Mumbai: It is quite a story. More so when Venkatachalam Sthanu Subramani, 49, tells it his way, in a sing-song voice, with a slight foreign accent, keeping the suspense alive all the time.

He speaks of a time when Just Dial Ltd (JD), the company he founded, was doing well. Of a time when almost every Internet start-up in India was doing well.

He speaks of 1999.

“So one of the consulting firms approached us," says Mani. “And said, look we can help you raise money. And you just need to have an Internet story to your business model. You know, for valuation."

“ I wasn’t interested much but anyway, an Indian entrepreneur, who had a successful company listed on NASDAQ, approached us to buy a stake in our company. I was surprised; I’m not going to give you a name. So he came to buy. First, the entire company; and then, part of the company. And he was giving me dotcom stocks, you know, swapping. And I was, like, ‘Sorry buddy. I’m not interested’. But at every meeting, he would say, ‘Hey, the stock is worth 2X and then 3X’. Anyway, I didn’t want any of it. I was like, ‘Give me hard cash and I may give part of my company to you’."

Eventually, that’s what some investors did—offer him cash.

“So I went to my chartered accountant and asked him, what is my company worth? You know what he said?"

No. What?

“15-20 lakh, or something like that. I was embarrassed. I was like, ‘How am I going to approach these guys and tell them that I am valued at 20 lakh?’. Why would anybody buy any stake at all? So I told them, ‘Why don’t you guys throw a number, of what you are willing to pay.’ And you know what they came up with?"

He pushes on without stopping.

“A couple of million dollars. And I said, ‘What’s that? Aa..aa..aa, come again, please’. I couldn’t breathe. And then I went back and asked them for $2.5 million, almost close to $3 million and I actually got it. And I was a millionaire. In 1999. In dollar terms. I had the money in my bank; can you believe it? In just three years, from where I had no money to buy telephone lines, I had become a millionaire."

“Now, why am I telling you all this?" he continues. “Because, these are times like that. There is a lot of glamour associated with the Internet these days. There is noise, media, valuations; but you know, in life, it is not easy to make money. To run a successful organization is not easy. You can’t throw money at a problem and run a successful organization. This whole Internet thing should not pollute young minds where they think, ‘I will come out of college, come out with an app and become a millionaire’. It doesn’t happen that way."

It would be fair to say that Mani knows what he is talking about.

In the start-up world of private valuations, JD is a publicly listed company. As on 30 July, its market capitalization was 7,600 crore. Along with his brother and wife, Mani holds 32.6% of the company’s equity, which is valued at almost 2,500 crore. As of July 2015, JD employed over 10, 879 people.

In 2014-15, it had a revenue of 590 crore, up 27% over the previous year. The company turned in a profit of 139 crore. Importantly, JD has been in business for quite a while—19 years, to be exact.

All of which means that Mani has seen India change. And there is only one way to put it; that when Mani started out, it must have been a pretty bleak world.

No phones. No Internet

VSS Mani was born at the Tata Main Hospital in Jamshedpur in 1966. Growing up in Calcutta (as the city was known back then), Mani had fairly simple and well defined goals—he would pursue a degree in commerce and chartered accountancy (CA). He attempted both, at the University of Delhi, but dropped out (of both) due to financial pressure.

It wasn’t until 1989 that the idea of Justdial first came about. Except, it had a different name and was called Ask Me. Back then, finding any information was a chore. Only two sources existed—a cumbersome book of listings arranged in alphabetical order that would be updated once a year or the government-run helpline number 197. As fate would have it, Mani was employed with a Yellow Pages company, which published one of those information directories.

“So I remember chatting with a client of mine (Rakesh Aggarwal), who wanted to be in the directory," says Mani. “And we were like, ‘People want information; why can’t they just dial a number and get it?’ We (thought we) could do something like this. He (Aggarwal) loved the idea and after that, he was after me for months to start this business and I refused to take his calls. I was not ready to take the plunge into business."

After a while, Mani succumbed. But right from day one, Ask Me was a non-starter. Less than 1% people in India had phone connections and getting one was like winning the lottery. Needless to say, Ask Me applied for phones but it would take years for it to come through. In certain cases, Ask Me entered the market with the promise that it would start services but didn’t because it couldn’t get a connection. “It was ridiculous," says Mani.

