Sanjeev Bikhchandani (PGP '89), From IIM Ahemdabad
Sanjeev is India's most successful internet entrepreneur. For close to a decade he struggled on the sidelines but never gave up on his Big Idea. In 2006, naukri.com became the first dotcom to IPO on an Indian stock exchange.
“I have spent most of my life in Delhi. My father was in the government, he was a doctor. My mother was a housewife; there was no business person in the family.” Nothing out of the ordinary and yet Sanjeev, at age 12 had more or less decided which direction his career would take. “At that stage, the idea started forming in my head that, look, somewhere along the way, I should be starting a company of my own.” Sanjeev went on to study economics at St Stephen’s college. The interesting thing is that he had got admission to IIT but did not take it. “I thought it was a five year course whereas BA was a three year course, so let me study economics instead. Then, let me work for
two years and go to IIM Ahmedabad.” The truth is, he wasn't inspired by engineering. Like most middle class kids living in government colonies, he just took the exam. But unlike others he had a mind of his own and the careless confidence to buck the trend. A trait you commonly find in entrepreneurs! Sanjeev worked for three years and then got into IIMA. “While on campus, there was a group of us who would talk about entrepreneurship, think entrepreneurship. I took a few courses like LEM and PPID, which are more oriented towards entrepreneurship.” The plan was to work for a year or two and then start a company. “I was clear that I was going to be in Delhi because my parents had a home - there was a safety net. I didn't have any capital. I thought I would work for while, look for an opportunity and then branch out on my own.” There was a desire to be different but Sanjeev did not actually do something different when he first started out. Except for the act of leaving a fairly comfortable job marketing Horlicks at HMM (now known as GlaxoSmithKline). Along with a partner, Sanjeev set up two companies - Indmark and Info Edge. The first specialised in pharmaceutical trademarks and the second produced salary surveys and reports. But the thrill of doing one's own thing was palpable. The company started life in the servant's quarter of his father's house, at a modest rent of 800 rupees per month. There were employees to be paid and often, a cashflow crisis on the 29th - just before payday. Sanjeev's own paycheque came from teaching at a couple of business schools over the weekend. Luckily, there was an ‘angel investor’: Sanjeev's wife - and batchmate - who was working with Nestle. That's how they managed to run the house. What I like is how he says this, matter-of-factly. “I had told Surabhi, even before we got married that I would soon quit and become an entrepreneur. I had told her that we will be living off your salary for quite a while. She was cool with it.” The more important bit: he was cool with it. Not all men are. The thing with entrepreneurship is you can't afford to have a big ego. You want to stay in business, you do every bit of business that comes along. You want to keep the dream afloat, you don't care what the neighbours and relatives have to say about who wears the pants in your house. And all the while you keep searching. For that one idea, that one product or service which is going to make your company something more than a writer of reports, a doer of projects. That one idea which makes you a brand. Ideas can come from anywhere.You could be sitting in a tub and have a eureka moment. Or in a bus or at your dining table. And so it was with the idea of a job database. Sitting around in the open plan HMM office Sanjeev would see colleagues flipping through Business India, the leading business magazine of that era. In those days the back of the magazine carried 35 to 40 pages of appointment ads and Sanjeev noticed that everyone read the magazine back to front. The eureka moment?
“Everyone likes to be in the know on jobs.” Even at a company like HMM - a good employer - people were keen to track what else was out there. You may not be looking FOR a job but you would look AT a job. That was a valuable insight and Sanjeev just knew it had an application somewhere. To top it all, every week headhunters would call and offer jobs that weren't ever advertised. So there were a bunch of jobs out there and people interested in knowing about those jobs. If somebody were to aggregate this database and keep it current and live, you would have a product which solved a problem. And it could somehow be monetised. Except there was no way to compile such a database and make it accessible easily and cheaply to users. And so it became one of those 'file and forget' ideas. Until one fine morning an advertisement issued by Department of Telecom appeared in the paper. The ad talked about ‘Videotex’ - a service where people would be able to access information stored on a central server from terminals all across Delhi. The ad invited private players to create and maintain these databases, on a revenue share basis. And Sanjeev said, “Hey, why don't we make a job database on this platform?” Info Edge was shortlisted. A detailed project report with screens, navigation and UI was submitted. Alas, DoT shelved the project. The year is 1993 and there are other things to worry about. Sanjeev and his partner decide to go separate ways. Each partner kept one company, and half the employees and assets. Sanjeev was left with Info Edge. And the ‘job database’ idea came with it. But life went back to the usual - reports, databases, market studies. Standardized stuff sold at a cheap price. Info Edge shifted back to the servant’s quarters from the office in south Delhi it had inhabited for a brief while. On a lower cost model, Info Edge made some money and Sanjeev managed to get construction work done at his residence. Once again the company shifted - this time into the second floor of his own house. So things were okay. Not too good, not too bad. Business was growing, but slowly. And then Sanjeev visited an exhibition at Pragati Maidan called ‘IT Asia’. Here, he was introduced to the internet for the very first time. It was a defining moment. Just talking about it, recounting how it happened, Sanjeev gets all animated.
“I saw a stall titled WWW. I was intrigued.”
I said, “What is this?”
He said, “Sir, this is World Wide Web.”
“What is the World Wide Web?”
“This is the internet.”
“What is the internet?" I had never heard of it.
He said “Sir, you can send and receive emails.”
The stall was a reseller of VSNL internet accounts and mainly interested in selling an email id bundled with an internet connection. But Sanjeev didn't know anyone who had an email ID, so he didn't see the point. Whom would he communicate with?
Then, the guy added, “Sir, with the internet you can access a lot
of information.”
