Photo by Patrick Tehan / Mercury News Kanwal Rekhi, TiE president and multimillionaire, is treated like a movie star by aspiring young entrepreneurs, who press their business cards into his hand.

MANISH GUPTA made the three-hour drive from San Luis Obispo in his Volkswagen Jetta. ‘‘I don’t have the money to fly yet,’’ the 25-year-old aspiring entrepreneur confides, as he peers through black-rimmed spectacles at the hundreds of other South Asian hopefuls filling the conference room of the Santa Clara Marriott this October evening.

Maybe, Gupta thinks, he will bump into Vinod Khosla, a co-founder of Sun Microsystems who is now a venture capitalist with Kleiner Perkins. Maybe he’ll snag a moment with Sabeer Bhatia, the whiz-kid founder of Hotmail. A chance to bend the ear of K.B. Chandrasekhar would be sweet.

Just five years ago, Chandra, as he is known, was another anonymous kid like Gupta, hitting the Marriott conference room in hope of angling an introduction to Kanwal Rekhi, the first Indian to run a Nasdaq-traded company from Silicon Valley. Rekhi gave Chandrasekhar advice and money for his brainchild, Exodus, the Santa Clara-based hosting company whose sprawling buildings house the servers that connect businesses to the Internet. Today, Exodus is worth $12.5 billion.

Gupta doesn’t know if he will see these stars tonight, but it is possible. All these men, part of the valley’s booming galaxy of Indian business luminaries, are charter members of The IndUS Entrepreneurs, better known as TiE, which sponsors these monthly networking sessions. This is Gupta’s first TiE meeting, and he’s come with a pocketful of business cards to hand out to potential mentor-angels. Gupta is director of business development for SloMedia, which produces software that allows entertainers to share their work on the Web, whether it’s movies, music or other media. Chuck D., the bad boy rapper from the group Public Enemy, is one of SloMedia’s clients.

Gupta is hoping to make a Chandrasekhar-like connection that will take the year-old San Luis Obispo start-up to $12 billion stardom. Others in this very room have done it. Why not him?

Circle of fortune

United States history offers countless examples of enterprising immigrants banding together to carve out a niche in the business world for their ethnic groups. But TiE is different. TiE doesn’t open doughnut shops, nail salons or corner stores, the modest enterprises typically started by newcomers working their way up from the bottom of the economic ladder. TiE mints high-tech moguls.

	Photos by Patrick Tehan / Mercury News The monthly gathering of The IndUS Entrepreneurs (TiE) in Santa Clara attracts South Asians hoping to attract money and guidance for their start-up plans.

Since its founding eight years ago, TiE has focused on assisting budding entrepreneurs—mostly Indians and South Asians but also others. The key to the group’s success is mentoring. A few trailblazing Indian entrepreneurs such as Suhas Patil, founder of Cirrus Logic, and Rekhi, who sold his network equipment company, Excelan, to Novell for about $200 million in 1989, decided they wanted to make it easier for their young counterparts to follow in their footsteps. They have sought out young talent and helped aspiring entrepreneurs by sharing their business insights and, sometimes, their investment cash. (The Monte Jade organization plays a similar networking role in the Taiwanese and Chinese entrepreneurial community.)

It’s India’s classic guru-chela, or teacher-student, relationship, applied to a business context. The mentoring spirit has become contagious—and lucrative:

In 1995, Rekhi, who is TiE’s current president, invested $250,000 and his expertise into Chandrasekhar’s fledgling Exodus. The company was moving in four different directions at once. Rekhi, who took a seat on the board, advised his protege to focus on one task. Exodus quickly became the premier hosting company for servers—and Rekhi’s stake is worth $100 million. Now, Chandrasekhar has become an investor himself, backing more than 15 companies and serving on the boards of four.

In 1996, Patil put $2.8 million in RightWorks, a firm founded by Vani Kola, and got back more than $12 million. Kola has since left RightWorks, which sells software to companies doing business on the Internet, and has started mentoring and investing in aspiring entrepreneurs.

So the circle expands.

