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[Music] Today on the podcast we have Narana Morti founder and former CEO of Infosys.
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He created a hundred billion dollar giant one of the largest companies in history which has transformed India's economy.
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Infosys founded in 1981 offers consulting IT and outsourcing services across the globe.
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18 years on from its founding, it became the first ever Indian company to be listed on the NASDAQ.
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My has been listed among the 12 greatest entrepreneurs of our time by Fortune magazine.
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He has been described as the father of the Indian IT sector by Time.
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When he speaks in India, huge crowds come to hear what he has to say.
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Mercy is also the father-in-law of Richie Sunnak, the former UK prime minister.
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>> So Mertie, thank you so much for joining us on the Giant Ideas podcast.
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We're incredibly excited to have you here.
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It is a pleasure for me to be talking to you people.
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I thank you very much for your time.
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>> The pleasure is all ours.
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Um, you've had an amazing life story, Marty.
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What were circumstances for you and your family like at the very beginning?
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>> Well, you know, I was born in 1946.
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Father was a high school teacher who taught English, physics, and mathematics. Mother was a homemaker.
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We were eight children, five girls and three boys, rather large.
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When you add my parents and my paternal grandmother to this list, we were 11 living on the salary of a high school teacher.
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My mother practiced an age-old Indian tradition called Warana.
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that is she would invite a different woman type than us each day of the week for dinner with us.
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Hence there were in effect 12 mouths to feed every day at dinner.
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Therefore we were poor or middle class people.
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There was no radio, no fan, no furniture, no cycle at all.
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We sat on the ground and ate our meals.
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We used to get just one set of new clothes every year at the time of Deepi, the festival of life.
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I used to play soccer in my locality.
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Since soccer ball was cheap those days and 30 of us friends poured money to buy it.
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My father would be Tom sword from one musil town to another every three years during my school days till we came to the city of Mysore for my high school.
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Father was a strict disciplinarian.
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He taught us to have high aspirations, good values, disciplined and to strive hard to achieve excellence in whatever little we did.
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He was never satisfied with our performance in the school.
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Just to give you some data, I got fourth rank in my state in my Alevel equivalent examination.
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Four out of probably 100,000 students.
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But he simply asked me why I did not get the first ran.
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That was his reaction when I went and told him and got the uh first I got the fourth rank.
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You know as a revenge I worked harder and I obtained third rank for the university in my pre university course but even then he was not impressed.
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My mother taught us kindness, generosity and compassion.
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We had excellent high school and primary school teachers who taught us through their own conduct important values like honesty, transparency, secularism, accountability, hard work, uh discipline, determination and most importantly putting the interest of the community or the society ahead of our personal interest.
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I did my undergraduate degree in electrical engineering from the University of Mysore in 1967 and my graduate degree in electrical engineering with specialization in computer science from the Indian Institute of Technology in 1969.
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My first job was at the Indian Institute of Management Ahmedabar as the chief systems programmer there.
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Then I went off to Paris to work in a the French realtime software company.
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Well, this is little bit of my background. >> Incredible.
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Well, tell us about the very scrappy early days of Infosys.
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Uh we heard or read that you and your wife started it with just $250.
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>> Well, you know, as a student, I was a leftist.
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I was brought up by my father under the influence of neurovvian Fabian socialism.
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I believed that government was the answer to every one of our problems.
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Do you still believe that?
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>> Yes, I did believe at that time.
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I was highly impressionable. I was in early 20s.
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I had been fed the uh principles of Fabian socialism which Naru himself probably learned it from Herasi in the UK.
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when I but when I went to work due you know in Paris during the early 70s I was surprised to see prosperity well-fed people well-lod people good infrastructure and high quality trains that ran on time but I I got completely confused because they were not practicing socialism.
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Therefore, I decided to study a little bit about various isms, socialism, capitalism, communism and libertarianism.
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I discussed with various experts on these isms at Sorbone and in fact I met a few leaders of these isms including George Marseilles who was then the head of the French Communist Party.
