I learnt from Purnendu Chatterjee, George Soros; Vinod Khosla and John Doerr at KP; Rajat Gupta and others at McKinsey; Bill Ford and Frank Quatrone at Morgan Stanley; and Atiq Raza and Raj Singh, who are friends and serial entrepreneurs.”

So, what are the lessons he picked up from the great and the good? “One definitive thing I learnt from Vinod is that if you really believe in something, then do it,” says he. Arjun’s passion was to start a Next Generation Communications fund and manage it himself. So, he decided to raise money on his own. He knew that without $75 million nobody would take him seriously. But that was a big sum to be raised for someone who was not known. Arjun did not give up. He announced a closing date for the fund and pursued investors relentlessly. “I talked to everybody: Philadelphia Teachers Association, PC, old clients, friends and family. I also found in those desperate days that almost every government in the world has a loan programme for small business, so we looked into that.” Arjun, unlike most Americans, was not deterred by bureaucracy and managed to get $40 million, and he finally ended up with $150 million instead of $75 million.

Thus, Telesoft-I raised $150 million, which returned a 450 per cent IRR! Having built a reputation and success rate raising $500 million for Telesoft-II was not very difficult in 2000. Today, Telesoft Partners has Alltel, Mannesmann and Vivendi investing in it and several institutions as well. “You have got to be smart and work hard but you need the network. If Vinod Khosla wants to get smart about a deal, he makes five calls. And at the end of three days, he will know everything there is to know about a particular technology. But because he has done it for many years, he will have a framework on how to fit it in. I wanted to create a network of Telecom companies. So we wanted carriers, corporate partners like Intel or Spectra Physics, and Institutions. We have proactively gone to semiconductor vendors, carriers and systems guys, and given a presentation on our companies. They choose the startup and we ask the startup people to make a presentation. If they like it, there will be a commercial agreement, an investment or even an acquisition. You don’t need investment bankers to sell a company,” says Arjun, networker par excellence. There are many VCs who talk about the keiretsu model, eco-system and so on, but few are actually able to implement it.

Today, Arjun is not cold calling any one. He has 500 individual investors. They know this is a new fund with fire in our belly. Telesoft’s managing fee is 2.5 per cent and carried interest is 25 per cent. The most reputed funds like Kleiner Perkins, have about 3 per cent managing fees and 30 per cent carried interest, while newcomers charge 2 per cent and 20 per cent respectively. Telesoft has already paid back the government and again took $100 million in Telesoft II. The government recognised that even though Telesoft is not small, it invests in small companies. Now many VC funds have realised it and are using government funds.

Arjun is probably the only VC who prints his successes and failures in his personal CV and in his company’s brochure. It boldly says there have been six write-offs recently and the fund has lost $20 million in those startups. “The probability of failure is very real, so let us get real. What used to take three calls for raising funds now takes seven calls. Today we would rather consolidate than do new investments,” says Arjun.

Arjun’s idealism has not gone unnoticed. Says Atiq Raza of Raza Foundries: “I have found Arjun to be focused, full of confidence and energy, working hard to understand the intersection of business and technology. He is thorough in his business practices. In addition, he is a great salesperson. He is also steeped in idealism. One day, he called me on my cell phone and described a project conducted by Stanford University to reduce military tension and nuclear risk between India and Pakistan. He also told me that he was going to provide 50 per cent of the funding and was inviting me to pick up the remaining 50 per cent. He thought it would be good if the project was funded jointly by an Indian expatriate and a Pakistani expatriate. I did not fully understand the project until later, but I had enough faith in Arjun’s values and judgement that I signed up.” That is tall praise coming from Atiq, a pioneering entrepreneur in the chip industry.

Rajvir Singh, founder of StratumOne, Sierra Networks and Cerent (acquired later by PMC Sierra, Redback Networks and Cisco respectively for a valuation of $12 billion) says: “Arjun will go places. I know him for a long time. He has built a very nifty organisation that is tightly managed by him as CEO. This style has some advantages and some disadvantages as well. He is very hard working and truthful and well connected with telecom carriers. His partner and MD, Yatin Mundukar, provides him great field support.”

Truly, Arjun Gupta is climbing new peaks even when the rest of the industry is in a valley. How has this been possible in a serious economic downturn? Is Arjun a hustler, just a smart deal maker? Obviously, Arjun is a very good networker, but that is not all. He has absorbed what he learnt at the Himalayan Mountaineering Federation in his teen years. After all, mountaineering involves strategic daring and tactical caution, long-term planning of details and short-term flexibility, ability to not only reach the summit but to get back to the base camp safely. And above all, grit and determination.

Tuesday, July 13, 2010

Venture Capital: Vinod Khosla

Business India, Jan 22-February 4, 2001
Vinod Khosla
Shivanand Kanavi

“You can put my name in any search engine and you will get enough material on me, and I have said whatever I have to say in most of my interviews. So you can dispense with the usual questions and fire away”, said Vinod Khosla, when we met him in his office at Sand Hill Road at Menlo Park. The words were not tinged with arrogance but were a genuine attempt at getting to the core issues quickly.

That is how Vinod has made his famous picks : Juniper Networks, Cerent, Sierra, Redback and more. Which, according to Fortune, have made over $16 billion for KPCB, thereby making him “the most successful VC of all times”. Clearly he has gotten to the core of the next generation of networking.

Vinod is famous for his brevity. Rajvir Singh, who has become a fountain of Optical start-ups, recalls how the first thing Vinod advised him in an e-mail when he invested in Fiberlane (later split into Cerent and Sierra) was: "Keep the B.S. out of all communication".

