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TAKING THEIR CUE



Nexgenix’s Indian Founders Decide U.S. Suits Their Style

When Rick Dutta and Don Ganguly finished college a few years ago, they had a decision to make: return to their native India or stay in the U.S.

They’re still here.

“There are so many opportunities here,” said Dutta, who has master’s degrees in business and engineering from the University of California, Los Angeles. “This is a country of entrepreneurs. This was an opportunity for me to start something of my own. In India, and most countries of the world, this opportunity is not available.”

Dutta and Ganguly, who graduated from the Wharton School at the University of Pennsylvania with a master’s in business, are taking advantage of that opportunity.

In the 10 years since the pair formed what’s now Nexgenix Inc., Dutta and Ganguly have grown revenue to $32 million in 1999 and say they are on track to double that this year. The Irvine-based company has 22 offices, including one in India.

But Dutta and Ganguly say that’s not enough.

“This is an organization that has to get to a billion dollars in sales,” Ganguly said. “In our business, you cannot aim for anything less.”

“If you’re not aiming for it, you’re not going to survive,” Dutta said. “It’s a critical mass.”

Nexgenix builds Web pages and offers electronic commerce, marketing and branding services. Among its customers: H & R; Block Inc., CBS’ SportsLine.com Inc., Sempra Energy’s Southern California Gas Co., Kawama.com Inc., Military.com Inc. and the latest, Thirsty.com, a site geared toward teens.

Dutta and Ganguly have attracted some high-profile attention. Negenix’s board of directors includes David Dukes, former co-chairman of Santa Ana based-Ingram Micro Inc., and Safi Qureshey, founder of now-defunct computer maker AST Research Inc. In November, the company lured $20 million in funding from Menlo Park-based Redpoint Ventures.

“They do quality work,” said John Walecka, managing director of Redpoint and a Nexgenix board member. “They have the capability to mine customer data and help vendors build a presence on the Net.”

Dutta and Ganguly each own 34% of the company. Redpoint owns 21% and Dukes and Qureshey 1.7% each.


IPO Still to Come

Earlier this year, Nexgenix filed for an initial public offering but called it off in May, citing market conditions. The pair shrugged off the cancellation, saying it’s just another event in their company’s life. They say they might pull the trigger later this year, if conditions are more favorable.

Dutta and Ganguly said that what differentiates their company from others in its crowded field is that they design Web pages that don’t merely conduct a transaction, but also form a relationship between the company and a client. They said it’s similar to the way a clerk at Nordstrom can pull out his black book to log the tastes of customers.


Back to School

Technology, marketing and the arts are three skill sets that Nexgenix Inc. aims to combine when building Web pages.

To find these skills, Rick Dutta is looking to UCI.

The chairman of Nexgenix is a member of the UCI Executive Roundtable, a group of 80 executives who raise funds for the university and provide advice to the university’s various schools.

Dutta is working with Graduate School of Management Dean David Blake to start a joint development project with students who are interested in areas like marketing.

He’s also involved in a group looking over the computer sciences at UCI, where he can observe new technologies and new students.

And Dutta has joined the Creative Technology Board, a group to advise the School of Arts on the future of new media, computer science and engineering. He wants to find students who can combine both the arts and computer savvy.

“We need to have creative people here,” he said.

Jill Beck, dean of the UCI School of Arts, said Dutta’s advice would be well received.

“We can use him for his business sophistication to strategize on how digital arts can be more helpful to the local economy,” she said.

, Peter Brennan

“The style of relationship that Nordstrom tries to establish with their customers is at a whole different level than their competitors,” Dutta said.

But what makes a company like Nexgenix particularly intriguing is that its employees are deciding which software and hardware its clients should use to build their Web pages.

While Internet hardware makers are a favorite among investors, the service arena is getting noticed as well.

In the first quarter, venture capitalists nationwide placed $2.3 billion in 202 Internet service companies, up from $273 million in 57 companies in the first quarter of 1999, according to PricewaterhouseCoopers.

