Sunday, 15 November 2009

One of the fastest internet companies with cash and profits!

Once again the audiences of Enterprise Tuesday at Cambridge were treated to some insights into entrepreneurship by asomeone who is very modest about his achievements. His initial take was that he just bumbled along for about 7 years from 1990 to 1997, living off his wife’s success – a former classmate from the Indian Institute of Management and now a successful top flight executive. He had tried many ideas, projects, consulting assignments and then started to follow a pattern that he saw all around him – that people seemed to open magazines from the back, spent time on the jobs pages before turning to the contents of the magazine.
So he and his nascent team and partner formulated a jobs based website, developed business models that were based on revenues of advertising from prospective employers. All this while bootstrapping the business out of bedrooms and garage spaces in Delhi (note – not in Silicon Valley!).
The company realised the basic proposition had to be that they had content – of jobs. So they took in all the newspaper advertisement – from 29 newspapers and uploaded the jobs onto the website – www.naukri.com
This was an initial big hit – huge numbers of visits and pretty soon it became apparent to employers that they had better use this channel as well. They now get over 200million unique page views per month. The company has become the hub of the Indian talent market and this has enabled the company to develop multiple streams of revenue; advertising being the mainstay.
When they reached $80,000 revenues with 9 staff, they started to receive visits from “smart MBAs” who had joined venture capital and were now riding the wave of hype around the dot com bubble. He was amazed and turned down offers of venture capital, all of which were placing his company at around $9m valuation. Sanjeev argued that had he taken the money and tried to invest it at the time – his balance sheet would have gone negative! He jokes – that they were somewhat paralyzed by the fear of “wasting the investors’ trust and cash”
Eventually – they took in money from ICICI and being cautious – he says with a wry smile – they put the cash into deposit accounts until they could figure out a really strong growth strategy. The injection of capital did give the confidence to go for growth. The initial test of strategy came when the sales director suggested that they grow the sales team as he had seen a direct correlation between increased sales people on the ground and increased sales. So – although they are a web company, they now have over 50 offices in India and neighbouring countries and around 1600 staff, most of who are in sales. They have 200 staff that develop technical solutions to meet the needs of the recruitment market.
This is a rapid growth business by any measure and the founder Sanjeev Bikhchandani is modest to say that the early days were action packed rather than strategic. It is only with the early success that the confidence grew to start to establish a firm strategy for growth, by diversifying the revenue streams, hiring people – based on generous reward structures and eventually by placing memorable advertisements on television to drive traffic to the web http://www.youtube.com/watch?v=f-89JndcGK4

The growth strategy was starting to build on gaining deeper insights into why people moved (at least in India) and one of the key reasons turns out to be disillusionment with the boss! This is what they used in their advertising and the character created became a household term for “nasty boss”!
What has Sanjeev learned from his business and entrepreneurial career?
If a problem has already been solved – don’t do it
Ensure that whatever business idea you come up with scalable – especially if you want to attract investors.
Talk and listen to customers – build deep insights
Focus – do one thing and do it well
Have the courage to take advantage of being a first mover. This can give you market leadership
Improve continuously – and do it quickly and keep it moving (something they call fail fast in silicon valley)
To build teams – be prepared to share your wealth
Retain a frugal mindset at all times – it helps if things get tough
Put yourself into ecosystems where you can get lucky! (Not sure if we should rely on luck for growth – but it sure helps if you get lucky!)
What has been the biggest mistake he has made – hiring for convenience rather than for quality!
Sanjeev runs a blog on http://www.sanjeevbikhchandani.com/
He has also kindly given us his investor presentation
http://www.infoedge.in/pdfs/corporate-presentation-august09.pdf

Once again the audiences of Enterprise Tuesday at Cambridge were treated to some insights into entrepreneurship by asomeone who is very modest about his achievements. His initial take was that he just bumbled along for about 7 years from 1990 to 1997, living off his wife’s success – a former classmate from the Indian Institute of Management and now a successful top flight executive. He had tried many ideas, projects, consulting assignments and then started to follow a pattern that he saw all around him – that people seemed to open magazines from the back, spent time on the jobs pages before turning to the contents of the magazine.
So he and his nascent team and partner formulated a jobs based website, developed business models that were based on revenues of advertising from prospective employers. All this while bootstrapping the business out of bedrooms and garage spaces in Delhi (note – not in Silicon Valley!).
The company realised the basic proposition had to be that they had content – of jobs. So they took in all the newspaper advertisement – from 29 newspapers and uploaded the jobs onto the website – www.naukri.com
This was an initial big hit – huge numbers of visits and pretty soon it became apparent to employers that they had better use this channel as well. They now get over 200million unique page views per month. The company has become the hub of the Indian talent market and this has enabled the company to develop multiple streams of revenue; advertising being the mainstay.
When they reached $80,000 revenues with 9 staff, they started to receive visits from “smart MBAs” who had joined venture capital and were now riding the wave of hype around the dot com bubble. He was amazed and turned down offers of venture capital, all of which were placing his company at around $9m valuation. Sanjeev argued that had he taken the money and tried to invest it at the time – his balance sheet would have gone negative! He jokes – that they were somewhat paralyzed by the fear of “wasting the investors’ trust and cash”
Eventually – they took in money from ICICI and being cautious – he says with a wry smile – they put the cash into deposit accounts until they could figure out a really strong growth strategy. The injection of capital did give the confidence to go for growth. The initial test of strategy came when the sales director suggested that they grow the sales team as he had seen a direct correlation between increased sales people on the ground and increased sales. So – although they are a web company, they now have over 50 offices in India and neighbouring countries and around 1600 staff, most of who are in sales. They have 200 staff that develop technical solutions to meet the needs of the recruitment market.
This is a rapid growth business by any measure and the founder Sanjeev Bikhchandani is modest to say that the early days were action packed rather than strategic. It is only with the early success that the confidence grew to start to establish a firm strategy for growth, by diversifying the revenue streams, hiring people – based on generous reward structures and eventually by placing memorable advertisements on television to drive traffic to the web http://www.youtube.com/watch?v=f-89JndcGK4

The growth strategy was starting to build on gaining deeper insights into why people moved (at least in India) and one of the key reasons turns out to be disillusionment with the boss! This is what they used in their advertising and the character created became a household term for “nasty boss”!
What has Sanjeev learned from his business and entrepreneurial career?
If a problem has already been solved – don’t do it
Ensure that whatever business idea you come up with scalable – especially if you want to attract investors.
Talk and listen to customers – build deep insights
Focus – do one thing and do it well
Have the courage to take advantage of being a first mover. This can give you market leadership
Improve continuously – and do it quickly and keep it moving (something they call fail fast in silicon valley)
To build teams – be prepared to share your wealth
Retain a frugal mindset at all times – it helps if things get tough
Put yourself into ecosystems where you can get lucky! (Not sure if we should rely on luck for growth – but it sure helps if you get lucky!)
What has been the biggest mistake he has made – hiring for convenience rather than for quality!
Sanjeev runs a blog on http://www.sanjeevbikhchandani.com/
He has also kindly given us his investor presentation
http://www.infoedge.in/pdfs/corporate-presentation-august09.pdf

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