1. Building a Innovation-driven “Product” Company
in India
Sanjay Nayak
Co-founder, MD & CEO
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2. 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 Innovation
Emerging Company of
Award 2010
the Year CSIR Technology Award
from Prime Minister
Technology Fast -50 India
Award for R&D & Award for
Fast-500 Asia Product of the Year 2010 Innovation
© Tejas Networks Ltd. Excellence in R&D 2

3. Constraint-driven Innovation: Opportunity
for India
• 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
© Tejas Networks Ltd. 3

4. 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
© Tejas Networks Ltd. 4

5. 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
© Tejas Networks Ltd. 5

6. 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
© Tejas Networks Ltd. 6

7. Building globally competitive Indian
Products
Create Successful Get global scale
Products commercialization for sustained
through R&D in India success
• 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
© Tejas Networks Ltd. 7

8. Entrepreneurial journey at Tejas
• A grand vision, with well-defined “success-stones”
Building the team;
Developing the • Building the team with a “can-do”, positive attitude
products • 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
Success with • Initial target Indian market- latest technology, highest
customers quality, lowest prices
in India • Unique processes to shorten time-to-market
• Raising funds at the “right” time
• Created a viable OEM business model- focus on R&D;
Winning
Leverage global OEMs for market access
International
business and • Gaining economies of scale
scaling-up • Establishing the brand globally
© Tejas Networks Ltd. 8

9. 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
© Tejas Networks Ltd. 9

10. Thank You
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