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The founding of Mindtree

Shilpa Phadnis, March 19, 2019: The Times of India

Mindtree is the stuff that middle-class dreams are normally made of. It’s the story of 10 IT industry professionals — from Wipro, Lucent and Cambridge Technology Partners — coming together, pooling in $1.6 million, and two decades later, being courted for over $2 billion.

But in this case, the founders are not happy. It has nothing to do with the money they could potentially earn though. They believe they built a company so culturally unique that it should not go to another company that, in their view, has a very different culture.

Those in Mindtree think of their culture as a mix of empathy, integrity, and purpose. Empathy was visible at inception in 1999, when the company unveiled a logo created by an alumnus of the Spastic Society of Karnataka, Chetan. Since then, the company has had a special emphasis on the differently-abled.

Mindtree staff are not employees or resources. They are Minds. On induction day, Mindtree Minds are individually met by the CEO or COO, they get to know each other, and the new inductees are made aware of the guiding values. Employees own a sixth of the firm.

“When Mindtree completed five years, the founders and some executives went to Tirupati. When we were going downhill by foot, we cleared the garbage strewn along the way. We picked up some eight truckloads of garbage,” recalls S Janakiraman, one of the founders.

It was a unique bonding around such values that was the genesis of the company. In the run-up to the launch, the founders had a number of discussions, some over lunches and dinners, others just sitting under one of the magnificent trees in Bengaluru’s Cubbon Park.

One of the crucial discussions happened at Taj Gateway’s iconic restaurant Karavalli, when Subroto Bagchi and Krishnakumar Natarajan (fondly called KK), who were then in Wipro, fleshed out the idea. Prior to that, Ashok Soota, who was also at Wipro, had met Coffee Day founder V G Siddhartha for lunch. The latter assured funding whenever Soota was ready to take the plunge.

Rostow Ravanan was the youngest of the founders. Janakiraman laughs as he recollects his first meeting with Ravanan, who was then working at Lucent. Wipro was negotiating to set up Lucent’s R&D centre in India, and Ravanan was proving to be a tough negotiator. “It was Ram versus Ravanan,” he says.

On launch day, Mindtree hosted a get-together that was attended by Wipro chairman Azim Premji and Infosys cofounder Nandan Nilekani.

Mindtree initially operated out of a two-room office provided by Siddhartha. Three founders — Scott Staples, Anjan Lahiri and Kamran Ozair — took a small office space in New Jersey, US. Staples won the first customer for Mindtree, and it happened to be Lucent. “A man named Rod Trombly (in Lucent) knew Scott, Anjan, Kamran and Amit and had the fullest confidence and trust in them. No one else could articulate the architectural problem he was battling with as well as this team could and we got the job,” wrote Bagchi in the paper Making of Mindtree 2.

In India, their first customer was Fabmart, which was setting up an e-tail business. Soota was keen to do business with Hindustan Unilever. So he wrote to Keki Dadiseth, the then chairman. They got a call from HUL. Bagchi recollects how “small and naked” they felt when they stood to make the presentation — no case studies, no customer references. But they won the deal.

“Ashok was our godfather. He anchored the team. He was the first to have a 360-degree appraisal for leaders and brought in best-in-class HR processes,” Janakiraman says. Soota had even put in place succession planning, identifying shadow leaders and who they would shadow for.

On January 28, 2011, Mindtree faced its biggest crisis till then, when Soota called it quits abruptly. The speculation is that he disagreed with the others on what to do with Kyocera Wireless, a company Mindtree had acquired in 2009.

Siddhartha again played the white knight, buying out half of Soota’s 11% stake. “Siddhartha was a very helpful promoter to the founders, and a good board member. I’m sure that he will be missed,” says David Yoffie, prof at Harvard Business School and formerly a Mindtree board member.

2019:  L&T buys 20% of Mindtree in hostile bid

L&T buys 20% of Mindtree in hostile bid, eyes 46% more, March 19, 2019: The Times of India

Larsen & Toubro (L&T) on Monday signed an agreement to acquire the 20.32% stake of V G Siddhartha, Mindtree’s largest shareholder, for Rs 3,269 crore, or Rs 980 apiece, in its unsolicited takeover attempt for Mindtree. L&T has also placed an order with its broker for an additional 15% of Mindtree and is making an open offer for a further 31% at the same price of Rs 980 apiece in line with the country’s takeover regulations. If L&T’s move succeeds, it will acquire 66.32% of Mindtree for Rs 10,669 crore.

However, the promoters of Mindtree, who together own 13.3%, are resisting the L&T bid. If they decide to make a counter bid, they will have to offer a price higher than Rs 980.

Mindtree’s management has already reached out to key non-promoter shareholders to fend off L&T’s takeover bid.

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