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Scaling Startups: The Info Edge Playbook for Founders | Sanjeev Bikhchandani
257 Plays4 years ago
"Successful businesses are built on deep customer insights about unsolved problems of the customer." This powerful insight from Sanjeev Bikhchandani underscores his entire entrepreneurial philosophy. It's not just about having an idea, but about deeply understanding a genuine customer pain point and offering a real solution – a principle that led to the creation of Naukri.com and the Info Edge empire.
Sanjeev Bikhchandani is the pioneering founder of Info Edge, the parent company of iconic Indian internet brands like Naukri.com, Jeevansathi.com, 99acres.com, and Shiksha.com. Starting with just ₹2,000 from his father's servant quarter in 1990, he launched Naukri.com in 1997 when India had a mere ~14,000 internet users. Info Edge went on to become the first Indian internet company to IPO in 2006. A visionary investor, his early bets in companies like Zomato and PolicyBazaar have yielded multi-billion dollar valuations from initial investments of crores. For his immense contribution to trade and industry, he was awarded the Padma Shri in 2020. Info Edge reported consolidated revenue of ₹2,950.07 crore for FY 2023-24.
Key Insights from the Conversation:
- The Power of Observation: The idea for Naukri.com stemmed from a simple observation of colleagues being more interested in job ads than editorial content, leading to the realization that "jobs are a high-interest category of information".
- The "Drifting Years" Value: The initial years (1990-1997) of exploring various small ventures with little income were crucial for learning, perseverance, and understanding market needs.
- Customer Money Over Investor Money: Focusing on getting customers to pay for your product/service validates the business far more effectively than just raising venture capital.
- Strategic Investing: Info Edge's venture investments were a way to deploy capital when suitable acquisitions weren't available, focusing on startups with "natural traction" and strong founding teams.
Chapters:
(01:53) - From Childhood Dreams of Independence to Early Career Choices
(11:32) - Learnings from Lintas: The Grind, People Skills & Hard Work
(19:06) - IIM Ahmedabad, a Brief Corporate Stint & The Entrepreneurial Plunge
(26:35) - The Birth of Info Edge: The IIM Placement Insight & First Product (Salary Surveys)
(35:08) - Early Ventures: The Trademark Database & Bootstrapping with ₹2000
(44:06) - Launching Naukri.com (1997) & Early Revenue from a Single Call
(49:00) - Navigating the Dot-Com Bubble, Raising VC Funding & The "Repeatable Profitable Unit"
(58:05) - Investment Thesis: Identifying Zomato, PolicyBazaar & What Info Edge Looks For
(01:01:05) - Core Advice for Founders: Customer Focus, Raising Capital Wisely & Perseverance
Hashtags for YouTube:
#SanjeevBikhchandani #InfoEdge #Naukri #StartupIndia #IndianEntrepreneur #Bootstrapping #IPOJourney #VentureCapital #BuildingUnicorns #StartupLessons #Entrepreneurship #MakeInIndia #DigitalIndia #FounderThesis #StartupPodcast
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Transcript
00:00:01
Speaker
H.T. Smartcast You are listening to an H.T. Smartcast original.
Introduction to Founder Thesis Podcast
00:00:23
Speaker
Hi, I'm Akshay. Hi, this is Aurob. And you are listening to the Founder Thesis Podcast. We meet some of the most celebrated sort of founders in the country. And we want to learn how to build a unicorn.
Introducing Sanjeev Bikchandani
00:00:59
Speaker
If I have seen further, it is by standing on the shoulders of giants.
00:01:07
Speaker
These words by Isaac Newton still remain true and it's our great privilege to present to you one of the giants of the startup world in India on whose shoulders so many of today's most celebrated founders have stood. He is the one who was a pioneer in creating an online business that he took to IBM.
00:01:31
Speaker
His company is now among the most active investors in the startup world, back in Millicorns, head policy bizarre, and so matter. I'm sure by now you have already guessed who Akshay Dutt is talking to. It's none other than Kenji Pichandani, founder of Info Edge and the man who inspired millions. Here's their insightful conversation about Sanjeev's journey.
Sanjeev's Early Life and Inspiration
00:02:01
Speaker
Hi, I'm Sanjiv Bikchandani. I'm the co-founder of nokri.com. So, Sajeev, tell me about your childhood. Where did you grow up? What was your family like? I spent, I'm 57. I've spent most of my life in Delhi. I think barring four years, two years in Bombay in my first job and two years at Ahmedabad for business school. I spent 53 years in Delhi. So I was born in Delhi. My father was a government servant, so we lived in government colonies. And that's where I grew up. That's where I spent the first 20 odd years of my life.
00:02:30
Speaker
Which part of Delhi? So, my father was a doctor in the government. So, the earliest memory I have is a couple of houses in the MP flats in South Avenue. Because my father was in charge of the dispensary in South Avenue, the MP's dispensary. And then we shifted to Chanakipuri, Satyamarg, the D1 flats. And then my parents went abroad and when they came back, we moved to Kidwainaga for where my father retired and we moved to our own house in Swastriha in East Delhi.
00:02:57
Speaker
Where did you go abroad and how old were you? I did not go abroad. My parents went abroad. I was staying in Delhi. And so, you know, entrepreneurship, was that there in childhood also? When I was 12 or 13, I sort of figured that maybe at some point in time it would be a good idea, you know, to be independent and run your own company and things. So for that time independence was a big thing for me. And, you know, of course, you know, when you're 12, you have a new dream every six months.
00:03:25
Speaker
But this one kept coming back. So by the time I finished school, I was in class level at 12, I was reasonably clear that this is a long-term goal. Sometime I will do it. How and where I did not know. If you have like a role model that you admired and like, you know, like a Tata, Bidla kind of a role model because of which you wanted to do business or like, how did that business come into your mind?
00:03:45
Speaker
I know I don't actually recall how it came in. No, I did not have a role model. I never had a single role model in my life. You know, you learn different things from different people. So I've tried to learn as much as possible from various different people. But I've had the good fortune of having worked with many, many people who are superbly talented and smart. And therefore I learned a lot from all my colleagues and my peers and my seniors. Okay. But yeah, you were in Columbus, right? I was in Columbus school in Delhi for 12 years. And most kids in Columbus come from service class families where like a job would be their ambition eventually.
00:04:14
Speaker
Well, a significant percentage come from service class families. And, you know, like me, my father was in the government, my mother's a homemaker. But there were some who were families were from business family as well. I mean, you know, any school in Delhi, you will find a certain percentage of business families. But yeah, it was largely a hardworking middle class family boy school.
00:04:35
Speaker
Okay. And then you joined Stevens. I joined St. Stephens College after class 12. I had the good fortune of getting admission into the
College Days and Career Decisions
00:04:44
Speaker
economics program there. And I joined. So was that like a transformative experience going to DU and especially from a boys college to a co-ed kind of?
00:04:53
Speaker
So actually, you see, St. Columbus is the kind of school in those days where if you're a good boy, you do science, and then all good boys did either in engineering or medicine, you know, and engineering in those days, you know, beyond the IITs, at least in St. Columbus, you did not think. So I did science, my father was a doctor, my brother went to IIT Kanpur, and then I'm in Doha.
00:05:12
Speaker
and I prepared hard and as luck would have it, I got into IIT. Now in my year, when I was finishing school, there was a three-year window where you could write the IIT entrance after class 11 or after class 12.
00:05:30
Speaker
because the country was just shifting from class 11 to class 12 and the different states were shifting at different times over a three year period. So the IIT, the IIT that said you can even join after class 11, it's fine. You don't have to complete, you don't need a school passing certificate. So obviously being competitive Indians and everyone would want to go after class 11 and save a year. So I wrote after class 11 and I got in after class 11. And when I went for the medical counseling, I learned that I was partially colorblind.
