The director of Active Analytic stared at his computer screen, startled. Two cyber-attacks had just blown a hole in his e-commerce business, the information was telling him. The core part of his company, which provides technology service platforms for other businesses and industries, had been dealt a huge blow.
The start-up was already fighting huge competition in India and progress was slowing, following the emerging market’s e-commerce boom. Suddenly it was no longer a normal weekday morning in the company’s home-built offices, below Mahek's house in Hyderabad.
The company’s founder, an established mechanical engineer, was under no illusions as to how big a set-back the attack would become. “I had a serious issue… my websites got hacked by some IP addresses from Russia and Pakistan,” recalls Mahek uncomfortably.
“It was a big drawback for us. And after we fixed it up, we had a couple more attacks. It was a bot or something, which knew how to attack from time to time.”
His service provider was less than useless. To fix up the battered servers at the time would have cost about $100,000. The start-up’s progress was already slowing. Mahek puts part of it down to his location. Some entrepreneurs are forced to operate out of their living rooms and kitchens; the entire ground-floor of his house is a temporary office.
In the heart of Hyderabad, the Indian state of Andhra Pradesh’s capital, HITEC City is thriving. Hyderabad Information Technology and Engineering Consultancy City, which sounds much less sexy than HITEC, is home to the country's top IT services, telecoms and related corporations.
The information technology park is still being built, at a cost of around $375 million. The infamous Cyber Towers, the first phase of HITEC City, were inaugurated by the then Prime Minister back in 1998. Oracle Software, Google India and Infotech currently grace the grounds, to name but a few.
“All the software companies are in HITEC City. It’s more famous in the press. So people are not willing to come and work for a software company which is not in this heart [of Hyderabad],” says Mahek ruefully. “I couldn’t get great talent.”
HITEC’s rise has coincided with perhaps the biggest e-commerce boom the emerging market has ever seen. India’s economy, while slowing to just below 5 per cent GDP growth this year, has boomed this century.
And internet penetration has been rapid too. The number of unique online visitors in India grew 50 per cent in the 12 months to November 2012, according to internet analytics firm comScore.
It is a boon for Indian entrepreneurs, whom are claiming a slice of the $300 million in investments made by VCs into India’s e-commerce industry. “India is at the cusp of a digital revolution. Declining broadband subscription prices, aided by the launch of 3G services, have been driving this trend,” says Milan Sheth, Partner and Technology Industry Leader at EY India, the leading consultancy.
“This has led to an ever-increasing number of 'netizens'.”
The industry has been braced for change. But Mahek sees the heightened competition as healthy. “I don’t see them as competition. The market is so huge and it’s just begun,” he says. “Even if 10 or 15 of the biggest players come, the market can absorb them.”
His company sells packages to SMEs which include a range of online services, using technology to increase operational efficiencies and visibility.
He sees the influence of cheap android phones as the biggest driver. The introduction of 2G and 3G technology has been adopted by people in rural India who don’t even have electricity, he says.
When Mahek graduated from MIP Politecnico di Milano, the leading Italian business school, he wanted to cash in on the e-commerce boom. His background made for a perfect fit. Before beginning an MBA in 2012, he studied mechanical engineering at IIT Madras, with an exchange program in UWA Perth during his third year.
One of his first roles was as an engineering consultant and business analyst at a firm in India.
But two years into running Active Analytic, he took a break from the cut and thrust of cyber-attacks and start-ups. The economic crisis in Europe, he says, presented the maximum opportunity to learn about business, and an MBA in Italy granted him the chance to sample the culture outside of India.
“The diversity in my class really helped; the perception of how to approach a client, the different ways to communicate,” explains Mahek.
When he got back to India and went a second round in the entrepreneurship ring, he says it was easier to find funding from venture capitalists with an MBA degree planted on his CV. “We are still trying to scale-up, but it’s a positive moment,” says Mahek.
If one start-up wasn’t enough, a product management role at [x]cube LABS, a leading mobile consulting firm, surely provided enough excitement. Mahek built software kits for the company and one product has just been nominated for an award.
He still works for the corporation on an ad-hoc basis, but it doesn’t slow him down. “I work very fast, so it’s OK,” he laughs.
The economic instability in other parts of the world has drawn more talent to emerging markets. Active Analytic is now able to hire well – regardless of their location. Mahek says they still operate from his home office, but also rent temporary office spaces around the city.
Now that his start-up has some stability, he is hoping to ride the e-commerce wave to new heights in Hyderabad. “Recently, there have been some amazing technology businesses here, and web and mobile products are viewed positively as something which makes services more accessible to consumers,” says Mahek.
“All these e-commerce sites are taking over the market without the market realizing it.”