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March 2011 | 150 | Volume 02 | Issue 02A 9.9 Media Publication

UDAY CHALLU and VISHAL DHAR have built iYogi into a Rs-250 crore tech support business in four years.

Now, they’re chasing billion-dollar dreams. PAGE 32

AMBITIONUNITED BY

THE WAY I WORK Rajyasree SenCooking up a storm of bytes PAGE 64

Augment the reality of your brandPAGE 57

Get clear about your company’s

futurePAGE 40

How RAMESH GROVER built the CMS groupPAGE 54

3 2 | INC. | MARCH 2011

MARCH 2011 | INC. | 3 3

It’s not enough that Uday Challu and Vishal Dhar have built a consumer services brand in the West, sitting right here in India. They’re gearing up for

$1 billion in revenue in the not-too-distant future.BY POOJA KOTHARI | PHOTOGRAPHS BY SUBHOJIT PAUL

ZOOMING AHEAD ON

THE GLOBAL HIGHWAY

ZOOMING AHEAD ON THE GLOBAL HIGHWAY

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VEN MY MOTHER doesn’t understand what we do,” says Uday Challu, CEO and co-founder, iYogi.

In fact, she isn’t the only one. Parents of most of the 20-somethings employed by iYogi find it hard to comprehend what the company does. Is the ‘i’ for investment, or India? Or, for

the internet? And, what to make of Yogi? That’s not a common word, even in India.Put them together, and what do you get? Well, a global business worth 250 crore in

four years—one that provides technology services and support to end consumers in the US, UK, Canada and Australia for prices varying between $40 and $169.

Here’s how the service works. If a consumer faces a problem, they can seek iYogi’s assis-tance either on phone, or online. Depending on the nature of the problem, iYogi charges them for a one-time intervention, or for an annual contract to help every time a problem arises. While a single person remains in contact with the consumer for that complaint, at the back end, multiple specialists can be brought in to solve the problem.

It doesn’t matter which brand, device or technology has a problem. It doesn’t even matter which geography the consumer is calling from. As long as there is a tech prob-lem—a computer that has crashed, or an iPad that refuses to sync with the iPhone, or a printer that just won’t follow a command—these Yogis will do their best to solve it; all to earn some ‘good karma’.

There are a few thousand of them—6,000 to be precise—a majority sitting in six floors of a tony commercial building in Gurgaon. This army of engineers, call centre agents, business developers, researchers and search optimisers starts work every afternoon. It is bound by a single mission—to resolve a problem that’s sent its way in the least possible time and in the most satisfactory manner.

It’s a simple business, really. Someone has a technology problem. iYogi solves it—and, gets paid. “It was a hugely underserviced market. We just spotted an opportunity and went after it,” says 48-year-old Challu.

MARCH 2011 | INC. | 3 5

THE MARKET“Technology support is a $30-billion market in the US alone,” says Alok Mittal of Canaan Partners, an initial investor in iYogi.

There’s little doubt that it’s a huge market. According to a Fast Company article, “Americans spent a whopping $4 billion on tech support last year. That number should grow to at least $6.4 bil-lion by 2013, and remote help is poised to drive much of that expansion”.

With the growing popularity of devices in the hands of consumers, be it smart phones, tablets, laptops and so on, this market will only get bigger in future. For instance, even within mobile phones, there are now multiple operating systems sup-porting different phones. Just syncing gad-gets with different OS is stressful for end-users, especially those who haven’t grown up with these devices. These include people above 50 years of age, who form a majority of iYogi’s customer base.

No wonder Challu and his team are confident of victory in the battle to set up a tech support company out of India. “There are 74 million broadband homes in North America. If I get 25 per cent of those, I will have 18 million households. That’s $3 bil-lion in revenue. And then, there’s UK, Aus-tralia, Middle East, India, China and so on,” counts Challu, excitedly.

Given that iYogi’s journey began only in 2007, when the company was incorporated and the first call taken, its scale of achieve-ment is commendable. The firm has built a subscription base of around 400,000 cus-tomers in the US, and solved more than 2 million problems—all on phone, or online.

The firm’s winning combination—an ability to communicate with the consumer and a platform to deliver support—has helped iYogi create a successful business on first try. “We’re the first consumer services brand out of India,” says Challu.