00:06:00
Speaker
Now, so the people there said, you know, you can join and it's fine. But some careers and some courses may be close to you, but it's fine, you can join. And it'll go down in your permanent medical record, you know, that you're partially colorblind. And that is the first time sort of, you know, I start in thought because, you know, I figured it was a risk because, you know, if for some reason I have to leave IID after one or two years, I won't even be a high school pass because I'm only past class 11. So I thought long and hard about it. And mine was the last year when you could write it after class 11.
00:06:30
Speaker
IIT was a five-year course then and the next year only class 12 passed provided and it was becoming a four-year course. So I figured that my junior batch can't write it. All the good guys in my batch have already gotten and will go after class 11. It's becoming a four-year course so I won't lose a year. So why don't I continue in school, finish class 12 and write the exam again, which is what I did. I wrote the exam again.
00:06:52
Speaker
But in that one year, I sat hot long and hard because with this colorblindness thing, for the first time I began to question, why do I want to be an engineer? And I realized that I didn't really want to be an engineer. I just wanted to be an IITM. I was joining a club. I couldn't pass an exam. I knew physics, chemistry, maths. I had to study hard.
00:07:11
Speaker
But if you asked me engineering, would I have passion for that? I didn't have passion for anything. We were all, most of us, reasonably clueless, drifting along, falling to the herd, and trying to study hard and make something of our lives. And I realized that I want to be an ITM. I don't want to be an engineer.
00:07:34
Speaker
After class 12, after class 12, I got into ID a second time and I got St. Stephen's economics. And I said, look, this is a three-year program. It's a four-year program. Why should I study something I'm not passionate about for four years? When I can study something I'm not passionate about for three years, I had no clue of economics. Okay. You know, I had done science and biology. I just got the marks and I was decent in an interview and I got through and I weighed the two options and I chose to go to St. Stephen's economics.
00:07:59
Speaker
And yes, it was a growing up experience, a real transformative experience. I'm afraid I didn't study very hard, but I made a lot of good friends and made a lot of good memories. It was a coming-of-age experience. But I did find parts of economics very, very interesting. You know, microeconomics, macroeconomics, I found very interesting.
00:08:14
Speaker
Were you like the shy kind of student or the outgoing student who would participate in debates and all that? No, I would not do debates and inclusion. I had stage fright. I used to play sports, so I played hockey for college. I got college colours in hockey. With my close friends, I would be outgoing extroverted, but outside my close friends, I was a reasonably quiet person. I would observe and listen more than speak when I was people I didn't know.
00:08:43
Speaker
So after three years at Stevens, what did you decide to do? So what happened was my brother, you know, who had been a brilliant student and, you know, he was in the same school as me, same Columbus, seven years senior to me. And he always come first in class. And in my life, my entire academic career, I have never come first in class.
00:09:03
Speaker
I've always managed and I used to in the big exam that I would score enough to achieve my goal and objective. But no, nobody would call me an outstanding academic performer or a brilliant student. I was good enough to get to where I want to go. And so my brother went to IIT Kanpur, then he went to Imanabad. And when he finished from there, he worked for a year. And then he said, I don't like this. I don't like the corporate sector. I want to do a PhD. And he went and did a PhD in the US.
00:09:30
Speaker
So, in 1991, I had just joined college and my brother and there were three or four of his batch mates from IMM Dawat, they had all chucked up their jobs and they were all going to the US for doing their PhDs. So, there was a luncheon at our house and his friends from IMM Dawat had come from out of town for the visa interviews. And so, I asked all four of them, thinking, Brother, why are you guys doing this? Why are you chucking up a great corporate career?
00:09:52
Speaker
to, you know, after doing an MBA, to go and do a PhD. And they said we made a mistake. We should not have done an MBA. We should have worked for two, three years after engineering in the corporate sector to figure out if this is what we want to do, and only then done an MBA. And if we didn't want life in the corporate sector, we could have gone for a PhD maybe two years ago, after one year straight after engineering. And in any case, they said that if you want to do an MBA, and I wanted to do an MBA from the beginning,
00:10:19
Speaker
Our suggestion is that you work for two or three years and then do an MBA because you will gain a lot more from your program because for us, it's an extension of college. We went straight to IID to IMM Duat and without working. We could not really correlate what we've been taught with real-life situations because we had not experienced that.
00:10:36
Speaker
And they said the best university in the US insist on two or three years work experience. And there's a reason for that, that you get more from MBA if you work before. So that stuck with me. So when I was in my third year in college, and also what had happened was that in college there was somebody senior to me, one year senior, who actually managed to get a scholarship to an MBA from the US, from Duke University. Now that was an eye opener because typically people in those days at least got scholarships only through master's and PhDs. So it occurred to me that an MBA scholarship is possible in the US.
00:11:05
Speaker
So, I put two and two together, my brother's friend's advice and this is what had happened. And I said, why don't I work for two years and then apply overseas for an MBA and get some luck in your scholarship.
MBA and Entrepreneurial Journey
00:11:18
Speaker
And I got a job still after college at Libtas in advertising. Coincidentally, they want to see in those days as after a BA you could really get jobs. It's not like today, right?
00:11:29
Speaker
And so I had also written the chat and I had got an offer from IAM Calcutta and I had got a job at Lintas. I decided to work for two years and apply overseas, which I did. I got admissions, but no scholarship, right? So I didn't go. What was your role at Lintas? I was in account servicing. I was in client servicing, account management. And I was a trainee, you know, I was there for three years. So for the first two years, I was a trainee. And last year I was a junior account executive. The job is the same. It's just your title changes and salary changes.
00:11:59
Speaker
Did it teach you anything much? It taught me a whole lot. I mean, I think just as a child learns the maximum in the first three or four years and absorbs the most, I think in the first three or four years of your career, you learn the most and your work ethic is set. So it's really important, I think, that your first job is in the right place where you learn the most and you learn from good people and it's a good environment.
00:12:23
Speaker
Because that will more or less set your personal standards, your work ethic, your integrity at the workplace. And I was really fortunate to have got that three years in lint test. I mean, there were some really super smart people I was working with. And I got some good opportunities, some good clients, both on the client side and the agent side. There were some really good people. So that taught me a lot. So first of all, I worked harder in those three years than I've ever worked in my life.
00:12:47
Speaker
In those three years, I didn't take a single day's leave. I worked all my Saturdays. It was a five-day week, but I worked all my Saturdays. I worked all holidays. Wow. Okay. I worked half my Sundays. You see, account servicing is a very, very operational intensive job. It's a coordinated job. And there's always something, some fire fighting going on, always. Right. And so, you know, when you're so deep and you just got to make it happen. So in terms of first of all, working hard, I learned the value of working hard over there really hard.
00:13:15
Speaker
Long hours from 9 a.m. to maybe 10, 11 p.m., six days a week, or three years in a row, half a Sunday or so. I was a shy, introverted person, not actually great at talking to people and persuading them and communicating to them, unless I already knew them. With my friends, I was okay, but outside my circle of friends, I was not. Now, the role of an account servicing person is essentially that of coordination.
00:13:38
Speaker
As a junior executive in account servicing or a training in account servicing, you are at the bottom of the totem pole. You are at the bottom of the courtyard. You are accountable for outcomes to everybody, to your boss, your boss's boss, to the client. Nobody's reporting to you. And your job is to coordinate and get work done out of 10, 15, 20 other departments, whether it is copywriting, art direction, art production, film production,
00:14:06
Speaker
Script writing, translation, media planning, media operations. There are 10-15 departments you work with. In all those departments, there were people who were older than me, senior to me. If they missed my deadline, they would not be pulled up. And they're not reporting to me. I'm younger than my 7-8, 10 years anyway.
