Coverage by Bhat Dittakavi of Variance.AI on “Beauty in Patterns” by Suresh Reddy of Lycos Internet at T-HUB on 11th January 2018
“I met him 18 months ago. Suresh is very modest.”, said one.
“He is so down-to-earth“, said the other.
Suresh Reddy, Chairman and founder of BSE-listed Lycos Internet, has made 10 international acquisitions, that include the legendary search engine Lycos, after raising $100 million. Lycos made it to Fortune India’s 500 and Business World’s 500 businesses last month.
Suresh got worldwide offices in 17 countries. He is into digital marketing, global outreach, mergers and acquisitions, fundraising, going IPO, cross cultures and team building. Suresh is Hyderabad’s hidden gem and is a member of Hyderabad Angels and is TIE Hyderabad’s elected President for 2019.
His team made a viral video of their move to Gachibowli office. It depicts Lycos culture and creativity with a peppy number in the backdrop as the camera navigates the entire office while team members are frozen in their action at work. Creative team of Lycos froze themselves at work and made sculptures of themselves. It can’t get more creative than this.
I put together slides from a book I love to make it a different talk than typical “my journey” talk. I follow the principles of Tao.
There are very old Chinese principles that I use as base for this talk and combine them with my own experiences. They say it is second most sold book after Bible. Read “Tao of leadership”.
Money is a good word.
Tao of abundance: Eight principles
Abundance of time, money and relations.
We struggle with lack and abundance. Abundance is not in the resources but in the mind. Abundance in mind is what we need.
1) Recognise the unity
Being in sync with the Market.
When we started, we used to be called USAGreetings.com in dot com era with animations, gifts and use of Flash. There was massive euphoria in those days about Startups just like what we see now. I remember meeting with Larry Page in the valley in those days. I saved his business card too.
Not the product, the market counts
We could attract many members for our greetings site. This was 1998. By 1999 many dotcoms raised funds too. Myself and my schoolmate Vijay are into this. We went to the drawing board and we came up with four ideas and all of them were greetings for different segments or occasions. Looking back, it sounds funny we made them four different ideas. We both worked hard, let go off many at the dotcom. We had great products. Big point is that we are all engineers and we have no market sense. I call this Engineering Syndrome.
We took our product to an HR manager at Sun Microsystems and tried to sell them online greeting cards. He showed us a list of people he was about to fire. It was a slap on my face. That was a shift in my thinking.
We needed to understand the market. That was a big lesson.
Be part of the overall unity. You can’t come up with your own product and assume people would buy.
2) Learn to receive
Humility with family, employees, customers, investors and press.
There is lot of resistance to receive new employees. Be open to receiving advice and money. Turn that little charm and receive by lowering your guard. It is salesmanship. The best salesmen in our companies are ourselves.
We raised $60 million by 2010 with six acquisitions and we were in a hot seat. We got a lady from I think Economic Times. What we carry percolates within our system. Whatever you are, your company will be. You can’t bluff your way. I was in that state of feeling high. My PR associate met this lady. I was stuck somewhere and I couldn’t make it. Reporter gave my associate left and right. I got the update. I called instantly and apologized to her. She suggested we meet at Cafe Coffee Day as against Taj Krishna and the meeting went on for 90 minutes. Next day, a huge story came up in the news. Take care of press and PR.
3) Wu Wei: Path of least resistance
Getting things done by doing nothing.
It talks about cross roads and choices. When I find resistance at cross roads, I find the path of least resistance as it worked for me.
4) Be in the flow
Circulate the energy: Be it networking for new business, investors or staying in touch with stakeholders.
We sat down after that rejection by the HR manager at dotcom bust. We attended trade shows. We could find people like us there and we did “last man standing” dinner. We acquired a company and we got into challenges on final payment owing to lack of clarity and we do fight that even now in court. It is Lycos. It occurred to me recently that I missed the flow and I started becoming active again in various ecosystems to derive energy from each other. People who are in the same boat help each other. I see that happen in the current entrepreneurial ecosystem helping entrepreneurs help each other.
5) Innate dignity
Authentic power comes from honoring your innate dignity and inborn capabilities.
When you seek funds, some VCs may look down upon you. I don’t think you should let that happen. Have pride in doing what you do. One of our VCs sent a representative for a quarterly review. We were trying to buy a company at that time. I gave a brief on the target, he advised me to fire the entire top management and let the sales reps run the target. There was no rationale. I told him I can’t take that advice. He countered me and questioned me for taking his money but not taking the advice. I told him to takeover and run it if he wanted his way. His boss called me later. I felt good as I didn’t demean myself.
Dignity is the key to hold, though you receive people with lowered ego.
6) Yin and Yang
Balancing the period of growth and consortium. Recognize that up period comes after the downone.
7) White space
Having enough time to be. To grow and to nurture gives you strength to persevere.
I pour my tea and spend my time with myself doing nothing for an hour in the morning daily. I just do zero. Nothing. No thinking or mind tune to do list. This calms my nerves and I love this part.
8) Li – The Beauty or Pattern
There is lot of beauty in pattern. The world at large, there is a pattern. If you get it, it suddenly becomes easier. You understand your client.
There is a pattern to how large global CEOs looking into India off late. Why is that happening? Take a minute and think. India is becoming important. Isn’t it? Why did Donald Trump win? There is a pattern. Something that went too far and too long. Noone comes to leadership on his own. It is the ecosystem that puts him or her there.