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I was not very impressed and I realized that the answer to India's prosperity lay only in entrepreneurship in a free market environment and consequently in capitalism.
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That's why I returned to India and conduct an conducted an experiment in entrepreneurship.
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Now that's how emphasis was born.
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I invited six bright and valuebased anger colleagues of mine who were five to six levels below me in corporate hierarchy at a firm in Mumbai to join me in the in experiment.
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A couple of them did not even have the small amount required for their equity.
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In order not to embarrass them, I decided that every one of us would take a loan from my wife who had a very good job as an engineer in a TA company.
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>> She was the uh she was the lender of first resort. >> Absolutely. Absolutely.
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We repaid the loan to my wife in a couple of years.
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Entrepreneurship those days was very difficult in India.
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There was no venture capital system.
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The banks did not understand software development and they wanted a physical uh collateral for even working capital.
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Therefore, they would not lend to a software company.
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Import of computers was controlled by the government to support a government company that was manufacturing a a kind of digital computer.
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It took 50 trips to Delhi to obtain a license for a computer. >> Yeah. >> 50 >> 50.
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>> Obtaining a phone connection took four to five years.
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There was no current account convertability.
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You had to apply to the central bank or the Reserve Bank of India and wait for 15 to 20 days to obtain a currency to travel abroad even for 2 or 3 days.
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I can go on and on and on.
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>> And Mercy, just to ask you about that, do you think that that enormous friction to getting going where you're you're facing, you know, 50 trips to go get this export license? Oh, yeah.
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Was it a good thing though in some ways that I guess it it really forced you to to to want to do this so badly and to forge ahead?
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I guess startup entrepreneurs now have it so easy by comparison with cloud and all the tools in a box ready to go and kind of none of that regulatory burden.
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But in in some kind of perverse way was it helpful in some way?
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>> What I realized is that the primary motive engine for entrepreneurs is passion.
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It is this passion of entrepreneurs that makes them see what appears impossible to most of those most of others as a plausible impossibility something that we should go after.
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So anyway, God was kind and we managed to overcome all those problems and here I am sitting with you.
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>> And the original Infosys was a was it was a database idea of sorts. >> Yeah. Yeah.
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It is the OLTP software system that has the responsibility to ensure the important task of maintaining the integrity of a database.
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I would say predicting the huge demand for bespoke commercial application software on inexpensive super mini computers was an important idea of mine.
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When the market opportunity exploded in the US, there was a serious shortage of talent to develop these OLTP based commercial applications in the US.
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That is where India came into the picture.
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In India there was large unemployment even for bright engineers except those who went away to the US, UK, Canada, Australia whatever it is for highest studies.
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I realized that if these engineers are well trained, these bright engineers would be able to form a very sound supply chain at globally competitive salaries to satisfy the bjoining demand for software development in the US.
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That is how we what we match the market demand with adequate supply and I I claim a little bit of credit for this.
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>> Give us a sense of the scale now my you've you've come a long way from loaning a computer from the Indian government and uh borrowing $250 from your wife.
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When we started the first year, we were just about US dollars 40,000 in revenue.
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Uh today, this year, the company should have a revenue of uh $20 billion US. >> Wow. >> Wow.
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It should have a after tax income or as we as we call the net income that's what they say in the US of approximately about $3. 5 to $3.
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6 billion and a market capitalization of probably about $75 billion.
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So that's that's a huge uh difference in uh scale. Amazing. Amazing.
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Mercy, let's talk a little bit about the intensity required to build a company like that.
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We're in recording this in in London and there's a big debate raging both in Europe and the US about startup culture.
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So, you know, this idea of startups in China doing the 996 where they're doing 9:00 a. m. to 9:00 p. m. 6 days a week.
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You've talked about the need to work 70 hours a week for India to really compete on the global stage.
