Mindtree’s founders and employees say they are battling to preserve the company’s unique ethos
BENGALURU: Mindtree is the stuff that middle-class dreams are normally made of. It’s the story of 10 IT industry professionals — from Wipro, Lucent and Cambridge Technology Partners — coming together, pooling in $1.6 million, and two decades later, being courted for over $2 billion.
But in this case, the founders are not happy. It has nothing to do with the money they could potentially earn though. They believe they built a company so culturally unique that it should not go to another company that, in their view, has a very different culture.
Those in Mindtree think of their culture as a mix of empathy, integrity, and purpose. Empathy was visible at inception in 1999, when the company unveiled a logo created by an alumnus of the Spastic Society of Karnataka, Chetan. Since then, the company has had a special emphasis on the differently-abled.
Mindtree staff are not employees or resources. They are Minds. On induction day, Mindtree Minds are individually met by the CEO or COO, they get to know each other, and the new inductees are made aware of the guiding values. Employees own a sixth sense of the firm.
“When Mindtree completed five years, the founders and some executives went to Tirupati. When we were going downhill by foot, we cleared the garbage strewn along the way. We picked up some eight truckloads of garbage,” recalls S Janakiraman, one of the founders.
It was a unique bonding around such values that was the genesis of the company. In the run-up to the launch, the founders had a number of discussions, some over lunches and dinners, others just sitting under one of the magnificent tree in Bengaluru’s Cubbon Park.
One of the crucial discussions happened at Taj Gateway’s iconic restaurant Karavalli, when Subroto Bagchi and Krishna kumar Natarajan (fondly called KK), who were then in Wipro, fleshed out the idea. Prior to that, Ashok Soota, who was also at Wipro, had met Coffee Day founder, VG Siddhartha for lunch. The latter assured funding whenever Soota was ready to take the plunge.
Rostow Ravanan was the youngest of the founders, Janakiraman laughs as he recollects his first meeting with Ravanan, who was then working at Lucent. Wipro was negotiating to set up Lucent’s R&D centre in India, and Ravanan was proving to be a tough negotiator. “It was Ram versus Ravanan,” he says.
Mindtree staff are not employees or resources. They are Minds. On induction day, Mindtree Minds are individually met by the CEO or COO, they get to know each other, and the new inductees are made aware of the guiding values. Employees own a sixth sense of the firm
On the launch day, Mindtree hosted a get together that was attended by Wipro chairman, Azim Premji and Infosys co-founder, Nandan Nilekani.
Mindtree initially operated out of a two-room office provided by Siddhartha. Three founders – Scott Staples, Anjan Lahiri and Kamran Ozair – took small office space in New Jersey, US. Staples won the first customer for Mindtree, and it happened to be Lucent. “A man named Rod Trombly (in Lucent) knew Scott, Ajan, Kamran and Amit had the fullest confidence and trust in them. No one else could articulate the architectural problem he was battling with as well as this team could and we got the job,” wrote Subroto Bagchi in the paper Making of Mindtree 2.
In India, their first customer was Fabmart, which was setting up an e-tail business. Ashok Soota was keen to do business swith Hindustan Unilever. So he wrote to Keki Dadiseth, the then chairman. They got a call from HUL. Bagchi recollects how “small and naked” they felt when they stood to make the presentation - no case studies, no customer references. But they won the deal.
“Ashok was our godfather. He anchored the team. He was the first to have a 360-degree appraisal for leaders and brought in best-in-class HR processes,” Janakiraman says. Soota had even put in place succession planning, identifying shadow leaders and who they would shadow for.
On January 28, 2011, Mindtree faced its biggest crisis till then, when Soota called it quits abruptly. The speculation is that he disagreed with the others on what to do with Kyocera Wireless, a company Mindtree had acquired in 2009. Siddhartha again played the white knight, buying out half of Soota’s 11% stake. Siddhartha was a very helpful promoter to the founders, and a good board member. I’m sure that he will be missed,” says David Yoffie, prof. at Harvard Business School and formerly a Mindtree board member.