“On what?” Sanjeev asked. And the reseller gave a demo, on a rudimentary B & W monitor, on an interface which looked similar to DOS. He opened a site called 'Yahoo!' and typed a keyword search.
“Like this, sir, you can go and search for any information.”
By now Sanjeev's mind was ticking. He said, “Hey, that old idea that you shelved! This may be the medium for that.”
He approached the reseller, “Look, I want to set up a website.
How do I do it?”
He said “Sorry sir, I can't help you. For that you need a server and
all servers are in the US.”
But a thought had been set into motion - a way would be found. He went home and called his brother Sushil. Seven years his senior, an IIMA grad and a professor at UCLA.
I said, “Look I want to start a website on the internet. Have you heard of the internet?”
He started laughing. “Of course, we use it everyday.”
“I said, ‘Okay, but it has come to India now, and I want to start a website but all servers are in the US. I need a server’.”
My brother said, “Yeah, sure.”
I said, “But I don't have any money.”
It was October ‘96 and the recession had hit. The company was
back in the red. With one kid in the family and another on the way,
Surabhi had also taken a break. By then Sanjeev had taken up a
second job at the Pioneer newspaper as consulting editor of the
career supplement.
When he explained the predicament, bhai said, “Don't worry, I will
pay for your server until you are able to do it.”
The shared server cost 25 dollars a month. In return, Sanjeev
gave his brother a 5% share in the company. “He didn't ask for it,
but I just thought it was fair.”
Sanjeev then invited VN Saroja (PGP 1990) from IIMA on
board. Saroja looked after operations in the start up team and
got a 9% stake.
Now Sanjeev went to Anil Lall, a friend who was a very good
programmer and worked from home on freelance projects. “I said
‘Look, I want a website’.”
Anil said he knew nothing about the internet.
Sanjeev said, “Never mind, I am sure you will be able to figure it
out somehow.”
In a week Anil called and said, “I can do it.” And thus Anil became
a founding partner of naukri.com with a stake of 7%.
Meanwhile, Sanjeev had got the classifieds of recognised
newspapers from all over the country. He went to two data entry
operators in the company sitting idle because business was low
(remember, there was a recession!).
He pulled out the old file with a detailed structure of the jobs
database and said, “I want you to input the jobs in your own
words in this data structure.”
In three days, they had 1,000 jobs. Within a week there was aserver. The database and a navigation UI was handed over to
Anil. Within a week, a website was ready. And naukri.com was up
and running by late March '97.
Now at the time many people warned Sanjeev that ‘naukri’,
‘naukar’ etc was downmarket. But something told him it was
distinctive, unique. He went with his gut and stuck to the name.
“Today, it's one of our greatest assets.”
Entrepreneurship is about dozens of small leaps of faith like
this. Taken every day. Often, you have to take a contrarian
stand.You can't say why but this feels right. And you have to have
it your way.
The very act of becoming an entrepreneur is contrarian to ‘middle
class values’; study hard, get a good job, be happy with secure
income and steady salary.
“For the first six months we did not have an internet connection.
We would go to Anil Lall's house with two floppies and he would
upload the site. And our promise then was 1,000 jobs minimum
on the site. Live and current. No job older then 30 days, all jobs
taken from the newspapers.”
Soon enough the site started getting traffic because it was one of
the few sites targeting Indians living in India. Most catered to the
NRI audience.
There were only 14,000 internet accounts in the country when
naukri.com launched but to Sanjeev it looked like a large number.
Then naukri began to get press coverage. Because journalists
were writing for the Indian audience. And when they wanted to
quote, they would invariably quote naukri, because there was no
one else. That became a big asset. The site got a great deal of
press coverage in the first two years without even trying.Not that he is trying too hard, even now. In the midst of our
interview, Sanjeev gets a call from a journalist. He rolls his eyes
and excuses himself. A ten minute conversation on ‘job trends’
follows. Sanjeev handles a lot of this stuff even now. Karna padta
hai. Free publicity is the oxygen of any business. 10 cms of
editorial coverage is worth a 100 cc of paid advertising.
The secret is that you - and your company - should be the ‘go to’
person for that industry. Any journalist writing on jobs will call
Sanjeev. And he will be available.
The other asset which worked brilliantly for naukri was its own
users. When folks began sending out covering letters referring to
‘Your ad on naukri.com’ recruiters took notice. Yeh kaun si nayi
cheez hai?
Within six months of launch, a direct mail letter was sent out to
3,000 HR managers and recruiters. For 350 rupees you could list
a job on the site. For 6,000 rupees you could get annual
subscription which gave you unlimited listings through the year.
And thus, naukri.com began to get business. Low business, maybe
Rs 2-2.5 lakhs, but in year two, more direct mails were sent out.
“Revenues increased between 8-9 times in one year. I had not
seen any of our products respond like that!” exults Sanjeev.
Suddenly, naukri was bigger than the rest of the company in
terms of revenue, although it was still not profitable. Then, it broke
even at Rs 18 lakhs a year. Sanjeev decided to shut down every
other activity - no more reports, no more databases. “I put all
people, all resources to naukri, and said: ‘This is the future’.”
“I figured that perhaps this is the Big Idea. India is a large country,
large working population, internationally growing.”
Sanjeev was right. The world was soon caught up in a frenzy
called the ‘dotcom boom’.
The year was 1999. Investment bankers were throwing off their
ties and setting up somethingsomething.com. Armed with four
page business plans, they promised world domination of anyone,anywhere and anything online - subject to receipt of 10 million
dollars in venture capital funds. And some of them actually got it.
Sanjeev too started getting feelers. “We would like to invest in
your company,” they said.
