He turned away from his first passion, teaching. But now, after succeeding with equity fund ChrysCapital, Ashish Dhawan is getting back to education
The truth is that when you have this going in your head, you don’t go around telling people. My friends know that even before I started ChrysCapital, I wanted to have a second career.
I had set a goal for myself that at age 30 I wanted to turn entrepreneur. And a few months before I turned 30, I quit to start ChrysCapital. My second goal was that by age 45, I wanted to have a career number two.
I have often spoken about this to the rest of the organisation; that I would leave someday. In the last couple of years we have created a more empowered organisation so this was the right time for me to leave.
We came and set up shop in Mittal Chambers, Mumbai back in 1999 and you know we were too ‘start-up’ at that point in time.
There was a lot of energy.
We worked very hard but with no direction. [At that time, 1999] there was no strategy we could figure out that would work; we sort of said let’s just be purely opportunistic and do everything. So the thing that was most exciting at that point in time, the Internet and BPO, consumed almost all our energy.
I’ll say for the first two years the Internet was a complete disaster, but it was a period of time before we could see an idea and in two days we could put out a term sheet and literally within 30 days we could be writing a cheque and get going.
And that’s how we funded Baazee and Jobsahead. We invested in the BPO space because Raman Roy, who founded Spectramind was leaving GE and we knew this space would open up. Obviously we were aware that Nasdaq had crashed in 2000 but we had a little bit of a delayed reaction here.
We didn’t realise that we were going to hell in a hand basket.
We had invested half a million dollars in Baazee which was set up by two Harvard Business School guys whom I knew. This was January 2000. In March 2000, we closed the second round five times our [Baazee’s] valuation. We closed the third round in May 2000 at 25 times our [Baazee’s] first round valuation.
Between January 2000 and May 2000 we had signed a deal at 25 times our initial valuation. We thought we were geniuses.
In June, I was in New York trying to bring in another investor in Jobsahead. I was with this guy from a very large fund, travelling in a Limo. I thought it was a done deal. Puneet [Dalmia] (founder of Jobsahead) had spoken at this fund’s annual conference.
And then this guy says: “The opportunity is very exciting but Ashish the world is cratering. We gotta walk away!”
That incident made me realise that maybe something is starting to turn.
We got seduced into dotcom and things came crashing down very, very quickly, but the problem is there was such a flurry of activity in that 12-month window that we did make multiple investments. And we made multiple mistakes also.
That was our darkest hour. It does impact morale. Many people had to decide: Do you want to do this or do you not want to do it. [Raj Kondur, co-founder of ChrysCapital, left in 2002].It was not clear that we were going to succeed, that things were going to work out. There was high stress.
The lesson I learnt is that you have to be good at spotting people and it’s important sometimes to just say, from a business stand point, “This is my focus.”
We had to quickly come out of the Internet and re-tool ourselves. Getting out of the Internet freed up our mindspace. We had a little churn but thereafter a more stable team. Having worked in a private equity as well as a hedge fund, one had developed the ability to look at themacro [picture].
So, in 2002-03 I got the organisation to step back and look at some of the debris around us. And take a little helicopter ride.
What areas were going to do well? Take something like construction. When we studied this industry, globally we realised there are 10-15 companies that win a disproportionate amount of business.
When NHAI [National Highways Authority of India] came up with its packages, the size of the orders was going to jump 10-fold and the guys who would qualify would be those who had raised money and had grown large. So, we thought eight to 10 companies would win disproportionate business. Fortunately, we were right.
When we sold Spectramind, people thought, “Chalo ek tukka lag gaya [it was a fluke].” But there were many that were hugely successful.
Yes Bank was one such. We came in at a ground level with Rana [Kapoor]. We did Shriram Transport finance. We were an early investor in Axis Bank. We did four construction companies, all of which did very well. So yes, we had luck, but we weren’t shooting darts either.
Now it turns out that some of the Internet investments too would have actually done okay. We were seed investors in Saffronart. We put a million bucks in a $5 million valuation and later got out. It secured an $80 million valuation three years ago. Jobsahead, we sold out to Monster. Jobsahead was almost neck-to-neck with Naukri at the time.
Look at what Naukri has become! Travel is taking off now but jobs was the first one. If we had just hung in there another three or four years...
I now want to take on a social cause. I got to know the education sector pretty well because I sat on the boards of not-for-profits in the education sector.
We have probably the worst K-12 education system in the world. The elite 5 percent to 10 percent gets a great education, for the bottom 50 percent, it is really bad. You can see it in the drop-out rates in the eight to 10th grades. As a country, you can go from being low income to middle income by increasing factor inputs.
So you increase investment rate as we have. You mobilise your already skilled labour, which IT companies and the likes of L&T are doing. You can get to $5,000 per capita this way. But to go to the high income bracket, you need to do something different.
I know of no country that has gone from being a middle income to high income without a well-educated work force. And two, you need good governance.
When I was younger, people used to talk about the Asian Tigers — Indonesia, Thailand, Malaysia, South Korea, Philippines. India wasn’t even mentioned. We know which of the tigers succeeded. Look at where South Korea is and where Indonesia is. What’s the difference? South Korea has one of the best education systems in the world. And good governance as well. That, for me, was the biggest economic lesson.
The best thing is that I enjoy teaching. I was a reasonably good student and our principal had this thing where he would pick the top five students and ask them to go teach a class and he would have teachers observe these kids when they taught a class.
And I won the ‘best teacher’ prize for taking a class on math — how to make math fun. This was at St. James in Kolkata and our headmaster was John Mason (he ended up being headmaster at Doon School later).
I really enjoyed teaching and mentioned this to my mum. She went and spoke to the math teacher behind my back. She got my teacher to convince me to get the idea of being a math teacher out of my head.
My teacher came to me and said, “Look at me, I am carrying a jhola. You will end up like me!” My mum brainwashed me!
And later, when I was in investment banking in New York, I taught at Harlem. My firm offered a programme where, as a kid on Wall Street, you could sign up.
So, I taught a class in math and economics — the first class of the morning — to sixth-graders.
My biggest insight was that you have to make the topic interesting. I would pick a company like Nike or McDonalds and then teach math and economics through these names that kids were interested in.
And now I teach my own kids, but it is easier to teach other people’s kids — they listen to you a bit more!
(As told to Shishir Prasad)