Plan your business forward. In our business, as agencies are getting nervous by the Googles of the world. Google is looking at Facebook and is scared. Facebook is looking at Snapchat. These are beautiful patterns if you take time to notice. This is good way to respond when VCs ask you why now and why should they invest in you.
Q) Let us know about your cquisition hurdles
Corporate gets accountability. My president is COO. He knew how to handle multiple locations. Each of us have a role. I made the CEO of an acquired company our chief strategy officer. Logic was about knowing the strength of the incoming teams through acquisitions. Have the humility to let those teams work. We hired a bigger company and together we made 60 million that more than our combined rrvenues. This is because the guy who reported to me got completely freedom.
How many times EBITDA, not PAT: 4-7 times is typically we use as multiple when it comes to valuations.
We called the entire team of acquisition target in Israel and have seen them in action as observers. One of the guys said he was the oldest and then someone else said the woman was the oldest. Then she responded right back with fun. Silence tells more. We never expected that they had a freedom and talk.
Force fitting acquisitions is hard unless you understand that the cultures align.
Q) Transition from bay area to India?
I moved back in 2001 right after the dotcom. We tried to manage remotely from bay area. One of the challenges was that the team says “right” then what do they mean? They say “we will do it” for “we will try”. Bug difference. I used to travel back and forth. We felt it would be good to move back to India. One fine day we packed and returned. For me, connections are more important than pollution in India. This is my place. It unleashed lot more energy for me. I didn’t have to do my own laundry or drive for myself. I love this. I did travel for five years frequently.
The day we had our first client happy by driving teams from India, we felt we could do global business. I can’t be everywhere and if the team did without me, I call it success. Q) Failure in acquisitions?
Smaller acquisitions were harder. I had to let go one of the founders as he was not in alignment. He wanted to open his office in London while we had another office there through this other acquisition.
We got hit at few places. Company Lycos was good when we acquired but the contract we signed got issues. We paid at EBITDA multiple of 6. That is $36 million. We noticed $4.5 million was EBITDA in three quarters and then the last quarter made $4.5 million and they said 9 times 6 is $54 million valuation. We didn’t have a cap. That was our mistake. We should have capped the acquisition instead of saying a multiple of whatever be the EBITDA. We are fighting this out in the court. Our culture has been to believe in the person-in-charge.
Q) Big companies come out of ad market. How do you see the transition?
A) I can’t be everywhere and meet the customers. I meet the sales guys. I learn and navigate. Stay nimble like in any other time in the history of mankind. When you find something, don’t wait and quickly move.
We are at the edge of a massive revolution due to internet. All these years we as users have been forced to learn new technologies. Users have been subjected to continously learn what is evolving. I believe phones are gone. Older generation learnt it and the younger generation know they can’t be choosy. The paradigm shift is that you are done learning and let the internet do the learning. All smart systems. In spite of the yup, there is lot of credence with intelligent surroundings.
You give verbal commands. No typing. No need to read and I visually see esp. in advertising. We see that usage pattern is changing. Have your eyes set on right thing.
I drive the same car and my gear knows it is me. Everything is learning on its own to accommodate you. This is like dotcom days.
Q) You managed teams of all sizes. What is your philosophy around hiring?
When we first moved, we were an internet company. There was a circular going around that the next day was Diwali and holiday. Then we had a cultural shift. We hired an English teacher to train our team. Lot of things transformed. We randomly put a team together and made a decision not to let people go as a core philosophy and chose to be choosy in whom we hired.
At the time of hiring, we have checks and balances. We used to conduct these tests. 5000 people come for 20 positions. We look for mental ability and aptitude, we give 6 months of training after hiring. “Quick at learning” and “right attitude” are our metrics. We are not even a human-intensive company and we are more of an analytics company. This is organic but acquisitions aren’t. We had to train the Israelis and Indians with clash of cultures. Both sides got to be educated. It is cheaper to get it done in India.
We are non-intrusive environment where people are not pushed around too much. It gives them space for creativity.
Machines do grunt of boring work and we do creative part and is a huge opportunity. If you can create a creative environment that is a huge plus.
Q) Building a brand?
It takes 300 crores to build a brand. There is branding for all and then for a specific company. It has a way of life. Every touch point has to carry that aroma. Clean minimalistic fields means audience notice and we interface with the outside world. Hoe your team functions can also be done without branding.
I have never built a B2C brand. I do B2B.
We pick the best person for the job irrespective of the nationality.
Q) Brand leadership?
When the lady quits, she recommended two failures her direct resports to take over. It is more organic and individual leaders have been given freedom for fostering leadership.
Q) How do you get original thoughts?
When you have white space for you, it is not for listing to-do list. It makes you tired. Engine gets hot. You have two minds. One is the monkey and the other is bull. Monkey in mind made me miss that clause in my contract. Bull puts you in control. It is important to keep that connection.
Q) What is your vision on entrepreneurship in Hyderabad?
I love the way the whole ecosystem is evolving. There is also some euphoria. One or two insights can change your company. Being in the know is the key. Think beyond Hyderabad. Think world as marketplace. Not just Hyderabad only.
Some amount of investment in PR is good.
Q) Education in advertising?
Awareness has come. What can industry get from the educational institute? Vice versa. Massive mismatch. Breaking the cylos hapoens by connecting more. Fundamentals are critical.
University centers you on fundamentals. Then prepare you for the industry. Second is secondary.
Keep them in good space. Don’t lose sight of the principles as stakes go high up. Let principles and values guide you.