In 1992, he quit, but he had been bitten by the entrepreneurial bug. Mani dabbled in a few other ventures, but they never really took off.

So, in 1994, he bid goodbye to Delhi and moved to Bombay (as the city was called back then) and started his own publication called Wedding Planner.

It was distributed (free) by the Times of India to its matrimonial advertisers. That, too, lasted a while. But, by 1995, Mani felt things had begun to change and it was time to revisit the Ask Me idea.

What changed exactly? Well, more phones and the arrival of the Internet.

“The telecom scene changed and I remember being exposed to the Internet," says Mani. “I used to have a Business India email account. But the dial-up network was so bad. It would take minutes to get through and then it would barely last. We didn’t believe in it but we used to read a lot of articles in the papers of (the Internet’s) great success and how it was taking off in the US. Like America Online and all. But for me as an entrepreneur, I knew it would take time and I wanted to ride the telecom wave."

So, in 1996, Mani started Justdial. In 1997, he registered the domain name www.justdial.com

Phones. Internet

“Telephone was a platform that could work for us," says Mani. “That’s what people had access to and they could dial in a number and get information. People would call and we would actually read out the information."

Then, in 1999, at the height of the dotcom boom, JD went online. There was a search box, where people could key in queries on products and services.

“(The) Internet took off like crazy then," says Mani. Except, it didn’t last long. After the bust, in 2001, JD shut down its website. “Because it was resource intensive," he says. “You needed to have a set of technology guys which was scarce and complicated. Also because we didn’t have any money and it was too risky for us because we could not monetize it (the Web). So we focused on telecom."

While JD grew, in 2004, the firm once again flirted with the website idea. After a few months, it ran into the same problem. No monetization. Small and medium business entrepreneurs weren’t interested in paying for the website listing. So, once again, Mani put the project on hold.

JD’s telephone service business though was chugging along smoothly. As the company grew to more cities, it found interest from investors. The earliest being SAIF Partners, sometime in 2006.

Ravi Adusumalli, managing partner of SAIF Partners, remembers his first meeting with Mani.

“Several members of our team were users of the service," he says. (The apocryphal story in investment circles speaks of a SAIF partner who was in Mumbai and wanted to find something, couldn’t, and was then advised to call JD.) “So we decided to meet Mani and understand the business better and well. The rest is history. We were sold. We loved his passion and his ability to build a real business with very little capital." After SAIF Partners, several other investors came along, including Tiger Global.

At JD, there was enough and more money in the bank. But money wasn’t the problem; as much as how and where to spend it in cracking the Internet.

“We waited a few more years," says Mani. “And in May 2007, we finally launched the website. Imagine, this is 10 years after registering the domain name."

It wasn’t an easy decision to make. Even in 2007, Internet penetration in India was just about 3%. And the price of personal computers was a significant barrier to entry. But the fact that the Internet would be big was evident.

Most operators had begun offering use and pay services instead of subscriptions. Phones were also capable of connecting to the Internet, although data connection was patchy. But Mani’s biggest challenge was convincing his clients to pay for the Web. “They were like, ‘We don’t want to pay for Web because we just understand voice service’," he says. “So we tried selling Internet separately, but barely recovered the cost of sales also. So, in 2009, I realized not to complicate this by selling voice, Web and mobile separate. I said, ‘let’s bundle everything in one and say that’s the single product from JD. Under JD, you get all of this, whether you want it or not"."

The strategy worked.

Before long, though, other problems cropped up. The Web worked differently. It wasn’t like having customers call in and JD sending information over text and emails. There, presentation mattered. JD’s website was boring and it didn’t have any takers. People wanted pictures, videos, location-based search and directions.

“So we started working on those and, in 2009, we launched a better looking site," says Mani. “In those days, we used to engage videographers and photographers and send them to these businesses to shoot videos and pictures, and then upload it. The content itself was not available to such businesses. Geocoding data was a challenge because it was very expensive."

