Sanjeev Bikhchandani’s search for a Naukri
Info Edge’s executive vice-chairman, Sanjeev Bikhchandani, launched his first Internet portal, Naukri.com, in 1997 when India had only 14,000 Internet users. Today, he is churning out strategies to make Info Edge the most dominant Internet company in the country.
In some sense, Sanjeev Bikhchandani is the Sachin Tendulkar of the Indian Internet industry. Bikhchandani’s unique selling proposition, very much like that of his cricketing counterpart, is his longevity. His ability to stay in the game long enough has been central to his success. In 1997, the first year of operating Naukri.com, his annual revenue touched Rs. 2.5 lakh. In year two, it hit Rs. 18 lakh. In fiscal 2010, Info Edge’s (the parent company behind Naukri.com) net sales was at Rs. 232.22 crore with a net profit of Rs. 56.92 crore. Over the last five years, in spite of a big recession in between, its revenue compounded annual growth rate (CAGR) was at 33 per cent.
In my mind, though, beyond Bikhchandani’s ability to generate sales, raise venture capital, attract and hire talent or deliver on product innovations, his longevity and ability to stay in business through the dotcom bust and tackle downturns in the economy is what stands out. Twenty years in business, through three different phases - the first six as a small business owner, the next four spent building Naukri.com including countering the dotcom bust and next 10 years spent scaling up, creating leaders and building a growth company – is what made me take notice.
Late last month, as I was walking through the headquarters of Info Edge in Noida, I could not help notice some interesting printouts that adorned the walls. The most interesting of them highlighted Naukri’s first ever press coverage. A June 1997 issue of Business India carried a small writeup on Naukri.com with a headline that read – ‘A tedious job’. The writeup ended on a skeptical note. It read, “Who will advertise on a job site that was visited by the jobless?” A few minutes later Bikhchandani answered that question for me. He said, “My thinking was fairly simple. If I could get 1,000 companies to pay Rs. 500 per job posting per month that would be Rs. 60 lakhs a year in business. That’s it. I was not thinking too large scale.”
Bikhchandani’s answers are brutally honest and to-the-point. In this article, I plan to share insights drawn from my conversations with Bikhchandani – on the growth plans for Info Edge, the overall Internet industry and what makes him tick and as an interesting aside, Info Edge’s foray into the corporate venture capital space.
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In quarter ending December 2010, Info Edge raked in Rs. 75 crore in net sales with a net profit of Rs. 21 crore. Bikhchandani’s flagship business Naukri.com contributed handsomely to this revenue. Quadrangle, the offline executive search and recruitment services arm, played a key role as well. His newer businesses, Jeevansathi.com, the matrimonial classifieds brand and 99acres.com, the online real estate listings portal, are growing as well.
While the jobs vertical continues to bring in most of the revenues, Bikhchandani is keen on diversifying across the spectrum and recreating the Naukri.com magic across several verticals. Infact, in fiscal 2010, Info Edge’s revenues from verticals outside of recruitment (a vertical that is highly dependent on the economy) has increased to over 16 per cent from just 5 per cent in FY 2006. This strategy stems from Bikhchandani’s belief that India’s consumer Internet game is a long-term one. He says, “The success of Naukri.com came about because of several factors – being an early mover, taking advantage of being an early mover, strong branding, quality of our sales force and continuous innovation to our product offering.” Of course, Bikhchandani does not have the early mover advantage in his other verticals. Jeevansathi lags behind Shaadi.com and Bharatmatrimony.com in the matrimonial classifieds space, but is hoping to gain market share in regions where the other two players do not have a strong hold.
However, there is one aspect of Info Edge that has probably gone unnoticed. Maintaining strong cash flows and operating with negative working capital is one of its strongest points. Consumers enroll in prepaid plans to avail any of Info Edge’s classified services. Negative working capital coupled with its ability to maintain healthy operating profit margins has helped it accumulate Rs. 400 crore in cash and liquid assets (as of February 2011). Today, its market capitalisation stands at a whopping Rs. 3,000 crore.
This kind of cash gave Info Edge the flexibility to start a corporate venture capital (VC) arm. In July 2010, there was an organisational change within the company. Hitesh Oberoi, previously the chief operating officer, took over as managing director and chief-executive. Oberoi’s focus was on the internal workings of Info Edge. Bikhchandani became executive vice-chairman and started focusing on external investments. Till date, Info Edge has invested in three consumer Internet ventures – policybazaar.com, an insurance comparison site; meritnation.com, an e-learning portal and zomato.com, a restaurant and food classifieds portal. Bikhchandani says, “The corporate venture capital model is a core part of our growth plans. We have identified growth strategies internally as well.”
