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The amazing story of the making of

Sanjeev Bikhchandani, CEO,
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January 24, 2007

Over the last six issues of MoneyLIFE, , a personal finance magazine, several CEOs we interviewed for this section said that this is the best time to be entrepreneurs in India.

Sanjeev Bikhchandani epitomises this. His is a classic story of spotting an opportunity and chasing it with guts, determination, lots of hard work and a little bit of luck. (the company is listed as Info Edge India Ltd on the Bombay Stock Exchange) is India's number one job portal at a time when there is a serious scarcity of employable people in just about every sector of business and industry.

It is also an extremely successful dot-com, having weathered the 2000 meltdown. How much better can it get? Naukri's CEO spoke to MoneyLIFE editors Sucheta Dalal and Debashis Basu about the road he took and its various turning points.

Shall we start with a little bit about your background and your upbringing? When and how did you decide to be an entrepreneur?

There are no business people in my family. My father is a doctor and he was in the government from 1950 to 1983. So we were brought up in government colonies. I studied at St. Columbus School in Delhi, so did my brother. There was no business background in the family, no great financial acumen or anything.

My brother went to IIT, Kanpur, then IIM Ahmedabad and then did his PhD from Stanford. It was forgone in our family that one would do engineering or become a doctor -- the standard middle class aspirations of parents in government service. So I dutifully prepared for IIT entrance, took the exams and qualified.

Then two or three things happened. My rank wasn't great. I wouldn't have got the top three or four departments.

Secondly, I went for a medical test and found out I was colour-blind -- partially. Thirdly, it was a five-year course. So, I decided it was a better option to go to Delhi University and study economics.

Meanwhile, my brother had passed from IIM and he told me not to do an MBA right away because it is useless unless you work for a while. Then Lintas came to college for hiring in 1985. I joined as an Executive Trainee and worked in advertising for three years.

Lintas was hiring graduates those days?

They were hiring MBAs as Management Trainees who would be given a one-year training and graduates would be given two years of training and they would be equalized after three years or so. We were actually the first batch of graduate hires.

For a year I was in Delhi then I was transferred to Mumbai. I then wrote the CAT and went off to IIM Ahmedabad. Typically, in an ad agency you have this thing about meeting clients and then wanting to be on the other side of the table since an Ad Agency executive is typically at the lower end of the food chain. So I decided I want to be on the other side and in Marketing. I got a job at HMM, which is now Glaxo SmithKline.

I was in brand management, handling Horlicks. I was there for a year and a half. But all along, ever since I was in school, I was pretty clear that I was going to do my MBA, I was going to work for a few years and then start my company. This was there since I was 12 or 13.

Were you clear even in those days what was involved in running a company?

No clue! But I knew that I didn't want to join government service, after my father's experience, because in government, you are financially very badly off if you are honest. There was no way I was going to be dishonest, because those were not the values we were brought up with.

Since I wanted independence, it had to be in a business. This was my dream, a distant goal till I passed out of college and joined Lintas. By then I had decided that I would work for 2-3 years and then start out on my own. So I worked at HMM, came back to Delhi and within a year-and-a-half I quit.

I started a company called Info Edge. That is still the name of my company, Naukri is the brand. I started it with a partner and we soon set up two companies, one was for salary surveys and one was a database of trademarks on which we were doing searches.

In October 1990, we were operating from the servants' quarters above the garage at home and were paying my father Rs 800 as monthly rent.

What form of searches were you doing?

They were trade mark searches. We launched a salary survey in Info Edge and with the money we made from that, my partner had another idea.

He said the trade mark registry in Bombay has a library where you can see pending trade mark applications. The government takes five years to approve or reject a trade mark application so if you thought of a brand name today, you apply for it, launch it in six months and five years later if the government rejects your application you are dead, especially if somebody else is already using it before you.

People used to hire a law firm which sent out people to do a manual check in the library and assess whether the trade mark is likely to be accepted or rejected. This library is opened to public inspection. So we sent in 20 college students to note down all information filed under pharmaceuticals in all 134 classes.

We dumped this data in a computer and we wrote software to search it. We then began to call pharma companies -- there were 5,000 of them -- saying if you are making a trade mark application talk to us. For Rs 350 we give you a printed search report. This was a massive hit.

How did you deliver this?