Even as all this was happening, Mani was worried. Would the Web strategy work? Wouldn’t it cannibalize his voice traffic? Was it the right decision to put out years and years of hard work (data) online and open it to competition who could just clone the JD model online? What about Google and the other Internet giants that had the potential to disrupt his business model.

“It was a big decision for us," says Mani. “And we were deeply suspicious about the whole thing. But then, I thought through the whole thing and stuck to the strategy I’ve followed all my life. Follow the user. If the user is evolving and you don’t, then within a few years you will be outdated and lose it all."

Needless to say, the critics were skeptical if JD would survive. They still are.

Today, there’s an app for almost any information that a person might need—buying, selling, eating out, shopping, rides, price comparisons across products and services; it is all there. But Mani believes that he has seen the back of one and too many detractors. “The outside world will be skeptical, but we just kept our focus," he says. “And we have built JD by being profitable, growing our top line, bottom line, no freebies, no cashbacks, nothing."

It would be fair to say that Mani comes across as a contrarian; one who doesn’t believe in the view that an e-commerce business must lose money. “JD did 600 crore of revenue last year. That is equivalent to roughly 60,000 crore revenue of an e-commerce company in terms of GMV," he says. Gross merchandise value, or GMV, is a term used in online retailing to indicate total sales of merchandise through a particular marketplace over a certain time frame.

“Commerce means making money. You cannot have deep discounts; you cannot buy things for 100 and sell at 80. Or (give) cash back. Do not glamourize this—I have a request to the media. Try to demystify this whole space and put out the right and wrong because a lot of sharp brains are getting misguided actually."

Is there one good reason why anyone should listen to him? Experience, perhaps.

“To a man in the industry, we are extremely worried about the way things are," says Mani. “Today we have the talent pool. In the dotcom days, it was a big challenge. People used to join organizations at double or triple the salary. It is another matter they all lost their jobs in the next six months. They all quit big companies to join Internet companies and most of the time they used to while away in the canteen thinking of all kinds of domain names. That is exactly what is happening today. People are flirting with apps. It doesn’t work like that."

The future: Smartphone. Apps

Mani’s cautionary tone and belief in the fundamentals of business isn’t the popular narrative of our times. What is? Growth and valuation, never mind the red on the books. Which is why, a lot rests on Mani’s idea (one which has been in the works for a while, though) of turning JD into a platform where people can transact or buy and sell, and not just be a destination for local information. The idea is called Search Plus. And it will be App led. “Any search with a commercial interest is JD," says Mani. “You could search for a scientific apparatus, used car, used furniture, doctors or any kind of product or service under the sun."

To be able to do that, JD is working on a lot of plans. There’s an advertising spend of 100 crore which has been kept aside to coincide with the launch (which has been delayed and pushed to August), a payment gateway, a local logistics service to deliver products in a radius of 2km and a cloud-based service to its merchants to manage inventory.

Opinion in the analyst community is divided on Search Plus. The optimists believe it is the right direction for JD and will add value to shareholders. In its equity report on the company, brokerage Nirmal Bang says that JD “will benefit as people get used to online services and is the one of the few companies with bottom-line growth."

It adds: “We believe JDL’s business model has inherent advantages over existing e-commerce players like: 1) strong database of 15mn listings, 2) strong lead generation capability because of over 1,000mn annual searches on its platform, 3) addition/update of more than 50,000 vendors on a daily basis, and 4) edge over competitors in cash collection, logistics cost, delivery time, personal touch, etc."

Sceptics though hold the view that maybe the company is spreading itself too thin. And that compared with its peers, several of them, from OLX to Flipkart to Makemytrip to Redbus, the room to grow for JD is limited. Because, unlike the others, the company has made it amply clear that it won’t go down the aggressive discounting route.

Comparison with peers doesn’t bother Mani. “We are an old company, so we have seen various competitors," he says. “For us, initially, the competition was the print industry, which was far more established. Run by big names like Tata Press and some bits of Times Group. We kind of killed that business model. In Web, there were many wannabes who tried it. In the horizontal space, we do not have any competition at all."

It is a bold statement to make. But, then, Mani is a survivor. And perhaps he knows what he is talking about.

Needless to say, where JD goes from here, will be quite the story.

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