Indya.com flared brightly and briefly. But was the passing of Indya's noisiest dotcom a News Corp effort to recover some of its millions?

By Vinod Mahanta

It all ended like it began-with a celebration. "Let not the internet bubble get the best of us," said the invitation. And so on November 2, 2001, more than 150 staffers, past and present, streamed in to Café Indya, the roof-top cafeteria of dotcom upstart Indya.com in the leafy suburb of Koramangala, Bangalore.

Amid much laughter, much reflection, backslapping and quiet regret, one of the largest pink-slip parties ever seen in India's tech capital got under way. They caroused, and they drank. They would have carried on until the sun came up, but in deference to Bangalore's legal ban on partying after 11 p.m., they shut down early. There was Sunil Lulla, 34, now ex-CEO, the guy with the love for socks and the big splash. "The camaraderie was just great," says Lulla of the going away party. There was networking mogul Pradeep Kar, 37, whose millions got Indya.com started in its quest for dotcom supremacy just about 13 months earlier. That's all it took: a year-and-a-half. Internet time, as we know now, severely crunches reality.

For a dotcom that for a while cornered every worthwhile Indian billboard, filled full-pages with smart advertisements and convinced The Times of India to forgo its 163-year editorial traditions and make its front page available for an Indya ad-all part of a big-bang launch that cost a cool Rs 4.5 crore-the reality came up particularly quickly. Only 25 people remain at Indya today to serve their new master, Rupert Murdoch's Star TV, which is converting the loud, splashy portal into a simple adjunct to its television business. As we reported earlier (See Purveyor of Dotcom Energy Dies, BT, November 25, 2001), Lulla, the top management and most employees-95 in all-are moving on.

The boom was first lowered on October 31 when all heads of department were called in to Sunil Lulla's office and told three things: that he was resigning, that the entire management team had resigned, that Star had a different business perspective. He also announced the downsizing.

Later that afternoon, the entire staff gathered at Café Indya to hear Gary Walrath, Star Group's Executive Vice President, sound the dirge. "It's a hard thing to say," a grim Walrath, told the stunned gathering. "Indya is a great brand, which had gone to great heights in the past 18 months." And then came the simple rationale. "But if $6 is being invested for every $1 we earn, then I have to take (some) rational business decisions. "It wasn't a reflection on any business team of on Indya.com per se,'' he explained, it was just the way the market was. The meeting lasted 40 minutes and at the end of it, at least the months of uncertainty and rumour were over.

Here A Million, There A Million

How did a company with a war chest of $53 million (more than Rs 200 crore) bite the dust so soon? After all, market leader Rediff has been going strong for four years and promises a break-even by the first quarter of 2002.

"The revenue from Indya did not justify the money being poured in, and it appeared that things would not change in the long-term," Sunil Rajshekhar, head of Star's new media and convergence division and Indya's new boss, told BT. That's something many Indyans, as former employees are called, don't agree with. They say the company was looking at a break-even in early 2003. That was clearly something Star wasn't willing to risk in the nuclear winter of the tech age.

"As long as Star were investors they were fine with it, but when it came to running an internet business, they were not willing to do it," says Lulla. He announced his intention to quit in the middle of October when it seemed clear that Star wasn't keen on allowing him to implement an offline survival strategy. Now, it's crystal clear. "We see Indya as Star's face on the internet," declares Rajshekhar. That means it will carry Star programmes, offer webcasting and be used to interact with Star's viewers. Period.

The precursor to Star's takeover of Indya was promoter Pradeep Kar's decision in July 2001 to move out of what he once called his "killer portal". Insiders say Kar sold out his more than 50 per cent stake for the money-Star paid $10 million (Rs 48 crore). Others say Kar was called in to Star's office in Mumbai and "forcefully requested" to sell out. Despite repeated requests, Kar did not speak to BT.