00:14:29
Speaker
Basically, you've got to get work out and get work done in such situations. People have to want to work with you. People have to want to work for you and people want to stretch for you. Say, I'll sit late to meet the deadline, I'll come on Saturday to meet the deadline, I'll work on Saturday to meet the deadline.
00:14:45
Speaker
You learnt like persuasion and saying, yeah, please do. I learnt to beg, to jolt, plead, you know, you know, just do it by dint of hard work, putting more hours. And I think, I think people skills may have asked you. So all my rough edges. Look, I had an ID admission. I went to Steven and studied economics. I had an IM admission. You know, I'm super smart.
00:15:05
Speaker
All that was knocked off within six months, right? When I had to go at three in the morning to a printing press on my two-wheeler in the middle of winter, you know, really bitterly cold, pick up some positives for printing. You had to go to Bombay the same day. From there, I went to the airport and I was standing outside the airport, controlling passengers to please carry this packet for me. In those days, there was no security problems, right? And finally, I met one passenger. My mobile's for me to go today.
00:15:31
Speaker
I met one passenger who said, I'll carry them to you. I said, my guy will come and meet you at the airport and he will be carrying a placard. And so he misses you. What is your home office phone number where you will be? So he can call you on the landline and rushing to office to phone up Bombay. The guy waiting there saying, go to the airport. This is the gentleman. This is what is coming. He's coming up this slide, stand on the placard and pick up the puzzle and then deliver it to the printer.
00:15:52
Speaker
You know, it's highly operational, there's stuff like that you do. And you know, or you got a request from a client, a very important client in Bombay, from the head office in Bombay, said, you know, so the big game would be which is going to be the first advertisement in the ad capsule on Chitrahar or Sunday feature. The first advertisement will get the most views because by the second ad people go about doing their business and they come back when the ads are over.
00:16:17
Speaker
very particular. So, you know, then you go and sit late at night, talk to the guy do Russian, boss, please put our hands first. I mean, of course, they have their own things, right? But you're going to try. So, you know, all those things, you know, the highly, highly operational things, the stuff that, you know,
00:16:33
Speaker
You know, you do manual labour also. I remember we had a presentation for a client in a building and cannot place on the 10th floor. Now, to set up the presentation, you have to take projectors and artworks. There was a massive long line for the lift. There was no way I was going to make it up next half an hour because the luncheon just fell over. I should have come two hours earlier, right? But we didn't because you were meeting deadlines. Just one minute.
00:16:59
Speaker
I'm walking up 10 floors carrying all this stuff to arrive there and still be on time. So this thing of doing whatever it takes, never mind how menial the work is, how seemingly small it is, I think that work ethic was set there.
00:17:14
Speaker
I think you must have also learned about how to build a culture of performance. It sounds like Lintas had a great form. Yes, he did. So people skills, stretching, working hard, somehow getting it done, doing what it takes, the attitude to work ethic, all that was set there. Also, I had the exposure, great exposure to strategy, communication and marketing strategy. So I had CDS there who was really smart at this and I would just sit and listen and learn and then contribute. I began to contribute also.
00:17:42
Speaker
So you finished two years there, got a... No, actually, I applied abroad after two years, I didn't get a scholarship, I didn't go, I spent a third year there. So I wrote the CAT again after three years and this time I got into, you know, IMA and went there. But why did you want to do an MBA? Was it again for the TAG, like you thought about IIT that you wanted a TAG?
00:18:01
Speaker
No, I thought, I don't know. This one, I was pretty clear, very useful course. I learned useful stuff. It will help me when I become an entrepreneur. I went for learning. The word networking had not been invented. So, I knew the placement. I wasn't very keen on, I'll take any job I get. I will quit and do my own company. So, how would those two years at a time end the world?
00:18:24
Speaker
I think very good. I think super blurring. So the thing you want to, I mean, you want to work really hard in Miami, you know, it's a pressure buffer, you know, atmosphere environment. But after three years of Lint test, I did not feel any pressure because I had worked much harder at Lint test. So it was very good, very good, useful learning. And so you see the MBA, it is said and it's true that you don't use 90% of what you learn there. Probably you don't know which 90% when you're there.
00:18:53
Speaker
So you learn a thousand things, you will use maybe a hundred. But those hundred will be useful. And should you want to use a hundred first, at least you know where to find it because you will not at all. And did you also have a campus romance? Like you met your future wife on campus. Did it like blossom while you were studying? Yeah, we met there. We met there.
00:19:12
Speaker
So, did you get married as soon as you passed out? Maybe a year later. So, from campus then, what did you take up? So, I... So, campus may work here. In those days, companies would come to IMs to only hire management trainees, right?
00:19:29
Speaker
So if you had work expense, you had to write it off by and large. Almost nobody would give credit for your past work experience, even if it was relevant. And I had worked three years in advertising. I said this is very relevant for brand management in companies, in SMG companies. I could have gone back to advertising, but I didn't want to. I wanted to be in SMG consumer marketing.
00:19:45
Speaker
And I went there, you know, and I discovered that I would have to join in the training because nobody was coming here and hiring laterally. So campus placement rules were that if there was a particular company that was not coming to campus, you could apply directly. If it was coming to campus, you could not approach them. So I went to a list of companies that were coming and I saw that HMM, which is now called Lexus with clients, but then it's called HMM, was not coming to campus. What were the products they were making at that time?
00:20:09
Speaker
Horlicks, blues, real cream, Eno, Marmite. So I wrote to them, saying, look, I'm very keen. And I also wanted to go back to Delhi after two years in Bombay. Because I said I'd go home. I'll be able to save some money. When I quit after two years, I'll be able to start a company with the lyrics.
00:20:26
Speaker
And if I'm texting at home with my parents, my costs will be lower. So when I do my own startup, you know, I can survive without earning money. So this is a Delhi-based company. So I, and it's FMC, MNC, good brands, ideal. They call me for an interview. I came Delhi for the interview while I took a weekend off. I took a day off and came. This was during your second year? My second year and third term. Okay.
00:20:47
Speaker
And I got the offer and I came back and I went back and I dropped out of placement. And so I worked for about a year and a half, maybe almost two years at HMM after I am. And what was your role? I was a product executive. So I was in brand management. I was product executive, reporting to the product manager, you know, who was reporting to the marketing manager, who was reporting to the marketing manager. But as luck would have it, within six months, the product manager left and the vacancy wasn't filled for a year. So de facto, I was doing his job also. And that was a good exposure area. So that is a useful experience too.
00:21:16
Speaker
So, why did you quit from there then, from HMM? So, look, I had gone. So, in advertising, right, you always... I was servicing a really good client. Now, you always... I used to look up to my clients and say, these are smart guys. It's the job I'd like to do. And therefore, I wanted to be in the client side after IMA. I did not want to be in the agency. But having migrated to client side, I did not find it particularly enthusing. You know,
00:21:40
Speaker
So in the late 80s, this is pre-liberalization, MNCs weren't that dynamic as they are today. Large companies are not dynamic. If the products succeed, then you're happy with 10-12% growth. You know that you can't be dislodged. You build a brand. You've got distribution in place. Customers are buying your product. Competition isn't very high. It's a more of a maintenance kind of job.
00:22:01
Speaker
And I didn't feel very enthused doing that. So a year and a half later, I quit and said I'll do my own thing. So tell me about the day you quit.
Foundation of Info Edge
00:22:10
Speaker
Were you clear on that day that this is what I want to do or was it just that? First of all, I did not. I was very nervous. I was scared. I would go for six months and go to office every day and say I'll quit today.
