Sramana Mitra: What was the concept around which you founded Synechron?
Faisal Husain: The concept was based on being a customer of this industry. I saw a gap in the service that I was getting from the company out in the market. The gap was that they didn’t have sufficient business skills. The whole outsourcing model was very appealing to clients and they wanted to embrace that, but these firms really lacked sophisticated technology capabilities. They lacked business knowledge. They lacked an agile and iterative approach to projects. Those were the gaps I saw.
I left my job at Merrill and tried to start this venture that involved very high-end technology capability combined with very deep business knowledge, and what today we all recognize and call an agile approach. 15 years ago, there was no term for it. We decided on that vision and that’s what we followed. That’s what got us to where we are.
Sramana Mitra: This is an entrepreneur journey story. Tell us about what were the circumstances. How did you get this company off the ground? Did you raise money? Did you self-finance? Who were the first customers? How did you validate the concept?
Faisal Husain: We didn’t raise any outside capital. We launched in 2001 and that was as the dot-com bubble was bursting. We didn’t want to raise money. Secondly, even if we wanted to, it would probably have been very difficult in those days. One of the three co-founders took a home equity line of credit of $16,000. It didn’t require a lot of capital.
The concept was already an existing model. We were trying to make it better. We talked to our network of people that we knew. Luckily, we were able to get people who were willing to give us some projects right from the get go. In terms of financing, not much was required. Whatever we had, we got from the home equity line. We validated the concept pretty early on and we got projects right from the beginning.
Sramana Mitra: Do you remember what kind of projects you got early on?
Faisal Husain: It was related to building out e-commerce systems for enterprises. We pitched to our previous employers Merrill Lynch and Dun & Bradstreet, because we had personal trust-based relationships with those companies. They were willing to make a bet on us. We made sure we went to the people who we knew.
Sramana Mitra: In terms of doing e-commerce projects, were there specific technologies that you were building on top of? Were there systems that you were building on top of?
Faisal Husain: It was a mix. In those days, you had technologies like Vignette. You had custom-built systems. You had technology like ETG. There were existing packages, which we had expertise on, but a lot of companies were rolling and building their own systems. Those were the earlier days of e-commerce, so not everything was as commoditized as it is today.
Sramana Mitra: What were the denominations of these projects that you were getting?
Faisal Husain: The size of these projects were a couple of hundred thousand dollar projects.
Sramana Mitra: That’s exactly what I was asking. Essentially, what you were following is a methodology that we have seen work for many entrepreneurs. We even have a book called ‘Bootstrapping Using Services.’ Typically, those kinds of projects that you’re describing does very well to provide the seed capital to get a business going.
Faisal Husain: Yes. For us, service is the strategic business model. We are in the services space. That was natural for us to do. Using services revenue that brings in fairly quick cash flows, assuming you can deliver projects successfully, can be used to seed other strategic ideas. You have to be careful about doing it diligently. Sometimes, the services business can suck all your focus and attention and not give you enough time to do what you originally wanted to do. For us, that was not the case.