Anatomy of Innovation: Exodus Founder B.V. Jagadeesh (Part 3)

SM: When you were exploring starting your own company, what resources did you have to draw upon?

JVB: Obviously both of us were not known except to our personal networks. I had been in the Valley for 12 years so I had a good network. I was also the chairman of the Interrupt Engineers Conference. I proposed that conference in 1992. They gave me an opportunity to run the conference. It was a very successful engineers conference. Each year it would attract 600-700 people. It gave me some fantastic opportunities to meet very good people.

In 1994 I quit Novell and had no pay. I had no idea exactly what we were going to do other than we had kicked off a consulting business to offer high-end networking technology consulting to various companies.

SM: To equipment vendors?

JVB: Yes. We were very clear from day one that we would not be a body-shopping consulting company. We wanted to be very high end and offer architecture design and implementation, end-to-end. We had some sophisticated customers such as Sun Microsystems and Adaptec, who was just jumping into ATM, and we got a big chunk of the development based on our expertise. Lockheed Martin, Toshiba were also there. We had six or seven large customers.

We built a team of 10-15 engineers in California, and we also had a backend operations in India through another consulting copany in India. That brought us another 20-30 people who were hard-core operating systems and low-end architectures engineers. They were device driver developers. That helped us generate the funds to do something else. We knew consulting is not something we would do long term. It is always a time and material business; it is not a scalable business.

SM: It is common for entrepreneurs to use consulting to bootstrap.

BVJ: It certainly helps bootstrapping. If you are not going to let someone fund you, how else are you going to generate the funds?

SM: Especially when you do not have exactly what you are going to do figured out. Consulting is a great way to experiment.

BVJ: Interestingly, during this process we bumped into this whole Exodus concept. It was a step-by-step approach. We started consulting and then ended up creating a business-centric Internet solutions provider in the middle of 1994. The Internet was just beginning to evolve at that time, and we offered a complete solution that included connectivity and mail services to small to medium sized businesses.

SM: How did you sell to small and medium sized businesses?

BVJ: We built an inside sales team. The selling was centered on customers in the Valley; we did not open up outside the Valley. A fascinating thing happened in 1995 that illustrated the key difference between us and other ISPs. At that time demand for Internet connectivity was exploding. It seemed like every company wanted to have connectivity. PacBell, the underlying carrier which provided the copper between the office and the service provider, ran out of copper, people do to the installations, and patch panels.

All of these shortages resulted in a huge delay in a company getting its Internet connectivity. If a company wanted a T1 connection, it would take about six months to get it online. When everyone was struggling at that time, we just used that as an opportunity. We went to those customers and asked them why they wanted an Internet connection. We found out they wanted to put a website online and give all of their employees access to email. We then offered to let those companies put the server that was going to run the webpage and email in our site.

We would then give them an ISDN or dial-up connection. Within 24 hours their company was on the web, and they could access the server and get their email. When they got their T1 they could just move their server back. Within 6 months we had 150-200 customers. We were not even geared up at that time. We had a small 4,000 square foot office. We had dedicated two rooms as our data center, which was not equipped as a true data center.

This segment is part 3 in the series : Anatomy of Innovation: Exodus Founder B.V. Jagadeesh
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