00:22:21
Speaker
But I could not muster up the courage to actually quit. I'm from a middle class family. My father understood me all his life. I wanted a salary check. And I was very, very nervous. But finally, one evening, I went to the marketing manager's house. I couldn't do it in an office. I went to the house. And so he and his wife had just had a baby. So I took a long bunch of roses to see the baby and wife. And while I was there, exactly my drawing group, I went to half an hour. And I said, look, I want to quit.
00:22:46
Speaker
And so he said, okay, fine, where are you going? I said, no, I'm going to do my own thing. So then you have a slightly open schedule. You don't have to go on a certain date. I said, no, this is maybe three months. Let me figure out how to handle and how to replace it. So I give time. I went beyond the notice period and we agreed on it. And I didn't have a joining date. And so I quit. But did you have an idea on what you want to do? Yeah, we had an idea. So, so basically when I was, when I went back to campus after getting my job at HMM and I dropped out a placement,
00:23:15
Speaker
I'd gone to the placement chair who's a professor and said, sir, I'm dropping a replacement. I have got a job. He says, which job? I hope you haven't broken any rules. I said, no, I've got a job at H&M. He said, oh, excellent. Then he said, look, I need help. And he sort of commandeered me and made me volunteer to help him during placement. Now there were three, four of us who were not taking placement. The others were basically writing a civil services exam and therefore they had deferred their placement by a year and they were taking a year off to prepare for the exam.
00:23:40
Speaker
So he told us your job is to receive the HR managers, the recruitment managers, the companies at the gate of the campus, escort them to the interview rooms. Make sure tea coffee biscuits are served. Make sure that candidates are lining up in order. You will have the list of people who have been shortlisted by interviews. Make sure that people go into the interview, come out of the interview, you know, things happen.
00:23:58
Speaker
Then at lunch time, you take them for lunch, stick to them, have lunch, bring them back, again take off in this afternoon, and at 5 o'clock when they end, you take them to the placement office, so the formalities, which is the office they've made, not made, all that can be tabulated. And then at 5.30, they will leave campus, you escort them to the gate and say bye-bye, take hands.
00:24:17
Speaker
So we were basically concierge, right? So we were concierge, or the concierge. Now, what this gave us was a ringside view of the interviews, the placement process, you know, and things like that. Now, there were 10 interview rooms all next to each other in dorm number two, right? And there was a foyer outside with 10 rooms where all the candidates would, all the applicants would be shortlisted would get, you know, maybe half a number for the interview.
00:24:42
Speaker
and they'd mail around and then you'd say, okay, you go here, you go here, you know, you direct traffic. And then you'd go inside the room and say, can I help you? Anything you need, Pani Jayay, you know, whatever. Now, what had happened was that, so day one of placement, there were four companies that came. So day one slot or a price slot, companies would compete for it. And students would vote on the most preferred companies and depending on the vote, the companies would be decided. Okay, so day one company is the Citibank, Bank of America.
00:25:06
Speaker
Hindustan Lever and Procter & Gamble. So Hindustan Lever had come with four people to interview. Citi Bank had come with eight. So basically Citi Bank was running four interview winners and Lever was running two. Now the Lever head of HR who was there and he was the alumnus of IMA and essentially all company sent alumni for interviews.
00:25:23
Speaker
Okay, so they were all alumni in those 10 rooms. The lever guys got worried that, listen, Citibank will interview twice as fast as us, they will make people job offers, people accept them. And if you accept a job offer, you are a basement and they won't even come for our final interviews. So we lose talent. So the lever guys began to do is if they liked the person in the first interview itself, no second round within 15-20 minutes, they would become a pro performer later.
00:25:48
Speaker
hear the job offer, write accepted, come with me to placement office and drop out of placement and don't go for any setback interviews. Okay, otherwise I'm tearing up this letter. Now that is completely against placement rules, because placement rules were that you could get up to two offers. And if you got an offer, you had 48 hours to say yes or no. If you said yes to an offer, your out of placement, if you said no, you could see that it will go for a second job. But if you get two offers, you're out of placement.
00:26:11
Speaker
So this was a huge issue because you don't want to defy the head of HR of Hindustan Leaver. You want to join the management training. What if you don't get Citibank? Of course, if Leaver was only the first choice, you'd be happily, you'd be happy to sign. So some people signed happily, some people signed under duress, some people ran away and said, I'm going to the toilet and didn't come back. And because they wanted to go for the other injuries, it was not the first choice. So the Citibank guys found out about it, you know, because somebody went and told them,
00:26:38
Speaker
I can't come for you. So they barged into the lever room, they started screaming and shouting, and they almost came to blows. And I was witnessing all this. And that's when this whole, that phrase had not been coined, war for talent, but I saw it in real life, in 1989, in March 1989.
00:26:56
Speaker
And from there, I got our first product idea. I think that companies compete like this for talent on IM campuses. Then if somebody were to do a salary survey of what companies are paying fresh MBAs on IM campuses, that report would sell. Because people will want to fine-tune their job offers, their salary offers. This is what competition is offering.
00:27:27
Speaker
But this sounds like somewhat of a niche product. How many companies would want to benchmark against IM salaries?
00:27:34
Speaker
all the ones who go to IMS are equipment. So, you know, there will be a pool of three, four hundred companies because I am there, right? Some companies don't go to IMS, but engineering colleges may still find it useful to, you know, we'll pay 20% less for a first degree. And, you know, I mean, there was a market and we felt that if you priced it at say three and a half, you did a report once and you priced it at three and a half thousand rupees. Now we were able, so what we did was through our own efforts, we got the data. Then we went to the JNU library and
00:28:02
Speaker
appointment ads from back issues or times of India economic times business India we noted down the addresses and designations of all of HR managers from all the appointment ads we built a database of 800 in those days completely really expensive it costs 1.4 lakh rupees for a PC XT you know
00:28:22
Speaker
20 AB hard days, 640 KB RAM, mono monitor, 540 copy drive. 140,000 rupees was about four times the annual salary of a fresh graduate of IMA. So clearly, we could not afford a computer. So in those days, a computer, one computer, then 20 people will share it. It will be in a separate room covered in a plastic dust jacket. That is the only room that will be air conditioned.
00:28:41
Speaker
So I went to a friend, I spoke to a friend who had an interiors company and he had one computer, the company had one computer. I said, you know, I really want to, may I take some time from you? He said, yeah, come at 10 p.m. and leave at 4 a.m. And he gave me a set of duplicate keys to his office. It was a DDA flat in Sheikh Sarai Phase 1. So he used to sneak in there.
00:28:59
Speaker
and works with VM. And we have out the report. We mail merge and send out letters to 800 companies. And we said, this is the report. These are the companies, 135 companies, priced at 300, 500 rupees. Send the check in. We didn't have an office, right? Send the check for draft in advance and we'll ship you the report. And the report is a copy when I think it passed a copy. And within three weeks, we had 23 checks and drafts. We had 80,500 rupees. And we said, wow, this product has succeeded because it was a 94, 95% margin product.
00:29:29
Speaker
We did a report, we did a report, we did a report, we did a report, we did a report, we did a report, we did a report, we did a report, we did a report, we did a report, we did a report, we did a report, we did a report, we did a report, we did a report, we did a report, we did a report, we did a report, we did a report, we did a report, we did a report, we did a report, we did a report, we did a report, we did a report, we did a report, we did a report, we did a report, we did a report,
00:29:58
Speaker
And when you solve an unsolved problem, you hit a hot button. Because customers will then buy without you having to sell. So what I always tell entrepreneurs today is, our question I always ask before we invest is, how do we get the idea? And the answer tells me a lot. So when I met Dipindar Bhola Zomato for the first time, I asked him, Dipindar, your idea can't say that.
