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Meeting Risk Head On

Business Standard  
Tuesday, 01 August 2006   

Asif Khader and Mukkarram Jan have built their company by taking risks few in the IT industry have taken

The defining moment for Asif Khader came early in his life, when he was too young to comprehend the true nature of things. He was only six years old when his father passed away. His mother, 22 years old and not well educated, wasted no time in telling her eldest child the value of earning a living. Khader was in business by the time he was eight years old.

Khader’s is no conventional rags-to-riches tale. His grandparents were among the richest people in Bangalore. “It is not easy to visualise how rich they were,” says Khader. “My maternal grandfather had property worth around Rs 300 crore at current prices on Cunningham Road itself.” His grandfather also owned the land on which stood the Victoria Hotel, one of Bangalore’s icons till Kishore Biyani decided to pull it down and build the Central Mall in 2003. Khader was born rich. But he lost it all with his father.

His mother went back to her father, taking her children with her. She had some assets, jewellery et al, which she had to sell one by one to raise her children. She knew they would not last forever. Yet she did not want Khader to enter the family business of trading. “Even without an education she knew that trading had a low entry barrier,” says Khader. She wanted him to have a good education. Khader wanted to learn, to play, to earn. He was a champion at the game of marbles, played during lunch hour at school. He also sold marbles outside the school, at the end of the day. “I used to practise hard,” he says. “I played not for pleasure but to win.” This hunger became useful later in life.

As he grew older, Khader began selling envelopes, mancha (a paste smeared on the strings of kites), or whatever his imagination let him do. “My mancha was the best in town,” he says. By the time he was in college studying engineering, Khader had set his eyes on software. He set up Cranes Software, and got a scientist in C-DoT to rent a small room and develop software. But the scientist went abroad all of a sudden, taking the keys to the room with him, and Khader did not have access to his computer for a month. “We then decided that we would not develop software. Our expertise lay in selling.” That was in 1990. The real Cranes Software was born within a year.

Khader had met Mukkaram Jan by then. It was an event that changed his life.

Mukkaram Jan also came from a rich family. His father, brother and uncle ran a flourishing set of businesses: carpets, real estate, construction and a small auto spares shop to boot. Jan was given this shop to run immediately after he finished school. It was enough to meet his financial needs. But it was nowhere near enough to fuel his ambition.

Jan watched his brother and uncle handle the big things. His father, increasingly doing charity work, kept away from routine jobs. Jan attended business meetings and offered suggestions, which were dismissed with a laugh. He also asked for a larger share in the business. “I was told that the auto spares shop was enough for my needs,” says Jan. His mind had started ticking by then.

One day, as Jan was walking with some friends, Khader passed by with a few friends of his own. They were introduced to each other. Khader and Jan decided to go for a run next morning. “I don’t know what made us do that,” says Jan. They met at six in the morning, started their run, and began discussing business plans within minutes.

Their first venture was short and sweet. They rented a place in front of the Town Hall, and gave it to garments businesses to set up shops in return for a commission on sales. There was no investment, and they made good money for a month. It ended when Jan learnt that Khader had to devote more time to his project work. “He wound up the business and told me to focus on my studies,” says Khader.

Their next venture was in granite. They bought a quarry near Krishnagiri about two hours away from Bangalore. The business flopped and they went back to garments, this time buying and selling on their own. Says Jan: “I borrowed Rs 75,000 from my aunt, telling her that I will give her 2 per cent monthly interest. We are still giving her that money at a higher interest.” They made some money, but decided to start a software business because Khader had studied computer science.

Khader found a niche that suited him perfectly: selling antivirus software. He got an indigenous product to sell as well. They made money quickly, which prompted Khader to expand overseas. He made a disastrous trip to Singapore, losing more money than the company had made. “I had to make a quick real estate deal to make up the loss,” says Khader. Those were the days of real estate recession, but Khader managed a commission of Rs 1 lakh on a single deal.