TiE isn’t behind every Indian success story in the valley, but it can claim some credit for many of them. And these days, there are many to be claimed. A 1998 study by AnnaLee Saxenian, a UC-Berkeley professor, found that Indian entrepreneurs headed 774 of the 11,443 high-tech firms started in the valley since 1980. They have surely founded many more since then. Fortune magazine recently estimated that the combined market value of the valley’s Indian-run firms is $235 billion.

Many of the top stars are TiE members, including Khosla, the Sun Microsystems co-founder and venture capitalist, who made Forbes magazine’s billionaires list, and Bhatia, who sold Hotmail for more than $400 million. Rekhi is worth $250 million, and he says he knows some 30 more Silicon Valley Indians with a net worth of at least as much.

American dream, Indian style

Gupta and the other hopefuls working the room with their Palm Pilots and business cards want desperately to join the circle. They share the same big dream with the same happy ending: Another Indian entrepreneur creates a successful company and a massive pile of wealth. The recent dot-com implosions and falling tech stocks notwithstanding, this bland conference room is burning with entrepreneurial fever.

The American dream seems especially alive in the monthly TiE meetings, perhaps because it involves an immigrant community that in the past has done well in the United States—but not Forbes-magazine-billionaire-list well.

As Chandrasekhar, the Exodus founder, put it in an interview, ‘‘I’ll tell you, this was something beyond my wildest dreams.’’ He sounded genuinely flabbergasted as he described his meteoric rise: Born in southern India. Graduates from Madras Institute of Technology. Moves to California. Two years later, he and a partner start Exodus, betting that companies flocking to the Internet would need someplace to house their servers. The company takes off and Chandrasekhar, who at one point was worried about paying the rent, becomes a multimillionaire before the age of 40.

‘‘I had heard of the American dream, but I never imagined that an Indian could be inserted into it,’’ he said.

Various forces have converged to bring about the explosion of Indian entrepreneurship. India has developed a network of highly competitive technical schools that specialize in churning out computer engineers—precisely the commodity craved by the valley’s high-tech firms, which constantly complain that they can’t find enough skilled American workers.

	Photo by Patrick Tehan / Mercury News Manish Gupta (center) hoped to make contacts for his San Luis Obispo start-up, SloMedia, at the TiE gathering in October.

Nearly half of the H1-B visas issued by the U.S. government have gone to Indian engineers, many of whom specialize in software engineering. And many have arrived just as the Internet has created a vast new business frontier—one that the valley’s Indians, given their particular skills, are especially well-positioned to exploit. TiE offers those with some initiative and know-how a place to refine their start-up ideas and seek venture capital.

Many of the roughly 500 people—nearly all of them men—at tonight’s October meeting have gold-plated résumés. They graduated from the finest technical schools in India, then came to the United States to do graduate work at America’s premier universities. They thrived at the valley’s blue-chip firms—the Intels, the Hewlett-Packards, the Ciscos. Then they took, or want to take, the plunge into the start-up world.

Gupta’s credentials, by contrast, are modest. When he was 6 years old, his family moved to California, where his father bought an oceanside motel just outside San Luis Obispo. After studying economics at the University of California-Santa Barbara, he worked as a financial adviser at Smith Barney and Morgan Stanley until he joined SloMedia.

Although Gupta never attended an elite Indian technical school or worked for a blue-chip valley firm, he feels strangely confident tonight, surrounded by techno-geeks. ‘‘You’ve got all these MBAs, all these Ph.D.s, all these tech guys,’’ Gupta says. ‘‘They have an IQ that would fill this whole room up. But a lot of these guys lack the social skills to succeed.’’ Gupta believes a knack for business and salesmanship is at least as important as technical know-how. So he’s not intimidated by all the brainpower in the room. ‘‘I think they should be intimidated,’’ he says brazenly. ‘‘They’re swimming in my water.’’

