Book Extract | The Groundbreaker: Risks, Rewards, and Lessons from a Legendary Entrepreneur, Kanwal Rekhi,- Moneycontrol.com
Excerpted with permission from the publisher The Groundbreaker: Risks, Rewards, and Lessons from a Legendary Entrepreneur, Kanwal Rekhi, published by HarperBusiness, an imprint of HarperCollins India.
But there was still much about Ray for me to unravel.
In April 1990, Ray agreed to merge Novell with Lotus. The $1.5 billion dollar deal was announced in April. A straight stock swap, it was expected to be the largest software industry deal at the time. The New York Times noted that networking was "the most rapidly growing segment of the computer industry" and framed the deal as "an effort to deliver a competitive blow to the Microsoft Corporation, the leader in personal computer software." Ray seemed to see it that way, too. But later analysis of the deal in The Times questioned whether the merger really was "an ideal match."
I never thought it was. Novell was the better, more profitable company, yet we were going to become a subsidiary of Lotus. It made no sense. And Ray? He was uncharacteristically absent — and apparently unreachable — when details needed to be hashed out. As the senior executive in charge, I was asked for directions. What do we do? How do we make this merger work? Where's Ray?
Lotus CEO Jim Manzi complained that he couldn't reach Novell's CEO. I had to admit I couldn't reach him either.
"How are we going to do this deal?" he asked.
"I don't know anything about the deal," I said. "Ray hasn't told me anything."
This was not the way deals got done — not serious ones, anyway. Yet the theatrics continued. When Ray resurfaced, he told Manzi to come up with the deal points. "Fill in the blanks," he said. That was another bizarre request. Discussion of the deal among our board added to the surrealism of the situation. Ray listened while company attorney Larry Sonsini praised him as a visionary who had shaped the industry and championed his audacious move to take on Microsoft.
Some of the board members chimed in with their endorsements.
Then it was my turn. I held nothing back.
"The merger doesn't make sense to me," I said. "None of the terms make sense to me. None of it does. But if Ray wants to do it, who am I to stand in his way?"
Ultimately the board fell into line like dutiful soldiers. Ray had the support he needed. But not so fast. A twist was still to come. Ray had the final word. This was his company after all. All eyes turned to Ray. He hadn't spoken a word the entire meeting. He scanned the room, letting the tension build, and after a long pause, he finally addressed us.
"Why are we doing this merger?" he asked. "You all seem to think we should do the deal?"
I interrupted. "I don't want to do it."
Then Larry, who had sung the deal's praises moments earlier, changed his tune. "Ray, I don't understand why we are doing it either."
In a stunning reversal, Ray agreed. It was the only time he spoke. And only four weeks after the merger was announced, the deal was dead. Ray told me to call Lotus's CEO. I refused, it wasn't my mess to clean up. Larry delivered the news instead. In hindsight, I don't think Ray ever intended to make a deal. It was about making a statement. Ray wanted to solidify Novell's position as an industry heavyweight while giving Microsoft a scare. Ray knew what he was doing. It was a masterclass in corporate theater. And in that respect, he was very successful.
But something about this gambit nagged at me. Why was Ray wasting time and resources on mind games? It was a red flag, and this fixation ultimately led to Novell's undoing.
Back to the Future: Silicon Valley and India's Awakening
In the early days of Silicon Valley, India wasn't on anyone's radar — not yet. The tech world was exploding, but India was seen as little more than an afterthought, a distant market that didn't warrant serious attention. That changed for me in the most unexpected way.
The merger with Novell catapulted me into a new role as the first Indian director of a billion-dollar company. It was a milestone not just for me but also for the growing Indian-American community in the Bay Area. By then, Indians were making their mark. Over 80 percent of Indian professionals in the Valley had arrived post-1970, with more than half holding advanced degrees. Nearly a quarter of all foreign-born engineers were Indian. We were no longer outsiders. Tech had leveled the playing field, and in the Valley, it wasn't about where you came from — it was about what you could build.
And then Harish Mehta walked into my office in Utah.
Harish was different. A young entrepreneur with the optimism of a dreamer and the persistence of a hustler, he had a message I hadn't expected to hear: India was ready. "The same tech language you speak here is being spoken in India," he told me. He wasn't just making a pitch; he was planting a flag. "India is changing. It's going to be an IT powerhouse. You should sell your software there."
