In this series, Sramana Mitra shares chapters from her book Vision India 2020, written to inspire entrepreneurs by sharing 45 interesting ideas for start-up companies with the potential to become billion-dollar enterprises either by focusing on the massive market opportunity in India, or by leveraging India as a development center catering to global customers. These articles are written as business fiction, as if we’re in 2020, reflecting back on building these businesses over the previous decade. We hope to spark ideas for building successful start-ups of your own. Feel free take any of these ideas, develop them, morph them, and if you need help, you can reach out to Sramana and the 1M/1M team.
In 2008, the labor arbitrage – based IT services industry, which had staked India’s place in the global technology market, was facing a dire threat. The supply-demand equilibrium was failing. India’s engineering education system simply could not keep up with the demand for talent. And in what talent it did supply, quality was quickly becoming an issue.
Engineering schools below the top tier (IIT, IISC, and a few others) were struggling to retain, let alone recruit faculty. Multinational companies were dangling lucrative, foreign job offers in front of anyone who knew engineering. Shuffling out to teach in an unknown engineering college at the end of a dirt road was out of the question.
Susan Hockfield was then the president of Massachusetts Institute of Technology. MIT had taken a leadership role in the OpenCourseWare (OCW) movement, posting every faculty lecture online, accessible to anybody in the world, anywhere in the world.
I had been on the advisory board of the MIT India program for several years before that and had a chance to think about MIT’s India strategy. In its earlier incarnation, MIT India was a relatively low-key program, sending students as interns to be placed at various Indian companies to gain experience working in one of the two most quickly emerging economies in the world. I was not happy with the strategy of the program and had, on numerous occasions, expressed my discontent, always emphasizing that we could and should be doing a great deal more. But push as I did, I could not bring my ideas to fruition.
So, I decided to implement the MIT India strategy I had in mind as a for-profit, private company to train engineers in India.
It took a great deal of lobbying up and down the MIT management chain to convince Dr. Hockfield to take equity in the company on behalf of MIT, and even more before she let us do the project under the MIT India brand, leveraging OCW content. We would, it was understood, only grant certificates, not MIT degrees. Nonetheless, the resistance was strong since the MIT brand was a hyper-sensitive issue amongst the institute’s administrators.
Gradually, I managed to enlist the support of a great many of the Indian faculty at the institute, starting with Anant Agarwal, whom I had worked with as a graduate student a decade earlier. With Anant’s support I began to bring other faculty into the fold, including the legendary Arvind, Sanjoy Mitter, Anantha Chandrakasan, Srinivas Devadas, and Madhu Sudan at the department of electrical engineering and computer science, Senthil Todadri in physics, Mriganka Sur and Pawan Sinha in brain and cognitive sciences, and Abhijit Banerjee in economics. They, in turn, helped me convince Dr. Hockfield that MIT’s approach to India needed a grand rethinking.
Beyond this faculty support, there were three other levers that I pushed in this process. First, the MIT alumni had no shortage of highly successful Indian entrepreneurs, including Vivek Ranadive, founder of TIBCO, Suhas Patil, founder of Cirrus Logic, Amar Bose, founder of Bose Corporation, and the list went on. The idea of making a dramatic impact on India’s engineering education by leveraging the MIT teaching methodology and OCW content resonated with all of them, and as major contributors to MIT’s endowment, they had their own ways of persuading the president.
Secondly, for early stage investors, I solicited venture capitalists who were also influential MIT alumni. Mark Gorenberg of Hummer Winblad, Gus Tai of Trinity Ventures, Lip Bu Tan of Walden, and Brian Jacobs of Emergence Capital each saw the potential of building a sizable venture based on the idea, and brought their firms, and their immense negotiating leverage, to the venture.
Finally, I approached my contacts in the Indian political arena to complete the onslaught of persuasion. Dr. Manmohan Singh himself led the effort, with Mr. Somnath Chatterji, then speaker of the Lok Sabha, and an old family friend who had helped me get DAIS off the ground in 1995, moving every chess piece necessary to offer the project a real chance.
Dr. Hockfield, with input from faculty, from a wide range of alumni, and enthusiastic invitations and incentives from the Indian government, began to see clearly the scope for making a tremendous multi-generational impact on India’s education. She could not resist.
