The Other Murthy

Disclaimer: The following is from an article published online in 2004 which I happened to come across.

December 1992. It was snowing hard in Boston. The man stepped off the plane and made his way to a small hotel. He had a year to prove himself in this foreign land. "It was the first time I had seen snow in my life. The first few days were tough. They had nothing vegetarian. I was eating pasta three times a day. I was fed up. I decided I had to go to a McDonald's," says Phaneesh Murthy. It had been snowing all through the week. So he just decided to wade through the slush and reach the nearest McDonald's. "But they didn't have anything vegetarian either. I was freezing so I sat there and drank three hot chocolates and munched on a few packets of French fries. It felt good. Here I was in America and I was in McDonald's. The American journey had started," he says.

For the next decade it would be a ride without any punctuation. And then in June 2002, the American journey came to a sudden full stop. Accused of sexual harassment of his executive assistant, Reka Maximovitch, Phaneesh Murthy would be dragged into courts. He would stand accused of suppressing facts, misrepresenting them to the board and, as a former colleague points out, "guilty of a serious error in judgement". Rather than choose to fight, he would agree to a $3-million payout to Ms Maximovitch. Phaneesh denies being a party to the settlement, but Infosys Technologies says the exact opposite. With the Karmic wheel in complete spin, the price would be dear - loss of job and definitely some reputation.

Cast down from nine circles of heaven into purgatory, he would wander looking for a fresh start. He would find temporary relief in Quintant, a consulting outfit. He would raise $30 million ($15 million was actually invested) before his funding agency, the Rs 2,500-crore GMR Group, a successful investor in ING Vysya with large interests in power, decided to pull the plug. GMR says it wanted to invest in its power business. But there is talk of Phaneesh being unable to get the revenues and business, and his investors getting impatient. Without the redoubtable army of developers, Phaneesh would be forced to abandon the fresh start and allow himself to be courted as CEO of software company iGate. Life would slowly slip back into the familiar. The future looking more like a linear extrapolation of the past, Phaneesh Murthy would wake up from a new dream into an old reality. But what matters is that it's real.

He is ready to float once more.

Phaneesh Murthy is sliding across the globe. He's dropped off the 30th parallel into Singapore. A week later he has tumbled down the E151 longitude into the Kangaroo land. It's late at night in Sydney but he's still trying to keep his antennae up. "I know what you are trying to say... but that's not the incident which fits. Let me think.... Hmm... hmm.... Okay, here's what is interesting and this happened while I was at IIM...," he says. That's when it strikes you. Phaneesh Murthy is a modem. No, no, don't go away; this is serious stuff. Think about it. In much the same way a modem screeches, whines and wails as it tries to match its thoughts with the other modem at the far end of the line, Phaneesh keeps rummaging, shuffling and hunting through analogies, metaphors and incidents to help you 'prove' your point. "I don't think the physics teacher example really demonstrates the point about 'my persuasive powers'. I'll give you another example." And off he goes again. It is a glimpse into the mind of a man who claims he scaled up Infosys sales from $2 million to $700 million. (Never use this line when talking to Infosys - it infuriates them to no end.) He has to do it all over again now.

Phaneesh has been on the road travelling to various iGate offices. "It's been gruelling," he says. "The passion level is high but we still have to do a lot of hard work before we realise value from that passion." That's as much an admission as a confession from the man, who, even close associates say, never had to try too hard to make things happen. This time it is different. He doesn't have as disciplined a cadre as he had at Infosys. He does not have as charismatic and far-sighted a guru as N.R. Narayana Murthy ('NRN') to open doors. Neither does he have as capable a strategist as Nandan Nilekani. "Sometimes I wonder if it was all a fluke. I really want to test myself again," he told a friend recently, referring to his innings at Infosys. The innings was not supposed to end the way it did.

It wasn't even supposed to begin that way. Phaneesh wanted to study medicine. But, instead, listened to his father, appeared for the IIT JEE, got a 132 all-India rank and did the obvious: joined. The IIT years were pretty uneventful otherwise. Phaneesh recollects that at IIT he was quite a "vela character".

In 1985, when Phaneesh finished his Bachelor's, he heard the song of the medicine man once more. "This time I took the test for medical schools in the US and applied to the Top 5 schools," he says. Harvard made him an offer with financial aid. Once again his father asked him to wait a while. He took the CAT and was selected to IIM-Ahmedabad. His ability to think big started right there. "Once we were trying to raise funds for an event and we had kept the sponsorship price at Rs 5,000. I said let's take it to Rs 10,000, and it worked," he says.When he left IIM-A, FMCG was big. The Nirma versus Hindustan Lever battle was drawing to a close; most people from the top of the class headed for a Lever or a Britannia. Phaneesh made the first unconventional decision of his life. He chose Sonata Software, a start-up in a tiny industry. To put things in perspective, TCS, a $1-billion company today, had a turnover of $15 million in 1987. "I did not find soaps intellectually stimulating. I wanted to do product management. In soaps or industrial products, most of the product definition is rarely changed. In software, you can use the customer feedback to improve the product," says Phaneesh. In Sonata, he also started on his first Mission Impossible. Design and sell a software for the Indian market. All the heroics were in vain though. The Indian IT industry was undergoing a disruptive change.