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Um, Infosys has interestingly put into place alerts for employees when they go beyond uh about 9 hours a day in an effort to perhaps address some of the kind of unsustainable working practices and burnout.
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Where do you stand today on the on this topic?
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>> Well, you know, I retired from emphasis in 2014. It's now 11 years.
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I have not seen Any individual, any corporation, any community or even any country succeed without high aspiration, good values, a little bit of smartness, lots of hard work, high productivity, discipline and determination.
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Even extremely smart globally respected respected academicians tell me that hard work is a must for them to succeed in today's highly competitive world.
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I used to be in the office at 6:20 a. m.
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every morning and I used to leave office for home at 8:30 p. m.
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During my 30 years of tenure at emphasis, I used to work six days a week.
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Sometimes I used to work half a day even on Sundays.
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That's already 90 hours a week.
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And my own surmise, my own conclusion is that both emphasis and I have benefited much from it and therefore I have absolutely no regrets. >> Fantastic.
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I think that's necessary for most founders I would say to to work very hard. That's for sure.
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Let's go back to entrepreneurship within India's role on the global stage.
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I thought it was really interesting earlier when you were talking about your initial idea for Infosys not just being about building a company but also about the role of entrepreneurship required and capitalism to build an innovation economy in India to to grow.
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So what role do you think entrepreneurship has in building a modern India?
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Entrepreneurs operating in a free market environment satisfying the customer by creating a differentiated business value with V the competitors. They do several things.
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one they create jobs for a large number of uh qualified people.
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Second, they create wealth for these employees either through employee stock options or through good compensation including bonuses.
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They create wealth for investors and most importantly they pay taxes to the government so that the government can use this tax uh money for solving the problems of public governance system.
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alleviating poverty, creating infrastructure and making the lives of the citizens better.
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Therefore, I am completely convinced uh that countries that aim to solve the problem of poverty will have to necessarily embrace compassionate capitalism and provide full support to entrepreneurs to create these jobs, these wealth and to pay taxes.
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There is no other option.
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>> Merty, where do you stand on the optimism levels on India's potential over the next decade?
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Are you excited about where India stands today, particularly within the innovation economy?
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>> Well, you know, you people know that India is a peaceful democracy akin to most western developed nations.
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I can understand why the western countries have a better appreciation for India's economic progress even though it may not be as stunning as the western a as the as the Chinese progress in alleviating the poverty because in In a democracy there are multiple streams of thought, multiple opinions, multiple views and to make progress amidst this diversity of opinions, it takes time.
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Now having said that, entrepreneurship in India has become popular due to encouragement provided by our higher educational institutions.
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by our government's supporting venture capital and angel investment institutions through tax breaks and use of ease of doing business and the flow of some of the venture money that was intended for China, Europe and US has come to India.
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The new educational policy of our federal government has been working on bringing problem solving focused in the curriculum from primary schools to higher educational institutions.
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Today at business schools more than 30% of the students want to become entrepreneurs. >> That's amazing.
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>> Engineering school is somewhere around 25%.
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These entrepreneurs are working on inexpensive drones.
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They're working on cheaper water, cleaner air, space vehicles, defense products, in inexpensive electric vehicles, cheaper painfree blood sugar and other human body parameter measurement products, delivery of groceries and food items, better agricultural productivity, and online education.
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I've just taken a few examples.
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I go to several higher educational institutions every year for delivering the commencement address as it is called in the US or the convocation address as it is called in India.
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I see considerable enthusiasm amongst youngsters to use entrepreneurship uh to solve some of India's problems.
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>> In your book, A Better India, a better world, Mertie, you talk about 51% of Indian children being undernourished despite having one of the highest GDP growth rates in the world.
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To put one of your own questions back to you, what do you think it will take for India to bridge this great divide?
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Well, you know, first of all, that speech you saw in my book was delivered probably around 2004 or five because the book itself was published in 2009.
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The situation for undernourished children has improved a lot in the last 20 years.
