Just Inspiring - Hardeep Singh Bedi

Hardeep Singh Bedi served in the Indian Army for 22 years before he set out to start his own company. Tulip started as a software company in 1992, with four employees and a seed capital of Rs. 4 lakh. It rose to become one of the biggest network connectivity players in the industry. The company has a turnover of Rs. 1242.14 crore (USD 310.73 million) for FY 2008 and an employee strength of over 2,100.

Lt. Col. (Retd.) H.S. Bedi, VSM TULIP TELECOM

From the armed forces to selling software to telecom services; how come?

Well, it has been interesting and adventurous. Of course, there were lots of ups and downs too.

The fact is that the army has been a great place and I have had some of my best times serving there. I would say that the army makes one a much better person. However, there is a stage when you realize that it is not just the organization where you can grow enough, or perhaps the army does not even need you. At that stage, one needs to take a decision as to what should be done next. With me, this happened after serving for 22 years. This is when I realized that there were not enough vacancies for people to grow. So the first step towards entrepreneurship happened with my decision to quit the army.

Even the decision to become an entrepreneur did not come that suddenly. Before I quit the army, I had to decide on whether I should take up a job or start a business of my own. For me, the army was a great place to be in a job role. But if I had to do something great with my life, I knew entrepreneurship was the better choice.

[Tulip Telecom] was originally started by one of my cousins and my brother-in-law in 1992. I joined them in 1994. Thereafter, we started out selling software products, got into hardware, then networking, followed by telecom, wireless, and now Virtual Private Networking (VPN).

Did you always want to be an entrepreneur?

The thought of entrepreneurship came to me around 1986. I was posted as an instructor in the computer wing at Military College of Telecom and Engineering (MCTE) then. I used to interact with a lot of businesses for arrangement of student training programs. This is when I started to have a genuine interest in entrepreneurship. However, I was also considering the fact that if one leaves the army after a span of 20 years then he becomes a pensioner. I knew that leaving after having put around 15 years in the army, without any security to go forward, would not have been the best decision. Hence, I waited till I completed 20 years of service. Around 1989, I decided to move on the next level in my life, and in 1990 I put that thought into action.

How do you know an opportunity when you see one?

The only way to spot an opportunity is by constantly innovating. Whenever you are doing a business that is going steady, you should constantly experiment in multiple lines of businesses. You see opportunities as you grow, and as you see an opportunity you keep experimenting. Some of these may take off, while some may fail. I believe that just being steady does not move you forward; life is all about innovating and trying new areas of business. It has been in my very nature to keep doing something new in my life.

You have ridden on bank funding quite a bit. Can you share your experience with us?

Initially most startups do rely on bank funding. When you start up, normally your idea is not mature enough for an angel to invest in you — they prefer to see some success in business first. As a startup, you would typically put in Rs 100 from your pocket and expect the bank to give you a loan of Rs 200. With this Rs 300, you get started, and once the business tastes success, the investors come into picture.

At this stage, the question is, “How much of equity do I want to let go?” As a tendency, startups typically go for as much fund as possible, not really bothering about the equity they are letting go in return. I believe one should restrict the amount of equity that one gives away. The focus should be more on getting maximum debt. So that whatever money you need, you have 50 percent more than that available for you to play around. I would say, try and have maximum of that from bank funding so that you conserve the equity. Rather than throwing your equity away on day one, save it for the time when the business grows, as this is when you will need your equity more than ever. But then, if your business is just starting, giving equity does add some credibility. It is all about getting the balance right. I believe that if you are sure about your business, go only for funding that you actually need, while trying to get maximum of debt, and retaining your equity till as late as possible.

Any advice for aspiring entrepreneurs while approaching a bank for business loans?

Banks go by the documents that you present. It is very important that you have the right people helping you with the business plan, presentation for the bank and also other documentation. There is nothing wrong in getting professional help in doing all this. It is crucial to get good advice and have the right representation when you approach the bank. Normally, approaching the bank for a business loan is taken very casually and people do not approach them in a professional manner. You should know that the bank goes by proper documentations.

