In a short entrepreneurial journey that began in 2007, friends-turned-business partners Kunal Bahl and Rohit Bansal found themselves facing a day to forget in just two years. Sometime in 2009, the two founders of Jasper Infotech were grappling with how to pay salaries amounting to Rs 4 lakh; the company account was almost bare and pay day was upon them. They had no choice but to dig into their personal accounts that, together, held a balance of Rs 5 lakh. “By the end of the next day, we had less than a lakh left in our accounts,” says Bansal.
A bigger survival question now hung over the two childhood friends who had shared a bench during their days in Delhi Public School. Both held prestigious degrees. (Bahl had done business management from Wharton School and Bansal had earned his engineering stripes from IIT Delhi.) They had also held top-paying jobs before turning entrepreneurs. The resultant introspection was inevitable: “Should we leave this life of uncertainty and go back to the comforts of a salaried job? Or should we stick on?”
But, as Bahl recounts, “We had a keeda [loosely translates to obsession] from our school days that we want to do something of our own.” This was not the time to give up on that dream. As it turned out, that call was a good one. “We never had to revisit such a day,” says Bansal.
They started changing their business model as often it took until they got the right mix. From a company that sold discount coupons, first offline and then online, they made the transition to building a marketplace-based ecommerce company called Snapdeal in 2010. There has been no looking back since as Bahl and Bansal have single-mindedly grown what is today the largest ecommerce marketplace in India. A 20-member team in 2010, Snapdeal has 1,200 “team members” today (“I hate the word employees,” says Bahl). Its sellers’ network includes more than 50,000 merchants/ brands and has a customer base of 20 million, the company website claims. Its customers come from over 4,000 cities and towns.
“Our business has grown by six times in the last year. By the end of financial year 2015, we will cross $1 billion in sales,” says Bahl, who is the CEO. Co-founder Bansal is the COO of the company. Snapdeal, which gets a commission that ranges from 5 to 30 percent for each product sold, expects to close the present financial year with sales of $500 million.
Naren Gupta, co-founder and managing director of venture capital firm Nexus Venture Partners, calls Bahl a “six sigma entrepreneur”. The Nexus team had met Bahl when he was working on the idea of the offline printed discount coupon. The team wasn’t clear if that idea would scale or even work, and suggested that Bahl focus online. After a year Bahl decided to take his model online. That’s when he met Nexus again and got them excited about his proposal. And Gupta, who saw a scalable opportunity in the online model, decided to back him. “Once the model was clear, I knew that Bahl had the execution capabilities to make the business a huge success. We were thrilled to back him,” Gupta says. Adds Suvir Sujan, co-founder and managing director at Nexus: “We were convinced that only a marketplace of services will be able to achieve scale in India and expanding into products would be a logical extension.”
The firm, along with IndoUS Venture Partners, was the first to invest in Snapdeal with a $12 million funding in 2011. Both were later part of another two rounds of fund-raising by Bahl and Bansal. The last one, in June 2013, saw the $14 billion American ecommerce major eBay taking a slice of Snapdeal and emerging as one of its biggest investors.
But these are early days in the Indian ecommerce industry. “Compared to the US and even China, we are just beginning to scratch the surface in India,” says Rahul Khanna, managing director, Canaan Partners, India, the local unit of the multibillion-dollar venture capital firm based in Silicon Valley. Ecommerce is just 0.25 percent of India’s total retail activity. But there is a difference. “The US has an old and rich legacy of organised retail and ecommerce came in later. In India, both are growing almost together.
[So] Indian ecommerce will grow much faster,” points out Khanna, hinting that as the market matures there might not be enough space for all the present players. (Canaan has also invested in marketplace ecommerce company Naaptol.)