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July 10, 1999


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Youth Power + Tech = World Domination! Gray Cell is low on funds. But there is no aspiration deficit. An interview with CEO T S Rajesh. I think I wasted five years in college, acquiring a degree in computer engineering," says T S Rajesh.

And he really believes in the cliché: The R&D chief of his three-year-old company Gray Cell is a 21-year-old college dropout.

Email this story to a friend. As you walk into the Gray Cell office in a sprawling house in Koramangala, Bangalore, the first thing that catches your eye is the beautifully landscaped backyard.

Founder CEO Rajesh explains this is the contribution of Suchitra Iyer, his landscape artist and interior decorator friend who was also his first financial backer.

The drone of the beverage dispenser in the background, as you sit at a small table in the yard, is a distraction. Then you realise that this is an intrinsic part of the Gray Cell culture. Young engineers continuously help themselves to cups of tea and glasses of cold water, all of which are available in unlimited quantity...

And so is the company's stock.

Rajesh claims that his employees own more stock in his company than employees anywhere else in India and possibly outside! And if his plans work out he hopes that they will all become millionaires soon.

At 29, Rajesh himself is the oldest person in the company that is hoping to pioneer a technology that will make mobile device-to-Internet technology commonplace all over the world. Excerpts from a conversation with M D Riti:

Can you tell us about your professional background?

I don't have much of a professional background. I got into this very early. I did a degree in computer engineering. Not that I learnt much of what I do now from there! After that, I did some projects for ISRO (the Indian Space Research Organisation) and IISc (the Indian Institute of Science), post curriculum.

All this started in late 1995, a couple of years after I left college: I had just spent those years doing nothing. Thirty-nine of my 41 classmates had gone abroad to do a master's in that time! I just wanted to do something that would be interesting and of value, that I could turn into a business opportunity.

I got this idea of a programme that could handle voice, fax and email together. I began working on it with a couple of other people in my outhouse. I got an American firm, which is a small telecom vendor, which said they would like to buy this small, made-at-home kind of programme. It could handle your voice calls, your fax, your email and all that sort of thing, put it into one mailbox and beep on your pager to notify you that you have got some mail.

It's a small piece of software that I used to distribute on CD. You could put it onto your PC.

Then, more ideas started forming in my head. Next, I thought why not send email to this effect directly on to a pager? Why use a mailbox and notify it at all? This is where we built a prototype of a product that later was called E-Page by Motorola. We licensed it to Motorola as a service. We did not sell them the technology. We ran the backend for them.

By doing this, we didn't get the brand name, but that didn't matter as we hardly had the money to pump in to get a global brand.

But we got a lot of consumer data that was invaluable. We used that information to build our next product, a sort of interim thing called Unimedia. We got beta testers across the world to use this and got to know what the consumer ultimately wants from Internet services on mobile devices.

We understood all the issues on both Internet and mobile sides, both of which were very domain specific. We have used all this to build our new product of today, which is a global consumer based Web product.

Initially, we were planning to sell the technology to mobile telecom companies, and they could then provide the services. Instead, anyone across the world will be able to download this product free of cost and get all these services on their mobile phone.

So you're just going to hand out your new product free on the Web. That's it? No money, no intermediaries?

Yes. We are going to be using all the Web based channels to reach out to as many consumers as possible. We have two business programmes...

In the first, which is our telecom programme, what we will be doing is to get the mobile telephone operator to provide this to his consumer along with the mobile instrument, and what the operator gets out of it is that the consumer uses his instrument more and thereby generates more telephone revenue.

In the second, the Web programme, the option to the Web guys, like, say, Rediff, would be to treat this like a Real Audio player, for which they can create their own content. Your consumers get all their services like, say, Rediffmail, on their mobile devices. And we become the player.

What do you get out of this, if you are giving it all away for free?

Us? Good question! We are trying to enter a new media business. In this first phase, we would just try to create a consumer usage of this new media tool. So you have a large number of people using this as a default tool.

Then you can probably look at delivering services in association with Web partners and look at a share of the revenue.

So if you plan to use this tool to notify your customers on the Web about buying something, then we would probably look at taking a small percentage of your revenue from this transaction like a small fee.

What exactly is this new product of yours?

This is a consumer product, available across the globe on the Web. With this product, the user does not have to bother what mobile phone he is using, which service provider caters to it or where he is globally. He can get any Internet service anywhere in the world on his handset.

There is no limitation that if you use A-Tel and have a Nokia handset, then you can get just these two services.

We are saying that it doesn't matter where you are in the world, you can get the same bunch of Internet services on your handset.

We believe that this is going to be to the mobile telephone industry what a browser was to PCs.

How did you identify this niche market?

We were early in this market of Net to mobile, as far back as in 1996.

First we saw these two markets exploding: the Internet market and the mobile telephone market. Then we saw the need for this simple tool which can be used anywhere in the world to get this range of services on a device.

Being in this space for a long time, we got an excellent understanding of what consumers want and don't want. We realised there was no product that was consumer backwards. We are always talking about a specific to mobile operator, a specific to service providers. What a consumer really wants is a product that really works for him irrespective of any of these constraints.

We saw a need and an opportunity, and put the two together.

You started this company with your own funding?

Initially, I started with a few lakhs (100,000s) of capital, which I had got from various friends. Then, we got some revenue from that first American customer company.

Before we got this present venture capital funding, we must have sunk in about Rs 4 crore (40 million rupees), borrowed from various institutions, as well as from our own revenue, and indiscriminate borrowing from anyone who would give us money!