His initial reaction: “I don't need your money… We are breaking
even now. Next year, we will continue to grow, bring in Rs 50-60
lakhs and make a profit. And I will be happy.”
The truth was he was happy as a small company, operating from
home. After years of struggle, he could finally see the word profit
in the horizon.
“I didn't want to sign complex agreements, have somebody
breathing down my neck and be under pressure for growth. I was
comfortable, leading an uncomplicated life.”
Around that time, he came across international magazines talking
about dotcoms, Yahoo! IPO, valuations. “I figured something is
happening in here. But I said I don't want the money anyway, no
matter what the valuation.”
But then, funded competition launched. The advertising budget of
jobsahead.com - just the launch - was twice as large as naukri's
annual turnover. They had deep pockets. When that happened,
Sanjeev realised the game had changed.
“You can't be a bootstrapped small company - 50 lakh turnover,
five lakh profit. You gotta be a five crore company with 50 lakh
profit. To migrate from this orbit to that orbit, you need funding
because there will be losses in the interim. Without those
investments, you can't migrate from orbit ‘A’ to orbit ‘B’.”
A quick call was made to the investment bankers.
“We told them, look, we have changed our minds. They said,
fantastic, great! Why don't you write a business plan? We quickly
put together our business plan, which now looks very
embarrassing.”
Info Edge got funding from ICICI Venture in April, 2000. The
company, with a Rs 36 lakhs turnover received a Rs 45 crore
valuation (which in those bubble days seemed modest). A month
later, the market crashed.
“We also got lucky in many ways,” muses Sanjeev. “We got the
money just before the market meltdown. So, we didn't get time to
spend it foolishly. We just put it in fixed deposit. And through the
meltdown, we spent the money on technology, products, people,
offices, sales team, getting new clients, trying to cut the losses.”This is when the importance of building good teams kicked in.
“Some of the people who joined at that time - just before VC
money and just after the VC came in - have probably contributed
more to building the company than I have,” muses Sanjeev.
“I may have been the founder, led the bootstrap years from 1990
to 2000. But post 2000, a lot of the credit goes to so many
others….”
One such person is Hitesh Oberoi, the COO. Sanjeev refers to
him as 'de facto CEO'. An IIM Bangalore graduate, Hitesh was
working in Delhi in Hindustan Lever and joined naukri in the
pre-VC phase. How did he manage to pull that off, I wonder?
Ah, but those were the bubble days. Everyone and their uncle
wanted to work for a dotcom!
Hitesh actually came to Sanjeev for advice. He had got an offer
from another start up. Sanjeev talked to him for about 2-3 hours
about life in a dotcom, what to look at, what is the offer like. At the
end he said, “Yeh sab theek hai. But why don't you join us
instead? You will be happier here because we will give you less
money and salary but we will give you more stock.”
Hitesh joined. He got a lot more stock (and ain't he happy about
that today!). The other company collapsed a few months later.
Post VC funding, of course, Info Edge was able to hire more
people, as there was money in the bank. And after the dotcom
meltdown, when people were leaving dotcoms, naukri was one of
the few which kept its eggs in the internet basket. It kept the faith,
kept recruiting.
When you truly believe in the fundamental value of a business, it's
not about cyclical ups and downs. People need to eat, they need
to bathe, they need to get jobs. When the market crashed the
bankers put away their jeans and brought back the ties. But the
entrepreneur simply rolls up his sleeve and works twice as hard.
That is what naukri.com focussed on: building a solid business.
The company had money in the bank, and spent it slowly and
strategically. There was a dotcom meltdown, an IT meltdown,
general economic recession. There was 9/11. But right through
that period, naukri kept growing.
Of course, it was a scary period. All around, dotcoms were
shutting down, VCs were pulling the plug. But ICICI was patient.
The money came in tranches and incredibly enough, it was not
linked to performance.
To their credit, ICICI did not hold back anything. The last tranchecame one and a half years after the first one. But there was no
renegotiation of the valuation.
“We kept growing but of course there were tough times. There
was a point when we were losing Rs.25 lakhs a month in cash.
And we had about 18 months of money left. That was the lowest
point - in late 2001.”
This mindset of frugality helped Info Edge. “We knew how difficult
it was to make money on the internet. We knew the value
of money because we had always been short of money.
So when this 7 crores came in, we were very careful about
how we spent it.”
Now generally, you invest, costs climb and revenues climb later.
But the encouraging thing here was that revenue kept climbing as
the company executed very well on sales. And this, Sanjeev says,
happened largely because of Hitesh.
Hitesh had no sales experience - he was a commercial manager in
Levers. But this was probably a good thing. He had no
preconceived notions on 'how sales should be done'. No cobwebs.
The company adopted a 'common sense approach'.
A salesperson costs the company 10,000 rupees salary plus
a mobile phone plus conveyance plus office space and use
of the computer. All in all, 20,000 bucks a month.
So if this salesman can recover Rs 25,000 a month, he is
contributing. Then, you keep on hiring more and more sales guys,
build structure and systems, open new branches and new
markets. And that's what Info Edge did.
Every branch kept breaking even in six months, and before they
knew it, Info Edge was a 300 person sales organization with
10-12 offices all over India. There were two years of losses and
then the company broke even at Rs 9.5 crores. Along the way, Info
Edge moved into a larger, swankier office in Noida, opened
several branches, invested in techonology platforms and people.
Today, Info Edge has 1,650 people of which 1,200 are in sales.Post break even, the company diversified. There was already an
executive search operation. The company added Jeevansathi
(matrimony site), 99acres and allcheckdeals.com (property sites),
naukrigulf (on local job trends in the Middle East), Brijj.com which
is a social networking site and most recently, asknaukri and
education portal shiksha.com.
