Before the Bansals of Flipkart and their Walmart billions there was Rajesh Jain, India's first internet hero whose 1999 sale of his start up to Satyam Infoway for the then princely sum of Rs 499 crore truly ushered the digital era into the country. IndiaWorld Communications, the company he had set up just four years ago with his own funds, ran a clutch of India-centric sites including khel, khoj, samachar and bawarchi with moderate success. Enough though to catch the eye of the still scorching Satyam group.

With DSP Merrill Lynch playing cupid, a deal was quickly cemented and announced to a disbelieving Indian audience and a cheering investor base on Nasdaq where Satyam Infoway had listed barely a month back. The company’s American Depository Share (ADS) rocketed nearly 50% on news of the agreement sending its valuation soaring and justifying the price it had paid.

The transaction itself was complex with Sify acquiring 24.5 percent for Rs 122 crore in November 1999 and putting in a deposit of Rs 51 crore for the option to buy the remaining 75.5 percent for the balance Rs 325 crore by June 2000, which the Chennai-based company, did with a mix of cash and stock.

Calling it the deal of the century may sound like an exaggeration until you consider IndiaWorld’s turnover of Rs 1.3 crore in 1999, the unproven nature of the business and the audacity of the valuation.

Crucially though, even on that miniscule turnover Jain’s company was profitable. He operated out of a tiny 250 square feet office in Nariman Point in Mumbai where an office peon sat in front of the TV and updated scores on its most popular site, the pioneering khel.com.

Just two years ago, another Indian, Sabeer Bhatia, had, along with co-founder Jack Smith, sold the email service hotmail that they had set up in 1996 to Microsoft for around $500 million. But that payout was in a distant land. With the IndiaWorld acquisition, the short-lived dotcom boom took off in India. Suddenly, cushy corporate jobs were being abandoned in the race to be the next big thing.

Less than a year later most of those dreams lay in tatters. While many blamed the irrational exuberance of the markets, the fact is most of the early entrepreneurs had little idea of how to run a business. Jain was different and perhaps lucky. The IIT Mumbai engineer with an MS from Columbia University had worked for US firm Nynex for nine years before making his way back home to bootstrap a pioneering business.

He was also one of the early entrepreneurs to launch internet shopping in the country but paisavasool which he started in March 2000 met with little success. In later years he went to start a marketing technology company Netcore Solutions before turning his attention to politics.

Author's note:

Sundeep Khanna is a former editor and the co-author of the recently released Azim Premji: The Man Beyond the Billions.