Be a Tortoise when your competitors are Hare – Info Edge
Sanjeev Bhikchandani started Info Edge (parent company) when the world still hasn’t got used to ‘www’. Naukri.com (subsidiary company) was launched in 1997. The dotcom bubble which started in the USA reached India by 1998.
When in 1999, Info Edge was making revenue of 36 lac Mr.Bhikchandani started getting calls from investors which he refused. Sanjeev believed in running business the traditional way – building business organically through internal accrual. Within a few months Sanjeev got to know about Jobsahaead.com spending 75 lac on advertisement which was 2 times of the overall revenue of Info Edge. Sanjeev quickly changed his decision & raised 7cr from ICICI in 2000. But a sudden meltdown of dotcom in March 2001 made him invest those funds in a Fixed Deposit. Sanjeev convinced ICICI the importance of building business slowly in the crash. Meanwhile, Jobsahaed.com was giving tough competition to Naukri.com with 33 cr funding till 2001 & with aggressive marketing. While Jobsahead.com was in a hurry Sanjeev was going slow and steadily growing profitable.
After global slowdown between 1999-2004 amid the dot com crash, Monster.com, a listed US company bought Jobsahaed.com at 40 cr in May 2004. Early investors in Indian startups became more confident. Monster.com decided to keep alive Jobsahaead.com for 2 years and then finally merge. Two years of chaos between merging entities helped Naukri.com improve its backend. Till 2006 Naukri was drawing a whooping turnover of 84cr. In Nov-2006, Info Edge launched an IPO with an astounding gain of 85% above the issue price. The company was valued at 1000cr.
Info Edge kept on running its marathon with steady profits rather than sprinting short distances like its competitors. Seeing opportunity in untapped real estate market in 2005, Info Edge launched 99acres.com as a competitor to housing.com. As opposed to map based interface of finding home by Housing.com, 99acres.com kept text based listings. 99acres.com thought it was more sensible. Housing.com had insensible better engineered product; on the other side 99acres had strong sales force with sensible product. Sanjeev believed in using customers’ money to grow business than using investor funding. “If you have a good website, customers will come and pay, but Investors’ money doesn’t make sure that customers will follow. One needs to have good value proposition”, says Bhikchandani.
Several real estate websites failed due to lack of value proposition and growth without ensuring profitability. Housing.com offered to merge 99acres.com when 99acres was making revenue of 70-80 cr. The reason quoted was, “You have got business and we have got the product” but Sanjeev countered “If you have got the product how come we have got the business”. In 2015, Rahul Yadav founder of Housing.com was sacked from the company and the following year the company merged with Housing.com.
Sanjeev firmly believes that when funding comes easily to founders they are less compelled to build a good business model & your business does not survive long run amid lack of value proposition & eventually the investor’s money stops coming in. Profit is the only real thing. Valuations are unreal. Under good condition when financing is easy you can raise money and migrate it to profit. Further, he says that, when he approached investors for funding, sighting the reason of a profit making startup, investors criticized him with lack of vision and claimed that nobody makes profit in a new economy. But he persisted. Continued his slow, profitable and sustainable journey backed with a good value proposition.