Cranes Software started flourishing. They got more partners, notably another friend called Anees Ahmed. In 1994 they became resellers — beating Wipro — of Matlab, a high-tech software used by scientists and engineers.More products were added in the next few years. Things looked perfect, but in 1997 the partners fought bitterly. Ahmed and a few others left the company, leaving only the Matlab business with Khader and Jan. The US government banned the sale of this product to defence labs in 1998 when India tested a nuclear device. After 12 years in business, Khader and Jan had come full circle. They had a company with one product and no customer.

Meeting Khader is unlike meeting any other entrepreneur or executive. He is shy yet friendly, quiet yet exuberant, reticent yet expansive. He tells his story freely, in between endless cups of tea. He delights in reliving his follies, and tells them over and over again. Seven years ago, with coffers empty and ambition overflowing, Khader had gone to the US to buy a Rs 65-crore company that was too sophisticated for his developers; Cranes was worth Rs 4.5 crore then. Luckily for him, he could not clinch the deal. Khader still retains this reckless streak. “I first plan a deal and think about the money later.” The virtuoso dealer in him can raise money in no time.

Jan is quieter still, more modest, and speaks in a soft monotone. He is devoted to his friend and partner, whom he had helped through difficult times. For a long time, Jan had no idea how little money Khader had. “Asif was taking a salary of Rs 800 a month when we began Cranes,” says Jan, who himself needed no salary. Khader briefed him about his personal finances one day. It was a revelation to Jan.

The reckless streak in Khader makes him lead an eccentric lifestyle. He wakes up at 5.30 a.m. to pray. Then he works for a while and has a short nap. He then works again at home, and goes to office by 4 p.m., remaining there till whenever necessary. He reads late into the night, often parts of several books during the same night. In between his meetings, phone calls and reading, he drinks cups and cups of tea. “I drink around 60 cups of tea a day.” In his office, a boy walks in with a cup of tea every 10 minutes. The ritual works with clockwork precision.

Khader’s two-bedroom house in the upper middle-class locality of Benson Town has few frills. He is no accumulator, no collector, no gadget freak. He dislikes shopping, buying expensive things, being anywhere where he cannot work. “I have never gone for a holiday,” he says. A holiday without working, that is. Once he went for a holiday to Lausanne in Switzerland, a location chosen by a friend to stop him from working. He met someone there and started talking about a new business opportunity. The holiday was forgotten.

After the split in Cranes, Khader and Jan came to an understanding: the company will be run by Khader. Jan will remain a director, chipping in with advice whenever necessary. They remain the best of friends. “I admire Mukkaram’s honesty,” says Khader. In 16 years, they created wealth they had never dreamt of. Their lifestyle was never extravagant, but they bought a Mercedes each a year ago, only after persuasion by colleagues, who thought that driving in cheaper cars would make customers and partners disbelieve the Cranes success story.

When Cranes fell apart in 1997, both Ahmed and Khader had tried to grab a key personality: Rudra Pratap, now associate professor at Indian Institute of Science. Pratap had helped them with technical advice on Matlab. Pratap knew Ahmed better, but his affinities were with Matlab, which Khader had kept. Pratap is now chairman of Cranes Software.

Pratap took time to know Khader well, as they did not interact frequently. “One of the first things I noticed was his ambition,” says Pratap. “I thought it needed to be channelled properly to stop him from getting into trouble. I was also struck by his achievements. In spite of financial and other troubles, he did brilliantly in academics.” Khader and Pratap became good friends over the years; they also share a fierce ambition to beat the developed world at their own game.

Soon after their meeting, Khader had put the company through a series of risky acquisitions, each bigger than the size of the company. Khader likes to play with risk. Jan is a sobering influence. “Jan knows how to use money,” says Pratap, who is now helping Khader build a billion-dollar company. Khader has promised Pratap a lab of his own, which they want to make in the same class as Bell Labs.

When the job is done, after Cranes becomes big and influential, Khader and Jan want to invest in other companies. “The only use of money for me is to create more wealth,” says Khader. They have another company — K&J Holdings — that has already invested Rs 10 crore in SpiceJet. Both Khader and Jan are in their early 40s. They would probably retire from breakneck work in about a decade. Then they would make their money work hard and create more wealth.

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