Inspirational stories

TiE meetings have three elements: A social period for intense networking, an inspirational tale from a high-tech titan, and an open microphone period in which anyone who wants the chance gets 90 seconds to pitch his ideas. Those who are most persuasive might get one-on-one meetings with Rekhi, who is inundated with requests for meetings and grants them to whoever has a striking idea—or the greatest persistence.

Like most of the people who come to TiE events, speakers tend to be young. At one recent meeting, iLeverage Corp. founders Dinish Katiyar, 32, and Eshwar Belani, 25—both of whom have Ph.D.s in computer science, keep their straight dark hair parted to the side and wear wire-rimmed glasses and khakis—made a presentation that was a consummate display of wonkish precision, with elaborate charts and subtitles. And yet they delivered their remarks with an ebullience that seemed anything but nerdy. They were brimming with that special brand of excitement inspired by the potential accumulation of vast wealth.

‘‘Silicon Valley is like an ice hockey game,’’ Belani said at one point, speaking in heavily accented English. ‘‘You can either sit on one side of the glass and watch the game go on, or you can be on the other side and help create it.’’ There was no doubt that the people in the room wanted to play the game.

At the October meeting, the featured speaker is Vinod Dham, the charismatic executive who oversaw the development of the Pentium chip for Intel. A different sort of star also shows up tonight: one of India’s most popular movie actors, Sunil Dutt. His presence is testimony to how important Silicon Valley successes are to the home country, where many Indian-owned American firms do business and recruit talent. Dutt, who looks like an ordinary middle-aged guy, is here to persuade the organization’s most successful entrepreneurs to support a cancer foundation he started in memory of his wife.

Back in India, Dutt tells the crowd, awestruck people speak of this incredible valley in California that is filled with Indian billionaires. ‘‘I said, ‘I better fly over there and take a look at them.’ ’’

Dutt’s presence impresses the young entrepreneurs, but they’re more interested in Kanwal Rekhi. From the moment Rekhi arrives at the start of the meeting, they swarm him as if he were a Hollywood star, pressing their business cards into his hand. When Gupta is introduced to Rekhi, he calls him ‘‘Uncle’’—a greeting young Indians have traditionally used to show respect for their unrelated elders. Rekhi, who already has a fat pile of business cards in his hands, takes Gupta’s.

‘‘I’d like to talk to you about my company when you get a chance,’’ Gupta says, trying not to come on too strong.

A heavyset man with a mischievous grin, dressed in his trademark khakis and polo shirt, Rekhi smiles and shuffles off. ‘‘Now he’s distinguished me,’’ Gupta says. ‘He’ll say, ‘I remember that kid. He called me Uncle.’ ’’

Interview with the Godfather

Gupta would love to arrange what Rags Rajagopalan, an eager young man across the room, has already engineered: a meeting with Rekhi. Once a week, Rekhi meets with a procession of young, would-be entrepreneurs who come to TiE’s modest Santa Clara headquarters to pitch their business plans.

Getting a slot on Rekhi’s crowded calendar isn’t easy, but one day last summer, Rajagopalan squeezed himself in after pleading with Bakul Joshi, who was then the keeper of TiE’s calendar. He landed an appointment at the last minute, then flew to San Jose from his home near Chicago, spending $1,600 on the plane ticket. After a canceled flight, then lost luggage, then a traffic jam caused by a crash on Highway 101, he arrived at the TiE office without a moment to spare.

Photo by Wes Pope / Special to the Mercury News Rags Rajagopalan, shown in his office near Chicago, vows to persist in his multi-faceted Internet endeavor despite a devastating critique from Kanwal Rekhi.

Fortune magazine recently described Rekhi as the Godfather of the valley’s Indian business community. He is 55 now, but retains the energy and spirit of a much younger man. Rekhi’s experiences, first at Excelan, the network equipment firm he and a partner started in 1982, then at Novell, which bought Excelan in 1989, convinced him that Indo-Americans faced workplace obstacles that white Americans did not. He was briefly interim CEO of Excelan, but says the company board decided it would be wise to have a native-born American at the helm when the company went public on Wall Street. He says they worried that an Indian CEO wouldn’t be well-received.