From Kar's point of view, the exit made sense. He was getting good money after all. But why did Star take over? After all, it had bought a 33 per cent stake in Indya in September 2000 at a now-humongous $50 million. Star bought the stake from, among others, Pradeep Kar, ICICI Venture, Chase Capital, UTI, SBI Mutual Fund, Birla Mutual (a pretty impressive list by any standards, which should tell you how many bought into the dream). Only, Indya was then valued at $150 million. Today, it's worth no more than $15 million.

Insiders tell BT that a large part of Indya's $53 million (Rs 249 crore) war chest is unused, supposedly more than $30 million (Rs 141 crore). The theory goes that Star invested $10 million (Rs 47 crore) more to salvage what it could from its contributions to Indya's still-substantial kitty. Only 2.5 per cent of Indya's stake is now not with Star. That's held by the Pearl group from Mumbai, makers of the Pearl Pet brand of kitchen plastic containers, who disagree with the current valuation.

The Power Of Hindsight

"Indya tried to do in four months what Rediff did in four years," says a former employee as he discusses Indya's bold, early days. It was quite late when Kar, who made his fortune connecting computer networks, decided to jump into the bloom of the dotcom era.

But Kar, a consummate networker, moved at a frenetic pace. In September 1999 he dropped into Lulla's residence on Mumbai's tony Napean Sea Road and within minutes had himself a first-rate CEO (As General Manager of MTV India, Lulla had turned around a seemingly moribund channel).

He put together a team of achievers-some of them earning annual salaries of Rs 50 lakh-scooped up some IIM-Calcuta toppers and talked to top quality investors. Among them: John Sculley, ex-CEO of Apple computers, Vinod Khosla, the super VC from Kleiner Perkins of the US, Rajat Gupta, CEO of consulting major McKinsey, Pavan Nigam, co-founder and CTO of Healtheon and Sanjay Parthasarthy, Vice President of Microsoft. Just listen to what they had said then. "A great portal will help us increase both utility and usage of the internet in India," said Khosla. "Indya.com has the potential of being just that definitive portal." James Murdoch (media moghul Rupert's son) asserted it was a "significant step for Star to partner with Indya to build a global internet brand".

The company quickly moved into hyper mode during the latter half of 2000. "Yes, we rolled out the site quickly because the market was full of significant players and in full heat," admits Lulla. Staff strength reached 240, around 40 alliances were sewn up, and travel portal Net2travel.com was acquired in a stock swap. Like all portals, the focus was on eyeballs, and more eyeballs. An IPO was targeted for December 2000.

On A Short Fuse

During this time, Indya's biggest attraction as an employer was also its biggest problem as a business: its burn rate. A swank office, the big salaries, the bigger team and the occasional indulgence-like the male strippers called in for a women's day party.

But it was becoming apparent to Lulla that there was no way Indya would ever get enough ads. The focus quickly shifted from eyeballs to revenues. By then the dotcom doom was in full flow and investors were jittery.

The IPO dreams quickly dematerialised. In its first round of downsizing, Indya asked 60 people to leave, mainly from the content and technology teams. Restrictions were placed on travel and telephone expenses and a floor was vacated. The travel channel's expansion plans were shelved. "The intention was to build a significant (online) travel business, but later the focus was on cost-cutting," says Rajiv Vij, former partner of Net2travel.com. "This despite transactions peaking at 700 a day."

Meanwhile, the astrology channel turned pay, yellow pages were launched in a desperate attempt to make some money, but the writing was on the wall.

By May 2001, well into the downturn, Star had dropped its plans for Star-I, its globe-straddling internet effort. And by July, Kar decided he had run his dotcom race-and lost.

So what went wrong? Actually, not too much. Indya misjudged the dotcom era, but then so did everyone else. There wasn't even anything wrong in doing so much, so fast. But Kar did enter the race too late, then burned too much money trying to make a splash. The burn rate finally became horribly unsustainable. In the end, though Indya still had lots of money, it was just an unbusiness-like way to run a business. Its era was done.

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