Case Study Ajay Bam
The late spring of 2002 had been a maddening period for Vayusa founder Ajay Bam. Here he had a unique idea (confirmed by a high-profile technology grant and a host of exceptional advisors), a leading venture capital firm seventy-five percent sold, a talented software developer ready to go, and keen interest from a number of key players in the electronic payments industry. Vayusa had seemed at once to have it all, and nothing whatsoever. Ajay knew that unless he was able to secure a substantial start-up investment, and soon, he would be forced to give up the fight and grudgingly return to a six-figure income as a Wall Street analyst.
When his landlord, Idealab, had ...view middle of the document...
We were one of twenty-five teams; the best and the brightest from
around the country doing some very interesting projects…and we were the only MBA school [in the group]...Out of the twenty-five, there were only four or five moving towards commercialization of the technology like we were. We came back and got some traction from that. The team was still struggling to break into what Ajay referred to as an entrepreneurial
triangle composed of investors, customers and technology: Investors would not fund the
idea until merchants had been signed up, and merchants wanted to see a viable product
before they would commit to anything. Ajay reasoned that of the three, the technology was
the only one that he could really control. So, despite having no money to fund such an
endeavor, he threw himself at the challenge of developing tangible proof of his vision.
Systems developer Rahul Mutha had been relentlessly seeking a deal with Vayusa
for over three months when Ajay finally explained that he was without capital. When
Rahul offered to develop the product for an equity stake in the new venture, Ajay tempered
his excitement until after he had performed his usual due diligence: It doesn’t matter if it’s a friend or whatever, you have to check references… Like every new person I have brought in, I made sure that all my advisors talked to Rahul. I wanted other people to screen him because
maybe I could be wrong in my judgment…. Rahul himself has been very successful. He sold an eleven million dollar company at age twenty-five and made a lot of money. He knew that if this takes off it is going to be big. So that is why he was attracted to this. Having convinced Verifone—a leader in secure electronic payment technologies—to provide the sales and distribution channels for Vayusa applications, Ajay now arranged for Rahul to attend an intensive training program at the company. Rahul returned from the session even more fired up about the potential of the Vayusa model. He promptly flew back to India, and, with his own funds, assembled a talented four-person engineering team to work on the project. Ajay, an engineer himself, found the push to develop their unique solution both fascinating and exhilarating: From July through October I just focused on the product; getting it working, getting it right. We used anything and everything that was free on the Web to build it; open standard…We had our first preview in August, and it was the highlight of the whole process. Having a working product, even if it was the first version, was huge. It was tangible. You
can sell that, and that made a big difference. Gray Hair Seeing Rahul charge ahead, Vayusa advisor Bob Wesley became more excited about the project. Soon after the prototype was up and running—bugs and all—the seasoned executive began to accompany Ajay to investor meetings and presentations. Ajay felt that Bob’s participation marked a major turning...