00:30:19
Speaker
And he said, I used to work in Bain Consulting. I had joined there one year after I finished IID. And Bain Consulting was an office in Gurgaon. People lived mostly by young men who would not bring food from home, but work long hours. Therefore, they would have lunch and dinner in the office. The office had a cafeteria that did not serve food, but you could bring your own food and eat. And he said that to make life easy, the admin team had
00:30:40
Speaker
collated some of the delivery menus or from 80 restaurants that were delivered to the location and put them in a file folder and deep in there said, you know, you know, to wait, I was hungry and to work through, you know, one Saturday I came in and I scanned all those menu cards and uploaded them on my personal page on the office intranet. Within two days, the IT infra guy came to me and said, what have you done? Why is all the internal traffic going to your page?
00:31:09
Speaker
And he said, that's when I got the customer insight. I was solving a problem for myself. It turns out that it's a problem. And that's when I realized that, look, aggregation of menu cards has got value. If you aggregate menu cards of all restaurants in Delhi NCR and put them up on a website, along with some details of the restaurant and some pictures traffic. And that's what he did on weekends. He took permission from his country manager, said, I want to work on a personal project. He said, sure, go ahead. And he went in.
00:31:31
Speaker
built up the first version of? Artso. Artso restaurant. They launched a site called Foody Bay. Foody Bay will later change its name to Zomato. So how much revenue did you do in the first year through this salary survey? And was that? A lakh and something. Okay. How did that sustain you? Like, you know, what was the... We weren't taking a salary. We didn't have an office. We didn't have employees. With the money that we made, we did two things.
00:32:02
Speaker
I don't know if it's still there, but classifieds may be for sale or not classifieds. This is 89 so that you don't, this is pre-liberalization, you don't get great foreign products, you won't get it right. So there is to be diplomatic leaving sales. His furniture is this, is that, whatever.
00:32:21
Speaker
So, we used to go through the four sale ads every Sunday. So, one Sunday, there was a diplomat leaving advertisement. They used to have these auctioners who would manage the sale. The diplomat would not be himself selling. I mean, somebody is doing it fine. So, we decided, you know, the sale is ending at 5pm.
00:32:42
Speaker
it's 8 a.m to 5 p.m and 9 a.m to 5 p.m let us go there at 4 30 we can negotiate it down because you know they have to sell so we went there and we bought some furniture i went to my father and i said can i use the seven quarter which is like hali he said sure then the next sunday we saw another ad it says school
00:33:05
Speaker
So we went there and it was a really beta ramshackle old computer but there was a computer, there was a printer and there was a CVT.
00:33:20
Speaker
Now we didn't have to do this 10 PM to 4 AM number. The next thing, there was an ad in the papers saying that WHO is auctioning its old furniture and computers. Again, it was a professional auction. So I went there. And for 9000 rupees, I bought a twin floppy drive laptop with no hard disk. Now we had two computers. So it was fine. Then we launched the second product. So Kapil Varma was my partner.
00:33:48
Speaker
His uncle was a very senior and eminent intellectual property attorney. So, a couple of his college days had done a summer internship at his uncle's office. So, intellectual property means, you know, trademark, patents, you know, design, copyright, right?
00:34:03
Speaker
So a trademark means a brand, a logo, something that distinguishes your product from that of another manufacturer or seller. And trademarks in India are governed by the Trade and Merchandise Marks Act. Government act under which trademarks are governed. There's a body called a trademark registry which administers this act.
00:34:21
Speaker
So, the trademarks act says that if you register your trademark, your brand name with the trademark registry for a particular product category, then you have the exclusive right to use that name for that product within the industry of India. So, if Hindustan Lever has registered a trademark surf, which it has registered, then for detergents, then only Hindustan Lever is allowed. To sell using that. To sell surf, sell detergent in the brand name surf.
00:34:43
Speaker
Now, obviously, to protect your goodwill, every company would want to register your trademarks. The only problem was that the trademark registry would take five years and get an application, roughly, to say yes or no. Are you registered or not registered?
00:34:58
Speaker
Now, one of the big reasons for denying registration was there's an identical or similar trademark applied for registered before you. First come, first serve. This guy's adding the queue. Oh, he's already registered. Sorry, you can't get this. Now, companies don't want to wait five years before launching a new brand. You know, they start thinking now, they're launching two years, three years.
00:35:16
Speaker
After you launch Dothin's Al-Bhad, the trademark register says, sorry, your trademark is not registered. Change your name. And you already invested in it. You already spent money on mining. Okay. I mean, this grows as rupees down the drain. Now, under the Rules of the Trademarks Act, the trademark registry is supposed to maintain a record of all registered and pending trademarks open for public inspection. And you're doing it in the trademark office, registry office in Bombay, in the library, you would inspect all the registered and pending trademarks.
00:35:43
Speaker
So what companies would do is they would hire lawyers to go and search that record and then give a report on likelihood of this being approved. Now the way things would work is that big companies hire big lawyers. These big lawyers would contract somebody in Mumbai who would then subcontract it. So the guy who actually searched this record would be a very low-tech junior fellow who
00:36:11
Speaker
was qualified as a lawyer, but couldn't do much else. Like a clerk, basically. Yeah, yeah, yeah. So Kapil, when he was doing his internship with Ankhil, his uncle said, son, I have these five trademarks from this MNC client from overseas, right? Can you go to Bombay and do a search? Now, the way the economic work is that, you know, MNC clients with 3000 rupees to the big lawyer, the guy with all the subcontracting, the guy at the bottom doing it, 150 rupees, right? So now this is a pharma company client, right? Kapil went to Bombay and he
00:36:39
Speaker
He told me, you know, I was aghast at the conditions that he said it was a library. He says the record is not computerized. The record is not maintained in alphabetical order of trademark. The record is maintained in reverse chronological order of date of application in files.
00:36:57
Speaker
two pages to an application. Thankfully, every separate product category had a different set of files. So there were six Slack registered and pending trademarks in India across 32 product categories in 1989-19. Of these, Class 5, which is pharmaceuticals, was the largest. It had 80,000 trademarks registered and applied for.
00:37:12
Speaker
Now, in order to do a search, you would have to see 160,000 pages for 150 rupees. So, clearly, it's not going to be a reliable process, right? First of all, the guy would wait for 10, 15 searches to accumulate. So, the queue builds up, right? So, it takes time. Then it's manually unreliable.
00:37:32
Speaker
So Kapil said, if we can somehow transcribe just the Pharma record and come out and double our computer and we can tell computer researchers faster for the library shippers. And that's what we did. Kapil went in there, paid the library fees, hired 10 students while he was in college, gave them registers, gave them a shape field string, gave them a shape column and he did one register per file. So he came back in a month's time with two suitcase for registers saying this is the Pharma record.
00:37:53
Speaker
We came to data at the company. They dumped it on a computer. I hammered out some code. I am not a techie, but I had done one or two codes in Miami. I looked to solve examples for textbooks and hammered out some code. And we had a trademark searching software. Trademarks really was ready. Once again, once again, deep customer insight. For the life of me, I would never have thought of this idea, but a couple had seen it. He'd experienced the problem. And he knew that this is the last mile, the weakest link in the chain. So that went.
00:38:16
Speaker
Once again, deep customer insight, I'll solve problems. Now we again did the same technique. We got directly to some organizations, associations. We send them all letters saying we can do a search in money for us. And we began doing orders with money in advance. And we had a second successful product. This was more like a service, right? Like, I mean, you were like per search, you would chat something.
00:38:38
Speaker
Yeah, I mean, look, you have a database, you're querying it, you're producing a report, and taking a printer and querying it. It was something email-lesser, internet-lesser. It was 1990. Okay. And how good the revenue did this contribute? I think between the two, we were able to do partial luck in the second year. And both were 95% value in products. Okay. And in 92, you know, I mean, that kind of money was very good, actually. It's more of a lifestyle business.