Market researcher International Data Corp. projects the global market for Internet services will grow from $16.5 billion in 1999 to $102.7 billion in 2004. IBM Corp. is the largest player, but the rest of the market is highly fragmented. Nexgenix’s rivals include Boston-based Viant Corp. and Chicago’s Lante Corp.

Redpoint’s investment has helped Nexgenix expand. As of May 31, the company’s employee count had grown 130% to 480 from the prior year. At its headquarters, its growth has been 118% to 183 employees.

“People, people, people,they are our manufacturing engine,” Dutta said.

Among the key executives Nexgenix has attracted are Mark St. Clare, the former chief financial officer of Costa Mesa-based FileNET Corp., who joined in February as vice president and CFO. Dave R. Andrade, Nexgenix’s vice president of strategic accounts, is a former regional director of Sun Microsystems Inc.’s Northern California operations.


Long Road to OC

Where Dutta and Ganguly are today is a far cry from where they began. Both grew up in Calcutta. The pair first met as students at the Indian Institute of Technology. Each went a separate way to schools in the U.S. Afterwards, Dutta worked for Hewlett Packard Co. and Unisys Corp. while Ganguly was at Irvine-based MAI Systems Corp. and Bluebird Systems in Carlsbad.

In 1990, Dutta formed NexGen SI, with less than $10,000. Ganguly joined two years later.

“We were both at different companies, but one thing that was apparent to us was there were a lot of people in closed proprietary systems and there was a movement toward open systems,” Ganguly said.

The pair decided that if they could establish a methodology for building software in a predictable fashion, that would be their magic potion.

The first few years were tough. Dutta’s first office was a room above the garage of his Irvine home. Ganguly joined in 1992, but the pair remained tight-fisted. They would use American Airlines’ Admirals Clubs at airports as unofficial offices to entertain business clients. They’d buy Southwest Airlines 2-for-1 discount tickets to fly to San Jose to pitch their services. Off the freeway near San Jose, they found a hotel with a bank of telephones.

“You could sit down there and set up an office,” Ganguly said. “It was centrally located, near Oracle.”

It was a touch-and-go situation. Ganguly’s wife would tell him, “If there’s any inkling it’s beginning to fail, quit and quickly find a job.”

But they kept moving to bigger offices every six months. In 1998, they changed their focus from networking technology to building Web pages. They like to say that not only do they have the technical expertise to build Web pages, but they also have the muscle of top marketers and graphic artists.

“We’re kind of like ‘ER,’ where these guys come in on a stretcher,” Ganguly said.


New Directions

Last September, the company changed its name to Nexgenix because officials Dutta and Ganguly said the name better reflects their aim of being a full-service relationship marketing and technology provider.

Both Dutta and Ganguly receive the same annual salary, $204,988. Both are listed as co-chief executive. Dutta has the title of chairman and oversees relationship marketing, accounting, finance, operations, people and organizational strategy and the technology delivery organization. Ganguly is the co-chairman and oversees the sales, marketing, recruitment and the strategic alliances.

In a federal filing for its IPO, Nexgenix predicted it won’t be making a profit until the end of 2001. To get to $1 billion in annual sales, the pair indicated they will push an acquisition strategy, using stock as currency. The past decade has prepared them for what they expect to be tough slogging ahead.

“Nothing really changes as you grow the business,” Dutta said. “The stakes become higher and higher and the issues become larger and larger. Your stomach lining just gets tougher and tougher.”

The biggest obstacle, Ganguly said, is coming to grips with the lack of structure and how lonely it can be at the top: “Nothing you read in the textbooks prepares you for being that alone.”

The pair’s background has given them insights into India, where many large tech companies are establishing operations and where the pair opened an office five years ago. About a fifth of the company’s employees are there. They said it helps the company work around the clock and build Web pages more quickly:

“24/7 is a reality for us,” Dutta said.

Nexgenix recently moved into a new, 43,760 square-foot headquarters in the Irvine Technology Park, near the Tustin Market Place. On a recent tour, Dutta showed off a coffee bar and a pool table for employees.

“If it’s 7 or 8 p.m. and people want to take a break, they can use the pool table,” Dutta said.

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