At the time, like most of those in tech, I viewed India as we did Europe — a market we'd get to eventually, but not one to prioritize. Harish was undeterred. He had returned to India after earning his master's in electrical engineering and working in the US, determined to help shape its tech future. He co-founded NASSCOM, a body that would go on to define India's IT sector, and launched his own software company, Onward Technologies. Now, he wanted to partner with Novell.
I wasn't convinced. India didn't seem like the opportunity Harish was making it out to be. I declined his proposal outright. He listened patiently, then leaned in with the quiet confidence of someone who knew he was right. "You don't have to invest a dollar," he said. "Just license me to sell your software in India."
His persistence worked. We created Onward-Novell, a joint venture where Novell held 51 percent and Harish 49 percent. We licensed him our product at a steep discount — 65 percent. Harish kept his promise. Onward-Novell became a runaway success. Novell gained a new revenue stream from a market it had deprioritized, and Harish built the groundwork for India's emerging IT industry.
But for me, this wasn't just about the bottom line. India was always in my heart. Even though my entire family had joined me in the US by then, it was still home in ways that words can't fully capture. Walking back into India through this partnership felt like returning to a place I'd never fully left.
Looking back, Harish was my wake-up call, and his vision was prophetic. He saw what the rest of us couldn't yet: that India wasn't just catching up — it was taking its place on the global tech stage. Sometimes, it takes someone else's conviction to change or broaden your own trajectory. For me, that someone was Harish Mehta, and the journey we started together opened up a new path — for Novell, for me, and, in many ways, for India.
The Synergy of Bold Moves
NetWare 3.1 and 3.11 were done under my direction. Though I faced some resistance within the company as always happens when someone tinkers with the primary revenue source and people question whether it is a smart thing to do, it was a smashing success. The upgrade was released between October 1990 and March 1991 and showed the synergy of our two companies.
Novell was a bright light within the industry. Sales and profits took off and the stock price began a steep climb that continued for a couple of years. Ray and I could not have been closer. We met with Oracle founder Larry Ellison. Oracle had got itself in a financial crunch; Larry wanted to borrow $200 million. Ray, in a gesture of trust, let me lead the conversation, which irked Larry.
My offer — $200 million at LIBOR (the cost of borrowing among banks) plus a 10 percent warrant coverage at the market price of Oracle stock — upset Larry, who stomped out of the meeting and never spoke to me again. Ray confided that he would have asked for harsher terms — LIBOR plus 2 percent plus warrant coverage, but the lesson was clear: knowing your worth and playing to your strengths matters, even if it ruffles feathers. Larry got his loan elsewhere and obviously did just fine. We moved on, too. For me, the lesson was clear: knowing your worth and playing to your strengths matters, even if it ruffles feathers.
Despite our camaraderie, one aspect of Ray's leadership baffled me — his deep animosity toward Microsoft. His disdain for Bill Gates and his second-in-command, Steve Ballmer, bordered on obsession. Ray often referred to Gates as "Pearly Gates" and Ballmer "the Emballmer," quipping, "You have to pass through the Emballmer to get to the Pearly Gates." It was a peculiar blind spot for an otherwise strategic thinker and only added to my insight in the almost religious war Ray was engaged in.
In February 1991 I went to Ray with a move that I knew would resonate with his competitive instincts. I proposed buying UNIX. It was a bold way to compete with Microsoft, giving us a powerful application server to complement our file server. UNIX's existing challenges — lack of profitability, standardization, and distribution — were problems Novell was uniquely positioned to solve. Our distribution network, engineering capabilities, and customer base made the acquisition a perfect fit.
We would have another powerful product to send through our sales channels to our existing customers and most likely add new customers. And we would inherit a top-notch engineering team. All for stock.
"It's hard to imagine anybody besides Microsoft who is likely to be very unhappy," I told Ray. "A Novell backing of UNIX may put Microsoft's future OS's (NT) at great risk. That alone may justify doing it."
I pitched the idea to AT&T, which owned UNIX Systems Laboratories (USL) but was pivoting to hardware through its NCR acquisition. Software was no longer a priority for them. I initially prepared to pay up to $1 billion but sensed an opportunity to negotiate.
I offered $250 million. AT&T countered with $300 million, and we had a deal. The agreement was announced in December 1992 and finalized in July 1993.
