“If I look back, our best investments—PolicyBazaar and Zomato—were made just around the global financial crisis or just after it, or maybe just before it," Sanjeev Bhikchandani, founder and vice-chairman of Info Edge said in the Q4 earnings call of Info Edge in May this year. “These are actually good times to invest if you have a 7, 8, 10-year perspective, which is what we do have. So, for us, actually, it"s quite good," the seasoned entrepreneur and investor underlined.
On being asked about the slow speed of investment in startups, Bikhchandani preferred to take a cautious approach. “We want to take our time and be very selective given the state of the market," he said, adding that he would be careful about valuations and enterprise. Here’s his take on a bunch of issues around the startup ecosystem and entrepreneurs, which he outlined over the last four earnings calls in FY23. Edited excerpts:
We are now not worried about missing investments, we are more worried that we don"t do the wrong one. Especially since we don"t know if there"ll be a follow-on round for another investor or not. There might be, but there might not be. Because everybody is being more careful. So we are investing, but we are being a little slower and more careful.
Then you go to the global financial crisis. There, we had a 40, we had a 43 or 44 percent traffic share at the beginning of the global financial crisis. Three years later, we had a 63 percent traffic share in Naukri. And that"s largely because our competition, Monster, Times Jobs, they all let go of salespeople. We did not let go of people. We simply did not sack. We were happy to live with lower profits for two or three quarters. We said we will keep our capabilities alive and intact. Competition cut advertising by 60 or 70 percent. We cut advertising by only 15 percent. Once again, we said we"ll take lower profits, but we will keep the business capability and the brand salience intact. That paid rich dividends and therefore when we came back, we came back with a roar.
Let"s take a look at 2020. [Through] Covid, lockdown, Naukri was minus 44 percent YOY in quarter one of 2020-21, April, June 2020, minus 44 percent billing growth YOY. We asked internally… can we stress test our P&L balance sheet and our cash reserves? If we have zero revenue, and we cut marketing, zero increments, how long can we live as a company with the current cash reserves? And the answer was three years. We said, okay, that"s enough runway. And we simply did not downsize. At a time during Covid when everyone, when a lot of other companies downsized, we simply said, listen, we are a people"s company. This is the wrong time to let go of people. There’s no light at the end of the tunnel. If you let go, then we don"t know what will happen to them. They never get a job. At the same time, this thing will turn around and we"ll start growing again. We don"t know when, but we"ll start. And, you know, preserving our capabilities in times of recession and not cutting back on investments too much has paid us rich dividends on three separate occasions, 2000, 2008- 2009, and again, 2020.
You"ve got to cut the expenses, but keep the right ones intact, be a little more careful about how you"re investing. And if you manage that right, hopefully it will help.
First Published: Jun 02, 2023, 17:44
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