He joined AMF Bowling, which pioneered the concept of bowling alleys in India. AMF had no operations in INDIA, so the job was in essence entrepreneurial. “India knew billiards, India didn't know pool. And India didn't know ten pin bowling, at all. The more he studied it, it's got to do well here!” AMF did set up a couple of hundred bowling alleys but bowling never quite became the “storm of the moment” that Deep Kalra wanted it to be. And there was a reason for it. The cost of real estate in India (even in 1995!) was just too high. Plus, the idea was probably ahead of its time as there were no malls and multiplexes.
Deep Kalra spent four years with AMF, and “really, really tried very hard to make it happen.” Although Deep Kalra worked for AMF as an employee, it was entrepreneurial for two reasons. The fixed salary component was low, it was based around bonuses and how much equipment you sold.
Second, there was very loose support from the US office. Apart from equipment support and service support, you pretty much did your own thing. The disadvantage was that there was nothing new to learn beyond a point.
So Deep Kalra began exploring options once again, and decided it was time to go back and work for a big company. An exciting opportunity came up from GE Countrywide - the consumer finance business. Although it was back to financial services, the job was to look at new avenues for distribution.
He knew somewhere deep in his heart that, the spark of entrepreneur is just about to trigger and waiting for the right time.
He realized internet is going to change our life fundamentally. And so, he will be doing something using the cutting edge technology.
He is clearly a risk taker at heart, won't gamble too much in cards, but just had an inner confidence that things are never going to get so bad that you won't have a job even if this thing does not work out.
So even as he continued with the day job at GE, the nights were spent planning his own venture. Two models came to mind – one was online stock broking. It made perfect sense, given his training and work experience. But Deep Kalra's heart was in travel and that's what he ultimately chose to do - an online travel portal. And heart should rule over mind when it comes to such a decision. Because that's the only way you'll put not just your body but your soul into what you do. The math you can learn for any business.
Of course it can't be purely love. The market size and opportunity as a whole must make sense. Deep Kalra recalls a third idea. His first child had just been born, and he thought, “Why not a kids portal?” Thankfully, better sense prevailed and the idea remained stillborn. Online travel made better business sense -50% of all e-commerce in the US was around travel.
However, Deep Kalra actually made two plans. One was for online stock broking. Besides being an avid traveler, Deep Kalra had another connection with the industry. His wife was making travel shows like Namaste India and Indian Holiday for a production house. So travel it was! The venture started out as ‘India Ahoy’ - a site which is still used to attract high leisure travelers from overseas.
Finally the Birth of the Spark – Travel portal
makemytrip.com – a name more suited for the Indian market
The biggest challenge is to convince the investor to fund in X crores of rupees, for a project which they have never funded before.
The first guy who was ready to fund him was Neeraj Bhargava, Managing Partner of eVentures. They actually closed the deal sitting in a café in the Crossroads Mall on a paper napkin! As per the investor “we will give you x million dollars and we will take so much percentage.”
Talking about business, when makemytrip set out, it said, “We will be the defining travel portal for travel to India, from India and within India.” So it was domestic travel, outbound travel, Indians going overseas, NRIs coming to India, foreigners coming to India. Everything!
Within two to three months, it was apparent that, in the India of 2001, no one was buying online. Lots of lookers, very few bookers. Everyone was coming to the site and saying “Wow, this is cool”. But that was it.
In June 2001, the irony was that now, a majority stake was with the management, and minority was with some angel investors. Some of these angels were individuals in eVentures. So even as the VC firm bailed out, they really believed in the idea and put in their own money.
Salary payments became difficult. The company shrank from 40 employees to around 20.
The belief in the business was so strong that he went on, without drawing a salary, for 18 months. And whatever was he not taking as a salary, was converted into equity. He also encouraged two senior colleagues to do the same and they were elevated to cofounder status. Of course many others said We can't handle this thing,’ and left.
So they decided,” We are going to fight it out boss.”
It became clear that ‘India focus’ was pointless. So makemytrip simply stopped marketing in India. All energies were focused on US based NRIs. And that saved the company.
