Video
Summary/Key Takeaways
Arjun Malhotra’s career journey: From studying at IIT Khadakpur in India to cofounding HCL, and later Techspan and Headstrong followed by Chairmanship Magic Software and other board positions to winning the Einstein Medal highlights the importance of curiosity, perseverance, overcoming external limitations, learning, and seizing opportunities.
Overcoming Obstacles: Malhotra faced significant hurdles, including government restrictions and limited resources, in establishing HCL. He emphasizes the importance of perseverance and adaptability in navigating challenging circumstances.
Innovation and Adaptation: HCL consistently innovated, developing unique products and adapting to changing market conditions, such as the limitations imposed by the Indian government. This highlights the importance of flexibility and a focus on customer needs.
Sales and Marketing Prowess: Malhotra's background in sales and marketing played a crucial role in HCL's early success. He emphasizes the importance of understanding customer needs and building strong relationships.
Social Impact: Malhotra is driven by a desire to create positive social impact, particularly in education and healthcare. He believes technology especially AI can play a vital role in addressing critical societal challenges.
Importance of Passion and Purpose: Malhotra stresses the importance of pursuing passions and aligning business goals with a higher purpose.
He believes that individuals who are driven by a sense of purpose are more likely to achieve long-term success and fulfillment.
Full Transcript
Piyush: Digital agenda is all about data analytics cloud. AML and emerging technologies that are transforming not only companies but also entire industries and even our life. Hi, my name is Piyush Malik, a curious mind who wears and juggles multiple hats as an engineer, management consultant, practitioner, a builder, a thought leader, entrepreneur, and a C suite executive.
Today, my guest is Arjun Malhotra.
Arjun Malhotra is an Indian entrepreneur, industrialist, and a philanthropist. In 1975, He co-founded its e group where he served as Vice Chairman. He also founded Tech Span and served as its CEO. And when the two companies tech Span and Headstrong merged, he served as its CEO as well. He is on the board of governance of prestigious institutions, including our foundation, Indian School of Business.And IIM Shillong. IIM Udaipur. The Doon School and so on and so forth. He holds a Bachelor of Technology from IIT Kharagpur and he was honoured with the Doctor of Science degree and named Life Fellow of IIT Kharagpur. He also won the Einstein medal way back in 2001.
Hello, hello, hello. Today we have an incredible guest, Mr.Arjun Malhotra, who I have known from, guess what? Ever since I started my professional career, my first employment letter was offered by, signed by him through his company HCL. He was the co founder of HCL. And since then, he's gone on to found several other companies and he's a stalwart of the technology industry.
Today, you will hear about certain aspects of his life and his thoughts you may not have seen before. So with that, welcome Arjun.
Arjun Malhotra : Thank you. Thank you for that very kind introduction and you must be good if we gave you an appointment letter for me.
Piyush: Well, Absolutely. And the only reason I did not take it up was it was in Kanpur and there were other things as well, which you and I have talked a few years back, but I'm so glad that finally you are here on the show.
And this is our, my season number three doing this. I'm not a regular podcaster. I do this on the side to inspire the youth and the folks who come in my ambit and I want to make sure they know about the incredible people who are in the industry. So with that just curious about your journey from IIT in India to here and what was that about to for, for the people who are curious, how an immigrant can have an impact on the U. S. economy.
Arjun Malhotra: So I have a slightly different route than most people from IIT, who came here to do their master's and PhD and, you know, graduate school. I was supposed to come here for graduate school. That's what most IITians in my time were looking at. I decided to stay back in India for very personal reason.
I had decided who I wanted to get married and I just thought that making her wait for seven years till I got my PhD, got a job and went back would be putting too much pressure on her. Because the family likes you to get married when you're a certain age and I figured I at least I checked with my to be father in law at that time and he obviously said I can't get my daughter married to someone who doesn't have a confirmed job.
Okay. So I, I, I had only applied for one job. Fortunately, I got it. I joined DCM, Delhi Cloth and Gentleman's Company Limited as a senior management training. And got confirmed in a year and got married 15 days after that. Wow. What happened was DCM decided to get into electronics and I must have been one of the few, if not the only electronics engineer in the company.
So I got called by the big boss, the executive director. And he told me that you're either going to head in this new division, you're either going to head sales and marketing, or you're going to head R& D and production. Now think of this, one year out of college, you're in the fourth largest private sector company in India by revenue.