Post-acquisition, I quickly turned the economics in our favor. USL had $50 million in the bank, effectively reducing our cost to $250 million. I negotiated one-time fees for perpetual UNIX licenses with IBM, Sun, and Hitachi, securing $235 million in total. This move effectively recouped our investment, and we still retained full control over UNIX. It was a masterstroke.
Now Novell was positioned to compete directly with Microsoft's NT on an equal footing. However, unbeknownst to me, it also stirred up internal tensions. What I viewed as a strategic coup began to sow division within the company. Paranoia and animosity surfaced, and over time, these undercurrents would lead to my exclusion from Ray's inner circle.
But separate from that, the story of UNIX's acquisition and integration epitomizes the power of bold, strategic thinking. It was a golden deal by any measure, proving that calculated risks and decisive action can yield big rewards. Yet, it also serves as a reminder of the complexities of leadership — how external victories can sometimes exacerbate internal challenges.
Leadership, as I've learned, isn't just about making great deals. It's also about navigating the human dynamics that come with them.
NeXT
Meanwhile, after Novell's acquisition of UNIX was announced, I received a call from Steve Jobs. He requested a meeting. I didn't know Steve but obviously knew of him, and I had been present at Davies Symphony Hall on September 19, 1990, for the announcement of NeXT computer. There he claimed to have orders for 15,000 of his new computers! That turned out to be a little bit of an exaggeration.
We met for dinner at Gaylord's, his favorite Indian restaurant, in Menlo Park. Steve arrived with an entourage of seven. A connoisseur of Indian food, he said that he had called ahead and pre-ordered dishes for the table, assuring me that I would approve of his selections . Why waste time looking at menus? Within minutes, busy waiters filled the table with tandoori chicken, fish curry, aloo gobi, and other dishes. Small talk ceased and Steve got straight to business. Whatever Novell was up to with UNIX, it was the dumbest thing he had ever heard. Yes, he was that blunt.
And even more intense. He wanted us to take his software and compete against Microsoft Windows for desktop dominance. He didn't propose this as much as he declared it as necessary as breath, as obvious as the color of the sky. It must be done. Except Novell software didn't make sense on Steve's machine. And when I told him that and explained why — because his was a desktop machine designed to compete with Microsoft and we were server providers — he flew into a somewhat restrained rage. We were in a restaurant, after all.
I could only imagine the man's wrath in a conference room. He called our strategy dumb and insinuated that I was no better. Then, suddenly, dinner was over. Steve got up and walked out, his entourage trailing behind. I was left alone at the table, staring at eight mostly untouched plates of Indian food — and the bill for the whole lot.
Understanding Ray's Obsession
Sometimes, you only understand a person when you see their battles up close.
My perspective on Ray's fixation became clearer during a critical period when I was deep into securing the UNIX deal for Novell. Around the same time, Ray orchestrated the acquisition of Digital Research, the makers of DR-DOS. His intent? To challenge Microsoft head-on. Windows 3.1 had just come out, bundled with Word, Excel, MS-DOS, and LAN Manager. It didn't matter that some of those products weren't as good as ours — Microsoft knew the power of the bundle.
The deal for Digital Research came in at $80 million, done as a flat stock transaction. "Here's $80 million worth of Novell stock," was the offer. Straightforward, but poorly timed. Novell's stock doubled in value shortly after the announcement, effectively making the acquisition cost $160 million. Digital Research's team walked away ecstatic; I wasn't as thrilled. But Ray? He didn't flinch. As The New York Times put it, "Novell was adding weapons for the contest with Microsoft." They were right — this wasn't just business competition. For Ray, it was personal. It was war.
That's when I began to see a side of Ray I hadn't fully grasped before. There were two powerhouse software companies in Utah at the time: Novell and WordPerfect. I suspected that the larger Utah community, perhaps even the Mormon Church, had recognized the state's future was tied to software. And Microsoft's growing dominance threatened that future. For them, Microsoft wasn't just a competitor — it was an existential threat. Maybe Ray had been handed an unspoken mandate: "Stop Microsoft, whatever it takes."
I didn't share this vendetta. I argued with Ray about it. "Microsoft's strength is on the desktop, Ray," I said. "We're about servers and networking. They sell more DOS, and we sell more NetWare. We're partners."
