The ‘boring’ way to build a billion-dollar company

Sharad Sanghi – the founder of NTT Netmagic

If you haven’t heard about this billion-dollar company from India, it was intentional. There are brands making a hue and cry about changing the world by building shopping apps. And others who make incremental changes to business models and pretend it is a whole new ballgame. There’s no need to take names, everyone knows the valuation game is the biggest championship in the world, played every day in boardrooms and investor offices. But the ones who solve massive technology infrastructure problems step by step bring about real change and lay the foundation for several businesses.  

Netmagic has been around since the late 90s. It is one of the most successful companies from India building data centres that essentially run parts of the internet economy. It’s not easy to explain what they do. It’s like the class explaining chemical reactions back in college. The professor speaks English but you have no idea what is being said. And you can mug up what’s necessary for answering the exams, vomit it and score high marks without having understood anything. A few get it. Exactly the way most of us go through life blissfully unaware of how technology has fundamentally changed our lives. We make calls from anywhere in the world. Mobile phone games don’t buffer. Emails and messages arrive every few minutes. Videos play with the stab of a finger. We make payments from our banks in just a few clicks. It’s just the way things are. Why bother about how it happens?

The internet’s exponential growth

Network effects. Pic courtesy: Network World

Let’s get the basics out of the way. The internet is a giant crucible of data created, stored, transmitted and served on request. Data is binary and represented by a series of zeroes and ones but it takes different forms and formats – documents, videos, photographs, games, records. And of course, ads. Those interrupters on every web page you never notice. But they have to be created, stored, transmitted and served from somewhere, right? You think it is the cloud, but what is the cloud, really?

Huge warehouses of connected servers hotter than most tandoori kitchens because an insane amount of requests and responses are zipping across every micro-second. When you click a post on Facebook or upload a video file, you may think it goes to YouTube. But where exactly, is Facebook or YouTube? Dispersed across those millions of buzzing servers. They are not in one ‘place’. That post you clicked or the video you uploaded is duplicated several times over so that it never disappears. And every time someone wants to read or watch, it is recalled and plays on their device. Or a laptop. Or a TV screen. 

The early years of the internet

Low speeds and connectivity

Without data centers, those gigabyte speeds at which streaming movies and maps are served would be impossible.  3G, 4G and now 5G networks could not have developed as fast as they have. Back in the 90s getting on to the net was the equivalent of getting to villages on bullock carts. It’s as if we moved from the stone age to the information age in a flash, given the speed at which the net has evolved. And most of it has got to do with the backend technology that manages the data in the most efficient way possible. And things are only going to get more complex from here on.

Data centers do not come cheap. Each one costs around Rs 700 – 850 crores (around $100-120 million) to build. And requires huge amounts of electricity to run. They have to withstand attacks from hackers every second of the day. Or cope with natural disasters and recover from floods, fires or earthquakes. Only the world’s biggest companies have scaled and survived in the business. Amazon. Google. Facebook, Microsoft. And an Indian company called Netmagic.

The Netmagic backstory

Netmagic is building world-class datacenters

Sharad Sanghi, the founder of Netmagic was a student at Columbia University back in the 80s. The professor he worked with built one of the first networks to connect the various departments and even the hospital. At that time, very few people knew about networking and the internet becoming a global phenomenon was at least a decade away. On a trip to India to attend a family wedding in 1995, he heard that the government had announced the launch of the commercial internet in India and Videsh Sanchar Nigam (VSNL) would no longer be the sole provider of internet access. He decided to pack his bags and move back to India.

It would take three more years for VSNL to formally open up private access and they faced several routing issues they did not have the expertise to solve. Sharad Sanghi offered to help and sorted things out. In turn, this led to several consulting projects. 

When private ISPs launched, they all targeted consumers because they believed that numbers and eyeballs were the metrics to build businesses and valuation. But Sanghi saw the opportunity for a company that would provide internet services for mission-critical enterprises and he found an investor who had precisely the same idea. The first ‘small’ data center cost Rs. 18 crores (about $2.5 million) and went live in Mumbai in the year 2000.

Consistency is critical – but not sexy

The backbone of tech infrastructure – Data Centers

It is clear that Sanghi had the perseverance and the skills to survive in a business that was still being defined in several ways. The dotcom bust of 2001 threatened them but they found ways to survive by providing value-added services like Dedicated Server Hosting, Firewall services, security, bandwidth, connectivity and storage solutions that cut costs for companies in manufacturing, telecom, and other process industries. They rode out the trough until data centers as a business came roaring back in 2006-7. Investment flowed in and the company was able to expand and build several data centers – one of the only companies in India which dominated the business.

It is hard to do – and few companies take up the job of solving major technological issues. It doesn’t make headlines, except when things go wrong. And you won’t find mainstream media waxing lyrical about Cloud companies and services because they are technological plumbing. Essential but tucked away behind obscure, hard to understand walls.

Netmagic has now been taken over by NTT Japan and Sharad Sanghi has gone from being an entrepreneur in the company to becoming an employee. Watch YourStory to find out how and why. He has built a billion-dollar company, made his investors happy and enriched his employees as well. 

Branding will help you stand out in a crowded field of me-too products and services. But if you’re one of a kind, you can be ‘boring’ and still make the big bucks.

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Author short bio: I head Ideascape, an agency that I started over 14 years ago. I have over 35 years of experience in building brands in businesses as different as fairness creams, cycles, HR services, hospitals, hospitality and project management.

We’re a boutique creative agency but we provide the full range of branding services in partnership with several associates in digital marketing, web development, and event management. This blog is a collection of my experiences and my point of view on marketing and advertising