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Rahul Jacob: Why Bengaluru rocks

This is Bengaluru's defining lesson for the rest of India, especially its cynical, controlling capital: Good behaviour begets better behaviour

Rahul Jacob  |  New Delhi 

Rahul Jacob

One of the main roads in a Bengaluru neighbourhood called HSR Layout is dotted with fruit and vegetable shops and the more-than-occasional poultry store where chickens in cages squawk in protest. It wasn't quite RK Narayan's Malgudi but, in its semi-rural, semi-urban ethos, it seemed far removed from the world of start-ups for which the city has become renowned. And, yet at the end of that road, where every 50 metres one seemed to encounter a construction site for a new four-storeyed office, was a building with grey glass windows: the headquarters of Simplilearn, a company that helps people the world over reskill through online courses.

Inside, the company's chief executive officer Krishna Kumar was speaking about a competitor, Lynda, being acquired by LinkedIn earlier this year for $1.5 billion. Did the prospect of going head to head with LinkedIn worry him? "When a small company (like Lynda) becomes a part of a big company, it gets confused," Mr Kumar, dressed in a peach-coloured polo shirt and blue jeans, replied, confident that Lynda would lose its agility. "Personally, I think it's good." Simplilearn itself acquired a Silicon Valley company called Market Motive in June for $10 million; its CEO, Michael Stebbins, will stay on as head of that division, which specialises in search engine optimisation and data analytics training and certification, and will be chief innovation officer for Simplilearn.

The Bengaluru company now has 400,000 students worldwide, with 50 per cent of its business in the US. The conversation with Mr Kumar segued from the average income of his customers in the US ($90,000 annually) to Simplilearn's syngeristic tie-up with India figured as well - it accounts for a fifth of Simplilearn's revenues - but mostly as a narrative backdrop. Mr Kumar had started at Infosys in 1999, at a time when relatively few of its computers in the office had internet connections, and many of its employees like him were under-employed. He quit in six months. Together with a couple of school buddies from Patna, Mr Kumar started a business. Simplilearn grew out of a blog he wrote subsequently.

Last month, a survey showed that nearly 30 per cent of investment from angel investors was going to firms in Bengaluru, surpassing Mumbai. Reading that report, it seemed, if anything, to understate the city's role as an epicentre of entrepreneurial energy. Last Thursday, AngelPrime, a seed stage venture capital firm, (now called Prime Venture Partners) announced it had raised Rs 300 crore. Speaking after the event, Amit Somani, one of the firm's managing partners, revealed that the company was tracking 3,000 start-ups, even though it currently invests in only eight after exiting ZipDial, which was sold to Twitter in January. The managing partners spend hours every week with each of the start-ups they invest in. All three are Silicon Valley returnees, and it showed in their informality. Each wore Day-Glo turquoise polo shirts for the event, the press pack said that one of them had learned to "cuss fluently in French" while studying in Paris - and, when the event was over, they all appeared to be hailing Uber taxis. Mr Somani goes so far as to say that Bengaluru is third only to Silicon Valley and Beijing as a hub for start-ups. This is debatable - a recent survey put Bengaluru closer to 15 - but it points to the Silicon Valley-style confidence in the city. Of course, it would help if more of its e-commerce ventures, starting with the granddaddy of them all Flipkart, actually made money and followed accounting principles that were comprehensible to the rest of us, instead of "gross merchandise value" and "run rates".

The city's relatively low-cost real estate and dispersal of business centres is proving a major advantage. Indeed, it's hard to say what the business centre of Bengaluru is any more as you crawl bumper to bumper at 7:15 am to Embassy Tech Village, where Flipkart last year leased three million square feet and counts Cisco and InMobi as neighbours. Prime Venture's Mr Somani says that so many start-ups operate out of apartments that he asks if they are 1 BHK (bedroom-hall-kitchen) apartment start-ups or 3 BHK. He sometimes asks to see the offices. After much hemming and hawing, a small start-up agreed. Mr Somani found it "inside the gully of a gully" in a 1,200 square foot office that costs just Rs 10,000 a month.

Mr Somani was favourably impressed by such frugality. It is this easy, informal manner of doing business in Bengaluru that really trumps the rest of India. When Prime Venture decides not to invest in a start-up, it gives five reasons why it chose not to - providing, in effect, a SWOT analysis for the start-up to work on - and introduces them to other possible investors. In a town where everyone knows everyone else in this world, and anyone might eventually be someone you would work with again, this is a sensible way to do business. Recognising that InMobi typically loses talent because employees quit to start their own company, it provides them office space and access to the canteen - and hires them back when and if the businesses fail, as most start-ups do.

Evangelical about InMobi's management culture, bizarrely called YaWio, InMobi's founders made it public. A company's managers are "in far higher control if you let go of control," CEO Naveen Tewari told me on Friday. I came away convinced that it was just the antidote that India's companies need to overcome our love of hierarchy and habit of reflexively calling people "Sir." Few companies, however, would have the courage to allow employees to take leave without approval as InMobi does, or do without a travel expense policy. Mr Tewari says the company has no problems following such a system because employees respond to being trusted by being responsible. And this is Bengaluru's defining lesson for the rest of India, especially its cynical, controlling capital: Good behaviour begets better behaviour. The happy upshot is that companies run mostly by nice guys look set to finish first after all.

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First Published: Wed, August 05 2015. 21:46 IST