And they're asking you to head one part of a division.
Incredible.
I told myself, you know, where am I going to get an opportunity like this? So they did find someone from Indian Telephone Industries to look after production. They got a PhD from IIT Delhi and Tokyo University to look after R& D. So I was given the responsibility of the field, sales, marketing, and maintenance.
And, you know, I had to buy a Kottler to see what is this thing called marketing? Because, you know, obviously we don't do that.
Piyush: The four Ps of marketing, huh?
Arjun Malhotra: And basically that was it. I, you know, it was exciting. I did that for four years. And I kept my admission open at Stanford. And then they said, you've got to reapply for your GRE.
I said, look, I'm not going to do that again. So that was, in any case, by that time we had we had progressed a lot from electronic calculators. And basically the model was simple. We made calculators off a standard chipset. We just did a really good design. We used plated through hole. PCBs at that time, gold plated connectors, used ABS molded cabinets, a competition used high impact polystyrene cabinets, they used single sided PCBs so our machine was more reliable.
And with our overheads, obviously more expensive, and, and, you know, India, the market where Price is play the major role and so to compete, we had to invest fairly heavily in R& D. And so we never really made, other than our first few years, we never really made a standard calculator. So, for example, let's say the.
Statisticians wanted mean, median regression, so we wrote some EPROMs, programmed them, gave keys that gave you single key, mean, median, whatever you needed, and priced it double what the competitor's standard calculator price was. And that really differentiated us and got us you know, we had about 80 percent market share in that business.
Oh, okay. One thing led to another, we moved into programmable calculators, and then we developed our own 16 bit bit sliced computer. And we were very excited to get to the computer market. We thought we'd be very excited because IBM were the two big companies, were selling really old technology at that time.
And microprocessors were on the horizon. So we felt, really felt microprocessors could change the world. And this little division called DCM Data Products was a young division. I was one of the older guys there. In 1975 at 25, 26, that was my age. They had pulled Shivnath in from the textile division. He was, I was a management trainee 9th batch, he was a management trainee 7th batch.
And because they felt that, you know, they were making a lot of profit. They wanted a little more aggression in the market, so to say.
What happened was, because of the monopoly, India was a socialist country in those days. I don't know if you recall, and there was an act called the Monopoly & Restrictive Trade Practices Act, which really stopped large private sector companies from going into any new area.
Piyush: Yeah. That was normally reserved for state and public sector.
Arjun Malhotra:Now, computer. You know, and if you've ever worked with a large company, you sort of realize that most of the time, the legal department's job is to tell them how they can't do things.
Piyush: Absolutely.
Arjun Malhotra:And so, legal in DCM told them that they can't get into computers.
We tried a lot to argue and say, look, a programmable calculator, a computer is also a programmable calculator in some ways, but DCM decided not to. So six of us decided to leave and get into that business ourselves.
Piyush: And what year was that? 1975. 1975 you established HCL.
Arjun : Well, we established a company called Microcom.
Piyush: Okay.
Arjun : In October 15th, October 1975 really didn't have a business plan, didn't have any money, just felt we knew we understood the market. So we pulled in all our resources, which was 1, 75, 000 out of which in Bombay, which was 60 percent of the market. You had to buy an office, you couldn't rent an office because the rules were crazy that if you rented a place for X years, I forget the period, you own the place.
And so when people rented, they took the value of the house as a deposit. So obviously we couldn't afford, we didn't have that kind of money. So we ended up buying a 953 square foot office in Cuffe Parade for 1, 25, 000. Out of the 1, 75, 000 that we had pulled together working capital was 50, 000.
Okay.
Arjun : We had, we got a lucky break. Mr. Ved Luthra, who is this founder, CEO of Televista televisions. He came to us and said, look, I am making calculators, but I find it difficult to sell them. So why don't you sell my calculators? I'll give you 90 days credit.
Piyush:Got it. Got it.
Arjun :That's how we got our funding.
Piyush:Got it. Got it. So it seems like you, your foundation was more in sales and marketing. And that's how you obviously HCL ultimately, and I'm interested in seeing at what point you got into the US and what was the first thing that you did when you landed here?
Arjun : Okay, so let me give you a little more background.
