Bullish on India - Company Business and Marketing

Industry Standard, The, Sept 4, 2000 by Daniel Akst

Few things sound crazier than launching an online stock brokerage in one of the world's poorest countries. But considering India's rapid economic growth, technical savvy and recent dot-com explosion, Indiabulls.com stands a fighting chance.

India immediately immerses you in its sorrows. On the route from the international airport to central Mumbai one glimpses through the taxi window an endless corridor of wretched shanties. In this milieu you can't miss the billboards. They are all over Mumbai (which English-speaking Indians still call Bombay) and New Delhi, looming in surreal smugness above the misery below. "Will the Internet learning revolution leave you behind?" asks one near Mumbai's dhobi ghat, a vast sun-baked laundry where thousands of men eke out a living pounding wet clothing against open-air troughs. "Pay your bills any time of the day or night," says another. They might as well advertise shoes to the legless. A third ad offers to book airline tickets online, while a fourth promises to deliver up-to-the-minute cricket scores -- wirelessly.

Like so much of the world, India is in the throes of dot-com mania. But against the backdrop of the country's poverty and overpopulation it seems hallucinatory at times. Nevertheless, dot-com fever is one of the many advantages young Sameer Gehlaut enjoys as he wraps a couple of Indian executives from GE Capital around his little finger. His visitors ought to have the edger; they look a little older, they work for one of the world's richest and most esteemed multinationals, and they are visiting Gehlaut in a flyblown garret overlooking Delhi's colonial-era Connaught Circus. This is the office Gehlaut and his two co-conspirators share for their fledging online brokerage company, Indiabulls.com, and like so many offices in India, it's a dump. Wires hang from a switch on the wall. The sofa is pathetic. But the decor seems to have no impact on the men from GE, who take Gehlaut and his audacious goal seriously. "We are setting up the country's premier retail financial services company," the Indiabulls chief execut ive says without batting an eye. "Our aim is to be the Charles Schwab of India."

For three Indians in their twenties to proclaim an Internet personal-finance revolution is more than audacious. It seems, at first blush, practically insane. India barely has 20 million telephone lines for its 1 billion souls, and the country's vaunted information technology sector still accounts for just 1 percent of its gross domestic product. India would have ranked dead last on the 55-nation World Times/IDC Information society Index (a measure of 23 variables ranging form PC ownership to secondary school enrollment) had not Pakistan obligingly finished just a few points lower.

Even more astonishing, Gehlaut and has young partners at Indiabulls aren't the only ones making big dot-com promises. Internet ventures are springing up all over this vast country -- some 2,000 during the past year alone, according to Samar Halarnkar, general manager of content at media portal India Today Group Online. And many of them probably have as much staying power as unrefrigerated milk on a Delhi windowsill in the summer. Eager capital "has produced a profusion of forest-floor mushroom dot-coms that will shrivel with the first dry season," Halarnkar wrote recently in India Today magazine. Citing a new study from credit-rating agency ICRA in Mumbai, he added: "In five years' time, only 20 Indian dot-coms will survive."

The guys at Indiabulls have been adept at convincing investors and others that it will be one of the firms left standing. "I like the company a lot," says Mir Arif of New York venture capital firm GlobalNet Management. Arif grilled the entire Indiabulls management team, from top to bottom, during a due diligence visit in June. "It is a first mover in [the online stock brokerage] industry and one of the best-suited for online implementation in a country that holds tremendous growth potential, both in terms of online users and the overall brokerage market."

Like so many Indian dot-com startups, Indiabulls was founded by worldly and well-educated young people who just a few years ago would have settled in Silicon Valley to join other Indian nationals making a name for themselves. Indian technical and managerial talent still flows to the States and other countries as far as Finland, but all of a sudden exciting opportunities are available at home. And talented people are finally starting to flow back, bringing with them the schooling, skills, contacts and, most of all, attitudes that they've acquired abroad.

Indian nationals come home for a variety of reasons: love of family and country, sure, but also, surprisingly, for the great opportunities they see in their homeland -- just the kind of opportunities they used to seek abroad. In America, the Internet is jammed with ventures of every kind, many of them seemingly condemned to a Pyrrhic struggle for dominance above profit. In India, the field is wide open. Young Indians with American MBAs can come back and still hope to start the Yahoo or eBay or, yes, even the Charles Schwab of India.