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Being the country with the largest population in the world today, it is not a surprise that we have the highest number of undernourished children in in sheer numbers.
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As a percentage, it may not be but certainly in numbers.
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I accept that it is also undeniable that we have to eradicate poverty, illiteracy and undernourishment.
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We have a lot of work to do in public health in providing nutritious food to rural children and in creating jobs in rural India.
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You know in some way what this needs is we have to be open-minded.
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We have to learn from countries that have performed better than us.
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We have to create an environment of meritocracy.
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We have to improve our problem solving capabilities.
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We have to welcome lots of foreign investment uh and create enough infrastructure so that that foreign investment and the Indian investment can create jobs in rural India.
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So these are all things that need to be done.
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But as you people know in a democracy everything takes time.
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So therefore for whatever reason you know we have chosen a certain good model that's what I believe and it is taking us down.
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There is no doubt about it.
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>> What is your what is your hope for the future of India Marty?
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>> Well you know that's a very good question.
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You know my my belief is my my hope for the future is that I want an India where the poorest child in the remotest village has decent access to nutrition to healthcare to education ation to shelter and most importantly has confidence that its own progeny will lead a better quality of life than itself.
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If we Indians can reach that goal to uh to me that is an equitable and appreciable economic progress. >> Fantastic.
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Mercy, I'm going to ask you a few quickfire questions about yourself, your own characteristics, your your very successful family as well.
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So let me start by asking what is it about yourself that has allowed you to achieve this extraordinary success of building emphasis from scratch into a 80 billion company?
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I am an average Indian brought up by valuebased parents who themselves had very high aspirations and also by first class early teachers with good values.
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My story therefore is about high aspiration.
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It is about being open-minded to employ people smarter than myself.
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It is about learning from competitors and others who have performed better than me.
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It is about average smartness which I believe I am.
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It is about lots of hard work.
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It's about lots of discipline, lots of determination and ability to learn from your critics and of course from your parents, your teachers and bosses and respect them for their view and finally to show some concern for the society.
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That's how I would sum up myself. >> Lovely.
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It's funny how many of our guests have had a teacher really change their life.
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You have an unusually successful family though, Marty.
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You have created Infosys from scratch.
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Your son-in-law Richishi Sunnak obviously went on to become the prime minister of of Great Britain where we're recording this from.
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What did you see in him that allowed him to go on and have that success?
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You know, I think in some way he embodies the values that I spoke about, which is high aspiration, which is uh working hard, which is trying to be at the top in the school, in the university, both at the undergraduate level and graduate level.
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It is about an intense desire to serve the country.
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It is about conducting oneself legally and ethically in every context.
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It is about putting the interest of the country ahead of one's personal interest.
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And I think these are the things that I see in him and that's what uh my wife and I have been teaching our children both my daughter and my son who himself has you know a very high quality PhD in computer science from Harvard he was at MIT or you know all good institutions but we have told them that most important thing is uh values.
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Though a professional is known by his or her competence and his or her values, competence without values has no has no real impact on your context.
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to valuedriven valuedriven humble but in the pursuit of excellence.
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That's that's that's what I'm hearing, Marty. Okay.
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>> You know, you know, I am often reminded of what uh Winston Churchill once said about Atly.
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>> One of Winston's friends told Winston, you know, Atley is a very humble man.
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Winston, as he was prone to saying, he said, remember that he has a lot to be humble about. Very good.
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Mercy, do you think that do you think that for for Rishi Sunnak seeing how successful you had been almost made it possible to dream about such you know soaring so high to become prime minister?
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Do you think seeing you as a role model really helped him with that ambition?
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>> Well, I I I think in some way uh it is all about high aspirations.
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It is all about living in an environment where the parents teach you good values, where the parents exhort you to reach higher and higher, where excellence is revered, where societal interests are considered extremely important and definitely in a situation ation where there is societal interest and your own personal interest, personal interest always takes a backseat.