This article was originally published by Times of India (https://timesofindia.indiatimes.com/business/india-business/its-a-company-born-out-of-a-culture-ofempathy-purpose/articleshow/68473850.cms)
A new win-win would be if Siddhartha is able to monetise his Mindtree investments and if the management is able to raise the money at a price which a strategic investor is willing to pay
I empathise with both parties. It is logical for Siddhartha as an investor to divest since he obviously has other requirements to deploy his funds. I also empathise with the founders who are ostensibly doing their best to raise funds and retain control. In their place, I would have done the same, only more aggressively
Siddhartha’s association with the founders of Mindtree began well before the company started. Around the middle of 1998, a mutual good friend, K Jairaj, suggested Siddhartha and I meet for lunch. I had no idea of the agenda and was surprised when Siddhartha expressed I should start out on my own and whenever I did so, he would be happy to provide venture funding support. This was followed by a separate meeting with Lip-Bu Tan, chairman of Walden (venture capital firm), who left me with a similar offer. Accordingly, when I “met” my co-founders through Walden, the funding was assured. Most of the founding team lined up largely by Subroto Bagchi were current and past members of my team!
Mindtree’s launch in August 1999 with Siddhartha’s venture firm GTV and Walden as our partners was the beginning of an amazing, supportive, non-interfering relationship with both, which continued well beyond Mindtree’s 2007 IPO. Both Walden and GTV brought us leads for customers and Siddhartha was able to support us in multiple other ways due to his local presence, including keeping space available in his Global Village Techpark till Mindtree was large enough to move in with buildings built to our design.
While the relationship began with me, Siddhartha soon also built bonds with other founders, primarily Subroto and also Krishna kumar and Rostow, the current CEO.
In 2011, when I decided to leave Mindtree (and start Happiest Minds), Walden and I were the largest shareholders with about 22% of the company. When we both decided to divest, Siddhartha moved decisively to pick up most of our shares and become a “white knight” for the founding team. If not, Mindtree could very well have faced in 2011 a situation similar to what the remaining founders are now facing.
This turned out to be a win-win as the team delivered excellent returns for Siddhartha while they continued on the journey of building Mindtree.
At this juncture when the market has been abuzz with rumours regarding Siddhartha’s plans to divest, I empathise with both parties. It is logical for Siddhartha as an investor to divest since he obviously has other requirements to deploy his funds. Also, a 20-year investor relationship is as long as you will see and for which any management could wish.
At the same time, I also empathise with the founders who are ostensibly doing their best to raise funds and retain control. In their place, I would have done the same, only more aggressively. However, considering the market value, the founders would require a combination of financial strategies to retain control and I am sure they will actively explore multiple options.
A new win-win would be if Siddhartha is able to monetise his Mindtree investments and if the management is able to raise the money at a price which a strategic investor is willing to pay. The amounts are large and, as of now, it’s not clear if the remaining founders can make this happen. The matter has been making news for several months and I’d like to believe that the delay in effecting a strategic sale is due to Siddhartha giving time to the founders to provide an alternate solution.
However, this had to close within a finite period and it seems that a larger IT company is poised to make its moves to reach the threshold of 26% holding for an open offer. The new buyers will have to take several more steps before they acquire control. If this happens, they should also keep in mind that the Mindtree leadership has delivered excellent returns to shareholders since the 2007 IPO. Accordingly, they should do their best to retain the key team members by giving them appropriate leadership roles in the new integrated structure. However, the founders have also indicated that they will make a concerted effort to retain control. I wish them great success in this endeavour, though the odds seem stacked against them
(The writer was the founding chairman & CEO of Mindtree. He’s now executive chairman at IT services firm Happiest Minds)
Mindtree has started leveraging social media to fight L&T’s unsolicited bid to acquire the company. A few hours before L&T informed stock exchanges, some Mindtree employees, including a few senior managers, took to Twitter with the hashtag #mindtreematters. The employee advocacy campaign, though a sidelight, showcased how social media narratives were finding its way even into corporate takeover battles.
One of the employees on Twitter said “….. we are a collection of unique minds that cares about people as much as profit; a culture that embodies excellence, not just economics; a state of mind, not a state of flux. Another said, culture and values set us apart and L&T could potentially destroy the fabric of it.
Founders have resisted the L&T takeover bid, arguing cultural incompatibility between the two companies.
Social media has remained a barometer that reflects the mood of employees in times of distress. While the L&T juggernaut appears unstoppable, the digital campaign will open up a new battlefront, which the acquirer cannot ignore.
However, HR experts cautioned that employees expressing their disappointment online could be exposing themselves to social media profiling by prospective employers. “While their intentions are upright, it’s fraught with risks in an age when digital footprints of employees are often tracked,” a senior HR executive said.
This article was originally published by Times of India (https://timesofindia.indiatimes.com/business/india-business/mindtree-staff-kickoffhashtag-campaign/articleshow/68472483.cms )
By Dr (Col.) A. Balasubramanian