What were the different personal stages that you had in Tulip’s growth?

At first, I was one of the directors in the company. In 1997, I bought out the company and since then I have been CEO. It has only been some time since I gave up that position and appointed Sudhir Narang from Cisco as CEO.

I have always introspected myself as CEO as well as the owner of the company. There is a difference in both these roles. As a professional CEO, you are not putting money where your mouth is. As an owner-CEO you are doing just the opposite and know that if you are right, you win — you gain the money; if you are wrong, you lose — you lose the money. I believe that if a person has confidence in his own business, he can balance these two roles just fine.

What personal challenges did you face in these stages?

I have a very great family who are really supportive. My wife, Maninder Bedi, is also working. Hence, half the day goes in our respective jobs, which leaves us with half the day to spend together. Our children joined the business immediately after their studies. My son, Deepinder Bedi (Director, International Business and Marketing) has been in the company since last five to six years. My daughter, Sukhmani Bedi (Director, North America)has been around for three years now. The children have had their share of work experience outside Tulip and are now pretty much hands-on with the business. Hence, at a personal level there were no big challenges, thanks to the support from my family.

The one real challenge was at the time when I bought out the company. There were cash flow problems. In the initial phase, changes happened fast, and we did go through a rough time. The fact is that businesses never go upwards in a linear fashion; there are ups and downs in a manner of a curve. As long as one understands this, he is prepared to manage the downturns. How does one prepare for downturns in business? You need to have multiple product lines for this purpose. Because, if you are dependent on only one line of business and that goes down, you are in trouble. If you keep experimenting and innovating in newer areas, it will definitely sustain you through rough patches.

At what stage did you stop being hands-on in operational roles?

I have never actually taken my hands off it. I have always remained personally involved. But yes, at a stage when I feel confident that the person heading that role is able to move at my speed to deliver as per my requirement, I do reduce my attention in that direction. My degree of involvement may change based on the person's performance.

The ideal scenario to find the right person to handle the operational role is promoting people who have been proving themselves in that line. This, of course, is the easy way. The problem comes when you hire new senior people, because these people may not necessarily perform the way you expect them to. So, one has to be very clear as to what the expected deliverables are. If they do not deliver as per requirement, opportunities should be given to other people in the organization who are worthy of that role.

Where did you get your early support from?

My family has always been there. Besides them, initially the four employees who were with the company were a major part of the business and their support helped me a lot. It has been 16 years now, and there are around 15 people who have been with us for 10 to 12 years now.

What was your first big success?

Around 1999, Tulip had just got into the wireless business as we saw tremendous potential in that area. We were looking for a big order and we got one from a bank. In 1999, we were able to connect a bank across multiple states wirelessly. This became our first and one of our biggest successes.

One failure that you learned from?

The biggest failure was that I was not able to get a good bank right in the beginning, due to the lack of understanding of the banking system. I was stuck with that bank for almost five years, which did not really support growing my business. That was probably the worst time that I went through.

For the aspiring entrepreneur who go for bank loans, the right thing to do is to change banks as soon as possible. He should also get the right people to advice him on generating finances at the right time. Do not sit on one single bank for a long time. One needs to understand that business is a race between two horses. One is the running horse (revenue), and the other one is the eating horse (expenses). The horse moving faster dictates where the business is heading. One needs to make sure that the running horse stays ahead.

Your biggest faith came from?

The faith shown by my large customers — both were banks. I convinced them of my new line of business i.e. to provide connectivity to banks across the country. Their acceptance and understanding of our business model meant a lot. After having done that for one bank, a second bank started following the same line. As a result, our business really took off and that was the turning point.

When and how did you know you were ready to go public?