After the IPO, Rekhi again served a quick stint in the top job until Novell took over the company. Rekhi served as Novell’s chief technology officer, but he was passed over for the chief executive job twice in favor of non-immigrants who, Rekhi believed, were less capable than he was.

Since then, Rekhi has poured his energy into TiE, where he has developed a reputation as something of a business plan genius. And, taking dozens of young entrepreneurs under his wings, he has cultivated his Godfather image.

The Godfather characterization seems apt in another way as well: Rekhi is about to deliver his message to Rajagopalan with all the tenderness of a hit man.

A bright-eyed 30-year-old dressed in a blue shirt and black jacket, Rajagopalan has an online scheme to help advertising agencies and large retailers who want to place ads in newspapers and magazines. The venture is one of 10 Rajagopalan has organized under the umbrella of what he calls his ‘‘meta-company’’—Notiontide. He bills himself as the outfit’s ‘‘Chief E-vangelist.’’

Rajagopalan, who grew up in India and attended Poona University near Bombay, tells Rekhi he has already spent a lot of his own and his family’s money putting his plan together. He’s maxed out his credit cards and taken out a second mortgage. With a gush of youthful enthusiasm, he unveils his plans. ‘‘Our intent is to be an ASP for the media service chain. The concept is pretty gargantuan,’’ he says, tossing around jargon that only a recent business school graduate could love.

Rekhi isn’t impressed. And he is horrified that Rajagopalan has spent $1 million of his own money. The first job of an entrepreneur, Rekhi says, is to raise cash—other people’s cash. The way to do that is to inspire them and to put together a talented team of people who believe in you and your idea. Who’s on Rajagopalan’s team? Rekhi demands to know.

Several of his Indian friends are on board, the young man replies, but they have visa problems.

‘‘Those are not the kind of people you need!’’ Rekhi thunders. ‘‘You need mainline, quality people! You need whiteys!’’ Rekhi is laughing as he says this, but his point is simple: An entrepreneur needs a solid team. And to do business here in America, Rekhi believes, it is important for the team to be integrated. You’ve got to have people on board who understand the nuances of American culture.

When Rekhi came to the States in 1967, the Indian community was so small that he had no choice but to integrate. And he did so with gusto, eating burgers and learning all about football. Nowadays, he says, the young Indians have become too cocky; they think they can do it all themselves.

‘‘I’m having a tough time believing anything you’re saying,’’ Rekhi tells Rajagopalan. ‘‘What you’re showing me doesn’t pass the smell test.’’ Rajagopalan, who is seeking $2 million in seed money, informs Rekhi that he has won an appointment with Brett Maxwell, a Palo Alto venture capitalist. ‘‘I think Brett will throw you out of there,’’ Rekhi predicts.

Rekhi explains later that it is important to be honest and blunt with the young people who seek his advice. ‘‘Entrepreneurs must be hardened people,’’ he says, because only the fittest survive.

Incubators

Aspirants whose plans do pass the ‘‘smell test’’ and who impress Rekhi get more personal attention. He currently mentors four young Indians and two non-Indians, helping them make strategic decisions, sitting on their company boards, offering moral support. He is especially high on Prasad Raje, a prototypical Silicon Valley Indian entrepreneur who recently founded Instantis, a Sunnyvale start-up that is devising software that will make it easy for businesses to start and maintain interactive Web sites. Raje, who is 34, graduated first in his class at the Indian Institute of Technology in Bombay—no small accomplishment. India’s five IIT’s are the country’s top engineering schools—India’s version of MIT—but the admissions requirements are even stiffer. Each year, between 75,000 and 100,000 people take the nationwide entrance exam, competing for 2,000 seats.

Just as Ivy Leaguers have their own elite old boys network, so do IIT graduates. In 1994, when Raje, who’d gone on to earn a Ph.D. in electrical engineering at Stanford, recognized the Internet’s potential and started a small Web site business, he turned to some of his IIT buddies for both customers and investors.