So yes, we were we came out of sales and marketing, but a lot of us were engineers who had worked very closely with the R& D people and sort of spec products with them and saw how it happened and, you know, all that stuff. So we then, you know, in three months, we made enough money to recruit some more people to set up an R& D.
And by March, we were pretty much developing our 4 bit PPS for Rockwell, PPS for microprocessor based advanced programmable calculator, right? Computer licenses were reserved for state and public sector. And so we, to get a, to be able to manufacture computers, we had to sign a joint sector agreement with UP Electronics Corporation who had a license and and the structure is 26%.
They own 25%. The promoters own 49 percent is supposed to be public. The total equity was 20 lakhs. You could have a cost of going public with more than 9. 8 lakhs. So indirectly we own 74 percent that's how it started. HCL or Hindustan Computers Limited, as it was called then, was incorporated on 26 August 1976.
Piyush:Okay, so that's that's basically how it started. Got it. Got it. So it was still during the time when there was emergency going on in India. Yes. And then the Janata government came in ‘77. And then IBM was asked to leave India, and then a lot of shakeup happened, and of course, CMC was formed.
And I worked for CMC and By the way when I didn't join you, I had joined Tata's, and that was the only reason
Arjun : that's history.
Piyush But what happened in India
Arjun :Yeah, what happened was we announced our product, the commercial product, the HCLHC, which was based on PPS, Rockwell's PPS 8 chip. We took out full page advertisements all over the country.
By coincidence, that was the day the headline was that IBM and Coke were leaving India. And there was a rumor about something like CMC starting. It hadn't started at that time. The government said that they would step into it. And with a name like Hindustan Computers Limited, a lot of people thought that we were the company That the company, of course, you know, a good salesman get takes mileage out of that fairly effectively.
Yep.
Yep.
Yep. So we did a lot of things. We, we actually innovated a lot. We were a worldwide beta site for sugars, five and a quarter inch floppy drive, et cetera. So we really got a number. We got the you know, the hermetically sealed Winchester disc drives into India for the first time. So a lot of technical innovation, you know, leadership.
What did happen was India was aligned with the Soviet bloc, if you remember, and so getting clearances of the latest chips would become a problem with Department of Commerce in the U. S. Yep. Most Indians read English magazines and they know what the latest chips are. So when Motorola came out with the
68010, 020, 030 etc . When the 30 came out, it was, we couldn't get it in India.
Yep. Yep. It was stopped by the U. S. Department of Commerce, but people wanted that functionality. Rajiv Gandhi had come in and he had said you can import sources without paying duty. Otherwise there was, software was not allowed, then there was high duty on software.
Unix sources were available. So we used Unix sources, added our own file system, which was like the PDP 11, if you remember that deck. I have worked on that, by the way. And our own spooler and stuff on Unix made it a commercial operating system. And when the 0. 3. 0 was not allowed into India, we developed a multiprocessor 0.
2. 0, a 68. 0. 2. 0 system. And gave the functionality and the number of terminal that people were looking for with the unique thing that the user didn't know it was a multi terminal machine. For him it was like a single CPU Unix machine. Got it. And at one of those CSI conferences. Vice president from AT& T was visiting and AT& T had bought Nobel, which had Unix, you know, and he saw this machine and he said, you know, you probably have a market in the U S.
Because the other multiprocessor machines in the US that ran Unix were MIPS and Pyramid, which are in the million dollar range. Mm-hmm . Our product would've been in the a hundred thousand dollars range. Got it, got it. Got it. So we got McKinsey to do a study for us mm-hmm . And give us a market entry strategy.
They were very positive. We applied to the government of India for, to allow us to convert our rupees to $5 million worth of equity. Which in those days was a very difficult thing to do because foreign exchange was tight. They gave us that permission. It took time. And we came to the, that's how we came to the US in late 1988 to start HCL America.
Piyush: Wonderful, wonderful. So that's like, you know, a new kind of a journey, which not many of my audience would have ever heard. So this is very, very unique. And of course, as you were talking, I'm imagining what Where I was in school or college during that time. So thank you for refreshing my good old memories Let's let's focus on today you are advising a number of companies on the board or chairman of a company as well And and at some point of time Which year I forget but you won a Einstein medal as well Tell me about that How did that happen?