Three years ago, there was some interest in wireless-to-handheld devices. There was a decrease in this trend and a revival of sorts again now. Is that why you are trying to make your presence felt again?

Three years ago there was nothing in wireless-to-Internet. We were monitoring this space very carefully, and I can vouch for this. There was only wireless email, and just 12 operators in the world who understood and used it. We were always predicting that this space is going to explode and we were in on it very early.

The Gray Cell gang! It took us about a year extra to get this kind of venture capital funding because we are in India. If we had been in Silicon Valley, we would have gotten it a lot earlier. Now, you know that the biggest story going around is Net-to-mobile. Microsoft, Yahoo, AOL... everyone is talking about it and trying to get into it.

But you say you were the first to come up with the particular software product that you are about to launch this August?

Not only the first, we are also still the only company worldwide to have developed a tool of this kind that is independent of operator handset or service provider at the back.

Are you a private limited company now?

Yes. But we have just started Gray Cell Inc in the US and that is the firm that got the venture capital funding. And that has just bought over Gray Cell, India. We have no branch offices. We are in Silicon Valley and Bangalore; that's it.

Can you describe the concept and technology of your product in some detail?

Technology? I cannot as it's scheduled for launch in a few weeks form now. Even then, we are unlikely to disclose the technology. But I can tell you briefly what it runs on. It runs on something called Unimedia Virtual Network, which plugs into all mobile telephone operators' gateways across the world.

That's a network we run and manage 24 hours a day. The product is sitting on this network. That is, the network creates an abstraction layer on which this product sits. The product has a consumer interface, wherein each person can choose what he or she wants. And it's got a database at the back, which essentially stores people's settings and choices.

Then we have this whole bunch of engines that pick up these major services and push them through a network to consumer devices.

Broadly, this is how it works.

The concept is that it's like a Real Audio player. You have content from multiple sources and get whatever you want on it. But there is another powerful facility that this has and that is messaging. You can send messages to any mobile phone across the world through it. That's an entirely different thing.

So you will not bother yourselves with content at all?

No. Content is not our business. We will not get into that at all. We are just a player. Content will be provided by anyone who wants to. We can advise such people on what services they could provide but it's for them to take advantage of this very active medium (as against a passive medium like a Web site, which is just sitting there waiting for anyone who wants to get to it).

What kind of consumer do you visualise?

Late Gen Y and early Gen X. The early adaptors amongst the typical mobile phone users.

What will be the size of your market in terms of number or products?

We are a one-product firm. Our market is global and every mobile phone user across the world is a potential consumer. We hope that this will soon expand to everyone on Planet Earth because everyone is soon going to have a mobile device.

Can you estimate the rupee value of this market that you hope to capture?

At this point, I don't have a number, but I know the value is very high. But it's not going to earn me any revenue, remember?

Are you eventually going to count on high volume of sales rather than a high profit margin?

We have a very powerful channel of delivery and those people who want to reach people through this channel are going to pay for the privilege.

Is your company breaking even now?

We will always be spending more than what we earn. We don't plan to break even in the near future. We always hope to be funded by venture capital funds, never by revenue. That's the model for Internet companies. We never work on revenue driven models.

What is your turnover now? And projected?

Its minus now and going to be more and more minus over time because we will be spending more and more money and we don't plan to earn any of it back for some time.

For how long?

Perhaps about 18 months to 2 years.

What do you think will be the future of handheld wireless devices?

They are going to be an extension of your body. They will no longer be just phones but devices with which you can deal completely with the outside world. Whether you want to book a flight ticket, get funds from your bank, check out the movies in town, read the news headlines or contact a friend. You will soon be doing it from your mobile phone device.

How do you place this in the context of the Web as a content base?

The Web has a huge role to play in all this. The Web is essentially a replica of the real world. This is going to deliver to you some of the features of the Web.

Typically, these kinds of technologies first establish themselves in the more developed markets before they reach India.

India is almost insignificant to us. Our real markets are the US, Europe and parts of SEA. These are the first markets we are targeting.

But Net-to-mobile has been tried in the West, and has never really taken off.

Yes. People have tried to deliver services on mobile devices all over the world in different places in different ways. But the concept has been very different. And yes, it's been a huge flop, because people have tried to retrofit one or two services on to mobile devices without creating applications that people want to use and without extending available services to consumers. The accent has always been on creating new services specific to a consumer or locale.

Besides, the consumer's own lifestyle has not been taken into account at all. The consumer will use a facility if it allows him to do whatever he wants with it.

You should let him access the universe and let him control what he wants out of that. Only then will it succeed.

The Internet boom took over one year to migrate from the US and Canada to India. How long will the migration lag be for technologies like yours?

Time is getting compressed with new technologies hitting the rest of the world very soon after they hit the developed world. We were not really lagging in getting to Internet in India, for example. We got GSM and mobile phones quite fast too.

But yes, we are still lagging where content and services are concerned. But that's not because of Internet itself, it's because the support infrastructure required to deliver those services is not there.

For example, it's not enough to just put a virtual bookshop on to the Internet, you need credit card systems that can be accepted by e-commerce mechanisms and overnight delivery capabilities and a whole bunch of things which are not there in the country and these cause delays.

But in our particular case, we believe that it will all happen very quickly, maybe in a year's time.

You cannot remain a one-product company forever. What is the general direction of your future growth?

Hotmail is a one-product company. So is ICQ. And Real Audio. In today's world, if you want to make a global impact, then you don't do five different things. Initially, make your product very popular all over the world, and then see what possibilities come up after that. As of now, we are looking at this product getting more sophisticated. We will have new versions of it coming out every other month. But it will still be that one product.

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