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I think that is what I believe will help all of us to to reach better and better uh positions and add value to the society.
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At the end of the day, as I've often said in my own uh company, when we, you know, respect from the society is the most important uh uh attribute that you should seek for because when we decided to frame the vision for our company in May 1981, I called the six younger people to my house.
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It's a small one-bedroom flat in Mumbai.
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And I asked them, "What do you want it to be?
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What's your vision for Infasic?"
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One fellow said, "I want it to be the largest company."
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Another fellow said, "I want it to be most profitable."
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Third fellow said, I want it to be to have the highest market capitalization.
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And as my style was, I was the last one to say and I said I wanted to be the most respected company in India.
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They were a little bit surprised. How will this help? I said it's very simple.
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If you satisfy your customer by delivering whatever you promise on time within budget and exceeding quality, you will earn their trust.
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And by earning their trust, their respect for you will keep on increasing.
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If you earn respect from your employees, they will become your brand ambassadors to bring better and better quality employees to the company.
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If you earn respect from investors, they will remain long-term investors and they would become your ambassadors in the stock market.
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If you earn respect from the vendor partners, they will put up with you in the days of your difficulty.
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And most importantly, if you earn respect from the government, they will appreciate what you're doing to the society and they will create policies that are conducive to your growth.
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And more above all of this you have to earn respect from the society because society contributes customers, society contributes employees, society contributes investors, society contributes politicians and bureaucrat and therefore society is the most important uh constituency that you should seek respect from.
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And in taking every decision in the company, you have to simply ask the question, will this enhance respect for emphasis and for me uh in the eyes of the society?
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>> My you live in the same modest house that you've lived in for decades now.
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We also heard a story that you reportedly still fly economycl class. Is that true? >> Yes.
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You know one thing that I have been practicing is leading by example.
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That's what I learned from Mahatma Gandhi who in my lexicon with the finest leader India has produced maybe the world has produced.
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That's of course different people have different points of view.
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I am not going to pick a quarrel with them.
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Now, Mahatma Gandhi demonstrated the power of leading by example, the power of practicing the precept rather than giving big lectures.
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you know he used to travel by third laws when in his uh in his aspiration towards India's independence every at every station thousands of people would want to come and see him and touch him so his compatriots would travel with him in plain clothes and make sure that food was not poisoned and that uh he not injured and all of that.
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One of his compatriates she said it takes a fortune to keep this man in poverty you know that was well worth it.
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So therefore as a as a as a Gandhian as somebody who has believed in the value of leadership by example I decided right in the beginning that if I want austerity in my company I have to demonstrate austerity.
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Therefore, until the company reached a revenue of $1.
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43 billion US and more importantly until it reached a net income or after tax profit of $389 million.
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I traveled and all the senior people, everybody traveled by economy on international flights, domestic flights, everything.
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However, at that time the younger people came to us and said, "Sir, we have worked so hard.
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The company has become $1. 43 billion in revenue.
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We have made $389 million of profit.
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Why can't we travel by business loss?" That was in 2004.
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That was the first time we said look if we travel by economy these youngsters will not feel comfortable traveling by business law.
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And that was the first time we started traveling by business law.
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But in the domestic sector even today I travel by economy because I meet lots of youngsters they have lots of questions and I find that there is no difference between uh traveling first loss or business loss and economy because we all reach at the same time we reach the destination at the same time.
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I said very true >> except except in one case that is when you are traveling overnight you know given your age given the fact that you have a meeting next morning you one may probably want to lie flat for some time and that's how business class helped us uh so I yes I even today I travel by economy in the domestic sector.
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But for international travel, of course, now I use my own money.
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It's it's not it's not the company money.
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I travel by business class.
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I think our listeners will forgive you that luxury after the journey you've been on.
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I think that's a lovely way to to end it.
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My thank you so much for joining us and sharing both your giant idea, but also just an incredible life story.
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It's been an absolute pleasure speaking to you today. >> Thank you so much. [Music]