The Billion Dollar Mu Sigma Story – with Founder Dhiraj C. Rajaram

by: Team YS

It is befitting of a billion dollar company in the business analytics space to be named after the symbols of mean (Mu) and standard deviation (Sigma). Mu Sigma is one of the fastest growing companies in the world and has raised a gargantuan grand total of 163 million dollars in funding over its 9 years of existence. Mu Sigma also holds the unique distinction of securing the largest funding round ever by a business analytics company. The accolades that Mu Sigma has accumulated over the years is a rapidly rising toll. But, like all great companies, the core of the company is built around the beliefs and ideas of an intrinsically curious person. Founder, Dhiraj C Rajaram, had a novel idea which bore no intentions towards entrepreneurship. But as fate would have it, Dhiraj’s novel idea manifested itself in a hugely successful entrepreneurial venture and the rest, as they say, is history. Read on to know inside stories of one of India’s biggest entrepreneurial success story:


Dhiraj Rajaram, Founder Mu Sigma “Never thought of myself as an entrepreneur” Dhiraj is very open about his reasons for starting up and entrepreneurship. He says, “I never thought of myself as an entrepreneur. I never wanted to start a company or anything like that. I was happy, doing what I was doing. There were few thoughts that led to how the company got started.” For Dhiraj, it all started because of his unending urge to learn. His second reason to startup was to separate noise from the signals – in terms of information that comes to businesses in their day-to-day life. And the final reason was his belief that innovation in businesses was nothing but chance.  And more the trial and error, the better the chance to innovate. The more experimentation, the better the chance to innovate. With these reasons and a dream in his heart Dhiraj started MuSigma in 2004. The beginning of the company was humble, but today it is a multi-million dollar company. There were others in that space when Dhiraj entered the fray, like IBM, Accenture etc but that did not deter him. What those companies had were different people to do programming and business analysis whereas Mu Sigma thought of it in an integrated manner and decided to get onboard people who were a applied mathematician, professional analyst and programmer – all rolled in one – called a decision scientist. “I had told my wife that I had this brilliant idea. I told her that we would sell our home and put all our money into starting this company. She immediately said yes. I was very surprised and I asked her, ‘how did you agree so easily?’ And she said ‘there is no point in arguing with you, once you have already made the decision!’ joked Dhiraj. The hiring crunch Dhiraj ranks hiring people in the initial years as his biggest challenge. “I was constantly begging people to join my company!”, he jokes. But he remembered the challenge of getting the right people in the company very well, as he said, “I think, once we started getting customers, people started seeing us in a different light. I also used to keep talking to my friends in Chicago and other people in industry about the progress that we made, so that everyone knew what we were doing.” According to Dhiraj, joining a startup is a more a matter of the heart. As a part of empathizing with this nature of his employees, he admits to having gone out of the way to get these people into his organization. He says, “You should empathize with potential hires. In many cases, you have to talk with their families. I remember for one person, I had to talk with his mom to explain why joining my company is that important.” Put your money where your mouth is Recollecting the early days Dhiraj says he was adamant on not raising money from outside. “I actually put 80% of my personal money into the business. It was not easy, because it was all or nothing. When you put your own money, you have so much skin in the game. You will spend wisely and it teaches you a lot of things,” says Dhiraj. He further adds, “When I see entrepreneurs who have raised money as soon as they started their company, I think of it as a good thing and bad thing. Now obviously they are very smart; they were able to raise the money. But I think they also give up something far more important. And it’s not just the equity. Equity is just a small price part of it. The most important thing that they give up is, a lot of learning that would have come from investing your own money. You will treat it very differently.” After surviving four years on his own, Mu Sigma raised its first round of investment worth $30 million from FTVentures (now FTV Capital) in 2008. Subsequently, in April 2011, the company raised an additional $25 million from Sequoia Capital, followed by the third round of $108 million again from Sequoia and a private equity investor General Atlantic, which is the highest investment ever made in an analytics company. 3 Mistakes and 3 Learnings In the process of scaling to a multi-million dollar company, mistakes are bound to happen. What decides their success is in how they handle the adversity and learn from it. Dhiraj lays out three commandments for successfully scaling a company. He says – “When you are looking for people to be part of your team, their character is just as important as their aptitude. Mu Sigma wouldn’t have worked if the initial set of people didn’t have character that they had. All of them still continue to be great friends of mine. Some of them are still part of the company. And they are doing very well. Had I not listened to my gut when I was hiring them and had focused on aptitude only, we might have never made it here. It’s important to go with your gut in the early days.” “It’s important to accept and correct mistakes very soon. In a startup, there are no easy decisions that we take. You will face situations where those decisions are wrong. We made some wrong hires in the beginning and we had to let them go as soon as possible. It was important for us to make those corrections as quickly as possible.” “The last most important thing is that once you believe in your vision, there will be many people who will doubt it. The more important your vision is, the more people will oppose it. The ability to stand your ground for a long time and deliver in the fundamental premise for which you stand, is quintessential to build a company. It was tested when I started the organization. It even gets tested today.” The love marriage and the arranged marriage entrepreneur Dhiraj admits that he hasn’t seen many downs during his journey with Mu Sigma. His problems were slightly different. He says, “We have been quite successful from the beginning. Having said that we had different reasons to shut the shop. Some very big companies wanted to buy us out. That was quite enticing. But that’s actually when your belief gets tested. What I felt immediately after even thinking about those offers was some sadness because I thought if I sold out, the idea might die.” To Dhiraj, the continuum of the idea was paramount. He has no qualms in saying, “If I believe that the idea will benefit by me stopping to be an entrepreneur, I will do that. The idea will always have more importance than me. At the end of the day you are just a small part in the world.” He signed off by drawing a relationship between the types of entrepreneurs and the two main kinds of marriages in India. He says, “ There are two kinds of entrepreneurs. One are arranged marriage entrepreneurs and the other are love marriage entrepreneurs.” “The arranged marriage entrepreneurs are the ones who want to be entrepreneurs and they look for the right business. They shop around. They try out different ideas. They sit in Starbucks and meet with people. They talk to VCs, raise money and sometimes even exit. And like many arranged marriages they have beautiful endings.” “The second kind of entrepreneur is the Love marriage entrepreneur. He is somebody who has found a girl and wants to live with that girl. And as part of that he is ready to get married with that girl. The girl is the idea. I became an entrepreneur because I wanted to work on that idea.” So what’s your idea? Visit Mu Sigma. Entrepreneurs like Dhiraj are inspirational. We wish him and Mu Sigma all the very best!



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