Sridhar Reddy Pinnapu, founder of the Pioneer Group, talks to us about his entrepreneurial journey and some key lessons that he has learnt along the way
Becoming an entrepreneur came naturally to Sridhar Reddy. The founder, chairman and managing director of the Rs. 750 crore Pioneer Group learnt very early in life that to be successful, one needs to do something on his own. During his college days, he started writing simple software, along with his friend, to maintain machines. They completed the coding in 10 days to 15 days. And then was born Pioneer Software, his first company in software development, in 1995, soon after he finished college. Reddy made some money on multilingual software but his first big break came when the ISP (Internet service provider) privatisation happened in the country. Reddy saw a huge demand supply gap and started ISP operations in India through Pioneer Online. Simultaneously, he developed everything which is required for telecom billing which became a good product. He also started a company called Easymed which is a medical BPO.
Reddy is credited with launching the first Tier-IV data center in India and has changed its market landscape by building a data center that guarantees least energy consumption. He incorporated CtrlS, an IT infrastructure and managed hosting provider, in 2007, with offerings comprising of data center infrastructure, disaster recovery, storage, application hosting, backup, hardware, cloud computing, OS layers, network and security solutions. Currently, he runs three businesses – Iconic Design (started in 2006), CtrlS, and Pioneer eLabs, a company that offers IT services. Under his leadership the group has been growing at more than 100 per cent CAGR over the past 15 years.
He is the recipient of numerous awards and honours including the Rajiv Gandhi Shiromani by Global Economic Council, Best Entrepreneur of the Year by ATA, The Outstanding Entrepreneur of the year-2010 for Asia Pacific Region by APEA and CEO of the year award by World Quality Congress – 2012. He talks to us about his entrepreneurial journey and some key lessons that he has learnt on the way.
Can you share with us your experience during your early days as an entrepreneur?
Starting a business venture was simple and easy as we had nothing to lose. We had second hand computers worth about Rs. 3,000 to Rs. 4,000 and a lot of time to spare. We rented an office for Rs. 2,000, had one fax machine and later one administration person. Even this money we made before setting up our office. But trouble came later in the form of a meltdown in 2000. All our revenues, cash flows, net worth and valuation evaporated into thin air. That’s the biggest crisis you could say – whatever I did for seven to eight years was wiped out and I was in deep debt. But this has taught many valuable lessons, which helped me not only come out of the crisis but also build bigger better companies.
You entered the entrepreneurial world in 1992 and have built diversified businesses under the Pioneer Group. What was the idea behind starting your latest venture, CtrlS?
There were many things changing, especially in the way Internet was panning out in the country during the last decade. I felt that there would be a huge change in the way the data centers would be operated and run in the country and there would be a huge demand for them. The reason is simple: it would not make sense to maintain an IT department inside your office once you have data centers which operate at a lower cost offering high-end technology. Five years ago, I could see this trend evolving and that prompted me to start CtrlS. I spent a lot of time visiting the best centers across the world. I have learnt that unless you are the best at what you do, you cannot really establish something which makes a difference and that’s what made us start a Tier-IV data center for the first time in the country. And we are perhaps the most energy efficient, commercially operating data center in the world with a good BFSI and telecom clientele.
For me, to select any business, it had to pass through many filters. The business should be able to add value to that sector and there should be a gap in that sector. Ideally it should be a sunrise sector and should not be excessively dependent on any supplier or customer.
What is your role in each of these businesses?
My role goes through different phases. For example, for the first six months at CtrlS, I was doing research and putting together a team; the next six months I was getting in my first few clients. There was a phase where I spent almost 50 per cent of my time in HR and I would also do a lot of marketing. From April to November, I was touring the country and nearby countries for business development. Now, I am forced to look inside the company to scale up quickly as there are many orders coming in and we have to scale up our systems and processes.
Share with us some business rules that you have learnt during your entrepreneurial journey?
Choosing the business you want to start very wisely. For me, to select any business, it had to pass through many filters. The business should be able to add value to that sector and there should be a gap in that sector. Ideally it should be a sunrise sector and should not be excessively dependent on any supplier or customer.
You and your employees should feel charged to do it. We don’t have great systems at CtrlS compared to many bigger players, but all the 350 employees are still quite charged and work long hours every day.
Your business should grow big but not so big that every multinational or large group wants to get into it. It has to be a niche area with a good progress, like CtrlS.
Learn to handle stress. The market dip in 2000 taught me how to handle stress. I also learnt not to take things for granted.
It is also important to develop a vision and be instinctive about your sector’s growth. It is possible to develop this only if you are a careful observer of all the things happening in your industry.
Recruitment is another area where one needs be very clear. I used to recruit people from IIMs or big companies and I still do that. There is nothing wrong with that. But it actually doesn’t really matter as long as you can get good committed people from smaller companies or universities as well. It is important for your people to be taught and stay guided on your company’s principles.
Timing is extremely important to hiring teams. I burnt the biggest dollars in hiring the sales team before the product was not fully mature. Even if you are ready to pay salaries, good people can’t stay if there is no value add being done by them whereas if I don’t have engineers on bench, I can’t scale up.
Putting your systems and processes in place is a big challenge especially when things are not finalised – like the products, market, customers, the kind of order you want to get and so on. In such a situation, setting up a system of appraisal and variable pay can be a challenge. We defined KRA and measurements around the key purpose of a role. For example, many of them have their variable pay linked to satisfaction surveys from customers.
Every entrepreneur needs to dream big. But the problem lies in how you take this dream to your people. I go with an idea to the team and many times it is not received with much enthusiasm. I look for owners for my ideas rather than the senior most employees suitable for that job.
What is your dream for CtrlS?
My goal for CtrlS in the next five years is to make it a Rs.1,000 crore company. And to achieve that, we are looking at expansion and creating capacity. We also need funds to achieve this and we have already done around four rounds of fund raising in the form of debt and equity. We will close this year with close to Rs. 100 crore revenue. We want to build a brand which is known to be the best in the industry and adds value to its customers.
How does an entrepreneur move on to the next level after he leads his company to a stage where the processes take care of the day to-day running of the organisation and his daily involvement is minimal? What’s the graduation path for an entrepreneur?
There is always a constant need in any business to innovate, add more flavors to the business and expand in a qualitative or geographical way. There is a constant change that happens in an industry and implementing that change in your organisation is the role of an entrepreneur. Facing the challenges which could not be solved by the management is also the role of an entrepreneur. For example, I’m currently battling with the challenges in rapid scale up of service delivery capabilities. I am also working on three new product ideas.