It has held its own among competitors, who are based locally. There’s Geek Squad, the customer service operation run by Best Buy, a leading consumer electronics retailer in the US. It runs in-store services, where consumers can walk in with their hardware to get the problem sorted, sends technicians to people’s homes, or takes the

Born to an officer in the Indian Air Force, Uday Challu led a life typical of the armed services. He attended 11 schools in 12 years and lived in different

cities across the country. He wasn’t to know then, but it was a good rehearsal for the professional life he was to lead. In his 27 years of working life, Challu has dabbled in many things. “I’ve held a job twice in my life,” he recounts.

The first one was just after he finished his graduation in economics from Uni-versity of Delhi, when he took up a job with CAL Systems, a start-up in Okhla in 1984. He joined them at a princely salary of 650 per month, and worked there for the next six years. “Even Wipro wasn’t into computers then,” recalls Challu.

In the middle, he left CAL along with a colleague to start a computer main-tenance business in 1986, but when that didn’t do well, he shut it down and went back to his former employer within a few months. His first entrepreneur-ial stint was rather short but it gave Challu a first-hand experience of the limi-tations of trying to build a scalable business with people.

In 1992, he joined a friend of his, who was working in the apparel manufac-turing industry. Challu and his friend decided to set up a retail chain of retail stores along the lines of Benetton. This was a business he knew nothing about. And, yet, Challu landed up creating a chain of six stores in Delhi, called Yankee Clipper. With two factories in Okhla and Ludhiana, and a workforce of 1,400 peo-ple, Challu established a turnover of more than 2 crore a year in 1995, when he sold the business. “I realised that India has no core competence in this industry, except that we grow cotton. Machines come from abroad. Manufacturing is done better in a place like China, where people have an industrial bent of mind; the real designs and clothing sense come from the West,” recalls he.

After that Challu worked for another start-up, did a three-month stint with a technology firm in the US, and started a boutique consulting firm mentoring technology start-ups. That’s where he met Dhar. For the past many years, he’s had no life beyond work. It’s only when he gets absolutely physically drained that he goes home to Gurgaon to his wife, his 22-year-old daughter, and dog. Two years short of his 50th birthday, Challu hopes to free up some time from iYogi to drive his bikes, a Ducati and a Hayabusa.

Always an EntrepreneurUDAY CHALLU | Co-founder and CEO

ZOOMING AHEAD ON THE GLOBAL HIGHWAY

3 6 | INC. | MARCH 2011

equipment to its depot for repairs. Then, there is a clutch of online support services, such as PlumChoice.com, which provide tech support to the customers of other companies. And, there are call centres run by manufacturers, such as service centres of Dell or Apple, which a consumer can turn to for support.

Despite sitting miles away, iYogi has done a good job of understanding its cus-tomers. “Our first call resolution rates are among the highest in the industry,” claims Challu. There’s no independent verification of these numbers. However, iYogi claims to have “90 per cent resolution rate” for the past 24 months and an even higher cus-tomer satisfaction rate.

It’s this ability to solve problems that appealed to Canaan Partners many years ago, when Challu approached the venture capital firm for funds. “Their first call res-olution was in mid-80s, while the rest of the industry, including Microsoft and Dell ran rates of 50-60 per cent. These guys were much better even at the pilot stage and that too, in a multi-brand envi-ronment,” adds Mittal.

When Vishal Dhar met Uday Challu in 2001 to seek investment for his entrepreneurial venture, he was

hardly to know that just a few years later, they’ll become partners in businesses. Dhar was then running Friday Cor-poration, a content aggregation business and his first stint as an entrepreneur.

Prior to that, Dhar had set up the Indian arm of UK-based Text 100, a public relations firm focused on technology busi-nesses. “I got my first taste of entrepreneurship with Text 100 because even though I was an employee, we scaled it up from a team of two employees to more than 50 employees across four offices,” says the alumnus of The Lawrence School, Sanawar.

Born in Kashmir, Dhar’s childhood was spent in the idyllic environment of pre-violence hit Valley. Post his schooling, Dhar attended Pace University in the US, where he stayed till 1995. After returning to India, Dhar spent a year with Mudra’s public relations arm, before he chanced upon the Text 100 opportu-

nity. Friday followed, which he started with two partners and built into a considerable business. “At one point in time, we were providing content to 44 different websites,” recalls he. However, despite two acquisitions and the best efforts of Dhar and Co, the company had to be shut down within three years. Luckily for him, that company introduced Dhar to his future business partner,

and now, co-founder at iYogi, Challu.Together, they first set up IQ Resource, a business targeted

at business-to-business media industry. It was while working on this business that the idea of iYogi first struck Challu.