There are multiple lines of business but naukri is still the flagship
brand, the one people have heard of the most.
As the company grew and became more and more profitable, it
became increasingly logical by 2005 to do an IPO. In November
2006, Info Edge became the first pure Indian dotcom to conduct
a successful IPO. At the time it had revenues of Rs 84 crores and
profits of Rs 13 crores.
A year after its IPO, Info Edge is still growing at a crazy pace.
In the year 2007-08, revenues stood at Rs 239 crores with
post-tax profits of Rs 55 crores. The company’s current market
capitalisation is $630 million* (over Rs 2,500 crores).
Many companies go through a phase of high growth. But the Info
Edge story is way beyond that. In 2002, the annual turnover was
a mere Rs 3 crores with losses of Rs 1.1 crores.
“In the year we made Rs 84 crores (2005-06), our business plan
had said we will make Rs 12 crores. So we had massively
underestimated our growth. The good bit was that whenever there
was an audit in ICICI, on who committed what and is delivering
what, we came out smelling like roses.”
Of course, it's also about being in the right place at the right time.
As the economy once again went into a growth phase and
confidence in the internet was restored, naukri.com took strong
advantage of the opportunity.
But let me qualify that - by right place and right time I don't mean
he simply got ‘lucky’. There was a fundamental belief in the
product. And the genuine need gap it addressed.“When I am talking to entrepreneurs, I always say base your
business on deep customer insights, the way naukri was formed.”
Let's say you have such an idea or insight. But it does not work
right now, perhaps it is ahead of its time... Keep it, at the back of
your mind. As the environment changes, as technology changes
you might be able to ‘join the dots’. To connect different pieces of
the puzzle and bring your concept to life.
Going to IT Asia was a wonderful break, but it was not something
that just 'happened'. Sanjeev went to the expo every year, just to
look around, get new ideas. He even had a strategy: avoid stalls
of large companies, visit the small ones - they're more interesting.
Seek, and ye shall find!
Entrepreneurs are seekers. And they are always open to change.
There are different kind of pressures operating at each stage- you
evolve, and learn to cope with them.
“There was a certain pressure when you were not breaking
even… There was a certain pressure when you took the VC
money and the market melted down and you had to deliver
growth… There are more pressures when your financials become
more complex and another set of pressures when you do an IPO.”
For Sanjeev, and most other entrepreneurs in the scale-up phase,
the key personal transformation area was learning to delegate. It
wasn't easy. “I had to learn to understand that it is not my
company alone, anymore.”
When you're going for that kind of growth it's all about
getting good people, aligning them to a larger goal and making
things work. When you have smart people, they will demand their
space. They will demand respect.You have to empower them and
get out the way.
But ‘what if.’
What if Sanjeev hadn't got funding at the right time?
What if the dotcom industry had remained in the doldrums?
What if he was still trying to figure out how to connect those dots?
How long does one hang in there? 5 years, 8 years, 10 years…
At what point would the entrepreneur throw in the towel? Decide
to give up?
“Never,” says Sanjeev.
“I could have quit anytime in the first 10 years, and I would have
been a failed entrepreneur. Why did I keep going? Because Iwasn't chasing money. And if you chase something long enough,
sooner or later you will get lucky. If you are really lucky then you
will do it in 5 years, if you are moderately lucky then you will do it
in 10 years, if you are terribly unlucky you will do it in 15 years.”
“But if we had missed this bus, I would have continued working at
what I was doing and maybe I would have succeeded at
something else 5-6 years hence. The point is to try long enough
and hard enough. I think persistence is a quality that you have to
have, to be a successful entrepreneur.”
If you love your work, and it gives your life meaning, then you will
have fun through the difficult times.You will find it in your heart to
keep going.You will never lose hope.
You see, there is no such thing as a failed entrepreneur. You are
a failed entrepreneur only when you quit. Until then, you are
simply not successful… yet.
Sanjeev Bikhchandani is a man with a lot of energy. He strides into my office for the interview, makes himself comfortable and spends the first 40 minutes giving gyaan on how I should run my business. Whatever he says makes perfect sense. The entrepreneur in me is taking mental notes, but the writer exclaims, “Gosh, this guy talks a lot!” Like the Energizer bunny he can go on and on and on. And that's actually an apt metaphor for India's most successful internet entrepreneur. The guy started early and simply never ran out of juice. Not when he couldn't pay himself a salary for six years. Not when he had to take up a second job to support the family. Not when he got funded but the whole dotcom dream went bust. The thing is, entrepreneurship was not one of many options for Sanjeev, it was the only one. But did Sanjeev imagine that one day his company Info Edge (commonly known as naukri.com) would be a darling of the stock markets? An industry leader with a market capitalization of $1 billion (Rs.4,300 crores) at its peak*, and an absolutely scorching pace of growth? The answer, Sanjeev honestly admits, is “Not really.” The reason for starting his own company was independence. You are your own boss - doing your own thing, setting your own priorities. There was the urge to create something, do something different. Success came along the way, but even through the days he ran a tiny business out of the servant’s quarter, Sanjeev was happy. And that's what makes it such a fascinating story.