We say amen to that, and give below a few notes from our conversation, albeit pared with Occam's razor:

Money: In 10 years I have never done a rate of return calculation. I have only looked at economic contribution. After all, if you have made economic contribution, then money will come anyway. Many people talk about how much they will be worth. I reject all those who only talk about money. That is Wall Street mentality. It goes against my intellectual curiosity, predicting trends and so on.

Venture Capitalism: It is all about helping entrepreneurs build companies. Juniper is a classic example. When Pradeep Sindhu came to me, he had no business experience. I guided him in building Internet routers and then helped him find the team; I helped him find Scott Kriens. All these things are really hard to do if you are just an engineer, because you have never done anything like this. What we do is help make an idea into a company. It is like being a coach for a soccer team or a football team.

Startups: I do not miss being in a startup myself. It is a lot of work and you get stuck in one area. Technology is moving rapidly in so many areas and I have interest in so many areas. Every two to three years I completely change the area I am investing in. I take a few months off to learn the whole technology and develop a vision of what the world is going to be like - it is literally going back to school – then start investing.

Current interests: Whether it is optical components, which is physics and material science or enterprise software, the only way to do it is to take three months off, learn and come back. My position lets me do it. I have got curiosity. I change my interests regularly when I get bored.
All three of my degrees are in completely different areas. Right now, as hobbies, I keep up with string theory and evolutionary biology.

Big vs small companies: It is not big vs small. People who refused to take risks are losing. Lucent had more talent than Nortel. But Nortel has changed: they have absorbed entrepreneurial culture. Lucent has wrong acquisition strategy and wrong culture. People don’t leave Cisco when it acquires, but they do when Lucent does. It is much harder for big companies but Nortel has done it.

Optical Networking: In both optical and wireless, valuations are hyped and over-hyped. But if you look at the impact they are going to have on society, on the way business is going to be run and so on, then they are underestimated. Investors are like lemmings; suddenly they go from greed to fear.

Indian entrepreneurs: The stockmarket is not a good indicator. Some have built businesses but some have built market caps. It is a bad value system. Issue is what you can create that has lasting value. Desh has real revenue. I like what Desh did. In the end his value will be judged if he makes the economic contribution. That is what Pradeep is doing. Intel, Sun, Dell, Microsft, Oracle all made contributions.

Education in India: A country of the size of India, a billion strong, does not have a major university which is world class and which is leading in research so that it does not have to depend on all the research in US. You have to take a 50-year view of this, not five to ten years. Over the long haul, India has the talent, language (English), enough infrastructure. It will grow in a very, very big way in the knowledge economy. Hopefully, people from all over the world will go to India to do research. That is the genesis of my interest in Global Institutes of Science and Technology.

Role models: I was 15-16 and living in Dehi Cantonment, as my father was in the army. I used to go to Shankar market and rent old issues of trade journals in electronics, which you get free there. I read about Intel being started up by a couple of engineers. That was my dream long before I went to IIT. In 1975, even before I finished IIT, I tried to start a company. Those days in India, it was not possible if your father did not have connections. That is why I resonate with role models. Andy Grove and Intel became role models for me.

Vinod Khosla loves travel and photography. Blown up pictures of his children taken by him are all over his office.

Thursday, June 24, 2010

Sand to Silicon, Internet Edition-7

EPILOGUE

THE COLLECTIVE GENIUS

“The process of technological developments is like building a cathedral. “Over the course of several hundred years: people come along, lay down a block on top of the old foundations, saying, ‘I built a cathedral.’ Next month another block is placed atop the previous one. Then a historian asks, ‘Who built the cathedral?’ Peter added some stones here and Paul added a few more. You can con yourself into believing that you did the most important part, but the reality is that each contribution has to follow on to previous work. Everything is tied to everything else.
Too often history tends to be lazy and give credit to the planner and the funder of the cathedral. No single person can do it all, or ever does it all.”

—PAUL BARAN, inventor of packet switching

Baran’s wise words sum up the pitfalls in telling the story of technology. Individual genius plays a role but giving it a larger-than-life image robs it of historical perspective.

In India, there was a tradition of collective intellectual work. Take, for instance, the Upanishads,† or the Rig Veda;‡ no single person has claimed authorship of these works, much less the intellectual property rights. Most ancient literature is classified as smriti (memory, or, in this case, collective memory) or shruti (heard from others). Even Vyasa, the legendary author of the Mahabharat, claimed that he was only a raconteur. Indeed, it is a tradition in which an individual rarely claims “to have built the cathedral”.

When I started researching this book, the success of Indian entrepreneurs in information technology was a well-known fact. As a journalist, I had met many of them, but I was curious to know which of them had contributed significantly to technological breakthroughs. While tracing the story of IT, I have also cited the work of several Indian technologists without laying any claim to completeness.

Nobody doubts the intellectual potential or economic potential of a billion Indians. However, to convert this potential into reality we need enabling mechanisms. The most important contribution of IT is the network. The network cuts across class, caste, creed, race, gender, nationality and all other sectarian barriers. The network, like all other collectives, creates new opportunities for collaboration, competition, commerce, cogitation and communication. It can inspire the collective Indian genius.

The hunger for opportunity, for knowledge, for change, is all there. I have seen it in the cities and villages of India. The political, intellectual and business elite of this country should break the barriers of the current networks of millions and build a network of a billion.

This is the call of the times: Hic rhodus, hic salta – Here is the rose, now dance!


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†Ancient Hindu philosophical texts that summarise the philosophy of the Vedas.
‡Considered the oldest Hindu scripture, carried forward for centuries through oral tradition.
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The Author: Shivanand Kanavi can be contacted at skanavi@yahoo.com