I think it was around mid-2005. We had done this project in Malappuram district for the government of Kerala, after which we thought that we had a very good idea in motion. We wanted to do similar things in other places. We did a similar network in Mumbai and some other locations. We were sure that this could be a really good business. Then I started going around to generate funds for it. I went and met all the large funds. Every fund said that while they liked the business, they did not understand it. Hence, none of them invested in my venture. Finally, when I did get approval from a couple of funds, I realized that it was taking too long. Hence, I decided to go for an IPO.

How will the current financial slowdown affect your business? Any countermeasures?

As things stand, it appears that the companies are likely to cut down on their Capital Expenditure (CAPEX) and some deduction of Operating Expenses (OPEX). As a part of our overall business strategy, we are reducing the network integration part of our business, which is what companies need CAPEX for. As far as OPEX is concerned, with the whole lot of fiber that we are doing, we have suddenly increased the addressable market by almost 550 percent.

The financial slowdown may reduce the spending of some customers. For not get effected by this, we have realigned our business in such a way that: one, in case of the CAPEX slowdown, we plan to reduce sales in the trading and equipment business; and two, in order to make sure that the slowdown does not effect our core business i.e. the bandwidth business, we have restructured our business to increase our overall business by 550 percent. Therefore, we do not see a slowdown, but an increase in the business instead.

SUCCESS MANTRAS New ideas or doing things differently will help you do well. Constantly innovate and look at new lines of business. Keep your mind open for new ideas. Listen to people around you. You will be able to pick ideas from the vaguest of places. Convert those ideas into actionable items. You need to be in a niche.

BFSI, defense, government, and telecommunication, how is your experience of working with various industries?

All these industries are good. Our experience of working with the private sector has been very good, but with the government sector, it has not been the best. There is a lack of respect for the money of vendors in government organizations.

Businesses like ours works on very tight budgets. We like to implement projects very quickly, and we need to get our money out quickly, as we are paying finance costs. It is our investors’ money that we are putting on the table while implementing projects with the government. In the bandwidth business, we are very happy with government organizations and we continue to work with them. The problem area is hardware and network integration where the payments get held up. This delay adversely affects the profitability of these projects, and as a result affects the margin of returns that we can give to our investors. This is not desirable by for business.

What is the next big thing in the area of data connectivity?

In the field of data connectivity we expect to see more players coming in and a tremendous growth thereby. This growth will come from greater coverage of network. So far, network has been restricted to the top eight to ten cities. As it starts moving to the interiors of the country, more and more parts will keep getting covered.

Banks go by the documents that you present. It is very important that you have the right people helping you with the business plan, presentation for the bank and other documentation.

The point is that the government needs infrastructure to deliver services. This infrastructure can be in the form of road, water or data connectivity. Data connectivity is a fundamental infrastructure for delivering services today. Going forward, as companies like ours expand, the ability of organizations to deliver better services in other parts of the country will improve.

You intend to reach out to every village in the country. What are the milestones set?

As a prudent businessman, it is not that we first make the expenses and then look for customers. We first get the business and then make the expenses. Having said that, we are now looking for orders. There are some states for which we have got orders. As the orders keep coming, we will start rolling out the network to cover every village.

Therefore, we do not set any milestone. The milestone is basically to pick up the orders. Our aim is to reach every village within two years, but that depends on us to be able to pick up the orders. The point is that we are willing to make the investments to reach out, but now it is for the government and business organizations to see whether they need services there. If it becomes profitable, then we will go there.

How much personal time do you get? How do you spend it?

Honestly speaking, I only get my Sundays off. What do I do on that one day? I spend the day in bed [laughs]. I lie there all day watching television and movies. My wife has no choice, because she has to share the bed with me [laughs]. The children bear with me as long as they can.

To be honest further, these days my lifestyle has changed quite a bit. I believe that there are different stages in a man’s life. I believe that this is the stage for me to create an organization. I want this organization to be something that a person would dream of to make in such a short time. The fact is that I have actually felt an increased sense of success in this organization since January 2006. My aim is that in the next ten years, I would like to make this company really big. Now is the time for me to do all this.