“I have spent most of my life in Delhi. My father was in the government, he was a doctor. My mother was a housewife; there was no business person in the family.” Nothing out of the ordinary and yet Sanjeev, at age 12 had more or less decided which direction his career would take. “At that stage, the idea started forming in my head that, look, somewhere along the way, I should be starting a company of my own.” Sanjeev went on to study economics at St Stephen’s college. The interesting thing is that he had got admission to IIT but did not take it. “I thought it was a five year course whereas BA was a three year course, so let me study economics instead. Then, let me work for
two years and go to IIM Ahmedabad.” The truth is, he wasn't inspired by engineering. Like most middle class kids living in government colonies, he just took the exam. But unlike others he had a mind of his own and the careless confidence to buck the trend. A trait you commonly find in entrepreneurs! Sanjeev worked for three years and then got into IIMA. “While on campus, there was a group of us who would talk about entrepreneurship, think entrepreneurship. I took a few courses like LEM and PPID, which are more oriented towards entrepreneurship.” The plan was to work for a year or two and then start a company. “I was clear that I was going to be in Delhi because my parents had a home - there was a safety net. I didn't have any capital. I thought I would work for while, look for an opportunity and then branch out on my own.” There was a desire to be different but Sanjeev did not actually do something different when he first started out. Except for the act of leaving a fairly comfortable job marketing Horlicks at HMM (now known as GlaxoSmithKline). Along with a partner, Sanjeev set up two companies - Indmark and Info Edge. The first specialised in pharmaceutical trademarks and the second produced salary surveys and reports. But the thrill of doing one's own thing was palpable. The company started life in the servant's quarter of his father's house, at a modest rent of 800 rupees per month. There were employees to be paid and often, a cashflow crisis on the 29th - just before payday. Sanjeev's own paycheque came from teaching at a couple of business schools over the weekend. Luckily, there was an ‘angel investor’: Sanjeev's wife - and batchmate - who was working with Nestle. That's how they managed to run the house. What I like is how he says this, matter-of-factly. “I had told Surabhi, even before we got married that I would soon quit and become an entrepreneur. I had told her that we will be living off your salary for quite a while. She was cool with it.” The more important bit: he was cool with it. Not all men are. The thing with entrepreneurship is you can't afford to have a big ego. You want to stay in business, you do every bit of business that comes along. You want to keep the dream afloat, you don't care what the neighbours and relatives have to say about who wears the pants in your house. And all the while you keep searching. For that one idea, that one product or service which is going to make your company something more than a writer of reports, a doer of projects. That one idea which makes you a brand. Ideas can come from anywhere.You could be sitting in a tub and have a eureka moment. Or in a bus or at your dining table. And so it was with the idea of a job database. Sitting around in the open plan HMM office Sanjeev would see colleagues flipping through Business India, the leading business magazine of that era. In those days the back of the magazine carried 35 to 40 pages of appointment ads and Sanjeev noticed that everyone read the magazine back to front. The eureka moment?
“Everyone likes to be in the know on jobs.” Even at a company like HMM - a good employer - people were keen to track what else was out there. You may not be looking FOR a job but you would look AT a job. That was a valuable insight and Sanjeev just knew it had an application somewhere. To top it all, every week headhunters would call and offer jobs that weren't ever advertised. So there were a bunch of jobs out there and people interested in knowing about those jobs. If somebody were to aggregate this database and keep it current and live, you would have a product which solved a problem. And it could somehow be monetised. Except there was no way to compile such a database and make it accessible easily and cheaply to users. And so it became one of those 'file and forget' ideas. Until one fine morning an advertisement issued by Department of Telecom appeared in the paper. The ad talked about ‘Videotex’ - a service where people would be able to access information stored on a central server from terminals all across Delhi. The ad invited private players to create and maintain these databases, on a revenue share basis. And Sanjeev said, “Hey, why don't we make a job database on this platform?” Info Edge was shortlisted. A detailed project report with screens, navigation and UI was submitted. Alas, DoT shelved the project. The year is 1993 and there are other things to worry about. Sanjeev and his partner decide to go separate ways. Each partner kept one company, and half the employees and assets. Sanjeev was left with Info Edge. And the ‘job database’ idea came with it. But life went back to the usual - reports, databases, market studies. Standardized stuff sold at a cheap price. Info Edge shifted back to the servant’s quarters from the office in south Delhi it had inhabited for a brief while. On a lower cost model, Info Edge made some money and Sanjeev managed to get construction work done at his residence. Once again the company shifted - this time into the second floor of his own house. So things were okay. Not too good, not too bad. Business was growing, but slowly. And then Sanjeev visited an exhibition at Pragati Maidan called ‘IT Asia’. Here, he was introduced to the internet for the very first time. It was a defining moment. Just talking about it, recounting how it happened, Sanjeev gets all animated.
“I saw a stall titled WWW. I was intrigued.”
I said, “What is this?”
He said, “Sir, this is World Wide Web.”
“What is the World Wide Web?”
“This is the internet.”
“What is the internet?" I had never heard of it.
He said “Sir, you can send and receive emails.”
The stall was a reseller of VSNL internet accounts and mainly interested in selling an email id bundled with an internet connection. But Sanjeev didn't know anyone who had an email ID, so he didn't see the point. Whom would he communicate with?
Then, the guy added, “Sir, with the internet you can access a lot
of information.”
“On what?” Sanjeev asked. And the reseller gave a demo, on a rudimentary B & W monitor, on an interface which looked similar to DOS. He opened a site called 'Yahoo!' and typed a keyword search.
“Like this, sir, you can go and search for any information.”
By now Sanjeev's mind was ticking. He said, “Hey, that old idea that you shelved! This may be the medium for that.”
He approached the reseller, “Look, I want to set up a website.
How do I do it?”
He said “Sorry sir, I can't help you. For that you need a server and
all servers are in the US.”
But a thought had been set into motion - a way would be found. He went home and called his brother Sushil. Seven years his senior, an IIMA grad and a professor at UCLA.
I said, “Look I want to start a website on the internet. Have you heard of the internet?”