00:39:01
Speaker
So life went on and then in the next week, couple that and sell it in separate ways. We weren't agreeing on anything. So we felt it's better than the part ways. So what happened to the products that you had built? Like did this thing with you? He kept his idea. He kept his idea. I kept my idea. So he took a trademark database with him. I took the seller's away with me. I got the info and brand with me. He took the Inmark, which was a brand that the trademarks had service with him. There were two companies. He kept one. I kept one. We divided the employees and we divided the physical assets. By now we had employees, you know,
00:39:33
Speaker
But he would have got more revenue now. I imagine that trademark business would be generating. In terms of revenue, roughly the same. Look, he had a more valuable asset because that derivatives are a huge asset. But he owned the idea, so I said it must go with the idea. I had a salary, I had an idea, that's straight away. So I did the salary for a few years and then
00:39:54
Speaker
You know, what had happened was in 92 before Kaplan had split up the Department of Telecom and put out a big ad in the papers in both TOI and HD in Delhi saying we are launching a video text TEX service where there'll be one server in one telephone exchange and there'll be 50 public access terminals all over Delhi. And they said we want private information providers, PIPs. These will be private people or organizations who would own and maintain databases on the server with a
00:40:20
Speaker
public will access for a fee from these public access terminals, right? And there'd be a revolution 50-50, you know, they won't charge us money for hosting data and they will not pay us money to build a database. Now what should happen was that when I was in my last job in HMM, you know, I used to observe that all my colleagues, you know, in the marketing department, all highly qualified from the IMs and the premier business schools, you know, FMS, Bajaj, right?
00:40:45
Speaker
They would all sit in an open hall. And I used to observe that when the office copy of Business India would come in, everybody would read it from the back. Because they used to be 35 to 40 pages of appointment at the back of Business India in those days. And I thought that to be very peculiar behavior. And I said, this is strange. I thought people did, you know, read magazines through the articles. But from then I got the insight that jobs are a high interest category of information.
00:41:06
Speaker
So this insight stayed with me. I had no idea what to do with it. But this insight stayed with me. So in 1992, I said, why don't we take job information from all published sources, newspapers and magazines around the country and dump it on the server. People will pay money. Over time, we can charge people to add more jobs to the database. So you can make money two ways.
00:41:27
Speaker
That was the thought. So we applied, we got selected and we worked for 6 to 9 months. It is going to be called JobNet. And after 9 months, we were called for one more meeting. Sorry, the plan has been shelved because the budget has been cancelled. But the idea was cooked in 93. There was no internet. So I said, okay fine, file and forget. It had been my idea. So this idea came with me when couple 9 separate ways.
00:41:53
Speaker
on the same principle. You keep your ideas, I keep my ideas. You know, ownership of ideas is very important. In 96 and I saw the net for the first time at an expo in Pragatibaya, you know, a penny dropped. And I said, let's just put our jobs from all over the place, not every public, and put them up over here. So that's
Birth of Naukri.com
00:42:06
Speaker
what we did. We used to get 29 newspapers and magazines from around the country. We used to put jobs in our own format, in our own words, and put them on the website when we launched. And sure enough, try to pay an account because jobs are the high interest area in which I had an insight. So all three businesses are in the motto, right?
00:42:22
Speaker
have been informed by deep customer insight. And that's how they succeeded without spending money on it. So like when you launched nocturney.com, how big was the internet? Like what were the, like the... So in the year 2000, so when we not talking about 14,000 internet accounts in the country, probably shared accounts. Okay. And how much traffic did you get over a year? Like, I don't recall, but you know, in a day, we got 1000 visits, 2000 visits, that was a big deal for us.
00:42:47
Speaker
Okay. Okay. Like half of internet users in India would have been visiting this. That's all. You know, when we did venture capital in April, there were about 4 million users in India.
00:43:03
Speaker
So how did this scale up into like a, you know, like the business, which it is today, like from a listing? On April 1, 1997, we were already in the second half of March, but he said they are left to do new financial year. So your accounts are for that financial year only. You don't have to submit separate accounts for the 15 days. So we delayed the launch and launched April 1. Now we just kept putting jobs and traffic. See what you see in those days, internet was a new field.
00:43:32
Speaker
the Indian had begun to get press coverage in India. But there were more NRIs on the net than there were Indians in India on the net. Therefore, every other site was targeting overseas Indians. But yet, the publication of India was a very interesting thing in India. So, they would invariably, for the benefit of the readers, talk about sites that were relevant to them. So, we began to get a huge amount of press coverage without having a PR agency, without trying.
00:43:55
Speaker
So, in the first two years, we had two files of press clippings, two FAT files of press clippings, we didn't have a PRA, just one more advantage of early removal and we saw it. So, we were taking jobs for free from newspapers. In September, I got a call, we got a call, and you know, those days, you know,
00:44:13
Speaker
telephones, kelly, arts, ultimate industry. So the phone was here on my desk. By now we had shifted out of 7 quarter. We were now in the second floor of the house. Those are square foot. My dad's house. And we, I will take out the phone. And this guy says, I'm from Flonso, company in Pula. I do the small size auto component company in Pula.
00:44:28
Speaker
You have taken my jobs from newspapers earlier and I've got good response from you. I have got six jobs which I have not put in newspapers. I send them to you when you put them up. Sir, it'll cost you some money. We'll charge you for it. How much? I had not thought of any pricing and things. Again, I started thinking about my job.
00:44:45
Speaker
I started in Surabai because the trademark search engine prices started in Surabai. That number was in my head. And that became the price of a single job listing on Nokri for the next 10 years. This guy sent a cheque along with the jobs by Korea. And we had a revenue model. So we took all the jobs for the last six months, all the old jobs, the expired jobs. We sent these people letters saying, Nokri, internet, format, started in Surabai single job listing.
00:45:12
Speaker
or shares are away, annuals of refund, unlimited listings for your company through the year. And the revenue we got to come in, we said send money in advance, once again. So in the second half of the year, from September to March, we did about 2,36,000 rupees revenue. We probably lost money maybe 4,500,000 rupees for the year. But ugliesal, this thing went to 18 lakhs on the same strategy as mailing out
00:45:33
Speaker
Now, I had never seen anything like 7X, even of a small base. And 18 lakhs meant it was as big as the company had ever been, which basically means that in one year, you've got a product that otherwise it took you 8-10 years to get to. And this 18 lakhs was without any feet on street sales happening? Correct. Okay. No salary survey, no teaching, no training, no consulting. I did 100 odd jobs to survive before that. Most of those odd jobs would have come on the back of the IMA tag, like
00:46:08
Speaker
So in 2000 when ICICI invested, what kind of revenue were you at and what was the reason to take the funding?
00:46:20
Speaker
Around mid-99. We had just done the 18 lakh year and I was targeting 50-60 lakhs this coming year. In my head, you know, I had no plan to achieve it. So we were set, I thought. 10 lakh profit was very recent for a good lifestyle business in 1990. And I began to get calls from people saying, we want to talk to you, we want to invest in your company. And you were completely baffled. You see, I was totally cut off from the rest of the world. We did not know that there's something called a dot-com valuation. I'd never heard of venture capital.
00:46:49
Speaker
You know, nothing. I said, you know, you run a business, you put some capital and then you get customer money and then profitable. Now our business growth or profit, then the mentality, basically. Yeah. And I was baffled. So I went for a couple of meetings and people are offering me, you know, we will pay you two billion dollars. We'll invest two million dollars.