TCS started the offshore business model in mainframes in 1989. Soon Indian firms figured that a dollar was 17 times better than a rupee. Phaneesh realised the domestic software industry would not go anywhere. Indians could not take advantage of great products as they were just not ready for automation.

And then, in 1991, India Today carried an advertisement.The India Today AdvertisementIt was a two-page recruitment advertisement for a company called Infosys. There was a small line at the end of the ad: "We also need a marketing manager for the US. Should be willing to relocate and travel extensively." The position did not require major qualifications. "I said this is a company that needs some serious marketing help. For every other post advertised they had at least a paragraph of qualifications!" Phaneesh hit it off with Nandan. And then the turn came to meet NRN, who would be his mentor, guide and, ultimately, his judge.

NRN thought Phaneesh couldn't do the job. Phaneesh did not smoke, drink or eat meat; NRN thought he would not last. But he liked the fact that Phaneesh was a numbers-driven, facts-oriented marketing guy. The deal was done. But before that, a target had to be set. Nandan, domestic business head Vijay Kumar and Phaneesh sat down to set one for the first year. "I told $1 million," Phaneesh says. Why? "Because it was a nice number!" Nandan agreed. Infosys' turnover was about $2 million then. Vijay Kumar was bewildered and asked Nandan: "Aren't you going to ask him how he will get $1 million?" And Nandan replied: "That's his problem. If he wants help, he will ask." Phaneesh was told that he had one year to show results.

Coming To America

His first negotiations were anti-climactic. He was dealing with Apple Computers. "When I went back with the contract I found the entire team... on the deal had been sacked. I admired them. They (knew) it not personal, not stigmatic. It happened and you moved on," he says.The years after 1992 saw a huge acceleration in IT offshoring. "We were getting so much work that when I bagged a huge order somebody said 'Shit! That means we will have to work more'," says Phaneesh. The big break came in 1994. Infosys was pitching to Nordstrom for a sale order management system. "I studied all the literature and approached the CIO. They liked the proposal but thought we were not familiar with the US market and so, gave us the merchandising system to develop." It was Infosys' first-ever million-dollar contract.

That is also when Phaneesh started building up the sales organisation. His rules were simple: agree on certain things - like not signing unlimited liability clauses, deciding on targets - and you have a free hand. That was the only one way to handle the salesforce and the bigger accounts that Infosys was trying to bag. "I met Phaneesh on his return trips to India every three months. He would be full of questions: How's so-and-so? Where have you been recently? What's the feedback on that firm? He remembered everything you told him," says T.G. Ramesh, founder, Bangalore Labs, who now works with Phaneesh.

The sales team grew after 1994 and threw up stars like Basab Pradhan, Srinjay Sengupta and Shobha Meera. "He created the 'two cultures' of Infosys. The process-driven, conservative software developers... (and) his team that was answerable only to the board," says a source in Infosys. Phaneesh feels it was more the customer-facing culture that he developed. "I believe people who interact with the customers should drive the organisation. As for a free hand - the only way you get high performance is if, after an initial watch period, you give a high degree of autonomy.

In 1996, that point was proved. For the first time Infosys went head-to-head with a formidable consulting firm - Cambridge Technology Partners (CTP). The contract was for about $9 million. CTP bid $8 million. Phaneesh and his team's math: total cost, including profits, of $4 million. The majority was for quoting this price. The sales team figured it would be a mistake: the client would think they had no idea of the project's complexity. So the team doubled the bid to $8 million. Infosys got the project. It was a crossing of the Rubicon. Infosys could beat the heavy guns at their own game.

Such victories made the man who was once a doubting Thomas, a believer. NRN became like a father to Phaneesh. Phaneesh had been a Maths Olympiad top scorer; NRN loved to communicate in mathspeak. "You could be discussing at a dinner table and these guys would start. It would begin with problems and degenerate into discussing the greatest mathematician of all times," says a person who was at one such dinner. The relationship grew till Phaneesh broke the inverted first law of robotics: "A human may not injure a machine, or, through inaction, allow a machine to come to harm." That machine was Infosys. Phaneesh had already met Reka Maximovitch. "He tried to hurt the company. He tried to hurt Infosys," says a person who knows NRN really well.

Phaneesh had one last victory. He says he won the $37-million Greenpoint deal for Progeon. But the stories of his power within Infosys, his conduct, his putting the firm at grave risk, grew and grew. And on 23 July 2002, Phaneesh resigned. Some say he was "de-risked".

Is there something in the last two years that Phaneesh would have wanted to change? "That's a very open question. But tell you what - to go back and study medicine; that's what I want."