When we launched MIT India in 2010, we were handsomely financed by contracts from Intel, Cadence, Autodesk, Tata Motors, and IBM. In addition, companies like Cadence and Autodesk donated CAD tools over which our engineering students sweated. Intel Capital became an investor in the venture and negotiated the deal with Intel’s India management. Beyond this, we worked with the extensive rolodex of our investors, board members, and government associates. Besides, Dr. Hockfield, once on board, became our most enthusiastic champion, contacting every single major engineering company operating in India on our behalf.
Our model was simple. We worked directly with major corporations interested in hiring trained engineers. Our customers, thus, were companies, not students or parents.
To the youth of India, though, we brought yet another value proposition: not only training, but guaranteed, high-caliber jobs. To begin this process, we created a comprehensive talent scouting program to recruit students from across 5,000 high schools using an effective PR campaign that asked teachers to nominate their top students on our Web site. Each year, millions of students took the IIT entrance exams, and only a small number gained admission. Many of those left behind, and many others whose family financial constraints required them to find jobs immediately, their academic potential notwithstanding, were perfectly qualified, and we managed to attract thousands of them into our program.
These students, upon acceptance into the MIT India program, were guaranteed a job at the sponsor company for which we trained them. For example, Tata Motors had us train mechanical engineers, while Intel had us train chip designers.
The course load and schedule was intense, broken into three trimesters of four courses each, covering 24 courses in two years. Forget about summer vacation; we ran one-month breaks after each course. Each curriculum was custom designed for a specific sponsor, and sponsors could request interdisciplinary courses for a set of students in a batch (or batch after batch). For example, Genetech could ask for a computer science and biology cross-course, which would cover, per trimester, two biology and two CS courses.
Throughout the two-year period, we sprinkled in “live” project work to familiarize students with real-world problems. For example, in a VLSI design program, one of the courses required teams of three to four students to design an actual chip. In mechanical engineering, students were designing novel versions of green transportation, drawing from the likes of the Segway, the Indian auto-rickshaw, and the Thai tuk-tuk.
We built six centers in our first year. Each housed 500 students, aligned specifically with one of our sponsors. The campuses were geographically dispersed – expanding far beyond Bangalore, which was already bursting at the seams. IBM’s center was in Kolkata, Tata Motors in Thane, Cadence and Autodesk in Indore, Texas Instruments in Jodhpur, and Intel in Bolpur.
One of the biggest challenges of this venture was recruiting the right faculty. I tried to address this up front by launching the venture under the MIT brand, which certainly helped. But the salaries, which were competitive to those at MNCs, also played a major role in recruiting talented engineers who were passionate about teaching.
We tried to work with Infosys, Wipro, and the Indian majors as well, but we quickly learnt that they had the classic NIH (not-invented-here) syndrome. Banking on the idea that their training capabilities were as solid as ours, they clearly underestimated the quality of our faculty and the power of following closely the MIT curriculum. For our part, we initially segmented our target market to the multinationals, focusing on companies like TI, IBM, Accenture, Cadence, Autodesk, Intel, Microsoft, and thus, setting aside Indian companies unless they contacted us. By 2015, however, they were all working with us.
As batches of students finished our two-year intensive program, we renewed our contracts with sponsors, recruited new sponsors, and opened new centers all over India. These contracts were extremely lucrative for us – we charged Rs. 6 lakhs ($12,000) per student at Rs. 1 lakh ($2,000) per trimester. We operated in a technology-enabled services business model where sponsors could simply log into our Web site and request how many students they needed each year. It allowed us to finance great infrastructure, afford and attract quality faculty, and address the engineering education crisis that India was facing.
Among our many opening decisions we made a few key strategic choices making it possible for us to build the $3 billion–a-year company we have today. First, we framed the engineering education problem as a corporate problem where more talent was essential, and we asked that they pay for a quality solution. They did. Second, we did not allow compensation to be a deterrent for hiring talented faculty. To the contrary, those with a passion for teaching could happily choose an academic career. Finally, we chose the MIT brand umbrella, gaining instant credibility among sponsors, faculty, and students.
In 2020, an MIT India center in Indore or Jamshedpur is a thriving, colorful campus where cutting-edge innovation in science and engineering is hotly discussed. Students stream in and out of labs, dreaming of a new material to advance the semiconductor industry, or a new drug to wipe Alzheimer’s from the face of the earth.
Perhaps our greatest accomplishment has been to inculcate MIT’s ethos of curiosity and innovation into the minds and hearts of our graduates, creating one of the most powerful engineering workforces in the world. And one that can not only build, but can also invent.