He started laughing. “Of course, we use it everyday.”
“I said, ‘Okay, but it has come to India now, and I want to start a website but all servers are in the US. I need a server’.”
My brother said, “Yeah, sure.”
I said, “But I don't have any money.”
It was October ‘96 and the recession had hit. The company was
back in the red. With one kid in the family and another on the way,
Surabhi had also taken a break. By then Sanjeev had taken up a
second job at the Pioneer newspaper as consulting editor of the
career supplement.
When he explained the predicament, bhai said, “Don't worry, I will
pay for your server until you are able to do it.”
The shared server cost 25 dollars a month. In return, Sanjeev
gave his brother a 5% share in the company. “He didn't ask for it,
but I just thought it was fair.”
Sanjeev then invited VN Saroja (PGP 1990) from IIMA on
board. Saroja looked after operations in the start up team and
got a 9% stake.
Now Sanjeev went to Anil Lall, a friend who was a very good
programmer and worked from home on freelance projects. “I said
‘Look, I want a website’.”
Anil said he knew nothing about the internet.
Sanjeev said, “Never mind, I am sure you will be able to figure it
out somehow.”
In a week Anil called and said, “I can do it.” And thus Anil became
a founding partner of naukri.com with a stake of 7%.
Meanwhile, Sanjeev had got the classifieds of recognised
newspapers from all over the country. He went to two data entry
operators in the company sitting idle because business was low
(remember, there was a recession!).
He pulled out the old file with a detailed structure of the jobs
database and said, “I want you to input the jobs in your own
words in this data structure.”
In three days, they had 1,000 jobs. Within a week there was aserver. The database and a navigation UI was handed over to
Anil. Within a week, a website was ready. And naukri.com was up
and running by late March '97.
Now at the time many people warned Sanjeev that ‘naukri’,
‘naukar’ etc was downmarket. But something told him it was
distinctive, unique. He went with his gut and stuck to the name.
“Today, it's one of our greatest assets.”
Entrepreneurship is about dozens of small leaps of faith like
this. Taken every day. Often, you have to take a contrarian
stand.You can't say why but this feels right. And you have to have
it your way.
The very act of becoming an entrepreneur is contrarian to ‘middle
class values’; study hard, get a good job, be happy with secure
income and steady salary.
“For the first six months we did not have an internet connection.
We would go to Anil Lall's house with two floppies and he would
upload the site. And our promise then was 1,000 jobs minimum
on the site. Live and current. No job older then 30 days, all jobs
taken from the newspapers.”
Soon enough the site started getting traffic because it was one of
the few sites targeting Indians living in India. Most catered to the
NRI audience.
There were only 14,000 internet accounts in the country when
naukri.com launched but to Sanjeev it looked like a large number.
Then naukri began to get press coverage. Because journalists
were writing for the Indian audience. And when they wanted to
quote, they would invariably quote naukri, because there was no
one else. That became a big asset. The site got a great deal of
press coverage in the first two years without even trying.Not that he is trying too hard, even now. In the midst of our
interview, Sanjeev gets a call from a journalist. He rolls his eyes
and excuses himself. A ten minute conversation on ‘job trends’
follows. Sanjeev handles a lot of this stuff even now. Karna padta
hai. Free publicity is the oxygen of any business. 10 cms of
editorial coverage is worth a 100 cc of paid advertising.
The secret is that you - and your company - should be the ‘go to’
person for that industry. Any journalist writing on jobs will call
Sanjeev. And he will be available.
The other asset which worked brilliantly for naukri was its own
users. When folks began sending out covering letters referring to
‘Your ad on naukri.com’ recruiters took notice. Yeh kaun si nayi
cheez hai?
Within six months of launch, a direct mail letter was sent out to
3,000 HR managers and recruiters. For 350 rupees you could list
a job on the site. For 6,000 rupees you could get annual
subscription which gave you unlimited listings through the year.
And thus, naukri.com began to get business. Low business, maybe
Rs 2-2.5 lakhs, but in year two, more direct mails were sent out.
“Revenues increased between 8-9 times in one year. I had not
seen any of our products respond like that!” exults Sanjeev.
Suddenly, naukri was bigger than the rest of the company in
terms of revenue, although it was still not profitable. Then, it broke
even at Rs 18 lakhs a year. Sanjeev decided to shut down every
other activity - no more reports, no more databases. “I put all
people, all resources to naukri, and said: ‘This is the future’.”
“I figured that perhaps this is the Big Idea. India is a large country,
large working population, internationally growing.”
Sanjeev was right. The world was soon caught up in a frenzy
called the ‘dotcom boom’.
The year was 1999. Investment bankers were throwing off their
ties and setting up somethingsomething.com. Armed with four
page business plans, they promised world domination of anyone,anywhere and anything online - subject to receipt of 10 million
dollars in venture capital funds. And some of them actually got it.
Sanjeev too started getting feelers. “We would like to invest in
your company,” they said.
His initial reaction: “I don't need your money… We are breaking
even now. Next year, we will continue to grow, bring in Rs 50-60
lakhs and make a profit. And I will be happy.”
The truth was he was happy as a small company, operating from
home. After years of struggle, he could finally see the word profit
in the horizon.
“I didn't want to sign complex agreements, have somebody
breathing down my neck and be under pressure for growth. I was
comfortable, leading an uncomplicated life.”
Around that time, he came across international magazines talking
about dotcoms, Yahoo! IPO, valuations. “I figured something is
happening in here. But I said I don't want the money anyway, no
matter what the valuation.”
But then, funded competition launched. The advertising budget of
jobsahead.com - just the launch - was twice as large as naukri's
annual turnover. They had deep pockets. When that happened,
Sanjeev realised the game had changed.
