There is no such thing as a failed entrepreneur.You are a failed entrepreneur onlywhen you quit. Until then, you are not successful. yet!
When you talk about Naukri.com as is today, it is impossible to imagine that the largest online company in India today did not even have an Internet account, or even a connection, when it began. Flashback 2000, when India had only 14000 Internet connections to boast of, here was a man who had launched an idea he never imagined would one day become the largest online staffing company in India. Sanjeev Bikhchandani, when sharing the journey of how Naukri.com reached its present revenue size of Rs.300 crores explained how the idea of the ‘business of jobs’ emerged from his experience at IIM Ahmedabad and later, when working in the marketing division at HMM (now called GlaxoSmithKline).
Since b-schools at the time only provided placements for management trainee roles, Sanjeev opted out of placements as he had a few years of experience. So, while his colleagues at b-school were busy sitting for interviews, Sanjeev went around the campus escorting HR teams from various companies. This gave the curious mind a chance to understand how companies were competing on campus for talent and even trying to outdo each other by making offers across the table. This led him to realize the value companies had for salary information of their competitors, and Sanjeev saw a potential market for a salary survey on what companies were paying to fresh MBAs. And thus, this marketing and advertising professional, who saw a need-gap, saw himself starting a company in the HR space.
Sanjeev believes that to be an entrepreneur, one cannot have an ego and should be willing to do every small job that is required to be done in a start-up. For the first 7 years, they drifted as they tried out varied small ideas including databases, salary surveys, feasibility studies, training and everything else that came their way, just to survive, and operated out of the servant quarter above the garage at home. His drive to solve an unsolved problem and the belief that there is potential in his idea, ensured that he did not give up even though there were many struggles, including not being able to draw a salary in the first 6 years. The support of his wife, a classmate from business school and working with Nestle then, allowed Sanjeev the time and opportunity to enjoy the thrill of following his dream. So in that sense, his wife was the first angel investor. And just as they had tried half a dozen small ideas, Naukri.com. was also seen as just another small idea as they launched themselves as the first online jobsite in India.
The idea spurred from his working days at HMM (now GSK), when he would observe his colleagues read the office copy of Business India from the back, because it carried 35-40 pages of appointments ads. This often led to endless discussions around new jobs available in the market, although each one was then sitting on the best job option in their choice of location, and had no plans to move. At the same time, every week, at least one or two of them would receive a call from a headhunter for a job opening that was not advertised. This made Sanjeev see potential in this high interest category of information and was convinced he could make a business out of it, although not so sure how just then.
In 1992, the Department of Telecom (DoT) took out an ad in TOI and HT in Delhi announcing the plan to launch a ‘VideoTex Service’. The concept was that there would be a server in one location in Delhi with 50 public access terminals all over the city. The server would host databases which the public could access on payment of a fee. The DoT advertisement was to request for proposals from information providers to host information on the server on a revenue share basis. Naukri.com jumped on the opportunity and began to work on a proposal for a jobs database that would collate information on jobs from companies and consultants. It made absolute business sense, but unfortunately within a few months, the DoT called off the plan due to budget cuts, and that left Sanjeev with a fully baked plan for a business in 1993, sometime before the Internet came into India. Conviction about the idea and the urge to solve a problem, drove the formation of Naukri.com. at a time when Sanjeev had not had the chance of experiencing the Internet and its might. Yet, he went ahead to create India’s largest Internet company. Circa 1996, the first time when the Internet was being showcased at an IT exhibition in Pragati Maidan, and Sanjeev decided to run a job website, even if it meant he had to get it done through his brother staying in the US as there were no servers to run websites available in India then. Sanjeev spent the initial 6 months uploading job information using his programmer friend’s expertise and Internet access. So, Naukri.com. was triggered from this consumer insight that job information is highly valued and highly fragmented, and there was a value if one could aggregate this information and keep it current. And since companies already had recruitment budgets, Sanjeev knew there was a price companies were willing to pay for such information.
Since jobs were a high interest category of information, Naukri.com was able to attract traffic from the very beginning. In the initial days, being a new business concept, they did a lot of press coverage and Sanjeev’s experience in the media helped him understand what made a good press release. While in the first 6 months, Naukri.com picked jobs ads that were put up by companies in print media, the story changed soon after recruiters began to learn about Naukri.com from candidates who often mentioned having seen the job opening on Naukri.com. Even as Naukri.com began to gain popularity in the market, they sent out a communication to all HR heads introducing the company. For the first time, companies got to know of an alternative medium to advertise jobs at a mere Rs.6000 a year for an unlimited number of postings, or Rs.350 for a single job posting. Being a far cheaper option than print advertising, cheques soon began to pour in. The first cheque came in when an auto parts company in Pune approached Naukri.com to pay for six jobs, which sent in September 1997, a cheque amounting to Rs.2100 for six job postings.
