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May 27, 2004

The Big Fight at Tracmail

There's nothing new about fights between Venture Capitalists and the founders of start-ups they've invested in. What's new about Businessworld magazine's detailed description of the battle between The View Group and Tracmail founder Adi Cooper is that such fights have now broken out in India's BPO sector. BW indicates that it is not just Tracmail. Similar battles are also being fought at other early-to-market call center firms like Epicenter and Infowavz as well.

According to the article, since Tracmail started out in 1999 - well before the BPO sector became a VC-darling - Cooper did not have too much of a choice about which VC to go with. So, he took "latched on to what was available" by selling "a hefty 50% stake" to The View Group for a "mere $7-8 million".

"Over the past two years, every time Cooper tried to replace his current VCs with investors who had a longer time horizon and bigger resources, The View Group would simply not agree on the price," the article says. The last straw was a three-way merger between Tracmail and two of its North America-based alliance partners (Webhelp and Spheronomics). "Spheronomics came in with north American management to boost the sales pipeline. That did not happen. So, in effect, with a North American cost structure and no incremental sales, the company has bled further," an unnamed Tracmail executive says in the article.

What's the latest position at Tracmail? According to the BW article, several members of Tracmail's senior management team (including the COO, CFO and CTO) have quit the company - with Chairman Cooper himself preferring to spend "most of his time at home" - the company's prospects don't seem too bright.

BW and its correspondent Snigdha Sengupta deserve kudos for coming up with such a rare and in-depth article on issues facing venture-backed BPO companies. The main negative in the article was that it did not contain any comments from either Cooper or The View Group. The reader is left to assume that the warring parties refused to speak to BW. It would have been better if the article told readers as much in the article itself.

Click Here to read the full article.