“You can't be a bootstrapped small company - 50 lakh turnover,
five lakh profit. You gotta be a five crore company with 50 lakh
profit. To migrate from this orbit to that orbit, you need funding
because there will be losses in the interim. Without those
investments, you can't migrate from orbit ‘A’ to orbit ‘B’.”
A quick call was made to the investment bankers.
“We told them, look, we have changed our minds. They said,
fantastic, great! Why don't you write a business plan? We quickly
put together our business plan, which now looks very
embarrassing.”
Info Edge got funding from ICICI Venture in April, 2000. The
company, with a Rs 36 lakhs turnover received a Rs 45 crore
valuation (which in those bubble days seemed modest). A month
later, the market crashed.
“We also got lucky in many ways,” muses Sanjeev. “We got the
money just before the market meltdown. So, we didn't get time to
spend it foolishly. We just put it in fixed deposit. And through the
meltdown, we spent the money on technology, products, people,
offices, sales team, getting new clients, trying to cut the losses.”This is when the importance of building good teams kicked in.
“Some of the people who joined at that time - just before VC
money and just after the VC came in - have probably contributed
more to building the company than I have,” muses Sanjeev.
“I may have been the founder, led the bootstrap years from 1990
to 2000. But post 2000, a lot of the credit goes to so many
others….”
One such person is Hitesh Oberoi, the COO. Sanjeev refers to
him as 'de facto CEO'. An IIM Bangalore graduate, Hitesh was
working in Delhi in Hindustan Lever and joined naukri in the
pre-VC phase. How did he manage to pull that off, I wonder?
Ah, but those were the bubble days. Everyone and their uncle
wanted to work for a dotcom!
Hitesh actually came to Sanjeev for advice. He had got an offer
from another start up. Sanjeev talked to him for about 2-3 hours
about life in a dotcom, what to look at, what is the offer like. At the
end he said, “Yeh sab theek hai. But why don't you join us
instead? You will be happier here because we will give you less
money and salary but we will give you more stock.”
Hitesh joined. He got a lot more stock (and ain't he happy about
that today!). The other company collapsed a few months later.
Post VC funding, of course, Info Edge was able to hire more
people, as there was money in the bank. And after the dotcom
meltdown, when people were leaving dotcoms, naukri was one of
the few which kept its eggs in the internet basket. It kept the faith,
kept recruiting.
When you truly believe in the fundamental value of a business, it's
not about cyclical ups and downs. People need to eat, they need
to bathe, they need to get jobs. When the market crashed the
bankers put away their jeans and brought back the ties. But the
entrepreneur simply rolls up his sleeve and works twice as hard.
That is what naukri.com focussed on: building a solid business.
The company had money in the bank, and spent it slowly and
strategically. There was a dotcom meltdown, an IT meltdown,
general economic recession. There was 9/11. But right through
that period, naukri kept growing.
Of course, it was a scary period. All around, dotcoms were
shutting down, VCs were pulling the plug. But ICICI was patient.
The money came in tranches and incredibly enough, it was not
linked to performance.
To their credit, ICICI did not hold back anything. The last tranchecame one and a half years after the first one. But there was no
renegotiation of the valuation.
“We kept growing but of course there were tough times. There
was a point when we were losing Rs.25 lakhs a month in cash.
And we had about 18 months of money left. That was the lowest
point - in late 2001.”
This mindset of frugality helped Info Edge. “We knew how difficult
it was to make money on the internet. We knew the value
of money because we had always been short of money.
So when this 7 crores came in, we were very careful about
how we spent it.”
Now generally, you invest, costs climb and revenues climb later.
But the encouraging thing here was that revenue kept climbing as
the company executed very well on sales. And this, Sanjeev says,
happened largely because of Hitesh.
Hitesh had no sales experience - he was a commercial manager in
Levers. But this was probably a good thing. He had no
preconceived notions on 'how sales should be done'. No cobwebs.
The company adopted a 'common sense approach'.
A salesperson costs the company 10,000 rupees salary plus
a mobile phone plus conveyance plus office space and use
of the computer. All in all, 20,000 bucks a month.
So if this salesman can recover Rs 25,000 a month, he is
contributing. Then, you keep on hiring more and more sales guys,
build structure and systems, open new branches and new
markets. And that's what Info Edge did.
Every branch kept breaking even in six months, and before they
knew it, Info Edge was a 300 person sales organization with
10-12 offices all over India. There were two years of losses and
then the company broke even at Rs 9.5 crores. Along the way, Info
Edge moved into a larger, swankier office in Noida, opened
several branches, invested in techonology platforms and people.
Today, Info Edge has 1,650 people of which 1,200 are in sales.Post break even, the company diversified. There was already an
executive search operation. The company added Jeevansathi
(matrimony site), 99acres and allcheckdeals.com (property sites),
naukrigulf (on local job trends in the Middle East), Brijj.com which
is a social networking site and most recently, asknaukri and
education portal shiksha.com.
There are multiple lines of business but naukri is still the flagship
brand, the one people have heard of the most.
As the company grew and became more and more profitable, it
became increasingly logical by 2005 to do an IPO. In November
2006, Info Edge became the first pure Indian dotcom to conduct
a successful IPO. At the time it had revenues of Rs 84 crores and
profits of Rs 13 crores.
A year after its IPO, Info Edge is still growing at a crazy pace.
In the year 2007-08, revenues stood at Rs 239 crores with
post-tax profits of Rs 55 crores. The company’s current market
capitalisation is $630 million* (over Rs 2,500 crores).