“This strategy saved us through 9/11, it saved us through SARS, it saved us through the attack on Parliament, it saved us through the dotcom bust.” Because that market was a very developed one, NRIs were used to buying online. Also they had a natural reason to come to India year after year. The US focus continued right up to 2005. Makemytrip became a nice, robust and profitable business. But it wasn't huge - about $15 million in gross billings, $2 million in commissions or ‘revenues’.
Trouble was, this market was not tremendously scalable. The same model did not work in the UK or Australia for various reasons. The question was, now what?
Then, fundamentally two or three things changed in India. New domestic airlines were launched. Complete and utter chaos ensued in the market. Every day there were ads in the newspapers offering fares of 99 rupees, 7 rupees and even zero rupees! So it was the perfect time for a portal like makemytrip to come in. With the help of technology, the site gave all the choices at one go. And people could make their own decision. Power shifted from the travel agent to the customer. The second big trend which gave Deep Kalra a lot of courage was a meeting with the folks at Indian Railways.
Of course there were also some numbers put out by NASSCOM which said the internet user base would soon be 30 million. But that is more a statistic to take note of, not bet the company's future on.
Ultimately many think tanks churn out reports, with all kinds of projections. Some estimate correctly, others are way off the mark. However real change can be sensed when people start behaving differently... and that's what was happening here.
“Air Deccan did a lot for us” says deep Kalra “they managed to bring the cheap ticket buyer to the net by screaming and giving these crazy prices. So makemytrip did not have to do that evangelization.” Now the company was faced with another decision point - should it launch a real quick with a rough and dirty site or be build the coolest site in the world and take 6-9 months to launch?
He has chosen the first one, launched on September 2005, when nobody else was in the market. That made them synonymous with the term ‘online travel’. And they still occupy that space. Even though other portals have gone crazy advertising. The current challenge is to make the India business profitable.
They are six months old! Bangalore is going to cross one crore next month. Travel means travel- means travel on land, on sea, on air, offline, online, under the line, whatever. You start with an innovation, but then you extend tentacles into the regular side of the business as well.
Within 11 months of launch, makemytrip became the highest issuer of air tickets for any single travel agency location, including the traditional players.
The growth story has been astounding. By March 2008, makemytrip achieved $250 million in sales, i.e., approximately Rs 1,000 crores. That translates into $20 million in commissions or Rs 80-90 crores. 70% of the business is now from India, with close to 10,000 tickets being sold online each day.
The big challenge now is to sell other products online. With hotels, makemytrip is beginning to see a breakthrough. Still, a big change of habit is required. Then there is the sale of holiday packages. Mostly people collect information online but purchase offline which made makemytrip has an 'army' of people selling packages over the phone. The company has set up 20 ‘travel stores’ across the country to be able to sell holiday packages to the various regional markets.
Growth is a hydra headed monster with an endless appetite! Of course all this growth did not just happen. Cash had to be burnt to build a national brand, so investors once again came into the picture. SoftBank Asia Infrastructure Fund was the first to invest. In subsequent rounds, Deep Kalra took money from three other funds - Helion Partners, Sierra Ventures and Tiger Global. But why take money from so many different people? Because different guys bring different things to the table. They also help to manage competitive pressures. Of course, managing so many investors is definitely a challenge in itself!
Deep Kalra has a meeting with IRCTC officials. He hopes to convince them to let him sell railway tickets through makemytrip. As they say, “Try, try and try until they give in!” which has finally happened and makemytrip.com also serves its customers with the facility of booking Rail tickets online.
When you talk about Spark, you should also know that spark has the feature of blazing and it has its own roller coaster to drive you, which will bend you with its unexpected twists and turns.
The journey of downsizing the business and to then massively scaling it from 20 to 750 people says it all.
Deep Kalra says “Once you have tasted blood, working on your own, you just don't want to work for anyone. For me, that would be the hardest thing to do.”
First the idea then the implementation and then the inclusion of other add-ins has been the success story of make my trip.com.
However, the future Deep Kalra would much rather carve out for his company is an IPO. To provide liquidity to all stakeholders, make the company even bigger and most importantly, to remain in control.
More About Deep Kalra
|Country of Citizenship
||Bachelor's degree in Economics from St. Stephen's College, Delhi (1990), and a MBA (PGDM) degree from the Indian Institute of Management, Ahmedabad (1992).
||FOUNDER OF MAKEMYTRIP.COM