00:47:06
Speaker
company. I was like shocked. I was doing a pass and in my head and at two, it was $2,000. So I stood here. It was an art program. For a company that has just done 18 lakhs and I was shocked but I couldn't believe it. You know and it sounded too good to be true. I asked him but you know eight crores, what should we do with the money? He said we spend on advertising, that will build brand and barrier inventory and then we raise twice the money at four times the valuation in six months time and then one year from now we list you on Nasdaq.
00:47:28
Speaker
Okay, okay. I didn't know what NASDAQ was. I knew it got something to do with the stock exchange. In the US, I know what it is. I've heard of it, but I know what it is. I'm saying here, I'm going to have to complete it. Okay, I'm going to break even because I'm not taking a salary. You know, the ACs don't work, power is taking me here. We don't have to put power back up.
00:47:51
Speaker
You know, he's not been to my office. He's just meeting my 5 stars and making an offer. And he'll make peace out of that complicated agreement. And he wants to reach out to the board and he wants to list the company on NASDAQ. And I have taken 10 years to reach here of slumming. And in those 10 years, I'm not taking salary for 6 years. Because you know, you're taking salary when the company will pay you. And not taking when the company won't pay you. I'm saying, yeah, it's just over.
00:48:12
Speaker
So then he said, I told him, boss, if you spend eight crores in Atazi, you know, you'll never get the money. I work in Atazi. I know. That's it. So we'll make a loss. And we're currently a profitable company. We were profitable because I wasn't taking a salary, but we were profitable. So he said, this is a problem with you Indians.
00:48:31
Speaker
You want to make a profit on the internet, you have a vision problem. I just didn't understand. I said, I'll get back to you. After two days, I got back to you. Thank you so much. I'm very happy to make a small company and make a profit. But then in February, this is mid-ninety-nine.
00:48:47
Speaker
with a launch ad budget that was twice our annual turnover. We would close at 36 lakhs. We would close at 36 lakhs. We would close at 36 lakhs. We would close at 36 lakhs. We would close at 36 lakhs. We would close at 36 lakhs. We would close at 36 lakhs. We would close at 36 lakhs. We would close at 36 lakhs. We would close at 36 lakhs. We would close at 36 lakhs. We would close at 36 lakhs. We would close at 36 lakhs. We would close at 36 lakhs. We would close at 36 lakhs. We would close at 36 lakhs. We would close at 36 lakhs. We would close at 36 lakhs. We would close at 36 lakhs. We would close at 36 lakhs. We would close at 36 lakhs. We would close at 36 lakhs. We would close at 36 lakhs. We would close at 36 lakhs. We would close at 36 lakhs. We would close at 36 lakhs. We would close at
00:49:17
Speaker
We got three term sheets. It was bubble time. We went to the ICICI venture. And even though it was the highest valuation, they were lower. We just felt more comfortable. We said, you know, because they were saying we know businesses take time to build in India. We don't want to invest in NASDAQ in a year or two years. We don't have those kind of expectations. And we felt comfortable with that. And that's how we raised the capital. We got really lucky. We spent the money. We put the money in 60,000 and said, now this is the only money we'll ever get. We have to make it on this. We got lucky in the timing.
00:49:46
Speaker
So, how did your approach change after that, like in terms of what you're... So, we took an office at 10 rupees a square foot in the back lanes of Noida, in chemical factories with open drains, which looks like in the monsoon. But we spent one-fourth of our venture capital raise on the interiors. We said, it looks like an MNC office, so employees are important. There was a comfortable work stay here.
00:50:15
Speaker
But why do you lend out the money? So we hired people, we hired sales teams, we hired, you know, and so first year after business venture capital, we lost two and a half crores, second year lost 1.14 crores, third year we broke. Change of strategy was that you spent on sales, like earlier you were just doing
00:50:30
Speaker
We spend on sales and we spend on tech and product. We do not spend on advertising. So we hire a sales team. So which brings me to my next point. You see, today what I say is that for any startup to scale, it needs to find its repeatable, profitable unit. So what do you mean by that repeatable, profitable unit? So I'll tell you. So one day, they say how sales was not moving. Okay. You know, six months of taking the money. It was not moving. No matter how much you may not, you would not get more sales than three lakhs a month.
00:50:57
Speaker
And this was through the mail order kind of a model? Yeah, so Hitesh had joined me then. Hitesh joined in February 2000, just before he was in venture capital. But we didn't talk for six months before that. So it's not... So Hitesh came to me and said, listen, why don't we hire some sales people and send them to make sales calls and see what happens.
00:51:18
Speaker
Sure, he went and hired four sales people in Delhi. And we discovered within three to four months, five months, six months. So a fully loaded cost of a salesperson. Tanka, conveyance, incentive, mobile phone bill reimbursement, you know, depreciation on computer, hot destiny, office rent, air conditioning, depreciate furniture, you know, and so on. Some mila vadu ke, baisala roh mein nafar, 32,000 rupees a month, right? Now, we discovered key, the average salesperson in six months was generating pachasa or bahi revenue.
00:51:47
Speaker
I did not. Avarakoi variable cost Thani. It basically means that each sales guy, each salesperson was making a 28,000 rupees profit for us and just profit was increasing month on month. Because you're selling more and more every month. You're getting more productive. We were also launching more products which are more expensive. So you could get a higher, a bigger check for the client.
00:52:03
Speaker
Okay. Like the hard jobs and premium sales. That's right. Okay. Okay. So we said, this is great. We should simply expand by hiring more and more sales people. And within two years, we had 240 sales people in 11 offices around the country. And we had scaled 35X in three years, in two and a half years in terms of revenue. And we were now doing 10 crores and making a 9.4, 10 crore and making a 80 lakh profit.
00:52:26
Speaker
So, building the sales team was largely... So, the sales person for us was the repeatable profitable unit. Can you give me other examples of other companies what could be like a repeatable profitable unit?
00:52:45
Speaker
a hamburger, it could be one restaurant, each restaurant is profitable, then you can just repeat that. It could be, you know, whatever. You make a profit delivery, repeat it. So you discovered the repeatable, profitable unit as the sales? We didn't call it that at that time. We simply said common sense. You have sales, you have sales, you have profit, or people have sales guys. And that's how you recover your overheads.
00:53:13
Speaker
So, you know, do you have some lessons on building a sales organization or building a large sales operations? I mean, I think, you know, the truth is that effort was led by Hitesh more than me. But yes, I mean, I was there. So I have some insights. But we hired some really good people who would report to Hitesh. We figured we must source them from B2B sales companies. They have a good practice. Xerox is one of them.
00:53:39
Speaker
Two of our regulators came to Xerox. And then we said, okay, replicate your training, replicate your processes. We had sales incentives in design. We had all those things. But fundamentally, as a founder and entrepreneur, apart from hiring right sales people, you have to be willing to lead from the front. Okay. Which means, you have to be a salesperson. Okay.
00:54:00
Speaker
So I remember 9-11 happened. In October of that year, Hitesh did 80 plus sales calls himself with the local sales teams. He would travel all over the country. And I did 60 plus sales calls myself. Traveling all over the country. Because that's how salespeople will observe you and learn to sell. You will be your best salesperson because you know the product and you're passionate about it. Salespeople will believe they're important to the company because you're doing the same job yourself. So that's how you scale.
00:54:24
Speaker
So you started doing diversification pretty early on, I can see on your website, like Quadrangle was the first acquisition
Diversification and Investments
00:54:33
Speaker
you did. Quadrangle was a company we acquired in the year 2000. We didn't know what would grow or how it would grow. We only formally intended users. We did not know what would scale. So one of those things we said, maybe this is scale. What was Quadrangle?
