How I Did It: Rajiv Mody

As told to Jacob Cherian

Rajiv Mody and team ring the bell at the Bombay Stock Exchange in Mumbai, in 2005

It’s a classic Silicon Valley start-up. Rajiv Mody, along with his two friends, left
his job to build their dream project out of a garage in California. The business soon travelled miles away to Bangalore, where it continues to rake in millions of dollars in profits. Sasken Communication Technologies is known for its expertise in developing
software embedded within chips, and multimedia technology for cell phones. Nearly
50 million handsets worldwide carry intellectual property created by Sasken. Mody
is now pulling all-nighters to wrap up his final-frontier project—the next generation
of satellite phones.

I was born in Mumbai and did my schooling in Rajkot. After I completed my engineering in 1981, I went to the Polytechnic Institute of New York University. In my second year there, I began teaching undergraduate students. It was a tough job—I was teaching a class of nearly 50 students about things that I wasn’t completely sure of.

The American students asked really difficult questions. After my very first class, someone reported me for doing a lousy job. I had to face the administration. Thereafter, I fought hard to overcome the fear of teaching and went on to teach graduate students. I gleaned a valuable lesson—consider the view point of the person sitting on the other side of the table. These years also taught me the importance of preparation and the trick to dealing with a rough crowd.

In 1983, a campus interview got me placed at Advanced Micro Devices, better known as AMD. We did a lot of skunk work there, trying to look for the best possible approach for circuitry on microchips. It was a great time to be in California. The area was full of old friends doing similar work at good companies.

Two years later, I moved out of California. I joined a small company, called Seattle Silicon, and did some cutting-edge stuff. By 1987, I moved back to California since my dentist wife could practice there, but not in Washington. I joined VLSI Technology, where I met my future partners, Suresh Dholakia and Badru Agarwala. We would throw around ideas and dissect them over lunch. The concept of building a venture, which would have a face in the US but would leverage the cost advantage of India, emerged during such meetings.

In October 1989, all three of us quit on the same day and began working out of Badri’s garage in Fremont, California. We managed to raise US$200,000 from investors and added to that our grand savings of US$35,000. By January 1990, we had our first order from Bell-Northern Research Labs to develop software at a distance.

Almost simultaneously, we also applied for an Export Oriented Unit licence in India. I am a believer of the old adage that luck favours the bold. We were given the licence on the condition that we would export Rs 90 lakh worth of our product in the next five years. The exchange rate stood at Rs 14 to a dollar. It seemed like a huge target back then, but we surprised ourselves by achieving it in a year and a half. In April 1990, we sold our digital simulator, called Vx-SIM, to NTT and Konami in Japan for US$250,000.

My wife and I headed back home. It was a risky decision, but I still had my Green Card if things went terribly wrong. I shuttled between India and US, meeting potential clients. We also concentrated on getting some really smart people. I visited IIT Bombay, where professors like G Venkatesh and Sunil Sherlekar, who later joined us, were doing cutting-edge work in the communication technologies field.

We began sponsoring projects for Rs 10,000 a year; the money helped students get a masters degree in technology and helped us strike up a relationship with some of the best brains on campus. This fuelled our technical developments. By 1995, we had become a destination for quality talent. The same year, Suresh and Badru, spun off our chip design simulator product into another company and left.

Three significant decisions helped boost our stand in the market. We started working in GSM with Nortel, not realising that this would become the de facto world standard. Secondly, we were working on ADSL technology, which we licensed some of that work to a company in the Valley in 1998. Thirdly, we began work on 3G WCDMA technology—a pretty ambitious move at that time. The credit for these decisions primarily lies with Venkatesh, whose technical expertise and knowledge helped us spot trends well in advance.

Four years later, Intel and Citibank channelled US$10 million into Sasken for a 10 per cent stake. We used that money to build our Bangalore facilities.

In 2000, we decided to focus our energies better. We removed electronic design automation from our bouquet of services. Our turnover grew from US$17 million in 1999 to US$28 million the next year—simply because we were more focussed.

As an entrepreneur, my biggest challenge has been to transform from being someone who is passionate about something to a person who can look at things holistically. I learnt to step back and see if the object of my affection is actually good for business.

At the turn of the century, the tech bubble went bust. We had to ask people to take a 20 per cent pay cut. The gloomy air and the nervousness of that August afternoon reminded me of my teaching days. I learnt that day that when people see your vulnerabilities, they usually understand you, and accept that these are temporary times.

Three years later, we went for a public listing. Those were heady days; like being on opium. We were oversubscribed 72 times. Later that year, we were voted the second-best place to work at by a survey.

In 2006, we acquired Botania Hitech in Finland for US$45 million to get close to Nokia, as a customer. Our plan worked; it is our single largest customer. That same year, we also set up shop in Mexico.

Then, in 2008, the economy cratered and survival became the order of the day. At the same time, Texas Instruments exited the chip design space. This was really bad news for us, since they were a partner. Tough times bring on tough decisions. I had to ask Hari Iyer, head of HR, and Sri Kannankote, head of marketing, sales and offerings, to resign. We started downsizing from the top. Since then, we have been focussing largely on raising the bar on our efficiency.

We are now working to finish the satellite phone. The launch date is July. Our cell phones transmit a signal one or two km to the closest transmission tower. A satellite-phone signal will be able to push past 36,000 km, and yet not kill the six-hour battery-life of the phone. It’s a project that has almost come to represent the next frontier. We are proud of this accomplishment.

I believe it is important for every person to challenge themselves to do things that seem impossible. The hardest part is the act of doing something; once you take the plunge, there is nothing more gratifying . The journey that follows is your reward.

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