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The Capital Achievements of Anil Khatod

January 2009
The Capital Achievements of Anil Khatod

By Sindya N. Bhanoo

In 1962, a precocious young boy in Jaipur skipped kindergarten and started first grade. He was only three years old.

Clearly, Anil Khatod , who now calls Atlanta home, never slowed down. At 21, he was the co-founder of a successful company in Silicon Valley. Since then, he’s had an illustrious career with companies such as Nortel Networks and AirDefense, and has made personal investments in several start-ups. He is now Managing Director of Argonaut Private Equity, a diversified global venture capital and private equity fund with more than $3.5 billion under management.

Today, Khatod also serves as a mentor and an inspiration for a new generation of Indian-Americans. He is the president-elect of the Atlanta chapter of TiE (The Indus Entrepreneurs).

The ability to dream big while working hard is what has helped this enterprising professional. In 1980, Khatod arrived in the United States at the age of 21 to enroll in Stanford Business School. But almost immediately he met some Stanford alums who were starting a liquid crystal display company called Ladcor, Inc. They invited him to join them as CFO and Vice President of Operations. Something about the offer felt right, and full of possibility. So he took a major gamble and dropped out of one of the country’s most prestigious business schools. He was tasked with the difficult duty of raising venture capital for the company. It was not an easy time to start a company — interest rates were high, and investors were picky.

“Venture funding was very, very scarce,” Khatod recalls. Though he himself was inexperienced, his colleagues helped guide him through the process. Plus, the idea was good. “Even in difficult times good ideas always get funded,” he observes. Khatod’s persuasive spirit and the company’s solid business plan helped him raise $ 3 million of investment capital. By 1981 the company was pulling in more than $ 18 million in annual revenue, and had grown from five co-founders to 200 employees.

Meanwhile, Khatod’s personal life was changing, too. In 1981, he visited India to get married and returned to Silicon Valley with his wife, Shubhra.

In 1982, when Ladcor was bought out by another company, Khatod’s extended family advised him to try working for a larger company. So he took a job with Nortel Networks, where, over the course of the next 19 years he made his way up the ranks. He served in various senior executive roles including VP of Marketing & Sales, VP of Operations, Division President of Optical Networks, and Chief Marketing & Strategy Officer of the company. Anil is widely recognized as the driver of Nortel’s success in the optical networks sector, where he led the business and operations to a record ten-fold growth in four years, enabling the company to reach $10 billion in revenue and more than $2.5 billion in earnings.

Meanwhile, Khatod also invested in a number of other ventures and start-ups as an angel investor. As a general partner at Argonaut, he has invested in fourteen companies in the United States, India and Israel and currently sits on the boards of ten companies in these countries. Three of the companies he has invested in went public during the summer of 2007 and one in January 2008.

After Nortel, during his three-year stint as the CEO of AirDefense, a wireless security company that was eventually acquired by Motorola, Khatod led the company to notable achievements that earned them several awards including: “Top 10 most innovative companies in Georgia (2006)”; “Top 100 private companies in US” —Red Herring; “Best wireless security technology 2005” —InfoWorld; “Top Innovators in US” — Red Herring; “2005 and 2006 Pace Setters award” for fastest growing companies — Atlanta Business Chronicle.

Khatod has addressed Congressional Committees on matters of technology, and has also been invited to the White House where he was recognized for his contribution to the telecom field. The formal recognition was at the Ford Theater where he and his wife, Shubhra, were guests of President and Mrs. Bush.

At home in Atlanta

Khatod and his family moved to Atlanta in 1986 through Nortel Networks, and though his work has taken him around the world over the years, Atlanta, he maintains, will always be home. “I had so many opportunities and I could dictate my location preferences but Atlanta feels like home,” he says. “Shubhra and I have an extensive social network here.”

He has used his time in Atlanta to work with charitable organizations as well as local companies. Last year, during a TiE conference in Atlanta, he came across a start-up called Sriya Innovations, a local company focusing on alternative energy and biofuels. Impressed by the founder, Khatod made an initial angel investment. Recently, the company won venture capital funding from Kleiner Perkins Caufield & Byers, the country’s premier venture capital firm.

Yoel Fink, the CEO of OmniGuide, a start-up Khatod serves on the board of directors, has this to say about him: “He has a deep understanding about how to interact with people and motivate them. (And he has a) way of getting people to understand, and be persuaded in a very mild-mannered way? he’s probably one of the more talented people that I’ve met in that area. In the end that’s all any of us are doing, working with people.”

“It’s very nice that you can still be both successful and humble. It teaches a new generation that one doesn’t need to be arrogant if they have a few dollars,” Fink says of Khatod’s humility.

Passing enterprise and charity onto the next generation

Khatod also maintains strong ties to India. Seven years ago, he founded a charitable organization called India Relief Fund, which provides financial and in-kind support to charities in India. One of the organizations they have funded is a leprosy ashram in Khatod’s hometown of Jaipur.

The entire Khatod family is invested in the work of the non-profit organization. “The children are both deeply engaged in the work we’re doing,” Khatod notes. “It’s not so much about the money but about actually going and spending time there.” The family also has entrepreneurship in their blood. Khatod’s father ran a department store in Jaipur, and his forefathers were also businessmen. “I don’t think I ever said or thought I’d be an entrepreneur, it just happened naturally. I have a natural affinity for risk-taking,” he said. “Entrepreneurship is about people who want to change the status quo. It’s about people that are always thinking about how something can be done better.”

His children, Khatod observes with pride, have this spirit running through them, too. “I expect from my children what my father expected from us,” he remarks. “Education is nothing but a way of thinking — and the idea is to get the best possible education and get into the best possible school.” His older son, 22-year-old Sumit, who graduated from MIT this year with a degree in engineering and economics, will be working as a consultant for McKinsey and Company. Entrepreneurship is in his long-term plans. “I see him following in my footsteps,” Khatod says. “He’s certainly a fairly good reflection of me.”

His younger son, Sahil, 18, is a senior in high school and going through the college application process. Sahil’s work with the India Relief Fund has made him passionate about social issues. “He is likely to be a social entrepreneur. He wants to eradicate poverty and is deeply committed to human rights,” says Khatod.

Like his father before him, Khatod wants his children to be well educated and well trained. Beyond that, the support that he and Shubhra provide is only to help their kids be the best at what they want to be. “The idea is to let them be themselves. And help them get there.”

He is optimistic about the next generation, and believes the best is yet to come. “Sometimes in the second or third generation that passion to win goes away,” he points out. “But in our children and many of our friend’s children I see a lot of focus, and they are doing very well.”

“Entrepreneurship is never easy,” Khatod observes. “It’s not easy now; it wasn’t easy anytime in the past. It takes much perseverance and total belief in what you’re doing.” But the hurdles, he says, should not stop anyone. “You need to go out, explore and make things happen.”

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