The corporate VC arm operates like any other VC firm except that it is laser focused on the consumer Internet space in India. “We have started looking for some opportunities in e-commerce,” adds Bikhchandani. Like any other investor, Sanjeev now travels around the country spotting interesting ideas from great teams. He looks for innovation, intellectual property creation and possibly an early mover advantage. In each of its current investments, Info Edge’s understanding of the Internet space is the biggest value addition apart from the money it invests.
Info Edge is also open to investing in intrapreneurs, people who come up with fresh ideas that can be incubated within the company. AllCheckDeals.com, an organised real-estate brokerage that uses the web for enquiry generation, came up the intrapreneurship route. The management at AllCheckDeals.com was given a stake and it was spun off into a separate entity within Info Edge. However, Bikhchandani admits that it is not something he plans for. If a new idea is suggested for Naukri.com, it obviously stays within the portal, but fresh ideas do get heard by Bikhchandani.
As we speak about Info Edge’s growth plans, I divert Bikhchandani to talk about the Internet landscape in the country. India’s Internet industry is unique in its own way. For starters, advertising as a revenue model is just taking off. From jobs and matrimonial to real-estate broking, deal making online has been the big success story so far. E-commerce is catching up with the growth of companies like FlipKart and Myntra. I ask Bikhchandani, what he thinks about the mobile and social media landscape in the country from an Info Edge perspective? “Mobile is going to be bigger than social,” he says. “Tapping into social media for customer acquisition is where social media will come into play.”
“My thinking was fairly simple. If I could get 1,000 companies to pay Rs. 500 per job posting per month that would be Rs. 60 lakhs a year in business. That’s it. I was not thinking too large scale”
Bikhchandani has been a keen observer of the global Internet industry since the early 90s. His conference room displays this big chart titled “Trends and Technology timelines 2010+” that lists all kinds of next generation technological strategies and ideas for several industries. My attention is drawn towards some key words from the chart - personalisation of content and niche portals, which I promptly cross-question Bikhchandani about. “Both personalisation and niches are something we are watching. We launched firstNaukri.com, which is a job portal for college graduates. We might have a few niche portals, but a large number of niche portals are unlikely,” he says.
Not every project that Bikhchandani touches succeeds. Brijj.com, a LinkedIn-clone in the online professional networking space, was launched to supplement Info Edge’s other portals in the recruitment space. Bikhchandani says, “Brijj is certainly facing a challenge. It is getting registered users, but not getting repeat usage.” Info Edge’s deep pockets allow it to take certain risks. Pilot projects are implemented to see if they work and losses are cut if the story does not pan out as planned.
Another pilot project at the company was the offline matrimonial centers for Jeevansathi. It was largely an effort to acquire customers who were not comfortable signing up online. Bikhchandani says the offline centers are overall breaking even, but the jury is still out on whether an offline center is needed or not.
As we speak about several of his portals, Bikhchandani is constantly talking about several members of his team. We talk about Naukri.com’s Hari Sadu campaign on television and he credits his marketing manager, Oberoi and the creative team at Draft FCB Ulka. The team page at Zomato.com, one of Info Edge’s investee companies, lists each and every team member at the company. His emphasis on talent does not go unnoticed. Bikhchandani says, “It is an ongoing process. If this kind of growth continues, we will probably have a shortage of talent, two years from now in our industry. So, attracting and managing talent is certainly crucial.”
Within the industry, Bikhchandani is known for his strategic inputs. In some sense, he’s seen as this entrepreneur who beat it out the hard way, and came out on top without giving up. His learnings and understanding of the Internet space from an Indian context is well respected. And this image is certainly helping the corporate VC arm of Info Edge. Aligning with Info Edge gives startup entrepreneurs insights into Bikhchandani’s thinking.
Naukri.com is certainly the poster child of the Info Edge stable. Jeevansathi and 99acres are catching on and so is AllCheckDeals.com. But, what will be interesting to watch is the growth of Info Edge’s investee companies. These companies will have access to Bikhchandani’s strategic inputs, but probably not his day-to-day operational skills. Only time will tell, how India’s largest homegrown Internet company continues to scale up with its unique combination of its internal businesses and external investments. Having interacted with Bikhchandani, I certainly believe it will be an exciting ride that will be filled with a lot of commitment and compassion. For me, its time to closely track Bikhchandani’s second innings as an investor and how the story of his portfolio companies pan out.
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