And then pivot from there into what makes you excited to come to work every day. You're not obviously working for money, you could easily retire anytime, but you're, you're still actively engaged in the industry, actively. I've seen you at Tai and other events as well. So what keeps you going?
Arjun :You know, what keeps me going?
I can answer that and then I'll come back to the other part again. Mm-hmm. You know, I feel, I look at India. And I feel that the biggest requirement or necessity there is creation of jobs. And I feel as long as I can create jobs, I have to keep working. So that's my motivation.
Piyush: Wonderful. Your why is very clear.Wonderful. Awesome.
Arjun :And I'm not getting any younger. I'll be, I'll turn, I'll be 76 tomorrow.
Piyush:So it's That's my daughter's birthday as well. So I'll remember that Jan 7th. So, okay.
Arjun : Okay. So what what drives me is there are lots of young people with lots of great ideas. They, you know, a lot of them need mentoring to be able to grow the company.
You know, a lot of people look at it and make a company and then sell it in X years and get, get financially comfortable and then do what I feel like. That's a good thing to do. But if you want to build an organization, you want to build something that quote unquote will last forever, then you can't do it short term.
You have to look at it over 7, 10, 15 years. And you've got to really build an organization, you've got to set up a team, you've got to, you know, the, the works that go in there, lots of sacrifices, right? I don't force anyone, I don't push anyone to do it because I know the pressure it put on my family life.
In fact, my kids, when I talk to my grandkids now, invariably my children tell me, but you never did that with me. And so my answer to them is, what don't you understand about the word grand?
But yes, I do feel guilty that I didn't spend enough time with them. I was in the field. Most of my, till I was, you know, I mean a lot of time, I mean, till I finally left HCL & sold Headstrong in 2011, I was in the field more, traveling a lot more than.
Piyush: Yeah! I can totally relate to that. You know, for the first decade here, when my kids were growing up until they went to college, I was always on the road every weekI was in a different country. I was heading up IBM's big data analytics center of excellence that made me travel around the world. Yes, it's great. Big teams. Great. You know. Colleagues all over around but your family suffers. So you know, my path to entrepreneurship was that okay I'm not gonna travel for at least two years. Stay at home to see when the kids go off to college then Then I will I will restart my thing.
So so anyways coming back to you …very very interesting background and given your love for hardware, now today everything is about software . Mark Andreessen at one point said software is eating the world and today we are seeing AI eating the world and the pace at which AI and Gen AI announcements and developments from different companies are coming, it's like many people are scared.
And some people are seeing this as an opportunity. Some people are seeing this as a level playing field that now you don't need a big hardware and software department. You can, somebody's solo can be an entrepreneur. Solopreneurs can and there was somebody who made a statement recently that, you know, you will soon see a billion dollar company or a unicorn started by a solopreneur. So all those statements are out there. All those quotes are out there. What's your personal take on this side of the business, which obviously you may not be actively doing stuff, but you are advising your companies who are doing AI stuff. So tell me about it.
Arjun : Yeah. So all this is exciting. It's not going to happen overnight. It may happen over many years. You know, I want to go back to the time when we started selling computers and that time unions used to object. Everyone said jobs are going to go away, computers are going to take away jobs. Just look at what has happened.
Now, I think the same thing is going to happen with AI. You know, you're going to see a temporary blip in jobs, but ultimately if people can work on AI or use AI, you're going to see more jobs because so much more data and video, audio. All that is going to get analyzed. And so I think ultimately you'll get more jobs.
The cycle, the time frame may be different the way it happened to computers and the way it's going to happen with AI. But I think the The end result will be somewhat the same.
So you're bullish and you're positive about it.
Arjun : Yes. And I think like we saw the bubble for e commerce, if you remember 99/2000.
Piyush: Exactly. Yeah.
Arjun : I think you've seen some level of bubble for AI. Until the apps start coming in. Become useful and give you an ROI You're not going to,
And the problem is the same, you know?
Piyush: Yeah.
Arjun : The, in a lot of companies, the CX suite, a lot of people didn't understand e-commerce. The same thing is true here.
They don't understand ai, but they listen to all this hype and think AI is going to do a great job. And actually stop or delay decisions. Which may hurt them over the long run.
Piyush: Right, So, yeah. The experimentation cost is a lot lower. So at least from, from my vantage point, I'm seeing anybody and everybody around me small, big or large companies, all are trying certain things.
