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How he built a million-dollar firm with Rs 500K

Anees Ahmed, President and CEO, Mistral
 
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February 20, 2008

The new breed of India's best innovators is set to take the world by a storm. Young, intelligent, and ambitious these dynamic entrepreneurs might well conquer the world with their innovative ideas, products and services.

rediff.com brings to you a special series on India's best innovators and entrepreneurs, winners of the latest Nasscom Innovation Award 2007.


When many youngsters of his age would have just begun a career in the corporate world, 25-year old Anees Ahmed ventured out to pursue his entrepreneurial dream. He started off with a modest initial investment of Rs 500,000. A decade later, his company, Mistral Solutions has grown to become a leading global player in the embedded systems domain.

Mistral provides end-to-end services for product design and development in the embedded space to various sectors like consumer electronics, wireless, defence, aerospace, automotive, semiconductor, and industrial applications.

Mistral Solutions has raised $6.5 million in a second round of venture funding from Nexus India Ventures and JAFCO Asia and has big expansion plans.

"I cannot imagine not being an entrepreneur. In India till about a decade ago, entrepreneurship was looked down upon. If you wanted to become an entrepreneur, people assumed you could not get a job!" says Anees Ahmed president and chief executive officer of Mistral.

Ahmed say he was fortunate to have a core team of experts from the beginning who wanted to become one of the best embedded design teams in the country.

"We had to generate immediate profits to survive. It taught us to be innovative, creative and aggressive. I think we have come a long way and established ourselves as a leading embedded design house," he says.

Anees Ahmed talks about his innovative venture, his pursuit for excellence and his vision to become one of the most reputed companies in the world in an interview with Assistant Editor Manu A B.

What was the innovation that won you the Nasscom award?

We designed a board for defence applications: The V8TS Board (VME based 8-TigerSHARC and PowerPC board). The board is ideal for usage in radar, sonar and naval applications. The V8TS will revolutionise the development of defence, medical and communication applications like electronic and network centric warfare systems, infra-red search and tracking systems, mobile surveillance systems and airborne systems.

The V8TS is an extremely powerful dual sub-system product consisting of digital signal processing and control processing on a single 6U VME platform. This is one of the first designs that combine the power of PowerPC and Multi-DSPs on a single platform. It took about an year to develop this product.

How important is innovation for a company?

Innovation plays a key role in Mistral's design process. It is Mistral's constant endeavour to deliver industry leading technologies in the embedded domain. One of our missions is to be a leading product-realization company, achieving about 30 per cent of our revenue from our own products.

Today we are competing with global companies. So if we are not creative, innovative and timely, we cannot be competitive. For companies like Mistral that invest in research and development, innovation is a business need.

How did you become an entrepreneur at a young age of 25? What was the inspiration to start this company?

Mistral was started by a team of 16 members, most of who are still with Mistral. We focussed on embedded systems from Day 1. We wanted to be one of the best embedded design team in the country and I think we have come a long way and established ourselves as a leading embedded design house.

What kind of hurdles did you face when you started your company?

When we started Mistral we had to bootstrap out operations. We had no luxury of initial funding. We had to generate revenue and profits from the first quarter to survive and establish ourselves.

We had to remain focused in the area we wanted to work in and not get diverted by the typical industry herd mentality.

What are the challenges that you face now?

Rising cost of engineering resources in India is a major challenge. Also as a company, we design and build products which involves hardware and software design under one roof.

But dealing with the various government agencies like customs, Electronic Hardware Technology Park, Software Technology Parks of India etc is not easy.

The procedural hurdles are time consuming, restrictive and eat into our time. We spend a substantial part of our time in these processes rather than focusing on our design work.

Until the customs duty is reduced to zero per cent, these processes are eliminated, we will have to go through it.

Could you tell us about your company's growth over the years?

Mistral has had 10 straight years of growth since inception. We look forward to growing at about 30 per cent over the next 3 years.

What is your staff strength now? Do you plan to hire more people?

We are currently a team of over 260 employees and we hope increase our strength to 400 by the end of the next financial year. Since we are not just a services oriented company, our hiring is not as aggressive. For us quality is more critical than quantity.

What are the major milestones that you have achieved?

I think as a SME in this market, surviving and growing over the last 10 years in itself has been an achievement. Along the way we have raised venture capital funding twice for fuelling our growth plans.

We have established ourselves as one of the best embedded design company. We have been associated with many defence programs and proved our credibility.

Most people find finance a major constraint. How was it for you?

We started Mistral with just about Rs 500,000 as investment. We had to generate profits from immediately to survive. It taught us to be innovative, creative and aggressive.

How do you like the role of an entrepreneur? Do you think India needs more entrepreneurs?

I cannot imagine not being an entrepreneur. In India till about a decade ago, entrepreneurship was looked down upon. If you wanted to become an entrepreneur, people assumed you could not get a job!! I am happy that this has changed after the various success stories from India and Indians.

Doing business in India is still not as easy as it is in the western world. But the change has begun. We are moving in the right direction.

What would be your advice to budding entrepreneurs in India?

Be willing to work hard and effectively. Build a team that grows with the company. Have a clear vision of what you want to do, but you have to be ready to adapt and change fast based on market situations.

What do you think about the quality of talent in India? Are you facing a shortage of talented people?

There is definitely a shortage of good quality manpower. So internal training is critical. I feel most engineering institutes these days do not have good teaching staff due to the pay scales. Unless this does not change or research funding does not grow in engineering institutes, this problem will not be solved. We churn our engineers in quantity but not quality.

What are your company's future plans? Where do you see the company five years from now?

We continue to remain focused in the embedded space. Our focus on defence market in India remains steady and we continue to get involved in more programs. With the defence offset business opening up, we see a lot of growth opportunities. It's difficult to predict where Mistral will be fivers from now. But all I can say is that we will be here and will continue to grow.

What are your views on the Indian IT sector?

We have established ourselves as a force in the services and BPO/KPO business. But as the cost arbitrage narrows, we have to get more focused on verticals. Unless the manufacturing industry does not grow, our growth will be limited. If the design is done in India and the manufacturing is done elsewhere, we are just getting 1-2 per cent of the potential revenue opportunity.

Do you think that the industry's boom can be sustained in the wake of a US slowdown?

The US slowdown will affect the Indian market due to its dependency on the US markets. Also the rupee rise against the dollar hits our bottom line. But on the other side, the Indian market continues to show strong growth which can offset this problem. For Mistral, the defence market is a high growth opportunity.

Indian companies focus more on services than products. How important is a product-based innovation?

Over the past decade, Indian companies have established themselves in the services domain which is a low risk business. Very few companies focus on products as it involves higher risks.

Considering that India's advantage as a low cost service provider is gradually vanishing due to rising cost of engineers, I think that companies that innovate faster have a better chance to succeed. At Mistral, we have a good balance between services and products.

Why are Indian firms not as good as Western ones at product innovation? What could be done to address this issue?

Most Indian companies are service oriented. Even though we can implement any kind of technology, we lack the market awareness, marketing and branding finesse as compared to our western counterparts.

An improvement in our manufacturing related laws and set-up can help bring in a change to this trend.  When companies go through the experiences of building world class products of high quality, we can compete with the western companies. Today it is still not a reality.

What are the reasons for your success?

I would attribute it to my team that has been together over the years.

What are your interests? How do you spend your spare time?

Earlier, I used to windsurf and sail, but these days it's mostly golf.

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