We put the information in a computer. There were no online database searches then. So we said, you tell us what you need, we do a search, prepare a report and send it to you by courier. In 1993 my partner and I decided to go our separate ways.

I kept the salary survey company Info Edge and since the trademark thing was his idea he kept that. I moved back to the servants' quarters and started afresh. Over the next three years I kept costs low and made some money.

How did the survey work?

We used to do entry level salary surveys -- what companies are offering MBAs and engineers at the entry level. We would do a report and send it to maybe a 100 companies. It was not customised. It was a standard survey sold at Rs 5,000 to maybe 100-200 companies. As the price went up we sold at may be Rs 10,000. We used to speak to students who got offers usually from top ten engineering colleges. It worked well.

Where did you get the idea?

When I was in HMM we didn't have offices with partitions like we do today. It was an open hall where you could see, hear and speak to everyone. I noticed that when an office copy of Business India came in, everybody used to read it from back to front. It had 35 to 40 pages of appointment ads in every issue.

At that time Business India was the No.1 medium for appointment ads for managers. And people would openly talk about jobs that were available or slipping out of their hands. They discussed opportunities. Nobody was applying, nobody wanted to leave because they were in a comfortable MNC job with good brands, good pay packages etc., but they used to talk about it.

From these conversations I figured that even if you are not looking for a job, you look at a job. You are constantly looking for a new benchmark and checking if you are missing out on anything.

Also, every week 2-3 head-hunters would call offering jobs. There must have been 100 headhunters out there and each of them probably had four to five clients. These jobs were never advertised because we never saw them in Business India or elsewhere. I figured, what is appearing in the newspapers is the tip of the iceberg. There is a massive market below the surface, highly fragmented and scattered across HR Departments and placement consultants.

If somebody could aggregate it, it would be a powerful product where you could somehow make money. I knew this by 1990. When you are trying to become an entrepreneur there are a thousand ideas -- this was one of them.

Where would your money come from, in a model like this?

I had no clue. This was only an idea and I knew something would come out of it but I didn't know how. It was just one of a thousand ideas -- file and forget kind of thing. By then I had quit my job.

The Department of Telecom had put an ad on the front page of a newspaper saying it was looking for private information providers to launch a video text service, like the one in Paris. They would put up a server. . . I didn't even know what a server was those days. . . and there would be terminals in 45 telephone exchanges and 50 other public places from where information can be accessed for a fee.

They said, we want people who will own and maintain the databases and will not charge us anything; but when the user pays we will do a revenue split. I spoke to my former partner and said let's make a proposal where we get jobs from the company head hunters free of cost and put them here and charge 50 bucks per search, so Rs 25 will be DoT's and Rs 25 will be ours. He agreed we put in an application, were short-listed and they called us.

We found that around 30 to 40 people had turned up, some wanting to put up tenders, others planning something else. So they said, fine, we have plenty of proposals so now we can move to the next stage and get into details. We got a plan ready, produced documentation and end user schemes with classifications for every industry type.

That was in 1991, before the Internet came to India. They approved our proposal and said they will get back to us on implementation. But the project was cancelled. So we had this concept ready in 1991-92 and didn't know what to do with it.

But by then I was charged up on the idea and wanted to try it out. We tried franchise models, couriered floppies, etc. We kept getting data but whatever we tried it didn't look like it would work. It was too cumbersome. Meanwhile, I and my partner had parted. This idea came along with me while he kept the trademark thing.

In October 1996 I attended the IT Asia exhibition in Delhi which is held every year. Usually at IT Asia they have one pavilion with 100 or more tiny stalls where one always found a lot of interesting things. I saw one stall with www written on it. So I asked this guy what it meant, he said it was the World Wide Web. I asked him what that meant and he said it was the Internet and explained it to me.

At that time there was no TCP/IP access, only black and white monitors on which he gave me a demo. He was a retailer, reselling VSNL e-mail accounts. I said I don't want e-mail, show me the Internet. So he took me to a site called Yahoo!, showed me how to search, browse, check other sites -- there was lot of information.

I asked him how many users are there in India. He said 14,000. So I said, 'Wow!' I told him I don't want an e-mail account but I want to set up a Web site, show me how to do it. He said I can't help you there because there you need a server and all servers are in the US.

