Bikhchandanis search for

the next big Internet idea

The Naukri promoter is on the lookout for start-ups which have the
potential to become as big as his own venture

WIDENING THE NET Bikhchandani started his business from scratch and now plans to grow it further by offering more services
SURAJIT DAS GUPTA
New Delhi, 19 March

anjeev Bikhchandani,
founder and vice-chairman of Info Edge, which
runs the countrys largest job
portal, Naukri.com, has devised
a test to spot a winner. Before he
takes a decision on investing in
an Internet start-up, he asks its
founder one simple question:
What would you like to pay
yourself?
The IIM Ahmedabad alumnus who started from scratch
selling salary surveys before hitting on his big Internet idea
says: The answer tells us a
whole lot about the entrepreneur. Is he willing to tighten his
belt? Does he want to get financially comfortable on the
investors money? Is he willing
to personally share the pain of
the company when it is making
losses?
Bikhchandani would, of
course, know. His company,
Info Edge, has invested ~285
crore in nine Internet companies that were picked up from
among 300 potential suitors.
What he looks for are Internet
businesses which have the
potential to become big like
Naukri. So, a few days ago, he
acquired software semantic
search company MakeSense
Technologies for around ~8
crore.
MakeSense was acquired to
fine tune the search abilities of
Info Edge's cash cow, Naukri,
and to help it better match
potential candidates with the
job profile. A few weeks before
that, Info Edge had invested ~85
crore to gain majority stakes in
two
start-up
ventures
Zomato.com, a restaurant rating site, and Meritnation.com,
an online educational site.
His investments are geared
towards one goal: to replicate
the success of Naukri. Sure, he
wants to grow Naukri even further by offering more services.
But he also wants some of the
other Internet businesses to
scale up to a similar size. With
revenues of ~300 crore, Naukri
currently controls over 60 per
cent of the online classified jobs
business. Its success has seen
the classified business shift dramatically from print to online
(of the total job classified business of ~800 crore, ~500 crore is
online). It also constitutes a
staggering 81 per cent of Info
Edges revenues, a dependence
which Bikhchandani would
surely want to reduce.

INVESTMENTS SO FAR
Site

Amount (in ~cr)

Zomato
Meritnation
Policy Bazaar
Mydala
Canvera
Happily Unmarried
99 Labels*
Floost
Investment written off

86.0
61.5
30.0
27.0
35.0
5.0
28.0
2.2

% Equity

57.9
54.0
40.0
47.0
22.0
25.0
40.0
30.0
Source: company

The new growth engines

firms may hesitate to do.
Bikhchandani is also being a
So, where will the next ~300
crore-plus Internet business mentor of sorts by giving the
come from? Insiders say the tar- new entrepreneurs access to
get is to achieve scale in at least Info Edge so that they can learn
four to five other Internet busi- from the systems at Naukri and
nesses to enable them to replicate them in their own
become as big as Naukri. start-ups.
Unlike a private equity firm,
Bikhchandhani says it can
come by directly running busi- Bikhchandani would like
nesses in which Info Edge has tighter equity control over these
management bandwidth, like companies. His average holdthe online classified business ing in the companies is over 40
or other businesses like online per cent. Also, all the compamatrimony (jeevansathi.com), nies that he has invested in,
online listing of educational except one, are in or around
Delhi, which is close
institutions (shikto Info Edges headsha.com) and online
HIS
OWN
quarters in Noida,
real
estate
BUSINESS
which helps in closer
(99acres.com).
At the same time, Sites & their revenue supervision.
In two of the big
the company, which Naukri
investments, Zomato
went public in 2006, ~300 crore
and Meritnation, he
does not want to lose
is already a majority
out on new opportu- Jeevan Sathi
nities which have the ~36-39 crore shareholder.
Bikhchandani is also
potential to scale up. Shiksha
chary of getting in a
Our bandwidth is ~20 crore
second investor as it
limited, so we cannot
might have comdo everything inter- 99 Acres
different
nally. However, that ~53- 60 crore pletely
based on rough
goals. However, he is
does not mean we *Figures
percentage shares of the
in the market as
ready to let go of this
will let go of other company
told by Info Edge
condition if the fundopportunities
because we have the cash. So, ing requirement is too large.
There are, of course, serious
we will make strategic investments in other companies, challenges to this strategy. With
such high stakes in each comsays Bikhchandani.
pany, he could also lose a lot of
Long-term play
money if the business fails. For
However, Bikhchandani insists instance, a few weeks ago, Info
he is not another angel investor Edge had to write off ~29 crore
looking to make investments in in 99labels, an e-commerce site
potentially promising compa- offering fashion merchandise.
nies, or in competition with oth- It has also written off around
er private equity funds. His ~4.4 crore in Studyplace, which
goals, he says, are different. used to provide information on
Unlike private equity firms, he is certificates and degree pronot looking to exit his invest- grammes. Many critics say
ments in three to five years, a most of the successful sites
strategy intended to bring more which require cash will become
majority-held by Info Edge and
stability to the promoters.
Also, he is willing to put in sub- function like its subsidiary if the
stantial amounts upfront. For promoters lack the ability to
instance, it invested ~20 crore make a matching financial conin policybazaar.com in the first tribution to the company.
Bikhchandani grew Naukri
round itself. Similarly, in
Mertination, the company put by taking private equity money
in ~6.5 crore even before the and then going public; he did
product concept was ready, not lose his majority control.
something that private equity But he has followed a com-

pletely different route for his

investments where the end
result can be only one, eventual control. That would kill entrepreneurship, says a senior
executive of a private equity
fund.
Info Edge, of course, defends
its strategic investments.
Bikhchandani says the new
entrepreneurs know him well
to feel comfortable in case Info
Edge decides to acquire a majority stake. Info Edge believes that
some of the businesses it runs
will become big. It sees more
potential even in Naukri, provided it expands the definition
of the jobs market.
Hitesh Oberoi, chief executive officer and managing director of the company, says that
the entire jobs business, which
includes consultancy, research,
campus recruitment, assessment of potential candidates, is
over ~ 4,000 crore. Of this, classifieds (print and online) is
around ~800 crore. Naukri has
the scope to expand its business
to get a larger share of the pie,
he says.
One way to do so is to provide newer and better services
to clients. So apart from
MakeSense, it has also bought
TooStep Consultancy, which
provides a platform to companies to sell jobs on social networking sites and search
engines.
Challenges in the way
Bikhchandanis challenge will
be to increase revenues from
non-job sites. He has taken the
prudent step of spinning them
into separate business units
with their own sales teams and
division heads. He realised that
while all of them were in the
classified business, they
required different expertise.
However, his non-job businesses have a long way to go to
reach the business size of
Naukri. For instance, jeevansathi is third in the pecking
order much behind its rivals
bharatmatrimony.com, with 13
per cent share of the ~300 crore
online market. And while
99acres is the top player in the
online property listings business with 35 to 40 per cent share
of the ~150 crore online business, it's still nowhere close to
Naukri in terms of size. Print
rules the roost in property listing, generating over ~1,750 crore
in revenues from this single category. The scope for growth is,
obviously, huge and the challenge now will be to repeat the
success of Naukri.