More importantly, he rustled up early clients at TiE meetings, and by the time he was ready to launch Instantis, had won the support of Rekhi, who kicked in $250,000 in start-up money and helped recruit other investors, including B.V. Jagadeesh, who co-founded Exodus with Chandrasekhar. Just as important, Rekhi helped critique Raje’s business plan. ‘‘He’s the business plan surgeon,’’ Raje says of his mentor. The other entrepreneurs Rekhi currently mentors also attended IIT schools.

Suhas Patil, another prominent Indo-American angel investor and founding TiE president, also devotes much of his time helping young businessmen, most of them Indians. He recently opened a building in Mountain View with space for six start-ups. Patil’s mentees work there, operating rent-free and sharing administrative resources to reduce costs. When their companies are mature enough, they will venture out on their own and others will move in to replace them.

In sharp contrast to his friend Rekhi, whose style is brusque and confrontational, Patil, 56, comes across as tweedy and professorial—as very much the MIT faculty member he was before he founded Cirrus Logic, the semiconductor company. Patil says he drew some of his early entrepreneurial inspiration from Amar Bose, an engineering professor at MIT who founded a successful stereo speaker company. But when Patil was starting out in the valley in 1984, it offered no Indian role models for him to emulate.

Young Indians flock to Patil for advice. And they take creative approaches to win his attention. One offered him a ride to the airport so he could have a few minutes to pitch his business plan. Another gave a plan to Patil’s father and asked him to pass it along to his son. Chandrasekhar came and pitched his Exodus idea while Patil was laid up in bed with a bad back and couldn’t escape. Vani Kola, the founder of RightWorks, befriended Patil’s wife, Jayashree, and wangled an invitation to the Patils’ home to pitch her idea. Patil eventually parted with $2.8 million—enough to get Kola’s company started.

The mentoring network Patil and Rekhi initiated has begun to pay off in ways beyond cash. Indians have had to rely on each other, the two businessmen emphasize, because the mainstream business world traditionally has lacked confidence in companies run by Indians. They were viewed as highly competent technical people—wonderful engineers—but nobody thought they had the capacity to manage. Winning the backing of traditional venture capitalists was a daunting challenge. That is one reason TiE was founded: to help Indo-Americans, who felt they were bumping their heads on a glass ceiling at the valley’s mainstream firms, unable to rise to the highest levels of management.

Today, Rekhi says, companies with Indian managers are starting to have a certain cachet. ‘‘It’s like the civil rights movement,’’ he says. ‘‘We don’t have to sit at the back of the bus anymore. All of these things we achieved as a group through TiE.’’

Persistence

Despite the pummeling he took from Rekhi last summer, Rags Rajagopalan keeps coming to TiE meetings, flying all the way from Chicago. Tonight, he finds himself sitting just one table away from the Godfather. Much to his disappointment, Rekhi doesn’t even acknowledge him. Rajagopalan tries his best to shrug this off, just as he tries to shrug off Rekhi’s critical judgments at their private meeting.

‘‘Mr. Rekhi didn’t shatter my dreams,’’ he declares. ‘‘He was very good at telling me the honest truth. On the other hand, not all his judgments were necessarily right.’’

Nonetheless, Rajagopalan did a lot of reassessing after the session with Rekhi. He never met with Brett Maxwell, the venture capitalist Rekhi predicted would scoff at his plans. He didn’t get a response to his e-mails to Maxwell to confirm their meeting, he says. This may be just as well, he believes, since he’s decided to postpone fundraising efforts for the time being.

‘‘We decided to get real customers and real revenues before we sought capital. We want to show that our models work,’’ he says.

Rajagopalan says he’s wrestling with the question all entrepreneurs must confront at some point: How committed are you to your dream? Despite the money crunch, his answer right now is: He won’t quit.

Manish Gupta left the October meeting fired up about his dream—inspired by the speaker and impressed that ‘‘all those successful people would come to lend their support to people like myself.’’ He believes Rekhi might sit down and talk to him or respond to his e-mail. ‘‘This to me is a chance to be in the same shoes as the major players in the industry.’’

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BEN STOCKING is a Mercury News staff writer.