Many companies go through a phase of high growth. But the Info
Edge story is way beyond that. In 2002, the annual turnover was
a mere Rs 3 crores with losses of Rs 1.1 crores.
“In the year we made Rs 84 crores (2005-06), our business plan
had said we will make Rs 12 crores. So we had massively
underestimated our growth. The good bit was that whenever there
was an audit in ICICI, on who committed what and is delivering
what, we came out smelling like roses.”
Of course, it's also about being in the right place at the right time.
As the economy once again went into a growth phase and
confidence in the internet was restored, naukri.com took strong
advantage of the opportunity.
But let me qualify that - by right place and right time I don't mean
he simply got ‘lucky’. There was a fundamental belief in the
product. And the genuine need gap it addressed.“When I am talking to entrepreneurs, I always say base your
business on deep customer insights, the way naukri was formed.”
Let's say you have such an idea or insight. But it does not work
right now, perhaps it is ahead of its time... Keep it, at the back of
your mind. As the environment changes, as technology changes
you might be able to ‘join the dots’. To connect different pieces of
the puzzle and bring your concept to life.
Going to IT Asia was a wonderful break, but it was not something
that just 'happened'. Sanjeev went to the expo every year, just to
look around, get new ideas. He even had a strategy: avoid stalls
of large companies, visit the small ones - they're more interesting.
Seek, and ye shall find!
Entrepreneurs are seekers. And they are always open to change.
There are different kind of pressures operating at each stage- you
evolve, and learn to cope with them.
“There was a certain pressure when you were not breaking
even… There was a certain pressure when you took the VC
money and the market melted down and you had to deliver
growth… There are more pressures when your financials become
more complex and another set of pressures when you do an IPO.”
For Sanjeev, and most other entrepreneurs in the scale-up phase,
the key personal transformation area was learning to delegate. It
wasn't easy. “I had to learn to understand that it is not my
company alone, anymore.”
When you're going for that kind of growth it's all about
getting good people, aligning them to a larger goal and making
things work. When you have smart people, they will demand their
space. They will demand respect.You have to empower them and
get out the way.
But ‘what if.’
What if Sanjeev hadn't got funding at the right time?
What if the dotcom industry had remained in the doldrums?
What if he was still trying to figure out how to connect those dots?
How long does one hang in there? 5 years, 8 years, 10 years…
At what point would the entrepreneur throw in the towel? Decide
to give up?
“Never,” says Sanjeev.
“I could have quit anytime in the first 10 years, and I would have
been a failed entrepreneur. Why did I keep going? Because Iwasn't chasing money. And if you chase something long enough,
sooner or later you will get lucky. If you are really lucky then you
will do it in 5 years, if you are moderately lucky then you will do it
in 10 years, if you are terribly unlucky you will do it in 15 years.”
“But if we had missed this bus, I would have continued working at
what I was doing and maybe I would have succeeded at
something else 5-6 years hence. The point is to try long enough
and hard enough. I think persistence is a quality that you have to
have, to be a successful entrepreneur.”
If you love your work, and it gives your life meaning, then you will
have fun through the difficult times.You will find it in your heart to
keep going.You will never lose hope.
You see, there is no such thing as a failed entrepreneur. You are
a failed entrepreneur only when you quit. Until then, you are
simply not successful… yet.
ADVICE TO YOUNG ENTREPRENURS
Be early. You can make your mistakes while it is cheap
to make them, when there is no competition.
Do not exaggerate in your business plan. Undercommit
and overdeliver.
Get great people - sell them the vision, the idea and
share the wealth, be generous with offering stock.
If you are starting a business to make money, don't do it.
Chances are that you will fail, because there WILL be
hard times. And if your motivation is not something
beyond money, those hard times will test you. You will
quit and go back to your job. But if you are doing
something other than money, you will rough it through
the hard times.
I spotted the opportunity but I didn't know how big it was,
how big it was going to be. I just said this is a smart idea,
I love it! And it happened to be the right idea, at the right
place, at the right time… If you are in enough places,
enough times and long enough, you get your breaks in
some form or the other.You just have to be smart enough
to take them.
Scaling up is also a lot about letting go. Get smart
people. If they are truly smart and if they have their self
belief, they will create their own space and they will do
stuff that maybe you can't do. Or may be you haven't
thought of.
And do keep in mind that every choice you make impacts
the family. If you live in a particular part of town, it will
obviously impact the kind of school your kids go to.
Frankly, these were the choices, the implications of
which I did not consider. Thankfully, things have turned
out well; the children also, the family also.
Be early. You can make your mistakes while it is cheap
to make them, when there is no competition.
Do not exaggerate in your business plan. Undercommit
and overdeliver.
Get great people - sell them the vision, the idea and
share the wealth, be generous with offering stock.
If you are starting a business to make money, don't do it.
Chances are that you will fail, because there WILL be
hard times. And if your motivation is not something
beyond money, those hard times will test you. You will
quit and go back to your job. But if you are doing
something other than money, you will rough it through
the hard times.
I spotted the opportunity but I didn't know how big it was,
how big it was going to be. I just said this is a smart idea,
I love it! And it happened to be the right idea, at the right
place, at the right time… If you are in enough places,
enough times and long enough, you get your breaks in
some form or the other.You just have to be smart enough
to take them.
Scaling up is also a lot about letting go. Get smart
people. If they are truly smart and if they have their self
belief, they will create their own space and they will do
stuff that maybe you can't do. Or may be you haven't
thought of.
And do keep in mind that every choice you make impacts
the family. If you live in a particular part of town, it will
obviously impact the kind of school your kids go to.
Frankly, these were the choices, the implications of
which I did not consider. Thankfully, things have turned
out well; the children also, the family also.
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