Widely regarded among Indian-American entrepreneurs as the smartest venture capitalist in Southern California, Ravin Agrawal is respected for his operating industry experience as well as his efforts to reach out to the local South Asian community.
A Partner at Los Angeles-based EastWest VentureGroup, Ravin Agrawal was born in the U.S. but spent every summer in Calcutta, India where most of his extended family lived. He has taken an unusual career path, eschewing the comfort of Northern California’s Sand Hill Road (home to most traditional venture investors) to work right on the edge of the entertainment business both geographically and figuratively.
INDIA IS HOME
Having worked at the New York office of global consultants McKinsey and Company, Agrawal moved to India days after he completed his MBA from the Harvard Business School in 1995. It is rare to see someone of Indian origin who was born in the USA to migrate to India and Agrawal expected to spend no more than 12 months there.
“India was newly deregulated and I was keen to get experience working and living in India. Through my family, we founded and built a networking consultancy that has since become one of the largest regional Compaq resellers in India, located in Calcutta and Bangalore. I learned how to manage cash flow and to grow and mentor a youthful workforce. We expanded into web-development and soon had 150 customers. These were the early days of the growth of the web: we began when Mosaic was still the dominant Internet browser.” The thrill of being a pioneer still rings fresh in his voice as we talk in the seventh floor conference room overlooking a sun-washed Westwood Boulevard.
The excitement of being an entrepreneur kept Agrawal in India for two full years and he became well-known for promoting the commercial promise of Internet in speeches delivered nationwide.
RETURN OF THE NATIVE
In 1997 he started again at McKinsey in New York but he was sure he would return to the world of startup companies. Agrawal became familiar with the potential and the power of digital media while working at McKinsey. Digital Media encompasses the transition of audio, video, voice, text, and images from physical or analog means to digital methods and the Internet is only one of many digital media.
As it turns out he has chosen a career where he gets to work with multiple startups.
“I liked the offer from the East West VentureGroup. They were a new fund, off the beaten track from Sand Hill Road (where most of the storied California venture firms are located) and I get to focus on Digital Media.”
Asked about the choice of location, Agrawal explains, “The distance from Northern California helps me keep perspective and avoid the herd mentality that led very smart people up there to make some very stupid investments. The people I meet outside the office are more like the rest of America: I can talk to defense companies and entertainment companies whose management are likely to be customers for the products that my portfolio companies sell.”
Most venture capitalists expect no more than 25% of their investments to do really well and when asked which venture investments, he feels most proud of, he says: “Internap is a Seattle-based company that came to us with a ingenious solution to a widespread problem. We were impressed with the articulate and the prophetic vision offered by the management team. They offer Global 1000 customers a way to transfer data using the low-cost public Internet but with the reliability associated with Plain Old Telephone Service or POTS.” Internap is now a very successful public company (Nasdaq: INAP) with sales of $105 million per year. Agrawal invested in them because of the management team but also because they were assured of a large and growing market.
“Another great example, one where the story is still being written, since they are still private, is Zone Labs located in San Francisco. This brilliant but somewhat quirky management team had been turned down by many Silicon Valley investors.” Agrawal is animated as he describes them. The engineers at Zone Labs wanted to help make corporate personal computers more secure from intruders, known as hackers. Most large companies install expensive complicated security software and hardware called a “firewall” at the point where the corporate network connects to the public network. The engineers at Zone built an alternative software method where protection is provided to each individual computer—among other benefits, this is much better at protecting offsite machines used by field personnel. Agrawal was the lone voice in favor of this company and their success in the market so far has vindicated his ability to call a winner.
ADVICE FOR THE UNEMPLOYED
He talked about the special challenges facing the thousands recently arrived Indian software professionals who find themselves suddenly unemployed with the current downturn. “There are certain sectors that will recover more quickly and grow fast. Anything connected with IT security and especially enterprise security is a good bet. I am also hopeful that the storage industry—Storage Area Networks and Network Attached Storage—will see an upturn sooner that other businesses.”
I tried to tempt Agrawal into comparing the entertainment industry with the software industry and the venture capital business and he chuckled, “Look, our Founding Partner, Merv Adelson brought the hit shows Dallas and FalconCrest to the public and my firm’s heritage is steeped in success from the entertainment business.” Merv Adelson was founder and CEO of Lorimar Telepictures, which he sold to what is now AOL Time Warner. “We have been inoculated from the sex appeal and sizzle of the entertainment business and so we will not invest in ‘content.’ We are specialists focused on the infrastructure around convergence in entertainment and other digital media, but we will not fund a show or movie, online or not.
Agrawal added, “Software companies have ongoing operations, and objective measures of success or failure; entertainment production is usually very emotional and subjective and it is hard to setup objective metrics on content creation. The one sector that might be an exception is the Video Game business which is really entertainment but can look a lot like software development.”
“I am a big booster of the Los Angeles area.” he exclaimed when I asked him about prospects of the Southland. “My wife and I love going to the movies and to the beach and we are glad to have chosen Southern California as the place to live.”
Gunjan Bagla is a technology entrepreneur based in Culver City, California. He presently advises technology companies on how to grow sales using smart marketing. [email protected].