The dot-com bankruptcy was the best thing that happened to us
Actions of IndiaMART , an online business-to-business market, increased almost 40% on its debut in EEB on July 4. For the co-founder and CEO of the company, Dinesh Agarwal , 50, the transcendental event came after a wait of 23 years.
Agarwal, who started the firm in 1996, spoke with TOI about the ups and downs that he experienced over the years. From the loan of a friend to register the domain name in the USA. UU Until facing business interruptions after September 11, the Agarwal trip is a rare start story that survived the boom and crisis of the Internet.
I have now plans to bring fintech and software-as-a-service products on IndiaMART 's platform. Excerpts from the interview:
Internet was a strange concept in the nineties. How did the trip begin?
I come from a family of small businesses in the Napara district of UP, near the border with Nepal. I studied at a Hindi secondary school in Sarkari (government) and then went to Lucknow to complete class 12. I lived with my grandfather. In 1990, I was fortunate to be one of BTech's first graduates in computational sciences from HBTI, Kanpur. I got a job at CMC Ltd, where I worked on software for the Indian Railways reservation system, and then joined Sam Pitroda and his team at the Center for the Development of Telematics to develop an indigenous digital telephone exchange for India.
I remember that, in 1990-91, I had access to an email ID, approximately four years before the Internet was officially launched in India. In 1992, I moved to HCL in the United States, establishing offices on the east coast. I saw the birth of the internet in the United States, it was a new world for me.
As I am from a business family, I always wanted to go back to India and do something on my own. On August 15, 1995, the PM [PV Narasimha Rao] announced that BSNL would provide internet connectivity in India. The next day, I put my documents in HCL and, within 45 days, I returned to India with my wife and my son. I started looking for opportunities related to the internet.
How did you come up with the idea of IndiaMART?
Initially, we wanted to build the website here, but there were not enough computers or internet infrastructure. We thought about building a site covering Indian businesses for clients in the West. I thought it would help exporters and remove price disparity of Indian products in developed countries. That's how IndiaMART was born. Our first tagline was: 'The global gateway to Indian marketplace'. We looked up 'marketplace' in the dictionary because it was not a popular term then (laughs).
At that time, there were only a handful of websites. Getting a domain name was a challenge; I lent money. It was expensive to keep the domain name - $ 135. It's $ 5- $ 7 now. I realized that my business model was not sustainable. I started with sites focused on export, so I thought, why not put a directory of exporters online? I asked the relatives to send free listing forms to give their consent to publish the details of the exporters. My first client was Nirula, who had an export house. In the first year, we operate from our home in Patparganj, recording revenues of ₹ 6 lakh with 40-50 customers.
How did the boom and bust of the dot com affect your company?
There was a massive boom in India; We could not understand what was happening. We receive financing offers, but we do not accept them. While things were at their peak here, the dot-com bubble collapsed in the United States. That was the best thing that happened to us. The night flyover operators had to close the store. We expanded and became aggressive, but September 11th happened.
How serious was the impact?
We sold land and obtained a bank loan of $ 50 lakh to finance the expansion. We were booming. On September 10, 2001, we held the opening ceremony of our office. The next day, the attacks occurred. Businesses fell 50%. That was our hardest phase. My co-founder, Brijesh Agarwal, and the staff were very supportive. There were wage delays, but the employees stayed.
How did IndiaMART move from being an export-focused business to India-focused one?
In 2007-08, the rupee became strong, affecting exports. Then, a recession hit the United States and demand fell. China took advantage and India lost. Alibaba made its IPO and Apple launched the iPhone. We decided that India would be the center, focused on the B2B market focused on India and raised $ 10 million of Intel Capital.
Why did you wait more than a decade before collecting external capital?
We did not need as much capital for the US market. India was a different ball game. We were expanding, so we needed capital. We opened 52 offices in 52 weeks and our sales grew 10 times in a year. We spend a lot of money. For 2012, we faced another slowdown as the economy slowed down. We report a loss for the first time in 15 years; We lost everyone's confidence and I was afraid to even leave home. We shrink and stop hiring. We made great changes in 2012-2013, but we became intrepid in the process and found a new adjustment for the product market.
What did you do well in 2014?
There was an e-commerce wave, with Flipkart emerging as a large company. We launched Tolexo, a platform for industrial products. While we were trying to turn IndiaMART around and scale up Tolex, we realized the latter will not be profitable. We merged the platforms, which worked wonders for us. We stuck to it and have gone public now. IndiaMART does not look like a classifieds website anymore. It's like Amazon for B2B products.
Would you have considered issuing differential voting rights, or DVR shares, if Sebi's approval had come before the IPO?
We would not have needed that. Brijesh and I will sell around 5% and retain 52% of the shares after the IPO. Therefore, we do not need a DVR structure to maintain control.