00:54:49
Speaker
But obviously the the knockery business was like a much bigger business Okay, what is quadrangle still running like there's still country And then you started g1 sati in zero four and
00:55:06
Speaker
No, we shall give something in 98. 98? Okay. So 98 may. So we said we've done jobs, let's do one more classified category. And we're not given something that's completely free site. And we spent no time on it, just floated it. So you could register free, search free, contact free, support free, support fully open site. Now, when we raised venture capital or ICSA venture, they told us, yeah, what is it? We've invested in Nokia, we want all the effort behind Nokia. So we said, okay. So one of the other conditions in the agreement was that you will change your auditors. We want one of the big five, step five auditors. Right.
00:55:35
Speaker
So we went to our old auditors. They were two brothers in one year of senior year of senior year of senior year of school. I knew them good guys who do a good job of audits. And I went there to tell them, I'm really sorry, but we have to let go of you and shift our audit because ICSA is insisting. That's it.
00:56:00
Speaker
So we told them, he was from Pentelism. So you have cost, but Pentel is not off. So if you make a profit, you take a salary. A lot of Pentelism is not over. It's company.
00:56:12
Speaker
On the promise that they would work hard and not ask for more money. So they worked hard for four years and it wasn't going anywhere. We said, let's buy it back because now we're profitable. They went and bought it back. And that's how the company came back to us. Then a year later we launched, this is 2004, a year later we launched 5 without 9.
00:56:33
Speaker
So that was again to further draw in the classified listing space so that there was like property listing. So why did you decide to go to the IPO route? What is the... Well, we had to give the investor an exit. We wanted ESOP to have value. We wanted to get capital as a company for strategic purposes. We wanted to put ourselves in a different strategic space that will always have access to capital, stop a life currency and will be truly independent.
00:57:00
Speaker
Okay. And post-IPO, again, you did a lot of VC bets in a way, in a lot of companies. So what was the rationale behind the bets you took? How did you decide which company? We had this bunch of money we raised. We had this bunch of money we raised. And one of the reasons we said we're raising it is to make acquisitions.
00:57:21
Speaker
But when we went out to look for acquisition, we found that nothing worthwhile available at a reasonable price. Okay. So we said, okay, next best thing is to invest behind other startups, which is what we did. And that actually panned out fairly well. So what were your learnings from being a VC? Like, you know, what were the good bets and the bad bets?
00:57:38
Speaker
Therefore, I think we see a thousand startups to invest in maybe five or six, right? So, you learn a lot about business models, people, entrepreneurs, what works, what doesn't work, what could work, and so on. So, I think we've learned a lot. I think we've learned what works, what steals, what makes profit, what doesn't make profit.
00:58:00
Speaker
We learnt the importance of natural attraction, we learnt the importance of being market leaders, we learnt the importance of being a winner and a winner they call market, important network effect. We thought we would see that. So we were looking at it. Okay. Do you invest in like the angel level also or like, you know, I don't invest in tech companies personally because the company does that. I don't want to conflict your interest. So the company does, we do from very early to series day. Okay. Very early meaning post revenue or you do pre-revenue also?
00:58:30
Speaker
So policy bazaar was a PowerPoint when we invested. And if you could elaborate a bit on the models that you've made, like what are the things that are like strong check boxes for you to make an investment.
00:58:46
Speaker
I think we look for signs of natural traction if it's already launched. Is it getting traffic downloads without having to advertise? Is the word of mouth good? Is it solving an unsolved problem? What's the competitive landscape like? Is there some IP? Can they build a moat? What's the defensibility? If not, now can it be done going forward?
00:59:03
Speaker
How good is the team? It's one thing to have a couple of founders who are running a team of 8-10 people. But when this company scales up, it might have 5,000 people. Are there sort of people who can run teams of 5,000? Can they be rushed across the table? Will people want to work with them? Some of their judgment calls, some of them, they call faith. So did you see the interest in Dipinder when you invested? See, Dipinder, look, it's very hard to say, he is a loving company when he's 28 years old.
00:59:30
Speaker
But he looked okay on that front to me, nothing negative there. But you can't positively say that. But what I did see was natural direction. I did see product clarity. I did see a huge desire to stay on for a long haul. And I saw a great product and huge customer insight.
00:59:47
Speaker
And what did you see in policy bazaar when you invested when it was just a PPT? Again, a good team and a very powerful value prop. He came to me and he said that I'm willing to bet you're spending 60 million more for your car insurance than you need to. And I said, obviously, you know, in my head, insurance is a commodity, you're publishing a company, why would they owe charge? Right.
01:00:08
Speaker
And he said, pull out of insurance, pull out of car insurance. And he got me some 12 alternate quotes. And sure enough, the lowest quote was 40% lower than what I was paying. He said, there's so much derivative pricing on the same policy across companies that you can't imagine. The customer does not know. Nobody tells the customer, it's a huge revelation. And I said, this will work.
01:00:25
Speaker
And what about Merit Nation? So Merit Nation is a good team. I had known them for a while. Good competency in education content and education. Initially, they showed great promise, but over time, they were talking about it. I think in sales execution, there was a bit of a lagoon, but good people otherwise. And I recently did an interview with Tanu Tejas of Shopkirana, whom you also invested in. So what did you see there?
01:00:51
Speaker
Superb team solving answer problem, a great traction, counterintuitive. You know, people say that e-commerce will take over and big deal will take over. But here was a guy making it happen for the small drama store in a manner that it works for the drama store and it works for them. So new age distribution. And I liked it. Okay. So my last question to you, what advice do you have for founders who are seeking to get invested by InfoEdge or by you?
01:01:17
Speaker
I mean, talk to us. But you know, number one, the customer money is better than the investors. And it is coming at a price that's higher than it costs you to deliver that product to service. Then chances are you have a viable business so long as you can get enough customers giving you enough orders. So investors love to invest behind businesses getting customer money.
01:01:40
Speaker
There is no guarantee of the customer's money. Because the customer is not your uncle, your aunt, your mother, your father. He is not doing any favors. He is buying you because it works for him and he is certainly buying you second time only if it works for him, but from the first time. But very often, you know, investor, it's about making good PowerPoint and impressing two young MBAs across the table. It's not the same thing.
01:02:02
Speaker
So agar, focus on customer or other investors. Second thing I say is that it's a great idea to raise money when the investor comes to you rather than you going to the investor. But that is when you get your terms of trade and the valuation and the terms you want. So focus on the customer, focus on somehow making a few things happen with the sources you already have and when you arrived at someplace. That's when you.
01:02:23
Speaker
Are there sectors that you are bullish on, markets or sectors? We don't do it top-down, we don't do it bottom-up. We meet companies, we go out and we meet companies, and if something is interesting, then we do it. And that becomes a company with a southern sector of interest. Do you think there will be a company that will disrupt Nokia in the years to
Future Challenges for Info Edge
01:02:41
Speaker
come? God knows, they might well be, but it's our job to ensure it doesn't happen.
01:02:46
Speaker
What do you think that could be? Like if there was a company to disrupt in the... We can't think of anything. But if we can't think of it when we're already taking action against it, we'll do the same thing ourselves. Okay. And what was the logic behind the IAM jobs acquisition? There's been a good brand, a good niche in a certain segment. And we felt there was value there in which our tech sales team could actually leverage that value and make it a lot bigger. And a very good founder. A very good founder is still the company.
01:03:28
Speaker
Wow!
Conclusion and Reflections
01:03:30
Speaker
Those were some amazing insights about building a unicorn. We hope that you are also able to identify new customer problems on which to build your business and are able to scale it up by finding your reputable, profitable unicorn.
01:04:02
Speaker
If you like the Founder Thesis Podcast, then do check out our other shows on subjects like Marketing, Technology, Career Advice, Books and Drama. Visit the podium.in that is t-h-e-p-o-d-i-u-m.in for a complete list of all our shows.
01:04:46
Speaker
This was an HD Smartcast original.