Ray wasn't having it. "They are evil," he declared.
I couldn't resist asking, "How are they any more evil than us?"
But then Microsoft made an unexpected move. They approached Ray about a merger. On the surface, it seemed like a coincidence. But knowing how strategic Gates was in business, it's hard to believe he wasn't aware of Ray's animosity. Bill Gates didn't back down from a fight, and now we had what felt like a chess match between two grandmasters. Ray said yes to the talks, even musing about whether the government might block the merger. But Microsoft reassured him: "We've got D.C. covered."
That's when I was pulled into the whirlwind of negotiations. Ray, always enigmatic, remarked, "We all have to go to the Pearly Gates sometime."
From a strategic standpoint, the merger made perfect sense. Microsoft lacked strong networking capabilities; Novell had them. Together, the companies could've been unstoppable. But that wasn't the real agenda. For Microsoft, this deal wasn't just about synergy — it was about neutralizing the one company bold enough to challenge them head-on. They were willing to pay handsomely to eliminate a potential disruptor.
Then came the twist. Right before the deal could close, Microsoft announced they were acquiring FoxPro for $75 million. FoxPro was a database solution — a glaring gap in Microsoft's portfolio. The ripple effects were immediate: Borland, which had cornered the database market after acquiring dBase, saw its stock price plummet. But the announcement had another unintended consequence. It enraged Ray.
"Why didn't they tell me about FoxPro?" he fumed. In a moment of fury, he killed the deal.
Looking back, I wonder if Ray ever intended to finalize the merger.
Maybe he was just playing his adversary, dragging Microsoft into the negotiation. Or maybe it was the other way around, with Gates using FoxPro to provoke Ray into walking away.
As I had warned before, "If you shoot at them, there's a very good chance they'll shoot back."
**********
Kanwal Rekhi, The Groundbreaker: Risks, Rewards, and Lessons from a Legendary Entrepreneur, HarperBusiness, an imprint of HarperCollins India., 2025. Hb. Pp. 288
"We don't do that in this country," my professor said. I told him that I didn't cheat … I found the test easy. The next time he gave a test, he stood directly behind me the entire time. When I scored even better on this one, the professor summoned me to his office again and said, 'If you're cheating, you're very good at it.' Rather than get upset by his insult, I enjoyed knowing I had done well on the test. It was not my problem if the professor did not believe his own eyes."
On a freezing cold night in 1967, Kanwal Rekhi arrived at the Michigan Tech campus as a student. He was part of the first wave of Indian emigres, known as the $8 Men, a moniker stemming from India's effort to stem the loss of brainpower from the country by allowing those who were leaving to take only $8 of currency. In the decades that followed, Rekhi went on to create history in the global technology and entrepreneurship space.
Dubbed the "Godfather of the Silicon Valley's Indian Mafia" by Fortune magazine, Rekhi rubbed shoulders with luminaries such as Bill Gates, Steve Jobs, and Larry Ellison on his meteoric ascent in the tech industry. He went on to advise Presidents and Prime Ministers on culture-shifting policies, and is perhaps best known for his work inspiring and launching the careers of thousands of aspiring entrepreneurs, many of whom have become millionaires and even billionaires.
In The Groundbreaker, Rekhi shares a firsthand account of what it meant to be an American at the dawn of the digital age, what it means to be an American now amid massive change and uncertainty, and why democracy is crucial to the role entrepreneurs play in moving the world toward a better tomorrow.
More than a memoir, this book is a call to action-for dreamers, doers, and those brave enough to bet on themselves. With lessons on resilience, leadership, innovation, and purpose, it's at once a deeply personal story of overcoming adversity and an urgent rallying cry for the next generation of changemakers.
Kanwal Rekhi was the first Indo-American founder and CEO to take a venture-backed company public on the NASDAQ. He has founded and built The IndUS Entrepreneurs (TiE) into the largest global network of Indian entrepreneurs, and co-founded Inventus Capital Partners, where he applies his time, energy, and attention for building the venture franchise into a catalyst for India's tech revolution. He went to the United States from India for graduate studies, advanced through the engineering ranks in a number of technology companies, and then co-founded Excelan in Silicon Valley to commercialize Ethernet and TCP/IP — standards that became the basis of the internet as we know it today.
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