My brother is a professor at the UCLA business school, so I rang him up and told him I wanted to start a Web site. I told him to help me hire a server, but didn't have the money and said I would pay him later. We were really struggling financially those days because in 1996, if you recall, there was a recession. He said, no problem, I will pay for it and you pay me when you can.

You didn't ever regret having moved out of a cushy MNC job and the long struggle?

I struggled for 10. . . no, 13 years. I had moved out of the MNC job rather early. My salary was Rs 80,000 per annum. This was decent in 1990 but I was not giving up a Rs 20 lakh (Rs 2 million) job to come to a zero rupee salary. In those days you could not buy a car for three to four years even after you passed from IIM Ahmedabad.

I had a two-wheeler. I had not seen the higher salaries so I didn't miss it. What happened over the years when I was struggling is that my friends changed because they were doing different things. They used to go on foreign holidays, visit hotels and bars, which I simply could not afford. Over time, of course, I have re-established contacts.

Were the adjustments easier because of your family background?

Well, for the first three years, my wife was in Nestle and the company couldn't pay me. The next two years, the company could pay me and my wife was still in Nestle so we were okay. She quit in 1995 and around 1996 I became the Consulting Editor of The Pioneer's career supplement called Avenues. That gave me a monthly cheque; we were not well-off but we got by.

By that time my reference group had changed, so I was not seeing what my batch mates were getting. In 2000 when we got venture capital from ICICI, I had been through the second round of not taking salary for three years -- 1997 to 2000. That was tough.

During that time my wife was not working, so I had to do a second job. I got up at 6.00 in the morning, dropped her to the bus stop, was in the office by 7.00, worked till 12.00 then would go to The Pioneer come back and work till midnight again. This went on for three years.

That was tough, but the thing about doing your own business is that you are probably very happy even though you are not making money, for the simple reason that you are in control of your life and priorities and that is important to me.

Was there the fear factor -- wondering how long you would have to keep struggling?

I got over the fear factor in the first two years. I realised that for an entrepreneur the real risk is often a lot less than the perceived risk before you jump. You learn to cope, to manage -- you find your cushions and buffers.

But sure, you have to be willing to say that I won't have a fashionable lifestyle, I am okay not buying a big car or owning a house. And it is easy if it is early in your career. So, in 1997 my brother paid for the server and I gave him 5% in the company. At $25 a month he got a good deal for the server.

I went to another friend who is a very good programmer and I told him about my idea to start a Web site. I gave him the old file and I asked him to do the programming. Since I didn't have the money I gave him a 7% share in the company. He was a freelancer working from home.

Then there was another friend, a year junior to me, called Saroja. She was also doing an independent consulting project. I told her that I am doing a second job in the afternoons and will she be interested in coming in for six hours a day. I offered 9% in the company and she agreed. Then we had some data entry guys and support staff from our other regular business.

We went to the Central News Agency and brought back some 29 newspapers with appointment ads. We built the structure of the database and told them to input the jobs. We got a thousand jobs, then I took a floppy to my techie friend and told him here is the menu and the navigation we want and he built the Web site -- Naukri -- in one week.

We launched on April 2, 1997. It was a very rudimentary site. If you look at it today it was really embarrassing. For the first six months I did not have an Internet connection.

But a good thing happened to us then. We were the first site that was targeting Indians in India. All others like, Khoj and Samachar were all targeting Indians in the US. At around that time, journalists in India had begun to write about Internet and were looking for Indian examples to talk about.

So we began to get massive coverage. In the first year itself we had two fat files of press coverage and that really helped us. Because we got coverage without trying, we also got traffic. Our contact strategy was very good -- we would always allow you to log on free. Because we were sure that with 14000 people accessing the Net, we had a small base of users and we had to get people to keep coming back.

So where did your revenue come from?

We were doing salary surveys still remember? In year one in Naukri we did Rs 2.35 lakh (Rs 235,000) of business and 80% of the jobs were free. In year two our figures jumped to Rs 18 lakh (Rs 1.8 million) and that is when I realised that we had a serious business possibility here, although I was not able to pay myself a salary.

The company was, quite frankly very very stretched even though we broke even. What I did was to shut other parts of the business and all workstations and people were working on Naukri.