But the pace at which they are able to see returns or not, that's still questionable.
And think of the, you know, we are talking about climate change and That issue right now and these data centers are going to take a lot of power and a lot of heating. Yeah, yeah,
Arjun : yeah. So I would think, ideally, why would I not set up a data center in space.
I know heating. I've got communication up and down. Okay. I mean put it on a satellite.
Piyush: So, so by any chance, are you investing in space tech as well?
Arjun : No, I'm not. But just think of it. I mean, you're talking about all this heat and how do I dissipate it? And how do I generate so much power? Why would I not just do it up in space?
Piyush: So what you're giving me an idea is maybe you could have multiple satellites out there with data centers inside them and they are powered by the solar energy over there and they are able to do crypto mining and whatnot and and and all the LLMs and all the latest developments in AI can process the compute power comes from there because solar power is abundant in in space.
Arjun : Solar and I think You're going to have nuclear too. You can put nuclear power up there. That'll actually last a fairly long time. After all, E is equal to mc squared would work very well in space.
Piyush: There you go. There you go. So, so that reminds me of the Einstein medal story that you didn't tell so far.
Arjun :Well, yeah, that's a long time ago, and basically, I don't know I didn't do anything for that. Someone came and said, Hey, you've been nominated. I said, Okay. You know, that's sort of how it worked. I have no idea why, why they chose me, why they didn't choose someone else at that time. No idea.
Piyush: Congratulations. I got to know about it recently. So I bring it up. But that's, that's very interesting. The space angle I hadn't thought through and now I can see why Elon Musk and the new incoming administration is bullish about things. And of course, they are skeptics of nuclear. But then when I saw somebody Who is a PhD in cyber security acquired a second PhD in nuclear physics recently at the ripe age of 79.
Now I can understand why, why he was bullish and how he's still pursuing it. So hats off to people of your generation who have that tenacity to continue studying and continue working. One, one thing which I do want to get to very quickly is, uh, your, you know, investments in entrepreneurship.
Obviously you've seen. a world which was kind of constrained by the kind of regulations that India had or the socialism or the thinking in India. Today's India is totally different. So obviously young graduates from IIT and others technical institutions don't think about coming to the U. S.
They are able to start their own firms in India itself. Likewise you know, here, our duty becomes to the society here, the younger generation here in the U. S., maybe our kids, maybe our next generation, to how do they balance India's needs as a local needs in the U. S. And more importantly, the society's needs, because I firmly believe that unless an individual has aligned their mindset with the higher purpose, they will not be happy and they will not be successful.
That's my theory. And I want to hear your, your comments on that.
Arjun : Yeah. So, you know, a lot of hospitals in India. Going, well, at least they used to be going after what I call low hanging fruit. So you see how eBay works in the U. S. You do a eBay in India with local conditions, stuff like that. So a lot, and those, I call that low hanging fruit because you've got the model already.
You just replicate it with local adaption and the smarter people are able to do it effectively. I, if I look at India today, in my view. Education, healthcare, and infrastructure are quote unquote infinite markets in India, right? And that's where we have to use technology to try and improve outcomes. I mean, infrastructure is not my field, but education and healthcare.
You can definitely have two areas and that's where I try to focus. I've spent most of my time with the companies that are doing work in those areas. Where they try making a, making a difference. And the problems in India are very different to the problems in the West, for example. Take healthcare. My biggest problem is I don't have enough doctors.
Piyush: In India or here in the U. S.?
Arjun :In India, in India.
Piyush:Huh, okay.
Arjun :Because you know what is happening is Economy is growing and the number of people who can afford to come into the healthcare system and pay is growing by some 12 to 18 percent. Doctors are only growing by 6 percent. And a lot of them are leaving India too.
But if I want more doctors, I invest today, they'll be available 10 years from now.
Yeah, and if I have a shortage today because every doctor I know is over in India, it'll get worse It's not going to get any better for at least 10 years Maybe longer right because those investments are not going in medical colleges in the volume that they should and so You must there must be a way we can find of leveraging technology to reduce or give doctors more patient facing time.
Piyush:Got it. Got it. And that's, that's what you're working on. All right.
