BackToday’s Internet entrepreneurs are bolder, their ambition global: Sanjeev Bikhchandani
Bikhchandani talks about how the current euphoria compares with the dotcom era of 2000
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New Delhi: In 1996, at the IT Asia Exhibition at Pragati Maidan, Delhi, Sanjeev Bikhchandani had his first tryst with the Internet. In that instant, he knew it was the word “dotcom" that was much needed for “naukri" to become a sizeable and successful business in the country.
From what started with a jobs portal Naukri.com, Info Edge (India) Ltd today runs a gamut of online classified portals in the country— 99acres.com, Jeevansathi.com and Shiksha.com.
Bikhchandani, 52, was among the few Internet entrepreneurs in India who managed to survive the dotcom bust. In an interview, he talks about running a business back then and how the current euphoria compares with the dotcom era of 2000.
Edited excerpts:
When and what inspired you to take the plunge into entrepreneurship?
After working for five years, I quit my job in 1990 to become an entrepreneur. For seven years, I drifted from one idea to another. I did a whole lot of things—from teaching at business schools, MBA coaching classes to corporate training. I was also doing salary surveys, building databases, writing.
One of the things that we did try at that time was to put up a jobs database by compiling jobs from newspapers. I did not have any big idea or a vision back then, but it was clear that I wanted to be an entrepreneur.
Where did the idea of creating a dotcom company come from?
In October 1996, I attended IT Asia Exhibition at Pragati Maidan, Delhi.
There, at a small stall, I saw the Internet for the first time. That discovery revived the whole idea of a jobs database. It led me to believe that we could now create Naukri.
We had come up with the idea of job listings in 1991 when the department of telecom (DoT) wanted to launch a video-text service. DoT had put a full-page ad in the newspaper inviting private information providers. They were supposed to put servers in telephone exchanges, and people would access information through public access terminals by paying a fee.
I and my partner submitted our application to list jobs from newspapers and head hunters. The idea got approved, so we ended up creating a full report on it, but the project never happened. So, we had the idea for a job listing back in 1991, but what we did not know was how to deploy the idea. The Internet came to India in 1995 and we launched Naukri.com in 1997.
“Naukri", we thought, was a small idea. It was only 1.5 years into the launch that we realized it could be big. The market responded with a 7x growth into the second year of business and that is when we realized that it had the potential.
How were the early days at Naukri?
In early April 1997, there were only 14,000 Internet accounts in the country and may be a couple of hundred thousand users. We used to get 29 newspapers in our office, and we used to rehash the appointment ads and put them on the website. It began to generate traffic immediately as we were solving an unsolved problem. For the first six months, we uploaded jobs from newspapers for no cost. We used to have thousand jobs live at any point and each job was kept live for 30 days.
When did you start generating revenues?
Six months after the launch, we got an inquiry from an automobile component company in Pune. They had seen some response from online listings and wanted to list jobs that were not already published. We told them that would cost ₹ 350 per job and they agreed.
We got our first cheque and a clear revenue model. We started charging ₹ 350 per job, or 6,000 as an annual subscription.
So, in the last six months of the financial year, we did ₹ 2.5 lakh of turnover at a loss of ₹ 4-5 lakh. Next year, revenue jumped to ₹ 18 lakh and we broke even. Back then, I was running the company out of my house. It was a low-cost operation, and even with the small base, the 7x growth made me believe that this was a big idea. So, we stopped doing everything else and started focusing on Internet and Naukri.
How long did the euphoria last?
In April 2000, we raised $1.7 million from ICICI Venture. We got lucky. The meltdown happened just at that time so we did not end up spending the money foolishly. We put the money in a fixed deposit and continued to build the company slowly, the hard way. We moved the office out of my house to a backstreet of Noida. The revenue kept growing, but we made losses for two years.
How badly was your business impacted during the meltdown?
There was a point in time when we had only 15-16 months of money left, and we were bleeding ₹ 25 lakh a month. We focused on the revenue growth and that is what saved the company. We moved from ₹ 36 lakh to ₹ 10 crore of revenue in three years. Of course, there was a dip in spending, but because we were a very low percentage of that budget, we were able to grow.
What did you do differently that made you survive?
The fact that we had struggled for some years before raising capital made us extremely careful with money, and that was a good grounding and schooling in a meltdown.
The fact that we had always survived on getting revenues made us execute very well.
How was the journey to the IPO?
We went public at a good time. There was a window of opportunity around 2005-06, which kind of closed down after 2007-08. We were able to get sufficient investor interest and make the IPO (initial public offering) successful.
We were also able to make a good run for 18 months after listing before there was a market correction.
You managed to get funds just before the meltdown and you also managed a successful IPO just before a market correction. Was it strategy or plain luck?
We have been lucky more than once. We were fortunate to list in 2005-06; if it was a year later, we would have not been able to list.
What do you think went wrong with other dotcom companies during 2000?
It was the timing. A lot of people never managed to raise a second round. And, in the first round of funding, they had committed themselves to a model, which required making higher losses for a large number of years and those losses needed funding.
How different is the scenario today?
It is very different. Today, there are 200-300 million Internet users. The market is real and the business is real. It is just that people are making very high losses. Right now, they are making losses for growth, but they will have to learn to grow slowly and with less burn.
What about the valuations?
It can be argued that the valuations are frothy given the amount of capital that is going in. The funding market has gone ahead of the real market, but that is the way markets work. There are cycles…so there are upswings and downswings.
What were the challenges of doing business back in the late 1990s and early 2000?
For us, the biggest challenge was lack of capital. It meant you could not get good infrastructure—good office space, power supply, air-conditioning, computers. It also meant lack of good talent as you could not afford salaries. Some people came for stock, but that was not common.
Scarce capital also meant that you could not afford to make significant losses. However, that bought fiscal discipline, and we focused on revenues, profits and making money.
And that is what makes us cash-rich even today.
Lack of capital also meant that you always negotiated on 100% advance payment terms, which meant that the product had to be good enough for people to pay in advance.
Apart from capital…the Internet market was very small, mobile Internet did not exist. So when the meltdown happened, there were an estimated four million Internet users in the country.
The market was very small and we had to survive and make money in that and break even.
We knew we would not be able to raise further capital, so we had to survive with this $1.7 million and turn the company around.
What were some of the upsides of doing business then?
Developing products was a lot simpler, competition was less. Capital was scarce, which is both good and bad. Less money teaches you fiscal discipline, and it teaches you the importance of getting it right in the first time.
If you had enough capital available, how differently would you have built Naukri?
Honestly, we would have spent it foolishly. I’m sure the company would have panned out differently, but I don’t know whether it would have been better or worse.
What do you think about today’s Internet entrepreneurs?
They are bolder, their ambitions are global, they are willing to take risk with much more capital, they move faster and they are less risk-averse. We were quite conservative.
As an investor, what kind of companies are you looking to bet on?
Consumer Internet and India focused.
Where does Info Edge stand today?
Naukri is the market leader in the space. 99acres is making rapid strides in the product category, but the challenge is that the real estate market is slowing down.
We need to figure out the road ahead for Jeevansathi, and we are currently trying to do that. With Shiksha, we need to achieve some milestones to make the product better. Shiksha has a large market opportunity.
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