Sramana: I don’t see what risk they were afraid of. You were financing the company with your own cash. The engineers were not taking any risks. They were just there earning their salary.
Ajay Sharma: Some of them thought that we were not going to be able to pay their salary. At that time, the media in India published a lot of material stating that India was only a software services economy. They would publish articles detailing why it was impossible to build product companies from India. That really spooked our engineers and most of them left us. We were only able to convince a few of them to stay.
Sramana: How large was your team when the media and healthcare companies were still combined?
Ajay Sharma: Initially, we had 14 people on our engineering team. We used that team to jump-start the media product. While we were working on that product, we focused on getting the market feedback for our healthcare product. We were contacting hundreds of hospitals all over the world so that we could find out what was evolving in healthcare.
Up to that point, we only had a technical perspective of the industry from our various projects in the enterprise application integration space. We did not have the greater business perspective. The doctors and individuals who had led healthcare organizations were the experts that we needed to listen to. We hired them and we sent them to hospitals all over the world to find out how healthcare was leveraging IT.
Sramana: It sounds like the media product was generating quite a bit of revenue while you were doing that market research.
Ajay Sharma: Yes, we had a million dollar run rate. We had done a lot of integration projects with media companies and we knew exactly what they were looking for. We were a bit more experimental on the healthcare side.
After two and a half years of market research, we started to understand what we needed to develop. We found that integration was the most neglected aspect of the healthcare industry. They have a lot of silos in that space without a comprehensive platform. We decided to build the comprehensive platform.
Once we understood the scope of the project, we created an estimation of the number of lines of code that would be required. Our initial estimation was a million lines of code. That’s when we started to lay out a path to separate the two businesses.
Sramana: What was your stake in the media business valued at?
Ajay Sharma: Initially, we tried to do an absolute valuation of the media business and the healthcare product. We quickly found that the absolute value had no meaning. We had some accounting firms run a few different formulas and we were told that the two products had a valuation of around 80 crore rupees (~$13 million). It was determined that the media side should pay 8 crore rupees in cash to the healthcare business when the two entities split.