In just a few years' time, Ken Bajaj made a fortune helping companies, small and large, shift from outdated mainframe computer systems to the "client-server" systems that are ubiquitous today in American industry.
So successful was Bethesda-based I-Net Inc., the company Bajaj and his wife founded to aid government agencies and companies with their computer system design needs, that it was bought two years ago this month by computer-services giant Wang Laboratories Inc. for $167 million.
Now Bajaj, a former electrical engineering professor who also worked for Texas billionaire Ross Perot, hopes to replicate that stunning success with AppNet Systems Inc., his new Bethesda-based venture, which he's aimed to ride what he calls the "next paradigm shift" for business: The Internet.
Bajaj, a 56-year-old father of two sons, believes that during the next three to five years, American corporations will embrace the Internet in droves as an indispensable tool for doing business, whether it be ordering parts and supplies from vendors or communicating with workers in far-flung offices or selling products and services directly to an increasingly wired globe.
Garnering business in the burgeoning electronic commerce industry, crows Bajaj, "will be like fishing in the Pacific Ocean."
International Data Corp. agrees. The consulting outfit projects that Internet-related commerce -- people buying goods and services over the Internet -- will grow more than 100 percent and generate $400 billion in revenue by 2002.
Bajaj, who immigrated to the United States from India, has his eye on that pot of gold. The unabashed goal for the venture, he says: build the leading electronic commerce consulting and systems integration outfit in the nation and take it public.
Part of AppNet's strategy is to capture a piece of that volume through its Seattle-based Internet transaction center. AppNet would garner a fee for every electronic commerce its center handles in much the same way banks charge fees for use of their automated teller machines.
Late last month, Golder, Thoma, Cressey, Rauner Inc., a Chicago-based private equity investment firm, backed Bajaj with $100 million in financing to buy up promising Internet service boutiques and operate them under the AppNet umbrella.
Bajaj goes so far as to project that AppNet potentially could generate $1 billion in revenue five years from now. And, he predicts, it will be as well known as Amazon.com, the publicly held online book retailer, which, despite its fame, has yet to post a profit. So who is this self-professed visionary of the wired world?
Until GTCR announced its funding of AppNet, Bajaj and his former company, I-Net, had not received much in the way of coverage from local newspapers or computer industry journals. Coverage was relegated to a few obscure trade publications, such as Federal Computer Week.
Indeed, many Internet experts and information technology consultants had never heard of Bajaj -- or AppNet -- until the GTCR deal was announced July 28.
But that lack of publicity didn't deter GTCR, said Philip A. Canfield, a principal in GTCR, the equity firm backing AppNet.
Canfield says GTCR spent months researching business ventures aimed at grabbing a share of the burgeoning Internet services industry and eventually locked its sights on Bajaj and his vision.
Canfield said Bajaj also has an uncanny sense of what companies will need next in computer technology, is skilled at managing large contracts for complex work, and is a stickler for hiring a first-class bullpen of employees.
Explains Bajaj, "I always hire people smarter than myself, and then give them the more freedom to do what they do best than anywhere else. My philosophy is that if you give really smart people enough responsibility, they will surprise you."
Staffing challenge
Indeed, Bajaj sees AppNet's toughest challenge ahead as finding and hiring the best players in the Internet industry. "I like to surround myself with the best people. That will be a top goal here."
AppNet, which has just 12 employees at its Bethesda headquarters, has already made two acquisitions, and more are forecast in the next month. By the end of September, the company forecasts, it will have 340 employees nationwide, said Julie Colton, marketing services director.
Bajaj says his personal formula for success also includes 15-hour work days.
His career started humbly enough. After graduating from the University of Michigan with a doctorate in electrical engineering and system sciences, he tried his hand at teaching.
Soon, private industry beckoned. After a stint at Washington-based Computer Sciences Corp., Bajaj was hired at computer systems giant Electronic Data Systems Inc., founded by Ross Perot.
It was while working at EDS that Bajaj began to display an acumen for business, and his career, as he puts it, took a pivotal turn when he helped the company land a plum government contract with the Army.
At the age of 39, Bajaj says, he found himself in charge of seeing to it that the $656 million deal to upgrade the Army's massive global computer system was done right and on time.
EDS then put the former professor in charge of overseeing the design and installation of a new computer system to automate car plants for General Motors Corp., which bought EDS in 1984.
"My job was on the line every day," recalls Bajaj. "The computer industry is unforgiving. If you make a mistake, you're never heard of again."
Luckily for Bajaj, no such fall from grace ever came.
His first experience with launching a start-up came in 1986 when he was among the EDS employees who left the company to help Perot launch Perot Systems Inc. after he was forced out of EDS by GM's board.
Perot set up Herndon, Va.-based Perot Systems to compete directly with EDS.
Bajaj sprang loose from Perot Systems in 1988 to help his wife of 25 years, Kavelle, run I-Net. She had founded the company in 1985 after Bajaj had suggested that government agencies needed help designing, upgrading and managing mainframe computer networks.
By the mid-1990s, Bajaj had the company's eye set on what he thought would be a big trend in computer services: helping government agencies and private industry shift to client-server systems, which allow far-flung computer networks to be managed from a central site.
Banking on luck
At the time Wang bought I-Net in August 1996, the company had $340 million in annual revenue and 3,200 employees worldwide, 1,000 of whom worked in the Washington, D.C., area. Its client list included corporate heavyweights Novartis, British Petroleum and Time Warner.
"I've been lucky. Everything I've touched has worked out well," said Bajaj.
Bajaj is banking on similar luck -- and titans of industry -- to propel AppNet to rapid revenue and earnings growth and a public offering within two years.
Bajaj, of course, is not the only one to have spotted the opportunities emerging in the rising Internet economy.
For example, Chicago-based New Logic Inc. and Long Beach, Calif.-based NetGateway Inc. have set their sights on varying niches of the Internet industry and have a running start on Bajaj.
Like AppNet, NetGateway's strategy involves acquiring Internet service boutiques.
And while it remains to be seen whether AppNet can generate bTC rapid revenue growth and become profitable as quickly as Bajaj predicts, his dream of running a publicly held company doesn't see too far-fetched to analysts.
Internet-related IPOs lately have generated investor enthusiasm.
For example, USWeb, a Santa Clara, Calif.-based company that helps companies set up Internet systems, has raised more than $200 million in two public offerings since December.
Pub Date: 8/24/98