The next year, turnover jumped to Rs 36 lakh (Rs 3.6 million) and we made Rs 1.8 lakh profit, but that was because I did not take a salary. I was now clear that I would grow to make Rs 50 to 60 lakh (Rs 5-6 million) and then the profit could be around Rs 10 lakh (Rs 1 million) and I could even take home Rs 5 lakh (Rs 500,000). In 1999-2000 we did Rs 36 lakh, but by October we were sure we would go to Rs 40-50 lakh.

So we were very optimistic and thought we will do well after 10 years of struggle.

Then, around May-June 1999, we began to get phone calls from people saying 'we want to invest in your company, why not take money from us'? We found it surprising, but I said we don't need your money, we are going to break even and are concentrating on profits next year, so please go away.

Then we learnt that funded competition was coming in and the game was going to change. Suddenly, I realised, you cannot be a Rs 50 lakh Web site and make a 10 lakh net profit; you will have to be a Rs 5 crore (Rs 50 million) Web site and make a Rs 1 crore (Rs 10 million) net profit -- that is the only way you will survive or else you will die, because the game is going to change.

Sure enough, Jobs Ahead was launched on the India-Pakistan Sharjah Cricket tournament. We didn't know what the budget was but somebody told us it 'it is twice your turnover.'

That is when we called back the venture capitalists and said look we have changed our minds. So they said, sure thing, write your business plan. So we went back to them, the terms sheets were signed and due diligence done and April 8, 2000 we signed the agreement and they cut their first cheque.

We got lucky. If we had taken the money six months earlier we would have spent it foolishly. The market melted down around that time. We were the last or second last dot-com in India to get funded. By March the meltdown had started but people did not officially acknowledge it till September-October. They kept saying it is a technical correction. We got the money on April 8th and we just put it in fixed deposit.

We had done business for three years and we knew how tough it was surviving on the Net so when the market crashed we knew it was a real crash. We knew of it six months back because we were in the business so I told ICICI that this is a real crash, we have to build the business slowly.

ICICI, to their credit, never ever asked us for revised valuation and did not hold back subsequent tranches.

Was this only for you or for everybody else?

For us. For whatever reason -- I don't know what their thinking was and why us, but the fact is they gave us the final cheque at the same valuation a year and a half after April 8th.

We began to invest in servers, technology, people, products, sales offices and we began to focus on growing the business -- not just by spending but through better products and a feet-on-the-street approach. Around this time the IT meltdown began. This was in November 2000.

Then 9/11 happened and although we continued to grow, we were very scared. There was a time when we had only two years of money left. And then slowly the revenues caught up. We made two years of losses and then we broke even and made a one crore profit.

Going forward, we see there has to be solid emphasis on product and technology so in the last two years we have invested a lot in these and will continue to do so. We need a lot of innovations and scaleable technologies because funny things happen when traffic suddenly goes up. It is easy to run a Web site when there is low traffic but you are really tested when traffic goes up.

Does your application still perform and your service still deliver? You don't realise that until you face the problem. We have invested a lot in scaleable technologies, in new products and features and in bringing mobile and Internet together as well as voice and SMS.

In our scheme of things, the first priority is the product, the next is the brand -- we spend a lot of money on advertising both online and offline. The third is the sales force and sales network in order to sell. We have 400 sales people all over the country so we can reach many more companies and service them better.

Where are you vis-�-vis your competition?

There are two publicly available sources of checking who is bigger. One is where you can check out the traffic of various sites. The other is a paid site called Matrix. As per Alexa we got over 75% to 80% share of job traffic in India and according to Matrix we got between 60% to 65%.

In terms of revenue share -- we roughly estimate that we have around 55% of the market. But the metrics we really look at is how many CVs we are adding everyday, how many applications are going daily from our Web site? On all these metrics we have no competitive data but we estimate we are ahead by 30% to 40%.

How are you advantaged or disadvantaged vis-�vis well known brands such as Times which is also in this business now?

Times of India obviously is a big company with a huge print presence and they are able to support their online presence through print. However, so far we have not been challenged in our market share or traffic share.

I think with online media a lot depends on your product instincts and qualities. How fast is the site? How many CVs do I get? How many finds do I get? We are in a situation where it is very easy for the customer to evaluate competitive offerings because you can measure how many responses you get and how many you hire.

But what about your original insight that people look at Business India from the end, even though they are not really looking for a job. Are you able to give that window shopping experience?

Yes, some people are looking for jobs, some people are just looking around. While you can browse through the site we do have an issue about the window shopping experience for passive job seekers. We recognise that.