Soon after its launch in April 1997, Naukri.com’s revenue in the first year was Rs.2.35 lakhs, having received their first cheque after 6 months of starting the business, simply because they never asked for money earlier. Then in October 1997, they sent out a letter to 3,000 companies about Naukri.com and its services. And soon, Naukri.com became a well-known name. But even then, Sanjeev saw the business as a small idea and was happy at the thought of being able to increase sales to Rs. 50 lakhs in 3 years’ time. Seeing the potential of this good small idea, they shut off all other business verticals to focus only on the job website, having finally found something that is sustainable.
Soon, from 2.35 lakhs, next year when sales rose to 18 lakhs, Sanjeev realized the huge potential of the business. And though they broke even, Sanjeev could still not afford to take a salary. When Sanjeev was first approached by an investment banker, he was not ready to scale the company so fast and decided to take his time to grow the business slowly, until JobsAhead launched, having raised 7 million dollars of funding. That is when he realized the game had changed in the online jobs industry.
Staying small was just not a viable option anymore and this led Sanjeev back to different investors and raised 7.3 crores in April 2000 with ICICI venture. But soon after, the whole dotcom dream went bust and they decided to put the money in fixed deposit, and invest further capital to scale slowly. Sanjeev sees the market meltdown in May 2001 as being lucky because it allowed them to raise the required equity and also the time to scale slowly. So, in the middle of 2001 when 9/11 happened, the business was losing 25 lakhs of cash a month which left only 4 crores untouched in fixed deposits. At this juncture, it was their sales effort which was able to lift the revenue and they turned around the business and even made profits, with 2 crores still left untouched in the fixed deposit. And while they made losses for 2 years after raising money, they broke even and moved from 36 lakhs to 10 crores in 3 years’ time.
The next part of the journey that followed then had its own pain-points. The first 3 years were tough because they were making a loss and running out of money fast, but they were able to turn that around. Thereafter, even though they made profits, the business was not large enough to list the company. While they did not want to sell the company, the investor had to exit somehow and the employees with ESOPs had to see some value.
Being a start-up, Sanjeev believes the first team is very critical and it is always people one knows personally, who create the initial team because they know you, trust you and believe in you. Subsequently, their friends, and then friends of friends join the team. And this follows friends of employees, before one can go through the formal channel of hiring. In case of Naukri.com, they went on to hire from beyond friends of friends only in 2001, as Sanjeev quips, “By then, you run out of friends, and you need to hire people 10-15 years younger than you and they are not your friends.” While Naukri.com surely enjoyed its first mover’s advantage, Sanjeev felt that his lack of experience in technology was a challenge in the beginning.
Sanjeev believes that an entrepreneurial venture can grow only if it has the support of its initial team, and that it is only fair to share the wealth back with those who help make the business happen. Therefore, at Naukri.com, minus the IPO dilution and VC dilution, they keep aside about 35 percent of the company for the people who made it. He affirms, “If you do not do this kind of sharing of wealth, you won’t build a big company because you would not get quality people, you won’t be able to retain them and it is also about fairness.” While in the initial days, Naukri.com did not provide stock options but gave shares upfront to its employees, formal ESOP came in after the VC, because then they had the money to hire a consultant, create a trust, etc. as required to administer ESOPs right.
Post the VC, the success of Naukri.com is primarily attributed to Hitesh, the present CEO of InfoEdge Ltd. and his team who took over the operations and running of Naukri.com since 2000 when Sanjeev, along with the CFO, had their hands full with the IPO. It took 11 months from appointing the investment banker to the IPO and 6 months before that to understanding the whole process. Hitesh, a Commercial Manager at Hindustan Lever who joined Sanjeev for the sheer drive to make a new business work, became the de-facto CEO during this time. Soon after joining, he took on the sales & marketing and built the team. And in 2 years, Naukri.com had a 200 strong sales team across 8 offices in the country, which brought in required push to scale revenue, by creating bandwidth to introduce more products at various price points. And today, the only person with no HR background, is the founder of the only Indian HR company that has had an IPO. And Sanjeev attributes this success to his endless pursuit to make it work which he believes is the DNA of an entrepreneur. He says, “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.”
While he did not have a formal HR qualification or had ever worked in an HR department, Sanjeev was driven by his customer insight that unfolded the market need. And this helped him articulate a business idea that had a ready market. In fact, Sanjeev believes that for every line manager and every entrepreneur to be good, they must be good at HR personally. There may not be great HR processes as they are what mostly HR professionals specialize in, but every good manager has to be a good people’s person.