Since its inception, Dhar has looked after marketing at iYogi. “I’m always amazed at how tech can change people’s lives. My mother has a Kindle, and a laptop; and my dad has an email ID. The fact that Google has become the window to the world shows a change in consumer behaviour,” adds Dhar.

It almost seems that his entire life prior to iYogi was spent in preparing for this business. Whether it was the ability to market technology brands that got honed at Text 100, or sim-ply the idea that processes can drive efficiency that came from IQ Resource, Dhar has put a lot of his past learning into his current responsibilities.

Based out of New York, where he lives with his wife and two children, Dhar remains focused on the “opportunity-of-a-life-time” that makes every day at iYogi an exciting one.

VISHAL DHAR | Co-founder and President, Marketing

Bullish on the Future

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the concept of “delivering a high-quality service out of India”. That was the time when Dell had taken its back-end operations out of India and back. Even Apple had experi-mented and opted out of India.

On top of that was the sheer lack of experience that Challu and Dhar had in this field. Nei-ther had worked in the out-sourcing industry, and had no idea what it would take to exe-cute a model along these lines.

The duo wasn’t in a hurry, though. “We ran a pilot for more than a year. We figured out how to deliver this service, built the plat-

Convinced of the potential, Mittal’s firm invested $3.2 million in iYogi, along with SVB India Capital Partners, almost four years ago. Since then, iYogi has gone on to raise $57 million in several tranches from reputed investors, such as Draper Fisher Jurvetson and SAP Ventures. Most recently, it raised $30 million from Sequoia Capital and existing investors in December 2010.

This money has clearly been put to good use. According to press reports, iYogi’s turnover has increased from under 13 crore in 2007-08 to 82 crore in 2009-10. It aims to close the fourth year of opera-tion—2010-11—with revenues of 250 crore, three times that of last year.

Challu claims to have added 5,000 peo-ple across cities, such as Bengaluru, Pune and Chandigarh, in the past year alone. “We hope to add another 6,000 in the next 12 months,” he adds.

THE BEGINNINGIt was around 2005, when Challu and his business partner, and co-founder at iYogi, Vishal Dhar, put a hypothesis to test. They were then running a boutique consulting firm, IQ Resource. The first wave of out-sourcing had proven that back-office oper-ations could be easily delivered from India.

And, as people became more accus-tomed to internet and dependent on tech-nology, more and more devices found themselves in people’s hands. Yet, there wasn’t anyone to support those multiple devices. “I knew the market existed. The original equipment manufacturer doesn’t own the ecosystem, just the component he makes. Therefore, someone else would have to take the ownership of the entire system,” says Challu.

Acting on his instinct, he travelled the world to check on the need for solving technology problems. “We spent one year researching this space. We met all sorts of people; spent time with people that ran tech support centres for large IT vendors like Microsoft and Dell to figure out what their customers were telling them. We experienced the flaws in the IT support ecosystem,” adds Dhar.

There was large-scale scepticism even among friends and acquaintances about

Yogi became iYogi,” regales Challu with tales from the early days.

Their lack of experience didn’t stop them from aiming high, though. “We wanted to get into this business only if it was massively scalable. To me, that meant a firm worth a couple of billion dollars in revenue, has millions of customers, and can still keep evolving along with technol-ogy,” says Challu.

It’s said that things get quite lonely at the top. Rarely can a

CEO find a confidant, or a mentor within the organisation. He has to usually look outside. We asked Alok Mittal, who has known Uday Challu since 2007, to give some advice to the captain of the iYogi enterprise. Here’s what Mittal had to say.

One thing to continue doing: That’s an easy one. Uday must maintain his hunger for the business. He has found some very creative solu-tions to problems in the past. He’s good at anticipating challenges and displaying creativity to solve those.

One thing to start doing: When a company grows as fast as iYogi is, it hides many weaknesses. I would advise Uday to keep an eye out for those. There is a risk of compla-cency, arrogance and inefficiencies building up in the system. Uday has to find and weed those out.

Guru SpeakALOK MITTAL | Canaan Partners

form, and created the technology and people processes required to deliver that service, then we hired people, and trained them. Only once we had all the pieces in the right place did we raise capital,” recalls Challu.

With an investment of $750,000 from personal savings, Dhar and Challu set out to “build the company from ground up”. Neither had ever worked in the outsourc-ing industry. Challu had previously set up a few businesses, including a retail chain for clothes in Delhi; while Dhar came from a marketing background.