A newspaper goes into the house for some other reason and you see jobs there. You don't have to make a separate effort. What we are able to do with technology is that if you register your resume with Naukri, the headhunters will call you.

But newspapers have a massive reach within the city on a given day. So if you are doing a walk-in interview, thousands will be walking in, after reading a newspaper ad. But then the Net is not expensive and will deliver results over a week, ten days or two weeks and it will deliver the results from all over the country.

So, it is not as if the Net will replace print, it's just some of the stuff which is going into print will rather be on the web. Besides, employees can themselves search nearly 2 lakh (200,000) job listings -- they can search, they can browse, they can set job alerts -- there are a lot of things the Net can do that print cannot.

Do you expect Jeevan Sathi and 99 acres to be successful as well?

As of now, Naukri accounts for over 80% of my turnover. Jeevan Saathi and 99 acres are plays for the future. If you look at our strategy there is a pattern. We started with Naukri -- a classified listings kind of business, a database search kind of business.

The market structures of the other two are very similar. There is big market in print, there is a segment which is run by consultants, there is an intermediary in the market -- a placement consultant, there is a job seeker, there is a final employer. We are creating a platform. Our job is to enable a handshake and we are charging for the prospect of enabling a handshake. is similar. There is a large print market, there are two parties who frequently use the services of marriage brokers.

So again there are similar players. It is the same in real estate. So we have actually gone after markets which are very similar in structure and are financially viable in print and hence not risky. So we expect to do well, but don't know how well.

Jeevansathi is the No. 3 matrimonial site in the country; when we bought it in September 2004 it was distant No. 3 and now we have narrowed the gap substantially and I think we should be No. 2 in the not too distant future. For 99 acres, there was nobody else of any significance so we launched in August 2005 and we are No. 1 already.

What is your special input in 99 acres? Why have other property sites not done well?

I don't know. May be they were too early in 1999-2000, may be their strategy was different from ours, maybe they were not neutral platforms, may be they did not aggregate enough content. We have 55,000 listings on our site right now and have a whole tele-calling team which calls up brokers asking for listings on the phone and give them free trials. So it is a question of intuition also.

The basic funda is the Naukri funda -- we have got the most jobs so we get the most traffic, we get the most traffic so we get the most response, we get the most response so we get the most clients, we get the most clients so we get the most jobs -- it is a virtuous circle like in any other media market. It is the same in newspapers and the same in Jeevan Sathi or 99 acres.

Looking back, what advise would you have for young entrepreneurs with your mindset?

I would say that frequently the perceived risk is lower than the real risk but nevertheless you should understand the risk and try to reduce it.

It is a myth that entrepreneurs are not risk averse. I must be the most risk averse person I have met in my life. I am really scared of risks. The point is to keep de-risking at every opportunity. So first, I did not quit my job until after I got married knowing there is income in the house. I began to teach on weekends.

If I had been single, or my wife was not working -- in fact she was the fist angel investor -- it would have been a lot more difficult. I may not have done it. These were all de-risking strategies. When you start out you don't know where you are going to end up.

When we launched Naukri and you had asked me what is your vision I would say there was no vision. All I thought was, if I get a thousand companies to pay me Rs 500 a month to list a job and this would be every month I can do a Rs 60 lakh (Rs 6 million) turnover in three years time I will multiply the turnover of the company five times, that was the opportunity I felt.

Somewhere down the way this dot-com thing happened, then venture capital happened, the meltdown happened and if somebody had told me that I would do a Rs 84 crore (Rs 840 million) turnover five years from now I would say he was joking. Our projection to ICICI in our business plan was Rs 25 crore (Rs 250 million) for this year. So a lot of things are also unpredictable.

What do you see happening in the business in future?

I think there is lot of growth left in the company, there is more business that we can do. I think that there is a lot of improvement to do in product and technology to make it a world class company.

I don't see us diversifying significantly outside the Internet, at least as of now. We are not evaluating a fourth portal. The reason is we want to at least make sure that Jeevan Saathi breaks even and makes a profit. If we were only in Naukri and Quadrangle -- the recruitment part of business -- our pre-tax profit would be about Rs 28 crore (Rs 280 million) just last year.

So we don't want to spread ourselves too thin, particularly from the management point of view. In our business, the constraint to growth is not money but execution and leadership.

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