"If The Customer Comes, Investor Money Will Follow"

We got lucky. We were the second last dotcom company to get funded. We signed the agreement on April 8, 2000 and got the first cheque. The internet bust was waiting to happen. There were signs as early as March, but it wasn’t until September or October that people would acknowledge the meltdown was real.

Being bootstrapped for 10 years teaches you the value of money. Surviving on your customer’s money is much better than depending on an investor. If a customer is willing to pay, it means the product is working. If the investor is willing to pay, it means your PowerPoint is working. Did we deserve to get the valuation? Honestly, no. It was like being hit by a wall of money…it was still an aberration. 

When I put the money in a fixed deposit, ICICI thought I was crazy…I told them I knew the meltdown is going to be deep. We had to make the funding last as long as we could. ICICI, to their credit, never ever asked us for a revised valuation and did not hold back subsequent tranches. The only thing they asked us was to change our projection. We had said we would do Rs.12 crore in the next five years. They thought it was conservative. I stuck to my guns…I knew my business better than anyone else. I couldn’t have been more wrong! We ended up making Rs.Rs 84 crore in the next five years.

Money in the bank can give you so much freedom. We didn’t have to worry about how we were going to pay salaries…so, we decided to fix other things. We put money in building new products, invested in sales and engineering. We had underinvested in these areas, you can’t do everything when bootstrapping…

Hitesh had joined us by then. He had come to me for advice. He was with Unilever and wanted to join a start-up…I convinced him to join Naukri. He wanted to spearhead marketing. We were going the direct mails route then. Hitesh felt sales guys would be far more effective than mailers. He was right…the sales guys were breaking even in three months – they had turned into profit centres. 

Looking back, I’m glad we invested in sales. It helped the company overcome its most challenging time. Post 9/11, the slowdown was severe; it had really started hitting us. We were losing Rs.2,500,000 every month. We only had enough cash left for 16 more months…We just had to reduce the losses, grow revenues. The sales team did it; it was a heroic effort…we managed to break even by 2002 with Rs.2 crore in the bank.

Tuesday, November 21, 2006 was the day Info Edge got listed. I remember the high – Rs.623 and the closing price – Rs.593. Our issue price was Rs.320. We were the first internet company to list in India, we were not sure we got the pricing right. Nevertheless, the struggle had paid off; we were vindicated! It was right after we clocked Rs.84 crore in FY06. 

I have always been partial to entrepreneurs. I know it’s not easy being one. But there is no better way to create wealth for shareholders than by investing in good entrepreneurs. Hitesh and I were using Zomato for six months to figure out where to eat. I was telling Hitesh how much I like that website. He asked me why don’t we invest in it? I couldn’t fathom why I didn’t think of that…

We were already investing in companies over the past few years. I sent an email to Deepinder, asking him if he was looking for investors. He was…we met the next day.  Within 72 hours, we offered him a term sheet. We are the single shareholder in Zomato. I believe raising money is not a true measure of being successful. If the customer comes, investor money will follow. It’s not necessary that customers will follow investors. 

Do I have any regrets? No. There were so many times I was hard up for cash, but I knew that would be the case. You only fail when you give up. Sometimes, not having money can be a blessing. Having too much of it can force you to make stupid decisions that you wouldn’t otherwise make. There’s nothing that I would really change. Quitting my job was the best decision I ever made…

This is the third of a three-part series. You can read the first part here.