“For either of us to put our skills and experience to use, we needed a product. And, we didn’t have one,” remembers Challu. So, they did what turned out to be the best thing in hindsight—they hired some people from outsourcing firms around Delhi, including IBM Daksh, Con-vergys, and so on.

“We basically focused on what the busi-ness will look like in 10 years—and then we got onto doing things that will take it there in 10 years,” says Challu.

Even as Shruti Dwivedi, the first hire who now runs a large part of operations, went about figuring out how the support will be delivered, Challu and Dhar took it upon themselves to build a brand. “We wanted to build a brand out of India. So, we needed a word that was universally recognised for its Indian origin. We didn’t get Yoga, so we opted for the closest alter-native—Yogi. Together, India, internet and

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Challu has the personality and creativ-ity of a “classic entrepreneur”, but he has surprised everyone—may be even him-self—with his ability to manage scale. “At every stage, he has operated ahead of the curve in bringing the right people on board,” comments Mittal.

When growth demanded an expan-sion of numbers, he opted for captive BPOs to solve the problem instead of try-ing to hire every resource internally. Sim-ilarly, iYogi showed an amazing ability to work with the resources it had. At each stage, it raised money with a clear goal in mind—and met that.

After the first round, the money was spent to explore internet as a sales channel, and get the “unit economics” in place.

merit in that argument. Of the 35 people iYogi started with, 27 are still around. “We haven’t lost any people at a senior level, except the ones we asked to go,” says Dhar.

It helps that together, the group of some of the earliest and senior employees own more stock on the company than Dhar and Challu combined. Yet, that’s hardly the main motivator, feels Challu.

“We found a common purpose in what we wanted to achieve for the company and how that translates into shareholder value, economic value and, therefore, value for all of us. That’s a rare situation,” he says.

It also helped that from the very begin-ning, Challu ran iYogi with all systems and processes on board. Whether it was the decision to put 15 per cent of the company stock into an Employee Stock Option Plan (ESOP), or performance appraisal systems, or a balanced scorecard, the company was ready for scale even before it received its first customer call.

Canaan’s Mittal adds another perspec-tive to the iYogi growth story. “One of the things that Uday has managed to do is build a transparent senior management team that can challenge each other. Cultur-ally, that has allowed them to grow as a company,” says he.

“Uday doesn’t believe that he has all the answers, or the best ones. Everyone knows what the issues are, and what’s going on. If someone comes back with a solution and it passes muster, it’ll get done,” adds Mittal.

“Within a year, Uday had shown that met-rics,” says Mittal. The end result of focusing on specific deliverables ensured the company managed its growth well within its means.

IN SERVICE WE BELIEVEFrom early on, Challu thought of the busi-ness as a technology business, rather than an outsourcing business—and, built it accord-ingly. There is a 20-member research and development team today whose only job is to stay ahead of the consumer’s problems.

“No one knew Steve Jobs was going to make an iPad. But the moment we knew he was on to something like that, we got on to the task of figuring out what possible issues its adoption would have amongst our sub-scribers,” says Dhar.

For more than four years now, Uday Challu’s life has revolved around his work. iYogi occupies much of his day—and his mind space, so much so that

it takes him “more than an hour” after reaching home to wind down enough to be able to go to sleep.

It’s not surprising then that his office is more than a place of work for him. It’s packed with personal belongings—whether it’s the gold fish that his daughter gifted him, or the huge painting of Ganesha that was a gift from his sister and now covers an entire wall of his 12 ft * 18 ft corner room.

There are the corks of champagne bottles that were opened at the office party last month, sitting pretty in a transparent glass vase. And, then, there’s the divine presence of the powers that be that Challu calls upon frequently—from the typical mandir hanging on the wall behind his desk to the nishan sahib, a long metal pole that is sacred to the Sikhs. In another corner are framed pho-tographs of ships from World War I that he bought for a friend. And, now intends to find the time to send to him.

There’s no missing the influence of Mahatma Gandhi on Challu. The enve-lopes, in which he packed the stock options awarded to employees, contains the Mahatma’s sketch along with his famous line: “Find purpose, means will follow”.

My Office, My Sanctuary

OUR STRENGTHThere are a number of things that have worked in iYogi’s favour so far. The most important, according to Challu, is the team he managed to put together.

When his team first came on board, each person came with different aspira-tions. “But once they came here, their individual moti-vations very quickly changed into a larger plat-form, a motivation that drives all of us together,” reasons Challu.

There might be some

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the best from them. We’ll continue to grow for a long time; we’ll need specialised skills. So developing those skills is important from our perspective.”