Arjun: So I can do, I do diagnostics and use AI to do diagnostics in India. And today we are saving doctors 30 to 50 percent of their time when they use it. There are issues in trying to get it to improve, but you know, those are local to India and over time I think we'll be able to solve them.
I you know, and the same thing is true in education. You know, education, we have a, how do I put it? I once talked to someone, I'm going back to the 80s, when Will Norris of CDC wanted, he had a setup called Apollo, where he wanted a mainframe at the back, an external type. Front ends with kids at home.
Piyush: Mm.
Arjun: And his logic was, or not him, but someone who worked with him, talked to me, and I'll use, try and use the words they use. He said, why can't a grade three kid do grade five maths at 11 o'clock at night if he is good at math? Why did the teacher have to do anything with him in math? Yeah. The teacher should spend his or her time with students who are weak in math in grade three.
Piyush:Yeah.
Arjun: Yeah. And not worry about someone who's. Yeah. And he felt that a computer at the back would be able to help doing this. He said, we force children to sit in a math class, an English class or whatever. And the words he used was the walking wounded, make it to college.
Walking wounded, make it to the college.
Right.
Now, I think we can do the same thing in India. Today with AI, it makes life so much easier. To do something like that. Let kids learn at their own pace. Let teachers only interact with them when they need
Piyush: personalized education! In that case even at the secondary level or are you talking about?
Arjun: I'm talking of primary level primary level. Okay.
I'm talking about K 12. Okay. Universities have a slightly different problem and we can discuss that, but at K 12, I think we've got to, we've got to get people to want to do things. I don't want to force people to sit down and do math when they are feel they don't know enough to do it.
So I have to help the kids. I want the teacher. Or the aid of whoever to help kids who are finding it difficult rather than spending time on kids who are doing Got it, you know a good job.
Piyush: Got it So are you doing it through a company or through a non profit or through the government? So all of them you yourself involved in all three?
Arjun:Yeah, well We're trying to do that. We're trying to see how we can adapt digital content for the learning handicapped/ (differently abled) you know, whether you have ADHD or you're, or you have, you know, visually handicapped or whatever.
Yeah. Yeah.
Arjun: How do I adapt my digital content so that you get the same. Learning experience, -Stuff like that
Piyush: I would love to follow up with you on that if there are pointers you can provide and if you are okay to share those, I'll share that with my audience as well. In the show notes.
Arjun: Yeah, the word is accessibility. And we work with all, not all, but a lot of publishers on making their digital content accessible. Most school districts in the U.S. talk about it - some 20 odd percent of the kids having some learning handicap. And so anyone who needs to, or sells content here, digital content has to get, make it accessible for these kids.And so we work with them, we audit what they have, rectify, you know, et cetera, et cetera.
Piyush: Beautiful. This is this is your next innings. Wonderful. So this is very exciting. I could go on and on, but have a time limit here and I want to be respectful of your time as well. You are flying to India.
So how can how can my audience be of use to you?
How can we be helpful to you in your mission?
And what's your final message for the youngsters?
Arjun: You know, just focus on what you're doing. Try and do a complete job. If you, if you're an entrepreneur, remember passion is important. Don't become an entrepreneur to say, I want to make money. I guarantee you that a very high probability you won't make money and you'll get very upset, disillusioned, dissatisfied.
But if you go with something where you're passionate, then even if you don't make money, you feel fulfilled. You feel satisfied that you did something. And that going back to your earlier point, a lot of times when you have a quasi social objective in what you're doing, It makes you feel so much better.
Yeah. So I'd really tell young people, you know, I mean, the usual thing, have a team, recruit people smarter than you. I won't get into all that because that you can pick up anywhere, but just try and try and be yourself.
I think but I always tell people that when you make a copy, it's never as good as the original. So don't try and copy Try and inculcate the things that you see and that you like in the other person within yourself, but don't try and be a copy of the other.
Piyush: Words of wisdom, words of wisdom, awesome. This has been so eye opening episode Arjun. Thank you so much from the bottom of my heart. Thank you for taking the time.This is for all the years of remote mentorship. You won't even know how much I looked up to you and I talked about you. I always felt guilty for not joining you guys back in my youth time, but now we are connected and happy to collaborate with you on anything. I could be of help to you. Just let me know.
Arjun: All right. Thank you so much. Take care. Bye bye.
Piyush: Thank you.
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