Challu’s problems don’t end with get-ting the right talent on board, though. Get-ting people to deliver on intent is something he’s already struggling with. “It’s only in India that you need to put a supervision layer and a quality layer on top of people. It drives our costs up—and it drives me crazy. Why can’t people simply do what they are paid to do? I’ve had to put a hierarchy in place—someone who will make sure that another person, who knows he has to do 10 things in an eight-hour shift, actually does those,” says Challu.

So far, he resisted having a HR practice in the company. After all, how hard can it be for college graduates to manage them-selves in an environment where all systems are automated? Well, as Challu’s discover-ing now, quite, it seems. “Some of the larger companies, like Genpact and IBM, have the same people problems, despite their superior HR practices. So, I am trying to manage this issue in completely different ways. I am going to create a methodology where if you want to work for say, four hours a day, you come and do just that.”

The company already has a strong learning and development function. “We constantly engage with the employees through My iYogi, our internal networking site for the employees. From the day they join, people know their career paths, including the options of cross-functional positions. And, we have minimum four weeks of training per employee; even higher for technicians,” says Deborah Steele, manager, HR, who hires nearly 500 people a month for iYogi. So far, the com-pany has managed to keep its attrition rates manageable due to these initiatives.

As iYogi puts its ambitious plans into action, it is bound to run into such prob-lems, some will be more manageable than others. But, as long as digital homes become a reality, and Android phones fight with those powered by Windows 7, and iPad gives birth to a new generation of tab-lets, Challu and Dhar will only get busier in the days that follow.

Adds Challu: “We have to remain ahead of technology, so whenever con-sumers buy something, we’re there with them to solve their problems. That’s our core capability. We have to be ready when that call comes.”

Another aspect that is unique to iYogi is its dependence on online marketing. Says Pradeep Chopra, co-founder, Digi-tal Vidya, an online mar-keting consulting company: “They have used search engine marketing really well.”

iYogi’s online market-ing has 200 people, up from four just a couple of years ago. “We’re one of the biggest spenders on Google AdWords from India,” says K.R. Sreejith, vice president, iYogi, who’s been with the firm for the past three years.

This team also creates content that helps customers solve some of the prob-lems on their own. “It’s not fair to ask someone to pay an annual subscription fee for something as small as changing the wall paper, or un-installing a program,” adds Sreejith. Such issues are solved through self-help videos that are put up online for convenience.

The company has also been quick to realise other channels of service. iYogi bun-dled its services with partners, such as McAfee, Dell, Avast and Wal-Mart, to gain a toe-hold into American households. Today, its sales come directly from global online marketing campaigns, as well as from its partnerships with retailers, OEMs, anti-virus companies and independent software vendors.

“When we offer our services free of cost, the customer gets to experience our ser-vice, and we get a chance to convert the customer into an annual iYogi subscriber,” says Ravi Neb, vice president, business ser-vices, iYogi. In the two years since the first partner programme was launched, these “non-direct marketing channels” have

grown to account for between 30 and 35 per cent of the company’s revenues.

IKE CHALLU, the business he runs is thinking far ahead of itself. iYogi’s open-ing its first service centre in Philippines this year. “Within six months, we should have a centre in Latin America,” adds Challu, who’s keen on the Middle East as well to cater to Arabic-speaking users.

Plans to launch the subscription ser-vice in India are already drawn. “By the end of the year, we will be a household name in India,” promises Challu. The company is also planning to launch field services by engaging 14,000 technicians

in North America in the next quarter to cater to the home and busi-ness segment.

Being a savvy businessman, Challu knows that finding the talent to feed his growing appetite might be difficult. So, he’s taken it upon himself to do something about that. “We’re launching an online certification programme for technology support and services; and we aim to train 250,000 peo-ple in the next three years,” he says.

Delivered online, the course will train people in tech support jobs, and make them available for employment in other industries, such as remote infrastructure support and technology support, as well.

Another skill that they’ve honed in-house, and now intend to market, is that of internet marketing, in which iYogi will offer another certification programme. “There is a huge shortage of people trained in internet marketing. But we’ve cracked it, so now we’ll teach others. It will be deliv-ered on video straight to the user’s laptop, and we will put people in mock situations, and bring elements of virtual plan into the training,” adds he.

Again, he displays the restlessness of a typical entrepreneur. Even before his bil-lion-dollar dream is reality, Challu’s look-ing at other “building blocks”. He justifies it with: “There’s a selfish reason. If I train 250,000 and iYogi needs 25,000, I can hire